Evening star., 1933-09-26
TREASURY HEADS
MUST ANSWERSU|T
Woodin Among Those Or
. dered to Answer Injunction
Z IN u. S. Savings Case.
(ConJiriued From First Page)


mated negotiations to reopen the bank
We're virtually at an end and divi-
dfnd would be paid as soon as the court
would permit
Just how this dividend could be paid
would depend on future developments,
bllt 1t was indicated the Treasury might
either throw the bank into geceivership
ahd sell some of its assets. or. on the
other hand, take steps to sell some OF
it's assets to another bank in order to
provide the cash dividend to depos-
itors Whether this sale would be made
TO the Hamilton, from which the United
states Savings was dropped by motion
OF the Treasury during the recent trial,
was not cleared up today
The letter from Deputy Controller
Lyons read in part as follows:
You state that the plan suggested
by this Office cannot be accepted for
the following reasons:
In the plan which we proposed, the
depositors would receive Immediately
upon the reopening of the bank, sixty
Ave $3.50 per cent. and the balance
would be guaranteed TO them by trus-
teeing certain assets and adding to the
trnst fund all dividends declared on the
stock of the bank. and by making the
entire present outstanding capital stock
1.-ltlc Ddllh d1oO lldbiC lOl QUILL uNui-
tfUnal amounts as may be necessary
tospay the depesitors in full"
saIn response to this statement, We
desire to point out:
hta) Whether the depositors would
receive 65 pers cent at the outset de-
pends upon the outcome of the re-
examination of the assets now in
process, and upon whether the bank
would be sufficiently liquid to release
that portion of its assets at the pres
ent time.
I(b) The balance would not be guar
anteed under Col Cooper's plan by the
trpsteeing of the stock and Of the divi-
dends, masmuch as there is no GER
tainty what future value the stock
would have or whether the bank would
make any profits. 1t appears the stock
has no value now, and that the bank
operated at a loss for the years 1891
and 1882.
s"(c) The trusteeing of the stock by
the present stockholders would not rep
resent a contribution by the stockhold-
ers, but by the depositors. who, under
Col. Cooper'S plan, would be forced to
restore value to the stock by taking such
value from their deposit balances. We
pointed out fully TO you in our letter of
September % that We do not consider
1t equitable that the depositors be re-
uuired. against their will, to restore the
capital structure Of the bank and at the
same time permit the stockholders to be
relieved entirely from contemporaneous
payment or contribution of actual funds
to restore value to the capital stock.
Proposition Restated.
you also give as further reason
for rejecting the plan proposed in our
letter of September %
Your suggestion that portion OF this
money be put up at this time and the
stockholders be realeased of any further
responsibility both as to stock ana olVl-
dends Is not in accordance with Col.
Cooper's desire to see that all de-
positors are paid in full
I'VE did not suggest in our letter OF
September % that the stockholders be
released of responsibility, but on the
contrary. specifically provided that all
outstanding stock be surrendered or
Cancelled and that the same be re-
purchased by the stockholders in cash
to the extent OF at least the aggregate
amount which Is. estimated could be
realized from enforcement OF assess
ment liability This would require,
before the plan We suggested could pc
come effective. that the present stock
holders meet all obligations now imposed
Afnt liability to the extent at least to
which such assessment is collectible,
and inasmuch as the plan was proposed
to be consummated under section 207 OF
the bank conservation act this
would necessitate the participation IN
the plan by at least two-thlrds IN
amount of the present stockholders. 1t
may be observed. however. under the
plan suggested by this office. that
although we stated that neither the
stock nor the dividends need be trusted,
fors the reason that entirely new capl-
tai structure would be provided. never
theiess. 1t is obvious that there would
be nothing to prevent Col. Cooper or
anY OF the other shareholders from
voluntarily transferring or placing their
stock" and their dividends in the trust
fund for creditors in addition to paying
in actual funds to repurchase their
stock.
FINALLY you state in your letter:
"dThe plan proposed by Col. Cooper
is 90 mulch fairer to the depositors than
the Hamilton National Bank merger
plan, which the controller not only
approved, but enforced. that your pres
ent position Is untenable and mcom-
prehensibie.'
Radical Differences in Plans.
';The radical differences between the
plan proposed by Col. Cooper and the
Hamilton National Bank plan are that
under Col Cooper's plan the depositors
and creditors are forced to contribute
the capital structure in addition to
waving the bank to solvency, and the
stockholders contribute nothing OF pres
ent value. whereas under the Hamilton
Bank plan, the depositors and creditors
are not required to waive any OF tnelr
deposits. but receive in immediate dlVl.
dends, which are today in process OF
distribution, so per cent Of their claims
as the proceeds of the sale of an exactly
corresponding amount of the assets OF
their banks, and the stockholders OF
the respective banks remain liable lot
assessment as an additional source, IN
addition to the proceeds OF the unsoid
assets. from which to pay the balance
of the claims of the depositors and
creditors Whether in view Of the fore
going -Col Coopers plan is so much
fairer' TO the depositors OF the United
States Saving Bank than the Hamilton
Bank plan is obviously matter con-
cerninE which there has been some
difference in viewpoint. but 1t seems far
to point out that from the standpoint
of the depositor the litigation instituted
by Col. Cooper. regardless OF IS merlts'
caused the organizers OF the Hamilton
Bank to withdraw their offer to pur-
chase, at dollar for dollar value, approx
imatels $500 900 of the assets of the
United States Savings Bank, and neces-
stated the withdrawal of the con.
troller Of his application for approval OF
such sale. i1afid the fact remains, for
which Col. Cooper must assume the re-
sponsibflftE Shat but for the opposition
OF Col. Codsert "a majority shareholder
of the bank" the depositors and cred
itors of the United States Savings Bank
would today be receiving dividends ag-
gregating approximately S9oo,o 900. which
would have been sufficient to pay each
Of such depoSitors and creditors so per
cent Of their tclaims.
"Our letter to you Of September %
suggested the basis of plan which We
considered would come as close to the