View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Collection: Paul A. Volcker Papers Call Number: MC279  Box 12  Preferred Citation: Congressional Correspondence, August-October 1983 [Folder 2]; Paul A. Volcker Papers, Box 12; Public Policy Papers, Department of Rare Books and Special Collections, Princeton University Library Find. it online: http://findingaids.princeton.edu/collections/MC279/c465 and https://fraser.sdouisfed.org/archival/5297 The digithation ofthis collection was made possible by the Federal Reserve Bank of St. Louis. From the collections of the Seeley G. Mudcl Manuscript Library, Princeton, NJ These documents can only be used for educational and research purposes ("fair use") as per United States copyright law. By accessing this file, all users agree that their use falls within fair use as iii iiii•iuiui lUll II defined by the copyright law of the United States. They further agree to request permission of the IIUJIUI Princeton University Library (and pay any fees, if applicable) if they plan to publish, broadcast, or otherwise disseminate this material. This includes all forms of electronic distribution. Copyright The copyright law of the United States (Tide 17, United States Code) governs the making of photocopies or other reproductions of copyrighted material. Under certain conditions specified in the law, libraries and archives are authorized to furnish a photocopy or other reproduction. One of these specified conditions is that the photocopy or other reproduction is not to be "used for any purpose other than private study, scholarship or research." If a user makes a request for, or later uses, a photocopy or other reproduction for purposes not permitted as fair use under the copyright law of the United States, that user may be liable for copyright infringement. Policy on Digitized Collections Digitized collections are made accessible for research purposes. Princeton University has indicated IiSPJPI aids. what it knows about the copyrights and rights of privacy, publicity or trademark in its However, due to the nature of archival collections, it is not always possible to identify this information. Princeton University is eager to hear from any rights owners, so that it may provide accurate information. When a rights issue needs to be addressed, upon request Princeton University will remove the material from public view while it reviews the claim. Inquiries about this material can be directed to: Seeley G. Mudd Manuscript Library w.lden Street Princeton, NJ 08540 609-258-6345 609-258-3385 (fax) mudd@princeton.edu   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  a  'October 5, 1983  The Honorable Walter E. Fauntroy Chairman Subcommittee on Domestic Monetary Policy Committee on Banking, Finance and Urban Affairs House of Representatives 20515 Washington, D.C.  •  Dear Chairman Fauntroy: Thank you for your letter of October 3 regarding hearings on Federal Reserve reform legislation. I look forward to appearthg before your Subcommittee on October 17 at 10:00 a.m. Sincerely, 11-1."" rZ t  CO:pjt (#V-198, 83157) bcc:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  •  Don Kohn Mrs. Mallardi (2)  I -• , f i• 1:  • 4LT  Don Kohn will be drafting statement AN WALTER E FAUNTROY. DC. CHAIRM STEPHEN L. NEAL, N C. DOUG BARNARD, JR., GA. CARROLL HUBBARD, JR., KY. BILL PATMAN. TEX. BUDDY ROEMER. LA. BRUCE A MORRISON, CONN. JIM COOPER. TENN. THOMAS R. CARPER. DEL  GEORGE HANSEN. IDAHO RON PAUL TEX BILL McCOLLUM. FLA. BILL LOWERY, CALIF. JOHN MILER. IND.  U.S. HOUSE OF REPRESENTATIVES POLICY SUBCOMMITTEE ON DOMESTIC MONETARY OF THE  H2-109. ANNEX NO. 2 WASHINGTON. DC. 20515 (202) 226--73115  N AFFAIRS COMMITTEE ON BANKING, FINANCE AND URBA NINETY-EIGHTH CONGRESS  WASHINGTON, D.C. 20515  October 3, 1983  The Honorable Paul A. Volcker Chairman - Board of Governors Federal Reserve System 20th and Constitution Avenue N.W. 20551 Washington, D.C. Dear Paul: Monetary On Monday, October 17, 1983, the Subcommittee on Domestic d affect the operations Policy will meet to consider several bills which woul could visit with of the Federal Reserve. I would be most pleased if you the efficacy of the Subconnittee at that time to share your thoughts in ideration. any or all of them to the extent you have given them cons provide a new H.R. 3868, a bill to amend the Federal Reserve Act to blish an additional class of directors for Federal Reserve Banks, would esta ves serving class of directors to be composed of three representati the savings staggered three-year terms to be chosen, one each from for the expressed banks, the credit unions, and the savings and loans, on this bill were purpose of providing thrift representation. Hearings ves of the trade held on Thursday, September 15, 1983, with representati ort of the bill; associations. The thrifts, understandably, were in supp ers Association the American Bankers Association and the Independent Bank comment on of America were less enthusiastic. If you are prepared to views at this this legislation, I would be most pleased to receive your time. legislation H.R. 3869, a bill to retire Federal Reserve stock, is inasmuch as which probably should be considered along with H.R. 3868 Reserve Bank H.R. 3868 would provide thrifts with representation on requirement of the Boards of Directors without imposing a membership and B Directors. nature now imposed on those who elect the Class A Federal Reserve There are other issues raised by the retirement of the you have not had stock which you may wish to defer for another time if you can minimally an opportunity to fully consider them. If, however, concept of membership address yourself to the issues associated with the your comments on and an expansion of institutional representation in to further proceed H.R. 3869, that would be most helpful in deciding how on H.R. 3868.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The Honorable Paul A. Volcker Page Two October 3,1983 eral Reserve, is essentially H.R. 4009, a bill to modernize the Fed r, deal with an issue directly eve how s, doe It l. bil ing eep sek hou a smuch as it seeks to resolve questions ina an irm Cha of ice off the ing ect aff of absence or unavailability; the surrounding succession in the event and the removal of the District an; irm Cha the of m ter the of ing fix Chairman. The bill also contains requirement on the appointment of the of detailed minutes which would be g pin kee the for ing vid pro s ion vis pro ation of the printing of the outside of the FOIA provisions, elimin se, and removal of the cap on Hou the of r ake Spe the by ort Rep ual Ann branch building construction. y comment on H.R. 4009. I I know you have been anxious to personall t bill. If, additionally, you tha on ws vie r you g rin hea to d war for look t on the other bills at the men com to ity bil ila ava r you of me ise will adv g notices to my colleagues rin hea the e par pre l wil I g, rin hea the time of appropriately. a.m. in Room 2128 of the Rayburn 00 10: at t l mee wil tee mit com Sub The es provide that witnesses should House Office Building. Committee Rul at least 24 hours before the provide 100 copies of their testimony h them additional copies if wit ng bri o als uld sho ses nes Wit g. hearin press and the public who may be the of s ber t mem tha e sur be to t they wan ies of their testimony. If you cop h wit ed vid pro be to are e anc end in att Howard Lee at 226-7315. have any questions, please contact on. Thank you very much for your cooperati you on the 17th.  I look forward to seeing  Sincerely yours,  Walter E. Fauntroy Subcommittee Chairman  enclosures: H.R. 3868, 3869 and 4009 Statements from 9/15/83 hearing IBAA and ABA letters   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  98TH CONGRESS 1ST SESSION  868  Lir D c, I  R.  tors for To amend the Federal Reserve Act to provide for a new class of direc Federal Reserve banks.  IN THE HOUSE OF REPRESENTATIVES SEPTEMBER 13, 1983 red to the Mr. FAUNTROY introduced the following bill; which was refer Committee on Banking, Finance and Urban Affairs  A BILL To amend the Federal Reserve Act to provide for a new class of directors for Federal Reserve banks. Be it enacted by the Senate and House of Representas of the United States of America in Congress assembled,  1 2 live 3 4  SHORT TITLE SECTION 1. This Act may be cited as the "Class D  5 Directors Act of 1983". 6 7 8 ed  CLASS D DIRECTORS SEC. 2. Section 4 of the Federal Reserve Act is amendby inserting after the twelfth paragraph the following:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  2 1 2  ers who shall be "Class D shall consist of three memb of the Federal Reserve s or rn ve Go of d ar Bo e th by ed at gn si de  ted, one from each of the in po ap be ll sha s or ct re Di . em st Sy 3 by the Board from , ons uti tit ins ry to si po de of s se as g cl in 4 follow ers who shall repremb me e th by it to de ma s on ti da en mm 5 reco fined in section 3 of the Fedde as s nk ba s ng vi sa e th ) (1 nt se 6 credit unions as d re su in e th ) (2 t; Ac e nc ra su In t si 7 eral Depo Credit Union Act; and l ra de Fe e th of 1 10 n io ct se in d ne 8 defi defined in section 401 of the as on uti tit ins d re su in y an ) (3 9 staggered terms e rv se ll sha s or ct re Di t. Ac g in us Ho 10 National s, at their first meeting, or ct re di e th of ty du e th be ll sha it 11 and ors of this class whose term ct re di e th of e on e at gn si de to 12 nuary nearest to Ja .of st fir e th om fr ar ye e on in re 13 shall expi term of office shall e os wh e on g, in et me ch su of te 14 the da such date, and one whose om fr s ar ye o tw of d en e th at re 15 expi ars from such ye e re th of d en e th at re pi ex l al sh 16 term of office chosen as hereinbebe ll sha or ct re di y er ev , er ft ea er 17 date. Th shall have been residents s or ct re di D s as cl l Al . ed id ov pr 18 fore h they are apic wh r fo ct tri dis e th of s ar ye o 19 for at least tw l experience of the ia nc na fi ed st te s es ss po ll sha d an 20 pointed depository institution. No of s as cl r ei th to e at ri op pr ap 21 type ployee, or em , or ct re di r, ice off an be l al sh 22 class D director on except of that uti tit ins ry to si po de r he ot y an of r 23 stockholde e director shall repreth h ic wh on uti tit ins ry to si po de 24 type of ll be filled in the manner sha r cu oc y ma at th s ie nc ca Va . nt 25 se  HR 3868 IH   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  3 and such appointees shall ion ect sel al gin ori e th in ed id ov pr 1 decessors and pre ir the of rm te d re pi ex un the for ice 2 hold off a full term. No person to t en tm in po ap for le gib eli be ll 3 sha utive terms. The Board sec l con ful re mo or o tw e rv se ll sha 4 tions to provide for the 5 shall promulgate rules and regula which it shall make om fr s on ti da en mm co re le tab sui of ng ki 6 ma ery nomination shall be ev t tha ure ass to d an ts en tm in po ap 7 or, sex, or national col d, ee cr e, rac to rd ga re t ou th wi 8 made dge of suitability and ju e sol e th be ll sha d ar Bo e Th . gin 9 ori s, the Board shall fill the 10 should there be no suitable candidate ard's judgment, Bo e th in o, wh l dua ivi ind an th wi y 11 vacanc the class of depository of sts ere int the ent res rep t bes l 12 wil 13 institutions which is vacant.". 0  HR 3868 IH  98TH CONGRESS v 1ST SESSION ki.R.3869 To retire Federal Reserve bank stock.  IN THE HOUSE OF REPRESENTATIVES SEPTEMBER 13, 1983 Mr. FAUNTROY introduced the following bill; which was referred to the Committee on Banking, Finance and Urban Affairs  13ILL To retire Federal Reserve bank stock. 1  Be it enacted by the Senate and House of Representa-  2 lives of the United States of America in Congress assembled, SHORT TITLE  3 4  SECTION  1.  This Act may be cited as the "Federal  5 Reserve Bank Stock Retirement Act". STOCK SUBSCRIPTIONS  6 7  SEC. 2. (a) The last sentence of the first parqgraph of  8 section 2 of the Federal Reserve Act (12 U.S.C. 222) is 9 amended by striking out "subscribing and paying for stock" 10 and inserting in lieu thereof "obtaining a certificate of 11 membership".   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  2 (b) The second sentence of the third paragraph of sec iking out n 2 of such Act(12 U.S.C. 282) is amended by str  1 2 lio  follows through 3 "subscribe to the capital stock" and all that in lieu thereof 4 "gold or gold certificates." and inserting nt to the provi5 "obtain a certificate of membership pursua 6 sions of this Act.". 7  h Act (12 (c) The fourth paragraph of section 2 of suc  8 U.S.C. 502) is amendedin (1) by striking out "shareholders" and inserting  9 10  lieu thereof "member banks"; and and all (2) by striking out "the amount of their" erting in t follows through the end thereof and ins  11 12  tha  14  ntum of the lieu thereof "an amount equal to 6 per ce such member paid-up capital stock and surplus of  15  bank.".  13  d eleventh paragraphs 'of an th, ten th, , nin hth eig e Th (d) 16 283; 285) are hereby 17 section 2 of such Act (12 U.S.C. 18 repealed. 19  2 of such Act (12 (e) The twelfth paragraph of section  20 U.S.C. 286) is hereby repealed. last paragraph of section 2 the of ce ten sen st fir e Th (f) 21 by repealed. 22 of such Act(12 U.S.C. 281) is here SERVE BANKS ORGANIZATION OF FEDERAL RE 23 tence of the first paragraph of sen ond sec e Th ) (a 3. C. SE 24 Act is amended by striking e rv se Re l ra de Fe the of 4 n tio sec 25  Hit 3$69 IH  3 1 out "a subscription to the capital stock of" and inserting in 2 lieu thereof "an` application for a certificate of membership 3 in". 4  (b) The second paragraph of section 4 of such Act is  5 amended6  (1) by striking out "When the minimum amount  7  of capital stock prescribed by this Act for the organiza-  8  tion of any Federal Reserve bank shall have been sub-  9  scribed and allotted," and inserting in lieu thereof  10  "When the organization committee shall deem that a  11  sufficient proportion of eligible banks have applied for  12  membership in a Federal Reserve bank in the process  13  of organization,";  14  (2) by striking out "the amount of capital stock  15  and the number of shares into which the same is  16  divided,";  17  (3) by striking out "subscribed to the capital stock  18  of" and inserting in lieu thereof "applied for member-  19  ship in";  20 21  (4) by striking out "and the number of shares subscribed by each"; and  22  (5) by striking out "subscribed or may thereafter  23  subscribe to the capital stock of" and inserting in lieu  24  thereof "applied or may thereafter apply for member-  25  ship in".   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  HR 3869 IH  •   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  4 1 2 of  of section 4 h" ht ig "E ed er mb ph nu ra ag (c) The subpar d by striking out de en is am 1) 34 C. S. U. 2 (1 t such Ac  3 "stock".  such Act (12 of 4 n io ct se of h ap gr ra pa h nt (d) The te 4 t "stock-holding" and ou ng ki ri st by d de en is am 5 U.S.C. 302) ember". f "m eo er th eu li in g in rt se in 6 paragraph of sech ft el tw e th of ce en nt se d (e) The thir 7 king out "subscriptions ri st by d de en am is t Ac ch 8 tion 4 of su thereof "applicaeu li in g in rt se in d an k" 9 to the capital stoc ". 10 tions for membership L RESERVE SYSTEM RA DE FE E H T IN IP SH ER MEMB 11 Reserve Act (12 l ra de Fe e th of 5 n io SEC. 4. Sect 12 ad as follows: re to d de en am is 7) 28 C. 13 U.S. TION FOR MEMBERSHIP CA LI PP "A 14 nks shall have no ba e rv se Re l ra de Fe e "SEc. 5. (a) Th 15 16 capital stock.  the Federal Rein ip sh er mb me r fo ng yi "(b) A bank appl 17 l Reserve ra de Fe e th of te da e iv e effect 18 serve System after th plication for ap an it bm su l al sh t n Ac 19 System Modernizatio gulations of the re th wi ce an rd co ac 20 such membership, in serve System, to the Re l ra de Fe e th of s or 21 Board of Govern nk of its district. 22 Federal Reserve ba ion submitted purat ic pl ap an of al ov pr "(c) Upon the ap 23 nk involved ba e rv se Re l ra de Fe (b), the 24 suant to subsection ing the memberst te at e at ic if rt ce a nk 25 shall issue to such ba  HR 3869 IH  5 1 ship of such bank in such Federal Reserve bank and in the 2 Federal Reserve System. "(d) With respect to any bank which has an application e System which is 4 for membership in the Federal Reserv e 5 pending on the date of the enactment of the Federal Reserv appli6 System Modernization Act, upon the approval of such 3  e to 7 cation of such bank, such Federal Reserve bank shall issu h bank 8 such bank a certificate attesting the membership of suc erve 9 in such Federal Reserve bank and in the Federal Res 10 System. 11 12  "(e) When a member bank voluntarily liquidates, it shall surrender its certificate of membership and cease to be a  of the 13 member or the Federal Reserve bank of its district and 14 Federal Reserve System. "(f)(1) Any bank which is a member bank on the date of ization 16 the enactment of the Federal Reserve System Modern p in 17 Act shall be deemed to hold a certificate of membershi erve 18 the Federal Reserve System and in the Federal Res  15   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  19 bank of which it is a member on such date. "(2) The Federal Reserve bank involved shall issue a 20 as soon 21 certificate of membership to each such member bank h Act.". 22 as practicable after the date of the enactment of suc  HR 3869 1H   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  6 INSOLVENCY OF MEMBER BANKS  1  SEC. 5. (a) The first paragraph of section 6 of the Fed3 eral Reserve Act (12 U.S.C. 288, first paragraph) is hereby  2  4 repealed. (b) The second sentence of the paragraph which, prior to was 6 the amendment made by subsection (a) of this section, .C. 7 the second paragraph of section 6 of such Act (12 U.S "The 8 288, second paragraph) is amended to read as follows:  5  k shall be 9 certificate of membership held by such national ban rict, and 10 surrendered to the Federal Reserve bank of its dist h Feder11 such national bank shall cease to be a member of suc 12 al Reserve bank and of the Federal Reserve System.". DIVISION OF EARNINGS  13  SEC. 6. (a) The first paragraph of section 7 of the Fedking out 15 eral Reserve Act(12 U.S.C. 289) is amended by stri "have been 16 "the stockholders" and all that follows through  14  17 fully met,". .18 19 tion  (b) The second sentence of the second paragraph of secout 7 of such Act(12 U.S.C. 290) is amended by striking  vided, and the 20 ", dividend requirements as hereinbefore pro 21 par value of the stock,". 22 23  Act (12 (c) The third paragraph of section 7 of such stock and". U.S.C. 531) is amended by striking out "capital  HR 3869 IH  C  7 1  APPLICATION FOR MEMBERSHIP BY STATE BANKS  2  SEC. 7. (a) The first paragraph of section 9 of the Fed-  3 eral Reserve Act (12 U.S.C. 321, first paragraph) is 4 amended5  (1) in the first sentence, by striking out "the right  6  to subscribe to the stock of" and inserting in lieu  7  thereof "membership in";  •   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  8 9 10  (2) by striking out the second and third sentences thereof; and (3) in the last sentence, by striking out "stock-  11  holder" and inserting in lieu thereof "member".  12  (b) The first sentence of the second paragraph of section  13 9 of such Act (12 U.S.C. 321, second paragraph) is amended 14 by striking out "Federal Reserve bank stock owned by the 15 national bank shall be canceled and paid for as provided in 16 section 5 of this Act." and inserting in lieu thereof "member17 ship of such national bank shall be terminated and the certifi18 cate of membership canceled by the Federal Reserve bank 19 involved.". 20  (c) The first sentence of the third paragraph of section 9  21 of such Act (12 U.S.C. 321, third paragraph) is amended— 22 23 24 25  (1) by striking out "stockholder" and inserting in lieu thereof "member"; and (2) by striking out "stock" and inserting in lieu thereof "membership".  HR 3869 1H   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  C  8 1  (d) The fifth paragraph of section 9 of such Act (12  2 U.S.C. 323) is hereby repealed. 3  (e) The first sentence of the paragraph which, prior to  4 the amendment made by subsection (d) of this section, was 5 the ninth paragraph of section 9 of such Act (12 U.S.C. 327) g in lieu 6 is amended by striking out "stock" and insertin 7 thereof "certificate of membership". 8 9 by  (f) The paragraph which, prior to the amendment made subsection (d) of this section, was the tenth paragraph of  10 section 9 of such Act(12 U.S.C. 328) is amended11  (1) in the first sentence-  13  (A) by striking out "all of its holdings of capital stock" and inserting in lieu thereof "its certif-  14  icate of membership"; and  15  (B) by striking out  12  dd.  Provided, however,  16  That no" and all that follows through "withdraw  17  als during that year"; and  18  (2) in the third sentence(A) by striking out "stock holdings" and ining in lieu thereof "certificate of membership";  19 20  sert  21  and  22 23  (B) by striking out "a refund of its cash" and to". all that follows through "likewise be entitled  HR 3869 IH  9 (g) The paragraph which, prior to the amendment made 2 by subsection (d) of this section, was the sixteenth paragraph 1  3 of section 9 of such Act(12 U.S.C. 333) is amended(1) in the first sentence, by striking out ", except 4 5  that any" and all that follows through "admission to  6  membership"; (2) by striking out the second through the seventh  7 •   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  sentences thereof; and  8 9  (3) in the last sentence, by striking out ", except  10  as otherwise hereinbefore provided with respect to cap-  11  ital stock".  12  (h) The last sentence of the last paragraph of section 9  out 13 of such Act (12 U.S.C. 338) is amended by striking ber14 "stock" and inserting in lieu thereof "certificates of mem 15 ship". ASSESSMENTS ON FEDERAL RESERVE BANKS  16 17 18 tion  SEC. 8. The first sentence of the third paragraph of sec10 of the Federal Reserve Act (12 U.S.C. 243) is  and in19 amended by striking out "capital stock and surplus" pre20 serting in lieu thereof "net earnings for the immediately 21 ceding six-month period". AS 22 BANKS IN DEPENDENCIES AND INSULAR POSSESSIONS MEMBER BANKS  23 24 25  SEC. 9. Section 19(h) of the Federal Reserve Act (12 U.S.C. 466) is amended by striking out "take stock" and  HR 3869 1H   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  10 Federal 1 inserting in lieu thereof "apply for membership in the 2 Reserve System".  4  RETIREMENT OF FEDERAL RESERVE BANK STOCK inSEC. 10. The Federal Reserve Act is amended by  6  tion: serting after section 5 of such Act the following new sec "RETIREMENT OF FEDERAL RESERVE BANK STOCK  3  "SEc. 5A.(a) Five years after the date of the enactment eral Reserve 8 of this section, each holder of stock in each Fed l Reserve bank 9 bank shall surrender such stock to the Federa begins five years 10 involved. During the ten-year period which 7  , each Federal 11 after the date of the enactment of this Act ual payments, to 12 Reserve bank shall pay, in ten equal ann ue of such stock. - 13 each former holder of such stock the par val l Reserve bank 14 The timing of such payments by such Federa t with the or15 during such ten-year period shall be consisten monetary conthe and get l bud era Fed the of ion rat ope ly der 16 the Federal Re17 trol policies of the Board of Governors of 18 serve System. er bank voluntarily mb me a ch whi in e cas any In ) "(b 19 n surrendering its 20 liquidates during such five-year period, upo the Federal Reserve 21 stock and certificate of membership to mptly receive pro ll sha k ban er mb me h suc ed, olv inv k 22 ban subsection (a), less any in ied cif spe as ck sto h suc for t en ym pa 23 Federal Reserve bank. 24 liability of such member bank to such  HR 3869 IH  C   https://fraser.stlouisfed.org "1"1. Federal Reserve Bank of St. Louis  11 case in which a member bank shall be de2 clared in-s-olvent during such five-year period and a receiver is 3 appointed for such member bank, or in any case in which a 4 receiver is appointed for a national bank during such five5 year period pursuant to the first paragraph of section 6 of this 6 Act, upon surrendering its stock and certificate of member7 ship in the Federal Reserve bank involved, the receiver shall 8 promptly receive payment for such stock as specified in sub9 section (a), less all debts of such member bank or such 10 national bank to the Federal Reserve bank involved.". 11 12  EFFECTIVE DATE SEC. 11. The amendments made by this Act shall take  13 effect on the date of the enactment of this Act, exce-pt that 14 the amendments made by section 2(e) and section 6 shall take  15 effect five years after such I. 0  11R 3869 1H  K..4609  . 98TH CONGRESS H 1ST SESSION   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  To modernize the Federal Reserve System.  S IN THE HOUSE OF REPRESENTATIVE SEPTEMBER 28, 1983 ch was referred to the Mr. FAUNTROY introduced the following bill; whi irs Committee on Banking, Finance and Urban Affa  A BILL To modernize the Federal Reserve System. use of RepresentaHo d an te na Se the by d cte ena it Be 1 Congress assembled, 2 lives of the United States of America in SHORT TITLE 3 4.  "Federal ReSECTION 1. This Act may be cited as the  5 serve System Modernization Act".. DETAILED MINUTES  6 7  l Reserve Act(12 SEC. 2.(a) Section 12A of the Federa  the end thereof the 8 U.S.C. 263) is amended by adding at 9 following: 10  Federal Reserve "(d)(1) The Board of Governors of the s of all meetem shall take and maintain detailed minute  11 Syst  12 ings of the Committee.  2 1  "(2) Subject to paragraph (3), the minutes of each such meeting shall contain a detailed record of the proceedings of  3 such meeting and shall be prepared in accordance with pub4 licly available guidelines prescribed by the Board. Such 5 guidelines may authorize the inclusion of staff reports. Views 6 expressed by any member of the Committee shall be attribut7 ed to such member in such minutes. . •,   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  8  "(3)(A) Before the publication of any minutes in accord-  9 alice with the provisions of paragraph (4), the Board may 10 delete from such minutes any information regarding any for11 cign country, central bank of a foreign country, or any inter12 national institution which has a majority of members who are 13 foreign countries or central banks of foreign cQuntries. Any 14 such deletion shall be indicated in such minutes. 15  - "(B) Not later than fifteen years after the date of each  16 meeting with respect to which information is deleted under 17 subparagraph (A), the Board shall review such information to 18 determine whether such information should be published. 19  "(C) Not later than thirty years after the date of each  20 meeting with respect to which information is deleted under 21 subparagraph (A) and withheld from publication under sub22 paragraph (B), the Board shall publish such information. 23  "(4) The minutes of each meeting of the Committee,  24 prepared pursuant to paragraphs (1) through (3), shall be 25 published and be made publicly available by the Board on,  HR 4009 1H   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  3 1 but not before, the last business day of December of the 2 fourth calendar year following the calendar year in which the 3 meeting involved occurs.". 4  (b) The amendments made by subsection (a) shall apply  5 only to meetings of the Federal Open Market Committee 6 which are held after the date of the enactment of this Act. 7 8  AT-LARGE APPOINTMENT OF THE CHAIRMAN SEC. 3. The first paragraph of section 10 of the Federal  9 Reserve Act(12 U.S.C. 241) is amended10  (1) in the second sentence--  11  (A) by striking out "not more than one of  12  whom shall be selected from any one Federal Re-  13  serve District,"; and  14  (B) by inserting after the second sentence the  15  following: "The President shall not appoint more  16  than one member of the Board from any one Fed-  17  eral Reserve district, except that when appoint-  18  ing, under the following paragraph, a member  19  who is also designated to serve as chairman of the  20  Board, the President shall not be bound by this  21  restriction.". ANNUAL REPORT  22  SEC. 4. The seventh paragraph of section 10 of the Fedout 24 eral Reserve Act (12 U.S.C. 247) is amended by striking  23  HR 4009 IH   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  •  4 1 ", who shall cause the same to be printed for the information 2 of the Congress". 3 4  APPOINTMENT OF THE CHAIRMAN AND VICE CHAIRMAN SEC. 5. (a) The second paragraph of section 10 of the  5 Federal Reserve Act (12 U.S.C. 242) is amended by striking 6 out the third sentence and inserting in lieu thereof the following: "The President shall appoint, by and with the advice and 8 consent of the Senate, one member of the Board to serve as 9 chairman. The term of such member as chairman shall expire 10 on January 31 of the first calendar year beginning after the 11 calendar year during which the term of the President who 12 appointed such member as chairman is scheduled to expire. 13 In the event a chairman does not complete his entire term as 14 chairman, his successor shall be appointed to complete the 15 unexpired portion of such term as chairman and shall serve 16 as chairman until January 31 of the first calendar year begin17 ning after the calendar year during which the term of the 18 President who appointed him as chairman is scheduled to 19 expire. The President also shall appoint, by and with the 20 advice and consent of the Senate, one member of the Board 21 to serve as vice chairman for a term of four years. Upon the 22 expiration of the term of the chairman or vice chairman, the 23 chairman or vice chairman, as the case may be, shall contin24 ue to serve in such capacity until his successor is appointed 25 and has qualified.".  HR 4009 Ill   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  5 1  (b) The second paragraph of section 10 of the Federal  2 Reserve Act (12 U.S.C. 242) is amended by inserting the 3 following before the sentence which prior to the amendment 4 made by subsection (a) of this section was the fourth sentence 5 of such paragraph: "In the event of the absence or unavaila6 bility of the chairman, the vice chairman or (in the vice chair7 man's absence) another member of the Board may be desig8 nated by the chairman to perform the duties of the office of 9 the chairman. In the event of the death or resignation of the 10 chairman or a vacancy in the office of the chairman, the vice 11 chairman shall perform the duties of the chairman until a 12 successor is appointed and has qualified. In the event of the 13 death or resignation of the chairman and the vice chairman 14 or a vacancy in the office of the chairman and a vacancy in 15 the office of the vice chairman, the member of the Board with 16 the most years of service on the Board shall perform the 17 duties of the chairman until a successor is appointed and has 18 qualified.". 19  (c) The amendments made by this section shall take  20 effect on the date of the enactment of this Act, except that 21 the amendment made by subsection (a) shall be applicable to 22 any person who was Chairman of the Board of Governors of 23 the Federal Reserve System immediately prior to such effec24 tive date only upon the expiration of the full four-year term  HR 4009 IH  •  •  6 1 as chairman which such person was serving immediately 2 prior to such effective date. • BRANCII BUILDINGS 3 4  SEC. 6. The ninth paragraph of section 10 of the Feder-  5 al Reserve Act(12 U.S.C. 522) is repealed. 0  OE.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  • f  HR 4009 IH  OPENING STATEMENT OF THE HONORABLE WALTER E. FAUNTROY CHAIRMAN, SUBCOMMITTEE ON DOMESTIC MONETARY POLICY COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS at Hearings on ESTABLISHING A NEW CLASS OF DIRECTORS FOR FEDERAL RESERVE DISTRICT BANKS Thursday, September 15, 1983 -- 10:00 A.M. 2220 Rayburn House Office Building, Washington, D.C. **********  The Subcommittee will come to order. of Today, we hold hearings on an issue of importance to the operations e System the Federal Reserve System. As the Members know, the Federal Reserv is composed of 12 Federal Reserve District Banks in addition to the Board of Governors here in Washington. These District Banks and their Branch Banks handle the day-to-day responsibilities of the Federal Reserve System such as check-clearing, providing currency to financial institutions, acting as the Treasury Department's fiscal agency, regulating financial institutions, and the other services to financial institutions and to the public. In addition, Presidents of the District Banks participate in meetings of the Federal Open Market Committee, bringing the Districts' economic conditions and needs before that body's deliberations on monetary policy. Thus, the District Banks the play a unique role as intermediaries between national policy decisions and people and financial institutions of the different regions of the country. The Boards of Directors for these District Banks reflect this unique role. At present, there are three classes of Directors at the District Banks. Three Class A Directors are elected by and represent the commercial banks of the District who hold stock in the Federal Reserve System. Three Class B directors are also elected by the stockholding member banks to represent the general public, and specifically the interests of agriculture, commerce, industry, services, labor, and consumers. Finally, three Class C directors are appointed by the Board of Governors to represent the public. The Chairman and Deputy Chairman are selected from the Class C Directors. r, This system has worked well. The Monetary Control Act of 1980, howeve created an anomaly. Under that Act, savings and loan associations, mutual of the savings banks, and credit unions were brought within the purview ements. Federal Reserve System through the adoption of universal reserve requir Federal These financial institutions were also granted direct access to ion of Reserve services such as check clearing, wire-transfers, and provis for them on currency and coin. Yet, no specific representation was provided the Board of Directors of the District Banks. I believe that this situation should be rectified, and that the best way s to do this is to establish a new class of Directors to represent the saving e institutions and credit unions who can now participate in the Federal Reserv System. These new Class D Directors would be composed of three , representatives -- one each from the mutual savings banks, the credit unions and the savings and loan associations -- serving staggered three-year terms. They would be appointed by the Board of Governors from recommendations made from each class of depository institutions. The hearing today will explore whether the resulting representation of thrift institutions on District Banks would facilitate their access to the policies and facilities of the Federal Reserve System, and whether the proposed solution of Class D Directors is necessary and appropriate along with the implications of such a proposal upon the thinking that affects the conduct of monetary policy. Our witnesses include: Roy G. Green, Executive Vice President of the U.S. League of Savings Associations; H. Lee Boatwright, III, President of CentraBank in Baltimore, Maryland, testifying on behalf of the National Association of Mutual Savings Banks; Rick Wieczorek, President of the D.C. Credit Union League, testifying on behalf of the Credit Union National Association; and John H. Hutchinson, Manager of the Hamilton Standard Federal Credit Union and President of the National Association of Federal Credit Unions. The American Bankers Association and Independent Bankers Association of America will be submitting written statements later for inclusion in the record.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  STATEMENT OF ROY G. GREEN ESTIC MONETARY POLICY BEFORE THE SUBCOMMITTEE ON DOM ANCE AND URBAN AFFAIRS HOUSE COMMITTEE ON BANKING, FIN  September 15, 1983  MR. CHAIRMAN: hington, D.C. My name is Roy G. Green of Was  I am Executive  States League of Savings ted Uni the of ent sid Pre e Vic Institutions*. in d to present this testimony ase ple is gue Lea . U.S The ". the "Class D Directors Act in ed odi emb t cep con the support of  the U.S. ings Institutions, formerly Sav of gue Lea . U.S e *Th , has a membership of 3,500 ons ati oci Ass s ing Sav of League of the assets of the t730 99% r ove ing ent res rep ies compan League membership includes ss. ine bus n loa and s ing sav billion ck l and state-chartered, sto era Fed -ons ati oci ass df all types savings banks have joined ent min pro y man ly, ent Rec and mutual. Leonard principal officers are: the League as members. The rnia; Paul Prior, Vice ifo Cal ch, Bea n gto tin Hun Shane, Chairman, sident, a; William O'Connell, Pre ian Ind , tle Cas New an, irm Cha y Legislative Chairman, Beverl is, Dav art Stu is; ino Ill Chicago, ent, Green, Executive Vice Presid Roy and a; rni ifo Cal Hills, Counsel, Jim Freeman, Senior Phil Gasteyer, Legislative League Washington, D.C. Legislative Representative, is t Wacker Dr., Chicago, Illino headquarters are at 111 Eas York ice is located at 1709 New 60601. The Washington Off 2) D.C. 20006. Telephone: (20 Avenue, N.W., Washington, 537-8900.  only recently assumed my I , an rm ai Ch . Mr , ow kn As you may ague with e Vice President of the Le iv ut ec Ex as st po t en rr cu ington the direction of its Wash r fo ty li bi si on sp re l overal ty-five served for more than twen I at th to r io Pr . ns operatio loan e separate savings and re th of r ce fi of ng gi na years as ma ntly, the nation -- most rece of s rt pa t en er ff di in associations naging le, Florida. While ma il nv so ck Ja of s ng vi Sa First Federal e to the subject-matter nc va le re me so of d an n, that institutio Advisory also was appointed as an I g, in ar he s y' da to of Federal Reserve Bank of e th of ch an Br le il nv so Director the Jack experience , I have some personal us Th . 6) t ic tr is (D a Atlant , though e Federal Reserve System th in le ro 's or ct re di with the   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  or" capacity. in an "advisory direct s ral Reserve Banks show de Fe ve el tw e th of ey rv A quick su e ngs bank executives ar vi sa or an lo d an s ng vi that ten other sa System. However, as e th in th wi s ip sh or ct re participating in di appointments is with e es th of ch ea e, in rm nearly as we can dete in the rict Bank, rather than st Di a of n io at er op a branch ass B tockholding members), Cl (s A s as Cl : es ri go te existing ca (public entatives), or Class C (elected public repres e rman, designated by th ai ch e th g in ud cl in representatives, gton). Board here in Washin es, since the passage iz gn co re n io at sl gi le As the proposed utions have in 1980, thrift instit t Ac l ro nt Co ry ta ne of the Mo Federal policy direction of the e th in e ak st ng si ea had an incr  -3Reserve System.  accounts With the authorization of NOW  mand rtunities for commercial de nationwide, the limited oppo d such ar's Garn-St Germain Act, an ye st la by ed id ov pr ts un co ac s as creation of unlimited ep st on ti la gu re de nt ue eq subs t NOW" accounts, involvemen er up ) "S le ab rv se re nd (a n io transact ing. em and its services is expand by thrifts with the Syst t have ue that most thrifts do not ye While it is certainly tr by e the threshold established reservable liabilities abov   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  at it is reasonable to expect th w, la 82 19 e th of 1 41 n io Sect ions s institutions and credit un ng vi sa of s er mb nu ng si increa n quirements as they broade re e rv se re to d se po ex me co will be me rvices for the public. (Let se t un co ac n io ct sa an tr their for ommittee, Mr. Chairman, bc Su is th d an u, yo nt me li mp again co ping Section 411.) your initiative in develo s will sting of reserves by thrift In my judgment, the po Congress r full Committee and the you if ly ke li re mo en ev s become Account Deregulation Act" ng ki ec Ch he "T -35 35 R. enact H. uished Chairman of your full introduced by the distingu Approval of that bill n. ai rm Ge St ve ti ta en es pr Committee, Re t deregulation process si po de e th te le mp co , st la would, at long al banks maining monopolies commerci re e th ay aw ng ri ea cl by S. al demand accounts. mhe U. ci er mm co ng ti ac tr at r fo enjoy an 3535 and looks forward to R. H. ts or pp su ly ng ro st League s. er in the next few week tt ma at th on y if st te to opportunity niversal" coverage for "u s it d an t Ac l ro nt Co ry The Moneta e facilities of the Fed th ed en op es ri to si po de ft non-member thri ements, of other than reserve requir es os rp pu ny ma System for  -4course.  titutions have found A growing number of savings ins  n and processing facilities the System's - heck collectio s. from other correspondent source ble ila ava se tho to or eri sup unions also use the Fed System dit cre and ons uti tit ins s Saving   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  cy transaction services, wire routinely for coin and curren n s, and Treasury tax and loa tie uri sec for ng epi eke saf transfer, account processing.  st in the Thus, thrifts have a vital intere  ct Banks regarding the policies adopted by the Distri of these services for all maintenance and development depositories.  on, savings And, under the 1980 legislati  to the discount windows of ess acc ory tut sta e hav ons instituti been ugh, to date, this use has the Fed System Banks -- tho discouraged in practice. credit unions so involved With savings institutions and ropriate the System, it is most app h wit ure fut the in and ay tod erve Act be modernized to Res l era Fed the t tha w vie in our ipation. The proposal to tic par g kin -ma icy pol e som assure Banks from nine to twelve ct tri Dis the of rds Boa enlarge the ld of a "Class D" category wou directors through creation accomplish this goal. s of suggestions about the detail We do, however, have a few s ilable to us at the time thi ava e mad as ft dra ve ati isl the leg testimony was being written: 1.  ociations and credit Unlike savings and loan ass  ks with -chartered mutual savings ban unions, traditional State theast and lly concentrated in the Nor era gen are nce ura ins FDIC cts. eral Reserve Bank Distri Fed or tes Sta all in nd not fou   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  5 for appointment for the There would be no one qualifying y half the Districts and, in savings bank 1%"slot" in approximatel such institutions is so small of ber num the , ers oth two or one among a handful of that directorships could circulate the dominant Conversely, savings banks constitute  individuals.  astern States and the rigid type of depository in certain Northe credit union division may, savings bank, savings and loan, and ings banks in those Districts. in effect, "under-represent" sav gest that the statutory Therefore, the U.S. League would sug ss D selections may be made language be revised so that the Cla es collectively, rather than from the three institutional typ from each type. rigidly specifying one director 2.  s and loan The definition chosen for a saving  ction 401 of the National institution director references "se Housing Act."  te; however, In most cases, this would be adequa  it is now possible for a Act n mai Ger t n-S Gar r's yea t las under r from the Federal Home rte cha l era fed a ing eiv rec k ban savings r it will retain FDIC insurance Loan Bank Board to choose whethe n nce-of-accounts (found in Sectio or switch to the FSLIC insura 401).  t the dozen or so It is not totally clear to us tha  o this unusual grouping of int g lin fal ks ban s ing sav l era fed titutions would "fit" any ins , red nsu C-i FDI but , red rte cha FHLBBin the proposal for Class D of the definitions spelled out n fters chose another definitio Directors. However, if the dra that appearing in Section in the National Housing Act --- any doubt would be 408(a)(1) [12 U.S.C. 1730a(a)(1)]   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -6be for a director's slot would removed and the potential itutions. assured for these few inst 3.  Class D Directorship The authorizing language for  specifies that:  be an officer, "No Class D director shall  tory kholder of any other deposi oc st or , ee oy pl em , or ct dire ry institution which to si po de of pe ty at th of institution except While we would agree that " t. en es pr re l al sh or ct the dire ong should be discouraged am ks oc rl te in or ct re di d an employee s, Reserve Bank directorship l ra de Fe of s se as cl t en the differ d. ding seems unduly rigi ol kh oc st y an t ns ai ag n io it the prohib g company stocks are in ld ho nk ba d an nk ba al Many commerci , kholders -- some of whom oc st of s nd sa ou th th wi publicly traded a valuable utives who could make ec ex ft ri th e ar t, ub do no Some of district Fed banks. ds ar bo e th to on ti bu ri cont ed so that de minimus id ov pr be to t gh ou y it il flexib not s of depositories do stockholdings in other type union institution or credit s ng vi sa a fy li ua sq di y automaticall n as a Class D Director. executive from selectio be nical adjustments may ch te r no mi w fe a y, ll na 4. Fi such as substituting w la ng ti is ex of ns io needed in other port 12 U.S.C. troductory sentence of in e th in e" in "n r fo "twelve" 301. in tions will be helpful es gg su e es th pe ho , I an Mr. Chairm le legislation. improving this worthwhi omes your interest in lc we ue ag Le S. U. e th , In conclusion Banks of the Federal ct ri st Di e th of ds ar broadening the the Bo   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ticipation by thrift industry Reserve System to include par l that they can make a meaningfu executives. We are confident ks king decisions of the Fed Ban contribution to the policy-ma g of our nation's central bankin and the overall functioning system. r initiative and hope that you ve ati isl leg s thi t por sup We move this bill forward in l wil ss gre Con the and tee Subcommit the months ahead. ty to present the views of the I appreciate this opportuni ward to your questions. U.S. League and look for  ###  WASHINGTON OFFICE  IONS UE of SAVINGS INSTITUT UNITED STATES LEKAG 637-8930 2) .20006 / (20 AVENUE, NW. / WASHINGTON, D.C   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  1709 NEW YOR  RELEASE  IMMEDIATE September 15, 1983 CONTACT: Katherine B. Ulman (202) 637-8930  modernized serve Act should be Re l ra de Fe e Th -C. D. , Washington the itution executives on st in s ng vi sa by n io at ip to include partic e System, s of the Federal Reserv nk ba ct ri st di e th of ds boar ional committee today. ss re ng Co a ld to n ee Gr Roy irs nance, and Urban Affa Fi g, in nk Ba e us Ho a re Testifying befo a new gislation to create le ed os op pr he "T , id subcommittee, Green sa institutions have had ft ri th at th es iz gn reco class of Fed directors the Federal Reserve of n io ct re di cy li po e th an increasing stake in of 1980. netary Control Act Mo e th of e ag ss pa e th System since itiative," he said. in e iv at sl gi le is th "We welcome director of the on gt in sh Wa d an t en id ce pres Green is executive vi ngs Institutions. U.S. League of Savi the large the boards of en d ul wo t" Ac s or ct The "Class D Dire e twelve directors. Th to ne ni om fr s nk ba e rv district Federal Rese vings banks, credit sa t en es pr re d ul wo ors additional three direct ey would serve 3-year Th . ns io at ci so as d loan unions, and savings an terms. ll be testimony that the bi s it in d te es gg su ue The U.S. Leag be made from the n ca ns io ct le se ry savings indust revised so that the e er than specifying on th ra ly ve ti ec ll co s type three institutional oid this change would av ng ki Ma . pe ty ch ea om director fr te in itutions which domina st in ry to si po de under-representation of n said. certain regions, Gree   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Statement of  MR. H. LEE BOATWRIGHT, III  on behalf of  BANKS the NATIONAL ASSOCIATION OF MUTUAL SAVINGS and the NATIONAL SAVINGS AND LOAN LEAGUE  before the CY SUBCOMMITTEE ON DOMESTIC MONETARY POLI U.S. House of Representatives  September 14, 1983   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  am the President Mr. Chairman, my name is Lee Boatwright and I of CentraBank if Baltimore, Maryland.  I am appearing here today on  al Savings Banks and the behalf of the National Association of Mutu National Savings and Loan League.  As you may have heard, our two  ating into one new trade associations are in the process of consolid ngs banks and savings and association which will represent both savi loans.  1983 and will The consolidation process began early in  Council of Savings culminate in the launching of the National Institutions on November 1, 1983.  testify in favor of I am pleased to have this opportunity to a new class of thrift Chairman Fauntroy's bill which would create s. directors at the twelve Federal Reserve Bank  We very much appreciate  and the prompt beginning your efforts in this area, Mr. Chairman, of this hearing process.  subject because We welcomed the invitation to testify on this ce to the long term we believe that it is of critical importan em and because we think efficiency of our depository services syst Reserve System to treat thrift that the time has come for the Federal ncial services process. institutions as equal partners in the fina can be of help to the subcommittee I hope that my appearance here today in the Federal Reserve System. with ce rien expe some had have I that in   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ident in charge of the I was from 1969 to 1974 the Senior Vice Pres of Richmond. Baltimore branch of the Federal Reserve Bank  thrift We believe that it is important and appropriate that the Fed system for institutions be represented in a formal way in three basic reasons.  es First of all, the Monetary Control Act plac  reserve purposes. us under the Fed's umbrella of authority for  At  were a small or nonthe time of the 1980 Act, transaction balances existent part of our deposit base.  That situation has changed and  s will increasingly there is every reason to believe that consumer unts as well as look to thrift institutions for transaction acco savings accounts.  , As thrifts build up their role in this activity  the Monetary Control Act and as the eight year phase-in provided in ing sterile reserves winds down, thrifts will be increasingly post become a more important with the Federal Reserve Bank, and will also part of the nation's payments system.  As these trends continue,  of thrifts in the Fed equity demands full and equal participation .•  system.  commercial banker's Prior to the 1980 Act the Fed system was a system.  the Fed banks Only Fed member banks posted reserves with  that member banks were Under that system it was not inappropriate the twelve Federal Reserve guaranteed representation on the boards of Banks.  savings banks, Since the reserve obligation will fall on  the more, it is, to say the savings and loan, and credit unions all be represented on these least, appropriate that these institutions Boards along with commercial bankers.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  bill is that as thrift The second reason for supporting the the transaction balances and institutions increase their share of tem, they will need greater their impOrtance to the payments sys ks and the banks will need Ban ct tri Dis the of es vic ser the access to new clientele. a better understanding of their  The legislation  poses very well in our opinion. before us today serves these pur  s legislation is that many The third reason for supporting thi ically state chartered savings of our member institutions, specif eral Home Loan Bank system and banks, are not members of the Fed rates erve Banks for borrowings the presently rely on the Federal Res Directors. on which are set by the Boards of  These savings banks  es. eral Reserve Banks for servic Fed the on y rel es, cas y man in o, als e the legislation introduced While we are here today to endors the few suggestions which we hope a e hav do we oy ntr Fau an irm Cha by . subcommittee will find constructive  "Class D" directors to be The legislation provides for three dit unions, savings and loans, appointed (one each) from the cre l is, n of savings bank in the bil and savings banks. The definitio h the bill's purpose. however, too limited to accomplis  As presently  ch lude those savings banks whi written, the definition would exc rter, those savings and loans convert from state to federal cha rtered bank charter, and newly cha s ing sav l era Fed to t ver con which Federal savings banks.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  the Federal Under authority granted by the Garn-St Germain Act, t de novo charter Home Loan Bank Board has recently granted the firs for a Federal Mutual Savings Bank.  The Board has also approved  s to federal savings many more changes of federal savings and loan old) and of course banks (an authority which is less than a year e to federal charters, many of our savings banks have changed from stat which Congress authorized in 1978.  This trend will not only continue  but very likely increase in the months ahead.  We would therefore  nitions which will respectfully urge the subcommittee to adopt defi we would be pleased accomodate the changes that are taking place and to provide draft language to your staff.  tation of terms of A second problem area has to do with the limi office for the Class D directors.  As drafted, the bill would limit  e years. the thrift directors to one full term of thre  It is our  y limit on the other understanding that there is no similar statutor does exist a policy three classes of directors, but rather there a preference that Class statement of the Board of Governors stating C directors be limited to two full terms.  It is our understanding  limit on Class A directors. that some of the banks have a self-imposed tations on terms be We suggest, therefore, that the issue of limi terms for everyone. left to the Board of Governors or set at two  ity to serve as The third problem area has to do with eligibil a Class D director.  be The bill provides that a direcotr must not  kholder" of any depository "an officer, director, employee or stoc h the director represents. institutions of a type other than that whic   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  the existing statutory This provision appears to have been taken from standard for Class C direcotrs.  Class C directors are, by law,  the boards. appointed —as the public interest representatives on  It  rmen of the boards is from this class that the chairmen and vice chai are selected by the Board of Governors.  The Class D directors, as  but rather are to be we read the bill, are not of this type at all representatives of the thrift industry.  We do not believe that the  to Class C. same prohibitions should be applied to them as  to eliminate We assume that the reason for this provision is of directors. any potential conflict of interest on the part  However,  the Class A directors, we are not aware of any similar restriction on a thrift and not be i.e., a commercial banker can own stock in banned from this position.  We suggest, therefore, that the word  stockholder be dropped from the bill.  We believe that the remaining  conflicts of representation. restriction will be sufficient to prevent  rtunity to raise a Mr. Chairman, I would like to take this oppo related issue not included in the legislation.  As you know, the  er of advisory committees Federal Reserve Board of Governors has a numb ons to the Board. which meet periodically and make recommendati ft Advisory Committee Several of our members have served on the Thri rding and worthwhile. and have found the experience both rewa  The  while some advisory committees point I want to raise here today is that sory committee is not. are established in law, the thrift advi  While  Volker will not continue we have no reason to think that Chairman record of the committee the committee, we do feel that the track ce. justifies giving it a statutory permanen  We respectfully urge   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -6-  this subcommittee to consider including language in its legislation to accompl.ish this purpose.  Conclusion In conclusion, Mr. Chairman, the National Association of Mutual Savings Banks and the National Savings and Loan League support the n legislation you have introduced to provide for thrift participatio in the operation of the Federal Reserve Banks.  I do want to make  clear that our support is based upon considerations of the role should of thrift institutions in the nation's financial system and of not be interpreted to mean that we are acquiescing to the role the Fed as a principal regulator of depository institutions.  That  e with is an issue which we and the Congress will have to grappl on when the Congress receives the report of the Bush task force agency restructuring.  Thank you, Mr. Chairman, for the opportunity to appear her, today.  I look forward to your questions.  /   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ,  STATEMENT OF RICK WIECZOREK, PRESIDENT D.C. CREDIT UNION LEAGUE ON BEHALF OF  ASSOCIATION, INC. THE CREDIT UNION NATIONAL BEFORE THE MONETARY POLICY SUBCOMMITTEE ON DOMESTIC OF THE NANCE AND URBAN AFFAIRS COMMITTEE ON BANKING, FI TIVES U.S. HOUSE OF REPRESENTA SEPTEMBER 15, 1983   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ,  Statement of Rick Wieczoreck, President D.C. Credit Union League Before the  ry Policy Subcommittee on Domestic Moneta September 15, 1983  Committee Members. Good Morning, Mr. Chairman and  My name is  the D.C. Credit Union League. Rick Wieczorek, President of behalf of the Credit Union I am appearing here today on CUNA represents more than . NA) (CU . INC on, ati oci Ass National 52 rtered credit unions through 19,000 state and federally cha member credit union leagues.  Collectively, these credit. .  lion Americans. unions serve more than 48 mil  to testify in support of I am happy to have this chance create a new class of credit Chairman Fauntroy's bill to 12 Federal Reserve Banks. the at ors ect dir ift thr and union representation for nearly a CUNA has called for broader e, posal reaffirms its importanc decade. Your legislative pro into to enact this recommendation s ort eff r you e com wel we and law.  1  e time has come for credit th at th an rm ai Ch . Mr e, ev We beli in a formal way in the Federal unions to be represented cy. nds of both equity and efficien Reserve System 'on the grou  t was passed in 1980, the Ac l ro nt Co ry ta ne Mo e th Before y to commercial banks. el rg la ed ng lo be em st Sy e rv Federal Rese gain ed to use commerical banks to Credit unions were requir rve's clearing and settlement se Re l ra de Fe e th to ss ce ac es rect access to these faciliti di ve ha ey th w No . es ti facili r financial depository, no he ot y an as s rm te me sa under the me token before 1980, sa e th By l. al sm or e rg la matter how,   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  er banks were required to post mb me e rv se Re l ra de Fe ly on This too has changed. Now s. nk ba d Fe e th th wi es reserv s rves against certain saving se re in ta in ma st mu ns io un credit nce credit unions have, Si . ts un co n ac io ct sa an tr d accounts an e mbers of the Federal Reserv me ng yi pa me co be , ct fe ef in .. e that they be extended the at ri op pr ap y rl ea cl 's it em Syst on -side commercial bankers g on al on ti ta en es pr re of e privileg e banks. the boards of the reserv  in that they are equal partners g in dg le ow kn ac to on ti di In ad g credit union members on in ac pl , em st Sy e rv se Re l the Federa l nks would improve the overal the boards of Reserve ba  2  payment system. efficiency of the nation's ions. unique financial institut  Credit unions are  to be Individually, they tend  ey hold more than $80 th ly ve ti ec ll co t bu es ri to small deposi vidually, they tend di In s. er mb me r ei th r fo ts billion in asse llective, they are co e iv at er op co a as t bu , to operate simply electronic network that d te ca ti is ph so a of rt pa becoming n al financial and informatio provides integrated nation services.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ting from direct access to fi ne be e ar ns io un it ed cr Already it union movement's ties to ed cr e th , me ti er Ov . es Fed servic and as this relation, ow gr ll wi em st Sy e rv se the Federal Re re banks will need to know mo ct ri st di e th , ps lo ve de ship credit unions operate. h ic wh in ys wa l ia ec sp e about th ly help the bank tailor on t no ll wi n io at rm fo in Having such nal needs of credit io at er op ar ul ic rt pa e th its services to tter to edit unions learn how be cr lp he so al ll wi it , ns unio . make use of those services  ple. Take borrowing, for exam  taken While credit unions have  d currency services an ng ri ea cl k ec ch s d' Fe e advantage of th borrow use of their ability to ch mu ke ma to t ye ve ha they ns There are many explanatio . ow nd wi nt ou sc di s d' Fe from the the are the restrictions that em th g on am t bu , is th r fo and terms of credit. We pe ty e th on se po im w no Reserve banks  3  in some measure on d se ba e ar ns io ct ri st re e believe that thes w ing of the needs of their ne nd ta rs de un of ck la s d' Fe the edit union representation cr ct re Di e. el nt ie cl n io un credit p and increase the ga n io at rm fo in is th ge id br would help vity in this area. amount of credit union acti   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  deral Reserve refine its Fe e th g in lp he to on ti In addi edit unions can help the cr , es ic rv se t en ym pa d an borrowing its other key responsibility -central bank fulfill an . conduct of monetary policy  Because of their close  ns and other major sponsors, io at or rp co th wi n io at li affi tioned to serve as early si po ly ue iq un e ar ns io credit un credit union to for on mm co -Un t no is It s. warning device t rike, for example, or a plan st a of ws ne e nc va ad have of an uld disrupt the economy co at th ts en ev r he ot or closing er Having a credit union memb . nk ba e rv se re a by ed area serv nks early access to ba d Fe e th ve gi d ul wo ds ar on their bo l to their policy-making ta vi is at th n io at rm fo in deliberations.  y e Board will not have an th at th t en id nf co ly te lu CUNA is abso each union people to serve in it ed cr g in nd fi ty ul ic ff di n representatives sit on io un it ed cr y ad re Al . ct distri For d by seven reserve banks. te ea cr ds ar bo ry so vi ad informal have been fortunate to I , ce an st in r fo s, ar ye the past 3  mmittee of the bank in Co ry so vi Ad ns io at er Op e th serve on serve banks have seen re e th of l al t no r, ve we Ho Richmond. bill, Mr. Chairman, ur Yo . ls ne pa ry so vi ad h uc -s fit to create the benefit of the Federal to n io at tu si is th dy me re d ul wo d the nation as a whole. an ns io un it ed cr , em st Sy e Reserv  tions that I hope this SubIn closing I have two sugges your e is simply that you expand On . er id ns co ll wi e te it comm entation on the boards of es pr re r de oa br g in ir qu re al propos ude the boards of the cl in to s nk Ba e rv se Re l ra de the 12 Fe . This would enlarge ll we as es ch an br 25 s e' rv se Federal Re ally rewarding exchange 'and tu mu a r fo s ie it un rt po op e th ns rtant role that credit unio po im ly ng si ea cr in e th re co unders on's financial community. and thrifts play in the nati   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  and rman is both precautionary ai Ch . Mr , on ti es gg su nd co Our se ently drafted, it provides es pr is ll bi ur yo As e. iv substant lected -- one each -se be to s or ct re di D" ss la for three "C s and savings banks. an lo d an s ng vi sa , ns io un from the credit s ement that all of the variou ir qu re e th at th e ev li be We to represented is important be ry st du in ft ri th e th of sectors wever, there may not be Ho . al os op pr ur yo of st ru the basis th cts and me Federal Reserve distri so in s nk ba s ng vi sa al tu mu r one of the new director fo e at id nd ca le ib ig el thus no Federal Reserve will, as a e th at th ct pe ex We positions.  5  be given greater flexibility in result, recommend that it be among eligible thrift represenselecting new directors from t such flexibility is not abused tha n tai cer e Mak To s. ive tat ry are fairly represented ust ind the of s tor sec all t and tha we urge you to require by , tem Sys e erv Res l era Fed before the one l Reserve district at least statute that in every Federa   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ected from the credit union sel be ors ect dir new the of industry.  to testify. Thank you for the opportunity  CUNA looks forward  p enact this legislation. hel to you h wit g kin wor to  • 4  6  Removal Notice The item(s) identified below have been removed in accordance with FRASER's policy on handling sensitive information in digitization projects due to copyright protections.  Citation Information Document Type: News release Citations:  Number of Pages Removed: 2  Credit Union National Association, Inc. "CUNA Favors Fauntroy Bill To Create New Fed Directors." September 14, 1983.  Federal Reserve Bank of St. Louis  https://fraser.stlouisfed.org   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  National Association of Federal Credit Unions  P.O. Box 3769 Washington, DC 20007  703/522-4770  STATEMENT OF JOHN J. HUTCHINSON PRESIDENT OF DIT UNIONS THE NATIONAL ASSOCIATION OF FEDERAL CRE BEFORE POLICY THE SUBCOMMITTEE ON DOMESTIC MONETARY OF THE AN AFFAIRS COMMITTEE ON BANKING, FINANCE AND URB U.S. HOUSE OF REPRESENTATIVES REGARDING THE CLASS D DIRECTORS ACT OF 1983  SEPTEMBER 15, 1983  , Domestic Monetary Policy on ee tt mi om bc Su the of s er mb Mr. Chairman and me J. Hutchinson, President n Joh am I g. nin mor s thi e her be it is a pleasure for me to r of Unions (NAFCU) and manage dit Cre l era Fed of on ati oci Ass of the National ticut. The National nec Con s, ck Lo r dso Win in n io Un Credit Hamilton Standard Federal the only national organization is ) CU AF (N ns io Un dit Cre l Association of Federa e Federal credit unions. Ther 's ion nat our of sts ere int the exclusively representing hout the nation serving the oug thr ons uni dit cre l era Fed are approximately 11,400 of more than 26 million members. borrowing and saving needs   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  OPENING REMARKS  y in ear before you and to testif app to ty uni ort opp the es iat rec NAFCU app Federal This Association and the 3." 198 of t Ac ors ect Dir D support of the "Class eration the legislation under consid in st ere int al vit a ve ha ent credit unions we repres for l Reserve Act to provide era Fed the d en am d ul wo It by the Subcommittee today. o would represent credit wh s son per of ed os mp co ors an additional class of direct Federal each of the twelve for ons ati • oci ass n loa d an s ing unions, savings banks, and sav on trict Banks, this legislati Dis the of rds boa the g in nd pa ex Reserve District Banks. By a unique understanding ve ha o wh ls dua ivi ind by on entati would assure broadened repres ancial services industry fin the of ts en on mp co ed liz s specia of the important role variou ent. onomic growth and developm ec 's ion nat our ng ini erm det play in  IT UNIONS PURPOSE OF FEDERAL CRED  l credit unions are chartered era Fed , ow kn ee tt mi om bc As the members of this Su ent purposes ll means credit for provid sma of ple peo to ble ila ava "••• to make more ize the , thereby helping to stabil dit cre ve ati per coo of em st sy through a national  Union .C. 1751). The Federal Credit U.S (12 " tes Sta ted Uni the of credit structure groups l credit union shall be limited to era Fed a in p shi ber mem t tha Act stipulates l, ation, or to groups within a wel oci ass or n tio upa occ of d bon having a common credit Accordingly, every Federal ct. tri dis al rur or ity mun com , defined neighborhood ving a limited field of member ser on, ati oci ass ed own ermb me ve, union is a cooperati mote a dual statutory mandate to pro has on uni dit cre l era Fed ry ship. In addition, eve provident or o creating a source of credit for als le whi s ber mem its ng amo thrift 2). productive purposes (12 U.S.C. 175  50 YEARS OF SERVICE FEDERAL CREDIT UNIONS MARK  's traditional financial institutions ion nat our of h eac , gin ori of e At their tim lthy le a necessary and generally hea Whi on. cti fun ic cif spe a m for per was designed to s and loan associations has ing sav and ks ban , ons uni dit cre n wee interrelationship bet pause and reflect upon lly ona asi occ to us for l pfu hel is it emerged over the years, signing ebrate the 50th anniversary of the cel to e par pre we as ay, Tod y. our histor s of all Federal credit unions are ber mem the , Act on Uni dit Cre l of the Federa unions continue to retain their dit cre l era t Fed tha t fac the of ud justifiably pro ion. e 50 years of growth and evolut pit des ce, pla ket mar ial anc fin the in unique identity f .  d by Congress to offer their ize hor aut n bee e hav ons uni dit cre In recent years credit unions are now able ugh tho n Eve es. vic ser l ona iti add members a number of residential vices as other institutions, such as ser of ds e kin sam the of y man e vid to pro only ds, they were authorized to do so car dit cre and , dit cre of es lin , mortgages g. ancial institutions were not fulfillin fin er oth t tha ds nee had s ber mem because their of membership, credit unions do ld fie d ite lim s on' uni dit cre the of However, because customers. Moreover, the small ial ent pot for ce pla ket mar n ope not compete in the   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ted the majority of them from implementing size of most credit unions has preven of 87% of all credit unions have assets their full range of powers, since more than e it possible for these smaller credit less than $5 million.. Expanded powers mak of consumers greater opportunities to unions to grow and bring to a larger percent save.  the larger credit unions to These increased powers have certainly helped  financial marketplace. better serve their members' needs in today's  the various types of financial It is important to recognize that each of r to meet particular credit needs institutions performs a specific function in orde some activities do overlap, the primary within the financial marketplace. Although functions of each remain different.  The recently expanded powers of credit unions  ices which may enhance the capacity relate almost exclusively to the types of serv of credit unions to meet those needs.  ECTORS ACT OF 1983" NAFCU'S SUPPORT OF THE "CLASS D DIR  if enacted into law, expand from The "Class D Directors Act of 1983" would, • serve on the boards of directors of the nine to twelve the number of individuals who s er existing law, the District Bank director twelve Federal Reserve District Banks. Und   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ons each. are divided into three classes of three pers  Class A directors are repre-  in the district and usually are bankers. ks ban l cia mer com ber mem the of es sentativ responsible for reflecting the interests Class B directors and Class C directors are ices, labor and consumers. of agriculture, commerce, industry, serv  Class A and  banks in the district; Class C directors are Class B directors are elected by member The majority of District Bank branch appointed by the Board of Governors. Bank's head office directors; the remainder rict Dist the by ted oin app are s ctor dire ors. are appointed by the Board of Govern  ld establish a new "class" of wou g nin mor s thi n tio era sid con er The proposal und e the Board of Governors. On by ted oin app be to , ors ect dir D three directors, Class lly insured credit unions, one era Fed of sts ere int the ent res rep ld Class D director wou , one would represent the and ks, ban s ing sav ual mut of sts would represent the intere assocations. interests of savings and loan  vided many services to both the pro e hav s nk Ba ct tri Dis the , Historically y In fact, to a large extent the . lic pub l era gen the as l wel as financial community the Federal Reserve System of s tie ili sib pon res ry iso erv sup exercise many of the orting on economic activity rep by t, par in , icy pol ry ta ne mo while helping to frame in their regions.  I, Public Law 96-221) tle (Ti " 80 19 of t Ac l tro Con y ar Enactment of the "Monet credit r linkage between the Federal ate gre n eve an to led has 80 on March 31, 19 This law stem than existed previously. Sy e rv se Re l era Fed the and union community ationFederal Reserve Board's rel the of t en em nc ha en an in ed has, in effect, result dit time, individual Federal cre st fir the r Fo y. it un mm co on ship with the credit uni .' . In em st Sy e rv se Re eral Fed the h wit es erv res e ril ste t unions are required to pos from the count and borrowing privileges dis to ed itl ent are ons uni return, credit wever, there has to date Ho ks. ban er mb me are as ow nd Federal Reserve discount wi icies, mulating Federal Reserve pol for in ons uni dit cre l era Fed been no role for any ve serves as a member of ati ent res rep on uni dit cre gle therefore, not a sin   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  nk Board. Federal Reserve District Ba s U's support for the principle FC NA s res exp to d ase ple Chairman Fauntroy, I am In fact, we have repeatedly ed. bas is " 83 19 of t Ac ors ect upon which the "Class D Dir onetary Control Act of 1980." "M the of e sag pas ce sin ion advocated such act  after recall that on April 1, 1980, the day Members of this Subcommittee may irman of Control Act into law, the then Cha ry eta Mon the ned sig ter Car President Henry e and Urban Affairs, Representative anc Fin g, kin Ban on tee mit Com the House Cavanaugh Parren Mitchell (D-MD) and John ves ati ent res Rep by ned joi was Reuss (D-WO, t tion Act" (H.R. 7001). Withou iza ern Mod e erv Res al der "Fe the ng (D-NB) in introduci ld bring to the attention of wou I e, tim s thi at 1 700 . H.R of addressing the merits Reserve Modernization Act," al der "Fe the t tha t fac the s ber the Subcommittee mem s brought intended to complement the reform was ss, gre Con h 96t the in d uce introd acity as trol Act. At that time in my cap Con ry eta Mon the of ent ctm ena about by of Federal Credit Unions I wrote to on ati oci Ass al ion Nat the of ent the Presid Chairman Reuss:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Boards II... we believe it is imperative that a director on each of the Accordingly, the National . ons uni dit cre l era Fed of sts ere int represent the to urges you and your Committee Association of Federal Credit Unions eral credit unions will be repreamend H.R. 7001 to stipulate that Fed twelve Federal Reserve Banks. sented on the Boards of each of the that the interests and concerns of Only in this way may we guarantee ed ... will be considered and represent s ber mem on uni dit cre l dua ivi ind ... ecting domestic monetary policy by a voting delegate when matters aff are considered by these bodies ..."  NAFCU's views on this subject w, kno ff sta r you and you as an, irm Mr. Cha D ocate legislation such as the "Class have not waivered. We continue to adv adoption of such a measure in for led cal U FC NA t, fac In 3." Directors Act of 198 Committee on May 4, 1983. testimony before the Senate Banking  representation on the District Banks' on uni dit cre l era Fed t tha e iev bel We appropriate. A Federal credit union and ary ess h nec bot is ors ect dir boards of a Bank would, I believe, contribute to ct tri h Dis eac of rd boa the on ve representati dit unions and credit union operacre of ure nat que uni the of g din tan better unders  al tions at the level of the twelve District Banks and also throughout the Feder Reserve System in general.  On more than one occasion in recent years, problems  treat Federal have arisen because7,the Federal Reserve System has attempted to credit union credit unions as they treat banks -- overlooking the reality that the commercial structure, operations and mission are vastly different from those of banks.  sal such as Accordingly, I am of the strong opinion that adoption of a propo  the course of the "Class D Directors Act of 1983" would greatly assist in enhancing ict Banks thinking which influences monetary policy, by assuring that the Distr receive sufficient input from credit unions.  RECOMMENDATIONS FOR AMENDMENTS TO THE "CLASS D DIRECTORS ACT OF 1983"  would like to offer I do, however, have four specific recommendations which I to the Subcommittee.  I believe adoption of these recommendations would help  assure the prompt realization of the objectives of this bill.  fies that Class D First, as drafted, the "Class D Directors Act of 1983" speci dations made by the memdirectors shall be appointed by the Board from recommen bers.  followed in the This procedure closely resembles that which is presently  appointment of Class C directors.  I believe the stated goal of the legislation "to  for individuals who have a provide broadened representation on the District Banks may be better realized if unique understanding" of the institutions they represent class of institution they repreClass D directors were elected by electors from the sent in each of the twelve districts.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  member banks in the district.  Class A and Class B directors are elected by  A procedure similar to that presently used for the  ed, would result in more election of Class A and Class B directors, if adopt equitable representation.  cted by electors from the Second, if our proposal that Class D directors be ele pted, I would urge that the criteria for class of institution they represent is not ado As drafted, the "Class D Directors ed. ifi mod be ctor dire D ss Cla a as nt tme oin app l be appointed by the Board from shal s ctor dire D ss Cla t tha s ifie spec 3" Act of 198 recommendations made by the members. what ambiguous.  The term "members" appears to be some-  ctor seats on the Since the purpose of establishing Class D dire  adened representation by individuals twelve District Bank boards is to provide bro itutions they represent, it would seem who have a unique understanding of the inst by those Class D director seats nominated for s ate did can e hav to ve cti odu rpr nte cou to ions whose interests they are nominated itut inst the by n tha her rat ks ban ber mem ctors elected by electors from the dire D ss Cla see to er pref ld wou We . ent repres a logical alternative would be to have r, eve How . ent res rep y the ion itut inst class of nt of Class D directors based upon the Board of Governors make their appointme n itution to be represented, rather tha nominations submitted by the class of inst nominations submitted by member banks.  ee Member banks at present elect the thr  in each district. Class A and three Class B directors  Member banks also nominate  rict. Class C director seats in each dist the candidates for appointment to the three are to those institutions whose interests for e rabl desi ly high be ld wou it eve I beli h district to have some role in the eac in s ctor dire D ss Cla the by ed ent res be rep r number to fill those positions. thei ng amo m fro als vidu indi d ifie qual of selection viduals who do, in fact, understand indi of tion elec the re assu lly era gen This should . Accordingly, the Subcommittee ent res rep y the ions itut inst the of s ect the unique asp isely ndment or through report language, prec may wish to clarify, either through ame   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ointment as Class D directors. app for s ate did can te ina nom uld sho who  contained in the "Class D Directors Act ge gua lan t tha ned cer con am I rd, Thi of cer, director, employee or stockholder offi an "... ibit proh ld wou ch whi of 1983"  h the director shall repreany other depository institution except of that type" whic sent from service as a Class D director.  While I fully agree that we need to  serve as Class D directors, I maintain the highest of standards for individuals who a_ a  question the need for such a blanket prohibition.  Perhaps this section of the bill  nal investments by Class D could be reviewed with an eye toward permitting nomi they represent. directors in types of institutions other than those  h I just addressed: Fourth, our final concern is related to that whic  the  "an officer, director, employee or prohibition against Class D directors serving as stockholder" of any other depository institution.  As I mentioned to you earlier,  public but rather limited groups Federal credit unions do not serve the general or groups within a well-defined having a common bond of occupation or association, neighborhood, community or rural district.  The fact of the matter is that certain  ly includes officers, directors, credit unions exist whose common bond explicit itutions. employees and stockholders of other depository inst  To impose a blanket  as Class D directors, may in ban on members of such credit unions from serving m individuals who possess a truly fact, deprive the District Banks of guidance fro II... unique understanding of ... economic growth and development."  This is an issue  that we believe merits further review.  UNION EXPERIENCE" THE IMPORTANCE OF "TESTED FEDERAL CREDIT  Fauntroy, NAFCU's strong support I would like to add at this point, Chairman s Act" which stipulates in a very of language contained in the "Class D Director clear and unambiguous way that:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  financial experience of all Class D directors ... shall possess tested ry institution." the type appropriate to their class of deposito  II ."  lic Law 95-630 in 1978, we During discussions of the enactment of Pub d Federal credit union experience." expressed a preference for people of "teste al Credit Union Administration Board, Although that act, which created the Nation l holds that belief. did not contain that requirement, NAFCU stil  The inclusion  chosen to serve should have previous experin this act of a requirement that those consistent with our stated position. ience in the institution they represent is  CONCLUSION  point out that Federal Reserve to like ld wou I an, irm Cha Mr. g, sin clo Before ony before this Subcommittee on May 15, Board Chairman Paul A. Volcker, in testim today may merit consideration. you ore bef t tha as h suc ion slat legi t 1980 suggested tha : In his testimony, Chairman Volcker stated  II... we do believe that consideration also needs to be given to the par on the boards of the Federal ions itut inst l ncia fina k ban non of on pati tici ipate in the election of directors, tic par uld sho y the r the whe ks; Ban e Reserv ... attention should be given and if so, how this should be accomplished the Federal Reserve Banks by to the participation in the operations of ntain reserves with the Federal mai will t tha ions itut l inst ncia fina k nonban on the boards of directors of Reserve, as well as their representation t those boards should be expanded those banks ... we continue to feel tha ader representative segment of the in size in order to accommodate a bro public as a whole."  ation, Mr. Chairman. NAFCU concurs with that recommend  We believe that the  ifications we have suggested today, mod the h wit 3," 198 of Act ors ect "Class D Dir the continued cooperation of the dge ple I ly, ing ord Acc l. goa t tha would achieve sure. dit Unions as you consider this mea National Association of Federal Cre   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  germain to this bill, I would like to Chairman Fauntroy, although it is not p Subcommittee for your cosponsorshi and this of s ber mem er oth the and you thank  signed into support of House Joint Resolution (H.J. Res.) 139 which the President law (P.L. 98-71) on August 11.  This Public Law designates the week of June 24,  approach the 1984 as "Federal Credit Union Week" and is also appropriate as we Act. 50th anniversary of the signing of the Federal Credit Union  ng to present the Thank you for the opportunity to appear before you this morni view of the National Association of Federal Credit Unions. respond to any questions.  ,   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  I would be happy to  AMERICAN BANKERS ASSOCIATION  1120 Connecticut Avenue. NW Washington. D.C. 20036  EXECUTIVE DIRECTOR GOVERNMENT RELATIONS GerAlci M Lowrie 202/467-4097  September 21, 1983  The Honorable Walter E. Fauntroy Chairman, Subcommittee on Domestic . Monetary Policy U.S. House of Representatives H2-109, Annex No. 2 Washington, DC 20515 Dear Mr. Chairman: on's views on your proposal to I am writing to convey to you our Associati erve bank directors as indicated to me create an additional class of Federal Res in your letter of August 31, 1983. ment Relations Council on September ern Gov our by d ere sid con was al pos pro s Thi not be enacted into law. 14, 1983. The Council believes it should the Board of Governors "to represent Class C directors are currently elected by consideration to the interests of ive lus exc not but due h wit to public labor, and consumers" (12 U.S.C. agriculture, coffcicrce, industry, services, as to include non-member financial 302). This language is broad enough so gle out specific types of institutions institutions. There is no reason to sin such a director should be to of ns tio ica lif qua the , her Rat e. dat man under this serve the broad public interest. Act of 1980, many non-member Since the passage of the Monetary Control l Reserve's services. It is our institutions have begun to use the Federa ks have set up advisory committees understanding that the Federal Reserve Ban We titutions to enhance this process. with representation among non-member ins e on to the status of Federal Reserv see no reason to elevate this representati public interest oriented concerns. Director with its inherently broader, r proposal would give specific We are particularly concerned that you but not to non-member banks. If the representation to thrift institutions te class of directors for non-member Congress does decide to create a separa oint more than one director for each app to d nee no is re the , ons uti tit ins ors appointed to the twelve Federal Reserve Bank. Among the direct that there is equal representation ure ass uld sho rd Boa the ks, ban ct tri dis loans, mutual savings banks, and credit among non-member banks, savings and unions. I hope these comments are helpful. Sincerely,/ , . - L' .. '-   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Gerald M. Lowrie  Resident  JAMES D. HERRINGTON, Br.,ard Chairman Coldwater Natio!la' Bank Coldwater, Kansat 67029   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  r_  First Vice Resident PAUL H. BRINGGOLD, Resident First National Bank Cannon Falls, Minnesota 55009  Second Vice President A J (JACK) KING, President Valley Bank of Kalispell Kalispell, Montana 59901  Trustee( JAMES R. TAYLOR, President/CEO McKeesport National Bank McKeesport, Pennsylvania 15132  GTON  WASHIN I I OFFICE n epen ent BANKERS ASSOCIATION OF AMERICA  HINGTON, D.C.20036 202/332-8980 1625 MASSACHUSETTS AVENUE N.W. - SUITE 202. WAS  September 21, 1983  oy, Chairman Honorable Walter E. Fauntr netary Policy Subcommittee on Domestic Mo H2-109, Annex No. 2 Washington, D.C. 20515 Dear Chairman Fauntroy: is ciation of America (IBAA) so As s er nk Ba t en nd pe de In The 68, for our views on H.R. 38 t es qu re ur yo to d on sp re ich pleased to ." This legislation, wh 83 19 of t Ac s or ct re Di D the "Class uld establish a new wo , th 13 r be em pt Se on ed ors, you introduc e District Bank Direct rv se Re l ra de Fe of s as cl three-member rnors, and respectively ve Go of d ar Bo e th by ed at ngs to be design savings banks, and savi , ns io un it ed cr d re su in representing and loan institutions. commercial banks--that of ty ri jo ma e th at th ew It is our vi member banks--are not e rv se Re l ra de Fe nno d, is, state-chartere rectors. strict Bank Boards of Di Di on d te en es pr re ly te adequa a t seem justifiable absent no es do 68 38 R. H. r, he Furt for' the purpose and criteria in ge an ch cy li po l ta en am fund Congress is prepared e th ss le Un s. ip sh or ct District Bank Dire trimental to the de be d ul wo ll bi e th , ge to make such a chan Therefore, the IBAA must s. er nk y ba it un mm co of s st re inte this proposal. express its objection to brethren attempting to ry to si po de r ou e se to It is ironic e deral Reserve System whil Fe e th in le ro r ei th expand d-like the imposition of any Fe to g in ct je ob ly us eo an simult in the s, such as is proposed rm te nt le va ui eq on , on regulati tion. This seems la gu re de t uc od pr ry to si Treasury bill for depo ong those financial am d en tr g in ow gr a of to be part and parcel ek to al banking sphere who se ci er mm co e th e id ts ou r entities ities while shirking ou or th au d an ts gh ri r ou e to appropriat Until Congress is ready s. nt ai tr ns co d an es ti li responsibi onbanks", the need for "n of n io at er if ol pr e what deal with th , and the question of at de si t se as 's nk ba of e IBAA deregulation becomes meaningless, th n io at ne li t de if hr /t nk ba point the rsions into banking's t the must oppose further incu R. 3868 which would pu H. as ch su e on ly ar ul ic sphere--part greater disadvantage. at s nk ba al ci er mm co majority of   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  2. e association for community The IBAA is the national trad ers ip of approximately 7,000 memb banks. Its current membersh mber ) state-chartered, non-Fed me consists of about 4,650 (66% banking sphere as a whole, banks. Within the commercial tion's 14,450 commercial banks approximately 8,850 of the Na in this category. (61% of the total) fall with s have no present say in As you are aware, these bank s. The three Class A nk Ba ct ri st Di e th of ds ar Bo selecting the by and be representative of the Directors "shall be chosen ctors 302). The three Class B Dire C US 2 (1 s" nk ba ng di ol kh oc st ding banks to represent the ol kh oc st by d te ec el so al e ar labor, mmerce, industry, services, co e, ur lt cu ri ag of s st re te in by s C Directors are designated as Cl e re th e Th s. er um ns co and rests as s to represent the same inte or rn ve Go of d ar Bo s d' Fe e th ass B or statute (12 USC 303), no Cl By B. s as Cl r fo ed st li e ar r, director, employee, or ce fi of an be y ma or ct re Di C stockholder of any bank. r of H.R. 3868 incorrectly Proponents testifying in favo ct Bank sing an inequity of Distri es dr re as it y ra rt po to ht soug al banks and other insured ci er mm co n ee tw be on ti ta en es repr e preceding review of the thre e th as r, ve we Ho . es ri to si depo t present distinction does no e th s, te ca di in s se as cl or Direct ding, Fed-member commercial ol kh oc st n ee tw be t bu e, er lie th sitories; including the po de d re su in r he ot l al d an banks are ineligible to select or o wh s nk ba al ci er mm co of majority ctors. serve as District Bank Dire aces two related issues pl 68 38 R. H. of on ti uc od tr The in t, is it advisable to rs Fi . ee tt mi om bc Su e th re fo y directly be e District Banks, thereb th of s or ct re Di of er mb nu e increase th proportionate influence d an r we po ng ti vo e th r he rt ee diluting fu Second, if the Subcommitt s? nk ba ng di ol kh oc st , er of Fed-memb affirmative, what nexus e th in on ti es qu g in ed ec pr e decides th deral Reserve System is of Fe e th d an ty ti en ss ne si bu between a y entitlement to Director if st ju to ty li ia nt ta bs su sufficient seats? IBAA believes that none , on ti es qu nd co se is th to In regard 68 in ed by proponents of H.R. 38 of the justifications rais lf to justify a new se it to un nt ie ic ff su is y their testimon ercial banks now lacking mm co 0 85 8, e th if ly ar ul Class D; partic inate e to continue in that subord adequate representation ar role. To wit-not appear to be sufficient -Reserve requirements would s unrepresented commercial bank y tl en es Pr n. io at ic if st ju the heart serves, and still comprise re d Fe l ia nt ta bs su in ta main depositories t as witnesses for the Ye . em st sy ts en ym pa e th of ed in testimony, most of tt mi ad 68 38 R. H. om fr t who would benefi ial any, much less substant st po to t ye ve ha s er mb me their e of the phase-in of thes n io at er op e th to e du , es rv rese   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  3. Further, requirements and interrelated statutory exemptions. Congress is much of their testimony seems to presuppose that r members to about to enact legislation which will permit thei to establish solicit the entire universe of business entities legislation interest-bearing commercial checking account. That and could has yet to be the subject of Congressional hearings and soundness, result in major income losses, undermined safety banking sector. and competitive inequities for the commercial • on Therefore, to justify this new Directors' class proposals is, insubstantial reserves and unreviewed legislative at best, premature. of these -Access to the discount window is, for most idity. institutions, a secondary source of emergency liqu the Federal Home Savings and loan institutions have access to tral Liquidity Loan Bank, and credit unions to the NCUA Cen s is available to Facility; neither of these liquidity source is sufficient commercial banks. If access to the window 50 justification for a Directors' class, then the 8,8 primary liquidity state-chartered banks who rely on it as their source surely have first claim. is a -The availability of Federal reserve services ons as a result of benefit which has accrued to these instituti ive to traditional 1980 legislation. It offers -them an alternat atisfied with the correspondent relationships. If they are diss the Fed does not quality and pricing of these services, and to seek the same respond to their input, then they are free e in a competitive redress as any other consumer of a servic economy--to take their business elsewhere. actions is a -Bearing the impact of Fed monetary policy utions, as well as the condition common to all depository instit n industries--such whole of American business (although certai re particularly as homebuilding, autos, and agriculture--a B and C Director vulnerable). It would appear that the Class t this common concern classes are already constituted to reflec ositories are deemed of the business community. However, if dep entation in this to have a particular unmet need for repres insured depositories regard, the possibility of authorizing all s could be explored by for eligibility to serve in these classe will propose that the Subcommittee. (Apparently, the Fed as eligible to serve as thrifts and credit unions be designated eligibility would have Class C directors. Any such opening of eal of the present to be accompanied, in our view, by rep vice in this capacity.) prohibition on commercial bankers' ser depositories -The need for greater input by nonmember etary policy functions, into District Bank operational and mon means short of a new Director if substantiated, could be met by lve District banks now class. We note that seven of the twe and that several of the maintain thrift advisory committees,  4. ch committees could Su . em th on ed rv d se ha witnesses last week sitories which are not Fed po d de re su in l al to the be opened y requirement for each of or ut at a st de ma d an members, ize a study of how or th d au ul co ss re ng e Co th eds, and District banks. Or presently meeting the ne e ar s nk ba ct ri st Di well the bers, and thereafter take em nm no of t, pu in e th heeding to cure any deficiencies. on ti ac e iv at sl gi le e appropriat servations mpelled to respond to ob co el fe we g, in os cl In H.R. 3868 to the effect that on gs in ar he ur yo ng made duri of electing Fed ce oi ch a ve ha s nk ba al ci er stock state-chartered comm rchase of District Bank pu e th , ow kn u yo As ion membership. s for which an institut nd fu of n io rs ve di a does require interest. If the of te ra et rk ma a an th ble receives less is costly option availa th ke ma to is re si de 's erve Subcommittee which would at least pres on si ci de a is at th fts and to thrifts, r, to propose that thri ve we Ho . ty ui eq of e t the the semblanc nk Directorships withou Ba ct ri st Di e ev hi ac ns ercial credit unio maintaining it for comm e il wh t, en em ir qu re stockholding . Of course, the ir fa un y gl in ed ce ex be and banks, would opening up an electoral at th e iz gn co re st mu in Subcommittee positories must result de r be em nm no r fo le ro Directorship shareholder requirement. n ow r ei g th in on ti es qu member banks do of this legislation, we ve ti or pp su be ot nn ca as While we of a continuing dialogue y it il ib ss po e th en op wish to leave cise a greater voice in er ex y ma es ri to si po de r to how nonmembe ions. Federal Reserve operat Sincerely, •   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  e James D. Herrington, President  cc:  bcommittee; All members of the Su Wylie; Rep. St Germain, Rep. ary William Wiles, Secret deral Reserve Board of Governors, Fe  OPENING STATEMENT OF THE HONORABLE WALTER E. FAUNTROY CHAIRMAN, SUBCOMMITTEE ON DOMESTIC MONETARY POLICY COMMI1TEE ON BANKING, FINANCE AND URBAN AFFAIRS at Hearings on ESTABLISHING A NEW CLASS OF DIRECTORS FOR FEDERAL RESERVE DISTRICT BANKS Thursday, September 15, 1983 -- 10:00 A.M. 2220 Rayburn House Office Building, Washington, D.C. **********  The Subcommittee will come to order. operations of Today, we hold hearings on an issue of importance to the al Reserve System the Federal Reserve System. As the Members know, the Feder Board of is composed of 12 Federal Reserve District Banks in addition to the h Banks Governors here in Washington. These District Banks and their Branc such as handle the day-to-day responsibilities of the Federal Reserve System g as the check-clearing, providing currency to financial institutions, actin tutions, and Treasury Department's fiscal agency, regulating financial insti In addition, the other services to financial institutions and to the public. Federal Open Presidents of the District Banks participate in meetings of the and needs Market Committee, bringing the Districts' economic conditions District Banks before that body's deliberations on monetary policy. Thus, the ions and the play a unique role as intermediaries between national policy decis country. people and financial institutions of the different regions of the e The Boards of Directors for these District Banks reflect this uniqu District Banks. role. At present, there are three classes of Directors at the banks of Three Class A Directors are elected by and represent the commercial B the District who hold stock in the Federal Reserve System. Three Class sent the directors are also elected by the stockholding member banks to repre rce, general public, and specifically the interests of agriculture, comme tors industry, services, labor, and consumers. Finally, three Class C direc The Chairman are appointed by the Board of Governors to represent the public. and Deputy Chairman are selected from the Class C Directors. however, This system has worked well. The Monetary Control Act of 1980, iations, mutual created an anomaly. Under that Act, savings and loan assoc ew of the savings banks, and credit unions were brought within the purvi reserve requirements. Federal Reserve System through the adoption of universal access to Federal These financial institutions were also granted direct , and provision of Reserve services such as check clearing, wire-transfers provided for them on currency and coin. Yet, no specific representation was the Board of Directors of the District Banks. the best way I believe that this situation should be rectified, and that the savings to do this is to establish a new class of Directors to represent the Federal Reserve institutions and credit unions who can now participate in of three System. These new Class D Directors would be composed credit unions, representatives -- one each from the mutual savings banks, the terms. and the savings and loan associations -- serving staggered three-year made They would be appointed by the Board of Governors from recommendations from each class of depository institutions. of The hearing today will explore whether the resulting representation s to the thrift institutions on District Banks would facilitate their acces policies and facilities of the Federal Reserve System, and whether the proposed solution of Class D Directors is necessary and appropriate along with ct the implications of such a proposal upon the thinking that affects the condu of monetary policy. Our witnesses include: Roy G. Green, Executive Vice President of the U.S. League of Savings Associations; H. Lee Boatwright, III, President of CentraBank in Baltimore, Maryland, testifying on behalf of the National Association of Mutual Savings Banks; Rick Wieczorek, President of the D.C. Credit Union League, testifying on behalf of the Credit Union National Association; and John H. Hutchinson, Manager of the Hamilton Standard Federal Credit Union and President of the National Association of Federal Credit Unions. The American Bankers Association and Independent Bankers Association of America will be submitting written statements later for inclusion in the record.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  STATEMENT OF ROY G. GREEN BEFORE THE SUBCOMMITTEE ON DOMESTIC MONETARY POLICY HOUSE COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS  September 15, 1983  MR. CHAIRMAN:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  My name is Roy G. Green of Washington, D.C.  T  am Executive  ngs Vice President of the United States League of Savi Institutions*. testimony in The U.S. League is pleased to present this Directors Act". support of the concept embodied in the "Class D  formerly the U.S. *The U.S. League of Savings Institutions, of 3,500 League of Savings Associations, has a membership 730 the companies representing over 99% of the assets of ip includes billion savings and loan business. League membersh artered, stock all types of associations -- Federal and state-ch s have joined and mutual. Recently, many prominent savings bank Leonard the League as members. The principal officers are: Paul Prior, Vice Shane, Chairman, Huntington Beach, California; President, Chairman, New Castle, Indiana; William O'Connell, rman, Beverly Chicago, Illinois; Stuart Davis, Legislative Chai President, Hills, California; and Roy Green, Executive Vice Senior Phil Gasteyer, Legislative Counsel, Jim Freeman, League Legislative Representative, Washington, D.C. Illinois headquarters are at ill East Wacker Dr., Chicago, New York 60601. The Washington Office is located at 1709 e: (202) Avenue, N.W., Washington, D.C. 20006. Telephon 537-8900.  -2ntly assumed my As you may know, Mr. Chairman, I only rece the League with current post a.s Executive Vice President of its Washington overall responsibility for the direction of operations.  ty-five Prior to that I served for more than twen  savings and loan years as managing officer of three separate -- most recently, associations in different parts of the nation Florida. First Federal Savings of Jacksonville,  While managing  the subject-matter that institution, and of some relevance to an Advisory of today's hearing, I also was appointed as ral Reserve Bank of Director the Jacksonville Branch of the Fede Atlanta (District 6).  Thus, I have some personal experience  rve System, though with the director's role in the Federal Rese in an "advisory director" capacity.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Reserve Banks shows A quick survey of the twelve Federal bank executives are that ten other savings and loan or savings System. participating in directorships within the  However, as  appointments is with nearly as we can determine, each of these er than in the a branch operation of a District Bank, rath existing categories:  Class A (stockholding members), Class B  C (public (elected public representatives), or Class designated by the representatives, including the chairman, Board here in Washington). e the passage As the proposed legislation recognizes, sinc ft institutions have of the Monetary Control Act in 1980, thri n of the Federal had an increasing stake in the policy directio  -3Reserve System.  With the authorization of NOW accounts  ercial demand nationwide, the limited opportunities for comm ain Act, and such accounts provided by last year's Garn-St Germ unlimited subsequent deregulation steps as creation of accounts, involvement transaction (and reservable) "Super NOW" is expanding. by thrifts with the System and its services do not yet have While it is certainly true that most thrifts established by reservable liabilities above the threshold to expect that Section 411 of the 1982 law, it is reasonable and credit unions increasing numbers of savings institutions as they broaden will become exposed to reserve requirements public. their transaction account services for the  (Let me  , Mr. Chairman, for again compliment you, and this Subcommittee ) your initiative in developing Section 411. by thrifts will In my judgment, the posting of reserves ittee and the Congress become even more likely if your full Comm Deregulation Act" enact H.R. 3535 -- "The Checking Account of your full introduced by the distinguuished Chairman Committee, Representative St Germain.  Approval of that bill  deregulation process would, at long last, complete the deposit commercial banks by clearing away the remaining monopolies   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  accounts. enjoy for attracting commercial demand  mhe U.S.  s forward to an League strongly supports H.R. 3535 and look the next few weeks. opportunity to testify on that matter in versal" coverage for The Monetary Control Act and its "uni facilities of the Fed non-member thrift depositories opened the other than reserve requirements, of oses purp many for em Syst  -4course.  A growing number of savings institutions have found  lities the System's C,heck collection and processing faci sources. superior to those available from other correspondent System Savings institutions and credit unions also use the Fed , wire routinely for coin and currency transaction services tax and loan transfer, safekeeping for securities, and Treasury account processing.  Thus, thrifts have a vital interest in the  policies adopted by the District Banks regarding the maintenance and development of these services for all depositories.  And, under the 1980 legislation, savings  windows of institutions have statutory access to the discount has been the Fed System Banks -- though, to date, this use discouraged in practice. ved With savings institutions and credit unions so invol appropriate today and in the future with the System, it is most nized to in our view that the Federal Reserve Act be moder assure some policy-making participation.  The proposal to  to twelve enlarge the Boards of the District Banks from nine would directors through creation of a "Class D" category accomplish this goal. details of We do, however, have a few suggestions about the the time this the legislative draft as made available to us at testimony was being written:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  1.  Unlike savings and loan associations and credit  ngs banks with unions, traditional State-chartered mutual savi Northeast and FDIC insurance are generally concentrated in the Districts. not found in all States or Federal Reserve Bank  -5There would be no one qualifying for appointment for the and, in savings bank ",slot" in approximately half the Districts small one or two others, the number of such institutions is so   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  that directorships could circulate among a handful of Conversely, savings banks constitute the dominant  individuals.  the rigid type of depository in certain Northeastern States and ion may, savings bank, savings and loan, and credit union divis Districts. in effect, "under-represent" savings banks in those tory Therefore, the U.S. League would suggest that the statu be made language be revised so that the Class D selections may rather than from the three institutional types collectively, rigidly specifying one director from each type. 2.  The definition chosen for a savings and loan  National institution director references "section 401 of the Housing Act."  In most cases, this would be adequate; however,  for a under last year's Garn-St Germain Act it is now possible Federal Home savings bank receiving a federal charter from the insurance Loan Bank Board to choose whether it will retain FDIC d in Section or switch to the FSLIC insurance-of-accounts (foun 401).  so It is not totally clear to us that the dozen or  ing of federal savings banks falling into this unusual group "fit" any FHLBB-chartered, but FDIC-insured, institutions would for Class D of the definitions spelled out in the proposal Directors.  However, if the drafters chose another definition  in Section in the National Housing Act -- that appearing doubt would be 408(a)(1) [12 U.S.C. 1730a(a)(1)] -- any  -6slot would be removed and the potential for a director's assured for these few institutions. 3.  ctorship The authorizing language for Class D Dire  specifies that:  "No Class D director shall be an officer,  any other depository director, employee, or stockholder of ry institution which institution except of that type of deposito the director shall represent."  While we would agree that  discouraged among employee and director interlocks should be rve Bank directorships, the different classes of Federal Rese ding seems unduly rigid. the prohibition against any stockhol company stocks are Many commercial bank and bank holding kholders -- some of whom, publicly traded with thousands of stoc d make a valuable no doubt, are thrift executives who coul banks. contribution to the boards of district Fed   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Some  de minimus flexibility ought to be provided so that ries do not stockholdings in other types of deposito itution or credit union automatically disqualify a savings inst Director. executive from selection as a Class D 4.  nts may be Finally, a few minor technical adjustme  law such as substituting needed in other portions of existing sentence of 12 U.S.C. "twelve" for "nine" in the introductory 301. will be helpful in Mr. Chairman, I hope these suggestions improving this worthwhile legislation. omes your interest in In conclusion, the U.S. League welc Banks of the Federal broadening the the Boards of the District  -7Reserve System to include participation by thrift industry executives.  We are confident that they can make a meaningful  contribution to the policy-making decisions of the Fed Banks   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  banking and the overall functioning of our nation's central system. your We support this legislative initiative and hope that rd in Subcommittee and the Congress will move this bill forwa the months ahead. views of the I appreciate this opportunity to present the U.S. League and look forward to your questions.  ###  Removal Notice The item(s) identified below have been removed in accordance with FRASER's policy on handling sensitive information in digitization projects due to copyright protections.  Citation Information Document Type: News release Citations:  Number of Pages Removed: 1  United States League of Savings Institutions. "News." September 15, 1983.  Federal Reserve Bank of St. Louis  https://fraser.stlouisfed.org   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Statement of  MR. H. LEE BOATWRIGHT, III  on behalf of  the NATIONAL ASSOCIATION OF MUTUAL SAVINGS BANKS and the NATIONAL SAVINGS AND LOAN LEAGUE  before the SUBCOMMITTEE ON DOMESTIC MONETARY POLICY U.S. House of Representatives •  September 14, 1983   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Mr. Chairman, my name is Lee Boatwright and I am the President of CentraBank if Baltimore, Maryland.  I am appearing here today on  behalf of the National Association of Mutual Savings Banks and the National Savings and Loan League.  As you may have heard, our two  associations are in the process of consolidating into one new trade association which will represent both savings banks and savings and loans.  The consolidation process began early in 1983 and will  culminate in the launching of the National Council of Savings Institutions on November 1, 1983.  I am pleased to have this opportunity to testify in favor of Chairman Fauntroy's bill which would create a new class of thrift directors at the twelve Federal Reserve Banks.  We very much appreciate  your efforts in this area, Mr. Chairman, and the prompt beginning of this hearing process.  We welcomed the invitation to testify on this subject because we believe that it is of critical importance to the long term efficiency of our depository services system and because we think that the time has come for the Federal Reserve System to treat thrift institutions as equal partners in the financial services process. I hope that my appearance here today can be of help to the subcommittee in that I have had some experience within the Federal Reserve System.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -2-  I was from 1969 to 1974 the Senior Vice President in charge of the Baltimore branch of the Federal Reserve Bank of Richmond.  We believe that it is important and appropriate that thrift institutions be represented in a formal way in the Fed system for three basic reasons.  First of all, the Monetary Control Act places  us under the Fed's umbrella of authority for reserve purposes.  At  the time of the 1980 Act, transaction balances were a small or nonexistent part of our deposit base.  That situation has changed and  there is every reason to believe that consumers will increasingly look to thrift institutions for transaction accounts as well as savings accounts.  As thrifts build up their role in this activity,  and as the eight year phase-in provided in the Monetary Control Act winds down, thrifts will be increasingly posting sterile reserves with the Federal Reserve Bank, and will also become a more important part of the nation's payments system.  As these trends continue,  equity demands full and equal participation of thrifts in the Fed system.  Prior to the 1980 Act the Fed system was a commercial banker's system.  Only Fed member banks posted reserves with the Fed banks  Under that system it was not inappropriate that member banks were guaranteed representation on the boards of the twelve Federal Reserve Banks.  Since the reserve obligation will fall on savings banks,  savings and loan, and credit unions all the more, it is, to say the least, appropriate that these institutions be represented on these Boards along with commercial bankers.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -3-  The second reason for supporting the bill is that as thrift institutions increase their share of the transaction balances and their impo-rtance to the payments system, they will need greater access to the services of the District Banks and the banks will need a better understanding of their new clientele.  The legislation  before us today serves these purposes very well in our opinion.  The third reason for supporting this legislation is that many of our member institutions, specifically state chartered savings banks, are not members of the Federal Home Loan Bank system and presently rely on the Federal Reserve Banks for borrowings the rates on which are set by the Boards of Directors.  These savings banks  s. also, in many cases, rely on the Federal Reserve Banks for service  While we are here today to endorse the legislation introduced by Chairman Fauntroy we do have a few suggestions which we hope the subcommittee will find constructive.  The legislation provides for three "Class D" directors to be appointed (one each) from the credit unions, savings and loans, and savings banks.  The definition of savings bank in the bill is,  however, too limited to accomplish the bill's purpose.  As presently  written, the definition would exclude those savings banks which convert from state to federal charter, those savings and loans ed which convert to Federal savings bank charter, and newly charter Federal savings banks.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -4-  Under authority granted by the Garn-St Germain Act, the Federal Home Loan Bank Board has recently granted the first de novo charter t_  for a Federal Mutual Savings Bank.  The Board has also approved  many more changes of federal savings and loans to federal savings banks (an authority which is less than a year old) and of course many of our savings banks have changed from state to federal charters, which Congress authorized in 1978.  This trend will not only continue  but very likely increase in the months ahead.  We would therefore  respectfully urge the subcommittee to adopt definitions which will accomodate the changes that are taking place and we would be pleased to provide draft language to your staff.  A second problem area has to do with the limitation of terms of office for the Class D directors.  As drafted, the bill would limit  the thrift directors to one full term of three years.  It is our  understanding that there is no similar statutory limit on the other three classes of directors, but rather there does exist a policy statement of the Board of Governors stating a preference that Class C directors be limited to two full terms.  It is our understanding  that some of the banks have a self-imposed limit on Class A directors. We suggest, therefore, that the issue of limitations on terms be left to the Board of Governors or set at two terms for everyone.  The third problem area has to do with eligibility to serve as a Class D director.  The bill provides that a direcotr must not be  "an officer, director, employee or stockholder" of any depository institutions of a type other than that which the director represents.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -5-  This provision appears to have been taken from the existing statutory standard for Class C direcotrs.  Class C directors are, by law, It  appointed -4s the public interest representatives on the boards.  is from this class that the chairmen and vice chairmen of the boards are selected by the Board of Governors.  The Class D directors, as  we read the bill, are not of this type at all but rather are to be representatives of the thrift industry.  We do not believe that the  same prohibitions should be applied to them as to Class C.  We assume that the reason for this provision is to eliminate any potential conflict of interest on the part of directors.  However,  we are not aware of any similar restriction on the Class A directors, i.e., a commercial banker can own stock in a thrift and not be banned from this position.  We suggest, therefore, that the word  stockholder be dropped from the bill.  We believe that the remaining  restriction will be sufficient to prevent conflicts of representation.  Mr. Chairman, I would like to take this opportunity to raise a related issue not included in the legislation.  As you know, the  Federal Reserve Board of Governors has a number of advisory committees which meet periodically and make recommendations to the Board. Several of our members have served on the Thrift Advisory Committee and have found the experience both rewarding and worthwhile.  The  point I want to raise here today is that while some advisory committees are established in law, the thrift advisory committee is not.  While  we have no reason to think that Chairman Volker will not continue the committee, we do feel that the track record of the committee justifies giving it a statutory permanence.  We respectfully urge   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -I-  this subcommittee to consider including language in its legislation to accomplish this purpose.  Conclusion In conclusion, Mr. Chairman, the National Association of Mutual Savings Banks and the National Savings and Loan League support the legislation you have introduced to provide for thrift participation in the operation of the Federal Reserve Banks.  I IS want to make  clear that our support is based upon considerations of the role Sf thrift institutions in the nation's financial system and should not be interpreted to mean that we are acquiescing to the role of the Fed as a principal regulator of depository institutions.  That  is an issue which we and the Congress will have to grapple with when the Congress receives the report of the Bush task force on agency restructuring.  Thank you, Mr. Chairman, for the opportunity to appear here, today.  I look forward to your questions.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  STATEMENT OF RICK WIECZOREK, PRESIDENT D.C. CREDIT UNION LEAGUE ON BEHALF OF . THE CREDIT UNION NATIONAL ASSOCIATION, INC BEFORE THE SUBCOMMITTEE ON DOMESTIC MONETARY POLICY OF THE N AFFAIRS COMMITTEE ON BANKING, FINANCE AND URBA U.S. HOUSE OF REPRESENTATIVES SEPTEMBER 15, 1983  s  Statement of Rick Wieczoreck, President D.C. Credit Union League Before the  Subcommittee on Domestic Monetary Policy September 15, 1983  bers. Good Morning, Mr. Chairman and Committee Mem  My name is  Union League. Rick Wieczorek, President of the D.C. Credit Credit Union I am appearing here today on behalf of the National Association, INC. (CUNA).  CUNA represents more than  unions through 52 19,000 state and federally chartered credit member credit union leagues.  Collectively, these credit .  . unions serve more than 48 million Americans   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  in support of I am happy to have this chance to testify ss of credit Chairman Fauntroy's bill to create a new cla l Reserve Banks. union and thrift directors at the 12 Federa for nearly a CUNA has called for broader representation decade.  ortance, Your legislative proposal reaffirms its imp  s recommendation into and we welcome your efforts to enact thi law.  1  come for credit We believe, Mr. Chairman that the time has the Federal unions to be represented in a formal way in and efficiency. Reserve System on the grounds of both equity  in 1980, the Before the Monetary Control Act was passed commercial banks. Federal Reserve System belonged largely to banks to gain Credit unions were required to use commerical and settlement access to the Federal Reserve's clearing ,  facilities.  lities Now they have direct access to these faci  depository, no under the same terms as any other financial matter how, large or small.  By the same token before 1980,  ired to post only Federal Reserve member banks were requ reserves with the Fed banks.  This too has changed.  Now  certain savings credit unions must maintain reserves against accounts and transaction accounts.  Since credit unions have,  ral Reserve in effect, become paying members of the Fede be extended the . System it's clearly appropriate that they ercial bankers on privilege of representation along-side comm the boards of the reserve banks.  equal partners in In addition to acknowledging that they are it union members on the Federal Reserve System, placing cred the overall the boards of Reserve banks would improve   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  efficiency of the nation's payment system.  Credit unions are  tend to be unique financial institutions. Individually, they more than $80 small depositories but collectively they hold billion in assets for their members.  Individually, they tend  ective, they are to operate simply, but as a cooperative coll network that becoming part of a sophisticated electronic information provides integrated national financial and services.  direct access to Already credit unions are benefiting from Fed services.  Over time, the credit union movement's ties to  as this relationthe Federal Reserve System will grow, and need to know more ship develops, the district banks will ns operate. about the special ways in which credit unio the bank tailor Having such information will not only help needs of credit its services to the particular operational n how better to unions, it will also help credit unions lear make use of those services.  Take borrowing, for example.  While credit unions have taken  currency services advantage of the Fed's check clearing and ity to borrow they have yet to make much use of their abil from the Fed's discount window.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  There are many explanations  ions that the for this, but among them are the restrict terms of credit. Reserve banks now impose on the type and  3  We  some measure on believe that these restrictions are based in of their new the Fed's lack of understanding of the needs representation credit union clientele. Direct credit union ease the would help bridge this information gap and incr amount of credit union activity in this area.  ne its In addition to helping the Federal. Reserve refi can help the borrowing and payment services, credit unions .  ty -- its central bank fulfill another key responsibili conduct of monetary policy.  Because of their close  sponsors, affiliation with corporations and other major as early credit unions are uniquely positioned to serve warning devices.  It is not Uncommon for -a- credit union to  a plant have advance news of a strike, for example, or economy of an closing or other events that could disrupt the area served by a reserve bank.  Having a credit union member  access to . on their boards would give the Fed banks early information that is vital to their policy-making deliberations.  not have any CUNA is absolutely confident that the Board will in each difficulty finding credit union people to serve district.  Already credit union representatives sit on  banks. informal advisory boards created by seven reserve   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  unate to the past 3 years, for instance, I have been fort  For  of the bank in serve on the Operations Advisory Committee Richmond.  seen However, not all of the reserve banks have  fit to create such advisory panels.  Your bill, Mr. Chairman,  the Federal would remedy this situation to the benefit of on as a whole. Reserve System, credit unions and the nati  this SubIn closing I have two suggestions that I hope committee will consider.  One is simply that you expand your  on the boards of proposal requiring broader representation boards of the the 12 Federal Reserve Banks to include the Federal Reserve's 25 branches as well.  This would enlarge  exchange and the opportunities for a mutually rewarding credit unions underscore the increasingly important role that unity. and thrifts play in the nation's financial comm  precautionary and Our second suggestion, Mr. Chairman is both substantive.  ides As your bill is presently drafted, it prov  -- one each -for three "Class D" directors to be selected s and savings banks. from the credit unions, savings and loan various We believe that the requirement that all of the ted is important to sectors of the thrift industry be represen the basis thrust of your proposal.  However, there may not be  rve districts and mutual savings banks in some Federal Rese   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  new director thus no eligible candidate for one of the positions.  as a We expect that the Federal Reserve will,  5  in result, recommend that it be be given greater flexibility selecting new directors from among eligible thrift representatives.  To mike certain that such flexibility is not abused  d and that all sectors of the industry are fairly represente by before the Federal Reserve System, we urge you to require one statute that in every Federal Reserve district at least of the new directors be selected from the credit union industry. , Thank you for the opportunity to testify.  CUNA looks forward  to working with you to help enact this legislation.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  6  Removal Notice The item(s) identified below have been removed in accordance with FRASER's policy on handling sensitive information in digitization projects due to copyright protections.  Citation Information Document Type: News release Citations:  Number of Pages Removed: 2  Credit Union National Association, Inc. "CUNA Favors Fauntroy Bill To Create New Fed Directors." September 14, 1983.  Federal Reserve Bank of St. Louis  https://fraser.stlouisfed.org  NAFCU   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  National Association of Federal Credit Unions  P.O. Box 3769 Washington, DC 20007  703/522-4770  STATEMENT OF JOHN J. HUTCHINSON PRESIDENT OF THE NATIONAL ASSOCIATION OF FEDERAL CREDIT UNIONS BEFORE THE SUBCOMMITTEE ON DOMESTIC MONETARY POLICY OF THE COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS U.S. HOUSE OF REPRESENTATIVES REGARDING THE CLASS D DIRECTORS ACT OF 1983  SEPTEMBER 15, 1983  Monetary Policy, Mr. Chairman and members of the Subcommittee on Domestic it is a pleasure for me to be here this morning.  I am John J. Hutchinson, President  FCU) and manager of of the National Association of Federal Credit Unions (NA s, Connecticut. Hamilton Standard Federal Credit Union in Windsor Lock  The National  national organization Association of Federal Credit Unions (NAFCU) is the only ral credit unions. exclusively representing the interests of our nation's Fede  There  ut the nation serving the are approximately 11,400 Federal credit unions througho ers. borrowing and saving needs of more than 26 million memb  OPENING REMARKS  you and to testify in NAFCU appreciates the opportunity to appear before support of the "Class D Directors Act of 1983."  This Association and the Federal  legislation under consideration credit unions we represent have a vital interest in the by the Subcommittee today.  for It would amend the Federal Reserve Act to provide  would represent credit an additional class of directors composed of persons who Federal for each of the twelve s unions, savings banks, and savings and loan associations Reserve District Banks.  lation By expanding the boards of the District Banks, this legis  have a unique understanding would assure broadened representation by individuals who the financial services industry of the important role various specialized components of development. play in determining our nation's economic growth and  PURPOSE OF FEDERAL CREDIT UNIONS  t unions are chartered As the members of this Subcommittee know, Federal credi t for provident purposes "... to make more available to people of small means credi helping to stabilize the through a national system of cooperative credit, thereby   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  . credit structure of the United States" (12 U.S.C. 1751)  The Federal Credit Union  union shall be limited to groups Act stipulates that membership in a Federal credit to groups within a wellhaving a common bond of occupation or association, or defined neighborhood, community or rural district.  Accordingly, every Federal credit  a limited field of memberunion is a cooperative, member-owned association, serving ship.  mandate to promote In addition, every Federal credit union has a dual statutory  credit for provident or thrift among its members while also creating a source of productive purposes (12 U.S.C. 1752).  FEDERAL CREDIT UNIONS MARK 50 YEARS OF SERVICE  cial institutions At their time of origin, each of our nation's traditional finan was designed to perform a specific function.  While a necessary and generally healthy  loan associations has interrelationship between credit unions, banks and savings and and reflect upon emerged over the years, it is helpful for us to occasionally pause our history.  signing Today, as we prepare to celebrate the 50th anniversary of the  unions are of the Federal Credit Union Act, the members of all Federal credit to retain their justifiably proud of the fact that Federal credit unions continue growth and evolution. unique identity in the financial marketplace, despite 50 years of  offer their In recent years credit unions have been authorized by Congress to members a number of additional services.  Even though credit unions are now able  such as residential to provide many of the same kinds of services as other institutions, do so only mortgages, lines of credit, and credit cards, they were authorized to not fulfilling. because their members had needs that other financial institutions were t unions do However, because of the credit union's limited field of membership, credi not compete in the open marketplace for potential customers.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Moreover, the small  size of most credit unions has prevented the majority of them from implementing their full range of powers, since more than 87% of all credit unions have assets of less than $5 million., Expanded powers make it possible for these smaller credit unions to grow and bring to a larger percent of consumers greater opportunities to save.  These increased powers have certainly helped the larger credit unions to  better serve their members' needs in today's financial marketplace.  It is important to recognize that each of the various types of financial institutions performs a specific function in order to meet particular credit needs , within the financial marketplace.  Although some activities do overlap, the primary  functions of each remain different.  The recently expanded powers of credit unions  relate almost exclusively to the types of services which may enhance the capacity of credit unions to meet those needs.  NAFCU'S SUPPORT OF THE "CLASS D DIRECTORS ACT OF 1983"  The "Class D Directors Act of 1983" would, if enacted into law, expand from nine to twelve the number of individuals who serve on the boards of directors of the twelve Federal Reserve District Banks.  Under existing law, the District Bank directors  are divided into three classes of three persons each.  Class A directors are repre-  sentatives of the member commercial banks in the district and usually are bankers. Class B directors and Class C directors are responsible for reflecting the interests of agriculture, commerce, industry, services, labor and consumers.  Class A and  Class B directors are elected by member banks in the district; Class C directors are appointed by the Board of Governors.  The majority of District Bank branch  directors are appointed by the District Bank's head office directors; the remainder are appointed by the Board of Governors.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  lish a new "class" of The proposal under consideration this morning would estab by the Board of Governors. three directors, Class D directors, to be appointed  One  rally insured credit unions, one Class D director would represent the interests of Fede and one would represent the would represent the interests of mutual savings banks, interests of savings and loan assocations.  ces to both the Historically, the District Banks have provided many servi financial community as well as the general public.  In fact, to a large extent they  Federal Reserve System exercise many of the supervisory responsibilities of the ting on economic activity while helping to frame monetary policy, in part, by repor in their regions.  e I, Public Law 96-221) Enactment of the "Monetary Control Act of 1980" (Titl ge between the Federal credit on March 31, 1980 has led to an even greater linka existed previously. union community and the Federal Reserve System than  This law  ral Reserve Board's relationhas, in effect, resulted in an enhancement of the Fede ship with the credit union community.  For the first time, individual Federal credit  ral Reserve System. unions are required to post sterile reserves with the Fede  In  g privileges from the return, credit unions are entitled to discount and borrowin s. Federal Reserve discount window as are member bank  However, there has to date  ral Reserve policies, been no role for Federal credit unions in formulating Fede es as a member of any therefore, not a single credit union representative serv Federal Reserve District Bank Board.  support for the principles Chairman Fauntroy, I am pleased to express NAFCU's based. upon which the "Class D Directors Act of 1983" is  In fact, we have repeatedly  Control Act of 1980." advocated such action since passage of the "Monetary   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  1980, the day after Members of this Subcommittee may recall that on April 1, law, the then Chairman of President Carter signed the Monetary Control Act into s, Representative Henry the House Committee on Banking, Finance and Urban Affair ell (D-MD) and John Cavanaugh Reuss (D-WI), was joined by Representatives Parren Mitch ion Act" (H.R. 7001). (D-NB) in introducing the "Federal Reserve Modernizat  Without  to the attention of addressing the merits of H.R. 7001 at this time, I would bring ve Modernization Act," the Subcommittee members the fact that the "Federal Reser the reforms brought introduced in the 96th Congress, was intended to complement about by enactment of the Monetary Control Act.  At that time in my capacity as  s I wrote to the President of the National Association of Federal Credit Union Chairman Reuss:  II._ we believe it is imperative that a director on each of the Boards National represent the interests of Federal credit unions. Accordingly, the to Association of Federal Credit Unions urges you and your Committee repreamend H.R. 7001 to stipulate that Federal credit unions will be . sented on the Boards of each of the twelve Federal Reserve Banks of Only in this way may we guarantee that the interests and concerns sented ... individual credit union members ... will be considered and repre by a voting delegate when matters affecting domestic monetary policy are considered by these bodies ..." s  subject Mr. Chairman, as you and your staff know, NAFCU's views on this have not waivered.  We continue to advocate legislation such as the "Class D  Directors Act of 1983."  In fact, NAFCU called for adoption of such a measure in  testimony before the Senate Banking Committee on May 4, 1983.  ' We believe that Federal credit union representation on the District Banks boards of directors is both necessary and appropriate.  A Federal credit union  to a representative on the board of each District Bank would, I believe, contribute union operabetter understanding of the unique nature of credit unions and credit   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  tions at the level of the twelve District Banks and also throughout the Federal Reserve System in general.  On more than one occasion in recent years, pmDblems  have arisen because- the Federal Reserve System has attempted to treat Federal credit unions as they treat banks -- overlooking the reality that the credit union structure, operations and mission are vastly different from those of commercial banks.  Accordingly, I am of the strong opon that adoption of a proposal such as would greatly assist in enhancing the course of  the "Class D Directors Act of 1983  thinking which influences monetary policy, by assuring that  eUistrict Banks  receive sufficient input from credit unions. s  RECOMMENDATIONS FOR AMENDMENTS TO THE "CLASS D DIRECTORS ACT OF 1983"  I do, however, have four specific recommendations which I would like to offer to the Subcommittee.  I believe adoption of these recommendations would help  ll. assure the prornpt realization of the objectives of wiirni. s  First, as drafted, the "Class D Directors Act of 1983" specifies that Class D directors shall be appointed by the Board from recommendations made by the members.  This procedure closely resembles that which is presently followed in the  appointment of Class C directors.  I believe the stated as. of the legislation "to  provide broadened representation on the District Banks for indduals who have a unique understanding" of the institutions they represent may be better realized if Class D directors were elected by electors from the class of institution they represent in each of the twelve districts. member banks in the district.  Class A and Class B directors are elected by  A procedure similar to that presently used for the  election of Class A and Class B directors, if adopted, would result in more equitable representation.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Second, if our proposal that Class D directors be elected by electors from the class of institution they represent is not adopted, I would urge that the criteria for appointment as a Class D director be modified.  As drafted, the "Class D Directors  Act of 1983" specifies that Class D directors shall be appointed by the Board from recommendations made by the members. what ambiguous.  The term "members" appears to be some-  Since the purpose of establishing Class D director seats on the  twelve District Bank boards is to provide broadened representation by individuals who have a unique understanding of the institutions they represent, it would seem counterproductive to have candidates for those Class D director seats nominated by member banks rather than by the institutions whose interests they are nominated to represent.  We would prefer to see Class D directors elected by electors from the  class of institution they represent.  However, a logical alternative would be to have  the Board of Governors make their appointment of Class D directors based upon nominations submitted by the class of institution to be represented, rather than nominations submitted by member banks.  Member banks at present elect the three  Class A and three Class B directors in each district.  Member banks also nominate  the candidates for appointment to the three Class C director seats in each district. I believe it would be highly desirable for those institutions whose interests are to be represented by the Class D directors in each district to have some role in the selection of qualified individuals from among their number to fill those positions. This should generally assure the election of individuals who do, in fact, understand the unique aspects of the institutions they represent.  Accordingly, the Subcommittee  may wish to clarify, either through amendment or through report language, precisely who should nominate candidates for appointment as Class D directors.  Third, I am concerned that language contained in the "Class D Directors Act of 1983" which would prohibit "... an officer, director, employee or stockholder of   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  any other depository institution except of that type" which the director shall represent from service as a Class D director.  While I fully agree that we need to  maintain the highest of standards for individuals who serve as Class D directors, I question the need for such a blanket prohibition.  Perhaps this section of the bill  could be reviewed with an eye toward permitting nominal investments by Class D directors in types of institutions other than those they represent.  Fourth, our final concern is related to that which I just addressed:  the  prohibition against Class D directors serving as "an officer, director, employee or , stockholder" of any other depository institution.  As I mentioned to you earlier,  Federal credit unions do not serve the general public but rather limited groups having a common bond of occupation or association, or groups within a well-defined neighborhood, community or rural district.  The fact of the matter is that certain  credit unions exist whose common bond explicitly includes officers, directors, employees and stockholders of other depository institutions.  To impose a blanket  ban on members of such credit unions from serving as Class D directors, may in fact, deprive the District Banks of guidance from individuals who possess a truly s  II._ unique understanding of ... economic growth and development."  This is an issue  that we believe merits further review.  THE IMPORTANCE OF "TESTED FEDERAL CREDIT UNION EXPERIENCE"  I would like to add at this point, Chairman Fauntroy, NAFCU's strong support of language contained in the "Class D Directors Act" which stipulates in a very clear and unambiguous way that:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  i'... all Class D directors ... shall possess tested financial experience of the type appropriate to their class of depository institution."  \  During discussions of the enactment of Public Law 95-630 in 1978, we expressed a preference for people of "tested Federal credit union experience." Although that act, which created the National Credit Union Administration Board, did not contain that requirement, NAFCU still holds that belief.  The inclusion  in this act of a requirement that those chosen to serve should have previous experience in the institution they represent is consistent with our stated position.  CONCLUSION  s  Before closing, Mr. Chairman, I would like to point out that Federal Reserve : Board Chairman Paul A. Volcker, in testimony before this Subcommittee on May 15, 1980 suggested that legislation such as that before you today may merit consideration. In his testimony, Chairman Volcker stated:  II... we do believe that consideration also needs to be given to the participation of nonbank financial institutions on the boards of the Federal Reserve Banks; whether they should participate in the election of directors, and if so, how this should be accomplished ... attention should be given to the participation in the operations of the Federal Reserve Banks by . nonbank financial institutions that will maintain reserves with the Federal Reserve, as well as their representation on the boards of directors of those banks ... we continue to feel that those boards should be expanded in size in order to accommodate a broader representative segment of the public as a whole."  NAFCU concurs with that recommendation, Mr. Chairman.  We believe that the  "Class D Directors Act of 1983," with the modifications we have suggested today, would achieve that goal.  Accordingly, I pledge the continued cooperation of the  National Association of Federal Credit Unions as you consider this measure.  Chairman Fauntroy, although it is not germain to this bill, I would like to thank you and the other members of this Subcommittee for your cosponsorship and   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  %  support of House Joint Resolution (H.J. Res.) 139 which the President signed into law (P.L. 98-71) on August 11.  This Public Law designates the week of June 24,  1984 as "Federal Credit Union Week" and is also appropriate as we approach the LI  50th anniversary of the signing of the Federal Credit Union Act.  Thank you for the opportunity to appear before you this morning to present the view of the National Association of Federal Credit Unions. respond to any questions.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ###  I would be happy to  AMERICAN BANKERS ASSOCIATION  1120 Connecticut Avenue. N W Washington. D.C. 20036  EXECUTIVE DIRECTOR GOVERNMENT RELATIONS GemIci M Lowrie 202/467-4097  September 21, 1983  The Honorable Walter E. Fauntroy Chairman, Subcommittee on Domestic Monetary Policy U.S. House of Representatives H2-109, Annex No. 2 Washington, DC 20515 Dear Mr. Chairman: I am writing to convey to you our Association's views on your proposal to create an additional class of Federal Reserve bank directors as indicated to me in your letter of August 31, 1983. This proposal was considered by our Government Relations Council on September 14, 1983. The Council believes it should not be enacted into law. Class C directors are currently elected by the Board of Governors "to represent with due but not exclusive consideration to the interests of to public agriculture, commerce, industry, services, labor, and consumers" (12 U.S.C. 302). This language is broad enough so as to include non-member financial institutions. There is no reason to single out specific types of institutions under this mandate. Rather, the qualifications of such a director should be to serve the broad public interest. • Since the passage of the Monetary Control Act of 1980, many non-member institutions have begun to use the Federal Reserve's services. It is our understanding that the Federal Reserve Banks have set up advisory committees with representation among non-member institutions to enhance this process. We see no reason to elevate this representation to the status of Federal Reserve Director with its inherently broader, public interest oriented concerns. We are particularly concerned that your proposal would give specific representation to thrift institutions but not to non-member banks. If the Congress does decide to create a separate class of directors for non-member institutions, there is no need to appoint more than one director for each Federal Reserve Bank. Among the directors appointed to the twelve district banks, the Board should assure that there is equal representation anong non-member banks, savings and loans, mutual savings banks, and credit unions. I hope these comments are helpful. Sincerely,/ - 1  \  ` Gerald M. Lowrie  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  President  NstViaPresideM  JAMES D. HERRINGTON, Board Chairman  PAUL H. BRINGGOLD, President  Coldwater National Bank Coldwater, Kansas 67029   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  First National Bank Cannon Falls, Minnesota 55009  Second Vice President A J (JACK) KING, President Valley Bank of Kalispell Kalispell, Montana 59901  Treasurer  JAMES R TAYLOR, President/CEO McKeesport National Bank McKeesport, Pennsylvania 15132  WASHINGTON OFFICE  ndependent  BANKERS ASSOCIATION OF AMERICA 1625 MASSACHUSETTS AVENUE N.W. - SUITE 202. WASHINGTON, D.C. 20036 202/332-8980  September 21, 1983  Honorable Walter E. Fauntroy, Chairman Subcommittee on Domestic Monetary Policy H2-109, Annex No. 2 Washington, D.C. 20515 Dear Chairman Fauntroy: America (IBAA) is The Independent Bankers Association of our views on H.R. 3868, pleased to respond to your request for s legislation, which the "Class D Directors Act of 1983." Thi establish a new you introduced on September 13th, would District Bank Directors, three-member class of Federal Reserve ors, and respectively to be designated by the Board of Govern ings banks, and savings representing insured credit unions, sav and loan institutions. mercial banks--that It is our view that the majority of com e member banks--are not is, state-chartered, non-Federal Reserv rds of Directors. adequately represented on District Bank Boa iable absent a Further, H.R. 3868 does not seem justif and criteria for fundamental policy change in the purpose Congress is prepared District Bank Directorships. Unless the detrimental to the to make such a change, the bill would be Therefore, the IBAA must interests of community bankers. express its objection to this proposal. thren attempting to It is ironic to see our depository bre e System while expand their role in the Federal Reserv tion of any Fed-like simultaneously objecting to the imposi as is proposed in the regulation, on equivalent terms, such deregulation. This seems Treasury bill for depository product among those financial to be part and parcel of a growing trend g sphere who seek to entities outside the commercial bankin while shirking our appropriate our rights and authorities Congress is ready to responsibilities and constraints. Until ", the need for deal with the proliferation of "nonbanks the question of at what deregulation of bank's asset side, and omes meaningless, the IBAA point the bank/thrift delineation bec banking's must oppose further incursions into 3868 which would put the sphere--particularly one such as H.R. ater disadvantage. majority of commercial banks at gre  2. The 1BAA is the national trade association for community rs banks. Its current membership of approximately 7,000 membe r consists of about 4,650 (66%) state-chartered, non-Fed membe banks. Within the commercial banking sphere as a whole, approximately 8,850 of the Nation's 14,450 commercial banks (61% of the total) fall within this category. As you are aware, these banks have no present say in A selecting the Boards of the District Banks. The three Class Directors "shall be chosen by and be representative of the stockholding banks" (12 USC 302). The three Class B Directors are also elected by stockholding banks to represent the , interests of agriculture, commerce, industry, services, labor by and consumers. The three Class C Directors are designated ests as the Fed's Board of Governors to represent the same inter B or are listed for Class B. By statute (12 USC 303), no Class C Director may be an officer, director, employee, or stockholder of any bank. Proponents testifying in favor of H.R. 3868 incorrectly ict Bank sought to portray it as redressing an inequity of Distr representation between commercial banks and other insured depositories. However, as the preceding review of the three Director classes indicates, the present distinction does not lie there, but between stockholding, Fed-member commercial banks and all other insured depositories; including the majority of commercial banks who are ineligible to select or serve as District Bank Directors. The introduction of H.R. 3868 places two related issues directly before the Subcommittee. First, is it advisable to thereby increase the number of Directors of the District Banks, ence diluting further the voting power and proportionate influ mmittee of Fed-member, stockholding banks? Second, if the Subco nexus decides the preceding question in the affirmative, what m is of between a business entity and the Federal Reserve Syste sufficient substantiality to justify entitlement to Director seats?   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  In regard to this second question, IBAA believes that none in of the justifications raised by proponents of H.R. 3868 their testimony is sufficient unto itself to justify a new ng Class D; particularly if the 8,850 commercial banks now lacki adequate representation are to continue in that subordinate role. To wit--Reserve requirements would not appear to be sufficient justification. Presently unrepresented commercial banks heart maintain substantial Fed reserves, and still comprise the itories of the payments system. Yet as witnesses for the depos most of who would benefit from H.R. 3868 admitted in testimony, antial their members have yet to post any, much less subst reserves, due to the operation of the phase-in of these  3. requirements and interrelated statutory exemptions. Further, much of their testimony seems to presuppose that Congress is about to enact legislation which will permit their members to solicit the entire universe of business entities to establish interest-bearing commercial checking account. That legislation has yet to be the subject of Congressional hearings and could result in major income losses, undermined safety and soundness, and competitive inequities for the commercial banking sector.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  • Therefore, to justify this new Directors' class on insubstantial reserves and unreviewed legislative proposals is, at best, premature. -Access to the discount window is, for most of these institutions, a secondary source of emergency liquidity. Savings and loan institutions have access to the Federal Home Loan Bank, and credit unions to the NCUA Central Liquidity Facility; neither of these liquidity sources is available to commercial banks. If access to the window is sufficient justification for a Directors' class, then the 8,850 state-chartered banks who rely on it as their primary liquidity source surely have first claim. -The availability of Federal reserve services is a benefit which has accrued to these institutions as a result of 1980 legislation. It offers -them an alternative to traditional correspondent relationships. If they are dissatisfied with the quality and pricing of these services, and the Fed does not respond to their input, then they are free to seek the same redress as any other consumer of a service in a competitive economy--to take their business elsewhere. -Bearing the impact of Fed monetary policy actions is a condition common to all depository institutions, as well as the whole of American business (although certain industries--such as homebuilding, autos, and agriculture--are particularly vulnerable). It would appear that the Class B and C Director classes are already constituted to reflect this common concern of the business community. However, if depositories are deemed to have a particular unmet need for representation in this regard, the possibility of authorizing all insured depositories for eligibility to serve in these classes could be explored by the Subcommittee. (Apparently, the Fed will propose that thrifts and credit unions be designated as eligible to serve as Class C directors. Any such opening of eligibility would have to be accompanied, in our view, by repeal of the present prohibition on commercial bankers' service in this capacity.) -The need for greater input by nonmember depositories into District Bank operational and monetary policy functions, if substantiated, could be met by means short of a new Director class. We note that seven of the twelve District banks now maintain thrift advisory committees, and that several of the  4. them. Such committees could witnesses last week had served on tories which are not Fed be opened to all insured deposi ement for each of the members, and made a statutory requir ld authorize a study of how District banks'. Or the Congress cou tly meeting the needs, and well the District banks are presen thereafter take heeding the input, of nonmembers, and e any deficiencies. appropriate legislative action to cur pond to observations In closing, we feel compelled to res . 3868 to the effect that made during your hearings on H.R e a choice of electing Fed state-chartered commercial banks hav of District Bank stock membership. As you know, the purchase which an institution does require a diversion of funds for erest. If the receives less than a market rate of int costly option available Subcommittee's desire is to make this ch would at least preserve to thrifts, that is a decision whi r, to propose that thrifts and the semblance of equity. Howeve k Directorships without the credit unions achieve District Ban ining it for commercial stockholding requirement, while mainta . Of course, the banks, would be exceedingly unfair g up an electoral and Subcommittee must recognize that openin tories must result in Directorship role for nonmember deposi shareholder requirement. member banks questioning their own islation, we do s While we cannot be supportive of thi leg of a continuing dialogue as wish to leave open the possibility exercise a greater voice in to how nonmember depositories may Federal Reserve operations.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Sincerely,  e James D. Herrington, President  cc:  All members of the Subcommittee; Rep. St Germain, Rep. Wylie; William Wiles, Secretary Board of Governors, Federal Reserve  .•  al BOARD OF GOVERNORS OF THE  FEDERAL RESERVE SYSTEM WASHINGTON, 0. C. 20551 PAUL A. vOLCKER CHAiRmAN -  a.  October 3, 1983  ,   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Honorable Fernand J. St Germain Chairman Committee on Banking, Finance and Urban Aftjars House of Representatives Washington, D.C. 20515  Dear Chairman St Germain: Thank you for your letter of September 6, 1983, requesting the Federal Reserve's views concerning what regulatory and/or statutory action is needed to deal with the activities of "money brokers". You, point out that substantial amounts of brokered deposits have been placed in banks that have failed and that in the wake of the failure of the Penn Square bank, money brokers have facilitated the placement of fully-insured deposits, thereby undercutting the market discipline that these investors might otherwise have imposed. The Federal Reserve shares your concern about the effect of the practices of some money brokers on market discipline and the operation of the financial system. We would point out, however, that in a banking system where individual institutions are subject to geographic limitations -- in some cases they are limited to a single office --it is quite natural and, under appropriate circumstances, economically desirable that mechanisms develop to facilitate the transmission of funds from areas of excess savings or liquidity to those areas in need of funds for the legitimate banking and credit needs of consumers and businesses. Brokers have long played and continue to play an important role in this function, and, in so doing, have contributed to a more efficient use of our economy's liquid savings. Brokers have also provided prudent managers of sound banks greater flexibility in the management of bank funding. In considering the activities of money brokers, therefore, the critical issue is to devise a regulatory response that will address the practices considered harmful without substantially impeding the legitimate role of the brokers. It may be useful in this regard to distinguish between the brokering of funds in very large denominations for sophisticated investors in the nation's largest depositories with the placement of smaller retail type deposits and the more recent practice of splitting brokered funds up into $100,000 fully insured denominations. With respect to the brokering of the larger wholesale deposits, we see no compelling need for regulatory or statutory action since the investors involved   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Chairman St Germain  2  evidence to should be capable of protecting their own interests and there is little your letter. suggest that this activity is causing problems of the type cited in quite large, Since, by definition, the denominations of these wholesale funds are d, and market incentives pertaining to individual transactions are not erode These wholesale broker's tend to deal with the larger banking organizations. the fact institutions continue to be subject to market scrutiny and discipline due to capital that they continually raise large volumes of funds in the money and markets. to On the other hand, the brokering of fully insured deposits does tend ularly undercut market discipline and raises safety and soundness issues, partic funds and when the depository institution pays above market rates for the brokered seeking maximum substantial commissions for the brokerage service. Investors higher rate rates of return, often through money brokers, are attracted to the the deposit to being offered by these institutions. If the investor or broker limits on of return the fully insured $100,000, the investor can obtain both the maximizati smaller retail and the minimization of risk. Under such circumstances, brokers of to obtain funding type deposits can enable some banks with financial weaknesses e. that they might otherwise be denied by the discipline of the marketplac to In light of this discussion, there appear to be two possible approaches First, rs. addressing the concerns raised by the activities of money broke in such a consideration could be given to modifying the deposit insurance system to reintroduce way as to distinguish between brokered and nonbrokered funds and gh brokers. some element of risk to those depositors who place their funds throu sure of the Second, banking organizations could be required to make periodic disclo through brokered use of brokered funds, distinguishing between amounts obtained heavy users deposits of more or less than $100,000. This would alert the market to follow-up to of brokered funds and provide more timely information for possible bank supervisors. We believe that as long as the investor is fully insured, he or she will on the basis of have little incentive to discriminate among depository institutions rate of return. financial condition and their choice would Ijkely be driven only by ory actions For this reason, we believe that, absent some regulatory or statut some have pertaining to insurance coverage, little would be gained by, as concerning suggested, requiring that investors be supplied with disclosure material it by the money the condition of the financial institutions selected for depos issues pertaining brokers. We understand that the FDIC and the FSLIC will address savings and loan to deposit insurance for Federally-insured commercial banks and e or eliminate associations. One possibility, for example, would be to reduc ing an element insurance coverage on brokered retail deposits, thereby reintroduc bringing market of risk to the depositor. While this may hold some promise for that any proposals discipline to bear on the activities of money brokers, we believe lly considered and for modifying the insurance system would have to be carefu or undermining the structured to avoid the possibility of eroding the strength essential coverage of our nation's deposit insurance system. this In our view, a more immediate and fruitful way of addressing the use of funds problem is to require greater and more timely disclosure of ng agencies have obtained through money brokers. Indeed, the Federal banki  , Chairman St Germain  3-  already begun to implement this approach in their revisions to the bank call report. Beginning with the September 30, 1983 call report, commercial banks will be required to report the total amount of funds obtained through money brokers. Further revisions to the call report proposed for March 1984 will obtain both total brokered funds and brokered retail deposits. This information will be reported on a quarterly basis and will be available to the public as well as the supervisory agencies.  ,   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  First, it We believe this approach has a number of benefits. distinguishes between wholesale and retail brokering and enables supervisory authorities to identify those institutions making heavy use -- or experiencing sharp changes in the use -- of brokered retail funds. Second, the approach avoids restrictions on the legitimate role played by some brokers and avoids the imposition of potentially costly or burdensome regulations. Third, disclosure of brokered deposits may help reinforce market discipline vis-a-vis any remaining large uninsured depositors or nondeposit suppliers of funds. For example, when used in conjunction with disclosure of nonperforming loans, investors, providers of Fed funds, other uninsured creditors and money market participants generally will be better able to identify those institutions whose rapid growth, possibly in combination with asset weaknesses, has forced them to rely heavily on brokered funds. Fourth, this approach is consistent with the general desire expressed by some members of Congress for greater financial disclosure by commercial banks. Finally, and perhaps most importantly, greater disclosure will enable bank supervisory agencies to monitor more effectively those institutions with a large or growing reliance on brokered retail funds and use this information to trigger onsite examinations and, if necessary, formal enforcement action. Information on the volume and growth of brokered deposits, both alone and in relation to total asset growth and other indices of bank soundness, can be factored into our early warning and surveillance systems and into our ongoing procedures for planning and conducting on-site examinations. Still another approach that has been suggested is a system of registration in connection with which the money brokers would be called upon to meet minimum standards of financial and ethical conduct. We believe that this is a desirable development, and that brokers should be encouraged to develop such standards. However, we do not believe that the present situation requires statutory action. Adoption of the self-policing steps being discussed by brokers and the users of their services would certainly be a step in the right direction. We hope that this information will be useful to your Committee. Please let me know if I can be of further assistance.  RS (V-184) bcc: Mr. Spillenkothen Mr. Ryan Mr. Kohn Gov. Partee Mrs. Mallardi (2),V-  \  Bradfield Action assigned Mr. JAKE GARN, UTAH, CHAIRMAN JOHN wOWER, TEXAS 4INZ, PENNSYLVANIA 1 JOHN/ WILLIAM L ARMSTRONG. COLORADO ALFONSE M D'AMATO, NEW YORK SLADE GORTON, WASHINGTON PAULA HAWKINS, FLORIDA MACK MATTINGLY, GEORGIA CHIC HECHT, NEVADA PAUL TRIBLE, VIRGINIA  WILLIAM PROXMIRE, WISCONSIN ALAN CRANSTON, CALIFORNIA DONALD W RIEGLE, JR MICHIGAN PAUL S SARBANES, MARYLAND CHRISTOPHER J DODD,CONNECTICUT ALAN J DIXON. ILLINOIS JIM SASSER, TENNESSEE FRANK R LAUTENBERG, NEW JERSEY  M DANNY WALL, STAFF DIRECTOR DIRECTOR KENNETH A McLEAN, MINORITY STAFF   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  United  4 3 (/ 5  tate,s ,*cnate  COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS WASHINGTON, D.C. 20510  ii  017-  "rir , f  September 19, 1983  Honorable Paul A. Volcker Chairman Board of Governors Federal Reserve System 20th & Constitution Ave. N.W. Washington, D.C. 20551 Dear Chairman Volcker: I again want to thank you for testifying on September 13, 1983 before the Senate Banking, Housing and Urban Affairs Committee on S.1532, S.1609 and S.1682, dealing with moratoriums on acquisitions and financial institution deregulation. For the record of this hearing, I would appreciate responses to the enclosed questions concerning this legislation. I would appreciate receiving your responses by October 11, 1983, so that we could insert them into the hearing record before it closes. y s Sincerel  Jake Garn hairman Enclosures JG:dbk   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Do our Banking Laws still make sense?  Some have argued that our major structural banking laws =Glass-Steagall and the Bank Holding Company Act-- no longer make any sense in today's market-place. There has been too much erosion because of loop-holes and that we have reached the point where it will be impossible to resurect these laws. The conclusion is that we either ought to repeal these laws or let the forces of the market-place develop unchecked for another year or two and then ratify what has ocurred. What do you think about this scenario?   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  r testimony, you suggest you of 13 and 12 es pag on Ir. Nioicker, erve changed so that the Federal Res that present law should be ing petition factors when approv is not required to review com that ding companies. You suggest new activities for bank hol by the Justice Department. this activity can be handled  iew Division at Justice should rev Do you believe the Antitrust g companies before they are new activities for bank holdin nging a subsequent antitrust approved - or be limited to bri ms arise? suit after competition proble  Questions for Vol  You have stated that you think the moratorium should be temporary, to allow Congress to make "permanent", well-considered changes. If, at the end of the moratorium period, Congress had not acted, would you refuse to support an extension of the moratorium?  2. Why does the moratorium bill propose to block future acquisitions of banks and thrifts by nonbanking companies? Do you feel that these developments have been, are- or will be, dangerous to the banking systemWould you recommend that these acquisitions continue to be blocked beyond the moratorium period, as a matter of public policy?  1. The moratorium bill prohibits acquistions of "insured banks" by certain nonbanking firms, and also expands the definition of insured banks and "banks". Insured banks are those which are FDIC insured and those eligible for insurance. Also, the bill says that a bank is one which makes commercial loans and accepts deposits which may be transferred by check. a. As a result of these definitions, how many more institutions may not be acquired? What kinds of institutions? b. Do you intend that these proviSions should continue as permanent law? ''?.The Fed recently proposed a revised Regulation Y. That proposal would greatly expand the definition of "commercial loan", and thus, the definition of "bank", under the Bank Holding Company Act. As a result, more institutions would come under Fed jurisdiction, and be blocked from combining with nonbanking firms. Since Congress is now considering the "definition of bank" issue, not? do you intend to drop that part of the Reg Y revision If not, why  Section 2 of the moratorium bill states "no company shall acquire control of insured banks in more than one state" without prior approval under the Bank Holding Company Act. If this provision were enacted, under what circumstances would the Fed allow acquisitions, and when would it deny acquisitions? Would you want this recommendation to be a permanent change, beyond  the moratorium period?   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  BOARD OF GOVERNORS OF THE  FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551 PAUL A. VOLCKER  October 5, 1983  CHAIRMAN  The Honorable William H. Gray, III House of Representatives Washington, D. C. 20515 Dear Mr. Gray: Thank you for your letter concerning minority representation at the Federal Reserve. While we recognize, as you have, that there are relatively few minorities represented in top economic policy positions, such as on the staff of the Federal Open Market Committee, we are encouraged by the results of our programs and strategies to increase the representation of minorities in mid- and upper-management positions in the System. As part of this process, the representation of minorities at all levels of employment in the System is monitored and analyzed on a regular basis. In this regard, during the two-year period ending December 1982, minority professional representation at the Board in the targeted FR-13 to FR-15 grades increased by eleven employees or 32.3 percent of the increase in this grade range. Moreover, although in terms of total percentages increases for minority group employees at the senior level (grades 14-16) at the Reserve Banks have been comparatively small, minority representation in this group has more than doubled in the past five years. As a means of implementing our policy of providing equal employment opportunity, the Board's affirmative action plan identifies areas needing special attention and specifies activities and programs designed to overcome barriers to equal employment opportunity. Similar plans have been developed and implemented at each of the twelve Reserve Banks. Of course, of minority recruitment is made more difficult by the scarcity , black, Hispanic, and other minority group economists nationwide salary offerings in private industry that the Board and the Reserve Banks are unable to match, and the desire of many poten tial applicants to remain in academia. We are, however, actively working to overcome these obstacles. In this regard, in 1979, in an attempt to increase the number of ethnic minorities in the finance and economics professions in general and at the Federal Reserve System in particular, the Board established a Minority Doctoral Fellowship Program. To date, eight minority students, including five blacks, have received support--totaling about $146,000. As of June 1983, five of these students have completed their Ph.D. requirements and are employed within the System, two at the   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The Honorable William H. Gray, III Page Two  Board and three at the Federal Rserve Rank of New York. Two of the remaining awardees are expected to complete their degree requirements luring the 1q8 3-S4 school year. (A copy of our last program announcement is enclo(7e1 for your information.) "oreover, the Federal Reserve System actively participates in the Amr?rican Fconomic Association Summer Intensive Program for linurity Students through direct financial assistance and other support. This program is a source of promising minority undergraduate students with the potential to complete Ph.D. programs and several graduates of this program have received fellowship offers under the Board's Fellowship Program. In closing, I believe that there has been a very favorable increase in the representation of minorities in important positions in the Federal Reserve System. And, as the enclosed materials show, minorities occuoy official and mana7erial positions at the Roard and throughout the System. Although prociress has been male, I can assure you that we remain committed to equal employment opportunity and will continue our efforts to identify and develop minorities in the economic policy area. Please let me know if I can be of further assistance. Sincerely,  Sgaul Voiskec  rnclosure  PWT:JWD:AFC:pjt (V-132)  bcc:  Portia Thompson Joe Daniels  -I". (2)   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ENCLOSURE I  FEDERAL RESERVE BOARD'S 1982-86 EQUAL EMPLOYMENT OPPORTUNITY AFFIRMATIVE ACTION PROGRAM.  z   https://fraser.stlouisfed.org Federal fr Reserve Bank of St. Louis  ENCLOSURE II  MINORITY AND FEMALE REPRESENTATION IN THOSE TARGETED PROFESSIONAL JOB SERIES FOR WHICH GOALS ARE ESTABLISHED IN THE BOARD'S AFFIRMATIVE ACTION PROGRAM (updates to pages 14, 21, 22, and 23 of the Program).   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ENCLOSURE III  IN APPENDIX C OF THE DATA ON WORKFORCE REPRESENTATION THAT WAS INCLUDED PROGRAM.  n1k.  i   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ENCLOSURE IV  SUMMARY OF MINORITY AND FEMALE REPRESENTATION ON OFFICIAL STAFF AND THE GOALS THAT WERE SET BY THE FEDERAL RESERVE BOARD IN JULY 1981.  ll   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ENCLOSURE V  THE FEDERAL RESERVE BANKS STATUS OF EQUAL EMPLOYMENT OPPORTUNITY AT 1982 ANNUAL REPORT   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ENCLOSURE VI  FELLOWSHIP PROGRAM, 1984-85 ANNOUNCEMENT OF TUE MINORITY DOCTORAL SYSTEM BOARD OF GOVERNORS OF THE FEDERAL RESERVE  Action assigned to Mr. Frost. /COMMITTEE ON APPROPRIATIONS • SUBCOMMITTEE ON TRANSPORTATION SUBCOMMITTEE ON FOREIGN OPERATIONS DISTRICT OF COLUMBIA COMM ITTEE  WILLIAM H. GRAY III 2ND DISTRICT. PENNSYLVANIA  WASHINGTON OFFICE:  o  429 CANNON HOUSE OFFICE BUILDING WASHINGTON, D.C. 20515 (202) 225-4001  Congre55 of tbe Ziniteb 5tate.  CHAIRMAN:  SUSCOMMI1TLE ON GOVERNMENT OPERATIONS AND METROPOLITAN AFFAIRS VICE CHAIRMAN:  CONGRESSIONAL BLACK CAUCUS  DISTRICT OFFICES: 6753 GERMANTOWN AVENUE PHILADELPHIA, PA, 19119 (215) 951-5388  Poutie of iltprefSentatibe5 Klasijington, ac. 20515  2318 W. COLUMBIA AVENUE PHILADELPHIA, PA. 19121 (215) 232-2770  July 13, 1983  Mr. Paul A. Volcker Chairman Federal Reserve Bank 20th & Constitution Avenue, N.W. Washington, D.C. 20551  151 N. 52ND STREET PHILADELPHIA, PA. 19131 (215) 476-872.5  1"▪ *" E.75 C—D r--rn  cil  Dear Mr. Chairman:  rr1  am writing to express my concern regarding the FilieraTF Reserve System's past performance with regard to affirmalivecn cl action and equal employment opportunity.  C..!3 C:=$ • retlq< re%  rrl  The Federal Reserve System exercises considerable influence over the lives of every citizen in this country through direct control of the domestic monetary supply. While I realize that the Reserves' actions are in the best interest of the country on a whole, I tun concerned, about the lack of minority representation in key decision-making positions at the Federal Reserve. It is my understanding, that out of the 18 member staff at the Federal Reserve's Open Market Committee, there are no minority group members represented. Given the fact that a similar pattern of employment exists at each of the twelve Federal Reserve Banks, it appears that minorities apparently are being closed out of numerous opportunities at the Bank. We can agree, I am sure, that these positions must be held by those who have the expertise and qualifications for the job. Consequently, I would like to know the employment process used at the Bank, particularly the criteria used in making selections in mid and upper -management positions. Additionally, I respectfully request that you forward to my office a complete statistical profile of the minority representation in all levels of the Bank's operation. Thank you for your cooperation and consideration. Sincerely,  William H. iay, III Member of Congress WIIG: jmh  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  C:C2 c:7.)  Cr)   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  HOUSE OF REPRESENTATIVES WASHINGTON. D. C. 20515  October 4, 1983  TRENT LOTT REPUBLICAN WHIP  Dear Mr. Chairman: I enjoyed our telephone conversation yesterday and appreciate your taking the time I am most hopeful that you to talk with me. will be able to give my invitation to speak at the economic symposium sponsored by the Merchants and Marine Bank every possible consideration. I would consider it a personal favor if you could travel to Pascagoula for this event to be held next year. Tom Leatherbury, President of the bank, will be getting in touch with you in the near future; however, should you have any additional questions, please feel free to contact me. With warmest personal regards, I am Sincer  y yours, (7,  mamma  —Ti  Trent Lott Mr. Paul Volcker Chairman Board of Governors of the Federal Reserve System Constitution Avenue and 21st Avenue Washington, D.C. 20551  •••••••4•16  .• • Of GOVeR.• •) vV . • r/1-••/' • • co  BOARD OF GOVERNORS OF THE  FEDERAL RESERVE SYSTEM  al/  •0 •T  • tY, IIIII  •  AiRt.5 - • '•4k • • •..• • •  WASHINGTON, 0. C. 20 551  October 4, 1983  n The Honorable Lloyd Bentse United States Senator 912 Federal Building 78701 Austin, Texas Dear Senator Bentsen: questing information on re s er tt le ur yo r fo u yo Thank is cont, Mr. William Porter, who en tu ti ns co ur yo of lf ha be eign currency exchange or "f of ss ne si bu a ng hi is sidering establ and check cashing." ons or licensing requireti la gu re l ra de fe no e ar e Ther buying and selling of e th or g in sh ca k ec ch in ments involved e issue of licensing or th r, ve we Ho . se r pe ge foreign exchan Porter actually intends . Mr if e is ar d ul wo n io federal supervis e banking business is Th g. in nk ba of ss ne si bu be to go into the law. A state bank must l ra de fe d an e at st th bo regulated by w. If the charter is la e at st nt va le re e th r de chartered un e bank regulations. The at st to t ec bj su is nk ba red approved, the wish to be federally insu en th y ma nk ba e at st d re newly charte deral Deposit Insurance Fe e th by d te la gu re , ly nt and, conseque also join the Federal y ma s nk ba e at St . C) DI (F Corporation is not mandatory. If a ip sh er mb me gh ou th al , em , its Reserve Syst e Federal Reserve System th of er mb me a s me co be state bank e Federal Reserve Board. th be d ul wo r to la gu re l ra primary fede , has a dual banking system es at St ed it Un e th e us ca Be red. The Comptroller of te ar ch y ll ra de fe be to se vibanks may choo s and regulates their acti nk ba al on ti na rs te ar ch st the Currency rally insured and also mu de fe e ar s nk ba al on ti na ties. All serve System. belong to the Federal Re lae subject to federal regu ar s ie an mp co g in ld ho nk Ba C.A. §§ any Act of 1956, 12 U.S. mp Co g in ld Ho nk Ba e th r a tion unde to the Act if it acquires t ec bj su is y an mp co A ire a 1841-1850. or banks. In order to acqu nk ba a in st re te in g in controll meet the requirements of st mu y an mp co g in ld ho nk ba serve bank, a oval from the Federal Re pr ap in ta ob d an 42 18 § A. "any 12 U.S.C. Act defines a "bank" as y an mp Co g in ld Ho nk Ba e • Board. Th of the United States • • ws la e th r de un d ze ni ga or ght institution depositor has a legal ri e th at th ts si po de s pt making which (1) acce ges in the business of ga en ) (2 d an , nd ma de on to withdraw C.A. § 1841(c)). commercial loans" (12 U.S. to a g or supervision applies While no federal licensin tions k cashing business, ques ec ch d an ge an ch ex cy en rr foreign cu   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  a  The Honorable Lloyd Bentsen Page Two  d suggest that may arise under state law. In any event, I woul who will be able Mr. Porter may wish to consult a local attorney le to his new to advise him on the requirements of law applicab business. iry and I regret the delay in responding to your inqu let me know if I hope this information is useful to you. Please can be of further assistance.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Sincerely,  Donald J. Winn Assistant to the Board  .c(.3Qz  — CL.04-t-  piLt  L L¼J1 L./ C.CI N  c.  TE  At  ES  TTE  MMI  CO XAS  F.,,ANcE  k ENT AND PUBLIC WORKS Nancy Jacklin expects to have the response ready this wee ENVIRONMJOINT ECONOMIC  ?..titifcb ,-Sfafez Zenate WASHINGTON, D.C.  JOINT COMMITTEE ON TAXATION ENCE SELECT COMMITTEE ON INTELLIG  20510  September 16, 1983 c..-11 --rt  nn rn rq  5 : E rr) .171 - .1 7 i. •-a 4 .  an Mr. Paul S. Volcker, Chairm Federal Reserve System Constitution Avenue between 20th and 21st Streets, N.W. Uashington, D.C. 20551   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -70  r-r-i  -7.1:r"rt  i -.1.--....-r-ri , r._ -.. ... _ -  .(0  :17  CO cr,  Dear Mr. Chairman: e to my inquiry to which I hav I am writing in reference ed a copy of the Treasury los enc e hav I y. pl re no received r reference. Department's letter for you s ation you can provide in thi orm inf any e iat rec app ld I wou regard. Sincerely,  Bentsen Enc osure PLEASE REPLY TO: 912 Federal Building Austin, Texas 78701 ATTN: Jill Kolbe  S-.11  ...rs tt-...•, "::, .1. C:,: :: 1.--.17 ;7 •,.-;•;,-.:, r-,i n., 7,--- z, f. ) -  -•,, c__ ;-„, ;...-..,  DEPARTMENT OF THE TREASURY WASHINGTON, D.C. 20220 ASSISTANT SECRETAily   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  August 3, 1983  Dear Senator Bentsen: This is in further reference to your letter of July 25 on behalf of Mr. William Porter regarding his interest in starting a new foreign currency exchange and check cashing business. It has been determined by the appropriate Treasury officials that your inquiry falls within the jurisdiction of the Federal Reserve System, therefore, I have taken the liberty of forwardi ng your correspondence to that agency for attention and further response. I have also attached a copy of the same inquiry which was transferred to this Departme nt by the Department of Commerce. Sincerely,  W. Dennis Thomas Assistant Secretary (Legislative Affairs) The Honorable Lloyd Bentsen 912 Federal Building Austin, Texas 78701 cc:  Federal Reserve System   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  PAUL TRIBLE VIRGINIA   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  BORD OF GTOIr\it.ERPIES  United tates ienate FEDERAL rESERVE SISTE.1 WASHINGTON, D.C. 20510  September 26, 1983  1933 SEP 28 PH 12: 1 9 RECEIVED OFFICE OF THE CliAIRMAr  Honorable Paul Volcker Chairman Federal Reserve Board Washington, D.C. 20551 Dear Paul: Thank you for agreeing to speak to a distinguished group of Virginia bankers and bank board members on Friday, October 21, 1983 from 9:30 a.m. to 10:30 a.m. in the Dirksen -7enate Officd Building, Room 562. This will be the first meeting of this group which is composed of 50 of the top banking leaders in the Commonwealth who are also leaders in their respective communities. The group will meet from 9:00 a.m. • to 300 p.m. on October 21st and will discuss the major banking issues before the Congress. I would appreciate your directing your comments to prospects for the economy and current banking legislation including the moratorium proposal. We have scheduled you to speak from 9:30 a.m. to 10:10 a.m. with a question and answer period to follow. A few days before the October 21st meeting, I will send you an agenda as well as a list of attendees. In the meantime, I would appreciate your sending me a photograph of yourself and a biographical sketch for use in our briefing materials. Once again, thank you for taking time from your busy schedule to meet with this distinguished group. If you need any additional information, please contact me or Martin Baxter, my Special Assistant, at 224-4024. I look forward to seeing you on October 21st.  Paul Trible   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  BOARD OF GOVERNORS OF THE  FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 2135S1  .  PAUL A. VOLCKER  September 23, 1983  'NAL RE• • • • ••  CHAIRMAN  The Honorable Russell Long United States Senate Washington, D. C. 20510 Dear Senator Long: Thank you for your letter endorsing the invitation of Baton Rouge Business Reports to participate in its First Annual Business Awards program. Unfortunately, because of the extremely busy schedule that I have in February, I have been forced to send regrets to Mr. McCollister. As you are aware, February is an extremely busy month for us at the Federal Reserve since we must prepare for our semiannual report to the Banking Committees on the course of monetary policy. This means that our Federal Open Market Committee must meet early in the month--February 6-7 this year--to be followed by preparation of the actual report and my testimony. Since I am intimately involved in the preparation of these documents I hesitate to accept any speaking commitments during this period. I can assure you that I considered the invitation very carefully but could find no way to accommodate my schedule to the Business Awards program. With best personal regards. Sincerely,  PAUL  bcc:  Mrs. Mallardi  JRC:tjf   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  September 8, 1983  The Honorable Parren J. Mitchell House of Representatives 20515 Washington, D.C. Dear Parren: Thank you for your rece.nt letter on behalf of Mr. Jack R. Marchbanks, who expressed an interest in employment with the Federal Reserve Board. Our Division of PersonneLhas been in touch with Mr. Marchbanks. Ms. Juanita Johnson has interviewed Mr. Marchbanks and explored potential career opportunities with him. Mr. Marchbanks will be interviewed in the Division of Banking Supervision and Regulation on September 21 for the position of financial analyst. I can assure you that he will receive full consideration. We appreciate having your. recommendation on behalf.of Mr. Marchbanks. SincereLy,  SLP_ayi CO:DJW:pjt (fV-173) bcc: Mr. Shannon ‘,/ Ms. Johnson Mrs. Mallardi (2)  12 c  10R2  BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM  •11., •: 4*. ' t  *.f.: 4  •• •  ti.k:Sar  'NW;  VP•C,.... • •  -so .4".r 111.140M... . 1111V *0-6 - -A* •  Per Dave Shannon, this is the most current status and the result of the interview process will be communicated to you per your original request re status.  ...• .• ..  .  •  ,-.."4:7:- ..'!".• .....11rieft. . ' . ".. ...4„,' .4,, 4, ......4h,..  „.... „ • , ..-,........; ....;:..,  .. • -!.  .... ;-.  '.... .,• . . _ 4.• •  .."• ..' .  .....1.,.. ,  •  '  . ,71..... ••• •••!....i.• -,•::....'.:•• •  • ...-  '  ..)  ,  7' .  t  ..  •  ....... . •••••  .47 .. •-•  •  ....  • 14 ... .  . .  '.-  '....,. '":.' .  .............. • •-•4.* .- ..........` 1- - 414-'4•.•-. . • • --'" ;• •4.1M---z.:i.r •4.......A..-........' 1, . •'*. '• ' . ....  . .-- _ X y,.  11...  ,,  .‘".'... •ft . 4 . ..7 ,.......r..1%.X. ..,...... ..-  . bd. ...  4 ..  •  ,........ .  ' 1 ... .".' -  .  •11. . ;. .a. ...‘ „ti 4.  •  -  'ir-• 4 -NS.: ,r,....,-. --,14. •0 ''...-. --•  7. .;,•,,,..,-.'7",.... .  '.....--... - :-; a.c,y:..— -  ir vf . r j„ . ...-f . . 4,...,,,.. oti  ,  •  ......A1  A  _  ,,. . ^-".. -747---.7.1101r .0 .. -  ....e-  •  Ur'....  •  --"'-'7.., ---t.s.. , .,..--4,-.4...• ,, 7....,....",,,40, ...  ..4.4....  ...„ --cIL  .' ' .,. ' "  ,4„... •....thr...,.... ..*-.....  r:-  --..-F-  -  , -4 4460trAe .' .4141tVr.'"' ..Ala..**-1 --1. :11 _ -.. -4''"'"" - -. , 'r'.. '....' ....'...:  -   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ''' .... .W:.''  •  r4.1,  1.. ...... ..-41e.  -at—..• ....11„,:ideelfrid,,..: -  .,  ...:  -  A.;Z -  -, , -..., - __, •—3k. ...--w, ', . ..-4.— ..... 4r,.....ic. iir.. 1 • •rs ,..ntles  , •  —,-J9Por, 1."'"  ,a.•1-• ,-"" --. ,...  -  „ ..-.  ait, •  •••, , •••  .  ,  • •  .. 4. •'.-1   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM  Date: fl-  Ig•iii-‘16.... From: David L Shannon  11  7  3e. 4>1  BOARD OF GOVERNORS or THE  FEDERAL RESERVE SYSTEM  Office Correspondence To_  Chairman Volcker  From  David L. Shannon   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Date Subject:  August 24, 1983  Application for employment of Mr. Jack R. Marchbanks  Initial iscreening by Personnel staff recruiter indicates Mr. Marchbanks is bright, articulate, and knowledgeable about the banking industry in general. He was riinly interested in the Division of Bank Operations where his resume w s reviewed and no interest shown because no appropriate vacancy available. His resule is presently being circulated to the Division of Banking Supervisior and Regulation for their review. Don Winn is on vacation this week, but when he returns I will discuss the possibility of interviewing Mr. Marchbanks regarding the Congressional Liais(p vacancy. Attached  Attachment  TS  a copy of his application.  Removal Notice The item(s) identified below have been removed in accordance with FRASER's policy on handling sensitive information in digitization projects due to personally identifiable information.  Citation Information Document Type: Employment application Citations:  Number of Pages Removed: 8  Application for employment and resume, Jack R. Marchbanks, 1983.  Federal Reserve Bank of St. Louis  https://fraser.stlouisfed.org  ammmmm: APPROPRIATIONS  RALPH REGULA hi 16TH DISTRICT. OHIO  SUBCOMMITTEES: INTERIOR MILITARY CONSTRUCTION  BUDGET  Congroii of the Eittiteb tattO  SELECT COMMITTEE ON WGINgp  71 c=,  3bottle of Repregentatibui  C=  C")  CZ)  **.1  qui attington,0.e. 20515  Cri  August 24, 1983 C•D  Mr. Paul A. Volcker, Chairman Federal Reserve System 20th and C Streets, N.W. Washington, DC 20551 Dear Mr. Chairman: SUBJECT:  Speaking Engagement, September 20, 1983  The "Day in Washington" program for the Canton, Ohio Chamber of Commerce members will be held in EF-100 in the Capitol, We are looking forward to your presentation to the group of approximately 40 people at 10 a.m. to 10:30 a.m. on • September 20. We would appreciate very much receiving a copy of your biographical sketch to be included in information packets. I appreciate your willingness to speak to this group.  RR:sls Please send the bio to the attention of Sylvia Snyder.  RAYBURN HOUSE OFFICE BUILDING  4150 BELDEN VILLAGE STREET N.W.  201 EAST LIBERTY STREET  WASHINGTON, D.C. 20515  CAnrroN, OHIO 44718  (202)225-3876  (216)489-4414  WoosTER, OHIO 44691 (216)264-3585   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  commmmrs:  RALPH REGULA 16TH &STRICT. OHIO  APPROPRIATIONS SUBCOMM ITTEESI  INTERIOR MILITARY CONSTRUCTION BUDGET  (Congre55 of tbe Einittb  tato  31ouIt of Repreckntatibeti Etiatbington, 10.C. 20515  SELECT COMMITTEE ON AGING  CID CO (......)  --t-i -•ri C-D Ft,  Fri  C=1 C=)  .7tIm. g—  i0 CL1  w  C= C')  Cr,  July 29, 1983  'VI Fri  Frl ••••-•1 C-D r'-'7:: re,  7= . c-, en rrl --i - i -71  I —  Mr. Paul A. Volcker, Chairman Federal Reserve System 20th and C Streets, N.W. Washington, DC 20551  7 ...= 1,..  -"to  --  rn  Zi.r.  .-:z-.• .....3 -7.... -...  Cr )  ,--,  ..-;;;  c..-:)  rel  co  .01.•  Dear Mr. Chairman: Thank you very much for agreeing to speak to the members from the Chamber of Commerce in the 16th District. They are very pleased that you will be the kick-off speaker for the "Day in Washington." You are highly regarded in the 16th District as well as the entire nation as you will note from the enclosed poll results conducted by the NFIB. Your winning margin in the 16th District is substantially better than mine. I will plan on your being with the group from 10 a.m. to 10:30 a.m. on Tuesday, September 20. Tentatively, we will be meeting in EF-100 in the Capitol, however, I will confirm this prior to the 20th. I am grateful for your acceptance. rely,  Ralph Regula, M.C.  0.4 .4.0 vc  RR:sls Enclosure  RAYBURN HOUSE OFFICE BUILDING   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  20515 (202)225-3876  WASHINGTON, D.C.  4150 BELDEN VILLAGE STREET N.W. CANTON, OHIO  44718  (216)489-4414  en .7.=io  C-1  201 EAST LIBERTY STREET WOOSTER, OHIO  44691  (216)264-3585  National Federation of Independent Business  DEAR  CONGRESSMAN  REGULA:  NFIB THE FOLLOdING IS A REPORT ON THE RESULTS OF MANDATE BALLOT #449. MEMBERS WERE POLLED ON THE QUESTIONS ANSWERED BELOW DURING JUNE, 1983. RESULTS  QUESTIONS :  DO  YOUR DISTRICT (16)  YOU :  IN  PERCENT :  THE YOUR STATE NATION (OH)  FAVOR OPPOSE UNDECIDED:  79 16 5  78 15 7  77 15 3  FAVOR OR OPPOSE STANDBY TAXES ON INCOME AND OIL IN 1936 IF THE DEFICIT IS OVER 2.5 PERCENT OF GNP  • FAVOR . . • OPPOSE UNDECIDED:  13 81 6  14 82 4  17 8j 3  3.  FAVOR OR OPPOSE RETAINING THE PRESENT SMALL-BUSINESS EXEMPTION FROM RCRA  . FAVOR . • OPPOSE . UNDECIDED:  43 49 8  46 47 7  44 48 3  4.  FAVOR OR OPPOSE ALLOWING WORKERS TO BE COVERED BY UNEMPLOYMENT TAX ACT  FAVOR . • . OPPOSE . UNDECIDED:  56 30 14  53 33 14  54 33 13  5.  FAVOR OR OPPOSE THE USE OF S3AGUARANTEED LOANS ONLY FOR LONG-TERM CREDIT NEEDS  • . FAVOR . • OPPOSE UNDECIDED:  29 56 15  33 56 11  34 57 9  1.  FAVOR OR OPPOSE PAUL VOLCKER AS FEDERAL RESERVE  2.  THE RE-APPOINTMENT CHAIRMAN OF THE BOARD  OF  RAILROAD THE FEDERAL  THE PRO AND CON ARGUMENTS APPEAR IN THE ENCLOSED COPY OF MANDATE #449. NOW, TO FACILITATE IN THE PAST WE HAVE FORWARDED TO YOU ALL VOTED BALLOTS. YOUR INSPECTION OF OUR REPORT, WE ARE SUBSTITUTING A COMPUTER PRINT-OUT OF MEMBERS WHOSE BALLOTS DO NOT CONTAIN PERSONAL COMMENTS, TOGETHER WITH THE BALLOTS RECEIVED FROM MEMBERS WHO COMMENT.  Home Office:  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  WILSON S. JOHNSON PRESIDENT  4  0VGJL 20th  Avenue, V on Aohan California aiAng Tolanhnno (41 5) gAl -7A Al 1  Legislative (firc• Washington,  D.C.  WASHINGTON OFFICE: 327 CANNON BUILDING WASHINGTON, D.C. 20515 (202) 225-3085  ALAMANCE COUNTY OFFICE:  P.O. Box 814, GRAHAM, N.C. 27253 (919) 229-0159 DAVIDSON COUNTY OFFICE:  COMMITTEES:  ARMED SERVICES INVESTIGATIONS SUBCOMMITTEE SEAPOWER AND STRATEGIC AND CRITICAL MATERIALS SUBCOMMITTEE  SMALL BUSINESS GENERAL OVERSIGHT AND THE ECONOMY SUBCOMMITTEE TAX, ACCESS TO EQUITY CAPITAL AND BUSINESS OPPORTUNITIES SUBCOMMITTEE   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  CongreMS of tbe Itniteb 'tate  P.O. Box 864, LEXINGTON, N.C. 27292 LEXINGTON:(704) 249-7556 THOMASVILLE:(919) 476-1131, EXT. 399 DENTON:(704) 869-2194, ExT. 399 N. DAVIDSON:(919) 724-3803, EXT. 399 GUILFORD COUNTY OFFICES:  3i)ou5e of ReprefSentatibeiS ROBIN BRITT SIXTH DISTRICT OF NORTH CAROUNA  P.O. Box 299, GREENSBORO, N.C. 27402 (919) 378-5005 510 FERNDALE BLVD., HIGH POINT, N.C. 27260 (919) 886-5106  August 5, 1983  Honorable Paul A. Volcker Chairman Board of Governors of the Federal Reserve System Constitution Avenue and 21st Street Washington, D.C. 20551  ••••••  Col  Dear Mr. Chairman: This will confirm our telephone conversation regarding youn speaking at the Freshmen Democrats Budget meeting on TuesdRy, September 20th. The group is looking forward to meeting with you and hearing what you have to say. We start at 7:30 a.m. with coffee and donuts, and the meeting goes from 8:00 a.m. to 9:00 a.m. We would like to have you come as early as 7:30 a.m. for coffee if you could. I'll let you know where the meeting will be held as soon as a room is confirmed. Thanks again for agreeing to speak at our meeting.  ROBIN BRITT Member of Congress RB/cg cc:  Congressman Buddy MacKay  MATTHEW F. McHUGH  BINGHAMTON OFFICE:  28TH DISTRICT, NEW YORK  201 FEDERAL BUILDING BINGHAMTON, NEW YORK 13902 (607) 773-2768  COMMITTEE ON APPROPRIATIONS  Congress of the United cStates  SUBCOMMITTEES: AGRICULTURE, RURAL DEVELOPMENT AND RELATED AGENCIES FOREIGN OPERATIONS  SELECT COMMITTEE ON CHILDREN, YOUTH AND FAMILIES WASHINGTON OFFICE: 2335 RAYBURN HOUSE OFFICE BUILDING WASHINGTON, D.C. 20515 (202)225-6335   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ITHACA OFFICE: TERRACE HILL-BABCOCK HALL ITHACA, NEW YORK 14850  J one of Representation illashinjgon, D.C. 2o5)5  (607) 273-1388  / yos  KINGSTON OFFICE: 292 FAIR STREET KINGSTON, NEW YORK 12401 (914)331-4468  August 4, 1983 0  06 CO  -71 rrl C, (VI  Mr. Paul Volker Chairman Federal Reserve Board 20th and C Streets, N.W. Washington, D.C. Cl) ^.  Dear Mr. Volker: On Tuesday, September 20th I will be holding a seminar here in Washington for a select group of businessmen from my Congressional District. I would be very pleased if you could participate in this program. The best time for us would be 2___LLL.g.m. in the Rayburn House Office Building. However, if you are n.6E—able to participate at that time but were able to at another time, we could probably work this out. I expect about 60-75 of the top businesspeople from my area will attend. As you may know, I have the pleasure of representing the area where IBM started its business and continues to maintain a large facility. Other major employers include Singer Link, General Electric and Cornell University. I would appreciate your giving this invitation your consideration. If you should require more information, please contact me or my Administrative Assistant, Tom Parkhurst. Best regards, Sincerely.  Matthew F. McHugh MFM:cs  e  730 ?
Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102