Evening star., 1933-03-25
HOME LOAN BANKS
SUSTAIN SELVES
Taxpayers Assured StabiIiz-
ing Mortgage Money Mar
ket Will Be CostIeSs.

The Federal Home Loan Bank Sys-
tenn, rather than being a Government
expense, Is self-sustaining, the United
States Building and Loan League
pointed out today in assuring taxpayers
that the Federal unit intends to do its
job Of aiding in stabilizing the mortgage
money market without costing them
anything"
Pointing to four definite provisions OF
the law which make 1t self-sustaining
the league explained that criticism OF
the system was largely the result Of mis-
understanding. -Four essential factors
to be considered, the organization says
in the financing Of the system, are:
l. The Government advances to the
Home Loan Banks are in the nature OF
shares Of stock owned and the Recon-
struction Finance Corporation, through
which the initial funds were advanced
will receive dividends of minimum
per cent cumulative from the date OF
investment. If the earnings of the IL
regional banks warrant a larger rate OF
dividend, the Government shares will
receive the same rate as member insti-
tutionS which are stockholders.
Repayment of Advance.
2. The Government advance will be
repaid as more and more Of the eligible
institutions, building and loan aSsocia-
tionS, savings banks and insurance COM
panies purchase stock. Applications for
stock approaching 1000 have been filed
by these institutions and they are pay
ing $13 100000 into the system for their
shares. Eventually, according to the
design OF the law, the fund advanced by
the Government will be retired plus the
dividends as mentioned
g. Expenses of the Federal Home Loan
Bank Board, after the fiscal year end
ing this June. are to be paid, not by the
Government but by a semi-annuaI as
sessment for the next six months work.
ing funds upon the IL regional banks
which make up the system. The law
on this point, as quoted by the building
and loan league says:
THE board shall have power to levy
sem1-annually upon the Federal Home
Loan Banks and they shall pay, on such
equitable basis as the board shall de-
termine, an assessment sufficient in its
Judgment to provide for the payment OF
its estimated expenses for the half wear
succeeding the levying of each such
assessment, beginning with the second
half OF the calendar year, 1888"
Loanable Funds Source.
4. The loanable funds of the Home
Loan Banks, after the initial advance
from the Government has been used
VIII be derived from the sale of bonds
to the public, thus providing that pri-
vate capital, through the medium OF
bond-buying individuals and institu-
tlons, shall flow into the home mort
gage field, support the operation of the
system and in the meantime derive for
itself liberal return.
On these four grounds the Home
Loan Bank System IS a quasi-public
corporation andS the Governments
share Is more that of supervising and
getting 1t started than anything re-
sembling an expense" the league said
Proponents of the system have fought
all along any suggested changes which
might impair the ability of the system
to support itself. If it should relax
some Of its strictly business standards
OF operation the chances are very grave
that 1t would not be able to derive that
support from private capital upon which
1t depends for its future"