Evening star., 1933-12-24
DEPOSIT INSURANCE
PLANS ARE READY
Guarantee to Embrace About
1900 Banks-InitiaI
Maximum Is $500.

Federal Government will throw around
most of the banks of the Nation
formidable bulwark against that ter
rorizing enemy of economic recovery
and financial stability-the bank run.
To the depositors of more than 10000
banks in every section of the country
Uncle Sam on January l will say, IN
effect: "A depositor in a bank has
right to his money. even though the
bank should close. The Government is
going to see that you get it by insur-
ing your deposit against loss by bank
failures
Originstors of this ambitious plan
declare there now will be no need for
hysteria on the part of customers of
the insured banks, that scenes of chaos
like those which made nightmare Of
banking in February and March Of
1888 cannot occur again.
Rumor mongers will not be able to
start unnecessary panicS by whispering
that such and such bank cannot
meet its obligations. To such rumors
the insured depositor may reply:
What of it? My savings in that
Ddllh dlt kudl dAllCCN c5ohASb AONo ~
the Federal Government. Let the bank
close, if it wants to. know my money
is safe, whatever happens"
Certain Limits Imposed.
This Utopian state Of affairs is the
goal of the new Federal Deposit 1nsur-
ance Corporation, created under au-
thority of the GlaSs-Steagan banking
reform act.
Beginning a week from tomorrow and
continuing for the first six months OF
1884, this corporation will insure every
deposit up to a maximum Of $4,000 In
every national bank and In as many OF
the $500 State banks as qualify for
the plan.
Thereafter. beginning July l next. all
GeRositsi SIT IN tde5 56o e cent and iarSeq
deposits will be insured for lesser per-
centages viz, rs per cent from $4,000
to $50 900 and so per cent Tor oepoSitS
above $4,000.
The 5.OOo-odd national banks auto
nnatically are included in the insurance
membership in the Federal Reserve Sys-
TEN.
OF the $500 non-Federal Reserve
State banks about 7,7o0 have applied
for the insurance, according to latest
figures.
Some Fail to Qualify.
Some State banks have been found
wanting in qualifications. however.
Jesse Jones, chairman of the Recon,
struction Finance Corporation, disclosed
last week that approximately 900 OF the
applying State banks need R. F. c. AID
to meet the requirements OF the Deposlt
Insurance Corporation. Loans totahng
S66 600 900 would be necessary to bring
the tentatively disapproved banks with
in the scope of the insurance plan.
Jones was advised by Senate leaders to
use his discretion in meeting this sltua-
ton.
In washington there are 81 nor
roaIiv fIlnctioning banks eligible for de-
posit insurance, providing they Quall1y.
All of the city's banks that have mem
bership in the Federal Reserve already
have qualified by reason of that mem
bership. There are 10 local banks that
are members of the Federal Re-
serve and all 10 have filed formal ap-
plications for deposit insurance. All 10
are confident their applications VIII oe
approved.
CORPORATION have guarded carefully the
names of applicants. No one outside OF
the corporation knows which banks
have been given the official o. K. and
which have been turned down. TO De
eligible for insurance the non-Federal
Reserve banks must have received
certificate of solvency from the state
banking commissioner and must nave
satisfied special examiners OF the De-
post Insurance Corporation they nave
SUFFICIENT assets to pay all depoltors
and other creditors.
The corporations examiners have
iy1NT
banks that have applied for insurance.
The survey has been conducted by ex-
perienced Federal and State bank ex-
aniners in a thorough-going manner.
Banks to Be Announced.
The names of approved banks Will
be made public at one time, the corpo-
ration has stated. The fact tnat
bank does not appear on the quallned
list does not mean it is 1nsolvent, 1t
is pointed out 1t may be one OF the
banks to receive aid from the r. F: C.,
or il NAV be the bank has not yet nleo
its application for deposit insurance.
Local banks we're required to apply
through a regional director OF the De-
post Insurance Corporation In Rlcn-
Ynond, Va Examination OF banks In
this vicinity has been conducted from
the regional office.
bers of the insurance plan were re-
ouired to deposit with the corporation
bv Yesterday half the assessment due
as the banks share of the insurance fee.
The assessment for the temporary six
month insurance period Is one-hat OF
/ per cent of the amount OF deposits
eligible for insurance. The second nall
of the assessment Is Subject to call"
The Federal Government already has
nut up its share of the cost OF the
scheme The Federal Deposit insurance
Corporation has an original caplCsl OF
$50 900 900 from the Treasury. sup
plemented by S175,000,000 from the re-
serves of the IL Federal Reserve CEN
traI banks. Besides, the corporation is
authorized to borrow twice its cash
capital. providing it eventually with
estimated total resources OF more than
$4,000, 100000.
Three Administrators.
This fund will be administered by
three men-Walter ]. Cummings, E. G.
Bennett and j. F. T. O'Connor, con-
troller of the currency. This trio con-
stitutes the Board of Directors of the
corporation, with Cummings sitting as
chairman. The law specified that one
of the directors should be the controller
and the other two presidential ap-
pointees of opposite political faith.
Cummings is the Democratic member
and Bennett the Republican.
Final decision as to which non-Fed-
eral Reserve banks shall be admitted
to the insurance benefits rests with
these three men. Regional directors are
merely advisory.
The assessment provision has stirred
I'D considerable criticism from bankers
who fear that when the maximum OF
irsurable deposits Is raised from S2,5OO
next July the greatly increased assess
T1lents will prove over burdensome to
the banks. There have been complaints
that the law is not sufficiently specihc
|RS to assessments, and that 1t would be