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Ir  (or ye MI 3 n c..$3   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  iqqo  1  Collection: Paul A. Volcker Papers Call Number: MC279  Box 10  Preferred Citation: Congressional Correspondence, September 1980; Paul A. Volcker Papers, Box 10; Public Policy Papers, Department of Rare Books and Special Collections, Princeton University Library Find it online: http://findingaids.princeton.edu/collections/MC279/c433 and https://fraser.sdouisfed.org/archival/5297 The digitizadon 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. 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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 directed to: Seeley G. Mudd Manuscript Library 65 Olden Street Princeton, NJ 08540 609-258-6345 609-258-3385 (fax) mudda,princeton.edu   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  BOARD OF GOVERNORS nF THE  FEDERAL RESERVE SYSTEM WASHINGTON • '1AL R• es • • •...• •  FREDERICK H. SCHULTZ VICE CHAIRMAN  September 2, 1980  The Honorable James M. Hanley Chairman Subcommittee on Investigations Committee on Post Office and Civil Services House of Representatives WashincTton, D.C. 20515 Dear Chairman Hanley: In Chairman Volcker's absence, I am pleased to respond to your letter of August 5 regarding the Board's actions to prohibit sexual harassment of its employees. The following respon ses correspond to the questions asked in your letter: 1. The Board issued the enclos ed policy statement on sexual harassment on March 24, 1980. 2. The Board's policy statement clearly defines and prohibits sexual harassment, and describes the remedies available to victims and penalties for har assers. 3. The Board's policy statement was distributed directly to all managers and employees of the Board. 4. The Board started a program to train its managers in order to sensitize them to the pro blems of sexual harassment in the fall of 1979. Approximately 50 per cent of our managers have been exposed to this training. Alt hough no formal program of training has been established for employees other than managers, it is our intention to expose all Board employees to such training. 5. The Board has not used the sex ual harassment training module created and distributed by the Office of Personnel Management (OPM) since our own module was independently developed prior to the availability of OPM's module s. The Board's sexual harassment pol icy and related training program were both developed prior to the Equal Employment Opportuni ty Commission's (EEOC) April 11, 198 0 guidelines. However, it is our   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The Honorable Jame*. Hanley Page Two  plan to abide by the sp irit and intention of th e EEOC's guidelines and to include them in ou r future training to EE O counselors and managers. In addition, Phase II of the Board's Affirmative Action Plan, currently being de veloped, will include sp ecific steps to alleviate or preclude an y sexual harassment. inquiry.  I hope that this inform ation is responsive to yo ur Please let me know if we can be of further assist ance. Sincerely,  / s/ Frederick H. Schultz Enclosure JRW:ETM:CO:JPB:pjt (#V-322) bcc: Gov. Schultz Messrs. Denkler, Mulrenin, Weis, Daniels Mrs. Mallardi   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  \  MNETY-SIXTHCONGRESS  JAMES M. HANLEY. N.Y.. CHAIRMAN GLADYS NOON SPELLMAN. MO. DONALD JOSEPH ALPOSTA. MICH. JOHN J. CAVANAUGH. NEI3R. GENE TAYLOR. MO. JIM LEACH. IOWA  Ac l ion assigned Mr. Denkler  •  Apt'5c of Ikepre5entatitie5 SUBCOMMITTEE ON INVESTIGATIONS OF THE COMMITTEE ON POST OFFICE AND CIVIL SERVICE 122 CANNON HOUSE OFFICE BUILDING  I •  1.111a9bington, D.C. 20513 August 5, 1980  Mr. Paul Volcker Chairman Federal Reserve System 20th Street and Constitution, N.W. Washington, D.C. 20551 Dear Mr. Volcker: In October and November, 1979, my Subcommittee on Inves tigations held hearings which examined the problem of sexual haras sment of Federal employees. These hearings were based on an extensive investigation of the problem and resulted in several governmental directives designed to alleviate the problem. During these hearings, the Subcommittee requested that the Office of Perso nel Management issue a policy statement on sexual harassment, which Director Alan K. Campbell distributed to department and agency heads on December 12, 1979. This directive recommended that each agency: 1.  Issue a very strong management statement clearly defin ing the policy of the Federal government as an employer with regard to sexual harassment;  2.  Emphasize this policy as part of new employee orientatio n covering the merit principles and the code of conduct; and  3.  Make employees aware of the avenues for seeking redre ss, and the actions that will be taken against employees violating the policy.  Each Federal department and agency has now had nearly eight months to implement the Office of Personnel Management's direc tive. The Subcommittee plans to review the progress the Federal gover nment has made in addressing the problem in a hearing to be held Septe mber 16, 1980. During this hearing, we will be evaluating the progress made by individual agencies. Accordingly, we would appreciate an update on your agency's compliance with the Office of Personnel Management 's directive. Specifically, we are requesting the following information:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  1.  Have you issued a policy statement on sexual harassment for your agency?  2 2.  Did this policy statement clearl y define and prohibit sexual harassment? Did it also describe remedies available to victims and penalties for har assers?  3.  Was this policy statement distri buted directly to managers? Directly to employees? What percentage of each group would you estimate is clearly awa re of your agency's policy? Has your agency trained its managers in order to sensitize them to the problem of sexual har assment? Have you similarly trained your employ ees? What percentage of each group would you estimate has been trained?  5.  Have you used the sexual harassmen t training module created and distributed by the Office of Personnel Management in your agency's traini ng efforts? If not, how have you developed your traini ng?  In addition to the Office of Per sonnel Management's directive, the Equal Employment Opportuni ty Commission has also taken steps to address sexual harassment. In response to our request, the Commission has directed agencies to include in Phase II of their affirmative action plans specific steps to prevent sexual harassmen t. The Commission also has developed a training module for EEO counselors to help them judicious ly process sexual harassment complaints. Most importantly, the Commission on April 11, 1980, issu.ed interim guidelines on sexual harassment which further define the problem and detail agency res ponsibilities in addressing harass ment These guidelines are in effect until the Commission has published final regulations. For the purposes of our September 16 hearing, the Subcommittee would also like to know:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  1.  Has your agency included in Phase II of its affirmative action plan specific steps to allevi ate sexual harassment?  2.  Have your agency EEO counselors receiv ed training to enable them to judiciously deal with sex ual harassment complaints?  3.  Are your agency's managers aware of the recent Equal Employment Opportunity Commission guideline s?  4.  Are your agency's managers aware of their responsibilities under the Equal Employment Opportunity Commission guidelines?  •  s•  3  •  I would appreciate receiving :our responses to my questions by September 1, 1980, in order to .ifford the Committee the opportunity to prepare for our hearing. I look forward to your cooperation in helping us fulfill the Federal government's commitment to a workplace free from sexual harassment. With every best wish, I am ,incerely, •  JMH:tbs   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  JS M. HANLEY rman  -0\40 . 7114-€1/0-44:, • V - 335 BOARD OF GOVERNORS OF TH E_  FEDERAL RESERVE SYSTEM WASHINGTON. O. C. 20551  September 2, 1980  The Honorable Russell Lo ng United States Senate Washington, D.C. 20510 Dear Senator Long: Thank you for your letter of August 14 requesting co on the enclosed letter mment from your constituent, Be ss ye D. He nd rix, concerning Regulation D, wh ich implements provisio ns of th Mo e netary Control Act of 1980 (P.L . 96-221). As you are aware, Congress enacted the Monetary Control Act, which was signed by the President on March 31, 1980, to provide the Federal Reserve with the tools believed approp riate for the conduct of monetary poli cy. The Act provides for the imposition of Federal reserve requir ements on all depository in stitutions in the United States, permit s these institutions to borr ow from the Federal Reserve when nece ssary, and provides open access to Federal Reserve services to all depository institutions. The Act is indeed far reaching in its effe cts and is important as a step toward competitive equality among de pository institutions. On June 4, 1980, the Boar d published for public comm its Regulation D--Reserve ent Requirements of Depository Institutions-to implement the requirem ents of the Act. The Board acted on August 5 to adopt the regu lation with several signific ant changes, First, in order to reliev e the burden that the immedi at e imposition of reserve requirements wo uld have on 11,000 smaller in stitutions, the Board has deferred re serve requirements for inst it utions with deposits of less than $1 million. In April, the Boar d will consider whether a further delay is warranted. In addition, the deposit reporting and reserve main tenance requirements for in stitutions with deposits of between $1 million and $5 million have been reduced through the implementation of a quarterly reporting and maintenance procedure. We believe that these actions should assist in the orderly implementation of the Act with a minimal burd en on financial institutions. (It should be noted that under the Act most institutions will have eight year s in which to phase in rese rve requirements,   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  AI  •  ;he Honorable Russ" Long Page 2  While reserve requirements may be a burden for deposi tory institutions, Congress has conclu ded that they are a necess ary element for maintaining the continue d strength of the nation 's financial system. You may be interest ed in the enclosed copy of the Board's release announcing revisi ons in Regulation D. I hope this information is useful. if I can provide additional information.  Please let me know  Sincerely,  (Signed) Donald J. Wind Donald J. Winn Special Assistant to the Bo ard Enclosures  (GTS:) DJW:CO:mrk (V-335 ) bcc:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Mrs. Mallardi  11.•,"  :  3)  RBL:jb  'ZCI-viteb ,Sfalez Zenafe August 14, 1980  Respectfully referred to:  Honorable G. William Miller Chairman, Board of Governors of the Federal Reserve System Federal Reserve Building Constitution Avenue between Twentieth and Twenty-first Streets Washington, D. C. 20551  =5  Because of the desire of this office to be responsive to all inquiries and communica tions, your consideration of the attached is requested. Your findings and views, in duplicate form, along with return of the -.4  enclosure, will be appreciated by  1 • ....ea  6•11  U.S.S.  Form #2 e.ir   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  'if'. •   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  •  c‘ j,• b MI:VC; 4!jeloriAra9/;yee.%  ) r  CAW;vir6i4albitri) August 7, 1980  The Honorable Russell Long United States Senate Washington, D.C. 20000 Dear Senator Long: Please consider the wishes of the millions of people who are members of Credit Unions throughout this nation of ours. We as members feel that the enactment of the proposed Regulation D will be a disaster to the Credit Unions. Please contact the Federal Reserve Board and do everything within your power to get this regulation defeated. Thanking you I am. Respectfully yours, I  • c.d.": t" e Bessve D. Hendrix Treasurer/Manager  BDH/ss cc: Federal Reserve Board  r.() Nix 1271 • 708 .1a‘kon Street • Alexandria.  71301 • Phone (31S1 44i-738S  •,„ oFG01,14.• 4Z-v 1 • 1/ 0 • •0 • -n  BOARO OF GOVERNORS OF THE  FEDERAL RESERVE SYSTEM WASHINGTON  FREDERICK H. SCHULTZ VICE CHAIRMAN  September 2, 1980  The Honorable James M. Hanley Chairman Subcommittee on Investigations Committee on Post Office and Civil Services House of Representatives Washington, D.C. 20515 Dear Chairman Hanley: In Chairman Volcker's absence, I am pleased to respond to your letter of August 5 regard ing the Board's actions to prohibit sexual harassment of its employees. The following responses correspond to the questions asked in your letter: 1. The Board issued the enclosed policy statement on sexual harassment on March 24, 1980. 2. The Board's policy statem ent clearly defines and prohibits sexual harassment, and describes the remedies available to victims and penalties for harassers. 3. The Board's policy statement was distributed directly to all managers and employees of the Board. 4. The Board started a program to train its managers in order to sensitize them to the problems of sexual harassment in the fall of 1979. Approximately 50 per cent of our managers have been exposed to this training. Although no formal program of training has been established for employees other than managers, it is our intention to expose all Board employees to such training. 5. The Board has not used the sexual harassment training module created and distributed by the Office of Personnel Management (OPM) since our own module was independently developed prior to the availability of OPM's mod ules. The Board's sexual harassment policy and related training program were both developed prior to the Equal Employment Opportunity Commission's (EEOC) April 11, 1980 guidelines. However, it is our   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The Honorable JamliV. Hanley Page Two  •  plan to abide by the spir it and intention of the EEOC's guidelines and to include them in ou r future training to EE O counselors and managers. In addition, Ph ase II of the Board's Affirmative Action Plan, currently being de veloped, will include sp ecific steps to alleviate or preclude an y sexual harassment. inquiry.  I hope that this inform ation is responsive to your Please let me know if we can be of further assi stance. Sincerely,  Frederick H. Schultz Enclosure JRW:ETM:CO:JPB:pjt (#V-322) bcc: Gov. Schultz Messrs. Denkler, Mulrenin, Weis, Daniels Mrs. Mallardit/'   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  tefolher 2, 11$D  TN* C'enoraLle WilliaN L. Arnstronl - ates benate - :sti!i4ton, D.C. 20510 .!:Axr  ;it:actor Palaatroncit  In the atsenct: of CLairman VcIcer I want to thank .:.. for i(dur ltAtcr f ut 18 recomwendini; 14arO1d R. of the board's Consumer Advisor-, 01,4.t3t.111,11, Jr., Az a UX letter to the Chairman's attention I 11 rtz zetura and I cat aswure you that Pr. f;t4ethille quali 2_1ti‘,1-1* -will receive full consideration vhen tc oard rates ual aL it'illtgAents to the Council.  :Lc r.oard 114,4r4CiatioS receivim your recommendatioL 1Gur intertA;t in the Consumer Adviser/ Council. A.no*rely  /5/ rroderick V.. Schultz  CO:DJw:mrk DCC   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  337)  WV, 6chu1tz Aim Yiarie nallardi  (w/copy of incoming)  WILLIAM L. ARMSTRONG COLORADO   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  IJE  Zenafe  WASHINGTON, D.C. 20510  •  August 18, 1980  Honorable Paul Volcker Chairman Board of Governors of the Federal Reserve System Washington D.C. 20551 Dear Mr. Chairman: I enthusiastically endorse the nomination of Harold R. Smethills, Jr. for membership on the Consumer Advisory Council of the Federal Reserve System. I have known Hat Smethills for four years and I respect his judgment and banking expertise. From nomination papers already submitted, you know that Mr. Smethills is an attorney and holds a masters degree in business administration; you also know of his volunteer legal work with Denver's needy, and his commitment to the Colorado Air National Guard. After 13 years of banking experience, Mr. Smethills is now vice president of Colorado's largest bank, responsible for legal compliance, affirmative action, corporate philanthropy, government relations and legal administration. Mr. Smethills is a leader in Colorado and national banking circles because of his impressive mastery of the dynamics of the financial world. This skill, coupled with his keen speaking ability, enables him to clearly explain even the most complex banking and legal issues. Further, he thrives on being at the cutting edge of business and government and he wants to draw the boundary lines which must exist between the two in the most practical manner possihae. Drawing these boundary lines will be a challenge it the 1980's. Banking will change dramatically this decade: electronic funds transfers,and "paperless" bank management will transform industry, and new methods will be needed to safeguard consumer privacy and to improve consumer banking services. In his banking career, Mr. Smethills has specialized in these issues and his experience and authority will be invaluable to the Consumer Advisory Council. I strongly recommend his appointment. I would be happy to chat with you should you have any questions. Thank you for your courtesy. Best wishes.  WLA:bwm cc to Ms. Janet Hart  William L. Armstrong  Ai  Llo;t (!, TL. Cboi :oint _eoncmic Ct -11ttuc 20510  EncleT:eti reasur Atte the reCi7ral 7 b I 4-:ezi3d from keliruar:i 19eo Fetlertli . ir ,. :r.zintea in the f;ini.tet. uf.A.1ir Vulletin. It is Luint.4 released to the i.roa:; for newsvaperl. aent to t Coi,ios of the reirt are alao oc:A( Chairmen ot othor interooted Comnittrdeu. Viditinno.1 Ttrff r+f rn:P7 nf are encIc5c.: tor Committee.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Amecrel., Ksigned) F. H. 13clita  September 3, 1)80  The Honorable Adlai E. St evenson Chairman Subcolamittee on Internationa l :inane° Committee on Lanking, housin g and Urban Affairs United States Senate Washinc;ton, D.C. 20510 Dear Chairman Ctevc!nson: Enclosed is a copy of a re port on foreign exchange operations by the Treasury and the Federal Reserve co vering the period from February 19 80 through July 1980. The report will be I.:rinted in the Z;ek) te4c,ber issue of the redera l Reserve Lullotin. II; is boin, rele ased to the :ress for use in tomorrow Lkorning's newETape rs. Sincere:LI-  Frederick H. Schultz  Enclosure Identical letters to:  JRC:mrk bcc: Gov. Schultz Mrs. Mallardi   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Sen. Heinz (ranking minority me mber of Senate Bkg. Subcmte. on Internationa l Finance) Chrmn. Neal (House Bkg. Subcmt e. on International Trade, Investment and Monetary Policy) and Cong. Jim Leach (ranking mi n. member) Ranking minority members--S en. Javits (JEC) Sen. Garn (Senate Bkg.) Cong. Stanton (Hse. Bkg.  The Zonorabla Uenry S. Reuss Chairman CoNwittee on Sankirlg, Finance and Urban Affair..; House of Rezzesentativos waehington, D.C. 205It near Claimer, V.euse. Thank you for your letter concerning eso Sok/Irate poeal to adopt a business day statement wee: for vur7koecs of computing reserve requirements. erlis proposal was intende not Only to elivinate the inequity arising from the use of weeYene arbitrage tochnic:ues, but also to reducy the likelihood that measurQs of the tIonetery aggrevItes would be distorted by practicnr that artificially inflate cash items. The t-Tocedure was prorosee in t%o context of the Board's revised Pogulation D in order to obtain public views on how the rractice would affect derository institutions. radiate' VAUferVID ataff also arranged infornal meetingn with 3everal persona familiar with C;(0 rractice of weakand arLitracc, to obtain additional information. In the course of tleas discussions, the rtaff *Koeame aware of certain reserve avoidance transactions that would not be ended with a businesa-aay computation weaP. In particular, it was learned that some institutions engage in, and many ottnrn are aware of, the rractioe of botrot.rins for very short reriorle in clearing house funds and repaying in federal funds. Titene! transactions would continue to be profitale une.er a businesn-day week and would eznentially be undetecta!Ae. As a resuat it would prow* difficult to uahe ailustmenta to remove potential distortions ia the measures of the monetary aggregates. voreover epoe also felt that the Uoption of a business-day weal. might encourage more roliartce on such boohing to recour earnings losses :or ordinary wcekend tr4nsactions. Also, the toard !las noted that a number cf mailer depoaitory institutions that are not involved in weekeud arbitrage techniques would encounter slightly higher required reserves if a 1-uniness-day computation period Imre adopted. As A result, thc Board believed that it would 1-;e   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The lioncralle nenvi Page Two  ntAltla  to aproi,riatc for tic! adeitionnl alterntivo zesasurea that could. efferctIvel c-n4 all reccrve avoidance rrac• a1. 7 yr, irete tc revicw t : tic, In ailditio2!, itho wen) , ,ly ruro&Al:tr and 3uhnitted liorrcIt-7irr; rc!TAIrt4! reports of depczitL by pottial participants in rcervc avoiaance trarsactiono to hav en4t0 in responsa to the determinc if sue. transactio Board /s statement. Individual institotionc conttnuin to enc;* in reserve avoidance techniques will he oouns411c: on to=!ir practices. IZ an 1:ndetlirable level of suc14 transactions continuos. th-7'.. Board rlay a3Alin consider regulatory actin includir. :11r-rtion of tLe ttusineas-day oom:latation rxoposal or eliminatinr: cas iterl dfiucrroi tiono that arise frora Eurotiollar The iloard recon:Uiev the inry-.cuit7 ro6ulting fr enkend arLitracok transactims ad is intent on !alti.n such practice in a way that doon not place an undue 14.3r,2&n on other eovository LaStitutions that do not engage in thoso trneections. Sincerc,ly Wait A. Voicka GULTDS4FILT:ABF.JPB:pjt (W-344) bcc: mesurs. Schwartz, Sinpson, Jensen, Frankel Mrs. Mallardi (29‘/Lega1 Records (2)   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  • The Honorable Henry S. Reuss Page Two  appropriate for the staff to explore additional alter native measures that could effectively end all reserve avoid ance practices. In addition, the staff was directed to review the weekly reports of deposits and Eurodollar borrowing reports submitted by potential participants in reserve avoidance transactions to determine if such transactions have ended in response to the Board's statement. Individual institutions continuing to engage in reserve avoidance techniques will be counseled on their practices. If an undesirable level of such transactions continues, the Board may again consider regulatory action, including adoption of the business-day computation proposal or eliminating cash item deductions that arise from Eurodollar borrowings. The Board recognizes the inequity resulting from weekend arbitrage transactions and is intent on halting such practices in a way that does not place an undue burden on other depos itory institutions that do not engage in these transactions.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Sincerely,  (zkti,4E-1  Lx (//t.  (kLki  I/X6C64  :(2%  • HENRY S. REUSS. WIS., CHAIRMAN THOMAS L. ASHLEY, OHIO ViILLIAM S. MOORHEAD. FA. FERNAND J. ST GERMAIN, R.I. HENRY B. GONZALEZ, TEX.  Josrri-i G. MINISH. N.J. FRANK ANNUNZIO. ILL. JAMES M. HANLEY, N.Y. FARREN J. MITCHELL. MD. WALTER r. FAUNTROY. D.C. STEPHEN L. NEAL. N.C. JERRY M PATTERSON. CALIF. JAMES J. BLANCHARD. MICH. CAE RG,..L HUBBAE 0, JR., Y. JOHN J. LAFALCE. N.Y. GLADYS NOON srru..mAN, MD. LES AuCOIN, OREG. DAVID W. EVANS. IND. NORMAN E. D'AMOURS, N.H. STANLEY N. LUNDINE, N.Y. JOHN J. CAVANAUGH, NEBR. MARY ROSE OAKAR, OHIO JIM MATTOX. TEX.  Action assigned Mr. Petersen 1110  •  U.S. HOUSE OF PEPRESENTATIVES COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS NINETY-SIXTH CONGRESS 2129 RAYBURN HOUSE OFFICE BUILDING  WASHINGTON. D.C. 20515  August 22, 1980  Llt-1  J. WILLIAM STANTON, OHIO CHALMERS P. WYLIE. OHIO STEWART B. MCKINNEY, CONN. GEORGE HANSEN. IDAHO HENRY J. HYDE. ILL. RICHARD KELLY. FLA. JIM LEACH. IOWA THOMAS B. EVANS. JR.. DEL. S. WILLIAM GREEN. N.Y. RON PAUL. TEX. ED BETHUNE. ARK. NORMAN D. SHUMWAY, CALIF. CARROLL A. CAMPBELL. JR., S.C. DON RITTER, FA. JON HINSON, MISS. 2.25-42417  BRUCE F. VENTO, MINN. DOUG BARNARD, GA. WES WATKINS, OKLA. ROBERT GARCIA. N.Y. MIKE LOWRY. WASH.  Honorable Paul Volcker Chairman, Board of Governors Federal Reserve System Washington, D.C. 20551 Dear Chairman Volcker: The Federal Reserve Board asked for public comment on June 4, 1980 on a proposal to end the practice of counting Fridays as three days instead of one day in the calculation of average weekly deposits. This practice allows large banks to make millions of dollars by artificially increasing their cash items in the process of collection and their "due from" deductions from the Eurodollar market which makes their deposits artificially small. The banks thereby reduce their reserve requirements. This "weekend Eurodollar arbitrage" would have been ended by counting each weekday as one day in the calculation of reserve requirements. This Federal Reserve Board proposal was a commendable and longneeded reform. On August 15, 1980 the Board announced that it will not adopt this reform. Instead it will ask the large banks to refrain from weekend Eurodollar arbitrage. Please inform me of the Board's new monitoring procedures that will be put in place to stop weekend Eurodollar arbitrage in lieu of the Board's approval of this reform. What penalties will be imposed on banks which continue this practice? Why was it decided to drop the Board's June 4 proposal? it not be far simpler to adopt the proposal?   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Sincerely,  Henry S. Reuss Chairman  Would  go,   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  •  •  C 44  60 September 5, 19  les, Chairman i h C n o t w a L e l b The Honora l Spending a r e d e F n o e e t Subcormit Open Governmnt Practices and tal Affairs n e m n r e v o G n o Comittee Senate United States C. 20510 Washington, D. n: Dear tir. Chairma gust 25, MO, u A f o r e t t e l , o your This responds t the period January 1, 1980cted rmation for ard condu o o f B n i e h g t n f i t o s s e u _j q nr e r ti 0, 1980, on 11.ee ne. I hope the enclosed 3 e n u J h g u o r h t t in the Sunshi under Governmen be helpful. l information wil thing more we y n a s i e r e h t f know i Please let me can do. Sincerely,  Enclosure d CBDoying/TEA:re #348    https://fraser.stlouisfed.org • Federal Reserve Bank of St. Louis  •  • Attachment  (1) Meetings. (January through June 1980) (a) Meetings of the Board. Total number of Open  20  Total number of Closed  61  Total number of Partially-Closed  0  Total number of meetings  81  (b) Meetings of the Committee on Employee Benefits. -- Total number of Open  0  -- Total number of Closed  2  -- Total number of Partially-Closed  0  Total number of meetings  2  (2) Reasons for closing meetings. (a) Meetings of the Board -- Specific exemptions.  Exemption 4 8 9A(i) 10  Number of meetings  1 1 20  1  2, 6 4, 8 4, 9A(i) 8, 9A(i) 8, 9A(ii) 8, 9B 8, 10 9A(i), 9A(ii)  1 1 1 1 1  2, 8, 9A(i) 4, 8, 9A(i) 4, 8, 9B 8, 9A(i), 9A(ii 8, 9A(i), 9B 8, 9A(ii), 9B  1 3 1 2 1 1  1 5 2   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  2, 4, 8, 9A(i) 2, 4, 8, 9B 2, 8,- 9A(i), 9B 2, 8, 9A(i), 10 4, 6, 8, 9A(ii) 4, 8, 9A(i), 9A(ii) 4, 8, 9A(i), 9B 4, 8, 9A(i), 10  2 1  2, 4, 6, 8, 9A(i) 2, 4, 8, 9A(i), 9B 4, 6, 8, 9A(i), 9B  1 1 1  2, 4, 5, 6, 7, 8 2, 4, 6, 8, 9A(i), 10  1 1  4, 5, 6, 7, 8, 9A(i), 10  1  1 1 1 1 1  Total  61  (b) Committee on Employee Benefits -- Specific exemptions. Number of meetings  Exemption 2  2 Total  2  (3) Description of litigation. No litigation was brought against the Board of Governors under 5 U.S.C. §552b during the period January through June 1980.  %Noo.44. Tt40. 0•S F I Ar.Lf 1c)F4, MO. LAWT.er1 CHILES, FLA. SAM MINN, GA,  JAC.011 K. JAVI/S. N V. WILI IAM V. ROTH, •DEL TED STEVENS. ALASKA  .1, ^HN GLENN, CHIO JIM SASSER, TENN. DAVID PRYOR. ARK. I CAM- LEVIN, MICH.  HENR DAVI  •,111  OA.  JACKSON. WASH. R. ARK.  41,  ri.A..  cutworm... MO.  WILLIAM  V. ROTH. JR., DEL. CHARLES MC C. MATHIAS, JR.. MD.  'ZICnitcb Zialcz Zenate COMMITTEE ON GOVERNMENTAL AFFAIRS SUBCOMMITTEE ON FEDERAL SPENDING PRACTICES AND OPEN GOVERNMENT (202) 224-0211 WASHINGTON. D.C. 20510  August 25, 1980 Paul A. Volcker, Chairman Federal Reserve System Board 20th Street and Constitution Avenue, N.W. Washington, D.C. 20551 Dear Mr. Chairman: I am writing to request that you provide me with the following information for the period January I, 1980 through June 30, 1930 pertaining to meetings conducted under the Government in the Sunshine Act: 1.  Total number of open meetings;  2.  Total number of closed meetings;  3.  Total number of partially-closed meetings;  4.  Reason for closing or partially closing meetings (i.e., indicate the number of times a specific exemption was cited alone or in combination with others); and  5.  Description of any litigation brought against the agency under the Sunshine Act.  Please use the same method of tabulation and reporting as in your annual report on the Sunshine Act. This information should be received by the Subcommittee no later than September 19, 1980. •  If any further assistance is required, please contact Janet Studley, at 224-0211. Sincarely, / LAWTON CH [ES Chairman LC:jsb  ,..,,A,„.•,..  JOHN C  RONALD A. CHI000 CHIEF COUNSEL AND STAFF DIRECTOR  DAVID DURENBERGER. MINN. RICHARD A. WEGMAN COUNSEL AND STAFF DIRECTOR  1,.. A , , ,  4"  AlliS 011 S PH NUNN  CHARLES MC C. MATHIAs, J JOHN C DANFORTH, MO. WILLIAM S. WHEN. MAINE  cHirr   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Action assignel Ted  Uonovable kobort N. iairo Chairman Committee on the BuOgct Cousc of Reierusentativeb Wani.rplton, D.C. 2Gr.i.trA Zoar Chairmarl Ciaimo Thank you for your letter of August 28 rearding your Comrattoe's Leaving os% the 1..udgst and economic issues. am Cc4,1!to.txt,cr 10.  ferv4hrd to appearing at 1000 Sincerely. Seagtil,VpJç  CO.D.M,I;t (1V-357) Lcc   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Eictaine  4Yr:h. ',allardi (2)47--  Aym.  A con assignei Mr. Kichline aryl ROBET N. GIAIMO, CONN. CHAIRMAN JIM WRIGHT, TEX. THOMAS L. ASHLEY, OHIO LOUIS STOKES. OHIO ELIZABETH HOLTZMAN. N.Y. DAVID R. OBEY, WIS. PAUL SIMON, ILL. NORMAN Y. MINETA. CALIF. JIM MATTOX, TEX. JAMES R. JONES. OKLA. STEPHEN J. SOLARZ, N.Y. WILLIAM M. BRODHEAD, MICH. TIMOTHY E. WIR TH, COLO. LEON E. PANETTA, CALIF. RICHARD A. GEPHARDT. MO. BILL NELSON, FLA. WILLIAM H. GRAY III, PA.  Zeisel  NINETY-SIXTH CONGRESS  'EL*. 3f)otW of 3ltprelentatitir5 COMMITTEE ON THE BUDGET  DELBERT L. LATTA, OHIO JAMES T. BROYHILL, N.C. BARBER B. CONABLE, JR., N.Y. MARJORIE S. HOLT, MD. RALPH S. REGULA, OHIO BUD SHUSTER, PA. BILL FRENZEL, MINN. ELDON RUDD, ARIZ. JAMES B. HEDLUND, MINORITY STAFF DIRECTOR  Ulazbington, T.3.e. 20515 August 2b, 1980  MACE BROIDE, EXECUTIVE DIRECTOR 225-7200  Honorable Paul A. Volcker Chairman Board of Governors of the Federal Reserve System Washington, D.C. 20551 Dear Mr. Chairman: This is to confirm our invitation to you to testify at hearings of the House Budget Committee on Wednesday morning, September 10, at 10:00 a.m. in Room 210, Cannon House Office Building . Committee members have asked for this set of hearings, unusual for the Budget Committee at this stage in the budget process, because of some serious concerns they have. They hope you can help them with your views on the following questions: (1) Do you feel the very difficult attempt to balance the budget in the Budget Resolution was a responsible course of action to take, given the economic setting at the time? (2) What advice can you give us on the appr opriate aggregate budget levels and other fiscal policies for the Second Budget Resolution? (3) You have testified that you intend to keep a very firm grip on the money supply. As the recovery proceeds, the Nation's demand for money will increase. What course will the Fed steer between concern over inflation and encouragement of the recovery? If inte rest rates are allowed to rise, will the recovery be nipped in the bud? (4) How will the international economy affect U.S. interest rates? (5) Will you comment on your views of the Administ ration's recovery and revitalization policy? We ask witnesses to send 100 copies of their stat ement in advance to distribute to the press. It would also be very help ful if we could have a copy of your statement a day or two before the hear ing because Committee members wish to prepare in advance for the discussion. I look forward to your testimony. Sinc rely yours, LA  RNG:nwc  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ROBERT N. GIAIHO Chairman  •  00 C  BOARD OF 50VERNORS  ;9.  OF Ti•E  • co 1/144,  FEDERAL RESERVE SYSTEM WASHINGTON, O. C. 20551  PAUL A. VOLCKER CHAIRMAN  September 8, 1980  The Honorable Parren J. Mitchell Chairman Subcommittee on Domestic Monetary Policy Committee on Banking, Finance and Urban Affairs House of Representatives Washington, D. C. 20515 Dear Chairman Mitchell: I am writing to express my strong opposition to the bill that the Domestic Monetary Policy Subcommittee will be considering this week to remove the Federal Reserve Bank presid ents from a decision-making role in the conduct of monetary policy. While I testified before the Subcommittee on this subject during the hearing on May 15, the day of testimony set aside for the Reserve Bank presidents was cancelled and they have not had an opportunity to state their views to the members of the Subcommittee. Since the legislation directly affects them and indeed would take away their most important role, I feel that they at least deserve to be heard on the legislation before the Subcommittee acts. For other reasons too, I find it rather surprising that the Subcommittee plans to move ahead on this legislation at this time, particularly when the Senate has so recently passed a resolution expressing concern that there is insufficient geographic diversity on the Board of Governors and that regional representation is an important element for those engaged in the conduct of monetary policy. This bill, of course, moves in the very opposite direction; it will vest all the monetary policy decision-making power in Washington. I think the timing is also unfortunate in that it would weaken the Reserve Banks in their capacity to attract individuals of high caliber at the very time that the Reserve Banks are trying to carry out the difficult task of implementing the various aspects of the Monetary Control Act. From the beginning the Federal Reserve System has been based upon a combination of central and regional elements. It was Congress' intention that twelve Federal Reserve Banks   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  •  The Honorable Parren J. Mitchell Page Two  should be established and given a significant role in the operation of the System in order to assure a proper consideration of viewpoints and needs from all sections of the country. The premise was that all wisdom does not reside in Washington and that some further insulation from short-term and partisan political pressure would come from giving an important role to the Reserve Banks. The bill before the Subcommittee would directly erode those objectives. It gives sole authority for the conduct of open market operations to the Federal Reserve Board and removes the Reserve Bank presidents from having any policy-deciding role in the formation of monetary policy. The Reserve Bank presidents and their research staffs bring to the FOMC knowledge and informed opinion about regional interests and needs. They are closer to the nation's commerce, industry and agriculture than any purely Washington-based policy-making organization can be. I would also point out that there is a clear and profound difference between a consultative role, as contemplated in the bill, and the role of a participant sharing responsibility for policy making. Removal of the presidents from the Federal Open Market Committee could only have the effect of making the FOMC more "Washington" oriented and less sensitive to regional concerns. It would also make it more likely that a single President could appoint a clear majority to the monetary policy making body; in that sense the bill would impinge on the independence of the Federal Reserve.  P.S.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  I am taking the liberty of forwarding a copy of this letter to the other members of the Subcommittee.  E.3 .0ARD OF GOVERNORS CF. TOE  •  FEDERAL RESERVE SYSTEM WASHINGTCN, D. C. 20SSI  PAUL A. VOLCKER CHAIRMAN  September 8, 1980  The Honorable John J. Cavana ugh House of Representatives Washington, D. C. 20515 Dear Mr. Cavanaugh: Thank you for your letter of August 28 recommending Mr. David Brown to fill the upcoming vacancy in the Board's Con gressional Liaison Office. I can assure you that Mr. Brown's qualifications will receive careful considera tion when the Board makes a decision regarding this vac ancy. The Board appreciates reCeiv ing your recommendation. Sincerely,  CO:DJW:vcd (#353) bcc:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Mrs. Mallardi  Actioossigned Congressional Liaiso  ffice  JOHN J. CAVANAUGH  COMMITTEES:  CoNGRESSMAN 2o CoNGRESSIONAL  BANKING. FINANCE AND URBAN AFFAIRS  DISTRICT  NEBRASKA SUBCOMMITTEES.  1208  LONGWORIll  Housr Orricr BuILDING  WASHINGTON. 0 C.  20515  Congrt55 of tijc.  (202) 225-4155  DISTRICT OFFICE:  8424  FEDERAL  215 Nomiti  Bult.olmo  17TH  OMAHA. NU:RA  aniteb cptateg  FINANCIAL INSTITUTIONS SUPERVISION. REGULATION AND INSURANCE  3i)otW of ikepre5Entatiing  INTERNATIONAL TRADE. INVESTMENT AND MONETARY POLICY  Wassbington, ae. 20315  INTERNATIONAL DEVELOPMENT INSTITUTIONS AND FINANCE  STREET  DOMESTIC MONETARY POLICY  6d102  (44)2) 221-4117  August 28, 1980  POST OFFICE AND CIVIL SERVICE SUBCOMMITTEE,  INVESTIGATIONS  Honorable Paul A. Volker Chairman Federal Reserve System 20th and Constitution, N.W. Washington, D.C. 20551 Dear Mr. Chairman: It is my understanding that there soon will be a vacancy in the position of Special Assistant to the Federal Reserve Board for Congressional/Government Relations. I commend to you my chief legislative assistant, David Brown. David was among the first people I hired when I began my service in the Congress and his assistance has been remarkable and invaluable to me throughout my congressional career. David has had the responsibility of preparing me for participation as a Member of the House Committee on Banking, Finance and Urban Affairs and through this experience he has developed a thorough knowledge of the functioning of both the House and Senate Banking Committees of the Congress and has acquired a comprehensive knowledge of banking legislation and an instinct for legislative trends. I believe David could be of invaluable assistance to the Federal Reserve Board by bringing to the Board a solid background in the practical as well as the substantive considerations and concerns of the Congress in the area of banking, finance and housing public policy. You could not find a better man. Sincere  INS. AVANAUGH Member of Congress,' JJC/jct   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  D:ARD  1 LUVERNOR5 LIF  FEDERAL RESERVE SYSTEM WASF-IINGT67:, D. C. 20551 •• ../?,4L RESt9 :•• • • •..• • •  PAUL A. VOLCKER CHAIRMAN  September 8, 1980  The Honorable Henry S. Reuss Chairman Committee on Banking, Financ e and Urban Affairs House of Representatives Washington, D. C. 20515 Dear Henry: Thank you for your letter of August 26 recommending Mr. David Bro wn to fill the upcoming vacancy in the Board's Congressional Liaison Off ice. I can assure you that Mr. Brown's qualifications will receive careful consideratio n when the Board makes a decision regarding this vacancy. The Board appreciates receiv ing your recommendation. Sincerely,  CO:DJW:vcd (#V-352) bcc:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Mrs. Mallardi (2)..//'  '40r 4  r 1.  rr  n L. The licnoraiac. St.c.i Iloutze of P.oireuentativet: 20515 7vashin-aton. D.C. Dcar Cr. Neal: have sent thil enclosed letter tn inairmar ith res1.4Act to the Domestic !Ionetary Policy 5ut.connitte7:'s con17.enerve sideration tomorrow of lesislation to rove the r(Jeeral ef Dank preoidents from a decixion-makin5 role in the conduct momItztry policy. I am °molted to thin; letlislation arvi wou1,1 apprecitite ;curconcir.lcration of my coamenta.  Ciznerely, S/Pa LiJ.As voicta  LLcloaure Daitpjt bcc: Mra. Mallardi (2) %-•• Congregsrnn n'Arlours. Barnard, Identical lettors alao sent to l%attox Cavanaugh, Vanser, Paul and Ritter.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Septe,nher IA, 14V)  The Honorable Thomas L. Ashley !louse of lepresentatives jasnington, D.C. 20515 -Jear  .  In rnsponse to your request, I an please4 to snbmit the RoarA's views on the 4ome Mortgage Oisclosure Act amendments as passed by the Senate in4 contained in the Aouaing and f`ommunity Development authorization measure awaiting a Uouse-Senate conference. The Roard opposes the requirement that federel financial regulatory agencies Jointly compile and disclose aggregate data hy census tract for each S4SA, with further categorization aceording to age of the housing, location, income level, awl racial and ethnic characteristics. In study conducted by the FDIC and FHL11$1, the cost of compiling this information was estimated to be about St million a year, with a year required to compile the information. The ;card's data processing division also considered the costs involved and eenerally concurs with the FDIC-F7LR‘ estiaate. it is the board's position that spending approximately $1 million year to nroaeon year-old information is not the best use of public funds, and that the high cost of assembling this information outweighs any benefit to lue derived. The &wird stronely opposes the erovision requirinp the financial reeulatory agencies, in consultation with IT11, to establish A central depository in each SgSA for the eiscicsure reports. The 12toard disagrees with tl,e eonclusion of some witnesses that the establishment of central deoositories is easy and inexpensive. The costs and log,isticel problems of specifying convenient repositories for each SMSA will be lreat. Furthermore, the Reard is not aware of many requests for the disclosure reports. As an alternative approach, one that would be far less expensive, the Board suests requiring repository institutions to mail s copy of the reports it prepares to any person raquestinv them And charging only for copying and mstale. Under the current law, institutions have these reports available and are supplying then upon request. Our proposal accomplishes the same result as contralizei collection without being burdensome or costly.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The flonorahle Thomas L. Ashley  ONO  The Beard recommends that financial institutions in counties with fewer than 50,000 eeople reoort loan information hy county rather than by census tract. The provision in the Senate bill Uniting census tract reportinn to eounties with n population greater than 30,000 will do virtually nothing to simplify the reporting requirements for iustitutions in areas of low population. Although the Atlantn TP1SA is not unique, it provides a good pxanple to illustrste this point. Atlanta is composed of 15 counties, the two central counties having two-thirds of the population. Rased upon fieures from the 1971 Census, each of the outer ten counties, which are predoninately rural in character, had a population less than 31,000 people. If the 19;10 Census reflects any substantial population growth, many of these 11 counties are likely to exceed the '0,000 population level. The Roard !malty** that the exemption from the Act should extend to institutions that have residential mortgame and home improvement loan portfolios of $11 million or less, unless the institution sakes nore that 7.1t1 hoot, eurchase loans in a calendar year. line* the Act's reqeirement la to disclose hone loan information, the exeeption level should be also be measured in terms of hone loans rather than total assets. fissed upon 1978 figures. about 5,16n commercial hanks and 2,151 savings and loan associations were required to report under the statute. These institutions hell sore than 90 percent of the amount of outstanding home purcheee an4 improvement loans held by all banks and savings and loans. If the Roard's sneeestions were adopted, about 1,400 commercial banks and 2,251 savings and loans would he required to report based ton 1971 portfolio vise. Althoush this chane would reduce the number of reporting beg*" by shout 73 percent, the commereial bank hone loan portfolio woeld he reduced by only 13 percent, from 99 to 86 percent. If savines and loan aesocietions ;ere included, the percentage of all oortfolio holdings vould tirop only 3 percent, from 99 to 96 percent. The &nerd firmly believes that its proeosal ro oodify reportin,; requirements represents substa ntially complete coverage of all institutions located in all SMSAs (96 percent of the hone loans hell by all hanks and savines and loan located in SIISAs ), and still would permit a significant reduction in the cost of compli ance with the Act. The noard believes that a sunset provision similar to that which prenoted review this year would be preferable to a permanent extens ion. A sunset provision would provide the opportunity to develop experience with evaluation of lending practices made under the Commueity Reinve stment Act and civil rights enforcement erogrnms and to determine the useful ness of the dtselosures. It would also allow for periodic evaluation to see if further changes are necessary. The *wird supports the amendment that requires disclosure by census tract rather than by census tract ow ZIP code, since reporting theref ore would he uniform. Furthermore. we suoport the standardization of the reporting period by substituting a calendar year bests for the current fiscal year   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The Honorable Thomas L. Ashley  disclosures. The Board has no objection to the requirement of a nationwide, standardized reporting format. qe would only ooint out that this requirement might to some degree preempt the home loan disclosure requirements of several states. Finally, the Board has no objection to participating in a loint Rtudy of the usefulness and feasibility of requiring disclosure of small business loans. Thank you for the opportunity to reiterate the Board's views on this legislation. Please let us know if w* can be of further assistance in this matter. Sincerely,  CJYarus:csd 04-09-80  -T-t.vmLer 11  1910  Thc Honorable Lloyd Bentsen United Ztatcs Senator 912 Pedersl Building 7S701 Austin, Texas Dear Senator Bentsen: Thank you for your letter of Aus-ust 22 requesting comment on correspondence you received from Xr. L. Tavis Vandygriff, Cot missioner of Texae Savings and Loan Derartrent. In his letter to you aated August 15, 1980, !..r. Vandygriff o!)jected to the Soard's final Regulatior D--Reserve Requirements of Derository Institutions (12 CFR Part 204, copy enclosed) since that regulation defines certain borrowings of savings and loan associations (and all othor derositerli institutions as well) as deposits subject to Yeders1 reserve requirements. tinder negulation D. the ter= 'deposit" is defined to include traditional passbook accounts, certificates of deposit one' checking accounts. In addition, 'deposit is defined to include. with certain exceptions, any liability of a der.ository institution on any promissory note acknowletlgement of advance, bankers' accept ance, or similar obligation (written or oral) including mortgage backed bonds, that is issued or undertaken by a depository institution au a means of obtaininci funds. The Board has consistently followed the broad rule that all funds received by a I:1=11er ba&-. in the course of its business that 9:Lye rise to a liability of the Lank will be regardee as a deposit if the proceeds are used 14 the bank in its general banYin5 business. The Loard believes that the treatment of such 1:..abi1ities osits in reascnsble because the institution incurrinu the a liability has enhanceei its ability to make loans anC other extencions of credit. There are important excertions to this rule that rernit depository institutions to borrow from other depository institutions, the U.S. Covernmcnt and its agencies ancl in the for:n. of repurchase agreements cpn U.S. Government and agency securities without incurring additional reserve ref:uirements. When Congross rassed the monetary Contrel Act of 1980 (Title I of P.L. 96.221) imposing redcral reserve re,..uireents on all de:ository institutions. it left the Board's authority to define the term *deposit' intact.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  •  The Fcnorable Lloye,nt Page Two  In light of the Board's experience uith methods ane devices occasionally used by institutions to avoid relleral reserve requirements and interest rate ceilings by crnating Oerosit-1117e relations:hips not strictly falling under the common forms of deposits, the Board doter=ined to aprly this long-staneing !4!:teition to all depository institutions. The exceptions to the rule, ag discussed above, provide tlepositery institutions with adequate flexibility to raise funds exeact from Feavral rescrve reciuire nents when traditional deposit sources do not root their needs. It is ixwortznt to note that While certain borrowings will be regarded as dfvosits, they will be subject to a zero per cent reserve requirement if they possess an original maturity of four This treatment of longer-term deposits eoule years or more assiet institutions in raisimj lon7er-terri funds free from reserve requirements. Derosits of other than natural person with p. oriviral maturity of lass than four years will be eublect to 3 rcr cvnt reserve requirement. Luring the next few weeks: the rederal !leserve Bank of so tLat Dallas will be holding seuinars on reserve requirennts tions depository instituttons may learn the requirements of and excep witIN. vhom to Resulation D. The person at the Dallats Pe5.erve Bank irb Vantlygriff should make contact is V.r. William Crce:i. (214/651 CM). I hopia this inroratation is belpful to you. we Xnow if I may be of further assistance.  nAaee let  r'ircerel!,  NW)Donald!. Wini Donald J. Winn Epeeial AssiBtAnt to t*.--c, r/Nlre tncloiur (CTS:PSP:JUZ:JPB;)C0.pjt (tV-350) bcc: nrs. nallardi   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Action assigned Neal Petersen C0.4MIT1IEE6  FINANCE ENVIRONMENT AND PUBLIC WORKS JOINT ECONOMIC  1C-nife6 Zia f WASHINGTON. D C  Zenate 20510  August 22, 1980  Chairman Federal Reserve System Constitution Avenue bewteen 20th and 21st Streets, N.W. Washington, D.C. 20551  86.  C •  Dear Chairman: I recently received the enclosed constituent inquiry, and I would very much appreciate your providing me with any pertinent information you might have regarding the matter. Your kind assistance is greatly appreciated. Sincerely,  Er  7±,L, Lloyd  tsen  Enclosure •••••  PLEASE REPLY TO: 912 Federal Building Austin, Texas 78701 ATTN: Mario Ortiz   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  AUG 20 19,90  TEXAS ,s_OAVAINNGDSEAnciTMENT L. Alvis Vandygriff Comm issioner  August 15, 1980  Mr. Griffith L. Garwood Deputy Secretary Board of Governors of the Federal Reserve System 20th and Constitutional Avenue Washington, D. C. 20551 Dear Mr. Garwood, It is disappointing, indeed, to find that the Boar d of Governors of the Federal Reserve System has determined that outside borrowings of savings and loan associations will require reserve requirements because of the definition that has been applied to "deposits." I cannot believe that the Board feels that this is grounds of efficient credit control. Reserve requ irement, as a tool of monetary restraint, is certainly an indi scriminate instrument, and to impose the restrictions implied is another way to increase the cost of funds of the savings and loan associations. Certainly, you must realize that ther e are enough burdens in the path for funds for housing. We must explore every possible avenue to obtain funds to meet the housing demand and we certainly do not need restrictions such as the new changes in Regulation D, which would appe ar to give the Federal Reserve System greater ability to curb- thri ft institutions' lending powers as compared to commercial banks. I urge the Board to give the industry and the 'public an opportunity to be heard on the subject before more restrict ions are imposed or actions taken by the Board. c rely  Alvis Vand Commissioner LAV/bc   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Post Office Box 1089 • Austin. Texas 78767 •(512) 475-7991  •  Mr. Griffith L. Garwood August 15, 1980 Page Two  cc:  Governor Nancy Teeters Board of Governors of the Federal Reserve System 20th and Constitutional Avenue Washington, D. C. 20551  cc:  Honorable Lloyd Bentsen U. S. Senate 240 Russell Senate Office Bldg. Washington,- D. C. 20510  cc:  Honorable John Tower U. S. Senate 142 Old Senate Office Bldg. Washington, D. C. 20510  cc:  Honorable Fernand St Germain Chairman, Subcommittee on Financial Institutions, Supervision, Regulation & Insurance B301, RHOB Washington, D. C. 20515  CC:  Honorable Jay Janis Chairman Federal Home Loan Bank Board 1700 G Street, N.W. Washington, D. C. 20552  cc:  Mr. Joseph E. Settle President Federal Home Loan Bank of Little Rock 1400 Tower Building Little Rock, Arkansas 72201  CC:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Commissioner Linda Tsao Yang Department of Savings and Loan 600 S. Commonwealth Avenue Los Angeles, California 90005  •  •  .• • Of GOVe _ , R4• ,••  SCARO OF 30VERNORS w  • 4;  ............................  • ' 4  if  _  FEDERAL RESERVE SYSTEM  rrfr\ ,-,"j •  '.4seej L • e.R, ••••••••  •  wASHINGTON, C.  2055  • PAU*6. A. VOLCKER  September 12, 1980  The Honorable Henry . Reuss Chairman Committee on Banking, Finance and Urban Affairs House of Representatives U'ashington, D. C. 20515 Dear Chairman Reuss: Thank you for your letter regarding concerns raised by Mr. Robert C. Franzen, President of the Dav County Bank of Webster, South Dakota, about the Board's Regulation E ("Electric Fund Transfers"). Mr. Franzen believes that Regulation E is an example of unnecessary and burdensome banking regulation, and feels that small country banks are especially penalized. In his letter, he refers to an Associated Press story discusSing one bank's experience with disclosures required by Regulation E. As reported in the news story, the hank claimed that printing and mailing disclosure pamphlets was a waste of money, and pointed to its experience with a $10 offer as proof that few of its customers read the pamphlet. You suggest that it would be useful to review the regulation for compliance with the mandate of Title VIII of the Depository Institutions Deregulation and Monetary Control Act of 1980. Title VIII requires that regulations be written as simply as possible and that required paperwork be minimal. I agree wholeheartedly that regulations should be made as simple as possible, and the paperwork kept to a minimum. Like Mr. Franzen, I also believe that there is a need to cut down on unnecessary regulation and sympathize fully with the problem that bankers have in keeping up with all the regulatory material that crosses their desks. In the process of considering and adopting Regulation E, the Board attempted to minimize compliance burdens to the greatest extent possible while carrying out the Congressional mandate. Many of the requirements that financial institutions find most burdensome, however, are expressly mandated by the Electronic Fund Transfer Act. Hence, changes will have to be made in the underlying legislation before much can be done to relieve the   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  •  The Honorable Henry S. Reuss Page Two  burdens. With this in mind, we are indeed reviewing both the regulation and the statutory provisions and expect to make legislative recommendations, later this year, of ways in which the statute might be modified without significant loss of consumer protections. In the case of disclosures, the Act requires that certain information be provided to consumers who have signed up for an EFT service. To facate compliance with this requirement, the Board issued model disclosure clauses that financial institutions could use in drafting their own disclosure statements. A pamphlet on Regulation E is enclosed. The model disclosure clauses appear on pages 23-26; one other required disclosure appears on page 5, with a shorter alternative version on page 6. You can see that the Board attempted to keep the suggested wording simple and concise. Institutions are not required, of course, to use the Board's model clauses. The disclosure pamphlet mentioned in the Associated Press article, for example, was drafted by the bank. The Board's staff has seen a copy of that pamphlet and informs me that much of the material is not required by Regulation E but was added by the bank for other purposes. The bank's experience, as reported, may therefore not be a representative demonstration of the difficulty that consumers have in absorbing information required by the regulation. I hope this information is helpful. if I can be of further assistance.  Enclosure  dr   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Please let me know  BOARD OF :OVERNORS OF  r HE  FEDERAL RESERVE SYSTEM NASHINGTON, O. C. 20551  PAUL A. VOLCKER CHAIRMAN  September 12, 1980  The Honorable Richardson Preyer Chairman Subcommittee on Government Information and Individual Rights Committee on Government Operations House of Representatives Washington, D.C. 20515 Dear Chairman Preyer: Thank you for your letter of August 20, in which you express concern that the Federal Reserve may be seeking to enhance its role in EFT in a manner inconsistent with recent actions of the Congress and the Federal Communications Commission to encourage competition and innovation in the private sector. Let me assure you that the Board has made no determination of any sort to expand the operational role of the Federal Reserve in EFT or to provide telecommunications services for EFT in competition with the private sector. The actions to which your letter refers--the issuance for comment of the proposed Subpart C to Regulation J relating to ACH transactions and the FRCS-80 project--are not related to one another.and were undertaken for reasons unrelated to expanding Federal Reserve EFT operations. The Board published Subpart C for comment in November 1979 primarily because believed that •it ACH services, which are now governed by 32 private agreements between Reserve Banks and automated clearing house associations, had achieved a level that required procedures similar to other Federal Reserve payments mechanism services. In these other payments services--check collection and wire transfers of funds-the Federal Reserve has established rules and procedures in Subparts A and 3 of Regulation J, and its operating circulars, that set forth the duties and responsibilities under which depository institutions may use Reserve Bank facilities. Because the various individual agreements between Reserve Banks and automated clearing house associations differed to varying degrees in their terms and conons, the Board felt it necessary to have a uniform, integrated set of rules under which ACH services would •be available to depository institutions on similar terms and conditions. The Board also was concerned that, under current arrangements, it was not   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The Honorable Richardson Proyer Page Two  clear when certain types of ACH payments were final and irrevocable. Subparts A and B provide such guidance for checks we collect and wire transfers, and the Board believed it was important that the participants in ACH payments, as in other economic transactions, be assured of certainty and finality regarding these payments. With respect to FRCS-80, the Federal Reserve is replacing its current communications network, which is becoming obsolete, with a network using newer technology. The Federal Reserve has operated a communications network since 1918. The communications network is primarily used: 1) for the transfer of reserve balances ,among member banks, 2) to facilitate the marketing of Government securities, and 3) to collect and transmit economic and accounting data. Among other things, the communications network is used to assemble and transmit the monetary data that are essential to the conduct of monetary policy. In 1979, 35 million payments for a total of $64 trillion were transferred using the Federal Reserve Communications System (FRCS). These payments resulted from: 1) the purchase and sale of Federal Funds, 2) Treasury disbursements and collections, 3) correspondent bank balance transfers, and 4) settlement for many of the nation's financial transactions. In addition, approximately $2.9 trillion of Treasury and Federal agencies securities were issued and transferred over the FRCS. The current ;:2twork was installed in the early 1970's and is scheduled to be replaced by a new network (called FRCS-80) before additional capacity is required. The need for added capacity has become urgent with the recent enactment of the Monetary Control Act of 1980 (Public Law 96-221). Under this Act, Congress has provided that all depository institutions having either transactions accounts or nonpersonal time deposits must maintain reserves, and all depository institutions will have equal access to Federal Reserve services subject to a fee schedule for such services. This means that many more thousands of financial institutions will be subject to and maintaining Federal reserves, and receiving Federal Reserve services. Thus, a new communications network using contemporary transmission techniques is needed to handle larger volumes and to improve the accounting and settlement functions. Finally, the Board is in the process of implementing the :.lonetary Control Act, which requires explicit prices to be charged for Federal Reserve services. We are fully in accord with Congressional objectives to promote a more competitive and efficient payments mechanism by means of a pricing environment that allows the private sector to compete with the Federal Reserve in providing payments services. The Board published for comment on August 28 a proposed schedule of fees for Reserve Bank services   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The Honorable Richardson Preyer Page Three  and the principles that underlie them. A copy of this proposal is enclosed for your reference. In accordance with the Act, the proposed fees are based upon the recovery of the long-run costs of providing Reserve Bank services, including the telecommunications costs associated with these services, and a markup reflecting taxes that would have been paid and profits earned by a private financial institution. Although the Act specifically recognizes in section 107 that it may be appropriate at some later date for Reserve Banks to offer additional services to be priced in accordance with the principles of theincluding those related to the electronic transfer of funds, no such new services are presently contemplated. Sincerely,  S/Pa41  Enclosure   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  V_9_1$14   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  BOARD OF 50VERNFR(.3 OF 1 P-1  FEDERAL RESERVE SYSTEM \Vp^+SHIN6T0%, D. C. 205. 51  PAUL A. VOLCKER CHAIRMAN  September 12, 1980  The Honorable John J. LaF alce Chairman Subcommittee on General Oversight Committee on Small Business House of Representatives Washington, D. C. 20515 Dear John: Thank you tot your letter of September 4 regarding your Subcommit tee's hearings on II. R. 7735, a bill to preempt state usury ceilings on consum er credit. Vice Chairman Frederick H. Schultz is looking forward to testifying on behalf of the Board on Tuesday, September 23, at 9:30 a.m . Sincerely,  SZPaul A. Volcker  CO:vcd (4V-361) bcc:  Vice Chairman Schultz Janet Hart (for preparation of statement) Mrs. Mallardi (2)  JOHN J. LAFALCE 36T14 flIt  ICT, NI W YORK  orOmt.11 TrE ON DANK it.1(:. r NANCr. AND    -cnki MI TICE ON SM Al L IJLJSINCSS  VicmChairman Schultz will testify; et Flart Ws been assignei preparation ollir stimony  Congre,55 of ttp.N. atitcb Dtatc5  CHMnmAN: cpv or; ri  FrornAL. BUILDING BuEFALO. NEW YORK (716) 846-4056  ). oti5e of Iktpre5tntatititiS Ulazbiligton, 20315 September 4, 1980  213 CANP*ON BUILDING WAININGTON, D.C. 20515 (202) 225-3231  14202  MAIN POCT Orr-KC BUILDING NIAGARA FAL L5. NEw YORK 14302 (716) 284-9976  3t)(  The Honorable Paul A. Volcker Chairman Federal Reserve Board Washington, D.C. 20551 Dear Paul: On July 2 of this year, I introduced a bill, H.R. 7735, to preempt state usury ceilings on consumer credit. This action was in keeping with the recent recommendations of the Interagency Task Force on Thrift,I nstitutions and the earlier actions of the Congress this year to preempt state usury ceilings on home mortgages, mobile home loans and certain business and agricult ural however, that I am not wedded to the approach embodied loans. I want to emphasize, in H.R. 7735. Rather, I introduced the bill to engender some discussion of the problem and to encourage those who are affected by usury ceilings, either in a positive or negative fashion, to come forward with suggestions on my bill. It was in, this spirit of exploration that I held my first day of hearings, on August 26th, within my Small Business Oversigh t Subcommittee. On that day, the subcommittee heard testimony from the American Bankers Association, the National Savings and Loan League, the National Associat ion of Federal Credit Unions, the Credit Union National Association, the Federal Home Loan Mortgage Corporation as well as several small business groups. I have plan ned a second day of hearings for Tuesday, September 23 ,,so that the subcommittee may hear from the federal regulators, consumers and additional small business groups. I would like to use this day as a forum for discussi on of the problem of usury ceilings, especially as they impact small business and cons umers, and would ask that a Board member be provided to testify on H.R. 7735. For the purposes of this hearing, a statemen t of any length which you determine to be adequate to cover the subject may be submitte d. Please be prepared to summarize your statement in less than 10 6inutes on the day of the hearing. The subcommittee also requests that 75 copies of your statement be submitte d to the subcommittee staff no later than noon on Monday, September 22. Plea se contact Marta Riordan of my staff at 225-3231 with any questions. ?rely,  JJL:MR  https://fraser.stlouisfed.org a Federal Reserve Bank of St. Louis  ,JOHN7. LaFALCE Memper of Congress •  Sc,-..tember 1 2, M20  The Caiman -11,1Acom4itt... on Cov,:,L. Information ane Iiividua1 Ri;hts Committee :Ar) Covermcnt ,Igrat;oms '-.Jou of ;.e,robentativc& 2051t .,hingtoo, D.C. Prc...ycrs TlizIn!-. you 1lor your letter of Aligust 20, in Ode- yr,u ..1trers concern that thf. rederal Reservu may be cooking to enhezec Lts role in rFT in a manner inconsistent with reeeut actions of the Con,3ress and the Federal Conrunications Commission to incourage cavaiAcItition and innovation in Ve private sector. Let mk,:. aasuro cxrar0 you that the Board has made no determinatin of any sort to the operational role of the Fee:Grail Reserve in EFT or to rrovietc, nrivate, telecommunications services for ErT in competition with the sector. The actions to which your letter refers—the issuance tor corti-ient of the proposed Subpart C to Regulation 3 relating to ACE transactions and the TRCS-00 project are not related to ono another and were undertaken for reasons unrelated to exranding icderal neaerva EFT operations. The Bocr-Y pUblished Ste-Tart C for co:Anent in Noveml;or 1979 1:Timarily Lecause it believed that ACii cervices which are now govers-,ed by 32 private agreement* between Lowery(' BanYs and automated clearing house association iadadlieved a level that recuired Ixocedures similar to other Feeleral Reserve payments meohanisz services. In there other collection and wire transfors of funds-aymcntsc 4ervices rub. tho rederal Ileserve has este-Ai:shed rulaa and proceftrc'1; in parts A and n of Res:nletion 3, and its clerating circu1ar,1 that under whie: depository set forth the duties; aid institutions may use Perserve Bank facilities. necause tie various individual avreeuents bc-tvesn Reserve nans 3nr.7 automated cl(,aring arr! house associations difZered t.,) varying detiraer in eleir ternz coaditioLs, tLa board felt it nocessary to .w a uniforr inth available to grated set cf tules under whicL is.CV ncrAd,.-ez der4Adtor: ilistitutions on ?imilar termk7 an./ conlitione. "ATe Toarc7 also was ...:oucc.traed that unear current arrare.:eNA9nts, it was not   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ••••••••  • The Honorable Richardson Prcycr Page Two  clear when certain types of ACH payments were final and irrevocable. Subparts A and B provide such guidance for checks we collect and wire transfers, and the Board believed it was important that the participants in ACH payments, as in other economic transactions, be assured of certainty and finality regarding these payments. With respect to FRCS-80, the Federal Reserve is replacing its current communications network, which is becoming obsolete, with a network using newer technology. The Federal Reserve has operated a communications network since 1918. The communications network is primarily used: 1) for the transfer of reserve balances .among member banks, 2) to facilitate the marketing of Government securities, and 3) to collect and transmit economic and accounting data. Among other things, the communications network is used to assemble and transmit the monetary data that are essential to the conduct of monetary policy. In 1979, 35 million payments for a total of $64 trillion were transferred using the Federal Reserve Communications System (FRCS). These payments resulted from: 1) the purchase and sale of Federal Funds, 2) Treasury disbursements and collections, 3) correspondent bank balance transfers, and 4) settlement for many of the nation's financial transactions. In addition, approximately $2.9 trillion of Treasury and Federal agencies securities were issued and transferred over the FRCS. The current 12twork was installed in the early 1970's and is scheduled to be replaced by a new network (called FRCS-80) before additional capacity is required. The need for added capacity has become urgent with the recent enactment of the Monetary Control Act of 1980 (Public Law 96-221). Under this Act, Congress has provided that all depository institutions having either transactions accounts or nonpersonal time deposits must maintain reserves, and all depository institutions will have equal access to Federal Reserve services subject to a fee schedule for such services. This means that many more thousands of financial institutions will be subject to and maintaining Federal reserves, and receiving Federal Reserve services. Thus, a new communications network using contemporary transmission techniques is needed to handle larger volumes and to improve the accounting and settlement functions. Finally, the Board is in the process of implementing the Monetary Control Act, which requires explicit prices to be charged for Federal Reserve services. We are fully in accord with Congressional objectives to promote a more competitive and efficient payments mechanism by means of a pricing environment that allows the private sector to compete with the Federal Reserve in providing payments services. The Board published for comment on August 28 a proposed schedule of fees for Reserve Bank services   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  1Lc, aonorablo nicF„ra-ci&or: rrtlyor Page Three  ant: the rbinciples that umlerlie them. A copy of this 7Nroposal ie 4.a/c1osed for your reference. In accorOrtncn it th.7 Act tht ...,rra.1?ommd reei4 Are Lase4 tion tha recovery of the lomj rur cozto rvices. itIcluCing tbe thlecomunicaol 14.•oviing nosey,. Bank tiona coots aazooiated with those vervices, ane a markup reflactin7 taxs that would have been paid and r-rofits clarnel by a rrivate financial institution. A1thou9h the ct n2ccifioa11y recovnize= lator (7ato for in section 107 that it may be appro:Iriato at Reuervo Baas to ofLur alditionia scrviccm tv 7,c2 price4 in acror dance with the principles of the Act, including t!;c1. related to tile electronic trartfer of funds, no ctlo!'. re2w scrvicee are presentl7y oontamplated. ncoxcly SaailA A. VolckeE  ,.r. dt  rncleuurc  3/21(1/Z0)  LSA:JP1%;jt (V 345) boo; Lee T.C.arc t:rs. :Iallardi (2) Le9a1 nocorCs (2)   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  •  mcmAposom pprvca. ROM-  N.C.. CHAIRMAN  T F. DRINA N. MASS. ENGLISH. OK LA.  Actionossigned Mr. Petersen with info Mr. Loren Meed  ation copy to THOMAS N. KINDNESS. OHIO M. CALDWELL BUTLER, VA. JOHN N. ERLENHORN, ILL.  DA. W. EVANS, IND. PT ; I H. KOSTMAYER, PA. TI O WEISS, N.Y.  NINETY-FIXTH CONGRESS 225-3741  Congt55 of the Uniteb 6tate5 PoluSe of AeprefSentatibefS GOVERNMENT INFORMATION AND INDIVIDUAL RIGHTS SUBCOMMITTEE OF THE COMMITTEE ON GOVERNMENT OPERATIONS RAYBURN HOUSE OFFICE BUILDING, Room B-349-B-C WASHINGTON, D.C. 20515  (t<  August 20, 1980  Honorable Paul A. Volcker Chairman Board of Governors Federal Reserve System Washington, DC 20551 Dear Chairman Volcker: Recent actions by the Federal Reserve Board suggest that it may be expanding its provision to the private sector of the basic telecommunications facilities and services upon which electronic fund transfer (EFT) services depend. The adoption of amendments to Regulation "J" by the Board and the proposed development of expanded capabilities to provide services through the Federal Reserve Communications System (i.e.,the "FRCS '80" project) seem to reflect a decision to enhance the operational role of the Board in EFT. While a central role for the Board in the development of EFT is essential, the provision of telecommunications facilities and services raises serious questions regarding the relationship of the Board's actions to broader national telecommunications policy goals as well as the appropriate role of the Federal Communications Commission in these matters. It appears that the Federal Reserve Board may well be offering services which will be in direct competition with private enterprises. Such a development -- a government agency providing telecommunications services in competition with private business -- would seem to be inconsistent with recent Commission and Congressional actions designed to encourage competition and innovation in the private sector. In pursuing its oversight responsibilities, the Government Information and Individual Rights Subcannittee would appreciate your assistance in determining to what extent the actions of the Board may conflict or otherwise present problems in the development and implementation of broader national telecommunications policy goals. I look forward to your response. Should you have any questions, please contact Christopher Vizas of the subcommittee staff at 225-3741.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  co,r9aW, / / Richardson Preyer Chairman  111  .  . GOVt/i• st4/ •.. ( •.Cr 4 ' 0- 4 '  •O • ''*\  •  •  •IN;Yi;  ' ••-.‘, '` ‘4 : ' r I ITI ri • tl• ‘,"' l\ t;IlLiiiil  BOARD  OF .30VERNOR .-=3 O'HE  FEDERAL RESERVE SYSTEM WASHINGTON, O. C. 205Si  .•: 4' e „ s‘‘'‘I' : ' '•ii4;' I. RV•S ' • • 1 • • :k-11  PAUL A. VOLCKER CHAIRMAN  September 12, 1980  The Honorable Henry S. Reuss Chairman Committee on Banking, Finance and Urban Affairs House of Representatives Washington, D. C. 20515 Dear Chairman Reuss: Thank you for your letter regarding concerns raised by Mr. Robert C. Franzen, President of the Day County Bank of Webster, South Dakota, about the Board's Regulation E ("Electric Fund Transfers"). Mr. Franzen believes that Regulation E is an example of unnecessary and burdensome banking regulation, and feels that small country banks are especially penalized. In his letter, he refers to an Associated Press story discussing one bank's experience with disclosures required by Regulation E. As reported in the news story, the bank claimed that printing and mailing disclosure pamphlets was a waste of money, and pointed to its experience with a $10 offer as proof that few of its customers read the pamphlet. You suggest that it would be useful to review the regulation for compliance with the mandate of Title VIII of the Depository Institutions Deregulation and Monetary Control Act of 1980. Title VIII requires that regulations be written as simply as possible and that required paperwork be minimal. I agree wholeheartedly that regulations should be made as simple as possible, and the paperwork kept to a minimum. Like Mr. Franzen, I also believe that there is a need to cut down on unnecessary regulation and sympathize fully with the problem that bankers have in keeping up with all the regulatory material that crosses their desks. In the process of considering and adopting Regulation E, the Board attempted to minimize compliance burdens to the greatest extent possible while carrying out the Congressional mandate.. Many of the requirements that financial institutions find most burdensome, however, are expressly mandated by the Electronic Fund Transfer Act. Hence, changes will have to be made in the underlying legislation before much can be done to relieve the   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The Honorable Henr10 S. Reuss Page Two  •  burdens. With this in mind, we are indeed reviewing both the regulation and the statutory provisions and expect to make legislative recommendations, later this year, of ways in which the statute might be modified without significant loss of consumer protections. In the case of disclosures, the Act requires that certain information be provided to consumers who have signed up for an EFT service. To facilitate compliance with this requirement, the Board issued model disclosure clauses that financial institutions could use in drafting their own disclosure statements. A pamphlet on Regulation E is enclosed. The model disclosure clauses appear on pages 23-26; one other required disclosure appears on page 5, with a shorter alternative version on page 6. You can see that the Board attempted to keep the suggested wording simple and concise. Institutions are not required, of course, to use the Board's model clauses. The disclosure pamphlet mentioned in the Associated Press article, for example, was drafted by the bank. The Board's staff has seen a copy of that pamphlet and informs me that much of the material is not required by Regulation E but was added by the bank for other purposes. The bank's experience, as reported, may therefore not be a representative demonstration of the difficulty that consumers have in absorbing information required by the regulation. I hope this information is helpful. if I can be of further assistance.  Please let me know  SirLçerely,  Enclosure   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  .  kto-c  LI  (47  - eitfutAAL aIZ o-ift unwittix-  7/te  TA.fi //;(6(2  S HEIIERN .S. REUSS, WIS.. CHAIRMAN THOMAS L. ASHLEY, OHIO VOL( ?Am S. MOORHEAD. PA. FERNAEED J. ST GERMAIN, R.I. HrNny B. GONZALEZ. TEX. Jost pH G. MINISH, N.J. FRANK ANNuNZIO, ILL. JAMES M. HANLEY. N.Y. rArr,r- N J. MITCHELL. MD.  Action assigned Janet Hart  U.S. HOUSE OF REPRESENTATIVES COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS  WALTER E. FAUNTROY. D.C. STEPHF "4 L. NEAL, N C. JE RRY M. PATTERSON. CALIF. JAMES J. BLANCHARD. MICH. CARROLL 1-4UBBARD, JR., KY. JOHN J. t AFALCE. N.Y.  •  • NINETY-SIXTH CONGRESS  GEORGE HANSEN, IDAHO HENRY J. HYDE. ILL. RICHARD KELLY. FLA. JIM LEACH. IOWA THOMAS B. EVANS. JR., CEL. S. WILLIAM GREEN, N.Y. RON PAUL, TEX. ED BETHUNE. ARK. NORMAN D. SHumWAY, CALIF.  2129 RAYOuRN HOUSE OFFICE BUILDING  WASHINGTON, D.C.  J. WILLIAM STANTON. OHIO CHALmERS P. WYLIE, OHIO STEWART B. McKINNEY. CONN.  CARROLL A. CAMPBELL, JR.. S.C. DON RITTER. PA.  20515  JON HINSON, MISS.  GLADYS NOON SPELLMAN, MD. LES AuCOIN. OREG. DAVID W. EVANS, IND.  Z25-4247  NORMAN E. D'AMOURS. N.H. STANLEY N. LUNDINE, N.Y. JOHN J. CAVANAUGH, NEBR. MARY ROSE °AKAR. OHIO JIM MATTOX, TEX. BRUCE F. VENTO, MINN. DOUG BARNARD. GA. WES WATKINS, OKLA.  August 29, 1980  pc(1  ROBERT GARCIA. N.Y. MIKE LOvvRY. WASH.  The Honorable Paul A. Volcker Chairman Board of Governors Federal Reserve System Washington, D. C. Dear Mr. Chairman: Congressman Daschle has forwarded to me a copy of a letter from President Franzen of the Day County Bank of Webster, South Dakota, commenting on an Associated Press story dealing with the Federal Reserve's disclosure requirements on electronic fund transfers, in connection with Regulation E. As you know, the Depository Institutions Deregulation and Monetary Control Act of 1980, Title VIII requires that regulations be written as simply as possible and paperwork minimal. The point Mr. Franzen raises suggests that it would be useful to review Regulation E with these requirements in mind.  Sincerely,  Henry S. Reuss Chairman  Enclosure   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ii  4/ ;/ f 1" -•  4.;  f..  i  (/'• 4)1./14:2 f-'/" e  •••': r  t.  -7  •dr  41., 4  111. ••••.,  . y. •  .‘ •  4  t •  •  t  J.;!.  Honurilble F;eprclEA-L,,dt'ive To!D LKicu!)ie 52.0 ainnun Office Building DC 2Dr::15  Thu  (.31 tile  i;  f  '  it pair:I.:: up ...;u vieli the problip country hanker, 3TC oui-Je1%, %,ith tu L:cco,lr:lutAte !.hu . never endinq 7,cw or .. ALich is unnecez5ary.  vc:rk lo;Id ;inJ  It le Lueunlinq evid;.,nt 1.:.;Ar:_ioolly the sm611 furecd ie inu:: Fur relief. 'L) ozAe or :nerger. Like5 pl3e:i, the con:-IwNer thAt this type Gf le.4i131z:tion is :;uppesed to tcict, Aill tW-..5 dearly. i;723 cuncern.  infof•f,lation  covaents Gil to you in .!ie  of (.11-  e  Today I have written to Sanator rnoxmire and RLpreenti.live H(..nrv rcuss, wo ch;dr repw2tivo cov;mitLec”:,, x,,ressiNg my discouragment. , „ ./ (  ‘'•  •,•'"cr e  t)) t L. FrAiszP "rciiclent  '  •  ( • .01' e /14 • •.; •-• ,•!  •C  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: Newspaper article Citations:  Number of Pages Removed: 1  "Bank Wins $1,000 Bet." Aberdeen American News, July 20, 1980.  Federal Reserve Bank of St. Louis  https://fraser.stlouisfed.org  .•*▪ • •Of GOVe •• g_c)  •  • BOARD  •co  mottet.t4L  OF ,30VERNORS O r' THE  FEDERAL RESERVE SYSTEM WASHINGTON, O. C. 20551  PAUL A. VOLCKER CHAIRMAN  September 12, 1980  The Honorable William Proxmire Chairman Committee on Banking, Housing and Urban Affairs United States Senate Washington, D.C. 20510 Dear Chairman Proxmire: Thank you for your letter of August 25, requesting the Board's views on H.R. 2297 as reported by the Senate Finance Committee. The Board shares your interest in Section 201 of that bill and is pleased to comment on that provision. Section 201 would repeal the withholding tax on portfolio debt investments in the United States of nonresident aliens and foreign corporations. Repeal would enable U.S. borrowers to tap the Eurobond market without resorting to the use of offshore financial subsidiaries. As a result, financing options available to some U.S. businesses would be expanded somewhat, and funds could flow into the U.S. economy more freely. On balance, we would view favorably this outcome. However, the Board is concerned that the amendment as it is now written could adversely affect the Federal Reserve's ability to use reserve requirements as a tool of monetary policy. The Federal Reserve requirements that will be phased in beginning on November 13 will ultimately place a three percent reserve requirement on both nonpersonal time deposits and Eurodollars which are used to support lending by U.S. offices of both foreign banks and domestic depository institutions. In addition, loans to U.S. residents from foreign offices of U.S. depository institutions will also be subject to a three percent reserve requirement. The Board has established this structure of reserve requirements in order to reduce the artificial incentives for lending from abroad to the United States as a means of avoiding domestic reserve requirements. Indeed, in the absence of the reserve requirement on lending from abroad, capital flows may   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  •  The Honorable William Proxmire Page Two  be stimulated in both directions; U.S. residents are induc ed to make deposits in the Eurodollar market, and these funds are in turn used by banks to make loans to U.S. residents. The volume of round-trip flows has expanded very rapidly over the past two years and poses problems of equity as well as for the timel y measurement of U.S. monetary and bank credit aggregates . The new reserve requirement structure is not applicable to loans to U.S. residents from foreign offices of forei gn banks. In the absence of a reserve requirement on loans from foreign offices of foreign banks, the withholding tax on interest paid to banks domiciled abroad serves to reduce or eliminate artificial incentives that would otherwise exist for foreign domiciled banks to shift abroad their lending to U.S. residents. Becau se of tax treaties that specify a reduced or zero withholding tax rate for some countries, the withholding tax will not in all cases inhibit foreign banks from avoiding reserve requirements. Neverthele ss, continuance of a withholding tax on normal bank lending operations would substantially reduce the disturbance to lending patte rns during the period ahead. It would be possible to achieve the main purpose of Section 201 of H.R. 2297--that is, to improve the acces s of U.S. firms to the Eurobond market--without removing the withh olding tax on interest paid to banks domiciled abroad pursuant to a loan agreement entered into in the normal course of their banki ng business. If such an amendment were adopted, those banks would then be deterred, to a certain extent, from avoiding reser ve requirements by making loans to U.S. residents from offsh ore offices. The Federal Reserve Board would then view the bill favorably. I hope that these views will be useful to you. Sincerely,  Saul A. YOICAOL  JS:PAU:pjt (#V-341) bcc: Jeff Shafer Ted Truman Gil Schwartz Mrs. Mallardi (2)   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Action assigned Mr. Trumanoiaff Jeff Shaf$er &Sydney Key WI! t TAM PROXM'RE, WIS., CHAIRMAN •t' • • A 4  SON A. WI LIAHS. JR.. N.J.  JOHN TOWF/1, TEX.  II . E. STEVENSON, ILL.  JOHN HEINZ, PA.  R T MORGAN, N.C.  DONALD W. •  JAKE GARP* UTAH  Ai CRANSTON, CALIF.  Rurco  F. JR..  S. SARBANE*. MO.  WILLIAM L. ARMS MONO, COLO. NANCY LANDON KASSERAUM, KANS. RICHARD GI. LI-I...AR,  I•L.D W. STEWAI,T, ALA. PA  'ZICttifeb Zfafez -.Senate  L. E. TSONGAS, MASS.  COMMITTEE ON BANKING, HOUSING. AND KENNETH A. MC LEAN. STAFF DIRECTOR N. DANNY WALL. MINORITY STAFF DIRECTOR MANY FRANCES DE LA PAVA. CHIEF CLERK   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  URBAN AFFAIRS WASHINGTON. D.C. 20510  August 25, 19 The Honorable Paul A. Volcker, Chairman The Board of Governors The Federal Reserve System 20th & Constitution Avenue, N.W. Washington,D.C. 20551 Dear Paul: I would very much like to get the views of the Federal Reserve on H.R. 2297 as it was reported out of the Senate Finance Committee (Report 504). I am particularly concerned about the amendment which affects the withholding of interest to certain foreign banks which is within the Board's jurisdiction and competence. With best wishes. Sincerely, ,/-  / William WP:hsd  roxmlre, U.S.S.  BOARD OF 30VERNORS 0- THE  FEDERAL RESERVE SYSTEM WASHINGTON, 0. C. 20551  PAUL A. VOLCKER CHAIRMAN  September 15, 1980  The Honorable William Proxmire Chairman Committee on Banking, Housing and Urban Affairs United States Senate Washington, D. C. 20510 Dear Chairman Proxmire: Thank you for your letter of September 4 concerning the recent report of the General Accounting Office (GAO) regarding the Federal Reserve System's use of internal auditing. The Board addressed the basis for its current internal auditing methods in its May 7, 1980, response to the draft of the GAO report and indicated certain actions that it planned to take to improve its current methods in view of GAO's several observations. The Board's comments may be found in the Appendix to the GAO report. These and additional actions have already been taken or are in the process of being implemented; these actions will be fully detailed in our response to Congress on the GAO recommendations, which the Board will submit by October 7, 1980. The Federal Reserve System maintains one of the largest internal auditing capabilities in the U. S. Government both on an absolute scale and relative to the size of our budget and staff. This is not mentioned in the GAO report, but it is the reason why the GAO recommendations do not concern, directly and indirectly, more than 80 per cent of the System's operations. GAO's criticisms are directed not at whether the remaining operations are audited, which they are, or the results of such audits, but only at the specific methods employed. There is no unanimous agreement in the auditing profession regarding such methods. Indeed, the Board's external auditors have the responsibility to review our overall audit, program but have not challenged our current methods. Therefore, the GAO recommendations, in their proper perspective, are relatively insubstantial. As a supplement to the Board's May 7, 1980, response to the draft GAO report, you may also be interested in the enclosed   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  10  The Honorable Wil Page Two  am Proxmire  correspondence that arose out of several statements on the Federal Poserve's use of internal auditing made by Comptroller General Elmer :itaats during his May 21, 1980, testimony before the Senate Comm ittee on Banking, Housing and Urban Affairs. I hope that this letter and the Board's forthcoming response to Congress will clarify this matter and place these issues in their proper perspective. Sincerely,  Enclosures - Ltr. dated 6/17/80 to Staats from Vice Chrmn. Schultz Ltr. dated 7/7/80 to Vice Chrmn. Schultz from Wm. J. Anderson, Director, General Govt. Div., GAO ETM:KS:vcd (#V-364) bcc:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Mr. Mulrenin Mr. Scheld Mrs. Mallardi (2)  1,%1  .111111,  IVA PRO/10.41r  HARR.cON A.  a  NM. CHAIRMAN  Action assignei Mr. Mulonin  JAFF. OARN, UTAH  ALV. r.HAN,-.TO... CALIF. F STEVFN. .ol , 'I L. ROPI PT MORr;AN  JOHN TOWER, JOHN HFIN2. PA. WILLIAM L. ARM:TRONG. coLo  R  o W. RIF r, j NIGH. PAUL s. .:0 RPANI S. HP), DONALD W Sit WART, ALA. GroRGE J. MI ICHE'L.L. MAINE KFNNETH A  NAP' (Y LANDON e AS'.f nAUM, KANS. RICHARD G. LUGAR. IND.  MC II AR .cTAUF DIRFCTOR  M. DANNY WALL, MIN(  ITY ).TAFf  DIRFCTOR  'Zinitcb Zfafcc. 'Zenale COMMIT-TUC ON BANKING. HOUSING. AND URBAN AFFAIRS  MART FRANC.LS DE LA PAVA, CHIEF CLERK   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  WASHINGTON. D.C.  20510  September 4, 1980  Honorable Paul A. Volcker Chairman Federal Reserve System 20th Street and Constitution Avenue Washington, D.C. 20551 Dear Mr. Chairman: As you know, the General Accounting Office (GAO) recently sent a report to the Congress based on its review of the internal auditing activities of both the Board of Governors and the Federal Reserve Banks. I have road the GAO report and support their two main recommendations: first, that there should be a permanent, independent internal audit group at the Board, and second, that the Federal Reserve Bank internal audit groups review banking supervision and regulation and economic research activities. I also concur with the GAO recommendation that the System's Conference on General Auditors should proceed to amend their "Audit Standards and Levels of Audit Attention for Federal Reserve Banks" to include specific policies and procedures for reviewing hank supervision and regulation and economic research activities. I would appreciate being kept informed of any decisions made by the Board for the Reserve Banks related to changes in internal auditing activities and procedures.  William Pro,nire Chairman WP:src  BOARD OF 60VERNORS OF THE  FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20 551  PAUL A. VOLCKER CHAIRMAN  September 15, 1980  The Honorable Berkley Bedell House of Representatives Washington, D.C. 20515 Dear Mr. Bedell: I understand that members of your staff have been in contact with the Board's staff about a possible amendment to H.R. 7244 which would require the Federal Reserve to transmit copies of the Country Exposure Lending Survey to the Senate Foreign Relations Committee and the House Banking, Finance and Urban Affairs Committee. I believe that, especially during a period where increasing attention is being focused on international bank lending generally, it is highly desirable to provide the relevant Congressional Committees and the public with available information on the foreign exposure of U.S. banks. For this reason, the agencies responsible for conducting the semi-annual survey of foreign lending by large U.S. banks have regularly released to the public the results of that survey since it was inaugurated on a permanent basis in December 1977. On several occasions the Board's staff has also made available to Congressional Committees and individual members of Congress supplementary disaggregated information and analysis. I believe that these procedures have worked well to date. In view of this satisfactory record, it does not seem necessary to me to embody a request to supply such information in legislation. Requiring such a statistical report via legislation would reduce the flexibility of the Federal Reserve and other agencies to modify our statistical practices if circumstances were to change in the future. We are always mindful of the reporting burdens that are imposed on banks, and regularly consider ways of reducing that burden consistent with informational needs. If this survey were required by legislation, and if circumstances change such that only an annual survey was felt to be necessary, then we would need legislative action to make such a change. In view of the interests of the various Committees in this information, I would plan to make it a practice to formally   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The Honorable Berkley Bedell Page Two  forward the survey on a regular basis to the Chairmen of the relevant Committees of Congress. I think that this approach would provide the Committees with the required information in a flexible manner without the need to embody the arrangement in a statute. I hope this approach will meet your objectives. Sincerely,  SZPaml A. Vpke  cc:  Chairman Henry Reuss  UaT.EzTIDJUIpjt aim; r. 74cridal wr. 'Scuola's xra. :Allard/ (2)   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  :  t  't,.;•:..;•  t.  .  ,  iu 4-kl.tt calculatee lotatit,in. „at Lkndir.  Z, •  ,eatciN  tr.  ct1.L  Lc a c4.-  1 cur t3  4. l•  4  A'St, •  ft.  t141.5 c4;6,  anc.ual ercert traral*ctif letter CctI it. iirr.;i1t1t:AA. x*:,zt eict.vn. t!Jt raiztni, ul tt;, yciu,  3igned) Donald I. Wino  tp*  4.1 - V11/G0 ltr. from Janet nart to Mr. s :% 21/80 irc..;/0 release OV-35§( V. 'Ilart.,t hrT6.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  I* I  tion assigned Janet Hart  6  coo4mirr EFS E INANCL ENVIRONMENT AND PUBLIC V.OFIKS JOINT ECONOMIC  'ZICniteb  afez Zencae  WASHINGTON. D.C. 20510  August 29, 1980  -C3  Chairman Federal Reserve System Constitution Avenue bewteen 20th and 21st Streets, N.W. Washington, D.C. 20551 Dear Chairman: I recently received the enclosed constituent inquiry, and I would very much appreciate your providing me with any pertinent information you might have regarding the matter. Your kind assistance is greatly appreciated.  PLEASE REPLY TO: 912 Federal Building Austin, Texas 78701 ATTN: Mario Ortiz  111••••   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  •  •  DMVON  DAVIS • GILBERT COMPANY, INC.  11 August 1980  The Honorable Lloyd Benson Senate Office Building Washington, D.C. 20510  Dear  Senator Benson:  Enclosed please find a copy of a letter we have just sent to the Federal Reserve Board which I think you will find interesting. I would appreciate any comments you may have. Sincerely yours, ----=7* -),  (I. /4,JLf  Hennon Gilbert HG/maf  -  •  • •  APT  ntscirities..14  • *1 ' .i,t1P1,114.!ti   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  .ari"•  r  ,t'4,1419N,10.,'TEN".(51?) 274777;1''  accionun  •  DmsioN DAVIS • GILBERT COMPANY, INC. 8 August 1980  Ms. Nancy H. Teeters, Governor Board of Governors of the Federal Reserve System Washington, D.C. 20551 RE:  §II (E)(6) and II (E)(7), Supplement I to Regulation Z, as ammended effective January 10, 1980.  Dear Ms. Teeters: One of the most common of consumer credit transactions is the short term, single advance, single payment loan. This letter focuses on a Regulation Z compliance problem relating thereto. Because of the immense volume of such loans, we believe the problem to be of great magnitude and worthy of prompt and careful consideration. If we are correctly interpreting the meaning of the above cited sections, we find an inconsistency which is best described by the following two single advance, single payment loan examples. This data is common to both loans: Amount of Loan - $10,000.00 Term, as stated on the note - 30 days Interest Rate - 14.5% per annum Amount due at maturity - $10,119.18 Loan number on December \ Loan number on December  1 is made on November 1, 1980 and matures 1, 1980. 2 is made on December 1, 1980 and matures 31, 1980.  The above cited §II (E)(6) seems to incorrectly define the term of loan number 1 as one month, thereby producing an incorrect APR of 14.30%; while §II (E)(7) correctly defines the term of loan number 2 as 30 days and produces the correct APR of 14.50%.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  • 8 August 1980 Ms. Nancy Teeters  page 2  The following scenarios will serve to illustrate two of the consequences of this disparity as it relates to both the consumer and the creditor. To set the stage for both scenarios: On November 1, loan number 1 is made to consumer. On December 1, consumer pays the interest and lender renews the loan for another 30 days, thereby creating loan number 2. Scenario 1: (Assume that the APR disclosures for both loans complied with §II (E)(6), and II (E)(7) respectively.) Consumer: "Mr. Lender, you told me that the interest rate on my renewal remained unchanged. How is it that you disclosed a rate of 14.30% on my first 30 day loan but now tell me. that the rate is 14.50% on my 30 day renewal of the same loan?" Lender: "I can't give you an intelligent answer to that question, except to say that we're complying with Regulation Z in disclosing your 'true' cost of creSit." Scenario 2: (Assume that upon renewal, the clerk who prepares the disclosure statement observes that the term and interest rate of both loans is exactly the same, and logically assumes that no new disclosure is required.) Scene shifts to time of next Compliance APR •the Examination. The examiner has just tested on loan number 2. Examiner: "Under the provisions of Regulation Z §226.80) and §226.811(iii), this loan is in violation. You made no disclosure for the renewal, eI has increased under Supplement but (E)(C), thereby requiring a complete new disclosure. Hey guys! (Calling other members of the examination team.) Watch for 30 day renewals of 30 day notes where there is no new disclosure for the renewal. Many of them will be in violation." Lender: "But...but...but....how is it possible for the APR to be different on two identical loans? We're innocent of any wrongdoing! We haven't overcharged our customers, but you're calling a violation anyway. Is this justice?" These scenarios are intentionally a bit satirical for the purpose of emphasizing the point. But un-  •   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  8 August 1980 Ms. Nancy Teeters  page 3  less the Board takes some action to eliminate this disparity, very similar scenes will soon be occuring all over the country. In this day of growing public discontent with the Federal Bureaucracy, we think you will agree that every effort should be made to eliminate or correct any regulatory element which may be truly unjust, such as the condition described above. We believe that the core of this problem lies in the fact that while the uniform month is necessarily a needed and proper time period expression when used in context with installment transactions, such is not the case with single advance, single payment transactions. With the latter, the laws of most, if not all states will require that interest be charged by the day, regardless of how the time period of the transaction is stated on the note. True, some lenders will state the time period in terms of months instead of days; but they don't actually charge interest by the month. Certainly, then, the APR disclosure for the single advance, single payment transaction should always be based on the time period for which interest is actually charged; and never in terms of some unrelated, arbitrary time period. (In this case, the uniform month.) Note that in the given examples the term of both notes was stated in days, and the interest charge was based on 30/365ths of a year. The uniform month (1/12th of a year) represents an actual time period of 30.4166 days. Unless the note term, as stated in days, included a fractional part of a day (which would certainly never be the case), we see no way to properly equate it to some round number of unifoLm months. Further, to reiterate an earlier statement, we see no reason for the use of the uniform month as a measure of time, except in installment transactions. It is our recommendation that the Board take such action'as is necessary to provide that in all single advance, single payment transactions, the time period, no matter how stated on the instrument, be reduced to the actual number of days for which interest is charged. By this means, the disclosed APR will be synonymous with the contract rate, and you will have achieved yet another "simplification" of the Truth in Lending Act.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  8 August 1980 Ms. Nancy Teeters  page 4  Yours very truly, DAVIS-GILBERT Co., Inc.  Hermon Gilbert Chairman of the Board CC:  Senator William Proxmire Senator John Tower Senator Lloyd Benson/ Congressman James Maddox Congressman Henry B. Gonzalez Ms. Janet Hart Mr. Ralph Richardson Mr. Richard Insley Mr. Allen Dombrow Mr. Patrick Parise Mr. Wallace Lamberth Tom Jennings, Esquire Mr. Richard B. West Mr. Ronald P. Braciak  HG/maf  •  .• • of GOvt •. R •  I  ;co • '.11 • -A • K,  .• •  ROAR!: OF GOVERNORS OF THE  FEDERAL RESERVE SYSTEM  • •  WASHINGTON, O. C. 20551  PAUL A. VOLCKER CHAIRMAN  September 16, 1980  The Honorable Ken Kramer House of Representatives Washington, D. C. 20515 Dear Mr. Kramer: Thank you for your letter of September 3 expressi ng your concerns about the Monetary Control Act of 1980. Included with your letter was a copy of an article that appeared in International Investor's Viewpoint dealing with the Act and a request for my views on this article. The arti cle notes that the Act: broadens the range of assets that can be acquired by the Federal Reserve and used to back the issuance of Federal Reserve notes; imposes uniform reserve requirem ents on all depository institutions and gives the Board auth ority, within limits, to vary those requirements (along with certain emergency reserve requirement powers); grant's all deposito ry institutions access to the discount window of the Federal Reserve; and requires that service charges be imposed on Federal Reserve services. The author is of the view that the Act is the most important one since the 1930's but is likely to be highly inflatio nary since it removes some restrictions on the expansion of Federal Reserve credit and, with its lower reserve requirement structure, .per mits a larger amount of money and credit to be supported by a given volume of Federal Reserve credit and reserves. While I agree that the Monetary Control Act of 1980 ir one of the most important pieces of financial legislat ion in son time, I have very different views of its effects on the economy. The Act's creation of a uniform reserve requirement structure to be applied to all depository institutions will stre ngthen the Federal Reserve's ability to control money and cred it, especially once the new requirements are phased in at all depo sitory institutions. Previously, the Federal Reserve's lack of direct reserve requirement authority over the rapidly growing nonb ank depository institutions and the loss of control through attritio n of member commercial banks from the Federal Reserve System were threatening   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The Honorable AIIRramer Page Two  to seriously undermine th e System's ability to exercise control over money and credit, Moreover, the Act, by re moving many restrictions that favo red artificially some ty pe s of depository institutions over othe rs, is likely to stre ng th en competition in our financial system and to improve the ef fi ciency of the payments mechanism, On the matter of the br oa der asset and collateral authority of the Federal Reserv e, I see no reason for concern, For some time the Federal Re serve has had the authority to extend cr edit to entities that could not be accommodated by privat e lenders, but has ra rely used Lhese powers. Also, the li beralization of the Fe deral Reserve note collateral provision, by providing the Federa l Reserve with more scope to adjust its asset holdings, will facilitate our ability to absorb rese rve balances released by the Act, thereby preventing the schedule d reduction in reserve requirements from contributing to an un desired expansion of mone y and credit. More generally, I wo uld point out that the Reserve's short-run Federal operating objective is to control the supp of reserves relative ly to their demand. The fact that we now have more flexibility--and wider scope over additi onal institutions-only increases our ab ility to constrain inIt ationary pressures by enhancing our abil ity to control money and crcHL. Th article, which argues that our increased po wers and increase inflationary pressures, is in my vi ew the exact opposite of its likely impact. I hope these comments are useful. if I can be of further assistance.  Plc;0 let me know  Sincerely,  sgalii A. VII!del  TS:DEL:ECE:CMcN:vcd (#V-36 3) bcc:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Mr. Ettin Mr. Lindsey Mr. Simpson Mrs. Mallardi (2)  KEN KRAMER  Actiowsigned Mr. E  •  574 DISTRICT, COLORADO  commir EDUCATION AND LABOR SCIENCE AND TECHNOLOGY  WASHINGTON orricr, ,NORTH HOUSE OFFICE BUILDING 1724 1-014, WASHINGTON. D.C. 20515 (202) 225-4422   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Croligre5 of tbe latittb .6tatt5 3fpufq of 1epres5entatibeii  DISTRICT orricrs, 1520 NORTH UNION BOULIVARD COLORADO SPRINGS. CoLcskoo (303) 832-8555  275 Univoi4 EXCHANGIE 8933 CAST UNION Averrut ENGLEN000, COLORADO 80110 (303) 779-8990  ZZIactington, 33.C. 20515  September 3, 1980 The Honorable Paul A. Volcker Chairman Board of Governors of the Federal Reserve System Twentieth Street and Constitution Avenue NW Washington, D.C. 20551 Dear Mr. Chairman: Enclosed is a copy of the International Investor's Viewpoint analysis of the Monetary Decontrol Act of 1980 which was recently forwarded to me by one of my constituents. As you will read, the International Investor's Viewpoint bulletin suggests that the expansive powers extended to the Federal Reserve by the Monetary Decontrol Act would permit the Fed. to expand the money supply should it be called upon to stimulate the economy or to bail the country out of an impending depression. The bulletin further suggests that if the Federal Reserve were to use such powers, the inflationary impact would be disastrous. Although I voted for the Monetary Decontrol Act, this article has now raised some serious concerns with me. I would appreciate having your own views on this analysis of the Act. Many thanks for your cooperation.  KK:mj Encl.  80909  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: Magazine article Citations:  Number of Pages Removed: 2  Bucksman, Charles B., III. "The Monetary Decontrol Act of 1980." International Investor's Viewpoint, 1980.  Federal Reserve Bank of St. Louis  https://fraser.stlouisfed.org  FRI.NK TTKPAPSON. 3m., REPPICENTATiyf WA. Paw lust!, Ck.,1114A14 CLAIT.ORNE PELL. SENAT111 ARCIA RWDDI IsLAN0, N,,cr CHAIRMAN AUGUSTUS F. HAWKINS RIPII(SPITATIVt rmcu CALIromA WILLIAM L. DICKINSCAI. PIPAIStvTlaryt 111-14 AUJAMA HO.NARD W. CANNOY. Pit•AD4 M4PK 0 HATFIELD. SITIIT;t FICM CHIEG:14  Congre55 of the aniteb *tatc5  GORDON ANDREW 44,KAY. siArr DIRECTOR AND GENERAL COUNSEL  Yoint Committee on Printing  FAYE'  M. PADGETT, DEPUTY  TO:  STAFF DIREC•oR  COMMITTEE ROOM  111 September 17, 1980  S-ISI. U S. CAPITOL WAAMI,GTOM. DC. 2D510 PHONE: 224.5241  CA 4 /52  HEADS OF ALL FEDERAL DEPARTMENTS AND AGENCIES, AND FEDERAL PRINTING AND PUBLISHING COLLEAGUES  The Joint Committee on Printing (JCP) and the Government Printing Office (GPO) will hold an open meeting in Denver, Colorado, on Tuesday, October 21, 1980, from , 10:00 a.m. to 4:00 p.m. to discuss the Federal government's printing and distributio programs, and receive your suggestions on improving the printing, procurement and distribution of government publications. The meeting will be conducted jointly by senior staff of the JCP and the GPO and will be held in Room 1204 at the Federal Center, Building 25 (enter through Entrance E2), Denver, Colorado. The Joint Committee staff also will be making inspections of the Government Printing Office's Denver facilities, other Federal printing establishments, and depository libraries in Region 8 (Colorado, New Mexico, Utah and Wyoming). The topics to be addressed during the open meeting include: the role of the Joint Committee under Title 44, the law governing federal printing and the distribution of government publications; federal printing and binding regulations; procurement of federal printing from the commercial sector, which now exceeds $425-million annually; GPO's contractor compliance program; GPO's in-plant capabilities; new technologies; standards for paper used by the Government; and public access to government documents. Ample time will be reserved during the presentation to answer questions you may have. I am attaching for your further information a copy of the open meeting agenda which details the topics to be discussed, including the three concurrent afternoon working sessions. I look forward to your participation in this important meeting. Subsequent inspections and public meetings by the Joint Committee over the next several months are planned for San Francisco, Los Angeles, Dallas, Columbus (Ohio), and Washington, D.C. The Joint Committee encourages your participation in any of these meetings. Attendance by appropriate representatives from your department or agency, including your Central Printing and Publications Management Organization and printing facilities in the Denver area and throughout GPO Printing Procurement Region 8, is requested. We would appreciate a response by October 14th, addressed to the U.S. Government Printing Office, Regional Printing Procurement Office, Building 53, Room H-1004, Denver Federal Center, Denver, Colorado 80225, telephone: (303) 234-2139, indicating the names, position titles, and full addresses of departmental or agency personnel who will attend the meeting. Sincerely yours,  Augustus F. Hawkins Acting Chairman Enclosure   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  S  •  MORNING SESSION  AGENDA October 21, 1980  •  (10:00 - 12:30)  OPENING REMARKS:  The Pole and Policies of the Joint Committee on Printing  THIS IS YOUR GPO: PROCUREMENT OF PRINTING FROM COMMERCIAL SOURCES: NEW TECHNOLOGIES: PUBLIC ACCESS TO GOVERNMENT DOCUMENTS AND THE DEPOSITORY LIBRARY SYSTEM: AFTERNOON SESSION   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  (1:30 - 4:00)  (Three simultaneous discussion groups) GROUP I  COMMERCIAL PROCUREMENT: Topics to be addressed:  GROUP II  1)  The Joint Committee's Policy on Commercial Procurement of Government Printing  2)  Denver Area Procurement Overview  3)  GPO's Quality Assurance Through Attributes Program  4)  Contract Compliance  NEW TECHNOLOGY AND FEDERAL AGENCY PRINTING PLANTS Topics to be addressed:  GROUP III  1)  Regulation of Printing & Binding Equipment and The Impact of New Technology  2)  Micropublishing in the Federal Government  3)  Analysis and Use of JCP Reporting Forms  4)  GPO's Denver Regional Printing Procurement Office  DEPOSITORY LIBRARY SYSTEM & PUBLIC ACCESS Topics to be addressed: 1)  New Developments in Library and Indexing Services  2)  Role of the Superintendent of Documents   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  September 17, 1980  The Honorable Henry S. Reuss Chairman Committee on Banking, Finance and Urban Affairs House of Representatives Washington, D.C. 20515 Dear Chairman Rues: As ntquired by Section 7(d) of t!le Inttrnational Banking Act of PPS, the enclosed report is submitted on the implementation of that Act. As noted in the report, experience with the operation of the Act is limited ano parts of its pmvisions have not yet been fully implemented. Consequently, it has not been pcnsible to evaluate fully the need for legislative changes. Some recommended chAnges are included nevertheless and the Board would De prepared to submit proposf...ts to legislative language in support of thor.e recornrneodations. The ...;ithin the next two years after there has been further submit a further report , opportimity to evaluate the operation of ttYN Act. In connection with the preparation of this report, the State bank: suptrvisors have been consulted as v'ere tht, staffs of the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency. Hoev, the recommendzitions contAnerj. in the report are solely those of the. Board. The Board is separately reviewing the issues that have been raised in connection with foreign acquisitions of domestic banking Institutions. If any recommendations for letslative changes emerge from this review, they- will :* promptly submi fled. Sincerely,  Enclo, ur)61,,jtkA, ;$_rvo  ca4300  C-txx&A-Tv---)  ‘)A-e-vittt_   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  September 17, 1980  The Honorable Donald W. Stewart United States Senate Washington, P. C. 20510 Dear Senator Stewart: Jim Stone has sent me a copy of their letter to you reviewing progress on the "futures" study. I can only agree with his conclusion that a deferred deadline for the study will produce a more satisfactory report. Sincerely,  PAV:ccm #2568  -  .•*of Govi•• .•0 • 41-  OF THE  ..  •  BOARD OF GOVERNORS  FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20 SSI  •  ('..0/• •`8•11L RF.S`" • '• •.. • • •  PAUL A. VOLCKER CHAIRMAN  September 18, 1980  The Honorable William Proxmire Chairman Committee on Banking, Housing and Urban Affairs United States Senate Washington, D.C. 20510 Dear Chairman Proxmire: As you know, the Federal Reserve recently commented in opposition to legislation report ed by the Senate Banking Committee to provide 100 per cent Federa l deposit insurancc for government deposits at all depository instit utions. In that connection, I have sub sequently become aware of a substantial study done by the Federal Reserve, completed in September 1979, precisely on this subject. The sLudy, after close and balanced review of the iss ue, reaches clear conclusions consistent with the position taken in my recent letter to Senator Tower opposing the legislation. I am forwarding a copy to you . and other members of the Senate Banking Committee so that you may have the benefit of this ana lysis, which is subsequenL to the ACIR study mentioned in your Committee Report. At the least, ii seems to me the matter would justify hearings before further act on the legislation. Sincerely,  .44414 Enclosure  s %M alsod Mosommoodatioos of th. Ad Use SWItesms . est Pail Isawereeig Gov't. Dopoolvs)  paticataV4pit &act Mrs. mallardi (2) lopuntice1 WNW ties soot to Soo. KommObsoo. Willia , m . Cemslims. Stoveosco. itioloo6 Mogi*. Sorboomes stawart. mitchen. Olara, Tower Maims, Arostoome, M SAW,  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  .• .Of • • covt'•. ."....q 9 ---,, --•i• • ...,. ..: ,1.1.:-.• \o p -.  . •  ...  .. •• iti&  .A... 4: • rV;i'l ktj •  ,, ...•.".e•_ ,'.;;''•.-l[r 'tc -il ,..,.:,:.,.. .4-:.• ''/.-..a.", ..-": ,::4'.•  ••  BOARD  - GOVERNORS  FEDERAL RESERVE SYSTEM THE  WASH1N  •• • •• •  O. C. 20551  PAUL A. VOLCKER CHAIRMAN  September 18, 1980 The Honorable Mary Rose Oakar House of Representatives Washington, D.C. 20515 Dear Ms. Oakar: I am responding to your letter of August 26 conc the Community Reinvest erning ment Act. challenge by Oh io Pu blic Interest Campaign ("OPIC") and Citizens to Bring Broa dw ay to the application of Back ("CBBB"), National City Corporatio n (" National City") to acquire The Henry Co unty Bank. As a member of the Boar d of Governors whose re bility it is ultimately sponsito act on National City 's proposal, I believe it would be inappropriate at this ti me for me to comment on the merits of the Co mmunity Reinvestment Ac t challenge to this application lodged by OPIC and CBBB or on an y other substantive aspect of the proposal. However, I would like to take this opportunity to assure you that the Federal Re serve System is fully mindful of the directiv es of the Community Re investment Act and that in connection with its action on appropri ate applications, the Board carefully ev aluates a bank holding company's record of performance with respec t to the criteria set fo rth in the Community Reinvestment Act. I am enclosing a copy of the Board's Community Reinvestment Act Inform ation Statement which I believe reflects the System's concern th at proper and timely co nsideration be given to an Applicant's Commun ity Reinvestment Act re cord, even in the absence of a protest. In the case of a protested application, the procedural rules se t forth in the enclosed statement assurn that all interested pa rties to a particular pr oposal are given an opportunity to have their comments presente d to the Board. The Federal Reserve ha s received all comments and CBBB in this case, from OPIC including those concerni ng the handling of this matter by the Fe deral Reserve Bank of Clcveland. In this regard, I am enclosing a copy of a letter date d July 18, 1980, from the Board's Secret ary, responding to OPIC and CBBB's letter of July 3, 1980. The record indict':, that in accordance with Board procedures the Re serve Bank has made ev ery effort to providt   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The Honorable Mary Rose Oakar Page Two  OPIC and CBBB an opportunity to supp lement the record, including nuerou.s efforts to arrange a meeting between the parties. While the record further indicates that such a meeting could not be arranged, members of the Reserve Bank staff attended a meeting held by OPIC and CBBB on September 10, 1980. Attendance at the meeting and other efforts by the Reserve Bank indicate that OPIC and CBBB have been provided ever y opportunity to supplement the record. These actions by the Rese rve Bank are consistent with the System's concern that a proper determination of the merits of this proposal be made by the Board. In closing, I appreciate your interest in this application and in the Community Rein vestment Act generally. Please let me know if I can provide any further information. Sincerely,  Enclosures  (Press release dtd. 1/3/80 & 7/18/80 ltr. to Mr. Liuzzo of CBBB from Mr. Garwood)  NLP:RMW:SW:DJW:pjt (0.7-346) bcc: Federal Reserve Bank/Cleveland Attn: John Davis Mr. Claude Blair President National City Corporation P.O. Box 5756 Cleveland, Ohio 44101 Ms. Sandy Buchanan Ohio Public Interest Campaign 340 Chester-12th Building Cleveland, Ohio 44114 Mr. Dan Liuzzo Citizens to Bring Broadway Back 4947 Broadway Avenue Cleveland, Ohio 44127  •••   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Mr. Petersen Mr. Whiting Ms. Weinberg Mrs. Mallardi (2) S&R Clearing Unit  •  •••  P Y ROSE OAKAR :MTH DISTRICT, OHIO  OFtion assigned Mr. Petersen•  comurrrrrs: BANKING. FINANCE AND URBAN AFFAIRS  DIST PICT OFFICE: 4 523 I  cal. COURT BUIL DING 215 SUPTHR , H A VI l,f  CLE VI LAND, OHIO  44114  (216) 5U-4927  WASHINGTON OFFICE: 107 CAT4 NOUS( Or 'IDE nuILDINcs  Coligres'E') of Or Uniteb *tattiS AptuSe of IleproSentatibel  POST OFFICE AND CIVIL SERVICE SELECT COMMITTEE ON AGING  Chair, Task Force on Social Security and Women  EZ.Lubiltaton, D.C. 20515  D C. 20515 (202) 2.25-5571  August 26, 1980  ( 0,  The Honorable Paul Volcker Chairman Board of Governors Federal Reserve System Washington, D.C. 20551 Dear Chairman Volcker: As you know, I have long been a supporter of the Community Reinvestment Act as well as the Home Mortgage Disclosure Act. It has been my belief that these two legislative instruments can help to bring about a banking system that is more responsive to the credit needs of the ordinary American. It is because of this belief that I was dismayed to learn from two community groups in Cleveland that the Federal Reserve Bank there has allegedly been less than responsive to the serious issue raised by the CRA challenge to National City Bank brought by the Ohio Public Interest Research Group and Citizens to Bring Broadway Back. It is not my intention here to argue for or against the merits of this challenge. That is a matter that can only be settled through the process provided for in the Community Reinvestment Act. What I am concerned with however, is the extent to which the Cleveland Federal Reserve Bank has been responsive to the challenge, in terms of setting up mutually agreeable meeting times, answering information requests, etc. These challenges, when placed by established community groups, are not frivolous or time wasting. I would expect the Federal Reserve authorities who are responsible for investigating and acting on these challenges to treat them with the seriousness that they deserve. I am enclosing for your information the detailed letter that was sent to me by the two community groups involved, Ohio Public Interest Research Group, and Citizens to Bring Broadway Back.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  S Paul Volcker  111  The Honorable August 26, 1980 Page Two  I would appreciate your looking into these allegations and letting me know if they have been corrected. If it is impossible to satisfy all the parties in Cleveland, perhaps this challenge had best be handled through Washington. Si cerely,  Mary Ros Oakar Member •f Congress  MRO:peb Enclosures cc: Ohio Public Interest Research Group Citizens to Bring Broadway Back   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  lammc&—  L4*-14.  Pito  MINIMIP0  ( PUBLIC tj/ INTEREST' CAM'AC\  •  July 28, 1980  Representative Mary Rose Oakar U.S. House of Representatives Washington, DC 20515 Dear Representative Oakar, In May 1980, the Ohio Public Interest Campaign -n/1d the Citizens to Bring Broadway Back filed a Community Reinvestment Act challenge against National City Corporation, Ohio's third-largest bank-holding company. The challenge was filed with the Federal Reserve Board, and has largely been handled by the Federal Reserve Bank of Cleveland. We are writing to you because we are very disturbed with the way the challenge has been handled by the Federal Reserve Bank of Cleveland and by the Washington Federal Reserve Board. We would appreciate any help you might be able to give us in seeing that the challenge is handled in a constructive, public manner. We would also like to invite you to a special public hearing on National City's investment record to be held in the North Broadway neighborhood on Wednesday, September 10 at 7:30 p.m. We would appreciate your response by August 13. As you know, National City is Cleveland's second-largest bank ($5 billion in assets) and the most profitable among the nation's fity largest banks. Despite its size and strength, National City has a very poor investment record in home mortgage loans and SBA-guaranteed loans in the City of Cleveland. The bank has shown an historical preference for doing business in Cleveland's very high-income suburbs, as the attached chart shows. National City Corp. has recently bought many smaller banks throughout the state, including five banks in 1979 alone. Our challenge was filed over the proposed acquisition of the Henry County Bank, located near Toledo in the heart of Ohio's tomato-growing region.  Akron-Canton Mansfield Area 146 South Hiph Street Akron, Ohio 44308 (216) 434 0784   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Warren -Youngstown Area 1457 Locust Street Mineral le, 44440 (216) 652-0048  Dayton 141 West 3rd Street Room 313 Dayton, Ohio 45402 (513) 228 8506  Cincinnati 617 Enquirer Bldg 617 Vine Street Cincinnati, Ohio 45202 (513) 421.0735  Toledo 946 Spitzer Bldg Toledo, Ohio 43604 (419) 24 1.9093  Columbus Legislative Office 16 East Broad Street Suite 908 Columbus, Ohio 43215 ,.—... (614)724-4111   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Letter To Rep. Oakar July 28, 1980 Page 2  National City's purpose in going to Henry County appears to be to enter the very profitable market of farm mechanization, which is currently taking place under the direction of the Campbell's Soup Company. Because of the potentially disastrous effects of such mechanization for farmworkers and small farms, the Farm Labor Organizing Committee (FLOC) has joined our CPA challenge. Despite the very serious nature of our charges against National City, we feel we have received bery little cooperation from the Federal Reserve Bank of Cleveland. Enclosed are copies of letters we have written to Mr. Theodore Allison, Secretary of the Federal Reserve Board, and Mr. Willis Winn, President of the Cleveland Federal Reserve Bank, detailing our experiences and grievances. Thank you for your help. you.  We look forward to hearing from  Sincerely, /t Dan Liuzzo Chairperson, CPA Committee Citizens to Bring Broadway Back  Sandy Buchanan Program Associate Ohio Public Interest Campaign  attachments  1„,, I  •  1•‘i!  B r  (.•••%•.  tI  \  r  Ld•-:1)  •  \•  :  C  'VE4IGN.  r  ;  "  ;C  4. Ile •  •  July 3, 1980  Mr. Theodore Allison, Secretary to the Board Board of Governors Federal Reserve System Washington, DC 20551 Dear Mr. Allison, We are writing to you to inform you of the many difficulties the Ohio Public Interest Campaign and Citizens to Bring Broadway Back have experienced in the handling of our Community Reinvestment Act challenge by the staff of the Cleveland Federal Reserve Bank. We have detailed below several of the instances in which we feel we have received unsatisfactory treatment from the Cleveland staff. In short, we feel that the Cleveland Federal Reserve bank staff is not handling the challenge with respect for the community organizations involved or with a thorough understanding of the letter and spirit of the Community Reinvestment Act itself. The first major problem we encountered revolved around the correct deadline for filing the initial challenge. In early March, Sandy Buchanan of OPIC called the Cleveland Federal Reserve Bank to ask whether National City Corporation had yet filed its application to purchase the Henry County Bank. She was referred to Mr. Joe Sabatini who said that he thought a draft application had been filed, but that it had not been published in the Federal Register. He also said he would have no way of knowing whether National City had published its notice of application in the newspaper, but promised to add Ms. Buchanan to the mailing list for the 11-2 wire, so that OPIC would receive adequate notice of the application. On May 1, 1980, Ms. Buchanan received the 11-2 wire indicating that National City Corporation (NCC) had filed its application on April 2. She immediately called the Cleveland Reserve Bank, and was referred to Mr. Jack Wixted, who said he was not familiar with CRA procedures but would call back to let OPIC know the deadline for filing a chal:.enge against that particular application. When he  Akron•Canton•Manstseld Ares  Viran•Younotown Area  Dayton  CI ntinnaU  ToJedu  145 south h ,:h Sliest  Locuil Ltr•st 1,,i1,msrs1 Redo', 44440  141 Watt 3rd Street  617 Enquerar DIJ.;  W46 So.ttar LOU;  kourn 313  (.17 Vend Sirsot  (2'(i) (.):;24:0043  Dayton, Ohio 4546  C•nc.innatg, Ohio 402  Toistio. Ohio 43604 is lin 241.00.J3  15131  (513) 421-0735  At,ron, Ohio 44:1C:i (2161434.61/A   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Culurraws Ley,bist.e• Oftscs IC. k•ii Ork..44 yo troot S.9u8 Cui‘aint.us. 4.1411.. iG14Ij14-4111  '   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Oa  S to M. Thcodoru  Lutter July 3, 1980 Page 2  •  AlliLn  called back, he said the challenge would have to be submitted to Mr. Harry Huning, Vice President on the next day -- May 2. Let us add here that although we have been told to address our correspondence to Mr. Huning, and that he is the CRA Officer for the Cleveland Federal Reserve Bank, we have never had any personal contact with him, and are very confused about his role in the challenge. To our knowledge, he is not taking an active role in administering the challenge, although he is listed as the CRA Officer. Fortunately for us, due to our long experience with the National City Corporation, we had already planned to file the challenge and quickly prepared an initial document. The challenge was filed on Friday afternoon. On Monday morning, Ms. Buchanan received a phone call from Mr. Marty Abrams, who explained that he worked in the Public Affairs Department in Cleveland and .would be our contact person for the case. Ms. Buchanan asked him several questions about the challenge procedures, including how the filing deadline was determined. He did not know the answers, but called back later to say that the actual deadline was Max 9 (30 days after publication in the Federal Register), not May 2. Thus, incorrect information from Mr. Wixted had caused us to file our challenge on just 24-hours notice. On May 8, Ms. Buchanan received a phone call from Mr. Glenn Canner and Ms. Susan Weinberg of your staff to say that we would be receiving a letter from you asking us to submit additional documentation of our request for a public hearing. They also said we should disregard a letter (which they assumed we had already received) from Mr. Robert Ware of the Cleveland Bank staff telling us to submit any additional information by May 9. They said the actual deadline would be May 19. We did not receive Mr. Ware's letter in the mail until later that day. This brings an interesting question up: If Mr. Ware was sincere about requiring a May 9 deadline, how could he have expected us to meet that when we didn't receive the letter until May 8? The OPIC office is six blocks from the Federal Reserve Bank, and we have had no trouble in handdelivering mail to the Bank, when we knew there was some urgency involved. Why couldn't the Bank do the same, or at least take into consideration the fact that mail can take one or two days to arrive. During the period from May 12- May 22, the Ohio Public Interest Campaign anc Citizens to Bring Broadway Back received several phone calls from Mr. Abrams and Mr. Ware, who were interested in setting up an informal meeting between the Bank staff, the  Applicant, an  the Protestants.  We explained that our  organizations were not opposed to participating in auch a meeting, blr: we did not think it was appropriate to discuss the date or auenda until we had received a response from National Ci.:y to our very serious charges.  rlore All  July 3, 1!),C) Page 3  fi  •  On 21, Abrams and Mr. Ware called to say they would like to come to the OPIC office to discuss the protest. They did not invite representatives of the other party filing the protest, the Citizens to Bring Broadway Back. Ms. Buchanan did call the Broadway representatives to invite them, but they were unable to come to a meeting on the less-than-24-hours notice which we had been given. On May 22, Mr. Ware and Mr. Abrams came to the OPIC office and met with Ms. Buchanan and Mr. Paul Ryder, Cleveland OPIC Program Director. Once again, we explained our concern that we not discuss such a meeting until we received National City's response, in the interest of fairness to all parties. They then produced a letter indicating that National City had been given until June 3 to respond. We also strongly expressed our feeling that any meetings held between ourselves, CBBB, and NCC be open to the public and the media, and be held at a convenient time and place for Broadway neighborhood residents. We asked that they put their proposal for a meeting in writing, because they were very unclear in their descriptions. Several days later, we received copies of a May 22 letter from Ms. Lucille Huston of NCC to Mr. John Kline of your staff,. confirming an extension of NCC's deadline until June 16. On the same day, we received a letter from Mr. John Davis, Senior Vice P::esident and Economist, suggesting a meeting for June 16. Obviously, this would have given us no time to study National City's response. OPIC and CBBB then wrote to Mr. Davis outlining again our reasons for wanting to hold the meeting after we had been given a reasonable time to study the bank's response (which was approximately 100 pages long), and repeating our request that he clearly explain the purpose of the meeting. (We have enclosed copies of this correspondence, which explains the issues involved). On June 17, Ms. Buchanan received a call from Mr. Ware and Mr. Abrams wanting to set a date for the meeting. Ms. Buchanan explained that the Citizens to Bring Broadway Back had not yet received a copy of National City's response (it did not arrive for several days), and we would all discuss our answer when they had had a chance to study the response. On June 23, Ms. Buchanan told Mr. Abrams that July 8 would be a possible meeting date, and expressed again our concerns about the meeting place, time, and public nature of the proposed meeting. Mr. Abram'; called later to say that July 8 would not be feasible because Mr. Davis had to attend a meeting of the Federal Open Mark,!t. Committee on that day. Mr. Abrams added, "that's actually why he (Mr. Davis) is in Cleveland - because he's interestcd in monetary policy - not because CRA is one of his favorite games." We do not consider CRA to be a "game," and   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  • i,cLt.ur  to Mr.  Thuouore Allisn  July 3, 1980 Page 4 were disappointed to hear Mr. Abrams refer to it as such. Mr. Abrams suggested a meeting date of July 9. After discussing that possibility, OPIC and Citizens to Bring Broadway Back decided that we could not go through with such a meeting until we had first met with representatives of the Cleveland Reserve Bank to discuss ground rules. We felt it was very important to explain clearly our firm committment to make the CRA process public and easily accessible to the members of our organizations. Consequently, we invited Mr. Abrams, Mr. Ware, and Mr. Davis to a meeting of the Citizens to Bring Broadway Back CRA Committee on Wednesday, July 9. Even though holding the meeting on that date would delay the meeting with National City by a few days, we hoped that in general it would contribute to the success of such a meeting. Ms. Buchanan invited Mr. Abrams to a July 9 meeting by phone, and used the word "confusion" to describe the process up to that point, meaning that we had received contradictory and unclear comments from the staff of the Cleveland Federal Reserve Bank. Mr. Abrams took the comment to mean that the CBBB CRA Committee was "confused," and rather than return the call to Ms. Buchanan, as promised, called the CBBB office to speak with Mr. Liuzzo. Mr. Liuzzo was not at the office when Mr. Abrams phoned (this took place on June 27). Mr. Abrams then sent a letter to the Broadway office referring to the CRA Committee's "confusion" and including copies of all correspondence between all parties up until that time (including letters from Mr. Liuzzo himself). Mr. Abrams implied that the receipt of these letters would make everything clear, although we had repeatedly stated that the letters were quite unclear. Mr. Abrams told a Broadway staff member that he would call back later that afternoon for Mr. Liuzzo. He did not call at the time he had promised, so he missed Mr. Liuzzo, and had another conversation with anothcr Broadway staff member, Mr. Douglas Van Auken. Mr. .Van Auken explained again that the CBBB CRA Committee was not "confused," but that we felt that the Federal Reserve Bank had not issued clear procedures. 'On Tuesday, July 1., rather than phoning Mr. Liuzzo as they had indicated they would, Mr. Abrams, Mr. Ware, and Mr. Davis dropped in at the CBBB office unannounced, and waited  When Mr. Liuzzo arrived, he explained again what Ms. Buchanan had explained over the for Mr. Liuzzo to arrive.  phone. He asked many questions about the Federal Reserve's procedures, and received some incredible answers.  tp,  •  T-_:LLer to Mr. Theodore Allison July 3, 1980 Page 5 Because most of our correspondence with the Cleveland Federal Reserve Bank had come from Mr. Davis, we assumed that he would be familiar with all of the CRA Procedures. But, when Mr. Liuzzo asked him , "What is the difference between an informal meeting and a public hearing?" and "What's the difference between articulating views and negotiating," Mr. Davi.s folded his arms and put his head down on the table. When and pointed to he looked back up, he said "I don't know Mr. Abrams and Mr. Ware, saying "Ask these guys." This lack of knowledge was quite disturbing to us. Throughout the meeting, Mr. Van Auken took notes on what was • is customary in said by all the parties. Such a procedure any meeting, so that a written record can be referred to later. But mr. Davis did not seem to want any written record of the meeting to exist. He stated that the note-taking would "reduce my candor" and stated, "Stop that damn note-taking!" Why should a federal official be afraid to have his statements recorded? Mr. Liuzzo pointed out that the CRA Committee of CBBB was not present at the time, and that he could not speak for all the members. Demonstrating again our desire to cooperate with the Federal Reserve, Mr. Liuzzo offered to call a meeting on very short notice. The next morning, July 2 , he invited the Federal Reserve staff to a CRA Committee meeting in Broadway that night at 7:30. On JulyRyder and Ms. Buchanan of OPIC and 15 members of the CBLIB CRA Committee were present for the meeting. Mr. Abrams, Mr. Ware, Mr. Davis, and Ms. Judy Menneck (an analyst at the Cleveland Reserve Bank) arrived at Mr. Liuzzo opened the meeting by describing our organizations' concern that our CRA challenge be handled with respect for the letter and spirit of the CRA: that is, that banks should be required to meet the credit needs of their communities. Mr. Davis opened by saying, " I don't know where to begin -I'm no expert on CRA or the Federal Reserve Board's pro::edures." If Mr. Davis is not an expert, then why is he handling our challenge, which we filed with good faith that it would be handled by knowledgeable persons at the Federal Reserve? We explained to Mr. Ware, Mr. Abrams, Mr. Davis, and Ms. Menneck that several membeis of CBBB had been present at a National People's Action conference in Washington where a Federal  Reserve staff member had promised that CRA meetings would be held in the neighbcrhoods, in the evening, and would be made public. The genticmen'were familiar with that statement, and even referred to the staff person by name.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  dr   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  1,etter tQ :".r. July 3, 1980 Page 6  Allgaorc  We requested repeatedly that the proposed meeting between ourselves, the Reserve staff, and National City be held in the Broadway neighborhood so that it would be accessible to community residents. We see no reason why, if the Reserve Bank staff members could come to a meeting in Broadway on July 2 , they could not come another time. We promised to provide a constructive atmosphere that would not be as intimidating as the Cleveland Federal Reserve Bank, where all visitors are greeted by armed guards. Mr. Davis refused to acknowledge that our organizations could conduct civilized meetings, and referred several times to the "hurly-burly" atmosphere. Although he did acknowledge that holding it in the neighborhood is "one possibility," he continued to insist that the meeting be downtown. We explained that the public nature of our own organizations and of our CRA challenge prohibited us from attending any meetings from whichtmot only members of the public and the press, but also more than four members of our own organizations, were barred. Mr. Davis could give us no logical reason for the arbitrary limit of four from each organization, and admitted that this limit was not a firm policy. We pointed out to Mr. Davis that it was National City that requested that the meeting be held in private. Quoting from a letter to Mr. Davis from Mr. Robert Killpack of National City on May 13: "we will expect a clear understanding at the outset that neither we nor the protestants will provide any information to the public, by way of press release or response to inquiry or report to public or organizational community meetings, about the fact that discussion is planned (or has been held), the subject of discussion / or the participants." Such a strong statement indicates to us that National City has something to hide. Mr. Davis referred several times to not wanting to "upset" National City. We pointed out to 1.1r. Davis that he should also be concerned with not wanting to upset us -- the parties who filed the challenge because the bank is not meeting our credit needs. In addition to insulting our organizations, by telling us that he did not believe we could conduct ourselves properly in our neighborhoods or in numbers larger than four, Mr. Davis decided to insult our city. He told us that he has only been in Cleveland for three years and added, "They get so goddamn sensitive about nuances, that's why Cleveland is different than other cities." Does Mr. Davis consider our community credit needs to be "nuances"? Would he rather that we ignore the CRA altogether? We of course welcome people from other cities to Cleveland, but do not feel we should be insulted by federal officials.  •  •4,  •   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Letter to 1.:17. July 3, 19S0 . 7 1-).1(ju  111 Theodore  AlliL;Dn  •  •  The meeting continued for an hour and a half. We continued to explain our position, and the Federal Reserve Bank staff continued to refuse to .consider that our suggestions had any merit whatsoever. Finally, we ended the meeting saying that we would all have to decide what to do next. We reminded the Bank staff that we would like to facilitate the resolution of the challenge, but that they were laying down impossible conditions. Throughout the meeting, Mr. Abrams had been holding a number of envelopes. As he was walking out the door, Ms. Buchanan asked him what was in the envelopes, since he had obviously intended to distribute them at the meeting. He turned around and sheepishly admitted that they were the agendas for the meeting on July 9, at the Federal Reserve Bank, at 7:00 p.m. If the Federal Reserve Bank staff members had come to the meeting with their minds made up not to listen to our suggestions, why had they come at all? Apparently, they had never taken our suggestions seriously. Since the meeting on the 2 nd, we have learned that the Federal Reserve Bank staff intends to go through with its original plans. Needless to say, we are very disturbed about the fact that they have refused to consider our position. In short, working with the Cleveland Federal Reserve Bank staff has been a nightmare. We have been given misinformation • have been told that they don't know the procedures, and have not been treated with respect. We have complied with every deadline that has been given to us in submitting written documents, we have called meetings on 24-hours notice, and we have made constructive, well thought-out suggestions. We are very sorry to have to write you this letter. We hope that you will take some action in this matter, so that our CRA challenge can be handled fairly. Thank you.  Sincerely, ,;(77,7 /..)Le Sandy ichanan Program As1:ociate Ohio Public Interest Campaign  cc:  Ms. Ms. Mr. Mr. Mr.  •ZiGe , lip0 Dan Liuzzo Chair, CRA Committee Citizens to Bring Broadwa: Back  Susan Wc!inberg, Attorney, Federal Reserve Janet Hart, Director, Consumer Affairs, FRB Jim Low(A.1, Community Liaison, FRB John Davis, Senior V.P. and Economist Claude Llair, Chairman, NCC Ti(orr.„ ForlPralvr, nf  • • *. .. '0CAG°Vf 1 •• "er •• ,. • --, r".1:p• ' ! 41 1•• 4AV1 f; • ...-cj, P.,/ i•-• • f',... : , •''''. • . •'. 1 .., : \ 04,111'11c 1 ,,4,x  • :• ' % .....  •  BOARD  •  ••  OF GOVERNORS OF THE  FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551  AL iii--S".••• PAUL A. VOLCKER CHAIRMAN  September 19, 1980 The Honorable Jim Wrig ht Majority Leader House of Representati ves Washington, D. C. 20 515 Dear Mr. Wright: Thank you for your rece nt letter expressing about recent increases concern in interest rates. I ca n understand and, in fact, share yo ur concerns. Intere st ra te increases in recent months unders core the deep-seated ec on omic problems facing the country. Ec onomic activity appe ar s to be :Lrengthening somewhat while th ere has been little pr og ress made in bringing down extraordin arily high rates ()r in flation. The resulting pickup in de mands for money ;IP, along with continuing high inflatio nary expecLation, ha s lek; to upward pressures on interest rates. As you may recall, on October 6, 1979, the Fe Reserve announced chan deral ging its operational pr occ-iures to place more emphasis on cont rolling the volume of bank rerve:,. Under this new procedur e, growth of reserves is maintained at a rate consistent with the System's tarcjets for expansion of the monetary aggregat es and bank credit, wh ile interest rates are allowed to vary in response to changes in demands for money and credit. For exam ple, when these dema nds slacken, as they did dramatically last spring, interest rate s fall. When credit demands strengthen, on the other hand, intere st rates tend to rise. In neither case does the change in rate s necessarily signal a change in th e basic stance of mo ,• netary policy as inui cated by the System's targets for growth of mo ney and credit. In its most recent Mo netary Policy Roit to the Federal Reserve reaf Congress, firmed the goal announce ,: (.arlier in the year of slowing mone y growth in 1980 irom pace during the preceding year; al so, tentative growth ra ng es for 1981 were established, whic h continue this gradua l deceleration. To date, the Federal Reserve has achieved it s goals r(,asonably well, particularly for the narrower aggregat es. Achievement   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The Honorable Jim Wright Page Two  of these objectives is, howeve r, jeopardized by rapid increa ses in the money supply in recent weeks. Looking at the situation from the opposite direction, the recent increases in interest rates have been accompanied by a very high rate of money expans ion, not the reverse. I would note that our basic monetary target s have been supported by the releva nt Congressional committees, and we could not ignore those target s without jeopardizing any sense of conviction that inflation (an d interest rates) will return Lo acceptable ranges. The hard fac t that faces us is that any att empt to pump up the money supply still faster would not only be inconsistent with our objectives, but would probably lead to still higher interest rates as concern about inflat ion grows. Obviously, this is a situation in which there are, quite simply, no easy answers. I wou ld be glad to talk with you about this in more detail if you wou ld like.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Since ely,  WT:DEL:JLK:PAV:vcd (#V-365) bcc: Mr. Trepeta Mr. Lindsey Mr. Kichline Mrs. Mallardi (2)  -.411111  Action assigned Mr. Kichline 4  JIM WRIGHT TrXAS  110  •  MAJORITY LEADER   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  of tije E1niteb*tates lootioe of ikepreviltatibes  Coligre55  Office of OR glaiority Reaber Illasbington, D.C. 20315 September 9, 1980  Hon. Paul Volcker Chairman Federal Reserve System Federal Reserve Building Washington, D. C. 20551  1&Na•miet#P  s•  v-  Dear Mr. Chairman: You may recall our several discussions about interest rates. They are beginning to rise again, and this is the worst possible thing that could happen to the U.S. economy at this particular time! The recent reductions in interest rates have caused the rate of inflation to fall and stimulate a healthy revival from the recession. Home building has started to rise. Retail sales have begun to revive. Factory orders are on the increase. Even auto sales show signs of an upturn. All of this has been helped by the decline in interest rates. If interest rates are allowed to rise again, it will choke off the economic revival. It will stifle the budding economic growth. It will cast us back down into the spiral of recession. And it will exacerbate inflation, as it clearly did in the early months of this year. Please, Mr. Chairman, the nation cannot afford a return of the dangerous economic trends that characterized the first few months of this year. We are counting on you. Since  1  Jim Wright  —  11.11111111Nnow  1••••  e.  BOARD OF GOVERNORS OF THE  FEDERAL RESERVE 3YSTEM vVASH:NIGTON rl.  ES!  PAUL A. VOLCKER CHAIRMAN  September 19, 1980  The Honorable 13n1) Pachwood United States nate Washington, D. C. 20510 Dear Senator Packwood: I am writing in response to your let ters addressed to Vice Chairman Schultz, Governor Wal lich, and myself requesting our views regarding the tax cut bill approved by the Senate Finance Committee. I had the occasi on last week to discuss the tax cut issue with the 'louse Budget Committee, so I suspect that these comments regarding H. R. 5829 will come as no surprise to you. We are very concerned that fiscal act ions like those under active consideration at the pre sent time will prove detrimental with respect to the nation's long-range economic health. While there is an understandable des ire to foster a prompt and vigorous recovery from the recent dow nturn in business activity, it is absolutely essential tliat we not lose sight of the implications of expansive htlf.itary action s in the current environment of rapid inflation and deep-seated inflationary expectations. In this environment any deviation fro m a commitment to sustained fiscal discipline is likely to have disturbing effects on the public's view of the prospects for a ret urn to price stability and, in consequence, there is a high pro bability that the hoped for stimulus to activity will be dissip ated in added financial and price pressures. Over the long term, well-structured tax reduction can play a role in resolving the difficult ies we have been facing. The tax system can be adjusted to provid e a framework of incentives that provides greater encouragement to productivity-expanding capital formation. Tax reduction can also help to relieve the pressures that have been placed on man y household budgets by a combination of rising living costs and increasing marginal tax rates. II. R. 5829, with its combinati on of personal and business tax cuts, does recognize these import ant objectives. However, even if the tax reduction is str uctured along such constructive lines, the question of timing is crucial and   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  .  I  •.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  •  The Honorable Bo4lOackwo od Page Two  the decision cannot be ma de without attention to the economic circumstances and the ov erall budgetary situatio n. All the evidence points to subs tantial growth of federa l spending in the year ahead. This fact, coupled with the strong inflationary trends already in plac e, seems to us to argu e convincingly against a tax cut of the magn itude embodied in H. R. 5829. If further restraint were exerci sed on the spending si de, the picture might be different, but barr ing that development, we would view the substantial expansion of the deficit as inflatio nary and the enlarged federal cred it needs as posing a si gnificant danger to recovery of interest rate sensitive sectors as housing and autos. We would much prefer to see the final consid tax legislation postpo eration of ned until later this ye ar or year. At that time so early next me of the present econom ic uncertainties will be cleared up and the Congress and the Ad mi ni stration will be able to address the issue without the pressu re s of an impending election and with a be tter view of the longer -r an ge ties of the national budget priorigovernment. The interven in g period also will provide an opportunity to refine the tax packag e, to make certain that it provides the mo st efficient mean:; ,)1 ac hi ev ing the objectives of balanced lo ng-range economic ,Jrowth an price stability. Sincerely,  MJP:JLK:CO:vcd (41V-356) bcc:  Vice Chairman Schultz Gov. Wallich Mr. Prell Mr. Kichline Mrs. Mallardi (2)b.  Waal A. Voick  e.  A oon assigned Jim Kichlin.e LONG. LA  L'FiL  p.  CHAIRMAN  HT RM•N T. 1 Al MADGE- .  Rom  AfIRAHAM RIRICOT F. CONIN.  000 PACKWOOD. OR/  HARRY  AYPO  JR  VA.  RT J.  not_ r.  WILlIAM V  P4rt_coN. •A IS.  KAN'.  ROTH. JR  MIKE GRAVE L. AL •clE A  JOHN H. CHAF fr. RI.  LLOYD BINTSEN. Tr X. SPARK M A.4•TtUNAGA, HAWAII DANIFL PATRICK MOYNIHAN, N.Y.  MAI TOLM  ..OHN HIINZ Ill. PA. W•LLOP. WY0  'AV D DORI NEWRGTR, MINN.  MAX ITAOCUS. MONT. (AVO L  REM  N  Oh LA.  I'LL  ITHATI  Zfafer, Zenate COMMITTEE ON FINANCE WASHINGTON. D.C. 20510  N J.  irir,s1 AT r .  OIL.  JOHN C. DANTE:MTH. MO.  CTTPIN. ST  Af",W  Arr nintcropt  (JOLT MINORITY COUNSI L 6. 6641/EN. -   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Prwr  August 29, 1980  IMPPIPRINAMPIMP  The Honorable Paul A. Volcker Chairman Board of Governors of Federal Reserve System Twentieth and Constitution Avenue, N.W. Washington, D.C. 20551 Dear Paul: A major issue facing Congress this fall is whether to cut taxes now for 1981. This letter asks your views on this question. Background: As you know, the Senate Finance Committee has approved a tax cut bill (HR 5829) which would reduce calendar year 1981 revenues by $39.1 billion. In fiscal year 1981, 60% of the revenue loss is for individuals, changing to 56% by fiscal year 1985. Attached is a table showing the provisions and revenue loss from HR 5829. The First Concurrent Budget Resolution adopted in June had assumed a balanced budget for fiscal year 1981. In July, the President's Midsession Review and the Congressional Budget Office estimated a fiscal year 1981 deficit of $28.1 - $29.8 billion. The Senate Budget Committee, however, voted to assume a quicker economic recovery, cutting the projected deficit to $17.9 billion. The calendar year 1981 deficit would be approximately $5.4 billion under this more optimistic assumption, and $19.6 billion under the July CB0 and Midsession Review Estimates. The tax cut bill approved by the Senate Finance Committee is not coupled with spending cuts or limits. The Senate Budget Committee, in markup of the fiscal year 1981 Second Concurrent Budget Resolution, rejected provision for coupling a fiscal year 1981 tax cut with a fiscal year 1981 spending cut.  •  r7r7'  1   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The Honorable Paul A. Volcker August 29, 1980 Page 2  As a result, it appears possible that the effect of the tax cut approved by the Finance Committee would be to boost the calendar year 1981 deficit to approximately $44.8 billion under the more optimistic budget projections made by the Senate Budget Committee, and $58.7 under the July CBO and Midsession Review estimates. This does not take into account amendments to the Finance Committee bill by the full Senate. There is much speculation about the timing of action on tax reduction. Evidently, tax cuts will not be considered by the Senate before September 18. Senate action could occur between then and the October 4 recess, during the post-election session beginning November 12, or in 1981. The Ways and Means Committee has not scheduled markup on tax reduction.  Questions: I am writing you today to request your judgment as to the impact of the tax cut approved by the Finance Committee on the federal budget deficit and on inflation. Some witnesses before the Finance Committee indicated that tax cuts without offsetting spending cuts would increase the budget deficit and run the risk of continuing inflationary expectations. Many witnesses were leary of tax cuts without offsetting spending cuts or spending ceilings. Other witnesses believed a tax cut could be structured which would not worsen inflation, even with no spending cuts. What is your view of the impact of the tax cut reported by the Finance Committee on the deficit and on inflation? Please indicate also your assessment of coupling these tax cuts with spending ceilings or cuts. Finally, please indicate your advice about the best time to complete action on tax cut legislation in 1980 or 1981. Thank you very much for your consideration of this matter. Cordially,  Bob Packwood  •  S. •  •  II. IIEVENUF EFFECTS  Estimated Revenue Effects of Tax Cut Decisions as Report( d by Senate Finance Committee, Fiscal Years 1981-1985 and Calendar Year 1981 (Preliminary) lllillIona of dollars)  1985  Calendar year 1981  -5. 4 -5.6 --1. 7 -0.5 -0. 5 -8. 3 -9. 7 -20.9 -25.0  -4.8 -1.5 -0.6 -2. 7 -12. R  -31.3 -36.8 -42.6  -22.3  -13. 3 -18.0 -18. 7 -19.6  -9.9  _  1982  1983  -4. 9 -1. 7 -1.1) - I. 6 0. 1 -0.6 -O. 3 -3. 4 -7.9 -14. 3  -5. 1 -1.6 -0. 5 -6.8  1981  Item ,4. Individual Tax Cut Provisions 1. increase in personal exemption 2. Increase in zero bracket amount _ 3. increase in earned income credit 4. Deduction for two-earner couples 5. Rate reductions  •_  -17.2  1984  liaumwar. Total, individual tax cuts Ii. Capital Formation and Productivity Tax Reductions 1. Depreciation-investment credit revisions__ _ _ . _ 2. Corporate rate reduction and small business provisions: a. Corporate rate reductions from 46 percent, to 45 percent in 1981 and to 44 percent in later years b. Corporate rate reductions on income below $150,000 in 1981 and below $200,000 in 1982 and later years_ _ _ _ c. Increase in accumulated earnings credit  d. Increase in used equipment eligible for credit to $150,000_ _ . in e. Elimination of certain W 2 filing requirements._ _ 1. Deferral of application of revenue ruling on inventory writedcm us_ _ _ _ _ _ ._ g. Increase in number of subchapter S shareholders to 25__ _ _ ._ __ ._ _ _ _ _ .._ h. Refund of excise t ax on eert am n fuels used in intercity, local and school buses. _ . _ .. __ . . _ _ . _ . . i. Reserves for market making activities__ _ j. Incentive stock options -------Subtotal, sinall business (b. through j.)  -11.0 -4.3  --24.6  -O. 7  -2. 4  -3. 7  -4. 2  -4.8  -0. 3 (2)  -1. 1 (3)  -1.8 (2)  -2. 1 (2)  -2. 3 (2).  -0. 2  -0. 2  -0. 1  (3)  (3)  (4)  (4)  (4)  (3) () (4)  (3) -- 0. 1 (4)  (3) -0. 1 (4)  -0. 4  (3)  -1.4 rIT  Research and development tax credit Savings incentives (I.E 1t:1s k I itts) Payroll-based ESOP credit _ Capital gains tax cut . _ 7. Foreign earned income exclusion . _ _  :3. 4. 5. 6.  Total, capital formation and productivity tax reductions . _  -0. 2  (3)  (3)  (4)  (4)  (3) (3) (4)  (3) (s) ()  -2.3  -2.5  -0. 7  -0. 2 4„t  (3) r.t*P4n ..(4)  -  -1. 1 -1.6  -0. 8 --1.2 -0.3  -3.0 -0.4  -3. 2 -0. 4  -3.6 -0. 5  -0.5 -0.6 -0.6 -2. 7 -0.3  -- 22. 3 - 30. 6  -32.3  -33.2  -17.0  -1.1) -2. 7  -0. 2  -0. 4  -0. 7  =.•  Grand Total_ __. I Them, figures inclui:e both the reduction in revenues and the increipw in outlays from the changes in the earned income credit. 'Indeterminate with respect to both amount and timing but could Nubstantial. 3 N rgligible loss.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  --18.2  46.9  -  -0. 1 (4) _ -0.9  0. 6 -O. 9 -2.0  -0. 2 -0. 3 -0. 3 -0.8  --7.2  U. 2  - 61.9  -69.1  -75.8  •  b.  •  -39. 4  'Loss of less than $5 million. I Loss of less than $50 million. • Gain of less than $50 million. Nory.-Detail may not add to total  10.C:111141  of rounding. r  .11••••••••••••••...  s  N'SC•   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  • • 0 •••41-  V• GOvi ••  • •O ••4 %-  111  BOARD OF GOVERNORS  111  OF THE  FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551 RAL RES ••••••  PAUL A. VOLCKER CHAIRMAN  September 19, 1930  The Honorable Joseph G. Minish Chairman Subcommittee on General Oversight and Renegotiation Committee on Banking, Finance and Urban Affairs House of Representatives Washington, D. C. 20515 Dear Chairman Minish: I appreciate the opportunity to comment on II. R. 7902, your bill to establish a National Development Bank. The bill addresses serious problems in our economy--the deterioration of the capital plant of many of our major cities and the need to stimulate capital spending by pri vate industry to provide job opportunities for those now une mployed. You are to he conmended for your efforts to find solutions to these problems. Under the proposed legislation, the Treasury would 1)0 authorized to purchase $5 billion of stock in a National Development Bank (NDB), whose purpose would be to lend to state and loc al governments for the construction of public facilities and to private businesses for expansion and improvements that would lead to increased employment opport unities. To pursue these objective s, the NDB would be authorized to issue up to $100 billion of debt that would be guaranteed by the Treasury and to guarantee up N $5 billion in private loans that wou ld also be guaranteed indi by the Treasury. In all cases, the NDB would be authorized to lend directly or guarantee a pri vate loan only if the govormiont or business can demonstrate that it cannot borrow on a reasonable basis from any other source. I certainly recognize the important goals you have in mind, but I have some questions about the approach you suggest. The functions of the NDB seem to overlap a number of existing federal programs. The Departmen t of Labor, for example, operates several programs under the Comprehen sive Employment and Training Act that are specifically intended to promote the hiring and    https://fraser.stlouisfed.org • Federal Reserve Bank of St. Louis  The Honorable Jo Page Two  phG. Minish  •  training of the hard-core unemployed. The Small Business Administration and the Commerce Department's Econ omic Development Administration represent two of a number of aven ues by which Congress can provide credit assistance to private busi ness. In addition to these kinds of programs, there are several U. S. Government agencies and sponsored enterprises that either lend directly or guarantee private loans to those sectors of the economy that are thought by Congress to require special assistance. These agen cies, either on their own or acting through the Federal Financing Bank, enjoy a favored position in financial markets because of thei r federal backing. These efforts obviously do not meet adequately all of the economic concerns addressed by your bill. But it may be possible and, indeed, more effective to reshape or redirect exis ting agencies than to create a new agency. This would have the added advantage of enabling Congress to retain a greater degr ee of control over the allocation of these funds than is now cont emplated with the NDB. This control over credit advanced to borr owers unable to tap private markets would appear especially desi rable in light of the intense Congressional debates over Chry sler and New York City. It also seems to me that the proposed NDB may not be especially useful to most municipalities, even those that are experiencing some financial difficulties . Municipalities can borrow at tax-exempt interest rates that typically are well below even the risk-free interest rates at which the Treasury can borrow. This suggests first that any cutbacks we see now in municipal spending may be due more to taxpayers' unwillingness to pay for capital improvements than to an inability to borrow at reasonable rates. It suggests also that only municipalities in the most precarious financial situatio ns would find it to their advantage to borrow at the rates the prop osed NDB would charge. As a result, the proposed NDB would find itself dealing only with the riskiest local governments. I doubt that many would qualif, :, questions of internal management woul d usually be raised, and t have a serious question as to whether a federal agency should be established to deal with those case s more or less as "routine" business. More generally, by providing a source of funds for borrowers that have exhausted private sources of credit, the proposed NDB could diminish the incentive of private lenders to scrutinize the financial condition and fiscal prac tices of their clients, which themselves would no longer have to handle their financial affairs quite so carefully. In any case , there is no evidence to suggest that private capital markets are generally failing to  . Thc Honorable Apph G. Min ish Page Three   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Lovide funds to credit-worthy borrowers. While I doubt that it wouL.1 be your intention, the proposed arrangements cou ld offer :':.(Dre protection to govern ments and businesses that cannot compete successfully in these markets than would be justif ied in terms of their economic fut ure, with the effect of rai sing borrowing costs for other sec tors of thc economy, discou rag ing a portion of the capital exp end.itures other borrowers wou ld otherwise make, and encouragi ng less prudent financial management. The establishment of an NDB is a major undertaking with significant implications for the allocation and use of real resources and credit. Conseq uently, it should be considere d in the context of a complete and comprehensive economic revita lization plan. In that connectio n, the President's Economic Revitalization Board comes to mind as possibly being helpfu l in the design of any new bank and the uses to which it would be put. I hope these comments prove use ful to you.  GB:DK:KS:PAV:vcd (#V-336 & V-358) bcc:  Mr. Burghardt Mr. Kohn Mrs. Mallardi (2)4/-  ' JOSEPH G. MINIS2.1, N 1, CHAIRMAN HENRY B. GO'NZALEZ. TEX. FR4NK ANNUNZIO. ILL. CARROLL HUBBARD, . KY. PARREN 1. MITCHELL. MD. STEPHEN L. NEAL, N C. DOUG BARNARD. GA. WALTER E. FAUNTROY. D.C. BOB LOFTUS, STAFF DIRECTOR  Alin assigned Mike Prell and Don  ohn  46  U.S. HOUSE OF PEPRESENTATIVES SUBCOMMITTEE ON GENERAL OVERSIGHT AND RENEGOTIATION OF THE  TrLcrHoNE 225- 2828   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS NINETY-SIXTH CONGRESS  WASHINGTON, D.C. 20515  August 29, 1980  ) 4:  The Honorable Paul A. Volcker Chairman Board of Governors of the Federal Reserve System 20th Street and Constitution Avenue NW Washington, D. C. 20551  Dear Mr. Chairman:  With regard to H.R. 7902, my bill to establish a National Development Bank, please note that references to "individuals" will be stricken from an updated version of the bill. Individuals will not be eligible to borrow from the bank. With kindest personal regards, I am  Sincerely,  Joseph G. Minish Chairman  S. WILLIAM GREEN, N.Y. RON PAUL. TEX. CARROLL A. CAmPBELL. JR.. S.C. JON HINSON, MISS.  • MP  JOSEPH G. MINIS .H, N.J., CHAIRMAN HENRY B. GONZALE_Z, TEX. FRANK ANNUNZIO, ILL. CARROLLHUDBARD, JR., KY. PARREN J. MITCHELL, MD. STEPHEN L. NEAL. N.C. 'DOUG BARNARD, GA. WALTER E FAUNTROY, D.C. BOB LOFTUS, STAFF DIRECTOR  Ac  line  assigned. to Benneman ana Ki Wren, Legal and Consumer Af Lo review)  S. WILLIAM GREEN, N.Y. RON PAUL. TEX. CARROLL. A. CAMPBELL, JR.. S.C. JON HINSON, MISS.  U.S. HOUSE OF PEPRESENTATIVES SUBCOMMITTEE ON GENERAL OVERSIGHT AND RENEGOTIATION OF THE  TELEPHONE 225-2828   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS NINETY-SIXTH CONGRESS  WASHINGTON, D.C. 20515  August 19, 1980  The Honorable Paul A. Volcker Chairman Board of Governors of the Federal Reserve System 20th Street and Constitution Avenue NW Washington, D. C. 20551 Dear Mr. Chairman: As per our telephone conversation this morning, enclosed is a copy of the legislation I have introduced to establish a National Development Bank. With kindest personal regards, I am •  Sincerely,  a9 Jos ph G. Minish Chairman  41.  .  • 0- •  • ft. at •  -  .- •  •.  31; •- ,,Uso  •  1 ."11  the persis,ry prayer and Bible-reding was uncoil- • versations with a great many of the leading fence of chronically hieh unemployment atianal as a violation of the Establish-' pastors of virtually all denominations over a levels make such a strategy imperative. cause. In the four cases, the facts period of years. It is also confirmed drarnatiNow, 3V2 years later, with the Nation . a that the prayer and Bible-reading cally by new findings just released by the urricular in nature, indoctrinative in 'Princeton Religious Research Center. This in the throes of a disastrous recessiort , and clothed 'with the vestiture of the respected research firm reported that, tha.-- and with unemployment climbin g_ the latest Gallup Poll findings on the subject need for a National Development .1y voluntary prayer has never been show that 76 percent of Arnerican3-82 per- Dank is all the greater. on and, in fact, remains a right of cent of Protestants and 77- percent of CachoMy legislati on would provide an onindividual by virtue of the con_stitu- lies--support changes that would clearly going loan program to meet the press• a right to worhsip as one chooses, as permit voluntary prayer and Bible-reading ing needs of local governments a:eed by . the freedom-of-religion in public schools. .• throughout the Nation_ •• pf the First Amendment. The ConstiA MA I-I-LA or CMG "••1CY atteptability of prayer and refer• The proposed bank, financed In my Judgment, the issue of the impact la: by a $5 billion Federal God in public meetings. state-sponGovernmen.t events. and public facilities is evi-• of the change in our schools that has result-- purchase of its stock, would also proby the frequent references to God in ed from the 1963 Supreme Court prayer vide a flexible and much -needed tool oiy of our major historical documents. ruling; and the vaccuum of values in the to stimulate the economy_ •'-o -orifirrne.d by the fact that all of public schools that that ruling has so often The N National Development Dank Vt."' governmental activities of all left behind it. is no longer a matter for a authoriz would be ed to make direct in - eluding sessions--of the-Supreme-- sirnplY academic consideration. I think. . are begun with prayer to God. And, rather, that it is an issue that threatens the and guaranteed loans to State and •rse, every president is required by law most vital wellsprings of our national spirit local governments for public works • .e IiLs hand on the holy, inspired and even our survival as a free people. we and facilities_ In addition. • or '..-Jod as part, of his inauguaration can, moreover. agree. I believe, that the sit- and small and medium-size individuals businesses nation is one with implications for all other- unable to secure credit in aany. • the marketLncongruous that we should deny our free nations as well since- the spiritual and place could also apply to the bank for • the same rights and privileges other strengthIbof the United States is so Americans enjoy in so many other crucial to the safety of so many other na- job-creating loans. Primarily, however, the hank vsilcl tions around the world. • -f our public life! Irther explanation and support of the I urge you as seriously as I know how. to (!)l'e to meet, on a comprehensive _anding of these legal issues which I weigh prayerfully and carefully the facts basis, the urgent financial needs of clintal. I am including as Appendix A about the present situation which you know local govermnents throughout the ; statement a summary of very exten- so well, to consider the undeniable facts re- country. Many communities are in dire - •..u-ch can-ied out by an attorney fa- garding the nation's Judeo-Christian heri- need of this type of instrument to ade,itn this area of the law. The appen- tage, and to ask yourselves if this is not a quately finance essential local services._ • incorsoratmd herein and made a full question that the nation's leaders should Most. importantly, this legislation this statement. grapple with. would be aimed at, creating- job„- in Your decision could well accelerate the 'ROWTII OF rifilISTIAN SCHOOLS • order to lower our high and completeIndication of the depth of concern disintegration and destruction of America. ly unacceptable unemployment level_ • .xists among Americans on this and under the chastening hand of God, or your The availabil ity of credit. on a continudirectly related issues, I think that It decision could help to restore our beloved • noteworthy that thousands of Chris- America as once again the "one nation ing basis, as with the National Develanoola are-being established across the under God' that our Founding Fathers in- opment Dank, would have an enor.• -yen though the parents involved are tended, and help to introduce a new era of mously beneficial impact oa the jobs a laving to make great financial sacii- blessing from God in accordance with the market. • . •-: • 'o enable their children to participate. promise which God gave to Solomon and apThis bill is one- of many that haveplicable principle In to our ow-a nation that, been introduc 'ost cases they are accepting those ed over the • pastees because they feel that it is vital "If my people who are called by My name yers to create banks or corporatifew ins. -.Or children be educated in a school will humble themselves and pray and seek with capital to finance public face My and turn from their wicked ways, works men'. where God is acknowledged nered and where teachers and stu- then will I hear from heaven and forgive activities, suppprt small business and •create jobs. Each bill takes a slightly ; are not intimidated out of exercising their sin and heal their land." We dare not continue to spend our ener- different approach tc2 the problem. but .- :kid-given and Constitutionally-guarrights to come before Him in prayer gies on taxes, and highways, and arma- all should be examined now with rerI.herwise worship. Him as their con- merits, and the environment—and then find newed seriousness to see how we can lead them. It is a. sobering indict- that, while- we have been . caring for the best put our unemployed back to work r. of our humanism-dominated public hands and ru-rns and fingers and toes of our -on these vital public works projects "body.'we have d ied at the heart 01 system that, according to present national A summary follows: more than half of our elementary for lack of the nourishment that has been SECTION-BY-SEC7TON SIT:‘ ,L.A NIcr our source real strength of ARYor from more than 0r 19 = 30 high school students will be educated in --•NATIONAL DEVEI-OPMF:Pr300 years. • • schoola by the end of 1990. •:Thank you., - Section 1 says that states and loc-alities no ubmit that the 1963 Supreme Court • " 'longer have the resources to fund needed ,a on school prayer has resulted in cre.• '•-ptiblic works and facilities, and that public : among tens of millions of Americans a THE NATIONAL DEVELOPMENT' And private sector Job opportunities, created sense of "taxation without representaACT OF 1980 .•- with Federal loan assistance, can fight the 'in the area of public education..This • .: • current high rate of unemploa-rnenta . • has arisen during the last few years as • Section 2: establishes a Nat.ional Develop-aian parents; representing more than HON. JOSEPH G.. MINISH . ment Bank, an instromentality- of the U.S. zirttion'l population 1VtVP folinr! r! or :.v.^.V .•,  • •  ••••,•:,  J C  •  7•• •.  Lr•  •  -  .3•  • • •-•, -"C-7, ; I I •  •  i .. .• •• •-  " ( 4 •••.1. '.-• ..-: .- •  ....1_ ..... ..Q.C.31:-.....  ..•,..... !:. I  -..c.-s"-, ....$1..( -I :•:: •''': ; .......•  •  •  -r......•  .•-•::. 4 .4.... ,„ -: ---7.7..  ••••  1  ---..• .... ..• ...1. ••••  ' 4 :1  :  1*-: •  -1-: ,se• i...- • •  .1*r . ' .. i. ••;; ••••',„... , i., -  1 t  '•••,.. r•W1  cr,vc•rrnii-ot, rt. r.r:-,•:!(!.•  , 1  '•7 :!•::(• r•• :;•.• iW  •  .•  CONGRESSIONAL. RECORD---Ex tensioniof .1:6.7trark's E.37 1-D all h •t.ar, the Supreme Court has•oa., constituencies_ That this is the ase is con- the nation. This continuing d in onlY four cases that required man." firmed not only by my own nur• erous con- country's industrial base - decline of the and  -V  r -k : :. ,4 .  t•  t!•:. ti  E:-acher3, to which the majority of  aeana continue to subscribe—a public -.11. system which. Ironically, had its very .alings in that biblical faith and the -hes which espoused • as OP AN1iAICAN CHRISTIANS AS. A. WHOLE !;HOHiti be noted that those Christian r; who say that they .represent their !s denominations and groups. and yet permitting voluntary prayer in the c schools do riot in fact represent their  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  7.W. 7  .  ..  7:":"•• •;. "- '• --  ii:Lf".c.., V.-1.11 1 •l'3(,. 19:SI)  .; Oaa;:i;  s:naea oa a,l  ".....,'  •,•  Speaker, I am in- Aar. c. troducing in this Congress,as I did in -: Section 4 creates a Bank Board Or Direethe 95th Congress, a bill to establish.a tors. Including the Secretaries of the Treas. ury. Commerce. Agriculture and Labor. the National ism riv t t e co nm t andDteov evls.osp of the Securities and Exchange When I introduced a similar bill In •-Chairman Commission, arid six other persons, appoint.• • 1977, I said: ' ed by the Prt-sic!ent. with Senate-confirmaI think it Is vitally important " that tion, from varied public and private organiwe begin to develop a groundswell of sup- . aatiOnS. Appointed directors serve for two port for the national development bank con- years. . cept as the centerpiece in a strategy to Sections 5-3 are housekeeping provisions Bank.unities through ' that create a. President of the 'tank. ap_  •-  :A-4: e• ......^-,,,. '..••• :.;.t;:: - •-  1  .........:'••• ••••.-1 , -;:••••• •  ' ...  • . .  r  F  ,  ev •  •  4 •  E:3750  •  • •  • 4.•  •  •  • -.._,  CONG RESSI •  • .  AL- RECORD--Extensions ,•  -  ••  of Renzaa  •  -•  ‘I. bi.t.pit Beard of- Ditaetore; that. aro-. what ia•really takine- pla •e behind.the • OlyMpics? ateote.en t this. be.the trees; ...r. •'-". ----.-s-e-esi hibit_ ccinflicts of.interest; tha.t. specify the_. Iron Curtain, to the valiant remaining tive way for vta to show the'- soviet .uak,.Bank's. corporate power:a. and. that locate:-, Helsinki monitors Jeri I :tbere in turn, that it will be held accountable for vlolatirar: : ---: •-:-:':'-'1 . e_sDistrict. poignantly describes -their• suffering international agreements It h.a.s ...signecle .Se the Bank's principa1,offi_ces .in th . - - ---• • ; goes one set or arguments_ '• 7. -7 -,.- — --- ------, -:-- :-..1, of Columbia. article in an in courage, and their On the other side we find - --a - ."-•,aqt't. •rc:speals - — , e- ... Section 9 authorizes the Treasury to put-. - '." • diplomat like Albert W.Sherer'Jr... who aaas - ‘.; • - -t!--1 chase stock up to a total of $5 billion, to the today's New York Times. r am personally gratified that Jeri_ In charge of American preparations extent these sums are provided in advance . _ - .. • •-...Laber would stand .up so courageously first review conference in .Helgradcz_in 1-471.in appropriations acts. -- .------- Section.; 10-13 establish the borrowing au- on behalf of the real human rights arguing in the summer Issue 'of • Fortalni. Policy that we should not repeat the m:a. thority of the Bank and permit the Treas- issue of the day. purto of System by takes Belgrade Reserve ury and the Federal "hammering away at I commend Jeri Laber's article chase assets or discount notes or other obli- -Moscow Versus Rights" to your atten- the cause of Soviet clis.sidents7 Mr. sacraa-, urges that the superpo..vers at. Madrid gations of the Bank.- •• '• - . 1on. . . operate rather than confront-7- One tvortdeer3 Section 14 says the Bank can make loans - . MOSCOW VERSUS Rrcries to what end.' and loan guarantees to companies to help . Lf we are to go to Madrid. arid •I believe. . • •-y Five years after the signing of the Hclsinthem raise money to: (a) create a new business,. or improve an ki accords with the second Helsinki review .that we should, it. is certainly not.to mollify a; existing one, that will combat unemploy- conference • scheduled for November In the Soviet Union within a HelsInkF frame-. .• Madrid_ articles have appeared recently on work. The Russians will ;attempt to focus ., ment or underemployment; editorial pages of several leading Amen. tention at. Madrid on queations: of rain:easy e•-•the services that provide or products make (b) ". _can newspapers suggesting that the United and economic security. They conveniently •• are in short supply: or •4 (c) do other things In -the public interesL States boycott the Madrid conference, thas forget that the accords are unique in re•co-t- ; 1 nizing that a country's human rig hts tea-rad Any borrower must agree to fill job open-. abrogating its Helsinki Commitments. today are worse relations unemthe Soviet-American is an international affair intrinsically linked Ings with or provide training for p!oyed or underemployed, or meet any than they have been in several decades; the to military and economic stability. We mitat other requirement the Bank may place on Soviet thrust into Afghanistan, the Amer-- force them to remember this at Madrtd_ The . • - .can boycott of the Moscow Olympic. Game-s .American delegation. while freely acknosin. • the borrower to carry out the Act. • Section 15 says the Bank can make loans, and the failure to ratify SALT II are recent edging its own shortcomings In- complyine loan guarantees, or provide other aid to fi- reflections of that tension.. Moreover, well with the Helsinki accords, should enlist an nancecapital costs for public works or corn- before Afthanistan. Soviet leaders, who the support it can get to clernand that the munity facilities that will provide benefits freely invoke the peaceful "spirit of Helsin- Soviet Union and Czechoslovakia rea-a,.... ki" when it suits their purposes, had made a their hop:isoned Hulsineirariariojiiti,teczt under the Act. f istviicr:: : eat Section 16 allows the Bank to provide mockery of the human rights provialcms of 85 cu .s (4.1i rsLacing . ontlez.• • technical assistance. • ; the Helsinki accords.religious or political beliefs:- a r, _I had a chance to see the "Helsinki spiritSections 17-18 says Bank loans shall be There may be room for quiet negotlAtions adequately secured, and the Board of Direc- in action last fall In Moscow when I met as well, but only if we make our peattlon tors shall determine appropriate maturity with members of the Moscow Helsinki known now-over and over• sgaefore : Watch Group in Andrei D. Sakharov's Madrid and at Madrid. 'We must take tales _ periods. Section 19 permits the Bank to guarantee apartment. The room was "bugged," of Initiative. even if-especially If-this is our loans made by any financial institution, as- course; this was openly acknowledg,cd. Yet. last. opporl un ity. long as the interest rate is not more than the people who had assembled there to percent above the.Federal Reserve dis-.. meet. a Helsinki colleague from the West FREIGIIT RATES TO FARMERS ccunt rate. • .. spoke openly•and without fear about their . _ Section 20 allows the Bank-to make direct troubles and hopes. Only one word caused loans at rates no more than the Federal gov- them to pause and lower their voices to a. 110N. RON NIARLENEE ernment's average cost of -money, as deter- : whisper-that v;ord was "Helsinki.- 1%1ONTANA .•. ----- • mined by the Secretary of the Treasury. if There were 12 of them waiting for me in IN THF. lIOUSF. OF It.F.PRE,SEN.TIATIVM borrowers prove they cannot obtain funds • the Sakharov living room on the September from other sources on reasonable terms. ' afternoon_ a plucky but dispirited group, Thursday, July Z-11,- 1980Section 21 exempts the Bank from most more women than men and most. of them MARLENT.F.% Speaker. taxes except real and personal property . quite elderly. They were the survivors of a (s. Mr. ,-.. taxes and taxes on the principal and inter-.: citizens' movement steadily eroded by'the during this time when - we-are in the•• .- t • •' est of Its obligations_ ""•• - • -. arrest and exile- of its most dynamic mem- prw:ess of considering•theil Act of '. ..' Section 22 allows GAO audits of the Bank. bers-people like Yuri F. Orlov. Analoly B. 1.9g0, Lam forced to reflect upon the.,'_:. : Section 23 authorizes-the necessary-appro- Shcharansky. Aleksandr Ginzburg and _Vla- transportAion plight faced. by tural._-.... ... trar priations.• .. Slepak. ..,. -1 lies - . America.. My State of Montana Is .a.,:,, ' -• Now, less than a year later, only five of. major wheat-prtchicing Iritate...11 State .i - -t ceiv -.I 'those people remain in Moscow, and they whic:h contains vast coal reserves. and , • - _.-.: Incl: rest The harassments SPIRIT OF • are subject to severe .. AS..THE ()N REPORT isiN EEPo A HR A :_' transportation, facing er. crucial State a a variety of ways: the PRACTICED By: have been dispersed in The Sakharovs to the.. closed . city . of Gorky, difficulties: Fanners in -. Montana are MOSCOW still 1.1Y t .legitimately and -;:f7 concerned, exile,Internal . very or , others to _prison • - • • - • the: others . expelled to the West. • Oksanai. about the- ever-incrmsing.,-Iransporta-T7T ,....2.-....4 for f JACK F. KEIVIP' eea--.; Meshko, a . handsome...75-year-old woman tion costs in a system' which.. provIdes; HON. • ••;• ".•7! who survived Stalin's gulag and whose son Is slow I ct. moderate service yiith little ef_ OF NEW YORK 7 .now a political prisoner, was recently forced fective' competition in..". many rural , . • :.---1 IN THE HOUSE OF BEPRESF:NTATIVES •-••-•. :into a psychiatric hospitaL ..i . • areas. Abandonment of- the Milwaukee .-` -has . monitors Soviet -Thursday, July'31, •198D • the Monitoring . game with a con- Railroad, a rail link to•the_most pro.9 Mr. KEMP. Mr. Speaker, as a critic become a tragic numbersthis writing. 43 are ductive grain-growing region in Mon- "--. of as rising tally: of the Helsinki accords, which legiti- stantly 't in prison or exile for attempting to exercise tana, vill mean even poorer service. or mized the Soviet Union's control over - the rights that we. their American counter- no rail service-at all, to grain Shippers.the captive nations, I was hoping that parts... take for granted in our Imperfect. In my recent meetings with people.... -: es. least the human rights proviaion:; United State.-4. This fieure cioea nut include mnnit:)r; •.•.ho f71.1(ly •olioe eocoureeernent. to thge er.L:)1.!17,-•rt!ci f:t:711(sr a f7lera eirree:at;'as -• to .;.ky the a!! lace-ei O--'-fl !•en.laenika, indeed , ....1-11.:*-..:11-:,...,_.-....:-...___ .: ( '*: .(,_: :1: : .'.. ..i : e° .."..t., ' - :ir.cnt:ie.niClliti.e 1e : hb: city; tii.-1fieltitoh kri cl il;:;;:i.zIt' : .; of tho••••-• eh() ,eere so. intierafated Welt ecoole. ot F.:el:Atoll and Central Furope. does . hike' Five years after._the,sig„ning of _the. they did not join in the first place..Nor Eastern merce Commission. The:July,3.- 1980. in watchers Helsinki • t-LT:i Helsinki agreements even these hopes ., it Include el: , Europe, where governments have followed freight rate increase on - wheat- and" courageous the. have dimmed. And • : :-;: -. • . !the Soviet lead.other agricultural corrimOdities- bY C.46 -.. rtm:1 .•1 : Helsinki watchers, who risked their ca-.- Should we, then, sit down at the confer.- percent comes at a time- when ner•- .- ' ' dis-. now a tli are for lee fall lives, -. reers and even their ence table with Soviet leaders this farm incomes are near record lowsand ....'. . among and jailed, compliance of are:exiled, Helsinki --- discuasion appearing..They. wheat production costs are Over $5 per.. 7'' Lae 1 the 35 signers? Would it not be morally and "'•••••• • • • h a Tossed. • ' bushel. What. is even more shocking. I. . ti Jeri Laber, executive director of Ifel;. •politically - consistent for us to boycott the 'as . -4 -:'." are...again railroads.. the find that. the sinki E Watch • in. America,:, reports 'on review conference as we haye boycotted -• -...•••••••• • •• •   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -  '  • •.  .  -  •  4 -:-;, '.;:•Ce":4• _ _-•..1-7-raal;CS-••",   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  96T1i CONGRESS 21) SEssioN  H.R.7902  To establish a National Development Bank to 'provide loans to finance urgently needed public facilities for State and local governments, to help achieve a full. employment economy by providing loans for the establishment of businesses and industries, and the expansion and improvement of such existing businesses and industries, and to provide job training for unskilled and semiskilled unemplo:i'ed and underemployed workers.  IN THE HOUSE OF REPRESENTATIVES JULY 31, 1980 Mr. MINISII introduced the following bill; which was referred to the Committee on Banking, Finance and Urban Affairs  A BILL •  To establish a National Development Bank to provide loans to finance urgently needed public fatilities for State and local governments, to help achieve a full employment economy by providing loans for the establishment of businesses and industries, and the expansion and improvement of such existing businesses and industries, and to provide job training for unskilled and semiskilled unemployed and underemployed workers. 1  Be it enacted by the Senate and House of Representa-  2 lives of the United States of America in Congress assembled,   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  2  1 That this Act may be cited as the "National Development 2 Act of 1980". 3 4  FINDINGS AND DECLARATION OF PURPOSE SECTION  1. (1) Tax  and other financial sources current-  5 ly available to State and local government are strained 6 beyond their capacity to achieve sound and orderly develop7 ment of the Nation's communities to accommodate our grow.n. Adequate fundings at reasonable cost must be 8 ing populatio 9 provided as soon as possible for a wide variety of public  10 works and facilities, such as streets, water, sewers, schools, 11 hospitals, airports, and recreation facilities together with 12 facilities to reduce and eliminate air and water pollution in 13 order that required social services and safeguards for the 14 health and welfare of the population be made available. 15  (2) It is imperative that effective action be taken to  16 combat alarming nationwide unemployment. This can best be  17 done by helping to provide adequate loan funds at reasonable 18 interest rates to finance public works and facilities, to estab19 lish businesses and industries, and to provide such existing 20 businesses and industries with loans necessary to expand or 21 otherwise remain competitive and prosperous, so that cm22 ployment opportunities providing adequate wages can be cre23 ated and sustained.  -vmenalli11111ft- ."4•4111111111111.1111..  •  • 3 1 2  ESTABLISHMENT OF THE BANK SEC. 2. There is hereby created a body corporate to be  3 known as the National Development Bank (referred to in this 4 Act as the "Bank") which shall be an instrumentality of the 5 United States Government and shall have succession until 6 dissolved by Act of Congress;and which will make and guar7 antee long-term loans at reasonable interest rates to State 8 and local . governments for public works and facilities, to indi9 viduals and corporations to establish new businesses and in10 dustries and to expand or otherwise improve existing busi11 nesses and industries, in order that vital public services may in  12 be provided, the health and welfare of our people will be  :le  13 safeguarded, and a full employment economy will be 14 achieved.  to  15  be  16  'le  1 7 forth in this section apply for the purpose of this Act.  ,b-  18  lig  19 equipment owned and operated by State and local govern-  or  20 ments to provide medical, social, educational, transportation,  In-  21 pollution control, and recreation services.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  22  DEFINITIONS AND RUDES OF CONSTRUCTION SEC. 3. (1) The definitions and rulet of construction set  (2) The term "public facility" means the structures and  (3) The term "adequate wage" means a wage which  23 shall not be lower than the highest of (A) the minimum wage 24 under the Fair Labor Standards Act of 1939, (B) the mini-  •   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  4 ts, and (C) the 1 mum wage set by State and local governmen comparable work. 2 prevailing rate of wages in the area for BOARD OF DIRECTORS  3  shall be vested in k Ban the of t men age man The 4. . SEC 4 of the Treas5 a Board of Directors consisting of the Secretary of Agriculury, the Secretary of Commerce, the Secretary Securities ture, the Secretary of Labor, the Chairman of the sons who shall 8 and Exchange Commission, and six other per and consent of 9 be appointed by the President with the advice e representa10 the Senate. Persons so appointed shall includ e enterprise, orga11 tives of State or local governments, privat h the Nation's ceo12 nized labor, and organizations dealing wit the and social problems. In making such appointments 13 among other relevant 14 President shall select persons who, and economic 15 considerations, are knowledgeable in the• social directors ap16 problems of low-income persons. The terms.of commencing 17 pointed by the President shall be two years, y director ap18 with the date of enactment of this Act. An for the unex19 pointed to fill a vacancy shall be appointed only tinue to serve 20 pired portion of the term. Any director may con which he was 21 as such after the expiration of the term for ted and has 22 appointed until his successor has been appoin lb  23 qualified.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  5 1 2  APPOINTMENT OF OFFICERS AND EMPLOYEES SEC. 5. The Board of Directors of the Bank shall ap-  3 point a President of the Bank and such other officers and 4 employees as it deems necessary to carry out the functions of 5 the Bank. Such appointments may be made without regard to 6 the provisions of title 5, United States Code, governing 7 appointments in the competitive service, and persons so ap8 pointed may* be paid without regard to the provisions of 9 chapter 51 or subchapter III of chapter 53 of such title relat10 ing to classification and General Schedule pay rates. The 11 President of the Bank shall be an ex officio member of the 12 Board of Directors and may participate in meetings of the 13 Board except that he shall have no vote except in case of an 14 equal division. No individual other than a citizen of the 15 United States may be an officer of the Bank. No officer of the 16 Bank shall receive any salary or other remunera4ion from 17 any source other than the Bank during the period of his em18 ployment by the Bank. 19  SEC. 6. (1) No director, officer, attorney, agent, or em-  20 ployee of the Bank shall in any manner, directly or indirectly, 21 participate in the deliberations upon or the determination of 22 any question affecting his personal interests, or the interests 23 of any corporation, partnership, or association in which he is 24 directly or indirectly interested.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  1  (2) The Bank shall not engage in political activities nor  2 provide financing for or assist in any manner any project or 3 facility involving political parties, nor shall the directors, offi4 cers, employees, or agents of the Bank in any way use their 5 connection with the Bank for the purpose of influencing the (3 outcome of any election. 7 8 9  CORPORATE POWERS SEC. 7.(a) The Bank shall have power(1) to adopt, alter, and use a corporate seal;  10  (2) to make contracts;  11  (3) to lease such real estate as may be necessary  12  for the transaction of its business;  13  (4) to sue and be sued, to complain and defend, in  14  any court of competent jurisdiction, State or Federal;  15  (5) to select, employ, and fix the cptnpensation of  16  such officers, employees, attorneys, and agents as shall  17  be necessary for the transaction of the business of the  18  Bank, without regard to the provisions of other laws  19  applicable to the employment and compensation of offi-  20  cers or employees of the United States;  21  (6) to define their authority and duties, require  22  bonds of them and fix the penalties thereof, and to dis-  23  miss at pleasure such officers, employees, attorneys,  24  and agents; and   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  7 1  (7) to prescribe, amend, and repeal, by its Board  2  of Directors, bylaws, rules, and regulations governing  3  the manner in which its general business may be con-  4  ducted and the powers granted to it by law may be exercised and enjoyed together with provision for such  6  committees and the functions thereof as the Board of  7 8  Directors may deem necessary for facilitating its busi. ness under this Act; and  9  (8) to exercise, to the extent not inconsistent with  10  the provisions of this Act, the general corporate  11  powers of a corporation organized and existing under  12  the laws of the District of Columbia.  13  (b) The Board of Directors of the Bank shall determine  14 and prescribe the manner in which its obligations shall be 15 incurred and its expenses allowed and paid, 16  (c) The Bank shall be entitled to the free use of the  17 United States mails in the same manner as the executive 18 departments of the Government. 19  (d) The Bank, with the consent of any board, commis-  20 sion, independent establishment, or executive department of 21 the Government, including any field service thereof, may 22 avail itself of the use of information, services, facilities, offi23 cers, and employees thereof in carrying out the provisions of 24 this Act.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  .11.MMV  8 1 2  PRINCIPAL OFFICE; BRANCHES SEC. 8. The principal office of the Bank shall be located  3 in the District of Columbia, and it may establish agencies or 4 branch offices in any city of the United States. 5 6  CAPITAL STOCK SEC. 9. The Secretary of the Treasury is authorized to,  7 and upon request of the Board of Directors shall, purchase 8 stock in amounts designated by the Board of Directors up to 9 a total of $5,000,000,000, to the extent such sums are pro10 vided in advance in appropriations acts. 11 12  BORROWING AUTHORITY SEC. 10. (1) The Bank may issue notes, debentures,  13 bonds, and other evidences of indebtedness in such amounts 14 and on such terms and conditions as its Board of Directors 15 may determine subject to the limitations prescribed in this 16 Act. •  17  (2) The aggregate outstanding indebtedness of the Bank  18 under this section at any time may not exceed twenty times 19 the paid-in capital stock of the Bank at that time. 20  (3) The obligations of the Bank under this section shall  21 be fully and unconditionally guaranteed both as to interest 22 and principal by the United States and such guarantee shall 23 be expressed on the face thereof. 24  (4) In the event that the Bank is unable to pay upon  25 demand, when due, any obligation under this section, the   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  9 1 Secretary of the Treasury shall pay the amount thereof and 2 thereupon to the extent of the amount so paid by the Secr e3 tary of the Treasury shall succeed to all the rights of the 4 holder of the obligations. 5 6  PURCHASE OF ASSETS BY TREASURY SEC. 11. The Secretary of the Treasury is authorized to  7 purchase from the Bank any asset of the Bank at such price 8 as may be agreed upon between the Secretary and the Bank. 9 10  DISCOUNT BY FEDERAL RESERVE BANK SEC. 12. (1) The several Federal Reserve banks are au-  11 thorized to purchase or discount any note, debenture, bond , 12 or other obligation, secured or unsecured, held by the Bank . 13 (2) Obligations of the Bank are eligible for purchase by 14 the Federal Reserve Open Market Committee. 15  (3) Obligations of the Bank are eligible-for purchase by 16 any federally chartered or regulated commercial-bank, say17 ings and loan association, or mutual savings bank. 18 19  INVESTMENT STATUS OF OBLIGATIONS OF THE BANK SEC. 13. All obligations issued by the Bank shall be  20 lawful investments for, and may be accepted as security for, 21 all fiduciary, trust, and public funds the investment or depo sit 22 of which is under the authority or control of the United 23 States or of any officer of officers thereof.  ''''"1"PWWIFIRIFFIPPwww.gor   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MMIW  , Wm  1  WV-  41  10  1 2  LOANS TO COMMERCE AND INDUSTRY SEC. 14. The Bank may make or guarantee loans to a  3 business concern to provide funds for the purchase of real and 4 personal property, for the payment of current debts or obliga5 tions, and for working capital necessary for— 6  (a) the creation of new business and industry or  7  the improvement of existing business and industry that  8  will have the effect of combating unemployment or un-  9  deremployment in the Nation; or  10 11  (b) the manufacturing or processing of products or services of which shortages are perceived; or  12  (c) such other uses as are deemed by the Board of  13  Directors to be in the public interest and consistent  14  with the purposes of this Act: Provided, That-  15  (1) the borrowers agree to fill a specified  16  number of job openings to be determined-by the  17  Bank with people who, prior to such employment,  18  were unemployed or underemployed;  19  (2) the borrowers agree to conduct training  20  courses for a specified number of unemployed and  21  underemployed persons to be determined by the  22  Bank with the result that these persons will,  23  within a period of time to he determined by the  24  Bank, be employed full time by the borrower and  25  receive adequate wages; or  11 1 2 3  (3) the borrowers agree to oth er requirements laid down by the Bank to carry out the purposes of this Act.  4  LOANS FOR COMMUNITY DEVELOPM ENT  5  SEC. 15. The Bank may make or guarantee loans or purchase obligations or guarantee the payment of principal and interest on obligations to financ e capital expenditures for public works and community facilitie s, including facilities for education, health, social welfare, rec reation, sewer and water systems, land for housing developm ent, public transportation,  6 7 8 9 10  11 and utilities, providing that su ch facilities  and projects extend  12 benefits specified by the Bank to carry out the purposes of 13 this Act. 14 1   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  TECIINICAL AND OTHER ASSISTAN CE  15  SEC. 16. (1) The Bank may provid e to' borrowers what16 ever assistance, technical or ot herwise, it considers necessary 17 to protect its investment and to carry out the purposes of 18 this Act. 19 20 21 22 23  (2) To assure fulfilling the purp oses of this Act, the Bank shall direct an adequate number of staff members to seek out and confer with repres entatives of State and local governments, public agencies, nonprofit private organizations, companies, corporations, par tnerships, and individuals,  24 in order to provide informati on about the services furnished 25 by the Bank, to provide wh atever assistance is necessary for   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  •••••••••111....  S  • 12  1 utilization of such services, and to assist the recipients of 2 such services in meeting other requirements laid down by the 3 Bank to carry out the purposes of this Act. SECURITY REQUIRED  4 5  SEC. 17. The Board of Directors of the Bank shall make  6 whatever arrangement it considers adequate to secure loans 7 made by the Bank. 8 9  •  MATURITY OF LOANS  SEC. 18. Loans made by the Bank to any State and  10 local government, private corporation, company, or individual 11 shall be for periods determined by the Board of Directors of 12 the Bank, bearing in mind that the maturity of such loans 13 should, whenever possible, coincide with the projected useful 14 life of the facilities financed with such loans. However, the 15 outstanding balance due on Bani loans shall be refinanced 16 through another lender whenever, in the judgment of the 17 Board of Directors of the Bank, such refinancing is feasible 18 on terms and conditions which the Board of Directors of the 19 Bank considers to be reasonable for the borrowers. 20 21  GUARANTEED LOANS SEC. 19. (1) The Bank may fully guarantee the entire  22 interest and principal of any loan made by any bank, savings 23 bank, trust company, building and loan or savings and loan 24 association, insurance company, mortgage loan company, or 25 credit union, provided that such loans are made to carry out   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  S 13 1 the purposes of this Act and the effective interest rate for 2 such loans is not more than 11/2 per centum above the Fed3 cral Reserve discount rate. 4  (2) The aggregate of the principal amounts of the loans  5 outstanding at any time with respect to which guarantees have been made under this 'section shall not exceed 7 $5,000,000,000. 8 9  DIRECT LOANS SEC. 20. To carry out the purposes of this Act, the  10 Bank may make direct loans to State and local governments, 11 public agencies, nonprofit private organizations, corporations, 12 companies, partnerships, and individuals: Provided, That the 13 effective interest rate shall not exceed the average cost of 14 money to the Federal Government, as determined by the 15 Secretary of the Treasury: And provided also, That borrow16 ers have presented evidence they are unablt to obtain funds 17 on reasonable terms from any other source to carry out the 18 purposes of this Act. 19 20  TAXABLE STATUS SEC. 21. The Bank, its property, its franchise, capital,  21 reserves, surplus, security holdings, and other funds, and its 22 income shall be exempt from all taxation now or hereafter 23 imposed by the United States or by any State or local taxing  24 authority; except that (1) any real property and any tangible 25 personal property of the Bank shall be subject to Federal,   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  14 g to its 1 State, and local taxation to the same extent accordin and all 2 value as other such property is taxed, and (2) any as to 3 obligations issued by the Bank shall be subject both to 4 principal and interest to Federal, State, and local taxation ions 5 the same extent as the obligatio.ns of private corporat 6 are taxed. AUDIT BY GENERAL ACCOUNTING OFFICE  7  SEC. 22. The General Accounting Office shall audit the  8  e shall 9 financial transactions of the Bank, and for this purpos 10 have access to all its books, records, and accounts. AUTHORIZATION OF APPROPRIATIONS  11  ated, SEC. 23. (1) There is authorized to be appropri  12  00, to 13 without fiscal year limitation, the sum of $5,000,000,0 chase of 14 the Secretary of the Treasury to finance the pur  15 Bank stock. (2) There are authorized to be appropriated, without al year limitation, such sums as may be necessary to pay  16 17 fisc  by the Bank 18 the difference, if any, between the interest paid Bank on its 19 on its obligations and interest received by the to the extent 20 loans, and to reimburse the capital of the Bank be neces21 of any defaults, and such additional sums as may rwise carry 22 sary to establish and operate the Bank and othe 23 out the purposes of this Act.  0   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  September 22, 1980  The Honorable Barber B. Conable, Jr. House of Repreeantatives Washington, D. C. 20515 Dear Barber: Thanks for the note, and particularly the warning!  I am delighted to follow a  really distinguished choice. All the best,  PAV:ccm  BARBER B. CONABLE. JR. NEW YORK, 35TH DISTRICT  COMMITTEES: WAYS AND MEANS BUDGET  111 Congrems of the tiniteb iptate5  WASHINGTON OFFICE 237 CANNON HOUSE OFFICE BUILDING WASHINGTON, D.C. 20515 (202) 225-3615 DISTRICT OFFICE  31)oufSe of RepreckntatibefS  311 FEDERAL OFFICE BUILDING 100 STATE STREET ROCHESTER, NEW YORK  JOINT COMMITTEE ON  assbington, ri.C. 20515  (716) 263-3156  TAXATION   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  September 16, 1980  Honorable Paul A. Volcker Chairman Board of Governors Federal Reserve System 20th Street & Constitution Avenue, N.W. Washington, D.C. 20551 Dear Paul: I want to congratulate you on receiving the Distinguished Public Service Award of the Tax Foundation this year. I received it last year, took it altogether too lightly, and delivered a sloppy speech off the back of an envelope which in keeping with the custom of the Tax Foundation was reprinted and distributed all over the United States, much to my humiliation. The audience will be most distinguished and the evening an appropriate tribute to your public service, even if they erred last year. I am sorry to say that I am already committed to a speech in Atlanta on December 3rd, and so will be unable to come to hear your presentation. My congratulations, nonetheless, and my wishes for a most successful evening. Sincerely yours,  Barber B. Conable, Jr. C/1  14614   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  HOARD OF GOVERNOR`3 DrTHr  FEDERAL RESERVE SYST EM WASHINGTON, D.C. 205 51  September 22, 1980  The Honorable James C. Cleveland House of Representati ves Washington, D. C. 20 515 Dear Mr. Cleveland: In Chairman Volcker's absence, I am pleased to your letter of Sept to respond ember 11 requesting ou r vi ews on a letter you received from Mr. Robert C. Elliott. Mr . El concern regarding the liott expresses activities of Citibank , N. A., New York, New York, in promoting a service called Citi-S ho pp er. Citi-Shopper is a merchandising se rvice offered to hold er s of Citibank credit cards by Comp-U -Card, Inc., an organization unrelated to Citibank. Citibank is a nation al bank 0111 as such is jurisdiction of the under the Comptroller of the Cu rr en cy . Citibank's parent corporation, Citicorp, New York, Ne w Yo rk, is a 1 ,Ink holding company and it s primary supervisor y au thority is the Federal Reserve Board. Members of the Board' s staff contacted representatives of Ci ticorp regarding the Ci ti-Shopper program and were advised that the promotional acti vi ties questioned by Mr. Elliott are perf ormed by Citibank ra th er than Citicorp. .The staff of the Comp troller of the Curren cy has, however, addressed issues simi lar to those raised by Mr. Elliott in a letter dated October 24, 1979, and has ad vised the Board's staff that this letter continues to represen t their views on this matter. We have enclosed a copy of th is letter for your convenience. I hope that this is responsive to your re let me know if I may quest. be of further assist ance. Sincerely, (Signed) Donald I. WTni Donald J. Winn Special Assistant to the Board Enclosure (CVH:C0):vcd (#V-366) bcc: Mrs. Mallardi  JAMES C. CLEVELAND  Wó  be handled by Congressional *bison Office wA1111107004 1..  Or•ICIr•  20 DISTRICT, NEW /14mrsminc  RAYBURN HOUSC OffICC BUILDING WAspop4GEow. D C. 20515  CommrrErrs  TEL., 225-5206  PUF3LIC WORKS AND TRANSPORTATION HOUSE ADMINISTRATION SELECT COMMITTEE ON CONGRESSIONAL OPERATIONS   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Q.7.oitgrecz of the ZLinttcb tate5 rnifse of IkeprefSentatiini‘  Divrottcr Orr- lets 316  FCC/CORAL OUILDINO 55 PLE4s4Nr Sir ET CONCORD. NEw 1114•Argi414E 03301  TEL. 228-0315  Zlilagbington, D.C.  20315  September 11, 1980  21TEmPLESTotErr NEststi4. tit ow HAMPSHIRE 03060 TEL., 883-4525  Mr. Paul A. Volcker Chairman Federal Reserve Board 20th Street & Constitution Avenue, N. W. Washington, D. C. 20551 Dear Mr. Volcker: Enclosed is a copy of a letter from Mr. Robert Elliott, a constituent of mine concerned over a new service apparently instituted by the Citibank. I am sure you can easily understand how my constituent might view such a service as a distinct threat to his small business and others like it. Therefore a report regarding this matter would be appreciated. Si  erely,  mes C. e e and ember of Congress  JCC:hsh Encl.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Kitchen & Bath Planning Maytag - Hotpoint Combination Windows Insulation - Plumbing Aluminum Awnings  . Home frnprovement Co., Inc° MERIDEN ROAD  Tel 448-4100  LEBANON, NEW HAMPSHIRE&Og66 C **/  September 2 Representative James Cleveland 2262 Rayburn House Washington, D.C. 20515  1989‘..  1/k-et) 5E? a 1,  4/49y 4:4ES'ICLP ONG-41d  -  ic.e.AN°  Dear Representative Cleveland: It has recently been announced by Citibank, one of the nation's largest banks, that they are starting a new banking service called "Citishopperu. —Card, It is a telephone buying service, offered in conjunction with Comp—U Inc., of Stamford, Connecticut, which offers Citibank holders of their VISA and MasterCard, this buying service. The cost is based on $18.00 per year membership and it entitles the member the right to purchase most small and major appliances among those items listed, at 40;.; off of the manufacturers' suggested retail price. This banking service offered to the customers of Citibank for marketing the VISA and MasterCard service is certainly a non—related banking service and must violate the charter of the Citibank. At best, this service does set up an unfair competitive practive for the distributors and retail dealers of these products. Custom2rs of these buying services are at a disadvantage insofar as ts delivered, d-,Inaged merchandise is concerned and service to these produc when it is required. would cause I would hope that this type of unquestionable banking service ending you some concern and that we can look forward to your support in these practices.  (. / truly yours, Very • , , Robert C. Elliott, President HUE BPR0VNT CO:•TANY, INC. Reigkg cc: AIKD  When You Buy for a Lifetime - Buy the Best  dr   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  •• GOVt .•  ••  • •• 0  R •  BOARD OF 30VERNORE M fr-IE  FEDERAL RE:SERVE SYSTEM WASHINGTON, D. C. 20551  PAUL A. VOLCKER CHAIRMAN  September 19, 1980  The Honorable Charles E. Grassley House of Representatives Washington, D. C. 20515 Dear Mr. Grassley: Thank you for your letter of August 22 expressing concern about the availability of bank credit to small businesses and farmers when economic activity picks up again and overall credit demands increase. Indeed, the more encouraging economic news and recent developments in the financial markets make your inquiry more pointed, although the present and foreseeable circumstances are quite different from those early this year. I appreciate your support for monetary restraint, and I believe we in the Federal Reserve in turn fully appreciate the dependence of small businesses and farmers on availability of bank credit on affordable terms. Not just in April, but on a number of occasions during the recent period of exceptional credit stringency, we informed banks that we expected them to maintain reasonable availability of funds to such borrowers and to others without access to other sources of financing. We encouraged them to give particular attention, in adjusting their loan rates and other lending terms, to the special problems of their smaller customers. In addition, as you know, the Federal Reserve established a special lending program last April -- the Temporary Seasonal Credit Program -- to ensure that smaller banks without access to national money markets could obtain the funds necessary to finance the seasonal credit needs of their regular small business and agricultural customers. That program has now, in effect, been incorporated into a permanent arrangement. To a considerable degree, the need for any prospective special program for handling seasonal requirements, particularly important in agriculture, is therefore obviated by the fact that all depository institutions now have regular access to the discount window and to the "permanent" seasonal lending program. All depository institutions with deposits subject to reserve requirements also now have regular access to all Federal Reserve lending programs, including "adjustment" credit that can be particularly important for small banks in periods of stringency.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The Honorable Charles E. Grassley - Page 2.  Consequently, we do have "permanently" in place arrangements analogous to the April program. I recognize none of this puts the smaller borrower in a preferential position or provides firm assurance that -- in extreme circumstances -- a squeeze could not develop. Indeed, I would be hard pressed to devise effective ways to provide such assurance far in advance of circumstances of unknown dimension, and I doubt that you or I would like to attempt to put in place a more or less permanent arrangement for subsidies or credit allocation. I do find encouraging the fact we have some evidence that last winter, loan rates for smaller businesses did not rise as fast or as far as those of larger borrowers. The extent to which that reflected our special efforts, and whether those efforts were timed appropriately, are of course matters of judgment. The danger of credit strains arising again is of course very much related to what else is going on in the economy, and most importantly, with respect to fiscal policy and government borrowing. I know of no way I can guarantee any sector insulation from difficulty; I can only emphasize the importance of avoiding situations that put so heavy a strain on monetary policy and credit markets. Sincerely,  Qi ,dt ?aia/(A--  LIS:JS:DL:JK:;PAV:ccm bcc:  (V-339)  Ms. Stockwell Mr. Spitzer Mr. Lindsey Mr. Kichline Mrs. Nallardi (2)  Action assigned Mr. Kichline  CHARLES E. GRASSLEY 30 DISTRICT. IOWA  1110 1227 Lomcwopm4 Housr Orricr BUILDING WASHINGTON. ID C. 20515 (232) 225-3301  commtr-rrri• AGRICULTURE  •  CongroS5 of tt)e inttcb6tatt5 3DOIlfq of ikepresSentatibet4  SELECT COMMITTEE ON AGING  lacutington, 3311.e. 20515 August 22, 1980  DISTRICT orricts: 210 WATERLOO BUILDING 531 CommcmcIAL STREET WATERLOO. IOWA 50701 (319) 232-6657 309-311 Po•. - r OFFICE ElutuDirto 211 NORTH DELAWARE AVENUE MASON CITY. IOWA 50401 (515) 424-3613 13 WIEST MAIN STREIT MARSHALLTOWN. lowA 50158 (515) 753-3172  The Honorable Paul A. Volcker Chairman Federal Reserve System Board of Governors of the Federal Reserve System Twentieth Street and Constitution Avenue, N. W. Washington, D. C. 20551 Dear Chairman Volcker: Most economic projections indicate that our economy will begin to recover in the first calendar quarter of 1981. Unfortunately, the recovery will occur at precisely the same time that the federal government will require massive credit to finance a $60 to $70 billion deficit. My concern is for the small businessman and the farmer who traditionally have been the last in line when the federal government "crowds out" the private scctor competing for credit. The net result is that interest rates are forced up and the credit needs of small businessmen and farmers are unmet. I applaud your tight monitary policy because I feel that it is the only way to ensure that inflation will be brought under control and that interest rates will eventually decline. However, I believe steps must be taken in advance, similar to those announced last April, to ensure that farmers and small businessmen are given priority treatment in meeting their credit requirements. I feel that you would agree that your policy was too little, too late for the thousands of small businessmen and farmers who were forced out of business because of high interest rates. The United States cannot afford another loss of this magnitude. Therefore, I request that you take steps now to ensure that credit will be available at the beginning of 1981 for farmers and small businessmen, especially in those states suffering from the severe drought. Please advise me of any action you intend to take in regard to this matter. Thank you for your cooperation in the past. Sin  ely,  CHA LES E. GRASSLEY Member of Congress  CEG/bko   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  THIS STATIONERY PRINTED ON PAPER MADE WITH RECYCLED FIBERS  •  •• • •"  C.°Vrb . •  .IA, ••  .•  BOARD OF GOVERNORS  er) •  • fp4 • -n  ;,,  •  ,  •  •  nF THE FEDERAL RESERVE SYSTEM WASHINGTON, O. C. 20551  •'.<0 .‘41 •1 41 / 4(y . I , ••'-v •" .e' o :',1Z.•;.4.50 ‘••1 ,441.• •• tii,11.12-E.S s•• • • • •.• • •  PAUL A. VOLCKER CHAIRMAN  September 24, 1980 S.  The Honorable Benjamin S. Rosenthal Chairman Subcommittee on Commerce, Consumer and Monetary Affairs Committee on Government Operations House of Representatives Washington, D. C. 20515 Dear Chairman Rosenthal: In your letter of August 20, you asked for a statement of the actions that the Federal Reserve has taken or will take to implement the recommendation in the report of the Committee on Government Operations that the Federal Reserve and the Treasury should publish OPEC data, country by country. The Federal Reserve data to which your Committee's recommendation refers are those for the liabilities to OPEC countries of the foreign branches of U. S. banks. As Governor Coldwell indicated in his testimony on behalf of the Board last year before your Subcommittee, virtually all of the liabilities in question represent accounts of the official agencies of the countries involved. We believe that it is necessary to preserve the confidentiality of these data just as we would for any other type of depositor, since they represent the balances of individual account holders. As you are aware, the United States, through the Federal Reserve System and the Treasury, publishes far more information in this area than any other country, both in depth of data and timeliness of release. We believe that the needs of the public for information are served by the present practice of publishing aggregates for oil-producing countries in the Middle East and in Africa. Publication of data that .would represent individual accounts could affect the use of the dollar in international transactions and perhaps compromise its international role; such publications could also hamper the Federal Reserve's relations with other central banks. For these reasons, the Federal Reserve does not believe it appropriate to change its publication policies. RFG:GTS:vcd (#V-338) bcc: Mr. Gcmmill Mr. Schwartz Mrs. Mallardi (2)   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Sincerely, (signed) Paul A. Volcker  •  • CHAIRMAN OC.N.1,6•404 11. ROSTNTHAL, N.Y.. POTHRT T. ma1sH1, cAur. •A. V get Cog PISA AIN. R.I. , , •114..•.4. ••••• di., * a, ie.. MICH. INAHHT H. Lay'vita. RA.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  LYLK WILLIAMS, 01110 JIM Mr/NUM% KANO. JOKL DIECKA140, INO.  NINETY-SIXTH CONGRESS  Conge0 of tbe Unittb  MAJORITY—(202) 225-4407  tatei;  ')4  3bottiSe of Ilepreantatilial COMMERCE. CONSUMER, AND MONETARY AFFAIRS SUBCOMMITTEE OF THE  COMMITTEE ON GOVERNMENT OPERATIONS RAYBURN HOUSE OFFICE BUILDING. ROOM B-377 WASHINGTON. D.C. 20515  August 20, 1980  Hon. Paul A. Volcker Chairman Board of Governors Federal Reserve Washington, D. C. 20551 Dear Chairman Volcker: On July 29, 1980, the Committee on Government Operations, House of Reprel sentatives, approved and adopted a report entitled, "The Adequacy of the Federa Response to Foreign Investment in the United States." (A copy is enclosed.) Based on its findings and conclusions, the report makes one recommendation in the which concerns the Federal Reserve's activities relating to foreign investment c United States. Please advise me in writing by October 1, 1980, of the specifi actions the Federal Reserve has taken or will take to implement recommendation 30(a). If you have any questions regarding the report, please contact Stephen R. McSpadden, Subcommittee Counsel. Sincer ly,  B njamin S. Rosenthal Chairman BSR:mv Enclosure  • •  ^A'IPLV"'   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  .49V1..•te  4 ' 441 '  ...ftotio=uouasids  mi  .  41,..VRIVdrirl4tiOlita#4•0,44.1r•r•Vtla,"46.,..TOVV•1•16•194  s  ,  iii*••••1114s•L '-•:•‘":t:lat.af, •-•  •  • 54 gress for improvements, whenever OFSPS lacks authority to make them. '25. .Because Commerce has historically failed to perform adequately in its PDT surveys, OFSPS' location in Commerce will ultimately render that office totally ineffective. Accordingly, the President. shouid amend Executive Orders 10253 and 12013 to return OFSPS to 0\113. 26. OFSPS should work closely with the two interagency committees: (a) OFSPS should implement future CFIUS' recommendations concerning the types of data which should be collected and the types of analyses on FDI which should be conducted. (b) OFSPS should revitalize the interagency Committee on International Investments Statistics whose meinCership should include staff from the same agencies comprising a reorganized (.3FIUS. OFSPS should utilize the committee for all aspects of FDI data collection, analyses, and reporting, not just for reviewing FIJI surveys. IV (Data Reporting)  J  27. Because Commerce's I3EA data contains so many gaps, understates substantially the real value of FDI, and cannot be correlated to the country of origin, when releasing any FM statistics, Commerce should prominently warn in its press and other releases that its data is of highly limited value. 28. In line with the OECD International Declaration of ,June 23, 1976, which commits the United States to "recommend" to foreign multinationals .which invest, in the United States full disclosure of their business activities, OFSPS and the interagency statistics committee should make a recommendation to Congress on the. need for and the feasibility of requiring foreign-owned U.S. firms to publish an annual report, containing the investment, financial, and business activities of such firms. 29. The Commerce Department should change BEA's confidentiality rules so that all FDI data is reported by country and by industry subsector, as long as the specific identity of the foreign investor is not identified at. the same time statistical data is reported. . Treasury and The the Federal Reserve r should 1 0 e ( 0. 1) : . ) ( 31 n0 , adhere to the arrangement with the Saudi Arabian and Kuwaiti Governments to keep their investments secret from the public, Congress, and other Federal agencies. They should therefore publish OPEC'country-by-country data. Also, they should share such data with Congress, and with other Federal agencies, particularly BEA. (b) OFSPS.should invoke Section 5(c) of the 1976 Act and require Treasury to share OPEC data with 13EA or any other Federal agency which needs it. for statistical purposes. 31. If the Commerce and Treasury I kpartments do not take the above actions, Congress should amend the 1976 Act and the Bretton Woods Agreement to clarify Congress' rights of access to all FM data collected, under these acts and to require publication of detailed BEA FIJI data and Treasury OPEC country-by-country port folio data.  ,kpartment,  (Federal 1'. :32. (a) Congress sh‘ agency, similar to the countries. This agenc., the United States of sary, reasonable condi, as a joint venture requ the U.S. economy, and ful aspects cannot be al (b) In order to assist legislative proposals rc advisory commission c knowledgeable person, and Ale private sectoi diverse viewpoints. Th: October 1,1981, report of U.S. FPI policy to ties of foreign-owned interests, and how the: aged and the manner ii! operate. 33. As part of this tions to Congress, the (a) Evaluate and rerestrictions on FDI wb be harmful to national (b) Decide when re(i investors would be app industries, such as fo, estate, banking and fin. other investments out: The Commission shoul. (tax or other) which ventures. (c) Propose specific on the foreign-owned Ii balance of payments, ai the U.S. economy both i (d) Examine the imi and the feasibility of gi to prevent foreign ta I; loans or loan guarani ee (e) Study other cow,: tion of a detailed prop. implement the above 1. United States. (f) Consider the offci. FDI investment and ad. state financial incentive  •. .••o• • GOW  •.1-Cs -" 7 - .-----;.:M' • • ..0 ' 1. •':` 3. ( ril .•  •c  ii•  4  .13,.  x,..41 ./.. .  .TA t.!..f. - • - ,41e .•  •  ROARO OF GOVERNORS CF THE  FEDERAL RESERVE SYSTEM  ....3,V.,.[J11.1 .' e s , 7: ..___: ,47.. _-:. " 4• •.e) ,9..  WASHINGTON, 0. C.. 20551  •( ''' i Ri-Sv(- • • ' . . ...•  PAUL A. VOLCKER CHAIRMAN  September 24, 1980 •••  The Honorable Benjamin S. Rosent hal Chairman Subcommittee on Commerce, Consumer and Monetary Affairs Committee on Government Operation s House of Representatives Washington, D. C. 20515 Dear Chairman Rosenthal: In your letter of August 20, you asked for a statement of the actions that the Federa l Reserve has taken or will take to implement the recommendation in the report of the Committee on Government Operations that the Federal Reserve and the Treasury should publish OPEC data, countr y by country. The Federal Reserve data to which your Committee's recommendation refers are those for the liabilities to OPEC countries of the foreign branch es of U. S. banks. As Governor Coldwell indicated in his testimony on behalf of the Board last year before your Subcommittee, vir tually all of the liabilities in question represent accounts of the official agencies of the countries involved. We believe tha t it is necessary to preserve the confidentiality of these data just as we would for any other. type of depositor, since they represent the balances of individual account holders. As you are aware, the United Sta tes, through the Federal Reserve System and the Treasury, publishes far more information in this area than any other country, both in depth of data and timeliness of rel ease. We believe that the needs of the public for information are served by the present practice of publishing aggregates for oil-producing countries in the Middle East and in Africa. Publication of data that would Lepresent individual accounts cou ld affect the use of the dollar in international transacti ons and perhaps compromise its international rolc; such pub lications could also hamper the Federal Reserve's relations with other central banks. For these reasons, the Federal Reserve does not believe it appropriate to change its publicati on policies. RFG:GTS:vcd (4V-338) bcc: Mr. Gemmill Mr. Schwartz Mrs. Mallardi (2)6/   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Sincerely,  Sealil A. Nag  ft  • • BENJAMJN S. ROSENTHAL. N.Y.. CHAIRMAN ROBERT T. MATSUI. cAt_or. EUGENIE V. ATKINSON, RA. FERNANG J. ST GERMAIN. R.I. JOHN CONYERS. JR.. MICH. ELLIOTT H. LCVITAS. GA.  ,  A1on assigned Jack Ryan  1  0  NINETY-SIXTH CONGRESS  Congrecz of ifie 1itittb .'zDtatefs lbou5e of i1eprefSentatibesS  LYLE WILUAMS, OHIO JIM JEFFRIES. KANS. NIEL IDECJICARO. IND.  mAJoaiTy—(202).215-4/07  4  COMMERCE, CONSUMER, AND MONETARY AFFAIRS SUBCOMMITTEE OF THE  COMMITTEE ON GOVERNMENT OPERATIONS RAYBURN HOUSE OFFICE BUILDING. ROOM B-377 WASHINGTON. D.C. 20515  August 20, 1980  Hon. Paul A. Volcker Chairman Board of Governors Federal Reserve Washington, D. C. 20551 Dear Chairman Volcker: On July 29, 1980, the Committee on Government Operations, House of Representatives, approved and adopted a report entitled, "The Adequacy of the Federal Response to Foreign Investment in the United States." (A copy is enclosed.) Based on its findings and conclusions, the report makes one recommendation which concerns the Federal Reserve's activities relating to foreign investment in the United States. Please advise me in writing by October 1, 1980, of the specific actions the Federal Reserve has taken or will take to implement recommendation 30(a). If you have any questions regarding the report, please contact Stephen R. McSpadden, Subcommittee Counsel. Sincer,  ly,  B njam in S. Rosenthal Chairman BSR:rny Enclosure   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  54 gress for improvements, whenever OFSPS lacks authority.to make them. • '25. Because Commerce has historically failed to perform adequately in its FDI surveys, OFSPS' location in Commerce will ultimately render that office totally ineffective. Accordingly,the President should amend Executive Orders 10253 and 12013 to return OFSPS to 0MI3. 26. OFSPS should work closely with the two interagency committees: (a) OFSPS should implement future CFIUS' recommendations concerning the types of data which should be collected and the types of analyses on FDI which should be conducted. (b) OFSPS should revitalize the Interagency Committee on International Investments Statistics whose membership should include staff from the same agencies comprising a• reorganized CFIUS. OFSPS should utilize the committee for all aspects of FM data collection, analyses, and reporting, not just for reviewing FDI surveys. IV (Data Reporting) 27. Because Commerce's BEA data contains so many gaps, understates substantially the real value of FM, and cannot be correlated to the country of origin, when releasing any _FM statistics, Commerce should prominently warn in its press and other releases that its data is of highly limited value. 28. In line with the OECD International Declaration of June 23, 1976, which commits the United States to"recommend" to foreign multinationals which invest in the United States full disclosure of their business activities, OFSPS and the interagency statistics committee should make a recommendation to Congress on the need for and the feasibility of requiring foreign-owned U.S. firms to publish an annual report containing the investment, financial, and business activ ities of such firms. 29. The Commerce Department should change BEA's confidenti rules so that all FDI data is reported by country and by industryality sector, as long as the specific identity of the foreign investor issubnot identified at the same time statistical data is reported. 30. (a) The Treasury Department and the Federal Reserve shoul d no I longer adhere to the arrangement with the Saudi Arabian and Kuwaiti Governments to keep their investments secret from the publi Congress, and other Federal agencies. They should therefore publi c, sh OPEC country-by-country data. Also, they should share such data with Congress, and with other Federal agencies, particularly BEA . (b) OFSPS should invoke Section 5(c) of the 1976 Act and require Treasury to share OPEC data with BEA or any other Federal agency which needs it for statistical purposes. 31. If the Commerce and Treasury Departments do not take the above actions, Congress should amend the 1976 Act and the Bretton Woods Agreement to clarify Congress' rights of access to all FDI data collected under these acts and to require publication of detailed BEA FDI data and Treasury OPEC country-by-country portfolio data.  [  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  (Federal P( 32. (a) Congress sho agency, similar to the a countries. This agency the United States of si sary, reasonable condit, as a joint venture requil the U.S. economy, and ful aspects cannot be all. (b) In order to assist legislative proposals re! advisory commission ot knowledgeable persons and the private sector, diverse viewpoints. TM. October 1,1981, report of U.S. FDI policy to ties of foreign-owned fi interests, and how the:,. aged and the manner in operate. 33. As part of this r tions to Congress, the p, (a) Evaluate and re. restrictions on FDI wli be harmful to national 1 (b) Decide when reqt. investors would be appt industries, such as fool estate, banking and fina other investments outs. The Commission shoul(1 (tax or other) which ventures. (c) Propose specific on the foreign-owned fir balance of payments, at the U.S.economy both it (d) Examine the imp and the feasibility of gi, to prevent foreign tali( loans or loan guarantees (e) Study other count don of a detailed prop( implement the above it United States. (f) Consider the offer' FDI investment and ad( state financial incentive,;  .•'  •-•OVei?  •  BOARD OF 50VERNOR5  • ••  OF THE  •  FEDERAL RESERVE SYSTEM  •  WASHINGTON, D. C. 20551  RES  PAUL A. VOLCKE R CHAIRMAN  September 24, 1980  The Honorable Ken Kramer House of Representatives Washington, D. C. 20515 Dear Mr. Kramer: I am pleased to respond to your let ter of September 2 requesting information concerning the collection by the Federal Reserve Bank of Kansas City of drafts drawn on certain savings and loan associations in the Denver and Colorado Springs areas. The drafts at issue are being offere d through these savings and loan associations as par t of programs that are designed to allow customers of these instituti ons to earn interest, in effect, on their transaction account balances. Typically, under such a program the customer signs up for two accounts, one a non-interest bearing savings account against which the customer may write drafts, and the other a reg ular interest-bearing savings account. The program provides for automatic transfers between the two accounts whenever the non -interest bearing transactions account has a zero balance. The reasons why these programs requir e the customer to use two accounts and an automatic tra nsfer service is that Congress has prohibited, in 12 U.S.C, § 1832(a ), depository institutions from allowing their customers to mak e withdrawals from interestbearing accounts by means of negotiabl e or transferable instruments payable to third parties. Thus, mos t savings and loan associations have not been authorized to offer thi rd party payment services to their customers. However, over the past few years, these restrictions have been gradually removed as Congress has granted depository institutions, including savings and loan associations, authority to offer negotiable order of withdrawa l (NOW) accounts. NOW accounts were first authorized in the New England states, and later in New York and then in New Jer sey. This year, as part of the Depository Institutions Deregulat ion and Monetary Control Act of 1980 (Public Law 96-221), Con gress determined that NOW accounts should be made available in the remaining 42 states effective December 31, 1980.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The Ionorable Ken Kramer Page Two  In their normal course of collectin g checks presented by m 3 - mber banks, the Federal Reserve Ban ks routinely have collected NOW drafts drawn on institutions in the eight authorized states . Further, we expect no major dif ficulty in collecting NOW drafts in the remaining states as they bec ome authorized on December 31, 1980. However, when the Federal Reserve Bank of Kansas City recently became aware that drafts drawn on savings and loan associations in Colorado were bei ng presented to the Denver Branch for collection, it was concerned about the legal nature of these instruments. Through consultation with the Fed eral Home Loan Bank Board, which is the primary Federal reg ulator of savings and loan associ ations, the Reserve Bank determine d that at the present time customers of associations may aut horize their associations to make payments to third parties from sav ings accounts only by means of non-transferable and non-negot iable orders or authorizations. The non-transferable nature of these instruments inhibits their collection through the Federal Res erve because of the legal basis under which Reserve Banks handle checks, which is Subpart A of Regulation J (12 C.F.R § 210) and Articles 3 and 4 of the Uniform Commercial Code ("U.C.C."). Section 3-805 of the U.C.C. states that the provisions of Article 3 do not apply to instrumen ts whose terms preclude transf er. The essence of payment instrumen ts involves the transfer of an instrument from one party to anothe r and the function of Article 3 is to define the rights and duties of parties participating in the process. Similarly, the concept of transferability is so inherent throughout Article 4 of the U.C.C. , it appears that it was not intended to apply to non-transfer able items. Finally, Regulation J was intended to cover those sam e instruments as are subject to Articles 3and 4 and to supplement the U.C.C. by providing additional terms and conditions for ite ms sent to Reserve Banks. Thus, the Reserve Bank determined that it would not handle the drafts drawn on Colorado savings and loa n associations because these instruments appeared to be non -tr ansferable and not subject to the provisions of Articles 3 and 4 and Regulation J. The termination date was scheduled to be August 11, 1980, but was moved back to August 18 to allow the affect ed savings and loan associations to discuss this matter further with Federal Reserve personnel. After such discussions occurred, how ever, the Federal Reserve Bank of Kansas City reaffi rmed its decision not to collect these instruments. The Reserve Ban k's decision was challenged by the Otero Savings and Loan Ass ociation of Colorado Springs. Otero contended its drafts were aut horized under Colorado law, and were not in violation of any Fed eral law, including 12 U.S.C. § 1832(a) referred to earlier in this letter. Otero was joined in   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The il)norable Ken Kramer Pagc Chree  this 3uit by three other savings and loan asso ciations in the area The F2deral District Co . urt in Denver hearing this case issued a temporary restraining or der requiring the Re serve Bank to contin to collect these drafts ue pending a hearing wh ich was held on September 2. As a resu lt of that hearing, the court issued a preliminary injunction also requiring contin ued collection until a trial is held. No da te for a trial has be en set, and meanwhile the Reserve Bank is ap pealing the district court's order to the 10th Circuit Court of Appeals. Sincerely,  LEA:GTS:pjt/vcd (#V-362) bcc: Lee Adams Gil Schwartz Mrs. Mallardi (2)w/ Legal Records (2)   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Action assigne-1 Mr. Pe ersen  KEN }<FRAMER 5TH DISTRICT, COLORADO  COMMITTEES! EDUCATION AND LAI3C)R SCIENCE AND TECHNOLOGY  WASHINGTON 1724 Lt-vv-,NoRTH  OFFICE:  HOuSt" OFrICE  N, .;TON, 0 C.  MILOING  20515  (202) 225-4422  111 • Congre5c.) of tbe laniteb ) r oucst of lAtpre5entatibt5 Ulatbington,/le. 20515  DISTRICT OFFICES:  111  1523 NORTH UNION BOULEVARD COLORADO SPRINGS, COLORADO 80909 (303) 832-8555 275 UNION EXCI(ANGIK 8933 EAST UNION AVENUE ENGLewoen, CoLcwAno 80110  tate.cs  (303) 779-6900  PA:v  September 2, 1980 The Honorable Paul A. Volcker Chairman Board of Governors of the Federal Reserve System Twentieth Street and Constitution Avenue NW Washington, D.C. 20551 Dear Mr. Chairman: I have been contacted by a number of my constituents from the Denver and Colorado Springs areas who have informed me that they recently tried to write drafts on their interest-bearing checking accounts and were told that such drafts would not be honored because the Federal Reserve had decided not to honor those accounts. My constituents are upset over the fact that service on their "today" or "now" accounts was terminated on such short notice. I have spoken with Mr. Lee Adams of your office regarding this matter. He informed me that the savings institutions affected by this decision were able to get an injunction against the Federal Reserve and that a hearing is to be held this week to examine the situation. I would appreciate a full explanation of the decision to terminate service on these interest-bearing checking accounts as well as knowing the outcome of the hearing held this week. Many thanks for your cooperation in this matter.  KK:mj Encl.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  f:c.:.tn17.trvr 2S, 18)  L. .1oLorab1e i'loward ZaVer, Jr. United States Sonate 20510 Wa.f.hingtc4n, D.C. Dear Senator Daker: For your inforr,ation, encloEcd is a lottcr on tax reduction that I sent today to Scnator robert Zyrd who ret;uststoC. 'ou  Will  views on ti  matter.  The letter as  apt-rociekte sin4ly reiteratcs a position that I  have: taken for vome time. Sinceroly, S/Paul  Wok*  Enclosure JC:pjt bcc. Mrs. Mallardi (2) Identical ltrc, also sent to renatcrs Long and Dole.  •  .• • of GOvt • R4, • •1-9 .'ot• /dr, '03  BOARD OF GOVERNORS iHr O  2- 1  FEDERAL RESERVE SYSTEM  ,•  WASHINGTJ, O. C. 20551  •t-o ••te  RAL RES0='• ••  PAUL A. VOLCKER  •••..•••  CHAIRMAN  September 25, 1980  The Honorable Robert C. Byrd Majority Leader United States Senate Washington, D.C. 20510 Dear Senator Byrd: I have your letter asking whether, in effe ct, my views on the wisdom of tax reductions at this time have changed. The direct answer is no. As I indicated in testimony two weeks ago, I felt the steps taken last March to reduce the Federal budget deficit were interpreted by the public and the markets as a meaningful effort by the Congress to achieve a more vigorous budgetary discipline. Those efforts were constructive in allaying fears on an accelerating inflation, and were one factor in the sharp down ward movement in interest rates in the spring. I can only comm end the efforts of the Budget Committee and others in Congress in resisting undue expenditure increases in the difficult period sinc e that time. Unfortunately, in my judgment, discussions of large immediate tax reductions over recent weeks have tended to undermine that sense of commitment, and action by the Congress to actually enact large tax reductions now, in a pre-election atmo sphere, could only reinforce the uneasiness about large defi cits and inflation. I recognize the force of the arguments for tax redu ction, especially directed toward investment and revi talization. But I have emphasized that tax reduction--and the potential benefits therefrom--must be achieved in the context of a total budgetary position consistent in a reasonable time fram e with a return to balanced budgets. That assurance seems to me absent now, when, among other things, we cannot by the nature of the calendar have a clear view of the spending priorities of an Administration or a Congress until after November. The implications of a large tax reduction in term s of increasing an already large budget deficit simply cannot be   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The Honorable Robert C. Byrd Page Two  ignored. As I indicated several weeks ago, "one of the questions . . . is whether the pressures of government financing--or the inflationary outlook generally--may dampen the recovery of significant sectors of the economy, such as housing or automobiles. It would be ironic, indeed, if over-exuberant planning for tax reduction--designed for stimulus--had adverse effects in terms of inflationary expectations and financial markets, interfering with the natural recuperative powers of the economy." As you well know, interest rates have moved significantly above the lows of several months ago. This movement, despite sizable money growth, is symptomatic of the sensitivity of markets to the outlook for inflation and government deficits. In the circumstances, I would continue to urge the Congress to defer consideration of tax reduction until the turn of the year, when the matter can be considered in the light of new budgetary plans and a fresh appraisal of the underlying economic situation. Sincerely,  SUMMINa ..JP;VAV#10jt (IV -374) Loot mike 'roll Urs. mallurdi (2)   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  •  • . • • of COVt • • •%IP R •CP. /%2 • • ct? ak...., .'t • -r, '1‘\Pf --  BOARD OF C-OVERNORS r • i6ir  FEDERAL RESERVE SYSTEM WASHINGTLN, DC. 20551  • ••  fRAL Risk;.•  PAUL A. VOL C KE R CHAP RMAN  September 25, 1980  The Honorable Robert C. Byrd Majority Leader United States Senate Washington, D.C. 20510 Dear Senator Byrd: I have your letter asking whether, in effect, my views on the wisdom of tax reductions at this time have changed. The direct answer is no. As I indicated in testimony two weeks ago, I felt the steps taken last March to reduce the Federal budget deficit were interpreted by the public and the markets as a meaningful effort by the Congress to achieve a more vigorous budgetary discipline. Those efforts were constructive in allaying fears on an accelerating inflation, and were one factor in the sharp downward movement in interest rates in the spring. I can only commend the efforts of the Budget Committee and others in Congress in resisting undue expenditure increases in the difficult period since that time. Unfortunately, in my judgment, discussions of large immediate tax reductions over recent weeks have tended to undermine that sense of commitment, and action by the Congress to actually enact large tax reductions now, in a pre-election atmosphere, could only reinforce the uneasiness about large deficits and inflation. I recognize the force of the arguments for tax reduction, especially directed toward investment and revitalization. But I have emphasized that tax reduction--and the potential benefits therefrom--must be achieved in the context of a total budgetary position consistent in a reasonable time frame with a return to balanced budgets. That assurance seems to me absent now, when, among other things, we cannot by the nature of the calendar have a clear view of the spending priorities of an Administration or a Congress until after November. The implications of a large tax reduction in terms of increasing an already large budget deficit simply cannot be   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  i ,  .. .  OA  The Honorable Robert C. Byrd Page Two  ignored. As I indicated several weeks ago, "one of the questions the . . . is whether the pressures of government financing--or inflationary outlook generally--may dampen the recovery of significant sectors of the economy, such as housing or automobiles. It would be ironic, indeed, if over-exuberant planning for tax reduction--designed for stimulus--had adverse effects in terms of inflationary expectations and financial markets, interfering with the natural recuperative powers of the economy." As you well know, interest rates have moved significantly above the lows of several months ago. This movement, despite s sizable money growth, is symptomatic of the sensitivity of market to the outlook for inflation and government deficits. In the circumstances, I would continue to urge the Congress to defer consideration of tax reduction until the turn of the year, when the matter can be considered in the light of new budgetary plans and a fresh appraisal of the underlying economic situation. Sincerely,  a6t_ 2 7  MXRXRAXX3 MJP:PAV:pjt (#V-374)  bcc:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Mike Prell Mrs. Mallardi (2)   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  •  •  fhS  (v-acw(p)  BOARD OF GOVERNORS OF THE  FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20 551  PAUL A. VOLCKER  September 30, 1980  CHAIRMAN  The Honorable Henry S. Reuss Chairman Committee on Banking, Finance and Urban Affairs U.S. House of Representatives Washington, D.C. 20515 Dear Chairman Reuss: I am pleased to forward preliminary reports on actions taken so far by the Federal Reserve to implement N. the Monetary Control Act of 1980 (Title I of P.L. 96-221) and on the actions of the Depository Institutions Deregulation Committee similar to that required annually under Section 206 of the Depository Institutions Deregulation r Act of 1980. These documents were requested in your letter of June 19. Along with the reports, I am enclosing copies of various relevant regulations, press releases, and staff memoranda. Sincerely,  oataadit Paul A. Volcker  Enclosures  do   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Enclosures: P. R. dtd. 3/31/80 P.R. dtd. 4/17/80 Ltr. to Executive Officer of Commercial Banks from Chrmn. dtd. 4/17/80. ' P.R. dtd. 4/23/80 P.R. dtd. 6/4/80 P.R. dtd. 6/10/80 P.R. dtd. 6/26/80 Memo to Board from Mr. Axilrod re Reg. D dtd. 7/31 /80 Memo to Board from Discount Policy Group re Reg. A dtd. 7/31/80 Memo to Board from R&S & Legal Divs. re Public Comme nts on Proposed Pass-Through Guidelines dtd. 8/8/80 P.R. dtd. 4/11/80 Memo to Board from Bk.Ops,R&S,Legal Divs. re Fede ral Reserve Float dtd. 8/15/80 P.R. dtd. 8/15/80 P.R. dtd. 8/27/80 P.R. dtd. 8/28/80  Memo to DIDC from DIDC staff re Selection of Chrm n. and Initial Organizational Decisions dtd. 5/2/80 Memo to DIDC from DIDC staff re Interest as a DepoAt for Purposes of the Early Withdrawal Penalty Rule; Payment of Interest After Maturity dtd. 5/2/80 Memo to DIDC from DIDC staff re Premiums and Finders Fees dtd. 5/2/80 l" P.R. from DIDC dtd. 5/7/80 P.R. from DIDC dtd. 5/13/80 RXRXXXXIIMXNIDEMMXSX27/REI Memo to DIDC from DIDC staff re Adjusting Rate Ceilings on Variable Ceiling Deposits dtd. 5/27/80 P.R. from DIDC dtd. 5/29/80 P.R. from DIDC dtd. 6/4/80 P.R. from DIDC dtd. 6/6/80 P.R. from DIDC dtd. 6/10/80 Memo to DIDC from DIDC staff re Early Withdrawal from IRA and Keogh Accounts dtd. 6/20/80 Memo to DIDC from DIDC staff re Congressional request for comment on money market mutual fund-type accounts for depos itory institutions dtd. 6/20/80 Memo to DIDC from DIDC staff re Deposit Rate Ceilings on Interestbearing Household Transaction Accounts dtd. 6/20 /80 Memo to DIDC from DIDC staff re Rhode Islan d Petition dtd. 6/23/80 P.R. from DIDC dtd. 6/30/80 Memo to DIDC from DIDC staff re Deposit Rate Ceilings on Interestbearing Household Transaction Accounts dtd. 9/3/80 Memo to DIDC from DIDC staff re Actions Relat ing to the Authorization of 14-29 Day Time Deposits dtd. 9/4/80 Memo to DIDC from DIDC staff re Proposed Rules on Premiums and Finders Fees dtd. 9/5/80 Charts Accompanying Briefing on Savings Deposit Flows--dtd. 9/9/80 by Dale P. Riordan of FHLBB.  Se3tterlter3C  lego  The RonoraLle William Prommirc CLaixman Coalmitt,ae Qr 1.1an%ing, Hout4im.; and rrben Affairs United Status Senate 20S1 Wanhinvton, U.C. Lear Chaira,an Pro›..1,tirt. all cleased to oard's initial rci-ort un(ler it tL the 7inuncial Pevulation Six.O.Afication Act ot! 1980, indicatin in Lalltimentinq eat, :,rovisiong r)f the Act. the Boar's ;-ro4rees ard a trtffiray tAt14,1 ortt rct;ula tory improver..ent t;fforte, and -it-ooJ. orward to or3..in41 the Congreen to reduce reculatory .Jurdene. C  (d  Oincerely, Sgaul A. Vo!cker  c1osurcBrIe.D.T4.1,jt Ucc. me. Lowrey tr,;. 14a1lardi (2)40 ' 0   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  lcttorL; alno r-ent to: Scn. 'arn and Chrmn. nouss Cong. Stcnton  I • Of GOV't •  BOARD OF ,30VERNDRS THE  .."• • •C  FEDERAL RESERVE SYSTEM WASHINGION, D. C. 20551  •e, . . 0, ••'RAI_ itt  ,..„. PAUL A. VOLCKER CHAIRMAN  September 30, 1980  The Honorable William Proxmire Chairman Committee on Banking, Housing and Urban Affairs United States Senate Washington, D. C. 20510 Dear Chairman Proxmire: I am pleased to send you a copy of technical amendments to Regulation E (which implements the Electronic Fund Transfer Act) that were adopted by the Board on September 24 and are contained in the enclosed press release. The press release also includes a proposed amendment issued by the Board for public comment addressing compulsory use of electronic fund transfers. Sincerely,  SZPaigA Volckei Enclosure  Larii4 a Viad boa 4   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Lyme Sort Mrs. NoLlatdi (2)ue° 20. Cairn, Cbtnn. uitcboll. Sen. Assotsomq (Sono  *AMMO ALM 5tIn  lag.)  Annunsio, conc. rums (noss* r‘r-  ROARD OF C  GOVERNORS THE  FEDERAL RESERVE SYSTEM WASHING1UN, D. C. 20551  PAUL A. VOLCKER  CHAIRMAN  September 30, 1980  The Honorable Walter F. Mondale President of the United States Senate Washington, D.C. 20510 Dear Mr. Vice President: I am pleased to send you a copy of technical amendments to Regulation E (which implements the Electronic Fund Transfer Act) that were adopted by the Board on September 24 and are contained in the enclosed press release. The press release also includes a proposed amendment issued by the Board for public comment addressing compulsory use of electronic fund transfers. I am sending you a copy of this proposal as required by Section 904(a)(4) of the Act. Sincerely,  Sibuil A. kait  Enclosure  PreetAieet et the U.O. gemato received (dato),.. Prosidept cg the V.C. Senate by  00414...O• .4.44414111.1.80`...148444.01.441•I•04414P.. 411 . . 414 44.0 . . 4 444 .  irrovicAL =TWA TO SnaMt 0')*2L& LDr.ved upciemptx Lynne nivic— , 3CAD. Millardi (2)   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  4
Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102