Evening star., 1935-03-26
HOLDING COMPANY
LAW HIT BY PRESS
Survey Shows 81 Per Cent
Against Abolition of
Set-up.
BY DAVID LAWRENCE.

The press Of the country Is ap-
parently united in its belief that hold
ing companies snould be properly reg
ulated, but divided or a basis of 81
per cent against abolition and SO per
cent in favor OF elimination Of hold
ing companies.
These facts are derived from sur
vey completed today by the United
States News, which each week tabu-
lates press opinion on current ques-
tions. ~-
The holding company controversy
does not, according to the survey fol-
low party lines in the comments most
Of which refer 20 the possible destruc-
ton of values to investors if the pres
ent bill becomes law,
This tendency on the part Of the
press to deal with economic questions
on a non political basis and TO di-
vide more and more on the broad
question of Government ownership
and control Versus private ownership
has been noted recently and is un-
questionably The result of the out
cropping Of economic and class is
sues due to the large number of items
life of the country.
President Said to Be Firm.
Just what the President will do
about the rising number Of pro-
tests against the elimination OF hold
ing companies is not known as yet,
though, in the last few days, con-
fiicting impressions have been OBJ
tanned by those in a position TO know.
The President is represented as not
intending TO yield an inch on his
recommendation for the elimination
of holding companies altogether or
leaving the question of which shall
survive and which shall continue to
the determination of Federal COM
mission.
On Capitol Hill, however. there are
reports that The congressional COM
mittees will be reluctant to keep the
abolition feature in the legislation and
that they may decide to try regulation
for a period of years, leaving it to
the experience of a Federal commits
sion to reveal whether abolition is ul-
timately necessary.
Government Money at Stake.
One of the little known. but never
theless important factors in the hold
ing company problem is the possible
loss to the Government itself il hold
ing company securities are maintained
at present levels without recovery.
Thus it is believed many millions of
dollars in loans made by closed banks
and some millions in loans made by
banks now open are related from the
standpoint of collateral to securities
in holding companies.
The Reconstruction Finance Corp.
has in its portfolio directly and also
indirectly through institutions to
which it has made loans a substantial
amount of holding company bonds
which are apt to be materially dimin-
ished in value If the holding company
bill becomes law.
The position of the Federal Govern
ment as a lender on what was con-
sidered good security in 1892 and 1888
may or may not be factor in the final
analysis. because the r. F. C. is not
expected to come out of the depression
without some losses. But it Is novel
TO find one Government department
introducing measures which will cause
loss to another branch or depart
ment. All these losses will represent
taxpayers money, of course, but the
character Of the collateral on loans is
not a matter on which the public can
get very much information.
Guarantee Behind Banks.
With respect to the loans in going
banks, the Federal Deposit Insurance
Corp. Is supposed to protect those in
stitutions in case they are handi-
capped by loans that go sour. Hence,
II, as a consequence of Federal Gov
ernment action, loans in some banks
are endangered, the Federal Deposit
Insurance Corp, through the insur-
ance plan, makes up whatever deficit
to depositors that may be necessary in
the event that the going banks close on
account Of it-a contingency not con-
templated in this instance, because,
whatever the loss through holding
company securities, it is doubtful If it
Is sufficient in any one institution to
cause embarrassment by impairing the
capital structure.
Still, the problem Of what action
the Federal Government may take to
load the going banks with assessments
based on losses in banks that are
directly affected by adverse legislation
Is far from solved, and, as a matter
Of fact, the inter-relationship of Gov
ernment policies to existing bank loans
has never been canvassed. so far as
is known, by any Government official
Lately, however, Chairman Jones Of
the r. F. C. has taken a lively interest
in what may happen to the railroads,
since the r. F. c. holds so much COL
lateral in railroad securities.
(CoDyriRht 1Q35)