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Federal Reserve Bank of St. Louis
May 1980 Chron File
Collection: Paul A. Volcker Papers
Call INTumber: MC279
Box 2
Preferred Citation: Chronological Correspondence: May 1980; Paul A. Volcker Papers, Box 2;
Public Policy Papers, Department of Rare Books and Special Collections, Princeton University
Library
Find it online: http://findingaids.princeton.edu/collections/MC279/c20 and
https://fraser.sdouisfed.org/archival/5297
The digitization ofthis collection was made possible by the Federal Reserve Bank of
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From the collections of the Seeley G. Mudd Manuscript Library, Princeton, NJ
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Federal Reserve Bank of St. Louis
May 30, 1980
Mrs. Dennis Lawrence
Dear 'Irs. Lawrence:
I have read your letter carefully and I want you to know that I can
appreciate the difficulties you and your family are facing. I also know that in your
current situation, you cannot be expected to draw much consolation from that alone.
nut, if we had not moved firmly to begin the process of winding down
inflation, I can assure you that the economic difficulties that we as a nation and as
individuals are facing would have steadily worsened. That inescapable truth does not
alter the fact that bringing inflation under control is not an easy process, but it does
make it clear that achieving that result is absolutely essential to the sustained
prosperity that you and I both want.
()
- ver the past two months we have seen very sharp declines in market
interest rates in the wake of a moderation in the demand for money and credit. And,
in response to this changing environment, the Federal Reserve has modified several
elements of its credit restraint program in a series of steps taken on May 22. These
developments should help to relieve some of the pressures in housing and related
industries.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
f
r:CL,:sep
111974
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
May 30, 1980
Mr. Sidney F. Paton
Dear Mr. Paton:
Thank you for your letter and clippings. You
raise some interesting points, and I definitely find myself
in agreement with your view that we should reduce inflation,
government deficits and our oil consumption. Although I
believe we need firm and decisive actions in all these
areas, I think that your specific proposal, for a $1.00
gasoline tax, raises difficult issues which require a Great
deal of study.
I appreciate your sharing your thoughts with me.
Sincerely,
RL:jrg
p1895
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Federal Reserve Bank of St. Louis
May 30, 1980
The Honorable William Proxmire
Chairman
Committee on Banking, Housing,
and Urban Affairs
United States Senate
Washington, D. C. 20510
Dear Mr. Chairman:
Thank you for your thoughtful letter of May 23 concerning
interest rate differentials between banks and thrifts. The decisions
of the Depository Institutions Deregulation Committee earlier this
week were indeed fashioned, after extended deliberations by the Committee, "to strike a delicate balance between preserving the finani—
cia1 stability of financial institutions, maintaining credit flows frIr
housing, agriculture, and small business, and providing equity for
savers." Only time will tell us whether we have succeeded in that
objective, but my colleagues and I on the Committee will be watching
developments very carefully and we will make whatever adjustments may
appear desirable in light of evolving economic and financial conditions.
Your support of our efforts is deeply appreciated.
Sincerely,
Paul A. Volcker
Chairman
NB:cak
D-694
cc:
Mrs. Mallardi (2)
Mr. Winn (1)
WILLIAM PIROXMIRE, WIS., CHAIRMAN
0
HARRISON AIPDWILLIAMS, JR., N.J.
JAKE GARN, UTAH
ALAN CRANSTON, CALIF.
JOHN TOWER, TEX.
ADLAI E. STEVENSON, ILL
JOHN HEINZ, PA.
ROBERT MORGAN, N.C.
WILLIAM L. ARMSTRONG. COL .
DONALD W. RIEGLE, JR., MICH.
NANCY LANDON KASSEBAUM, KANS.
PAUL S. SARBANES, MD.
RICHARD G. LUGAR, IND.
DONALD W. STEWART, ALA.
GEORGE J. MITCHELL, MAINE
KENNETH A. MC LEAN, STAFF DIRECTO
R
M. DANNY WALL MINORITY STAFF
DIRECTOR
MARY FRANCES DE LA PAVA, CHIEF CLERK
•
'ZICnifeb ,States Zonate
COMMITTEE ON
BANKING, HOUSING, AND
URBAN AFFAIRS
WASHINGTON, D.C. 20510
May 23, 1980
Chairman Paul A. Volcker
Depository Institutions Deregulation Committee
20th and C Streets, N.W.
Washington, D.C. 20551
Dear Mr. Chairman:
It has been reported that the Depository Institutions
Deregulation
Committee will consider the advisability of eliminating
the rate differential on money market certificates which otherwise will be
restored when
Treasury bill rates fall below 9 percent. Any decision
on the differential
will have to strike a delicate balance between preservi
ng the financial
stability of financial institutions, maintaining credit
flows for housing,
agriculture, and small business, and providing equity for
savers. A
judgment on this issue requires access to detailed info
rmation on the current condition of financial institutions and on the rece
nt credit market
developments. For these reasons, Congress left the issu
e of the differential on accounts created after December 10, 1975 to
be decided by the
Deregulation Conunittee.
For example, in passing the Depository Institutions Dere
gulation and
Monetary Control Act of 1980, Congress could have amen
ded P.L. 94-200 to
require the differential be maintained on all categori
es of accounts and
not just those in effect on December 10, 1975. Cong
ress chose not to do
so. It is obvious, therefore, that Congress inte
nded to vest discretionary
authority on post-December 10, 1975 accounts with the
Deregulation Committee.
Hopefully, the Deregulation Comntittee will carefully asse
ss the impact
of restoring or eliminating the differential before maki
ng its decision.
I believe the Congress clearly intended that the Deregula
tion Committee
exercise its best judgment on such matters. I have take
n no position on
this issue; instead, I urge the Deregulation Conunittee
to decide the
issue strictly on its merits without reference to alts
ide pr ssure.
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4
Federal Reserve Bank of St. Louis
S cerel
Ill am
Chairman
xmire
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Federal Reserve Bank of St. Louis
May 29, 1980
Mr. Allen G. Zaring, III
The Zaring Company
8170 Corporate Park Drive
Suite 310
Cincinnati, Ohio 45242
Dear Mr. Zaring:
Thank you for your letter on the difficulties being
experienced by your homebuilding business. I can understand the
concerns that prompted you to write, and I appreciate having your
thoughts on broader aspects of Government policies over the years.
You have also put your finger on a critical aspect of the
problem with your comments on government spending. Persistent federal
deficits are a major source of our economic difficulties, both in terms
of their direct consequences and, perhaps more importantly over time,
in their fostering of inflationary expectations. I sense, however,
there is a growing realization--throughout all segments of our society-that we must bring this process under control. The recently proposed
cuts in federal spending--while perhaps not as large as you or I would
have wished--are representative of that changed attitude.
Of course, monetary policy also has an essential role to play
in the fight against inflation since excessive inflation cannot persist
over time unless fueled by excessive growth in money. Thus, the basic
thrust of monetary policy is, and will remain, aimed at maintaining
moderate growth in money and credit.
There has recently been a decided easing of the extreme credit
market pressures that we have experienced in the past few months. The
demand for credit has lessened and market interest rates have moved
significattly lower. And, In response to this changing environment, the
Federal Reserve has modified several elements of its credit restraint
program in a series of steps taken on May 22. A press release on these
actions is enclosed. These developments should help to relieve some of
the pressures in housing and related industries.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Mr. Allen G. Zaring, III
-2-
Whatever short-run results may be associated with these
developments, we must not lose sight of the fact that the key to
sustained prosperity lies in achieving a non-inflationary environment,
and that requires sustained discipline in our financial and fiscal
affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
JH:jmr
#1859
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Federal Reserve Bank of St. Louis
May 30, 1980
Mr. David N. Adamson
National "Write Your
Congressman" Club, Inc.
11420 E. Northwest Highway
Dallas, Texas 75218
Dear Mr. Adamson:
I will happily forgive the error -- and less happily
the rather prejudicial way the question was put. In any
event, interest rates are down for the present -- and we'd
better continue progress on inflation to keep them there
and lower!
Sincerely,
PAV:ccm
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
%a:r. 30,
19ep
The tioncrable Joserb P. Al.idabtto
ovzie of Xlspresontatives
- _,invAon, D. C. 20515
Lor xr. Addel-bo:
Thank iota tar your ;-al 20 Icttex rc,;ardin a
4,r(Jvision in tha ixtard't cons=or credlt restralnt 1.4-..m1atioo that allo4,
, * creclit card isuuors to increa , intcrest
rates on Comiumert" eatiztin
ilanceb.
The ,rovision to which you refer i-roviewi
form rula for creditors to follow in clvanin5 certain tern1
in tbeir rvc1v
crWit account.474 and 30-da-z cricait ac
t}ounts.
cmedit card issuerv would 1.e amonl those
attljact to tUt sicultl, it all;c alTlies to other creditors
ofterin those t:J es of accounts.) The hoard was concerned
that the variet of State lawv and contrbot provisions
adt:iressio-,
ia UMW* slit,!:t not rovids sufficient
,erotection'tc COASUUM or 4dat4uate ,olidance to creditors
4*so1cin, to
their credit c;rowth in accordance with th,
rulatic,n. "Ms 'Eoart41 1taieve4 tint the asiendment repretent.
the bwzt altctrtative in resolviri
concerne of
tor$ and cun‘uz;,c4r:',#üeencouret;ir:: crt4It reetrziitlt.
certainly undertand ;our concern refArdintj t
ir.4;t of tIle rule on cotaumerzt tut would like to L,oint out
that the Lcard'u, asendluent in nirtn-1
: cia
consumv,rs an
iv
ction that would not be availalAle undtr either !;,tlite
their credit contracts. ThAt oztion allaz cu%tomars
Ucl ret,ley outatandinkl Lalances unid*r the OA ter=j.t!Afe,
,10 Act use their accounts ifter tte effective at or a
cilanige. The inicraation iatherc,d
the !rd' staf indi.
catea that only tour 2tates currentI !,,ro:74.!At A, :11cation
01 chaniee in temp to existinit :,alaaces, 04.1e tt,s remainder
either expresali ermit those chan
cr tkro ailent on the
issue. 1,,:here state law le ailentt the .rult is li;lonerally
.t.werrie4 by the contraot 1.0etween the contAlr atd th
creditox. tie understand that contracts sercrall'i allov
c..an-jct In terms to be ai.klied to outstandisw tAlancea.
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Federal Reserve Bank of St. Louis
rz z.
cq.,1r
to f:!!ri.;
C
I VAS:ved C V- 226)
-cc
Stewart
Hrs. Mallardi (2)
30, 1980
Mr. Patrick Benhoff, Secretary
elvin C. Benhoff & Sons, Inc.
Williamson Lane
Cockeysville, Maryland 21020
Dear kir. Benhoff:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
for
time, continue to work to reduce inflation and thereby provide the foundations
greater economic stability. Monetary policy has an essential role to play in that
ve
process since excessive inflation cannot persist over time unless fueled by excessi
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
ts of
to this changing environment, the Federal Reserve has modified several elemen
its credit restraint program in a series of steps taken on 'ilay 22. A press release on
the
these actions is enclosed. These developments should help to relieve some of
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
ng a
must not lose sight of the fact that the key to sustained prosperity lies in achievi
al
non-inflationary environment, and that requires sustained discipline in our financi
and fiscal affairs.
on
As you know Congress has already passed a limited tax exemption
Federal
savings account interest. While tax laws are not the responsibility of the
Builders
Reserve, I appreciate your advising me of the proposal of the Home
Association of Maryland regarding a larger exemption.
Thanks again for writing.
Sincerely,
:RL:sep
#1829
Enclosure
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Federal Reserve Bank of St. Louis
May 30,1980
Mr. Benjamin B. Botts
Botts Construction Company
2421 Newmans-Cardington Road West
Prospect, Ohio 43342
Dear Mr. Botts:
Thank you for your petition on the effects of high interest rates on housing.
I can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. 'Ionetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on 7klay 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
RL:sep
#1894
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Federal Reserve Bank of St. Louis
May 30, 1980
yir. Mark G. Rotts
Dear Mr. Botts:
you to
Please excuse the delay in my response to your petition but I want
st rates on
know that I understand your concerns about the effects of high intere
housing. I can fully appreciate the considerations that prompted you to write.
inflationary
In the setting of excessive inflation and deeply embedded
must, over
expectations, there is a wide national consensus that economic policies
foundations for
time, continue to work to reduce inflation and thereby provide the
in that
greater economic stability. Monetary policy has an essential role to play
by excessive
process since excessive inflation cannot oersist over time unless fueled
aimed
growth in money. Thus, the basic thrust of monetary policy is, and will remain,
policy alone
at maintaining moderate growth in money and credit. However, monetary
you that we
cannot do the job effectively. In that regard, I would strongly agree with
as it applies to
need help in the form of firm discipline in fiscal policy, particularly
restraining the growth in government spending.
t
There has recently been a decided easing of the extreme credit marke
for credit has
pressures that we have experienced in the past few months. The demand
in response
lessened and market interest rates have moved significantly lower. And,
al elements of
to this changing environment, the Federal Reserve has modified sever
release on
its credit restraint program in a series of steps taken on May 22. A press
e some of the
these actions is enclosed. These developments should help to reliev
pressures in the housing industry.
ts, we
Whatever short-run results may be associated with these developmen
in achieving a
must not lose sight of the fact that the key to sustained prosperity lies
in our financial
non-inflationary environment, and that requires sustained discipline
and fiscal affairs.
tly enacted
As for your suggestions concerning saving institutions, recen
allow, over a period
legislation, the I)epository Institutions and Deregulation Act, will
ng funds.
of time, savings institutions to become more competitive in seeki
I appreciate your taking the time to write.
fit>
3H:RL:sep
F.nclosure
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Federal Reserve Bank of St. Louis
Sincerely,
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Federal Reserve Bank of St. Louis
May 30, 1980
Dear President Carovano:
On behalf of my mother, daughter, and niece, may I
extend our thanks for all you did to make our stay at
Hamilton College such a pleasant one.
Your hospitality
was superb, and I am greatly honored by the whole affair.
The sunburn on my nose won't last, but the memory will.
Please give my thanks to your wife as well.
Sincerely,
Dr. J. Martin Carovano
President
Hamilton College
Clinton, New York 13323
PAV:ccm
May 30, 1980
Mr. Raphael Cohen, Executive Vice President
Mr. Malcolm Davis, President
Independent Dealers Committee Dedicated
to Action
P.O. Box 421
Ridgewood, New Jersey 07451
Dear viessrs. Cohen and Davis:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and related industries is a difficult one that has been complicated by the
energy situation and related shift in the demand for small fuel-efficient cars.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither automobile dealer
loans nor auto loans to consumers should he subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which the automobile
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
Enc.lo ure
J
L:sep
#1918
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Federal Reserve Bank of St. Louis
May 30, 1980
Mr. R. M. Clutchen
Dear Mr. Clutchen:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write, though I must emphasize
that the Federal Reserve has been granted by the Congress a large degree of
independence in the day to day conduct of monetary policy, which effectively isolates
it from the type of political pressures you envisioned.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on 11/44ay 22. A Press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in housing and related industries.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
1 appreciate your taking the time to write.
Sincerely,
Enclosure
1-1:RUsep
#1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
C
May 30, 1980
The Honorable Norman E. LVAmours
louse of Representatives
Washington, D.C. 20515
Ilear Mr. D'Amourst
This letter is in response to your letter dated May 9, 1980, urging the heads
of the federal financial supervisory agencies to request the Financial Institutions
Examination Council not to adopt the Justice Department's interpretation regarding
transfers of information to law enforcement agencies under the Right to Financial
Privacy Act.
I am pleased to report that Governor Partee, the Board's representative on
the Council, successfully persuaded the Council not to adopt the Justice Department
position. Instead, the Council members decided to forego adoption of a uniform
procedure for use by the five agencies when making these referrals. The Council
recommended that in lieu of uniformity, each agency should be guided by its 7;erteral
Counsel as to the referral procedure It would use. Mr. Robert Lawrence, Executive
Secretary of the Council, has Informed our staff that the Council will be reporting
directly to you about this action.
As you .-nity know, the Board's staff rejected the Justice Department
opinion regarding the criminal referrals. Instead, the Board's staff transmitted
instructions to System member banks that they should refer these matters directly,
and include the FBI case istenber assigned to a particular matter when reporting to the
Reserve Bank that the particular referral had been made. In those rare instances
where a member bank fails to make the referral, the Reserve Bank will refer the
matter to the proper authorities and will give the bank customer notice that the
referral has been made. This method also eliminates the former practice of a Reserve
Bank luplicating a member bank's referral of information concerning an alleged
violation of Law to federal law enforcement authorities.
I believe that the practice described above complies fully with the
financial privacy law and shields ow employliies from unintentionally making unlawful
referrals.
Please let me know If I may be of further assistance.
CO:sep
sPeritrkkig
Identical letter sent to each of the following:
The Honorable Jerry M. Patterson
The Honorable John J. Cavanaugh
The Honorable Barry M. Goldwater, Jr.
The Honorable James J. Blanchard
The Honorable Stewart B. McKinney
The Honorable Les AuCoin
The Honorable John H. Rousselot
The Honorable James M. Hanley
The Honorable Fernand J. St Germain
The Honorable Parren J. Mitchell
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Federal Reserve Bank of St. Louis
The Honorable Stanley N. Lurviine
The Honorable Henry S. Reuss
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Federal Reserve Bank of St. Louis
The Honorable Jim Niattox
The Honorable Fortney H.(Pete)Stark
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Federal Reserve Bank of St. Louis
!tr. Coyle" Despredel
COVASTUOIr
Central lank of the boalstiees lkoralic
I 234
lie
4 el Ge
rstut*tiow
tz
**public
iozward to daft
continuation
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Governor WaI 1.ich
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}Ir. 1374nesn
Mr. Stessen
Ars. Brown
Maront
W. Suencer
k)41
tt
I,
between our
vo institutions
May 30,1980
Mr. Thomas J. DiRito
Dear Mr. DiRito:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. lonetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing enviroament, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
:RL:sep
#2017
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 30, 1980
Mr. James P. Dunn, President
J. D. Homes, Incorporated
11150 Embassy Drive
Cincinnati, Ohio 45240
Dear Mr. Dunn:
Thank you for your letter on the effects of high interest rates on housing.
I can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly agree with you that we
need help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
31-I:RL:sep
#2013
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
y 30, 1980
Mr. Michael S. Egan, President
Alamo Renta A Car,Inc.
Fort Lauderdale, Florida
Dear Mr. Egan:
Thank you for your mailgram. I want you to know that I can fully appreciate
the circumstances that prompted you to write. I know that the current situation in the
automobile and related industries is a difficult one that has been complicated by the
energy situation and related shift in the demand for small fuel-efficient cars.
As to the credit aspects of the problem, we have had very sharp declines in
Interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither automobile dealer
loans nor auto loans to consumers should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an econotnic environment in which the automobile
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
3
L:sep
#1826
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
The !!.,mortil-le
tcAL,144.1 oi
itca, Ci
L.
4"
4
?.tr.
Monk :lou. for
10.4
tuation at tr41:.7t 1;1“,itutin
to two. utw.24tiomi tor
thrr‘c
crxr
and
cuu a44aurc
tLAt
&ttor rc";!tsral r47-r,it,rw•are
of the diliculties cauota
vint rLd loan agm,i,ciutiona
tha recimt
IcArsa141 of &t .t rates. It is a 3ituatior
we rtonitor coo4tat1y and oat,
vt 14timicucdextent1v+11:t:
with the Qthtr •fc4leral r.i;oulAtor ‘1%0 zvr,)t;longlihilities in
this 4.rcia.
ha:Ac
facttd
thotto inztitutions, ao
iou
ia that
int4rcat rates incre4ae their ceet of
obtainim„i tuada LAucb or than their rcturna 021 assets i
terve
zicrtior. c$L if.141.=1: art older: 3ower-iie1dins;1 mortqaile6. From
this 4txsilfeetive,I think thv ro:cont declisien in ratea are
onvourai
41thintl4 ir U174 relieve muoll of the current int'n
nizocire3suz*Iioi tLirifts
Over the lonuor
run, the c:1,clical charactor of thrift earnin‘'s will tecoze loss
Ironoutict4 Atli. the Law:caged use of alternative zAortgac4e irtstruvaotke return% alrlo fluctuate 'with the level of merXet rtitee.
The i.,le crtuslity Lo soil
mortsaces to the
4ovcrri,ment kieu14, Qf courac, 1-rovide some it.ztediato relief tor
f;.arky Le tituticu allet 1.ettur omitien them tould rltort-torm
ratw. once ;.*-i
!
;ain rlEtt
Powever#
au concarrme: alAout
1:.udotart trA,Act uf
Irolram and tht prcteeclent it w-ould
otet. It wculd rf.ttlirc sailatntial outlays( '4th tIse tillt,$yeTz
loam,* ria4rosmute4 by the differeme 1:vtovn the
..arket =Id took values of theme assets. sue!
ill-advised at a time when but..c.;et
iu i.Aki,.ortAnt tei our efforts to curb inflatiou
1'03:cover, if
•
4
The Honorable Joseph L. Fisher
Page Two
the government bought low-yielding assets of thrifts, others
with similar problems would also seek federal aid. These
might include industries with outmoded productive capacity
as well as financial institutions. I might note that the
Depository Institutions Deregulation and Monetary Control
Act mandates an interagency study of what can be done about
the imbalance between thrift asset and liability portfolios.
The approach you put forward is being considered in this
study, and I would expect that the analysis there will help
to clarify the issues.
With respect to money market mutual funds, our
concerns about their ability to divert credit from its traditional channels led us--under the Credit Control Act of
1969--to impose a special marginal reserve requirement on
the growth in their assets. We have recently reduced this
requirement along with relaxation of other special measures
imposed on March 14, given slackening of credit demands,
lower interest rates, and some strengthening of flows to
thrift institutions. Nonetheless, there remain serious
questions about the impact of these funds on the distribution of credit and about competitive equity between the
funds and depository institutions. These considerations,
of course, must be weighed against the obvious convenience
and returns they offer savers. In general, I remain concerned about the present regulatory status of money market
funds and believe that the matter deserves the attention of
the Congress and appropriate federal agencies.
I appreciate the opportunity to comment on these
ideas.
Sincerely,
,
/
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/90
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
L.
a.Eeft.,CC
r
May 30,1980
Mr. Robert E. Cialla;her
Dear sir. Gallagher:
Thank you for your letter on the effects of high interest rates on housin. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and riee;sly em`secIderf inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. "onetary policy has an essential role to play in that
process since excessive Inflation cannot persist over time unless fueled by excessive
growth in money. Thus,the bask thrust of monetary policy is, and will r(Itcrtain, aimed
at maintaining moderate growth in money and credit. However, raonetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline In fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressares that we have experienced in the past few months. The desnand for credit has
lessened and market interest rates have moved significantly lower. IVA, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint programs in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve sonic of the
pressures in the housing industry.
!vhateyer short-run results may be associated with these developments, we
riuSt not lose sight of the fact that the key to sustained prosperity lies in achievin7 a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
fInclosure
:RL:sep
#2015
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 30, 1980
rkitr. Charles Goeken, President
Hi-Way Implement, Inc.
P.O. Box 151 - Highway 71 South
Audubon, Iowa 50025
Dear Mr. Goeken:
Thank you for your letter on the effects of high interest rates on your
business. I can fully lppreciate the concerns that prompted you to write, including the
fact that difficulties in agriculture are affecting your dealership.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures affecting small business and agriculture.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
e/
31-1:RL:sep
#1599
Enclosure
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 30, 1980
-1r. Barry A. Gold, President
The Lumber Exchange of ''iaryland, Inc.
4300 Milford Mill Road
Maryland 21208
Dear Mr. Gold:
Thank you for your letter on the effects of high interest rates on the
lumber industry. I can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. lonetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the farm of firm discipline in fiscal policy, particularly as It applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in housing and related industries.
'vhatever short-run results may be associated with these developments, we
rust not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
31
L:sep
111844
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 30, 1930
'4rs. Sue Goletz
Iear Mrs. Goletz:
I can well unrferstand your concern as to the significance of the recent
3harp decline In interest rates, for I too have been alert to the possibility that such
trends might be misconstrued. Basically, these lower interest rates reflect the fact
that credit demands have moderated appreciably, in part because of the slowing in the
oace of economic activity. Our basic policy of seeking moderate growth in money and
credit is unchanged and we are, in fact, running a hit below our o5jective for I9S0. We
have in no way "forced" interest rates down, and I want to assure you that our policy
of restrained growth in money remains very :-such in place.
"Ay recent speech to the National Association of Savings Fsankers addresses
V.lese questions, so I have enclosed a copy for your information.
Sincerely,
J1-1:RL:sep
#1784
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 30, 1980
Mr. Charles V. Hardwick, Jr.
First Vice President
James T. Barnes Mortgage Company
One Central Plaza
11300 Rockville Pike
Rockville, Maryland 20852
Dear Mr. Hardwick:
Thank you for your letter on the effects of high interest rates on your
mortgage banking firm. I can fully appreciate the concerns that prompted you to
write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
JH:RL:sep
#2020
Enclosure
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 30, 1980
Mr. L. Clarke Jones, III
President
Home Builders Association of Richmond
5803 Staples Mill R.oaci - P.O Box 6521
Richmond, Virginia 23230
Dear Mr. Jones:
I can appreciate your reaction to the press report but I can assure you that
I never made that statement. I also fully understand your concerns about the effects
of high interest rates on housing.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. r‘lonetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write and hope you will excuse my
delay in getting back to you.
Sincerely,
En
sure
1I-1:RUsep
111486
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 30, 1980
Mr. Robert E. Kale
Dear Mr. Kale:
Thank you for your letter. I appreciate the
concerns that prompted you to write. The Federal Reserve
normally gets involved in pending legislation only when
asked to do so by the Congress. But, I have asked my
staff to keep abreast of the housing finance legislation
you refer to.
Sincerely,
1.(7.
RI:jrg
01955
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 30, 1980
Mr. Eugene W. Kelleher
Dear Mr. Kelleher:
Thank you for your letter on the situation in the housing industry. I can
fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
policies must, over
expectations, there is a wide national consensus that economic
the foundations for
time, continue to work to reduce inflation and thereby provide
role to play in that
greater economic stability. Monetary policy has an essential
by excessive
process since excessive inflation cannot persist over time unless fueled
remain, aimed
growth in money. Thus, the basic thrust of monetary policy is, and will
ry policy alone
at maintaining moderate growth in money and credit. However, moneta
with you that we
cannot do the job effectively. In that regard, I would strongly agree
it applies to
need help in the form of firm discipline in fiscal policy, particularly as
growing awareness of
restraining the growth in government spending. I sense also a
in federal spending,
this fact throughout all elements of society. The recent cuts
representative of that
while perhaps not as large as you or I would have wished, are
changed attitude.
credit market
There has recently been a decided easing of the extreme
d for credit has
pressures that we have experienced in the past few months. The deman
And, in response
lessened and market interest rates have moved significantly lower.
several elements of
to this changing environment, the Federal Reserve has modified
press release on
its credit restraint program in a series of steps taken on May 22. A
some of the
these actions is enclosed. These developments should help to relieve
pressures in the housing industry.
we
Whatever short-run results may be associated with these developments,
achieving a
must not lose sight of the fact that the key to sustained prosperity lies in
our financial
non-inflationary environment, and that requires sustained discipline in
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
reciesure
31-1:RL:sep
#1752
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ay
30,1980
Mr. Don M. Kirk, President
National Frame Builders Association
1406 Third National Building
Dayton, Ohio 45402
Dear Mr. Kirk:
Thank you for your telegram on behalf of the Board of Directors on the
effects of high interest rates on housing. I can fully appreciate the concerns that
prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. t.lonetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
Usep
#1833
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 30, 1980
Mr. Mel Kirschner
Dear Mr. Kirschner:
I can well understand your concern as to the significance of the recent
sharp decline in interest rates, for 1 too have been alert to the possibility that such
trends might be misconstrued. Basically, these lower interest rates reflect the fact
that credit demands have moderated appreciably, in Dart because of the slowing in the
pace of economic activity. Our basic policy of seeking moderate growth in money and
credit is unchanged and we are, in fact, running a bit below our objective for 1980. We
have in no way "forced" interest rates down, and I want to assure you that our policy
of restrained growth in money remains very much in place.
fly recent speech to the National Association of Savings llankers addresses
these questions, so I have enclosed a copy for your information.
Sincerely,
sure
1I½Rsep
#1817
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
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https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
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https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ay 30, 1980
The Honorable Pill Poyer
Fouse of **presentative%
Washington, D. C. 70515
Dear Yr. Royer:
As yeu TNity imagine, the refereac to ntiz- in the
article enclosed with your letter abut the "last
buzz saw* is a total faLrioation. The fact is thott
I have not been to the vest Coast for month*, antJ had
DC mmetias of the kind described at that time.
or
does the article in any way reflect my view*,
don't know how to catch ap with this ki:W of
irresponsibility. Zr of courso wrote to Lluggest a
correction, fruitlessly.
Sincerttly,
Copy tot
Mr, Ray P. Galli, Jr.
Mr. Dan Dorfman
May 30, 1980
Mr. Harold Sanders
Dear Mr. Sanders:
I have read your letter carefully and I want you to know that I can
appreciate the difficulties you and others are facing. I also know that in your current
situation, you cannot be expected to draw much consolation from that alone.
But, if we had not moved firmly to begin the process of winding down
inflation, I can assure you that the economic flifficulties that we as a nation and as
individuals are facing would have steadily worsened. That inescapable truth does not
alter the fact that bringing inflation under control is not an easy process, but it does
make it clear that achieving that result is absolutely essential to the sustained
prosperity that you and I both want.
Over the past two months Afe have seen very sharp declines in market
Interest rates in the wake of a moderation in the demand for money and credit. And,
In response to this changing environment, the Federal Reserve has modified several
elements of its credit restraint program in a series of steps taken on May 22. A press
release on these actions is enclosed. These developments should help to relieve some
of the pressures in the housincr, industry.
..Thatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Ee?ure
31-1:RL:sep
#1888
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
kiay 30, 1580
John M. Sperry
Dear Mr. Sperry:
I can well understand your concern as to the significance of the recent
sharp decline in interest rates, for I too have been alert to the possibility that such
trends might be misconstrued. Basically, these lower interest rates reflect the fact
that credit demands have moderated appreciably, in part because of the slowing in the
pace of economic activity. Our basic policy of seeking moderate growth in money and
credit is unchanged and we are, in fact, running a bit below our objective for 1980. We
have in no way "forced" interest rates down, and I want to assure you that our policy
of restrained growth in money remains very much in place.
Nly recent speech to the National Association of Savings 3ankers addresses
these questions, so I have enclosed a copy for your information.
Sincerely,
osure
iikrC:sep
#1797
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 30, 1980
Dear Herb:
I appreciate your letter and interest
in the Minneapolis opening.
All the best,
Mr. Herbert Stein
Senior Fellow
American Enterprise Institute
for Public Policy Research
1150 Seventeenth Street, N. W.
Washington, D. C. 20036
PAV:ccm
#2048
May 30, 1980
Mr. F.. C. Stone
Dear Mr. Stone:
I can well understand your concern as to the significance of the recent
sharp decline in interest rates, for I too have been alert to the possibility that such
trends might be misconstrued. Basically, these lower interest rates reflect the fact
that credit demands have moderated appreciably, in part because of the slowing in the
pace of economic activity. Our basic policy of seeking moderate growth in money and
credit is unchanged and we are, in fact, running a bit below our objective for 1980. We
have in no way "forced" interest rates down, and I want to assure you that our policy
of restrained growth in money remains very much in place.
y recent speech to the National Association of Savings Bankers addresses
these questions, so I have enclosed a copy for your information.
Sincerely,
EntJbsure
JH:RL:sep
#1023
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
4
1011M
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 30, 1980
Se nonorable James Stone
Chairman
Commodity Futures Trading Commission
2033 K Street, Forthwest
Washington, D. C. 20581
Dear Jim:
I wanted to write to you personally and follow up on
several threads of discusnions that have taken place between
our staffs in recent days.
First, we have spoken to the banks involved with the
Placid loan in order to have them, in cooperation with other
parties, work out for us some satisfactory approach for
monitoring and evaluating performance against the provision
of the loan agreement that allows the Hunts to make commodity
investments necessary for the prudent" operation of their
sugar and other businesses. We should be hearing from them
in a few days and will be back to you at that time.
In addition, the banks and other parties are now working
out detailed procedures for their more general periodic reporting
to us. ebeiously,to the extent information surfaces in those
reports that may be userul to you, we will make it available
to you.
T also understand that your staff has written to the
staff here eetting forth an approach to exchanges of information, which I heartily endorse. For our part, I can see
no reason why we should not be able to provide you with what
information we have on cash positions in government securities.
Foreign central bank holding of government securities and the
whole foreign exceange area may present sore problems, but
think something can be worked out, at least in aggregate terrs.
However, we will strive to tell you precisely what kinds of
data in all of these areas can he made available within a week
or two.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
The Honorhble James Stone - Page 2.
As to our immediate situation, I think you know that
we and the Comptroller's staff have a series of nagging
questions regarding the financial aspects of the silver
situation. To answer those questions more to our satisfaction, we will need access to information and data which
you have concerning dealer and other positions in silver
over much of 1979 and early 1980. I understand that our
staffs have already discussed this matter and I would hope
that arrangements could be worked out to make that information available to us at an early date.
If there is anything else we can do, please let us
know.
Sincerely,
EGC:ccm
May 30,1980
Ms. Elizabeth Tinker
Dear 'As. Tinker:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
:RL:sep
#2016
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
May 30, 1980
As. Therese 'Jones Ward
r)ear ;,./Is. Ward:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. lonetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary oolicy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on 'lay 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
os e
RL:sep
/11932
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 30, 1980
Dear Margaret:
I have the material you sent -- and
I'll read it on the plane.
Many thanks.
I hope our paths cross in China.
All the best,
Mrs. Margaret S. Wilson
Scarbroughs
Congress at Sixth
Austin, Texas 78701
PAV:ccm
May 29, 1980
Mr. and Mrs. James N. Allred
Dear Mr. and Mrs. Allred:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. 'Ionetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
short-run results may he associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
hatever
I appreciate your taking the time to write.
Sincerely,
Enclosure
JH:R.Usep
#1969
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
Mr. Arthur Andersen
Dear Mr. Andersen:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard,! would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
islhatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
JH:RL:sep
#1931
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
Ms. Holly Beeson, Secretary
Mission Construction Company, Inc.
2501 Washington, N.E.
Albuquerque, New Mexico 87110
Dear Ms. rieeson:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
JI-1:RL:sep
111963
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29, 1980
-ir. Ronald J. Benker
The Zaring Company
Suite 310
8170 Corporate Park Drive
Cincinnati, Ohio 45242
Dear Mr. Benker:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
31-1:RL:sep
#1843
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
U' 29, 1980
Mr. Sydney P. Bevan
Dear Mr. Bevan:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stabty. 'Monetary policy has an essential role to play in that
prS cess since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintag moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government vending.
There has recently been a decided easing of the extreme creciit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved signcantly lower. And, in response
to this changing environment, the Federal Reserve has moded several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
F.nclosure
JH:RL:sep
#1874
May 29,1980
Ms. Yvette Di Bisceglie
Dear Ms. Di Bisceglie:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflatiorlary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
31-I:RL:sep
#1964
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
Mr. Thomas N. Burlison
Dear Mr. Burlison:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
F.nclosure
JH:RL:sep
#1934
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29, 1980
s. Kathleen M Campbell
Dear Ms. Campbell:
Thank you for your letter on the housing industry in your area. I can
fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
31-1:RL:sep
#1910
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29, 1980
Mr. Joe Campbell
Dear Mr. Campbell:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
tirne, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. N.4onetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results ma.y he associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
31-1:RL:sep
#1876
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29, 1980
‘,4s. Lorraine A. Cano
Dear Ms. Cano:
Thank you for your letter on the housing industry in your area. I can fully
appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
JH:RL:sep
#1941
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
Mr. Bob Conley
Dear Mr. Conley:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on !'..iay 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
31-1:RUsep
#1967
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
Ms. Maureen Cottone
Dear Ms. Cottone:
Thank you for your letter on the effects of high interest rates on housin
g. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must,
over
time, continue to work to reduce inflation and thereby provide the
foundations for
greater economic stability. Monetary policy has an essential role to play
in that
process since excessive inflation cannot persist over time unless fuele
d by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remai
n, aimed
at maintaining moderate growth in money and credit. However, monetary
policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that
we need
help in the form of firm discipline in fiscal policy, particularly
as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit marke
t
pressures that we have experienced in the past few months. The demand for
credit has
lessened and market interest rates have moved significantly lower. And,
in response
to this changing environment, the Federal Reserve has modified sever
al elements of
its credit restraint program in a series of steps taken on May 22. A press
release on
these actions is enclosed. These developments should help to relieve
some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies
in achieving a
non-inflationary environment, and that requires sustained discipline
in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
JH:RL:sep
#1886
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
NNE -
'lay 29,1980
Mr. Jim Curves
Dear Mr. Curves:
Thank you for your letter on the effects of high interest rates on :iousims. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
31-1:RUsep
#1995
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ay 29, 1980
kir. Bernie Tlernbeck 111
tlear Mr. Dembeckt
Please excuse my delay in revondIng to your letter, but 1 want you to know
that I am not insensitive to the difficulties you and others in the real estate business
are facing. 1 also know that in your current situation, you cannot be expected to draw
much consolation from that alone.
Sut, If we had not moved firmly to begin the process of winding down
Inflation, I can assure you that the economic difficulties that we as a nation and as
individuals are facing would have steadily worsened. That inescapable truth does not
alter the fact that bringing inflation under control is not an easy process, but it does
make it clear that achieving that result is absolutely essential to the sustained
orosperity that you and I both want.
Over the past two months we have seen very sharp declines in market
interest rates in the wake of a moderation in the demand for money and credit. And,
In response to this changing environment, the Federal Reserve has modified several
elements of its credit restraint program in a series of steps taken on May 22. These
developments snould help to relieve some of the pressures in the real estate and
housing industries.
Whatever short.run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non.inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
1 appreciate your taking the time to write.
Sincerely,
3#4:/(1.,:sep
#1266
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
Mr. E. Wesley oils III
Executive Vice President
Francis 'vagner Company
P.O. Box 3603
Albuquerque, New Mexico 87190
Dear Mr. DIIs
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
must, over
expectations, there is a wide national consensus that economic policies
for
time, continue to work to reduce inflation and thereby provide the foundations
in that
greater economic stability. Monetary policy has an essential role to play
ve
process since excessive inflation cannot persist over time unless fueled by excessi
aimed
growth in money. Thus, the basic thrust of monetary policy is, and will remain,
alone
at maintaining moderate growth in money and credit. However, monetary policy
that we need
cannot do the job effectively. In that regard, I would strongly emphasize
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
has
pressures that we have experienced in the past few months. The demand for credit
lessened and market interest rates have moved significantly lower. And, in response
s of
to this changing environment, the Federal Reserve has modified several element
on
its credit restraint program in a series of steps taken on 'A4ay 22. A press release
of the
these actions is enclosed. These developments should help to relieve some
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
ng a
must not lose sight of the fact that the key to sustained prosperity lies in achievi
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
JH:RL:sep
#1875
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
Mr. Jeffrey A. Edwards
Dear Mr. Edwards:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. I iowever, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on Niay 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
appreciate your taking the time to write.
Sincerely,
Enclosure
JH:RL:sep
111935
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
May 29, 1980
;41-. Robert Fondiller
Vanem.ment Consultants
2u.)Iest5f.3th Street
'-ew York. New York 10019
Dear Or. Fondiller.
Thank you for your letter of Play 19 expressinn your
concern with the annressive pricinq policies of the 1PEC cartel.
It is indeed important for oil consumers to develop a
countervailing strateny that would limit the power of OPEC
countries to take unilateral actions on oil prices. The International Energy Agency, of which the United States is a member,
helps to coordinate the actions and policies of the industrial
countries that conswe oil. In the longer run, however, we can
only achieve independence from OPEC oil by reducing our demand
for oil through censervation and accelerates development of
alternative energy sources. These measures are not dramatic in
their immediate impact but they will work if we push them hard
enough.
Sincerely,
bcc: Mrs. Mallardi (2)
Mr. Truman
Mr. Pizer
Ms. Brown
SP/EMT:ms
#2064
May 29,1980
Mr. Richard D. Foster
Dear Mr. Foster:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
#1921
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
Ms. Yvonne Foster
Dear cis. Foster:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
3H:RL:sep
#1986
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
Mr. Doug Fritzsche
Dear Mr. Fritzsche:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
J1-1:RL:sep
#1971
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29, 1980
Ms. Helen M. Fuge
Dear Ms. Fuge:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
JH:RL:sep
#1922
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
Mr. Leonard F. Gabaldon
Production Manager
Builder Services
1704 Moon, N.E. - Suite #12
Albuquerque, New Mexico 87112
Dear Mr. Gabaldons
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
RI:RL:sep
#1923
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1%0
Ms. Debbie Garcia
Dear Ms. Garcia:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. '.4onetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
JH:RL:sep
#1880
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
Mr. Ralph K. George
Dear Mr. George:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
J1-1:RL:sep
#1939
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
'irs. Jane H. Gran
Dear Mrs. Gragg:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard,! would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on L'ilay 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
JH:RL:sep
#1884
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
.1/irs. Ralph Hendrick
Dear Mrs. Hendrick:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
31-1:RL:sep
#1883
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29, 1980
Mr. Dave Hill
Dear Mr. Hill:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
JH:RL:sep
#1970
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
r. Fred C. Hill
Dear Mr. Hill:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on P,lay 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
"Thatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
JH:RL:sep
#1966
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29, 1980
Mr. George S. Irvin
President
National Automobile Dealers
Association
8400 Westpark Drive
McLean, Virginia 22102
Dear Mr. Irvin:
I have carefully read your recent letter and, as you
tatives of
know, Vice Chairman Schultz has met with represen
ation.
e
your industry to get a better sense of the immediat situ
I think you know that it was never contemplated that autorelated loans should be the subject tif special restraint
within the context of the 6 to 9% guideline. You may also
on of
be aware that on May 22 we modified the administrati
very
that program somewhat and, in the process, made it
clear that subject to hanks' own credit judgements, the
ed
banks should not exercise special restraint on auto-relat
press
loans at the wholesale or retail level. A copy of our
release is enclosed for your information.
p
More fundamentally, the combination of the recent shar
growth
drop in interest rates and the marked slowing of the
particin overall credit demands should provide some relief,
smaller
ularly as we get on with the long overdue shift to
and more fuel efficient cars.
the 15%
As to your suggestion about the credit against
ority and,
special deposit, I don't think we have t'e auth
to further
more importantly, this approach would only serve
temporary
institutionalize a program which I see as clearly
in the special
in nature as indicated by our recent reduction
deposit rate.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Mr. George S. Irvin - Page 2.
I know that this has been a difficult period for the
members of your Association. Indeed, the combination of
the energy situation and the credit market pressures
crowing out of the inflation situation have been a real
test for all of us. Put, I know that you understand that
the auicker we aet on with the remedies to these problems,
the sooner we can return to the kind of economic and financial
environment in which the auto and related industries can again
flourish.
Sincerely,
Enclosure
May 29,1980
Mr. Ernie Jackson, Home Builder
Dear Mr. Jackson:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard,! would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
JH:RL:seo
#1926
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
Mrs. Grover 3ones
near Irs. Jones:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to mrite.
in the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. '.ionetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced In the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on %lay 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
'fhatevo, short-run results may he associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
nclosure
JII:RIAsep
01965
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
V.
Kimmick
Dear Mr. Kimmicks
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
JH:RL:sep
#1937
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
Mr. and Mrs. Bob Kitts
Dear Mr. and Mrs. Kitts:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. <Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on ',lay 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
Jii:RL:sep
#1938
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29, 1980
Mr. Dennis R. Lawrence
Kitts Enterprises, Inc.
1129 Landman, N.E.
Albuquerque, New Mexico 87112
Dear Mr. Lawrence:
Thank you for your letter on the situation in the housing industry. I can
fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. ionetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
I appreciate your taking the time to write.
Sincerely,
Enclosure
JH:RL:sep
#1933
May 29, 1980
Mr. Thomas H. klagariel
Dear Ar. qagariel:
I can understand the concerns in your letter about the effects of high
interest rates on your business. But, if we had not moved firmly to begin the process
of controlling inflation, the economic difficulties that we as a nation and as individuals
are facing would have steadily worsened. specially in view of your experiences, I can
appreciate your concern about the press reports—often misleading—concerning the
role played by the Federal Reserve in certain loans to the Hunt family.
Neither 1, the Federal Reserve, nor any government official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said It would not object to such a credit,
provided that the 4unts would not be allowed to engage in fresh speculative activity of
any kind and that their remaining silver would be liquidated In an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations—
they will not lead to any new funds for the f.iunts. My sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing new speculation.
eyond this, the Federal
Reserve cannot and should not interject itself into individual private transactions
between lenders and borrowers, and I would emphasize that no government money
directly, or Indirectly, was Involved.
1 have enclosed a copy of my Congressional testimony on this subject,
which exolains my role more fully. I do appreciate your taking the time to write me
on this issue.
Sincerely,
ure
lett
3H:RL:sep
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
Mr. Patrick McCuan, President
McCuan Development Corporation
Teachers Building - Suite 312
Columbia, Maryland 21044
Dear Mr. McCuan:
Thank you for your letter on the effects of high interest rates on housing.
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity Iles in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
1--1:RL:sep
#1836
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
-
May 29, 1980
Mr. James L. Menghini
V. Menghini & Sons, Inc.
Hazleton-McAdoo Highway
Hazleton, Pennsylvania 18201
Dear Mr. Menghini:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that promoted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
J1-1:RUsep
#1783
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29, 1980
Ms. June Mooney
Northwest Concrete Prod. and
Ornamental Iron Company
Hwy. 7 and 71 East
Storm Lake, Iowa 50588
Dear Ms. Mooney:
Please excuse my delay in responding to your letter, but I want you to know
that I can appreciate the difficulties you and other small businesses are facing. I also
know that in your current situation, you cannot be expected to draw much consolation
from that alone.
But, if we had not moved firmly to begin the process of winding down
inflation, I can assure you that the economic difficulties that we as a nation and as
individuals are facing would have steadily worsened. That inescapable truth does not
alter the fact that bringing inflation under control is not an easy process, but it does
make it clear that achieving that result is absolutely essential to the sustained
prosperity that you and I both want.
Over the past two months we have seen very sharp declines in market
interest rates in the wake of a moderation in the demand for money and credit. And,
in response to this changing environment, the Federal Reserve has modified several
elements of its credit restraint program in a series of steps taken on May 22. A press
release on these actions is enclosed. These developments should help to relieve some
of the pressures on small business,
Whatever short-run results may he associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
311:RL:sep
#1443
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
Della M. Moseley
Dear .is. Moseley:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
e"
Sincerely,
Enclosure
31-I:RL:sep
#1953
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
Ms. Janelle Norman
1)ear Ms. Norman:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
mic policies must, over
expectations, there is a wide national consensus that econo
de the foundations for
time, continue to work to reduce inflation and thereby provi
ial role to play in that
greater economic stability. Monetary policy has an essent
unless fueled by excessive
process since excessive inflation cannot persist over time
policy is, and will remain, aimed
growth in money. Thus, the basic thrust of monetary
monetary policy alone
at maintaining moderate growth in money and credit. However,
ly emphasize that we need
cannot do the job effectively. In that regard, I would strong
as it applies to
help in the form of firm discipline in fiscal policy, particularly
restraining the growth in government spending.
credit market
There has recently been a decided easing of the extreme
demand for credit has
pressures that we have experienced in the past few months. The
y lower. And, in response
lessened and market interest rates have moved significantl
several elements of
to this changing environment, the Federal Reserve has modified
on May 22. A press release on
its credit restraint program in a series of steps taken
to relieve some of the
these actions is enclosed. These developments should help
pressures in the housing industry.
developments, we
Whatever short-run results may be associated with these
lies in achieving a
must not lose sight of the fact that the key to sustained prosperity
line in our financial
non-inflationary environment, and that requires sustained discip
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
#1890
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
".4 ,y 29,1980
Mr. Cal Porter
Dear Mr.Porter:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
31-1:RL:sep
//1952
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
Mr. D. T. Robertson
Dear Mr. Robertson:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
31-1:RL:sep
#1973
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29, 1980
Mr. Jerry B. Rudd, President
Autohaus Volkswagen - BMW
P.O. Box 9698
1901 Lake Tahoe Boulevard
South Lake Tahoe, California, 95731
Dear Mr. Rudd:
Thank you for your letter. I want you to know that I can fully appreciate
the circumstances that prompted you to write. I know that the current situation in the
automobile and related industries is a difficult one.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither automobile dealer
loans nor auto loans to consumers should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which the automobile
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
Enclosure
1I-1:RL:sep
#1929
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
Mr. Billy Salas
Dear Mr. Salas:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
31-I:RL:sep
#1925
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
l'Aay 29,1980
Mr. John M. Santenillo
Dear Mr. Santenillo:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market Interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on '.lay 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
JH:RL:sep
#1954
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
Mr. Paul P. Simon
Simon Floors Inc.
2639 Madeira, N.E.
Albuquerque, New Mexico 87110
Dear Mr. Sirnon:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies rnust, over
I ime, confinue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modifie,d several elements of
its credit restraint program in a series of steps take.n on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
inffikellizRoRini
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
1\1r. Jack Stahl
Dear Mr. Stahl:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. "2 ,ionetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
Jii:RL:sep
111990
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29,1980
Ms. M. Evelyn Stewart
Dear Ms. Stewart:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
JH:RL:sep
#1920
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29, 19110
Mr. Johnny J. Synder
Sinder Electric
2630 Lincoln Way
Lynnwood, Washington 98036
Dear Mr. Synden
Thank you for your letter concerning S.R. 392. I can well understand your
concern about high interest rates.
In fact, we have already seen a very sharp drop in market interest rates
which, fundamentally, is an out-growth of the moderation in the demand for credit we
have experienced in the past several months. Interest rates are essentially determined
in the marketplace, and the Federal Reserve's influence over those rates is indirect.
Our basic policy is directed at achieving and maintaining moderate growth in money
and credit. This policy rests on a basic truth—one borne out by literally centuries of
experience—namely, that excessive inflation cannot persist over time unless nourished
by excessive growth in money.
The only way to "force" interest rates below the level associated with a
given demand for credit is to increase the money supply. nut, this would soon prove
sell-defeating, since it would foster inflation and inflationary expectations—resultinz
in increased demand for credit and in turn still higher interest rates. In that sense,
high interest rates are themselves a reflection of inflation.
I am somewhat encouraged by recent trends in interest rates as I am sure
you are. Ultimately, however, achieving and maintaining low interest rates depends on
our success In bringing inflation down.
Sincerely,
I er
JH:RL:sep
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
1
May 29, 1980
Mr. Steven P. Tornita
Assistant Vice President
American Service Corporation
2901 Juan Tabo, N.E. - Suite 220
Albuquerque, New Mexico 87112
Dear r Ir. Tomita:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
of
to this changing environment, the Federal Reserve has modified several elements
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
a
must not lose sight of the fact that the key to sustained prosperity lies in achieving
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
JH:RL:sep
#1882
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29, 1980
Mr. George Tronto
Dear Mr. Tronto:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
areater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate groi.kith In money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraiII g the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal R.eserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
S ressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
JI-I:RL:sep
#1924
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
lay 29,1980
in lien J. Walcott
Dear Mr. Walcott:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
must, over
expectations, there is a wide national consensus that economic policies
tions for
tirf:e, continue to work to reduce inflation and thereby provide the founda
play in that
greater economic stability. "Ionetary policy has an essential role to
by excessive
process since excessive inflation cannot persist over time unless fueled
remain, aimed
growth in money. Thus, the basic thrust of monetary policy is, and will
policy alone
at maintaining moderate growth in money and credit. However, monetary
that we need
cannot do the job effectively. In that regard, I would strongly emphasize
to
help in the form of firm discipline in fiscal policy, particularly as it applies
restraining the growth in government spending.
t
There has recently been a decided easing of the extreme credit marke
for credit has
pressures that we have experienced in the past few months. The demand
in response
lessened and market interest rates have moved significantly lower. And,
l elements of
to this changing environment, the Federal Reserve has modified severa
release on
its credit restraint program in a series of steps taken on May 22. A press
e some of the
these actions is enclosed. These developments should help to reliev
pressures in the housing industry.
ts, we
Whatever short-run results may be associated with these developmen
achieving a
must not lose sight of the fact that the key to sustained prosperity lies in
financial
non-inflationary environment, and that requires sustained discipline in our
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
31-1:RL:sep
#1885
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
May 29,1980
Mr. Bobby Walcott
Dear Mr. Walcott:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
3I-1:RL:sep
#1881
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 29, 1980
Dr. Leonard Weinery
Associates in Periodontics
& Endodontics, P.C.
12 C Medical Square
1601 North Tucson Boulevard
Tucson, Arizona 85716
Dear Ar. Weiner y:
I understand the concerns in your letter about the press reports—often
misleading—concerning the role played by the Federal R eserve in certain loans to the
Hunt family.
Neither I, the Federal Reserve, nor any government official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not be allowed to engage in fresh speculative activity of
any kind and that their remaining silver would be liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations—
they will not lead to any new funds for the Hunts. My sole concern has been to ensure
,
that such a loan complies ivith the Federal Reserve Special Credit Restraint Program
particularly as it applies to preventing new speculation. Beyond this, the Federal
ions
Reserve cannot and should not interject itself into Individual private transact
between lenders and borrowers.
I have enclosed a copy of my Congressional testimony on this subject,
which explains my role more fully. I do appreciate your taking the time to write me
on this issue.
Sincerely,
L:sep
#1914
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
'.1ay 291 1980
kir. Richard W. Westover
near t'Ar. Westover:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. fyionetar y policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline In fiscal policy, particularly as it applies to
restraining the growth in government spending.
There 'ias recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on "lay 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
31-I:RL:sep
#1877
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. Fred W. Allnutt, nresident
Fred W. Allnutt, Inc
10370 Ilaltimore National Pike
Ellicott City, Maryland 21043
Dear Mr. Allnutt:
Thank you for your letter on our monetary policy actions
and other measures that were taken to help curb inflationary
pressures. I understand the concerns that prompted you to write and
assure you that your views, even though critical, serve a useful
purpose to those of us in government.
Sincerely,
11-1:RL:sep
#1950
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. & Mrs. Ross Barnard
Dear Mr. & Mrs. Barnard:
Please excuse the delay in my response, but I did want to thank you for
your letter concerning S.R. 392. I can well understand your concern about high
Interest rates.
In fact, we have already seen a very sharp drop in market interest rates
which, fundamentally, is an out-growth of the moderation in the demand for credit we
have experienced in the past several months. Interest rates are essentially determined
in the marketplace, and the Federal Reserve's influence over those rates is indirect.
Our basic policy is directed at achieving and maintaining moderate growth in money
and credit. This policy rests on a basic truth—one borne out by literally centuries of
experience—namely, that excessive inflation cannot persist over time unless nourished
by excessive growth in money.
The only way to "force" interest rates below the level associated with a
given demand for credit is to increase the money supply. But, this would soon prove
self-defeating, since it would foster inflation and inflationary expectations--resulting
in increased demand for credit and in turn still higher interest rates. In that sense,
high interest rates are themselves a reflection of inflation.
I am somewhat encouraged by recent trends in interest rates as I am sure
you are. Ultimately, however, achieving and maintaining low interest rates depends on
our success in bringing inflation down.
Sincerely,
31-1:RL:sep
#1696
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28 1980
Mr. Troy R. Barnett, President
Professional Electric, Inc.
P.O. Box 14712
Spokane, Washington 99214
Dear Mr. Barnett:
Please excuse the delay in my response, but I did want to thank you for
your letter concerning S.R. 392. I can well understand your concern about high
interest rates.
In fact, we have already seen a very sharp drop in market interest rates
which, fundamentally, is an out-growth of the moderation in the demand for credit we
have experienced in the past several months. Interest rates are essentially determined
in the marketplace, and the Federal Reserve's influence over those rates is indirect.
Our basic policy is directed at achieving and maintaining moderate growth in money
and credit. This policy rests on a basic truth—one borne out by literally centuries of
experience—namely, that excessive inflation cannot persist over time unless nourished
by excessive growth in money.
The only way to "force" interest rates below the level associated with a
given demand for credit is to increase the money supply. Rut, this would soon prove
self-defeating, since it would foster inflation and inflationary expectations—resulting
in increased demand for credit and in turn still higher interest rates. In that sense,
high interest rates are themselves a reflection of inflation.
I am somewhat encouraged by recent trends in interest rates as I am sure
you are. Ultimately, however, achieving and maintaining low interest rates depends on
our success In bringing inflation down.
Sincerely,
J/-:RL:sep
#1623
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. John W. Behrn, Sr.
Dear Mr. Behm:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and related industries is a difficult one that has been complicated by the
energy situation and related shift in the demand for small fuel-efficient cars. I also
appreciate the fact that the difficulties that agriculture is currently facing are also
affecting your business.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither automobile dealer
loans nor auto loans to consumers should be subject to special restraint.
These factors will help hut they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must et the process over
with so that we can move into an economic environment in which the automobile
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
Enclosure
31-1:RL:sep
#1678
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. Albert G. Bell, President
MetCo. Kenworth, Inc.
P.O. Box 2264
2501 Vaughn Road
Great Falls, Montana 59403
Dear Mr. Bell:
Thank you for your letter. I want you to know that I can fully
appreciate the circumstances that prompted you to write. I know that the
current situation in the automobile and truck industries is a difficult one that
has been complicated by the energy situation, and by difficulties in other
industries.
As to the credit aspects of the problem, we have had very sharp
declines in interest rates over the past two months or so which should help. I
would also point out that it was never intended that automobile credit should be
subject to special restraint under our credit restraint program. Also, the fact
that overall credit growth is running within our guidelines has permitted us to
alter the administration of that program somewhat as outlined in the enclosed
press release. That statement should make it clear that, subject to banks' own
credit judgments, neither dealer loans nor auto loans to consumers should be
subject to special restraint.
These factors will help but they do not alter the fundamental fact that
the process of taming inflation will not be easy. But if we fail now, the
discomfort later will be all the more serious. That is why I believe that we
must get the process over with so that we can move into an economic
environment in which the auto/truck business and the economy in general will
prosper. I appreciate your taking the time to write and I hope I will have your
understanding and support as we seek to resolve this most pressing, national
problem.
Sincerely,
Enclosure
3H:RL:sep
#1710
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
a
May 28, 1980
Mr. Don Belman, Realtor
Don Belman Realty
W227 54130 Concord Court
Waukesha, Wisconsin 531g6
Dear Mr. Belman:
Please excuse the delay in responding to your letter, but I did want you to
know that I can appreciate the difficulties you and others in the real estate business
are facing. I also know that in your current situation, you cannot be expected to draw
much consolation from that alone.
But, if we had not moved firmly to begin the process of winding down
inflation, I can assure you that the economic difficulties that we as a nation and as
individuals are facing would have steadily worsened. That inescapable truth does not
alter the fact that bringing inflation under control is not an easy process, but it does
make it clear that achieving that result is absolutely essential to the sustained
prosperity that you and I both want.
Over the past two months we have seen very sharp declines in market
interest rates in the wake of a moderation in the demand for money and credit. And,
in response to this changing environment, the Federal Reserve has modified several
elements of its credit restraint program in a series of steps taken on May 22. These
developments should help to relieve some of the pressures in the real estate business.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
I appreciate your taking the time to write.
Sincerely,
1I-1:RL:sep
111398
May 281.1980
Mr. Edward 0. Bevis, President
Bevis & Associates, Inc.
1904 Stewart Street
Tacoma, Washington 98421
Dear Mr. Bevis:
Please excuse the delay in my response, but I did want to thank you for
your letter concerning S.R. 392. I can well understand your concern about high
interest rates.
In fact, we have already seen a very sharp drop in market interest rates
which, fundamentally, is an o'it-growth of the moderation in the demand for credit we
have experienced in the past several months. Interest rates are essentially determined
in the marketplace, and the Federal Reserve's influence over those rates is indirect.
Our basic policy is directed at achieving and maintaining moderate growth in money
and credit. This policy rests on a basic truth—one borne out by literally centuries of
experience—namely, that excessive inflation cannot persist over time unless nourished
by excessive growth in money.
The only way to "force" interest rates below the level associated with a
given demand for credit is to increase the money supply. But, this would soon prove
self-defeating, since it would foster inflation and inflationary expectations—resulting
in increased demand for credit and in turn still higher interest rates. In that sense,
high interest rates are themselves a reflection of inflation.
I am somewhat encouraged by recent trends in interest rates as I am sure
you are. Ultimately, however, achieving and maintaining low interest rates depends on
our success in bringing inflation down.
Sincerely,
:RL:sep
#1755
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. Austin B. Boeker, Board Chairman
Schwind-Boeker, Inc.
5001 Brady Street - P.O. Box 2489
Davenport, Iowa 52809
Dear Mr. Boeker:
Thank you for your letter. I want you to know that I can fully
appreciate the circumstances that prompted you to write. I know that the
current situation in the automobile and truck industries is a difficult one that
has been complicated by the energy situation, and by difficulties in other
industries.
As to the credit aspects of the problem, we have had very sharp
declines in interest rates over the past two months or so which should help. I
would also point out that it was never intended that automobile credit should be
subject to special restraint under our credit restraint program. Also, the fact
that overall credit growth is running within our guidelines has permitted us to
alter the administration of that program somewhat as outlined in the enclosed
press release. That statement should make it clear that, subject to banks' own
credit judgments, neither dealer loans nor auto loans to consumers should he
subject to special restraint.
These factors will help but they do not alter the fundamental fact that
the process of taming inflation will not be easy. But if we fail now, the
discomfort later will be all the more serious. That is why I believe that we
must get the process over with so that we can move into an economic
environment in which the auto/truck business and the economy in general will
prosper. I appreciate your taking the time to write and I hope I will have your
understanding and support as we seek to resolve this most pressing national
problem.
Sincerely,
Enclosure
JH:RL:sep
#1806
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 23, 1980
Mr. Jim Brace
Dear Mr. Brace:
Please excuse the delay in my response to your further letter. I am not
insensitive to the difficulties you and others are facing, though I also know that in
your current situation you cannot be expected to draw much consolation from that
alone.
Rut, if we had not moved firmly to begin the process of winding down
inflation, I can assure you that the economic difficulties that we as a nation and as
individuals are facing would have steadily worsened. That inescapable truth does not
alter the fact that bringing inflation under control is not an easy process, hut it does
make it clear that achieving that result is absolutely essential to the sustained
prosperity that you and I both want.
Over the past two months we have seen very sharp declines in market
interest rates in the wake of a moderation in the demand for money and credit. And,
in response to this changing environment, the Federal Reserve has modified several
elements of its credit restraint program in a series of steps taken on May 22. A press
release on these actions is enclosed. These developments should help to relieve some
of the pressures in the homebuilding and related industries.
".lhatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
affairs. In that regard I would strongly agree with you on the need for fiscal
I appreciate your again taking the time to write.
Sincerely,
Enclosure
JH:RL:sep
RE: 1053
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
May 28, 1980
Mr. Gilbert 3rannan
Speedy's Service & Sales
Box 117
St. John, Washington 99171
Dear %Ir. Brannan:
Please excuse the delay in my response, but I did want to thank you for
high
your letter concerning S.R. 392. I can well understand your concern about
interest rates.
In fact, we have already seen a very sharp drop in market interest rates
which, fundamentally, is an out-growth of the moderation in the demand for credit we
have experienced in the past several months. Interest rates are essentially determined
in the marketplace, and the Federal Reserve's influence over those rates is indirect.
Our basic policy is directed at achieving and maintaining moderate growth in money
and credit. This policy rests on a basic truth—one borne out by literally centuries of
experience—namely, that excessive inflation cannot persist over time unless nourished
by excessive growth in money.
The only way to "force" interest rates below the level associated with a
given demand for credit is to increase the money supply. But, this would soon prove
self-defeating, since it would foster inflation and inflationary expectations—resulting
in increased demand for credit and in turn still higher interest rates. In that sense,
high interest rates are themselves a reflection of inflation.
I am somewhat encouraged by recent trends in interest rates as I am sure
you are. Ultimately, however, achieving and maintaining low interest rates depends on
our success in bringing inflation down.
Sincerely,
ep
trs/
#1639
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. Gary Briggs
Dear Mr. Briggs:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and related industries is a difficult one that has been complicated by the
energy situation and related shift in the demand for small fuel-efficient cars. I also
appreciate the fact that the difficulties that agriculture is currently facing are also
affecting your business.
As to the credit aspects of the Problem, we have had very sharp declines in
Interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither automobile dealer
loans nor auto loans to consumers should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will 5e all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which the automobile
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
E nclosure
31-1:RL:sep
#1676
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. Robert E qurris
Dear
3urrist
Thank you for your letter. I want you to know that I can fully
appreciate the circumstances that prompted you to write. I know that the
current situation in the automobile and truck industries is a difficult one that
has been complicated by the energy situation, and by difficulties in other
Industries.
As to the credit aspects of the problem, vie have had very sharp
declines in interest rates over the past two months or so which should help. I
would also point out that It was never intended that automobile credit should be
subject to special restraint under our credit restraint program. Also, the fact
that overall credit growth is running within our guidelines has permitted us to
alter the administration of that program somewhat as outlined in the enclosed
press release. That statement should make it clear that, subject to banks' own
credit judgments, neither dealer loans nor auto loans to consumers should be
subject to special restraint.
These factors will help but they do not alter the fundamental fact that
the process of taming Inflation will not he easy. Rut if we fall now, the
discomfort later will be all the !noire serious. That is why I believe that we
must get the process over with so that we can move into an economic
environment in which the auto/truck business and the economy in general will
prosper. I appreciate your taking the time to write and I hope I will have your
understanding and support as we seek to resolve this most pressing national
problem.
Sincerely,
nclosttre
#1727
#1799
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Ms. Linda Carlson, Vice President
C & K Home Wiring, Inc.
4323 A Street
Tacoma, Washington 98408
Dear Ms. Carlson:
Please excuse the delay in my response, hut I did want to thank you for
your letter concerning S.R. 392. I can well understand your concern about high
interest rates.
In fact, we have already seen a very sharp drop in market interest rates
which, fundamentally, is an out-growth of the moderation in the demand for credit we
have experienced in the past several months. Interest rates are essentially determined
in the marketplace, and the Federal Reserve's influence over those rates is indirect.
Our basic policy is directed at achieving and maintaining moderate growth in money
and credit. This policy rests on a basic truth—one borne out by literally centuries of
experience—namely, that excessive inflation cannot persist over time unless nourished
by excessive growth in money.
The only way to "force" interest rates below the level associated with a
given demand for credit is to increase the money supply. But, this would soon prove
self-defeating, since it would foster inflation and inflationary expectations—resulting
in increased demand for credit and in turn still higher interest rates. In that sense,
high interest rates are themselves a reflection of inflation.
I am somewhat encouraged by recent trends in interest rates as I am sure
you are. Ultimately, however, achieving and maintaining low interest rates depends on
our success in bringing inflation down.
Sincerely,
JH:RL:sep
#1524
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
may 28, 1980
Mr. Fred E. Chadwick
Chadwick Chevrolet, Inc.
Highway 10, West
Laurens, Iowa 50554
Dear Mr. Chadwick:
Thank you for your letter. I want you to know that I cart fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and truck industries is a difficult one that has been complicated by the
energy situation, and by difficulties in other industries.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither dealer loans nor
auto loans to consumers should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must 5i,et the process over
with so that we can move into an economic environment in which the auto/truck
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
Enclosure
3H:RL:sep
#1906
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
E. H. Conklin
Captain, USN (Ret.)
Dear Maptain Conklin:
Thank you for your letter and enclosure and for calling
my attention to Gerald Krefetz' book, The Dying Dollar. You raise
some interesting and timely points, although some of them involve
complicated issues with more than one side. But, I do agree with
you on the need to take firm actions to conserve energy and reduce
our external energy dependence.
I appreciate your taking the time to write.
Sincerely,
RB:jmr
t1905
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
"lay 28, 1980
Mr. W. M. Coover, Owner
Coover Chevrolet-Oldsmobile
New Highway 30
Nevada, Iowa 50201
Dear Mr. Coover:
Thank you for your letter. I want you to know that I can fully
appreciate the circumstances that prompted you to write. I know that the
current situation in the automobile and truck industries is a difficult one that
has been complicated by the energy situation, and by difficulties in other
industries.
As to the credit aspects of the problem, we have had very sharp
declines in interest rates over the past two months or so which should help. I
would also point out that it was never intended that automobile credit should be
subject to special restraint under our credit restraint program. Also, the fact
that overall credit growth is running within our guidelines has permitted us to
alter the administration of that program somewhat as outlined in the enclosed
press release. That statement should make it clear that, subject to banks' own
credit judgments, neither dealer loans nor auto loans to consumers should be
subject to special restraint.
These factors will help but they do not alter the fundamental fact that
the process of taming inflation will not be easy. But if we fail now, the
discomfort later will be all the more serious. That is why I believe that we
must get the process over with so that we can move into an economic
environment in which the auto/truck business and the economy in general will
prosper. I appreciate your taking the time to write and I hope I will have your
understanding and support as we seek to resolve this most pressing national
problem.
Sincerely,
Enclosure
3H:RL:sep
#1708
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. :ferry Cox
Jerry's Auto Sales
3704 North Roan Street
Johnson City, Tennessee 37601
Dear Mr. Cox:
Thank you for your letter. I want you to know that I can fully appreciate the
in the
circumstances that prompted you to write. I know that the current situation
icated by the
automobile and truck industries is a difficult one that has been compl
energy situation, and by difficulties in other industries.
As to the credit aspects of the problem, we have had very sharp declines in
would also point out
interest rates over the past two months or so which should help. I
special restraint
that it was never intended that automobile credit should be subject to
credit growth is
under our credit restraint program. Also, the fact that overall
stration of that
running within our guidelines has permitted us to alter the admini
That statement should
program somewhat as outlined in the enclosed press release.
r dealer loans nor
make it clear that, subject to hanks' own credit judgments, neithe
auto loans to consumers should be subject to special restraint.
that the
These factors will help but they do not alter the fundamental fact
discomfort later
process of taming inflation will not be easy. But if we fail now, the
process over
will be all the more serious. That is why I believe that we must get the
the auto/truck
with so that we can move into an economic environment in which
taking the time to
business and the economy in general will prosper. I appreciate your
to resolve this
write and I hope I will have your understanding and support as we seek
most pressing national problem.
Sincerely,
Enclosure
JH:RL:sep
#1729
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
William N. Cramblit, General Manager
Clover Ford, Inc.
613 Richmond Avenue
Ottumwa, Iowa 52501
Dear Mr. Cramblit:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and truck industries is a difficult one that has been complicated by the
energy situation, and by difficulties in other industries.
As to the credit a.snects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither dealer loans nor
auto loans to consumers should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not he easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which the auto/truck
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope! will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
Enclosure
J1-1:RL:sep
#1627
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28 1980
Mr. Richard Davis, Builder
Dear Mr. Davis:
Please excuse the delay in my reply, but I did want you to know that I am
not insensitive to the difficulties you and others are facing. I also know that in your
current situation, you cannot be expected to draw much consolation from that alone.
But, if we had not moved firmly to begin the process of winding down
inflation, I can assure you that the economic difficulties that we as a nation and as
individuals are facing would have steadily worsened. That inescapable truth does not
alter the fact that bringing inflation under control is not an easy process, but it does
make it clear that achieving that result is absolutely essential to the sustained
prosperity that you and I both want.
Over the past two months we have seen very sharp declines in market
interest rates in the wake of a moderation in the demand for money and credit. And,
in response to this changing environment, the Federal Reserve has modified several
elements of its credit restraint program in a series of steps taken on ikilay 22. A press
release on these actions is enclosed. These developments should help to relieve some
of the pressures in the building industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
31-I:RL:sep
#1476
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. Harold Denner
Dear Mr. Denner:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and truck industries is a difficult one that has been complicated by the
energy situation, and by difficulties in other industries.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither dealer loans nor
auto loans to consumers should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which the auto/truck
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
Enclosure
3H:RL:sep
#1786
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. Mike DeVolder
Dear Mr. DeVoider:
Thank you for your letter. I want you to know that I can fully
appreciate the circumstances that prompted you to write. I know that the
current situation in the automobile and truck industries is a difficult one that
has been complicated by the energy situation, and by difficulties in other
industries.
As to the credit aspects of the problem, we have had very sharp
declines in interest rates over the past two months or so which should help. I
would also point out that it was never intended that automobile credit should be
subject to special restraint under our credit restraint program. Also, the fact
that overall credit growth is running within our guidelines has permitted us to
alter the administration of that program somewhat as outlined in the enclosed
press release. That statement should make it clear that, subject to banks' own
credit judgments, neither dealer loans nor auto loans to consumers should be
subject to special restraint.
These factors will help but they do not alter the fundamental fact that
the process of taming inflation will not be easy. But if we fail now, the
discomfort later will be all the more serious. That is why I believe that we
must get the process over with so that we can move into an economic
environment in which the auto/truck business and the economy in general will
prosper. I appreciate your taking the time to write and! hope I will have your
understanding and support as we seek to resolve this most pressing national
problem.
Sincerely,
Enclosure
JH:RL:sep
111688
May 28, 1980
Mr. A. Dorsch
Dear Mr. Dorsch:
Thank you for your letter on our monetary policy actions
and other measures that were taken to help curb inflationary
pressures. I understand the concerns that prompted you to write and
assure you that your views, even though critical, serve a useful
purpose to those of us in government.
Sincerely,
JH:RL:sep
#1972
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
May 28, 1980
is. Mary 1 Eppley
Dear Ms. Eppley:
Please excuse the delay in my reply, but I did want you to know that I am
not insensitive to the the difficulties you and others are facing. I also know that in
your current situation, you cannot be expected to draw much consolation from that
alone.
nut, if we had not moved firmly to begin the process of winding down
inflation, I can assure you that the economic difficulties that we as a nation and as
individuals are facing would have steadily worsened. That inescapable truth does not
alter the fact that bringing inflation under control is not an easy process, hut it does
make it clear that achieving that result is absolutely essential to the sustained
prosperity that you and I both want.
Over the past two months we have seen very sharp declines in market
interest rates in the wake of a moderation in the demand for money and credit. And,
in response to this changing environment, the Federal Reserve has modified several
elements of its credit restraint program in a series of steps taken on May "72. A press
release on these actions is enclosed. These developments should help to relieve some
of the pressures in the housing industry.
`Vhatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs. In that regard I would strongly agree with you on the need for restraint
in government spending, and I am encouraged by a growing awareness of this fact
throughout all segments of society.
I appreciate your taking the time to write.
Sincerely,
Enclosure
Trii:RUsep
111574
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. George R. Gettrnan
Dear Mr. Gettman:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and truck Industries is a difficult one that has been complicated by the
energy situation, and by difficulties in other industries.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither dealer loans nor
auto loans to consumers should he subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which the auto/truck
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
Enclosure
3I-1:RL:sep
111677
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. Kenneth Goodwin
near Mr. Goodwin:
Thank you for your letter. I want you to know that I can fully
appreciate the circumstances that prompted you to write. I know that the
current situation in the automobile and truck industries is a difficult one that
has been complicated by the energy situation, and by difficulties in other
industries.
As to the credit asoects of the problem, we have had very sharp
declines in interest rates over the past two months or so which should help. I
would also point out that it was never intended that automobile credit should be
fact
subject to special restraint under our credit restraint program. Also, the
that overall credit growth is running within our guidelines has permitted us to
alter the administration of that program somewhat as outlined in the enclosed
own
press release. That statement should make It clear that, subject to banks'
be
credit judgments, neither dealer loans nor auto loans to consumers should
subject to special restraint.
These factors will help but they do not alter the fundamental fact that
the
the process of taming inflation will not be easy. But if we fail now,
discomfort later will be all the more serious. That is why I believe that we
must get the process over with so that we can move into an economic
environment in which the auto/truck business and the economy in general will
your
prosper. I appreciate your taking the time to write and I hope I will have
understanding and support as we seek to resolve this most pressing national
problem.
Sincerely,
Enclosure
3H:R1.,:sep
#1795
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Ms. Rita Gould
Dear Ms. Gould:
Please excuse my delayed response, but I did want you to know I am not
insensitive to the difficulties that you referred to. I also know that you cannot he
expected to draw much consolation from that alone.
!Nut, if we had not moved firmly to begin the process of winding down
inflation, I can assure you that the economic difficulties that we as a nation and as
individuals are facing would have steadily worsened. That inescapable truth does not
alter the fact that bringing inflation under control is not an easy process, but it does
make it clear that achieving that result is absolutely essential to the sustained
prosperity that you and I both want.
Over the past two months we have seen very sharp declines in market
interest rates in the wake of a moderation in the demand for money and credit. And,
in response to this changing environment, the Federal Reserve has modified several
elements of its credit restraint program in a series of steps taken on May 22. A press
release on these actions is enclosed. These developments should help to relieve some
of the pressures in the economy.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
May 2,1980
1r. G. L. Grantham
First National Rank of Pickens County
P.O. Drawer 607
Tiasley, South Carolina 29640
Dear Mr. Grantham:
Thanks for your letter on our monetary policy actions
and other recent anti-inflation measures. I appreciate very much
your confidence and support.
Sincerely,
L:sep
#1982
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. Charles D. Gross, CPA
Dear Mr. Gross:
Please excuse my delayed reply but I did want to thank you for your letter
on high interest rates and inflation. I appreciate having your commentary and
suggestions on many aspects of our economic problems.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly agree with you that we
need help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending. I also agree with your views that we
must encourage savings, capital formation and productivity increases.
There has recently heen a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures affecting small businesses and the economy at large.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
As you suggest, this process requires sustained
non-inflationary environment.
discipline over time in our financial and fiscal affairs.
1 appreciate your taking the time to write.
Sincerely,
Enclosure
311:RL:sep
#1126
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Air. Jerry Hall
Hall Motor Company
828 3rd Street - Box 578
Humboldt, Nebraska 68376
Dear Mr. Halls
know that I can fully appreciate the
Thank you for your letter. I want you to
know that the current situation in the
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most pressing national problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
Enclosure
JI-1:RL:sep
#1621
May 28, 1980
Mr. Richard L. Hargrave
Dear k,ir. Hargrave:
Please excuse my delay in responding to your postcard, hut I did want you
to know that I am not insensitive to the difficulties you and others in the homehuilding
industry are facing. I also know that in your current situation, you cannot he expected
to draw much consolation from that alone.
But, if we had not moved firmly to begin the process of winding down
inflation, I can assure you that the economic difficulties that we as a nation and as
individuals are facing would have steadily worsened. That Inescapable truth does not
alter the fact that bringing Inflation under control is not an easy process, but it does
make it clear that achieving that result is absolutely essential to the sustained
prosperity that you and I both want.
Over the past two months we have seen very sharp declines in market
interest rates in the wake of a moderation in the demand for money and credit. And,
in response to this changing environment, the Federal Reserve has modified several
elements of its credit restraint program in a series of steps taken on May 22. These
developments should help to relieve some of the pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
31-1:RL:sep
#1382
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. R. D. Harold
Harold Electric Company
811 West Rose Street
Walla Walla, Washington 99362
Dear Mr. Harold:
Please excuse the delay in my response, but I did want to thank you for
your letter concerning S.R. 392. I can well understand your concern about high
interest rates.
In fact, we have already seen a very sharp drop in market interest rates
which, fundamentally, is an out-growth of the moderation in the demand for credit we
have experienced in the past several months. Interest rates are essentially determined
in the marketplace, and the Federal Reserve's influence over those rates is indirect.
Our basic policy Is directed at achieving and maintaining moderate growth in money
and credit. This policy rests on a basic truth--one borne out by literally centuries of
experience—namely, that excessive inflation cannot persist over time unless nourished
by excessive growth in money.
The only way to "force" interest rates below the level associated with a
given demand for credit is to increase the money supply. But, this would soon prove
self-defeating, since it would foster inflation and inflationary expectations—resulting
in increased demand for credit and in turn still higher interest rates. In that sense,
high interest rates are themselves a reflection of Inflation.
I am somewhat encouraged by recent trends in interest rates as I am sure
you are. Ultimately, however, achieving and maintaining low interest rates depends on
our success in bringing inflation down.
Sincerely,
,
31-1:RUsep
#1634
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mrs. William Harris
Dear Mrs. Harris:
Please excuse my delayed reply to your letter, but I did want you to know
that I can appreciate the difficulties you and others are facing. I also know that in
your current situation, you cannot be expected to draw much consolation from that
alone.
But, if we had not moved firmly to begin the process of winding down
inflation, I can assure you that the economic difficulties that we as a nation and as
individuals are facing would have steadily worsened. That inescapable truth does not
alter the fact that bringing Inflation under control is not an easy process, but it does
make it clear that achieving that result is absolutely essential to the sustained
prosperity that you and I both want.
Over the past two months we have seen very sharp declines in market
interest rates in the wake of a moderation in the demand for money and credit. And,
in response to this changing environment, the Pederal Reserve has modified several
elements of its credit restraint program in a series of steps taken on May 22. A press
release on these actions is enclosed. These developments should help to relieve some
of the pressures in the homebuilding industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
E nclosure
JH:RL:sep
#1577
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. Joseph Harrison, III
Energy-Conscious Homes, Inc.
P.O. Box 627
Amherst, New Hampshire 03031
Dear Mr. Harrison:
Thank you for your letter on monetary policy and the housinq industry.
I can understand the concerns that prompted you to write, and I aaree that fiscal
policy must complement monetary policy in the finht against inflation.
As you noted in your comments on government spending, persistent federal
deficits are a major source of our economic difficulties, both in terms of their
direct conseouences and, perhaps more importantly over time, in their fosterinn
of inflationary expectations. I sense, however, there is a growing realization-throughout all senments of our society--that we must bring this process under
control. The recently proposed cuts in federal spending—while perhaps not as
large as you or I would have wished--are representative of that changed attitude.
Put, make no mistake about it, achieving major cuts will be very difficult. That
process can be aided immensely by public opinion and it is important that individuals like yourself let your views be known. I, for one, will continue to speak
out whenever I can as to the need for sustained discipline over time in our fiscal
affairs.
Of course, monetary policy also has an essential role to play in the fight
against inflation since excessive inflation cannot persist over time unless fueled
by excessive growth in money. Thus, the basic thrust of monetary policy is, and
will remain, aimed at maintaining moderate growth in money and credit.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit
has lessened and market interest rates have moved significantly lower. And, in
resnonse to this chancing environment, the Federal Reserve has modified several
elements of its credit restraint nrogram in a series of steps taken on May 22.
A press release on these actions is enclosed. These developments should help to
relieve some of the pressures in the housing industry.
Aatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in
achieving a non-inflationary environment, and, as you emphasize, that requires
sustained discipline in our financial and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
J .tb
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
#1765
May 28, 1980
Mr. D. E. Hartwig, President
Hartwig Motors, Inc.
629 South Riverside Drive - P.O. Box 2417
Iowa City, Iowa 52244
Dear Mr. Hartwig:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and related industries is a difficult one that has been complicated by the
energy situation and related shift in the demand for small fuel-efficient cars. I also
appreciate the fact that the difficulties that agriculture is currently facing are also
affecting your business.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither automobile dealer
loans nor auto loans to consumers should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not he easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which the automobile
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
Enclosure
JI-1:RL.,sep
#1727
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 19b0
Mr. Victor E. hatcher
Vic Hatcher Construction
Albuquerque, New Mexico
Dear Mr. Hatcher:
Thank you for your letter on the effects of Government
policies on business.
I have some real sympathy with many of the points
you make, and I wee with you on the need for greater fiscal discipline.
Sincerely,
:jmr
#1878
May 28, 1980
Mrs. Jan Herzog
J. R. Herzog Roofing
14176 South Lindsay Road
Oregon City, Oregon 97045
Dear \Ars. Herzog:
Please excuse my delayed reply to your letter, but I did want you to know
that I can appreciate the difficulties you and others are facing. I also know that In
your current situation, you cannot be expected to draw much consolation from that
alone.
But, if we had not moved firmly to begin the process of winding down
inflation, I can assure you that the economic difficulties that we as a nation and as
individuals are facing would have steadily worsened. That inescapable truth does not
alter the fact that bringing inflation under control is not an easy process, but It does
make it clear that achieving that result is absolutely essential to the sustained
prosperity that you and I both want.
Over the past two months we have seen very sharp declines in market
interest rates in the wake of a moderation in the demand for money and credit. And,
in response to this changing environment, the Federal Reserve has modified several
elements of its credit restraint program in a series of steps taken on May 22. A Dress
release on these actions is enclosed. These developments should help to relieve some
of the pressures in the housing industry.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
F,nclosure
JH:RL:sep
#1194
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. William L. High
President
Concrete Systems, Inc.
P.O. Box 3625
Albuquerque, New Mexico 87190
Dear Mr. High:
Cease excuse my delayed reply, but I did want you to
know t am not insensitive to the kinds of difficulties you and other
businessmen are experiencing. I also know that you can't be expected
to drat, much consolation from that alone.
But I am encouraged by the sharp decl*nes in market interest
rates in the wake of moderation in the demand for money and credit.
In response to this changing environment, the Federal Reserve has
modified several elements of its credit restraint program.
On the matter of "overextension, the point I was trying
to make is that there is a general thinness in liquidity and capital
In the business sector which, inevitably, makes business, small and
large; more prone to short-run problems.
I appreciate your taking the time to write.
Sincerely,
JH:jmr
#1573
May 2,1980
Mr. Vernon C. Hunzelman
Dear Mr. Hunzelman:
Thank you for your letter. I want you to know that I can fully
appreciate the circumstances that prompted you to write. I know that the
current situation in the automobile and truck industries is a difficult one that
has been complicated by the energy situation, and by difficulties in other
industries.
As to the credit aspects of the problem, we have had very sharp
declines in interest rates over the past two months or so which should help. I
would also point out that it was never intended that automobile credit should be
subject to special restraint under our credit restraint program. Also, the fact
that overall credit growth is running within our guidelines has permitted us to
alter the administration of that program somewhat as outlined in the enclosed
press release. That statement should make it clear that, subject to banks' own
credit judgments, neither dealer loans nor auto loans to consumers should be
subject to special restraint.
These factors will help hut they do not alter the fundamental fact that
the process of taming inflation will not be easy. But if we fail now, the
discomfort later will be all the more serious. That is why I believe that we
must get the process over with so that we can move into an economic
environment in which the auto/truck business and the economy in general will
prosper. I appreciate your taking the time to write and I hope I will have your
understanding and support as we seek to resolve this most pressing national
problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
Enclosure
31-1:RL:sep
#1724
Niay 28, 1980
Mr. D. R. Hutchinson
Hutchinson Chevrolet Company
Pisgah, Iowa 51564
Dear vir. Hutchinson:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and related industries is a difficult one that has been complicated by the
energy situation and related shift in the demand for small fuel-efficient cars. I also
appreciate the fact that the difficulties that agriculture is currently facing are also
affecting your business.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to bank& own credit judgments, neither automobile dealer
loans nor auto loans to consumers should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. nut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which the automobile
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
Enclosure
JH:RL:sep
#1792
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
)tay 28, 1980
Mr. Lloyd V. Jensvold, President
Jensvold Motor Company
P.O. Box 218
Emmetsburg,Iowa 50536
Dear Mr. Jensvold:
Thank you for your letter. I want you to know that I can fully anpreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and related industries is a difficult one that has been complicated by the
energy situation and related shift in the demand for small fuel-efficient cars. I also
appreciate the fact that the difficulties that agriculture is currently facing are also
affecting your business.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither automobile dealer
loans nor auto loans to consumers should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which the automobile
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
Enclosure
31-1:RUsep
#1674
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
lay 28, 1980
Mr. Gary K. 3ohnson, President
NII Corporation
1621 - 114th S.E. - Suite LT;
Rellevue, Washington 9S004
near
3ohnsont
lease excise the delay in my response, but I did want to thank you for
your letter concerning S.R. 392. I can well understand your concern about high
interest rates.
In fact, we nave already seen a very sharp drop in market interest rates
which, fundamentally, is an out-growth of the moderation in the demand for credit we
have experienced in the past several months. Interest rates are essentially determined
in the marketplace, and the Federal Reserve's influence over those rates is irviirect.
Our basic policy is directed at achieving and maintaining moderate growth in enoney
anci credit. This policy rests on a hasic truth.one borne out by literally centuries of
experience.namely, that excessive inflation cannot persist over tirne unless nourished
by excessive growth in money.
The only way to "force" interest rates below the level associated with a
given demand for credit is to increase the money supply. But, this would soon prove
self-defeating, since it would foster inflation and inflationary expectations.resulting
in Increased demand for credit and in turn still higher interest rates. In that sense,
high interest rates are themselves 3 reflection of inflation.
I am somewNat enc.ouraged by recent trends in interest rates as I am sure
you are. l!itirnately, however, achieving and maintaining, low interest rates Aeoends on
our success in bringing inflation down.
Sincerely,
34
6
/
°
:RL:sep
#1616
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mrs. Georgia Lois Jones
Dear Mrs. zones:
Thanks for your letter on our monetary policy actions
and other recent anti-inflation measures. I appreciate very much
your confidence and support.
Sincerely,
#1927
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Ms. Laurie Jones
Dear Ms. Jones
Please excuse the delay in responding to your letter, hut I want you to
know that I can appreciate the difficulties you and others are facing. I also know that
in your current situation, you cannot be expected to draw much consolation from that
alone.
But, if we had not moved firmly to begin the process of windin,g down
inflation, I can assure you that the economic difficulties that we as a nation and as
individuals are facing would have steadily worsened. That inescapa5le truth does not
alter the fact that bringing inflation under control is not an easy process, hut it does
make it clear that achieving that result is absolutely essential to the sustained
prosperity that you and I both want.
Over the past two months we have seen very sharp declines in market
interest rates in the wake of a moderation in the demand for money and credit. And,
in response to this changing environment, the Federal Reserve has modified several
elements of its credit restraint program in a series of steps taken on May 22. A press
release on these actions is enclosed. These developments should help to relieve some
of the pressures in the homebuilding industry.
Thatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosnerity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
31--i:RL:sep
#1460
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Ms. Barbara J. Just, President
City Sheet Metal, Inc.
327 South Central
Kent, Washington 98031
near Ms. Just:
Please excuse the delay in my response, but I did want to thank you for
your letter concerning S.R. 392. I can well understand your concern about high
interest rates.
In fact, we have already seen a very sharp drop in market interest rates
which, fundamentally, is an out-growth of the moderation in the demand for credit we
have experienced in the past several months. Interest rates are essentially determined
in the marketplace, and the Federal Reserve's influence over those rates is indirect.
Our basic policy is directed at achieving and maintaining moderate growth in money
and credit. This policy rests on a basic truth—one borne out by literally centuries of
experience—namely, that excessive inflation cannot persist over time unless nourished
by excessive growth in money.
The only way to "force" interest rates below the level associated with a
given demand for credit is to increase the money supply. But, this would soon prove
self-defeating, since it would foster inflation and inflationary expectations—resulting
in increased demand for credit and in turn still higher interest rates. In that sense,
high interest rates are themselves a reflection of inflation.
I am somewhat encouraged by recent trends in interest rates as I am sure
you are. Ultimately, however, achieving and maintaining low interest rates depends on
our success in bringing inflation down.
Sincerely,
tff1L:sep
111702
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. Hubert J. Kaliski
Maxim Chemical Company,Inc.
45 John Street
New York, New York 10038
Dear Mr. Kaliski:
Thanks for your letter on our monetary policy actions
eciate very much
and other recent anti-inflation measures. I appr
your confidence and support.
Sincerely,
sep
#1957
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
'
,lay 28, 1980
Mr. Darwin J. Kilburg
D & D Chevrolet, Inc.
616 West 9th Street
Dewitt, Iowa 52742
Dear Nit% Kilburg:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and related industries is a difficult one that has been complicated by the
energy situation and related shift in the demand for small fuel-efficient cars. I also
appreciate the fact that the difficulties that agriculture is currently facing are also
affecting your business.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should he subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither automobile dealer
loans nor auto loans to consumers should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Tut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which the automobile
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
Enclosure
31-I:RL:sep
#2654
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
May 28, 1980
Mr. R. E.'‘iacFadden, President
Puget Sound Industry Services, Inc.
3407 Airport way South
Seattle, Washington 98134
Dear Mr. MacFadden:
Please excuse the delay in my response, hut I did want to thank you for
your letter concerning S.R. 392. I can well understand your concern about high
interest rates.
In fact, we have already seen a very sharp drop in market interest rates
which, fundamentally, is an out-growth of the moderation in the demand for credit we
have experienced in the past several months. Interest rates are essentially determined
in the marketplace, and the Federal Reserve's influence over those rates is indirect.
Our basic policy is directed at achieving and rnaintainin, moderate growth in money
and credit. This policy rests on a basic truth—one borne out by literally centuries of
experience—namely, that excessive inflation cannot persist over time unless nourished
by excessive growth in money.
The only way to "force" interest rates below the level associated with a
given demand for credit is to increase the money supply. rut, this would soon prove
self-defeating, since it would foster inflation and inflationary expectations—resulting
in increased demand for credit and in turn still higher interest rates. In that sense,
high interest rates are themselves a reflection of inflation.
I am somewhat encouraged by recent trends in interest rates as I am sure
you are. Ultimately, however, achieving and maintaining low interest rates depends on
our success in bringing inflation down.
Sincerely,
:RL:sep
#1521
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Ms. Eileen M. Mathews
Dear Ms. Mathews:
I have read your letter and I would make several
points. First, there is no connection between the First
Pennsylvania Bank and the punt brothers. Second, since
the Federal Deposit insurance Corporation was the government
agency responsible for the capital assistance program for
that bank, I am a little at a loss to understand your reference
to violation of FDIC rules. That program Is described in the
attached press release.
As to the Hunt situation, I have also enclosed my recent
testimony which makes it cuite clear that neither I nor anyone
else initiated or guided that loan negotiation and that the
transaction is essentially one between private parties and
involves no public funds.
Sincerely,
EGC:ccm
#1756
May 28, 1980
Mr. Dennis Matney
Dear Mr. Matney:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and truck industries is a difficult one that has been complicated by the
energy situation, and by difficulties in other industries.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also pc:sint out
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither dealer loans nor
auto loans to consumers should be subject to special restraint.
help but they do not alter the fundamental fact that the
These factors
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which the auto/truck
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
May 28, 1980
Mr. Armour Mehlisch
Dear Mr. Mehllsch:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and truck industries is a difficult one that has been complicated by the
energy situation, and by difficulties in other industries.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither dealer loans nor
auto loans to consumers should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which the auto/truck
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
Enclosure
JH:RL:sep
#1687
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. Ole R. Mettler
President and Chairman
of the Board
Farmers and Merchants Bank
of Central aalifornia
121 W. Pine Street
Lodi, California 95240
Dear Mr. Mettler:
I have read your letter concerning the Monetary
Control Act of 1980 very carefully and I can appreciate
the point you are making. Fundamentally, the thrust of
your remarks is one of the reasons I would have preferred
a legislative solution that retained a "voluntary' character.
But, that approach -- in part because of its implications for
Treasury revenues -- simply was not possiblFor
this same
e.
reason it would, I regret to say, be very much contrary to
the intent of the Congress to use the Fed's surplus to offset
the relative burden on member banks during the transition
period. In that regard, I should also emphaize that under
the !ill member banks will benefit fromaa sizable reduction
in reserves. That reduction could not have occurred were
it not for the legislation providing the offset via the
impositi*n of reserves on non-members.
None of this changes the essence of your point which
we have had, and will continue to have, in mind as we begin
the process of implementing the legislation.
I appreciate your taking the time to write.
Sincerely,
EGC:ccm
#1812
May 28, 1980
Mr. Paul R. Miller, President
Oelweln Body & Truck Sales, Inc.
829 1st Avenue,S.E.
Oelwein, Iowa 50662
r)ear rolr.Iler:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and related industries is a difficult one that has been complicated by the
energy situation and related shift in the demand for small fuel-efficient cars. I also
appreciate the fact that the difficulties that agriculture is currently facing are also
affecting your business.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should he subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That staterneni should
make it clear that, subject to banks' own credit judgments, neither automobile dealer
loans nor auto loans to consumers should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which the automobile
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
Enclosure
3I-1:RL:sep
111659
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. W. Charles 'liner
Dear Mr. Miner:
I have read your letter carefully and I want you to know that I can
appreciate the difficulties you and others are facing. I also know that in your current
situation, you cannot be expected to draw much consolation from that alone.
But, if we had not moved firmly to begin the process of winding down
inflation, I can assure you that the economic difficulties that we as a nation and as
individuals are facing would have steadily worsened. That inescapable truth does not
alter the fact that bringing inflation under control is not an easy process, but it does
make it clear that achieving that result is absolutely essential to the sustained
prosperity that you and I both want.
Over the past two months we have seen very sharp declines in market
interest rates in the wake of a moderation in the demand for money and credit. And,
in response to this changing environment, the Federal Reserve has modified several
elements of its credit restraint program in a series of steps taken on May 22. A press
release on these actions is enclosed. These developments should help to relieve some
of the pressures in the industrial sector and the economy.
Whatever short-run results may he associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
JH:RL:sep
#1793
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 23, 1980
Mrs. Robert Mitchell
Dear Mrs. Mitchell:
Please excuse my delay in responding to your letter, but I did want you to
know that I can appreciate the difficulties you and others are facing. I also know that
In your current situation, you cannot be expected to draw much consolation from that
alone.
ilut, if we had not moved firmly to begin the process of winding down
inflation, I can assure you that the economic difficulties that we as a nation and as
individuals are facing would have steadily worsened. That inescapable truth does not
alter the fact that bringing inflation under control is not an easy process, but it does
make it clear that achieving that result is absolutely essential to the sustained
prosnerity that you and I both want.
Over the past two months we have seen very sharp declines in market
Interest rates in the wake of a moderation in the demand for money and credit. And,
in response to this changing environment, the Federal Reserve has modified several
elements of its credit restraint program in a series of steps taken on May 22. These
developments should help to relieve some of the pressures in the hornebuilding
industry.
Whatever short-run results may he associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
#1585
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
`•••11111111
May 28, 1980
Mr. Alan S. Newman
Dear Mr. Newman:
I understand the concerns in your letter about the press reports—often
misleading—concerning the role played by the Federal Reserve in certain loans to the
Hunt family.
Neither I, the Federal Reserve, nor any government official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not be allowed to engage in fresh speculative activity of
. I
any kind and that their remaining silver would be liquidated in an orderly fashion
g
might emphasize that the negotiations involve a restructuring of existin obligations—
n
been to ensure
they will not lead to any new funds for the Hunts. My sole concer has
Credit Restraint Program,
that such a loan complies with the Federal Reserve Special
this, the Federal
particularly as it applies to preventing new speculation. rieyond
private transactions
Reserve cannot and should not interject itself into individual
between lenders and borrowers.
I have enclosed a copy of my Congressional testimony on this subject,
which explains my role more fully. I do appreciate your taking the time to write me
on this issue.
Sincerely,
Eros re
• L:sep
#1945
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. Edward I. o'Brien
President
I
i
Securities Industry Association
20 Broad Street
New York, New York 10005
Dear Ed:
Thank you for your invitation to address the 1980 Annual
Convention of the Securities Industry Association in Boca Raton on
December 5. I am pleased to accept your invitation, but with a
caveat. I would like to keep my appearance very informal, perhaps
with some remarks to be followed by a question-and-answer session.
Sorry that I was unable to attend the SIA meetings last
year and at the Greenbrier but my schedule just wouldn't permit it.
I think we'll have better luck this time.
I look forward to seeing you in Boca Raton.
Sincerely,
JRC:mrk
#222
s,./lay 28, 1980
Mr. and Mrs. Jerry Phillips
Dear Mr. and Mrs. Phillips:
"lease excuse my delayed reply to your letter, but I did want you to know
that I can appreciate the difficulties you and others are facing. I also know that in
your current situation, you cannot he expected to draw much consolation from that
alone.
But, if we had not moved firmly to begin the process of winding down
inflation, I can assure you that the economic difficulties that we as a nation and as
individuals are facing would have steadily worsened. That inescapable truth does not
alter the fact that bringing inflation under control is not an easy process, but it does
make it clear that achieving that result is absolutely essential to the sustained
prosperity that you and I both want.
Over the past two months we have seen very sharp declines in market
interest rates in the wake of a moderation in the demand for money and credit. And,
in response to this changing environment, the Federal Reserve has modified several
elements of its credit restraint program in a series of steps taken on May 22. A press
release on these actions is enclosed. These developments should help to relieve some
of the pressures in the homehuilding industry.
\thatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
F.nclosure
JH:RL:sep
#1292
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. Al Pimper, Jr.
Al Pimper Chrysler-Plymouth-Dodge
East Highway 30
Fremont, Nebraska 68025
Dear Mr. Pimper:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and truck industries is a difficult one that has been complicated by the
energy situation, and by difficulties in other industries.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither dealer loans nor
auto loans to consumers should be subject to special restraint.
These factors will help hut they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment In which the auto/truck
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
Enclosure
JH:RL:sep
#1619
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Irs. J. C. Pritchett
near r‘rs. Pritchett:
Please excuse my delay in responding to your letter, but I did want you to
know that I can appreciate the difficulties you and others are facing. I also know that
in your current situation, you cannot be expected to draw much consolation from that
alone.
But, if we had not moved firmly to begin the process of winding down
inflation, I can assure you that the economic difficulties that we as a nation and as
individuals are facing would have steadily worsened. That inescapable truth does not
alter the fact that bringing inflation under control is not an easy process, but it does
make it clear that achieving that result is absolutely essential to the sustained
prosperity that you and I both want.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Over the oast two months we have seen very sharp declines in market
interest rates in the wake of a moderation in the demand for money and credit. And,
in response to this changing environment, the Federal Reserve has modified several
elements of its credit restraint program in a series of steps taken on "lay 22. These
developments should help to relieve some of the pressures in the homehuilding
industry.
Thatever short-run results may be associated with these developments, we
-lust not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
31-1:RL:sep
#1589
May 28, 1980
Mr. and Mrs. Arthur Quaid, Jr.
Dear Mr. and Mrs. Quaid:
Please excuse my delayed reply, but I did want you to know that I can
appreciate the difficulties you and other are facing. I also know that in your current
situation, you cannot be expected to draw much consolation from that alone.
But, if we had not moved firmly to begin the process of winding down
inflation, I can assure you that the economic difficulties that we as a nation and as
individuals are facing would have steadily worsened. That inescapable truth does not
alter the fact that bringing inflation under control is not an easy process, but it does
make it clear that achieving, that result is absolutely essential to the sustained
prosperity that you and I both want.
Over the past two months we have seen very sharp declines in market
interest rates in the wake of a moderation in the demand for money and credit. And,
in response to this changing environment, the Federal Reserve has modified several
elements of its credit restraint program in a series of stens taken on May 22. A press
release on these actions is enclosed. These developments should help to relieve some
of the pressures in the housing industry and the general economy.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
JH:RL:sep
#!370
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. G. E. Rasmussen, Vice President
Rasmussen Motor Sales, Inc.
Maquoketa, Iowa 52060
Dear Mr. Rasmussen:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and related industries is a difficult one that has been complicated by the
energy situation and related shift in the demand for small fuel-efficient cars. I also
appreciate the fact that the difficulties that agriculture is currently facing are also
affecting your business.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither automobile dealer
loans nor auto loans to consumers should be subject to special restraint.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
These factors will help hut they do not alter the fundamental fact that the
process of taming inflation will not be easy. ut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which the automobile
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
F.nclosure
31-1:R1..:sep
#1643
May 28, 1980
Mr. Rod Reoh
Rods Ford, Inc.
2nd and Dakota, Box 146
Akron, Iowa 51001
Dear Mr. Reoh:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and related industries is a difficult one that has been complicated by the
energy situation and related shift in the demand for small fuel-efficient cars. I also
appreciate the fact that the difficulties that agriculture is currently facing are also
affecting your business.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither automobile dealer
loans nor auto loans to consumers should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Mut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which the automobile
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
Enclosure
JH:RL:sep
#1648
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
).1 1ay 28, 1980
Mrs. Bernadine Richtrnan
Dear Mrs. Richtman:
Thanks for your letter on our monetary policy actions
very much
and other recent anti-inflation measures. I appreciate
your confidence and supoort.
Sincerely,
JI-1:RL:sep
#1904
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
lottz.4-c
netn
hf,,rsaentative
24S.1.5
l(7r ,our lettst of
7 concerning common,
geo;voivici‘:1 iror, ota of :is= constituents, %I. C. Coleman Mccet
atd :Alret;anto Co.riAlration hichr4on4.
x-.4 ez-,;atie* lav4,rceea concern al-,out the impost Ost t
.
;
. luctronia Wund Transfer het and &ociiii ulation
viii. NM* OA tNiik
:Alinkiztv iAdUstry .1444 on
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coneut4*lr),4 s it rigtuires financial inatitutiona to nee4.411 COUt12 al-04s in c.-7,iuient and operations and
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ard
cen4Ideraticm to thu eflkct$ .cited ix Mr, NeCtshes*s
leltter e 41414. ,thether 41A) ratxt*diAl 4et3*A iS nOv contenvlated ty ttie
,
Arard.
r
Ths .loartl is recuira4ty tlAs At to &Italy's and ceasider
tkie
000netoic itt;otrct of the INTflooentinc regulation and to
det,cnxttate to the extcnt iracticable that tr.* comma= irotectiona
v rovided
trt xe-oalatiwi outwvi0;Ue com lianas Wixtg iAlrons4
U;On 0044123114trst 4n4 financial inntitutiolia. ?lease tls aeaured tat
Vag. : )- 41trd AAdo
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thooe 1-cy.arementc. t144at wezc naCesAisrl'. kne 11,ectrouic fund Transfer
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Cites the !4.:Tard
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utliic axs discuaasd 1,;olox..)
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lond the Act*6
;Actndatea. rox tUta V0440A the aoard docg not oontomirlats rovtin4$3,4esd, „ein9 in a ;:csition to
we14o) faajor rtolit4, tt4rough
(
c':,aniles4 iv the rti-iulatior.0
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https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
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https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
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https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
(tv-203)
;
do.
;
(2)
May 28, 1980
Mr. Lowell E. Rodas, President
Mr. Dan Paris, General Manager
Rodas Chevrolet, Inc.
Strawberry Point, Iowa 52076
Dear 3,1essrs. Rodas and Paris:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and related industries is a difficult one that has been complicated by the
energy situation and related shift in the demand for small fuel-efficient cars. I also
appreciate the fact that the difficulties that agriculture is currently facing are also
affecting your business.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither automobile dealer
loans nor auto loans to consumers should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which the automobile
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
i.nclosure
1-1:RL:sep
#1726
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. Douglas P. Rolfsrneier, Vice President
Rolfsrneier Motors, Inc.
139 North 6th Street
Seward, Nebraska 68434
Dear Mr. Rolfsmeier:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and truck industries is a difficult one that has been complicated by the
energy situation, and by difficulties in other industries.
As to the credit aspects of the problem, we have had very sharp declines in
rates
over the past two months or so which should help. I would also point out
interest
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make It clear that, subject to banks' own credit judgments, neither dealer loans nor
auto loans to consumers should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which the auto/truck
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
Enclosure
JH:RL:sep
111618
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. Larry Rose, President
Rose Equipment, Inc.
P.O.'lox 82246
Lincoln, Nebraska 68501
!")ear 1r. Rose:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and truck industries is a difficult one that has been complicated by the
energy situation, and by difficulties in other industries.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither dealer loans nor
auto loans to consumers should he subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. ut if we fail now, the discomfort later
will he all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which the auto/truck
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
Enclosure
JH:RL:sep
#1682
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
lEM
May 28,1980
W. F. Ruhick
Dear Mr. Rubicks
Thank you for your letter on high interest rates. Please excuse the delay in
my reply.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There has recently been a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved significantly lower. And, in response
to this changing environment, the Federal Reserve has modified several elements of
its credit restraint program in a series of steps taken on May 22. A press release on
these actions is enclosed. These developments should help to relieve some of the
pressures in the economy.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
44i
Enclosure
31-1:RUsep
#1475
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. Dennis L. Runolfson, President
Fashion Carpets, Inc.
8619E. Sprague Avenue
Spokane, was`lington 792CA
Car ir. R unolfson:
you for
Please excuse the delay in my response, but I did want to thank
your concern about high
your letter concerning S.R. 392. I can well understand
interest rates.
t rates
In fact, we have already seen a very sharp Piro, in market interes
the demand for credit we
which, fundamentally, is an out-growth of the moderation in
are essentially determined
have experienced in the past several months. Interest rates
over those rates is indirect.
in the marketplace, and the Federal Reserve's influence
moderate growth in money
Our basic policy is directed at achieving and maintaining
out by literally centuries of
and credit. This policy rests on a basic truth—one borne
over time unless nourished
experience—namely, that excessive Inflation cannot persist
by excessive growth in money.
with a
The only way to "force" interest rates below the level associated
this would soon prove
given demand for credit is to Increase the money supply. But,
expectations—resulting
self-defeating, since it would foster inflation and inflationary
rates. In that sense,
in increased demand for credit and in turn still higher interest
high interest rates are themselves a reflection of inflation.
as I am sure
I am somewhat encouraged by recent trends in interest rates
t rates depends on
you are. Ulti.nately, however, achieving and maintaining low interes
our success in bringing inflation down.
Sincerely,
-IfL:sep
4#1670
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. James Russell, Jr.
Dear Mr. Russell:
Please excuse the delay in my reply, but I did want you to know I am not
insensitive to the problem you described regarding financing for your sons' college
education. I also know that in your current situation, you cannot be expected to draw
much consolation from that alone.
But, if we had not moved firmly to begin the process of winding down
inflation, I can assure you that the economic difficulties that we as a nation and as
individuals are facing would have steadily worsened. That inescapable truth does not
alter the fact that bringing inflation under control is not an easy process, but it does
make it clear that achieving that result is absolutely essential to the sustained
prosperity that you and I both want.
Over the past two months we have seen very sharp declines in market
interest rates in the wake of a moderation in the demand for money and credit. And,
in response to this changing environment, the Federal Reserve has modified several
elements of its credit restraint program in a series of steps taken on May 22. A press
release on these actions is enclosed. These developments should help to relieve some
of the pressures in the economy.
ihatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
J1-1:RL:sep
#1229
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. R. A. Schukel, President
Bob Schukel Ford
721 South Monroe
Mason City,Iowa 50401
Dear Mr. Schukel:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and related industries is a difficult one that has been complicated by the
energy situation and related shift In the demand for small fuel-efficient cars. I also
appreciate the fact that the difficulties that agriculture is currently facing are also
affecting your business.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point out
that It was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to Alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither automobile dealer
loans nor auto loans to consumers should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fall now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that Ive can move into an economic environment in which the automobile
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
F.nctosure
311:RL:sep
#1673
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Ms. Alice H. Smith
Dear Ms. Smith:
Please excuse the delay In my response, but I did want to thank you for
your letter concerning S.R. 392. I can well understand your concern about high
interest rates.
In fact, we have already seen a very sharp drop in market interest rates
which, fundamentally, is an out-growth of the moderation in the demand for credit we
have experienced in the past several months. Interest rates are essentially determined
in the marketplace, and the Federal Reserve's influence over those rates is indirect.
Our basic policy is directed at achieving and maintaining moderate growth in money
and credit. This policy rests on a basic truth—one borne out by literally centuries of
experience—namely, that excessive inflation cannot persist over time unless nourished
by excessive growth in money.
The only way to "force" interest rates below the level associated with a
given demand for credit is to increase the money supply. But, this would soon prove
self-defeating, since it would foster inflation and inflationary expectations—resulting
in increased demand for credit and in turn still higher interest rates. In that sense,
high interest rates are themselves a reflection of Inflation.
I am somewhat encouraged by recent trends in interest rates as I am sure
you are. Ultimately, however, achieving and maintaining low interest rates depends on
our success in bringing inflation down.
Sincerely,
(3114-ReCi-sep
#1680
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. Donald L. Soderberg
Palmer - Soderberg, Inc.
3201 East River Road, N.E.
Rochester, Minnesota 55901
Dear Mr. Soderberg:
Please excuse my delayed response, hut I did want you to know that I can
appreciate the difficulties you and others are facing. I also know that in your current
situation, you cannot he expected to draw much consolation from that alone.
Rut, if we had not moved firmly to begin the process of winding down
inflation, I can assure you that the economic difficulties that we as a nation and as
individuals are facing would have steadily worsened. That inescapable truth does not
alter the fact that bringing inflation under control is not an easy process, but it does
make it clear that achieving that result is absolutely essential to the sustained
prosperity that you and I both want.
Over the past two months we have seen very sharp declines in market
interest rates in the wake of a moderation in the demand for money and credit. And,
in response to this changing environment, the Federal Reserve has modified several
elements of its credit restraint program in a series of steps taken on May 22. A press
release on these actions is enclosed. These developments should help to relieve some
of the pressures in the housing and related industries.
•
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
Enclosure
JI-1:RL:sep
#1800
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. Anthony M. Solomon
President
Federal Reserve Bank of New York
New York, New York 20045
Dear Tony:
Thanks for your note on the Martin-Burns
letters.
The study you have instituted sounds
like a good and timely idea and we look forward
to its kompletion.
Sincerely,
EGC:ccm
#2028
May 28, 1980
Mr. C. F. Straw
Crown Machine Works, Inc.
3602-B South Cedar Street
Tacoma, Washington 98409
Dear Mr. Straw:
Please excuse the delay in my response, but I did want to thank you for
your letter concerning S.R. 392. I can well understand your concern about high
interest rates.
In fact, we have already seen a very sharp drop in market interest rates
which, fundamentally, is an out-growth of the moderation in the demand for credit we
have experienced in the past several months. Interest rates are essentially determined
in the marketplace, and the Federal Reserve's influence over those rates is indirect.
Our basic policy is directed at achieving and maintaining moderate growth in money
and credit. This policy rests on a basic truth--one borne out by literally centuries of
experience—namely, that excessive inflation cannot persist over time unless nourished
by excessive growth in money.
The only way to "force" interest rates below the level associated with a
given demand for credit is to increase the money supply. But, this would soon prove
self-defeating, since it would foster inflation and inflationary expectations—resulting
in increased demand for credit and in turn still higher interest rates. In that sense,
high interest rates are themselves a reflection of inflation.
I am somewhat encouraged by recent trends in interest rates as I am sure
you are. Ultimately, however, achieving and maintaining low interest rates depends on
our success in bringing inflation down.
Sincerely,
RI:RL:sep
#1470
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
May 28, 1980
Mr. Merrill C. Strong, President
Strong - Hecke Auto Villa, Inc.
P.O. Box 405
Holdrege, Nebraska 68949
Dear Mr. Strong:
Thank you for your letter. I want you to know that I can fully
appreciate the circumstances that prompted you to write. I know that the
current situation In the automobile and truck industries is a difficult one that
has been complicated hy the energy situation, and hy difficulties in other
industries.
As to the credit aspects of the problem, we have had very sharp
declines in interest rates over the pest two rnonths or so which should help. I
would also point out that it was never intended that automobile credit should be
subject to special restraint under our credit restraint program. Also, the fact
that overall credit growth is running within our guidelines has permitted us to
alter the administration of that program somewhat as outlined in the enclosed
press release. That statement should make it clear that, subject to banks' own
credit judgments, neither dealer loans nor auto loans to consumers should be
subject to special restraint.
These factors will help but they do not alter the fundamental fact that
the process of taming inflation will not be easy. But if we fail now, the
discomfort later will be all the more serious. That is why I believe that we
must get the process over with so that we can move into an economic
environment in which the auto/truck business and the economy in general will
prosper. I appreciate your taking the time to write and I hope I will have your
understanding and support as we seek to resolve this most pressing national
problem.
Sincerely,
E nclosiire
31-1:RL:sep
#1801
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. Dave Taylor
Dave Taylor Ford, Inc.
First Avenue at Third South
Mount Vernon, Iowa 52314
Dear Mr. Taylor:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and truck industries is a difficult one that has been complicated by the
energy situation, and by difficulties in other industries.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither dealer loans nor
auto loans to consumers should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which the auto/truck
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
Enclosure
JI-1:RL:sep
111636
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Ms. Edna Thompson
Owner, Manager
The Mouse Closet
521 - 156th Avenue, S.E.
Bellevue, Washington 98007
Dear Ms. Thompson:
Please excuse the delay in my response, but I did want to thank you for
your letter concerning S.R. 392. I can well understand your concern about high
interest rates.
In fact, we have already seen a very sharp drop in market interest rates
which, fundamentally, is an out-growth of the moderation in the demand for credit we
have experienced in the past several months. Interest rates are essentially determined
in the marketplace, and the Federal Reserve's influence over those rates is indirect.
Our basic policy is directed at achieving and maintaining moderate growth in money
and credit. This policy rests on a basic truth—one borne out by literally centuries of
experience—namely, that excessive inflation cannot persist over time unless nourished
by excessive growth in money.
The only way to "force" interest rates below the level associated with a
given demand for credit is to increase the money supply. But, this would soon prove
self-defeating, since it would foster inflation and inflationary expectations—resulting
in increased demand for credit and in turn still higher interest rates. In that sense,
high interest rates are themselves a reflection of inflation.
am somewhat encouraged by recent trends in interest rates as I am sure
you are. Ultimately, however, achieving and maintaining low interest rates depends on
our success in bringing inflation down.
Sincerely,
JH:RUsep
#1454
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
!'iay 28, 1980
vit.
. Harry N. Walters, President
Potsdam Paper Corporation
Potsdam, New York 13676
Dear Mr. Walters:
Please excuse my delayed response, but I did want you to know that I can
appreciate the difficulties you and others are facing. I also know that in your current
situation, you cannot he expected to draw much consolation from that alone.
But, if we had not moved firmly to begin the process of winding down
inflation, I can assure you that the economic difficulties that we as a nation and as
individuals are facing would have steadily worsened. That inescapable truth does not
alter the fact that bringing inflation under control is not an easy process, but it does
make it clear that achieving that result is absolutely essential to the sustained
prosperity that you and I both want.
Over the past two months we have seen very sharp declines in market
interest rates in the wake of a moderation in the demand for money and credit. And,
in response to this changing environment, the Federal Reserve has modified several
elements of its credit restraint program in a series of steps taken on May 22. A press
release on these actions is enclosed. These developments should help to relieve some
of the pressures in the industrial sector.
Whatever short-run results may be associated with these developments, we
must not lose sight of the fact that the key to sustained prosperity lies in achieving a
non-inflationary environment, and that requires sustained discipline in our financial
and fiscal affairs.
I appreciate your taking the time to write.
Sincerely,
'Enclosure
31-1:RL:sep
#1424
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
r. lay 28, 1980
Mr. Jim Whittemore
Dear Mr. Whittemore:
Thank you for your letter. I want you to know that I can fully
appreciate the circumstances that prompted you to write. I know that the
current situation in the automobile and truck industries is a difficult one that
has been complicated by the energy situation, and by difficulties in other
industries.
As to the credit aspects of the problem, we have had very sharp
declines in interest rates over the past two months or so which should help. I
would also point out that it was never intended that automobile credit should be
subject to special restraint under our credit restraint program. Also, the fact
that overall credit growth is running within our guidelines has permitted us to
alter the administration of that program somewhat as outlined in the enclosed
press release. That statement should make it clear that, subject to banks' own
credit judgments, neither dealer loans nor auto loans to consumers should be
subject to special restraint.
These factors will help but they do not alter the fundamental fact that
the process of taming inflation will not be easy. But if we fall now, the
discomfort later will be all the more serious. That is why I believe that we
must get the process over with so that we can move into an economic
environment in which the auto/truck business and the economy in general will
prosper. I appreciate your taking the time to write and I hope I will have your
understanding and support as we seek to resolve this most pressing national
problem.
Sincerely,
Enclosure
JH:RL:sep
111695
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 28, 1980
Mr. Sterling L. Worden, President
A. C. Propeller Service, Inc.
975 S. Nebraska Street
Seattle, Washington 98108
near Mr. Norden:
Please excuse the delay in my response, but I did want to thank you for
your letter concerning S.R. 392. I can well understand your concern about high
interest rates.
In fact, we have already seen a very sharp drop in market interest rates
which, fundamentally, is an out-growth of the moderation in the demand for credit we
have experienced in the past several months. Interest rates are essentially determined
in the marketplace, and the Federal Reserve's influence over those rates is indirect.
Our basic policy is directed at achieving and maintaining moderate growth in money
and credit. ThLs policy rests on a basic truth—one borne out by literally centuries of
experience—namely, that excessive inflation cannot persist over time unless nourished
by excessive growth in money.
The only way to "force" interest rates below the level associated with a
given demand for credit is to increase the money supply. rut, this would soon prove
self-defeating, since it would foster inflation and inflationary expectations—resulting
In increased demand for credit and in turn still higher interest rates. In that sense,
high interest rates are themselves a reflection of inflation.
I am somewhat encouraged by recent trends in interest rates as I am sure
you are. Ultimately, however, achieving and maintaining low interest rates depends on
our success in bringing inflation down.
Sincerely,
:/
3t.
:RL:sep
#1570
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 27, 1980
Mr. Olaney
m.
Anderson
uear Hr. Anderson:
Thank you for your letter and the interesting
discussion it contains. As I understand the basic point you
are making, you believe inflation occurs when the supply of
money and credit is excessive in relation to the underlying
needs of the economy. In fact, that is why the Federal
Reserve is committed to a moderate growth of the money supply.
The high interest rates we have experienced reflect the high
inflation we have had, and are expected to drop--as they have
shown signs of doing--as inflationary expectations are reduced.
I appreciate your taking the time to write.
Sincerely,
May 27, 1980
ar. Elliott Averett
Chairman of the Board
The Bank of New York
43 Wall Street
New York, New York 10015
Dear Elliott:
Thanks for your letter and the book on "Fiat Money
And, you are right -- there is
Inflation in France."
a lesson to be learned from that experience. Your efforts
to make the point are useful and I appreciate the effort.
Sincerely,
EGC:ccm
#1984
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 27, 1980
Mrs. Cindy Blevins
Dear Mrs. 17,1evins;
Thanks for your letter on the proposed tax withholding on
interest. Although tax matters are not the direct responsibility of
the Federal Reserve, we will keep your thoughts in ninth
Sincerely,
I:jmr
#1915
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 27, 1980
Mr. Elbert L. Bradshaw, President
Linaburry Brick e3r. Block Co., Inc.
2301 N. Hawthrone Lane
Indianapolis, Indiana 46218
Dear Mr. Bradshaw:
I understand the concerns in your letter about the press reports—often
misleading—concerning the role played by the Federal Reserve in certain loans to the
Hunt family.
Neither I, the Federal Reserve, nor any government official instigated,
ts and the group of
guided or approved the loan negotiations between the Hunt interes
not object to such a credit,
banks involved. The Federal Reserve has only said it would
ative activity of
provided that the Hunts would not he allowed to engage in fresh specul
in an orderly fashion. I
any kind and that their remaining silver would he liquidated
g of existing obligations—
might emphasize that the negotiations involve a restructurin
,1y sole concern has been to ensure
they will not lead to any new funds for the Hunts. '
l Credit Restraint Program,
that such a loan complies with the Federal Reserve Specia
this, the Federal
particularly as it applies to preventing new speculation. Beyond
ual private transactions
Reserve cannot and should not interject itself into individ
ssional testimony
between lenders and borrowers. I have enclosed a cony of my Congre
on this subject, which explains my role more fully.
I appreciate your taking the time to write, and I might note that Pm
res that have
encouraged by the decided easing of the extreme credit market pressu
of the difficulties
characterized the past few months. This should helo relieve some
small businesses in particular are experiencing.
Sincerely,
Endl sire
3H:R .sep
111 692
May 27, 1980
Ms. Mary Ann Carter, Vice President
and Secretary
Carter Ford, Inc.
!lox 195
Oxford, Iowa 52322
Dear Ms. Carter:
Thank you for your letter and attached letter to President Carter. I
want you to know that I can fully appreciate the circumstances that prompted
you to write. I know that the current situation in the automobile and related
industries is a difficult one that has been complicated by the energy situation
and related shift in the demand for small fuel-efficient cars. I also appreciate
the fact that the difficulties that agriculture is currently facing are also
affecting your business.
As to the credit aspects of the problem, we have had very sharp
declines in interest rates over the !last two months or so which should help. I
would also point out that it was never intended that automobile credit should be
subject to special restraint under our credit restraint program. Also, the fact
that overall credit growth is running within our guidelines has permitted us to
alter the administration of that program somewhat as outlined in the enclosed
press release. That statement should make it clear that, subject to banks' own
credit judgments, neither automobile dealer loans nor auto loans to consumers
should he subject to special restraint.
These factors will help hut they do not alter the fundamental fact that
the process of taming inflation will not he easy. Rut if we fail now, the
discomfort later will he all the more serious. That is why I believe that we
must get the process over with so that we can move into an economic
environment in which the automobile business and the economy in general will
prosper. I appreciate your taking the time to write and 1 hope I will have your
understanding and support as we seek to resolve this most pressing national
problem.
Sincerely,
JH:RL:sep
1/1642
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Enclosure
rwlay 27, 1980
kir. Robert E. Casey
Dear Mr. Casey:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know tha.t the current situation in the
automobile and related industries is a difficult one that has been complicated by the
energy situation and related shift in the demand for small fuel-efficient cars.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should he subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should.
make it clear that, subject to banks' own credit judgments, neither automobile dealer
loans nor auto loans to consumers should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which the automobile
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding an(1 support as we seek to resolve this
most pressing national problem.
Sincerely,
7-1nclosure
JI-1:RL:sep
111691
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 27, 1980
Mr. Garry L. Colee, President
S & H Motors, Inc.
Hiway 3 East
Pocahontas, Iowa 50574
Dear Mr. Colee:
Thank you for your letter. I want you to know that I can fully appreciate
the
circumstances that prompted you to write. I know that the current situation in
the
automobile and related industries is a difficult one that has been complicated by the
energy situation and related shift in the demand for small fuel-efficient cars. I also
appreciate the fact that the difficulties that agriculture is currently facing are also
affecting your business.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point
out
that it was never intended that automobile credit should he subject to special restrai
nt
under our credit restraint program. Also, the fact that overall credit growth
is
running within our guidelines has permitted us to alter the administration of
that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither automobile
dealer
loans nor auto loans to consumers should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of tamin9, inflation will not be easy. ilut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the proces
s over
with so that we can move into an economic environment in which the automo
bile
business and the economy in general will prosper. I appreciate your taldnwthe time
to
write and I hope I will have your understanding and support as we seek to resolve
this
most pressing national problem.
Sincerely,
Enclosure
11-1:RL:sep
#1698
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 27, 1980
Mr. R. P. de Camara
President and
Chief Executive Officer
Midas-International Corporation
222 South Riverside Plaza
Chicago, Illinois 60606
Dear Mr. de Camara:
Thanks for your letter.
I understand your concern over
the complexity of our economic problems, and I appreciate your
calling the National Association of Realtors' pamphlet to my
attention.
Sincerely,
NA ay
27, 1980
Mr. '4onte nelzell
Delzell Bros., Inc.
Morning Sun,Iowa 52640
Dear Mr. Delzell:
Thank you for your letter and attached article. I want you to know
that I can fully appreciate the circumstances that prompted you to write. I
know that the current situation in the automobile and related industries is a
difficult one that has been complicated by the energy situation and related shift
in the demand for small fuel-efficient cars. I also appreciate the fact that the
difficulties that agriculture is currently facing are also affecting your business.
Ats to the credit aspects of the problem, we have had very sharp
declines in interest rates over the past two months or so which should help. I
would also point out that it was never intended that automobile credit should be
subject to special restraint under our credit restraint program. Also, the fact
that overall credit growth is running within our guidelines has permitted us to
alter the administration of that program somewhat as outlined in the enclosed
press release. That statement should make it clear that, subject to banks' own
credit judgments, neither automobile dealer loans nor auto loans to consumers
should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that
the process of taming inflation will not be easy. But if we fail now, the
discomfort later will be all the more serious. That is why I believe that we
must get the process over with so that we can move into an economic
environment in which the automobile business and the economy in general will
prosper. I appreciate your taking the time to write and I hope
have your
understanding and support as we seek to resolve this most pressing national
problem.
Sincerely,
Enclosure
JH:RL:sep
#1807
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 27, 1980
David F. Durham
Durham Associates
681 Market Street
San Francisco, CA 94105
Dear Mr. Durham:
Your interpretation of our April 17 press release is
correct, hut since then we have issued a further statement
which I have enclosed. That latter statement amplifies the
point you are making further. As to the SBA type loan, we
have avoided using the term "exempt," but at the same time
it should be very clear from our May 22 statement that such
loans should not be subject to special restraint.
Sincerely,
Enclosure
EGC:ccm
#1823
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 27, 1980
Mr. James E. Fitzgerald
James E. Fitzgerald, Inc.
50 East 42nd Street
New York, New York 10017
Dear Mr. Fitzgerald:
Thanks for your letter and your expression of support.
I appreciate your taking time to write, and I assure you we intend
to stick with it.
Sincerely,
H:jmr
#2000
May 27, 1980
Mr. Bruce L. Gettman
Dear Mr. Gettman:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and related industries is a difficult one that has been complicatec! by the
energy situation and related shift in the demand for small fuel-efficient cars. I also
appreciate the fact that the difficulties that agriculture is currently facing are also
affecting your business.
As to the credit aspects of the problem, we have had very sharp declines in
interest ra.tes over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither automobile dealer
loans nor auto loans to consumers should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
Process of taming inflation will not he easy. But If we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic envimnment in which the automobile
business and the economy in general will prosper. I appreciate your taking the time to
write and hope I will have your understanding and support as we seek to resolve this
TT)ost pressing national pmblern.
Sincerely,
P_nclosure
311:RL:sep
#1716
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 27, 1980
Mr. Robert L. Head, President
Bob's Auto Sales & Service, Inc.
206 South Olive
Maquoketa, Iowa 52060
Dear mr. Head:
Thank you for your letter and attached letter to President Carter. I
want you to know that I can fully appreciate the circumstances that prompted
you to write. I know that the current situation in the automobile and related
industries is a difficult one that has been complicated by the energy situation
and related shift in the demand for small fuel-efficient cars. I also appreciate
the fact that the difficulties that agriculture is currently facing are also
affecting your business.
As to the credit aspects of the problem, we have had very sharp
declines in interest rates over the past two months or so which should help. I
would also point out that it was never intended that automobile credit should be
subject to special restraint under our credit restraint program. Also, the fact
that overall credit growth is running within our guidelines has permitted us to
alter the administration of that program somewhat as outlined in the enclosed
press release. That statement should make it clear that, subject to hanks' own
credit judgments, neither automobile dealer loans nor auto loans to consumers
should he subject to special restraint.
These factors vill help but they do not alter the fundamental fact that
the process of taming inflation will not he easy. But if we fail now, the
discomfort later will be all the more serious. That is why I believe that we
must get the process over with so that we can move into an economic
environment in which the automobile business and the economy in general will
prosper. I appreciate your taking the time to write and I hope 1 will have your
understanding and support as we seek to resolve this most pressing national
problem.
Sincerely,
Enclosure
JI-1:RL:sep
111686
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 27, 1980
Mr, Arthur C. Holden
Dear Mr. Holden:
I have read your recent letters concerning debt
burdens and arrangements for amortization. I don't
think it's fair to say that financial leaders are
indifferent to this situation. And, as you fully
recognize, unless and until we get inflation under
control, I don't think we can really begin to get at
this problem.
Sincerely,
EGC:ccm
#1943
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 27, 1980
Mr. Norman Jacobson
Vice President
Contempo Vans
11611 Cantara Street
North Hollywood, California 91605
Dear Mr. Jacobson:
Thank you for your letter.
you expressed.
I understand the frustration
You make some good points, though a number of the issues
you mentioned have many sides to them.
But I agree with you on the need
for greater fiscal discipline.
Sincerely,
:jmr
#1961
J
4
27,
The flonortable Edward 14. Kennedy
United States Senate
20310
Washington, D.C.
Dear itenater Kennedy
Thank you for your letter of _t.ty 15 *oncoming a
1A4ttes you received froi,e, the New Twjand ueI twAtitute
rtkiardirel the status* under the 1oardi4 conwIner credit
restraint rolulation, of certain bank Loans =Ado for energy
conservation oarposes.
The Doardis Leal Division has advise4
Burkhardt
that ;oink financing arran/ed by feel oil distributors fer the
oirot.ase and installation Of more *nem efficient heatin4
unita iu the kind of credit the beard interlded to exempt and
would not constitute "covered credit* under the Board's conor your information
sumer cre-dit restraint roulation.
nave enclosed a ooky of tYc: teal Oivision'a response to
X.UurklAardt. Almos wtten the Board modified the f2pecia1
Credit itestreint ;0,rosram on :tiy 220 it informed the Chief
;executive Officer of all coLvaercial banks that thin pro9ram
is not deuignad ti eAvrt rotitraint on enerTi- conservation
credit.
I alippraciats yc;ur interest in this matter.
let um know if I CAA 1.** of furthar assistance.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
=Aclosure
(Ltr. dtd. 5/15/80 to I:27. Durkharrit from
CO4pjt (IV-224)
bcc: mrs. Lallarai (2)
)!annion.)
May 27, 1980
Mr. Gary La.frenz
Dear Mr. Lafrenz:
Thank you for your letter and I want you to know that I can fully
appreciate the circumstances that prompted you to write. I know that the
current situation in the automobile and related industries is a difficult one that
I also realize that the
has been complicated by the energy situation.
difficulties that agriculture is currently facing are affecting your business.
As to the credit aspects of the problem, we have had very sharp
declines in interest rates over the past two months or so which should help. I
would also point out that it was never intended that automobile credit should be
subject to special restraint under our credit restraint program. Also, the fact
that overall credit growth is running within our guidelines has permitted us to
alter the administration of that program somewhat as outlined in the enclosed
press release. That statement should make it clear that, subject to banks' own
credit judgments, neither automobile dealer loans nor auto loans to consumers
should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that
the process of taming inflation will not he easy. Rut if we fail now, the
discomfort later will he all the more serious. That is why I believe that we
must get the process over with so that we can move into an economic
environment in which the automobile business and the economy in general will
prosper. I appreciate your taking the time to write and! hope I will have your
understanding and support as we seek to resolve this most pressing national
problem.
Sincerely,
Enclosure
31-1:RL:sep
111675
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
May 27, 1980
Mr. Wayne Liebe, President
Iowa Motor Company, Inc.
116 First Avenue, S.E.
Oelwein, Iowa 50662
Dear Mr. Liebe:
Thank you for your letter. I want you to know that I can fully appreciate
the
circumstances that prompted you to write. I know that the current situation
in the
automobile and related industries is a difficult one that has been complicated
by the
energy situation and related shift in the demand for small fuel-efficient cars.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point
out
that it was never intended that automobile credit should be subject to special restrain
t
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither automobile dealer
loans nor auto loans to consumers should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which the automobile
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
Enclosure
JH:RL:sep
#1689
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 27, 1980
Dear Herman!
Thanks for your note and your 1980-81
forecast.
I fully appreciate your point.
Sincerely,
Professor Herman I. Liebling
Lafayette College
Economics and Business
Ea
n Pennsylvania 18042
EGCccm
#1813
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 27, 1980
Mr. Robert B. MacDonald
President & Chief Executive Officer
State BAnk of Chittenango
Chittenango, New York 13037
Dear Bob:
I have read your letter and T can assure
you thot we are hard at work!
having your thoughts.
Sincerely,
e.-1//
EL,C:cam
01830
I appreciate
May 27, 1980
Mr. Dick Mathison
Mathison Ford
323 5th Street
Ames, Iowa 50010
Dear Mr. kilathison:
Thank you for your letter and attached letter to President Carter.
want you to know that I can fully appreciate the circumstances that prompted
you to write. I know that the current situation in the automobile and truck
industries is a difficult one that has been complicated by the energy situation,
and by difficulties in other industries.
As to the credit aspects of the problem, we have had very sharp
declines in interest rates over the past two months or so which should help. I
would also point out that it was never intended that automobile credit should be
subject to special restraint under our credit restraint program. Also, the fact
that overall credit growth is running within our guidelines has permitted us to
alter the administration of that program somewhat as outlined in the enclosed
press release. That statement should make it clear that, subject to banks' own
credit judgments, neither dealer loans nor auto loans to consumers should be
subject to special restraint.
These factors will help but they do not alter the fundamental fact that
the process of taming inflation will not be easy. But if we fail now, the
discomfort later will be all the more serious. That is why I believe that we
must get the process over with so that we can move into an economic
environment in which the auto/truck business and the economy in general will
prosper. I appreciate your taking the time to write and I hope I will have your
understanding and support as we seek to resolve this most pressing national
problem.
Sincerely,
Enclosure
JH:RL:sep
111653
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 27, 1980
Mr. S. M. McAshan, Jr.
Dear Mr. McAshan:
Thanks so much for your letter.
I
appreciate your continuing support, and I
wish others would more fully understand that
unchecked inflation is clearly the greater
problem.
Sincerely,
t:ccnt
#1846
a: 270
HonoraZle Stewart B.:
,
:clinncy
-)ouue of llowresantativaa
DX.
20515
1.41431:
Zh1you 1:for
our latter of
16 concerninu a
ItAter
urecAAved trom tAc Maw trOpand rucl Inztituto
t4iz 4tatuti3O under tha toardia consumer (=oat
rcAtralat rouUlotion, of certain banK loans aa4a for enertly
cuslrvation purposes*
The 'Ward's Legal Division has advised !-:Ar. BurkLardt
:-141k
t'4ist
financing arranged by fuvl oil distrillutorn for the
i urc4I.ana ilud. installation of acre enolNy efficient heating
uI41L4
el* kind cf. credit tha Board intended to exenv.t and
Lt
woul4
constitute coVeriod oredit*' under tht Board'ci consumvx crudit restraint regulation* Per your informatiop e I
hdav4 ouolo3o4 a coy of the Leal Division's rosIonse to
Hr. BUXkLradt* A1400 when the Board modified the SiAacial
Credit i4latraint Program 011 May 22i it informed eto Mief
Xsecutive Otficar of all co=eroial hanhit that thio -.;?rorjx4t1
is not dezijnad tv fa4cert rautraint on anoil:
'
0 conuervation
credlt.
I avpraciate the slipport that you haw coTrassed
f4a. .Vede al :;asarviti 1,011Cies, an
look foroard to workinI
uit :40%1 and ?our colloa9uez ill finding solution$ to our
natiolOu coc4.
inozilc veal:J.11=s.
Sincorely,
Zaclosure
(Ltr. dtd* 5/15/80 to ir. Burkhardt from %r. nannion.)
CO3pjt (#V-219)
bcc: tIrs, Lullardi (2)
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 27, 1980
Mr. Allan Nelson
near Mr. Nelson:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and related industries is a difficult one that has been complicated by the
energy situation and related shift in the demand for small fuel-efficient cars. I also
appreciate the fact that the difficulties that agriculture is currently facing are also
affecting your business.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither automobile dealer
loans nor auto loans to consumers should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which the automobile
business and the economy in general will prosper. I appreciate your takInq the time to
write and I hone! will have your understanding and sunport as we seek to resolve this
most pressing national problem.
Sincerely,
Enclosure
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Federal Reserve Bank of St. Louis
May 28, 1980
Ambassador Nicholas Parkinson
The Australian Embassy
1601 Aassachusetts Avenue
20036
Washington, D. C.
pear Ambassador Parkinson:
On behalf of my colleagues at the Federal Reserve
Board and in the name of the Fine Arts Program, I want to
thank your government for the gift of two Aboriginal paintings.
Over the past five years the Board has attempted
to collect and display fine examples of the arts by Americans
as well as by artists from other countries. These unique
examples of the native art of Australia are a welcome
addition to our permanent collection.
Sincerely,
bcc:
Mallardi (2)
Denkler (1)
Goley
(1)
PAVOLCKER:MAGOLEY:tbk
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Federal Reserve Bank of St. Louis
5/28/80
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 27, 1980
Mr. rric C. Petersen
Brokaw Capital Management Co., Inc.
1270 Avenue of the Pmericas
New York, New York 10020
Dear Mr. Petersen:
Thanks for your further letter and your
kind words. As to the thrust of your remarks,
I agree that "getting us to the other side" will
be difficult and will require some positive
incentives, and I appreciate having your
suggestions in that regard.
Sincerely,
EGC:ccm
#1827
May 27, 1980
Mr. William L. Price, President
Price Motors Inc.
808 South 4lonroe
Mason City, Iowa 50401
Dear Mr. Price:
Thank you for your letter. I want you to know that I can fully appreciate the
circumstances that prompted you to write. I know that the current situation in the
automobile and related industries is a difficult one that has been complicated by the
energy situation and related shift in the demand for small fuel-efficient cars. I also
appreciate the fact that the difficulties that agriculture is currently facing are also
affecting your business.
As to the credit aspects of the problem, we have had very sharp declines in
interest rates over the past two months or so which should help. I would also point out
that it was never intended that automobile credit should be subject to special restraint
under our credit restraint program. Also, the fact that overall credit growth is
running within our guidelines has permitted us to alter the administration of that
program somewhat as outlined in the enclosed press release. That statement should
make it clear that, subject to banks' own credit judgments, neither automobile dealer
loans nor auto loans to consumers should be subject to special restraint.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move Into an economic environment in which the automobile
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
Enclosure
J1-1:RL:sep
#1706
https://fraser.stlouisfed.org
ME_
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 27, 1980
Dear Bill:
Thanks for sending me the piece you
submitted to the Times.
The analysis is
right on the mark and the message needs to
be fully understood.
Sincerely,
Professor William L. Silber
Plew York University
Graduate lchool of Business Admininstration
90 Trinity Place
New York, ,Iew York 10006
EGC:ccm
#1781
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 27, 1980
Mr. Arthur J.R. Smith
President
National Planning Association
1606 New Hampshire Avenue, N.W.
Washington, D. C. 20009
Dear Arthur:
I have looked at the material you have sent, and
while I will be away most of June, I think it would be
worthwhile if we could get together when I return. I
will have my secretary set something up, but you should
know that I doubt there is anything we can do by way of
direct support.
Sincerely,
PAV:ccm
41789
May 27, 1980
Mr. Frank J. Starch
Vice President
Beaver Coaches, Inc.
20545 Murray Road
Bend, Oregon 97701
Dear Mr. Storch:
Thanks for your letter.
I understand your
agree with you on the ne
ed for greater fiscal discipliconcern and
I'm encouraged by a growin
ne. Actually
g
aw
ar
en
es
ss
of
th
is fact,
the proposed cuts in Fe
deral spending. I, for one, wias evidenced by
speak out on the need fo
r sustained discipline in our ll continue to
fiscal affairs.
Sincerely,
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
May 27, 1980
Mr. Paul D. Williams
President
Citizens Savings ane Loan Association
295 Barnett Road - P.O. Drawer A
Medford, Oregon 97501
Dear Mr. Williams:
am sorry that I have not responded to your letter
sooner, but I did want you to know that I am fully sensitive
to the concerns you have expressed. Since you have written,
of course, we have seen a very sharp decline in interest
rates -- rarticularly for snorter-term money market type
instruments. That development has relieved some of the
imwediate pressures, but the real test lies with our ability
to control inflation in such a way that the level of rates
moves permanently lower.
appreciate your taking the tine to write.
Sincerely,
#1168
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Federal Reserve Bank of St. Louis
May 27, 1980
Mr. Fd.Younghlood
Director, Government Pelations
American Motorcyclist Association
P.O. Box 141
Westerville, Ohio 43081
Dear Mr. Youngblood:
In response to your further letter,
I am sending 9ou our May 22 press release
which, I believe, clarifies matters.
Sincerely,
EGC:ccm
May 27, 1980
Ms. Joan Zumbiel
Dear Ms. Zurobiel:
Thank you for your letter concerning the one-week increase
of $5.8 billion in the money supply. Undue significance should not be
placed on weekly monetary data, and even with that increase, we are,
In fact, running a bit below our mondtary objectives for 190. I would
like to assure you that the basic policy of curbing moderate growth in
money and credit is unchanged. I did very much appreciate your warm
words of encouragement.
Sincerely,
RL:jmr
#1942
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
-
4410
•-• f
B -cell
ot*
fl
-
fQr
t":44 4.;,1:.porttamit-; t6 coient
Alleat14014 of your cionAttttlont,
tbnwaltN.tr ap)ut
walthor 7rono.ow
L44 ,I=.:fartl'4 cansimugr roxtraint mtt,,4ulatioti.
that ooatrolo be *at an 44,1wnimont ro%uircants for pUrt- WAI
IA eivatitin
4 variety of credit-fiaancod couvu!:lier itAWfA4
ttaAlt dirodt control of credit torrm e r.walthor' 14oft ie sizilax
the apoach taken toward credit rtstrnint durinc the !tore=
As Ivo Mtow s tie Ticard on :;are. 14 it;.plOtttvntctA a coa.
uhie: r4tirie criitore to
44,44.4uZ imedit ravtraint
leposit with the k'cdfaral reaerve en apiount equal to 1S .:2ercent
to-rothe of consumer eradlt, iTtc1uei_s4
et increaaos IA
cro4it Garda, ehook credit overdraft plikns um3e-w4rct t-rr,ncn,a1
loans, and secured credit where the proceoft *re aot tolod tv
finealca the collators', The revulation is 4ctisivle4 to
tat44e the inflationary orealmres to which excess criallt
ctt
izontri,Aate,
vhilfst tl,e Board entioip,ated that kany eraditor7
striAlent credit toms in re:/:ionl,,i7 to the!
vdci.;tta to ii417-0U4
L,56 Doln,rd deliherateir refrained fron
:Lea4urol: 4irectl. In the poardis view t it arprosch
*on4iderab1e incentive to restrain 5rowth ctr
*rksditor
ocrimrog t:tvi:on
or2dit4 4,,,t the mel‘oe timso the rootlet/ow
exeitor;; Eloxibility to tailor reetrainitg actions e4:71
e;e1r 4.0vn QvIt1Z4tio= and to this needs of their ou*tooers*
The z:,loci41 doe'it roceirem*ate and the voluntave
Iror4war4 callin,,; for r*Atr4!:;t on lendiivj at batto4.4 Art clearl
astralordinar 2-AtJaure.
continued for WI 1an0014
thtti wouLlt
ooral market ,toseasell, and tIlovefore
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Federal Reserve Bank of St. Louis
se
•••
The Honorable Berkley Bedell
Page Two
are certainly not a substitute for the general instruments of
monetary and fiscal policy. In recent weeks, demands for money
and credit have declined and interest rates have dropped substantially. I am hopeful that these developments, along with
progress in fighting inflation, will permit a removal of credit
control measures in the not too distant future.
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Federal Reserve Bank of St. Louis
Sincerely,
t&
Xecit
terA4
6,),V
ei/(,
(
Ate4ht&kf
/ti/
flay 23, 1980
Dear Senator Cranston:
I very ;Auch regretted to learn of
the untimely death of your son, Robin.
to
express my sympathy to you and the merabers
of your family at this time of sorrow.
Sincerely,
The Honorable Alan Cranston
United States Senate
Washincjton, D.C. 20510
JB:mrk
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
I want
c4/1
Itt>.
V31 194C
,..444C441V4t4tile.4:
T-ief•
20,S1.5
x. :oatL
:ki.,r-44.i42.
.z‹,4417
coacera regardieg recent
te .tter vQ.11.tola lalustry # AS expressed
lu 4,Aix 1tt4r of -•,44N 1. :t.t. 44-4 K: ti-jaliela that
inventor
1,
...AattlixictAltkas aud tiacalux*- 1 rvoezt firlanctal devey control
losmouta,
44.1;4-1414,treti4tl*rt, (ALA tt.141$ Soard ki
ti-ialasetiost
to 411tyiate t:Lts ,,,rweaems beinv fecod bx this progrotake
induatry.
ult;411. tt,41. ;;JutQx vohl-clo industry, s
a have taaitt taken
to swings* 444.14gUile* otopetv ;44,11ace laat suomer*1kea*
roductiese
LUV411100tits
beeL 444..liehisol largely is tho face of weak
saIsee. Lazi444
Ilgo4r1444.41a 4 igmmta per vehiele r*** until
44.14iUre vex* 4U44444nal lz containing total finance
ehervea.
Ube last several voexet the aituatiO4 has heasn
furto
4 ar aided
LAWN ahort ftro iateroot rates*
aiepresiate yens ;wok...sal to eatem;:,t Atrli oax at4 track.
lease foga tLit tto I ercent loeu ,-frowth rancleu.
tederal
Aess4ros deo* u‘t believe it a2prokriate at this
time to somift04114 4060MiA 1-013 kartiOsUr tips of liman a 11.-ccaoso
of AtintainIn ti coatrol over the ciirowtL of exodof the levertanco
tzonaistaut with th4t overall tremework of the tiAbo itw nowever4
iel Credit
trwiabit Procraca, the *card Lad aumAuraced acwommoi
el Wintn to
give ,x-lacit*d to malutalaiu a reaseuebla flow of fund
aumer *ad sooll itlittaiaazIazi this ixie3.e4es sato deal s to colaers with
axtdit Una* *I *1,5
ot iess* lf necessary thon # landing
tu IAX01,41- W*4-01444:4Jrtg4 wotJ4bavu to .4it reftee4 in
order to 'momsmadat4, iucirtu'ut-o in cotu,Au:nu azId tloesAastnia9 loaP
A sad still
u4aUttait% sisowth of all 14444
thin the 2uideli444.
SMOOS44,0 iallatioa c;44not 4;-ersiet Qiiter tia. oZcour#40
4aleoa fueled by emeessiv* ex.4,Alitax4n le 'loamy anel
the boats Utmost of Federal ;Auvrvill volig,
stak.! *I wet
telzing acoiterato growth la sglseiato zgioao.47- nr,4 crt444t.
cess
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Federal Reserve Bank of St. Louis
,
The Honorable nartin Frost
Page Two
of assuring a moderate rate of. growth in money and credit so as
to fight inflation is obviously not easy or painless. We are
now seeing signs that inflation and inflationary pressures are
easing, credit demands weakening, and interest rates are declining
from their recent levels. Ultimately this will increase consumer
income, restore purchasing power, and help revive the auto industry.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sin erely,
aida(LA-
IA Ltyie A ckto-fAzdirs74,77
zupp.
.
,
gJJ
/or Arwil
Pita'
ca;04“
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 23, 1980
Mr. Mark M. Cunlefinger, Jr.
Dear Mr. Gunlefinger:
Thank you for your letter concerning the authorization of a
discount for cash purchases. I appreciate having your suggestions.
Merchants today are free to give a cash discount up to the five
per cent maximum now permitted. The Board does support proposed
legislation that would remove this limit thereby permitting
merchants to offer unlimited discounts to encourage their customers to pay cash rather than use a credit card. I would hesitate, however, to have the government direct merchants to live
cash discounts. Still, I do share your concern about the role of
consumer credit in fueling inflation, and the Federal Reserve has
moved to limit the growth of certain types of consumer credit as
part of its Special Credit Restraint Program.
I appreciate your taking the time to write.
Sincerely,
RL:JH:tb
#1562
May 23, 1980
Mr. Frank J. Lutolf
Swiss Bank Corporation
Zurich, Switzerland
Since I will not be coming to Basle in June, I
regret that it will net.: be possible to get together.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Regards,
Paul A. Volcker
1
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
!toy 23, 1980
Tb4o tionocaule
illiirkroxmir
Chaitmea
Committee en tankirks,, z,coubinv
and UXioaa Affairs
United States Senate
washingten0 D. C. 20510
Dear Chairmen Prosaism*
Thank you ior your letter of key 20 reipardisw
2 Qur ',Iloarinits on S. 27040 a billto emend tbis Federal
aervp. Act to authorise the tionxil of Govt,
snors of tIlt
Reserve
to estalaisch stargin retilliremttnts
for transactic
in financica instruments.
loo4in*ti forwarZ to aKearin,4 *t 10100
un Thursdai, ;1*-4 29.
Sinoexelyo,
sipagky:.0„.cMcc
CO;vcd (IV-229)
hcct
Corric4aL
Mr. atruLle
Mrs. Mallardi (2)
N*7 23, 1,00
rho 4onoreble William Proxmire
Chairman
committee on Similiingo Mousing
and Urban Affairs
gaited States Sonata
Washington, D. C, 21S10
The Sostetable Jake dare
United States Senate
ftehington, 0. C. 25SIO
Dear Cbelrumm Promeire
an Seastor farms
!Mak yes for your 1 tter ocamersime the gieettes of arming
the D1OC useC.r$1 to the palate ubea it immeiders the dtflerentlal OR
the money market certificate.
I fear there hem boss a esmoSistahlA momt otesettesdas skeet
this matter reflecting the Latins* interest of sow lionve on the differential question. lhe fact is that ttve lest meetIng of the Committee essi.
*Owed, in a preliminary an4 rather apecastive ways a series of qmpo*tions
*best the mmaseumeot of Lateral& rate eatliegs in the period ahead.
While the differential question arose as part of that ilisensatos, it
was amtively in that Israer oontexty
07 mine st the time that riblike discussion
'hese was no qnostio*
of posalida simaipse in Interest rate ceilings in the SONtekt of hYPothettsal
market sosmsrbes# and the tweet of merhet midoutlin Atm.*
exposure to afters* deposit flews, and the ability of pertiftlar lestitaticee
to service 3e0Me foc heasis, end small haste's* am* agriculture, 00014
base seetilbsted to miemaderstanding and aporoulatlive rattet remotions,
Laeledise alma ametaxy policy itself. Memo pmesibie reactions clearly
could hese boa ationettle to both markets and institutional behavior.
I staserely delft that mesh a result wield have been in the panne interest.
1 ma smeared by Oehisael that, Owes the typo of eleseesisa
esetempietedi there was no dealt *hal closing the sosoctisq net the petSt the ikwermant in the lemaisso set, whisk, as I adorsteed
It, mas expressly &stoned to reougaime the kind of satiation vie fond.
4( ewes* say decision to alefie a sestiarb or any portion of meting,
met be sift Wanajority vote et the Committee members.
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Federal Reserve Bank of St. Louis
rhenium Proelaire and &mat r
arn
I toenail* thoo potato tatereat
gime toetioes and I have
act reoorvatim *boat evening 11101011014 et pactioas thereof
: LasIvaial
a aastiage w portion of a imeatimg, easeaatrattag am roacibiagmk4Meigtea
ea the differential itself# whet* the dieoeiteleas ere not lib*, to
lova an adverse ippon en the stability elf fleanoial markets et settlealar
swamp art teetitetiese, la tki* regard, witelel be Sousa he Wag
year amaaeraa to the atteatioe of the other aambora of the Oamitteso
Simweiraly#
MP,MCInas
5/2340
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
a
Zay 23
1980
Dear t;enatw: Cranklton
very mch regretted to learn of
the untitaely death of your son, nobin.
I want
to exi-Areas zy z6ynpathy to you and the Aember
of your family at this time of zorrow.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely;
Sfai A Volicile
The Honorable ;Alan Cranston
United States Senate
Washington, D.C. 20510
JB:attrk
44.2
,
The iIonera41* hillia L* 2,4a
Vnitwa States Semite
D*C*
20510
;,tt4r Senator Arm444101454
Miz Li in response to your letter of Hari* 6
QiarruL...cfrAd44.14m IrtgA one of your constituents, Ur* Stev risoardist
en Ke
14r.11c,i 0
ntQlf, the Ulu,V4 of Boulder * Uoulderf Colorado,
Utttox coacerua a credit
cittered by
The 0.4n 2riovid4x, I:4Z A 25 ;varmint interest relA
tte to
444L4u.4:.es if U-4cCQ1
the kernent ter=4 et the loan
(=tract* -,;ro *&1
ett
tate according to 11444exal i'esstrve
4t4if, tItu
ourrcut lew end snot bfi4 diacontizku44.
rhea, appears to bc 40Wit alsundoratending of what the
Pleziorve bank of Lamm City beg said rolarding the bank's
loaA vlan, The Board's staff Las diaou4sed the natter
with the
Xamsas City staff, and LAU altzo reviewed the corr
espon4enes
betweun i'4r* iscoley end Kanzaz City, Bt, the t.ize
rve
taasaa Cit; and the boardg4 atatf agree tit vAitre is Sank of
no prolAVoition &pilot a baak't cficrinu consumers a rete of
interest*
It La neceaser i havorur, .ffr t-rAl
to t4V.*
interest rebate into account in me-tinc ita Trutt. iz Lond the
ip4
diselooures* That is‘ the ;go:3X LT;vit ileke disclosures ca the
essumOlon ttost the consam4r 4U in fact visko Umiak; laaym
entfl
and theroy %ittallfy tor tbv, rohatc, Re4u14tion t alao woul
d
retiuira the beak to disclouc tc, the culaomer that late
ayslent
ot ani instalment will result ii th* forfeiture of Cte rea
ti4;i vhic4 thu cuatcear would otherwiz7s Le eatitled, so lon-Ite
aa
th4 Liank opot±liss with teuizt and any other related 4izo1
o4iimre
rruw.ents, it will be in conpl4nce with Astauletion S
in
thc4 r4aate available to itp deatowl..r*.
LO°44 this intoruAtion uill Liebeltul to you. If
tits) staff cQn
ot assistamee t4 r.
jease let es know
rijt (IV-79)
bcc: Dolorez Svitli
.nrs* aUadi (2)
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Federal Reserve Bank of St. Louis
Sgagl 1197sivi
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Federal Reserve Bank of St. Louis
May 22, 1980
The Honorable Lawton Chiles
United States Senate
Washington, D. C. 20510
Oexir $enator Chiles:
Thank you for your thoughtful latter to members of the
Depository Institutions Deregulation Committee regarding the
interest rate diff4r0Otil1 SD money morkst certificates. I want
to assure you that the CaMMittee shares your concern regarding
the availability of funds to institutions that finance housing.
We are actively swami in a broad review of the competitive
availability of tail, to depository institutions and related
questions. The inteleat rate differential is included in that
review and I approolste having the benefit of your views.
Sincerely,
Paul A. Volcker
Chairman
NB:cak
D-268
cc:
Mrs. Mallardi (P)
Mr. Winn (1)
trAWTOlor CHILES
FLORIDA
•
•
COMMITTEES,
APPROPRIATIONS
BUDGET
GOVERNMENTAL AFFAIRS
'ZICrtifets Ztafez Zenate
SPECIAL. COMMITTEE ON AGING
DEMOCRATIC STEERING COMMITTEE
May 20, 1980
The Honorable Paul Volcker
Chairman, Federal Reserve Board
Federal Reserve Building
Constitution Avenue
Washington, D. C. 20551
2
Dear Paul:
It is my understanding that later this afternoon the Depository
Institutions Deregulation Committee will meet to consider
removing the differential available to savings and loan associations on money market certificates. As you know, the recently
enacted Depository Institutions Deregulation Act recognized the
need for savings and loan associations to have time to adjust
to the changing financial marketplace and given the current
condition of the housing industry, so dependent on S&L's for
financing, I question whether now is the time to take this action.
I would urae that the Board give the utmost consideration to the
plight of the bousing and savings and loan industries when this
matter' is considered later today.
With kindest regards, I am
LAWTON CHILES
LC/cdc
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON,0 C
20551
A vot.cK
F1461 4,1
PAUL
May 22, 1980
Mr. M. K. Coslett
UNCS - USN (Ret.)
Dear Mr. Coslett:
Thank you very much for your recent letter.
the concerns that prompted you to write.
I can well understand
The issue of the U.S. Government's support of exports is a
troubling
one, The Export-Import Bank of the United States was establishe
d in 1923
in order to support U.S. exports and thereby assist in creating
employment
in this country. All major industrial exporting countries have
official
export-financing agencies, which in most cases support their
countries'
efforts at artificially low interest rates. The U.S. Export-Impo
rt Bank
does not lend money at interest rates lower than that offered
to foreign
firms that compete with the U.S. exporters, but, where possible,
matches
the rates offered by foreign competition. In the twelve month
period
ended September 30, 1979, Export-Import Bank financing
supported more than
$13 billion worth of U.S. exports and therefore considerab
le employment in
this country. It is certain that without that support
many of those export
orders would have been won by foreign manufacturers.
Our Government, however, would prefer not to have to support U.S. exports at conce
ssional
interest rates, and for many years we have pressed other
exporting nations
to abandon the practice. I might note that the general
level of interest
rates charged by official export-financing agencies
has been rising recently,
and there are signs that export financing competition
between countries,
which is carried out at a cost to taxpayers in all these
countries, may
be abating.
The increase in Federal Deposit Insurance that you
asked about was a
result of legislation passed by the Congress earlier this
year, and was in
recognition of the generally laraer deposit balances that
individuals are
maintaining nowadays. I might say, in response to your
point about your
paying for this insurance, that the Federal Deposit Insur
ance Corporation
is supported by preniums assessed on the insured insti
tutions themselves
r=thor ti- 3n fro- ta\ revenues.
T
'hi; in'orr- tion is useful and I appreciate your
writing.
Sincerely,
TEA:jmr
#1669
5r?A
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
7
22r 1900
The Nonorable rrank churczl
United States Zonate
26510
Washington # D.C.
Dear Senator Church:
As I 1,romiised ,ou in wy letter of '-: y 13, I am
vending you our 'Interim 7t-Tort** on the financial aspect!:
of the recent Runt-silver market situatlon.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
This entire matter we* an unhanpy one in which some
major financial institutioral and the financial markets generally
were tezted. It aars that the storm has 1>een weathereel without
rzan=t danage tc those .4;erketzl or inatitutions. aut,
an
think it ia clear that cmut turn our attention to an analyein
of wt cdn and should be done) in Law or regulation, to prevent
a similar occurrence in the future. That Ix. Frecisely uhat we,
in coci:,eration with other at.ieneies, are doing and I will keep
you informed as to the status of Close efforts.
Sincerely,
WalgA.Votslbc
Einclotalre
ECC:WW:pjt (Ise° #V-187)
rz. ial1ardi
boo;
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 22, 1980
lheilianorable Arlen Erdsb/
Maw of Representative*
Iftebington, D. C. 20513
Deer Mr. Erdahl:
Thank you for your letter of May 9 in which you WO*
the Depository Institutions Deregulation Committee to elimimatm
the interest rate differential on money minkst certificate*. T
want to assure you that the Committee ibexes your concern about
the availability of funds to honks that finance Lammers and smell
businesses. We are actively eelegmd in a brood review of the
competitive awl/ability of funds to depesitory institutions and
related questions. The interest rata differentia is included in
that revive and I appreciate having the benefit of your views.
With best regards,
Sincerely,
Paul A. Volcker
Chairman
ND:rak
D-20
ac: Mrs. Wallardi (2)
Mr. Winn (1)
•
SMALL BUSINESS
CONGRESSMAN ARLEN ERDAHL
1ST DISTRICT. MINNESOTA
COUNTIES:
DAKOTA
DODGE
FILLMORE
GOODHUE
HOUSTON
OLMSTED
WASHINGTON OFFICE:
1017 LONGWORTH HOuSE OFFICE BUILDING
202-225-2271
DISTRICT OFFICES:
704 MARC/VETTE BANK BUILDING
ROCHESTER. MINNESOTA
HOUSE OF REPRESENTATIVES
WASHINGTON, D.C. 20515
RICE
STEELE
WABASHA
WAS
WIN ONA
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
•
COMMITTEES:
4
•
EDUCATION AND LABOR
33 E. WENTWORTH AVENUE
WEST ST. PAUL. MINNESOTA 55118
612-725-7718
May 19, 1980
Mr. Paul A. Volcker
Chairman
Federal Reserve BOard
Room B-2046
20th and Constitution NW
Washington, D.C. 20551
St
/),
Dear Chairman Volcker:
I understand the Depository Institutions Deregulation Committee
has established the ceiling on money market certificates for banks
at 8.78% and for savings and loan institutions at 9%.
This obviously puts banking institutions at a competitive disadvantage and will have an adverse effect on the ability of banks to
supply funds te agricultural and small business establishments during
this credit crunch. I hope that the Deregulation Committee will
consider eliminating this differential.
With best regards.
Sincerely,
42
LC'
ARLEN ERDAHL
Member of Congress
AE/kjm
55901
507-288-2384
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
#1856
may 22, 1980
kr. Robert P. i:orrestal
First Vice President
Federal MOOOTVO Bank of Atlanta
Atlanta, Ceorgia
30303
Dear Bob:
Thank you for sending me copies of the reports by
Axt Kentner and Don Baer on their visits to Penmen, Colombia,
Haiti, and the Bahamas in March and April, and the latest
issue of your Baek's
bb./...mAgigajegonasic Survu. i know
thst these documents will be read here with interest.
Sincerely,
bcc:
1/4:13b
Mr. Truman
Mr. Henry
Mr. Maroni
Mrs. Mallardi (2)
Ms. K. Brown
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 22, 1980
The Honorable Jake Garn
United States Senate
Washington, D. C. 20510
Dear Senator Garn:
I want to thank you for your thoughtful letter to members
of the Depository Institutions Deregulation Committee regardieg the
interest rate differential on money market certificates. The Caw
aittee is actively engaged in a broad review of the competitive
availability of funds to depository institutions and related quasi,
time. The interest rate differential is included in that review
and I appreciate having the benefit of your views.
With bast regards,
Sincerely,
Paul A. Volcker
Chairman
NB:cak
0-.4 7 2-
cc: Mrs. Mallardi (2)
Mr. Winn (1)
'E. Jr(JAKE) GARN
UTAH
5121 DIRKSEN SENATE OFFICE BUlt-DING
TELEPHONE: 202-224-5444
JEFF M.BINGHAM
ADMINISTRATIVE ASSISTANT
•
L)
Cni1eb Zfalez Zonate
COMMITTEES:
APP ROPR IATIONS
r777,
BANKING, HOUSING AND
URBAN AFFAIRS
INTELLIGENCE
WASHINGTON. D.C. 20510
May 20, 1980
Honorable Paul A. Volcker
Chairman
Board of Governors of the
Federal Reserve System
Constitution Avenue and 20th Street, N.W.
Washington, D.C. 20551
Dear Honorable Volcker:
I am writing in regard to the meeting of the Depository Institutions
Deregulation Conuitittee -scheduled for today and to the Committee's
consideration of the question as to whether it is appropriate to
eliminate the present interest rate differential between thrift institutions and commercial banks on six-month money market certificates
which yield less than nine percent.
While I realize that you and the other members of the Committee may
only review this issue and not make any determination today, I do want
to express my concern that in looking at the issue the Committee give
consideration to tHe broad effects the interest rate differential has
not only on the financial stability of thrift institutions but also
on those served by such institutions. I am particularly concerned that
the depressed state of the housing industry could be adversely affected
by the outflow of funds from thrift institutions if the differential on
money market certificates is eliminated.
•
If the Committee does decide to revise the differential regulation, I
would suggest that it not eliminate the differential altogether but
adopt a rule which promotes competition for funds among different types
of financial institutions and ensures the continued availability of
funds for housing needs. For example, the Committee could retain the
differential but allow all depository institutions, be they thrifts or
commercial banks, which invest at least a majority of their assets in
housing loans to offer the differential on six-month money market certificates. This type of alternative should be considered to ensure that
the focus of the Committee's review of the differential issue takes into
account the original purpose of the differential.
;
Sincerely,
(
A2
C\
Q
a2(e
,.,‘ Gam
riewr
JG:dwh
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
•• •••
r:.
t0:11 .
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 22, 1930
Dear John:
Many thanks for shepherding me about
last weekend.
It was quite an experience for me to
join the Notre Dame family, and I particularly
appr._ciate your welcome.
Sincerely,
The Honorable John L. Gilligan
Thomas J. White Professor of Law
University of Notre Dame
Notre Dame, Indiana 46556
PAV:ccm
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 22, 1880
Dear Father Ted:
Just a note to say that my first visit to Notre Dame
was a great personal pleasure.
After the gloom that pervaded the "after dinner"
discussion, I couldn't help but be bouyed by the sight
of all those fine young men and women about to enter
the real world. Somehow, it didn't fully square with the
gloom, and I hope the Sundy impression turns out more valid
than the Saturday.
Your hospitality was wonderful, and I take great pride
in being a member of the Tiotre Dame family.
Sincerely,
The Reverend Theodore M. Hesburgh
President
University of Notre Dame
Notre Dame, Indiana 46556
PAV:ccm
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 22, 1980
Mr. Wyman Kurtz
Federal Reserve Bank of Chicago
239 South LaSalle Street
Chicago, Illinois 60690
Dear Mr. Kurtz:
Just a note to tell you how much I
appreciated your driving me from South
Bend, Indiana to Chicago in order to catch
my plane to Washington last Sunday.
Sincerely,
CCM
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Lay 22,
rise
list 16morab1e Thomas A. Luken
amse Af Representatives
Washington, D. C. 20515
Door We. taken:
TIN* you for your letter of day 12 in which yom appers
your opposition to a proposal by the Depository Inst
itution* 1144.gulation Committee that would prohibit the use of prem
iums by depository institution's to attract deposits. 1 will bring your
view to
the attention of
colleagues on the Committee, and I assure you
they will be Aim our careful consideration.
With best regards,
Sincerely,
Paul A. Volcker
Chairman
NB:eak
D-271
CC:
Mallardi (2)
Mr. Winn (1)
Mrs.
THOr't.P.S A. LUKEN
COMM ITTEIES:
ZD DisTRicy, OHIO
SMALL BUSINESS
WASHII 1 GTON OFFICE:
Room 1131
LONGWORTH HOUSE OFrICC E3UILDING
WA YrIINGTON, DC. 20515
Congre5 of tbe Zinitcb ftatcc
(202) 225-2216
Potifq of ileprefSentatibefS
CHAIRMAN, SUBCOMMITTEE ON
ENERGY, ENVIRONMENT, SAFETY
AND RESEARCH
INTERSTATE AND FOREIGN
COM MERCE
SUBCOMMITTEE ON HEALTH
DISTRICT OFFICES:
3409 FrarmAL OFFICE BUILDING
CINCINNATI. OHIO
r•-*
Ulatbington, 73.e. 20315
SUBCOMMITTEE ON COMMUNICATIONS
SUBCOMMITTEE ON
CONSUMER PROTECTION AND FINANCE
45202
(513) 684-2723
SELECT COMMITTEE ON AGING
MOBILE OFFICE
May 12, 1980
SUBCOMMITTEE ON
HEALTH AND LONG TERM CARE
Hon. Paul A. Volcker, Chairman
Depository Institutions
Deregulation Committee
Constitution Avenue and 20th Street, N.W.
Washington, D.C. 20551
r;ow
Dear Chairman Volcker:
I am opposed to the recent action of the Depository Institutions DerOulation
Committee which would prohibit premiums or gifts given by an institution
upon the opening of a new account or an addition to an existing account.
I am requesting that this letter be included in the hearing record on
this proposed rule.
The Congress passed the Depository Institutions Deregulation and Monetary
Control Act of 1980 to deregulate interest rate ceilings. By taking that
action the Congress was creating an incentive for individuals to save.
This in turn- would provide additional funds to banks and other savings
institutions to invest in our economy.
I fail to see where this action by the committee meets either of these
criteria. I urge the committee to abandon this rulemaking. This is
another case of the federal government over-regulating. Just as the
Congress moved to stop over-regulation by the Federal Trade Commission,
so the Congress would, in my opinion, stop this action if we have the
opportunity. At a time when the nation and the Congress has moved to
reduce federal rules and regulations, this new committee has chosen to
increase restrictive federal regulations.
The offering of gifts and premiums may be one of the few incentives our
current system gives to individuals to save. At the very least it is a
means to encourage competition among our different banking institutions
The action of your committee runs counter to the desires of Congress to
encourage savings by our citizens and the long held principle that competition
is at the bedrock of our economy.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
THIS STATIONERY PRINTED ON PAPER MADE WITH RECYCLED FIBERS
•r7•4••••
•
air
•
Hon. Paul A. Volcker
May 12, 1980
Page 2
I give no credence to the claims by some of the member institutions on
your committee that the offering of gifts and premiums take too much time
from the real work of federal bank inspectors. It would seem that an inspection
of a bank's "books" would take the same amount of time with or without
the offering of these gifts and premiums.
With kind regards, I am
Sincerely
TF1AS A. LUKEN
Member of Congress
TAL/sj
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Nib
•
or!
K°r.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 22, 1980
The Honorable Howard M. Metzenbaum
United States Senate
Washington, D. C. 20510
Dear Senator Metz...NNW
I appreciate having the views that you communicated to
the usibers of the Depository Institutions Deregulation Committee
concerning our proposal to prohibit the use of premiums by depository institutions. A major concern underlying the proposal relates
to the serious supervisory problems that we have encountered in
administering the current regulations. In addition, many depository institutions have found premiums to be increasiegly costly,
both in terms of direct expenditures and staff time. There are,
of course, arguments on the other side including the competitive
aspects that you cite in your letter. I want to assure you that
the DIDC will weigh all of these considerations very carefully
before making a final decision on this issue.
I will be happy to discuss with my colleagues on the DIDC
your recommendations to extend the period for comments and to hold
public haulage an the proposal. With best regards,
Sincerely,
Paul A. Volcker
Chairman
NB:cak
D-02-13
cc:
Mrs. Mallardi (2)
Mr. Winn (1)
EDMUND S. MUM!, MAINE. CHAIRMAN
;MEN G dolAGNUSON, WASH.
ERNEST F. HOLLINGS, S.C.
LAWTON CHILES, FLA.
JosErm R. BIDEN, JR.. DEL
J. BENNETT JOHNSTON, LA.
JIM SASSER, TENN.
GARY HART, COLO.
HOWARD M. METZENBAUM. OHIO
DONALD W. RIEGLE, JR.. MICH.
DANIEL PATRICK MOYNIHAN, N.Y.
J. JAMES EXON, NEBR.
•
11110
HENRY BELLMON. OKLA.
PETE V. DOMENIC!. N. 14
BOB PACK WOOD. OREG.
WILLIAM L. ARMSTRONG. COLO.
NANCY LANDON KASSFEAUM, KANS.
RUDY BOSCHWITZ. MINN.
ORRIN G. HATCH, UTAH
LARRY PRESSLER, S. OAK.
?-1Crtifeb Zfatez Zenate
COMMITTEE ON THE BUDGET
WASHINGTON, D.C. 20510
JOHN T. MC EVOY. STAFF DIRECTOR
ROBERT S. BOYD, MINORITY STAFF DIRECTOR
May 16, 1980
Chairman Paul A. Volcker
Federal Reserve Board
20th and Constitution Avenue, N.W.
Washington, D.C. 20551
,;01*
Dear Chairman Volcker:
I am most disappointed that at the first meeting of
the Depository Institutions Deregulation Committee you
proposed a regulation to bar banks and thrift institutions
from offering gifts and premiums to attract depositors.
It is ironic that one of the first actions of a
Deregulation Committee, established to permit freer competition among Depository institutions, adds an additional
regulatory provision to further burden small, neighborhood based competitive savings institutions.
The proposed regulation is not in keeping with the
spirit of the "Dgpository Institutions Deregulation and
Monetary'Control'Act of 1980." In addition, it does not
seem likely that such a draconian prohibition against a
popular and proven competitive practice will sOlve the
general problem of inventory assessment.
A proposal this severe deserves more than a 30 day
public comment period. I would urge you and the Commission
to conduct public hearings in each Federal Reserve region,
and allow a period for comment after the hearing record has
been closed and printed.
I would appreciate your views on the questions I have
raised as to the appropriateness of this regulatory action,
and on my request for public hearings.
Thank you for your consideration.
oward M. !\etzenbaum
United States Senator
CC:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Irvine Sprague
Jay Janis
Lawrence Connell
G. William Miller
POW
•
:'ay 22, 1980
T4e iitdaorntle .arren J. tiitchell
Chaixman
Subcommittee on Dou7estic icouetsitry
Policy
Comwittes on Banking, Pinanee and
Urban Affairs
Roue* of Pepresentatives
Wasting-ton, D.C.
20515
LeL'l.r
Chairman A.teltell
As we dincus-c;ed at tho hearinfj on thgt redera/ reserve
odernization ct," I am encloaing our "Interin Perort' on th,i,?.
financial aspects of t77,c1 recent thant-oilver nartet oituation.
Thi3 entire matter uss an unhappy one in k*hich zoru
;-Aar financial institutionz and the financial zartctr
,aere tested. It appaara that the storm !Ina heart veatbcNredt without
41
vemanent danage to those zarketa or instituticn. nut, I
think It ie cicar that we vAist turf.; our attention to an Aaa1ysi2
of %.hat can and a,
:zeuld be done, in 14 or regulation, to vroveut
GiP.ilar occurrence in the future. That is Irecii-3011:what wOt
ir4 peoveration i4.th other wjencies, are doing an
‘4.111 keep
inforaled at5 to the etatua of those efforts.
172incerely,
S/Paul A. Vold&
nriclosure
EGC.DOM.pjt
bcc
I
na11ardi(2)4.'
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
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i-.chedule under whic the agency prereses to act, to ter with
any other reaconelAy olAainaLle infornation. 'Me Select Cottt
mittoo may undertake an investigation of any suet *coney rule
on its own initiative, at the request of any not4;er or 9xoup
of members ,ar at the rek-zueat Qf am, standing comittee hevir
substantial jurisdiction over tLe subject natter. The Select
Committee may then report to the House and, if appropriate, reccx
mend a joint rezolution tIlat would repeal or prevent the promul
qation of CoAt rule, 1:,revont zuc.1 rule iron tatiro effect; or
peotkone, susiland or toril.*;atc such rule z effectivenevs.
Althou9h
recoelniaes the serWuvness of tLe
proLlas addressed, we Law, 5icriow reservations al-out the rrac
ticality of such a Coagroznicaul/ review procedure. It is noted
fro your recort that over 7,500 rules and regUlations were
;ro-4ullated in 1979. It appears that the han4tixc. of such a
vclurae of reuletiona would uwativ the &Antis* of any single
cc;risrossional comAttee.
Tha lloard suggests therefore, that serious consileratier. be siven to impramment in overstiqht procedures by the
various committees havirs. le.2iiilative jurisdiction over the
re-lulatory agencies* Aidod by the reforNs in re:141story rrocedures
that have boon adopted ca are cerrcntly bein5 considered by the
Congress. For example, Title VIII of the neository Institutions
!Ieregulation and Monetar; Control 41-..ct of 196r41, (P.L. 96-221)
adopted a 'Financial :-!eculation Sim2lificatiou 7-ct of 19804'
itiong the requirements tr.posod are directiona to avoid conflicts;
'111-p1iostiona and inconsistencies between reciulationa iesued by
te redcral Financial
Agencies ana to obtain tLmely
1..artioLpation and coment by other Federal agencies, a -,T.roprtate
gtate and local Agencies; and financial institutions and consumers.
In addition, regulatory ref.= bills such as B.R. 3263, S. 262 and
3, 2147 now under active consideration by the Commess would
furnish talc% nova backviround analysis of regulations and more
information about overlaps and duplication in rederal requiatiems,
with thig now body of infomation. Congreasional oversilht could
made =re effective
I am kleased to have bad tho o:-ortunity to submit
these co=ents and hoos the7y will tie el* u1 in the further
cousideration of ?our report.
Sino*rely e
c..::;Dh7W:pit (IV-177)
Icc
Er, HeLoill
nm,
11rci (2)%,,0-
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
1041A. Vokkai
%ay 22, 118C
The Eonorable Daniel 7. :::oynihan
United State Senate
20510
WLircjtcn,L.C.
1-_;aar
our discussion at lunch yezterIns 7 am
enclofiini our Praterim tsport' on the financial aspectr• of the
recent Hunt-silver market *ituation.
This entire matter was an unhappy one in Olich someN
major financial institutions an the financial markets 7onerally
were tested. It appears that the storm hae been weatheree vIthout
any remanent darAl to those marts or inAtitutiona. tutr I
think it is clear that we must turn our attontion to an analymie
of what can and 41ould to done, in law or riewulati=, to rrevent
a similar occurrence in the futnr.
Sincere172,
tgaillitivpme!
L'nolosuro
EcC;DJW;pjt
Loc. 1trs. a1lardi
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Federal Reserve Bank of St. Louis
(2)
DI
!
22, 1g80
The tinoraLle aenjarin S. rosental
Chairman
•,1-covartittect on Commerca, „onzmmer
and Monetary Affairs
Co=littee on Covernment
-orativn2
riou=o of ;c1-resentativeu
wazain,3ton? p.C.20515
Chairman no4ione1:,
IL lL.;Lt of your uboomnitte-ote rtcent hearinci on
7unt-silver situation, I thou 'ht
you would bo interegted
in havins the enclosed "'Interim noport on the financial aspects
o: that cituations I think the report will help clnrify tome
of thu factual issues that *roue in your hearings.
.t.zt the 'Interim alloport' indicates? we have now turned
muol; of our attention to the more bowie clueatiose as to how the
whole aituation aro4o in the first inmtance and What sight be
done to :=revent a aimilar problen in the future
We viiikeep
infomed.
%-u
cincerely?
SLP_aul A. Volcker
Z.cloaure
EGC;WW;prjt
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Federal Reserve Bank of St. Louis
Mallardi (2) /P"
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Federal Reserve Bank of St. Louis
May 22, 1900
The Honorable Dnnald W. Stewart
United States Senate
Washington, D. C. 20510
Dear Senator Steuart:
I want to thank you for the letter of May 16 in which you
and Senator Proxmire appeassed your opposition to a proposal by the
ulation Committee that would prohibit
Depository Instituti
the WOG of premiums by depository institutioms to attract deposits.
I will bring your view to the attention of ay colleagues on the
Committee, and I assure you they will be given our careful consideration.
With best regards,
Sincerely,
Paul A. Volcker
Chairman
NB:cak
D-270
cc: Mrs. Mallardi (2)
Mr. Winn (1)
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Federal Reserve Bank of St. Louis
May 22, 1980
The Honorable William Proxmire
Chairman
Committee on Banking, Housing, and
Urban Affairs
United States Senate
Washington, D. C. 20510
Dear Chairman Proxmire:
I want to thank you for the letter of Hay 16 in which you
and Senator Stewart expressed your opposition to a prepssel by the
Depository Institutieee Deregulation COMMittee that woad prohibit
the use of premiums by depository institutions to attsect deposits.
I will bring your viers to the attention of my colleesses on the
Committee, and I assure you they will be given our careful consideration.
With best regards,
Sincerely.
Paul A. Volcker
Chairman
NB:cak
D-270
cc:
Mrs. Mallardi (2)
Mr. Winn (1)
WILLIAM PPIOXMIRE. WIS., CHAIRMAN
HARRISON A. WILLIAMS. JR., NJ.
.
ALAN CRANSTON, CAM,
ADLAI E. STEVENSON. ILL
ROBERT MORGAN. N.C.
DONALD W. RIEGLE, JR., MICH.
PAUL S. SARRANES, MD,
DONALD W. STEWART, ALA.
PAUL E. TSONCLAS, MASS.
JAKE CIARN, UTAH
JOHN TOWER, TEX,
JOHN HEINZ, PA.
WILLIAM L. ARMSTRONG, COLD.
NANCY LANDON KASSESAUM, KANS.
RICHARD 0. LUGAR. ND.
'ZICnifeti Ztatez -.Senate
t'
COMMITTEE ON BANKING, HOUSING. AND
URBAN AFFAIRS
KENNETH A. MC LEAN. STAFF DIRECTOR
M. DANNY WALL, MINORITY STAFF DIRECTOR
MARY FRANCIS DE LA PAVA, CHIEF CLERK
WASHINGTON. D.C.
20510
Gif=
V1:04•714
May 16, 1980
The Honorable Paul Volcker
Chairman
Federal Reserve Board
20th and Constitution Avenue, N.W.
Washington, D.C.
20551
Dear Mr. Chairman:
The Depository Institutions Deregulation Committee
recently proposed a regulation which would effectively
prohibit banks and thrift institutions from offering gifts
and premiums to attract deposits.
We oppose any such regulation and we find it somewhat
disturbing that one of the first actions of the Deregulation
Committee would be to further restrict a financial institution's range of legal activities.
The Linancial industry in this country took a giant
step toward a_..more competitive market structure with the
passage. of the Depository Institutions Deregulation and
Monetary Control Act of 1980. We think this legislation
will prove to be of tremendous benefit to both the industry
and the customers it serves in the coming years. However,
the action you have recently taken with regard to the prohibition on promotional gifts is a step backward from the
earlier gains we have made.
pg4,i4t
:•
As long as Regulation Q remains on the books, and financial institutions are precluded from offering competitive
rates of interest to the saver, institutions should not be
prohibited from using merchandise as a means to attract deposits.
We would urge the DIDC to carry out the deregulatory
spirit of P.L. 96-221 by not approving this prohibition on
bank gifts. If the members of the DIDC are concerned about
the difficulty of enforcing the present regulations on gifts,
most of those concerns could be alleviated by revising the
regulations to cover all costs as suggested by the DIDC staff
rather than by prohibiting gifts altogether.
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Federal Reserve Bank of St. Louis
Sincerely,
\.•
•
DONALD W STEWART
/
N
WILLIAM- ROXMIRE
Chairman
-
hay 22,
1980
Mr. James Q. Whitaker, M.D.
Dear Dr. Whitaker:
Your letter of May 2, expresses concern about week-to-week
These revisions,
revisions in the published monetary aggregates data.
which are generally minor in magnitude, essentially reflect changes in the
underlying deposit data reported to the Federal Reserve.
A variety of sources are used to calculate the various components
of the monetary aggregates. Each week, deposit liabilities are reported to
the Federal Reserve by approximately 5,400 commercial banks that are members of the Federal Reserve and a sample of nonmember banks. In addition,
other items of information must be obtained from other institutions, including the U.S. Treasury, savings institutions, and certain foreign related banking institutions. The data are carefully checked prior to publication, but revisions do occur later, largely in consequence of changes
For the most
in the basic figures suppled by individual institutions.
part, however, the subsequent revisions in reported data tend to be of a
relatively small magnitude in proportion to the levels of the monetary
aggregates.
I might add that the Federal Reserve has emphasized continually
that first-published monetary aggregates data should be regarded as preliminary and will be subsequently revised as new information is received.
Indeed, each Federal Reserve statistical release of monetary aggregates
data indicates prominently that "special caution should be taken in interpreting week-to-week changes in money supply data, which are often highly
volatile and subject to revision in subsequent weeks..."
I trust these comments have served to provide you with a better
understanding of the monetary aggregates data.
60
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Federal Reserve Bank of St. Louis
Sincerely,
Mr. Leo 3loch
Dear Mr. Bloch:
Thank you for your note and attached letter on wage and price controls. I
can understand the intuitive appeal of these measures in view of the high and
persistent inflation our nation has heen experiencing.
However, previous experience with such controls irlicates, at best, a
limited degree of success and, at worst, that they may cause more prohlems than they
solve. Furthermore, our experience has been that when controls are lifted, the "catch
up" increases of prices and wages that follow generally offset the prior slowing during
the control period.
Whatever we might think of wage and price controls, they are no substitute
for disciplined fiscal and monetary actions. The actions taken by the President on
.'arch R with respect to fiscal and energy policies and those further actions by the
Federal Reserve to restrain the growth of credit are among the necessary steps that
must he taken to bring inflation under control.
This process is not quick, nor easy, nor painless. Rut if we fail now, the
discomfort and difficulties later will be all the more serious. I appreciate your taking
the time to write and I hope I will have your understanding and support as we seek to
resolve this most pressing and serious national problem.
Sincerely,
:RL:sen
#1617
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
May 21, 1980
Mr. Glen Campbell
Dear Mr. Campbell:
Thank you for your letter on monetary policy and the
difficulties being experienced by many would-be home buyers. I
can fully understand the concerns you expressed.
The problems we are facing, including high interest
rates, are very much wrapped up in the persistent inflation we
are experiencing. This inflation will be brought under control
only if we maintain moderate, non-inflationary growth of money
and credit, and we also need help in the form of restraint in government spending.
I am very much encouraged by the recent declines in
interest rates, including mortgage rates. These developments reflect a letup of the extreme credit market pressures that have
contributed to the difficulties you described.
I appreciate your taking the time to write.
Sincerely,
thi:Jrg
i1586
May 21, 1960
tqr. Spencer F. Eccles
?resident and Chief operatine
Officer
Pirct Security Corporation
and First Security Company
P. O. Aox 30006
Salt Lake City, Utah 34125
”earr.
cc1es:
Tt is my ,
-, leasnre to welcome 7ou to rederal Reserv
e System
service as a Director of the Salt
Lake City Branch of the Federal Reserve
Bank of San Francisco. The System in
fortunate to be able to draw upon
the resources of such public-spirited
nersons as yourself.
qe vill be gendinq vou the Federal
Reserve Bulletin on a onthly
basis. This periodical provides curren
t information about System policies
and financial developments. The Federal
Reeerve Bank of an Francisco will
furnish you with additional material con
cerning the System.
I hope that your associs.tion with the redera
l Reserve System
will he an enjoyable one for you.
ncerelY,
cc:
bcc:
Mr. Balles
Mr. Holman
Governor Coldwell
JMD:lmr
5/8/80
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
May 21, 1980
Mr. William A. Gaster
Dear Mr. Gaster:
Thank you for your letter concerning the
Lxport-Import Bank loan to Mr. Rupert Murdoch. This
loan, of course, was to an Australian airline company
of which Mr. Murdoch is part owner, and is intended
to finance the export sales of U. S. aircraft. It is
not within my province to comment on the wisdom of
using subsidized credit to promote exports, but this
credit program has been Congressionally legislated,
and, as I understand it, the loan to Mr. Murdoch fell
within that program.
I appreciate your taking the time to write.
Sincerely,
jrg
ft.1 313
May 21, 1930
Mr. Jay Voelker Groves
Dear Mr. Groves:
Thanks for your letter and your thoughts on inflation and the
diseconomies of scale. You make some very thoughtful points, which we
will keep in mind.
I might note that our monetary policy is directed towards
maintaining moderate, non-inflationary growth in money and credit, since
excessive inflation cannot persist over time unless fueled by excessive
money growth. We are encouraged too bv signs of a decided easing of the
extreme credit market pressures of the past few months.
I appreciate, very much, your taking the time to write.
Sincerely,
(sep
#1328
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
t1ay 21, 1980
W. John F. 4O1
President
First northern lank
l'S N. First Street
6ox 547
Dixon, CA g362n
tlear Hr. Remelt
Thank you tor your letter of April 7g cozmentinz on the pro..
visions of the Monetary Control Act that effect flanks that withdrew
from the System after July 1, 1V79.
As you reau4nise, the noard s s flexibility indeed is limited.
In enacting the Monetary Control Act, Comsress drew * line defining
which foreer member Wulks wouli he treated as nonmember banks and
which au member banks for nurpoles of the transition provision* of the
At
The Moard most implement that Congressional policy.
'..)T1 April 23, the Zoartl issuee an interpretive rftulation, a
copy of which is attacheil, establishing the reserve requir4ents for
former *ember tanks. rats resonation peroits your bank to deley
holding the reserveN required of a member bank until August n,
This delay in implementing the reserve requirement for former wAmber
hanks will provirie tthe for adartstion. %ginning Septenher 4, 1110,
reserve requ1renents for former .3e*iher hank* will Oise* down Gver a
period of four years to the level established toy the Aet for 011 hAnVs.
Le,;islation is produeed by a process of comrrowase and
revision that Nakao it difficult for industry Eroups and the vrebn to
disseminate cooplete ft/Corr/at/on on pen4ing legislation throur,hout the
country in a timely fashloo. tleverteless, it is unfortunate tt!at you
did not learn of the provisions of the 4onetary Control Act affecting
your b3r0e, while the legislation wan in the dreftin%., stasot. Your view
would no doubt have been influential with your representatives in the
congress. I am sympathetic to your torments, and the Federal Reserve
will do it hest to ensure that you are kept fully informed with
respect to OUr actions to izplement the Act.
ir. John f. !Tama'
Page 2
*a sure I *peak Cor the Federal Reserve 13ank of San
Francisco fAs well ee the Board In looking forward to reMtah1ish
in te relationehip the System has had with your bank over the
decades. Please elo not hesitate to contact the Reserve %tut:: for
any help the Systev can provide in i'vplementinc; the new reserve
requirements.
Sincerely,
la‘3,1
;
6
/
4
1
https://fraser.stlouisfed.org
a.
Federal Reserve Bank of St. Louis
A.
Vole
ker
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Federal Reserve Bank of St. Louis
"Ay 21
1
The honorable Cecil Reftel
Fouse of Representatives
lashinoton, D. C. 20515
Dear Mr. Feftel
This is in response to your letter of April 29,
z,nd also to your letters to me7-ibers of the roard's st;Iff,
requestinr tho rf!,ar to consider qrantinr' waivers of reserve
requirements to the rialk of T-'onolulu.
As you are aware, --tate chnrtered, nonrorTher deposiw.ii on
1,upines in
tory institutions that were eni-lacind in :
Auust 1, 1978, will be eNerTt from Federal regervP rc7uirements
under the recently enacte,1 !',Ionetary Control Act of 1980 (Title
of P.L. 96-221) until January 1, 1936, et which time they will
commence a phase-in of reserve requirements over an eight yoar
period. Merher lAnks, regardless of location, incluOinq national
banks and banks that withdraw from membershir, 'however, will
he subject to a four-year phsse-down to the new levels of reserve reguirenerts provided in the Monetary Control Acts lictu
state that those provisinrs will place the Park of Ponolulu
at a competitive OisNdvantarye to nonreptbors and subject the
vere hardship.
bank to
The Feeleral Reserve recoc!nizes that the disparate
trentnent of member 1Ainks tind nonmember depository instittitions
in lawaii under t1.-c Monetary Control Act may place such menber
bank r At a coTsetitive disa4vantae. ”owever, the sg4cerd doc.s
not ar,rtiar to have the flexibility un4ler thc legislAtion tc
grant tte tyre of relief retillesteel. Coriseqntly, it nprears
that the rermirer>ents for r-erlber honks cotld only be ct.,=Inci0
through Cflriresmional action.
,9incerely,
kWA.Vo1c*
bcc
(#V-192)
Messrs. Wallace, 7f,)tersen,
Schwartz, Pilecki
Mrs. Mallardi
May 21, 1980
Dear dr. heiss:
Thank you for your letter and clipping concerning your proposal for a $500 tax exclusion for interest
income. Tax legislation is not the direct responsibility
of the Federal Reserve, but I certainly agree with you that
It is vital to raise the saving rate in this country. You
may know that Congress has voted to permit a limited interest
exclusion, although not as large as the amount you suggest.
I appreciate your taking the time to write to
me.
Sincerely,
Mr. Frederick P. Heiss
Jh:RL/tn
1701
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Federal Reserve Bank of St. Louis
may 21, 1980
Honorable Daniel K. Inouye
United states Senate
'
hinc.ton, D. C. 20510
Dear Senstor Inouye%
Tii ii in resronse to yorT letters of May 1 nnd
May 5 reguestin the ;7 0ard to consider crrantinr: waivers of
reserve requirements to nstional banks locatel in the tate
of !iawaii.
As you are aware, rtate chartered, nonmember cif:!posiwaii on
tory institutions that were encmod in business in
Alulust 1, 1978, will 12,c elt.mpt from Federal rmservo requirements under tl-e recently enacted Monetary Control Act of 19SO
(Title I of P.L. 96-221) until January 1, 1986, rtt which time
they will commence a phase-in of reserve requireents over an
eV-Mt-year period. Member banks, regardless of location, including national banks and banks that withdraw from nembership,
however, will be subject to a four-year phase-Llown to ti-.e new
levels of reserve remlirements provided in the Mrynetary Control
Act. You state that these provisions will place national banks
at a competitive disadvantage to nonmerbrs and subin
ject such banks to severe hnrdship.
The Ftz!deral Reserve recognizes that the disparate
treatnent of member banks and nonmember depository institu, Control Act may place such
tions in Nawaii under the nen(Aari,
member banks at a conpetitive disadvantacc. However, the
Pciard does not appear to have the flexibility under the legislation to .,r.rant the type of relief requested. Conveguently,
it appearg that the requirements for rember banks could only
be chanced. through Concfressional action.
!rlincerel'7,
251 & A281)
PP:WITTgtvcd
hoc: Mr. w 1 ace
Mr. Petersen
Mr. Schwartz
Mr. Pilecki
Mrs. Mallardi
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Federal Reserve Bank of St. Louis
S/Paul A. Volcker
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Federal Reserve Bank of St. Louis
May 21, 1980
Mr. Curt Kanow
Dear Mr. Kanow:
Thanks for your letter and your continued support
in the fight against inflation.
It is reassuring for me
to receive words of encouragement such as yours.
Sincerely,
JH:sep
#1850
.•••
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Federal Reserve Bank of St. Louis
May 21, 1980
Mr. Sidney David Kingston
Dear Mr. Kingston:
Thank you for your letter concerning your proposals for a prohibition on ,eemature withdrawals of
money market certificates and the general elimination
of high interest savings certificates. While I appreciate the concern that prompted you to write, I can
assure you that the Federal Reserve and other agencies,
such as the FDIC, have the means necessary to prevent
any panic (which incidentally I do not foresee) due to
deposit withdrawals.
I appreciate your taking the time to write.
Sincerely,
rg
#1202
May 21, 1980
Mr. Everton A. Lloyd
Dear Mr. Lloyd:
Thank you for your further letter. I can fully appreciate your
continued concern about the present situation in the economy.
There are now signs of a decided easing of the extreme credit
market pressures that we have experienced in the past few months. The
demand for credit has lessened and market interest rates have moved
lower. Reflecting these developments, the Federal Reserve has eliminated
the 3 percentage point surcharge in the discount rate that had been
established for certain classes of banks. And, mortgage rates have fallen
as reflected in the lowering by the Federal housing Administration of its
maximum mortgage rate. Also, we can begin to look forward to the dismantling of the direct credit measures we have adopted, although we should
not move prematurely. I am hopeful, for these reasons, that the economic
situation you describe will start to improve.
In the meantime, the Federal Reserve has taken steps to help
ensure that small banks that are unr liquidity pressures will have added
funds at their disposal to help meet the credit needs of their local communities. And, we have said that where banks are essentially confining
their loan expansion to prinrity areas--including homebuilding and small
business--that such banks are justified in exceeding the 9 percent limit
on loan growth contained in our Special Credit Restraint Program. We will,
of course, continue to monitor developments in all sectors in the economy
closely.
I appreciate your again taking the time to write.
Sincerely,
JH.jrg
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
May 211 1980
Mr. Elvis L. Mason
Chairman of the Roard
First National flank in Dallas
Dallas, Texas 75283
Dear Mr. Mason:
I have carefully read, your letter of May 13 concerning
the proposed credit facility to the Placid Oil Company, and
I am satisfied that the loan a5n7,147enrt ;!rvi related contracts
proviOe satisfactory safeguards along the lines of our conversation against new speculation by the Funts and their
interests, arIrTlIrst other utilization of the proceeds
in a manner inconsistent with the Board's Special Credit
Restraint Procx, 1 ain also satisfied that appropriate
arrangements have been made for the orderly management
and disposition of remaining silver and silver positions
of the Hunts and their interests. Tn line with your letter,
I fully expect that you will make available to us, on a
regular basis, reports regarding the status of the credit,
the disposition of assets, and other information needed to
assure us that the intent and purposes of the arrangements
are being met.
As you know from our discussions, the Federal Reserve's
interest in the credit facility has arisen in the context of
your inquiry as to the manner in which we view the transaction
in the context of our credit restraint program. The business
and credit judgment remain entirely those of the parties to
the transaction and the Federal Reserve has not expressed any
view or judgment in that regard.
Sincerely,
FGC:ccm
f1S19
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Federal Reserve Bank of St. Louis
a
Mey 21, 19SC
71-.0 4cmorable :17Nark
Mzo.tiv,Anac,t
TiLited 17tates Tenet*
M,ngtoll, D. C, 70510
nemr !"rnator 9atsunalaApril 30
This is in ntsponse to your letter
erefluestir the cYcar6 to consior a waiver of reserve recuir
nents for the Bank of c';'nolulu.
Att you are aware, State chtfrtered, nonmomber deposior
tory institutions thet were engaged in business ill awaii
eAliquot 1, 19781 will be exempt from. Fe0er1 reserve requir
cf 1980
ments under the recently enacted Monetary Control Act
(Title I of PL* 96-221) until January 1, 1T16, at which time
over an
they will commence a phase-in of reserve requirements
ineight-yc,ar period., Meer benke‘ recareless of location,
,ralqp,
cludinc national banks and banks that withdraw frow merb47
the new
however, will be subject to a four-year phase-down to
Cf.,rtrol
levels of reserve reqvireents provided in. tht! Monetary
Bank of
Act. You state that these provisionr will place the
sub
7)onolu1u at a competitive disadvantage to nomembers and
lect suoll bantrx to sever+a hardship.
The 7.L'eleral ftest?rv recollnizen thect 'Ow diararate
institl:
treatment of ment-er banks fIrs' nonrember depository
rlacs
ticns i 'il under th.t?. 4onetary Control Act malt
oopetitive diseOvantaepc. 0oweve,r
such member banks at
the Roard does not appear to have the flexibility under
the legislation to !1:*arit the typo of relier requeAted.
Consequently, it eppears that the req,uirevients for 7tel-lber
.
banks coula only be, cbarc;o;t throua Con,-fressional action
.4ncerely,
(4V-2(8)
bee.
nr.
Mr. Petersen
Mr. Schwartz
Mr. riteci,i
Mrs. Msllarcli (2) *mow'
steagt A. Voickgt
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Federal Reserve Bank of St. Louis
May 21, 1980
Mr. George B. Purdon, Jr.
Dear Mr. Purdon:
Thank you for your letter and your suggestions. I understand your concerns and apparent frustrations with the situation in
the economy. To me it seems that many of these difficulties are, one
way or another, wrapped up in the problem of inflation our nation has
been experiencing. The high interest rates we have are largely a
reflection of our rapid rate of inflation, and the deeply embedded
expectations that prices will continue to climb. That is why it is
important that we take the necessary steps to bring inflation under
control. Maintenance of reasonable control over the growth of money
and credit is an essential ingredient in the fight against inflation,
and the Federal Reserve is committed to this policy.
Thank you for the suggestions you have made and I appreciate
your taking the time to write.
Sincerely,
41. :Irg
FD
#1407
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Federal Reserve Bank of St. Louis
May 21, 1980
Dear Mr. Rice:
Thank you for your further letter and your
continued support in the fight acainst inflation.
appreciate your words of encouragement.
Sincerely,
Mr. Ralph I. Rice, Jr.
/tn
(#2291)
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Federal Reserve Bank of St. Louis
May 21, 1980
Mr
F. W. Ryon
Dear Mr. Ryon:
Thank you for your letter on interest rates and government
policy. I appreciate having your suggestions, and I understand the
concerns that prompted you to write. With regard to government employment, you might be interested to know that we decreased the number
of employees in the Federal Reserve banks by about 13-1/2 percent in
the last 5 years.
In the current setting of excessive inflation and mounting
inflationary expectations, there is a wide national consensus that
inflation is the nation's number one economic problem and that firm
actions must be taken to combat inflation now. The actions taken by
the President on March 14 in respect to fiscal and energy policies
and those further actions by the Federal Reserve to restrain the
growth of credit are among the necessary steps that must be taken
in the effort to bring inflation under control.
I appreciate your taking time to share your thoughts with me.
Sincerely,
Jr #1361
May 21, 1980
Mrs. John J. Wright
Dear Mrs. Wright:
Thank you for your letter on the effects of high interest rates
on your business. I can fully appreciate the concerns that prompted you
to write.
In the setting of excessive inflation and deeply embedded
inflationary expectations there is a wide national consensus that economic
Policies must, over time, continue to work to reduce inflation and thereby
provide the foundations for greater economic stability.
There are now signs of a decided easing of the extreme credit
market pressures that we have experienced in the past few months. The
demand for credit has lessened and market interest rates have moved
lower. Reflecting these developments, the Federal Reserve has eliminated
the 3 percentage point surcharge in the discount rate that had been
established for certain classes of banks. And, mortgage rates have
fallen.
These factors are encouraging but they do not alter the
fundamental fact that the process of containing inflation will not be
easy. But if we fail now the discomfort will be all the more serious.
That is why I believe that we must get the Process over with so that we
can move into an economic environment in which business and the economy
In general will prosper. I appreciate your taking the time to write and
I hope I will have your understanding and support as we seek to resolve
this most pressing national problem.
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Federal Reserve Bank of St. Louis
Sincerely,
4(:H:sep
#1539
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Federal Reserve Bank of St. Louis
May 20, 1980
Sir Harold Knight, K.B.E. D.S.C.
Governor
Reserve Bank of ilistrelia
65 Martin Place
Sydney, Australia 2000
Dear Governor /4tight:
I regret the delay in responding to your request for informatio
n
regarding foretwe banks in the United State*, but, as I wis sure you are
aware, these bribe been very busy times for the Federal Reserve.
The first "bastion raised in tho attachment to your Letter
relates to entry, supervision and regulation of foreign banks. Forei
gn
banks operate in the sited States principally through three types
of honking institutions: agencies, branches and sUbsidiary commercial banks.
a result of the International Banking Act of 1978, foreign bmnks
may new
establish E4se corporations. The powers and activities of these different
types of institutions are discussed in the enclosed article from the
October 1979 Federil.Resenwaylletin.
As you Wm, the United StAtes has a unique banking system, the
so-called durl bankiag system. Under this system, if a foreign bank
enters
the United States through either a state-Chartered or nationally
chartered
U.S. subsidiary bmak, it is subj ct to the lank Holding CompAny ,ct.
However, prior to on,ctment of th;.: intorngtional
nking Act of 1978, if a
foreign bz-ak nntored tb UnitA Stites only through astblishment of
m
agancy or branch, both its entry nnd regulation wont v uptti.r of state
law.
A r result, unlike virturdly all domes
tic banks, U.S. Mismcies and
branches of foreign benks were supervised only by the licamsing state
.
Moreover, they were net eibject to the limitation" of interstate
honking
thrlt apply to U.S. Webs.
1.so the specie* aid branches were not
required to hold ressmos with 6.rehtral Reserve System, a situation
that
tended to complicate assietary uneesement.
For several years. the Federal Reserve strongly advoc
ated
legislation to remedy these problems, and in the fall of 1978 the
International Banking Act (tDA) was enacted. The IBA created a Federrl
repulatory framework for foreign banks in the United States to achieve
two
principal objectives: (1) promoting competitive equality between
domestic
and foreign banking institutions in the United States through a
policy of
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Federal Reserve Bank of St. Louis
Sir Harold Knight
- 2
natiewel treatment, under which foreign ent
erprises operating in the
United States are afforded the same rig
hts and privileges, and are
subject to the sem pavers, as their domest
ic counterparts: and
(2) facilitating ummetery policy throug app
lication of Federal reserve
h
requirements to U.S. agencies and bra
nches of foreign benks.
The second question in the attachment to you
r letter relates
to the asenamic impact of foreign ban
k operations in the United States.
In gemerel, entry of foreign banks has
served to premote competition in
benhiag and finnnee. I might note that
the Federal Reserve has approved
acquisitions of U.S. banks by foreign
banks under the Bank Molding
Company Act, which applies the same cri
teria for acquisitions by a foreign
organization that are applied In cases
involving domestic cowponies.
A* discussed in some detail in the enc
losed article, one of the
mere meltable aspects of the U.S. activities of
foreign banks his been the
rapid growth of their outstanding business loa
ns to both domestic rnd
foreign borrowers. Mlle a significant portion
of this growth ha
uedieubtedly been related to financing U.S.
trede with foreign countries
and third country trade, the U.S. offices of for
elipt hanks have become
isersesingly active participants in the domest
ic beseismwes leen merkat.
Varicose reports emegost that their presence
has eihanced competition, particularly with respect to pricing, in thi
s serhat.
The third question in the ettelhMett to you let
r
ter relates to
eny unique policy problems that have
assorpomied the preaence of foreign
bank activities. /Our particular are
as Should be mentioned, all of which
were addressed by the International
Banking Act: (1) reserve requirements,
for U.S. agonies and branches of for
eign banks; (2) the interstate
banking operations of foreign banks, (3) the
relationship of U.S. offices
of foreign banks to non-benking activitie
s of their foreign parent bank;
and (4) Federal supervision of U.S. activitie
s of foreign banks.
es discussed in the enclosed article,
the International B nking
Act authorized the Federal Reserve Board to
imposo reserve requirements on
U.S. agencies and breaches of foreign banks.
The Dowd has already imposed
its merginal reserve erogrmm on mgencies and bra
nches of foreign banks and,
beginning lea September of this year, will be
lehssing in basic reserve
requirements. U.S. reserve requirements hav
e been applied only to the U.S.
offices of foreign banks, and the Federal Reserv
e may face a long-term
prdblen arising from the possibility that for
eign banks will conduct
increasing MMOMIati of U.S. bankiag business fro n out
side the country. However, that problem would arise whether or sot
foreign banks operated
offices in the 101ted States, as long as
the United States does not have
exchange contests.
Prior to sweetmeat of the tie, foreign banks
could establish
full-service branches wherever state Lew per
mitted. By contrast,
domestically chartered banks were not per
mitted to esteblish branches
outside the state in which they operate.
‘'s discussed in the enclosed
article, Congress, through the ISA, att
empted to foster competitive
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Federal Reserve Bank of St. Louis
•
Sir Harold Knight
- 3 -
equality by Unitise sag, interstate expansion of desastic deposit talkies
motivities of foreign bamboo while grsadfitherims existing; mponstieso•
She Federal Reserve Surd be. proposed regulation to implevost this
pesvisieft of the ZIA; the period for public segment has essisio al the
Saard expects to issue fieel regulative* is the veer future.
wit% waserd to memboshing activities, prior to enactment of the
lilt,foreign babe eperettogU.$. mosesies *ad brandies, but not oust'.
esbaidiary sesmereiel bauha, awe act subject to Teders1 restriction* es
vosheohing activities, despite the longotandise U.S. policy mistrials
separation of bashing sad airseerce. The !Si addressed this situettoe by
applying liaitotiose on sombeables activities mostained in the Is Seldiss
4Oppeey Act to fordo* banks operating A/tomtit* and branches. illOos
emomptioms to thelkmikastding Campos, -!ct's seperatioaof bashing mod cone
gerce were greeted in order to Unit th4 evtraterritortel eft** of this
peinelpla. The federal Reserve Serard has issued for comment proposed
regslations to implement theee emomplions.
Und*r the precisions of the MA esencies and bram00100 as* now
supervised jointly by the states and by the Federal bank regalehory
assmcies. The federal Deposit humans* Corporation has primer, osper4.
vuery reepeoeibility at the Federal level for *tote-licensed imaged
bresehees and the Comptroller of the Oarreney has primary responsibility
imr federally licomeed soancise sad brandbes. The Federal leasevo System
be. roadie swretaery authority ever all LS. activities of foreign
beaks and is reeposetble for the safety mad somedneee ef the U.S. offices.
Last year, the Federal Raserve Send published a statement on supervisory
policies toward foretsalwdilmOWWWliesupanies, a copy of abich is
emalosed. The Board hes elms published for ammeet proposed report frost
to obtain datt DA She facet.* parole barbieg lestitutieas In order to he
Able to supervise effectively U-Sit delosoiee end branOhea of foretrot boa.
and U.S. sammercial hanks euesd by fere.* beaks. Sene aspects of the
proposed report* are eamtsossrsisl, the Valle comment period has eoded,
but Marl reemlatiena hove sot yet hem Loomed.
The fourth qmsotise raised is the attachment to your letter
relates to die *neat of restriction of foreign bank operation, to offshore
markets. the %Lod States permits emery of foreign basks for full-seals
°partitions, sad issues me special license to restrict foreign Webs to
offshore activities. $igh activities are apt subject to restrictions ander
U.S. lam.
The ftaal question raised in the attachment to your letter
relate* to the possibility of more liberal arraniements for the admission
of foreign bombs. Givaa the relatively resent emaotmeet of the latereational
Soaking Act, this qmestioa does set $440 applicable to the Witted "tines.
/ lope you find Oho above intermstion sad the vollaeures to be
useful is year deliberatieswea the role of foreiip basks is *matrons.
Sincerely,
Enclosures: (2)
SJK:mag
No. 626 5 March 1980
bcc: Mrs. Mallardi (2), Ms. Key, Ms. Brown, Mr. Truman (for division file)
PAUL
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Federal Reserve Bank of St. Louis
May 20, 1980
Mr. Vaughn D. Manning
Dear Mr. Manning.
Thank you for your letter on the effects of the high interest
rates on the automobile business. I can fully appreciate the concerns
that prompted you to write.
In the setting of excessive inflation and deeply embedded
inflationary expectations, there is a wide national consensus that
economic nolicies must over time continue to work to reduce inflation
and thereby provide the foundations for greater economic stability.
Monetary policy has an essential role to play in that process since
excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and
will remain, aimed at maintaining moderate growth in money and credit.
however, as you suggest, monetary policy alone cannot do the job
effectively. In that regard, I would strongly agree with you that we
need help in the form of firm discipline and fiscal policy, particJlarly
as it applies to restraining the growth in government spending and
thereby in government borrowing.
There are now signs of a decided easing of the extreme credit
market pressures that we have experienced in the past few months. The
demand for credit has lessened and market interest rates have moved lower.
Reflecting these developments, the Federal Reserve has eliminated the
3 percentage point surcharge on the discount rate that had been established
for certain classes of banks. And, mortgage rates have fallen.
These factors are encouraging, but they do not alter the
fundamental fact that the process of containing inflation will not be easy.
but if we fail now, the discomfort later will h
ll the more serious. That
is why I believe that we must get the process over with so that we can move
into an economic environment in which business and the economy will prosper.
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Federal Reserve Bank of St. Louis
Mr. Vaughn D. Manning
-2-
I appreciate your taking the time to write and I hope I will
have your understanding and support as we seek to resolve this most
pressing national problem.
Sincerely,
TEA:JH;irg
l741
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Federal Reserve Bank of St. Louis
May 20, 1980
The Honorable James T. McIntyre, Jr.
Director
Office of Management and nudget
Executive Office fiuilding
Washington, D.C. 20503
Dear Jim:
On Friday, June 6, 19S0, the Board is having another meeting with a
group of leading economists similar to the ones held during the last few years.
The topic to be discuss& and a list of the economists expected to attend are
enclosed.
The meeting will start at 10:00 a.m. and will end with a luncheon at
1:00 p.m. You are cordially invited to attend all or part of the program
including lunch. If you cannot attend, perhaps one of your deputies could join us
for the meeting and luncheon.
Emmett Rice is coordinating the meeting and he would be glad to
discuss any questions about its substance. He can he reached at 452-3285,
Sincerely
Enclosures
GLS:evjj
5/20/80
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Federal Reserve Bank of St. Louis
May 20, 1950
Mr. Richard S. scree
Dear Mr. Mcicee:
Thank you for your recent letter regarding the lack of
control over federal credit activities. Durine the past decade,
botY inside and outside the eovernment -maey budget ?everts
have expressed concern about the rapid growth of federal credit
activities, and have the urged the Administration to establish
mechanisre for effective review and control.
In response to these recommendations, the resident's
January budget Included a credit budget that was designed to
bring both direct and guaranteed federal loans under greeter
scrutiny and supervision. The budget also recommended that
annual appropriation lita be placed on a wide range of federal
credit activities, including those of the Federal Financing Bank.
In setting up this new system, the Administration decided to
restrict coverage to activities that were unambiguously part
of the Federal novernment. Pence, privately-owned, governmentsponsored agenclev -- such as the Federal Ilational mortgage
Association -- were excluded from the formal review process and
from the new credit budget. Since the liabilities of these
agencies have an implicit goverment guarantee, however, there
is some justification for including them in an expanded credit
budget.
In general, I believe that the Administrationts new credit
budget represents a useful first step in our attempt to eonitor
and control federal credit activities. These recent efforts,
however, will need to be strengthened in the future if we are
to limit the rapid growth of federally guaranteed and sponsored
credit.
I hope these comments prove useful to you.
Sincerely,
bcc: messrs. Kichline, Struble, Fralick
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•
Federal Reserve Bank of St. Louis
e
May 20, 1980
The Honorable G. William ‘1111er
Secretary of the Treasury
Treasury Department
Tashington,
20220
Dear 1111:
On Friday, June 6, 1980, the Board is having another meeting with a
group of leading economists similar to the ones held during the last few years.
The topic to be discussed and a list of the economists exnected to attend are
enclosed.
The meeting will start at 10:00 a.m. and will end with a luncheon at
1:00 p.m. You are cordially invited to attend all or part of the program
including lunch. If you cannot attend, perhaps the Deputy Secretary or one of
the Under Secretaries could join us for the meeting and luncheon.
.r.nrriett Rice is coordinating the -fleeting and he would be glad to
discuss any questions about its substance. He can be reached at 452-3285.
Sincerely
Fnclosures
GLS:evjj
5/20/80
‘eittri
aonorable Josekh C. Axiit*
40u4o of Rti,reekimtatives
20515
waabington; b ee,
Dear. niniatt
Thank you for your Utter of
ru1 210 Z-.:xntardinl
anC,
* letter frost Lowensteia0 5andler, Brocin, Rohl*
So.jan0 attorneya OA teillhalf of * bank located in your District.
Their lutttor requested tLat t
;rd conatrue titt Monetary
Control Act of 1.t#0 to n.f.- 4,1", t%izt. any bank that filed ito with ,
draw*1 kllioation befor4 zul; 10 11 790 .3'..111 bcdetrlod a non.
mawber 14Lnk for
tic transition provisions af the
r, cu
Aut.
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,
Federal Reserve Bank of St. Louis
*n Aril 23 t 1161t
a,17,1 •tdopted a requlation
interlrfatin(4 the talaw,-7itictn -,..rovilonc of the t'!onetary Control
Act. T1.* interimatatoz 1-rovidea that a nate A4MItitt
will .2.e treated as a now;teml)er bank if its Federal reserve Sank
received motile* of the 4eciion n't the bank's board of directors
to withdraw from megsbalfehip
7.ulyi 1 0 1979, T'ne Federal
Aeserve Sank. of Sew Yolk reports tilt the avrlicatiGn to with
draw by the 4fruat Cemrany 0! Ailw :erzey gas received on !
, rot 300
1979, VAarefore, that bank will
treated aa nnon-member
for vurpossu of the transition vrovisiooz of the tonetary
Control 40t,
f:inceraly 0
4gAl
XIBe0spit (fV-162)
'.)cc; Jim Brundy
Mrs4 Mallardi (2)
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Federal Reserve Bank of St. Louis
May 20,1980
%Ars. Barbara S. 4Aullowney
Celia Y. Houghton
Mrs. Nancy H. Headley
Dear Mmes. Mullowney, Houghton and Headley:
Thank you for your letters on the effects of high interest rates on !lousing.
I can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stahility. 'ionetarv policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by. excessive
growth in money. Thus, the basic thrust of monetary policy Is, and will remain, aimed
at maintaining moderate growth in r toney and credit. However, rnonetan, policy alone
cannot do the job effectively. in that regard, I would strongly emoha.size that we need
help in the form of firm discipline in fiscal policy, particularly as it apnlies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge In the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal 'Housing Administration
of Its maximum mortgage rate.
The Federal Reserve has also taken steps to helo ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
The credit needs al their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such hanks are justified in exceedirat the oercent limit on loan growth contained
in our Special Credit Restraint Program.
Page Two
Mmes. mullowney, Houghton and Headley
These factors will help hut they do not alter the fundamental fact that the
process of taming inflation will not be emsy. r%ut if we fail now, the discomfort later
will he all the rnore serious. That is why I believe that we must get the process over
with so that we can move Into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we see< to resolve this most pressing
national problem.
Sincerely,
3H:ev ij
P158I
01559
#1580
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
May 20, 1980
Dear Gordonl
I appreciate your letter and action,
supplementing Henry's earlier conversation.
I hope and expect the need will soon
pass.
Sincerely,
The Rt. Hon. Gordon Richardson, M.B.E.
Governor
Bank of England
Threadneedle Street
London, England
PAV:ccm
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Federal Reserve Bank of St. Louis
67,
May 0, 1980
The Honorable Charles Schultze
Chairman
Council of Economic Advisers
Executive Office Tuilding
Washington, D.C. 20503
Dear Charlie:
On Friday, lune 6, 19R0, the Board Es having another meeting with a
group of leading economists similar to the ones held during the last few years.
The topic to be discussed and a list of the economists expected to attend are
end osed.
The meeting will start at 10:00 a.m. and will end with a luncheon at
1:00 p.m. You are cordially invited to attend all or part of the program
including lunch. if you cannot attend, perhaps another Member of the Council
could join us for the ,neeting and luncheon.
Emmett TZice is coordinating the meeting and he would be glad to
discuss any questions about its substance. He can be reached at 1452-3285.
Sincerely
Enclosures
GLS:evjj
5/20/80
"S.
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Federal Reserve Bank of St. Louis
May 20, 1980
4.. George W. Schustek
Dear Mr. Schustek:
Thanks very much for your card and your words of support.
We have been saying, although perhaps not forcefully enough, that
the Federal Reserve is strongly committed to reducing growth rates
of money and credit, over time, to levels consistent with price
stability.
We also need to emphasize that monetary policy alone cannot
deal effectively with the problem of excessive inflation and deeply
embedded inflationary expectations. In that regard, I would strongly
emphasize that we need help in the form of firm discipline and
fiscal Policy, particularly as it applies to restraining the growth
in government spending.
Many thanks for writing.
Sincerely,
TEA:ai;jry
#1693
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Federal Reserve Bank of St. Louis
May 20, 1980
Dear Alan:
Thanks, I guess!
All the best,
Mr. Alan B. Wade
Public Affairs
United States League
of Savings Associations
1709 New York Avenue
Wasigington, D.C. 20006
PAV:ccm
May 19, 1980
Dorothy H. Apnell
Dear Ms. Appel!:
I understand the concerns in your letter about the press reports—often
misleading—concerning the role played by the Federal Reserve in certain loans to the
Hunt family.
Neither I, the Federal Reserve, nor any government official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
hanks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the /flints would not be allowed to engage in fresh speculative activity of
any kind and that their remaining silver would be liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations—
they will not lead to any new funds for the Hunts. n.4 y sole concern has been to ensure
that such a loan compiles with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing new speculation. Beyond this, the Federal
Reserve cannot and should not interject itself into individual private transactions
between lenders and borrowers.
I have enclosed a copy of my Congressional testimony on this subject,
which explains my role more fully. I do appreciate your taking the time to write me
on this issue.
Sincerely,
sure
31
:sep
#1715
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Federal Reserve Bank of St. Louis
May 19, 1980
Mr. Richard S. Colman
Dear Mr. Colman:
Thank you for your letter on the money market mutual fund issue. I can
understand the concerns that you expressed. The recent action by the Federal Reserve
Board to which you refer was not aimed directly at placing a lid on rates and certainly
was not designed to disadvantage savers, but rather to help keep a more even
distribution of credit throughout the country. The growth of money market mutual
funds during the months leading up to the "larch 14 actions had dramatically reduced
the flows of deposits to banks and thrift institutions serving local communities and
their ability to meet the credit needs of those communities; at the same time, these
funds were adding greatly to the liquidity of the central money markets and therehy to
inflationary pressures in the economy. The enclosed press release and attached
docmoents explain the rioard's measures more fully.
As indicated in the press release, the Roard was authorized by the President
to take these actions unPier terms of the Credit Control Act of 1969.
I appreciate your taking the time to write.
Sincerely,
Enc °sures
:sep
#1S38
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Federal Reserve Bank of St. Louis
%ay 19, 1960
Tile Honorable John C. Culver
United State Senate
Aashingtoni D.C.
20510
Dear Senator Culver.
ca-;-kfILIIJ alTreeiate
understanu_ your •concerns
about the recent etain nf events cirolgins7 out of the affairs of
the Lunts related to the uilver market anil I can asure you
that ILave no f;:ore sympathy for their cituation then you
think you are also aware, through our resctive ztiffs,
t%.xt ee have lAeen ItiorYin:: on an 4Interim tovort" on the financial anects of tbiu ei4siodo whici I an vleased to emlove for
your inornation.
I beliew that the "Xnterit4 IlseroW makes it very
-lear that t
loan in queztion was naclotiated entirely Ly
ri\uttepartim; in a franework in whic both the creditors And
the delAort 4ercoiv.024 tat the proopective credit faci/ity would.
strenen their reiortive To;Ation3. Neither It nor anYolus in
t:%c rederal P,eserve or thc. lovernment nore generally, initiated,
.uided or ap17,roved the credit facility---which is still being
neqotiated. Au indicated in the *Interim nonort" ny nolo concorn Lea been to orlzura that the creidit facility ww-,; ttructurci1
in such a ;w4y aa to proGent furtcr zpoculution an0 to ensure
that the Runt:a* ramaininn ailver woul(74 be liquidated in an
and as indicated in the 'Interim
orderly faahion. At thia tin
tiafied that the loan of7reement will provide
lIcort,*I
edegeate aszuranccil on hoth of theze counCi. And, let will
in a peoition to monitor elm:1U; in t%eltie rearelo over the con
ana
1 %avo ravieved the qsticn
itt4 yitL your
letter and IIi Vi most of them are answered in tho r,aterials
-,ihic% Iam forwardinsj to you. The possible excaption.l s w;
40U it, are queitiorau 9 throuqh 13 which g in tho contoxt of
the actual chain of event, take On a awf,owhat differelat nloanin
than izt 117,1lica in the questiona thetaselvcs.
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Federal Reserve Bank of St. Louis
The Nonorable John C. Culver
Page Two
.=,oro specifically, and ac the "Interi
ort" indicates
virtually all of the loans in question ''ere made in robruary and
nareh and at the time the rederal 1-,eservo wan unavare of the fact
that they were being made. In the nornal course of events, such
loans would cane to our attention on1;, in an eost fashion via
the bank exananation rrocens. In retrospect, the vclume of loan
involved is nue-, that tl'ey nal 'have had nom marginal imnact on
the co2t and availaLility of crndit nore n-enerally. Even now,
however, I ar not in a position to quantify any such effects
but the timinn and magnitude of the loans leads me to the con
clusion that any such effects were slight. ITavinn raid that,
I am not sure that I can be equally as cancuine about the direct
and indirnct effects on inflation and interest rten arising
from the general outburst of commodity speculation in 1979 and
early 1980. Indeed, that iqorn generalized nhenomenon—including
the role plal*ed in it by the Nunts- denonntrates all too vividly
the kinds of distortions and excessen associated with unchecked
inflation.
7ou have also aLked if these matter,s were discussed
with anyone in the nzecutive Office of the Presiftnt. The
direct answer on my part id "no," hut thn situation was discusned
with t7ecretary Tiller and Deputy Secretary Carswell of the
Treasury as well as others in 2jovernment. Thus, it is quite
rossiblc that officials in the Executive Office of the President
were aware of the events.
I nnaro your view that thi.n entire matter was an
unhavix,' one in which nome major financial institutions and the
financial markets generally were tested. it arpears that the
storm ban been weathered without any permanent damage to those
markets or institutions. But, I think it ir clear that we nut
turn our attention to an analyzi*. of what can and should be done,
in law or regulation, to prevent a sinilar occurrence in the futuee.
That in 1,reoise1y what we, in cooperation with other agencies,
are doing and I will Ineep you informed as to the status of those
efforts.
Sincerely
Wag & Vo
1:nclosure
ECC:lAt (11V-l67)
bcc: ;Ars. Uallardi (2) u./..
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Federal Reserve Bank of St. Louis
May 19, 1980
Mr. John Denier
Dear Mr. Denier:
Thanks for your Postcard on our monetary policy actions
and other recent anti-inflation measures. I appreciate very much
your confidence and support.
Sincerely,
!
(
1:RL:sep
'
111854
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Federal Reserve Bank of St. Louis
May 19, 1980
r.‘.`71.1liam H. Derbins
Derbins-Skidmore, Inc.
2800 Veterans Boulevard
Suite 200
Metairie, Louisiana 70002
Dear Mr. Derbins:
I understand the concerns in your letter about the press reports—often
misleading—concerning the role played by the Federal Reserve in certain loans to the
Hunt family.
Neither 1, the Federal Reserve, nor any government official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not be allowed to engage in fresh speculative activity of
any kind and that their remaining silver would he liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations-they will not lead to any new funds for the Hunts. My sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing new speculation. Beyond this, the Federal
Reserve cannot and should not interject itself into individual private transactions
between lenders and borrowers, and I would emphasize that no 7overnment money
directly, or indirectly, was involved.
I have enclosed a copy of my Congressional testimony on this subject,
which explains my role more fully. I do appreciate your taking the time to write me
on this issue.
Sincerely,
losure
sep
111700
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 19, 1980
Mr. Charles H. Dyson
The Dyson-!(issner-Moran Corporation
230 Park Avenue
New York, New York 10017
Dear m.r. Dyson:
I understand the concerns in your letter about the nress reports--often
misleading—concerning the role played by the Federal Reserve in certain loans to the
Hunt family.
Neither I, the Federal Reserve, nor any government official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not he allowed to engage in fresh speculative activity of
any kind and that their remaining silver would be liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations-they will not lead to any new funds for the Hunts. ly sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing new speculation. Feyond this, the Federal
Reserve cannot and should not interject itself into individual private transactions
between lenders and borrowers. I have enclosed a copy of my Congressional testimony
on this subject, which explains my role more fully.
I also understand your concern about the difficulties experienced by many
small businessmen. However, there are now signs of a decided easing of the extreme
credit market pressures that we have experienced in the past few months. The
demand for credit has lessened and market interest rates have moved lower.
Reflecting these developments, the Federal Reserve has eliminated the 3 percentage
Point surcharge in the discount rate that had been established for certain classes of
banks. And, mortgage rates have fallen, as reflected in the lowering by the Federal
Housing Administration of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to Priority areas—including small business—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help, although the process of taming inflation will not be
easy. I appreciate your taking the time to write.
Sincerely,
if 1 59tr,
Enclosure
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 19, 1980
Mr. Harry 3. Farnham
Dear Mr. Farnham:
I understand the concerns in your letter about the press reports—often
misleading—concerning the role played by the Federal Reserve in certain loans to the
Hunt family.
Neither I. the Federal Reserve, nor any government official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not be allowed to engage in fresh speculative activity of
any kind and that their remaining silver would be liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations—
they will not lead to any new funds for the I. lunts. v4.y sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing new speculation. rAeyond this, the Federal
Reserve cannot and should not interject itself into individual private transactions
between lenders and borrowers.
I have enclosed a copy of my Congressional testimony on this subject,
which explains my role more fully. I do appreciate your taking the time to write me
on this issue.
Sincerely,
tire
:RL:sep
#1779
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
V 19, 1")
Mr. James C. Fitzgerald
Jarnes E. Fitzgerald, Inc.
General Contractors
50 East 42nd Street
New York, New York lint 7
near t 4r. Fitzgerald:
I understand the concerns in your letter about the press reports—often
tnisleading—concerning the role played by the Federal Reserve In certain loans to the
Hunt far-illy.
t official instimated,
`.‘..lefther I, the Federal Reserve, nor any ??,rlyern
!Wrier' or approved the loan negotiations hetween the Hunt interests and the rnun of
banks involved. The Feral Reserve. *las only said it would not object to such a crodlt,
provided that the Hunts would not be allmed to engage in fresh speculative activity of
any kind and that their retraining silver would 11, liquit4ated in an cirderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations—
they -411 not lead to any new funds for the Hunts. !.-ly sole concern has heen to ensure
that such a loan complies with the Federal eserve Special Credit Restraint PrNra-rt,
eyond this, thf. Federal
particularly as it applies to preventirl rtcw sneculation.
Reserve cannot and should not interject itself into individual private transactions
between lenders and horro,rers.
ongrelsional testtriumy on this subject,
I have mclosed a copy of fr:
which explains my role more fully. I do appreciate your taking. the time to write me
on this issue.
SincerelY,
1...nclosure
Jri:RL
0177A
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
I.••••114.,
.lay 19, 1980
Mr. James S. Ginocchio
Dear Mr. Ginocchio:
understand the concerns in your letter about the press reports--often
misleading--concerning the role played by the Federal Reserve in certain loans to the
Hunt family.
Neither 1, the Federal Reserve, nor any government official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not he allowed to engage in fresh speculative activity of
any kind and that their remaining silver would be lioqidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations-they will not lead to any new funds for the Hunts. 'ly sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing new speculation. Beyond this, the Federal
Reserve cannot and should not interject itself into individual private transactions
between lenders and borrowers.
have enclosed a copy of my Congressional testimony on this subject,
which explains my role more fully. 1 do appreciate your taking the time to write me
on this issue.
Sincerely,
nc1ovi
:11-1:Rffp
#1805
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
19, 1980
Mr. Fredric 3. Forster, President
Newport Balboa Savings
Westcliff Plaza
Irvine Avenue at 'W estcliff Drive
Newport FAeach, California 92663
.7)Aar Vr. Forster:
Thanks for your letter on our monetary policy actions
and other recent anti-inflation measures. I appreciate very much
your confidence and support.
Sincerely,
#1816
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 19, 1980
Mr. Ralph A. Framrnolino
Dear Mr. Frammolino:
understand the concerns in your letter about the press reports—often
misleading—concerning the role played by the Federal Reserve in certain loans to the
Hunt family.
Neither I, the Federal eserve, nor any government official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks Involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not he allowed to engage in fresh speculative activity of
any kind and that their remaining silver would be liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations—
they will not lead to any new funds for the Hunts. :tly sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing new speculation. rAeyond this, the Federal
Reserve cannot and should not interject itself into individual Private transactions
between lenders and borrowers.
I have enclosed a copy of my Congressional testimony on this subject,
which explains my role more fully. I do appreciate your taking the time to write me
on this issue.
Sincerely,
Epsure
31-1:RL;sep
#1556
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
'
,
,
44,Wa t'Or
.71,5t t4t, o
tilltitew to
C4,40,4atls 5,7,1r1 4
Yigaut COlttitittlitTAV tl:;4t
rytlAt
iv a/Vxweft to -410.,
theit requiro4 rxtaairvitio for t
7
“
„-roduotloA 10.0,-A
to tarv4oro tP. 1140, IA
,., 1744ti.1- for
;;.:zut:,,rz,1,1411 tocould mluce reervt.1 rf.4-taire
.
8fiect;
Yor
to avrivulttgrill
,ct.A4-4*4 in let141a
*40L ,T44.4Amk; tt* rli;,
,,ia-44.54, of
1J4.74
‹),11 ito
ou tl-At tiatnis*Attion 4Ltb Aat4A4 In fovit 1041p.
*144tottuaitiea to 113,1-.41alo. ottoU 14)4niv.
,4Male tbp, :
a4oral nvzvrira I:4)4rd
L.4- tactic obj*etivw of ttis ,provo**1., ve beltolm ttiltt Arfforta
to 41roct the tiov u4 oxedit to I;Artieulas sector* sUould
*voldeuds *04 that rack *aco*raltIn*latx t%*t Ate
doeNve. Z*044V.14"1.' *hould t4/* *trim:tut:04 to voly to ttto tgroetotst
.cat*pt
tenAX,Ait 40160hAAlam* In hwkizs,.. with thAtme
Ieoerd ettalitaL44 in 1973 s *e**oual diocouttt
urtAl. rural 1-Aank* can ott*IP
lAwr00
0
larn tr.ro-4161;':
tuad4 tu rgtoo.;tkititlt of tLeirU4txte-,aur, to wittioeal A6swt?'
4t4on3i 1.1*201r4vi49 t4c!lit4 tyvwxXe
axteta4,_.
La4;is.,
* twor.tr,orArl tucakonia tzrellt :reqr-ctim iti* A
wonted 1,44.t. ifg.loutN.
';.-r-,4;11urzs I-Yu-AY* exImlari
reptauoloGt to the AlatV*X10.
*aced
.*'„ulte5“.7, aA4 t4 roc-Kat 10
4:441AAtim l'7.toe4**inl
345,1ki
4:L-1 aotiailo ot
14toatartto Ai*count
*000*44 t0 CA4* 7eder4I .
ttaz za4 ilxilr*4'7rf aro cout4irrnt ku tive gmillor;ad 7r43, 4 rial**se
1 anks, cAn obtai4
ot 4041,1 17. ttrow0, tea,
* t-,vagram4, tm411 ,
4441tWnel fir,ancig49 LA taller tv ri4tie17 t%**,
croulit
Th*via*
yout countitmont *Ise pro3140)1144
410054
for toioetiary o**tro
IA le,-,41tIoation", the Ztaird h**
problem*
hin4s
t;f
maita
Withim tbd 1.,tovadaxteg !„14-1,4itc!ifi4#1,1
vot rosorv* rorTairsammst* for
claAvva at banks at lattole ft-,tt
TX.
Pal* Tv*
ttie:ha,r4
t.r.:4% Late 4ccount t1t need tr.e exereitm control over Irowth cgf
t14,71. voattziry aviroc4tikg,
t-„laNietakation of mcaratasy oItc
jrt1eade-e. lA the ahort ruz
cociotamy tn those requdimr.
:r44r.t. Your conAtituent4.4
vould introdue* fluctuations
rft,uir-ed reiservus ttiat WM
nesvate the already 4iffios1t
tauk c, aollievin4 tLga
r;rowth ratcs dextral
ths
Yoderal 0
:4rkat Cc4taittoo.
thevl CWArmUlt*1U/veva usoof%1 to rm.
I
am alio an,clukiA, a rvccAllt stz,lt 4-1.n:Alefolt of oonatioac tt rural
backst which you
01 ictererkt.
Sincerelye
Wald& Volcker
illucio urea
(Rural Xanklw, Cowntions anA F4rm
,,1 ,1711
by Emanuel
dtd. 3/27/80.)
W.:ZPNCX.LW,JLE.ijt (111," 171)
• Itichtilut
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Per, -Weilirev
Mr. :zelictiar
Ars* 2-411ardi (2)
rci
May 19, 1980
Mr. Richard T. Hale
near
r. Hale:
I understand the concerns in your letter about the press reports—often
misleading—concerning the role played by the Federal Reserve in certain loan to the
Hunt family.
Neither I, the Federal Reserve, nor any government official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not he allowed to engage in fresh speculative activity of
any kind and that their remaining silver would be liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations—
they will not lead to any new funds for the !lunts. 'Ay sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing new speculation. T3evond this, the Federal
Reserve cannot and should not interject itself into individual private transactions
between lenders and borrowers, and I would emphasize that no government money
directly, or indirectly, was involved.
I have enclosed a copy of my Congressional testimony on this subject,
which explains my role more fully. 1 do appreciate your taking the time to write me
on this issue.
Sincerely,
.rU
Psure
:11-1:RL:sep
111739
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
113
Pay ID, 1980
ionorel.;)1e 3ir
Ci k air.-aan
• f3d)conureittee on Intc r-tov, rn: ,nt
7.-boaation n
Ciittc‹, on
:c)r °-;.3.1 7fair
Cnitc16 tatccF.enateWazhin,jton, D.C.
251D
Livar
-
;.%Emer:
X (--..74. n fully a:,-)rr:cicito anet unctrstanri
7ur cc;ncern
al/out ti:J.:. roo.:,nt d'ain of evontr! vroiinv
otlt of tic ?Iffzli,-P;
of the, nuat:7; rc!lat,,d to tlir cilvrIr nalLot an..7 1 c-.1n acuro
You that I l,av,- no roorc svmrat;I:: for their cJituc.Lion '‘.- 13.n
-OU have. 1 think you also !:now r 0.
4rou-th our r=pocLive
z,t.:117fs, that we hz,..vo 1)con wt-.)rkin(! on an
"Intnzir.: ro)-ort" on
the tinaLcial b.:11-1cct of the c-,-iode.
T:!lic!I 7 ;IA plearl to
ent..11cse for.
your Jr.:formation.
1 7;elicivc; that th.,, 'Intc-%-cir,
ro7-ort" --aaken it very
clear that the loan in 'Llostion t,N-a..:
r;o-oti;Ito0 entirolv
_
_ 1-1v
1 riv(Ate .artis in a rraor7z in
.
wIl:c:1 1.:*otl• tIle cre0.itorr! rind
the de5tor5 - oror.ivM t-Lat the ronreotive crc-Ait facility
woul‘l strenTthon ti,- rc5:,00tivn
l'oition:-,:. ncither I nnr
anyone in tile Federal 1orvo or the rJcvcrAmnnt more rrenorall,
initiated, uuldc.A1 or arovo(1.
1 tl,::, credit facility—which is
citIll being nogotiated. Px. indicatoJ
in the "Intorexl rcrert'
. sole concern has hoon to enroaro tl_at i.%o creAit
facility
„
wa3 L;tructurcd in riLle a way at: to
pre_,cont further sr4?oulntion
and to cronare that. the Hunt' t-e:7ainincl
::ilvn- would 'no
1L-_ uidate(.1 in an orderl- farion. ?'.t-.
_4
tti::; titlo f and a5:: indicatcd in tite 'Intori "r7-ort," - :In
P.:atir;fied 4-1-lat tho loan
ivirce.71ent will -rewido
ado.uate znsuance.73
(.- -r
on '-oth of ther,
counts. .Fxna we ‘.:ill !:n in a 1- ooltion to
nonitor ovcnts in
thez;e regardL over to coin.- -eokr: antl"
nonthr.
1 r;haec-.., :,:our view that tl-l&r.1 (-ntiro T
,.1ttor v;:ar an
unhapov
_... one in wIliclx .uonti ar,a3or financial inqtitutions and
,
tliefillancicannorall_wero
ter.It‘1,1. It apn.narn that
the otorm has ;)eon weathcacd witi:out any
por!,.7,nont danarlo to
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ilonorable Jim
ra-,e Tt.,70
tbooc markcto or itistitutions. But,
thi4 it ig clear that
wo :=12t turn. or attention to
ana1,2sio of vhat can ana should
. •
be Cono, In 'cry! or rculatior.7. to r)revont a rAmilar occul-rence
in the future. That i.
at
in coopertion T]ith
!:)ther ac=cic<z e. arc (loin and I will hInnri you Infol-mcd as to
thc statum of thomo 'f.fortf3.
Sincerely,
S/Pal hVPIcigt
Enclotwrc
ECC:pjt (41V-173)
bcc; 1:ro. nallardi
19, 1.9itn
Ms. Evelyn Hockenberry
E.;ear 4s. Hockeeherry:
I understand the concerns in your letter about the press reports—often
misleading—concerning the role nlayed by the Federal Reserve in certain loans to the
Hunt faellly.
Neither 1, the Federal Reserve, nor any governnent official instigated,
guided or approved the loan negotiations hetween the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not be allowed to engage in fresh speculative activity of
any kind and that their remalnine silver would he liquidated in an orderly fashion.
might emphasize that the negotiations involve a restructuring of existing obligations—
they will not lead to any new funds for the Hunts, "-y sole concern has been to ensure
that such a loan complies with the Federal aesfrve Special Credit Restraint Program,
particularly as it applies to Preventing new speculation. rkevond this, the Federal
Reserve cannot and should not interject. itself Into Individual private transactions
between lenders and borrowers.
I have enclose a copy of my Congressional testimony on this subject,
which 'explains my role more fully. 1 do appreciate your taking the time to write me
on this issue.
Sincerely,
re
#1541
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 19, 1980
/144s. Mary Jane
'
anson
Dear Ms. Hanson:
Thank you for your letter. In view of your interest in obtaining funding for
a job training center, I can understand you reaction to the press reports—often
misleading—concerning the role played by the Federal Reserve in certain loans to the
Hunt family.
Neither I, the Federal Reserve, nor any 7overnment official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not be allowed to engage in fresh speculative activity of
any hind and that their remaining silver would be liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations—
they will not lead to any new funds for the Hunts. My sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing new speculation. 1`.,eyond this, the Federal
Reserve cannot and should not interject itself into individual private transactions
between lenders and borrowers, and I would emphasize that no government money
directly, or indirectly, was involved.
have enclosed a copy of rny Congressional testimony on this sthject,
which explains my role more fully. I do appreciate your taking the time to write me
on this issue.
Sincerely,
Enclosure
31-1:RUsep
#1815
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
May 19, 1980
Mr. William H. Yoeper
Dear Mr. Hoeper:
Thanks for your letter on our monetary policy actions
and other recent anti-inflation measures. I appreciate very much
your confidence and support.
Sincerely,
31-1:RL:sep
/11723
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 19, 1980
lerold C. Hoffherger
Der
r. ioffberger:
understand the concerns in your letter about the press reports—often
n loans to the
misleading—concerning the role played by the Federal 7.eserve in certai
Hunt family.
Neither I, the Federal Reserve, nor any government official instigated,
and the group of
guided or approved the loan negotiations between the Hunt interests
such a credit,
banks involved. The Federal Reserve has only said it would not object to
activity of
provided that the Hunts would not be allowed to engage in fresh speculative
y fashion. I
any kind and that their remaining silver would be liquidated in an orderl
ng obligations—
might emphasize that the negotiations involve a restrncturing of existi
has been to ensure
they will not lead to any new funds for the Hunts. y sole concern
Restraint Program,
that such a loan complies with the Federal Reserve Special Credit
d this, the Federal
particularly as it applies to preventing new speculation. Beyon
private transactions
Reserve cannot and should not interject itself into individual
a,overnment money
between lenders and borrowers, and I would emphasize that no
directly, or indirectly, was involved.
this subject,
I have enclosed a copy of my Congressional testimony on
time to write me
which explains my role more fully. I do appreciate your taking the
on this issue.
Sincerely,
Insure
:RL:seo
#1658
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
IA
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 19, 1980
Mr. J. Winston Ivey
Dear Mr. Ivey:
Thank you for your letter of April 20 on our special deposit
requirement for money market mutual funds. I can understand the concerns that you expressed.
The recent action by the Federal Reserve Board to which you
refer certainly was not designed to disadvantage savers, hut tather
to help keen a more even distribution of credit throughout the country.
The growth of money market mutual funds during the months leading up to
the March 14 action had dramatically reduced the flow of deposits to
banks and thrift institutions serving local communities and their ability to meet the credit needs of those communities. At the same time,
these funds were adding greatly to the liquidity of the central money
markets and thereby to inflationary pressures in the economy. The
enclosed press release and attached documents explain the Board's
measures MOM fully.
I appreciate your taking the time to write.
Sincerely,
ENosure
4;t1517-k
#1511
ME,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
14oAorat41tt
-V.47440-ri
Conaervation
und Credit
Cmnittee on hijriaulturo
atuae of PA-tros*ntatives
l4astinsiton4 D.C.
20515
L,cax Clairnan 3oncvz.
for your Vetter oi Zlay
invitint7 Ctc
rd to tostiZy berore yoUr SubOomoitto* on the adocuacy
autLority tr.) rel'ulate cemmodity tuture tradtm‘;..
yOU
0
avi 1o0:=4:-;,5 for.fard to apearing on -a
10,00
Sinoteral;
STaui
s„a4w1t (ov
201)
Corritlan
:rs. 4:a11ar1i (2)
.H
-1 at
May 19, 1980
Mrs. Norval luines
Dear Mrs. 3uInes:
understand the concerns in your letter about the press reports—often
misleading—concerning the role played by the Federal Reserve in certain loans to the
Hunt family.
Neither I, the Federal Reserve, nor any government official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said It would not object to such a credit,
provided that the Hunts would not be allowel to engage in fresh speculative activity of
any kind and thlt their remaining silver would be liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations—
they will not lead to any new funds for the Hunts. My sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing, new speculation. Reyond this, the Federal
Reserve cannot aril should not interject itself into individual private transactions
between lene4ers and borrowers.
I have enclosed a copy of my Congressional testimony on this subject,
which explains my role more fully. I do appreciate your taking the time to write me
on this issue.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
osure
May 19, 1980
Mr. Keith Kahle
Dear Mr. Kahle:
I understand the concerns in your letter about the press reports—often
misleading—concerning the role played by the Federal Reserve in certain loans to the
Hunt family.
Neither I, the Federal Reserve, nor any government official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not be allowed to engage in fresh sneculative activity of
any kind and that their remaining silver would he liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations—
they will not lead to any new funds for the Hunts. Ay sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing new speculation. Beyond this, the Federal
qeserve cannot and should not interject itself into individual private transactions
between lenders and borrowers.
I have enclosed a copy of my Congressional testimony on this suhject,
which explains my role more fully. I do appreciate your taking the time to write me
on this issue.
Sincerely,
Fftc'cLu
J1-1:RUsep
#1666
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•••
"lay 19, 1930
Ms. Marjorie F. Kernick
Dear l's.ts. Kernicio
I iinderstand the .-oncerns in your letter ahout the oress reports—often
misleading—concerning the role played by the Federal Resorve in certain loans to the
Neither I, the Federal Reserve, nor any government official instigated,
u11ed or aoproved the loan negotiations between the Hunt interests and the group of
hanks Involved. the Federal Reserve has only said it would not object to such a credit,
provided that the Tiunts would not be allowed to engage in fresh speculative activity of
any kind and that their remaining silver would be lividated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations—
they will not lead to any new funds for the Hunts. cy sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing new speculation. Reyond this, the Federal
Tieserve cannot awl should not Interject itself Into individual private transactions
betvoit.en lenders and borrowers.
I have enclosed a copy of my Congressional testimony on this subject,
which explains my role more fully. I do appreciate your taking the tirne to write me
on this issue.
Sincerely,
7
,-Enclost
31~::RL:sep
#1314
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 19, 1980
Mr. Harry L. Koenigsberg
Dear Mr. Koenigsberg:
I understand the concerns in your letter about the press reports—often
misleading—concerning the role played by the Federal Reserve in certain loans to the
Hunt family.
Neither I, the Federal Reserve, nor any government official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would net object to such a credit,
provided that the '-itints would not be allowed to engage in fresh speculative activity of
any kind and tht their remaining silver would be liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations-they will not lead to any new funds for the Hunts. Vy sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it a.pplies to preventing new speculation. Reyond this, the Federal
Reserve cannot and should not interject itself into individual private transactions
between lenders and borrowers.
I have enclosed a copy of my Congressional testimony on this subject,
which explains my role more fully. I do appreciate your taking the time to write me
on this issue.
Sincerely,
losure
:RL:sep
#1612
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 19, 1980
Vr. Ira Prentiss Kurlander, Architect
near ‘Ir. KurLawler:
I un.ierstand the concerns in your letter ahout the press reports—often
misleading—concerning the role played hy the Federal eserve in certain loans to the
,lunt
Neither I, the Federal Reserve, nor any government official instigated,
guided or approved the loan negotiations betveen the Hunt interests and the group of
banks involved. The Federal eserve has only said it would not ohject to such a credit,
provided that the Hunts would not be allowed to engage in fresh speculative activity of
any kind and that their remaininit silver would he liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations—
they .vill not lead to any new funds for the Hunts. vly sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Proz,rarn,
narticularly as it applies to preventing new speculation. P,eyond this, the Federal
Reserve cannot and should not interject itself into individual private transactions
between lenders and horrowers.
have enclose4 a copy of my Congressional testimony on this subject,
.7.,hich explains my role rlore fully. I do appreciate your taking the tin-te to write me
on this issue.
Shicerely,
31-1:RL:sep
01637
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
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Mr. David kiatteson
Dear Mr. Matteson:
I understand the concerns in your letter about the press reports—often
misleading—concerning the role played by the Federal Reserve in certain loans to thp
Hunt fan-illy.
Neither 1, the Federal Reserve, nor any government official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not he allowed to engage In fresh speculative activity of
any kind and that their refiaining silver would be liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations—
they will not lead to any new funds for the Hunts. 'Y sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing new speculation. Reyorxi this, the Federal
eserve cannot and should not interject itself into individual private transactions
between lenders and borrowers, ml,:f I would emphasize that no government money
directly, or indirectly, was Involved.
I have enclosed a copy of my Congressional testimony on this suhject,
which explains my role more fully. I do appreciate your taking the time to write me
on this issue.
Sincerely,
Trt1tL
#1543
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 19, 1980
Mr. 0. Michael Noonan
Rinke, Noonan, Grote & Smoley, Ltd.
100 South Second Avenue - Box 5
Sauk Rapids, innesota 56379
'ear Mr. Noonan:
I understand the concerns in your letter about the press reports—often
misleading—concerning the role played by the Federal Reserve in certain loans to the
Hunt fa.nily.
Neither I, the Federal Reserve, nor any government official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said It would not object to such a credit,
provided that the Hunts would not be allowed to engage in fresh speculative activity of
any kind and that their remaining silver would be liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations—
they will not lead to any new funds for the Hunts.
y sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing new speculation. revond this, the Federal
Reserve cannot and should not interject Itself into individual private transactions
between lenders and borrowers.
I have enclosed a copy of my Congressional testimony on this subject,
which explains my role more fully. I do appreciate your taking the time to write me
on this issue.
Sincerely,
E nclo re
V
1I-1:RL:sep
#183I
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 19, 1980
Mr. William B. O'Connell
Executive Vice President
United States League of
Savings Association
111 East Wacker Drive
Chicago, Illinois 60601
Dear Mr. O'Connell:
I am in receipt of your letter of .ay lf, the tone
of which disturbs me.
You may be interested to know:
(1)
I am uncertain at this point whether or not
any 'proposer to eliminate the intere
st rate
differential will come before the
nTnc at this
time: scheduled meetings of the
committee will
be considering e variety of
issues.
(2)
There is not now, and never
has been,. any marginal
reserve requirement on man
aeed liabilities ef
small
banks.
I believe the mne is
well aware of the
ations surrounding the
various constflerinterest rate dif
questions concerning
the interest rate ferential and other
capable of consideri
ceiling and is fully
ng and resolving
the
interest and accord
issues in the public
ing to law.
Yours sincer
ely,
May 19, 1980
Mr. Einar D. Reiten
Dear Mr. Reiten:
Thanks for your letter of April 22 on the economic situation.
I can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply imbedded
inflationary expectations, there is a wide national consensus that economic policies must, over time, continue to work to reduce inflation
and thereby provide the foundations for greater economic stability.
Monetary policy has an essential role to play in that process since
excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will
remain, aimed at maintaining moderate growth in money and credit. However, monetary nol icy alone cannot do the job effectively. In that
regard, Iwould strongly emphasize that we need help in the form of firm
discipline and fiscal policy particularly as it applies to restraining
the growth in government spending.
There are now signs of a decided easing of the extreme credit
market pressures we have experienced in the past few months. The demand
for credit has lessened and market interest rates have moved lower. Also,
mortgage interest rates have fallen.
The Federal Reserve has also taken steps to help insure that
small banks that are under liquidity pressures will have added funds at
their disposal to help meet the credit needs of their local communities.
And, we have said that where banks are essentially confining their loan
expansion to priority areas -- including small business -- that such banks
are justified in exceeding the 9 percent limit on loan growth contained in
our Special Credit Restraint Program.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Mr. Einar D. Reiten
These factors will help but they do not alter the fundamental
fact that the process of taming inflation will not be easy. But if we
fail now, the discomfort later will be all the more serious. That is why
I believe that we must get the Process over with so that we can move into
an economic environment in which business and the economy in general will
prosper. I appreciate your taking the time to write and I hope I will
have your understanding and support as we seek to resolve this most pressing national problem.
Sincerely,
TEA:mrk
#1519
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
y 191 1920
The Honorable nenry S. kAuss
Chairaan
Committee on Banking, Finance
and Urban Affairs
House. of Representatives
20515
Washington D.C.
tex Chairman Palms:
,
A I romised you I am onclocirr; our Interi.-.7! r
411.1ort
on thefinancial aspeo.ta of thc recent nunt r7.51vor mar%et situation.
This ontire natter was an unbarpy one in cthieh some
nerally
major financial institutions and the financial rlarket
were tctod. It alvears that the storm has been weathered without
any :saraneat delAase to those marketc or inatituthans, Bute X
thinc it is clear that we must turn our attention to an analysis
of 14„hat can arid 11%ould he done, in law or regulation, to prevent
a zinAlar occurrence in the future. That Lt7; 7:recisely lerat we,
in co‘vc,ration with other agencies, are ',e)ing and I will keep
you iaurlAed ae to the status of therIc efforts.
nincerely,
SZPatil vagirt4_
Encloaurat
EGCLAt (4V-1E6)
bicc:
rs. !Allardi (2)4.00.
May 19, 1980
Mr. Edward C. Roark
Dear Mr. Roark:
Thank you for your letter concerning the recent decline in
interest rates. Interest rates have declined in part because of a decline
in inflationary expectations and its associated credit demands. I can
assure you that the Federal Reserve will continue in its policy of
maintaining moderate growth in money in order to fight inflation.
I appreciate your taking the time to write.
Sincerely,
4
--17fep
#1802
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
1
Tloa ixknoratae Jim ::;asuer
Chairman
Subcommittee on Inter.:Jovornt-.ent:A
RelationE,
Comattes on t;overnmental
fir
United States Zonate
WaahinLAon V.C.
20S10
a;le)rociatc, ar10 uncitAnd your
aiout tLo recent Q.!..th of events growing out of CLet 4rfirs
of tho nurlta related to t:
iivcrliarhot ail: I cl,n mtlture
you that I lurtte no ,;,0,ore 11.v.pat11.; for their aituatio4 t%an
4.ou have, I thia. :ciu also know, through our ratvective
ataffs, that vo havn been workinq on an °Interim reort' on
ele financial azrzectf17 of the eritIode which
al4 pleanud to
cnclocm for your inforraatior.
CZ4n f'V4117;
I lAsaieve that the Interirt
7:ort :e_aken it very
clear that the loan in quoution uas naclotiated entirely by
vrivate 1-artics in 4 framework in with both the creditors and
the debtoru i:erccived that the !7rospectivo crelit facility
would strenuthen their respective rotations. Neither It nor
anyone in thc redaral Reserve or the Ioverment more 4-Iv-mora1ly,
initiated, guided or arproved the credit facility--which is
till beinl naTotiated. As indicated in tI'le -interim Perort
:v' sole concern haz been to ensure that t%c credit facility
wet; atructured in such a way as to pant furter speculation
and to ensure that the Runts' remaining vilver timid Se
liquidated in an orderly fashion. At thin time, and as indicated in t!q3t "Interita icort1 I an satiefied that the loan
a4reement will provide adeunte assurance$ on bt of these
counts. 2%nd, we will be in a roAtion to oonitor eventr,: in
thADaie recjard$ over the conine,; vecks and montlx.
I klare i.our view that thilta entlre Tztter
on.o i
141,011 acme ALJOr financial institution and
the Lixianciel raarkats omerally were testad. It a.,-Aaarathat
the ato= %as bea,n weathoweed without any permanent elat,.-va to
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
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https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
lay 19, 1980
1 H. Spearman
Chairman of the Board
Gate City Savings and Loan Association
201 West %,,arket Street - P.O. Rox 1379
Greensboro, North Carolina 27402
Dear ,o4r. Spearman:
I understand the concerns in your letter about the press reports—often
misleading—concerning the role played by the Federal Reserve in certain loans to the
I tint
?k!either I, the Federal Reserve, nor any government official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not be allowed to engage in fresh speculative activity of
any kind and that their remaining silver would be lifluida.ted in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations—
they will not lead to any new funds for the Hunts. iy sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to oreventing new speculation. Beyond this, the Federal
Reserve cannot and should not interject itself into individual private transactions
between lenders and borrowers.
I have enclosed a copy of my Congressional testimony on this subject,
which explains my role more fully. I do appreciate your taking the time to write me
on this issue.
Sincerely,
sure
.
Ee9
3H:RL;sep
#1572
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 19, 1980
Ms. Gloria J. Summy,Stockbroker
H. J. Summy
2706 College Plaza
Dallas, Texas 75205
Dear 'As. Summy:
understand the concerns in your mailgram about the press reports—often
misleading—concerning the role played hy the Federal Reserve in certain loans to the
Hunt family.
''either 1, the Federal Reserve, nor any government official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not he allowed to engage in fresh speculative activity of
any kind and that their remaining silver would be liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing thligations—
they vill not lead to any new funds for the Hunts. Thy sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing new speculation. Beyond this, the Federal
Reserve cannot and should not interject itself into individual private transactions
between lenders and borrowers, and I would emphasize that no government money
directly, or indirectly, was involved.
I have enclosed a copy of my Congressional testimony on this subject,
which explains my role more fully. I do appreciate your taking the time to write me
on this issue.
Sincerely,
sure
3H:RL:sep
#1514
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
19. 17;14,,
The Honorable Donald W. tvart
Chairman
Subcommittee on Agricultural noucarch
and Comma' Levislation
Committee on Agriculture; Nutritiexl
and Forestry
United States Senate
20510
washiagtw D.C.
Dear Chairman 5tevart,
In lic;;Lt of your r
ttee'a Uecont hearinq on
I tEout you would be intarqated
the Uunt-sil
itujo
Thteri74-,Iport" cfn the finaacial aspeet5
in having the CnCIQ4c
Ot that situation. I think 'thc rerort will help to clarify come
of the- factual inous that arose in your hearinla.
Av the "Interill x'Arlort indicatea i we seive
nuch of our attention to the tore
-,ulmation; an
whole situation aroae in ea: first inztance amil what
done to ;-rovent a slallar rrolaeLl in the future, ”e
you infor_141.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
§Nliti/944
anclogure
ECC:Ot
bcc; vrs.
(2)-'
7
now turned
to 1-4n7 the
miclt 'be
will keep
May 19, 1980
G. r:. Szego
Inter Technology/Solar Corporation
100 Main Street
Warrenton, Virginia 22136
rtear Mr. Szego:
I understand the concerns in your letter about the press reports—often
misleading—concerning the role played by the re.leral Reserve in certain loans to the
Hunt family.
Neither 1, the Ferieral Reserve, nor any •,
,overnment official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would net object to such a credit,
Provided that the Hunts would not be allowed to engae In fresh speculative activity of
any kind and that their rernainine silver would be liquidated in an orderly fashion. I
!night ernphasize that the negotiations involve a restructuring of existing ohligPtions—
they will not lead to any new funds for the Hunts. y sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program.
particularly as it applies to preventing ne'v speculation. fkeyond this, the Federal
Resivve cannot and should not interject itself into individual private transactions
between lenders and borrowers, :end I
emphasize that no government money
directly, or indirectly, was involved.
I have enclosed a copy of my Congressional testimony on this subject,
which explains Fn y role more fully. I do appreciate your takinl the tine to write me
on this issue.
Sincerely,
31-i:RUsep
11757
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 19, t9g0
Mr. Herman H. Talbert
)ear Mr. Walhert:
I understand the concerns in your letter about the press reports—often
rnisleading—conce.rning the role played by the Federal Reserve in certain loans to the
Hunt family.
`-.either I, the Federal Reserve, nor any governr,-)ent official instigated,
guided or approved the le,an negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not be allowed to engage in fresh speculative activity of
any kind and that their reilaining silver would be liquidated in ari orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations—
they will not lead to any new funds for the Hunts. tv sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing new soeculation. Reyond this, the Federal
Reserve cannot and should not interject itself into individual private transactions
between lenders and borrowers, and I would emphasize that no government rnone y
directly, or indirectly, was involved.
I have enclosed a copy of my Congressional testimony on this subject,
which explains my role more fully. I do appreciate your taking the time to write me
on this issue.
Sincerely,
Ft>sure
31-1:RL:sep
#1745
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 19, 1980
Mr. Joe Whitaker
Dear Mr. Whitaker:
Thank you for your letter on the money (narket mutual fund issue. 1 can
understand the concerns that you expressed. The recent action by the Federal Reserve
Board to which you refer was not aimed directly at placing a lid on rates and certainly
was not designed to disadvantage savers, but rather to help keep a more even
distribution of credit throughout the country. The growth of money market mutual
funds during the months leading up to the '
,
larch 14 actions had dramatically reduced
the flows of deposits to hanks and thrift institutions serving local communities and
their ability to meet the credit needs of those communities; at the same time, these
funds were adding greatly to the liquidity of the central money markets and thereby to
inflationary pressures in the economy. The enclosed press release and attached
documents explain the lloard's measures more fully.
appreciate your taking the time to write.
Sincerely,
losures
J :RL:sep
1/1796
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
may t9, 19RO
Mr. Phillip F. Woodard
Indian Jewelers Supply Company
P.O. Box 1774
601 East Coal Avenue
Gallup, New Mexico g73O1
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Dear Mr. V.,00dard:
I understand the concerns in your letter about the press reports—often
misleading—concerning the role played by the Federal Reserve in certain loans to the
Hunt family.
Neither I, the Federal Reserve, nor any government official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not be allowed to engage in fresh speculative activity of
any kind and that their remaining silver would be liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations—
they will not lead to any new furids for the Hunts. My sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing new speculation. P)eyond this, the Federal
Reserve cannot and should not interject itself into individual private transactions
between lenders and borrowers, and I would emphasize that no government money
directly, or indirectly, was involved.
I have enclosed a copy of my Congressional testimony on this subject,
me
which explains my role more fully. I do appreciate your taking the time to write
on this issue.
Sincerely,
losure
F, ......._
e
3H:RI.:sep
#1684
May 19, 1980
Mr. Byron 'V. Woodson
Dear Mr. Woodson:
I understand the concerns in your letter about the press reports—often
misleading—concerning the role played by the Federal Reserve in certain loans to the
Hunt family.
Neither I, the Federal Reserve, nor any government official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not be allowed to engage in fresh speculative activity of
any kind and that their remaining silver would be liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations—
they will not lead to any new funds for the Hunts. ‘iy sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing new speculation. Beyond this, the Federal
Reserve cannot and should not interject itself into individual private transactions
between lenders and borrowers.
have enclosed a copy of my Congressional testimony on this subject,
which explains my role more fully. I do appreciate your taking the time to write me
on this issue.
Sincerely,
losure
3H: L:sep
#1640
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 18, 1980
Dear Mr. Jordan:
On the occasion of your retirement, I want to
express the Board's appreciation of your dedicated
service during your six years as a member of the
Board's staff. My colleagues on the Board join me
in extending our very best wishes for a retirement
enriched with good health and happiness.
Sincerely,
Mr. Leo L. Jordan
GGS:slw
5/6/80
Pik
May 16, 1980
Mr. Henry Ludmer
Dear Mr. Ludmer:
Thanks very much for your letter of April 22.
appreciate your words of support and encouragement.
I greatly
I appreciate too your thoughts on economic policies that might
help to deal with the pressing Problem of inflation. In urging balanced
budgets for the upcoming fiscal years, you have put your finger on a
critical aspect of the inflationary problem. Persistent federal deficits
are a major source of our economic difficulties, both in terms of their
direct consequences and, Perhaps more importantly over time, in the
fostering of inflationary expectations. I sense, however, there is a growing
realization--throughout all segments of our society--that we must bring
this process under control. The recently proposed cutt in federal spending-while perhaps not as large as you I would have wished--are representative
of that changed attitude. But, make no mistake about it, achieving major
cuts will be very difficult. That process can be aided immensely by public
opinion and it is important that individuals like yourself let your views
be known. I, for one, will continue to speak out whenever I can as to the
need for sustained discipline over time in our fiscal affairs.
Thanks very much for writing.
Sincerely,
e_Y
JH:sep
#r1512
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
ay lt, 19G0
lionorab14 WiU.iat Proxmire
Chairman
CautIaitt4.-te on Daring, iiouineJ
and .Url)an Affairs
United 1;tatoz Senate
Washington, D.C.
20510
Dear Chairilian Proxmire
I am sendinTi you, in rcsponso to your earlier letters,
an 4InteriLl; P.eport on the Financial Asects. of the Silver 1,ar'ket
:..iituation in Larly 1.(X30." I thinh that interim aeport fully and
lairly reflects the information available to us at thiL; tire.
11Ln:ever, (:1, in coaceration with otr aciencie2, are continuing
to look at a num;;:r of oth‘nr asects of tha situation includinLj
th fundaental quarition of what can _be done to rxevent the occurrenco of this unhaiy -kind of event in the Lutura.
One of
:Icajor conclusions of our investi9ation to
date is that we can find no evidence to suugest that bank credit
was ubied in
cd;ncant '4ay 1.:y the Ijunt int=erAs to finance
the acciuiition and laaintenance of their naive silver i- osition
during the 02riod
in which silver prices wore rising.. However,
it i2 very clQ:lar that when the f.rice of tiilver broke
lower
.in late January. and then wain in .n.arch, the nunts incurred dAigationz well in exces of $1.5 billion, a substantial fraction of
which were financed, either directly or indirectly, by do?;4.c:.stic
bank credit. i3O;:.1out $900 million of such oblisations arc still
outstanding today dcs..ifita the fact that the Kuntz; apparently
have had to liuidate or disi?ose of a considera'Lle amount of
iilver and certain other acto to meat oblisations.
.Thoae oblioationl.; that arLi still cuttandinrr are the
debt:6 lieiteduled to b rt.otructurcd
virtue of the highly publicized credit line of 511.1
being ncotiated
by a uroup of doLlestic and foroign bankci and the it interets.
In that rcuard, the Interin Rc*ort also Illakcs it clear that this
credit facility wa
:rucl2 initiated and neetiated by the hunt
interests and the banko--?resuL-ial)ly becau
each of the .42,arties
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Federal Reserve Bank of St. Louis
rg
•
iienor.aLle
f:olt that tlx,
refectivo
1
rol?ectivc arranemcnt yould iAtrervjthen their
Tt
jud6ments and the credit
tri
thciir2 alone. 1:y rcae and the - role of
1cF;arve: waL: 1L.Jitcd to dif.;cusr;ion aimed at inourin
--Lat tilt.; loan would ilL;t in
way ;.:Ar.
: twod in a way that would
criit*1,cicu1atiori. At thi. point, I ari aatioricd that
adeuata .iafe.i;ualirdz to that effact, whi.ch are ccfcrrod to in a
:Joneral way in the Incrii. c.ort,
.
will
a lart of any final
loan ev:;roer.:cnt. 7.Jid; if and ;11c.-11 the cr:?..dit fucility is con:,.ttmziated, Iwi,11
101.1 with vio.i%1 dctailcd information in
that rexd.
,We. will ke%7; you informcd
to tho Eitatu
riavicw and analyziJ of thi2 2ituation.
L4i=t=c1_41
Sif_a41 A,
E(.2-C:pjt
bcc; Lrc, Itallardi (2)
A00:.
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of our furthcr
•
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Federal Reserve Bank of St. Louis
ft4r4 if
lgt GC
L.
t1
The ucuove,1-10
UAited 5tata4 Sozate
2.251a
ia for J our latter of April It rec;ardirw
iAdia,4,tr::. while maul of the fiscal mut relulatory
Illiaois bees builder tratsoend
rongttlial 1-4-/
acittAa,rit; oi the rederal Deserve, the overall ;Ackatya utalw
*core:: the extdout ti; wtlio4 mortcaTe and homing- markets bevy
;734114an umder ;r0$11,1114r.
Th keder41 4aaerve A'hares tbe Omaserne *hoot
j lortvele lorotere, home buyers 4 builders,
r&11i eeo t*
financinq alternatives* In d*siqnLr
ur.e t,t4i4r!A v4t;1
tL
ci1 Cre4it 7.42tralut Pro‘,ra areloufteed on March IC
vivo: :tiority to msittudAirtekv to :
t.,44rd asked ommercial
ro400uabl* availabilit3 of laze% to *mall tvesiamoseeei $ue"
144za1 builderif and to serving the Itidity needs of thrift
intltitutleasy The *rectal 44n-e3it re,AtireNextql applilaq t
incroaae* to ceasueer cretlit zrocificaIlv excluded vortoac
credit fox the purchase or imorovenert *f home*. In addit1en4
ot any further olkip
devesit re,%utrarotkatit
ttle
sloe ill the assets *f moaey market nutual fundn theuld
curb the s:nift of $“eviatiu s leavinc morr funtU avallahle
local otarkets to help meet local credit deuonds,
those asiacesiated tith housitg, rerthvrsre. the Federal Itez
has long supported gequIstory ehangosi that vwill make credit
readily available for tomainq durinq reriods of '.11.0
rates, Xessures enhencinq the abilivx of thrift inc-tit
to oomotte fox tends, such as VI* receAtly enautod 'alit
which provides for deregulation of der.oultort; in;titvitit.mr,
are imkortaat contributions in this recoard.
Derin4 recent veskso several other ty4.eu of rel.tef
home builder* have a-servo& slthoulh they will otviously ta'
*ma time to be reflected fully in eortvsge uarket conditio,
eit4 La homsbuildin-j activity. Costs of oonetruction credit I
declined in =dual localities as chert-ters intere*t rAtet N4V*
•
•
The Honorable Charles H. Percy
Page Two
dropped noticeably; costs of long-term residential mortgage
credit also appear to have reversed their earlier upward trend.
Effective April 18, the Department of Housing and Urban Development amended its policy to allow builders to obtain FHA-insured
permanent mortgage financing upon completion of a house, thus
easing the burden of carrying unsold inventory with highercost construction financing. In the realm of legislative
action, on April 22 the Senate passed a bill (S. 2177) that
would revise and broaden the types of emergency financial
assistance available to home buyers.
Measures designed to aid the mortgage and housing
markets, however, do not go to the core of the problem facing
these and other sectors of the economy. The inflationary
process itself must be halted. To do so within the limits of
our economic and financial resources requires a coordinated
approach by business, government, and consumers alike. The
anti-inflation measures announced recently by President Carter,
including fiscal restraint and tax changes that increase productivity, comprise a major step in that regard.
The proposals by the Illinois home builders also
alluded to the supervisory treatment of loans to borrowers
experiencing financial problems as a result of current conditions in the home building industry. Pursuant to the Federal
Reserve's supervisory responsibilities, standard examination
procedures require full consideration of all relevant factors
when reviewing loan portfolios. Chief among these considerations
are the underlying value of collateral, the ability of borrrowers
to resolve their difficulties, and the effects of general
economic and financial conditions. These procedures enable the
Federal Reserve to make an accurate assessment of the financial
condition of individual banks while remaining sensitive to the
difficulties of particular borrowers and economic sectors.
Within the bounds of prudent banking practice, the supervisory
oversight process does not preclude the management of a financial
institution from devising appropriate strategies, such as
renegotiating terms of certain loans or granting interest rate
concessions, that will enable borrowers to work out their problems
in a manner consistent with the interests of the lending institutions.
The concerns raised by the Illinois home builders are
similar to those presented in a recent meeting with representatives of the National Association of Home Builders. The NAHB
4110
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
donoraLla Charlaa H. Pairc
ra4;6 Three
roa.,uuistud that the bask rugulatory swamies take 4tat,„
ensuro that examiner, axe aware of the current oendl°'
tacin9 tht bane building indteatt. This cattier bas
reterred to the faderal financial Inetituticms Cr
it relates to the 5uparvie4ox of thrift isetituti4r4,.. 4,6# 404.4
At cokoorcial tatas, Itbonld point out that an7 action tat
with respbot to this natter would haw, to maintain the integr
of tlIe axaminetios i:rocess and *nature the alecoism 4 s4ility
oroacts the safety tad tiounotneto of the financial isstitut
indastr-y.
sincerti
Ufa. a_ 1 A. Volcker
arAtcsas4ot (fV-3.58)
1.
.,e41
NAL* Fic*cr
tig, Corwin
Spillcukat%er.
Mrs. lota114rdi
ny 1. 1180
The Uonorable William Proxmire
Chai=au
comtaittse on Danl.ing, iiin
and torliaa Affairs
k;nited
..ato.-‘; Senate
20510
Dear C4aixan Proxmirei
I WZ endin you, in relonsf, to our earlier lettere,
"Interin keport on the 1%inanci3l Aspects of the Silver ilarket
Situation in Larly 19804' I think that Interim ::7e:-:ort fully and
fairl reflectii the inforlaation available to us at thiz
ilowever, we, in cooexation with other agencies are continuing
to looL at a nuxa;er of other asitcta of the situation including
t1 -ulesstion of what can be done to ;,ravent tIle occur
the fund
roe c4. tit unklay kind of event in the future.
1.,1tjor concluLlions of our inves,ti‘jation to
(..inv. of
ate i that we can find no evidenc to zuget ti;at ank credit
1.11
in a t;initicant way by the 1!unt
tG finance
acc4uik.iitiun and zaintenance of their raiagivo i1vtr rosition
during the weriod in 4hic:4 ailver rice were risince. However,
it iu ver;, cltsar that wnen the i,rice of nilver broke sharpll: lower
in late Januax:„ and thou e4.1ain in liarcL, the Uunts incurred obliations well in wtoo:.4.a of $1.5 billion, a substantial fraction of
whiclz. work.; fillanced, eithcx directly or indirectly, by doz:lela.tic
x. ;out$900 zuillion of auch oiaiz3ations are still
outandiij today desiA.te the fact that the flunts apoarently
have ;ad to lik;uidate or dispose of a oonsideraLle amount of
ailver and certaLi other auzets to meet obligations.
Z4k.,1,e olAic.iation6 that are still outstanding are the
e r‘etructured j virtue of the highly publidebt
cizec tel.:et:lit line of $1.1 Lillian vhich ia still being negotiated
by a vrout, oi dua44tic ;Ind foreign banks aid theEllot interests.
ln that re(jard, the Interir. Roi'ort also makes it cicar that this
credit facility was, freely initiated and necjotiatod b thi aunt
interost and the banks--iiresuwably bccau%e each of thc;. i.arties
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Federal Reserve Bank of St. Louis
Tat., 1104-wraL16
Proxitiire
f4at. tiat
arran=4.ement would strenithen their
reisctive iwiitiona. M41
jud%vAentc ancA t.tio credit
jud,:iwents ar thuirz and theiru alone. ;.1r role and the rolc of
FedQral I'v3erve was limited to diDcussion aimed at inaurin=ii
that tht; loan w.tuld not in any way be uue0 in a way that would
skteculation. ;It this roint/ I am saticfied that
adecivate safeiusird4 to that effect/ whicl/ aro saferred to in a
tiay in tl-ie interift Report/ will be a iart of any final
/owl
4%nd, if and when the credit facility is contztlaated l I wini.provide you with vore detailed information in
L4at reii‘rd.
inforued
to thc statuz; of our further
We will
riAriw and analyaio of thiz .vAtuation.
acerely 0
Sgaml A. Mau
Encluoare
EGC:iljt
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1,iallardi (2)
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Federal Reserve Bank of St. Louis
Mlv 16. 1980
Tte ;'ortorritle i1iiwt Proxnire
Cheirman
Cc-:nittele on M..nkinn, ousirvi
and Urban Affairs
UniteA States
nate
vfashin47ton, t. C. 70510
Dear Chairman Proxpl
11-ank you for your letter of May 13 rervAr'lier;
your Connittee's oversif7ht hearin9 on the Chrysler
Corporatiou Loan Cunvoltee Act.
I am lookin7 forward to arrearthq before your
CorgAttee on May 70 at Z.30 p
Slneerely.
SLPaul A Volcker
CO:vcd (V-214)
bee- Pr. Corrigan
mrs. Yellardi (2) t/"'
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Federal Reserve Bank of St. Louis
My 16, 1980
MEMORANDUM FOR CHAIRMAN SPRAGUE
FROM:
Paul A. Volcker
The attached letter from True Davis is self-explanatory.
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Federal Reserve Bank of St. Louis
May 15, 1960
wear Mr. Avery:
Thank you for the letter on the economic situation.
can fully appreciate the concerns that prompted you to write.
The course we are pursuing of trying to reduce
inflation and inflationary expectations through fiscal and
monetary discipline is now showing some signs of success,
particularly in the recent easing of credit market pressures.
can appreciate too your concern about the cost to
our nation of foreign aid and of export-subsidy programs.
Decisions redarding those programs, however, must take into
account a number of considerations that aren't entirely
economic, for example relating to national defense and
national security--matters that are resolved ultimately by
the Congress in its deliberations.
Sincerely,
Mr. M. W. Avery
TEAftn
#140
Vay 15, 1980
Mr. Cyril F. Brickfield
Executive Director
National Retired Teachers Association
1909 K Street, N.W.
Washington, r).C. 10049
isear Mr. Brickfield:
Thank you for your letter on the money market mutual fund issue. I can
understand the concerns that you expressed. The recent action Sy the Federal Reserve
Roard to which you refer was not aimed directly at placing a lid on rates and certainly
was not designed to disadvantage savers, but rather to help keep a more even
distribution of credit throughout the country. The growth of money market mutual
funds during the months leading up to the March 14 actions had dramatically reduced
the flows of deposits to banks and thrift institutions serving local communities and
their ability to meet the credit needs of those communities; at the same time, these
funds were adding greatly to the liquidity of the central money markets and thereby to
inflationary Pressures In the economy. The special deposit requirement of the hoard on
increases in money market mutual funds assets is intended to be temporary,and we hope
conditions will permit it to be eliminated at an early date.
I appreciate your taking the time to write.
Sincerely,
#1056
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Federal Reserve Bank of St. Louis
Aay 15, 19kC
Dear Mr. crown:
Thank you for your letter.
I appreciate your
takino the time to write and have enclosed a copy of
my testimony at these !tiearinos.
Sincerely,
Enclosure
••• alb
Mr. Carl C. Brown
May 15, 1980
Mr. Howard L. Caplan
CSNI, Realtor
8700 Libery Plaza Mall-P.O. Box 268
Randallstown, Maryland 21133
Dear Mr. Caplan:
Thank you for your letter on the effects of high interest rates on the
construction industry. I can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
onetary policy has an essential role to play in that
greater economic stability.
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly agree with you that we
nee,: help in the form of firm discipline in fiscal policy, particularly as it anplies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been gystablished for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small hanks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas, including home building,
that such hanks are justified in exceeding the 9 percent limit op loan growth contained
In our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fail now, the discomfort later
will be all the more serious. that is why I believe that we must get the process over
with so that we can move into an economic environment in which construction and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
L:sep
#1271
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Federal Reserve Bank of St. Louis
ay 15, 1980
Doors Incorporated
P.O. Box A 127 - Hartman Road
Wadsworth, Ohio 44281
Dear Sirs:
Thank you for your letter concerning the difficulties you are experiencing
In the housing industry. I want you to know that I am not insensitive to the kinds of
difficulties you and others are experiencing. There are now signs of a decided easing
of the extreme credit market pressures that we have experienced in the past few
months, and in the meantime, the Federal Reserve has taken steps to help ensure that
small banks that are under liquidity pressures will have added funds at their disposal to
help meet the credit needs of their local communities. And, we have said that where
banks are essentially confining their loan expansion to priority areas—including
homebuilding—that such banks are justified in exceeding the q percent limit on loan
growth contained in our Special Credit Restraint Program.
As far as your comments about the role played by the Federal Reserve in
certain loans to the Hunt family are concerned, these have been the subject of often
misleading press reports. Neither I, the Federal Reserve, nor any government official
instigated, guided or approved the loan negotiations between the Hunt interests and
the group of banks involved. The Federal Reserve has only said it would not object to
such a credit, Provided that the Hunts would not he allowed to engage in fresh
speculative activity of any kind and that their reroaining silver would be liquidated in
an orderly fashion. I might emphasize that the negotiations involve a restructuring of
existing obligations—they will not lead to any new funds for the Hunts. My sole
concern has been to ensure that such a loan complies with the Federal Peserve Special
Credit Restraint Program, particularly as it applies to preventing new speculation.
Beyond this, the Federal Reserve cannot and should not interject itself into individual
private transactions between lenders and borrowers.
I have enclosed a copy of my Congressional testimony on this subject,
which explains my role more fully. I do appreciate your taking the time to write me.
Sincerely,
Enclosure
RL:sep
1/1753
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Federal Reserve Bank of St. Louis
tha.
ytt..
....caudate* -Itatstmarmatummaito.•
15, 1980
Mr. Carl Elswick
Dear Mr. Elswick:
I have read your letter on high interest rates and inflation, and desnite your
strong words, I can symphathize with the concerns that prompted you to write.
You have put your finger on a critical aspect of the problem with your
comments on government spending. Persistent federal deficits are a major source of
our economic difficulties, both in terms of their direct consequences and, perhaps
more importantly over time, in their fostering of inflationary expectations. I sense,
however, there is a growing realization—throughout all segments of our society—that
we must bring this process under control. The recently proposed cuts in federal
spending—while perhaps not as large as you or I would have wished—are representative
of that changed attitude.
However, monetary policy also has an essential role to nlay in the fight
against inflation since excessive inflation cannot persist over time unless fueled by
excessive growth in money. Thus, the basic thrust of monetary policy is, and will
remain, aimed at maintaining moderate growth in money and credit.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal eZ.eserve has also taken steps to help ensure that sraall banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs ot their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas, including small business,
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental tact that the
process of taming inflation will not be quick or easy. 5ut If we fail now, the
discomfort later will be all the more serious. That is why I believe that we must get
the process over with so that we can move into an economic environment in which
housing and the economy in general will prosper. I appreciate your taking the time to
(
IH:sep
#1582
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Federal Reserve Bank of St. Louis
Sincerely,
May 15, 1980
Mr. Merle E. Elliott
Dear r. Elliott:
Thank you for your letter on the handling of monetary policy.
I can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded
inflationary expectations, there is a wide national consensus that economic policies must over time continue to work to reduce inflation and
thereby provide the foundations for greater economic staty. Monetary
policy has an essential role to play in that process since excessive
inflatiV n cannot persist over time unless fueled by excessive growth in
money. Thus, the basic thrust of monetary policy is, and will remain,
aimed at maintaining moderate growth in money and credit. However, as
you suggest, monetary policy alone cannot do the job effectively. In
that regard, I would strongly agree with you that we need help in the
form of firm discipline and fiscal policy, particularly as it applies to
restraining the growth in government spending and thereby in government
borrowing.
There are now signs of a decided easing of the extreme credit
market pressures that we have experienced in the past few months. The
demand for credit has lessened and market interest rates have moved lower.
Reflecting these develooments, the Federal Reserve has eliminated the
3 percentage point surcharge on the discount rate that had been established
for certain classes of banks. And, mortgage rates have fallen somewhat.
These factors are encouraging, but they do not alter the fundamental fact that the process of containing inflation will not be easy.
But if we fail now, the discomfort later will be all the more serious.
That is why I believe that we must get the process over with so that we
can move into an economic environment in which business and the economy
in general will prosper.
I appreciate your taking the time to write and I hope I will
have your understanding and support as we seek to resolve this most pressing national problem.
Ii
TEA:JH:mrk
#1719
(
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Federal Reserve Bank of St. Louis
Sincerely,
May 15, 1980
Mr. Charles F.. Clock, President
Glock, Inc.
P.O. Fox 6, 318 Reckord Road
Fallston, Maryland 71047
near Mr. Glock:
Thank you for your letter on interest rates and monetary policy. I can fully
appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to viork to reduce inflation and thereby provide the foundations for
greater economic stability. zionetary policy has an essential role to play in that
process since excessive inflation cannot persist over tir.ie unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, as you noted,
monetary policy alone cannot do the job effectively. In that regard, I would strongly
aree with you that we need help in the form of firm discipline in fiscal policy,
particularly as it applies to restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage Point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing A.dministration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas--including home building-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the --aore serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
1:1-ZL:sep
1270
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Federal Reserve Bank of St. Louis
May 1,, 13.8/1
Randy Grimm
Dear Mr. cirimmt
Thank vou for your letter on high interest rates and the economy. I can
understand the concerns that prompted you to write.
You have nut your finger on s critical aspect of the pro,lern with your
'comments on government spending. Persistent federal deficits are a major source of
our economic difficulties, both in terms of their direct consequences and, pcsrhans
more importantly over time, in their fosteringof Inflationary expectations. T sense,
however, there is a Ilrowing realizati,y1—thrsughout all segments of our society—that
we must hrinst, this process under control. The recently proposed cuts in federal
spending—while perhaps not as large as you or I would have wished—are representative
of that changed a ttitts-se. c'tit, make no mistake about it, achieving major cuts will be
very difficult. That proctms can he aided immensely isy public opinion and It is
important that individuals like yrnirself let your vients be known. 1, for one, will
continue to speak out whenever I can as to the need for sustained discipline over time
in our fiscal affairs.
Of course, monetary policy also has an essential role to play in the fight
against Inflation since excessive Inflation cannot persist over time unless fueled by
excessive growth in money. Thus, the basic thrust of monetary policy is, and will
remain, aimed at maintaining moderate grovrth In money and credit.
There are now signs of a decided easing of the extreme credit Inarket
pressures that we have experienced, in the past few months. The demand for credit has
lessened and market Interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of bans. And, mortgage rates have
fallen somewhat, as reflected In the lowering by the Federal Housing Administration
of Its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local commmities. And, we have said that where banks are
essentially confining their loan expansion to priority areas, including hornebuildins,
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit r',estraint Program.
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Federal Reserve Bank of St. Louis
•••••-r1/4..
a
Mr. Ilandy Grirf,f,)
Page Two
hell) hut they do not alter the fundarrental fact that the
These isctors
not be quirk or easy. 711t if We fail now, the
prooess of tAming inflation
eliscomfort later will be all the more serious. That is why I believe that we must get
the process over with SP that we CArt move into an economic environment in which
prosper. I appreciate your takinv the time to
housing aro the extvonly in generAl
write iryi I ‘lope I will have your unelerstanding, anti smport sve seek to resolve this
most pressing national provlem,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
SIncogely.
L:seo
May I
LAO
Mr. Adam Hamilton
;Near k4r. Hamilton:
yo4i to ',‹now that I am net insersitive to
I .1ilve read your letter and
the kinds of difficulties you are experiencing. I also know that in the current
circumstances, you cannot .dra.efe much consolation frerl that alone. nut, you have put
your finger on a critical aspect of the problem with your comments on goverrneet
spending.
You are absolutely right in sue esting thAt persistent federal deficits z?rer.
major source of our economic difficulties, both in terms of their direct consequences
and, oerhans more importantly over time, in their fostering of Inflationary
expectatines. I sense, however, there is a growing, reallesticitn.throughout all
segments of our society—that we ?rust brine this process under control. The recently
propose'4 cuts In federal spending—while perhaps not as large as you or I would have
wished—are representative of that changed attitude. gut, rnat<e no mistake about it,
aeNeving major cuts will be very difficult. That process can be at
immensely by
oublir opinion and it is imr.
,
,,
...1rtant that indivieuals like yeltrself let your eievi be
known. 1, for one, -will continue to sneak out whenever I can as to the nefel for
sustained discipline over time in our fiscal affairs.
There are now signs of 3 decided easing of the extreme credit market
pressures that we have experienced in the nett few months. The demand for credit has
lessened and 7narket interest rates have movee lover. reflecting these developments,
the Federal Reserve has el1minate4 the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen sorneeytutt, as reflected in the lowering Sy the Federal 1-4ousing Administration
of its rnax1:--,u,..-n riortgaie rate.
Sincerely,
311:RL:sep
#14%
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 15, 1980
Mr. Raymond L. Horvath
r)earAr. Horvath:
Thanks for your further letter. I understand your point about VA mortgage
rates especially in view of current levels of military pay, but the Federal Reserve
cannot involve itself directly in this matter.
We are encouraged, however, by signs of a decided easing in credit market
pressures. Mortgage interest rates have fallen somewhat, as reflected in the lowering
by the VA of its maximum mortgage rate which you noted.
The prospects for a lasting decline in interest rates depend on continued
progress in reducing inflation and inflationary expectations, and that is the objective
of our policies.
I appreciate your again taking the time to write.
Sincerely,
e/
311:sep
#1622
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
e.'iay I 5, 1980
Mr. r'onald 3. Kales&y
Dear Mr. Kalescky:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies rnust, over
time, continue to vork to reduce inflation and t!iereby provide the foundations for
greater economic staby. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in rnoney. Thus, the basic thrust of monetary policy is, and will•remain, aimed
at maintaining moderate growth in money and credit. However, monetary Policy alone
cannot do the job effectively. In that rel,ard, I would strongly agree with you that we
need help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
Pressures that we have experienced in the past few months. The demand for credit ha.s
lessened and market interest rates have moved lower. Reflecting these developme.nts,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that haci been established for certain classes of banks. And, mortgage rates have
fallen sornewhat, as reflected in the lowering by the Federal Housing Administration
of its rnaximurn mortgage rate.
The Federal Reserve. has also taken steps to help ensure that small banks
that are under liquidity pressure.s will have added. funds at their disposal to help meet
the credit needs of their local communities. And, we have saki that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit R.estraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that %.ve must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your uncierstanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
:V,14R6L4:sep
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 15, 1980
Dear Mr. Lynch:
I have read your letter and can fully understand
your point. In fact, I do, whenever the situation
permits, speak out on the need for fiscal discipline
for I, like you, believe that achieving that result
more fully will help us to resolve our economic problems.
On the matter of "overextension," the point I was
trying to make is that there is a general thinness in
liquidity and capital in the business sector which,
inevitably, makes business, small and large, more
prone to short-run problems.
I appreciate your taking the time to write.
Sincerely,
Mr. Richard 0. Lynch
President
The Trelyn Company
1660-H Townhurst
Houston, Texas 77043
Ee:slw
#1482
May 15, 19S0
Mr.T)ennis F.. 'laticsen
Dear Mr. 'yiaddens
Thank you for your letter on the effects of high interest rates on housing.
an understand the concerns that prompted you to .vrite, and incidentally the quote
you apnarently read is inaccurate.
You have put your finger n a critical aspect of the prohlem with your
comments on gevernme.nt spending. Persistent federal 9.'1,1ic1ts are a major source of
our economic 'fifficuities, both in terms of their direct consequences and, perhaps
;nom Importantly over time, in their fostering of Inflationary expectations. 1 sense,
however, there is a growing realization—thromhout all segments of our society—that
we must bring this process under control. The recently proposed cuts in federal
spending—while perhaps not as large as you or I would have wished—are representative
of that changed attitude. Nit, make no mistake about it, achieving major cuts will be
very difficult That process can he ailed i-enensely by public opinion .Irtri it is
Important that indivktuals like yourself let your views be known. I, for one, will
continue to speak out whenever I can as to the need fnr sustained discipline over time
In our fiscal affairs.
`...1onetary policy also has an essential role to play in the fight against
inflation since excessive inflation oinnot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit.
There are now signs of ;7,. decided easing of the extreme credit ?narket
pressures that we have experienced in the past few months. The demand for credit has
lessened aril 1.1arket interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 'I percentage point surcharge in the discount
rate that had been established for certain classes of hanks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve as also taken steps to help ensure that small hanks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where barites are
essentially confining their loan expansion to priority areas, Including homebuildine,
that such banks are Justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
nennis E. ,ILladden
Page Two
These facters will help but they do not alter the fundamental fact that the
process of taming inflation will not he quick or easy. Nit if we fail now, the
believe that we lilust get
cliscorlfort later will be all the more serious. That is
the process over with so that we can move into an er:onorlic environment in which
housing and the economy in general will prosper. I appreciate your taking the time to
,..rrite and I hope I will have your understanding and support as %if? seek to resolve this
tnost pressing national problem.
Sincerely,
141613
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 15, 1980
Dear Mr. Massino:
Thank you for your letter asking for the definition
of a recession. Some economists define a recession in a
technical fashion as a drop in real Gross National Product
for two successive quarters -- that is, GNP adjusted for
the impact of changing prices. More generally, a recession
is a widespread slowing in economic activity marked by
lower sales and output and a climb in the unemployment
rate.
I appreciate your taking the time to write.
Sincerely,
Mr. John Massino
JH/EGC:slw
$1455
May 15, 19/10
4r. H. Smith eKann, President
rteral Products Company,Inc.
Fre•iericksburg, Virginia 774)11
r)ear ir. McKann:
Thank you for your letter on the effects of high interest rates on !lousing as
well as the materials you enclosed. I can understane the concerns that nrorepted you
VI write.
You have put your finger on a critical aspect of the prnblern with your
comments on government spending. Persistent federal deficits are a major source of
our economic difficulties, both in terms of their direct consequences and, nofhaps
more importantly over time, in their fostering of inflationary r.”pectatIons. I sense,
hoa ever, there is a ;rowing realization—throughout all segments of our society—that
we must hring this process under control. The recently proposed cuts in federal
spendin7—wh11e perhaps not as large as you or I would have wished—are representative
of that changed attitude. Rut, make no mistake about it, achieving major cuts will be
very difficult. That process can he aided immensely hy public opinior. And It is
important that indivirittals like yourself let your views he known. 1, for one, will
continue to speak out whenever I can as to the need for sustained discipline over time
in our fiscal affairs.
course, monetary policy also has an essential role to play in the fight
against inflation since excessive inflation cannot persist over time unless fueled by
excessive, growth in -noney. Thus, the basic thrust nf monetary policy is, and will
remain, aimed at maintaining moderate i%trowth in money and credit.
of
There are now signs of a decided easing of the extreme credit niarket
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. eflecting these ei,velopments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of hanks. And, rt-4vtgage rates have
fallen somewhat, as reflected in the lowering by the Fe,leral !-‘cvtising Administration
of Its r- axl(r.:un.1 mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liouldity pressures will have added funds at their disposal to help meet
the credit needs of their local corimunities. And, we have said that where hanis are
essentially confining their loan expansion to priority areas, including homehuilding,
that such banks are justified in exceeding the 9 percent limit on loan growth contained
In our Special Credit Restraint Program.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Mr. if. Smith 1,*cr(ann
Page Two
These factors will help but they do not hlter the fundamental fart thdt the
process of taming Inflation will not be quick or easy. nut LI we fail now, the
elscorifort Ipter 'All be all the more serious. That is whys believe that we froist get
the process over with so that we can move into an economic environment in which
housing and the economy in Aereral will prosper. I appreciate. your taking th:1 tire to
write and I hope I win have your unelerstanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
(t1052:RT.:sep
https://fraser.stlouisfed.org
orFederal Reserve Bank of St. Louis
444
.
. ..211111•111Iiir
-
..
May 15, 1980
Mr. Richard Morse
near vtr. Morse:
Thank you for your letter. In view of the experiences you described, I can
fully understand the concerns you have about the press reports—often misleading—
concerning the role played by the Federal Reserve in certain loans to the Hunt family.
Neither I, the Federal Reserve, nor any government official instigated,
guided or approved the loan negotiations betveen the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not be allowed to engage in fresh speculative activity of
any kind and that their remaining silver would be liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existinf., obligations—
they ‘vill not lead to any new funds for the :lunts. ‘ly sole concern has been to ensure
that such a loan complies with the Federal 7?,
, eser ve Special Credit Restraint Program,
particularly as it applies to preventing new speculation. Beyond this, the Federal
Reserve cannot and should not interject itself into individual private transactions
between lenders and borrowers.
I have enclosed a copy of my Congressional testimony on this subject,
which explains my role more fully. I do appreciate your taking the time to write me
on this issue.
Sincerely,
F.e/osure
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
761
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 15, 1980
Mr. George Rath
Dear Mr. Rath:
Thanks for your letter of May 1. I can fully appreciate
the predicament faced by retired persons in an environment of
unprecedented rates of inflation, particularly those whose savings
are invested in long-term, low-yield assets.
Your proposals for treating long-term, lower-yielding
Treasury securities more flexibly is interesting, but I am afraid it
raises a number of concerns about the management of the government
debt. I would point out, however, that an investor can obtain a constantly changing, market-related yield on an investment in government
securities now -- simply by investing in short-term instruments, say
three-month or six-month bills.
The best solution, it seems to me, is to reduce our inflation from its recent destructive levels and thereby reduce interest
rates as well. I am particularly encouraged that interest rates have
declined rather considerably in recent weeks. It is, of course, true
that interest rates are still at high levels and I cannot be sure that
these recent reductions will be enlarged or that rates will move
decisively and permanently lower. That will ultimately depend on our
success in getting the inflation rate down. But I am encouraged by
these most recent market developments.
Thanks very much for writing.
eA
)/
:JH:mrk
#1714
Sincerely,
;\,lay 1.5, 1980
Mr. James C. Schmidt, President
and Managing Officer
San Diego Federal Savings and Loan Association
600 B Street
San Diego, California 92183
Dear Mr. Schmidt:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
for
time, continue to -.vork to reduce inflation and thereby provide the foundations
in that
greater economic stability. Monetary policy has an essential role to play
ive
process since excessive inflation cannot persist over time unless fueled by excess
n, aimed
growth in money. Thus, the basic thrust of monetary policy is, and will remai
alone
at maintaining moderate growth in money and credit. tlowever, monetary policy
with you that we
cannot do the job effectively. In that regard, I would strongly agree
s to
need help in the form of firm discipline in fiscal policy, particularly as it applie
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
d for credit has
Pressures that we have experienced in the past few months. The deman
developments,
lessened and market interest rates have moved lower. Reflectinl these
the discount
the Federal Reserve has eliminated the 3 percentage point surcharge in
age rates have
rate that had been established for certain classes of banks. And, mortg
Administration
fallen somewhat, as reflected in the lowering by the Federal Housing
of its maximum mortgage rate.
banks
The Federal Reserve has also taken steps to help ensure that small
al to help meet
that are under liquidity pressures will have added funds at their dispos
where banks are
the credit needs of their local communities. And, we have said that
home building—
essentially confining their loan expansion to priority areas—including
growth contained
that such banks are justified in exceeding the 9 percent limit on loan
in our Snecial Credit Restraint Program.
that the
These factors will help but they do not alter the fundamental fact
discomfort later
process of taming inflation will not he easy. But if we fall now, the
process over
will he all the more serious. That is why I believe that we must get the
housing and the
with so that we can move into an economic environment in which
write and I hope
economy in general will prosper. I appreciate your taking the time to
most pressing
I will have your understanding and support as we seek to resolve this
national problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
May 15, 1980
Mr. Theodore H. Silbert, Chairman
Sterling National Bank & Trust Comany
of New York
540 Madison Avenue
New York, New York 10022
Dear mr. Silbert:
Thank you for your letter and enclosures on the criticisms of
commercial banks in the Mew York area. I was glad to see that you rightly
pointed out in your editorial reply that the Federal Reserve has urged that
the normal financing needs of snail business receive special attention.
I also think you put your finoer on an important point in stressing that
It is essential that small businesses receive adequate consultation in
preparing their loan applications. Thank you for taking the time to write
to me.
Sincerely,
JH:RL:sep
#1730
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 15, 1980
Dear Mr. Skaalen:
I can well understand the sentiments expressed
in your letter about the Credit Restraint Program.
In fact, the "ground rules" for large banks and nonbanks (including Commercial Credit Corporation) are
stiffer because they are required to supply special
monthly reports on their lending activities under the
Program. More to the point, these extraordinary measures are not easy for anyone and I hope conditions
will permit their removal in the not too distant
future.
Sincerely,
Mr. Leonard D. Skaalen
President
Harmony State Bank
Harmony, Minnesota 55939
C:slw
#1542
May 15, 1980
Mr. William 3. Smith
Dear Mr. Smith:
Thank you for your letter on the effects of high interest rates. I
understand the concerns that prompted you to write. While we certainly have our
economic problems, 1 do not foresee anything like a major depression such as the one
in the 1930's.
Let me just say a few words on the economic situation. The level of
interest rates is largely a reflection of the rapid rate of inflation we are experiencing
and the deeply embedded expectations that prices will continue to climb. In this
environment, interest rates are high mainly because lenders are reluctant to extend
credit without being compensated for the declining value of the dollars they will
receive in repayment.
The only way we are likely to achieve a lasting decline in interest rates is
if there is a lowering of inflation and inflationary expectations. 'laintenance of
reasonable control over growth of money and credit is an essential ingredient In the
fight against inflation, and the Federal Reserve is committed to this policy. However,
monetary policy alone cannot do the job effectively. In that regard,! would strongly
emphasize that we need help in the form of firm discipline in fiscal policy, particularly
as it applies to restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small hanks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including small business—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an environment in which the economy in general will
prosper. I appreciate your taking the time to write and I hope I will have your
understanding and support as we seek to resolve this most pressing national problem.
Sincerely,
H:RL:sep
7\1347
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 15, 1980
Mr. Earl E. Stetter
Dear 'AG StatiPr:
I have read your letter on high interest rates and inflation, and T want you to
know that I am not insensitive to the kinds of ,lifficulties that prompted you to write.
You have put your linger on a critical aspect of the prolern with your
comments on government spending. Persistent federal deficits are a major source of
our economic difficulties, both in terms of their direct consequences and, perhaps
more importantly over time, in their fostering of inflationary expectations. I sense,
holiever, there is a grewine realization—throughout all segments of our societv—that
in federal
we trust bring this erocess under control. The recently proposed cuts
s7eneinr.—while perhaos not as large as you or I would have wished—are representative
of that changed attitude. !Nut, make no mistake about it, achieving major cuts will at
very difficelt. That process can he aided iremenselY 'ay public opinion and it is
important that individuals like yourself let your views he known. I, for one, will
continue to speak out y.henever I can as to the need for sustained discipline over time
in our fiscal affairs.
Of course, monetary policy also ha,g an essential role to play in the fight
aaainst inflation since excessive inflation cannot persist aver time unless fueled by
excessive growth in money. Thus, the basic thrust ef monetary policy is, and will
remain, aimed at maintaining moderate growth in money and credit.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced In the past few •nonths. The demand for credit hAs
,
lessened and market interest rates have moved lower. Reflecting these developments
the Federal Reserve '111,S eliminated the 3 percentage point surcharge in the discount
have
rate that had Seen established for certain classes of banks. And, mortgage rates
stration
fallen somewhat, as reflected in the lowering by the Federal Housing Admini
of its rna.ximurn mortgare rate.
The Federal Reserve has also taken steps to help ensure that small banks
meet
that are under liquidity pressures will have added funds at their disoosal to help
are
the credit needs of their local communities. And, we have said that where banks
homehuilding,
essentially confining their loan expansion to priority areas, Inclading
that such banks are justified in exceeding the 9 percent limit an loan growth contained
In our Special Credit Restraint Program.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
tlarl
Page T
Statler
These factors will help hut they do not alter the fundamental fact that the
process of taming Inflation will not be quick or easy. Aut if we fail now, the
discomfort later will he all the more serious. That is why I believe that we must get
the process over with so that we can move into an economic environment In which
housing and the ecenorn y in general will prosper. I appreciate your taking the time to
svrite.
Sincerely,
4
(--nsep
f1427
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 15, 19b0
!Ir. burr Weilane
Weiland builders
602 Hillcrest Drive
Verona, Wisconsin 53593
Dear hr. Weiland:
Thank you for your letter on the effects of our current
economic policies on you and others in your industry. I can fully
appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded
inflationary expectations, there is a wide national consensus that
economic policies must, over time, centinue to work to reduce inflation
and thereby provide the foundations for greater economic stability.
There are now signs of a decided easing of the extrette credit
market pressures that we nave experienced in the past few months. The
demand for credit has lessened and market interest rates have moved
lower. Reflecting these developments, the Federal Reserve has eliminated
the 3 percentage point surcharge in the discount rate that had been
established for certain classes of banks. And, mortgage rates have
fallen somewhat. These developments are encouraging, but they do not
alter the fundamental fact that the process of containing inflation
will not be easy. But if we fail now, the discomfort later will be
all the more serious. That is why I believe we must get the process
over with so that we can move into an economic environment in which
business anL1 the econory in general will prosper. I appreciate your
taking the time to write and I hope I will have your understanding
and support as we seek to resolve this most pressing national problem.
Sincerely,
TEA:JH/tn
#1699
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 15, 1980
Dear Mr. Worsham:
Thank you for your letter concerning the
homebuiloing industry. The Federal Reserve does not
have a subsidy program for that industry, but in this
perio6 of extrewe credit market pressure, which has
been felt with especial severity in homebuilding, we
have tried to see that, within the Special Credit
Restraint Program, the normal flow of credit is maintained to the housing industry.
appreciate your taking the time to write.
Sincerely,
Mr. Randolph S. Worsham
Attorney At Law
Executive Plaza Tower, Suite 4020
1545 West Mockingbird Lane
Dallas, Texas 75235
May 15, 1980
Mr.l. Zarnbakian
Dear Mr. Zarnbakian:
1 have read your letter and I want you to know that I am not insensitive to
the kines of difficulties you are experiencing. I also know that In the current
circumstances, you cannot draw much consolation from that alone. rAlt, you have put
your finger on a critical aspect of the problem with your comments on eovernment
spending.
You are ahsolutely ricr„ht in suggestine, that persistent federal deficits are a
major source of our economic difficulties, both in terms of their lirect consequences
and, perhaps more iraportantly over tirre, in their fostering of inflationary
expectations. I sense, however, there is a growing realization—throughout all
segments of our society—that we must bring this process under control. The recently
proposed cuts in federal spending—while perhaps not as large as you or I would have
wished—are representative of that chaneecI attitude.
s,ionetary policy also has an essential role to eiay in bringing rforin
Inflation, since excessive inflation cannot persist over time unless fueled by excessive
growth of money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced In the past few months. The demand for credit has
lessened and market Interest rates have movel lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
,
fallen somewhat, as reflected In the lowering by the Federal Housing Administrating.
of its maximum mortgage rate.
Sincerely,
311:1-ZL:sep
#1330
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
;44tra.katz, izar4X ;%1111U,14AIO
4,.:o1‘UmCX Aifair
64.,cou.litukta
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am; i)rt#4..11 ;4ffair,,z
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traint roulation,
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ckc to an6nd
aoard ourci 14, The : titio
desliwi With Change in terms, by kermittin crediterz
rut that custowers notify th,em of refusal to acet th
•Vou ara concerned *bout the offset of ,t1Alel a proociwwners who may be :fotentially subject to tnese
i4ue whiall the ;;-lutitiA)n •midras60a4hc';a4eri the
supixt
conct.arn on tlAo :.art af creditors and conr4i
sutara.Ii rder tc:, reoolve the ;‘A.11,:ti
tAtiui or S 229.6, the Board will oontadcAr tlaz.k ;otition
at ti ;44ketin-,3 7.ic4i-tauled or YAity 21. CE course, the boarOs
aoclionw cor:41der this irietition fornalL4 does not zglealk the
;. xist will Aoa.,41;4arlly adopt the proposal. Uowever, we believe
U.at filrthes oluxification of this natter is essential in order
ertidit restraint nzolroo with
to carri out the
t
;7414111414u,;
- 4.A.a4ocatIon to croditorti and conzunere.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
We understand your coricerm* regardin tho Lmpact OA
oonA:luwaru of any further changes in this aroa, Your views on
:Aatter will 14; fully considered before any final asciaion
reached. I al:,,Au4ciate your tekin4 the time to share them
uu.
JEijt (04-1`j1)
.Gtawart
bcct
(
.
Sincercky l
i,1)t01_11ciw
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Hay 14, 1980
Dear Mr. Auerbach:
Thanks very much for your note of April 22.
I can fully appreciate now inflation is affecting you,
and I very much appreciate your words of support.
Sincerely,
Mr. Irwin Auerbach
- e/
1"
3R/tn
#1527
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 1980
Dear John:
Thanks for your note about your directors' concerns
about the significance of the drop in rates. In fact,
I think the markets have shown a rather remarkable
degree of understanding. But, you're right, we have to
stay with the task of making sure our policies are
understood.
Sincerely,
Mr. John J. Balles
President
Federal Reserve Bank of San Francisco
San Francisco, California 94120
EGC:slw
May 14, li3t;
Mr. tiarold B. denjamin
Realtor
4 orootnill «wad
Conyngnaw„ Pennsylvania
1b219
uear Mr. Benjaiin:
faank yuu for your letter on the effects of
interest mites on
housing. I can fully appreciate the concerns that proripted you to write.
In the settinti of excessive inflation and deeply ewbedded inflaticalarY
expectations, there is wide national consensus that economic policies tl6st,
over tie, continue to work to reduce inflation ano thereby provide the
foundations for greater OCOTIOMic stability. :iohetary policy has un essential
role to play in that process since excessive inflation cannot persist over
ti=.4c unless fueled by excessive growth in money. Thus, the basic thrust of
nonetary policy is, and will re..ain,
at maintaining mooerate growth in
ney and credit, however, monetary policy alone cannot do the job effectively.
In that re9ard, I would strongly e4phasize that we need help in the ^Tom of
firY;I. discipline in fiscal Jolicy, particularly as it applies to restraining
the jrtiwth in governritent si„enuing.
There are now sins of a cieciaeci easing of the extrelie credit aarket
pressures that we have experienced in the past few months. The deiaand for
credit has lessened and market interest rates have wove(' lower. 'eflectiny
these developments, the Federal ;serve has elidiinated the 3 percentaje point
surchanje in the discount rata th(4t had been established for certain classes
of banks. And, uortgage rates aave fallen somewhat, as reflected in the
lowering by the Federal nousik, .all,inistration of its
rJortyae rate.
The Federal Reserve has also taken steps to help ensure that sll
bQIIKS that are untier liquidity pressares All have added fuss at their
disposal to aelp oeet the credit neeus of their local coutranities. And, we
havv! said that where banks are essentially confihin their loan expansion to
priority areas--includin nowe ouildinj--that such kanks are justified in
exceetling the percent hut on loan growth cuntainbd in our .)pecial redit
estraint Prograo.
These factors will help but they do not alter the fandanental fact
that the process of taAnv inflation will not be easy. but if we fail now,
the discomfort later will be all the •iorv2 serious. That is why I believe that
we must get the process over with so that we can move into an econcAc environalent in which housing and the econoiv in general will prosper. 1 appreciate
your taking the tive to write and I hope I will have your understanding and
support as we seek to resolve this nost pressinii national problem.
5incareli,
'n:evjj
N\
1477
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 1980
Mr. Joseph E. Berger, President
Mr. Jerome Palho, Project Coordinator
Ms. Anges E. Mensingio, Secretary
Ira Berger 3( Sons, Inc.
Birkbeck Street at walnut
Freeland, Pennsylvania 18224
Dear Messrs. Berger, Palho and 'As. mensingio:
Thank you for your letters on the effects of high interest rates on housing.
I can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. aeflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of hanks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
1
Sincerely,
Ji-I:sep
t1377
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
#1379
&
1435
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 1980
Dear Mr. Berick:
Thanks for your further letter.
be assured, we will be monitoring the
situation closely.
Sincerely,
Mr. Joseph n. rerick
Burke, Haber & Berick
Central National Bank Building
Cleveland, Ohio 44114
EGC:slw
Re #734
And,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 1980
Mr. Guy W. Botts
Chairman of the Board
Barnett Banks of Florida, Inc.
100 Laura Street
Jacksonville, Florida 32202
Dear Guy:
Thanks for your letter and your observations on
the McFadden Act issue. You are certainly right in
suggesting that, as a very practical matter, the issue
is already squarely before us. We have been looking at
a range of possible positions, including one broadly
similar to the approach outlined in your Annual Report.
Your thoughts on the subject will be helpiiir.
Sincerely,
cm
#1665
May 14,1980
Ms. Rennalea Trock
Culligan water Conditioning
2310 Jefferson - P.O. Box 666
Lawton, Oklahoma 73501
Dear ms. 13rock:
Thank you for your postcard on the effects of high interest rates on
housing. I can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housins, Administration
of its maximum mortgage rate.
The Federal -.f.-.serve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas--including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fail now, the discomfort later
will he all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
t\
:RL:sep
# 762
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Oay 14, I9o0
ur.'Jannis W. bush
Dear Jr. dush:
Thank you for your letter on the effects of hijh interest rates on
housing. I can fully ar;preciate the concerns that proi9ted you to write.
in the settiut. of excessive inflation win deeply enneddec inflationary
expectatious, there is a wide national consensus that economic policies nust,
over ttle, continue to work to rer,uce inflation and thereby provide the
foundations for greater econoAc stability. l4onetary policy has an essential
role to play in that process since excessive inflation cannot persist over
unless fueltd by excessive g'otNth in money. Thus, the basic thrust of
ti
tametary policy is, and will mmain, aimed at maintainift moderate growth in
money and credit, however, onetary policy alone cannot do the job effectively.
In that rejard„ I would stronAy e3pnds1ze that we aeed help in the for. of
firm discipline in fiscal policy, pdrticularly as it apAies to restrainin
the growth in joverwent spending.
There are now sins of a decided easing of the extrene credit market
pressures that we have experienced in the past few nonths. The demand for
credit has lessened and market interest rates halk fcved lower. Reflectin
these developnents„ the Feeral xeserve has eliainatoc the 3 percentage point
surcharge in the discount rate that had been established for certain classes
of banks. And, wortjave rates have fallen sorlewhat, as reflected in the
lowering by the Federal housintj Administration of its piaxi
mortga9e rate,
The l'ederal Aeserw,1 hiAs zlso taken steps to help ensure that small
banks that are under lirviuity pressures will have added funds at their
disposal to help meet the credit needs of their local coLgJunities. And, we
nave sdiu that where banks are essentially confinin9 their loan expansion to
priority areas--1ncludin,2, 'note building--that such banks are justified in
exceeding the '4 percent Mit on loan growth contained in our Special Credit
estraint
These factors will help but they do not alter the fundamental fact
that the process of taminy inflation will not be easy, but if we fail now,
the uiscofort later will be all the t.:tore serious* That is why I believe that
we Ilust fiet the process ever with so that we can wove into an economic environment in which housing and the econociy in general will prosper. I appreciate
your taking the tine to write and I hope I will have your understandir6 and
support as we seek to resolve this riost pressinj national r)roble,
li
li:evjj
- 1419
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Ancerely,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 1960
.)ear Mr. Canaday:
Thanks for your letter of April 28. Although
can't agree with many of the points you make, I
do appreciate your takinç the time to write.
Sincerely,
Mr. Ray Canaday
Stitn
#1620
a
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 1980
Dear Mr. Carlson:
Please excuse my belated response to
your letter about the "seasonal borrowing"
program and the clarification of the 6-9
percent limit. I appreciate your taking
the time to write. (I'm also surprised
that we have not had more 'takers.")
Sincerely,
Mr. Merlyn Carlson
President
National Cattlemen's Association
Post Office Box 569
Denver, Colorado 80201
slw
V /
4:K
#1445
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14. 1980
Mr. Robert Carreau
Dear Mr. Carreau:
Thanks for your letter of April 28 and the enclosed
letter to the editor of the Cambridge, Maryland, "Banner."
I must say that my reading of your proposal raises many of
the same concerns that Mr. Bernard noted in his letter of
November 1977. However, I do appreciate your interest in
seeking ways to strengthen our financial system, and I most
especially appreciate your words of support for our current
efforts.
Sincerely,
ai:tn
01597
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 1980
Mr. R. P. Craig, Jr.
President
Craig Supply Company, Inc.
99 Madbury Road
Durham, hew Hampshire 03824
Dear :Ir. Craig:
Thanks very much for your letter of April 15 and your words
of support and encouragement.
As you point out monetary policy alone cannot deal effectively
with the problem of excessive inflation and deeply embedded inflationary
expectations. I agree fully that we need help in the form of firm
discipline in fiscal policy, particularly as it applies to restraining
the growth in government spending.
There are now signs of a decided easing, of the extreme credit
market pressures that we have experienced in the past few months
the demand for credit has lessened and market interest rates have
moved lower. I hope that these recent developments will, avong other
things, ease the pressures being faced by companies such as yours.
I appreciate your interest in talking to me on April 22 or 23.
Unfortunately, your letter didn't arrive until April 21, and my volume
of mail prevented me fror reading it until just today. I hope that
your meetings in Washington were constructive. Thanks again for
writing.
Sincerely,
JH tn
RE: 936
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ray 14,
imo
Mr. bartley J. D'Alfonso
Dear Mr. b'Alfonso,
I have read your letter and I want you to know that I am not
insensitive to the difficulties that you and other workers in the
wood products and housing industries are experiencing. I also realize
that in your current situation you cannot be expected to draw much
consolation from that alone.
However, there are now signs of a decided casino of the extreme
credit market pressures that we have experienced in the past few months.
The demand for creait has lessened and market interest rates have moved
lower. Reflecting these developments, the Federal Reserve has eliminated
the 3 percentage point surcharge in the discount rate that had been
established for certain classes of banks. Also, mortqaoe rates have
fallen somewhat, as reflected in the lowering by the Federal Housin9
Aem:inistration of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that
small banks that are under liquidity pressures will have added funds at
their disposal to help meet the credit needs of their local communities.
And, we have said that where banks are essentially confinin9 their loan
expansion to priority areas—including home building—that such banks
are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
We must reduce the rate of inflation we have experienced
recently if we are to move into a period of sustained economic growth.
The months ahead should show some moderation in inflation, and this
will ease nary of the problems of our economy—and. I hopes those you.
personally, are experiencing.
I appreciate your taking the time to let me know of your
experience.
Sincerely,
JH/tn
#2
15 L
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 1980
Dear True:
I have your letter, and will share it with the
Federal Deposit Insurance Corporation, which is more
immediately in the firing line in this case. As you
no doubt suspect, they have certain "prerogatives"
as part of the loan agreement. rut, at last reading,
they were inclined to stay with the present executive
officer, who is relatively new in the job and not
"implicated."
Let's see what they say.
Sincerely,
The Hononable True Davis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 1980
Dear Jayt
Thanks for your note on the "seasonal borrowing"
program.
While we haven't had many takers yet, I
believe the program will be constructive.
Sincerely,
Mr. Jay J. DeLay
President
Huron Valley National Bank
125 South Fifth Avenue
Ann Arbor, Michigan 48108
EGC:slw
#1624
TNiay 14, 1980
Mrs. Dorothy L. Drolet
Dear
1
rs.
uncierstanci the concerns in your letter about the press reports—often
misleading—concerning the role played by the Federal Reserve in certain loans to the
Hunt family.
Neither 1, the Federal reserve, nor any government official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not be allowed to engage in fresh speculative activity of
any kind and that their remaining silver would be liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations—
they will not lead to any new funds for the Hunts. My sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing new speculation. Beyond this, the Federal
Reserve cannot and should not interject itself into individual private transactions
between lenders and borrowers.
have enclosed a copy of my Congressional testimony on this subject,
which explains my role more fully. I do appreciate your taking the time to write me
on this issue.
Sincerely,
E
losure
31-1:RL:sep
#1717
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
44,
;.lay 14, 1933
Mr. Ldwarti
i.
iieia
iJear ier.
Thank you for your letter on the effects of hip interest rates on
eousing. 1 can fully appreciate the concerns that proeptee yeti to write.
In the setting of excessive inflation arid deeply eebeuded inflationary
expectations, there is a wide natiunal consensus that economic policies must,
over tine, continue to work to reduce inflation ant thereby provide the
founuations fur greater econoeic stability, rionetary policy has an essential
role to play in that process since excessive inflation cannot persist over
tioe unless fueled by excessive erowth in money. Thus, the basic thrust of
monetary policy is, and will remain, aired at slaintaining moderate erowth in
money ane creuit. however, monetary policy alone cannot cro the job effectively.
In that reeard, I would strongly teephasize that we need help in the fote-,1 of
fire discipline in fiscal policy, particularly as it applies to restrainine
the growth in governetent spending.
there are now sins of a decided easing of the extreee credit earket
pressures that we nave experienced in the past few 6ontlis. Trie demand for
credit has lessened and motet interest rates have moved lower. keflectine
these uevelopeents, the Federal Reserve has eliminated the 3 percentage point
surcharee in the discount rate that had been established for certain classes
of banks. And, eortgage rates have fallen socieehet, as reflected in the
lowering by the Federal ilousine eceinistration of its isaximue piortgaye rate.
The Feeeral eserve iles also taeen steps to help ensure that small
banks that are under liquieity pressures will neve addeu funds at their
eisposal to nelp reet the credit needs of their local communities. Ands we
have said triat where banks are essentially confining their loan expansion to
priority areas—including nom building—that such banks are justified in
exceeding the 9 percent lieit on loan irowth coiitainee in our Special Credit
Restraint Program.
These factors will help but they do not alter the fundariental fact
that the process of tareIng inflation will not be easy. But if we fail now,
the discomfort later will be all the more serious. That is why I believe that
we must get the process over with so that we can Nave into an economic environment in which housing anti the econoisy in general will prosper, 1 appreciate
your takine the time to write and I hope I will have your unuerstanding and
support as we seek to resolve this most pressing national problem.
4
il:eveii
,
1490
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
iiay
14. 19ao
Gilbertson and Canparly
Realtors
2720 West )
i tain Street
Rapid City, South Dakota 57701
Gentleuen:
Thank you for your letter on the effects of hit) interest rates on
aousinr,. I can fully appreciate the concerns that proopted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that ocunonic policies must,
over ttze, continue to work to reduce inflation and thereby provide the
foundations for ja-eater economic stability. Aonetary policy hns an essential
role to play in that process since excessive inflation cannot persist over
tine unless fueled by excessive growth in money, Thus, the basic thrust of
tionetary policy is, and will remain, aided at maintaining moderate growth in
money and credit. however, monetary policy alone cannot do the job effectively.
in that reard, 1 would stronyly eophasize that we need help in the for, of
firfi dsciplino in fiscal pulley, particularly as it applies to restrainimj
the grcwth in governflent spandiaj.
There are now stns of a decided edsing of the extreme credit market
dressures that we have experience in the past few months. The deoand for
credit has lessened and oar-Let interest rates have moved lowar. iflectin
these developments, the Federal Reserve has elioinated the 3 percentage puint
surcharge in the discount rate that nad been established for certain classes
of banks. ,nu, riortla:-A rates have fallen soiewhat, as reflected in the
lowering by the Federal HOUSitij Administration of its :daXt1Liti niortrjage rate,
The Federal aeserve has also taken steps to help ensure that s7-all
banks that are under liquidity pressures will have aduedi funds at their
disposal to help net the credit needs of their local dpovunities. Ana, we
have said that where banks are essentially confininc th4tr loan expansion to
priority areas--includity, home building—that such banks art justified ia
exceecing the 9 percent limit on loan growth contained in our Special Credit
Intstraint ProsTac:I.
These factors will help but they do not alter the funuamntal fact
that the process of tiny inflation will not be easy. aka if we fail now,
the discomfort later will be all the wre serious. That is why I believe that
we oust 4et the process over with so that we can nove into an econwic environnlent in which housing and the econwy in general will prosper. 1 appreciate
your taking the tine to write and I hope 1 will have your urirstandina and
support as we seek to resolve this idost pressinq national problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Ancenaly,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
MO 14, 1980
Uear Mr. Gnaedinger:
Thank you for your letter of April 21. Your
observation about the wage increases is, of course,
timely, and I appreciate your writing.
Sincerely,
Hr. John P. Gnaedincier
Soil Testing Services
ill Pfingsten Road
Uorthbrook, Illinois 60062
411/tn
#1520
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14/ 1980
Dear Bill:
Thanks for your note and the charts
they are provocative. The staff has them
and / am sure they will find them useful.
•••••
Again, many thanks.
Sincerely,
Mr. William R. Grant
President
MacKay-Shields Financial Corporation
551 Fifth Avenue
New York, New York 10017
-61
:slw
f1523
May 14,1980
Mr. Ronald S. Gross, President
National Homes Corporation
The English Village Professional Center-Suite 104
North Wales, Pennsylvania 19454
Dear Alr. Cross:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures vill have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the Process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this mast pressing
national problem.
1(
Sincerely,
H:RUsep
1751
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 1980
Mr. J. R. Guinter
President, Chief Executive Officer
First National Bank of Akron
106 South Main Street
Akron, Ohio 44308
Dear Mr. Guinter:
Thanks for Your letter and your
further comments on the money market
fundSissue. The point you are making
about geographical redistribution of
these funds is a valid one. I appreciate
having your views as we continue to evaluate
these complex issues.
Sincerely,
WGA:ccm
#1517
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 1980
Ms. Barbara Harris
Team II Student
Rodger Borror School
365 W. Locust Street
Wilmington, Ohio 45177
Pear Ms. Harris:
I have read your letter and the question you have
raised is a difficult one. The easy answer is to work
hard, study hard and maintain a sense of discipline in
all aspects of your life now and later as an adult.
I know those things sound like cliches, but they are
much more than just words. Beyond this, it also stiikes
me as important that young people like yourself try to
find ways to involve yourself in civic and community
affairs. I wish I had a more precise answer, but I also
think that by the mere fact that you asked the question
that you will make your contribution to the strength of
the United States.
Keep up the good work.
Sincerely,
P.S.
An autographed photograph is enclosed.
EGC:ccm
#1296
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 1960
Dear i4s. Hart:
Thanks for your letter of -lay 2 and your
interesting sugge,stions concerning tax policy. Your
Interest in seeking solutions to the problem of
inflation is heartening.
I appreciate your writing.
Sincerely,
Mr. Max Hart
1A/rtn
#1738
May 14, 1980
Mr. Seichi Hirai, Clerk of the Senate
The Senate
The Tenth Legislature of the
State of Hawaii
Honolulu, Hawaii
Dear Mr. Hirai:
Thank you for sending us a copy of the State of Hawaii S.R. Mo. 174
concerning high interest rates and inflation. I can well understand the concern the
Senate feels about this, and you can hn assured that we at the Federal Reserve are
following these matters very carefully.
The only way we are likely to achieve a lasting decline in interest rates is
if there is a lowering of inflation and inflationary expectations. Maintenance of
reasonable control over growth of money and credit is an essential ingredient in the
fight against inflation, and the Federal Reserve is committed to this policy. However,
monetary policy alone cannot do the job effectively. In that regard, I would strongly
emphasize that we need help in the form of firm discipline in fiscal policy, particularly
as it applies to restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the rliscount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local cotereunities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including housing—that
such banks are justified in exceeding the 9 percent limit on loan growth contained in
our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an environment in which the economy in general will
prosper. I appreciate your taking the time to write and I hope I will have your
understanding and support as we seek to resolve this most pressing national problem.
Sincerely,
:lfT:RL:sep
#1681
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 193U
Jatms C. Holt
Dear Mr. Holt:
Thank you for your postcard on the effects of hign interest rates on
housine. I can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embeeded iffflationary
expectations, there is a wide national consensus that econonic policies must,
over tiele„ continue to work to reduce inflation and thereby provide the
foundations for greater econeeic stability. Nonetary policy has an essential
role to pley in that process since excessive inflation cannot persist over
tie unless fueled by excessive erowth in eoney. Thus, the basic thrust of
monetary policy is, and will reeain, alined at maintaining moderate eradth in
money and credit. However, eonetary policy alone cannot do the job effectively.
In thet reeard, I would strongly eophasize that we need help in the forr of
fire diecne in fiscal policy* particularly as it applies to restrainine
the growth in governoent spending.
There are now siens of a deci6ed easing of the extreme creditiaarket
pressures that we have experienced in the past few months. The demand for
creUit has lessened and market interest rates have MOVE6 lower. Reflecting
these developleents„ the Federal Reserve has eliniinated the 3 percentaee point
surcharge in the discount rate that had been established for certain classes
of banks. And, mortgage rates have fallen somewhat, as reflected in the
lowering by the Federal Housing idainistration of its maxirlum mortgage rate.
The Federal Reserve. has also taken steps to help ensure that selall
banks that are under liquidity pressures will have added funds at their
disposal to help meet the credit needs of their local corelunities. And, Via
have said that where banks are essentially confining their loan expansion to
priority areas--includine hoiae bendiag—ethat such banks are justifieu in
exceeding the 9 percent lieit on loan growth contained in our Special Credit
*L;,estraint Program,
These factors will help but they do not alter the fundamental fact
if we fail now,
that the process of tamine inflation will not be easy.
the discomfort later will be all the more sertous, That is why I believe that
we must get the process over with so that we can move into an econorlic environ—
ment in which housine and the economy in general will prospers I appreciate
your takine the dial to write and I hope I will have your understanding and
support as we seek to resolve this mest pressing national probleu.i.
WV
:evjj
1504
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
MI•
Sincerely,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 1980
Dear CC:
I wanted you, however belatedly, to know that I
have carefully read your letter on the application
of special deposit requirements on money market funds
under the Credit Control Act. I appreciate having
your views and , like you, hope that we will never
again have to resort to the use of the sweeping
powers contained in the Act.
Sincerely,
Mr. C.C. Hope, Jr.
President
American Bankers Association
c/o First Union National Bank
Charlotte, North Carolina 28288
EGC:ele/
#1277
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
MI
May 14, 1980
Dear John:
Thanks for your note.
I have passed
Ms. McColgan's resume along to the right
people here who will be in touch with
her.
Sincerely,
Mr. John F. Horne
cc:
Bill Stovall
E
#1492
May 14; 1980
Mr. kod horsley
Dear Hr. Horsley:
Thanks for your letter of April 21. I can well
understand your frustration over the current econowic
situation and in particular, over the effects of inflation on the poor.
Our monetary policies are now and have for some
Lime been directed at reversing the inflation and the
inflationary psychology that have been so destructive.
I am hopeful that we are beginning to see signs that
our efforts are bearinr: fruit. And the working people
of America will mst surely benefit.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
May 14, 1980
\fix. Lewis J. Jahr()
Executive Secretary
Chrysler Plymouth Dealers Association
of Los Angeles Zone
1601 North Gower Street
Hollywood, California 90028
Dear Mr. Jabro:
Thank you for your telegram on the effects of high interest rates on the
members of your association. I can fully appreciate the concerns that prompted you to
write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including small business—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not he easy. But if we fail now, the discomfort later
will fle all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment In which business and the
economy in general will prosper. I appreciate your taking the time to write and I hope
will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
RL:sep
#1 67
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 19i30
Mr. Gene J. Johnson
Real Estate Finance
4361 Loma Riviera Court
San Diego, California 92110
Dear :Ir. Johnson,
Thanks for your letters of support. You have
put your finger on a critical aspect of the problem with your
coments on government spending. Persistent federal deficits
are a m4jor source of our economic difficulties, 43th in terms
of their direct consequences and, perhaps more importantly over
time, in their fostering of inflationary expectations. I sense,
however, there is a growing realization--throughout all segments
of our society--that we must bring this process under control.
The recently proposed cuts in federal spending--while perhaps
not as large as you or I would have wished--are representative
of that changed attitude. tut, make no mistake about it,
achieving major cuts will be very difficult. That process can
be aided inrAensely by public opinion and it is important that
Individuals like yourself let your views be known. I. for one,
will continue to speak out whenever I can as to the need for
sustained discipline over time in our fiscal affairs.
Sincerely,
Jultn
#1728, #1513
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
"ay 14, 1930
Dr. T. Stephen Jones
Dear Dr. Jones:
I understand the concerns in your mailgram about the press reports--often
misleading—concerning the role played by the Federal Reserve in certain loans to the
Hunt family.
Neither I, the Federal Reserve, nor any government official instigated,
guided or anproved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not be allowed to engage in fresh speculative activity of
any kind and that their remaining silver would be liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations—
they will not lead to any new funds for the Hunts. My sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing new speculation. 1-‘eyon1 this, the Federal
Reserve cannot and should not interject itself into individual private transactions
between lenders and borrowers.
I have enclosed a copy of my Congressional testimony on this subject,
which explains my role more fully. I do appreciate your taking the time to write me
on this issue.
Sincerely,
E - ure
•
3H: L:sep
111705
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
viay 14, 1980
Mr. Sy Kaster
Province Rea ity Company
1929 Gross Street
Green Bay, Wisconsin 54304
Dear Mr. Kasten
Thank you for your letter and your thoughts on government policies and
Inflation. I can understand the concerns that prompted you to write.
You have put your finger on a critical aspect of the problem with your
comments on government spending. Persistent federal deficits are a major source of
our economic difficulties, both in terms of their direct consequences and, per!‘ans
more importantly over time, in their fostering of inflationary exnectations. I sense,
however, there is a growing realization—throughout all segments of our society—that
we must bring this process under control. The recently proposed cuts in federal
spending—while perhaps not as large as you or I would have wished—are representative
of that changed attitude. But, make no mistake about it, achieving major cuts will be
aided immensely by public opinion and it is
very difficult. That process can
Important that individuals like yourself let your views be known. 1, for one, will
continue to speak out whenever I can as to the need for sustained discipline over time
in our fiscal affairs.
Of course, monetary policy also has an essential role to play in the fight
against inflation since excessive inflation cannot nersist over time unless fueled by
excessive growth in money. Thus, the basic thrust of monetary policy is, and will
remain, aimed at maintaining moderate growth in money and credit.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and ;itarket interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage noint surcharge in the discount
rate that had been established for certain classes of harks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maxireurn mortgage rate.
I appreciate your taking the time to write.
Sincerely,
3H:RLasep
#1274 1c84?
May 14, 1980
Mr. 6harles A. kearns, President
Kearns Oachinery Co.
Exit U1 As 1-29
P.O. aux 1307
Sioux Falls, South Uakota 57101
FP11MI1i.:,earns:
Thank you for your letter on the effects of high interest mites un
your business. I can fully appreciate the concerns that proL.ipted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wi cie national consensus that econoieic policies must,
over time, continue to work to reduce inflation and thereby proviee the
fS undations for greater econotdc stability. ekmetary policy hds an essential
role to play in that process since excessive inflation cannot persist over
time unless fueled by excessive. yrowth in Tierney. Thus, the basic thrust of
n)onetary policy is, and will reeAin, aiteed at leaintaining moderate growth in
ever, ieonetary policy alone cannot as the job effectively.
eioney end credit.
In that regard, I would strongly esephasize that we need help in the fon', of
fine discipline in fiscal policy, particularly as it applies to restrainind
the growth in f',uverniient spendine.
There dre now siens of a decieed easins of the extreme credit market
pressures that we have experienced in the past few irtonths. The demand for
creeit has lessened o.nd market interest rates have eoved lower. Reflectine;
these develop...Tents, the Federal Reserve has elielnated the 3 percentage point
surcharge in the discount rate that had been established for certain classes
of banks. And, mortgage rates have fallen vxiewhat, as reflected in the
loeteriryj by the Federal liousing fecLinistration of its ;eaxiciula 1,!ortgage rate.
The Feeeral Reserve has also taken steps to help ensure that sT:all
banks UNA are under liquidity pressures will have added funds at their
disposal to help &REA the creeit needs of their local coiemunities. "'And, we
have sale that where banks are essentially confining their loan expansion Lo
priority areas—including swell business—that suck banks are justified in
on loan 9rowth contained in our Special Credit
exceeding the 9 percent
ees trai nt Prc6raei.
These factors will help but they do hot alter the fundaiental fact
that the process of taming inflation will not be easy. But if we fail now,
the discoefort later will be all the more serioes. That is iceiy I believe that
we must yet the process over with so that we can move into ah ecunoeiic environeent in which business and the econoey in general will prosper. i appreciate
your taking the title to write and I hope I will have your understanding and
support as we seek te resolve. this Ift0St pressing.,aational problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 1980
Dear Dave:
I have your letter and we will see
what can be done.
The Personnel people
here will contact John directly.
I hope
something can be worked out.
Sincerely,
Mr. David Klein
Executive Director
The American Council on Germany
680 Fifth Avenue
New York, New York 10019
l Stovall
AR
cBil
#1485
https://fraser.stlouisfed.org
or
Federal Reserve Bank of St. Louis
nay 14, 1980
Dear Ken:
Thanks for your statement before the
Committee on Governmental Affairs.
make a good case!!
Sincerely,
Mr. Kenneth Lipper
Salomon Urothers
One New York Plaza
New York, New York
#1596
10004
You
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 1980
Mr. David Lloyd
Dear Mr. Lloyd:
Thanks for your letter and your confidence and support.
appreciate, very iiuch, your kind words. I also understand fully
your concerns about the enclosed letter you received from a retail
store urging credit purchases. While the Federal Reserve does not
get involved in the day to day laanagement decisions of creditors,
we have as you know sought to restrain certain types of consurer
and other credit through adoption of a special deposit requirement
on increases in such credit. We are encouraged too by the slower
growth of consumer credit over the course of recent months.
Thanks aaain for writing.
Sincerely,
May 14, MO
William R.. Loeffler
Attorney at Law
50 South Steele Street - S lite 375
nenver, roloralo 1..fr09
,4r. Loeffler:
71ear !
I understand the concerns In your letter ahout the press reports—often
IsIea1ingconcernlng the role played by the Federal Reserve In certain loans to the
Hunt family.
:. overnrnent official instigated,
Neither I„ the Federal Reserve, nor any 7,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not he allowed to engage in fresh speculative activity of
any kind and that their remaining silver would be liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations-sole concern has been to ensure
they will not lead to any new funds for the
that such a loan complies with the .Federal !Zeserve Special Credit Restraint Program,
particularly as it applies to prevtonting new speculation. Reyond this, the Federal
Reserve cannot and should not interject itself into individual private transactions
between lenders and borrowers.
have enclosed a copy of my Congressional testimony on this subject,
which explains rny role more fully. I do appreciate your taking the time to write me
on this issue.
Sincerely,
f
lorsre
:111:RL:sen
P1730
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
.rilay 14, 1980
Jonald G. Lostbaroo
sir-Tech Insulation, Inc.
30th td. Church Street
nazleton, Pennsylvania 18201
Oear ir. Lostardo:
Thank you for your letter on the effects of ht3n interest rates on
housing. 1 can fully appreciate the concerns that pm tpte.i you to write.
of excessive inflation anci deeply eisbedded inflationary
,Apectations, there is a wide national consensus that econotsic policies rust,
over tie, continue to tJork to reduce inflation and thereby provide the
foandations for greater ecunwic stability. ilonetary policy nas an essential
role to play in that process since excessive inflation cannot persist over
disc; unless fueled by excessive growth in money. Thus, the basic thrust of
monetary policy is, and will remain, atse,1 at i:eintaining moderate growth in
sioney and credit, tiowever, rsonetary policy alone cannot do the job effectively.
In that regard, I would strongly etsphasize that src need help in the fort% of
fir uiscipline in fiscal policy, particularly as it applies to restraining
the srowtn in government spendincs.
I t the setting
There are /sow sins of a decided easin of the extrehe cre6it :sarket
pressures that we have experienced in the past few it:oritlis. The uet,land for
cret.tit has lessened an market interest rates have coved lower. ,4eflectinfs
these developtsents, the Federal deserve has eltoinateti the 3 percentage point
surcharge in the discount rate that had been establisheo for certain classes
of thinks. And, sortgage rates have fallen sotiewhat, as reflected in the
lowering by the Federal housing Adisinistration of its isaxtiuts oortsage rate.
The I-edt.ral ,eserve has also taken steps to nelp ensure that sail
banks that are under liquidity pressures will have added funds at their
Uisposal to help sleet the credit needs of their local cosusunities.
And, we
have said that where banks are essentially confinints their loan expansion to
priority areas—includin,s Wise building—that such banks are justified in
exceeoing the 9 percent ljHlt on loan isrowth contained in our Special Credit
:('estraint Prograts.
These factors will help but they do not alter the fundamental fact
that the process of tarsin,s inflation will not be easy. tut if we fail now,
the discoisfort later will 1)e all the store serious. That is why I believe that
we filust get the process over with so that we can wove into an economic environLent in which housing and the econoisy in general will prosper. 1 appreciate
your taking the tiise to write and I hope 1 will have your untterstanding and
support as we seek to resolve this isost pressing national probleis.
Sincerely,
$1\Jh:evjj
\
1476
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
14. 1380
Mr. George E. Lucas
F & L Sales & services, Inc.
tiaim & Lucas
P.U. iiox J37
Aazleton, Ilenneylvania 16201
Dear Ar. Lucas:
Thank you for your letter on the effects of high interest rates on
housing. I can fully appreciate the concerns that proeotee you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that ecomeeic policies inust,
over tilae, continue to work to reduce inflation and thereby provide the
foundations for greater economic stability.. ,
i lonetary policy has an essential
role to play in that process since excessive inflation cannot persist over
tiiee unless fueled by excessive growth in money, Thus, the Oasic thrust of
monetary policy is, and will re:eein, zeleed at tgaintaining moderate irowth in
money and credit, owever, geonetary policy alone cannot do the job effectively.
In that reyard, I would strongly o,lphasize that we need help in the form of
firm discipline in fiscal policy, particularly as it applies to restraining
the growth in government spending.
There are now sios of a decided easing of the extreeie credit market
pressures that we have experienced in the past few months. The deiland for
credit has lessened and market interest rates have flovee lower. ieflecting
these developelents, the Federal Reserve has elleinated the 3 percentage point
surcharge in the discount rate that had been established for certain classes
of banks, f'*nd, mortgage rates have fallen smewhat, as reflected in the
lowering by the Federal housinfj Adieinistretion of its waxiieee Mortgage rate.
The Federal eserve has also taken steps to help ensure that small
banks that are under liquieity pressures will have added funds at their
disposal to help meet the credit needs of their local corelunities. And, we
have said that where banks are essentially confinicej their loan expansion to
priority are.as—includiN 'noete building—that such banks are justified in
exceeding the 9 percent litAt on loan growth contained in our Special Credit
Restraint Prof:Iran.
These factors will help but they do not alter the fundamental fact
that the process of tatainj inflation will not be easy. kiut if we fail now,
the discomfort later will be all the loom serious. That is why I believe that
we must get the process over with so that we can i'love into an econoulc environreent in which housire:i and the econoeiy in general will prosper. I appreciate
your taking the ale to write anti I hope I will have your understand1n5 and
support as we seek to resolve this most pressing national problem.
Sincerely,
#1496
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
day 14, 198o
Mr, Nark Lucid
Mark Lucni st.tilders
603 A. 6road Street
West nazleton„ Pennsylvania
1i-201
Lear 4r. Luchi:
interest rates on
Thank you for your letter on the effects of
nousinu. I can fully appreciate the concerns that pro$lpted you to write.
In the settinn of excessive inflation antl ueeply eobedden inflationary
expectations, there is a wide national consensus that cconoric policies 1iiust,
over tite, continue to work to reduce inflation and thereby provime the
foundations for ,J•eater econotic stability. Oonetary policy lkis an essential
role to play in that process since excessive inflation cannot persist over
tine unless fuelod by excessive 9rowth in noney. Thus, the basic thrust of
uonetary policy is, and will rein, aimed at maintaining tJuderate growth in
i=oney and credit. However, inonetary policy alone cannot do the job effectively.
1a that reljard, I would strongly enphasize that we neec help in the form of
firri; discipline in fiscal policy, particularly as it apOies to restraining
the growth in goverment spending
mere are now signs of a decided easinv of the extrefic creait r.tarket
pressures that we nave experienced in the past few =Jooths. The denand for
credit hds lessened and narket interest rates have $3oved lower. kefloctint.;
these developh:ents, the Federal Reserve has eliAnated the 3 percentage point
surcharge in the discount rate that had been established for certain classes
of banks. mu, hiortvae rates have fallen scoawhat, as reflected in the
lowerinn by the Federal dousin ,kitinistratiotof its „laxiv4ur, i,,orttiat.3e rate.
The Fencral Reserve has also taken steps to help ensnre that sr all
banks that are under lignitity pressures will hav..1 added funds at their
disilosdi to help weet the crecit needs of their local coounilies. And, we
nave said that where banks are essentidlly confining tneir loan expansion to
priority areas—ihcludinn home building—that such banks are justified in
exceeding tne 9 percent li it on loan qrowth contained in our Special Credit
f(estraint Progrart.
fnese factofts will help but they do not alter the flindaLientd1 fact
that the process of ta,tin inflation will not be easy. J.ut if we fail now,
the discwfort later will be all the Lore serious„ That is why I believe that
we twst vet the process over with so that we can move into an econotjc environ.
meat in which noasinn and the econo4 in c;eneral will prosper. I appreciate
your taking the Moe to write and I hope I will have your understandinc; and
support as we seek tu resolve this rtost pressini national problet..
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
tlay 14,1980
Mr. Harry Lutz, Partner
Acuff Homes, Inc.
Joing Venture
305 Fairway Homes Court
Lee's Summit, Missouri 64063
1)ear Mr. Lutz:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary Policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
1 \
1--1:RL:sep
1.681
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ii,y
14„ 1930
Hr. John Maso
Charles Aaso & Sons, Inc,
fOtchea 3 iidth Center
P.O. box 118
Freeland, Pennsylvania 1,_;224
)ear Mr. ilaso:
Thank you for your letter and attached petition on the effects of
high interest rates on housing. I can fully appreciate the concerns that
proupted you to write..
In the setting of excessive inflation and deeply ei-,ibetitied inflationary
4..xpectat1onst there is a witie national consensus that econotuic policies must,
over tie, continue to work to re6uce inflation and thereby provide the.
foundations for greater economic stability. Monetary policy has an ,essential
role to play in that process since excessive inflation cannot persist over
tire unless fueled by excessive growth in money. Thus, the asic thrust of
monetary policy is, and will relain, alied at rintaining moderate i.lrowth
nea and credit. i'iowever, monetary policy alone cannot do the job effectively..
In that retjard, I. would strowily ellphasize that we need help in the form of
than discipline in fiscal policy, particularly as it applies to restrainin
the growth la goverment spending.
There are now signs of a decicied easing of the ,•:.xtre14,. credit market
pressures that we have experience6 in the past few ;tonths. The deoan-d for
credit has lessened and tilarket interest rates have 4.-ovetr..i lower. ;.wflecting
these develovents, the Federal Reserve has eltlinated the 3 pc,i4centa.ge point
surcharcje in the discount rate that had been establisheci for certain classes
of banks. i:.411J, r.orVjacie rates have fallen sollewhat, as reflected in ,the
loweriny by the Federal itousinc Adainistration of its maxtasi nortgae rate.
The Federal Reserve has also taken steps to help ,ensure that sili
banks that are under liquidity pressures will have added funds at their
disposal to help weet the credit needs of their local coalonities. And, we
have sai4 that where banks are essentially confininu their loan expansion to
priority areas—includik; home building--that st:cb banks are justified in
exceeding the 9 percent liit on loan growth contained in our Special Credit
.3straint Proira“-J.
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Federal Reserve Bank of St. Louis
Paue Two
Are John :taso
These factors will help but they do not alter the fundah4ntal fact
that the process of taFling inflation will not be easy. But if we fail now,
the discmfort later will be all the wore serious. That is why 1 believe that
we must get the process ever with so that we can move into an econmAc environ—
ment in which housinij and the econoiv in i,jeneral will prosper, I appreckle
your takinq the tiiie to write and 1 hope twill have your understanding anci
support as we seek to resolve this most: pressin:j national proble.
Sincerely,
41
,:evjj
497
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Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 10-00
Nr. John L. McDaniel
Dear Hr. McDaniel:
Thanks for your letter of April 28. I very much agree
with you on the need to encourage savings and the formation of
capital. The notion of a tax exemption for interest on savings
account has received a great deal of attention lately, and a
$400 exclusion (for joint returns) was recently enacted into law.
As I understand it, there still is some support in the Congress
for an even larger exclusion.
Removing the exemption for interest expense, however,
raises more fundarental questions and would have to be thoroughly
considered by the Treasury and the Congress. It is helpful to
hear of your interest in this suggestion, though.
Many thanks for writiK.
Sincerely,
TEA/tn
#1626
Fay 14, 19iA-)
,. Jcar Mr. Mckechnie:
Thank you for your letter and the suggestions
it contains.
I appreciate your taking the time to share
your thoughts with me.
Sincerely,
Mr. I. C. McKecnnie
Norwest Engineering Laboratory
8524 North 50th Place
Scottsdale, Arizona 6523
RL/tn
#1744
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
May 14, 1980
Dear Jim:
Thank you for your note and I want
you to know I appreciate your efforts at
getting the message about interest rates
across.
Sincerely,
Mr. A. James Meigs
Chairman of the Board
Claremont Economics Institute
201 W. Bonita Avenue
Claremont, California 91711
EGC:slw
#1667
;/ay 14, 1980
r.dichael leister, President
Pnilciont Contractors, Inc.
P.J. box 430
WntinAon Valley, Pennsylvania 19006
Dear Mr, Neister:
Thank you for your letter on the effects of hinh interest rates on
housing. I can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must,
over tine, continue to work to reduce inflation and thereby proviue the
foundations for greater econwic stability. Monetary policy hns an essential
role to play in that process since excessive inflation cannot persist over
tiue unless fueled by excessive growth in =ley. Thus, the basic thrust of
4lonetary policy is, and will relain, aincd at maintaining moderate growth in
money and credit., nowever, monetary policy alone cannot do the job effectively.
In that renard, I would strongly emphasize that we need help in the for“ of
firm discipline in fiscal policy, particularly as it applies to restraininn
the growth in goverment spendinin.
There are now sinns of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The devand for
credit has lessened and market interest rates have moved lower. Reflectinn
these developments, the Federal eserve has elicAnatek: the 3 percentage point
surcharge in the discount rate that had been established for certain classes
of banks. And, mortnage rates have fallen souewnat, as reflected in the
lowering by the Federal Housinn AdNinistration of its max1tur4 mortgage rate.
The Federal keserve has also taken steps to help ensure that skill]
banks that are under liquidity pressures will have added funds at their
disposal to help meet the credit needs of their local counities. And, we
have said that where banks are essentially confining their loan expansion to
priority areas--includinn home building--that such banks are justified in
excaening the 9 percent liLit on loan growth contained in our Special Credit
:(estraint Pronrairn
These factors will help but they du not alter the fundamental fact
that the process of taiAnn inflation will not be easy. Init if we fail now,
the discoNfort later will be all the oore serioas,- That is why I believe that
we must get the process over with so that we can move into an econooic environ—
a.mt in wnich nousinn and the econouy in general will prosper. I appreciate
your takimj the tie to write and I hope I will have your understandinn and
support as we seek to resolve this most pressing national problem,
t
Sincerely,
JII:evjj
1473
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
,t
May 14, 1980
:uar r. Milos;
Thans for your letttr oh aur wont ary policy
actions and other recent anti-inflatiori measures.
appreciate very much your confidence and support.
also entirely agree with p:ou on the need to curb persistent
fiscal deficits whicn are a major source of our difficulties.
Sincemly,
Mr. Joan Ales
Jititn
21743
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Federal Reserve Bank of St. Louis
May 14, 1980
hr. Ldward F. iwrc„ Jr,
President
Aston Villa9c ASSOCi., Inc.
8501 1est Cuester
upper jarby„ Pennsylvania 19062
Jeer ir, ioore;
Thank you for your letter on the effects of Wjh interest rates on
ncusink;,. i can fully appreciate the concerns that p Iipte4 you to write.
Li the settW of excessive inflation and deeply erbeeded inflationary
expectations, there is a wide tuitional consensus that economic policies Ist„
over ti, continue to work to reduce inflation and thereby provie the
fcuntiations for seater econowic stability. MooetarY policy has an essential
rola to play in that process since excessive inflation cannot persist over
tictia unless fueled by excessiv4 . iirowth in money. Thus, the basic thrust of
L4onetary policy is, and will main, aimeU at weintainin% ny4erate growth in
wever, iTionetary policy alone cannot do the job effectively.
mney and credit.
In that re,.Ard, 1 would stmgly egphasize that we need help in the for of
fir, discipline in fiscal policy, particularly as it applies to restraining
the , irowth in vvernment spending.
There are now sins of a decide easing of the extree creoit mariket
pressures that we have experience4 in the past few months. The dead for
credit has lessened zwid oarket interest rates have noved lower. Reflectinl
these developvients, the Federal Reserve has eliAnated the 3 percentaw point
surcharie in the discount rate that had been established for certain classes
of banks. And, wortjaje rates have fallen somewhat, as reflected in the
loweri% by the Federal liousiwj. rAidnistration of its naxitAap t:lorta9e rate.
The Federal osere has also taken steps to help ensore that st;4all
banks that are under liquidity pressures will have added funds at their
disposal to help meet the credit needs of -their local ca/munities. Ad, we
nave said that where banks are essentially confining their loan expansion to
priority areass—includ1k4 home building—that such banks are justifieo in
exceeding the 9 percent lioit on loan growth contained in our Special Credit
testraint Pro(jrailo
These factors will help but they do not alter the funtental fact
that the process of tailinil; inflation will not be easy. Cut if we fail now,
the 4isco1ifort later will be all the more serious. That is why 1 believe that
we uust get the process over with so that we can uove into an economic environw
rient la which howsini; and the econo4 in general will prosper. I appreciate
your takity the tilue to write and I hope I will have your understanding allod
support is we seek to resolve this rost pressing national problem.
Sincerely,
jii:evjj
14
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Federal Reserve Bank of St. Louis
,
.17E
'•
08111.-
-
'
danowl
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 1980
Dear Mr. Morgan:
Thank you for your warm and supportive letter.
On the matter of the "Morgan House" I am at a bit of
a loss to see how I can help. That kind of thing,
however worthwhile, is well beyond my knowledge. My
hunch -- for what it's worth -- is that you may do
better with private foundations than with the government.
Sincerely,
Mr. Walter L. Morgan
EGC:slw
#1484
May 14, 1980
Morton Floors, Inc.
Dear Sirs:
Thank you for your letter and enclosure on the effects of high interest
rates on your business. I can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
These developments are encouraging, but the fundamental fact remains
that the process of taming inflation will not be easy. But if we fail now, the
discomfort later will be all the more serious. That is why I believe that we must get
the process over with so that we can move into an economic environment in which
business and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your understanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
1I-1:RL:sep
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Hay 14, 1980
Hr, Hicnael
President
i-iolen Companies, Inc.
4 Geniantown Pike
Plyiwutn Heating, Pennsylvl ia
191162
Or Hr. lolen:
Thank you for your letter on the effects of high interest rates on
(lousing. I can fully appreciate the concerns that prowteu you to write.
In the settin;; of excessive inflation and deeply eilbeddeu inflationary
xpectations, there is a ;ride national consensus that economic policies ;lust,
over time, continue to work to reduce inflation and thereby provide the
foundations for ,jreater econeL:ic stibilit,y. onetary policy has an essential
role to play in that process since excessive inflatien cannot persist over
tit.le unless fueled by excessive =irowth in toney. Thus, the 4asic thrust oT
monetary policy is, and will min, aitleLl at waintaining woderate vrowth in
woney and credit. Aowever, isonetary policy alone cannot do the job effectively.
In that mard, I would strongly eiphasize that we nees,; help in the font of
firai discipline in fiscal policy, particularly as it applies to restrainin4
the growth in :
c;ovc...rn.Aimt spending.
There am now sins of a decide easing of the extreme credit market
pressures that we have experienced in the pust few months. The demand for
credit nas lessened and market interest rates have gloved lower. Aeflectiw,
these developments, the Federal :eserve has elioiniitea the 3 percentaye point
surcharge in the discount rate that had been established for certain classes
of Danks. „nd, r,;ortgage rates have fallen soi.ewhat, as reflected in the
lowering by the iederal !;ousinfJ; Administration of its oaxintita mortgage rate.
The Federal Reserve has also takt...n steps to help ensure that snail
banks that are under liquidity pressures will have aoeec: funds at their
disposal to help irieet the credit needs of their local ca:3:iunities. ;dui, we
nave said that where banks are essentially confininri their loan expansion to
priority areas—including home building—that such Danks are justified in
exceedinfz.i the 9 percent Mit on loan growth contained in our Special Credit
testraint PrograL14,
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Federal Reserve Bank of St. Louis
Page Two
i-iichael A. tiolen
These factors will help but they do not alter the fundarental fact
that the process of tilling inflation will not be easy, :Jut if we fail now,
the discomfort later will be all the 4ore serious. That is why 1 believe that
we must get the process over with so that we can move into an economic environcent in which housing and the economy in general will prosper, I appreciate
your taking the tile to write and I hope I will have your understandimj and
support as we seek to resolve this -oost pressing national probleul.
Sincerely,
41501
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
;1
Patrick
Mr. Robert
General Contractor
R.U. #1, tiox 191-o
nnzleton, Pennsylvania
14, 1960
In2o1
Jear r. Patrick:
Thank you for your letter on the effects of hinn interest rates on
housiro. I can fully appreciate the concerns that prwpted you to write.
In the setting of excessive inflatien anil deeply enbedded inflationary
exnectations, there is a wide naticnal consensus that economic policies
over ttne, continue to work to reduce inflation and thereby provide the
foundations for ,.freater econonic stability. lionetary policy has an essential
role to play in that process since excessive inflation cannot persist over
tine unless fueled by excessive growth in tioney. Thus, the basic thrust of
netary policy is, and will refain, aired at ;naintainin,„; rzderate growth in
money and credit. however, fnonetary policy alone cannot do the job effectively.
Irs that retnard„ I would stronnly emphasize that we need help in the form of
firm discipline in fiscal policy, particularly as it applies to restraininn
the nrowth in novernment spending.
There tire now $11iS of a decided easinn of the extreme creuit market
ixessures that we have experienced in the past few months. The demand for
crwit hs lessened ann 1.iarket interest rates nave noved lower. Reflecting
percentage point
these develop:lents, the Federal Reserve has eltninatec the
surcharne in the discount rate that had been establisheu for certain classes
of banks, And, ortanc: rates have fallen sainewhat, as reflected in the
lowerinb by the Faueral fousinn Adrlinistration of its inaxinat :/ortnane rate.
The Federal eserve nas also taken steps to help ensure that soall
banks that are under liquinity pressures will have added funds at their
disposal to help t.',eet the credit needs of their local conAnunities. And, we
nave said that where banks are essentially confininn their loan expansion to
priority areasinclud1n hotte builuinn—that such banks are justi Nen in
exceeninn the 9 percent
on loan growth conta1ne0 in our Special C,redt
iZestraint Pronrain.
These factors will nelp but they c.o not alter the fundanental fact
that the process of taninj inflation will not be easy. But if we fail now,
the discotnfort later will be all tha more serious. That is why I believn tha
we gust et the process over with so that we can dove into an econoNic eaviroaheat in which housinn and the econoniy in jeneral will prosper. I appreciate
your takinn the tt)e to write and 1 hope I will have your understanding and
support as we seek to resolve this inost pressing national problem.
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Federal Reserve Bank of St. Louis
Sincerely,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 1980
Dear Mr. Paymer:
Thanks for your note.
And, despite
some individual situations, I am encouraged
by the response of banks, non-banks, and
consumers to our action.
We will keep an
eye on developments.
Sincerely,
Mr. L. Paymer
#1641
14, 1'4IG
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Federal Reserve Bank of St. Louis
Xathleca 041.74t1;1
licAfee
(01/-
•
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Federal Reserve Bank of St. Louis
STAFF MEMORANDUM ON QUESTIONS BY
HON. BENJAMIN S. ROSENTHAL RELATING TO THE
LEGISLATIVE HISTORY OF SECTIONS 2(h) AND 4(c)(9)
OF THE BANK HOLDING COMPANY ACT
In connection with hearings to be held by the Commerce,
Consumer, and Monetary Affairs Subcommittee of the House
Committee on
Government Operations, Chairman Benjamin S. Rosenthal
has asked the
Board to review a report of the Congressional Resea
rch Service entitled
"Legislative History of the Nonbanking Prohibitio
ns of the Bank Holding
Company Act," to respond to particular questions
relating to the background of exemptions provided to foreign corporatio
ns in sections 2(h)
a-J 4(c)(9) of that Act, and to supply further
background information
regarding these exemptions.
A major thrust of Chairman Rosenthal's inqui
ry is that exemptions
under section 4(c)(9) of the Act were intended to be
limited to investments only by bank holding companies "principally
engaged in the banking
business outside the United States."
The staff believes that suggestion
reflects a misreading of the legislative histo
ry; we have found no proposal in the legislative history that the provi
sion be so restricted
and the Board did not recommend such a limit
ation.
After preliminary review in the limited time
available, the
Board's staff is satisfied that the focus and direc
tion of the report
Chairman Rosenthal has submitted are generally
accurate, but the report
omits some illuminating detail and, because it is
only a brief overview
of the development of selected exemptions, the repor
t draws some conclusions that could be misleading.
In reviewing materials bearing on
the questions raised, staff notes that there is
available a more comprehensive study of the legislative history of the
Act's coverage of
foreign corporations.
Lichtenstein, "Foreign Participation in Unite
d
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Federal Reserve Bank of St. Louis
-2--
States Banking:
Regulatory Myths and Realities," 15 B.C. Indus. & Corn.
L. Rev. 879 (1974).
While the article expresses some personal opinion
and indulges in conjecture with which the Board or others involved in
the development of these exemptions may disagree, it addresses the
areas
of Chairman Rosenthal's interest and inquiry in particular detail, and
a copy is attached for his information.
The article addresses Chairman Rosenthal's first and third
questions, regarding the origin of section 2(h) in 1966 and the meaning
of "principally engaged in the banking business outside the United States,"
beginning on page 917.
It confirms the Congressional Research Service's
conclusion that there is little legislative history clarifying these
questions, and at this time the staff has not found other sources contradicting that conclusion.
The article suggests, however, that the limi-
tation of the exemption to bank holding companies "principally engaged
in the banking business outside the United States" may have been inserted only to prevent domestic banks from evading all restriction on
their purely overseas investments rather than intentionally to
distinguish between foreign banks and other foreign corporations.
Chairman Rosenthal's second question, the staff believes,
arises from a misinterpretation in the report of section 4(c)(9) and
of Chairman Burns' testimony in 1970.
The report states on page 14
that "the exemption was amended to permit ownership of foreign
companies
'the greater part of whose business is conducted outside the United
States,'" and the analysis that follows treats section 4(c)(9)
as if
it were an exemption for the ownership by bank holding
companies, wherever
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•
Federal Reserve Bank of St. Louis
-3-
located, of foreign companies.
This is incorrect.
Section 4(c)(9)
is clearly an exemption for the ownership, within limits to
be prescribed
by the Board, la foreign bank holding companies of compa
nies and activities of any description, wherever located.
In that light, section 4(c)(9), as enacted, is not simil
ar
to section 4(c)(9) of S.1664.
The latter provision, relating to ac-
quisitions of foreign banks rather than acquisitions by
foreign bank
holding companies, would not have conferred a new exemption,
but was
intended to curtail overly broad exemptions found in the
original act.
Section 25 of the Federal Reserve Act requires member banks
to secure
the Board's approval to invest in foreign banks and presc
ribes capital
investment limitations.
The first paragraph of Chairman Burns' testi-
mony quoted on page 16 of the report relates to this narro
w question,
the possibility that existing exemptions might allow domes
tic banks
to evade the restrictions of section 25 of the Federal
Reserve Act by
use of separate affiliated corporations; it does not concern
the legislative proposal that culminated in section 4(c)(9)
of the Act.
In the balance of the quoted testimony Chairman Burns
endorsed
"provisions of the House-passed bill [H.R. 6778] authorizin
g the Board
to grant exemptions."
That bill included not only the provision that
(with a minor change) became section 4(c)(9), permitting
the Board upon
proper findings to exempt any investment or activity of forei
gn bank
holding companies, but also provisions permitting the Board
to exempt
from the act's coverage altogether companies whose only
banking subsidiaries were foreign and conducted most of their busin
ess abroad or
were domestic but chiefly engaged in activities relat
ed to foreign commerce.
None of these provisions of the House bill purported
to restrict
-4-
the availability of the exemptions to companies principally
engaged
in banking outside the United States)'
From that background, it is reasonably clear that
in offering
the Board's views on the provisions of the House bill,
Chairman Burns
was not arguing that those provisions were too broad nor
was he recommending a restriction not suggested by the provisions he
endorsed.
Instead, he was giving the clearest examples of situatio
ns in which
an inflexible application of the existing law, which did
make special
provision for bank holding companies "principally engaged
in the banking
business outside the United States," could lead to an unne
cessary interference with foreign business and invite retailiation
against domestic
banks, situations in which the Board could most reasonably
be expected
to exercise at once authority under those provisions if
it were granted.
The staff notes that it has recently received a
separate report
prepared by the Congressional Research Service that
discusses in greater
depth the procedural requirements of section 4(c)(9) of
the Act, and
the staff expects to complete to forward to you its analysis
of that
report in the near future.
Attachment
1/ Neither were the exemptions proposed in S.1664 restr
icted to bank
holding companies principally engaged in banking outs
ide the United
States. So far as the staff has been able to dete
rmine from a review
of available materials to date, no one was suggesting
such a restriction.
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Ar
Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
May 14, 1980
Dear Mr. Savage:
Thank you for your letter and your support.
And, despite the two situations you have cited, I
have been generally encouraged by the response of
banks, non-banks and consumers to this initiative.
We will he monitoring the situation carefully and
your observations are useful.
Again, many thanks.
Sincerely,
Mr. Thomas
:slw
#1578
E
F. Savage
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Federal Reserve Bank of St. Louis
May 14, 1980
Dear Mr. Sayen:
Thank you so much for your warm and
supportive letter.
By the way -- I think
I got away in one piece!
Sincerely,
Mr. W. Henry Sayen
Eet</
s1w
#1488
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14,
ear Dr. Sims:
Thanks for your letter and your confidence
and support.
Your 1958 article makes some important
and timely points, even after 22 years.
reading it.
Sincerely,
Eugene Sims, D.U.S.
714 Bell building
MontgomerY, A1a4ama 36104
Jii/tn
#1594
I enjoyed
May 14, 1980
Ms. Pamela Spevack
Dear 51s. Spevack:
I understand the concerns in your letter about the press reports—often
misleading—concerning the role played by the Federal Reserve in certain loans to the
Hunt family.
Neither I, the Federal Reserve, nor any government official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not he allowed to engage in fresh speculative activity of
any kind and that their remaining silver would be liquidated in an orderly fashion.
might emphasize that the negotiations Involve a restructuring of existing obligations—
they will not lea.ci to any new funds for the Hunts. My sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing new speculation. ;3eyond this, the Federal
Reserve cannot and should not interject itself into individual Drivate transactions
between lenders and borrowers.
I have enclosed a copy of my Congressional testimony on this subject,
which explains my role more fully. I do appreciate your taking the time to write me
on this issue.
Sincerely,
„n osure
L:sep
#1712
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
•
Federal Reserve Bank of St. Louis
May 14, 1980
Dear Mr. Sprague:
Thank you for your letter on our monetary
policy actions and other measures that were taken to
help curb inflationary pressures. I understand the
concerns that prompted you to write and assure you
that your views, even though critical, serve a useful
purpose to those of us in government, although I can
assure you that the Board's actions have not been
taken with any political motive in mind. One of the
great things about our system is the independence of
the Federal Reserve which allows us to act without
regard to short-run political considerations.
Sincerely,
Mr. Ed Sorague
RL:mrk
#1255
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 141 1980
)ear Mr. Stoltzfus:
Thanks for your letter and enclosure on the
department of Cnergy's proposed REPS prograc4.
Although
this profjran is not the responsibility of the Federal
keserve, I appreciate your taking tke to communicate
your thoughts.
Sincerely,
Hr. Clete L. Stoltzfus
President
Creater Cedar Rapids It Marion
Home guilders Association
1930 St. Andrews Drive, 4.E.
Ce4r Rapids, Iowa 5/402
IIH/tn
#1651
May 14, 1980
.)ear Mrs. Stone:
Thank you for your letter concerning inflation
and saving0 I fully agree with you that we should try
to encourage saving, and I might note that Congress has
just passed legislation exer.pting sore interest from
taxation. Your proposal concerning a wider exclusion
of interest on savings from taxation and widening the
dividend exclusion will be kept in mind.
Sincerely,
Mrs. W. C. Stone
RL:JH/tn
#129I
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
may 14. .19g0
Mr. D. Ford SVrIrt
Dear Mr. Stuart:
I understand the concerns in your letter about the press reports—often
misleading—concerning the role played by the Federal Reserve in certain loans to the
Hunt family.
Neither I, the Federal eserve, nor any government official instigated,
guided or approved the loan ne7,,otiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not be allowed to engage in fresh speculative activity of
any kind and that their remaining silver would be liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations—
they will not lead to any new funds for the Hunts. Illy sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing new speculation. Beyond this, the Federal
Reserve cannot and should not interject itself into individual private transactions
between lenders and borrowers.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
I have enclosed a copy of my Congressional testimony on this subject,
which explains my role more fully. I do appreciate your taking the time to write me
on this issue.
Sincerely,
osure
3. :sep
111707
May 14, 1980
Mr. Chris L. Talley
Senior Vice President
Peoples Loan & Trust Co.
Winhhester, Indiana 47394
Dear Mr. Talley:
I fully agree with your point and thenneed for
fiscal discipline, particularly as it applies to
restraining the growth in government spending, and
I have repeatedly spoken out on this point. Achieving
more fully that result an and will be aided by making
sure that elected officials in the Congress and elsewhere understand the need for such restraint.
Sincerely,
EGC:ccm
!#1731
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 1930
Mr. Williim F. Treiber
Dear bill:
Thanks so much for your letter and
your good wishes. And, while I fully
agree that we have a very long way to go
on the fiscal side, there are some encouraging
"straws in the wind." Your efforts will help
that process.
Sincerely,
cm
#1657
May 14, 1980
Mr. George van Tubergen
Dear Mr. Van Tuhergen:
Thanks for your postcard on our monetary policy actions
and other recent anti-inflation measures. I appreciate very much
your confidence and support.
Sincerely,
#1632
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 1980
Dear Ms. Vedra:
I cannot account for the statement
attributed to me in the Chicago Tribune
for I certainly did not say anything like
that. As to the wisdom of Solomon, you're
right, we can all use as much of that wisdom
as we can muster.
Sincerely,
P.S.
I have not been on the West Coast for
months.
PAV
Ms. Ruth T. Vedra
e
t<s.lw
#1547
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 1980
AIR MAIL
Mr. icolas M. W. Vermeulen
South Africa
Dear Mr. Verneulen:
Thanks very much for your letter of April 16
suQqesting a solution to the probleT:i of inflation.
Thoua the revisions you suggest in our tax system
would not fall within the responsibilities of the
Federal Reserve System, I am glad to know of your
views. And I appreciate your interest in seeking
solutions to this serious problem.
Sincerely,,
TEA/tn
#1651
\iay 14, 1980
'kir. C. R. Wall
Squash Blossom
229 10th Street
Alamogordo, New Mexico 88310
Dear 9r. Wall:
I understand the concerns in your letter about the press reports—often
misleading—concerning the role played by the Federal Reserve in certain loans to the
litint family.
Neither I, the Federal eserve, nor any government official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not be allowed to engage in fresh speculative activity of
any kind and that their remaining silver would he liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations-they will not lead to any new funds for the Hunts. 1y sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing new speculation. 'leyond this, the Federal
Reserve cannot and should not interject itself into individual private transactions
between lenders and borrowers.
I have enclosed a copy of my Congressional testimony on this subject,
me
which explains my role more fully. I do appreciate your taking the time to write
on this issue.
Sincerely,
F.Lsure
31-1:RL:sep
#1711
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Hay 14, 1930
Nr„ Joseph E. Wallace
President
International Travelers
Cheque Cowan".
70 W4 Burton
ox 3002
Chicago, Illinois 60610
iiear Mr. Wallace:
Thanks for your letter on our monetary
policy actions and other recent anti—inflation
geasures. I appreciate very much your
confidence and support
ncerely,
jil:evjj
#1502
Nay 14, 1960
Mr. Richard A. Willette
President
QCM CoLipany
3467 South 208th Street
Building E-4
Kent, Washington 93031
Dear Or. 41l1ette:
Thank you for your letter concerning SR 392.
It is my understanding of this bill that it is intended
to have the Federal Reserve roll sack interest rates, a
goal which you do not support. The legislation does not
address the question of foreign money in the United States.
I appreciate your taking the time to write.
Sincerely,
RL/tn
#1769
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Mo 14, 1980
Dear Dr. Won Son:
Thank you for sending me a copy of the Spring
1930 Regional Economic Survey for your area.
I am always
glad to receive first-hand reports such as yours and we
will keep your findings in niind.
Sincerely,
Dr. Sung Won Son
Senior Vice President and
Chief Economist
iorthwestern National bank
Seventh & Marquette
Hi neapolis, Ninnesota 55460
,J
R fin
#1774
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
I
May 14, 1980
Dear John:
Thank you for your letter and I want you to know
that I fully understand your point about the dangers
of excessive money growth and large deficits. And, I
hope and trust that we can and will avoid some of the
mistakes of the past.
I appreciate having your views.
Sincerely,
Mr. John J. Young
President
First Federal Sauings
and Loan Association
of Amarillo
406 Polk Street
Amarillo, Texas 79105
EGC:slw
#1410
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 14, 1980
Dear Zygmunt:
Thanks for your note and the piece
from Barron's.
And, please do keep in
touch.
Sincerely,
Mr. Zygmunt Nagorski
The Lehrman Institute
42 East 71st Street
New York, New York 10021
9e5lw
390
.7
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
'iay 13, WO
Ars, Li, 4;akhen
Ur fits, 4akKen:
Thanks for your postcaril oft our JionetrY
policy actions and other recent anti-inflation
masures.I
ppreciate very wuch ywr
coofidence 4nd support.
Sincerely,
jii:evjj
May 13, 1980
Ms. Marguerite J. Bertroche
Dear Ms. Bertroche:
I understand the concerns in your letter about the press reports often
misleading—concerning the role played by the Federal Reserve in certain loans to the
Hunt family.
Neither I, the Federal Reserve, nor any government official instigated,
of
guided or approved the loan negotiations between the Hunt interests and the group
a credit,
banks involved. The Federal Reserve has only said it would not object to such
of
Provided that the Hunts would not be allowed to engage in fresh speculative activity
. I
any kind and that their remaining silver would be liquidated in an orderly fashion
ions—
might emphasize that the negotiations involve a restructuring of existing obligat
ensure
they will not lead to any new funds for the Hunts. y sole concern has been to
nt Program,
that such a loan complies with the Federal Reserve Special Credit Restrai
l
particularly as it applies to preventing new speculation. Beyond this, the Federa
tions
Reserve cannot and should not interject itself into individual private transac
between lenders and borrowers.
,
I have enclosed a copy of my Congressional testimony on this subject
write me
which explains my role more fully. I do appreciate your taking the time to
on this issue.
Sincerely,
En os e
31- . L:sep
#1656
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
13„ 19150
Biguar
bear
Thank you for your letter on the money market mutual fund
issue, I can understand the concerns that you expressed. The recent
action by the Felleral aeserve Board to which you refer was not aioed
directly at placing a lid on rates and certainly was not desined
disadvantage savers, but rather to help keep a more even distribution
of credit throughout the country. The growth of money market mutual
fumis dtrirr the months leading up to the :iarch 14 actions had
dramatically re,luced the flows of deposits to banks an0
institutions serving local cov:Aunities and their ability to rvet the
credit needs of those co unities; at the saNe time, these funds wttm
add1n9 greatly to the liquidity of the central 'Aoney markets and
thereby to inflationary pressures in the econoily. The enclosed press
release and attached docwents explain the iwardis gleasures more fully,
appreciate your taking the tine to write.
Sincerely,
Oclosures
)ttevjj
p1479
May 13, 1980
Mr. Carl R. Bogese, President
Home Builders Association
of Southside Virginia
2225 East Washington Street
Petersburg, Virginia 23803
Dear Mr. riogese:
Thank vou for your letter and article on the effects of high interest rates
on housing. I can fully appreciate the concerns that prompted you to write.
In thy setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over tine unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard,! would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge In the discount
rate that had been established for certain classes of hank's. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are tinder liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building-that such hanks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment In which housing and the
economy In general will prosper. I appreciate your taking the time to write and I hope
will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
11:sep
1205
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
nay 13.. 1990
TIAe ilenoraLle Frank Oluxo:„
tJajtuti $tateu Senate•
Washinyton„
2051.1
DO4r
S=ator Curch;
1 can egU understand your concern about tlx , nt laattor.
1 C444 &sours jouI have r4o ore apui„,athy than you for t4-4eir pertcort.tcc.
The loan under discuzsion, which Lax Leen privately
netiated, contains provisionz, to provoLt durinv its life further
.:oculative ventures by the Uutlt;i and relata0 parties, The Nunts
4ave aot cleared themselves of their speculative debts—the loan
restructures but does not 'close thase debts. While the position
of the creditors and ttia Mints would presumably be stalalizad-and that is why they ircely decided to negotiate the loan—the
Liunts cannot return to r"buoinusti aa usual' so long aa the detItt
axe outstanding, and indcod aliivar to have been forced to lirladate
rvice t4eJr silvor debts.
eceli.t; cothaz assetu to
- 0uld not 7rubvtancAir analysis zu5qeste this neli loan !;i::.
ti4lli affect th,, riz,tional flu;:lly of credit et this point, ';:secausn
luia loan will rcilace existing debto (v.c 6arlier debts of widez
144 wert;,, unaware d4 they were increased, coulii 14(.1 contstruftd az
alttoul:h the.%i larlely AITtAr to have '2;,een incurred
to cover :F;:eclativa Iosso4
to avoid liuidation rather than to
kurc;441E z;i1vor). Mc ,ractical and unfortunate situation wo facod
was ttlat, 444 a bii:roduct of the mint speculation aud tho conzeuent
sairol4urta of other in:;titutlx,na with which they dealt, the titabilit\
of curtain ananciAl inetitutious and markets was t}:xeatoned; had
that ttlreat oaterializod, it Jo innocent bystanders, includimj
desIladeut on Lk,le orderl:i to of bank credit, 0
to
- .10 would have
paid k art.
T4ft loan, whicth 1 neither al;roved nor disairoved, v 11
contain
a,jaiagt te renewed zi4itaulation ,
jou (and I
dilQrazisuaing it is con4umtaated.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Thu Hopor
Paiia Two
la rzutrehi. Cburcb
Ws are in the p:Gceoz ot ccaiv14s.tiAq a morc thoroui
4na1ysis of tbe fir,ancial zi,ectx;
C4is zituation for t,Yzt
4euate Sankin Cogivtittee. 'that rort ahLtuld 4- 11t clotaiAoted in
& 14isi days awl I will 3=4 a cvq-y to :
:
4 ou for :our inforzotion,
In tae raoanxile, I am encloain.;; '6ome tectimony that I 11,31clarifieat
istuoz,
4ortz imvortaxt for the. „...uturo, ia -hJ:. can Le done to
foreLtall asu.)thex einode of this kind.
elrti--; IL t
-'at dirction,
Sinceroly r
VW&
Llaclu;.!ux..);
(Statement di. 5/1/80.)
LCXjt (V-1b7)
bccI
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Volcker
V.re 1.ttva turned oar
,
qe-fireontAtiv*s
Y
4
•
c•
fmn
-1^Clr
111.1ergtzr,•1 your ccmcior,-,
l'. 711te no T:lorc
te HInt
dos Ae-e. to 7-4.t to Asc!onstru* t):
att;5.chin
of the rfrttl ncssrve in this t,attc,r.. T
heirs clarify thr, ientws.
tiA
role-
the loan under disvIzrsion: wlAt.th har
In portic-:been privately re9c; L. contains provisions to prevont trjrv
its life further speculative ventures by the Hunts an rite
•
tlelts have not cleared thorselves of their srocu
17I1
-- the loon restructures but does not "clear- thaps
?Ind the Hunts womld
croitt
'141gz, the pesitin cs;f7
r,-11c7: tat io wY.y t7A!?y freely deciae
rresIlmably ho tabitt.
rtts cannot 1. turn trf 11111114341.11
to nelotiete the loan ,th
117) inele$_od rrnalr
usual- no 'owes the Jebts are r.lutstandir
to have beer ferce4 to liquie;Ae sc,r! other aArmt. to rrv1c17
their silver debts.
0ur emalysir sutjests tis new loan sboul nct 31;10.startiAdy affect the national oupply of credit at tin point,
bocauto the new loan will replzIce existinq debtv Vole etrlier
debtt*, or vbith we yore untwmre as they were increased, cole
tthoigh they larqely appear to
iciatitt.
be construed as
I.T.Am been incurred to cover !%poculative losses or to avoid
lit7kliaatizn rather eltin to purchase silver)- limkeLl at in this
liqht, T can't believe that t.14e situation bas c,r will undermine
or creeit rt-strint prtrran. Mcleod, were it not. for the fact
of thtst nrornTrz, we probWly would not 141.ve, been in a position
to insist or tl-ie prolAbitionv on speculation that will be part
of the loan ml.reeellt.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
;!onorable TIorr,Tin
Page Two
D'Aryurv
The practicel and urft%c.tunatet situation we facee was
as a byrroduct of the isunt speculation ane the consequent
ey.,-ovire of other institutions with 10-kieh they dealt, the stacertain financial institutions ane InmrXets was threat1,ilitl
ene6 had that ttroat naterialized: it is innocent 1:1.7stam7ers,
includin those dependent en thm orderly flow cf bank credit
who would 'have rata nett of the rrice
TIle loan, Whit. T rcf.itheA. Approve6 nor disapproved,
tfur
int. tbe renewed
will, na note0 n1:-Inve, contain
1 1) 6..eriore, aF3sunilow it is consulmated.
speculation yi:u (ar,
More itnnortant. ror the future, is what can be done
ye 1-lave turned our
to forestall another eriso0e of this
t'fforts in that direttion.
efincerely
SiInt IL Wu
"Frclosurc
PLV ,vcd (uV 190)
hcc:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
nrs, Nz.Illardi (2)
May 13, 1980
Mr. Tiurl Davenport
Dear Mr. navenport:
I have read your letter and I want you to know that I am not insensitive to
the kinds of difficulties experienced by you and other small businessmen. I also realize
that you cannot be expected to draw much consolation from that alone.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including small business-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
the
with so that we can move into an economic environment in which business and
economy in general will prosper. I apnreciate your taking the time to write.
Sincerely,
‘.1 f..isep
#1709
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 13, 1980
Mr. John C. Dear
President
Glenwood State Pank
32 North Walnut, Box 431
Glenwood, Iowa 51534
Dear Mr. Dean:
I have carefully read your letter concerning access
to the discount window for non-member banks, and I can
appreciate your point. But, the Omnibus Banking Bill
signed into law by the President in late March requires
such access. You may be assured that we will approach
the administration of the discount window for these
institutions with the same discipline that we have
traditionally used with member banks.
Sincerely,
E C:ccm
#1373
Vlay 13, 1980
Mr. Don Dilrnore, President
Di!more Realty, Inc.
285 W. Campbell
Richardson, Texas 7.5080
Dear Mr. Dilmore:
I have read your letter and I want you to know I am not insensitive to the
kinds of difficulties you and others in the building industry are experiencing. I also
realize that in the current situation you cannot be expected to draw much consolation
from that alone.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write.
Sincerely,
k
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
:RL:sep
608
1
May 13, i9O
Mr. William George, Regional
3eDmEr.)
imager
24 Windward Circle
Lake Hinsdale Village
Clarendon 19115, Illinois 60514
Dear Mr. George:
I understand your concern and frustration about hieh interest rates,
especially in view of the experiences you described. I also knew that saying this
doesn't make it any easier for you and many individuals.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Adelinistration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to heir, meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including small business—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which business and the
economy in general will presper. I appreciate your taking the time to write.
Sincerely,
#1304
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
3 MAY law
Hr. Howard Golden
President of the Borouell of 3rooklyn
Borough Hall
iirooklyn Civic Center
Brooklyn, New York 11201
Dear Hr. Golden:
Ihank you for your April 1 letter concerning the noard's
consumer
credit restraint regulation. In your letter, you comment on
potential
deciaions by the Board regarding creditors' changing the
terms of credit
accountn.
On April 2 end 14, the noard Le:tended the regulation to
establis
a uniform rule for creditors to follow if they wish to make
certain changes
in terms on open-end and 30-day credit accounts. Enclosed are
copies of
the amendments and the press releases describing the rules
adopted by the
3oard. Before taking those actions, the Board and its sterf
considered many
comments such as yours. Those commento were extremely usefu
l to the Board
in iashionine an equita5le resolution of thie issue.
We believe that tho chenge in terms rule best effec
tuates the
purpose of the eensuiecr credit restrnint pro,grele while
taking into account
consuners' concerns about adequate notice and creditors'
concerns about disruption of their credit plane.
lie appreciate your takine the time te send us your
comments for
our consideration. Your na!)e has been placed on the
mailing list to receive
information concernine, future lioard actions in thin area.
Sincerely,
rncloaures
Vt.'?
Denise Rechter:flh
5/5/so
rilo7
Rs-n347
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 13, 1980
Ms. Alice Keiser Greth
Dear Ms. Greth:
unlerstand the concerns in your letter about the press reports—often
misleading—concerning the role played by the Federal Peserve in certain loans to the
Hunt family.
Neither 1, the Federal Reserve, nor any government official instigated,
guided or approved the loan negotiations between the Hunt interests and the group of
banks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not he allowed to engage in fresh speculative activity of
any kind and that their remaining silver would he liquidated in an orderly fashion. I
might emphasize that the negotiations involve a restructuring of existing obligations-they will not lead to any new funds for the Hunts. My sole concern has been to ensure
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
particularly as it applies to preventing new speculation.
eyond this, the Federal
Reserve cannot and should not interject itself into Individual private transactions
between lenders and borrowers.
I have enclosed a cony of my Congressional testimony on this subject,
which explains my role more fully. I do anpreclate your taking the time to write me
on this issue.
Sincerely,
'Pr/
c closure
31-1:RL:seo
#1740
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
9-ay 13 1980
Mr. Charles r. lielnItz, President
Heinitz Pre-?iung Doors, Inc.
Route 3, Box 50
Shelton, Washington 985214
Dear Mr. 1-leinitz:
I understand vou
Thank you for your letter urzing support of S.R.
concern and frustration ahout high interest rates, especially in view of the experiences
you described. I also know that saying this doesn't make it any easier for you nnd
many individuals in the building trades.
There are now stens of a decided. easing of the extreme credit market
pressures that we have exnerienced In the past few months. The demand for credit has
lessened and market interest rates ha.ve meved lower. 'f;leflectirig these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discot.mt
rate that had been established for certain classes of hanks. And, friortgage rates have
fallen somewhat, as reflectell in the lowering hy the Federal 9ousing Administration
of its maxirourn mortgage rate.
The Fet.leral Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their dicoosai to het)rneltt
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas including small business,
that such banks are justified in exceeding the percent limit on loan growth containee
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be quick or easy. Rut If we fall now, the
discomfort later will !)e all the more serious. That is why I believe that we must get
the process over with so that we can move into an economic environment in which
business and the economy in general will prosper. 1 appreciate vour taking the time to
Sincerely,
Rissep
#1533
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
!lay 13, 194::4i0
Harold Heuer
)ear Irs. ieuer:
I understand well your COtiCerrIS about high interest rates.
The level of interest rates is largely a reflectien of the rapid rate of
Inflation we are experiencina and the jee.ply eLthedded expectations that prices will
continue to cilia.). In this environakant, interest rates ire high mainly because
lenders are reluctant to extend credit without beina coGpensated for the cleclinina
value of the dollars they will receive in repayment.
(he only way we are likely to achieve a lasting decline in interest rates
Is if there is a lowerin9 of inflation anti inflationary expectations. aintenance
of reasonable control over growth of money and creait is an essential ingreaient
in the fiaht against inflation, and the Federal Reserve is coralttea to this policy.
itover, tionetary policy alone cannot do the job effectively, in that reaard, I
would strongly ertphasize that we need help in the form of firm discipline in fiscal
policy, particularly as it applies to restrainina the growth in government spending.
There are now signs of a decided easing of the extretae credit raarKat
pressures that we have experienced in the pastml% raonths. The eeraand for credit
has lessened and mara.et Interest rates have rroved lower. Reflecting these developraents, the Federal Reserve has eliminated the 3 percentage point surcharge in the
discount rate that itau been established for certain classes of banks. And, mortgaae
rates have fallen soiamhat, as reflected in the lowerina lay the Federal housing
Adatinistration of its taxi um 1,tortaaae rate.
The Federal aeserve has also taken steps to help ensure that s-tall panks
that are under liquidity pressures will have added funds at their disposal to help
al-et the credit needs of their local communities, And, we have sain that where banks
are essentially confining their loan expansion to priority areas—includina fannina
and small business—that such banks are justified in exceeding the 9 percent Malt
on loan gnawth contained in our Special Credit Restraint Proaraaa
These factors will help but they do not alter the fundaaiental fact that the
process of taarina inflation will not be easy. but if we fail now, the aiscomfort
later will be all the taore serious, That is why I believe that we HAAS t get the
process over with so that we can move into an environment in which the economy in
general will prosper. I appreciate your taking the tile to write and I hope I will
have your understanding and support as tad seek to resolve this alost pressing
national problem.
Sincerely,
;i:evjj
,1376
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
'lay 13, 1980
Mr. Eugene S. Holderness
Minnesota Homebuilders, Inc.
3131 Fernbrook Lane, 202.
Plymouth, Minnesota 5544!
Dear Mr. Holcierness:
Thank you for your letter and attachment on the effects of high interest
rates on housing. I can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
tine, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Tionetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly agree with you that we
need help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 1 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our SPecial Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. F3ut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most Pressing
national problem.
Sincerely,
:sep
111263
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 13, 1980
kir. Fred Huckvale, President
Carolina International, Inc.
I Hurstbourne Park - Suite 701
Louisville, Kentucky 40222
Ibii
ILTtvale:
business.
Thank you for your letter on the effects of high interest rates on your
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation a.nd deeply embedded inflationary
expectations, there is a wide national consensus tha.t economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining modera.te growth in money and credit. However, rnonetarv policy alone
cannot do the job effectively. In that regard, I would strongly agree that we need help
in the form of firm liscipline in fiscal policy, particularly as it applies to restraining
the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminate,d the 3 percentage point surcharge in the discount
rate tha.t had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgap,e rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the crertit needs of their local communities. And, we have said that where hanks are
essentially confining their loan expansion to priority areas—including small business—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not he easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which business and the
prosper. I appreciate your taking the time to write and I hope
economy in general
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
J1-1:RL:sep
#1713
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 13, 1980
Mr. Royce Johnson
Raleigh Heating and Air conditioning
3505 Ruffalo goad
Raleigh, North Carolina 27604
Dear Mr. :Johnson:
have read your letter and I .,./ant you to know that I am not insensitive to the
kinds of difficulties you and others in the home building industry are experiencing. I also
know that in the current circumstances, you cannot draw much consolation from that alone.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments.
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. AM, mortgage rates have
fallen somewhat, as reflected In the lowering by the Federal Housing Administration
of its maximum mortgage rate.
Sincerely,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
• •••• J•
•
https://fraser.stlouisfed.org
.A-414///b-ANG
Federal Reserve Bank of St. Louis
1J, 19W
4. %Rini.; ;:.elly
Jearr. EiUy
Thanks for your letttm c;i;&r
ctry
policy actions and other mcint anti-infiatiot
iimasures.
appreciatii very nuch iwtr
confidence anl support.
Ancerely,
a:evjj
#1505
-At
May 13, 1980
Mr. Don Kirk, r'resident
Kirk Structures, Inc.
P.O. Box 157
Perry, Minas 62362
Dear Mr. Kirk:
your
Thank you for your !fitter on the effects of high interest rates on
the concerns that
business and the farm sector in general. I can fully appreciate
prompted you to write.
inflationary
In the setting of excessive inflation and deeply embedded
mic policies must, over
expectations, there is a wide national consensus that econo
the foundations for
time, continue to work to reduce inflation and thereby provide
role to play in that
greater economic stability. !Ionetary policy has an essential
unless fueled by excessive
process since excessive inflation cannot persist over time
and will remain, aimed
growth in money. Thus, the bask thrust of monetary policy is,
monetary policy alone
at maintaining moderate growth in money and credit. However,
that we need help
cannot do the job effectively. In that regard, I would strongly agree
applies to restraining
in the form of firm discipline in fiscal policy, particularly as it
&the growth In government spending.
credit market
There are now signs of a decided easing' of the extreme
demand for credit has
pressures that we have experienced in the past few months. The
g these developments,
lessened and market interest rates have moved lower. lieflectin
arge in the discount
the Federal Reserve has eliminated the 3 percentage point surch
And, mortgage rates have
rate that had beers established for certain classes of banks.
al Housing Mministration
fallen somewhat, as reflected in the lowering by the reder
of its maximum mortgage rate.
banks
The Federal Reserve has also taken steps to help ensure that small
sal to help meet
that are under liquidity pressures will have added funds at their dispo
that where banks are
the credit needs of their local communities. And, we have said
uding small business
essentially confining their loan expansion to priority areas—incl
nt limit on loan
and farming—that such hanks are justified in exceeding the 9 perce
growth contained in our Special Credit Restraint Program.
fact that the
These factors will help but they do not alter the fundaniental
the discomfort later
process of taming inflation will not he easy. rkut if we fall now,
process over
will be all the more serious. That is why I believe that we must get the agriculture,
ess,
with so that we can move into an economic environment in which busin
time to write
and the economy in general will prosper. I appreciate your taking the
resolve this most
and I hope I will have your understanding, and support as we seek to
pressing national problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
311:sep
111510
'lay 13, 1980
Rocrt LeFevre, President
%Ir.
LeFevre Sales, Inc.
0
P.O. f.Nox 17,
Jamestown, Nlorta nakota 58401
Dear Mr. LeFevret
Thank you for your letter on the e.ffects of high interest rates on your
building materials business. I can understand the concerns that prompted you to write.
have put your finger on a critical asoect of the problem with your
comments on government spending. Persistent federal rieficits are a major source of
our economic difficulties, both in terms of their direct conseleences and, perhaps
more irneortantly over time, in their fostering of inflationary expectations. I sense,
however, there is a qrowing realization—throughout MI segments of our society—that
we must bring this process under control. The recently proposed cuts in federal
spending—while mhaps not as large as you or I would have wished—are representative
of that changed attitude. But, make noristake about it, achieving major cuts will be
very difficult. That process can he aided hr,n-terisoMy by public opinion 4rvi it is
important that individuals like yourself let weir views he known. I, for one, will
continue to speak out %whenever I can as to the need for sustained discipline over time
in our fiscal affairs.
You
(Nf course, monetary policy also has an essential role to play in the fight
against inflation since excessive inflation cannot persist over time unless fueled by
excessive growth in money. Thus, the basic thrust of monetary policy is, and will
remain, aimed at maintaining moderate growth In money and credit.
There are now signs of a decided easing of the extreme credit market
pressures that we have erperienced In the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been estahlished for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maxiceurn mortgage rate.
The Federal Reserve has also taken steps to help ensure that small hanks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit neels of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas, including home building and
small business, that such Nanks are justified in exceeding the 9 percent limit on
loan growth contained in our Special Credit Restraint Program.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Page Two
Mr. C. Robert leFevre
These factors will help but they do not alter the fundamental fact that the
process of tasning inflation will not be quick or easy. But If we fail now, the
discomfort later will be all the more serious. That is why I believe that we must get
the process over with so that we can znove Into an economic environment in which
housing and the economy in general will prosper. I appreciate your taking the time to
write and I hope I will have your !inderstanding and support as we seek to resolve this
most pressing national problem.
Sincerely,
311:sep
)52
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
My 13, 1980
Mrs. Betty Jean Lucke
Dear Nrs. Lucke:
Thank you for your letter on the money market mutual fund
Issue. I can understand the concerns that you expressed. The recent
action by the Federal Reserve board to which you refer was not ainnd
directly at placing a lid on rates and certainly was not designed to
disadvantaoe savers, but rather to help keep a nore even distribution
of credit throughout the country. The growth of money market mutual
funds during the months leading up to the arch 14 actions had
dramatically reduced the flows of deposits to banks and thrift
Institutions servik; local conounities and their ability to meet the
credit needs of those communities; at the same time, these funds weTt
adding greatly to the liquidity of the central money markets and
thereby to inflationary pressures in the economy. The enclosed press
release and attached documents explain the Board's measures nore fully.
appreciate your taking the tiwe to write, and I also
alyee with you on the need for fiscal discipline.
Sincerely,
Lnclosures
JH:evjj
#1419
May 13, 1980
Mr. Ed McNeils, President
Ms. Helen McKinney, Executive Vice President
Caldwell Chamber of Commerce
404 South 10th Avenue
Caldwell, Idaho 33605
Dear Mr. "cNelis and Ms. McKinney:
Thank you for the letter on the effects of high interest rates on business. I
can fully appreciate the concerns that nrornpted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
Process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the Dast few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including small business—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Put if we fail now, the discomfort later
will he all the more serious. That is ve!ly I believe that we must let the process over
with so that we can move into an economic environment in which business and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
31-1:RUsep
#1440
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 13, 1980
Mr. David B. Morgan, Jr.
Dear Mr. Morgan:
Thank you for your letter and attached article on high interest rates and
inflation. I understand well the concerns you expressed.
The level ,af interest rates is largely a reflection of the rapid rate of
inflation we are experiencing and the deeply embedded expectations that prices will
continue to climb. In this environment, interest rates are high mainly because lenders
are reluctant to extend credit without being compensated for the declining value of
the dollars they will receive in repayment.
The only way we are likely to achieve a lasting decline in interest rates is
if there is a lowering of inflation and inflationary expectations. Maintenance of
reasonable control over growth of money and credit is an essential ingredient in the
fight against inflation, and the Federal Reserve Is committed to this policy. However,
monetary policy alone cannot do the job effectively. In that regard, I would strongly
emphasize that we need help in the form of firm discipline in fiscal policy, particularly
as it applies to restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge In the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Ieserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including small business-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will ae all the more serious. That is why I believe that we must get the process over
with so that we can move into an environment in which the economy in general will
prosper. I appreciate your taking the th - e to write and I hope I will have your
understanding and support as we seek to resolve this most pressing national problem.
Sincerely,
1_H:sep
1148
,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Ivlay 13, toy"
Mr.1 3. Nortman
Dear Mr. Nortrf
Thank you for your letter on high interest rates and your bond portfolio.
can fully appreciate the concerns that prompted you to write.
There are now signs of an eesing of the extreme credit market pressures
that we have experienced in the past few months. The demand for credit has lessened
and market interest rates have moved lower. The howl market has, as you know,
staged a significant rally. It is, of course, true that interest rates are still at high
levels and I cannot be sure that these recent reductions will be enlarged and such rates
will move decisively and permanently lower. That will utirnately r.lepend on our
success in &eating the inflation rate down, for the level of interest rates is essentially
a reflection and an 01.st r th of inflation. But, I am encouraged by these most recent
financial market developments.
In the current setting of excessive inflation and deeply embedded
Inflationary exeectations, there is a wide national consensus that firm action must he
taken to combat inflation now. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless Fielder by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as It applies to
restraining the growth in government spending.
I appreciate your tskiag the time to write and tell me firsthand of your
experience.
Sincerely,
i•. taseo
#1094
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 13, 1980
Mr. Williar B. O'Connell
Executive Vice President
U.S. League of Savings Associations
111 East Wacker Drive
Chicago, Illinois 60601
Dear Mr. O'Connell:
Thanks for your letter, and I want you to know that
I fully appreciate your point on the potential implications
of large shifts into the 2-1/2 year certificates. We in
the Federal Reserve and the other agencies represented on
the new Depository Institutions Deregulation Committee are
taking a hard look at all options and, in that light, I
appreciate having your views and suggestions.
Sincerely,
9
,..,...
AIINIMMENIMINNIIIMINNIMINIIIIIIIIM11
N.4ay 13, 1980
Mrs. Kathleen Pape
Dear Mrs. Pape:
I §Inderstand the concerns in your letter about the press reports—often
to the
misleading—concerning the role played by the Federal Reserve in certain loans
Hunt family.
Neither 1, the Federal Reserve, nor any government official instigated,
group of
guided or approved the loan negotiations between the Hunt interests and the
hanks involved. The Federal Reserve has only said it would not object to such a credit,
provided that the Hunts would not be allowed to engage In fresh speculative activity of
I
any kind and that their remaining silver would he liquidated in an orderly fashion.
might emphasize that the negotiations involve a restructuring of existing obligations—
not lead to any new funds for the Hunts. My sole concern has been to ensure
they
that such a loan complies with the Federal Reserve Special Credit Restraint Program,
l
particularly as it applies to preventing new speculation. Beyond this, the Federa
ctions
Reserve cannot and should not interject itself into individual private transa
between lenders and borrowers.
I have enclosed a copy of my Congressional testimony on this subject,
to write me
which explains my role more fully. I do appreciate your taking the time
on this issue.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
s1ire
y
Ero
JH:RL:sep
#1646
44,
.
j ay 1.3, 1130
ir.aichard ?ulaaan
Paul's Enterprises
iiighway 22 So.
P.O. BOX 546
'iankato, Hinnesota 56001
dear •if*.
'
i utman:
Thank you for your letter anti attached article. I ulaierstand well your
concerns ebout high interest rates.
The level of interest rates is largely a reflection of the rapid rate of
inflation we are experiencina and the deeply eatedded expectations that prices will
continue to clifab. in this enviromemt, interest rates are his3h r:gainly becaase
lenders are reluctant to extend creait without bein9 co1:4aensated for the declinin
value of the dollars they will receive in repayLamt.
The only way we are likely to achieve a lasting decline in interest rates
is if there is a lowering of inflation and inflationary expectations. elaintenance
of reasonable control over gritaath of Loney and crealt is an essential ineredient
in the fight against inflation, and the Feeeral aeserve is co.aaitted to this policy.
however, monetary policy alone cannot do the job effectively. In that regard, I
would strongly emphasize that we need help in the forn of fine discipline in fiscal
policy, particularly as it applies to restraining the growth in government spending.
There are now signs of a decided easing of the extretie credit aerket
pressures that we have experienced in the past few months. The demand for credit
has lessened and isarket interest rates have moved lower. Reflecting these developments, the Federal aeserve has eli,lneted the 3 percentage point surchaNe in the
discount rate that had been established for certain classes of banks. And, mort9aie
rates nave fallen somewhat, as reflected in the lowerin9 by the Federal Housing
Administration of its caaxitaura mortgakae rate.
The Federal iZeserve has also taken steps to help ensale that siaall banks
that are unuer liquidity pressures will have added funds at their disposal to help
mra...et the credit needs of their local comaamities. Ands we have sale that where banks
are essentially confining their loan expansion to priority areas—includinasiall
business—taat such banks are justified in exceeding the 9 percent Mit on loan
arewth contained in our Special Credit Restraint Prograra.
These factors will help but they do not alter the fundemental fact that the
process of taming inflation will not be easy. but if we fail now, the discualort
later will be all the more serious. That is why I believe that we wust 9et the
process over with so that we can move into an enviromaent in which the economy in
general will prosper. I appreciate your taking the tiae to write and I hope I will
have your understanding and support as we seek to resolve this most pressinzj
national problen.
1
1-1:evjj
1333
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
V- 191,
.•
• ofGovt'•,
BOARD OF GOVERNORS
tp%
OF THE
FEDERAL RESERVE SYSTEM
to.
WASHINGTON, O. C. 20551
PAUL A. VOLCKER
'?AL RE.
CHAIRMAN
May 13, 1980
The Honorable Matthew J. Rinaldo
House of Representatives
Washington, D. C. 20515
Dear Mr. Rinaldo:
Thank you for your letter of May 5 transmitting correspondence which you received from Mr. Edmond V. Lawlor, Jr.,
regarding financial institutions offering "premiums or giveaways"
to attract savers.
At the first meeting of the Depository Institutions
Deregulation Committee, comment was requested by June 9 on a
proposal to prohibit any premiums or gifts given by an institution.upon-thvPopening of a new account or an addition to an
existing account. Enclosed is a copy of the press release
issued by the Committee.
The Committee appreciates receiving Mr. Lawlor's
views, and they have been made a part of the public record
on this proposal.
Sincerely,
/ebigaa,
/-•
7)
Enclosure
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Federal Reserve Bank of St. Louis
/
at a
&tab& 4f,
V-Z
ett,
(,efit43?" („4"e,q
%WW1
(.‘
((ale
C-l/t A -yte
4r=
wee
iiay 13, 1930
ir. gichard
keff
Dear 11r. Ruff:
understand well your concerns about high interest rates.
The level of interest rates is larjely a reflection of the rapid rate of
Inflation we are experiencing and the deeply eebeeded expectations that prices will
continue to climb. In this environeent, interest rates are hieh eainly because
lenders are reluctant to extend credit without beine cenpensated for the declinire,
value of the dollars they will receive in repay ient.
The only way we are likely to achieve a listing decline in interest rates
is if there is a lowerine of inflation and inflationary expectations. ilaintenance
of reasonable control over growth of moriey and credit is ae essential ingreelent
In the fight against inflation, anti the Federal Reserve is coeeitted to this policy.
however, monetary policy alone cannot do the job effectively. In that reeard,
would strongly ecephesize that we need help in the forte of firm discipline in fiscal
policy, particularly as it applies to restrainine the growth in eovernmeet seendine.
(here are now signs of a decided easiny of the extreee credit earket
pressures that we have experienced in the past few eonths. The ceteand for creeit
has lessened anei market interest rates have litoved lower. Reflectinv these develop—
merits, the Federal Reserve has eliminated the 3 percentage point surcheree in the
discount rate that had been established for certain classes of banks. And, mortgage
rates have fallen soeewhat, as reflectee in the lowerine by the Federal eousing
Adeinistration of its Liexieeit Alrtgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under lluidity pressures will have added funds at their disposal te help
eeet the credit needs of their local ceeriunities. And, we have said tnat where banks
are essentially confininy their loan expansion to priority areas—includine si.all
business—that such banks are justified in exce.e:iing the 9 percent Welt on loan
growth contained in or Special Credit kestraint
These factors will help but they et) not alter the fundaeental fact that the
process of teeing inflation will not be easy. eut if we fail now, the discoefort
later will be all the more serious. That is why 1 believe that we tust get the
process over with so that we can move into an enviromient in which the econoey in
general will prosper. 1 appreciate your taking the tie to write and 1 nope I will
have your anderstandine and support as we seek to resolve this Most pressing
national problem,
Sincere,
evjj
1569
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 13, 1980
The iiseorable Fernand J. St Germain
Chatham
Financial Institutions Supervision,
Regulation and Insurance Subcommittee
Committee as lashing, Finance and Urban
Affairs
House of RepreMentattves
Washington, D. C. 20515
Dear Chairman St Germain:
I as pleased to nanowleApi es behalf of the Depository
Institutions Doissolation Committee year letter of May 6, 1980, in
which you and Congressman Patterson empessesd your concerns about
the ability of depository institutions to ceepste with money market
mutual funds and sigessted a study of two alternatives that would
Mei toward compititiVeimirity. I have asked the staff to undertook* such a study. It will not be feasible for them to complete it
in time for our June 2 meeting, but they will hews it ready for consideration at the Committee's subsequent meeting in July.
Sincerely,
Paul A. Volcker
Chairman
NB:cak
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Federal Reserve Bank of St. Louis
cc:
Mrs. Mallardi (2)
May 13, 1980
'fir. W. L. Tatum
Dear Nir. Tatum:
I have read your letter and I want you to know that I am not insensitive to
the kinds of difficulties you and others in the building industry are experiencing. I also
know that in the current circumstances, you cannot draw much consolation from that
alone.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and elarket interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Proeram.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be quick or easy. Still that does not diminish the
legitimacy of your concerns. I appreciate your taking the time to write.
Sincerely,
:sep
#I298
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Federal Reserve Bank of St. Louis
•
May 13,
The ”onorable nruct 1. Verto
'e.tusto of Representatives
;1Rshinc,ton, r. C. 20315
Dear Vr. Vento
evt7.1t sense of
T owl well undermtAnd your concern
shock - Abc=ut, the runt rattowr. Y can assure you I have no ncre
syrpatily than you for their rerformarce,
Your letter does seem to me to mieconstriac entiroly
Iar attPtchin.c,
the role of the Tederal Reserve in this !ratter
ftor, testirony that I hope helps clarify- t151
In varticuIar. the loan under discussion, wjc
been privately neotiated. contains rrovisions to prevent durin
its life further speculative venturon by the unts and reloted
ntrties. The 1,Ints beve not clearer themselves of their speculative debts -- the loan restructures but does not 'clear thoew
the pcsition of the creitors A.nd the l'ctunts woul
robta.
'- ;r1P,surab1y be stabilized -- ;7n4 that is lary they freely decief-7
to nerotiate the loan - the %'lints cannot return to -business ;s
7.1sv.al so long as the e4ebts are outstandinc, an ineed trpear
to t,4ve been forco4 to liquiate scat., other assets to service'
titr silver debts, The releraI Reserve has not: and will not
'1,;r:-.-!erwrite - the loans.
!inalysis pt:Istst this nfr,w loan s/,toule not sub
st&rtially affect the natinnal aupply cf credit at this point
because the new loan will rtple.ce existing debts (the earlier
delots.of which we were untisvIre no they were increased_ could be
construed SS - mreculative. - iNltillcuh they largely oppear to 1-Ive:
l'ven incurred to cover apeculetivo losses or to avoid liquidation
rather tan to purchase silver). Me practical andunnfortunate
situation we face was that, as a byproduct of the Runt speculation aril the conseclert oxposure of other institutions with wINic.
U certair financial institutions end
they dealt, the sta))ilityo
markets was threatened; had that threat oaterialize04 it is inno.
cent bystanders, ircludinQ those liependert or t.1,43, orerly flow of
1:!fir14. creelit, who woula have paid part of t.le price.
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Federal Reserve Bank of St. Louis
1'he emorahle Trcc
;?ItTO
Vcnto
The loan, which I neither approved nor disapproved,
will contain seectmrAs wIninnt the renewed speculation you
(nnd T) deplore, aseunint it is rfonsumated.
More iportnt for thfl future, is what cs.4.11 he done
to fnremtall nnother episode of t).As kind. Ve have turned our
ef orts ir tbilt direction.
ince
1
SgautitiVoicket
, acloslar41
PAV.vc'a (V -l95)
ticc
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Federal Reserve Bank of St. Louis
Mrs. Mallardi
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 12, 1980
Mr. James E. Ammerman
Treasury Representative
Embassy of the United States of America
FPO Om York 09510
Door Jim:
appreciate your recent letter emdorsing the invitation
of Lord Armstrong to speak at the Oversees Smokers Club next February 2.
My difficulty is that the time coincides with the period when
a mew Congress starts work and demands that I be available to defend
myself and the Federal Reserve in Committee lwarings. Consequently, I
really used to keep my calendar relatively clear in the last meek of
Jammory amd early February, amd I have been forced, consequently, to
sand my regrets to Lord Armstrong.
Best regards to you and Gwen.
Sincerely,
cc:
Mrs. Hallardi
#269
JRC:tjf
•
!tlay 12,1980
Mr. Paul R. Vander Bender
SKOGG
500 S. Madison Street - P.O. Box 726
Green say, Wisconsin 54305
Dear Mr. Bender:
Thank you for your letter on the situation in the building industry. I can
fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded Inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the q percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will heir, but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
"f
, :RL:sep
#1414
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 12, 1980
Mr. William Biggs
Dear Mr. Biggs:
Thank you for your letter on the effects of hi.e,h interest rates on housing.
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary Policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 nercentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal deserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, lye have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will Prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
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Federal Reserve Bank of St. Louis
Sincerely,
May 12, 1980
Michael Bigus, Jr.
Dear Mr. Bigus:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help hut they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
I
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Federal Reserve Bank of St. Louis
H:sep
1571
Sincerely,
Viay 12 1980
Mr. Norman L. Brame
Dear T1/41r. i'3rarne:
Thank you for your Postcard on the effects of high interest rates on
housing. I can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. 'lionetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in reoney and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
hell, in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth In government spending.
There are now signs of a decided easing of the extreme credit market
Pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special f7redit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not he easy. But if we fail now, the discomfort later
will ')e all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
#14 6
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
cu212?),(.0LL
7hr\z)
DUAR Li or 1.1UVERNUI2L,
•
.0
OF
FEDERAL RESERVE SYSTEM
WASHINGTON, a C. 20651
•
PAUL A. V 0 LEK ER
:••
0
RE.
•.RAL
••
•
CHAI R MAN
May 12, 1980
The Honorable Jack Brooks
Chairman
Committee on Government Operations
House of Representatives
20515
Washington, D. C.
Re:
Report by the General Accounting Office entitled "The
Federal Reserve Should Assure Compliance With The 1970
Bank Holding Company Act Amendments" (GGD-80-21)
Dear Chairman Brooks:
On December 13, 1979, the Federal Reserve responded to the
tiveness
draft report of the General Accounting Office ("GAO") on the effec
r
of the Federal Reserve's administration of the 10-year grandfathe
ny Act ("BHCA").
provisions of the 1970 Amendments to the Bank Holding Compa
s
The Federal Reserve's response is basically applicable to the point
wishes
made in the GAO's final report. The Federal Reserve, however,
ts that
to supplement its previous analysis with a report on developmen
have occurred since the issuance of GAO's draft report.
As a result of its voluntary program, the Federal Reserve
their
has now received responses from all affected companies concerning
attached
plans for compliance with the 1980 requirements. (Please see
the GAO
table). Moreover, since September 30, 1979, the date used by
in full
in its report, an additional 60 affected companies are now
ations, only
compliance. Of the 253 remaining companies with 1980 oblig
on).
33 are large publicly-held companies (assets over $300 milli
nking concerns
Generally, these companies originally had several nonba
making steady
subject to the 1980 requirements, and they have been
the Board's approval
progress toward compliance by divesting or seeking
ities. The bulk of
to retain their nonbanking subsidiaries and activ
s are small closelythe 253 remaining companies with 1980 obligation
companies typically
held companies (assets under $300 million). These
iance is not likely to
have only one nonbank activity, and their compl
procedures.
involve any lengthy divestiture or retention
701(b) of the Monetary
Finally, it should be noted that section
enacted by Congress, amends
Control Act of 1980 (P.L. 96-221), recently
the Board may extend the
section 4(a)(2) of the BHCA to provide that
1982, for the divestiture by a
1980 divestiture date to December 31,
estate. From the plans
bank holding company of interests in real
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Federal Reserve Bank of St. Louis
•11.
The Honorable Jack Brooks
-2-
submitted, it appears that many of the most difficult and complicated
divestitures that remain involve real estate. Accordingly, the Federal
Reserve has approved a policy statement that institutes procedures
requiring affected bank holding companies to apply for this extension
no later than July 1, 1980.
Based on its assumption that the Federal Reserve's actions
to date have been inadequate and its expectation that violations of
the 1980 provisions may occur, in its final report the GAO recommends
that the Federal Reserve take the following actions:
Require bank holding companies to declare the method
by which they will comply, that is, divestiture,
retention, reorganization, or claim of exemption.
Establish a mandatory filing date for retention
applications and divestiture plans, to insure that full
compliance is achieved by the deadline.
•Im•
Require companies filing a divestiture plan to adhere
to the reporting requirements in the February 1977 Board
policy statement on divestitures.
With respect to the first recommended action, as noted the
Federal Reserve has, through its voluntary program, obtained such
declarations from all affected companies. In addition, in its recentlyadopted policy statement the Federal Reserve requires affected companies
with 1980 obligations to file monthly progress reports on the actions
they are taking to meet such obligations.
With respect to the second recommended action, as noted above,
compliance plans have been obtained from the vast majority of affected
companies. Similarly, of those companies indicating plans to file
retention applications, over one-third currently have applications in
various stages of processing. In its December 13 response the Federal
Reserve stated its belief that it lacks authority to shorten the
Congressionally-mandated ten-year grandfather period. While section 5(b)
of the BHCA authorizes the Federal Reserve to issue orders to prevent
evasions of the BHCA, it is the Federal Reserve's judgment that it is
still too early to ascertain whether such evasions will occur in
particular instances. Notwithstanding procedural difficulties in
enforcing such early compliance, the Federal Reserve is cognizant that
time is running short, and in its policy statement the Federal Reserve
established a program for the affected companies to ensure that they
take action to comply promptly and to enable the Federal Reserve to
monitor their progress.
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Federal Reserve Bank of St. Louis
The Honorable Jack Brooks
tion, as
Finally, with respect to the third recommended
the Federal Reserve indicated in note 4 of its December 13 response,
the quarterly reporting provisions of the Boardi's February 1977 policy
statement on divestitures refer to divestitures mandated, by Feral
Reserve Order or a commitment, rather thin 1980 obligations. In any
event, the Federal Reserve has imposed even more stringent reporting
provisions that are specifically applicable to companies with 1980
divestitures.
Accordingly, the Federal Reserve continues to believe that
its administration of the 10-year grandfather provision has been
reasonable, fair and effective.
Sincerely,
SZFatil Wig
Attachment
ccs
Chairman Reuss
Mr-lason:vab
5/9/80
•
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Federal Reserve Bank of St. Louis
•
•••••
Sa2. •
viay 12, 1980
Mrs. James J. i)ryant
Oear Mrs. Rryant:
I
Thank you for your letter on the effects of high interest rates on housing.
.
can fully appreciate the concerns that prompted you to write
dded inflationary
In the setting of excessive inflation and deeply embe
omic policies must, over
expectations, there is a wide national consensus that econ
provide the foundations for
time, continue to work to reduce inflation and thereby
tial role to play in that
greater economic stability. Monetary policy has an essen
unless fueled by excessive
process since excessive inflation cannot persist over time
and will remain, aimed
growth in money. Thus, the basic thrust of monetary policy is,
monetary policy alone
at maintaining moderate growth in money and credit. However,
emphasize that we need
cannot do the job effectively. In that regard,! would strongly
ly as it applies to
help in the form of firm discipline in fiscal policy, particular
restraining the growth in government spending.
credit market
There are now signs of a decided easing of the extreme
The demand for credit has
pressures that we have experienced in the past few months.
cting these developments,
lessened and market interest rates have moved lower. Refle
surcharge in the discount
the Federal Reserve has eliminated the 3 percentage point
. And, mortgage rates have
rate that had been established for certain classes of banks
al Housing Administration
fallen somewhat, as reflected in the lowering by the Feder
of its maximum mortgage rate.
e that small hanks
The Federal Reserve has also taken steps to help ensur
disposal to help meet
that are under liquidity pressures will have added funds at their
said that where banks are
the credit needs of their local communities. And, we have
—including home building-essentially confining their loan expansion to priority areas
on loan growth contained
that such banks are justified in exceeding the 9 percent limit
in our Special Credit Restraint Program.
tal fact that the
These factors will help but they do not alter the fundamen
the discomfort later
process of taming inflation will not be easy. riut if we fail now,
get the process over
will be all the more serious. That is why I believe that we must
housing and the
with so that we can move into an economic environment in which
to write and I hope
economy in general will prosper. I appreciate your taking the time
ve this most pressing
I will have your understanding and support as we seek to resol
national problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
•
May 12, 1980
Mr. 3ohn#1,. Butschky
Anarex, Inc.
503 Ritchie Highway - Suite la
Severna Park, Maryland 21146
Dear Mr. Butschky:
Thank you for your letter on the effects of high Interest rates on housing
and related businesses. I can fully appreciate the concerns that prompted you to
write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. l'Ionetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
g—
essentially confining their loan expansion to priority areas—including home buildin
that such banks are justified in exceeding the percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fall now, the discomfort later
over
will be all the more serious. That is why I believe that we must get the process
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
pressing
I will have your understanding and support as we seek to resolve this most
national problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
1:RL:sep
1432
•
May 12, 1980
Mr. Michael S. Dopidn, Vice President
The Dopkin Door Company
10433 Reisterstown Road - P.O. Box 311
Owings Mills, 'aryland 21117
Dear Mr. D.opidn:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its -,,aximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building--that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
H:seo
151.5
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May U,1980
Mr. Dan Fine
C. R. Yeagley and Associates, Inc.
486 South Mountain Boulevard
.1ountaintop, Pennsylvania 18707
near Mr. Fine:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. !kionetary policy has an essential role to play in that
process since excessive inflation cannot persist over tire unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that ,vhere banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors Neill help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fall now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hone.
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
Ji : L:sep
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 12, 1980
Mr. Floyd F. Grayson, President
Grayson Homes, Inc.
2000 Century Plaza - Suite 245
Columbia, Maryland 21044
Dear Mr. Grayson:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it apnlies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Peflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal .eserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan exnansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Tut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
if)(
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
:sep
1583
May 12,1980
Mr. Michael C. Hilgenberg, vice President
Hilgenberg Realtors
1 60n South Ashland Avenue
Green Ray, l•ilisconsin 54304
Dear Mr. Hileenherg:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over thae unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not he easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
H:RL:sep
‘1418
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 12,1980
Mr. H. F. Holland
Plumbing & Heating
100 Susquehanna Boulevard
West Hazleton, Pennsylvania 18201
Dear Mr. Holland:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. 'vionetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. 14owever, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. 0. efle.cting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its ma.xirruna mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas--including home building-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the orocess over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
k'aay 12,1980
1 ,4r. L. Edwin Hoopes
Hoppes Builders, Inc.
1533 Moorefield Road
Springfield, Ohio 45503
Dear Mr. Hoppes:
Thank ycxi for your letter on the effects of high interest rates on your
business. I can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply ernbe.dded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since ,,,
.”(cessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessenee arer! market interest rates have moved lower. 1-Zeflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve tias also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including small business—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of tarning inflation will not he easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which business and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
I. tional problem.
Sincerely,
:RIesep
/1411
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 12, 1980
Mr. Bruce Huthenstra
4ark Luchi Builders
603 N. Broad Street
West Hazleton, Pennsylvania 18201
Dear Pt/1r. Huthenstra:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the hasic thrust of monetary policy is, and will remain, aimed
at maintaining noderate growth in eioney and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building-that such banks are justified in exceeding the 9 percent limit on loan growth contained
In our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
JHk:
#
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
.411.
:sep
May 12, 1980
Mr. Richard A. Kasper, President
Amerhart, Ltd.
2455 Century Road - P.O. Rox 3068
Green Bay, Wisconsin 54303
Dear Mr. Kasper:
Thank you for your letter on the effects of high Interest rates on housin7. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal taolicy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas--including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your .understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
111 H:sep
1611
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 12, 1980
Mr. Neil Larnana, President
Devonshire Homes
Route 309 Mountaintop Roulevard
and Crestwood Road
Mountaintop, Pennsylvania 18707
Dear Mr. Lamana:
Thank you for your letter on the effects of high interest rates on housing. I
can fully anpreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easinl of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved, lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal .eserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But If we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most Dressing
national problem.
Sincerely,
11H:sep
11553
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 12, 1980
Mrs. lack G. Levine, Jr.
Dear Mrs. Levine:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic laolicies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy Is, and will remain, aimed
at maintaining moderate growth In money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have ex erienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where hanks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loc-m growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the liscomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general vill prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
%H:sep
i 1576
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 12, 1980
'ir. E. C. Levy, President
Tattrie & Levy Construction Co., Inc.
3689 Sharp Road
Glenwood, Maryland 21738
Dear Mr. Levy:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that promoted you to write.
In the settina of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play In that
process since excessive inflation cannot persist over ti---te unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth In money and credit. :.:o,krever, monetary policy alone
cannot do the job effectively. In that regard,! would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. An,l, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum nortgage rate.
The Federal 14eserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special (7redit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. ,Fut if we fail now, the discomfort later
will he all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
3 sep
#1 8
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Y,ay 12, 1980
Ms. Lisa Lundgren
Dear !Is. Lundgren:
Thank you for your letter on the effects of high interest rates on the
building industry. I can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasiTe that we need
help in the form of firm discipline in fiscal policy, particularly as it apnlies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
3H:sep
111333
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 12, 1980
Mr. Richard J. Mathew
Air-Tech Insulation, Inc.
30th & N. Church Streets
iazleton, Pennsylvania 18201
Dear "•4r. i'Aathew:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of hanks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit iZestraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will he all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the ti-ne to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
L:sep
May 12,1980
Mr. Edward 3. Niewinski, President
Niewinski & Sons' Inc.
325 Williams Lane
Chadds Ford, Pennsylvania 1Q317
Dear Mr. Niewinski:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive Inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. P.eflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors vUl help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. liut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the tine to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
5
. :sep
#1 79
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
•
• OT cot.14,
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1 .1 E
FEDERAL RESERVE SYSTEM
WASHINGTON, 0. C. 20551
••
• • I'CAL-if
• • .. • •
PAUL A. VOLCKER
CHAIRMAN
May 12, 1980
The Honorable William Proxmire
Chairman
Committee on Banking, Housing
and Urban Affairs
United States Senate
Washington, D.C.
20510
Dear Chairman Proxmire:
Hy lettar to you of May 2 expressed certain reservations
regarding S. 2379. Those reservations stem not from lack of sympathy with the purpose of this legislation in making export related
services available to more firms in the U.S. Rather, we in the
Federal Reserve have substantial questions about the degree to which
banking organizations should be permitted to participate directly
in, or even control, eXport trading companies. In that connection,
we feel strongly that the tradition of separation of banking and
commerce haz served the country well. To assure that separation
is mintained,!while permitting a degree of banking participation
in support of export trading companies, I would suggest certain
amendments to the proposed bill establishing substantive and procedural standards that are necessary with regard to bank involvement
in such companies.
Those recommendations, which I endorse, include the following elements: first, no banking organization would be permitted
to acquire more than 20 per cent of the voting stock of an export
trading company or to control the company in any other manner;
second, not more than 50 per cent of an export trading company's
voting stock could be owned by any group of banking organizations;
third, the aggregate investment by any banking organization would
be limited to 5 per cent of its aggregate capital and surplus (25
per cent in the case of Edge and Agreement Corporations) in one or
more export trading companies nor could a banking organization lend
to an export trading company in an amount which, when combined with
its investment, would exceed 10 per cent of the banking organization's
capital and surplus; an export trading company would not be permitted
to take positions in securities or commodities for speculative purposes; an arms length relationship would be maintained in any lending
activity; and the name of the bank could not be used in the name of
the export trading company.
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Federal Reserve Bank of St. Louis
a
The Honorable Will. Proxmire
Page Two
Furthermore, we propose that any major commitment to
investment in an export trading company--in excess, say, of
$10
to $15 million--be specifically approved by the Board of Governors
in advance. As this suggests, we believe that because of the risks
that may attend export trading company activities and the lack
of
experience of U.S. banks and their regulators in dealing with such
companies, it would not be prudent to permit banking organizations
to exercise control over export trading companies at this time.
For that reason, the Board of Governors cannot support the curren
t
version of S. 2379.
The amendments that I am enclosing for the Committee's
consideration have been discussed with your staff. We,
of course,
would be pleased to provide any further assistance.
Si
/2,cerely,
/damege-t-,
Enclosure
MB:PAV:pjt (See V-168 & V-163 (to Stevenson))
bcc: Mike Bleier
Mrs. Mallardi (2)
Identical letter to Sen. Stevenson
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
HOARD OF FOVERNFIRS
OF !HE
FEDERAL RESERVE SYSTEM
WASHINGTO,,0. C. 20551
PAUL A. VOLCKER
&4L RS•
• •..•
CHAIRMAN
May 12, 1980
The Honorable Abraham A. Ribicoff
Chairman
Committee on Governmental Affairs
United States Senate
20510
Washington, D. C.
Re:
entitled "The
Report by the General Accounting Office
ance With The 1970
Federal Reserve Should Assure Compli
(GGD-80-21)
Bank Holding Company Act Amendments"
Dear Chairman Ribicoff:
erve responded to the
On December 13, 1979, the Federal Res
("GAO") on the effectiveness
draft report of the General Accounting Office
10-year grandfather
of the Federal Reserve's administration of the
HCA").
k Holding Company Act ("B
provisions of the 1970 Amendments to the Ban
applicable to the points
The Federal Reserve's response is basically
Reserve, however, wishes
made in the GAO's final report. The Federal
ort on developments that
to supplement its previous analysis with a rep
ft report.
have occurred since the issuance of GAO's dra
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Federal Reserve
As a result of its voluntary program, the
companies concerning their
has now received responses from all affected
ed
nts. (Please see attach
plans for compliance with the 1980 requireme
GAO
the date used by the
table). Moreover, since September 30, 1979,
panies are now in full
in its report, an additional 60 affected com
only
with 1980 obligations,
compliance. Of the 253 remaining companies
s over $300 million).
33 are large publicly-held companies (asset
cerns
y had several nonbanking con
Generally, these companies originall
been making steady pro
e
hav
y
,
the
and
nts
eme
uir
0
req
198
the
subject to
roval
or seeking the Board's app
gress toward compliance by divesting
activities. The bulk of
and
ies
iar
g
sid
kin
sub
ban
non
ir
the
to retain
y
h 1980 obligations are small closel
the 253 remaining companies wit
lly
n). These companies typica
0
lio
$30
mil
er
und
s
set
(as
ies
held compan
to
their compliance is not likely
and
ty,
ivi
act
k
ban
non
one
y
have onl
iture or retention procedures.
involve any lengthy divest
etary
t section 701(h) of the Mon
Finally, it should be noted tha
amends
recently enacted by Congress,
),
221
96L.
(P.
0
198
of
Control Act
the
provide that the Board may extend
to
A
BHC
the
of
)
)(2
4(a
section
a
31, 1982, for the divestiture by
er
emb
Dec
to
e
dat
re
itu
est
1980 div
in real estate. From the plans
sts
ere
int
of
y
pan
com
g
bank holdin
The Honorable Abraham A. Ribicoff
2
submitted, it appears that many of the most difficult and complicated
divestitures that remain involve real estate. Accordingly, the Federal
Reserve has approved a policy statement that institutes procedures
requiring affected bank holding companies to apply for this extension
no later than July 1, 1980.
Based on its assumption that the Federal Reserve's actions
to date have been inadequate and its expectation that violations of
the 1980 provisions may occur, in its final report the GAO recommends
that the Federal Reserve take the following actions:
,•••••••
•••••••••
Require bank holding companies to declare the method
by which they will comply, that is, divestiture,
retention, reorganization, or claim of exemption.
Establish a mandatory filing date for retention
applications and divestiture plans, to insure that full
compliance is achieved by the deadline.
Require companies filing a divestiture plan to adhere
to the reporting requirements in the February 1977 Board
policy statement on divestitures.
With respect to the first recommended action, as noted the
Federal Reserve has, through its voluntary program, obtained such
declarations from all affected companies. In addition, in its recentlyadopted policy statement the Federal Reserve requires affected companies
with 1980 obligations to file monthly progress reports on the actions
they are taking to meet such obligations.
With respect to the second recommended action, as noted above,
compliance plans have been obtained from the vast majority of affected
companies. Similarly, of those companies indicating plans to file
in
retention applications, over one-third currently have applications
Federal
various stages of processing. In its December 13 response the
Reserve stated its belief that it lacks authority to shorten the
section 5(b)
Congressionally-mandated ten-year grandfather period. While
of the BHCA authorizes the Federal Reserve to issue orders to prevent
it is
evasions of the BHCA, it is the Federal Reserve's judgment that
still too early to ascertain whether such evasions will occur in
in
particular instances. Notwithstanding procedural difficulties
t that
cognizan
enforcing such early compliance, the Federal Reserve is
Federal Reserve
time is running short, and in its policy statement the
that they
established a program for the affected companies to ensure
Reserve to
take action to comply promptly and to enable the Federal
monitor their progress.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
•
The Honorahle Abraham A. Ribicoff
3
Finally, with respect to the third recommended action, as
the rederal Reserve indicated in note 4 of its December 13 remonse,
the quarterly reporting provisions of the Board's February 1977 policy
statement on divestitures refer to divestituren manellted by Fee!eral
Reserve Order or a commitment, rather than 1.980 ellIgattons. In any
event, the Federal Reserve has imposel even more stringent rf.,porting
provisions that are specifically applicable to companies with 1980
divestitures.
Accordingly, the Federal Reserve continues to halifwo that
its administration of the 10-year granlfather provision has been
reasonable, fair and effective.
Sincerely,
SieaLli A.1gickei
Attachment
cc* Chairman Proxmire
BMMasonsvab
5/9/80
)fr
i
•
474
https://fraser.stlouisfed.org
..ZEL•
'
Federal Reserve Bank of St. Louis
May 12,1980
Mr. Thomas J. Riesenberg
Dear Mr. Riesenberg:
Thank you for your letter on the effects of high interest rates on businesses
consumers.
I can fully appreciate the concerns that prompted you to write.
and
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. '-lowever, monetary policy alone
cannot do the job effectively. In that regard,! would strongly emphasize that we need
help in the form of firm Oiscipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—Including small business-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. 13ut if we fail now, the discomfort later
will he all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which business and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
H:sep
C189
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 12, 1980
Mr. Frank J. Shuba
Remodeling Contractor
101 Hillside Road
McAdoo, Pennsylvania 18237
Dear Mr. Shuba:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that promoted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard,! would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 Percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the. percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
IH:sep
#1561
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
h.
May 12,1980
Mr. Morris Silberman, President
Martex Builders, Inc.
3635 Old Court Road
Raltimore, Maryland 21208
Dear Mr. Silberman:
Thank you for your letter on the effects of high interest rates on housin
g. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic polici
es must, over
time, continue to work to reduce inflation and thereby provide the founda
tions for
greater economic stability. Monetary policy has an essential role to play
in that
process since excessive inflation cannot persist over time unless fueled by excess
ive
growth in money. Thus, the basic thrust of monetary policy is, and will remai
n, aimed
at maintaining moderate growth in money and credit. However, monetary
policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that
we need
help in the form of firm discipline in fiscal policy, particularly as
it applies to
restraining the growth in government spending,.
There are now signs of a decided easing of the extreme credit marke
t
pressures that we have experienced in the past few months. The demand for
credit has
lessened and market interest rates have moved lower. Reflecting these
developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the
discount
rate that had been established for certain classes of banks. And, mortgage rates
have
fallen somewhat, as reflected in the lowering by the Federal Housing Admini
stration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to
help meet
the credit needs of their local communities. And, we have said that where banks
are
essentially confining their loan expansion to priority areas—including home buildi
ng—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. !"ut if we fall now, the discomfort later
will be all the more serious. That is why I believe that we must get the proces over
s
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
Mr)
Mr. lerry Smith, President
Campbell Leonard Realtors
2210 West 75th Street
Prairie Village, Kansas 66208
Pear Mr. Smith:
Thank you for your mailgram on the effects of high interest rates on
housing. I can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it anplies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will heln but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
4
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
d:RL:sep
1038
May 12, 1980
Mr.:Joe Solano
Valley Kitchen Designs
1205 Wyoming Avenue
Forty-Fort, Pennsylvania 18704
Dear Mr. Solano:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that Prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to Play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas--including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help hut they do not alter the fundamental fact that the
process of taming inflation will not he easy. Tut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
NH:sep
¶549
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ay 12,1980
Mr. H. L. Spaide
H. L. Spaide Custom Home vuilder
Box 37, R.D. #4
Mountain Top, Pennsylvania 18707
Dear Mr. Spaide:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. \ionetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard,! would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken stens to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where hani<s are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent iintit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,:sep
# 545
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Aay 12, 1980
Ms. Shirley Spaide
H. L. Spaide Custom Home Builder
Box 87, R.D. 14
Mountain Top, Pennsylvania 18707
Oear Ms. Spaide:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth In money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of hanks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortg,aze rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not he easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
11554
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 12,1980
Mr. Charles 1 Tassinari, Jr.
President
Plelsito Tassinari, Inc.
100 Court Street
Plymouth, 'assachusetts 02360
Dear Mr. Tassinari:
Thank you for your letter on conditions in the housing industry. I can fully
appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. 9owever, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent litait on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not he easy. But if we fail now, the discomfort later
will he all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
A
J -- L:sep
#1456
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
May I.?, 1980
Mr. Stanley A. Urbanski, President
Stan Urbanski Homes
247 Old River Road
Wilkes-Barre, Pennsylvania 18702
r)ear ir. Urbanski:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. '
,/lonetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aired
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will he all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
11
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
:RL:sep
1.437
1
•
May 12, 1980
Keith Vollendorf
Vollendorf Masonry
R.D. #3, Box 58-I
Drums, Pennsylvania 18222
Nit%
Dear Mr. Vollendorf:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
Pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 Percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity presstires will have added funds at their disnosal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the Drocess over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
,,\
H:sep
1551
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
,
Sincerely,
May 12, 1980
Mr. Denl C. Weaver
Custom Builder & Dealer
Box 254-9
Sugarloaf, Pennsylvania 18749
Dear Mr. Weaver:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage tx)int surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
11:1563
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 13, 1980
Mr. Roy G. Wilken
Paradise Farms, Inc.
R.R. 1, Box 51
Danforth, Illinois 0930
Dear Mr. Wilken:
Thank you for your letter on the effects of high interest rates on farming
and the economy. I can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. P4 4onetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including farming—that
such banks are justified in exceeding the 9 percent limit on loan growth contained in
our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not he easy. But if we fail now, the discomfort later
will he all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which agriculture and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
H:sep
1l399
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
\iay 9,19S0
Mr. Edward P. Arters
Arters Brothers, Inc.
Baltimore Pike at Oriole Avenue
Media, Pennsylvania 19063
Dear "-r. Afters:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government soending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help hut they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment In which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
(
JI-1: :sep
#1465
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9,1980
Mr. Ralston E. Ayers
Dear '!'r. Ayers:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot per sist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
ousing Administration
fallen somewhat, as reflected in the lowering by the Federal"
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
H:sep
411314
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Ilay 9, 1980
The EolwraLae IrAr1 1;e11.c,c;1
United States Benute
Washington, L.C.
20510
Lear Sidnator Bollmon;
I 'lave cru11y cad :our letter concernin9 the
Chrslor situation and I 'u11y avpreciGte the thrust of your
realar. I. and Qy ataif
lookiw, at all aiocts of the
situation au it tat; (waived, including tn. MAJMOr in which
tho 41.43 billion ir or federally latietranteed flnancini ay
1Je satisfie‘t.
IL that etualoction, I appreciate havim; the
„Aarieflt of -d our t;tou.4-ht.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
incere1y,
SiPaul/LI/picket
GC;t (#V-184)
cc4hrs. Mallardi (2)
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Tte 1-onorab1eLloy 1 4:3ntsen
Coairtran
Joint Fconoi'aic Corrittee
wLsbinton, D. C. 2C510
7)car Chairnan Pantsen.
Tn accordance with arrancowentr- that bn
been irwie with your Corrtittee, enclosed is a staff
report coverin
financial develorAents in the . _rst
rtrhrnf 19SC,
Pincerely
SZPA1 A. Volcker
17c{'
(.c -
Joint r2conoic Co7.r.s,littee
witl-t 30 copies of ltr. /C4 rept.)
Vice C11.airman 3o11inc
71inor 7achraCh, Tommy Prooks, Steve Roberts (Senate
)
?aul Llelscn, Crahar Nort1-11p (11ouse V;kcs.)
Yob Weintreub (Domestic Mcnetary Policy Subcmte.
fT )
John Fari%er (Vice rrs. Mondlle's office)
(011se ArlDrons.)
Ms ,
-,allardi (2)
•
Aiay 9, 1980
Mrs. Lee Basey
Dear Mrs. Basey:
Thank vou for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policie.s must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
rein, aimed
growth in money. Thus, the basic thrust of monetary policy is, and willma
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extrerne credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Fe.cleral R.eserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressure.s will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building-that such, banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help 1-xit they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
May 9,1980
Mr. Tom Brighton
Dear Mr. Brighton:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of Pxcessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
p
#141)3
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9, 1980
Benchmark Builders, Inc
22 Monte Sano Drive
Charleston, South Carolina 21405
Dear Sirs:
Thank you for your letter on the effects of high interest rtes on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining, moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth In government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. rZeflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of hanks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building-that such hanks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help hut they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
i:sep
/1,1 367
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9,1980
Mr. Roland Burrs
Griswold-Burrs Construction Company
P. O. Box 5700
Lawton, Oklahoma 73504
Dear Mr. Burrs:
Thank you for your postcard on the effects of high interest rates on
housing. I can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easine of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, lye have said that where banks are
essentially confining their loan expansion to priority areas—including home building-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will he all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the tire to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
llWL:sep
111425
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
3rittf,
1,ettor of ApTil *6 irmuivW
yt.7:Ju f.or syc..
t!t74eitb11ity riterlft for tte Toportkry
cr
1.7irol is -','.;,esi1;0110d.
f:re,;:tit
it!.(-A.Teett. to n4tion41
to cswarotøt to74$1t144 t,oto,s ultbcA4t:
to fluenct, ttAl; see4iione1
fun
.40ekots CAV obtlir the nevesta
.t-ooOs *1 their rv.u1et stual bustr4los ArA aoricultur41 cus..„
VOwLAWt anA Etommover Nmks witb less thee $10.0
in 4oposits tst hWtM 4 loan-4*poolt ratio of' 46
percett or r"re tre .;2etairra11y alicitlo for the prw3ram,
ttte reA'arhl Reserve is prertAreZ to .•e„,atetror Vlore
cretlit tire o‹...71v6.1 to S percent of the bapo1.4 e total
1.14$14
besql 71.41y
At tl'* ti .4 0: opplivtion
.ioate *Ittsta.
t.47 inercitse
1;rev. upon Itr itrAps to !treue*. 70 p4T;:ttit t
iosn, rl:Axiro ttorjprevetlir tit. tht
rs expootea to tor,41 a proportionate
b'k
s.. artt of t17441r borrow-I:Ks if their loam level tbst dectiellia
or if ,16vosits rcw lv elm*** of lo*niv, Vol3era1 P.sorve
creqt is etrecto4 to '411 tully roTeld vtett tite loom-depoelt
1)orr.-61010A tx't
retie returns to tbe atertin fif;ure.,
nornally be reptid withit sift Nxlmthe, bt rJit 0y be
eirruT,Istameeti_
ottt.h.a
4gIrt4Aded for ot.11otber
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
'-i:404PT7.0r4
1!Ilts
i
that e4avera1 of the 7fln
t4,1 staff
etsvntl
woul4 ftt•nper to quaUf Ctz;r thoi
.-,t**vt,:.7
14,,mAercfm :1r4k disotwAt orricoro report, 1,
ttat katlItAv:h tle etnounvezeut Ctb3,,- now pr7i,“luw,. 441! 71.411
144fficer of over, tom*rttlial bam%,
exeovtivov .
to tbo
inquiries *r sr-plicAtirms bevy boon retk.e.ivad trot zomy TrIO&
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
t:,•44!
"•
:
1
•
*'.
'
•
•
• •' •
*-.7",. „v.
"e•,a
tyr
sZPatti A. Vackez
"71,
•;.• •1. .
5)
r.oze3r,-;:
1,1rI15ey
011e.rr1 (7)
"c, r
May 9,1980
Mr. lay 3. Cohn
Knoxhridge Homes
One Chesterbrook Boulevard
Chesterbrook at Valley Forge
Wayne, Pennsylvania 19087
Oear !tit-.Cohn:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. '7,ef1ecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected In the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming Inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
9, 1980
Mr. Angelo Costello, luilder
near Mr. Costello:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. 'ionetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. fut if we fail now, the discomfort later
will be all the aore serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
,H:sep
/\1400a
'ay 9, 1980
Mr. Henry Cring
Dear Mr. Cring:
I understand well your concerns ?bout high interest rates.
The level of interest rates is largely a reflection of the rapid rate of
inflation we are exneriencing and the deeply embedded expectations that prices will
continue to climb. In this environment, interest rates are high mainly because lenders
are reluctant to extend credit without being compensated for the declining value of
the dollars they will receive in repayment.
The only way we are likely to achieve a lasting decline in interest rates is
if there is a lowering of inflation and inflationary expectations. 'laintenance of
reasonable control over growth of money and credit is an essential ingredient in the
fight against inflation, and the Federal Reserve is committed to this policy. However,
monetary policy alone cannot do the job effectively. In that regard, I would strongly
emphasize that we need help in the form of firm discipline in fiscal policy, particularly
as it applies to restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small hanks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including small business-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors "ill help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fail now, the discomfort later
will he all the raore serious. That is why I believe that we must get the process over
with so that we can move into an environment in which the economy in general will
prosper. I appreciate your taking the time to write and I hope I will have your
understanding and support as we seek to resolve this most pressing national problem.
Sincerely,
1Ifisep
If iI 92
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9,1980
Mr. Norman DeSouza
ich mar Builders
Plaza 101
725 North Presidential Roulevard
Bala Cynwyd, Pennsylvania 19004
Dear Mr. illeSouza:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. ivionetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. f-iowever, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. 'eflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Snecial Credit Restraint Program.
These factors will help hut they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
(
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
I-1:sep
1392a
ay 9,1980
Mr. George L. Durham
Durco Construction
3014 East Sixth
Port Angeles, Washington 98362
Dear Mr. Durham:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that Promoted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small hanks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
sep
#1405
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ay 9, 1980
Mr. Charles Feger
r,ir. Harold W. Auten
Harris Homes
R.17). #1- Box 307
Valmont Parkway
Hazleton, Pennsylvania 18201
1)ear Messrs. Feger and Auten:
Thank you for your letters on the effects of high interest rates on housing.
I can fully appreciate the concerns that prompted you to write.
In the setting of e.xcessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm -liscipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas--including home building-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But If we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
JITI.R
1 L:sep
#1 44 and #1446
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9, 1980
Mr. Glen Fortson
Dear Mr. Fortson:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the I percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the Process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
JIiRL:sep
#1 l2
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9, 1980
Mr. Boyd Fousel
Dear :"T. Fousel:
Thank you for your letter on the effects of high interest rates on housing.
can fully appreciate th.e concerns that prompted you to write.
In the setting, of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. ionetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing, of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Put if we fail now, the discornfOrt later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
ay 9, 19g0
Mr. W. McD. Frederick
Kavanagh, Scully, Sudow, White & Frederick
700 Commercial National Bank Building
Peoria, Illinois 61602
Dear Mr. Frederick:
I understand well your concerns about high interest rates.
The level of interest rates is largely a reflection of the raid rate of
inflation we are experiencing and the deeply embedded expectations that prices will
continue to climb. In this environment, interest rates are high mainly because lenders
are reluctant to extend credit without being compensated for the declining value of
the dollars they will receive in repayment.
The only way we are likely to achieve a lasting decline in interest rates is
., .laintenance of
if there is a lowering of inflation and inflationary expectations. '
reasonable control over growth of money and credit is an essential ingredient in the
fight against inflation, and the Federal Reserve is committed to this policy. However,
monetary policy alone cannot do the job effectively. In that regard, I would strongly
emplaa.size that we need help in the form of firm discipline in fiscal policy, particularly
as it applies to restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including small business-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will he all the more serious. That is why I believe that we must get the process over
with so that we can move into an environment in which the economy in general will
prosper. I appreciate your taking the time to write and I hope I will have your
understanding and support as we seek to resolve this most pressing national problem.
Sincerely,
31-kp
#11e9
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9, 1980
Mr. Anthony Garluish
Lehman Homes
Box 200, RD 5
Shavertown, Pennsylvania 18708
Dear Mr. Garluish:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth In government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liauidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment In which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
31- sep
#1. 80
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9, 1980
Mr. Terrell L. Haines
Dear Mr. Haines:
I understand well your concerns about high interest rates.
The level of interest rates is largely a reflection of the rapid rate of
inflation we are experiencing and the deeply embedded expectations that prices will
continue to climb. In this environment, Interest rates are high mainly because lenders
are reluctant to extend credit without being compensated for the declining value of
the dollars they will receive in repayment.
The only way we are likely to achieve a lastine decline in interest rates is
if there is a lowering of inflation and inflationary expectations. liaintenance of
reasonable control over growth of money and credit is an essential ingredient in the
fight against inflation, and the Federal Reserve is committed to this policy. However,
monetary policy alone cannot do the job effectively. In that regard, I would strongly
emphasize that we need help in the form of firm discipline in fiscal policy, particularly
as it applies to restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including small business-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But If we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an environment in which the economy in general will
prosper. I appreciate your taking the time to write and I hope I will have your
understanding and support as we seek to resolve this most pressing national problem.
Sincerely,
3HIsep
#1081
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9, 1980
t4.1r. George F. Hibbard, President
Guardian Corporation
8610 Fenton Street - Suite 112
Silver Spring, Maryland 20910
Dear iwir. Hibbard:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting, of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic Policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
Process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it aPplies to
restraining the growth In government sending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures "'ill have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent lirait on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
May 9, 1980
Ms. Louise Hinds
Dear Ms. Hinds:
Thank you for your card on the effects of high interest rates on housing. I
can fully aporeciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. T-lowever, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
In our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That Is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
k
3H L:sep
#14.0
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9, 1980
Mr. Paul Johnson
Mr. Robert T-kover
ACHVP.,
314 Main Street - P.O. f.ox 106'3
Conyngharn, Pennsylvania I8119
'ear Messrs. Johnson 'Ind Royer:
Thank you for your letters on the effects of high interest rates on housing.
I can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation aryl deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.,.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal deserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas--including home building-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
#135k
Jlip
& #1359
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9,1980
Mr. Steven H. Korman
Senior Vice President
Korman Corporation
Two Neshaminy Inter))lex
Trevose, Pennsylvania 19047
Dear 'kir. Korman:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard,! would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of hanks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. rkut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
Jlep
#1401
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9,1980
Mr. Herbert Lawson, President
Herbert Lawson, Inc.
29501 Greenfield Road
Southfield, Michigan 48076
Dear .1r. Lawson:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationsry
expectations, there is a wide national consensus that economic policies must, over
continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit rnar ket
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fall now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
TelfiRL:sep
#1 33
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9, 1980
Mr. Richard Link
Richard Link Construction Co., Inc.
411 Lighthouse Point
Kansas City, Missouri
r;ear Mr. Link:
Thank you for your thoughtful letter on the effects of high interest rates
on housing. I can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it apnlies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced In the oast few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering I-)v the Federal Housing Administration
of its maximum mortgage rate.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
Jlep
If 1 _42
May 9,1980
Mr. Torre J. Lippl, Proprietor
TM construction Company
234 South River Street - P.O. ;lox 864
Wilkes-Barre, Pennsylvania 18703
Dear
Lippi:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over tine unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decidefi easing of the extreme credit market
oressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are Justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will he all the more serious. That is why I believe th,et we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
- 1
#l'362 .3r- 1 0
https://fraser.stlouisfed.org
WININW
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
in
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itilt*414/11
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https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
- 17,1tits
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7-sincerely.
SOWILVolaa
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T,Tr1,17..
Nt.
4/17/In 7N•reete release
May 9, 1980
Mr. Larry Luchi, Jr.
Larry J. Luchi & Son
603 North Broad Street
West Hazleton, Pennsylvania 18201
Dear Mr. Luchi:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. 'Aonetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 Percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small hanks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
‘eill be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
311 L:sen
111452
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ay 9, 1980
Mr. Thomas Luchl
'kar. Robert Luchl
Luchi Constructors
R.P. #1, Box 270
Drums, Pennsylvania
'er%.lessrs.
ng.
Thank you for your letters on the effects of high interest rates on housi
I can fully appreciate the concerns that prompted you to write.
inflationary
In the setting of excessive inflation and deeply embedded
policies must, over
expectations, there is a wide national consensus that economic
de the foundations for
tie, continue to work to reduce inflation and thereby provi
role to play in that
greater economic stability. "Ionetary policy has an essential
s fueled by excessive
process since exeessive inflation cannot persist over time unles
and will remain, aimed
growth in money. Thus, the basic thrust of monetary policy is,
monetary policy atone
at maintaining moderate growth in money and credit. However,
emphasize that we need
cannot do the job effectively. In that regard, I would strongly
ly as it applies to
help in the form of firm discipline in fiscal policy, particular
restraining the growth in government spending.
market
There are now signs of a decided easing of the extreme credit
nd for credit has
pressures that we have experienced in the past few months. The dema
cting these developments,
lessened and market interest rates have moved lower. Refle
surcharge in the discount
the Federal Reserve has eliminated the 3 percentage Point
. And, mortgage rates have
rate that had been established for certain classes of banks
al liousing Administration
fallen somewhat, as reflected in the lowering by the Feder
of its maximum mortgage rate.
that small banks
The Federal Reserve has also taken steps to helo ensure
disposal to help meet
that are under liquidity pressures will have added funds at their
that where hanks are
the credit needs of their local communities. And, we have said
home building—
essentially confining their loan expansion to priority areas—including
growth contained
that such banks are justified in exceeding/ the 9 percent limit on loan
in our Special Credit Restraint Program.
fact that the
These factors will help but they do not alter the fundamental
the discomfort later
process of taming inflation will not be easy. rut if we fall now,
get the process over
will be all the ;lore serious. That is why I believe that we must
housing and the
with so that we can move into an economic environment in which
write and I hope
economy in general will prosper. I appreciate your taking the tirae to
this most pressing
I will have your understanding and support as we seek to resolve
national problem.
Sincerely,
fl:RL:sep
#1347 & #1450
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9,1980
Ms. Debbie Martz
Dear Ms. Martz:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, 1 would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of hanks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
:RL:sep
1397a
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9,1980
Mr. John 71azzo1a, Project Manager
Giovanni Associates, Inc.
Suite 109
Hazleton Office Campus A - Route 309
Hazleton,'Pennsylvania 19201
Dear Mr. Aazzola:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not he easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressinF,
national problem.
Sincerely,
k-1:sep
1358
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9, IMO
Ms. Pamela Mazzola, Assistant
Torn Hart, Realtor
Box 96, Route 309
Drums, Pennsylvania I g722
Dear Ms. Mazzola:
Thank vou for your letter on the effects of high interest rates on housing.
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation ane deeply ernhetided inflationary
expectations, there is a wide national consensus that economic policies must, over
tie)e, continue to work to reduce inflation /And thereby provide the foundations for
,Ionetary policy ;as an essential role to play in that
greater economic stability. '
process since excessive inflation cannot persist over time unless fueled by excessive
growth In money. Thus, the basic thrust of monetary policy is, anti will remain, aimed
at maintaining moderate growth in money and credit. however, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize thee we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a e_lecided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lesseeed and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Adrninisttation
of its maximum mortgage rate.
The Federal Reserve has also taken steps to hip ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified In exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Pelt if we fail now, the discomfort later
will ')e all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in gereral will prosper. I appreciate your taking the time to write and I hope
will have your understanding and support as we seek to resolve this most pressing
national problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
LB:sep
111372
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
P,tay 9lq$0
., • nororahle .4.oloard VYetzenbaum
United :t.e.t.es '3enete
Yeabin,3ton, n. C. 2C51c)
honorable John C. Ct./Ivor
United Ste.teste
'Ipaottirr.ton, n. C. 7C!It
7
„Senators Metzc
r.v1vor
Thank you for your letter cer: Anril 2$
invitinq writ to participate in the Con-jres.ftinpll
.%on for the 7,cnno-nv
contemn,* entitled -1410 7.;,
Proposed Novae* - Xre Naqs and Price rontroL,;
Voceasary?
Aittionch 1 . vi1l be testifyinc
a SUbcommittaa of the !:!(tuso r,47,krkir,7 eo7w4ittert
1A.11 :ake every etffcrt
the morning of Pay 15*
to stop by oomatire urintetrrrr
ng 7r.mr !!.trmfer.e.
1.00.71*
forward to suoinc vr,u.
:Ancorely,
Saaul
_ - _A. VPIcki
CO:vcd (#v
bcc:
Mrs. Mallerdi (2)
199r
The Kenortblc •
'2e4A.13e of Perreventatives
C„ 2115
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
17,ear mr. yo14,0
Thenlit you for 'Jvinri re tl'at oppDrtunity to comlent
cr tha orA're,,s 7-onsurer credit restraint rot)ul*tion, You
swtc;estoset thR4t the relerAl Peserve consiler th/1 erpmr_riate
nos* of restraints ml unsecured home inprevez.ent loans, in
view of nitiont,1 pclicy to eecoureqe resi4ertia1 anorcy
vcnservation.
The consurtr credit re/iulation represerts 41m effort
re4er41 ,,- eserve to balp sehieve the trowl loxt‘lic of te,
prograpk. t,eiors a4opt1r, the re4:14
1-reeider,t's enti
refialy weigthe4 the potentiftl t-peot ot
ir
t
Iti
tile economy end relative
tftprriffl (m w7-rite serts
- ,riorities, 7he aoard rocovnised that a
te* otttr matinn41
rm:Allatirm of tl,is fl4t1,!ra iticzght appear nduly burdonsoee tc
ar- to ran counter to other policy
cotrtain people
of identifyin which types of credit.
otjectivs. In
tJntior the weave determined that
would be saject
unsocureci 110:w_ i'yz,-cv, ant lecns, and bore improvement leans
secured ty collateral other then the boo-Ivor a sevinls deposit
vould lute treated as cov*rel irit r,o matter lkov Ova proceeds
Ta4,rt us0.
The regut4tion is, a tegeporery ,15e*sure desilned to
he.vp relieve currerit, ittflationnry pressures. i can assure
you that tte ,P.oare will r,ot extet4 it t.eyond the tkla necessary to achieve that result, Ir adelition /should the ovtleeeNk
,Aitthersd iD tbe period stvital irdiczte that tTte burdens impoee,l
op consumers and crotlitors .1rc disproportionate to any beneficial effect on the tre.nomy. the 4oar4 certainly ulna,/ ccAnsIder
it presett. hovever
trtzt"kir,- appropriete etane;es in the pccr.
furttr 4NAjnitments it the regulation do not appear advisable
sincerely,
RMr.JLK.ved (0V-176)
bcc
71er
Mr. Vichline
!rsMalardi ( )
May 9,1980
His. Julian Moynahan
near Ms. Moynahan:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as It applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have ad,led funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special credit Pestraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
'ay 9, DSO
C. V. Parker
Building Materials Center
2626 East Indian School Road
Phoenix, Arizona 850 t6
Dear 'Ir. Parker:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that promoted you to write.
In the setting of excessive inflation awl deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. "Aonetarv policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal Policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced In the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal ilousing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help hut they do not alter the fundamental fact that the
process of taming inflation will not be easy. 13ut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
1..:sep
11l4
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9,1980
Mr. Chuck Pedone, Constriction Manager
Mr. Harold 2. Bush
Harris Homes
101 NI. Poplar Street
r3erwick, Pennsylvania t 8403
Dear messrs. Pedone and Bush:
Thank you for your letters on the effects of high interest rates on housing.
I can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened a.nri market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity Pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building-that such hanks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. 'i'hat is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
31-1:sep,\
#1394 6c 1393
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9, 19g0
Mr. Ralph Poleri
Poleri Construction Company
404 Ridge Street
Freeland, Pennsylvania 1 g2.24
Dear Mr. Poler':
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
are
the credit needs of their local communities. And, we have said that where banks
essentially confining their loan expansion to priority areas—including home building-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
have your understanding and support as we seek to resolve this most pressing
I
national problem.
Sincerely,
4
J
#11
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
L:sep
6
'%Ay
94
1980
Th. honorable William Prox;aire
Aaakinl, Uou ins
a.rw, z,:r4,au
',uitted
flAsLins;t4un,
20510
L'oar Bill;
our lo Vor
2Lanka oo wuch for sending uio a co2
it1oz and or ataff's pai t,r on the Chrycler
to cc t4X
financing plan. I 4ave read that anal111',i carefully% and 1
; reciate havini that viuterial avai1aL1‘, to me.
:
d
Aact.rely,
LGCt (tV-17S)
,a1.11ardi (A)
,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9, 19F0
Mr. Paul N. Quigley, SRA
Appraisers Inc. of Green Bay
P.O. Box 61
Green Bay, Wisconsin 54305
Dear Mr. Quigley:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in governm ent spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken stens to help ensure that SIP all banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
Jilsep
#1398a
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9, 19S0
Mr. Tony Reese
Dear Mr.Reese:
Thank you for your postcard on the effects of high interest rates on
housing. I can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard,! would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have exnerienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Mousing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
:sep
#t397
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
'lay 9, 1980
Mr.:Johnny Robertson
Dear Mr. Robertson:
I understand well your concerns about high interest rates.
The level of interest rates is largely a reflection of the rapid rate of
inflation we are experiencing and the deeply embedded expectations that prices will
continue to climb. In this environment, interest rates are high mainly because lenders
are reluctant to extend credit without being compensated for the declining value of
the dollars they will receive in repayment.
The only way we are likely to achieve a lasting decline in interest rates is
if there is a lowering of inflation and inflationary expectations. laintenance of
reasonable control over growth of money and credit is an essential ingredient in the
fight against inflation, and the Federal Reserve is committed to this policy. However,
monetary policy alone cannot do the job effectively. In that regard, I would strongly
emphasize that we need help in the form of firm discipline in fiscal policy, particularly
as it applies to restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including small business—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will he all the more serious. That is why I believe that we must get the process over
with so that we can move into an environment in which the economy in general will
prosper. I appreciate your taking the time to write and I hope I will have your
understanding and support as we seek to resolve this most pressing national problem.
Sincerely,
.5eio
/.11d
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
I
May 9,1980
Mr. Edwin Schmieding
Dear 'dlr. Schmieding:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of hanks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such hanks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation vill not he easy. %t if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
1
H:RL:sep
, 1462
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
May 9, 1980
Mr. George A. Skiro
Professional Painting
265 North Mountain Boulevard
Mountaintop, Pennsylvania 18707
Dear Mr. Skiro:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. Ilowever, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are no,v signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move Into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
JIt1:Sep
111378
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9, 1.980
Ms. Jennifer Sloan
Dear Ms. Sloan:
I understand well your concerns about high interest rates.
The level of interest rates is largely a reflection of the rapid rate of
inflation we are experiencing and the deeply embedded expectations that prices will
continue to climb. In this environment, interest rates are high mainly because lenders
are reluctant to extend credit without being compensated for the declining value of
the dollars they will receive in repayment.
The only way we are likely to achieve a lasting decline in interest rates is
if there is a lowering of inflation and inflationary expectations. Maintenance of
reasonable control over growth of money and credit is an essential ingredient in the
fight against inflation, and the Federal Reserve is committed to this rx)licy. However,
monetary policy alone cannot do the job effectively. In that regard, I would strongly
emphasize that we need help in the form of firm discipline in fiscal policy, particularly
as it applies to restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of hanks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including small business-that such hanks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an environment in which the economy in general will
prosper. I appreciate your taking the ti-ee to write and I hope I will have your
understanding and support as we seek to resolve this most pressing national problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
May 9, 1980
Ms. Kimberly B. Strutt
York Manor, Inc.
300 Five Farms Lane
Timonium, Maryland 21093
Dear Ms. Strutt:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
11400
May., I 80
Ms. Rosalie Thomas
Dear Ms. Thomas:
I understand well your concerns about high interest rates.
The level of interest rates is largely a reflection of the rapid rate of
inflation we are experiencing and the deeply embedded expectations that prices will
continue to climb. In this environment, interest rates are high mainly because lenders
are reluctant to extend credit without being compensated for the declining value of
the dollars they will receive in repayment.
The only way we are likely to achieve a lasting decline in interest rates is
if there is a lowering of inflation and inflationary expectations. Maintenance of
reasonable control over growth of money and credit is an essential ingredient in the
fight against inflation, and the Federal Reserve is committed to this policy. However,
monetary policy alone cannot do the job effectively. In that regard, I would strongly
emphasize that we need help in the form of firm discipline in fiscal policy, particularly
as it applies to restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage print surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including small business—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help hut they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an environment in which the economy in general will
prosper. I appreciate your taking the time to write and I hope I will have your
understanding and support as we seek to resolve this most pressing national problem.
Sincerely,
ep
#1344
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9, 1980
Mr. D. 3. Veras
Veras Construction Company, Inc.
R. D. 115 - Oldfield Road
Shavertown, Pennsylvania 18708
Dear Mr. Veras:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. !lowever, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, Particularly as It applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage ooint surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not he easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
3iiRL:sep
111451
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9, 1980
Mr. Sam Wallace
Dear Mr. Wallace:
I understand well your concerns about high interest rates.
The level of interest rates is largely a reflection of the rapid rate of
inflation we are experiencing and the deeply embedded expectations that prices will
continue to climb. In this environment, interest rates are high mainly because lenders
are reluctant to extend credit without being compensated for the declining value of
the dollars they will receive in repayment.
The only way %:e are likely to achieve a lasting decline in interest rates is
if there is a lowering of inflation and inflationary expectations. "slaintenance of
reasonable control over growth of money and credit is an essential ingredient in the
fight against inflation, and the Federal Reserve is committed to this policy. However,
monetary policy alone cannot do the job effectively. In that regard, I would strongly
emphasize that we need help in the form of firm discipline in fiscal policy, particularly
as it applies to restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including small business-that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming Inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an environment in which the economy in general will
prosper. I appreciate your taking the time to write and I hope I will have your
understanding and support as we seek to resolve this most pressing national problem.
Sincerely,
1H:sep
V1283
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 9,1980
Mr. Clarence R. Yeagley
C.R. Yeagley and Associates, Inc
46 South Mountain Boulevard
Mountaintop, Pennsylvania 18707
Dear Mr. Yeagley:
Thank you for yonr letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it applies to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
nressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminate the percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help hut they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fall now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
May 9, 1980
Mr. Richard Zanolini
Stephen Zanolini (!i: Son, Inc.
Drums, Pennsylvania 18222
Dear Mr. Zanolini:
Thank you for your letter on the effects of high interest rates on housing. I
can fully appreciate the concerns that prompted you to write.
In the setting of excessive inflation and deeply embedded inflationary
expectations, there is a wide national consensus that economic policies must, over
time, continue to work to reduce inflation and thereby provide the foundations for
greater economic stability. Monetary policy has an essential role to play in that
process since excessive inflation cannot persist over time unless fueled by excessive
growth in money. Thus, the basic thrust of monetary policy is, and will remain, aimed
at maintaining moderate growth in money and credit. However, monetary policy alone
cannot do the job effectively. In that regard, I would strongly emphasize that we need
help in the form of firm discipline in fiscal policy, particularly as it at-301es to
restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates hive moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. A nd, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal Reserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including home building—
that such banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
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Federal Reserve Bank of St. Louis
These factors will help hut they do not alter the fundamental fact that the
process of taming inflation will not be easy. Rut if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an economic environment in which housing, and the
economy in general will prosper. I appreciate your taking the time to write and I hope
I will have your understanding and support as we seek to resolve this most pressing
national problem.
Sincerely,
: .L:sep
3,4
#14, 9
May 9, 1980
Mr. John H. Zinn, Jr.
near Mr. Zinn:
I understand well your concerns about high interest rates.
The level of interest rates is largely a reflection of the rapid rate of
inflation we are experiencing and the deeply embedded expectations that prices will
continue to climb. In this environment, interest rates are high mainly because lenders
are reluctant to extend credit without being compensated for the declining value of
the dollars they will receive in repayment.
The only way we are likely to achieve a lasting decline in Interest rates is
if there is a lowering of inflation and inflationary expectations. miaintenance of
reasonable control over growth of money and credit is an essential ingredient in the
fight against inflation, and the Federal Reserve is committed to this policy. However,
monetary policy alone cannot do the job effectively. In that regard, I would strongly
emphasize that we need help in the form of firm discipline in fiscal policy, particularly
as it applies to restraining the growth in government spending.
There are now signs of a decided easing of the extreme credit market
pressures that we have experienced in the past few months. The demand for credit has
lessened and market interest rates have moved lower. Reflecting these developments,
the Federal Reserve has eliminated the 3 percentage point surcharge in the discount
rate that had been established for certain classes of banks. And, mortgage rates have
fallen somewhat, as reflected in the lowering by the Federal Housing Administration
of its maximum mortgage rate.
The Federal eserve has also taken steps to help ensure that small banks
that are under liquidity pressures will have added funds at their disposal to help meet
the credit needs of their local communities. And, we have said that where banks are
essentially confining their loan expansion to priority areas—including small business—
that such. banks are justified in exceeding the 9 percent limit on loan growth contained
in our Special Credit Restraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not be easy. But if we fail now, the discomfort later
will be all the more serious. That is why I believe that we must get the process over
with so that we can move into an environment in which the economy in general will
prosper. I appreciate your taking the time to write and I hope I will have your
understanding and support as we seek to resolve this most pressing national problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 8, 1980
Mr. Willis W. Alexander
Executive Vice President
American Bankers Association
1120 Connecticut Avenue, N.W.
Washington, D. C. 20036
Dear Willis:
Thank you for your recent letter inviting me to attend
the ABA convention to be held in Chicago on October 11-15.
While I'm unable at this time to make a commitment to
attend the entire convention, I hope to be able to spend some time
at the meeting to discuss banking issues with you and your colleagues.
With best personal regards.
Sincerely,
cc:
Mrs. Mallardi
#265
JRC:tjf
04"."
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 3, 1980
Dear Mr. Gibbs:
Thank you for your further letter and your
continued support in the fight against inflation.
It
is reassuring for me to receive worcis of encouragement
such as yours.
Sincerely,
Mr. Matthew T. Cibbs
Gibbs Pontiac-Buick
246 South Main Street
hesville. Pennsylvania 17737
Jfl7tn
#I533
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 8, 1980
Dear Mr. Hickey;
Thank you for your letter. I can understand
the concerns and frustrations you expressed. To we it
seems that many of our economic difficulties, including
credit market pressures, are one way or another wrapped
up in our nation's problem of inflation. That's why
it's important that we take the necessary steps to
bring inflation under control now.
I appreciate your taking the time to share
your thoughts and first-hand impressions with me.
Sincerely,
Mr. Thomas J. hickey
JH/tn
#1428
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 8, 1980
Mr. John J. Hutchinson
Pre,ident
National Association of
Federal Credit Unions
P.O. Box 3769
Washington, D. C. 20007
Dear Mx. Hutchinson:
I am pleased to accept your kind invitation to address the
13th Annual Conference of the National Association of Federal Credit
Unions on July 28. Rather than a long, formal speech, however, I
would prefer to deliver some informal remarks and perhaps get some
comments and questions from the delegates on the changing relations
of our financial institutions.
Looking forward to seeing you in July.
Sincerely,
cc:
Mrs. Mallardi
#260
JRC:tjf
41.44.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 8, 1980
Mr. Yusuke Kashiwagi, President
The Bank of Tokyo, Ltd.
Nihombashi, Chuoku, Tokyo, Japan
Dear Mr. Kashiwagi:
Thank you for your recent letter inwhich you detailed
a proposal for an exchange of views which the publishers of Nihon
Keizai Shinbun would feature in one of their issues. I am pleased
to accept the offer and to join with you in a discussion of major
economic problems.
Perhaps a session could be arranged for the evening of
June 3. I do not plan to arrive in New Orleans for the IMC meeting
until the afternoon of the 3rd and must return to Washington on the
afternoon of June 4.
Please let me know if arrangements can be worked out with
Nihon Keizai Shinbun for that evening. I look forward to seeing you
in New Orleans.
With best personal regards.
Sincerely,
cc:
Mrs. Mallardi
#267
JRC:tjf
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 8, 1980
Dear Mr. Langdale:
Thank you for your letter and your additional
sucgestions to curb inflation.
I appreciate your continued
interest in solving this most pressing national probletil.
Sincerely,
Mr. John A. Langdale
JH/tn
#1592
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 8, 1980
Mt. Thomss 141. Macioce, Chairman
Tex Foundation Incorporated
1875 Connecticut Avenue, N.W.
Washington, D. C. 20009
Dear Tom:
I ain pleased to
Foundation to receive its
December 3 and to address
Conference. I am honored
for the award.
accept your invitation from the Tax
Distinguished Public Service Award next
a dinnor meeting during your Animal
that the Foundation would consider se
Please notify ay office of the time amd place of the
meeting by contacting Mr. Joseph R. Coyne, Assistant to the Board,
at 202 452-3204.
Best regards.
Sincerely,
cc:
Mrs. Mallardi
#266
JRC:tjf
el-eC°°
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 8, 19n
Mr. Gary G. Rumsey
Dear Mr. Pumsey:
Thank you for your letter. I want you to know I understand
your concerns and apparent frustrations with our nation's economic
difficulties. I can also understand the intuitive appeal of wage and
rice controls.
tiowever, previous experience with such controls indicates,
at best, a limited depree of success and, at worst, that they may
cause more problems than they solve. Whatever we mioht think of
wage and price controls, they arc no substitute for disciplined fiscal
and monetary actions. The actions taken by the President on rarck 14
with respect to fiscal and energy nolicies and those further actions
by the Federal Reserve to restrain the 9rowth of credit are among the
necessary steps that must be taken to brinn inflation under control.
This process is not quick, nor easy. nor painless. But if
we fail now, the discomfort and difficulties later will be all the more
serious. I appreciate your taking the time to write, and 1 have some
real sympathy with your views on the need to reduce costly, excessive
uovernment regulations.
Sincerely,
Jt:seo
il2453
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 8, 1980
Mr. Donald E. Wilkinson
Farm Credit Administration
490 L'Enfant Plaza
Suite 4000
Washington, D. C. 20578
Dear As. Wilkinson:
I appreciate your attending the recent meeting with farm
group representatives that was held at the Federal Reserve. The
input we received was very helpful to us in reaching decisions on
the scope of our credit restraint program.
Your invitation to address the annual conference of System
directors is certainly appreciated, but, unfortunately, I am forced
to somd my regrets. In view of the economic situation and the
comooquont onoortainties in my schedule, I hesitate to take on am
additional omt-of-town spooking commitments, even one as far Amoy as
October.
You have my best wishes for a successful meeting.
Sincerely,
cc:
Mrs. Mallardi
#252
JRC:tjf
4Ib
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D C
20551
PAUL A. VOLCK ER
CHAIRMAN
May 7, 1980
The Honorable Lawrence Connell
Chairman
National Credit Union Administration
Washington, D.C. 20456
Dear Larry:
I am pleased to respond to your letter of April 25, 1980,
requesting the Board's advice about a proposed temporary adjustment by
the National Credit Union Administration in the interest rate ceiling
applicable to loans by federal credit unions. As proposed, the current
15 percent statutory limit would be raised for the time being to 18 percent, under authority of Section 310 of the Depository Institutions
Deregulation and Monetary Control Act of 1980.
Section 310 of this Act, as you know, requires a determination
by the NCUA 'Board that money market interest rates have risen over the
preceding six-month period and that prevailing interest rate levels
threaten- the safety and soundness of individual credit unions as evidenced by several specific adverse trends. Insofar as market yields
are concerned, the record indicates that money market rates within the
past six months reached new highs, but have dropped quite sharply in
recent weeks. On a monthly basis, money market interest rates in April
were still considerably above the averages prevailing six months earlier
in October.
By early May, nearly all money market interest rates had
decreased significantly below the April average and were even below
their levels prevailing in early November. Whether or notfthis recent
decline, extending over a few days, militates against raising theloan
ceiling rate is, I think, entirely a matter of judgment of your Board.
We recognize insufficient time has passed to determine if the
adverse trends that emerged earlier in liquidity, capital, earnings, and
growth of credit unions are in the process of being reversed by the recent interest rates movements. Even though interest rates have recently
declined, loanable funds potentially available to credit unions and other
financial institutions still remain quite costly by most historical
standards. Some further loan rate relief for federal credit unions
would provide additional leeway for improvement in earnings and growth,
and would allow these institutions to adapt their operations even more
responsively to the broad range of credit needs of their borrowers.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
S
The Honorable Lawrence Connell
-2-
On the other hand, in the case of federal credit unions, there
has not been time to incorporate fully into earnings the recent upward
adjustment in the statutory loan rate ceiling to 15 percent. In any.
event, I would like to point out that not all federal credit unions, nor
all of their consumer lending, are subject to the provisions of the Board's
special consumer credit restraint program. Quite a few of these institutions, and many of their loans, accordingly would not fall under the
special 15 percent deposit requirement on increases in covered credit above
the base amount. This possible source of upward pressure on costs would
thus not be applicable in these cases.
On balance, the Board believes that there are reasons both
temporarily to adjust the loan ceiling rate upward and equally good arguments for waiting a few weeks or so to determine if the recent increase
in the statutory loan rate ceiling and the downward movement of market
rates make such an adjustment unnecessary at this time. We believe the
decision clearly falls within the area of judgment that must be exercised
by your Board in the context of their closer knowledge of the situation
in credit unions today.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 7, 1980
Dear Professor Holt:
Thank you for sending me a copy of your statement
before the Joint Economic Committee entitled "Inflation
and the Need for New Economic Policies." Your pwoposal
to establish an "Economic Stabilization Board" is innovative and interesting, and one that attempts, among
other things, to correct the long-term bias towards
federal budget deficits. As you can well appreciate,
your proposal raises many issues central to economic
policymaking in the United States and which have proven
to be quite controversial.
I very much appreciated receiving a copy of your
statement and you are quite correct in assuming that
the Board's current responsibilities keep it fully
employed.
Sincerely,
Professor Charles C. Holt
Director
Bureau of Btsiness Research
University of Texas at Austin
Austin, Texas 78712
Mr.
Mr.
Mr.
Mr.
Kichline
Struble
Ramm
Madigan
BFMadigan/WRRamm/FRStruble/JLK:slw
#1206
19SC
stoporaiau Gotfort4m ,.4.c4";40vern
40nited 4,ataa Senate
20510
Wasitinston, DX,
1-Aw4t
Senator ::cCovern.
In raa“,4wv LA, 4 ctr Latter of, April 28
conoornieg som* difficulties citAad
Rerzilan Lar4a1 in
ialiiing a credit line und*tr the Ye440rA1 i-Awervies Tittki,vorax4
104;44ual Crt(;,lt Terogram4
ilave contact4d the .341,ntuti,olis
_44:;,Qzlev Lank lousdin:i 44fficar on thiu -Alatteri Lc inf4r=4tt
.4411.14m txt,dit lint 4aa now bouti eata4lisUed for
(TL
1..rdal*z
Lational Sauk of 14tchell,
Dakota), TLe
f:eflicar will dlicusu tha credit lin*
Lerd4.1 when ha retarna to the 1.-amk later
arraucement with
this week.
4=
Sincerely;
Volckei
OA/ 179)
Lice,,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Li*
Li,i,itzer
Zeit
Atiallardi (2)
ley 74, 19$0
:4aora4411s Parran Z. ,F.itchisll
Ci)ecirw4u
..11.1Lcokoulttoa on Domoistic monsttary Policy
,
-..'ozze.iittoe
bauking f kinanoe and
Affairs
Ur4au
Uouse of .--,11roserkt4tivas
Astatillt;t:440
ZubIS
1..car c4Airl.,411
oa
for ;./ our latter of Xi4xil 29 ivitin
70Q1, tha *taderal i.aserva kvAernisation 4,%ct.
foruard to al-ia4r1u-,; belore your
11:, at, 1M.0 a.v..
§Lf#4
bco‘
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
(i-164)
tr.
itercr
..a11,4rdi (2)
-a
MAY 7
4r. John 11, O'Connor, Jr.
%ler Mr. O'Connor:
Thank you for the copy of your recent corre ondente to Ituropean
American Rank, concerning its now credit policy. I
sorry to learn that
you were adversely affected by the credit restraint proeram that went into
effect in March. As I understand it, turopeset American, citing the credit
restraint program, has limited its credit card customers who do not have
deposit relationship with the Sank to a $500 credit limit.
a pre-March
Usually the Vederal Reserve System does not direct lv involve
itself in the lending nolicies of banks and other creditors. Lenders have
a great deal of flexibility in establishing criteria for the types of loans
they will make an0 the creditworthiness of the person to *Mont they will
Lend. ,lowever, in a continuing effort to moderate and reduce inflationary
forces in our economy, the President has asked the Federal Reserve to take
action 4esigned to restrain the growth of certain tynea of coesumer credit
extended by banks and other creditors. The restraint is to be encouraged
through the imposition on hanks and other creditors of a requireillent that
special noninterest-bearine deposits be made with the Federal Reserve
System equivalent to 15 percent of each creditor's expansion of its outstandinc, credit in the form of credit card and other forms of revolvine
credit, and uneecored personal loans.
The methods used by 'eiders to achieve this restrnint are motter%
for each individual creditor to decide and will vary frost creditor to
creditor. 4swever, the creditor's criteria used for determining who does
or does not receive credit, and in what amount, must not discriminate
avainst a class of persons protetted under the Equal Credit Opportunity
Act (EC). The "P.COA prohibits credit discrimination on the basis of sex,
marital status, race, color, national oriein, age, religion; secause the
applicant's income derives from any public assistance program; or because
the applicant has in good faith exercised any right under the Consumer Credit
Protection Act. Absent *tree indication that the policy diecriminetes among
consumers on a basis erohibited by the !MA, if a creditor wishes to take
the existence of a deposit relationshie into account in deciding to whom to
extend credit, it may do so.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
1980
mr. John P. O'Connor
We hone that the inconvenience to both creditors and consumers
that is caused by the credit restraint proaram is short-lived. In the
meantime, ve also hone the nrooTan is successful in reducing the impact
of inflation on us all.
I appreciate your views and thank you for taking the time to write.
Sincerely,
Paul A. Tiolcker
hcc: Candy Wolfe (Control No. 1185)
cc: Rollin Fenner, /Cathryn Casey
ItAC
5-2-S0
CCC 18479
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
.4_
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 7, 1980
Dear Irv:
T am in my usual dilemma with regard to your invitation
to serve on the Dinner Committee for the Denai B'rith dinner
honoring Walt Wriston. Emotionally, I should and would want
to, but I am sure you will understand my self-imposed ban on
a Chairman of the Fed seeming to sponsor a tribute to a
regulated bank -- however deserved. It can be too easily
twisted and misunderstood.
So I am left only with wishina you all success for a
well deserved tribute.
Sincerely,
Mr. Irving S. Shapiro
Chairman of the Board
E.I. duPont deNemours & Co.
Wilmington, Delaware 19898
PAV:ccm
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 6, 1980
near Governor:
IT greatly appreciate your response to
my recent letter concerning the Special
Credit Restraint Program. Hopefully, the
need will be short.
Sincerely,
The Honorable Carlo Ciampi
Governor
Bank of Italy
Via Nazionale, 91
1-00184 Rome,-Italy
PAV:ccm
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 6, 1980
Dear Mary:
Many thanks for the comments and lift.
Sincerely,
Mrs. Mary Holt
President
Clothes Horse
5 Fields Building
Little Rock, Arkansas
PAV:ccm
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 6, 1980
Mr. Robert A. Imig
Mr. Arthur R. Imig
Mr. Robert J. Imig
Art Imig's
723 New York Avenue
Sheboygan, Wisconsin
53081
Dear Messrs. Imig:
You are absolutely right in suggesting that persistent
federal deficits are a major source of our economic difficulties, both in terms of their direct consequences and,
perhaps more importantly over time, in their fostering of
inflationary expectations. I sense, however, there is a
growing realization -- throughout all segments of our
society -- that we must bring this process under control.
The recently proposed cuts in federal spending -- while
perhaps not as large as you or I would have wished -are representative of that changed attitude. But, make
no mistake about it, achieving major cuts will be very
difficult. That process can he aided immensely by public
opinion and it is important that individuals like yourself
let your views be known. I, for one, will continue to
speak out whenever I can as to the need for sustained
discipline over time in our fiscal affairs.
Sincerely,
EGC/JH:slw
#1343
400,
,
0
.•
.'•• c Go veR;.
BOARD OF GOVERNORS
o''v •
....
0i4%7
•0
.,
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
.
•
.A \
•
(-) •
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
/4-.•
RALRs•
-•
• • •.• • •
PAUL A. VOLCKER
CHAIRMAN
May 6, 1980
The Honorable James H. Quillen
House of Representatives
Washington, D.C.
20515
Dear Mr. Quillen:
Thank you for your recent letter regarding the difficulties
being faced by homebuilders and homebuyers. There is no doubt that
conditions have deteriorated in recent months, in response to an
acceleration of inflation and governmental policies designed to bring
inflation under control. I also appreciate your sending samples of
messages you have received from Tennessee builders who expressed
their desire to have interest rates reduced and inflation brought
under control.
The Federal Reserve is cognizant of the special problems
that high interest rates have created in mortgage, housing, and other
markets. In designing the Special Credit Restraint Program announced
March 14, the Board asked commercial banks to give priority to maintaining a reasonable flow of funds to small businesses, such as
local builders, and to serving the liquidity needs of thrift institutions. The special deposit requirements applying to increases in
consumer credit specifically excluded mortgage credit for the
purchase or improvement of homes. Also, the requirements imposed
on any further expansion in the assets of money market mutual funds
should leave more funds available in local markets to help meet
local credit demands, including those associated with housing.
Furthermore, I have urged the banking community to make
special efforts to accommodate the appropriate credit needs of small
businesses, homebuilders, consumers, and farmers. Also, the Federal
Reserve has long supported changes in regulatory processes that will
make credit more readily available for housing during periods of high
interest rates. Measures enhancing the ability of thrift institutions
to compete for funds, such as the recently enacted legislation calling
for deregulation of depository institutions (P.L. 96-221), are an
important contribution in this regard.
Given the short-term outlook for depressed real estate
activity, the Congress itself may wish to consider special programs
to aid housing through this difficult period. The benefits expected
Vor ''!-onorablo S4W.0
'-141.1.1
TWO
l'*ror- special ilansuros bowegvcr sorialo be, vei bed csrefully *FlAirst
likely cOsts. ,:overtlloslenA, w;',1utiona ,Jesioned to aid the mcrt.
caul housirm 1..aetets will not
prohler,
to tho t;-PLre of
teso
otber sectors oo
oconory. Tho: inflationary
process -,tlat be hnite4. A* infifttion teoates *nd inflation:try expec4Trle,,et interest rates will rtsceae, pressures oti
tetiorts
e%#. tlopository institutionA will ease, and t.t(i, supply of rre4it will
impreva,
rmicliroo In nftet.et retos
intorest it reoent weeks 4re
13,!!'
40F* rr4.1f7ras in ''.1n,
an encouracAn
) solutions to
Zin,
the notion's cconoo!ic protlAsrA win restat in furtt,!er 44solinfss in
the future,
Wall A. Volcker
%Wx2LXx5tctOace*x*9:Y.xifeO4
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
-,71'4<, vce OW-169)
f'
Mr. Kix/aline
Mrs. :oallar,11 (2)
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Nay 5, 1980
Dear idendell:
Thanks for sending me the Deseret News section
on the MX missile.
It's certainly a timely piece, which
I appreciate receiving from you. Besides, it's always
good to hear from a member of the Fed family.
Sincerely,
Mr. Wendell J. Ashton
Publisher
Deseret News
P.O. Box 1257
Salt Lake City, Utan 84110
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 5, 1980
Dear Nick:
I appreciate your note and the cold
weather gear.
I may need the protection
regardless of the physiaal temperatuee soon!
Sincerely,
Mr. Nicholas F. Brady
Chairman of the Board
Purolator, Inc.
255 Old New Brunswick Road
Piscataway, New Jersey 08854
PAV:ccm
#1625
May 5, 1980
Dear Mr. & Mrs. beChiaro:
Thanks for your letter and your confidence and
support.
It is reassuring for me to receive words of
encouragement such as yours.
Sincerely,
Mr. & Mrs. Louis F. OeChiaro
J• tn
#1494
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
(JA-
May 5, 1980
Dear Mr. Dudley;
Thank you for your letter and proposed tax plan.
You have put forth an interesting proposal, which I've
passed on to my staff. Although tax laws are not the
direct responsibility of the Federal Reserve, we will
keep your thoughts in alind for any discussions that
may arise on this subject.
Sincerely i
Judd
#1548
Ce-7-2-eM
May 5, 1980
Mr. Vincent C. Fede
President
Community Federal Savings and
Loan Association of gergen County
161 Last Main Street
Ramsey, flew Jersey 07446
Dear Mr. Fede:
Thank you for your letter on the special deposit
requirement on increases in money market mutual fund
assets. The Federal Reserve and other financial regulators are keeping a close watch on savings flows and
other developments in the thrift industry, and your firsthand impressions are helpful in this process.
I appreciate your taking the time to write.
Sincerely.
etn
p
(
1- 11537
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 5, 1980
Dear Fritz:
I appreciate your note on the restraint
program.
Hopefully, the need will he short.
Sincerely,
Mr. Fritz Leutwiler
President
Swiss National Bank
Zurich, Switzerland
PAV:ccm
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
3/4.36M5060;AAP
May 5, 1980
Dear Mr. Mortensen:
Thanks so much for your letter and the copy of
your letter to Secretary Miller. I appreciate knowing
of your current thinking. Hopefully underlying economic
conditions -- as reflected in the recent sharp drop in
Treasury rates -- will alleviate some of the problem.
But, in any event, I appreciate your suggestion.
Sincerely,
Mr. William S. Mortensen
President
National Savings and Loan League
1101 Fifteenth Street, N. W.
Washington, D. C. 20005
I would like to hear about how the outlook looks
today from your vantage point!
PAV
EGC:slw
#1300
P.S.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 5, 1980
Dear Ed:
Just a note to tell you how delighted
I am that you have accepted the President's
invitation to become Secretary of State.
With very best wishes,
Sincerely,
The Honorable Edmund S. Muskie
United States Senate
Washington, D. C. 20510
CCM
hay 5, 190
L-/ear Mr. Mustain:
Thank you for your letter and your continued
support in the fight against inflation.
It is
reassuring for e4e to receive words of encouragement
such as yours.
Sincerely,
Mr. M. H. Mustain
#1503
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Federal Reserve Bank of St. Louis
hay S o 1930
The lionoral4e Benjamin S
.a1
Chairman
Suboosmaitte. onCQUIZStree ;;;4awki.kitUAr
411134, tio1letar7 Aii
tte. on Cioverament 01.-erationa
aoauzfit of itepresentativuo
14a;aiintort, D.C.
20515
Lear Cloa
4-ilosezAtLiall
I am writ414,4 it ro.z4ard to your Lotter *f Avril 21,
exixfiweed aoncn rtii
prolosaa staff intarirretatiou oZ :2AtiUlatiOn Z of toiA? Truth in I'eading Not. That
inturkristation, ;CC•ain# disousz4is tho c!itt-cloamrozt required in
**lineation with t4or-called11
cortiticatea o uhicli involve
the loan by an 1114,tituti
of u iportion of the r.iniasx, dtv,?osit
rekiuipred fox r.4.114e:i iA4rkat curtificAte:;. You cluerotion t;-,o need
fvr Truth in Lcaulin cliticloauroz under t%eue, circtItaAc.43.
ira w2a1ct.
Aa a -J411r.cral rulid, the Arutit in Lendia
mne4 i:69uIation
rfeiuire disclosures in any Ooltaur credit traauuction. You astuto
that ti.e Board Las autlioriti to
certain
ol credit
transactionat *Awn as life LeserancQ l olicy loan4, from Truth in
L4irdit;olczuress We would liku to el,,Thasize that the treatment
ot
loans is batied on unofficial staff 2etter4 aad deea not
roivitent au axew,ption froa t.11,4& ro3ulatif.A4. ArAw zttaff concluded
that in these tranauctions no credit was extended, becauze. thz
04
- 11cy owner was eiLsply dzawin on the asersad onah valuo of the
,olicy wit no mattactsal obligation to re:ay that amotmt to VAI
itsurance COU0kAiy• In lcopbeta transacticris, OA the other hand,
t4 customer inoura
dezt And *.uttarL; into a contractu41
to reioki that auourlt. Under these eircutances, it vould a„ivar
that crodit ibas bean tlAto:ided4
U1,4er Zzotion 1GS of th4; Act, t..Q Blzhard taki cxceit from
t4o ratiulatiQn au'i claws of crWit tranaactin4 if the Board find4
t.4t aa exouitiom la "ntacesvar;i or :,ropot to ffcctlaatia t
urpcae:;
Qi this title, to ;.-,rovent eircunventin or
ic 12Aareot, or to
facilitate comAlance.
whi14 ti4 Lloard !las nzlvcr formalky coatildered an 024414Z.tiO4 for thi t,eof transaction, it a..?:'aer
t4st
v4i
diaclozur4a, for thez;ci transactions doofa ticlv tt
cerr,y out tht; eseritial criklit-s*arins:1 functio;1 of TrutL in
;* an alternative to enterinq tnto t',44
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Federal Reserve Bank of St. Louis
Tkaa riollr4;-1.e. Pe
katie
traxiaao.ti, vit t'zct fivane al institutiouf the ouv,torier could
Ii4ok otUtire: to oLitain the fund
the
ced44ry to oak*
$10,000 iAinimul. amount for the oartifieates Without diaclo3uro
of the coQ,t or tcrra. of th* 1oan off4red by the iwsuin; inatitutiou uniler t
ooitn 0.ar? a cuutomer vishinl to ce,:icyarti.
credit tmouzcle* would 1- 11 414*.rrived of tiontial information noctetv,ar;
for tLAt iiAirrClaftc, IA tia coutttt the Trutl, in Londimi di4>c1or,urlz
Zor t
tAife of transactioa lescril-zi in tIle staff interrretatiou
;46 of assliztancu in carryin out the i'mrvcraeaøf thu Trat%
Laudiwit act.
As sou know, a roquivat for 4,,lubl.ic co3aant
4i riwsvive44
ruaiarainv rC-0171e thus ksuiapendin;; the effective date of
intrt.tit.,tioni6 lour letter will, Le treated es a ,A1141ic
cont.lent
:WU, comaiditratit a1oZps1 with all vothex oommeatn rtimisiveZ 0;1
ihtereretation• Uu apyrociatt;I having yet= vi.;(v or
tttar aud will lct you ikTIC0W au soot% au ar„ turVm.;T action
i1.14,6411.›B:i1:4t (W-15,9)
kacc. 4,;arvaret Ltowart
.Ltrs. Mallardi (2)
https://fraser.stlouisfed.orgFederal Reserve Bank of St. Louis
•
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Federal Reserve Bank of St. Louis
May 5, 1980
Dear William:
I greatly appreciatc your recent letter inviting me
to come to London as speaker at the annual banquet of the
Overseas Bankers Club. I know the forum is exceptional.
The difficulty is that the time coincides with the
period when a new Congress starts work, and demands thtt
I he available to defend myself and the Federal Reserve
in Committpe hearings. Consequently, I really need to
try to keep my calendar relatively clear in the last
week of January and early February, so I fear I must
regret.
I do appreciate the invitation, and can only extend
my best wishes for a successful meeting.
Sincerely,
The Rt. Hon.
Lord Armstrong of Sanderstead, P.C., G.C.B., M.V.O.
Chairman
Midland Bank Limited
London, England
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Federal Reserve Bank of St. Louis
May 5, 1980
Dear Charlie:
Per our telephone conversation, I am pleased to
confirm that the Board of Governors has granted your request
for the services of Mr. Perry Quick for a 12-nth period
beginninis
. June 1, 1980. It is understood that Mr. Quick
will be on a reimbursable detail (salary plus all fringe
benefits) during this period.
To arrange for appropriate billing procedures,
your office may contact Mr. George Livingston, Assistant
Controller, on 452-3552. For any further assistance your
personnel office may wish to contact Mr. John Weis an
Assistant Director in our Division of Personnel on 452-3435.
Sincerely,
The aonorable Charles L. Schultze
Chairman
Council of Economic Advisers
:2506
Washington, D.C.
MHair/JLKichline;bam
#1264
cc:
Mr.
Mr.
Mr.
Ms.
Mr.
Kichline
Weis
Livingston
Wolfe (2)
Garabedian
•
May 5, 1980
Mrs. Arnie Strentz, Manaaer
Credit Bureau of Kerrville
104 Plaza Drive - Suite F
Kerrville, Texas 78028
Dear Mrs. Strentz:
I have read your letter concerning the recent action of the
Federal Reserve in establishing a "special deposit" requirement on
Increases in certain types of consumer credit and I can understand
your concerns. This action was taken under the extraordinary powers
contained in the Credit Control Act of 1969 which was activated by
the President in mid-March. The specific action of the Federal
Reserve was a limited and a temnorary one aimed at limitinn the
increase in only a relatively small part of total consumer credit,
in line with our overall effort of achieving moderate growth in
money and credit and thereby lessening inflation. I, like you,
hone that conditions will permit us to eliminate this extraordinary
aspect of the program at an early date.
N)netary nolicy has an important role in curbing inflation,
but as you noint out, we also need help in the form of fiscal discipline. While we may differ on the specifics, I would agree on the
need for restraint in government spending. I also sense there is a
nrowing realization of this fact throughout all segments of society.
The recently proposed cuts in federal snending--while perhaps not as
large as you or I would have wished—are representative of that changed
attitude. But, make no mistake about it, achieving major cuts will be
very difficult. That process can be aided immensely by public opinion
and it is important that individuals like yourself let your views be
known. I, for one, will continue to speak out whenever I can as to
the need for sustained discipline over time in our fiscal affairs.
I appreciate your takinq the time to write.
Sincerely,
IfLP/K
#1371
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Federal Reserve Bank of St. Louis
0
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Federal Reserve Bank of St. Louis
May 5, 1980
Mr. Alan P. Thomas
Sheppards and Chase
Clements House, Gresham St.
London EC2V 7AU, England - Telex #886268, 887091
Would be delighted to see Peter Wills on May 15
at 4:00 PM.
1
Paul A. Volcker
May 2, 1980
Mr. Rex T. Fox
Dear Mr. Fox:
Thanks for your letter on our monetary policy actions
and other recent anti-inflation measures. I appreciate very much
your confidence and support.
Sincerely,
#1384
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Federal Reserve Bank of St. Louis
?..4ay 2, 1980
A1r, David E. Aalistrorn
Dear ;Mr. Hallstrolls
Thanks for your letter on our monetary policy actions
and other recent anti-inflation measures. I appreciate very much
your confidence and support.
Sincerely,
1,11417
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 2
iggn
!-ionorablc,. villiam Proxmire
Chaiman
Cowmitteo on nankin
nounin,J.
and Urban Affairs
Unitefl Ftates r!ftnate
'zcl.slAnvtori, D. C. 20510
near Chairman Proxrlire T am replyini to your letter of April 24 requep,tin
views on S. 2379, which woula 2ervlit. U. r bankirr!
to invest ir export train' conpanleAs.
T. tort
lizve reservations about an exp7tnsion of the
scope for UstAs to invest in cormercil octivities, and about
Vlo pe,rticular 71rovisions of S. 2379 that would permit such an
expansion without some form of special oversic!ht hy banV renulatory
a,?Tnoies. The stator,ent subnAttee by Covernor Wallich on this
bill outlinee
nr.mber of concerns that
Board woul3 have wit!.
any rrol3osal that would breach the traditional separation of bankinc?
And commerce in the United Ftates. It also emphasized the inportance
attAcheC by the noard to tio tT!aintenance of bank capital positions
that are aZtluate in .121.tion to traditional bankinc activities. T
fully shsra, those concerns. In ry jud7ment, it would be prudent to
proceed czutiouslv and at a .1eliberate pace in openiir up new ereas
of anh r‘ctivity, especially at the present ti
vank holdinrf companis are now reritted to invest in up
to 5 percent of the shares cf. Any ccr!Tany and can do so without any
recjulatory approval. To our knowledrx, there are now few, if any,
damestic ban'k holdinq corranies that have any such investronts in
trading conpanies in the Unitefi States. T. am not in a position to
say whether this is in3ietivc of A lack of interest l'17 banks jr
exT?ort tradinc; ocrpanies or whther the level of ownership interest
pernitted to holefin corpaniog is too srall to attract ban): holdinc7
corp,7"ny invest!vonts. Tf investments in export trading companies by
banks ;7).116 r'r
liii
conpanies were to 1.-;e authorized beyond the
level currnntly permitte& T would strongly favor requiring sorr!
fom of prior arl)roval. If thet requirwront were included, rmnreover, T telieve that it would be very desirab1o!
the lerialation
containeJ statutory standarels on which regulatory decisions r7.ould
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Federal Reserve Bank of St. Louis
••-
•••
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
The Honorable William Proxmire
Page Two
be based. For example, one might wish to have special rules
regarding commodity trading. Our staff would be willing to
work with Committee staff to develop such standards,
Sincerely,
(atli
/5.0//tieiti
CNteatikei att
1/tAta
tei;
4gli
I t Li 16/6
gad
a,dttriA41-
tedditi
etz
t
fi(9
S-
!Any 2: I'
The
flor-h14 A3117. stev,
,
_ nson
United states ,
F enate
;Ishincton, D. C. 20510
Dear hdlai
tir replying to your lct er of April 22 ree4-arOin'7
v^ur hill to encourevle the creation of export traino conoanies.
at:me fully tnat the 1Fnited ctatos needs a strong
exr*rt sector. As you know, o..ir export performance ir the past
se.wral yeArs has been r7ood, with exoorts of nonrrnufactured
e-co4s risin,7 by 20 percent in vclu-,e lurinq tl,at
Funda-tental to continued irowth in our eYports is a sharp reduction
in the rate of inflaticn in thir country. lut marketinc consirstions are also iortmlts.
The ':.xport
Tradinq Company Art (S. 2379) puts groat
er'rlisis on tile need for bnnk investent ir trinc! compenies.
Jt urderstn it banks are re,77,areeii
?1 source of expertise
in interratiomll transections and as ,3 source of investrent
capitl for tradinq company ventures. F)
,
.
ri larre, bank e)k
pertise in a ranqe of aspects of international trade is new
available to bank customers as an adjunct to ttc! trrtae financin
that. barks have tve.ditionally supplied. wIlen one t-urns to banks
as a source of venture capital. it is necessz!try to ask. whether
this scilrce resource
to !..y resret and concern, bank capital
is becoin increasim-ly scarce—should he conserved ts surport
for tank lendirfl, or permitted to be diverted to other lires of
activity that
v yield national benefits. I confess tLat T tend
to be conservative in stich ratters.
urt1te!1 :;tates banks with expertisf.
, in international'
banking, are already able to ract investmentn in vp to
percent
of the stock of export trading comranios throl.17h their parent
holding. companies. To my knowle, there have beet few (if
any) such investr,ents to date. if it should prove necessiary to
exparl the present scope for hank investments in tradinc
I hope that suc11. action coule he ten cautiously, subject to
statutor ii-its nne, regulatory restraints, perhaps on a
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Federal Reserve Bank of St. Louis
The Honorable Adlai E. Stevenson
Page Two
case-by-case basis. It would be important to guard against
significant involvement by banks that do not have the requisite
experience in international finance.
I should be glad to discuss the response to those
questions further if it would be helpful. I also understand
that Governor Wallich is responding to a number of questions
that you have raised in connection with his statement on S. 2379.
Sincerely,
ietve
(f 1
igt/zaze/ted hbt-e_§
te::
€
4
ed
"
pa
:
(1 ,air‘te.e.t belzik4
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Federal Reserve Bank of St. Louis
•/°
May 1, 1980
Dear Mr. Biskey:
Thank you for your letter.
I appreciate your
confidence and support, and it was 900d of you to take
the time to write.
Sincerely,
Mr. Fred Biskey
t•JH/tn
#1438
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Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 1, 1980
Mr. Robert N. Carpenter
Uear
f•ir. Carpenter:
Thank you for your letter and attached clippinp
on inflation. I want you to know I understand the
concerns that prompted you to write.
I fully agree with you on the need for meaningful
restraint, but am less clear that we can act only on
merchant's inventories or that this is a meaningful way
to fight inflation.
appreciate your taking the time to share your
thoughts with me.
Sincerely,
May 1, 1980
Mr. Paul Cernocky
i)ear Mr. Cernocky:
Thanks for your letter on our monetary policy actions
and other recent anti-inflation measures. I appreciate very much
your confidence and support.
Sincerely,
p
tse
'
111365
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Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 1, 19r
Mr. William D. Crabbs
Dear Mr. Crabbs:
Thank you for your letter on interest rates and credit
policy. I understand the concerns that prompted you to write,
and I appreciate your statement of support.
I do agree with your suggestion that we should be
trying to control the growth of the money supply since excessive inflation cannot persist over time unless fueled by
excessive growth in money. In fact, the basic thrust of
monetary policy is, and will remain, aimed at maintainin
moderate growth in money and credit. However, monetary
policy alone cannot do the job effectively. In that
regard, I would strongly emphasize that we need help in
the form of firm discipline in fiscal policy, particularly
as it applies to restraining the growth in government
spendinq.
I appreciate your taking the time to write.
Sincerely,
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Federal Reserve Bank of St. Louis
May L 1980
Mr. Henry uolch
Dear Mr. Dolch;
Thank you for your letter on the Administration's
proposal concerning a withholding tax on dividends. This
proposal is before Congress and is not now a law. I
appreciate knowing your views, but you understand that
the tax laws are not the responsibility of the Federal
Reserve.
Sincerely,
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Federal Reserve Bank of St. Louis
5:Ja04:. tionoralt_
Duncan
;;,ouze oh4vr4uvaltativi.ls
'intn L.0
20515
/or
1.114t4cazi:
Taniz you for your letter
April 28 regarding
cc.zrinaikence you reccivtla tram ;61r. David Zurloson, Lef.O.slative Chairman ol te Z
, ome Builders Association of Greater
belivv* tLe enclosed letter from 4ovarnor Partee
k`-4idEsilt L t
kvie Zuildexa Axasociation of Greater
i.noxville is n4lf, exi,1anatory.
I hoLzo that ttit:, is rusuonuive to your int;uiry.
4incerely,
.6,icAer
1,
:.cligu;uxu (Ltr. dtd. 4/25/30)
C0.1)jt (IV-183)
occ
irs. ,44-alardi (2)
May 1, 1980
Mr. Matte° V. Fasanaro
Dear vr. Fasanaro:
Thank you for your further letter and your thoughts on fiscal
policy and the fight against inflation.
I agree that we need help in the form of firm discipline in
fiscal policy, particularly as it applies to restraining the growth
in government spending. I sense also that there is a growing realization--throughout all segments of our society--that we must bring this
process under control. The recently proposed cuts in federal spending
--while perhaps not as large as you or I would have wished--are representative of that changed attitude. But, make no mistake about it,
achieving major cuts will be very difficult. That process can be
aided imensely by public opinion and it is important that individuals
like yourself let your views be known. I, for one, will continue to
speak out whenever I can as to the need for sustained discipline over
time in our fiscal affairs.
Sincerely,
JH:EGC/tn
#679
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 1, 1980
Mr. Thomas W. Fowler
Dear Mr. Fowler:
Thanks for your letter on our monetary policy actions
and other recent anti-inflation measures. I appreciate very much
your confidence and support.
Sincerely,
Lep
#1387
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Federal Reserve Bank of St. Louis
May 1, 1980
Mr. Conrad Gable
Dear Mr. Conrad:
Thank you for your letter on the Administration's
proposal concerning a withholding tax on dividends.
I under-
stand the point you are making, and while tax laws are not the
direct responsibility of the Federal Reserve, I appreciate
knowing your views.
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Federal Reserve Bank of St. Louis
Sincerely,
May 1, 1980
Mrs. Lillian Hough
Dear Mrs. Hough:
Thanks for your letter on our monetary policy actions
and other recent anti-inflation measures. I appreciate very much
your confidence and support.
Sincerely,
JI-1:sep
#1426
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Federal Reserve Bank of St. Louis
May 1, 1980
Mr. Jack D. Husak
1901
Dear Mr. Husak:
Thanks for your letter on our monetary policy actions
and other recent anti-inflation measures. I appreciate very muc
h
your confidence and support.
Sincerely,
if1431
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
May 1, 1980
Mr. Marcus
7,4.
Kerner
Dear Mr. Kerner:
Thanks for your mailgram on our monetary policy actions
and other recent anti-inflation measures. I appreciate very much
your confidence and support.
Sincerely,
:sep
#1429
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Federal Reserve Bank of St. Louis
May 1, 1980
Mr. Richard B. Krepps
Dear Mr. Krepps:
Thanks for your postcard on our monetary policy actions
and other recent anti-inflation measures. I appreciate very much
your confidence and support.
Sincerely,
#1399a
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Federal Reserve Bank of St. Louis
May 1, 1980
Mr. E. M. Miller
Dear hir.
Thanks for your letter on our monetary policy actions
and other recent anti-inflation measures. I appreciate very much
your confidence and support.
Sincerely,
M.-1:1
st
#1396a
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Federal Reserve Bank of St. Louis
1•111
Pay 1, 1980
Dear Dr. Oppenheimer:
Thank you for your letter and the copy of your new
book, A Realistic Approach to U.S. Ener9y IndeTndence.
It was good of you to share your latest work with me.
Sincerely,
Dr. Ernest J. Oppenheimer
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
1. 1.9E3
The donorlo i4cLardson PryiAr
Cheixitan
.4"ucommittou oa %;ovvirutwont
Inforzation and Iudividual ;1,110ct2
verumant (4erationii
CA:0Law;ttee on
Al044C 0.t kAaixoaeutativt44
20515
tlaiiv.iwjteuf D.C.
8 requesting the
a1.1. iou fta our letter of
4244itatitlie Ot tIA0 Federal l'uLerve in examiniro.i current and
In carryinv out
Zutur iro4.01(zl.b in trAinborder dat4
rtuaki.onaiilitie, the Fwgiural AOSCAXVO relies on data
do.Leiztic uources; however, important
su,sirlied
inforiadtion i roeded fr. icarei-jn oflicea of U.S. banks. TL.
ddte ‘21c, h.we not ex rice akt difficulta in revoiviAq
funot.
;:orei;A data necezaary to carr:i out keaural
It is our undarastanain,; that tti..a ret:trictic,ns on trawl',•
;koraar data fluw cited in your latter could Law; 4A impact on
international col^4..toxce and have au adve.rse iect on tt,e,
of Ciiite‘; z;t,tt4.2 co:11,1,Aiiics, to corkate ovc:xnoaG. T;ne rartnol
ZI4tional Telecomunications and Tn5;orot
row,,f
axc
kAation P.dalinietratiun i ia ccurva.t1; atudyire4 tho ir4eact
rig*txiotion.5.; would !lave on illt.lzral;.tionel Oomm*rca. The Vedoral
ietlervs. will cwitinue to zAouitor txamborder data flow 2robl:
and we will aL i riae you ot aal, difficulties we experience t:-..xt
ctzfti JU 6llitj to fulfill our role.
bee:
(W-142)
;,r. Get:Lain.
1:a11ardi (2)
Kay 1, 1980
Dear Dr. Sanjurjo:
Thank you for your letter and your thoughts on
the Administration and the economy.
taking the time to write.
Sincerely.
Dr. R. R. Sanjurjo
#1463
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Federal Reserve Bank of St. Louis
I appreciate your
May 1
1980
Dear Mr. Secondi!
Thank you for your letter.
I can understand your
concern and frustration with the inflationary spiral, and
you make some good points about cost of living escalators.
appreciate your taking the tire to share your
thoughts with me.
Sincerely,
Mr. Joseph Secondi
Wofford College
Spartanburg, South Carolina 29301
#1030
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
May 1, 1980
Mr. Rick E. Skates
Assistant Vice President
First Citizens Bank of Poison
P.O. Rox 50
Poison, Montana 59800
Dear Mr. Skates:
Thank you for your letter concerning inflation and government
policy. I fully understand the deep concern that prompted you to write
and agree with many of the points you raise.
You are absolutely right in supgesting that persistent federal
deficits are a major source of our economic difficulties, both in terms
of their direct consequences and, perhaps more irportantly over time,
In their fostering of inflationary expectations. I sense, however, there
is a growing realization—throughout all segments of our society--that
we must bring this process under control. The recently proposed cuts
in federal spending—while perhaps not as large as you or I would have
wished—are representative of that changed attitude. But, make no
mistake about it, achieving aajor cuts will be very difficult. That
process can be aided immensely by public opinion and it is important
that individuals like yourself let your views be known. I, for one,
will continue to speak out whenever I can as to the need for sustained
discipline over tire in our fiscal affairs.
I also appreciate your worries about high interest rates and
inflation. The level of interest rates is largely a reflection of the
rapid rate of inflation we are experiencing and the deeply embedded
expectations that prices will continue to climb. In this environment,
Interest rates are high mainly because demands for credit to finance
purchases are strong, while lenders are reluctant to extend credit
without being compensated for the declining value of the dollars they
will receive in repayment.
The only way we are likely to achieve a lasting decline in
interest rates is if there is a lowering of inflation and Inflationary
expectatons. Maintenance of reasonable control over growth of money
and credit is an essential ingredient in the fight against inflation.
May 1, 1980
Ms. Sarah E. Thulin
Dear Ms. Thulin:
Thank you for your letter about the ability of
the German and Japanese governments to control their
inflation. While in some respects their inflation records
have been better than ours, they too have had a surge in
inflation recently.
In both countries there is a widespread understanding of the need to maintain fiscal and monetary constraint in order to control inflation, and these are two
areas I have often spoken about.
I appreciate your taking the tirfe to write.
Sincerely,.
16fr
#1413
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Mr. Rick E. Skates
-- 2
The Federal Reserve recognizes that periods of tight credit
create particular problems for borrowers who rely Primarily on lending
institutions for financing. In implementing anti-inflationary policies,
the Board has tried to recognize the special needs of small businessmen.
Banks have been encouraged to maintain the availability of funds to
these borrowers, and we will be monitoring the distribution of credit
closely to ensure that these objectives are fulfilled.
Sincerely,
#1190
May 1, 1980
Dear Mr. Venedikian:
Thank you for your letter on credit restraints.
As you know, the Federal frNeserve adopted a series of
neasures designed to restrain qrowth in bank loans and
other types of covered credit. These neasures, wfAch
are described in more detail in the enclosed press release,
are among the steps necessary to help curb inflationary
pressures. We have also seen some recent evidence of a
slowing In the growth of credit demand.
I appreciate your taking the tire to write.
Sincerely,
Mr. Harry M. Venedikian
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
I
May 1, 1980
Dear Mr. West:
Thanks for your note on the meting with National
People's Action at the Fed.
I appreciate very much your
kind words of support.
Sincerely,
Mr. John H. West
0
JH/tn
#1408
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
?tiay 1, 1980
Ms. Cathy Whitaker
Dear Ms. Whitaker:
1 unlerstand well your concerns about high interest rates.
The level of interest rates is largely a reflection of the rapid rate of
Inflation we are experiencing and the deeply embedded expectations that prices will
continue to climb. In this environment, interest rates are high mainly because lenders
are reluctant to extend credit without being compensated for the declining value of
the dollars they will receive in repayment.
The only way we are likely to achieve a lasting decline in interest rates is
if there is a lowering of inflation and inflationary expectations. Maintenance of
the
reasonable control over growth of money and credit is an essential ingredient in
fight against inflation, and the Federal Reserve is committed to this policy. However,
monetary policy alone cannot do the job effectively. In that regard, I would strongly
emphasize that we need help In the form of firm discipline in fiscal policy, particularly
as it applies to restraining the growth in government spending.
Some signs have emerged that suggest relief may be forthcoming from the
extreme credit market pressures that have characterized the past few months. The
demand for credit seems to have eased and market interest rates have moved lower.
Of course, interest rates are still at a very high level, and I cannot be sure whether
these reductions will be sustained. That will ultimately depend on our success in
getting the inflation rate down. But, I am somewhat encouraged by these most recent
developments.
In the meantime, the Federal Reserve has taken steps to help ensure that
small hanks that are under liquidity pressures will have added funds at their disposal to
help meet the credit needs of their local communities. And, we have said that where
banks are essentially confining their loan expansion to priority areas—including small
business—that such banks are justified in exceeding the 9 percent limit on loan growth
contained in our Special Credit Qestraint Program.
These factors will help but they do not alter the fundamental fact that the
process of taming inflation will not he quick or easy. But if we fail now, the
discomfort later will be all the more serious. fiat is why I believe that we must get
the process over with so that we can move into an environment in which the economy
in general will prosper. I appreciate your taking the tine to write and I hope I will
have your understanding and support as we seek to resolve this most pressing national
problem.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Sincerely,
31-1:seP
01395
May 1, 1980
Mr. Richard A. Winter
Dear Mr. Winter:
Thank you for your letter and your suggestions to reduce the
national debt and bring down inflation.
You are absolutely right in suggesting that persistent federal
deficits are a major source of our economic difficulties, both in
terms
of their direct consequences and, perhaps more importantly over time,
in their fostering of inflationary expectations. I sense, however, there
is a growing realization--throughout all segments of our society--tha
t
we must bring this process under control. The recently proposed
cuts
in federal spending--while perhaps not as large as you or I would
have
wished--are representative of that changed attitude. But, make
no
mistake about it, achieving major cuts will be very difficult. That
process can be aided immensely by public opinion and it is important
that individuals like yourself let your views be known. I, for one,
will continue to speak out whenever I can as to the need for susta
ined
discipline over tine in our fiscal affairs.
Sincerely,
JH/tn
#1439
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
@FedFRASER