Mr. FASCELL. But it is your considered opinion and that of your organization, of your legislative committee, that this plan does not add anything to those principles?

Mr. BUBB. Yes, that is right. We don't feel that it is workable at all. I don't want to cover all of the reasons why. They have been covered many times today.

Mr. FASCELL. But in general you don't feel that it would if you did, you would be happy to cooperate with it.

Mr. HENDERSON. Mr. Bubb, you are familiar with the Advisory Council to the Federal Home Loan Bank Board?

Mr. BUBB. Yes, sir.

Mr. HENDERSON. Are you aware as to whether or not the Federal Savings and Loan Advisory Council was consulted on this matter? Mr. BUBB. I understand they were not.

Mr. HENDERSON. Do you know whether such consultation was contemplated when the Advisory Council was set up?

Mr. BUBB. Well, my understanding has always been that that is the reason for the existence of the Advisory Council.

Chairman DAWSON. I want to thank you for your testimony, Mr. Bubb. You have added a great deal to this hearing, and I want also to congratulate you upon your manner of putting your ideas across, putting them into words.

Did anyone else with you wish to add to your statement?

Thank you very much.

Mr. BUBB. Thank you, sir.

Chairman DAWSON. At this time we will hear from Mr. Maloney, of Fordham University.

Mr. Maloney, the time is running out on us. Could you summarize your statement and we will put your statement in the record? Mr. MALONEY. Yes.

STATEMENT OF DR. JOSEPH F. MALONEY, HICKSVILLE, N. Y.

Mr. MALONEY. Mr. Chairman, and other distinguished members of the committee, I am appearing here in a personal, private capacity. I haven't discussed this particular statement that I have submitted with any of the members of the industry. My point of view is simply that of a college professor in the field of government.

Chairman DAWSON. Identify yourself and your college, please. Mr. MALONEY. My name is Joseph Maloney. I am a member of the faculty of Fordham University, New York.

One of our problems in teaching government is trying to explain to students how the original parity between the two branches of Government, that is, the Congress and the executive, has seemed historically to slip more in the favor of the ascendancy of the Presidency, and I believe that one of the reasons for this has been that perhaps Congress in the past has not been careful enough to make sure that the organization of the executive branch has been one that Congress itself can oversee with the greatest of felicity.

The object of this entire statement is simply to emphasize a belief on my part that this particular plan as it has been proposed would complicate the supervision of this particular industry on the part of the congressional committee.

It would also violate the primary principle established by the first Hoover Commission, namely, that because of the limits of the ability of the executive to oversee the various agencies reporting to him, there should be a consolidation of such agencies rather than a multiplication, and that I think serves the substance of my particular statement: I appreciate your allowing me to come and present it, and I don't think there would be any benefit in my speaking any further on it. Chairman DAWSON. Mrs. Harden?

Mrs. HARDEN. No questions.

Chairman DAWSON. Mr. Brown.

Mr. BROWN. No, I want to thank Professor Maloney for the interest he has taken to come down here as a private citizen and give us the benefit of his views, and I expect to take his full statement with me and read it carefully.

Chairman Dawson. Mr. Fascell.

Mr. FASCELL. Mr. Chairman, I just wanted to add my commendation also to the professor. It is refreshing indeed to see public spirit put to practiced use, especially from an objective viewpoint.

I think the points you have made are well taken and I certainly concur in them although I haven't had an opportunity to discuss them fully.

I do believe exactly as you do that there has been a tendency to slip, and furthermore, I think there has been a tendency on the part of the public to think that Congress is responsible for all the administration, and it has been very embarrassing.

Mr. MALONEY. That is why I am here. You can't teach the students. without being faced with the proposal of put up or shut up. So here I am putting up.

Chairman DAWSON. We appreciate your statement.

Your full statement will be put in the record.

Thank you, Mr. Maloney.

(The statement follows:)

STATEMENT OF DR. JOSEPH F. MALONEY, HICKSVILLE, N. Y.

My name is Joseph F. Maloney. I reside at 10 Boulevard Drive, Hicksville, N. Y. I am a member of the faculty of Fordham University in the department of political philosophy. Among other fields of government I teach public administration. My professional connection with Fordham is mentioned solely for identification. The views I am presenting in this statement are presented only in my own name.

As a teacher of public administration I believe that Congress should reject Reorganization Plan No. 2. The proposed reorganization is contrary to sound reasoning, especially in view of the actual present structure of the excutive branch of the National Government.

1. The first Hoover Commission concluded that the President did not have sufficient control over his own establishment. Consequently this Commission recommended the regrouping of functions into major departments and agencies for the sake of more coherence and responsibility. Reorganization Plan No. 2 is in direct contradiction to this well-accepted basic Hoover Commission recommendation.

The primary effect of Reorganization Plan No. 2 is to set up an additional semi-independent agency to "*** be subject to the direction and control of the

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President of the United States." The probable net result in this respect would be the subordination of the additional independent agency to an anonymous member of the presidential staff. The increased use of the staff techniques and the recent more extensive delegation of presidential activities to staff members indicate the present practical impossibility of personal Presidential direction and control of an additional agency.

There are limits to the "span of effective attention" on the part of every executive. The burdens and details of the Presidency are such as to indicate that an additional independent agency would be beyond possible personal Presidential control.

2. Most of the authorities in American government are in full agreement that complication in the executive branch organization makes congressional oversight of the executive more difficult. The preservation of de facto parity between Congress and the Presidency and the preservation of the effectiveness of our fundamental system of checks and balances require that Congress keep the executive structure as simple as possible. An additional independent agency is an unnecessary additional burden for heavily laden congressional committees. 3. If the Federal Savings and Loan Insurance Corporation is made independent of the Federal Home Loan Bank Board, then an additional body of bank or association examiners must be created and staffed. Truly independent insurance regulation by an independent corporation would require additional examinations every year of the member associations, in addition to the examinations of a slightly different type required by the remaining supervisory and regulatory duties of the Federal Home Loan Bank Board.

At present there is an acute shortage of highly qualified applicants to fill the existing vacancies of bank and savings and loan association examiners. The latest annual report of the superintendent of banks of the State of New York stresses this shortage, which is also being currently experienced by the Federal Home Loan Bank Board.

Creation of a new separate examining agency at this time would serve only to dilute and make less effective and efficient the present examining agencies, Federal and State.

If the new independent agency is to be dependent upon examinations by other than its own agents, there is no justification for the Corporation being granted independent status.

4. Some of the predicted effects presented in the message accompanying this plan are not likely to occur. One prediction is that the plan * * * will enhance the quality of the management of the Corporation."

This prediction is an implied criticism of the present management of the Corporation-the same management that would continue under the plan, except for 2 of the 3 members of the new Board of the Corporation. Under the plan presented presumably the present lower level managers would continue their present functions, except for new directions by the new Board, one of whose members is the Corporation's present Board Chairman.

I am not aware that any evidence has been presented to Congress that demonstrates that the present Bank Board members are less than highly competent.

If the originators of this Reorganization Plan No. 2 believe the present management quality level of the Corporation through the Federal Home Loan Bank Board is less than desirable, the better course of action would be further investigation into present management, rather than a divorce between the Corporation and the Bank Board. Even if this plan becomes effective, the Bank Board will retain far too many responsibilities in supervising and regulating savings and loan associations for it to be permitted to have anything but a very high level of management quality.

The granting of a new independent status would not solve any present problem of low management quality. Furthermore, I know of no indications that the present quality of management is anything but highly satisfactory.

5. Similarly, the message accompanying plan No. 2 also states that the plan "will promote continuing public confidence in the savings and loan insurance program. ***** This same message notes that "the volume of savings insured by the Corporation has increased nearly sixfold in the last 10 years and now stands at approximately $28 billion."

There appears to be no lack of such public confidence today or reason to doubt that this confidence will continue, in view of the constantly rising level of insured savings deposits in savings and loan associations. Apparently the public cannot see any distinction in respect to fundamental soundness between the

guaranties of the Federal Savings and Loan Insurance Corporation and the FDIC.

6. The accompanying message also states that this plan "*** will better safeguard the interests of the Corporation and of the Treasury in minimizing the danger of losses arising from the contingent insurance liability."

There is no evidence to indicate that a new independent corporation would be less interested in sound regulation than the present or new Federal Home Loan Bank Board.

7. Finally the accompanying message predicts that the plan "*** will in the long run tend to reduce expenditures of the Government ***", reductions which “* * * it is not practicable, however, to itemize at this time. * * *”

A new independent agency with additional overhead will undoubtedly mean increased expenditures by the institutions who must support it by fees and assessments, with no reasonable predictable cause presented for even hoping for reduced governmental expenditures.

8. There are other basic defects in Reorganization Plan No. 2 as it has been submitted to Congress. The plan fails to stipulate the duration of the terms of the two new Board members of the Corporation. The plan also fails to describe adequately the division of functions between the Corporation and the Bank Board. Because of these and other indications of undue haste in the preparation and submission of the plan, Congress should reject the plan if only because of a lack of sufficient information about its essential effects.

CONCLUSION

I wish to thank you, Mr. Chairman, and the other distinguished members of this subcommittee for permitting me to present this statement. I hope I may have been of some slight assistance to you in your deliberations. I strongly believe that the willingness and determination of Congress to continue as an independent and equal branch of our Government can well be measured by the degree and quality of independent judgment manifested in considering reorganization measures such as this.

I urge you to recommend the rejection of Reorganization Plan No. 2.
Chairman DAWSON. Mr. Morrison.

STATEMENT OF W. FRANKLIN MORRISON, CHAIRMAN, LEGISLATION COMMITTEE, NATIONAL SAVINGS AND LOAN LEAGUE

Mr. MORRISON. Mr. Chairman, my name is W. Franklin Morrison. I am executive vice president of the First Federal Savings & Loan Association of Washington, D. C.

I am chairman of the legislation committee of the National Savings & Loan League, and am appearing here in that capacity in opposition to Reorganization Plan No. 2.

Now, Mr. Chairman, the points in this statement have been so thoroughly covered that we would like to offer it in the record, and let it stand on that.

Mr. Braman, the manager of the league, is here if anyone would like to ask either of us any questitons.

Chairman DAWSON. Mrs. Harden?
Mrs. HARDEN. I have no questions.
Chairman DAWSON. Mr. Brown?

Mr. BROWN. I will also read this statement carefully.
Chairman DAWSON. Mr. Fascell?

Mr. FASCELL. I have no questions, Mr. Chairman.
Chairman DAWSON. Mr. Henderson?

Mr. HENDERSON. No questions.

Chairman DAWSON. I, too, want to thank you both for being with us. We are trying to give this matter as much consideration as we can in order that the Congress might have the opportunity to judge what the

people think who actually are out in the business, and your statement will be given thorough consideration at our executive session.

Mr. MORRISON. Thank you.

(The complete statement follows:)

STATEMENT OF W. FRANKLIN MORRISON, CHAIRMAN, LEGISLATION COMMITTEE, NATIONAL SAVINGS AND LOAN LEAGUE

My name is W. Franklin Morrison; I am executive vice president of First Federal Savings & Loan Association, of Washington, D. C. I am chairman of the legislation committee of the National Savings and Loan League and am appearing here in that capacity in opposition to Reorganization Plan No. 2.

The Federal Home Loan Bank Board was established in 1932 in order to provide home-mortgage credit for savings and loan associations. In 1933 Congress authorized the creation of a Federal type of savings and loan institution called Federal savings and loan associations and the Federal Home Loan Bank Board was given the chartering and supervising authority over these institutions. In 1934 the Federal Savings and Loan Insurance Corporation was created in order to insure the accounts in Federal savings and loan associations and in Statechartered savings and loan associations. The Insurance Corporation was likewise placed under the Federal Home Loan Bank Board. These 3 functions and duties of the Federal Home Loan Bank Board are carried out under 3 separate congressional acts. The Board and many of its staff work on all 3 functions. The cost of the operation is borne entirely by the industry it serves and not out of appropriated funds.

The Federal Home Loan Bank Board has been an outstanding success in its field. Through the Home Owners' Loan Corporation, one of its affiliates, the Federal home-loan banks it created, and the insured savings and loan associations, it was a dominant factor in restoring order to the home mortgage market. Savings and loan associations now hold over $34 billion of the Nation's savings in thrift accounts, and provide the funds for over a third of the home mortgage financing in the United States. The operation of the Federal Home Loan Bank Board has been extremely conservative, the supervision of these institutions has never been stronger or better and a good indication of the tightness of the operation of the Federal Savings and Loan Insurance Corporation is indicated by the fact that it has not had a loss in over 11 years.

The proposed Reorganization Plan No. 2 of 1956 would take the Federal Savings and Loan Insurance Corporation out from the Federal Home Loan Bank Board and place it under a three-man board of trustees, one of which, however, would be the Chairman ex officio of the Federal Home Loan Bank Board. The Insurance Corporation, by the terms of the plan, would be made subject to the control of the President, which, under the existing setup, would mean direct control by the Bureau of the Budget. We are opposing the plan for the following

reasons:

1. The Federal Home Loan Bank Board since its inception has been bipartisan; its expenses have been borne by the industry it serves and it has been administered as a quasi-judicial body. The proposed reorganization plan does not set up a bipartisan board for the Federal Savings and Loan Insurance Corporation, prescribes no terms of office for the incumbents, removes the quasi-judicial feature of their duties and makes them a political arm of the Government. It is difficult to see how this could strengthen or aid an industry which pays its own expenses or how it could be in the public interest.

2. Instead of eliminating a Government agency, a new Government agency would be created.

3. There would be substantially increased expenses of operation, and accordingly one of the primary purposes of the plan would not be effected.

4. The Hoover Commission recommended that "no person be permitted to serve as a member of the Federal Home Loan Bank Board and the Federal Savings and Loan Insurance Corporation at the same time." The recommendation of the Hoover Commission would not be complied with, since the Chairman of the Federal Home Loan Bank Board would also serve as 1 of the 3 members of the board of trustees of the Federal Savings and Loan Insurance Corporation. 5. The President's plan presupposes that the Insurance Corporation would be strengthened by the reorganization plan and thus apparently justify the increased expense. The facts do not justify this assumption. The Federal Savings and Loan Insurance Corporation has not had a loss for 11 years. Supervision by