Caracas, Venezuela, 1966 INTER-AMERICAN MEETING on SAVINGS and LOANS

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INTER-AMERICAN MEETING ON SAVINGS AND LOANS

Caracas, Venezuela, 1966 INTER-AMERICAN MEETING ON SAVINGS AND LOANS

Caracas, Venezuela, 1966

Sponsors:

Inter-American Development Bank Agency for International Development

National League of Insured Savings Association. Inter-American Savings and Loans Union ORGANIZING COMMITTEE

PRESIDENT: Ing. Eduardo Fuentes C.

President, Federaci6n Venezolana de Entidades de Ahorro y Prestamo. President, Inter American Savings and Loans Union.

VICE-PRESIDENT: Dr. Gonzalo Carnevali

General Manager, Oficina Central de Ahorro y Pi'6stamo de Venezuela.

HS0T3: Comisi6n de Ahorro y Prestamo de Venezuela

Banco Obrero, Oficina Central de Ahorro y Prestamo de Venezuela

Federaci6n Venezolana de Entidades de Ahorro y Prdstamo

SPONSORS: Inter-American Development Bank

Agency for International Development

National League of Insured Savings Associatiot

Inter American Savings and Loans Union 0 F F I C E R S 0 F T H E M E E T I N G

PRESIDENT: Dr. Gonzalo Carnevali

- General Manager, Oficina Central de Ahorro y Prestamo de Venezuela.

VICE-PRESIDENT: Cnel. de E.M. Jorge Salvador y Chiriboga

- President, Banco Ecuatoriano de la Vivienda.

SECRETARY GENERAL: Stanley Baruch

- Chief, Housing and Urban Development, AID.

COORDINATORS OF THE MEETING

Ing. Eduardo Fuentec C.

Presidet, Federaci6n Venezolana de Entidades de Ahorro y Pr6stamc. President, Inter American Savings and Loans Union.

Eneas Maza

- Inter-American Development Bank.

Malcom Burrows

- Agency for International Development.

Richard KnIght

- National Leagu.e of Insured Savings Associations.

GENERAL COORDINATOR: Ing. Eduardo Ruan S.

CONFERENCE OFFICER: Alvaro Chaves AGENDA

COMMISSION "A". Pr ni ti ,n, Orgtnizati)n and Devel--pment _f an A.,s :-ciati,-n

PRESIDENT: Mario Luis Velasco

PANEL: Ulrich Neisser Manuel Pittaluga Sam Borden Edmund Dagnino

RAPPORTEURS: Francisco Arias Gustavo Coll Jorge A. Casanova

1. Initial promotion of the association. Study of the Savings and Loan Market. The apparent competition with other Finance Companies.

2. Minimum and ideal organization chart. Selec tion of personnel. Distribution of work in terms of growth. Distribution of functions. The uniformity of methods and procedures on a national scale. Accounting systems and mechanizat ion.

3. Working hours in terms of the associate. De sirable and timely expansion; agencies and branch offices. Promotion of Savings and loans.

COMMISSION "B". Savings and Loans.

PRESIDENT: Enrique Santa Cruz

PANEL: Fernando Lanusse Salomon Chornik Horace DIvila Robert Speetles RAPPORTEURS: Lucfa Alcald Strupp Arturo Pardo Tito Fernandez Moran

1. Promotion and collection of savings. Adver tising in Savings and Loans. The Advertising Plan; media; assessment of results. Direct Promotion. Presence of the Association in the Community. The personnel as promoters. "Service" the best savings promoter. Clas sification and Dynamics of Savings. Liquidity in terms cf the type of savings and the sea sonal phenomenon.

2. Guarantee, quality and risks. Appraisal and Credit Policy. Single family dwellings, multi family dwellings and condomini-m. Applicatsions for Loans and their aialysis. Credit analysis; repayment capacity; mot!1vasion. Fire insurance and other risks. Life insura.ce and -ther" types of insurance.

3. The Loan Committee. Construc_tion loans. Purchase loans. Analysis of the mortgage portfolio. Collection system. Mortgage system and iegis lation on the Continent. Influence of the Savings and Loan System on the mortgage mar'ket. Organization and functioning of the system of insured mortgages.

COMMISSION "C". Savings and Loan System. Its Influence and Development in the Community.

PRESIDENT: Guillermo Le Fort Campos

PANEL: Ricardo Garcia Rodriguez Luis F. Madera Grijalba Joseph Benedict Robert Souter

RAPPORTEURS: Ricardo Palacios Pedro E. Blanco Isidro de Miguel 1. Social Function. Influence on the social economic field. The Association: "Private Enterprise regulated to perform a social function". Desirable regulation and super vision to guarante the achievement of its true aims. Insured Savings, benefits and obligations implied. Creation of the savings habit; efects on the stability of the family and the c ommunIuy. 5simulntion of individual, family and ,u!]luct ivt savings.

2. Relation of savLngs and loan to Dthyr financial institutions. Housing cooperatives and savings systems ib firms. Collaboration witl official activities in economic housing plans. Integral development of new zones; normative influence in its characteiistics. Integration and financing of community services.

3. Inter-relations in savings and loans; national, continental and world expressions; justification and aims of such initiatives. Growth and integral strengthenting by means of international action. Assemblies and meetings; purposes and goals to be reached. The Inter-American Union of Home Savings and Loans.

COMMISSION "D". Tecnical-Financial Bases.

PRESIDENT: Manuel Velarde

PANEL: Juan F. Martfn Mario Granai Everett Sherbourne George Greenwood

RAPPORTEURS: Gral. Oscar Clavo Mejras Elfo Soto V. Isbelia SAnchez

1. Influence of the State on the development of the System. The Alliance for Progress and the Savings and Loan System. Central Savings and Loan Organizations. Legislation on the Continent. North American legislation authorizing associations in that country to invest in Latin America through the Guarantee Fund (A.I.). 2. International Home Loan Bank (North American Institution). Popular saving s and "promotional" savings as a Zenuine source of funds. Necessity for new fi nancial sources. Creation -f Leppropriate instrument:

i) Development of insufed oortgages;

2) Secondary mortgage mar'ket; natjonal, continental and extracontinertal.

3. The inflationary process and 1ts reper cussions; readjustment systems. RE GU LA TI ON S

PURPOSE

Artic-Ie 1. The purpose of th? Meeting will be to study and analyze the progress made by savings and loan systems iii the couj.ti[i. of the region, to e:iucwa ge and suppoirt the t:verthening of these systems, and to wO:'k towards effective tech.,Lcal and financial :assistance in behalf :f thu Lat:n Amu, L:n. cosntr'us

PARTIC IPATS

Art'ic 2. Thu parsticiaa's in the Mettin g will be those persons and representa tives of ils'1tti n:...'. 1lsin Ame-ica aid ouher regc-ins who have beer. expressi, >:.v'tea:. D,,gates will attenid "as individuals, except .the ase covL ,ea by A'' o0. Observers may :ct as i-epresetrta v e.: thu "r-ai:zto!-s Spec 1Lil gues'IS w II atte. d as idiv i du w' Ii assfied. as lows:

a) D,:'. ates. Th-s ,u OIv~ued t(, parti p-ra, eit her as individu -I : ' . . tt Vus )f ,cies it the cosu:tr-ies of the Ititer ne- 'ca. system.

b) Oser -v.s. Represt: tttive of international agencies invited to par tic ipat.

c) SpeciaL Guests. Those persons invited to participate, either as indi vduals or ac represenitatives of agencies in countries outside of the lIater-Amer icai system.

AGENDA

Article 3. T'he topics for discussion by the Meeting will be those included in agenda (Doc. 1).

AUTHORITIES

Article 4. The Chairman and three (First, Second and Third) Vice Chairmen of the Meeting and the Chairmen of the working committees will be elected at the first plenary session. The Secretary General of the Meeting and the Rapporteurs for the working committees will also be announced at that session. These persons will serve as the officers of the Meeting. Article 5. The Chairman of the Meeting:

a) Will preside over the opening and closing sessions.

o) Will direct the plenary sessions and, to that end, will take all necessary steps to restrict individual statements and general dis cussions to a time limit and to the subjects included in the agenda. He may delegate the direction of the plenary sessions.

c) Will install the working committees and, in gene-ai, guide the work of the Meeting.

COM14ITTEES

Article 6. A working committee will be set up for each of the general topics on the agenda.

Article 7. Each committee will have a Chairman and a Rapporteur, pursuant to Article 4.

Article 8. The Rapporteurs will prepare summary reports of the work done Vy their respective committees for presentation at the corresponding plenary session of the Meeting.

RESOLUTIONS

Article 9. Resolutions will be adopted by majority vote of the countries of the inter-American system represented at the Meeting by accredited delegates.

Article 10. The delegates of each member country of the inter-American system will have one vote, as a body, which will be cast by the delegate appointed for the purpose.

Article 11. The delegates who will cast the votes of their respective countries will be selected prior to the first plenary session, and their names duly communicated to the Secretariat. TIE WHITE IOUSE

WASHINGTON

January 25, 1966

I am pleased to extend my heartiest greetings to the participants of The Fourth Inter-American Savings and Loan Conference and to wish you every success in your deliberations.

The creation of capital to provide long-term home mortgages is one of the key efforts of the Alliance for Progress. The success which your associations have achieved represents a tremendous step forward.

Only five years ago, two small associations began successful operations in Latin America. Today 89 associations, with a membership of over 300, 000 persons, have accumulated savings in excess of $100 million and have financed more than 37, 000 homes. This is a fine achievement and a good example of people helping themselves to attain a higher standard of living.

Your undertaking is all the more important be cause it exemplifies what can be accomplished when our governments join hands with private enterprise to achieve a common objective. INAUGURATION OF ilE FOURTH MEETING

AN ADDRESS BY II.. STANLEY BARUCH, SECRETARY GENERAL OF THE FOURTH INTER-AMERICAN IEETIJG ON SAVINGS AND LOANS. DIRECTOR, HOUSING AND URBAN DEV=LOPMEI' IT DIVISION, UNITED STATES AGENCY FOR INT'ERNATIONAL DM\ELOPITEIT.

In my capacity as Secretary General of the Fourth Inter-American Meeting on Savings and Loans, I hereby declare the heetinC open.

With the consent of the participants, the chair will he taker:, following the tradition established at previous .eetins, ly the chief executive &1 the host and sponsoring institution, r.Gonnalo Carnevall, lanager of the Central Savings and Loans Office of Venezuela.

Also following previous tradition, the Vice Chairman will he the Chairman of the Third Meeting, held in Quito last year, Ccl. Jorge Salvador y Chir:Loja, President of the Ecuadorian HcusinC Ban-k.

The Chairmen of the Workinr Committees will be four distingCihed officials of the Inter-American Savings and Loans System, Dr. Mario Luis Velasco, Dr. Enrique Santa Cruz, Dr. Guillermo Le Fort and Dr. 1Manuel Pittalura, who oc cupy managing positions in the savings and loan systems of El Salvador, Guazemala, Chile and the Dominican Republnr, respectively.

A1 AJJDPFSS BY I._.GOHZALO CAfBIYVALI. CFA[R!/: OF TiE FOURTH INTER-AJERICAE 'EETING O. SAVITNNS LJTD LOANS. GENERAL MANAGER OF THE CENTRAL SA,.IN:GS NjD LOANS OFFICE OF \rEI\rEZIJEA.

It is for me a specia] privilege and a source of great pr ,.,ot as an individual and as a Venezuelan, to preside over this Fourth Inter-Arerican Meeting on Savings and Loans. I can assure ;ou that I snall spare no effort to ensure that this eeting is a worthy continuatioL of those ihel:i in Lima, Santiago and Quito. The enormous interes>, that this event :as aroused, and which is evidenced by the fact that 500 dnle

On behalf of the host institutions and of the four co-sponsors of t:is Meeting, I extend a most cordial welcome to you all and sincerely hope that your stay in Venezuela will prove both pleasant and profitable.

1 AN ADDRESS BY MR. EUGENIO MENDOZA, PRESIDENT OF THE VENEZUELAN SAVINGS AND LOANS COMMISSION

It is my pleasure to extend a cordial welcome to the delegates who honor us with their presence here today and to wish them a pleasant stay in Venezuela.

The Fourth Inter-American Meeting on Savings and Loans is sponsored by the Agency for International Development, the Inter-American Development Bank, the Inter-American Savings and Loans Union and the National League of Insured Savings Associations of the United States. These institutions have dem onstrated a constant interest in the development and diversification of the activities of the savings and loans movement in Latin America.

The fact that there are present among us today those responsible for the consolidation and development of the system is a cause for optimism.

For those countries, like Venezuela, in which the savings and loans movement is a novel concept, meetings like this have a special significance.

The appointment of Dr. Gonzalo Carnevali to preside ove this important meeting gives me great pleasure and I wish him every 5uccess in his task.

The conditions in which people are condemned to live by the acute housing shortage, which grows more critical every day, is a worldwide problem. But because it afflicts the less developed countries with particular severity, it is a problem of special concern to us in Latin America.

Numerous studies have been carried out to determine the magnitude of the housing problem in Latin America and to devise means of solving it. While the statistics produced by the various national and international organizations do not always agree exactly, I think we may accept that the housing deficit is no less than 15 million units.

Venezuela's own housing deficit may be taken to be about 800,000 units. To make up this existing shortage and to fill the future needs would require the construction of 2 million dwelling units over the next 15 years.

The enormous sums required for the carrying out of the vast programs needed for the solution of a problem of this magnitude makes it imperative that we mobilize the maximum possible resources for this purpose.

The physical and economic aspects of the housing problem cannot be considered in isolation from its human dimensions, which are beyond doubt even more compelling.

The proliferation of belts of wretched slums around our cities, in which hundreds of thousands of people live in nothing less than intolerable condi tions, is a truly alarming situation. In dramatic contrast to these subhuman living conditions are the accomplishments of the housing programs under which our peoples are being provided with the basis of the physical and spiritual well-being that is their right.

2 At the present time, plans are being drawn up and efforts are being made on an ever increasing scale, both on the part of the government and of private enterprise. In spite of this, we are falling behind because of the population explosion, through which the needs grow faster than the means available to meet them, leaving us further from our goal every day.

We need to devote serious thought to one of the fundamental aspects of this problem. Any housing policy will be useless unlec-, it is accompanied by a population policy that is based on a realistic appreciation of' tile tragic situation in which population growth places the Latin American people. We must therefore encourage and promote population control measures in order that man, whose well-being is the primary ob'jective of development, may live in an environment that is the product of a balanced and not of a disordered growth of the society to which he belongs.

This is a challenge to our generation and one that is faced more or less equally by all the Latin American countries.

Because the housing problem is largely an economic problem, its solution will always depend to a high degree on the magnitude of the financial resources that we are able to mobilize. But the needs posed by the housing deficit are so great thaLt the State will be quite unable, in any of our countries, to solve the problem alone. It is therefore essential that the other sectors of the community assist the government in this task and, to that end, that mechanisms be crea;ed through which other resources can be channeled, on an ever increasing scale, to housing cons-truction.

Conscious of this imirility of the public sector to carry the entire burden of solving the housing problem, and recognizing the advantages of savings arid loans institutions and their potential capacity for effective collaboration in the execution of the national housing programs , in 1.61 the Venezuelan Government issued Decrees Nos. 520 and 655, establishing a Savings and Loan- System in our country. In referring to these decrees last year, the President of the Republic underscored the importance of the role assigned by his government to the Savings and Loans System.

These two decrees provile for a provisional structure designed to make it pos sible to profit from the advantages of such a system, pending enactment of the corresponding Law. An honorary Commission, composed of seven members appointed by the President of the Republic from among persons active in the field of housing development and construction, is responsible for supervising and direct ing the System through a Central Office, which is its executive organ and carries out all che tasks necessary to its operation. In addition, the Commis sion has been entrusted with the task of drawing up and putting into practice the rules and regulations governing the operation of the System and has drafted the law by which it will be governed in the future.

It must be stressed that the form in which the Savings and Loans Commission was constituted, specifically envisages the participation of the private sector, from the very beginning, in the top-level direction of the System, subject, of course, to the control that is appropriate to the State, taking into account its responsibility in the guaranteeing of savings and mortgages.

3 The Commission devoted the first year of its activities to studying the rules and regulations that would govern the operation of the System. We attached special importance to this work because it was necessary to ascertain the experience of other countries and to evaluate them carefully, in order to adapt their methods and practices to the special characteristics of the situation in our own country.

We experienced the difficulties typical of any beginning. It was essertial that the public learn to understand and appreciate the purposes and advantages of the facilities that were being made available to them. From the very start, we received the cooperation of perq:uns ready to support the System. We gradually gained the confidence of savers, who came to understand the advantages of cecurity for their savings offered by the various savings and loans associations that were eslblished. The number of those Crew rapidly and the time, in fact, came when we had to decide that it was necessary to suspend completely the authorization of now -associations in order to strengthen those already in existence. The Federation of Saving s and Loans Associations has done valuable w.ork in coord inat in- and standard ing the operations of the associations, thereby enabling them to bettor accomplish their purposes.

The first Venezuelan association began operations in October 1962. Since then, the System has deeloped in many respectL beyond the most optimistic expectations. From barely 2,000 in June i160, our membqrnhio had risen to 36,000 by the end of last year. The volume of depoits has increased from an initial Bs.6 million to Bs. 110 million. Lo-n totalling Ds. 250 million have been granted to members to finance more than 41000 dwellings.

The initial stage of our Y'-r has already been completed. With the completion of this stage, it is appropiiate to review the work accomplished, to evaluate the benefits obtained and to examine carefully the difficulties encountered along the road and the errors cotitmitted.

The second stage, which we may call the stage of consolidation, begins with the enactment of the new legislation which will govern the operation of the System and it includes the establishment of the National Savings and Loans Bank. It will be necessary that the Law prcvide for onservation of the positive advances that have been achieved, in order to give strength to one of the most effective instruments for solving our country t s housing problem.

It is our view, based on the experience obtained thus far, that there are certain fundamental requirements which the Law shou7d establish. First, private enterprise must be truly represented in the top-level administration of the System, as was provided for in Decree lo. '20 by which the System was established. Second, it is desirable that the legal form of a stock company be adopted and that savings and loans associations participate in the subscrltion of the capital.

The first of these requiremcits stems from the very essence of the Savings and Loans System, which is an appropriate combination of private enterprise and public sector action and in which the State acts as the proniator and multiplier of the private savings that constitute the foundation of the System. Thus, it is only logical that the representatives of the savers should have a voice in the System's top-level organ of administration without pre,!udice to the maintenance of necessary controls by the State. The success of the Savings and Loans System depends primarily on the confidence that it inspires among savers and no other formula could be more suitable in creating and sustaining that confidence.

14 The need to adopt the stock company form of organization is fundamental, because the legal structure of a stock company provides particular flexibility and is especially suited to an institution like the T.lational Savings and Loan Bank which has to operate In the national and international financial fields. Moreover, the stock company form of organization permits tee shareholding institutions to elect their representatives on tle Board of Directors, thereb.y ensuring a true representation of the sa inys and loans associations.

Because the scale of the operations of the Savings and Loans System depends primarily on the volume of savings that it obtains through voluntary deposit by the general pul lic, it will require contributions of funds from the State during a certain period of time, where the habit of saving has not yet been acquired. These contributions constitute the starting motor that sets the gears turning.

In the case of Venezuela, the funds contributed by the State have proved inadequate in the face of the rapid expansion of the System. Moreover, the absence of prior planning witt. respect to the magnitude and timing of the contributions has haiupererj the prompt adoption of a fina.n'r 1ng poli<'y to meet the ever-growing demand for ere :it.

Another question of' funda'rrenta] _ortance to tee otcration of the System is that of its administrative -tructure. The special form of or:'anization establish e when the System as-. initited in Venezuela under the administrative authority of the Banco Obrero, liited the powers of th(e Commision and the Central Office regarding th. copiex fui-tions that dereentrurt(--o them.

In spite -f'the problems we h.ave= en'ountered, an above and beyond all ot!er considerations, the result:: that we have a .i'red. and to whii. I have already referred. testify to the 2ulrironherent o0 tlii . System and to its adaptability to the economic Saiooial :onditions of' our country.

I am confident that tle se--ond zts.-,e of t:h ievelopment of the Venezuelan Savings and Loans System will be mare: by complete success and that those who are called upon to administer tlhe System will prove equal to the demands and responsibilities imposed by its progressive development.

Tne agenda that hus been submitted to y7ou provides for discussion of the various aspects of the Savings and Loans System. I should like, however, to stress briefly a number of points that in roy judgement merit your special attention.

In my view, when new Systems are being establishea and organized. it i2 extremely important to keep 1'. mind their need of enjoying, from the very beginning, the highest possiblc degree of administrative autonomy and stebility of financing sources.

I also call to youi attention the problem of the promotion of individual savings in order to attain, by every ava2lable means, the maximum volume of resources deriving from pure savings, which in the final analysis constitute the true strength of the System. If effective formulas for the promotion of private savings are devised, this effort will have been more than lustified.

5 There is a need for basic and specialized training centers to provide the technically trained staff required for the effective development and consolidation of the system. Your recommendations will help to promote the setting up of such centers.

The work of the previous meetings yielded tangible results in the form of programs and specific goals. I commend to this Fourth Meeting the same spirit of constructive and practical discussion, so that its resolutions may be carried into practicc.

The Savings and Loans System is capable of satisfying the desire of enormous numbers of our people who aspire to full ownership of their own homes. Our efforts must be directed to satisfying that desire with the energy and resolve appropriate to the needs of our time.

6 AN ADDRESS BY MICHAEL GREENEBAUM, MEMBER FEDERAL HOME LOAN BANK BOARD, U.S.A.

It is a real pleasure for me to be here in Caracas ardto have this oppor tunity to meet with you. The Chairman of the Federal Home )LoanBank Board, Mr. John E. Horne, and the other Board Member, Mr. John deLaittre, have requested me to extend their personal greetings arid well wishes. They had hoped to be able to be here themselves, but a long-scheduled conference with the presidents of our twelve regional Federal Home Loan Banks unfortu nately prevented their attendance.

I am sorry that I have to use an interpreter to speak to you. I belong to that large group of United States citizens who unfortunately can speak only one language.

The Government of the United States has long recognized the importance of decent housing. The Housing Act of 1949 specifically declared that, "The general welfare and security of the .ation ard the health and liviIg standards of its people require housing production and r'elated ommuity development sufficient to remedy the serious housi- snortage, the elimina tion of sub-standard and other inadequate housK:g t hr'eugh the cleara.ce of slums and bl ghted areas, and the reaiization as soon, as feasible of -he goal of a decenthome and a suitable living enviro.nmen- fox every America..

As in your countries, ou- housing problms are :.ot soived.ret Vie see in our slums the terribje effects of inadequate housi.g. We know how this can become part of a deodly tr"&p that stifles each :.ew generation at birth, breeding continued ignorai-ce, povertv, despair, a:d urest. We know, too, how much individual home on.ef-ship and a decent place 1.n which to live and bring up childi-en, contribute to political and economic stability and growth and to the deve".opment and preservatiocn of democratic government.

As in the United States. some of you!' housing problems will undoubtedly call for direct gover~uaent action, but dir-ect gve"iment programs alone are not likely to provide an adequate solution. In the first place, the housing shortage is simply too vast to be left to one sector of the econo my. The demands on the revenues of any government are alreadytremendous; to add the total housing needs of any country to these would be over whelming.

In addition, large-scale government programs are not always appropriate to problems which are spread across city, town, and village, problems whose solution requires considerable flexibility in adapting to local circun stances. This is why the solution to Latin American housing problems depends so heavily on the growth of local thrift institutions, such as savings and loan associations, which will mobilize as yet untapped local resources for local use.

7 But the growth of savings and loan associations means more than better housing. One of the two or three great problems in economic growth is the development of local resources. Savings and loan associations can bring forth smaIl, individual savings and channel them into constructive spending. In addition, there is a dangerous tendency towards top-heaviness in the economic growth of many countries. Savings and loan associations can help to correct this tendency by providing a solid, wide-ranging base for con tinued economic development.

The importance of savings and loan associations to the economic, political and social welfare of Latin America makes their continued growth of great interest to thn United States. And as the chief regulatory agency for savings and loan associations in the United States, the Federal Home Loan Bank Board has an especial interest in this movement.

What then !an the United States do to help savings and loan associations in Latin America through its foreign aid program, through the resources of its regulatory agencies, such as the Federal Home Loan Bank Board, and through the efforts of its private business men? The savings and loan movement in Lanin America is largely an indigenous lovement. Just as the United States borrowed the idea from England, you, Tn turn, have taken it up. Your enthusiasm and interest are essential to its success. The United States can, I think, do two things!

1. Provide seed capital to help savings and loan associations get under way; and

2. Provide the benefits of our experience with savings and loan asso ciation operations and supervision.

I said earlier that one of the essential aspects of the savings and loan association movement in Latin America is its ability to mobilize local re sources. This is its great strength, for there is little possibility of infusions of capital from outside sources large enough to meet the vast need. We can, however, help to provide the basic operating capital which associa tions need to get started.

In this area, Congress recently authorized Federal savings and loan associa tions to invest up to one percent of their assets in loans guaranteed under Section 224 of the Foreign Assistance Act. At the same time, Section 224 itself was broadened. Previously this section only allowed the Agency for International Development tc issue guarantees for United States investment in demonstration housing projects in Latin America. It is now extended to loans or investments in Latin American credit institutions, such as savings and loan associations, which are engaged directly or indirectly in the fi nancing of home mortgages. The total amount of guarantees provided under Section 224 was also increased from 250 million to 400 million dollars.

8 In addition, as you probably know, for several years there have been pro posals before the United States Congress to create an International Home Loan Bank. Although this proposal has been put forth in various forms, it essentially would create an organization devoted to raising United States private capital to be 1iivested either directly in housing loans or in savings institutions which ar(e involved in mortgage lending. The prin cipal source of funds for this Bank would be United States savings and loan associations. In effect, this Bank would coordinate the sort of lending now allowed by Sectilon 224.

The Administration has taken a definite position in support of' this type of legislation in hetrinors conducted before the House Banking and Currency Committee in 1963. However, it is riot certain at this time whether problems such as the critical balance of payments situation which cojnfronts our coun try will cause a delay -,Ithe enactment of enabling _eislatio. I can assure you, however, th,-,tin the absence of such overridnirl preblIems, the Federal Home Loan Ba'k Boat-d stands ready t'o support suh egilation and to help make it an effective Jnstrunment of international :elations once it has become the law .f th 'atId.

Another way in which the United States can help is w'th experience. First, the skills and expertise of oUr own association "mnagers should be useful to you in settinr up your ovni associations. Fsr se )''ears 1.ow, the Agency for International Development and the National Lea:ce if insured Savings and Loan Assoiat ions have bee:. workinr he s: i-ri de echnical assist ance by U.S. savins ad _oai. sager to new :,cat .ns Tsutin America. This kind of coopef'ation will be expanded du' he c g years through the direct participation -of she Savi.gs and Lons losti u) ai d 'he increased interest of the United States Savbirs and Loan League.

Another important area iii which our expurieice can, be of helr is, I think, in supervision. There is a finie iine between adequae supervision necessary to protect the public and to assure coitinued confiden"ie in the savings and loan business and overregulation which stifles initiative. If our experience is worth anything to you, I can assure you that findlnE the right balance between these is not easy and will not take place without some disagreement. Indeed, the Federal Home Loan Bank Boar-d itself is eve, now in the process of a complete review of its own supervisory processes.

In recognition of the importance of the contribution which the Federal Home Loan Bank Board feels it can make to the griowth of savings and loan associa tions in Latin Anerica, the Board recently established an Office of Interna tional Home Finance as part of its agency operations. The director of that office, Mr. Jack Carter, came to Caracas with me to attend this meeting and become acquainted with you and to learn first-hand from you of the areas where you feel we could be of help.

9 In addition, a progran of exchange visits has been inaugurated. Over the past few years, several of the Board's top personnel have gone to other countries to advise them in setting up their supervisory agencies. In the other direction, during the past 6 months alone, the Board has been visited by over 106 visitors from 16 foreign countries. Most of these visitors were from Latin America.

Finally, Chairman Horne of the Federal Home Loan Baak Board recently ap pointed a Committee of outstanding industry leaders to consult with the Board on international programs. The members of this Committee are re cogn Ized leaders in the United States savings and loan business who have participated in the efforts of our country to aid the development of savings and loan institutions throughout the world. Indeed, many of them are present at this conference. I have talked personally with the members of this Committee and I feel very strongly that their enthusiasm and stature promise good results.

The programs which I have outlined demonstrate our recognition that strong savings institutions and strong housing programs are essential to the well-being, stability and growth of this hemisphere. Yet they are only beginnings. They are the first attempts to find the most effective way in which we can mobilize our resources to help you mobilize yours.

10 AN ADDRESS BY RAYMOND P. HAROLD, PRESIDENT, INTERNATIONAL UNION OF BUILDING SOCIETIES AND SAVINGS ASSOCIATIONS

It is both an honor and a pleasure to be here in this beautiful old c~ty of Caracas, the birthplace of the great liberator Simon Bolivar, with so many of my good friends from both North and South America to attend this Fourth Inter-American Savings and Loan Conference sponsored by the Inter- American Development Bank, the Agency for International Development and the National Savings and Loan League.

I have visited South America many times and attended all of the previous Inter-American Conferences, and I never fail to be filled with inspiration by the vast natural resources of your continent and the friendliness of your people.

You are making tremendous strides in many fields. The sight of the oil derricks and ranches from my plane coming int, Caracas gives promise to the rising middle class and growing economic stability.

In the savings and loan industry you are making exceptio.al progress. Where less than 5 years ago there were few associations in South America there are now nearly 100.

Many United States agencies and organizations are co-operating to encour age the growth of the savings and loan movement among your nations. Great credit is due to both President Kennedy for initiating the Alliance for Progress and to President Johnson for opening the way, through the agencies of the State Department and by his own enthusiasm for the basic principles which our industry brings to the common people - the dignity of a man owning his home - the opportLuni',y to save money for the things he wants and should rightly expect for himself and his family.

Through the excellent cooperation of A.I.D. Anministrator David Bell and his able assistants, Stanley Baruch, Osborne T. Boyd, Herbert Waters and Harold Robinson, millions of dollars of "seed capital" have been invested in the savings and loan systems in Latin America. Others have made a sig nal contribution to the expansion of the savings and loan system and the beginnings of a solution for the housing problems in Latin America by their work for the government in this area. The Agency for International Development also works through the twc Trade Leagues in The United States and the American Savings and Loan Institute to further the establishment of savings and loan institutions in the developing countries.

We hope and expect that legislation creating an International Home Loan Bank will be passed by Congress this year.

11 Already, Federal Home Loan Bank Chairman, John Horne has appointed Mr. Jack Carter, Director of the Office of International Home Finance to head an International Development Committee on Savings and Loans. The five committee members have been appointed.

The National Leagu.e is to be commended for pioneering a program of tech nical assistance ,under the capable direction of Kenneth Heisler and William Kerwin which is being successfully carried on; the United States Savings and Loat League for making its great resources available through the progiessive actions of Norman Strunk, Executive Vice President, Mr. John Stadtlur, immediate past President, and Mr. C.A. Duncai., Lhe new President, and ts Board of Dii'ecLoi's.

The League now shares the space of its Washington office with the head quarters of the Iterenational Union. Miss Josephine Ewalt, an experi enced staff member of the League and one conversant with the internation al movement durin g a period of nearly thirty years, assumed office as Secretary-General November 1, 1965. Mr. Robert Distelhorst will serve as liabon officer with the A.I.D. Programs.

The Amrican Savings and Loan Institute in cooperation with A.I.D. will sponsor the second Savinigs and Loan School at Princeton University in April 1967. I hope that many of you from South America will take advan tage of this great opportunity. The first International Savings and Loan School held ii April 1964 at Lincoln College, Oxford England under the auspices of the British Building Societies, was a great success with over 100 studen:ts from 27 countries attending. We look for an even greater world-wide attendance at Princeton, New Jersey in the United States in 1967.

Also individual programs of technical assistance will be established in various South American countries under the sponsorship of the American Savings and Loan Institute.

The 10th Congress of the International Union of Building Societies and Savings Associations was held in London in October 1965. It was by far the largest ever held and represented more of' the nations of the world than any in the 56 years during which savings and loan institutions have had international relations within their own ranks. Thirty-four countries were represented; and over 900 persons, including wives and guests, were in London, for the meeting. The actual delegate body consisted of 450 officials of savings and loan institutions and of the governments of the countries represented.

This Congress wouid have been a great satisfaction to a handful of men from our industry who met in 1919 and organized the International Union.

12 From that historic agreement there evolved an organization complete with officers and a cons.titution. These pioneers admitted to having both social conscience and economic ambition. They realized that the two are not un related, but go hand in hand. And they state, their five main objectives as follows:

Fostering the ideals of thrift and home ownership, plus a spirit of cooperation by providing facilities for congresses arid con ferences throughout the world,

encouraging a cooperative study of methods and practices, especially by the establishment of some educational means,

arousing and stimulating world-wide interest in thrift and home ownership by private enterprise,

encouraging legislation to safeguard the expansion of the savings and loan movement,

and adopting various proposals to attain the foregoing purposes.

In 1938 before the outbreak of hostitilities in Europe, the I.ternational Union of Building Societies and Savings Association-s welcomed deiegates from 12 countries to their Congress in Zurich, Switzerland. Interrupted by what might have proved to be disastrous circumstances, the Unio:;, in 1957 picked up where it had left off by holding a:. impressive CJigress i:. Stuggart, Germany. Arid since that date the International Ur.io.-. has rapidly rainied in prestige arid effective-iess Luntil today there are 500 members . 40 couitries with 90 new members joining last year. To show how the idea has caught on, in 1957 we had 167 members from 29 coi-Ltries includ.Ingu-ade associations. And at that time there were no members at all from the South American couLn tries. Since then we have increased our total membership more than three times.

In 1965 even some of the developing countries not represented had sent re ports on the status of housing and housing finance and these reports were included in the volume of technical papers and national reports already in print when the Congress opened, and were available to all delegates.

There were present several representatives from the Department of State, Agency for International Development. The United States delegation numbered over 150 savings and loan executives. The United Nations sent Mr. Eric Carlson, Chief of the Centre for Housing, Building and Planning as an ob server.

In the addresses and papers of the Congress, I could find much to interest the members of this Conference, but time does not permit anything more than

13 selection of pertinent thoughts. The Int-rnational Congress was honored by having Mr. Stanley Baruch, of A.I.D., who brought to the Congress best wishes of A.I.D. Administrator David Bell. He reported the $48.5 million of "seed capital" which A.I.D. had invested in the savings and loan pro grams in Latin America.

Mr. Baruch's thoughtful paper brought out convincingly one basic idea that housing does contribute to economic development, contrary to a long standing economists' dictum.

While the 10th Congress of the International Union in 1965 consisted of representatives of thrift and home financing institutions, which we call "savings and loan" and which the British Commonwealth countries call "buildincg societies", and while most of its emphasis dealt with methods of meeting housing needs through this type of institution, there was a growing understanding -uong the delegates that meeting the actual housing needs of the .ations is the real goal; that the methods used to attract capital, whether from savers or from government bodies, to meet the credit needs of home-ownfers are many, and that the methods must reflect different cultule and behavior pattei-ns. This wider view of the problem and its solutio~s will cer tainly be the emphasis of the International Union in the years immediately ahead.

The Interniational Home Loan Bank legislation which has been the great interest of so many of us and of some prominent members of the Congress in the past five years is one of the most imaginative actions ever to be under taken by the savings and loan industry in the United States.

The main paper on the International Home Loan Bank idea was given by Federal Home Loan Bank Board Chairman John Horne who listed four reasons for sup porting this International Home Loan Bank;

1. It would benefit the developing nations.

2. The investment opportunities for savings and loan institutions pro vided by an International Home Loan Bank would far surpass the ini tial guaranty authority for direct loans and investment in Latin American countries which has been given in the 1965 Housing Act.

3. A progressive savings system is a prerequisite to a vigorous econo my, and lack of mortgage fund prevents the development of a healthy construction industry; this lack, in turn, retards industry which produces the materials going into housing - in other words, the International Home Loan Bank would have a potential to be a big boost to the economy of any developing country.

4. The staff of the International Home Loan Bank would help in solving the problem of technical assistance in the establishment of home financing institutions.

14 The Congress had the special honor of' being addressed by the Prime Mihis ter of Great Britain, Mr. Harold Wilson, who praised 4 he development of the building societies in Great Britain over a period of nearly two hun dred years, since they channel the savings of individuals int the highly desirable purpose of the housing f'r peop .e.

The national reports from the deve7.oping countries were full ,f challenging ideas and information. The rather detailed report from Chile listed 7 main incentives for persons to save in the fairly well-develped savings and loan system in Chile.

One of the attractive brochures which was distributed at the Cogross was the "Statistics _)f the Peruvian Savings and Loan System." This was dis tributed by Father Dan McLellan, who, by the way. i an t' er f the newly elected Vice Presidents ,f the Internati ,nal Uni n. Th,_ .en- -ral rep, rt from Peru was made t, the Congress by onecf the tiber Periuvian delegates since Father D'In was already o-,n the C_;uncil f t In, . nal Uni rn. This report was, of course, one of the shining exairiples -f wht has beern done to establish the savings and 1-,-an sy :tei in S-uth AJii-ericu, and the author of the report stre:sed the Ireatnee_-d f r the Intern'ti nal Home Loan Bank.

Much credit is due to ore of o'ur outstanding savings anu 1 an l,_,aders who has been active in the Internati nal Uni-n f r many years, Mr. M -t-n Bodfish, now of Wickenburg, Arizona, f rmerly -:f Chicaz , wh is a Past President of' the International Uniiri and has served n its E):,cutive Com mittee for the past 25 years.

In closing I would like t- refer briefly t,- the recmmendati- ns made :n my acceptance of the Presidency of the Internati nal Union last Cctober in London:

1. The speedy accreditation of tne International Uni-n t the United Nations. The Union's purp-oses_- embrace all pe pl. and its vast re sources are properly dedicated t housing ur swellin- p pulati ns, which is of deepest concern t the United Nati ns.

2. The formation of a wo rld Home Loan Bank wich will be identifiable with free enterprise, initiated by seed capital, u-,ierated by re presented investors, and -open t world markets in the field of housing.

3. The amendment of the International Home Loan Bank Bill n:ow before Congress to allow participation of all countries in this venture.

4. Working for legislation in countries represented by the membership of the International Union to allow for such participation.

15 5. Encouraging and helping International Union members to obtain the organization of Central Banks - patterned after the Federal Home Loan Bank in America - including necessary legislation in their respective countries.

6. The institution of a training program, world-wide, for young men and women in the administration of savings and loan associations, and the employment of all qualified man power experienced in the fields of credit and housing - such as retired managers - for the extension of the savings and loan concept in developing nations.

7. The initiation of an alliance of all agencies now involved with world housing, savings and loans, mutual savings banks, insurance companies, pension funds and similar institutions.

Only by working together - people with people - business with business government with government and any number of combinations of all of these can we meet the needs of the people of the world. I suggest that we in vite and include all such agencies to join with us in discussion of world wide cooperation in the field of housing and if necessary amend our by laws to approve such discussion.

A whole world is still in need of homes and we are only now beginning to release our reservoir of resources to fulfill our true mission of making these homes possible.

I submit the observation that we must anticipate charity among peoples and among nations by preventing poverty, and that we have one of the best tools in the world for accomplishing that objective. A philosopher many years ago suggested that we must help our fellow man by teaching him, by putting him in a position where he may earn an honest livelihood, by raising his sense of dignity in society - and not force him to the dreadful alternative of holding out his hand to charity. "This", he said, "is the highest s-ep and the summit of charity's ladder."

I am convinced that the kind of work which built everything we now have in our savings and loan associations, can build everything we want for the future. This is agrigantic task which we must all work together to accomplish.

16 AN ADDRESS BY HARRY P. GREEP, PRESIDENT, NATIONAL LEAGUE OF INSURED SAVINGS ASSOCIATIONS, U.S.A.

It is my pleasure, on behalf of the National League of Insured Savings Associations, to bring you greetings from the savings and loan managers in North America.

It is especially pleasing to me to be here in Venezuela where I have been the AID consultant to assist in some small measure in the creation of a system of savings and loan institutions. IHere in Venezuela, where we see savings and loans flourishing, and also have an awareness of their con tribution to the over--all increase in the economy of the coun,_r, we can surely realize what the savings and loan systen: means to te n',ntries where it exists and know, of course, Venezuel is tut one of t.je many nations in Latin Ajneric: where savino-s and lo!:ns are r:pidlyv progressing. Your institutions have made toese meei ings not only possii le EL . because of the enormous growth of associations in SouP-mAeric!, an absolute necessity.

I can remember when these meetings began, under skeptical eyes of many who didn't think we had a chance to make home financing institutions work. But we have.

You have.

And now, the annual meeting of the Inter-American Savings and Loan Confer ence is an accepted fact.

Savings and loan associations are in Latin America to stay.

In the ten short years that your associations have been in operation, we have come a long way. You all know the statistics - 92 operating asso ciations from a meager start of lust two - 350,000 savers - $120 million in savings - 40 new homes financed each day.

But statistics don't tell the whole story. You know that. The true picture is in what these associations have accomplished for individual families which a few years ago couldn't hope to dream of owning a home - families which a few years ago didn't know what real savings and thrift could mean to them - and even famiilies which a few years ag7o lived in shacks and other make shift shelter. Surely, it is in these individual stories ihat the true worth of your savings and loan systems must, be measured for, as the savings and loans develop in each of your countries, everyone - from the middle-income group downward - will ultimately feel its impact.

17 Today we are meeting for the fourth consecutive year. And we have more delegates than ever. Dedicated men of the savings and loan business from my country and yours--and we're all working together to bring about a better savings and loan system--in my opinion, the greatest business in the world.

I can see friends here from many nations. Delegates from all over the hemisphere' here to work and to learn more about how to house more people faster, belter and for less money, through capital formation.

While we can all be proud of a job well done thus far, we must be aware of the tremendous job that still must be accomplished. The problems that arise from day to day and the disappointments must not dll our perspetive nor lessen our enthusiasm to attack the massive tasks that are still ahead of us.

As many of you know, the ational League of Insured Savings Associa tions comniles monthly data on the progress of your institutions. In the time since we last. met, your associations have continued to show a growth that i know is gratifying to your counterparts in the United States, and weic'n must be hig-hly satisfying to you.

Accordiny to ouw figures fo,' the calendar year just ended, your institu tions posted significant gains in year-to-year activity. This continuing record of achievement ',as not gone unnoticed in the United States.

As President of' the 11atiotial League, I had occasion to meet just two weeks ago with the Acbinistrator of the Agency for International Development, .1r. D.vid Pell.

We talked about the prosress of your savings and loan associations, and about the great strides that your instittiions are making. Mr. Bell indicated his support of legislation to establish an lnternational Home Loan Bank, where savings and loans in my country would invest capital in loans through the Bank to established associations in Latin America.

Mr. Bell's support for this legislation will be an important factor in its passage. 1Mhille we, as in your countries, find the legislative process slow and had hoped 'o have the Bank in being by this time, it is in fact to the credit of 11r. Dell in great measure for marshalling continued support in the United States for the development of savings and loan institutions in Latin Piterica.

IT is hoped tniat-iis year the U.S. Congress will pass the legislation authorizing the International Home Loan Bank. I am convinced that this step will r-reatly strenrthen the fabric of the entire savings and loan movement in Latin America.

Last year the Congress did pass legislation providing for investment in Latin America by U.S. savings and loan associations. This authorization

18 enables our institutions to invest v,. to one per cent of assets in housing for Latin America.

The new law is expected to result in the financing of new housing for Latin America, over and above that accomplished by your institutions.

Of course, the A.. I. D. program does not begin and end in Latin America. The savings and loan industry is also expanuing to other areas of the world, and associations may soon be established in such nations as Iran and Thailand.

And I can say this without equivocation, if these institutions do as well as yours have done, we will be well on our way towards a truly worldwide savings and loan industry.

President Johnsoi .as indicated he is willing to give the A.I.D. the tools it needs to elp you do the job. In his recent budget message, Mr. Johnson stated that "to promote development through better planning, legislation is being recommended to authorize A.I.D. activities for a period of five years."

This legislation will enable the A.I.D. to make long-range plans in all its activities, and also to better coordinate ics plans throughout the A.I.D. system.

The President also said that our nation -.ill "accelerate our efforts to encouLage the developing countries to take vigorous self-help measures."

As the President's %udget message indicated, the A.I.D. mission is re garded as a high priority program by the Administration. I am convinced that the success of your institutions have kept it in such iligii esteem.

It was not always so. But the results of early efforts in your nations have given proof positive to skeptics in my country -- and in yours - that private savings and loan systems can prosper if given the chance.

For the one thing the skeptics foroot about :,is that, while A.I.D. has given technical assistance to your aLions, and U.S. savings and loan executives have traveled to your countries to help out in whatever way they could . , the greatest commodity we've got in this savings and loan business -- and this goes for any place on the globe -- is the strong desire for home-ownership. And, so long as this persists, the skeptics will always be wrong.

My personal experience with the dedicated men and women in Venezuela, who have given unstintingly of their tine, talent and effort to make their system strong, and to give leadership to the individual savings and loan associations, is so outstanding that I feel ccmpelled to salute all of you attending this conference who have taken on not only the challenge of creating savings and loan entities but also are contribut ing to the further development and well being of your individual countries.

19 AM ADDRESS BY DAVID BRONHEIM, DEPUTY UIITED STATES COORDINATOR ALLIANCE FOR PROGRESS

all of the other I cannot resist the opportunity, and I know I speak for done by the delegates, to comment on the wonderful job that has been Also, I have officers of the organizing committee and of this meeting. easier by having to comment on the fact I think their job has been made country and particular our meeting located in this spectacularly beautiful ly our magnificent surroundings. and for my government It is a great honor and privilege for me personally Your efforts and the to be associated with this terribly exciting event. part of the work efforts of your organizations form a vitally important I cannot stress toward achieving the goals of the Alliance for Progress. showrn by you as enough the importance of the kind of energy and dynamism goals. individuals anid by your institutions in achieving these

that have occurrced in You aic all aware of the tremendous accomplishments clearer when one the Hemisphere in the last five years. These are made similar span through compares what has happened in this period to any other out our history. The mere fact that a meeting like this is taking place, to reform and develop and the number of people like yourselves dedicated ment testifies to our achievements. we have reorganized This progress can be seen in my government in the way The movement to make our contribution to the Alliance more effectively. President Johnson. started under President Kennedy and has continued under of national plans and It can be seen in your Covernments in the developing more effectively. the attempt to mobilize and allocate national resources establishment of the It can be seen in the Inter-American System by the and in the reforms Inter-American Committee for the Alliance for Progress, meeting in Rio. that have been suggested at the recent foreign ministers in the roads and It can also be seen any place one goes in the Hemisphere: in the transmission the hydroelectric systems that are under construction, industries of your coun lines that are carrying the power to the homes and in new schools. And, in tries. It can be seen in the number of children, credit institu the more complex areas, it can be seen in the intermediate revolutionary goals to tions that have been established to achieve really obtain funds or tech- assist families previously without hope who could not can see this in the nical assistance to better their way of life. And we industrial sector where private development institutions have been set up could never before and where funds have been made available to people who are carrying out expect to receive them. Public development institutions country, credit has the same task and in the agricultural sector in every begun to go to people previously denied this privilege.

20 It can of course, also be seen in the housing field where the success has been primarily due to the efforts of individuals like yourselves. As a result of your energies and imaginations, people who five years ago or more recently than that, were condemned to live in inadequate housing without hope or personal dignity, now, for the first time throughout Latin America, are beginning to see a glowing light on the horizon.

You have increased the opportunity to obtain the financing to live decent ly, and to obtain the fruits of the second half of the twentieth century; to achieve the social justice that has been eluding them so long and which perhaps now may become a reality.

You have, in fact, shown the way that this can be done in other fields, and in each the Hemisphere must find people who are prepared to sacrifice and to dedicate themselves to achieve the goals of our alliance.

I know that the problems before us are still vast, and must not be under estimated, but I feel the momentum has started and the attitude change has set in, and there is no turning back. Our Hemisphere is alive for dynamic development and social reforms, and structural change is in the air; human dignity is on the rise. The opportunity of the individual to achieve his fair share of our wealth is increasing aiLd I am sure you all appreciate that this is really our goal.

We sometimes get involved in talking about statistics and numbers of houses built, and how many beds are needed, gross national products and all of the larger and terribly impressive data that we spend our time uith, but it takes a meeting like this to bring us back to the reality that we are really talking about people and bettering their way of life and letting them hold up their heads a little higher.

I would hope in recognizing the problem before us, this meeting as with simi lar meetings in the past, would come up with or would begin to start us up along the road to new solutions; better solutions to the myriad of problems before us. Obviously, the job ahead is still very large. How can we mobi lize the necessary resources to make available decent homes, not just for the middle class, but also for those below them who are trying to climb into the middle class? How can we develop the institutions and techniques for increasing food production and making available to every one decent diets so that their children can study well and their men can work adequately in the fields and in the factories? How can we mobilize the resources to train the people to set up decent educational system for all so that parents throughout the Hemisphere can know that their children have a L tter oppor tunity than they had2

And so it goes. In the health field, why is it that in the second half of the 20th century people still do not have the opportunity to share in the tremendous technological knowledge that is available to us, and are still

21 dying of diseases for which we know the cure? If we look at our cities, both in my country and in yours, there are shocking conditions that exist and we will obviously have to develop more than the techniques to build the houses, install the social services, and mobilize the capital to do the job.

I cannot over-emphasize the importance that my government and I personally attach to a meeting like this and to the work that each of you are doing in .our c.untry. In this connection, I have been asked to read to you a message from my President and, I quote:

"I am pleased t, extend my heartiest greetings to the participants of The Fourth "Inter-American Savings and Loan Conference and to wish you every success in "your deliberations.

"The creation of capital to provide long-term home mortgages is one of the "key efforts o-f the Alliance for Progress. The success which your associa "ti~nn have achieved r:", resents a tremendous step forward.

"Only five years age, two small associations began successful opera oions in "Latin America. Today 89 associations, with a membership of over 300,000 "pers-ns, have accumulated savings in excess of $100 million and have financed "mere than 37,000 homes. This is a fine achievement and a good example of "peolo heloing themselves to attain a higher standard of living.

"Yur undertanding is all the more important because it exemplifies what can "be accomplished when our governments join hands with private enterprise to "achieve a common objective." - Lyndon B. Johnson.

22 AN ADDRESS BY MR. ALFONSO ROCHAC, TECHNICAL MANAGER OF THE II]ER-AMERICAN DEVELOPMENT BANK

On behalf of the Inter-American Development Bank, I have the pleasure of conveying cordial and respectful greetings to the Venezuelan authorities, who have devoted so much effort to the holding of this Fourth Inter-American Meeting on Savings and Loans.

Felipe Herrera, the President of the IDB, once said that these meetings might justly be called the mobile university of housing, because of the human qualities and technical expertise of their participants, because of the exchange of knowledge accomplished through mutual assistance and sharing of experiences, and, above all, because their purpose is to contribute to the solution, through economic methods, of a complex problem with deep social implications.

This is a timely opportunity to recall a number of' facts about the housing problem in Latin America and the collective efforts that have been made for its solution. Latin America has one of the most marked trends tow.,ard urbanization of all the regions of the ,,orld. In 19(0 the total population living in cities .,as about 95 million. Since then, the population of the urban areas have increased by about 20 million and there is no doubt that by 1975 the majority of the Latin American people will be city dwellers.

The provision of housing for human beings is one of the most acute problems faced by the world today. It is particularly acute in Latin America, where it constitutes a most serious challenge to the talent and inagination of men of thinking and action. While the technicians and experts shut themselves within the ivory tower of their specializations, ignorant cf these realities of the environment in i.which wJe operate -- perhaps in the ie that we are only too familiar with it -- there proliferate in Latin America the retched slums and shanty-towns by i-,hich our large cities are s:urrounded. Fortunately, housing and urban development already forn part of the econom'c anu -ocial policies of the governments of many of our countries, w.,hich are promoting the development and expansion of the construction indust-y a- one means of reducing costs and increasing production. In addition, vocational technical schools and vocational training institutes are being set up to study and put into practice economic, social and technical advances.

Since the start of its operations, the !DB has assigned priority to the problems that affect the well-being of the Latin American communities, in the conviction that this well-being is the foundation of any economic development. It has, accordingly,furnished financial and technical assistance to all programs designed to stimulate housing construction and the provision or improvement of housing infrastructure services, such as potable w,,ater, sewerage, electricity, access roads and so on.

In fort years, the IDB has granted housing construction loans for a total of US$226 million. In addition, it has approved loans totalling US$368 million for public works projects ancillary to housing development. It has thus made a total contribution of nearly US$600 million to the financing of urban development.

23 Through their multiplying effect, these loans have stimulated local invest ment in excess of US$1.5 billion.

In addition, the IDB has granted technical assistance for housing programs to the value of about US$2 million and for potable water, sewerage, environmental sanitation and electric power development projects to the value of US$7 million.

When all these programs are completed, an estimated 262,000 dwelling units, with all necessary sanitation and other services, will have been constructed in Latin America.

I should like to take this opportunity to state the policies that the IDB has been following in its housing develooment lending and technical assistance operations. They may be tumnarized under ten headings:

1. Wherever possible, the housing loans must be used for projects forming an integral part of national or local development programs. Houses must be built for reasons other than the simple desire of building them.

2. Provisions must be made in order that when houses are built the necess:ary commounity services, such as water, sewerage, lighting, transportation, safety installations, etc. will be available.

3. Priority must be assigned to housing programs for low income families, which comprise the bulk of our populations.

4. Home ownership, with full title, should be encouraged.

5. Human dwellings cannot be relegated to mere subjects of business speculation and much less of usury.

6. Systems of directed effort and mutual aid must be fostered.

7. Loans must be made available to the beneficiaries under adjustable amortization and interest terms so that payments represent a reasonable proportion of' family income. In certain cases, the contribution by the local or central government in the form of land or of basic or administrative services should not be charged to the final homeownar, or should be charged only in part.

8. High priority must be assigned to programs for the provision of essential facilities in rural areas suitable for settlement.

9. The establishment of an efficient and competitive construction industry must be fostered so that housing construction costs may be reduced through the use of modern materials, new techniques and improved designs.

10. As a general rule, the principle of periodical adjustment of outstanding mortgage and savings account balances must be adopted in order to obviate depreciation caused by inflation.

24 We consider this a suitable occasion to place on record the work that Venezuela has been accomplishing in the provision of housing for low and middle income families. Responsibility for the urban programs is entrusted to the Banco Obrero, with which the IDB has cooperated in the fori of financial and technical assistance. A Sunmary of the work accomplished up to now by the Banco Obrero has been presented by said institution and has been circulated umon the participants. The Rural HousinE Division of the Bureau of I.lariology and Environmental Sanitation is responsible for dealing with the housing problems of the rural population in Venezuela. From 161 to 1065 this agency has built a total of A5,000 dwelling units, partly vith iDB assistance, which represent an investment of more than Bs. 200 million and have benefited about 600 com munities and a quarter of a million peoplo.

Venezuela has carried out a number of integrated rural housinC programs, which include projects for water supply, sanitation, roads, assistance services, schools and land settlement. Venezuela has a proud record to show Latin America in the matter of rural welfare planning.

It is a source of sptisfaction to the IDB to have been able to support the efforts of the Venezuelan Government in the execution of these rrograms.

The Venezuelan Community and Municipal Development Foundation has participated in the financing of self-help and mutual-aid housing pro.ects. The Foundation has received substantial loans from AID to help finance its comnunity and local government development activities, which include housing programs.

In 1958, Vanezuela established the Low-income Hcusin C Foundation (Fundaci6n de la Vivienda Popular), a non-profit institution which received a loan from the former Development Fund (now incorporated into AID) for the accomplishment of its objectives. In addition, a number of municipal housing institutes have been set up, such as the one in Maracaibo.

Venezuela is carrying out a four-year housing development proCram covering the period 1965-1969. The following are the broad lines of the policy on which this four-year program is based. The action of the public sector is directed primarily toward satisfying the needs of families with incomes below Es.1,200. The land can be granted under emphyteutic contract, or heritable leacehold, with built-in right of redemption. The cost of the services provided is recovered through the lease pa.ments, and ownership of t e house can be acquired under contracts of sale with pa-nyents: spread over up to 30 years. in addition, incentives are provided to non-profit organizations and private enterprises to participate in the low-income housing programs. The neei of families in tbe Bs. 1,200 - 3,900 income group are met through the cavinaE and loans system. Finally, families with incomes in excess of Bs. 3,900 vre cared for by the mortgage banks and other private credit institutions. In this way, the Vene zuelan Government is ensuring equitable attention to the needs of all social groups of the population and is directly assisting those who are in most need of help.

By mid 1964 there were about 88 associations in 7 Latin American countries, while the other countries had systems designed to promote pure savings. These savings and loans associations had a total memlership of 340,000 and total net deposits of nearly US$ 100 million. This is one of the most ambitious programs to have been conceived in Latin America.

25 I should like to make special reference to the Venezuelan savings and loans movement. The first savings and loans association was established in 1962, with resources of Bs. 645,000 and a membership of 661. The first loan was made in December of that year. By 1965, there were 21 associations in Venezuela, with a total membership of over 26,000. Total savings had multiplied to Bs. 108 million, while 0,601 loans had been granted, for a total of Bs.214 million.

The work of this Fourth Inter-American Meeting on Savings and Loans begins under the best possible auspices. At these meetings we have employed a working method characterized by .JseiL!:ss. frankness and a full sense of the responsibility we bear in hl= zuzii n. to problems that affect the col lective well-being. This is attributable to the development within the savings and loans movement of a spirit that needs to be nurtured in Latin America - a spirit of private enterprise motivated by the profit motive, ready to place such benefits at the service of the cormnaity.

The savings: and loans movement has received a great deal of help from the National League of Insured Savings Associations, a United States private organization, which has spread amnng the Latina American countries the benefit of its experience in mobilizing capital for housing construction by teaching a system in which saving is transformed, from a virtue and a burden into a habit that requires neither sacrifices nor special incentives and promotes the general welfare.

Recognition must be given to the positive and constant assistance rendered in this crusade for the mobilization of savings by the Agency for International Development, better known as AID. Future generations of Latin Americans will have cause to remember with gratitude the names of those in AID who have done so much to make the savings movement a reality in our countries.

I would venture to assert that these institutions that have fostered the development of the savings and loans movement in Latin America share the philosophy of the peace corps, in that their efforts serve to help us achieve economic and social harmony.

I should like to dedicate a few final words to the Inter-American Savings and Loans Union. The Union, which is the culmination of a program which began right here in Caracas in 1964, has accomplished fully its purpose of fostering close ties between all the deposit and lending institutions, wherever located and whatever their legal status or methods of operation. We believe that the Union has acquired the necessary maturity to serve as the liaison organ between savings and loans associations in this Hemisphere and similar institutions in other parts of the world, and to assume the leadership of the System at the Inter-American level, to work in the interest of the thousands of savers and recipients of housing loans and insurance services.

We are certain that this Fourth Meeting, which begins under the most favorable auspices, will yield gratifying results, for it is being held in Venezuela, a country in which the government and the private sector possess resources for economic and social development and also faith in the principle that the best political guarantee of any people is respect for the law and the reign of liberty.

26 I wish to conclude by recalling a dictum that might have been said by Father McLellan or by Stanley Baruch himself: "If you give a man a present, you may satisfy a passing need, but if you teach him to save, you will be helping him to meet all his future needs".

27 AN ADDRESS BY MR. LEOPOLDO SUCRE FIGARELLA, MINISTER OF PUBLIC WORKS OF VENEZUELA

It is a great honor for me to inaugurate this Fourth Inter-American Meeting on Savings and Loans on behalf of the President of Venezuela, Dr. Rail Leoni. I am certain that through the exchange of knowledge and experiences, which will undoubtedly prvide positive -uidance for future action, the work of this Meeting will further the progress of the program being carried out in this field by ur sister republics represented here today.

in the name of tl:e President of the Republic and on my own behalf, I wish all the (1dotlejati in s fr m our sister coutries a most fruitful outcome in their discussi, ms and a most enjoyable stay in our country. In Venezuela you will have an inpprtunity t n)te for yourselves that massive as the problems are, and great as is the w-rk that remains t( be done, at least we have prgressed with energy and hav,- gradually advanced on the road to their solution. This pro-res has been achieved thr ,ugh the j oint ff, rts of the pocple and its g-,verrment witi in th democratic systeu that has been in f,-,rce in Venezuela since lc)%Q, and wl ich is inspired by the principles of respect fir individual, political and . cial liberty, and wi iso administration is directed to raising the welfare and the cultural and material living standards of its pe)ple as well as toward the creutirn of the social and ec noic infrastructures neces sary fmr the develuoment Lf all aspects o f national life.

I am als- certain that the distinguished delegates to this Meeting will find evidence ,f the high spirit -f regard and comununity of interest that we Venezuelans feet t' ward our partner peoples of Latin America and which, going beyond mere declamnation and rat ry, is reflected, at the human level, by a true .f_Tesebr tLherho,:d and solidarity, and at the governmental level, by a spirit of active coliaboration in all activities conducive to the achievement of cultural, ccnemic and s cial progress and ali undertakings directed toward o)ur c ,mmor:n devel _oment.

Proof of this spirit of collaboration is provided by Venezuela's adhesion to the Latin American Free Trade Association, by the joint Colombian-Venezuelan programs for the development of frontier regions. by the completion of the Venezuelan sections o)f the Pan American Highway, by Venezuela's substantial cooperation in the project sponsored by the President of Peru, Dr. Bel-dunde Terry, for the construction of the Carretera Marginal de la Selva, which will contribute to the development of the Amazon basin, by the cultural agreements concluded by the Venezuelan Goverment, and by the technical and professional assistance that we are rendering t, certain of our sister countries of Latin America.

The national government led by President Radl Leoni regards this meeting as an event of extreme importance, inasmuch as its objectives are to promote an increase in savings and the channeling of those savings to housing construction, two fundamental requirements for the economic and social development of our peoples.

28 The establishment by the Venezuelan Government of the National Savings and Loans System and its subsequent strengthening and development are tangible proofs of the governmentts keen interest in promoting the mobilization of private savings and in channeling them to housing construction.

Since its organization in 1962, the System has expanded to the point that 4,322 loans have been granted for a total amount of BE.232 million, of which Bs. 110 million has been financed out of savings deposits and Bs. 123 million by means of rediscounts by the Central Savings and Loans Office.

Savings and loans associations are now operating throughout Venezuela. The creation of such a powerful financial instrument in such a short span of time is proof of the interest felt by the savers in organizing themselves.

Our System is based on the principle most widely adopted, that of promotion of voluntary saving. The savings are insured by the national government, and the interest paid of up to 6 percent is an incentive to the general public to deposit its savings in the associations of the System.

The national housing policy announced by the President of Venezuela in his first Presidential Message to Congress on March 11, 1965 assigns specific areas of responsibility to the various State agencies that are concerned in remedying the housing problem.

Through the Banco Obrero, the Community Development Foundation and the Rural Housing Division of the Ministry of Health and Social Welfare, the Government plans to build, during the period 1965 to 1968, 150,300 dwelling7 units for families with a maximum monthly per capita income of Bs. 250. This program is being executed as scheduled and, in fact, some of its goals are being exceeded.

The National Savings and Loans System is responsible for meeting the needs of families with incomes of from Bs. 1,000 to Bs. 3,900 a month, and has been assigned the target of housing 30,000 families over the four-year period.

In formulating this housing program designed to satisfy the needs of low-income families and to remedy the general national housing deficit, the Government has adopted realistic goals based on the country's actual housing construction and financing capacity. The dwellings that are going up all over the country provide visible evidence of the success of this program.

To return to our central topic, that of savings and loans, the Central Office has received cash contributions from the national goverrment totalling Bs.137 million, of which Bs. 45 million derives from a loan made by the Agency for International Development. In addition, mortgage bonds for a total amount of Bs. 135 million have been allocated to it for placement with financial institutions. These contributions offer tangible proof of the Government's readiness to assign adequate resources to ensure the sound operation and progress of the System. To supplement these resources, loans are being negotiated with international organizations. It must not, however, be forgotten that the purpose of the savings and loans system is to channel savings and to increase

29 the number of savers, and that the burden of providing the necessary funds cannot be borne solely by the State. Nor must it be forgotten that the System cannot be converted into an institution directed solely to the financing of housing, since that activity is merely a byproduct of the fundamental object of the System, which is to channel savings. If this fundamental purpose were not accomplished, its financing needs could not be met, for the national treasury would be quite unable to provide the necessary volume of resources. Such a situation could arise in the case of the Venezuelan system, and it is the duty of the Savings and loans Conmiss-' n to draw up the appropriate guidelines and to introduce the necessary changes in the policy being pursued by the System to steer it toward the specific purposes for which it was created.

Consolidation of the Savings and Loans System in Venezuela is a most important task, since with the strengthening of the System it will be able to serve as an instrument not only for solving the housing problem for a very large number of families, but also as one for the generation of capital resources that can contribute in one way or another to over-all national development.

It was precisely with these aims of consolidating and strengthening the National Savings and Loans System, of endowing it with a dynamic institutional structure and of providin. the legal instruments to enable it to fully accomplish its mission, that the Executive recently presented to Congress the Law pertaining to the Eational Savings and Loans System (Ley del Sistema Nacional de Ahorro y Prstamo). Taking into account its possible contribution toward the achievement'. and well-being of the community, we are confident that this Law will be %pproved ;..ithout loss of time.

It is n eossary that this Fourth Meting on Savings and Loans also serve to strcarthen the bonds cf solidarity between our countries, and that there emerge from i: formulas of solidarity, by means of which those national savings and loans ystems that have surplus resources can help to finance the systems of other countries whose resources are inadequate .

In renewing my best wishes for a very fruitful discussion and a most enjoyable stay in our country, I have the pleasure, on behalf of the President of Venezuela, Dr. Ra6l Leoni, of formally declaring this Fourth eeting on Savings and Loans officially inaugurated.

30 REPORT PRESENTED BY COMMITTEE "A"

PROMOTION, ORGANIZATION AND DEVELOPMENT OF AN ASSOCIATLON

Members of the Committee:

Chairman: Mario Luis Velasco

Speakers: Ulrich Neisser Manuel Pit-: D.uga Sam Borden Edmund Dacnino

Rapporteurs: Francisco Arias Gustavo Coil Jorge A. Casanova The Committee was assigned the examination and study of the topic

"Promotion, Organization and Development of an Associacion".

The following points were to be covered:

1. Initial promotion of the association. Study of the savings and loan market.

2. Apparent competition of the savings and loan associa tions with other financial institutions.

3. Ideal minimum organizational chart: selection of per sonnel. Distribution of work and its relation to growth. Accounting systems and mechanization.

4. Working hours. Desirable and timely expansion. Agen cies and branches. Promotion of savings and loans.

The conclusions and recommendations on each of the points listed are as follows:

1. Initial Promotion of the Association. Study of the Savings and Loan Market.

a. One of the basic factors for complete success in The establishmient and growth of a savings and loan associa tion is that it be promoted at the outset in the best possible ways that expertise and experience can recom mend.

b. The prornotional group must include representatives of the different sectors of the cornunity so that the association may be founded at the outset on the broadest possible base.

c. The promoters must be persons of impeccable integrity, throughly familiar with the true nature and purposes of the institution they intend to organize, and capable of fostering its growth.

d. Within the promoting group, the influence of persons who may place their private interest ahead of that of the association must be avoided.

32 e. Since the manager of an association i. its most impor tant executive official, and one whose activities are vital to the success of the operation, special care must be taken to choose for this posu a person who is honest, capable, responsible, dynamic and talented in the field of human iAlations.

f. Before the decision to establish an association is taken, an exhaustive study must be made of the savings and loan market in the area where it is to operat.e.

g. In such a study, depending on the facilities available, the following points must be determined as accurately as possib-: social and economic characteristics of the population groups in the area where its operations will be carried out; their levels of income and expen diture; their savings habits; facilities and services offered by existing financial ins. itutions; nature of local economic activities; educational and recreational facilities; housing- -]hortage; percentage of population living in rented homes; capacity of the building indus try; prospects of local economic developmi,.t in general; and such other conditions as directly and indirectly affect the "avings and loan business. h. Before the association opens its doors, a projection of its operating results over a period of not less than the next three _ars must be performed, not only to deter mine the feasibility of' the project, but also to provide a yardstick against which to gauge tL.e success of the financial policy and administrative practices. i. It is the responsibility of the central savings and loan institutions to insure that associations are promoted in accordance with the foregoing recoimr.eneations and that the following criteria are observed in authorizing the establishment of new associarions:

Need for the new association in view of the insuf ficiency of existing s rvices;

Economic :easibility o' the proposed institution;

Integrity and capacity of the promoters and manager; and

That undue harm is not done to other financial ins titutions operating in the area.

33 2. Apparent Competition of the Savings and Loan Association with other Financial Institutions.

a. In view of the limitations on the range of investment and depositary operations that savings and loan asso ciations may engage in, and of the economic and preem inently social uses to which they put their resources, it is obvious that the regulations applied to the fi nancial system must grant them certain advantages to permit and encourage their rapid gro.th. Desirable, and often indispensable means of accomplishing this are readjustment facilities, tax exemptions on the cap ital saved and on their dividends and interest, and measures to keep the latter higher than in other finan cial institutions.

b. Fair competition in the attraction of savings must never discourage but rather stimulate the study and adoption of increasingly efficient administrative practices.

c. In savings and loans many elements contribute greatly to the economic development of the nation and also, directly and indirectly, benefit other institutions in the financial system. The reactivation of the buil ding industry, often deliberatly promoted by the system, the accumulation of new and greater savings attracted by better service, the deposits made by the associations themselves in commercial banks, are examples which amply bear out the preceding statement.

d. The association must guard against the pitfalls of un fair competition, such as floating fixed-income high yield securities to which full liquidity inconsistent with their nature is openly or secretly granted.

3. Ideal and Minimun Organizational Chart. Selection of Personnel. Distribution of Work and its Relation to Growth. Accounting Systems and Mechanization.

a. In the initial stage of the association, its organiza tional chart must be as simple as possible and confined to the organs that are generally prescribed in the law, such as the general stockholders meeting, an auditor's office, an executive council, an office of the manager and the basic personnel needed for its operation, such as accountants and other technicians, and employees to deal with the public.

34 b. As stated, special care must be taken in selecting the Manager of the Association and the rest of the personnel. Offering remunerations at less than current local levols is generally a pernicious prac tice and sometime does irreparable harm to an associa tion that is just starting out.

c. The rather rudimentary distribution of personnel func tions at the outset will gradually resolve into an in creasingly specific allocation of responsibilities as the volume of operations mounts during the growth pe riod. No exact rules may be laid dovn on this point because circurstances vary greatly with tlie country, the locality and the degree of complexity demanded by the external factors on which ti.e conduct of operations depends.

d. Uniformity of methods and procedures within the savings and loan system is highly desirable to the extent that it enhances the productivity of' the individual associa tions, and facilitates data comparisons and th-.e super visory work of the central organizations. The central organizations lave an important part to play by setting up catalogues of accounts, manuals, procedures and uni form docurentation 'or t(e entire sys ten., always allowing! enough leeway for the individual variations t!.at differ ences in the volume and cople:xity of operations may im pose on eacl association. The_, 'ederations, eitl.er directly or through affiliated technical institutes, may also con tribute effectively in tlhis worr: by constantly encouraging the improvement of procedures.

e. Although in certain cases the acquisition of basic mechanic al office equipment at the very inception of an association has been viewed as an unnecessary -and even superfluous cost, the advantages, particularly in more effective con trol and a good impression on the public, more than ofset disadvantages that may be laid to that equipment.

4. Working Hours. Desirable and Timely Expansion; Agencies and Branches. Promotion of Savings and Loans.

a. In determining the worcking hours of the Association, the needs of the depositors should always prevail over those of the personnel.

35 b. To the extent possible, the Association should be open for business during the hours at which the savers can most conveniently make their deposits and withdrawals. c. If the foregoing means that the ordinary workday must be lengthened, there is no need to retain the full staff for the additional hours but only such employees as are needed to handle withdrawals and deposits, while avoi ding so far as possible all undue overtime costs. d. The association should not expand by opening agencies or branches before it has arrived at an economic sit uation in which it can safely do so, save in exceptional circumstances such as the prospect of rapid and unsual growth at a given location. e. In every case, the establishment of an agency or branch must be preceded by the performance of a serious study on its profitability and advisability. f. When it authorizes the opening of agencies and branches, the central savings and loan institutions must observe criteria similar to those enunciated above for authorizing the establishment of iew associations. g. Despite the unquestionable benefits that inhere in the savings and loan system, it needs to be accompanied by an adequate and sincere publicity campaing, preferably of the institutional type, to convey a true image to the public by delivering the message with all the vigor that it deserves, but avoiding all distortion that could fal sify its content. The central offices should spare no effort to spread this message by every means at its com mand and must also follow up by publicizing the results obtained, in order to keep the public aware of the spirit, dynamics and guiding principles of the savings and loan system.

36 REPORT PRESENTED BY COMMITTEE "B"

SAVINGS AND LOANS

Members of the Committee

Chairman: Enr'ique Santa Cruz Fernando Lanusse Salomon Chornik Horace D;vila Robert Speetles

Rapporteurs: Lucia A1cal6 Strupp Arturo Pardo Tito Fern6ndez MorAn The Committee was asked to examine and study the general topic of "Savings and Loans". This work was done following the agenda pre pared by the Organizing Committee of the IV Inter-American Meeting on Savings and Loans.

The subjects were presented in the following order:

1. The promotion and acquisition of savings.

2. The loan application and its analysis.

3. Handling the mortgage portfolio.

4. The insured mortgage system.

The conclusions and recommendations on each of these subjects are as follows:

1. The Promotion and Acquisition of Savings

a. Stress was laid on the importance of savings as the foundation and motive force of the savings and loan system for housing or, in other owrds, that this system cannot be conceived as existing, much less as growing, without the prior formation of savings.

It was said that savings forestall contingencies which threaten the most treasured possession of man: individual liberty.

b. To promote savings it is necessary to know beforehand the en vironment in which one operates. Account trust be taken of: the cultural levels of the population; social conditions; the levels of collective and per capita income, expenditures and savings and the observed characteristics of savings habits.

One way to know and evaluate the environment is through well planned and executed surveys.

c. Once the environment is knon the publicity plan must be formu lated. The most advisable and useful plan is doubtlessly the institutional one, which is carried out in behalf of all the savings and loan associations. This does not, however, obviate the need of individual publicity for each association, as they are mutually complementary.

38 d. Both the institutional publicity and the publicity conducted separately by each association must be based on a budget, whose amount may be determined as a percentage of the lending fund or as an estimate of the outlay needed to obtain a given volume of savings. In the United States, the average publicity budget ranges between 2.5% and 4% of the association's operating costs.

e. The publicity plan must be drafted to take accouit of ditect promotion, which consists of house calls by employees of the savings and loan association or by professional publicists; lectures by the directors and executives of the association, in clubs such as the Lions, Rotarians, and chambers of commerce and industry; talks at educational centers, including a few gifts, propaganda, contests and other suitable incentives.

f. It must be kept in mir.J u.iat popular sa,;ings come from low income earners and that the best way to attract them is by offering prizes and gifts, since the interest rate in such cases is negligible. On the other hand, middle and high-income savings come from people in the middle and high income brackets, for whom the only consideration is the it-.terest rate, which must be higher than in commer'cial banks.

g. The importance that may be given to the association "service" in the publicity plan must not be overlooked. The "service" may be regarded as resulting from personal contact with savers or from collaboration with and assistance to the community. Relevant in the first case are contacts by the :mnager and employees of the association with the public. lnitPal contacts, when information is requested from the association or- when ac counts are being opened, are very important, as well as the successive later contacts, when money is deposited or withdrawn. In the second case it is important, for instance, that the directors and executives of the association collaborate in social-work campaigns and that the use of the association halls be offered to various community groups; such services, although not directly related to savings, generate good will for the association. h. Also useful are the press, radio and television, when intelli gently and steadily used. Consideration must also be given in the publicity plan to the promotional work done by the members themselves when they are fully cognizant of the benefits that are brought to them by the association. i. The results of publicity plans for the promotion and acquisition of savings must be evaluated periodically so that they may be adjusted for greater effectiveness.

39 j. The association's liquidity is related to the various types of savings. The curve of contractual savings differs from the curve of voluntary savings. A similar observation is made from comparisons between groups of large accounts and groups of small accounts. The latter are more stable than the former. Therefore, the association should maintain suitable statistics on its different savings accounts as a constant check on their liquidity. Due account must be taken also of the seasonal phenomena or customs that affect the level of savings deposits. In an agricultural district ac count of the sowing and harvesting periods must be considered. Among customs, account must be taken of local holidays. All this is bound to influence the levels of savings, and, con sequently, the association's liquidity.

The foregoing considerations led to the following conclusions and recommendations.

I. Savings are the foundation and motive power of savings and loan systems.

II. Savings protect against contingencies that threaten personal liberty.

III. To promote savings it is imperative first to know the environ ment to be able to draft the institutional publicity plans and those of each association according to its budgetary possibilities.

IV. In the preparation of publicity plans fr savings, account must be taken of direct promotion, the urigin of savings, the "service" of the association, promotion by the members, in short, everything that can be helpful to this purpose. These plans must be evaluated periodically to achieve maximum results.

V. In the acquisition and maintenance of savings, account must be taken of the relative prcportions among the different types of savings and of the liquidity or the association, which is vital to it.

VI. It is recommended that savings promotion plans not overlook the sense of freedom which savings confers on the individual and the community.

VII. It is recommended that the savings habit be instilled by every possible means, especially in children.

VIII. It is recommended that savings deposits be insured.

4o IX. It is recommended that all attending countries introduce the clause on readjustments to offset currency devaluations in their systems, when circumstances so warrant.

2. The Loan Application and its Analysis

a. The loan application must clearly show the conditions and terms on which the applicant desires the loan. It is advisable that it be accompanied by a confirmation of employment from the owner of the company where the applicant works, and by confir mation of such bank deposits as the applicant may have.

b. The analysis of the loan application must be divided into two parts: the applicant and the real property offered in guarantee. The analysis of the applicant is begun with an examination of the reason for the application, which, when completed, may re sult in acceptance or rejection of the application, depending upon the standards applied on this point. The next step is to examine the applicant's capacity to pay in terms of his in come and expenses. For an assesment of the moral character of the applicant, the information furnished by a credit investigator independent of the association will be examined.

c. The examination of the real property offered in guarantee of the operation will consist c!efly in an appraisal of that property. To this end, variable methods such as those developed in the United States may be employed. The property must be given on a first mortgage basis.

d. When there is a mortgage insurance system, the institution, which must be state-omed, will be responsible for the analysis of the credit application with regard both to the applicant and to the real property, which will considerably lighten the burden for the association and offer the best possible safeguard for the interests of both the association and the insurer.

e. The conditions of the loan such as the amount, term and form of delivery must be tailored to the borrower's needs. The monthly installment on the loan should not exceed 30% of the borrower's monthly income.

f. The amount of a loan should not exceed 70% of the appraised value of the real property unless state-run mortgage insurance facili ties are available, in which case loans of up to 90% of that value may be made.

41 g. In most Latin American savings and loan systems, fire insur ance is compulsory but not life insurance, which is also called mortgage disencumbrance insurance. In certain countries the associations customarily require3 the latter insurance when low premiums that do not weaken the borrower's payment capacity are obtained.

h. In certain Latin American countries where there is an inflation problem,it is customary to readjust periodically the value of both the mortgages guaranteeing the loan and the insurance covering the buildings, on the one hand, and the borrower's family situation, on the other.

The foregoing considerations led to the following conclusions and re commendations:

I. It is recommended that the analysis of the borrower's credit and the appraisal of the real property offered in guarantee of the loan operation be done with care since the success of the operation depends on it. It is better if the appraisals are done by the institute insuring the mortgages, where such service exists; this is nt to preclude the associations from always making their oim appraisals.

II. It is recommended that fire and ecrthquake insurance on the real property and life insurance or mortgage disencumbrance insurance be required in all loans in order to guarantee the real property and also the family of the mortgagor in the event of his death.

III. It is recommended that the termirology of the savings and loan systems be standardized and, more specifically, that the use of the expre sion "propiedad horizontal" be adopted to designate the legal institution which in some countries is called "condominium".

3. Handling the Mortgage Portfolio

a. The mortgage portfolio must be frequently e..amined so that its various components na, be kept proportional to the characteristics of the savings deposits; at the same time, the composition of the portfolio must be properly balanced.

b. Extra-judicial collection methods must be highly efficient and may even extend to direct collection by persons.

42 c. It is recommended that the associations make sure that the mortgage securities are properly and safely handled and re gistered in accordance with the legislation and legal stand ards of each country.

4. Insured Mortgage System

a. Mortgage insurance consists in a gurantee by a state institu tion against the possible non-payment of a mortgage debt. This insurance was developed in the USA in 1934, and spread to Puerto Rico, Guatemala, the Dominican Republic, El Salvador and elsewhere.

b. Mortgage insurance is not a simple insurance but rather a whole system since it modifies the traditional conditions of housing loans oy allowing them to be granted in long terms and in amounts of up to 90% of the property value, without endanger ing the stability of the savings and loan associations; it establishes a close interrelation among lender, borrower, builder and investor.

c. In mortgage insurance, the public and private sector are close ly united, the former contributing its dearest prize - its unlimited guarantee - and the private sector putting up the capital and the dynamism of its businessmen.

d. By strengthening the traditional g-uarantee of the credit operation, the property, plus the mortgage and the unlimited guarantee of the State, considerable confidence is bred in mortgages, which Rre then,easily negotiated in the country itself and abroad.

e. It was felt that the mortgage insurance system on the national level could be strengthened through the formation of an Inter- American mortgage reinsurance agency.

On the basis of the foregoing, the following recommendations are made:

I. That mortgage insurance be established in all the Latin American countries with the same characteristics and techniques of the FHA in the UnL±ted States.

II. That it be recommended to the Inter-American Development Bank that it investigate the possibilities of establishing a mortgage reinsurance institute on the Latin American level to develop an international market in those securities.

43 III. That the funds which the US savings and loan associations may soon invest in Latin America be utilized to develop the mort gage market.

IV. That it be suggested to AID that it authorize guarantee insur ance on private investment in the mortgages of the Latin American savings and loan associations.

As a general conclusion, the Committee recommends to the Inter-American Home Savings and Loan Union that it endeavor to put into effect those resolutions and recommendations of this meeting which are applicable to its activities, purposes and objectives.

44 REPORT PRESENTED BY COMMITTEE C

SAVINGS AND LOAN SYSTEMS

THEIR PLACE AND DEVELOPMENT IN THE COMMUNITY

Members of the Committee

Chairman: Guillermo Le Fort Campos Speakers: Ricardo Garcia Rodriguez Luis Fco. Madera Grijalba Joseph Benedict Ronert Souter Rapporteurs: Ricardo Palacios Pedro E. Blanco Isidro de Miguel The Committee was assigned to examine and study the topic "Savings and Loan Systems. Their Place and Development in the Community".

The subjects were presented in the following order:

1. Social function. Influence in the socio-economic field. The Association: private enterprise regulated to fulfill a social function. Regulation and supervision desirable to guarantee fulfillment of its true purposes. Guaranteed savings. The savings habit; effects on the stability of the family and the community. Incentives to individual, family and collective savings.

2. Relation of savings and loan system to other financial institu tions. Collaboration with government action in low-cost hous ing plans. Over-all development of new areas. Integration and financing of community services.

3. Interrelations among savings and loan systems, on the national, continental and world levels. Growth through international action. Assemblies and meetings; purposes and goals to be attained. The Inter-American Home Savings and Loan Union.

The conclusions and recommendations on each of the above subjects are as follows:

1. Social Function

a. Savings and loan system acts as a catalyst of public morali ty. To encourage the habit of saving and the ambition to own one's home is to foster good habits and a love of work, to consolidate the institution of the family and to help raise the moral and material standard of the population. It should also be considered that the savings for buying homes are part of the national capitalization and therefore they help to creatithe infraestructure needed for the develop ment of the nation.

b. The savings and loan sysoem performs a social development function in the commwiiity. It is a financial mechanism which should seek as borrowers people who have the neces sary capacity to pay and so can service their debt within a reasonable time consonant with their receipts and income.

c. To make it easier for new socio-economic groups to join the system, consideration must be given to tax incentives and to construction methods or procedures designed to reduce building costs, which must be reflected in the

46 prices at which the homes are sold. The central offices or banks, in turn, must set limits on the price and qual ity of the homes to be purchased through the systeu.

d. For savings to perform their social function they must be properly guaranteed against losses from administrative or other failings and from eventual currency devaluation.

It is also advisable to regulate the purposes fci which acquired savings are to be used, to ensure that they will favor, in the best possible way, savers interested in home loans. Also, they must be so dispenseO as to yield the greatest return in terms of housing units. Moreover, savings must be so channeled as to make effective contri bution to the housing programs of each country. This regulation should be elastically conceived so as not to hinder the operation of the association. It is better to use, so far Ps possible, a series of incentives rather than a system of limitations.

e. Machinery must be created to render the system the greatest possible dynamism.

To this end, it is recomended that the savings and loan associations join in the social, cultural, athletic and other activities of the locality so that the presence of the system may be felt on all socio-economic levels.

2. Relation of Savings and Loan Systems to other Financial Institu tions.

a. Obviously the savings and loan system stands in a direct or indirect relationship to other financial institutions, with many of which it is mutually complementary. Thus, it is necessary to promote deposits in the associations by such entities as savings banks and cooperatives or provident funds.

b. Since life insurance is a potential source of savings in sufficiently developed in Latin America, it would be well to encourage the establishment of life insurance coopera tives, which in countries of strong inflationary tendency would apply a systeLi for readjusting the value of their p-emiums and of their indeiimifications, and whose reserves would be invested in mortgage securities of the savings and loan system. Along the same lines, it is recommended that the associations be at liberty to contract directly

47 for a life insurance that would pay its beneficiaries a larger sum proportional to the value of the savings accumulated. c. As for fire insurance, it is recommended that the associa tion reach an agreement with the insurance companies on the investment of part of their reserves in mortgage secu rities of the system, providing reduced premiums and a profit for the association in exchang;e for which the latter would assume responsibility for the sale of insurance policies and the collection of premiums. d. The presence of housing cooperatives in a savings ard loan system has three important consequences for the solution of the housing problem:

- it augments the savings potential;

- it reduces the cost of housing to the home buyer;

- it educates the rroup for better community living.

It is recommended, therefore, that cooperatives be promoted and that they be authorized by the central funds or offices to obtain housing loans.

Financing should cover the cost of urban utilities. It is also proper to require of these cooperatives that they avail themselves of the services of technical assistance agencies sufficiently specialized in the field, that they be non profit and that maintain the necessary independencevis-L-vis the financial sources.

It is further recommended that a middle-run (5-year) financial projection be drawn for the cooperatives to provide for the continuity of their operations and fores stall discouragement and the loss of resources.

In those countries where the savings and loan associations or funds do not meet the borrowing demands of the housing cooperatives, it is recommended that the possibility be considered of having the federations of cooperatives set up their own associations or that the existing associations be incoiporated into them. e. The savings and loan system cannot be considered apart from the housing policy and program of each country. The credit generated by the system should be oriented primari ly to meet the requirements of those programs.

4s The official agencies should, therefore, adopt the necessary rules and regulations to direct the credits primarily toward solutions which, from the standpoint of a sound housing policy, contribute to the construc tion of new individual or collective housing units with their community facilities, appropriate public utili ties and such minimum urbanistic solutions as may be recommendable at the time.

f. It is recommended to the governments that the municipal agencies which authorize housing construction include representatives of the savings and loan entities and of cooperatives, so that the housing constructed may satisfy the local needs of the population.

3. Inter Relations Among Savings and Loan Associations.

On the international level it was agreed to suggest:

a. That the Inter-American Union of Savings and Loan asso ciations establish standing committees to study the conclusions of the Inter-American Meetings of Savings and Loan Associations and their future work programs.

b. That the Union disseminate such information of general interest as it may acquire from any source on savings and loans, through a periodical publication (bulletin, review, booklet, etc.).

c. That the cooperative institution be strengthened as an ideal medium for alleviating the housing problem afflict ing the Latin American people and that efforts be made to extend to this type of institution the same treatment enjoyed by the other types of housing entities.

d. That henceforth an organization of world-type scope with objectives similar to those of the Inter-American Union of Savings and Loan Associations be promoted.

e. That the Union step up its efforts to affiliate all the organizations, institutions or associations connected to the savings and loan system.

f. That the associations affiliated with the Union and those which are not yet so affiliated be persuaded that the Union offers a desirable means to the effective realiza tion of their common goals.

g. That a Committee of representatives of the four smonsors of this Congress be set up to draft an agreement fu-2 reciprocal collaboration on the norms that will govern

49 our forthcoming international meetings. The Committee wishes to stress that the Union should have a growing coordinating role in these meetings, in view of its function as the permanent liaison organization for the savings and loan systems in the Continent.

50 REPORT PRESENTED BY COMMITTEE D

TECHNICAL-FINANCIAL BASES

Members of the Committee

Chairman: Manuel Velarde Speakers: Juan F. I'Martin Mario Granai Everett Sherbourne George Greenwood Rapporteurs: Gen. Oscar Clavo Mejia Elio Soto V. Isbelia Sdnchez The Committee was assigned to examine and study the topic

"Technical-financial tBases".

The subjects were presented in the following order:

1. Influence of the State on the development of the system. The Alliance for Progress and the savings and loan system. Central savings and loan agencies. Legislation on the continent. The United States law authorizing investments by associations of that country in Latin America through the Cuarantee Fund (AID).

2. International Home Loan Bank (a United States institution). Popular savings and "promotional" savings as a genuine source of funds. Necessity of new sources of financing. Creation of appropriate machiney. National, continental and extra-continental secondary mortgage market.

3. Inflation and its repercussions; readjustment systems.

Following are the conclusions and recommendations cn each of the above mentioned points:

1. Influence of the State on the Development of the System

a. The influence of the State is most important. In view of the social function that the system must perform, it ought, if possible, to be assigned specific fields of action with in national housing plans, and the state would be right to facilitate this action by means of promotional measures such as appropriate tax exemptions.

b. The State's backing will effectively help the system win public confidence. This backing may take the form of super vision and financing through appropriate machinery to give the savings and loan associations a sound financial structure as a safeguard to savers. It would also be the State's responsibility to develop a secondary mortgage market, for which the necessary legal instruments should be adopted.

c. It is up to the State to define the position and weight, in the housing sector of the national development program, the contribution which the national savings and loan system should make to the country's housing effort.

d. State action must be aimed at the promotion of existing as sociations and, if necessary, at the creation of new ones.

52 e. Consistently with this action, the state must authorize financial support that such assistance requires and promote the organization of a low-cost housing market, with due attention to the technical aspects of the cons truction process and the marketing of the homes.

f. The state should also endeavor to solve the convertibility problems that will arise with the growth of financial colla boration on a much greater scale among the continental savings and loan associations.

g. That the modern state intervenes in the economy is a fact, and it is certainly right to do so, but it should still foster sound provate enterprise as a fundamental and basic requisite for a vigorous continental economic development.

2. The Alliance for Progress and the Savings and Loan Systems a. Besides the measures recommended through the Alliance for

Progress relating to the creation of adequate national resources and machinery to foster the home savings and loan systems in Latin Amnerica, a perinanent financial aid system should be organized with the guarantee of the gover ments, and which aim would be to strengthen the action of the savings and loan systems in each country. The assistance would be proportional to the country's effort, private and public.

b. With such assistance the systems could be consolidated and expanded. It would be a practical and conc: -te way through which the international agencies could iontribute to the realization of the goals of the Alliance for Progress in the field of savings and housing.

3. Central Savings and Loan Organizations. Legislation on the Continent.

a. It is important the establishment of one or more central organizations, either as state or mixed institutions, in every country where the savings and loan system has been established. The private sector should be represented in these institutions.

b. The central agencies should issue the general rules gover ning the system, as well as the relations with the savers and loan beneficiaries. It should control the operation of the associations besides prividing the loans needed for their proper organization and operation.

53 c. Encouragement should be given to the exchange of information among the American countries on the laws affecting the sav ings and loan system, so that the juridical experience acqui red. in each country may redound to the benefit of the others. This would be the best way to bring about whatever standard ization is possible in the continental legislation.

d. It has been noted as a signifizant fact, by this IV Inter- American Savings and Loan Meeting, that the United States Congress has passed the law authorizing the American Savings and loan associations to invest in the savings and loan systems of Latin America, through the AID Guarantee Fund.

The Committee is happy to congratulate those who participated in this extremely important decision, which will constitute an effecti,e contribution to the continental development of the system in line with the objectives of the Alliance for Progress.

At the same time it is requested that the Inter-American Savings and Loan Union express to the competent U. S. Government officials the interest of the Latin American Associations in the prompt regulation and enforcement of the mentioned legislation.

Since it is essential that there be an administrator to approve and administer the individual mortgage credits under the AID guaranteed investment program, we feel that the savings and loan associations are best suited to perform such a role. To this end, we propose that the Inter-Anerican Savings and Loan Union convey this view to the Director of the Division of Housing and Urban Development of AID, in order that in the future the savings and loan associations may be entrusted with the administration of such programs.

These initiatives, together with the efforts of the Latin American national savings and loan systems, are in the genuine spirit of the Alliance for Progress, and are achieving, through the associations in the United States and Latin America, a direct people-to-people collaboration, since the savings and loan associations are the institutions in which the people organize themselves to attain their own development and freedom through savings.

Lastly, the Committee believes that these initiatives constitute only new financial instruments for the financing of Latin American housing plans and, therefore, that the rresent channels of foreign credit should be maintained and their ex.pansion continued to the extent required for the growth of the national systems in Latin America.

.. International Home Loan Bank

The efforts of North American savings and loan executives to bring about the establishment of this important institution are formally

54 recognized. We trust that the project will soon be realized.

5. Need of new financing sources. Development of appropriate instruments

a. The external loans must have the characteristics which may make them a real help to the national savings and loan systems in their efforts to attain the goals set forth for the national housing programs.

b. It is important the establishment of national secondary mortgage markets. Equally important is the development of an Inter-American market, with the support of the savings and loan systems of the countries and oriented toward the procurement of resources at the costs prevalent on the money markets in the respective areas.

c. This implies that the national savings and loan systems must attempt to standardize their policies regarding placements on the secondary market, especially as to interest rates and liquidity.

d. The Inter-American Savings and Loan Union should contract a technical work team to analyze all the operational, economic, financial, mone tary and convertibility aspects implied in the establishment of an inter-american mortgage securities market, whether readjustable or non-readjustable.

6. Inflation and its Repercussions

In view of the complexity and multiplicity of the problems generated by inflation in the Latin American countries, there should be an exchange of pertinent information and experience. The following points are especial ly important:

a. That the inflation does not result in a paralysis of the housing programs;

b. That a search is made for forulas capable of helping the savings and loan associations to maintain sound financial basis;

c. That the formulas applied do not affect the borrowers: ability to pay.

Although it was not approved, the Committee decided to reproduce here after the following proposal:

55 Motion submitted by Argentinian delegates:

"In view of the generous interest of the United States Government in ex tending financial assistance to the countries of Latin America for the purpose of solving pressing economic and social problems, and

Whereas:

a. It is the beneficiary countries themselves which know best the causes of said economic problems, their social effects and how to solve them;

b. In an inflationary economy, property financing, which requires long amortization terms and low interest rates, cannot absorb dollar loans without recourse to special clauses for the readjustment of savings and mortgage credits;

c. The application of such readjustment clauses may prove to be untimely and inadvisable, besides involving, in some cases, substantial modi fications in the very operating methods of the savings and loan sys tem in the beneficiary country; and

d. It is inadmissible that the financial assistance referred to should be subject to the acceptance by the beneficiary country of conditions or clauses that are not, in its opinion, consonaint with the socio economic milieu where they are to be applied;

It is proposed that the IV inter-American Meeting of Savings and Loans declare :

1. That the financial assistance provided by the Government of the United States of America under the program of the Alliance for Progress, through international credit agencies, shoulA be adapted and in no way do violence to the features and procedures characte,'istic of the sav ings and loan systems as they operate in the countries that are bene fiiartes of said financial assistance.

2. When, for inflationary or other reasons, the savings and loan systems are unable to absorb dollar loans without surrendering their own d4 stinctive features, the international credit institutions must allow the competent organizations of the beneficiary countries to allocate dollars from the financial assistance into more reproductive economic sectors and channel into the savings and loan system the counterpart value of said loans in local currency."

56 Lastly, the Committee, in view of the important work being done by the Inter-American Savings and Loan Union, has agreed to request that the Assembly assign to it the responsibility for compiling and maintaining current the documents issuing from this and other conferences of similar nature.

57 SUMMARY OF THE CLOSING SESSION

The closing session and final plenary session, held in the main meeting room in the Macuto Sheraton Hotel and attended by the delegates, special guests and observers, was called to order by the Chairman of the Fourth Inter-American Meeting on Savings and Loans on February 3, 1966, at 10:00 a.m.

The Secretary General, Mr. Stanley Baruch, announced that the first order )fbusiness was to give the floor to the Chairmen of the f-ur committees designated tn develop and discuss the topics on the Agenda (f the Meeting, in order to hear their reports on the conclusions and rec, mmendations approved in their respective c,)mmittees.

After t1.e c-nrimitces' reports had been read and approved by the meeting, statements wore made by Mr. Modesto Collades Nuflez, Minister if HusinE and Urban Plannin rf Chile, Mr. Eduardo Fuentes C., President f the Vezveulan Federnt inn f Savings and Loans Associations and of the Inter-American Savin. and Las Union and Mr. Gonzalo Carnevali, General Ma.'.r f th. CLntral Savings and Loans Office of Venezuela and Presidnnt f tie F iuxth Meting.

The Secretary General tnnunced that the ad-hoc Committee composed f repre.entativ. ,f tihe sponsoring agencies and the heads of uhe delegati ns th c wutries that had so generously offered to be hosts t, the Fitth Iinor-hArican Meeting in Savings and Loans had unanimously designated Buepnn Aires, Argentina, as the site of the Fifth Meeting, with the c ncurrece Df the Brazilian delegatin, which had withdrawn its own pr pial. The delegates and other participants applauded the designation of Buenos Aires and the gesture qf the Brazilian delegation. Mr. Robert, Miliari, Chairman of the Delegation of Argentina, expressed the appreciation of his country fnr this designation.

Finally, Dr. Alfonso Rochac, Technical Manager of the Inter-American Development Bank, requested that the Assembly appoint a commission to place a floral wreath before the tomb of the Liberator of America, Simon Bolivar, as a fitting epilogue to the highly successful meeting that had just come to an end. The Assembly rose and approved the proposal by acclamation.

58 AN ADDRESS BY MR. EDUARDO FUENTES C., PRESIDENT OF THE VENEZUELAN FEDERATION OF SAVINGS AND LOANS ASSOCIATIONS AND OF THE INTER-AMERICAN SAVII'GS AND LOANS UNION

Today marks the completion of one more stage in the development of the Latin America Savings and Loans System. It has been an immense privilege for us to take part in this Fourth Inter-American Meeting on Savings and Loans. We return to our daily tasks inspired to correct previous judgments and to introduce new methods and procedures in the interest of the continued development of our asLo'iation . Once again, the commendable work begun in Lima 163 ,ith the holdinp of the First Inter-American IMeeting, has borne positive results.

For us, the Venezuelan Savings and Loans System is a -ource of great pride. Tt has also made us prouc. to be ab e to welcome you here. We greatly value the knowledu, e anc experience tha' .ou have shared with us at this Meeting. It has once again been proven that the savings and loans movement is the fruit of the combined effort of LLl sectors of the nation -- of the government, of the people, of the financial world and of professional Croups -- to achieve the harmonious ,evelopment of the entire community.

All these elements are actively at work in the Venezuelan system. The Savings and Loans Commission, composed of men who have woikec selflessly to promote the growth of the System anu to leac it to its present high level of development, may well be satisfied, with its work. Its achievements are there for all to see. To these men is due the credit for having believed in the System and] for having- been ready to assume the immense burden of responsibility involved in the launching and successful guidance of a new system characterized by a balanced combination of financial considerations and social Foals.

At this Meeting, we have learned that men of this caliber exist in the associations and in the central funds, all over Latin America. The Fourth Meeting inspires optimism, for it is uncontestable proof that Latin America is awakening and organizing itself.

This Fourth Meeting is, however, more than Just another meeting. It is distinguished by a special characteristic that marks it s a turning point in the development :f the Latin American Savings and Loans System. That special characteristic is the presence here of the Inter-American Savings and Loans Union, both as a co-sponsor and as an active participant in the preparation, orientation and conduct of this Fourth Meeting

The Inter-American Union is the fruit of an idea that was born at the First Meeting, in Lima, and that began to take tangible shape at the Second Meeting, in Santiago, which set up its Organizing Committee. The Union was officially constituted in Caracas on November 12, 196L, and its first General Meeting was held in Quito, following the Third Inter-American Meeting on Saving and Loans.

59 A clearly felt desire is discernible in the process that I have just described -- the desire to create an organization, based on the principles of coordination and cooperation, designed to serve the interests of all savings and loans associations and institutions in Latin America and to provide a corarmwn f rlnl fr the discussion cf their problems and for the exchange of kn:wledge and experiences, and an organization whicL can develop into the agent f ,r securing the necessary balance in the techni cal and financial relatiinship between the members of the System. An organi zation, mre -vr, in wh se benefits each and uvery -ne of our member associ ati _ns can share, regariless f its special characteristics or status. The Int r-American Union is th.e answer to these needs. It represents the most p -sitive single accomplishments of the Inter-American Meetings on Savings and L ,ans.

The Intcr-American Dcval pment Bank, the Agency for International Dev-lpnpmont and the United States League f Insured Savings Associations may also view their accmplis hents with satisfaction. The savings and 1 ,ans i- ment is bringing inniuerible benefits t the whole of the Latin 1 American pc ple, just as it has already br ughi; them t the peap of the Uni-ted 3 at-s. I wish L take tii -pp rtunity t express ar prfoiumd apprecia-i n t- these institutino fr the w rk they have accomplished. The valueva this w rk euwt b,-, w.ca wared in terms f the creation f nechunisms thr uah which we ara being enablod to exploit s- )wr latent capacities and row LrC.5, lar ely .Cupproed because of lack of thn necessary rganizati n. rather ha.' in terms "f the purely monetary value of airect ucd. The "avin - Iand1 in m vement is a financial mechanism that generates iVa wn capital, and Ln d ina s serves t mobilize the financial resurces f Latin Americ and t channiel them t the solution of the husing problem.

Latin America p esesses the necessary intellectual resiurces for the devel pment f the savings and loans movement. What it lacks is suitable mchanicsms, and it is this luck that the Savings and Loans System fills.

The Inter-American Union is the focal point of the savings and loans mivement and the culmination -f this trend toward the creation of needed instrur.ents •

The cru: f the housing problem is essentially the lack of suitable financing mechanisms. But since it also happens to be shared by all the Latin American countries, it follows that those financial mechanisms must be continental in scope while at the same time taking into account the special features of the problem in each individual country. The Savings and Liaus System, in its diverse nati ,nal firms, is undoubtedly such a mechanism, and the Int r-American Union is the organization that gives these diverse national expressions of the movement their continent-wide perspective.

At the same time, the Union represents one of the most positive steps taken so far toward Latin American economic integration in the housing field. It is a response to the needs that brought about the Act of Bogota in September 1960, when a special OAS committee stressed the urgent need fr continent-wide economic cooperation in housing.

6o The Union is now a reality -- an organized, smoothly functioning entit: in full swing of development. It represents a challenge to all of us-- a challenge to our capacity and to our interest in the progress of the American community. In order to even aspire to the development of the Union to such a point where it can fully accomplish its Puvposes, a most vi norous effort of promotion is demanded of each one of us and, even more, a sense of' 'nission.

The savings and loans associations constitute the basic c-Ils of this socially-oriented financial movement; they develop and they achieve their objects only as they are converted into a reality as private enterprises; self-financing and generating profits for their members, but doing so without forgetting for one moment their social missivn. The continent-wide organization through which they are mutually linked must be founded on the same principles. We shall not perform any social mission except through a true purpose of service, accomplished with a high degree of efficiency.

In the short time since its foundation, the Union has already begun to make its influence felt within the Latin American Savings and Loans System. As a permanent institution it stands as a guarantee of the continuity of work accomplished at these annual Inter-American meetings.

The studies and invesoigations revealed to be necessary at our annual meetings are no longer dependent for their execution on individual and isolated initiative. Instead, they are carried out throuCh a central organization, under the direct influence of all setors represented in the Union and in response to the common needs expressed by all the interested.

The Inter-American Union is destined to play e .!ecisive role in the relauionships of the Latin American Savings and Loans System. By way of example, we may cite the terms of the various loan aCreements that have been concluded between the Agency for International Development and certain Latin American governments. Experience has taught us that some of the features of these agreements have prqvented the re ulting investments from yielding all the benefits expected of them, due to the lack of an agency familiar with both facets of the problem and thus Ole to provide the necessary guidance and advisory assistance. Another example in furnished by the statistical data on the Savings and Loans System ristributed among the American countries. These data have a static character tat very frequently leads to erroneous conclusions and the makinr of inan curate comparisons and thereby to the formulation of incorrec: ju yents and even to the taking of unsuitable decisions. Here again, the Inter-American Union, because of its knowledge of all the sectors involved, is undoubtedly in a position to express more accurate opinions thah those deriving ' m a single source.

We could go on mentioning cases of this kind in which, in spite of the proven good will of the international organizations, important errors have been committed as a result solely of an inadequate knowledge of the Savings and Loans System as a whole and of the peculiar characteristics o' a particular region.

61 The Inter-American Union, which represents all facets of the Latin American Savings and Loans System, is beyond doubt the centralizing agency par excellence, destined to play a balancing and guiding role in all aspects of the technical and financial inter-relationships of the Savings and Loans System.

The inter-American Union is supported by a fully organized General Secretariat through which the approved work programs are being carried out. These programs cover a broad range of activities, among which I should like to mention the following:

1. Internal efficiency

We are seeking to attain the maximum possible operational efficiency, particularly through the building of good communications, which are essential for the strengthening of ties.

2. Promotional efforts

We are working to secure the effective membership in the Union of all savings and loans institutions throughout Latin America, so that the Union may become more truly representative of the interests of the System day by day.

3. International status

a. The Union must acquire the International status to which it is extitled by its constitut 4 on and its objectives. To achieve this, it is important that it have a clearly-defined legal charter recognized by all the Latin American countries. It already exists de facto as an international institution legally recognized by a number of our countries.

b. The Union maintains close relationships with the international agencies and it is its intention to strengthen these bonds even further and to extend them to still other institutions, such as the Organization of American StdCes, the Inter-American Economic and Social Council and the International Union of Building Societies and Savings Associations.

4. Relationships within the System

We attach particular importance to relatio,ships within the Savings and Loans System, embracing not only all componentE and sectors, both public and private, but also related institutions. The permanent exchange of knowledge and experience is one of the basic purposes that the Union strives for.

62 5. Services

a. Personnel training programs and she establishmend of centers for training by correspondence courses.

b. The provision of advisory as istan:-. ai.X informational ser ices.

c. Collaboration in the negotiation of international loans.

d. The dissemination of information on techniques and procedures deriving from experience ,-ainei within the inter-american sphere, through the promotion of regional seminars on specific topics.

6. Publicizing of our basic goals and objectives

Publicizing the goals and objectives of the Union and the measures promoted by it among the institution,, and authorities concerned in the formulation and implementation of housing policy; collabo ration with its member orgsanizations in tie better orientation of their practices and programs.

7. Research

The Inter-American Union is working actively toward establishing itself as the most cormprehensive stati::tical data center on all aspects of the housing problem.

We attach the highest degree of importance to thIs project arid are going ahead with it with at the greatest possible speed. Such a data center is an essential tool if' we are to make an over-all and organized attack on the housing problem.

8. Promotion of the flow of financial resources toward the System

Special mention must be made of AID's guarantee program. This program must take into account the existing situation in latin America and the specia; characteristics of each country. Its success must not depend on the undoubted -ood will of persons who, while having a high degree of capacity, are however, remote from our special problems and our true needc .

The Inter-American Savings and Loans Union is the practical outcome of our inter-americpn meetings. As a living entity, legally recognized and possessing the necessary organization and capacity, it is its responsability to see that the recommendations put forward this morning are carried into practice. The Union accepts this trust with enthusiasm and feels honored by the statements made at this Meeting. As the technical organ of integration in the savings and loans field, the Union will depend on the efforts of each and every one of us present here today. in order to be able to accomplish its purpcses, to achieve recognition and to mobilize support as an institution that belongs to all our countries. Let us all, whethei in private enterprise or in government, or in the international organizations - a source of

63 encouragement and support of the Union -- rise to the responsibility entrusted to us, but let us do it with a balanced and objective approach, for what is at stake is the System itself, with all the far-reaching contributions it is capable of making to the development of the American community.

64 AN ADDRESS BY MR. GONZALO CARENEVALI, GENERAL MANAGER OF TEE CENTRAL SAVINGS AND LOANS OFFICE OF VENEZUELA, CHAIRMAN OF THE FOURTH INTER-AMERICAN MEETING ON SAVINGS AND LOANS.

We now come to the end of four days of deliberations in which we have been united by a mutual and sincere desire to exchange ideas, face problems and seek solutions with a view to the maximum strengthening and development of our savings and loans systems.

Many factors have helped to make this Fourth Meeting a worthy con tinuation of tl'ose held in Lima, Santiago and Quito. Among these have been the effort and dedication displayed by the delegates, and the very generous collaboration afforded in all aspects of our work by the four co-sponsors of thiL event. I s-hould like to sinCle out for special mention the adminis trative ;taff of the Meeting, beginning with our General Secretary, Lr. Stanley Baruch, .he ;,-imultaneous interpretinE and secretarial teams and all the many people whose tireless work has contributed to its success. , .'armest ap preciation is also due to my fellow officers of the Vene-uelan Sayings and Loans System for their selfless assistance to the chai_'r:en of the Working Committees, and to the latter for their magnificient .:crk in the preparation and presentation of the reports that we have ,*u:t heard.

A wide range of topics related to cur savinss and loans systems have been studied and discussed during these last fe .: days-. These dis:cuL:-ions have resulted in specific propos--als and recommendations that have beer. -um marized clearly and concisely in the report. pre-ented by the four working committee chairmen who have oreceded me in speaking-. In deference to the brevity imposed on me both by limitations of time and by respect for your patience, I propose to review only briefly my impressions concerning the most salient points of these reports.

First of all, I should like to say that the impressive figures relating to the progress of our savings and loan.- systems, and the high caliber of the staffs that we have succeeded in assembling both within the central govern mental agencies and at the level of the individual savings and loans associa tions, leave me with a great and justified sense of optimism with regard to the future of the savings and loans movement in our countries.

It is precisely the capacity for work, the energy and devotion and the patriotic faith that have been demost.-ated in this meeting: and in the previous ones that have enabled our savings and loans systems to progress at such a rapid pace and to achieve in a space of years what would normally take decades. All of this demonstrates that we can look forwar., confidently to maintaining our onward march until the savings and loan s'ovement becomes a decisive instrument for alleviating the gigantic housing problem that afflicts Latin America today.

65 At the same time, it is clear that, in deference to the great responsibility that we bear, -e must be on our guard against undue optimism. It vould be foolish of us to close our eyes to the difficulties that remain to be overcome before the goals to which we ail aspire are achieved.

What, then, are the major problems that hamper the development and strengthening of our savings and loans systems? From the reports presented by the Chairmen of the various Working Committees it is clear that these problems, with their numerous and wide ramifications, fall into two main groups: those related to financing, and those of a technical or administrative nature.

In other words, we need to overcome the obstacles that impede, first, the chanieling to our systems of F powerful current of financial resources and, second, the utilization of those resources with the maximum effectiveness.

Up to now, the lending operations of our savings and loans systems have been financed from three main sources: the savings deposited by the members of our savings and loans associations, the funds contributed by our govern ments, and loans by the international financing agencies affiliated with the Alliance for Progress. The local private financial institutions have also contributed, although on a smaller scale.

From the statements made by the Ci-iirmen of the various Working Com mittees it is clear that a virtually unanimous agreement exists among the delegates present at this Meeting in the sense that the financial structure of our savings and loans systems must be founded on spontaneous or pure saving, on funds deposited by savers who do not look for a housing loan in return.

It is evident that this policy, the mobilization and utilization of private savings, is the only moans by which we shall succeed in making our systems instruments capable of contributing directly and truly effectively to the solution of our housing problems.

This does not, however, by any means signify that we have already reached the stage of consolidation in which we will be able to finance our operations entirely and exclusively through the mobilization of private sa 'ns, and acquire independence from any assistance that could be obtained from other sources of financing.

As a financial institution, the savings and loans movement in Latin America is still very much in its infancy.

We still have before us a stage during which it will be essential to supplement our savings resources. The assistance furnished by our governments and by the international financing agencies will, therefore, have to be maintained and even increased, since it is only through this injection of capital that our young systems will be able to yield all the hoped-for benefits and achieve the idcal condition of financial self-sufficiency.

66 In reviewing this problem, I have postponed until now consideratin of what could well constitute the most stable and powerful supplementary source of funds for the financial support of our savings and loans systems. A topic that has been the subject of lively discussin in this Meetin., as in the previous meetinCs, is the promotion and perfection of a secndnry mirtage market as an instrument fr the stable rd laro-ccale transfer f funds frrm the financially strng t the financially weaker c untries; this c uld eventually mre than replace the financial suport that we huv been receiving up to now, mainly fr, m our fverrnenes the A -ency f r Iriter:.'ati-onal Development and the Inter-American Development Dank.

The various Working C mxr.ittess hawc reiterated in their rec, :cendations the proposals and resolutions put f rward in Quit, with respect t- the neces sity of measures t promote such u secondary rnrtzage rark-_t. Th- nl i has been stressed t- make the mnrtdaes grantod by our savings and lans asvcia tions more attractive to invstrs. T achieve this, it may b, n-cessary, either to increase the fin'ncial yield ',f these m-rtgagcs, tq intrnduy now legislation or to amend existing leg cilatin, in order that the f rm lities rquired for their assignment and ala_ ation be streamlined. The alternative thus chosen will depend on the methods and procedures that may be in frce in the individual countries.

These financial and legislative changes may be n-t nly nrcossary, but indeed essantial, if we are t, be in K o siticn t take full ivi rta/o -f the benefits that will be offered with th- establishment -feh Intur-kre:ican Housing Tank., whose establisment is; n w bLinj P nidrmd by thn United States Congress. So tat this magnificent v,ntur.. ethr wiG in AID pr gram of guarantees, may bear full fruit it my be uv bi ta r ur mortgages be made irer attrictive tnr u h the fixinj T Y-r- ronlistic interest rates, and second, that these mort.acw he c nvertu -it in tru.ents -imilar in their essential characteristics t he m-rtgagn certificates b-nds, with the object 5f minimizing the legal fOrmalities required f r their sale r assignment.

The technical and administrative problems, which is the sec nd fundamental problem faced by our savings and lvans systems, is in my jud~pcent as equally important as, or even more so than the financial prblem. Much f the eff-rt of the Working Committees has been dov ted t the study f Onii imr,-rant t pic and its various subsidiary aspccts. The members f these c : rite,: nave laid great stress a the need tV advance with the 7reast ;-nsible speed in the task of perfecting cur technical and administrative capacities.

The committees have studied such imo rtnt matters as th selecti n of the staff V the savings and l:ans assnciati ns, the divisi in f respnsibilities, the standordization of meth~ds and pr, cedures, f ace unting s 7- ems and their mechanization, of publicity, and savings campaigns, etc. an!, in the specific sphere of lending, the evaluation of loan applications, mrrtgage p rtfelio analysis, property valuation, life, fire and other insurance c verage.

67 All this points very clearly to an iwmperative need to train ourselves to the highest possible technical and administrative standards, at the levels both of the local savings and loans associations and of the central offices and funds that supervise and support their operations, so that we may prepare ourselves to be able to provide a full and efficient service to the members of the associations, who are, after all, one of the most effective instruments for the promotion of our systems.

The establishment of basic and farther training institutes for our personnel is of fundamental importance for the solution of these problems.

The establishment of such training institutes, at both the national and continental levels, together with the setting up of an inter-American institute devoted to the same purposes, is one of the most important of the many tasks before us and one that, because of the great benefits it could bring, merits our unstinted effort and attention.

At this point, I should like to express our thanks to our distinguished colleagues from the United States who have rendered very real and constant assistance in this field and whose valuable support and advice we hope we shall continue to receive in the future.

This brief review: will s', fice, I am sure, to demosrate the fundamental importance of the discussions held here. We are also aware that the conclusions and recomendations contained in the siumnary reports of the working committees presented to this Plenary Selsion are exactly what they claim to be: conclusions arid, in particular, recoimnendations,w ith all that these terms imply. As we reach the clos:in: isoments of this Fourth eeting, it is important that we ponder very seriously on what ,.:u have gained from it, with a full understanding that it is only through our effort and resolve that these conclusions and recom mendations can be converted into practical action. It is our responsibility to see -hat they are put into practice.

There is no doubt that a basic instrumert for the more effective implemen tation of these conclusions and recommendations will be available as a result of the establishmient of the Inter-American Savings and Loans for Housing Union. By giving the Union our unstinted support we shall strengthen its capacity for decision and action. t're must realize that it is only through concerted action, through a spirit of fraternal unity*, that we shall be able to mobilize the strength and vitality that is needed if we are to make inroads on the housing deficit. We can only build the 16 million dwellings that our peoples lack by combining our action and our efforts and, above all, our ideas and our resources.

Gentlemen, Venezuela has been honored by your presence here during the last few days. It is our sincere hope -- perhaps even our proud claim -- that our efforts to make your stay in Venezuela pleasant have been successful. We are not unaware of the importance for our own local System of the discussions that have taken place in this Meeting. But I can assure you that above and beyond this legitimate interest, the aim has at all times prevailed of ensuring that, in leaving us and returning to your own countries, you may carry with

68 you pleasant memories of Venezuela and the assurances of our desire to make you feel at home in our country. The door will always remain open in the hope that you will one day return, either individually or collectively, whenever you wish. '.e offer you our sincere and eternal thanks for having honored us with your presence.

69 AN ADDRESS BY MR. ALFONSO ROCHAC,

TECHNICAL MANAGER OF THE II'TER-AMERICAN DEVELOPMENT BANK

The sponsors of the Fourth Inter-American Meeting on Savings and Loans, interpreting the sentiments of the participants, have asked me to inform you that at the close of this session a wreath will be placed on the tomb of the Liberator Simon Bolivar, at the National Pantheon.

Wc cannot think of a more appropriate way of expressing our grati ide to Venezuela, its government and people, and to the leaders of the savings and loan system, than by signifying our respect for the iLlustrious statesman who enthroned freedom and integration as the loftiest aspiration of our peoples. The Chairman of the Organizing Committee will designate a special commission to place this offering, in behalf of us all, before the altar that enshrines the remains of the Liberator.

70 ROSTER OF PARTICIPANTS

(Per Registration Record) CHAIRMEN OF THE DELEGATIONS

ARGENTINA Mr. Roberto Migliari

BOLIVIA Col. Oscar Angulo

BRAZIL Mr. Oliviera Penna

COLOMBIA Mr. Gabriel Izasa Botero

COSTA RICA Mr. Lidio A. Donato

CHILE Mr. Guillermo Le Fort Campos

ECUADOR Col. Jorge Salvador y Chiriboga

EL SALVADOR Mr. Vario Luis Velazco

UNITED STATES OF AMERICA Mr. Stanley Baruch

GUATEIALA Mr. Mario Granai A.

HONDURAS Mr. Rafael Callejas

Mn'ICO Mr. Carlos Garcla Ramos

NICARAGUA Mr. Jos6 Antonio Estrada Cabrera

PAIIAMA Mr. Harmodio Arias

PARAGUAY Mr. Daniel G. Burt

PERU Mr. Alberto Le6n

PUERTO RICO Mr. Horacio Ddvila

DOMINICAN REPUBLIC Mr. Manuel Pittaluga

VENEZUELA Mr. Eduardo Fuentes

72 ARGENTINA

Braun, Armando Gerente Crear, Credito Argentino S. A.

Balicki, Mariano Director - MI CASA S. A. Institu ci6n de Ahorro y Prestamo.

Bonta, Juan Assor Crear, Credito Argentino S. A. Carlstein, Rodolfo G. Instituto de Promoci6n del Ahorro para la Vivienda. Davini, Alejandro Rodolfo Gerente General, Fedataria Argen tina de Ahorro y Prestamo.

Garcfa y Badaraco, Juan C. Gerente AYPSA - Centro. Gimdnez Zapiola, Horacio Administrador, Gimdnez Zapiola Vi viendas.

Hodes T., Roberto Contador Director Gerente. Lago, Armando V. Presidente de la Federaci6n Argen tina de Couperativas de Vivienda Ltda. Instituto Federal Cooperati vo de Ahorro para la Vivienda (FADECOOP-IFCAV).

Lanusse, Fernando R. Presidente, C'nara Argentina de Ahorro y Prestamo. Luduefia, Arturo L. Vice-Presidente, Instituto de Pro moci6n del Ahorro. Martfn, Galileo Director Secretario, Federaci6n Ar gentina de Cooperativas de Vivien da Ltda. instituto Federal Coope rativo de Ahorro para !a Vivienda. (FADECOOP-IFCAV).

Martin, Jos4 Ram6n Presidcrite Instituto de Asesoramien to Integral de Ahorro y Prdstamo .JLPA) .

Migliari Roberto F. A. Vice-Presidente, Banco Hipotecario Nacional. Delegado Suplente, Uni6n Interamericana.

73 Miguens, Hugo E. Gerente General.

Palacin, Manuel Presidente,Cooperativa El Hogar.

Palmiero, Andr6s Rafael Presidente,Inst. Argentino de Ahorro y Vivienda.

Pefia, Jaime Joaquin Director Gerente,Vivienda Guillermo A. Pefia.

Ponde, Eduardo Bautista Presidente,Fedataria Argentina.

Soria, Ratil Antonio Director-Titular de la Federa ci6n Argentina de Cooperativas de Vivienda Ltda. Instituto Fe deral Cooperativo de Ahorro para la Vivienda (FADECOOP-IFCAV)

Sterin Natalio Vice-Presidente,Inst. Argentino de Ahorro y Vivienda.

Trozzo, Jos6 Rafael Presidente,Fiar Vivienda S. A. de Ahorro y Pr6stamo

Rago, Antonio Oscar Vice-Presidente Ejecutivo de la Federaci6n Arger tina de Coopera tivas de Vivienda Ltda. Institu to Federal Cooperativo dr.;Ahorro para la Viviend'i. (FADECOOP-IFCAV).

Pastene, H6ctor Gerente de la Caja Federal Ahorro y Prdstamo.

BOLIVIA

Angulo Santilldn, Coronel Oscar Presidente Consejo Nacional de Vivienda Ave. 20 de octubre, Esq. Fernando Guachalla La Paz, Bolivia

Escobar Quiroga, Hugo Sub-Secretario de Estado Ministerio de Obras Pidblicas La Paz, Bolivia

Knaudt, Gustavo Coordinador Programa de Vivienda B.I.D. Casilla 1124 La Paz, Bolivia

74 L6pez C6rdova, Coronal Claudio Presidente Servicio Financiero del Consejo Nacional de Vivienda La Paz, Bolivia

Parada, Juan Manuel Gerente "La Prirmera" Sucursal Santa Cruz Santa Cruz, Bolivia

Paz Soldan, Joaqufn Gerente Operaciones, Corporaci6n Boliviana de Fomento La Paz, Bolivia

Rojas Duarte, Ronny Asesor Jurldico "La Primera" Cochabamba, Boli.via

Romeo Lascano, Vfctor Sub-Director de Bancos del Ministerio de Hacienda La Paz, Bolivia

Salazar, Hugo Gerente "La Primera" La Paz, Bolivia

Urquiola Murillo, AmfIlcar Presidente Primera Sucursal Oruro Oruro, Bolivia

Wende, Ernesto Presidente Asociaci6n Mutual de Ahorro y Pr~stamo para la Vivie.da "La Primera" La Paz, Bolivia

BRAZIL

Abreu Soares, Josd Heleno Gerente - Caixa Econ6mica Esta dual.

Amorim, Evaldo Jefe Servicios - Caixa Econmica Federal.

Bittencourt, Idelmar T. Consilitor Tdcnico - Consejo Supe rior de Cajas Econ6micas Federales.

75 Brandao Fischer, Valdivio Presidente - Caixa Econ6mica Federal de Brasilia.

Chdvez, Raymond Asesor de Ahorro y Pr6stamo Banco Nacional de la Habita ci6n

Da Costa Prieto, Arnaldo Secretario de Estado de Trabajo y Vivienda de RTho Grande Do Sul.

De Areum, Josd Feliciano Jefe de Cartera Hipotecaria Caixa Econ6mica Estadual - Ins tituto de Asistencia Tdcnica y Cooperativas.,Brasil.

De Almeida Rego, t. M. Asesor T~cnico - Banco Nacional de Habitaci6n.

De uliveira, Ciro Tavares Director - Caja Econ6mica Esta dal de Rio Grande do Sul.

De Oliveira M., Renato A. Jefe de Servicio de Financiamien tos de Habitaciones y Urbanismo.

De Oliveira T., Josd E. Director - Banco Nacional de la Habitaci6n.

De Vasconcellos, Fabio P. Asesor - Banco Nacional de Habi taci6n.

Ferreira Barros, Mauricio Jefe del Servicio de Estudios y Planeamientos.

Lucciola, Armando Ingo Secci6n de Planeamiento Caja Econ6mica de la Provincia de Minas Generales - B.N.H.

Moreira Velloso, Nylton Presidente - Caixa Econ6mica de E.de Minas Gerais.

Pinto Jr., Francisco Director Superintendente Grupo - Halles. Cr~dito Financia mento e Investimentos.

Ribeiro Lisboa, Ibafez Director - Caixa Econ6mica Federal R.G. Sul.

76 Soares Madureira, Mucio Jefe de Servicio de Ingenieria Caixa Econ6mica Minas Gerais.

Vegas Castello , Armando Director - Caja de Ahorro Fede ral de San Paulo.

COLOMBIA

Ballesteros Uribe, Hermann Instituto de Crt4dito Territorial

Cortes Boshell Jorge Gerente General,Banco Central Hi potecario.

Carrillo Lozano, .Alfonso Gerente Fondo de Ahorro Inscredial.

Isaza Botero, Gabriel Instituto de Cr~dito Territorial

Ni';o, Josd T. 1erenteCooperativa de Vivienda Colombiana.

Martfnez G., Hernando Director C.ja Colombiana de Ahorros.

Rojas Gaona, Ernesto Director Ejecutivo, Asociaci6n Co lombiana de Cooperativas.

Ruiz, Alberto Auditor,Banco Central Hipotecario

COSTA RICA

Lidio A. Donato Jefe Dpto. Financiero Inst. Nac. de Vivienda y Urbanismo.

Carlos Eduardo Saborio Alvarado Secretario General del Instituto Nacional de Vivienda y Urbanismo

CHILE

Collados NifezModesto Ministro de Vivienda y Urbanismo

Truyol,Eduardo Sub-Secretario del Ministerio de Vivienda y Urbanismo

Amunategui Stewart, Felipe Director de la Asociaci6n de Ahorro y Prdstamo RENOVACION.

77 Beves, Christian Gerente de Promoci6n de la Asociaci6n de Ahorro y Prdstamo AHORROMET

Beltrdn, Leonardo Director de CALICANTO

Campos Romero, Francisco Javier Presidente de la Cooperativa El Esfuerzo

Cooper, Carlos Presidente de la Asociaci6n de Ahorro y Prdstamo H.U.E.L.E.N.

Costa, Enrique Director Gerente Asociaci6n de Ahorro y Prdstamo Diego Portales.

Chornik Steingard, Salom6n Presidente Ejecutivo de la Asociaci6n de Ahorro y Prdstamo Bernardo O'Higgins

Guevara, Luis Presidente AAPP Diego Portales

umucio, Pablo Presidente de la Asociaci6n de Ahorro y Prdstamo Libertad

Humerez, Enrique Presidente de la Asociaci6n de Ahorro y Prdstamo APREMUR

Illanes ue, Mina Gerente Administrativo AHORROMET AAPP

Krauss Rusque, Enrique Director de la Asociaci6n de Ahorro y PrdBemo Libertad.

Larrain, Sergio Director de la Asociaci6n de Ahorro y Pr6stamo Renovaci6n.

Le Fort CamposGuillermo Presidente de la Caja Central de Ahorro y Prdstamo.

Lavanderos Figueros, Herndn Director Gerente de la Asociaci6n de Ahorros y Prdstamos Libertad.

7- Marfan Jaramillo, Octavio Gerente de la Asociaci6n de Ahorro y ?restamo Casa Propia y Vicepresidente de la Federaci6n Nacional de Asociaciones de Ahorros y Prdstainos

Magasich, Jorge Director de la Asociaci6n ACOVAL

Montalbetti M.,Ambrosio Presidente de la Asociaci6n y Promoci6n ACOZAL

Posada Copano, Francisco Jefe de Relaciones Pblicas de ALICOOP

Posada, Francisco Gerente de ALICnop

Pinto, Guillermo Directo de la Asociaci6n ACOVAL

Ramirez, Agustin Jefe de Relaciones Pdblicas C'ja Central de Ahorros y Prdstamos

Rouliez Bascuian, Fernando Vicepresidente de ALICOOP

Saavedra Alcalde. Omar Presidente de la Federaci6n Nacional de Ahorro y Prdstamo de Ciile

Salas Rivas, Pablo Gerente de Casa Chile, A.A.P.

Sdnchez, Jorge Presidente de Casa Chile, A.A.P. y Director de la Uni6n Interamericana de Ahorro y Pr6stamo para la Vivienda

Sandoval. y Munita, Ar!uro Asesor de Promoci6n Caja Central de Ahorros y Pistanos

Sommerhoff Ruer, Walter Presidonte de TECNICOOP

Soto Lafoy, Guillermo Gerente de la Asociaci6n Ahorro y Prdstamo Bernardo O'Higgins

79 Straub, Enrique Director Ejecutivo de la Caja Central de Ahorro y Pr6stamo

Trivifio Martinez, Hugo Gerente Cooperativa El Esfue.zo

Valle Pdrez,Enrique Secretario Adjunto Uni6n Interamericana de Ahorro y Pr6,tamo para la Vivienda

Varela, Ra6l Gerente General de AHORROMET

Vinagre M6fioz, Guillermo GerenLe de la Asociaci6n de Ahorro y Prdstamo Renovaci6n

Zabala, Alvaro Jefe Departamento de Viviendas Caja Central de Ahorro y Prdstamo

ECLADOR

Borrerro, Antonio Presidente de la Asociaci6n Mutualista AZUAY.

Ddvila, Miguel E. Vocal - Mutualista "Pichincha"

Duefias L., Gonzdlo Director - Mutualistas Sebastian de Benalcazar.

Klever, Viteri Presidente - Mutualista Previsi6n y Seguridad.

Madera, Luis Presidente de la Asociaci6n de Mutualistas del Ecuador.

Mena, Alfonso Secretario General de la Asocia ci6n Nacional del Ecuador.

Mordn de, Maria Esther A. Vocal Fundadora - Mutualista Luis Vargas Torres.

Salvador Chiriboga, Jorge Presidente del Banco de la Vivienda.

Sdnchez, Cecilia Consejo de Administraci6n - Mutualista Belacasa.

Villag6mez, Hernando Vocal - Encargado de la Gerencia Mutualista Belacasa.

8o EL SALVADOR

Freund, Ernesto Director de Vivienda S.A. Asociaci6n de Ahorro y Prdstamo

GarclaJulidn GerenteAhorro y Vivienda, S.A.

Velasco, Maric Luis Presidente,Financiera Nacional de la Vivienda

UNITED STATES OF AMERICA

Alci.no, Maria Anglica Secretaria National League of Insured Savings Associations, Wash. D.C.

Baker Jr., T :x G. Southwestern Savings Association

Basina, Jcsd B. Jefe de la Divisi6n de Viviendas, USAID, Ecuador.

Benediot, Joseph T. Senior Vice-President Worcester Federal Savings and Loan Association, Worcester, Mas.

Benes, Bernardo Vice-President Washington Federal Savings & Loan Association of Miami Beach

Bernbaum, Maurice M. Embajador de los Estados Unidos de Amdrica , Venezuela

Borden, Sam W. President Loyola Savings & Loan Assn., Baltimore

Bottom, Dale C. Executive Assistant American Savings & Loan Instit- :, Chicago

Boyd, Osborne T. Department of State, Wah. D.C.

Bronheim, David Deputy U.S. Coordinator Alliance for Progress Agency for International Development Department of State . Washington, D.C.

81 Buchanan, W. Evans President W. Evans Buchanan (Builder) Rockville, Md.

Burrough, Roy Judson Economist Department of Housing and Urban Development Office of International Housing Washington, D. C.

Burrows, Malcolm A. Oficial de Desarrollo Urbano US AID/Venezuela Embajada Americana

Campbell, W. J. President Foundation for Cooperative Housing, Washington, D. C.

Carnegie, J. Lloyd President Commerce Savings Shawnee, Kansas

Cater, Jack Director Office of International Home Finance, Washington, D. C.

Coan, Carl A. S. Staff Director Housing Subconuaittee U. S. Senate Washington, D. C.

Connolly, Charles R. Rocap, American Embassy, Guatemala

Dagnino, Edmund F. President Boston Federal Savings and Loan Association

Distelhorst, Robert U. S. Savings & Loan League Assistant Vice-President Washington, D. C.

Dodge, J. Robert Director of L. A. Programs FCH International, Washington

Doherty Jr., William C. Administrator American Institute for Free Labor Development, Washington, D. C.

Donahoe, F. Marion President Citizens Federal Savings and Loan Association, San Francisco

82 Doyle, Phil A. Housing Advisor National Housing Bank, Brasil

Dunham, Riseel L. President, S. and L. Slidell, La.

Easson, George B. Internaticoal Division Federal Housing Administration Washington, D. C.

Edmondson, Jack Deputy Director, International Program Foundation for Cooperative Housing, Washington, D. C.

Foster, Paul Rocap, American Embassy, Guatemala

Fossum, Charles P. Director US/AID Venezuela

Gaskill, W. Ross FCHC, Rocap, kmerican Embassy Guatemala

Generes, Allen H. President & General Manager Central Savings & Loan Assc. New Orleans

Goes, Vieira, Luciano USAID, NE, Brasil

Greenebaum, Michael Miembro de la Junta Directiva Federal Home Loan Bank Washington, D. C.

Greenwood, George W. Presidente Topeka Savings Association Kansas

Greep, H. P. Atlantic Federal Fort Lauderdale Florida

Harold, Raymond P. President Worcester Federal Savings & Loan Association Worcester, Mass.

Heisler, Kenneth G. National League, Washington, D. C.

Hill, Gerald San Francisco

Hoben, Edmond H. USA Economic Mission, Cclombia 83 Hofgren, Daniel Treasurer International Charter Develop ment Corporation, New York

Holway, James R. Director of Social Projects American Institute for Free Labor evelopment, Wash. D.C.

Killkelly R. Vice-President Manchester Federal Savings

King, Tom Executive Vice-President Soutlhestern Savings Association Housto.1, Texas

Knight, Richard C. National League, Washington, D.C.

Kraft, Eileen Vice-President & Secretary Loyola Federal Savings & Loan Association, Baltimore

Kreutz, O.R. President First Federal Savings & Loan Associat.ion of St. Petersburg Florida

Martin, John A Rocap, El Salvador

Mason, Raymond K. President S 3 L Jacksonville, Florida

Moore, H.A. President Brentwood Federal Savings & Loan Pittsburgh

Morrison, Franklin Executive Vice President First Federal Savings & Loan Washington , D. C.

Mosmiller, Joseph William Vice President Loyola Federal Savings & Loan Association, Baltimore

McKenna, William F. General Counselor N.L.I.S.A. Washington, D.C.

Pallot, Al Biscayne Federal & Loan Assoc. Miami, Florida

Pearce, Clarence E. Vice President & Controller Loyola Federal Savi:,gs and Loan Association, Baltimore

84 Perrin, Robert P. Director of Advertising United States Savings and Loan League, Chicago Chicago

Peterson, Alfred G. President Greenwich Federal Savings & Loan Association Greenwich, Conn.

Preisler, Otto L. Vice President United States Savings & Loan League, Chicago

Ransom, Bide M. Bell Savings, Chicago

Roessner, Gilvert G. Secretary Vice-President City Federal Savings & Loan Association. Elizabeth. New York

Ruff, Stephen L. President - West Highland Savings Assoc. Chicago

Schram, Marlo J. USAID, Dominican Republic

Silbauch, Preston N. President, Chairman of the Board, Beverly Hills Federal Savings and Loan Association California.

Speetles, Robert Presidente - Cayuga Savings & Loan Assoc. Philadelphia, Pa.

Sola, Juan A. USAID, Argentina

Souter, Robert World Savings & Loan Assoc. California.

Watson, General J.W. Director - Home Federal Savings & Loan Hollywood, Florida

Ewalt, Josephine Secretary General International Union of Building Societies and Savings Association Washington, D. C.

85 Willburn, D. A. President - First Federal Savings Loan Coffeyville.

Williams, Bill Justin Housing Advisor U.S. A.I.D. Brasil American Embassy

Kerwin, William J. Executive Vice President National League of Insured Savings Washington, D. C.

Wohl, Thomas M. President - Home Federal Savings and Loan Hollywood, Florida

Zenger, Richard USAID Rep-dblica, Argentina

GUATEMALA

Barillas, Roberto P. Gerente Instituto Nacional de la Vivienda.

Granai Andrino, Mario Presidente Banco Granai & Thompson

Insua, Ricardo Presidente Ejecutivo Banco de la Previsin, S. A.

Saa del Rio, Arturo, Dr. Sub-Gerente Banco Granai Thompson

Santa Cruz, Enrique, Lic. Gerente Inst. de Fomento de Hipotecas Aseg.

HONDURAS

Callejas, Rafael Encargado Dpto. Financiero Banco Centroamericano de In tegraci6n Econ6mica.

86 MEXICO

Garcia Pamos, Carlos Gerente de Habitaci6n Banco Nacional Hipotecario Urbano y de Obras Pblicas, S.A. Mdxico D.F., Mdxico

NICARAGUA

Carri6n Montoya, Luis Gerente General - Financiera de la Vivienda

Estrada, Josd Antonio Presidente del Directorio - Instituto Nicaraguense de la Vivienda

Meneses Ocon, Gonzalo Miembro de la Comisi6n Ahorro y Prdstamo

Santos, Hernaldo Gerente de la Inmobiliaria de Ahorro y Pr6stamo, S.A.

Zelaya, Fausto Gerente General del Instituto Nicaraguense de la Vivienda

PANAMA

Aleman, Gustavo E Gerente General Primera Asociaci6n de Ahorro y Prdstamo para la Vivienda

Arias G., Harmodio Gerente General Instituto de Fomento de Hipotecas Aseguradas.

Pasquel M., Julio Jefe del Departamento de Pr~stamos Hipotecarios - Instituto de Vivienda y Urbanismo

Pariente, Severino Miembro Junta Directiva Instituto de Fomento de Hipotecas Aseguradas.

Pianetta, Guillermo Consultor Juridico y Econ6mico "I.V.U."

87 Ponce D., Fidel Sub-Gerente General del Instituto de Fomento de Hipotecas Aseguradas.

Tribaldos, Eladio Administrador Regional del Instituto de Vivienda y Urbanismo

PARAGUAY

Burt, Daniel G. Vice-Presidente NORMA Sociedad An6mina Comercial - Asunci6n

PERU

arreto Aryan, Jorge Presidente Mutual AMCV Naval

Barrios, Rail Director Banco Central Hipotecario del Peril

Bouroucle, Arturo Gerente Caja de Ahorro y Prdstano para Vivienda

Bovet, Claudio Asesor Banco de la Vivienda del Perd.

Carrillo Salinas, Cdsar Director A.M.C.V. - "EL PUEBLO"

Cruzados Zabala, Julio Presidente Alianza Sindical Cooperativista

Cavero, Miguel Asesor Jurldico Cdmara Peruana de Asociaciones de Ahorros y Prdstamo

Chirinos Gratta, Ada Maria Asistente A.M.C.V. - "EL PUEBLO'

Lanata, Ernesto Presidente Caja de Ahorro y Prdstamo pars Vivienda.

Le6n, Alberto Presidente Cdmara de Mutuales.

88 L6pez Stein, Roque Director-Gerente Caja de Ahorro y Prdstamo para Vivienda El Santa L6pez J., Alfonso Director Mutual El Pueblo Caja de Ahorro y Prdstamo para Vivienda McLellan, Margaret Asistente A.M.C.V. - "EL PUEBLO" McLellan, Daniel Presidente Mutual - "EL PUEBLO" Mohama, Miguel Rend Presidente Mutual El Santa Moura Tuanama, Francisco Primer Vicepresidente Caja de Ahorro y Prdstamo para Vivienda Loreto. Orego Villacorta, Eduardo Director Mutual El Pueblo Osorio, Othon Director Caja de Ahorro y Prdstamo para la Vivienda Ortiza de Zevallos, Luis Presidente Banco de la Vivienda del Perd Paredes, Leonardo Director Mutual El Pueblo - Caja de Ahorro y Pr6stamo para la Vivienda Piaggio, Ezio Vicepresidente Caja de Ahorro y Prdstamo para Vivienda Eaygada, Eduardo Gerente Divisi6n de la Vivienda (IBEC) Velarde, Manuel Gerente General Banco de la Vivienda del Perd

Villanueva Ortiz, Baldomero Presidente Asociaci6n Mutualista de Orddito Para Vivienda.

89 Valdivia Paredes, Doris Jefe Dpto. de Prdstamo Asociaci6n Mutual de Vivienda El Pueblo

Wenzel, Jr. Howard E.° Director-Gerente Viviendas del Norte, S.. A.

PUERTO RICO

Bermidez, Juan J. Vice-Presidente del First Federal Savings & Loan Assn.

Ddvila, Horacio Presidente del First Federal Savings & Loan

Del Valle, Manuel L. Director de la United Federal Savings.

Gonzdlez Mfioz, Carlos M. Director de la United Federal Savings and Loan Assn.

Montilla, Eduardo Director de la United Federal Savings & Loan Assn.

Pdrez, Rafael V. Vice-Presidente Ejecutivo de la United Federal Savings & Loan Assn.

Rico, Guillermo Miembro Junta de Directores United Federal Savings & Loan Association - San Juan

DOMINICAN REPUBLIC

Anido, Josd Rafael Gerente General Asociaci6n CIBAO Bellair 98, Santiago, Rep.Dominicana

De Pool, Luis A. Director Fomento de Hipotecas Aseguradas Banco Nacional de la Vivienda Santo Domingo, Rep.Dominicana

Hazoury T., Azor Vice-Presidente Ejecutivo Asociaci6n Popular de Ahorros y Prdstamos Santo Doming ,Rep. Dominicana

9o Herrera, Gustavo A. Auditor Banco Nacional de la Vivienda Calle Modesto Diaz Apartado de Correos 1504 Santo Domingo, Rep. Dominicana

Pittaluga, Dr. Manuel Gerente Banco Nacional de la Vivienda Calle Modesto Diaz Apartado de Correos 1504 Santo Domingo, Rep. Dominicana

VENEZUELA

Acarregui, Juan M. Vice Presidente "La Vivienda", Entidad de Ahorro y Prdstamo Caracas, Venezuela

Acedo Mendoza, Carlos Director Acedo Mendoza & Vega Edif. San Jacinto Gradillas a San Jacinto Caracas

Alcald Strupp, Lucia Jefe Departanento Legal Oficina Central de Ahorro y Pr6stamo Av. Leonardo da Vinci Colinas Bello Monte Caracas

Alonzo, Manuel Presidente "El Porvenir" Entidad de Ahorro y Prdstamo Cabimas, Edo. Zulia

Alvarez, Enrique Avaluador Oficina Central de Ahorro y Pr stamo Av. Leonardo da Vinci, Ed. Pigalle Primer Piso Colinas de Bello Monte Caracas

Andrade, Lic. Heriberto Auditor Oficina Central de Ahorro y Pr~stamo Caja Popular de Occidente Maracaibo, Edo, Zulia

91 Arias Anexi, Francisco Economista Jefe Departamento Financiero Oficina Central de Ahorro y Prdstamo Edif., Pigalle, 10 Piso Av. Leonardo Da Vinci Colinas de Bello Monte Caracas

Arenas Amigo, Valentin Director Instituto Venezolan) de la.Vivienaa 20 Piso, Edif. San Jacinto Gradillas a San Jacinto Caracas.

Aristiguieta, Raimundo Director "La Industrial", Entidad de Ahorro y Prdstamo Calle La Iglesia, Edif. Lincoln Sabana Grande Caracas

Arteaga Planas, J.B. Vocal Suplente Junta Directores "La Vivienda" Caracas

Ayala, Gubtavo Ingeniero Siemens S.A. Caracas Ayala Landa, Jose Ram6n Secretario Ejecutivo Federaci6n Venezolana de Ahorro y Prdstamo Caracas

Ayala Herndndez, Dr.Ignacio Presideote C.A.RICCA Edif. A§kain, Apto. 9 Caracas

Baez, Josefina Navarro de Ingeniero Jefe Departamento Tdcnico Oficina Central de Ahorro Pr~stamo Ed. Pigalle , Av. Leonardo da Vinci Colinas de Bello Monte Caracas

Barroso Lima, Gustavo Oficina Central de Ahorro y Pr6stamo Av. Leonardo da Vinci Edif. Pigalle Colinas de Bello Monte Caracas

92 Beltrdn G6mez, Luis Gerente Pro-Vivienda San Cristobdi Edo. Tdchira

Ijenavides, Federico L. Asesor Asuntos Econ6micos Banco Obrero Caracas

Bencomo Montilla, Juan Gerente "Casa Propia" - Barquisimeto Edo. Lara

Berti, Arturo Luis Miembro de la Comisi6n Nacional de Ahorro y Pr~stamo Colinas de Bello Monte Caracas

Blanco M., Sr.,Pedro E. Gerente "La Primogdnita" Entidad de Ahorro y Prdstamo Cumand Edo. Sucre

Boada, Jesus Rafael Presidente "Mrida" Entidad de Ahorro y Prdstamo Mdrida, Edo. Mdrida

Bocaranda Sardi, Lic.Nelson Coordinador Adjunto de Prensa del Congreso de Ahorros y Prdstamos Caracas

Bolafos, Armando Sub-Gerente "Miranda" Entidad de Ahorro y Prdstamo Caracas

Burguera, Carlos Enrique Auditor Sistema Nacional de Ahorro y Prdstamo Colinas de Bello Monte Caracas

Bustamante Ramirez, Eduardo Gerente "Miranda" Entidad de Ahorro y Prdstamo Caracas

Cardozo F., Alejandro Sub-Gerente "La Primera", Entidad de Ahorro y Prdstamo Ave. Fco. de Miranda Caracas

Carnevali, Gonzdlo Gerente Oficina Central de Ahorro y Prdstamo Colinas de Bello Monte Caracas

93 Carrasco, Tomds Economista Fundaci6n para el Desarrollo de la Comunidad y Fomento Municipal Avenida Casanova, Edif. Santiago de Le6n 30 Piso Caracas.

Casanova, Jorge Ali Presidente "Horizonte", Entidad de Ahorro y Prdstamo Esq. de Gradillas Caracas

Casanova MaM, Manuel Gerente "Mdrida", Entidad deAhorro y Prdstamo Avenida 5, esquina con Calle 24 Mdrida

Cepeda, Humberto Andrade Director Suplente Entidad Caja Popular de Occidente Maracaibo, Edo. Zulia

Chdvez Orozco, Antonio Asesor Financiero Oficina Central Ahorro y Pr~stamo Ed. Pigalle, Colinas de Bello Monte Av. Leonardo Da Vinci Caracas

Clavo Mejfas, Oscar Miembro Principal Comisi6n Nacional de Ahorro y Prdstamo Caracas

Coll Loges, Gustavo Gerente Entidad de Ahorro y PrOdimo Av. La Iglesia, Sab. Grande Edif. Lincoln Caracas

Contreras Barboza, Carmelo Abogado Caja Popular de Occidente Maracaibo, Edo. Zulia

Ddvila Cdrdenas, Jesis Director General Techo S. A. Edif. Polar, Piso 10 Plaza Venezuela Caracas

De. Abajo Chdvez, Augusto Economista Oricina Central Ahorro y Prdstano Colinas de Bello Monte Caracas 94 De Miguel Pdrez, Isidro Director de Bancarios Bancarios Entidad de Ahorro y Prdstamo Ave. Urdaneta, Edif. Phelps Caracas

De Zabala, Pbro. Silverio Presidente "LA VIVIENDA", Entidad de Ahorro y Prdstamo Caracas

Dfaz Boada, Francisco Gerente "Oriente" Enzidad de Ahorro y Prdstamo Cuertos La Cruz, Edo. Anzodtegui Dominguez, Josd Rafael Presidente "Magisterio", Entidad de Ahorro y Prdstamo Caracas

Fajardo, Luis "Editorial La Esfera" Esq. de Pante6n Caracas

Farlas, Gerardo de Jesds Director Ejecutivo Circulo Nacional de Comerciantes Edif. Sudameris 50 piso - 509 Avda. Urdaneta Caracas

Ferndndez Echeverria, Julio Revista "El Ingeniero" Muerto Peldez 1518 Caracas

FernAndez Mordn, Tito Director Fondo Comdn Entidad de Ahorro y Prdstamo Marr6n a Dr. Paul, Edif. Seguros Caracas

Frfas, Josd Francisco Fondo de Previsi6n de los Trabajadores de la C.A. Electricidad de Caracas Ave. Vollmer, San Bernardino Caracas

Fuentes Manzo, Rub4t, Entidad La Vivienda Ahorro y Pr6stamo.

95 G6mez, Alberto Presidente Constructora Progreso C.A.

G6mez Mantellini, Anibal Gerente Magisterio Entidad de Ahorro y Pr~stamo

Gonzdlez, Gonzalo Gerente de Operaciones Techo, S.A.

Gonzdlez Angulo, Nectario Secretario Caja Popular de Occidente

Gonzdlez Rubio, Ivdn Consultor Jurldico Caja Popular de Occidente

Guzmdn Pards, Manuel Director Techo, S.A.

Hinestrosa, Gilberto Director Secretario El Porvenir, Entidad de Ahorro y Pr~stamo

Huizi A., Alejandro J. Gerente,Apoderado General La Vivienda Entidad de Ahorro y Prdstamo.

Lacau, Luis Rafael Presidente Coro Entidad de Ahorro y Prdstamo

Lafee, Alfredo Miembro Comisi6n Nacional de Ahorro y Pr6stamo

Landaeta, Enrique Jefe de Secci6n Balanza de Pagos Banco Central de Venezuela

Lartitegui, Xavier Asesor Tdcnico La Primera Entidad de Ahorro y Prdstamo

Le6n Rovaina, Jes~is Guillermo Tesorero Horizonte,Entidad Ahorro y Prdstamo

Holzer Guillermo Sub-Gerente La Industrial S.A.P.

L6pez L6pez, Jaime Hernando Presidente de Casa Plusultra

Machado, Rafael Ingenkro

96 Maestre, Rosalba Jefe del Servicio Social de la C. A. La Electricidad de Caracas Maldonado Bolafios, Reinaldo J. Gerente Progreso, Entidad de Ahorro y Prgstamo Martinez Olavarr~a, Leopoldo Presidente del Banco Obrero Matute Lander, Ennio Gerente Maracay, Entidad de Ahorro y Prstamo M4ndez de Dfaz, Gladis Directiva La Vivienda, Entidad de Ahorro y Prgstamo Mendoza, Eugenio Presidente Comisidn Nacional de Ahorro y Prdstamo Monteverde, Frank Director La Industrial, Entidad de Ahorro y Prdstamo Moser, Pablo Presidente de la Asociaci6n La Primera Entidad de Ahorro y Prdstamo Mouchet C., Juan Angel Administraci6n Oficina Central de Ahorro y Prdstamo Ortiz R., Arturo Miembro Suplente Comisi6n Ahorro y Pr4stamo Padilla Ferndndez, Roberto Sub-Director, Banco Obrero Palacios Galindo, Ricardo Asesor Jurfdico OCAP - Ofocina Central de Ahorro y Prdstamo Pardo E., Arturo Comisidn de Ahorro y Prgstamo Pdrez Barreto, Luis Jesus Miembro Junta Directiva del Banco Obrero Pdrez Judrez, Asdrdbal Departamento Tecnico Oficina Central de ALorro y Prdstamo Pericchi, Juan Jacobo Tesorero La Vivienda, Entidad Ahorro y Prdstamo Pocaterra, Alberto Gerente Siemens, S. A.

97 Polanco, Tomds Consultor Juridico Banco Hipotecario de Crddito Urbano

Puroy Terdn, Gregorio Presidente de la Caja de Ahorros de los Empleadosde la C.A. La Electricidad de Caracas

Quintana Romero, Cdsar Ingeniero Ministerio de Sanidad y Asistencia Social

Rasquin Arvelo, Sim6n- Vocal de la Junta Directiva de Directores Magdsterio,Entidad de Ahorro y Prdstamo

Rengifo A., Carlos Gerente de Fondo Comin Entidad de Ahorro y Prdstamo

Requena, Josd Gabriel .valuador de Inmuebles Oficina Central de Ahorro y Pr6stamo

Rivas, Erasmo Rafael Profesor Escuela Administraci6n Pdblica

Rodero Rubiera, Emilio Tesorero de la Primera Entidad de Ahorro y Pr~stamo

Rodriguez Amengual, Alfredo Vicepresidente Comisi6n Nacional de Ahorro y Prdstamo

Rodriguez Delgado, Josd Luis Gerente El PorvenirEntidad de Ahorro y Prdstamo

Rodriguez Ramirez, Cdsar Vicepresidente La Industrial Entidad Ahorro y Pr~stamo

Rond6n, Max Secretario Junta Directiva La Vivienda,Entidad de Ahorro y Prdstamo

Ruan, Eduardo Asesor, Oficina Central de Ahorro y Pr6stamo - Coordinador General IV Reuni6n

Ruiz Herndndez, Juan Josd Ingeniero,Secci6n Propiedad Horizontal Oricina Central de Ahorro y Pr~stamo

Ruiz Rivas, Guillermo Jefe Departamento Fiduciario Banco del Caribe

Sdnchez, Isbelia Abogado Oficina Central de Ahorro y Prsno

Santamaria F., Luis Administraci6n Plan de Casas Creole Petroleum Corp.

98 Scandella Betancourt, Guillermo Particular

Sferra, Sergio Gerente de Bancarios Entidad de Ahorro y Pr~stamo

Solano Campuzano, Vicente Gerente Caja Popular de Occidente

Sosa, Macario Magisterio,Entidad de Ahorro y Prdstamo,

Soto Van Der Dis, Elio Presidente Caja Popular de Occidente

Stefanutti, Valentino Director Techo, S.A., de Promoci6n Inmobiliaria

Sucre Vegas, Miguel Angel Director Gerente Vegas C.A.

Uslar Braun, Federico Asesor,Departamento Producci6n Techo, S. A.

Valencia, Joel Jefe de la Divisi6n Crddito y Banca del Banco Central de Venezuela

Valero Garcla, Sim6n Jefe del Departamento de Ahorro La Primera,Entidad de Ahorro y rrdstamo Vegas Rolando, Nicolds Abogado Acedo Mendoza & Vegas

Wilson Castillo, Guillermo Fundador G. & A. Wilson Castillo

Wulff, Eduardo Socio de Ruan & Wulff,Tasaciones y Evaluaciones

Zambrano,Eufimio Secretario General Circulo Nacional de Comerciantes

Zambrano S., Maria J Abogado Apoderado Banco Obrero

Zavarce H., Oscar E. Asesor Fundaci6n para el Desarrollo de la Comunidad y Fomento Municipal

99 INTER-AMERICAN DEVELOPMENT B.NK

Niemtschick, Oscar Director Ejecutivo Rochac, Alfonso Gerente Tdcnico Glower, Rafael Representante Regional

Rey Alvarez, Radl Representante Regional Scioville, Henri Jefe Unidad de Vivienda Maza, Eneas Consultor de Vivienda Aguilar, Edmundo Ingeniero Residente Avil~s, Leonidas Redactor de Informaci6n Chavez, Alvaro Oficial de Conferencias

INTER-AMERICAN SAVINGS AND LANS UNION

Fuentes C., Eduardo Presidente Garcia Rodriguez, Ricardo Secretario General Valle Pdrez, Enrique Secretario Adjunto

OBSERVERS AND SPECIAL GUESTS

Carlson, Eric Jefe, Secci6n de Viviendas, NN.UU. Major, Harrison Embajada de Trinidad y Tobago, Venezuela

100 THE HOUSING PROBLEM IN LATIN AMERICA

Summary of recordings made in the four Working Committees

I. THE DIMENSIONS OF THE PROBLEM AND THE LAUNCHING OF THE SAVINGS AND LOANS MOVEMENT The housing deficit A new approach The savings and loans movement

II. THE STATE AND HOUSING The role of the State Division of functions State assistance to the savings and loans movement The central agency for the guidance, assistance and supervision of the associations

III. THE SAVINGS AND LOANS ASSOCIATIONS Public they are intended to serve Nature and characteristics Publicizing of the savings and loans system Incentives Competition with the private banks Purpose of the loans Evaluation of the applicant Appraisal of the property Conditions of the loans Management of the associations

IV. WORK ACCOMPLISHED IN THE HOUSING FIELD

V. INSURANCE AND THE MORTGAGE MARKET The role of insurance Strengthening of the domestic mortgage market Inter-American mortgage market

VI. WORK ACCOMPLISHED BY THE IDB, AND OTHER ASPECTS OF INTER-AMERICAN COOPERATION Volume of IDB assistance and resources mobilized Examples of IDB operations Policies followed by the IDB Impact of the work accomplished with IDB assistan( The IDB and an Inter-American mortgage market Other aspects of Inter-American cooperation

101 I. THE DIMENSIONS OF THE PROBLEM AND THE IAUNCHING OF THE SAVINGS AND LOANS MOVEMENT

The housing deficit

Latin America's aggregate housing deficit is estimated at more than 15 million units; some estimates even put it as high as 19 million. At she same tire, Latin America has an extremely high population growth rate -- perhaps the highest in the world.

Calculations were quoted during the Caracas Meeting on the number of houses that would have to be built in order to eliminate the existing deficit and also to meet the needs arising from the population growth and housing aouterioration. To do this over a period of thirty years would require building 11 to 12 units per 1,000 inhabitants each year.

The problem is not being solved. According to the available informa tion, none of the Latin American countries has succeeded during the last few years in maintaining a volume of new construction that per mits it to meet the needs of new families. No more than 2 units per 1,000 inhabitants are being built annually.

Latin America has one of the highest rates of urban population growth in the world. In 1960 there were about 95 million persons living in its cities; during the last few years the urban populations have increased by about 20 million and by 1975 the majority of Latin Americans will be city-dwellers. The result (,f this urban population density is that the housir. shortage is felt more intesely in the cities. It is estimated that nearly 40 percent of The urban inhabitants are badly housed, in extremely overcr,wded c-nditions or in shacks built of improvised materials, lacking even the basic minimum services such as running water and sewage disposal.

The rural population, similar in size to the urban population, lives in equally bad or even worse conditions. The problem is not felt so acutely in the rural areas, itor is as clearly evident as in the cities, because the rural population is more dispersed. Moreover, the expecta tions of rural inhabitants and communities are different from those that predominate in the middlc-sized and large cities; in the latter, the social tensions derived irom or accentuated by the lack of suitable housing become more s.rious every day.

A document prepared for the Fourth Meeting by the Inter-American Savings and Loans Union and the Venezuelan Housing Institute presents a dramatic picture of the housing situation in Latin America. While the figures given may vary slightly from those quoted in other documents, by reason of differences of dates and criteria, they do indicate very well the

102 dimensions of the problem. The following is an extract from the document:

Until a few years ago, the housing situation was regarded as a factor that affected only family life. Nowadays, the housing situation is recognized as an important factor in a country's over-all development. The reason for this is that the concept of development is no longer constrained within purely economic bounds. In Latin America, the housing problem is dramatic in its dimensions. A United Nations nission that studied the problem in 1956 reported that the cumulative housing deficit was then 19, 400, 000 units and that the population grow h was adding new needs of 485,000 units every year. The report estimated that it would be necessary to build 1,240,000 units a year, at a cost of US$1.2 billion. At that time Latin America was building only 640,000 units a year, for an invest ment of US*600 mil. ion, which indicated an annual construction deficit of 600,000 units and an annual investment deficit of US$600 million. Subsequent estimates b the same agency placed the cumulative deficit at 15 million units and the annual construction requirement over 30 years - to solve the main aspects of the problem - at 1.4 to 1.5 million units. Merely to keep pace with the population growth it would be necessary to build 250 houses an hour.

A new approach

The Latin American councries have for some time been conscious of the gravity of the housing problem and the magnitude of the difficulties in solving it with their limited domestic resources. They have, accordingly, for some time now been seeking external assistance. The Tenth Inter-American Conference, held ii Caracas in 1954, recognized that the housing problem was one of the most serious of the problems faced by Latin America. Up to 1960, however, little or no cooperation was furnished by the international community in this field.

During the discussion of this aspect in the Fourth Inter-American Meeting on 'avings and Loans, it was stated that:

External loans were not made available for social development pro jects. It was considered that this would follow in the natural course of events from economic development. Fortunately, it is clearly understood today that it is not possible to furthei economic development without at the same time promoting social development. An iriportant step was taken in September 1960, when the Committee of 21 laid down in the Act of Bogotzi the bases for an Inter-American program aimed at improving housing and communal services. It was

103 then that the United States Government set up the Special Inter- American Fund for Social Development, and the countries partici pating inthe BogotA Meeting welcomed the suggestion that the Inter-American Development Bank become the primary mechanism for the administration of the Fund.

In indicating the measures to be adopted for social improvement, the Act of Bogot; recommended that efforts in the housing field be directed toward the following aims:

1. The examination of existing policies in the field of housing community facilities. Special consideration should be given to encouraging financial institutions to invest in low-cost housing on a long-term basis and in building and construction industries.

2. The strengthening of the existing legal and institutional framework for mobilizing financial resources to provide better housing and related facilities for the people. Special consideration should be given to legislation and measures which would encourage the establishment and growth of:

a. private financing institutions, such as building and loan associations;

b. institutions to insure sound housing loans against loss;

c. institutions to serve as a secondary market for home mort gages;

d. institutions to provide financial assistance to local com munities for the development of facilities such as water supply, sanitation and other public works.

3. The expansion of home building industries through such measures as the training of craftsmen and other personnel and the development of construction standards for low and medium cost housing.

4. Encouragement of self-help housing construction.

The savings and loans movement

The first Latin American savings and loans association was organized in Peru just over six years ago. It was the start of a movement that in only a few years would flourish, not only in Peru, but in nearly every other Latin American country.

104 The first international loan in the housing field was made in 1960, to the incipientnational savings system of Peru.

The movement spread next to Chile, which today has beyond doubt the most advanced and widely developed system in Latin America. It was in Chile that the innovation was introduced of periodically adjusting the balances of savings accounts to reflect the rise in prices result ing from inflation. This measure. together with a corresponding adjustment to the outstanding balances of mortgage loans, represented the system's response to the challenge presented to it by inflation.

These two pioneers were followed by Ecuador, Venezuela, and the Dominican Republic, and later by Bolivia, Panama and El Salvador. Other countries are now setting up savings and loans systems or have recently done so.

In this way, in a space of a few years, there was launched throughout almost the whole of Latin America, a new financial system based on the mobilization of savings to finance housing. While the movement has encountered difficulties, the results achieved have been very satisfactory. Figures for nine of the countries show that at mid 1966 they had a total of nearly 450,000 depositors and total savings accounts deposits of mcre than US$150 million, and had -ranted mort gage loans totallino more than US$275 million.

In examining the history of the savings and loans movement in Latin America, several delegates pointed out that the success of meetings such as the presen't, is one of the proofs of the progress achieved in such a short span of time. It was stressed that one of the fruits these meetings of has been the establishment of the Inter-American Savings and Loans Union to serve as the organ of communication and permanent cooperation between the Latin American associations and also between these and the United SLates associations.

The document prepared jointly by the Inter-American Savings and Loans Union and the Venezuelan Thstitute of Housing summarizes the progress accomplished in the following words:

Much has been done in this field since the Charter of Punta del Este was signed. Proof of this is furnished by the direct loans made by the Inter-American Development Bank to the major institu tions, both public and private, responsible for solving the housing problem in Latin America, and the gua-antees Provided to United States investments abroad, by the Agency for International Develop ment.which have resulted in the mobilization of millions of dollars for the construction of low-cost housing. In the institutional sphere, savings and loans institutions have been established with the dual aim of promoting domestic saving and orienting these re sources to housing construction. As of May 1965, 88 savings and loans associations had been established in Latin America, with a

105 total of 282,713 depositors and total net deposits of US$81,509.000 These associations had lent a total of US$147,508.000 and had financed the construction of 32,888 new houses, at an estimated average cost of US$5,600. The average monthly income of the purchasers ranged from US$150 to US$680.

More recent data indicate that at present there are nearly 100 asso ciations operating in Latin America, with a total of more than 400,000 deposit accounts. The associations have financed the construction of some 50,000 low-cost houses.

The Technical Manager of the IDB, Mr. Alfonso Rochac, recalled that President Felipe Herrera, in defining the value of the Inter-American meetings on savings and loans, had said that these meetings might be regarded as mobile universities of housing, because of the human qualities and technical capacities of those who take part in them, their teaching mission, and their purpose of contributing tn the solution of a complex problem with deep social implications . Refer ring to the Fourth Meeting and to the meetings that had preceded it, the Technical Manager of the IDB stated thati

At these meetings we have employed a working uethod characterized by purposefulness, frankness and a full sense of the responsibility we bear in seeking solutions to problems that affect the collective well-being. This is at-riliutable to the development within the savings and loans movement of a spirit that needs to be nurtured in Latin America -- a spirit of private enterprise motivated by the profit motive, ready to place such benefits at the service of the community.

106 II. THE STA.TE AND HOUSING

The Role of the State The functions that are nowadays considered to be proper to clude many of the State in those related to housing. The intervention of the public authorities in the housing field has been impelled by a number of facts. These include:

- The shortage of houses, aggravated by the population growth; - The need to facilitate house purchases by the middle class, which grows more numerous and whose demands grow greater every day; - The necessity for clearer understanding of the relationships between housing, migration and urban economy generally. These problems naturally assume greater dimensions and exert more intensive pressure in the under-developed countries. The general phenomenon of under development generates diverse social and economic difficulties, usually on a vast scale. A number of the Latin American countries have set up machinery for the formulation, promotion and execution of housing programs. These already occupy a well-defined place within the general scheme of public-sector planning in Latin America. The general and specific functions, as well as the institutional structure of the public-housing agencies, vary from country to country. This is in evitable, in view of the difference of circumstances in each country, and of their consequently diverse needs and priorities, and the variety of the programs and procedures adopted for the solution of their housing problems. Referring to this fact, one of the delegates to the Fourth Meeting pointed out that:

The important thing is that certain functions shall be exercised or directed by the State. The following are examples of functions appro priate to the Executive in the housing field:

- To carry out and stimulate the preparation of studies;

- To formulate and propose policies and programs; - To coordinate housing policies and programs with those at the na tional level and with those of other sectors;

107 - To carry out programs of financing and construction of houses for the low-income groups whose needs can only be met through systems involving grants of large-scale subsidies;

- To encourage and guide private enterprise generally in the promo tion of savings and the channelling of those savings to the financ ing of housing;

- To create conditions conducive to the organization and prosperous development of private enterprise in the form of savings and loans associations, in view of the proven soundness of the system;

- To promote the development of industries ancillary to the construc tion industry.

During the course of the discussion of this role of the State, a number of delegates expressed opinions concerning the most suitable form of orga nization for the exercise of these public-sector functions. A number of alternatives were meelioned, including the system adopted in Chile, which is one of the Latin American countries that is showing the greatest initiative and resolve in facing up to these problems. A number of delegates declared that they were in favor of the creation of a Ministry of Housing and Urban Planning as the top-level organ of guidance in this field. Such a ministry would bring together the various aspects of the States's activities and would have, basically, the following functions:

- Drawing up the National Housing Program, as an integral component of the National Development Plan;

- Proposal or approval of the necessary measure for the execution of the Natio, 1 Housing Program;

- Implementation and the ensurance that the measuresadopted are imple mented;

- The systematic evaluation of the National Housing Plan and its execu tion, including the aspects related to financing instruments and practices;

- Serving as the directing or guiding agency for the planning and execu tion of urban development projects, particularly in certain areas of high population density;

- Proposal and execution, or approval and supervision of the execut4 on of specific projects relating to urban and rural residential districts;

- Encouragement and guidance of the activities of private enterprise in the promotion of home ownership and urban development;

103 - Promotion of studies on the construction materials market; orien tation and supervision of said market.

- Promotion of higher productivity in the fields of housing construc tion and urban development.

Division of functions

At various points during the Meeting the question of the most suitable scheme of differentiation of public-sector functions and private-sector ac tivity in the housing field was discussed. The following view was expressed by one of the delegates:

The principal sphere of competence of the State is the solution of the problem of providing housing for the neediest social group, i.e. for those who are unable to save at all. Housing for the under privileged laboring class and for others to whom society has denied every advantage must and should be provided through a system based substantial State subsidy. on The most that can be expected of these members cf society is that they shall contribute their labor toward the construction of the house and pay a moderate rent or purchase it on liberal amortization terms. To require that the associations assume the responsibility for this task, however worthy of maximum attention, would be to distort the concept and purpose of the savings and loans movement. This is a task that must be carried out directly by the public authorities. The savings and loans system is directed toward those who are able to save in order to buy a house and who do not need to be subsidized, or need only a minimum of subsidization. It is also clear that the system must rely for its resources to a large extent on the capital of the investor who has no need to purchase a home.

2 A 0-year IDB loan is assisting us to meet the needs of people of a more humble station than that of those to whom we have traditionally provided financing. We are passing or to these people the advantages of the generous terms granted by the IDB.

Official domestic and external aid can help strengthen the savings and loans system and widen the scope of its activities; but it is essential to distinguish clearly between those social groups whose needs must be catered for directly by the State and those whose needs must be met through the associations.

State assistance to the savings and loans movement

The point was made during the Meeting that the complex of institutions and practices characteristic of the savings and loans movement is a unique example of combined private enterprise and public-sector action.

109 National legislation must provide incentives and protection to associations, the the savers and the pure investors. In this connection, examples were quoted from the legislation of the United States and of the Latin American countries, and satisfaction was expressed concerning the considerable degree of protection and encouragement of the savings and loans system that the Latin American countries have found it possible to include in their legislative provisions. On this point, one of the delegates observed:

While we have undoubtedly made progress, there is still room for improvement in our legislation. We need to amplify it, and also to examine it carefully in order to ensure that it is not depriving the savings and loans system of its essential character. While all private activity that involves the public interest calls for State guidance and supervision, it must not be forgotten savings that the associations are private enterprises and must be allowed the corresponding freedom of action. Legislative requirements and supervision can result in stimulation and protection of the associations; but they can also act as obstacles to their develop ment as private entities. Nevertheless, while the State must not uiduly hamper the activities of the associations, it is also the duty of public authorities to ensure that those activities are not directed to the service of vested interests. As one of the delegates put it, any system created to serve the interests of a syndicate or other closed group starts off at a tremendous disad vantage and violates the basic philosophy of the movement. The associations must be open to all interested members of the public. Referring to the question of collaboration between public authorities and private enterprise, one of the delegates pointed to the need for substantial representation of private entities operating in the housing field on the executives of the governing agencies to be set up by the State. This an extremely is effective method of enabling private enterprise to participate in the formulation of housing policy and of creating and maintaining public confidence.

A word of warning was thought necessary in this connection, however: care must be taken to ensure that the participation of the private sector in the direction of these agencies is not allowed to impair the supervision that is appropriate to the State, having regard to its responsibilities, particularly in its capacity of guarantor of savings and mortgages. It was considered adequate that legislation grant certain advantages to the savings and loans system not enjoyed by the private banks generally. This was felt juztJ':Kd because, by reason of their very nature, the associations can only carry out a limited range of operations and because these operations have a markedly social purpose. The regulations should provide for monetary ,tdjustment, mortgage insurance, tax exemption for savings, dividends, interest, and so on. In addition, payment of higher dividends and interests than those allowed to other types of private financial entities, should be permissible.

110 In the financial field, the functions of the State include particular ly the adoption of the necessary measures for the creation and develop ment of mechanisms-that facilitate the sale of mortgages by the associa tions. One of the most important incentives that could be provided by the State in this sense would be the establishment of Central Funds, Housing Banks or similar institutions empowered to purchase, guarantee and deal in savings and loans mortgages.

The central agency for the guidance, assistance and supervision of the associations.

The Meeting discussed the necessity, advantages and functions of an agency to supervise and assist the system. The agency would be autono mous and would be linked to the components of the public administration generally having the most direct responsibility for the housing problem.

The concept of this central function and the institutional scheme through which it is exercised differ from country to country. In some cases it is divided among two or more entities. Many of the countries have housing banks. One delegate stated that in his country the Housing Bank was entrusted with a number of different functions, such as those related to the insurance of savings and mortgages, the development, coordination and supervision of the mortgage market, the mobilization resources, of and international housing finance programs.

The principal purposes and functions of the Peruvian Housing Bank, which was established in 1962, are:

- To promote the investment of public and private capital in the financing of housing.

- To promote the development of savings funds and mutual home loan associations, and to provide them with technical and financial assistance, as well as to supervise their operations.

- To establish the minimum cash reserve and liquidity ratios that must be maintained by the funds and associations.

Another example is provided by the Ecuadorean Housing Bank, which is a limited liability company and in which the insurance and pension funds have acquired a large share participation. The Bank is empowered to grant loans to the mutual saving associations, cooperatives and other institu tions devoted to the solution of the medium and low cost housing problem. It also administers international loans. It issues bonds and operates che deposit insurance and mortgage loans insurance systems..

ill Referring to housing banks, one delegate offered the following opinion:

I consider that the housing banks should have a mixed capital structure and that the shareholders should include the savings and loans associations. The limited liability company is a form of organization that provides flexibility and that facilitates the representation of various sectors in the direction of the enterprise. We consider that the private sector should be substan tially represented on the board of directors of a housing bank, because the encouragement and guidance of the private sector will always constitute the principal objective of such an insti tution.

In Chile, the principal organ of the savings and loans system is the Central Savings and Loans Fund. This is an autonomous entity, under the direction of an executive appointed by the President of the Republic. Its functions are to authorize and supervise the activities of the associations and to insure the deposits of the savers and the loans granted. It is authorized to issue promissory notes, to contract loans and to sell mortgage loans to other banking institutions. It is linked to the recently-created Ministry of Housing.

The following comparison was made of the functions of the Chilean Central Fund and those of the United States public agencies:

The Central Savings and Loans Fund of Chile fulfills three basic functions: those of supervision, of insuror, and those of the central- financial organ of the system. These functions parallel those of the various United States agencies, as follows:

- The Fund's supervisory function corresponds approximately to those of the Board of the Federal Home Loan Bank.

- Its savings insurance function corresponds to that of the Federal Savings and Loan Insurance Corporation, and its loan insurance function in part to that of the Federal Housing Administration. So far as its activities in relation to the secondary mortgage market are concerned, the parallel United States agency is the Federal National Mortgage Administration.

- Finally, its function as the central financial organ is similar to that of the Federal Home Loan Banks.

In the discussion of this matter, stress was laid on the need that the central directing agency devotes the greatest attention to the establishment of the basic lending policy to be followed by the associa tions. The adoption )f a general. policy would not only help to ensure coordination between the work of the associations and the general economic and social development plans, but also help to lend uniformity of action with respect to fundamental points.

112 III. THE SAVINGS AND LOANS ASSOCIATIONS

Public they are intended to serve

It was repeatedly stressed during the Meeting that the savings and loans system is one of the most ingenious schemes that private enterprise has devised to enable the members of the middle income group to buy their own homes. The State will not easily be able to satisfy the desire of this group for home ownership.

The associations bring together citizens with a certain financial capacity for the cooperative solution of what used to be -- and by many still is -- mistakenly regarded as a problem that concerns the State exclusively. The savings and loans system cannot make it possible fcr everybody to have a house, but it is a means through which a house can be provided for a considerable number of middle-class citizens. The resources that the State is able to assign to housing will always be very small in comparison with the vast numbers of people who have no home and whose financial ability to save is non-existent, or almost close to that.

It was attempted by various means to define the public to which the associations must direct their attention. The following statements sum up the thinking of the delegates:

- There is a large section of society that will be unable to solve its housing problem without substantial assistance by the State or even through outright grants. The savings and loans system is not intended to serve this section of society, but rather the middle-income group, which grows larger every day and possesses the minimum capacity necessary to make the self help effort that is implicit in the savings and loans movement. In the past, this self-help effort, this effort of saving in order to buy a house, has frequently failed to reap its just reward because of the high cost charged by enterprises that sought profit above all else.

- The savings and loans system has a function to perform in Latin America, and is at present performing that function for a particular segment of society. The system is helping to solve the housing problem of a section of the community. On the other hand, it is also benefitting other even needier sections of the community, by enabling the State to devote a greater part of its resources to them. The savings and loans system will perform its function to the extent that we respect its inherent nature. We must avoid any attempt to force it to serve artificially purposes that it is technically not designed to fulfill.

113 - The so-called middle class is at one and the same time the fruit and the sustenance of a modern economy. The philosophy of the affluent society leads this class to aspire to wellbeing and security. The members of this class desire to buy their nwn homes but wish to do so while retaining the advantages that they already enjoy. The savings and loans system is custom-fitted for this section of sciety because it can lead to the fulfillment of that aspiration without the individual being required to give up his other advantages.

Nature and characteristics

One of the delegates presented an analysis of the nature and chief characteristics of the savings and loans associations. He stated, in part:

They are specialized banking institutions that differ from the traditional banks mainly because of their basic guiding philosophy and of the public that they are intended to serve.

2. Their principal object is to stimulate saving and to invest those savings in long-term loans for house purchase.

3. Those that operate in the form of mutual associations or cooperatives do not seek to make a profit.

4. Because of the mortgage insurance and secondary mortgage market facilities by which the system is, or should be supported, they have a relatively low liquidity require ment.

5. They are not permitted to open current accounts or to make loans of the types made by the other private banking institutions.

A discussion ensued on the various forms assumed by the savings and loans entities. The following examples were given:

- In my country, they take the form of mutual associations of savers and borrowers. Mutuality means that all the members share the profits and bear the losses equally and no member or group enjoys any special rights or privileges.

- Our associations are limited companies, capital companies or share companies. I consider it a tautology to speak of an association limited by shares. In the United States

114 there are "savings and loans stock associations." This is an inappropriate term that has been adopted in Latin America. Only two or three Latin American countries provide in their legislations that the associations may be established both as mutualities and as stock associations.

- For savings and loans purposes, certain rules governing limited companies have been modified. For example, no natur-al or juridical person or group of persons connected by a specified bond of relationship may hold more than 10 percent (or in some countries 20 percent) of the shares of a savings and loans company. These companies are also subject to control and supervision by a Central Fund. Other wise, they operate in exactly the same way as a corporation or a limited liability company of the financial type.

Other delegates attempted to characterize the associations on the basis of the legal limitations imposed on their operations. One delegate stated:

- Similar limitations are imposed in our countries on the asset and liability operations of the associations. In my country, there is a loan ceiling of US$10,000 and a property valuation limit of US$14, 500. The law provides that the savings and loans associations are the only institutions specializing in the making of long-term housing loans.

The savings and loans system is a form of banking organization, a type of financial institution, and its operation must accordingly be based on the corresponding principles of financial equilibrium and solvency. This can and must, however, be combined with a socially oriented philosophy and policies. This philosophy can best be expressed in the efforts to ensure that the savings mobilized are utilized with the maximum effectiveness in terms of units of low-cost housing. The greater the contribution of the system to the financing of this type of housing, the more significant will be its contribution to a balanced national development.

On this theme, the following comments were offered:

- In our country, all deposits and mortgages are protected by insurance. We have sought to protect the associations against financial loss. At the same time, however, we do not regard the savings and loans associations as financial entities but as service institutions, administered by persons of goodwill who care about social problems. The orientation

115 that we pass on to the officials of the associations is the same as that already possessed by the officials of the Central Fund, whose duty it is to supervise them.

- The savings and loans associations are a combination of public service institution and commercial enterprise. On the one hand, they serve the public interest by encouraging individual saving and through the long-term financing of reasonably-priced housing; on the other hand, they must be organized and must operate as commercial enterprises.

- Collaboration between the various forces of society, both public and private, is essential for the solution of any of the great problems of our time. The housing problem is one of the great problems of this century. The prosperity that the savings and loans movement has achieved in the United Smates is the fruit of such collaboration. At the prsent time, we have more than 6,000 associations, which serve 35,500,000 members and account for 46 percent of all mortgage loans for house purchase. The assets of our associations total more than US$120 billion. A hiudred and twenty years ago the majority of our families were tenants; today, two-thirds of them owm their homes.

Whether and to what extent an association is guided by a spirit of service will depend largely on its organizers. As one delegate put it:

An association is not a government agency, but neither is it a profit-motivated enterprise; or perhaps to put it better, it must be a businesslike enterprise operated in the mutual and equal interest of all its members. Whether or not this spirit prevails will depend upon the organizers or administrators of the association or on those who direct it. With respect to the latter, it is necessary that they be persons of good reputation, with salutary intentions and free of ties to any particular interests. They must not represent construction companies, landowners or materials suppliers. A savings and loans association is a financial institution, with specific functions, which include those of service to the members and to the community.

Publicizing of the savings and loans system

Mutuality and the other forms of association for the mobilization of savings and their channelling to the financing of

i16 housing have, as already stated, met with substantial success in Latin America, considering the short time that has elpased since the introduction of the system in the region. Repeated reference was made during the Fourth Meeting to the success achieved by the movement. At the same time, the need was stressed for a wider dissemination of information about the benefits offered by the system. This effort of publicity must be directed to all sections of society in Latin America: the general public, administrators, legislators, businessmen, students and workers. It is necessary to educate the public about the philosophy of the system and the advantages of saving.

The resources of the associations are derived basically from the savings of two different groups:

1. Persons who wish to buy a house and will be able to do so if they can obtain long-term financing, because they have a more or less assured, even though modest, income.

2. Invetors, or "pure savers".

The needs of the first of these groups led to the creation of the savings and loans system and justiay its existence. The savings of this group are essential to the system, since it is not supported by grants but, on the contrary, is based on the premise of individual effort.

The accounts of those savers w'o need a house are naturally small. In Latin America these accounts rarely exceed US$1,000; the averagL amount is probably about US$500.

As one delegate observed: every person who is in tune with the workings and values of a modern-day economy wishes to save to buy property. But ii such a person lives under conditions of under development, as occurs in Latin America it will take him a long time to acciumlate savings of any substantial amount. This means that for every loan we make we need to have the savings of a large number of small savers. This is all the more true since the loans have to be made at fairly long term if our nperations are not to be limited to a relatively small mid -e class.

In the United States, small savers similarly account for the bulk of the members. In the words of one of the United States delegates:

Small savers account for 70-80 percent of our depositors and for 20 percent of total deposits. There is another group, which seeks an assured return on its capital and which accounts for perhaps 30 percent of the number of

117 depositors and contributes S0 percent of total savings. This latter fact is of great significance for the direction of the savings and loans movement in Latin America. I believe there is an extremely rich class in Latin America. This class must be persuaded invest to " part of its resources in the savings and loans associations. A number of delegates stressed the need for special to attract the savings efforts of, not only persons who will one day apply for a housing loan, but also of those savers, whether rich or not, who already have a house and seek only to obtain a return on their capital. It was recognized that it is not easy to mobilize savings in a poor economy. The majority of individuals are barely meet their able to most urgent needs. On the other hand, those resources who have available generally tend, because of prejudices deep-rooted or of beliefs, to prefer some other form of investment.

The promotional campaigns, whether conducted publicity, personal through contact or other means, must be based on a thorough knowledge of local conditions. It will be important know the preferences to of the groups that it is sought to reach, the average level of income in the area, and the extent of the local housing shortage. It will also be useful to know what results have been achieved through previous savings publicity campaigns conducted in the area in which the association operates. Much interest was expressed in the question of the amount that an association should expend on publicity with the object of informing the public about the purposes of the system and of attracting savings. The amount of this expenditure will depend on a large number of factors, including:

- The extent of the existing general awareness on the part of the public of the nature and objectives of the savings and loans system;

- The purposes of the particular promotion campaign; - The division of the publicity work between the central agency and the associations; - The volume of the savings deposits and lending operations of the associations;

- The level of the operating expenses of the associations; - The costs of utilization of the various publicity media.

116 In the United States, average promotional expenditure varies from 2.5 to 4 percent of the total operating expenditures of the associations.

In connection with the discussion of costs of promotion, a paper by Mr. Natalio Sterin entitled "Inversiones en Publici dad" (Investment in Publicity) was distributed amoung the delegates.

Incentives

It will be possible through educative publicity to inculcate the savings habit. The associations will be able to capture these savings if the savers are aware of the philosophy, benefits and modus operandi of the system.

By their very nature, the associations will attract the small saver who wishes to buy a house. It must, indeed, attract him and it must stimulate him to persevere in saving. On the other hand, the small savings will riot be adequate to enable the system to fulfill, on a progressively greater scale, its social mission. The question was therefore discussed at the Meeting of the role that certain incentives can play in attracting the resources of social and economic groups interested exlusively or primarily in investment.

The Meeting discussed, among others, the following incentives, whose significance will undoubtedly vary according to the type of saver:

1. A higher return on amounts deposited with the associations than that allowed by the ordinary commercial banks on savings accounts. It will be possible to link this higher return to the length of time that the savings are left on deposit and to the regularity with which deposits are made.

2. Insurance of the deposits.

3. Insurance of the mortgages -- a factor of interest both to the associations and to the investors.

4. Tax exemption for profits and dividends, for savings and for assignments by succession or donation within the system.

5. Monetary adjustment of deposit balances to take account of depreciation of the currency, and correspond ing adjustment of outstanding mortgage balances.

119 6. Flexibility and efficiency of operation of the associations.

7. Granting of premiums on the opening of accounts or the fulfillment of commitments entered into with respect to the regularity of deposits.

8. The adoption of convenient arrangements for the making of deposits, such as the "mobile fund" method.

Competition with the private banks

It was pointed out that the savings and loans associations are designed to serve sections of the population that the private commercial banks have not been reaching. This is particularly true with respect to the attraction of the savings of the modest wage-earner, because of the incentive offered by the prospect of a long-term loan to enable him to buy a home. One of the delegates expressed it simply and eloquently:

Our associations were established because a gap existed that needed to be filled. If a man of small means went to a commercial bank, he very often encountered difficulty in opening an account. The large accounts always enjoyed preference. The same was true of mortgage loans. The banks wished to grant mortgage loans to well-to-do people who coult put up at least half the cash needed to buy the property and were able to repay the loan over a very few years. It is this gap that the savings and loans associations have filled. The public has responded well. All are welcome in the associations. We advertise and we render a good service.

Effo:rts were made during the discussions to define the differences between the two systems. The following points were stressed:

- The commercial banks do not usually make loans for house purchase; when they do, they do not lend at long term.

- The associations, because of their nature and purposes, hold relatively low cash reserves, are not authorized to maintain the traditional current accounts, do not make short-term loans and do not engage in other operations typical of the commercial banks.

120 Various delegates defended the principle of granting certain privileges to the savings and loans system, on the grounds of its purposes and of its limited sphere of operations. The following statement exemplifies the spirit of thought in this connection:

In my country, the savings and loans associations are subject to restrictions with respect to their asset and liability operations that do not apply to the commercial banks. Their liability operations are limited to the acceptance of savings on deposit. With respect to their asset operations, they are only permitted to make certain types of loans, that is, they are limited almost exclusively to long-term loans for the purchase, construction, repair or improvement of housing, with a loan ceiling of 25,000 colones. From this point of view, the range of operations of a savings and loans association is much narrower than that of a commercial bank of the traditional type. This limitation, and the purpose for which the proceeds of their loans are used, justify granting the savings associations a privileged position in relation to the advantages that they can offer to the saver. Were this not so, the competition between associations and the commercial banks would be, as we say in Latin America, "a fight between a tiger and a hobbled donkey".

The savings and loans system is not only part of a banking system but is also part of an entire economic and financial system. The associations compete with the banks, the housebuilders, the retail stores, and with all who sell or wish to sell something to the potential saver or who offer him some advantage to attract deposits.

It was pointed out that the chief competition with the private banks arises when the associations attract investors with relatively high resources through the offer of a higher interest or dividend rate. On the other hand, the associations use the capital of both the investors and the small savers in current operations and thereby increase the level of economic and financial activity in the.community, a fact which is in turn reflected in increased business for the commercial banks. The statistics show that the associations have contributed to the prosperity of the banks in the areas in which they are operating.

One of the delegates commented, with respect to the side effects of the loans made by the associations:

The available funds of the rest of the financial system are diminished when the associations hold reserves in

121 cash, and are increased to the extent that the loans made by the associations generate profits for those concerned with land subdivision, urban development, building construction, the supply of construction materials, and so on. It is a well-known fact that the profits earned during the entire process of providing housing are infinite ly greater than the small cash reserves held by the associations.

On the other hand, many commercial banks are a source of competition and stimulus to the associations because of their experience, their modern methods of operation and the possibilities that are available to them, and which they are using, of "humanizing" their mortgage portfolios.

Another matter discussed during the Meeting was the desirability and need for good relations and collaboration between the associations and the banks. Examples were cited of such cooperation, such as the cases in which savings deposits are received directly by the banks on behalf of the associations.

Purpose of the loans

The loans made by the associations are mainly granted for the purchase, :enovation or improvement of a property of moderate value that constitutes a single residential unit and is presently occupied, or will be occupied by the purchaser.

Some systems also provide for the making of loans for re payment of existing mortgages, particularly in cases of single family dwellings, when the new loan can be made on terms that are advantageous to the borrower from the point of view of amortization period, interest rate or repayment installments.

Next in order of preference as security for loans follow two, three and four-family residential units. The associations usually require that the oormer shall live in one of the units.

Some experience also exists in Latin America regarding long-term lending through the savings and loans system for the construction of cooperatively-owned apartment buildings. One delegate stated:

In my view the savings and loans system is fulfilling its purposes when it lends on the security of cooperative or "horizontally-owned" apartment buildings. These buildings have proved to be a very effective sol7tion to the housing problem in areas of high population density where land is scarce and expensive. A cooperative apartment development

122 provides families with homes of their own in a central location, close to transportation faci-Iities, schools, shops and utilities. At the same time, it can in many cases replace small and dilapidated houses.

Another delegate stated:

The system of "horizontal ownership" offers many advantages, in particular:

- It greatly reduces the construction cost, except in the case of a luxury development;

- Construction takes less time than it would take to build separate houses to accommodate the same number of families;

- It solves the problem of the scarcity and high cost of land in densely-populated areas;

- It can solve the problem of distance from place of employ ment for a large number of individuals.

In my opinion the associations should provide increased credit facilities for groups interested in the organization of a cooperative apartment project.

Evaluation of the applicant

It was stressed during the Meeting that it was important that the decision to grant a loan be based on knowledge, as conplete as possible, of the circu rrstances of the applicant and of the real estate security offered, i.e. of the property itself.

The applicant is evaluated by reference to his motives for borrowing, his employment, his credit history, his existing financial commitments and his consequent capacity to pay a given monthly sum during the term of the loan and to comply with the general statutory requirements of the savings and loans system.

Study of the motives of the individual will be the most difficult task because it involves the consideration of imponderables and a subjective judgment. It will accordingly be essential that the officials of the association entrusted with this tadts possess, not only wisdom and objectivity, but also the qualities of approachability and human understanding.

In the large cities, it will be possible to verify the information on employment and credit and other easily measurable

123 factors through the services of specialized bureaus. In the small towns, the information given is not only more readily verifiable but is also generally more accurate because of the applicant's greater concern with avoiding social censure.

Appraisal of the oroperty

Evaluation of the building offered as security consists of a direct valuation of the property and an appraisal of local conditions. In this connection, one of the delegates observed:

A given property has several different values: market value, reproduction value or cost, and rental value. Each association must insist that its property assessors furnish complete information. The asking price and the true market value of a property are not always the same. A badly informed buyer may wish to buy a property at more than its true value. In many cases, therefore, the association will be in a position to protect the buyer by preventing him from investing an excessive amount in a property through refusing to grant him a loan on an inflated purchase price.

The property must be valued on the basis of a study that takes into account not only the market and asking prices but also such factors as durability, quality of construction, premature obsolescence, appreciation in value, and so on. Relevant to this appraisal are the floor area, the quality of construction, the materials used, the design of the house, the frontage-depth ratio, physical features and, in particular, location of the land.

It was suggested that the data contained in the municipal land records as well as statistics on property values be used for this purpose. One of the delegates reported:

We use the data furnished by the surveys carried out by the local authorities for our appraisal. However, each of the associations has its own valuation staff. The valuat on by the association is almost invariably higher than that made by the local taxing authority. The association thus has two bases of reference for its decisions: the local authority valuation, based on criteria related to construction and location, and the reports presented by its own engineers or architects. A cheap method available to the associations is to use statistics on land values and construction costs. This

124 system can be operated by an official of the association who is not an expert, since he has only to apply the tables. The method obviously involves certain risks and must be used with the greatest caution.

Attention was drawn in various ways and with varying degrees of emphasis to the inter-relationships between the problem of property valuation, i.e. of determining the true value of the house, and the morgage aspect. It is necessary that the valuation be as accuarate as possible in order to ensur.w Lhat the value recorded in the mortgage deed is in fact adequate to guarantee at any time recoupment of the money lent. The mortgages will not find a market if the values recorded in them are unrealistic.

At the same time, the security represented by the house always involves certain risks. As one of the delegates said:

There are the risks of fire and earthquake, against which protection can be obtained by adding to the security certain insurances against total or partial loss. On the other hand, there is another risk against which no protection can be given: depreciation in the value of the security as a result of a fall in its market price, neglect to maintain it properly, abandonment of the property, or neighborhood deterioration. It is essential that this unforeseeable risk is not increased through unnecessarily inaccurate valuation.

The revq''se can, of course, occur and has in fact occurred in areas chaf'acterized by rapid growth and real estate speculth'n. It somnetimes happens that a mortgaged house is resold at a p-ie wel' above the morbgage valuation.

Condi'rKions ,?L-ii J3car:s

The FourtL.Meeting devoted some time to a study of the inter relatD.Dnships bet:cen the loan conditions, the value of the property, the payr.nt capaCo y of the borrower and the level of individual saving,

]t general, the amount of the loun is limited to 70 percent ofr the estiriated value of the house unless the mortgage is insured by the State, in which case the loan ceiling may be as high as 90 percent of value.

While the best security is the property itself, it is necessary that the loan conditions (amount, term, method of payment)

125 be adapted to the payment capacity of the buyer, i.e. to his economic and financial status. If, for example, the applicant desires a 20-year loan but his income qualifies him to repay over 15 years, he must be granted a loan for the shorter term. The more rapid recovery of the capital will increase the ability of the association to make new loans and will also benefit the borrower. In any case, it is always necessary to siinimize the likelihood of enforcement for reason of default in payment. Enforcement is not in the association's interest from any point of view, particularly because it defeats the central purpose of the system, which is to promote home owership.

The monthly amortization and interest payments must be fixed by reference to the salary of the purchaser. It was suggested that these payments should not exceed 30 percent of income, including the salaries of both the head of the household and his wife, if she is employed outside the home. It will, of course, be necessary to show that these salaries have some degree of permanence. While the place of employment, employment history and career prospects of the applicant will be important considerations, the most decisive factor will be his income at the time the loan is made. The percentage of income represented by montIly pa-yments will vary from country to country, and even from area to area wiithin a given country, since it will depend on important variables such as the proportion of the famiily budget accounited for by the cost of food, clothing and education of th: children.

Questions were raised about the granting of housing loans to savers who have above-averare incomes or who already own property. On this point, one of the delegates stated:

It must be borne in mind that the loans granted to depositors with high incomes help finance the system because these borrowers are able to repay the loan over 8 to 10 years instead of the 25 to 30 years required by the low.er-income borrowers, so that three loans of the first type can be made in the same period as only one of the second type. The number of such loans to higher-income borrowers must, of course, be small, not with the object of imposing any restriction but because the main purpose of the system is to foster the granting of loans to depositors with small incomes.

The amount of the loan applied for will affect the require ments imposed on the granting of the loan. As one of the delegates stated:

126 The greater the amount of the loan, the more stringent must be the requirements with respect to the amount and duration of savings deposits. In Chile, for example, an application for a loan of 10,000 escudos receives more favorable treatment with respect to term, interest and other conditions than an application for the maximum amount of 31,500 escudos. It is considered that the granting of a lower loan favors the lower income groups and thereby permits the association to accomplish its purpose more fully.

In the cases of certain savings and loans associations, the amount of the loan is directly related to the average annual level of savings, regularity of saving, and credit capacity the applicant. of For this reason these associations may lend for the construction or purchase of a house up to 10, 12 or even more times the applicant's average annual level of savings.

Management of the associations

The Fourth Meeting discussed a number of topis related the organization to and administration of the savings and loans institutions. Some of the statements made in this connection are summarized below. Organization.- The vertical div:*sion of authority and the horizontal division of work will have to be as simple as possible, particularly at the beginning. As directive organs, there will have to be a General Meeting, a Board of Directors and a Management. At the operational level, experience will show what the most suitable division of work is and what degree specialization of' is needed. The accounting and auditing tasks will have to be the special responsibility of qualified professionals from the very start.

The desirability of action to secure the highest possible measure of standardization of procedures was pointed out. This will facilitate communications, comparison of data and supervision by the central superintending agency. On this point, it was mentioned that the central agencies could draw up standard sets of accounts, specialized administrative manuals, standard forms, and so on, for general utilization within a given country. Expansion through agencies and branches should not take place until the association is solidly established, except in unusual circumstances such as the early likelihood of large-scale development in a particular residential district.

127 Personnel administration.- It is extremely important that personnel administration policies be adopted that are capable of attracting staff with the necessary qualifications or with high trainee potential to join and remain in the service of the associations. Constant changes in the personnel of an institution represent a depletion of its capital. The officials need time and perseverance in order to master all the various aspects of savings and loan operations. Moreover, a stable staff will facilitate the builJding up of bonds of knowledge and understanding between thL officials of the association and the public that it serves -- a most important factor in operations of this kind. This public is a "captive public" in the sense that its relations with the association last over a long period of time.

It is desirable that the associations devote continuous attention to the problem of personnel training. In many cases there will be a need for courses on social topics directly related to the work of the savings and loans system. There will in all cases be a need for training courses in the specific techniques of banking management and, in particular, of savings and loans administration. The savings and loans systems have generated a complex of techniques that can be taught through classes, seminars, visits, lecture programs and other methods. The offic'.als of the Latin American associations must be made more fa'iliar ith the experience gained in countries like the United States. Comparative studies will have to have a prominent place .n any training program.

Ratio between operating expenditure and income.- Because the. have only been established for a short time, the majority of the Latin American associations have not yet accumulated sufficient data to permit a meaningful analysis of the trend of operating expenditure. The Meeting recognized, however, the importance of this subject. The right road toward the maintenance of a proper ratio between operating expenditure and income is a constant improvement in working efficiency. Even with a substantial increase in the number of deposit accounts and in the volume of lending, this ratio can still be held stable or be even reduced. In the United States, for example, a substantial increase in gross incomes has been accompanied by a fall in operating expenses. Salaries and other personnel benefits naturally account for the major part of expenditure. It wa- recalled that an increase in efficiency is closely linked to personnel training and the use of modern methods of administration, including the mechanization of routine procedures; at the same time, the introduction of mechanized systems must be preceded by a careful stud, of the volume of data to be handled.

128 Liquidity.- The legislations of most of the countries lay down specific liquidity ratios or cash reserve percentages. It will, nevertheless, be necessary for the boards of directors of the associations to give careful study to this matter and to fix higher percentages on their owm initiative, if they consider that the existence of particular operating conditions or the nature of the various sources of cash funds render this advisable.

A United States delegate informed the Meeting that the U.S. legislation specifies that the associations must hold cash reserves equivalent to between 4 and 8 percent of total savings deposits. At the present time, une minimum liquidity percentage fixed by the Federal Home Loan Bank Board is 7 percent of the balances of the accounts. Ai association that fails to meet this requirement is not permitted to make loans. Violation of this regulation can result in cancellaL Dn of the authorization to operate. The associations divide their cash reserves into two parts: that fixed by law, and that necessary to cover immediate requirements in the event of a large volume of cash demands by savers or of increased loan applications.

With respect to cash reserve requirements, the situation of an association varies according to whether it is located in an industrial, a rural or a residential community. Each type of association presents characteristics that directly affect its liquidity situation.

The ratio of total deposits held in large accounts to the total represented by small accounts is an important factor. Liquidity stability is greater when an association has a large number of small-balance accounts than when its deposits are represented by a relatively small number of accounts with large balances.

The mortgage portfolio must be kept under constant review, from the points of view both of its composition (:;z-ber and types of operations, amortization terms, interest rates, recovery history, ect.) and of the ratio of lending to saving. Knowledge of the pattern presented by these factors and ratios will be fundamental in determining the policies to be followed.

Insurance.- The Meeting discussed the various types of insurance designed to provide protection against risks and contingencies to the savers, the mortgagers, the associations, the central supervising agency and the purchasers of the mortgages. The legislative provisions and the experience gained with resDect

129 to the application of such insurances vary according to the country concerned. Some of the countries have adopted all these forms of insurance coverage, while others have adopted only some of them. The following forms of insurance were discussed:

Insurance of savings deposits: The cost of this insurance is met by the association. The central supervising agency assumes responsibility toward the savers for the solvency of the association. The amount of the premium is a percentage of the average level of deposits during each financial year.

Insurance of mortgage loans: This type of insurance protects the association, or the subsequent purchaser of a mortgage, against losses resulting from enforced sale of the house given in security for the loan. Such enforced sale can be made necessary by default in payment on the part of the borrower, and it is possible that, because of the situation of the property market or because of other conditions, the proceeds of the sale of the house may not be sufficient to cover the whole of the outstanding balance of the loan plus arrears of interest and collection costs. Through this insurance the central supervising agency assumes responsibility for the difference. This form of insurance is studied in greater detail elsewhere in this summary.

Mortgrage cancellation insurance: The object of this insurance is to guarantee the family a home. In return for a premium calculated on the amount of the loan, the insuring agency of the system undertakes to repay in full the balance of the loan in the event of the death of the mortgagor.

Fire insurance: This risk is generally iTnsured with a private insurance company. The premium is calculat- d on the real value of the property mortgaged, excluding land. Agreements are often entered into with the insurance companies under which they undertake to invest part of their reserves in mortgages issued by the association. In addition, the premiums are reduced if the association assumes responsibility for placing the insurance and collecting the premiums

ee This insurance covers the debtor against the risk of sickness. For as long as he has no income as a result of sickness, the association credits the amount of the amortization installments. It is common practice for the association to reinsure this risk.

130 IV. WORK ACCOMPLISHED IN THE HOUSING FIELD

Institutions specializing in activities related to housing have been set up in all the Latin American countries. More or less comprehensive housing development programs have been initiated through ins+itutes, banks and through savings and loans associations. The projects include the building of individual houses, the construc tion of new residential districts, and the reconstruction of the existing ones, etc. These programs are being carried out in rural as well as in urban areas. The following country-by-country summary of the measures adopted in the institutional sphere and the activities undertaken will give a good idea of ihat Latin America has done in the recent past and what it is currently doing to solve the housing deficit.

Peru

Since the system begaai in 1961, the number of savings associations and loans in the principal cities has multiplied. By the end of 1965 there were 19 associations operating in Peru, with 27 branches located in 16 cities and a total of 75,648 depositors. During current the year (to nctober 31, 1965), deposits rose from 372.4 million to 661.8 million Dles. Both the IDB and the AID have provided financial assistance for the program of housing construction through the savings and loans system. There is a large number of housing cooperatives in Peru which operate in a very similar manner to the savings and loans associa tions. The NaLional Federation of Housing Loan Cooperatives consists of more than 120 separate cooperatives. In 1965 alone, 800 houses were built for members of these cooperatives, with the financial assistance of the government (108 million soles) and of AID (162 mil lion soles).

The National Housing Bank (Banco Nacional de la Vivienda) was set up in 1962, and the National Housing Board (Junta Nacional de la Vivienda) in 1963. The Bank is authorized to orumote national ard foreign, private and public capital investment to finance housing conftruction. may accept It savings dposits, contract loans and issue bonds to augment its capital resources. I- is empowered to grant loans and sible is respon for promoting and supervising the savings and loans institutions. Half of its initial capital was derived from an AID loan of US$7.5 million; the other half was contributed Ly the government. The National Planning Board is the institution responsible for

131 planning, administration and direct action in the housing field. Its Chairman is a member of the Board of Directors of the National Housing Bank, while the Chairman of the Bank is a member of the Directorate of the Planning Board, with the object of securing coordination in both policy and operations. The Planning Board also collaborates close ly with the housing office of the National Planning Institute (Institu to Nacional de Planificaci6n). In addition, it carries out a large part of the public works projects related to the improvement of resi dential areas, such as the construction of streets and water supply and sewerage systems.

Mexico

A number of public sector institutions and agencies concern them selves with the housing problem of the middle and low income groups in Mexico. They include the Workers' Social Security and Service Institute (Instituto de Seguridad y Servicios Sociales de los Traba jadores del Estado), which began operations in 1925 and which is the institution that has built the largest number of houses; the National Urban and Public Works Mortgage Bank (Banco Nacional Hipotecario Urbano y de Obras P blicas, S. A.); the Mexican Social Security Institute (Instituto Mexicano del Seguro Social); and the National Housing Institute (Instituto Nacional de la Vivienda). Up to 1964 the public sector had built a total of 130,371 dwellings, of which about 60 percent were built during the period 1958-1964.

The Mexican Government has placed great emphasis on the mobiliza tion and utilization of private funds. In 1961 it asked the private mortgage institutions to give preference to medium and low cost housing loans and to set a limit on the financing of commercial and luxury construction. In 1962 it amended the General Law governing Credit Institutions and Ancillary Organizations (Ley General de Ins tituciones de Credito y Organizaciones Auxiliares) with respect to their savings and loans departments, with the purpose of facilitating their participation in the financing of low-cost housing. The reforms also provided for the establishment of mutual savings and loans associations and empowered the Ministry of Finance to authorize their operation.

In 1963 the government drew up the Housing Financing Program and set up two trusts within the Bank of Mexico to support it: the Housing Operations and Bank Discount Fund (Fondo de Operaciones y Descuento Bancario para la Vivienda), and the Housing Loans Guarantee and Support Fund (Fondo de Garantla y Apoyo a los Cr~ditos para la Vivienda).

El Salvador

In El Salvador, the institution responsible for promoting the establishment of savings and loans associations and assisting them in their operations is the National Housing Finance Corporation (Financiera Nacional de la Vivienda), which was founded in 1963, and began its activities in 1964. By the end of 1965 it had succeeded in establishing three savings and loans associations, with a total of 1,700 depositors,

132 and had approved loans totalling more than 5.8 million colones for the financing of 324 dwellings. The system is expected to finance the construction of 440 additional dwellings in 1966.

The Urban Housing Institute (Instituto de Vivienda Urbana) is a governmental agency responsible for the formulation and execution of urban housing programs. In 1962 it initiated a US$6 million program of construction of 5,000 houses, with financial assistance from IDB. By the end of 1965, the Institute had built 3,590 houses and had 2,410 additional houses under construction or study.

In October 1965 the IDB granted a second loan of US$6 million to the Institute to help finance a new program for the construction of 4,415 dwellings for low-income families in urban areas; of these, 3,975 will be built in San Salvador and the rest in four cities in the eastern part of the country. Half of these dwellings will be built by the system of direct construction, and the other half by systems involving self-financing and self-help systems. This program forms part of the 1965-1969 Housing Plan, under which a total of 25,000 dwellings will be built in various cities.

Ecuador

From 1961 to 1964, the National Housing Institute (Instituto Nacional de la Vivienda) was responsible for the programs of construc tion of low-cost housing. In 1964 the Institute ceased to function and its resources were transferred to the Ecuadorian Housing Bank (Banco Ecuatoriano de la Vivienda). This Bank was established in 1961 to serve as the government's financial agent in the housing field. It has promoted the establishment of savings and loans associations and also the mobilization of funds deriving from savings, insurance institutions and pension funds.

The programs undertaken by the Bank up to 1964, either directly or through the savings and loans associations, resulted in the construction of 1,789 housing units. Another 3,000 units were under construction in 1965, with the assistance of an IDB loan of US$10.6 million, from Social Progress Trust Fund resources.

The mutual savings and loans movement has been growing steadily in Ecuador. It was initiated with the support of the Ecuadorian Housing Bank and has benefited from an AID loan of US$5 million. In 1964 there were 11 mutual savings and loans associations, with a total membership of 10,136. it the end of 1965 the number of members had risen to 12,600 and the total savings deposits to 25.7 million sucres equivalent to US$7.2 million. These associations have granted 1,866 housing construction loans.

Brazil

In 1964 Brazil enacted the National Housing Law, which provides

133 that the government shall act in the housing field through the new National Housing Bank (Banco Nacional de la Vivienda).

The National Housing Bank was set up as an autonomous entity linked to the Ministry of Finance. Its principal functions are to promote savings for the financing of housing construction and to coordinate public-sector and private-sector activities in the housing field.

The Bank is empowered to establish branches throughout the country, but it is required to operate chiefly through the federal and state savings banks, the commercial banks and other entities engaged in the financing of housing; it is not permitted to engage in direct financial operations with house buyers. Its funds derive from various sources, including the issue of bonds. The Industrial Workers' Social Service (SESI) and the Business Employees' Social Service (SESC) are author ized to purchase bonds of the National Housing Bank, and the retire ment and pension funds are obliged to keep on deposit with the Bank an amount equal to not less than 20 per cent of their annual budgets. Other sources of funds of the Housing Bank are the 1 percent payroll tax, the deposits of the federal savings banks, and domestic and foreign loans. All the Bank's operations are subject to the regula tions of the National Currency Council. Both the loans and the bond issues are guaranteed by the Ministry of Finance. Monetary adjust ment must be applied to the buyers' mortgage amortization schedules whenever a change is made in the minimum wage.

Colombia

The Colombian institutions concerned with the housing problem include the Real Estate Credit Institute (Instituto de Cr6dito Territorial), or ICT. During the 5-year period 1961-1965 the ICT built a large number of houses. Of a total investment of 780 million pesos, over the period 1961 to 19 6 4, the Institate devoted 61 percent to the provision of housing for low-income families and the remaining 39 percent to middle-income housing. Out of the 251.8 million pesos investment programmed for 1965, it devoted 72 percent to low-income and only 28 percent to middle-income housing.

These efforts to improve the housing position of the lower-income groups were carried out mainly through self-help programs and through loans to lot-ovmers.

In 1965 the ICT continued the execution of a program started in 1961 with IDB financial assistance, for the construction of about 13,000 housing units in various localities. In addition, it pursued a program of construction of 7,000 dwellings in 22 cities, and another for the construction of i,400 units in Bogot6a, for members of the Colombian Trade Union Alliance for Housing, a cooperative entity whose members are drawn from the country's two largest central trade unions. Chile

Chile is perhaps the Latin American country that has accomplished the most in the field of housing. In 1953 it established the Housing Corporation (Corporaci6n de la Vivienda), an autonomous agency Ministry of the of Public Works. In 1959 the government adopted a three-year Housing Plan. The law governing the Plan centralized in the Corpora tion all the public-sector activities in the housing field and assigned new resources to it. Since 1960 the government has promoted the establishment of savings and loans institutions with the object of mobilizing the funds of the middle and low income groups. The Central Savings and Loans Fund (Caja Central de Ahorrc y Pr6stamos) was set up to promote and support the system. The National Ten-year Economic and Social Development Plan provides for the construction of 538,700 housing units during the period 1961 1970; this entails the allocation to housing of more than 20 percent of the total investment proposed under the Plan.

Chilets work in the housing field will undoubtedly be strength ened through the activities of the recently-created Ministry of Housing and Urban Planning. The Ministry will be able to call upon the assistance of an advisory body representing all branches of the building industry to be called the National Housing Council (Consejo Nacional de la Vivienda) and of a Technical Secretariat. The Minister will have under his authority an Undersecretary and three Directors, in charge respectively of the Departments of the Budget, Planning and Urban Works. Associated with the Ministry will be four autonomous institutions: the Housing Corporation, the Central Savings and Loans Fund, the Housing Services Corporation (Corporaei6n de Servicios Habitacionales) and the Urban Improvement CorporaLion (Corporaci6n de Mejoramiento Urbano); this latter agency will carry out the policies of expropriation and purchase of land and of urban reconstruction.

Chilean activities related to housing include the following: At the end of 1961, the IDB granted a loan of US$1.3 million from Social Progress Trust Fund resources to the Production Development Corporation (Corporaci6n de Fomento de la Producci6n), to help finance the construction of dwellings for 500 families. In 1962 the Central Savings and Loans Fund received an IDB Trust Fund loan of US$5 million to help finance the construction of 2,300 dwellings.

In 1963 the IDB granted another Trust Fund loan of US$2 million to CORVI (Housing Corporation) for the financing of about 2,400 dwellings in the environs of Vifa del Mar.

135, During 1964 the Central Savings and Loans Fund obtained three large loans to help meet the cost of its program of financing housing construction through the savings and loans system. AID granted a loan of US$8.7 million and guaranteed a loan of US$10 million obtained from the Connecticut General Life Insurance Co. The IDB granted a Trust Fund loan of US$5 million to help finance the construction of 2,300 dwellings for members of housing cooperatives.

In March 1965 the IDB granted a loan of US$2 million from the Social Progress Trust Fund to assist in financing 840 dwellings comprising the first phase of a program that calls for the construction of 2,800 low-cost houses for members of the savings and loans associa tions. This loan was granted to the CARITAS Low-nost Housing Institute (Instituto de Viviendas Populares - CARITAS).

According to information furnished by the Ministry of Public Works, the construction of 46,710 dwellings (including 32,000 by the public sector) was started during the first ten months of 1965. Up to the end of 1965 the savings and loans associations had

financed nearly 18,500 houses.

Venezuela

In Venezuela, the savings and loans system began at the end of 1961. The firs-; association was set up shortly afterwards. At the end of 1965 there were 21 associations with a total of 26,808 members. They had granted 4,061 loans, for a total amount of US$214 million.

In 1962, the Banco Obrero initiated a program for the construction of more than 5,600 low-cost dwellings in a number of cities. Under this program, for which the IDB made a loan of US$10 million 4,093 unit3 had been built in 17 cities, another 792 were under construction and 816 were about to be started by the end of 1965. By that same date, the Banco Obrero had built a total of 5,615 dwellings under its various programs.

Venezuela has drawn up a National. Housing Program under which the public sector will be responsible mainly for providing houses for families with incomes below Bs.1,200 a month. The land will be acquired under a lease agreement carrying the right of redemption; the houses will be obtained under a purchase contract providing for repay ment over as long as 30 years. For families with incomes of over Bs.1, 200 and up to Bs. 3,900 a month, the action of the state will be channelled through the Savings and Loans System by the granting of loans repayable over up to 20 years and bearing moderate interest. It is considered that families with monthly incomes in excess of Bs.3,900 will not require public-sector assistance, since their needs will be met through mortgage banks and other private lending ir.stitu tiors.

136 Dominican Republic

The country's savings and loans system was set up in 1962. In November 1965 the System comprised 8 associations, located in many as cities, with 9,757 members and total deposits of 3.1 million pesos. The associetions had approved 1,762 loans for a total of 10 million pesos. Th.e value of the beneficiaries' participation in these operations totalled about 2 million pesos. Also, in 1962 the National Housing Institute (Instituto Nacional de la Vivienda) and the National Housing Bank (Banco Nacional de La Vivienda) were established.

The following are the principal functions of the Housing Institute:

- To formulate and (.rec the execution of the National Housing Program;

- To promote the participation of private resources generally in the financing of housing projects;

- To organize and promote self-help programs of housing construction.

In 1963 the Institute launched an Emergency Program for the construction of houses in 23 provincial capitals. Under this Program, which received financial support from the IDB, l, 461 housing units were built in urban areas and 145 in rural areas. In the same year the Institute launched a program, assisted by an IDB loan of US$3.5 million, for the construction of 5,000 dwelling units in a number of cities and certain rural areas. At the end of 1965, 1,500 units had been built under this program, 584 units were under construction and the formalities were being completed for the construction of an additional 341 units.

The chief functions of the National Housing Bank are: to supplement the resources of the savings and loans associations for housing and those of other nonprofit institutions set up to finance the construction and purchase of low-cost family housing; to promote the establishment of savings and loans associations; to orient policy with respect to mortgage lending for house financing; to insure the accounts of the savings and loans associations for housing; and to engage in mortgage insurance operations.

In 1963 the Bank received a loan of US$2.1 million from the Agency for International Development.

The Bank has carried out secondary mortgage market operations through the issue of mortgage certificates and the sale of insured mortgages. Up to December 1965 it had sold mortgage certificates

137 for a total amount of 926,000 pesos and insured mortgages for the amount of 257,000 pesos. The Bank's Insured Mortgages Development Department granted 67 insurance policies for a total of 365,000 pesos in 1964, and 433 policies, for a total of 2.3 million pesos in 1965.

138 V. INSURANCE AND THE MORTGAGE MARKET

The role of insurance

Insurance by the State of the mortgages securing loans made by the associations is a cornerstone of the system. This form of insurance originated in 1934J, with the establishment in the United States of the Federal Housing Administration. One of the United States delegates summarized the advantages that the measure brought to the savings and loans system of his country in the following terms:

1. It made it possible for the members to obtain loans at longer term and for higher percentages of the cost of the house. This had the effect of reducing the total cost of the house because the fact that a buyer could obtain a higher loan from the association meant that he was no longer obliged to obtain other parallel loans.

2. It enhanced the liquidity of the mortgage loan portfolios of the associations because, since the mortgages were guaranteed by the government, their placement on the financial market was made easier. This naturally resulted in the liberalization of lending policy.

3. The requirements imposed by the government with respect to the conclusion of the mortgage insurance agreement, and the technical guidance that it furnished, resulted in the perfection of the techniques of property appraisal and of evaluation of the area in which the property is located.

4. It paved the way for expansion of the secondary mortgage market, which has been a factor of great economic and financial signifi cance in the United States.

Mortgage insurance has a specially important role to play in the under-developed countries, where there is even greater need than in other regions for the average purchaser to be able to obtain a loan covering almost the entire cost of the house and repayable over a long period. From the point of view of the associations. it is necessary, because of the modesty of their resources, that their securities shall find ready acceptance on the market, which would be impossible without the backing of State insurance. The consequent short-term recovery of the funds invested permits greater rotation of capital and thereby increases the yield of the system, in terms both of interest earned and payable and of the number of houses financed.

139 The beneficial effects of State insurance of mortgages were stressed by a number of other speakers. One delegate commented:

This form of insurance enhacE.s the ability of the association to fulfil its social purpose, particularly with respect to the amount of the loan, the price of the houso and the period of amortization. Because of this insurance, the mortgages are readily negotiable, not only on the domestic market but even abroad. This insurance gives tangible form to the coordination between the State and the private sector that is so vitally important for the solution of the housing problem. The State contributes its guarantee, and private enterprise its capital and its labor.

A number of Latin American countries are experimenting with the mortgage insurance system. One of the delegates explained in simple terms how the system uorks:

When a house purchase loan is granted, the house is mort gaged to the association, which obtains insurance from the central agency through which it is able to obtain compensation in the event of default by the borrower. The association can then readily place the mortgage on the market. The central agency can take over the mortgage and in turn assign it to a third party. The association is responsible for collecting the monthly instalments, and the purchaser of the mortgage receives his monthly dividend from the association or the central fund, as the case may be. The association receives a percentage as commission for rendering this service.

The following are extracts from two other statements on this subject:

In Chile, the procedure most commonly used up to now has been that of assignment to third parties through the endorsement of as many mortgages as are necessary to make up the value of the operation. The association is per mitted to charge a commission for the granting of the loan of up to 4 percent in the case of a private person or 2 percent in the case of a cooperative. In addition, it receives a commission of one-half o- 1 percent for the service of Fptment of the dividend. The investment is exempt from uax, is guaranteed by the State, and earns interest of up to 6 percent. In addition, provision is made for monetary adjustment in the event of depreciation of the currency, so that the value of the investment is protected.

140 - In El Salvador, state-insured mortgages enjoy certain tax privileges. The deeds are exempt from registration duties and stamped paper duty and stamp tax, while the interest on the insured mortgages and on the capital of the investor are exempt from income tax.

The Meeting also discussed the system of automatic state insurance of mortgage loans that has been adopted in some of the Latin American countries. Under this system, the loan is automatically guaranteed i.rom the moment that it is granted, by the central agency that adi&-:isters the State insurance scheme. Some of the delegates defended this principle of unrestricted insurance because of its virtue of speeding up the lending operations by eliminating many of the prior formalities required by the insuring agency. Others drew attention to the dangers for the entire system inherent in automatic insurance. To dispense with certain prior requirements could lead to the granting of mortgages that do not accurately reflect the true value of the house or that are not formalized and registered in accordance with sound legal and administrative practices. This could result in possible loss by the insuror and diminish the confidence of the secondary market. It was remarked during the discussion that automatic insurance would be tanta mount to placing the funds of the State at the mercy of a particular group of the private sector.

Strengthening of the domestic mortgage market

It was observed during the Meeting that property dealing is one of the most active forms of business in Latin America. The reasons for this preference include, besides tradition, the limited possibilities that exist at least in many parts of the region, for direct investment in industry or through securities markets, Government insurance could constitute an increasingly important incentive to private investment in mortgages held by the associations.

In addition to government insurance, other measures were recom mended in order to make savings and loan mortgages more attractive. such as increasing the rates of interest on investments in mortgages and simplification of the procedures for their sale or assigment, to permit them to be negotiated in the same way as mortgage certificates.

Factors closely linked to the efforts to make investment in mortgages more attractive are those of valuation of the property and appraisal of the credit-worthiness of the borrower, and also those connected with the administration of the loan. While these problems mainly concern the insuror, since they affect him directly, they are

141 also of interest to the secondary market investor. The value of the property recorded in the mortgage document must reflect as closely as possible the actual physical value of the house. It is necessary to minimize the probability of foreclosure due to default by the purchaser. It is essential that no room for doubt remain about the business-like administration of the loan. Weakness on these points would adversely affect the internal relationships of the system (those between the associations and the governmental insurance agency) and could, as well, undermine the confidence of the secondary market, which would be quick to withdraw its support since its commercial nature makes it particular ly sensitive and cautious.

The strengthening of the secondary mortgage market, i.e. the increasing utilization of private sector funds for the indirect financ ing of the type of housing with which the associations are concerned, will also depend, in most cases, on perfecting of the institutional structure at government level. Simple State insuraice will have little economic impact and will not by itself provide any quick solution to the lending problem of the associations and of similar institutions. What is needed is an instrument -- whether it is a direct State agency or a semi-autonomous institution such as a mixed-capital bank -- capable of facilitating the placement of the mortgages and of orientating private capite.l toward them. Such an instrument itself can, in fact, act as a second.ary market with the function of opening up, in turn, a tertiary market. This function or one similar to it, is being performed by the Housing Banks in Latin America.

In the document prepared by the Inter-American Savings and Loans Union and the Venezuelan Housing Institute, reference is made to the dichotomy that exists between the governmental insuring agency and the central institution set up to purchase and/or place mortgage deeds. The former, as its title implies, does not make loans to the associations but merely insures them. Its operating capital is very small; what is important is its moral and technical authority. With respect to the second type of institution, the document proposes the setting up of a type of central banking entity in the form of eo National Mortgage Fund, along the lines followed in the United States. The docu ment explains that this Fund would be a limited liability company promo ted jointly by the State and the various sectors interested in housing construction, and that its purpose would be to purchase, at a small discount, insured mortgages placed on the market either by mortgage financing institutions or by private promotors. The funds of the company would be contributed partly by the national government, which would subscribe the preferred shares, partly by mortgage institutions, promotors, builders and other businessmen having close ties with the construction industry, who would subscribe the common shares, and partly

142 by general investors. These investors would include the insurance companies, the savings funds, the commercial banks (up to the percen tages permitted by law), the commercial and industrial enterprises having closest links with the sector, and private investors in general. In this way, various components of the private sector would be incorporated into the mortgage market and would participate, each according to the nature of its funds, in the financing of low-cost housing.

In the course of a discussion on the Latin American experience in the secondary market for savings and loan mortgages, the following statements were made:

I will try to describe briefly certain aspects secondary of the mortgage market in Chile. The mortgage loans are insured by the central agency, and the interest rate includes one-half of 1 percent to cover the risk of default. This makes them extremely solid securities for potential investors. Currently, operations involving the assignment of either the whole or a part of a loan are carried out. The interest received by the purchaser of the mortgage is lower than that charged to the borrower. The difference covers the associationIs costs of dividenO collection, as well as general investment administration costs. From the start, the question of whether or not this securities market should be oriented toward the assignment of loans without a repurchase commitment has been considered in Chile. In practice, the experience of the associations has shown that it is essential to provide the investor with the possi bility of recovering all or part of the amount invested. This system of assignment of loans has yielded results that we think are promising. It has been in operation in Chile for just over a year and in that time has mobilized funds in excess of 20 million escudos. A l..rge part of this 20 million escudos has come not from large investors, but from a section of the public that invests relatively small amounts.

- Mortgage loans in Chile are subject to monetary adjustment, a feature that constitutes an important incentive to investors, particularly those who need to place funds for a specified period of time. For example, construction companies that have completed a project and intend to commence another within a short period of time have a certain amount of cash temporarily available that they invest in securities of this type. The investor enjoys complete tax exemption.

143 In Guatemala, the introduction of the FHA system was started about five years ago. The mortgage certificates that we offer in the market are secured by the mortgaged property and are also insured by the FHA scheme, which is in turn backed by the State. This makes the certificates very desirable securities. In addition, -something of great importance to the investor, - the earnings of the investment are completely exempt from contributions and profits tax.

Although we have only just introduced the system, we are already seeking foreign markets for our securities. The associations assume the responsibility of paying the dividends and of supervising the guarantee. A market has also developed for participation certificates, which entitle the purchaser to a prorated share of the earnings of the mortgage portfolio. In my opinion the FHA system greatly facilitates the placement of securities on the domestic market and I have no doubt that in the course of time it will also prove a means of opening markets abroad.

Inter-American mortgage market

During the Fouth Meeting the question of the desirability that development of the secondary mortgage markets of Latin American countries be accompanied by the creation of an inter-American mortgage market was discussed. It was argued that the existence of such a regional market erould contribute greatly to the strengthening of the local secondary markets.

The inter-American market would be organized with the support of the national savings and loans systems-- both of Latin America and of the United States -- and with the assistance of the IDB and AID.

In this connection, a number of statements were made concern ing the proposal of the United States government to establish an international or Inter-American housing loans bank. This bank, supported by investments of the United States associations, could serve as one of the instruments for the creation of an Inter-American market.

The Meeting also discussed certain aspects of the AIDs insur ance guarantee of private investments in mortgages granted by the Latin American savings and loans associations. Questions were asked about the U.S. Government's program of guarantee of certain investments by United States citizens or corporations abroad.

144 On the subject of the mortgage market, a lively exchange of views took place concerning the way in which the international agen cies are using their resources for technical and financial assistance to housing. In a document prepared jointly by the Inter-American Union of Savings and Loans Associations and the Venezuelan Housing Institute, these organizations recognized the value and pertinence of this work, related it to the question of the Inter-American mortgage market and at the same time suggested the need for certain measures:

Up to now, the funds assigned to housing by the in,!rnational agencies (such as the Agency for International Development (AID) and the Inter-American Development Bank (IDB)), have been invested preferentially in the direct financing of specific programs through public or private nonprofit institutions. This policy is a proper one, because it is a matter of stimu lating the construction of low-cost housing in all the Latin American countries. It has undoubtealj yielded positive results. This first stage having been ompleted, however, the question now arises o2 what would be the best way of using the funas that the international agencies have available for housing with the object of achieving the maaimum multi plying effect. This effect would be obtained by moving from this progressive investment uf the international funds for the financing of housing; toward the creation of a multilateral fund. This opinion agrees with the view e~xpressed by Gerald M. Desmond, a United Nations official, in an article on the subject of the "Evaluation of the Investment Guarantee Program": "Nevertheless, the chief conclusion that we have reached is that the best way of using the international funds is to provide the basis of a central reserve or reinsurance system as the foundation for the establishment of individual national invest ment guarantee programs". This multilateral fund would act as a "lever" to promote the investment of domestic and foreign private capital.

The joint document suggests that two multilatei*al agencies would.be needed: a Reinsured Mortgages Promotion Agency (Fomento de Hi-potecas Reaseguradas - F.H.R.), and an Inter-American Mortgage Fund (FondoIHipotecario Interamericano - F.H.I.). The former would act as reinsuror of the mortgage portfolio of the Inter-American Mortgage Fund. The purpose of the Fund would be to discount mortgages sold to it by the national funds, as indicated elsewhere in this chapter.

145 The national funds would sell mortgages to the Inter-American Mortgage Fund with the dual purpose of raising cash to pay off the domestic investors, and of lending additional funds to promotors of low-cost housing. The document proposes that the capital and operat ing funds of this agency for the discounting of national mortgages be obtained through share subscriptions by the IDB and AID and the placing of bonds on the external market. The proposal concludes with the following words:

The ample guarantee that these bonds would enjoy, their attractive yield, and the reputation of the administering agency, which would be the IDB itself, wculd without doubt facilitate their placement abroad. In this way the funds contributed by the AID and the IDB through the subscription of preferred or common shares, respectively, by stimtlating private investment in the construction industry, wou .d achieve the optimum multiplying effect, which is precisely what is sought.

It was pointed out by various speakers that it would be essential for the creation of An Inter-American mortgage market that the national systems standardize their policies and practices with respect to the placement of mortgages on the domestic market and in regard to interest rates and liquidity requirements.

146 VI. THE WORK ACCOMPLISHED BY THE IB, AND OTHER ASPECTS OF INTER-AMERICAN COOPERATION

Volume of IDB assistance and resources mobilized

Up to the end of 1965, the volume of financial resources provided to the Latin American countries to help solve the housing problem totalled US$2. 5.1 million. The first loan contract to assist the financing of a housing program was concluded with Panama on August 22, 1961. Since then, more than 30 loans to 18 member countries have been made. The total of other resources, mainly of local origin, for programs assisted by IDB loans is estimated at US$295.2 million. More than 250,000 families will ultimately bene fit under the programs.

The periods of amortization of IDB housing loans are usually quite long -- in some cases terms of up to 30 years have been granted. Interest has been fixed at specially low rates, 1-1/4 percent being the general rule.

The reports presented by the representatives of the IDB also stress that from the beginning of its operations the Bank has assign ed priority to the establishment or improvement of the basic services directly related to housing, such as potable water supply, sewerage, electricity and so on. By the end of 1966 the IDB had granted a total of US$368 million for such urban development projects.

Examples of IDB operations

The following are some examples of IDB operations in the housing sector:

Institute of Housing and Urban Planning of Panama

Two loans have been granted, one for US$7.6 million in 1961 and the other for US$9 million in 1965. The Institute is the official agency responsible for promoting the construction of houses for low-income families. Up to US$150,000 of the second loan may be used to pay for the services of consulting firms or independent consultants to advise the Institute in connection with the reorganization of its administration, financial opera tions and accounting system, and in the execution of the program.

147 h"El Pueblo" Mutual Loan Association of Peru

Up to US$45,000 of a US$1.2 million loan granted last year will be used to finance advisory assistance services to the Association. A previous loan of US$1 million, part of which was used for technical assistance, had been granted to the Association in 1962.

Paraguayan Institute of Housing

In 1963 the Bank provided non-reimbursable technical assist ance to finance a mission to Paraguay that advised the Institute on its reorganization and in the preparation of a program for construction of low-cost houses. In 1964 the Bank granted a loan of US$3.4 million to finance 50 percent of the cost of the program's first stage. Of this amount, US$125,000 is being used to finance technical assistance in connection with execution of this stage and with the Insti tute 2 s planning activities. Another US$125,000 was granted in the form of non-reimbursable technical assistance for the same purposes.

Bolivian Development Corporation

Together with a US$4 million loan granted in 1963 to finance part of the cost of the first stage of a national housing program, the Bank approved a non-reimbursable technical assistance operation in the amount of US$150,000 to assist in setting up a national housing agency, in the promotion of housing cooperatives and savings and loans associations and in the provision of training in self-help methods in the housing field.

Central Savings Fund of Chile

A loan of US$5 million has been granted to be used in support ing the work of various housing cooperatives.

Central Bank of Guatemala

The IDB has made a US$2.12 million loan to help finance the establishment of a savings and loans system in Guatemala.

Policies followed by the IDB

A large part of the resources made available by the IEB for housing derives from the Social Progress Trust Fund administered

148 by the Bank. The Administration Agreement provides that the IrB shall utilize the resources of the Fund, in the housing field, for projects that benefit low-income groups, through assistance to institutions providing long-term housing finance and engaged in mobilizing domestic resources for this purpose,

In accordance with these purposes and guidelines, the IDB has furnished assistance preferentially for programs:

- that are directed to the provision of houses for low and middle income families;

that proiide for the construction of the basic communal services, such as water supply, sewerage, paving, lighting and so on, simultaneously with the building of the houses;

- that encourage self-help methods, including the provision of own labor in the building of the house;

- in which the monthly payments for the house represent a proportion of the income of the final beneficiary that is such as to allow him to fulfil his contract without default;

- in which the value of any land and the cost of the construc tion of any basic services provided by the government are not charged, or are only charged in part, to the recipient of the house;

- in which the advantages of low interest rates and long amor tization terms of the IDB loans are passed on to the purchaser of the house;

- that contribute to the establishment or strengthening of organizations whose purpose is to mobilize domestic public and private resources for housing construction;

- that have wider social and economic objectives than a mere increase in the number of houses, however necessary such an increase may be, and that are accordingly directed to general communal and urban development.

Concerning the granting of land and the provision of other advantages by the public authorities, referred to in the above list, it was asked wha -LB's position in the matter was. The following is an extract frm.the reply of one of the I1DB representatives:

149 The statement that IDB gives consideration to projects that involve a certain element of subsidy does not mean that all' operations must necessarily be of this type. The housing field exhibits wide diversity, not only within Latin America but also within each individual country. Various systems are possible. The IEB studies each case on its merits. In some cases, the system of a partial subsidy is fully justified. For example, as has been said here, the Bank considers that the contribution by a national or local government of land, essential public services or administrative expenses for a housing program should not be charged to the final beneficiary, or should be charged only in part. This does, in fact, invol ve a kind of subsidy. But we must understand that the class of housing to which this formula would be applied is not the kind that is being built through the savings and loans associa tions. The latter are intended for a social class that is one or more rungs higher than the class to which the subsidy would be granted.

A Chilean dalegate commented that the confusion between the savings and loans system and the method of direct subsidy is harmful to the interests of the system. It is more desirable for the subsidy to reach the beneficiaries through another channel. He added that the rate of interest fixed for certain loans also implies a subsidy; for example, the housing cooperatives in Chile pay interest of only .5 percent a year. This low interest had been made possible through the IDB resources received by the Central Savings and Loans Fund.

Another delegate stated that he was not opposed to the grant ing of a subsidy to borrowers of the savings and loans system but felt that the sobsidy should not be financed or materially paid by the savings and loans system but by a State agency unconnected with the system.

Impact of the work accomplished with IEB assistance

On many occasions and in a variety of ways, a number of the effects achieved through programs either completed or under execution have been enhanced as a result of IDB~s cooperation. Among others, the following examples were cited:

- Strengthening of the institutional structure in both the public and the private sectors, particularly with respect to the bank ing savings and loans system.

- Increase in the number of home-owning families.

150 - Increase in employment, particularly in certain areas.

- Training of manpower, especially in cases in which the fu ture owners of the houses have contributed their labor in its construction.

- Increase in the production, and in some cases in the perfect ion, of construction materials.

- The technical contribution of the advisors engaged by the IDB or the AID to the planning of residential districts under communal development programs, to the design of houses and housing developments and to the study of construction materials.

During the discussions provoked by these statements, a number of delegates stressed the importance of the Savings and Loans Meetings. One delegate stated that the holding of these meetings, to the financing and organization of which the 1DB has made a substantial contribution, represents an important part of the IDB's work in the housing field.

The IDB and an Inter-American mortgage market

In discussing the assistance furnished by the IDB, the question of the possible participation of the IDB in the establishment of a La tin American mortgage market was examined. One of the delegates offered the following observations and proposals:

The Latin American governments should be urged to take action to create or strengthen national mortgage markets. The task of studying the most suitable form of organization of the mortgage market at the regional level should b- entrusted to the Inter-American Development Bank, as Latin Americals"Bank for Latin American Integration". We consider the Bank to be the most suitable agency not only for the carrying out of this study but also for the channelling of any financial contribu tions toward that end. The Inter-American Bank is well-known, enjoys high standing aad is respected all over the world, being in fact at present engaged in floating bond issues in Europe. For these .2easons it would perhaps be the most suitable channel and would provide the greatest guarantee and security to foreign investors, including the International Savings and Loans Bank that the United States proposes to set up.

Other aspects of Inter-American cooperation

In addition to the work accomplished by the IDB, stress was

151 laid in various ways and on a number of occasions during the Meeting on the considerable financial and technical assistance furnished by the United States Agency for International Development in support of the various national housing programs and of the efforts of the private sector for the development of the Latin American savings and loans system.

The appreciation of the associationj for the generous and constant assistance furnished by the AID was expressed by one of the delegates in the following terms: "Future generations of Latin Americans will have reason to remember with gratitude the names of those within the AID who have done so much to make the savings and loans system a reality in Latin America".

Emphasis was also laid on the substantial cooperation furnish ed by the United States National League of Insured Savings Associa tions. The League has promoted training progranms for officials of Latin American associations, both directly and in collaboration with AID. It has participated actively in the organization of the Inter- American Meetings on Savings and Loans.

The agency of liaison and cooperation between the national associations has already been set up. It is the Inter-American Savings and Loans Union. The organizing committee was appointed by the Second Inter-American Meeting on Savings and Loans, held in Santiago in 1964. The Union was officially constituted in Caracas on November 12, 1964 and held its first General Meeting following the conclusion of the Third Inter-American Meeting on Savings and Loans, held in Quito in 1965.

The origins, purposes and current activities of the Inter- American Union were summarized during the Fourth Meeting in the fol lowing terms:

- The Union constitutes the most positive of the results acnieved by the Inter-American Meetings on Savings and Loans. The Inter- American Development Bank, the Agency for International Develop ment and the National League of Insured Savings Associations, the traditional promotors and sponsors of these meetings, have good reason to feel satisfied. I should like to take this opportunity to express our profound appreciation for the mag nificent work accomplished by these institutions. This work is even more valuable when measured in terms of its results in the creation of mechanisms through whizh we are being enabled to mobilize and exploit our own resources, which have generally been suppressed for lack of the necessary organization, than when measured solely in terms of aid in the form of money.

152 - The Union has been created as the organ of unity ration of the and coope savings and loans associations of America. In Latin America it will be called upon to play a most important role in the improvement and expansion of the savings and loans movement and in the creation of new machinery to give greater strength and dynamism to the housing programs.

- We who are responsible for the direction of the Unionts ac tivities are going ahead vigorously with plans to make the Union the center of information on the financing of housing and on all other aspects of the housing problem in Latin America.

- We hope to be able to organize personnel training programs, advisory assistance services and regional seminars on specific topics related to the savings and loans movement.

The Inter-American Union is particularly generation interested in the of funds through an Inter-American secondary mortgage market. The expansion of the AID guarantees program, both in scope and in resources, is a positive step toward the creation of such a market. When the guarantee effectively program is under way it will be possible for United States savings and loans institutions to invest in similar institu tions in Latin America and to participate, either directly or through the central funds and offices, in the efforts for the solution of Latin America's housing priblem.

153 TABLE OF CONTENTS

Organizing Committee i

Officers of the Meeting ii

Agenda iv

Regulations viii

Facsimile of letter by the President of the United States of America X

Inauguration of the Fourth Meeting:

An address by Mr. Stanley Baruch, Secretary General of the Fourth Inter-American Meeting on Savings and Loans and Director of the Housing and Urban Develop ment Division of the United States Agency for Inter national Development I

An address by Mr. Gonzalo Carnevali, Chairman of the Fourth Inter-American Meeting on Savings and Loans and General Manager of the Vene_uelan Central Savings and Loans Office 1

An address by Mr. Eugenio Mendoza, President of the Venezuelan Savings and Loans Commission 2

An address by Mr. Michael Greenebaum, Member of the Board of DirecGors of the United States Federal Home Loan Bank 7

An address by Mr. Raymond P. Harold, President of the International Union of Building Societies and Savings Associations 11

An address by Mr. Harry P. Greep, President of the Nationa3 League of Insured Savings Associations of the United States 17

An address by Mr. David Bronheim, Deputy United States Coordinator, Alliance for Progress 20

An address by Mr. Alfonso Rochac, Technical Manager of the Tnter-American Development Bank 23

An address by Mr. Leopoldo Sucre Figarella, Minister of Public Works of Venezuela 28

154 Report of Committee "A": Promotion, Organization

and Development of an Association 31

Report of Committee "B": Savings and Loans 37

Report of Committee "C": Savings and Loans Systems. Their Place and Development in the Community 45

Report of Committee "D": Technical-Financial Bases 51

Close of the Fourth Meeting:

Summary of the Closing Session 58

An address by Mr. Eduardo Fuentes C., President of the Venezuelan Federation of Savings and Loans - Associations and of the Inter-American Savings and Loans Union 59

An address by Mr. Gonzalo Carnevali, General Manager of the Venezuelan Central Savings and Loans Office and Chairman of the Fourth Inter-American Meeting on Savings and Loans 65

An address by Mr. Alfonso Rochac, Technical Manager of the Inter-American Development Bank 70

Roster of participants 71

The Housing Problem in Latin America. Summary based on recordings made in the four Working Committees 101

Table of Contents 154

155