13962. Clifton Trust Company (Clifton, NJ)

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THE SUNDAY EAGLE, SUNDAY, AUGUST 13, 1933 15 assaic County's Only Sunday Newspaper Clifton Trust Plan May Go To Court IGHT FINANCIAL INSTITUTIONS, WHO SUCCEEDED PRES. HUGHEY, AGREED TO MEET DEFICIENCES Continued from Page 1 Clifton Trust. Department at Trenton, were not given such rivilege or right. It was point blank refused to hem. Members of the eight banks failed to reeal the contents of the agreement. Mr. Weinerger last night stated, he had the original in is possession, given to him for the purpose of nstituting suit against the Clearing House AsAct. ociation. The papers will be prepared tomorrow and will be filed without delay. This means that if he action is successful, the depositors of the Clifton Trust Company will receive every cent their money and will not have to accept any eventy-thirty plan. Losses will have to be paid the banks that guaranteed the accounts. Before depositors of the Clifton Trust Company apof the plan announced yesterday, whereby they will receive but thirty cents on the dollar when the bank opens and the seventy per cent to be converted into the payment preferred stock, they will want to know whether or not there was an agreement by and between eight other banks and the Clifton Trust Company made when William Hughey stepped down as president. When bank stocks began to drop, two years ago, it was ound that the Clifton Trust Company had considerable shares of the National City Bank of New York. These had dropped heavily until they were thousands of dollars under the price paid for them. Commissioner Frank H. Stevens, who was then banking commissioner in this state and who happens to be the same man to close the Hobart Trust Company and the Rizsak Bank in Market street, Passaic, ordered that the Clifton institution make some arrangements otherwise it would have to be closed. One of the "arrangements" for Mr. Hughey and the directors as well as the stockholders to allow eight other banks in Passaic County to take the institution, which also controlled the First National Bank of Clifton. To Pay Losses The eight banks agreed, as it was understood at that time, to see that no depositor lost one cent. They als) agreed to meet any losses which might be sustained by the bank and likewise they would be liable for any deficiencies from that time on, Immediately after that, Wesley Benson, President of the United States Trust Co., of Paterson, was named as head of the bank. With a group of other bankers they took over the A few months ago, George F. Schultze, who was a member of the Paterson Board of Finance and who was an executive officer at the Hamilt :n Trust Company, was named President of the Clifton Trust to succed Mr. Benson. On March 4, when the bank holiday was declared, the bank closed and has never reopened to do business on an unrestricted basis Instead, it is operating under the Altman Although various plans have been submitted to the banking authorities, none were okayed until that announcement yesterday whereby only thirty cents will be paid to the depositors and they will be required to accept seventy per cent in preferred shares. In addition to the preferred stock, all such preferred stockholders will hold certhe week. tificate of interest in 1,100 shares of common stock of the Clifton Trust Company. While that may stund somewhat better than putting the seventy per cent into a holding company and getting shares in a realty firm, as is the case with the depositors of the Peoples Bank in Passaic, we are wondering why the depositors of the Clifton Trust have t) sacrifice cne cent of their deposits. If the agreement. made when Hughey relinquished control of the bank was really made and was not a bluff, then it is up to the eight banks which took over control of the Clifton Trust to make good whatever deficiencies existed and also to see, as they agreed, that not one dollar is lost. They may claim that the seventy per cent is not lost but will be paid in some future time. Why must depositors wait until then when the other banks had control of the institution for the past three years running it as they thought best and taking it under an expressed agreement? In the first place, the depositers of the Clifton Trust Co., ought to make certain in regard to the agreement. This is a matter of record It was published in all the daily newspapers and was signed by the various agents of the banks that the banks to meet the requirements of such an agreement and pay up the losses that have been sustained, Why must the depositors of the Clifton Trust suffer? If they can only get thirty cents on the dollar now, it must be concluded that the bank has been in a seri us financial condition. What difference would it have been had the institution closed when it was taken over? Might it be argued the depositors would have only received a certain percentage-and that would be small. In the Guaranty State Bank, The Rizsak institution, depositors have received almost eighty per cent of their deposits. Does that show a bank to be insolvent and in a position to close down? The Clifton Trust C) depositors ought to be positive whether they can get more than thirty per cent or not, after the eight banks have upheld the provisions of their agreement. While nothing ought to be done to prevent the reopening of that bank, it is the duty of the officials of the institution to see to it tha he dep siors receive every cent that is coming to them Information was received last night, that a meeting of depositors of the bank will be called during this week. Several prominent men are giving this serious attention and will announce the time later during various acounts such as loans, discounts, mortgages, bonds, stocks and securities in general ought to be made public to decide whether or not they are up to par and whether or not losses were sustained that must be met by the directors and officers personally. An interesting question was raised last night by Mr Weinberger in referring to the seventy-thirty plan. He questioned. whether there was any letter in writing from the Federal Reserve System stating that the seventy-thirty is the only plan they will approve He also asked whether such a letter was received from the Reconstruction Finance Corporation or from Colonel William H. Kelly, head of the New Jersey Banking Department. The SUNDAY EAGLE is reliably informed that no such letter has ever been received. The various banking authorities have only sanctioned the present plan, as one that meets the desires of all, But they do not state it is the ONLY plan and no letter has been sent making such a statement.