Mr. WIGGLESWORTH. Your break-down seems to indicate that your average salary is $3,500, or thereabouts.

Mr. FALLON. I am surprised that the figure is as high as that. Mr. WIGGLESWORTH. That is a pretty high average, as compared with the normal salaries in the Government service.

Mr. FALLON. One reason, I think, is that 9 of the 18 people are lawyers; that is because we are taking on business at the present time, and the legal phases are rather troublesome. They have to examine the State laws, the bylaws, charters, and certificates being issued. That would account for that substantial average. That average is also high because we had to temporarily employ a lawyer of some standing.

Mr. WOODRUM. You are referring to 18; the break-down I have gives the number of departmental personnel as 36.

Mr. FALLON. That is 36 prospective employees for 1938.

Mr. WOODRUM. It gives 35 for 1937.

Mr. FALLON. We did not put them on. That is against the emergencies that have not yet arisen. That is what we were allowed. Mr. WIGGLESWORTH. What is your estimated expenditure for the current fiscal year?

Mr. FALLON. It will be, roughly, about $120,000.

Mr. WOODRUM. That is including your personnel and your other obligations?

Mr. FALLON. Yes; to be more exact, it is $124,000. That will include everything.

Mr. WIGGLESWORTH. For all items?

Mr. FALLON. Yes.

Mr. WIGGLESWORTH. How much of that is personnel?

Mr. FALLON. Our pay roll is running about $62,000 a year at the present time.

Mr. WOODRUM. How many additional employees do you contemplate taking on during the fiscal year 1938?

Mr. FALLON. We would not take on a single one that we did not have to, but we do have to allow for emergencies. We believe the number that we are allowing for here would cover any normal emergency.

Mr. FITZPATRICK. Why do you expect an emergency?

Mr. FALLON. This business we are in, particularly in connection with the State-chartered institutions, gives us some difficulties. We do run into defalcations by employees, and we run into institutions where, through these defalcations, we have an emergency to meet. We have to make that good. We do know that in the normal course of events, in some part of the country, there must be some trouble.

AMOUNT OF CAPITAL FUND INTACT

Mr. FITZPATRICK. For what amount of guarantee is the Government now obligated?

Mr. FALLON. The Government actually has not a cent of obligation over the $100,000,000 they put in there.

Mr. FITZPATRICK. Will it be necessary to spend the $100,000,000? Mr. FALLON. If we got into a very dire emergency it might be. Mr. FITZPATRICK. But up to the present time it has not been necessary?

Mr. FALLON. We have never touched a cent of it. Mr. FITZPATRICK. It has been able to carry this up to the present time?

Mr. FALLON. Yes.

Mr. FITZPATRICK. And the prospects are that it will not be necessary to touch that amount?

Mr. FALLON. We have every wish to keep that capital intact, and we have every hope that we are going to do it. We have a 6-million-dollar surplus now added to our capital.

Mr. FITZPATRICK. Where is that invested?

Mr. FALLON. That is invested in United States Government bonds.
Mr. FITZPATRICK. And the interest goes back into the fund?
Mr. FALLON. Yes; and that is a continuous process.

AMOUNT REQUESTED OF BUDGET BUREAU

Mr. WOODRUM. What was the request you made of the Budget? Mr. FALLON. We have here $256,180.

Mr. WOODRUM. Did they allow you what you requested?

Mr. FALLON. They reduced it. We originally requested $50,000 more than that.

EXPENSES IN CONNECTION WITH LIQUIDATION OF INSURED INSTITUTIONS

Mr. WIGGLESWORTH. I notice in the language of the appropriation it is provided—

that all necessary expenses in connection with the liquidation of insured institutions under said title IV shall be considered as nonadministrative expenses for the purposes hereof.

That is for the reasons you have already outlined?

Mr. FALLON. Yes, sir.

Mr. WIGGLESWORTH. You say there has only been one instance of failure to date?

Mr. FALLON. Only one failure up to date that we have been involved in.

Mr. WIGGLESWORTH. Incidentally, you have the right to cancel insurance, do you not?

Mr. FALLON. Yes, sir; under certain provisions.

PAYMENT OF ADMINISTRATION EXPENSES AND OTHER OBLIGATIONS OF

CORPORATION

Mr. WIGGLESWORTH. Will you explain this language in the item?—

The administrative expenses and other obligations of the Corporation shall be incurred, allowed, and paid in accordance with the provisions of said act of June 27, 1937.

Mr. RUSSELL. That is customary language that the Bureau of the Budget is using with reference to Government corporations. That is the act under which the Corporation was formed.

Mr. WIGGLESWORTH. That is the act originally setting up the Corporation?

Mr. RUSSELL. Yes; that is the organic law under which it operates. That is the National Housing Act that is referred to in that citation. This Corporation was formed under title IV of the National Housing Act.

Mr. WIGGLESWORTH. Where does the Federal Savings and Loan Advisory Council come into this picture?

Mr. RUSSELL. That is in the Bank Board.

Mr. FALLON. It comes into the picture remotely, so far as we are concerned.

GUARANTY OF CORPORATION TO INVESTORS

Mr. FITZPATRICK. Do the housing projects come under your jurisdiction?

Mr. FALLON. No, sir; we are insuring the safety of the investments of the public in these insured institutions, and they can voluntarily insure with us. We are more similar to the Federal Deposit Insurance Corporation. They are insuring deposits in commercial banks and we are insuring the equivalent of deposits in building and loan associations.

Mr. WIGGLESWORTH. It is similar work, but without any duplication or overlapping?

Mr. FALLON. No, sir; no duplication. We are limited to a different type of institution."

Mr. FITZPATRICK. For instance, the Railroad Building & Loan Association of New York comes under you, does it?

Mr. FALLON. Yes, sir; that is insured; that is a Federal institution.

Mr. FITZPATRICK. Only insofar as their loans and mortgages are concerned. Do you guarantee the people that invest their money or deposit their money there?

Mr. FALLON. Yes; but only in the case of failure.

Mr. FITZPATRICK. There are many people who deposit that do not make a mortgage or make a loan, but they get interest, and at one time they were paying regular interest rates. Have you anything to do with regulating interest rates that they pay to depositors? Mr. FALLON. No, sir; that is a matter of management. Mr. FITZPATRICK. Somebody sets the rates?

Mr. FALLON. The Federal Home Loan Bank Board have that matter under their control. We stand ready in case of failure to secure the safety of his money to the investor. We do not come into the picture prior to that, except in the matter of supervision and examination of the institution.

Mr. FITZPATRICK. They have, besides a mortgage department, an investment department, or bank, where depositors are paid a certain rate of interest and others take out mortgages. Do you guarantee both?

Mr. FALLON. We guarantee their investment in there. We guarantee every individual who has invested and for the amount he has invested.

Mr. WEEB. Up to $5,000.

Mr. FITZPATRICK. Take the Railroad Building and Loan Association in New York City. Do you guarantee investment in that up to $5,000?

Mr. FALLON. Every dollar of investment up to $5,000 is safeguarded by us; we guarantee the investor in the safety of the investment. Mr. FITZPATRICK. Very often that question is asked, insofar as those institutions are concerned.

Mr. RUSSELL. A State association may take it or leave it, but a Federal institution must take the insurance.

Mr. WIGGLESWORTH. Has the Corporation issued any obligations? Mr. FALLON. No, sir.

Mr. WIGGLESWORTH. Have you received any deposits, acting as a depository for the Federal Government?

Mr. FALLON. No, sir; we do not have that authority. Some of the institutions have that authority, but we do not happen to have it.

Mr. WIGGLESWORTH. Have those institutions acted in that capacity? Mr. RUSSELL. Yes; they have. The Secretary of the Treasury designated these Federal savings and loan associations as fiscal agents, and has called upon them to serve in connection with the sale of United States savings bonds, and a good many of them have qualified. They have to give bond.

They are also designated to collect money through the Federal Housing Administration under title I, on the modernization notes.

They are also serving the HOLC in acting as collecting agents in certain areas where the HOLC has no offices, and where the HOLC wants to receive the cash payments made by these borrowers. borrowers.

Mr. FALLON. May I correct one statement. I said the Budget had reduced us $50,000; it was actually $113,000.

Mr. WIGGLESWORTH. How long do you expect the work of the corporation to continue, up to the point you indicate as desirable?

Mr. FALLON. At the present rate it will take us 2 years more. We are half way through now. There is very little indication of increasing speed unless we use some process of developing interest by the public.

Mr. FITZPATRICK. What is the type of assessment of the Loan Insurance Corporation?

Mr. FALLON. We have an annual premium of one-eighth of 1 per

cent.

Mr. FITZPATRICK. That is the same as the Bank Insurance Corporation?

Mr. FALLON. Yes; except that our rate is a little different. Mr. FITZPATRICK. Theirs is one-twelfth of 1 percent, I believe. Mr. FALLON. Yes. We also have the right to assess them for another one-eighth of 1 percent for any one year to meet our losses and

expenses.

Mr. FITZPATRICK. Up to the present time it has not been necessary to do that?

Mr. FALLON. No, sir.

Mr. FITZPATRICK. So the fact is that the depositors of the corporation pay all of the carrying expenses?

Mr. FALLON. Yes; the institutions directly and the depositors indirectly.

DATA SHOWING ASSETS, SHARE AND CREDITOR LIABILITIES, ETC., OF ALL

INSURED ASSOCIATIONS

Mr. WOODRUM. We would like to have several of your charts that you have here in the record.

Mr. FALLON. Yes; we will be glad to insert those in the record. (The charts referred to are as follows:)

FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION

Grand total.

1,493 1,083, 819, 042 992, 333, 332 1, 172, 428 582, 905, 618 24, 399 314, 919, 336 787, 201, 054 49, 392, 800 61, 231, 100 897, 824, 954 94, 508, 357 192, 924, 336 799, 408, 996

Total share and creditor liabilities to assets.

Insured share and creditor liabilities to assets.

Potential liability of Federal Savings and Loan Insurance Corporation to assets.