Evening star., 1933-09-12
DEPOSIT INSURANCE
LAWS DEFENDED
4. G-.7C
Senator Vandenberg Denies
Z Restricted Banks Could
.Ah, Not Qualify.
BULLETIN.

CHICAGO, September IL P.-
The National Association Of State
Bank Supervisors today voted ap-
proval of temporary deposits in
,surance after listening to Senator
Arthur II. Vanderberg Of Michigan
denounce bankers for their objec-
tious to such insurance.
~ lhe Associated Press.
. CHICAGO, September 12.-Senator
Arthur H. Vandenberg. Republican. of
Michigan, today denied that 2,700 banks
operating on a restricted basis could
hot qualify for the proposed Federal
deposit insurance as was contended in
D resolution adopted by the American
Bankers Association.
Speaking before a meeting Of State
bank supervisors. the Michigan Senator
likewise asserted there were no grounds
for fear that requirements necessary to
qualify for the act would be so rigid
as to exclude many smaller banks and
thus force them to close.
Opposition Held Useless.
, He asserted that opposition to Fed
eral deposit insurance was useless and
that the bankers main arguments
against 1t were based on fallacieS
Federal insurance is lynched for
the, sins of the old State guarantees
every time the problem is adversely
diSsected," he said 1T would be as
logical to say that because some old
6tate bond issues once defaulted there
cpn be no integrity in the bonds CT
the Government Of the United States"
. He said State guarantees involved
localized and concentrated risks, while
the new Federal insurance was based
on the same principle Of diffuSed risks
As employed by insurance companies
He said State guarantees were loosely
administered and were open to partici-
pAtion by new and needless banks.
Explains Guarantees.
'"The State guarantees had no back
log OF resources and credit for the
hour of Stress he said. The Federal
Insurance is capitalized with truly
prodigal reserves. The initial fund Is
s29Q000,000 before q single penny Of
insurance premiums are paid, Its tenn
porary borrowing capacity will exceed
= billion dollars"
Vandenberg reviewed statements by
President Roosevelt that the system
would be founded on fairness to all and
care for the interests of the little
fellow"
Several supervisors attending the con-
vention have expressed apprehension
lest the requirements for participation
would pe hardship on State banks.
He said bankers who attacked the
postal savings system failed to see that
guaranty Of deposits was the only al
Tentative to save them from that COM
petition. He said postal savings repre-
sented boarded money. but that such
savings existed because of nonconf1dence
In banks
Halls Guaranty Aid.
Although admitting that guaranty
Is no sinecure" and that it might not
be entirely successful. Vandenberg
hailed it as the only possible means of
curing the banks ailments. He pointed
out that only deposits Of $4,000 and
less would be guaranteed for the first
part Of the guaranty period and said
depositors universally would be willing
to sacrifice one-half of l per cent on
their interest to obtain such protection
H. w. Koeneke, State banking COM
missioner of Kansas. reviewed the his
tory Of deposit insurance in his State,
saying it had been failure.
If insurance of deposits is put into
effect nationally it can only result In
bankruptcy of the fund" he said
: Koeneke said Kansas ended 20 years
.of deposits guarantee in 1929 with a de-
hcit OF $1,000, 600 representing loss to
depositors.