Article Text

Receiver Costs

Are Held Excessive by O. J. Morrison

[The following letter by O. J. Morrison is a discussion of the cost of receiverships of closed banks in West Virginia. Mr. Morrison urges the legislators to "make a legislative investigation and draft a law protecting the depositors as well as the stockholders of these closed institutions." Copies of the letter were sent Wednesday to all members of the state senate and house of delegates.—Ed.]

To the Editor of the Daily Mail: Report of the state banking commissioner of June 30, 1934, shows since 1929 there have been 70 state banks closed with assets of more than fifty millions. There is owing to depositors something over thirty-six million dollars. If economically administered depositors in many cases should be paid in full and stockholders should receive most of their money. The administration of these closed banks through the state banking department, appear to be excessive from practically every angle. In other words, it would appear that the receivership is costing anywhere from five to ten times what it should as a liquidating process. Take any line of business from any standpoint, and the records will not justify these expenses that it is costing depositors in the liquidation of these banks, and if continued at the same rate depositors will run far short of what they have on deposit.

It is only necessary for you to get one of the banking commissioner's reports issued June 30, 1934, and look up the expenses of these receiverships on these closed banks to see, that as a whole, the charges would appear excessive.

These fifty million assets which belong to the people, the interest alone should add to these assets three million dollars yearly. This interest alone should more than three times pay the annual administrative charges and instead of these assets in these closed institutions shrinking in value they should increase in value. One per cent should more than cover collecting these assets and very few businesses have a shrinkage in assets of more than one per cent. Two per cent should more than cover shrinkage in assets and expenses of collecting; while the records show that it is costing many times this amount.

The gross sales tax is costing less than four-tenths of one per cent to collect. A two per cent levy on property pays for collection, disbursement and losses, and pays the running expenses of state, county and city.

The state authorizes a bank to do business, examines it and supervises it while in operation. When closed, if the state has any money deposited in them, they become preferred creditors, and then proceed to liquidate the bank through receivers without any supervision of the depositors whose assets are being liquidated.

You will see by the state banking commissioner's reports that excessive clerical salaries, excessive attorney fees, and miscellaneous items go to make up an extravagant method of liquidation. The state code provides that the attorney general is the advisor of the banking department. Still there are thousands of dollars listed as attorney fees by these receivers. Clerical expense runs many times what it should. Whether these expenses are carried on under disguise of law, or customs, its the depositor's money paying the bills, and the excessive charges should not be permitted.

This is not a request to levy additional taxes, it's a request to you that by virtue of your office that you enact a law to protect more than one-half million depositors whose interests are being liquidated by the state through the banking commissioner. A strict law should be enacted throwing safe guards around those funds, as well as a strict accounting, and a limit to every charge made in connection with these funds. May I suggest, that these closed institutions be combined under one head, or receivership, which would reduce cost to a fraction of what it is under the present set-up. It would seem that each closed bank should have a committee of at least three depositors, increased by two stockholders, if desired, that strict regulations surround officials of these closed institutions regarding salaries and expenditures, and that they be held strictly accountable to the people who this money belongs to.

There should be a legislative investigating committee authorized to go into administration of these closed institutions from every angle, and from this investigation, frame and enact a law that will stop all excessive charges, and throw protection around the people and the money belonging to the people.

The following figures taken from their reports speak for themselves.

A statement published by the receiver for the Charleston Trust company as of December 31, 1934, shows expenses to date of $54,728.20. This includes large expenditures for clerical work, legal fees and miscellaneous items. This total expense is approximately 18 per cent of all collections, exclusive of loans.

In the annual report published by the commissioner of banking as of June 30, 1934, total expenses listed for the Union Bank & Trust Company of Huntington, W. Va., which was closed in 1931, to that date shows $370,055.23. Of this amount over $30,000.00 was clerical expense, over $25,000.00 legal expense and over $6,600.00 miscellaneous expense.

In this same report, the Bank of Monongahela Valley which was closed, December 31, 1930, shows total expenditures, by the receiver, of $160,622.72. Of this amount over $35,000.00 was for clerical expense, over $18,000.00 legal expense and over $15,000.00 miscellaneous expense.

The above items are quoted so you can see the way your money is being spent.

Money you deposited in the banks are the assets now in the hands of the receivers, being handled without any voice of the owner. You should demand a law that will give you a voice and protect you and your money.

—O. J. Morrison

Charleston, Jan. 29.