New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1912-11-25
BANKING ABUSES Barred
State CombatS Dangers in
Overextended Loans.
YEARS PROGRESS TRACED
False Statements of Borrowers
Lure Advances, Says Super
intendent Van Tuyl.

Albany, Nov. 4.-Outlining the steps ~
which Improvement in methods Of bank
examination has been brought about IN
this state, Superintendent George c. Van
Tuyl. ir., Of the State Banking Depart
ment. has an interesting chapter In prep
aratlon FOR his annual report In state
ment issued to-day superintendent van
Tuy says:
The most important Of the innovations
adopted by the department was a Icguld-
ton providing Tor the calling Of meeunsS
OF boards OF directors 10 pass upon the
loans and general condition or lnsula-
tons al caCh examination. AT every eA-
animation members OF the boards OF III
IeCtOTs are required 10 pass upon Nlt
genuinencss and worth Of every loan ana
discount In the institution. ana, IN gen
Cral, 10 assure the examiner thht the ~
tendaut conditions surrounding suCh loals
are satisfactory. The directors also HIa
CuSs with the examiner the policies anu
tendencies affecting the condition OF the
Thus the responsibility for the standing
OF the bank IS placed s4Lareiy upon We
board Of directors, wnerc II properly q
longs So important il this matter IN Ite
owes ~ those most concerned that II Is
interesting 10 note that the lonuoit.
Of the Currency has taken similar posi-
lion IN the supervision OF the aHaIIH o.
the national banks. The department Sc
verely crlticises absenteeism rom Tesu-
lar meetings OF directors.
Something never before attempted bF
the department as protection 10 uaIn1
against the OveTeNtenslOn OF bnIIoNrl y
was instituted during The year ~ l.
adoption by the Superintendent or the
practice Of making simultaneous exam
nation of all banks located lu certain
districts. During the last year TINS ~
multaneous examination WOIh mas -
undertaken in two OF the largest clues
In the western part OF the state, ana
also I'm all the banding districts OF Long
Island. The new method or WORK taih'l
the approval OF the local bankers IN %. u
Of the cases mentioned.
Referring 10 the establishment OF the
credit bureau in New York, Superin-
tendent Van Tuyl says:
The principal work Of the credit bureau
10 the investigation OF loans 10 oEettA-
tended borrowers. This class or borrow
ers IS most dangerous one. They Sc
cure accommodation through false state
ments made - tilr 0aI.E- az 20 the tN-
tent Of their loans. They borrow large
amounts from a number OF INSTITUTIONS
each Institution making &c loan upon ule
assumption that II Is the only large cred
! By means OF this system OF collecting
and compiling such information the BaLh-
ing Department Is eHdbleu 10 a-''l ,"''l
the number ~ banks from which they
are Borrowing, and also the aggreG ate, o., o,
their loans In the event OF haEFa,t
abuse banks are advised OF the condl-
ton Of the borrower. in order that fuI-
Their extension may bs prevented. \ case
was found In which the borrower man
tanned loan accounts iu twcnly-hine IN
stltutlOus Again. one ind vidual was as
covered borrowing I'm the names OF thIIS
different individuals and corporations
"The directors relations with instt'-
lions are Investigated" continues the
statement Some Instances have been
found IN which directors appear TO DC
large stockholders IN their banks. but the
majority OF the stock which they own Is
hvpothecated IN other institutions. Oc-
casionaily they even go so far as to Dor
row upon their qualifying shares. Some
do not hesitate to cause large loans TO be
made 10 themselves and TO their com
panles, as well as 10 individuals with
whom they are associated, without giving
proper security 10 the bank