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Form No.


Office Correspondence

£6igernor E c c l e s


Date. May 7, 1935
Subject: Letter to Mr. McDonald

You may be interested in reading this copy of a letter
that I wrote to Mr. McDonald following yesterday1s meeting at FHA.
The participants in the meeting were Mr. McDonald, Mr. Catharine
(Field Director for Titles II and III), Mr. Ferguson (Assistant
General Counsel), Riefler and myself.
The meeting in which they have asked me to participate
tomorrow is to discuss a general revision of the Title II regulations, including the schedule of interest rates, service charges,
and insurance premiums.

Dear Hr« HcDoHftldl
In the Bidet of anoh dlaottfilott >f
acted rdstrativ© ssatt-rs yesterday, I neglected to thank you
for arranging a very &gr> eable luncheon meeting and for g
me the opportunity of renewing ft direct acquaintance
progreoi in which I have, quite niutiireliyj a considerable
IOBftl int ere at*
1 M t t t y••:- t o knofc
that there are no strings
attached to ay expreesion of iminfllOOl to cooperate in my
•ay tht;t 1 C&R to further the succesa of your undertaking*
vIXX doubtleM find the>t| mfisr | .-1 ^ athi if
being on the oiitBide and occupied vith other mattersf I tm
not veil inforsed ftj to WtttJ of the practical difficulties you
have encountered * But t h i s MJ not be altogether a dlMdrfcata
Tor O the one hand 1 have lost none oi' my interest in the F A
proglttti while on the ather I hft¥e fuilv recognized thftt i t s
actual Opere^tloQ Wt% necessarily huve revealed defects and
proj^leu that *e eon] • t httfl foreseen %hile the Sousing l e t
lo i t s formative ltftge««
ihea I « M acting l*«t j9top M ir«
in connection with the housing profrtag i t fell to
lot to arrange vari >M fir^ncltil oonfereooei i s PtfMnfVtn
lie the banking contacts hero and in New Tork« i v&s t
the foeel poiiiti to to Mgr# of the fiaettolAl oppoeitios and objections t h t t had to be dealt with froai dsy to day as the Act
was in the staking, 1 do not U&dereetlafttef thsrefore^ the obsteclet of a similar nature that sve tUMperlnf your program
if one thing, hovereT| 1 ea ^txlte Mrtalai ead I think
y:^u laay find i t ground for enoourtgeMftt* Itet i s that the
psyehology of the Lesdlzig eoMRBdLtgr has undergone • eonelderehle

change In the year that bft
MMl since wa w w loldlng
finaaclal oonfereaeesj and even in the six souths tine* you
Inaugurated your Bortg&ge lnsurenee activities*
A year ago, 'ri^sm six •
agOv there was still •
gettuiSN reluctance on the part of nearly &11 the beakers X met
to resttes Mortgage lending of any ki^d. They were still do:uln~
feted by the Liquidity COBplexj Still eager, or at Ifeaat willingj
to find a m y Of getting more •ortgagSS off their hands rather
than to enlarge their portfolios, Th»t is not the e*te
They are feeling MOaih less d*pet)d«nt now on the \3BXJQf in
as jrom teov from y .mr cran exT>erience» they are feeling their
Mlii to such ^r: ©xfcent that they irt htglTmtng to lend ?aor$
fr«elTf and doing it in the aaia (qtilta contrary to our
iions) without benefit ftf FBA«
In stfher word5|
- liag tbi urge for earning
as#ettf but In .fact . latisfyinn It—far ttcm it—-becauee they
not jet grasped the fall purport of the Bousing Act*
reasons it wo Id seea that the nature of the
roblem has changed s good deal) and it is possible that the naturi
of the approach might well be revised also to aeet the new COnditiomi that are becoaiing rtiorn evident i-i the field of aortgage
iendinge 1 should therefore .for ey M«B ?sart be disposed to explore the matter again without regard to any preconceptions of s
yea? ago or to ey lApressions of six Booths ago*
At any ratcf I \xo a tl
ill feel quite free to
call on ae if there is anything that I say contribute to the
work yoa are doing*
Aa fair Gorernor Eooles &nd his asaooiatei on the Federal
larfe Board, 1 caa Bs&vre yo\) that their desire Is to cooperate
in every practicable %sy io enlist the active interest end support of the Federal Reserve banks and the aeiaber h&nks, I have
had no >pportwnlty to talk with Governor KeoXes iinoe By meeting
with you &.nci Mr«. Catherine end iri Ferguson jiestf>i'<1ajj but l am
sure that he would have me say to you* as he said to we last
that h€ would like to see a cooperative in•nflOBOnt worked out
the Federal Reserve Systea coi2ld get behind the progras


I m

not la • p*rfttHOt ry way only, bttt to *go the limit in
ting the pragrtm
with kind rtgardt aad ^ r t e s t vlsb*i for*
In your* Bt responeibillty^ I &


Speoial i i s i s t a n t to tb« Board

| Adainittx
Federal Houtiag Adainistration
K*thlngtonf 1 * C*