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those you now have, or would there be new personnel and, if so, in what number?
Mr. Foley. Well, you would have to have new personnel, unquestionably, since we do not now have personnel enough for the activities Congress has so confidently asked us to undertake from time to time. I cannot at this moment,
I think, give you an estimate on how much, nor exactly what types. It would require additional personnel and as the activity expanded probably an expanding amount of personnel would be needed to render the services involved in connection with processing, and so on-which must be quite familiar soil to you, Senator.
Senator Cain. It is, except that your answer, pleasant though it is, does not give me any information. [Laughter.]
Mr. FOLEY. That is right. It is quite possible that we may have the information.
Senator Cain. Well, yes, I think somebody has probably designed an organization chart, if you are proposing to spend all this money, this over $2,000,000,000. Somebody has got to give a little consideration on how many people you will need to make it work.
Mr. Foley. Well, we have not prepared an organization chart, Senator, or we would have had it here. But we are studying budget requirements. I do not know whether we have estimated personnel requirements.
Mr. FITZPATRICK. Not as yet.
Senator Cain. Well, then, you get the money first and then figure out how to spend it.
Mr. FOLEY. No, then we come to get the appropriation for what is authorized by this bill.
Senator Long. How do you visualize these cooperatives being organized? I wonder if you have any ideas on that yourself? How would it work-for instance, how much would be the expenses that people would have to go to in order to initiate a project under this bill before they will be able to obtain loans to further the cooperative's purpose--in other words, to plan that?
Mr. Foley. Well, at this point as I envision it, and I am sure I am not as expert as many other are on this subject, you would probably start with a group of individuals who have decided they have some interest in the development of a cooperative. They may have received some advice from other cooperatives, or they may have received it from an association of cooperatives in different parts of the country which are becoming somewhat more active than in the past, and then quite likely they would come before the agency for technical advice, as contemplated in this bill.
The expenses of their organization, the necessary legal steps that are involved, whatever they may be in their individual State, would have to be borne by themselves. It would not be a large cost. I do not know exactly what it might be, but the estimates I have seen for certain cases are small.
At that point they would be in a position then as a cooperative or as an established association to move further with plans for a project.
Senator LONG. Now, is it assumed they would have to have the plans themselves before they applied for a loan like, possibly, blueprints of the proposed housing?
Mr. FOLEY. I would assume that they would have ordinarily what would probably amount to a tentative sketch of what they had in mind rather than detailed blueprints. As a matter of fact, probably it would be unwise to have blueprints and to go to all that expense before they discovered whether or not that housing would be eligible under the set-up in this bill, just as many people unfortunately in the past have spent a lot of money in blueprints, expecting to get a mortgage on a house that did not in the end meet the specifications of the FHA. At that point I think they would be eligible for consideration, a't least preliminary advances under the plan for aid.
Such advances in my conception, as I indicated this morning, would be based on whether or not it was established they were a bona fide association as is contemplated here and that they were serious and in earnest about it, and this small preliminary advance would be their means to get started.
Further advances, as I indicated in my statement, I think would be contingent upon the progress made and the assurance that the project was developing. There would be some risk in those preliminary advances.
Senator Long. It seems to me that you would probably have some groups coming to you and inquiring what could be done under the cooperative, assuming this legislation is passed, and they would very probably want the advice of your agency as to how much various types of units would cost, and they would expect you to have that available and that you would show them certain data as to how much certain types could be built for and ascertain costs. ; Mr. Foley. Yes, and I think that is the type of advice we would be in a position to give.
Senator Long. And it occurs to me there are a great number of people who rather than hire an architect to design a building, would like to look at a few sets of blueprints or submit some tentative designs in some cases and have you pass on them.
Mr. FOLEY. They could go to the architect with the idea of what they wanted and have it developed.
Senator SPARKMAN. Mr. Foley, just one more question. Talking about personnel, I notice a provision that:
The Corporation shall have power, with the approval of the Administrator, to select, employ, and fix the compensation of such officers and employees as shall be necessary for the performance of its duties under this title, without regard to the provisions of laws applicable to the employment, compensation, leave, or expenses of officers and employees of the United States. That
means without regard to civil service, does it not? Mr. FOLEY. That is right, with further provision there with respect to the salary level, if I recall correctly.
Senator SPARKMAN. Yes, that is true. But I was going to ask, is that the language that is usual in the case of Government corporations?
Mr. FOLEY. I am not sure.
Senator SPARKMAN. In mixed-ownership corporations. In other words, this is not any departure, it is the same language?
Mr. FITZPATRICK. Yes, sir.
Senator Cain. Mr. Foley, who appoints the board of directors of the new corporation?
Mr. FOLEY. The Administrator of the Housing and Home Finance Agency.
Senator Cain. And are those nominations subject to confirmation by the Senate? Mr. FOLEY. I think the bill does not provide for that.
Senator Cain. Now, in line with Senator Sparkman's question, is that an unusual procedure?
Mr. FITZPATRICK. It is not.
Mr. FOLEY. I have not heard of nominations confirmed by the Senate other than nominations made by the President.
Senator Cain. But the point is that this is a new corporation, it will be a brand-new departure, and we are not certain of the answers to our questions, because it has never been tried before. Now, we are going to create this Corporation and the Administrator for Housing and Home Finance will appoint these five and they will be members of the Board and that is the last Congress knows anything about it. Now, I am not being disrespectful, Mr. Foley, and I know you would not take it so, but we would have nothing whatsoever to say about the appointment or decide on those directors. I was wondering about the difference between that Corporation and the RFC as a corporation, the members of which are automatically subject to confirmation by the Senate.
Mr. FOLEY. An inherent difference.
Mr. FITZPATRICK. The regional home-loan banks are mixed ownership corporations. Some of the directors are elected by member borrowers, and others are appointed by the Home Loan Bank Board; but they are not subject to confirmation.
Senator Cain. Yes.
Senator Long. Do you contemplate in the development costs situations where a cooperative might find it desirable to build their units on sites where there are already some housing? For example, in my section of the country there are in our best cities some old and dilapidated housing here and there that should be demolished to prepare a proper site for some other type of housing. Of course, that would increase the cost, would it not, of acquiring a site?
Mr. FOLEY. I think the factor would have to be considered as to whether the cost factor created by that situation was such as to raise the total cost of the project out of the reach of the middle-income group.
I think that would be the only factor, assuming otherwise the location was acceptable from the standpoint, say, of not too rapid deterioration.
Senator Long. It would be a matter just of the expense required, how far they would have to go to demolish the buildings. Mr. Foley. Yes. Certainly nothing in this would prevent the
FOLEY demolition of other buildings of the type proposed in your question. Senator SPARKMAN. Is there anything else? If not, the committee
? stands in recess until 10 o'clock tomorrow_morning in room 301, Senate Office Building. We thank you, Mr. Foley.
Mr. FOLEY. Thank you, Senator.
(Thereupon, at 4:50 p. m., the subcommittee recessed until 10 a. m., Friday, January 13, 1950.)
FRIDAY, JANUARY 13, 1950
UNITED STATES SENATE,
Washington, D. C. The subcommittee met, pursuant to recess, at 10 a. m., in room 301, Senate Office Building, Senator John J. Sparkman presiding.
Present: Senators Sparkman, Maybank, and Bricker. Senator SPARKMAN. The committee will come to order, please. Is Mr. Russell here? Mr. RUSSELL. Yes, sir. Senator SPARKMAN. Will you come around, please, Mr. Russell? We are glad to have you with us.
Mr. RUSSELL. Thank you, sir.
Senator SPARKMAN. Identify yourself for the reporter, and proceed, please.
Mr. RUSSELL. Thank you. If I may read this prepared statement of five pages?
Senator SPARKMAN. Go ahead, please.
STATEMENT OF HORACE RUSSELL, UNITED STATES SAVINGS AND
Mr. RUSSELL. Mr. Chairman and gentlemen of the committee, I submit a summary of my objections to the proposal for so-called cooperative housing as submitted by Mr. Maybank in the Senate on January 6, 1950, page 116 in the Congressional Record, as follows:
1. The proposal is in effect Government housing for middle-income families, and private citizens cannot compete with the Government and pay the subsidies involved.
2. It creates a new Federal bureau to be known as National Mortgage Corporation for Housing Cooperatives, under a new $15,000 Administrator who will have to have a new staff in Washington and in the field comparable to the staffs of the Home Loan Bank Board which in 1949 had 868 people and 2.8 million dollars; the Public Housing Administration which in 1949 had 1,730 people and $6,829,750; and the Federal Housing Administration which in 1949 hád 5,180 people and $20,761,490.
3. It involves Federal subsidy for middle-income people, to be paid by Federal taxpayers; for appropriations for expenses and losses; and for certain Federal and State tax advantages.
4. It involves loan terms which are uneconomic and unrealistic and which no private lender can meet.