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by the President by and with the advice and consent of the Senate, shall receive compensation at the rate of $16,000 per annum, shall perform such duties as the Administrator may from time to time designate, and shall be Acting Administrator and perform the functions of the Administrator, including his functions as a member and the Chairman of the Loan Policy Board hereinafter provided for, during the absence or disability of the Administrator or in the event of a vacancy in the office of Administrator.

SEC. 3. Other employment prohibited.—No person shall while holding the office of Administrator or Deputy Administrator engage in any business, vocation, or employment other than that involved in the holding of such office.

SEC. 4. Loan Policy Board.-There is hereby established the Loan Policy Board of the Reconstruction Finance Corporation, which shall be composed of the following members, all ex officio: The Administrator, as Chairman, the Deputy Administrator, as Vice Chairman, the Secretary of the Treasury, the Secretary of Commerce, and one other member who shall be designated from time to time by the President from among the officers of the United States who are required to be appointed by and with the advice and consent of the Senate. Either of the said Secretaries and the said designee of the President may designate an officer of his department or agency to act in his stead as a member of the Loan Policy Board with respect to any matter or matters.

SEC. 5. Functions transferred to Administrator.--All functions of the Board of Directors of the Reconstruction Finance Corporation, including those of the members and Chairman of the said Board and including those with respect to the management of the Corporation, are hereby transferred to the Administrator, except as the said functions are otherwise vested by the provisions of sections 6 and 7 of this reorganization plan.

SEC. 6. General policies.-The Loan Policy Board shall establish general policies (particularly with reference to the public interest involved in the granting and denial of applications for financial assistance by the Corporation and with reference to the coordination of the functions of the Corporation with other activities and policies of the Government) which shall govern the granting and denial of applications for financial assistance by the Corporation.

SEC. 7. Financial-assistance procedure.—All applications for loans or other financial assistance totaling in excess of $100,000 to any borrower shall be referred to a board of review, and such board shall submit a recommendation in each case to the Administrator. Any board of review shall consist of not less than five persons who shall be designated by the Administrator from among personnel of the Corporation having major responsibilities assigned to them and who shall receive no additional compensation for service hereunder. Whenever any loan or purchase of obligation shall be approved or declined in any case wherein the board of review has recommended otherwise, the Administrator shall place in the records of the Corporation a memorandum setting forth his reasons for granting or denying the financial assistance involved.

SEC. 8. Delegation of functions.-The Administrator may from time to time make such provisions as he shall deem appropriate with respect to the performance by any officer, employee, or administrative unit under his jurisdiction of any function of the Administrator under the provisions of this reorganization plan.

SEC. 9. Abolition of present Board.-The Board of Directors of the Reconstruction Finance Corporation, including the offices of the members of such Board, is hereby abolished, and the Administrator shall provide for winding up any outstanding affairs of the said Board not otherwise provided for in this reorganization plan.

SEC. 10. Effective date.-Sections 4 to 9, inclusive, of this reorganization plan shall become effective when, and not until, the Administrator first appointed hereunder enters upon office pursuant to the provisions of this reorganization plan.

PENDING LEGISLATION

Mr. GARY. What is the status of the legislation pending before the Senate with reference to a further reorganization of RFC?

Mr. SYMINGTON. Mr. Chairman, I am not quite sure about that. The MacArthur hearings have sort of sidetracked a good deal of the efforts as to the activities of most of the other committees over there.

I am not quite sure whether the Fulbright subcommittee has presented to the full committee the matter; and, if so, whether the full committee has presented it to the floor.

I will be glad to get that information and report back to you, sir. Mr. GARY. What, in brief, is the general purposes of the bill which is now pending before that committee?

Mr. SYMINGTON. I think they propose to make the agency operate under a single administrator. In their bill they call him a Governor and have him elected for a 3-year term, with a right of reelection or reappointment.

Mr. GARY. What is his term now-unlimited?

Mr. SYMINGTON. Yes, sir, to the best of my knowledge.

Mr. GARY. Subject to the discretion of the President?

Mr. SYMINGTON. Yes, sir. They also want to eliminate this business of working on a loan and then going to work for the borrower after the loan has been successful, which, of course, we fully approve, and have as a condition of our loans now.

I believe that is correct; is it not, Jim?
Mr. DOUGHERTY. Yes.

LENDING TO SMALL BUSINESS

Mr. SYMINGTON. In general, I thought the proposed legislation was good, sir. There has been some other legislation about small business, with the RFC, you might say, following up for small-business loans.

I do not think we should do that. I think we should be a lending agency, and not get into the question of expediting materials and orders after a loan is made.

I think we will have plenty to do as a lending agency, especially because of our added functions in the critical-materials field.

Those are the most salient features of the legislation, as I remember it.

Mr. GARY. In your opening statement you said that the authority, and therefore the responsibility, for a loan should be concentrated in one agency, and you called attention to the fact that that is not the case now in the RFC.

Does this pending legislation seek to correct that situation?

Mr. SYMINGTON. I do not think it does, sir. There are several bills pending. There is the bill in Senator Fulbright's subcommittee of the Senate Banking and Currency Committee. Then Senator Sparkman has a bill in the Small Business Subcommittee.

DEFENSE LOANS

Then there is the Defense Production Act itself, which gets into the question of defense plants. My belief is, from what I have heard from the director, Mr. Wilson, that he would be sympathetic to the defenseplant loans being concentrated in the RFC, the defense loans.

That to me seems logical, especially as you have a committee with the record of the RFC Review Committee.

I believe that it would be a good idea to have that experience in Government fully utilized when these various type loans come up.

CLARIFICATION OF RESPONSIBILITIES OF THE CORPORATION

Mr. GARY. I have a mimeographed statement here that was released by the Fulbright subcommittee, entitled "Revision of the RFC Act," in which it is stated that the

present bill seeks to strengthen the control over the activities of RFC by clarifying the responsibilities of the Corporation in three important aspects.

It eliminates those provisions of the present act under which the Corporation is enabled to share its responsibility for certain specific loans with other agencies of the Government, it reclassifies one important limitation imposed by the present act so as to clearly require that it be observed as a condition precedent to lending, and it imposes one new requirement as a condition precedent to the exercise of the lending power.

Mr. SYMINGTON. I would be frank with you, sir; I have not been working on that legislation. There has been limited time and we have had some pretty serious problems. When the five Directors left, in effect that left one Director to handle the work.

The Reorganization Act gave me a Deputy, but he had to be confirmed and has just arrived.

One organizational problem that had to be corrected immediately was lack of definiteness as to just who in Washington the agencies in the field reported to.

I bring these points up because my problem to date has been primarily a reorganization of the present planning, you might say, for the future.

I have to approve every loan over $100,000, and be at every loan meeting. With many loans up, many hours are involved.

I notice on defense loans, where we turn down a loan in whole or in part because of lack of collateral, that then the loan may be passed as a defense loan. This splitting of the function seems a little absurd.

Mr. GARY. It does look as though that subject is being treated in the pending bill, however. It would seem to be well to follow it through in an effort to settle the problem.

Mr. SYMINGTON. I am sorry I did not read that bill again, Mr. Chairman, before I came over today, sir. I should have done so. I have read it before, and talked about it with Senator Fulbright.

My reaction to his bill was that there might be a point here and there I did not agree with, but in the main it was a fine bill.

PROFITS FROM RFC LENDING PROGRAM

Mr. GARY. The main program of the RFC is your lending program. Is most of your profit made on that program?

Mr. SYMINGTON. I would think so; yes, sir.

Mr. GARY. You do not make any profit on the nonlending program? Mr. SYMINGTON. On the materials program?

Mr. GARY. Yes.

Mr. SYMINGTON. No, sir.

Mr. GARY. You showed a profit of $19.8 million in 1950, $5.3 million in 1951, and an estimated profit of $6.1 million in 1952. What is the reason for this decrease in profits?

Mr. MASON. There are two principal reasons: In 1950 we had, as you know, the Federal National Mortgage Association. That Associa

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tion has since been transferred to the Housing and Home Finance Agency under Reorganization Plan 22. A very considerable part of our income, in 1950 $10,000,000, was in the form of a dividend from that Association.

Another major part of our income in that year was approximately $7 million received from the liquidation of acquired collateral. That accounts for $17 million of the $19.8 million profit in 1950.

INTEREST RATES CHARGED BY RFC

Mr. GARY. What interest do you charge on loans?

Mr. SYMINGTON. We have been charging 4 percent. Then that was changed a few months ago to 5 percent. All loans stay at 4 percent if they were originally at 4 percent. New loans, or additions to old loans, are at 5 percent.

(Discussion off the record.)

FULL PUBLICITY GIVEN TO RFC ACTIONS

Mr. SYMINGTON. May I add a couple of points to my testimony? Mr. GARY. Yes.

Mr. SYMINGTON. Among other changes made, we require the registration of any representative of any borrower. That has been an unfortunate situation in the RFC in the past. We have had special representatives come in, with a special relationship to the would-be borrower.

Now everybody has to register. The book is available to the public and the press. Also, we publish all loans authorized every week. We publish the authorized loans in as much detail as we think fair to the borrower. We do not publish declines. That would hurt a company, turned down by what, you might say, is the last resort. This information is available to the press and the public.

PROFITS FROM PRODUCTION PROGRAMS

There is a profit in tin at this time. We sell our synthetic rubber at cost. We take a reserve for contingencies, but after much examination, it looks as if we are selling at a fair cost figure, considerably less than half the cost of natural rubber.

In tin we show a fairly heavy paper profit. The reason for that is the price went up heavily after we had bought fairly heavily. On the other hand, at the present time we are selling tin below the price of the world market. So this paper profit may well be equalized over a period of 12 months. We do not want to make a profit, or show a loss in the sale of tin to American industry.

STATEMENT OF INCOME AND EXPENSES

Mr. GARY. In connection with that, I would like to put in the record the table appearing on pages 1 and 2 of the booklet entitled, “Business-Type Budget," which is headed "Statement of income and expenses, part I-lending activities."

(The material referred to is as follows:)

[graphic]

Statement of income and expenses (fiscal years ending June 30, 1950, 1951, and 1952)

PART I-LENDING ACTIVITIES

Income:
Interest and dividends earned on loans to, and securities of:

Commercial enterprises, financial institutions, political subdivisions of States, Territories,

Expenses:

Total expenses before losses and charge-offs, and adjustment of valuation allowances (state-
ment A, part I)....

Loans, investments, and other receivables charged off:

Net income (or loss (-)) from lending activities before adjustment of valuation allowances.
Increase (-) or decrease in valuation allowances:

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