Evening star., 1961-01-03
Sdviings-Loan
Laws Sought
ByMary|and


ANNAPOLIS, Jan. 8 (AP).-
The Maryland Legislature,
opening its 90-day session to-
morrow in Annapolis, will be
asked to regulate savings and
loan associations.
| Legislative studies of the last
two years have focused atten-
tion on the fact that savings
and loan firms in Maryland now
may operate without:
1. State regulation, supervi-
sion or taxation.
2. Legal obligation to tell its
depositors periodically what 1t
is doing with their money.
3. Insuring deposits against
theft. embezzlement or frivo-
lous investment by inexperi-
enced or intemperate managers.
Legislation Drafted
| Legislation designed to take
care of these first two points is
still being drafted by a COM
mission appointed by Gov
Tawes and headed by Baltimore
lawyer Richard w. Case.
The third is expected to be
covered by legislation being
prepared by a committee under
Delegate Joseph D. Tydings,
Democrat of Hartford, which is
proposing an overhaul of State
insurance laws in general.
Preliminary attempts to pro-
tect the savings and loan in
vestor have shown an intense
rivalry among the various
types of savings and loan as
sociations.
A recent check of the three
big groups of Maryland asso-
Citations showed this break
down:
Sixty-seven chartered, regu-
lated and insured by the Fed
eral Government.
Seventeen chartered by the
State and insured by a Gov
ernment agency.
Four hundred and seventy
chartered by the State and in
sured by no one.
The first two groups had a
total Of $l4 billion-or about
sixth the total handled by
all firms in the State.
Majority Reputable
The vast majority of the 47O
State chartered, uninsured
firms are ng-established, rep
utable companies. Many of
them are the traditional neigh
borhood associations set up to
help promote home ownership
among ethnic, religious or
business groups.
Noting a marked increase in
the number Of associations
chartered in Maryland recently
by non-State residents, the
Case Commission has pointed
many Of its preliminary pro-
poSals toward disbursement
Of fly-by-nighters.
Some of these proposals
would require that two-thirds
OF an associations directors be
Maryland residents, that incor-
porators be required to put up
enough Of their own money as
capital to get the firm started,
that a State board be set I'D to
regulate the industry and that
firms be made to report regu-
larly on their operations to the
board, as well as to investors.
Opposition Expected
But other proposals, also ad-
Vanced by the commission as
safeguards, have aroused some
opposition from within the in
dustry itself.
One Of these would require
firms to issue only one class oi
stock. Proponents say this
would bar a group of insiders
from controlling preferred
stock and operating the busi-
ness to their benefit and to the
detriment Of those holding
common stock.
But some opponents contend
this would mean the death OF
some reputable multistock com.
panies which have proved
profitable to all stockholders.
Another Of these proposals
would require the firm to in.
vest its funds only in first
mortgages within a 50-mile ra.
dius of its main office.
Proponents say this Is aimed
at preventing unsound invest.
ments. Opponents contend thi.
would put State-regulated asso.
citation at great disadvantage
with federally regulated firms
which can invest outside the
,50-mile radius under certair
conditions.
They say it also would bs
unfair to limit a homeowner ts
dealing with his original mort.
gage holder If he wants to make
a connnd Ynortoo for ha,a,