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The Federal Reserve Bank of San
Francisco is one of twelve regional
Reserve Banks which, together
with the Board of Governors in
Washington, D.C., comprise the
nation's central bank.
As the nation's central bank, the
Federal Reserve is responsible for
making and carrying out our na
tion's monetary policy. It also is
a bank regulatory agency, a provi
der of wholesale priced banking
services, and the fiscal agent for
the United States Treasury.
The Federal Reserve Bank of San
Francisco serves the Twelfth Fed
eral Reserve District, which in
cludes the nine western states
Alaska, Arizona, California,
Hawaii, Idaho, Nevada, Oregon,
Utah and Washington-Guam,
American Samoa, and the
Northern Mariana Islands.
Table of Contents
Crossing Frontiers
2
From Accommodating Business Needs ...
To Stabilizing Business Cycles
4
From Regulation ... To Deregulation
6
From Regional Development ...
To Community Development
8
From Hands-On ... To Electrons
10
Federal Reserve Bank of San Francisco
12
Organization Chart
14
Highlights of 1988
16
Directors
21
This District is the largest in the
Federal Reserve System in terms of
geographic size and population.
And it is the busiest in terms of
economic activity considering em
ployment, income, and the diversity
of industries-all of which also
affect the structure of banking
in the West.
"'111
of
...
Balld.»
MAR 10 1989
LIBRARY
1
Crossing Frontiers
Seventy-five years ago, two days
before Christmas, President Wood
row Wilson signed the Federal
Reserve Act into law. The Act ush
ered the new frontier of central
banking into the United States.
Today, almost 18 percent of the
nation's population live in the same
western states, and employment in
manufacturing and trade here
account for 16 and 18 percent of
the national totals, respectively.
Banks at the time were loosely
knit at best, making the flow of
money and credit fitful. Much con
fusion and little confidence in such
a system resulted in periodic pan
ics that were crippling the growth
of a young and dynamic nation.
The pioneers of central banking in
the United States knew the Federal
Reserve would face new frontiers
over the years. We pay tribute, on
this seventy-fifth anniversary of
the signing of the Federal Reserve
Act, to their foresight and to the
enduring goals that have served
well as guideposts for our country's
development.
The Federal Reserve System, cre
ated by the Act, was designed to
provide a stable monetary system
as a basis for economic prosperity,
to promote safety and soundness
in banking, and to ensure that
the nation's system for making
payments operated smoothly
and efficiently.
Seventy-five years ago, the western
United States was still considered
an economic frontier. Only 6 percent
of the nation's population lived
here, and they were suspicious of
paper money. The region's wealth
lay in raw materials, not finished
products or trade, and its people
preferred to transact business in
gold and silver.
2
Robert R Erburu
Chairman
~r.7
Robert T. Parry
President
,
"
From left, Carolyn S. Chambers, Deputy Chairman,
Carl E. Powell, First Vice President, Robert T. Parry, President,
and Robert F. Erburu, Chairman.
3
From Accommodating Business Needs ...
Seventy-five years ago, further
growth for a nation that had
harnessed the engines of the in
dustrial revolution depended on a
smoothly functioning, nationwide
monetary system.
The Federal Reserve System was
designed to provide a source of
liquidity for the economy by fur
nishing "an elastic currency" and
affording "a means of discounting
commercial paper."
In 1913, Keynes had not yet
conceived Keynesianism; monetar
ism was not yet cause for argu
ment; and economists labored
without benefit of foresight from
computer-aided multivariate
regression analysis, econometric
modelling, and Bayesian vector
autoregressions.
National economic statistics now
taken for granted did not yet exist,
and Reserve Banks gathered their
own data from surveys of regional
industries. A Senate resolution
in 1932 started the Department of
Commerce compiling national in
come statistics, but measures
of gross national product (GNP)
were not developed until after
World War II.
The framers of the Federal Reserve
System assumed that the United
States would remain on the gold
standard, under which the credit
system was essentially self-balanc
ing over the long run.
Without impediments, the demand
for money presumably would
adjust to the supply; the economy
would automatically adjust to the
quantity of gold that backed
the currency.
The gold backing constrained the
total amount of money and credit
that could be created, limiting
the Federal Reserve's policy discre
tion largely to determining the
discount rate.
Accordingly, Reserve Banks pas
sively supplied Federal Reserve
notes to the public and businesses,
and discounted commercial paper
to provide additional reserves for
surges in the demand for loans.
New frontiers in the use of policy
instruments were discovered at the
time of World War I, when the
United States effectively abandoned
the gold standard.
During the war, for the first time,
banks were allowed to pledge gov
ernment securities and to borrow
reserves from Reserve Banks.
4
· .. To Stabilizing Business Cycles
Shortly after the war, in what some
history books call the "great dis
covery," Federal Reserve Banks
turned to buying and selling gov
ernment securit ies in the open
market to influence reserves in the
banking system .
When Reserve Banks bought secu
ri ties, they added reserves to the
banking system ; the opposite hap
pened when Reserve Banks sold
securities in the open market.
The Federal Reserve Act had em
powered the Banks to buy and sell
Treasury secur ities, but it s writers
did not foresee the role such opera
tions would eventually playas the
major tool of monetary policy.
Monetary policy began crossing the
frontier from accommodating busi
ness needs to stabilizing bu siness
cycles after World War 1. Policy
would no longer merely react to th e
needs of consumers and industry.
Policy would also attempt to mod
erate fluctuations in money and
credit in re sponse to developments
in business activity.
In the late 1970s, the Federal Re
serve broke new ground in trying to
conquer double-digit inflation. For
three years beginning at the end of
1979, the Federal Reserve adopted
a new procedure whereby open
market operations were used
to stabilize the growth of the
money stock.
More recently, rapid innovations in
the financial market have broken
down the traditional relationship
between money growth rates and
inflation, and forced the Fed to
reduce it s emphasis on money
supply measures.
Much focus at this Bank has shifted
to the use of macroeconomic fore
casting models to assess the impact
of Federal Reserve policies on
the economy.
The Banking Act of 1935 central
ized the making of monetary policy
in the single agency known as the
Federal Open Market Committee.
Congress officially marked the
change in policy focus by passing
th e Employment Act of 1946. The
Act explicitly charged the Federal
Reserve with the goals of promot ing
full employment, price stability,
and a su stainable rate of growth
for the country.
Congress re- stated tho se goals in
the Full Employment and Balanced
Growth Act of 1978, and they guide
policy today.
5
From Regulation ...
Seventy-five years ago, the national
banking panic of 1907 was still on
legislators' minds when Congress
passed the Federal Reserve Act.
The Act was designed in part to
prevent a recurrence of such catas
trophes by establishing "a more
effecti ve supervision of banking in
the United States" through the
Federal Reserve System.
Banking was considered to playa
unique role in supplying money
and credit to the economy, and its
safety and soundness was, and
continues to be , a matter of
public concern.
In 1913, regulation at the federal
level was sparse as only the Office
of the Comptroller of the Currency
counted bank examination an im
portant part of its responsibilities.
/
In its early years, the Federal
Reserve's authority was limited
primarily to supervising the activi
ties of member banks. It took the
failure of some 9,400 banks during
the Great Depression to define a
new frontier of bank regulation.
The Glass-Steagall Act of 1932
separated commercial and invest
ment banking, thereby formalizing
the concept of appropriate and
inappropriate activities for banks.
The Banking Act of 1933 estab
lished the Federal Deposit Insur
ance Corporation, and, combined
with the Banking Act of 1935, gave
the Federal Reserve additional
supervisory powers.
The 1933 Act also prohibited the
payment of interest on demand
deposits, and gave the Federal
Reserve authority to set deposit
interest rates on the accounts of
member banks.
By the 1950s, the development
of bank holding companies was
presenting yet another challenge
to bank regulation. Holding com
panies that owned banks and a
variety of other interests could
effectively circumvent geographic
and business restrictions applied
to banks.
/
Concerned that they presented new
and unregulated risks to the safety
and soundness of banking, Con
gress passed the Bank Holding
Company Act of 1956 and amend
ments in 1970 to extend the Federal
Reserve's supervisory authority
over these companies, and also re
quired the Fed to regulate their
formation and acquisitions.
Today, the Federal Reserve also
supervises Edge Corporations and
the domestic branches and agencies
of foreign banks.
6
· .. To Deregulation
In the 1970s, banks started to face
severe competition from compar
atively unregulated industries.
Authorities saw that the regula
tory structure of the 1930s was
hampering banks' ability to adapt,
and began charting the frontier
of deregulation.
Money market mutual funds , for
one, could pay higher interest
because they were not limited by
Regulation Q-type interest rate
ceilings, and non -banking insti
tutions were providing banking
services on a nationwide basis.
Banks' severely limited investment
powers also handicapped their
ability to adjust to the economic
environment of high inflation.
Through landmark legislation such
as the Depository Institutions De
regulation and Monetary Control
Act of 1980, regulators tried to
restore an "even playing field" in
the financial services industry.
The regulatory response has fo
cused on capital regulation as a
method of controlling the added
risk presented by expanded bank
powers. This approach emphasizes
a sound base for undertaking
investments.
The Federal Reserve also is turning
attention to the geographic fron
tiers of bank expansion. Many
states now allow state-chartered
banks to branch interstate. All
states in the San Francisco Reserve
Bank's district except Hawaii have
formed some type of reciprocal
agreement with their neighbors
to allow interstate banking, often
providing for nationwide entry at
a later date.
In 1988, the Federal Reserve's su
pervisory concerns included the
debt of lesser developed countries
on the books of large banks, the
demands of the savings and loan
crisis, and the effects of increasing
consolidation on competition in
the banking industry.
Nationwide interest-paying check
ing accounts and market-rate sav
ings accounts were authorized in
1982. Between 1980 and 1986,
Regulation Q ceilings were phased
out, with the exception of the limit
on demand deposits . The Compet
itive Equality Banking Act of
1987 redefined nonbank banks to
bring them under some govern
ment supervision.
Banks would like to expand further
into nontraditional investments
such as insurance. But even this
frontier has been breached as
banks can now provide such ser
vices as discount brokerage and
even limited securities
underwriting.
7
From Regional Development ...
Seventy-five years ago, the writers
of the Federal Reserve Act created
a central bank with a unique blend
of national and regional elements.
The Board of Governors served as
the "capstone" of the System, as
the Board was called by Woodrow
Wilson. In addition, there were
to be not fewer than nine and not
more than twelve regional Reserve
Bank Districts to serve the differing
credit needs of the country.
Reserve Bank boards of directors
would set discount rates to reflect
regional conditions. The rates
themselves were expected to differ
among the twelve Reserve Banks.
Early open market operations also
were conducted independently by
the Reserve Banks.
But within its first decade, the
Federal Reserve came to realize
that monetary policy required a
national focus as money and credit
markets were national in scope.
By 1922, an informal committee of
five Reserve Bank presidents had
formed to handle open market
transactions for all Reserve Banks.
In 1923, a single System invest
ment account was created.
By 1930, all Reserve Banks were
given representation in the "Open
Market Policy Conference" and
decisions of the Conference were
subject to Federal Reserve Board
approval although Reserve Banks
were still free to undertake their
own open market operations.
This centralization was completed
by the Banking Act of 1935 which
vested authority to make monetary
policy in the Federal Reserve Board
of Governors and the Federal Open
Market Committee.
The Committee is made up of the
seven members of the Board of
Governors, the president of the New
York Reserve Bank, and four of
the other Reserve Bank presidents
who vote on a rotating basis.
For most of seventy-five years,
monetary policy has therefore fitted
its description by a former Reserve
Bank president of being a "blunt
instrument." He meant that policy
aimed to achieve national goals
and made no attempt to direct the
flow of credit into particular sectors
of the economy.
8
.
I
· .. To Community Development
Nevertheless, Reserve Banks have
maintained a commitment to the
development of their particular
Districts, and remain active on
a smaller scale on the frontier
of community development.
The issues of consumer and com
munity credit rights arose in the
1960s and 1970s in major legisla
tion such as the Truth in Lending
Act of 1968, the Community
Reinvestment Act of 1977, and
the Equal Credit Opportunity
Act of 1979.
The Community Reinvestment Act
called for the federal agencies that
regulate financial institutions to
encourage lenders to help meet the
credit needs of their communities.
In particular, the Act aimed to
eliminate redlining and other
discriminatory practices thought
to contribute to the deterioration
of inner cities.
These major projects derived from
a continuing commitment to com
munity development by Reserve
Banks. On a regular basis, Reserve
Banks mediate community dis
agreements with banking orga
nizations and host conferences
that present community invest
ment strategies.
This Reserve Bank has started to
issue reports on the investment
and development needs of various
communities in the Twelfth Dis
trict, and will provide advice and
assistance in formulating effective
and profitable development plans.
/
Reserve Banks administer credit
rights legislation through the ex
amination of banks, the applica
tions process, and direct service to
consumers and communities.
/
The San Francisco Reserve Bank,
for example, received over 2,400
consumer inquiries in 1988, the
bulk of which related to Truth-in
Lending and transactions involving
automated teller machines.
Also in 1988, the San Francisco
Reserve Bank, in partnership with
the San Francisco Development
Fund, helped form a task force to
create a statewide lender consor
tium called the California Commu
nity Reinvestment Corporation.
This group will pool the resources
of participating institutions to
finance affordable housing
throughout the state. The Bank
also supported the Washington
State Banking Association's efforts
to form a multi-bank community
development corporation.
9
From Hands-On ...
Seventy-five years ago, checks were
passed through a patchwork of
country and city banks, some of
which would take a fee off the top.
After the fees, a depositor was left
with checks worth considerably
less than their face value.
With its establishment in 1913,
the Federal Reserve provided the
country its first nationwide check
clearing system.
Seventy-five years later, the Federal
Reserve's goal continues to be that
of providing a convenient and effi
cient payments system. Depositors
now can expect checks to clear
at par value, and Reserve Banks
not only distribute coin and
currency but also transfer funds
electronically.
The frontiers in providing payments
services have , in the main, been
technological. Check processing
was a hands-on activity until 1962
when new technology allowed
banks to add a magnetic strip along
the bottom of checks to be read
by electronic machines. Magnetic
ink character recognition
(MICR) ushered in automated
check processing.
New technologies continue to be
applied to check handling. This
Bank is the test site for digital
image processing, in which elec
tronic photos of checks, complete
with identifying signatures, will be
relayed by computer.
Coin and currency were counted by
hand at first. Now, they are counted
on high-speed machines that read
bill s with lasers and automatically
destroy worn currency for replace
ment with new. Robotics for stack
ing and st oring cash is under
consideration for the future.
Fingers used to tap out transfers
of large funds in Morse code. Now
computers make the transfers. The
Federal Reserve's wire transfer
system, Fedwire, handles more than
$633 billion in transfers each day;
the San Francisco Bank alone
handles over $110 billion.
10
· .. To Electrons
Automated clearinghouses-used
mainly for payroll and social secu
rity payments-also are becoming
more electronic. The San Francisco
Reserve Bank, for example, offers
several ACH services through
mainframe computer links and
personal computer connections
as alternatives to the standard
practice of delivering ACH
items on reels of magnetic tape
for processing.
The benefits of a nationwide check
processing system were obvious
enough from the beginning as
banks became members of the
Federal Reserve System to make
use of the service. Yet large city
banks were providing clearing
house services then and they
continue to do so.
Seventy-five years after the found
ing of the Federal Reserve, the
provision of payments services
by the Federal Reserve continues
to represent competition to the
private market.
The Act gave all depository in
stitutions access to the Federal
Reserve's payments services and
mandated the Federal Reserve to
price its services with the explicit
goal of encouraging competition
and, thereby, greater efficiency in
the nation's payments system.
In 1987, another landmark in pro
viding check services was crossed
with the passage of the Competitive
Equality Banking Act. The Act
set limits on the hold depository
institutions can put on deposited
funds , thereby making prompt
notice of returned checks critical.
From a concern with setting up
a nationwide check clearing system
seventy-five years ago , the Federal
Reserve turned in 1988 to expedit
ing the return of dishonored checks.
In this major effort, Reserve Banks
mobilized additional staff and new
technology, such as faster computer
based systems that allowed
returned checks to be processed as
quickly as checks are cleared.
Crossing the frontier into explicit
recognition of this competition took
place with the passage of the Mon
etary Control Act in 1980.
11
Federal Reserve Bank of San Francisco
Seventy-five years ago, the writers
of the Federal Reserve Act created
a central bank with regional
and national, governmental and
private elements.
Separately incorporated regional
Reserve Banks would constitute
the Federal Reserve's operating
presence around the country and
complement policymaking at the
Board of Governors in Washington,
D.C. The Federal Reserve System
could decentralize further by open
ing Reserve Bank branches within
the Districts.
In 1913, only three cities were said
to have been guaranteed Reserve
Bank status: San Francisco, Chi
cago, and New York.
When District lines were drawn
in 1914, the Pacific Northwest cla
mored unsuccessfully for its own
Reserve Bank. Instead, Spokane
became the site of the first branch
office in the San Francisco Reserve
Bank District on July 26,1917,
and Los Angeles, the last, on
January 2, 1920.
Today, Los Angeles is the largest
branch in the Federal Reserve
System, and the Spokane office has
been closed since 1938, although
not without protest at the time.
Seventy-five years ago, the writers
of the Federal Reserve Act also
made participation by members
of the public an integral part of
the Federal Reserve's decision
making process.
Reserve Banks would be subject to
supervision and control by boards
of directors composed of business
and community leaders, the major
ity of whom must represent non
banking segments of the economy.
Among their duties was setting
the discount rates charged mem
ber banks for borrowing from
Reserve Banks.
aO
In 1988, as in the seventy-five years
before, the diverse backgrounds
and informed viewpoints of Reserve
Bank and branch directors provide
invaluable input into the formula
tion of national monetary policies
and enhance the quality of the
System's economic information and
perceptions of the business outlook.
o CJ
Hawa ii
D
Twelfth Federal Reserve District
12
The management of the San Fran
cisco Reserve Bank continues to
benefit greatly from the strong
involvement and support of the
directors at all five offices.
We especially thank those directors
who completed terms of service
in 1988: on the San Francisco
Board, Spencer F. Eccles (Cha ir
man and Chief Executive Officer,
First Security Corporation, Salt
Lake City, UT ) and Togo W. Tanaka
(Chairman, Gramercy Enterprises,
Inc., Los Angeles, CA); on the Los
Angeles Branch Board, William
L. Tooley (Chairma n, '!boley &
Company, Investment Builders,
Los Angeles, CA) and Thomas R.
Brown , Jr. (Cha irma n of the Board,
Burr-Brown Corporation, Tucson,
AZ); on the Portland Branch
Board, Herman C. Bradley, Jr.
(for mer President and Chief Execu
tive Officer, Tri-Country Banking
Company, Junction City, OR) and
G. Johnny Parks (for mer Northwest
Regional Director, International
Longshoremen's & Warehousemen's
Union, Portland, OR); and on
the Seattle Branch Board,
w.w. Philip (Cha irman of the
Board and Chief Executive Officer,
Puget Sound Bancorp, Tacoma,
WA) and Byron I. Mallott (Chief
Executive Officer, Sealaska Corpo
ration, Juneau, AK ).
Management Committee members:
(Seated, from left)
Carl E. Powell, First Vice President
Robert T. Parry, President
(Standing, from left)
Thomas D. Thomson, Executive Vice President
Michael J. Murray, Senior Vice President
Thomas C. Warren, Executive Vice President, Los Angeles
13
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Audi ting
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Auditor
Pe te r K.C. H"ich
Au d it O ffi ~ r
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Robcrt T, P:l.rry
Prl""idl"nt
and
Chief E.xeeutn'c Officer
Feb r ua ry 1, 1989
A~ ..I."I;m l
(.it'nt,: r""
.d Aud itor
Charlo.;,. O. Bowden
Audit Offic er
Southern Rc~lon
Gary
Audl
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15
AM(.Vlc o:P ~ ldo.:llI
fh:ClrOn.ic P" pnc n b
Highlights of 1988
Economic Research
Major projects focused on: the
threat of rising inflation in the
robust economy ; the refinement and
use of macroeconomic forecasting
models to guide monetary policy;
the U.S . trade deficit and prospects
for continued foreign financing
Regulatory research studied de
posit insurance reform and bank
capital regulation, bank holding
company'affiliation and bank
behavior, interstate banking, -.
and the influence of foreign banks
Strengthened research in regional,
natural resources, ana agricultural
economics, and produc ed analyses
of relationship between national
.:and state business cycles and
...sources of regional growth ' ,
Hosted an academic conference on
Federal Reserve policy i~sues
Devoted quarterly issues of the
Weekly Letter, circulated nation
wide, to regional economic and
banking developments
Public Information
Strengthened liaison program with
print and electronic media to ex
pand education and outreach ef
forts ; economic research received
regional and national print and
broadcast coverage
Inaugurated quarterly newsletter,
FedWest, to inform District deposi
. tory institutions of Federal Reserve
services and policies
Completed 6-part audiovisual
education ser ies, The World of
Economics, distributed free to high
school classes nationwide
Helped local school districts
develop economic curricula and
train teachers
16
Supervision, Regulation
and Credit
Overall financial condition of bank
holding companies and their subsi
diaries continued to improve. The
debt of lesser developed countries
arid 'poor real estate markets in
some states remained concerns for
some financial institutions
As a result of applications
approved, the Bank extended
-its supervisory purview over
additional banks and other compa
nies in the Twelfth District
Twenty st ate member banks were
subject to special supervisory at
tention-five less than in 1987
Borrow ing from the discount win
dow was little changed from 1987
Supervision of international
entities continued to shift from
Edge Corporations, which are less
involved in trade financing and
sovereign lending, to the expand
ing activities of agencies and
branches of foreign banks and the
increasingly complex activities
of U.S. banks
Helped form a task force to create
a statewide lender consortium
California Community Reinvest
ment Corporation-to finance
affordable housing
Applications for merger and con
solidation continued at brisk
pace with a sign ifican t number
representing interstate bank
acquisitions
Applications to engage in
nonbanking activities declined
from 1987 but banks showed
heightened interest in securities
investing and underwriting
Seventy-Fifth Year
Established enhanced supervisory
policy for larger banking institu
tions and those experiencing
problems
Examiners given special education
on capital markets as institutions
increase activities in that area
Electronic Access
Assumed responsibility to oversee
management of electronic access
within the Federal Reserve Sys
tem-will provide long-term plan
ning, coordinate access methods
among Districts to achieve uni
formity, and help prepare the
Federal Reserve for the opera
tional demands of future
interstate banking
Positioned District depository
institutions for migration to
FEDLINE II product line-an
integrated software package that
allows depository institutions ac
cess to all its services from one
main menu on a personal computer.
FEDLINE II will offer current
FedLine services plus securities
transfer, and help establish uniform
electronic access standards
throughout the Federal Reserve
Introduced three new electronic
access products: FedCom State
ments, FedLine AM, and FedLine
ACH Advices
Check Services
Successfully implemented Expe
dited Funds Availability Act and
Regulation CC, which set limits on
how long depository institutions
can hold depositors' funds: provided
associated training for industry,
introduced new check return ser
vices, hired and trained additional
staff, added new processing ma
chines, developed new specialized
processing software
Return check volume increased
over 30 percent in the District after
implementation of Regulation CC
on September 1, paced by over 50
percent growth at the Los Angeles
Branch.
Completed comprehensive analysis
of future hardware and software
configurations for check processing,
including remote processing,
and selected a new check
processing system
Automated
Clearinghouse
Exceeded goals for encouraging
depository institutions to use elec
tronic access to send and receive
ACH transactions with concomi
tant benefits to them of greater
speed and reliability
Electronic access to ACH services
rose almost 50 percent
Cash
Growth in cash volume was volatile
and continued high, averaging 15
20 percent in the first half of 1988
and 10 percent in the second half
Improved ACH return item pro
cessing by promoting use of
electronic service and thereby
reducing manual handling of
paper statements
Established a coin diversion
program in which private coin
facilities assist in sorting and
warehousing coins; improves access
to supplies and reduces costs
of transport
17
Funds Transfer
Summary of Operations*
Achieved high level of online wire
transfers-99.85 percent of all
wires were transferred to the
Bank electronically
Cash Services
Currency paid into circulation
Coin paid into circulation
Food Coupons processed
Fedwire service availability ex
ceeded goals with full-day service
availability of 99.7 percent and
99.9 percent availability during
critical hours
Securities Services
Savings Bonds original issues
Savings Bonds redemptions processed
Other Treasury original issues
Book-Entry Securities processed
Provided capability for depository
institutions to use a structured
format for third party information
in wire transfer messages; non
structured messages will be
rejected beginning April 3, 1989
Check Services
Commercial checks collected
Government checks processed
Return items processed
Securities and
Fiscal Services
Completed second phase of project
to consolidate and automate secu
rities and fiscal processing by cen
tralizing new consignment stock
accounting in San Francisco and
Los Angeles offices
Electronic Payment Services
Wire transfers processed
Automated clearinghouse
transactions
Discounts and Advances
Thtal discounts and advances**
Number of institutions
accommodated**
"Volume in thousands except where noted
Distributed two software releases
developed at the Bank that support
remote logging of securities, moni
toring daylight overdrafts, and
transferring of securities on
. the personal computer product
line, FEDLINE II
Converted 80 percent of savings
bond volume to Treasury Depart
ment's E-Z Clear in pilot program
to improve service
18
1986
1987
1988
2,651 ,545
4,980 ,392
265 ,921
3,044,958
5,443 ,894
275,531
3,207 ,649
5,468 ,011
295,264
2,821
231
74
319
3,835
217
128
303
3,534
283
142
303
2,690,145
91 ,458
31 ,239
2,853,718
87 ,945
32 ,090
3,022,928
83 ,867
35 ,714
12,632
13,285
14,224
150,272
174 ,933
210,867
1,074
1,037
1,013
130
115
104
**Whole number (not in thousands)
Branch Operations:
(Seated, from left)
Thomas C. Warren, Executive Vice President in Charge,
Los Angeles
Gerald R. Kelly, Senior Vice President in Charge, Seattle
(Standing, from left)
Carl E. Powell, First Vice President and Chief Operating Officer
John F. Hoover, Senior Vice President in Charge, San Francisco
E . Ronald Liggett, Senior Vice President in Charge, Salt Lake City
Angelo S. Carella, Senior Vice President in Charge, Portland
19
San Francisco Head Office
The San Francisco Office of the
Federal Reserve Bank of San Fran
cisco houses both head office func
tions-administration, centralized
operations of the Reserve Bank,
and specialized functions-as well
as financial services provided by
the San Francisco Branch.
Economic Research, Law, and
Product Management are examples
of specialized functions located in
San Francisco. Credit and Funds
Transfer are among the operations
centralized in San Francisco along
with the policy and functional
coordination of many other
activities.
Opened: November 16, 1914.
Branch Territory: Northern Cali
fornia , western Nevada, Hawaii,
and various U.S. territories in the
Pacific.
Cash Services (volu me in OOOs):
Currency paid into
circulation
1,056,978
Coin paid into
2,120 ,631
circulation
Food coupons processed
90,936
Securities Services (volume
in OOOs):
Savings Bonds original
issues
3,408
Other Treasury original
issues
60
137
Book-Entry Securities
Check Services (volume in OOOs):
Commercial checks
collected
820,605
Government checks
processed
83 ,867
Return items processed
9,566
Electronic Services (volu me
in OOOs):
14,224
Wire transfers processed
ACH transactions
processed
117 ,632
Community Involvement: The
Bank maintains a multi-faceted
outreach to the public that includes
educational services and products,
publications of economic research, a
media liaison program, and a
speakers' bureau involving senior
management and economists.
In addition, the Bank frequently
hosts meetings with civic and busi
ness groups such as the Bay Area
Council and the Asia Foundation.
During 1988, the Bank welcomed
representatives of the People's Bank
of China ; delegations from the
Soviet Union, Korea , and Japan;
and young chief executives
from the Young Presidents'
Organization.
20
Board of Directors
Federal Reserve Bank of
San Francisco
Advisory Council on Small
Business and Agriculture
1989
Erburu
Chairman
Fred W. Andrew
Partner
Andr ew & William son Sal es Co.
Bakersfi eld, Ca liforn ia
Chairman and Federal Re serve Agent
Robert F. Erburu
Cha irma n of the Board a nd CEO
The Times Mirror Company
Los Angeles, California
Deputy Chairman
Ca rolyn S. Chambers
Pr esident and CEO
Chambers Communications Corp .
Eug ene, Oregon
Rayburn S. Dezember
Cha irma n of the Board and CEO
Cent ra l Pacific Corpora tion
a nd Cha irman of th e Board
Ameri can National Bank
Ba kersfield, Ca liforn ia
Chambers
Donald Butl er
President
Coronado Cattle Co., Inc.
Tucson, Arizona
Dezember
Anne Cha dwick
Agricultural Trade Specialist
Ca liforn ia St ate World Tr ade Commiss ion
Sacr am ent o, Ca liforn ia
John C. Hampton
Pr esident and Chief Execut ive Officer
Willamina Lumber Company
Portl and , Oregon
R. Blair Hawke s
Pr esident a nd CEO
Ireland Bank
Mal ad City, Idaho
Hampton
Hawkes
John N. Nordstrom
Co-Cha irma n of the Board
Nordstrom, Inc.
Seattle, Washington
Hull
Robert 1. Han cock
Pr esident
Avtech Corporation
Seattle, Washington
Peter D. Herder
President
Herder Companies
Tucson, Arizon a
Nordstrom
Pa rk Price, III
President
Park Price Motor Company
Pocatello, Idaho
William 1. Tooley
Cha irma n
Tooley & Co., Investment Builders
Los Ang eles, California
Federal Advisory Council Member
Paul Hazen
Pr esident a nd Chief Operat ing Officer
Wells Fargo Bank, N.A. and
Wells Fargo & Co.
San Fran cisco, Ca lifornia
George M. DeMedeiros
President
Dairyman 's Co-operat ive Crea mery
Associati on
Tul are , Ca liforn ia
Robert P. Evan s
President
Evan s Grain & Elevator Co., Inc.
Ogden, Utah
Cordell W. Hull
Executive Vice Pr esident a nd Director
Bechtel Group, Inc.
Sa n Francisco, California
Willi am E.B. Siart
Cha irma n of the Board, Pr esident
a nd CEO
First In terstate Bank of Ca liforn ia
Los Angeles, California
Vice Chairman
Sandra A. Suran
Small Business Advocate
State of Oregon
Salem, Oregon
Siart
Lesli e Tang Schilling
Pr esident
L.T.D.D., Inc.
San Fran cisco, Ca liforn ia
John Sloan , Jr.
Pr esident a nd Chief Executi ve Officer
National Federation of Independent
Business
San Mateo, Ca liforn ia
Tooley
Henry J . Voss
Pr esident
Ca liforn ia Farm Bureau Federation
Sacr amento, California
Hazen
_ _ _ _ _ _ _ __
_
_
21
_
_ _ _ _ __
_
_ _ _ _ _J
Los Angeles Branch
Opened: January 2, 1920.
Branch Territory: Southern Cali
fornia, southern Nevada, Arizona.
Cash Services (volume in OOOs):
Currency paid into
circulation
1,716,400
Coin paid into
circulation
2,326,871
Food coupons processed
115,710
Securities Services (volume
in OOOs):
Savings Bonds original issues
Savings Bonds redemptions
Other Treasury original issues
Book-Entry Securities
126
276
41
96
Check Services (volume in OOOs):
Commercial checks
collected
1,251,678
Return items processed
19,056
Electronic Services (volume
in OOOs):
ACH transactions processed 93,235
Community Involvement: In re
sponse to Los Angeles' importance
as an economic and banking center,
the Branch expanded resources
committed to public outreach
in 1988.
Board of Directors
Los Angeles Branch
Chairman of the Board
Yvonne Brathwaite Burke
Partner
Jones, Day, Reavis & Pogue
Los Angeles , California
Ross M. Blakely
Chairman of the Executive Committee
of the Board
Coast Savings and Loan
Los Angeles, California
Burke
Fred D. Jensen
Chairman of the Board, President
and CEO
National Bank of Long Beach
Long Beach, California
Blakely
Ignacio E. Lozano, Jr.
Editor-in-Chief
La Opinion
Los Angeles, Cal iforn ia
Howard C. McCrady
Vice Chairman
Valley National Corporation
Phoenix, Arizona
Jensen
Richard C. Seaver
Chairman
Hydril Company
Los Angeles, California
Lozano
Harry W. 'Ibdd
Chairman, CEO and President
Rohr Industries, Inc .
Chula Vista, California
McCrady
Branch staff were active in local
civic and educational organiza
tions, such as the Regional Occu
pational Program and Leadership
Educational Development Program
for minority students.
Seaver
In addition, civic and business
leaders were invited to the Branch
for events such as a luncheon for
the Asian business community
and a lecture series for the Bank
Administration Institute.
Todd
22
Portland Branch
Opened: October 1, 1917.
Branch Territory: Oregon, parts
of southern Washington, northern
Idaho.
Cash Services (volume in
Currency paid into
circulation
Coin paid into circulation
Food coupons processed
Board of Directors
Portland Branch
OOOs):
Chairman of the Board
Paul E. Bragdon
Assistant to the Governor for Education
Office of the Governor
Salem, Oregon
136,921
354,152
29,192
Stuart H. Compton
Chairman and CEO
Pioneer Trust Bank, N.A.
Salem, Oregon
Securities Services (volume
in OOOs):
Treasury original issues
not Savings Bonds
Book-Entry Securities
21
19
Check Services (volume in OOOs):
Commercial checks
collected
205,609
1,472
Return items processed
Community Involvement: Branch
staff continued an outreach to civic
and educational organizations such
as the Portland Rotary Club and
the Oregon Council on Economic
Education, participated in Oregon
Business Week, and used directors'
luncheons to showcase Federal
Reserve functions.
Bragdon
William A. Hilliard
Editor
The Oregonian
Portland, Oregon
Compton
Stephen G. Kimball
Pre sident and CEO
Baker Boyer Bancorp
Walla Walla , Washington
Wayne E. Phillips, Jr.
Vice Pr esident
Phillips Ranch, Inc.
Baker, Oregon
Hilliard
Sandra A. Suran
Small Bus iness Advocate,
State of Oregon
Salem, Oregon
Kimball
G. Dale Weight
Chairman of the Board and CEO
The Benjamin Franklin Savings
and Loan Association
Portl and , Oregon
Groups such as presidents, CEOs,
and chairs of the boards of small
and medium-sized banks, repre
sentatives of local companies, and
Japanese executives that were part
of the International Executive
Program were regularly invited to
directors' luncheons that featured
presentations by a Bank economist.
Phillips
Suran
Weight
23
Salt Lake City Branch
Opened: April 1, 1918.
Branch Territory: Utah, southern
Idaho, eastern Nevada.
Cash Services (volume in
Currency paid into
circulation
Coin paid into circulation
Food coupons processed
OOOs):
101,600
138,615
17,823
Securities Services (volume
in OOOs):
Treasury original issues
not Savings Bonds
Book-Entry Securities
7
11
Check Services (volume in OOOs):
Commercial checks
359,726
collected
2,190
Return items processed
Community Involvement: Branch
staff maintain an active speaking
program using a slide presentation,
"Focus on the Fed," to describe the
activities of the Federal Reserve
to audiences throughout the Branch
territory. Branch staff also are
involved in local educational ef
forts, including the Academy of
Finance, a high school program
for students interested in careers
in financial services.
Board of Directors
Salt Lake City Branch
Chairman of the Board
Don M. Wheeler
President
Wheeler Machinery Company
Salt Lake City, Utah
Gerald R. Christensen
President and Chairman
First Federal Savings and Loan
Association
Salt Lake City, Utah
Wheeler
Curtis H. Eaton
President and Vice Chairman
of the Board
Twin Falls Bank & Trust Co.
Twin Falls, Idaho
Christensen
Ronald S. Hanson
President
Zions First National Bank
Salt Lake City, Utah
Virginia P. Kelson
Management Consultant,
Organizational Development
Salt Lake City, Utah
Eaton
Robert N. Pratt
President and Chief Oper ating Officer
Bonneville Pacific Corp.
Salt Lake City, Utah
Hanson
D.N. Rose
President and CEO
Mountain Fuel Supply Company
Salt Lake City, Utah
Kelson
They also plan special programs
involving guests such as the
Trustees of the Utah Economic
Development Corporation and other
community and business leaders
in conjunction with monthly
directors' meetings.
Pratt
Rose
24
Seattle Branch
Opened: September 19, 1917.
Branch Territory: Most of Wash
ington, Alaska.
Cash Services (volume in
Currency paid into
circulation
Coin paid into circulation
Food coupons processed
OOOs):
195,750
527,742
41,603
Securities Services (volume
in OOOs):
Treasury original issues
not Savings Bonds
Book-Entry Securities
13
40
Check Services (volume in OOOs):
Comm ercial checks
385 ,310
collected
3,430
Return items proce ssed
Community Involvement: Local
business and community leaders
are regularly invited to economic
outlook presentations in the Seattle
Branch. The Branch manager
speaks throughout the Branch's
territory to such groups as the
Chambers of Commerce in Juneau
and Ketchikan and the Washington
Savings League.
In addition, Branch staff offer a
program called "Inside the Fed,"
wherein university students simu
late a board of directors meeting,
and are active in the Applied
Economics project of Junior
Achievement and activities of
the Women in Banking program
sponsored by the Washington
Bankers Association.
Board of Directors
Seattle Branch
Chairman of the Board
Ca rol Nygren
Partner
Laventhol & Horwath
Seattle, Wash ington
B.R. Beeksma
Chairman of th e Board
InterWest Savin gs Bank
Oak Harbor, Washington
Nygren
Irma Goertzen
Hospital Administrator
University Hospital
University of Washington
Seattle, Washingt on
Beeksma
Robert P. Gray
President
National Bank of Alaska
Anchorag e, Alask a
Bruce R. Kenn edy
Cha ir ma n a nd CEO
Ala ska Air Group, Inc.
Seattle, Washington
•
Goertzen
H.H . Larison
President
Columbia Pa int & Coati ngs
Spokan e, Washington
Gray
William S. Randall
Chairman, President a nd CEO
First Interstate Bank of Washington,
N.A.
Seattle, Washin gton
Kennedy
Larison
Randall
25
Comparative Statement of Account
(Thousands of Dollars)
December 31,
1988
1987
Assets
Gold certificate account
Special Drawing Rights certificate account
Other Cash
. $1,429,000
.
670,000
.
66,964
'"
$
1,483,000
670,000
81,045
Loans to depository institutions
.
10,301
15,930
Federal Agency obligations
.
894,497
1,046,315
14,481,234
11,678,066
3,842,942
14,918,204
11,494,158
3,912,249
Total United States Government Securities
Total loans and securities
. 30 ,002,242
. 30 ,907 ,040
30,324 ,611
31,386,856
Items in process of collection
Bank premises
Operating equipment
.
.
.
1,361,760
151,027
35,103
1,168,430
152,764
33,496
Other assets:
Denominated in foreign currencies
All other
.
.
1,296,176
643 ,112
1,134,712
575 ,643
Interdistrict Settlement Account
.
-2,057,633
Total assets
. 34,502,549
33 ,586,458
. 24 ,845 ,628
24 ,761 ,047
..
.
.
.
7,449,120
21,300
26,095
7,496,515
6,659,644
21,900
103,214
6,784,758
Deferred credit items
Other liabilities
.
.
1,170,131
407 ,965
1,080,665
377 ,846
Total liabilities
. 33,920,239
33,004,316
291 ,155
291 ,155
291 ,071
291 ,071
. 34,502,549
33 ,586,458
United States Government securities:
Bills
Notes
Bonds
.
.
.
-3,099,488
Liabilities
Federal Reserve Notes
Deposits:
Thtal depository institutions-reserve accounts
Foreign
Other deposits
Total deposits
Capital Accounts
Capital paid in
Surplus
.
.
Total liabilities and capital accounts
26
Earnings and Expenses
(Thousands of Dollars)
December 31,
1988
1987
Current Earnings
Discounts and advances
United States Government securities
Foreign currencies
Income from services
All other
2,243
. $
. 2,372,524
42,680
.
.
73 ,807
1,709
.
Total current earnings
.
2,492 ,963
2,375 ,002
Total current expenses
Less: reimbursement for certain fiscal agency and other expenses
Net expenses
.
.
.
144,904
12,061
132,843
137,972
12,348
125,624
Cost of earnings credits
.
9,807
9,192
Current net earnings
.
2,350,313
2,240 ,186
$
1,845
2,246,662
50,118
74 ,576
1,801
Current Expenses
Profit and Loss
Additions to current net earnings
Profit
Profit
Profit
Total
on prior period adjustments
on sales of United States Government securities (net)
on foreign exchange transactions (net)
additions
.
.
.
.
3,177
54
5,802
263,424
269 ,280
3, 177
Deductions from current net earnings
Loss on foreign exchange transactions (net)
All other
Total deductions
.
.
.
72,544
45
72,589
44
44
Net additions ( + ) or deductions ( - )
.
-69,412
+269,236
Cost of Unreimbursed Treasury Services
.
-2,253
-6,903
Assessments by Board of Governors
Board expenditures
Federal Reserve currency costs
Net ea rnings before payments to the United States Treasury
Dividends paid
Paym ents to the United States Treasury (interest on Federal Reserve Notes)
.
.
.
.
.
- 11,939
- 19,188
2,247,521
17,591
2,229 ,846
-11 ,783
-20,421
2,470,315
16,763
2,433,221
Transferred to surplus
Surplus, January 1
Surplus, December 31
.
.
.
84
291 ,071
291 ,155
20,331
270 ,740
291,071
27
Twelfth Federal Reserve District
San Francisco Office
PO. Box 7702, San Francisco, California 94120
.Los Angeles Branch
P.O. Box 2077 , Terminal Annex, Los Angeles, California 90051
Portland Branch
P.O. Box 3436, Portland, Oregon 97208
Salt Lake City Branch
PO. Box 30780, Salt Lake City, Utah 84125
Seattle Branch
PO. Box 3567, Terminal Annex, Seattle, Washington 98124
This R eport was designed and produced by Karen Rusk and written by
Gregory J . Tong. Cover illustration, map and graphics were created by
William Rosenthal. Special as sistance was provided by the Research
Library and Bank Archives. Color photography by Paul Schulz.
28
WOODROW ILSON
SIGNS FEDERAL
RESE.RVE ACT ~ 19 \3
@FedFRASER