Evening star. [volume] (Washington, D.C.) 1854-1972, 1908-09-21
"R|OT ACT" IS READ
TO BANK EXAMINERS
Controller Murray Demands
Better Work or designations.
STANDARD MUST BE RAISED
Anxiety for Fees Indicated by Lack
of Thoroughness.
MEN. NOT SYSTEM, AT FAULT
Duty to Find Out Conditions of
Banks Must Be Properly Per-
formed Henceforth.
STANDARD MUST BE RAISED
MEN, NOT SYSTEM, AT FAULT

81 say to you emphatically that your
work must be improved.
"Embezzlements have failed of discov-
cry; defalcations and dishonesty have
been concealed from you. and in many
cases you have failed to correctly or even
approximately estimate the value of the
paper and the securities held by the
bank
This was the declaration made today by
Controller of the Currency Lawrence o.
Murray in addressing the conference of
national bank examiners, representing
practically all of the territory east of
Ohio.
The conference. held behind closed
doors, is expected to continue several
days, and is the first under the control
lers call of September 9. designed to dis
cuss the bank examiners work, with
view to radical improvement. Later Mr..
Murray will hold conference with the
western examiners. probably at Chicago.
Today's discussion was along the lines
of securing better methods. Mr.. Murray,
in his speech, said that some of their re-
ports to him indicated that few exam
iners do not realize the obligations of the
office, and the results indicate hurried
work.
He said examiners should call upon
committee of two or three members of
the board of directors to go over the
tire discounts of the bank with the exam
iner; that the examiners must be ready
to accept assignment anywhere in the
United States. and that ''if you are un-
able to discover the true condition of a
bank do not send excuses, simply send
in your resignation and your commission
for cancellation"
Mr.. Murray's Address.
Mr. Murray's address was as follows:
Il have called you together this morn
ing for a general conference, not only
between the officers here, but between
yourselves.
There can be no successful admins
tration of this bureau unless your re-
ports absolutely reveal the true condition
of the banks which you examine. l have
other means of knowing the condition
of the banks except by the reports which
You make.
And some of these reports indicate that
a few examiners do not realize the Obli
cations of the office
Il say to you emphatically this morning
that your work must be improved. En-
beZzlements have failed of discovery; de-
falcations and dishonesty have been con-
cealed from you. and in many cases you
have failed to correctly or even approx
mately estimate the value of the paper
and securities held by the bank.
Ihere are In tnlS once instances WQere
examiner has failed to discover, al
though he made several successive exami-
nations. various shortages or other GRIM
inal wrongdoing in the bank.
In some few instances the examiners
are not to blame for failing to discover
dishonesty. but it is difficult to convince
the public of this fact, SO that the effect
is just the same.
But in many instances subsequent in
vestigation has shown that the failure of
10
wholly to defective methods. hasty or per-
functory examinations or absolute incom-
potency.
"One of the most essential features of
an examination is the correct valuation
of the assets. In this respect the examiner
cannot be too careful and painstaking for
upon this estimate the controller must
wholly rely to determine the sovency of
an association or the extent of its losses,
If any have been sustained.
Murray Sets Standard.
THE examiner should, in every in
stance. inform himself as fully possible
in regard to the value of every note and
collateral found in the bank and the
financial responsibility of all makers and
indorsers of paper. Some examiners rest
satisfied with the statements of the Off
GERS in regard TO the worth of paper, col
lateral or other securities. and the finan-
cial responsibility of borrowers and their
lnQOrSerS, ana 90 not take time ana tTOu-
BILE to inform themselves otherwise.
while an examiner should consult free
~ with the officers and some of the di-
rectors of the bank In respect to its as
sets. he should by no means, accept their
statements as conclusive, but should sat
isfy himself. by discreet inquiry through
other reliable sources of Information, es-
pecially In regard to any paper that he
is not familiar with or concerning which
he has any doubt
"A great TeDOrtS received from
examiners indicate hurried work. There
Is too much disposition on the part of
examiners 10 increase their compensa-
tion at the expense OF the thoroughness
and reliability of their work.
If getting fees from the bank is more
important TO you than getting informa-
ton about the bank for me. then resign
a once
An examiner should remain, in bank
until he is thoroughly satisfied that he
understands its condition, instead of
measuring the amount of time devoted
10 an examination by the amount of the
Zee that he will receive therefor.
Examiners. as A rule. know what their
DUTY is If they perform that duty they
VIII know what the condition of the bank
Is. and can report it in detail.
1t would increase the value of such
examination If the examiner should call
upon a committee of two or three men,
bers of the board of directors and have
them 20 over the entire discounts of the
bank with him Such a committee should
be selected by the bank examiner himself
ana should consist OF members OF the
board of directors. other than members
or tHe regular discount committee. At
eacA examination during the year a diff
ferent set Of directors should make up
this committee. Bu; this is rarely If
ever. done.
In this way. during any given year. a
large number. and possibly every member
o. the board OF directors. would be COM
peLed 10 inspect the loans and discounts
srtArr
their value and character This practice
would compel directors to have knoWl-
edge of the affairs of the banks of which
they were directors. would prevent i'm
proper practices on the part of the mem
bers of the discount committee which
have sometimes led TO the wrecking of
banks. and would unquestionably be an
aid to the examiner.
Incompetence of Examiners.
You will be surprised TO learn that
some examiners who have been in the
Continued on Eleventh Pagel