First Loan & Repealer

On July 22 President Hoover signed a bill near & dear to his heart, creating a Federal Home Loan Bank system. Under this act building & loan associations, co-operative banks, savings banks and insurance companies were to subscribe to the stock of twelve new regional banks at which they could discount their first mortgages on homes worth $20.000 or less. The R. F. C. was authorized to invest, if necessary, up to $125,000,000 in the system. The Hoover idea was that the Government should help mortgage institutions which in turn would pass such assistance along to debt-ridden home owners. Republican campaigners quickly spread the false impression that President Hoover and the U. S. Treasury were coming directly to the aid of individual citizens with mortgaged homes. Actual progress of the Home Loan system:

Aug. 6--President Hoover appoints the Federal Home Loan Board, headed by his old friend and 1928 campaigner Franklin William Fort, "lame duck" Representative from New Jersey. Three days after taking office the Board marches to the White House to be photographed with the President. Says he: "Good luck and God bless you!"

Aug. 24--The Board announces plans for twelve regional discount banks, with a total minimum capital of $134,000,000 to unfreeze $20,000,000,000 worth of mortgages. Home owners begin swamping the Board with applications for cash relief. They are told the Board does not make personal loans.

Sept. 8--It is discovered that only eight states have laws permitting their mortgage institutions to become stock members of the Federal system.

Sept. 14--Stock subscription books are opened to raise $134,000,000.

Oct. 15--The books are closed, with disappointing results. The twelve regional banks technically open. Their lobbies are filled with job-seekers and home-owners looking for loans. The loan seekers are advised to go to private mortgage concerns for relief. Chairman Fort optimistically announces that every good mortgage in the U. S. now becomes liquid and that after Nov. 1, all foreclosures should cease.

Oct. 28--Campaigning at Indianapolis President Hoover declares: "I consider the [Home Loan] Act was the greatest act yet undertaken by any government at any time on behalf of the thousands of owners of small homes."

Nov. 28--Subscriptions to the system from eligible members total $9,259,081, with paid-in cash considerably less. To reach the minimum capitalization the R. F. C. must put up its full $125,000,000.

Dec. 6--Chairman Fort announces that five of the twelve regional banks are ready to make loans.

Dec. 16--Chairman Fort announces the first loans by regional banks: at Winston-Salem, $65,000 for remodeling homes; at Newark, N. J. $100,000 to a building & loan association to pass on to homeowners.

Announcement of these initial loans last week, five months after the system was created, did not come in time to halt a concerted Senate drive to wipe the Home Loan Bank Board out of existence. Its record of inaction outraged Senator Borah who week before offered a sweeping repealer. Said he: "The act is proving wholly unsatisfactory. We are going to build up a tremendous institution at very great expense without any real benefit."

New York's Senator Copeland, friendly to the act, arose in its defense but admitted: "I recognize with regret that the law has accomplished very little, if anything. The President made a great mistake in his organization of the board. He made a national banker the chairman [Mr. Fort] . . . who is most widely known as a politician. He [Chairman Fort] spent much of his time, when the Board ought to have been operating, working for the election of his ticket."

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