Report of Independent Public Accountants

To the Board of Directors and Stockholders
of TeleBanc Financial Corporation and Subsidiaries

We have  audited  the  accompanying  consolidated  balance  sheets  of  TeleBanc
Financial  Corporation (a Delaware  Corporation) and subsidiaries as of December
31,  1997  and  1996,  and  the  related  consolidated   statements  of  income,
stockholders'  equity,  and cash flows for the years then ended. These financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of TeleBanc Financial Corporation
and  subsidiaries  as of  December  31,  1997 and 1996,  and the  results of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
generally accepted accounting principles.



                                                         /s/ Arthur Andersen LLP

Vienna, VA
February 20, 1998