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IF YOU BUY A CARIF YOU BUY A HOUSE IF ANY OF YOUR POLICIES EXPIRECALL ‘BOW’ WILLIAMS Automobile and general Insurance Represents ICT The Company Owned by Union Members 624 LAMAR BOULEVARD AUSTIN, TEXAS. TELEPHONE GReenwood 2-0545 “LET’S ABOLISH THE POLL TAX” by HALLY WOOD : ‘0 Lovely Appearance of Death’ available from Electra-Stratford, 361 Bleeker St., New York City Texas Folk Songs available from William Charles Music Company, 2350 Guadalupe, Austin, Texas. \(Long :If you like traditional styles in folk singing, you may enjoy own ing one or both of these albums AUSTIN ‘Warren G. Harding will oppose ‘Jesse James for State Treasurer of Texas next summer. Harding, county treasurer of Dallas County, paid his filing fee of $875 Saturday and said it’s time for a change in the office. James said he will stand for reelection. The Commission’s Role AUSTIN Hard-to-obtain official transcripts of the Board of Insurance Commissioners hearings on credit ‘insurance reveal that the boardwas on notice four years ago that credit insurance was being used by loan sharks as a usurious cloak, but it also heard Rep. Doug Bergman of Dallas, his law partner Frank Cain, and other credit insurance executives defend the high commission, low claims part of the industry, and it sided with them. ‘Commissioners at that time were George Butler, chairman, Paul Brown, and Garland Smiththe latter the only member still on the board. The commission has not held a rate hearing on credit insurance since September, 1952. Cain and Bergman testified at the 1951 hearing, and Bergman wrangled with the commissioners at great length again in 1952. \(Bergman was the principal House sponsor of the credit insurance law. Cain was Ahen, president and is now chairman of the board of Home Life and Accident, leading Texas ‘credit insurance firm Bergtnan.speaks best for himself at the 1952 hearing. “I happen to know something about” the credit insurance law, he told the commissioners, “because I know the chairman 6f the commission and I think Mr. Smith knows a little something about it, too …. I handled that bill before the Insurance Committee. At that time I did not represent anybody in the loan . business or … in credielife or health and accident business. I was trying to represent the people is a special insurance … a particular and a peculiar . type of insurance …. you have got to pay high commissions to write It … It isn’t credit ins-tit-ante unless it is sold in connection with a loan J’ Bergman interpreted the law he had helped pass to the commissioners. He used such phrases as “The Legislature ha t told … you you couldn’t .. -1; “You must necessarily …” \(accept “The Legislature tells . y o u yoU must …”; and tell you what_ the Legislature had in mind …. Why not face it when setting the rate, why say they a r. e _paying a high commissi on ….” \(Bergman had been defeated for.reelection at the 1950 election. He was He told the commissioners that if they cut the profit on credit insurance, the loan companies would go back “to operating as outlaws.” “If you ap-proach it frOm the intent of the Legislature you must necessarily not just wave aside this happens to involve people who are in the loan business and that the loan business is a scan Early Sessions Attended .By Solons, Executives dalous and scurrilous business,” he said., NED FRITZ, Dallas attorney, testified, for the State Junior Bar at the ’52 proceedings. He formally charged “usurious abuses by certain companies in credit insurance operations in the small loan field.” He cited one instance where a loan chain with four offices in Dallas split up a single loan four ways to write four insurance , policies on it. He read high premium S into the record. He told the commission “the loan company owner get 85 percent of the premiums as their commission” in one caSe. He specified how the board’s still-extant rules let companies multiply the credit insurance premiums twelve times by limiting the size. and splitting the loan up among loan offices. Then, he said, “they hound them to renew, they say renew, renew,, renew. If he gets a day behind, come in, renew. They talk to them nice, talk to them strong, call .their employers …” . Fritz and Bergman. had this exchange over whether. the board could cut down these usurious abuses : . “Bergman : This Board’haSnothing to do as to whether or not a loan company does that. “Fritz : It can make changes in the Board Order …. cutting down on the usurious abuses. “Bergman: If you are correct it then I’m going to move to New Zealand.” Fritz also mentioned what he called other abuses: “juicy commissions,” failure to allow refunds .on loan renewals, discouragement of claims, and failure of one mutual credit insurance company to keep a roster of its -members as required by law. Fritz recommended limiting the : lenders’ .tommissionS to 20 percent and other reforms. \(They were not to, investigate credit insurance to see if ‘it was being abused in the small loan field. \(As of 1956, the board had not run totals on the volume of credit insurance business being done. in F RANK . CAIN appeared for his company in 1951 \(when Bergboard it had “no right whatsoever” to regulate credit hospitalization insur He said the “tentacles” of “gigantic corporations”tried to kill the credit insurance b i 0specifically h e mentioned Household Financtand called the law passed “one of the most . commendable pieces of legislation that has ever been passed in the United States” and helps borrowers. Then-Senator ,Keith Kelly of Fort Worth also appeared. This exchange took place when Butler sought to -find out whom he represented. “Butler: Senator Kelly for the industry or the people ? Kelly : Both. Butler ; Oh, I see.” Rep. Horace B. Houston of Dallas appeared “for the public” at the 1952. hearing. He is also attorney for Bankers Health and Accident, one of the largest Texas credit insurance companies. . Butler said at this hearing that the board had no jurisdiction over usury; Paul Connor, then in charge of credit insurance for the board, said “the field of lending in general has been strictly placed beyond our jurisdiction.” , Commissioner Brown was indignant about the high commissions. He asked Cain if a lender should “hide behind” an insurance policy and said it doesn’t take a salesman to sell it “when you are loaning the poor devil money.” \( Cain said “… you don’t have. to force them to buy it.” He refused Brown’s request for a schedule of The Texas Observer Page 5Jan, 25, 1956 Herbert Tigner, president of South ern Life Insurance Co. of Houston, appeared in 1952 and told the board that without credit insurance more than half the moneylenders of Texas would return to “plain blank usury.” “We have got to .pay high commissions or we are out of business,” he said. Read into the record . that year Was a statement by the Better Business Bureaus of TexaS that “excessive insurance pretniums” are “a device to circumvent the usury laws … and permit the gouging of the public.” The bureau official who presented this statement to the board was ;permitted to be cross-examined for two pages by Tigner and Bergman. . Executives of two out-of-state companies testified in. 1952 that their loss ratios were 39 .and 46 percentnot 7 percent, as an exhibit on Texas companies indicated. The Texas companies contested this exhibit, but Connor made the point that since they had already paid out such thigh commissions, “it impossible for these companies to pay any higher loss ratio” than the indicated 7 percent. ” . The most pregnant reminder in. the 1952 hearing came from an executive of Credit Life Insurance Company of Springfield, Ohip. Credit insurance, he said, has been “authorized and .condoned and directed by the Legislature in Senate Bill 208.” Group Seeks Resignation Of Smith and Saunders AUSTIN The executive committee of the loyalist Young Democratic Clubs of Texas Sunday adopted a resolution urging the resignation of Insurance Commissioners J. Byron Saunders and Garland Smitil and a’ special session of the Legislature to ‘hire state employees to conduct a statewide insurance audit, prohibit “the proposed C.P.A. sham audit” of the companies, and consider impeachment of “every official from governor down who has any responsibility relating to insurance.” Gubernatorial prospect -Ralph Yat borough has called for the resignation of all three ‘commissioners. The executive committee of the Young Democrats elected Dean Johnston, state president, to’ the spot allocated to the Young Democrats on the loyalist Democratic Advisory Council steering committee. Johnston won over Houston Clinton, Jr., by a close vote. The committee also adopted a resolution in favor of the teacher retirement amen dmerit. ‘Return to Normalcy’? TEXAS ‘WORST SHARK. STATE. AUSTIN The Houston Post this week also began a report on the Texas credit insurance industry. In his first article, staffer Tom Martin quotes Senator that the Insurance Commission and Attorney General John Ben Shepperd failed to co-operate with his Senate subcommittee inquiry into credit insurance. Langer said Texas is “perhaps the worst loan shark state in the union.” Langer wrote the commission and Shepperd in the summer of 1954 about his touring subcommittee. Garland Smith replied that the commission would be “delighted to co-operate” but added that Texas credit insurance is “already regulated.” Shepperd produced his reply to Langer that his office would co-operate “as much as possible” but that “my staff will be extremely busy beginning this week” because of new court sessions. Langer decided against the Texas inquiry he . was considering. John Lee Smith Calls Daniel Strategy ‘Unconstitutional’ AUSTIN A former lieutenant governor, John Lee Smith of Lubbock, maintains that Senator Price Daniel must resign the Senate before he files for the governorship. ., Smith quotes the Texas Constitution, which states that no , member of Congress is eligible for any state of, fi,ce. He also mentioned a Supreme Court case on an unrelated matter which held that a candidate must be eligible when he places his name on the ballot. Daniel was questioned on Smith’s point Saturday but said he had not noted it. __…._…..___……._,_:…………._____ SUBSCRIBE or ‘ . RENEW to THE TEXAS OBSERVER For the Truth About Texas and a Glimpse at Its Future One Year-52 Issnes-416 Pages 1,664 columnsOnly $4 Name and Address: .. Name and Address : Subscription I.