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for other services shall not receive as salary as a member of the board any amount which would make the combined salary or compensation paid to him exceed $12,000 per annum. The President shall designate one of the members as chairman of the board. The chairman shall be the chief executive officer of the board and in his absence or disability the duties of his office shall be performed by some one of the other members to be designated as acting chairman by the chairman in such order as he may determine. The board shall supervise the Federal home loan banks created by this act, shall perform the other duties specifically prescribed by this act, and shall have power to adopt, amend, and require the observance of such rules, regulations, and orders as shall be necessary from time to time for carrying out the purposes of the provisions of this act. The board shall have power to suspend or remove any director, officer, employee, or agent of any Federal Home Loan Bank, the cause of such suspension or removal to be communicated in writing forthwith to such director, officer, employee, or agent and to such Federal home loan bank.

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ADMINISTRATIVE EXPENSES

SEC. 16. (a) There is hereby authorized to be appropriated the sum of $500,000 for salaries, travel and subsistence expenses, rents, printing and binding, furniture and equipment, law books, books of reference, periodicals, newspapers, maps, contract stenographic reporting services, telephone and telegraph services, and all other necessary expenses of the board, together with expenses preliminary to the organization and establishment of the banks created hereunder, until the end of the calendar year 1932.

(b) The board shall have power to levy semiannually upon the banks, and they shall pay, on such equitable basis as the board shall determine, an assessment sufficient in its judgment to provide for the payment of its estimated expenses for the half year succeeding the levying of each such assessment, beginning with the first half of the calendar year 1933. All expenses of the board incurred in carrying out the provisions of this act, as determined by it, beginning January 1, 1933, shall be paid from the proceeds of such assessments, and if any deficiency shall occur in such fund at any time between such semiannual assessments the board shall have power to make an immediate assessment against the banks to cover such deficiency on the same basis as the original assessment. If any surplus shall remain from any assessment after the expiration of the semiannual period for which it was levied, such surplus may be deducted from the next following assessment.

SEC. 17. The board shall have power to select, employ, and fix the compensation of such officers, employees, attorneys, and agents as shall be necessary for the performance of its duties under this act without regard to the provisions of other laws applicable to the employment or compensation of officers, employees, attorneys, and agents of the United States. The board shall be entitled to the free use of the United States mails for its official business in the same manner as the executive departments of the Government; and shall determine its necessary expenditures under this act and the manner in which they shall be incurred, allowed, and paid.

EXAMINATIONS AND REPORTS

SEC. 18. The board shall from time to time, at least twice annually, require examinations and reports of conditions of all Federal Home Loan Banks in such form as the board shall prescribe and shall furnish periodically statements based upon the reports of the banks to the board. For the purposes of this act, examiners appointed by the board shall be subject to the same requirements, responsibilities, and penalties as are applicable to examiners under the National bank act and the Federal reserve act, and shall have the same powers and privileges as are vested in such examiners by law.

UNLAWFUL ACTS, AND PENALTIES

SEC. 19. (a) Whoever makes any statement, knowing it to be false, or whoever willfully overvalues any security, for the purpose of influencing in any way the action of a Federal Home Loan Bank or the board upon any application, advance, discount, purchase, or repurchase agreement, or loan, under this act, or any extension thereof by renewal, deferment, or action or otherwise, or the acceptance, release, or substitution of security therefor, shall be punished by a fine of not more than $5,000, or by imprisonment for not more than two years, or both.

(b) Whoever (1) falsely makes, forges, or counterfeits any note, debenture, bond, or other obligation, or coupon, in imitation of or purporting to be a note, debenture, bond, or other obligation, or coupon, issued by a Federal Home Loan Bank; or (2) passes, utters, or publishes, or attempts to pass, utter, or publish, any false, forged, or counterfeited note, debenture, bond, or other obligation, or coupon, purporting to have been issued by a Federal Home Loan Bank, knowing the same to be false, forged, or counterfeited; or (3) falsely alters any note, debenture, bond, or other obligation, or coupon, issued or purprting to have been issued by a Federal Home Loan Bank; or (4) passes, utters, or publishes, or attempts to pass, utter, or publish, as true any falsely altered or spurious note, debenture, bond, or other obligation, or coupon, issued or purporting to have been issued by a Federal Home Loan Bank, knowing the same to be falsely altered or spurious, shall be punished by a fine of not more than $10,000, or by imprisonment for not more than five years, or both.

(c) Whoever, being connected in any capacity with the board or a Federal Home Loan Bank, (1) embezzles, abstracts, purloins, or willfully misapplies any moneys, funds, securities, or other things of value, whether belonging to it or pledged or otherwise intrusted to it; or (2) with intent to defraud the board or any Federal Home Loan Bank, or any other body politic or corporate, or any individual, or to deceive any officer, auditor, or examiners of the board or a Federal Home Loan Bank, makes any false entry in any book, report, or statement of or to the board or a Federal Home Loan Bank, or, without being duly authorized, draws any order or issues, puts forth, or assigns any note, debenture, bond, or other obligation, or draft, mortgage, judgment, or decree thereof, shall be punished by a fine of not more than $10,000, or by imprisonment for not more than five years, or both.

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(d) It shall be unlawful for any individual, partnership, association, or corporation (1) which is not a Federal Home Loan Bank to use the words Federal home loan bank," or a combination of all such words, as a name or a part of a name under which he or it shall do business (except in the case of a name under which business is being done at the time of the enactment of this act), or (2) which is not a Federal Home Loan Bank, to advertise or represent in any way that he or it is a Federal Home Loan Bank, or to publish or display any sign, symbol, or advertisement reasonably calculated to convey the impression that he or it is a Federal Home Loan Bank, or (3) which is not a member, to advertise or represent in any way that he or it is a member, or to publish or display any sign, symbol, or advertisement reasonably calculated to convey the impression that he or it is a member. Violations of this section shall be punishable by a fine of not exceeding $1,000, or by imprisonment of not exceeding one year, or both.

(e) The provisions of section 112, 113, 114, 115, 116, and 117 of the Criminal Code of the United States (U. S. C., title 18, secs. 202 to 207, incl.), in so far as applicable, are extended to apply to contracts or agreements of any Federal Home Loan Bank under this act, which, for the purposes hereof, shall be held to include advances, loans, discounts, and purchase and repurchase agreements; extensions and renewals thereof; and acceptances, releases, and substitutions of security therefor.

(f) The Secret Service Division of the Treasury Department is authorized to detect, arrest, and deliver into the custody of the United States marshal having jurisdiction any person committing any of the offenses punishable under this act.

MISCELLANEOUS

SEC. 20. (a) In order to enable the board to carry out the provisions of this act, the Treasury Department, the Comptroller of the Currency, the Federal Reserve Board, and the Federal reserve banks are hereby authorized, under such conditions as they may prescribe, to make available to the board in confidence for its use and the use of any Federal Home Loan Bank such reports, records, or other information as may be available, relating to the condition of institutions with respect to which any such Federal Home Loan Bank has had or contemplates having trasactions under this act or relating to persons whose obligations are offered to or held by any Federal Home Loan Bank, and to make through their examiners or other employees, for the confidential use of the board or any Federal Home Loan Bank, examinations of such institutions.

(b) Every institution which shall apply for advances under this act shall, as a condition precedent thereto, consent to such examination as the bank or

the board may require for the purposes of this act and/or that reports of examinations by constituted authorities may be furnished by such authorities to the bank or the board upon request therefor.

(c) Section 5202 of the Revised Statutes of the United States is amended by adding a clause as follows:

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'Ninth. Liabilities incurred under the provisions of the Federal Home Loan Bank act."

SEC. 21. Each Federal Home Loan Bank shall have succession until dissolved by the board under this act or by further act of Congress.

SEC. 22. Whenever the board finds that the efficient and economical accomplishment of the purposes of this Act will be aided by such action, and in accordance with such rules, regulations, and orders as the board may prescribe, (1) any Federal Home Loan Bank may establish a branch or branches within the district in which such bank is located, or (2) any Federal Home Loan Bank may be liquidated or reorganized, and its stock paid off and retired in whole or in part in connection therewith after paying or making provision for the payment of its liabilities. In the case of any such liquidation or reorganization, any other Federal Home Loan Bank may, with the approval of the board, acquire assets of any such liquidated or reorganized bank and assume liabilities thereof, in whole or in part.

SEC. 23. If any provision of this act, or the application thereof to any person or circumstances, is held invalid, the remainder of the act, and the application of such provision to other persons or circumstances, sahll not be affected thereby.

SEC. 24. Any institution organized under any law of the United States, including the laws relating to the District of Columbia, shall be authorized to subscribe for stock of a Federal Home Loan Bank if otherwise eligible to make such subscription under the terms of this act, any provision in any such law to the contrary notwithstanding.

SEC. 25. The right to alter, amend, or repeal this act is hereby expressly reserved.

Mr. REILLY (presiding). This is a meeting of a subcommittee of the Committee on Banking and Currency of the House of Representatives appointed for the purpose of considering H. R. 7620, to create Federal home loan banks, and so forth.

At an informal conference of the members of this committee, it was decided that in as much as the Senate of the United States had conducted extensive hearings on an identical bill as is now before the subcommittee, that this subcommittee would consider testimony taken on the Senate hearing on the pending bill.

In view of such determination on the part of the subcommittee, we do not care to hear any witnesses who appeared and testified at the Senate hearing unless they have some additional testimony to offer. The subcommittee does not desire to bar any person interested in this bill from appearing and giving his views, except that it is deemed unnecessary and a waste of time to hear the testimony of those who have already testified on a similar bill and which testimony is available for the use of the committee.

What is the vote of the committee on that?

Mr. WILLIAMS. That is my view.

Mr. REILLY (presiding). Mr. Campbell, what do you think?
Mr. CAMPBELL. That is my view, Mr. Chairman.

Mr. REILLY (presiding). Mr. Hancock?

Mr. HANCOCK. Yes; that is entirely satisfactory.

Mr. REILLY (presiding). The bill before this subcommittee bears the name of Representative Luce, a member of this subcommittee. The Chair understands that Mr. Luce has spent considerable time and study in the preparation of this bill, and I know the subcommittee will hear with profit whatever Mr. Luce may have to say on the pending bill.

STATEMENT OF HON. ROBERT LUCE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MASSACHUSETTS

Mr. LUCE. Mr. Chairman, as sponsor of the bill in the House, I will attempt to give you a concise statement of the bill, with a word or two about its history.

In 1913 Congress created the Federal reserve system, a system based upon membership-a compulsory membership by all of the Federal banks and an optional membership by State banks. The purpose of that system was twofold, an emergency purpose, in order that there might be a reservoir of credit available for commercial banks in times of stress, and the continuing purpose that the system might function to give the country adequate currency without exposing it to the danger of inflation. That system was based upon the rediscount of commercial paper-short-time paper arising out of business transactions and some transactions connected with agriculture.

Three years later Congress created the Federal farm loan system with the purpose of furnishing to agriculture access to greater credit, thus improving the opportunities for individual farmers and at the same time reducing the average rate of interest throughout the country on farm loans.

That system now has something more than a billion dollars of mortgages and an estimate resulting from an investigation semiofficial in nature indicated that it had reduced the average rate of the total of farm mortgage interest throughout the country by one and a half per cent.

The creation of these two systems suggested that a similar system might furnish credit in the building field.

The idea took shape within the Department of Labor in the administration of President Wilson and that department formulated and presented a program to be applied to the home-building field, embodying the same principles that had been applied to the commercial field and to the agricultural field. The time was not ripe. The measure did not prevail. It started a discussion which has been continuous among those particularly interested in this subject, gradually arousing more and more interest and resulting in some State activities, notably in New York, where a land bank was formed. Very recently in my own State of Massachusetts, a system accomplishing or meant to accomplish a part of what is now before you has been put into effect, the Supreme Court having vouched for its constitutionality. The same proposition is under consideration in New Jersey. I have not heard the latest news as to where it stands. These are tentative steps toward combining the institutions particularly concerned, so that they may buttress each other and get the protective advantages that have accrued from the Federal reserve and the Federal land bank system.

The country-wide emergency with its prospect of great distress gave emphasis last year to the need for immediate action in order to expand the credit facilities in the building field. The occasion for this will undoubtedly be laid before you in detail by witnesses. It has already been set forth in the Senate hearings. Summarizing, the need may be said to spring from the withdrawals of deposits

from all sorts of banking institutions large and small, whether for the purpose of hoarding or for the necessities of domestic life. This feature of the building situation became prominent in a conference held here last fall by representative men of high standing interested in the general subject of home construction. As a result of that the President issued a statement in November, urging action in the direction contemplated by the bill here pending, and in his opening message at the beginning of the session of Congress, early last December, he put this paragraph, to which I ask your attention while I read it. It is not long, and it covers the ground most succinctly. The President said:

I recommend the establishment of a system of home-loan discount banks as the necessary companion in our financial structure of the Federal reserve banks and our Federal land banks.

My I interject and ask particular attention to the fact that he begins by advising us to do the same thing here that we have done for commerce and agriculture. He goes on saying:

Such action will relieve present distressing pressure against home and farm property owners. It will relieve pressures upon and give added strength to building and loan associations, savings banks, and deposit banks, engaged in extending such credits. Such action would further decentralize our credit structure. It would revive residential construction and employment. It would enable such loaning institutions more effectually to promote home ownership. I have discussed this plan at some length in a statement made public November 14, last. This plan has been warmly indorsed by the recent National Conference upon Home Ownership and Housing, whose members were designated by the governors of the States and the groups interested.

As is customary in the matter of the more important Executive proposals, one of the departments, this time the Department of Commerce, undertook the preparation of a bill. At the opening of the session it was given to Senator Watson for introduction in the Senate and to myself for introduction in the House. Neither of us-and I am sure that I speak for the Senator as well as myself-claims the slightest credit for the preparation of the bill. When it was handed to me I was told that it had been drawn in some haste, and that undoubtedly changes would be necessary. Upon examining the bill this was quickly evident, and, upon further study, it proved that the bill need to be wholly recast, to be changed in some and to be rearranged in many particulars. Therefore, I went to the legislative drafting service, and Mr. John O'Brien, who sits at your left, was assigned to assist me. I want to attest for the record the very remarkable help that he has given in mastering a most complicated subject and preparing a far better bill than the original bill. Mr. O'Brien did not have all of the time that was desirable, and I gather from reading the Senate hearings that there were some particulars brought to attention where further changes in matter of technical detail are desirable. He will be with us through the hearings, and can furnish a more accurate statement in point of detail than I can. I am sure he will be very glad to assist us. He had to do this work more hastily than would be wished by reason of the desire on the part of the Senate subcommittee to proceed at once. It was important that they should proceed with the revised bill in hand rather than the original bill, and so he worked, and those of us who labored with him. worked, under high pressure, for days. I gave to it as many hours as I could, without probably much help in matter of technique, but contributing, as far as I could, from my experience of a dozen years

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