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The Federal Home Loan Bank Board supervises and regulates the Federal Home Loan Bank System, the System of Federal Savings and Loan Associations, and the Federal Savings and Loan Insurance Corporation, created to serve the American public through the media of savings and loan associations, co-operative banks, and other financial institutions engaged in the encouragement of thrift and economical home ownership.
These three components are described as follows:
Federal Home Loan Bank System.—The Federal Home Loan Bank System, through its 12 regional Federal Home Loan Banks, strategically located throughout the country, provides a permanent credit reserve for eligible thrift institutions of the savings and loan type. The Federal Home Loan Banks advance funds to these member institutions to meet withdrawal demands as well as seasonal and expansionary needs for additional home-mortgage funds. Through the use of interbank deposits, the System maintains an adequate flow of home loan funds into every locality. October 15, 1965, marked the 33d anniversary of the opening of the regional Banks.
The regional Banks, the stock of which is owned by their member institutions do not deal directly with individuals. The great majority of the members are savings and loan associations, also known sectionally as building and loan associations, co-operative banks, and homestead associations. Included also in the membership of the Federal Home Loan Bank System are 47 mutual savings banks.
The importance of the Federal Home Loan Bank System is indicated by the fact that at June 30, 1965, the combined resources of its member institutions totaled over $128 billion (the December 31, 1965 figure is estimated at approximately $134 billion). In fiscal year 1965 its savings and loan members made home loans amounting to $23.5 billion.
Located in most cities, suburban areas, and towns throughout the United States, the System's member institutions serve over 49 million people including savers, investors, and home-loan borrowers.
Federal savings and loan associations.-The creation of Federal associations was authorized by Congress in 1933 to provide additional local thrift institutions for people to place their savings and/or obtain loans to finance their homes. In their charter and form of organization, Federal associations embody the most modern practices developed by savings and home-financing institutions during their 134year history in this country.
All Federal savings and loan associations are required to be members of the Federal Home Loan Bank System and to carry insurance of their savings or share accounts with the Federal Savings and Loan Insurance Corporation.
At June 30, 1965, there were 1,993 privately owned, local, mutual institutions operating under charter, examination, and supervision by the Federal Home Loan Bank Board. Their combined resources at June 30, 1965, were $64.3 billion. Federal savings and loan associations are in operation in every State, in the District of Columbia, and in Puerto Rico.
Federal Savings and Loan Insurance Corporation.—Created in 1934, the Federal Savings and Loan Insurance Corporation insures, up to $10,000 each, savings or share accounts in approved savings and loan associations and similar institutions. Insurance of savings has been an important factor in stimulating the flow of savings into thrift and home-financing institutions. These savings are used largely for the financing of homes. The number of insured institutions at June 30, 1965, was 4,483; their combined assets were $119.7 billion.
All insured institutions are members of the Federal Home Loan Bank System.
INTRODUCTION The Federal Home Loan Bank Board is primarily a regulatory and supervisory agency in the savings and home-financing field. It also issues charters for Federal savings and loan associations, insures savings or share accounts in Federal savings and loan associations and in approved State-chartered savings and loan or building and loan associations and associations of the savings and loan type.
The 1967 budget estimates of the Federal Home Loan Bank Board, the Office of Examinations and Supervision, and the Federal Savings and Loan Insurance Corporation are based on the need for maintaining all operations in a current status giving full consideration to the complex problems arising from changing economic conditions and the increased competition for savings among financial institutions.
The number, size, and assets of member savings and loan institutions supervised by the Board continued their expansion in fiscal year 1965; however, while there was an expansion in loans made and new savings, the rate of expansion was slightly lower than amounts recorded in fiscal year 1964. The following table reflects a comparison of these details:
(Dollars in billions)
This expansion continued notwithstanding the increased competition for savings from commercial banks, insurance companies and other financial institutions. The number of loans made by member institutions in fiscal year 1965 represented over 43% of the Nation's home financing.
The budget programs of the Federal Home Loan Bank Board including the Federal Savings and Loan Insurance Corporation are presented as business-type budgets.
The budget estimates for 1967, the revised estimates for the current fiscal year, and actual expenses for fiscal 1965 are summarized in the following two tables:
The 1967 estimates of administrative expenses of the Board and Staff Offices, the revised estimates for the current fiscal year, and actual expenses for 1965 are summarized in the following table:
As shown, the Federal Home Loan Bank Board requests authority to expend $4,410,000 for administrative expenses of the Board and its Staff Offices in fiscal 1967.
The estimate reflects an increase in personnel of 23 positions or 29.0 man-years over the current fiscal year, and an increase in funds of $450,000 over the estimated expenses for the current fiscal year.
Of the increase in funds, $360,000 is in Personnel Compensation, $29,500 in Personnel Benefits, $40,500 in Contractual Services and Supplies, and $34,000 in Acquisition of Capital Assets. These increnses, however, are offset by $14,000 additional reimbursements estimated to be collected in fiscal year 1967.
Personal Services and Benefits.—The need for the 23 new positions requested is set out in the departmental justifications of the following offices and divisions: Office of Congressional Liaison (2); Office of Research and Home Finance (5); Office of Public Affairs (1); Office of the General Counsel (5); Office of the Director of Audits (1); Office of the Secretary (1); Division of Personnel (1); Division of Federal Home Loan Bank Operations (1); Organization and Methods Division (1); Office of Applications (3), and Administrative Services Division (2).
All Other Expenses.—The net increase of $74,500 in all other expenses is in the items of Travel and Transportation of Persons $17,500; Rent, Communications, and Utilities $52,000; Printing and Reproduction $22,000; Supplies and Materials $7,000, and Equipment $34,000; there is a net decrease in Other Services of $58,000. Review and analyses of these items together with justification of the need for the increases will be found beginning on page 99.
Reimbursements.-A table showing reimbursements to the Board for services rendered will be found beginning on page 110. Sources of funds
The funds used to pay the administrative expenses of the Board are derived from the following sources:
Distribution of the 1967 expenses among the 3 sources shown is based upon the following formula: The Insurance Corporation will pay 25% of the administrative expenses of the Board as a direct charge for services rendered by the Board Staff Offices and Divisions in its behalf. The remainder of the administrative expenses will be distributed by assessment as follows: 10% to the Office of Examinations and Supervision, 42% to the Insurance Corporation, and 48% to the Banks. The percentage for the Office of Examinations and Supervision is based on past experience. The respective percentages for the Insurance Corporation and the Banks are based on the ratio of the membership of each one to the combined membership of the Insurance Corporation and the Bank System at June 30, 1965.
OFFICE OF EXAMINATIONS AND SUPERVISION
The Office of Examinations and Supervision under the general direction of the Director of the Office conducts regular periodic and special supervisory examinations of all Federal savings and loan associations, of insured State-chartered savings and loan associations, other institutions of the savings and loan type insured by the Federal Savings and Loan Insurance Corporation, and of noninsured member institutions of the Federal Home Loan Bank System not subject to State supervision. The Office also examines and analyzes the financial condition of institutions which apply for membership in the System, for insurance of accounts, or for conversion from a State to a Federal charter. The institutions examined bear the costs of examinations, and the fees charged therefor are calculated to defray all of the operating expenses of the examination function.
The Office of Examinations and Supervision under the general direction of the Director of the Office also is responsible for the supervision of institutions insured by the Federal Savings and Loan Insurance Corporation. The purpose of such supervision is to prevent the development and/or continuance of unsafe and unsound financial practices in these institutions and the correction of such practices where found. În carrying out the supervisory function, the Office reviews and analyzes the examination reports forwarded by the Chief Examiners of the respective District offices.