Competitor Jones

"The underwriting community wilted and reeled," reported the sympathetic New York Herald Tribune in telling how Federal Loan Administrator Jesse Jones last week offered to bid for public utility bond issues. "Investment bankers . . . saw the RFC as a potential competitor who could fix terms and rates, and put them entirely out of business."

On second thought, Jesse's plan struck Wall Street as much less alarming. What he had really offered was to backstop SEC with RFC cash if the former gets into trouble enforcing its new competitive bidding rule. Issues involving $100,000,000 or more may prove too big for competing syndicates to tackle, and that is where RFC will step into the picture. Right now there is a case in point: Columbia Gas & Electric's $120,000,000 issue, for which not even Halsey, Stuart has been able to get together a syndicate.

Ex-SEC Chairman Jerome Frank got the backstop idea while he was complimenting Jones on his tough handling of the Arkansas State issue he took at a "reasonable" price and resold promptly at a profit. He asked Jones if he would similarly make a market in big utility deals, and last week Jones made public his promise to compete for any big issues which bankers seemed to be negotiating for on their own terms. Subsequently he will accept piecemeal bids from bankers or market the bonds direct to insurance and trust companies. In that event, probably more gilt-edged flotations would go to smaller institutions outside of New York than heretofore. In the rush of stock offerings sure to result from holding company dissolutions Jones may also help by lending investment houses money to bid.

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