savings and loan associations in their relations with the Federal Government.

3. The assumption that the establishment of separate agencies in Washington would change the quality of the examinations of our associations for the better is implicit in the plan, but no substantiation for this concept is offered. We who operate the savings and loan associations and are well acquainted with the character of examinations to which we are subjected, fail to see how separation of the agencies would make for better results; after all, examinations are conducted by individual men hired and paid according to civil service standards, and the same type of personnel generally would be engaged in the work, whether they were working for one agency or the other, or for the two jointly.

The above disadvantages to the savings and loan associations are particularly significant since the savings and loan associations own all of the capital of the Federal home-loan bank system and pay all of the costs of operating the Federal agency. In spite of this fact, the associations were not consulted nor given any opportunity to submit their views prior to the transmittal of the reorganization plan.

I would also like to enumerate some of the reasons why the plan should not be adopted from the point of view of the Congress and the general public interest.

1. The plan violates the basic philosophy of the Reorganization Act of 1949. As we understand the purpose of reorganization plans, it is to permit greater efficiency and economy in Government operations. The establishment of 2 agencies in lieu of 1 cannot possibly be economical but on the contrary represents an increase in expenses. The two agencies now share in the expenses of such activities as a common legal department, statistical department, public relations division, office of secretary, and budget officer. As separate agencies each of these activities would have to be separately staffed. Similarly, the establishment of two agencies is in exactly the opposite direction of avoiding duplication and overlapping, one of the stated objectives of reorganization plans. Congress has recognized that the reorganization plan procedure is a major delegation of legislative authority and it would appear that only reorganizations supported by clear and compelling reasons or of an emergency nature are appropriate for treatment under this procedure.

2. The plan is substantially different than the recommendations of the Hoover Commission report and is exactly opposite to the recommendations of the Commission's Task Force on Lending Agencies. The single sentence recommendation of the Hoover Commission report was that no person should serve on the Federal Home Loan Bank Board and on the Board of Trustees of the Federal Savings and Loan Insurance Corporation. There was no substantiating data or documentation. The Task Force on Lending Agencies, which conducted a thorough study and consulted with the affected agencies, included in its report a substantial section on the operation of these activities and concluded:

It [the Federal Home Loan Bank Board] supervises a system of privately owned Federal home-loan banks, and their member institutions which are local thrift and home-financing institutions of the savings and loan type. Also, it supervises the Federal Savings and Loan Insurance Corporation. This appears to be a natural grouping of functions which requires no change.

Under the heading "Recommendation-Federal Savings and Loan Insurance Corporation" we find the following single sentence:

Except for the general recommendations on management presented earlier in this report, the task force has no recommendation to offer with respect to the organization and operation of this mutual insurance trust.

3. Just last year administration spokesmen opposed the creation of two separate boards. There appears on page 392 of the 1955 hearings before this very committee, the comments of the Housing and Home Finance Agency on the lending agencies report. Administrator Albert M. Cole had this to say about the Hoover Commission recommendation:

I do not agree that the Home Loan Bank Board should be separate and distinct from a board or other managerial body administering the affairs of the Federal Savings and Loan Insurance Corporation. Both the Home Loan Bank Board and the Federal Savings and Loan Insurance Corporation are concerned with the operations of savings and loan associations, and the existence of two boards could result in conflicts of policy and confusion in the industry. Furthermore, such organization would be much less economical than the present one wherein the HLBB and the FSLIC have common administrative services, utilize the services of one examining division, and accumulate jointly knowledge and information about the industry as a whole and about the operation of specific savings and loan associations.

Similarly, on September 13, 1955, the Chairman of the Federal Home Loan Bank Board transmitted an official letter to the chairman of the Senate Banking and Currency Committee expressing his opposition to the principle of the separation of the Insurance Corporation and the Board.

One of the most amazing things about the plan is its complete inconsistency with the administration's own statements last year regarding the creation of independent agencies. In signing the Housing Amendments of 1955, President Eisenhower stated:

I also have serious objections to the provisions of the bill which would create still another independent agency in the executive branch by detaching the Home Loan Bank Board, including the Federal Savings and Loan Insurance Corporation, from the Housing and Home Finance Agency.

Earlier, administration spokesmen, speaking of the establishment of an independent Federal Home Loan Bank Board, made the following statement before the House Banking Committee:

The administration believes that new independent agencies reporting to the President should be created only upon the showing of clear and compelling reasons for such action and of persuasive advantages to be derived from it.

4. The plan injects an unfortunate partisanship into the agency by failing to require bipartisanship on the Board of Trustees of the Corporation. The Federal Home Loan Bank Board is, by law, a bipartisan board.

5. The reorganization plan fails to provide for any term of office for the trustees. The Federal Home Loan Bank Board, the Federal Reserve Board, and the Federal Deposit Insurance Corporation, and virtually all similar Government agencies, make provision for specific terms of office.

We feel that these disadvantages to our associations and to the Congress are compelling reasons for the approval of the resolution to disapprove reorganization plan No. 2. Let me emphasize, however, that our objection to the plan goes right to the basic idea; that

is, a separation of the two agencies. I want the committee to understand that even if it were possible to correct some of the other defects in the plan we could not support it as long as it would splinter our Federal agency into two parts.

Let me assure the committee that we do not take the position that there is no need for improvement in the savings and loan business, or in the Federal agencies governing such associations. On the contrary, we recognize the need for constant study and improvement. A special United States Savings and Loan League committee to study the Federal Home Loan Bank System, headed by the league's past president, Ralph Crosby, of Providence, R. I., has been engaged for the past 4 months in an intensive study of the Federal Home Loan Bank System and will in the near future issue a comprehensive report. This report will set forth a complete program designed to assure an effective Federal Home Loan Bank System which makes its maximum contribution to the safety and soundness of the savings and loan business and to our national fiscal policy and housing program.

The president of the United States Savings and Loan League, Mr. Walter Dreier, of Evansville, Ind., has written to President Eisenhower assuring him of our willingness to cooperate in developing and advancing any needed improvements in the functioning of our Federal agencies or the savings and loan associations. We have given similar assurances to the House and Senate Banking and Currency Committees which have over the past years so carefully and wisely dealt with legislation in this field.

In this connection we were greatly encouraged when the House Banking and Currency Committee in reporting the housing bill, included a section clearly stating the committee's intent to nullify reorganization plan No. 2. In the accompanying committee report the committee says in part:

Your committee believes that Reorganization Plan No. 2 should not go into effect because (1) any basic change in the organizational structure of these Federal agencies should come only after adequate consultation with the Congress, the Board, and the industry; and (2) the committee has serious questions as to the basic merits of the plan and its possible effect on the savings and loan associations of the country which are currently supplying a vital 37 percent of all home financing * * * The committee feels that there is a real question as to whether it would be in the public interest or in the interest of the savings and loan business. Such a situation is conducive to conflicting regulations, duplication of supervision, and agency conflict. The Housing Subcommittee's recent investigation of urban renewal activities has clearly indicated that controversy and buckpassing between agencies can stifle the accomplishment of a constructive program and impede congressional intent *** the plan fails completely to draw the necessary lines between the present Board's functions and those of the proposed new Board. The result would be a period of paralyzing confusion.

I thank the members of the subcommittee for this opportunity to testify on this important matter and we are hopeful that after the subcommittee's hearings and deliberations it will favorably report the resolution of disapproval.

Mr. BUBB. Now, in all of the testimony that has been given, and I am sure Mr. Brown and Mr. Holifield will agree with me on this having been members of the Hoover Commission, there has been considerable discussion about the Hoover Commission report, but no one yet has mentioned the fact that the Hoover Commission Task Force on Lending Agencies specifically recommended a continuation of the

present setup and I would like to read on page 6 what they have to say concerning that.

The Federal Home Loan Bank Board supervises a system of privately owned Federal home-loan banks, and their member institutions which are local thrift and home-financing institutions of the savings and loan type. Also, it supervises the Federal Savings and Loan Insurance Corporation. This appears to be a natural grouping of functions which requires no change.

Now, also this morning I think there was much discussion about the reversal by the administration and the heads of departments, Albert Cole, Oakley Hunter, and others of my good friends, but I would like to quote directly from President Eisenhower in his statement on signing the Housing Amendments of 1955.

The President stated:

I also have serious objections to the provisions of the bill which would create still another independent agency in the executive branch by detaching the Home Loan Bank Board, including the Federal Savings and Loan Insurance Corporation, from the Housing and Home Finance Agency.

In-closing, just let me assure the committee that we in the savings and loan business do not take the position that there is no need for improvement in the savings and loan business, or in the Federal agencies governing such associations.

Either my colleagues or I will be very happy to answer any questions, Mr. Chairman.

Chairman DAWSON. Mrs. Harden.

Mrs. HARDEN. No questions, Mr. Chairman.

Chairman DAWSON. Mr. Brown.

Mr. BROWN. I want to congratulate the gentleman on making a very thorough statement. I have attempted to read this statement hurriedly. I glanced over it at noontime and I have read hurriedly the complete text of your statement, and I was especially pleased with the statement that you made that you do have a committee of your association at work trying to find means and methods and ways to strengthen the protection that is given both to the depositors and to the borrowers of these institutions.

Is it your plan or program to submit these recommendations to one of the congressional committees within a short time and make it available, to say, the Banking and Currency Committee which has jurisdiction over these matters?

Mr. BUBB. Yes; we would be very happy to do So, sir.

Mr. BROWN. May I in connection with the line of questioning I followed earlier today ask whether you have any committee or group within your organization that acts as a sort of policing agency within your own industry to see that some of these rather apparent actions, detrimental actions which are being taken by some associations are eliminated, or curtailed, or curbed, or whatever you want to call it? Mr. BUBB. Well, of course, as a league we try to do everything we can to keep our business on the very highest standard possible, and we have taken some actions lately regarding a certain practice that a very few associations have attempted. Certainly those associations don't like it very well, but we have gone right ahead with it anyway because we feel it is for the best interests of the public and the savings and loan business.

Mr. BROWN. Well, in every organization you will find some members will be cutting a little close to the edge. That even happens in

Congress once in a while, and the newspaper business, but you are as an association and on organization through your membership trying to take every step possible to give greater safety and protection. Mr. BUBB. On the major things, yes; that is correct.

Mr. BROWN. Were you in the business back in the thirties when we had some trouble?

Mr. BUBB. Yes, sir; I started in 1926.

Mr. BROWN. Then you know that things can happen sometimes, and being from Kansas I am sure you are rather conservative in your approach, anyhow.

Mr. BUBB. Yes, sir.

Mr. BROWN. But you are trying to impress upon the membership that the rule of reason sometimes is a pretty good rule to follow. Mr. BUBB. That is correct.

Mr. BROWN. I don't think there is any desire on the part of Congress to legislate or put too many straps or chains on any industry or business, but here is a great industry or business, or whatever you want to call it, that does deal with the welfare and the resources of the people on a substantial basis and also the Government of the United States; and the taxpayers have a great interest in the organization, so it is good to hear you say, sir, that your organization will work with the Congress and its various committees in every rightful attempt to make this organization and the setup we have in the building and loan and savings association field just as sound and safe as possible. That is for the good of America, isn't it?

Mr. BUBB. Thank you. I would like to say, Mr. Brown, we have very fine and pleasant working relations with both the House and Senate Banking and Currency Committees.

Mr. BROWN. That is all.

Chairman DAWSON. Mr. Fascell?

Mr. FASCELL. Mr. Bubb, don't you feel that the ramifications of this proposed plan are so great with respect to functions, duties, responsibilities, management problems, and administration, that it would be a lot better to legislate this problem than to attempt to do it in the manner which is proposed?

Mr. BUBB. I do.

Mr. FASCELL. If any institution is in any kind of trouble, it is a black eye for the whole industry; isn't it?

Mr. BUBB. That is correct.

Mr. FASCELL. Therefore, your association is anxious to do anything it can to maintain a high standard of attainment with respect to the members and nonmembers.

Mr. BUBB. Yes, in Topeka there are five associations. If one or the other associations had to close or did something that wasn't right, it affects all of us, so we are naturally interested in trying to keep the whole business on as high a plane as possible.

Mr. FASCELL. So where it is practical and reasonable, the association and its individual members are most anxious to cooperate with the Board or with the Congress or with the Executive on anything necessary that would raise the standard and make this industry a better industry, promote the public confidence and make it safer and better for the individual members to participate in the business, wouldn't they?

Mr. BUBB. That is correct.