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BACKSTAGE BARGAINING How the Stage Was Set Senate Coalition Scotches Loan Bill lem by independent studies. Our rate structure is in line with the California ratessome of the ‘best in the country. How in the world do you justify legalizing such enormous rates? Thirty-six percent should ‘be enough.” Rep. W. T. Oliver of Port Neches, opposing the measure, said the bill would initiate an ‘unfavorable trend toward regulating “every business in Texas. I don’t want to keep the poor man down, but I think we can get a better bill than this one.” After the House approval and the Senate reversal, the only hope remaining for loan legislation of any kind would have been House concurrence in Senate amendments to a somewhat revised Cole bill, a step which it refused to take several days before. Although Kennard and Rep. Terry Townsend of Brady, one of the House conferees, literally worked the floor of the Senate in the closing hours after the Senate defeated the bill Thursday night, reconsideration of the narrow 16-14 Senate setback did not materialize and all hopes for loan legislation in the special session were dead. Behind-the-Scenes The story of the behind-thescenes negotiations between House and Senate conferees on the loan measure is a story of an almost relentless effort to compromise, ending b an obvious victory of the House group in “calling the bluff” of ‘the five Senate negotiators. Former Lt. Gov. Ben Ramsey, who had been a supporter of strong regulatorybig company legislation, had set up a Senate banking committee which was generally stringent on loan matters. The banking subcommittee last week drew up a regulatory bill somewhat in line with the original Cole bill, but with more concessions to the small, small lenders. When the Senate subcommittee’s bill hit the Senate floor late last week, advocates simply didn’t have the votes. Their proposal was cut to ribbons on the floor by a coalition of uncommitted senators, such as Martin Dies, and senators who normally defend the small lenders. The result in the Senate was a bill which one loan expert described as “a cleverly drawn farce,” with concessions to the small lenders but not enough to make it completely possible for the small loan industry to live under, and with a loan level cut off at $200, which exempted the large lenders. In this form the bill went to the House, which refused to concur. MARTIN ELFANT Sun Life of Canada Houston, Texas CA 40686 The House confereesCole, Kennard, McGregor, Townsend, Vernon Stewartwere all in favor of a regulatory act which would include all lenders. They were all flexible on rate and insurance sections. The Senate conferees \(see sepabroadly drawn bill that would include all borrowers in the small loan field. They preferred to apply a loan ceiling and devise a measure that dealt only with the $5-$50 loan class, or alternatively, to separate secured loans, which under current operating procedures in Texas, would sharply reduce the number of lenders within a loan measure. A lengthy and complicated battle was waged in the conference committee all week. The areas of agreement between the Senate and House conferees–regulatory provisions, the structure of the small loan commissioner’s office, exemptions were reached, narrowing the field of bargaining to the crucial rate and insurance sections. House conferees wanted to bring experts from the attorney general’s office and the Legislative Council, but the senators refused. Sen. Owen of El Paso was an informal chairman of the Senate group, Cole of the House. Sen. Reagan, among the Senate negotiators, made it clear he would support any regulatory act. Sens. Tom Creighton, Culp Krueger and Owen never made it completely clear what they wanted. Dies was uncommitted, and sought to reach a compromise that would regulate lenders and at the same time be acceptable to what he thought was the Senate position. One excellent method of defeating a regulatory loan act would be to draw a bill so tig.htly that no lender could live under it, as the narrowly drawn Senate bill, to assure defeat in the House. All of the Senate conferees supported every move to ‘tighten the measure. The House negotiators all started with a position favorable to the large lenders over the $50 bracket. The question in committee soon became a delicate balanceto see if a level of compromise could be reached that was sufficiently realistic. After much involved debate on specific provisions, the House conferees, rightly or wrongly, felt the bill under consideration was too ‘stringent to be realistic and was little more ‘than a sham to evade responsibility. At this point the House conferees laid down an ultimatum for an $800 ceiling and graduated rates to $400, and loans of $200 and over with security. The Senate made a final counter offer which included an $800 max, imum, graduated rates to $300, and a $200 security figure. The question that plagued the House conferees, as one House member not on the conference committee phrased it: “Should they go back to the House and blast the Senate for not being realistic, and for trying to thwart a loan bill, or should they go back to the House with that very bill and try to pass the toughest regulatory act in the United States?” The House conferees gambled. They came back to the House Thursday and managed to pass the conference report by 30 votes. The calculated risk worked, setting the stage for the defeat of the measure on the Senate floor at 8 p.m. the last-minute effort to ditch Daniel’s appropriations requests was a move to embarrass politically both Daniel and Speaker Turman, who had just announced for lieutenant governor. It was a typical last-night stand in the House. The appropriations bill was bounced back and forth between conference committee and the House floor in the dying hours. The Senate approved the conference report by voice vote Thursday night, but the House, in the last of a series of votes to suspend the rules and bring up the appropriations bill for consideration, decided by a 78-70 vote at 11:40 ‘p.m. not to consider the measure. By this time it was too late. Rep. Joe Ratliff of Dallas, chairman of the House conferees, accused Cotten of using “distortions, half-truths, and untruths” in leading the move to kill the bill. Cotten accused the conference panel of writing a new bill at the behest of Daniel. There ‘was considerable heckling and jousting, led by conservative Reps. W. T. Oliver of Port Neches, Jim Atwell of Dallas, and Bill Jones of Dallas. Rep. Tom James, another Dallas conservative, made a last-minute plea, at two til midnight, for passage of the appropriations bill, but his colleague Jones used the closing seconds by taking his allotted three minutes for debate. loans over $200, an annual license fee of $150 for lenders, ‘and require Texas ownership of firms not doing business in the state before Nov. 8, 1960, and at least 5 percent of ail loans to be made for amounts less than $50. The committee report was brought to the floor by Sen. Frank Owen of El Paso, chairman of the Senate group, who urged its adoption. After two and a half hours of debate, Sen. Galloway Calhoun of Tyler moved to reject the compromlse bill and demand another conference committee. Hopes Destroyed With the knowledge that the House had already voted 86-56 to accept the compromise loan bill, senators killed the measure, 16-14. The lengthy debate and the late hour, nearly 8 p.m., destroyed hopes of trying to report another bill. The Senate named a new group, headed by Calhoun, but no meeting with representatives was attempted. Only four senators voted against the loan ‘bill a week earlier on final Senate passageSens. A. M. Aikin Jr. of Paris, George Moffett of ‘Chillicothe, George Parkhouse of Dallas, and Bill Patman of Ganado. The dozen other senators who joined them to defeat the compromise report were Sena. Calhoun, Toni Creighton of Mineral Wells, Jep Fuller of Port Arthur, Dorsey Hardeman of San Angelo, Grady Hazlewood of Amarillo, Abraham Kazen Jr. of Laredo, Wardlow Lane of Center, David Ratliff of Stamford, Andy Rogers of Childress, Jarrard Secrest of Temple, Preston Smith of Lubbock, and Doyle Willis of Fort Worth. The 14 in favor of the conference report were Sens. Bob Baker of Houston, Neveille Colson of Navasota, ‘Louis Crump of San Saba, Martin Dies Jr. of Lufkin, Charles Herring of Austin, Hubert Hudson of Brownsville, ‘Culp Krueger of El Camp-o, Crawford Martin of Hillsboro, Bill Moore of Bryan, Frank Owen of El Paso, Bruce Reagan of Corpus Christi, Ray Roberts of McKinney, A. R. Schwartz of Galveston, and Franklin Spears of San Antonio. The Senate was also primarily responsible for the death of a small loan bill during last year’s 140-day regular session. The measure passed by the House never got out of the Senate state affairs committee. In 1960, voters approved a constitutional amendment authorizing the state legislature to raise interest rates on small loans above the constitutional ceiling of 10 percent so the lenders could make a legal profit. But at the same time legislators were instructed to put strict controls on the industry. Violators of the compromise measure would have been subject to fines of from $100 to $1,000 a year or jail terms up to six months. The only state action against lenders who charge too much interest at present has been court orders to temporarily stop them from making more loans. The primary objection senators raised against the compromise loan ‘bill was that it would eliminate the market for “small-small loans.” But they objected to a maximum coverage of loans up to $1,500 in the original House bill as indirectly raising rates on consumer finance. Hardeman Against Dies said some small lenders might not be able to make a profit under the compromise bill, “but you are never going ‘to pass a small loan bill that is going to satisfy all lenders unless you allow interest rates that I say are too high.” “We are trying to clean up the small loan industry and protect the borrowing public,” Dies concluded. The longest speech against the committee measure was 45 minutes by Sen. Dorsey Hardeman of San Angelo, who sponsored a small loan bill of his own last year. He said the compromise measure was not “a reasonable loan bill.” “People have gotten whipped into a frenzy and lost the concept of lending money,” Hardeman said. “It is simply an item of merchandise.” For a comparison of haw senators voted from one week to the next on small loan regulatory legislation, here is the 16-13 vote in favor of a $200 maximum bill taken Jan. 25. son, Creighton, Crump, Dies, Herring, Hudson, Kazen, Krueger, Martin, Moffett, Owen, Patman, Rogers, Willis. Hardeman, Hazlewood, Lane, Moore, Parkhouse, Ratliff, Reagan, Schwartz, Secrest, Smith, Spears. The vote on rejecting the compromise loan bill with a $300 ceiling over which interest of more than 10 percent could not be charged: Creighton, Fuller, Hardeman, Hazlewood. Kazen, Lane, Moffett, Parkhouse, Patman, Ratliff, Rogers, Secrest, Smith, Willis. Crump, Dies, Herring, Hudson, Krueger, Martin, Moore, Owen, Reagan, Roberts, Schwartz, Spears. Walker, Daniel The word is “apparently,” because at this writing he has not announced, and has npt answered any questions from newsmen. By the time this Observer ‘goes ‘to press, he will have held ‘his capitol news conference and more may be known of his ‘plans. Twenty minutes before Walker showed up at Democratic headquarters, Clyde Johnson, executive ‘secretary of the SDEC, still wasn’t sure the ‘was coming. Queried ,by waiting newsmen, Johnson said, “He may be over at Republican headquarters, for all I know.” When newsmen ermuntered Walker, their questions were answered with a stare. At the airport, he ‘would not tell them he was going to run for governor, or that he was going to the Democratic offices ‘to file. He responded only, “You have asked some good questions.” At Democratic headquarters, he interrupted the filing of former Senator Manley Head as candidate for congressman at large, and Johnson had Walker wait outside the office. Walker listed his age as 53 and !hi occupation as soldier. He would not answer newsmen’s questions about whether he had voted while in the Army, nor would he answer the question about what decided him to run for office. He promised to answer all questions at his 2 p.m. Saturday news conference at the capitol, and he kidded when reporters repeatedly implored him to answer questions on the spot rather than put them off until Saturday afternoonovertme for most of them. As the newsmen left, one old capitol reporter commented: “This guy is the damndest ‘politician I’ve ever seen.” AUSTIN An angry and unruly Texas House, led by appropriations chairman Jim Cotten of Weatherford and strengthened by a coalition of anti-Daniel, antiTurman conservatives, refused to approve the governor’s omnibus appropriations bill in the usual hectic race against the clock Thursday night. As a result, the money measure, which included a $58,500 increase in the state juvenile parole program, San Jacinto monument repairs, Texas tourist advertising, emergency repairs for Prairie View A&M College, and other minor provisions, went for naught. Gov. Daniel said Friday morning there would not be another special legislative session in the near future despite the setbacks to the loan shark \(see separate ures, he warned, “may well have a bearing on what I say” about a fourth gubernatorial term. Cotten and other House members were piqued over Daniel’s appearance before the House-Senate conference committee Wednesday, when at his request appropriations for air-conditioning the governor’s mansion and building a $1.3 million parking garage for state em