depends, of course, upon whatever action may be taken by the President in exercising his authority under section 201 of the proposed bill. Under the bill the President must authorize the more liberal terms provided for before they become applicable to the FHA program. On the other hand, it is noted that the only action which the President could take in respect to VA guaranteed home loans would be to make GI loan terms more restrictive. If the FHA program is liberalized as contemplated in the bill all eligible veterans, including recent veterans of the Korean conflict, will be deprived to a considerable degree of the preferred position they heretofore enjoyed in respect to housing credit. Inasmuch as it is not known to what extent the President would liberalize the FHA program, the exact effect of the proposed legislation upon the preferred position of veterans in the housing market cannot be forecast." For all practical purposes these provisions would wipe out the preferences now granted veterans in obtaining GI financing. When the Members of Congress enacted the loan provisions of the present laws they most certainly intended that veterans should be given preference in obtaining these mortgages, and we do not believe the economic status of veterans of World War II or Korea has improved to such an extent as to warrant the termination of such preference, thus forcing them to compete with their more fortunate fellow citizens in their quest for mortgage money. Mr. KENNEDY. With your permission, I would just like to hit a couple of high spots. I would also like the record to show, Mr. Chairman, that upon checking with the staff of the committee a few minutes ago, I find that a chart prepared by the Federal Housing Commission which we had intended incorporating in the record has already been inserted by Mr. Hollyday, and I believe it appears at page 157 of the official stenographer's minutes. The CHAIRMAN. How big is this chart? Would it be well to place it in the record again at this point, do you think? I think it is a good idea to put in in the record at this point. I think we will, then, place it in the record again at this point, because it must be pertinent to your testimony. Mr. KENNEDY. I appreciate it. The CHAIRMAN. We will put it in the record at this point. (The data referred to follows:) 44750-54-pt. 1-24 PERCENT PER ANNUM 6.00 AVERAGE YIELD ON U. S. TREASURY TAXABLE BONDS WITH IS OR MORE YEARS REMAINING MATURITY ROUNDED TO NEAREST 1/8 PERCENT, !/ Average from January 1944 through March 1962 based on the mean of daily closing bid and asked prices of all Treasury bonds neither due nor callable for 15 years: Source: Annual Reports of Secretary of the Treasury and Treasury Bulletins for January 1944 through January 1953; unpublished averages computed by U. 3. Treasury Department for February 1953 through January 1964. Mr. KENNEDY. Senator, our objections, if I might use that term, are confined mainly to two points. One is on the question of the method of fixing the rate of interest which the bill provides, under section 201. That is the point which would give the President the authority to fix the interest rate at approximately 22 percent above the average yield for Government long-term bonds, and I would like to call your attention to our objections to that provision. We feel that there should not be any change in the present law which gives the Administrator of Veterans Affairs, and the Secretary of the Treasury, the right to fix the interest rate at 42 percent, pursuant to legislation which was enacted last summer. Secondly, we feel that the maintenance of a separate housing program for veterans under the sole jurisdiction of the Veterans' Administration should be maintained. In other words, continue the present policy. We believe that the power to regulate interest rates should remain in the Congress itself. The CHAIRMAN. You are recommending that the Congress state what the interest rate ought to be in the law, and give the President, and no one else, any right to change it. Mr. KENNEDY. That is right. We would prefer the Congress to do that, sir, just the same as you did in this public law which was enacted last summer. I have the number of it here. The CHAIRMAN. In other words, you want us to write into the law what we think the interest rate ought to be, and only Congress can change it? Mr. KENNEDY. Yes, sir; we object to this provision which would give a fluctuating rate, for reasons that a glance at this chart here will show how that rate goes up and down. Our feeling is—take, for instance, what the chart shows for the year 1953. It is a little over 5.50. Now, if you add 22 percent to that, assuming, of course, that the maximum authorized under the bill were exercised by the President, or whoever you gentlemen of the Congress see fit to give that authority to, you can see that rate is going to be very, very high. We feel, as we say in our statement, that 42 percent is fair and reasonable, and we would like to see it maintained at that level. In other words, if you would see fit, we would like to see the law remain the same on that score. The CHAIRMAN. I believe the Mortgage Bankers Association objected to the bill, also, in that respect, except that they want the bill to specify a committee which, in turn, wil have the right to fix the interest rate from day to day, and month to month. They don't want the Congress to write any maximum in whatsoever. Mr. KENNEDY. With due respect to all our officials and committees, we still have more faith in Congress to handle these things. Our experience shows-and I am not trying to be a bit facetious The CHAIRMAN. The mortgage bankers, yesterday, recommended that the bill say nothing about what the interest rate ought to be, but a committee be appointed to fix the rate from day to day or month to month or period to period. You think we ought to specifically write into the law X amount, and no one should have the right to change it. Mr. KENNEDY. That is right, sir; only the Congress, or leave the present law as it is now, 412 percent. The CHAIRMAN. Yes. Well, I think you have that point very clear. Mr. KENNEDY. We give in detail, on pages 3 and 4, Senator, some other reasons. The CHAIRMAN. Your other point here was, you said you don't want the veterans and the FHA to do what? Mr. KENNEDY. We don't want any powers that are now exercised by the Veterans' Administration transferred from the Veterans' Administration to any other agency of Government, whether or not it be the FHA, which, of course, would have to do with housing. We appreciate the fact The CHAIRMAN. There is nothing in this bill that does that. I presume you are thinking the reorganization may well do that. Mr. KENNEDY. I am talking about the FHA The CHAIRMAN. Don't you think it might be a good thing to merge the appraisals of the two together, so we can get a uniformity of appraisal of properties? I have given considerable thought to that, and I have checked into it, and it seems to me that as it is now, VA appraises their own property and so does FHA, and the two are different. Mr. KENNEDY. Our position on that, Senator Capehart, is, and we have given considerable study to it, the best answer I could give you, is that I would like to have permission to file a copy of a letter our national commander sent to President Eisenhower recently, the President's reply, and a second letter which Commander Connell sent to the President, and also Mr. Higley, the Administrator of the VA, giving our reasons on that very subject. I don't have such copies here, but if I could have leave to file them by 4 o'clock this afternoon The CHAIRMAN. Yes; without objection, you may file it. (The letters referred to follow :) The PRESIDENT, THE AMERICAN LEGION, The White House, Washington, D. C. DEAR MR. PRESIDENT: The American Legion is vitally concerned over the recent recommendations of the Presidential Advisory Committee on Government Housing Policy and Programs to transfer functions of the Loan Guaranty Section of the Veterans' Administration to another agency. As national commander, and in accordance with national mandates of the American Legion, I wish to voice our vigorous opposition to such a move. The Servicemen's Readjustment Act (GI bill) which place all veterans programs, including the GI home loan program, under the jurisdiction of the Veterans' Administration 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. For your information I am enclosing two resolutions adopted by the national economic commission of the American Legion which opposed previous attempts to remove the Loan Guaranty Section from the Veterans' Administration. We are aware of the need for improvement in the handling of GI loans, and we feel an effort to work out a clear and simplified method should be made to recommend to the Administrator of Veterans' Affairs, Harvey Higley. To accomplish this we have scheduled a conference of lenders, builders, representatives of realestate boards, of the Veterans' Administration and of the Housing and Home Finance Agency, with Legion officials, under the direction of the chairman of our national housing committee, to be held on March 1 and 2, 1954, here in our Washington office. At the end of this 2-day conference we will meet with Mr. Higley and lay before him our findings. These recommendations will also be presented to you, and we sincerely hope you will give them your most earnest consideration. Sincerely, ARTHUR J. CONNELL, Mr. ARTHUR J. CONNELL, THE WHITE HOUSE, Washington, February 16, 1954. National Commander, the American Legion, Washington, D. C. DEAR MR. CONNELL: We appreciate having the views in your letter of January 30, 1954, to the President, and the resolutions of the national economic commission of the American Legion. You refer to a recent recommendation of the Advisory Committee on Government Housing Policies and Programs supporting the transfer of Veterans' Administration loan guaranty functions. The committee was concerned by the duplication of certain technical operations in the processing of applications under the Government's loan guaranty programs. However, it is our understanding that the committee did not advocate the transfer of any of the statutory responsibilities of the Veterans' Administration or the abandonment of the concept of a single agency for veterans' affairs. Instead, the committee proposed that the Administrator of Veterans' Affairs and the Housing and Home Finance Administrator work out an agreement under which the FHA would perform certain technical functions for the VA on a contract basis. The President has not yet determined what measures are required to produce efficient, coordinated administration of the home loan guaranty programs. Nevertheless, an attempt to reach an agreement along the lines suggested by the Advisory Committee appears to be in the interest of all home buyers and the public in general. It is gratifying to note that the American Legion recognizes the need for improvement in the handling of GI loans. We shall look forward to any specific suggestions for bringing about that improvement which may come out of the conferences which you are holding early in March. Sincerely, SHERMAN ADAMS. The PRESIDENT, THE AMERICAN LEGION, Washington, D. C., March 8, 1954. The White House, Washington, D. C. DEAR MR. PRESIDENT: In accordance with my letter of January 30, 1954, I am enclosing a copy of a letter written to the Honorable Harvey V. Higley, Administrator of Veterans' Affairs, together with the recommendations of the American Legion for improvement in the administration of the GI loan program. A meeting was conducted for 2 days with representatives of the Veterans' Administration, Housing and Home Finance Administration, Federal Housing Administration, lenders, builders, real-estate boards and others interested in this program. I am sure that this meeting was of much value and produced sound, constructive ideas, which we are happy to submit to the Administrator for consideration. We are deeply grateful for your interest in this matter. ARTHUR J. CONNELL, National Commander. The Honorable HARVEY V. HIGLEY, Administrator of Veterans' Affairs, Veterans' Administration, Washington, D. C. DEAR MR. HIGLEY: This letter is written to you in accordance with National Commander Connell's letter to President Eisenhower of January 30, 1954. The undersigned committee constituted by a mandate of the 1953 national convention of the American Legion, has met on March 1 and 2, in Washington, D. C. It has considered the comments and testimony of interested industry, and Government groups on methods for expediting the handling of GI loans under the statute. It seems that there are two particularly vexing problems in connection with the present GI loan procedures according to the testimony which was heard. The first of these indicates that builders, lenders, and veterans themselves are experiencing extreme delays in the processing procedure. We would not pretend |