Purely for the record, I am the chairman and one of the founding officers of Washington Federal Savings & Loan Association, which, in the past 7 years, started with 250 members and $250,000 and now has approximately 24,000 members and over $62 million.

In addition to that, I have been privileged to be given the opportunity to serve the ICA and, therefore, our Government, in going down to Chile to try to solve the problem of instituting local savings and loan associations in Chile in a country where inflation is so rapid it does not make any sense to save and in a country where a mortgage loan is not a loan, but, in fact, a gift because of the inflationary character of the currency.

First, may I say, sir, that I was particularly interested to hear the remarks of the chairman of the Federal Home Loan Bank Board. Mr. Robertson, and to hear the observations about these remarks made by the Honorable Senator Javits, and I am most sorry he had to leave because I particularly wanted to address myself to some of the observations of the Home Loan Bank Board.

In order to be more specific

Senator SPARKMAN. I may say, Mr. Javits has a very able assistant here.

Mr. COURSHON. I notice. In order to be more specific about the philosophy of this type of thing, may I say, sir, further that it is not my belief that Senator Smathers, who was a cosponsor with Senator Morse, together with the endorsement of many of the other able gentlemen of the Senate who are interested in this problem, intended that the bill, S. 3282, not have some central authority or some central agency. I believe that what the Senator had in mind, from conversations with him personally on the matter, and from reading his published statements, is that, to use a common phrase, we get the show on the road. Certainly, he is sophisticated enough with the legislative process to know that it requires a central agency.

Secondly, one of Mr. Robertson's remarks was that one of the things we have to do is find out what the people in the industry think about this. Well, I believe that what the people in the industry think about this has been adequately expressed already. For the record, may I read it briefly?

One of the large trade associations that has governed itself with the public interest is the National League of Insured Savings & Loan Associations about which many of you men are aware and have had the happy faculty of working with and who have, as a trade organization, done much to further the savings and loan business in this country. In their most recent public statement about this particular matter, they have said, and I quote:

It is recommended that the Federal Government and the Congress be urged to channel through the Federal home loan banks such funds as may be appropriated for assistance to housing in foreign countries, particularly with emphasis upon aid to housing to be provided in foreign countries through counterparts of savings and loan associations.

They have further stated:

It is further recommended that the Federal Government undertake the study of the possibilities for direct investment in housing in Latin American countries by savings and loan associations through the medium of guaranteed or insured mortgage. In view of the fact that commercial banks of the United States have Branches in many of the Latin American nations, it is believed that there is no 55869-60--16

justifiable reason for barring savings and loan associations from having offices in such countries if the countries themselves permit foreign banking and mortgage institutions.

Let us refer briefly to this second portion of the statement. It is not, nor has it been, intended that Senate bill 3282 become a branch bill for domestic savings and loan associations to open offices in Latin America. Nothing could be further from the truth. The intent of S. 3282 is, No. 1, to carry out what appears to be the administration's published policy to aid and assist on a person-to-person basis Latin America.

We believe that if Latin America becomes a nation of haves instead of a nation of have-nots, and if their living standard, through adequate housing, which would raise their social and economic levels, approaches curs, that we will no longer have to worry about the Castros in Cuba or communism in any other places of South America.

To implement this policy, intergovernment conversations have been held quite recently, which sometimes seem to be in conflict with what the Treasury or other administrative agencies may say is the present governmental policy concerning housing. One of these statements is, and I quote:

Private enterprise should be encouraged to intensify its effort to promote home ownership in the less-developed countries.

Private enterprise, gentlemen, is a savings and loan system in this country. The savings and loan system is not a governmental agency; it is a partnership between Government and private enterprise wherein Government supervises and regulates, while private enterprise amasses capital and does the job.

Secondly, there is the ICA, as an instrumentality of Government policy, which instrumentality does not always have unanimous support, but such instrumentality, without this support, has done a tremendous job.

It has been working, too, because capital formation has been brought about in Latin America and the underdeveloped countries of the world for private mortgage financing similar to what has been done and what is being done in the United States.

The housing needs of the world are enormous, and request for loans and assistance in financing house construction are constantly increasing. Since the demand for housing credit is so much greater than the resources available at present, the careful use of capital generated in local communities can bring about a greater result.

What is suggested now is simply this: Assuming section 5 of the Home Owners' Loan Act of 1933, which is the law that we must address ourselves to in the savings and loan industry, is amended, enabling members of the Federal Home Loan Bank System to invest some of their share capital as seed capital for foreign savings and loan associations, then they will be able, on a person-to-person basis, to bring about the birth of similar institutions in Latin America in order that the living standards and the economic standards of these communities will be so raised that, with the general economy of Latin America being on the rise, they will become greater consumers of our goods.

It does not follow if we make prudent business loans to enable the formation of sound capital, formation of institutions to finance hous

ing, that currency is leaving the United States, that it is not benefiting the United States. One of the main troubles we have had in Latin America is that we do not have enough sound currency to buy what we produce. It is our belief that establishing this form of partnership will raise the economic level of these countries and, therefore, produce the situation where they can become sound consume. customers for the United States and, at the same time, a happier, safer, and more satisfied people.

To get down to the particular problem that the Chairman of the Home Loan Bank Board raised this morning and to the question that was addressed to the chairman by Senator Javits, which is Big Brother or large government controlling it as against private industry and individual savings and loan system having some say about it, basically speaking, what is suggested is a partnership between Government, on the one hand, which is necessary and which has been the foundation for the savings and loan system, and interplay on the part of the individual savings and loan people so that, working together, they can assist Latin America.

It is suggested that an international advisory committee, consisting of five men who shall act as an advisory council for these funds, work directly under the Federal Home Loan Bank Board. This advisory committee shall consist of one appointee from the ICA, one appointee from the Federal Home Loan Bank Board, one appointee from the Treasury, and two appointees from the savings and loan industry, bringing about a master board which represents the thinking of government and industry in the housing and home finance field. These shall be appointed in the manner in which the present National Advisory Committee is appointed under the Federal Home Loan Bank System, which now works domestically as adviser to the Federal Home Loan Bank Board.

This international advisory council shall make recommendations as to dispositions of the funds available to the Federal Home Loan Bank Board, which Federal Home Loan Bank Board shall be the administrative agency which shall make all financial determinations.

The Home Owner's Loan Act, if amended as requested under S. 3282, would then provide certain restrictive regulations to prevent a flow of capital available for American housing in excess amounts, in order that American housing not be depleted. One of the suggested changes would be this: That no more than 1 percent of the assets of any individual savings and loan association of the United States shall be available for this purpose.

In order to insure that it is a sound association on a domestic basis, making this type of investment, that no association with less than 5 percent reserves shall be authorized to participate in this program. The Federal Home Loan Bank Board as the final administrative agency, should be authorized to participate in this manner, but subject to prior consultation with the National Advisory Council for international monetary and financial problems, recognizing the facts of life that unless the Home Loan Bank Board consults with the National Advisory Council and gets the thinking of the Treasury and gets the thinking of States, we are talking about an agency that will never get off the ground because it must work with and in conjunction with general legislative intent and administrative policies to be a practical program.

In order to insure that loan repayments be in dollars, it is suggested that no loan may be made that is not repayable in dollars based on the set dollar exchange at the time of making the loan, which repayment, as to dollar exchange, must be guaranteed by the Government in which the savings and loan association system receiving these funds is located. Gentlemen, in conclusion, may I say this. We are discussing a broad program, a rather comprehensive program, and an involved program, and one which may require further study. It may well be that it is the feeling and recommendations of this committee that at this time there is not sufficient detail to act. But, certainly, it is urged by the industry and certainly by me that if nothing more come out of these hearings that a trial study and a complete study be made in order that this worthwhile project of helping the people of Latin America on a person-to-person basis in order to raise their social and economic level not be abandoned, but move forward.

It has been a great pleasure to be here this morning, and I hope if there are any questions in any of your minds that I have the opportunity to answer them.

Thank you.

Senator SPARKMAN. Thank you, Mr. Courshon.

May I say just this: I am thoroughly in sympathy with the idea. As I said to the chairman a while ago, I have not explored it sufficiently myself, but this thought goes through my mind: Taking it for granted it would be desirable for us to encourage the establishment of savings and loan institutions in Latin America rather than to have our local people participate through their local savings and loan associations, why could we not use the agency of the Development Loan Fund or even the Export-Import Bank or some agency of that kind that might lend money for the purpose of underwriting the capitalization?

Senator BUSH. Will the Senator yield?

Senator SPARKMAN. Yes.

Senator BUSH. You could not get the savings repository under that setup.

Senator SPARKMAN. Why couldn't you?

Senator BUSH. The Development Loan Fund does not take into it savings of the people, as I understand this bill.

Senator SPARKMAN. Of course, this is another question that I raised. What effect would this have upon our own ability to handle our mortgages here?

Senator CLARK. Does the Export-Import Bank take participations from private banking?

Senator BUSH. They offer participations.

Senator CLARK. Why do they not participate in the savings institutions?

Mr. COURSHON. Senators, may I address myself to the question? I do not wish to presume upon the deliberations that are presently taking place, but I wish to point out there is a difference between the Development Loan, Fund or, as Senator Clark suggests, the ExportImport Bank, or any other agency participating as against the suggested participation here..

That difference is this: You are dealing with Government funds: when you are dealing with the Development Loan Fund or Export

Import Bank, and you would actually be having a capital flow of Government funds down there from other places where it may well be felt that there are more specific projects needed, whereas the proposed program does not deal with Government funds. It deals with the funds that are amassed by the savings and loan industry, which are private funds.

The only participation Government would have is saying, and right fully so:

We will determine how much of our private funds go out of the continental limits of the United States, and we will say where it should go and how much of it should go since we are concerned with the domestic welfare of the savings and loan associations.

Therefore, what we have here is an entirely separate concept, a concept which I frankly know, from the following career of every gentleman that happens to be in front of me, you believe in. Here you have the people through their funds being marshaled in savings and loan associations and not Government funds, having through a central Government agency as the regulatory or supervisory body, having a chance to make direct loans through their savings and loan association. But you do not have the individual savings and loan associations running wild without supervision and divesting American housing needs of capital that it may well need at the present time.

Senator BUSH. Does the bill provide, then, that a savings and loan association such as yours may invest in the shares, accounts, deposits, or certificates of indebtedness in local mutual thrift and home financing institutions in Latin America just as individuals in that area may invest in those shares, accounts, or deposits? In other words, do you put yourself in the same position under the bill?

Senator SPARKMAN. No, because they are severe limitations.
Mr. COURSHON. No, sir, Senator.

Senator BUSH. Within the limitations, though, you simply become a depositor or shareholder?

Mr. COURSHON. No, I do not think it would be sound for that.
Senator BUSH. That is what the bill says, does it not?

Mr. COURSHON. This bill does not go that far, but this bill says

Senator BUSH. May invest their funds in shares, accounts, deposits, or certificates, and so forth. That puts you in the same position as the local lawyer who wants to open an account in the savings and loan organization in Puerto Rico or Guatemala.

Mr. COURSHON. I understand, Senator.

Senator BUSH. Is that right?

Mr. COURSHON. That could be construed that way, but I do not think it is intended, sir.

Senator BUSH. Does it not say so?

Mr. COURSHON. Yes, it does, but it does not give enough detail, as a matter of fact, and what it provides for is a legislative intent just as, if you will permit me, if you read the Home Owners Loan Act of 1933, which is the foundation of the savings and loan associations, you will find that while the act has broad powers, the regulations of the central governing body of the Home Loan Bank Board, which they put cut, becomes, in fact, the law. And that is what we operate under. What is contemplated is this, sir, that a central agency under the Home Loan Bank Board shall determine (a) how much of the funds