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- Title
DEPOSITS AS DEBTS: THE PECULIAR RELATIONSHIP BETWEEN BANK AND DEPOSITOR.
- Authors
Howe, Zach
- Abstract
This Article analyzes the legal and historical development of banks' power to loan deposits, a power that forms the foundation of fractional-reserve banking. The ability to loan deposits derives from their legal classification as debts. This categorization differs from that of other fungible-good deposits, which are considered bailments. To explain the law's treatment of bank deposits, this Article looks to historical and legal trends that date back to sixteenth-century England and follows those trends through nineteenth-century American jurisprudence. Ultimately, the Article concludes that the courts correctly classified deposits as debts, but erred in failing to require banks to disclose to depositors that they were not, in fact, holding their deposits in safekeeping.
- Subjects
BANKING industry; LOANS; DEBT; BAILMENTS; JURISPRUDENCE
- Publication
UMKC Law Review, 2016, Vol 84, Issue 4, p913
- ISSN
0047-7575
- Publication type
Article