the Treasury; and (5) that if, upon the effective date of conversion, the Home Owners' Loan Corpoartion will hold of record shares of the association, its approval of the conversion has been obtained; (6) that, in the event of dissolution after conversion, the members or shareholders of the association will share on a mutual basis in the assets of the association in exact proportion to their relative share or account credits; (7) that such conversion shall be effective upon the date that all the provisions of this act shall have been fully complied with and upon the issuance of a new charter by the State wherein the association is located; it being provided that its act of converting into a State-chartered institution shall constitute an agreement to be bound by all the requirements that the Federal Savings and Loan Insurance Corporation may legally impose under section 403 of title IV of the National Housing Act, as now or hereafter amended, and the association shall upon conversion and thereafter be authorized to issue securities in any form currently approved at the time of issue by the Federal Savings and Loan Insurance Corporation for issuance by similar insured institutions in such State, District, or Territory. "In addition to the foregoing provison for converson upon a vote of the members only any association chartered as a Federal savings and loan association, including any having outstanding shares held by the Secretary of the Treasury or Home Owners' Loan Corporation, may convert itself into a State institution upon an equitable basis, subject to approval, by regulations or otherwise, by the Home Loan Bank Board and by the Federal Savings and Loan Insurance Corporation: Provided, That if the insurance of accounts is terminated in connection with such conversion, the notice and other action shall be taken as provided by law and regulations for the termination of insurance of accounts.' Recommendations Amend subsection (i) as follows: (1) by striking in the second paragraph the language "or Territory" and inserting in lieu thereof the language "Territory, or possession"; (2) by striking in the second paragraph subdivisions (4) and (5) and renumbering subdivisions (6) and (7) as subdivisions (4) and (5), respectively; and (3) by striking in the last paragraph the language "a State institution" and inserting in lieu thereof the language "an institution organized pursuant to the laws of the State, District, Territory, or possession in which the principal office of such Federal association is located". Reasons Amendment (1) would make clear that Federal savings and loan associations may convert under the second paragraph of subsection (i) not only to State-chartered institutions but also to institutions of the District of Columbia or of the Territories and possessions. Amendment (2) would remove obsolete provisions relating to investments in Federal savings and loan associations by the Secretary of the Treasury and the Home Owners' Loan Corporation; the Home Owners' Loan Corporation is no longer in existence, and the provisions of the Home Owners' Loan Act of 1933 under which the Secretary of the Treasury formerly made such investments (subsecs. (g) and (j) of sec. 5) are hereinabove proposed to be repealed. Amendment (3) would accomplish the same purpose with respect to the last paragraph of subsection (i) that amendment (1) would accomplish with respect to the second paragraph of said subsection. 147. PROMOTION OF SAVINGS AND LOAN ASSOCIATIONS Existing law Section 6 of the Home Owners' Loan Act of 1933, as amended: "To enable the Board to encourage local thrift and local home financing and to promote, organize, and develop the associations herein provided for or similar associations organized under local laws, there is hereby authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, the sum of $150,000, to be immediately available and remain available until expended, subject to the call of the Board, which sum, or so much thereof as may be necessary, the Board is authorized to use in its discretion for the accomplishment of the purposes of this section without regard to the provisions of any other law governing the expenditure of public funds. For the purposes of this section the Secretary of the Treasury is authorized and directed to allocate and make immediately available to the Board, out of the funds appropriated pursuant to section 5 (g), the sum of $700,000. Such sum shall be in addition to the funds appropriated pursuant to this section, and shall be subject to the call of the Board and shall remain available until expended. The sums appropriated and made available pursuant to this section shall be used impartially in the promotion and development of local thrift and home-financing institutions, whether State or Federally chartered." Recommendation Repeal section 6, and renumber the last two sections of the act as sections 6 and 7, respectively. Reason Section 6 authorized an appropriation and an allocation of funds to enable the original Federal Home Loan Bank Board to promote, organize, and develop Federal savings and loan associations or similar associations organized under local laws. The present Board has not engaged in any such promotional activities and sees no need at the present time or in the foreseeable future for the resumption of such activities. 148. TERRITORAL APPLICABILITY OF ACT Existing law Section 7 of the Home Owners' Loan Act of 1933, as amended: "The provisions of this Act shall apply to the continental United States, to the Territories of Alaska and Hawaii, and to Puerto Rico, Guam, and the Virgin Islands." Recommendation Amend section 7 (to be renumbered sec. 6) to read as follows: "SEC. 6. Nothwithstanding any other provision of law now or hereafter in force, the provisions of this Act shall apply to the several States, the District of Columbia, and the Territories and possessions of the United States." Reason This amendment is proposed in order to make clear that the act applies to all the States, to the District of Columbia, to Territories now existing or hereafter created, and to the possessions of the United States. TITLE IV OF NATIONAL HOUSING ACT 149. REFERENCES TO HOME LOAN BANK BOARD Existing law Title IV of the National Housing Act, as amended (too long for reproduction here). Recommendation Amend title IV by striking the language "Home Loan Bank Board," wherever the same appears therein, and inserting in lieu thereof in each place the word "Board." Reason References in existing title IV to "Home Loan Bank Board" do not accurately reflect the name of the Board (the present Federal Home Loan Bank Board). Recommendations 150. DEFINITIONS Amend section 401 of the National Housing Act, as amended, by adding thereto at the end thereof the following new paragraph: "(e) The term 'Board' means the Federal Home Loan Bank Board referred to in subsection (b) of section 17 of the Federal Home Loan Bank Act." Reason This amendment would supply a definition which is needed in the act. 151. INSURED ACCOUNTS OF FIDUCIARIES Existing law The last sentence of paragraph (b) of section 401: "Funds held in fiduciary capacity, when invested in an insured institution, shall be insured in an amount not to exceed $10,000 for each trust estate, and notwithstanding any other provisions of this Act, such insurance shall be separate from and additional to that covering other investments by the owners of such trust funds or the beneficiaries of such trust estates." Recommendation Amend the sentence as follows: (1) by striking the language beginning with the word "Funds" and ending "shall be insured" and inserting in lieu thereof the language "Any account of an insurable type in any insured institution held in fiduciary capacity shall be insured to the fiduciary or fiduciaries"; (2) by striking the language "trust estate" and inserting in lieu thereof the word "beneficiary"; and (3) by striking all of said sentence beginning with "the owners of such trust funds" and ending immediately before the period and inserting in lieu thereof the language "the fiduciary or fiduciaries holding such account or the beneficiary or beneficiaries of such account." Reasons This amendment is proposed for the purpose of clarifying the insurance of accounts held in trust or in other fiduciary capacity. Amendment (1) would make clear that the special provisions as to such accounts would apply whenever an account of an insurable type is held in a fiduciary capacity, regardless of the antecedent status of the funds. The same amendment would also make it clear, by the use of the language "shall be insured to such fiduciary," that the Federal Savings and Loan Insurance Corporation, in making payment of the insurance, will be protected in making payment to the fiduciary and would not be under a duty to make payment to the beneficiaries. Amendment (2) is designed to clarify a problem which arises from the fact that the existing sentence provides separate insurance for each "trust estate." Although the regulations treat these words as referring to the interest of each beneficiary, it might be contended that the reference to "trust estate" is a reference to the property held by the fiduciary. This amendment would clarify the matter by substituting the word "beneficiary" for the quoted words. Amendment (3) would conform the closing language of the provision to the terminology of the remainder of the provision as it would be amended by the other two suggested amendments. Existing Law 152. INSURED ACCOUNTS OF "PUBLIC UNITS" The second sentence of paragraph (b) of section 401: "Each officer, employee, or agent of the United States, of any State of the United States, of the District of Columbia, of any Territory of the United States, of Puerto Rico, of the Virgin Islands, of any county, of any municipality, or of any political subdivision thereof, herein called 'public unit,' having official custody of public funds and lawfully investing the same in an insured institution shall, for the purpose of determining the amount of the insured account, be deemed an insured member in such custodial capacity separate and distinct from any other officer, employee, or agent of the same or any public unit having official custody of public funds and lawfully investing the same in the same insured institution in custodial capacity.” Recommendation Amend the sentence aforesaid as follows: (1) by striking the language "of any Territory of the United States, of Puerto Rico, of the Virgin Islands, of any county, of any municipality, or of any political subdivision thereof" and inserting in lieu thereof the following: "of any Territory or possession of the United States, of any county, of any municipality, of any political subdivision of any of the preceding, or any court or any corporate or other public agency or public instrumentality of any of the same"; (2) by striking the language "of publie funds" and inserting in lieu thereof the language "or control of public funds or funds of such public unit, or funds deposited with such public unit or with such officer, employee, or agent"; (3) by striking the language "the insured account" and inserting in lieu thereof the language "insurance under this title"; and (4) by striking the language "an insured member in such custodial capacity" and inserting in lieu thereof the language "a separate insured member with respect to each separate account of an insurable type in such institution in which any of such funds are so invested, and as such shall be deemed to be an insured member". Reasons This amendment is proposed for the purpose of clarifying the provisions of the act with respect to the insurance of investments by officers, employees, and agents of the United States, the States, and other "public units. Amendment (1) would expressly include "possessions" of the United States as public units within the meaning of the provision. The same amendment would include courts and public agencies and instrumentalities, corporate or unincorporated, as public units for this purpose. Amendment (2) would make clear that funds of a public nature or funds on deposit with public units or personnel thereof, such as funds paid into court, are covered by the provision, as well as funds which are public funds in the strict legal sense. Amendments (3) and (4) would make clear that each separate account is separately insured and would thus accomplish the dual purpose of giving public officials reasonable assurance as to the extent of the insurance coverage and freeing the Federal Savings and Loan Insurance Corporation from the necessity of trying to determine, by itself or through the courts, difficulty and complicated questions of State law as to the status of various funds under the control of the same public official or public unit. 153. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION Existing law Subsection (a) of section 402 of the National Housing Act, as amended: "(a) There is hereby created a Federal Savings and Loan Insurance Corporation (hereinafter referred to as the "Corporation'), which shall insure the accounts of institutions eligible for insurance as hereinafter provided, and shall be under the direction of a board of trustees to be composed of five members and operated by it under such bylaws, rules, and regulations as it may prescribe for carrying out the purposes of this title. The members of the Federal Home Loan Bank Board shall constitute the board of trustees of the Corporation and shall serve as such without additional compensation. The principal office of the Corporation shall be in the District of Columbia." Recommendation Amend subsection (a) of section 402 as follows: (1) by striking in the first sentence all language after "under the direction of" and before the period and inserting in lieu thereof the language "the Board”, and (2) by striking the second sentence. Reason This amendment is suggested for the purpose of removing from title IV certain provisions as to the Board of Trustees of the Federal Savings and Loan Insurance Corporation which became obsolete with the taking effect of Reorganization Plan No. 3 of 1947, which abolished said Board of Trustees. The amendment would also delete certain provisions as to bylaws, rules, and regulations; these provisions are |