The Bismarck tribune., 1923-01-19
GUARANTY LAW
IS TOO LOOSE
S0L0NS TOLD
Report of Dep0sitors Guar
anty Fund Commission Is
Sumbitted to Legislature
HAVE TOO MANY BANKS
Guaranty Body Says That
Number Higher in N. D.
Than Elsewhere Per Capita

More rigorous laws regarding
banks and more constructive super
vison would have prevented the clos
ing of many banks in the state, the
Depositors' Guaranty Fund Commits
sion declares in report on the work
of the commission, submitted to the
legislature this afternoon in re-
sponse to joint resolution passed
by both house N.d senate.
The present guaranty of bank de-
polits law is hopelessly inadequate
to meet the situation, the commits
sion asserts, and declares that the
law, as it now stands, 'is nothing
more than an advertising lodges to
attract deposits"
The state of North Dakota has
too many books, and "the result has
been an era of vicious banking prac-
tices, the report asserts.
While making no direct recon-
mendations for legislation the COM
mission points out conditions and de-
clares it's willingness to appear b..
fore any committees of the legisla-
ture to aid in framing constructive
bank legislation.
. The condition of closed banks, the
report declares, is one of grave con-
Germ adding that "the subject is so
full of problems that as you proceed,
you will become, as we have, some
what daezd by its magnitude and
seriousness"
Financial Condition.
The financial condition with respect
to close banks is related as follows:
Since the enactment of the guar
anty of deposits law 70 banks have
closed (6S since Nov. Is, 192O). De-
positor5 of two banks were paid in
full. Nineteen banks have been re-
opened, leaving 81 state banks now
closed and in the hands of the bank
ing board.
Total deposits in closed banks were
$7,145,636. and less than so per cent
of the amount is guaranteed under
the law.
Maximum assessment on membe.
banks yields $240,OOO year, a great
er assessment would drive state
banks to nationalize.
Interest on liability to depositors
placed near Accomplishments than
equals the annual income.
There is now $573,743 in the
guaranty fund.
OF the questioned deposits" on
which liability is in doubt or now de-
MED, 1861 ,656.79 is redeposits of the
Bank of North Dakota in closed
banks.
Good and collectible paper in
closed banks is estimated to be worth
but "A cents on the dollar.
The board, which made the report,
is composed of M. r. Porter, Minot;
c. B. Mcmillan, Hannah; S. G. Severt-
son, Bismarck, all bankers, and Gov
ernor R. A. Nestos and Gilbert Sem
ingson, state examiner, ex-officio
members.
Throughout the report great stress
is laid on the declaration that the
Guaranty Fund law is hopelessly in
adequate; that there is conflicting
authority between the state examin-
er, banking board and commission,
and that no adequate powers are Civ
en- to anybody to close up affairs of
closed banks.
Too Many Banks.
k"There are too many banks in
North Dakota" the report declares.
zone to each 750 population. The
averape in tho I1nitod Ctatos 10 nno
to each $500. Overhead cost to
maintain two banks-often three or
four and where one will serve, is a |
direct tax on that community. Have |
less banks. closer supervision and
better banks"
The reports points out that re-
ceivers have restricted powers, that |
there is no recognized authority over |
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