1932 - GOV (Senate) - Creation of a System of Federal Home Loan Banks [FHLB] - S.2959 - 5 parts - James E. Watson (R-IN)

  • 1932 - GOV (Senate) - Creation of a System of Federal Home Loan Banks [FHLB] - S.2959 - 5 parts - James E. Watson (R-IN)  ---   [BonkNote]
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    • Part 1 - 1932 0114, 16, 19, 20, and 21
      • (p88) - James E. Watson (R-IN) - A man will pay these loans and his life insurance to the exclusion of everything else, will he not?
    • Part 2 - (p214- ) - 1932 0118/29 and 0215/16
    • Part 3 - (p460- ) - 1932 0217/18/23
    • Part 4 - (p682- ) - 1932 0309
    • Part 5 - (p740- ) - 1932 0611/14
    • A Bill To Create Federal Home Loan Banks To Provide For The Supervision Thereof And For Other Purposes
    • Senate - Subcommittee of the Committee on Banking and Currency
  • (p88) - James E. Watson (R-IN) - A man will pay these loans and his life insurance to the exclusion of everything else, will he not?
  • (p162) - Mr. CLARK.  May I also make this suggestion? I do not think this has been made public. During the past four months any institution, banking, building and loan or anything else that had what was considered sound mortgages could get all the money it needed to make it liquid.
    • The life insurance companies bought $80,000,000 of mortgage loans from commercial banks, trust companies, building and loan associations, mortgage companies, aside from their regular business . I personally have inspected.
  • Senator WATSON. Are these mortgage loans of such value that those insurance companies are perfectly safe in the purchases they have made?
  • Mr. CLARK. Yes. My organization took care of two banks in Connecticut that were frozen up. The freezing up is not due to the mortgages. It is due to the lack of foresight. The law says they may loan up to 70 per cent, and if they go up to 70 per cent they are flirting with trouble.
  • Senator WATSON. You say the insurance companies have taken over $80,000,000 of mortgages?
  • Mr. CLARK. Over $80,000,000 of mortgages, yes.
  • Senator WATSON. From banks?
  • Mr. CLARK. Yes.
  • Senator WATSON. And trust companies?
  • Mr. CLARK. And trust companies, building and loan associations, and other institutions.
  • (p419) - Senator WATSON. They are not making any demands on your life insurance company?
  • Mr. GOLD. No. They would like to have money from time to time.
  • Senator WATSON. And you have not got any to let them have?
  • Mr. GOLD. No; policy loans are hitting the life insurance companies pretty hard, and these, with our own loan connections, are taking our available lending funds.
    Senator WATSON. And you have not any money to loan them?
  • Mr. GOLD. No. We are making loans direct to the individual borrowers.
  • (p487) - Mr. McKAY. Well, in the first place, we occupy an office building which cost us practically a million and a third.
  • Senator WATSON. Go right on, Mr. McKay.
  • Mr. McKAY. We occupy an office building which cost us approximately a million and a third, and last September we tried to get a mortgage loan on that building.
    • I might say that at one time we had had a loan of a half million dollars from the Massachusetts Mutual, and we went to them first.
      • They told us their funds were all required to meet policy loans.
    • So we inquired of other insurance companies, and, among them, of the Penn Mutual.
      • Their representative told us that he had had word that all their money available for mortgage loans at that time had been appropriated; there would be a further appropriation for mortgage loans some time in the future, and he would let us know.
      • That was last September, and he has never yet advised me that they were ready to consider any more mortgage loans.
  • (p565) - J. F. BROWNLOW, real estate boards of the State of Tennessee and the State association: I  had one instance that came to my attention just before I left Knoxville, of a very well-known citizen, who stands high in the community.
    • He is not a wealthy man, but has been known there for years and has a splendid reputation.
    • Five years ago he took a $5,500 life insurance company mortgage on his home, which is in a most desirable residential section. He lives in it and keeps it in A No. 1 condition, both inside and out.
    • That was a 5-year loan that had to be amortized at the rate of $200 a year. He has paid every interest and amortization payment right on the dot. It is now paid down to $4,500. It is going to be due the latter part of this month. He does not want to renew for $4,500.
      • He wants to renew for $4,000, and he can by stretching a little renew for $3,500.
        • But they won't renew his loan. He has been all around town trying to get enough money to take it up.
        • Two days before I left he told me that he was offering 9 per cent if he could get anybody to let him have $3,500 or $4,000 on that property. There simply isn't any mortgage money to be had.
  • ...................
  • (p565) - Mr. BROWNLOW. I think it is largely due to the insurance companies demanding the payment of their loans as they fall due.
    • Local money has been exhausted paying off these loans. 
  • (p582) - S. F. Westbrook, Vice President Ætna Life Insurance: The launching of large amounts of Government funds into a situation that normally is taken care of adequately, would cause a future aggravation.
  • Senator James COUZENS (R-MI):You made reference to the amount of money borrowed on insurance policies. Have you any figures on that?
  • Mr. WESTBROOK. Only for my own company.
  • Senator COUZENS. What is that company?
  • Mr. WESTBROOK. The Aetna Life Insurance Co.
  • Senator COUZENS. What has been your experience?
  • Mr. WESTBROOK. During the last year, our policy loans increased by about $13,000,000, growing up from $53,000,000, to about $66,000,000.
  • Senator COUZENS. How many policyholders have you?
  • Mr. WESTBROOK. Approaching 300,000.
  • Senator COUZENS. What percentage of the 300,000 have borrowed on their policies?
  • Mr. WESTBROOK. I cannot answer that question, sir, because I do not know.