Evening star., 1961-08-11

and also, whether a reduction
IN the reserve allowance and
higher taxes for these institu-
tions would cut down the over
all supply of money for home
financing.
THE mutuals' chief competi-
tors for savings. the CONNER
cial banks. had their innings
on the second day of the hear
ings before the House Ways and
Means Committee and argued
strongly that the present
reserve deduction is far greater
than needed to meet any
possible losses.
They also contended that the
mutuals had presented no real
evidence that q larger tax bill
for them actually would result
in a decrease in the overall
supply of mortgage funds.
Two Fire Blasts
: Two members Of the House,
Representative Multer of New
York, and Representative Pat
man Of Texas, enlivened the
final session with blasts
against commercial bankers,
who appeared in support of the
Treasury's recommendations
that the mutuals be required to
pay more taxes.
: At the sessions start Mr..
Multer took shots at the Fed
eral Reserve Board and the
Federal Deposit Insurance
Corp. for supporting the Treas
ury's proposals.
Mr.. Patman In the afternoon
charged that commercial bank
ers already enjoyed unfair
privileges from the Federal
Government and were support
ing the proposed changes to
ruin their competitors. the saw
ings and loans and mutual saw
ings banks.
Several members of the Com
mittee, however, were critical
Of the savings and loan and
mutual savings bank witnesses
contending that the IL per
cent reserves are necessary.
Representative Curtis of Mis-
souri, and Repre- eSent a t i've
Byrnes of Wisconsin both ques-
toned witnesses closely.
Walker Presents Case
Charls E. Walker, executive
vice president Of the American
Bankers Association, presented
a major part Of the bankers
case for taxation Of the mutuals
during the morning and at the
close of the hearings, Howard
j., Stoddard, co-chairman of
the Bankers Committee of Tax
Equality, spoke. as
Mr.. Walker emphasized the
compelling need for more taxes
to pay the costs of defense and
said the mutuals represented a
$110 billion industry paying an
nual Federal taxes Of less than
1/100th of / per cent of total
assets and less than 3/10ths of
/ per cent of income before
dividends and interest"
He argued that the rapidly
growing industry could well af-
ford to pay its fair share of
taxes and that a change in its
tax status should not affect
the overall supply Of mort
gage funds as predicted by the
savings and loan and mutual
savings bank witnesses.
1t fell to Charles A. Wellman
Of Glendale, Calf, legislative
chairman for the National
League of Insured Savings As
sociations. to give probably the
meatiest defense Of the mutuals
present tax status.
~ Defends IL Pet. Reserve
Mr.. Wellman said the present
IL per cent reserve allowance
for savings and loans Is neces-
sary for sound operations and
protection against cychcal
mortgage losses.
He rejected the Treasury
figures which indicated that
average mortgage losses Of the
associations had been around
only 1.6 per cent in is years
following 1880. Cyclical losses
do not spread themselves over
that long a period and figur-
ing out such an average is only
mathematical exercise, he de-
clared.
When things were tough back
In the 1930s, mortgage losses
actually ran around Is to 18
per cent and these had to be
met at that time and not spread
out over a 15-year period, he
said. Reserves are needed
when the losses occur" he en-
phasized.
Mortgages matured then in
less than Is years and now they
are stretched out to 20, 25 and
so years, he reminded the COM
f1ittee. Loans also are made on
Is much as 80 per cent Of the
value of the property and there
fore it would not require a de-
preston like the 1930s to pile
up substantial losses, he argued.
The witness said foreclosures