Chapter 234, Laws of 1903, created the Banking Department. The Department was under the management and control of the Commissioner of Banking, except during the years 1933-1947 when a three-member Banking Commission replaced the Commissioner. Under state government reorganization in 1967, the Banking Department was renamed the Office of the Commissioner of Banking but retained its status as an independent agency.
The Banking Department was organized into divisions in 1956. Among these was the Bank Division: known briefly as the Division of Active Banks. When the Department was renamed in 1967, the Bank Division became the Banks Division of the Office of the Commissioner of Banking.
These banking offices had the authority under section 220.08 of the statutes to manage the liquidation process of a delinquent bank. The agency, through a Special Deputy appointed for the task, obtained approval from the circuit court to sell the bank's security and real estate, to distribute the proceeds to depositors, and to pay the expenses of the liquidation.
Emergency legislation inspired by the depression of the 1930s permitted the agency to negotiate a stabilization agreement between depositors and financially troubled bank. Under such an agreement, the bank continued operation, but all of the old funds, plus a 100% levy on the stock of the shareholders of the bank, went into a segregated trust. This trust was managed by two depositors and an officer of the bank selected as trustees, under the guidance of the circuit court and the agency. The trust was liquidated and the proceeds distributed to the depositors in accordance with the terms of the stabilization agreement. The procedure kept the bank running and allowed the depositors eventually to reclaim their deposits with interest. Banks in liquidation which reopened as reorganized banks also had segregated trusts set up for the benefit of the depositors and unsecured creditors of the bank.
See each Agency's History in the catalog:
