Federal Housing Administration and the Federal Home Loan Bank System are taken out from under the war controls now exercised over them by the temporary National Housing Agency. They urged that at the earliest practicable time these two permanent agencies should be restored to their relatively independent prewar status. The National Chamber's organization members are strongly of the opinion that the emergency activities of the wartime National Housing Agency are essentially temporary in character and should not be made permanent.

On February 7, 1945, Eric A. Johnston, who was then president of the National Chamber, appeared before the Subcommittee on Housing and Urban Redevelopment of the Special Senate Committee on Postwar Economic Policy and Planning. He made a strong plea for the early release of the Federal Housing Administration and the Federal Home Loan Bank System from their war controls.

He called attention to the fact that the National Housing Agency was established in February 1942 by Presidential Executive Order 9070, under the authority of title I of the First War Powers Act of 1941. This war agency, he pointed out, placed under one direction all activities of the Federal Government directly affecting war housing in any way, including:

(a) The Federal Housing Administration and its functions, powers, and duties, including those of the Administrator thereof.

(b) The Federal Home Loan Bank Board and all the functions, powers, and duties of the Board and of its members. This Board (1) charters and supervises Federal savings and loan associations, (2) supervises 12 regional home loan banks, (3) serves as the board of directors of the Home Owners Loan Corporation, (4) serves as the board of trustees of the Federal Savings and Loan Insurance Corporation.

(c) The United States Housing Authority and its functions, powers, and duties, including those of the Administrator thereof.

This sweeping wartime reorganization replaced the Federal Home Loan Bank Board of five members with a single Federal Home Loan Bank Commissioner. It continued the Federal Housing Administration, as formerly, under a single head. The United States Housing Authority was renamed the Federal Public Housing Authority, and given responsibility for spending Lanham and other available funds to build war houses and to reconvert old houses to war-housing uses. The functions of the Federal Home Loan Bank Board continued under the new National Housing Agency much as before, with adaptations of course to various wartime measures and conditions. The Federal Housing Administration suspended most of its normal activities and undertook through a new title VI, added to its act, to insure against loss the private builders who built war housing for sale or for rent. The United States Housing Authority became the construction and operating arm of the wartime National Housing Agency. It was thus given an important war job, which has also served to keep alive its organization.

In setting up this wartime National Housing Agency it was contemplated both by the President and by the Congress that, under the terms of the First War Powers Act, it would automatically come to an end 6 months after the end of the national emergency. It was not contemplated by the Congress, or by the Fresident at that time,

that there should be continued parmanently under one agency the diverse activities brought together solely in the interest of the war effort.

While permanency thus was not contemplated by Congress, or by the Executive order setting up this wartime activity, it was contemplated. by the officials in charge of this wartime housing agency. Long ago they made elaborate presentations to Congress and to the public pointing out the need, as they saw it, for a single housing agency to control all the activities of the Federal Government in the housing field.

The reasons for our disagreement with this proposal are fundamental. We do not believe that either the purposes of a more efficient organization of the Federal Government's housing activities or the public interest will be served by combining under the dictatorial control of one Government official the responsibilities, on the one hand, which the Federal Government has undertaken with respect to the private home financing activities of this country, and the responsibilities, on the other hand, which this same Government has undertaken in financing the building and in subsidizing the rentals of publicly owned housing. This is indeed an attempt to mix oil and water.

We are compelled to believe that the persistent and long-continued effort to force the merger of these two entirely different functions is motivated by something more than an interest in a better organization of Government activities. The widespread propaganda for this proposal reveals a determined purpose to subordinate the Federal Government's activities in the field of private credit to its activities in the field of welfare housing.

We do not believe that either the welfare activities of the Federal Government or those activities which are designed to strengthen the private home financing facilities of the country will benefit by this unfortunate union. To merge these completely distinct functions, as is done by the President's Reorganization Plan No. 1, will mean that either sound and reasonable principles of credit will be weakened by diverting them to the uses of charity, or, on the other hand, that the principles of welfare where they properly apply will be restricted to the point of view of a mortgage credit operation.

There is no doubt in the case of the National Housing Agency but that the former alternative would prevail because that agency is in the hands of ardent public housing advocates. A main purpose for setting it up as a permanent agency is to strengthen and broaden the influence of public housing activities in the United States.

The Federal Housing Administration is an agency set up by Congress to insure mortgage loans. Six and one-half billion dollars of home mortgages have been insured by this agency whose Administrator is responsible to Congress. He should continue to be responsible to Congress for the regulations and decisions he makes in carrying out the important purposes for which this mutual insurance fund was established. The Reorganization Plan No. 1 impairs his responsibility by making him completely subordinate to the proposed permanent National Housing Administrator. As a matter of fact this peacetime National Housing Administrator would have much greater power and control over the agencies under him than was given his counterpart in wartime.

The Federal home-loan banks are banks for making advances to their members who in turn are State-chartered or Federal-chartered savings-and-loan institutions and in some instances insurance companies. The act setting up this Federal Home Loan Bank system created a Board of five members to supervise its activities. This Board, under the terms of this act, is responsible to Congress for the regulations and decisions it makes in administering this important private credit function.

Acting under his wartime powers the President abolished the Federal Home Loan Bank Board. In its place be made one administrator responsible for the operations of this banking system. It is now proposed under the Reorganization Plan No. 1 not only to continue permanently the administration of the Federal Home Loan Bank System in the hands of one administrator, instead of a board as provided by Congress, but in addition to place this administrator completely under the control of another administrator. We are thus confronted with the startling proposal to place the assets of thousands of savings and loan institutions throughout the country, which total over $6,000,000,000, under the direction-not of a five-man board which Congress felt was necessary when it created the Federal Home Loan Bank System in 1932-not of a single administrator which has been the case during the war period-but under an administrator who is subject to another administrator who in turn will be charged with the broad welfare objective-as set forth in the President's message transmitting this Reorganization Plan No. 1-of seeing to it that every family in the United States ultimately obtains a suitable dwelling.

Both the operations of the Federal Home Loan Bank System and the Federal Housing Administration, which involve the savings of millions of people amounting to billions of dollars, are placed in unnecessary jeopardy by this proposal to set up a permanent National Housing Agency. The officials of this wartime agency are primarily interested in public housing and in housing welfare activities and not in safeguarding the interests of private investors and the savings entrusted to private lending institutions.

If there is a need, as some think there is, for correlating Federal mortgage-credit policies and maintaining a proper relationship between them and the direct use of Federal funds for housing, then Congress should give consideration to creating a board to perform this function. One such proposal now before the House contemplates a board composed of the Secretary of the Treasury, the Secretary of Commerce, and the heads of the four principal housing agencies, namely, the Federal Home Loan Bank Board, the Federal Housing Administration, the Veterans' Administration, and the Federal Publie Housing Authority. A board of this kind could review the general policies and operating conflicts of the several agencies, could settle differences, and could make recommendations to the President and the Congress where modifications in law are considered advisable.

We can have a grouping and correlation of certain activities without merging and consolidating them. The advantages of such a coordinating board are that it would not interfere with the functions created by Congress and no superagency would be set up. Such a board would serve a useful purpose. The Federal Loan Agency to

which I refer at the conclusion of this statement is another example of how agencies can be grouped without consolidation.

The difficulties of consolidating all housing activities in one agency is shown by the fact that this proposed National Housing Agency omits one of the most important of the Federal Government's housing agencies. That is the Veterans' Administration. The National Chamber's organization members, in the referendum to which I referred earlier, have expressed themselves in favor of continuing in the Veterans' Administration the assistance which the Government is giving veterans in the purchase of homes. There is no other practical way to handle such assistance, even though it injects another Government agency into the Federal Government's activity in the housing field.

For at least the next 10 years the Veterans' Administration will be the most important single Federal agency in the mortgage field. Yet it is not considered practicable by the Government planners themselves to bring this Administration under the same supervision as is proposed for the Federal Housing Administration and the Federal Home Loan Bank Board.

Congress should at once restore the Federal Housing Administration and the Federal Home Loan Bank Board to their previous positions of influence, leadership, and responsibility. This will do more than any other single action to encourage housing progress in this country. Congress can do this most effectively by refusing to favor the President's proposal to set up a permanent National Housing Agency and by giving careful study and consideration, in connection with pending permanent housing legislation, to the proper places in the Government's organization structure for both the private credit as well as the welfare functions of the Government which relate directly to the public's interest in better housing.

In making this recommendation I have no doubt it leaves you with the same question in your mind as I have in mine, namely, if we are not to place the Federal Housing Administration and the Federal Home Loan Bank System in a permanent National Housing Agency, where then are we to place them?

There was a time when these two agencies, together with the Reconstruction Finance Corporation, were grouped together in the Federal Loan Agency. It is to be noted that this Federal Loan Agency was set up by President Roosevelt acting under authority of a previous reorganization act of 1939, which was somewhat like the present Reorganization Act of 1945.

The Federal Loan Agency was broken up as a result of action taken by the President under his war powers. By Executive order he transferred the Federal Housing Administration and the Federal Home Loan Bank Board to the National Housing Agency. He transferred the Federal Loan Agency itself together with the Reconstruction Finance Corporation and its subsidiary corporations to the Department of Commerce. Later on Congress separated the Federal Loan Agency and the Reconstruction Finance Corporation from the Department of Commerce.

The members of the National Chamber have urged that the Federal Loan Agency be made active again and that the Federal Housing Administration and the Federal Home Loan Bank Board be returned to

this Agency. It seems to me that we should frankly face the necessity, from a Government reorganization standpoint, of either restoring the Federal Loan Agency to its prewar status of prestige and influence or of transferring all of the agencies formerly grouped under it to the Treasury Department.

Certainly the President, as the chief administrative official of this great Government, cannot do his job properly if he has too many agencies reporting to him. We are in sympathy, therefore, with his objective of reducing the number of agencies which do report to him, although we find ourselves compelled to disagree with his proposal to set up a permanent National Housing Agency. We believe that his reorganization purposes would be served better by keeping the private credit functions of the Government in one grouping and its welfare functions an another.

Mr. WEST. I think the institutions around the country would have bought a greater quantity of stock than they were actually compelled to under the law in the Federal Home Loan Bank System had they had some assurance in the last few years as to where they would ultimately go. We speak of the Federal Home Loan Bank Board as an entity because it was the operator of these four institutions I first described. We do know that the President abolished that Board. That Board was a Board of five men appointed by the President and confirmed by the Senate, and left that Federal Home Loan Bank Board, a Federal Home Loan Bank Administration with a Commissioner operating it. It has operated that way under the National Housing Agency.

It seems to me that the Federal Home Loan Bank System, the 12 banks, and the Federal Savings and Loan Insurance Corporation had little, if anything, to do directly with the war question. They were originally independent agencies of the Government or departments, and in the one case, they are a reserve credit agency, and in another case an agency set up to give the people of this country an insurance up to $5,000, that well-known limit, the same as on bank deposits, for people who put their money in savings and loan associations and the type institutions I described. They have among their stockholders, insurance companies. Therefore, certainly it is a reserve credit system, that is, the bank system. The insurance corporation is certainly a corporation that institutions are permitted to call themselves a member of that affords that security which I described a while ago, ultimately that the Government, up to $5,000, will say that the money in these institutions, either shares, or investments or accounts or deposits is good from day to day and at par.

These institutions have served a great credit purpose. Of course they have induced people to save their money in these institutions, some $6,000,000,000 worth and in turn it is loaned to people to own homes and to provide shelter for themselves.

Therefore, these agencies are agencies to stimulate private enterprise, and so it can be said of FHA.

Now the question comes to you gentlemen as to whether or not we are going to consider everything that has the remotest touch to housing and place it all under what is called a National Housing Agency because the President in his reorganization plan, you gentlemen have before you, proposed a National Housing Agency as a permanent agency of government.