Annette Hoffman, age 13, of Dayton, Ohio, for her question:
WHEN DID THE FIRST SAVINGS AND LOAN BANK OPEN?
Savings and loan associations are banking institutions that are devoted to .the thrift and homeownership needs of the American public. They represent the second largest group of financial institutions in the United States. Only commercial banks account for more savings deposits and assets.
The American savings and loan business began in Frankfort, Pa., in 1811 with the creation of the Oxford Provident Building Assn., which was patterned after British building societies of the time.
The savings and loan business in the U.S. was founded because commercial banks dealt primarily with the nation's commercial and industrial needs. The Oxford Provident was crested so that ordinary individuals would have a place to invest their money and borrow funds to buy a home.
In the early days, most savings associations were terminating institutions, meaning that their sole purpose was to enable members to purchase homes. Each member would deposit a monthly payment and the institutions were set up so that these payments would allow one member per month to buy a home.
The member who was granted a mortgage then paid monthly installments until the debt was satisfied. The terminating associations stayed in business until all members had received funds to purchase homes of their own, and then they were usually dissolved.
The success of Oxford Provident and other similar institutions led to the development of the serial association. Members were admitted on a quarterly or annual basis. Unlike the terminating institutions, these institutions had a continuing life. Many accepted members who wanted to save, but not necessarily to buy a home. Borrowers were charged interest on their loans while savers were repaid their contributions plus earnings of interest.
In 1933 the United States Congress crested the Federal Home Loan Bank Board to supervise federally chartered savings and loan associations. The Bank Board also operates the Federal Savings and Loan Insurance Corp., which insures savers' deposits.
The real growth of the savings and loan business came after World War II, tracking the boom in housing. Before the 1940s, fewer than half of all Americans owned their homes. Today, nearly two out of every three families own their dwellings.
In the mid 1980s there were about 3,500 federally chartered or state chartered savings and loan associations, of which some 3,000 were insured. The total number of associations was 38 percent less than in 1970, however, reflecting a trend toward the consolidation of smaller institutions into larger and more efficient operating unit.
Also, financial difficulties experienced by associations in several states in the mid 1980s stimulated efforts to make federal deposit insurance mandatory.