Mr. DAVIS. I would be glad to.

Now we are talking about homeowners, as I understand it?
Senator BAYH. Yes, sir.

Mr. DAVIS. I will pass this one on to Mr. Cowles, if you will run down the list.

Mr. CowLES. Senator, we, of course, have a rather lenient program with respect to this particular situation. An individual who has suffered a damage in the disaster program is eligible to apply to us, and I would like to make it clear, because of your earlier statement, that we do not require them to go to the bank in this.

We are anxious to get them back where they were, so they don't have to go to the bank.

Now, the one thing that is required is that if they do have insurance, which I think was one of the big situations in Indiana; that insurance, of course, must be applied to repair the home first, and then any funds that are needed over and above that, we will supply.

Now, there is one situation. If the bank insists, or the mortgagee insists upon being paid off, then, of course, we will make a complete loan to the individual.

Now, the situation here is that if the individual's income exceeds their expenses, by an amount sufficient to repay the loan, that's all that's necessary. It is really just that simple. So that, anyone who suffered a loss because of a disaster which we have declared is eligible to apply to the Small Business Administration for a loan.

Senator BAYH. Do you have provisions so that one cannot qualify if a loan is available at similar rates and terms?

Mr. COWLES. No. We do not. The only situation there might be if the bank, of course, came in and said to us-we say this, that you are not required to go to a bank. However, if in the processing of the case we determined that funds are otherwise available on reasonable terms, then, of course, we could decline a loan for that particular purpose, so, fundamentally, what we are saying is if a bank said to us, "We will make a loan to this individual," then, yes; we would not make the loan to the individual.

Senator BAYH. Some of these rates in Indiana, I am not too proud to say, run as high as 8 percent.

Mr. COWLES. Well, in that particular situation, we would take this position, which I believe we have, is that we would expect the bank, if they were going to make the loan, and they had the loan before, to make the loan exactly on the same terms, without any unusual charges.

Now, if they insisted upon making a loan for greater amounts and higher interest rates, and so forth, we certainly would step in to make the loan to that individual.

Senator BAYH. One of our later witnesses this morning is Sheriff Woody Caton of Elkhart County, Ind., and certain portions of this county were devastated, as you know, and I am sure the total, as high as it was in Elkhart County would have been much higher if it hadn't been for the quick response to the need by Sheriff Caton. He went several days without any rest, as you well know. He will point out in his statement a specific example or two in which, as you know, a trailer park was swept away, almost in toto, and the appli

cants, or one of the specific applicants to whom he refers was told that his credit status was too good for him to qualify for a 3 percent loan; and thus he was required to get a 6-percent loan, to rebuild his disaster-destroyed property.

Could you speak to that point a little?

Mr. COWLES. Well, I am sure that I would certainly take no exception that these things could happen. This is not our rules and regulations, definitely not, and whoever told them that was in error in making that particular statement.

Senator BAYH. I think it would be helpful for the record if you would explain for us the dollar limitation or lack thereof which characterizes the FHA programand the SBA program. For example, the FHA has a $2,500 maximum in one particular area. The SBA does not have a maximum, does it?

Mr. CowLES. No. We have no dollar limitation. The limitation is determined by the amount of money it would take to put the individuals back where they were, physically.

Senator BAYH. Gentlemen, I don't think there is any need to hold you further. The statement of Mr. Davis is complete in pointing out that you wholeheartedly support or at least you are willing to cooperate with us in our effort to get the cost-sharing provisions of the Budget Bureau's plan and work with this, which I think, in cooperation with the other authority we hope that you get will make a much more workable program.

So, let me thank you for your testimony, for taking the time to come up here this morning, and, also, once again, I would like to thank you for the efforts that you have made to help us in Indiana. Mr. DAVIS. Thank you, Mr. Chairman. You have been very kind. We will be delighted to furnish anything for your record, should something come up.

Senator BAYH. I notice that one of our colleagues, who has had a great deal of personal experience with this disaster problem, is with us. I would like to ask Senator Bartlett from Alaska if he would care to testify, and let us have the benefit of his thoughts. Certainly, he has had a firsthand view of what the forces of Mother Nature can do.

STATEMENT OF HON. E. L. BARTLETT, A U.S. SENATOR FROM THE STATE OF ALASKA

Senator BARTLETT. Thank you, Senator Bayh.

I am very pleased to have this opportunity.
Would you care to have me continue now?
Senator BAYH. Oh, yes; surely.

I will say, if I might, before you start, that I would like the record to show that we are indebted to Senator Bartlett for the effort that he and members of his staff have made in helping in this joint sponsorship, where we have about 30 Senators who are joining together in a comprehensive approach to revision of this overall disaster pro

gram.

I think it goes without saying that the contribution that the Senator's staff made, and he made, has been very helpful to us, because of their firsthand experience.

Senator BARTLETT. Thank you very much.

I am pleased to be here this morning to testify before you, because it is apparent by the events which have occurred that these national disasters are not casual, isolated, infrequent incidents, but they strike over widely separated geographic areas, and they have been doing so with extraordinary frequency in these last years, and especially these last months.

I have here, Mr. Chairman, and I hope a copy has been supplied to you, a prepared statement. I don't propose to read that. However, I should like to ask your permission to place it in the record.

Since it was prepared, there have been further disasters. There has been a recent disaster in Texas in which flash floods took a good many lives and caused enormous property damage. Then, too, headlines in the papers every day now tell us about the disastrous effects of floods in Colorado and adjacent States.

It becomes more and more apparent, I believe, that the Federal Government must take a larger and larger role in bringing relief in these situations, insofar as relief can be provided. There will also be, of course, loss of life. But there will also be large property loss. It is in this area that we can be helpful.

My experience in the Alaska situation was that the Federal agencies moved effectively, affirmatively, and with great speed. After the disastrous earthquake, and succession of seismic waves there, on March 27, 1964, Alaska would have been shattered, Alaska would have been crippled, Alaska would have been no one knows how long in recovering, if the Federal Government had not moved in in such a massive and helpful way. As a consequence of what the President ordered to be done there, his establishment of the Reconstruction Commission, a great number of Federal agencies were brought together to work as a unit.

I suppose it is always a little dangerous to try to single out a special department, special agencies, but I am bound to mention how helpful were the Office of Emergency Planning, the Corps of Engineers, the Small Business Administration, the Housing and Home Finance Agency, and all the others that joined together in this mighty effort. But, as a consequence of what happened in Alaska, Mr. Chairman, the members of my staff and I gave increasing attention to this whole disaster program. It seemed to me that, when you introduced this bill which you are holding hearings on now on April 30th last, you moved forward in a very constructive way to further the role of the Federal Government in these situations, and to make these agencies even more effective than they could possibly be under existing legislation.

I think that this bill is needed. What is more, it is essential. Concomitantly, the Congress moved in another direction-at least the Senate did when, in January, it passed S. 408, a bill authorizing the Housing and Home Finance Administration to make studies of how financial assistance might be provided to those suffering property losses in national disasters. S. 408 places emphasis on the possibility of developing an insurance program to cover earthquakes, to cover floods. and to cover other forms of national disaster.

A Fderal disaster insurance program has been talked about for a long while. Even, on one occasion, the Congress passed a bill relating to flood insurance. It was never implemented, however. No appropriation was ever provided.

Working out a satisfactory Federal insurance program is a difficult subject, indeed. It is going to be mighty hard to work out a program of premium payments and the like. However, I don't think this is beyond the capacity of man, and I believe very strongly that a Federal insurance program is warranted and essential in the field of natural disasters not presently covered by insurance.

We know that in Alaska, there was practically no earthquake insurance; practically no help was forthcoming from that direction. I only know of one or two such policies which were in existence there.

Senator Bayh, S. 408 passed the Senate without any opposition at all. It is now before the House Banking and Currency Committee. That it is looked upon with some degree of favor there is indicated by the fact that the distinguished chairman of that committee introduced under his own name a like bill. We are hopeful that hearings will be held upon it in the near future, that it will be passed, and that this act will become law.

In the meantime, I think the record clearly shows that the provisions incorporated in your bill, Senator Bayh, are modest, are designed to be helpful, and should become effective at the earliest possible moment, by way of congressional passage and Presidential approval.

When I heard that you were to introduce it, I was more than happy to cosponsor it, because it seemed to me that the time for delay, the time for hoping that these disasters will never occur again, has long since passed. We have a heavy obligation upon us to move ahead, to make it easier, at least for those who suffered losses in these terrible disasters. We can't, no matter what we do, make their situation whole, but we can restore people who otherwise would be shattered financially to some semblance of well-being. This is an obligation that I think is national in character. It cannot be handled on a State or community basis.

Finally, Mr. Chairman, I would like to say in reference to the Alaska situation, I forgot to mention one agency that certainly was a great help. I probably have forgot others as well. But the one I would particularly like to mention here is the Bureau of Public Roads.

I should like your permission, Senator Bayh, to incorporate with my prepared statement the one I made on April 30 before the Senate, when I joined you as a cosponsor of the bill you are now considering. Senator BAYH. We are very happy to include that also and will place both at the end of your oral testimony.

Senator BARTLETT. Thank you very much.

Senator BAYH. Might I ask a question or two?
Senator BARTLETT. Certainly.

Senator BAYH. You point out correctly that, no matter what type of legislation we have, we are not going to inhibit disasters, and we are not ever going to completely restore anyone.

Because of the seriousness of the tragedies involved, and the size of the loss, we are never really going to make a person as well off as he was before. We are trying to find some type of equitable relief to help them get back on their feet.

I think you are also correct in pointing out that we need to go to the basic bill to have a basic revision of the overall disaster law so that when a disaster strikes, we don't want to have to go through what you did in Alaska, have to wait until the bill, itself, is enacted by

Congress. Even as tragic as the case was in Alaska, it took some time, as it did for the Northwestern disaster bill that just passed in this last week or two.

Senator BARTLETT. Signed last week.

Senator BAYH. Yes. It had to go through twice, because of one particular section, as you know. We don't want to do this. We want to get something that will apply to everyone across the country. Now, the Alaska bill contained something unique in disaster legislation, the special provisions which provide for Federal loan adjustment. Would you care to give us your thoughts as to how these worked out in Alaska?

Senator BARTLETT. Well, it worked out, on the whole, extraordinarily well. The Farmers Home Administration, the Veterans' Administration, but most particularly the Small Business Administration, moved in and by order of Administrator Foley promulgated the most liberal regime attainable under the law: 30-year loans, interest rates on the order of 3 percent, deferment of principal payments for a period so that the people could, insofar as possible, get on their feet. And these loans have flowed out; already in a volume of far more than $50 million.

Had not this money been available, I don't know what would have happened up there, because referring to that which you said concerning the need for a basic law, the plain fact of the matter is, Mr. Chairman, that these disasters have been occurring, as I stated at the outset, very frequently. As has been said, the tears dry rather quickly. People feel awfully sorry, the people of the Nation, for residents of a given community, or a given State, when they are hard hit. But other events transpire, and the people's attentions are diverted elsewhere. There isn't the same sentimental desire, by and by, to do the things that need to be done. There isn't the pressure of public opinion which would force the Government, in all its phases, to move to help. That is one reason why I think that your bill is so desirable. It will provide for a liberalized program to cover all such situations throughout the Nation. There won't be this need to come to Congress again for separate legislation in trying to take care of each new disaster, as has been the case up to now-and is still the case. We don't have to have an Alaska bill. We won't have to have a Pacific Northwest bill, and all the rest of them. Instead, general provisions will be written into the statute books.

Senator BAYH. May I get your thoughts on one last question? I know you are extremely busy.

Having discussed this matter for the past several weeks with the Bureau of the Budget, I know they and the President are well aware of the need to revise our disaster statute. They share my concern, and I am sure yours, about the fact that when a person has a long-term loan on his house, and the house is blown away, that that doesn't take the mortgage away. The mortgage is there, and for this person to take another loan on top of his first one is almost an impossible situation, so there has been a great deal of consideration given to some type of financing for this type of individual.

Presently, the thinking has progressed to the point that the Bureau of the Budget is recommending an establishment of a joint fund, from which outright grants can be made to individuals, on a cost-sharing