We believe that this voluntary home credit program would go a long way in facilitating the flow of mortgage credit into remote areas and small communities without resort to a Government-supported mortgage marketing facility, particularly if as provided in title II of S. 2938, recognition is given to the need for some flexibility in interest rates and adjustment of fees and charges. The American Bankers Association will give its cooperation and support in seeking to make the voluntary home credit program effective if it is authorized by Congress. STATEMENT OF THE AMERICAN BANKERS ASSOCIATION ON THE PROPOSED CHANGE IN THE NAME OF THE FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION AS CONTAINED IN SECTION 501 (3) AND SECTION 504 OF H. R. 7839 Section 501 of H. R. 7839, as passed by the House of Representatives, in paragraph (3) provides for a change in the name of the Federal Savings and Loan Insurance Corporation to Federal Savings Insurance Corporation. Section 601 of S. 2938, which is the comparable section in the Senate bill, contains no such provision. Section 504 of H. R. 7839 supplements the proposed change of name of the Corporation provided in section 501 (3). Title VI of S. 2938 contains no provision corresponding to section 504 of the House bill. Neither of these provisions was included in H. R. 7839 as introduced. Paragraph (3) of section 501 was added by the House Banking and Currency Committee prior to reporting the bill to the House. Section 504 was adopted as a floor amendment. The American Bankers Association wishes to register strong disapproval of these two amendments in H. R. 7839. The Federal Savings and Loan Insurance Corporation has been in existence for 20 years. A change of name of this Corporation after such a long period of time should be made only for the most compelling reasons. No such reasons exist. The proponents of this change of name allege that it leads to a misunderstanding of the function of the Corporation by conveying the impression that it insures loans. There is no evidence of such a result. No one has ever sought to obtain or collect insurance from the Corporation on loans. On the other hand, to change the name of the Corporation, as proposed, to the Federal Savings Insurance Corporation would create greater confusion in the minds of the public as to the true nature of the insurance function of the Corporation, which is to insure the equity interests of shareholders in insured savings and loan associations. The word "savings" is a generic term having a broad connotation. People invest their savings in various media. They deposit their savings in commerical and savings banks. The public seeing the name "Federal Savings Insurance Corporation" might easily assume that it was a government agency created to insure savings invested in other media than the shares of savings and loan associations. Also, the public conceivably would be confused by the name Federal Savings Insurance Corporation into believing it was the agency authorized to provide insurance for savings deposits in commercial banks and mutual savings banks rather than the Federal Deposit Insurance Corporation. The Federal Deposit Insurance Corporation was created in 1933 to insure deposits of all types in commercial banks and savings deposits in mutual savings banks. This was a year before the creation of the Federal Savings and Loan Insurance Corporation in 1934. It is reasonable to assume that Congress in selecting this name for the agency created to insure the share accounts of savings and loan associations did so to make clear the distinction between the function of this insuring agency and the function of the Federal Deposit Insurance Corporation in insuring deposits in commercial banks and mutual savings banks. This distinction must be preserved in order that the different insurance functions of these agencies can be more easily understood by the public. This can best be accomplished by retaining the name Federal Savings and Loan Insurance Corporation without change. This name has become familiar to the public during the past 20 years and specifically identifies the agency with the insurance of share accounts of savings and loan associations. It is urged, therefore, that no change be made in the name of the Federal Savings and Loan Insurance Corporation in the Housing Act of 1954 as finally adopted. THE AMERICAN LEGION, NATIONAL LEGISLATIVE COMMISSION, Washington 6, D. C., April 9, 1954. Re S. 2938-Housing Act of 1954. Hon. HOMER E. CAPEHART, Chairman, Senate Banking and Currency Committee, Senate Office Building, Washington 25, D. C. DEAR SENATOR CAPEHART: Referring to the bill S. 2938, also known as the Housing Act of 1954, now pending before the Senate Banking and Currency Committee, I am taking the liberty of calling to your attention the position of the American Legion with reference to certain sections thereof. The American Legion strongly opposes sections 201 and 201 (1), having to do with fixing interest rates on Veterans' Administration mortgages, and section 801, which deals with veterans' preference in purchasing permanent war housing. Attached please find statements setting forth our reasons for requesting that these sections be stricken from the bill. We also trust the committee will not insert a provision authorizing the President to transfer any functions now vested in the loan guaranty section of the Veterans' Administration to the Housing and Home Finance Agency. Our objections are contained in a separate statement, also annexed. Under the provisions of section 301 of Public Law 171 of the 81st Congress, amending the Housing Act of 1937, subsection 15 (8) (b), etc., families of veterans and servicemen did not have to comply with the substandard housing factor for admission to public housing projects. This provision expired March 1, 1954. The Senate passed S-2937 on March 1, 1954 but it would extend the law only to August 1, 1954. Before the House passed H. R. 7839 on April 2, 1954, an amendment (sec. 401, (3)), was approved extending the time to March 1, 1959. We respectfully request that a section be inserted in S. 2938 extending the period for 5 years or until March 1, 1959. Appreciating as I do your interest in the protection of qualified veterans, I know we can rely upon you to give our requests consideration during your deliberations in writing up the bill. With kind personal regards, I am, MILES D. KENNEDY, Director. WHY THE AMERICAN LEGION OPPOSES SECTIONS 201 AND 201 (1) of S. 2938-THE HOUSING ACT OF 1954 (These sections have to do with interest rates on VA mortgages) 1. The VA advises that the average loan to a veteran in 1953 was $9,480, with a typical maturity of 20 years, and that had the interest rate in 1953 been 51⁄4 percent rather than 4 and 42 percent (as it actually was), the veteran would have had to pay an increase in interest of $70.72 for the first year, and $932.83 additional interest over the period of his mortgage. At 5%1⁄2 percent, 5 percent or 6 percent the amount of interest will, of course, increase accordingly. 2. When the original Servicemen's Readjustment Act (Public Law 346, 78th Cong.) was written, a ceiling was placed on the interest rate on these mortgages in order that there might not be a prohibitive rate charged those who had served in the Armed Forces and for whom the legislation was intended to give some assistance in reestablishing themselves on a sound economic basis. Sections 201 and 201 (1) violate this principle in every respect. 3. We believe in the maintenance of a separate housing program for veterans under the sole jurisdiction of the VA; we want the present policy continued. 4. The power to regulate interest rates should remain in Congress. 5. We submit that the phrase contained in section 201 "*** the President is hereby authorized, without regard to any other provision of law * * *" is too broad and that only specific authority should be granted, not only to the President, but to any other Government official who may be concerned. 6. These sections are bound to result in an increase in the interest rate, now fixed at 42 percent in keeping with the provisions of Public Law 101 of the 83d Congress. 7. The proposed method of fixing interest rates would result in discrimination between veteran home purchasers, due to the fact the rates would vary from time to time, during the same year, depending on the average yield of marketable obligations of the United States. 8. This method of fixing interest is not practical from the standpoint of the veteran-mortgagor or the builder. 9. There is nothing to stop the rate from being increased to 6 percent any time the yield on Government obligations goes to 3% percent. 10. The "big money" interests will not be satisfied until they get the rate on veterans' mortgages up to 6 percent. They are not interested in the veteran as such. 11. Sections 201 and 201 (1) abridge the principle of veterans' preference, and should be stricken from the bill. 12. Identical sections were stricken from the House bill (H. R. 7839) before the bill was passed by the House on April 2, 1954. WHY THE AMERICAN LEGION OPPOSES SECTION 801 OF S. 2938-THE HOUSING ACT OF 1954 (This section has to do with the disposal of permanent war housing without regard to veterans' preference housing laws) 1. Under the provisions of section 801, the Housing and Home Finance Agency Administrator would be authorized to dispose of any permanent war housing without regard to the preferences contained in the present law (Public Law 475 of the 81st Cong.). 2. The present law states that preferences in the purchase of any dwelling designed for occupancy by not more than four families and offered for separate sale, shall be granted to veterans over other purchasers for such period as the Administrator may determine and in the following order: "(1) A veteran who occupies a unit in the dwelling structure to be sold and who intends to continue to occupy such unit; "(2) A nonveteran who occupies a unit in the dwelling structure to be sold and who intends to continue to occupy such unit; "(3) A veteran who intends to occupy a unit in the dwelling structure to be sold." The present law also grants first preference to groups of veterans organized on a mutual ownership or cooperative basis, etc., where a housing project is to be disposed of. 3. No such preferences are contained in section 801 of S. 2938. 4. Section 801 would open wide the door for the elimination of veterans' preference in the disposal of permanent war housing. 5. We contend that veterans' preference has never hindered the sale of these properties, or worked a hardship on the Housing Agency. 6. Stripped of its legal phraseology, section 801 is nothing more or less than a bold attempt to knock out veterans' preference in the purchase of defense housing. 7. Current economic conditions do not warrant a weakening of the preference laws granted veterans in the field of housing. 8. Section 801 abridges the principle of veterans' preference, and should be stricken from the bill S. 2938. 9. The same provision was stricken from the House bill (H. R. 7839) before the bill was passed by the House on April 2, 1954. WHY THE AMERICAN LEGION OPPOSES THE TRANSFER OF ANY FUNCTIONS OF THE LOAN GUARANTY SECTION OF THE VETERANS' ADMINISTRATION TO THE HOUSING AND HOME FINANCE AGENCY 1. The Servicemen's Readjustment Act (GI bill), which placed all veterans' programs, including the GI home loan program, under the jurisdiction of the VA, was sponsored by the American Legion in the belief that all veterans' programs should be handled in a single Government agency. We have continuously adhered to that position. 2. No provisions transferring any of the powers now vested in the VA were contained in the companion bill (H. R. 7839) when same passed the House on April 2, 1954. 3. The transfer of any functions now vested in the VA to another agency would be a step toward the dismemberment of the VA. 4. Veterans would have to depend upon 2 agencies rather than 1 to obtain redress for justifiable complaints. 5. The VA would be unable to properly protect the interests of veterans which will be best served by retaining the present system. 6. While there may be room for improvement in some of the methods now used by the VA, there is no reason why such improvements cannot be accomplished administratively rather than through the medium of legislation transferring certain functions now performed by the VA to the Housing and Home Finance Agency. 7. The veterans' plank of the Republican Party adopted at the 1952 national convention held in Chicago reads in part as follows: "That the Veterans' Administration be maintained as a single, independent agency in full charge of all veterans' affairs, and that the Veterans' Administration manage veterans' affairs in an efficient, prompt, and uniform manner." 8. The veterans' plank of the Democratic Party, adopted at the 1952 national convention held in Chicago, reads in part as follows: "We pledge ourselves to provide special housing aids to veterans and their families." CONGRESS OF THE UNITED STATES, Hon. HOMER E. CAPEHART, HOUSE OF REPRESENTATIVES, Chairman, Committee on Banking and Currency, United States Senate, Washington, D. C. DEAR SENATOR CAPEHART: You will recall that not long ago I testified before you regarding the proposal of the Housing and Home Finance Agency that subsection (b) of section 2 of the Alaska Housing Act be repealed. This desire on the part of the Housing and Home Finance Agency is to be found in section 305 (p. 70) of S. 2938. I understand that in the material which had originally been furnished you, at least, by the Housing and Home Finance Agency there was no statement as to why repeal of this section of the Alaska Housing Act was desired. I still do not know. My understanding is that following my suggestion to several of the members an effort was made to amend the corresponding House bill in the Banking and Currency Commmittee on this side of the Capitol but for some reason or other unknown to me it was decided by vote to retain the language although in this instance, too, I am advised there had been no showing on the part of the Housing and Home Finance Agency to demonstrate the advisability or necessity of putting the repealer through. I am now in receipt of a letter from Mr. E. Glen Wilder, Executive Director of the Alaska Housing Authority, suggesting that some very ill consequences may result if the repeal is effected. I cannot see for the life of me that any harm will be done if the existing language remains unaltered; everything having to do with it is permissive and the Housing and Home Finance Agency is not required to act unless there is a demonstrated need for such action. Copy of Mr. Wilder's letter is attached. Likewise enclosed is a copy of resolution on this subject adopted by the Alaska Chamber of Commerce meeting at McKinley Park, Alaska, on March 27, 1954. I believe, too, you will be interested in reading the enclosed copy of letter received by me today from Mr. F. A. Grimsdell, Vice President, Commonwealth, Inc., of Portland, Oregon. I do hope that your committee will strike the language mentioned on page 70. Sincerely yours, DEAR BOB: Many thanks for your letter of April 2 with the attached record of your efforts on the House floor. The repeal of subsection (b) of section 2 of the Alaska Housing Act becomes increasingly more serious the further I check on the consequences and study the matter. Last week I talked to Dan Cuddy of the First National Bank and Elmer Rasmuson of the National Bank of Alaska here and they are without question very worried over the proposed elimination of FNMA in Alaska. They are expressing their concern to several Senators and Congressmen and to Albert Cole. I have also written to 10 other banks in the Territory who have had some interest in FHA insured mortgages and explained the situation to them. Enclosed is a copy of my letter. Elmer Rasmuson said that he would get in touch with Marshall Crutcher in Kodiak as head of the Alaska Bankers Association. I asked that they send to you copies of their letters or wires so that you would be advised. Do you think that there might be some chance of stopping this in the Senate? I am sure that we would have some listening ears if they knew the effect of this repeal. It has already been demonstrated the result when a couple of years ago FNMA withdrew from Alaska for a very short period. The banks immediately ceased taking on new FHA mortgages and both Dan Cuddy and Elmer Rasmuson told me that such would be the case if this new law with the repealer were enacted. It would appear to us that little hope could be placed upon the discretionary powers given to the President. From my own observation it may never happen that the President would ever put into force permissive powers to FNMA and even if he did there might be a delay in obtaining such authority. Even otherwise, when such an important issue is not assured by law and is subject to immediate alteration it is doubtful that the banks would be willing to "stick their necks out" and take a chance that FNMA would have the necessary authority to pick up the paper when they became eligible and offered for sale by the banks. I am enclosing a copy of the Resolution passed by the Alaska Chamber of Commerce with regard to maintaining six million dollars in the revolving fund of the Alaska Housing Authority to meet the remaining and future housing needs of Alaska. Sincerely yours, ALASKA HOUSING AUTHORITY, Executive Director. RESOLUTION Whereas the expressed aims of the Alaska Housing Act (Public Law 52, 81st Cong.) are (1) to promote the development of Alaska, (2) to construct necessary housing throughout the Territory to strengthen Alaska as a strategic outpost of national defense, and (3) to promote the establishment of a private building industry; and Whereas the program which has been carried on under said act has substantially satisfied the needs in the larger communities but as yet has not completed the job in and around several of the smaller cities, and it has been demonstrated during the last 5 years, notwithstanding incentive provisions of the Alaska Housing Act, that private lending and sponsorship has not been available with respect to said smaller communities; and Whereas new industries are becoming established in these areas but are impeded by lack of housing for key personnel and other essential employees, which calls for continued assistance from the Alaska Housing Authority with further use of the revolving fund in cases where private financing and sponsorship are not available: and Whereas the maximum of $19 million heretofore appropriated for said fund is no longer required, which would warrant reducing same, it is still urgent that the revolving fund be retained in a less amount sufficient to meet the remaining and future needs in a sum of not less than $6 million considered as the minimum necessary; and Whereas continuance of a reduced revolving fund is consistent with current economy measures as it involves no grant-in-aid but rather a potential investment of Federal moneys on an interest-bearing basis: Now therefore, be it Resolved by the Alaska Chamber of Commerce in convention assembled, That the Congress is urged to retain the revolving fund of the Alaska Housing Act in a sum of not less than $6 million to meet the remaining and future housing needs in Alaska to implement the development of new industries and in the interest of the national defense. Adopted: March 27, 1954. By: The Alaska Chamber of Commerce. |