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Air pollution

STATEMENT OF THOMAS H. KUCHEL, A UNITED STATES

SENATOR FROM THE STATE OF CALIFORNIA

Senator KUCHEL. Mr. Chairman, I greatly appreciate your permitting me to testify briefly here as a coauthor with Senator Capehart of S. 1565. I might say that legislation of similar purport was introduced, Mr. Chairman, in the 83d Congress by Senator Capehart and me. It passed the Senate only to become lost in the House of Representatives. It deals with the subject of air pollution, one of growing importance to the people of the United States. Meanwhile, however, Mr. Chairman, at the conclusion of the 83d session of the Congress, Senator Capehart and I joined in requesting the President to appoint a committee, consisting of various members of the departments of the Federal Government, to inquire into the broad subject of air contamination and to determine what might be done by the Federal Government to assist the cities and counties and States of America in coping with that problem.

I was glad to note that when the President addressed the Congress in January in his state of the Union message, he recognized the problem or air pollution or air contamination and suggested that the Federal Government could occupy a portion of the field designed to eliminate that pollution ultimately.

I think, Mr. Chairman, I can say that there are two fields where the I'ederal Government might well operate in the fight against air contamination. It is true that the control of the problem through legislation should remain with local government, but it is also true that in the field of research the Federal Government might well perform a constructive service. It might, secondly, provide an incentive to industry in America through appropriate tax amortization legislation. Thirdly, and I address myself now to a portion of the bill before us, it might provide for loans to people in America who desire to install various types of air pollution control devices. That, Mr. Chairman, is the reason why I am particularly interested in those portions of the present legislation providing for loans by the Housing and Home Finance Agency. I think it is vital for the Federal Government, acting through that Agency, to provide such assistance in the installation of devices and apparatus which would cut the amount of air pollutants discharged into the atmosphere.

To illustrate the need for such assistance on the part of the Federal Government, I wish to advise the committee that only recently the air pollution-control authorities in the city of Los Angeles have adopted an order outlawing the use of home incinerators. These rubbish burners are extremely numerous in that metropolitan area. Similar situations unquestionably exist in the large metropolitan areas across the Nation. The regulation prohibiting such gadgets was taken after long debate but is indicative of the lengths to which responsible local governmental agencies are going and will go in order to reduce smog and other pollutants.

Therefore, with the suggestion that an important source of air contamination is the home and small industry or business heating plants, it is not inconceivable that control efforts will reach the point

where major modifications of such installations are required. In addition, it has been suggested that the building codes should be strengthened so that future construction will be designed to hold air pollution to a minimum. Such steps would make necessary, credit facilities for property owners, and I therefore urge the committee to approve particularly the loan provisions embodied in Senator Capehart’s and my legislation. I particularly hope the legislation will contain authority for loans to individuals as well as to business enterprises.

I was happy to join in sponsoring this legislation because I feel that production and the ultimate elimination of pollution in the air are imperative in connection with the efforts to solve the Nation's housing problem and wipe out slums. There is no doubt that contamination of the air is a strong factor in the deterioration of neighborhoods. Obnoxious fumes are known to damage physical properties.

For these reasons, Mr. Chairman, I feel it is entirely logical for this committee to approve legislation amending the Housing Act so that resources of the Housing and Home Finance Agency may then be employed in a broad campaign against smog and all other types of air pollution.

Thank you very much, Mr. Chairman.

Senator SPARKMAN. Any questions? Thank you very much, Senator Kuchel. We are glad to have your statement.

Senator SPARKMAN. The United States Savings and Loan League, Mr. Henry A. Bubb, chairman of the legislative committee.

Mr. Bubb, you have heard what I have said about the necessities of time, and I wonder if you will cooperate with us in trying to condense or summarize your statement, if you will, in order that we may give a chance for all of them to be heard. Home loan bank

STATEMENT OF HENRY A. BUBB, CHAIRMAN, LEGISLATIVE COM

MITTEE, ACCOMPANIED BY STEPHEN SLIPHER, STAFF VICE PRESIDENT, UNITED STATES SAVINGS AND LOAN LEAGUE

Mr. BUBB. Mr. Chairman, in order to expedite matters, I had already contemplated that, and I have cut out quite a little bit of my statement, which will be presented for the record.

Mr. Chairman and Senators, I am Henry A. Bubb, of Topeka, Kans., president of the Capitol Federal Savings & Loan Association of Topeka, and chairman of the board of directors of the Federal Home Loan Bank of Topeka. I appear, however, as chairman of the legislative committee of the United States Sayings and Loan League. I have Mr. Slipher with me, who is our Washington representative.

On behalf of the officers and members of the league, I wish to express my appreciation to the committee for the opportunity to state our views on legislation dealing with housing, and with the Federal statutes which affect our savings and loan institutions. Our membership consists of some 4,100 local savings and loan associations, cooperative banks, homestead associations, and building and loan associations.

I am going to skip some of this paragraph.

On extension of title I of the National Housing Act, I just want to state that the league favors the extension of the title under which the FHA insures home repair and modernization.

On low-rent public housing, as the senior members are well aware, the league has repeatedly and consistently presented its view of unalterable opposition to public housing.

Savings and loan sections of S. 1800—and this is particularly what I would like to talk to today:

Besides the provisions of S. 1800 which relate to Government activity in housing, the bill contains certain proposals relating to the statutes governing the Home Loan Bank Board and its activities in relation to the savings and loan associations, both federally and State chartered. These proposals are of immediate concern to the savings and loan institutions which I represent, and the league generally favors them.

Now the next five sections are rather minor items. They have been explained by the Chairman of the Home Loan Bank Board, Mr. McAllister, and they are explained in our statement. So I will skip reading those in order to expedite our testimony.

I am going to page 4, at the middle of the page:

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 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.

Senator CAPEHART. Return $66 million to the Treasury?

Mr. BUBB. That would be returned to the Treasury, Senator Capehart.

Senator CAPEHART. I am highly in favor of it.
Mr. BUBB. Thank you, sir.

Senator CAPEHART. I am in favor of this, the Board being returned to its original status.

Mr. BUBB. Thank you.

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 cost 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 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

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minimum required stockholdings of members 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, of the small home builder will go far out into the country to build in areas where sewerage, streets, and water are not required—and this would be a step backward. 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 “No. 1 housing problem." We believe this amendment is one effective answer to the problem. It has the enthusiastic support of many small home builders.

And I might say, Mr. Chairman, I have many telegrams here from small home builders, but I know you are rushed for time, and that being the case, if I may, I would like to introduce them in the record.

Senator SPARKMAN. We would be very glad to include them in the record at this point.

Mr. BUBB. Thank you very much, sir. (The telegrams referred to follow :)

WOONSOCKET, R. I., May 15, 1955. HENRY BUBB, Chairman, United States Savings and Loan League,

Washington, D. C.: We favor bill permitting savings and loan associations to acquire and develop land for small builders. Small builders' cost of acquiring, improving, and developing of utilities make it practically impossible to stay in business. Passage of this bill with aid from United States Savings and Loan League will help to keep the small builders in business.

CONTEMPORARY HOMES, INC.,
ARTHUR JOHNSON, President.

WORCESTER, MASS., May 16, 1955. HENRY A. BUBB, United States Savings and Loan League,

Washington, D. C.: In favor of amendment to administration housing bill permitting savings and loans to make loans to small builders and acquire land in connection with urban renewal projects. This will be of great assistance to our New England cities.

JOSEPH T. BENEDIT, President, New England Regional Council, National Association

of Housing and Redevelopment Officials.

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