Reconstruction Finance Corporation
Reconstruction Finance Corporation (RFC), a United States government agency, 1932–53. It was established during the Great Depression to give financial aid to both private and public organizations and thus revive industry. In 22 years the RFC loaned more than $12,000,000,000.
Congress created the RFC on January 22, 1932, during the administration of President Herbert Hoover. The corporation was authorized to lend to banks, building and loan associations, agricultural credit corporations, mortgage companies, insurance companies, states and their political subdivisions, and other public agencies. The RFC began with capital of $500,000,000 subscribed by the U.S. government, but was authorized to issue bonds, notes, and other obligations to three times this amount.
The RFC was empowered to organize subsidiary companies. The RFC Mortgage Company was established in 1935. The Disaster Loan Corporation was organized in 1937 to aid persons affected by floods and other catastrophes. During World War II, through the Defense Plant Corporation, a subsidiary, the RFC was also authorized to make loans to enterprises essential to the war effort.
The RFC was directed by a board of seven (later five) members. In 1951 a Senate subcommittee charged the RFC with political favoritism and other abuses. The board was then abolished, and the RFC was placed under a single administrator. In 1953 the agency's functions were transferred to the Small Business Administration and other agencies.