Evening star., 1953-05-19
New Policy for RFC
Aims 10 Limit Loans
For Essential Uses
BY the Assoeiufed Press

AA"~A @V' ~A0NCA4oS ACW du~
ministrator of the Reconstruc-
ton Finance Corp, has an
nounced new, tighter loan pol
icy aimed, he said, at greater
efficiency" and at limiting loans
to essential" business or COM
munity projects.
Mr.. Cravens. who took over
the RFC two weeks ago, told a
news conference yesterday:
1--WE are trying to, tune our
policy to present peak economic
conditions. We don't think 1t
should be the objective of the
RFC at this time to increase eco
nomic activities beyond what is
essential"
He said he had made the rec
concentrations for the new loan
policy and that they were ap-
proved by the other members of
the RFC Loan Policy Board
These are Secretary of the
Treasury Humphrey, Secretary
Of Commerce Weeks and Abbott
L. Mills, jr.. of the Federal Re-
serve Board.
Objectives Detailed.
Mr.. Cravens explained the new
policy would:
l. Forbid loans which might
result in Subsidizing with public
funds" businesses run by Gin
ferior management" to the detri-
mellt Of well run, able and eff
cient competing business"
2. Restrict loans in labor sur
plus areas" (areas certified by
the Department of Labor as CEN
ters of unemployment) to busi-
nesseS producing, processing or
distributing goods or services
"customarily recognized as ne
cessities as distinguished from
luXurieS."
3. Require, where loans are
certified by the Defense Depart
ment as necessary to defense
production, that the Pentagon
also certify it cannot find a con-
tractor who does not need a loan
or that there is a particular rea-
son for using a contractor who
requires Government credit.
4. Automatically make an ap-
plicant ineligible for an RFC
loan if he has been turned down
by the armed services for V-loan
treatment. (The V-loan is loan
for defense purposes by private
interests. guaranteed by tn e
armed services under the De-
tense Production Act.)
Ban "Bail Out" Loans.
5. Forbid loans of the "bail
out" type to repleniSh company
funds already paid out to credi-
tors or to furnish funds for pay
ment to proprietors or stock
holders.
6. Forbid loans to an appli-
cant who has been, is or will be
directly or indirectly connected
with illegal activities.
7. Require evidence that a COM
pany applying for a loan can not
raise either new capital or credit
privately on reasonable terms.
8. Forbid loans to companies
that cannot meet specified tests
showing that they are reason
ably sure to be able to pay back
the loan.
9. Forbid loans to communities
except for projects urgent and
indispensable to the health and
safety of the community" and
except where proof is offered
that an attempt was made to
get private funds and no such
funds were offered on reason
able terms.
Reorganization Set.
Mr.. Cravens also announced a
reorganization of field Offices ito
increase efficiency, concentrate
agency functions and reduce op-
Grating COSTS"
The reorganization did not
shut down any RFC loan Offices
but it reduced 20 district Offices
to branches of regional agencies.
Mr.. Cravens said the RIGS field
personnel would thus be reduced
from 1,247 to TOO. He said it
would result in an annual saw
ing of approximately So million.