If the bank is hopelessly insolvent the receiver proceeds to wind up its affairs, and in so doing he seeks to protect the claims of the depositors. All available assets are converted into cash, and if these are not sufficient to pay the creditors, the receiver of a national bank may assess each stockholder in an amount not exceeding the par value of his stock.
In settling claims against the bank the United States Government is in a sense a preferred creditor. The circulating notes of national banks, which are promises to pay money to the holders, are protected by bonds deposited in the Treasury. The Comptroller sells enough of these bonds to pay off the failed bank's notes as they are presented. To the depositors of a failed bank the receiver issues as promptly as possible a "certificate of proof of claim," which certifies that the holder is a creditor of the bank to a certain amount. From time to time as the assets are realized upon by the receiver, "dividends" are paid to the depositors. The receiver's certificate issued to the depositor is usually negotiable and can be sold or discounted like a note. Loan agents are always on hand to buy up these claims, usually at a great discount. Sometimes other banks are willing to accept these certificates on deposit, giving the depositor immediate credit for, possibly, two-thirds of the amount represented by the certificate.
When state banks fail the procedure of liquidation is much the same as with national banks. Until recently, however, the receivers for failed state banks were appointed not by the banking department but by the courts. Frequently the receiver of a state bank or trust company is not a trained man but gets his appointment for political or personal reasons. Then, too, instead of receiving a fixed salary as a national bank receiver does, he gets a percentage of all the money handled. In many cases the fees thus received are very large. There is a growing feeling that the liquidation of state banks should be placed under the control of the bank supervisors.
Bolles: Money, Banking, And Finance, Ch. XXVII.
Fiske: The Modern Bank, Ch. XXIV.
Howard and Johnson: Money and Banking, Chs. XVII, XVIII. Moxey: Practical Banking, Ch. XIX.