Evening star. [volume] (Washington, D.C.) 1854-1972, 1935-07-20
HOME LOAN BANK
NEAR 3YEARS OLD
Third Anniversary Monday
Marks New Milestone
in Loan Changes.

Versary of the Presidents signing OF
the Federal Home Loan Bank act,
marks another milestone in steady
movement which is changing the face
of the building and loan industry in
this country, according to I. Fried
lander, president of the United States
Building and Loan League.
The movement to which he refers
Is the mobilization Of the building
and loan units, the trend away from
their community isolation in the credit
structure and toward their autonomy
as a group of institutions alongside
the banks and the insurance COM
panies and the other organized finan-
cial units. This development must
definitely be taken into consideration
in all future prospectuSes regarding
real estate financing, he said.
Factors in Development.
Mr.. Friedlander names the Fed
eral Home Loan Bank System and the
more recent Federal Savings and Loan
Insurance Corp. as the two factors
which are making possible this devel-
opment in a business which three
years ago had thousands of scattered
units from cross road villages to
metropolitan centers and no way to
shift resources from one section to
another, no way to strengthen each
others position. He pointed out that
the two steps which are rapidly max
ing the building and loan business a
co-ordinated structure both arose out
of the leadership of the business itself
and we're not thrust upon it by any
Government pressure.
what the Federal Home Loan Bank
System actually did was to give the
building and loan associations their
own banking system, created to grant
credit along lines which would be
most suitable to the operations and
habits of the associations providing
10-year advances when such long
term credit was needed to increase
their mortgage lending resources and
seasonal credit for those occasions
which used to force the associations
to borrow from commercial banks" he
said. "At the end of 1881 the aSso-
Citations were indebted to the COM
mercial banks for some $500, 000,0 600
and to this extent we were mixing
long-term credit with the short-time
money market to our own later regret
With the existence of our Home Loan
Bank System this can be confidently
expected never to happen again"
1t has proved a popular banking
system with the building and loan
associations, considering the uncer-
taintieS of the times. the league preSi-
dent indicates AS of June 90 total
of $751;, $4,000 had been advanced
by the IL banks during the two and a
half years of their actual operation.
Of this amount $73,000.000 had been
paid back both as amortizing INSTALL
ments on the longer-term loans and
as repayments of the shorter-term
loans. Interest ranging from 31a to
per cent was paid On that money
by the associations and as stockhold-
ers in the banks they have been re-
ceiving a 2 per cent dividend, the
same return as paid to the Govern
nent for its stock in the bank system,
The volume of advances in May and
June was heaviest for any two months
in its history.
$500 Associations Members.
There are approximately $500 aSso-
Citations members of the system today
and they represent more than half of
the total building and loan assets OF
the country.
Mr.. Friedlander recalled that the
act has been frequently amended dur
ing the past three years as experience
with its provisions developed. Col
lateral requirements nave been hber-
allied and the minimum amount OF
stock which a member association
must subscribe for has been reduced.
More recently a Federal Savings and
Loan Advisory Council has been au-
thorized by Federal statute, to give the
practical managers of these thrift and
home financing institutions an oppor-
tunity to make recommendation re-
garding the operations of the system.
Altogether there has been steady
progress both by statute and by the
performance of member associations
toward giving the system the kind of
utility its sponsors sought for it, he
said.
1.-The significance of this changing
complexion of our building and loan
units to the home owners and to the
real estate market is far greater than
any one outside our cwn industry
realized three years ago" he contin-
lied. There is still the major factor
of having the local institution making
the local loans and thus safeguard the
funds it uses by the superior knowl-
edge of the community which its own
citizens are bound 20 have. But
there Is no more need for the asso-
citation to refuse loans when its idle
resources are exhausted and there is
no further necessity for it to seek an
outlet for It's surplus cash by making
less desirable loans. In the former
case of need it may get an advance
from the regional bank and in the
latter case 1t may place its funds on
deposit with the Home Loan Bank
and help swell the funds which other
associations can use. That facility Of
moving funds from one section to an
other will bear tremendous fruits in
the months ahead which appear from
here to be destined for a recovery
oaaet;nad rooI aeto re- mo rkaf dimension "