Evening star., 1937-03-04
URGES FIDELITY
REORGANIZATION
US. Home Loan Bank Board
Proposes Change to Fed
eraI Association.

Reorganization of the closed Fidelity
Building and Loan Association into g
Federal savings and loan association
was proposed to the Treasury De-
partment today by the Federal Home
Loan Bank Board.
The proposal, in the form Of a
comprehensive report, was presented
in the Office of the controller of the
currency this morning, but no details
of its contents were divulged
The action today follows an ex-
animation Of the Fidelity by the
Federal Home Loan Bank Board ex-
perts which was officially announced
first by Controller of the Currency
j. F. T. O'Connor January z.
Controller O'Connor was out of the
city, so the report was taken in charge
by his aides.
No comment was forthcoming from
the controllers Office concerning the
proposal itself, beyond the fact that
it had been received and taken into
consideration.
Controller lndicateS course.
An indication of what shareholders
might expect in a reorganization was
forecast, however, by the controller
himself in his statement Of January.
such a reorganization" O'Connor
explained at that time, would con-
template the creation of an insured
Federal savings and loan association
through which, if consummated, there
would be made available to the share
holders of Fidelity their respective
proportionate share of the sound value
of the assets of the association"
A considerable period Of time Is ex-
pected by those familiar with the situ-
alton to be used by the controllers
Office in going over the official report.
While it is known that the Bank
Board examiner co-operated with the
receiver, who is under direction of the
controller, the entire plan as evolved
by the board for reorganization has q
new problem for the controllers office.
Never before in its history has the
Office of the controller been called
upon to reorganize a building and loan
association. 1t has handled numerous
closed banks.
Could Have Money or Stock.
If the Fidelity should be reorganized
as a Federal savings and loan asso-
ciation, a new institution would be
set up which would offer the members
the opportunity of taking out their
money or reinvesting it in the insured
institution. Each depositor would re-
ceive his proportionate amount, what
ever that proportion was.
In this connection an interesting
development in the local courts has
set up the principle that offsets can
not be allowed 100 per cent, but must
take whatever cut Is made for all
members alike. In other words, under
court decision, those who are in the
double position of both owing the
association and having the association
owe them, will get only their propor-
tionate share and cannot have the
debt offset against the credit 100 per
cent.
The sound assets of the Fidelity, as
predicted by the controller himself in
his earlier statement, would be used
as a basis for the new organization.
The examination by the bank board,
the controller explained, consisted
primarily of a classification of the
assets of Fidelity in order to deter
mine which of such assets would be
acceptable to the bank board as assets
of a new insured Federal savings and
loan association, and whether a sufi-
cient amount of acceptable assets are
available to justify the reorganization
Of the Fidelity"
The proposal now rests with the
/Con UTnTT Yrv Do0a AoN