CHAS. E. QUINCEY & Co.BRANC

S P E C I A L I S T SE S T A B L I S H ED I S S 6

C L E V E L A N D , O H IOJ. S. GOVERN M ENT MEMBERS C I N C l N N A T I , O H I OS E C U R I T I E S C H I C A G O 7 I L L .

NEW YOER STOCK EXCHANGE NEW YOER CURB EXCHANGE

24 BROAD STREET

NEW YORKTELEPHONE HANOVER 2-4410

November 13, 1934

Mr. Marriner S. Eccles, GovernorFederal Reserve BoardWashington, D. C.

My dear Mr. Eccles:

May I take this opportunity to congratulate you on your newpost and to wish you the best of luck.

I have been making efforts to bring about some kind of co-operation among the government bond houses in connectionwith a secondary market in Home Owners* Loan Corp. bonds,in accordance with our conversation in Washington. I hopewithin the next few days to be in a position to let youknow whether or not it looks as though I am making anyprogress.

I am enclosing a copy of a letter I wrote on October 17thto Miles Colean of the Federal Housing Administration. Ihave since discussed this matter at considerable length withhim. I did not mention this to you when I was in Washingtonbecause I knew your time was limited, but I think perhapsmatters are coming to a head and for that reason am now for-warding this letter. Knowing your interest in the FederalHousing Administration, I thought you rni ht wish to considerthe thoughts contained in this letter, and if you agreed withtheir tenor, you might wish to discuss the matter with Mr.J. Howard Ardrey at the Housing Administration. I thinksomeone in the Treasury mi«?ht also he interested in followingthis matter along, since here will be another example of a"near" government bond and, in my opinion, the Treasuryunquestionably should pass upon a setup of this type ofsecurity.

Thanking you for your many courtesies, I am,

Very truly yours,

TRG:KKEnclosure

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at they would \y. willing to purchase a mortgage at a much lovier inter-est rate" providing it hv6 bien set \jp at a bond issue and could, there-fore bo markets-, soap tiae in th€ -"uture.

In order to make sueli an issue salable at the best terms, it would benecessary for the Federal Housing Administration to make certain agree-ments with the bondholders. It would be advisable to agree that incase of default and foreclosure the trustee would be ^iven government-guaranteed three-year notes vitnin a specified period after title tothe property had been transferred to the "Administration.n I am-oncierin t fora this agreement Will take. Can there be a Treasuryendorsement on the mortgage, or can the Treasury countersign an agree-aettt to this effect with the bondholders. It is perfectly apparentthat issues of this character at the present time -vould only be salablebecause of the • ov-r rnrnent insurance of the guaranty, -nd the exactvordin,; of this feature in an offering circular will influence thesalability of these issues considerably.

I understand such leapes are not exempt from the provisions of the'Securities Act. I have already discussed this matter briefly rith Mr.George Matthews, of the Seeuriti s Exchange Commission, :-nfJ. with oneof the members of the staff. The warding of the circular and theindenture would hAYe to be cleared through them. Ho dotfbt the TreasuryDepartment would also -wish to pass upon ording of the circular,since the sale of !tnearn government securities might affect the overn-me&t bond market. Due to the fact that the lav? leaves so arach dis-cretion to the ^Administration," several legal opinions by the AttorneyGeneral may also be advisable. ^ understand that insured mortgages arelegal investments for savings banks and trust funds in Nev York State*but that a bond issue secured by an insured mort-- would not be legalfor such funds. 1 would suggest that someone be delegated, to see thatlegislation in various £t tea is passed which would take cere of thismatter. A Mr. Daniel MeHamara, Assemblyman in the lew York StateLegislature, and for som-;j time counsel for the Home Owners * LoanCorporation, ent around bo various State-- legislatures to get legisla-tion passed to make 'Tome Ov/ners1 Loan bonds legal investments. Hemight be utilized, If ; vailable, to do the missionary work in thismatter.

On my last visi!:. to Washington, Mr. KXab~r asked me what the trustee'ss would amount to under a net-up such as the on? discussed above.

The big He- York bank re a set of standard fees, froa which theydeviate, but there is more or less of a gentleman's agreement thatthese fees should be lived up to. I am enclosing two copies of thisschedule of fees. On page 11, you '-ill notice the certification chargeson temporary certificates for an issue of $5,830,000, which ould amountto about >l,?40. On page 12, are the certification charges for permanentbonds, amounting to about |2,900 for the u.bove sized issue. On page 13,there is a schedule of annual fees for the services of crustee; for thisissue the charge v ould amount to <:bout |4JO. In addition* there arefees in connection with payseat of Interest and the operation of thesinking fund. On a t7ienty-ye;i <f issue iv e for sinking fund operationwould be about *?62. Th? fee for ?iakine: issues registers ble as to principal

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