The Western news. [volume] (Libby, Mont.) 1933-current, 1933-09-21

{nsurInG Ben D eft OF suit
Bank Deposits Lake, as s members .hs
new Federal Deposit Insurance eorpor-
alton formally has taken shape, and
the second big step has been made
toward another experiment In national
government, namely, the insurance OF
bank deposits of private individuals
and corporations. Nothing like it has
ever been attempted on so vast
scale as is now being worked out for
the banking act of 1888 was the first
national law ever to carry provisions
for guaranteeing deposits or course,
1t does not become operative until next
January /, but many tasks remain 10
be performed before this new piece
of federal machinery Is ready to run.
Because 1t Is new thing and be-
cause of its complicated character,
| It seems better to outline again what
the deposit insurance proposes to do.
| After January |, 1884, each and every
deposit amounting to $500 or less Is
automatically insured II the bank In
which that money Is deposited has
| complied with the requirements OF law.
| Since those requirements are highly
/ technical and quite complex for a lay
| man to understand. 1t may suffice TO
say the law demands that the bank De
absolutely sound and that 1t have suf-
ficlent assets that 1t can pay OF de-
positors 100 cents for each dollar. II
a bank cannot do that, the law au-
thorizes the board of the corporation
TO refuse to admit that bank to men,
bership. and when that happens, II
seems to me. the particular bank may
as we'll close up shop. Few persons
will leave their money with 1t longer
than 1t takes to withdraw It,
| have been speaking OF the So
called temporary insurance provisions,
for there Is permanent insurance act
that takes effect July |, 1884. and
then the amount OF deposits coming
under the protection OF the Insurance
fund will be much larger. After next
] July /, any depositor's account amount
ing to $4,000 or less will be fully
insured. In the next category, all OF
: the account up to $4,000 will be in
sured and rs per cent OF the amount
above that figure until the total rs
$4,000. If the total Is greater than
$4,000, the first $4,000 will be fully
insured. the amount between $1,000
and $4,000 will be rs per cent in
sured. and all above $4,000 will be
so per cent insured. The theory is
that this protection will make 1t GER
tain none OF the depositors will be
seriously handicapped should the bank
close. The bulk OF the deposltors
will be paid In full within a very few
days after the bank fails. for the de
post insurance fund will have money
with which to do 1t. The Deposit In
surance corporation will take over thu
assets of the bank, liquidate them anf
get as much Of Its money back as pos
sible, after 1t has paid Off all depos
itors. Tt is to be remembered, how
ever, that those with large accounts
may have to walt awhile to get thei
money, for part of those are not In
sured.
While the Federal Deposit Insur
ance corporation Is federal agency
1t is In fact owne
Banks Put by the banks them
Up Money serves lucy na ~
money The law requires that eac
bank becoming member of the COZ
poration must pay into the fund
sum equal to one-half Of ] per centur
OF the deposits that bank has. Tha
will make several hundred million do
lars available and the supporters
the insurance plan claim the total wi
be large enough to last a long tin
before another assessment will have
be made upon the banks to replenis
the fund. That, of course, Is open
question. Only time can tell wheth,
the fund Is sufficient. Nor can anyor
know now how many bank failure
there will be In the future. II the
are few, then the drain on the insu
ance fund will be small and. convers
lv. II there should be seige Of ia
ures such as we had In the last sever
years, anybody's guess Is good as
how long $3.50, 100000 will last In pa
. ing off depositors.
> All of the national banks that
banks which have received charte
from the comptroller OF the curren
I in the treasury, must be members
the corporation. The law makes til
= certain. Then. all of the banks
Grating under charters given by thu
r respective states and which are me
$ bers of the Federal Reserve systt
/ must be members. That Is In the la
n too. But there are some eight Tho
2, sand state banks which are not me
n hers of the Federal Reserve Syste
II with them, membership In the corpo
r ton Is optional. II they choose
& seek membership-and all OF TIN
a. must or face withdrawal OF deposits
n they must pass the examination Il
the law provides.
If There is where the rub comes. I
e examination will be strict The bar
IA ,t .shono mn for that pyaminafi