The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1936-01-17
BORAH FOSTERS
| BILL TO RAISE
| U. S. EXPENSE
HOLE Measure Would Cost
Nation $500, 900, 900
Over Is Years.

~ Dntted Pfess
WASHINGTON. Jan. 17-New
Dealers discovered in the bottom Of
the legislative hopper today bill
introduced by Senator william E..
Borah CR., IdaJ, which they believe
would raise Federal expenditures
10000 annually for Is years.
The measure probably will attract
unusual attention because Borah is
passive candidate for the Republi-
can presidential nomination. It
would reduce interest rates on Home
Owners Loan Corporation mortgages
from per cent to 3.
An executive council order long
ago forbade New Dealers to discuss
pending legislation. But it was pos
sible to learn on good authority that
the Hole fears the Borah bill.
1t is suggested that 1t would cost
the government $500, 900, 900, de-
moralize the couptry's private loan
business, artiflcially increase the
value of some homes by as much as
$4,000, lower the worth Of others in
proportion and perhaps ruin the
home loan corporation.
"Fiddlesticks," exclaimed Senator
Borah, when asked what was be-
hind the measure. 1T explains it
self. There is nothing mysterious
about it. 1t means just what it says
reduce the rates from S to per
cent"
Says Present Rate Too High
He said he thought the per cent
rates were too heavy burden upon
distressed home owners, who are
the principal clients of the Hole,
and indicated his belief that the
measure would have no disastrous
effects, either upon the government,
or upon private business.
Experts not connected with the
Hole said that ramifications of
tie bill could be discovered by any
one with pencil and paper, taking as
a starting point the fact that the
corporation now has about $780,
100000 in loans outstanding to
nearly 1000, 100000 home owners,
and that it expects to take in next
year $150,000,000 in interest pay
ments.
Reduction of these interest
charges by 2 per cent would lower
the corporations income by $780,
100000 the first year, without low
ering its operating expenses, nor the
2.7 per cent it now pays for the
money 1t has lent cut.
Margin Would Be Small
Borah's bill would leave the Hole
with ~ margin of three-tenths of /
per cent in interest income to pay
operating costs and losses-which
are expected to be considerable.
1t was estimated that Congress
would have to pass a deficiency bill
of about 100000, 900 next year if the
bill became law and the HOLC were
to survive. There would be necessary
similar smaller appropriations dur
ing the next IA years, totaling
something more than 100000 900
before the affairs of the corpora
lions could be liquidated.
Similarly it was pointed out that
the bill would mean a reduction in
payments by the average mortgage
making householder of one dollar a
month, but would have the effect of
raising the value of his home arti-
f1cially about $500 to $4,000.
Might Demoralize Business
That is because a house with
8 per cent mortgage would be
worth considerably more than an
identical dwelling with a 5 per
cent loan upon it.
This fact, it was said, would have
a tendency to demoralize the private
mortgage lending business, which
was none too happy when the New
Deal placed its rates at per cent.
Building and loan association
rates, including all charges, now
average more than per cent,
while other private lending agen-
cies frequently charge more. Critics
of the Borah bill raid few citizens
would care to MAKE loans at these
prices when their neighbors were
dealing with the government at
lower rates.