Now, we have that right back to 1944, and if you want this statement for the record Senator MAGNUSON. Yes, we will put it in the record because I think this is quite important to the committee. It goes up from 2.69 in 1944-it was lower than that, 2.42 in 1946. About 21⁄2 is that from 1944 to 1949, and then it starts going up until 1955 the average was 3, and it has been continually going up until now it is the highest; isn't it, 4.27? (The information referred to follows:) TABLE 1.-Average annual dividend rate paid by FHLB member savings and loan TABLE 2.-INSURED SAVINGS AND LOAN ASSOCIATIONS AVERAGE ANNUAL DIVIDEND RATES PAID BY FHLB DISTRICTS Mr. MCMURRAY. Can I just see this a minute? I want to point another thing out. Senator ALLOTT. Yes, and the Federals alone are only 4.18 here. There is four one-hundredths of a percent difference, just a slight difference, alone. The third column. Mr. MCMURRAY. Yes, sir; 4.21. Senator MAGNUSON. From 4.25. Mr. MCMURRAY. 4.21. You will notice also, Senators, this is the first time in a long time that the dividend rate was down. If you will notice June 30, 1963, it was 4.28 and December 31, 4.27. It is the first time in this series that the rate went down. And that probably was due to certain actions which this Board took. MAXIMUM INTEREST RATES Senator ALLOTT. What would be the maximum rate of interest paid by any association? Mr. MCMURRAY. The maximum regular rate so far as I know, is 5 percent paid in southern California. Ken, did they reduce their rate, the two still paying 5 percent? Mr. SCOTT. You mean on this quarter, I didn't see that they did. Mr. MCMURRAY. Originally there were 17 associations, Senator, that had raised their rate in October from 4.85 to 5 percent, and these were mainly relatively small associations, and at that time in making a speech to the mortgage bankers, when this news came through and as a result I stated that the Board was going to take certain actions, and as a result of that statement also with some excellent cooperation from the Governor, Governor Brown, the associations in California, the larger ones, did not go up to 5 percent as expected they would. RESERVE REQUIREMENTS Then the Board passed some regulations on reserve requirements, and following through that statement and the result of it was that 17 associations that were paying 5 percent, 15 of them reduced their rate, and none of them, none of the others went up and the 2 that didn't reduced their rate had already advertised and under California law once they advertised, they could not reduce their rate; so our regulations did have the effects we intended. Senator ALLOTT. Then you accomplished this really by increasing the reserve requirements, didn't you? Mr. MCMURRAY. Yes, sir. And also Senator ALLOTT. I want to compliment you, I think it was a very good move. Mr. MCMURRAY. Thank you very much. Senator MAGNUSON. I put his speech in the record, it is in the record, just after he made it, which lays it out, I mean fairly well. Senator ALLOTT. I remember the situation. Mr. MCMURRAY. I appreciate it. Senator ALLOTT. I think this ought to be a part of this hearing, too, because I really feel that this was a very judicious decision, and this whole thing, I feel, has been getting a little out of hand. Mr. MCMURRAY. It is good to have you say that, Senator, because we don't hear it too often from some of the people in the industry. The good people generally in the industry are supporting us. The fee and discount regulation was also promulgated which had its effect in terms of making associations pay on true current earnings and not on future earnings. SATURATION POINT ON LOANS Senator MAGNUSON. Are there any member associations that have got to the, and I am just speaking generally, to the point where they have attracted all kinds of savings but they find themselves with saturation point on loans, I mean to keep the money working? What do they do then? They don't leave it in reserve, do they? Mr. MCMURRAY. What they do is buy participations from other associations or Senator MAGNUSON. Other associations? Mr. MCMURRAY. And they, some of them have a little higher liquidity than they otherwise would have and they can invest in treasuries, you know. Senator MAGNUSON. Could a savings and loan association refuse to take your account? Mr. MCMURRAY. Oh, yes. Senator MAGNUSON. That is part of what they can do. They could conceivably say, "We have got enough money, we can't handle any more.' Mr. MCMURRAY. As a practical matter what they generally do is cut down their advertising and other solicitation methods and this slows their intake down. Senator MAGNUSON. All right. Let's go on to the other two items you have. Mr. MCMURRAY. I think these would be interesting to you. 31-706-64-pt. 1-14 NO DIRECT EXPENDITURE OF FEDERAL FUNDS Senator ALLOTT. Before we do that and while we are still on this, you do not spend Government funds directly. You just come to us for the authorization. Mr. MCMURRAY. That is right, sir. Senator ALLOTT. Thus there is a tendency to say, "Well, they are not spending Government funds, it doesn't matter too much." Mr. MCMURRAY. Quite the contrary, Senator. Senator ALLOTT. Well, some people figure that way, I have heard it said. Mr. MCMURRAY. Not this boy. ADMINISTRATIVE PERSONNEL Senator ALLOTT. Your administrative personnel in 1963 were 195. Then it went up-these are fiscal years-then it went up to 225, and now you have jumped from 225 to 328 for 1965. This is a 33-percent-in round figures-increase. Let's have the story. Mr. CORCORAN. It is due to the reorganization. We took 105 employees out of the Insurance Corporation and put them in the Board; you will find there are only 16 people in the Insurance Corporation estimate for 1965. Senator ALLOTT. You had 989 for last year and for 1965 you have got 989 plus 328, that would make 1,317 and you still have an increase of a hundred there. If we keep reorganizing along these lines won't we reorganize ourselves to where we have too many employees? Mr. CORCORAN. Senator, we don't have any increase in personnel between 1964 and 1965. There is no increase at all. Senator ALLOTT. I don't see how you figure that. Mr. CORCORAN. If you look here, at page 10. Senator ALLOTT. You look at these figures I am looking at, too, and you will see those were procured from you. Mr. CORCORAN. These are the figures here. APPARENT INCREASE SHIFT OF PERSONNEL Mr. MCMURRAY. The 225 you are referring to and the 328 are accounted for entirely by the shift from the Insurance Corporation to the Board of certain employees. Now, if I may rephrase what you are asking, you are really asking why the increase from 195 to 225 from 1963 to 1964. Senator ALLOTT. No. Mr. MCMURRAY. Because actually this increase- year. Mr. MCMURRAY. Yes, sir. There has been no increase in the Board staff, for the budget that we are presently requesting funds authorization. Senator MAGNUSON. On page 2 of your statement you haveMr. MCMURRAY. Senator, if you look here you will see the reduction from 126 to 16 and-we really shifted them over there. Mr. CORCORAN. From the Insurance Corporation. Senator ALLOTT. In your Insurance Corporation you reduced it by 110? Mr. CORCORAN. That is right, sir. Senator ALLOTT. But you have increased Mr. CORCORAN. Moved them over to the Board. Senator ALLOTT. But you increased a similar amount, a little more, in the Home Loan Bank Board itself. Mr. CORCORAN. That is right, sir. Senator ALLOTT. And you have taken it out of the Insurance Corporation? Mr. CORCORAN. That is right, sir. Senator AI LOTT. And this represents the combining of the application functions, and so forth. Mr. CORCORAN. Yes; and the merging of the respective comptroller's functions; that is right. Senator MAGNUSON. Is this correct that you have a total, you had a total of 1,359 positions? Mr. CORCORAN. For 1965 that is correct. Then it was reduced by 15 positions. TOTAL PERSONNEL Mr. MCMURRAY. We now have 1,344. Senator MAGNUSON. 1,344 total. In all divisions? Mr. MCMURRAY. That is right, sir. Senator ALLOTT. What was the total for 1964? Mr. CORCORAN. It was 1,364; so 1965 was 5 less than 1964 before the adjustment made by the amendment. Mr. MCMURRAY. Even though our business has increased 15 percent. Mr. CORCORAN. That total has been reduced by 15 positions, bringing it down to 1,344. EXAMINATION AND SUPERVISION Senator ALLOTT. Let me ask you another question about your employment. In the Office of Examinations and Supervisions, you have 1,000 in 1964, and 1,000 in 1965. I know these people are not always too anxious to see your examiners come in, but is this sufficient really to do the police work, maybe that isn't the proper word, the supervision? Mr. MCMURRAY. Supervision. Senator ALLOTT. That really needs to be done with respect to your insurance functions. Mr. MCMURRAY. Well, I will give you the answer here. Senator MAGNUSON. I think you ought to have as a background, too, that these examiners have, for the next fiscal year, 105 more institutions to examine. Mr. MCMURRAY. Yes. Senator MAGNUSON. Isn't that correct? Mr. MCMURRAY. That is correct, sir; at least 105. Senator ALLOTT. He is going into that. Mr. MCMURRAY. I answer that question in some detail. |