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The "Luikart" Bank Receivership Report (Continued from Page 1). clerk Section asks for the employes doing field work, and there is submitted herewith of such employes who are designated sistants receiver, together their salaries: The list of employes shown under Sections and are as Jan. 31, 1933. So that the legislature may know that this department is making strenuous effort to keep the cost of administering receiverships minimum, you adare vised as of March 1933, assistants the receiver are being relieved of their duties their work assigned to other to the receiver. While this means that those remaining in our will have larger number of banks to look after, existing conditions caused heavy decrease in the amount of collections made by men, an increase the cost of This of necessity us to reduce our force order to meet the present emergency. is also contemplated that the force in the Lincoln office will be reduced by at least ten employes, resulting additional saving in the administration of insolvent state banks. Section 8 involves an unusually large amount of detail work, has occurred to this department that possibly the ones interested procuring this information might able give us the names of particular attorneys to whom fees have been paid, whose names are desired by the introducer of this resolution. If Mr. Williams would care to furnish with list of attorneys to whom fees have this we will only too glad to special effort to him the amount of fees paid to such parties, and thus the necessity of going thru the receivership books banks which have been under the administration this department since Jan. 1931. Section 10, regarding the State bank of Omaha, wish to advise that receiver's report of Jan. 31, 1933 now being compiled and copy of the report will furnished to the house of representatives. Permit us also to suggest that it might facilitate matters Mr. would come to this office for the purpose on the which he desires, with the end in view simplifying the as possible, at the time give him information which be of value to him, instead of large amount of figures which in our judgment will not reflect curate if furnished in the form asked for in the resolution. There is suggestion in the that the money collected and disbursed by this dpartment is public funds. We do not believe this to be the case. The money handled by this office belongs to the depositors of insolvent state banks, and no one else, and the funds are treated trust funds by the receiver and he is accountable to the court for all and made by him. The receiver of insolvent reports periodically the court, setting forth in detail all money collected and all money disbursed, and these are matter public in the office of the clerks the district court of the counties in which the banks are located copy of the receiver's report is also to the depositors' and copy is also on file this department, where is available to any one interested in any particular bank. Mr. Luikart, as receiver of insolvent banks, under separate bond for each trust, the amount of the bond being fixed by the Each assistant to the receiver also under bond, as are many the of the Lincoln office the division. Every safeguard and possible to the creditors of insolwhose funds are handled by this So that the may have some history as to procedure in Nebraska, we wish to submit the Prior the method of liquidating insolvent state banks in Nebraska thru local receiver, appointed by the judge the district court the county where the bank was located, such appointment usually being made on of local politicians attorneys who were likely to recelve personal benefits from the receivership. This liquidating banks proved very expensive, for the that the allowed large salaries and attorneys for the receivers paid fees for and the cases, not chosen for their fitness or experience liquidating insolvent banks. The average paid to receivers under the receivership plan was about per month, but there are cases in the state where the receiver was $500.00 per month and similar amount was allowed his assistant. In some receiverships under the old plan, attorneys were allowed fees from to bank. Receivers did not realmuch from the assets they should, taking into consideration the under which were liquidating as they exist today Because of excessive salaries paid and fees and the of the local system, the leg. islature of Nebraska, in 1923, ated the fund sion, with powers take over existing from the dividual receivers, the ture giving guarantee commission the right to name the receivers of insolvent state banks. The guarantee fund commission named its members as receivof insolvent banks, member the commission acting receiver banks in his particular district. An agent the receiver was placed in charge of the bank that their fees fixed by the counsel of the guarantee fund As result this change, the liquidatinsolvent state banks was duced from cents cash dollar collected by the individual ceivers. to 6.4 cents per cash dollar collected under the guarantee fund system, and the percentage of assets realized was increased from percent under the individual local receivership system to percent under the guarantee commission plan semi-centralized system. In 1929 the guarantee fund comabolished and in place of the guarantee fund the legislature that the of the trade should be the sole and only of state banks. The of the department of trade and receives additional salary by reason his position as failed but paid by the state, the salary $5,000, with the same duties which he had prior the legislative provision making him insolvent banks With the naming of the secretary of the department trade receiver, the receivership division of the department of trade commerce was created, which handles the affairs of insolvent banks thru central organization. receivership vision consists six departments as follows: Legal department, claims department, collection department, dividend department, accounting department and estate Each of these departments is in charge an perienced man who the phase of the under his his experience having in most cases, been gained over a considerable period time. The experience of the Lincoln office is the of every insolvent under the supervision and liquidation the secretary of the department of trade and and there no question but what experience of the centralized office worth great deal to the creditors of these banks, and can only be gained thru long work liquidatinsolvent institutions. For the purpose of defraying the expense of the Lincoln office, assessments levied against each receivership, the amounts of these assessments varying, depending upon the size of the bank and length of time it has been in liquidation. When bank is taken over by the department of and commerce, an to the is fixed by the secretary of the department. salary assistants to the about $180 with an average of $300 under the individual receivership system. The assistant to the must establish his headquarters in the town where the failed bank is located and pays his board and room while at headquarters. If he is in charge of more than one bank, as the case with the majority assistants the receiver, he is entitled to charge up his meals and hotel when away from home, he also entitled to charge up his mileage for trips made in with the the rate of five cents per mile. He pays for his automobile expense, as gasoline, oil and repairs. The assistant to the makes an expense account, all expenses incurred by him, to which expense ac- count he must affix his signature and before notary public that the statement is correct. Receipts for expenditures, cept meals, must accompany the statement. These statements are carefully checked by our accounting department before allowed. Since Mr. Luikart has been actof the department trade commerce, has been appointed receiver 126 banks which he was the origireceiver. An audit covering the banks in which Luikart Dec. 31, 1931, was made our accounting department, and showed that the cost per cash dollar was 2.25 cents compared under guarantee fund and cents under the individual system. Figures also compiled as of June 30, 1932, showing the cost cash dollar cents. This shows increase 1.22 cents over the Dec. 21, ures, but this is accounted the fact many of the banks being liquidated, the quick assets of the institution were realized on early, resulting in low cost liquidation. With the present distressed conditions, anticipated that an additional increase cost of collections will experienced, but as heretothis department is strenuous effort to keep the at low figure by consolidating the work under fewer and reducing the number of employes in the office. To assist the department and the of the bank the the bank's fairs, depositors' selected the receiver among the depositors. Care is taken the selection of this so that the men ing this are men of high the the of their local citizens, whose unquestioned who have had business experience capable passing upon the questions which they will be required to pass upon. It is the policy department to submit to the depositors' committee, all settlements where is necessary to take less than 100 cents on the dollar for notes of debtors or sales of real estate and also sales of personal property, that the committee may approve disapprove all such settlements and sales. compromise must accompanied by sworn property the debtor and the facts set forth the statement are investigated by the assistant the receiver and also by members the as to their Such after the depositors' sent to the Lincoln office for approval of the heads the and then formally submitted to the court for final approval. following this the depositors, thru their system committee, kept close touch with the work liquidation and are in position to check any settlements which should be made, and also disapprove of and real property. The of our state have this system of depositors' many courts will not any setapprove tlements sales unless they have first been accepted by the depositors' committee. The depositors' serves without compensation, performing their work in the interests of their We not permit borrowers, stockholders or any other individuals to serve on these depositors committees, who might some personal interest, other than that depositor, the liquidation of the affairs of the failed bank. In number of instances the department has been petitioned place in charge banks, man living the locality where the situated. experience of the department the employment local man liquidate bank is expensive and inefficient as results concerned, for reason that local man influenced by his friends, friends ers, procure the liquidation in community capable accomplishing. The department has, in one two instances, complied with the requests of local citizens to place local man in charge, but was not long before the depositors' realized their mistake and requested that the local man that the department send to the bank an sistant of its selection, would not be influenced by local prejudices, his friends others interested settlements which should not be There are over the state bank was and the assets not permitted into the bank were turned to local for liquidation. In every instance the results complished by this local individual have and the department has been, many cases, requested to take charge the liquidation of the rejected assets. In all these cases however, the department is to as the liquidation of the assets entirely of its hands. Cases this kind are connection with the banks Alliance, Tecumseh, Colon, Platte Center, Alexandria, Eagle and number of other cases which could be given. With the system of depositors' an assistant to the receiver named the of the of trade and there is no question but what that system, as compared with the individual receivership system, much expensive and efficient. Statistics of both systems prove this statement beyond doubt and the facts have been recognized by the legislature of Nebraska which passed the law naming the secretary of the department trade and receiver of insolvent state banks. The department has in mind at all times, first, the interests of the depositors does its utmost to realize as large dividends as possible out the assets which come into the possession the depart-
