The CHAIRMAN. No; I have not, but we will take that up in the morning. If we want him, I see no reason why we should not just agree to call him right then. I think maybe I will have the clerk to alert him this afternoon of the possibility that we will be asking him some questions in the morning over the telephone, before deciding whether or not to ask this appearance. Would that be satisfactory? Mr. ROUSSELOT. Yes; what about the Chairman of the Federal Reserve Board? The CHAIRMAN. He will be here the 23d. Mr. Mitchell, at Mr. Burns' request Mr. ROUSSELOT. I remember that, but I just thought since Mr. Burns has had a lot to say about this, that maybe The CHAIRMAN. I know Mr. Mitchell is well acquainted with it, and Dr. Burns told me yesterday that he was as well acquainted with it as he was, and wanted him to take his place today; and I told him it would be perfectly all right, especially in view of the fact that the 23d, Dr. Burns is set down on our schedule of hearings. Mr. BROWN. Mr. Chairman ? The CHAIRMAN. Mr. Brown? Mr. BROWN. Extraneous to this colloquy, I am wondering what the chairman's plans are in the holding of these hearings concurrently with the housing and community development conference? The CHAIRMAN. Well, we want to have hearings every chance we get with the conferees of the Senate. We had a hearing set out for this afternoon at 3 p.m., and when we got through here, we were going in with the Senators. Mr. BROWN. Is it the expectation of the Chair that we will work on conference in the afternoon, and these hearings will go on in the morning? The CHAIRMAN. We will have to do a little zigzagging here to get through, I think. We will go to one one morning, and then another one in the afternoon, in order to get through. Mr. BROWN. I realize this is terribly important business that we are considering here today, but at the same time, we have legislation that has been passed by both the House and the Senate, and I think it would be just unconscionable for us not to proceed to get that into shape, so it could The CHAIRMAN. We can decide that tomorrow morning, if it is agreeable with the gentleman. Mr. BROWN. Fine. Mr. WIDNALL. Mr. Chairman? The CHAIRMAN. The conference for tomorrow afternoon on the housing is already set, and it was not our fault we did not have one this afternoon. We were perfectly willing to, but the Senators could not go, could not be there. Mr. WIDNALL. Mr. Chairman? The CHAIRMAN. Mr. Widnall? Mr. WIDNALL. I was hopeful we could continue our housing conferences in the morning, because the afternoon always get tied up with House action or Senate action on the floor; and the housing market operation is in such bad shape at the present time in so many ways, it is imperative that we come to grips with the whole matter and finish our conference on the housing bill. I do not think that this can wait. I still recognize the importance of the matter that is before us at the present time. The CHAIRMAN. Let me interrupt, Mr. Widnall, to say that the Senate has been consulted about that, and they will not agree to meet tomorrow morning, but they will agree to meet tomorrow afternoon, at the earliest. Mr. WIDNALL. That is fine, as far as tomorrow afternoon is concerned. Now, back to what we have before us; the Citicorp matter. It seems rather clear to me, after the hearings we have had today, that the major thrust of the Citicorp's entire operation was to get their hands on some money to refinance the short term paper, and to make a profit out of refinancing that. No matter what you say about it, this is not designed to give investors, or low-income investors, or lowcapital investors, an opportunity to make more interest than they can at the present time. It might incidentaly d that for some people, but actually, it seems to me that this is purely a refinancing operation, which certainly would be copied immediately by others in other areas who would have the right to go ahead with it. I would certainly think, too, although there has been no comment on this, that the savings and loan industry that has some holding companies would immediately, with their holding companies, go into the same type of operation that the banks are involved in at the present time. Is that not so, that they would take advantage of it, the other financial holding companies? Mr. CRAWFORD. It would be very difficult, Mr. Widnall, to have a mutual savings bank holding company, because we do not have any stock to be held. Mr. WIDNALL. Savings and loan holding company, I should have said. The CHAIRMAN. All right, Mr. Widnall. May I suggest this; that we meet at 10 o'clock in the morning on time if we can, and pass on this question I brought up first, and whatever we decide to do, of course, we will just do. Then, we will feel our way from there. Would that be satisfactory, after a consultation with the whole committee? Mr. WIDNALL. 10 o'clock tomorrow morning? The CHAIRMAN. Yes, sir. Mr. BROWN. Mr. Chairman? The CHAIRMAN. Yes, Mr. Brown? Mr. BROWN. Before we conclude, may I just throw out a question to the panel? The CHAIRMAN. All right. Mr. BROWN. The thing that is bothersome, I think—and it is very obvious in this whole discussion-is that if we assume that most of the home mortgage money comes from deposits in thrift institutions and other rate-regulated financial institutions, and if we, through such rate regulation of deposits, and through the setting of rather high minimums for other investments of similar types where a rate of re turn is obtained; do we not end up with the things you are advocating today? For instance, with the small saver becoming the one who subsidizes the home mortgage market; and I would think, Mr. Goldfinger-especially with you-looking at the figures here, it would appear that probably somewhere around 70 percent of your membership-between, I would say, 65 to 70; the breakoff is not right there, so I have to extrapolate, but it seems that approximately that portion of your membership is in the savings category of below $1,000. So 65 to 70 percent of your membership cannot get into this other area. Mr. GOLDFINGER. That seems right. Mr. BROWN. It seems to me that you must be on the horns of a dilemma in representing your membership, and being concerned about the portion of your membership who are potential homeowners vis-avis those who are savers, who are required to accept a rate of return that is inequitable, compared to the return being received by larger savers. Is that not a bit of a dilemma for you? Mr. GOLDFINGER. The issue that you are getting at I believe, Congressman, is the entire very high level, and rising level, of interest rates. The issue is not simply what Citicorp and Chase Manhattan Corp. are up to. That would add to all of the current problems, and it is not only homebuilding. This is adding, probably, to chaos and a liquidity crunch in the money market. But the problem is the entire monetary policy, which has to be gotten at. We need a selective monetary policy. Mr. BROWN. Mr. Goldfinger, I am talking about your representation of-because, in effect, we are representing people, also. We find that same dilemma. But you are representing members who are savers, and should they not be entitled to the same kind of return, as a small saver, as big savers? Mr. GOLDFINGER. Sure. But we also represent people who want housing; we represent people who build the housing, and all of these issues have to be taken into consideration, we think. Mr. BROWN. So you would agree that we have to, at the same time, see what kind of an impact the kind of regulation you are advocating in this legislation will have on our constituents as consumer savers, as well as potential homeowners, right? Mr. GOLDFINGER. Well-but the Citicorp-like that kind of note has a requirement that the initial purchase be $5,000 or more, which is not available to the average saver, or probably not to about 80 percent or more of American families, who have much smaller savings or no savings. Mr. BROWN. But would the gentleman prefer to have it $1,000, then? Would it be all right, then? Mr. GOLDFINGER. No. We think that this is adding-this is another additional action in this upward spiral of interest rates, which is a grave danger to the entire economy and to the country as a whole. Mr. ROUSSELOT. Well, in their prospectus, as you know-would the gentleman yield? Mr. BROWN. Just a minute. Mr. Goldfinger, do you think that if your savers that are under $1,000, who cannot buy these $1,000 notes, and so on, could get 9.7 percent is that not what Citicorp group is talking about, 9.7 per ་ cent for their money-would they increase their savings, do you think, if they got that kind of return, instead of, say, 534 percent? Mr. GOLDFINGER. Congressman, if it comes to every man for himself, then that is the route we go. But we do not think that would be responsible. We think that the home building industry is crucial. We think that the high rates of interest now are devastating to the country, not only to home building; that they are having a devastating impact on the entire economy; and we would like to see something done, not only about these specific notes, which would add to the problem. We would like to see a selective monetary policy, that gets into the whole monetary policy. Mr. BROWN. I think we would all like to have a solution. Mr. GOLDFINGER. I would be glad to submit this in a written state ment. Mrs. HECKLER. Would the gentleman yield. Mr. BROWN. I think I did this by unanimous consent. May I yield, Mr. Chairman? The CHAIRMAN. Certainly. Mrs. HECKLER. Thank you, Mr. Chairman. Mr. Goldfinger, I wonder if you would comment on the suggestion raised by Mr. Rogg earlier, that we consider a proposal which would free the interest for the small saver or up to a certain amount on savings as a means of attracting people to save; because obviously, somehow or other, we have got to develop an incentive. What about this tax incentive? How do you feel about that? Mr. GOLDFINGER. Well, I would like to look at it, and think about it before I go forth; because the tax code is now full of all kinds of loopholes. I think it would be much better for the whole country to bring down the level of interest rates, so that we do not get into this kind of an upward spiral crunch. The CHAIRMAN. If the members would bear with me for just a moment-tomorrow morning, in considering what we should do, I wonder if it would be worthwhile to give consideration to asking the Department of Justice to evaluate this proposal, and also to ask the Federal Trade Commission to look into it, and see if they consider it against the public interest. Would that be satisfactory? Fine, we will bring it up. Thank you. Without objection, we will stand in recess until further call of the Chair. [The following letter and telegram from the Independent Bankers Association of America, and the Association of Registered Bank Holding Companies was received by the committee for inclusion in the record:] INDEPENDENT BANKERS ASSOCIATION OF AMERICA, Re H.R. 15869 and Others-Amendments to the Bank Holding Company Act of Hon. WRIGHT PATMAN, Chairman, House Committee on Banking and Currency, DEAR CHAIRMAN PATMAN: The Independent Bankers Association of America representing over 7,200 independent banks supports legislation to restrain bank holding companies and their subsidiaries from the general sale of debt obliga tions which are not subject to the Interest Rate Control Act and draw on the reputations of the bank subsidiary in the holding company structure. In reviewing draft legislation, specifically H.R. 15869, we believe that the preamble bill should be amended to include a restriction applicable to the Savings and Loan Holding Company Act as well as the Bank Holding Company Act. Further, under paragraph F(1) we believe that the term general public is unclear and could give rise to confusion as there are instances in which private or limited public offerings on the part of holding companies or their subsidiaries are necessary for the purpose of raising additional funds for expansion or the operation of the company or a subsidiary. For that reason we would recommend that at line 8 of your bill on page 2 under Section (f) (1) the following be inserted: "For the purposes of this subsection (f) the word general public means more than 25 natural persons, partnerships, associations, trusts or corporate entities." We believe that this amendment would clarify substantially the purposes and intent of the bill. It is imperative that a restriction of the type proposed against bank holding companies likewise be applied to savings and loan holding companies inasmuch as a restraint to the one and not to all lending institution holding companies would work an unfair disadvantage. We trust the amendments recommended above would clarify the legislation and achieve the purposes intended. Very truly yours, [Telegram] EMBREE K. EASTERLY, President. JULY 15, 1974. Hon. WILLIAM S. MOORHEAD, Our association opposes H.R. 15869. Cumbersome approval procedure thwarts Government policy of making holding companies source of strength for subsidiary banks. Would have disruptive impact on banks holding two-thirds of Nation's deposits. Urge careful consideration of all ramifications of bill. Request this telegram be inserted in Banking Committee hearing record. DONALD L. ROGERS, Association of Registered Bank Holding Companies. [Whereupon, at 4:26 p.m., the committee adjourned, subject to the call of the Chair.] о |