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1986 Colorado Attorney General Reports and Opinions 1 (1986)

handle is hein.sag/sagco0029 and id is 1 raw text is: January 7, 1986 Wellington E. Webb Executive Director Department of Regulatory Agencies State of Colorado 1525 Sherman Street, Room 110 Denver, Co 80203 RE: Fidelity bond coverage requirements for state chartered commercial banks AG Alpha No. RG BA AGAOV AG File No. ORL8506234/AOV Dear Mr. Webb: This opinion letter is in response to your November 12, 1985 memorandum requesting a formal attorney general opinion about the need for blanket bond coverage for state chartered commercial banks. QUESTION-PRESENTEDAND CONCLUSION Your request for an attorney general's opinion presents the ques- tion: May a state chartered commercial bank continue to operate if its blanket bond is cancelled and its efforts to procure blanket bond coverage continue in the negotiation stages beyond the expiration date of the original blanket bond? Yes, a state chartered commercial bank may continue to operate if its blanket bond is cancelled. While the Colo- rado bank commissioner and the Colorado banking board have discretion to determine whether opereting without fidelity insurance is an unsound banking practice and therefore have discretion to subject the bank to regulatory action, including closure and involuntary liquidation, there are no statutes or regulations which require an extreme measure such as closure for operating without fidelity insurance. ANALYSIS Section 11-3-120, C.R.S. (1973), mandates that the directors of a state commercial bank require fidelity bond coverage for the