$100 Million Windfall Profits

In its first roundup report on the housing scandals, the Administration estimated last week that windfall profits were well over $100 million in the 1,547 projects investigated. The report was prepared by William F. McKenna, a Los Angeles lawyer appointed by the Administration five months ago to check up on the Government-sponsored projects.

In 90% of the projects,* said he, there were windfall profits as a result of watered-up mortgage loans, insured by the Federal Housing Administration under the Housing Act's Section 608. McKenna put the blame for the skulduggery directly on ex-FHA Assistant Commissioner Clyde L. Powell, whose gaudy gambling career put the FBI on his trail last year and started the whole investigation (TIME, July 12).

"The story of corruption in FHA's postwar apartment construction program," said McKenna, "is largely the story of the reign of ... Powell." Said the report: "The total of payments stated to have been made by various [building] promoters to him, and Powell's receipts for which no other explanation can be found, goes comfortably into six figures for the years 1946 to 1950." Pressed for a more specific figure, McKenna would only say "in excess of $100,000." But a top housing official thought even that estimate "was only a small part of the total."

Answered Powell, who was appointed to the agency during F.D.R.'s first term, last week: "I deny that . . . anybody . . . has evidence that any . . . promoter ever paid me any money during my tenure of office ... in connection with official business." But the Administration may have trouble pressing its charges against Powell any further, since the three-year statute of limitations ran out on much of its evidence more than a year ago. Nevertheless, the Attorney General plans to request a special grand jury in the District of Columbia to go into the scandals. Among the first witnesses to be called: Powell.

*At week's end Federal Housing Czar Albert M. Cole released an additional list of 40 apartment projects, which resulted in another $14 million worth of windfalls.

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