Evening star., 1941-04-25
Small Loan Bill
Backed by Five
At Hearing
Amendment Offered
To Curb Practice
Of Procurers

Proposed amendments to the small
loan legislation we're heard today by
the subcommittee of the House Dis
trict Committee of which Repre-
sentative McGehee of Mississippi Is
chairman.
The only witnesses spoke in favor
of the bill, after which Mr. McGehee
announced there probably would be
no further hearings
The witnesses today were Rich
mond B. Keech, corporation counsel;
Evan H. Tucker, for AZ years presl-
dent of the Northeast Washington
Citizens Association: Francis C..
Addison, jr, president Of the Secur-
ity Savings & Trust Co. and chair
man of the Law and Legislation
Committee of the District Bankers
Association; c. F, Burton, president
of the City Bank and vice chairman
of the committee. and Harry S.
Wender, vice president of the Fed
Grafton of Citizens Associati tions and
chairman of its Committee on Law
and Legislation.
Protection for Borrowers Sought.
Corporation Counsel Keech said
the District Commissioners zee a
necessity for small loans in the Dis
trict and are seeking legislation that
will encourage legitimate business
of this kind and will protect the
borrowers.
One amendment was introduced 70
curb the practice of procurers. Other
amendments were offered because
the original language is too broad
/ and the effort is made to make the
wording of the bill more clear and
/ concise.
Mr.. Eeech emphasized that the
| bill is drafted along the lines of the
4 uniform Small-Loan Act as recon-
mended by the Russell Sage Founda-
1 ton. In reply 10 question, he said
| that around the fringe Of the Dis
/ trict II or more loan companies are
operating.
212 Per Cent Interest Rate.
The bill proposes an interest rate
of 212 per cent month which It Is
thought will encourage borrowers TO
make their loans in the District and
avoid a 81 per cent or higher rate
outside Mr.. Keech also emphasized
no collection fee would be permitted
and the insurance rate would be all
inclusive
Mr.. Addison said the bankers
would be opposed to the original act,
but if the amendments are kept
they would have no objection. They
have two reasons for wishing to
have the banking business separated
from the small-loan business. One
is that already they are now under
three definite supervisory authori-
ties. the Federal Deposit Insurance
Corp, the Federal Reserve System
and the Controller of the Currency.
This definitely prohibits, under the
usury statute, any rate higher than
8 per cent by contract, he said.
Mr.. Tucker said he hoped a mini
mum rate of 2 per cent a month
could be included in the legislation
and a 500 license fee. He said he
believed citizens wished to encourage
small loan companies to come into
the District
Questions by Representative Dirk
sen. Republican, of Illinois and other
members of the committee brought
out that the license fee would be to
help maintain the proposed Office of
supervisory of the small loan busi-
ness and could not possibly produce
revenue.
d. c. Support Of Office Seen.
Representative Dirksen empha-
sized that even an exorbitant
license fee would not make the SUI
pervising Office Self-SuStaining and
that. doubtless. the District would
find it we'll worth While TO support
such an office. Chairman McGehee
indorsed this decision.
Mr.. Wender said many of the
Keech amendments met the de-
mands of the Federation of Citizens
Associations. He exhibited litera-
ture he had received. urging him to
make loans and offering HIM
premiums such as a radio for dong
so
During discussion by members Of
the committee with Mr.. Keech. 1t
was practically decided that a low
interest rate of 2l2 per cent would
take care of the possibility OF any
one being able to offer valuable
premiums as an inducement 10 poor
people to go into debt. Mr.. Wender
emphasized that certain loan COM
NAMES are doing it now outside the
law"
Speaking for the Federation OF
Citizens Associations, Mr.. Wender
said I'VE demand regulation and II
there is any revenue from this busl-
ness, it ought to come into the Dis
trict. If there is a low rate here,
District citizens will not go into
Maryland and Virginia. where
HIGHER rate is charged which may
run up to 500 and 1000 per cent.
As it is, exhorbitant rates Of interest
are being charged here. 1t is wholly
unregulated business" ."
Hits 'Installment Racket"
! He tOlQ tne committee lIle ACuCl n
ton will seek legislation Ito cover
the installment buying racket Mr..
Wender stated that the press and
public are in support of this leglsla-
ton and he directed the attention
of the committee to a pamphlet
covering a discussion of the small
loan legislation by United States
Attorney Edward NJ. Curran.
Mr.. Wender made several state
ments concerning the banking busl-
ness in Washington which were
resented by both representatives OF
the banking association present. He
said one bank was taking wage
assignments and that half dozen
or more were charging more than 3
per cent interest and "if they con-
tinue this type of practice. they
must come under this small loan
law"
Mr.. Burton said cit is impossible
to put the banks and small loan
businesses together" and Mr.. Nc
l.