Evening star., 1934-01-04
|bADbANK|NGL0ANS|
TO JUDGES SHOWN
"PoIicy" Advances to PoIiti-
Cal Figures Revealed in
Directors Report.
Continued From First Page.)

Continued From First Page)
Ford, was called to elucidate Lords
testimony.
Pecora introduced an exhibit tend
Ing TO show that the minutes OF a
directors meeting on January "a, 1888,
said annual reports were ordered sent
to stockholders
Lord said he recalled such meet
ing and that Kanzler presided, but
that the latter only read from notes.
Notified. by Examiners.
Senate investigators received evidence
at the resumption of their inquiry yes
terday that some institutions in the
Guardian Detroit Union Group, Inc,
had been given advance notice when
national bank examiners were about to
inspect their books.
This evidence, following closely ex-
hibits purporting to show the Guardian
National Bank of Commerce, declared
a dividend late in 1882, when doubtful
assets alone exceeded the capital, came
during questioning of Bert K. Patterson,
former executive vice president of the
group.
Patterson resigned as a national bank
examiner to accept the vice presidency.
Evidence introduced two weeks ago had
developed that four former national
examiners had quit their jobs to become
connected with the group banks
Patterson, when asked by Pecora if
he knew Of any instances in which
banks had advance information as to
when examinations were to be made
said he recalled only one That, he
said. was in May, 1882, when prelimin-
ary arrangements were necessary to ex-
anime the Guardian National Bank of
Commerce.
Believes He Participated.
When questioned more closely, the
banker said he believed we participated
with the examiners in al, examination
of the Grand Rapids National Bank"
and that I'VE sent men over there to
participate"
Pecora then exhibited letter from
Alfred P. Leyburn, chief national bank
examiner, in Chicago, written on De-
cember II, 1881, addressed to Patterson,
and advising him that field examiners
would arrive in Detroit within a few
days.
To this. Patterson said the examina-
ton had been requested by the bank IN
connection with the proposed merger oil
the Guardian Detroit Bank With the
National Bank OF Commerce.
Other evidence presented at yester-
days hearing was designed to show:
That r. l. Hopkins. national oank
examiner who later became employed
by the Guardian group, recommended
"leniency" to .he controller OF the cur
rency in dealing with these banks.
That a national bank examiner sent
a warning to The controller Of the cur
rency Of the Conoition Of the National
Bank of Commerce in May, 1882, nine
months before the Michigan banking
holiday.
That the National Bank Of Com
merce extended loans for the speclflc
purpose Of speculation in stock markets.
Denies Circumventing Law.
Pecora dwelt AZ length on the large
amounts of group stock held by the
unit banks as collateral on loans, but
Patterson would not agree with his
suggestion that the policy amounted to
a "circumvention of the law"
When confronted with number OF
reports of national bank examiners to
the controller of the currency criti-
cizing the holdings, two Of which ex-
pressed the opinion the policy amount
ed to circun Ycntlon, Patterson insisted
serious efforts mad been made to re-
duce the holdings.
Patterson at first defended the final
dividend of s15o,Oo0 declared by the
Guardian Nationa! Bank of Commerce
in the last quarter of 1882 and said
he believed at that time earnings
justified it.
Didn't Warrant Payment.
He agreed later with Pecora, however,
that the evidence the committe coun-
sci introduced regarding the condition
of the institution apparently did not
warrant such a payment.
Pecora had quoted from a report
made by w. A. Regan, national bank
examiner. on Noverber 9. 1882, prior
to the declaration Of the dividend, list
ing slow assets Of s25, 1883 doubtful
assets of sl8 692,875, and losses of $546,-
942.
Doubtful loans themselves actually
exceeded the entire capital funds Of
something over Sl7000,000," Pecora
said Did that indicate to you the
banks condition warranted dividend?''
The banker said he did not know at
that time such condition existed.
He added the dividend was paid to
take care Of the interests of the group,
but protested when Pecora suggested
the interests of the depositors were
sacrificed to accomplish this.
INFORMAL EDUCATION