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Senator BRICKER. That was supported by the Advisory Council too, was it not?

Senator CAIN. Yes.

Mr. Wiggins, might I ask you this question if you consider it to be proper? Do you think the bill as presently drawn could safely be passed after eliminating certain provisions?

As I understand your testimony this morning the Treasury is in positive opposition to section 8, it is in support of section 3, and it certainly has indicated to some of us on this side of the table that a considerable amount of additional thought ought to be exercised on section 6 before any action is taken by the Congress.

We certainly want to be of whatever service we can to those concerned with this legislation without taking any steps about which this committee is not presently certain.

Mr. WIGGINS. Mr. Chairman, as to section 6, I would not want the record to show that I oppose section 6. I am merely pointing out certain factors involved in section 6 and with particular reference to the action in reducing the rate.

Senator CAIN. I understand.

Mr. WIGGINS. Which I think is inconsistent and I think the first concern of Congress in this matter must be the fullest degree of protection of the Insurance Corporation.

If I were a trustee of an insurance corporation I personally would not want section 6 but that is their business and not mine. I would not want to pay back this $31,000,000 out of surplus and pay interest on it if the FDIC had not been made to pay it back and we have not done it with other institutions as far as I know, such as for example, the Federal Intermediate Credit Bank and the Production Credit Corporation where Government has put up the capital. As far as I know it is a rare exception where starting off these corporations the Government has required them to pay interest on the investment to start with.

Senator FULBRIGHT. How much does that change make from oneeighth to one-twelfth?

Mr. WIGGINS. It cuts the income down one-third.

Senator FULBRIGHT. What was that, $11,000,000?

Mr. WIGGINS. No, the insurance on premiums this year is estimated to be $8,711,000, a reduction from an eighth to a twelfth of it is a reduction of a third, which would take about $3,000,000 off of that, a little less than $3,000,000 off of it.

Senator FULBRIGHT. From $8,000,000 to $5,000,000 in round numbers?

Mr. WIGGINS. That would be $5,800,000, say.

Senator CAIN. The Home Loan Bank Board in its testimony in a perfunctory fashion supported section 8 for the reason

The insurance which is provided by the Government through the Insurance Corporation, the examination of the insured institutions, and other safeguards for which provision is made through title IV of the NHA make these investments safe in desirable securities for a fiduciary trust in public funds.

Mr. WIGGINS. I call your attention, Mr. Chairman, to the fact that in the report on S. 2417, reducing the rate, that witnesses from the housing and home financing agency advised against the proposed reduction in insurance premium and they are the people that have the responsibility.

Senator CAIN. Mr. Wiggins, would you satisfy my curiosity and help my thinking a little bit? When matters of this kind are being considered what steps are generally taken to reconcile the differences as they may appear between executive branches of the Government, namely, we are taking testimony from you which certainly will_not be misunderstood or misinterpreted by this committee because these are public hearings, the contrasting views of one agency as opposed to another is subject to misinterpretation as I see it by the people of the country.

It might appear that there was a violent disagreement between the Treasury on the one hand and the Home Loan Bank Board, the Federal Reserve, or the FDIC. Because of my not having been in a Congress very long, I think that there ought to be a way to settle these matters across the table before they reach the stage they have this morning. Mr. WIGGINS. We have two ways, one is formally and one is informally. Informally I do not consider my testimony here this morning inconsistent with the housing agency. I have discussed this section 8 with them and it is entirely satisfactory to them to eliminate it; that is informally.

Senator CAIN. When you refer to the housing agency, to whom do you refer?

Mr. WIGGINS. Mr. Foley, Mr. Fitzpatrick.

Senator CAIN. There we are getting at what appears to be the inconsistency. Their testimony indicates that they are in support of it. In yours you are against it. They now have agreed that they would not resist cutting it out but it remains a fact in the public record that there is a disagreement which can only be reconciled by means of the questions which we asked and which you answered.

Mr. WIGGINS. That is correct.

We are on record with the Budge Bureau of saying that if you are going to do this you must keep it within the limits of the insured

accounts.

The formal way of clearance, Mr. Chairman, that is historically the method by any administration, is that when a bill comes up the various agencies that might have views on it or might be affected by it are asked by the Bureau of the Budget, or if asked by a committee, send their tentative position to the Bureau of the Budget and then the Bureau of the Budget is the clearing agency, being in effect the voice of the President for this very unification that you are talking about. That is the formal way but I think that you can well understand that reasonable men have different points of view.

Senator CAIN. Certainly.

Mr. WIGGINS. Even within your own staff there will be differences of opinion and it will be almost impossible, if men are intellectually honest in analyzing a problem, that you are going to have 100 percent agreement on the details of proposals, particularly if they are broad financial proposals.

Senator CAIN. Well, in this problem before us, which has been striking, it has not been that we expected 100 percent agreement from parties having an interest in this legislation but we did expect that there would be some degree of understandable agreement.

With reference to a number of provisions we have talked about the differences are 100 percent and conclusive.

Senator FULBRIGHT. Mr. Chairman, I was not here, did they disagree on the reduction of the rate? Did any Government agency recommend reduction from one-eighth to one-twelfth?

Senator CAIN. Senator Fulbright, we will have the staff check that, but at the time the subcommittee did.

Mr. L'HEUREUX. Before the vote was taken Senator Tobey pointed out that the whole administration was against that reduction of the premium rate. They voted anyway, those present, to vote it out. The report points out that there was objection to that.

Mr. WIGGINS. Mr. Chairman, I would like to point out something if I may?

Senator CAIN. Please do.

Mr. WIGGINS. I see relatively few inconsistencies. As you have read other financial reports from other agencies here, the housing group, Mr. Foley and his men, have said to me that they intended this $1,000,000,000 fund to be a temporary and emergency thing and that is all that was said. There is no difference in view as far as I know on that.

Senator CAIN. Also I am of the belief, if I am not mistaken, sir,. that there is this difference: You think that this legislation will result,. section 3, in the extension of money for temporary or emergency requirements.

As we received written testimony at our last hearing from, as I recall, the Advisory Council of the Federal Reserve, the Federal Reserve itself, the Federal Insurance Deposit Corporation and perhaps others, they took the same position as you that these moneys should be for temporary and emergency purposes. But they did not think it could be restricted to that and so they recommended strenuously against the adoption or inclusion of section 3.

Mr. WIGGINS. Now Mr. Chairman, when you come to the Federal Advisory Council of which I was a member for so many years, it has no inhibitions in its recommendations and frequently is in complete disagreement with the Board of Governors of the Federal Reserve System.

Senator CAIN. In a very healthy way sometimes.

Mr. WIGGINS. Yes.

Senator BRICKER. We have found that out several times.

Mr. WIGGINS. Yes.

They are a group of bankers selected by the directors of the various reserve banks for advising the Board of Governors, but the Board of Governors is not required to take their advice and so you will find a divergence there.

Now as I understand it, the Federal Reserve Board is under no requirement of clearing its position with the Budget Bureau, nor is the FDIC.

I think frequently they report to the Budget Bureau their views but my understanding is that they are not under any limitations of expressing an opinion regardless of what the Budget Bureau might think about something or you might say the administration's viewpoint.

Senator CAIN. That is quite correct, sir.

In this instance they appear to be quite fully in agreement with the Board but here is a disagreement as coming from the FDIC, quoting a portion of their letter of May 13:

We are opposed to section 3 which would permit the Secretary to purchase obligations to $1,000,000,000. However helpful such assistance from the Treasury might be to the Federal home-loan banking system in times of emergency, we do not believe that such a general authorization for the purpose of providing a greater liquidity to this system should be given until its member associations are required to maintain a greater degree of liquidity.

They just take a position that is untenable in the face of your point of view.

Senator Bricker?

Senator BRICKER. No questions.
Senator CAIN. Senator Fulbright?
Senator FULbright. No.

Mr. WIGGINS. The inconsistencies from the bank supervisory agencies are understandable, though among themselves they discuss these things and frequently come to a common viewpoint.

Senator CAIN. I know that you recognize our desire for caution in our approach to such legislation because of its importance. It is because of that that we have asked a number of questions and speaking for the committee and Senator Tobey, the chairman of the full committee, I want to express our real appreciation for the frankness and the fullness of your views as you have given them to us.

In the absence of any further questions from the committee, I will declare that our hearing is in recess.

(Thereupon, at 11:50 a. m.. the subcommittee recessed subject to the call of the chair.)

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