The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1927-01-17

xtt2x IN
I The State of North Dakota has not
Until the last lew years, had closet
bank problem. Beginning with 1920
however, and up to the present time
the state has had and still has vita
problem In the closed bank situation
which demands attention.
The situation is much better thar
it was and is continually getting bet.
ter. The worst is over. In justice
to the creditors Of the closed institu'
tions, the state owes a duty to sex
that as large percentage as possible
shall be returned to the losers. Al
present al closed state banks arc
administered through one receiver
and are in various stages of iliquida-
ton. The total amount. involved al
present in these banks aggregating
over forty million. A consolidated
statements Of the closed banks COM
piled from their books, 1t date Of clos.
ing shows over fifty millions involv.
"a.
That porti6h Of the banks assets
in which the creditors are mainly
interested and from which the great
est recovery should be possible. il
the loans and discounts. There has
been prepared q report showing. the
name of the bank, the amount Of its
bills payable and the collateral pledg-
ed to secure the same, together with
the name of the holder. This report
reveals that over twenty-three mil
lions Of loans and discounts were
pledged to secure approximately eight
millions of bills payable. The amount
Of loans and discounts unpledged re-
naming in the banks was less than
the amount pledged. Also the ones
pledged were the best in the bank.
When banks first began to close the
universal practice by bills payable
holders was to exercise their right
under the pledge contract and imme-
diately foreclose upon the collateral
and either sell it to an outside party
or collect it, entirely ignoring the
insolvent bank and its creditors, and
with little. or no attempt to limit col
lecting expenses. The theory SEM
ed to be that so long as the claimant
reimbursed itself, it had no obliga-
ton towards the closed bank.
On January 1, 1898, there were over
fifty closed banks in North Dakota,
scattered of the state, with pros
nect that several more would close
during the year. The closings were
mot confined to any particular por-
ton OF the State. The closed banks
were either in charge of receivers
appointed by the district. courts, or
the banking board, or were in charge
Of REPRESENTATIVES of the state exam
liner or guaranty fund commission,
which representatives were termed
deputy examiners, or special deputy
examiners in charge.
Too Ssnall to Pay Expenses
Many of the institutions were so
small that it MAS impossible for the
man in charge to collect enough
money to pay his salary and ordinary
running expenses. The legislature,
then IN session, by joint resolution
called for. a report from the guaranty
fund commission which, among other
things, called for a report on the con-
ditions Of closed banks. The report
which was submitted pointed out
some of the difficulties incident to
closing up the affairs Of insolvent
banks. The following 'is quoted from
the report: :. |.
Tue m0LteFr OF winding UP =
some of the closed banks has
been one of deep concern and
much Thought and work on the J,
part Of the commission. Realiz-
ing the fact that many OF their
assets were of little value. that :
the expense Of the receiver
ships was absorbing all that was Y
heing realized from collections,
hn. Haas ,..~Nlswr,
Tor months to find some way to
and determine the real loss, but
eat purchasers, hut when one was
found who was interested, it was /
- difficult for ourselves, p well \
rs for. the banking board. to IL
nany realise that sales should
necessarily be made ut what, on
its fare. seemed to, be . great !.
ssGcrifics. Finally, by "a .comhin- !
iation of circumstances, one, case
was taken before the district /.
Court In, Grand Forks county,
and It was there 4 made evident !
that the powers Of the banking q
board; the guaranty fund cam
mission and the receivers were \,
very limited and that unless the
law. lis amended. every, ons Of
these closed hanks muet yet be
taken into court, ,adjudioated
ing much expense and delay with
turthcr loss 70 the creditors and
sists. ~ the governor, secretary
~ o. IN nj okkntmnsy nsanV~t