June 27, 1934: FSLIC Is Formed to Administer Deposit Insurance for S&L Institutions

The Federal Savings and Loan Insurance Corporation (FSLIC) is established. It is administered by the Federal Home Loan Bank Board (FHLBB), which was formed by the Federal Home Loan Bank Act of 1932. The FSLIC is created as part of the National Housing Act of 1934, New Deal legislation passed amid the ongoing Great Depression in order to make housing and home mortgages more affordable. The act, which also establishes the Federal Housing Administration (FHA), is signed into law by President Franklin D. Roosevelt. Upon its creation, the FSLIC is assigned a capital stock of $100 million. All federal savings and loan associations (S&Ls) will be required to apply for insurance through the FSLIC; other building and loan associations whose capital is not impaired are also allowed to apply. The FSLIC is given certain regulatory powers over insured institutions, requiring each institution to accumulate reserves over several years, and assesses an annual insurance premium, calculated at 0.25 percent of the total amount of all accounts of insured shareholders or members, plus any creditor obligations. The FSLIC will routinely suspend insurance premiums whenever its reserve fund is greater or equal to five percent of all insured accounts and creditor obligations of all insured institutions. [Courier News, 7/28/1934]