Evening star. [volume] (Washington, D.C.) 1854-1972, 1935-03-04
PROBE OF H. 0. |. c.
Invited BY FAHEY
Says Every Device Used to
Prevent Graft in Or.
ganization.
BY the Associated Press.

6y Inc ASeoCldLeQ FEeoS.
An Investigation Of the work of thu
Home Cwners' Loan Corp. was invited
today by Chairman John H. Fahey,
who appeared before the House Rules
Committee to answer charges Of graft
and inefaciency.
Fahey denied there had been any
fnefnciency on the part Of the CORPORA
ton, asserting that every safeguard
possible had been thrown around it,
work, considering that it was created
IN the midst OF an emergency.
organized under intense pressure ana
overwhelmed by an avalanche Of loan
applications. which quickly mounted
to more than ESQ 900.
Fahey revealed that l04 persons
have been indicted for violation of
the home owners loan act, but said
that only 80 had ever been emp..yed
by the corporation. The legal de-
partment, he said, through its special
criminal section, has dealt with more
than / 200 complaints.
Might Reveal Problems.
Fahey suggested that such an in
quiry, even though it would delay the
corporations work, might be justified
If 1t enabled Congress and the public
to understand better the corporations
problems and its accomplishments in
relieving distress Of nearly a million
home owners and protecting the saw
ings Of millions Of small bank deposit
tors.
IF there existed any such general
condition Of graft and inefnciency as
these few vague criticisms have al
legged" Fahey said, there would have
been . far greater volume Of protests
from the army of over 1,750, 900 ap-
plicants who have been in contact
with employees Of the H. o. L.C.
The fact Is that less than 50
charges from all this vast number of
applications have been made before
Congress rs to the corporations prac-
tees, dealings or delays. OF this
number, specific Information has been
given us in only 81 cases. Out Of
these 81 cases, only eight deserve the
serious consideration Of any commit
tee interested In dealing with the
facts"
Various Devices Used.
Fahey said every conceivable de-
vice" has been successfully employed
to prevent graft, malfeasance and neg
lect on the part Of members of the
board or central executives Of the
corporation land TO assure fair treat
ment to the home owners and to pro-
tect the Governments interest"
He asserted that 236 attorneys had
been discharged for unsatisfactory
work since the corporation started,
and e42 had resigned or been dis
charged because they were holding
political ONCE or had become candi.
dates for once.
During the last year. ais ap-
praisers have been permanently dis
qualified for corporation employment
because Of unsatisfactory work, and
a State and district managers and
assistant managers were obliged to
resign on grounds Of mismanagement,
disregard Of instructions, ineficiency
VI CuIC1CoouCc6s
Cites Congressional Criticism.
Fahey recalled that one member Of
Congress had charged that the corpo-
ration's wholesale work in his own
city simply represented the "bailing
out" Of banks for the benefit Of stock
holders. He added that such an
assertion is hard to understand, con-
sidering that the stockholders of those
banks had already lost their entire
investment, that the refinanced mort
cages accepted in that city by the
corporation represented drastic
scaling down in value from the origi-
nal mortgages and that this under
taking resulted in providing the
necessary money for payment in full
to $4,000 depositors in one bank alone
in the city which that Congressman
represents"