Evening star. [volume] (Washington, D.C.) 1854-1972, 1926-02-14

reCtly with a State bank, thus doing
away with useless red tape.
The bill further proposes to give ma
tional banks the right to organize
separate corporations to carry on a
safe deposit business in connection
with the banking business and to set
aside not more than 10 per cent OF
their capital and surplus for that pur-
pose. This is desired in order to
limit the liability of the bank to the
amount of capital subscribed to the
safe deposit corporation. AT present
the entire capital. surplus and und1-
yided profits of a national bank doing
safe deposit business Is liable for
any damages that may be awarded
in a suit brought against the bank
for anything in the way of an &C
cident that may happen In the sa1e
deposit department., thus deprlVlns
the other depositors Of their share OF
the projection in the capital, sur
plus and Profits.
Extends Loan Periods.
National banks are permitted now
to lend part of their capltal ana part
of their time deposits on the security
of real estate loans for period OF
one year. The bill extends the time
for which loans may be made TO nVe
wears, permits 20 per cent or capltai
and surplus or one.half of savings de-
posits to be loaned in that way pro
vided loans be secured by first
mortgage for an amount not greater
than 80 per cent of the value or the
property.
The savings deposits In national
banks are not different from the saw
ings deposits in State banks, trust
companies and savings banks. IL 1t
is safe for State banks to lend their
savings deposits on the security of
real estate then there can be no ques-
ton about the safety of permitting
national banks to make the Same
kind of loans out of their savings de
posits. There is a great demand now
for money for building purposes In
the cities and loans for that purpose,
tudiciously made, would be helpful in
building up the community. Then,
too, a three-year~ loan or five-year
loan is more liquid than a one-year
loan and can be sold more readily
because persons with money to invest
rarely want TO put 1t out for only one
year.
For many years national banks
have been using their surplus funds
in the purchase of what are known
as investment securities, such as
ed and have a ready market. 1t Is
proposed to legalize that practice, but
give the controller of the currency
the power to define investment Sc
curities to the end that undesirable
Investments which have a limited
market shall be excluded. There Is a
further provision that a bank may
purchase an amount not greater than
% per cent Of its capital and surplus
of securities issued by one debtor,
which will be in harmony with other
provisions of the law limiting the
amount of money that can be loaned
to one person.
New Property Rule Sought.
At the present time if a national
bank desires to buy additional prop
erty for future use 1t must improve
that property and add it to it's bank
ing quarters at once. Many banks
looking ahead desire to secure avail
able property near the bank for future
expansion of business. but they do
not want 10 be forced to spend the
money to improve 1t at once. The
proposed law will permit them to do
that.
Another provision of the law
legaliZes the practice of increa sing
capital stock by the declaration OF
stock dividends and it provides the
further regulation of the amount of
surplus. which must be maintained
when such stock dividends are de-
c1ared. Reports Of condition made
to the controller of the currency
must be certified now by the presi-
dent or cashier. Very often such re-
ports are called for when these Off
GERS are not in the bank. therefore
it Is proposed TO permit such reports
to be certified by a junior officer.
Section $500 of the Revised Statues