JANUARY 131911
7
Nebraska's guaranteed Bank Deposits Law
The Commoner.
House roll number 423 a bill for an act'
for the" regulation, supervision and control of
-the business of banking, and to provide penal
ties for its violation, repealing chapter eight of
the compiled statutes of Nebraska of 19 Q7, and
all acts and parts of acts inconsistent herewith.
Be ft Enacted by the Legislature of the. State
of Nebraska: p ,
Section 1. The business of banking, or tlio .re
ceiving of doposlts of money or instruments of
credit subject to bo repaid upon "check, draft, cer
tificate, pass-book or order; the discounting,. nego
tiating of promissory .notes, drafts, bills of ox
change," and other evidences of debt; and the'ldanJ
ing .of money upon personal or other security, Is
hereby declared to be a quasi-public business, and
subject to regulation nd control by tho statp. .
Sec. 2. It shall bo unlawful for any corporation,
partnership, firm or Individual to engage in or
transact a banking business within this .stato on
and after tho taking effect of this act, except by
means of a corporation duly organized for such
purpose under tho laws of this state. It shall bo
unlawful for any corporation to receive money
upon deposit or transact a banking business Under
tho laws of this stato until said corporation Shall
have complied with all tho provisions and
requirements of this act. Any violation of
tho provisions of this section shall subject'
tho corporation, partnership, firm or individual so
offending to a penalty of twentyilve ($25.00) dol
lars for each day of the continuation of such
offense, and bo cause for tho appointment 6f a
receiver as hereinafter provided, to wind up such
banking business.
Sec. 3. Tho term "bank" or "banking corpora
tion" as Used in this act, shall bo construed to
mean any incorporated bapking institution which
shall havo been Incorporated under the laws of
this state as they existed prior to tho taking effect
of this act, and to such banking institutions as
shall hereafter become incorporated under the pro
visions of this act. The term "commercial bank"
shall bo construed to mean any such banking insti
tution as shall', lri addition to tho exerciso of other
powersi follow tho practice of re-paying deposits
upon check, draft, or order, and of making com
mercial loans chlelly; tho term "sayings bank"
shall bo construed to -mean any cuch banking in
stitutions as shall, in addition to the exerciso of
other powers, follow the practice of re-paying
deposits, only upon tho presentation of pass-books,
and whoso loans are chiefly made on real estate
security.
Sec. 4. Tho term "lawful money" as -used in this
act shall bo construed to mean all coin, United
States notes, treasury notes, gold certificates, silver
certificates, national .bank notes, ,and all other
forms of money issued by or which may hereafter
o? !P-Pa.?,yiVM?F-'tJ1J,ut.hJorlty o the United..
States 'lis-' a' clrduiatlng niediiim, and "shall also
be construed to mean any form of certificate -which
Is now or may hereafter bo declared to bo lawful
money of tho United States.
Sec. 5. There is hereby created a stato banking
board which shall consist of the following stato
officers: The governor, who shall be ox-offlclo
chairman thereof; tho auditor of public accounts
and the attorney general, a majority of whom shall
constitute a quorum for tho transaction of busi
ness. Said board shall- have general supervision
and control of banks and banking under tho laws
of this stato and no person or persons shall bo
permitted to engago in or transact a banking busi
ness savo corporations having complied with tho
provisions of this act. Provided, however, that
this,,act Is not intended to apply, to banks organized
under tho banking laws of the United States.
Said board shall be and constitute the stato bank
ing board, and successor to tho state banking
board as now , existing, as such entitled to all
tho records, books, files and papers theroof, and
shall exerciso all the powers and discharge all tho
duties of such board under tho laws of this stato.
Sec. 6. Tho governor shall appoint a secretary
of tho said banking board, who shall be an elector
of tho state, and who, at tho timo of his appoint
ment, shall have had, at least, three years practical
experience In actual banking, and who shall re
ceive a salary of three thousand dollars ($3,000.00)
per year, and a clerk of said board, -who shall
receive a salary of fifteen hundred dollars
($1,500.00) por year, and who shall be a competent
book-keeper and an expert accountant, and one
other ussistant, if necessary, who shall hold
their respective offices at the pleasure of tho
frovernor, and perform the duties hereinafter en
oined upon them, and such other duties as usually
devolve upon such offices. The governor shall also
appoint a suitable person, or persons, having had
at least three years actual experlenco in practical
banking, to make an examination of and into the
affairs of every corporation transacting a banking
business and subject to the provisions of this act,
as often as shall bo deemed necessary or proper
by tho said stato banking board, and at least twico
In each year. Jput no person thus appointed shall
bo permitted to examino tho affairs of any bank
in which ho has a personal interest, or of which
ho is, or within one year next preceding his ap
pointment was an officer or employe, and any and
all persons appointed under tho provisions of this
Bectlon shall bo subject to removal at the pleasure
of tho governor. Said bank examiners so appoint
ed shall perform all tho duties and exerciso all
tho functions of bank examiners under tho laws
of this .state. Such secretary and bank examiners
shall each enter into a hond, to tho state of Ne
braska, before taking their respective offices, with
surety or sureties to bo approved by the governor,
the secretary's to bo in tho sum of $25,000.00 and
each examiner's Jin tho sum of $25,000.00.
Sec. 7. Tho said banking board shall procure
and keep a seal, upon "which shall be engraved
tho coat of arms of the state and- the words "Stato
Banking Board of Nebraska" and all charters and
orders issued by said board shall bo attested by
said seal and the signatures of- tho said chairman
and, .secretary. , , , . .
Sec. 8. Any bank examiner so appointed shall
have power to mako a thorough examination Into
all the books, papers and affairs of ahy corporation,
transacting a banking business in this stato, and,
in so doing, to administor oaths and affirmations,
and to examino on oath or affirmation tho officers,
agents, and clerks of such corporation, touching
tho matters which they may bo authorized and
directed to inquire Into and examino, and to sum
mon, and by attachment compel tho attendance of
any porson or, persons in this stato to testify under
oath beforo them in relation to tho affairs of. such
corporation. Tho person or persons making such
examination shall mako a full and detailed report
of tho condition of such corporation to the stato
banking board. Provided, that apy examiner ap-
pointed under tho provisions of this act who Shall
knowihgly- and wilfully mako any false or fraudu
lent .repprt of the condition of any bank which shall
,havo been examined by him, with tho intent to. aid
' -or abet tho officers, Owners or agents of such
, bank, In continuing to operate an insolvent bank:
. or if any such examiner shall receive or accept
any bribe or gratuity, given for tho purposo of
inducing him to not fll'o any roport of an examin
ation of any bank made by him, or who shall
nefrlect to mako an examination of any bank by
reason of having received or accepted any brlbo
or gratuity, ho shall bo doomed guilty of a felony,
and, on conviction thereof, shall bo imprisoned
in tho state penitentiary for not loss than two, nor
more than ten years. Provided, further, that such
bank examination shall bo in tho presenco of at
least two of. tho board of directors of tho bank
undetgolng said examination, and it shall bo tho
duty of tho examiner to incorporate In his report
herein referred to. the names of tho directors in
whoso presenco tho examination was made, and
such examination shall include, at least annually,
a verification from 'sources outside of said bank
of at least ten per cent in number of tho deposits
and loans.
. ?ec-,9' EvPT person thus appointed to examine,
into tho affairs of banking corporations, shall re
celvo as compensation for his services at the rate
of eighteen hundred ($1,800.00) dollars per annum
and all necessary traveling expenses incurred and
actually paid out in tho performance of his duties
as such examiner, not to oxceed dno thousand
($1,000) dollars per annum, such traveling expenses
to bo paid out of tho general fund, upon his filing
with, tho stato auditor an Itemized report of such
expenses approved by the stato banking board, or
any two members thereof. Every bank thus ex
amined shall pay to the state treasurer, for credit
of general fund, within ton days after tho com
pletion of such examination, the following fees:
,;Frllan,k?, wIth a capital of fifteen thousand
. 016,000) dollars or less, fifteen ($15) dollars; for
banks with a capital of more than fifteen thousand
$5i222 dollars and less than fifty thousand
($50,000) dollars, twenty ($20) dollars; for banks
with a capital of fifty thousand ($50,000) dollars
an,d Ies ,th,an oho , hundred fifty thousand
($150,000) dollars, thirty ($80) Hollars; and for
banks with ono hundred fifty thousand ($150,000)
dollars or more, fifty ($50) dollars; provided that
not more than two such foes shall bo paid In any
pne calendar year. Tho examiner shall roport to
the stato treasurer and stato banking board within
five days from tho completion of examination, tho
date thereof and tho amount of fee duo. Evory
person appointed as such examiner shall mako,
at tho end of ovory year, to tho stato banking
board a detailed report undor oath of all foes re
ported by him undor this act, and of all his neces
sary traveling expenses in the performance of his
duties as such examiner; and shall give a bond
in the sum of twenty-fivo thousand ($25,000) dol
lars, executed by himself with one surety where
suon surety is an incorporated surety company
authorized by tho laws of this stato to transact
such business and with at least two sufficient
sureties whoro such sureties are natural persons,
to bo approved by tho governor, conditioned for
tho faithful performance of his duties- as such
examiner.
Sec. 10. Any duly qualified bank oxamlnor ap
pointed as aforesaid shall havo authority when
ordered by tho stato banking board to take pos
session of any bank doing business under tho
laws of this state, and to retain possession of such
bank for a timo sufficient to mako a thorough
oxamlnatlon Into its affairs and financial condition
and if, upon such examination, it bo found by said
examiner, that said bank is insolvont, or Is con
ducting Its business In an unsafe or unauthorized
manner, or Is endangering the interest of its de
positors, then such examiner shall havo full power
and authority to hold and retain possession of all
tho money, rights, credits, assets, and property of
overy description belonging to such bank as
against any mesne or final process issued by any
court against such bank or corporation whose
property has been taken by such examlhor, until
the state banking board can receivo and act on
the report made by the examiner of said bank,
and have a receiver appointed as hereinafter
provided.
Sec. 11. It shall be unlawful for any person or
corporation to conduct a bank or to engage in or
transact a, banking business in this stato without
having first obtained a charter from tho stato
banking board in tho manner hereinafter provided,
which charter shall issue only to corporations
duly organized for tho transaction of such business.
Sec. 12. A majority of tho members of tho
board of directors of any banking corporation
transacting business under the provisions of this
act must be residents of tho county wherein auoh
ba?Jc 'I cated, or of tho counties immediately
adjacent thereto, and every director of a bank hav
ing a capital of fifty thousand dollars ($50,000)
or less must bo tho owner and holder of at least
four per cent of the paid-up capital stock in his
own name and right, and in a bank with a capital
of moro than fifty thousand dollars ($50,000)
every director must own and hold in his own
, name 'and right not less than three thousand
dollars J34000) of the paid-up capital stock.
' froylded. however, that the provisIons,,Qf this scc
.. Oon. -shan not apply to. .banks operating at the
. -s Jaktog, off ect of this, act. .Provided, however; that
of a savings bank shall qualify tho ownor to Tie
elected as a director of such bank.
Sec. 13. Tho paid-up capital stock required, to
cntitlo a corporation to a charter under tho pro-
visions of this act. shall bo as follows:
In no case less than ton thousand dollars; where
tho bank lo located in a village or town of more
than ono hundred and. not less than fivo hundred
Inhabitants, not lotfs than fifteen thousand dollars;
in towns or villages of fivo hundrod or more, ana
less than ono thousand inhabitants, not less than
twonty thousand dollars; in towns or villages of
One thousand or more, and less than two thousand
inhabitants, not less than twenty-fivo thousand
dollars'; in cltlds or villages of two thousand or
more, and less than fivo thousand inhabitants, not
loss than thlrty-flvo thousand dollars; In cities
pi five thousand or moro, and less than twenty
fivo thousand inhabitants, not less than fifty thou
sand dollars; In cities of twenty-fivo thousand or
moro, and less than- ono hundred thousand ihhubl
. tants, not less than one hundred thousand dollars;
In cities of ono hundred thousand or moro In
habitants, not less than two hundred thousand
dollars. Provided, howover, that tho minimum
paid-up capital of a savings bank shall bo fifteen
thousand ($15,000) dollars. Whoro a savings bank
Vtl0S?tcd H a c,ty oC moro than fifty thousand
SSP,PSPA an.d .lcHs thai ono hundred thousand
(100,000) inhabitants, tile, paid-up capital shall bo
not less than.thlrty-flvb .thousand ($35,000) dollars.
In cities of ono hundred thousand (100,000) or
,moro Inhabitants, tho prtld-up capital of savings
banks shall bo not less than seventy-five thousund
dollars, and such paid in capital, including tho
Initial and subsequent payments shall consist, at
the time, of lawful money, credit with depositor
banks, to bo approved by tho stato banking hoard,
national, stato, county or municipal bonds, bank
furniture and tho riocossary bank building, and tho
lot or lots upon which such building is situated,
which, said lot or lots shall bo free from Incum
brance; but national, State, county and municipal
bonus -shall not constitute. In tho aggregate, moro
than1 one-half, nor tho bank building and tho lot
or lots upon which It is situated, together with
thp hank furnlturo and fixtures moro than ono
third of, tho paid In capital, nor shall such furni
ture and fixtures constituto moro than one-tenth
thereof. Provided, however, that tho provisions
of this section shall not apply to banking corpora
tions organized and engaged in tho business of
banking at and prior to tho taking effect of this
act.
Sec. 14. Every corporation transacting a bank
ing business under the laws of this state, shall,
within sixty days after tho taking effect of this
act, nlo with tho state banking board, a full, com
P etc and detailed report of its condition, as pro
vided for in section 1G of this act, -and it shall
bo the duty of tho stato banking board upon ex
amination of tho report and approval of tho same,
if satisfied that such corporation meets tho re
quirements of this act, to Issuo to said banking
corporation, a certificate stating that said banking
corporation has complied with tho laws of this
s,ta,1for. tho protection of bank depositors, and
that Its depositors are protected by tho depositors'
guaranteo fund of tho state of Nebraska. Every
banking corporation receiving such certificate shall
conspicuously display tho same in its place of
business and said banking corporation may print
or engravo upon Its stationery and advertising
matter, words to tho effoct that its depositors aro
protected by the depositors' guarantee fund of tho
stato of Nebraska. Tho printing or engraving of
a false statement of tho fact last beforo this named,
is hereby declared to bo a violation of the provi
sions of this act.
Sec. 15. Every corporation, organized for and
desiring to transact a banking business, shall
bofpro commencing such business, mako under
oath, and transmit to tho state banking board, a
full, complete and detailed statement of: First,
tho name of tho proposed bank; second, a certified
copy of the articles of incorporation; third, the
names of thp stockholders; fourth, tho county, city,
town or village in which tho said proposed bank
is located; fifth, tho nature of proposed banking
business, whether commercial or savings; sixth,
tho amount of paid-up capital stock, and the
Items of money and property Included In said
amount.
Sec. 16. Whonoyer, after tho examination and
approval by tho state banking board, of the state
ment provided for in section 15 of this act, the
corporation shall filo with the state banking board
tho oath of the president, or cashier, that the
capital stock has been paid in as provided for,
and in compliance with section 13 of this act, then
Jrx.s&H baJ!kin hoard, " upon investigation.
It shall be satisfied that the parties requesting said
charters are parties of integrity and responsibility,
shall, upon tho payment of certain fees as herein
after provided, issuo to said corporation tho certifi
cate provided for in section 14 and a charter to
transact the business provided for in its articles
of Incorporation. The fees for such charters to
engage in the business of banking shall be as
follows: For banks having a capital of twenty
fivo thousand dollars ($25,000) or less, tho fee
shall bo twenty-fivo dollars ($25); for banks hav
il&.A01 capital of twenty-five thousand dollars
$fM22 UJ? 2 and. including fifty thousand dollars
($50,000) the fee shall be twenty-five dollars ($25)
and fifty cents ($.50) for each additional thousand
above twenty-fivo thousand dollars ($25,000); for
banks having a capital in excess of fifty thousand
dollars ($50,000) the fee shall be thirty-seven and
fifty ono-hundredths dollars ($37.50) and twenty
fivo cents ($.25) for each additional thousand above
fifty thousand dollars ($50,000). Tho above fees
shall bo paid to the state banking board and by
them paid to tho state treasurer who shall place
thesamp in the general fund of tho state. On
payment of the required fees and tho receipt of
the charter the proposed bank may begin to trans
act a banking business
Sec. 17, Every corporation transacting a bank
ing business hereunder shall make to tho state
banking-, board: not less thaa rfour -() reports dur
ing each year according. to. tjie. form which may
fitt lt r,(Cpntiaucd on.page.10)
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