Word: loan
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Dates: during 1960-1969
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...Escalator. Because other loan rates are scaled upward from the prime rate, the increase means that the already high cost of borrowing money for everything from autos to homes, from financing business inventories to major industrial expansion will also escalate to new altitudes. While these effects will ripple through the economy slowly-depressing housing starts further and perhaps hurting auto and appliance sales-Wall Street reacted swiftly. Already jittery over Viet Nam, the U.S. balance-of-payments deficit and the cloudy prospects of higher taxes, the stock market staggered through its worst week in seven. The Dow-Jones industrial average...
That disruption showed clearly last week in the increasingly wild rate war for savings deposits between commercial banks, savings banks, and savings and loan associations. In New York City, about a quarter of the mutual savings banks boosted their rates from 4½% to 5%. Even so, many reported "heavy" withdrawals by savers attracted to 5¼% "certificates of deposit-money left to earn interest for a stated time-at commercial banks. In California, at least 40 associations followed the controversial lead of Los Angeles-based Home Savings & Loan in raising rates on passbook accounts from...
Chairman John Home of the Federal Home Loan Bank Board seemed to feel the same way. Calling the Reserve Board's action "minimal," he demanded among other things that action be taken to "reduce the widespread availability of certificates of deposit." With that, the HLBB handed S & Ls more power to fight back. Abandoning its only restraining weapon over S & L interest rates, the board suspended a policy cutting off S & Ls paying more than 4½% in most states (and 5% in California and Nevada) on passbook accounts from borrowing privileges at the twelve Federal Home Loan Banks...
...hundred dollars to maintain have not made up for the large number of small individual accounts. Therefore, the bank must rely on building up a large enough volume of small accounts to make handling them profitable. In the bank's present situation, where the costs of funds available to loan out are high, it is a normal banking reaction to minimize loan risk by spreading loans to other areas than Harlem, and to other borrowers than Negroes...
Until the bank finds a more solid financial backing than it now has, it will be preoccupied with the simple question of survival. Although in the long run, such helpful steps as liberalization of mortgage credit or the establishment of an educational loan fund might be possible, Freedom National is behaving now very much like any other bank. Rather than admit this fact, Hudgins continues to talk race goals--partly because he really believes in them and partly because he thinks favorable publicity will attract the volume of small accounts the bank needs to survive...