Full text of Federal Reserve Notes : December 1978

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Federal Reserve Notes
FEDERAL RESERVE BANK OF SAN FRANCISCO

•

DECEMBER 1978

Serving Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Utah & Washington
.•

J. F. Alibrandi

M. T. Stamper

R. A. Young

C. C. Maier

ALIBRANDI AND MAIER
HEAD BANK'S BOARD

MEMBER BANKS ELECT
YOUNG & STAMPER

ber of special service awards from the
Washington Bankers Association and

The Federal Reserve Board of Gover

Federal Reserve member banks in

the national winner of the Freedom

nors last month reappointed Joseph

the San

Foundation Award in 1972.

F. Alibrandi and Cornell C. Maier as

Chairman and Deputy Chairman of

Robert A. Young, and re-elected Mal
colm T. Stamper, to the Board of

the Board of Directors of the Federal

Directors

Reserve Bank of San Francisco. The

Bank of San Francisco. Young was
elected as a Class A Director, repre
senting District member banks, and

Robert Morris Associates, and was

one-year terms are effective January
1, 1 979. The Board of Governors also

Francisco District elected

of

the

Federal

Reserve

reappointed Alibrandi as a director;
his term had expired, while Maier's
current term as director expires in

Stamper was elected as a Class B
Director, representing nonfinancial

1980.

Young is chairman of the board and
president of Northwest National Bank
in Vancouver, Washington. A gradu
ate of the University of Iowa, he joined
Northwest National in his present
position in 1966.

Alibrandi is president and chief exe
cutive officer of Los Angeles-based
Whittaker Corporation. He received
his bachelor of science degree in
mechanical engineering from the
Massachusetts Institute of Technolo

gy, and currently serves on MIT's
Corporation Development Committee
and the Sloan School of Management
Visiting Committee.

Stamper is president of the Boeing
Company. He attended the University
of Richmond and Georgia Institute of
Technology, where he earned a de
gree in electrical engineering. Later
he attended the University of Michi
gan Law School.

interests in the District.

Young is currently chairman of the
Policy Governing Council of Robert
Morris Associates, and is a past na
tional president of that organization.

Stamper joined Boeing as Manager of
Electronics Operations, and was
elected president in 1972. He is cur
rently a director of the Boeing Com
pany and the Nordstrom Company, as
well as a trustee of the Seattle Art

Museum. He is a past regional chair
man and member of the Board of
Directors of the National Alliance of

Businessmen.

Stamper

has

also

served as chairman of the Board of

He also served as a director of the

Directors of this Bank's Seattle office,

Washington

Association,

as well as director of the Washington

Alibrandi is chairman of the Business

and was a member of the Commercial

Advisory Council at the University of
California at Los Angeles, as well as a

Loan

American Bankers Association and

(continued on page 3)

the Comptroller of the Currency Advi
sory Council. He has received a num-

State Savings Bond Committee and
Washington State Boy Scouts of
America Development Fund and as
trustee for the Seattle Repertory

Bankers

Executive

Committee

of the

Theatre, *fr

SUMMARY OF KEY FED DEVELOPMENTS
BOOK-ENTRY TREASURY BILLS

FOREIGN BANKING

All new Treasury bills offered for sale after this month will be
available only in book-entry form—that is, with computer
ized entries rather than actual paper securities. The last of
the Treasury bills offered in physical form—$100,000

The Board of Governors has amended Regulation K (For
eign Banking and Financing) pursuant to the recentlyenacted International Banking Act. The Board removed the
10-percent minimum reserve requirement that had applied
to the domestic deposits of Edge Act Corporations. (Edge
Corporations are U.S. corporations established under the

bills—will be available only in the new form after December
31. By eliminating millions of pieces of paper and utilizing
computer processing, the system reduces cost, enhances
security, and improves operating efficiency. Over the past
two years, processing of all T-bills have been converted to
book-entry, except for securities of $100,000 denomination
issued to investors who were legally required to hold
securities in physical form. The Treasury Department
established a grace period to provide an opportunity for
appropriate changes in any Federal, state, municipal or
local laws or regulations that precluded holding or pledging
book-entry securities. For further information, contact the
Fiscal Department at any Federal Reserve office,
NOTICE FOR EXECUTIVE LOANS

The Board of Governors recently adopted an amendment
to Regulation O (Loans to Executive Officers of Member
Banks) specifying that a member bank's executive officer
could not become indebted to the bank under a credit card,

check credit or similar plan offering terms more favorable
than those available to the general public. The amendment
required immediate compliance—which however, could
conflict with notice requirements under Truth in Lending
and state laws in such states as Utah. To comply with
notice requirements, a bank should give 15 days written
notice of any change in loan terms. Technically, this would
represent nonconformity with Regulation O, but banks will
be considered to be in compliance as soon as they notify

Federal Reserve Act to engage in foreign banking and
finance.) With this recent change, they now become sub
ject to the same reserve requirements on domestic depos

its as member banks. In addition, the International Banking
Act removed the limitations in the Edge Act which had
prohibited foreign ownership of Edge Corporations and
which required all directors to be U.S. citizens.

In a separate statement, the Board announced a coordinat

ed effort by the Treasury Department and Federal banking
authorities to implement other aspects of the International
Banking Act, including the establishment of a uniform sys
tem of Federal examination for U.S. offices of foreign banks.
The Board is now preparing regulations covering reserve
and interest-rate requirements for branches and agencies
of foreign banks. Other matters being addressed include
the licensing of Federal branches and agencies, deposit
insurance for foreign-bank branches, registration of foreign
banks with the Federal Reserve, and registration of repre
sentative offices with the Treasury Department. For further

information, call the Reserve Bank's Bank and Community
Relations Department (415) 544-2352.

RESERVE-REQUIREMENT CHANGE

affected executive officers. For further information, contact

the Reserve Bank's Law Department (415) 544-2254 or
544-2256.

UNIFORM COUNTRY-RISK PROCEDURE

The three Federal bank-regulatory agencies have adopted
a uniform examination procedure for evaluating "country
risk" factors involved in U.S. banks' international-lending
activities. Country risk refers to factors within a nation that
influence the timely repayment of debts to foreign lenders.
Under the new system, examiners segregate country-risk
factors from other lending-risk factors, dealing with them in
a separate section of their examination reports.

The Reserve Bank has mailed member banks a Supple
ment to Regulation D (Reserves of Member Banks), dealing
with the 2-percent supplemental reserve requirement
imposed primarily on time deposits of $100,000 or more.
This supplemental requirement, one of the dollarsupporting moves taken by the Federal Reserve and the
Treasury last month, is designed to encourage member
banks to decrease their reliance on domestic borrowing as
a source of funds and to increase borrowing in the Eurodol
lar market. The rule went into effect on deposits outstand
ing beginning November 2, with reserves required to be

maintained on these deposits on November 16. Along with
the Supplement, the Reserve Bank sent all member banks

Commercial-credit risks for international loans will contin

a revised Regulation D pamphlet, as amended July 6,1978,

ue to be assessed on an individual loan basis, according to
traditional standards of credit analysis. The new procedure
emphasizes diversification of exposure as the primary
method of moderating country risk in international portfoli

to replace an outdated 1972 pamphlet. For further informa
tion, contact the Reserve Bank's Accounting Department

os. For further information, contact the Reserve Bank's

Supervision, Regulation and Credit Department (41 5) 5442266.

at (415) 544-2403.

REGULATORS ANNOUNCE
CRA EXAM PROCEDURES

PORTLAND BRANCH

a storage tank with a 200-gallon ca

TAPS THE SUN

pacity.

The major financial regulatory agen

The Reserve Bank's Portland Branch

A circulating pump moves the water

cies last month announced uniform

has installed a solar-heating unit that

from the storage tank through the

examination procedures to help fi
nancial institutions comply with the
new Community Reinvestment Act
(CRA). The Act, which went into effect
November 6, requires the Federal

promises a significant reduction in the
consumption of energy for water
heating. According to Vice President

collector panels at a rate of three

Angelo Carella, officer in charge of
the Portland Branch, the energy de
mand for that purpose dropped 10

the building's hot-water system at the

Reserve System, the Comptroller of
the Currency, the Federal Deposit
Insurance Corporation, and the Fed

eral Home Loan Bank System to as
sess the marketing and lending rec

percent in September, the first month
of operation.

gallons per minute. Then a mixing
valve disperses the heated water into
temperature needed for the cafeteria.

ALIBRANDI & MAIER
(continued from page 1)

director of UCLA's International Stu
dent Center. He is a member of the

deposit insurance, branches or merg

The project developed out of a rec
ommendation by the Reserve Bank's
task force on energy conservation,
which is part of a government-wide

ers with other institutions.

effort to reduce energy usage.

Business Administration at the Uni

Congress passed the Act as a means
of encouraging financial institutions

"The Task Force felt that if solar

heating could be used successfully in

cently he assumed the chairmanship
of the Los Angeles chapter of the

to meet the needs of their communi

Portland

French-American Chamber of Com

ties, including low- and moderateincome neighborhoods, consistent
with safe and sound lending prac

weather conditions, then other offices
also would be able to convert from

tices. CRA implementing regulations

solar-heating installations," Carella

officer

require each financial institution to

said. "We determined that solar heat

Chemical Corporation. He graduated

delineate its community through the

ing would be most useful in connec
tion with cafeteria operations. This
accounts for about 75 percent of the
total hot water used in the building."

from the University of California with a
bachelor of arts degree in electrical
engineering.

ords

of financial

institutions

when

evaluating applications for charters,

Board of Councilors of the School of

versity of Southern California. Re

use of maps, to designate the types of

credit it offers within that community,
and to keep public files of comments
received on its performance in meet
ing community credit needs.

The new examination procedures
state that examiners normally should
request only required bank records
and other existing information, "since

Congress did not intend to impose
significant new reporting or record
keeping requirements on financial
institutions." However, the guidelines
said that "the scope of the review
must always be sufficient for an ade
quate assessment."

with

conventional

its

heat

less

to

than

ideal

successful

Portland's Building Department, un
der the direction of Jack Halley, Build
ing Manager, designed the system,
and Building Engineer Bob Lasher,
was responsible for its installation. It

consists of 10 solar panels totaling
180 square feet of collector surface.
The collector system is connected to

merce.

Maier is president and chief executive
of

Kaiser

Aluminum

and

Maier is a director and chairman of

the Aluminum Association, the trade

organization for that industry. He is a
member of the national Business
Roundtable and a director of the Cali
fornia Chamber of Commerce. Maier
is also a director of the International

Primary Aluminum Institute, the Bay
Area Council, and the Oakland Coun

cil for Economic Development.
programs,

and

small-business fi

nancing, including loans to small
farms," in assessing how well an
institution meets community-credit

Alibrandi and Maier head a

nine-

person Reserve Bank board. In addi

tion to the newly elected Young and

needs.

The procedures also state that the
examiners should adjust the CRA

Stamper, the board includes Freder
ick G. Larkin, Jr., Chairman of the

The guidelines stress that examiners

Board and CEO of Security Pacific

procedures "on a case-by-case ba

"should maintain a balanced per

National Bank; Ole R. Mettler, Presi

sis to accommodate institutions that

spective in conducting a CRA exami
nation. The examiner cannot normally
conclude on the basis of any one

dent and Board Chairman of Farmers
and Merchants Bank of Central Cali

fornia; Dorothy Wright Nelson, Dean

factor that an institution is or is not

and Professor of Law at the University

helping to meet the credit needs of its
local community... The procedures
are designed to ensure that informa

Clair L. Peck, Chairman of the Board

vary in size, expertise and locale.
Community credit needs will often
differ with the specific characteristics
of each local community, and institu
tions may serve these local credit
needs in a variety of ways. For exam
ple, the agencies would view favora

tion from both the institution and the

bly "housing-related extensions, par
ticipation in community-development

community are objectively reviewed

President and CEO of Knudsen Cor

and evaluated." ijfr

poration (Los Angeles). *fr

of Southern California Law Center;
of C. L. Peck Contractor (Los An
geles); and H. R. Vaughan, Chairman,

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WELCOME TO THE

NEW CONSUMER CREDIT

DISTRICT—North Park Bank

FILM

...Utah Firstbank
A new film that illustrates the rights of
Two banks in the Salt Lake City area

individuals under Federal consumer-

became member institutions of the

credit laws and regulations can now

Federal Reserve Bank of San Fran

be borrowed by commercial banks
and other groups. Entitled To Your
Credit, the 15-minute, 16mm color
film was produced by the Federal
Reserve Bank of Philadelphia. The
film highlights the consumer protec
tions afforded by theTruth in Lending,

cisco in recent months. The two are
North Park Bank of Commerce of

Logan, Utah, and Utah Firstbank of

'Salt Lake City.
North Park Bank, incorporated in

Equal Credit Opportunity, Fair Credit
Billing, and Fair Credit Reporting

1975, serves an area of Utah noted for

its dairy industry. Heading the man
agement team is President Mardell

Laws. Difficulties commonly encoun

Nielsen, and the Chairman of the

tered by consumers in the credit field
are portrayed in a series of vignettes
simulating real-life situations. Banks
may find the film useful for training
courses, especially in the field of

Board is Robert E. Skabelund. Ac

cording to Nielsen, North Park joined
the System "because of the many
services which the Federal Reserve
can offer a small bank."

consumer affairs. For further informa

tion, contact the Public Information
Fed

Section at the Reserve Bank's San

services as a reason for choosing
membership status. The bank opened

Utah

Firstbank

also

stressed

or call the Bank and Public Relations

Francisco office—(415) 544-2184—

Department at any of the Bank's other
offices. %

for

business this fall as a statechartered member bank. Harold E.

Turley is President of Utah Firstbank,
while Richmond D. Paul is Chairman

of the Board. Paul is also President

and Chairman of First Bancorpora-

tion, the holding company which

owns the bank.'if*

H. E. Turley