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1979 Annual Report FEDERAL RESERVE BANK OF CHIC 1979 ANNUAL REPORT Federal Reserve Bank of Chicago CONTENTS A message F r o m 1979 THE Financial Summary of president statements operations 1 5 8 directors 9 Officers 12 A president MESSAGE FROM THE Thouqhts on inflation and monetary policy W e can hardly move into a new decade w i t h o u t w o n d e r i n g what the f u t u r e holds. W h i l e w e may be uncertain, w e naturally tend, I t h i n k , to anticipate a brighter f u t u r e because of o u r past experiences. Given the performance of the A m e r i c a n economy d u r i n g the 1970s, however, can w e be this optimistic? D u r i n g the closing year of the decade w e experienced the worst inflation of the postwar period. Even m o r e dist u r b i n g , the inflation of 1978-79 appears to be a resumption and further acceleration of a cycle that was traced most recently by the U.S. e c o n o m y between the late 1960s and mid-1970s. T h r o u g h o u t the postwar period we can observe a series of cyclical peaks, each o n e bringing higher inflation and interest rates than the o n e preceding it, w i t h less moderation in the recession that f o l l o w e d . Thus, despite the substantial price—in terms of prosperity, jobs, and i n c o m e — p a i d by Americans in 1974-75 to c o n t r o l inflation, those pressures subsided only temporarily. M u s t w e repeat this pattern again or can w e break away and avoid still higher inflation a few years d o w n the road? I think the 70s p r o v i d e d us w i t h m o r e than merely a forecast of what o u r f u t u r e w o u l d be like. The experiences of the decade underscored some hard realities about inflation and what is required to combat it. W h a t was demonstrated was hardly anything new. But if w e as a nation understand, accept and act u p o n those realities, w e w i l l have reason t o anticipate a better f u t u r e rather than just a repeat of the past. Reality #7; Money growth combat inflation has to be restrained to " T o o m u c h money chasing t o o few goods"—a highly simplified description of inflation to be sure. Clearly it fails to cover important aspects of the story, such as why there may be t o o m u c h money. Nevertheless, logic, economic theory, historical fact, and certainly our recent experience all substantiate the validity of this capsulized d e f i n i t i o n of inflation. Inflation is essentially a matter of aggregate expenditures in excess of available goods and services. Spending, in t u r n , depends o n the availability of money and credit. G r o w t h in m o n e y and credit supports business activity and expansion of t h e nation's p r o d u c t i v e facilities, b u t o n l y to a p o i n t . The n a t i o n can p r o d u c e only so m u c h and, w i t h i n any given t i m e p e r i o d , the e c o n o m y has a l i m i t e d ability to expand p r o d u c t i v e capacity. W h e n idle resources begin to disappear, c o n t i n u e d m o n e y g r o w t h causes prices to be b i d u p , and t h e inflationary process begins t o take hold. It stands t o reason that if i n f l a t i o n is financed by excessive m o n e y g r o w t h , t h e n taking away t h e fuel should p u t o u t t h e fire. W h i l e t h e d e v e l o p m e n t of inflation is a c o m p l i c a t e d process, n u r t u r e d and sustained by a variety of interacting forces, it c a n n o t be o v e r c o m e w i t h o u t regaining adequate c o n t r o l of t h e q u a n t i t y of m o n e y . Responsibility for c o n t r o l l i n g m o n e y g r o w t h rests largely, of course, w i t h the Federal Reserve. This was precisely the message a n d m e a n i n g of t h e actions a n n o u n c e d last O c t o b e r 6. " T h e Federal Reserve today a n n o u n c e d a series of c o m p l e m e n t a r y actions that should assure better c o n t r o l over t h e expansion of m o n e y and bank credit . . . and t h e r e b y serve to d a m p e n inflationary forces." The i m m e d i a t e market response to that a n n o u n c e m e n t — s h a r p increases in t h e w h o l e spectrum of interest rates—was q u i t e dramatic—so dramatic, in fact, that I fear that many may have confused the s h o r t - t e r m results w i t h t h e Federal Reserve's u l t i m a t e objectives. The Fed's a n n o u n c e m e n t i n v o l v e d all t h e tools available to the Fed to affect m o n e y — t h e discount rate, reserve r e q u i r e m e n t s and o p e n market operations. Thus, the actions in c o m b i n a t i o n signified the System's c o m m i t m e n t to d o all in its p o w e r to c o n t r o l excess g r o w t h in m o n e y and credit. Record high interest rates w e r e n o t an e n d in themselves b u t merely a t e m porary and inevitable o u t c o m e of the refusal to a c c o m m o d a t e excessive credit demands. Interest rates represent t h e price of credit. Like any price they reflect t h e relationship b e t w e e n supply and d e m a n d . H i g h interest rates reflect high credit d e m a n d s relative to funds available. Since i n f l a t i o n permits b o r r o w e r s to repay debts w i t h cheaper dollars, inflation itself stimulates these credit demands. A n d creditors, of course, factor their inflationary expectations into the interest rates they charge. The Fed c o u l d r e d u c e shortt e r m rates t e m p o r a r i l y by p r o v i d i n g m o r e loanable funds. U l t i m a t e l y , h o w e v e r , t h e action w o u l d only add f u r t h e r to inflationary pressures, causing rates to rise even higher. H i g h interest rates are m o r e p r o p e r l y v i e w e d , t h e n , as a s y m p t o m of inflation rather than either as its c u r e or as a cause. So l o n g as p e o p l e expect inflation to persist, it is inevitable that rates w i l l remain high. But if real progress can be made t o w a r d restraining excessive m o n e t a r y g r o w t h and r e d u c i n g c r e d i t demands, rates w i l l just as inevitably c o m e d o w n . That decline w i l l in no way violate t h e Fed's m o n e t a r y objectives; it w o u l d not indicate that t h e Fed had given up t h e fight against i n f l a t i o n , b u t rather that some success had b e e n w o n . 2 Reality #2; Monetary cannot work in a policy does not vacuum and Like o t h e r c e n t r a l banks a r o u n d t h e w o r l d , t h e Fed has in r e c e n t years established a n d a n n o u n c e d a n n u a l target rates of g r o w t h in t h e m o n e y s u p p l y w h i c h it d e e m e d a p p r o p r i a t e in l i g h t of t h e n a t i o n ' s c u r r e n t e c o n o m i c c o n d i t i o n a n d l o n g - r u n e c o n o m i c o b j e c t i v e s . Targets f o r t h e p e r i o d f r o m t h e last q u a r t e r of 1978 t o t h e last q u a r t e r of 1979 w e r e set last February. T h e Federal Reserve's a c t i o n s of O c t o b e r 6 d i d n o t m o d i f y these targets. Rather t h e p u r p o s e o f t h o s e actions was t o increase t h e p r o b a b i l i t y of h i t t i n g t h e m . G i v e n that w e k n o w t h a t l o w e r rates of m o n e t a r y g r o w t h are essential t o c o n t r o l i n f l a t i o n , w h y h a v e n ' t w e a c h i e v e d t h e m d u r i n g t h e past several years? Largely because, as I h i n t e d e a r l i e r , t h e s i m p l e n o t i o n t h a t w e can get i n f l a t i o n u n d e r c o n t r o l if w e just stop " p r i n t i n g m o n e y " leaves o u t i m p o r tant parts of t h e story. The t e c h n i c a l p r o b l e m s associated w i t h b o t h t h e d e t e r m i n a t i o n a n d i m p l e m e n t a t i o n of m o n e t a r y p o l i c y , of c o u r s e , r e p r e s e n t o n e part of that story. O u r e c o n o m y is t o o c o m p l i c a t e d a n d u n p r e d i c t a b l e f o r m o n e tary p o l i c y t o b e a m a t t e r o f s i m p l e a r i t h m e t i c . In t r y i n g t o set m o n e y targets, p o l i c y m a k e r s are c o n f r o n t e d by a variety of u n c e r t a i n t i e s c o n c e r n i n g , a m o n g o t h e r s , t h e effects of n e w m o n e y substitutes, d e p o s i t shifts, a n d t h e rate at w h i c h m o n e y w i l l be s p e n t , t h a t is, its v e l o c i t y . In a d d i t i o n , h i t t i n g targets is n o s i m p l e task g i v e n t h a t m o n e y g r o w t h has t o be i n f l u e n c e d ind i r e c t l y t h r o u g h t h e supply of b a n k reserves, that m o n e y d e m a n d can f l u c t u a t e significantly, t h a t lags in p o l i c y effects vary, a n d that o u r i n f o r m a t i o n f l o w s are l i m i t e d . But e v e n if w e had all t h e i n f o r m a t i o n a n d t e c h n i c a l expertise necessary t o c o n t r o l m o n e y p e r f e c t l y , t h e r e is a n o t h e r a n d e v e n m o r e i m p o r t a n t part t o this story. T h e p o l i t i c a l a n d social realities of t h e s i t u a t i o n are such that r i g i d a d h e r e n c e t o m o n e t a r y targets by a c e n t r a l b a n k is n e i t h e r palatable n o r practical. I n c o m e s a n d prices in m a n y segments of t h e e c o n o m y have b e c o m e i n s t i t u t i o n a l i z e d t h r o u g h legislation a n d c o n t r a c t u a l a r r a n g e m e n t s . They d o n o t f l u c t u a t e freely in response t o c o m p e t i t i v e forces. Prices a n d i n c o m e s have b e c o m e " s t i c k y , " a n d a d j u s t m e n t s are o n l y possible w i t h fairly l o n g t i m e lags. Because of these rigidities a n d lags, it is d i f f i c u l t t o see t h e v a l u e of restraining m o n e t a r y g r o w t h , b u t t h e costs are o b v i o u s . Jobs a n d i n c o m e s are a f f e c t e d l o n g b e f o r e i n f l a t i o n . M o r e o v e r , t h e initial i m p a c t of m o n e t a r y p o l i c y is u n e v e n , a f f e c t i n g t h o s e sectors m o s t d e p e n d e n t o n c r e d i t . T i g h t m o n e y is l i k e a g a m e of musical chairs, a n d residential c o n s t r u c t i o n , small business, a n d a g r i c u l t u r e t e n d t o b e t h e first losers. 5 Because t h e costs are o b v i o u s l o n g b e f o r e t h e b e n e f i t s , f o l l o w i n g a c o u r s e of strict m o n e t a r y d i s c i p l i n e is likely t o b e s e l f - d e f e a t i n g . T h e r e is an u n d e r l y i n g d a n g e r that as t h e m o n e t a r y p o l i c y b i t e takes h o l d , forces may be set in m o t i o n o n o t h e r p o l i c y f r o n t s t o c o u n t e r b a l a n c e it, f u r t h e r aggravating a n d p r o l o n g i n g t h e i n f l a t i o n battle. M o n e t a r y policy cannot w i n that battle alone. The stronger the elements that increase money d e m a n d in relation to the supply of real goods and services—notably budget deficits, soaring oil prices, and declining p r o d u c t i v i t y — t h e m o r e d i f f i c u l t it is for the Fed to restrain monetary g r o w t h w i t h o u t incurring costs that are politically and socially unacceptable. Reality #3: A "quick-fix" neither possible nor to our inflation desirable problems is In light of the high cost associated w i t h a rigid anti-inflation policy, w e clearly cannot ask for or expect t o o m u c h , t o o soon f r o m the Federal Reserve's actions of O c t o b e r 6. In the end, however, a gradual b u t consistent policy is our best hope for l o n g - t e r m success. Americans w i l l have to exhibit uncharacteristic patience to pursue a gradual solution to problems that have been b u i l d i n g for almost fifteen years. A t t h e same time, w e w i l l have to have the forebearance b o t h to accept the inevitable costs—in terms of reduced e c o n o m i c a c t i v i t y associated w i t h anti-inflationary policy, and to avoid m o v i n g t o o q u i c k l y to a policy geared t o w a r d offsetting them. Overly stimulative measures in a weak p e r i o d are a threat to lasting progress. W e must recognize that w h e t h e r w e c o n f r o n t o u r inflation p r o b l e m or not, w e w i l l have to pay a price. O u r only real choices have t o d o w i t h h o w great that price w i l l be, w h e n w e w i l l pay it and, once having paid it, w h e t h e r there is likely to be an e n d u r i n g beneficial effect. Given what w e have learned about inflation's impact o n savings, investment and the nation's p r o d u c tivity, inflation and recession can no longer be regarded as an e i t h e r / o r situation. W h i l e it is unrealistic to h o p e for or pursue a final solution to inflation q u i c k l y , dramatic actions, such as those of O c t o b e r 6, w e r e a vital first step. The public's expectations, w h i c h have b e c o m e such a f u n d a m e n t a l element in the inflationary process itself, have to be altered before l o n g - t e r m stability in the e c o n o m y can be restored. Ultimately, p e o p l e will have to be c o n vinced that there is a firm public policy c o m m i t m e n t to c o n q u e r inflation. O n l y if this happens can w e avoid progressively higher inflation that can be corrected only by deeper recession. Robert P. Mayo President 1 9 7 9 FINANCIAL STATEMENTS The financial statements of private enterprises provide a basis for evaluating performance. Their balance sheets and statements of income are statistical indicators of current and future capacity to generate earnings. By contrast, Federal Reserve Banks do not operate under a profit objective. Nonetheless, substantial earnings are incidental to the functions performed. Changes in major asset, liability and income items on Reserve Bank financial statements reflect developments in the economy and actions undertaken in support of System monetary objectives. Through purchases of securities and loans to member banks, the Federal Reserve increases the base for expansion in currency and deposits in accord with the economy's growth needs. Additions to member bank reserve deposits that result from this process are either withdrawn as currency or used to support the public's deposits at commercial banks. Income consists mainly of interest on each Reserve Bank's share of the System's portfolio of Treasury securities. Most of this is returned to the Treasury after expenses and statutory dividends to member banks are paid. During 1979 this bank's share of securities held in the System O p e n Market Account increased by $1.0 billion. All the increase in Reserve Bank credit outstanding was absorbed by the payout of currency (Federal Reserve notes outstanding) in response to public demands. 5 Increased interest income resulted from higher market interest rates as well as the larger portfolio of loans and securities. Bank operating expenses increased only moderately and foreign exchange losses, entailed in System currency stabilization operations, were insignificant compared to last year. As a result, net earnings rose by over $357 million, producing a record payment of almost $1.5 billion to the U.S. Treasury. STATEMENT of condition (in thousands of dollars) As of December 31 1979 Assets Gold certificate account Interdistrict settlement account Special drawing rights certificate account Coin 1978 1,591,089 (769,417) 1,762,680 183,836 300,000 30,647 215,000 13,865 151,035 1,303,778 18,454,852 67,175 1,259,214 17,460,051 19,909,665 18,786,440 2,113,866 15,998 769,950 1,624,385 15,637 588,584 Total assets 23,961,798 23,190,427 Liabilities Federal Reserve notes 18,504,804 17,189,680 3,689,067 283,924 45,149 150,036 4,092,270 427,940 31,013 105,929 4,168,176 4,657,152 589,904 363,118 757,482 260,909 23,626,002 22,865,223 167,898 167,898 162,602 162,602 335,796 325,204 23,961,798 23,190,427 Loans and securities: Loans Federal agency securities U.S. government securities Total loans and securities Cash items in process of collection Bank premises Other assets Deposits: Reserves1 U.S. Treasury—general account Foreign Other Total deposits Deferred availability cash items Other liabilities Total liabilities Capital accounts Capital paid in Surplus Total capital Total liabilities and capital i n c l u d e s reserves of Edge Act Corporations and of U.S. agencies and branchesof foreign banks in addition to member bank reserves. 6 STATEMENT (in thousands of of Earnings dollars) Year e n d i n g December 31 1978 Current earnings: Interest o n loans to m e m b e r banks Interest o n g o v e r n m e n t securities Interest o n investments of foreign currencies A l l other Total current earnings Current expenses: O p e r a t i n g expenses Cost of Federal Reserve currency Total current expenses Less reimbursement for certain fiscal agency and other expenses C u r r e n t net expenses Current net earnings Additions to (or deductions from) current net earnings: Net profit (or loss) on sales of securities Net p r o f i t (or loss) on foreign exchange transactions Assessment for expenses of Board of Governors Net additions (or deductions) Net earnings before payments to U.S. Treasury Distribution of net earnings: Dividends paid Payments to U.S. Treasury (as interest o n Federal Reserve notes) Transferred to surplus 7 24,582 1,586,820 8,003 1,325,213 10,374 297 222 248 1,621,998 1,333,761 85,932 9,667 81,679 8,412 95,599 90,091 7,651 7,307 87,948 82,784 1,534,050 1,250,977 (24,422) (20,792) (551) (77,369) (7,600) 496 (8,130) (36) (32,077) (106,327) 1,501,973 1,144,650 9,981 9,603 1,486,696 5,296 1,129,478 5,569 1,501,973 1,144,650 SUMMARY o f OPERATIONS Dollar amount 1979 Clearing and collection operations Commercial bank checks collected .. U.S. government checks collected 1 .. Automated payments processed Wire transfers of funds Corporate and municipal bonds, coupons and other noncash items collected Currency and related operations Currency received and counted Unfit currency withdrawn Coin received and counted Food stamps received and processed. Loans to member banks Total loans made during year Banks accommodated Services to U.S. Treasury Marketable government securities issued, serviced and redeemed: Definitive securities Book entry securities U.S. savings bonds issued, serviced and redeemed Federal taxes processed Member bank "service" operations Safekeeping of securities: Definitive, balance December 31 . . . Book entry, balance December 31 .. Securities purchased and sold for member banks 1,113.9 80.0 7.5 9.5 billion billion billion trillion 2.5 billion 8.1 1.6 289.9 652.5 billion billion million million 35.7 billion — Number 1978 991.8 60.0 4.7 7.9 billion billion billion trillion 1.9 billion 7.5 1.4 262.1 858.6 billion billion million million 15.0 billion — 1979 2.1 102.6 19.5 5.0 billion million million million 1978 2.0 90.3 14.0 4.2 billion million million million 659.5 thous. 563.3 thous. 976.0 325.0 2.2 190.7 936.2 274.4 2.0 224.0 million million billion million 7,588 364 million million billion million 5,870 299 2.9 billion 975.4 billion 3.2 billion 875.4 billion 2 259.1 thous. 424.4 thous. 304.3 thous. 327.5 thous. 4.2 billion 64.3 billion 4.1 billion 56.9 billion 66.2 million 0.8 million 62.2 million 0.8 million 8.7 billion 50.5 billion 9.7 billion 43.2 billion 1.7 million 1.7 million 1.8 billion 1.8 billion 34.7 thous. — — 25.9 thous. includes postal money orders. Revised. 2 8 DIRECTORS 9 Federal Reserve Bank directors, under the general supervision of the Board of Governors of the Federal Reserve System, supervise the operations of the bank and ensure that the affairs of the bank are administered fairly and impartially. Drawing on their broad experience and knowledge of regional conditions, the directors provide the president of the bank and the Board of Governors information for use in formulating monetary policy. At least once every 14 days, they establish the discount rate charged member banks borrowing from the Fed, subject to the review and determination of the Board of Governors. The directors are also responsible for selecting the district's representative to the Federal Advisory Council which meets periodically with the Board of Governors to provide input and advice on economic policy matters. A n d because of their association with the Federal Reserve, the directors contribute to better public understanding of the Federal Reserve System and its actions. Each Federal Reserve Bank has nine directors serving three-year terms. Three Class A and three Class B directors are elected by member banks in the district. Three Class C directors are appointed by the Board of Governors. For the election of Class A and B directors, member banks are classified into three groups according to their capital size. Each group elects one Class A and one Class B director. Class A directors are representative of the member banks. Class B and C directors represent the public; they cannot be officers, directors, employees, or, in the case of Class C directors, stockholders of a bank. These nonbanking directors are chosen with due but not exclusive consideration to the interests of agriculture, commerce, industry, services, labor, and consumers. O n e Class C director is designated chairman of the board of directors and Federal Reserve Agent by the Board of Governors. Another is appointed deputy chairman. Branches of Federal Reserve Banks have either five or, as in the case of. the Detroit Branch, seven directors. A majority of the branch directors are appointed by directors of the parent Federal Reserve Bank. They meet the same qualifications as Class A or B directors of the head office. The other branch directors are appointed by the Board of Governors. They are selected according to generally the same criteria as Class C head office directors, the difference being that they can be stockholders in banks. The chairman of the branch is selected from directors appointed by the Board of Governors using a method prescribed by the parent Federal Reserve Bank. The directors of the Detroit Branch, for example, elect their chairman. The directors of the branch assist the bank's board of directors in overseeing the operations of the branch. In addition, just as with directors of the bank, they provide two-way communication between the Federal Reserve and the public, ensuring participation by regional representatives in the formulation of monetary policy. DIRECTORS (as of December 31, 1979) Board of Directors, Federal Reserve Bank of Chicago, from left to right: (standing) Messrs. Abboud, Decio, Sagan, Hunt, Spies; (seated) Messrs. DeLay, Strotz, Ms. Garst; (not shown Mr. Brabec). Chicago ROBERT H. STROTZ, Chairman President Northwestern University Evanston, Illinois EDWARD F. BRABEC Business Manager Chicago Journeymen Local 130 Chicago, Illinois JOHN SAGAN, Deputy Chairman Vice President-Treasurer Ford Motor Company Dearborn, Michigan A. ROBERT ABBOUD Chairman of the Board The First National Bank of Chicago, Illinois Federal Advisory Council Plumbers, DENNIS W . H U N T President Hunt Truck Lines, Inc. Rockwell City, Iowa ARTHUR J. DECIO Chairman of the Board Skyline Corporation Elkhart, Indiana Chicago ROGER E. ANDERSON Chairman of the Board Continental Illinois National Chicago, Illinois MARY GARST Manager—Cattle Division The Garst Company Coon Rapids, Iowa Member JAY J. DeLAY President Huron Valley National Ann Arbor, Michigan Auditors JOHN F. SPIES President Iowa Trust and Savings Bank Emmetsburg, Iowa Bank (reporting to bank's board of FRED A. DONS, General Bank directors) Auditor RICHARD P. BUSH, Assistant General Auditor Detroit Branch JORDAN B. TATTER, Chairman President and Chief Executive Southern Michigan Cold Storage Company Benton Harbor, Michigan RODKEY CRAIGHEAD Chairman of the Board Detroit Bank & Trust Company Detroit, Michigan HERBERT H. D O W Secretary The Dow Chemical Midland, Michigan Officer JAMES H. D U N C A N Chairman First American Bank Corporation Kalamazoo, Michigan LAWRENCE A. JOHNS President Isabella Bank and Trust Mount Pleasant, Michigan CHARLES R. M O N T G O M E R Y President Michigan Consolidated Gas Company Detroit, Michigan H O W A R D F. SIMS President Sims-Varner & Associates, Detroit, Michigan Inc. Company 10 BoardchangesF R 1980 O John Sagan Howard Sims C h i c a g o Fed b o a r d D e t r o i t Branch b o a r d New Chicago Fed and Detroit 1980. Robert Strotz Three directors who provided Chicago Fed boards completed 11 Branch board chairmen Jay DeLay have been designated for Jordan Tatter six years of valuable service and leadership their terms at year-end 7979. on John Sagan, vice president-treasurer of Ford M o t o r Company, will serve as Chicago Fed board chairman in 1980, assuming the post held by Robert H. Strotz the past two years. M r . Strotz, w h o is president of Northwestern University, completed the maximum of two consecutive three-year terms on the bank's board at year-end 1979. Stanton R. Cook, president, Tribune Company and publisher of the Chicago Tribune, has been appointed to a three-year term as a Class C (nonbanker) director by the Board of Governors and will serve as deputy chairman in 1980. The only other new director on the Chicago Fed board in 1980 will be Patrick McNarny, president of the First National Bank of Logansport, Indiana. McNarny was elected a Class A director by medium-sized district member banks to fill the seat held for the past six years by Jay J. DeLay, president of the Huron Valley National Bank, Ann Arbor, Michigan. Mary Garst, of The Garst Company in Coon Rapids, Iowa, was reelected as a Class B (nonbanker) director by the district's largest member banks after serving on the board in 1979. Changes in the board at the Chicago Fed's Detroit Branch for 1980 include a new chairman, Howard F. Sims. M r . Sims is president of Sims-Varner & Associates of Detroit and has been a branch director since 1978. In addition, two new directors are joining the branch board. Russell G. Mawby, president and trustee, W.K. Kellogg Foundation , Battle Creek, was named by the Board of Governors to take the seat held by Jordan Tatter, president, Southern Michigan Cold Storage Company of Benton Harbor. M r . Tatter completed two full terms on the branch board and served as branch board chairman for the past four years. Taking the branch board seat held by Rodkey Craighead, chairman of the board of Detroit Bank and Trust, will be Dean E. Richardson, chairman of Manufacturers National Bank of Detroit. M r . Richardson was named a branch director by the Chicago Fed board. OFficERs (as of December 31, 1979) EUGENE J. WAGNER, Vice President ALLEN G. WOLKEY, Vice President NICHOLAS P. ALBAN, Assistant Vice and Assistant Secretary JAMES A. BLUEMLE, Assistant Vice President President HARRIS C. BUELL, JR., Assistant Vice President CHARLES W . FURBEE, Assistant Vice President ROBERT P. M A Y O President DANIEL M . DOYLE First Vice President OLIVER I. IRELAND, Assistant General CAROL P. KASPAR, Assistant Vice ERICH K. KROLL, Assistant Vice M . BRIAN CAREY, Senior Vice President and FRCS-80 Project W A R D J. LARSON, Senior Vice Legal Adviser and Secretary President ROSE M . KUBUSH, Assistant Vice Manager President LARRY R. MOTE, Senior Economist Assistant Vice President President, Counsel President and LAWRENCE J. POWAGA, Assistant Vice KARL A. SCHELD, Senior Vice President Director of Research and President HARVEY ROSENBLUM, Senior Economist Assistant Vice President HARRY S. SCHULTZ, Senior Vice President CARL E. VANDER WILT, Senior Vice President RICHARD H. RAMSDELL, Assistant Vice JAMES R. MORRISON, Senior Vice President WALTER A. SIENKO, Assistant Vice President RICHARD P. ANSTEE, Vice President DAVID R. STARIN, Assistant Vice and President President HILBERT G. SWANSON, Assistant Vice GEORGE W. CLOOS, Economic Adviser Vice President and President PATRICK J. TRACY, Assistant Chief CARL C. WELKE, Assistant Vice FRANKLIN D. DREYER, Vice President President THOMAS L. WOLFE, Examining Examiner DetroIt DANIEL P. KINSELLA, Vice President JOSEPH G. KVASNICKA, Economic Adviser and Vice President B r a n c h WILLIAM C. CONRAD, Senior Vice President and GLEN BROOKS, Assistant Vice DOROTHY M . NICHOLS, Economic Adviser Vice President and offices President President ROBERT W . C O O K , Assistant Vice President District offices THOMAS P. KILLEEN, Assistant Vice President, Des R A Y M O N D M . SCHEIDER, Vice President RUSSELL O . LANGAN, Assistant Vice President, ROBY L. SLOAN, Vice President RICHARD L. SIMMS, JR., Assistant Vice President, Associate Director and Manager President WAYNE R. BAXTER, Assistant Vice WILLIAM T. NEWPORT, Vice President and Officer FREDERICK S. D O M I N I C K , Vice ROBERT A. LUDWIG, Vice President WILLIAM ROONEY, Vice President President PATRICIA W. WISHART, Assistant Vice President Assistant Director of Research WILLIAM H. GRAM, Vice President, General Counsel and Assistant Secretary LOUIS J. PUROL, Vice President, district Examiner ROBERT W . WELLHAUSEN, Assistant Vice ROBERT M . FITZGERALD, Vice President RODERICK L. HOUSENGA, Chief President WARREN J. TAUBMAN, Assistant Vice PAUL J. BETTINI, Vice President Moines Milwaukee Indianapolis of Research ADOLPH J. STOJETZ, Vice President RUTH F. VILONA, Vice President 12 official changes 13 A number of official changes were announced during 1979, including the promotion of Carl E. Vander Wilt to senior vice president with overall responsibility for the management services and automation services departments; Robert A. Ludwig to vice president in the management services department; and Ruth F. Vilona to vice president in charge of the accounting and disbursing departments. In addition, Senior Vice President Ward J. Larson was named legal advisor, and Vice President William H. Gram was appointed general counsel. Joining the official staff during 1979 were Richard P. Anstee, vice president in automation services; Nicholas P. Alban, assistant vice president and assistant secretary, responsible for the new office of the bank secretariat; Oliver I. Ireland, assistant general counsel in the legal department; and Lawrence J. Powaga, assistant vice president in the fiscal agency department. Finally during 1979, the Federal Reserve System announced that a special project team, composed of staff from Fed offices across the country, would be based at the Chicago Fed to coordinate the development and installation of the system's new computer-based communications network, FRCS-80. M . Brian Carey of the Board of Governors staff was named FRCS80 project manager, and for purposes of thisassignment,a senior vice president of the Chicago Fed. At year-end the promotions of three assistant vice presidents and the appointment of eight new officers were announced. Effective January 1, Harris C. Buell of the supervision and regulation department, Charles W. Furbee of the personnel department, and Patricia W. Wishart of the research department were elevated to vice presidents. New members of the official staff included Gary L. Benjamin, as senior economist and assistant vice president in the research department, and seven managers of various bank divisions. They are Jack S. Light, accounting department, Delmar W. Robb, disbursing department, Warren E. Potts, wire transfer department, and John Van Pelt, Detroit Branch check operations, all named operations officers; Marlene O'Sullivan and Jean L. Valerius, both of the research department, named research automation officer and research statistical officer, respectively; and William D. Stratton, bank relations division, named banking services officer. (312) 322-5112 FEDERAL RESERVE BANK OF CHICAGO Public Information Center P. O. Box 834 Chicago, Illinois 60690 BULK RATE U.S. POSTAGE PAID CHICAGO, ILLINOIS PERMIT NO. 1942