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JEFFERSON FEDERAL SAVINGS AND LOAN ASSOCIATION, INC.,

Louisville 2, Ky., June 21, 1956. Hon. NANTE 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 them 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 Insurance 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.)

APPENDIX

(Telegrams addressed to Hon. William L. Dawson follow :) NINTH FEDERAL SAVINGS & LOAN ASSOCIATION OF NEW YORK CITY,

New York, N. Y., June 20, 1956. Hon. WILLIAM L. DAWSON, Chairman, House Committee on Government Operations,

House Office Building, Washington, D. C.: On behalf of 42,000 members, request you disapprove separation of Insurance Corporation from Federal Home Loan Bank Board proposed by Reorganization Plan No. 2. Plan would only create an unnecessary expensive new agency unduly complicating day-to-day operations of thousands of savings and loan associations throughout country to no ultimate advantage to public. Additional objection is our business was not even consulted and issues never debated on such major change. Your help is needed to defeat plan.

JULIAN R. FLEISCHMANN, President.

CENTRAL FEDERAL SAVINGS & LOAN ASSOCIATION OF NASSAU COUNTY,

Long Beach, N. Y., June 22, 1956. Hon. Congressman WILLIAM L. Dawson,

House Office Building, Washington, D. C.: I wish to express opposition to Reorganization Plan No. 2 of 1956 which proposes separate and independent status for the Federal Savings and Loan Insurance Corporation and the Home Loan Bank Board. This division will result in confusion between the two agencies when the present liaison status ends if this bill is passed.

Duplication in supervision of insured savings and loan associations can only result in conflicting ideas, purposes, and directives. Management of insured savings and loan associations will therefore be impaired due to the lack of agreement on policies proposed by two separate supervisory agencies.

VANCE CARNAHAN, Executive Secretary.

THE DALLES, OREG., June 23, 1956. Hon. WILLIAM L. DAWSON, Chairman, Subcommittee on Reorganization,

House of Representatives, Washington, D.C.: As the Oregon representative of the Savings and Loan Industry, I wish to register my opposition to reorganization plan No. 2, on basis no emergency exists, this actiton 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.

BUFFALO, N. Y., June 28, 1956. WILLIAM L. DAWSON, Chairman, House Committee on Government Operations,

House Office Building, Washington, D.C.: Our board of directors at a meeting June 25, 1956, expressed strong objections to the purpose and provisions reorganization plan No. 2 and respectfully ask your support in its defeat.

BLACKROCK RIVERSIDE SAVINGS & LOAN ASSOCIATION. 110

(Letters addressed to Hon. John W. McCormack follow :) BOSTON FEDERAL SAVINGS & LOAN ASSOCIATION,

Boston, Mass., June 20, 1956. Hon. John W. McCORMACK,

House of Representatives, Washington, D. C. MY DEAR CONGRESSMAN : Some time in the near future the Committee on Government Operations will consider resolutions to disapprove Reorganization Plan No. 2. I wish to express our opposition to this plan, and I am urging you to support the action to defeat it.

Although Reorganization Plan No. 2 was a Presidential proposal, we feel that it was doubtful that the President was made aware of the implications of this proposal. We cannot find any evidence of advice having been sought from the organized savings and loan business, or any of the savings and loan supervisory officials.

Congress last year made the Bank Board independent. Any changes as suggested under Reorganization Plan No. 2 should have the full study of the supervisors of the saving and loan business, as well as the industry itself ; and any suggested changes should be made only after the fullest study by Congress.

Reorganization Plan No. 2 creates another separate agency and the wisdom of tampering with this present successful single agency is highly questionable and dangerous. Unlike most reorganization plans proposed, this would not result in economy of operation but rather would increase the expense of the Government agencies to individual savings institutions. 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 the Congress and to the President.

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

EDMOND F. DAGNINO, President.

FIRST FEDERAL SAVINGS & LOAN ASSOCIATION OF LOWELL,

Lowell, Mass., June 19, 1956.
Re Reorganization Plan No. 2
Representative John W. McCORMACK,

House Office Building, Washington, D. C. DEAR REPRESENTATIVE McCORMACK: This association respectfully requests your support in opposition to the above reorganization plan. It is natural that the existence of two Boards, with overlapping responsibilities for a savings and loan operation, will result in a conflict of policy and general misunderstanding within the business as well as to both supervisory authorities, Congress and the President.

The creation of another agency will, of necessity, increase the cost of operations for savings and loan associations throughout the country as well as for the Government itself.

The creating of another Board with overlapping responsibilities for savings and loan operations will create controversies throughout all phases of the business to all who are involved. Many other vital points in opposition can be pointed out, but I am sure that in your studies of this particular reorganization plan, you will understand why we solicit your support in opposition to the same. Very truly yours,

STANLEY A. GIFFIN, President.

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