Word: ls
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...Free Accounts. Introduced in the House by North Carolina Republican James Martin, this measure would allow S and Ls and savings banks to issue one-year savings certificates that would give tax-free interest. This would make them much more attractive to savers in higher income brackets and probably start a new flow of money into the thrifts...
...mortgages from the thrifts and hold them for three years. The Government might purchase about $10 billion of the old loans now earning less than 7½%. Cost to the Government: approximately $2.1 billion. Relieved of the burden of these low-yielding mortgages, the S and Ls could gain a little more profitability and then later buy back the "warehoused" mortgages...
Restrict Money-Market Funds. The S and Ls see the money-market funds as their main competition, since so much cash has gone out of their vaults and into the popular new accounts. The S and Ls, therefore, would like the Federal Reserve to impose the same kind of reserve requirements on money-market funds that it now requires of banks. At present, banks have to set aside a percentage of their total deposits in a reserve account that cannot be lent to customers. If the money-market funds also had to do that, it would increase their costs...
...only fix in place for the S and Ls is an innovative money-market instrument called a repurchase agreement. This allows S and Ls to pay rates comparable to those of money-market funds for small amounts, perhaps as low as $1,000, for up to a maximum of 89 days. That could help the S and Ls' competitiveness in seeking funds, but there is a catch. The accounts, like the money-market funds, would not be insured by the Government...
...variable-rate mortgages, loans whose interest rates are not fixed for 20 or 30 years but go up or down as general interest rates fluctuate, will help the S and Ls match their mortgages to deposits. But such loans are not likely to constitute more than 25% of all thrift portfolios before the middle of the decade. Some S and Ls will not last that long and will feed the merger trend that has begun. But the survivors will be in a better position than ever to be the country's major mortgage lenders, tending once again to their...