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u https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Collection: Paul A. Volcker Papers Call Number: MC279 Box 11 Preferred Citation: Congressional Correspondence,January-February 1982 [Folder 1]; Paul A. Volcker Papers, Box 11; Public Policy Papers, Department of Rare Books and Special Collections, Princeton University Library Find it online: http://finclingaids.princeton.edu/collections/MC279/c445 and https://fraser.stlouisfed.org/archival/5297 The digitization ofthis collection was made possible by the Federal Reserve Bank of St. Louis. From the collections of the Seeley G. Mudd Manuscript Library, Princeton, NJ These documents can only be used for educational and research purposes ("fair use") as per United States copyright law. By accessing this file, all users agree that their use falls within fair use as defined by the copyright law of the United States. 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Mudd Manuscript Library 65 Olden Street Princeton, NJ 08540 609-258-6345 609-258-3385 (fax) firstname.lastname@example.org https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Congressional January-February1982 Peinuery 26, 1902 The Memseable Jibe Gam Chateau% Committee on Bavittol, limning* mod tirit,4n Affairs United *totes Senate Washington, C. 20510 Dear Mc. Chairmen* ( I an wilds. te jou is oonnectton with the dei:t rvatxuoturimg lees sod. by the Hunt brother* esti by Placid 011 Company in 1900 Ishii* was related to silver mechert doinelopments in the winter and lapriap Of that year. I would like to infer% yoo that Placid vill immune* a refinancing of this loom teeay. Om *111 reesll then the ori9tnal loon use undertake^ to the soutest Of oamearn 6, perticipeting tlynks othiera test a failure. tie restructure this debt made have unsettling influences on markets end on inetttutiono* 1 laterpmeed no oolection to the loan in eons14*ratio* of euvesamts contained is the loan eareemeots relating to orderly sales et silver amed avoidance of speculation in commodities. thus assisting in easering consistency of the loom with the Special voluntary Credit Resttalnt Proqram then in 4o/fee-A. At various times over the pest years there heve.been regatta ot attempts hy Pieria Oil Cempeny to refinance thi* loon. I have stat*-4 ellen **hail that I wt,uld consider awi stem vilict had the effect of significantly nIterin9 the purposes end protections of the original loan covenants to be clearly inconsiettnt with the uneettandinl that forme the basis for sty decio.i.on not to object to Cie debt restructuring* Lets 'ton year I was Wormed that the borrower* sere proposing to refinance tte loan in a manner that involve4 oommitmeota to neittain the perpoces 4VAW! protection*, ot the *slating loon covenAnt, by mese* of an enforc*able agreement with private parttes that towld remain ln effect regardless of whether Om underlyinq loan remain*0 outatentting. In eMmaidering-f..at the request of totn lerwer4 sitn4 horrower%-the privet, ftamocial reettucturtme artanqe4 ttle bocrowecs OP assist I have paid close attention to aseuriN thet the oriqin41 Gewaltmeats to sell the silver In an orderly warirer ihrt0 to Avoid *peculation are being peeserved and protected in the Pdbig artawiaimonts. 1' believe the public policy protection* of the war Joist ars bring aiintsdniti, https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis rtie gonoraltle Jake Garn 110.21104, and I have been assured that the ntw alreteetta_ will bt casrleci out go9.04 taith without re*ervitition or welification. ;n this connectitan g sm enclusing for raw persoral inforPation a recent exchange of coriteponence that I have ha4 with th* partitirants in this loan. neW eatangements appeat to no fully consiatent with oaintatning the purpoaee anti pectectio4s cf the 1950 covenarts, / have interpose4 no objectiefts avitaM156 the Sincetelyi Seaul L Vo!ckec Enclosure nmaierIcAL 1.11111111111 SEM W: The Honorable linty S. Reuss Chairnan Joint Economic Committee House of Representatives The Honoxable William Proxmir.1 United States Senate The Honorable Edward Jones Chairman Subcommittee on Conservation, Credit and Rural Development Cemmittee on Agriculture Fouse of Representatives The Sonorablia imajemin S. Rosenthal Chairman Subcommittee on Comeero*/ Consumer, 4nd Neeetary Affaizs Committee on Government Operations U.S. House of Representatives The Honorable Fernand J. St Germain Chairman Committee on Banking, Finance, and Urban Affairs House of Representatives exam 2/25/82 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis February 26. 19112 The Masocahle Jake Ose* Chairmen Committee on Booking. Ilemminge and Urban Affairs United States Senate Washington, D. C. 2051S Dear Sir. Chairaen# I ae writing to you in concoction with the debt restructuring loan made by the Runt brothers eni by Placid Oil Cowpony in 1900 which wig related to silver market developments in the winter amd opting of that year. I would like to inform yea that Placid will SMMONN40 refinancing of this loan to0ay. You fill recall that tha origins/ loan was undertak en in the context at cOnaern by participating banks and othe rs that a failure to restructure thin debt clowad have unsettling influence* on markets and ov institution. I interposed meaddeetlem to the lean in consideration of oeveseate oentelmed in ths Seem agrtemen ts relating to orderly tales of silver and avaidence of speculatiem In eamm edities, thus assisting is assuring cossistency of the loan with the Spec ial Voluntary Credit Asetzaint Proegan then in effect. At various tines ever the pest year, there have been reports of attempts by Placid Oil Cempeny to rtilaase e this loan. I have ststeZ when aeked that I would moodier assy steps *doh had the efftot of significantly altering the purpose, and proteetiene of the original loan covenants to be clearly inconsistent with the umderttanding that formed the basis for my dtcssion not to object to the debt restructuring. Leto 'set year I wax infecasd that the borrower s were proposing to refinance the loan in a mennoor that involved comm itmeets to maintain the purposes and protections cot the existing loan covenants if/ MHOS of an enfeeetable egteemamt with priest* parties that eneLd camels is effect instates of 'hotbox the undetlying loan remaintd eatetandiage In considering—at the copilot of both lend ers and norfewerewthe private financial restructuring /avenged by the bc.crowers on this basis, I havt paid eines attenties to assuring that the orisinal oommitments to sell the silver in en orderly mann er one to evoi4 *peculation are being preserved Amid proteettd in the see etrangemonts. I believe the public policy protections at the 11000 Less ere belay maintained https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis .2. The Honocabae Joke Gam and X have been assured that the new ogratments will be carrieti out in food faith without reservation or welification. in this connection, I em emelosing for yaw personal infocmation a recent exchange at elect.epoondsmes that I haws bac with the participants in this loan. *maws* the eew stsamgesents appear to be fully commietent with maintaining the peewees and protections of the MO onVenants, I have interposed no ohisetioa. ainamayf S/Paul A. Volcker Enclosure TDENTICAL LETZERS BENT TO: The Honorable Henry S. Reuss Chairman Joint Economic Committee House of Representatives The Honorable William Proxmire United States Senate The Honorable Edward Jones Chairman Subcommittee on Conservation, Credit and Rural Development Committee on Agriculture House of Representativea The g000rahle Benjamin S. Rosenthal Chairman Subcommittee or: Commerce, Consumer, and Monetary Affairs Committee on Government Operations U.S. House of Representatives The Honorable Fernand J. St Germain Chairaan Committee on Banking, Finance, en6 Urban Affairs House of Representatives latmam 2/25/82 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • February 26, 1982 The honorable Pete V. Domenici Chairman Committee on the Budget United States Senate Washington, D.C. 20510 The honorable Ernest F. Hollings Ranking Ltinority Member Committee on the Budget United States Senate Washington, D.C. 20510 Dear Chairman Domenici and Senator Hollings: Thank you for your letter of February 23 regarding my appearance before the Committee on the Budget at hearings on the First Concurrent Budget Resolution for FY 1983. I am looking forward to Leing with you on March 2 at 10:60 a.m. Sincerely, Si Valli CO:pjt (#V-45) bcc: Susan Lepper K Messrs. Kichliniejnd Zeisel Mrs. Mallardi (2) https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis A, VolcAceL z • BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20SSI PAUL A. VOLCKER CHAIRMAN February 26, 1982 The Honorable Glenn English Chairman Subcommittee on Government Information and Individual Rights Committee on Government Operations House of Respresentatives Washington, D. C. 20515 Dear Chairman English: In accordance with the requirements of the Freedom of Information Act, I am submitting the Annual Report of the Federal Open Market Committee of the Federal Reserve System covering the implementation of its administrative responsibilities under the Act during the calendar year 1981. Sincerely, Enclosure https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • 0 • GOvk.•. BOARD . •co •C FEDERAL RESERVE SYSTEM • -,, • ..A OF GOVERNORS OF THE 1- • c•I • WASHINGTON, O. C. 20SSI RAUL A. VOLCKER CHAIRMAN February 26,1982 The Honorable Paul Laxalt Chairman Subcommittee on Regulatory Reform Committee on the Judiciary United States Senate Washington, D. C. 20510 Dear Chairman Laxalt: In accordance with the requirements of the Freedom of Information Act, I am submitting the Annual Report of the Federal Open Market Committee of the Federal Reserve System covering the implementation of its administrative responsibilities under the Act during the calendar year 1981. Sincerely, dee6;&.,/h. Enclosure https://fraser.stlouisfed.org • Federal Reserve Bank of St. Louis • • BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, O. C. 20SSI RAUL A. VOLCKER CHAIRMAN February 26, 1982 The Honorable George H. W. Bush President of the U. S. Senate Washington, D. C. 20510 Dear Mr. Vice President: In accordance with the requirements of the Freedom of Information Act, I am submitting the Annual Report of the Federal Open Market Committee of the Federal Reserve System covering the implementation of its administrative responsibilities under the Act during the calendar year 1981. Sincerely, 1/e/./;7 Enclosure https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 7 • . . ' . G0li,..• 1.4,• . 0• .. •co . .. •0 i: • -•1 i-- • '...1 , LI. • 5. .1. • x•r•\>__ t4;[1[[[1 ___ , n. •..t, ,<.,. W. RALRE.S • • BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551 PAUL A. VOLCKER •• CHAIRMAN February 26, 1982 The Honorable Thomas P. O'Neill, Jr. Speaker of the House of Representatives Washington, D. C. 20515 Dear Mr. Speaker: In accordance with the requirements of the Freedom of Information Act, I am submitting the Annual Report of the Federal Open Market Committee of the Federal Reserve System covering the implementation of its administrative responsibilities under the Act during the calendar year 1981. Sincerely, / 77 e1 Enclosure https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • February 25, 1982 The Honorable James C. Miller, III Chairman Federal Trade Commission 20580 Washington, D.C. Dear Mr. Miller: Enclosed for your information are three copies of the Board's seventh Annual Report on Section 18(f) of the Federal Traae Commission Act. If you need additional copies, please let us know and we will be glad to furnish them. Sincerely, Poui Vol_cher Enclosures Identical letters also BNB sent to Chrmn. Isaac, FDIC, and Comptroller Conover, OCC. bcc: Mrs. Mallardi (2) Robin Fenner • • February 25, 1982 The honorable George H. W. Bush President of the United States Senate 20510 Washington, D.C. Dear Mr. Vice President: The Board of Governors of the Federal Reserve System is pleased to submit its seventh Annual Report on the Board's functions with respect to Section 18(f) of the Feaeral Trade Commission Act. Sincerely, S/Paul A. VoLL=.0- Enclosure Identical letter also sent to Speaker O'Neill. \-Dc_c ' https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Cc>AQ,14- --40\A0 m•sc6Acik https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • FEEs :s• The !.oncrahl?. n r. Preslilent cf ".7. Yashin.:ton. :.C. Coar 1!. rush Vice rrf!siCrt. In accoreance v!lt, the requirements ef Frcilc7.1 of tt, I air: pleased to su!:::it the l'oarc!'s trr.ual r,c!crt cc,verin i(Tle,:7cntation of its z, ! ,.inistrative rcsporsftilitics Act durirvg calendar year 1: :1. :incerely. I Er.cicsur: President of the U.S. Senate, received RLArnold:nlf 2/23/82 J ' • https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • FEB 24 1982 Or. The Honorable Thomas P. Speaker of the Eouse of Pc%prerertatives Washingtor. C. ?717 2pcekNi r)ear In accordance vit1-. th: rr:luirerents of the freedom of Inforcliation Act_ I ar! pleascr! to suit the 1:card's Ar.nual Report covPring the implcrentation of its ad!-inistrativ? resrorsihilities th !et during calWar year 171. Sincerely. rrcloeurc Speaker of the !!ouse of representatives Received by RLArnold:nlf 2/23/82 ED https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • FFB 9.1- rs.i3e 1-• -, lilt 4:A 1 -1 ;)-,• c_I • ; '; ‘f ,:t • iu 1 on .11!di i ary 1.!nited StAtes SerFato. '"l'' . Dear Chairr:an L.,:\al L. FreeicA ,c: (,` 1) r• yit'; Tn 's (kor.ual Rerort it VIP .ir, i Jr. l'sct, I a:'7, .,)1,-(asx1 to resronsitilities coverink_.-1 the ininlonent,Fttion of its :?•,2,...inistrative d'aring calendar year 1. under tric Sincerely, ,A) Paul I,. Enclos!tr2 ••••••••• ,:r https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • FEB z 32 Thc Honorable r1r-mn Encllish Chairman Sucommittee on Government Information and Indivtlual RiOhts Co7rittee on .overnmcnt Pperations House of Representatives ,4ashinpton, D.C. 2051rj Cha.irman Enr!lish: :litircments of the Freedom .pf , ri-_, In accordance with th. Inforation ,"ct, I am pleasnd to suHit the ,fwird's Annual Perort covrrip.ri the ir,ifllementation of its 011inistrtive rcsronsibilitis 'oder the Act :fm-inn calon-..lar year 1'01. Sincer,ly, idi JP:slh https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Alig4 FEB S ,1 1982 The Honorable nlenn English Chairman Subcommittee on novernmprt Triformation and Individual Ritshts Committee on rovernment Operations House of Representatives Washington, D.C. 211515 Dear Chairman English: In accordance with the requirements of the Frpedexv, of Information Act, I am pleasad to submit the Board's Annual Report coverinn the implementation of its administrative resDonsibilitics under the Act durinn calendar yew Sincerely, Enclosure JD:slb https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • fIlv' PktidaAti2L (V 31) D3ARO OF D5VERNOR5 OF 1- rF: FEDERAL RESERVE SYSTEM WASHINGTON, O. C. 20SSI February 24, 1982 The Honorable Charles W. Stenholm House of Representatives Washington, D. C. 20515 Dear Mr. Stenholm: Thank you for your letter of February 4 requesting comment on correspondence you received from your constituent, 1,Irs. Bernice Prescott, concerning the autonomy of the Federal Reserve Board. The Board of Governors ctnd the entire Federal Reserve System were created by passage of the Federal Reserve Act in 1913. Congress, in creating the Federal Reserve System, provded it with a substantial degree of independence in order to in:alate monetary policy decisions from day-to-day political pressures. Members of the Board of Governors are appointed by the President, with the advice and consent of the Senate. Although the Board is an independent agency, Congress does have ultimate authority over the Federal Reserve and oversees the activities of the System through relevant committees. The Board also maintains close communication with the Administration and is in continuous contact with officials of other government agencies. For example, frequent meetings are held with the Treasury, the Council of Economic Advisers, and the Office of Management and Budget to help evaluate the economic climate and to discuss objectives. Moreover, the general goals of the Federal Reserve have been set forth in the Full Employmenc and Balanced Growth Act of 1978, in which Congress laid out for the Federal Reserve, as well as for the President, the directives of promoting full employment, balanced growth of real income, adequate productivity growth, and reasunable price stability. In attempting to achieve these goals, which tend to be longer term in nature, the Federal Reserve establishes annual ranges for growth of monetary and bank credit aggregates. Those ranges are presented in Monetary Rcports to Congress each February and July, in which the Federal Reserve discusses how money and credit growth within these ranges will contribute to the achievement of longer-term goals. In addition, the Board is required by law to make an annual report to Congress, • , • .1 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis . C Chairhlan, are called crivj,rE ional co: mittees :i:1-c;.1-.4n7L-.1'. to tc.!stii.y Zlirthea.- bacLL,rouTld on thr, Syste::‘,, I ar.: enclosing ::. (amphiets on LUC structure Fedcral Reserve Syster, .1L_eu lay be of introst to •1-17, • 7.0T)^ cn LQ I •1 Of irlforticyn :urthcr :! 2rOSCOtt uqeful. ,d , (Signed) Donald 1, Winn C1 • t. 7 CO:vcd (V-31) bcc: Na1lardi let me Cc.. Liaison Office will prepare fiponse IOW DISTRICT OFFICES: P.O. Box 1237 STAmroRo, TEXAS 79553 (915) 773-3623 CHARLESMLSTENHOLM * 17TH DISTRICT TEXAS Ian WASHINGTON OFFICE: LONGWORTH HOUSE OFFICE BUILDING WASHINGTON, D.C. 20515 (202) 225-6605 Congreofi of the Einiteb COMMITTEES: AGRICULTURE SMALL BUSINESS https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • tatel P.O. Box 1101 ABILENE, TEXAS 79604 (915) 673-7221 11)011sitOtilepreOentatibtO fillassbington, 1D.C. 20515 1 ee" e February 4, 1982 LCD ^ rn Honorable Paul Volcker, Chairman Federal Reserve System 20th and Constitution N. W. Washington, D. C. 20551 Dear Mr. Volcker: Please find enclosed a copy of a letter I hava just received from Mrs. Bernice Prescott in which she asks about the Federal Reserve System. It would appear that she is interested in authority provisions for the system and its responsibility to Congress and the Administration. Any information you may be able to provide in this regard would be greatly appreciated. Thanking you in advance, and with warm regards, I remain Sincerely yours, Charles W. Stenholm Member of Congress CWS:fxc Enclosure • • .2rs. Lernice 12.:ccott 1982 Hon. Chrrles Stenholm U.S. House of Pepresentatives : 1 :ashington, D.C. 7)ear Cong. Stenholm, I received the copy of the Budget of the United States Government today, snd I appreciate your cooperations in my efforts to better know rnd understend.the functions of our Government. '• Now another question. "hr is the Federal Reserve Board an auton- "hat constitutional amendment places it above the control of the executive and legislative branches of our government, and omy? thus the people? *I heve always considered the structure of our government - the three branches - to have been based on the architectural or engineering concept used by the buiders of the Egyptian Pyramids, each side of the triangle of equal strenght:i a:d supportive or restrained by the other two sides, thus indestructive throughout time. In recent years the Supreme -ourt hEs tipped the triangle, and if other agencies or commissions are given autonomy or are other wise without controls by the people, Till not the structure of our government collapse? https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • • I fully support 7resident Reagens proposal to return resnonsibilities and control. , monies to the state and local Eovernments for I would like to see another agency ad:ied to the list J,ency. aonrressm,711 Stenholm, the :ries with stE:te End Problems of eni.c_ron:-::-:-Jnt and ecology v:, graphical loc&tion. If the states had control of their own problems, then we wouldn't be attempting to tell the industrial northeast how to their air pollution, end they wouldn't be telling us what to do with our coyotes. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ein for the publication and good luck in the year ahead. erely, Bernice Prescott • • • lc9, 1 Tho Honorable Jako Corn Chairman Corr'littee on Ranking, !lousing, and Hrhan Iffairs !Inited States Senate 1!ashington, n.C. 2051n r)ear Chairman Garn: The Poard re.centiv considerod thr, issuo of l't h rlr rf‘al Nrokers should he .considered "arran( .7ers of credit" under thP royisod Truth in Londing Act when they arrange for homeolmors to fina ncc. t.J.e sale of their hvies. If so, the hrokers would he required to nrovide Truth in Londinn disclosuros to the hme purchasers. The issue arose as a result of j2on Truth in Lending Simplification and reform Act, vihich for the first tigo imposed disclosure responsibilities on those who arrange tor credit to hP '?xt owifqi by nonnroffIssioral extenders of credit. Pe have carefully reviewed the lonislative historv and are unable to determine whether the Congress in fact intended for real estate brokers to he considered arrangers of credit for this curnose. Under current mortnar.,? market conditioos, numher of home sales are being financed in i,:hole or in nart i)v thP spllpr. The seller may take a first mortgage, or tho buyer may asst ve thn re=rlaining nrinciral halance of the! existing mortgano wit!1 the sell er providino additional financinc! through a second mortriaoe. Frer;uently, the sell er financinq lic-fs a nayoent schedule cornarable to a :10-yar mortnane hut the hal, ,ince is due ir '3 to 7 Years. As a result, there often is a final "halloen " iiyrrq.:!nt of a largo portion of the principal amount of the note. Truth in Lending disclosures, if re(;uired, scoe honefit to the consumer, particularly by highligh tini tho size r.nr4 f:ate of any halloon oavment. However, tho only person who coul d he ro,wird to nroyide such disclosures is the real estpte broker that arra nnns since the original homeowner is a nonprofessional extender of crr,r'it , t1(1 exgrint frog Truth in Lending. The Roaro is at.lare, however, tilat discloSurPs hv hrokers when they arrange such transactions woul d rira-lticallv incre,ise coverane of the act, since there are as gany as 2 million rt-al liconsr.es in the country. Truth in Lendirri would a noY hur.lr.N f P .P ')urdened industry and would cause infori - ati3O fn ko ir pirt, wmild duplicate the contract nf pn:! https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Carn -2- • • The issue thus involves a difficult balancing of benefits to consumers against burdens to real estatu urokers, and tne ultimate decision will affect a large number of individuals and nuloerous transactions. Absent clear guidance from the Congress on the matter, the ooaru is reluctant tu proceed at tnis time with a regulatory amendment brinyinj brokers under the regulation -- particularly since the Senate now has under consideration a bill (S.17'40) that would permanently exempt them. Furthermore, the 6oard oelioves that the question is particularly well suited to legislative, rather than reyulatury, resolution. The Board therefore has amended the definition of "arranger of credit" in the reviseu Regulation L (which implements the Trutn in Lenuing Act) to exclude real estate brokers from coveraye, fur the tiile beinj, giving the Congress the opportunity to indicate its desire on this issue. foe 3oard plans to reconsider the question in early 1983 if the Congress has not acted by that time. I have enclosed a memorandum prepared by tne 6oard's staff that discusses arguments made for and ayainst covera(je in over 3,000 cuwent letters that the board has received on the issue. The comments themselves are, of course, also available for your review, and we All ue pleased to assist you in any way we can to resulve this difficult issue. A copy of this letter is bein9 sent to the chairmen and rankiny minority members of the relevant congressional com!littees and subcommittees. Sincerely, Wag'A.Wicket Enclosure Identical letters also sent to: Cnrman. Chafee, Senators Uilliams and Dodd; Chrmn. St Germain and Cnrmn. Annunzio, Cong. Stanton and Paul. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis /19/' • • • Should Real Estate Rrokers Have Truth in Lending Responsibilities in Connection with "Seller Financing" of Homes?* BACKGROUND In 1980, Congress amended the Truth in Lending Act to require disclosures by persons who arrange financing extended by a nonnrofessional credit extender. 1/ Before the 198n revisions, a person who arranged credit extended by another person was not a creditor unless the primary credit extender was also a "creditor." This change raised the prospect that real estate brokers who assist with seller financing in home sales might he required for the first time to give Truth in Lending disclosures to home buyers. However, congressional intent regarding the treatment of real estate brokers is unclear. Although the staff analysis accompanying the Federal Reserve Board's draft simplification hill, which was submitted to Congress in 1977, recognized that real estate brokers might indeed he arrangers of credit, Congress changed the statutory language somewhat without indicating its intent as to the treatment of real estate brokers. In October 1981, the Federal Reserve Roard decided to seek public ment on the question of the proper treatment of brokers under the implement:: Regulation Z. 2/ More than 3,000 comments were received in response to a pro- posed regulatory amendment that defined "arranger of credit" to include real estate brokers who arrange seller -financed transactions. * Prepared by the staff of the Federal Peserve Roard, February, 1982. 1/ Title VI of the Depository Institutions Deregulation and Monetary Control Act of 1980, Pub. L. No. 96-221, 94 Stat. 170, March 31, 1980. 2/ 46 FR 51920 (Oct. 23, 1981). https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • 2 niscussiom The commenters included real estate agents and their trade associations, financial institutions, consumer groups, law firms, Federal Reserve Banks, and a few individuals. The commenters were overwhelmingly opposed to covering real estate brokers, with only about 45 favoring the proposal. Two form letters from realty agencies and related groups, which opposed the proposal, accounted for about 60% of the comments. The comments supporting the Proposal came predominantly from financial institutions, as well as a few consumer groups, law firms, and individuals. All of the Federal Reserve Ranks commented, and their responses were split, with five supporting the proposed amendment and seven opposing it. Letters also were received from more than 3o members of Congress; some opposed the proposal, others forwarded constituents' letters. nuring the comment period, the question also was discussed at some length by the Board's Consumer Advisory Council. voiced support for the proposal. Many members of the Council At an earlier time, the Council's Legislation Committee had reached a consensus supporting the coverage of real estate brokers. The proposal requested comment on several alternatives, including the exemption of real estate brokers, the establishment of partial disclosure requirements, and a delayed effective date. Most commenters favored either an exemp- tion for brokers or a delayed effective date. Many of them referred to a letter written to the Poard by Senator Garn in July, 1981, in which he stated that real estate brokers were not the focus of the Senate Banking Committee's discussions at the time the definition of creditor was amended. addressed the partial disclosure option. A small number of commenters A few favored requiring a warning to highlight the necessity of refinancing a balloon payment, but there was little support for reauiring that some, but not all, of the Truth in Lending disclosures be given. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis I• • • • 3 ARGUMENTS The following pages contain the major arnuments raised by the conmenters. Home purchasers would benefit from receiyinn Truth in Lending disclosures describing the seller-financed portion of their obligations. As some commenters noted, the disclosures are particularly valuable in these cases because the purchase of a home often involves large amounts of money and repreSince this sents one of the most important credit decisions most people make. type of financing is "nontraditional" and poses special risks, there may he a greater need than usual to ensure that the parties clearly understand and appreciate the obligations being undertaken. The credit terms of most current seller financing appear to be fairly simple -- often level monthly payments of interest and principal based on a long-term amortization schedule or payments of interest only, with a balloon payment at the end of three to seven years. Even in such relatively straightforward transactions, Truth in Lending disclosures would provide some information that may not he in the contract document (for example, the amount of the final balloon payment, the total finance charge, and whether or not the obligation is assumable). Disclosures also would highlight the credit cost information and provide it in uniform terminology (for example, in terms of the "annual percentage rate"). (The attachment to this memorandum contains a sample note and disclosure statement.) Moreover, even though most current seller financing is uncomplicated, more complex and innovative features (such as variahle rates, graduated payments, front-end fees, and private mortgage insurance) could develop in the future. In some of these cases, the annual percentage rate would differ from the contract interest rate. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • 4 • The purposes of the Truth in Lending Act would not he promoted hy reouiring disclosures by real estate brokers in seller-financed transactions. A number of commenters asserted that the main purpose of Truth in Lending disclosures, to allow consumers to compare credit terms, would not he furthered by these disclosures. Buyers who obtain seller financing usually turn to that arrangement because they are unable to secure conventional financing from an institutional lender. Therefore, seller financing is their only choice, and buyers have nothing with which to compare the terms of this financinn. Furthermore, many commenters mentioned the simplicity of most sellerfinanced transactions. Most of these transactions contain no hidden costs, such as points or loan origination fees, that would be figured into the annual percentage rate. As a result, the disclosed annual percentage rate is the same as the simple interest rate contained in the note. Almost all of the disclo- sures, in fact, would duplicate terms in the note. Although the amount of a large balloon payment would probably appear only in the Truth in Lending disclosures, the utility of disclosinn the amount alone is open to question. As some commenters argued, the real risk of a balloon payment to consumers is that refinancing will not be available on satisfactory terms when the balloon comes due, and Truth in Lending disclosures give no information or explicit warning about refinancing conditions. The real estate industry is already burdened with many problems without the additional burden of compliance with Truth in Lending. The commenters pointed out that many real estate agencies are small businesses. They argued that the cost of training salespeople to provide Truth in Lending disclosures and possibly hiring attorneys to avoid disclosure liahility might seriously threaten their ability to stay in business during these already difficult times. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • In addition, commenters alleged that if some brokers decided to refrain from arranging seller-financed transactions to avoid Truth in Lending responsibilities, home sales would be further depressed. Consumers could also be harmed hecause of higher fees charged by brokers to recoup the cost of making Truth in Lending disclosures. The responsibilities of compliance may he no more than those imposed on other creditors subject to the act. Although a new group of businesses for the first time would need to train their personnel to provide disclosures and accent liability for any errors made, commenters pointed out that this is the same requirement made of all others subject to the act. If the credit terms remain simple, the calculations required hy the regulation would not be difficult, and the Board's model forms would simplify the problem of designing proper disclosure statements. Coverage of real estate brokers would create serious operational problems which would require detailed interpretations of the regulation. This result would be contrary to one of the Board's goals in implementina the Truth in Lending amendments, which was to provide clear, simple rules not needing detailed interpretations. example: Some of the problems that would arise include, for how to apply the numerical test for coverage (to each broker, sales- person, or firm);3/ who is the party legally responsible for disclosure, particularly when more than one broker is involved (listina or selling broker, firm, salesperson, or principal broker); and when the disclosures should he given (if there are several offers and counter-offers that may he exchanged before a contract is finally accepted). These issues would need to he addressed in detail in the staff commentary to Regulation Z and could require periodic revisions as new issues and problems develop. 3/ https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis A person must arrange credit secured by a dwelling more than 5 times a year to be covered by revised Regulation Z. 46 FR 2n848. • • In some cases, a Truth in Lendino violation hy the real estate broker might create a cause of action against the home seller. In some jurisdictions, a serious error on the Truth in Lending statement might permit the huyer to sue the seller for fraud or misrepresentation hy the seller's agent. If successful, the buyer could rescind the contract of sale or collect monetary damages from the seller. Fraud could also be asserted as a defense to a deht action or foreclo- sure and, even if unsuccessful, could complicate the proceedings. Difficult enforcement problems would he created hy imposing Truth in Lending requirements on real estate brokers. It is estimated that as many as two million real estate salespeople and brokers are licensed in this country. Although some work for large real estate firms, many are either sole practitioners or work for very small offices. Commenters claimed that it would he impossible for a federal agency (in this case the Federal Trade Commission) to monitor Truth in Lending compliance by brokers because of both their numbers and the lack of structure in the industry. They also contended that the conduct of real estate brokers is already monitored, and can he better monitored, at the state level by several means, such as licensing statutes, contract law, ethics codes, and educational requirements of state real estate commissions. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • Attachment A Truth in Lending disclosure statement, residential sales agreement, note, and deed of trust based on a hypothetical sale of a home are contained in this attachment. If real estate brokers were considered "arrangers of credit," the disclosure statement would have been given to the purchaser by the real estate broker prior to the sales agreement having been signed by all parties. In this hypothetical transaction, a home was sold for a $3n,00n downpayment. $75,000 at 7% interest. si5n,00n with The purchaser assumed a first deed of trust note for The second deed of trust was taken hack by the seller to secure a five year "balloon" note for $45,00n at 13% interest, to be repaid in monthly installments of interest only. The attached disclosure statement reflects only the seller-financed transaction. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Washington, DC Felllal Truth in Lending Statementilll ANNUAL FINANCE Amount Total of Total Sale Price PERCENTAGE CHARGE Financed Payments The amount you will have paid after you have made all payments The total cost of your purchase on credit, including RATE The dollar amount The amount of credit The cost of your credit as a yearly rate. the credit will cost you. provided to you or on your behalf. /3 0,.0 s2.91 25-0 s, d7(.5-0,0 i your dovvnbayment of D 00'— /0C l as scheduled. S s 7‘71/ 2-5—v s/79 2SO ---- You have the right to receive at this time an itemization of the Amount Financed. 'S. I do not want an itemization. IN I want an itemization. Your payment schedule will be: Number of Payments sly / Amount of Payments Y-87, co # Alic, V- r7.5-0 VVhen Payments Are Due Al04 Ntly Ak ("/in 11//) vem,be r- // /97/. 0c4046e,r- /. /9F6. Insurance Credit life insurance and credit disability insurance are not required to obtain credit, and will not be provided unless you sign and agree to pay the additional cost. Type Credit Life Premium Signature I want credit life insurance. I want credit disability N/4 Credit Disability /4 Credit Life and Disability "VA insurance. I want credit life and Signature disability insurance. Signature You may obtain property insurance from anyone you want that is acceptable to from Signature you will pay S /A N If you get the insurance Security: You are giving a security interest in: the goods or property being purchased. .(br,ef description of other property). g Filing fees S $.1_5-- Non-filing insurance S Late Charge: If a payment is late, you will be charged S / % of the payment. Prepayment: If you pay off early, you j iii will not • may have to pay a penalty. 0 will not be entitled to a refund of part of the finance charge. 0 may Someone buying your house may, subject to conditions, be allowed to assume the remainder of the mortgage on the original terms. See your contract documents for any additional information about nonpayment, defauIt, any required repayment in full before the scheduled date, and prepayment refunds and penalties. e means an estimate https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Oeftl•turitty Resider.Sales Agreement For District of Columbia Prilky 9/9/1981 DATE OF CONTRACT t. RECEIVED FROm Five Thousand and xx/100 check and if in the fOrM 01 Cain Or chiicii. snail Do Otoositec) by the undersignet Agent in a d•posit of ,n In* form of CASH/CHECK/NOTE Doiiirs is 5,000.00 beavng •SCrOvr eCCounf in INTEREST/NONaNTEREST savings and loan institution wittim a Dank _ days of acceptance of this connect The O•posit snail ot applit0 as part payment of me purcnase pric• of Int premstrs knOwn aS SuCtOivision Souare Walinington C witn improvements tri•reon incluOtrig iCross out ,f nol acipticabie, th.oft•fn hiall'ng Plant and ate-cc:int:W.0mnd SyStem. win0Ow ail•Corvittioning units. ail piu mping and lignting ',stunts, kitcrienQuipMent .r1Oluding rang. ,g1flifillOf Owl! C.snwasne• ancl disposal. all wail-to-wail carptting. cornices, cunain rOCIS and OraPetry rOOS. awritngS, T V antennas. SCre•riS. Storm door' anCI irrinClOwS. venetian DtinCIS. Shades indoor snutterS tree._ Washer and dryer not to convey. shrubs ario °tants. instalieo on tri• premises as of the above dat• upon Mir 10110vnng terms of sai• Total Price°, proptrly One Hundred Fifty Thousand and xx/100 Thirty Thousand and _xxil_00 a:wars': 150,000.00 Dosiwus 3o,noo on Purcriamt agfets tO pay cash at ilettlernant of *relicts sum this clepOsit snail be a part It Int Otposit exceeds tme (sown payment. any excess shell acighy first to Settleftwant C.osIs ancl th• Daianc• Snail be ritifunOec to Purchasor at sottlemont. 2. FINANCING ASSUME s. FirSt Truitt. Purcriaser is to a firSt clescl of trust tn latncliar s usual form socured PLACE/TAKE TITLE SUBJECT TO/ASSUYAE 75,000.00 due in 146.0 premises 0. 20 year! and brilanng intereSt at the rat• of 7.0 piircent per annum or in cases oiruir Man rive Hundred Eighty one and 47/100 Monthlypoo,„ 4 aSSumOtiOns Ine maxtrrtur, 581.47/month ....piing rate al time of settitimiint, payable MOnf /4 Pius on* tvnitfth Of annual taxes. fat insurance. and private mortgage inSuranCe. it reQuired oy ionaer b Stcond Trust The purcnasor is tO n/a a second atoll of trust in len040 S (Awl fOrM stcuriid on so. PLACEJTAKE TITLE SUBJECT TO/ASSUME preinisos of S dye in years An0 bearing align's! at Mil rate ot percent per annutet payable Dollarit IS c. That Trio atiforrecl amounting 45,000.00 purchase money 10 S by a dteCI of trust m. usual torrn On Said premiSe 10 twit paid in monthly installment* 01 S Of mare. witriOut D•riaity at maker s option inCluding tntereSt al Ina rate Of 13.0 barCent pilir annum eacn inStallment when So paid 10 be appli•cl first to trio paymont of inttrest cm the amount 01 prinCtpal rernatning and the DalanC• Mare°, Credited 10 prinCiOal. wrtiCri aeed of trust Soy! &gross to accept as part of th• purchaso price In calm of default on riny payment, the entire amount tnten remaining unpaid snail immtcliately become du• and payalble Sai0 trust and not• may not be assurned or titi• taken suot•cl to saecl trust and note without the prsor written consort! of th• note Molar The *mire unpaid Oalance snail cio duo 487.50 is" )1;07n siicthurect second anti payaoie in fuel with. five years In Me event paragraph 2c. is appticade. this contract Snail nOt Do assignod witivut the prior written Canaan' the Sothis, 3. CONVENTIONAL LOAN Thiscontract contingont on theabillty of Purchaser to secure or ',cone a commtirnent for ttio herein describea financing, to take title subject to an, existing aoeas of trust. or ootain ionarer s apprOval Of any aSSumptiOn, if reguired. fortrfive caitinisar aays frOM frill Oaf* Of aCCIPOlaftCli Of If1.6 COrIffaC1. drfl,Of1COMM.flYtir Of IOOf0V111 PurCnasor sorties to pursuit diligently PurChaSfer ',WY's Me right to triChease the Caart OCivrrt payment anctioe to accept a modified COmmilmant for ftnanCing and if Purcruis• eiticts to do so. he Snarl SO notify Siiittr and Agentit in writing witnin int term 01 this contingency If. attar matting every feasonaOlte effort. PurCnasor iS unable tO obtain Mt spiecitierinancing of incraas• tn• casn clovat payment Ando, accept a mooitmod commitmant tor financing wetritei Ma term of this contingenCy and nOtili•S 5•11fer 01 tritS faCt in gaming WitINori term of this conttngency. this contract shaii trecome not and void and eurcnesof s ciscosit shail be ref undeo in full: proncled however Mat tnis contract shall remain in Wit torca or. effect. if Setior notifies PurChaser in %tinting that Seller %Intl acCept a ourchaso monsy mortgape upon this same hermit. 4. FHA LOAN II is exprtssly agreed that. notwitnsiencling any OtheW prOvianbnll Of thie Contract, tri• Purchasar shall not be odigated to Compitte purr-has/ of th• prOperty Clew/100c holfetn tO Incur env PeneltY bY fOriesturti of earn's! money degoSit of' °therms* unites, the Sorior has *slivered to the Purchaser a yrntion statement issued by the Federat hicmiong atiOrsiMid value of the twat:softy (excluding closing UMW Of not Nita than S COMmtsmohtlr sattincl forin wifteCh statem•rit the Sole*, honey agrees to delfwef to th• Purchaste promptly atter sucfi appraised 'slut suatement is rruidi avertabra to this Seam. Tim PurChaser nOvniver. Nano the prlintoge an4 option of proctedIng mai consurn• matiOn Of the contract without fedora to th• amount ot int appraised valuation made fly tete Fedeeel elOuSing COMM...4000r Th• aporaistad valuation is arrtve0 at lo determine ff%. rfial.fnUfn mOrIgag• U S :Department Of Inoustng arid Urban DievelOpment Vf.11 'MUM/ HUO 60•• flOf , fei, J41 Of Ma condition of th• prOperny Th• PurCriaatirr SnOvid SaltS4, Mims's/ that Me price and tri• COrilttion Of the propriety ant acc•ptaa• L LOAN FEES If a new lOart is tO De OtaCed unbar this contract. Purchaser agrees to pay a loan ongination fo• of 1% of the principal sum of trio icon on FHA and vA loans offi on ail mho, loans Stlier agrees to pay a lain placem•nt toe of n/a % of said loan. The loan plectiment lee is based On tho present mortgage money manic an0 it is further prowl tna Purchasor and Soilor will comply with any realOrtable Chang* in said fee at frit limo of strut/Tient. provicieCI lefts change is duo to a criangt in Mt mortgage mangy maniet. Lender • inspection ft,. if applicablo. tre Damp try &ow, Purchaser agrees to pay private mortgage insurance premiums as reguirea by London IL D.C. SOIL DISCLOSURE REOIJIREMENTS Th• crtatactoristic of thri soot on the sutoect proo•ny as !Yount:tied by th• Soil Consorvation Sorvtce of th• united States Dopartment Agriculture in tho Soii Survey of tn• District of Cottimoia published in 1976 arid as shown on the Soil Maps of In* Distnct of Columbia is USC -4 For ?Wino intofmation the Purcnasav can contact a soit testing Laboratory. tn. Orstnct of C,olumbia Oepartm•nt of Environrntntal StrviCes. or the Soil Conservation Sorince of if' OaltSanmont of Agetculture Y. EXAMINATION OF TTTLE ARO COSTS fhoperty is to oe convoy/to tn trio nanWNSI Of THE PlJF‘CHASER HAS THE RIGHT TO SELECT THE TITLE ATTORNEY, TITLE INSURANCE COMPANY, OR SETTLEMENT OR ESCROW COMPANY Purcriasim More:iv autnOriZeS tr unO•nigne0 Agarit tO Order prOMPtly the examination of tam.•survey, and tts• oreoafalvon of WI neCessary conveyancing pacers tnfougn and agrees to pay In* sottioment charges in connection thottrenth, tax certificate. conveyancing, notary fees, survey, 14M0111fil fa*, IlliCluaive Of irillp•CtiOn Nrei, and recording chime.except tnose incident to cleanng existing encumbrances Tho 1% 0 C Transfer Tax will be paid by tho Soo./ and this 1% Rocoraation Tax iota paia Dy tne Purcnastr Stilt,herItC agree* 10 pay any coats incurre0 it upon ezarnination Me title should be found oefoctive and a is not rernocii•ct rverfin Stated. inCluding a reasonable tint tor sitrvices renCirtroct him On & SETTLEMENT Within f p or lan-Nseroat•t iRilir.c.;41%,6f reouirecl. anctior loan processed. ail a promptly apptied for. Sailor and PIOCflaSef aS SOOrt triereatter as a re0Ort 01 1114I lithe can be SeCured, tf promptly °roared anciror survey. agree tO Matte full Settlernant in accordance Anti+ tho terms Mateo, 9. TEhlANCY Tho ortiCierCY is *old we shell be cOnvored free of any existing tenancy, exCept as follows' n/a Soo*. has ostivorea to ilhe tenant all Ogallala nOtiCeS reQuir•C by tri• Current rent controi regulatiOnli of Ma District of COlumbia arneno•a anti. pursuant to that Act the Sailor wi promptty provtde tO thei tertant notice of this contract after wroch tonant shall have a 15 bay ',grit of first ripfusai to purcrtaso ort tno terms ana conaltions of the contract If Mitre is *misting ttnancy. Sotirtr agrees to gtv• tiossassion at the time of settiontent. and if the Seiko. faits to do so and occupitts saia proporty, Soiler shall Pecornis ana Oe thereattor tenant Suff•ranc• 01 Purcheart, and hareby expalrlialy weave* all nOliCe tO quit provicuad Oy IP. AGENCY Seller feCOgnizall °couscous for services hindered amounting 10 from th• proceeds of the sate. ail Agents neg.itiating this contract and war•es to bar SIX thw salts Once. and the peny miming sentemont is horeby airected autmorized to oaduct and pay trios brokerage fit 11. AGREEMENTS Of PRINCIPALS WA. the undersignod, her•by ratify, accept and agree to au. contract end actinoviiedge receipt of a copy thoreof The principais to this COntrat. rnutuaity agree mat it snail be binomg uO0f1 ff*IffTt MIN! metre. eiteCtrIOnt, actemnistralOrS, personal reofeeentartvell. liteCC.ellSOrS and assigns. that the provisions hereof shall survive M. execution and disovvary ot tn• ditict noriein stated anis snail not bo morgod thgreen: that this contract contains the finai end onto* agreamont betweon the parties hereto. an0 ritither they no tritir Awls snail be bound by any terms. conditions. stattiments. warrantios, or reortisontationt, otos of writlan nOt Pierson contamind The actin's assurne no responsibility tor the COnCJitiO• Of the PrOOvirty nOf ?Or the PerfOrManCe Of !hitt contrtc: by any or all parties metro ADDENDUM ATTACHED X No. Yee ADDITIONAL PARAGRAPHS NuMBERED 12 THROUGH 2S SET FORTH ON THE REVERSE SIOE HEREOF ARE INCORPORATED HEREIN ANO MADE A PART HEREOF AND AL: PARTIES ACKNOWLEDGE THAT THEY HAVE READ SAID PARAGRAPHS AS INOICATED frr TNEIA INITIALS ON REVERSE SIDE oiEREOF THIS IS A LEGALLY BINDING CONTRACT. IF YOU DO 140T UNDERSTAND ALL Of THE TERMS Of TNIS DOCUMENT SEEK COMPETIENT LEGAL ADVICE BEFORE SiGNING IT Sitnfn Plat/vain' Se//er rensonon• Residency, (.40lOnras. 11 other Mon orren•syS1 041,11 Of ACc•OrIncto https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Purchatior 011fd• Address of Purcnasof riotpnon• Fteintenc• Office of Settee in *hien event Purcnaser snail Pe relieved from further tiability nersunber unless Seiler notifies Purchaser and Agents in writing vritnin rainy i30) clays atter tn. owe provide for settlement nersin of his election to avail Of any legal or tiouitalsi• rignts. otniir Man Me said liouiclatecl Claniagits. eructs NI may have under this contract. In that event. Inc Peppeit Snail be returned by true Agent holding trio same to PurCnalitlir Inia Agent snail not Cie lisol• to Seiler lot return of Laid deposit In the event the forfeiture of the oinposit a• liquidated carriages or in th• event of an award of Oy a court or 3 COMpfOrrlite aireernient betyreen Seiler and PurC1triaier el Vail allow nut Agents onartaif thereof at COMPeriSatiOn 104 lerviCilit ren04Wed. said amount riot t the amount of the full brokerage les. IS TITLE The property, including the person& pro scribed in Pa:scrape One above. is soid tree of encumbrances, excitot covenants, fIntil 01 way. easements, coma/none end restrictions ol recant. if ant Marketed* Su0111C1. nowirret, Med heron Title is to De good of roc0,0 aytc 14. PEPIFORMANCE Settlement is to ort made at the ollic• of trie Attorney or tne Titie Company designated in Paregraori Seven Delivery to ine Attorney or to the Tint/Company of •casit payment and settlerrient costs as heroin stated. In* executed Coed of Conveyance and such timer papers as are nrouirect ',Mar oany by Ine tenni or this contract snail be consider. 2ocits and sufficient tender of performance in accordance with the terms hereof 11 is agreed that funds arising out of Mill trartaaCtiOn al SeWarne/It may 00 used to pin off any ••8111,' encumbrances. including interest. as rtiouired py iien0er 11. ADJUSTMENTS RfflIS. taxes. water. sewer, insurance and interest On 1131Sting efiCumbranCeit. any. and other operating cnarges are to be adiuSled 10 date of settlement Rent SeCurity 0•00SitS../ any. 0IuStreat snail twa transferred to PurUMW at ?IMO 01 Settlement Taxes, wiriest and acacia if any. are to be actuated accoroing to the certificat• of lave ,ssuecl oy tn• 0 C Department of Finance and Revenue. exceot that assessments for improvements c.omputted onor to the Cato of acceotance rwimeot. wheiner assessment Meretore been levied or not. shall be Oted by Setter or allowance made trwerefore at time of settlement. it CONVEYANCE Seiler agrees to execute and deliver a good and sulficient special warrarrty cleect. PigChaser agrees to have the Oviet1 of COnveyeriCe ieCiwO0C1 promptly 17. INSURANCE The nsit of toes astnage to said proOorlY DY hr. Or Mho beaullftY le 03001T1013 by Settee until the executed deed of conveyance is *silvered to In* Purcnaser or recorOed en the Title COmOany or Attorney cork:fueling the conveyance. PPIOPERTY C03101T10111 Seiler. at IMO lime of settlement or occupancy (whichoser occurs titan. will leave premises free and clear of trash and debris and broom clean. and OW plurnOing, heating. air-conoitioning and any other mechanical systems and itouipment included in this c.oritract in operating condition and deliver the premises in substantially the same ortySical COnditiOn SS 01 the date of accootance of this contract Purchaser has the Privilege of a pre-settlement inspection or the premises All nOtiCell 0' riOtiatiOna 01 municipal orOers requirernemts noted or issued by any department or agency of the District of Conant:vs or prosecutions in any courts on account Mingo' against or affecting the propeny at the dale ot acceptance ot this c,ontraCI Snell be complied witn try Seller and the property conveyed free trtereof, viiin the exception of the moans of ogress repute:len& learre I rt. 040C1 r Kati IS. TIERMITE INSPECTION Prior to tne Ilene ol settlement. Seller snail order termite insometion and no Later than the low of saulaviseeit seder anal say tne costa 01 termite inspeictior and provide to Purchaser a written certification from•licensed exterminator that, dyed utiOn•careful ileum inspection of accessible mem of the house. there is no evidence of infestation of termites or rectiod-borir.g infeCtli. II such infestetion exist*, Salter tO Seller al Own expense and prior to grittnimient snail repair any prier or current visibi• Carnage caused by termites or woo0-boring insects, 11. however, tele damage proves to be extensive. the Setter reserves the rignt to recons.der hie acceptance of Milt contract, provvsed the lorming inspection report is cotained and true determination is made within seven Clays alter final acceptance of true contact 21). GENERAL FINANCING PROVISPOPIS lei In mit event that mortgages are used rather than deeds of trust, the ward "mortgai2e- snail ti• autriltitUled aulontaticaily. (b) if this contract provides for the aseurreStiOn or existing 'rustle) Or fOr OurchaSe sutnect to existing truing), it is understood that Me balance of sucn trustls) and tne cash Cooperman! are approximate amounts. The terms and cOnditiOnil 01 the existing trusits) COnliontild on the adclenOum attached hereto. Any changes) recluirecl Dy the lender in orOer that tne tryst may De assumed, win be subiect to this Purchasers corteent. if salisumpnon ia promptly applied for. (C) Trustees in ail CleeCli of trust are to be named by the parties SiKiiired thereby (a) Saillrir Snell •110v• inSpeCtiOne 01 ell tne premises and furnish any pertinent ifilOrrnatiOn 1e0Uiriliel by Pt.irCriaaiar Or Nil ImanCing ageriCy in feriereriC• tO Oensintrig a loan commitment (el Purchaser piecing financing agrees to maim appiic.ation immeolatety and lile aii necessary papers that are reouirecl to compete processing and across that failure to 60 sc within severt (71 Pays snail give Settee the nont to 00Clare the Oepeeit forfeited or avail himaM1 of any 100/11 Or equitabie rignts as provided in the paragraph iiieeieO -FORFEITURE OF DEPOSITILJOUIDATED DAMAGES." 21. VA LOAN In the event that the Pyrenees, is placing a Veterans Administration guaranteed loan. the Veteran Piircriasers deposit snail be ptaced in an escrow account as required by Title 311. uS Code, Section ISM It is expressly agreed trim. notwithstanding any other provisions of this contract. true PtirCluatterr nOt inCur any Dy forfeiture of earnest money or otherwise or be obligated to complete trie purchase of trie property descnbed nerein, if the contract purchase one* or cost exceed* the reasonabie vaiue of the property establisned Me Veterans Administration or tn• PurCriasSer 'S nOt approved try the Veterans Administration arid nut lending institution In nut event Me Certificate of Reasortaist• Value is loss than tn. amount of the contract price the PlirCnate•I shall have the pnvii•ge and option for five clays atter reCeipt of the VA ariplailiar tO proceed will, tne COnetimmatiOn 01 Inia COntreCt eilnOtif regard to tne amount of reasona0441 wawa establisned by trie Veterans Administration Dy giving the Seiler notice of his intention to do iso by the manioc! provided in Paragrapn 22 hereof In the event that he snail not so eiect. triers the Seller shall have the privilege arw3 option of reoucing the contract price to the VA appraised value This option must be exercised tyy the Setter, within seven (7) clays after delivery to the Purchaser ot the VA apprallel. DV Omni) Pumbeeer m011C. Of NS 111111n"04 '10 C30 tlY th. rn.th°4 0":" . " " 1 PII"gra0^ 22"4".°4 If the Seiler eirects to reduce the contract price to the appraillad the PtirCnalyer COmenant• anct agrees to be bound to proceed irstri COnliirimenaliOn hiens01 at IND appeatile0 PnC0 11 Me Seiler ClOet not Meet to reduce the prica after the Purcntiow s relusai to consummate this contract at its full price, then this comract snail be null anti vovd Thit contract is contingent on the approval of the house and the Purchaser by the Veterans Administration arid the tending inetnution If the aforesaid approval not °atoned. it expreeety ber•si3 Mel the Putcnaeet sheaf be refunded hie Oeoosat. wird the contract shall be null and void. 22. FHA/VA/CONVK1PC REOUIREMEHTS If FHA. VA, Conventional or Government Programmed Conventionai(GPC)financing is being pieced hereon, any outstanding sower and teeter tap fees snail be paid in full Dy Seller, if said Agency or !erasing institution mourns* payon of such feet as a condition of financing. Seiler agrees to convoy with reasbnabie FHA, VA C.onventronai or GPO requirements or repairs rimers Wadeable 23. CONSUMEP REPORT AUTMORLIATION PlaChaliar here0y authorizes the Agent to disclose to Setter or any Winder the credit information provided to the Agent by Purchaser In the event that terms ot this contract require Saner to tare beclit financing from Pun:rower. Uwe contract of sale shall be contingent loon epprover cid a seitsfactory Commenter 113•0011 &* Re130 , 11 by SMAer within 10 Clara Sher received oi said re0on by Setter if Seder close nial =Crowe the Cr0Olt StairiOnn 01 PUrChilleer, arbd Purchaser is so notified in awning tiv Sewer within 10 days after receipt of the Consumer 110pOrt, MIS COntreCt snarl be nut! and void and the Osman returned to Purchaser Purchaser heresy snrionzes the Argent 10 Order and obtain a Consumer Report from a Consumer Reporting Agency to be used only rn connection inn, this treneaction. Further. wi Me went the aQent is acting on behall 01 a crednor, Seiko, or other party directiy elected by said transaction, Purchaser hereby authorizes the Agent to fonvard ail or any portion of the intonvielion Contained in the Consumer Report to the creditor. Sourer or orate Party directly invOlveCL COM Of Said CANISUrner RSOOrI barn* by Purchaser. Except as stated hereon, the Consumer Report is COnliderekel and the inionnenon contained Memo snail not Pe knowingiy rweesed to 041ftere iritnOut the legman conient ot Purchaser 24. NOTICES All notices reouired Or permitted PIIMIWI snail be in writing and effective as of Me dais wnich such fidlide is maned in any United States Post Office. by canilied or registered mail. postage prepaid, or hand-detiveret2 to Seiler al the property snores& to cite Agents or Purchaser el ine addressee designated herein, or to such othile addressee ei the Parties may designate in wnting from isms 10 lome. 21. THE PROFITS FROM THE SALE OF RESIOENT1AL PROPERTY OTHER THAN THE PRINCIPAL RES40ENCE /4hY SE SUBJECT TO THE "RESIDENTIAL FIEAL PROPERTY TRAivSF EP TAX ACT OF THE DISTRICT Of COLUIPSUL" 1.3 IMPORTANT THAT YOU DETERMINE YOUR TAX UAJIIILITY, IF ANY, IN CONNECTION milli.. PROPOSED SALES OF PftOPERrf 26) Purchaser is entitled to a walk through inspection 24 hours prior to settlement. Initials of: Seller Seller Purchaser Purchaser https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis This form is the property or the WegningtOn Bilber0 of REALTORS, Inc. and i• 101 Mernberill vie 001y https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • Given for allikerred purchas2 . mbney and Placed by secured b Deed of Trust on Trustees NOTF. $45,000.00 Washington, D.C. September 1 5, 1981 For Value Received ("Borrower") jointly and severally, promise to pay to the order of ("Note nolder") the sum of Forty-five Thousand and No/100 Dollars ($45,000.00), with interest from the date hereof until paid at the rate of Thirteen per centum (13%) per annum. Said principal and interest payable in monthly installments, of interest only, in the amount of Four Hundred Eighty-seven and 50/100 Dollars ($487.50), commencing on the 1st day of November, 19g1 and continuing on the 1st day of each and every month after date until paid. On October 1, 1986, the then unpaid balance of principal and interest shall be and become due and payable. Principal and interest payments shall be made in the form of a certified or cashiers' check, and made payable to the Note holder. And it is expressly agreed that if dc.!fault be made in the payment of any one of the aforesaid installments when and as the same shall become due and payable, and shall remain uncured for Thirty (30) days after written notice thereof to Borrower, then and in that event the unpaid balance of the aforesaid principal sum and accrued interest shall at option the of the Note holder at once become and be due and payable. Borrower reserves the right to prepay this loan in any time, during the length of the loan, without penalty. any amount, at This Note may not be assumed or title taken subject to without the prior written consent of the Note holder. This is to certify that this is the Note described in a Deed of Trust to the Trustees named hereon and bearing even date herewith. Said Note and Deed of Trust having been executed in my presence. Note one of two •d irMis Drrb of ZEntAllade this 15th day of September 11)81 •• S, , •• ••••••••• •• - 14.▪:• nd between hereinafter referred tu as "Grantor," and , hereinafter referred to as -Trustees"; • tafIrrroo. Grantor is justly indebted unto in the principal sum of Dollars ($45,000.00 ), Forty-five Thousand and No/100 purchase money T•re 1••••••••••••1 for which amount the Grantor has signed and deli‘ervd his promissory note nf even date herewith payable to the order of in the principal amount of Forty-five Thousand and No /100 Dollars ($ 45,000.00 ) bearing interez. at the until paid, on the following terms and obligations: rate orrhirteen perc,ent ( 13. ( 1) 70) per annum Said principal and interest payahle in monthly installments, of interest only, in the amount of Four Hundred Eighty-seven and 50/100 Dollars (S487.50), commencing on the 1st day of November, 1981 and continuing on the 1st day of each and every month after dAte until paid. On Octoher 1, 1986, the then unpaid balance of principal and interest shall be and become due and payable. Principal and interest payments shall he made in the form of a certified or cashiers' check, and made payable to the Note holder. And it is expressly agreed that if default be made in the payment of any one of the aforesaid installments when and as the same shall become due and payable, and shall remain uncured for Thirty (30) days after written notice.thereof to Grantor, then and in that event the unpaid balance of the aforesaid principal sum and accrued interest shall at the option of the Note holder at once become and be due and payable. Grantor reserves the right to prepay this loan in any amount, at any time, during the length of the loan, without penalty. This Deed of Trust and the Note secured hereby may not be assumed or title taken subject to without the prior written consent of the Note holder. Z4rrrtnrr. Urril at (.1;ruin T}i:it 10 Fecure the proMpt pnyrnent of said indebtedness and all charges and advances as in said promissory note and as herein providoci, the Grantor, in consideration of the sum of One Dollar in hand paid by said Trustees at and before the sealing and delivering of these presents, the receipt of which is hereby acknowledged, does hereby vrant and convey in fee simple unto the Trustees the land and premises lying and being in the District of Columbia, and described as follows: https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 1 • • together with all the improvements in anywise appertaining, and all the estate, right, title, interest, and claim, either at law or in equity or otherwise however, of the Grantor, of, in, to, or out of the said land and premises; CEruat to permit said Grantor to use and occupy the said described land and premises and to receive the rents, issues, and profits thereof, until default be made in the payment of any indebtedness hereby si.cured and in the performance of the conditions and obligations made and stipulated in the said promissory note or in the performance of any covenant or agreement contained in this trust; and upon the full payment of all of said note and any extensions or renewals thereof, and interest thereon, and all moneys advanced or expended as provided for in said promissory note or as herein provided, and all othcr costs, attorney's fees, charges, commissions, and expenses, at any time before the sale herein provided for to release and re-convey the said land and premises unto and at the cost of the Grantor or the party or parties then claiming under said Grantor. The Grantor, for himself and his successors and assigns, covenants and agrees as a part of this trust, as follows: 1. That he will pay the indebtedness evidenced by the note secured hereby, all taxes and assess. ments relating to the land and premises herein described, ground rents, all charges against the property, and all other sums which are required to be paid by him under the terms of said promissory note or this Deed of Trust, including costs, expenses and attorney's fees incurred by the Trustees or the holder of said note with respect to thia trust. the said note or the land and premises herein described. and in default of any such payment the holder of said note may pay the same, and any sum or sums so paid shall be added to the debt hereby secured, shall be payable on demand, shall bear fuil legal interest, and shall be secured by this Deed of Trust. 2. That he will keep the said premises in as good order and condition as they are now and will not commit or permit any waste thereof, reasonable wear and tear accepted; and that he will not act or fail to act in any manner which will jeopardize the lien of this Deed of Trust. 3. That he will keep the improvements now existing, or hereafter erected on said land, insured against loss by fire and other hazards, ca.sualties and contingencies in such amounts and for such periods as may be required by the holder of said note, and will pay promptly, when due, any premiums on such insurance. All insurance shall be carried in companies appro.ved by the holder of said note and the policies and renewals thereof shall be held by said holder and have attached thereto loss payable clauses in favor of and in form acceptable to the holder of said note. In event of loss he will give immediate notice by mail to the holder of :aid note, who may make proof of loss if not made promptly by the Grantor, and each insurance company concerned is hereby authorized and directed to make payment for such loss directly to and to the order of the holder of said note, and the insurance proceeds or any part thereof may be applied by such holder at his option either to the reduction of the indebtedness hereby secured or to the restoration or repair of the security property. In the event of sale under the terms of this Deed of Trust or other transfer of title to said security property in extinguishment of the indebtedness secured hereby, all right, title and interest of the Grantor in and to any insurance policies then in forcc shall pass to the purchaser or grantee. .1. That in the event the ownership of the security pro,vrty becomes vested in a person other than Grantor, the holder of said note may, without notice to the Grantor, deal with such successor or successors in interest with reference to this instrument and the indebtedn ess secured hereby in the same manner as with Grantor, and any extension of the time of the payment of the indebtedness or any other modification of the terms of the indebtedness at the instance of the then owner shall not relieve the Grantor of his liability on the note hereby secured or from the performance of any of the covenants and agreements contained herein whether said extension or modification be made with or without the consent of the Grantor. 5. That the irrevocable power to substitute one or more of the trustees named herein or substituted therefor is expressly reserved to the holder of the note secured by this Deed of Trust t...) be https://fraser.stlouisfed.org • Federal Reserve Bank of St. Louis . . 1 1 .. 1 .. 1111111111111.11 ' rh'htiey ereafter no matter how often without noti ce and without :.;pecifying, any tl:erefor by filing for record arn.mg reason the land ruciirds where this instrume •it i4 recorded Appointment. and thereu .„ Deed uf all of the title ;lee estat-. flowers, righ ts an tie, of the trustee thus superceded shall termina d shall be vested in the soccessnr trus tee stcee The Grantor and the Trustees herein name er that hereafte r may be substituted hereunder expr essly waive notice of the exercise uf this power, the giving of bond by any trusti e, and any req uirement for application to any Court for the removal, substituti-,n or appointment of a trustee hereunder . 6. That each Trustee acting hereunder shall he paid a fee of Fit.teen and .,:0/100 Dollars ($ 15.00 )for each document which he is requ ired to execute under the terms of this Deed of Tru::t. 7. Tha't his failure to perform any of his obligations under this Deed uf note snail constitute a default and Trust nr under said all indebtedness serured shall immedi ately bi.corre payable at the option of the hold am i er of said note. Any time thereafter, at the re.iiiest of the !inkier of said note, the Trustees shall have the pow er and it shall be their duty to sell said land and premise: or any part thereof at public anetion, in stik. ii manner. at such time and place, upo n suc h tt rnis and cieidit:ons, and upon such public notice as the Trustees may deem best for the inte rest of all concerned, ct, hsisting of advertisement in a newspaper of general eirt.olation in the enmity or city in which the security property is located for at least onc e a week for two surt.•..4-uve wce k3 or for such period as appl:eable law may require and, in case uf default of any purchaser. to re-s ell with such postponemert re-sale and upon such public noti :tle ce thereof as the Trustees may determine, and upon compliaiwe the purchaser with the terms of sale, and upon judicial approval as may be reqiiired by law. con\ 4e.: said land and premises in fee sim ple to and at the cost of the porc haser. who shall 'not be to the application of the purchase tn see money: and from the prneeeds of sale: FIRST, tu pay ;ill proper costs and charges, including but not limited to court `St 4, :l,1%•••11 king' l'XPell • ' the L.xpenses, if any, required 4. anction..er*.: ;Woe. mite, to correct any irregularity in the title. premium fnr Trust. e:* auditor's fee, attorney's fee. and all other expenses of sal, incu rred in and about tne protectiiel execution of this trust, and all mon and eys advancitil for taxes, assessme nts. insurance, and with interest thereon as provided herein. and all taxes due upon said 1.0e1 and promies at tin:, of sale, ;ie.! as compensation a commission uf ;•.-ta in five percent (5',; ) the amount of said sale or sales: to pay the whole amount then rem SEi•()ND, aining unpaid of the principal of said note. and interest thereon date of payment. whether the sam to e shall be due or 'lot. it being und er toed and .r_treed that. ipo:: sale before maturity of the note such the balance thereof shall be ly due and payable; THIRD, to pay liens of record against the secu rity property according to their prio rity of lien and to the extent that funds remaining in the hands of the 'Trustees are availab!e; and LAST, to) pay the reniaiiiier said proceeds, if any, to the Gra ntor, his heirs. personal represen tatives, suece..:ors or as the delivery and surrender to the etinti purchaser of pessessien tile said land and peernise,e les. expenses of obtaining possession. c..st: and 8. That if the security proper ty shall be advertised for sale. am hereiriabove provided. and not sold, he will pay all CoSti in conn ection therewith including. lint not fees and a Trustees' commissi.0n of limited to advertiiirir, a ttoreee's 21:27, a tht! OW!. unp aid prin cipa l the same shall be secured in like man balance of the indebtedne,s. anti ner as other charges and exp enses relating to the execntio trust and bear interest at the rate stat n of this ed in said note. 9. That he warrants specially the property herein conveyed and that he N% execute such further .L.ssurances thereof as may be requisit e. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The provision.; of this Dec. ' of Trust shall he }Uniting upon an inure tu his hvirs, personal representati bent nt ves. successors and assigns. the GI:It:tor. triii;tie or trustees, and the Trussees and any r, holder the note licr eby set-Arco. include the 'Ultra'. the plural us•vcr u..eti Olt Ain t•91:,1the singular, and the it :e of any render shall lie applicab le tu all renders. trjithrfiti the following sign atures and ve: 4 ist.ve] Witness: c • • 1 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Fabruary InQ9 Honorable J. I;ennett Johnston United Statcs Senate Wshilaton, D. C. 20510 :Dear Senator Johnston: Thank you for your lctLor of JLnuary exi-rescinL, your colleen). about a Loard proposal to clarify '1.ezulation Z's definition of an "arranLcr of credit'. For your infomation„I al -1 enclosing a press release ,lescribil4: a Board action taken last week affectin realtors. As you hnm-, th,1 BoarC took up the question of the cow:rare of. brokers who arranLe f3cIler of homes in response to the 1930 amendi , - ents to the Truth in Lendine Act, Lhich left the matter unclear. On Fel:ruary 12, the Board excluded realtors Zrom coverage until 'early in 7903" to allow Cunixess to address the u.atter. Sincerely, Enclosure WRM:NS:vcd (V-11) bcc: Maureen English Mrs. Mallardi (2) ‘,//' . 4 • Action. assignei Janet Hart v , • J. BENNETT JOHNSTON LOUISIANA llertiteb Zfatez -.Senate WASHINGTON. D.C. 20510 , https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis January 14, 1982 d li The Honorable Paul Volcker Chairman, Federal Reserve Board Federal Reserve Building Constitution Avenue between 20th and 21st St. Washington, D.C. 20551 Dear Chairman Volcker: rted I am writing to express my grave concern over repo real estate proposals by the Federal Reserve Board to classify under brokers who facilitate seller -financing as "creditors" the Truth and Lending Act. supply In my view, such a characterization will reduce the now faced of mortgage credit and will exacerbate the problems aordinarily by the housing industry. As you well know, the extr g can be high interest rates available for mortgage financin essions reduced in most instances only through special conc but logical provided by sellers. It is not only reasonable the to expect brokers to communicate the positions of both financing buyer and seller with respect to such concessionary the basis of home sales. These communications should not be and of subjecting a real estate broker to the requirements penalties of the Truth and Lending Act. review Although I have not yet had the opportunity to several conproposals in this area, I have been informed by undesirable. stituents with expertise that the regulation is to avoid Therefore, I urge you to make every possible effort te brokers characterizing custom -ary communications by real esta red under the from the "buyer" or "seller" as "providers" cove Truth and Lending Act. With kindest regards, I am Sinc Bennett Joh ston lted States enator JBJ:wnq https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • February 19, 1( 9 iloilcrable Millicent 17c;nwick Nouse of :cpresentatives Tashington, D. C. 20515 Thank jc-Ju for your let-ter oE i)cee-Ller 24 c::pressinE; your concern al)out a 3oard proposal to clarify Leculation Z I G definition of au "arranr,er of credit". For your information, I ar: enclosing a press release deccribin3 a Board action taken last affecting realtors. you know, the Board took up the queztion of the covera3e of brokers who arrane seller financinc of hocts in response to the 1930 av.nents to the 'Iruth in LendinE, Act, wicich loft the latter unclear. On February 12, the Loard excluded rcaltors fron coveraLe until "early in 1933" Corlsress to aairess the matter. Sincerely, ? Lnelosure WRM:NS:vcd (V-1) bcc: Maureen English Mrs. Mallardi (2) V https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • l'ebruary 19, 1932 r ‘ T ,Jonorc.Lo LOC. 11. liar:linen. ChairifLan Subconittce on l'iconomic Coals and Interovernmental Joint Economic Co=ittee V;ashiLton, D. C. 2()510 Dear Chair]..an Kamilton: Thank you for your letter of February 1 regarding correspondence frum your constituents concernin the "arra,ser or credit" issue. For your information, I am encicsing a press release describin a Board action taken last week affectiy, realtors, As you 17now, the Loard took up the question of the covc;re of lirol.ers who arrange seller financin of hol::es in respoiase to the 1930 ammdments to the Truth in Lendin,-, Act, which left the imtter unclear. On February 12,.the Board ey_cluded realtors from coverage until "early in 1933" to allo-c;' Col.vress '.;o address the r'. ,Incc.!.rfAy, • . ;:411closure WRM:NS:vcd (V-26) bcc: Maureen English Mrs. Mallardi (2),Z I !„, • 0:1 „kolligt Hc HEIL. SENATE .07;EPREsENTATIVES RE SS, WIS., CHAIRMAN leicHARii Cot) NG. MO. LEE H. HAMIL 3N, IND. GILLIS W. 4-A,LA. PARREI' 1ITCHELL, MD. FREDIR1 W. RICHMOND, N.Y. GLARES-E J. BROWN, OHIO mARGARET M. HECKLER, MASS. JOHN H. ROUSSELOT, CALIF. CHALMERS P. VVYLIE, OHIO Action assigned Janet Hart; be answereq after etrd considers on February 10 • eongrez of the Eniteb JAMES K. GALBRAITH, EXECUTIVE DIRECTOR JOINT ECONOMIC COMMITTEE (CREATED PURSUANT TO SEC. Ca) OF PUBLIC LAW 304, 7ITH CONGRESS) WASHINGTON, D.C. 20510 February 1, 1982 Rearm W. JEPSEN, IOWA, VICE CHAIRMAN WILLIAM V. ROTH, JR., DEL. JAMES ABDNOR, S. OAK. STEVEN D. SYMMS, IDAHO PAULA HAWKINS, FLA. MACK MATTINGLY, GA. U-OYD BENTSEN, TEX. WILLIAM PROXMIRE. WIS. EDWARD M. KENNEDY, MASS. PAUL S. SARSIANES, MD. L.C.1 CD3 —11 FIM J The Honorable Paul Volcker Chairman Federal Reserve Board of Governors Constitution Avenue, N.W. Washington, D.C. 20551 CD Cre CO Dear Mr. Chairman: I have received a number of comments from constituents regarding the impact of a provision in the 1980 revisions to the Truth-in Lending Act. These revisions take effect on October 1, 1982, and one of them may have a particularly debilitating impact on the housing industry and market. After October first, anyone who arranges more than five home mortgages in a year must comply with the TIL Act. In a situation not forseen in 1980, this provision will require many real estate agents and brokers to comply with the extensive provisions of TIL for the first time. This compliance includes the risk of lawsuit should these persons fail to adhere tightly to the provisions of the TIL law. It was not envisioned by Congress in 1980 that such individuals would even be subject to this law -- a law designed to apply specifically to financial intermediaries. Yet, the spectacular rise in mortgage rates since then and the resulting widespread use of so-called "unconventional financing" for homes have forced realtors to act as arrangers of credit and subjected them to the new TIL. As you know, most residential sales currently involve some form of unconventional financing. And, while the future course of interest rates is not known, there is a high probability that mortgage rates will not subside to more traditional levels for a good period yet. The looming application of TIL provisions to realtors in that environment could well close the door to unconventional financing and add a major depressant to an already hardhit industry. At best, such an application will result in a sharp jump in home closing costs as realtors scramble for accountants and attorneys to meet the dictates of TIL -- assuming they can first find affordable insurance for their legal exposure under TIL. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The Honorable Paul Volcker ir \February 411 1, 1982 • 'Page Two I believe your staff is reviewing this situation now and the Board itself will address it shortly. I encourage the Board to accept remedial modifications to the TIL Act. A variety of steps are open to you in this regard, including an increase in the threshold for individual arrangers of credit to (say) 20 to 25 loans annually. Another option is to limit the legal exposure of real estate agents and brokers under the TIL Act. I hope you will be able to head off this unintended and potentially disastrous situation. If I can be of help to you and the Board in this matter, please call me or have your staff contact George Tyler at 224-5171. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Thank you. s• Lee H. Hamilton Chairman Subcommittee on Economic Goals and Intergovernmental Policy Irebresx) LS, 10.4 The Monotrt14/ 4.$:w L. Dingell. Chairmen Ccamdittaa ca. asegly an4 ,, ,pareebre* Da* Nam 0 Ropecgisnrativev GAL 5 liamhiertemo C Dams Mr, Cbalsoott Masa you for 'mat Ittettur 0 Petigeary Sf 10128. coacerninq *erste requireesato ea stoat totes futures oestraota. I am eacloning a letter I wrote to Cossettlities Fututogr ?lading Cammisalca Camino* Jettitacts reates4ay tit tutors his of tk* Saares *Lev reaffirsimg that it hes authority to establish margins few tradiag to stook monis lades future.* matted**. however. the sairad did not believe it vas someasery at this Use co ositsaltsh margin rules to stem of tto recast action the Sesta* City heara of Trade to establish a ki,her level of sorgiaii. As 2 inforead Chairman Johnston. h.voe 4treatad the Seat. staffs is sooperetAce with the CP= staff. to %imp 4eveloposta is the market* wheat review, dith a view to leereing fres experieuto in the market whothax federal itesexve Margin t4/*14tiOU* are respired Rae if IMO at what levels. In the seastisa, vie have formulated a passibla regem Istary framework avid will. ask tom/illy for public cossett. In order to *sour* that a framework tor regulation dill km available is the *vast that there ta au issealate stead for ite tha Ocaird shall slawaly * pripmeodammigin raquIrmhoot framework tom pubLis colammit. imood me this commumilt. Shimeld t* 4 positiee to act *ape&timely it the attemtiem simmal4 teimice• va.Li i • Itirsiosese Memo Identicial blotters sent to Samatee 21440 and impeasentatimpas Mosamtbal amd Glickman https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Pebtuaty IS, 1.982 Sob Dole Ibe Maitoo iitaLea Senate illanhingtore, D• C• 24S10 DIM Sobs Insiosed corm:ermine morgitas will find that the rieue empreemed is is a copy et the letter I sent to Phil Johnstin yeeterday ea stook lades futures contracts. I tainii that yfts approaoh taken by the Seard is oonsiatent with the your latter to me *f February 11, IOU. but itbe Beard has asserted its juriediction in tbia bee refrained fres establishing regelationc so that ue cam Froosed orstely tu detonate* whether or sot, in the light of experistme, any margin requirements extehliabed by regulation ire necessary. This course was saee feasible by the action of the Mesas City Soave of Trate to eetabliah • higher level of margin requirement* on a selt-regulatoey basis. As you can se* tram my letter to Phil, our two egeeeies worked csoporstiseiy OA tnis isame• au the future, I belie asked my staff to work with tna CP2C staff te sonitot devoisomeets, Witble the nest sis momtbe we will review the situation booed on the overtones 'mimed frau nerket isporations. IA the meantime es have formulated a lesetble regulatory framework an0 will ask for public OMMMOOt4p I appreciate your 'tows and look fotwar4 to beepia, peo Wormed uf t,:evelopmects. Sincerely, Maslesere Mena https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • BOARD OF GOVERNORS DF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551 February 18, 1982 PAUL A. VOLCKER CHAIRMAN The Honorable Jake Garn Chairman Committee on Banking, Housing and Urban Affairs United States Senate Washington, D. C. 20510 Dear Chairman Garn: In my recent appearance before the Senate Banking Committee, I agreed to provide for the record information on the fluctuation in growth rates of money in the United States compared with other industrial countries, which I am pleased to enclose. The data can be presented and analyzed from a number of perspectives. Even allowing for the technical difficulties involved in making such international comparisons, they all appear to demonstrate the same point: U. S. monetary aggregates rank au or near the top of the league in terms of low variability. The enclosed two tables illustrate this point. The first table presents the lowest and highest monthly growth rates for M1 in 1980 and 1981. It also shows the range covered by those rates. The second table presents the same information for the same years using quarterly observations. In both tables the growth rates are presented at annual rates, as is unfortunately customary in the United States. This presentation, of course, tends to exaggerate differences. The monthly results show that U. S. Ml-B (shift adjusted) showed a narrower range of fluctuation in 1980 and 1981 than did the most nearly comparable aggregate in any other country except Italy. In the quarterly results, which in general exhibit much lower variability, only France and Germany had a range in 1981 approximating that in the United States. In 1980, France and Italy had a much narrower range of quarterly fluctuation in M1 growth, while the range in most of the other countries, with the significant exception of Switzerland, was close to that in the United States. In interpreting these results, it is important to remember that complete stability in the growth of monetary https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • The Honorable Jake Garn Page Two aggregates is not an objective of monetary policy in the United States or in any of these major foreign countries. On the other hand, slower medium-term growth in the monetary aggregates (and monetary authorities abroad are increasingly looking at more than one aggregate even though they continue to target on at most one) is widely recognized as a necessary condition for a sustained reduction in inflation. In this connection, one might note that Italy, the one country that does "better" than the United States in three out of the four comparisons presented in the enclosed tables, has had one of the highest rates of growth of M1 (measured, for example, over 12 months or four quarters) and one of the highest rates of inflation in recent years. I hope that these comparisons help the Committee to appreciate the difficulty of short-term aggregate control and the absence of an obvious link between our current economic problems and the short-term variability of our monetary aggregates. Sincerely, SL Paul Enclosures EMT:NS:vcd bcc: https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • • • Mr. Truman Mrs. Mallardi (2) L./ • • • Table 1 Monthly Changes in Narrow Money in Selected Industrial Countries 1980-1981 (Percentage change from previous month, annual rates) 1/ 1981- 1980 Low High Range Low High Range 127-1/2 Canada -17 35-3/4 52-3/4 -40 87-1/2 France -11-1/2 30 41-1/2 - 6-1/2 37-1/2 44 Germany -16-1/4 30-3/4 47 -32 28-1/4 60-1/4 Italy _2/ - 4-1/4 24-1/2 28-3/4 - 6-3/4 16-1/2 23-1/4 Japan -39-1/2 51-3/4 91-1/4 -44 93-3/4 137-3/4 Switzerland Z__/ -22 27-1/2 49-1/2 -42 14 56 United Kingdom -17-3/4 43 60-3/4 -29-1/2 58-3/4 88-r/4 United States q/ -15-3/4 21-1/4 37 -10 19-1/2 29-1/2 1/ Data are available through December 1981 except for the following countries: France (November), Italy (October), and Switzerland (September). 2/ Season3lly adjusted by Federal Reserve Board staff. 3/ Ml-B shift adjusted, https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis _. • . • Table 2 Quarterly Changes in Narrow Money in Selected Industrial Countries 1980-1981 (Percentage change from previous quarter, annual rates) 1/ 1981- 1980 Low High Range 19 Canada 2 17 France 6-1/4 10-1/2 Germany -2-1/2 11-1/4 6-1/4 15-1/4 Italy _2/ Low High Range -18-3/4 6-1/2 4-1/4 11-1/2 15-1/2 13-3/4 - 4-3/4 1-1/2 6-1/4 2-1/2 15-3/4 13-1/4 22 21-1/4 -1-1/4 12-1/2 9 25-1/4 4 Japan -10 7-1/2 17-1/2 3/4 Switzerland _2/ -23-1/2 5-1/4 28-3/4 -13-3/4 United Kingdom - 6 11-1/2 17-1/2 1 21-1/4 20-1/4 United States 3/ - 3-1/4 14 17-1/4 - 1 5-3/4 6-3/4 1/ Data are available through December 1981 except for the following countries: France (November), Italy (October), and Switzerland (September). 2/ Seasonally adjusted by Federal Reserve Board staff. 3/ Ml -B shift adjusted. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis February 17, 1982 The honorable Mark O. Ilatfield Chairuan Committee on Appropriations Sta.tes Senate WashinL,ton, D. C. 20510 Dear Chairman hatfield: Thank you for your letter of February 10 concerninz; my testimony at your econom ic overview hearings. I look forward to appearing before your Committee on 'larch 4 at 9:30 a.1.1. Sincerely, stPaul VoIsek4 CO:vcd (#V-33) bcc : Messrs. Kichline and Zeisel Ms. Lepper Mrs. Mallardi (2) // Me s s rs. K ichline MARK O. HATFIELD, OREG., CHAIRMAN TED &WENS, ALASKA LC P. WEICKER, JR., CONN. JAF.n.WA. MC CLURE, IDAHO PAUL LAXALT, NEV. JAKE GARN, UTAH HARRISON SCHMITT, N. MEX. THAD COCHRAN, MISS. MARK ANDREWS, N. DAK. JAMES ABDNOR, S. DAK. ROBERT W. KASTEN, JR., WIS. ALFONSE M. DAMATO, N.Y. MACK MATTINGLY, GA. WARREN RUDMAN, N.H. ARLEN SPECTER, PA. • WILLIAM PROXMIRE, WIS. JOHN C. STENNIS, MISS. ROBERT C. BYRD, W. VA. DANIEL K. INOUYE, HAWAII ERNEST F. HOLLINGS, S.C. THOMAS F. EAGLETON, MO. LAWTON CHILES, FLA. J. BENNETT JOHNSTON, LA. WALTER D. HUDDLF_STON, KY. QUENTIN N. BURDICK, N. DAK. PATR IC.K J. LEAHY, VT. JIM SASSER. TENN. DENNIS DE CONON!, ARIZ. DALE BUMPERS, ARK. J. KEITH KENNEDY, STAFF DIRECTOR THOMAS L. VAN DER VOOFtT, MINORITY /STAFF DIRECTOR Zeisel ioing statement PAJCnifeb Ziatez Zenate COM M ITTEE ON APPROPRIATIONS WASHINGTON, D.C. 20510 L February 10, 1982 Paul A. Volcker Chairman, Board of Governors of the Federal Reserve System 20th Constitution, N.W. Washington, D.C. 20551 cf. Dear Mr. Volcker: I am writing to confirm arrangements made by our staffs for your testimony before the Senate Committee on Appropriations on March 4. The Committee will conduct a series of economic overview hearings in order to gain an understanding of the economic conditions likely to prevail in the coming year, as well as an understanding of the President's economic plan. For this purpose, the President's chief economic spokesmen, including Secretary Regan, David Stockman, and Dr. Murray Weidenbaum, will testify before the Committee on February 24 and 25. In addition, the Committee is anxious to have your view of the appropriate monetary policy of the Federal Reserve Boord for the coming year, and your forecast for interest rates for the same period. We very much appreciate your altering your schedule in order to provide us this assessment at 9:30 on March 4. For your information, distinguished outside economists will present their views on the economy before the Committee on March 5. Our hearing on March 4 will take place in room 1114 of the Dirksen Senate Office Building. Please provide at least 40 copies of your testimony no later than noon on March 2. In order to have copies to distribute to the press and others attending the hearing, please provide an additional 60 copies of your statement by the evening of March 3. Again, thank you for your willingness to accommodate the Comrdttee's schedule. We look forward to your testimony. Warm personal regards. Sincerely, Mark 0. Hatfield Chairman MOH:dmk https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • February 17, 1932 John J. Salmon, Esq. Chief Counsel Committee on Ways and neans house of Representatives Washington, D. C. 20515 Dear Ns. Salmon: Thank you for your letter of February 12 inviting me to appear before the Committee on Ways and neans at hearings on the President's economic prosram, including tax and spending cut proposals. I am looking forward to being with the Committee on February 23 at 9:30 a.m. Sincerely, ,)/ Paul A. bidet CO:vcd (V-34) bcc: Mr. Kichline Mr. Zeisel Ms. Kusko Mrs. Mallardi •s• https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ..••• •.. • of GOv •• 4.1?4,'. ••• 0 , -1 - ,,.15 . O• '0 4: ,P• • •'f° :././gii.th ,,,....,,,,,, • c ..Q,--i ,r,:o 2: •,1: I.i...it?1 LL". • .4 r S:'.P/ ..-; • ..1. 4UTI.'I'''-ls. . • • BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM : ' ;, .".4.1E-A' 4.RAI. R.s.`t •• '••••••••• WASHINGTON, D. C. 20551 February 1r), 1982 PAUL A. VOLCKER CHAIRMAN The Honorable Paula Hawkins United States Senate Washington, D. C. 20510 Dear Senator Hawkins: I am pleased to supply responses to the three written questions you submitted following my appearance before the Joint Economic Committee on January 26. (I) Given the tremendous difficulty the Federal Reserve Board has in actually controlling the money supply, are you now ready to consider returning to the gold standard? Answer: There have been sharp fluctuations in money growth when measured on a weekly or monthly basis, reflecting not only some difficulties in exercising short-run control over the money stock, but also judgments by the Federal Reserve that efforts to force money to adhere closely to a narrow growth path on a week-to -week basis would involve unnecessary and ill-advised wrenching of the financial markets. Short-run movements in the monetary aggregates have little impact on the economy, and may even reverse themselves without aggressive action by the Federal Reserve. The Federal Reserve does have the ability to achieve desired growth of the money supply over periods that are relevant to economic performance and results. The more difficult problems for monetary policy, in my view, involve setting the appropriate targets for money growth in an era of rapid evolution in financial practices and instruments, rather than meeting these targets once chosen. The gold standard, of course, would provide little help in this regard. The quantity of money would be tied to the stock of gold, without regard to the changing needs of our economy. Moreover, the historical experience of the U. S. with a gold standard demonstrated not stability in money growth but dramatic fluctuations--over periods measured in years not months. Inflows and outflows of U. S. gold holdings automatically arose from divergent U. S. and foreign economic developments as well as from new discoveries, and the stock of money registered quite substantial swings over time. As a consequence, the price level was subject to sustained periods of inflation and deflation lasting • https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • The Honorable Paula Hawkins Page Two • a decade or longer. Real economic activity was also destabilized by the monetary fluctuations associated with the operations of the gold standard. In light of this experience, and in the expectation that financial changes will continue at a rapid pace, I believe that discretion and judgment remain essential to managing the country's basic supply of liquidity. Reasoned exercise of surh judgment will assure expansion of the money stock over time to achieve our nation's goals of price stability and sustained economic growth. (2) I have sponsored a bill, the Federal Reserve Amendment of 1981. Do you think that broadening the membership on the Board of Governors to include small businessmen and others now being crippled by high interest rates will make the Board more responsive and more effective? Answer: Board membership should reflect a variety of backgrounds, so that in arriving at its decisions the Board has the benefit of many different viewpoints and experiences. A number of existing statutory provisions already reflect Congress' wishes in this regard. For example, only one Board member may serve at any one time from any one of the twelve Federal Reserve districts. In addition, in making appointments to the Board, the President must give due regard to a fair representation of financial, agricultural, industrial and commercial interests as well as the geographical divisions of the country. Further specification of membership qualifications is unnecessary and would unduly restrict the President and Senate in selecting the best possible man or woman to serve on the Federal Reserve Board. Moreover, I believe we already have a responsive and effective Board of Governors--one that has tackled the difficult problems we face with courage and intelligence and has set a course for monetary policy to benefit Americans from all regions and walks of life. (3) You are calling now for additional spending cuts to lower the deficit and to help slow inflation. The budget of the Federal Reserve Board has skyrocketed 800 percent from $77 million to $791 million in the last 30 years. Do you think it's now time for Congress to exercise closer budgetary control over the Federal Reserve Board? Answer: In forming the Federal Reserve Act of 1913, the Congress carefully considered the question of the degree to • • •••• • https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The Honorable PIC Hawkins Page Three • which the Federal Reserve would operate within the framework of the federal government. In this connection, the Congress decided to exempt the central bank from the political pressures that so frequently attach to the appropriations process. Congress has seen fit to preserve this form of independence over the years. The Federal Reserve System has not taken this exemption as a license to spend unwisely. On the contrary, the operations of the Board and the Reserve Banks have been conducted in a highly responsible and financially conservative manner. All spending is subject to supervision and review by the Board of Governors. Expenses of the Reserve Banks from 1950 to 1980 increased at an average annual rate of only 8.1 percent compared to a 9.1 percent average annual increase in federal government outlays and a 10.4 percent increase in the legislative branch's expenses. When the expenses in the Federal Reserve are adjusted for the impact of inflation, the average annual rate of increase drops to less than 4 percent. This modest growth in expenses should be viewed in light of the rapidly growing workload during this period and the increased responsibilities imposed by Congress. For example, in 1950 the System processed 2 billion checks, whereas in 1980 the System processed over 15 billion checks, a 700 percent workload increase in this operation alone. In the same period, processing of currency and coin increased close to 150 percent, and the volume of funds transfers grew from 1 million annually to over 43 million annually. In addition, the huge task of acting as the federal government's fiscal agent and banker doubled in the last 30 years, as measured by the number of issues, redemptions and exchanges of U. S. government securities. These increases in workload were accomplished with less than a 1 percent average annual increase in employment. The work of the Federal Reserve in the fields of monetary policy and bank regulation has also expanded during this time period, especially in the area of bank holding company and consumer regulations. In conclusion, I do not feel it is necessary for Congress to exercise closer budgetary control over the Federal Reserve. The Federal Reserve System remains fully attentive to the needs of the public, the financial community, the Treasury, and other government agencies, while demonstrating operating efficiency and economy. I hope this information is useful. DLK:JLK:ADeb:JMD:vcd (#V-22) Sincerely, bcc: Mrs. Mallardi (2) Ms. DeBeer Messrs. Kohn, Kichline and Denkler cc: Mr. James K. Galbraith HENRY S. REUSS, WIS., CHAIRMAN RicHARD BOLLING, MO. LEE H. HAMILTON, IND. ROGER W. JEPSEN, IOWA, VICE CHAIRMAN WILLIAM V. ROTH, JR., DEL. JAMES ABDNOR, S. DAK. Actioniisigned Mike Pre11 GILLIS W. LONG. LA. PARREN J. MITCHELL, MD. „k _IrifEL.CK W. RICHMOND, N.Y. CLAREPE J BROWN. OHIO MARGARET m. HECKLER. mASS. JOHN H. ROuSSELOT, CALIF. Congre55 of flit Elniteb CHALMERS P. WYLIE, OHIO JAMES K. GALBRAITH, tate5 JOINT ECONOMIC COMMITTEE (CREATED PURSUANT TO SEC. 5(a) OF PUBLIC LAW 304, 79TH CONGRESS) EXECUTIVE DIRECTOR WASH INGTON. D.C. 20510 February 1, 1982 The Honorable Paul Volcker Chairman Board of Governors Federal Reserve System Washington, D.C. 20551 Dear Mr. Chairman: At the request of Senator Paula Hawkins, I am forwarding the attached additional questions, with the request that you submit written responses for the Record. Sincerely, 4',Z0(41.a4;7:;? 0/1-12/ albraith ames K xecutive Director JKG:jm https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis STEVEN SYmMS, IDAHO PAULA HAWKINS, FLA. MACK MATTINGLY, GA. LLOYD BENTSEN. TEX. WILLIAm PROXMIRE, WIS. EDWARD M. KENNEDY, MASS. S. SARBANES, MD. rAuL QUESTIONS FOR CHAIRMAN VOLCKER: (1) (2) (3) https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis rve Given the tremendous difficulty the Federal Rese ly, Board has in actually controlling the money supp gold are you now ready to consider returning to the standard? I have sponsored a bill, the Federal Reserve ng Amendment of 1981. Do you think that broadeni ude the membership on the Board of Governors to incl by small businessmen and others now being crippled high interest rates will make the Board more responsive and more effective? You are calling now for additional spending cuts n. to lower the deficit and to help slow inflatio The budget of the Federal Reserve Board has skyrocketed 800 percent from $77 million to $791 million in the last 30 years. Do you think it's y now time for Congress to exercise closer budgetar control over the Federal Reserve Board? https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • February 16, 1982 The Honorable bill Nichols house of Representatives Washington, D. C. 20515 Dear Mr. Nichols: I appreciate your consideration in forwarding the position of the Alabama Bankers Association on deregulatory issues facing the Depository Institutions Deregulation committee. In keeping with your request, I am asking the Committee's Executive Secretary to make the Alabama Bankers Association correspondence with you a part of the public record. The next meeting of the Committee is scheduled for March 22, 1982. Sincerely, S/Paul Yolcket cc: Mr. Steven L. Skancke Executive Secretary Depository Institutians Deregulation Committee 1- 4B:vcd (#V-25) bcc: Ur. Bernard (w/copy of incoming) Mrs. Mallardi (2) Action assigned Mr. Bernard. COM M ITTEE ON ARMED SERVICES Bi'LL NICHOLS Sao DISTRICT, ALABAMA DISTRICT OFFICES 2417 RAYBURN BUILDING WASHINGTON. D C. 20515 PHONE: (202) 225-3261 Congres55 of tbe Viniteb COUNTMS. AUTAUGA CALHOUN CHAMBERS CLAY CLEBURNE COOSA ELMORE LEE LOWNDES MACON RANDOLPH RUSSELL TALLADEGA TA LLAP00SA https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis FEDERAL BUILDING taterS ANNISTON, ALABAMA PHONE : 236-5655 3i)oute of ilepreskntatibesS FEDERAL BUILDING OPELIKA, ALABAMA Preop4V: 745-6222 Efliacsbington, ri.e. 20515 115 EAST NORTH SIDE TUSKEGEE, ALABAMA P February 3, 1982 NJ -"M 7-1r: Mr. Paul A. Volcker Chairman Depository Institutions Deregulation Committee 20th and Constitution Avenue, Room B 2120 20551 Washington, D.C. Dcar Mr. Volcker: On behalf of the 315 memher banks of the Alabama Bankers Association, I am pleased to transmit their position to the Depository Institutions Deregulation Committee urging the following: 1. oppose any legislation to delay action by DIDC 2. ask menhers of DIDC to exercise their current nandate to deregulate deposit rate ceilings 3. take no action to interfere with the DIDC consideration scheduled for March 22,1982 I would respectfully request that the Alabama made a part of Association's Mailgram to me March meeting and comment prior to the DIDC Bill Nichols, M.C. BN:cm Enclosure lic record ! ; I NE: 727-6490 4-022541S032 02/01/82 ICS IPMRNCZ CSP RSHB 2058341890 MGm TDRN MONTGOMERY AL 75 02•01 0103P EST ; , „P),... ^• , ( REPRESENTATIVE BILL NICHOLS 2417 RAYBURN HOUSE OFFICE BLDG wASHINGTON DC 20515 THE 315 mEmBER BANK OF THE ALABAMA BANKERS ASSOCIATION URGE YOU TO CONTACT DEPOSITORY INSTITUTIONS DEREGULATION cOMMITTEE TO CONTINUE MANDATE OF CONGRESS; 1)OPPOSE ANY LEGISLATION TO DELAY ACTION bY D IDC; 2)ASK mEmFERS OF DIDc TO EXERCISE THEIR CURRENT MANDATE TO DEREGULA1E DEPOSIT RATE CEILINGsl 3)TAKE NO ACTION TO INTERFERE wITH THE DIDC CONSIDERATIONS SCHEDULED FOR MARCH 22, 1982 C E AVINGER ALABAmA BANKERS ASSN 13:03 EST MGMCOmP https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis TO REPLY BY MAILGRAM, SEE REVERSE SIDE FOR WESTERN UNION'S TOLL - FREE PHONE NUMBERS https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • February 12, 1982 The honorable Frank R. Wolf house of Representatives Washington, D. C. 20515 Dear nr. Wolf: Thank you for your recent letter expressing concern over the federal government's Reduction in Force ("RIF") and its possible impact on employees of the Board of Governors of the Federal Reserve System. While the Board has generally followed the reduction procrams of the Executive Branch by reducing its own staf f, we do not utilize the federal government's RIF program. Rath er, the i;oard follows its own Personnel Placement Program ("PPP") in instances where employees arc displaced by changing pers onnel requirements arising from the revision, reduction, or elimination of a function or program. A total of 53 positions were abolished at the Board during 1981. All but 17 of these positions were vacant at the time of abolishment. In its concern for minimizing the impact on individual eLiployees, the Board achieved most of the reductions by retraining and reassigning employees to more critical positions. Only three employees were formally placed in the PPP. Of these, one employee, who was given substantial placement assistance by our Personnel Division, voluntarily separate d upon accepting another position within her commuting area. The remaining two employees chose to retire rather than accept reassignment and were separated at year-end. Fourteen other employees, who were identified in positions to be abolished, were assisted in securing other positions at the Board before it was necessary to formally place them in the PPP. We do not anticipate any additional displacement of employees during 1982. While the Board has increased its focus on filling positions from within, we have contacted many of the agencies experiencing significant cutbacks in an effort to assist in their outplacement activities. For your information, I am enclosing a listinL, of positions for which the Board is actively seeking external candidates. Again, we appreciate your interest and support. ETM:vcd (V-19) bcc: Mr. Weis Mr. Mulrenin Mrs. Mallardi (2) -/ Enclosure Sincerely, BOARD OF GOVERNOR• S • • • • •.0 OF THE OV G0Vi-/?• • • St- FEDERAL RESERVE SYSTEM : •• o WASHINGTON, D. C. 20551 ' it• co https://fraser.stlouisfed.org • Federal Reserve Bank of St. Louis ADDRESS OFFICIAL CORRESPONDENCE (.1 TO THE BOARD . RE.s • •... • February 3, 1982 Career Opportunities The following represents recurring opportunities at the Board. Candidates interested,in applying for these positions should send a completed SF-171 and/or resume to the Board of Governors of the Federa l Reserve System, Division of Personnel, 20th & C Streets, N.W., Stop 156, Washington, DC 20551. Title Grade Range (GS Equivalency) Contact Secretary/Clerk Typist/Stenographer FR 2-6 Kathy Warehime Research Assistant/Economist FR 7-14 Linda Inman Financial Analyst FR 7-13 Juanita Johnson Attorney FR 11-13 Brada Panther Programmers FR 7-13 Brada Panther An Equal Opportunity Employer • ction assigned Mr. Denkler ••••••• FRANK R. WOLF 10TH DISTRICT, VIPtGINIA PLEASE REsPOND TO ADDREss cHEcKED WASHINGTON OFFICE, ii Congre5s4 of tbe Elniteb AvIATION WATER RESOURCES POST OFFICE AND CIVIL SERVICE SUBCOMMITTEES: astington, )11).C. 20515 1651 OLD MEADOW RD. SuITE 115 MCLEAN, VIRGINIA (703) 714-1500 CIVIL SERVICE HUMAN REsOURCES 2.21o2 O tatef; 30ouse of illtpreoentatibefs CONSTITUENT SERVICES OFFICES, O COMMITTEES, PUBLIC WORKS AND TRANSPORTATION SUBCOMMITTEES: 414 CANNON BUILDING WAsHip•oToN. D.C. 20515 (202) 225-3136 O • January 26, 1982 POSTAI_ oPERATIONs MD SERVICES 19 E. MARKET ST. R00M 4B LEESBURG, VIRGINIA 22075 (703) 777-4422 Mr. Paul A. Volcker Chairman Federal Reserve System Twentieth St. and Const. Ave. N.W. Washington, D.C. 20551 Dear Mr. Volcker: I have become increasingly concerned about the degree of effort and commitment that is being made by a number of federal agencies to assist federal employees who face a reduction-in-force (RIF). As you know, a number of highly qualified and dedicated federal workers are now or will soon face a RIF. In a sense, these people are innocent victims of the dramatic change in government policy that this Administration has undertaken. Because of this fact, I believe that the government has a special obligation to provide the maximum amount of assistance and counseling to minimize the impact of any RIF and help place RIFed employees either within or outside of the government. Last August, the President asked his Cabinet to take it upon themselves to minimize the impact of RIFs on federal workers. While many departments and agencies have established out-placement programs and encouraged their employees to participate in the Voluntary Inter-agency Placement Program (VIPP), I am receiving reports that some agencies are not aggressively working to help RIFed workers. In fact, I am told that a few agencies have continued to hire new employees from outside government when qualified candidates who have been RIFed were available within the same agency. I want to make you aware of one office that is working especially hard to avoid RIFing its employees. The Office of Noise Abatement Control at the Environmental Protection Agency Headquarters has not been funded for Fiscal Year 1983. To date the agency has placed 57 out of 92 employees and has yet to issue the first RIF notice. The management of this office made a commitment to its employees to help them find new employment. The advantages of this effort to https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis RECYCLED FIBERS THIS STATIONERY PRINTED ON PAPER MADE WITH . • • • Mr. Paul A. Volcker Page 2 January 26, 1982 the government are several. First, the morale of the office is high. The employees do not feel abandoned and alone and they recognize that the RIF does not reflect on their worth as people. Second, there is a substantial savings to the government. For those employees who are placed, the government will save the expenses related to severance pay, payout of accrued annual leave and unemployment compensation. The withdrawal of funds from the federal retirement programs should be reduced. Third, the office is not paralyzed. It continues to function and provide a product even though it is being phased out. The key to the success of the work of this office lies in the commitment to help RIFed employees on the part of management. They have formed a task force to actively pursue positions for the office's workers. I am writing to appeal to you to make a personal commitment to do everything within your power to help RIFed employees at your agency to find suitable employment. You can set the tone and example within your agency. With an aggressive program of out-placement you can be satisfied that you have participated in reshaping the direction of government without imposing a hardship on skilled federal workers. In addition, I would appreciate it if you would provide me with a report on the efforts your agency is making to help place RIFed employees within the agency, elsewhere in the government and in the private sector. I would like to know what vacancies now exist within your agency and what types of positions are available. It would be helpful if this information could be available by February 15. I hope you agree with me that the government has an obligation to assist RIFed employees and that you will do as much as you can to help them find satisfying jobs. Thank you for your assistance. Frank R. W Member of ongress FRW/rp https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ( rfr_,2) • ••• ••0 GOvt •. • • •co . BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM •0 • -n WASHINGTON, D. C. 20551 •IN February 11, 1982 •••••• PAUL A. VOLCKER CHAIRMAN The Honorable Ron Paul The House of Representatives Washington, D. C. 20515 Dear Mr. Paul: Thank you for your recent letter in which you request a chronology of the changes in the monetary aggregates published by the Federal Reserve from 1970 to the present. The monetary aggregates that the Federal Reserve publishes have been changed several times since 1970. In January 1970, the Federal Reserve published a single monetary aggregate, representing assets that could be used directly as payments media. It included demand deposits at commercial banks other than interbank and U.S. government deposits, foreign demand balances at Federal Reserve banks, and currency outside the Treasury, Federal Reserve banks, and commercial banks. In April 1971, this measure was designated M1 to distinguish it from two broader monetary aggregates--M2 and M3-that were introduced at that time. These broader aggregates included other liquid assets not regarded as payments media themselves but convertible to media of exchange with varying degrees of ease. Specifically, M2 contained, in addition to Ml, commercial bank savings deposits and time deposits other than negotiable certificates of deposit issued in denominations of $100,000 or more (large CDs) by a panel of large commercial banks. The M3 measure included, in addition to M2, savings and time deposits at thrift institutions. Two additional monetary aggregates--M4 and M5--were established in April 1975 that incorporated negotiable large CDs--the only major commercial bank deposit liability until then not included in the monetary aggregates. M4 was defined as M2 plus large CDs while M5 was M3 plus large CDs. Beginning around the mid -1970s, the behavior of the narrow money stock was influenced by the growing availability of interest-bearing transaction accounts. Authority to offer negotiable-order-of-withdrawal (NOW) accounts was given first to depository institutions in New England beginning in 1974 and later extended to depository institutions in New York and New Jersey in 1978 and 1979, respectively. In addition, in late 1978, federally insured commercial https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • The Honorable Ron Paul • 2 banks and mutual savings banks nationwide were given regulatory approval to offer automatic transfer service (ATS) accounts. Because NOW and ATS accounts entered the monetary aggregates at the M2 level--in savings deposits--the introduction of these accounts tended to damp M1 growth as funds were shifted to them from demand deposits. In recognition of potential distortions to M1 at the time NOW accounts were authorized in New York State and ATS was authorized nationwide in late 1978, an additional measure of narrow money, called M1+, was introduced in December 1978. This aggregate included Ml, savings deposits at commercial banks, NOW accounts at banks and thrifts, credit union share drafts, and demand deposits at mutual savings banks. M1+ was viewed as a supplemental measure of transactions balances during the period of adjustment to ATS acocunts, as its behavior was not affected by shifts from demand deposits and ordinary passbook accounts at commercial banks to ATS accounts. A major redefinition of the monetary aggregates--described more fully in the attached article--was made in February 1980 as continued changes in the payments mechanism and in the character of certain financial assets reduced the usefulness of the old measure. Four newly defined monetary aggregates—MI-A, Ml-B, M2 and M3--replaced the old M1 through M5 measures, as well as M1+. In addition, a very broad measure of liquid assets--L--was adopted. Ml-A was very similar to the old M1 aggregate except that Ml-A excluded demand deposits held by foreign banks and official institutions. Ml-B included Ml-A and interest-earning checkable deposits at all depository institutions--NOW accounts, ATS accounts, and credit union share draft balances. Travelers' checks issued by nonbanks were included in Ml-A as of July, 1981, when adequate data for this component became available. The new M2 measure consists of Ml-B, savings and small denomination time deposits held at all depository institutions, money market mutual fund shares, and overnight and continuing contract repurchase agreements (RPs) issued by commercial banks and certain overnight Eurodollar deposits held by U.S. residents other than banks. Redefined M3 consists of the new M2 measure plus large denomination time deposits at all depository institutions (including negotiable CDs) and term RPs issued by commercial banks and thrift institutions. Finally, the very broad measure of liquid assets, L, contains, in addition to M3, other Eurodollar holdings of nonbank U.S. residents, savings bonds, bankers acceptances, commercial paper, and marketable liquid Treasury obligations. Due to lags in data availability, L cannot be calculated on a timely basis. In 1981, the Federal Reserve published a "shift-adjusted" measure of Ml-B in recognition of newly opened NOW accounts, authorized nationwide at the end of 1980. An article describing the construction of shift-adjusted Ml-B, as well as benchmark and seasonal revisions made to the money stock in 1981, is enclosed. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis . • .. •• • The Honorable Ron Paul -- 3 In light of evidence that the public's adjustment to nationwide NOWs was largely complete by year end 1981, the Federal Reserve ceased calculating a shift-adjusted measure as of January 1982. At the same time, the Ml-A measure--which by that time excluded over $78 billion in transaction deposits-was dropped and Ml-B was redesignated Ml. Enclosed are tables indicating the monthly, quarterly and annual growth rates of the new aggregates from 1959 through 1981. I hope this information is useful to you. Sincerely, Enclosures https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Action assignel Mr. Yichline • RON PAUL 22ND DISTRICT, TEXAS - • Concire555 of the alniteb Otate5 ROOM 1234 CE BUILDING LONGWORTH HOUSE OFFI (202) 225-5951 ji)ouge of iltprettntatibtl KING, COMMITTEE ON BAN AFFAIRS AN URB AND E, FINANC tElagbington, 13.C. 20515 RANKING REPUBLICAN L OVERSIGHT SUBCOMMITTEE ON GENERA January 21, 1982 MEMBER, UNITED STATES GOLD POLICY COMMIssion https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis CONSTITUENT SERVICE CENTERS: 1110 NASA ROAD 1, SUITE 100 HOUSTON, TEXAS 77058 (713) 486-8583 SUITE 307 6711 BELLFORT AVENUE, 87 770 AS TEX HOUSTON, (713) 226-4636 Y, SUITE 105 2116 THOMPSON HIGHWA RICHMOND, TEXAS 77469 (713) 226-4568 OYSTER CREEK DRIVE i 77566 LAKE JACKSON. TEXAS 3961 297(713) : cONORESSIONAL HOTLINES 1550 2373) HOUSTON:(7i 297-0202 LAKE JACKSON:(713) A. Volcker The Honorable Paul Chairman the Federal Board of Governors of Reserve System tution Avenue, N.W. 20th Street & Consti 551 Washington, D.C. 20 Dear Mr. Volcker: f as possible, a brie on so as , ve ha to I would like stock the changes in money of gy lo no ro ch gh ou but thor from 1970 the Federal Reserve by ed at ul lc ca es aggregat to the present. ription of ould include a desc sh gy lo no ro ch a e Such in 1970, plus all th ed at ul lc ca es at eg gr nce all the ag finitional changes si de d an s, on ti di ad deletions, then. planation of why ex an e ud cl in to If you would wish so. was made, please do each of the changes cooperation. Thank you for your Sincerely, ,117 • Ron Paul Member of Congress RP/jr :""n • •• 0F.G . 0 .1;••. 00* https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis -• • • .•12.'X;117R - ?.s.•• ••...•• Paul A. Volcker February 8, 1982 Mr. Chairman: Enclosed is the note you requested which reviews, in summary form, my serious concerns about S. 1080. Enclosure • • IMPACT OF S. 1080 ON THE FEDERAL RESERVE 1080 establishes extensive and complex rulemaking procedures, gives to the Executive branch the right to supervise and review the process of establishing major rules, and subjects emergency actions taken for good cause to retroactive review in accordance with these procedures. Executive oversight is inconsistent with the monetary policy role of the Federal Reserve, and the rulemaking requirement would seriously hamper the implementation of monetary policy. Problems also arise in the supervision of safety and soundness, and bank holding company and interest rate deregulation. Executive Oversight Should Not Apply To the Federal Reserve --For well known reasons, Congress made the decision at the inception of the Federal Reserve to insulate the money-creation and credit-regulation processes from the Executive functions of financing the government. Long experience had demonstrated--and subsequent experience confirms--that the separation of these two functions makes a vital contribution to a more stable and effective domestic monetary system. --Monetary policy is carried out, in part, through rules affecting reserve requirements, discount window operations, margin credit, and interest on deposits. These rules would be subject to S. 1030, but the effective conduct of monetary policy, and the related ability to fulfill the role of lender of last resort, requires a high degree of discretion and a minimum https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • -2- amount of rigidity in the form of complex procedural rules. S. 1080 would prevent independent, timely and effective action that is responsive to quickly changing market situations. --There is no need to apply S. 1080 to the macroeconomic policymaking involved in monetary policy, and in fact it does not apply to the formulation of budgetary or other fiscal policies. Congress has established procedures to regulate economic policy formulation; and in the case of monetary policy it has established elaborate procedures for review and oversight. Effect on Safety and Soundness The Federal Reserve and other agencies have major responsibilities for the safety and soundness of banking institutions. In order to carry out this role, they must be able to act quickly for good cause in emergency situations. The present thrift industry problems facing the Federal Deposit Insurance Corporation and the Federal Home Loan Bank Board illustrate the situation in which banking regulatory agencies must have the flexibility to take emergency action in the interest of individual financial institutions and in the interest of avoiding repercussions on the economic system generally. S. 1080 would seriously hamper the ability of banking regulatory agencies to react promptly and effectively. Banking Deregulation The Federal Reserve has authority under the Bank Holding Company Act to allow bank holding companies to engage in additional activities. Application of S. 1080 to this process would substantially delay consideration of new activities for bank holding companies and subject proposed rules to establish new activities to years of adminstrative procedures and judicial review. A similar situation would apply to the deposit interest ceiling deregulatory process established by Congress through the DIDC. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • February 10, 1982 The Honorable George Bush President of the United States Senate Washington, D. C. 20510 Dear Mr. Vice President: The Board is pleased to submit its Monetary Policy Report to the Congress pursuant to the Full Employment and Balanced Growth Act of 1978. Sincerely, SINut "'r Enclosure DJW:vcd bcc: Mrs. Mallardi (2) Thomas P. O'Neill, Jr. Identical letter sent to The Honorable Speaker of the House of Representatives (w/two copies of report) https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • February 10, 1982 The Honorable Howard H. Baker, Jr. Majority Leader United States Senate viashington, D. C. 20510 Dear Senator Baker: The Board of Governors of the Federal Reserve System is pleased to forward to you its Monetary Policy Report to the Congress pursuant to the Full Employment and Balanced Growth Act of 1978. Sincerely, .14 1• . Enclosure DJW:vcd bcc: Mrs. Mallardi (2) IDENTICAL LETTERS SENT TO THOSE ON ATTACHED LIST "EL • • Senate Howard H. Baker, Jr. Majority Leader (S-233 Capitol Bldg.) C. lyrd Mihority LcauL.r (S-208 Capitol Bldg.) Ted Stevens Majority Whip (S-229 Capitol Bldg.) Alan Cranston Democratic Whip (S-148 Capitol Bldg.) Strom Thurmond President Pro Tempore (209 RSOB) Jake Garn, Chairman Committee on Banking, Housing and Urban Affairs (5300 DSOB) Harrison A. Williams Ranking Minority Member Committee on Banking, Housing and Urban Affairs (5300 DSOB) Robert Dole, Chairman Committee on Finance (2227 DS0b) Russell B. Long Ranking Minority Member Committee on Finance (2227 DSOB) Pete V. Domenici, Chairman Committee on the Budget (20'k Carroll Arms Annex) Ernest F. Hollings RanKing Minority Member Committee on the budget (20i Carroll Arms Annex) W. Jepsen, Vice Chairman Roger Joint Economic Committee (G-133 DSOB) Lloyd Bentsen Senate Ranking Minority Member Joint Economic Committee (G-133 DSOB) https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Hous_e • • Jim Wright Majority Leader (H-148 Capitol Lildg.) Rouert H. Michel 1.edJer (H-2.3 Capitol Bldg.) Thomas S. Foley Majority Whip (H-107 Capitol Bldg.) Trent Lott Republican Whip (--;;41111 RHOB) Fernand J. St Germain, Chairman Conunittee on Banking, Finance and Urban Affairs (2129 RHOB) J. William Stanton Ranking Minority Member Committee on Banking, Finance and Urban Affairs (2129 RHOB) James R. Jones, Chairman Committee on the Budget (214 HOB Annex I) Delbert L. Latta Ranking Minority Member Committee on the Budget (214 HOB Annex I) Henry S. Reuss, Chairman Joint Economic Committee (G-133 DSOB) Clarence J. Brown House Ranking Minority Member Joint Economic Committee (G-133 DSOB) Walter E. Fauntroy, Chairman Subcommittee on Domestic Monetary Policy of House Banking Committee (H2-179 HOB Annex II) Dan Rostenkowski, Chairman Committee on Ways and Means (1102 LHOB) Barber B. Conable Ranking Minority Member Committee on Ways and Means (1102 LHOB) Benjamin S. Rosenthal, Chairman Subcommittee on Commerce, Consumer and Monetary Affairs of House Gov't. Opers. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis (B-377 RHOB) • • BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551 February 8, 1982 PAUL A. VOLCKER CHAIRMAN The Honorable Thomas J. Downey House of Representatives 20515 Washington, D.C. Dear Mr. Downey: I want to thank you for your letter of January 6 concerning the appointment to the Federal Reserve Board of a representative of small business. As you state, the law provides for appointments to the Board to be made by the President--not by the Federal Reserve Board--with the advice and consent of the Senate. In this regard, there are certain statutory guidelines that the President must follow in appointing Board members. For example, only one Board member may be selected to serve at one time from any one of the 12 Federal Reserve districts. In addition, the President must give due regard to a fair representation of the financial, agricultural, industrial, and commercial interests, and geographical divisions of the country in appointing Board members. I appreciate your concern and I do think it important that existing law be faithfully observed and that Board membership reflect a variety of backgrounds and geographic representation. However, in my judgment it would not be advisable to narrow the representational requirements in the Act any further. I believe that the President and the Senate should not be overly restricted in selecting the best possible man or woman to serve on the Federal Reserve Board. Sincerely, AFC:NS:DJW:pjt (#V-4) bcc: Mrs. Mallardi (2) https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis -VW Response will be preparei bytng. Liaison Office ( THOMAS J. DOWNEY 2P6D Dis-roncr, NEW YORK till LONGWORTH HOUSE OFFICE BUILDING' TELEPHONE (202) 225-3335 • comMITTEE ON WAYS AND MEANS Congroz of tbe tittiteb tatecs SELECT COMMITTEE ON AGING DISTRICT OFFICE: 4 UDALL ROAD Warr I sup. NEW YoRK 11795 TE.L.EpHoNE:(516) 66143777 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SUBCOM ITTEES: TRADE PUBLIC ASSISTANCE AND UNEMPLOYMENT COMPENSATION Powse of NtepretientatiW ./11: asAingtott, ri.C. 20515 January 6, 1981 Honorable Paul A. Volcker Chairman The Board of Governors The Federal Reserve System 20th Street and Constitution Avenue, Northwest 20551 Washington, D.C. tC:) CO C._ r\.) Dear Chairman Volcker: -••••• - As you know, the economic difficulties of recent months have created strong support in the Congress for the addition of a representative of small business to the Board of Governors. My purpose in writing is simply to request your position on this matter recognizing fully that the prerogative for making appointments lies with the President. Upon being approached for my support I was surprised to find that this idea had received little cinsideration in the past despite the direct affect the Board's decisions have on small businesses. I do not believe that small bus ness is attempting to counter stated policy with this effort as much as it is attempting to ensure appropriate discussions of its relationship to monetary policy before decisions are made. I respect the Federal Reserve System's independence completely, but before adding my voice to those calling for a mandate on this I had hoped to have the benefit of your views. Thank you very much in advance for any comments you would care to provide. Sincerely, THOMAS J. DOWNE Member of Congr Iss TJD:cb • • February 5, lqA2 :he 7onorable targaret 4. ::eckler 7ouse of lepresentatives 'Teshington, n.c. 20515 near 'Irs. lecklers As you know, the rederal '4aserve loes not ordinarily iisclose its relationships with private depository iqstitutions. Nowever, in response to your request for an analysis of the concerns that Ir. Robert ipiller recently expressed regarding access of The 2oston Five Cents Savings lank to the Federal leserve discount window, a staff review of the record in that respect is enclosed. The record demonstrates that the Federal 7eserve lank of 3oston, consistent with the Monetary Control Act and the .oard's related policy :luidelines, has offered credit to The 3oston Five Cents 7,avings lank on the sane terms and conditions available to commercial hanks. Indeed, since Aueust of last year, twenty-six thrift institutions have participated in the extended credit program available to depository institutions subject to protracted liquidity strains. These institutions have received loans under the !Yroeram totaling '1622 million. The volume of borrowing has eoparently heen limited by the easing in market conditions that developed over the latter months of last year Ohich tended to moderate liquidity pressures on depository institutions and the Federal 'iome Loan 1ank System. I can assure you that The lloeton Five Cents Isvings l.ank has rr.ceived access to the discount window on the some terms as nny other similarly situated depository institution, thrift or commercial hank. Sincerely, SZPaml A. YD,IclieL bccts (07-24) Mr. Struble Woopy Mrs. Mallartii (2) Snclosure https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis =caning) • • Review of Discount Window Contact with the Boston Five Cents Savings Bank Mr. Spiller of the Boston Five Cents Savings Bank suggests that the Federal Reserve Bank of Boston has, contrary to the Monetary Control Act, administered the discount window in a way that discriminates against thrift institutions, particularly those that are not members of the Home Loan Bank System. His views appear to reflect a misconception of the basis on which access to the discount window is available to member commercial banks as well as to other institutions. Federal Reserve credit is provided to eligible borrowers under two broad programs, both of which are designed essentially to ameliorate strains on the borrower's liquidity. Adjustment credit is available to meet temporary needs for funds or to cushion briefly more persistent fund outflows while an orderly adjustment is being made in the borrower's assets or other liabilities. Extended credit is provided when more protracted strains on liquidity positions appear to be developing with little prospect for correction over the near term. Reasons for adjustment borrowing that are considered appropriate generally include: loan demands the temporary accommodation of unexpected increases in the coverage of sudden, unanticipated deposit outflows; and the need to counter temporary and unexpected difficulties in obtaining funds from the money market. are: Among the reasons that are considered inappropriate borrowing to finance lending in the federal funds market; borrowing to acquire securities or money market paper at a profit - and borrowing to refinance outstanding indebtedness with other lenders at a lower interest cost. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • f • -2- The Boston Five's initial request to borrow from the Federal Reserve came in the early fall of 1980, not long after the Board's Regulation A (which governs access to the discount window) had been revised (as required by the Monetary Control Act) to allow for borrowing by nonmember depository institutions on the same terms and conditions as borrowing by member banks. Because the bank was a net supplier of funds to the money market at the time, it was evident that any credit it borrowed from the Federal Reserve Bank was likely to be reloaned in the money market at a profit, or be used to repay outstanding more costly debt of other lenders. Since such uses would have run directly counter to our guidelines for adjustment credit borrowing, this initial Boston Five request was turned down. Officials at the Bank were advised, however, that if their institu- tion's liquidity position should subsequently come under pressure, adjustment credit assistance would be readily available. Starting in May 1981, the Boston Five did begin to experience occasional unanticipated strains on its liquidity and, from time to time thereafter, it obtained adjustment credit from the Boston Reserve Bank at the basic discount rate. During the early fall, the duration of the Bank's borrowing began to spill over into successive statement weeks. Because the Boston Five is a large institution with total deposits in excess of $500 million, it therefore became subject (in these spillover weeks) to the 3 percent discount rate surcharge then applicable to large institutions--where they draw on the discount window in successive statement weeks or in more than 4 of the most recent 13 statement weeks. After early October, the Boston Five avoided borrowing at the surcharge rate. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The Boston Five's • • • -3 1981 borrowing record shows 18 individual adjustment credit loans totaling about $83 million. In late summer, after the Federal Reserve announced that it was establishing discount rates on extended credit to meet liquidity strains at savings and other institutions with longer-term assets, officials at the Roston Five expressed interest in obtaining such credit. At that time the program provided credit to eligible borrowers for the first 60 days at the then prevailing basic discount rate of 14 percent (which was appreciably below the prevailing charges on borrowings from private money market lenders). For borrowings under the program that extended beyond 60 days (to 150 days), the charge during the additional period was 15 percent; and for borrowings that extended beyond 150 days, the charge was increased to 16 percent--in all cases below the 17 percent overall rate then applicable to adjustment borrowings that were subject to the surcharge. The extended credit program for depository institutions with longer-term assets was established to alleviate problems that are very different from those addressed by the adjustment credit program. Extended lending is designed essentially to assist firms facing protracted strains on liquidity arising from net fund outflows. The immediate credit needs of institutions confronted with such liquidity strains are often sizable, and the likely timing of repayments on loans arranged to cope with these strains is uncertain. Since the volume of high powered reserves that might be released through extended credit lending appeared to be potentially very large at the time the program began to be implemented last summer, the Federal https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • -4- Reserve established guidelines designed to assure that credit would be advanced only when it was clearly needed and would be repaid as soon as alternative sources of funds might again become available. To assure that these guidelines were effective, prospective borrowers were required, among other things, to continue seeking funds from usual market sources to the extent funds could be reasonably obtained. In addition, they were expected, while borrowing from the Federal Reserve, to forego increases in investments and to limit increases in loans to already outstanding commitments plus whatever minimum volume of expanded lending might be required to retain a competitive foothold in their local credit market. Users of extended credit were also required to provide more frequent and complete reporting on their current and prospective cash positions. When the Boston Five first sought credit under this extended lending program, it clearly was not being confronted with severe liquidity pressures. Nevertheless, the Bank did provide evidence suggesting that it might experience significantly larger fourth quarter drains on its liquidity reserves than had previously been anticipated, and that reflows of funds to cover this need might not be forthcoming from usual sources for some weeks ahead. In light of this evidence the Boston Reserve Bank indicated that it was prepared to enter into an extended credit agreement with the Boston Five to help cover its relatively protracted credit needs should they in fact arise. Because the general objective of the extended lending program is to meet different and more protracted needs than the regular adiustment credit program in which the Boston Five had previously been involved,arrangements for making these longer-term loans consistent with the guidelines set down by the Board had to be worked out. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • • —5— A feature of such arrangements to which management of the Boston Five has registered special objection is the requirement that prospective users of the program draw on alternative sources of funds, to the extent they are reasonably available, before coming to the window. Application of this guideline to savings banks and savings and loan associations that are members of the Federal Home Loan Bank System means that they are required to seek assistance from their FHL Bank before turning to the Federal Reserve. In the early fall of 1981, at the request of the Home Loan Bank System, because of general pressure on the liquidity of the Home Loan Banks, the Federal Reserve and the FHL Banks agreed to share in meeting the added credit needs of institutions that were members of the FHLB System. Borrowers like the Boston Five that are not members of the FHLB System are also expected to maintain their access to alternative sources of funds, such as bank lines of credit, to the extent this can be reasonably accomplished. Commercial banks--whether members or not--are subject to the same guideline. The Boston Five posed a special problem in this regard because it had apparently cancelled the last of its regular credit lines with commercial banks sometime after passage of the Monetary Control Act on the presumption that any unexpected needs for credit in the future could be fully accommodated instead through borrowing at the Federal Reserve discount window. Staff at the Boston Reserve Bank questioned the wisdom of this decision from the start, suggesting that any prudently managed depository institution should maintain regular back-up credit lines with a special industry lender or private lenders. It is clearly a sound banking practice for institutions without a special industry lender to maintain some external source of liquidity. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • • When the Boston Five recently requested extended credit, the Boston Federal Reserve, therefore, indicated that while it was prepared to cover most of the Bank's projected need, the Boston Five should seek to reestablish credit lines with commercial banks to cover a part of it. Staff at the Boston Fed recognized that it might be difficult to reestablish bank credit lines after they had been allowed to lapse. The staff felt, however, that the Boston Five should at least make the effort to do so since other users of extended credit were being required to place reasonable reliance on alternative sources of funds before coming to the Federal Reserve. The Reserve Bank was prepared to withdraw this requirement if the credit was not reasonably available, and its position in this regard was carefully explained in meetings with Boston Five officials. However, the Boston Five apparently never attempted to determine the availability and cost of such alternative sources. Perhaps the misunderstanding that has arisen between Mr. Spiller and the Boston Reserve Bank--as to whether the Boston Five has been subject to different treatment than member commercial banks--is attributable to a failure to draw a clear distinction between the adjustment and extended credit programs. In its use of adjustment credit the Boston Five has been asked to operate within the same administrative guidelines as member banks. And in its request for access to extended credit, it has been asked to work out the same type of operating agreement and adhere to the same operating guideline as other users of that program throughout the country. Mr. Spiller also objected to the provision in the letter of understanding which the Boston Reserve Bank has requested him to sign (in https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis . • - • . -7- order to qualify for extended credit) that would permit the Reserve Bank, upon written notice, to modify the terms of the agreement on which such credit would be provided. It is standard practice for regulatory author- ities to include such language in lending agreements in order to gain protection in the event of a deteriorating financial situation. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Federal Reserve Board Staff January 13, 1982 Response being preparel by Bill Maloni 111 11ARGARET M. HECKLER U.S. REPRESENTATIVE 10TH DISTRICT, MASSACHUSETTS 111 Fre4 Struble JOINT ECONOMIC COMMITTEE INVESTMENT, JOBS AND PRICES SUBCOM M TTEE AGRICULTURE AND TRANSPORTATION SUBCOMMITTEE DISTRICT OFFICES: VETERANS' AFFAIRS COMMITTEE ONE WASHINGTON STREET WELLESLEY, MASSACHUSETTS 02181 EDUCATION, TRAINING AND EMPLOYMENT SUBCOMMITTEE HOSPITALS AND H EALTH CARE SUBCOMMITTEE 235-3350 30 LIBERTY LANE TAUNTON, M A SSACHUSETTS 02780 824-8611 Congre55 of tbe tiniteb - tateti *muse of Ilepressentatibto POST OFFICE BUILDING FALL RIVER, MASSACHUSETTS 02720 679-2109 bEiusbington,111C. 20515 SCIENCE AND TECHNOLOGY COMMITTEE SCIENCE, RESEARCH AND TECHNOLOGY StmammmmE CONGRESSWOMEN'S CAUCUS. Co-CHAin February 2, 1982 C The Honorable Paul A. Volcker Chairman Board of Governors of the Federal Reserve System Washington, D.C. 20551 -n rrt Dear Chairman Volcker: It has recently come to my attention that there is some uncertainty l among thrift institutions on the question of equal access to the Federa of Reserve's Discount Window, as provided for by the Monetary Control Act 1980. 1iT) n Robert J. Spiller, President and Chief Executive Officer of the Bosto t Five Cent Savings Bank of Boston, Massachusetts, has apparently sough d to provide clarification from the Federal Reserve of the criteria establishe with for this access by non-member depository institutions. He is concerned is being what he believes are inequities in the way the Monetary Control Act has administered, and in addition to contacting the Federal Reserve he contacted me. I would greatly appreciate it if you would provide me with some backSpiller's ground material and other information that will help me address Mr. concerns about the Discount Window. Thank you for your attention in this matter. Sincerely, M. HECKLER MARGAR MEMBER OF CONGRESS Wilh:prq https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MADE WITH RECYCLED FIBERS THIS STATIONERY PRINTED ON PAPER *'„ez„ • • • February 4, 1982 The honorable Shirley Chisholm house of Representatives Washington, D.C. 20515 Dear Ms. Chisholm: Thank you for your recent letter suggesting that the Board use its good offices to arrange a meeting between commercial banks and National Peoples Action to discuss an "Affordable Line of Credit" for neighborhood groups. Last year, the Board was asked by Mrs. Gale Cincotta of National Peoples Action to sponsor such a meeting and although members of the Board are sympathetic to the plight of home buyers, small businessmen and farmers, we felt it would be inappropriate to convene the type meeting requested. Since the Federal Reserve is the primary regulator of the nation's large banks or their holding companies, a meeting held under Board auspices would have overtones of pressure to allocate credit to particular segments of the economy. There was also a concern that a meeting of the type proposed might raise anti-trust questions. Mrs. Cinootta subsequently asked the Board's Consumer Aavisory Council to sponsor such a meeting and the Council discusseu the request for more than two hours at its meeting last week. Many members of the Council felt that the Council lacked authoxity to sponsor such a meeting but they adopted a motion to place on the next agenda a discussion of the implications under the Community Reinvestment Act of the current economic environment. The Council will invite written submissions from a broad spectrum of community organizations. The Council's next meeting is scheduled for April 28-29. Sincerely, Saul A. 4 ax JRC:pjt (#V-6) bcc: Mr. Coyne Mrs. Mallardi (2) \/// Identical ltr. also sent to: https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Cong. Biaggi, Richmond, Weiss, Bingham, Solarz, Peyser, & Schumer Action assigned ,Toe Coyne Ila https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Congre55 of tbe Einiteb tateti jipuitofAepre5entatibess ico7 /14 1 .r Eastington,0.e. 20515 January 14, 1982 ,‘" The Honorable Paul A. Volcker Chairman Federal Reserve Board Twentieth Street and Constitution Avenue, NW Washington, D.C. 20551 Dear Chairman Volcker: High interest rates are having a devastating impact on New York City's neighborhoods. Thousands of our constituents cannot afford new homes or loans to improve their present homes. Apartment buildings in our districts have been abandoned because property owners cannot afford loans to upgrade their buildings. Neighborhood preservation groups have had to cut back their rehabilitation efforts because of the high cost of money. Small businesses have reduced their operations or closed down for lack of affordable capital. In short, New York City's neighborhoods are hurting, and our colleagues from other states inform us conditions are no different in the neighborhoods of their cities. We understand the tight money policy of the Federal Reserve Board is intended to reduce inflation. We believe, however, that the Federal Reserve should not ignore the impact of its policy on the neighborhoods of our country. We commend the Federal Reserve for taking part in public meetings around the country to hear testimony from neighborhood residents on the impact of high interest rates on their communities. Now that the problems are being heard, it is time to develop solutions. National Peoples Action has asked the Federal Reserve to convene a meeting of twenty leading commercial banks to discuss creating an affordable line of credit for housing, small business, and small farmers. This strikes us as a good next step. We understand members of the Federal Reserve Board felt it inappropriate to convene such a meeting, and suggested that one of the banking associations sponsor a meeting which the Federal Reserve would attend. Apparently the banking associations approached by National Peoples Action have also been reluctant to sponsor a meeting. 'Moo https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • • Honorable Paul A. Volcker January 14, 1982 -2- It seems to us valuable time is being wasted. Surely some way all parties. can be found to arrange a meeting that would be acceptable to s to We strongly urge the Federal Reserve Board to use its good office s break the logjam and bring about a meeting between National People ng an Action and the commercial banks to begin discussions on creati affordable line of credit. Sincerely, . Shirley Ch Bin ham olm a f ' 4044.44 • •01 Pe er Peyser arles Schumer • . • •co(.3" E3OARO OF (30VERNE.MS.) - '4, • t-1 / 2\ "1" •C „ • Or THE FEDERAL RESERVE SYSTEM /-• • WASHINGTON, a C. 20561 •.(<6 ••`/?Ai_Rest.• • PAUL A. VOLCKER • February 3, 1932 CHAiRMAN The Honorable John H. Glenn United States Senate Washington, D. C. 20510 Dear Senator Glenn: I am pleased to respond to your request of January 25, 1982, for additional views regarding the Executive oversight provisions of the Regulatory Reform Act (S. 1080). I welcome your amendment, applicable to independent agencies, requiring that Executive Branch reviews of major rules be completed within 120 days and limiting Presidential action to nonbinding advisory recommendations. Nevertheless, I remain very seriously concerned about the impact of this legislation both in rigidifying the flexibility needed to conduct monetary policy, and in changing the long-standing division of functions between the Federal Reserve and the Executive Branch of the government in this area. In its effort to improve regulatory procedures S. 1080 establishes extensive and complex rulemaking procedures, gives to the Executive Branch the right to establish additional procedures for the implementation of "major rules," and subjects even emergency actions to retroactive review in accordance with these preestablished procedures. Ther2 are numerous monetary policy actions that would fall within the scope oE S. 1080. For example, monetary policy is carried out, in part, under rules made in connection with the operation of the Federal Reserve's discount window, through which loans are made to banks and thrifts for short-term, seasonal and extended borrowing needs, and through which the Federal Reserve carries out its functions as lender of last resort. Another example can be illustrated by rules establishing reserve requirements, a basic tool for influencing the level of the money supply and the availability of credit. Other examples of monetary policy actions include rules relating to margin credit and interest on deposits. The very fact that the rulemaking involved in carrying out these functions would be subject to the extensive and elaborate procedural requirements of the bill gives me cause for great concern. The proper conduct of monetary policy and the ability to fulfill the role of lender of last resort requires a high degree of discretion and a minimum amount of rigidity in the form of complex procedural rules that would hamstring independent, timely and effective action that is responsive to the quickly changing needs of the economy. I very much doubt whether the changes • in regulatory procedures contained in S. 1080 were ever intended to apply to the formulation of monetary policy. The provisions on Executive oversight, even to the extent they are made only advisory, compound the problems described above of https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • Os- • The Honorable John H. Glenn • -2- procedural delays in the taking and implementing oC decisions that must be carried out immediately in order to have their proper market impact, while, at the same time, raising the fundamental question of the appropriate division of responsibilities for the carrying out of monetary policy. Congress made the decision at the inception of the Federal Reserve in 1913 to establish it as an independent entity in order to emphasize the insulation of the credit regulation process from the function of financing the government. Long experience had demonstrated--and subsequent experience continues to demonstrate--that the separation of these two functions makes a vital contribution to a more stable and effective domestic monetary system. S. 1080, as it now stands, would undermine these basic principles that have guided the formulation of monetary policy. I believe that this is an inadvertent result from a bill designed with the intention of improving regulatory procedures but not aimed at changing fundamental relationships that have been established by Congress and have become an essential part of the fabric of economic policy formulation. For all of the reasons I have described I would like to suggest an additional amendment that excludes the Federal Reserve's monetary policy functions from the scope of S. 1080. We have been in touch with the Office of Manag-ment ana Budget on this amendment. They concur in my view that the provisions of S. 1080 were not intended to cover monetary policy and they have informed us that the Administration will support an amendment removing monetary policy as formulated by the Federal Reserve Board from the scope of the bill. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Sincerely, ••• WILLIAMILL.V. ROTH, JR DEL., CHAIRMAN EAGLETON,WA PERCY, THOMAS CIHARLES F.JACKSON, H. ST:VENS, ALA`,K M. HENRY TEDCHARLES FLA. MC C. MATI-'11,3, LAWTONNUNN.CHILES, JR., MD SAM MO. GA. DANFORTH. JOHN C. JOHN GLENN,TENN. OHIO S. COHEN. WIN= WILLIAMDURENBERGER, MINN. SASSER, JIM DAVID GA.N H. CARL ARK. DAVIDLEVIN, MACK MA7TINC.LY, PRYOR,MICH. WARREN B. RUDM"kN, JOAN M. MC ENTEE, STAFF DIRECTOR CHARLES H.MINN. PERCY, ILL..JOHNCHAIRMAN GLE.NN, OHIO WASH. DURENBERGER, VID HENRYLEVIN, M. JACKSON, S. COHEN,GA.MAINE CARL "OMACKLLIAMMATTINGLY, MICH. WILLIAMANDA. STRAUSS STAFF DIRECTOR CHIEF COUNSEL •• • /Unita% Zfatez -Senate COM M ITTEE ON GOVERNMENTAL AFFAIRS SUBCOM MITTEE ON ENERGY. NUCLEAR PROLIFERATION AND GOVERNMENT PROCESSES WASHINGTON, D.C. 20510 t(( January 25, 1982 The Honorable Paul A. Volcker Chairman The Federal Reserve System Federal Reserve Building Washington, D.C. 20551 ••) .77 Dear Mr. Chairman: Last fall you wrote Chairman Roth expressing your agency's concerns regarding the executive oversight provisions of the Regulatory Reform Act (S. 1080). As you may be aware, that legislation is expected to be considered by the Senate in early February. Recognizing the serious intrusion on the independence of agencies such as your own that these provisions might cause, I introduced an amendment to the bill to mitigate this impact when S. 1080 was taken up by the Governmental Affairs Committee. My amendment was adopted unanimously, but for parliamentary reasons, it will be necessary for me to reintroduce such an amendment when S. 1080 comes before the Senate next month. In conjunction with Senate consideration of the bill, I would greatly appreciate your providing me with any further views you may have concerning the executive oversight provisions of S. 1080, with reference, specifically, to the text of the bill to be taken up for Senate floor action (the "consensus" bill, technically referred to as printed amendment 640). In addition, I would be most grateful if you would provide two or three examples of major rulemaking activity by your agency where independence of agency decision-making might be adversely affected by Presidential action pursuant to the authority conferred by S. 1080. I would also be most interested in receiving your views on the effect of section 8 of the bill on this subject. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis N. .. Gr. • • • . The Honorable Paul A. Volcker January 25, 1982 Page Two Inasmuch as Senate action on S. 1080 is expected within the next two weeks, I would request that you provide the foregoing information at the earliest feasible time. Best regards. Sincerely John Glenn JG/lst Enclosure https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • • GOVt • BOARD OF GOVERNORS OF THE • co •o FEDERAL RESERVE SYSTEM • HI WASHINGTON, D. C. 20551 • ▪ RE.s .• February 3, 1982 PAUL A. VOLCKER CHAIRMAN The Honorable Jake Garn Chairman Committee on Banking, Housing and Urban Affairs United States Senate 20510 Washington, D.C. Dear Chairman Garn: Thank you for your letter of December 7, 1981, inquiring about the concerns of Mr. F.H. Stringham over the Federal Reserve's charges for currency and coin transportation. The Monetary Control Act (Title I, P.L. 96-221) ("Act") provides that the Federal Reserve is required to establish fee schedules for its services. The Act enumerates the services for which fees shall be provided, including Federal Reserve currency and coin services. During the Congressional debate on the Act, Senator Proxmire indicated that the pricing of coin and currency services "is intended to cover services such as coin wrapping, transportation and the internal operating activities associated with the provision of these services. No charges are required for services of a governmental nature, such as the disbursement and receipt of new or fit coin and currency." (126 Cong. Rec. 3168, March 7, 1980) It is clear from the legislative history of the Act that Congress intended that the Federal Reserve charge for the costs of transporting coin and currency. In developing its fee schedule for that service, the Board recognized that charging outlying banks for full cost of transportation would be inconsistent with the principle established by the Act that an adequate level of services be made available nationwide. As a result, the Federal Reserve transportation fee schedule is composed of a uniform national fee per bag of currency or coin and a per-stop fee generally related to the distance involved and contains a temporary ceiling on the per-stop portion. This approach was adopted in order to ameliorate sudden adverse cost impacts on outlying institutions and to allow these institutions some additional time to adjust to tne new charges. This ceiling, however, is scheduled to remain in effect for a period not to exceed two years. In the interim, a variety of methods of reducing transportation costs to high-cost locations will be explored by the Reserve Banks. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • The Honorable Jake Garn Page Two Because the Board recognizes the concern expressed by Mr. Stringham, we have proceeded cautiously and with a degree of protection against unanticipated, large, cost impacts. however, any decision to eliminate the requirement for imposing charges for coin and currency transportation would have to be made by Congress. Sincerely, GTS:LEG:pjt (#V-393) bcc: Gov. Gramley Gil Schwartz Mr. Meeder Mr. Hamilton Mrs. Mallardi (2) Legal Records (2) https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Mr. John Balles, FRB--San Francisco Mr. Grant Holman, FRB--Salt Lake City fr JOHN Towrn. Trx. osom mrim. FA. Action assigned Mr. Allison • JAR! DARK UTAIL, CHAIRMAN IIARRtr.ON A. Wit LLAMA. JR.. N.J. WILLIAM L. Arkin rnoNia. COLO. RICNAnn O. toonn, 1/40. ALIFONSE M. D'AmATO. N.Y. n.l. JOHN H. CHAP r HARRISON SCHMITT. N. PAEX. IAM FROYMinr. nnti4Tori, mn mratir. [Foot r• rAut. nAIMIANI MD. CI twat °pintos J. t•ono. COHN. ALAN J. DIxoN. ILL. M. DANNY WALL, STAFF nInIECTOR STAPP' runccion ANO C.OUNSCL HOWARD A. MCIPELL. MINORITY https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Zfalcz Zenale COM M UTTLE ON DANK ING. HOUSING. AND URBAN AFFAIRS WASHINGTON. D.C. 20510 December 7, 1981 )?"1-_7) The Honorable Paul A. Volcker, Chairman Board of Governors of the Federal Reserve System Federal Reserve Building Washington, D. C. 20551 Dear Mr. Chairman: Enclosed is a copy of a letter that I have received from a constituent of mine, F. H. Stringham, President, Valley Bank and Trust Company, Salt Lake City, Utah, concerning the proposal of the Federal Reserve to charge banks and other financial institutions transportation charges for shipping coin and currency to offices of such institutions. I shall appreciate very much receiving from you a- full and complete explanation for this proposed action in order that I may properly respond to Mr. Stringham. Sincerely yours, Jake Garn ,hairman JG:jcr enclosure .•• I I • • •• l• • . VALLEY BANK AND TR usT ;COMPANY u<•••.„ 2510 SOUTH STATE STREET A SA SALT LAKE CITY. • I All 84 115 v#41. 1:111 (801) 973-5(ri October 22, 1961 111111000 3 - 12 0)411 '81 The Honorable Jake Garn United States Senate 4293 Dirksen Senate Office BuiZding Washington, D. C. 20510 Dear Senator Garn: The Federal Reserve System has sent out for comment, a proposaZ to charge banks and other financiaZ institutions, transportation charges for shipping coin and currency to all of the financiaZ institutions offices. I just attended a joint meeting of the Branch Board cf Directors and the Board of Governors in Washington, D. C. and I raised the question to one of the Board of Governors as to why they were doing this. 1,•• ' I pointed out that certainly one of the important duties of the Fed was to see that there was adequate coin and currency in circulation to facilitate the fZow of commerce and that I feZt it had never been the intent of Congress that there shouZd be charges associated with its distribution. I further pointed out that this was very discriminatory, particularly to those financial institutions offices in the outly-Lng areas and could very ZikeZy Zead to a deterioration in the quality of currency in these areas. His response was that the attorneys for the Fed had looked very carefully at the ZegisZation passed Zast year b7,1 Congress which mandated and required the Fed to price their services and felt that they had to, under that ZegisZation. I cannot believe we've reached such a point in our eoonomic existance that now merchants wiZZ have to pay for the use and availability of coin and currency or be subsidized by the banks invoZved. Very truZy yours, 1 11 . "1.11.1 VALLEY BANK AND TRUST COMPANY F. H. Stringham President FHS:sk https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis , T— 1 ,1 t,rnrsr.r. Cilr11(1,-"ItT.e•" https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis February 3, 1982 The Honorable Bill Bradley United States Senate Washington, b. C. 20510 Dear Senator Bradley: Thank you for your recent letter concerning the invitation from the Mid-Atlantic American Accounting Association. Because of scheduling conflicts, I have been forced to send rearets to the Assuciation't; invitation. Perhaps we could get together for lunch some day when You are free. Sincerely, I'll call your office. bcc: Mrs. Mallardi JRC:tjf • BILL BRADLEY NEW JERSEY -46 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • 'AlCnifeb Ziatez -.Senate WASHINGTON, D.C. 20510 January 15, 1982 Honorable Paul A. Volcker Chairman Board of Governors of the Federal Reserve System Federal Reserve Building Washington, D. C. 20551 Dear Mr. Chairman: I have been advised that an invitation was recently extended to you to address the Mid -Atlantic American Accounting Association luncheon this spring. This Association is a group of accounting educators which meets annually to hear presentations of topical interest to the profession. Your comments would add greatly to the While I know the demands on occasion. your time are extraordinary, if your schedule permits, I would urge you to give this invitation your favorable consideration. Sincerel ( ill Br dley United States BB/de enator • • • of GOVe •. •;49 BOARD OF GOVERNORS t • c0 • • • •0 • -n • --I • fo https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis OF THE FEDERAL RESERVE SYSTEM RAL RES ▪ • •.. • • • WASHINGTON, D. C. 20551 PAUL A. VOLCKER February 2, 1982 CHAIRMAN The Honorable Jim Weaver House of Representatives Washington, D. C. 20515 Dear Mr. Weaver: Thank you for your recent letter concerning the meeting in Portland with Oregon Fair Share. The Board was represented at the meeting by Theodore E. Allison, staff director for Federal Reserve Bank Operations, and Griffith L. Garwood, deputy director of the Division of Consumer and Community Affairs. Other Federal Reserve representatives at the meeting were Kent Sims, Senior Vice President of the Federal Reserve Bank of San Francisco, William Burke, Vice President of the Federal Reserve Bank of San Francisco, and Angelo Carella, Vice President in Charge of the Portland Federal Reserve Branch. Sincerely, cc: Mrs. Mallardi #11 JRC:tjf COPY J1M WEAVER dITH DISTRICT, OREGON • • WASHINGTON OFFICE: LONGWORTH HOUSE OFFICE BUILDING WASHINGTON, D.C. 20515 (202) 225-6416 COMMITTEES: AGRICULTURE INTERIOR-AND INSULAR AFFAIRS Congre55 of tbe tiniteb tate5 JOE RUTLEDGE ADMINISTRATIVE ASSISTANT https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis DISTRICT OFFICES: FEDERAL BUILDING 211 ji)ow5e of ileprefientatibesS EAST 7TH AVENUE 97401 (503) 687-6732 EUGENE, OREGON tilia0ington, ri.C. 20515 FEDERAL BUILDING 333 WEST 8TH STREET 97501 (503) 779-2351 MEDFORD, OREGON 12 January 1981 t/ Mr. Paul A. Volcker, Chairman Federal Reserve Board Dear Mr. Volcker: I am writing in support of a request by Oregon Fair Share, the Oregon AFL-CIO, the International Woodworkers of America and Conaressman Ron %/den. The above have requested that the Board of Governors of the Federal Reserve send a representative to a hearing on interest policy in Portland, Oregon on Saturday, January 30th from 1 to 3 PM. I concur with their opinion that it would be most helnful to have a representative of the Board present at this event. As you know, Oregon is among the three states most severely affected by the current economic downturn. I believe that it would benefit both the Board and the citizens of the state of Oregon to enter into a dialogue on present monetary and interest policies. Sincerely, 0;K:sioNOL, Jim Weaver, M.C. J.W./pad (-7 • • ••PE GOviR •• •. co . .0 • -n • cf`A, • BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM 1-• .1`2' WASHINGTON, O. C. 20551 February 2, 1982 The Honorable Robert W. Kasten, Jr. United States Senate Washington, D. C. 20510 Dear Senator Kasten: Thank you for your letter of January 26 on behalf of State Representative Patricia Smith concerning the Board's recently published proposal to clarify Regulation Z's definition of an "arranger of credit". This issue is inherently difficult and one to which the Board has given considerable thought. On the one hand, no one is anxious to propose additional government regulations. On the other, there is a legitimate concern that the interests of both buyers and sellers be adequately protected in a transaction as significant as the sale of a home. The Board is now struggling to find a reasonable solution to this problem, which, as you may know, arose from recently enacted legislation intended to simplify the Truth in Lending Act. Under the amended Truth in Lending Act, a person who regularly arranges for the extension of consumer credit from those who do not regularly extend credit may be subject to the disclosure requirements of the Act. The Board's proposal (enclosed) would amend the definition of "arranger of credit" in revised Regulation 7 to describe more clearly an arranger of credit and, if adopted, would cover real estate brokers who arrange more than five seller-financed transactions. In the proposal, the Board specifically requested comment on whether such real estate brokers should be considered arrangers of credit and subject to disclosure responsibilities under the amended Truth in Lending Act. As you are aware, S. 1720, introduced by Senator Garn, includes a provision that would exclude arrangers of credit from the Truth in Lending Act. This would serve to relieve real estate brokers involved in seller-financed transactions from disclosure responsibility under the Act. Although no action was taken on this provision by Congress prior to adjourning for the Christmas recess, legislation was adopted (H. R. 4879) delaying the effective date of the amended Truth in Lending Act from April 1 to October 1, 1982, which would provide Congress more time to change the law if that is determined to be desirable. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • AP. The honorable Robert W. Kasten, Jr. Page Two share The Board appreciates your taking the time to comments these your constituent's views. I can assure you that will receive the fullest consideration. Sincerely, 71nn Pgried) Donald J. Winn Assistant to the Board Enclosure (P.R. dated 10/20/81) (MPE:DS):vcd (V-17) bcc: https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Maureen English Mrs. Mallardi w/copy of incoming)' Reply will be prepared by CLO MARK O. HATFIELD, OREG., CHAIRMAN TED STEVENS, ALASKA LOWELL P. WEICKER, JR., CONN. JAMES A. MC CLURE, IDAHO PAUL LAXALT, NEV. JAKE GARN, UTAH HARRISON '..CHMITT, N. MEX. THAD COCHRAN. MISS. MARK ANDREWS, N. DAK. JAMES ABDNOR S. DAK. ROBERT W. KASTEN, JR., WIS. ALFONSE M. D'AMATO. N.Y. MACK MATTINGLY, GA. WARREN RUDMAN, N.H. ARLEN SPECTER, PA. • WILLIAM PROXMIRE. WIS. JOHN C. STENNIS, MISS. ROBERT C. BYRD, W. VA. DANIEL K. INOUYE, HAWAII ERNEST F. HOLLINGS, S.C. THOMAS F. EAGLETON, MO. LAWTON CHILES, FLA. J. BENNETT JOHNSTON, LA. WALTER D. HUDDLESTON, KY. QUENTIN N. BURDICK. N, DAK PATRICK J. LEAHY. VT. JIM SASSER, TENN. DENNIS DE CONDINI, ARIZ. DALE BUMPERS, ARK. J. KEITH KENNEDY. STAFF DIRECTOR THOMAS L.VAN DER VOORT, MINORITY STAFF DIRECTOR https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • 'Unita)Zfafez -Senate comMITTEE C.) ON APPROPRIATIONS WASHINGTON. D.C. 20510 January 26, 1982 CO c .`• The Honorable Paul A. Volcker Chairman Board of Governors of the Federal Reserve System Federal Reserve Building Washington, D.C. 205S1 Dear Chairman Volcker: Please find enclosed a copy of a letter from State Representative Patricia Smith questioning the advisability of designating real estate brokers as "arrangers of credit" in creative financing transactions. Please comment on her letter and provide any rationale for this regulation. A copy of the regulation would be helpful. Thank you for your prompt attention. rds, obert W. Enclosure RWK:blz sten, Jr. • PATRICIA SPAFFORD RepresentatiNe, 75th Di SMITH strict 6 West, State Capitol Madison, WI 53702 Tele: (608) 266-2519 Legislative Hotline (toll-free) 1-800-36 2- 9696 Wisconsin Legislatur e Assembly Chamber 823 Burgs Park Shell Lake, WI 54871 Tele: (715) 468-7769 December 3, 19 81 Senator Robert Kasten 328 Russell Sen ate Office Buil ding Washington, D .C. 20510 Dear Senator K asten: Several real e state brokers concern with in my district the Federal Re expressed thei s e r v r e Board's new home brokers a Reg. Z which d s "arrangers o efines f credit" in s tions when th eller financed ey arrange more transacthan five tran sactions in on e year. This additiona l r egulation wil already beleag l only serve t uered real est o bog down the a t e industry. W cing, the rea ithout owner l estate busine finanss won't move force real estate bro a n y w h e r e . We shouldn't kers to choos or being forc e between actin ed out of busin g as a lender ess. The Federal Re serve Board sh "arranger of c ould revise it redit" as it a s definition o p plies to real f assistance you e s tate brokers. can provide wi Any ll be appreci ated. I look forward to hearing fr om you in this m atter. Sincerely, 1--xv,k Patricia Spaff ord Smith Representative , 75th Distric t PSS:mks https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • A •••• https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis February 3, 1982 The Honorable David O'B. Martin House of Representatives 20515 Washington, D.C. Dear Mr. Martin: Thank you for your letter of January 19 enclosing a copy of a letter addressed to Chairman Volcker from your constituent, Mr. Frank A. Augsbury. For your information, I am pleased to enclose a copy of Chairman Volcker's response to Mr. Augsbury. Please let me know if I can be of further assistance. Sincerely, Donald 1. Wing Donald J. Winn Assistant to the Board Enclosure (Ltr. dtd. 1/27/82) CO:pjt (#V-7) bcc: Mrs. Mallardi v/ - Office As soon as Chairman signs letter to Mr. Augsbury that Secretary's com MITTEE ON INTERIOR tter will be prepared by Coniriaison DAVID O'B. MARTIN s preparin S7TH Dirrwicr. Nrw Yonx INSULAARNA DFFAIRS Office to ongressman Martin Congre0 of tbe alititeb 0tate5 jbousSe of ilepregelttatiba obington,)ID.C. 20515 i•e January 19, 1982 Honorable Paul A. Volcker Chairman Board of Governors Federal Reserve System Federal Reserve Building 20551 Washington, D. C. Dear Mr. Volcker: I am attaching hereto a copy of a letter addressed to you by Mr. Frank A. Augsbury, Jr. of Ogdensburg, New York. Mr. Augsbury has numerous major business interests throughout the Northeast. His family-owned Hall Corporation of Canada operates one of the largest commercial fleets sailing in the Great Lakes-St. Lawrence Seaway System. I point this out to illustrate to you that his comments are written from the perspective of a successful international businessman who has some very real concerns about high interest rates. I would appreciate your assessment of his comments. looks forward to hearing from you, as well. spectf lly yours, David O'B. Martin Member of Congress DM/dbb Attachment https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis I know he • • FRANK A. AUGSBURY, JR. Executive Offices 100 Lafayette Street Ogdensburg, New York 13669 January 15, 1982 Honorable Paul A. Volcker, Chairman The Board of Governors Federal Reserve System Washington, D.C. 20551 Dear Mr. Volcker: Once again I would like to call to your attention how disastrous high interest rates have been to the nation. There is very little indication that inflation is decreasing and unemployment is rising on a daily basis! The principals of management are planning, organization and control. Businessmen, such as I, cannot plan properly when interest rates fluctuate as much as 10 per cent over a short period like a yo-yo. Accordingly, if we are going to have incentive and motivation to take the risks which is a prerequisite of doing business, we much have to the best of our ability solid facts to deal with on a regular basis. In our own business we have to borrow $28 Million regularly for inventory financing requirements. It's almost impossible to determine what to do when we have such a tremendous influx in Interest rates which, in our opinion, are simply unreasonable. Any relaxation on the part of the Federal Reserve Board in having a fixed interest rate which both the public and private sectors can count an, whether it be high, average or low, would be gratefully appreciated; or we are not going to be able to develop meaningful programs which would be beneficial to all, including stockholders, management, employees and the ability to pay taxes to the Internal Revenue Service. Please advise us either by personal letter or by a speech to the nation as to what we can expect for the long term period so that 1982 will not be as disastrous as 1981. With great appreciation for the difficult undertaking which you are attempting, and with every good wish for a happy, healthy and successful New Year, https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Yours very sincerely, Frank A. Augsbury, Jr. • • ip BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, O. C. 20551 February 2, 1982 The Honorable Bill Archer House of Representatives Washington, D. C. 20515 Dear Mr. Archer: Thank you for your letter of January 22 on behalf of Ms. Mollie Alexander concerning the Board's recently published proposal to clarify Regulation Z's definition of an "arranger of credit". This issue is inherently difficult and one to which the Board has given considerable thought. On the one hand, no one is anxious to propose additional government regulations. On the other, there is a legitimate concern that the interests of both buyers and sellers be adequately protected in a transaction as significant as the sale of a home. The Board is now struggling to find a reasonable solution to this problem, which, as you know, arose from recently enacted legislation intended to simplify the Truth in Lending Act. Under the amended Truth in Lending Act, a person who regularly arranges for the extension of consumer credit from those who do not regularly extend credit may be subject to the disclosure requirements of the Act. The Board's proposal (enclosed) would amend the definition of "arranger of credit" in revised Regulation Z to describe more clearly an arranger of credit and, if adopted, would cover real estate brokers who arrange more than five seller-financed transactions. In the proposal, the Board specifically requested coumient on whether such real estate brokers should be considered arrangers of credit and subject to disclosure responsibilities under the amended Truth in Lending Act. As you are aware, S. 1720, introduced by Senator Garn, includes a provision that would exclude arrangers of credit from the Truth in Lending Act. This would serve to relieve real estate brokers involved in seller-financed transactions from disclosure responsibility under the Act. Although no action was taken on this provision by Congress prior to adjourning for the Christmas recess, legislation was adopted (H. R. 4879) delaying the effective date of the amended Truth in Lending Act from April 1 to October 1, 1982, which would provide Congress more time to change the law if that is determined to be desirable. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • • The Honorable Bill Archer PaEe Two The Board appreciates your taking the time to share the views of your constituent. I can assure you that these comments will receive the fullest consideration. Sincerely, (Signed) Donald J. Winn Donald J. Winn Assistant to the Board Enclosure (P. R. dated 10/20/81) (MPE:DS):vcd (V-13) bcc: https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Maureen English Mrs. Mallardi w/copy of incoming) https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Action. assigned Janet Hart • • • WASHINGTON OFFICE: 1135 LONGWORTH HOUSE OFFICE BUILDING BILL ARCHER 7TH DISTRICT, TEXAS MEMBER: WAYS AND MEANS COMMITTEE Congre55 of the Itiniteb ifptates DISTRICT OFFICE: FEDERAL OFFICE BUILDING HOUSTON, TEXAS 77002 jimust of Acpres'entatibesS egastington, z.c. 20515 1 January 22, 1982)1 Dear Chairman Volcker: I er and article which tt le a g in os cl en am I , one of my constituents received today from Mollie Alexander. comments on her letter. ur yo te ia ec pr ap I would er attention to this matt I thank you for your st your reply. With be and look forward to regards, Bill Archer Member of Congress Paul Volcker Chairman Federal Reserve Board 6 Board Building, #204 , N.W. 20th & Constitution 551 Washington, D.C. 20 ; 1 -7 I WITH RECYCLED FIBERS TED ON PAPER MADE THIS STATIONERY PRIN • 1-73- 8 • • 0.00498a---av; r'j) Relin rA MAC A--i-E)47- vorfig, A ••••mserzn.10011.1111111. PARA, C. r Ow. ermaeme• as. P:5-ayse-s-in(4/r (A/-4riso/ 62 1 Pagi. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis - 2- ., iza„ t'-2-J/- x-4,•a, Ai tf-- /2&-e-t--;-‘. f4 , „,,,,: 7 1, ,,,' ,c,, .‘_ e )11:L f'Di L ,24d ‘ .."/"1/A- to-te e4i-e,4 71. i_tad_g .) 1AL,,efliatiuzAy --6), e-t7 k zA 4'"it: 21 /ti ,El Wet trt--‘2- (4411600-tc* s -)V,(41‘ Ate a (14-auk- ..1, itt faa€44,a_a MeL/&_ ,i/ , , , ./?...-Alie‘ le-‘ 7 (41-t // e&A_ 7 ca_f 14 -ift- (a4 V-ct; 441 ' ' ° 62)2 4 iti)/161. ? Adei ‘iPe / ( C° 4&-40ey t(t&r: ) PL tc,e-t 1491 11.6> ati2L12 VIAlu ittot Ft424 t'uti;,d I; kift)z/ 44404 xeleiel„h‘, 71 dP,d-Je It*-‘42471 nLk' 47wall-6) , r he-41; AA). ("e-61ar , 4 ata ir_ii 1/eAz #1;14i2 46a -4 ,-/K -4 `641 (4,;;;;„) 5 IN 5/111 717//5 r,e0p4)_s • https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • 4r - A- Am • •4114 111, • ri mit a4a-1-(i44a4t L //uz /4 C'dait4/ tit' Le lit4t Ak:veh- frtiz, 0-titetneJ4 )i-c_eytm_12 ≪ 'egel (t ) itd}?let)- (alc6C t 5()T0)6_ , IA at( ied-el (CO ,Z• 4 ° -e ‘Zip 77igetz.6 'Md4(6-e ae,tiett,tktz toc il ; L q.ciro_ Alhe44-1- ///te#106 74,A7Or /st7.) # 2 ,6it -et /6- LA( a4, r4d-4. aze, it-41/ 5A2 t/ i A /166( (LIM dr oir 11,t4alh ti/Zu24(-7924r 4(-/Tv7^=c /q-n /1.e .,e (9141'• ketet_t. (end. &eit ei2-kAlAk(4,,Q_ /t& , le 01 ; x.42e 4-/ 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: 2 Teeley, Sandra Evans. "Truth-In-Lending Proposal Stirs a Storm in Real Estate Industry." Houston Chronicle, January 13, 1982. Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 7/414- ,A9A...e.0414.414-4..' The Honorable Paul laxalt Chairmar Subcommittee on Regulatory Reform Committee on Judiciary United Statis Senate Washington, D.C. 2n510 Dear Chairman Oxalt: Ir accordance with the requirenents of the Freedom of Information Act, I am pleased to submit the Board's Annual Report covering the implmentation of its administrative resnonsibilities under the Act during calendar year 1981. Sincerely, LaClOSUre JO:slb https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ?)44,20'40..4,4444: The Honorable Thomas P. O'Neill Jr. Speaker of the House of Representatives Washington. D. C. 2051S Dear v'r. Speaker In accordance with the requirements of the Freedom of Information Act I ar pleased to submit the tiard's Annual Report covering the implementation of its administrativr responsibilities under the Act durin9 calenefar year Sincerely Frclosure Speaker of the nouse of Representatives Received RLArnold:nlf 2/23/82 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • 'Unita)Zfatez „Senate 1"? FE9 1 8 P'. 2: 14 WASH I NGTON, D.C. 20510 February 13, 1982 Mr. Paul A. Volcker Chairman Federal Reserve System Washington, D.C. 20551 Dear Mr. Volcker: Thank you for sending me a copy of the Monetary Policy Rc)port. Your thoughtfulness in providing me with this publication is greatly appreciated. I am certain that the information it provides will be of beneficial use to me and my staff as relevant matters come before the Senate. With kindest regards and best wishes, Sincerely, 4tVi.15Y-rx c'#--Prkdk-A-f-k-/YYLIe•-4 Strom Thurmond ST/f — • NORMAN D. DICKS 6TH DISTRICT, WASHINGTON • DISTRICT OFFICES: PIERCE COUNTY SUITE 602 SECURITY BUILDING 915/ 1 2PACIFIC AVENUE COMMITTEE: APPROPRIATIONS TACOMA, WASHINGTON suscommITTEm 98402 PHONE:(206) 593-6536 DEFENSE KITSAP COUNTY INTERIOR CongraZ of tbe ZEIniteb SuiTE 3 tate5 900 PACIFIC AVENUE BREMERTON, WASHINGTON 1122 LONGWORTH HOUSE OFFICE BUILDING PHONE:(202) 225-5916 98310 PHONE:(206) 479-4011 jiptuSe of Repretentatibes WASHINGTON, D.C. 20515 KING COUNTY SUITE 101 gbington, a.C. 20515 1025 SouTH 320TH FEDERAL WAY, WASHINGTON 98003 PHONE:(206) 941-2382 February 1, :1_982 Mr. Paul A. Volcker Chairman Federal Reserve Board Twentieth and Constitution, N.W. Washington, D.C. 20551 Dear Mr. Chairman: Thank you for meeting with me for breakfast on January 27th. appreciated having the opportunity to share with you the details of Washington State's economic situation. I know you agree that an unemployment rate in excess of 10 percent is appalling. I hope you will exercise your authority to ease the restrictions on the money supply which are holding interest rates up. Some relaxation of the controls might enable the forest products and housing industries to begin their recoveries, allowing them to rehire many of the employees they have laid off during the last year. Again, T. appreciated the chance to meet with you. I hope 1982 will bring both lower interest rates and a reduced federal deficit. Sincerely, /10V-11...‘ NORMAN D. DICKS Member of Congress NDD:gwc https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis I), t) 01.4ALI J 44Leakti Olv‘ 099v. oLtd.Cocr_ striAn (Adk- • • February 1, 1982 The Honorable BenjAmin S. Rosenthal Chairman Subcommittee on Commerce, Consumer and Monetary Affairs Committee on Government Operations House of Representatives 20515 Washington, D.C. Dear Chairman Rosenthal: I am pleased to reply to your letter to Chairman Volcker requesting certain information and documents relating to the Board's August 25, 1981 approval of the applications of Credit and Commerce American Holdings, N.V., Willemstad, Netherlands Antilles, Credit and Commerce American Investment, N.B., Amsterdam, The Netherlands, and FGB Holding Corporation, Washington, D.C., for permission to become bank holding companies by acquiring control of Financial General Bankshares, Inc., Washington, D.C. In response to your letter, the staff has prepared a memorandum, which is enclosed, addressing the questions raised in your letter. With respect to the information furnished in response to question number one of your letter, it should be noted that Applicants have requested confidential treatment for the identity of certain of the investors in Credit and Commerce American Holdings. This information has to date been afforded confidential treatment by Board staff and by those federal and state regulatory agencies to which it has been made available, including the New York State Banking Department. Accordingly, it is being provided to the Subcommittee for its use with the expectation that it will not be publicly released. I hope the enclosed memorandum is useful to you and the Subcommittee. Sincerely, JK:DJW:pjt (#V-305) bcc: Mr. Bradfield Mr. Keller Mr. Mannion Mrs. Mallardii Legal Records (2) Enclosure https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis )5i Michael Bradfield General Counsel • • STAFF MEMORANDUM ON QUESTIONS BY HON. BENJAMIN S. ROSENTHAL RELATING TO APPLICATIONS TO ACQUIRE CONTROL OF FINANCIAL GENERAL BANKSHARES, INC. By letter of October 16, 1981, Chairman Benjamin S. Rosenthal of the Commerce, Consumer, and Monetary Affairs Subcommittee of the House Committee on Government Operations has asked the Board to provide certain information and documents relating to the Board's August 25, 1981 Order approving applications by Credit and Commerce American Holdings, N.V. ("CCAH"), Netherlands Antilles, Credit and Commerce American Investment, N.B. ("CCAI"), Amsterdam, The Netherlands, and FGB Holding Corporation ("FGB"), Washington, D.C. (hereinafter "Applicants"), to become bank holding companies by acquiring Financial General Bankshares, Inc. ("FG"), 1/ Washington, D.C. Before responding to the specific questions raised by Chairman Rosenthal's letter, it should be noted that in processing these applications the Board determined that it would be appropriate to hold a meeting at the Board's offices to be attended by representatives of the investor group, counsel for the Applicants, and representatives of the banking supervisory offices for each of the states in which FG has a subsidiary 2/ bank. This proceeding was held at the Board on April 23, 1981. 1/ 67 Federal Reserve Bulletin 737 (1981). 2/ FG has subsidiary banks in the States of Maryland, New York, Tennessee, and Virginia, as well as the District of Columbia. With the exception of the Commissioner of Banking for the State of Tennessee, the bank regulatory department of each of these States and the Comptroller of the Currency were represented at the meeting. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • -2- The purpose of this meeting was to enable representatives of those states in which FG has subsidiary banks, as well as Board staff and representatives from the Federal Reserve Bank of Richmond, to meet and address questions to representatives of the investor group and their attorneys. The transcript of this meeting was made part of the record upon which the Board based its decision, and the non-confidential portions of the transcript have previously been made available to the Committee's staff. The questions set forth in Chairman Rosenthal's letter are repeated below, followed by the staff's response. QUESTION #1: Please provide the following information about each and every investor known to the Federal Reserve to be participating in the purchase of Financial General: a. Name, nationality, and country of residence (if different from nationality); b. Amount of investment in Financial General, CCAH, and/or CCAI; c. Other business interests or investments in the U.S.; and d. Investment in, loans from, and/or other involvement in the affairs of Bank of Credit and Commerce International (BCCI). ANSWER #1: In responding to this question, the Board staff has determined that information regarding shareholders who own or control less than 5 per cent of the shares of CCAH warrants confidential treatment. The reason for this determination is that such information is not requested either by the Board's section 3(a)(1) application form (Form F.R. Y1) or its "Annual Report of Domestic Bank Holding Companies" (Form F.R. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • -3- Y-6). The F.R. Y-1 only requires information on principals, who for the purposes of these applications would be the investors owning 10 per cent or more of the outstanding voting shares of CCAH, while the F.R. Y-6 would require the holding company to list each shareholder of record who, directly or indirectly, owns, controls or holds with power to vote 5 per cent or more of any class of the bank holding company itself. Since the Board does not ordinarily require the filing of information with respect to shareholders of less than 5 per cent of the outstanding voting shares of a bank holding company, Board staff believes it appropriate not to reveal the identity of these investors. However, one of the less than 5 per cent shareholders participated in the meeting and Applicants have permitted the release of his identity; accordingly, the requested information is provided with respect to him. With respect to those shareholders who own 5 per cent or more of the shares of CCAH, but less than 10 per cent of its shares, it should be noted that Applicants have requested confidential treatment for the identity of these shareholders and to date the Board has not made this information publicly available. This information, together with all of Applicants' submissions, have been made available to the appropriate federal and state regulatory authorities, including the New York State Banking Department. Board staff believes that in providing this information to the Subcommittee it is not waiving the Board's authority to withhold this information from the public if a request were made pursuant to the Freedom of Information Act. Accordingly, Board staff believes that the Subcommittee should not release this information to the public. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • -4- astb. Name Kamal Adham Abdullah Darwaish (financial advisor to Mohammed bin Zaid al Nahyan) Abu Dhabi Investment Authority Stock Holding Company, S.A. (personal holding company for Rashid bin Saeed al Maktoum) Abdul Raouf Khalil Crescent Holding Company, S.A. (personal holding company for Rashid bin Rashid al-Maktoum) Mashriq Holding Company, S.A. (personal holding company for Hamad bin Mohammed, al Sharqi) Faisal Saud al Fulaij Humaid bin Rashid al Naomi Ali Mohammed Shorafa El Sayed El Sayed El Gohari Amount of Investment (Millions of $) Nationality Saudi Arabia Abu Dhabi 32.3 23.3 19.02 13.72 Abu Dhabi Abu Dhabi Luxembourg 14.0 14.0 8.24 8.24 Dubai Saudi Arabia Luxembourg 14.0 14.0 8.24 8.24 Dubai Luxembourg 13.0 7.66 Fujeirah Kuwait Ajman Abu Dhabi Saudi Arabia 12.2 12.0 11.0 1.0 7.18 7.07 6.48 0.59 (There are 3 other shareholders, each owning less than 5 per cent of the shares of CCAH). https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis c. It is staff's understanding, on the basis of submissions c -Id statements on behalf of Applicants' investors, that none of the investors owns or controls, outside of FG's shares, more than five per cent of the voting shares of any United States bank or corporation. d. % Ownership of CCAH Counsel for Applicants has filed with the Board, on a confidential basis, the shareholdings of certain of Applicants' investors with respect to Bank of Credit and Commerce International (Luxembourg), S.A. ("BCCI"). Staff is of the opinion that such information warrants confidential treatment. • • -5- Staff has no knowledge of loans from, or other involvement in the affairs of, BCCI on the part of Applicants' principals. It should also be noted that pages 55-56 and 77-81 of the transcript of the April 23, 1981 meeting, which has previously been submitted to the staff of the Subcommittee, addresses the relationship between BCCI and the investors. QUESTION #2: Please provide a statement giving the following information about the confidential supplement or supplements to the application: a. The identities of all individuals and/or business entities for which information was provided in the confidential supplement(s); b. The exact nature of the items of information provided by each such party; and c. The nature of and reasons for any omissions of any items of information requested by the Federal Reserve for inclusion in the confidential supplement(s). ANSWER #2: https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis a. Information with respect to each of the investors was provided in confidential supplements to the applications. These investors are listed in answer la & b., with the exception of three of the less than 5 per cent investors. b. 1. Kamal Adham - personal balance sheets and income statements, certification as to ownership of real property and its worth, description of certain real property holdings, bank statements regarding account balances, and bank letter of reference. • • . -6- 2. Abdullah Darwaish (Mohammed bin Zaid al Nahyan) - see answer 2(c). 3. Stock Holding Company (Rashid bin Saeed al Maktoum) - balance sheet. 4. Abdul Raouf Khalil - balance sheet, income statement, balance sheet for certain controlled investments. 5. Crescent Holding Company (Rashid bin Rashid al-Maktoum) - see answer 2(c). l https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 6. Mashriq Holding Company (Hamad bin Mohammed, al Sharqi) - see answer 2(c). 7. Faisal Saud al Fulaij - balance sheet, income statement, schedule of real estate ownership, list of marketable securities, bank letter of reference. 8. Humaid bin Rashid al Naomi - see answer 2(c). 9. Ali Mohammed Shorafa - balance sheet, income statement. 10. El Sayed El Sayed El Gohari - balance sheet, income statement, statements of real estate investments, corporate investments, and deposit accounts. c. Applicants stated that they were unable to provide information with respect to investors in certain instances where the information was personal financial information that was not ordinarily maintained nor readily available. In such instances, however, Applicants provided estimates of the net worth of the investors. • • -7- QUESTION #3: Please provide copies of all letters to the applicants, investors, their attorneys, or other parties, or any other similar documents, that specify what information was being requested by the Federal Reserve, either: a. for inclusion in the confidential supplement(s), or b. in any other form about the personal background and business affairs of each and every investor. ANSWER #3: The letters seeking financial or personal information about the investors include an October 22, 1980 letter (Attachment A), and an April 17, 1981 letter (Attachment B). In addition, at the April 23, 1981 meeting, questions were asked regarding the investments of each of the investors attending the meeting (Messrs. Adham, Fulaij, Khalil and Gohari). 13 of the transcript. See pages 106-- At that meeting, it was also stated that further information would be provided after consummation of the proposal in order that the Board's staff could determine if there were any common investments that would result in an entity being an "affiliate" of FG for the purposes of section 23A of the Federal Reserve Act (12 U.S.C. § 371c). See pages 171-72 of the transcript. QUESTION #4: https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Please state whether any borrowed funds are being used to finance the acquisition of Financial General. If so, please state: a. The source of the funds and the principal loan terms; • • -8- b. whether the persons and/or institutions providing loan funds are receiving any contingent rights (such as rights exercisable on default under the loan) or options or warrants exercisable at the lender's discretion to obtain an equity ownership position in Financial General, CCAH, and/or CCAI; and, if such contingent rights, options, or warrants will be outstanding; c. The exact terms and conditions of any such contingent rights, options, or warrants. ANSWER #4: https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis CCAH will borrow no more than $50 million, and its principals will provide from personal funds an estimated $170 million to acquire Financial General for a total of approximately $220 million. a. The loan agreement is with the Banque Arabe et Internationale d'Investissment ("BAII"), Paris, France. BAII is a European consortium bank, with $2.4 billion assets as of December 31, 1980, which is owned by a group of American, European and Middle Eastern banks and investment companies. It is anticipated that the loan will be syndicated with BAII acting as the agent bank. The principal loan terms are as follows: Interest Rate: Fees: 3 or 6 months LIBOR rate plus 1 1/2 per cent. One per cent flat management fee and one-half per cent per annum commitment fee. • • -9- Maturities: a 10-year maturity with principal payments starting at $5 million in the fourth year increasing to $11 million in the tenth year. b&c. The lending institutions will have no equity ownership rights such as options or warrants in FG. The lenders will receive all, and not less than 51 per cent, of the voting shares of FG as security for the loan. The loan will be unconditionally and irrevocably guaranteed by three or more of the shareholders of CCAH. For payment of interest and principal on the loan, the lenders will look first to CCAH, second to the guaranteeing shareholders, and third to the shares of FG in the case of default by both CCAH and the shareholders. (For more details see Attachment C, BAII's loan commitment letter, transmitted to the Board by letter dated June 22, 1981. QUESTION #5: https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The Federal Reserve stated in its order approving the application that "the Board expects Applicants to serve as a continuing n In source of strength to FG and its subsidiary banks. . support of this statement, please provide a. a statement of how the Board expects the applicants to serve as a continuing source of strength and what formal commitments have been made by the applicants in order to meet the Board's requirements on this subject; and b. copies of all correspondence between the Board and/or the Federal Reserve Bank of Richmond and the applicants or their attorneys pertinent to the subject of how the applicants will serve as a source of continuing strength to Financial General and its subsidiary banks. • • -10ANSWER #5: https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis a. In the subject applications, Applicants have demonstrated to the Board's satisfaction their capabilities and willingness to be a continuing source of strength to Financial General and its subsidiaries through the proposed contribution of $12 million equity capital and the appointment of capable individuals to senior management and the board of directors of FG. The $12 million equity capital contribution will increase FG's consolidated capital position (equity + reserves/assets + reserves) from 7.8 per cent to 8.3 per cent, which is in excess of the 6.8 per cent average for peer bank holding companies with assets between $15 billion. Applicants will appoint four prominent individuals to the board of directors of FG. will be Chairman of the Board. Mr. Clark Clifford Mr. Clifford is a Washington lawyer who has served in a number of important government positions including Special Counsel to the President of the United States and Secretary of Defense. The other individuals appointed as directors will be Mr. Stuart Symington, Mr. Elwood R. Quesada and Mr. James M. Gavin. Mr. Symington served 24 years in the United States Senate; before that, he was Chairman of the Board of Emerson Electric Manufacturing Company. Mr. Quesada is a retired Lieutenant General in the Air Force and is Chairman of the Board of L'Enfant Plaza Properties. Mr. Gavin served as Ambassador to France, and has been President and Chairman of the Board of Arthur D. Little, Inc. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • • -11- Applicants have selected as FG's President and Chief Executive Officer a person who has substantial experience in the management of large bank holding companies. Confidential treatment has been requested by Applicants for the name of the individual selected to be President and CEO of FG. Staff is of the opinion that this information warrants confidential treatment. The $50 million acquisition debt will increase the combined parent holding companies debt/equity ratio to .42:1. Applicants committed to protect the capital position of FG and the subsidiary banks until the parent debt/equity position is reduced to the more modest level of .3:1 by committing: 1. That no more than $50 million acquisition debt would be incurred without prior approval of the Board. 2. That the $12 million capital injection into FG would be used only for the purpose of strengthening the holding company and subsidiary banks. 3. That no debt will be used to acquire the class A shares of FG after consummation that would raise the combined parent debt/equity ratio above .41:1. 4. That FG will pay no dividends to Applicants in any quarter that would cause its consolidated equity + reserves/assets + reserves ratio to fall below the peer average of 6.8 per cent. • • • -12- b. Two pieces of correspondence from Applicants are attached. Attachment D is a copy of a letter dated June 15, 1981, from Applicants setting forth the financial commitments Applicants made to the Board. Attachment E is Applicants' discussion in their application of the financial and managerial impact of, as well as the convenience and needs associated with, the acquisition of FG. QUESTION #6: The Board's approval order states that "The proposed transaction would provide FG with $12 million in new capital." In support of this statement, please provide (if not already provided fully in answer to question 5): a. a statement of how this sum will be employed to provide additional capital to the individual subsidiary banks of FG, including the specific dollar amounts to be contributed to each bank; and b. copies of all relevant correspondence between the Board and/or Federal Reserve Bank of Richmond and the applicants or their attorneys regarding the specific amounts of new capital to be invested in Financial General and in each and every individual subsidiary bank. ANSWER #6: https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis a. The Board did not require that Applicants decide precisely how management would use the $12 million equity capital contribution to FG. The total capital position of the subsidiary banks is satisfactory so there is not a current need for additional capital in the banks. Applicants have committed not to use the $12 million capital to acquire FG's class A common stock after consummation and, as discussed in question 5 above, to use the capital for the purpose of strengthening the holding company and subsidiary banks. • • b. -13- • See Answer 5b. QUESTION #7: Please provide cassette tapes, minutes, and (where available) printed transcripts of those portions of all Board meetings held after July 1, 1979, whether open or closed, in which the proposed acquisition of Financial General was discussed. ANSWER #7: https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The only Board meetings at which these applications were discussed were the meeting of August 19, and 24, 1981. The minutes for these meetings are Attachments F and G to this memorandum. Action asstgned Jack Ryan vith copies to Messrs. 13radfield and Wiles for coordination of reply BENJAMIN S. ROgENTHAL, N.Y., CHAIRMAN JOHN CONY1 RS, JR., MICH. EUGENE V. ATKINSON, PA. STEPHEN L. NEAL, N.C. DOUG BARNARD, JR., GA. 411 NINETY-SEVENTH CONGRESS • LYLE WILLIAMS, OHIO HAL DAUB. NEER. WILLIAM F. CLINGER, JR., PA. JOHN HILER, IND. Congre5 of the Viniteb atate5 PETER A. PEYSER, N.Y. MAJORITY-(202) 225-4407 )- ott5e of ilepreltntatibe5 COMMERCE, CONSUMER, AND MONETARY AFFAIRS SUBCOMMITTEE OF THE COMMITTEE ON GOVERNMENT OPERATIONS RAYBURN HOUSE OFFICE BUILDING. ROOM 8-377 WASHINGTON. D.C. 20515 October 16, 1931 Hon. Paul A. Volcker Chairman Federal Reserve Board Washington, D. C. 20551 Dear Mr. Chairman: The Commerce, Consumer, and Monetary Affairs Subcommittee, in connection with its continuing interest in foreign investment in U.S. banks, is currently reviewing the Federal Reserve Board's recent approval for certain foreign I am writing to parties to obtain control of Financial General Bankshares. request certain information and documents related to the Federal Reserve's approval of this application. 1. 2. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Please provide the following information about each and every investor known to the Federal Reserve to be participating in the purchase of Financial General: and country of residence (if different from a. Name, nationality, nationality); b. Amount of investment in Financial General, CCAH, and/or CCAI; c. Other business interests or investments in the U.S.; and d. Investment in, loans from, and/or other involvement in the affairs pf Bank of Credit and Commerce International (BCCI). Please provide a statement giving the following information about the confidential supplement or supplements to the application: a. The identities of all individuals and/or business entities for which information was provided in the confidential supplement(s); b. The exact nature of the items of information provided by each such party; and 2 • • c. ‘3 4. 5. 6. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • The nature of and reasons given for any omissions of any items of information requested hy the Federal Reserve for inclusion in the confidential supplement(s). Please provide copies of all letters to the applicants, investors, their attorneys, or other parties, or any other similar documents, that specify what information was being requested by the Federal Reserve, either: a. for inclusion in the confidential supplement(s), or b. in any other form about the personal background and business affairs of each and every investor. Please state whether any borrowed funds are being used to finance the acquisition of Financial General. If so, please state: a. the source of the funds and the principal loan terms; h. whether the persons and/or institutions providing loan funds are receiving any contingent rights (such as rights exercisable on default under the loan) or options or warrants exercisable at the lender's discretion to obtain an equity ownership position in Financial General, CCAH, and/or CCAI; and, if such contingent rights, options, or warrants will be outstanding, c. the exact terms and conditions of any such contingent rights, options, or warrants. The Federal Reserve stated in its order approving the application that "the Board expects Applicants to serve as a continuing source of strength to FG and its subsidiary banks...." In support of this statement, please provide a. a statement of how the Board expects the applicants to serve as a continuing source of strength and what formal commitments have been made by the applicants in order to meet the Board's requirements on this subject; and b. copies of all correspondence between the Board and/or the Federal Reserve Bank of Richmond and the applicants or their attorneys pertinent to the subject of how the applicants will serve as a source of continuing strength to Financial General and its subsidiary banks. The Board's approval order states that "The proposed transaction would provide FG with $12 million in new capital." In support of this statement, please provide (if not already provided fully in answer to question 5): a. a statement of how this sum will be employed to provide additional capital to the individual subsidiary banks of FG, including the specific dollar amounts to be contributed to each bank; and b. copies of all relevant correspondence between the Board and/or Federal Reserve Bank of Richmond and the applicants or their attorneys regarding the specific amounts of new capital to be invested in Financial General and in each and every individual subsidiary bank. • 7 3 • Please provide cassette tapes, minutes, and (where available) printed transcripts of those portions of all Board meetings held after ally 1, 1979, whether open or closed, in which the proposed acquisition of Financial General was discussed. Sincerely, : k, Benjamin Chairman BSR:tb https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Rosenthal