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INDEPENDENT OFFICES APPROPRIATIONS FOR 1965

FRIDAY, APRIL 17, 1964

U.S. SENATE,
SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS,

Washington, D.C. The subcommittee met at 8:30 a.m., pursuant to recess in room S-128, U.S. Capitol Building, Hon. Warren G. Magnuson (chairman) presiding.

Present: Senators Magnuson, Allott, and Young.

FEDERAL HOME LOAN BANK BOARD

STATEMENT OF JOSEPH P. McMURRAY, CHAIRMAN OF THE

BOARD; ACCOMPANIED BY JOHN DE LAITTRE, MEMBER OF THE BOARD; KENNETH E. SCOTT, GENERAL COUNSEL; NATHANIEL L. ARMISTEAD, DIRECTOR, OFFICE OF EXAMINATIONS AND SUPERVISION; LAWRENCE M. WALTERS, DIRECTOR, DIVISION OF EXAMINATIONS; ALBERT V. AMMANN, ASSOCIATE DIRECTOR, DIVISION OF SUPERVISION; AND THADDEUS CORCORAN, BUDGET OFFICER

APPROPRIATIONS, FISCAL YEAR 1964, ESTIMATES, FISCAL YEAR 1965 Senator MAGNUSON. All right, the committee will come to order.

We have this morning the Federal Home Loan Bank Board, and the administrative expenses in 1964 were $2,430,000 and the budget for 1965 is $3,890,000 or a plus of $1,460,000 with a revised estimate of minus $65,000, and then the nonadministrative expenses were $12.8 million, and the estimates for 1965, fiscal 1965 were $13,443,000, which is a plus of $643,000 with an adjusted revised estimate of minus $35,000. A comparative summary of their 1963, 1964, and 1965 budgets will be placed in the record at this point.

The Chairman, Mr. McMurray, is here, for the record, and his associates, and they have a short statement. We will be glad to hear you, from you at this time.

31-706-64-pt. 1—-13

Federal Home Loan Bank Board Revolving Fund
A. STATEMENT OF SOURCES AND APPLICATION OF FUNDS

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Federal Home Loan Bank Board Revolving Fund—Continued

B. STATEMENT OF INCOME AND EXPENSE

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Income:

Examining fees and charges...
Assessements for services and facilities:

Federal Savings and Loan Insurance Corporation...--
Federal home loan banks

Office of Examinations and Supervision..
Reimbursements from other accounts..
Conservation, supervisory representative in charge, and

other income Miscellaneous

Total income
Expense:
Administrative expense:

Reimbursable expense.
Nonreimbursable expense excluding depreciation..

Subtotal..
Depreciation on administrative facilities..

Total administrative expense.--
Cost of examining savings and loan associations:

Reimbursable expense. -
Nonreimbursable expense excluding depreciation...

Subtotal.
Depreciation on nonadministrative facilities

Cost of examining savings and loan associations.....
Cost of supervising savings and loan associations:

Reimbursable expense..
Nonreimbursable expense excluding depreciation..

Subtotal...
Depreciation on nonadministrative facilities

Cost of supervising savings and loan associations... Conservatorship, supervisory representative in charge, and other expense.

Total expense..
Assessments and fees in excess of expense..

ANALYSIS OF DEFERRED AND UNDISTRIBUTED CREDITS
Deferred and undistributed credits, beginning of year.
Credit allowed Federal home loan banks on prior years'
assessments. ---

Deferred and undistributed credits, end of year..

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FEDERAL Home LoAN BANK BoARD
Program highlights

[Dollars in millions]

Federal Home Loan Bank System 1963 actual 1964 estimate 1965 estimate Members (June 30): Number 4,971 5,000 5,225 Assets $100,800 $117,700 $133,600 Savings (shares)- --- $86,800 $101,300 $114,900 Mortgage loans- - $84,700 $98,700 $112,100 Insured -- 4,386 4, 512 4,645 Regional banks: Advances outstandin $3,270 $4,500 $4,400

OUTLINE OF FUNCTIONS

The three agencies under the Federal Home Loan Bank Board—the Federal Home Loan Bank System, the System of Federal Savings and Loan Associations, and the Federal Savings and Loan Insurance Corporation—were created to serve the American public through the media of savings and loan associations, cooperative banks, and other financial institutions engaged in the encouragement of thrift and economical homeownership. They were established by Congress in the 1932–34 depression period, when these savings institutions—basic components of the Nation's financial structure—needed additional supports sponsored by the Federal Government on a permanent basis. For the protection of the homeseeker and the small saver and investor, the Federal Home Loan Bank Board carries out three primary obligations, through the following activities which it directs or supervises. Federal Home Loan Bank System.—The Federal Home Loan Bank System, through its 11 regional Federal home loan banks, strategically located throughout the country, provides a permanent system of reserve banks 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, 1963, marked the 31st 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, cooperative banks, and homestead associations. Included also in the membership of the Federal Home Loan Bank System are 37 mutual savings banks. The importance of the Federal Home Loan Bank System is indicated by the fact that at June 30, 1963, the combined resources of its member institutions totaled almost $101 billion (the December 31, 1963, figure is estimated at over $110 billion). In fiscal year 1963 its savings and loan members made home loans amounting to over $22.2 billion for calendar year 1963 the figure is estimated at over $24.9 billion. Located in most cities, suburban areas, and towns throughout the United States, the System's member institutions serve nearly 44 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 132-year 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 through the Federal Savings and Loan Insurance Corporation. At June 30, 1963 there were 1,957 privately owned, local, mutual institutions operating under charter, examination, and supervision by the Federal Home Loan Bank Board. Included among these are institutions newly organized by local citizens since 1933 and those already established which elected to transfer from State to Federal charter. Their combined resources at June 30, 1963 were $52.9 billion. Federal savings and loan associations are in operation in every State, in the District of Columbia, and Puerto Rico.

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