The Washington times., 1934-10-05
A Start at Last
Purchase of Bank Assets


Purchase of Bank Assets
: The disclosure that the Reconstruction Finance CoTpo
ration and the office of the Comptroller of the Currency
are at last getting together proposal to have the cor
poraon exercise its authority buy the assets Of closed
banks is heartenng sign for the depostors of these in
stitutions
IT SHOULD NOT HOWEVER, LEAD THE VAST
ARMY OF THE DISTRESSED DEPosIToRs INTO
BELIEVING THAT THEY WILL IMMEDIATELY
GET ALL OR EVEN PART OF THE MONEY
WHICH THEY HAVE TIED UP
The present negotiations between the two Offices it is
understood deal only with banks which have assets Of
$4,000 less. This group, it is conservativey est
mated includes only about hundred of the more than
one thousand banks still in the hands of receivers
THE IMPORTANT THING ABOUT THE NEGoT1A
TIoNs IS THAT MORE REASONABLE ATTITUDE
Is APPARENTLY BEING TAKEN BY BOTH THE
COMPTROLLER AND THE FINANCE CORPORATION
TOWARD THE CLOSED BANK PROBLEM
The authority to purchase the assets of closed banks
on liberal appraisal basis conferred upon the cor
poration by the Mcleod steaga bill passed by the last
session of Congress effort to relieve the distress OF
the millions of victims of the banking debacle.
UP TO NOW THERE HAS BEEN NO ATTEMPT
TO USE THAT AUTHORITY ALTHOUGH IT WAS
PLAINLY THE INTENT OF CONGRESS WHEN THE
BILL WAS ENACTED THAT TT SHOULD BE USED.
Both the Reconstruction Finance Corporation and the
office of the Comptroller have seemed reluctant to have
the former buy the assets and thus close out the expensive
recevershps which costing the depositors millions
Of dollars each year.
Since the law is simply permissve and does not direct
the corporation to purchase the assets there has been OF
little that could be done to induce the corporation
to buy Comptroller to suggest that his receivers
SELL
The negotiations which are said to be going in
regard to closing out through the purchase route the az
fairs the banks with little money involved should point
the way to general application Of the purchase pro-
vision.
the project is successful in regard to these smaller
banks there is every reason to believe that would be
successful if applied to those with larger deposits.
outright purchase project would seem to be highly
preferable to the later plan announced by Chairman Jesse
Jones under which assets of the closed banks pledged
collateral with the Finance Corporation would be sold
the loan being paid off out of the purchase price and the
balance, if any, going to the depositors.
The two plans of course, not incompatible but the
plan for outright purchase has many advantages the
Jones plan.
Use of the purchase provision even if confined tenn
porary to the smaller banks will be Of considerable aid
ia restoring confidence in the banking structure, con-
fidence which becomes more sorely needed daily.
IT WILL CONVINCE THE DEPOs1TORs OF THOSE
INSTITUTIONS THAT THE GOVERNMENT IS WILL
ING TO AID THE THRIFTY CITIZEN WHO PLACED
RELIANCE IN GOVERNMENT INSPECTION OF
BANKS JUST THE SAME AS IT IS WILLING TO
AID ALL OTHER TYPES AND GROUPS OF CITI-
zENs WHO HAVE SUFFERED FROM THE DEPREs-
SION.
The negotiations being pursued between the Comp
troler and the Finance Corporation will undoubtedly
stimulate the determination Of Representative Clarence
J. Mcleod R of Michigan, to fight in the coming ses
sion of Congress to make the purchase section of the law
mandatory instead of permissive.
MR.. M'LEOD HAS ALREADY ANNOUNCED THAT
HE WILL MAKE SUCH A FIGHT AND THERE IS!
EVERY REASON TO BELIEVE THAT HE WILL BE
ABLE TO MAKE EVEN MORE PROGRESS IN THE
COMING SESSION THAN HE WAS ABLE TO MAKE
IN THE LAST CONGRESS WHEN HE WON COM
PROMISE HIGHLY BENEFICIAL TO ALL DEPOsI-
TORS OF CLOSED BANKS.
RuSSia'S Racket