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Show BANK CHARTERING POLICY REVIEWED State Official Declares Sound Principles in Licensing Banks Are Essentia! PHILADELPHIA Sound public 3t lK-y In chartering batiks was dis cussad by Carl K. Withers, Commis sloner of Banking and Insurance of the State ot New Jersey, before thp Eastern Conference on Ranking Service, held here recently under the auspices of the American Bankers Association. He declared that "few questions, bearing on the future stability and security of our banking systems loom as more im portant than that of a sound policy to be pursued in bank chartering." Alluding to competitive policies of both state and national banking authorities to charter the most banks In the past, be said that "this country was over-banked, and thai tside from any other consideration, economic or otherwise, this condi tlon was brought about largely through an unwise, unsafe and un thinking charter policy, alternating between the state and national sys terns, which has marked and ham-pnred ham-pnred banking progress in this country coun-try since its very inception." Political Influence He decried political considerations considera-tions in connection with the charter-inc charter-inc of banks saying: "Political In fluence has no more place In bank ing that it has in the deliberations oj! our highest tribunal The Su ireme Court of the United States. Until this is recognized and brought into being within both our state and national systems, we may never feel safe against the shifting sands of political expedience and favor." As to tbe "element of sometimes ridiculous competition heretofore existing between the state and national na-tional systems," he said that much may be said in favor of the progress made In recent years. In many states there exists a practical work-in,, work-in,, agreement between local supervising super-vising authorities and the federal authorities, whereby all charter ap plications are mutually considered 0 a basis of community need rather than competitive advantage as between be-tween systems. In some states this arrangement goes even further in the refusal of the one authority to even consider a charter while pending pend-ing with the oth-ir. Aside from the competitive and political aspects of our future char-for char-for policy, he continued, there are several others more individual and local which merit consideration. Among these he mentioned honesty of purpose, community need, the character of management and adequacy ade-quacy of capital. Most state laws maka reference U the "character, responsibility and fitness" of the incorporators of a new bank, he said, continuing: "So important do I conceive this factor to be, that 1 place it first among those foi consideration, for unless the motive Is sound, honest and sincere, there if little likelihood that the resultant Institution In its service to the community will reflect other than the spirit of Its founders. The Lessons of the Past "Too often in the past have char ters been granted to promoters pure and simple not always pure, and by no means simple. The country was dotted with such. The experi encu has been costly and, it Is to be hoped, the lesson well learned, not only by charter-granting authorities but by the general public as well." Other factors to be considered as among the most important In granting grant-ing new bank charters, he said, are the number of Institutions already serving the area, the record of earn lngs of existing Institutions, the number of failures since 1920, and the reasons therefor, public con renlence and advantage, the reason abla prospects for growth of the oommunity, expectation of profit able operation and whether a branch of an existing Institution could serve as well. "Sound public policy demands that no new banks be chartered un lass there is a definite, necessitous and permanent need," be declared "Sound mergers, consolidations and the sensible extension of branch banking are much to be preferred to any general movement toward a flood of new charters. But here again we must guard carefully against monopoly or unbridled 1 branch competition, either of which I might become as dangerous as the organization of new banks." |
