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Sec. 3. Status of the Corporation ; authority of the President.-(a) The Corporation, including the board of trustees, shall hereafter be separate from and, except as provided in section 2 (b) of this reorganization plan in regard to approval required under section 406 (a) of title IV of the National Housing Act, as amended independent of the Federal Home Loan Bank Board; but nothing herein shall preclude the Corporation or the Federal Home Loan Bank Board, in respect of their respective functions after the provisions of this reorganization plan take effect, from utilizing the information, services, and facilities of the other under interagency arrangements authorized or permitted by law.
(b) The Corporation, including the board of trustees and all matters under the jurisdiction of the board of trustees, shall be subject to the direction and control of the President of the United States.
SEC. 4. Incidental transfers.-(a) All assets, liabilities, contracts, commitments, property, records, personnel, and unexpended balances of appropriations, allocations, and other funds (including authorizations and allocations for administrative expenses), available or to be made available, of the Corporation shall remain with the Corporation.
(b) So much of the assets, liabilities, contracts, commitments, property, records, personnel, and unexpended balances of appropriations, allocations, and other funds (including authorizations and allocations for administrative expenses), available or to be made available, of the Federal Home Loan Bank Board as the Director of the Bureau of the Budget shall determine to relate primarily to the Corporation or to its functions (including the functions vested in the Corporation by statute, the functions transferred to the Corporation by the provisions of this reorganization plan, and the functions transferred to the board of trustees by the provisions of this reorganization plan) shall be transferred from the Federal Home Loan Bank Board to the Corporation at such time or times as the said Director shall direct.
(c) Such further measures and dispositions as the Director of the Bureau of the Budget shall determine to be necessary in order to effectuate the transfers provided for in this section shall be carried out in such manner as the Director shall direct and by such agencies as he shall designate.
SEC. 5. Effective date. The provisions of sections 2, 3, and 4 of this reorganization plan shall take effect on the first day following the day on which the second of the two appointive members of the board of trustees first appointed under this reorganization plan enters upon office as such member.
Chairman Dawson. Because we have several Congressmen with us who have other meetings to make, I am going to seek to accomodate them, and our first witness will be Congressman Lester Johnson, Wisconsin.
STATEMENT OF HON. LESTER JOHNSON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WISCONSIN
Mr. Johnson. I appreciate the opportunity to appear before the committee in support of House Resolution 541 and in opposition to Reorganization Plan No. 2. This is a reorganization plan affecting the Federal Home Loan Bank Board and the savings-and-loan associations of the country. There are eight savings-and-loan associations in my district, and they have played an important part in enabling our citizens to become homeowners and to accumulate savings for their future security. These savings-and-loan associations are vitally affected by this plan and are very much opposed to it.
I do not profess to be an expert in this field, and I am not a member of the Banking and ('urrency ('ommittee which ordinarily handles these matters. It does seem to me, however, that before any basic change is made in the Federal agency it should be preceded by very careful study and that the institutions affected by it should be given every opportunity to express their views.
And I might state, Mr. Chairman, that I am a member of the House Agriculture Committee, and in that committee we have had plans that were suggested, I believe, by the Hoover Commission for the Federal Land Bank, the Bank of the Cooperatives, and the Production Credit Association.
Now, in the last session of Congress we took up the changes for the Federal Land Bank and the Bank of the Cooperatives, but the member banks and the people that were connected with it all were in agreement with the legislation that we put through and because there was no agreement in the Production Credit Association, we waited until this session until we could get agreement before that legislation was passed, and it just passed the House very recently.
You do not have to be a financial expert to see some of the defects in this plan. Whenever you establish two authorities in the same field, there is bound to be conflict, buck-passing, and duplication. It is also obvious that when you create a board without requiring any bipartisanship and without stating any term of office, you are likely to have a rubber-stamp board which is especially subservient to the party in power.
The people in my district are happy with the services that they are receiving from the savings and loans until someone convinces me otherwise, I am in favor of maintaining the present Federal agency structure.
One of my constituents who is a long-time respected friend of mine, Mr. Walter Wensel, executive vice president of the First Federal Savings and Loan Association of Eau Claire, has written me: I can see no useful purpose or reason for changing the status quo. And also: We were somewhat surprised that this action was taken by the President in view of the fact that he nor anyone close to him did not discuss the matter with the savings-and-loan industry in any way, which industry, of course, is directly and vitally affected.
Mr. Chairman, I urge the adoption of the resolution and disapproval of the plan.
Also, I ask unanimous consent to have printed in the record after my remarks a telegram which was sent to me from Eau Claire which reads as follows: Hon. LESTER R. JOHNSON,
House Office Building, Washington, D. C.: The associations in your district have all gone on record opposing reorganization plan No. 2. We will appreciate your efforts in opposition to this move.
First Federal Savings and Loan, Eau Claire, Barron County Federal
Savings & Loan Association, Chippewa Savings & Loan Association, Tri-County Building & Loan Association, Cumberland Fed'eral Loan & Savings Association, Rice Lake Building & Loan Association, River Falls Federal Savings & Loan Association,
Jackson County Federal Savings & Loan Association. I also ask unanimous approval to have printed in the record five letters that I have received from building and loan associations in my district.
Mr. HOFFMAN. May I ask, Mr. Chairman, that all of the witnesses put their exhibits in without reading them.
Chairman Dawson. Unless there is objection, that will be done.
(The five letters follow :)
FIRST FEDERAL SAVINGS & LOAN ASSOCIATION OF EAU CLAIRE,
Eau Claire, Wis., June 4, 1956. Hon. LESTER JOHNSON,
House of Representatives, Washington, D. C. DEAR LESTER: I am writing you with reference to reorganization plan No. 2 of 1956 which President Eisenhower transmitted to the Congress on May 17. As I understand it, this plan, unless vetoed by either House of Congress within 60 days, will establish the Federal Savings & Loan Insurance Corporation as an independent agency.
After a studied consideration of the matter I feel strongly that Congress should not approve this plan. Presently, the insurance corporation is under the Federal Home Loan Bank Board, which Board has to do with the savings and loan industry, and by creating another agency independent of that Board the expense of administration would certainly be substantially increased over that which it is now, and I can see no useful purpose or reason for changing the status quo. Then too, under the proposed new plan, it would not necessarily be bipartisan or nonpartisan, which in my opinion might be dangerous for our economy.
We were somewhat surprised that this action was taken by the President in view of the fact that he nor anyone close to him did not discuss the matter with the savings and loan industry in any way, which industry of course is directly and vitally affected.
I strongly urge you to use your influence to reject this plan in the Congress and will appreciate your efforts along this line. Yours very truly,
W. H. WENZEL Executive Vice President.
RICE LAKE BUILDING & LOAN ASSOCIATION,
Rich Lake, Wis., June 4, 1956. Representative LESTER JOHNSON, House Office Building,
Washington, D.O. DEAR MR. JOHNSON: My attention has been called to the fact that under date of May 17 the President transmitted Reorganization Plan No. 2 of 1956 to the Congress. Unless vetoed by either House of Congress within 60 days the plan will establish the Federal Savings and Loan Insurance Corporation as an independent agency, separate from the Federal Home Loan Bank. The savings and loan industry is opposed to this operation with which we join. Very truly yours,
LAURENCE S. COE, Secretary.
DURAND FEDERAL SAVINGS & LOAN ASSOCIATION OF WISCONSIN,
Durand, Wis. June 21, 1956. Hon. LESTER JOHNSON, Congressman, State of Wisconsin,
House of Representatives, Washington, D. O. DEAR CONGRESSMAN: I am writing concerning Reorganization Plan No. 2 which would divorce the Federal Savings and Loan Insurance Corporation from the jurisdiction of the Federal Home Loan Bank Board and set it up as a separate Government agency.
I wish to advise you that our board of directors has met and is against Reorganization Plan No. 2 as presently proposed and have directed me to inform you of their objection. The board feels that it would be harmful to the Federal savings and loan organization if such a proposal was adopted. Yours truly,
F. W. CARPENTER,
RIVER FALLS FEDERAL SAVINGS & LOAN ASSOCIATION,
River Falls, Wis., June 21, 1956. Congressman LESTER JOHNSON,
Washington, D.O. Hon. LESTER JOHNSON : We ask you to please oppose Reorganization Plan No. 2 which would divorce the Federal Savings and Loan Insurance Corporation from the jurisdiction of the Federal Home Loan Bank Board and set it up as a separate Government agency. Very truly yours,
H. E. SIMPSON, Secretary.
JACKSON COUNTY FEDERAL SAVINGS & LOAN ASSOCIATION,
Black River Falls, Wis., June 23, 1956. Hon. LESTER JOHNSON, House of Representatives,
House Office Building, Washington, D. C. DEAR MR. JOHNSON : Our directors, at a meeting held this past week, requested me to write to you to register our strong opposition to the administration's Reorganization Plan No. 2, whereby the Federal Savings and Loan Insurance Corporation would be divorced from the jurisdiction of the Federal Home Loan Bank Board.
It is our feeling that this would be a distinct step backward for our industry as a whole.
Apparently all parts of our business were surprised when this plan was disclosed; also apparently our industry representatives in Washington were not contacted or consulted before it was presented, as is usually done in such circumstances. We cannot avoid the feeling that somehow the administration action in this case was inspired by those not interested in our future well-being.
Again, we are against this plan. We will surely appreciate it if you would use your influence to oppose it. Thank you very much. Respectfully yours,
RUFUS DIMMICK, Secretary-Treasurer,
Chairman Dawson. This subcommittee is privileged to have with us this morning the distinguished chairman of the Banking and Currency Committee. He has taken time from his many duties to give us the benefit of his long experience in these matters.
I am going to ask Congressman Brent Spence if he will come forward and be a witness.
STATEMENT OF HON. BRENT SPENCE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF KENTUCKY Mr. SPENCE. Mr. Chairman, I thank you very much for the opportunity to come to express my opinion on House Resolution 541 disapproving Reorganization Plan No. 2 of 1956.
All expenses of both the Federal Home Loan Bank System and of the Federal Savings and Loan Insurance Corporation are borne by their members—the members of the Nation's 4,200 thrift and home financing institutions—and not by the Government.
Practically none of these organizations are in favor of the Reorganization Plan No. 2.
It is not an unimportant institution that has the power to insure $32 billion of the people's money and has an authority to borrow from the Treasury $750 million. Its administration as now organized has operated splendidly.
No reorganization should be made without careful investigation and consideration.
The Banking and Currency Committee was not consulted about this reorganization. I am sure that neither of the savings and loan leagues were consulted. As you know both are earnestly and vigorously opposed to this reorganization plan.
In all of the other organizations comparable—the Home Loan Bank Board and the Federal Deposit Insurance Corporation—there is a provision for bipartisan membership in the controlling body. Under the Reorganization Plan No. 2, the Board of Trustees of this Corporation is appointed without term, without any provision as to their qualifications and without any provision for bipartisanship.
They shall report directly to the President. Of course, none of the appointed trustees will remain very long if there is a turnover in the administration. It would make them a political football. It is an invitation to the next administration to discharge them.
There certainly ought to be a definite term of the trustees. Members of the Federal Reserve Board are appointed for 14 years, members of the Home Loan Bank Board are appointed for 4 years, members of the Board of the Federal Deposit Insurance Corporation are appointed for 6 years.
Under the proposed plan, trustees of the Federal Savings and Loan Corporation are appointed without term.
The Banking and Currency Committee was so greatly interested that we inserted in the housing bill an amendment that would make the plan inoperative. I am very glad the disapproval resolution has been offered and I hope that it will pass the House by a constitutional majority.
I thank you.
Mr. McCORMACK. Mr. Spence, were you or any members of your committee consulted before this plan was submitted ?
Mr. SPENCE. No, I didn't know anything about it.
Mr. McCORMACK. In a plan of this kind, that is a little bit strange, isn't it?
Mr. SPENCE. I didn't hear that.
Mr. McCORMACK. Well, it is probably a leading question, so I won't repeat it.
That is all.
Mr. SPENCE. We were not consulted. While we give this power to the President we know that he could not consider all these matters and that he must delegate the authority to a committee to prepare the plan and submit to him. I think it would have been very appropriate for the committee to have discussed the matter with the legislative committees of the Congress having jurisdiction before it was offered.
Chairman Dawson. Mr. Hoffman.
Mr. Brown. I would just like to comment enough to set the record straight.
This reorganization plan was submitted by the President of the United States, not by a committee. It was based upon some general recommendations made by the second Hoover Commission, which was