Show SEEKS SECURITY g Ig I- I WIL SENATOR VANDENBURG BANK DEPOSITS SURETY SOUGHT Michigan Senator Preparing Legislation to Prevent Relaxed Credit Br Dr Associated tint Ires WASHINGTON Dec 26 Legisla 26 Legisla Legislation tion to regulate and insure time deposits deposits deposits de de- de posits in banks w was s advanced ad today by Senator Vander Michigan Republican as a means of preventing hoarding creating confidence and relaxing relaxing re reo re- re credit Saying he is irrevocably opposed to a general federal guaranty of bank deposits proposed to create a gigantic fund for the protection pro of time deposits and to distinguish distinguish dis dis- dis these from demand deposits The Michigan senator would define time deposits as those turned over to toa a bank for at least 90 days and Insure insure in In- sure them up to 75 per cent through a federal time deposit insurance fund SYSTEM SYSTEM- EXPLAINED r f Such n system if it practicable would end 95 per cent of the threat of runs he said By properly classifying classify classify- ing time deposits' deposits it would make an enormous but un estimated further contribution to o the resources of the banks By creating a new meas measure re of security It would invite a billion doU dollars rs out of hoarding There are countless other profound said a federal guaranty of bank deposits would reduce all nU banking to a dead level where reckless reckless reck reck- less bankers could bid for confidence on a parity I with sound bankers and Continued on Pare Pace Two BANK DEPOSITS SURETY SOUGHT Continued F From om Pace Page One asserted the mass of Individual d deposits de de- posits is in savings and certificates It uIt is In this group that mass hy hysteria hys hys' teria generates the runs which ma may wreck perfectly solvent institutions he added It uIt is here that mass tra tragedy trag trag- edy occurs with attendant social a awell as aswell well as economic wrench when banks bank close Under proposal th the fund would be created by an appropriation appropriation of from th the treasury the addition of or one fourth of ot the annual surplus of the Federal Reserve system and an annual ta tax of ot one-eighth one of one per cent on a an all I IHme time deposits in member banks I The fund would be used to reimburse reimburse relm burse 75 per cent of any time deposit depos in a closed member bank FROZEN CREDIT Much of today's frozen credit is due to the fact that time deposits deposIts' are misnomers said sale They are all actually demand deposits de de- posits Therefore the bank has n no dependable deposits To this this anomaly anomaly aly may be traced much of ou our present credit Basing his estimates on the report of the comptroller of the currency said the total loss fr from m time lime deposits in federal reserve memo mem ber banks from 1914 to 1932 was or less than a yearA year A fund such a as he proposes he said would have received during that time Not even the losses since June 1932 would drive the fund fun into nto a deficit he added as |