EDIT@RIAL

More Honds in the Money Pot

TWO recent developments in the exotic world r of hieh finance have been described as having the f,otential of putting the already beleaguered housing industry into increased peril. And they sure won't do the rest of us any good, either.

Both the United States Tfeasury and the American Telephone and Telegraph Co. are considering issuing securities in small denominations. Small in the Treasury's league is considered $1,000 each. AT&T reportedly would like to finance all or part of another of their expansion programs by issuing what they call "savings bonds" in amounts of $100 each.

The screams of agony in response to these proposals were not long in coming. Some were even egged on by members of the congress.

Rep. Patman, (D. Texas), chairman of the House Banking Committee and Sen. Sparkman, (D. Alabama), chairman of the Senate Banking Committee, wrote to Louis Barba, president of the National Association of Home Builders, asking him to give a "searching examination" to the financing proposals and the effect they might have on housing.

It would "deprive thousands of families of sorelv needed homes," Barba responded, adding that it could draw billions of dollars away from the saving and loan institutions and might result in about 200,000 fewer housing units being built.

Ponderosa Pine

The American Bankers Association and the United States Savings and Loan League are both solidly opposed to this latest threat to housing's already thin trickle of .money.

They note that AT&T's plan to sell their I0 year bonds through their 2,000 business offices throughout the country at a 6/2/o yield, if approved, would allow them to legally pay higher rates than federal ceilings permit thrift institutions to pay.

Others have pointed out additional implications that could have devastating and far reaching consequences in our economy.

It might evolve government borrowing practices into a new and questionable direction that could drain away money from Series E and H government savings bonds.

The precedent in letting AT&T sell bonds could easily induce firms {ar less stable to try the same thing. Any resulting failures could seriously hurt investor confidence. It could also set ofi, in Louis Barba's word's "a vicious new cycle" of increases in long term interest rates.

There is no question that our dynamic economy. now reaching the trillion dollar level, must continually find new sources of capital. We have no dispute with that. It does seem obvious to us, though, that housing must be better protected from further incursions into its money sources. Certainly any plans that have the in-built drawbacks of the above, should not be allowed.