The Bridgeport evening farmer., 1917-06-23
HINMAN AGAINST
SECURITIES SHIFT
BY SAVINGS BANK
Discourages Transfer to
National Banks In
Opinion.

the granting or PERMISSION TO saw
ings banks to transfer to national
banks securities In which the funds
of the savings bank are invested, was
discouraged in an opinion rendered
by Attorney General George E. Hin
man yesterday to Bank Commissioner
Everett ]. Sturges.
The securities, the TRANSFER of which
was in question In the mind of the
bank commissioner. were such as may
be deposited by national banks with
the United States treasurer to secure
government deposits, and the idea was
tional bills of sale, the national banks
making payment to the savings banks
of the amount Of the value Of the Sc
curities, by means of certificates OF
deposit paying interest at the same
rate as the securities transferred, but
ON condition that the savings banks
have the right at any time to re-buy
the securities at, the same price at
which they were TRANSFORMED The
bank, commissioner wanted to know If
uassable, and the attorney general
kayes his opinion az follows:
It is quite apparent that the real
Vl1HtQ<90 &IlQ 1Iz&LuIO VI LILO P4OkrOc~S-
y It is difacult to tell how much these
ties by the savings bank to the ma
tionaI bank, under an agreeent to pay.
in consideration of such loan interest
on the value of said securities during
the continuance of such loan. with a
right reserved by the savings bank
to demand return OF the securities at
any time on surrender Of the certifs
cate Of deposit This DEPARTING Dtshas
previously ruled that a loan by, a saw
ings bank of its securities to ma
) tional bank Is illegal, because4 at does
not constitute or even purport to be
an investment Of the deposits and sur
plus of the savings bank but is a
parting with possession of securities
in which said deposits and surplus are
invested pursuant to statute, which
securities should at all times be in
the custody of the managers of the
} savings bank, as trustees for the de-
positors, to respond to the demands
of said depositors.
: See opinions OF attorney general.
1s0T-s; page 79.
- The proposed transaction is, in its
purpose and effect, open I'd the same
objection and criticism as such an
avowed loan of savings bank securi-
ties However, the law. Section 80,
chapter lat Of the Public Acts of
1919, permits savings banks to de-
post in an incorporated bank or trust
company located in this state. or in
other states therein designated, to an
amount not exceeding 80 per centum
of the capital stock, surplus and I'M
divided profits of such depository. A
savings bank, il its officers so order,
may lawfully sell to a national bank
securities in which its deposits and
surplus are invested and. within the
above mentioned limitation, deposit
the proceeds of such sale in such ma
tional bank, and 1t might also be
agreed, by an independent contract
that the savings bank should have the
right, at its option, at a future time
to repurchase said securities from the
national bank as a price therein
named or provided for, but the nature
OF the entire transaction should ot
such that the savings bank would
have, contemplated by law, that is
lupon its deposit therein unaffected by
any collateral agreements or Other
contingencies, and any contract fol
re-purchase should be entirely indie
pendent of such sale and deposit and
solely within the control of and a
the option Of the savings bank. Sucf
transaction might. as a legal propo
sition. be technically valid, but, being
obviously for the Accommodation ant
benefit of the national bank, instead
OF the savings bank depositors fol
Vhom the officers of such bank ar
trustees and to whom alone said Off
GERS owe duty the responsibility and
importance of which is not only OBJ
wious but has been repeatedly EN-
phasized by our courts and by this de
partment, ought not to. be approves
or encouraged by you.