The committee met, pursuant to notice, at 2:05 p. m., in room P-63, United States Capitol, Senator Homer E. Capehart (chairman) presiding. Present: Senators Capehart, Maybank, Bennett, and Bush. The CHAIRMAN. Our next witness will be Mr. Norman P. Mason, of Chelmsford, Mass., to be Federal Housing Commissioner. Mr. Mason, this is your first appointment? Mr. MASON. Yes, sir. Senator BUSH. Is there any memorandum on Mr. Mason? You have been serving now as Acting Commissioner for how long? The CHAIRMAN. Have you figured out ways and means of eliminating all the so-called alleged irregularities we have been running into, that we are talking about, investigating, in this committee? Mr. MASON. Sir, that is a real assignment when you say "all of them." Certainly I have been working at it but I would be foolish, I think, to say I had eliminated all of them at this stage. The CHAIRMAN. Are you aware of them? Mr. MASON. I am aware of them. The CHAIRMAN. Of the irregularities and the ingenuity of the industry that you are in. As shown by our investigations to dateit is something to watch. Mr. MASON. I am firmly convinced, sir, and I always have been, that any Government agency which dispenses credit or funds has a prime responsibility firsthand to see that those are used honestlyand I see that that has not always been done in this particular assignment. The CHAIRMAN. In other words, in your work you are conscious that there is a job to be done and that this committee is investigating the whole housing problem and all housing activities? Mr. MASON. Yes. We read the transcript of your hearings every day. The CHAIRMAN. Fine. Mr. MASON. And when occasion arises and things are called to our attention in that regard we have taken action. We have, further, reports of investigations conducted by Mr. Cole. He keeps us advised, although he does not have such a nice transcript as you do. 1 We take action when things come up. We have our own study groups that we instituted both within the agency and outside, people to tell us what they thought were problems to eradicate. Senator MAYBANK. Do you expect to bring the conference report up tomorrow? The CHAIRMAN. On housing, 3 o'clock tomorrow. Senator MAYBANK. I want to tell you, Mr. Mason, that I know your background and I have heard a lot of people talking about you, and all of them have a high regard for you. We, in the Appropriations Committee, have just heard a great deal of testimony from the military which was off the record, testimony about the situation in Nevada. Mr. MASON. Mountain Homes, you mean? Every time I look at this thing it gets worse. It is bad enough, but when you find out what the military has done, the things that have been done by the services, those are even more shocking. You are well familiar with the contract for additional houses let in Nevada just a few months ago. It is a bad situation and these things just go on, getting worse and worse. Mr. Murchison testified yesterday before this committee that he already had the contract in Idaho, and the gentleman does not even own the land. I don't know who is responsible, but I think that something has got to be done and unless something is done, it is going to be worse under the new bill than we had before The CHAIRMAN. Let us keep the record straight. He is responsible for FHA. Mr. MASON. That is correct. Senator MAYBANK. Yes, but he has done nothing about it andThe CHAIRMAN. The Defense Establishment is responsible for defense housing. What happens is that the Defense Department decides that they want so many units of a specific type and under the law, all that they have got to do is to direct FHA to make the commitment. FHA has nothing to say about it if the Defense Establistment directs them to make the commitment. Under the law they must make the commitment. Mr. MASON. That is correct. Senator MAYBANK. But he did not even have possession of the land The CHAIRMAN. The FHA has no right to say "No," if the Defense Establishment directs them to make a commitment. That is the way it works. Senator MAYBANK. Yes, but it is an FHA commitment. What is the difference, it is Government money. The CHAIRMAN. No question about that, but my point is that FHA under the law, when the Defense Establishment directs them to make a commitment, has to make that commitment Senator MAYBANK. Well, I don't know whether they have to do it or not. All I am doing is just telling you that this thing is getting worse. For example, we spent 2 hours this morning with the officials of the Army, the Navy, and the Air Force concerning all of these contracts being let, about this $260 million authorization-are you familiar with that? Mr. MASON. Surely, I am. The CHAIRMAN. Let us ask our experts here. Mr. McMurray is our expert on housing. Let us ask if I am right or wrong, that under the law if the Defense Establishment directs the FHA to make a commitment, then they have no choice. Is that correct? Mr. MCKENNA. I could make a guess, Mr. Chairman. I think since the law was originally passed, the Defense Establishment was pulled in primarily to designate the areas and number of units required, and I think there was some discussion at that time about FHA carrying on the inspection, the plans and specifications, and exercising some judgment with respect to whether to commit or not, whether a commitment should be issued. However, my recollection is that in writing the regulations, the Defense Department said, "We want to assume more control over that program," more than the law would allow them, "therefore we are going to see that all of these units are built the way we want them built"-and under that interpretation, that is true, there is not much left to the FHA. The CHAIRMAN. If there is no objection by the members of the committee, I am going to suggest that the staff at this point in the hearing put into the record the exact law and the exact regulations, as to who does or does not have responsibility or what responsibility each has, the Defense Establishment and the FHA in this so-called joint venture. They are joint, in that the FHA guarantees the mortgages, but the Defense Establishment designates the numbers and kind and type of construction, and put the whole business right into the record at this point. Senator MAYBANK. That would be perfectly satisfactory to me, Mr. Chairman, but I just want Mr. Mason to know about the situation-and I want him furthermore to know that in the instance of Nevada, they have not negotiated with anybody The CHAIRMAN. I think in order to keep the record straight, when you say "they," you are talking about the Defense Establishment? Senator MAYBANK. That is right, and if I had been in the FHA, while I cannot speak for them, I would say that it would be better to have at least 1 or 2 contractors, and not just have this fellow have 600 units just given to him-and there is the other 400. Yesterday Mr. Murchison himself said that he already had the contract in Idaho. The CHAIRMAN. That is correct. Senator MAYBANK. It is very embarrassing to me, to be a member of this committee and pass a law and have it cut across by other laws. I say this most respectfully, I am not saying that you are responsible, Mr. Mason. I don't know who is responsible, but we have been hearing all of this testimony in our investigations, and, as I say, we heard testimony for 2 hours today about what happened in Nevada. The CHAIRMAN. Is the General Counsel for FHA present? Senator MAYBANK. What I want to do and what I know you and the chairman and others want to do is to clean up this mess. Mr. MASON. That is correct. Senator MAYBANK. But I do think that there should be a closer association between you and the Defense Establishment. The CHAIRMAN. We are going to place in the record at this point the exact law and exact regulations and who has the responsibility, where and when. (The documents referred to follow:) Division of responsibility between the Federal Housing Administration and the Defense Establishment in the development of title VIII housing projects Action 1. Planning and justification.-Ascertaining whether installation is eligible for title VIII housing under the provisions of the law and determining number, size, and type of units and maximum rentals. 2. Feasibility.-Consultation on local community housing support, affect on project on local housing market and general economic practicability. 3. Coordination and approval.-Ascertaining interest of other military departments in proposed project and submitting proposals for approval of Secretary of Defense. Reviews proposal for eligibility and justification, lack of adequate community support and tentative approval by FHA. 4. Design.-Employing architect-engineer to design housing and site layout and engineering. 5. Appraisal.-Examining plans and specifications for adequacy, 6. Selection of sponsor.-Advertising proposal inviting bids and 10. Certification of tenants.. 11. Inspection of operations.. 12. Change in rental rates.. Responsible agency Military departments. Military departments and Federal Military departments. Office of the Secretary of Defense. Federal Housing Administration. Military departments. Federal Housing Administration. Military departments and Federal Military departments. Federal Housing Administration. DEPARTMENT OF DEFENSE Properties and installations Summary of housing program under title VIII, National Housing Act, as of June 30, 1954 1 1 According to reports received in Housing Division, OASD (P. and I.) by July 23, 1954. |