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CHAS. E. QUINCEY & C o . E S T A B L I S H ED SPECIALISTS J. S. G O V E R N M ENT S E C U R I T I E S BRANC I S S 6 CLEVELAND, OH IO C I N Cl N NA T I , O H IO C H I C A G O 7 I L L . MEMBERS NEW YOER STOCK EXCHANGE 24 NEW Y O E R CURB EXCHANGE BROAD STREET NEW YORK TELEPHONE HANOVER 2 - 4 4 1 0 November 13, 1934 Mr. Marriner S. Eccles, Governor Federal Reserve Board Washington, D. C. My dear Mr. Eccles: May I take this opportunity to congratulate you on your new post and to wish you the best of luck. I have been making efforts to bring about some kind of cooperation among the government bond houses in connection with a secondary market in Home Owners* Loan Corp. bonds, in accordance with our conversation in Washington. I hope within the next few days to be in a position to let you know whether or not it looks as though I am making any progress. I am enclosing a copy of a letter I wrote on October 17th to Miles Colean of the Federal Housing Administration. I have since discussed this matter at considerable length with him. I did not mention this to you when I was in Washington because I knew your time was limited, but I think perhaps matters are coming to a head and for that reason am now forwarding this letter. Knowing your interest in the Federal Housing Administration, I thought you rni^ht wish to consider the thoughts contained in this letter, and if you agreed with their tenor, you might wish to discuss the matter with Mr. J. Howard Ardrey at the Housing Administration. I think someone in the Treasury mi«?ht also he interested in following this matter along, since here will be another example of a "near" government bond and, in my opinion, the Treasury unquestionably should pass upon a setup of this type of security. Thanking you for your many courtesies, I am, Very truly yours, TRG:KK Enclosure ? 0< a Col< a . Chi • • • - - - - • - Let* - ;. • MB the 1 fO* 3* ' • ' • . . Ing : * % Lug i • ^ any l a d i v l t i v a l p r o j e c t s eosffi«ne#« lief Id i This Lna&cei j> fc f ^ r t h « i be- I '~~ ir •''in - • sor-^u : • ach Limited •, -n*1 >r t h © * to If -•;;,.• ngf . .. • ;.. , vie«« *tj ie . ; • :. the pyckaj BOT1 • - ge . th j . - . . -• . Ilmltc- • o be a&ace J >I ^ l a i to. -i . . | i ^i , -. . It i n • considerable l o est coete »f w»ch projects, i t is likely , 3r :•;/..• " P • ttt, abll Bt-*la . 71 I jay ctf the b« >ut ey kns of ®y 1 tive r Mr. Colean -2- 10/17/~4 at they would \y. willing to purchase a mortgage at a much lovier interest rate" providing it hv6 bien set \jp at a bond issue and could, therefore bo markets-, soap tiae in th€ -"uture. In order to make sueli an issue salable at the best terms, it would be necessary for the Federal Housing Administration to make certain agreements with the bondholders. It would be advisable to agree that in case of default and foreclosure the trustee would be ^iven governmentguaranteed three-year notes vitnin a specified period after title to the property had been transferred to the "Administration.n I am -oncierin t fora this agreement Will take. Can there be a Treasury endorsement on the mortgage, or can the Treasury countersign an agreeaettt to this effect with the bondholders. It is perfectly apparent that issues of this character at the present time -vould only be salable because of the • ov-r rnrnent insurance of the guaranty, -nd the exact vordin,; of this feature in an offering circular will influence the salability of these issues considerably. I understand such leapes are not exempt from the provisions of the 'Securities Act. I have already discussed this matter briefly rith Mr. George Matthews, of the Seeuriti s Exchange Commission, :-nfJ. with one of the members of the staff. The warding of the circular and the indenture would hAYe to be cleared through them. Ho dotfbt the Treasury Department would also -wish to pass upon ording of the circular, since the sale of !tnearn government securities might affect the ^overnme&t bond market. Due to the fact that the lav? leaves so arach discretion to the ^Administration," several legal opinions by the Attorney General may also be advisable. ^ understand that insured mortgages are legal investments for savings banks and trust funds in Nev York State* but that a bond issue secured by an insured mort-would not be legal for such funds. 1 would suggest that someone be delegated, to see that legislation in various £t tea is passed which would take cere of this matter. A Mr. Daniel MeHamara, Assemblyman in the lew York State Legislature, and for som-;j time counsel for the Home Owners * Loan Corporation, ^ent around bo various State-- legislatures to get legislation passed to make 'Tome Ov/ners1 Loan bonds legal investments. He might be utilized, If ; vailable, to do the missionary work in this matter. On my last visi!:. to Washington, Mr. KXab~r asked me what the trustee's s would amount to under a net-up such as the on? discussed above. The big He- York bank re a set of standard fees, froa which they deviate, but there is more or less of a gentleman's agreement that these fees should be lived up to. I am enclosing two copies of this schedule of fees. On page 11, you '-ill notice the certification charges on temporary certificates for an issue of $5,830,000, which ould amount to about >l,?40. On page 12, are the certification charges for permanent bonds, amounting to about |2,900 for the u.bove sized issue. On page 13, there is a schedule of annual fees for the services of crustee; for this issue the charge v^ould amount to <:bout |4JO. In addition* there are fees in connection with payseat of Interest and the operation of the sinking fund. On a t7ienty-ye;i <f issue iv e for sinking fund operation would be about *?62. Th? fee for ?iakine: issues registers ble as to principal -3- y is -bout $100 . .1 lold, I htj V •nly MM o. j 0 • not include . I foe fo 10/17/ZA . .• I© Of i 3* OV J o | .oupon. - at to :,••;:.•- OQ »0l ' i o n .. J3toe* ;uitc>d I '•-$?$ 1 • .> vice ai tm«t##« 113 i c h c > •. in 4 :. rpo a a this • " •.' ' •• • p t y "^y wi ««j t c i a g * I d->nf tve -1 . h i ';. .• ot •. -:• i p s ] .. '-^e t o n s ."ilnh aay £ z i r t Lnl "iea. I ^blom; ivod i fc o,r policio, •>int in the devtlopnle*i | l LlitjT • E l nclosln BOW of . ir lr« Q. ;: > te i t tf y s to yo:ir 1 6 w i8« •cions» If y^u feel tl La latter is wort i e , I . . i l l be glad to come to Washingtdtt at, i ny time, i nd to bring with Be -j-n orney with *l 0 bels . it Is :itu:ti.')n» 1 -.:nt to t I . a • siarqp Ccmrt#fi«», .1 onderf -uch a positive vl^ j ,i s^ part ' 4 9 sl# 7ei-y tj \iLy lo'z .pose In wrl : at In is
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