View PDF

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 27  Preferred Citation: Federal Reserve Membership, 1979; Paul A. Volcker Papers, Box 27; Public Policy Papers, Department of Rare Books and Special Collections, Princeton University Library Find it online: http://findingaids.princeton.edu/collections/MC279/c188 and haps://fraser.stlouisfed.orearchival/5297  The digitization ofthis collection was made possible by the Federal Reserve Bank of St. Louis. From the collections of the Seeley G. Mudd 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 defined by the copyright law of the United States. They further agree to request permission of the 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 (Title 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 what it knows about the copyrights and rights of privacy, publicity or trademark in its finding aids. 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 clirected to: Seeley G. Mudd Manuscript Library 65 Olden Street Princeton, NJ 08540 609-258-6345 609-258-3385 (fax) mudd@princeton.edu   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  BOARD Or' GOVERNORS OF THE  FEDERAL RESERVE SYSTEM  Office Correspondence To  Chairman Volcker  Date Subject:  August 23, 1979  H.R.7 Reserve Worksheet  From Perry Quick  Attached is the more complete version of commercial bank reservable balances above selected exemption levels.  An additional  table sets out the comparable reservable balances and applied vault cash for all depository institutions.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Reserves Worksheet ($ Billions, December 1977)  Tranche  Reserve Ratio  Transactions Balances  Savings  Nonpersonal Time  Other Time  Total  Less: Applied Vault Cash  Reserves at Fed*  of * Reserves at Fed of $7.8 billion implies net cost to Treasury $292 million.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Required Reserves  MODIFICATIONS TO H.R. 7  1.  Reduce exemption level and reserve ratios.  2.  Reinsert collateral provisions. -  (See Tables 1,2, and 3.)  (See Table 4.)  Add to eligible assets. Foreign government securities. Assets denominated in foreign currencies.  --  Eliminate collateral requirement for Notes held in FR Bank vaults.  3.  Redefine short-term, non-personal time deposits. --  Exclude deposits of State and local governments. Non-profit organizations.  4.  Eliminate Stanton Amendment or, at least, Equalize reserve ratios during voluntary and mandatory phases. --  H.R. 7 reduces ratio from 3 percent to 0 on first $35 million of transactions deposits when requirements become mandatory.  5.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Reporting Authority  -  a.R.  7 requires Board to collect all data from nonmembers  through the other agencies. Except, report of reservable deposits.  AUGUST 20, 1979 TABLE 1 ANALYSIS OF MONETARY IMPROVEMENT PROGRAM PLANS  Exemptions: Ratios: Transactions Savings Short-time Long-time  35/0  1977 35/0 5/0  5/5  11 0 0 0  12 0 0 0  17 0 0 0  12 0 6 0  7.2 .6 7.8  8.3 .7 9.0  11.0 2.2 13.2  13.7 2.4 16.1  Reserves Released  19.5  18.3  14.1  11.2  Cost of Reserve Requirements Changes (millions) Revenue from Service Charges Revenue from Float Charge  1307 (410) (247)  1228 (410) (247)  931 (410) (247)  769 (410) (247)  Net Cost after Taxes (55 percent marginal rate)  293  257  123  '50  PLAN:  Reserves (billions) Members Nonmembers Total  Actual 1977  27.3 0 27.3  Number of Commercial Banks Exempt Members Nonmembers  0 8868  5044 8633  5044 8633  2088 5612  2086 5611  With Required Reserves Members Nonmembers  5664 0  620 235  620 235  3576 3256  3578 3257  With Reserves at Fed Members Nonmembers  5587 0  332 117  357 122  2217 1596  2252 1602  Percent of Total Deposits At Banks with Required Reserves At Banks holding Balances at Reserve Banks  73.1 72.9  64.0 53.8  64.0 54.9  91.4 79.4  91.5 n.a.  Percent of Transaction Deposits At Banks with Required Reserves At Banks holding Balances at Reserve Banks  73.7 73.5  65.4 55 6  65.4 56 7  92.6 81.9  92.6 a.a.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  AUGUST 20, 1979 TABLE 2 ANALYSIS OF MONETARY IMPROVEMENT PROGRAM PLANS 1977 35/0  25/0  15/0  10/0  5/0  11 0 0 0  11 0 0 0  11 0 0 0  11 0 0 0  11 0 0 0  7.2 .6 7.8  7.6 .8 8.4  8.2 1.1 9.3  8.7 1.3 10.0  9.5 1.9 11.4  Reserves Released  19.5  18.9  18.0  17.3  15.9  Cost of Reserve Requirement Changes (millions) Revenue from Service Charges Revenue from Float Charge  1307 (410) (247)  1267 (410) (247)  1204 (410) (247)  1148 (410) (247)  1058 (410) (247)  292  275  246  221  180  Exemptions: Ratios: Transactions Savings PLAN: } Short-time Long-time  Reserves (billions) Members Nonmembers Total  Actual 1977  27.3 0 27.3  Net Cost after Taxes (55 percent marginal rate) Number of Commercial Banks Exempt Members Nonmembers  0 8868  5044 8633  4795 8478  4236 8038  3571 7444  2088 5612  With Required Reserves Members Nonmembers  5664 0  620 235  869 390  1428 830  2093 1424  3570 3256  With Reserves at Fed Members Nonmembers  5587 0  332 117  430 174  697 370  1055 632  2064 1478  Percent of Total Deposits At Banks with Required Reserves At Banks holding Balances at Reserve Banks  73.1 72.9  64.0 53.8  68.5 57.1  75.9 62.8  82.0 68.1  91.4 97.3  Percent of Transaction Deposits At Banks with Required Reserves At Banks holding Balances at Reserve Banks  73.7 73.5  65.4 55.6  70.0 59.0  77.5 65.2  83.5 70.6  92.6 80.0   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  AUGUST 20, 1979  TABLE 3 ANALYSIS OF MONETARY IMPROVEMENT PROGRAM PLANS  10/0  5/0  10 0 0 0  10 0 0 0  10 0 0 0  6.4 .6 7.0  6.9 .9 7.8  7.3 1.1 8 4  7.9 1.5 9.4  19.5  20.3  19.5  18.9  17.9  1307 (410) (247)  1358 (410) (247)  1299 (410) (247)  1255 (410) (247)  1183 (410) (247)  293  315  289  269  236  35/0  25/0  11 0 0 0  10 0 0 0  7.2 .6 7.3  Reserves Released Cost of Reserve Requirement Changes (millions) Revenue from Service Charges Revenue from Float Charge  PLAN:  Exemptions: Ratios: Transactions Savings Short-time Long-time  Reserves (billions) Members Nonmembers Total  Actual 1977  27.3 0 27.3  Net Cost after Taxes (55 percent margin rate)  1977 15/0  Number of Commercial Banks Exempt Members Nonmembers  0 8868  5044 8633  4795 8478  4236 8038  3571 7444  2088 5612  With Required Reserves Members Nonmembers  5664 0  620 117  809 161  1428 343  2093 575  3576 1349  Percent of Total Deposits At Banks with Required Reserves At Banks holding Balances at Reserve Banks  73.1 72.9  64.0 53.8  68.5 55.3  75.9 60.8  82.0 66.0  91.4 75.2  Percent of Transaction Deposits At Banks with Required Reserves kt Banks holding Balances at Reserve Banks  73.7 73.5  65.4 55.6  70.1 57.1  77.5 63.0  83.5 68 4  92.6 77.9   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Table 4 Note Issue Collateral With aud Without Suggested Provision ($ billions) June 30, 1979  Actual  Proposed  104.8 17.3 118.1  104.8 -0104.8  12.3 1.6 -0106.4 7.8  12.3 1.6 -0106.4 7.8  5.5  5.5  -0-0133.6  2.4 -0136.0  15.5  31.2  FR Notes Outside FR Banks Held in Vaults Total to be collateralized Eligible Assets Gold certificates & SDR's Member borrowings Acceptances Treasury securities U.S. agency obligation Securities held under repurchase agreement Assets denominated in foreign currencies Foreign government securities Total collateral Net Free Collateral   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Mo.  BOARD OF 130VERNORS THE  FEDERAL REqERVE SYSTEM  Offi.ce Correspondence To  Chairman Volcker  From  Perry D. Quick  Date Subject:  August 28, 1979  Effect of H.R. 7 on the 10 Largest Banks  The attached table shows estimated reserves released and net before-tax earnings effects of H.R. 7 for the 10 largest banks.  Reserves  released for these banks are sizable--a reducti„on from $7.7 billion under the current reserve structure to $2.8 billion after H.R. 7 is fully enacted. 1/ their net earnings After payment for Fed services of roughly $60 million gain for 1977 (at 6-1/2 percent interest) would have been on the order of $250 million.  1/ A word of caution: these estimated charges are very rough and could change--but only slightly--on the basis of survey data available shortly. Moreover, the banks would be charged for float, raising their costs by roughly 50 percent of service charges.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  • Deposits and Required Reserve Balances (December 1977) Reported Total Domestic Deposits ($ billions)  Reserves at Fed (8 millions) H.R. 7 Current  Earnings on Released Reserves ($ millions)  Service Charges ($ millions  Net Earnings Gain ($ millions)  Bank of America  36.8  1,775  456  85.7  10.9  74.8  Citibank  17.7  1,087  448  41.5  5.8  35.7  Chase Manhattan  18.7  1,010  421  38.3  6.2  32.1  Manufacturers Hanover  16.9  786  338  29.1  7.5  21.6  Morgan Guaranty  10.8  646  348  19.4  2.7  16.7  Chemical Bank  12.4  725  301  27.6  5.9  21.7  Continental Illinois  9.3  455  152  19.7  6.1  13.6  Bankers Trust  8.5  265  82  11.9  3.5  8.4  First National of Chicago  9.0  439  115  21.1  4.6  16.5  11.9  508  153  23.1  4.5  18.6  Security Pacific   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  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: Book Citations:  Number of Pages Removed: 126  Abt Associates, Inc., Peter Merrill Associates, and Arthur Andersen & Co. "The Federal Reserve Membership Problem: Impact on Banks: A Study for the American Bankers Association." Washington DC: American Bankers Association, 1979.  Federal Reserve Bank of St. Louis   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102