Evening star., 1932-08-08
The Home Loan Bank Plan,

Selection of membership Of the
Federal Home Loan Bank boaIo'
responsible for carrying out the provi-
sions Of the home loan bill passed by
Congress In the closing days OF us laVe
session. sets in motion the machinery
for making effective one of the major
,oronosals of the Federal reconstruction
program. The proposal, in brief, is 10
save an unestimated number oil tnou-
sands of small home owners from one
of the most disastrous effects OF the
depression by making available the
credit, for mortgages and refinanclng
of homes of less than $4,000 In value,
that banks and building and loan
associations have for one or more rea-
sons been unable or unwilling to supply,
In theory, the functioning Of the home
loan bank machinery has been pretty
clearly outlined, and when the wheels
begin to turn the relief to be afforded
should be tangible and direct. In
practice there are obvious difficulties
that must be met and in a manner
that remains to be determined by ex-
perience with realities.
Among these difficulties Is the prob
lem of saving the home of the man
who has lost his job. Last year, it has
been estimated. 10000 families lost
their homes through the process OF
foreclosure. and such loss meant, to-
gether with the loss of place OF
abode. the loss of savings accumulated
through a lifetime. One OF the most
vicious effects OF the depression has been
this wholesale turning out on the streets
of a large section Of the most valued
type Of citizen.
Foreclosures may have been dictated,
in many cases, by demand upon banks
to liouefy and increase their supply OF
cash to meet Withdrawals. They may
have been due, in other cases, to the
inability of the home buyer to meet de-
mands for mortgage curtailments' But
it is feared that too many of them re-
owner lost his job and thereby his
ability to meet interest or other assumed
obliSations. And the efficacy OF the
home loan bank plan in saving these
neople from eviction and the loss OF
their savings through forced sale is
questionable, unless there Is also the
provision of employment-and that, OF
course, is beyond the scope of the home
loan banks.
But to comprehend the full purpose
of the home loan bank plan, one must
look beyond the plight Of the indl-
vidual whose loss of a job threatens
the loss of his home and his savings
though there may he thousands OF sucn
Individuals attempt to visualize it
as only a part of the whole reconstruc-
ton program.
The purpose of this program from
the first has been to stimulate credit
and to restore confidence by turning
good securities, frozen by fear, into
cash. With the restoration OF Sucn
confidence and credit, the theory Is
that buying will begin again, creating
in turn the demand for materials tnaI
furnishes employment. The home loan
bank plan is merely part OF this
whole program, conceived as filling
one particular gap in the economic
structure blasted by the depression. 1t
will benefit the home owner whose
property represents sound security Tor
a loan, but whose banker, or whose
building and loan association, has not
been able or willing to grant or tc
renew that loan, and 1t will enable such
banks and such institutions to perform
more readily their normal functions by
making cash available when cash Is
needed.
Conceived in this light at the outset
the plan should prove practical and dc
its part toward Fastening recovery. II
must not be mistakenly conceived as
an aItruistic mission, on the part OF
Uncle Sam, to pay money for mort
cages that are not worth the money
to buy worthless real estate or cheer
fully to furnish every young bride
groom with the wherewithal TO con-
struct love nest.