Evening star., 1939-10-28
Investors Favoring
DEPOSIT Insurance
Institutions, Is Claim
Home Loan Bank Boord
Member Warns Others
They Ought to Join Up

Thrift and home financing in
stitutions now uninsured should
watch the barometer of public opin-
ion and insure the accounts of their
investors, if they want to retain
public support, DR.. William H. Hus-
band, member of the Federal Home
Loan Bank Board, declared today.
The most sensitive barometer in
the savings and loan business, Dr.
Husband said, is the trend of private
investment. From December 81,
1887, to December 81, 1898, some
1883 insured associations through
out the country showed an average
increase in private investments Of
l6 per cent. During the same period,
reports of 90l non-insureo members
of the Federal Home Loan Bank
System showed a gain Of only 05
per cent; the remaining non-insured
associations, as group, showed
steady decline in private invest
ments.
"Other statistics on lending &C
tivity. growth of assets, and
reserves could also be presented"
said DR.. Husband. but of deeper
significance are the fundamental
advantages made available through
insurance of accounts. They may
be treated under the following cate
gories:
"1-As buffer against emergency
conditions,
2-As a form of progressive and
sound public policy,
3-As an aid to operating manage
ment and
4-As an aid to the growth of the
savings and loan industry"
Expedient Becomes Permanent.
The insurance of deposits and ac-
counts was prompted by an emer-
gency, DR.. Husband asserted, but it
proved master stroke" The
Federal Deposit Insurance Corp.
was established in 1888 to in
sure deposits in banks up to $1,000
for each account, and a year later
the Federal Savings and Loan In
surance Corp. provided the same
facilities for institutions in the
savings and loan field Their
establishment was an expediency,
DR.. Husband declared. long since
justified as a permanent national
policy.
mo one can predict with accuracy
what long war in Europe will
mean in the way of repercussions
on financial institutions" said Dr.
Husband, but we do know that in
contrast to the last war We now
have fully established facilities
which should serve to cushion our
financial structure against severe
strain and pressure In the savings
and loan field membership in the
Federal Home Loan Bank System
should be of particular value in
helping to meet possible Withdraw
ais of funds or other urgent de-
mands. However, this is form of
secondary relief and affords a
means of defense after the Difficult
ties have presented themselves.
Insurance of accounts compile
ments Federal Home Loan Bank
membership by serving to strength
en- the primary or first lines of de-
fense. The public knows that an
insured institution is safeguarded
by an agency of the Federal Gov
ernment. For this reason there is
less danger of rupturing public con-
fldence.
Illustration Provided.
Let me cite a specific case. Only
recently an insured State associa-
ton was held by State authorities
to be in default and a stop order
was issued forbidding the associa-
ton to accept new funds. In a
large advertisement, notice was
given to shareholders to verify the
amount of their shareholdings. Even
under these extreme conditions only
a few withdrawal notices were ac-
tually filed because the investors
knew they were protected"
To those who ask the hard boiled
question, Does it pay?'" DR.. Hus-
band replies by pointing to the
competition thrift and home -financ-