Evening star., 1933-10-14
BANK GUARANTEE
SYSTEM SPEEDED
800 Examiners Scrutinize
Applications Coming in
at 200 Daily.
BY the Associated Press.

| BY the Associated Press.
| Government financial officials are
making every effort to have maximum
number Ct operating banks within the
Federal Deposit Guarantee System by
the time 1t starts operating, January /.
The Deposit Insurance Corporation is
receiving applications for membership
at the rate Of 200 a day from the more
than 5000 State banks which are not
members OF the Federal Reserve Sys-
| tenn. More than 2.700 of these have
been received Federal Reserve member
banks participate in the pool automat-
ically.
Some 500 examiners are busy going
over the books Of these institutions to
determine whether they are eligible
When banks are found which do not
meet requirements, the plan Is for the
Government to lend its assistance in
placing them upon an impregnably
sound basis.
The ONCE of the Controller of the
! Currency Is busy. meanwhile, with the
/ between March 16 and October TO- 674
such banks which did not open at the
conclusion Of the banking holiday were
| licensed to become operative AS un-
licensed banks. their frozen deposits to-
tailed 81, ,l62, ,307 900.
S58l.153,5O0 Released.
Oficials say this does not mean that
amount was paid out to depositors.
They estimate that an average of about
| SO per cent Of frozen deposits becomes
available to depositors when bank pre-
i viouSly closed is licensed fro business. On
this basis. S58l .153 500 was put at the
disposal of depositors
| On Octnhnr IN TS6 nofiono1 ho nkS
with frozen deposits of $638, ,467 900 re-
| mained closed. A total of 372 national
| banks with deposits of 1897 ,573 900 had
| drawn up reorganization plans which
had been approved by the controller.
Before they can receive licenses to open,
| however, they must meet certain condi-
tions laid down in the reorganization
plans, some of which have required con-
siderable time.
In addition to the national banks,
| figures compiled August % show l,766
State banks. non-members of the Fed
eral Reserve system. were closed with
frozel deposits Of 81 ,057 $4,000.
The controllers figures also show
payments totaling s270647,000 to de-
positJrs in banks in receivership be-
| tween March and September % Dur
| ing that period. the r, F. c. made 666
! loans to such banks totaling s68, 400 500
and received 1850. .665 in repayment.
| On September %. the controllers once
was directing LAO receiverships. with
total deposit liability Of s8l80l2,438.
| As outlined by President Roosevelt
the Administrators policy is to see that
no bank which can be put on sound
basis shall be permitted to close. All
| the Government assistance possible will
! be given to the end that closed banks
I shall be reopened.
| But before the Government steps in
Mr.. Roosevelt is anxious that the peo-
pie of the locality first do their share.
II additions to the banks capital are
needed. they must first do their part
toward subscriptions to new issues of
preferred stock. The r. F. c. will buy
| the unsold remainder.
Home Bonds Eligible.
/ The Home Owners Loan Corporation
is ready to replace slow real estate
mortgage assets with its readily mar
ketable bonds. thus improving liquidity
Of the bank engaging in the trans
| action. The Treasury has ruled that
these bonds are eligible national bank
| investments. Receivers. too, with court
approval. have the privilege of con-
verting such assets into home owners
| loan bonds. Consideration is being
given to the possibility Of permitting
| conservators to do so.
The Home Owners Loan Corpora
ton is authorized to issue So 900 900 900
worth of the bonds. They are tax ex-
erupt and the interest, though not the
principal Is guaranteed by the Treas
, ury. The Farm Credit Administration
also is empowered to issue q like
amount of bonds for application to
rural mortgages
Behind the Deposit Corporation. the
Farm Credit Administration and the
Home Owners Loan Corporation. are
plans for still another Federal agency
intended to help in the bank opening
activities. These. still in the formula
tive stage. contemplate the establish
ment of a corporation financed by the
Reconstruction Finance Corporation
which would become a clearing house
for slow assets.
Care Exercised.
Outlining the process of placing q
closed bank in operation. j. F. T.
OConnor. Controller of the Currency.
says:
Few people appreciate the intrica-
cies involved in opening a closed bank.
A careful examination must be made
of the assets and liabilities: the char
acter Of assets analyzed to establish
/ liquidity: losses must be determined.
When these facts are found. the basis
Is laid for reorganization. If the capi-
tai surplus and undivided profits are
wiped out, the stockholders must con-
tribute up to 100 per cent Of their
holdings.
Efforts are made to revive the old
oank or establish new bank; new capi-
tai is furnished by stockholders, de-
positors and In some instances by the
Reconstruction Finance Corporation.
This corporation operates in three ways:
First. by purchase of preferred stock
In the new bank; second. by loans to the
new bank, and third by loans to con-
servators or receivers upon application
of the controller of the currency where
bank must be liquidated and this
money made available to depositors.
KElIY IMPRISnNEn