Evening star., 1939-03-25
Statistics Attest
Safety Through
Savings Insurance
Corporations Manager
Cites Authority to
Protect Investor

The growing financial strength of
the Federal Savings e. Loan In
surance Corp, which now protects
the savings of investors in 2,115
thrift and home-financing institu-
tions, was emphasized today by
Nugent Fallon. its general manager,
showing that the corporations losses
during its five years of existence
have totaled less than 2 per cent
OF its premium income.
The corporation thus far has been
called upon to make good in but
seven cases, with contributions to
protect investors totaling but $140,-
600, said Mr. Fallon. The total
assets of the corporation are $117,-
100000.
Undoubtedly there are more
losses ahead, but the Federal Saw
ings & Loan Insurance Corp. Is
completely liquid financially" Mr..
Fallon said. 1T has a Well-selected
well-trained organization and profits
from the continued assistance of the
agencies of the Federal Home Loan
Bank Board throughout the country
and the cooperation of the compe-
tent supervisory forces of the various
States and of the Federal Govern
ment.
by promptly and effectively
handling each difficulty as it arises
the corporation already has DEM
onstrated it is a real aid to the
whole financial structure of the
country"
Growth Attests Popularity.
The popularity of the Federal
insurance program among savings
and loan associations is shown by
Its rapid growth, Mr. Fallon pointed
out. Although not established by
Congress until 1884, it now insures
the savings of 100000 investors in
2,ll5 institutions, operating under
both Federal and State charter.
Insured associations include 1866
"Federals," with assets of approxi-
mately $3.50 100000, and $50 State
chartered associations, with re-
sources of about $685. 100000.
The potential liability of the cor
poration. Mr.. Fallon said, is esti-
mated at ST ,525 100000. Through its
capital and reserves it has 81 in
cash or Government securities for
each $l3 of insured risk. It's present
annual income approaches Sc 900 900,
more than 1920 of which is cur
rently being placed in the reserve
fund
The insurance corporation has
wide authority and ample funds to
prevent the default of an insured
institution, or to restore the capital
of such an institution in default by
cash loan, a contribution, or a
purchase of assets" Mr.. Fallon said,
May Offer New Account.
IF it becomes inadvisable or i'm
possible to follow this procedure
in the case of an insured associa-
ton in default, the corporation must
make available to each investor in
the association a new account in
an insured institution not in de-
fault, equal to his insured invest
ment In the defaulting association" "
In practice, Mr.. Fallon pointed
out, the substitution of a new ac-
count in a financially sound insured
institution for one in a defaulted
association is tantamount to cash
settlement, as the investors funds
In the second association will be
available to him If he wishes to
withdraw them.
AS an alternative, Mr.. Fallon said,
the investor may elect to receive 10
per cent Of his account in cash at
once, As per cent in cash within
one year and As per cent in cash
within three years. For the interim
the shareholder is given negotiable
debentures of the Federal Savings
& Loan Insurance Corp.
1T is apparent" Mr.. Fallon said
"that few investors will choose the
cash and debenture settlement when
they may accept new insured ac-
counts with the attendant safety
and withdrawal and dividend ad-
Vantapes."