To Amend the Federal Home Loan Bank Act, Hearing Before a Subcommittee of ..., 76-3 S. 4095 and H.R. 6971 ..., June 11, 13, 18, 20, 1940

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) the first sentence and the language in the second sentence preceding the colon in said second sentence of subsection (a) of section 10 of the Federal Home Loan Bank Act, as amended, are amended to read as follows:

"SEC. 10 (a) Upon such terms and restrictions as the Board may impose, each Federal home-loan bank is authorized to make advances to its members, upon the security of (a) home mortgages, (b) first mortgages on real estate upon which there is located a structure or structures designed principally for residential use for more than four families in the aggregate, irrespective of whether any such structure has a party wall or is otherwise physically connected with any other structure or structures, or (c) obligations of, or fully guaranteed as to principal and interest by, the United States, subject to the following limitations as to amount:".

(b) Paragraph (3) of subsection (a) of section 10 of the Federal Home Loan Bank Act, as amended, is amended to read as follows:

"(3) If secured by a first mortgage given in respect of any other mortgage loan, the advance shall not be for an amount in excess of 50 per centum of the unpaid principal of the Mortgage loan; but in no case shall the amount of such advance exceed 40 per centum of the value of the real estate securing the mortgage loan.” (c) Subdivision (6) of section 2 of the Federal Home Loan Bank Act, as amended, is hereby amended to read as follows:

"(6) The term 'home mortgage' means a first mortgage upon real estate upon which there is located one or more home or combination home and business properties designed for residential use for not more than four families in the aggregate, irrespective of whether any such structure has a party wall or is otherwise physically connected with any other structure or structures. The term 'first mortgage' means any form of instrument whereby a first lien is created or reserved upon real estate or whereby title to real estate is reserved or conveyed as first security for the payment of money or the performance of a legal duty, in each case in accordance with any lawful and well-recognized practice in the locality,

together with the credit instruments, if any, secured thereby. The term 'real estate' means an interest in fee simple, or a leasehold (1) under a lease for not less than ninety-nine years which is renewable or (2) under a lease having not less than fifty years to run from the date the mortgage was executed."

(d) Subdivision (7) of section 2 of the Federal Home Loan Bank Act, as amended, is hereby amended by striking out the word "home" in the phrase "home mortgage" and inserting in lieu thereof the word "first".

(e) The lost sentence of subsection (b) of section 10 of the Federal Home Loan Bank Act, as amended, is hereby amended by striking out the word "home" in the phrase "home mortgage".

SEC. 2. The first sentence of subsection (b) of section 10 of the Federal Home Loan Bank Act, as amended, is amended to read as follows:

"(b) No mortgage shall be accepted as collateral security for an advance by a Federal home-loan bank, if at the time of such advance is made, the mortgage loan secured by it (1) has more than twenty-five years to run to maturity, or (2) exceeds $50,000, or (3) is past due more than six months when presented, unless the amount of the debt secured by such mortgage is less than 50 per centum of the value of the real estate with respect to which the mortgage was given, as such real estate was appraised when the mortgage was made."

SEC. 3. Section 11 of the Federal Home Loan Bank Act, as amended, is further amended by the addition of a new subsection as follows:

"(i) The Secretary of the Treasury, in his discretion, is authorized to purchase any obligations issued under the provisions of this act or title IV of the National Housing Act, 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 amended, and the purposes for which securities may be issued under the Second Liberty Bond Act, as amended, are extended to include such purchases. The Secretary of the Treasury may, at any time, sell 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 under this subsection any obligations issued under the provisions of this Act 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 the Federal home-loan banks. Likewise, the Secretary of the Treasury shall not at any time purchase under this subsection any obligations issued under title IV of the National Housing Act if such purchase would increase the aggregate principal amount of his then outstanding holdings of such latter obligations under this subsection to an amount greater than three times the aggregate amount of the then outstanding capital stock, reserves, and surplus of the Federal Savings and Loan Insurance Corporation."

SEC. 4. (a) Section 17 of the Federal Home Loan Bank Act, as amended, is amended by inserting at the beginning thereof the letter "a" in parentheses and by adding at the end thereof the following:

"(b) For the enforcement of the rights and powers now or hereafter vested in it under this Act, section 5 of the Home Owners' Loan Act of 1933, or any other Act, all as now or hereafter amended, or under any agreement or stipulation entered into with it, or otherwise vested in it, and of its orders, rules, and regulations, the Board shall have power, by resolution, in its own name or in the name of the United States through the Attorney General, or using its own attorneys subject to the direction of the Attorney General, as the Attorney General may determine, to institute or otherwise voluntarily participate in and to prosecute to final satisfaction any action, suit, or other proceeding in any State, Federal, or other court. Any such action, suit, or other proceeding instituted in a district court of the United States shall be deemed to have been instituted by an officer of the United States authorized by law to sue, within the meaning of section 24 of the Judical Code, as amended.

"(c) For the enforcement of the rights and powers now or hereafter vested in it under this Act, section 5 of the Home Owners' Loan Act of 1933, or any other Act, all as now or hereafter amended, or under any agreement or stipu lation entered into with it, or otherwise vested in it, and of its orders, rules, and regulations, the Board shall have power to issue complaints, notices of hearings, and other process. The failure of a respondent to appear at any hearing at the time and place fixed therefor shall be deemed to be a waiver of the hearing and to authorize the Board without further hearing or notice to issue its order upon the complaint. For the purpose of any hearings and investigations which in the

opinion of the Board are necessary or proper for the exercise or enforcement of any of such rights, powers, orders, rules, and regulations, or in aid of the exercise of any of the powers or duties of any conservator or receiver appointed by the Board, the Board, any member thereof, or its duly authorized agents, shall at all reasonable times for the purpose of examination have access to and the right to copy any documentary evidence of any institution, whether incorporated or unincorporated, being investigated or proceeded against that relates to any matter under investigation or in question. Any member of the Board or any trial examiner shall have power to issue subpenas requiring the attendance and testimony of witnesses and parties and the production of any documentary evidence that relates to any matter under investigation or in question, at any hearing or investigation before the Board, any member thereof, or its trial examiner conducting the same. The Board shall, at the reasonable request of any party to a hearing, cause a subpena to issue requiring the attendance and testimony of one or more witnesses and the production of any documentary evidence that relates to any matter under investigation or in question at such hearing: Provided, That the party or parties requesting such subpenas shall deposit with the Board a sum which in the opinion of the Board is reasonably sufficient to pay the fees and mileage and other costs resulting from the issuance of such subpenas. Any member of the Board, or any trial examiner designated by the Board, may administer oaths and affirmations, examine witnesses, and receive evidence at any hearing or investigation. Such attendance of witnesses and the production of such documentary evidence may be required from any place in the United States at any designated place. Testimony in any such hearing on a complaint, if taken before a trial examiner, shall be taken within the area of territorial jurisdiction of the district court of the United States within which at least one respondent resides or has its principal office, unless at least one respondent requests that testimony be taken (1) at the offices of the Board of Washington, District of Columbia, or (2) elsewhere, in which event the Board may grant any such request. The Board may order testimony to be taken by deposition at any place in any proceeding or investigation. Any party to such proceeding may procure_testimony by deposition of any person at any place by application to the Board. Any such depositions may be taken before any person designated by the Board and such person shall have the power to administer oaths and affirmations Such testimony shall be reduced to writing by the person taking the deposition, or under his direction, and shall then be subscribed by the deponent. Any person may be compelled to appear and depose and to produce documentary evidence in the same manner that witnesses may be compelled to appear and testify and produce documentary evidence. Upon the application of the Attorney General of the United States, at the request of the Board, the district courts of the United States shall have jurisdiction to issue orders commanding any person to comply with the provisions of this Act, as now or hereafter amended, or section 5 of the Home Owners' Loan Act of 1933, as now or hereafter amended, or any order of the Board, or any agreement or stipulation entered into with the Board. In case of contumacy or refusal to obey a subpena or other process issued to any person, any district court of the United States or the United States courts of any Territory or possession, or the District Court of the United States for the District of Columbia, within the jurisdiction of which the inquiry is carried on or within the jurisdiction of which said person guilty of contumacy or refusal to obey is found or resides or transacts business, upon the application of the Attorney General of the United States, at the request of the Board, shall have jurisdiction to issue to such person an order requiring such person to appear before the Board, any member thereof, or trial examiner thereof, there to produce documentary evidence if so ordered, or there to give testimony touching the matter under investigation or in question, or otherwise requiring such person to obey the requirement of such subpena or other process; and any failure to obey such order of the court may be punished by said court as a contempt thereof. No person shall be excused from attending and testifying or from producing books, records, correspondence, documents, or other evidence in obedience to any such subpena, on the ground that the testimony or evidence required of him may tend to incriminate him or subject him to a penalty or forfeiture; but no natural person shall be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which he is compelled, after having claimed his privilege against self-incrimination, to testify or produce evidence, except that such person so testifying shall not be exempt from prosecution and punishment for perjury committed in so testifying. Witnesses summoned at any hearing before the Board, any member thereof, or any trial examiner, shall be

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