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LET IT BE REORGANIZED
THE ANNOUNCEMENT of the state bank examiner that his department will set itself immediately to the work of reorganizing the Washoe County Bank, which suspended its business yesterday because of the heavy withdrawals that were being made upon its cash reserve, discloses very clearly that he comprehends the proper step that should be taken in the situation. In the opinion of persons of the most conservative judgment the capital and surplus of the bank, amounting to been impaired by losses have very largely which it may take upon "frozen" ranch and livestock loans, but the impairment does not extend beyond the banl capital assets. If such is the situation, and such it is affirmed to be by numerous persons of the very best business judgment, it is entirely possible to reorganize and re-open it in perfectly solvent form without loss to the depositors. In carrying out such a plan the stockholders of the bank might lose very large part or even all of their stock holdings, but in other instances that have arisen within the state during the last dozen years reorganization plans similar to ones now being considered have been carried through in which even the stockholders' losses have not been heavy.
One thing stands forth very people of this community and of the state for that matter, want no repetition of the methods by which the vast properties of the State Bank and Trust Company were administered following its suspension and that of its branches little more than twenty years ago. In that instance the incompetency displayed was a disgrace to the state and with proper firmness upon the part of those charged with protecting the depositors could have been avoided.
At the present time the affairs of the bank are in charge of the state banking department of which E. Seaborn is the examiner. Seaborn took office only a few months ago but his fitness for the place is unquestioned and for the best interests of the depositors he should be given free hand in working out a solution. For several weeks he has been endeavoring to effect reorganization of the institution and there is no reason why this plan should be interrupted. By all means "liquidation," which means the sale of its great properties and assets, should be avoided. In the final analysis such procedure would mean a costly receivership, huge fees, the sacrifice sale, in some cases, of its magnificent assets, and eventual losses to its depositors.
Because of the heavy losses to depositors which SO frequently occurred years ago in the case of bank suspensions, or "failures" as they were called, they were almost invariably followed by public fear of other banks and apprehensions of local business depression. Such is no longer the rule and it will not be so in the one at hand. The day has gone in which great losses to bank depositors may occur. Under present methods of supervision, bank losses, caused by frozen or bad loans, are no longer permitted to extend to degree that will seriously impair the funds of depositors. This rule of banking supervision is being enforced in the state of Nevada. Within the last ten years two of the state's banks, one at Wells and one at Gardnerville, have been suspended by orders of the examiner and both were successfully reorganized and continued in business.
To have one's funds tied up in bank suspension is admittedly inconvenient. In isolated instances it may be seriously but in the present situation the total amounts that will be actually removed from daily use, or the amount that actually might be lost, should losses possibly occur, would be very small, indeed, compared to the total circulating wealth of the community. The calmness with which the whole community views the situation shows that it is not disturbed. And there is no reason why should be.
