Evening star., 1952-01-27
RFC Nomination Fiohi
Puts Him In Middle
Mcdonald Declares

Harry A. Mcdonald said last
night a fight between the Senate
and the White House over his
nomination to head the Recon-
Struction Finance Corporation
(RFC) has put him "in the mid
de-"
Ethical standards Of the Secur-
ities and Exchange Commission,
of which Mr.. Mcdonald is now
the chairman, have become q
major issue in the scrap.
A big Senate investigation of
the whole SEC. to parallel one
already started in the House, be-
came a possibility. A House Com
merce subcommittee is looking into
charges of fraud in some SEC
activities. None of those charges
has been aimed at Mr.. Mcdonald
himself.
Accusations Challenged.
Mr.. Mcdonald told a reporter
he challenges accusations by Sena-
tor Douglas, Democrat, of Illinois,
that the SEC has a double stand
ard of ethics for its bosses and
employees - both standards too
low. The Senator had told news
conference Friday the written
code for the five-man commission
running SEC affairs under Nc
Donald's leadership is lower than
that for the staff.
Mr.. Mcdonald made his reply
as his Office handed the Senate
Banking Committee a four-foot
stack of records on SEC affairs
which Senator Douglas had de-
manded.
Senator Maybank, Democrat, of
South Carolina, the committee
chairman, said he was sending
the documents to Senator Douglas
for initial study and that the
committee would meet next week
to consider them.
There is no dynamite in those
files" Mr.. Mcdonald said. Sena-
tor Douglas indicated he would
start at once to dig into them.
Douglas, Others Protest.
The House Commerce subcom-
mittee investigating SEC has re-
fused to tell the Senate what itI
is learning.
Senator Douglas and some other
members of the Senate committee
have protested they should not
have been asked by the White
House to approve Mr.. Mcdonald
at this time for a new Federal
Job in view of the circumstances.
Senator Fulbright. Democrat, Of
Arkansas, suggested publicly that
some common sense" at the
White House would have avoided
the difficulty.
Senators Fulbright. Douglas and
some others said the Senate
should be especially careful of
confirming an RFC head because
scars from RFC scandals of al
year ago have barely healed under
ministrations of w. Stuart Sym
ington, it's temporary boss and
trouble shooter.
President Truman had named
Mr.. Mcdonald to take over from
Mr.. Symington who seeks to re-
turn to private life.
May Name Deputy.
Mr.. Truman has indicated he
may name a deputy administrator
also subject to Senate approval
to take over from Mr.. Syming-
ton while Mr.. McDonald's case is
In the Senate mill.
There was some speculation he
might call back Chicago banker |
Peter I. BukowSki, who resigned
as deputy last December 81, for
"a short-term haul" as deputy.
Senator Douglas has contended
that Mr.. Mcdonald did not wage
a "heroic" fight to have tighter
ethical rules installed at SEC.
Hes right" Mr.. Mcdonald con-
eeded, but he quickly offered an
explanation.
He said he had proposed a rule
denying anyone in SEC the right
to quit and work Immediately for
clients having business with SEC.
The proposal was voted down by
other members of the commission.
Mr.. Mcdonald indicated he felt
there was a basis for an argument
that such a rule would discourage
young lawyers from going to work
for SEC. At any rate, he said he
did not want to shove the pro-
posal down the throats" of sub
ordinates in SEC who are less
prosperous than he is.
Prospered in Business.
"I did all right financially as a
business man before I ever got into
the Government" he remarked.
Existing SEC rules now forbid
former staff members to argue
any SEC cases with which they
had a contact while. employed by
the agency. The rule does not
specifically cover commissioners,
but Mr.. Mcdonald said that in
practice it is applied more rigidly
to them than to the Subordinates.
The House inquiry repeatedly
centers about some former SEC
officials.
The documents delivered to the
Senate committee yesterday were
requested earlier in the week.
When it did not receive them from
Mr.. Mcdonald at a session last
Friday the committee indicated it
would indefinitely delay action on
the nomination. This was inter-
preted as a strong hint to the
White House to withdraw Mr..
McDonald's name and appoint
someone not connected with SEC.
President Truman, however,
served notice he would stick by
Mr.. Mcdonald
Refuse to Comment.
Committee officials refused to-
~ sSA