The past and present presidents of the Metropolitan Washington Savings and Loan League criticized President Carter this week for recommending to Congress that small passbook savers be given the same high interest rates as investors in goverrnment and corporate securities.
The Washington thrift institution executives, in interviews during the trade association's 71st annual meeting here, said that Carter was wrong and acted politically when he stated this week that it was "unconscionable for the federal government to prohibit small savers from receiving the return on their deposits that is available to large and sophisticated investors."
"I think it was a quick shot on his part and he shows no leadership in making a statement like that," said Martin Wiegand, who was elected today as the league's new president. Wiegand, chairman of Metropolitan Federal Savings and Loan Association, and outgoing President Ralph S. Childs Jr., president of Home Federal Savings and Loan Association, both said that interest rates for small and large savers will eventually become equal, but "it has to be done over a period of time."
In a message to Congress, the Carter administration this week called for an orderly transition to market-level interest rates for the average saver, but Wiegand and Childs contended that the effect of such a proposal would put savings and loans out of business.
Such a recommendation would not curb inflation, Childs said: "It would shove mortgage interest rates through the ceiling." Childs said he did not expect the president's suggestion to be enacted by Congress.
Federal law limits the amount banks can pay depositors. It is now stuck at 5 1/4 percent for passbook savers at federally chartered institutions. Those with $10,000 or more to invest can get about 9 1/2 percent interest by buying corporate or government securities. There is no interest ceiling on those investments.
Both Wiegand and Childs suggested that passbook savers be given a tax break rather than higher interest rates. Carter's proposal would dry up mortgage money, they argued.
They predicted that mortgage money locally will be scarce without such a proposal this year, particularly in the District, which has no ceiling and Maryland recently removed its 10 percent limit on interest rates.
The S&L executives also said they supported as proposal before the Federal Home Loan Bank Board, which regulates the savings and loan industry, to allow District savings and loans to branch into the Maryland and Virginia suburbs.
"We should have the right to go out and to be part of the metropolis we built," Wiegand stated.
Childs noted that he favors reciprocal branching, whereby suburban institutions could branch into the District. The bank board is studying this concept, but Maryland and Virginian S&L leaders interviewed here were hostile to the branching suggestion.
Wiegand and Childs also said that the industry will continue to be plagued by high withdrawals. Recent figures on savings acccounts have shown that more withdrawals than new deposits are now being made