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/ 1 4 . _ „ , , r . , r   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Collection: Paul A. Volcker Papers Call Number: MC279  Box 12  Preferred Citation: Congressional Correspondence, August-October 1983 [Folder 1]; Paul A. Volcker Papers, Box 12; Public Policy Papers, Department of Rare Books and Special Collections, Princeton University Library Find it online: http://findingaids.princeton.edu/collections/MC279/c464 and haps://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 theft 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) mudda,princeton.edu   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Congressional Correspondence August-October 1983   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  BOARD OF GOVERNORE OF THE  FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551 PAUL A. VOLCKER CHAIRMAN  October 31, 1983  The Honorable George Bush President of the Senate United States Senate Washington, D.C. 20510 Dear Mr. Vice President: In accordance with 5 U.S.C. 552a(o) and the guidelines established by OMB Circular No. A-108, the Board of Governors of the Federal Reserve System submits the attached report on a new system of records that the Board proposes to have maintained by its contractor, the University of Michigan's Survey Research Center. A copy of the Federal Register notice for the new system of records is also enclosed. The attached report and notice have also been distributed to the Speaker of the House of Representatives and to the Director of the Office of Management and Budget, as required by the Privacy Act of 1974. Inquiries and comments about the report may be addressed to the Secretary of the Board, Board of Governors of the Federal Reserve System, Constitution Ave. at 20th Street, N.W., Washington, D.C. 20551.  Enclosures  President of the Senate received   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  by  I ;co -  g3   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  BOARD OF GOVERNORS  4.  OF THE  FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551  PAUL A. VOL CKE P CHAIRMAN  October 31, 1983  The Honorable Thomas P. O'Neill, Jr. Speaker of the House of Representatives H-205 Capital Building Washington, D.C. 20515 Dear Mr. Speaker: In accordance with 5 U.S.C. 552a(o) and the guidelines established by OMB Circular No. A-108, the Board of Governors of the Federal Reserve System submits the attached report on a new system of records that the Board proposes to have maintained by its contractor, the University of Michigan's Survey Research Center. A copy of the Federal Register notice for the new system of records is also enclosed. The attached report and notice have also been distributed to the Director of the Office of Management and Budget and to the President of the Senate, as required by the Inquiries and comments about the report Privacy Act of 1974. may be addressed to the Secretary of the Board, Board of Governors of the Federal Reserve System, Constitution Ave. at 20th Street, N.W., Washington, D.C. 20551. Sincerely,  Enclosures  Speaker of the House of Representatives rec   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  by  ••  •  ..  • o? Gove4• ••44-Y \ u, . co . .:-_-.., ,• • .•. ia, iii:; ;'"`" 0 • • -11  S BOARD OF GOVERNOR OF THE  SYSTEM FEDERAL RESERVE 20551 WASHINGTON, D. C.  • ...{ '.,•.0 ,  . It • . *I -'4 )" \!e; l{ Fil [ T\ ". t4:: .. .. , . . :4 .,-../5-: .• &_ 0 '. ...•ee .•  LRO - •• EkA ••..•••  R PAUL A. VOLCKE  October 28, 1983  CHAIRMAN  rnard The Honorable Doug Ba Chairman erce, Consumer Subcommittee on Comm s and Monetary Affair ment Operations Committee on Govern House Office Bldg. Room B377 Rayburn 20515 Washington, D.C.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  d: Dear Chairman Barnar  ion of proving the applicat ap r de or 82 19 9, ne Island In its Ju acquire the Long to ) I" BC (" na ia al It es Banca Commerciale er of policy issu mb nu a ed is ra d ar Bo e entities under al Trust Company, th nt me rn ve go n ig re ent of fo ese issues arose involving the treatm Th . ") ct "A he (t t mpany Ac Government which n the Bank Holding Co ia al It e th by d rectly owne anking because BCI is indi owns over 100 nonb d an is no li Il in nk ness in the United si also controls a ba bu in d ge ga en e ar which companies, many of States. mental her foreign govern et wh is on ti es qu c ng The basi nking and nonbanki ba r de oa br in ge ga mpanies with a co entities may en n ig re fo or S. private U. estion is one qu activities here than is Th . es at St ed the Unit S. banking presence in licy but broader U. po g in nk ba S. U. ly on more that involves not investment policy n ig re fo g in ud cl in licy. policy interests foreign economic po d an s on ti la re n ig re generally, U. S. fo these able interest in er id ns co d se es pr ex You have chnical aspects of te e th of me so e yz to anal the issues and asked us morandum explaining me a is ed os cl En plying this question. Company Act, of ap g in ld Ho nk Ba e th ing consequences, under th a U. S. bank wi s nt me rn ve go n ig also its terms to fore osed memorandum cl en e th d, te es qu that As you re presence. ditional factors ad e th of me so on ve briefly touches up her issues you ha ot d an , er id ns co to Congress will need raised.  77:-MIMPISTMFISPrair._ Tiatr. %et  7." •.'.;  .  ••  -2-  rnard The Honorable Doug Ba  am forwarding to you I at th y ud st e th at th I hope these ssional consideration of re ng Co to l fu lp he proves the issues with you s us sc di to d se ea pl be d ul questions and wo further. Sincerely,  Enclosure NJ:ME (V-54 and V-233 (1982))   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  bcc:  Ms. Jacklin Mr. Bradfield Legal Files (2) Mrs. Mallardi (2)  TECHNICAL ANALYSIS STAFF MEWORANDUM: A OF APPLYING THE BANK OF SCME IMPLICATIONS AL FOREIGN GOVERNMENT HOLDING COMPANY ACT TO ENTITIES  A.  Background  ed an application by ov pr ap d ar Bo e th , On June 9, 1982 me a bank holding co be to ") Ed (" na ia al Banca Conmerciale It mpany ("LITCO") of Co t us Tr nd la Is ng Lo g the company by acquirin to ing company, Istitu ld ho a by ed wn -o ty BCI is majori New York. ich is controlled by wh ), I" IR (" no ia al It per la Ricostruzione controlled a U. S. ly ct re di in I IR y. Ital the Government of d I application, woul BC e th h ug ro th , us d th bank in Illinois an Had IRI been a state. nd co se a in nk ba ry acquire a subsidia foreign government no ng vi ha n io at or rp n co domestic or foreig ion ited the acquisit ib oh pr ve ha d ul wo Act ownership, the EHC in engaging indirectly s I' IR in ed lt su re ve because it would ha In d) of the EEC Act. 3( n io ct se to ry ra nt co interstate banking IRI has over 100 at th d te no so al d its Order, the Boar ties. d in nonbanking activi subsidiaries engage BHC amendments to the 70 19 e th e nc si s se ca In several ign ns in which fore io at ic pl ap ed ov pr ap s Act, the Board ha Board was noted but the t an ic pl ap e th of p government ownershi In government owners. s t' an ic pl ap e th to Act did not apply the ded practice and conclu st pa s it d te no d ar the BCI case, the Bo the ate to continue ri op pr ap s wa it that as a consequence respect to currently th wi it m ir nf co d se an practice in that ca   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  2 ment-owned entities with rn ve n go ig re fo of es ti vi conducted acti United States. a banking presence in the However, the  Board  indicated  its concerns  with  the  in the future, but also ce ti ac pr e th ng ui in nt co implications of uld result from strict co es nc ue eq ns co e bl ra si noted that unde governmental entities. n ig re fo to t Ac C BH e application of th t to foreign nces of applying the Ac ue eq ns co e th , er ov re Mo sues that go beyond bank is cy li po es is ra es ti ti governmental en ign reign relations, fore fo S. U. g in ud cl in , regulatory policy On balance, the Board policy. ic om on ec d an nt me st ve in policy issues raised by ic bl pu x le mp co e th concluded that ork a Congressional framew in ed lv so re st be e ar applying the Act considerations to be cy li po nt va le re l al that allows for addressed. In  this  connection,  the  Chairman  ce, Consumer, and Subcommittee on Commer  of  the  Monetary  House  Affairs has  the plications of applying im n ai rt ce of is ys al requested an an In his request, ties. ti en al nt me rn ve go n ig BHC Act to fore of n with the disparity er nc co s hi s se es pr ex Chairman Barnard h esent practice by whic pr e th om fr s lt su re treatment that ss ate and conduct busine er op to le ab e ar s nt foreign governme nt greater range and exte a of es at St ed it Un e activities in th zation ivate business organi pr y an r fo e bl si is rm than would be pe er Barnard raises a numb an rm ai Ch n. ig re fo either domestic or um, sed in this memorand es dr ad e ar at th s on of specific questi at legislative action th y an of ns io at ic pl concerning the im   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -3-  would  explicitly apply the  Act  BHC  foreign  to  governmental  ze any there are ways to minimi r he et wh ks as so al He entities. ring ing an objective of ensu ev hi ac e il wh es nc ue eq ns adverse co that  foreign  governments  and  their  instrumentalities  are  y than asible, no more favorabl fe nt te ex t es ll fu e th treated, to A further question was s. on ti za ni ga or or s ie an private comp c) e criteria of section 3( th in on ti ca fi di mo y an r raised whethe ew permit the Board to revi to r fo ed ll ca is t Ac of the BHC es to ign government entiti re fo om fr ns io at ic pl ap adequately ited States. acquire a bank in the Un This  memorandum  accordingly  provides  a  technical  of the BHC of strict application ns io at ic pl im e th of analysis in which tities and some ways en al nt me rn ve go n ig re Act to fo gated. ng the Act might be miti yi pl ap of es nc ue eq ns co certain vernment e BHC Act to foreign go th ng yi pl ap of ns io at ic B. Impl entities  and  ments encompass foreign govern Applying the BHC Act to pany" the definition of "com in s ie it al nt me ru st in r thei  would  affect  foreign  government-owned  banking  organizations  States in several ways. ed it Un e th in ns io at with oper 1.  Interstate banking  were considered If a foreign government  a "company,"  would be ed by that government ll ro nt co s nk ba n ig re fo then all of the strictions, regardless re g in nk ba te ta rs te in subject to As a consequence, the banks. of es nc te is ex e at or rp separate co which lowed only one state to al be d ul wo nt me rn ve go a foreign   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  stricted ntrolled banks would be re co 's nt me rn ve go at th of all United t-taking operations in the si po de r ei th g in nd pa ex in 1 States.—/ The  table at attachment  banks  foreign  controlled  directly  A  contains or  a  of  list  indirectly  all  foreign  by  esence in the United pr g in nk ba r ei th s be ri sc governments and de ibitions the interstate banking proh of n io at ic pl ap e Th . es Stat g company ign government as a holdin re fo a to t Ac C BH e th of with the exception of y, el iv ct pe os pr ly on e su would create an is her foreign government ot No . nt me rn ve go n ia IRI and the Ital subsidiary banks in more S. U. ve ha at th s nk ba n controls foreig than one state.  state  dicates the current home in B nt me ch ta at at e The tabl wned bank in the United -o nt me rn ve go n ig re fo of each  States. As Regulation  to K  the  "home  prohibiting  state" provisions a  foreign  bank  of  the  from  IBA  and  having  th the more than one state, wi in es ch an br ng ki ta tsi depo  of 1978 ternational Banking Act In e th of 5 n io ct Se 1/ tablish bank's ability to es n ig re fo a ts mi li ) The ("IBA" "home state." le ng si a e id ts ou es ch deposit-taking bran ibution of operation through attr te ta rs te in on n io ct restri entity is n banks to a single ig re fo le ip lt mu of p ownershi ides that gulation K which prov Re s d' ar Bo e th by governed any must choose the mp co me sa e th by ed ll n foreign banks contro In addition, sectio . )) (e 22 1. 21 § R. F. same home state (12 C. n by a company of io it is qu ac e th s it ib oh 3(d) of the BHC Act pr ch interstate an one state unless su th re mo in s nk ba of shares law. thorized by applicable au ly al ic if ec sp is n io acquisit   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  , all of ance, Brazil, and Thailand Fr of s nk ba e th of n io pt exce y have the banks from the same countr d le ol tr on -c nt me rn ve go e th foreign n of these provisions to io at ic pl Ap e. at st me ho me sa only a e listed above would have os th an th r he ot s nt me rn ve go prospective effect. 2. The engaging  in  Nonbanking Activities BHC any  Act  prohibits  nonbanking  bank  holding  activities  or  companies  owning  shares  from of  tivities fall activities unless the ac ch su in d ge ga en s ie an mp co 2/ The t. Ac e th of ns io pt em ic ex if ec sp e th of e on in th wi in the United States in ta in ma to is n io ct ri st purpose of this re to prevent g and commerce so as in nk ba of on ti ra pa se the ition, undue interests, unfair compet of s ct li nf co l ia nt te po banking practices that d un so un d an s ce ur so re concentration of e tion and nonbanks ar za ni ga or g in nk ba a e could result wher objectives are to r jo ma e Th r. ne ow on mm controlled by a co impartial distributor an as em st sy g in nk ba maintain the U. S. prevent e United States, to th in e nc na fi d an it of cred t excessive risk to mi li to d an r, we po ic om concentration of econ   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  the system. anies have ic bank holding comp st me do e, nc ue eq ns co a As es in in nonbanking activiti ge ga en to y it or th au d only limite emptions to The most important ex . ad ro ab d an es at St the United  4 limitations of Section e th s ie pl ap A IB e th Section 8 of cy or with a branch, agen nk ba n ig re fo y an that of the BHC Act to , and to any company es at St ed it Un e th in bank subsidiary nk. controls such foreign ba 2/  -6-  the  Act's  ed prohibitions are provid  the Act. section 4(c)(13) of bank  activities of  the  Board  section  4(c)(8) and  lows any The first provision al  quire holding company to ac which  by  shares  of  determines  any  company the  to be "so closely  be a ntrolling banks as to co or ng gi na ma or g related to bankin bank provision allows any nd co se e Th " o. et er proper incident th es any company "which do of es ar sh in st ve in holding company to its pt as an incident to ce ex es at St ed it Un e no business in th 2/ if the Board . • • , ss ne si bu n ig re fo international or ially uld not be substant wo n io pt em ex e th . determines that . in the is Act and would be th of es os rp pu e th at variance with public interest." Two  additional  exemptions  nizations. foreign banking orga two  exemptive  provisions  is  to  are  applicable  The overall lessen  the  solely  to  purpose of these extraterritorial  the e extent feasible, th to , ng ti mi li e il effects of the Act wh the United States from e th in s ct fe ef potential adverse me activities in the sa al ci er mm co d an g in combination of bank to the provisions seek , me ti me sa e th At organization. virtue that may result by es ag nt va ad e iv it minimize the compet ing organizations. nk ba n ig re fo r fo ns of creating exemptio  Edge lly permissible to ra ne ge e os th e ar the 3/ These activities ns 25(a) and 25 of io ct se r de un ns io at or the and Agreement Corp C.F.R. § 211) in 2 (1 K on ti la gu Re d an Federal Reserve Act ro ab ad. United States and   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -7Section  that  provides  Act  BHC  the  2(h) of  the  s of section 4 of the Act restrictions on nonbanking activitie shares of a foreign company shall not apply to acquisition of line of business in the United that engages in the same general States  as  exemption  the  company  conducts  is inapplicable  to:  abroad,  except  (a) shares  that  this  in companies  that  ing riting, selling or distribut engage in the business of underw that would not be permissible securities in the United States , and (b) the conduct in the for domestic bank holding companies ancial operations or types United States of any banking or fin or tion 4(c)(8) except with pri of activities permitted under sec is available only to a ion mpt exe the r, eve How al. rov Board app the t is principally engaged in foreign bank holding company tha United States. banking business outside the In 4(c)(9) of  addition the  BHC  to Act  the section exempts  2(h) exemption, section  shares  held  or  activities  foreign zed under the laws of a conducted "by any company organi ss is conducted outside ine bus se who of t par r ate gre country the if  the  determines that, under  the  the  United  States,  Board  by  regulation  circumstances and  or  subject  order to the  order, the exemption or n tio ula reg the in th for conditions set es of variance with the purpos would not be substantially at public interest." this Act and would be in the lementing these provisions, In adopting regulations imp The first, which is most es. pos pur l era gen two the Board had titutions the kinds of foreign ins relevant here, was to define   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -8-  that  would  qualify  for  The aim  was essentially  foreign  institutions  managerial  strength  Accordingly,  the  the  supervisory  serve to  Board  exceptions. section 4(c)(9)/2(h)  as  their  a  source  U.S.  restricted  -- to of  banking the  ensure  that  financial  the and  1/ operations.  availability  of  the  primarily banking e ar at th ns io ut it n inst exemptions to foreig K requires that to on ti la gu Re s d' ar Bo . The institutions abroad on the ed by the regulati rd fo af ns io pt em ex e qualify for th ged in the banking ga en y ll pa ci in pr must be foreign institution e cond purpose of th se e Th . es at St ed e Unit business outside th qualifying criteria h rt fo t se to s tions wa implementing regula anking activities. nb no of es at St ed the Unit for the conduct in banking qualifying foreign a at th es id ov pr Regulation K nbank company that no n ig re fo y an vest in organization may in company must derive e th ) (1 : ts en em g requir meets the followin ) e United States; (2 th e id ts ou om fr business more than half its n e company's foreig th as me sa e th es must be the U. S. activiti ge in securities ga en t no y ma y an mp ) the co activities; and (3 engage in es, and may not at St ed it Un e th activities in s without the Board' es at St ed it Un e es in th financial activiti prior approval.  n of Foreign Bank io is rv pe Su e th ent on 5 4/ See Policy Statem tory Service T 4-83 la gu Re e rv se Re l 1 Federa ions Examination ut Holding Companies, it st In l ia nc na Fi See also Federal Federal Reserve (1979). 65 , 79 19 , 20 ne ement of Ju Council policy stat . Bulletin 634 (1979)   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -9uld qualify as a co nt me rn ve go no at th It is apparent ions from ible for these exempt ig el on ti za ni ga g or in nk foreign ba Act tivities of the BHC ac ng ki an nb no on ns io the prohibit to be d not be considered ul co nt me rn ve go n ig re because a fo nonqualifying a As g. in nk ba in d ge ga en principally cally ment would be automati rn ve go n ig re fo e th , organization es of rning nonbank activiti ve go s le ru e th l al subject to within the scope ng gi in br us th s, ie an mp domestic bank holding co al activities here ci er mm co of t uc nd co e f the Act not only th ons. y governmental functi ar om st cu so al t bu ad and abro rigidly applied, d an ly ct ri st re we t Accordingly, if the Ac ted from engaging mi li be d ul wo s nk ba d ne foreign government-ow However, under . es at St ed it Un e th in in a banking business vities empt nonbanking acti ex n ca d ar Bo e th ) (9 section 4(c) ibitions of section oh pr e th om fr s ie compan conducted by foreign at to do so would th es in rm te de d ar Bo e the 4 of the BHC Act wher the with the purposes of ce an ri va at y ll ia not be substant Act.  /  grant lows the Board to al K on ti la gu Re of 5/ Section 211.23 ailable under the av ns io pt em ex y an tions or nonqualifying organiza other activities at th e in rm te de y ma n under section io regulation and pt em ex an r fo ns conditio investments meet the t. 4(c)(9) of the BHC Ac   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -103.  Reporting requirements  were considered as es ti ti en nt me rn ve go n ig re If the fo be required to file d ul wo ey th t, Ac C BH e th "companies" under include the Annual e es Th e. rv se Re l ra de reports with the Fe Y-7; the ganizations, Form F.R. g Or in nk Ba n ig re Fo of rt Repo , al Report of Operations ti en id nf Co on ti za ni ga Or Foreign Banking ment-owned e case of foreign govern th in d, an ; 68 20 R. F. Form d to only branches se po op s (a s nk ba ry ia id bs banks with U.S. su ny Transactions for pa om rc te In of rt po Re e and agencies), th Bank U. S. their and tions za ni ga Or g in nk Ba n ig re Fo rms require inter alia fo e es Th f. Y-8 R. F. rm Subsidiaries, Fo ganization, information or g in rt po re e th of ts en financial statem reign es conducted by the fo ti vi ti ac ng ki an nb no e on th in determining the st si as to es at St ed it Un e organi2,ation in th ng provisions of the ki an nb no e th th wi ce an li organization's comp ions information on transact d an K, on ti la gu Re d an BHC Act U. S. its subsidiaries and the d an nk ba es at St ed it Un a between iaries to s majority-owned subsid it d an nt re pa n ig re fo bank's that tercompany transactions in ng ri to ni mo in d ar Bo e assist th a U. S. safety and soundness of e th on s ct fe ef e rs ve ad may have . ign banking organization bank subsidiary of a fore riate believe it is inapprop Foreign governments might would n on the theory that it io at rm fo in e th of ch mu to provide at government's domestic th to in n io us tr in an represent the oad discretion under br r, ve we ho s, ha d ar Bo e Th affairs. nsistent with the co nt te ex e th to e, in BHC Act to conf ope of tory functions, the sc la gu re s it of ts en em ir requ ies. ired of bank holding compan qu re be y ma at th n io at rm info   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -11l Reserve Act ("FRA") Section 23A of the Federa C. § 371c) imposes S. U. 2 (1 A FR e th of A 23 Section a member ount and security) upon am of s rm te n (i s on ti limita These stments in affiliates. ve in d an to s an lo 's bank ember banks through nm no to le ab ic pl ap y ll limitations are equa S 1628(j)). The C. S. U. 2 (1 t Ac e nc ra su In the Federal Deposit guard the resources fe sa to is A 23 n io ct se principal purpose of organizations under of t fi ne be e th r fo se su of a bank against mi were If a foreign government . nk ba e th th wi l ro nt co common t, then all covered Ac C BH e th r de un " ny pa considered a "com the foreign government d an nk ba S. U. s it n ee transactions betw in which the foreign y an mp co y an ., .e (i or any subsidiary terest or otherwise in ng ti vo t en rc pe 25 government has a limitations of section e th to t ec bj su be controls) would nsistent with its co n ai / ag d an y, ar ss If nece 23A.1)discretion to grant s ha d ar Bo e th , es ti regulatory responsibili e Board of section 23A if th ns io is ov pr e th om fr ns exemptio rposes consistent with the pu be d ul wo so do to at th determines the public interest. in d an A FR e th of A 23 of section 4.  that even I, the Board stated BC in r de Or s d' ar Bo e In th 6/ were not treated as nt me rn ve go n ia al It though IRI and the d their majority-owned an ey th t, Ac C BH e "companies" under th of the FRA by virtue A 23 n io ct se to t ec subsidiaries were subj jority O through common ma TC LI th wi n io at li fi ant to of their af is approach as import th d te op ad d ar Bo e Th ion of shareholders. fects from the affiliat ef e rs ve ad l ia nt te po mitigate the However, section 23A anies. mp co ng ki an nb no th wi of a U.S. bank branches or agencies by ns io ct sa an tr to does not apply r affiliates. foreign banks with thei   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -12C.  n government-owned banks Implications of precluding foreig from the U.S. market A  impact  potential  procedures could  be  action  tightened  from against  U. S.  supervisory  banks  operating  ntries would react It is impossible to predict how cou s area, particularly if they to any U. S. initiatives in thi to be part of a policy of were judged by the home countries  abroad.  rationalizing  national  treatment  a9ainst individual countries or  rather  than  attempting  discriminating  to impose  on other standards of economic organization  U. S.  countries.  The  restrictive provisions of the experience in implementing the n that other countries have International Banking Act has bee they were convinced that these not retaliated, possibly because rationalization of the U. S. measures were an appropriate local treatment of Moreover, most studies of the system. s ntries indicate that deviation foreign banks in foreign cou applied equitably against all are ent atm tre al ion nat m fro from a particular country. foreign banks rather than banks setting foreign measures is Although the possibility of off possible  and  cannot  be  excluded,  major conclude it is unlikely that  it  seems  reasonable  to  foreign countries would  S. banks that is different U. for s int tra res of set a pt ado foreign banks. from the policies applied to all of tighter restraints on A second possible implication any country contemplating t tha be ht mig ks ban d wne t-o governmen   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -13nationalizing  its local banks would  ts on weigh some restrain  States ties in the United vi ti ac g in nk ba t uc nd its ability to co s are onalization decision ti Na n. io at iz al on as a cost of nati onomic ic political and ec st me do r fo n ke ta almost invariably actices U. S. regulatory pr at th ly ke li un is reasons, and it country's decision y an on ct pa im l ma a mini would have more than nks. to nationalize its ba D.  t to application of BHC Ac om fr s ct fe ef e rs ve ad Lessening entities foreign governmental 1.  strictions Interstate banking re  to apply If the BHC Act were  to foreign  government  the Board would t, Ac e th of d) 3( n io r sect entities, then, unde s in any state nk ba of ns io it is qu oving ac be limited in appr banking ich the principal wh in e at st le ng si other than the nks are conducted ba n ig re fo d ne ow vernmentoperations of the go deposit-taking ng hi is bl ta es to As bank. through a subsidiary e IBA and its th of 5 n io ct se , le states branches in multip at a single "home th e ir qu re to ar pe would ap legislative history the same n banks owned by ig re fo l al by ed in state" be mainta government. One  way  in  which  to  ameliorate  the  foregoing  andfathering, that gr by is t Ac C BH ying the consequences of appl , for example, us Th y. el iv ct pe os t only pr is, to apply the Ac athered. ing could be grandf nk ba te ta rs te in existing future may be needed as to s ep st ng ti ga ti mi No further tions Act and IBA limita C BH e th e nc si , ns interstate operatio  -14which lity of other vehicles by bi la ai e av th by d te ra io el am are These include s U. S. presence. it nd pa ex y ma nk ba n ig re a fo ly mited branches (which may on li , ns io at or rp Co ge Ed , es agenci rporation can accept), and Co ge Ed an at th ts si po de take established pursuant to be y ma at th s ie an mp co ng nonbanki None of these entities is t. Ac C BH e th of ) (8 c) section 4( ions on interstate expansion. subject to federal restrict 2.  Nonbanking activities  If the BHC Act  were applied  to foreign governmental  those ence in the United States, es pr g in nk ba a th wi es ti enti in the in activities abroad and ly on ge ga en d ul co es ti enti lding sible for domestic bank ho is rm pe e ar at th es at St United how to al question is whether and on ti di ad an , us Th s. ie compan ign strict application to fore e th of es nc ue eq ns co e th reduce and ibitions of the BHC Act oh pr ng ki an nb no e th of governments te the impact is by ra io el am to y wa e On K. Regulation activities of foreign ng ki an nb no t en rr cu e th ng grandfatheri g presence in the United in nk ba a th wi es ti ti en ed government-own , the ion of the Act, as well at ic pl ap e iv ct pe os pr to States. As applicability under the s it t mi li to y it or th au Board has broad Act provided the Board C BH e th of ) (9 c) 4( n io provisions of sect at variance with the y ll ia nt ta bs su t no e ar finds the exemptions in the public interest. e ar d an t Ac e th of es purpos any such exemptions, Finally, in connection with   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  it  should  be  noted  that,  by  regulation,  a  foreign  -15nongovernment-owned presence  in  principally  the  organization  United  engaged  in  States banking.  may unless As  have  not the  a  banking is  organization  indicated  above,  this  at with the aim of assuring th y el rg la d te op ad s wa on ti limita al on will have adequate manageri ti za ni ga or nt re pa n ig re fo the ed wever, if all government-own Ho s. ce ur so re l ia nc na fi and rial equate financial and manage ad e hav es lv se em th at th s nk ba United e a banking presence in the hav to le ab un re we s ce ur so re Further rtant policy issues. po im e is ra ld wou is th es at St king ed in the scope of nonban lv vo in are s on ti es qu cy poli issible for a foreign rm pe be ld ou sh at th es ti vi acti the U. S. banking presence, and a h wit ty ti en al nt me rn ve go for irements should be modified qu re g in rt po re ch whi to nt exte   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  these entities. E.  section 3(c). Adequacy of criteria under  r the present language of It has been questioned whethe on s the Board, when acting it rm pe Act BHC the of c) section 3( ed banks, to give due wn -o nt me rn ve go n ig re fo by applications n cial motives" of foreig er mm co on "n y an to n io at consider om e effects resulting fr rs ve ad le ib ss po ir the and governments . acquisition of a U. S. bank Section 3(c) provides  that  in  every case  the  Board  e s of the acquisition, th ct fe ef e iv it et mp co the must consider k of the company and the ban s ce ur so re al ri ge na ma financial and e transaction on the th of s ct fe ef the and to be acquired,   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -16To the to be served. y it un mm co e th of s ed ne convenience and ign government-owned re fo a at th s nd fi d ar extent the Bo achieve objectives that to nk ba e th e us to s nd applicant inte S. the operations of a U. of t uc nd co e th th wi nt are inconsiste e the application becaus ny de d ul co d ar Bo e th , subsidiary bank nce and needs of the ie en nv co e th on ct pa im of the adverse potential use of a U. S. e th y, rl la mi Si s. ie bank's communit es or the operation of iv ct je ob l ia rc me om nc no bank to achieve its safety or soundness rm ha d ul co at th er nn ma the bank in a ant as management of an applic e th on y el rs ve ad so could reflect In each case, however, n. io at ic pl ap e th of al ni de to warrant orted g in denial must be supp in lt su re n io at in rm te de the adverse can also idence. Such concerns ev l ia nt ta bs su by rd in the reco bank supervision and h ug ro th d se es dr ad y el be effectiv examination.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ATTACHMENT A  is a listing of all foreign The attached ing presence and government-owned banks with their U. S. bank the asset size of each entity.  Column 1 indicates country of origin.  Column 2 indicates ("CFAE6 ).   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  banks  under  common  corporate  control  al banking entity in Column 3 indicates the name of the individu the United States. the U. S. banking Columns 4 and 5 give the city and state of entity. Column 6 indicates the type of banking entity: Entity Types:  1. 9. 11. 13.  12. 21.  U. S. subsidiary bank Branch Agency "Agency" that accepts large deposits (considered a branch for home state purposes) New York Investment Company Edge Corporation  Column 7 indicates asset size entity.  in  the  United  States  of  the  r(Jith I  LX/V t-LittPA t-1Vi - 1,161.W  ortivt-1 •  Li •  fLL.  i  7. 3o 644a, 4.1- g3o6  OCTOBER 14, 1983 DATE OF RUN: 0 OD: PERI DATA FOR  1080. 1080. 1080.  20.  1080. 1080. 1080.  20.  1080.  25.  20. 20.  O.  1080. IMO;---1080.  20. 20. 25. -75.  BANQUE NATIONALE DE PARIS FRENCH=AMERICAN 8KG CORP -BANQUE NATIONALE DE PARIS  ATP5NA L CORP 8NP- IP4TFANBANK OF THE WEST  ANGUE NAIL 15E PARyg-la-ENcy  Y BANQUE NATL DE PARIS AGENC A CREDIT of0NR CREDIT LYONNAIS SA Cal-DTT -LYONNAIS  25. CREDIT LYONNAIS AGENCY 25 --CR.EDTTANDNNATS-Aancs,  NEW YORK N E W NOB K CHICAGO HOUSTON SAN FRANCISCO 1:6! ANGELES SAN FRANCISCO NEW YORK MIAMI CHIrAGO  Lc SA  .;ELES  ANCISCO vORK NEw SUEZ DE L 63. BNQ DE L INDOCHINE 1080. NEW YORK R EDIT-114005T In TT-CDRA 63: 1080. CHICAGO 63. OANQuE INDOSuEZ 1080. HOUSTON BANK INTL IN6oSurf LOS ANGELES SUEZ INOO UE 63. BANQ loso. NEW YORK E FRANC bir 08.--CAr0IT - tbki4FACIAL 1080. NEW YORK BAS PARI UE 126. BANQ 1080. ---kgr 111 --174.--IANOUE-PARIRAS 1080. AGO CHIC 126. BANQUE PARIBAS 1080. STDN Nilti CO TNT S K ETDE rAKT Dr 126. 840 LOS ANGELES 126. BANQUE PARIBAS lotto. -YORK MIN -mrFTEN EIAO UR LIUNT -- BANQUE - DI 1D80: YORK NEW ALE GENER ETE SOCI 140. 1080. 14SOCTEYEPRALU 1686; LOS ANGELES 140. SOCIETE GENERALE 1080. CHICAGO 146;--tkis-sT NAT DE Cato AGRICOLE NEW YORK 177. BANQUE WORMS 1080. NEW YORK NORD DU 1666. -222. CREDIT YORK NEW SOANK LANDE SCHE OEUT WEST 75. 1100. YORK NEW GRTLE NK ESBA - 1160. --165. -14ESS1CHE LAND NEW YORK 188. BAY LANDESBK GIRZNTRLE 1100. SA BOSTON E GREEC 4. NATIONAL BANK OF YORK NEW YORK NEW OF BANK 4. ATLANTIC 1120. -A 6- 15 SA -041C CE ORFf OF SANK ONAL NATI 4. 1120.  1880.  1 150.  1150.  . LONG ISLAND TRUST COMPANY NA ANCA- CCIMACRCI Alt ITAI1A-Fa  GARDEN CITY  NEW YORK -CHICAGO LOS ANGELES NEW YORK.  BANCA COMMERCIALE ITALIANA COMMi ITALIANA AGENCY BANCA NAZIONALE DEL LAVORO_ 6. Al ANT-AANCA NAZIONALE DEL LAVABO 6. 1150. ATLANTA O 6. NAZIONALE DEL LAVOR 1150. A60- 041C RO LAVO DEL LE NA A ZIONA 8ANC - 6. 1150. O ANGELES LOS LAVOR DEL NALE A NAZIO BANC 6. 1150. YORK NEW YORK §A-NLT) Of NAPOLI NEW 7. 'ISO. NEW YORK 8. BANCO DI ROMA 1150. CHICAGO ) ROMA CAGO (CHI DI O BANC 8. 1150. CHICAGO 8. BANCO DI ROMA 1150. SAN FRANCISCO Y ROMA AGENC DI O 8. BANC 1150. NEW YORK AN° ITALI ITO CRED 59. 1150. LOS ANGELES Y AGENC AN° ITALI - ---115-6. NEW YORK IA 01 O SICIL BANC 115. 1150. NEW YORK NO-TORI O PAOL SAN 13ANC -IST 161. . 1150 NO LOS ANGELES TORI SAN BANC PAOLO 163. 1ST 1150. LOS ANGELES Amt § 10 as s T ANce FIRS 161. - 1150. YORK NEW ° 134. BANCO PORTUGUES DO ATLANTIC 1231.  1150. 1 ISO. 1150.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  5.  NY  NY IL TX CA  CA CA NY FL IL CA  CA NY  9.  254187.f 894352 9. 21. 1._ 11. 11. 9. 11. 9.  218402. 55715.  9.  NY FL IL  9. 11. 9. 21. 11. 9.  -ILNY  1167709. 147304. 543698.  11. 11.  NY  CA NY NY IL CA IL NY NY NY NY NY MA NY  269583. 4494.  1731470. 64101. 121935.  9. --- NIF--9.9. IL 21. TX 9. CA  TX  _  9. 9. 9. 9. 9. 9. 9. 9. 9. 9.  1. 9. 1.  NY IL CA NY FL GA IL CA NY NY IL IL CA NY  9. 9. 11. 9. 11. 11. 9.  CA NY. NY CA CA NY  11. 9. 11. 9. 1. 13.  11. 9. 9.  1. 9. 11. 9.  1287701. 976092. 101036. 2510.  17460. 446709. 963764. 13995. 167364. 9555. 356447. 114990. 1295096.  103867. 53411. 299355. 103372. 347417. 821546. 87229. 288270. 28770. 482455.  38420. 1144311. 1785054. 566716. 190676. 1424905. 89900. 165810. 324003. 246090. 896099. 1275123. 168376. 514592. 423293. 798153.  216514. 391154. 673146. 122558. 392649. 129931.  9: IaL-  40-4 /32 kttia'x..--7 a_4„,  _AA-A-41 eAt-  /2 17/  _Lva,ar-r-  e4c-tal  21• a  _MA  Ny NEW YORK ACORES CA 138. BANCO TOTTA ‘ O 1231. SAN FRANCISC ORES NY 151. BANCO TOTTA t.AC 1231. STONY BROOK BANK EXTE FL . 122 . 1250 MIAMI TERIOR -01- ESPANA -CA - 122. BANK -OF 1X LOS ANGELES ESPANA SA or--p --1224. BANCO EXTERIOR DE 1250. YORK NEW KIKtokpokATIoN SAPE &TO BANE FL 2 2?. .1250 MIAMI CREDITO SA NY 227. BANCO ESPANOL DE 1250. YORK NEW A NTIN ARGE ON FL 60. BANCO OE LA NACI 3010. •_ I MIAM ARG AGNCY 11. 60. BANCO DE LA NACION 3010. 4INA--5-41CAGo CA 60. - 6ANCO Of LA-WYN -06f 3010; AGNCY SAN FRANCISCO ARG ON NACI NY 60, BANCO DE LA 3010. YORK E NW FL 4.-BANCO --60-111kAZTC-SA 3030. MIAMI AGENCY CA 9, BANCO 00 BRAZIL SA 3030. LES LO' r4GE siATTCSA AGENCY ____CA ----Miff:- - 9. ---wARTVERn Si , 1NCISCD CY AGEN SA IL BRAZ 00 O 9, BANC NY 3030. RK SA6-PAULO N, Ea. -60407WEIIADO DEFL_ 3036. • O MIAMI 61. BANCO DO ESTADO DE SAO PAUL CA 3030. LES ANGE LOS -ESTAbb OE SAO PAULO 61. BANCO 00 CA 3636.CISCO ESTADO DE SAO PAULO SAN FRAN DO O BANC 61. NY 3030. YORK NEW 1940 BCO DO EST DO RIO DE JNRO 3030. NY YORK NEW 216. BCO ESTADO RIO GRANDE SUL NY 3030. YORK NEW CY AGEN CO 10e BANCO NACL ot MEXI CA 3170. LES ANGE LOS 10. CALIFORNIA COMMERCE BANK CA 1170. LES ANGE LOS CY i0.--BANCO -4ACL OE MEXICO AGEN NV 1170. NEW YORK 64* BANCOMER SA AGENCY CA 3170. MESA LA NK T NBA 1C7SP64. GROS CA 3170. LOS ANGELES AGENCY SA OMER BANC 64, NY 3170. YORK NEW CY 1130.7-14ANCA SERFIN SA AGEN CA ----5170. LES ANGE LOS CY 110. BANCA SERFIN SA AGEN NY 3170. NEW YORK 48. MULT-113-ANCO CONERMEX SA AGCY GA LES ANGE LOS 148. MULTIBANCO COMERMEX SA AGCY NY 3170. YORK NEW 172. BANCO INTERNCAL SA ---5170. NY NEW YORK_ 185. BANCO MEXICAN° SA . 3170 NY YORK NEW 215, BNCO NACIONAL DE PANAMA 3188. NY YORK NEW UAY 187. BANCO REP ORNT URUG NY 3260. NEW YORK --WI. BANCO iND bE VENEZUELA CA .--3271. FL I MIAM 78. BANCO IND DE VENEZUELA CA 3271. NY YORK NEW 162. GULF INTL BANK BSC 4070. NY YORK NEW 191. BANK OF CHINA 4140. NY YORK NEW 48. STATE BANK OF INDIA 4210. IL CHICAGO 48. STATE BANK OF INDIA CA 4210. LEt ANGE LOS 48. STATE BANK OF INDIA 1CALIFi 4210. CA LOS ANGELES INDIA AGENCY OF E BANK STAT 48. 4210. NY NEW YORK 116e BANK OF INDIA 4710e CA O CISC FRAN SAN 116. BANK OF INDIA AGENCY 4210. NY YORK NEW 142. BANK OF BARODA 42/0. NY NEW YORK 14. BANK MELLI IRAN AGENCY 4230. CA O C1SC FRAM SAN Y -----I4;--bAkK-PIE1.LT-IkAWAGENC ---- 423-0: NY YORK NEW CY 120. BANK SEPAH IRAN AGEN 4230. NY NEW YORK 38. KOREA EXCHANGE BANK 4300. IL AGO CHIC 38. KOREA EXCHANGE BANK 4300. CA LES LOS ANGE BANK A CALIFORNIA KORE 4O38 CA LOS ANGELES 38. KOREA EXCHANGE BANK AGENCY 4300. WA ----TLE -SEAT --KOREA -ExcHANtr BANK --M. . 4300 NY YORK NEW LTD 119. CHOHUENG BANK 4300. CA O CISC SAN FRAN I14:--Ti4O-44E1JNO BANK LTD AGENCY 4300. NY YORK NEW AD 139. BK BUMIPUTRA MALAYSIA BERH 4360. CA LES ANGE LOS AD 1 BERN V11 TRA mak ; BVIIM/PU 4166. ----11347NY NEW YORK 31. HABIB BANK 4470. NY YORK NEW 42. NATIONAL BANK OF PAKISTAN AATO. DC ON INGT WASH STAN OF PAKI BANK 41.^ 42. NATIONAL 4470.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  11,.. 11. I. 11. 11 • 12. 11. 9. 11. 9. 11. 9. 11. H. 11. 11. 11. 11. 11. 9. 9. 11. 1. 11. 11. 1. 11. 11. 110_ 11. II 11. 11. 13e 9. II. 11. 9• 9. 9. 9. 1. 11. 9. 11. 9. 11. 11. 11. 9. 9. 1. Ii. 9. 9. 11. 9• 11. 9• 9. 9•  161844. 11565. 318899. 57: 32 58 79 _0 2 122601. 44464. 977976. 45011. 17-3533* 206868. 388037. 60051. 621432. _864536. 17002. 104944. .__ 129907. _IMP, 66853. 6716. 934898. . _ _40.1_903 97188. 981185t 145154. 204295. 140909. 179522. 207580. 146884. 165406. 102179. 23539. 37291. 407398. 69438. 142896. 562349. 73454. 25787. 6546. 49708: 45759. 45818. 14288. 17604. 9676. 249. 551319. 74771. 139085. 121712. 64033. 418157. 202646. 146421. 81050. 28750. 260323. 67145.  1.••••••••••11.....  4470. 4470. 4480. 4480. 4480. 4641. 4641. -4641. 4660. 6008. 6008. 6168. 6168.  CHICAGO ISTAN 42. NATIONAL BANK OF PAK NEw YbAX 5 ITE LIm 1151.---INTTED EVANikrNEW YORK BANK 44. PHILIPPINE NATIONAL AiE Lo 44. PHILIPPINE-NATIONALLU __ OLU HON K AGENCY 44. PHILIPPINE NAIL BAN KYOR NEW NK -LTO 145. STAN COmmERCIALBA ANGELES LOS D ITE LIM K BAN 145. SIAM COMMERCIAL NEW YORK 1 MTrETIK LIBAN AL -TR TZ KAU . 21u WASHINGTON INC 167. ABU DHABI INTL BK YORK NEW A TRI AUS 127. CmNwLTH TRO BK Or LOS ANGELES NCY AGE T AUS OF BK 127. CmNwLTH TR NEW YORK LANO 111. BANK OF NEW ZeA LOS ANGELES NCY AGE D LAN 133. BANK OF NEW ZEA   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  IL pY NY  CA HI NY CA NY DC NY CA NY CA  9. 9. 9. 9. 11. 13. 9. 9. 9. 9. 11. 9. _11.  6914. 19375. 22790. 49106. 641. 62290. 17903. 155726. _ 173873. 161171. 104878. 57107. 29441.  b   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ATTACHMENT B  HOME STATES FOREIGN GOVERNMENT-OWNED BANKS' FOREIGN BANK  HOME STATE  FRANCE 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.  Banque De L'Union Europeenne Banque Nationale De Paris Credit Lyonnais Banque De L'Indochine & De Suez Credit Industriel et Commercial Banque Indosuez Credit Commercial De France Banque Paribas Societe Generale Caisse National De Credit Agricole Banque Worms Credit Du Nord  New York New York California New York New York New York New York New York New York Illinois New York New York  GERMANY 1. 2. 3.  Westdeutsche Landesbank Hessiche Landesbank Girozentrale Bay Landesbank Girozentrale  New York New York New York  GREECE 1.  National Bank of Greece S.A.  Massachusetts  ITALY 1. 2. 3. 4. 5. 6. 7.  Banca Commerciale Italiana Banca Nazionale Del Lavoro Banco di Napoli Banco di Roma Credito Italiano Banco Di Sicilia ino Istituto Bancario San Paolo di Tor  New York New York New York New York New York New York California  PORTUGAL 1. 2.  Banco Portugues Do Atlantico Banco Totta & Acores  New York None/  operate a domestic branch or A foreign bank that does not ose States is not required to cho subsidiary bank in the United a home state.  */   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -2SPAIN 1. 2.  Banco Exterior De Espana S.A. Banco Espanol De Credito S.A.  New York None  ARGENTINA 1.  Banco De La Nacion Argentina  New York  BRAZIL 1. 2. 3. 4.  Banco Banco Banco Banco  Do Brazil S.A. Do Estado De Sao Paulo Do Estado Do Rio De Janeiro Estado Rio Grande Sul  California None New York New York  MEXICO 1. 2. 3 4. 5. 6.  Banco Nacional De Mexico Bancomer S.A. Banca Serfin S.A. Agency Multibanco Comermex S.A. Banco Internacional S.A. Banco Mexicano S.A.  California California None None None None  PANAMA 1.  Banco Nacional De Panama  New York  URUGUAY 1.  Banco Rep. Ornt Uruguay  New York  VENEZUELA 1.  Panco Ind De Venezuela C.A.  None  BAHRAIN 1.  Gulf International Bank BSC  New York  PEOPLE'S REPUBLIC OF CHINA 1.  Bank of China  New York  INDIA 1. 2. 3.  State Bank of India Bank of India Bank of Baroda  New York New York New York  IRAN Bank Melli Iran Bank Sepah Iran  1. 2.  None None  KOREA 1. 2.  Korea Exchange Bank Cho-Hueng Bank Ltd  New York New York  MALAYSIA 1.  Bank Bumiputra Malaysia Berbad  New York  PAKISTAN 1. 2. 3.  Habib Bank National Bank of Pakistan United Bank Limited  New York New York New York  PHILIPPINES 1.  Philippine National Bank  California  THAILAND 1. 2.  Siam Commercial Bank Ltd Krung Thai Bank Limited  California New York  UNITED ARAB EMIRATES 1.  Abu Dhabi International Bank Inc.  Washington, D. C.  AUSTRALIA 1.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Commonwealth Trade Bank of Australia  New York  NEW ZEALAND 1.  Bank of New Zealand  New York  •   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  October 27, 1983  The Honorable Robert J. Lagomarsino . House of Representatives Washington, D. C. 20515 Dear Mr. Lagomarsino: Thank you for your letter of October 4 requesting comment on correspondence you received from your constituent, Mr. Armand G. Martone, who is questioning the method used to compute interest on U.S. Plan Retirement bonds. As fiscal agent for the United States, the Federal Reserve Bank of San Francisco, Los Angeles Branch, is required to compute interest as prescribed by the Department of the Treasury. Accordingly, we have forwarded your request to Mr. William M. Gregg, Commissioner of hhe Public Debt. I am sure you will be hearing from Mr. Gregg shortly. Please let me know if I can be of further assistance. Sincerely,  Donald J. Winn Assistant to the Board CC:  Mr. William M. Gregg Commissioner of the Public Debt  MLB:CO:vcd (V-202, 83-211) bcc: Mr. Bermudez Mrs. Mallardi V  Action assigned Mr. Farnsworth COMMITTEE ON FOREIGN AFFAIRS  ROBERT J. LAGOMARSINO 19TH DISTRICT, CALIFORNIA 2332 RAYBURN BUILDING WASHINGTON, D.C. 20515 202-225-3601  SUBCOMMITTEE  WESTERN HEMISPHERE AFFAIRS  Congre5s5 of the initeb  CONFERENCE. SECRETARY   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  COMMITTEE ON INTERIOR AND INSULAR AFFAIRS  lbousSe of ReprefSentatitiesS IA; asbington, 20515 October 4, 1984  RANKING MINORITY MEMBER  tate5  SUBCOMMITTEES  -1/  INSULAR AFFAIRS RANKING MINORITY MEMBER  PUBLIC LANDS AND NATIONAL PARKS  rar ›-  Paul A. Volcker Chairman Federal Reserve Board Constitution and 21st 20551 Washington, D.C.  C.Z.3 •••••• ••••••  Dear Mr. Volcker:  NJ  Please find enclosed a letter from my constiutent, Armand G. Martone, who is having difficulties with the Federal Rerserve bank of San Francisco. I would appreciate any assistance your office could provide for Mr. Martone. Thank you.  RJL;k1m encl.  SUITE 101 5740 RALSTON VENTURA, 93003 842-2200/656-4344  STUDIO 121 EL PASEO 814 STATE STREET SANTA BARBARA, 93101 963-1708  120 WEST CYPRESS POST OFFICE BLDG SANTA MARIA, 93454 922-2131  r .1   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  August 23,  19a3  Mr. Michael Wootton Administrative Assistant Office of Representative Robert J. Lagomarsino 2332 Rayburn Building Washington, D. C. 20515 Dear Mr. Wootton: Reference is made to attached copy of your letter dated August 18, 1983, letting me know that the Government Securities Office of the Federal Reserve Bank of San Francisco refuses to disclose how they computed interest in connection with the redemption of my U. S. Retirement Bonds and suggesting that I compute the interest myself. Well, I have computed interest, as per the attached schedule, using their own Table C, and I come up with 156.26 shortage. Therefore I'm going to insist that they produce their interest computation figures, which they had to compute in the first place and which computations they could easily have inserted in the schedule I mailed them with the bonds. Putting their computed interest figures on said schedule at time of computation would have taken only a few more minutes, so their excuse of lack of personnel is not acceptable. Will you please carry the ball for me on this matter since I don't even receive the courtesy of a reply to my letters to them. Thank you very much. Sincerely yours,  Armand G. Martone  COMM I TTEE ON FOREIGN AFFAIRS suscow MrTTEES:  ROBERT J. LAGOMARSINO 18TH DISTRICT..CALIFORNIA 2332 RAYBURN BUILDING WASHINGTON, D.C. 20515  202-225-3601  Congre5f of tbe ?Unita tatai ousSe of RepresSentatibeg  ASSISTANT REGIONAL WHIP, PLAINS AND WESTERN STATES   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Eastington, 1B.C. 20515  INTERNATIONAL ECONOMIC POLICY AND TRADE RANK NG M Ipiorry M CURER INTER-AMERICAN AFFAIRS  COMMITTEE ON  INTERIOR AND INSULAR AFFAIRS SUOCCR4tJ ITTEES:  INSULAR AFFAIRS RANKING MiNootrri• M Euterpe PUBLIC LANDS AND NATIONAL PARKS  August 18, 1983  Mr. Armand G. Martone  Dear Mr. Martone: While Congressman Lagomarsino is in California for the summer recess, it is my pleasure to acknowledge your letter concerning your U.S. Retirement Bonds. On your behalf I have contacted the Government Securities Office of the Federal Reserve Bank of San Francisco in San Francisco. They informed me all government bonds, except E and EE Bonds, are redeemed at face value. If you substract the total face value of all your bonds from the total amount of the check, then you will have the total amount of interest paid on the bonds. They said they are sorry that they do not have available personnel to break down payments on bonds into principal and interest paid for each bond. If you have any questions concerning other Federal matters, please do not hesitate to contact the Congressman.  0 TON MICHAEL Administrative Assistant  MW:smh  c- ci  lamtimmrin  PAPER MADE WITH RECYCLED FIBERS   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  REGULATIONS GOVERNING UNITED STATES RETIREMENT PLAN BONDS 1974 Third Amendment to Department Circular Public Debt Series No. 1-63 Dated January 10, 1963 Fiscal Service Bureau of the Public Debt  TREASURY DEPARTMENT Washington, January 30, 1974  Section 341.1 (a) of Department of the Treasury Circular, Public Debt Series No. 1-63, dated January 10, 1963, as amended (31 CFR Part 341), is hereby further amended to read as follows: Sec. 341.1. Description of bonds. — (a) Investment yield (interest). United States Retirement Plan Bonds, hereinafter sometimes referred to as Retirement Plan Bonds, will be issued at par. The investment yields (interest) are as follows: (1) Bonds with issue dates of January 1, 1963, through May 1, 1966 — 3% percent per annum, compounded semiannually. (See table of redemption values appended to the circular.) (2) Bonds with issue dates of June 1, 1966, through December 1,1969 — 4.15 percent per annum, compounded semiannually. (See Table A, appended to the First Amendment of the circular.) (3) Bonds with the issue dates of January 1, 1970, through January 1, 1974 — 5 percent per annum, compounded semiannually. (See Table B, appended to the Second Amendment of the circular.) (4) Bonds with the issue date of Februaj. 1974,, or thereaftej — 6. percent per annum, compounded *semiannually. (See Table C,_tippenderfo this amendment.)  .••••••  The interest will be paid only upon redemption of the bonds. The accrual of interest will continue until the bonds have been redeemed or have reached maturity, whichever is earlier, in accordance with these regulations. The foregoing amendment was effected under authority of the Second Liberty Bond Act, as amended (40 Stat. 288, as amended; (31 U.S.C. 752, et seq.) ), and 5 U.S.C. 301. Notice and public procedures thereon are unnecessary as the fiscal policy of the United States is involved. JOHN K. CARLOCK Fiscal Assistant Secretary of the Treasury.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  TAsis C ?ARIA Or LIDRIIFTION FALIII1  rsoviinvio AN OtTIPTURNT TURLD Or 11 TICICINT FIR ANN1711 Vol RONDO BLARING WWI DAMS 11FAINIONO YRBRUAILY 1, 1074  of bolding following the date of Teble shows the increase in redemption value kw each succeed ve half-year term The redemption values have been issue en Retirement Plan Bonds bearing issue dates beginning February 1, 1974. compounded semiannually, on determined to provide an investment yield of approximately S percent'vet annum to maturity is indeterminate the purchase price from tame del e to t he beginning of each half-year period. The period in aocnrdanoe with the provisions of Sec. 141.1(b) of tills circular. issue price Period after issue date  Pint 4 year h to 1 year 1 to 14 years 14 to 2 years 2 to 24 years 24 to 3 years 3 to 34 years 34 to 4 years 4 to 44 years 44 to 5 years 5 to 54 years 14 to 6 years 6 to 64 years 64 to 7 years 7 to 73-S Years 734 to 8 years 8 to 84 years 64 to 9 years 9 to 94 years 14 to 10 years 10 to 104 years 104 to 11 years 11 to 114 years 1134 to 12 years 12 to 124 years 114 to LI years 13 to 134 years 134 to 14 years 14 to 14,14 years 144 to 15 years 15 to 1534 years 154 to 16 years le to 1654 Years 11134 to 17 years 17 to 174 years 174 to 18 years 16 to 184 years ittyi to 19 years 19 to 194 years 194 to 20 years 10 to 204sears  $50.00  1100.00  S500.00  $1,000.09  Redemptlori values during each half-year period (values increase on first day of period shown) $86.00 51. 541 53.00 54.54 86.28 57.9$ 59. 71 61. 49 61.34 65. 24 117. 26 69.21 7L 29 73.43 75.5$ 77.90 80.24 82.64 86. 12 87.86 90.31 93. 01 96.81 98. 68 10L 64 101 69 107.83 11L 04 114.40 117.83 12L 36 125.00 128.75 132.02 136.50 140.59 144.91 149.20 153.74 158. 15 163, 10  $100.00 100.00 106. 19 300.28 11.2.58 115.92 119.40 122.98 126.86 Lao.48 Lit 40 38.42 142.58 146. 86 161.20 155.80 100.48 156.28 170 24 175.36 180.02 186.02 191.62 197.36 203. 26 2O9. 38 215. 64 :La 12 228.80 735.66 242.72 250.00 257. 60 265. 24 273.20 281.18 280.02 298.52 107.48 318.70 326. 20  t Based on redemption values of $1,000 bond. [Ma Doc.74-2901 Piled 2-6-74;8:46 am]  $500,00 515.00 510. 50 645. 40 562,90 579.60 697.00 614.90 613.40 652. 40 072.00 692. 10 712.90 734.30 78630 779.00 W.40 825. 40 851. 20 876.80 903. 10 930. 10 956. 10 986. 80 1,016. 40 1,046. 90 1,OM 30 1,110. 60 1,144.00 1, 178. 30 1,211 60 1, 250. 00 1, 287. SO 1,126. 20 1,366. 00 1,406.90 1,449.10 1,492. 60 1,537. 40 1,583. 50 1,641. 00  $1,000.00 1,0/0.00 1,061.00 1,OW.80 1,125.00 1,159.20 1, 194. 00 1, 229. 80 1,556.80 1.104.80 1,344_ 00 1, 384_ 20 1,425.80 1, 468. 60 1, 512.60 1, 558. 00 1,604.80 1,662.80 1,M.. 40 1,753. 60 1,806, 20 1,860. 20 . 1.916. 20 1,973.00 2,002.80 2,091 80 2, 156.00 2, 221. 20 2,288.00 2,356.60 2,427. 20 2, 500. 00 2,575.00 2, fl.C2. 40 2,712 00 2,813. 80 2, 998 20 2, COZ. 20 1,074. BO 3. 167. 00 a,202.00   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  August  9, 1983 a v  Hon. Robert J. Lagomarsino 19th Congressional District 2332 Rayburn Building Washington, D. C. 20515 Dear Representative Lagomarsino:  Approaching the dead -line age of 70A years, I cashed in some U* S. Retirement Bonds through the Los Angelea Branch of the Federal Reserve Bank of San Francisco. With the bonds I submitted, 4/15/83, a, schedule like the attached, asking them to fill in the interest earned for each bond. They sent one check for all of the bonds plus interest but no break-down as to principal and interest for each bond. I wrote a_ follow-up letter and mailed them another fillin schedule several weeks ago - but still no response. So I'm writing to ask what you can do to get the information for me. I know they had to compute interest on each bond in order to arrive at the total for which they mailed me a check. All I'm asking for are those computed figures* Thank you very much. Respectfully yours,  a  lAev\e2-1,'`'t1 Armand G. Marton.  •  .  •  •  •  . ...•• ••.  3•:;  ' • . .• •• . .•.•  ':  • •:-.• • '- ••  ••  -'-'!1( i:•.• • ' •: •  Removal Notice The item(s) identified below have been removed in accordance with FRASER's policy on handling sensitive information in digitization projects due to personally identifiable information.  Citation Information Document Type: Financial record Citations:  Number of Pages Removed: 1  Retirement bond numbers, dates, and amounts, Armand G. Martone, 1983.  Federal Reserve Bank of St. Louis  https://fraser.stlouisfed.org  PAUL S TRIBLE, JR VIRGINIA  UNITED STATES SENATE WASHINGTON, D. C. 20510  C(  0C- ()(2A_ M  )  A  \.(\i‘tuL  s&\IIA\A  o  c_cD\  sS  CC\A/U\a-C-CC2-S4--O'k  (jL.  \4)(2)L.Q._ OsCCIZZYk_a-\  \A.t2A\ C2S2_CSL.WQA  cza\KQAA  ( 6 \t1A.A-  _  \rukcv2_  tk. \6Aow -KkAL  co\AAwk:/14-c-TQE WLIL\f\ft.  \ADQ/14k '\&:\de\\A- \&-\0  tcL t(QA  \Q,—,—   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  L_L.kCCed  6/vc),k.)  ti&.Q0(R/Q.A._  \   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  BOARD OF Ct.; CF T:.-.y'l.Pti'itif3 FECE;;Al. RESEW:: 'E.11  1933 OCT 31  Ai1 10: 3,9  hECEIVED CFFiCE CF1-1E CHARNAII   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  October 26, 1983 e.  The Honorable John C. Stennis United States Senate Washington, D. C. 20510 Dear Senator Stennis: Thank you for your letter of October 6 oyrecommending Ms. Cornelia Vaughn Jordan for empl iding ment with the Federal Reserve Board and prov qualifications. US with information regarding her Ms. Linda C. Inwan of our Division of nged Personnel has contacted Ms. Jordan and arra the for her to interview with a staff member in Board's Division of International Finance. g Ms. Inman will contact her directly regardin the status of the interview. We appreciate having your recommendation on behalf of Ms. Jordan. Sincerely,  LI:CO:vcd (V-201, 83210) bcc:  Ms. Inman Mrs. Mallardi (2) ---  will interview Personnel and Gemmill MARK 0. HATFIELD, DREG., CHAIRMAN TED STEVENS, ALASKA LAWELL P. WEICKER, JR., CONN. JAMES A. MC CLORE, IDAHO PAUL LAXALT. NEV. JAKE GARN, UTAH THAD COCHRAN, MISS. MARK ANDREWS. N. OAK. JAMES ABDNOR, S. OAK. ROBERT W. KASTEN, JR., WIS. ALFONSE M. D AMATO, N.Y. MACK MATTINGLY, GA. WARREN RUDMAN, N.H. ARLEN SPECTER, PA. PETE V. DOMENIC', N. MEX.  JOHN C. STENNIS, MISS. ROBERT C. BYRD, W. VA. WILLIAM PROXMIRE. WIS. 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. OAK. PATRICK J. LEAHY, VT. JIM SASSER, TENN. DENNIS DE CONCINI, ARIZ. DALE BUMPERS, ARK.  J. KEITH KENNEDY, STAFF DIRECTOR FRANCIS .1. SULLIVAN MINORITY STAFF DIRECTOR  'ZICrtifeb Zfatez -.Serrate COMMITTEE ON APPROPRIATIONS WASHINGTON,  D.C. 20510  October 6, 1983  41••  rf  _ • r  Honorable Paul A. Volcker, Chairman Board of Governors of the Federal Reserve System Constitution Avenue at 21st Street Washington, D.C. 20551 Dear Mr. Chairman: I would appreciate it very much if you would consider the employment of Mis5. Vaughn Jordan._an outstanding young woman from Mississippi. Miss Jordan recently graduated from Mississippi State University Magna Cum Laude, with major course work in economics and political science. As the attached resume reflects, she has demonstrated superior personal qualities by her achievements in many fields. Noteworthy is her class ranking of 13 out of 159 in the May, 1983 class, and her knowledge of Spanish and computer programming. She worked as a Congressional Intern in former Congressman David Bowen's office, and received high praise for her research work and analysis of the Fiscal Year 1983 Budget. Miss Jordan has special interests in the field of economic policy, and I believe would very much benefit by the guidance and counseling of the professionals in the Federal Reserve organization. With warmest regards and be  shes, I am ince j ly you  OHN C. STENNIS nited States Senator JCS:j1w Enclosure: a/s cc: Mr. Anthony F. Cole Special Assistant to the Board of Governors of the Federal Reserve System Washington, D.C. 20551   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Removal Notice The item(s) identified below have been removed in accordance with FRASER's policy on handling sensitive information in digitization projects due to personally identifiable information.  Citation Information Document Type: Resume Citations:  Number of Pages Removed: 2  Resume, Cornelia Vaughn Jordan, 1983.  Federal Reserve Bank of St. Louis  https://fraser.stlouisfed.org  Alb  BOARD OF GOVERNORS  •••   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  OF THE  : '...c,3, .......o,./  •  r rrr rr 11 .Y1,  2:  FEDERAL RESERVE SYSTEM  , •  ., .. - ,,,,,,v.• ;;. . . •:tse0 • •tt.k41. • • • •• • •..Ris`.  WASHINGTON, D. C. 20551  October 26, 1983  The Honorable Pete V. Domenici United States Senate Washington, D. C. 20510 Dear Senator Domenici: Thank you for your letter of October 5 requesting comment on the enclosed letter and article submitted to you by Mr. W. W. McClellan concerning the issuance of currency and the financing of the public debt. It is important to point out that there is no connection between the financing of the public debt and the issuing of Federal Reserve notes. The U.S. Treasury receives its funds from two sources--taxes and borrowing--and does not finance its deficits by borrowing from the Federal Reserve. Federal law does not permit the Treasury to borrow directly from the Federal Reserve. When it is necessary to raise funds, the Department of the Treasury sells Treasury bills, notes, or bonds to the general public. The Treasury is not permitted to sell these obligations directly to the Federal Reserve. The Federal Reserve, however, in conducting its monetary policy operations, may purchase such obligations in the secondary market from others who may have purchased them directly from the Treasury. Similarly, the Federal Reserve also may sell these securities on the open market at any time, again depending on current monetary policy. These transactions are intended to influence member bank reserves, as is described in more detail in the enclosed booklet, "The Federal Reserve System--Purposes and Functions". It should be noted also that the Federal Reserve is not the sole owner of the Federal debt and held only 11.6 percent of the total public debt of the United States as of September 1983. The balance of the debt is held by private investors or individuals, commercial banks, insurance companies, and other investors who have purchased Treasury bills, notes, bonds or other securities. While the Federal Reserve does receive interest on the government debt obligations it holds, it should also be noted that the Federal Reserve is not operated for a profit. The Federal Reserve returns all earnings (including interest received on government debt obligations) in excess of expenses to the U.S. Treasury; in calendar year 1982 payments to the Treasury by the Federal Reserve amounted to more than $15 billion. In recent years, the Federal Reserve has turned over to the Treasury about 90 percent of total earnings.  .,  The Honorable Pete V. Domenici Page Two  The Federal Reserve did not pay any income tax in 1982 because Congress has exempted the Reserve Banks from Federal, State and local taxation, except for taxes on real estate (12 U.S.C. 531). However, this tax exemption does not increase the profits of the Federal Reserve because, as discussed above, each year the Federal Reserve returns virtually all earnings in excess of expenses to the U.S. Treasury. With respect to the issuance of Federal Reserve notes, which constitute the bulk of the nation's currency, I hope Mr. McClellan will find the following information useful. Section 16 of the Federal Reserve Act (12 U.S.C. § 411) provides that Federal Reserve notes may be issued at the discretion of the Board of Governors. In fact, Federal Reserve notes are issued in response to the public's growing needs for currency. As the economy expands, currency is needed by the public in order to carry out transactions. Virtually all of the new currency issued is put in circulation to facilitate the public's need for cash. The amount of notes that may be issued is not unlimited. For example, the amount of notes in circulation is constrained by Section 16 of the Federal Reserve Act, which requires that Federal Reserve notes be backed by collateral security with a value at least equal to the notes issued. The Federal Reserve Act also specifies the types of collateral that are acceptable. In actual practice, the Federal Reserve System distributes Federal Reserve notes in the following manner: a. Federal Reserve notes are printed at the Bureau of Engraving and Printing in Washington, D. C., as directed by the Comptroller of the Currency, an office of the United States Treasury Department. The Federal Reserve pays the costs of printing the notes, which is currently about two cents per note. b. Upon request of the Board of Governors, the Comptroller of the Currency orders the shipment of notes to the Federal Reserve agent at a Reserve Bank. The agent, who is a representative of the Board of Governors, holds the notes until they are requested by the Reserve Bank. c. When the Reserve Bank obtains the notes, it holds them in its vaults until they are requested by depository institutions. d. Each time a depository institution orders notes, the Reserve Bank charges the amount to the ordering bank's account with the Reserve Bank and the Reserve Bank increases its   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  •  The Honorable Pete V. Domenici Page Three  net liability for Federal Reserve notes outstanding. When the notes are sent to the requesting institution, Reserve Banks are required to pledge collateral with the Federal Reserve agent in an amount equal to the sum of notes sent. e. Members of the public receive Federal Reserve notes when they cash checks or make withdrawals from depository institutions. When the public has on hand more notes than currently needed, they deposit the excess with depository institutions, and the process just described reverses itself. From this description, it is clear that the issuance of Federal Reserve notes does not involve lending the notes back to the government. Mr. McClellan's letter suggests that the U.S. Treasury should issue the nation's currency, and exercise control over the nation's money supply. However, the Federal Reserve Act of 1913 sought to prevent such a practice precisely because of its potential for inflationary consequences. The quasi-independent nature of the Federal Reserve helps to give the nation's monetary authority insulation from short-term political or partisan pressures. Such pressures otherwise could result in the temptation to use the government's money-creating authority to finance government expenditures. To avoid this pitfall, Congress established an independent monetary authority and deliberately insulated the Federal Reserve from such pressures. In closing, I think it is important to point out that although the Board is an independent agency, the Congress does have ultimate authority over the Federal Reserve and oversees the activities of the System through relevant committees. The Board is required by law to make an annual report to the Congress, and members of the Board, especially the Chairman, are called upon frequently to testify before Congressional committees. Moreover, the general goals of the Federal Reserve have been set forth in the Full Employment 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 reasonable price stability. As further background on the System and Federal Reserve notes, I am enclosing five pamphlets on the structure of the Federal Reserve System and a pamphlet entitled "U.S. Currency", which may be of interest to Mr. McClellan.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  7Tr.V.  -  •.  ..1r7744r11111.e.ri”rii.  •  The Honorable Pete V. Domenici Page Four  I hope this information is useful. if I can be of further assistance.  Please let me know  Sincerely,  Donald 3. Winn Assistant to the Board Enclosures  CO:DJW:vcd (V-199, 83190) bcc:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Mrs. Mallardi  •   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  'Alerviteb ,Stafez Zervale WASHINGTON. D.C. 20510  141  October 5, 1983  1=3 -11  mn (... rs1  c:=1 c--  CD (--)  r-  c=, cn  —4 I  Mr. Paul Volcker Chairman Federal Reserve 20th & Constitution Avenue, NW Washington, D.C. 20551  Cfl  Because of my desire to be responsive to all inquiries and communications directed to this office, and knowing that your objectives are similar in this regard, the attached communication is referred to you for consideration. I would very much appreciate your evaluating the information presented and taking whatever action is required to resolve the situation. At your earliest convenience, I would be grateful for your findings and views, in duplicate form. Please send your response to the attention of Pat White.  Pete V. Domenici United States Senator PVD/fpw Enclosure  01 --r1  rrl  --,-  Dear Mr. Volcker:  My warmest personal regar  -n  co c...,.)  (,)  ••••••••   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Septeriber 13, 1983 Senctoryete V. Do:]enici Senate Office Bldc. 1:'ashin7ton 70 20510  1  Dear Senator Donenici: •••  I would appreciate your reaction to the following letter being sent to the Albuquerque, Tribune by me for publication. THE NOr.7.-LDERAL RESERVE The recent 'Truth in Money' bulletin entitled, 'The Debtless Printing Press' deserves consideration by all. This bulletin explains very cleDrly how the Federal Reserve orders paper money from the Treasury's ..ureau of Engraving and Frintinc7, B.E.P., paying for the paper, ink and labor only, in any amount wanted. The Federal Reserve in turn loans checkbook money to the c-,overnrent at the prevailing rate of interest. 1.'.-hy do we continue to let these 'money-changers' collect this interest End kee on increasing Qur national debt? Our government should print its own money and stay out of debt; of course this would alienate a . small se7.ment of our society controlling the money.' and collect:Inc interest at the expense of the rest • Sf thc nation. Also, shouldn't the Federal Reserve be paying tax on this interest income? II The worst part of all this money fiasco is that the general public i.(77 unaware of what goes on ane! purposely so. A copy of this letter is being sent to all rew Eexico congressmen.  I - cClell n  Encl: 1  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: Newsletter Citations:  Number of Pages Removed: 2  Freedom Through Truth Foundation. "The Principle of the Debtless Printing Press." Truth In Money, Bulletin No. 10, 1983.  Federal Reserve Bank of St. Louis  https://fraser.stlouisfed.org  ....... •• Ot GOV .• . 1,.-•4 IR,t,•. •. 0 t/.4\'• it• 4,.. ...., :6.r • -••• ,., •:...• •, I . ....I '•rtrt  °• ...,•• 11 •-  BOARD OF GOVERNORS OF THE  FEDERAL RESERVE SYSTEM  , *-- • .....•  WASHINVION, 0. C 20551  ...-\-,,:%.,.. ' ,,,,-.5•4:, / .., • ( •. 6 1 --.: 4' .'i. .• .•  A L Itt`: ‘ ,• • • •k • .. , .  October 26, 1983  PAUL A. VOLCKER CHAIRMAN  The Honorable Charles E. Grassley United States Senate Washington, D. C. 20510 Dear Senator Grassley: Thank you for your letter of October 1 expressing your concern regarding the serious impact that the past summer's drought has had on the economic stability and viability of some agricultural and small business concerns throughout the country. Your letter suggests the need for coordinated efforts by government agencies and banking organizations to help alleviate the financial pressures that have been placed on farms and other agricultural -related borrowers. In particular, you request that the Federal Reserve assist in these efforts by taking steps to ensure that examinations of financial institutions having loans to farmers and others affected by the drought be conducted by examiners who are knowledgeable regarding the agricultural sector and that examiners be directed to work closely with banks that are attempting to help borrowers through this difficult period. The Federal Reserve shares your concerns regarding the recent drought and is keenly aware that this problem, coupled with the general economic environment over the past several months, has resulted in financial pressures on farmers, small businesses and individuals. Most agricultural loans reviewed by System examiners are located in Federal Reserve Districts in the southern, midwestern and western sections of the United States. The Reserve Banks located in these areas have a profound and intimate understanding of the unique economic and financial conditions facing farmers and agricultural -related businesses. With respect to the examination of farm sector banks, Federal Reserve System examiners receive training in evaluating agricultural loans and have considerable expertise and experience in dealing with the special economic and financial problems confronting farmers and small businesses. Because of this training and long experience in dealing with farm sector banks, Federal Reserve examiners are highly knowledgeable with respect to the farm situation and the particular circumstances that affect the financial condition of farmers and the quality of agricultural-related loans. Federal Reserve examiners understand that financial pressures experienced by farm-related borrowers are, at times, reflected in increased delinquency rates and loan classifications in the portfolios of the nation's financial institutions.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The Honorable Charles E. Crasslev Page Two  Moreover, some borrowers who are experiencing financial difficulties may face the prospect of foreclosure on their homes and family farms, or the failure of their small businesses. However, through training and experience our examiners also appreciate that often these problems are transitory, and that many borrowers are able to resume payments when general economic conditions improve. Under such circumstances, the Federal Reserve recognizes that financial institutions may find that the most prudent policy is to stretch out payments and exercise forbearance rather than to take more precipitous action such as foreclosure and/or forcing a borrower into bankruptcy. The Federal Reserve, as a supervisor of state member banks and bank holding companies, has taken steps to minimize the possibility that its supervisory actions could discouraae this type of forbearance. Indeed, it is the long-standing policy of the Federal Reserve that such forbearance is in the public interest and is to be encouraged when it is consistent with safety and soundness considerations. In carrying out this policy, Federal Reserve examiners are sensitive to the problems discussed above and have been instructed to refrain from criticizing bank management for exercising an appropriate degree of forbearance, as well as to refrain from recommending foreclosure or other precipitous action. These policies were reiterated to our examiners earlier this year in a supervisory letter which I have enclosed for your information. The Board fully appreciates and shares your concerns with the problems being experienced by farmers and farm-related borrowers. I hope that this letter indicates the depth of our commitment to ensuring that our supervisory policies and practices represent a proper balancing of safety and soundness considerations with the special difficulties confronting farmers and farm-related borrowers. Sincerely, $ZPaulA1Vcowt,,,  Enclosure (John E. Ryan ltr. of 3/30/83 to officers in chg. of examinations at FRBks (SR 83-15 (FIS)) RS:DJW:CO:vcd (V-197, 83150) bcc: Messrs. Spillenkothn and Ryan Mrs. Mallardi (2)%./   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  BOARD OF GOVERNORS OF THE  FEDERAL RESERVE SYSTEM WASH I NGTON, D. C. 20551  SR 83-15 (FIS) DIVISION OF MANKIND SUPERVISION AND REDULATION  REs .RAL ••• • •  March 30, 1983  TO THE OFFICER IN CHARGE OF EXAMINATIONS AT EACH FEDERAL RESERVE BANK  SUBJECT:  Home Mortgage, Farm and Small Business Loans  The economic environment over the past several months has resulted in financial pressure on a rising number of bank customers, particularly certain farmers, small businesses and individuals. These financial pressures are, at times, reflected by delinquent business and residential loans in the portfolios of the nation's financial institutions. Some borrowers who are experiencing financial difficulties face the prospect of foreclosure on their homes and family farms, or the failure of their small businesses. Often these problems are transitory and the borrowers are able to resume payments when general economic conditions improve. Under such circumstances, the financial institutions may find that the most prudent policy is to stretch out payments and exercise forbearance rather than to take more precipitous action such as foreclosure and/or forcing a borrower into bankruptcy. As a supervisor of State-member banks and bank holding companies, the Federal Reserve does not wish its examinations or its supervisory actions to be pursued in a manner that discourages this type of forbearance. On the contrary, such forbearance is in the public interest and should be encouraged when it is consistent with safety and soundness considerations. It is requested, therefore, that you remind the Federal Reserve examiners in your District of the need to be particularly sensitive to these prOblems at this time and to refrain from criticizing bank management for exercising forbearance in the circumstances described. Moreover, in accordance with long-standing instructions, examiners should not recommend foreclosure or other precipitous action. Supervisory staff should also take these policies into account when dealing with the supervised institutions' hoards of directors and When designing remedial action plans.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  RYAN : 1' 57?d ,11'1 44 11 Director  INO E 228 POST OFFICE AND COURT HOUS BuiLD 320 6TH STREET &Dux CRY, IOWA 51101 (712) 233-3331  • tram  721 FEDERX BUILDING 210 WALNUT STREET DES MOINES, IOWA 50309 (L.t) 294-4890  United itts oeliate  206 FEDERAL BUILDING 101 1ST STREET S.E. CEDAR RAPIDS, IOWA 52401 (319 399-2555  CHARLES E. GRASSLEY  210 WATERLOO BUILDING 531 COMMERCIAL STREET WATERLOO, IOWA 50201 (319) 232-6657  135 HART SENATE OFFICE BUILDING WASHINGTON, D.C. 20510 (202) 224-3744  cc Co Caj CZ) C, -4  October 1, 1983  CO  Ge)  The Honorable Paul A. Volker Chairman Board of Governors Federal Reserve System , N.W. 20th Street and Constitution Avenue Washington, D.C. 20551  ••••••••  Dear Mr. Chairman: America's economic fiber al rur ed ain s str ha t ugh dro 's This past summer wa are serious for States such as Io to the limits. The implications lture-related businesses. icu agr and re ltu icu n agr upo y that depend heavil es are balancing preiti run oom ire ent d s, an sse ine bus Farmers, small ntly clear by those from nda abu is It er. ast dis of e edg cariously on the we must pull together t tha ss gre Con and e us Ho te Whi e mainstreet to th is trouble. from all sectors to weather th as regulators of our t, tha e tiv era is imp it s, ces TO help assure suc s. There are two steps ort eff r ou in ist ass you , ons financial instituti ate our dilemma: that you can take to help allevi ts to examiners who 1) Shift drought-impacted accoun farming and the / have a thorough understanding of and if agriculture-related businesses, i 1 h to work closely wit 2) Direct your bank examiners ! help borrowers bankers who are attempting to 1 ' through this drought. orts to maintain the sound eff s on' uti tit ins r you d I recognise and applau ve public confidence in ser pre to d an ry ust ind g kin condition of the ban es far beyond this role, .go r, eve how n, sio mis ur Yo our banking system. individual borrowers and of ds nee the to ty ivi sit ers and requires keen sen well-being of these borrow ial anc fin e th n wee bet the close relationship a whole. and that of the comnunity as ling to help their wil are and d nee the d tan In short, bankers unders to assist, however, is y lit abi ir The t. ugh dro customers through this allowed by your examiners. ty ili xib fle e th to ed closely ti  Committee Assignments: BUDGET LABOR AND HUMAN RESOURCES CHAIRMAN, Aging   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  FINANCE  Internal CHAIRMAN, Oversight of the Revenue Service; Estate and Gift Taxation; International Trade  JUDICIARY CHAIRMAN, Administrative Practice and Procedure; Immigration and Refugee Policy; Constitution  SPECIAL COMMITTEE ON AGING  The Honorable Paul a. Volker October 1, 1983 Page 2 cy and If they are denied this essential latitude due to rigid poli lost from agriculturally ignorant examiners, I fcar that much will be Administration to the efforts by individuals, states, Congress, and the bankers are mitigate the impact of the drought. If the hands of our survive may be tied, farmers and small businesses that otherwise could ing effect on lost. This will have an immediate, direct, and devastat rural America. Thank you for your serious consideration.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  cerely  CHARLES E. GRASSLEY United States Senator CEG/kcj  October 25, 1963 s.  The Honorable ?ruce F. Vento House of Representatives 1-ashington, n. C. 20515 D-ar  r. Vento'  Thank you for your letter of September 21 requesting my views on the ao;-Nroriateness of the International tIonetary Fund borrowing in private markets to augment its resources. the Plr 1 9S the authority to borrow in Private - unler Article VII, Section 1 of the riF's Articles of , market, A=icmc:nt, such a sten on any large scale could significantly change the character of the Funl in a direction that many members would find inappropriate. It is desirable to maintain the Fun as a short-terrl source of official financing to assist mer countries facing temPorary balance of oayments difficulties, where such financing is supplied by members. One con-uence of the Fund's borrowing on the private market could he that TI.S. and other creditor governments' influence over the Fun'!'s operations could be reduced.. Thus, if nonin, would be readily available to the IF from private sources, the Fun i might well be subject to increased pressure from some members to lend with easier conditions, weakening the Fund's surveillance role over the functioning of the international mon?..tary system. In other circumstances, doubts about the availability of private funding in periods of crisis or strain could affect the lending capacity of the r!F adversely. In essence, where member countries' iuota subscrirltions remain th-2 ma-ior continuing source for enlarging the financial base of :ercise its the PV, the full membership of the Fund can best e, -;111:!mant in clirectinci the policies and operations of the runl. Another -ossihle consequence of Fund borrowing on private markets at this time is that it could induce a shift, on a less than proportionate basis, of bank lending to the 1'1", rather than directly to countries with eytarnal debt problems, leaini to a net reluction in the flow oc financing to these countries. Such a develonment would further corciolicate the resolution of the international debt p-roblem. Mternativoly, the F4F would be driven to expand its own loans to those countries, in effect, substituting more official credit than riou.-arn-1-2nts were th,3-is':!lves willing to support. I would not rule out occasional recourse to Private market financing for the F-IF on a limited basis as an interim   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  A  7.7.-mnrabl2 Price F. vnto Page Two 4.  quota in--1-3urE, when, for oxa-elpl, official financing via available and creases has been aqree1 bnt is n'It yet readily are strained. Plt I would regard when the resourc?.s of the I quate subPrivate market borroiqini by the runl to be an inal,? ,nlaroincT the financial resources of the stitut as a source for ,, ,1 urge the Furl that is necessary at this critic.11 time. I wou1 it. In that Conlr->ss to act promptly on the 17.gislation before in private context, further debate on the role of borrowing not be at the markets might be useful, hut that debate should r.nonse of Cie action clearly nele1 now. . Pleas  let me know if I can be of further assistance. 7,incerely, S/Paul A. Volcker  CJS:EMT:NPJ:PAV:vcd (V-190, 8387) bcc:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Mr. Siegman Mr. Truman Ms. Jacklin Mrs. Mallardi (2)  BRUCE F. VENTO  Action assigned Messrs. Truman and Bradfield for coordination of reply  HOUSE COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS  4TH DISTRICT. MINNESOTA  2433 RAYBURN HOUSE OFFICE BUILDING WASHINGTON, DC. 20515 (202) 225-6631  Congress of thetlnittd ctatts  DISTRICT OFFICE:  HOUSE SELECT COMMITTEE ON AGING  %louse of RcprestntatiDes Vazhington, D.C. 20515  ROOM 150 MEARS PARK PLACE 405 SIBLEY STREET SAINT PAUL, MINNESOTA 55101 (612) 725-7724   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  HOUSE COMMITTEE ON INTERIOR AND INSULAR AFFAIRS  -cl --t-i /  9 September 21, 1983 .  410  C-4-3  rri  ,-.---.— F17.:, rn : — :-1 v<  i-7  -3 rrl c 4...••• ••••+ ,....  rr▪i -0  rel  CD 1—▪ 711 en IG) .7..c.  INia)  ,---,  in ,„..._.) .-......  0 ---,  c=• >  rn  rri  a  Cr)  r9  Honorable Paul Volcker, Chairman Federal Reserve System 20th Street and Constitution Avenue, N.W. Washington, D.C. 20551 Dear Mr. Chairman: your Over the past nine months, you have frequently reiterated support for the I.M.F./G.A.B. quota increases. ing However, serious questions and proposals have arisen regard to the the ability of the I.M.F. to raise resources by going as a private market, borrowing the resources with its assets collateral, for example. and Mr. Chairman, I'm deeply concerned about this question require your response concerning the Federal Reserve Board and in interpretation of the authority of the I.M.F. currently actions of the the future, and most importantly, the intent and the Federal Reserve Board concerning any such initiative by I.M.F. to exercise such action. Your prompt response would be helpful. Sin  faY  tif \i  / A 4 LA  puce F. Vento ember of Congress BFV/gg  ED FIBERS THIS STATIONERY PRINTED ON PAPER MADE WITH RECYCL  L/D  ,•   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  .  a  October 25, 1963  The Honorable Trent Lott House of Representatives Washington, D. C. 20515 Dear Trent: and for your telephone Thank you for your recent letter tion to participate in an ita inv r you of me ing ind rem l cal Pascagoula, Mississippi economic symposium to be held in in February or March. ermely busy schedule unfortunately, because. of the ext ths, I will be forced to mon se tho for up g pin sha is t tha send regrets. n I am typically February and March are months whe gress frequently with required to appear before the Con awkward _ and difficult policy statements, and I find it my schedule at worst -h wit ent ist ons inc y all tot -at best at that time. to take on other public speeches the grass roots, Sometimes it's good to get out in oncile the demands with and for that reason I tried to rec at least at the time the invitation. But this time -iate the opportunity to rec app do I But 't. can I ed, propos consider it. Best regards,  PAV:ccm  4e  TRENT L01•I —  2400 RAYBURN BUILDING  5TH DISTRICT, MISSISSIPPI  WASHINGTOAI, D.C.  20515  202-225-5772 REPUBLICAN WHii IP  Cortgre5S5 of tbe Elniteb 6tate5  RULES COMMITTEE  DISTRICT OFFICES. GUL_FPORT, MISSISSIPPI  71501  601464-7170 ADMINISTRATIVE ASSISTANT  35otbe of 11epresSentatibet  TOM H. ANDERSON. JR.  HATTIESBURG, MISSISSIPPI  LAUREL,  Ula5bington, 33.4E. 20515 j  MISSISSIPPI  79440  110144/-1111  September 8, 1983 ''  cn  r.,n cn  --ri nri  co  .----,  7  ret Mr. Paul Volcker Chairman Board of Governors of the Federal Reserve System Constitution Avenue and 21st Street Washington, D.C. 20551  rri  r-  "El  ........  r•.-: -el  r•O  1-r1 ,.,..,-. c=1.  .... 71...  FA .,...-  (PI  -...  CO  Dear Mr. Chairman: I would like to take this means of inviting you to my hometown of Pascagoula, Mississippi, to participate in an economic symposium which is being sponsored by the The Bank would like to host Merchants and Marine Bank. this event sometime in February or March, 1984, on a weekday that is convenient for your schedule. This event has become an annual meeting which involves approximately 500 of our business and industry leaders from The program usually begins around the Mississippi Gulf Coast. However, if your schedule 3:00 p.m. and concludes at 6:00 p.m. would allow you to arrive earlier in the day, the Bank would like to host a luncheon in your honor. Also, your tTansportation costs will be paid for by the bank and they will be glad to accomodate your needs in every way possible. I certainly hope you will be able to give my request your utmost consideration and I look forward to hearing from you in the near future.  It--  t_  Trent Lott TL:sw   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  74:  rri ,  -1... ...:-  Sincer ly yours  c=,  - :_:, rn  ......-. ".... .....  With warmest best wishes, I am  mot  6014114246  ...In'  -n -n C--) rni  ...• ...•••,  Cf:') OD LA.) CD Ci .......4  / .  rn —4 C-J . rfl...7:-  MO••••  .......  , C7: c=i ›.-  .---  C:7  7rl C7.? C---/ . Crl --.-1 -1-1 C-3 r.-1 -••"1, ;t 777: •--,- rri  -....  c-,rn c---  C/3  --..  .,.....  ---:  ..  MERCHANTS & MARINE BANK':  rn c= r-,1 123 :  1.`,.  -...  .4-  WPA PASCAGOULA-GAUTIER-MOSS POINT-FSCATA  P 0 DRAWER 729  THOMAS S  LEATHERBURY  October 6, 1983  PASCAGOULA. MISS  39567  CHAIRMAN OF THE !BOARD  22' Honorable Paul A. Volcker Chairman Federal Reserve Board 20th and Constitution Avenue, N.W. Washington, D. C. 20551 Dear Mr. Volcker: to speak at We would like to extend you an official invitation Marine Bank, the Annual Economic Symposium of the Merchants & has spoken Pascagoula, Mississippi. Our Congressman, Trent Lott, to have you as to you about this event, and we would be honored our guest speaker. ary, March or We prefer having this event in the months of Febru is held April on a Thursday afternoon at 3:00 p.m. The symposium ed in our bank lobby, and we can accomodate four to five hundr industrial people. This event is attented by bankers, businessmen, leaders and some students from the Mississippi Gulf Coast, New sium Orleans, Louisiana and Mobile, Alabama areas. By having the sympo at 3:00 p.m. would allow you time to leave Washington, and we would like to host a private luncheon from 12:30 p.m. to 2:00 p.m. for you and other special guests. Our speakers in the past have been industrial, business and professional leaders such as Mr. Donald T. Regan. We will be glad to furnish your transportation and cover your expenses. We always have television coverage from a number of stations, and if you would like we can arrange for a press conference in our bank board room about forty-five minutes prior to the symposium.  16011 762-3311 3118 PASCAGOULA ST   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -1  Honorable Paul A. Volcker October 6, 1983 Page 2  We sure look forward to having you, and if you need additional information, please feel free in calling my secretary, Barbara Bass or Jolly McCarty, Vice President and Public Relations Officer, who can give you any details that you might need. Very truly yours, MERC  & MA  N  ANK  T OMAS S. LEATHEPBURY CHAIRMAN OF THE BOARD AND  TSL/bb   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  tDENT   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  October 25, 1963  The Honorable Trent Lott House of Representatives Washington, D. C. 20515 Dear Trent: Thank you for your recent letter and for your telephone call reminding me of your invitation to participate in an economic symposium to be held in Pascagoula, Mississippi in February or March. Unfortunately, because. of the extermely busy schedule that is shaping up for those months, I will be forced to send regrets. February and March are months when I am typically required to appear before the Congress frequently with policy statements, and I find it awkward- and difficult at best -- totally inconsistent with my schedule at worst -to take on other public speeches at that time. Sometimes it's good to get out in the grass roots, and for that reason I tried to reconcile the demands with the invitation. But this time -- at least at the time proposed, I can't. But I do appreciate the opportunity to consider it. Best regards,  PAV:ccm  J TRENT LOTT  2400 RAYBURN BUILDING  5TH DISTRICT. M ISSISSIPPI  WASHINGTON, D.C.  20515  202-225-5772 REPUBLICAN WHIP  Congre5s5 of tbe Elnittb  RULES COMMITTEE  tatel  DISTRICT OFFICES: GULFPORT, MISSISSIPPI  gloute of ReprefientatibeZ  HATTIESBURG, MISSISSIPPI  LAUREL, MISSISSIPPI  rJr' C:7) -1•1  =") ••••-1; •-•  Mr. Paul Volcker Chairman Board of Governors of the Federal Reserve System Constitution Avenue and 21st Street Washington, D.C. 20551  c,v" . :=1,1 _  Dear Ar. Chairman: I would like to take this means of inviting you to my hometown of Pascagoula, Mississippi, to participate in an economic symposium which is being sponsored by the Merchants and Marine_BankThe Bank would like to host this event sometime in February or March, 1984, on a weekday that is convenient for your schedule,_ This event has become an annual meeting which involves approximately 500 of our business and industry leaders from the Aississippi Gulf Coast. The program usually begins around 3:00 p.m. and concludes at 6:00 p.m. However, if your schedule would allow you to arrive earlier in the day, the Bank would like to host a luncheon in your honor. Also, your transportation costs will be paid for by the bank and they will be glad to accomodate your needs in every way possible. I certainly hope you will be able to give my request your utmost consideration and I look forward to hearing from you in the near future. With warmest best wishes, I am Sincerftly yours  Trent Lott   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  39440  101441-1231  September 8, 1983 i f  V-)  39401  601-582-3246  Eilactington, 31D.C. 20515  TL:sw  39501  601-864-7870  ADMINISTRATIVE ASSISTANT TOM H. ANDERSON. JR.  • •• of Govt •.  BOARD OF GOVERNORS 17—  OF THE  •.,//<-5 •gz:,  2-  FEDERAL RESERVE SYSTEM WASHINGTON, 17. C. 20551  [  I o, • RES •:IZAL . ' ••  PAUL A. VOLCKER  • ••  •••  C HAI RmAN  October 24, 1983 C.  The Honorable Jake Garn Chairman Committee on Banking, Housing and Urban Affairs United States Senate Washington, D.C. 20510 Dear Chairman Garn:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Your letter of September 19 , certain questions concerning S.1532 deal with moratoriums on acquisitions My responses to your deregulation. below.  requests my responses to S.1609 and S.1682, which and financial institution questions are provided  structural banking 1. Some have argued that our major k Holding Company Act -- no laws -- Glass-Steagall and the Ban There has been ketplace. longer make any sense in today's mar oles and that we have reached too much erosion because of loop-h e to resurrect these laws. the point where it will be impossibl ht to repeal these laws or The conclusion is that we either oug elop unchecked for another let the forces of the marketplace dev What do you occurred. year or two and then ratify what has think of this scenario? my testimony on As I advised your committee during that a reexamination of the September 13, there can be no doubt However, I ome urgent. existing legislative framework has bec es of the Bank Holding believe that the underlying premis continue to make sense. Company Act and the Glass-Steagall Act dition in the United States These statutes embody the strong tra commerce. In my view such of a separation between banking and the safety and soundness of separation is necessary to maintain avoid potential harmful the banking system as well as to concentration of resources, conflicts of interest, excessive line separating banking and undue risk. At the same time, the ined in view of the changes in xam ree be to ds nee ce mer com m fro e resulted from market the financial industry that hav technology. incentives, customer needs, and new stration has proposed, The legislation that the Admini ports, would accomplish this and that the Federal Reserve sup ervisory procedures applicable objective by simplifying the sup allowing them to engage in an and ies pan com g din hol k ban to ivities while also maintaining act ial anc fin of ge ran ed and exp In my n banking and commerce. wee bet ons cti tin dis ad bro the ative package such as that isl leg ped elo dev lly efu car a view,  far preferable to which the Administration has proposed is continue to alter our allowing the forces of the marketplace to eve is both haphazard financial system in a manner which I beli seen that when left and potentially dangerous. We have already lt in competitive unchecked, market forces acting alone resu are able to take inequalities because some institutions the existing legal advantage of loopholes or ambiguities in present situation fabric and others are not. In addition, the s, public confidence, is inconsistent with the goals of soundnes and payment services and continuity in the provision of money In my view, system. that are essential for a stable banking onable compromise the Administration Bill represents a reas policy objectives. between market forces and these public suggest On pages 12 and 13 of your testimony, you 2. the Federal Reserve that present law should be changed so that ors when approving is not required to review competitive fact You suggest that new activities for bank holding companies. Do you ice Department. this activity can be handled by the Just Justice should review believe that the Antitrust Division at s before they are new activities for bank holding companie subsequent antitrust approved -- or be limited to bringing a suit after competitive problems arise? Administration One of the principal objectives of the which bank holding Bill is to streamline the process by I would be vities. companies may commence new nonbanking acti al requirement for hesitant, therefore, to create any addition before bank holding prior notice to the Department of Justice The activities. such in engage could companies prior notice to the Hart-Scott-Rodino Act presently requires e Commission at least Department of Justice and the Federal Trad nonbanking acquisition 30 days before consummation of any major believe that any by a bank holding company, and I do not ensure the adequate additional procedures are necessary to enforcement of our antitrust laws.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  um You have stated that you think the moratori 3. to make "permanent", should be temporary, to allow Congress If, at the end of the moratorium well-considered changes. refuse to support an period, Congress had not acted, would you extension of the moratorium? um was originally The Federal Reserve proposed moratori conclusion of this year. for a six month period ending at the still appear reasonable A six month moratorium from now would at the end of that time, in light of the present situation. If , and the Congress was on a great deal of progress had been made  favor a very short the verge of passing a bill, I might gress to complete its extension of the moratorium to allow Con ely in such alternatively, and perhaps more lik work. . C 3. 4 1 1 4• — s, •_ _ —--C--: • ather dates set in the with the effective date and any grandf maintain a moratorium proposal, would avoid any clear need to of the I do not foresee a blanket extension in place. moratorium legislation moratorium. I fully recognize that the disarray in the financial alone is not a remedy to the current need to expand the industry since it does not address the panies and to streamline nonbanking powers of bank holding com If general ivities. the procedures for commencing new act eventually be led into legislation is not possible, we might it is difficult for me the de facto evolution you describe, but advance the public to see that that approach would better interest.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  to block Why does the moratorium bill propose 4. ifts by nonbanking future acquisitions of banks and thr pments have been, are, companies? Do you feel that these develo Would you g system? or will be dangerous to the bankin ue to be blocked beyond recommend that these acquisitions contin policy? the moratorium, as a matter of public nonbanking The ownership of banks and thrifts by nciple that banking and companies is inconsistent with the pri As indicated above, application commerce should be separated. g ary to maintain a sound bankin ess nec is ple nci pri s thi of erest and other adverse int of cts fli con id avo to and system combination of banking and effects that may result from the ons between banks In my view, permitting affiliati commerce. commercial activities presents and companies engaged in general erse effects on the banking a significant potential for adv banking company is engaged in system, particularly when the non substantial risk or may be lines of business which involve Consequently, I functions. closely integrated with "banking" g banks and thrifts by nonbankin of on iti uis acq the t tha e iev bel prohibited after the conclusion be l era gen in uld sho ies pan com for this reason I favor the of any moratorium period, and on Bill that would generally provisions of the Administrati where bank holding companies prevent such acquisitions except same line of activity. were permitted to engage in the itions of "insured The moratorium prohibits acquis 5. g firms and also expands the kin ban non n tai cer by ks" ban Insured banks are "banks". and k ban d ure ins of n tio defini se eligible for insurance. tho and d ure ins C FDI are ch those whi l k is one which makes commercia Also, the bill says that a ban ck. that may be transferred by che loans and accepts deposits ons tions, how many more instituti As a result of these defini Do you t kinds of institutions? Wha ed? uir acq be not may tinue as permanent law? con uld sho s ion vis pro se the intend that  -4-  The bank definition that we have proposed in our It is also contaire:J moratorium bill has crained wide support. in the Administration Bill and the moratorium bills suggested by Chairman St Germain and the FDIC. The applicability of this definition to FDIC insured institutions would cover all of the 14,500 commercial banks and 315 savings banks presently insured With the exception of the 50 or so "nonbank by the FDIC. banks" created in the last few years, all of the commercial banks mentioned above are already covered under the current bank definition. Although a broadening of the scope of the bank definition beyond institutions that are federally insured should be carefully examined to assure that we are not covering more than necessary, it is our initial judgement that the broader definition is necessary to prevent the development of further loopholes of the kind that this legislation is intended Adding the standard of eligibility for FDIC to close. insurance to the bank definition would primarily encompass industrial banks, savings banks, and some industrial loan companies that are now eligible for FDIC insurance but have not The functional test based on secured such insurance. commercial lending and the acceptance of transaction accounts would. encompass the remaining industrial loan companies, as well as savings and loan associations not insured by the FSLIC, listed but only if these institutions performed both of the sively functions. Since the institutions in question are exclu but it state chartered, exact figures are difficult to obtain, banks and appears that there are approximately 1,000 industrial that industrial loan companies, 160 savings banks, and 450 S&Ls ons could be covered by the "eligibility" and "functional" porti many of the proposed definition. We understand, however, that ns of the industrial loan companies are very small institutio not that do not offer transaction accounts and therefore would Moreover, many savings banks and S&Ls are mutual be covered. al in form and thus would be unaffected by the definition With regard to the desirability of continuing this change. ined definition permanently, the bank definition that is conta istration in our moratorium bill is also contained in the Admin these Bill which we support, and we would therefore intend that or similar provisions continue as permanent law. 6. The Fed recently proposed a revised Regulation Y. of That proposal would greatly expand the definition ", under "commercial loan", and thus, the definition of "bank As a result, more institutions the Bank Holding Company Act. from combining would come under Fed jurisdiction and be blocked Since Congress is now considering the with nonbanking firms. that part of "definition of bank" issue, do you intend to drop the Reg. Y revision? If not, why not?   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The expanded "commercial loan" definition is part of a major revision of Regulation Y to clarify its terms, to speed and simplify the applications process, and to incorporate outstanding Board rulings applying the Bank Holding Company Some time before the Regulation Y revision Act's provisions. was announced, the Board had defined the term "commercial loan" a to include any transaction representing a credit extension to commercial organization. This definition was adopted in order to halt the pronounced and accelerated trend by nonbanking In proposing its revision of organizations to acquire banks. e Regulation Y the Board believed it appropriate to incorporat all important interpretations of the Act's provisions, including the Board's definition of commercial loan, and to ask for public comment on these positions.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  As we see it, the inclusion of the commercial loan definition in the Regulation Y revision would preserve the options of Congress in dealing with this issue since it is designed to maintain the status-quo, and prevent continuation of the disorderly process by which nonbanking organizations are However, breaching the barrier between banking and commerce. on the Board has not yet reviewed the public comments submitted the Regulation Y proposal and has not made any decision on whether to include the definition of bank in the final regulation. Section 2 of the Moratorium Bill states "no 7. than one company shall acquire control of insured banks in more Company state" without prior approval under the Bank Holding circumstances Act. If this provision were enacted, under what deny would the Fed allow acquisitions, and when would it Would you want this recommendation to be a acquisitions? permanent change beyond the moratorium period? Bill Moratorium the this provision of Under ng acquisitions that are consistent with the interstate banki would prohibitions contained in the Bank Holding Company Act Thus, for example, the Board would continue to be permitted. invites continue to approve applications where a given state acquisition entry by out-of-state organizations or where the accept involves a trust company that does not generally Other proposals deposits other than in a fiduciary capacity. prohibitions that are inconsistent with the interstate banking  -6  This provision of the Moratorium Bill is would be rejected. to prevent intended to insure that the Board has the ability ons that would the formAtion of multi-state banking organizati in the violate the interstate banking prohibition contained a For this reason, it seems desirable to have such Act. the basic clarification of the Board's authority so long as We would, however, prohibitions of the Act are maintained. present urge the Congress to reconsider the nature of the legislative prohibitions on inter -state banking as part of its be reviewed review, and any authority provided the Board should in that light. I hope this information is useful to your Committee. . Please let me know if I can be of further assistance  Sincerely,  ••  MB:JVM:CVH:gw bcc:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Chairman's Log V-192 G. C. Log 259 Mr. Bradfield Mr. Mattingly Mr. Howard Legal Records (2)  Alr  JAKE GARN. UTAH. CHAIRMAN JOHN TOWER. TEXAS JOHN HEINZ, PENNSYLVANIA WILLIAM L ARMSTRONG, COLORADO ALFONSE M DAMATO, NEW YORK SLADE GORTON, WASHINGTON PAULA HAWKINS, FLORIDA MACK MATTINGLY, GEORGIA CHIC HECHT, NEVADA PAUL TRIBLE VIRGINIA  WILLIAM PROXMIRE, WISCONSIN ALAN CRANSTON, CALIFORNIA DONALD W RIEGLE, JR , MICHIGAN PAUL S SARBANES, MARYLAND CHRISTOPHER J DODD,CONNECTICUT ALAN J DIXON, ILLINOIS JIM SASSER, TENNESSEE FRANK R LAUTENBERG NEW JERSEY  M DANNY WALL. STAFF DIRECTOR DIRECTOR KENNETH A McLEAN MINORITY STAFF   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  United e5tates ,*cnate COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS WASHINGTON, D.C. 20510  September 19, 1983  Honorable Paul A. Volcker Chairman Board of Governors Federal Reserve System 20th & Constitution Ave. N.W. Washington, D.C. 20551 Dear Chairman Volcker: I again want to thank you for testifying on September 13, 1983 before the Senate Banking, Housing and Urban Affairs Committee on S.1532, S.1609 and S.1682, dealing with mora. toriums on acquisitions and financial institution deregulation For the record of this hearing, I would appreciate responses to the enclosed questions concerning this legislation. I would appreciate receiving your responses by October 11, 1983, so that we could insert them into the hearing record before it closes. Sincerely  clQwx.x. Jake Garn hairman Enclosures JG:dbk  osuc )   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  •  Do our Banking Laws still make sense?  Some have argued that our major structural banking laws =Glass-Steagall and the Bank Holding Company Act-- no longer make any sense in today's market -place. There has been too much erosion because of loop-holes and that we have reached the point where it will be impossible to resurect these laws. The conclusion is that we either ought to repeal these laws or let the forces of the market-place develop unchecked for another year or two and then ratify what has ocurred. What do you think about this scenario?  41   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  u suggest 13 of your testimony, yo d an 12 s ge pa on r, ke ic Nr. \o serve anged so that the Federal Re ch be ld ou sh w la t en es that pr proving mpetition factors when ap co ew vi re to ed ir qu re t is no t that ing companies. You sugges ld ho nk ba r fo es ti vi ti ac new nt. d by the Justice Departme le nd ha be n ca ty vi ti ac this  review vision at Justice should Di t us tr ti An e th e ev li be Do you e companies before they ar g in ld ho nk ba r fo es ti vi new acti ng a subsequent antitrust gi in br to d te mi li be or approved lems arise? suit after competition prob  Questions for Volcker  er-#44-1/4-7/--r4k-  I. You have stated that you think the moratorium should be temporary, to allow congress to make "permanent", well-considered changes. If, at the end of the moratorium period, Congress had not acted, would you refuse to support an extension of the moratorium?  L. Why does the moratorium bill propose to block future acquisitions of banks and thrifts by nonbanking companies? Do you feel that these developments have been, arP- or will be, dangerous to the banking systemWould you recommend that these acquisitions continue to be blocked beyond the moratorium period, as a matter of public policy?  1. The moratorium bill prohibits acquistions of "insured banks by certain nonbanking firms, and also expands the definition of insured banks and "banks". Insured banks are those which are FDIC insured and those eligible for insurance. Also, the bill says that a bank is one which makes commercial loans and accepts deposits which may be transferred by check. a. As a result of these definitions, how many more institutions may not be acquired? What kinds of institutions? b. Do you intend that these proviions should continue as permanent law? l 'q.The Fed recently proposed a revised Regulation Y. That proposa would greatly expand the definition of "commercial loan", and thus, the definition of "bank", under the Bank Holding Company Act. As a result, more institutions would come under Fed jurisdiction, and be blocked from combining with nonbanking firms, Since Congress is now considering the "definition of bank" issue, why not? do you intend to drop that part of the Reg Y revision If not,  S. Section 2 of the moratorium bill states "no company shall acquire control of insured banks in more than one state" without prior approval under the Bank Holding Company Act. If this provision were enacted, under what circumstances would the Fed allow acquisitions, and when would it deny acquisitions? Would you want this recommendation to be a permanent change, beyond the moratorium period?   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ROBERT W. KASTEN, JR. WISCONSIN  'ZICTliteb Zfatez Zertate e'n  WASHINGTON. D.C. 20510  -r1 --11  rri  g  on 40  c=3  October 20, 1983r ---4 r!"."0 -rj  --:::1  N...) -F6..-  C.11  I C,  .3 Hi '.‹ , V rrl  ..a.....  .-  The  Honorable Paul A. Volcker ..:_s. -x.Cr' Chairman _,--4 Board of Governors of the Federal Reserve System Constitution Avenue and 21st Street Washington, D.C. 20551 Dear Paul: I know that you have been invited to go out to Wisconsin next February for an annual meeting sponsored by the Independent Business Association of Wisconsin. This is an excellent event and I am writing to encourage you to consider accepting. I realize that your schedule is a busy one, but this is a fine group of people.  Robert W. Kasten, Jr. RWK/gw  --c..n  •   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  October 20, 1983  The Honorable Dennis DeConcini United States Senate Washington, D. C. 20510 Dear Senator DeConcini: Thank you for your recent_ letter on behalf of Miss Yvonne Durazzo, who has expressed an interest in employment with the Board of Governors of the Federal Reserve System. Miss Durazzo's material is currently being reviewed by our Division of Personnel, who will contact her directly regarding the status of this review. We appreciate having your recommendation on behalf of Miss Durazzo. Sincerely,  Sgaul A Marx  KW:CO:vcd (V-200, 83209) bcc:  Ms. Warehime Mrs. Mallardi (2) ,  Action assigned Mr. Shannon STROM THURMOND, S.C., CHAIRMAN JOSEPH R. BIDEN, Jot., DEL EDWARD M. KENNEDY, MASS. ROBERT C. BYRD, W. VA. HOWARD M. METZENBAUM, OHIO DENNIS DECONCINI, ARIZ. PATRICK J. LEAHY, VT. MAX BAUCUS, MONT. HOWELL HEFLIN, ALA.  CHARLES McC. MATHIAS, JR., MD. PAUL LAXALT, NEV. ORRIN G. HATCH, UTAH ROBERT DOLE, KANS. ALAN K. SIMPSON, WYO. JOHN EAST, N.C. CHARLES E. GRASSLEY, IOWA JEREMIAH DENTON, ALA. ARLEN SPECTER, PA_  VINTON DEVANE LIDE, CHIEF COUNSEL AND STAFF DIRECTOR DEBORAH K. OWEN, GENERAL COUNSEL SHIRLEY J. FANNING, CHIEF CLERK MARK H. GITENSTEIN, MINORITY CHIEF COUNSEL   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  United ,tates Ienate COMMITTEE ON THE JUDICIARY WASHINGTON, D.C. 20510 October 3, 1983 II C. r•-•1 -  rms. rri  •`--4 C"')  Cr, ri 7 C=7 ••• .  ••  Mr. Paul A. Volcker Chairman Board of Governors of the Federal Reserve System Constitution Avenue and 21st Street, N. W. Washington, D. C. 20551  : • ••  Dear Mr. Volcker: I would like to recommend Miss Yvonne Durazzo for a position with the Federal Reserve System. Miss Durazzo has an excellent background, as you can see by the attached resume. I would appreciate whatever can be done in her behalf. Sincerely,  DENNIS DeCONCINI United States Senator DDC/GKJ Enclosure cc:  Miss Yvonne Durazzo  Removal Notice The item(s) identified below have been removed in accordance with FRASER's policy on handling sensitive information in digitization projects due to personally identifiable information.  Citation Information Document Type: Resume Citations:  Number of Pages Removed: 1  Resume, Yvonne Durazzo, 1983.  Federal Reserve Bank of St. Louis  https://fraser.stlouisfed.org  October 20, 1qS3  The Fonorable Charles E. Schumer House of Representatives Washington, D. C. 20515 Dear rir. Schumer7 tember 26 expressing Thank you for your letter of Sep ding advertising of the new your concern about possible mislea ial institutions. deregulated time deposits by financ which created the As you are aware, the legislation Committee ("DIDC") #1 not Depository Institutions Deregulation tory institution regulatory affect the authority of the dePosi institutions. Therefore, agencies to regulate advertising by agencies and will continue in this authority remains with these st. effect after the DIDC ceases to exi Federal Pr?serve has Pursuant to this authority, the advertising rules aimed at established a framework of deposit ments of deposit instruments. full disclosure of the material ele prohibits any advertisements A.R a ien -2ral matter, Pegulation Q st paid on deposits that are or solicitations relatincl to intere resentative of deposit coninaccurate, mislealirm, or misrep provisions of the regulation tracts (12 CF? 5 217.6(g)). Other information appear in advertiserequire that specific types of ments: an effective annual (a) advertisements that display state the annual yield based on compounding must basis of comrate of sim7le interest and the pounding (12 CFR 5 217.6(b));   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  (b)  (c)  (d)  (e)  d that states a no interest rate can he advertise n one year in yield basel on a period of more tha yields are not order to ensure that effective .E(c)); artificially inflated (12 CFR 217 e only on a deposit if an advertised rate is payabl unt requirement, that meets a specific time or amo clearly and consuch requirements must he stated ; spicuously (12 CFR 5 217.6(1)) t state that advertisements for time deposits mus nt of early interest penalties apply in the eve withdrawal (12 CFP 217.6(e)); orm customers at member banks are required to inf ned as to the the time that an account is ope  .4  The Honorable Charles E. Schumer Page Two  method that will be used in computing and paying interest on the account, incluling any provision for nonpayment of interest (12 CFR 217.142). The Federal Deposit Insurance Corporation an-7 the for Federal Home Loan Rank 'loan.] have virtually identical rules institutions subject to their respective iurislictions. To bring additional attention to the Board's rules we concerning fair and accurate advertising, earlier this year tising sent member banks a letter calling attention to the adver Money provisions of Regulation 0, esnecially as they relate to of Market Deposit Accounts ("M'tns") and Suner NOWs. A copy his letter this letter is enclosed for your information. states that, where a member bank offers a split rate on an (1) account, it cannot advertise the higher rate unless it rate states clearly in close proximity to the rate that the includes applies only to balances above a stated amount, and (2) below the lower rate that applies to the amount of the account with the cutoff rate in the advertisement in equal Prominence advises the higher rate. With respect to service charges, it restthat any advertisement or other solicitation for an inte such bearing account that fails to disclose the existence of or mischarges wou1,1 be regarded as inaccurate, misleading, representative of the deposit contract in violation of ce Section 217.6(g) of Regulation 0. Accordingly, if servi est-bearing charges or other similar fees are imposed on an inter ence of account and an interest rate is advertised, the exist t. such fees must be stated conspicuously in the advertisemen In response to a Congressional inquiry last spring, the Super Peserve Tianks reviewed 197 advertisements for MMDAs ans-1. . NO accounts offered by all types of denository institutions February Thc review covered the period from December 1922 to est rates 1923 and focused on the terms of disclosure of inter which the paid on accounts as well as on the period of time for reveal advertised rate would be available. The review did not ion of any pattern of abuse in advertising or any concentrat is also consumer complaints. Compliance with the regulation Federal monitored through the examinations process, and the rn or Reserve's examiners have not noted any significant patte informal number of abuses of the advertising provisions. An ulation review of advertisements relating to the latest dereg warranting efforts also did not indicate any pattern of problems remedial measures. al I believe that these actions, together with the Feder g and Reserve's regulatory provisions regarding advertisin   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The Honorable Charles E. Schumer Page Three  raised. Further, the disclosure, alsaress the concerns you have aavertisini regulations Boarl is in the process of reviewing its that the DIDC has recently for revisions to reflect the changes estions will be taken ado-Aerl. I can assure you that your sugg sions. into consideration in making these revi to you. I hope that this information is helpful questions. let 771e know if you have any further Sincerely,  Si Paul,  Fnclosure (S-2466 ltr. of March 9, 1983) JHJ:AFC:vcd (V-193) bcc:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Mr. Jorgenson Mr. Schwartz G.C. Log 260 Legal Files (2) Mrs. Mallardi (2)  Please  Mrs. Mallardi CHARLES E. SCHUMER  Action assigned to Mike Bradfield  126 CANNON MOUSE OFFICE BUILDING WASHINGTON. DC 20515 (202)225-6616  10TH r_LTRir.74.'EW YORK 11.  1628 KINGS HIGHWAY BROOKLYN. NEW YORK 11229 R121965-5400  COMMITTEES: •-  BANKING. FINANCE AND URBAN AFFAIRS  ConEass of the United etats  JUDICIARY  tionsc of iltprescntatius  POST OFFICE AND CIVIL SERVICE NEW YORK CITY DEMOCRATIC WHIP   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  1663 10TH AVENUE BROOKLYN. NEW YORK 11215 (212)965-5055  illashinton, D.C. 20515 September 26, 1983  1061"5 F.7.1  f co C-AJI  rr's  rn C17  1-T1 :27  r-r-1 CZ7  -3 77 -  Honorable Paul Volcker Chairman, Federal Reserve Board 20th and Constitution N.W. V‘lashington, D.C. 20551  - 12 F-71 -  NJ  .1 771 r. 7  C.07 ---4  rr1 ry,  a. C.03  NJ  Dear Mr. Volcker:  C/7  co r co The complete decontrol of bank time deposits longer than 31 days promises tremendous opportunities for consumers and financial institutions, but it is also fraught with peril for both.  toe/  In the past, initial offerings of new deposit instruments have been immediately preceded by the advertising equivalent of a full court press on the consumer, with institutions offering astronomical interest rates in an effort to bring consumers through their doors. Unfortunately, many of the ads neglected to mention certain hidden costs, conditions, or penalties which made the investment less attractive than advertised. In the weeks before All Savers Certificates were introduced, for example, "teaser" rates were offered for short terms leading up to the day the certificates could be sold, on the hidden condition that the consun-ier purchase an ASC. As you know, federal banking authorities finally had to step in to halt these "bait and switch" marketing techniques. With Money Market Deposit Accounts, many consumers enticed by high initial rates were soon disappointed to see that rate plunge in following weeks. At the same time, they were surprised to learn that fees would be imposed on their acounts for transactions they assumed to be free and, at least from the advertisements, had little reason to believe otherwise. In addition, both the ASC and the MMDA were introduced at a time when many financial institutions were experiencing severe difficulties. The success of these campaigns may have accelerated the decline of some institutions. New money was brought in at a rate above what their assets were yielding, and there was a shift out of low cost accounts into higher yielding ones. Although MMDAs may have contributed to the long-term strength of most institutions, these institutions would have been better off had they marketed N1MDAs more sensibly. In order to avoid repetition of past abuses, I strongly urge you to publish a regulation or notice governing the marketing of time deposits which: 1) Stops the bait and switch:  prohibits the payment of a high rate for  THIS STATIONERY PRINTED ON PAPER MADE WITH RECYCLED FIBERS  Ir  •   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  honorable Paul Volcker September 26, 1983 Page Two agree to rollover his a short term on the condition that the depositor deposit into a long-term certificate. e a sample of the Requires institutions' advertisements to includ rities. This will give rates they are offering for a variety of matu on more than the the consumer a way to evaluate their options "teaser" rate. ly withdrawal penalties. The 3) Requires conspicuous publication of ear awal penalties, but DIDC rules only provide for minimum withdr ones. A difference in institutions arc free to impose more severe of an institution, yet CD penalties could be the key to the choice ads rarely specify exact penalties. fees or miscellaneous charges Requires conspicuous publication of all prohibits assessment of any that the institution plans to levy, and publicly known when the fees or charges on any CD which were not CD was purchased. institutions you supervise to Finally, I also urge you to monitor the r on their balance sheets and, if consider the impact of the rates they offe imprudently to take corrective necessary, instruct any which are acting action. &regulation of tine deposits We should all approach the imminent t consumers only if they have a apprehensively. Competition will benefi offers. It will benefit institutions full and fair opportunity to evaluate all tive competition. I believe that the only if it does not lead to self-destruc that deregulation does indeed measures I have outlined will help ensure benefit both. to a repetition of past A regime of caveat emptor can only lead abuses. 2)  Sincerely,  CHARLES E. SCHUMER Member of Congress  CC:  Hon. C. Todd Conover Hon. Edwin Gray Hon. William Isaac   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  October 18, 1983 C.  The Honorable Stephen L. Neal Chairman Suboommittee on International Trade, Investment and Monetary Policy Committee on Banking, Finance and Urban Affairs House of Representatives Washington, D. C. 20515  •  Dear Chairman Neal: Thank you for your letter_ of October 7 recommending Mr. Royal Frederick Kastens, Jr., to fill the vacancy in the Board's Congressional Liaison Office.  I can assure you that Mr. Kastens' qualifica-  tions will receive careful consideration when the Board makes a decision regarding this vacancy. The Board appreciates receiving your recommendation. Sincerely,  CO:vcd (V-206 - 83220) bcc:  Mrs. Mallardi (2)  Cong. Liaison Office drafting response  if  CongreE;1 of tbe tiniteb  tate5  kouVe of Ilepressentatibev STEVE NEAL  October 7, 1983  5TH DISTRICT, NORTH CAROLINA  rrt rt  E-rl'"11  rrt  Hon. Paul A.Volcker Chairman Board of Governors of the Federal Reserve System Constitution Avenue and 21st Street Washington, D.C. 20551  ••• •  F3  CD  c- • i:411 rirt  E.A.)  Crl  Dear Chairman Volcker: I understand that Mr. Royal Frederick Kastens, Jr. is under consideration by the Federal Reserve System for a position in the office of Congressional Liaison. I and members of my staff are acquainted with Mr. Kastens and we believe he would be a valuable employee in the system and quite capable of carrying out the functions of the office. Any consideration you give to Mr. Kastens, consistent with employing policies and procedures, will be appreciated. Thank you for your consideration. Bes  / es  / /S PHEN L. NEAL Chairman, Subcommittee on International Trade, Investment and Monetary Policy  cv SLN/da  WASHINGTON OFFICE 2463 RAYBURN House OFFICE BUILDING WASHINGTON, D.C. 20515 PHONE:(202) 225-2071   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  HOME oFFICL 421 FEDERAL BUILDING WINSTON-SALEM, NORTH CAROLINA 27101 PHONE:(919) 781-3125  •  CHRISTOPHER J. DODD CONNECTICUT  BOARD OF C6YERNI;3 F TEE FED 11.1!_ 1.:377NE ,4 77.1.71  ',Z1Cniteb ,Stafez „Senate WASHINGTON, D.C. 20510  1S83 OCT (7 Pi 9: 53 October 14  1983  RECEIVED OFFICE OF TiET,E  The Hon. Paul Volcker Federal Reserve Board 201- h & C Streets, NW Washington, D.C. 20551 Dea,:. Chairman Volcker: Later this month, key representatives of Connecticut's businesses, labor unions, colleges and universities, and local governments will be in Washington for a two-day seminar I am organizing. The seminar is intended to provide Connecticut's leaders with a better understanding of federal decision-making and Congress. The seminar begins the evening of October 26 with the first full day. Ogtober 27, focusing on economic and domestic policy issues. On October_28, the seminar program will focus on national security and foreign policy issues. Both days, panel discussions on these general subjects will be followed by smaller group workshops on specific policy questions. I would be honored if you would join me at a reception planned for Thursday, ca.tob_er 27 at 5 p.m., concluding the seminar's first full day. The seminEl.'s participants would benefit greatly from the opportunity to speak with you in an informal setting, considering your Washington experience and insight. Please feel free to join me for any other portion of the seminar that interests you as well. The entire seminar will be conducted on Capitol Hill; the -.- : ",.. , 1 ,,e, 1, in Room 325 of the Russel recept:.:n .., l Senate Office e"... ..-.. Building. I have in civaed a c opy of the seminar's agenda, for your information. am very excited about this seminar and as final plans are made, am confident it will provide interesting and provocative discussions. I hope you can join me at the reception and look forward to seeing you there. Please contact Richard Plepler of my staff, 224-0356, if you will be atteffg.  Enclosure   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  DODD WASHINGTON SEMINAR October 26 - 28, 1983  AGENDA WEDNESDAY, OCTOBER 26  State Room, Mayflower Hotel  5:00 - 7:00 p.m.  REGISTRATION  7:00 - 8:30 p.m.  RECEPTION  THURSDAY, OCTOBER 27  Russell Senate Office Building - Room 325 REGISTRATION 8:00 - 9:30 a.m. BREAKFAST 8:30 a.m. ORIENTATION 9:00 a.m. Senator Christopher J. Dodd 9:30 - 10:30 a.m.  PANEL: The American Economy: we go from here?  Where do  Moderator:  Senator Christopher J. Dodd  Panelists:  Honorable Bill Bradley United States Senator D-New Jersey David Maxwell Chairman, Federal National Mortgage Association Rudolph G. Penner Director, Congressional Budget Office United States Congress  Air WORKSHOPS 10:30 - 12:00 Noon A.  Financial Institutions  Moderator:  Panelists:  ....._,__ _-..-/ 2 Peter Kinz,er Minority Counsel, Committee on Banking, Housing and Urban Affairs United States Senate Dr. Saul B. Klaman President, National Association of Mutual Savings Banks Steve Paradise Vice President - Congressional Liaison, New York Stock Exchange M. Danny Wall Staff Director, Committee on Banking, Housing and Urban Affairs United States Senate Thomas E. Wilson Partner, Charles, Karalekas, McCahill and Wilson, Washington, D.C.  B.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Housing and Urban Affairs  Moderator:  Ed Silverman Legislative Assistant Senator Christopher J. Dodd  Panelists:  Robert Banister Senior Vice President - Government Affairs Division, National Association of Homebuilders Steven May Assistant Secretary for Legislation Department of Housing & Urban Development Ann L. Sullivan Director, Washington Office, State of Connecticut   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  o  C.  Tax Policy  Moderator:  Richard Belas Deputy Chief Counsel, Committee on Finance, United States Senate  Panelists:  John E. Chapoton Assistant Secretary for Tax Policy United States Treasury Department Honorable Thomas J. Downey U.S. House of Representatives New York J.D. Williams Williams & Jensen, Washington, D.C.  LUNCH 12:00 - 2:00 p.m. Russell Senate Office Building - Room 325 Keynote Speaker:  Honorable Robert Dole United States Senator, Kansas Chairman, Committee on Finance  2:00 - 3:00 p.m. PANEL: Human Resources for the Future  Moderator:  Senator Christopher J. Dodd  Panelists:  Honorable Dan Quayle United States Senator, Indiana To be announced To be announced  •  WORKSHOPS 3:00 - 5:00 p.m.  A.  Education  Moderator:  Michael W. Naylor Legislative Director Senator Christopher J. Dodd  Panelists:  Polly Gault Majority Staff Director, Subcommittee on Education, Arts & Humanities United States Senate John C. Hoy President, New England Board of Higher Education R. Bruce Hunter Legislative Specialist, American Association of School Administrators  B.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Labor Policy  Moderator:  Michael F. Forscey Counsel, Committee on Labor United States Senate  Panelists:  David Dunn Chief Counsel, National Labor Relations Board James S. Ray Attorney, Connerton & Bernstein Washington, D.C. William B. Welsh Director of Legislation AFSCME, Washington, D.C.  ci   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  C.  Health  Moderator:  Westley Clark Minority Counsel, Committee on Labor United States Senate  Panelists:  Linda Jenckes Vice President of Federal Affairs Health Insurance Association of America Dr. Paul Kerschner Associate Director, L.R. & D.S. American Association of Retired Persons Liz Robbins Liz Robbins Associates  RECEPTION 5:00 --.flOISps. m. Russell Senate Office Building - Room 325  FRIDAY, OCTOBER 28 BREAKFAST 8:30 Dirksen Senate Office Building - Room 106 Keynote Speakers:  Honorable Robert C. Byrd United States Senator, West Virginia Minority Leader Honorable Ted Stevens United States Senator, Alaska Assistant Majority Leader  9:30 - 11:00 a.m. PANEL The U.S. in a Global Economy: Obligations and Opportunities  Moderator:  Senator Christopher J. Dodd  Panelists:  Honorable John C. Danforth United States Senator, R-Missouri Chairman, International Trade Subcommittee Hon. Stuart E. Eizenstat Powell, Goldstein, Frazer & Murphy Washington, D.C. Robert Hormats Vice President, Goldman, Sachs and Company, New York  WORKSHOPS 11:00 - 12:30 p.m.  A.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  International ,-]conomic Policy  Moderator:  Janice O'Connell Minority Staff, Committee on Foreign Relations, United States Senate  Panelists:  Hon. Dr. Paul Craig Roberts Georgetown Center for Strategic and International Studies, Washington, D.C. Myer Rashish President, Rashish & Associates Washington, D.C. Robert Russell External Relations Officer International Monetary Fund  F t   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  B.  Trade Policy  Moderator:  Dr. Paul Freedenberg Committee on Banking, Housing and Urban Affairs United States Senate  Panelists:  Donald Ephlin Vice President and Director of General Motors, UAW International Union Dr. Ava Feiner Director of International Trade Policy U.S. Chamber of Commerce Hon. Robert E. Lighthizer Deputy U.S. Trade Representative  C.  Arms Control -- National Security Policy  Moderator:  William G. Ashworth Minority Staff, Committee on Foreign Affairs, United States Senate  Panelists:  Karen Elliott House The Wall Street Journal Walter Slocombe Attorney, Caplin & Drysdale Washington, D.C. Hon. Helmut Sonnenfeldt Guest Scholar, Brookings Institution  LUNCH 12:30 - 2:00 p.m. Dirksen Senate Office Building - Room 106 Keynote Speaker:  Hon. Sol M. Linowitz Coudert Brothers, Washington, D.C. 2:00 - 2:30 p.m.  Seminar Wrap-up  Senator Christopher J. Dodd   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ...rli  C:7) ....71  c.f-i (..4.1  Ca  1'8'1 rn .....„7 1 i...ri —1 C''' 7, -7. rr ,....,_ —I ' " .< c-", rn  October 7, 1983  Hon. Paul Volcker Chairman Federal Reserve System 20th and Constitution Avenue, NW Washington, DC 20551  C, C.--) ....1 ..... ......  ...:Z"•  -.T...  ::11 --f -,...,  cp  ---...  Ni  rn  CO r 81 C.. .......7 '7.3,0 .---O ,---'8 CZ3 7,:t7 L .., C'n rn -vs -T 1 cr, rta —1 C7) ::: ::.-1.: -.1 -. rra -‹ rn Col : 74;) -(...  c.......,4 ........  c..,-,  -i..  Dear Paul: I need your help. On Monday October 24, my campaign committee is sponsoring a receper6E-5T-77717tol Hill Club from 6:00 - 8:00 p.m. The proceeds from this evening will begin to finance my 1984 re-election campaign efforts in Connecticut. Please be my special guest at this important event. The evening of October 24th is particularly significant to me. In fact, your presence would greatly contribute to the success of this fundraiser and in the end, my re-election campaign. And I know in the past, everyone has simply had a great time at the party. If you can attend, please let me or Paul Hicks, my Administrative Assistant know by Friday October 21. 4/ I hope I can  t on seeing you there.  sinc;i0etewart B. McKin ey, M.C.  4 4,1 ( 4  eat, " -' )7 4  ck../  AIM  •  MD.  BOARD OF GOVERNORS OF THE  FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551  October 7, 1983  The Honorable Doug Barnard, Jr. Chairman Subcommittee on Commerce, Consumer, and Monetary Affairs Committee on Government Operations House of Representatives Washington, D. C. 20515 Dear Chairman Barnard: In Chairman Volcker's absence, I am responding to your letter of September 22 in which you request copies of examination report materials regarding the United Southern Bank of Nashville for use by the Subcommittee. We understand that the Subcommittee held hearings on the matter on March 15 and 16, 1983, but that its investigation is continuing. Your staff has indicated that the requested documents are needed to complete the Subcommittee's report. Enclosed is a staff memorandum explaining the background to the joint examination. Also enclosed is the material you requested except for the joint report. The FDIC prepared this joint report and is the proper agency to provide it to you. We understand that they have agreed to do so. A few words of caution are necessary regarding the enclosed documents. These documents are highly confidential as of many they contain information concerning the private affairs individuals and companies, including existing banks. Documents are of this kind, which record the results of bank examinations, use disclosed by the Board to other government agencies only for ct where necessary in the performance of official duties, subje confito explicit commitments that the documents will be kept in dential by such agencies. 12 C.F.R. 261.6(b). Moreover, the this case there is an additional factor which emphasizes importance of maintaining the confidentiality of these documents. The documents contain information that is directly jury related to the subject matter of an ongoing Federal grand investigation and have been provided to the Justice Department ney as part of a grand jury proceeding. The United States Attor who is monitoring the grand jury investigation has asked the it Board not to publicly disclose any of the information that avoid has made available for use by the grand jury in order to compromising possible criminal proceedings. In light of these considerations, we are making the will enclosed documents available to you on the basis that they be maintained in confidence and will not be disclosed by the   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The Honorable Doug Barnard, Jr. Page Two  the SubSubcommittee. Ue would appreciate your assurance that s. committee accepts these documents on a confidential basi Our Director of Banking Supervision and regulation, Mr. Ryan, is familiar with this matter and is available to answer any questions you may have. Sinc3rely,  (Signed) Dor*, J. Winn Donald J. Winn Assistant to the Board Enclosures   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  JER:MB:pjt bcc: Jack Mike Mrs.  (#V-191) Ryan Bradfield Mallardi  4  S  STAFF MEMORANDUM ON SUBCOMMITTEE'S REQUEST FOR EXAMINATION DOCUMENTS RELATING TO THE TENNESSEE BANKING CHAIN In 1976, certain questions arose regarding the management, control and underlying  financial  strength  of  the  rapidly  expanding  banking  network  of  had :Jacob F. Butcher and C.H. Butcher, Jr. At that time, it was believed the Butchers use of ownership interests in at least thirteen banks. The questions surrounding the Federal the chain banking concept by the Butchers resulted in an agreement by the banking agencies to perform simultaneous examinations of these banks at the end of 1976. The banks involved in the chain consisted of nine State nonmember banks, the two national banks and two State member banks. The two State member banks in chain were United American Bank of Nashville, which subsequently changed its name which to United Southern Bank of Nashville, and United American Bank of Memphis, terminated nernbership on July 1, 1978. Since nine of the thirteen banks were State which nonmembers, the FDIC coordinated the project and prepared a final report the contained ownership information and certain financial data generated by respective examinations. of The subcommittee has requested a copy of the FDIC report and copies Southern Bank the examiner's comments pages from the examination reports of United the requested of Nashville for the years 1977 through 1983. The Board is providing   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ations with examiner's comments pages from the United Southern Bank examin copies references to third parties deleted. We are also providing to the subcommittee rn Bank, of formal supervisory actions issued by the Board against the United Southe with references to third parties deleted. subcommittee a copy of the joint report.  We understand the FDIC is providing the  Action DOL4RARNARD, JR-, GA-, CHAIRMAN r_f_‘..EVAN, TEA. RONALD JOHN M. SPRVT, JR., S.C. JOHN DNYEAS, JR., MICH. ELLIOTII H. LEVITAS, GA. HE'..1Y A. WAXMAN, CALIF.  JUDI CREGG N.H. WILLIAM F. CLINGER, JR., PAL TOM LEN S. FLA  aNT4Eii§n-Egi-THaO(NGINIS  Congrecz of the V.Juiteb  *771)tate5  MAJORITY—(202) 225..44.  otta of ikepreantatibeg COMMERCE, CONSUMER, AND MONETARY AFFAIRS SUBCOMMITTEE OF THE  COMMITTEE ON GOVERNMENT OPERATIONS  q/  RAYBURN HOUSE OFFICE BUILDING, ROOM B-377 WASHINGTON, D.C. 20515  September 22, 1983  Ca.) C")  r-a  re :70  ,Crif  CZ)  Hon. Paul A. Volcker Chairman Federal Reserve Board Washington, D.C. 20551 •••••••  ••••  ••  Dear Mr. Chairman:  CO  Fnl !•11. 0•••••  s Subcommittee is The House Commerce, Consumer, and Monetary Affair supervision of financial investigating the adequacy of the Federal banking agencies' by Jake Butcher, C. H. institutions in Tennessee and Kentucky owned or controlled this issue on March 15 and Butcher and their financial interests. Hearings were held on 16, 1983, and a report is presently in preparation. activities of the Federal While the subcommittee's focus is on the operations and banks" was a member of Deposit Insurance Corporation at least one of the "Butcher Nashville, Tennessee, which is the Federal Reserve System — United Southern Bank of extensions credit to United now closed. Moreover, the Federal Reserve was involved in banks" as well. Finally, American Bank in Knoxville and, perhaps, to other "Butcher the Federal Reserve Board the subcommittee is advised that during the summer of 1976 for the purpose of planning a participated in meetings with the FDIC and the OCC ssee and Kentucky. This joint joint examination of Butcher controlled banks in Tenne life arrangements and examination (which studied a number of issues including credit ship arrangements among other forms of compensation paid to the Butchers; stock owner to provide compensatory the various Butcher banks; the use of correspondent balances among the banks, etc.) took balances for the benefit of the Butchers; loan purchases the Federal Reserve Board place in October or November of 1976. Mr. Jack Ryan of in Washington participated in the planning meetings. Affairs Subcommittee with Please provide the Commerce, Consumer, and Monetary the following: 1.  2.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  memorandums, letters, etc., Copies of the 1976 joint examination report or any discussing the results of that joint examination; s" or "Summary" pages of any Copies of the examiners' "Comments and Conclusion ern Bank of Nashville for Federal Reserve examination reports for United South the years 1977 through 1983.  2 Please furnish the materials requested above no later than September 30, 1983. If there are any questions, please contact the subcommittee staff director, Peter S. Barash. Your anticipated cooperation is appreciated. Sincerely,  Doug lrnard Jr. Chairman DB:bb   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  October 5, 1993  The Honorable Robert H. :lichel Republican Lealer House of Representatives Qashington, D. C. 20515 Dear Bob: Thank you for your letter of September 30 recommending 71r. Benjamin Shapiro for a nosition on our Consumer Mvisory Council. I can assure you that Tlr. Shapiro will receive full consiration when the noard selects eight new Council members 1at.2.r this Tar. The Council provides valuable assistance in a0vising the Board on its iTpleTentation of consumer re-julations an on other consumar-relatel matters, and the Board is pleaser3 to receive reco-rnendations for qualified inlivi(luals who can contribute to the Council's work. 7Y-fain, the Board appreciates having your recommendation. Sincerely,  J104 CO:pjt (#V-195, 83139) bcc: Mrs. Bray (w/copy of incoming) Mrs. Mallardi (2),   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  H-232.7.44EcApirot. WASHINGTON, D.0. 20515  . 4FRT H. MICHEL : RO ism DISTRICT, ILLINOIS   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  225-0600  Office of the ilepublican Reaber Unita'  tate  ijOUCSC of ilepres'cntatibeiS  taastington, D.C.  20515  Cn ....„, ....r; ) C-Pri  September 30, 1983  cm — rri  -4 C-3 77- I-T1 t 1-1Z  W CO  C.0  Fl  g  CD 4 C.....4  >....  =,  I—  rm  1 CA)  :7'77 Cn C=' I-71 -El C-1, ril ...-1 CD  Ia.  .- ..... rea ..w..._ ......., rn m 1 = Z. ri,  CP  G-.  r', rrl  ...77. a ›-  Mr. Paul A. Volcker, Chairman Board of Governors Federal Service System Washington, D.C. 20551  ._....... -...„.... .....  ........  rv--1  Ul  Dear Mr. Chairman: record in support I would like to take this opportunity to go on for appointment to the of Mr. Benjamin Shapiro who has been nominated Board. Consumer Advisory Council of the Federal Reserve ce make him an I believe MY. Shapiro's background and experien , and I hope he outstanding candidate for service in this capacity ction committee during will be given serious consideration by the sele their evaluation of all nominees. receive favorable I sincerely hope Mr. Shapiro's nomination will attention he might receive. consideration and will greatly appreciate any Sincei4) t/Michel Rob rf Repitlican Leader  =
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