Lapas attēli
PDF
ePub

EMERGENCY HOME FINANCING

TUESDAY, FEBRUARY 3, 1970

HOUSE OF REPRESENTATIVES,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D.C.

The committee met, pursuant to recess, at 10:05 a.m., in room 2128, Rayburn House Office Building, Hon. Wright Patman, (chairman), presiding.

Present: Representatives Patman, Sullivan, Ashley, Moorhead, Gonzalez, Minish, Gettys, Annunzio, Galifianakis, Bevill, Griffin, Hanley, Brasco, Chappell, Harrington, Widnall, Dwyer, Brock, Mize, Brown, Williams, and Wylie.

Chairman PATMAN. The committee will please come to order.

The second session of the House Banking and Currency Committee's emergency housing hearings will focus on the testimony of three distinguished men: Prof. Robert C. Wood, director of the Joint Center for Urban Studies of MIT and Harvard, and former Undersecretary of HUD: Prof. Lester C. Thurow, a member of the MIT Economics Department, and Kenneth Wright, who is vice president and chief economist of the Life Insurance Association of America.

The committee welcomes you gentlemen to the hearing. I know that each of you can make a valuable contribution in the search for solutions to the Nation's housing crisis.

We are particularly interested in source of funds, where we are going to get the money at reasonable interest rates. Several suggestions have been made. Any comment you gentlemen care to make on that will be especially helpful to us.

Professor Wood, we will start with your testimony and go on to the testimony of Professor Thurow and Mr. Wright before we begin questioning you three.

Now, may I add this statement. This is from Mr. Bill Barrett who couldn't be here today. He is the ranking majority member.

"Due to a longstanding prior commitment, I am unable to attend today's session of the hearings on mortgage credit. I particularly regret missing our distinguished former Under Secretary of the Department of Housing and Urban Development, my good friend, Bob Wood. Bob testified last year in the Housing Subcommittee's hearings on national housing goals and from comments from all sides, I believe that his testimony was one of the finest we heard. I know that Bob will present the committee with an excellent analysis and ways to aid us in meeting our national housing goals."

Dr. Wood, we are glad to have you, sir, and you may proceed in your own way.

STATEMENT OF PROF. ROBERT C. WOOD, DIRECTOR, JOINT CENTER FOR URBAN STUDIES OF MIT AND HARVARD

Mr. WOOD. Thank you, Mr. Chairman, ladies and gentlemen of the committee, and I thank Mr. Barrett for his kind remarks. It is a pleasure to be back with you this morning and renew associations of years past. It is always good to talk with members of this committee who are collectively responsible for so much of the landmark urban legislation of the 1960's and who, individually, have devoted their careers to improving the urban condition.

I am glad not only to appear this morning with my old friend Ken Wright, but wtih Prof. Lester Thurow, of MIT, an able and forthright economist. And I congratulate the committee for demonstrating that it can close the generation gap in its academic testimony more effectively than university administrators are able to, perhaps, in academic instruction. Even though we are associated at the same university, let me make it clear that my comments on H.R. 13694, H.R. 14639, and H.R. 15402, and related matters are made as an individual and do not reflect institutional views of the Joint Center for Urban Studies of MIT and Harvard or of the Massachusetts Bay Transportation Authority where I serve as a part-time chairman of the board.

These pleasantries are, I am afraid, the only comfortable themes I can strike today. My professional mood these days is sanguine; my estimate of the urban situation is pessimistic.

Last May when I appeared before the Subcommittee on Housing, chaired by Representative Barrett, I testified as an anxiety-ridden optimist. Now, my anxiety is up and my optimism is down.

I took objection at that time to the instant skepticism that surrounded the newly enacted 1968 Housing Act, and quoting from housing observers who believed that the goals in that act were impossible to attain, I disagreed with them. In effect, I called for more time and more work to carry out the provisions of the act, especially in view of the transition between administrations. I suggested that commentators who dismissed the legislation so lightly had forgotten its bipartisan sponsorship, its professional draftsmanship, and its sweeping innovations, which had been contributed by men and women in and out of Government who had spent a lifetime in urban development.

Now, 10 months later, I am no longer able to offer this committee a message of such comfort and joy. It is true that some achievements can be recorded. The 1969 Housing and Urban Development Act was responsible to obvious limitations that handicapped the programs, and it is indeed a testimony to the creativity and energy of this committee and its Senate counterpart. My own successors at HUD have actively, and with good will, undertaken to emphasize housing production, and they have continued to drive for simplifying and accelerating the processes of Federal assistance. Massive support from FNMA and FILB poured a record volume of funds into FHA-VA markets. New private techniques of financing strengthened the housing market.

But these tangible signs of progress have been all but overwhelmed by the tide of an apparently implacable inflation that is eroding the capabilities of the housing industry with special vengence. Advancing interest rates fall now with special impact on residential housing.

Moreover, I sense that there is nationwide a muted indifference to the plight of the poor, and of the disprivileged, and of too many Americans who suffer most from our acute housing shortage.

Two conditions distress me most: First, so far as national priorities are concerned, there is a disturbing national tendency to replace goals instead of fulfilling them. In this instance, there is the tendency to shift emphasis in 1970 from the priorities of urban development which were established only 2 years ago and to towns on the new area of the natural environment. This unhappy trait fringes on environmental escapism. Second, so far as the mobilization of resources is concerned there is not only an apparent unwillingness to consider important new approaches but also a reluctance to use existing institutions and delivery systems to their fullest capacity; that is, there is program slack.

As to the present desperate situation: your committee has already documented fully the hostile environment in which the processes of urban development now function. Tight money, high interest rates, industrial deficiencies, technological lags have combined to make 1969, with an output of 1.46 million units, a bad year. We lag behind the Japanese, the Dutch, the Swedes, the Soviets, and the French in housing production. And this has been so despite the dramatic changes in governmental financial operations made possible through the 1968

act.

Accordingly, as President Nixon observed on January 21, we face a "crisis situation" in "the housing of our people."

Yet, just as we are forced to take sober assessment of our short falls from the goals the act specified, to explore the reasons for our failure, to test the capability of our institutions to produce, and to see what promises we can fulfill-the public spotlight moves to another act.

It is not yet 3 years since the Nation endured its domestic Pearl Harbor, capsuled in the disorders of Newark and Detroit during August of 1967. At that time, the "crisis of the city" helped spark not only the 1969 housing legislation, but the Urban Coalition, the 1968 Civil Rights Act, and a rash of special supplements in magazines and newspapers, radio editorials, and television documentaries, which proclaimed that city-building was the Nation's greatest need.

Yet, scarcely have we buckled down to work when the "crisis of the environment" is upon us, and off we ride into a new round of "priority" speeches, legislative proposals, and policy experiments.

We establish a new set of goals for a new future before we begin to realize the goals of the very recent past. Forever mobilizing our resources to changing objectives, we may never have to allocate them at all-and so, evading discipline, work, and costs, we embrace environmental escapism.

Mr. Chairman, let me be sure my remarks are not misinterpreted. I advocate no parochial, exclusive concentration of policy and program attention upon the central city, the ghetto, or housing production. Throughout its early years, HUD emphasized metropolitan development through comprehensive planning and increased national support for regional councils of government. It emphasized the necessity of good design and worked hand-in-hand with conservation and beauty programs. Our metropolitan development administration, under

Assistant Secretary Haar, was a center of program innovation. We acted as well as planned, to the extent that some observers occasionally accused us of excessive zeal. Such was the case when we took planning seriously in Montgomery County, Md.. and, against opposition, suspended our grants-in-aid programs until adequate attention was paid to the county's own planning process.

Finally, I have a special personal responsibility today which is to encourage the development of one key component of a better urban environment—the mass transportation system. Achievement of a balanced transportation system will, in my judgment, require amending the 1964 Mass Transportation Act to provide more responsive Federal assistance over a longer period of time than has heretofore been given. And as was so ably and eloquently documented in the testimony before Congressman Ashley's subcommittee last year, an expanded Federal role in guiding the process of growth and migration and in preserving the environment is essential to a truly national growth policy.

All of us today should be concerned over the dangers from automobile exhaust, the threats from pollution by industrial plants and power stations, the damage from careless use of chemicals, and the need to preserve natural beauty. But all the advocates of the new environmental priorities should remember that environment, by definition, surrounds the place where all Americans live-the great American cities included. All advocates of quality living should recall that no decent environment is possible without decent housing. It is a curious twist of fate that since the 1949 Housing Act has failed for 20 years to provide the housing we guaranteed in an acceptable environment, we pass on now in 1970 to a concern over the environment, conveniently setting aside our housing failures of the past. It is as if this country were doomed to aspire to one impossible dream after another, without ever taking seriously the effort to realize at least one attainable dream. This is not to discount the difficulties of such a course of action in housing. Today, the political underpinning to the new emphasis on environment is powerful and understandable. The theme of the environment is coincidental with the theme of middle America. In December of 1967 I tried to identify the dangers facing a government which undertakes to solve rapidly the problems of its minorities and disprivileged. I said then that concentrated programs focused on the concerns of the minorities, however well deserved, were bound to fail unless they took into account the just needs of the majority, the working American and his family. We needed then-and we need now-to pay more attention to the middle American's concern for a job, his family, and his home; to understand his frustrations and we do not achieve this by harsh criticism of racism and bigotry but by recogniz ing his genuine needs in our complicated society.

But, there are other ways to respond to the concerns of the working or middle American than through common programs of community building. Playing on prejudices and fears is one: It can be helpful to give more constructive encouragement of subcommunity ethnic group identity. Or we can seek to find common denominators that are the concern to all: public safety and the deteriorating environment are two such elements. If properly advanced by thoughtful political

leaders, these common concerns can in fact build appealing communities. But these themes cannot translate themselves into reality if the just, deserved, requirements of the minorities whom we began to help in the 1960's are abandoned and forgotten.

What steps are required to avoid escapism through deception and rhetoric? Clearly, the bills now for consideration before this committee point the direction. It is fundamental that we assure that the functioning of private investment markets will provide sufficient resources for the housing industry. Similarly, in the public sector, we need more subsidies for low-cost housing and for the community infrastructure. I regard these hearings as an occasion not only to review the technical provisions of these bills-H.R. 13694, H.R. 14639, and H.R. 15402-but also to make it clear once again to the American people that we are evading our duty. It is not more legislation that we need, or more debate, so much as it is action and production under existing programs. Before we begin to enact new policies we need to be sure that we have fully exploited our existing system and our existing institutions. I believe we can do much to take up the slack in policy formulation and the allocation of resources in the organizational and financing arrangements for providing presently authorized assistance, and in the better use of the existing delivery system for urban housing.

First, at the policy level, housing and urban affairs do not yet receive proper consideration when key monetary and fiscal decisions are made. Throughout his administration Robert Weaver fought aggressively and continually to represent the requirements of the housing industry and to make clear to managers of our fiscal and monetary systems the special vulnerability of housing to strict monetary policy. I think it is fair to say that he made progress. The understanding of members of the Council of Economic Advisers increased appreciably; some viewpoints in some parts of the Treasury underwent mutation; some members of the staff of the Budget Bureau became more sensitive to the impact of their decisions. Indeed, one of the major benefits of the 235 and 236 programs is the improved budgetary attitude that has been obtained in the housing field.

But Secretary Weaver and I will be the last to say, I suppose, that we stood at the center of the monetary policy decisions of 1966. In the transition between administrations, the Commission on Mortgage Interest Rates, on which members of this committee have served with distinction, did undertake to maintain the emphasis on housing finance, and the report of the Kaiser committee on urban housing a year ago provided another eloquent statement of the special disadvantages of the housing industry in terms of its access to resources. But it seems clear that continued, vigorous, representation of housing and urban interest must continue if we are to assure the availability of resources without pricing the majority of Americans out of the housing market. Second, on the organizational front in Washington, I think some forward steps can be taken. Indeed, my principle concern about the legislation before you is directed at the institutional complexities that are being introduced into the provision of new Government assistance. When HUD was established, many Members of Congress expressed the belief that the Department was too small and included too few programs. Four years of hindsight suggest that they were right. Al

« iepriekšējāTurpināt »