Gross earnings.-The gross earnings of the Corporation for the fiscal years 1939 through 1942, inclusive, together with the estimated gross earnings for the fiscal years 1943 and 1944, are reflected in the following schedule:

1 Does not include profit on sale of securities and other miscellaneous income.

The estimated administrative expenses of the Corporation for the fiscal year 1944 are less than the estimated income from invested reserves during the same period and represent but 7 percent of the estimated gross income of the Corporation for 1944.

Loss experience. From the inception of the Corporation through September 30 1942, a total of 36 insured institutions have experienced difficulties. Of this number, 24 have required corrective action by the Corporation, 7 have been placed in liquidation, 2 required no corrective action, and 3 are now under investigation to determine appropriate action.

It is estimated that the final losses which will be sustained in the 31 associations to which the Corporation has made or authorized contributions, or which have been placed in liquidation, will amount to $5,342,000. These estimated losses represent 12 percent of the gross premium, admission fee and interest income through September 30, 1942, and 0.19 percent of the estimated total insured liability as of the same date.

TABLE III.-Comparative Budget estimates for 1944, 1943, and 1942

Comments on Budget estimates.-Despite the growing need for the services of the Corporation, as evidenced by the steadily rising figures of insured institutions which on June 30, 1942, numbered 2,374, having combined assets of $3,461,228,000, the Corporation continues to function with a relatively small staff of salaried employees due to the availability of the facilities of other agencies of the Federal Home Loan Bank Administration.

The recent experience of the Corporation has indicated the need for a well-knit organization of operating divisions adapted to immediate expansion when the operations so demand. Accordingly, four operating divisions are being established under the executive direction of the general manager, namely, (1) Division of Underwriting and Rehabilitation, (2) Division of Claims and Adjustments, (3) Division of Liquidations and Recoveries, and (4) Division of Administrative Analysis and Reporting, the personnel and salary requirements for each of which are reflected in the 1944 Budget estimates for the first time. In former years, the Budget estimates have been prepared with personnel and annual salary requirements included in the office of the general manager. The 1944 Budget estimates provide for personnel and salary requirements for the four operating divisions as outlined above, and represents a redistribution of personnel already employed. Notwithstanding the continued growth of the Federal Savings and Loan Insurance Corporation and mindful of the need for conserving manpower, provision is made in the 1944 Budget estimates for a total of only 59 employees with annual salaries aggregating $197,890, of which 49 employees are employed in the home office and 10 employed in the field. This compares with a total of 69.2 employees, with annual salaries aggregating $216,676, as shown in the revised estimates for the fiscal year 1943, and 53.2 actually employed with annual salaries totaling $157,823 during the fiscal year 1942. The estimates for the fiscal year 1944 covering annual salaries have been calculated at the maximum of the Executive order grade so as to provide for the transfer into clerical, administrative, and fiscal grades, whereas the figures for the fiscal year 1942 are on an actual salary-paid basis.

The estimated pay roll for the fiscal year 1944 is only 2.56 percent of the estimated gross income of the Federal Savings and Loan Insurance Corporation for the same period, as against 2.91 percent for the fiscal year 1943.

Other obligations.-The 1944 estimates for other obligations, amounting to $328,620, show an increase of $148,796 over the revised estimates for 1943 and $162,470 over the amount actually expended during the fiscal year 1942. The major increases are reflected in the estimates for communication services, rent, and utility services, printing and binding, other contractual services and supplies and materials. The largest single increase appears in the item "Other contractual services." The estimate for the fiscal year 1944 includes the reimbursement to the Home Owners' Loan Corporation for services to be rendered in the amount of $125,458 and reimbursement to the Federal Home Loan Bank System for service to be rendered in the sum of $148,500. There is also included under the item of "Rent and utility services" the sum of $21,986 covering rent to be paid the Home Owners' Loan Corporation. Estimates covering the reimbursement to the Home Owners' Loan Corporation and rent to be paid amounting to $147,444 have not appeared in previous years.

The 1944 estimates for communication services show an increase of $4,997 over the amount provided in the revised estimates for 1943. This is due to a reallocation of the cost of telephone service following the transfer of the Home Owners'

Loan Corporation from Washington to New York. This increase is correspondingly offset by a reduced estimate for communication services for the Home Owners' Loan Corporation.

The 1944 estimates for rent and utility services show an amount of $21,986. The total space occupied by the Federal Savings and Loan Insurance Corporation amounts to 7,199 square feet at $1.76%1⁄2 per square foot, amounting to $12,706 and represents the cost of such space to the Home Owners Loan Corporation and which will be paid to tha Home Owners Loan Corporation in the same manner as other tenants occupying the space in the building. The proportion of the cost of space occupied by those units or sections which perform services for more than one agency to be borne by the Federal Savings and Loan Insurance Corporation is $9,280, making a total of $21,986. This item has not appeared in previous estimates.

The 1944 estimates for printing and binding, amounting to $5,700 show an increase of $1,235 over the amount provided for in the revised estimates for the fiscal year 1943. Executive Order 8512, as amended by Executive Order 9084, dated June 1, 1942, requires that all contractual services for printing and binding of books, pamphlets, and other publications, printed forms and letterheads are to be included under this prescribed classification. In prior years the expenditures for printing and binding were included in the expenditures for supplies and materials. The above estimate reflects the amount necessary to cover the cost of printed forms, printing revisions of the rules and regulations, letterheads and informative literature used to answer inquiries concerning the value of and procedure for obtaining insurance of accounts.

The 1944 estimates for other contractual services, amounting to $278,508, show an increase of $118,060 over the revised estimates for the fiscal year 1943 and $125,293 above the amount actually expended during 1942. The estimate for the fiscal year 1944 reflects the changes made necessary by regulation No. 1, revised, Executive Order 8512, as amended by Executive Order 9084, dated June 1, 1942. There is included the anticipated cost of repairs and alterations, typewriting and stenographic services, duplicating work, multigraphing and mimeographing, blueprinting, photographing, and all other contractual services not otherwise classified, and takes the place of estimates previously submitted under the heading of "Special and miscellaneous," multigraphing, etc. As previously explained the sum of $125,458 provided for reimbursement to the Home Owners' Loan Corporation is included in the 1944 estimates under this object classification.

The 1944 estimates for supplies and materials, amounting to $3,807, show an increase of $2,914 over the amount provided in the revised estimates for the fiscal year 1943. The amount provided in the 1944 estimates is considered necessary to provide for the expenses for all office supplies (other than printed forms and letterheads) and other expendable items.

The 1944 estimates for travel expenses and equipment show a reduction from the amounts provided in the revised estimates for 1943.

The 1944 estimate covering the reimbursement to the Federal Home Loan Bank System for services rendered by it to the Federal Savings and Loan Insurance Corporation, amounting to $148,500, which has been included in the item "Other contractual services," shows a reduction of $6,903 over the amount provided in the revised estimates for 1943 and a reduction of $2,177 from the amount actually paid during the fiscal year 1942.

Transfers. Provision is made for transfer to the National Housing Agency amounting to $5,250. This represents an increase of $3,431 above the amount provided for in the fiscal year 1943.

Conclusion. Of the total amount of $531,760, the sum of $154,372 represents the following major increases of which the sum of $21,986 covers an item which has not heretofore been submitted in previous estimates:

Reimbursement to the Home Owners' Loan Corporation_.
Transfer to the National Housing Agency -

Communication services-

Rent and utility services.

Total....

$123, 958

3, 431

4, 997

21, 986

154, 372

For the purpose of comparison by deducting the above amount from the total estimated requirements for the fiscal year 1944 leaves a balance of $377,388, which is $22,612 less than the amount authorized by Congress for the fiscal year 1943.

HOME OWNERS' LOAN CORPORATION

Mr. FITZPATRICK. We will now take up the Home Owners' Loan Corporation.

JUSTIFICATION OF ESTIMATES

Mr. FAHEY. I submit the following justifications:

HOME OWNERS' LOAN CORPORATION

Creation of the Corporation.-The Home Owners' Loan Corporation is charged with the responsibility of carrying out the provisions of the Home Owners' Loan Act (Public, No. 43, 73d Cong., H. R. 5240, approved June 13, 1933), as amended by an act to guarantee the bonds of the Home Owners' Loan Corporation, to amend the Home Owners' Loan Act of 1933, and for other purposes (Public, No. 178, 73 Cong., S. 2999, approved Apr. 27, 1934), and as further amended by title V, section 506 (a) and (b), section 508 (a) and (b) of the National Housing Act (Public, No. 479, 73d Cong., H. R. 9620, approved June 27, 1934), and as further amended by an act to provide additional home-mortgage relief, to amend the Federal Home Loan Bank Act, the Home Owners' Loan Act of 1933, and the National Housing Act, and for other purposes (Public, No. 76, 74th Cong., H. R. 6021, approved May 28, 1935), subject to section 7 (a), title IV of the First Deficiency Appropriation Act, fiscal year 1936 (Public, No. 739, 74th Cong., approved June 22, 1936), and as amended by an act to allow the Home Owners' Loan Corporation to extend the period of amortization of home loans from 15 to 25 years (Public, No. 381, 76th Cong., S. 628, approved August 11, 1939).

Authorized capital and bonded indebtedness.-The Corporation's authorized capital is $200,000,000, subscribed for and made available by the Secretary of the Treasury. Under the original act bonds guaranteed as to interest only by the Federal Government were authorized for issue in an aggregate amount of $2,000,000,000. In an amendment approved April 27, 1934, the bonds of the Corporation were guaranteed by the Federal Government both as to principal and interest. Subsequent amendments contained in the National Housing Act, approved June 27, 1934, increased the authorized issue of bonds to $3,000,000,000, and by amendment approved May 28, 1935, authorized issue was further increased to $4,750,000,000, exclusive of bonds issued for refunding purposes.

Of the authorized bonds, $100,000,000 was specifically designated to provide capital for the Federal Savings and Loan Insurance Corporation, and $300,000,000 of the total authorized issue was set aside for the purchase of bonds, debentures or notes of the Federal home loan banks, shares of the Federal savings and loan associations, and shares of insured or uninsured members of the Federal home loan bank system. Of the amount authorized for investment at June 30, 1942, there had been invested a total of $223,756,710, of which $56,686,900 had been repurchased, thus reflecting investments in shares of Federal or State-chartered institutions at that date of $167,069,810, and an unobligated authorization for investment of $76,243,290.

Of the total amount of bonds issued, the following schedule reflects the amount outstanding at the end of the fiscal years 1940, 1941, and 1942:

Purpose. The outstanding purpose for which the Corporation was created was that of refinancing distressed home mortgages. By the provision of the original legislation the authority of the Corporation to acquire distressed home mortgages and other obligations and liens secured by real estate in exchange for cash or bonds of the Corporation expired June 12, 1936. Therefore, since that date the principal function of the Corporation has been to service the loans, to take over properties where necessary, and rent or sell such properties, whichever appears in the best interest of the Corporation. Through this process the Corporation is proceeding with an orderly liquidation of its assets.

Organization and management.-From the inception of the Corporation up to February 24, 1942, the members of the Federal Home Loan Bank Board constituted the Board of Directors of the Home Owners' Loan Corporation and served in this capacity without additional compensation. By virtue of the authority vested in the President of the United States by title I of the First War Powers Act, 1941, approved December 18, 1941 (Public Law No. 354, 77th Cong.), Executive Order 9070 dated February 24, 1942, was issued. This order provided for the consolidation of certain agencies, including the Federal Home Loan Bank Board, into a National Housing Agency to be administered under the direction and supervision of a National Housing Administrator. The unit administering the functions, powers, and duties of the Federal Home Loan Bank Board and its members is now known as the Federal Home Loan Bank Administration, and the Chairman of the Federal Home Loan Bank Board was made Federal Home Loan Bank Commissioner. The Federal Home Loan Bank Commissioner, in lieu of the Board of Directors, now administers the functions of the Home Owners' Loan Corporation. Manuals of approved rules and regulations, amended from time to time by the Commissioner, stipulate routine procedure supplemented by orders for specific authorizations. Many of the operations are carried on by the Commissioner through a general manager in charge of operations and through certain department heads who report directly to him. Regional managers in charge of regional offices located in the following cities report directly to the general manager, New York, Cincinnati, Atlanta, Memphis, Chicago, Omaha, Dallas, and San Francisco.

During the fiscal year 1942 in order to effect economies without impairing efficiency of operation, the Detroit regional office was closed and its duties and functions transferred to and consolidated with the Chicago regional office. Also, the Baltimore regional office was closed and its duties and functions transferred to and consolidated with the New York regional office. Indicative of the constant elimination of offices where their functions could be merged, consolidated, or reclassified all State offices, as of June 30, 1942, have been closed, with the exception of the Pennsylvania State office, which was closed as of September 30, 1942, and only 8 regional offices and 39 loan service stations now cover the field operations as compared with 55 State, division, and territorial offices, 52 district offices, and 317 loan service and field stations as of June 30, 1938. The home office of the Corporation is now located at 2 Park Avenue, New York City, having transferred the major portion of its personnel on September 23, 1941, for the purpose of making additional space available in Washington for defense purposes.

Analysis of mortgage loans and advances.-An analysis of the 1,017,823 original individual loans made by the Corporation for an aggregate amount of