cedures applicable to commercial transactions as provided by the Government Corporation Control Act, as amended, and no other audit shall be required: Provided, That such financial transactions of the Administrator as the making of loans and vouchers approved by the Administrator in connection with such financial transactions shall be final and conclusive upon all officers of the Government.

(b) Funds made available to the Administrator pursuant to the provisions of this title shall be deposited in a checking account or accounts with the Treasurer of the United States. Receipts and assets obtained or held by the Administrator in connection with the performance of his functions under this title, and all funds available for carrying out the functions of the Administrator under this title (including appropriations therefor, which are hereby authorized), shall be available, in such amounts as may from year to year be authorized by the Congress, for the administrative expenses of the Administrator in connection with the performance of such functions.

(c) In the performance of, and with respect to, the functions, powers, and duties vested in him by this title, the Administrator, notwithstanding the provisions of any other law, may—

(1) prescribe such rules and regulations as may be necessary to carry out the purposes of this title;

(2) consult with and secure the advice and recommendations of the Office of Education in the Federal Security Agency;

(3) sue and be sued;

(4) foreclose on any property or commence any action to protect or enforce any right conferred upon him by any law, contract, or other agreement, and bid for and purchase at any foreclosure or any other sale any property in connection with which he has made a loan pursuant to this title. In the event of any such acquisition, the Administrator may, notwithstanding any other provision of law relating to the acquisition, handling, or disposal of real property by the United States, complete, administer, remodel and convert, dispose of, lease and otherwise deal with, such property: Provided, That any such acquisition of real property shall not deprive any State or political subdivision thereof of its civil or criminal jurisdiction in and over such property or impair the civil rights under the State or local laws of the inhabitants on such property;

(5) enter into agreements to pay annual sums in lieu of taxes to any State or local taxing authority with respect to any real property so acquired or owned;

(6) sell or exchange at public or private sale, or lease, real or personal property, and sell or exchange any securities or obligations, upon such terms as he may fix;

(7) obtain insurance against loss in connection with property and other assets held;

(8) subject to the specific limitations in this title, consent to the modification, with respect to rate of interest, time of payment of any installment of principal or interest, security, or any other term of any contract or agreement to which he is a party or which has been transferrred to him pursuant to this title; and

(9) include in any contract or instrument made pursuant to this title such other covenants, conditions, or provisions as he may deem necessary to assure that the purposes of this title will be achieved.

(d) Section 3709 of the Revised Statutes shall not apply to any contract for services or supplies on account of any property acquired pursuant to this title if the amount of such contract does not exceed $1000.

APPORTIONMENT

SEC. 503. Not more than 10 per centum of the funds provided for in this title in the form of loans shall be made available to educational institutions within any one State.

DEFINITIONS

SEC. 504. For the purposes of this title, the following terms shall have the meanings, respectively, ascribed to them below:

(a) "Housing" means structures suitable for dwelling use, including singleroom dormitories and apartments.

(b) "Educational institution" means educational institutions of higher learning, including (a) any public educational institution, or (b) any private educational

institution, no part of the net earnings of which shall inure to the benefit of any private shareholder or individual.

(c) "Development cost" means costs of the construction of the housing and the land on which it is located, including necessary site improvements to permit its use for housing purposes.

(d) "Faculties" means members of the faculty and their families.

(e) "State" shall include the several States, the District of Columbia, and the Territories and possessions of the United States.

(f) "Administrator" means the Housing and Home Finance Administrator.

TITLE VI-MISCELLANEOUS PROVISIONS

SEC. 601. Section 10 of the Federal Home Loan Bank Act, as amended, is hereby amended

(1) by striking out of subsection (a) (1) the words "titles II and VI" and inserting in lieu thereof the words "title I, title II, or title VI"; and

(2) by inserting the following after the word "maturity," in the first sentence of subsection (b): "unless such home mortgage is insured under the National Housing Act, as amended,”.

SEC. 602. Section 24 of the Federal Reserve Act, as amended, is hereby amended

(1) by striking out the second sentence thereof and inserting in lieu thereof the following: "A loan secured by real estate within the meaning of this section shall be in the form of an obligation or obligations secured by a mortgage, trust deed, or other instrument upon real estate, which shall constitute a first lien on real estate in fee simple or, under such rules and regulations as may be prescribed by the Comptroller of the Currency, on a leasehold (1) under a lease for not less than ninety-nine years which is renewable or (2) under a lease having a period of not less than fifty years to run from the date the loan is made or acquired by the national banking association, and any national banking association may purchase any obligation so secured when the entire amount of such obligation is sold to the association."; and

(2) by striking out of the third sentence "titles II and VI" and inserting in lieu thereof the words "title II or title VI or section 8 of title I". SEC. 603. The last sentence of section 102 of the Housing Act of 1948 is hereby amended to read as follows: "Such loans or purchases shall be made under such terms and conditions and with such maturities as the Corporation may determine and may be made either directly or in cooperation with banks or other lending institutions through agreements to participate or by the purchase of participation, or otherwise: Provided, That no financial assistance shall be extended under this section unless it is not otherwise available on reasonable terms: Provided further, That to the extent that the proceeds of such loans or purchases are used for the purchase of equipment, plants, or machinery, the principal obligation shall not exceed 75 per centum of the purchase price of such equipment, plant, or machinery: And provided further, That the total amount of loans made and obligations purchased under this section shall not exceed $100,000,000 outstanding at any one time, plus the aggregate original principal amount of such mortgages on erected houses manufactured with financial assistance under this section as are taken by the Corporation as securities for loans made or obligations purchased under this section.'

SEC. 604. Insofar as the provisions of any other law are inconsistent with the provisions of this Act, the provisions of this Act shall be controlling.

SEC. 605. Except as may be otherwise expressly provided in this Act, all powers and authorities conferred by this Act shall be cumulative and additional to and not in derogation of any powers and authorities otherwise existing. Notwithstanding any other evidences of the intention of Congress, it is hereby declared to be the controlling intent of Congress that if any provisions of this Act, or the application thereof to any persons or circumstances, shall be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the remainder of this Act or its applications to other persons and circumstances, but shall be confined in its operation to the provisions of this Act, or the application thereof to the persons and circumstances, directly involved in the controversy in which such judgment shall have been rendered.

The CHAIRMAN. Mr. Foley is our first witness this morning.

Mr. SMITH. Mr. Chairman, before we proceed may I make a brief statement? I hope the committee will not sit while the House is in

session today as I want to be on the floor for the legislation coming up there.

Furthermore, I would like to know whether the committee is going to have an opportunity, since this bill provides for an additional loan which would involve the Lustron Corp., to have the Reconstruction Finance Corporation testify on this matter; and, also, whether it is possible to bring in the Lustron Corp. officials.

The CHAIRMAN. We will certainly try to investigate all matters that are pertinent to the bill.

Mr. SMITH. Mr. Chairman, that does not answer my question. The Congress should now know what is going on with reference to the Lustron Corp. This bill involves another heavy commitment, and I want to know just whether or not this question can be answered, Mr. Chairman: Whether or not we can have the RFC testify, and also the officers of Lustron Corp., in relation to this matter.

The CHAIRMAN. I see no objection to having them testify. If you want them to testify, you can call them.

Mr. SMITH. I want them to testify.

The CHAIRMAN. Very well.

Now, Mr. Foley, you may proceed. We want to get the truth and all the facts, Mr. Smith.

Mr. SMITH. I know you do, Mr. Chairman.

STATEMENT OF RAYMOND M. FOLEY, HOUSING AND HOME FINANCE ADMINISTRATOR

Mr. FOLEY. Mr. Chairman, as the committee probably knows by now, I am Raymond M. Foley, Administrator of the Housing and Home Finance Agency.

I have which is rather necessary-a long prepared statement, since the bill is rather long and complex. And, for the purpose of having as full an exploration as is practical, and, at the same time, conserving the time of the committee, may I suggest that I be permitted to read that part of the statement that applies to each separate title of the bill separately, and, in between, we may proceed with questions on each individual title.

The CHAIRMAN. You may proceed as you please, Mr. Foley.
Mr. FOLEY. Thank you.

Mr. Chairman and members of the committee, I am pleased to have this opportunity to appear before your committee today as you commence the hearings on H. R. 5631, the Housing amendments of 1949, which contains many provisions designed to supplement housing legislation already enacted and is directed toward completing legislative action to provide a well-balanced, comprehensive housing pro

gram.

I should like to take this opportunity to record formally my sincere appreciation for the time and attention which the Committee on Banking and Currency has already devoted to needed housing legislation. In this, I feel sure, I speak not only for the Housing and Home Finance Agency, but also for the many groups and individuals who have a real interest in the provision of adequate housing for the people of this country.

Whether we approach it from the standpoint of the human values, or from the standpoint of the economic values, the problem of assur

ing the provision of adequate housing for the American people merits our full effort and attention-today, and for many years to come. It is in full recognition of the responsibilities of the Housing and Home Finance Agency in that effort that I appear before your committee today with the earnest desire to extend what assistance I can toward your evaluation of the merits of H. R. 5631.

I am mindful of the fact that the Committee on Banking and Currency is extremely busy. In order to conserve as much of your time as possible, there have been made available to your committee copies of a section-by-section summary of the bill. Also we have prepared, and made available to your committee copies of a general statement and detailed analysis of title II of the bill dealing with the disposition of war and veterans' housing, together with several tables containing statistical information bearing on that title.

As your committee knows, in his January 3, 1949, budget message, the President recommended the enactment of legislation along the lines of titles I and II of H. R. 5631. My statement also deals generally with the other titles of the pending bill.

We have also prepared a more detailed, formal report on title III of the bill. With your permission, I would like to include this report in the record at the conclusion of my remarks on title III of the bill.

The CHAIRMAN. Without objection, that may be done.

Mr. FOLEY. We have a few technical changes to recommend to your committee for consideration, particularly changes which would have to be made in title I of the bill as a result of the passage of the military housing bill. In order that all such changes may be available for the record, they will be included in a letter which we are preparing and will send to your committee.

In general, the provisions of titles I and II of the bill have our general endorsement and support. I have been authorized by the Director of the Bureau of the Budget to advise that the enactment of legislation similar to titles I and II of the pending bill would be in accord with the program of the President.

With respect to title III of H. R. 5631, I have been advised by the Director of the Bureau of the Budget that there is no objection to the presentation of our formal report for the consideration of your committee.

With respect to title IV of the bill, as indicated in our formal report, I have been authorized by the Director of the Bureau of the Budget to advise that the enactment of legislation to authorize direct loans, as provided in section 401 (d) of the bill, would not be in accord with the program of the President. Due to the shortness of time, I have not been able to ascertain the relationship to the program of the President of title V of the bill relating to loans to educational institutions for housing for their students and faculties.

Now, first as to title I, I believe that the provisions of title I of this bill can be of very substantial assistance to the home-building industry for the production of a larger volume of good housing at prices or rents within the financial means of a broader range of American families. All of us who have some responsibility in the field of housing are sincerely interested in sustaining a high annual rate of home building. All of us, I am sure, are gratified at the volume of

housing which industry has produced over the last two years, and is producing during the current building season. But all of us know that the home-building industry can continue to produce in volume only if it can continue to sell the product it produces. In order to continue this high annual volume of new housing construction, more housing must be produced at prices or rents which families with rather modest incomes can afford.

Title I of this bill has that objective.

If I had to single out any particular provision of title I of the pending bill as especially effective in the accomplishment of that desirable objective, I believe that I would select the amendment of section 203 (b) (2) (D) of the National Housing Act which would be made by section 104 of this bill. This would amend that section of the act in two important respects. First, it would authorize the insurance of a mortgage which does not exceed $6,650 or 95 percent of the value of the property, with a maturity of not exceeding 30 years. Second, it would provide that, if it is not feasible within this dollar limitation to construct dwellings containing 3 or 4 bedrooms without sacrifice of sound standards of construction, design, and livability, such maximum $6,650 amount may be increased by not exceeding $950 for each additional bedroom in excess of two contained in the dwelling, but not exceeding $8,550 in any event.

These increases available for additional bedrooms may be granted only if the dwelling meets sound standards of design or livability as a 3- or 4-bedroom house. This requirement is essential. It avoids any encouragement to the construction of additional bedrooms without corresponding increases in other accommodations and amenities essential in a satisfactory 3- or 4-bedroom house, as compared to a 2-bedroom house.

This section seeks to encourage and assist construction of homes at lower costs without sacrifice of space and size necessary for adequate family life. It recognizes that it is the cost, not the size, of the house which must be reduced.

Proposals to further increase section 203 mortgage ceilings.

I desire to call specifically to the attention of your committee that, under the present law, the most liberal FHA assistance, which is provided by section 203 (b) (2) (D), is limited to a maximum mortgage amount of $6,000 or 95 percent of the value of the property. This bill proposes to liberalize that to the extent of a $650 increase in the permissible maximum mortgage amount, and by adding additional leeway for the provision of 3- and 4-bedroom houses.

I know that there will be witnesses appearing before your committee who will urge an even greater liberalization of this section. It is my earnest hope that your committee will reject any such proposals. This seems especially necessary at the present time, when we are in a declining cost market and there are substantial prospects of significant cost reductions.

In your consideration of this problem, there are certain points to which I should like to direct the attention of your committee.

In the first place, the attractive financing terms contemplated by title I of the bill-95 percent of value for a term of 30 years-should be restricted to the area where good housing is needed most-for families of moderate income. The present terms of title I of the bill have therefore been carefully drawn to meet this goal, and are frankly