Evening star., 1935-06-08
SAVINGS GUARDED
UNDER NEW LAW
Federal Home Loan Act e.
fects Held Beneficial to
Many Investors.

The new Federal home loan act
gives strong impetus to the more
general insurance of saving, held by
millions of wage earnerS and salarleo
workers in thrift institutions OF the
building and loan type. according to
statement issued today by the Federal
Home Loan Bank Board. The state
ment was as follows;
THE Federal Savings and Loan
Insurance Corp. was created IN
June. 1894, for the purpose of in
surfing up to $4,000 the withdrawable
accounts of every investor in any
duly insured thrift and home-flnanc-
ing institution. BY law. all Federal
savings and loan associations must be
so insured, for the benefit OF their
shareholders. but insurance is op-
tional for State-chartered assocla-
tions
Insurance of savings by the Fed
eral Savings and Loan Insurance
Corp. is wholly distinct from in
surance of individual mortgages under
title 2 Of the national housing act.
The latter insures payment of prln-
cipal and interest of an insured
mortgage to the lending institution.
whereas insurance of savings in a
thrift institution safeguards its in
vestors against loss.
$1,000 Is Limit Set.
"The cost of such insurance is paid
directly by the insured institution,
not by the investor. Every person
holding a withdrawable account is
automatically insured up to SIS 600. II
his funds are placed in an insured
institution. No investor can have
his own individual savings insured in
an institution which is not insured.
ITO date, applications for insur-
ence have been received from more
than 1000 institutions. representing
over S625 900. 900 in resources, and ap-
proXimately a million shareholders or
depositors Nearly 800 of these in
stitutions have already been approved
for insurance. after examination by
the Federal Home Loan Bank Board.
Several important revisions effected
bv the new home relief act just ap-
proved by President Roosevelt should
greatly facilitate insuring against loss
some 5000 900 small investors in sew
eral thousand State-Chartered asso-
Citations which have not yet applied
for insurance in behalf of their share
holders, but which are probably in
surable on the basis of their present
sound management and solvent flnan-
cial condition.
Premium Cost Reduced.
The most important step taken by
the new measure in making insurance
more widely available is the reduction
of so per cent in the annual premium
cost to insured institutions. The new
premium rate is only "a Of per cent
of the insured institutions aggre-
gate shareholder and creditor liabll-
ity, the premium rate formerly in
force having been a of l per cent OF
such amount. Under the new meas
ure the maximum annual assessment
is likewise reduced from "A of l pei
cent to IA of ! per cent of the lnsti-
tution's aggregate shareholder ano
creditor liability
Equally important in speeding the
number of building and loan institu.
tions, through insurance. is provl-
sion in the new act which makes
$500 100000 available for direct in
vestment in Federal savings and loan
associations or in insured institutions
under State charter, or in members of
the Federal Home Loan Bank System
or for the purchase of Federal Home
Loan Bank bonds. notes or debentures
"A further amendment in the new
Federal home relief act provides that
dividends may be declared and paid
to shareholders of insured institutions
even when losses are chargeable to re-
serves, if the declarations of dividends
under such circumstances is approved
by the Insurance Corp.
Under another amendment the In
surance Corp. is authorized to make
loans or contributions to or tC
purchase the assets of an insured in
stituton in order to prevent default
or to restore an insured institution
which is in default without recourse
to liquidation.'