2. PETITION TO THE SENATE AND HOUSE OF REPRESENTATIVES IN CONGRESS PREPARED BY UNITED STATES BUILDING AND LOAN LEAGUE, CHICAGO, ILL. PRELIMINARY STATEMENT The following suggestions for the amendment of H. R. 5531 and S. 1771 are submitted and their consideration respectfully urged on behalf of the savings, building and loan associations of the United States. Such amendments, in the judgment of the petitions, will not only perfect and make more useful existing legislation and administrative procedure, but will substantially aid in the encouragement of thrift and in making possible the building, owning, buying, and refinancing of homes. This petition is presented by the United States Building and Loan League, a national organization founded in 1892, representing over 4,000 individual institutions, 46 State leagues and over 75 percent of the assets in this type have participated in their preparation. S AND RECOMMENDATIONS RE: H. R. 5531 AND S. 1771 (SECTION BY ly satisfactory in present form. This is proposed by the Federal an Bank Board and has not been discussed or considered by our ion or member associations. The initial reaction of the leaders of ization is to prefer to continue to pay the Government for such are made available to the system. If the Federal Home Loan Bank to succeed, it must be a financially-sound business operation and also able to pay the expenses of the supervisory board in Washington. the system has paid the Government over $2,600,000 for the use of rnment funds which are very safely invested. The amendment can ed on an emergency basis. SECTION 3 Recommendation by striking out the entire section 3 of H. R. 5531 and S. 1771. Explanation. are a number of compelling arguments against this proposal of the Home Loan Bank Board. Government is represented now by two public interest directors on rd, selected by the Federal Home Loan Bank Board, which also ape chairman and vice chairman (who are, therefore, the leaders in ds). In addition, the Federal Home Loan Bank Board itself is ly a Government-appointed and controlled board, which has as subcontrol over the activities of the 12 banks as any other financial Washington has in its particular field. The Federal Home Loan Bank ot only has complete powers of supervision, and broad powers of n, but it controls the banks even in some of their most detailed policies approval of appointment and compensation of bank officers, power to irectors and officers, power to assess the banks without limit and prescribe forms, routine and procedure. Recently the board has taken direct employment of the examining personnel of the banks. only argument for change at this time is that the Government has ately $80,000,000 invested in stocks in the banks, while the members' t now totals approximately $22,000,000. The facts are that the ent's capital has been carefully husbanded, thoroughly protected and ✓ managed. It was contemplated in the original statute that the scribed by members would continue to increase until the banks had a y strong structure to retire Government capital completely. In the severest depression in history, not a month has passed in which stment of members has not increased. As the volume of credit in s expands, this increase of members' capital should be accelerated. bership in the system is voluntary. Hundreds of institutions invested pital stock with both business and patriotic motives. Their rights pate in management should not be changed without long and thoughtof the question. 99 ems also, when the banks are being well managed, that it would be ychology to make a change which eliminates three directors who a elected by the members. After all, these are men who have taken y duC а move. пете 15 evidence LO шитсаte ша а uecrease III Lue umber of representatives of the members will bring better management or more successful operation. The development and progress of this system is essentially a problem for men who understand the conduct of the thrift and home financing business and who have a full-time interest in the progress and uture of the savings and loan idea. The work and leadership of such men s not irreconcilable with the public interest. A 5. Our organization firmly believes that the system will be most effective f a fair division of responsibility is maintained, believing that the bank sysem should be a decentralizing influence in the business of home financing. change at this time will certainly discourage wider membership, use of the nsurance facilities, and the general enthusiasm of the institutions for the whole Federal Home Loan Bank Board program. 6. The complete elimination of this section will meet with the complete aproval of our organization and of the member institutions of the Federal Home Loan Bank System. Satisfactory in present form. SECTION 4 SECTION 5 Acceptable, although some may doubt the wisdom of encouraging associations to make mortgages as large as $20,000. SECTION 6 This perfecting amendment is satisfactory. SECTION 7 Recommendation Amend by striking out the entire section 7 of H. R. 5531 and S. 1771. Explanation The Congress should continue to exercise some control over the expenditures of money by public agencies. No board or bureau should have the sole power to levy assessments and to undertake such expenditures and activities as it alone desires. A portion of the funds for operating the Federal Home Loan Bank Board are paid by the 12 banks. This amendment to the Federal Home Loan Bank Act would remove the opportunity of member institutions to be heard by an impartial legislative committee in case they feel the assessment of the Board are onerous or provide for an undue expansion of Federal personnel or activity at the expense of the banks and the member associations. While the Board has broad supervisory responsibilities, its assessments upon the 12 banks are already on a $300,000 per annum basis, and this notwithstandng the fact that it has 3 other major activities under its jurisdiction. Our organization strongly prefers that Congress retain some jurisdiction over these funds. Such fees or charges as the Federal board must make for examnations of individual institutions should be excepted from the routine appropriation procedure. SECTION 8 This section is satisfactory in its present form, and we especially commend the present language, which confines the use of the moneys to "applications neretofore filed." SECTION 9 Satisfactory in present form. Federal sets of should b rporation is immediately authorized to purchase shares in building ssociations, savings and loan associations, homestead associations, ative banks organized and operated under State charter or under ision of the Comptroller of the Currency of the United States and eposits or purchase certificates of deposit or investment certificates banks and building and loan associations upon terms agreed upon. shall be made available without discrimination in favor of Federally Associations." Explanation pose of investing in Federal associations is to increase the flow of noney in communities around the country. There is no reason why e 10,000 State-chartered institutions cannot be used for the same thout forcing them to cast off their State charters and become Federal 3. A program confined to Federal associations is not only an unfair tion in the use of public moneys, but fails to use all of the outlets in t of immedate mortgage-lending activity. eral Home Loan Bank Board has had $100,000,000 approved excluthe use of Federal associations for over a year and a half, of which $14,000,000 has been disbursed to date. Numerically there are 688 ssociations, in contrast to 10,727 State-chartered associations. The the Federals are 21⁄2 percent of those of the State institutions. It noted in this connection that in the Reconstruction Finance Corporaation for banks, even where national banks were greater in numbers , the Congress did not exclude the State banks from the privilege of stock investments. It should also be recalled that the House of Reprepassed a share-purchase provision for State-chartered institutions in ssion of Congress. pervisory officials are unanimous in requesting equal share-purchase for State-chartered institutions. Both as a matter of fairness and in sts of getting the desired action, the share-purchase facilities should be lable to all sound thrift and home-financing institutions. Conversion ral charter should not be required unless the purpose is to eliminate e system of State-chartered community thrift and home-financing s, thousands of which have made an enviable record in assisting small means in thrift, as well as in the building and buying of homes. SECTION 11 Recommendation section 11 of H. R. 5531 and S. 1771 by adding at the end the following funds shall be used impartially in the promotion and development of t and home-financing institutions, whether State chartered or Federal." Explanation ginal section 6 of the Home Owners' Loan Act of 1933 provided $150,000 romotion and development of Federal savings and loan associations ar associations organized under local laws." In the act of Congress April 27, 1934, an additional $500,000 was made available, and now a 200,000 is proposed. Every dollar of these public funds has been used e Federal savings and loan associations, or to encourage the conversion hartered institutions into Federals. It would seem that this work has e first stages in which extensive subsidy is necessary, or at least the uld be constructively used in the interests of all institutions, as was e intention of Congress in the original Home Owners' Loan Corporation s is not a request for elimination of this item, but a suggestion that the e funds be substantially broadened in accordance with the original 1. No comment. SECTION 14 Partially satisfactory, although the comments made regarding section 7 of the -ill apply to part of this amendment. PPT SE amely targe SECTION 15 Recommendation Rewrite the entire section 15 of H. R. 5531 and S. 1771 to read as follows: Explanation The amendments proposed in section 15 recognize that the reserve provisions the present act are not workable. While the amended language is an imrovement, it is still not satisfactory. The language in the bill requires that n association having made a legitimate charge-off of losses to reserves, must et permission in Washington from the Insurance Corporation in order to dis-ribute earnings to its hundreds or thousands of savers. This involves delays, orms, and machinery which are totally impracticable. By means of the xamination program of the Corporation and its other general powers, it can ertainly protect itself without expanding its activities to the consideration and pproval of dividend declarations. Satisfactory in present form. SECTION 16 SECTION 17 This change is in accordance with the judgment and recommendations of our rganization, and we are particularly anxious that this section be enacted. SECTION 18 Satisfactory in present form. SECTION 19 Not germane to our institutions or shareholders. SECTION 20 Not germane to our institutions or shareholders. SECTION 21 Not germane to our institutions or shareholders. SECTION 22 The comment under section 7 is applicable to this proposal, as we feel that uch matters should be within the jurisdiction of the Congress. |