Mr. HOWARD. I do not remember ever going to his office and discussing this loan with Mr. Hise and Mr. Toole. Mr. FLANAGAN. Do you remember ever going to Mr. Hise's office and discussing this loan with anyone in that office? Mr. HOWARD. No, sir. Mr. FLANAGAN. Now, in Mr. Toole's diary under date of January 18, it has this to say, and he is referring to you: He said Chauncey Dodds was working might and main to get our deal in the best possible shape and that he didn't think it necessary for me to come back to Washington on the loan before Monday the 24th. Do you recall ever telling Mr. Toole that Dodds was working on this loan, working "might and main" or words to that effect? Mr. HOWARD. No, sir; I do not. And furthermore, I never recall having discussed this loan with Mr. Dodds at any time. Mr. FLANAGAN. You never discussed this loan with him? Mr. HOWARD. Not to my knowledge; no, sir. Mr. FLANAGAN. Are you sure of that, or is that to the best of your recollection at this time? Mr. HOWARD. That is-I am satisfied in my mind that I did not, and I have checked with Mr. Dodds, and he confirmed that I never talked with him about it, or that he had talked to me about it, in the last week or 10 days. Senator MUNDT. You and Mr. Dodds were discussing this within the last week or two, and you agreed between yourselves that you had never talked to each other about the loan, is that correct? Mr. HOWARD. No. I went to him, sir, and asked him if I had ever discussed this loan in any shape or manner with him. He said, “No.” Senator MUNDT. That is what I said. Mr. HOWARD. Yes, sir. Senator MUNDT. That is exactly what I said. Mr. FLANAGAN. In Mr. Toole's diary, under the date of February 23, he has this to say: Called on Ernest Howard at RFC this a. m., and he advised against my seeing Mr. Hise again as our case is making as much progress as proper consideration of its importance permits. Do you now recollect that Mr. Toole ever came to you and wanted to see Mr. Hise on a second occasion? Mr. HOWARD. No, sir. Mr. FLANAGAN. Do you recollect that Mr. Toole ever talked to you about going to see Mr. Hise? Mr. HOWARD. No, sir, I do not. Mr. FLANAGAN. What do you recollect that Mr. Toole talked to you about on this loan? Do you have any recollection of any specific thing he ever asked you about this loan? Mr. HOWARD. The only thing that I remember about the loan and his visits is, that one day, going down the hall, I met Mr. Toole and Mr. Blauner and spoke to them, and I am satisfied they did not come in my office on that occasion, and in the course of the conversation Mr. Toole told me that they were going up to see Mr. Willett, but as to when it was, I cannot say. Mr. FLANAGAN. And that is the only specific matter you recall in connection with this loan? Mr. HOWARD. Ever referring anybody as to reference to somebody else. Mr. FLANAGAN. Do you recollect that after this loan was granted, this $80,000 loan, if Mr. Toole ever came to you to enlist your assistance in having his salary raised with the American Lithofold Corp.? Mr. HOWARD. No, sir. Mr. FLANAGAN. You have no recollection of that? Mr. HOWARD. No, sir. He might have told me that his salary had been cut. I think somewhere down the line he told me that they cut his salary half in two, but he certainly didn't ask me to help him in getting it put back. Mr. FLANAGAN. Do you recall that yesterday Mr. Toole testified that after the second loan was granted he met you in the hall and you asked him why he had not been handling that second loan? Mr. HOWARD. Sir, I don't quite follow you. Mr. FLANAGAN. Do you recollect yesterday's testimony by Mr. Toole, wherein he stated that he had met you in the hall after the second loan had been granted, and you had asked him why he had not been around working on that loan, and you told him at that time that you yourself had not worked on the loan, but it had been handled. by the Board of Directors? Do you recall such a conversation? Mr. HOWARD. (No answer.) Mr. FLANAGAN. First of all, do you recall the testimony of yesterday on that point? Mr. HOWARD. Not clearly as to yesterday, tied in with what you are talking about now. Mr. FLANAGAN. Well, we will get the record here and read it back to you. You were here yesterday, weren't you? Mr. HOWARD. Yes, sir. Mr. FLANAGAN. I am reading from yesterday's record, and I asked this question of Mr. Toole: After that loan was approved in September did you ever have occasion to discuss it with any of your old friends in the RFC? And then Mr. Toole's answer was: Well, I don't know about discussing it. I think one of my old friends met me in the corridor one day and said, "Hello, J. E., I see you have got another big loan through the other day." I says, "What do you mean?" And he elaborated by mentioning this loan you are speaking about now. I said, "Well, I had no part in it." This friend, who customarily and usually had to do with all loans of any large amounts, said "I didn't either." He said, "It was done up there," pointing toward the directors' room. So evidently it was unknown to the man in the usual channels that handled the loan as well as it was to me. Later on in the testimony here it states: Who was this man who told you that he did not know anything about this loan either, saying it was handled upstairs, meaning the Board of Directors? Mr. TOOLE. Would I have to say that? Mr. FLANAGAN. I think it would be helpful. Mr. ToOLE. I think it was Mr. Howard. Now, do you recollect that testimony from yesterday? Mr. HOWARD. Yes, sir. Mr. FLANAGAN. Do you now recollect any such conversation with Mr. Toole? Mr. HOWARD. I think I do, substantially along those lines of what you have said there, since you have said it and refreshed me. Mr. FLANAGAN. Well, now, tell me what kind of a conversation did you have with Mr. Toole in the fall of 1949 concerning the second loan, the large loan? Tell me to the best of your recollection the substance of that conversation. Mr. HOWARD. This particular conversation? Mr. FLANAGAN. Yes. Mr. HOWARD. Well, frankly, I just don't recall. I just really don't recall what I said. Mr. FLANAGAN. Well, do you recall that there was such a conversation? Mr. HOWARD. I have a faint recollection that there was, yes, sir. Mr. FLANAGAN. Did your division, in fact, handle the second large loan for the American Lithofold Corp.? Was it handled in your division, the $565,000 loan to the American Lithofold Corp.? Mr. HOWARD. Yes, sir; it was. Mr. FLANAGAN. Well, according to Mr. Toole, you told him that it was not handled in your section. Mr. HOWARD. Are you talking about the action of March, now? Mr. FLANAGAN. No, I am talking about the action of September. Mr. HOWARD. September? Mr. FLANAGAN. Yes. Mr. HOWARD. It was handled in my division, yes, sir. Mr. FLANAGAN. Did you tell Mr. Toole that it was not? Mr. HOWARD. No, sir, I could not have told him that. Mr. FLANAGAN. You don't know what you told him? I don't know what you told him, I only know what he said you told him. Now, did you or did you not tell him that the loan was not handled in your section but was handled by the Board of Directors? Mr. HOWARD. Why, the loan was written, the report was written by Mr. Williams, who is in our section. Mr. FLANAGAN. Did you assign that loan to Mr. Williams? Mr. HOWARD. I did not. Mr. FLANAGAN. Who did? Mr. HOWARD. I do not know. Mr. FLANAGAN. Do your records show who assigned it? Mr. HOWARD. No, sir. They show that it was assigned to Williams, but we have not been able to determine who did it. Mr. FLANAGAN. You can usually determine who assigns a loan to an examiner, can't you? Mr. HOWARD. By his handwriting on the slip, but Mr. Dickinson did all of the assigning and it was not his handwriting. Mr. FLANAGAN. Can you give any information to the committee as to why you are unable to find out who assigned this particular second loan to your examiner ? Mr. HOWARD. I have been unable to do it. The records up there show that it was assigned to Mr. Williams. Mr. FLANAGAN. Was Mr. Williams one of the men in your section? Mr. FLANAGAN. Did you ever discuss this loan with Mr. Williams? Mr. FLANAGAN. It being a problem loan, would it be the ordinary practice for Mr. Williams or any examiner to discuss this problem with you? Mr. HOWARD. Not necessarily, sir. Mr. FLANAGAN. I didn't say not necessarily, I said ordinarily would these examiners who had been handling problem loans discuss them with you? Mr. HOWARD. No, sir; I would say they do not. Sometimes they do and sometimes they don't. Mr. FLANAGAN. But you have no recollection of Mr. Williams ever discussing this loan with you? Mr. HOWARD. Not in any way, shape, form, or fashion. Senator MUNDT. Didn't I understand you were Chief of that sec tion? Mr. HOWARD. Yes, sir. Senator MUNDT. Wouldn't you sort of be responsible for what the people under you do on these loans, then? Mr. HOWARD. Yes, sir; but I never have made it a rule, all through the years, and especially since I have been in this position, I have always made it a rule not to try to in any way influence an examiner on his report. Senator MUNDT. To influence him, that is correct, but as the Chief you would have some responsibility for the section, and haven't you made it a practice to look over their recommendations after they have made them before you send them on to the Board? Mr. HOWARD. They would be put up in the docket, sir, and submitted to the Board. I would never see them. Senator MUNDT. You would never see them? Mr. HOWARD. Until they got in the docket and went to the Board. Now, remember that all during this time I had other duties that took up more than 50 percent of my time. Senator MUNDT. Tell us what the functions of a Chief of a division like that in the RFC are, then, if you have shed all responsibility for things done under you, if that is not your responsibility, what is? That is a peculiar kind of a structure for me to understand. Mr. HOWARD. It was my over-all responsibility to see that the work went through. Senator MUNDT. Were you interested in the kind of work that was done or in just getting a lot of work done out of them? Mr. HOWARD. No, sir; I was interested in getting the work out and getting the reports written, giving full and complete information that would make it so that the board of review or the review committee at that time, and the Directors, would have a clear picture of the. case being presented to them. Senator MUNDT. As Chief of the section, then, you paid no attention as to the nature of the report or the kind of report that came up or you never checked as to its validity or to its desirability, but your job was to get the reports out to them and to get them back to the Board, and if they were good, O. K., or if they were bad, O. K., that was not part of your work; is that right? Mr. HOWARD. That was my responsibility, I would say, but it was all delegated to two of the best men that I had, and they devoted their full time to it. Mr. Dickinson, who assigned the new applications for a long time reviewed every report. Senator MUNDT. That came back? Mr. HOWARD. Sir? Senator MUNDT. Every report that came back he reviewed? Mr. HOWARD. Before we would return it or turn it in to the review committee, Mr. Dickinson reviewed it, made corrections in it, and if he saw fit he would have the examiner write it over to correct technical mistakes. Senator MUNDT. Did Mr. Dickinson do that job on this American Lithofold Corp. loan? Mr. HOWARD. Not to my knowledge. Senator MUNDT. Now, you said you had two men do it. Who is the other man? Mr. HOWARD. The other man was Mr. Hendrick, but his job was in the administration of outstanding loans and handling amendatory applications. Senator MUNDT. Did he review this loan on its way back, to see whether it was properly certified? Mr. HOWARD. Mr. Hendrick? Senator MUNDT. Right. Mr. HOWARD. No; it would not come to him at all. Senator MUNDT. Well, Mr. Hendrick did not do it, Mr. Dickinson did not do it, and you did not do it. Mr. FLANAGAN. I might say that Rochelle's report on the first loan was reviewed by Mr. Dickinson, who agreed with Rochelle. Senator MUNDT. I am trying to find out about the second loan. You say you did not review it. Mr. HOWARD. No, sir. Senator MUNDT. And Mr. Dickinson, who normally had that function operating under you, as your assistant, you delegated him that particular job because you had a lot of other duties, and he did not do it? Mr. HOWARD. That is right. Senator MUNDT. And your other assistant, Mr. Hendrick, does not have that function lately. Mr. HOWARD. No; I cannot answer for Mr. Dickinson about reviewing it. I think you should let him tell you that. To my knowledge he never reviewed it. Senator MUNDT. So far as your knowledge goes, then, as Chief of the Board, your whole reviewing apparatus was completely bypassed when the second loan was sent up to the Board, is that right? And if it not right, why is it not correct? Mr. HOWARD. Will you repeat that again, please? Senator MUNDT. Yes, sir. So far as you know, and I am talking about what you know now as the Chief, responsible for seeing that a good businesslike job is being done by those under you who make these recommendations, so far as you know those who checked the desirability and justification in their work were completely bypassed as this loan came back from those you looked to for recommendations to the Board? Mr. HOWARD. Yes, sir. Senator MUNDT. That is all. Senator HOEY. Proceed, Mr. Flanagan. |