Bisbee daily review., 1911-06-14

report on the conditions found by him in full detail to the directors of each bank examined. His reports to the directors are just as compd ent accountants would make were they employed by the directors to make examinations
 In this way each Chicago clearing house bank gained the advantage of having an examination by a compe- tent examiner. The examiner gener- ally reports to he clearig house committee on conditions found by him in the individual bank. drawing special attention to any depreciated assets, any irregularities or anyt hing in the institution open to serious criticism.
 In event conditions warrant ]. the committee has the right to the pe- rusal of the detailed repor made to the directors, a copy of which the examiner keeps in his own file. On the basis of this general report if there is anything to criticise the committee gets in touch with the directors of the bank through its president and in as diplomatic a way as possible all matters open to crit
 
 In addition 70 this each bank is still required to send to the clear ing house a copy of the report made to the government on the call of the comptroller of the currency or the state auditor, as the case may be. These are taken up and considered by the clearing house committee from standpoint Of the last exam ination made to 1t by the clearing house examiner. The committee may decline to pass such statements as satisfactory until all matters criti- cised in the clearing house examin- CTS repor are shown to have been corrected or provider for.
 Without Fear or Favor.
 The clearing house examination Is supplemental to the legal exami- nations by the comptroller of the currency or he head of the state banking department in Chicago. Both the state auditor, examiners and the national bank examiners un- der the direction of the comp roller of the currency have worked in com plete harmony with the clearing house examiner. In fact, because Of his close rouch with the individual hanks and. his frequent examinations and inspections, the clearing house examiner is able to give considera- ble assistance to the national and state examiners in rheir work.
 The clearing house examination plan as developed in Chicago is simply one of bank supervision with ou. fear or favor and places in the clearing house committee all $ ate ments which must conform with the examinations by the federal and state government and win the re ports of it's own examiner. This nee essarily must divulge the true con dition of the bank, which means tha5 the assets at a fair and reasonable valuation will offset the liabilities, Including it's capital, surplus and un- divided profits. The cld~iDg house examinations are under the direction and supervision of men who are thoroughly posted on local credits and are familiar with or can easily ascertain the value of local securi- ties.
 Clothed, as it is, with the power of enforcing coTrec ions of methods and conditions when first discovered the clearing house system has an advantage over government al su- pervision in that neither the govern ment or state banking departments have power to in. erfere otherwise than by criticism until conditions be- come so bad that the capital of a bank is materially impaired of it's soIvency ques toned. The fact that the clearing house evamination is established by mutual consent of the members or the Cleariu- a1use and of banks clearing througE members gives 1t an authority which federal and ate statutes do n0l confer up- o.l gOvernuantal examiners.