Mr. LANHAM. Is there any real grounds for fear that public housing would be preferred to private housing or that it would get any advantage due to this organization already in existence? Mr. WEST. Well, we simply feel that this is a useless organization. That is all. It is nothing but making the National Housing Agency permanent. Mr. LANHAM. That is all. The CHAIRMAN. Mr. Wadsworth? Mr. WADSWORTH. No questions. The CHAIRMAN. Mr. Jenkins? Mr. JENKINS. The only question I would want to ask is: Your objection to what you call low-cost housing is that you do not want the Government competing with private industry in the housing field. Mr. WEST. We do not feel that the Government housing fits in with the private enterprise operation. Mr. JENKINS. You want the Government out of the private housing business. Mr. WEST. They are already in there. You will never get them out. I am not trying to stop that, but I do not want them in my business. I want my agencies all separated, most of which are selfsustaining and ought to be. The Federal Home Loan Bank System and the Federal Savings Loan Insurance Corporation ought not to be supported at all by the Government. Mr. JENKINS. That is all I have, Mr. Chairman. The CHAIRMAN. Mr. Wilson? Mr. WILSON. Do you think that all of these agencies that have public housing for their purpose could be consolidated with some benefit, and on the other hand the Government secured loan agencies could be consolidated with any benefit with regard to efficiency or to economies in Government? Mr. WEST. Yes, sir. Mr. WILSON. I certainly agree with you. They should not be. joined up. There is too much danger that some man would start out and build up the theory and submerge private enterprise and everything else. The CHAIRMAN. Mr. Riehlman? Mr. Hardy? Mr. HARDY. To sum this up, we are not arguing the merits of Federal Public Housing and subsidized low-rent housing; but it is your feeling that the financing and banking phases of the housing program should be separated from the public-housing program. Mr. WEST. Yes, sir. In other words, the bank system, the Federal Savings and Loan Insurance Corporation, and the FDIC, which insures deposits in banks, certainly have nothing directly to do with this subject. The Federal Housing Administration after all is an insurance agency, insuring mortgages. It is all to promote private enterprise. The bank system is to promote private enterprise by affording the greatest block of installment credit in the world. The Congress set up that bank system. Mr. HARDY. Well, you would agree with them that the HOLC and the Federal Savings and Loan and those other related activities should be under one item. Mr. WEST. HOLC was started on June 13, 1933, and it ran for 3 years. It expired on June 13, 1936. They have not made a loan since, except extension of loans. It is a liquidating agency, and I think it belongs in the Treasury. Mr. HARDY. We will eliminate the HOLC, but there are active agencies that are engaged in financing or insuring and should be under one agency, but they should not be tied to the public-housing phases. Mr. WEST. That is right. Mr. HARDY. That is all, Mr. Chairman. Mr. McCORMACK. Suppose I go to your savings bank to get a loan. You said you pay one-eighth of 1 percent. That is for the guaranty of deposits up to five thousand now? Mr. WEST. That is right. Mr. McCORMACK. That is a very beneficial thing, is it not? Mr. WEST. Yes. It was almost necessary for the Congress to do that for us because they guaranteed deposits in banks, and a week later they set that up. That was back about 1933 or 1934. Mr. McCORMACK. And it has worked very effectively. Mr. WEST. A number of people have had confidence in the institutions up to $5,000 because of it. Mr. MCCORMACK. And that is borne by the member banks. Mr. WEST. Yes. We pay that premium. I should like to say, Mr. Congressman, in that respect, that a federally chartered savings and loan association is somewhat like a national bank. A national bank must carry that insurance, and the Federal Savings and Loan Association must carry that insurance. I think in a State-chartered institution, it is optional. Mr. McCORMACK. But in a sense it is quite imperative for a State bank, chartered bank, to become a member. Mr. WEST. Some State banks around the country do not have their deposits guaranteed. They get along well without it. Mr. McCORMACK. The Federal system has between 15,000 and 16,000 member banks on it, offhand. Every national loan agency has to be a member. Say I go in and want to get a loan. Do I go, after you pass upon it at your bank, to the FHA to see if they will insure it? Mr. WEST. You do not have to because I can make you a loan without the FHA insuring it. That is optional with me as to whether I will take insurance on one of my loans. They charge a one-half per cent premium for that insurance. Mr. McCORMACK. That is protection. The purpose of it is for protection. Mr. WEST. FHA was created to pump out jobs and material in depression, both title 1 and title 2. Mr. McCORMACK. Federal Housing now is a sort of insurance Mr. McCORMACK. What percentage of your loans are covered by FHA insurance? Mr. WEST. Practically none. We prefer to put the one-half percent in our own reserve and run our own business without it, but others run with it and like it. Mr. McCORMACK. You make a cash loan, and then the collateral is a protective measure. I can see your point in having the financing agencies separate. I want you to understand that. I understand your point very well, but I was wondering how you had the fear about · the money that was paid in that would be used for public housing expenses. This would be appropriated by Congress. Mr. WEST. The one-eighth percent I believe for insurance accounts is not appropriated by Congress. Mr. McCORMACK. That would not be used, for example, for the National Housing. Mr. WEST. If we set up a super coordinator somewhere they might coordinate all these agencies, depending upon the nature if they charge him for that part of the work he does. Mr. McCORMACK. I do not think so. Congress would appropriate there. Mr. WEST. It has been true up until now, sir. If you look up your appropriations. Mr. McCORMACK. On your proposition as to the separation of the financial activities from the others, I see that one could support that with logic; but I could not quite go along with saying or expressing the feeling that the money being paid in would be used for any of the other activities, because Congress appropriates for that. The CHAIRMAN. Are there any further questions? Unless there is some objection, we will meet tomorrow morning. We have witnesses scheduled on the unification bill. I would like to have it half past nine tomorrow morning, if possible. Mr. LANHAM. Cannot we meet at the other place for this, too? Where are you going to have the hearing, in this room? The CHAIRMAN. Yes. Mr. LANHAM. The unification hearing will be here, too. The CHAIRMAN. Yes; and we will continue with the witness from out of town tomorrow morning at 9:30. Mr. West may be excused at this time. We have here a statement presented by the National Savings and Loan League of Washington, D. C., by its assistant manager, Harold B. Braman. It is only one page. I ask permission to insert it in the record of this hearing at the close of the testimony. Also memorandum on Reorganization Plan No. 3 of 1947, by Carl E. Hoffman, professional staff member. (Whereupon, at 12: 40 p. m., an adjournment was taken until Tuesday, June 10, 1947, at 9: 30 a. m.) REORGANIZATION PLAN NO. 3 OF 1947 TUESDAY, JUNE 10, 1947 HOUSE OF REPRESENTATIVES, COMMITTEE ON EXPENDITURES IN THE EXECUTIVE DEPARTMENTS, Washington, D. C.. The committee met at 10 a. m., pursuant to call, in room 1501 of the New House Office Building, Hon. Clare E. Hoffman (chairman) presiding. The CHAIRMAN. We will come to order. Gentlemen, the witnesses who were here yesterday to testify on Reorganization Plan No. 3 asked permission to put in their statements, and because the committee could not hear them then, they have been here once for that purpose, and I am going to put that to you now whether you will receive those statements without any opportunity to cross-examine. Hereafter, I am going to object to any statements of that kind going in the record, because the only way you can test the logic and soundness of statements is by cross-examination. This idea of bringing in a statement and letting it be accepted as the fact, I do not think is a policy we should follow. If you gentlemen have no objection to that being done this morning, we will put those statements in the record. We will not do it any more. Mr. RICH. Mr. Chairman, I would like to say that when you asked them to come here as witnesses, they did, and because you were unable to hear them, I do not know whether they are going to be able to spend 2 or 3 days waiting. Therefore, I would suggest that these be recorded here as a part of the minutes. The CHAIRMAN. If there is no objection, they will be so considered. Mr. HOLIFIELD. I would like to say something on this point, although I realize the predicament the committee is in, and I would like to see this thing expedited, I think it is a precedent we do not want to permit in the future. The CHAIRMAN. The record will show that there was no opportunity for the members to oppose the views or to question those views. We will take a vote and see if there is any objection on reporting out concurrently Resolution No. 51. Is there any objection to that? That is, on Plan No. 3. I hear none. The clerk will now call the roll. If you want to reject the plan, you vote "aye," and if you want to approve the plan, you vote "no." The CLERK. Mr. Bender? Mr. BENDER. Aye. The CLERK. Mr. Rich? Mr. RICH. I will pass over. The CLERK. Mr. Wadsworth? Mr. WADSWORTH. Aye. The CLERK. Mr. Brown? Mr. BROWN. Aye. The CLERK. Mr. Chenoweth? Mr. CHENOWETH. Aye. The CLERK. Mr. Busbey? (No response.) The CLERK. Mr. Boggs? (No response.) The CLERK. Mr. Riehlman? Mr. RIEHLMAN. Aye. The CLERK. Mr. Jenkins? Mr. JENKINS. Aye. The CLERK, Mr. Manasco? Mr. MANASCO. Aye. The CLERK. Mr. McCormack? (No response.) The CLERK. Mr. Delaney? Mr. DELANEY. Aye. The CLERK. Mr. Holifield? Mr. HOLIFIELD. I will pass. The CLERK. Mr. Lanham ? The CLERK. Mr. Down? (No response.) The CLERK. Mr. Hardy? Mr. HARDY. Aye. The CLERK. Mr. Karsten? Mr. KARSTEN. I will pass. Mr. WILSON. Aye. 1 The CHAIRMAN. I ask your unanimous consent that those members who come before this session is over be permitted to vote. Is there any objection to that? Mr. BROWN. I would object to that as a matter of policy, because such action might change the present result, and no one knows what it will be later with people coming in and voting after the meeting. The CHAIRMAN. Perhaps I made that suggestion with an idea that the result would be practically unanimous. I will withdraw it then. The statements will be inserted in the record at this point. (The statements referred to above are as follows:) STATEMENT OF CALVIN K. SNYDER, REPRESENTING THE NATIONAL ASSOCIATION OF REAL ESTATE BOARDS Mr. Chairman and members of the committee, I am Calvin K. Snyder, of Washington, D. C., secretary of the realtors' Washington committee of the National Association of Real Estate Boards. I am appearing in behalf of the National Association of Real Estate Boards, which represents 900 local real estate boards, having a membership of 37,500 located in every State of the Union. I am appearing in favor of House Concurrent Resolution 51 to disapprove Reorganization Plan. No. 3. |