There has been apprehension on the part of many concerning the lack of regulation of industrial loan associations because a number of these associations solicit and accept savings from the public. The advertising practices of some of these associations, the lack of insurance on savings, or the adequateness of such insurance where it has been effected, and the preferential position enjoyed by all of them with respect to permissible interest charges, have also been matters of concern.

The essential problem to be considered is this : industrial loan associations may receive the savings of the public the same way that banks do. Having received these savings, the association has the legal right to invest them in anything it chooses: stocks, bonds, second mortgages, or any other form of investment. They can put the money in real estate, improved or unimproved. While no industrial loan association in Virginia has ever become insolvent, it appears that any corporation licensed by the State to accept savings in the same way that banks do should be subject to the same sort of regulations as banks. This problem is not a new one but has been previously recognized and was the subject of a study made by the Virginia Advisory Legislative Council resulting in its report to the Governor and the 1950 General Assembly (Senate Document 12, 1950).

This and related problems led the General Assembly at its 1958 Regular session to adopt House Joint Resolution No 51, creating a Commission to determine whether industrial loan associations should be regulated in a manner similar to that in which banks and other financial institutions are regulated.

Pursuant to this resolution, the President of the Senate appointed to the Commission from the membership of the Senate the following: Gordon F. Marsh, of Portsmouth, and Thos. C. Phillips, of Abingdon; the Speaker of the House of Delegates appointed to the Commission from the membership of the House the following: Shirley T. Holland, of Windsor, Edward E. Lane, of Richmond, and H. Ray Webber, of Low Moor; and the Governor appointed to the Commission George L. Hunter, Jr., Commissioner of the Revenue, Fredericksburg, and Thomas D. Jones, Jr., Deputy Commissioner of Banking, Hanover.

The Commission, at its organization meeting, elected Edward E. Lane Chairman and Thos. C. Phillips Vice-Chairman, and appointed John B. Boatwright, Jr., Secretary.

The Commission met several times and also held a public hearing which was well attended. There appeared at the hearing representatives of the Virginia Bankers Association and the Virginia Industrial Bankers Association, and other individuals, including officers of banks and industrial loan associations, who presented their views, comments and suggestions to the Commission.