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May 16, 1945.
Chairman Eccles:
As requested, I attach a non-technical
suiHBiary of the proposed Izecutive Order which
would authorize the Board to regulate real
estate credit. The draft sent to you by Mr*
Davis is the same as the draft which Mr.
Emerson gave to me.
SUMMARY OF PROPOSED EXECOTI7E ORDER EEGDLA3?ING HEAL
ESTATE CREDIT
(Draft of May 12, 1945)
In general, the draft of the order follows the pattern of
Executive Order 8843, which authorized Regulation W*
The order, which is based on the Trading with the Ineiay Act,
as amended by the First War Powers Act of 1941, would be effective
during the war and during the period of the "unlimited national emergency*
declared by the President; on May 27, 1941*
Declaration of Necessity and purpose ("Whereas" Clauses), —
Because of the influence of the rise in prices of urban and rural real
estate on speculative activity and on the economic stabilization program directed by Congress in the Price Stabilization Act of 1942, the
public interest requires that real estate credit be regulated in order
to assist in curbing speculation, in preventing evasion of rent control, in restricting inflationary tendencies, and in promoting the
interests of agriculture, home owners, returning veterans and the public • Such control should appropriately be exercised "subject to the
general policy directives of the Economic Stabilization Director"
through an agency with responsibilities for administration of national
credit policies (i.e., the Board of Governors).
Designation of Board of Governors of the Federal Reserve
System (Sec. 1)7 — The Board is designated as the agency through which
transfers of credit or payments by or to banking institutions, arising
out of the extension of credit on urban or rural real estate, shall
be regulated or prohibited. "Banking institution" would be defined
broadly to include any person extending credit as principal or agent.
In exercising such powers, the Board would be governed by the general
policy directives of the Economic Stabilization Director*
Regulations (Sec. 2 ) . — The Board would be directed to prescribe regulations regarding credit for buying or holding real estate.
The Board could require persons or transactions to be registered or
licensed, and could regulate the amount of down payment required. The
Board could, if necessary, also regulate such matters as maturities
and the rate of instalment payments* The regulations could be terminated
by the Board whenever it deems them no longer necessary to carry out
the purposes of the order.
Reports (Sec. 3 ) . — The Board would be given power to require persons affected to keep full records and furnish complete information, and would also be given power to inspect accounts and records.
-2Administration (Sec. 4) • ~ The Board would be authorized
but not required to utilize the information and services of the FDIC,
the Comptroller of the Currency, The National Housing Agency, the Farm
Credit Administration and any other Federal or State agencies. The
Economic Stabilization Director could require any Federal agency to
participate in the administration of the Board1s regulations if the
Board made request that such agency participate. The Board could also
utilize the Federal Reserve Banks. Credit outstanding on the date of
the order would not be affected by the order, except as the Board
might deem necessary*
Definitions (Sec. 5 ) . -- In addition to certain terms which
are defined specifically, such as "banking institution" and "extension
of credit", the Board is given the power to define other terms*
Penalties (Sec. 6 ) . — Tiolations of the order or of the
Board's regulations would be subject to criminal penalties as provided in the Trading with the Enemy Act.
5/16/45
@FedFRASER