HANDLING OF ANTIBALLISTIC MISSILE DEVELOPMENT PROGRAM BY SECRETARY OF DEFENSE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP70B00338R000300100043-7
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 2
• Document Creation Date: December 19, 2016
• Document Release Date: January 10, 2006
• Sequence Number: 43
• Publication Date: June 1, 1967
• Content Type: NSPR

June 1, 1967 Approved F~- RI/3ifBDP R R000300100043-7
school to train war veterans and others for
various jobs.
ADIN O ANTIBALLISTIC MIS-
SLE DEVELOPMENT PROGRAM BY
SECRETARY OF DEFENSE
Mr. DIRKSEN. Mr. President, at the
request of the Senator from Texas [Mr.
TOWER], who is necessarily absent, I
have been asked to make the following
statement, which he has prepared:
STATEMENT BY SENATOR TOWER, READ BY
SENATOR DIRKSEN
Mr. TOWER. Mr. President, Technol-
ogy Week magazine's editor, Mr. William
J. Coughlin, has written an editorial in
his May 15 edition which, I believe, gives
voice to many of the worries and un-
certainties that many Americans feel
about the Defense Secretary's handling
of the antiballistic missile development
program.
I ask unanimous consent that the edi-
torial be printed in the RECORD and com-
mend it to the attention of the Senate.
There being no objection, the editorial
was ordered to be printed in the RECORD,
as follows:
ON WALKING SOFTLY
It isn't quite unanimous.
The Joint Chiefs of Staff believe this na-
tion should have an anti-ballistic missile
(ABM) system. Committees of both the Sen-
ate and House believe this nation should
have an ABM system. The Secretary of the
Army agrees. The Secretary of the Air Force
agrees. The Secretary of the Navy agrees.
The Secretary of Defense disagrees. His
stand is one of commitment to talks with
the Soviets in hope of heading off an arms
race by convincing the Russians they should
dismantle the ABM system they are building.
There are so many fallacies in Mr. Mc-
Namara's position it is little wonder everyone
around him is disagreeing with him.
Perhaps the foremost and most dangerous,
because of the implications it holds for our
nation's entire defensive posture vis-a-vis the
Soviets, Is the Secretary's belief that the
power of his logic will force the Russians to
cease and desist. He is so convinced that the
building of ABM systems by both nations is
ill-advised that he is certain he can make
the Soviets see this if they will just talk to
him.
We don't know how many Russians Mr.
McNamara knows, but we have some news
for him. The Russians don't trust him. Since
he is head of the American military estab-
lishment, they are inclined to regard his
statements as something less than the word
of Marx. When he tells them something is
good for them, they are less than over-
whelmed by his generosity in making the
news available.
That is a major stumbling block. But it is
far from the only one. Much more dangerous
is Mr. McNamara's hope that he can talk the
Russians out of doing something they al-
ready are doing by promising that the U.S.
will continue to do nothing.
The Soviets must be smiling slyly at the
naivete of suggesting that kind of horse
trade.
Even worse is the fact that the Soviet will-
ingness to discuss the matter is billed as a
great victory for the McNamara viewpoint.
What else would the Soviets do? They are
busily engaged in the building of an ABM
system to protect their nation and to read-
just the balance of power in their favor. If
a series of protracted conferences with Mr.
McNamara can delay initiation of the Nike-X
system while deployment of the Soviet ABM
continues, it Is hardly surprising that the
Russians are willing to talk.
We are rapidly nearing the end of a six-
month period since President Johnson and
Secretary McNamara revealed that they were
postponing initiation of Nike-X production
in an effort to engage the Russians in an
ABM detente. We suggest that setting of a
deadline to Mr. McNamara's nonsense is a
must.
The very inactivity of the U.S. program
will encourage the Soviets to continue dis-
cussions while stepping up their own ABM
deployment. Every week that goes by widens
the gap.
If Mr. McNamara expects the Russians ever
to give serious consideration to his argu-
ments, he should pass the word immediately
to start deployment of a U.S. ABM. Only
when such work is underway will the Soviets
begin to think seriously about what he is
proposing. And while they are considering
it, they will not have the advantage of im-
proving their military position by taking part
in the discussions.
The need for an early and public deadline
was made apparent by the qualifications of
each of the service secretaries In voicing
their support for Nike-X deployment. Air
Force Secretary Brown referred to deploy-
ment if the talks "do not succeed." Army
Secretary Resor used the phrase, "if these
negotiations do not lead to a satisfactory
settlement." Navy Secretary Nitze made his
support "subject to the results of the nego-
tiations with the Soviet Union."
Another argument by the Secretary of De-
fense that leaves us cold is his belief that
allowing the Russians to redress the balance
of power will ease tensions in the world. He
has made it apparent he feels the world will
be much better off if the Soviet Union is per-
mitted to bring Its offensive ICBM strength
up to a level more equitable. with that of
the U.S. Attainment of such a position of
offensive parity can also be achieved, of
course, by alteration of the defense positions
of the two nations.
Our worry stems from the fact that the
Soviets have shown themselves to be much
more sensible in pursuit of national interest
than Mr. McNamara has. He is going so far
in the opposite direction, as a matter of fact,
that we anticipate his whole attitude on
this topic one day becoming the subject of a
Congressional investigation.
The difficulty lies in the fact that the Rus-
sians have shown no intention of stopping
when they reach parity nor is there any rea-
son for believing they will do so. They may,
in fact, already have passed that point. You
may recall that Mr. McNamara was basing
his actions of several years ago on the belief
that he could convince the Soviets that in-
ferior ICBM strength was good for them and
the world.
Now that he has failed to get that word
across, he is pressing for an equal balance
of power. If he stays around long enough,
we expect to hear Mr. McNamara someday
patiently explaining at a Pentagon back-
grounder why the world is better off if the
U.S. is in an inferior military position to the
Soviets.
We sympathize with Mr. McNamara's thesis
that a nuclear holocaust is so horrible to
contemplate that the nations capable of
bringing it about must take steps to prevent
it. But this opens a trap for the internation-
alist Into which Mr. McNamara has fallen.
National interest still is a major force in
the world.
Walk softly and carry a big stick is still
good advice. It should also carry the re-
minder that on occasion national interest
requires doing something other than walk-
ing softly. If there is then no big stick, all
the U.S. will be able to do on such occasions
Is to continue walking softly-into sub-
jugation
If President Johnston wants Mr. McNamara
to work on the problem of easing interna-
tional tensions, be should name him Secre-
tary of State. Then he should name a Secre-
S 7599
tary of Defense who will protect the national
interest against the mistakes of the Secretary
of State.
FEDERAL HOUSING
ADMINISTRATION
Mr. DIRKSEN. Mr. President, at the
request of the Senator from Texas [Mr.
TOWER], who is necessarily absent, I have
been asked to make the following state-
ment, which he has prepared:
STATEMENT BY SENATOR TOWER, READ BY
SENATOR DIRKSEN
Mr. TOWER. Mr. President, Mr. Seth
Kantor, whom I regard as among the
most talented and professional newsmen
covering Washington, has recently writ-
ten a penetrating, skillful series of three
articles about the Federal Housing Ad-
ministration.
These articles appeared concurrently
in the El Paso Herald-Post, the Albuquer-
que Tribune, and the Fort Worth Press.
Similar shorter articles were published
by other Scripps-Howard newspapers
across the country, such as the Washing-
ton Daily News.
I commend these articles to the atten-
tion of the Senate, particularly Senators
who are charged, as I am, with special
responsibilities in the field of housing
and urban affairs. I ask unanimous con-
sent that the three articles be printed in
the RECORD.
There being no objection, the articles
were ordered to be printed in the RECORD,
as follows:
From the El Paso (Tex.) Herald-Post,
May 16, 19671
FHA HAS MODERN FRONT, DILAPIDATED
OPERATION
(This Is an exclusive three-part series on
FHA problems in general and Texas and New
Mexico in particular.-The Editor.)
(By Seth Kantor)
WASHINGTON, May 16.-The Federal Hous-
ing Administration puts up a modern front
and behind it is a dilapidated collection of
19th Century operating procedures.
Robert N. Jones, the FHA's deputy assist-
ant commissioner for multifamily housing,
puts it this way:
"We have a system which takes us 12
months to process a case. It takes us three
months just to say 'no' to somebody. We
desperately need a system to reduce losses-
to avoid the large claims we've experienced in
the past couple of years."
The case of Campus Associates of San
Bernardino, Calif., thrown out this year as
operators of the high-rise Barkley apartments
in downtown Fort Worth, is a classic exam-
pie of the bureaucratic gumbo that the FHA
walks around in.
Nov. 5, 1965, the FHA "sold" the 233-unit
building to Campus Associates for $750,000.
The property had been worth $2 million.
Under terms of the deal, Campus Asso-
ciates put up $22,500, signed a note for $727,-
500 and was allowed to wait nine months to
make its tax payment on the Birkley.
As it turned out, Campus Associates never
made a payment and the FHA foreclosed this
year, buying the property back from itself
for $675,000.
How did the California group, a holding
organization formed in 1965 for Campus Cru-
saders for Christ, happen to get the Fort
Worth property?
"I steered them to it," J. Guy Arrington,
an FHA official, said yesterday. In 1965 lie
was head of the FHA's property disposition
committee. "We usually always sell proper-
ties on a competitive basis, but we can ne-
gotiate with non-profit organizations."
Approved For Release 2006/01/30 : CIA-RDP70B00338R000300100043-7
 S 7600
Approved For R 1?P9?JQ)1tQt. 9I&-1WQBQ k1 0300100043-7 June 1, 1967
Arrington says he is "fuzzy" abcut the de-
tails, but Campus Associates "came to us,"
looking for a deal. "There was a soft market
in Fort Worth. There was a surplus of prop-
erties in the area. We felt we could take the
Birkley off the market."
Made up of seven top FHA officials, the
property disposition commitee approved
Campus - Associates without taking another
bid because the religious group "held prop-
erties in other states and other nations,"
said Arrington, adding:
"We had :never heard of them before, so
I guess they were more thoroughly checked
out than any other organization we ever
dealt with."
But when one asks questions about what
states and what countries have successful
properties held by Campus Associates, Ar-
rington shrugs.
"Once the property disposition committee
made its decision," he slid, "the Campus
Associates file moved on to the multifamily
division. We don't have access to that file
any more."
But the multifamily people at FHA can't
tell you anything about Campus Associates
because once foreclosure proceedings were
begun, the file moved on to the legal de-
partment. The legal department refers you
to the Justice Department.
The FHA doesn't even have so much as an
index card to show other Campus Associates
properties. Things can only be looked up by
case number. Never by name.
It is common information at FHA-that
Campus Associates got hold of the Birkley
In Fort Worth because it had a couple of
successful projects in Arizona.
But records show that the California or-
ganization took over the Arizona properties-
the 183-unit Sierra Catalina Vista and the
124-unit Imperial Gardens, both in Tucson-
in September, 1965, only two months before
it took over the Birkley there was no record
of successful management, in Tucson.
Records further show that Campus Asso-
ciates couldn't make a go of it in Tucson,
either, losing money there, the group un-
loaded the two apartment houses last fall,
selling them to Turtle Creek properties of
Tucson, Inc., which operates out of Indian-
apolis. Both properties -are thriving now.
Earlier this year the Justice Department
said it would sue Campus Associates in
Texas. Then the suit was withdrawn because
the organization was not Incorporated In
Texas.
But federal lawyers have had third
thoughts. The attorney general's office said
yesterday the U.S. will file suit against
Campus Associates after all, for moneyowed
and damages.-Seth Kantor.
I From the Albuquerque Tribune, May 17,
1967(
THE FHA EXPERIENCE WITH PARK PLAZA IN
ALBUQUERQUE
(EDITOR'S NOTE.-Seth Kantor, Tribune
Washington Correspondent, has made a
study of FHA activities in the apartment
house field. Today's story is the second on
a three-part series. Yesterday's story dealt
with the experiences of FHA in handling an
apartment house project in Fort Worth. To-
day's discusses an Albuerque project.)
By Seth Karitor)
WASHINGTON, May 17.-The way has been
cleared by the Federal Housing Administra-
tion for M. M. Hardin of Albuquerque tem-
porarily to keep operating his high-rise
apartment house-even though foreclosure
proceedings have been begun against him for
failure to pay his creditors.
F. ardin built the 151-unit Park Plaza
Apartments near Downtown Albuquerque In
1963, along with a pair or bigtime El Paso
builders, Charles H. Leaveli and Dan Ponder.
FHA INSURED
The El Pasoans owned 55 per ce at of the
new landmark on the New Mexico skyline.
The New Mexico State Investment Council
loaned the trio $2.8 million to put up the
building and the FHA insured the deal.
Subsequently, Ponder died. Hardin later
became full owner of the Park Plaza.
By Feb. 24, 1967, Hardin's mortgage was
declared in default by the State Investment
Council. He still owed the state agency
$2.8 million. He had paid $14,747 on the prin-
cipal.
GRANTED DEFERRALS
Hardin had been granted 18 months of
deferrals, amounting to $53,000, on interest
payments.
Without checking with the State Invest-
ment Council Hardin had transferred owner-
ship of the Park Plaza last Dec. 22 from
himself as an individual to himself as a cor-
poration, and was applying for another six-
month deferral in interest payments. That
automatically caused the default, the Invest-
ment council: ruled.
In a private letter to State Instrument
Officer Robert G. Mead on May 4, the FHA
said it is treating the date of Hardin's de-
fault as last Sept. 1, which was more than
two-and-a-half months before Hardin's
"automatic default."
Private negotiations are under way now
by the FHA and the investment council to
settle the FHA's pay-off in debentures to the
state agency, in exchange for the mortgage.
The investment council now can transfer
the Park Plaza deed to the FHA, in lieu of
foreclosure, and Hardin could be designated
by the FHA as operator of the apartment
house, with the FHA serving as lender.
NO PERSONAL LOSS
Under that arrangement, Hardin wouldn't
lose any of the money he has invested.
So far, the FHA here reports that "there
has been nothing irregular" in Hardin's con-
duct of Park: Plaza financial affairs But the
Justice Department is expected to move in
to investigate, when and If foreclosure action
becomes final, "in order to protect the gov-
ernment's interests."
Ordinarily, there is no federal agency in
Washington more aloof from the government
than the FHA-when it wants to be.
OWN RESERVE FUND
Salaries and operating expenses of the
FHA, a division of the Department of Hous-
ing and Urban Development (HUD) come
from the FHA's own pool of reserve money.
The reserve now totals about $1.1 billion,
according to an FHA spokesman, and it ini-
tially comes from the half-per cent interest
rate charged to millions of FHA-insured in-
dividuals and groups in the nation. The
reserve is invested in government bonds.
When losses are sustained by the FHA-
such as when mismanagement causes a fore-
closure-the money comes from the reserve
pool and is not paid for out of the federal
budget.
TRANSACTIONS PRIVATE
FHA officials tell you that with privately
gathered funds to operate on, the agency
doesn't have to make public its transactions
with clients.
But the FHA invokes Title 18, Sec. 1905 of
the U.S. Code, which forbids release of in-
formation that could adversely affect a per-
son or corporation doing business with a
federal agency.
The FHA denies that politics ever plays a
part in its decisions.
[From the Fort Worth Press, May 18, 19671
FHA IMPROVES PLAN FOR ELDERLY HOUSING
(By Seth Kantor)
WASHINGTON.-When an employee of the
Federal Housing Admn. commits a blunder,
the running gag inside the agency is that
the offender will be banished to "Title
Seven."
Title Seven of the federal act setting up
the FHA 33 years ago calls for establishment
of investment yle:ld insurance-and is so
complicated that it hasn't been brought into
existence even yet.
It typifies tl)e pace at FHA, where an in-
tensive, internal study has been under
way--a "critical review," they call it-for the
past three years o:o the FHA's housing for
the elderly program.
What's been learned so far?
As one FHA expert answered it:
"Rents have been too high in this program
because building costs are high. The risks
of the program are high because the average
age of the renter is 72.
"When you get into a market study of the
elderly, you find they buy one pork chop
instead of five. We ::rave learned a lot."
They have done that in just three years.
But, through trial and error in the field,
the FHA has beer.. developing a far more
substantial program for the elderly than it
had :Five years ago when Christian Homes Inc.,
was put up on the edge of Fort Worth.
The 343-unit, $3.1-million Christian Homes
spread was the "moat spectacular of all flops"
in the housing for the elderly program, an
FHA official shuddered. "We use it as our
prime example of failure.
"We were misled at Fort Worth. We didn't
check out, enough of the facts. It was typical
of our attempts to service the elderly market
In an all-too-optimistic manner."
Another $3.4 million housing for the elderly
project on the edge of Fort Worth, St. Francis
Village, has become controversial now, be-
hind scenes at the FHA.
The Third Order. of St. Francis, sponsor
of the project, hasn't made a payment on the
principal yet. Some interest payments have
been mad.e. The project was opened in 1965.
Two months ago, regional FHA director
Adrian Henderson denied one public report
that St. Francis Village was facing foreclosure
procedures.
"They're doing marvelously out there,"
Henderson insisted to a newspaper reporter,
about the progress at St. Francis. But at FHA
headquarters here, Henderson encountered
stone faces.
Private.:y, April 27, a toughly worded letter
was sent to Henderson from headquarters,
setting up May 10 as the absolute deadline
for a final: "firm, acceptable proposal" for the
Third Order of St. Francis to run its project
in a business-like way or get out.
May 10 came and went, of course.
Henderson scheduled yesterday, a week
after the dire deadline, for the showdown.
That was all right with FHA officials here.
They are not exactly in a hurry to come to
grips with mistakes.
One of the most classic sleepy-time ap-
proaches to business by the FHA occurred
during the Kennedy administration at old
Cape Canaveral, Fla.
It was a military-impacted area. Service-
men came and went. FICA analysts couldn't
bring themselves tc approve a request for a
1000-unit project.
Finally, when the space launching site was
clearly, visibly booming, the experts saw the
need.. They okayed the project. But by then
private builders were jumping into the same
market with 5000 units.
As a result, everybody lost. But that's not
a new story with the FHA.
LAKE ERIE CANAL
Mr. SCOTT. Mr. President, the ad-
ministration has included in its fiscal
year 1968 budget request an item (rf $2
million for the :Lake Erie-Ohio River
Canal. In order for this canal to ever be
Approved For Release 2006/01/30 : CIA-RDP70B00338R000300100043-7