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THE DALLES, OREG., June 23, 1956. Hon. DANTE B. FASCELL, Member, Subcommittee on Reorganization,

House of Representatives, Washington, D. C.: As the Oregon representative of the savings and loan industry, I wish to register by opposition to Reorganization Plan No. 2, on basis no emergency exists, this action is hasty and the problem, if any, should be carefully studied by constituted authorities concerned with savings and loan operation before taking action.

B. M. KEITH.

FEDERAL HOME LOAN BANK OF GREENSBORO,

Greensboro, N. C., June 22, 1956. Hon. DANTE B. FASCELL, Member of Congress, House of Representatives,

Washington, D. C. MY DEAR MR. FASCELL: As you know, the Federal Home Loan Bank of Greensboro is a reserve credit institution which serves 549 member savings and loan associations, 89 of which are located in Florida. The bank's directors have studied Reorganization Plan No. 2 which was transmitted to the Congress of the United States on May 17, 1956. Individually and collectively, they have expressed their opinions that the plan is not in the best interests of the Federal Government, the more than 3 million savers and borrowers served by the savings and loan associations in the Fourth Federal Home Loan Bank District, and the savings and loan business.

We are enclosing a copy of a resolution adopted by the bank's board of directors on June 18, 1956, which we hope you will consider in your deliberations on Reorganization Plan No. 2. You will notice that the bank's directors commend and approve the position in opposition to the plan which has been taken by the Federal Savings and Loan Advisory Council and the national savings and loan trade organizations. Yours very truly,

J. M. SINK, Jr., President.

RESOLUTION OF FEDERAL HOME LOAN BANK OF GREENSBORO, GREENSBORO, N. C.

Whereas Reorganization Plan No. 2, heretofore submitted to the Congress of the United States, 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 the Federal Savings and Loan Advisory Council has adopted a resolution urging the rejection of said Reorganization Plan No. 2; and

Whereas the savings and loan national trade organizations have taken prompt and vigorous action to alert the savings and loan business and the Congress to the dangers and weaknesses of Reorganization Plan No. 2, and have adopted a program of opposition to the plan: Now, therefore, be it

Resolved, That the board of directors of the Federal Home Loan Bank of Greensboro commend and approve the actions of the Federal Savings and Loan Advisory Council and the savings and loan national trade organizations in opposing Reorganization Plan No. 2 and in urging the Congress of the United States to reject said plan; and be it further

Resolved, That a copy of this resolution be forwarded to the Members of Congress from the Fourth Federal Home Loan Bank District, to the members of the Federal Home Loan Bank of Greensboro, to the chairman of the Federal Savings and Loan Advisory Council, and to the executive officers of the savings and loan national trade organizations.

FEDERAL SAVINGS AND LOAN ADVISORY COUNCIL

Whereas the Federal Savings and Loan Advisory Council was cre i ed by Congress under sertion 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 or. ganization 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 Honie Loan Bank System of maximum effectiveness to the savers and home owners 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 iesolution 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.

FEDERAL SAVINGS AND LOAN ADVISORY COUNCIL,
LACY BOGGESS, Secretary.

BAY RIDGE SAVINGS AND LOAN ASSOCIATION,

Brooklyn 9, N. Y., June 20, 1956. Reference to Reorganization Plan No. 2. Hon. DANTE B. FASCELL, House of Representatives,

Washington 25, D. C. SIR: Your cooperation is respectfully requested in the defeat of Reorganization Plan No. 2 for the following reasons:

1. The probable necessity of filing separate reports to both the Federal Savings and Loan Insurance Corporation and the Home Loan Bank Board.

2. Submission of matters requiring approval of both agencies, first one and then the other.

3. Added examination costs.

4. Effect of reorganization plan will result in chaos through conflicting rules and regulations.

5. Expensive duplication of examinations.

6. The present single agency system to handle savings and loan affairs has been developed over a period of 25 years and has produced a strong and progressive nationwide system of savings institutions which now finance a substantial part of our Nation's homes.

7. We question the wisdom of tampering with the present single-agency system as being questionable.

8. The proposed reorganization plan would not result in economy of operation and would increase the cost of operations to individual savings institutions.

9. Two boards with overlapping responsibilities for savings and loan operations might well result in conflicts of policy and added confusion.

10. We are ready to support any constructive improvement in supervision of savings and loan business. The United States Savings and Loan League is currently making a careful study of the Federal home-loan bank system with that end in view.

May we count on your support in the defeat of the proposed Reorganization Plan No. 2 about to be submitted to you? Respectfully,

HENRY G. STEIN, President.

JEFFERSON FEDERAL SAVINGS AND LOAN ASSOCIATION, INC.,

Louisville 2, Ky., June 21, 1956. Hon. DANTE B. FASCELL, Offiice Building, House of Representatives,

Washington, D. C. DEAR CONGRESSMAN FASCELL: I wish to express the opposition of this association to Reorganization Plan No. 2 and to urge your support of congressional action to defeat it. The present single agency to handle savings and loan affairs is the culmination of numerous congressional enactments, which have established a nationwide system of savings institutions now financing 37 percent of all home loans and we oppose the proposed change which would create another separate agency. Such change would increase the cost of the Government agencies to the savings institutions and the existence of two separate boards with overlapping duties for the savings and loan operations would result in conflicting policies and confusion to all concerned.

As you know, all insured savings and loan associations are members of the Home Loan Bank System—with resulting economies in overhead. Our institutions are interested in and will support constructive improvement in the supervision of our business. The United States Savings and Loan League is now making a careful study of the Federal Home Loan Bank System with that end in view.

I sincerely trust that you will recognize the merit of our position and that you will feel justified in giving your good assistance to defeat Reorganization Plan No. 2. Sincerely,

IRVIN MARCUS, President.

FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION,

Austin, Tex., June 20, 1956. Hon. DANTE B. FASCELL, House of Representatives,

Washington, D. C. DEAR MR. FASCELL: I understand that on May 17, President Eisenhower transmitted to the Congress the Reorganization Plan No. 2 of 1956. This plan contemplates that the Federal Savings and Loan Insurance Corporation will be established as an independent agency, subject to the direction and control of the President of the United States, with its affairs to be administered by a three-man board of trustees appointed by the President, one of whom shall be the Chairman of the Home Loan Bank Board.

With all due respect to the President, I wish to submit my objection to the plan for the following reasons:

1. Savings and loan associations over the country would have to deal with two government agencies—one, the Insurance Corporation, and the other, the Home Loan Bank System. This would in all probability result in a tremendous amount of confusion and overlapping of decisions and authority.

2. The Insurance Corporation, if made an independent agency, would not feel the responsibility for the general progress and advancement of the savings and loans business, and would create an incentive to control salaries, dividends, pensions, and other functions that should be left to management of the associations.

3. The operating costs of both the Insurance Corporation and the Board are now paid by members associations, and if the separation were effected, the plan would bring considerable operating expenses to the industry.

4. The supervision and examination of associations would be doubly increased. since the Insurance Corporation and the Board would have their respective responsibilities and obligations to determine each year as to the soundness of member associations.

5. The advice and counsel of leaders in the savings and loan industry were not consulted before the plan was submitted, and if they had been, perhaps the President would have viewed the other side of the picture more carefully.

I might also mention that this plan would not actually result in any benefit to the public, and is not a true interpretation of the Hoover Commission recommendation.

The Federal Savings and Loan Insurance Corporation, as a part of the Federal Home Loan Bank Board, has been highly successful and progressive, and to

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tamper with this combination in which the public has so much confidence might result in creating a lack of confidence on the part of the public. This would be a setback to the progress that the savings and loan industry has contributed in our economic life over the past years.

You may be assured that this association, as well as all the others over the country, is interested in constructive improvement of the supervision of the savings and loan business, and that should any changes occur in the future for improvement, the industry will support hem to the limit. However, it is felt that the present plan under consideration would be detrimental rather than helpful to the business, and I earnestly solicit your support in defeating adoption of the plan. Very truly yours,

A. B. SHIERLOW, President.

UNION FEDERAL SAVINGS AND LOAN ASSOCIATION,

Baton Rouge, La., June 19, 1956. Hon. DANTE B. FASCELL,

House of Representatives, Washington, D. C. DEAR Sir: Your all-out opposition is requested to the proposed splitting up of the Federal Home Loan Bank Board as provided in Reorganization Plan No. 2. This plan, as you know, would divide the Federal Savings and Loan Insurance Corporation and the Federal Home Loan Bank Board into two separate agencies.

The present single agency to handle savings-and-loan affairs was developed over the past quarter of a century by numerous congressional enactments and has resulted in a strong and progressive nationwide system of savings institutions which now finance 37 percent of all home loans. The wisdom of tampering with this present successful single agency is highly questionable and dangerous. It would create still another agency, which, unlike most reorganization plans proposed, would not result in economy of operation but rather would increase the expense of the Government agencies to individual savings institutions (which pay most of the costs of the Board and the Insurance Corporation). The existence of two boards, with overlapping responsibilities for the savings-and-loan operation, would result in conflicts of policy and great confusion in the business as well as to Congress and the President.

In addition, there are the following disadvantages to the plan:

1. The congressional committees which deal with the Federal Home Loan Bank Board, and the insurance Corporation, and the savings-and-loan business were not consulted on the plan and have never recommended a separation of the Corporation from the Board.

2. The plan injects an unfortunate partisanship into the agency by failing to require bipartisanship on the board of trustees of the Corporation. Unlike the Bank Board and most Government boards, all three trustees could be from one political party.

3. The plan fails to provide for any term of office for the trustees.

4. The congressional philosophy of reorganization plans is that they are to result in savings and greater efficiency in Government. Whatever the possible merits of the plan are, it is impossible for it to claim "economy,” since it would establish 2 agencies in the place of the present 1.

5. Although the letter accompanying the plan states that it follows a recommendation of the Hoover Commission, the Hoover report merely recommended that no one man serve on both boards, and there was no supporting data in the Hoover Commission report.

6. The Hoover Task Force on Lending Agencies which recommended independent status for the Bank Board last year specifically commented on the advantages of the present grouping of the Board and Insurance Corporation.

7. Just last year the administration opposed the plan. Administrator Cole's official comment on the Hoover Commission recommendation said, "I do not agree *** that the Board and Insurance Corporation should be separate."

Our association is interested in and will support any constructive improvement in the supervision of the savnngs-and-loan business. The United States League currently is making a careful, painstaking study of the Federal Home Loan Bank System with that end in view. Yours very truly,

JOSIE T. CAMORS, President.

Mr. FASCELL. I suppose we could get thousands more to show that the industry has not only been consulted but they are extremely concerned with the proposed plan and reorganization.

Therefore, I submit, in view of all of these facts, Mr. Chairman, it would be a wiser course for Congress to disapprove the plan and allow the legislative committee with the assistance and willingness of the other agencies and the Congress to make a thorough study to determine whether or not the one single point I have heard throughout all of this testimony has any justification for making a change in the present situation and that is that there is somewhere out here a diaphanous, nebulous, inherent conflict of interest between the responsibilities of the Ínsurance Corporation and the Board to such an extent that we would go to the trouble of making the tremendous change contemplated by this reorganization plan.

Now, from the testimony that has been presented to the committee, it is my considered judgment that there is no clear, compelling reason in line with the President's own statement at this time to set up a new agency in order to do this job, and until we have stronger reasons, more elaborate and detailed testimony which would clearly define the dangers of this conflict or the fact that it has occurred or is very likely to occur, I think that we would be making a very tragic mistake, to change and therefore I hope that this subcommittee will adopt the disapproving resolution and report it to the full committee with all possible speed.

Chairman Dawson. Any questions any of you would like to ask the author of the resolution?

I am going to ask the staff to notify the members that the subcommittee will meet tomorrow morning at 10 o'clock in executive session.

Gentlemen, we will stand adjourned.

(Whereupon, at 5:10 p. m., the subcommittee was adjourned, to reconvene at 10 a. m., Wednesday, June 27, 1956, in executive session.)

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