The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
NOMINATIONS OF JAMES E. SMITH, THOMAS R. BOMAR,
GRADY PERRY, JR., GLORIA E. A. TOOTE,.
ROBERT C. HOLLAND, AND JOHN R. EVANS;
,'y,.
HEARING
BEFORE THE
COMMITTEE ON
BANKING, HOUSING AND URBAN AF}~IRS
·i.,. : ·-'UNITED· STATE& S-ENATE
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THI!!·• NOMINA'l'10NS 0F' 11-tMES E . SM'l'.PH- ·T~ ' BE' COMF'• 1
TROLLER OF THE CURRENCY; TH<'.1:M'AS '':tt: ''.ao~ita A.'kti'J:1,-,'
GRADY PERitY JR.'"'i'0''Bljf
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' .mE llllDERAL
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HOME LOAN BANK BOARD; GLORIA E. A. TOOTE TO BE AN
ASSISTANT SECRETARY, DE1i"ARTMENT OF HOUSING AND
URBAN DEVELOPMENT; ROBERT C. HOLLAND TO BE A
MEMBER OF THE BOARD OF GOVERNORS OF THE FEDERAL
RESERVE SYSTEM; AND JOHN R. EVANS TO BE A MEMBER
OF THE SECURITIES AND EXCHANGE COMMISSION
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MAY 31, 1973
Printed for the use of the
Committee on Banking, Housing and Urban A1fairs
U.S. GOVERNMENT PRINTING OFFICE
9&-912
WASHINGTON: 1978
COMMITTJIJE ON BANKING, HOUSING AND URBAN AFFAIRS
JOHN SPARKMAN, Alabama, Okfnllott
WILLIAM PROXMIBB. Wlacluta
lOBN TOWIIIR, Texa1
HARRISON A. WILLIAJ(S, Ja., New Jene7 W AILLACE F. BEN.NETT, Utah
THOMAS J. McINTYJUD, New Hami,■blre
IIIDWAJU> W. BROOKE, lllassaehueetts
BOB PACKWOOD. Oregon
ALAN CRANSTON, Caltfornla
: , BILL BROCK, Tennessee
ADLAI E. STBVENSON In, Dllnol■
J. BENNETT JOHNSTON, JR., Loul9tana
ROBERT TAll'T, JR., Ohio
WILLIA)( D. HATHAWAY, Maine
LOWBLL P. WEICKJDR, JR., Connecticut
JOSIIPB L BIDIIN, la.. Delaware
DUDLIIY L. O'NIIAL, Jr., SU.I Dweo,or ·"' Gener.I Covuel
MICHAELE. BURNS, Jlinont11 Covouel '
(D)
CONTENTS
Pa11e
Statements of:
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Ja~ E.',Siuith, nominee .to be Comp~.roller of the Currency-------Thomas R. Bomar, nominee ,t o be member of the ·Federal 'Honie Loan
Board---------------------------------------------------
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Bank Board--------------------------------------------------Gloria E. A. Toote, nominee to be Assistant Secretary, Department of
Housing and Urban Development_ ______________________________ _
Robert
C. Holland, nominee to be a member of the Board of Governors
of the 1''ederal Reserve System ______ ___________________________ _
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Bank
Grady Perry, Jr., nominee to be member of the Federal Home Lonn
John R. Evans, nominee to be a membe1· of •the Securities 11nd
Exchunge Commission -----------------------------------------Biographlaal sketches of:
Mr Smith ------------------------------------------------------~
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=== ·=== . . =========================
Mr. Holla·nd==================
----------------------------------------------------Mr. Evans-----------------------------------------------------Additional information:
Letter from Glllis ,v. Long, Re11re8entatin• in ('ougrpi,s from the Stnte
of J,onisiana ------------------ - ------------------------------Letters from Thomas R. Boman, answering written tJuestions, to:
Senator Brooke---------------------------------------------Senator Stevenson------------------------------------------Letter
from
Federal Home
Loan Bank
Board to an member11 of the_
Illtnols
oonpessional
delegation
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Fedel'al Home Loan Bank Board statement of pollcy regarding
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··? Jft:!¼~~i~~f_;;l:s~~~~i~~.;;;t~-~~~~~~~-~~~~~~~-~~~e_8-~-~-~~!~~
Letten from U.S. Savings and Loan League_.:'____ _:.:_..::._..:_.:;·__ ~.::._'__
News release from Federal Home Loan Bank Boa•r d announcing
nominations of new memberl!I----------------------------------Statement of Senator Javlts on nomination of Gloria E. A. Toote____ _
Statement of Senator Buckley on nomination of Gloria JD. A. Toote __ _
Letter from Senators Bro11ka and Curtis on nomination of Robert C.
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Bolland------------------------------------------------------010
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NOMINATIONS OF JAMES E. SMITH, THOMAS R. BOMAR,
GRADY PERRY, JR., GLORIA E. A. TOOTE, ROBERT C.
HOLLAND, AND JOHN R. EVANS
THUBSD.A.Y, KAY 31, 1973
CoxHITl'EE
U.S. SENATE,
URBAN .AFFAIBS,
Washington, D.O.
ON BANKING AND
The committee met at 10 a.m., pursuant to call, in room 5302, New
Senate Office Building, Senator John Sparkman ( chairman of the
committee), presiding.
Present: Senators Sparkman, Proxmire, Williams, McIntyre,
Cranston, Stevenson, Johnston, Hathaway, Tower, Brooke, Brock, and
Taft.
The CHAffi)IAN. Let the committee come to order, please.
We have quite a list of appointees from whom we want t.o hear. That
is the purpose of this meetmg, to hear the gentlemen and one lady who
have been nominated to fill various posts in the executive branch of the
Government.
Let me say at the outset that all of these nominees have been cleared
bv the Senators that ·represent the home States of the nominees. I know
oi1e of these felJows from Alabama. I don't re,member anybody ash."ing
me about him, but I will give my clearance now.
Since we do have six nominees to hear from, unless another member
of the committee wishes to make a statement, I will ask :for the first
nominee, Mr. James E. Smith, of Virginia, whom we know quite
well-he has been before this committee man;r times-to take the witness stand.
Mr. Smith is nominated to be Comptroller of the Currency to replace
Mr. William B. Camp who has for a long time been the Comptroller
bnt who has retired because of illness.
j\fr. Smith, we are very glad to have you. As I have already said, you
have been before the committee many times.
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Mr. Smith has done a Yery fine job in the Treasury for several years,
and I know he will do an equally fine job in the Office of Comptroller
of the Currency.
Now, there are a few formal questions I would like to ask you.
Have you submitted a financial statement to us~
STATEMENT OF 1AMES E. SMITH, NOMINEE, TO BE COMPTROLLER
OF THE CURRENCY
:Mr. SJ\n·1·11. Yes, I have, Mr. Chairman.
· The Cn.\iRMAN. Very well. As you know, that financial statement
will be available to members of this committee here in the committee
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room. Afterward it will be sealed, locked up in our safe, and will
remain there so long as you hold this office and for 1 year thereafter.
~\.II nf the nominees might be reminded of tlH•t. That is our rPgular
pmrrch11·r.
· You ha ,·e chcdu•cl. I prc,mme, with tlw counsel ns to whPt!,1:"1' or not
you ha,·e any conflict of interrst based upon yo11r tinall<'ia I stakmcnt?
· Mr. ~)tITit. Yes. Mr. Chairman. The Acting ( ,eneral Counsel of the
Treasury, :Mr. Lee Ritgei·, re,,ie:wed my fina11eial ,;tatt:>nwnt )'l"'Sterday
and conelmled that I did not. have any conflict of iutrrPst.
The C1urn11ux. :Kow, tlwre is anothC'r q11Pstion that I want to submit to e,·ery nominee. If yon are confirmed to tl1is position, will yon
rPspond to requests of this committee and other cong-ressional committees to appear when n,-ked to do so and tPsti fy !
Mr. S:\Irrn. unquestionably, Mr. Chairman. I ha,·e spent. :W years in
this community, and nearly nil 20 of them eitlwr working in or with
the Congress, and I will be responsi n~ to all requests to appear.
The CHAIRMAN. Very well.
1Ve will place in the record your biographical sketch.
[The biographical sketch of ~Ir. Smith follows:]
BIOGRAPHICAL SKETCH OF JAllllsS
E.
S~IITII
Name: James E. Smith.
Title: Deputy Under Secretary.
Personal data : Date of bh'th : September 29, 1930. Place of uirth : Aberdeen,
S. Dak. Marital status: Married, May 1959 to Sarah Spear Smith. Children:
Mnry Margaret, age 5: Susan Elizabeth, age 12: James E .. Jr., age 18 (by a
former 11111.rrlage). Home addreiaia: 700~ CTirnrd 8tr.,et. '.\f<'Lenn. Y11.
Education: Elementary and secondary: Public schools. Pierre. S. Dak. College:
South Dakota School of Mines and Technology, R11pld City. S. Dak.-B.S. 1952;
George Washington University, Washington, D.C.-LL.B. 1960.
'.\Iil!tan· service: None.
Career summary: Government: 195lh'i7-Investigator, Office of Security, Department of State; 1957-62-Leglslative assistant to Senator Karl '.\Iundt: 100263-Mlnorlty counsel to the Senate Suucommlttee on Intergo,ernmental Relations: 1969 to August 1972-Speclal assistant to the Se<'retarr for C'ongressional
Relations: August 1972 to present-Deputy Under Secretary of the Treasury.
Career iiummary: Private industry: 1963-69--On the Waiahinirton iataff of the
American Bankers Association as deputy manager nnd nssociate Federal legislative <'0un~el.
'.\Iembershlps: Association of Former Senate Aide~. South Dnkotn Rnr Association.
Special career recognitions: Alexander Hamilton Award-.T:m1rnr; 1971.
The C'H.,m,rAN. Senator Tower.
Sc>nator TowF.R. I <lon't have manv t111estions. l\fr. Chairman. I would
~implv likP to sa:v that ,Tim Smith' is wc>ll knn,Yn to 11s nnd has r!one
~ ffOO<l iob as cong-ressional liaison with thP TrPns11r,· DPnn1-tmP11t.. I
-don't know of anv con!?Tessional linison officn thnt I think wr ha,·e
hnd hPttPI' rplations with than ,Tim Smith.
I ,rn11l<l likr to ask one qnPst.ion. In thP past thPrl' has somPtimc>s
l)('P ll n t011drncv to tnrn down re.(Jnc>sts for clrnrtrrs for minoritv bnnks
hnsNl. T think.' on too zealous att.mtion to tlw technirn litiPs inYoh·ed.
I am ho1wfnl that we can move more capital into the minority groups
nncl hri1w tlwm more into thP mainstream of the free entHprise system.
I wonkl simnl:v exprPss t.he hope that you would he particularly
conrP1·rn,fl ahont. applications from blacks an<l from l\fexican-Americnns for tlw formation of banks and wonld show some sympathy to
thosP applications.
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Doyot,t;ha,r nan~·oqnimenton'thatL .- . .· · ,, : !. :-> ,:· . > · · ·
Mr. SHITlt. Senafurl just this: That I played a very modest role in
the Tre~ry Department ·:in th@ , e.tforts of the last •few years Cio
strengthen the existing minority banking institutions through directing ~overnme~t: q_t,posits into,those ~nst1tuti?ns, I have not J.>layed a
pr111c1pal ·role m 1t, .but I am certamly entirely sympathetic to the
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objectives that you suggest.
· And I think, frankly, in terms of chartering policy generally, if you
were to put it on a ·scale of 10 as to liberal versus conservative chartering policy, I might come out a 7 or an 8. I think that will be my attitude
generally-to give competition and the benefits of competition the nod
and the benefit of the doubt in close questions.
Senator TOWER, Thank you very much. That's all I have.
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The CmmMAN. Senator Proxmire.
Senator PRoxMIRE. Mr. Smith, I concur that you have fine qualifications and excellent experience. It is good to have a man appointed
who has the kind of background you have, aiid I certainly welcome
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this appointment.
There are some aspects of this that trouble me somewhat. Your
principal employment except in the Treasury Department and a period
when you served here on the Hill was with the American Bankers
Association as deputy manager and associate Federal legislative
counsel.
Mr. SMITH. Yes, sir.
Senator PRoxMIRE. Is that right i
Mr. SMITH. Yes. sir.
Senator PROXMIRE. Does that mean that you were working on legislation on the Hill here for the American Bankers Association?
Mr. SMITH. Yes, Senator. In unvarnished terms, I was one of the
industry's lobbyists.
Senator PRoxMmE. As you know, I have a great admiration and
respect for bankers. I think they are wonderful people. But the American Bankers Association has been wrong on almost every bit of legislation that has come up here in my view. They have opposed almost
And I am very hopeful that as
everything that has been before
Comptroller of the Currency with the great authority yoti have, because you will determine who gets a national bank charter as I understand it-you are a member of the FDIC which determines charters
for other banks-in this very powerful capacity that you would not be
stand-pat, status-quo conservative as some Comptrollers have been in
the past but more in the tradition of Mr. Saxon-that is, in favor of
initiative, in favor of new competition, in favor of opening up opportunities for gr?ups, not o~ly minority groups-and I agree with Senator Tower this 1s somethmg we ought to do our best to encouragebut others too.
l\fr. SMITH. Senator, let me sav I served with the Rankers Association cluring Mr. Saxon's hmnre. I have great admiration for his competPnce. I hope that I can do some very positive things in the office.
I don't think I can assure yon that I can provide, perhaps, the same
st,vl(' nnd color ns Mr. Saxon. but I'll do my best.
Y onr question certainly is a most valid one considering my former
employment. I wish I could submit to you some objective evidence to
assure you that I am going to be impartial and objective in this new
responsibility if you see fit to confirm me.
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I will sa_y that in my 41/2 years in Che Treasury l)epartment there
have•been. ~ , and one1ever eo n,ooml:y, in rwhlch'1 .bave taken a
:rather ·vi.gMOUS -position eoBtnry to the industry. I refer here to the
femous NOW aeooont issue.
. Senator PRoDIIRE. I oertainly eommend you on that.
Mr. SHI'!'H. I am not antagonistie to the mdustry, nor do I think
I should be, but I am not a sycophant.
Senator ~ •I welcome your testimony on that, and it was
a matter of direct and conspicuous conftict. The bankers are -very much
opposed to NOW accounts -a nd you ca.me up with a contrery position.
What e2:peri~ ·have Y'Ml had in the Treasury Department that
relates to the Comptro1ler's functions1
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Mr. SMITH. I \VOuld suppose ·that the most direct experience has
been working with banking legisiation. I have, for example, worked
on the B._.nk HoldingC-Ompany Ad·amendments.
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I think I can say with sotM aoouracy th1tt I have been invo1ved in
perhaps every major pieee of banking legislation -over the last 8 to 10
years in one role or another.
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I am cuITeDtly, at the direction of Sooretarv Shultz~ eluliring nn
interdepartmf\ntal group E'tndeavori.ng t-0 develo11 n legislatiw package
out of the so-<'.a1led-Hunt. Commission r~port -,.elating to thf' strn<'ture
of the financial institutions. And I say in advance that I regrPt our
delay in getting- that package to you. It has taken longer to hnmmer·
out the consensus than I thought it would.
But I think we al'(' on th<' brink of an .announcement there. I think
that is very relernnt to th<' work of thf' Comptroller.
Senator PROXMIRE. There was a story in the Post this morning I
understand about bank charters being awarded to large politiCRI contributors. Would you favor a procodnre of not p<'rmitting <'hartHs to
go to people who had contributed or to members -0f groups thnt had
made contributions? Or do yon think legislation would be dP:-irahle
in that respect? What is your f Pel ing about that?
· ·Mr. SMITH. WelJ, on thf' one hand, obviously, I don't think 1wople
should be favored in consideration £or hank charters bf'cause they ha Ye
been involved in the elective process. either as an nctive campaiiner or
as e, contributor. On the other hand, I would ('<'rtain]v want to give
some thought as to whether or not pe0ple should he drnie<l. the opportunity to participate in the organization of a bank because of a past
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history of political involvement.
Senator PROXMIRE. You nnderstanrl the corn1pting principle
involved here.
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Mr. S1,nTH. Yes, sir.
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Senator PRoxumE. And certainly in the atmosphere that we are all
aware of right now in the country, this could be n, ver,v serious problem.
Mr. SMITH. Well. I will say this. I am satisfic•d from mv own contact with the previous Comptroller's administmtion and the great
professional staff that he has there that their decisions are not colored.
by suc_h factors. I assure yon that my own decisions wil1 not be so colored either.
Senator PRox11rn:E. Well, I hopP. yon wilJ think ahont the possibility
or the desirability of legislation prohibiting: cousideration within a
year, say, or a venr and a half. something like that, of those who rnnke
political contributions for recPiving a hank chnrter.
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One other question. Have you submitted or agreed to submit in
ad Yance a signed resignation to the White House so they can pick it up
whenever they want to do soi
Mr. SMITH. No, I have not 'been asked to do so. Nor was I asked to
do so in my present position, other than the geheral reqtmSt at the end
of the first term of this administration. I was appointed to my present
position in Augu.st of 1972. No such request was made then. I don't
anticipate any such request being made now.
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Senator PRour:rnE. You say "other than." However, you did submit
your resignation along with everybody else 1
Mr. SMITH. Yes, at the end of the fitst term of this administra,tion.
Senator PRoxllCIRE. I am· relieved; And I think it is tremendously
important in your :position, booause this is a position that we· would
hope would be independent and, as you •h ave mdicated, should be independent of political considerations. Any such request of that kind
would be most unfortunate.
So you tell us now that you hav~ not been aal!ied1--Mr. ·SMITH. :Right.
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Senator PROXMIRE [rontinuing]. To submit an undated resignation
to the President that he could pick up whenever he wishes~
Mr. SMITH. That's right.
_Senator PnoxMIRE. Thank you..
The Cu.URMAN. Senator Williams.
Senator Wu.i.u.Ms. Thank yon, Mr. Chairman.
I too am very pleased thllit•Mr. Smith has been nominated for this
position.
Mr. s~uTH. Thank you.
Senator WILLIAMS. It has been a pleasure to work with him over
the years in his capacity as liaison to the Treasury Department.
I might have missed one of Senator Proxmire's questions but were
you asked whether you, would submit a resignation m bla,nk if asked i
.Mr. S:uITH. That was not the: way the question was phrased. Not
having been asked to i'n my present position and not having been ask~d
to with respect to this new assig1u.nent, I'd rather p.ot sp~ulate, but t
think I am sensitive to the issue. . ·
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•Senatot WILLIAMS; N"ow would. ,oo a good tun~ to announce that you
would not .. It, is very appropriate. Would y~ like tQ answer at thii;;
point?
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r. S:M:ITff. l'thinkl'd rat°'er :not speculate. [Laughter,]
. Senator WILJ.,Y4_Ms1 .Tl:ie laughter drowned out the . response.
M:1·. ~hr:tTH'.. I sa'ld I think I would rather not speculate smce l don't
anticipate that I will be asked to submit a letter. .
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Senator WILLIAMS. Thisi is your line of questio~ing Cto Senator
Proxmire].
Sena.tor PROXMIRE. If the Senator wo.uld yield, I would hope you
wonld re{'onsider that, Mr. Smith. Aftet all, you are being appointed
to a _nositio:u of indPr>endence. I think it would be a tragedy if any
Pres1<lent-how long does your term last?
Mr. ~M:r;rtt. Tt is a. 5,vear term.
' Senator PnoxMIRE. Weil, now-., Mr. S11rtTH. I understand I am filling out the balanceSenat,or :P~OXMIRE. I d"Otl't :wa.nt to make any adverse reference to
PrE>sident Nixon.
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Mr. SMITH. Senator, my reluctance to make such a pledge involves
no misunderstanding of the prindple involved. I just do not wunt to
make an answer here that would imply that I belieYe I shall be asked
to submit such a letter, and if-Senator PROXMIRE. Fine. Fine.
Mr. Sxrm [continuing]. If we can make that clear that I do not
expect to be, that in saying that I would refuse to provide such a letter
if asked that it implies no expectation on my part that I will be asked
for an undated letter, then I am perfectly willing to make such a statement of intention.
Senator PROXMIRE. Then what you are saying. Mr. Smith, is you
do not expect to be asked, there is no indication you would be asked.
If you were asked, however, you would refuse to submit that kind
of letted
Mr. SMITH. Yes. By the same token, I have no question but that I
do serve at the pleasi1re of the President. He may for good and sufficient reason ask for my resignation. As a matter of fact, there is
question I am told as to the period for which I haYe been nominated.
Whether it is a new 5-year term or the balance of the previous 5-year
term.
If I am in any way able to influence that result, that legal result,
I would hope that it is the balance of the previous term simply because
it expires in March of 1977. Such a result comports with my own view
of the way things ought to be done. Whoever happens to be President,
that being the beginning of a new term, I think should have the opportunity to select an individual for this important assignment.
Senator PROXMIRE. At any rate, you are saying yon don't expect
to be asked to submit a resignation. HoweYer, if vou were to be asked
to do so, you would not comply 1 Is that correct 9
Mr. SMITH. Yes.
Senator ToWER. Would the Senator yield~ I don't think he should
be compelled to give a black-or-white answer to that, because there
might be certain circumstances-Senator PROXMIRE. As I understand i t - ·
Senator ToWER [continuing]. He can't anticipate.
Senator PnoxMIRE [ continuing]. The position taken by Mr. Smith,
as I understand it, was if the President should request his resignation
that he would consider it at that time, and he might very well resign.
But what he is saying is he would not submit to the President in
advance an undated Jetter of resignation that the President can just
pick up.
Mr. SMI'I'H. Right.
Senator PROXMIRE. And he said he would not.
Mr. SMITH. 1Right.
The CHAIRMAN. Senator Williams.
Senator WILLIAMS. Just one further question. In your position you
wi11 come in contact with our dual banking system and with State
banking commissioners. In one particular area-the irranting of applications for new banks or for branches of existing banks. It seems to
me thPre has he<'n confusion in the area of comity between the ComptrollPr and the States. Are you familiar with what the situation is,
and wh<'ther the Comptroller stands back until the State banking
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commissioner considers a new application before he considers a later
application for a bank in the same area¥
Mr. SMITH. No, I am not, Senator, conversant with that policy.
Senator Wu.uAMS. This is an area that I believe is somewhat
troublesome. At one point there was a ruling of comity-that the first
application would be considered whether it was at the State level or the
national level. I believe that now this is not quite clear and has not
been clear in recent years.
Mr. SMITH. "\Vell, I can only say this: That I am a devout belie,·er
in the dual system. I think it has served the structure of our financial
industry well, and I intend to take affirmative steps to counsel with
and advise with State banking superintendents on the policies of the
Comptroller:s office.
Senator W11,1..1AMS. On an application for a State bank, the State
banking commissioner makes the final decision, doesnit he?
Mr. SMrrH. Yes, he does.
Senator "\VILLI.-\MS. With the FDIC being a natural secondary
partned
Mr. SMITH. That's right.
Senator WILLIAMS. A Junior partned Normally a bank will not Le
chartered unless there has been FDIC approval 1
Mr. SMITH. That's right.
Senator "\VILLIAl\lS. I have known situations where a State bank was
chartered without FDIC approval, and then the FDIC felt they had
better catch up to the situation and insure the bank.
I would, at a later date, like to know more about this policy.
Mr. SMITH. All right, sir. I will get myself informed.
Senator ,v1u.1.u1s. I support his nomination, Mr. Chairman.
The CHAIRl\IAX. Senator McIntyre.
Senator McINTYRE. Thank you, Mr. Chairman.
Your biographical sketch says 1969 to August 1972 you were Special
Assistant to the Secretary for Congressional Relations. That is the
Secretary of the Treasury ; right~
Mr. SMITH. Yes, sir.
Senator McINTYRE. So you have been over in the Treasury Department now for what-3 or 4 years~
Mr. S:HITH. About 4½ years.
Senator McINTYRE. In 1971 there was a report rendered-the Hunt
Commission report.
Mr. SMrrH. Yes, sir.
Senator McINTYRE. Can you give this poor committee-we are now
locked in combat with the House conferees over the NOW accounts~an you give us any idea, any remote suspicion, if the administration
1s going to speak to the Hunt Commission report¥
Mr. SMITH. Yes, sir. And I made a pledge to you some sever,11 weeks
ago which I have not fulfilled on. We are in what I hope is the final
lap of our development of a position. We have had a package of recommenclations before the so-called Troika on two occasions in the past
6 weeks. That is a busy group of fellows, as you know. And I think
that in and of itself demonstrates a real interest.
I have instrnrtions from Sec,.darv Shultz to undertake some revisionc; whid1 hnn' !low hPrn mn:lP. ,,...e are procer<liiw to rf'cit·cnlate
tlwm amon:I t hf' finnnf'ia l ag-<•ncir: :-":cl ot-lwr interested ng-encies, and
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I wonld hope that within 10 days or so we can be back to the Troika
and hopefully with a final package that can then be announced sometime in June or early July hopefully.
Senator McINTYRE. I hope that will be carried out.
How are the NOW accounts doingY Or don't you want to talk
about it1
Mr. SMITH. I would say they are fairing reasonbly well.
Senator McINTYRE. Well, I have known Mr. Smith, Mr. Chairman.
He has been down here and he has worked very closely with Charles
Walker, Under Secretary of the Treasnry. I have a high regard fo1·
this gentleman and would hope he would bring the experienC'e he has
had in these years to this very importnnt office.
I would expect that Mr. Smith will be a fine, outstanding Comptroller of the Currency and am happy to support him.
Mr. SMITH. Thank you, Senator.
The CHAIBMAN. Senator Brock.
Senator BROCK. If I may, I wonld just like to echo the Senator from
New Hampshire's stateme11t. I have known Mr. Smith for some time,
and I am delighted with this appointment. I cannot adequately expreRS
my pleasure and my hope that you are going to do as well as I know
you have the caipacity to do.
I only have one area of concern that I would like to mention this
morning, and that is in the area of-I know it is not always within
your direct jurisdiction and authority-bnt thl' rather remarlrnhle
explosion of bankholding companies of late and the concern that many
community banks have with their opportunity for continued existence.
There is a rather sizable element of concern among the so-called
smaller banks, rural banks, community banks, that they are going to
be placed in the position of not being able to compete.
I obviously don't expect a response from you on this particular point
this morning, hut I hope it would be a matter of some concern to you
in your new capacity to be sure that our smaller towns, rural areas
continue to receive the kind of personalized service that they do from
the smaller banks.
I think it is important that they be a part of our institutional strnchtre and we don't end up with a situation in which you only have one
or two or three banking complexes that service an entire State. I tliink
that is something that certainly would cause me a great deal of concern
if it. went to that extent..
Mr. SMITH. I share your concern. I am a native of South Dakota,
and that's all we have is small communitfos, so I am sensitive to the
issue vou speak of.
·
Senator BnocK. I think the point I was making is somewhat in
response to Senator Williams' comment about the duality of our bank~
ing systems. I think that is one of the safeguards we have.
Bnt even int.hat instance a complex of State banks that are created
to get ont of the national hanking svstem so they can go the holding
company route poses rather severe difficulties for a national bank if it
is not of sufficient size to effectively compete.
Mr. SMITH. Right.
~Pnator RnocK. I think that is somethin!!' that warrants our considHn hfo attention over the next yl'ar or so. '·
Mr. SMITH. Thank you, Senntor.
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The CHAIRMAN, Senator Johnston.
Senator JOHNSTON. Mr. Smith, I am also interested in this relationship between the Comptroll~r and the FDIC. Now, you sit on the
Board of the FDIC! Is that right?
Mr. SMITH. Yes, Senator.
·
Senator JOHNSTON. What do you see as the role of the FDIC in
State banks? Should they simply come along and insure what the
State does or should they have a.hand in that?
Mr. SMITH. No, I think they have some responsibility to make some
independent judgments. The directors are, after all, charged with the
fiduciary management of the insurance fund, and they certainly ought
not to go out and insure a situation which they deem for good and
sufficient reason to be a highly risky one, despite what a State superintendent may have done.
· ·· ·
·
·
I think those situations-I am not highly conversant with it-I
think they arise ever so infrequently. When they do, I think they have
to be faced forthrightly.
·
Senator JOHNSTON. Now, the FDIC Board is made up of whoml
·who are the decisionmakers?
Mr. s~nTH. It is made up of two appointive Directors. The Comptroller is a director by provision of statute. There are two other directors. And it further provides that no more than tw:o of the <lirectors
may be of the same political faith, so you tend to have a majority party
chairman, if you will, and a minority director on the Board. It is a
thref'-man Hoard-a th1·ee-p<>rson Board.
SPnator ,TonKf'TON. That's all I lrnw, Mr. Smith, except to say that
while I haven't known you, my colleagues here are so high on you and
your reputation around the Hill is such that I can join in also in
enthusiastically supporting yonr nomination.
·
]\fr. s~nTn. Thank you. You have some very generous colleagues.
The f'n•m:-.rAx. ~e!1ntor Tower.
Senator TowEn. I note on examining your biographical sketch you
have precisely t,hP,same birthday I do,
Therefore, he has got to he a "good guy." ,[Laughter.]
;\,fr. SJ\nTn. Thank you.
.
.
Senator ,JonNSTON. I thong-ht you were much older, .Tohn.
[ Laug-hter.]
The f'HArnM .\N. Same war .
.\ny further questions?
rNo response.]
Tlie C11ArnMAN. Th:rnk you V<'l"V in1wh.
I want to add my testimony that l\fr. Smith has been an outstanding- member of the Treasury's staff and he has done a wonderful job..
I know he will do the same in the Comptroller's office. 'I congratulate
y011 and wish vou great success.
· :'.\fr. SuTTn. Thanlc you ever so much, l\lr. Chairman. I will do my
best.
·
The CHAIRi\IAN. Next we call l\fr. Thomas R. Bomar of Marvland
to he a member of the Federal Home Loan Bank Board for tf1e re- ·
mainer of the term. I believe that carries with it the chairmanship.
Oh, it is to replace Dr. Preston Martin, who has resigned. Are you
automatically Chairman?
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STATEl'tlEBT OF THOMAS R. BOMAR, ROJrlmEE, TO BE A MEHBER
OF THE FEDERAL HOME LOAR BARX BOARD
:\[r. BOMAR. Mr. Chairman, it is my understanding that the President designates one member of the Board, of the three-man Board,
to be Chairman.
The C'HAIR:\IAN. But does not do it in the nomination?
~fr. Bo~IAR. I am not certain of that, Senator.
The CHAIRMAN. I am sure that is right. I was a little puzzled by
t lw fact it just says a member of the Board, but I am sure that is
correct.
"~e are very glad to have you, Mr. Bomar.
By the way, your biographical sketch will be placed in the record.
[The biographical sketch of Mr. Bomar follows:]
BIOGRAPHICAL SKETCH OF THOllAS
R. BOMAR
Current achlrt>ss-8-W0 l'ltt,-flt>ld <'onrt. l'otonm<·. :\111. :!01':i-t.
· Birthplace-Sheruurn, Tex.
Hirth dnte-July 16. 10-&7.
:\larried, two children.
Employment history :
}'rom Sept.. 1, 1970 to present, Organll'.ittlon. Tltli's 111111 Rei,:ponsiblllttes}'edt>rnl Home Loan Mortgage Corporation, Wttshin1'ton. D.C'.; Ext>eutlve Vice
President and Chief l!lxecutlve Officer; Organized and develo1>ed this organization created l.Jy Emergency Home Finance .\ct of 1!170.
.\pr. 1. 1970 to Sept. 1. 1970, Ammr Assodntt>~. Erwlno. Calif. Partnership
with one othn individual. During -this short period th1• prl11d1ml assignment was
as a consultant to the FHLBB and FIIJ, Banks.
Apr. 1, 1967 to Apr. 1, 1970, Larwin Group, Inc., Beverly HUis, Calif. This organization is a holding compnn~· (now owned hy t'X.-\ Fir11111elul Corp., Chicago)
who!'(> Rubsldlarll'R ar1> 1>ngagf'd ln multlpll' formi,: of r1•al t>>'hltl' activity. During
the time at this organization prhnu)· tltle>1 and dntl,•~ werl': \'.P. Trnct Loan
Dt,partment. Brentw•HKl :\lortguiw f'or11. ( owrt~:IJ(t> l·:111ki>ri< 1 : _,·i<·e IH't'l!ident
nnd controller, Brentwood :\fortgugt> Corp.: fln11rwlal ,-i(·t- pr1•sl1IPnt. P,n>n'twood
:\lort,rage Corp.; executive vlee prtsillent., Rt>Xford Fiuundal <'nrp. -/conliltructlon loan mortgagf' bankf'r): fl111rnel11l ,·ll"e pl't':<ldent :incl eilief operating officer.
B:\IC :\Ionagement. Inc. /managt,r of l.arwln mortin1gp lnvt>slor,., a $ IO mllllon
RJ.~IT spedalizlng in constrnctlon and derelopmeut loans In ,·-q•inn• ,-tl\'te:1 <'na~t
to coast) ; vice president, Larwin Mortgage Investors, a REIT vice president,
Larwin Group, Inc. (holding company) .
Sept. 19, 1961 to Apr. 1. 1007. Security Pacific Nfttlo11ul BuuL:. v~~ Angele~.
:\lm111i:-Nnf'nt de'felopment tr11l11e1> to a~istan-t vice prt>,-i«lt>nt. eummt•relnl and real
i>stn te lending offlcl'r.
Education:
Dtl(te
Date ,
MajOf,
Institution -
MBA ________ January 1961. •••••. Manapment and finance __________ _ UCLA.
8$ ..•••••••• January 1960 ••••••. Manaeement and accountin&--- · -··· California State University at Northridp
Calif.
AA •• --- - ···· January 1958 ••••••• _ Business administration_ •••••••• -·. Glendale College, Glendale. Calif.
Graduate••• • • January 1955 ________ ••••••••••• _•••• __ • ·----- -· ••••••• Hoover Hi&h School, Glendale, Calif.
Education 1um<>ra:
Beta Gamma Sigma, Gamma of California, UCLA Graduate School of Business
Administration, 1960 (life member).
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HOUSE OP Rl:PBE8E)'T,&TIVJC8,.
lVashington, D.C., ,4ta1116, 1973.
Senator
JOHN J. SP.ABK.MAN,
Chairman, Senate Committee on Banking, Houaing, and Urban Alfaira,
Senate Ojftoe BuUding, WaaMngton, D.O.
DE.AB Ma. CaAmMAN : Mr. Thomas R. Bomar has been nominated by President
Nixon to serve as Chairman of the Federal Home Loan Bank Board, and his
nomination ls before your committee for approval.
l\Ir. Bomar ls highly regarded by my constituents in the banking profession
and I would like to supplement their support by asking that your committee
give Mr. Bomar every consideration for the appointment.
I appreciate your attention to this matter and I know that your committee will
give careful consideration to this most important appointment.
With kindest personal regards, I remain
Sincerely yours,
GILLIS LoNG,
Member of Oongrea,.
The CHAIRMAN. I am sure your biographicalsketch shows •t hat you
have he.en connected with the Home Loan Bank Board-'for how long 1
Mr. BoMAR. I have been with the Federal 'Home Loan Mortgage
Corporation, Mr. Chairman, since September of 1970, which is an
affiliate of the Board.
The CHAIRMAN. Well, I knew it was the mortgage end of it.
Mr. BOMAR. Yes, sir.
The CHAIRMAN. And all the reports that I have had have been to
the effeet that he has done an excellent job and knows the establishment of that organization gave us a wider mortgage market and more
flexibility, and I think it has been most helpful for home mortgages
in this country. I am interested in your work.
Mr. BOMAR. Thank you.
The CHAIRMAN. Now, let me ask you the questions that I have asked
the others. You have filed with us your financial statement¥
Mr. BoMAR. Mr. Chairman, I have that right here in an envelope.
The CHAIRMAN. Very well; if you will leave it with us. And you
unde1-stand the conditions under which we take it¥
Mr. BoMAR. Yes, sir.
The CHAIRMAN. All right; now, I will ask you this question that
I ha rn asked all of the nominees! and that is if you are con.finned in
this r>0sition will you respond to questions from this committee or any
regularly constituted committee of the Congrt>SS, to a request to appear
and testify 1
Mr. BoMAR. Yes, sir; of course.
The C11Aml\UN. Let me ask you this. While your financial statement
is here, you ha ,·e obtained I presume counsel's finding on it?
l\fr. BoMAR. Yes, Mr. Chairman, I have.
The CnAml\lAN. And do you have any holdings or any interest that
might constitute a conflict of interest?
Mr. BoMAR. No. sir; I do not in my opinion. and the General Counsel
of the Federal Home Loan Bank Board has issued a letter to me in
which he concurs in that jud#?Jl}ent.
The CnAmMAX. All right, Senator Tower.
Senator Towt:R. Mr. Chairman, I hold Mr. Bomar in high re!!ard,
except I note he was born in Sherman, Tex., in Sam ,R ayburn's district
hnt harl the eminent poor judgment to move to California. I trust it
was before lw reached the age of discretion and had no say in the
matter. [Lang-htcr.]
·
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Mr. BoMAR. Yes, sir; that is correct.
Senator TowEtt. I have no questions, Mr. Chairma1\, but be11ator
Brooke has-asked me to submit two questions in writiup; to Mr. 13vmar,
if he would answer those for the reco1-d.
\Ve will provide you with these so you can answer them for b1::11ator
Brooke.
Mr. BOMAR. Yes, sir.
[The following letter was in answer to questions posed by Senator
Brooke.]
FEDERAL Ho~JE
Senator EDWARD
w.
J.,oAN BANK
BO,l.llD,
lVaBhington, D.O., Juiie 7, 1973.
BROOKE,
U.S. Senate,
Washinut<.m, -I).<;..
DEAR SENATO& BROOKE: 'fhe following is respectfully ,SIJUlllitted in response
to your written questions given to me at the Senate :Banking, Housing and
Uri.Jan Alfairs Colllmittee meeting on l\lay 81, 1978 at which the mutter of my
contirn1atlon I.Jy the Senate was considered.
I I.Jelieve tlmt it. is only equital.Jlc for interest rate ceilings to Le the sallle for
sa\·ings and loan associations and cooperative banks. However, tlle nut ure and
timing of any action with respect to rate ceilings on cooperative I.Janks would
dl•peml upon Mtions taken by the .FDIC witb respect to interest rate. ce.lliugs on
mutual savings I.Junks.
,
.
,
1 llo not think that it is desirable at this time to raise the passbook interest
rate ceiling for savings and loan associations. However, ·ruy JJosition on this
matter woulrl have to depend upon the trend in other intereHt ratt>s nnd. most
importantly, interest rute ceilings on I.Junks. If t11e latter were to IJe raised by
tlie F,ideral Reserve Board and FDIC, I would suppo1·t parallel action t•J maintain the colllpetitive position of savings and Ivan associations am! to prl',·.,11t an
a(h·erse impact on the flow of housing credit.
While most savings and loan associations would tn<::renHe interest. · 1,,te;o paid
on savings accounts, many individual associations wonlrl still find themselves
hard pressed to pay higher rates or could do so only at tl.ie exve11,-;e of needed
allditimtH to rp,-;en·Ps. I\'ortnnately, savings u11d loan 11ssociat~o11s nrP r·oJ11 in11ing
to improve their portfolio yields, partly as a result of expanded loan nncl im·estm('nt powers. ',
·
As you know, the statQtory responsibilities for rate ceilings for savings and
loan associations reside in the Board. Board actions in this area are liu~ Pd ,m a
t110rough analysis of puhlic policy considerations, such as impact on thc li,1nidity
and so1v('ncy of associations, the flow of housing credit, and eqnity to tl!e !S:tYer.
· "Sincerely, · ·
'
l ,,
THOMAS R. BOMAR, Ohair1111t11.
Tlw Cn,nnrnN.Senittor Proxmire.
Senntor PnnXl\mm. )fr. Domar, von were Chief Exe<'nti\·e··<)Akrr nf
the FNlPrnl Home Loan Mortgage Corporation?
- · ,. , ,
· ~fr. HmrAR. I am presently, Senator. ,
Senator PRox..·,nmi:. Yon have been, as I said~ since Repfomhrr 1. 1n7o.
That is almost~ vears.
t
'
·
i'\fr. Ro:'\·fAn. y·es~ sir.
, · ,, ·• · ·
Srnator Pnoxllmm. "What does tho Federal Home Loan Mortgage
Corporation do, for the record?
:\fr. Bmr,R. The FPclc.ml Home J.,oall Mortgrige Corporation was
t'r 0 rt<,d hv rin act of Con!:!"ress, the Emer.Q"encv Home Finance Act of
1fl70, n ncl its cha rte red purpose is to make. a sccondarv market in
residential mortg-ages.
· .
·
,
·
· Senator PnoxJ1mm. As you said, this was created by statute. You
have heen · the only Chief Executive Officer and Executive Vice
President?
·. •, ,,.
Mr. BOJ1£An. Yes, Senator. Correct.
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Senator PROXMIRE. You started, you organized, you established this
agency as I understand it?
Mr. Bo11rAR. Yes, sir.
Senator PROXMIRE. What do you see as the principal duty of the
Home Loan Bank Board now or the principal responsibility and
obligation?
Mr. BoMAR. The Federal Home Loan Bank Board has a number of
functions, Senator, as you are aware. It is a regulatory agency. The
Federal Home Loan Bank Board serves as the administrative head of
the Federal Savings and Loan Insurance Corporation. The three members of the Federal Home Loan Bank Board are the Directors of the
Federal Home Loan Mortgage Corporation. And it is a Federal regulatory body chartering Federal savings and loan associations, establishing Federal Savings and Loan Insurance Corporation regulations,
administering the 12 Federal home loan banks and the Federal Home
Loan )fortgage Corporation.
Senator PROXMIRE. As you know, the principal concern that many
of us have with respect to this agency is what role it can play in stimulating housing, and we are very conscious on this committee of the
importance of housing for our economy and the failure that our society
has suffered up until recently at least in providing adequate housing
for our people.
In this respect, what do you see as the principal problems for the
Home Loan Bank Board, two or three problems, over the next couple
of years?
Mr. BoMAR. Well, providing funds for housing, as you indicate,
Senator, has always been a very tough problem for us in this country
and countries all over the work, and certainly we need to do much
better.
I would be hopeful that the Federal Home Loan Bank Board could
work with HUD advising as it can on the establishment of its programs, that it could enact regulations and pursue policies which
would help stabilize funds flows to housing on the best possible prices.
And that is a very complex undertaking, sir.
Senator Pnox11nRE. Well, how can that be accomplished best under
present circumstances? One of the things that bothers me is that there
1s evidence that the housing boom that we enjoyed for a couple of
years mav be reaching a conclusion. There is pressure on interest rates
that seems to be great. They have been moving up sharply.
Mr. Bmc.\R. Yes.
Senator Pnox11nRF:. Not in the mortgage area, but in other areas,
and mortgages are likely to follow. What do you think the Home
Loan Bank Board can do about it?
Mr. Bo11rAR. Well, with the Federal Home Loan Mortgage Corporation which was created almost 3 years ago now we have a device so
as to be able to fuel money into the housing market in this fashion.
Second, the 12 Federal home loan banks have in the past successfully-and we think that we can do so again and perhaps even more
succes-;fully-pnmped sufficient funds in the housing market by raising
it in the capital market to help stabilize funds flows.
We understand that there will be questions forthcoming with regard to the structure of financi al institutions and what might be done
96-912-73-3
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in order to stabilize the opportunity for thrift institutions to raise
funds so as to stabilize the mortgage market.
Senator PROXMIRE. Your agency is so critical in housing construction. Just vital. I am very hopeful that you will be a real champion
of housing in the capacity you are moving mto.
Let me ask you briefly about the Larwin Group, Inc., BeYerly Hills,
Calif.
Mr. BoMAR. Yes, sir.
Senator ·PROXMIRE. That is a holding company as I understand it
and engaged in a number of forms of real estate activity. You were
associated with that organization for 3 years. Is that right 1
Mr. BoMAR. Yes, Senator.
Senator PROXMIRE. 1967 through 1970. In fact, that was the last
private occupation you had before you came to be Chief Executive
Officer of the Home Loan Mortgage Corporation.
Mr. BoMAR. There was an interim period for about 6 months after
I left the Larwin group and before I cnme with the Federal Home
Loan Mortgage Corporation where I was a partner with another
fellow in a consulting firm. But except for thatrSenator PROXMIRE. But you had before the consulting job 3 years
with Larwin?
Mr. BoMAR. Yes.
Senator PROXMIRE. What did Larwin do 1 What was their mission t
Mr. BoMAR. Larwin's principal activity was as a residential-or as a
homebuilder. In addition to that, they had a commercial properties
division and still do. They had a mortagage banking division, a real
estate investment trust management coml?any, an insurance agency
operation, and various other facets relatmg to the construction of
homes and commercial properties, management and financing of them.
Senator PROXMIRE. You were vice president and controller of various of these subsidiaries 1 Is that correct 1
Mr. BoMAR. Larwin has a number of subsidiaries. I was the vice
president of the holding company when I left. I had been the financial
vice president and chief operating officer of the trust management
company. I hnd been vice president of the mortgage company, executive vice president of another one of the construction-oriented mortgage companies. I was an officer of various of the companies generally
dealing with the financial aspects of the organization.
Senator PROXMIRE. You certainly have had a lot of experience for
a man of your age. You are still a young man. Much of this experience was when you were only 30 years old, when, I guess, you took
over in these capacities for Larwin. Very impressive.
Let me ask you the same question I asked the previous witness
because you are going to be an important figure in an independent
agency. Have you submitted a resignation to the White House in any
form?
Mr. BOMAR. No, Senator, I have not.
Senator Pnoxl\nRE. Would you submit such a resignation if
requested 1
l\fr. Bo111AR. If I understand the question properly, if I wasSenator PnoxMIRE. I didn't phrase the question properly. Let me
say again would you submit a resignation that could be acted upon at
any time by the President if requested to do sot
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Mr. BoMAR. I will have to respond, Senator, as Mr. Smith did.
Nothing has been requested of that nature. I certainly don't anticipate
that and see no reason such would be requested. I have never heard
of that being done except at the end of the last administration when
a number of people did that. I see no particular benefit or reason to
do anything like that. But if requested-Senator PROXMIRE. If asked, would you submit it or not 1
Mr. BoMAR. If I were asked to resign for good reason, I would
resign.
Senator PRox:mRE. Well, that's something else. I am not asking that
question. I am asking if you were asked to submit a resignation in.
advance that could be acted upon at any time by the President.
You see, what concerns me as a iMember of Congress is that this is an
independent agency, and it's one thing for the President to be able to
ask for .your resignation and secure it, and that may be perfectly
proper. It's something else for the President-any President; I'm not
talking about the present President-any President to have in his
power the capacity just to cut you off with that.
Mr. BOMAR. Yes, sir.
Senator PROXMIRE. If he asks you to resign, you might decide to do
so or not to do so. On the other hand, if the President has an undated
resignation in his possession and can act to cut you off, then the power
that the Executive has over this independent agency would be very
considerable.
Mr. BoMAR. Yes, that's correct.
Senator PROXMIRE. My question is: Would you if ~nested submit
that kind of a conditional-or that kind of an unconditional I should
say-resignation, signed resignation form, in advance to the President 1
Mr. BOMAR. Senator, this 1s an area that we are dealing with that I
really do not have great familiarity with what is the proper thing to
do. I am not aware of any circumstances under which that would he
requested, and I cannot conceive of a situation in which I would comply with that kind of request.
But I really am not aware of all the particulars under which that
kind of request might be made and am reluctant to say that I absolutely would not do it under any circumstances, not being familiar
enough with what all the circumstances might be.
Senator PROXMIRE. So what you are saymg is that you might if the
President should request it and the circumstances should indicate it
wise in your view-you might submit such a resignation signed that
he could act on when he wished to do so 1
Mr. BoMAR. Sir, I would be very reluctant to do anything like that,
and it would be my ex.rectation that I would not do that. But not having ever considered this, not being aware of the ramifications of it, it is
difficult for me to say that I absolutely under any set of circumstances
would not do that.
I think if I was asked to resign I would simply resign.
Senator PROXMIRE. I understood Mr. Smith to say he would do so
without qualifications. In other words, he would not submit such a
resignation form to the President for him to use, that he would not do
so. You say you haven't considered it and you probably would not
agree to that kind of a request but you don't know the circumstances
and it is conceivable that you might. Is that right i
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Mr. BOMAR. Senator, I think I would have to say that was the
situation. I would like to ask the General Counsel of the Board's
opinion about this kind of situation and gain some kind of insight
into the kind of particulars that might be forthcoming and would
be glad to submit that kind of statement for the record for you if you
would like.
Senator PROXMIRE. I hope so. "\Ve might want to act on your nomination this morning. Frankly, I would be opposed to your nomination unless you would give an unequivocal statement that you would
not submit such a resignation of the kind described to the President,
and I would do my best to hold it up on the floor. That is something
you might not be concerned about. But that is my position on it, and
you should know it.
I would hope before we act on your nomination on the floor that
we could get word from you one way or the other.
Mr. BOMAR. Senator, if I could be allowed to do so, 'l would be very
happy to. There is a counsel for the Board, the Mortgage Corporation,
in the room, and some other people who have experience in this area,
and after the questioning is completed if I might be permitted just
a moment to ask them the answer to this particular question, ask their
advice on it, I will be happy to respond immediately.
Senator PROXMIRE. Thank you.
Senator TOWER. If the Senator would yield, l\fr. Bomar has said
he can't conceive of a circumstance under which he would do this,
and to me that is an adequate answer. Because we can't foresee what
circumstances might arise. But as long as a man says that he can't
conceive of any circumstances in which he would do this, I think that
is adequate.
Senator PnoxMIRE. May I say to the Senator from Texas that
doesn't satisfy me. I think Mr. Smith's answer did. The reason this
doesn't satisfy me is I just want an unequivocal answer. I think l\lr.
Bomar does seem to be well qualified. He is a young man who has
done brilliantly in business and done very well in his Government
capacity. But I think this is so important, the independence of this
agency, and this is a device which would subvert it, that I would want
an unequivocal, clear-cut answer, not a conditional answer that circumstances might develop that he can't imagine now.
l\Ir. BoMAR. Senator, I understand the principle that yon are driving at. It is certainly a very worthy principle. And I anticipate that
I can give you that kind of unequivocal answer. Bnt I don't want to
give unequivocal answers about questions about which I do not have
sufficient familiarity, and this is one of those.
Senator PROXMIRE. Thank you, Mr. Chairman.
The CHAIRMAN. Senator Williams.
Senator WILLIAMS. Thank you, Mr. Chairman.
There is just one problem I face with this line of inquiry on resignation, and I have been a party to it with the prior nominee. I don't believe that in the past any Executive has asked for blanket resignations
from members of independent agencies. Has there been any precedent?
Senator PnoxJ\lIRE. Well, we have, of course, the experience at the
lw<:rinning of this administration where the President requested top
officials in all the executive department to submit resignations. I have
no objection to that. I understand that.
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Senator WILLIAMS. But there was nothing to suggest that any appointees to independent agencies-Senator PROXMIRE. No, and Mr. Smith made that very clear that he
didn't think he would be asked to do it. He didn't have any notion
that that would be asked. But I want to make sure that that doesn't
develop-Senator WILLIAMS. I just want t o Senator PRoxMIRE. The Senator from New Jersey is correct in his
implication that there is no evidence that there is any intention on the
part of the administration.
Senator WILLIAMS. I just wanted to clarify that, and, therefore, we
are in a sense questioning hypothetically and in a sense academically,
but it is an important question. We are not pointing any finger of
accusation that this might be imminent.
Senator Proxmire mentioned earlier that he can't recall when so
many nominees for important positions have been before this committee at one session, and I have noticed that too. I also noticed that
without exception all of the nominees today have a depth of background and experience in the areas to which they have been nominated,
which is good news indeed.
Senator PROXMIRE. If the Senator would yield, I was struck by the
same thing. These are the best qualified group of nominees as a group
that I can recall in the 15 years I have been on this committee. I think
that it is remarkable. You all have fine backgrounds in the Government, you are career people. I think the President has done extraordinarily well.
Senator ·w1LLIAMS. That was the point I was going to make too. I
agree.
There is one question I would like to ask Mr. Bomar.
Mr. BoMAR. Yes, sir.
Senator Wn,LIAMS. In the secondary market activities of the Federal
Home Loan Mortgage Corporation, what residential housing does the
Corporation reach? Does it reach the programed housing-235, for
example? Is this one of the residential housing areas that there is a
secondarv market for?
Mr. BoMAR. Yes, Senator. The corporation is limited in its ability
to bnv residential mortgages, being those that either are FHA or
VA, or if they are conventional, not having Government insurance or
guarant.pe of some sort, then the amounts of those loans, the dollar
amounts of those loans, must be in general conformity with the limits
set under 203(b) and section 207 of the Housing Act.
,S enator "\VILLIAMS. Is 235 within those limits as part of-Mr. BoMAR. Yes, sir. The mortgage corporation has bought a lot
of 235 loans.
Senator WILLIAMS. How has the moratorium announced on February
11 affected the activity of the corporation?
Mr. BOMAR. The activity of the corporation has been very heavy this
year. The corporation has done over $3 billion worth of business since
its formation, and the principal activity of the mortirage corporation
is moving into the conventional loan area, and the volume of business
in the FHA-VA sector is much less.
There-fore, there is no impact, and the 235's when the moratorium
was established-there were many sti11 in the pipeline, and even though
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the corporation might still be in the FHA-VA business, I doubt if
that would have had an impact by now.
Senator WILLIAMS. When you say you are increasing your activity
in the conventional residential mortgage marketMr. BOMAR. Yes, sir.
Senator WILLIAMS. This is not housing which is designed for lower
income families, is it i
Mr. Bmun. Well, a great deal of it is. The mortgage corporation's
average loan amount on a single family house in the conventional sector
is around $26,000 ,t o $'27 ,000. So we are dealing with the lower priced
housing market predominantly.
Senator WILLIAMS. What is that figure, $26,000? Is that the
mortgagei
Mr. BOMAR. That is the approximate average mortgage amount; yes,
sir.
Senator WILLIAMS. What would the average selling price of the
house be if that were the mortgage ?
Mr. BoMAR. It is not very much more than that in most instances
since a great proportion of the volume is in the new 95-percent conventional loan that comes to private mortgage insurance. I don't have
a figure on what the average home sale price is, but most of these loans
are from 80 to 95 percent, the great proportion of them being the 95percent. loan-t.o-valne ratio loans. So we are dealing with the morecertainly not low priced housing when you get into the $30,000 range
but more reasonably priced housing.
Senator WILLIAMS. What would be the interest rate on the mortgages supporting that kind of housing?
Mr. BOJ',IAR. Sir, that depends upon the market. The prices that the
mortgage corporation posts are generally in line with the market at
that particular time.
Senator WILLIAMS. It's hard to talk averages, but try to. -what would
be the average right now?
Mr. BoMAR. Well, as of right now the corporation has seven loan
purchase programs, and for the FHA-VA prog-rams those prices are
stated in terms of percentages of par, and the price is about 92½ cents
or 92½ percent of par.
There is a participation program which is the most active in which
savings and loan associations or commercial banks sell up to 85 percent
interest in packages of either all single family loans or single family
loans combined with apartment houses. Those are priced at a net yield
to the corporation, and that current price, sir, is 73/g percent. No, 73/4
percent. Excuse me.
The prices have chan~cd in the last week, and I'm not snre if it was
7¾ or 73/g. I would have to check that. But approximately.
For conventional loans tha,t is priced on a different basis, conventional home loans, and that is currently priced at 8¼ percent, which
nets the corporation after servicing 7% percent.
So there is a whole range of prices depending upon how those individual institutions, whether they be banks or savings and loans, choose
to sell.
Senator "\Vn,LIAMS. It seems to me without some support of the interest payment on their mortgages the lower income people are just
being-new housing is just plain not available.
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Mr. BoMAR. It is extremely difficult, Senator. When mortgage rates
begin to increase, it certainly forces people out of the market.
With the cost of constructing a home today, all the way from the
raw land prices to the development stage, it's a very expeilSlve process,
and it is a critical problem.
Senator WILLIAMS. Do you hear in your profession-among :your
professional acquaintances in Government or out--how the admmistration's study of the present housing programs is going 1
Mr. BoMAR. Sir, I have not heard.
Senator Wrr..LIAMS. You have not~
Mr. BOMAR. The Federal Home Loan Bank Board and the Federal
Home Loan Mortgage Corporation have responded to questions put to
us by the HUD group with regard to certain aspects, what our opinions
might be in these areas. We have responded to those questions. But I
don't have any idea of what their overall status is.
Senator WILLIAMS. Thank you very much.
Mr. BoMAR. Yes, sir.
The CHAIRMAN. Any further questions i
Senator PROXMIRE. Mr. Chairman, I have a couple of questions Senator Stevenson wants to ask for the record directed to Mr. Bomar.
Mr. BmrAR. Yes, sir.
[The questions and answers referred to and a letter from the U.S.
Sa,·ings and Loan League regarding Mr. Bomar's nomination follow:]
FEDERAL HOME Lo.A.N BANK Bo.A.Bo,
Waehington, D .O.
Hon. ADLAI E. STEVENSON III,
U.S. Senate,
Waehington, D.O.
DEAR SEN.A.TOR STEVENSON: The following ls respectfully submitted in response
to your written questions given to me at the Senate Banking, Housing and
Urban Affairs Committee meeting on May 31, 1973, at which the matter of my
confirmation by the Senate was considered.
The questions are prefaced with the following statement: "The regulations
of the Federal Home Loan Bank Board state that it ls the Board's policy to
follow State law in decitling whether to allow Federal savings and loans to
establish branch offices."
'l'his statement is not entirely accurate. The Board's policy ls set forth in
Section 556.5 of the Rules and Regulations for the Federal Savings and Loan
System, paragraph (b) (1) of which stat!'s in pertinent part: "As a gmeral
policy, the Board permits branches and mobile .facilities by Federal savings
and loan associations in a particular State if the State law, or State practice
in absence of statutory prohibition, permits savings and loan associations, savings banks, or commercial banks of the State to establish branches in such
State or to contlnct chain, group, or affiliate operations."
Thus, the Board's policy also takes into account State law and practice regarding branching by savings banks and commercial banks and regarding chain,
group, anti affiliate operations. These additional matters are directly relevant
in the State of Illinois.
The reasons for the Board's decision of January 12, 197'3, were set out in
Actinl{ Chairman Kamp's letter of that date to all members of the Illinois Congressional Delegation. A copy of the letter is attached for your convenience.
The Board's policy should not, in my judgment, "follow state policy on branching" in instances in which stat!' policy would he inconsistent with the pnrpo,:es of
the Home Owners' Loan Act of 1933, which Congress has charged the Board
with atlministering. If there is a community, in Illinois or any other state, where
the Board finds a necessity for a facility of a local mutual thrift institution
which pl'ople may use to invest their funds and finance their homes, and the
Board finds that such a facility has a reasonable probability of usefulness and
success without undue injury to properly conducted existing local thrift and
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home-financing lnstttutlons, the Board would be acting in full accord with the
purposes of the ·A ct when it permitted a Federal savings and loan association to
establish a branch there. I would suggest that, if such a facility could not be
established by a state-chartered savings and loan institution because of restrictions of state law or policy, the principle of substantial competitive equallty
could be served by amending the state law or Polley which, if observed by the
Federal authority, would result in the denial of a needed public service.
There ls nothing in the letter or spirit of the Board's regulations or statements
of Polley to suggest wspension of implementation of the Board's decision of January 12 as formalized by Resolution No. 73-178, of February 7, '1973. (A copy of
the letter ls also attached. )
The Board's position, for reasons indicated above, has been established independently of any pending or future enactment of the Illinois legislature.
In a number of recent cases Federal associations located in Illinois have in
etrect "relocated", or sought to relocate, their home offices by establishing branch
offices while retaining their existing home offices and redesignating the new
!facilities as home offices and the old ones as branch offices. In such a case, the
community from which the home office is relocated is not deprived of any sa'l"lngs
and loan services, as paragraph (a) of Section 545.14 of the Rules and Regulations for the Federal Savings and Loan System provides: "Any business of a
Federal association, as authorized by the association's board of directors, may
be transacted at a branch office."
Since the same services may be provided by a home office and a branch office,
it does not appear necessary to change the regulations "to consider the impact of
the move on the community from which the S&L proposes to move" in this kind
of case.
The simple relocation of an office of a Federal association which takes away
a facility from a community is another matter. In such a case, our present
regulations do not specifically require that the move's impact on that community
be considered or that notice be provided in that community. Appropriate amendments may be desirable and I will direct the staff to prepare such amendmC'nts
for prompt consideration by the Board.
Sincerely,
THOMAS R. BOMAR, Chairman,
LETTEB TO ALL MEMBERS OF THE ILLINOIS CONGRESSIONAL DELEGATION'
The Federal Home Loan Bank Board has decided today to permit applications
for de novo branching to be filed after January 31, 1973, by Federal savings and
loan associations in Illinois. It is the present intention of the Board to permit
Federal associations to file only one branch or other facility application during
1973. The purpose of this letter is to inform you of the Board's decision and to
set forth the legal basis and summarize the facts which the Board has considered in making its decision.
In Section 5(a) of the Home Owners' Loan Act of 1933 the Congress clelegated
to the Federal Home Loan Bank Board the exclusive authority to charter and
regulate Federal savings and loan associations. This regulatory authority includes the power to approve or deny applications from Federal savings and loan
associations to establish branches without reference to state law governing
branching by state-chartered savings and loan associations or banks.
As a matter of general pollcy rather than statutory requirement, the Board considers a state's branching practices in determining its branching policies for
Federal savings and loan associations in the state. This Board policy is set forth
in Section 556.5 of the Rules and Regulations for the Federal Savings and Loan
System. Paragraph ( b) (1) of this section states in part:
"As a general policy, the Board permits ·b ranches and mobile facilities by
Federal savings and loan associations in a particular State if the 'State law, or
State practice ln absence of statutory prohibition, ,permits savings and loan
associations, savings banks, or commercial banks of the ,S tate to establish
branches in such State or to conduct chain, group, or affiliate operations."
Illinois is presently the only State in which the Board does not permit Federal
savings and loan associations to branch de novo. The Board now believes it
necessary for competitive reasons to permit Federal associations in Illinois to
branch de novo. The Boarcl's position is based upon facts which show a multi•
plication of State-approved savings and loan and banking facilities, and the
existence of substantial affiliate hanking operations in Illinois.
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ILLINOIS SAVINGS AND LOAN FACILITY ACT
Following an amendment to the Illinois Constitution, the legislature in late
197'1 passed the "Facility Act," which authorized the Illinois Savings and Loan
Commissioner to permit the establishment of a "facility" in the case of a supervisory merger or incident to relocation by an association of its main office
[32 Ill. Ann. Stats. Section 709). A "facility," as defined in the Act, may not
originate mortgage loans, but may exercise virtually all of the other powers
of a savings and loan association.
The Cowmbsiouer's policy of merging, for su1.1ervisory reasons, smaller state
associations into larger 011es is allowing state nssociaNons to incrPnise their area
of operations by retaining the former hollle oflke of the smaller us.,oeiation as a
"facility" following the werger. Unlike the Board, the Commis:-foner does nat
require the smaller associntion then to be in unsound flmrncial contlitiou in order
to consider the transaction as a supervisory merger.
J.t is importm1t to note that a "facility" may be establiRhed under the Facility
Act incident to any relocation ·by a smte-chartered association of its main office.
This f.s in shar1> contrust to ,the Board's policy for J,'ederal associa1:ion8 which
permits the esrablishment of a branch in a main office relocation only if the
main office was In a declining low-income Inner-city neighborhood.
The Board is aware that some 39 state-chartered n;:sociations have alrt'Rdy
established "fad Ii ties·• or fllt'<l petitions under the Act to do i,;o.
WhHe the J,'acility Act bas been iu eff'eot only a short while, ,the competitive
disadvantages it create>< for Federal associations are obvious. It is appa·rent that
state-chartered a!>-sociations nre using the Act to extend ,their operations into new
prime markets whilt> 1-'t"<leral aS80Ciations remniu lock~l into tht>ir pre:,ent areas
with little opportunity to tnp ishifting sources of sa \'ings.
CHAIN OB OBOUP BANKING
The long-standing practice ot "chain banking" has been well described by
Chairman Wright Patman "as ,the situation where the same Individual or individuals controls two or more banks."• Chain banking may also be known as
"group" banking.
There are three principal advantages of chain banking: large loans are split
among members of a chain, so that lending llmlts are not violated ; banks in a
chain share services such as computer time and advertising expenses, thus
reducing costs ; and the leading bank in the chain acts as correspondent bank
for the others, again reducing costs. The effects of chain banking are substantially the same as those of branch banking-the chain participants are able to
share resources and tap larger financial markets.
The Board has been able to identify, as of August 1972, at least 29 separate
groups of banks in Illinois which it believes are affiliated through interlocking
directors and officers and operated as chains. Together these groups control 130
banks, and as of August 1972, bad been issued permits or bad applications on
file for permission to organize 22 additional banks, or a total of 171 banks. Four
examples of these groups are •the Heritage Bank Group, the Beverly Group, the
Streans Group and the Progressive Bankers Group. Based on the evidence that
the Board has seen on the interlocking directors and officers of the 29 groups,
the Board has no doubt that many other groups exist. The Illinois Bankers
Association has recently reported that there are approlJJimately 100 different
(lf'oups, wMch include over one third of the bank.~ in IlliMi.~. •
J,'e<leral associations are prohibited from having interlocking directors and
officers. and 111-< a rpsnlt of their mutual form of organization common control
throui,:h share capital is not possible.
HOLDING CO~IPANY OPERATIO::',S
Geueral nankshares Corporation, a multipl<• bank holrling company. owns at
least 89% of the stock of three commercial banks in Illinois (the Bank of Benton,
the Illinois Stnte Bnnk of Quincy and the Bank of Zeigler). Financial General
Bankshares appears to be affiliated with four banks of the Heritage Group.
1
January 2, 1963 letter to the Small Business Committee of the House of Representatives.
Report of the Illlnols Bankers Association Bank Structure Committee to the Council
of Administration of the Assoctatton on December 12. 1972.
1
96-912-73,--4
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Bass Financial Corporation, a registered savings and loan holding company,
appears to own and control two state-chartered stock associations in Illinois
(Pa·rk Forest Savings and Loan Association and Unity Savings Association,
Chicago). There are 14 other state chartered associations which are controlled
by savings and loan holding companies. Although no holding company, other than
Bass, controls more than one association in Illinois, it is likely that the savings
and loan holding companies will also acquire control of other Illinois associations.
]j'ederal associations, which are all mutually owned, are prohibited from being
part of a holding company by Section 408 (i) of the National Housing Act, and
are able to extend their operations only through separate facilities of the same
entry.
DRIVE·I:-1/PEDESTRIAN FACILITIES
Under the 1970 revisions to the Illinois Banking Act, commereial banks may
establish a drive-in facility (which may also serve walk-in customers) within
1500 feet of its home office [16½ Ill. Anu. Stats. Section 10:i ( lri) ] . A bank facility
is similar to an Illinois savings and loan fa cility; it is prohibited only from
accepting and approving loan applications. 'l'hese facilties are in effe-ct permitting
banks to branch doubling their number of offices. In a highly concentrated market, such as downtown Chicago where eight banks have established drive-in/
pedestrian facilities, it is difficult to distinguish these facilities from branch offices. It is also important to note that these facilities can be established by banks
without obtaining the approval of any state banking official.
CONCLUSION
Through the use of chain and group banking, drive-in/pedestrian facilities and
bank holding companies, there now exists in Illinois affiliate banking and a multiplication of bank offices. Through the use of main office relocations without
Hmi.tation to declining neighborhoods, supervisory mergers under less stringent
conditions, and savings and 'loan holding companies, there is also now a multiplication of offices by state-chartered savings and loan associations in Illinois.
As a result Federal savings and loan associations are at a severe and increasing
competitive disadvantage with respect to both commercial banks and state chartered savings and loa•n associations in Ililnois. Federal associations in Illinois
are at a severe and increasing competitive disadvantage with respect to both
commercial banks and state chartered savings and loan assooiaions in Illinois.
Federl associations in Illinois recognize this competitive disadvantage and are
demanding that the Board promptly permit de novo branching.
The Board now needs to apply to Federal associations in Illinois its general
policy with respect to branching set forth in Section 556.5 of the Rules and
Regulations for the Federal Savings and Loan System. In applying this policy
the Board would permit de novo branching after January 31, 1973 where these
criteria are met: a need for the branch in the community to be served; a reasonable probability of success and no "undue injury" to existing thrift institutions
properly conducted ['R eg. Section 545.14(c) ]. The Board will not consider applications to establish branches to be located more than 100 miles from the home
office of the association [Reg. Section 556.5(-b) (3) ]. In addition, during 1973 the
Board presently Intends to limit Federal associations in Illinois to one application for a full branch or other facility. By th-is limitaiton, the Board expects to
be able ,t o process applications on a fair and orderly basis.
Sincerely yours,
0.ABL 0. lu.M:P, Jr.,
Acting Ohairman.
FEDERAL HOME LoAN BANK BOARD
No. 73-178
Date: February 7, 1973.
Federal Savings and Loan Associations
STATEMENT OF POLICY REGARDING APPLICATIONS FOB PERMISSION TO ESTABLISH
BRANCH OFFICES AND MOBILE FACILITIES IN ILLINOIS
The Federal Home Loan Bank Board, in considering its policy regarding
applications by Federal savings and loan associations for permission to establish de novo branch offices, mobile facilities, and satellite offices in Illinois, has
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determined that commercial banks in Illinois are conducting affiliate operations.
Accordingly, under the Board's statement of policy set out in paragraph (b) (1)
of § 556.5 of the Rules and Regulations for the Federal Savings and Loan
System (12 OFR 556.5(b) (1)), de novo branch offices, mobile facilities, and
satellite offices of Federal associations in Illinois are now, for the first time,
permitted by the Board. However, in order to effect an orderly transition, the
Board hereby imposes the following limitations with respect to applications by
Federal associations for permission to establish de novo branch offices, mobile
facilities, and satellite offices in Illinois:
1. The Board will process and consider only such applications as are filed on
or after February 1, 1973.
2. During 1973, the Board will process and consider only one such application by each association; this limitation will apply with respect to any such
application filed on or before December 31, 1973. If more than one such application is filed during 1973, all but the earliest application will be returned to
the applicant.
3. In connection with the approval of any such application, the Board will
provide, as a condition of such approval, that the branch office, mobile facility,
or satellite office applied for shall not be opened prior to July 1, 1973.
JACK CABTEB, Secretary.
UNITED STATES SAVl:'>GS
ANII
LoAX LEAGUE.
Washington, D .C., May 23, 1973.
Senator JOHN ~PARKMAN,
Chairman, Senate Banking, Housing and Urban Affairs Committee, N ew Sr·nate
Office Building, Washington, D.C.
DEAR MR. CHAIRMAN: The United States Savings and Loan League is plea~ed
to endorse the nomination of Thomas Bomar to serve as l\lemher 1rnd Clwir1111111
of the Ffc'deral Home Loan Bank Hoard. Mr. Bomar is wt•ll •1nalified by experi Pll<'P
and has achieved an outstanding record as Chief Executivf' Officer of the F edt-ra l
Home Loan Mort1rnge Corporation.
We are confident he will provide great leadership in the impor,tant JIO:-ition to
which he has been nominated.
Sincerely,
STEPHt;N SLIPHF.R.
Legislative Director.
The CHAIRMAN. Thank you very much, Mr. Bomar. "\Ve wish you
well.
Mr. BoMAR. Mr. Chairman, can I - The CHAIRMAN. I certainly endorse the statements that have been
made praising your work in your present position.
Mr. BoMAR. Thank you, sir. If I may just say one thing, I will
respond to Senator Proxmire's direct question in just a few minutes.
I will send it up to you.
The CHAIRMAN. Very well.
Senator PROXMIRE. Thank you very much. I appreciate it.
The CHAIRMAN. Thank you very much.
Our next nominee is Mr. Grady Perry, Jr., to be a member of the
Federal Home Loan Bank Board for a term of 4 years expiring
June 30, 1977, to take the place of Thomas Hal Clarke who is retiring.
Mr. Perry, we have your financial statement. I assume you have a
certificate from the counsel to the effect that there is no conflict of
interest in your holdings in the position to which you haYe lwrn
appointed.
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STATEMENT OF GRADY PERRY, lR., NOMINEE TO BE A MEMBER
OF THE FEDERAL HOME LOAN BANK BOARD
Mr. PERHY. Mr. Chairman, I have a letter from Mr. Charles Allen
who is the general counsel to the Federal Home Loan Bank Board
which is attached with my financial statement that indicates that there
is a possibility of a conflict with reference to stockholdings of myself
and my family in certain commercial banks in the State of Alabama.
Mr. Allen has informed me that these conflicts can be eliminated by the
creation of a blind, no-control trust that would completely remove any
administration, interest, control or other association with these holdings during my tenure as a member of the Federal Home Loan Board.
This would be done promptly upon m:y confirmation.
Further, I would disqualify myself in passing upon applications
involving insured institutions or persons seeking to organize such institutions which may be competitors or potential competitors of the commercial banks in which I, my wife or my children have an interest.
The CHAIRMAN. And you agree to do all of that?
Mr. PERRY, Yes, sir; I agree to do that.
The CHAIRMAN. You have heard the question I have put to the other
nominees. I will ask you the same. If confirmed in this position, will
you respond to requests of committees, this committee and other committees of Congress, to appear and testify 1
Mr. PERRY. Absolutely, Senator; without reservation.
The CHAIRMAN. We will insert Mr. Perry's biographical sketch in
the record at this point.
[The information follows:]
BIOGRAPHICAL SKETCH OF GRADY PEBBY,
JB.
Present address-9208 Twin Hill Lane, Laurel, Md. 20810.
Birthplace-Fyffe, Ala.
Birth date-February 23, 1931.
Family-Married to Louise Wallace of Gadsden, Ala. Two sons: Jeffrey Perry,
age 14, and Gregory Perry, age 9.
Employment history :
July 1965 to present-Congressional Liaison Officer, Federal Home Loan Bank
Board, Washington, D.C. The Congressional Liaison Officer acts as liaison between the Board and the Congress, government agencies, the savings and loan
industry, and the agency staff. Advises and consults with the Board on issues and
policies before the Board. Participates in the formulation of Board policy, with
emphasis on legislation.
February 1957-.July 1965-Chief Clerk, Subcommittee on Housing, Committee
on Banking and Currency, U.S. House of Representatives, Washington, D.C.
January 1955-February 1957-Legislative Assistant to Congressman Albert
Rains (Ala.).
September 1949-April 1952-Clerk, Document Room, House of Representatives, Washington, D.C.
Military experience :
April 1952-April 1954-Served in the United States Marine Corps with 13
months service in Korea.
Education-Undergraduate work at George Washington University and American University in Business Administration. Graduate courses in Real Estate at
American University.
The CHAIRMAN, You have been with the Home Loan Bank Board
how long?
Mr. PERRY. Senator, I went with the Federal Home Loan Bank
Board in July 1965.
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The CHAIRMAN. And prior to that time you were employed on Capitol Hill, weren't you 1
Mr. PERRY. Yes, sir. I have about 15 years experience on the House
side of the Capitol.
The CHAmMAN. And how long a time were you the assistant to
Congressman Albert Rains who for several years was chairman of
the Housing Subcommittee on the House side i
Mr. PERRY. Well, Senator, my entire experience on Capitol Hill
has been in association with Congressman Rains. I came to Washington in 1949 and I went with Federal Home Loan Bank Board upon
Mr. Rains' retirement in 1965.
The CHAmMAN. Well, you did serve £or a time in the document
room, didn't you 1
Mr. PERRY. Yes, sir. That is correct. This was also under the sponsorship 0£ Congressman Rains.
The CHAIRMAN. I have known Grady Perry for a long, long time,
and I know the good job he has done during the time he has been the
representative of the Home Loan Bank Board in congressional relations, and I know he will do a good job in this position. I am happy
to see you nominated, and I wish you well.
Mr. PERRY. Thank you very much, Senator. I appreciate that.
The CHAIRMAN. Senator Tower.
Senak,r Tow1m. Mr. Chairman. I ham no questions of Mr. Perry.
He certainly comes highly recommended.
I would note that in worldng for Albert Rains he must have learned
quite a bit about the housing business because nobody on Capitol Hill
was more authoritative in that field. So I see no reason why I shouldn't
support Mr. Perry wholeheartedly.
Mr. ·PERRY. Thank you very much, Senator.
The CHAIRMAN. B:v the way, there came out a newsletter from the
Federal Home Loan Bank Board recently and impressed me as telling
about his nomination to this position, giving facts about him, and
there were comments from the other members of the Board. I wonld
like to read them into the record.
The Acting Chairman of tlw, Bo:ml, ~fr. Kamp, sa,id:
I am extremely pleased that the •P resident hns nominated Grady Perry to be a
Member of the Federal Home Loan Bank Board to succeed Thomas Hal Clarke.
Because of his last eight years as Congressional Liaison Officer with the Bank
Board, Mr. Perry •b rings to his new position a unique insight. He possesses all
of those qualities essential to meeting the demands of his new position. The
Federal Home Loan Bank Board is indeed fortunate to have acquired such an
individual.
I may comment 1\fr. Kamp is the minority party on the Board.
He al~o said-1\Ir. Kamp did-and I quote:
The Board will sorely mi:ss the sE>rvices of Thomas Hnl ClnrkE>. who is returnIng to private life, but in the person of Mr. Perry we have a most ahle successor.
The Pl'<'sid<'ntial Chairman-designate, 1\fr. Bomar, whom you have
just heard, said:
·
The Presirlent's nomination of Grady Perry to hE> a Memher of thE> FE>deral
Home Loan Bank Board is an excellent one. I am familiar with Grady's efl'Pctive
service as the Board's Congressional Liaison Officer and will welcome the chance
to work with him on the Board.
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Retiring member Thomas Hal Clarke said, and I quote:
I am delighted that the President has named Mr. Grady Perry to succeed me
at the Democratic Member of the Federal Home Loan Bank Board. Mr. Perry
will bring to this position an impressive background of experience which will be
of great benefit to the Federal Home Loan Bank Board and the savings and
loan industry. He and the new Board have my sincere and best wishes.
Senator Proxmire.
Senator PRoXMIRE. Well, I join in the general enthusiasm about
your nomination, Mr. Perr_y.
Mr. PERRY, Thank you, sir.
Senator PROXMIRE. I think you are highly qualified for this job.
While you were congressional liaison officer you did an excellent job
for the Home Loan Bank Board for a number of years now, Blears.
But you have also been their liaison man with the savings an loan
industry, I understand, so that you know the industry as well as you
know the Congress and know the legislative problems and know the
policies of the Board, all of which 1t seems to me well qualifies you
for this particular job.
I would like to hear from you, Mr. Perry, very briefly, a minute or
two, on what you think are the principal steps that the Home Loan
Bank Board can take to shore up the housing situation and to provide
the best possible opportunities under the circumstances for housing
to move ahead.
l\fr. PERRY. Well, Senator, Mr. Bomar has addressed himself to this.
Senator PROXMIRE. Do you want to pull the microphone closer~
Mr. PERRY. Mr. Bomar has previously addressed himself to this
question. I believe that the Federal Home Loan Mortgage Corporation which was created by the Emergency Housing Act of 1970, can
assist in smoothing out the flows of funds into housing. I think that
the empowerments in several of the housing acts, principally the 1968
Housing Act, have been very helpful to the Board, and I would hope
that we will be able to develop further improvements which we will
be submitting to you in the near future.
Senator PROXMIRE. With your background, as everybody has
pointed out-there is something about Alabama. They contribute more
to housing, I think, than any State by far. Senator Sparkman, of
course, is "Mr. Housing" in the Senate, and Albert Rains for years
did a great job in the House. And as another man from Alabama, you,
Mr. Perry, are going to continue, I'm sure, in that tradition.
Mr. PERRY. Yes sir, I will do my very best.
Senator PRoxMIRE. You know how strongly we all feel about that.
I think I can save the time of the committee, Mr. Chairman, if we
can have Mr. Bomar come back up. He is ready to reply. And then I
could ask Mr. 'P erry the same thing. Because they are in the same
agency.
The CnAIRMAN. Mr. Bomar.
Senator PROXMIRE. l\Ir. Bomar, T understand you had an opportunitv to consult with counsel on this matter. Let me ask you: Would
you if requested submit to the President a resignation form in
advance, signed in advance, so that he could execute it at any time
at his discretion to remove you from the agency if he cared to do sot
~fr. BOMAR. No, sir, I would not.
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Senator PROXMIRE. You would not i Your position is now
unequivocal i
Mr. BoMAR. Yes, sir.
Senator PRoXMIRE. All right. I think that is clear. Do you want
to amplify that in any way i
Mr. BoMAR. No, sir. I have conferred with people from the Board
who are familiar with this and have no reservations about that statement, Senator.
Senator PROXMIRE. All right. Thank you very much, Mr. Bomar.
Now, Mr. Perry, what is your response to thIS question1
Mr. PERRY. Well, Senator, my appointment is for a term expiring
June 30, 1977. The good Lord willing, I intend to complete that term.
Senator PROXMIRE. Let me ask you the explicit question. Would you
if requested by the President of the United States to submit to him a
form signed, undated, so that he could execute it at any time and
remove you from your position-Mr. PERRY. No, sir, l would not.
Senator PROXMIRE [continuing]. At the Federal Home Loan Bank
Board?
Mr. PERRY. I would not.
,S enator PROXMIRE. You would not?
Mr. PERRY. No, sir.
Senator PROXMIRE. Thank you, Mr. Chairman.
The CHAIRMAN. Any further questions?
[No response.]
Thank you very much, and we all wish you well.
[The following information was received for the record:]
NEWS RELEASE-FEDERAL HOME LoAN BANK BOABD, MAY
22, 1973
Responding today to the White House announcement of his nomination as the
Democratic Member of the Federal Home Loan Bank Board, Grady Perry, Jr.,
said: "I am most honored that President Nixon has asked me to succeed Thomas
Hal Clarke as the Democratic Member of the Federal Home Loan Bank Board.
I con!lider it a privilege to serve with Presidential Chairman-designate Thomas R.
Bomar and my other Bank Board colleagues in carrying forward the long tradition of bipartisan Bank Board policy which bas done so much to encourage
national thrift and home building programs for the American family."
A native of Gadsden, Alabama, Mr. Perry came to the Federal Home Loan
Bank Board in 19<'>5 as the Congressional Liaison Officer and bas served continuously in this capacity.
Prior to joining the Board, he was Chief Clerk of the Subcommittee on Housing, Committee on Banking and Currency, U.S. House of Representatives. Mr.
Perry also served as Legislative Assistant to former Representative Albert Rains
of Alahama.
Mr. Perry did his undergraduate work at George Washington Universit.~ aud
The American University and has attended graduate courses in Real Estate at
The American University.
He served in the United States Marine Corps including 13 months in Korea
(Aprll 19i'i2-April HlM). Married to the former Louise Wallace, also of GadRden,
the Perrys have two sons, Jeffrey and Gregory, and live in Laurel. :Maryland.
Other FHLBB offi<'ials commenting on Mr. Perry's nomination inchulP<l A<>ting
Chairman Carl 0. Kamp, .Tr.; Chalrman-0esignate Thomas n. Bomar; and Board
l\lembeT Thomas Hnl Clarke.
Acting Chairm11n Kamp said: "I am extremely pleased that the Presiilent has
nomlnlltPil Gr11dy PPrry to bl' 11 MemhPr of the FP<lPr11l Hom!' Loan Rank Board
to succeed 'T'homR!'! H11l Clarke. Rec-11use of his last eight ypars as Congressional
Liaison Officer with the Bank Board, Mr. Perry hrings to his new position a
1
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unique insight. He pos.'-!'sses all of ,t hose qualities essential to me1.>ting the
demands of his new position. The Federal Home Lo.1n Bank Bonrd is indeed
fortunate to have acquired such an individual."
Acting Chairman Kamp also took the occasion to state: "The Ron rel will sorely
miss the services of Thomas Hal Clarke, who is returning to private life, but in
the person of Mr. Perry we have a most able successor."
Presidential Chairman-designate Thonrns R. Bomar said: "The Presidf'nt's
nomination of Grady Perry to be a l\Iemher of the Federal Home Lonn Bank
Board is an ex~llent one. I am familiar with Grady's effective &>rvice as the
Board's Congressional Liaison Officer and will welcome the chance to work with
him on the Board."
Board Member Thomas Hal Clarke snid: "I nm delighted that the President
has named Mr. Grady Perry to succeed me as the Democratic :\[ember of the
Federal Home Loan Bank Board. Mr. Perry will bring to this position an Impressive brickground of experience which will be of great oenefit to the Federal Home
Loan Bank Board and the savings and loan industry. He and the new Board have
my sincere and best wishes.
UNITED STATES SAvI:-.Gs AND J,OAN LEAGUiE.
May 23, 197.'f.
Senntor
,JOHN
SPARKMAN.
Chairman, Senate Bank-ing, Housing and Urban Affairs Committee, ],;cw Senate
Office Building, Washington, D.C.
DEAR MR. CnAmMAN: The United States Savings & Loan Lengne strongly
endorses the appointment of Grady Perry, Jr., as a Member of the Federal Home
Loan Bank Board.
:Mr. Perry's great knowledge of housini:- legislation and his outstanding record
at the Federal Home Loan Bank Board will ennl>ie him to serve with distinction
as a Member of the Board.
Sincerely,
STEPHEN SLIPHER,
Legislative Director.
The CHAIRMAN. Next is Dr. Gloria E. A. Tootc, of New York, to be
an Assistant Secretary of Housing and Urban Development in place
of Samuel J. Simmons, who has resi~rncd.
Doctor, we are glad to have you with us. Have you filed a financial
statement?
STATEMENT OF DR. GLORIA E. A. TOOTE, NOMINEE, TO BE AN ASSISTANT SECRETARY OF HOUSING AND URBP.N DEVELOPMENT
Dr. TOOTE. I have, sir, and there is a letter from the Gcnernl Counsel
relative to the statement enclosed in the envelope.
The CHAIDMAN. Did he certify that you had no conflict of interest?
Dr. Toorn. He did so.
The CHAffi1\L\N. And you state to us that you han no holdings of
interests that wonld constitute a conflict of interest?
Dr. ToOTE. No holdings or interrsts that would be a conflict of interest.
The CHAIRMAN. If confirmed in this position, will you respond to
requests from this committee or any other reg-ular committee. any
other appropriate committee, of the Congress to appear and iestifyf
Dr. Toon:. Inde<>d I wonl<l. sir. In fact, I hnve mn<le an effort to see
the members of this committee before even the date of this hearing-. I
sha 11 always be avnHnble and attempt to bl' as responsive ns pos;:ihle.
The CHAIRMAN. Doctor, I have read your biographical sketch, which
will be placed in the record. We have also recrive<l stntemrnts -from
Senn tors .T avits and Rncklev endorsing Dr. Toote which will be inserted in the record at this point.
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[The information follows:]
BIOGRAPHICAL SKETCH OF
DR.
GLO&li
E. A.
TOOTE
Dr. Gloria E. A. Toote was nominated by President Nixon on May 7, 1973
to be Assistant Secretary for BquaI Opportunity of the Department of Housing
and Urban Development.
Dr. Toote served as Assistant Director of ACTION, where she directed the
Office of Voluntary Action Liaison since November 1971. Prior to joining the
Administration, Dr. Toote was President of Toote Town Publishing Inc., and
engaged in the private practice of law in New York City.
She was president of 'l'own Sound Recording Studios Inc. from 1966 to 1970.
Dr. Toote also worked ,vith several law firms in New York and is a former
member of the editorial staff: of the National Aft:airs Section at Time Magazine.
A native New Yorker, Dr. Toote is a former aide to New York Governor Nelson
Rockefeller.
A scholarship student at the Howard University School of Law, Dr. Toote was
the youngest graduate in the history of that school when she earned her Doctor
of Jurisprudence degree in 1954. She received her LL.M. degree from the Columbia University Graduate School of Law in 1956.
STATEMENT OF SENATOR JACOB
K. JAVITS, IN SUPPORT OF THE NO~11:'iATION OF
GLO&li
E. A. ToOTE
Mr. Chairman and members of the Committee: I am pleased to support the
nomination of Gloria E. A. '.I.'oote for the position of Assistant Secretary for
Equal Opportunity at the Department of Housiug 1111d Urban Develo1}ment.
Gloria Toote is a native New Yorker and is presently serving as Assistant
Director of Action and Director of the Office of Voluntary Action Liaison at
Action. She is eminently qualified for the job of Assistant Secretary for Equal
Opportunity by reason of her prior legal training at Howard Law School, where
she received the Civil Rights Scholarship Award and Iler training at Columbia
Law School where she received her master of laws with a thesis on eonstitutional
law. She has also worked at several law firms in New York and served as Assistant Counsel to the Ne,v York State ·workman's Compensation Board.
The position of Assistant Secretary for Equal Op1}0rtunity at H.U.D. is a very
important one since we still have a long way to go to achieve true equality in
housing in the U.S. A citizen's right to an adequate home In any area where he
or she desires to live is one of our fundamental rights and federal programs
should be directed toward achieving that objective. This is especially true of
our housing program. Thus it is important that there be a strong Assistant
Secretary of Equal Opportunity at H.U.D.
I believe Gloria Toote, because of her experience, her legal training and her
dedication to the cause of equal opportunity, will make an excellent Assistant
Secretary and should be favorably reported by the Committee and confirmed
by the Senate.
STATEMENT OF JAMES
L.
BUCKLEY, U.S. SENATOR lfROM THE STATE OF XEW YORK
It is a privilege to recommend to this distinguished Committee, Dr. Gloria
Toote, to be Assistant Secretary of the Department of Housing and Urban
Development.
Dr. Toote has the distinction of heing the youngest graduate In the history
of Howard University School of Law. Following graduation from Howard,
Dr. Toote went on to Columbia University Graduate School of Law from wllich
she was graduated in 19::i6.
She is admitted to the practice of lnw in ~l'w York State. in the United States
Distri<'t Court ,f or the Southern District of New York, in the United States District Con rt for the Eastern District of Xew York and before the Supreme Court
of the l'nited States.
Dr. Toote hns -been engnged in the general practice of law for the past eighteen
years.
At present. she is Assistant Director of ACTIOX and Director of Voluntary
Action Liaison for ACTION.
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I believe that Dr. Toote ls well qualified for the position to which she bas
been nominated and I support her nomination without reservation.
The CHAIRMAN. I think that we will be very fortunate in having you
to head up the service that you will be rendering in Housing and
Urban Development, and for my part I wish you well.
Dr. TOOTE. Thank you, sir.
The CHAmMAN. Senator Tower.
Senator TowER. Mr. Chairman, Dr. Toote comes highly recommended, and I think she has the proper experience to commend her
to this job. I therefore have no questions. I would be delighted to support her confirmation.
The CHAIRMAN. Senator Proxmire.
Senator PROXMIRE. Dr. Toote, you graduated from Howard University as a doctor of jurisprudence.
Dr. TOOTE. Yes.
Senator PROXMIRE. You were the youngest graduate they had ever
had there. Is that ri~ht i
Dr. TOOTE. Yes, sir.
Senator PROXMIRE. Well, that is certainly to your credit. My stepdaughter just ~duated from Marquette Law School as doctor of
jurisprudence, I am proud and happy to say, 10 days ago.
The CHAIRMAN. May I ask at that point what year did you graduate
from American University?
Dr. TooTE. 1954.
The CHAIRMAN. 1954?
Dr. TooTE. Yes. I then went to Columbia University for 2 more
years of study in the field of constitutional law.
The CHAIRMAN. I have been a member of the board of trustees of
the American University for I guess 30 years. I don't know exactly,
but it has been a long time.
Senator PROXMIRE. Dr. Toote, you are to be an Assistant Secretary
of Housing- and Urban Development. What would be your principal
responsibilities?
Dr. Toon:. Fair housing and equal employment opportunities.
Senator PnoxMIRE. Fair housing and what?
Dr. TooTE. Equal employment opportunities.
Senator PROXMIRE. Equal employment opportunities j
Dr. ToOTE. Yes.
Senator PROXMIRE. Well, that is a very, very vital area.
You were formerly an official in ACTION?
Dr. TooTE. Yes. I am still serving in ACTION as Assistant Director.
Senator PROXMIRE. And you are taking the place of Ur. Simmons?
Dr. TooTE. That is correct.
Senator PRonnm:. ·what do you see as your-I said Howard before.
The CHAIRMAN. I'm sorry. I understood American University. I
was misinformed.
Dr. TooTE. It is an excellent school, sir. Both are excellent schools.
Senator PRoxumE. We have been troubled for a long time about
discrimination in all forms of our life, as you know. I think we have
made a lot of progress in recent years. What do you see that HUD
can do to provide fair housing without discrimination in the next
few years?
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Dr. TOOTE. Unfortunately, I am not prepared at this moment to have
any specific plans or designs. My basic intent is to study the programs
presently in existence in my odice: Those that are eifective will be
carried on. Those that are not effective will be worked upon to make
them effective.
I will then study the skills of my staff, both regionally and at
headquarters.
Based upon that, my goals will then be made, and hopefully at the
close of my position or close of my term in oilice we will see some
real impact in the area. of housing that possibly may not have been
perceived at this time.
1 ha.ve been reading a great deal and just relating and speaking to
aa many people as possible, but I come with no preconceived plans.
The area 1s a very large one. As a citizen I am not satisfied with the
growth of housing in America. I know it can be better. I believe it will
be better, and I Just simply wish to play a vital role.
8enator .PnoxM.mE. lt is a nationwide problem. "\Ve have it very seriously in our State of Wisconsin-lack of housing opportunity for minority groups.
One final question. How about the employment aspect? What do you
understand your functions to be with respect to fair employment opportw1ities? I understand it is not only fair housing but fair employment.
Dr. TOOTE. Fair employment relative to members of the community
who live in an area where public housing will be constructed or housing
even that has Federal money. I shall attempt to encourage builders,
construction companies, and so forth, to utilize the talents of the members of that community and those that are lacking talent to ofter training to them so that they may participate in a specific program and have
a gainful form of income.
Senator Pnox:umE. Just one final suggestion to you. It would be
very helpful to us if you could develop statistics that would show the
progress or lack of progress in both these areas, housing discrimination and employment discrimination. Any kind of statistics that come
to your mind would be very helpful so we can get as objective and
clearcut an understanding as we can of where the problems are, where
the lack of progress is. Then I think we would be in better position to
know what we have to do to correct it.
Dr. TooTE. That is very much in line with my thinking, sir, and
I will be delighted to do that.
Senator PnoxMIRE. I have no more questions.
The CHAIRMAN. Anything else?
[No response.]
The CHAIRMAN. Thank you very much. "\Ve congratulate you and
wish you well.
Next, Mr. Robert C. Holland, of Nebraska, to be a member of the
Board of Governors of the Federal Reserve System for the unexpired
term of 14 years from February 1, 1964 in place of James Louis
Robertson, resigned.
Mr. Holland, we are very glad to have you, sir.
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STATEMENT OF ROBERT C. HOLLAND, NOMINEE, TO BE A MEMBER
OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE
SYSTEM
Mr. HOLLAND. Thank you, Mr. Chairman.
The CHAIRMAN. You have filed a financial statement 1
Mr. HoLLAND. Yes; I did.
The CHAIRMAN. Certified to by the counsel of the Bonrd, I believe?
Mr. HOLLAND. Yes; he has looked at my statement and he finds no
conflict of interest represented therein.
The CHAIRMAN. And you will tell us that you have no holdings or
interests that you consider a conflict of interest?
Mr. HOLLAND. That's right, sir. I do not.
The CHAIRMAN. Let us insert in the record at this point a letter
endorsing Mr. Holland, received jointly from Senators Hruska and
Curtis.
[The letter follows:]
U.S. SENATE,
Washington, D.C., May 30, 1913.
Hon. JOHN SPARKMAN,
Chairman, Senate Banking, Housing and Urban Affairs,
wa.~hi11gton, D .C.
DEAR ~IR. CHAmMAN: It is our understanding that Robert C. Holland has
been nominated to serve on •t he Board of Governors of the Federal Reserve
System and will appear before your Committee, May 31. This is to register our
solid snpport and wholehearted endorsement of Mr. Holland.
Mr. Holland is a Nebraska native. We ha¥e known him for many years and
have always been proud of his fine accomplishments. His record is before you
and speaks for itself. In fact, in our judgment, there is no more eloquent recommendation for him than his record.
Hence, we would hope that your committee would look with favor on Mr.
Hollnnd's nomination and report it favorably to the Senate.
With kind regards,
Sincerely,
RO:\fAN L. HRUSKA,
U.S. Senator.
CARL T. CURTIS,
U.S. Senator.
The CHAIRMAN. How long have you been at the Federal Reserve
Board?
Mr. HoLI,AND. I have been at the Board 12 vears. Before that I was
with the Federal Reserve Bank of Chicago for 12 years.
The CHAIRMAN. I will ask you the other question that I have asked,
and that is: If you are confirmed to this position, will you respond to
requests from this committee or any other appropriate committee of
Congress to appear and testify 1
1\fr. HOLLAND. Yes, I will, Mr. Chairman.
The CHAIRMAN. Senator Tower.
Senator TOWER. Mr. Holland, you will become the Vice Chairman
of the Board, will you not?
Mr. HoLLAND. No; Senator. The President has appointed a present
member of the Board, Gov. George :Mitchell, to be Vice Chairman
of the Board.
Senator Towi;:n. I see. I did not understand that. I thought that
you would be Vice Chairman.
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· Mr. Chairman, I think that this is the first time that a professional
staff member has been elevated to, the Board. Is that correct?
l\Ir. HoLLAND. That's right, Senator.
Senator ToWEn. And certainly Dr. Burns thinks that he merits this
elevation, and I think it is a good idea. He has certainly got a wealth
of experience.
·
·
I don't have any particular questions I think that I would ask him
at this time and intend to support his confirmation. ·
The Cn,,rnl\IAN. Senator Proxmire?
·
' Senator PROXMIRE. l\1r. Holland, I have been very critical of some
of the past appointees of the Board. I am not critic!\l of your appointment. I think it is an excellent appointment.
Yon have exnrtly the kind of background that I think should be
rewarded with promotion and appointment t? the Board. It mystifies
me as to why there aren't more career appomtments.
Here yon arc, an outstanding economist, a man who has served
with the Fcdrral Reserve in one capacity or another for 24 years, 12
years in ,vashington on the Board itself and 12 years in the fiel<l.
And you have S<'rved in a position as Executive Director, Secretary
of the Board, Secretary of the Frdcral Open Market Committee,
A(hiser to tho Board. You understand monetary policy thoroughly.
That has been your field.
.
You :tre also a Ph. D. as I understand it in economics from the
University of Pennsylvania, and an :M.A. in economics, so you have
the training, the background. Yon have the experience. You have all
the kind of qualifications tliat seem to be most desirable.
I think that this is a topflig'ht appointment.
..
Let me ask you about your understanding of the relationship of
the Board first to the executive and second to the legislative branch.
What do you see ns the Board's responsibility in each direction?
l\Ir. HoLJ,AND. "'e11, tl1e 13oanl is essentially a creature of Congr2ss.
It was crnated by Congress. The whole Federal Reserrn Sysh>i,1 i8 the
crcalnrc of ( '.OJl!!Tesci. I reitarcl it as Leini.r accountaLle to the Con!!l'PSS
and a'<'COlllltabk for its stewardship throi.1gh the reports that we render
periodically, includinl! our annual reports, as well as through testimony hefor·e your nu·ious committees by our chairman. In effect, we
are your stewar<ls in the fiPld of money, and I think we ha1•p to d,,(i\'er
on that trnstC'eship the best WRY we know how, accounting to you as
time and dc\'Plopmc11ts make it appropriate to account.
This field of money is a complex and teclmicn,l one. I think accountin!! over periods like a year is a verv nsefol wav to kt the hiel111if•.rilit·ips
a11d the fluctuations ol the moment foll into some kind of 1wrspPdive,
then,hy givinl,! you a good rlirr!1ce to look at "·hat the Fcdernl ,TI;,,w1TC'
has <lone and satisfy yourself about it.
,vith rC'spect to' the Rdministration. our r('lationship I think is a
little different. Former Chairman :Martin has dC'scrihed onr position
succinctly by saying that we are hldepen<font within the g·oyf'rn111P11t.
not independent of the government.. In that respect we confer with
members of the administration with regard to economic policy or
monetary policy or other aspects of policy that need to be discussed in
order to insure proper coordination, In the last analysis the Board
has to make its own judgments on monetary policy, an<l'I would expect
it will, sir.
·
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Senator PROXMIRE. So you are independent in the sense you make
your own judgments W You consult with the executive branch, you
listen to their concerns and their advice, but you make you own independent judgment¥
Mr. HoLL,AND. That's right.
Senator PROXMIRE. As far as Congress is concerned, vou are t.he
creature of Congress W When we act formally in legislative form, that
is the law and you respect it and abide by it W
Mr. ROI.LAND. Precisely.
Senator PROXMIRE. I was very disturbed, as I am sure _you were md
Dr. Burns and others were, at the enormoi1s increase m tlw money
supply last yE>nr. I thought it was inflationary. I think with tlw lag
involved it is one of the reasons why we are suffering the present inflation we are going to suffer for some time.
Can you give us just a notion of what you feel the Boal'(l cun do
about this very, very serious inflationary problem we now suffer in
view of the immense increase in the money supply last year, the higgest
bv far in history 1
~Mr. HoLI..AND. The money supply increase for 1972 was a sizable
number, a little over 8 percent when you measure from the beginning
of the year to the end. But in a way I don't think that 1rives a ver.v fair
representation of what monetary policy is and what volume (lf money
was allowed to be 1,?enerated in om bankinl,? system in rn72. You always
have a problem when you take a measurement where you bt.~gin aud
where you end the measurement.
SE>nator PnoxMIRE. I arrree if von take a month it is not fair, but if
you take a year the aggreirates tend to balance out.
Mr. HoT,r,AND. Except if you happen to use December of 1972. as the
end point for measurement purposes the month of December then has
a nowerfult>ff£'ct.
.
.
~Pnator-Pr.ourn11,. It has 11 other months to modify that.
Mr. HoriAxo. But if I may sav. Senator, the moiiey supply ,rrowth
in 1972 fluctuated over the vear. ,ve had a bul,re in mid-year. We had
more moderate money supply 1,?rowth in the fall. Then
had a bulge
at the vear-end. December ,ms the bi,rgest month in as long as I can
renwmber. It was bi!? for a lot of one-time and rPvt>rsible reasons.
The verv succeeding month. ,Tan11an·. showed no ~rowth in tht>
mone:v supply at aB as some of thE> technical fa~tors that had expanded
tli,e'm6ney s&N>ly in De'cemhe'nt•t'<'r&•d tliemseife!:l: '
·
Senatoi· PROXMIRE. All right. If you took 13 months and includ<'d
.January. you would still have an increase of money supply o,·er i percE>nt for that period.
Mr. Hou.ANO. That's right.
Senator PnoxMIRE. Which is excl'ssirn under the circumstances,
inftntionar_r.
·
~fr. Hor:uxo. Since that time the increase has ·b een running about
5 percent. So _vou can see a difference in the rate of growth of the monev
supply from that point to now-and an entirely appropriate rate of
difference, I might say.
I think we nre living through a serious kind of inflation where it is
imp01tant for monetary policy to dampen the growth of demand. Our
mom•tnry policy. as our Chairman has mentioned, is one of trying to
foster a moderate growth in money and credit, which means a slower
rate of growth than that statistically defined 8-plus percent of 1972.
we
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We had some success with that policy in the early months of this
year. I think one wants to be a little careful about the very latest weeks.
It is difficult in making comparisons. For example, it is very likely the
money supply .figure right now is being bulged temporarily because
many of us-I include myself in this list, and perhaps some of youhave been getting income tax 1·efunds as a result of the effects of overwithholding of last year's tax.
::,enator PROX.MIUE. You say the money su1_Jpiy has slowed down com)ared to last year. :,till it's a substantial mcrcase of 5 percent o~ a
ittle over 5 percent, at the top range of the i to 6 percent the Jomt
.Economic Couuuittce suggestl'u :;hou1d be the zone. And we are suffermg mftation.
£\.t the same time-I don't want to seem to l.,c going hoth ways at
011ce-lmt how nl.Jout the housi,,g problem!
ual can ue done unde1·
these circumstances tf you are gomg to have a moderate increase in the
money :,;upply not to aoort an mcrease in the housing starts ,,111cu our
economy may need as we go down the pike and which certainly the
people rn our country w110 narn inwcquate housmg <10 need~
.Mr. HOLLAND. That's right, Senator, and I think there are some
other aspects of the economy that one has to keep in mind when one
is applymg monetary pre,ssure.
One is the effect on housing. Another is the effect on thrift institutions that help people to save and put those savings into housing.
Senator PBoDDRE. What do you see that the Federal Reserve Board
can do i In the past, as the Chairman has pointed out many time, it has
been_ the principal victim when you have slowed down the money i:;upply mcrease.
Mr. HoLLAND. That's right.
8enator PRoxMIBE. When you have tried to be anti-inflationary, you
have been anti-inflationary in housing, in State, and local government
secondarily, and almost nothing else.
Mr. HOLLAND. I think out of each of the successive experiences-and
there have been some painful ones in the last decade-there have been
a number of adaptations of public policy developed to try to level out
a little bit this eth•ct of tight mmwy.
I might say your committee and the Congress have been effective
in creating some of those.
I think it is clear now, for example, that some of those policies to
maintain the flow of funds into housing are helping the situation no:w
to be better than it otherwise would be.
Senator PRoxMuu:. I>o you think it is g-oing to be adequate if we have
a slowdown of the money supply increase to 4 to 5 percent.?
Mr. HoLLAND. I think we are in a very dPlicatc time, Senator, right
in through here. I think the next few months are going to be critical
months with respect to whether we can cool down the inflation without generating pressures that could mean an unhappy business situation in 1973 and 1974.
The Federal Reserve has been working in other areas to try to smooth
the etfPct of this 11101wta1·v rPstraint pmg-ram that it has heen following. You notice we have been taking actions to raise reserve requirements on banks. Chairman Burns addressed a ldtcr just the <,ther week
to the chief executives of banks urging them to tighten their lending
policies, in order to achieve the moderate dampening of credit that
we need to cool off this inflation.
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At the same time, in that statement1 we did say to tl1e· h:rnkPrs it
would be appropriate for them to contrnue to accommodate the needs
of their local communities, and when we said nrrds of the local communities we meant farmers, small businessmen, the consumers, and the
home buyers in those areas.
Senator PROX:\rIRE. Well. to mf', one of the biggest 11nso]n,d economic problem~; we have in this country is tl11' probh,111 of how WP can
reduce infla! in :try pressures \Yithout cutting t!,c heart ollt of brn::;i11g.
Tho Federal l:r:wrvt1 lloard has in<licaUi(l in I.lit: tm,;t tlrn,uµ.;, the
Chairman that we have made progrPss. And wr have in so111e areas.
But the Frdrral R0se1T<' Boarcl hasn't secnwcl to ha,·f' tnk<'n any modification of its own policies. aucl I wo:ilc.l hope you wo11lu l"l',t11·,· consider that as scriouslv as you ean-wimt the Fl'llcrnl Hes,itTP Hoard
might do.
·
•
We have suggrstrcl some proposals that might. b11 consi:lcn ·cl rntl1t'r
radical, but they rnnJ .c ,;,•nsc. Ia other Cotintric;-: there i:; a gtdttei:
def!rec of immlntion of ltott:-;ing from 1110;1ctar,v policy, /.ZT<'a,l'I' <·011cP11-·
tration on slowing clc\1·11 lrn:-;im,ss opl'rations \\"Jtich arP11't 1p1ite a,- :=;cnsiti ,·e to monetary po.licy. .
.
.
But don't ,Yant to take \"Olli' time or tit(! COllllllittcc's [illll'. T11i_;; is a
confirmation hearing. _\ud ,,·hilc I am Pxeite1l about your appoint11wnt
and I think _you a re ~•Ji11g to lH\ a most use fol no, ernor of th1' FPrleral
Re,,Prrn l~oanl in llllltl_\'. ways in )"(\S j)0'!SC ta Congn~Si; a;; :tll r.xp,~rt,
and so forth, I wantt 1.l to 11wntian those tJ1ings.
·
One other thing. ( iorcr;.1.11· R<>' ;erh0 ; t wa.; in chi rgc !or, tl, ,: Fl',h i·al
R<'sene Board of trntlt in l1•1l(li11,r. as 11111ctP1"stand it.
· ··
·
i\Ir. I-Iou,AND. Yes, he had tfolc:gatec1 authority •
.8enator P1w:omm. I think we' all wo11ld a 6 rce he was a fine Go1cl'11or ,u:i;d scnccl l.)iis eountry \"(•ry, very well.
.
· . ,
:Mr. Hm.(.\Xv. IIc ,\·ou lcl lJc pleased to ha \"C you say so .. .
. SP1wto1" Pi:o.\J\llm:. And I ~r<.>atly admired him .
·
X0,1·, _,rnuld yot! be in charge of trntl, in lcncling? ·Do yo,1 Llllt:crstand you would Lo tak_iug o,·cr that function? .
· )fr. IloLLAND. Prnbnbly not, Senator.
Senator Puox21mm. Probably not?
,
~fr. HoLLANO. The Chairman will make rctldrilmtion of the rnrions
9-clcgation assignments of the Doard.
.
Senator l'1:ox:w 1m. That has not been dc_tcrmined yet?. , .
:!\fr. HoLLAND. He has not acted yet, but I woul<ln't expeet to gc•t it, :
I hnve expertise in some areas-Senator Pnox:mRE. ,vhen will that determination be made?
Mr. HOLLAND. Probablv within the next few wcd-:s.
Senator· Pnox:mm:. Ail right. One other question. You· heard this
asked of l\fr. Bomar and the other nominee, l\fr. Perry, of the Federal
Home Loan Bank Board, and )Ir. Smith also, if they would, if
reqnestc,d, submit an nnsigned n ,signation to th ,, -Prcsidt'nt for him to
act on. Let me ask you first ha,·c you submitted such a resignation?
)fr. lioLI .. \ND. No.
Senator Pnox111rnE. ,vould you submit a resignation if you were
asked to do so?
. )fr. Hm,LAND. Unclated and in blank; no, sir, I would not. I don't
think that is fitting with my position or my agency's relationship.
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Senator PROXMIRE. When you say undated and in blank, I take it
there are circumstances under which you might resign if requested W
Is that right?
·
·Mr. HoLI.AND. I hope I would never create that kind of circumstances, but I think a public servant always has to stand accountable
for what he does.
Senator PROXMIRE. But you would not submit a resignation undated?
Mr. H01LAND. No.
Senator PROXMIRE. Which he could act on at his discretion ?
Mr. Hou.AND. No, sir.
Senator PROXMIRE. Thank you very much.
l\fr. HoLI,AND. Thank you very much.
The C11.un.,L\N. ::\Ir. Holland, you were making some comments a
moment ago about some of the policies the Board has put into effect.
One was calling on business, banks, financial institutions, to tighten
up on their big loans, to distribute their capital more equitably or
something like that. How did they respond to that 1
Mr. HoLI.AND. The response is very interesting, I think, Mr. Chairman, although we did it recently enough so it is rather early to C')11nt
the returns.
The CHAIR:\IAN. The reason I ask that question is I rend an l:lr6cle
in the financial pages a few days ago to the effect that it was felt that
it was not going to work. Did you see that articlei
Mr. HOLLA ND. Yes, I did.
The CHAIR:\fAN. I just wondered what your react.ions to it were.
Mr. ROI.LAND. That banker and a good many bankers like him say,
"Two-thirds of all our credits are in term loans, and the rest are largely
takedowns on comments, so it's hard to cut back." And ·he's right.
Thafs true. Rut I think it is ensy to exaggerate how mu<'h efft>c~ ont>
!leeds to get from a Jetter ]ike that to be very helpful to the national
mterest.
If that letter changes 1 lending decision in 50, it will have moderated enough the flow of credit demands to have substantially helped.
The CHAIRMAN. Do what 1
Mr. HoT,LAXD. ,vill have m0<lcratcd enough the amount of eredit
extensions to have snhstantiall.v helped us in this current very inflationary interval. We don't. have to change everybody's mind. We inst
have to change, on the margin, a few decisions toward less spending,
less eredit-financ<'d spending.
The end of that same news story, Mr. Chairman, is that after several
bankers were quoted as saying it is hard to affect credit flows, one
banker said, "Well, it's true Chairman Burns has often written us and
asked us to do things we didn't like or thought were wrong, bnt. we
sometimes found out in the end what he asked us was good for us."
TlH1 CH .un:!lrAN. I am g-lad to hear that. I was glad when the boitrd
took thitt net.ion . In fad. I thouv.ht mAny different times in the terrific
crnnrh that orenrred in ·1966 and 1967 that thflt 011ght to ·havP he('n
done.
But let me ask you about another thing. How is vonr dual intei·est
·
rate working 1
Mr. HoLLA:\"D. Mr. Chairman, that belongs to the Committee on
Interest. and Dividends, not the Fedeml Reserve, though the chairman of both of those bodies happens to be Arthur Burns.
The CHAIBMAN. Wait. I want to get that. Belongs to whaU
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Mr. HOLLAND. The dual prime rate idea was develo_Ped by the Committee on Interest and Dividends, which is chaired by Arthur
Burns-The CHAIRMAN. Oh.
Mr. HOLLAND [continuing]. But separate from the Federal Reserve.
The CHAIR:UAX. Yes. I saw Dr. Burns had commented on it. In fact,
he talked to me about it one time.
)fr. HoLLAND. Oh, yes.
The CnAml\IAX. And I overlooked the fact that it came out of the
Committee on Interest and Dividend8------'and Profits I believe. isn't it?
Mr. Hou,AXD. I can say, however, that I am informed that that is
working relatively well as a practical, pragmatic way of trying to sort
out impacts and generate more responsible interest rnte behador. It
seems to work, I would say, reasonably well.
The C1u11m.,x. I thought it was a goocl proposal. I hope it does
work.
Any further questions?
Senator Brock 1
Senator BROCK. No questions.
The CHAIRMAN. Mr. Johnston f
Thank you very much.
Senator Pnox;,11mE. Let me ask if I could-and I apologize again
for detaining yon-hnt the Chairman pointed out that there was a
reaction of at least some bankers that that jawboning, that rhetoric
on distributinj! their capi~al more equitably wasn't working, and yom
response was 1f one bank m 50 responds yon have made some prog~,-ss.
Mr. HoLLAXD. Or if on one Jonn in 50 a hanker makesSenator Pi:ox:mm:. Y 011 see. the difficnltY with that is the good
fpl]ows will do it and at their expense and the expense of their bank
and their stockholde1-s perhaps, but isn't that too much to ask? ·w1i_v
shouldn't you J.,, \·e a differ<>ntial resen·<• req11iremPnt for hou:;ing. for
instance? Then it would be automatic. Then it would be in their profit
intere,t to react to lH'o\·ide a better brPnk for housing- un<ler the,;,e
circumstances.
Mr. Hou.ANO. "re think this letter, fitted in as it is between a couple
of other approa<'hes. Senator, -will g-i\·e us a reasonable, more wol'kable result-ca more workable one than by putting- l'eSf'rve reQuirements
on housing or special resen·f' 1w1nirements on the asset side of ballk
balance sheets.
After all, this letter comes not in isolation hnt is adclr<'ssed nftrr the
Federal Reserve had taken a series of actions to pro<lnce n g-rf'ntt•r
degree of credit restraint.
We think of that letter as, in effect, ca1ling the bank's att('ntion to
the fact that there is more pressure on t h<'m. The sooner they a 1·e a w:1 re
of it, the sooner they make appropriate adjnstnwnts to it, the sooner
we will get the kind of restraint we want, and tl1e sooner we will have
made whatever contribution we can to dampl'ning- this whole r•'riod
of inflation.
We might have a conversation or two with a l.,anker who ,v:lS not
paying any attention whatsoever to the need for restraint-to <lo no
mo•·e. than trv to make <'lear to him the kind of national interest we
wnrp trving-to arti<'11latP in that letter.
S:,nat01-'PRox::11mE. Thank yon.
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The CHAIRMAN. Thank you very much, Mr. llollund. We cong-rat11lat,e you and wish you well. "'e will put your biogrnphi«-nl sket<'h in
the record.
[The information follows:]
BIOGRAPHICAi,
SKF.fl II OF ROIIEKT (', 1101.1 ..-\.\'lt
P<'rSQnal: Born: April 7, ]!r2:-,: TPk:tmah. :-iPhrll!<l<:t IBnrt ('n1111ty). F:11lu•r:
Carl Luther Holland (dt'C!'ll"P<l ). :\lntlu·r: Un•1d11·11 Tl11,111p,-;1111 1tlt••·••;t.~"'1 I. :\Jar•
ried: DeEtte Harriet Ht>clln111l, O-<·t•ol11, ~t>hr., Spptt•mlwr 7, 1!147. Chiltln•n: ,Jn:111
DeEtte, bom 1003; Nancy GretchPn, born 1956; 'l'lmothy Rohnt, born rn:;:,;.
Home : 5508 Cromwell l>rin-. W11shi11;.:ton, D.<.:. i1N111; 1 '.\ln11t;.:n1uny 1·011111y.
Md.).
Education:
1938-42-Tekamah Hi;.:h Sr·honl, T1·ka111nh. :'\1•hr.
Hl42-43----,l.Jnlverslty of Ne1Jra,-;k11, Linl'ol11, :'\,,hr. 1!l Ill. n..;.: .. 11ts Sd1nlar,-;hip,
l.Jni\'ersl,ty of Nt•l,rasko.
1946-48-University o! Pe1111")'l\'1111i11, Wharto11 Selwnl nf Fi11a11,·1• u111I ('0111merce, Philadelphia, Pn. B.S. (lllllllll't'), Hf'l'hl'l'I s. Stl'HM' :\l1·11111ri11l l'rizt• I 11111·
standing senior), Beta G11mma Si;.:11111.
194U--'l.Juh·ersity ot l't-nr1s)·ln111i11. l'hila•l••lphin. 1'11. '.\I ..\. 1p1·0110111i<-,').
1951-54-l'uh·ersity of Chic11;.:11, ('!Jit-a;.:o. Ill. ( pnrt-tiult').
19:'iO-t:niver,-;ity of Pt>1111syl\':111ia, l'hil11tlt•lphi11, 1'11. I'll. U. 11·<·1111 .. 111i<•,-;) .
.llilitm·y 1wri-icc: U.S. Army H1-t:-1---rn-H-.\S'l'l', l ' 11i\'t'r,-;ity of \\'i.-1·011.-iu. :\la,lison, Wis.; 1944-45-l'rivate, 00th Jufantry J •il·i,,ion ( l'11il1•tl Stat,•s. 8011th 1'11cific, •Philippine Invasion Campaign); 1945-U.S. Corps of C11tlets, U.S. Military
Academy, West Point, N.Y.; honorahlt> di.sch11rgP.
Employment:
1\!48-49-Jnstrudor In monl')' an,! hankia;.:, \\'hnrt .. 11 8d100I of Finu11ep am]
Commerce, t.:niversily of Penn,yln111i11. l'hila,t ... tphia. l'a.
lW0-61-Ft>deral Ht',;erve Hank of l'hiea;.:o, l'hi•·a;.:o. Ill.: 1!14!1-;;7, tl11a11dal
economist; l9;j7-::iH, Assistam \'i1•p l'rPsidPnt fr"-""" rd, I a 11tl .\s,,istant \'i;·p
President (loans) ; 1959-61, vice president (loans).
1950-57-Instt-uctor, Amnieau J11,1i111tl' of Ba11ld11;.: (1•v,,11i11;!,-;J.
1961 to pre,ent-Bou rd of Gm·t•rnor., of thP FPd1•ra I l{psen-1• 8ystt•m. \\'it sh-ington, !J.C.; H!Hl-tiJ, .\tll'iSl'l', ] li\'ision or Hl'Sl'/1 rd1 811tl Ht,, t i:,otiC!;; ] !Mi:.!- tiH,
Associate Economist, l·'.,,lt-ra I 11111'11 :\lark Pt I '0111111itl vi·; ]!lli4-4~"i. A,,od11te
Director, Divisiou of Hl's,,ar!'h a11<l :-<tatistit-s; l!l.i:i- lii, ,\ll,·1:-..r to the Boan.I :
1966 to pre.'!ent, Secn•lltl')', FPtl<'ral Ojl(•Jl :\Jarkt>t ('0111111ittPe: ]!l<iS-71, St•<·rt-tary
of the Board; 1971 to rire,-;t-nt, Exe.·ntivt' JJir ..,•tor.
MembcrsMps: Profcx.~imwf-Auwrkan Eeouomic Assodntion; Anwrican Finance Association. Fratcrni-ty-Beta Theta Pi ( 1:11inrsit)· of ::'\elJraskn, 1!14:.!).
Religious-St. Paul's Lutlll'ran Ch11rl'II, Wnsllingtou, D .C. Other-Cosmos Club;
Kenwood Golt and County Clnh.
Special services: 196!",-.Memht>r, National BnrPau of Economi<• Rest-nr<'i1 Ad·
vi.sory Committee on Exploratory Stud)· of Ilaukiu;.: l\lnrkets and Bank Structm·e.
1965-66-Member, Natioual Coundl of Churches. Commi,,:sion ou Chureh and
Economic Life; Labor-Management Atlvisory t'ommitlt>t>. Hlli7-liS-'.\fpmlwr, Program Committee on 'fhe Church and Economic Lift>, National Council of Churches.
1971-Member, Task Force on Finance, Lnthernu ('hureh in Amnif'n. 19i3Member, Finance Department Advisory Committee, The Wharton School of lt'i•
nance and Commerce, University of l't-nnsylvania.
Pu.l>Uoo.tfon.11:
1951-55--Burinells C<mditions, ;\fonthly Re\'if'w of F«>tlnal RPservP Rank of
Chicago, various artic-lPs. 1952-Sooial Educatio-11, "Roll' of n111netary polic.r in
fighting inflation." 19;;9-Dissertation: B1111k Lt-11ding to Hnh•,-; FiunncP Com•
panles, 1951-56. 1964--Federal Re;1cr1:,· Rullctin, "HPsf'nn·h in llauking Strnctnre
and Competition." 1970-Afcn, .lion<'!! & Polic11, essn)·s in hnuor of Karl R . Bopp"Reappraising the Ferleral R,•sei·,·p Discount l\lPchanism." Hl70--Journul of
Monc11. ('r('(lit and JJankinr,, ''Tl1(• FP<lf'ral Hespn·p Di,-;c,11111t ::\(pchanism as nu
Instrument for Dealing with Bnukin;.: ::'llarket lmp.. rt'Pdiou,-;." 1971-Rcapprai.~al
of the Federal Re.~<'l"l:e Di,q<·nunt .lle<'1w11i.<w1. volt1111e 3. "The Rerlesigne1l Vii.count ::'IIP<'hnnism anfl the l\lont•)' ::\lnrket," Rohert C. Holl:111,1 and George G11n·)·
(1968). 1!171-Commercfal banki11y in a modern rco11Qm./1. SPminar sponsored hy
the Hauk of Italy, "Ilankiug 'frau,-;formation in the l'nitell States'' (19ti!l).
Political affiliation: Republic·a n.
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The CHAIRMAN. Next is Mr. John R. Evans, of Utah, to be a. member of the Securities and Exchange Commission for a. term of 5 years
expiring June 5, 1978.
.
\Ve are glad to see you before us again. When were you confirmed
previously t
STATEMENT OF 10HN R. EVAMS, OF UTAH, TO BE A MEMBER OF
THE SECURITIES AND EXCHANGE COMMISSION FOR A TERM OF
5 YEARS EXPIRING 1UNE 5, 1978
Mr. EvANS. When I was confirmed 1 I don't remember the exact
date. My appointment became effective on the ·3d of March.
The CHAIRMAN. The 3d of March. And you are back again!
Mr. EVANS. Right. I was appointed to fill the remaining part of a
term expiring on June 5, of this year.
The CHAIRMAN. Now you are up for a 5-year term 9 Is that correct 9
Mr. EvANS. That is correct.
The CHAIRMAN. We are very glad to have you. You have filed a
financial statement,
Mr. Ev.,r ns. It was filed by the SEC. I don't have any idea what
m:v securities holdings are at this point.
The CHAIRMAN. I notice there is one in here, and it does certify
yon have no conflict of interest.
::\fr. EvANS. That is what I understand.
The CHAIRMAN. Of course, we went over this with you just back
in :March, didn't we 9
;\Ir. EvANS. Right; since that time, even though there was no conflict. I decided to put my securities under a blind trust, and this is
why I couldn't personally file a statement. All the information regarding the account goes to Mr. Albert Fontes, Assistant Director of our
Personnel Office, and so I have no connection with it at all.
ThP CHAIRMAN. I saw that in connection with the :financial
statement.
Now I will ask you this question also. You have heard it before.
If confirmed in this position, will you respond to requests from this
committee or any other appropriate committee of the Congress to
appear and testify~
Mr. EvANS. 'Yes, I will.
The CHAIRMAN. Let us put Mr. Evans' biographical sketch in the
record at this point.
[The biographical sketch of Mr. Evans fo}lows :)
BIOGRAPHICAL SKETCH OF JOHN
R.
EVANS
Personnl : Born June 1, 1932, Bisbee, Ariz. Married December 18, 1964, to the
former Gnle Gagon of Provo, Utah. Father of three sons: John, Michael, and
Ric-hard . Member of the Church of Jesus Christ of Latter-Day Snints (Mormon).
Presently serving as a Washington Stake High Councilor. Present address: 9208
Seven Locks Road, Bethesda, Md. 20034. Telephone : 469-6836. Legal and voting
resident: Murray, Utah.
F.dneatlon: University of UtRh, B.S. (economics) 1957, Secondary Teaching
Certificate (business) 1959, M.S. (economies with banking and finance minor)
19!'i9. Schol:lstle honors : Betn Gnmma Sigma, 1959.
Employment : Present: March 1973-Commissioner, Securities and Exchange
CommiRsion. Former: June 1, 1971-March 3, 1973-Professlonal staff member,
U.S. Senate Committee on Banking, Housing and Urban Affairs. July 1964-
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.l'wie 1971-'Minorit_y ata!r dlr~~£, .!7.S. &nate (,QtnmJ.ttee en :8allking, Housl.~~
and •Urt)1111' ~tts. f'ebrtt&t'Y 11fflihj1lly 1964-lnconomtcs a!ISlstant t.o U.S. 1!1enamr WallMe P. Beanett. Janar, llN141emuat"Y 1911--Beeeardl aMlyst, Bureau
ot Ji1coDomlc ,w<l .Busi.,_~. Untivereity
f1I. Utah. 1962 {School year)Uoiv.eralty Qt Utall. January 196()..January 1961-Research assistant, Bureau ot Economic and Business Research, University of Utah.
Jjlconomica lut.rQctioo,
The CHADUilAN. Senat® Tower.
Senator ToW1!1L Well, -of oou.rse, ha.ring known and worked with
John for yeall3 and r8$,P-00t.ed his ability and his integrity, [ can't
think of any pert.io.en.t questions I would b.11.Te to ask him now. I would
note that tomorrow he will be 41 and it is all downhill from there.
[Laughter.]
We are glad to have you back, John, aud, ,of course, I am delighted
to support your .nomina.tion.
The CHAIRMAN. Sena.tor Proxmi:m.
Senator PROXMIRE. I agree. We know you 8() well. You served on
this committee and served so very ably. Although you were a minority
staff member, those of us on the ma1ority had great respect for ;rou
even when we disagreed with the position which you were supportmg.
So you are 'I think well qualified oorminly to oontintte. But I would
like to ask you-I just can't resist taking adva.ntage of this opportunity. There is so much that has happened to the SEC in the last
couple of months. As far as you could, give us reassurance or some
notion of what the SEC is doing to cope with a very difficult situation.
Your Chairman has resigned. The stock market has been very, very
unsettled. Under the circumstances could you tell us what the SEC
is doing to try to bring greater stability to the securities markets and
greater confidence 9
Mr. EvANS. I can try.
First, I don't believe that the SEC has brought about the instability.
I believe there are some more basic factors than that. Among those
factors are such things as inflationary price increases, questions about
gm1 ernmental action on wages and prices, our foreign trade balance,
a recent devaluation of the dollar, the continuing lack of strength of
the dollar, and record prices for gold. There have also been some
forecast.c; snggesting a downturn in the economy either later this year
or early next year.
I also think that Watergate has had a significant impact on a lot of
investors. In addition, the SEC has recently brought some mnjor
actions alleging fr11.ud and the use of insider information in cases
involving Mr. Vesco, Equity Funding, and the earlier action against
Four Seasons Nursing Centers. As these matters have bren made
public. I expect the:v have had an impact on investor conficlence. In
an:v 1:went, there has bPen a Jack of trading b:v individuals and thr low
trading ,olume on t'xchangcs has resulted in losses by a si~ificant
number of broker dealers.
The SEC cannot deal directly with basic economic factors which
bring ahont instabilitv in our securities markets. In the ar('l'.S under
our jurisdiction. howi,·er. we can Jia,e some influence. As far ns what
the SEC is doln,2 without a chairman, we are going right ahead " ·ith
the same pattern that we were following before. We are moving ahead
with implementation of steps toward a central market system. We are
workinQ: on i:rnidelines relating to use of insider information. ,ve are
upgrading accounting practices required in filings before the Com-
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mission. We are continuing our enforcement activities and we are
upgrading financial standards of bl"oker-dealers. The staff, of course,
:bas many adcli.tional project.a under•consideration, .all of which are
intended to improve protection of investors and thus increase confidence in our securities markets. We have not slowed down as a result
of not having a chairman.
·
.
In tact, I would sa.Y that th~ staff as w.ell as the Commission itself
has tried to redouble its efforts m order to be sure that no one can even
suggest that there is· a problem at the SEC as a result of the Chairman's resignation. "\Ve felt very sad about that, but we are going ahead
in any eveiit.
·
·
Senator Puox:mRE. That is reassuring. You have had two very
vigorous chairmen; both Mr. Casey and Mr. Cook were extremely
active and were working hard for reforms of various kinds. You feel
that the momentum is there and it is being continued?
Mr. EvANS. Yes, I do.
Senator PROXMIRE. Let me ask you this, Mr. Evans. I asked the
pre\·ious witnesses, and you may have heard their responses. Have
you submitted to the White House a letter of resignation that the
President could act on at his discretion'?
lir. EvANS. No, I have not.
Senator· PROXMIRE. Would you submit such a letter if requested to
do so?
Mr. Ev ANS. After hearing your question to the others, I checked with
our Acting General Counsel, Mr. North, to see what the situation was,
not knowing the law in relation to that. He said that this has never
occurred so far as he is a ware in an independent agency.
Obviously, the ·purpose of having a term, a 5-year term, or whatever it may .be is to assure independence of those who receive the term.
And my reaction is I don't know why such a letter would be requested
or why such a resignation would ·be requested. I think this would
jeopardize the very system that has been setup.
1 can think of a situation wherein it might occur. Congress might
authorize the President to take action like this, and in a situation like
that I would feel I was bound to send in such a resignation. Without
such authorization ,J see no reason why I ever should nor do I understand why one would ever be requested.
.
Senator PROXMIRE. Well, all I want to know 1s whether absent a
change in the law would you, if requested, submit your resignation
si~ned and undated that ·the President could act on.
Mr. EvANS. No, I would not.
Senator PROXMIRE. Would not? Thank you.
The CHAIRMAN. Senafor Brock.
Senator BROCK. I was interested, John, in your response to the question with regard to the ongoing activities of the SEC. Is it your feeling- that, while obviously you would be better off with a chairman,
that there is no reason you shonld hesitate or delay in any respect with
thP programs that are underway with the SEC both with regard to
reforms being considered and supervision of the regulation i They are
all a matter of the responsibility of the Securities and Exchange
Commission?
::\fr. EVANS. Riaht. There is no reason for us to 'hesitate. We have
£our Commissioners. Three is all we need to act. And as long as three
are present for any action I see no reason why we should hesitate.
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Even if we had five, those same three could control the actions of the,
Commission.
·
: · '
· Senator BROCK. I regret the loss of a man that I considered to be
outstanding in this particular area, hut I share I think Senator Proxmire's interest in encouraging you to give visibility to this effort because I think it is important. There are enough unsettling factors in
the market without this being added to the list, and I am grateful for
the fact that you indicate it is not and will not become so.
Mr. EvAX8. I think, Senator, th<>re are those who would like to reduce
the effediveness of our agency. I think V csco and some people connected with him, for example, would like to do this, and they have
made statements to the effect that the agency had a cloud OYer it.
.\,, fH r as I am <'oncerned. there is no "<'loud over our agency. I
thi11k-a11d I harn said this before-that what was done by l\fr. Cook
wns to assure that no cloud was going to be o,er our agency, and,
wlwtlwl' it was necC'ssary or not, he did it so that no one could either
question the effectin•ness or the CT('Sire of our agencv to be independent
without any political overtones.
•
I ham found no political ov<'rtones at all in the Commission. Now
we ha,·e two Democrats and two Republicans on the Commission, but
we a!'e not partisan in our decisions.
I might say this. nnd maybe this is somewhat risky because I harn
found when I was a member of the committee> staff that those who
spoke too much got in trouble-but I think it is om responsibility as a
commission not only to be independent of White House pressure but
nlso of pressure from individual Members of Congress. When Cong11.'ss acts, obviously we carry out the law to tlw best of our ability.
But I think that Members of Congress should realize that as a commission we can't comply with the wishes of indfridual Members when
it come,:-; to matters of enforcement and regulation. I hO:'P this is understood by the Members of Congwss.
But I think as an independent agPncy we have to remain independmt of both, if we are going to do the joh we think we ought to do.
SomPtimes this is hard because demands hy indiddnal Members pursuant to nn o,·ersight responsibility can create some problems for our
enfore~ment action. I would cmtamly hope that oversight is not carried out in a way so that our enforcement cases are jeopardized. There
is that possibility.
Senator Tow1m. You ther<'fore distinguish lwtween the collective
action of Congress and pressure that might be brought to bear by
individual :.\!embers?
Mr. EvANS. Very much so. As far as collectirn action by Congress,
that is what we are there to do--carrv that out and administer the law.
Senator TOWER. I concur.
"
Senator BnocK. I appreciate your statement. I would point out while
you have two Democrats and two Republicans, rarely do -the i~ues
before• you contain any partisan ov£'rtones at all. I hope that they are
nHn dc,cided on any partisan basis. I don 't :-;cc any justification for
that.
I think the fact that you might iclentifv with a political partv indicatl'S a ePrtain philosop!iical coloration liut I knm,- of no is.sue 'lidore
tlw SEC that wonhl in ml many partisan mattt>t·at all.
Mr. EvANS. I am not aware of anv. I think onr actions cross lines
completely. ·when we consider major policy decisions such as mem-
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are
bership on exchanges or brokerage commission rat.es, there
different interest groups obviously. Many billions of dollars are involved.
And we have to just do the liest we can. Actually, we are in a. very unenviable position, because whatever we do is considered wrong by a
major percentage of those who are affected by our action. That's pa.rt
of the Job.
Senator BROCJt. I thank you for your response. ·
Mr. Chairman, I would simply say I know of no nomination that
I have taken ~ter delight in supporting than that of John Evans.
He is an outstanding person.
The CHAIRMAN. I am sure that is true with all of us.
Senator McIntyre, any questions¥
Senator McINTYRE. I yield to Senator Johnston.
The CHAIRMAN. Senator Johnston.
Senator JOHNSTON. We had this conversation today about letters
of resignation. Is or is not the SEC appointed at the pleasure of the
President, or is it for a term i
Mr. EvANS. It is for a term, a. 5-year term.
Senator JOHNSTON. Removable only for cause 9
Mr. EvANS. Tha.t's right.
Senator JOHNSTON. Is the same thing true for the other offices we
have considered 9
The CHAmHAN. Independent agencies.
Senator JOHNSTON. All independent agencies are not removable by
the President 1
Mr. EvANS. Except for cause. There are basis on which he can do
this. But this is different, I think, from what Senator Proxmire is
asking. He is asking, would we sign a letter in advance that any time
the President wanted-Senator JOHNSTON. I had the impression today with some of these
other offices that they were removable at the President's pleasure, even
though they were independent, but I am glad to hear they are completely independent.
Sima.tor TowER. One of them is Dr. Toote.
Senator PROXMIRE. I didn't ask Dr. Toote. She is in HUD, and that
should be at the pleasure of the President, certainly.
·
The CHAIRMAN. By the way, you may remember back in FDR's
time he tried to remove such an appointee. As I recall, it was in the
Federal Trade Commission. And the Court ruled definitely against
hlm.
•
Any other questions 9
Senator Taft 9
Senator TAFr. No questions.
The Clli.IRKAN. Senator McIntyre?
Senator McINTYRE. I just wanted to say that Mr. Evans is over
there now, isn't he, performing his duties 9
The CHAIRMAN. This is a reappointment for a regular term.
Senator McINTYRE. For a 5-year term. And I just want to go on
record as saying during- the time John Enrns was here on this committee I respected his integrity and everything about the way he per•
formed his duties, and you must be now getting your feet wet, and I
am delighted that the President has decided to keep you on for 5 more
years, and I want to wish you the very best.
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Mr. EvANS. Thank you, Senator.
The CHAIRMAN. Senator Taft, do you have any questions?
Senator TAFT. I have no questions, Mr. Chairman.
The CHAIRKAN. Thank you very much, and we all wish you well.
Now the committee will go into executive session and I ask all of
those not connected with the committee to retire.
[Whereupon, at 11 :53 a.m., the committee proceeded in executive
session.]
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