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poorly located, and unfit for habitation. Another group of these homes should be renovated, repaired, and modernized before they can come back on the market. The doubling-up process that has been going on for some time with families and friends in order to cut living costs will some day start undoubling and it won't then be long before the surplus of livable homes is absorbed. The need for a permanent agency, such as the Federal home loan bank, will then become apparent.

4. As long as the American people are so constituted as to be either overoptimistic or overpessimistic we will continue to have our periods of inflation and deflation, and it is absolutely necessary to have a governor of some kind to level off the peaks and valleys of the first-mortgage financing business. The temporary needs of our home-lending institutions are most urgent because we can not make a dollar work two ways—i, e., pay off withdrawals and make necessary loans-so the sooner this bill is passed the sooner will we contribute our share to the restoration of business. Building and loans in our State will welcome an opportunity to become members of this system just as soon as they are permitted to do so.

5. Demand deposits can no longer safely be loaned on real-estate mortgages; therefore the home owner must secure his loans from institutions dealing in long-time investment funds, while these institutions must have some place to go to secure assistance from time to time as necessity requires.

We are convinced that the rate of interest on first mortgages will be reduced to the home owner just as soon as our lending institutions can be assured of greater liquidity. Few building and loans carry in excess of a 5 per cent cash reserve owing to the nature of their business, and as soon as the public know they can secure their funds from these associations in a short time through the assistance of the Federal home-loan banks the heavy witlidrawals that are now taking place will gradually dry up.

We can then resume our normal functions of making necessary loans to home owners. The element of inflation through speculative loans to builders can no longer be considered, because the well-managed building and loans will not accept this type of loan.

6. The passing of the Federal home loan bank act, which touches most closely the homes of our citizens and the millions of investors in savings and home-financing institutions, should not be delayed by the protests of selfish interests.

The bill, in my judgment, is workable and carefully drawn and should not be loaded down with amendments; especially by reducing the 1 per cent section to one-half of 1 per cent would continue Government participation twice as long. It is impossible to draft a bill that will meet the approval of all the States, owing to their different laws, but instead of amending this bill to fit all conditions it would be far better for the States to change their laws to meet the requirements of the Federal home loan bank bill. This will be done in Michigan without doubt, as our legislature has always been fair in legislation of this kind.

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Creation of a System of Federal Home

Loan Banks

HEARINGS

BEFORE A

SUBCOMMITTEE OF THE COMMITTEE ON BANKING AND CURRENCY

UNITED STATES SENATE

SEVENTY-SECOND CONGRESS

FIRST SESSION

ON

S. 2959

A BILL TO CREATE FEDERAL HOME LOAN BANKS
TO PROVIDE FOR THE SUPERVISION THEREOF
AND FOR OTHER PURPOSES

THE LIBRARY OF THE

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Printed for the use of the Committee on Banking and Currency

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COMMITTEE ON BANKING AND CURRENCY

PETER NORBECK, South Dakota, Chairman
SMITA W. BROOKHART, Iowa.

DUNCAN U. FLETCHER, Florid
PHILLIPS LEE GOLDSBOROUGH, Maryland. CARTER GLASS, Virginia,
JOHN G. TOWNSEND, JR., Delaware.

ROBERT F. WAGNER, New York.
FREDERIC C. WALCOTT, Connecticut.

ALBEN W. BARKLEY, Kentucky. JOHN J. BLAINE, Wisconsin.

ROBERT J. BULKLEY, Ohio. ROBERT D, CAREY, Wyoming.

CAMERON MORRISON, North Carolina. JAMES E. WATSON, Indiana.

THOMAS P. GORE, Oklahoma. JAMES COUZENS, Michigan.

EDWARD P. COSTIGAN, Colorado. FREDERICK STEIWER, Oregon.

CORDELL HULL, Tennessee.
JULIAN W. BLOUNT, Clerk
GIBBS W. SHERRILL, Assistant Clerk

SUBCOMMITTEE ON SENATE BILL 2959

JAMES E. WATSON, Indiana, Chairman JOHN G, TOWNSEND, JR., Delaware.

ROBERT J, BULKLEY, Ohio. JAMES COUZENS, Michigan.

CAMERON MORRISON, North Carolina.

II

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