CONTENTS Erdmann, Arthur G., H. E. Hoagland, and Oscar R. Krentz, repre- senting the National Savings and Loan League_ Fahey, John H., Commissioner, Federal Home Loan Bank Adminis- Ferguson, Abner H., Commissioner of the Federal Housing Adminis- Irr, Henry P., second vice president, United States Savings and Loan Lee, Col. Harold, general counsel, Federal Home Loan Bank Admin- Bodfish, Morton, executive vice president, United States Savings 30, 34 54 34. Needham, D. J., general counsel, American Bankers Association Statements, letters, briefs, etc., submitted for the record: 72 Further statement entitled "Opposition of Treasury Depart- ment and Federal Reserve Board to S. 756, S. 757, and S. TO AMEND THE FEDERAL HOME LOAN BANK ACT OF 1933, AS AMENDED TUESDAY, MAY 23, 1944 UNITED STATES SENATE, SUBCOMMITTEE ON HOME LOAN BANK AND RELATED MATTERS OF THE COMMITTEE ON BANKING AND CURRENCY, Washington, D. C. The Subcommittee on Home Loan Bank and Related Matters met at 10:30 a. m., pursuant to call, in room 301, Senate Office Building, Senator George L. Radcliffe presiding. Present: Senators Radcliffe (chairman of the subcommittee), Danaher, Thomas of Idaho, and Buck. Senator RADCLIFFE (chairman of the subcommittee). The subcommittee will please come to order. We have three bills for consideration. I might say this is a subcommittee of the Committee on Banking and Currency which was appointed to consider S. 756, S. 757, and S. 1034. (The bills are as follows:) [S. 756, 78th Cong., 1st sess.] A BILL To amend the Federal Home Loan Bank Act, as amended Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That subsection (a) of section 10 of the Federal Home Loan Bank Act, as amended, is amended by striking out subdivision numbered (1) thereof, by renumbering subdivisions (2), (3), and (4) as (1), (2), and (3), respectively, and by adding thereto at the end thereof the following new paragraph: "Without regard to any other provisions of this subsection and subsection (b), each Federal home loan bank, upon the approval of the board or the Federal Home Loan Bank Administration by regulations or otherwise, is authorized to make advances to its members upon the security of any mortgage or obligation which is insured or as to which a commitment for the insuring thereof has been made, or as to which the member institution has insurance, under title I or any other title or provision of the National Housing Act as heretofore, now, or hereafter in force: Provided, That such advances may not be made in excess of 90 per centum of the unpaid principal of such mortgage or obligation." SEC. 2. The last sentence of subsection (b) of section 11 of the Federal Home Loan Bank Act, as amended, is amended by striking out the language "held and secured under section 10 (a) of this Act" and inserting in lieu thereof the following: "(exclusive of those evidencing unsecured advances), and the obligations of, or fully guaranteed by, the United States, held". SEC. 3. Section 11 of the Federal Home Loan Bank Act, as amended, is amended by adding at the end thereof the following new subsection: "(i) The Secretary of the Treasury is authorized to purchase any obligations issued pursuant to this section or title IV of the National Housing Act, both as heretofore, now, or hereafter in force and for such purpose the Secretary of the Treasury is authorized to use as a public-debt transaction the proceeds of the sale of any securities hereafter issued under the Second Liberty Bond Act, as now or hereafter in force, and the purposes for which securities may be issued under the Second Liberty Bond Act, as now or hereafter in force, are extended to include 1 such purchases. The Secretary of the Treasury may, at any time, sell, upon such terms and conditions and at such price or prices as he shall determine, any of the obligations acquired by him under this subsection. All redemptions, purchases, and sales by the Secretary of the Treasury of such obligations shall be treated as public-debt transactions of the United States. The Secretary of the Treasury shall not at any time purchase any obligations under this subsection if such purchase would increase the aggregate principal amount of his then outstanding holdings of such obligations under this subsection to an amount greater than three times the aggregate amount of the then outstanding capital stock, reserves, and surplus of, in the instance of obligations issued under this section, the Federal home loan banks, or, in the instance of obligations issued under title IV of the National Housing Act, the Federal Savings and Loan Insurance Corporation." SEC. 4. Section 20 of the Federal Home Loan Bank Act, as amended, is amended by striking out the word "twice" where it appears in the first sentence. SEC. 5. Notwithstanding any other evidences of the intention of Congress, it is hereby declared to be the controlling intent of Congress that if any provision of this Act, or the application thereof to any person or circumstances, is held invalid, the remainder of this Act, or the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby. [S. 757, 78th Cong., 1st sess.] A BILL To amend section 5 of the Home Owners' Loan Act of 1933, as amended Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That subsection (c) of section 5 of the Home Owners' Loan Act of 1933, as amended, is amended by striking the word "other" in the phrase "other improved real estate" and inserting in lieu thereof the word "any", and by adding at the end of said subsection the following new sentence: "Without regard to any other provisions of this subsection, such associations, upon the approval of the Board or the Federal Home Loan Bank Administration by regulations or otherwise, may invest their funds in any mortgage or obligation which is insured or as to which a commitment for the insuring thereof has been made, or as to which the association has insurance, under title I or any other title or provision of the National Housing Act as heretofore, now, or hereafter in force." [S. 1034, 78th Cong., 1st sess.] A BILL To amend title IV of the National Housing Act, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That subsection (b) of section 402 of the National Housing Act, as amended, is amended by adding at the end thereof the following new paragraph: "After June 30, 1943, (1) dividends shall not be payable on such stock, and (2) all dividends theretofore accumulated and remaining unpaid shall be waived by the Home Owners' Loan Corporation. Any reserve funds of the Corporation existent on the date of enactment of this paragraph shall be transferred to the reserve fund provided for by section 404 of this title." SEC. 2. (a) Subsections (a) and (b) of section 404 of the National Housing Act, as amended, are amended by striking the word "one-eighth" wherever it appears therein and inserting in lieu thereof the word "one-twelfth". (b) Subsection (c) of section 404 of the National Housing Act, as amended, is amended to read as follows: "(c) The one-twelfth of 1 per centum per annum insurance premium rate shall be effective as of July 1, 1943. If an insured institution has paid a premium at a higher rate for any period of time after such date it shall receive a credit upon its future premiums in an amount equal to the excess premium so paid for the period after such date." (The following departmental reports have been received on the above-printed bills:) In re S. 756. Hon. ROBERT F. WAGNER, NATIONAL HOUSING AGENCY, Washington, D. C., February 25, 1943. Senate Office Building, Washington, D. C. MY DEAR SENATOR WAGNER: Let me acknowledge your letter of February 23, requesting the views of the National Housing Agency concerning S. 756, a bill introduced by yourself on February 22, "to amend the Federal Home Loan Bank Act, as amended". Broadly speaking, the purposes of this bill are (1) to expand the power of Federal home-loan banks to make advances to their member institutions on the security of any mortgage or obligation insured under the National Housing Act, (2) to enable the debenture base upon which the joint and several obligations of all the Federal home-loan banks are issued to include obligations guaranteed by the United States and certain other secured obligations, (3) to authorize the Secretary of the Treasury in his discretion to purchase obligations of the Federal home-loan banks and of the Federal Savings and Loan Insurance Corporation, up to a fixed limit, and (4) to reduce the number of periodic examinations of the Federal home-loan banks. It is felt that these amendments will strengthen the credit of the Federal home-loan banks, and correspondingly will enlarge the lending power of the System which they represent in a way that will have direct utility to the private war-housing program, particularly in connection with the repair and improvement of existing structures. The National Housing Agency regards this bill as a desirable measure at this time, and is authorized to state that the Bureau of the Budget has no objection to the submission of these views. MY DEAR MR. CHAIRMAN: Further reference is made to your letter of February 23, 1943, requesting the views of the Treasury Department with respect to S. 756, a bill, to amend the Federal Home Loan Bank Act, as amended. The principal provisions of this bill would (1) authorize the Federal home-loan banks to make advances to their members upon the security of mortgages insured under any provision of the National Housing Act up to 90 percent of the unpaid principal of such mortgages, (2) include United States obligations held by the Federal home-loan banks in the base for determing the amount of debentures which such banks are authorized to issue, and (3) authorize the Secretary of the Treasury to purchase and sell obligations issued by the Federal home-loan banks and the Federal Savings and Loan Insurance Corporation, such transactions to be treated as public-debt transactions. The Treasury has no comment with respect to the first two of these provisions. The provision for the purchase of obligations of the Federal Savings and Loan Insurance Corporation by the Secretary of the Treasury appears reasonable inasmuch as a similar authority now exists with respect to the Federal Deposit Insurance Corporation and its adoption in this case seems necessary in order to provide a corresponding protection for the contracts of insurance entered into by the Federal Savings and Loan Insurance Corporation. |