Home Loan Bank System in all of its operations including those of the Federal Savings and Loan Insurance Corporation. In its deliberations the Council considered suggestions originating with the savings and loan business, the Federal Home Loan Bank Board or its department heads, other Government agencies and the public. Over the years, the Council has proposed many constructive ideas to the Federal Home Loan Bank Board and to the savings and loan business. During the time I have had the privilege of serving as a member of the Council, these suggestions were in every case graciously received and studied, and sincere efforts made to implement them.

The last meeting of the Federal Savings and Loan Advisory Council was held on May 24 and 25 of this year. At that time a most careful and thorough study was made of the provisions of the Reorganization Plan No. 2 of 1956. The Council membership includes savings and loan executives, public interest directors of district Federal home loan banks (who represent other businesses and professions), the president of the national association of supervisors of State chartered savings and loan associations, and executives of both national and State savings and loan trade associations. It was the considered judgment of the Council, representing all of the areas of interest enumerated above, that the proposed Reorganization Plan No. 2 of 1956 is an unstudied and ill-timed suggestion. Its adoption would bring about fundamental and undesirable changes in the operation and supervision of the savings and loan business. These changes would be disadvantageous, confusing and costly and would not result in additional protection or benefit to the public.

As a result of the reasoning and conclusions which I have described, the Federal Savings and Loan Advisory Council voted unanimously a resolution of disapproval, copy of which is hereto attached.

I strongly support Senate Resolution 291 and ask the subcommittee to report it favorably.

RESOLUTION OF THE FEDERAL SAVINGS AND LOAN ADVISORY COUNCIL

"Whereas the Federal Savings and Loan Advisory Council was created by Congress under section 8 (a) of the Federal Home Loan Bank Act to confer with the Federal Home Loan Bank Board and the Board of Trustees of the Federal Savings and Loan Insurance Corporation on matters affecting the Federal Home Loan Banks and their members, and

"Whereas, the 17 members of the Council, elected and appointed from each of the 11 regional Federal Home Loan Bank districts throughout the Nation, were given no notice of Reorganization Plan No. 2 until it was made public a few days before the Council's meeting of May 24-25 and the Council had absolutely no opportunity to study the proposal or offer its considered advice thereon,

and

"Whereas, Reorganization Plan No. 2 provides for a drastic change in the organization and operation of the Federal agencies by separating the Federal Savings and Loan Insurance Corporation from the Federal Home Loan Bank Board, and

"Whereas, such separation of the agencies would result in increased cost, needless and conflicting duplication of supervision and inject partisanship into a newly created independent agency, and

"Whereas, the Advisory Council and the national trade associations are currently conducting intensive studies designed to seek a Federal Home Loan Bank System of maximum effectiveness to the savers and homeowners of the Nation: Now, therefore, be it

"Resolved, That the Federal Savings and Loan Advisory Council strongly urges the rejection of Reorganization Plan No. 2; and be it further

Resolved, That a copy of this resolution be transmitted to the President of the United States and to members of Congress for their consideration and action, and to the Nation's 6,000 savings and loan associations whose business is so vitally affected by this abrupt act.'

I hereby certify that the above is a true and correct copy of a resolution adopted by the Federal Savings and Loan Advisory Council at Washington, D. C. on May 25, 1956.

LACY BOGGESS,

Secretary, Federal Savings and Loan Advisory Council.

Senator KENNEDY. The following letters will be incorporated in the record:

Letter dated June 8, from Senator J. W. Fulbright, to the chairman of the Subcommittee on Reorganization;

Letter dated September 7, 1955, to Senator J. W. Fulbright, from Walter W. McAllister;

Letter dated September 13, 1955, to Senator J. W. Fulbright, from Walter W. McAllister;

Letter dated June 8, 1956, to the chairman from Senator Homer E. Capehart;

Letter dated June 28, 1956, to the chairman from Senator Herbert H. Lehman;

Letter dated June 22, 1956, to the chairman, from Senator Wayne Morse;

Letter dated June 18, 1956, to the chairman from Senator J. Glenn Beall; and

Letter dated June 6, 1956, to the chairman from Meyer Kestnbaum, special assistant to the President.

DEAR SENATOR KENNEDY: Thank you for your letter of May 23, 1956, requesting the views of the members of the Banking and Currency Committee upon the merits of Reorganization Plan No. 2 of 1956. This plan would separate the Federal Savings and Loan Insurance Corporation from the Federal Home Loan Bank Board.

I have sent a copy of your letter to each member of the Banking and Currency Committee in order that they may reply individually to your letter.

Personally, I can see no justification for the reorganization plan. The Insurance Corporation has been a part of the operations of the Federal Home Loan Bank Board since the Corporation was created in 1934, and I am unaware of any reason for separating the two. The President's message admits that the plan will result in increased operating expenses, and the message does not state any specific economies which would result.

It seems to me that before we take any action dividing these supervisory and regulatory responsibilities into different agencies, the subject should be carefully considered, and, if it is to be done, a plan should be worked out which would result in good administration and would avert a duplication of supervision and examination and not invite controversy and conflict between two Federal agencies administering overlapping, and in some instances, identical responsibilities.

In addition to these basic questions, the plan has some unusual aspects in that it would make this Board which would be permanent, nondefense and nonemergency, subject to the direction and control of the President; it does not fix specific terms of office for the members of the proposed new Board and would not make it bipartisan. The 3-man Federal Home Loan Bank Board is bipartisan so that of the 5 members on the 2 Boards, 4 could be from 1 political party.

Furthermore, the plan creates an additional independent agency which reports directly to the President. I had understood that one of the principal objectives of reorganization of the Executive branch was to reduce the number of agencies reporting to the President. You may recall that this was one of the principal objections of the President last year when the Congress removed the Federal Home Loan Bank Board from the jurisdiction of the Housing and Home Finance Agency.

Unless the subcommittee can discover some economy to be achieved or some other principle of good management to be served, I would recommend that Reorganization Plan No. 2 of 1956 be disapproved by the Senate.

Your committee may be interested in the enclosed letters from the chairman of the Home Loan Bank Board, dated September 7 and September 13, 1955, commenting on S. 2454 and S. 2318. _These bills, now pending before the committee, had the same general purpose as Reorganization Plan No. 2 of 1956.

Sincerely yours,

J. W. FULBRIGHT, Chairman.

FEDERAL HOME LOAN BANK BOARD,
Washington, D. C., September 7, 1955.

Hon. J. W. FULBRIGHT,

Chairman, Committee on Banking and Currency,

United States Senate, Washington, D. C.

DEAR SENATOr Fulbright: Mr. Albert M. Cole, Housing and Home Finance Administrator, has furnished me with a copy of his letter of August 17, 1955, to you, advising you he was referring to the Federal Home Loan Bank Board, for comment, the request embodied in your letter of July 13, 1955, for an expression of views on S. 2454.

This bill, which provides that no person who is serving as a member of the Home Loan Bank Board shall be eligible for appointment to or serve as a member of the Board of Trustees of the Federal Savings and Loan Insurance Corporation, would not, as written, be relevant to the situation as it now exists. By reorganization Plan No. 3 of 1947, the Board of Trustees of the Federal Savings and Loan Insurance Corporation was abolished and its powers and functions_transferred to the Home Loan Bank Board-now the Federal Home Loan Bank Board. It would first be necessary, before the bill could have any clear force and effect, to reconstitute a Board of Trustees for the Federal Savings and Loan Insurance Corporation.

However, to direct our comments to the apparent purposes of the bill, we are not in agreement that a separate board should be established to administer the affairs of the Federal Savings and Loan Insurance Corporation. Both the Federal Home Loan Bank Board and the Federal Savings and Loan Insurance Corporation are concerned with the operations of savings and loan associations and the existence of two boards could bring about conflicts of policy. We feel that it is also apparent that such operations would be much less economical. Possibly the Congress might feel that some checks and balances might be needed to preserve necessary controls over the approval of insurance and the granting of charters, but this Board does not believe any benefit would derive merely by the establishment of a separate governing body for the Federal Savings and Loan Insurance Corporation.

As requested in connection with this matter, five copies of this reply are being sent you.

Sincerely yours,

WALTER W. MCALLISTER, Chairman.

FEDERAL HOME LOAN BANK BOARD,
Washington, D. C., September 13, 1955.

Hon. J. W. FULBRIGHT,

Chairman, Committee on Banking and Currency,

United States Senate, Washington, D. C.

DEAR SENATOR FULBRIGHT: Mr. Albert M. Cole, Housing and Home Finance Administrator, has furnished me with a copy of his letter of September 1, 1955, to you, advising you he was referring to the Federal Home Loan Bank Board, for comment, the request embodied in your letter of June 28, 1955, for an expression of views on S. 2318.

This bill, which provides that no person who is serving as a member of the Home Loan Bank Board shall be eligible for appointment to or serve as a member of the Board of Trustees of the Federal Savings and Loan Insurance Corporation, would not, as written, be relevant to the situation as it now exists. By Reorganization Plan No. 3 of 1947, the Board of Trustees of the Federal Savings and Loan Insurance Corporation was abolished and its powers and functions transferred to the Home Loan Bank Board-now the Federal Home Loan Bank Board. would first be necessary, before the bill could have any clear force and effect, to reconstitute a Board of Trustees for the Federal Savings and Loan Insurance Corporation.

It

However, to direct our comments to the apparent purposes of the bill, we are not in agreement that a separate board should be established to administer the affairs of the Federal Savings and Loan Insurance Corporation. Both the Federal Home Loan Bank Board and the Federal Savings and Loan Insurance Corporation are concerned with the operations of savings and loan associations and the existence of two boards could bring about conflicts of policy. We feel that it is also apparent that such operations would be much less economical. Possibly the Congress might feel that some checks and balances might be needed to preserve necessary controls over the approval of insurance and the granting of charters but this Board does not believe any benefit would derive merely by the establishment of a separate governing body for the Federal Savings and Loan Insurance Corporation.

As requested in connection with this matter, five copies of this reply are being sent you.

Sincerely yours,

WALTER W. MCALLISTER, Chairman.

UNITED STATES SENATE,

Hon. JOHN F. KENNEDY,

COMMITEEE ON BANKING AND CURRENCY,

Chairman, Subcommittee on Reorganization,
Committee on Government Operations,

United States Senate, Washington, D. C.

June 8, 1956.

DEAR SENATOR KENNEDY: I have received a copy of your letter of May 23, 1956, to Senator Fulbright, requesting the views of members of the Banking and Currency Committee concerning Reorganization Plan No. 2 of 1956.

As you know, the Banking and Currency Committee has legislative jurisdiction over the Federal Home Loan Bank Board and the Federal Savings and Loan Insurance Corporation, and as the ranking minority member of that committee, I am, of course, extremely interested in any proposal affecting these institutions. Reorganization Plan No. 2 provides for complete separation of the Federal Savings and Loan Insurauce Corporation from the Federal Home Loan Bank Board. The administration of the Corporation would be vested in a Board of 3 trustees, 1 of whom would be the Chairman of the Bank Board.

This plan calls for a change in the method of operation that has proven successful for the past 22 years. I have not been convinced that there is any valid reason for separating the FSLIC from the Bank Board. Certainly, I have heard no demand for such action from the members of the savings and loan industry that are so vitally concerned with the operation of these agencies.

The proponents of the plan have admitted that the reorganization will result in increased operating expenses. I can see no advantage to the Government or to the industry to counterbalance the increased expenses involved in duplicate personnel and offices.

I am sure that your subcommittee will study this matter carefully and thoroughly to determine whether there are any overriding considerations that necessitate the adoption of this plan. I appreciate your affording me the opportunity to outline my views.

Sincerely yours,

HOMER E. CAPEHART.

UNITED STATES SENATE, Washington, D. C., June 28, 1956.

Hon. JOHN F. KENNEDY,

Chairman, Subcommittee on Reorganization,
Senate Committee on Government Operations,
Senate Office Building, Washington, D. C.

DEAR JACK: This is in further reference to my letter to you of June 13, in which I informed you that although I had not studied it in detail, I was tentatively inclined to oppose Reorganization Plan No. 2 of 1956, the plan which seeks to create separate managements for the Home Loan Bank Board and the Federal Savings and Loan Insurance Corporation.

In the interval since I wrote you the aforementioned letter, I have had opportunity to study this measure in greater detail. On the basis of that study, I would like to inform you, for the record, that I see no merit whatever in Reorganization Plan No. 2 and, further, that I wholeheartedly support S. Res. 291, the resolution expressing the Senate's disapproval.

I wholeheartedly subscribe to the scholarly and careful statement made by Senator Sparkman on behalf of himself and Senators Fulbright and Capehart, the chairman and ranking minority member, respectively, of the Senate Banking and Currency Committee. I also wish to endorse the testimony that Senator Sparkman delivered in person at the subcommittee's hearings yesterday.

I am unable to discover anyone who supports this proposal, except the Bureau of the Budget. And even the support of the Bureau of the Budget seems to be somewhat equivocal, in view of the statements that various representatives of the administration have made in the past. My own heavy mail on the question has been unanimously opposed to this plan.

I would appreciate it very much if you could make this letter a part of the record of your subcommittee.

With kindest regards.

Yours very sincerely,

Hon. JOHN F. KENNEDY,

Chairman, Subcommittee on Reorganization,
Committee on Government Operations,

United States Senate, Washington, D. C.

DEAR SENATOR KENNEDY: I should like to record my support of S. Res. 291 to disapprove Reorganization Plan No. 2.

This plan provides for a separation of the Federal Savings and Loan Insurance Corporation from the Federal Home Loan Bank Board. The savings and loan leaders in Oregon tell me that the representatives of the industry are opposed to the plan and were not in any way consulted prior to the submission of the plan to the Congress. My own experience on the Senate Banking and Currency Committee has led me to be extremely skeptical of changes of such a major nature which have not had the benefit of careful hearings and committee work.

On the face of the plan, creating 2 agencies where 1 exists, it would appear that the philosophy of reorganization plans has been violated. What economy can result from establishing, staffing, and operating two agencies?

If there are sound justifications for a change in the structure of these Federal agencies, I urge the administration to present them in legislative form so that the regular committees can deal with them in a careful and thorough manner. Meanwhile, I would urge the committee to report favorably the resolution of disapproval. With kindest regards, Sincerely,

WAYNE MORSE.

UNITED STATES SENATE,
COMMITTEE ON BANKING AND CURRENCY,

Hon. JOHN F. KENNEDY,

Chairman, Subcommittee on Reorganization,

June 18, 1956.

Senate Office Building, Washington 25, D. C.

DEAR SENATOR KENNEDY: In reply to your request of Senator Fulbright for the views of the members of the Senate Committee on Banking and Currency on Reorganization Plan No. 2, of 1956, I have the following comments to make:

It is my opinion that the Federal Savings and Loan Insurance Corporation should not be separated from the Federal Home Loan Bank Board, but that the former should remain under the supervisory jurisdiction of the latter, as at present, conforming to the Hoover Commission task force report on lending agencies, page 38.