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F E D E R A L R E S E R V E BANK O F NEW YORK f Circular No. 3 8 9 4 " 1 L September IS, 1952 J REAL ESTATE CREDIT Suspension o f Regulation X To all Persons Engaged in the Business o f Extending Real Estate Credit in the Second Federal Reserve D istrict: The Board of Governors of the Federal Reserve System, with the concurrence of the Housing and Home Finance Administrator, suspended Regulation X, effective September 16, 1952. Following is the text o f the press statement announcing the suspension, released fo r publication today. The B oard o f Governors o f the Federal Reserve System today suspended Regulation X — Real Estate Credit— in connection with its announcement o f a period o f real estate credit control relaxation prescribed by the 1952 amendments to the Defense Production A ct. The suspension of Regulation X , effective September 16, 1952, applies to credit terms on both residential and nonresidential properties. Conventional mortgage loans are, o f course, still subject to basic State and Federal statutes governing real estate loans by financial institutions. The B oa rd ’s action today relates only to real estate credit not insured or guaranteed by the Government. A statement on terms that will apply to Government-aided real estate credit is being issued separately by the H ousing and Home Finance Adm inistrator, Raym ond E . Foley, who concurred in the B o a rd ’s announcement. Regulation X was first issued in October 1950, under authority o f the Defense Production A ct o f 1950 and Executive Order 10161 providin g fo r regulation o f real estate credit terms to restrain inflation and conserve defense-needed materials. It was suspended in view o f m andatory provisions in the 1952 amendments to the Defense Production A ct. These amendments required that a period o f residential credit control relaxation be announced if estimated residential con struction starts fo r three consecutive months were below a seasonally adjusted annual rate o f 1,200,000 units. Inform ation lias been received from the Secretary o f Labor that the seasonally adjusted annual rate o f housing starts, as estimated fo r this purpose, was less than 1,200,000 units in each o f the months o f June, July, and A ugust 1952. A copy o f the Notice of Suspension o f Regulation X is enclosed; additional copies o f this circular and of the enclosure will be furnished upon request. A llan S proul, President. R E G U L A T IO N X — R E A L E S T A T E C R E D IT N O T IC E O F SU SPE N SIO N ISSUED B Y T H E BOARD OP GOVERNORS OF T H E FEDERAL RESERVE SYSTEM W IT H T H E CONCURRENCE OF T H E HOUSING AND HOME F IN A N C E ADM INISTRATOR 1. a. The Secretary o f Labor has transmitted to the B oard of Governors o f the Federal Reserve System the estimates required to be made by section 607 o f the Defense P roduction A ct o f 1950, as amended, and section 503 o f Executive Order No. 10161, as amended. b. The Secretary o f Labor, on the basis o f his estimates o f the number o f permanent, nonfarm, fam ily dwelling units, the construc tion o f which has been started during each o f the three calendar months June, July, and A ugust 1952, has estimated the annual rate o f construction starts during each such months, after making reason able allowance for seasonal variations in the rate o f construction. c. The annual rate o f construction starts so estimated by the Secretary o f Labor fo r each o f the said three months was at a level below an annual rate o f 1,200,000 starts per year. 2. In view o f the foregoing, as required by section 607 o f the Defense Production A ct, as amended, and section 503 o f Executive Order No. 10161, as amended, the B oard o f Governors o f the Federal Reserve System, with the concurrence o f the H ousing and Home Finance Adm inistrator, hereby announces the beginning o f a “ period o f residential credit control relaxation” which period shall begin on September 16, 1952. 3. a. E ffective September 16, 1952, Regulation X is suspended. b. The suspension o f Regulation X was adopted by the Board after consideration o f all relevant matter, including recommendations received from time to time from industry and trade association representatives and others. Section 709 o f the Defense Production A ct o f 1950, as amended, provides that the functions exercised under such A ct shall be excluded from the operation o f the Adm inistrative Procedure A ct (60 Stat. 2 37), except as to the requirements o f section 3 thereof. FR IN TE D IN NEW YORK