Word: rfc
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After lending Henry Kaiser $34.4 million only a month ago, the RFC last week opened its cash drawer and plunked out another $10 million to its great & good friend. The earlier loan was to help Kaiser-Frazer bring out a low-priced car by next spring to compete with Ford, Chevrolet and Plymouth. The second loan was to permit K-F to finance its dealers' purchases of cars from the factory, because K-F dealers had trouble getting loans from private banks. All told, RFC has loaned K-F almost as much as the company raised in stock sales...
Despite the whopping Kaiser debts to the U.S., RFC Chairman Harley Hise, a onetime California banker and minor Democratic politician, regarded the $44.4 million loans as "sound banking" action. Hise thought that there was "more than a reasonable chance that K-F can succeed...
Actually the terms to Kaiser are fairly stiff. For the $44.4 million, RFC required 1) a lien on all physical assets of K-F, 2) a guaranty for $15 million of the loan by two other Kaiser companies "who must also put up stock collateral having a market value of at least $10 million, and 3) a lien for $10 million of the loan on a fixed reserve of unsold autos...
...former RFC director and onetime South Carolina banker, Sam Husbands, in the words of his onetime boss Jesse Jones, "knows more about banks than any man in the U.S." He also knows a lot about what goes on in Washington. FRB is backing a bill in Congress which would give the board greater regulatory powers over bank holding companies that control more than 15% of the stock of an operating bank. Once Transamerica's holdings in Bank of America are reduced to 11.1%, it could argue that FRB should not be concerned with Transamerica even though the 11.1% might...
...RFC, which has always proved a friend in need for Henry Kaiser, came through last week with a $34.4 million loan for Kaiser-Frazer. RFC said some of the cash would be used to tool up for a complete line of cars. (K-F now makes only four-door sedans.) Detroit also heard that about $5,000,000 would be used to turn out a car for under $1500 to challenge Ford, Plymouth and Chevrolet. Henry Kaiser, who has paid back $67.6 million of his federal loans, now owes the government $149.8 million...