The board of directors, unlike Mr. Condit, have been on board; some since the very early hours of the bank's existence. Let me say to the members of the board present here today, you are critical to the future of this bank. If you do not have the will, the good judgment, the dedication necessary to set fair but hardnosed policies, and see that they are carried out, the bank is doomed.

One cannot read the FCA reports and listen to the GAO testimony without concluding that successive boards of directors have allowed haphazard policymaking to become a way of life. On the one hand the board seems mesmerized by key issues clearly in its bailiwick, while on the other hand, it's all too willing to dabble in dayto-day operations and decisionmaking better left to the on-scene management team. The board must get its act together.

Let me emphasize in the strongest possible terms that you people are the trustees for the members of the National Consumer Cooperative Bank, for the taxpayers of the United States who put up money for your operations, and for cooperatives throughout the Nation. And you also are entrusted with the faith, the hard work and the dedication which were contributed by so many to the long and difficult task of creating this institution. You are the temporary custodians of large sums of public money.

This Member of Congress does not intend to let any of you forget any of these solemn responsibilities. In the name of all of the good people who need the bank and who worked long hours to make it possible, I intend to haunt you until the necessary changes are made to straighten this institution out, and once again, point it in its original direction.

This morning we have John Comerford, the acting president during the organizational phase of the bank; Dr. Carol Greenwald, president of the bank from 1980 through 1982 and presently a major contractor with the institution; Mitch Rofsky, the executive vice president who served as acting president until May 31; and the members of the present board of directors.

Mr. Sollars, as chairman of the board, we'll ask you to introduce your colleagues; however, first, I'd like to call upon Mr. Wylie.

Mr. WYLIE. Thank you very much, Mr. Chairman, I'm glad to welcome with you this very impressive array of talent.

Each of you are well known for your expertise in the cooperative movement and we have high hopes and expect great things from you as members of the board of the National Consumer Cooperative Bank.

Last month the subcommittee received testimony from the Farm Credit Administration and the General Accounting Office, both expressing reservations about the future viability of the National Consumer Cooperative Bank.

You've seen that GAO report, I'm sure, but it criticized the bank's loan policies and procedures as well as several other aspects of internal administration.

Consumer cooperatives by their very nature require a source of credit to be responsive to their essential needs. Essential to the bank's success is that it be operated by the people who are responsive, and that they be held fully responsible for its operations.

I would like to associate myself with the observations of the chairman, Mr. St Germain, in that he hopes the oversight by this committee can correct the shortcomings found by the examiners.

In 1977, as one of the original cosponsors of the National Consumer Cooperative Bank legislation, I recommended passage of that legislation to my colleagues-as those of you sitting on the front here know, we went through a lot of hearings to get that passed.

So I have some feeling for the National Consumer Cooperative Bank and in my additional views, when that legislation was passed, I stated that in 4 years, establishment of the National Consumer Cooperative Bank could well be acclaimed as one of the landmark pieces of legislation ever passed by this Congress.

Nothing would be accomplished if the problems of the bank were ignored by its very founders. It is necessary for those who believe in the bank to confront the problems to insure that the original intent of the statute creating the bank is carried out for the benefit of the people who depend on this institution.

During last month's hearings I listened to discussions about a possible lack of commitment due to the cooperative movement. I'm sure that isn't the case for those of you seated in front of us this morning.

However, a fortunate aspect of an otherwise difficult situation, it seems to me, has been in the services of Mr. Sollars when he undertook this responsibility. His dedication to the consumer movement and to the cooperative movement over the years has proven to be one of magnitude and accomplishment, and I think Mr. Sollars has the background and the expertise to do what is right as far as the Consumer Cooperative Bank is concerned.

So with that little opening statement, I look forward, Mr. Chairman, to listening to these witnesses today, with assurances that we want to try to be helpful as possible to see that this cooperative bank will turn around.

Thank you.

Chairman ST GERMAIN. At this time I will recognize Mr. Sollars, chairman of the board, to introduce his colleagues to us, and we will put your entire statement in the record and you may proceed to make your presentation.

STATEMENT OF FRANK SOLLARS, CHAIRMAN OF THE BOARD OF DIRECTORS, THE NATIONAL CONSUMER COOPERATIVE BANK Mr. SOLLARS. Thank you very much, Mr. Chairman. It's a pleasure to be here today and it's also a pleasure for me to introduce my board of directors.

I'll not only introduce them but give you the committees they serve on, so we'll give you some background for questions later.

Peter Behringer is president of the Baltimore Multi-Family Housing Services. Would you make yourself known as I introduce. you? He's from Baltimore, Md.; he's on the credit and lending, finance and pricing and investment committee.

Cynthia Copple is director of Associated Cooperatives Wholesalers in California. Her committees are finance, development and marketing, and review. She's the chairman of that committee and Peter's the chairman of the credit and lending committee.

23-148 0-83--5

Joseph Hanksnecht is director of public affairs for the League of Insurance Companies; he's chairman of the finance committee, he's also the pricing and investment chairman, development and marketing, executive, and the CCDC executive committee.

Ann Hoyt is an economist from Kansas State University. The committees that Ann serves on are finance, development and marketing; election review; pricing and investment.

Dean Lund is vice chairman of Group Health, Inc., St. Paul. The committees that Dean serves on are credit, and the CCDC executive.

Father A. J. McKnight, who was unable to be with us todaywe're very sorry about this-is from the Holy Ghost Catholic Church. He's also my vice chairman. On the committees, he serves on credit and lending, executive, CCDC executive.

Paul Mohn is the chairman of the board of Greenbelt Cooperatives, Inc. Paul is chairman of the audit committee and is also in finance, development and marketing, and executive.

Alfred Reynolds, who was not able to be here today, is from California. He's a special project officer of the John Stewart Co. He serves on our credit and lending and CCDC executive.

George Schechter is from New York; he's executive director of Coordinated Housing Services. The committees that George serves on are credit and lending, and he sits on the election review and executive committees.

Maria Varela, of the board of directors of-my Spanish isn't too good, so I get repercussions from this. She's trying to teach me, but the committees that Maria serves on are credit and lending and CCDC executive.

Charlie Warner is also from St. Paul; he's executive director of Common Space. Charlie serves on our audit, credit and lending, and CCDC executive.

Morgan Williams is president of the Cooperative League, U.S.A. Morgan served on audit, credit and lending, development and CCDC executive committees.

Also on my right is Tom Condit, our new president and chief executive officer. Also with us we have Mitch Rofsky who is our acting president.

Thank you very much. Did you want me to go ahead with my statement?

Chairman ST GERMAIN. Yes.

Mr. SOLLARS. Of course I'm honored to appear before you to discuss the history and operations of the National Consumer Cooperative Bank, an institution that I have served on for nearly 3 years as a presidential appointed representative of small business; since 1981 as chairman of the board.

Paul Mohn, chairman of the audit committee and Mitch Rofsky, the bank's executive vice president, will also make statements, and the board will be pleased to respond to any questions.

I also would like to introduce Tom Condit, president of the bank, which I've already done.

The bank has many achievements spread over the past 3 years. The bank has enabled thousands of tenants to become homeowners, many of whom were dependent on the bank for a source of financing.

They help hundreds of thousands of persons control the cost and quality of their health care through our lending to health care cooperatives. We've assisted distressed neighborhoods in Detroit, New York, Denver, and Houston, to name a few, by financing or providing technical assistance to new cooperatives.

We enabled one new house or commercial cooperative to form each 3 weeks of our existence. More than half of these new co-ops benefited low-income individuals.

In fact, roughly half of all our loans have been made serving lowincome people. The board has taken a very active role in shaping this institution, meeting monthly during these formative years.

The board asked the Farm Credit Administration to examine the bank in the early spring of 1982. While the examination pointed to deficiencies in the bank's operations, the problem should be viewed in the context of a startup operation serving a market that is so underdeveloped that it justified the creation of a special Government-assisted program.

The bank is pleased that in the latest examination, the Farm Credit examiners concluded that the board and management had responded appropriately to the deficiencies identified in the previous report.

On the 1982 election, the consequence of the 1981 amendments to the bank act was the election of nine additional directors by the bank's members.

In a very compressed timeframe, the election was held. There have been some criticisms of the process, but the bank agrees that future elections will be held in a different manner. The board has already announced its schedule for future elections would be reflected in the bank's bylaws. That should guard against the recurrence of the complications in the next election.

The creation of CCDC; Father McKnight who chairs the CCDC, a nonprofit-high-risk loan fund which is affiliated with the bankcould not be here today, so I will describe the current status of the corporation.

As you know, Congress structured title I and title II as separate funds with separate, distinct, but interrelated purposes. The purpose of the title II fund, as embodied in the Consumer Cooperative Development Corporation, was to assist low-income and other borrowers who could just not meet the credit standards of the bank.

The bank and the CCDC were intended to leverage one another to enable the bank to fulfill its mission. The question has been asked whether the bank has acted properly as the guardian of the Development Corporation. We surely believe it has.

With the establishment of the Development Corporation, the functions described under title II will become more visible, eliminating much of the criticism the bank has received since Congress required the transfer of the functions of the Office of Self-Help and Technical Assistance to the new Corporation at the end of 1981.

At that time the bank decided to slow down the rate of title II lending to enable the recently elected board to plan for the new Corporation. Additionally, the bank did not want to utilize the remaining resources in the self-help fund prior to the shift in control of the fund's resources to the corporation.

Establishment of the new Corporation has been delayed to permit adequate public and member discussion and review of draft articles of incorporation and bylaws. With the encouragement of this committee, forums on the Corporation were held at the bank and around the country. The board believes it is critical that the bank and the Corporation operate as a partnership.

Tom Condit, the new president, will also serve as executive director of the Development Corporation. It is our view that the best way to efficiently coordinate policy development and implementation is to hold the same individual responsible for the performance of both corporations.

It is in the interest of good organization that compatible goals are established and compatible directions given to staff. After all, the Development Corporation is by no means assured of being selfsupporting.

It is now and for the foreseeable future dependent on the resources of the bank. Furthermore, it is the board's best belief that low income borrowers are the primary constituency of the Development Corporation and deserve the support of the middle income cooperatives to maximize its chances of success.

The bank needs the Corporation to help it lend to new and low income cooperatives and to expand its market. We just do not accept that there is an inevitable cleavage between middle and low income cooperatives such that it overrides the need for the bank and the Development Corporation to operate in concert.

I want to thank this committee for your interest.

[The prepared statement of Mr. Sollars on behalf of the National Consumer Cooperative Bank follows:]