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Urban renewal substantial need exists for community improvement and betterment. Slum clearance and urban renewal programs improve community living conditions through the reconstruction or elimination of blighted areas. This wholesome type of community betterment program is beyond the financial resources of local governments and the complex problems require cooperation of the local government, the Federal Government, and of private industry and private financial institutions.

We recommend that Congress provide, in connection with the present urban renewal program authorized by the Housing Act of 1949, such appropriations and improvement of operational procedures as may be needed to assure a proper functioning organization.

In addition to urban renewal assistance for the very large communities, we urge that equal opportunities be provided for smaller communities as well, and for those with a population of under 25,000, as provided in Senate Joint Resolution 153.

Senator CLARK. I think we are all happy to see the ABA coming along on urban renewal.

Mr. REILLY. We are in favor of it, and we think the smaller communities should get the same benefits that the larger ones do, and apparently up to this point it has been rather difficult.

Senator CLARK. No doubt about that, they have been slower in getting along. But I think in the last year, there has been a very encouraging spread of the program through the smaller communities. Of course one trouble has been they have not had access to adequate planning, and now in many instances the States are helping them out with that, and I think they are getting further ahead.

Mr. Reilly, thank you very much for your testimony. I am sure the other members of the committee will read it with great interest. Mr. REILLY. Senator, we understand the two savings associations appeared this morning and made statements. I am sorry I was not able to be here.

There may be some of their statements we would like to file supplemental statements on.

Senator CLARK. We would be very happy to have you do that, particularly to have you take a careful look at the revision of S. 2791, which was submitted this morning by Mr. Bubb on behalf of the United States Savings & Loan League. Let the committee have the thinking of the ABA on that revised bill, which is said to have met a number of objections which were initially raised to it by the Federal Home Loan Bank Board.

I think if you fellows want to knock that on the head, you ought to get into pretty strong testimony against it.

Mr. REILLY. Thank you, sir, we will file a supplemental state

ment.

SUPPLEMENTAL STATEMENT ON BEHALF OF THE AMERICAN BANKERS ASSOCIATION In our statement to the committee on May 15, 1958, we expressed the view that a new mortgage insuring corporation, as proposed in S. 2791, would cause an unnecessary and undesirable duplication of mortgage insurance programs.

The revised draft of S. 2791, as presented to the committee on May 15, 1958, by the United States Savings and Loan League contains a number of changes in the original bill, which we have now had an opportunity to review, and they serve to strengthen the view we previously expressed that if a new program of mortgage insurance is to be established, it should be within the framework and as a part

of the Federal Housing Administration and should not be made the occasion for the creation of a new Federal agency.

Although the proposed corporation, according to its advocates, would have no Federal money, it would have many of the characteristics of a Government corporation. The revised draft changes the title of the proposed new corporation to the "Federal Home Mortgage Guarantee Corporation"; authorizes the Federal Home Loan Bank Board, an agency of the Government, to operate the Corporation; entitles the Corporation "to the use of the United States mails for its official business in the same manner as the executive departments of the Government"; requires the concurrence of the Secretary of the Treasury to any borrowing of money by the Corporation and for the issuance of its bonds, notes, debentures, or other obligations; limits the deposit of funds of the Corporation not required for current operation to deposits either with the Treasurer of the United States or, with the approval of the Secretary of the Treasury, in a Federal Reserve bank; authorizes the Corporation to act as a depository of public money when so designated by the Secretary of the Treasury and to be employed as fiscal agent of the United States; exempts the obligations of the Corporation, both as to principal and interest, from all State taxation, except estate, inheritance, and gift taxes; and exempts the Corporation, including its franchise, activities, capital, reserves, surplus and income, from both Federal and State taxation, except that its real property is made subject to State or local taxation.

It seems certain that these characteristics would lead the public to view the Corporation as a Government operation and that the Federal Government would be virtually obligated to come to its rescue in the event it got into financial difficulties.

In the revised draft, participation in the proposed Federal Home Mortgage Guarantee Corporation would be limited to members of the Federal Home Loan Bank System only. This accentuates the discrimination against other types of mortgage financing institutions which we pointed out in our original testimony on S. 2791.

The revised draft places the operation of the Corporation under the Federal Home Loan Bank Board which is authorized to prescribe bylaws, rules, and regulations not inconsistent with the act. We have no reason to believe that the Board as presently constituted would operate the Corporation or exercise its regulatory authority other than in the interest of providing a sound insurance program and adequate standards. Nevertheless, in view of the fact that there is another agency already providing mortgage insurance, conflicts of policies and procedures would be likely to develop. If Congress sees fit to enact such a mortgage insurance program as is contemplated in the draft bill, this situation would be avoided by designating the Federal Housing Administration as the administering agency.

COMMENTS ON PROPOSALS PRESENTED BY THE NATIONAL LEAGUE OF INSURED SAVINGS ASSOCIATIONS

It is noted that the statement of James E. Bent, chairman, legislation committee, National League of Insured Savings Associations, presented to the Subcommittee on Housing on May 15, 1958, contains 2 legislative proposals not related to any of the bills pending before the subcommittee. One of these proposals deals with the investment powers of Federal savings and loan associations, recommending their expansion to include investment in State and municipal obligations and equity investment in land for development and sale. The other proposal is to remove the present $10,000 ceiling on the insurance of accounts of savings and loan associations, and other like institutions, by the Federal Savings and Loan Insurance Corporation, thereby providing 100 percent insurance coverage for each insured account regardless of the amount.

Removal of limitation on insurance of accounts

Banks are concerned with any proposal to increase the insurance coverage of accounts insured by the Federal Savings and Loan Insurance Corporation. Any such proposal must be viewed in the light of its possible effect on the insurance of bank deposits by the Federal Deposit Insurance Corporation.

The American Bankers Association in testimony before the Senate Banking and Currency Committee in 1950, on the bill which became the Federal Deposit Insurance Act, stated the following general principle:

"Under no circumstances should the original function of deposit insurance in protecting the great mass of depositors be altered in the direction of total

guaranty of bank credit, instead of deposits. In other words, deposit insurance is primarily for the benefit of small bank depositors."

This principle is equally applicable to the insurance of accounts of savings and loan associations, and the proposal to remove the $10,000 limitation would violate this principle by altering the original function of such account insurance in the direction of total guaranty of the mortgage credit provided by savings and loan associations. The insurance provided by the Federal Savings and Loan Insurance Corporation is designed primarily for the protection of the small account owners.

The reason given in Mr. Bent's statement for seeking the removal of limitations on the insurance of accounts is to induce large investors such as pension fund trustees to place funds in the accounts of insured savings and loan associations as an indirect means of investing in mortgages. This is clearly a deviation from the concept of the function of such insurance to protect the accounts of small individual savers.

Broadening of investment powers

The proposal that the investment powers of Federal savings and loan associations be broadened to permit investments in State and municipal obligations and in unimproved land for development and sale would seem to constitute a substantial departure from the traditional character of these associations as primarily mortgage investment institutions. Moreover, such broadened powers could result in a diminished supply of funds available for mortgage investment. Government bonds and bonds of the Federal Home Loan Banks and Federal National Mortgage Association in which Federal savings and loan associations may now invest are readily marketable obligations and serve to provide a degree of liquidity in the assets of such associations. State and municipal obligations, on the other hand, are not generally readily marketable obligations.

Neither does it seem that illiquid investments in unimproved land for the purpose of development and sale are a proper type of investment for institutions whose primary concern should be the safety of the funds entrusted to them by small savers.

We recognize that a healthy economy is dependent on a sound financial structure, and believe that any proposals which could have the effect of diverting funds of savings and loan associations into investments which are not consistent with their primary function of investing in mortgages would, in the long run, adversely affect the whole financial structure of this country.

Senator CLARK. The hearings will recess until 10 a. m. on Monday, May 19.

(Whereupon, at 3: 48 p. m., the subcommittee recessed until 10 a. m., Monday, May 19, 1958.)

HOUSING ACT OF 1958

MONDAY, MAY 19, 1958

UNITED STATES SENATE,

COMMITTEE ON BANKING AND CURRENCY,

SUBCOMMITTEE ON HOUSING,

Washington, D. C.

The subcommittee met, pursuant to recess, at 10: 13 a. m., in room 301, Senate Office Building, Senator John Sparkman (chairman of the subcommittee) presiding.

Present: Senators Sparkman, Clark, and Bush.

Also present: Representative Curtis, of Missouri.

Senator SPARKMAN. Let the subcommittee come to order, please. We shall get started. Other members of the subcommittee will be here shortly, but I think we had better get going.

Our first witness this morning is Congressman Thomas B. Curtis of Missouri. Congressman Curtis has another committee meeting that he needs to get to, so I think we will go ahead, Congressman Curtis, in order to accommodate you.

Mr. CURTIS. Thank you very much.

Senator SPARKMAN. We have a copy of your statement that will be made available to other members as they come in.

Mr. CURTIS. Thank you, Mr. Chairman.

Senator SPARKMAN. You proceed in your own way. We are glad to have you with us.

STATEMENT OF THOMAS B. CURTIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MISSOURI

Mr. CURTIS. I first want to thank the chairman for the opportunity of testifying before the committee on this important subject of adequate facilities for the aged.

No subject seems to be receiving more attention today than the problems that face our older citizens. It is very important that their problems receive attention. Indeed, the point has been raised of what value has been this increased lifespan given to us through the achievements of our medical and pharmaceutical professions if the years added to the lives of our people are to be spent in unhappiness. What should be one of the greatest boons to mankind has in some respects become a bane. I believe it is well within our power to give the boon real meaning. However, it requires some clear thinking of what should be done. What has been done, although done with good intentions, has often produced poor results.

The problem of the aged is to a large degree a financial problem. Most older people are on fixed incomes, pensions, social security, or

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retirements of some sort. Their plans for financing their retirement have been thrown out of kilter by two major economic and social forces.

1. Instead of living 10 years they now are living 20 years. This is the boon that has become a bane, because they have not prepared themselves for this financial burden. The cost of staying alive is greatunnecessarily great. The drugs and medical care are available, but their cost is burdensome.

2. Inflation has hit this group of people most cruelly. What they had set aside has been cut in half. Although we have sought to alleviate this damage through granting double personal exemptions to persons over 65 in our income-tax laws, and in other ways, this has amounted to to little for those who get it and has been of no help to those in the lower economic brackets who do not have enough income to be on the incometax rolls.

One way in which we can help these older citizens is to analyze with some care just what their needs are and see if we cannot provide the facilities that are tailored to their needs. What we have been doing, I suggest, is trying to convert the facilities that already exist in our society to fit their needs or, equally as bad, to distort their needs to fit what facilities exist. This does not work, and it is costly.

Let me illustrate. Older people need more medical attention than younger people but do not need constant doctor care, nor do they need constant nursing care. Yet, ofttimes, they are confronted with the choice of either staying at home or going to a hospital. They do not need hospitalization. They need something much less expensive, something in between. The result is we tend to overload our hospitals and inadequately meet the needs of the aged and unnecessarily burden them financially.

I am going to make a confession. I was the first member of the male sex to serve on the board of the Visiting Nurses Association of St. Louis. I was deeply interested in the work that the visiting nurses were doing. I observed how their caseload had changed over the years. The primary caseload of the visiting nurses used to be instructing young mothers in prenatal and postnatal care, because most births took place in the homes and not in the hospitals. Today, there are very few maternity cases in the home. In place of maternity care, the visiting nurses now find their primary caseload is geriatricsteaching the families of older people in the home how to care for the aged person in the home; how to administer a hypodermic shot; how to handle other problems of chronic illness or just old age.

I regret to state that the use of the visiting nurse approach, which is so much less costly than the hospital approach and much more suitable, has not received the attention and the development that it should. But it illustrates the point I am trying to make that facilities geared to the problems of the aged should be set up specifically for them rather than to try to make the aged problems fit into the facilities we have been using for the general society.

So I come to the specific question at hand-the encouragement and implementation of nursing homes designed to take care of the aged. As a matter of fact, the very terminology I am using "nursing homes"-confesses that I am guilty of the very thing I am urging that we avoid. What we need is not nursing homes in the traditional way

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