ABSTRACT
In the early part of the post-war boom, commercial banks kept pace with the growth of the housing market with their loans on real estate. Most of the real estate held by commercial banks was in insured loans such as FHA or VA, which were backed by federally insured bonds. Federal statutes allowed a national bank to loan up to 60 percent of its savings deposits on real estate, but government-insured loans were not counted in the percentage. The growth in California real estate relative to the rest of the nation was so rapid that moving funds from outside the area into real estate development, construction, and mortgages became the major challenge to the financial industry. Building & Loan Societies (B&Ls) continued to change their charters to savings banks or to savings and loan associations and commercial banks increasingly focused their lending on business and consumer loans.
