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FHA Form. No.

12

FEDERAL HOUSING ADMINISTRATION
MEMORANDUM

DATE
TO:
SUBJECT-

Honorable J, M. Daiger
Room 610 - Shoreham Building
Washington, D # C.

Dear Daiger:

The attached is Dr. Fisher's
report on the Brooklyn savings
banks situation that you spoke
to me about.




Si/irerely yours,

Stewart McDonald
Administrator

5-26-36

SITUATION IN BROOKLYN AND LONG ISLAND

C ItdttMday and Thursday, May kQ and 21, I was in
m
Xork ana called on eoiae of UM tfflotri Qt Dc-,vlngs
and of In* bavinga B&ak Trust Coap&ny to discuus with the® the
situation in Brooklyn and Lon^ Island in winch ws hftT« mutual
*
interests.
The attitude that I tooc: was til ..x, you hzQ »AlDt(l • • to
:o H w Etefe to inaicatfc to
e
maibl« offieam of
savings banicii aur desire to cooperate with tasa in acaieving
shat we conceive to be our •ntmiil oDJ^ctivea of aaintaining a
sound mortgage rasrk:et and improving bousing conditions.
I particu,.
liclt#d c r i t i c i a a s o. our pm
procedure in BrooJtlyn tnd uong I»Xaai enci the opinion of tlieae
offici&is 10 to tha changes ifHich vould wVI^ a chaser coordination
Xiieieu b l t t m as .
The principal criticis r i» or Qujectian& M t T d &i'ound
MM C
ti'iree points, i.©.s




1.

SaviB|
Ui laroociyn aad ijoiag 1SI&.OG p
<
1 or
are about to pom
1 cjnsi1 number of propert i e s at a coet of a«<iui#iti«o which i s hlglbsr than
the prices at «hich n&» b0VM9 on saich we are i n suring — r t |
Lag sold. TlMM ofan^s are concerned, therefore, about tlM wraantity of new houses
placed on the Market «.t tn«se prices, ih&y ere oilerlag, however, to make m lMMIf i^na i baiieve that
this a t t i t u a e on their pert e&n be ehftBf^ll by careful
aegotiation*

2*

Soae of these official* I
In connection with
isose of the MB.t* in viiuc'
-iriag aortgages oux1 »t«»t<rd< are sot being enforced. Some
•boddjr conatraction i s being biilit &nc pwilMara
being deceived u to the q«fclity 01 coastruction of
nouses ^hey pare 1

air. McDonald
M y 2$, 19>6
&
A B L N ISLilHD blTUAI'IOH
H OG

— patJe ^ .

In connection ssitfc this critici&ai I strongly urged that
y submit i f 111 fir cases to WM to enable xm u> sake
careful investigation tad ta&e action &ccortiingly on our
findingiJ^^Ij.eaiphaaized tkat general statements we eould
do ho things iiut that ra would take prompt action on any
eases that sere brought tc our attention*
3.

i>ome very bittor opinions wera expressed about the a c t i v i ties of Faderal Savings tfti Loan Asaoci&tionE in this area.
In the opinion o t U M sdtn whoa i talked., fu&da to lend
d X M
on sound f i r s t aortt;ac;ss tat9 very abundant. There
therefore f no need for tha .organisation of Federal Savings
and I»oan Associations in the area,
I t was pointed out tfcftt t i
j>ci::,tioai» oper-->. te with
reiati¥ely l i t t l e r e s t r i c t i o n . They can ma&e loans up to
75^ oi* their own appirmiamlSj whether iasur^so or not insured.
They are not obliged to aftfe* any inspectiafis to insure sound
construction on "aninsm-ed loans, and no lissiuitions are
winced opon ins ¥o^um.e ox' m bttildlni; */U.eh they aay M >
h
courage through their

If the unbridled coa^tstition far VOIIUM of Itmam which
in the l 20 f i de'veiops in tula or other areas, the M M unsound situaH
tion will be created shich brought aboul
mil i f in the 20*8,.
I t i s on the method ox ooep«zmtlag in ouch & way as to prevent
this unsound d©«r©iopaent that we wish to meet with the olfic&rs of
IJMM si&vings b&aks* they reply that no ioa^ at a jr'@d»raily controlled
and partially Federally financed institution i s creating t h i s uncontrolled and imrestrictsd competition for loans both u to quality and
quantity they see no point la mutiny roiy efiort to cooperate in our
program, in other words, they uty "Let the fi'¥tm—lit i«t i t s own
house in order, and th«n private landing institutions will be ready
to cooperate."




Mr. McDonald
• * J 2 5 , 1936
BSOO&LXXAD LOIG ISL

l e are

B —

ftopln

• mprtlititiTt ^roup rill be

willing to meet at an Mtrlj oate to Giscutse wilese mutual probleas.
M « Daiger i U agreed to go a l t h Hie or vith any
r
Ml
else whom you d««lfBat« to such a eani'erence.




Ernest iU ilshar