Banks and Loaning CreditSubmitted by fredlox on Fri, 10/10/2008 - 18:29
"A national bank has no power to lend its credit." (Farmers & Miners Bank vs. Bluefield National Bank, 11 F2d 83, 271 US 669)
"Banking Associations from the very nature of their business are prohibited from lending credit." (St. Louis Savings Bank vs. Parmalee 95 U. S. 557)
"National Banks may lend their money but not their credit." (Norton Grocery vs. Peoples National Bank, 144 S.E. 501, 151 Va. 195)
"Neither, as to include in its powers not incidental to them, is it a part of a bank's business to lend its credit. If a bank could lend its credit as well as its money, it might, if it received compensation and was not careful to put its name only to solid paper, make a great deal more than any lawful interest on its money would amount to. If not careful, the power would be the mother of panics . . . Indeed, lending credit is the exact opposite of lending money, which is the real business of banking, for while the latter creates a liability in favor of the bank, the former gives rise to a liability of the bank to another." (American Express Co. vs. Citizens State Bank, 194 NW 429)
"A bank can lend its money but not its credit." (First National Bank of Tallapoosa vs. Monroe, 135 Ga 614, 69 SE 1123, 32 LRA)
"It is not within the statutory powers for a national bank, even though solvent, to lend its credit . . ." (First Intermediate Credit Bank vs.
Herisson, 33 F 2nd 841)
"A national bank, under federal law being limited in its powers and capacity, cannot lend its credit." (Howard & Foster Co. vs. Citizens National Bank of Union, 133 SC 202, 130 SE 758)
"Banking corporations cannot lend credit." (First National Bank of Amarillo vs. Slaton Independent School District, Tex Civ App 1933, 58 SW 2d 870)
"There is no doubt but what the law is that a national bank cannot lend its credit or become an accommodation endorser." (National Bank of Commerce vs. Atkinson, 55 Fed Rep 465)
"Nowhere is the express authority granted to the corporation to lend its credit." (Gardilner Trust vs. Augusta Trust, 134 Me 191; 291 US 245)
"A national bank has no authority to lend its credit." (Johnston vs. Charlottesville National Bank, C.C. Va. 1879, Fed Cas. 7425)
"A contract made by a corporation beyond the scope of its power corporate powers is unlawful and void." (McCormick vs. Market National Bank, 165 U.S. 538)
"A national bank . . . cannot lend its credit to another by becoming surety, endorser, or guarantor for him, such an act is ultra vires . . " (Merchants' Bank vs. Baird, 160 F 642)
Despite the above court cases, Ralph Gelder, Superintendent, Department of Banks and Banking, State of Maine, said on Feb. 20, 1974, "A commercial bank is able to make a loan by simply creating a new demand deposit (so called checkbook money) through bookkeeping entry." This is in total contradiction to what the courts have said. Yet, that is exactly how the banksters create the money to loan to its customers or to buy government bonds.
"Federal Reserve bank credit does not consist of funds that the Reserve authorities get somewhere in order to lend, but constitute funds that they are empowered to create.
" (Federal Reserve Bank: Its Purposes and Functions, 1939 Edition)
"Act is ultra vires when corporation is without authority to perform it under any circumstance or for any purpose. By doctrine of ultra vires a contract made by a corporation beyond the scope of its corporate powers is unlawful." (Community Fed S&L vs. Fields, 128 F 2nd 705)
"A bank is not the holder in due course upon merely crediting the depositors account." (Bankers Trust vs. Nagler 229, NYS 2nd 142)
"A holder who does not give value cannot qualify as a holder in due course." (Uniform Commercial Code 3-303.1)
"Checks, drafts, money orders and bank notes [Federal Reserve Notes] are not lawful money of the United States." (State vs. Nealan, 48 Ore.155)
"When an instrument [notes] lacks an unconditional promise to pay a sum certain at a fixed and determined time, it is only an acknowledgement of the debt and statutory presumptions like the presence of a valuable consideration, are not applicable." (Bader vs. Williams, 61 A 2d 637)
"A note is not negotiable unless it is payable at a time in the future." (Rhodes vs. Schofield, 82 So.2d 236)