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NEWS RELEASE FEDERAL DEPOSIT INSURANCE CORPORATION WASHINGTON, D. C. 20429 Telephone: 393-8400 Br. 221 FOR RELEASE AFTER 11:30 A M , , MONDAY, MAY 17, 1965 "OUR NUMBER ONE BUSINESS" — A CHALLENGE AND AN OPPORTUNITY FOR THE MUTUAL SAVINGS BANKERS By K. A. RANDALL, CHAIRMAN FEDERAL DEPOSIT INSURANCE CORPORATION W ashington, D. C. b e fo re 1+5TH ANNUAL CONFERENCE o f th e NATIONAL ASSOCIATION OF MUTUAL SAVINGS BANKS a t th e W ashington H ilto n H o te l W ashington, D.C. 11:30 A. 4. Monday, May 17, 19&5 "OUR NUMBER ONE BUSINESS" - - A CHALLENGE AND AN OPPORTUNITY FOR THE MUTUAL SAVINGS BANKERS As you know, I am h e re s u b s t i t u t i n g f o r my p re d e c e s s o r and good f r i e n d , Joe E a r r , whom you i n i t i a l l y in v ite d t o speak t o you. Jo e , as a l l o f you a re now aw are, has moved on t o t h a t v e n e ra b le f i n a n c i a l i n s t i t u t i o n o f our government t h a t c o n tin u e s t o be engaged in th e n e v e r-e n d in g s tr u g g le to keep i t s checks’ honored - - th e U n ite d S ta te s T re a s u ry . Thanks to th e s tr e n g th o f th e American economy, th e soundness o f i t s b an k in g system , and th e competence o f th e b a n k e r, th e F e d e ra l D e p o sit In su ra n c e C o rp o ra tio n has y e t t o be th r e a te n e d in t h i s p a r t i c u l a r way. I p o in te d o u t t o Joe t h i s r a t h e r conspicuous d i s t i n c t i o n betw een th e two i n s t i t u t i o n s , h is and m ine, sa y in g t h a t , o f f e r e d s a t i s f a c t o r y te rm s , x^e m ight be w illin g to in s u re him, b u t h is r e t o r t w as, "Never m ind, th e buck alw ays s to p s h e r e ." I suppose we must ag ree t h a t th e buck d o e s, in d e e d , s to p th e r e - - b u t o n ly i f he i s ta l k i n g about our ta x d o l l a r s . I would l i k e t o u se th e tim e t h a t you have g iv en me to d is c u s s w ith you th e most im p o rtan t c h a lle n g e t h a t fa c e s our n a tio n and our i n s t i t u t i o n s to d a y . p e o p le . I t i s , o f c o u rs e , th e ta s k o f e d u c a tin g our young The P r e s id e n t has e a ile d t h i s our "number one b u s in e s s ," and 2 I am su re none o f us h e re w i l l want to ta k e e x c e p tio n to such an u rg en t p r i o r i t y . For th e r e i s r e a l l y n o th in g t h a t m a tte rs more. Our system o f governm ent, our p ro d u c tiv e economic m achine, our s ta t u r e in th e community o f n a tio n s , our v e ry way o f l i f e a l l lo o k f o r su p p o rt in th e f u tu r e to th e t r a i n e d brain p o w er o f our young c i t i z e n s . A c u r r e n t te e n a g e c o llo q u ia lis m , i f we mean im portance r a t h e r th a n f a s h io n , p u ts i t b e t t e r : " B ra in s i s i n ." But I do n o t w ish t o im ply t h a t we have done b a d ly along t h i s l i n e in th e p a s t . Our c o u n try i s s tro n g and p ro sp e ro u s b e c a u s e , in la r g e m easu res, e v e ry fa m ily has assumed as a p rim ary r e s p o n s i b i l i t y th e g o a l t h a t each c h ild ach ie v e a rung on th e academic la d d e r a t l e a s t a l i t t l e b i t h ig h e r th a n t h a t ach ie v e d b y h i s o r h e r p a r e n ts . a l l Americans a re now in c la ssro o m s. One q u a rte r o f S ince th e tu r n o f th e c e n tu ry , c o lle g e e n ro llm e n t has in c re a s e d 8 0 - f o ld . The U n ited S ta te s has one- f o u r th o f th e i n s t i t u t i o n s o f h ig h e r le a r n in g in th e w o rld , and along w ith them a t h i r d o f th e p r o f e s s o r s and s tu d e n ts o f c o lle g e l e v e l . But th e t a s k f o r th e in d iv id u a l as f o r th e n a tio n has been and always w i l l be a c o n tin u o u s ly u n fin is h e d one. Here i s one p la c e where i t i s n ev er q u ite enough t o do as w e ll as we d id y e s te rd a y . We must p r o g r e s s iv e ly do b e t t e r , or we in e v ita b ly do w orse. It cannot e a s i l y be d is p u te d t h a t we do have some v e ry s e r io u s problem s in h ig h e r e d u c a tio n to d a y . More th a n one hundred th o u san d o f our b r i g h t e s t h ig h sch o o l g ra d u a te s each y e a r w i l l n o t e n te r c o lle g e - 3 - - u n le s s o p p o r tu n itie s f o r h ig h e r e d u c a tio n a re somehow g r e a t l y expanded. One stu d y found t h a t ^5 p e rc e n t o f American h ig h sch o o l y o u th s c o rin g in th e to p 20 p e rc e n t in s c h o la s tic a p titu d e s f a i l t o go on t o c o lle g e . About h a l f a re from f a m ilie s w ith incomes under $ 6 ,0 0 0 , and o n ly onef i f t h from f a m ilie s w ith income o f $9?000 o r more. D e sp ite a l l o f our o p u le n ce , f i n a n c i a l problem s a re s t i l l w ith us. Numerous s c h o la rs h ip s t h a t a re a v a ila b le save th e d ay , in many in d iv id u a l in s ta n c e s . B u t, h e re a g a in , f o r e v e ry c o lle g e s c h o la rs h ip awarded t o a p u p il from a fa m ily w ith an income under $3? 000, fo u r a re g iv e n t o s tu d e n ts from f a m ilie s h av in g incomes above $11,000. a d d itio n , c o s ts c o n tin u e t o mount. Annual e x p e n d itu re In f o r m a in ta in in g a s tu d e n t in c o lle g e i s now e s tim a te d a t $1,560 in p u b lic i n s t i t u t i o n s and $2,370 in p r iv a te s c h o o ls . By 1980, i t i s e s tim a te d , th e s e r e s p e c tiv e f ig u r e s w i l l have in c re a s e d t o $2,^-00 and $ 3 ,6 ^0 . In d e e d , t h i s i s n o t a l l b y any m eans. By 1970, our c o lle g e s must be p re p a re d t o adm it 50 p e rc e n t more s tu d e n ts th a n th e p r e s e n tly overcrow ded f a c i l i t i e s can c a re f o r . c o lle g e te a c h e r s a re needed. R ig h t now, an a d d itio n a l 32,000 Y e t, l e s s th a n 1 ^,0 0 0 P h .D .’ s a re tu rn e d ou t a n n u a lly , and few er th a n h a l f o f th e s e e n te r c o lle g e te a c h in g ra n k s . You may n o t r e a l i z e t h a t o n ly about h a l f o f our f o u r -y e a r c o lle g e l i b r a r i e s meet minimum s ta n d a rd s s e t by th e American L ib ra r y A s s o c ia tio n , and l e s s th a n 20 p e rc e n t o f o u r tw o -y e a r sc h o o ls can q u a lif y on t h i s sco re. - k We, o f c o u rs e , can go on and on r e c i t i n g our d e f ic ie n c ie s and la m e n tin g th e en o rm ity o f our p roblem s. w hat more can we do? But what a re we d o in g , and C e r ta in ly , we have done a g r e a t d e a l. We have done a g r e a t d e a l th ro u g h our governm ent, and we have done a g r e a t d e a l th ro u g h our p r iv a te e n d ea v o rs. P u b lic e x p e n d itu re s in 1964 f o r h ig h e r e d u c a tio n a lo n e , e x c lu d in g v e te r a n s a s s i s t a n c e , t o t a l e d $3*8 b i l l i o n , th e g r e a te r p a r t expended a t th e S ta te and l o c a l l e v e l s . L ess th a n $1 b i l l i o n was sp e n t in 1950. The N a tio n a l D efense A c t, j u s t r e c e n t l y ex ten d ed and expanded, has p ro v id e d f o r lo a n s t o 600,000 s tu d e n ts , and fe llo w s h ip s have been awarded t o 8,500 s tu d e n ts a t th e g ra d u a te l e v e l . There a re many o th e r p u b lic program s. The e d u c a tio n o f our p eo p le i s m u ltifo rm in c h a r a c te r ; i t i s as d iv e rs e as th e most c h e ris h e d g o a ls and a s p ir a ti o n s o f each in d iv id u a l s tu d e n t, and as complex as th e f u n c tio n s and a c t i v i t i e s o f th e populace as a w hole. I l i k e t o th i n k , t h e r e f o r e , t h a t our t a s k h e re i s l e s s one o f a m assive s ta n d a rd iz e d program a t n a tio n a l o r S ta te l e v e l s o f governm ent, a lth o u g h su p p lem en tal F e d e ra l and S ta te su p p o rt i s c e r t a i n l y e s s e n tia l. R a th e r, h e r e , as in so many o th e r a r e a s , our e f f o r t s as in d iv id u a ls and as p r iv a te ly - m o tiv a te d i n s t i t u t i o n s can o r d i n a r i l y do much b e t t e r . There i s much ev id en ce to su p p o rt t h i s b e l i e f . - 5 P r iv a te b u s in e s s in t h i s c o u n try has a lo n g and d is tin g u is h e d h i s t o r y o f re n d e rin g a id t o h ig h e r e d u c a tio n . a id has m arkedly in c re a s e d . Since World War I I , such In 1963, c o rp o ra te f i n a n c i a l c o n tr ib u tio n s t o c o lle g e s end u n i v e r s i t i e s t o t a l e d $225 m illi o n , a f i v e - f o l d in c re a s e s in c e 1950. I n d u s tr y a id ta k e s numerous form s. There a re cash c o n tr ib u tio n s t o e d u c a tio n a l i n s t i t u t i o n s , s c h o la rs h ip s and lo a n s to s tu d e n ts , c o n tr ib u tio n s o f m a te r ia l and equipm ent to i n s t i t u t i o n s , p ro v is io n o f te a c h in g a id s , c o n tr ib u tio n o f company manpower, and th e l i k e . In d u s try -s p o n s o re d s c h o la rs h ip s can be awarded a t a c o s t to a c o rp o ra te sponsor o f $1,500 p e r s tu d e n t p e r y e a r th ro u g h th e N a tio n a l M erit S c h o la rs h ip C o rp o ra tio n , w hich, as you know, a ls o co n d u cts annual n a tio n w id e c o m p e titio n s f o r s c h o la rs h ip s among h ig h sch o o l s e n io r s . 170 c o rp o ra tio n s p a r t i c i p a t e in t h i s program . About There a re v a rio u s o th e r s c h o la r s h ip and award program s, and l e c t u r e s and sem inars under v a rio u s sp o n so rsh ip s by th e n o n - f in a n c ia l segm ents o f p r iv a te e n t e r p r i s e . Nor a re th e f i n a n c i a l i n s t i t u t i o n s d ra g g in g t h e i r f e e t . i s c e r t a i n l y n o t a new id e a t o you o r your own i n s t i t u t i o n s , E d u catio n M utual sav in g s banks have alw ays encouraged s y ste m a tic sav in g s f o r h ig h e r e d u c a tio n o f young p e o p le . I t i s n o t w ith o u t s ig n if ic a n c e t h a t we f in d names l i k e "Dime Savings B ank," "D o lla r Savings B ank," "Boston F iv e C ents Savings B ank," t h a t su g g est lo n g -ra n g e t h r i f t program s t o fin a n c e e d u c a tio n and o th e r m ajor g o a ls . - 6 - The American B ankers A s s o c ia tio n has f o r a number o f y e a rs fin a n c e d a v a r i e t y o f program s - - g ra d u a te fe llo w s h ip s in econom ics, workshops f o r c o lle g e f a c u lty members, an n u al symposiums, and th e l i k e . Ju st r e c e n tly announced i s a new program e n v is io n in g th e e s ta b lis h m e n t o f economic e d u c a tio n c e n te r s a t c o lle g e s and u n i v e r s i t i e s . However, th e c h a lle n g e o f e d u c a tio n a l lo a n s f o r th o s e o f you in th e b anking in d u s tr y , and e s p e c ia ll y in th e m u tu al sav in g s segment o f th e in d u s tr y , a re to me th e most e x c it in g . make lo a n s d i r e c t l y to s tu d e n ts . Only a few i n d u s t r i a l companies The a t t i t u d e i s w id esp read t h a t th e b u s in e s s o f le n d in g money f o r e d u c a tio n as f o r o th e r p u rp o ses i s b e s t l e f t t o th e b an k s. th e b a n k e r. Here r e a l l y i s a r e s t r i c t e d a re a o f o p e ra tio n f o r L a rg e ly as a r e s u l t , in a number o f s t a t e s , n o n p ro f it c o rp o ra tio n s have been formed by in d iv id u a ls , b u s in e s s e s , and t r u s t s f o r th e purpose o f g u a ra n te e in g n o n in s u re d , lo w - in t e r e s t lo a n s advanced by ' banks to d e se rv in g s tu d e n ts . The U n ite d S tu d en t Aid Funds, founded in I 960, to d a y o p e ra te s th e l a r g e s t p r i v a t e s tu d e n t lo a n program in th e c o u n try . S tu d e n ts a tte n d in g some 634 c o lle g e s and u n i v e r s i t i e s may borrow on t h e i r own s ig n a tu re lo w -c o s t, lo n g -te rm , funds o f up to a maximum o f $4,000 from more th a n 4 ,8 0 0 c o o p e ra tin g banks in 49 S ta te s . As o f June o f l a s t y e a r , lo a n s a g g re g a te d $26 m illio n un d er t h i s program , w ith l e s s th a n 0.8 p e rc e n t o f th e t o t a l advances in poor s ta n d in g . Among th e S ta te p la n s f o r g u a ra n te e in g u n sec u re d e d u c a tio n a l lo a n s to s tu d e n ts , th e M a ssa c h u se tts H igher E d u catio n Loan P lan - - dubbed HELP - - - 7 i s th e o l d e s t . D uring th e f i r s t seven y e a rs o f t h i s program - - i t was e s ta b lis h e d in 1956 — over $9*5 m illio n in lo a n s were made to l k ,500 s tu d e n ts . I u n d e rs ta n d th e r e a re some 35 m u tu al sav in g s banks now p a r t i c i p a t i n g , w ith lo a n s o f $ 3915^0 ex ten d ed . In New York S t a t e , s tu d e n t lo a n s a re made a v a ila b le u n d er a program o f th e New York H igher E d u catio n A s s is ta n c e C o rp o ra tio n , in which sav in g s banks were a u th o riz e d t o p a r t i c i p a t e in i 960. L ast Septem ber, th e sa v in g s banks o f th e S ta te had a t o t a l o f some 51,000 s tu d e n t lo a n s o u ts ta n d in g , am ounting to more th a n $40 m i l l i o n , and th e com m ercial banks had made ov er 85,000 w ith a v a lu e o f $63 m illio n . In New J e r s e y , a p la n was i n i t i a t e d in 1959» The seven m utual sa v in g s banks p a r t i c i p a t i n g in i t l a s t December had g ra n te d more th a n 500 lo a n s a g g re g a tin g over $559 j 000. In New H am pshire, 63 banks - - about tw o - th ir d s o f a l l banks in t h a t s t a t e - - p a r t i c i p a t e in a p la n t h a t has ex ten d ed over $kl+0,000 t o s tu d e n ts a tte n d in g 167 i n s t i t u t i o n s o f h ig h e r e d u c a tio n . Among o th e r a c tiv e program s t h a t have come to my a t t e n t i o n a re th o s e in M aine, Rhode I s la n d , and Vermont. I b e lie v e t h a t th e r e a re now some 12 o r 15 s t a t e s t h a t have s u c c e s s fu l e d u c a tio n a l lo a n p la n s in o p e r a tio n , and many more s t a t e s have s im ila r p ro p o s a ls o r l e g i s l a t i o n p en d in g . The a re a o f e d u c a tio n a l lo a n s i s one t h a t has j u s t begun to be d ev eloped. •• I b e lie v e t h a t i t o f f e r s a t t r a c t i v e and fo rw a rd -lo o k in g o p p o r tu n itie s to your in d u s tr y . But t h i s i s r e a l l y n o t th e v i t a l th in g t h a t i s a t sta k e h e re . e d u c a tio n i s a more s e r io u s m a tte r . H igher In our p r a c t i c a l d a y -to -d a y a f f a i r s - 8 - we have become accustom ed to a c c e p tin g th e n o tio n t h a t e d u c a tin g our y o u th i s a good th in g and p ro b a b ly w orth a re a so n a b le b u rd en . But even p a u sin g f o r a c a s u a l lo o k a t t h i s n o tio n in s p ir e s awe a t i t s tr u e s ig n if ic a n c e . R eal s c h o la rs h ip in v o lv e s m a stery o f complex s tr u c tu r e s o f th o u g h t in r e l a t i o n to o th e r v i t a l s t r u c t u r e s . I t e x p la in s how d is c o v e r ie s a re made and h e ig h te n s th e ex citem e n t in new knowledge and new id e a s . I t te a c h e s i n i t i a t i v e , how t o shape le a r n in g and m a rs h a ll re s o u rc e s to re a c h d e s ir e d en d s. I t te a c h e s th e a r t s o f com m unication, and f o s t e r s deeper u n d e rs ta n d in g o f men and r e s p e c t f o r t h e i r b o u n d less c re a tiv ity . I t le a d s t o e f f e c t iv e n e s s in th e a f f a i r s o f th e w o rld . It does a l l o f th e s e th in g s and more. There i s r e a l l y no n o b le r u n d e rta k in g f o r any o f us th a n to p ro v id e l i m i t l e s s e d u c a tio n a l o p p o rtu n ity f o r our y o u th . r o le in th e s e p ro c e s s e s . Banking has a s t r a t e g i c I t i s a c h a lle n g e t h a t we d are n o t n e g le c t. ########
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