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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

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