1931 Herbert Hoover - Federal Home Loan Bank Act - Hoovervilles

In 1931, the depression continued to worsen and President Hoover was looking for many ways to help his fellow Americans.  Americans were suffering, jobs were lost, families were suffering, and homes were being lost.  Many of those who had lost here homes were fortunate enough to stay with family and friends, but those left homeless were forced to take up residence in shacks and shantytowns, that came to be known as "Hoovervilles".   There were no good records that tracked the foreclosure rates during the great depression, but historians suggest that throughout the great depression, 1000 homes loans were placed in foreclosure every day.   President Hoover wanted congress to take action.  He wanted action that would increase new home construction, reduce foreclosures and create more homeowners.  So, in Hoover's 1931 annual address to congress he recommended establishing a system of home-loan discount banks. Such action would decentralize the credit structure, and enable banks to more effectually promote home ownership.  Greater home ownership would lead to more residential construction and hence more jobs.

"I recommend the establishment of a system of home-loan discount banks as the necessary companion in our financial structure of the Federal Reserve Banks and our Federal Land Banks. Such action will relieve present distressing pressures against home and farm property owners. It will relieve pressures upon and give added strength to building and loan associations, savings banks, and deposit banks, engaged in extending such credits. Such action would further decentralize our credit structure. It would revive residential construction and employment.  It would enable such loaning institutions more effectually to promote home ownership. "

On July 22, 1932 the Federal Home Loan Bank Act was passed to lower the cost of home ownership.  The act established the Federal Home Loan Bank Board to charter federal savings and loan institutions, and created the Federal Home Loan Banks which would lend funds to community banks and other institutions in order to finance home mortgages.  The Federal Home Loan Bank Board remained in existence until 1989 when it was abolished and replaced with Federal Housing Finance Board.  Then in 2008, the Housing Economic and Recovery Act replaced the  the Federal Housing Finance Board with the Federal Housing Finance Agency.

References

Presidency.ucsb.edu. (2018). Herbert Hoover: Annual Message to the Congress on the State of the Union.. [online] Available at: http://www.presidency.ucsb.edu/ws/index.php?pid=22933 [Accessed 3 Apr. 2018].

Globalresearch.ca. (2018). How Many People Have Lost Their Homes? US Home Foreclosures are Comparable to the Great Depression | Global Research - Centre for Research on Globalization. [online] Available at: http://www.globalresearch.ca/how-many-people-have-lost-their-homes-us-home-foreclosures-are-comparable-to-the-great-depression/5335430 [Accessed 3 Apr. 2018].

U-s-history.com. (2018). Federal Home Loan Bank Act. [online] Available at: http://www.u-s-history.com/pages/h1530.html [Accessed 3 Apr. 2018].

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