Summary of replies to question No. 5 "If the proposed system had been in operation, to what extent do you think foreclosures, local bank failures, etc., could have been avoided during the past two years?" Nature of reply: None.. 50 per cent of each. To great extent.. Very little. Nature of reply-Continued. 25 per cent of bank failures_ 80 per cent of bank failures. 60 per cent of bank failures_ 85 per cent of bank failures_ 3 per cent of each.. 95 per cent of each. 15 per cent of bank failures_ closures__ Number of replies 75 per cent of foreclosures_ 17 Felt no need for.. 1 Foreclosures would have Absurd... been avoided... 17 Would have saved $500,000 Made matters worse.. 14 Would have saved $2,000, 100 per cent of bank failures... 000 1 35 per cent of each.... 10 Would have saved $5,000, 65 per cent of each.. 85 per cent of each. Helped building and loan associations. 75 per cent of bank failures_ per cent of bank failures. Summary of replies to question No. 5 "If the proposed system had been in operation, to what extent do you think foreclosures, local bank failures, etc., could have been avoided during the past two years?" Nature of reply: None.. 50 per cent of each. To great extent. 15 per cent of each.... 52 41 40 Nature of reply-Continued. 25 per cent of bank failures. 80 per cent of bank failures. 60 per cent of bank failures_ 85 per cent of bank failures_ 30 per cent of bank failures_ 40 per cent of foreclosures45 per cent of foreclosures_ 65 per cent of foreclosures.. 80 per cent of foreclosures__ 2 per cent of each.......... 3 per cent of each. 95 per cent of each 15 per cent of bank failures_ 33% per cent of fore closures__ Number of replies 75 per cent of foreclosures. 17 Felt no need for.. Foreclosures would have Absurd... 1 been avoided.... 17 Senator WATSON (presiding). You may proceed. Secretary LAMONT. I will say that 76 per cent of the 8,800 people who replied were in favor of the bill. Senator WATSON. Mr. Secretary, let me ask you two or three questions in that regard to clarify the situation. Secretary LAMONT. Certainly. Senator WATSON. Did you send the questionnaire to people whom you knew were for the bill, I mean in the beginning? Secretary LAMONT. No; in the first instance we sent it to everybody except insurance companies, and we assumed the insurance companies would be pretty generally against it, because in the committee meetings of the President's conference on home building and home ownership the attitude of the insurance people was pretty uniformly against any such bill as this. Senator TOWNSEND. Do you mean against this particular bill? Senator TOWNSEND. You did not send to them with the questionnaire a copy of any bill? Secretary LAMONT. No. The questionnaire was based on the general statement by the President on a proposed rediscount bank for building and loan and other associations and banks who lend to home owners and builders. We were somewhat criticized for not having sent the questionnaire to insurance companies, so we did that later. Just as soon as we found out that there was criticism we sent copies to all insurance companies we could get a record of, and I think we got them all. While we had rather assumed that they would all be against such a plan, to our surprise I think more than 40 per cent of them favored it. Doctor GRIES. Almost 50 per cent of the insurance companies replying were in favor of a bill somewhat similar to this one that you have before you. Senator WATSON. Mr. Secretary, let me ask you a second question: Did you send the questionnaire to investment bankers, mortgage bankers? Secretary LAMONT. Yes; we sent the questionnaire to banks, building and loan associations, insurance companies and mortgage bankers, but not to investment bankers. Senator TOWNSEND. And to commercial bankers, or to bankers of each and every character? Secretary LAMONT. Yes; to all classes of banks except investment bankers. Senator BULKLEY. Didn't you send with this questionnaire a copy of the bill? Secretary LAMONT. No, we did not. But we thought everybody knew, particularly everybody who was interested in this sort of thing. knew what the President's proposal was, and that the bill was supposed to follow the general features outlined by the President. Senator BULKLEY. The questionnaire refers here to "the proposed home loan discount banks." As I understand you, that did not have any reference to anything that was dated in the questionnaire or any inclosure therewith. Secretary LAMONT. Yes. There was an inclosure with the questionnaire the President's statement of November 13. Senator BULKLEY. And you relied upon their general information on the subject concerning it. Secretary LAMONT. Yes; we had no specific bill in mind. Senator WATSON. I have not read the questionnaire, Mr. Secretary, but is there anything in it to induce an affirmative answer on the part of a person receiving it? Secretary LAMONT. No; there was no such intention. Senator WATSON. Or was it just a general questionnaire? Secretary LAMONT. The questionnaire will speak for itself in that respect, but it was not intended to be leading. The best answer to that question is perhaps this, that there was a good deal of discrimination shown in the replies received as evidenced in the variation in numbers of yeses and noes to the different questions. In other words, the answers were not uniform as to the different questions. Senator COUZENS. Senator Watson, while you were out of the room for a minute I had the questionnaire put in the record. Senator WATSON. I am glad that you did that. Senator COUZENS. I do not like to disagree with the Secretary but I think the questions are very leading. Secretary LAMONT. Well, they were not intended to be leading, Senator Couzens. I do not get that impression from reading them. Senator COUZENS. I have never heard of anybody asking a question of a person if he needed money when there was a negative answer. That questionnaire is substantially asking them all if they want money. is: Secretary LAMONT. Well, suppose we just read them. Question 1 Would the facilities provided by the proposed home loan discount banks for borrowing on your home mortgages add desirable flexibility and security to the conduct of your institution? Well, now, if a bank did not need any help I think it would not reply yes to that question. As a matter of fact, about 23.3 per cent answered no. Now let us take the next question, No. 2: Would operation of the discount banks increase the amount of credit now available for legitimate use in your community? Well, I think that is a fair question. Senator COUZENS. Mr. Secretary, in view of the fact that this money was to be put up by the Government, and that every banker who knows banking understands that he desires his assets as flexible as possible, it seems to me he would obviously answer "yes" to the first question. I do not know how the percentages were divided as relating to the several questions, but on the first question it seems to me almost everybody of experience would answer "yes." Secretary LAMONT. But the bulk of this money is supposed to be put up by the using institutions and not by the Government. Senator COUZENS. Yes; but not until after the Government has first put up the initial capital. In other words, if a bank gets into trouble later on and wants its assets flexible it may come in. But if it goes along without needing any rediscounts or any additional flexibility, then of course it would never use the Home Loan Discount Banks, but it would always have the Government back of it in case an emergency arose. I mean, if I were engaged in the banking |