Low Bow?

For its easy-come, easy-go ladling out of cash, RFC has been roundly criticized by congressional reformers. Last week, President Truman ousted two of the lending agency's top officials: Chairman Harley Hise (Democrat) and Director Harvey J. Gunderson (Republican).

At first glance it appeared that the President was making a low bow to RFC's critics. There was no doubt that RFC's management had been sadly inept under Chairman Hise. And his vague explanations about some of RFC's multi-million-dollar loans during his regime had satisfied practically nobody.

Congressional tempers had really burned over such loans as the $6 million to wobbly Waltham Watch Co.; $37.5 million to the now bankrupt Lustron Corp.; $10.1 million to Texmass Petroleum Co., which used 81% of the money to bail out creditors; and $975,000 to Reno's Mapes Hotel, which gets a big part of its income from a thriving gambling concession. Congressional probers had found that 50% of all RFC business loans had gone down the drain of shaky companies instead of being used to finance new ventures.

But Washington gossiped that RFC's inept management had not been the only reason for the President's head chopping, especially since some of RFC's biggest blunders (e.g., Lustron) had been made under White House pressure. Another probable cause was the fact that both Gunderson and Hise had opposed Truman's plan to transfer RFC to the Commerce Department. Furthermore, Gunderson had bucked Truman's plans to aid small business with federal loans; Gunderson thought that a cut in taxes would help far more.

To replace Hise and Gunderson on RFC's board, and to fill the vacancy left by Director Henry Mulligan, who resigned almost four months ago, the President last week made three nominations: two were Democrats--Oklahoma Banker W. Elmer Harber and Massachusetts Lawyer C. Edward Rowe--and the third was a Republican who talks like a Democrat: Utah Banker Walter E. Cosgriff. The President also renominated RFC Director William E. Willett, to a three-year term. He will probably be the new RFC chairman.

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