Realities; 5; Banks and the Poor

The American self-torture it hasn't changed much over the years. Today is in the 30s. We celebrate money. We revel in its abundance. We agonize over its absence but whether we are rich or poor when it comes to borrowing money most of us are dependent upon a single group the bankers. The bankers participation in what has been described as the free enterprise system has been felt in both urban and rural acts of survival. The banker traditionally has called himself the friend of the farmer although many farmers remember the lack of loans during the great droughts of the 30s. The banker has declared himself the friend of the working man although many union leaders were called in support of corporations during some of the cruelest union busting in this century. But this is a new day and new age and our program concerns itself with the

bankers of today and the needs of today especially as they affect those Americans most urgently without the poor. For a definition of the banking industry's current philosophy concerning low income Americans any T went to the chairman of the board of The Chase Manhattan Bank David Rockefeller. The banking industry recognizes fully that it has a very essential role to play and almost in the same sense that the Doctor does in taking care of the personal needs of individuals who are in trouble as well as businesses small businesses as well as large businesses. And in this period of time when there is a great deal of distress on our nation when the economy is declining the banking industry has paid special attention to the needs of the disadvantaged to the needs of

minority groups to helping the unemployed find satisfactory jobs and most importantly to helping with the desperate housing problem that exists in the country today. During the next hour any realities will examine how the banks have paid special attention to quote Mr. Rockefeller to the needs of low income Americans. One unmistakable expression of our gross national product of over nine hundred ninety

five billion dollars is the printing of money if the Federal Bureau of Engraving in Washington D.C.. These crisp new buildings these tangible symbols of capitalism will be sent to banks throughout the country. They are to become a part of the daily economic mainstream. The question for this study is how much of this money will low income groups ever see. For the answer. One must first check the pronouncements of a savings and loan associations. If you combine the total assets of Standard Oil of New Jersey. General Motors Ford. Texaco. Gulf. Mobil IBM U.S. Steel General Telephone and electronics. Standard Oil of California General Electric Standard Oil of Indiana Chrysler shell AT&T Tenneco Dupont Union Carbide Bethlehem Steel Phillips Petroleum Western Electric lane tempco void Eastman Kodak Kontinental oil and Atlantic Richfield. Take the

assets of the country's 25 largest industrial corporations. And put them all together. You would still need all of us seven billion dollars more to match the assets of savings and loan associations. Were over 44 million people save with profit and safety since this commercial was made the total assets have savings and loan associations have grown to one hundred sixty nine billion six hundred thirteen million dollars. These banks are required under federal charter to provide for the financing of homes to be a main resource for a community's housing funds. But of the one hundred sixty nine billion plus assets. The best estimate by the House banking and currency committee is that only a fraction over 0 percent has gone toward the financing of low income housing. Compounding this figure is the charge by a congressional ad hoc subcommittee. That money is lent instead to slum speculators and many slums are perpetuated by savings and loan associations

through their financing of absentee owners. In this case a euphemism for slumlords such lending practices as charged promote deterioration because little or no maintenance is carried out by the owner resulting in slums. The committee put it bluntly savings and loan associations have extended financing to those who milked the properties or were only interested in tax benefits. The chairman of the House banking and currency Committee and a frequent critic of the banks is right. PATMAN the big banks never had it so good in their life and the housing industry had never had such a difficult problem and such and satisfactory conditions to deal with and set up some people's money and the people's resources that we are using so we should take care of the housing and not the poor people. Just saying that would take care of the big banks at least give a fair allocation of credit. My savings and loan association wants you to say for a sunny

day save for the good things in life for the chance to breathe. Stretch your arms and wiggle your toes and let the sun so between your shoulder blades to break you can make it happen and the earnings on your savings can make it happen faster. That's why over 42 million Americans are saving in savings and loan association. Start your savings account today. When you say does make a difference for. The Washington D.C. apartment of Mrs. Hatti muse and her seven grandchildren how they live does make a difference.

The Muse living quarters are only a few blocks from the Capitol building but it is doubtful as many legislators are aware of its existence. My daughter. See by a level playing field. She was the mother of these four to see here. And. Q When you came over here. I read that baby up to you you having to be the queen of the living room kitchen and bathroom is the total space for eight people. Considerably less than the Washington housing code requirements which specify that each dwelling unit shall contain at least one hundred thirty square feet of floor area inhabitable rooms for the first occupants and at least 90 additional square feet for each of

the next six occupants sleeping space required is 50 square feet minimum for each occupant the property and almost two block long tenement was financed by a loan from a member of the Savings and Loan foundation. The Jefferson Federal Savings and Loan Association. The loan was for the sum of one hundred thirty two thousand seven hundred fifty dollars made payable to a real estate company. The real estate company is headed by a landlord who is also a director of Jefferson federal and the president of Jefferson federal is also a vice president of the real estate company. So when this was filmed Mrs. Muse had her own special wish for Christmas and it takes

me longer to help. What can I do if I can pull up this weekend. Another example of the way banks have help for graduates slum conditions can be seen in

Philadelphia's North Fleet Street. The neighborhood is typical of many of the disaster areas sociologists daintily call the inner city. A resident speaks. Here. They really got what Gene found in the street. They were told that. We could this in the houses they could. They were not. People. They don't have no place for the kids. We. Can one family slum houses on this street were purchased by landlords with bank financing. According to one concerned community action group the Philadelphia neighborhood renewal program there are no plans for rehabilitation because it is too far gone but people must still live here. Number 23 0 8 was financed by the North Philadelphia savings and loan association. Number 23 24 was financed by the Citizens Bank. It has 104 points in violations. 60 is considered unfit number 23 28 was financed by the North

Philadelphia savings and loan association. Number 23 47 North Lithgow was purchased outright at a sheriff's sale by Liberty Federal Savings and Loan legal street underlines what the previously cited Congressional Committee report called abuses by savings and loan associations and extending lines of credit to quote predatory slum speculators. Quote The US Savings and Loan League said they completely share the objective of the congressional report in trying to assure that low income families are not exploited in their attempt to secure housing. They stated that savings and loan associations probably have a better record in financing low income buyers than any other group of financial institutions particularly in recent years and think it unfair to expect that their institutions which typically make conventional loans should extend credit in those neighborhoods where even a government agency was unwilling to assume a risk. They said the situation is now improving with more insuring of loans by the FHA. And if we can solve the problems of inflation

and take money we should begin to make substantial progress in this troublesome area. Our cities need action fast. Neglect the neighborhood it can turn into a place like this when decay has gone too far. We have to rebuild from scratch. But neighborhoods can be saved if they're caught in time. Business and industry have pioneered ways to reclaim the city for its people. Chase Manhattan is helping chase and other concerned corporations helping revitalize Brooklyn's Bedford-Stuyvesant section with a mortgage lending pool $100000000. Private citizens too can help save vast occupiers. That's a beautiful example of this industry and individuals are getting out of that place to live. All of you for your company. But. Many Bedford-Stuyvesant playgrounds and the houses still look like this.

George champion former chairman of the Chase Manhattan Bank once said concerning the private sector's involvement with the ghetto we are involved because it is the right the humanitarian the moral the Christian like thing to do. But the mortgage lending pool of which Chase Manhattan is a member along with 79 other New York banks has come under heavy criticism. Attorney James Phinny a consumer advocate and lawyer with the NAACP Legal Defense Fund told me mostly Silverstein. The. 80. Banks. Announce. Establishment of a hundred million dollars for rehabilitation. That's. Stipes. News of the announcement generated a lot of Excite. Because people thought change was imminent today. Not one for restoration.

Time. Chase Manhattan Bank that you've been most vocal in its concern for rehabilitation out here. Is made available only 700000. Think about the most meaningful is that it won't affect 80 percent of families and get five. Houses. For families a mortgage lending is really another example of a vicious murder perpetrated by the rich boy who helped chase Manhattan Bank has been very glad to be one of 80 banks which have participated in a mortgage pool. Designed to improve the housing conditions and opportunities for people in the red Stuyvesant section of Brooklyn which of course is the the black. Concentrated area of Brooklyn. I think unquestionably is

this project was a highly desirable one. I'm bound to say that. Like. Some other projects with with high ideals and objectives it was a little slow in getting off the ground. It hasn't generated the amount of interest or investment that its sponsors hoped to do. Would. We have invested we committed to invest up to five million dollars of only 700000 has actually gone out. We have however through our real estate and mortgage department given a good deal of assistance to the program and we're hopeful that it is going to move faster in the future. We're. Eager to. Put the money out if the opportunities present themselves. Attorney James Finnie believes that the opportunities present themselves every day in

terms of thousands of families who must endure inadequate housing. He urges that the mortgage lending for redirect its efforts toward those families now excluded as well as the many who have applied for and have not yet received urgently needed loans. Now the second largest bank in the world is a chase Manhattan Bank and David Rockefeller is the head of that bank. He testified before my committee on banking and currency. Soon after that rate of interest was increased from seven and a half percent to eight and a half percent. We were trying to determine why that was done and we wanted to find out where the money was going. We found out that very little of the money was going for housing very little in a Chase Manhattan bank as big as it is worth 15 to 20 billion dollars. They were only putting a few million dollars in housing just a very few very insignificant amount. Well in gambling casinos like the resort International with Chase Manhattan bought

a substantial interest than about that time you know they had plenty of money to go on to Resorts International which operates for profit. They had plenty of money to go into that they have had plenty of money for speculation. They have had plenty of money for everything except one of the essentials of family life. And which helped. They didn't have any money for that. Congressman Portman is a very distinguished and successful. Politician. I think his prejudices and biases in the banking industry are quite well known. I understand that when he was a young man he was once turned down for some loan that he tried to make in his local Texas bank seems to have. Taken a rather dim view on bank fees ever since. Later Congressman Patman responded to my concern about the abuses of

the large commercial banks does not stem from any personal disappointment as claimed by Mr. Rockfeller. This is an old story that has been bolstered disseminated by the paid banking lobbyist here in Washington all over the country. Never been turned down by a bank or a banker for a loan and there has never been any unpleasantness between me or any bank or banker big bankers like Mr. Rockfeller simply aren't used to being challenged and when someone questions their activities they feel they have to find some excuse. That's about right. Money isn't the issue. The issue is what the big banks are doing against low income Americans. He's referred to. A loan connected with resorts International in point of fact. This was an investment that was made by our fiduciary

investment department on behalf of a client of the bank. It was not a loan made by the bank and investment made for a customer's bank. So that really the comment is not particularly relevant to what the bank is doing. I'm glad that Mr. Rockfeller has at long last publicly admitted his bank's involvement with the gambling casinos in the Bahamas. The one operated by Resorts International He says the investment was made by what he calls his Puducherry investment department. That's the apartment where they keep trust funds for their loved ones. What this means is the trust department of the bank that department is as much a part of it Chase Manhattan Bank as the commercial loan department checking account services personal loan department or any other department is claims that the trust department is a separate entity outside His control

is just so much all goys. I really think that it gives a totally false picture of the banking industry and of our banks specifically. Chase Manhattan is simply not doing very much about desperately needed low and moderate income housing it simply is not. I think perhaps it would be worthwhile if I mentioned some of the things that in point of fact we are doing. Directly through the bank and on behalf of customers. The bank has outstanding something in the neighborhood of 3 billion dollars of mortgage and real estate loans in addition to that we have recently sponsored a hundred million dollar Chase Manhattan real estate. Trust which will generate mortgage loans in the neighborhood of several hundred million dollars in the in the years ahead.

He talks about real estate loans but he is really talking about massive investments in office buildings and in luxury housing not the kind of housing that is really needed. I think it would be quite unwarranted. To say that a bank such as ours has been unmindful. Of the needs of the public in the housing field. I think we've done in a very substantial amount in this. Area unequivocally. I repeat my rate is going to try Chase Manhattan apparently has millions of dollars by gambling casinos but only compared it is housing for the poor. Any TV cameras filming action at resorts International's Paradise Island casino tables are popular with tourists with sufficient money to improve or change their luck. If it does not work out there is always the beach the next day for restoring the spirit.

Please everybody. Here. As it turned out it was the last Christmas spent at the Washington tenements by Mrs muse and her

seven grandchildren. The building was torn down with plans for the land to be sold for a high rise apartment complex. The president of Jefferson federal stated that the building was 60 years old and had long outlived its usefulness that if there were any housing code violations he was unaware of them or was sure that they had been met and that Jefferson forever was most concerned about the need for adequate housing for low and moderate income families beyond housing. What happens when the poor go to the bank for a personal loan. This is a commercial about words. Words that describe what a full service but spell spelled out one saying. Two checking accounts. Three all kinds of loans for cars home education

home improvement. Financial advice. Remember for all your banking for this simple answer. And that's the last word. But for low income people it is not the last word. Frequently the last word is a resounding no. A refusal of a personal bank loan. This occurs even when the individual has a stable income. And even those statistics bear out the high payback rate by low income customers. The dilemma of the working poor in this situation and their business recourse is spelled out by the attorney in charge of a Harlem legal aid society branch Schuyler burek. Nowadays more than before he first goes to a bank but I'm afraid when he goes he doesn't find that kind of reception he finds another flights. I've witnessed them. I think we all have the loan officer gives him an

application to fill out. Frankly it's weighted again. He takes it home and read the question and the questions don't apply to him. That's how long he's lived in his apartment. Not a stable there. I asked about property here. He doesn't own any property. He has a car he doesn't have any real equity in the car otherwise he has very little besides his word and has promised to pay this loan back. Most often he does not come back with that loan application and if he does he know he's going to face an unfriendly reception. The questions have told him that so he turns to an alternate. The alternate is a small loan company. They don't start with a form. They start with a friendly face to face reception of the Spanish. They have a Spanish speaking person in the office. Black they're black people in the office they wanted to feel at home and alone. How large alone company. Well the office itself generally is small it likes to look like a neighborhood office but most often it wants to win national loan now with offices and

every one of the 50 states and loans running into the hundreds of millions of dollars. But they want him to feel at home so it's small and cause more and more and more than any hidden cameras recorded. What Mr. Barak and many consumer advocates say is an everyday situation with a low income wage earner once his personal loan application is turned down by a bank forcing him to go to a loan company one month the wage and application figures presented by the man applying for the loan are typically the high interest figures soon to be presented here by the loan company are also typical. When they require you in the likes.

Of the organism. One family was. Doing. Well you know some overtime a lot of the time and plus was was that all the time. About $20 a week. We did a lot of time plus I do you know jobs. If. It. Sucks. Is. No litigation you. Did you tell me. One thing that almost is going I tell you 36 these things are when you. Thirty two. Thousand thirty six. Did you like it down to thirty two dollars a month for 36 months. Says the loan company man that amounts to one thousand one hundred and fifty two

dollars for a loan of eight hundred dollars. In other words the rate of interest is twenty five and a half percent more than double the rate a person would pay in a bank. The other interesting question is whether the loan company get its money from that is lending out at this horrendous rate. And the answer is from the banks that the very banks that will turn a man down because they consider him a poor risk is in effect lending the money to the small loan company to lend him under the same conditions with absolutely no other collateral for sometimes a larger amount than the bank itself on its own policy will lend in an unsecured loan. Yet the bank doesn't show up. What's in it for the night. It has the advantage of the bulk sale beneficial borrowers say a million dollars in the bank. The bank has only one account to carry the good and the bad loans that beneficial makes will kind of even out so that the bank's security is fairly

good because experience shows that 95 percent of all borrowers even poor borrowers pay the loans back. So the bank has the advantage of saving a tremendous amount of bookkeeping. If we break up this million dollar into small loans there would have to be made about fifteen hundred individual loans to eat up the same one million dollars with the necessity of keeping fifteen hundred sets of books some 3000 mailings alone at the start of the law. And this is the current push in our economy for bulk sales of all kinds whether it's furniture or money. Money is just a commodity to be sold and it has a price. So what are we saying that the banks are doing anything illegal in this instance. This is perfectly legal it's perfectly permissible. It's a question of philosophy and a question of what value the community gets from the banks that are located in the community. If the bank located five doors from the loan company will not really lend money on the same conditions to

the same people then the people are not getting the maximum value from their own bank where they are probably depositors beneficial responded. It is only one of many state legally licensed lenders making loans to the public and that it is misleading to imply that loan companies make higher profits and the banks who charge lower interest because the loan companies are charge interest themselves when they get money from the banks and they must also be sufficiently profitable to attract investors taxpaying loan companies claims beneficial. So a vital need by making money legally available at fair rates to borrowers. The loan companies believe they are on the horns of a dilemma. We are vehemently attacked for overloading low income people with credit while being accused of not being willing to lend to low income families. The same is often true in Washington where banks often turn down low income applicants who could have been charged only 8 percent. Forcing them to go across the state line to loan companies in Maryland. Here the maximum

legal interest rate chargeable on a small personal loan is 36 percent legal in Maryland but usurious in many states of the Union. Four of these companies seaboard G A C personal thrift and the state loan company have bank officers serving on their boards of directors helping to determine lending policy. The relationship between banks and lending companies is examined by Congressman Patman. At one time we had loan companies under investigation and we discovered that even the president of the American Bankers Association at the time. Was seeing a line of credit to a loan company that was charging extortionate and usurious rates of interest so often times the source of funds. In fact I don't know of any any small or large finance company that's operating in Italy as a loan company that doesn't get funds from a commercial bank. They just get them there and so they are contributing to this. Now I think when they know that a person is

charging outrageous interest rates and really just robbing the poor people. That a bank should be more considerate of making loans like that. The president of the American Bankers Association Mr. Nat Rogers let me begin by saying that we need to separate the fact in the fiction. There are certain statements made by Mr. Batman which are obviously correct. There are occasional abuses in terms of the rates which are charged by finance companies all of which incidentally are regulated by the states in which they operate. It is also true that banks make loans to finance companies. But having said that a little different interpretation is perhaps appropriate for example. Oh. Finance companies are legitimate businesses as other enterprises are always individuals aren't. Surely banks have them as a part of the overall business community. And banks recognize that they fulfill a special niche in terms of financing in the small loan area

a need which has to be met. This is recognized not only by banks again but by the jurisdictions under which they operate but banks themselves are much more interested these days in expanding their own services directly. And we've seen an important expansion of direct loan services in this Paulhan area to low income groups within the past 20 years. Of getting their attention. I mean the conditions inside. The balance of the purchase money must be deposited in cash together with the need for execution by the eyes that are to the sheriff at his office with enslaver Philadelphia sheriff's sale in which Provance and household possessions are auctioned off the first Monday of every month. What do people who lose their homes are often the poor who have fallen behind on an installment credit payment. Property maybe be to get rid of body builder. No shack. I the exception.

How is the banking industry involved in this auction in the city of brotherly love. 23:3 in New York and other states defaulted consumer debts result in garnishment of wages. But in Philadelphia and many other cities a default or delinquent payment may result in the sale of a person's farm usually or claustrophobic brick or wooden one the story affair. Since banks are large buyers of installment contracts they along with the get own merchant and the finance companies who also buy such contracts and on whose boards bankers serve often become a trilogy of interest against the poor especially when a sheriff's sale is instigated human destruction. Case Histories are abundant as typified by a woman who co-signed an automobile loan from her brother who then fell behind in his payments. The woman Mrs. Elizabeth Riley whose home was the collateral reduced the debt of fifteen hundred dollars to one hundred fifty seven dollars and sixty nine cents. But our house was still put up for auction at a sheriff's sale and they do say did we take my home just for the town.

I didn't even Amban it inside and do anything about it. And I know no one to go to at that time. To get this fund for my daughter then she said. So Nanea helping me. With this. But they still put my house up so my hands. Can do. I wish that they would do something bad. So any one happen to anyone else. Just awful things. To do just for. A small amount of money like this. This. Man. Is an. Attorney on the rich. Remember 229 $350 any more. What's

life. Without the demonstration by the consumers education and protected Association against what he considers unfair bank practices. Clarissa OK. We got. About them. Cut. You. Out. We. Come back with. Our death would have been a great. Time to. Do it right. Come. On. Out. At you. Why. Not. Take CPA is Max when we ask you. I like the policy for us to pursue in this day and age.

Mrs. Pickett is a registered nurse and a homeowner in West Philadelphia. She fell behind in Erbil a few months because of an accident that put her in the hospital. She was unable to pay that bill. As for the fines because she has three separate accounts at the first Pennsylvania but this collector feels that if she goes down to South Carolina attend a funeral that. That's something only an idiot would do. Only an idiot they say would do something like that and we might as well right. Not one more literate. They would have the same effect on them as they do on you. You can't afford to go to South Carolina. But you can pay your fantastic. Ticket. Or something like that for the first Pennsylvania bank. Charles you him the incident you have just seen was provoked by a handwritten message left by one of our collection department personnel. We

apologize for the content of the message. Our bank does not condone this type of action. Our collector was young and relatively inexperienced. A collector's position is open to many tensions and frustrations and occasionally one oversteps the bounds of good business conduct. The particular customer involved was nine months delinquent in her installment contract. And had made repeated promises of payment which were broken. This in no way excuses our employees conduct. We have periodic retraining programs for all of our collection personnel and carefully investigate any complaints to prevent a recurrence of this type of unfortunate incident. Mrs. Pequod says the bank statement is not accurate that she was never more than two months behind and that was due to being hospitalized and later attending the funeral in South Carolina three years ago. This note was left to the home of Mr. Robert Charles who had fallen behind on an installment contract on which he owed all of 40

dollars. When I get a letter. I felt there. Was a loud noise one from another I didn't know who to go see. And I got to have more. The first goes away and if you go to the bay to make a complaint you never get to the first floor. This particular day I think I ended up on the 21st floor fever. How many people live in a ghetto. Ever seen this room. I say we never even know that you have this incident did happen and a personal apology was made to the customer by the vice president then in charge of our collection department. This happened in February of 1967. And approximately three and a half years have elapsed between the two incidents. Since we make several hundred thousand loans each year. I think it proves that we do our best to see that our customers are not subjected to any personal indignities. While there may have been other incidents of which we are unaware these are the only two to be brought to our attention by the

consumer education and Protection Association. Mr. Cho says no apology was ever made and see those states they have brought numerous cases of our ethical behavior to the attention of first Pennsylvania and other lending institutions while the consumers are here to protest against such a big institution like the first Pennsylvania bank customer. I was right. In closing I would like to say that we recognize that there are abuses in the consumer finance business. And we have done our best to take constructive action in eliminating. We will continue to do so in the future and support any realistic recommendation for change. Another severely criticized practice and consumer lending is the holder in due course darken a corner to New York city's commissioner of Consumer Affairs besmirches and grant a bank buys a customer's installment contract from the retailer or

finance company and then becomes legally exempt from any claim from the customer when the merchandise proves defective. Commission or grant details what happens when unscrupulous merchants sell shoddy merchandise and then sell the often inflated credit contract to the bank. Now where is our consumer court. Clearly in the middle he's being sued by the bank. And he's stuck with the defective merchandise in the year. Even if the store never delivers the merchandise at all. But gets. That signature on a contract that those to the. You have to pay them back. Now this deplorable shopping situation this holder in due course of time is actually legal in 45 out of 50 states and the United States. The only recourse really that the consumer has is to engage in a very expensive lawsuit against the retailer and when you consider that the minimum legal fees are probably several hundred dollars. The man is struggling to make ends meet as it is.

You can begin to really imagine the frustration and sense of futility the dilemma of the paperwork and demonstration of how the holder in due course doctrine works in home improvement contracts was filled by any team using concealed camera an aluminum siding salesman was asked to come to a home to make a survey and then quoted price and financing plan. The salesman was not aware that the homeowner the man with the cigar was an inspector from the Department of Consumer Affairs Commissioner Grant will analyze the salesman's pitch. 86 said the time he gave the name of it is that it's Rosell rentals. That's why it's a big name copy. It's top. The quality to get a two day guarantee.

This is a classic home improvement sales pitch. The salesman tries to persuade the homeowner of his integrity by falsely invoking the names of well-known brands of metal which he has no intention of supplying. Then he makes our own guarantees. In this case 30 years which will not appear in the customer's written tongue later you'll hear the salesman say the guarantee is five years. Down double pay $65 $66. Complete. After to do years earlier the salesman said the complete job would cost two thousand six hundred eighty six dollars. Now he tells the customer that it's only sixty six dollars a month for 60 months with no down payment. Now that comes to three thousand nine hundred and sixty

dollars hidden in that some of the finance charges the bank's profit of one thousand two hundred seventy four dollars. That's a third of the total price. Well one of the questions. No not really. Fine is right. Like do I get my bank on the island here. But nevertheless you have your book. You could go anywhere flybacks American David. First discuss what are these five that you don't know which would be any one rated the most frightening thing about this transaction is the involvement of the bank here. The salesman rattles off the names of five banks which like the major aluminum company he also mentioned appear to make him seem legitimate but what often happens is that he sells the customer's contract. One note to the bank for quick cash and moves on to new territory perhaps in another state. If the siding falls off or even if the contractor moves away and never installs the aluminum siding at

all the bank will still insist that the customer pay anyway and will sue the customer if he protests the bank will claim to be a holder in due course entitled to be paid because it paid the contractor and claimed to be totally uninterested in any fraud that the contractor may have committed. I know you want it. What I'm saying is that something went wrong. All right. The fight to save money of course not all home improvement salesman of fraudulent but too many are. And these could last a day if the banks were more selective about the businessmen they dealt with by fighting for the elimination of the holder in due course doctrine in New York and in all states it would preserve consumers legal rights and it would make banks think twice about the merchants they deal with the banks would know that they could not collect on fraudulent contracts and it would they would stop doing business with dishonest merchants. It would be one major step in ending the bank's support of

unscrupulous merchants and finance companies support which militates against everyone especially the poor. The question remains why isn't the banking industry. Indeed the system more responsive to the needs of the poor. The banks clearly have made a commitment and half the assets. Chase Manhattan is only one example. Over twenty nine billions in deposits and trust department assets and interlocking directorates with America's largest industrialists. Beyond this is the savings and loans 169 billions and the commercial banks. Eight hundred and five billions. The men hired to protect these private empires known as lobbyists and are principally based in Washington. Yet the government's Federal Reserve System which has regulatory powers over the banks annually pays over one hundred thousand dollars in dues to this lobby specifically to the American Bankers Association and two other state and regional banking associations. The chairman of the House banking and currency

Committee right Patman the lobbyist they all play in that key. They are the brightest men in the country. They are the smartest public relations lawyer and they then they had tried to do something for their clients and they are handsomely paid by their clients. They have unlimited resources at their command and they can do anything to create goodwill with the members of Congress and try to induce them to see their viewpoint and vote with them. And of course some of the biggest law firms in the country are engaged in that person who hired a lawyer. As a lobbyist has two or three benefits one in particular. That the lawyer of course has a confidential relationship with his client. And he probably would not be required to tell the whole truth. Before a grand jury investigating body on the theory that he is a relationship between him the lawyer and a client and that he can't disclose it.

So there are many ways that attractive. Arguments can be made. Neal it's a real bad bill for the people. Earlier this year the association of the bar of the city of New York did a study on congressional ethics on the question of conflict of interest. Its chairman Lewis M. Loeb former bar association president believes legislators should not also be shareholders or directors of banks. If the public thinks that. He is a director or an officer of a bank. Then they are suspect that he may be casting his vote in the interests of his. Vast the interests of his institution rather than the public interest of a constituency that he represents. And secondly I think the public may well be right that the congressman is not as free. To cast an independent judgment on the merits of the legislation as he would be if he didn't have a financial interest as an officer or director and a banking institution.

Chairman Lowe believes congressmen should divest themselves of bank holdings and directorships and should not serve as members of law firms representing bank and clients. His report quoted Plato's Republic. They should agree to receive from the citizens a fixed rate of pay. And have to meet the expenses of the year and no more. The divine level is within them. And they have therefore no need of the dross which is common among men. And ought not to pollute the divine by any such Persily admixture. Or that common at all has been the source of many unholy D. But they are wrong is undefined. They alone of all the citizens may not touch or handle silver or gold. And this will be their salvation. They will be the saviors of the state. I'd like to say that it seems to me that what. Mr. Plato said. For a time in which he

lived is equally applicable to the time in which we are struggling. Soon after Treasury Secretary David Kennedy took office congressman Patman charge that in possible violation of a US code governing conflict of interest in the executive branch. Mr. Kennedy and his wife hold at least seventy eight hundred shares of stock in Continental Illinois bank of which Mr. Kennedy was board chairman and that he now receives a nearly $5000 monthly pension from the bank an amount roughly equivalent to his government salary. Secretary Kennedy said no comment to the congressman and any. Concerning the Congress House Rule 8 says where the private interests of a member are concerned in a bill or question. He is to withdraw the bar association does not charge that congressman with banking interests or necessarily voted those interests. Indeed in some cases they have not. But rather that there could be an appearance of a conflict to the public which can undermine trust in its legislators. The following is a listing of those

congressmen who have disregarded the house rule by taking part in the vote on recent major banking legislation. All have bank holdings or directorships a next to the congressman's name indicates he sits on a committee most pertinent to banking legislation. The bar association report also recommended that congressmen serving as

members of law firms with bank clients sever such connections. A. Further criticism was leveled by the Bar Association against senators serving as directors of banks. This seemed to be contrary to Senate duties since the American Bankers Association defines the bank director's job as one in which he must regularly attend board meetings bring his own new business to the bank and help determine the banks lending policies among many other fronts. And these senators are listed as members of law firms representing banking clients.

This program began with the printing of money. It ends with its Perny. In either case the poor have seen little of it. Some remedies suggested by banking critics in this study include the relocation of credit through the Federal Reserve system to meet basic needs. Most countries already require their central banks to allocate credit for low income housing and other social priorities. Also suggested is the establishment of a national usury law and a National Development Bank as a lender of last resort. And interest rates. Serving as a yardstick for commercial banks recommended to our meaningful codes of ethics and possible congressional conflicts of interest such remedies the critics suggested might enable

an affluent nation and its banking industry to better serve the needs of the poor. We are. My. Mom