Evening star., 1935-08-31
INSURED SHARES
PROGRAM LAUDED
More investments Are
Drawn Into Home Mort
( gage Field, Is Report.


I Fruits of the are-insurance pro-
Rram for savings, building and loan
associations as means OF drawing
more investments into the home mort
rage field are given a preliminary once
over and found encouraging by A. D.
Theobald, director Of education and
research for the American Savings,
Building and Loan Institute, writing in
the September issue of Savings and
Loans.
A survey conducted by the institute
among the first 26 associations which
voluntarily insured their shares
showed almost unanimously for this
group a definite increase in payments
on shares and especially from new
shareholders.
From his survey Theobald concludes
that the program for insuring shares
in these associations will be the most
effective of all the various means pro-
vided in the National Housing act to
bring private capital back into invest
ment in the stream of home loans. He
pointed out that these associations use
their entire lending resources for
financing homes and that they are
the only financial institutions in the
country with such a specialized func-
ton. Therefore sharp and sustained
increase in their receipts is bound to
be reflected Immediately in the volume
of available home-loan money.
S61 Groups Insured.
According to latest statistics from
the Federal Savings and Loan InSur-
ance Corp, 861 associations have been
insured to date, including total assets
Of $418,954948 with the share ac-
counts of 678,353 people. With Al Of
these institutions the insurance was
optional because they were chartered
by the States, and it is with this
group that the institute survey chiefly
concerned itself. What they had to say
about the effectiveness of insurance in
securing new investors and savers is
told by Theobald as follows:
In the associations where money
was needed, the announcement Of the
insurance Of accounts attracted new
shareholders with the result that many
more new accounts were opened per
day or week than had been experienced
in the preceding two or three years.
After a single publication or adver-
J tisement of the fact that shares would
be insured many associations have
received so much money that they
have been obliged to limit the amount
which could be invested to $1,000
and also to establish a waiting list
for people who wish to invest.
"Of remarkable interest were some
Of the replies which indicated that in
certain instances shareholders who had
been making monthly Withdrawals in
order to live, had executed a right
about-face when word of the insurance
Of shares had been received, and were
now making equal or larger monthly
additions to their savings.
Security Worth More.
GAS developed in a survey made by
the American Savings, Building and
Loan Institute nearly two years ago
most individuals are willing to ex-
change security for a lower dividend
rate. AS further proof Of this attitude
the questionnains revealed that there
Is a very general feeling on the part of
shareholders in insured associations
that the security resulting from the
insurance is worth much more than
the slight dividend reduction occa-
stoned thereby"
The building and loan educator, COM
menting on the results Of the survey,
said that the past three months, since
the original act for share insurance
was amended, have accounted for about
nine -tenths of the success of the pro-
gram. The rate of premium was re-
duced by one-half and the possible
assessment In addition to premium
was cut from one-fourth Of per cent
Of insured liabilities to one-eighth. He
said further:
"The share-insurance program has
called attention to the other favorable
factors about savings and loan asso-
Citations, such as their unusual safety
record over the past 13 years for
: which accurate statistics on the sub
ject have been kept. Attracted by the
announcement Of share insurance,
people looked farther into the history
Of this type Of investment and found
out that the association insuring had
never lost a cent for any Of its in
veStors and was reassuring itself
against any such possibility at any
future time. Thus, they have q back
ground for their share insurance which
breeds further confidence and has a
material effect In Tedirecting invest
ments into home mortgages"