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Is it right and proper for me to make an observation on testimony that has been submitted here?

Senator WATSON. Why, certainly, that is, of you don't say anything personal about the other fellow who has gone.

Mr. CLARK. I like to meet my man face to face.
Senator WATSON. That is the only way to do.

Mr. CLARK. I read in the United States Daily that Mr. Bodfish of the building and loan associations—I don't know Mr. Bodfishstated that installments are being paid regularly. He referred to the building and loan associations. If that is true, where is the trouble with the building and loan associations? In other words, if their business is balanced, where is the trouble?

Senator COUZENS. As I understand, one of his troubles is that they are doing a demand deposit business and when a man comes to get his deposit out of the building and loan association he is held up by the rules and regulations. Therefore, this building and loan association is not in a position to do a current business.

Mr. CLARK. A building and loan association should not do a current banking business. If it is a building and loan association it should not mix up these two kinds of businesses.

Senator WATSON. I think they have paid-up stock. I don't know whether they do it in all States or not. But they can not withdraw it. That is the trouble.

Mr. CLARK. The building and loan commissioner of the State of Missouri has a good article of a recent date, in which he specifies the causes—and there are more than one of the present situation with the building and loan associations. Competition is one. High rate of interest is another. Low dues and a tendency to withdraw deposits. So I repeat again: It is a state of mind. It is a matter of management, and it also is a matter of a local situation that should be handled by each community and not by the Federal Government. The passage of a bill of this kind will put us in a very much worse situation in

Senator COUZENS. How would the passage of this bill specifically affect your business?

Mr. CLARK. Not at all, that I can see.
Senator COUZENS. So you have no selfish interest in it?

Mr. CLARK. I have no selfish interest in it at all. I do not sell my loans to the individual public. I sell my loans just to insurance companies, and I have all the money to use that I need. As I stated before, there is available all the money necessary for legitimate projects.

Senator COUZENS. Don't you believe the fact that the building and loan associations pay 5 per cent on money deposited helps to create this situation?

Mr. CLARK. Yes. They are paying too much. That situation is developing in the savings banks throughout the country that are trying to pay 5 per cent also. That is just an observation on the side. . Senator WATSON. All right, Mr. Clark. (Mr. Clark left the table.) Senator WATSON. Anybody else who wants to be heard? Senator COUZENS. I see Miss Obenauer from Michigan here in the

Do you wish to say something about this, Miss Obenauer?

three years.

room.

STATEMENT OF MARIE L. OBENAUER, WASHINGTON, D. C. Senator COUZENS. Give the reporter your name, will you, please? Miss OBENAUER. Marie L. Obenauer. Senator CouZENS. And you occupation.

Miss OBENAUER. I am director of the Industrial Survey and Research Service.

Senator COUZENS. Located in Washington?

Miss OBENAUER. With offices located in Washington, 1022 Barr Building. My residence, however, is in Michigan.

Mr. Chairman, I did not come with any documents or figures at all, not having expected to talk. I would like, however, if I might, to refer to page 4-and I will give you the reasons for it-of this bill. The institutions eligible to membership in group 1 might read: “Building and loan associations, cooperative banks and homestead and home owner associations."

Senator COUZENS. Will you please explain just what the last category includes?

Senator Watson. Miss Obenauer wants home owners included there.

Miss OBENAUER. Just home owners included. Senator, when I wrote to you I suggested a league of home owners. But I do not think anyting so cumbersome should be put in. It is just homestead and home owner associations that might be put in here instead of merely homestead associations.

Senator COUZENS. Just what is a homestead and home owner association ?

Miss OBENAUER. I am not qualified to speak on the homestead association, but I would like to say that as a result of the conference on home building and home ownership, a number of people who are home owners feel that the home owners should get together in State leagues to look after their own interests and speak for themselves. There are approximately 13,000,000 homes in the country occupied by their owners and about 5,000,000 of them carrying mortgages. I should think from the figures available now that a large number of those are carrying second mortgages too. I can not say how many, because I have not been able to get the figures.

There was a very conspicuous absence of the home owner at the president's conference on home owing and home building. Everybody on earth was speaking for the home owner, but he wasn't there to speak for himself.

Senator Watson. I have known that to happen.

Miss OBENAUER. Yes. There are so many things in which the home owner, if he is going to be on his feet-and when I say “he" I mean “she” too, because I am one should be able to speak in his own interests, as distinct from the interest-perfectly legitimate, Mr. Chairman, of scores of other agencies and individuals whose business it is to make money out of home building and home owning.

Senator Watson. Your plan then can be carried out without any Federal aid at all?

Miss OBENAUER. Absolutely, but the only thing is we would like to have you make provision so that if a State league qualifies otherwise, it will be able to have the service of this home loan bank should Congress give it legal existence.

That is all I have to say. If you want further figures I will be glad to come before the committee again.

Senator WATSON. We have your ideas, thank you.
(Miss Obenauer then left the table.)
Senator WATSON. Anybody else?

Senator CouZENS. Mr. Robert Oakman from Michigan would like to say something, I believe.

Senator Watson. Come forward, Mr. Oakman, please.

STATEMENT OF ROBERT OAKMAN, DETROIT, MICH.

Senator Couzens. Will you give your name to the reporter, Mr. Oakman?

Mr. OAKMAN. Robert Oakman.
Senator COUZENS. And your address?
Mr. OAKMAN. Detroit, Mich.
Senator COUZENS. And your business?

Mr. OAKMAN. Real estate. I am interested in real estate, banking, and trust business. I didn't intend, Senator, to say anything this morning. I came up to listen, but if you will bear with me I would like, while we are here, to tell you briefly what I think about this bill, preparatory to something that I think I can offer to clear the situation up to-morrow.

Senator Watson. We need that.

Mr. OAKMAN. I think I have that, Senator. I do not want to ramble on the matter. I will put it before you. I have it in fairly good shape. I have been working on it since July, or at least since I heard the propaganda going out for the release of these so-called frozen securities.

I have consulted with some of the big men of the large life insurance companies that we deal with on this matter. We deal in large mortgage amounts in Detroit, up into the millions.

Senator Watson. Do your remarks pertain to the provisions of this bill or to the general condition?

Mr. OAKMAN. To this bill particularly, but to-morrow, if you will permit me, I would like to take up the subject in detail and discuss it.

Senator WATSON. What subject?

Mr. QAKMAN. The same subject, but at the present time I would like to say this: In the first place, I don't approve of this bill as it now is. I don't think it means anything. I have been about 47 years in the real estate business. I communicated with the illustrious Senator La Follette when he was a young man, comparatively, in Wisconsin. I was on the State tax commission in Michigan and was city tax assessor in Detroit. I was on the first State taxcommission. I handled the valuation of all of the railroad property, telephone, telegraph property, and so on, in the State of Michigan. The work was done under the State tax commission. We were in charge of that work. Also I have handled my own properties. I have opened up about 4,000 acres of land in Detroit. Senator Couzens here knows how I began. He helped me out when I was starting. sold about fifty or sixty million dollars worth of property. I have now about 425 houses on hand and millions of dollars in land, and know something about second mortgages and something about the whole business.

Senator COUZENS. May I ask Mr. Oakman if he comes here representing himself alone or some organization?

Mr. OAKMAN. We Detroit real estate men talked over this legislation. There was not any official meeting. We had a meeting of what is called the real estate committee.

Senator COUZENS. Of Detroit?

Mr. OAKMAN. In Detroit. I said I would go to Washington and study the situation. Some feel pretty blue about the present bill in Detroit. Some think it is of no earthly use. It can not be used to any great advantage in Michigan, as far as we know.

Senator COUZENS. You mean that the bill can not be used?
Mr. Oakum. This bill can not be used to best advantage. No.

Senator COUZENS. Do you represent yourself or some organization which passed a resolution authorizing you to speak for it?

Mr. OAKMAN. No; there was no resolutions passed. We have had general conversations. We have been talking about the proposal for months.

Senator COUZENS. When you say “we” you mean the real estate board or some agency?

Mr. OAKMAN. I am on various committees and on the real estate committee of the Union Trust Co. that is handling many mortgages. So I volunteered to come down. I am not an official representative or anything of that sort.

Senator WATSON. Tell us now why this bill will be ineffective if passed.

Mr. OAKMAN. In the first place, it is unworkable. As was said before it will not pay if it is carried through. That is, it will pay if it is changed and improved but the reason it won't pay now is because under it we real estate men can not get the money to make it do business.

Senator WATSON. You have the old bill, I believe, Mr. Oakman. Mr. OAKMAN. Is there something newer than this one?

Senator Watson. Oh, yes. Here is the new bill. You have old 35 there, which is entirely different from this new one.

Mr. OAKMAN. The points I wanted to discuss in detail on were the $15,000 loan limit and the 50 or 60 per cent loan.

Senator Watson. Yes, those are in this bill.

Mr. OAKMAN. These are the only details I wanted to talk about this morning.

Senator WATSON. That is all right.

Mr. OAKMAN. In the first place, it was understood that the bill would be passed to relieve the mortgages held by banks, and so forth, on the homes of working people. I don't know of any working man who has a home good enough to have a $30,000 mortgage. I would hope that a son of toil would have a $30,000 home or a home that would be valuable enough to have a $15,000 mortgage. But that would be ridiculous. A working man's home must be based on his earning power. If he has a son or daughter working, then it can be, perhaps, a little better than usual. But if he goes beyond a certain amount, it is a case of luck to be able to pay such as somebody giving him money.

I believe in the first place that your loan should be cut down to not more than six or seven thousand dollars.

Senator WATSON. This is “not to exceed $15,000.” It means that no one could borrow at any time over $15,000.

are.

Mr. OAKMAN. I wouldn't allow anybody to borrow that much. Make it not over six or seven thousand dollars, not over that. I would confine it to that amount. If you go beyond that, I think you will find that the borrower can get a loan at a bank.

Senator COUZENS. In other words, you would limit the value of a workingman's home to from twelve to fourteen thousand dollars?

Mr. OAKMAN. Yes, as a limit. And he has a good home when he has that. That is one item. Take the percentage here. Some people talk about depression. They don't know what depressions

They never saw one until the present one. But I have seen other depressions, where people said land was of no value, and so forth and so on, and that everything was gone. I remember in my early days in the panic of 1893-1898 that I went down with the rest of the boys because I tried to buy up half of the world, the northeast section of Detroit up by the Dodge factory, and instead of becoming a rich young man, the panic came, I woke up one morning and found I wasn't worth 30 cents.

But that wasn't careful legitimate business at all. We were going at everything smash bang, to get every dollar that we could, and we lost. But 15 years afterwards property that sold at $8 or $10 a foot in the hard times was sold as high as a thousand or may be three thousand a foot. So we got out of that depression and we are going to get out of this one. I am not afraid of real estate. I have been city assessor during a time of depression. People would come in and say, “We must have our assessments reduced; our rents have gone down,” and so forth. What is the use of reducing the assessments? If you did it for the business man you would have to do it for the home owner. We equalize our assessments.

Senator Watson. You said you wanted to say something about the 50 and 60 per cent.

Mr. OAKMAN. Yes. I will see if I can find it.
Senator WATSON. Mr. O'Brien will show it to you.
Mr. O'BRIEN. Here it is.

Mr. OAKMAN. The advance may be for an amount not in excess of 60 per cent of the unpaid principal of the home mortgage loan.

What does that mean? This bill was undoubtedly prepared by somebody who thought that the real intrinsic value of the property has gone down and the present market value has gone down and isn't going to pick up again. Take in our institution, the Union Trust Co. Suppose we have $4,000,000 of

frozen stuff. All good, practically. We want a million dollars. We send over to your proposed bank for a million dollars. What have we got to do? First, you have got to have a million dollars' worth of original value. Then you take 40 per cent off of that. Forty or fifty per cent of the actual value of the property is what the first bank will loan. So the bank is getting about à 25 or 30 per cent loan on the property, and if they do they won't have any more assets to borrow on. No bank will deal with them and no trust company can deal with them on that basis.

Senator COUZENS. Just a minute. The legislative lawyer is here who helped to draft the bill. I think perhaps from the way he is shaking his head he does not interpret the law the same way you do. So let him explain it.

Senator WATSON. Mr. O'Brien.

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