The Home Owners' Loan Corporation laid the ground work by arresting the avalanche of foreclosures, the deflation of property values, and the freezing up of large numbers of financial institutions. A realestate market which was already suffering from half a million foreclosures on urban properties in 1931 and 1932 never could have survived the million more foreclosures halted directly by the refinancing operations of the HOLC. Without this refinancing, the stabilization of the real-estate market upon which any sound revival of new construction is predicated would have been delayed by years or indefinitely. Moreover, the long-term amortization loan plan instituted by the HOLC on a nation-wide scale has set an example which today is accepted by most private mortgage-lending institutions as sound and safe.

The existence of a central reserve system for thrift- and homefinancing institutions, and insurance of accounts in a large number of these institutions, has stimulated confidence and helped to direct the flow of money into home finance and new building. The revival of home-mortgage lending is evidenced by the almost $3,500,000,000 of home-mortgage loans made by savings and loan associations in the five-year period from 1934 to 1938, of which approximately $1,000,000,000 was for new construction. The creation of a new progressive type of savings and loan association, chartered and supervised by a Federal instrumentality, has given added strength to the home-financing industry as a whole. Through rules and regulations. laid down by the Federal Home Loan Bank Board, and through supervision and guidance of home-financing institutions, mortgagelending practices and savings plans have been improved, standards of management raised, and costs of home ownership reduced.

The adoption of the direct-reduction loan plan by the institutions under direct supervision of the Federal Home Loan Bank Board has brought millions of savings to home owners. Liberal loan limits and longer amortization periods permitted under Federal law have made home ownership available to families of moderate means. At the same time, the gradual transformation of large portions of the shortterm mortgage indebtedness into long-term amortized loans has reduced unnecessary hazards to borrowers and lenders as well. By all these legislative and administrative measures, thrift and home ownership have been placed on a broader and more secure basis, and a greater degree of uniformity has been injected into a sector of our financial system once characterized by a confusing variety of plans of operations and by lack of national coordination.

IMPORTANCE OF COORDINATION

By concentrating responsibility for the supervision of the Federal Home Loan Bank System and the Federal savings and loan associations, as well as the direction of the operations of the Federal Savings and Loan Insurance Corporation and the Home Owners' Loan Corporation in one governing unit, Congress combined major elements of urban home mortgage finance in the Federal Home Loan Bank Board. Through this provision there was assured a uniformity of policy and direction which otherwise would not have been possible. Coordination under one management has also permitted the utilization of the experience gained in one agency under the Board for the benefit of the others. As Federal activity in the field of homemortgage finance is of such recent origin, this coordination has greatly facilitated the orderly development of sound standards and the gradual training of a staff of public servants chosen to specialize in this important field.

Finally, the concentration of management under one Board has resulted in substantial economies. Not only are the administrative expenses of the Board, with the exception of those of the Examining Division, absorbed by the several agencies, but-as will be seen from the Organization Chart facing page 1-ten general service units are at the disposal of all agencies under the Board, with the result that overhead costs as a whole are considerably lower than if each agency had to maintain such service divisions of its own. These divisions include the Legal Department, the Examining Division, the Division of Research and Statistics, the Review Committee, the Public Relations Department, the Personnel Department, the Personnel Committee, and the offices of the Secretary, the Financial Adviser, and the Budget Officer.

To a large extent, a similar system of coordination is in effect in the regional organization of the activities under the Board's jurisdiction. While the primary function of the Federal Home Loan Banks is that of credit reserve institutions, the officers of the Banks act as agents for the Board in the supervision of Federal savings and loan associations and State-chartered insured savings and loan associations. They also act in an advisory capacity with respect to operating problems of all member institutions in their Districts; handle applications for membership in the Federal Home Loan Bank System, for insurance of accounts, and for the issuance of Federal charters; and receive and make recommendations on requests for investments by the Home Owners' Loan Corporation in member institutions. This procedure reduces the volume of reports, examinations, and other work, not only

for the agencies under the Board but also for the home-financing institutions themselves. It has helped to keep costs at a minimum and to render the Federal Home Loan Banks a source of invaluable information on home-financing conditions in their Districts.

SUPERVISION AND EXAMINATION

Coordination is of particular value in the field of supervision. The concentration of Federal supervision over home-financing institutions in the Federal Home Loan Bank Board has permitted a great degree of simplicity and uniformity.

As already indicated, the Examining Division of the Federal Home Loan Bank Board serves all agencies under the Board. It conducts periodic and special supervisory examinations of Federal savings and loan associations, of State-chartered savings and loan associations which are insured by the Federal Savings and Loan Insurance Corporation, and of such noninsured member institutions of the Federal Home Loan Bank System as are not subject to State supervision. It also analyzes the financial condition of institutions which apply for membership in the Federal Home Loan Bank System, for insurance of accounts, for conversion from State to Federal charter, or for investments by the Home Owners' Loan Corporation. This centralization of examining functions results in many advantages. Federal savings and loan associations are subjected to examination by only one agency. In the case of State-chartered savings and loan associations insured by the Federal Savings and Loan Insurance Corporation, agreements have been reached with 33 States providing for joint examinations in order that overlapping of Federal and State examination may be reduced. If insured State-chartered savings and loan associations apply for conversion to Federal charter or for investments by the Home Owners' Loan Corporation, the data collected by the Board's Examining Division may be used in the consideration of such request. Uniform standards and procedures are being applied in all examinations and analyses of reports.

Supervision is one of the most important functions of the Federal Home Loan Bank Board. On June 30, 1939, there were 2,214 thriftand home-financing institutions with total assets of approximately $2,400,000,000 under the direct supervision of the Board, including all Federal- and State-chartered insured savings and loan associations, and member associations of the Federal Home Loan Bank System that are not supervised by State authorities. In addition, the Board is charged with the semi-annual examination of the twelve Federal Home Loan Banks.

Thorough and efficient supervision is not only a matter of sound business practice, but a means of safeguarding the savings of more than four million individual investors in the institutions supervised by the Board. It is also instrumental in protecting the large amount of funds invested in these institutions and related Federal agencies by the United States Treasury and the Home Owners' Loan Corporation. All together, investments of the United States Treasury and the Home Owners' Loan Corporation in the capital stock of the Federal Home Loan Banks and the Federal Savings and Loan Insurance Corporation, and in shares of member institutions of the Bank System are close to $600,000,000. The responsibility for such supervision as may be necessary to protect the Government interests rests upon the Federal Home Loan Bank Board.

The following table contains a summary of the examinations and analyses conducted by the Examining Division of the Federal Home Loan Bank Board during the fiscal year 1939:

Number

Supervisory examinations..

Supervisory examinations and audits..

Miscellaneous examinations____.

Examinations and analyses of applications for membership, insurance, conversion, and HOLC investments.

Other services 1.

Total.

399

1, 443

261

753

259

3, 115

1 Examinations on occasion of mergers; purchase, sale, transfer, or segregation of assets; services to Federal Home Loan Banks and Federal Savings and Loan Insurance Corporation; and other services.

During the fiscal year 1939, examination costs to the institutions supervised by the Federal Home Loan Bank Board were materially reduced. A revised, simplified examination report form, which was developed in conferences by the National Association of State Building and Loan Supervisors, the United States Building and Loan League, and representatives of the Federal Home Loan Bank Board, was adopted in October 1938. Furthermore, the basic rate of per diem charges was decreased by 10 percent, effective January 2, 1939, and charges for assistant examiners were computed at lower per diem rates, effective March 1, 1939.

OPERATION ON A SELF-SUPPORTING BASIS

Although the Federal Home Loan Bank Board and its agencies are entirely self-supporting, they operate within budgets approved by Congress. The Board derives its income from assessments upon the twelve Federal Home Loan Banks, from charges made against the Home Owners' Loan Corporation and the Federal Savings and Loan

Insurance Corporation for services rendered by the Board, and from fees received for the examination of home-financing institutions. The greater portion of the Board's operating budget represents expenses of the Examining Division, all of which are reimbursed by the institutions examined.

The Federal Home Loan Banks obtain their income from interest on advances and investments, and the Federal Savings and Loan Insurance Corporation from insurance premiums and interest earned on investments. The Home Owners' Loan Corporation has also been able to operate within the revenue which it collects, although it has sustained some inevitable losses in the liquidation of its emergency loans.

At the end of the fiscal year 1939, the personnel of the Federal Home Loan Bank Board totaled 347. Exhibit 1 presents a summary of personnel by departments, as of June 30, 1938, and June 30, 1939. A statement of receipts and disbursements of the Federal Home Loan Bank Board for each of the fiscal years 1938 and 1939 is given in Exhibit 2.