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Theodore Fischer, Assistant Director
Student Union Building, Ohio State University
Columbus, Ohio


President, The American Bankers Association,
before the opening session of The National
Mortgage School, Ohio State University,
Columbus. Ohio, Sunday Evening, August 18, 1963.
Mr. Kimbrel is chairman of the board, First
National Bank, Thomson, Ga.

It is indeed a pleasure for me on behalf of The American Bankers
Association to welcome you to the opening session of the National Mortgage School.
The creation of any new banking education activity is a significant
milestone for the industry.

We all look back with amazement at the foresight

shown by those bankers who in 1901 organized the American Institute of Banking.


you know, the institute has made tremendous progress over the years, and it now
stands as the largest adult education program in the country sponsored by an
The Graduate School of Banking at Rutgers, which was founded in 1935,
has provided many bankers with the broad background necessary to assume management
positions in their banks.
Another high point in banking education was reached in i960, when The
National Trust School was established at Northwestern University.
These educational activities, plus many others conducted at the state
and regional level, have helped thousands of bankers sharpen their skills and
keep abreast of this rapidly changing business we are in.

And, those of you who

have been associated with the banking industry for the past 10 or 15 years realize
how dramatic some of the changes have been.




The two major overriding trends, of course, are rather obvious.


corporations have been taking greater advantage of their cash flows, depreciation
allowances and inventory controls, and, consequently, have been able to keep
demand deposits down to a bare minimum.
With interest rates on the rise in the postwar years, these corporate
customers have been getting more mileage out of each dollar.
been eliminated.

Idle balances have

Then too, with more funds being generated internally, the credit

needs of these customers have been reduced.
Bankers have responded to these circumstances by developing new and
more imaginative ways to serve corporate customers.
intensified competition for corporate business.

Needless to say, this has

But, I for one believe that

this will lead to better banking.
The second major trend which I mentioned is the changing status cf
the consumer.

With the steady rise in personal disposable income since World

War II, more and more people are finding that they need bank services.

As a

consequence, banks have developed into what are commonly called department stores
of finance to meet all the financial needs of an individual.
This trend has been the main force behind the rapid expansion rof
branch banking and the introduction of many new services such as in-plant banking
and payroll services.

Since convenience is uppermost in the mind of the consumer,

I believe we will see more moves in this direction in the future.

The changing

status of the consumer as a bank customer has also encouraged banks to expand
their participation in consumer credit and in mortgage lending.
It was only natural that some of our competitors would argue that we
should not compete in the field of mortgage lending.
our participation to indirect financing of mortgages.

They say we should limit
Others have said that

because of fluctuations in the market we will find ourselves with excess capacity.




Still others state that we will lose all interest in mortgage lending when other
outlets appear to be more profitable.
This would indeed be a strange economic system if we could talk com­
petitors out of competing with us.

Fortunately, that is not the way our system

The individual consumer has an uncanny knack of insisting on, and getting,


And the consumer alone can talk us out of competing.

He can do this

by simply ignoring our products.
I am firmly convinced that commercial banks are in the mortgage lending
business to stay*

I believe this for several reasons.

First, if we are to continue to push the concept of one-stop banking and
provide for all of our customer5s financial needs, we must maintain our interest
in mortgage lending.

It would be folly on our part to tell a customer that we can

take care of all his financial needs and then back down when

he wants to make

what probably is the biggest investment of his life.
Second, savings and time deposits now account for close to ^ 0 per cent of
total deposits in commercial banks.

If the present trend continues, and I believe

it will, by 1970 over half of our total deposits will be in time and savings deposits.
These deposits, of course, are more stable than demand deposits and lend
themselves more readily to the mortgage market.
Then too, I think there is every reason to believe that the savings
pattern of recent years will continue.

This country has been doing a good job in

maintaining price stability since about 1958.

With the threat of inflation on the

decline, people are more likely to save.
Many banks have also found that by servicing mortgages they can
stabilize their mortgage operations,
I am sure that most of you are aware of the increase in mortgage loans held
by banks.

Since i960 bank holdings of mortgages have increased by about $6.5 billion.



As the Federal Reserve Bulletin for July points out, commercial hanks have been
taking more than 15 per cent of the record net increase in all mortgages outstanding
during the past 18 months.

This was an increase of 50 per cent over the share

commercial banks had been taking over the preceding five years.

The Bulletin went

on to say, "This heavy investment by banks has been an important element in the
continued ease in mortgage markets."
I stated earlier that the opening of any new educational activity for
bankers was a significant occasion.

But I feel the opening of this school has a

special significance.
As you know, a lot of preliminary work must be completed before a school
of this type can be established.

The American Bankers Association and officials of

Ohio State University had to work out the endless details of curriculum, materials,
schedules, faculty and the many other problems involved in organizing a school.
But the most important aspect of this school being opened--in fact, the
real starting point— was the aroused interest in mortgage lending that had been
displayed by bankers across the country.
this would not have been attempted.

Without that interest, such a school as

Your presence here, and I understand that

38 states plus the District of Columbia and Puerto Rico are represented, is
indicative of that interest.

Moreover, knowing bankers as I do, I am sure that your

management would not have sent you to this school if they did not consider that your
bank would be in the mortgage business on a permanent basis. It wouldn’ make sense to
train personnel and go to all the start-up expense of establishing a mortgage
department for the short run.
It would seem to me that the very existence of this school should be
ample proof that the commercial banks are going to be competing in the mortgage
lending business for many years to come.
Before closing, I would like to take this opportunity to wish you all well
in your studies here.

The A.B.A. and Ohio State officials have made every effort to

give you the latest information available about new trends and techniques in mortgage

The handbook prepared for this course is excellent*

administration of the school are groups of outstanding men.
Digitized this will be a very

The faculty and
In short, I am sure

rewarding experience for you and a real benefit to your bank.