Evening star. [volume] (Washington, D.C.) 1854-1972, 1962-03-18
REGULATIONS 80 YEARS OLD
Virqinio Strict With SCI

Maryland experienced con-
siderable difficulty with asso-
Citations advertising that their
accounts were insured" or
"federally-inSured."
The sec spokesman said Vir-
gina law prohibits an asSocia-
ton from advertising its &C
counts are insured" unless it
actually carries such surety
and, because there is no State
inSuring agency, this means it
is covered by FSLIC.
II know Of none that is IN
sured privately" the sec
spokesman said, although this
would not be impossible if the
sec, after investigation, ap-
proved the insurer"
Unlike Maryland, before the
new saving and loan law took
effect last June, Virginia does
not permit associations to in
vest in second mortgages or in
property on which money is
owed some one else.
The exceptions to this rule"
the sec official said, ARE that
a limited amount of the total
assets may be placed in second
mortgages when the same asso-
citation also holds the first mort
gage on the same property or
when the second mortgage loan
is fully secured and pledged by
the borrowers shares in the
association"
Investments Limited
Otherwise, investments are
limited to first mortgages, bond
and other obligations guar
anteed by Federal, State or To-
cal governments and up to Is
per cent of an associations as
sets in home maintenance re-
pair and improvements, but not
in excess Of $500 and repay
able within five years.
Although Virginia law always
has required sec approval Of a
charter before an association
could do business, the statutes
were frightened considerably at
the 1860 session of the General
Assembly.
This grew out of a legislative
study initiated two years earlier
as result of one of the ma
TONS largest embellishments
from a savings and loan asso-
citation in Norfolk in 1857. Miss
Minnie Mangum, who came to
be known as Miss Minnie"
now is serving a term at the
State farm for women at
Goochland for embezzling about
$2.7 million over a period of
years.
After a charter is granted,
the sec is required under the
frightened laws to make an in
SpeCtion of the associations
records at least once each year.
Surprise Inspections
This isn't done at regular
intervals" Mr.. Sewers said.
"They inspect at varying in
tervals so that the officers and
employees will have no advance
knowledge of when it is to be
DONE"
The 20 federally-chartered
associations are examined by
the Federal Home Loan Bank
Board. The Is tate-chartered
associations carrying FSLIC
insurance are subject to double
inspections both by the Fed
eral agency and the sec.
The remaining Is uninsured
state associations also are in
spected annually by the sec.
Prior to $780," Mr.. Sewers
said, "the uninsured associa-
lions were permitted to file
annual statements with the
commission"
The law was amended, how
ever, after the sec investi-
gated a complaint in the north
ern area Of the State. This led
to the disclosure that an I'M
insured association had started
doing business with the general
public. but had failed to indi-
cate this in its annual report.
Before 1860, five persons
could form a savings and loan
association by investing only
500 each in it's shares. This
now has been raised to a mini
mum requirement of $4,000
and members must promise in
writing not to withdraw any
shares within a year. If Or
ganized as stock company,
the association must have
$4,000 paid in cash into it's
treasury for shares of stock.
Each new application is