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A BILL To amend section 403 of title IV of the National Housing Act affecting insurance

of savings and loan agcounts and to amend section 5 (1) of Home Owners' Loan Act of 1933, as amended, affecting Federal savings and loan associations, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That title IV of the National Housing Act, as amended, be, and the same is hereby, amended by adding a new subsection to section 403 thereof, as follows:

“(e) The Corporation shall reject the application of any applicant if it finds that the applicant is not a local, mutual thrift and home financing institution, The Corporation shall terminate within 1 year the insurance of accounts of any institution which has been converted after July 1, 1956, from a mutual institution to or been merged into or consolidated with a stock company having nonwithdrawable stock, the holders of which have any preference or advantage as to control of the institution or as to the earnings reserves or surplus over the withdrawable account holders."

Sec. 2. Section 5 of the Home Owners' Loan Act of 1933, as amended, is hereby amended by the addition of the following to subsection (i) thereof :

“The Board shall not approve the liquidation of any Federal association or the conversion or merger of one to any form of organization except a mutual savings institution unless provision is made for the mutual owners thereof to receive the full value of their accounts, including participation in any value represented by reserves, surplus, and undivided profits.”

HOUSE OF REPRESENTATIVES,

Washington, D. O., June 25, 1956. Hon. WILLIAM L. DAWSON, Chairman, Committee on Government Operations,

House of Representatives, Washington, D.C. DEAR COLLEAGUE: Thank you for your letter of June 18 advising me of the hearings on Reorganization Plan No. 1 and Reorganization Plan No. 2.

In connection with Reorganization Plan No. 2, I am enclosing a letter from Mr. Arthur Tonsmeire, Jr., president of the First Federal Savings and Loan Association in Mobile, Ala., and letter from Mr. J. M. Sink, Jr., president of the Federal Home Loan Bank of Greensboro, N. C., in opposition to the plan.

I shall appreciate your arranging to incorporate these letters in your record of the hearings. Sincerely yours,

TRANK W. BOYKIN,

Member of Congress.

FIRST FEDERAL SAVINGS & LOAN ASSOCIATION,

Mobile, Ala., June 7, 1956. Hon. FRANK W. BOYKIN,

Member of Congress, Mobile, Ala. DEAR FRANK: The United States Savings and Loan League, of which First Federal is a member, has requested that we contact our Congressman with regard to the portion of Reorganization Plan No. 2 specifically referring to the separation of the Federal Home Loan Bank Board from the Federal Savings and Loan Insurance Corporation. We are opposed to this plan for several reasons :

1. Associations that are members of both the bank system and the Insurance Corporation and all Federal associations would have to deal with two governmental agencies, a circumstance which would result in duplication, confusion, and delay in decisions on important matters.

2. The Insurance Corporation, being solely concerned with the insurance fund and having no responsibility for the general progress or advancement of the savings and loan business, would be strongly inclined to veto any freedom of management of liberalization or relaxation of regulations. The incentive to control salaries, dividends, pensions, advertising, and other management functions would be very strong.

3. The operating costs of both the Insurance Corporation and the Board are borne by member associations. The plan would thus increase operating expenses to the savings and loan business.

4. Supervision and examination could be doubled as both the Board and the Insurance Corporation would have their respective legal obligations to determine the soundness of associations.

5. In spite of the fact that member associations own the bank system and shortly will own all of the capital of the Insurance Corporation, they were not consulted in any way prior to the attempt to separate the agencies.

You would probably be particularly interested in the following facts pertaining 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 of Insurance Corporation should be separate."

So far as I know, the commercial banks are in no way interested in this problem.

Thanks so much for your consideration of our position with regard to your Board. Sincerely,

ARTHUR TONSMETRE, Jr., President.

FEDERAL HOME LOAN BANK OF GREENSBORO,

Greensboro, N. C., June 22, 1956. Hon. FRANK WILLIAM BOYKIN, Member of Congress,

House of Representatives, Washington, D. O. MY DEAR MR. BOYKIN ; As you know, the Federal Home Loan Bank of Greensboro is a reserve credit institution which serves 549 member savings and loan asosciations, 33 of which are located in Alabama. 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, 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 Sav. ings and Loan Advisory Council, and to the executive officers of the savings and loan national trade organizations.

BAY SHORE FEDERAL SAVINGS & LOAN ASSOCIATION,

Bay Shore, N. Y., June 25, 1956. Re Reorganization Plan No. 2 of 1956 Hon. WILLIAM L. DAWSON, House Committee on Government Operations,

House Office Building, Washington, D. O. DEAR CONGRESSMAN DAWSON: We beg leave to register our strong opposition to the proposal of splitting up the Federal Home Loan Bank Board, as provided in above-referred to plan No.2.

The present single agency to handle savings and loan affairs was developed over the last quarter century and has resulted in a strong and progressive nationwide system of savings institutions which now finance 37 percent of all home loans. To tamper with this successful single agency would increase the expense of the Government agencies to individual savings institutions, would create overlapping responsibilities for the savings and loan operation, with resulting possible conflicts of policy and confusion, such as duplication of effort, reporting, examination, and supervision, all without any foreseeable benefits, efficiency or benefit to the public.

We understand that the insured savings and loan associations (of which we are one) were neither advised nor consulted with, prior to the transmittal of the plan to Congress. We respectfully urge that the Reorganization Plan No. 2 of 1956 be withdrawn or defeated. Respectfully yours,

RALPH FLAMBERG, President.

CITIZENS SAVINGS & LOAN ASSOCIATION,

Belleville, Ill., June 25, 1956. Hon. WILLIAM L. DAWSON,

Chairman, House Committee on Government Operations, Congressman,

State of Illinois, House Office Building, Washington, D.O. MR. DAWSON: Throughout your entire tenure of office you have consistently supported bills for the best interest of the people and businesses under your jurisdiction.

It is with this thought in mind that I encourage you to study thoroughly and thereby support action to defeat the current Reorganization Plan No. 2 of the President concerning the proposed division of the Federal Savings and Loan Insurance Corporation and the Federal Home Loan Bank Board into two separate agencies.

The following are the beliefs of my officers and board of directors:

1. The present, single agency to bandle 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.

2. The wisdom of tampering with this present, successful, single agency is highly questionable and dangerous.

3. It would create still another separate agency, 4. Unlike most reorganization plans proposed, this would not result in economy of operations but, rather, would increase the expense of the Government agencies

to individual savings institutions (which pay most of the cost of the Board and the Insurance Corporation).

5. 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.

I would like to also inform you that we are interested in and will support any constructive improvement in the supervision of the savings and loan business, and inform you that the United States Savings & Loan League currently is making careful, painstaking study of the Federal Home Loan Bank's system with that end in view. Best personal regards,

H. THOMAS DUNCK, Executive Vice President.

ST. CHARLES SAVINGS & LOAN ASSOCIATION,

St. Charles, Ill., June 25, 1956. Re Reorganization Plan No.2: Savings and loan associations Mr. WILLIAM L. Dawson, Chairman, Committee on Government Operations,

House of Representatives, Washington, D.C. DEAR SIR: We, officers and members of the St. Charles Savings & Loan Association are opposed to this proposed Reorganization Plan No. 2.

We feel this would bring an additional work in that the savings and loan would have to file separate reports, one to the Home Loan Bank Board and one to the Federal Savings and Loan Insurance Corporation.

There would undoubtedly be added examination costs, as this plan would create another separate agency. 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 savings and loan operation, would undoubtedly result in conflict of policy and confusion.

We feel it unwise to tamper with the present single agency which was developed over the past 25 years by congressional enactments, and has resulted in a strong progressive nationwide system of savings and loan institutions.

While this, we understand is a Presidential proposal, we feel it very doubtful that the President was made fully aware of the effect on our business, or of its reaction on the thousands of individual members throughout the Nation.

Our institution is interested in and will support any constructive improvement in the supervision of the savings and loan business.

The United States Savings & Loan League is presently making a careful study of the Federal Home Loan Bank System with that end in view.

We thank you in advance for careful consideration of this matter and hope you will lend your efforts toward defeating Reorganization Plan No. 2. Very truly yours,

JOHN T. MCCONKEY, President.
C. JAY MARVIN, Secretary.

THE STANDARD BUILDING & LOAN Co.,

Cincinnati, Ohio, June 25, 1956. Reference Reorganization Plan No. 2, Federal Home Loan Bank. Hon. WILLIAM L. DAWSON, Chairman, House Committee on Government Operations,

Washington, D. O.. DEAR SIR: This institution wishes to express their sincere opposition to the proposed change in the Federal Home Loan Bank Board as proposed in Reorganization Plan No. 2, for the following reasons :

1. The present single agency handling the 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 insti: tutions, which now finance 37 percent of all home loans.

2. We question the wisdom of tampering with this present successful, single agency as being highly questionable and dangerous.

3. The organization as planned would create still another separate agency.

4. Unlike most reorganization plans proposed, this would not result in economy of operation, but, rather, would increase the expense of Government agencies to individual savings institutions who pay most of the cost of the Board and the Insurance Corporation.

5. 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 behalf of this institution, we wish to emphasize that we are always interested in, and will support any constructive improvement as a savings and loan business. The United States League, as you probably are aware, is making a careful, painstaking study of the Federal Home Loan Bank System with that end in view. Very truly yours,

GEORGE E. REIFF, President.
WILLIAM K. HALLER, Secretary.

CONGRESS OF THE UNITED STATES,

HOUSE OF REPRESENTATIVES,

Washington, D. C., June 26, 1956. Hon. WILLIAM L. DAWSON, Chairman, Committee on Government Operations,

United States House of Representatives, Washington, D. C. DEAR MR. CHAIRMAN: I refer the enclosed letter from the president of a savings and loan association in my district to your committee and respectfully request that the viewpoint expressed be given consideration, Very sincerely,

JAMES J. DELANEY,

Member of Congress.

WOODSIDE SAVINGS & LOAN ASSOCIATION,

Woodside, N. Y., June 14, 1956. Hon. JAMES J. DELANEY,

Brooklyn, N. Y. DEAR CONGRESSMAN: Here at the Woodside Savings we are all opposed to the President's Reorganization Plan No. 2, calling for a separation of the Federal Savings and Loan Insurance Corporation from the Federal Home Loan Bank Board.

We think it is a bad plan. It will cost needless expense to the savings business of this country and will also subject us to two conflicting kinds of authority. The present system is pretty good and should certainly be preserved.

We would apreciate anything you can do to stop this reorganization plan from being put into effect. Sincerely,

JEROME Z. LORBER, President,

(Letters submitted by Hon. L. H. Fountain follow :)

HOUSE OF REPRESENTATIVES,

Washington, D. O., June 26, 1956. Hon. WILLIAM L. DAWSON, Chairman, Committee on Government Operations,

House of Representatives. DEAR MR. CHAIRMAN : I will appreciate your making a part of your record of hearings in connection with Reorganization Plan No. 2 the attached corre spondence.

I do not care to burden the record of your hearings with a detailed statement about Reorganization Plan No. 2. I simply want to say that on the basis of the study which I have thus far made of this plan, and the results to be expected, I am opposed to it. I do not believe its enactment will bring greater economy and efficiency. On the contrary, I envision in the splintering of the Federal Home Loan Bank Board by separating the Federal Savings and Loan Insurance Corporation from the Board and creating it as another independent agency reporting to the Congress and to the President, increased operating costs, conflicts between

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