Converting Savings and Loan Associations From Mutual to Stock Ownership--A National Policy Needed
GGD-79-78: Published: Oct 1, 1979. Publicly Released: Oct 17, 1979.
- Full Report:
A review of the conversions of federally chartered savings and loan associations from mutual to stock ownership included the effects of actual conversion, the effectiveness of conversion regulations, an evaluation of appraisal methodology and process, and an analysis of conversion alternatives. In 1974 Congress enacted a law to study the problems of conversion which contained a provision to allow up to 49 savings and loan associations to convert to stock ownership.
The conversion of these savings and loan associations from mutual to stock ownership requires establishing a national policy. Although the Federal Home Loan Bank Board (FHLBB) has made great strides to ensure that conversion will be equitable to both management and depositors, it could make further strides by revising some of its regulations and better reviewing stock appraisals. Since the moratorium allowing savings and loan associations to convert to stock ownership and retain their Federal charters has expired, the right of 15 federally-chartered savings and loan associations to do business is in doubt. GAO believes that alternatives to conversion are available for improving an association's equity position, and that depositors have little knowledge of or interest in conversion.