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immediate concern to the savings and loan institutions which I represent and the league generally favors them. Over the years, Mr. Chairman, our legislative committee and other standing committees, made up of the men who actually operate savings and loan associations, study possible improvements in the Federal statutes which have a bearing on our operations. The provisions in this legislation have had the substantial study made possible by this continuing program of the United States League. I understand that the Chairman of the Home Loan Bank Board has presented a general summary of the provisions and what they would accomplish. What I shall add is, of course, from the industry itself and should, therefore, give the committee a well-rounded picture of the effect of the proposals. In referring to these portions of the bill, my testimony will identify the various provisions by their section numbers in S. 1800.

Section 14 (1): Reduction of the stock in the Federal home-loan banks.It has been evident for several years that the Federal home-loan banks, all 11 of them which make up the System, are increasing their capital at an excessive rate under the formula now provided by the law. The growth of the savings and loan business has been very rapid, as you gentlemen are doubtless aware, and their substantial additions to their mortgage loan portfolios in recent years, as they have continued to do one-third of all the home financing in the country, has brought about an unanticipated rapid increase in their stock in the Federal home-loan banks. This is due, of course, to the fact that the associations are required to have 2 percent of their mortgage loans outstanding in Federal homeloan bank stock. We feel that the provision in S. 1800 would afford a reasonable formula for slowing up the accretion of home-loan bank stock by the members to a degree far beyond any need or prospective need.

Section 14 (2): Termination of bank membership.—This provision is in line with the substance of the provisions for conservatorship and receivership which the Congress wrote into the Federal savings and loan statute last year. Its provisions were generally favored by the league and we favor this new proposal for State chartered members of the bank system.

Section 14 (4): Increase in number of elected directors in Federal home-loan banks.This proposal would enable the Home Loan Bank Board to correct what seems to be an inequity in the present provision for elected directors in the Federal home-loan banks where the bank's district comprises an unusually large number of States.

Section 15: Removal of $2,500 limitation on property-improvement loans by Federal associations.—This proposed amendment would merely clarify the situation regarding the power of federally chartered associations to make propertyimprovement loans insured by FHA or VA in amounts of $2,500 where the property is a multifamily one.

Section 16: Admission fee to the Federal Savings and Loan Insurance Corporation.-The Federal Savings and Loan Insurance Corporation has now been in operation for 20 years and the original provisions for admission fees for associations newly availing themselves of the Corporation for protection can appropriately be determined by factors other than those governing the formula when the Insurance Corporation was younger and in the building-up stage.

These items, as can be seen, are primarily technical or internal matters which have relatively little effect on the basic savings and loan operation or our ability to serve the savings or home-owning public. I would like to propose to the committee certain amendments to the bill which I feel sure will have a much more far-reaching effect, both from the point of view of savings and loan associations and of the national housing program.

We understand that the committee is giving consideration to various pending housing measures and we would urge that the substance of H. R. 5945 recently introduced by Representative Spence, chairman of the House Banking and Currency Committee, be added to the overall housing bill. This would be accomplished by enacting the attached amendment No. 1 which would restore the independence of the Home Loan Bank Board and immediately retire the $66 million of Treasury funds now invested in the Federal Savings and Loan Insurance Corporation.

Independence of the Home Loan Bank Board has been one of the major legislative objectives of the United States Savings and Loan League for many years. I feel that this committee and this Congress could do nothing which would add more to the prestige and effectiveness of the Home Loan Bank Board or be more pleasing to the savings and loan business, than the enactment of this amendment.

The Federal Home Loan Bank Act, which became law in 1932, created the Federal Home Loan Bank System to be the central banking system for the thrift and home-financing institutions of the country, following the broad pattern previously established with the Federal Reserve System as the central banking system for commercial banking and the Federal Land Bank System as the central banking system for farm-mortgage credit.

The legislation followed the generally accepted principle that where Government agencies are created to supervise in the public interest the operation of privately owned business corporations, such supervision should be exercised by nonpartisan boards or commissions, the members of which are appointed for specific and overlapping terms. Only in this fashion is there provided a continuity of policy so essential to the operation of the institutions under supervision. This principle is well demonstrated in the case of such bodies as the Federal Reserve Board, the Interstate Commerce Commission, the Federal Communications Commission, the Federal Trade Commission, and others.

Insofar as the grouping of related governmental operations is concerned, it may be pointed out that the Home Loan Bank Board, in addition to its original function, has since been charged with the further responsibility of supervising the Federal Savings and Loan System and of operating the Federal Savings and Loan Insurance Corporation. In the administration of its duties in these three areas, the operations of the Home Loan Bank Board are conducted without expense to the Government, all of its costs being apportioned to and paid by the institutions it supervises.

The institutions that are supervised and that pay the costs of operation of the Federal Home Loan Bank System, of the Federal Savings and Loan System, and of the Federal Savings and Loan Insurance Corporation, raised no objection when, as a wartime emergency measure, in 1942, a Presidential directive placed the Home Loan Bank Board under the supervision of a single administrator, along with certain other unrelated activities of Government-reliance being had on the statute which provided that such directive would expire with the termination of the war emergency. Nevertheless, under another statute, this consolidation was made permanent in 1947.

The Federal Home Loan Bank System is now owned entirely by its member institutions. There are no Federal funds in its capital structure and no appropriation of Federal funds is made for its operation. The Board exercises administrative, legislative, and judicial powers and supervises a three-phase financial operation. There is no community of interest or advantage served by placing it under the supervision of an administrator--and indeed, the continuance of such a program does injustice to a basic philosophy of governmental supervision of private business operations.

The independence of the Home Loan Bank Board was recommended both by the Hoover task force and by the Hoover Commission report itself. It is endorsed by every organization of savings and loan associations that I know of and according to the American Banker is endorsed by the American Bankers Association. The language of this measure which was worked out by many elements of the savings and loan business is very simple. The Board is simply restored to its original independent status and the $66 million of Treasury funds are retired and replaced by an investment by the 11 Federal home-loan banks. The investment by the banks requires only 6 percent of the Federal home-loan banks' assets, but even so the committee might want to consider laying aside for the time being the proposal to reduce the minimum required stockholdings of member associations in Federal home-loan banks.

The second amendment we are offering is one which would permit Federal associations with reserves, surplus and undivided profits equal to at least 5 percent of withdrawable accounts to invest up to 5 percent of their withdrawable accounts in the development of homesites and in the assistance of urban renewal projects.

The amendment would assist the national housing program in two vitally important ways. First, by assisting small home builders to overcome the serious problem of land acquisition and secondly by providing urgently needed funds for housing in urban renewal areas.

The cost of raw land and site development has climbed steadily to the point where small home builders are unable to finance further operations. Unless small home builders are assisted in acquiring suitable land there will either be a growing concentration of home building among a few very large builders, or the small home builder will go far out out into the country to build in areas where sewerage, streets, and water are not required—and this would be a step backwards. If Federal associations can acquire the land, develop it and install the necessary facilities for the small builder, the project will be well planned, adequately developed and the economies of large operation will be passed on to the purchaser. FHA Commissioner Mason, in recent speeches, has referred to land as a “number one housing problem ;" we believe this amendment is one effective answer to the problem. It has the enthusiastic support of many small home builders.

At least nine States have enacted specific legislation permitting this type of investment by State savings and loan associations. The results have proven very successful. This amendment provides ample safeguards for such investment as the money loaned would be backed by a mandatory 100 percent reserve. Further, the amount that could be so invested is only a small portion of the association's savings.

The second purpose of the amendment is to permit Federal associations to participate in the urban renewal program. Although urban renewal and urban redevelopment are key parts of our national housing program, Administrator Cole and all others concerned have admitted that their number one obstacle is lack of adequate private financing. In fact, at this committee's recent round table session, both Administrator Cole and James Follin, head of the Urban Renewal Administration, stated quite flatly that they just can't find any private money available for rebuilding slum neighborhoods. Federal savings and loan associations are uniquely suited to provide a portion of the funds necessary to rebuild declining neighborhoods. Several associations have specific tracts in mind and need only the enactment of this amendment to go ahead with their projects. Inasmuch as the total amount invested under both phases of the amendment may not exceed 5 percent of withdrawable accounts and must be less than the total reserves, there could be no weakening of the association's strength nor any appreciable change in the association's overall operating function.

Mr. Chairman, here is a chance to solve at least partially, two tough problems, land acquisition for small builders, and private financing for urban redevelop ment, and I certainly hope your committee will adopt the amendment.

Our third recommended amendment would permit Federal associations to purchase certain restricted securities as approved by the Home Loan Bank Board. The purpose of this amendment is to permit associations in areas where the home mortgage market is limited to continue to accept savings from the public and to invest these savings in securities other than Government bonds, such securities to be approved by the Home Loan Bank Board. Mutual savings banks have been successfully investing in such securities for many years.

In this connection, just last Thursday a representative of the American Municipal Association appeared before this committee and pointed out the great difficulty that most cities, particularly the smaller ones, are experiencing in financing local improvements such as sewerage, roads, etc. It is anticipated that municipal securities would be included on the approved list.

In closing, Mr. Chairman, let me assure this committee that the savings and loan associations are continuing and accelerating our part in financing home ownership in America. As the largest source of home financing credit, we take pride in the fact that the tremendous activity in home building of the past year is now credited by many economists with preventing a national recession. We feel our contributions will be further improved if this committee restores the Home Loan Bank Board to its independent status and grants authority for our associations to assist the small builder to overcome the severe financial difficulties of acquiring and developing homesites.

ATTACHMENT TO STATEMENT BY HENRY A. BUBB

PROPOSED AMENDMENTS SUBMITTED FOR S. 1800

I. Add at the end of Section 14 of S. 1800 the following new subsection :
“(5) Renumber Section 17 to read Section 17 (a).
(6) Add at the end of Section 17 a new subsection (b) as follows:

“*(b) The Home Loan Bank Board which was, pursuant to Reorganization Plan Numbered 3 of 1947, established and made a constituent agency of the Housing and Home Finance Agency shall, from the effective date of the Housing Amendments Act of 1955, cease to be such a constituent agency and shall be an independent agency (including the Federal Savings and Loan Insurance Corporation) in the executive branch of the Government: Provided, That the functions vested in the Chairman of said Board under clause (2) of the last sentence of subsection (b) of section 2 of said reorganization plan are hereby transferred to said Board. Notwithstanding any other provision of law, said APPENDIX M Number of families living in permanent low-rent housing, by occupation and race

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Couple and five children leave unheated tenement for city project apartment

One of 1,500 relocated-Army veteran found lots of rentals, but they were barred to large family

(By Emma Harrison) When Frank Hughes got out of the Army, he and his wife Dorothy began to look for an apartment. Now, some 10 years and 5 children later, they have found

one.

The Hughes family's move from a crowded, damp, unheated Brooklyn tenement back to the 20th century occurred when their application for city housing was accepted. They took possession of a modern 5-room apartment in Jefferson Park Houses, 330 East 115th Street.

When the mammoth federally aided project is completed, the Hughes family will be 1 of 1,500 families relocated from what the City Housing Authority calls substandard housing. But being one of an impressive statistic doesn't begin to reveal the major changes being made in the lives of these families.

To note that the Hughes family is now confronted with an abundance of heat, hot water and living space would be to oversimplify the meaning of that change.

In the 10 years since the war, the Hughes family, like so many others, lived in varying degrees of makeshift and discomfort. Seven of these were spent in a sunless, stuffy 4-room flat in the West Sixties. The last straw in that occupancy was the appearance of a rat. The Hugheses fled to another inadequate apartment in the Rockaways.

RENT IS DOUBLED

When the resort season rolled around and the rent was doubled to $125, the post office transportation clerk and his family had to move in with relatives—in two groups. Two of the young girls were boarded out at $30 a week. One went to an aunt in Kingston.

“We could have got lots of places without the children, but when you say you have five, people think you're crazy,” said Mrs. Hughes, explaining why the next refuge was a heatless, hot-waterless tenement on Brooklyn's Glen Street.

The 7 Hugheses, including the new baby, Frank Jr., crammed themselves into 3 of its 4 tiny rooms. The fourth, a mere cubbyhole, was uninhabitable because of dampness.

The first winter was heatless. Water was heated sparingly by a rickety gas water heater that the parents distrusted. Because the baby burned himself on the unguarded heater, Mrs. Hughes had to wash dishes only when he was asleep.

Life was one constant head cold. In rainy weather, water streamed down the walls. Major expenditures added measurably to the $29.10 rent. A kitchen stove, gas radiator and refrigerator were bought. Gas bills were as high as $30; laundry bills averaged $2.50 a week. Frank Hughes' estimate of the rent with these extras was $60, only $7 less than the new, utilities-included apartment.

CAT IS NECESSARY Besides the 5 children, 4 of whom slept in the 1 small bedroom, there was Tiny, the cat. There wasn't room for Tiny, but he displaced a certain number of mice and was essential.

If the necessities of life were elusive, its niceties were impossible. The Hugheses painted walls 3 times in 18 months. Fumes from the gas radiator kept walls and curtains blackened.

And there was Frank Hughes' biggest problem-sleep. A night shift man in the General Post Office, he tried to sleep days on a couch in the living room. Just before he moved, he said :

“The kids climb on top of me and Frankie gets hold of my hair. Just to get in a room and close the door. That's what I'm looking forward to most.”

Now, although they are still unpacking, startling contrasts present themselves daily. Mrs. Hughes, a slender, energetic housewife in her early thirties, has taken-an entirely new outlook on her duties in the sunfilled, spacious quarters.

"It's a pleasure to do things here," she says. “You can see what you've done. In the other places you worked and worked and you couldn't tell it."

CLOSETS, TOO, NOW

She takes pleasure in such simple joys as being able to turn the radiator down, open the steel casement windows, and have closets.

“But it's the children first,” she said, thinking over the improvements the move has made. “They have room to play where they're not underfoot. Their colds are almost gone. And they have places to keep things. It's hard to teach them to do things right when they have no place to put things."

Perhaps her greatest single joy is planning for curtains that will stay fresh and clean and brighten her home.

Part of her day already has been lightened. In the new school, Our Lady Queen of Angels, there is room for one more Hughes daughter, Kaaren, 6. This leaves only Frances, 4, and the baby home part of the day.

MAY 16, 1955. Memorandum re: Pattern proposed to be employed by Asheville (N. C.) Housing

Authority for excluding lower-income families from public housing Pisgah View Apartments, in Asheville, N. C., was built under the Housing Act of 1949 and contains 262 apartments. The Federal Government has contracted to pay subsidies of up to $137,020 per year to permit this project to operate at a loss so that it can house families in the "lowest income group” and “who have the most urgent housing needs."

The Housing Authority has set up ranges of monthly rents for the apartments as follows: $21 (minimum), $22 to $26, $27 to $31, $32 to $36, $37 to $41, $42 and over.

The actual current occupancy of these apartments is as follows (bear in mind that the yearly maximum income of the family is determined by the ceiling of five times the rent):

Number of families

now housed

at this rent $21 minimum. $21 to $26_

29 $27 to $31.

52 $32 to $36.

41 $37 to $41.

24 $42 and over

13 The above allocation has apparently not resulted in the Housing Authority adopting a mandatory quota system like that in use by many, if not most, housing authorities. Under the quotas, a certain number of apartments are permanently

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