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Letter to Senator Capehart on the Investigation of the Federal Housing Administration.

October 23, 1954

Dear Senator Capehart:

This will acknowledge your letter of October tenth in which you refer to the shocking testimony before your Committee regarding the Federal Housing Administration.

Since then I have discussed the contents of your letter with the Attorney General and with the Administrator of the Housing and Home Finance Agency. As you know from the cooperation which they have already given your Committee, these two officials have been conducting intensive investigations of the activities of the Federal Housing Administration from 1934 through 1952--the period during which these scandals took place. As you also know, the Attorney General has already obtained 200 indictments returned in Federal Courts in connection with his investigation. He has many additional matters to present to grand juries throughout the country and it is expected that many additional indictments will result.

The Administrator of the Housing and Home Finance Agency reported to me that 21 Federal officials appointed to the Federal Housing Administration prior to 1953 have been dismissed from the Government service as a result of his investigation. There are several similar investigations presently being conducted.

The Administrator also assured me that he is convinced that the loopholes in previous laws which made this costly scandal possible have been closed by the Housing Act passed in the last session of Congress. The applications for federally-insured loans are greater today than at any time before in our history. This is largely due, I believe, to restored public confidence in the operation of the new housing law by public officials dedicated to decent, honest government in the best interests of all the people of our country.

The tragedy of the disclosures made by your Committee, as I see it, is that a great number of innocent Americans have been forced to pay for the wrongful acts of certain public officials and builders. Windfall profits over the years have resulted in higher rentals for unsuspecting tenants. Fraud and misrepresentation in connection with home improvements have cost the small home owner other millions of dollars.

The Attorney General is seeking by civil process to force rebates from the builders who benefited from these huge windfalls. He will continue, at my direction, to take every appropriate legal step against those who have violated their public trust and those who gained easy money at the expense of tenants and the small home owner so that those responsible for what you call "the biggest scandal in the history of the United States" may be brought to justice.

With warm regard,



Note: Senator Homer E. Capehart of Indiana was Chairman of the Senate Committee on Banking and Currency. His letter, released with the President's reply, stated that the Committee had heard witnesses who admitted total FHA mortgage proceeds of more than $85 million above their total construction costs, and that many FHA employees were shown to have received money or substantial property from builders with whom FHA was doing business.

Dwight D. Eisenhower, Letter to Senator Capehart on the Investigation of the Federal Housing Administration. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/232970

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