Evening star., 1937-05-03
$3O,161,0DO SAVING
FORECAST IN BILLS
Byrd Preparing Two Based
on Reports of Brook
ings Institution.
BY WILL P. KENNEDY.

Two bills are being prepared by
Senator Byrd of Virginia, chairman
OF the Senate Reorganization Com
mittee and member of the Joint Com
mittee on Government Reorganization,
which might effect a saving of $780,
Isl 900 annually, according to reports
made to Byrd by special examiners
for the Brookings Institution. These
Examiners have gone into various
financial agencies of the Government
and made their own independent
studies.
The bills are to be filed in the SEN
ate early this week. One provides
for merger of the Home Owners Loan
Corp. and the Federal Housing Ad-
mlnlstration, with an estimated an
nual saving of s245OO,OO0. This say
Ing is the independent estimate of the
Brookings Institution specialists and
not that of Senator Byrd.
The second bill concerns the Re-
construction Finance Corp. 1t pro-
poses Cd that preferred stock and
capital notes and debentures of banks
which are held, to be sold to the Fed
eral Deposit Insurance Corp and fu-
ture purchase of stock be made by
that agency: (2) that if the corpora
ton Is to discontinue lending, as pro-
Vlded by existing law, it be liquidated
ana It's assets (other than preferred
STOCK and capital debentureS of
banks) be transferred to other agen-
cles (mostly to the Treasury for COL
lection through the reserve banks)
and (3) that if it is to continue lend
ing it make loans as fiscal agent of
the Treasury and the resulting assets
be collected through other agencies
Chiefly through the reserve banks.
Savings Vary With Plan.
II the lending activity terminates,
the anticipated annual saving is
S5,O00,000, while if the lending activ-
ity is continued. but preferred stock
transferred to the F. D. I. c., the
saving would be about 100000.
Senator Byrd explains that. accord
Ing to the estimates prepared for
him by agents of the Brookings In
stitution, if the H. o. L. C. is liqui-
dated and the loans sold, the an
ticipated annual saving would be
S25, ,l6l ,209, and If consolidated with
the F. H. A. and the loans not sold
the saving annually is expected to be
$4,597078 Then the saving on both
bills might reach maximum of s3O,-
6l,029 annually, or a minimum OF
$4ee7,O7S
These figures emphasize, according
to Byrd, how widely estimates of saw
ings vary, dependent on what course
Congress decides. The Senator's chief
desire at this time is to show that
very important economies can be ef-
fected Immediately by prompt action
OF Congress on a progressive program
OF specific reorganization proposals.
The maximum or minimum of saw
ings is determined only by what ac-
tlon Congress may take
The estimated savings by merging
the liquidating H. o. L. c. with the
F. H. A. is figured as follows:
Additional costs to the F. H. A.:
For property management, $4,000
for reconditioning and appraisal, ST.
100000; for accounting, s5OO,O00, and
for legal work, $1,000, 900, making a
total Of s7,5OO,O0O.
The budget directors allowance for
expenses of the H. o. l.. C. for 1888
is s32,000,000, and the Brookings In
stitution experts figure it would con-
tinue about that figure for the next
five years, since the amounts to be
collected annually would not be re-
duced except by foreclosure of bad
loans and reflnancing of good loans
through other agencies. So they fig
ure the net saving from liquidation of
the H. o. L. C. at $24,5OOOOO per
annum.
The costs should drop, it is ex-
planned, after the rush of foreclosures
Is over and the properties are sold.
In the event Of new depression then
a new crop of foreclosures is to be ex-
pected.
In addition to that 4,5O0,OOO direct
saving, further savings are calculated
from consolidation of the general
overhead cost and promotional &C
tlvltles OF the F. H. A. with those of
the Federal Home Loan Bank Board.
As follows: For administrator office,
sll5,S74; for publicity, 100000; for
research and statistics, 100000, and
for education, s345, ,335-making a to-
tai Of 1851, ,209. This added to the
S24,500,000 gives the sum of $685.
16l ,209 mentioned above.
Senator Byrd calls attention that
this possible saving is in administra-
tive costs, and not in the net budge-
tary saving, because the budget costs
OF the H. o. l.. G. are offset in large
part by the margin between the rate