Lapas attēli
PDF
ePub

(c) The Secretary of the Treasury is authorized on behalf of the United States to subscribe for preferred shares in such associations which shall be preferred as to the assets of the association and which shall be entitled to a dividend, if earned, after payment of expenses and provision for reasonable reserves, to the same extent as other shareholders. It shall be the duty of the Secretary of the Treasury to subscribe for such preferred shares upon the request of the Board; but the subscription by him to the shares of any one association shall not exceed $100,000, and no such subscription shall be called for unless in the judgment of the Board the funds are necessary for the encouragement of local home-financing in the community to be served and for the reasonable financing of homes in such community. Payment on such shares may be called from time to time by the association, subject to the approval of the Board and the Secretary of the Treasury; but the amount paid in by the Secretary of the Treasury shall at no time exceed the amount paid in by all other shareholders, and the aggregate amount of such shares held by the Secretary of the Treasury shall not exceed at any time the aggregate amount of such shares held by all other shareholders. To enable the Secretary of the Treasury to make such subscriptions when called there is hereby authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, the sum of $100,000,000, to be immediately available and to remain available until expended. Each such association shall issue receipts for such payments by the Secretary of the Treasury in such form as may be approved by the Board, and such receipts shall be evidence of the interest of the United States in such preferred shares to the extent of the amount so paid. Each such association shall make provision for the retirement of its preferred shares held by the Secretary of the Treasury, and beginning at the expiration of five years from the time of the investment in such shares, the association shall set aside one third of the receipts from its saving, investing and borrowing shareholders to be used for the purpose of such retirement. In case of the liquidation of any such association the shares held by the Secretary of the Treasury shall be retired at par before any payments are made to other shareholders.

(d) Such associations, including their franchises, capital, reserves, and surplus, and their loans and income, shall be exempt from all taxation now or hereafter imposed by the United States, and all shares of such associations shall be exempt both as to their value and the income therefrom from all taxation (except surtaxes, estate, inheritance, and gift taxes) now or hereafter imposed by the United States; and no State, Territorial, county, municipal or local taxing authority shall impose any tax on such associations or their franchise, capital, reserves, surplus, loans, or income greater than that imposed by such authority on other similar local mutual or cooperative thrift and home financing institutions.

(e) Any member of a Federal home-loan bank may convert itself into a Federal savings and loan association under this act upon a vote of its stockholders as provided by the law under which it operates; but such conversion shall be subject to such rules and regulations as the Board may prescribe, and thereafter the converted association shall be subject to examination and regulation to the same extent as other associations incorporated pursuant to this act.

ENCOURAGEMENT OF SAVING AND HOME FINANCING

SEC. 6. To enable the Board to encourage local thrift and local home financing and to promote, organize, and develop the associations herein provided for or similar associations organized under local laws, there is hereby authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, the sum of $250,000, to be immediately available and remain available until expended, subject to the call of the Board, which sum, or so much thereof as may be necessary, the Board is authorized to use in its discretion for the accomplishment of the purposes of this section without regard to the provisions of any other law governing the expenditure of public funds.

PENALTIES

SEC. 7. 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 the home owners' loan corporation or the Board or an association upon any application, advance, discount, purchase, or repurchase agree

ment, 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 the home owners' loan corporation or an association; 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 the home owners' loan corporation or an association, knowing the same to be false, forged, or counterfeited; or (3) falsely alters any note, debenture, bond or other obligation, or coupon, issued or purporting to have been issued by the home owners' loan corporation or an association; 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 the home owners' loan corporation or an association, 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 the home owners' loan corporation or an association (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 the home owners' loan corporation or an association, or any other body politic or corporate, or any individual, or to deceive any officer, auditor, or examiners of the Board or the home owners' loan corporation or an association, makes any false entry in any book, report, or statement of or to the Board or the home owners' loan corporation or an association, 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.

(d) The provisions of sections 112, 113, 114, 115, 116, and 117 of the Criminal Code of the United States (U.S.C., title 18, secs. 202 to 207, inclusive), insofar as applicable, are extended to apply to contracts or agreements of the home owners' loan corporation and an association 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.

SEPARABILITY PROVISION

SEC. 8. 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, shall not be affected thereby.

Senator BULKLEY (chairman of the subcommittee). We will first hear from Mr. Russell, the counsel for the Federal home-loan bank board, who was one of the group that participated in the drafting of the bill.

STATEMENT OF HORACE RUSSELL, GENERAL COUNSEL FEDERAL HOME LOAN BANK BOARD, ATLANTA, GA.

Senator BULKLEY. Mr. Russell, will you explain the purposes of the bill, the draft of it?

Mr. RUSSELL. Mr. Chairman, I will read a short statement that I have prepared and answer any questions that I can, if I may.

This act repeals section 4 (d), the provision for direct loans to home owners by Federal home-loan banks, of the Federal home loan bank act for the reason that the same has proved to be utterly

unworkable. The reason the same has proved to be unworkable is that the Federal home loan bank act was very carefully framed and enacted as a conservative reserve system for home financing institutions and for the purpose of the conservative and sound expansion of their resources for home financing, and the direct loan provision was inserted at the last moment without adequate provision for its administration, and it has proved to be and is impracticable of administration in the act.

Furthermore, it is economically and financially unsound for a reserve bank system, based upon the privately subscribed capital and private assets of home financing institutions, to lend money direct all over the Nation to home owners. Furthermore, it is impracticable for such a reserve system, with a capital of $134,000,000 to undertake to serve with direct loans the home mortgage market of this country, consisting of about 20 billion dollars of home mortgages. If that system is compelled to make direct loans it will require inconceivably large appropriations from the Federal Treasury and, as a practical proposition, it will be proper for the sound home financing institutions of the country to withdraw from the system, as such direct lending and a consevative reserve system are inconsistent.

The home owners' loan act of 1933 is an effort to give special relief to the small home owners of the Nation. Its operations are confined to homes having a value not exceeding $10,000 and used by the owner as his home.

Senator COUZENS. At that point, it would not make any difference how many families lived there, whether it was a 2-family flat or what, as long as it was not in excess of $10,000 ?

Mr. RUSSELL. It is limited to one and three families, not exceeding $10,000.

It is estimated that this class includes at least three fourths of the owner-occupied homes of the country, or about 8 million homes. This group of homes are mortgaged today for several billions of dollars.

Senator ToWNSEND. You have no correct estimate of what that amount is? You say it is "several."

Mr. RUSSELL. No, sir; I have not an exact estimate. The best figures we have are the Federal census, and approximately one half of the homes are under $5,000 in value, and there is no estimate there as to the exact number within $10,000 value.

Senator TOWNSEND. You have no exact amount of mortgages?

Mr. RUSSELL. There are about 1011⁄2 million owned homes in the country, and that is the way we have arrived at the estimate of 10,000,000 here that are within $10,000 of value.

Senator BULKLEY. Can you tell us how many more homes would be included if that were increased to $15,000?

Mr. RUSSELL. Well, I could not tell, but I could estimate that it would take another one and a half million homes, something like that.

Senator BULKLEY. And then how many more on top of that if it were increased to $20,000?

Mr. RUSSELL. That would take nearly all the homes in number, exclude some of course, but I should say that that would include

probably 10,000,000 of the owned homes, or another half million, and those are just rough estimates based on the census figures.

This act provides a 200 million cash capital and authorizes $2,000,000,000 of bonds, the interest on which would be guaranteed by the United States. It does not provide for loans in cash to take up mortgages, but provides for the exchange of these bonds for mortgages and for cash to pay the necessary taxes and incidental items essential in the transfer and refinancing of the home owners, provided the mortgagees will accept the bonds for his mortgage. Then the Home Owners Loan Corporation can take up the mortgage and pay taxes and incidental items in cash and give the home owner a new mortgage for all his indebtedness, not exceeding 80 percent of the value of the home.

Senator TOWNSEND. 80 percent?

Mr. RUSSELL. Eighty percent of the value of the home.

Senator COUZENS. Then that would be a maximum of $8,000, is that it?

Mr. RUSSELL. That is right; yes, sir.

Which would bear interest at the rate of 5 percent per annum on the unpaid balance, and would require a monthly payment of about $8 a thousand a month, to be applied first to interest and the balance to principal, over a period of 15 years until the loan is paid.

The Corporation would have the right to grant a moratorium of interest and principal at any time or from time to time not exceeding 3 years. By this means, if the mortgagee will take the bond, the home owner whose mortgage is due and who is about to lose his home, or whose monthly or other payments are excessive, could have all his home financing obligations brought up to date and put in one mortgage, the payments on which would be less than the rental value of his home, and if he got out of work or in the hospital, his payments could be extended to save his home. In addition to the exchange of bonds for mortgages the Corporation could make cash loans for the sole purpose of paying taxes to such home owners whose homes are otherwise unincumbered. The act does not protect the home owner whose home is mortgaged in cases where the mortgagee might refuse to take one of the bonds in lieu of its mortgage. It has been discovered that in probably one third of the counties in the United States there is no kind of an institution providing funds to finance homes. The banks which used to render this service are either out of business or have entirely, and apparently permanently, discontinued making long-term loans on real estate.

Senator COUZENS. Have you any information as to the number of counties in which there never was a home financing institution?

Mr. RUSSELL. I have not definite information, Senator. I can only illustrate by certain States. In my own State, Georgia, for instance, there is no kind of a home financing institution except to the extent that State banks did home financing in a little over a hundred counties in the State.

Senator TOWNSEND. You mean there has not been?

Mr. RUSSELL. There has not been for at least a generation, and in those counties the State banks and other banks have substantially discontinued real estate lending.

Senator CouZENS. At some time or other there were home-loan facilities in those communities, is that correct?

Mr. RUSSELL. In most of those communities there has never been any home loan facilities. They have depended upon foreign lenders. Senator COUZENS. Such as insurance companies?

Mr. RUSSELL. Yes. The insurance companies which formerly did much of the home financing in these communities have withdrawn and are not now making any such loans in most of these places, and if they are making home loans at all, they are selecting the most select risks in the most select cities in the United States.

Therefore, it seemed desirable, and, in fact, essential for the protection of home ownership and for the promotion of good citizenship in this country, that some provision be made for home financing in these counties. Therefore section 5 of this act provides for Federal savings and loan associations as local mutual thrift and home financing institutions in these communities. Each such association would be an entirely separate unit, organized in the community under a Federal charter and managed in the community to accumulate the miscellaneous savings of the people of the community to finance their neighbors' homes. These associations would be permitted to lend their funds on homes or to invest in Government bonds or Federal home-loan bank bonds, but they would be limited to this business.

Senator TOWNSEND. Do I understand that these institutions will accept deposits?

Mr. RUSSELL. No, sir. The plan is that they shall take money only on shares, similar to the present system of savings and loan associations in New York State and the building and loan plan in States like North Carolina, where they do not take deposits but receive funds from the purchase of shares.

Senator COUZENS. In other words, this Home Loan Board in Washington would grant the member charter; is that right? Mr. RUSSELL. That is right, Senator.

To encourage the development of such local thrift and homefinancing institutions an appropriation of $250,000 is proposed to assist in the organization and development of them, and an appropriation of $100,000,000 is proposed to take preferred stock in these associations, provided the people of the community first subscribe and pay in an amount equal to that subscribed by the Government. The Government subscription is limited to $100,000 in any one association and is preferred stock, and is to be retired after 5 years.

It is thought that these associations can raise in the country very large sums of money and render a very large service to home owners and that they will prove to be permanent institutions to continue the long-term financing of local homes by local people.

Senator COUZENS. May I ask you on what you base your statement that large sums can be raised for this purpose?

Mr. RUSSELL. That statement, Senator, is based upon the experience of the past in organizing local thrift institutions. There are about eleven or twelve thousand of them in the country now that have accumulated about $8,000,000,000 of cash.

Senator COUZENS. But that is not recent experience, is it?

« iepriekšējāTurpināt »