Full text of Federal Reserve Notes : December 1975
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Federal Reserve Notes
FEDERAL RESERVE BANK OF SAN FRANCISCO • DECEMBER 1975
Serving Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Utah & Washington
STAMPER AND HANSON
ELECTED TO BOARD
Malcolm T. Stamper and Ronald S.
Hanson have been elected by mem
ber commercial banks to the Board of
Directors
of
the
Federal
Reserve
Bank of San Francisco.
Stamper is President of The Boeing
Company in Seattle, Washington. He
was elected to a three-year term
through year-end 1978 as a Class B
Director, representing the business
community on the nine-member
board.
Stamper joined Boeing in 1962 after
14 years with General Motors. As a
vice president he was responsible for
running the 747 program—the world's
largest jetliner—from start-up to
airline introduction. In 1971
he as
sumed the presidency of Boeing.
His
civic
and
charitable activities
M. T. Stamper
R. Hanson
son became Utah's youngest bank
president at 38 when he and his
associates organized Pioneer Nation
al Bank in Logan. After Pioneer
National Bank merged with First
DIRECTORS ROSENBLATT,
National
the Board of Directors of the Federal
Bank
in
1973,
Hanson
have included serving as a board
member of the Seattle Repertory
became president of the successor
Theater, director of the Seattle Art
Museum, director of the National
He was elected as president of the
Alliance of Businessmen for hiring the
disadvantaged, and honorary chair
man of the Washington Savings
Bonds Committee, and of the Wash
ington State Boy Scouts of America
Development Fund.
bank.
Utah
Bankers Association in 1969
after holding all of the major offices in
that organization. He is chairman of
the Association's Legislative Com
mittee, which is guidingthe draft bill to
allow electronic banking in Utah.
Joseph Rosenblatt and James E.
Phillips are retiring this month from
Reserve Bank of San Francisco.
Rosenblatt, who is Honorary Chair
man of the Board of Salt Lake Citybased Eimco Corporation, has at
tained one of the longest records of
continuous service with the Bank. He
has been a director for 23 years. After
six years with the branch board in Salt
Lake City, Rosenblatt was elected a
Class B Director of the San Francisco
Hanson has served as a member of
Ronald Hanson is president of the
First National Bank of Logan, Utah. He
was elected to a three-year term as a
Class A Director, representing the
banking community. His term extends
through 1978.
PHILLIPS RETIRE
the American
Bank's head-office board.
Bankers Association
Governing Council, and of the ABA
special committee on the Presidential
Rosenblatt's activities have earned
him recognition abroad as well as in
Commission on Financial Structure
his own home town. He was awarded
the coveted French Legion of Honor
National Bank in 1948 while still a
and Regulation (Hunt Commission).
In 1973 he was appointed by Utah
Governor Calvin Rampton to repre
sent the banking industry in writing
the Utah Money Management Act,
which governs the state's financial
student at Logan High School. Han-
investment policies. ^
A member of a banking family,
Hanson began his career with First
Medal for his contributions to mech
anized mining, and the Distinguished
Alumnus Award from his alma mater,
the University of Utah. During his
presidency, Eimco Corporation grew
(continued on page 3)
FIRM STAND AGAINST DISCRIMINATION
IRA RULES
LIBERALIZED
Rules governing Individual Retire
ment Accounts have been relaxed by
the Federal Reserve System to
Commercial banks have been urged
be required to
by the Federal Reserve Board of
directly to the Department of Com
Governors to avoid involvement in
merce.
encourage individuals to save for
The Board of Governors disclosed
restrictive foreign trade practices that
discriminate against U.S. citizens or
that accommodate boycotts against
friendly foreign nations.
that Regulation Q—interest on
deposits—has been amended to
The Board said that such discrimina
United States," the Board stated, "is a
tory banking practices are clearly
"incompatible with the public-service
function of banking institutions in this
misuse of the privileges and benefits
conferred upon banking institutions."
The Board said that was particularly
true "where such boycott efforts may
cause discrimination against our
retirement.
facilitate the establishment of IRAs by
eligible individuals. The Employee
Retirement Income Security Act of
1974 permits individuals not covered
by a retirement plan to deposit up to
$1,500 a year or 15 percent of gross
country."
income, whichever is less, in special
number of actions in this area. He
tax-deferred retirement accounts.
directed the Secretary of Commerce
to amend regulations under the
Export Administiation Act to prohibit
U.S. exporters and "related service
organizations" from answering or
complying in any way with boycott
requests that could cause discrimina
tion.Theterm "related service organi
Underthe new amendments, member
banks may waive the $1,000 mini
mum required for time deposits with
four-to-six year maturities for IRA
accounts. Member banks may also
pay all, or a portion, of an IRA time
deposit prior to its maturity without
penalty for early withdrawal, when the
In
November the President took a
report the matter
"The participation of a U.S. bankeven passively—in efforts by foreign
nationals to effect boycotts against
other foreign countries friendly to the
citizens or business."
One specific abuse the Board men
tioned was the issuance of letters of
credit containing provisions intended
to further a boycott against a foreign
country friendly to the U.S. This
practice has taken place in commer
cial transactions between U.S. ex
zations" includes commercial banks.
porters and foreign importers. The
importer arranges for the issuance of
Banks that become
involved in a
a bank letter of credit as a means of
the
boycott request related to an export
account is established is 591/2 years
transaction from the United States will
making payment to the exporter for
the goods he has shipped. In some
cases the importer has required, as a
individual
for
whose
benefit
old or more or becomes disabled.
condition
This change waives the penalty Reg
Q normally imposes in the form of a
before
loss of interest when time deposits
are withdrawn before maturity. The
begin with. The Board believes this
serves the intent of Congress to assist
individuals saving for retirement.
regulation already provides that early
withdrawals may be made from time
To obtain the tax-deferral benefits of
deposits without penalty in the case of
death of the depositor.
an IRA account for the year 1975,
depositors must have established IRA
agreements by December 31, 1975.
IRAs already in existence may be
amended to
incorporate these
changes which apply solely to IRA
the
that
U.S.
must
bank
be
satisfied
can
make
payment to the exporter, that the
exporter provide a certificate attest
ing that it is not connected in any way
with a country or firm being boycotted
by the importer's home country.
The Board noted that such conditions
conformance with the IRA agreement
between the bank and the depositor.
The Board of Governors "is continu
go beyond normal commercial pro
tections, and may have a discrimina
tory impact upon U.S. citizens or firms
that are not themselves the object of
the boycott. Although arrangements
of this type originate with the foreign
importer who arranges a letter of
ing to examine" the question of
credit, the Board said U.S. banks that
Member banks
IRAs from which
payments can
reduction in the
interest-rate
agree to honor such conditions may
be viewed as giving effect to—and
thereby becoming participants in—
the boycott. The Board believes that
even this limited participation by U.S.
banks in a boycott contravenes the
policy of the United States an
As
a
result
of
this
amendment,
member banks may distribute the
proceeds of an IRA account in a
single payment and without penalty
when
the
distribution
is
made
accounts.
in
may also establish
periodic, annuity-like
be made with no
rate of interest paid.
differentials
on
IRA
accounts. At present, there is a 0.25percent differential in time-deposit
interest-rate ceilings between thrift
institutions and commercial banks,
Waiving the $1,000 minimum require
ment
on
IRAs
will
allow member
banks to pay the 7'/4-percent interest
rate available for four-year time
deposits, or the 7V2-percent interest
rate on six-year deposits, to deposi
tors who may not have $1,000 to
and the two types of institution
disagree about the wisdom of retain
ing that differential in the case of longterm
IRA accounts.
The
Fed
had
asked for comment on this matter last
June, but it left the question unde
cided in its recent announcement.^
nounced by the President. 1j|p
DIRECTORS
(continued from page 1)
from a small, local manufacturer of
heavy machinery to an organization
with global interests.
A native of Salt Lake City, Rosenblatt
received his undergraduate degree
from the University of Utah. He has
also received an Honorary Doctor of
Law degree from Westminster Col
lege, and a Doctor of Humane Letters
from the University of Utah.
Phillips is President of First National
Bank in Port Angeles, Washington. He
was elected by District member
banks as a Class A Director in 1972.
A leader in a wide range of business
and community activities, he is a
member of the Seattle Chapter of
Robert Morris Associates, and has
HOT OFF THE PRESSES—James A. Conlon, Director of the Bureau of Engraving and
Printing, has his hands on the first sheet of two-dollar bills bearing the Twelfth District
imprint An estimated $60 million in the new currency will be shipped to the Federal
Reserve Bank of San Francisco to meet the needs of commercial banks, business and the
public in its nine-state western area. April 13—Thomas Jefferson's birthday—is the initial
release date for the two.
THE $2 BILL IS BACK
by encouraging the widespread use
of the new bill."
The $2 bill is coming out of retirement
next year in a move that the U.S.
Treasury hopes will save taxpayers
millions of dollars in currencyinventory and production costs.
The
$2
will
make
its
comeback
appropriately enough on April 13, in
commemoration of Thomas Jeffer
son's birthday. Jefferson's likeness
will appear on the front of the bill, and
a reproduction of the signing of the
Declaration of Independence will
appear on the reverse side. About
It's estimated that the new $2 note will
result in an annual saving of $4 to $7
million in printing costs alone. About
1.6 billion $1 notes are printed each
year, accounting for 55 to 60 percent
of the total currency production of the
Treasury. The new $2 is expected to
replace about half of the one-dollar
bills
in
circulation
over
the
next
several years.
served on the Board of Trustees of the
Community Banks of the State of
Washington for the past six years. He
is a member of the Long Range
Planning Committee of the Washing
ton State Bankers Association, and is
a past-member of numerous policy
making and advisory committees on
the regional, state and local banking
levels.
Phillips received a B.A. degree from
Whitman College in Walla Walla,
Washington. Among his civic and
service affiliations are membership in
the Chamber of Commerce, the Port
Angeles Rotary Club and the Port
Angeles Symphony, "iff
The two was discontinued in 1966
because the currency had been
under-utilized by Americans. Treas
ury officials believe the primary
reason for the public's lack of accept
ance was the failure to produce the
the initial release of twos will be about
bill in sufficient volume. As a result, it
geles, Portland, Salt Lake City and
a new convenience to our currency
became an anomaly instead of being
readily interchanged along with other
the currency from the Fed along with
system," said President John J. Balles
bills. This time around, the Bureau of
other
of the San Francisco Federal Reserve
Engraving and Printing is planning on
printing 400 million twos for its first
demands of business firms and the
$500 million in twos will be released in
April. Another $350 million more will
be available on the nation's 200th
birthday on July 4.
"The reissuance of the $2 bill can add
Bank. "In addition, acceptance of the
bill by the public can help reduce the
cost of government, by saving as
much as $30 million in currency-
The Federal
Reserve Bank of San
Francisco estimates that its share of
$60 million, for distribution through its
offices in San Francisco, Los An
Seattle. Commercial banks will order
denominations
to
meet
the
general public.
several months of circulation. After
If the new $2 wins acceptance in the
production costs over the next five
years. Commercial bankers through
1976 the note will be printed at the
rate of about 400 million each year.
This production volume is 60 times
greater than the average annual
marketplace, the public stands to
profit. With less bucks to pass, the
out the district can assist this process
production of the previous $2 bill.
great deal more cost-efficient. Ijjff
money and banking system will be a
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SAN FRANCISCO FED
POSTPONEMENT OF
CHAIRS ENERGY STUDY
REPORTING DATES
In six months' time, California voters
The Federal Reserve Board of Gover
will go to the polls to decide the future
of nuclear power plants in the nation's
most populous state, but already the
debate on this subject is heating up.
nors, together with the other Federal
bank regulatory agencies, has post
poned the effective date for imple
menting
revised
condition-andincome reports required of banks
under their supervision.
the revised reports to March 31,1 976.
As a consequence of the postpone
ment, the year-end 1975 report of
condition
and
the
1975
income
statement for state member banks will
be in the current formats. The sched
The proposed revisions were pub
ule of the maturity distribution of
investment security holdings (Sched
ule B), which has been reported in
recent years only for June 30, will also
be required for the 1975 year-end
al Reserve Bank of San Francisco has
lished for comment on October 1, at
statement.
drawn together a team of outside
economists and research specialists.
Their goal is to assess the costs of
alternate energy choices, so that
which time the date of implementation
In an
effort to provide essential
economic information for voters on
the statewide referendum, the Feder
Californians
can
make
informed
decisions on questions of energy
policy, especially regarding the "Nu
was December 31,1975. The Federal
Reserve Board, the Federal Deposit
Insurance Corporation and the
Comptroller of the Currency have
now agreed to defer the initial filing of
clear Power Plant Initiative" on the
June 8 ballot. Passage of the initiative
would impose severe restrictions on
nuclear power plant construction and
the levels of operation of these plants.
* University of California-Santa Cruz
* University of California-Riverside
* California State University-Long
Beach
The postponement of the proposed
revisions was made in light of exten
sive comments received from banks.
It affects both the universal condition-
and-income statements to be filed by
all banks and proposed large-bank
supplements to these reports. The
deferment was adopted to give banks
more time to prepare for the new
reporting requirements and to give
regulatory agencies additional time to
take account of comments received.
Participants collaborating in the joint
study represent the following:
* Stanford Research Institute
* Electric Power Research Institute
* Lawrence Livermore Laboratory
* California Assembly Committee on
Energy
* Sierra Club
* Sherman Clark Associates
* Energy Research and Develop
ment Administration
An independent advisory board of
university economists will review the
papers going into the final report. The
report is scheduled for release in the
Spring of 1976. The members of this
advisory board include Professor
James Rosse (Stanford University),
Professor Walter Meade (University
of California, Santa Barbara) and
Professor Darius Gaskins (University
of California, Berkeley). %
In the preparation of the final form of
the large-bank supplements, the
agencies are giving careful study to
comment received, and will also meet
with a panel of bankers that the Bank
Administration Institute will be asked
to designate. A revised version of the
large-bank supplements and detailed
instructions for them will be issued as
soon in 1976 as possible. Ijflf
@FedFRASER