Kankakee Valley Post, Volume 3, Number 4, DeMotte, Jasper County, 8 June 1933 — FOR FAILURE PROOF BANKING STRUCTURE [ARTICLE]

FOR FAILURE PROOF BANKING STRUCTURE

Speaker Outlines Threefold Cooperation Between Bankers, Government Officials and the Public to Maintain Bank Standards TWO elements beside the bankers themselves are required in order to give the nation universally the type of banking it should have, Francis H. Sisson, president of the American Bankers Association, declared in a recent address. He said that the efficiency of government officials upon whom the people rely to supervise the banks properly, and the patronage of the people themselves are factors in the kind of banks a community shall have. “There can be no question that the people of the United States should have banks immune from failure and wholly free from bad or questionable banking,” Mr. Sisson said. “It is not enough, as President Roosevelt has said, that, while some bankers had been incompetent or dishonest, this was not true in the vast majority of our banks. A situation should exist in which there is not even a small minority of bankers open to question. There should be no room for dishonesty or incompetency to exercise any influence in banking anywhere. “While bad faith and bad management enter the human factor in all types of business, their effects in banking should be surrounded by such special safeguards as to render them no longer a factor in bank failures. The responsibility for bringing this about, however, cannot rest upon the bankers alone, for the means to accomplish it are not wholly in their hands. There are other essential elements. “One is the efficiency of government supervision. Since we rely so greatly upon supervision, it may, unless it is of the highest order in safeguarding the public interest, create a sense of false security. Supervision should render bad banking impossible, but it has failed to do so. There was supervision by presumably the highest type of bank supervisors in every one of the instances of questionable banking that has shocked the attention of the coun try during the past three years. Therefore a thorough strengthening ot super vision is clearly called for if the people are to rely on it to the fullest extent for the protection of their interests. The Public’s Part “Another essential factor in main taining good banks involves the part played by the public in banking. There is certainly a responsibility on the people themselves to support that type of banker whose rigid adherence to sound principles makes a sound bank, rather than to give their patronage to the easy going banker who may be easier to do business with, but whose methods create a weak bank. “Bank customers are charged with a great responsibility in protecting the safety of their banks in respect to their utilization of the assets of the banks as borrowers. Banks have failed because many of their loans and securities, created in good faith by bankers in cooperating with the business interests of the country, proved unsound under subsequent conditions. An unsound loan is created by the borrower as well as the banker. A bank is only as sound as its community, and this applies also to the banking structure as a whole in relation to the economic condition of the nation as a whole. "A bank is truly a semi-public institution, but in a reciprocal sense--it has its obligations to the public, but so has the public equal obligations to the bank. No one who has not sound banking principles at heart has any business in a bank whether as a banker or as a customer. “The banker is a semi-public servant He is charged with the heaviest of responsibilities and obligating that occur in our economic life. But he can meet these fully only through the cooperation of good laws, good public officials who are empowered to exercise authority over his bank, and good business methods on the part of business men generally who utilisz his bank. Only through such cooperation by all elements in our nation’s community life can we be assured of a failure-proof banking structure. “The Administration at Washington has taken hold of this problem with a firm grasp of essentials and is exercising splendid leadership toward the desired end. The strongest feature of the government program will be found in recognizing the joint responsibility of the public, of business and of government officials together with the bankers themselves in creating the kind of banking the nation should have.”