Full text of Federal Reserve Notes : October 1975

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Federal Reserve Notes
FEDERAL RESfiWEefiQN&PF SAN FRANCISCO • OCTOBER 1975
Serving Alaska, Ari26nwpOati|©iRia, Hawaii, Idaho, Nevada, Oregon, Utah & Washington

NOV 4

FEDACT.VATES

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L"»RAR*

WHAT THE NEW LAWS MEAN

CONSUMER AFFAIRS UNIT

The Fair Credit Billing and Equal Credit Opportunity Acts passed by Congress

has been

and approved by the President last year became effective on October 28,

formed by the Federal Reserve Bank

1975. Both pieces of legislation will have a major impact on consumer-credit
matters. Here are some of the key points which bankers should know about

A

consumer-affairs

unit

of San Francisco to assist consumers

and businesses in understanding
their rights and responsibilities under
the Federal Government's new fair-

credit legislation, President John J.
Balles has announced.

"This complex new legislation could
not be implemented until new regula
tions were set in place," Balles said.
"With the help of voluminous com
ments from a large number of interest
groups, the Federal Reserve has now
developed a detailed set of regula
tions to govern problems arising in the
consumer-credit field. OurConsumer

Banking Affairs Unit will interpret
these regulations for consumers and
creditors in the nine Western states."

Balles said the new unit will process
inquiries and complaints regarding
provisions of the Fair Credit Billing
Act, which is a new part of the existing
Truth-in-Lending Act. The Consumer
Banking Affairs Unit will also handle
problems arising under the Equal
Credit Opportunity Act, which forbids
discrimination by creditors on the
basis of sex or marital status. Most of

the

provisions

became

of this

effective on

legislation

October 28.

Several federal agencies are respon
sible for administering various
aspects of this important new law, but
the Federal Reserve has played a key
role by drafting the basic regulations
governing this activity.
"We

believe

an

immediate

need

exists to inform consumers of their

(continued on page 2)

these laws.

Q. What is the purpose of the Fair Credit Billing Act?
A. The Fair Credit Billing Act is an extension of the Truth in Lending Act. The
purpose of this legislation is to assist consumers in resolving credit-billing
disputes in a fair and timely manner. The act prohibits certain billing and
credit-card practices.
Q. What is the purpose of the Equal Credit Opportunity Act?

A. This act prohibits discrimination on the basis of sex or marital status with
respect to any aspect of a credit transaction.
Q. When do these laws go into effect?
A. Federal Reserve Bank regulations implementing the Fair Credit Billing and
Equal Credit Opportunity Laws became effective on October 28, 1975.
However, there is a transition period for some provisions, to allow enough
time for the printing of new forms as well as the implementation of technical
program modifications and operations changes. This transition period has
been provided to allow creditors reasonable time to comply with the
provisions involved.
Q. What creditors are covered by this legislation?
A. Institutions which regularly extend credit to individuals, such as banks,
finance companies, department stores, credit-card issuers and govern
ment agencies.

A. What Federal agencies are responsible for administering these provi
sions?

A. The Federal Reserve System was given the responsibility for writing the
implementing regulations, as well as enforcing the provisions for such
creditors as state-chartered banks who are members of the Federal

Reserve System. However, other federal agencies also have supervisory
responsibility with respect to the new laws. In addition to the Federal
Reserve System, these include the Federal Trade Commission, the
Federal Deposit Insurance Corporation, the Comptroller of the Currency
and nine other Federal agencies.

NEED INFORMATION? HERE'S WHO TO CONTACT

If you have questions about Truth in Lending or Equal Credit Opportunity as they may apply to a
particular business, you may get further information from the federal agency which enforces the law
for that business. These agencies, and the businesses they cover, are listed below.
Business

Address

Telephone

Retail, Department Stores, Consumer Finance
Companies, and all Other Creditors not

Division of Consumer Credit
Federal Trade Commission
450 Golden Gate Avenue

556-1270

Listed Below

San Francisco, CA94102

Regional Administrator of

National Banks

781 -4438

National Banks

555 California Street

San Francisco, CA 94120
State Chartered Banks that are Members of

the Federal Reserve System

Federal Reserve Bank of
San Francisco
Division of Consumer Affairs
400 Sansome Street

397-1137,
ext. 308
or 392

San Francisco, CA 94111
O. P. Celli
State Chartered Nonmember Banks that are

(continued from page 1)

Insured by the Federal Deposit Insurance
Corporation (FDIC)

new rights under this legislation and
to communicate with creditors con

cerning their expanded obligations,"

Regional Director
Federal Deposit Insurance
Corporation
44 Montgomery Street

556-2736

San Francisco, CA 94104

Savings Institutions Insured by the Federal
Savings and Loan Insurance Corporation and

Manager of Supervision
Federal Home Loan Bank of

Balles said. "Our intent is to serve

Members of the Federal Home Loan Bank System San Francisco

both parties to a transaction, so that
the public interest is served in an
equitable and efficient manner.
Unquestionably there will be a tran
sitional period of adjustment in many
cases, since new forms, procedures
and training will have to be devised
and instituted by literally thousands of
organizations across the nation."

(Except for savings banks insured by FDIC)

981-1001

P.O. Box 7948
San Francisco, CA 94120

Regional Director

Federal Credit Unions

556-6277

National Credit Union
Administration
760 Market Street

San Francisco, CA 94I02

Airlines and Other Creditors Subject to

Director, Bureau of Enforcement

Civil Aeronautics Board

Civil Aeronautics Board

1825 Connecticut Avenue, N.W.

Washington, DC. 20428

Balles said the new Fed unit has

direct
credit

jurisdiction over consumer
matters relating to state-

Meatpackers, Poultry Processors and Other
Creditors Subject to Packers
and Stockyards Act

chartered commercial banks which
are members of the Federal Reserve

System. However, the Federal Re
serve will have an impact across the

Packers and Stockyards
Administration

Department of Agriculture
Washington, D.C. 20250
Farm Credit Administration

Federal Land Banks, Federal Land Bank
Associations, Federal Intermediate Credit

490 L'Enfant Plaza East, S.W.

Banks and Production Credit Associations

Washington, D.C. 20578

entire spectrum of consumer-creditor
transactions because of its role in

FED REDUCES CERTAIN RESERVE REQUIREMENTS

developing credit regulations. Fur
thermore, the Fed will act as a

clearinghouse for consumer inquir

The Federal Reserve Board of Gover
nors this month reduced reserve

investigate their concerns.

requirements on member-bank time
deposits with an original maturity of
four years or more. The action will

The key contact point in the San

release about $350 million in reserves
to the banking system.

ies, referring individuals to the proper

government agency authorized to

Francisco Reserve District will be the

Consumer Banking Affairs Unit at the
San Francisco office, headed by
Oscar P. Celli, Credit and Consumer
Affairs Officer. Consumer units have

This action is designed primarily to
encourage banks to lengthen the
structure of their liabilities. It will also

help meet seasonal needs for bank

also been established at the Bank's

reserves

other offices in Los Angeles, Portland,

growth in the money supply.

Seattle, and Salt Lake City, ijf

and

facilitate

moderate

Under the restructuring action, re
serve requirements on these longterm deposits will be reduced from 3
percent to 1 percent. In no case,
however, may the average of re
serves on time-and-savings deposits
at each bank be less than 3 percent,
the minimum level specified by law.
The new reserve ratio will apply to the
level of deposits beginning the week
of October 16-22, and will affect
required reserves beginning the
statement

week

November 5. Ijjjfp

of

October

30-

"aMW* -

New Member Bank

EL CAPITAN NATIONAL BANK JOINS SYSTEM

new National Bank. The group was
representative of the citizens who are

ers, Sonora sees a steady stream of
campers, fishermen, hunters and
nature lovers. As the gateway to
Yosemite National Park and the high
Sierra, the community is a magnet for

active in the affairs of a small but vital

thousands of Californians and out-of-

city—a doctor, a druggist, a banker,
an undertaker, the publisher of the
local newspaper, and the owner of the
local telephone company.

state visitors.

Early this year a group of Northern
California

businessmen

mailed off

their application for a charter for a

"We're a growing community," says
President Ward, "with a vigorous
economy that banks on cattle, agri

According to Chairman Maurice R.

culture, lumber and tourism. Sonora is

Foster and President Bill Ward, the

also attracting many retired persons
who are moving into the foothills from
California's large cities." Ward added
that Sonora is a "must" on every

progress of the new bank has been
This summertheir El Capitan National
Bank opened its doors for business as

California, heads a staff of 11 at the

facility. James K. Angelo is Vice
President, and George Langley is
Cashier and Director of Operations.

••

.1

a new member of the Federal Reserve

traveler's list. -%

System. The bank's assets include
not only a capitalization of $1 million,

BORROWING COSTS RISE

but also its location in the heart of the

Business borrowing costs at major
West Coast banks rose in August,

Mother Lode gold country in Sonora,
California. Sonora retains much of the

bringing a halt to the downward trend
which began last fall, according to the
latest quarterly interest-rate survey
conducted by the Federal Reserve

architecture of its historic golden

past. Its buildings, like those in the
nearby state historic park of Colum
bia, California, reflect a bygone era
when millions of dollars of precious

Bank of San Francisco. Following the

yellow metal were mined and pro
cessed following the 1849 gold rush.

August survey, however, the pressure
on rates again eased, reflecting a shift
in monetary policy as well as market

But El Capitan National Bank symbol
izes another day and age that is
epitomized by the latest in innovative
banking. Its modernistic office offers a

factors.
W. J. Ward

full line of services for the 25,000

excellent since its summer opening.
President Ward, who was formerly

people who live in Sonora and its
environs. Today instead of goldmin-

dres National Bank in Santa Maria,

president and chairman of Los Pa

During the August 1-15 survey period,
the average rate of regular short-term
business loans was 8.45 percent—12
basis points above last May's figure,
(continued on page 4)

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(continued from page 3)

GRIFFITH NEW FED VP

However, this level was still 370 basis

Richard T. Griffith has been appointed
Vice President in charge of Computer
Information Systems at the San
Francisco Fed's headquarters office.
In this capacity, he will be responsible
for all data-processing activities in the

points below last August's record high
of 12.15 percent. (One hundred basis
points equal one percentage point.)
This rise, like the comparable rise on
revolving credit loans to 8.02 percent,
reflected the generally higher level of
money-market rates and an increase
in the prime rate since the previous
survey period.

Twelfth Federal Reserve District.

Before joining the bank, Griffith held
several key posts in data-processing
work and banking operations. He
previously served as Vice President
and Deputy Administrator of Opera

greater than for small loans. For
example, on regular short-term loans

tions Administration at Crocker Na

of $1 million or more, the average rate

tional Bank. Griffith also was Execu

rose 19 basis points to 8.37 percent in
August. For the smallest categoryloans under $10,000—the average
actually declined 5 basis points to

Rate changes for large loans were

tive Vice President of the Banking
Division of Teknekron, Inc. He at

tended Pepperdine College in Los

Angeles. if.

9.67 percent, lijflj!

R. T. Griffith

BUSINESS SAVINGS ACCOUNTS OKAYED
The Federal Reserve Board of Gover

nors this month permitted business
firms to maintain savings accounts at
member banks, by changing the
definition of savings deposits in its
Regulations D and O. The amend
ments, effective November 10, place
a ceiling on business savings depos

its of $150,000. The ceiling is in
tended to limit such accounts to small
businesses that do not have access

to the money markets to earn interest
on temporarily idle funds. The Board

asked the banks to classify their
business savings accounts as a
separate item for reporting purposes.

Savings accounts generally have not
been available to profitmaking busi
ness organizations at member banks,
as they are at thrift institutions. The
new regulatory amendments thus will

enable member banks to compete
more effectively with savings institu
tions.
This

is

the second

recent

action

helping to remove the competitive
edge which thrift institutions now
have over commercial banks. Last

month, the Fed empowered member
banks to offer a bill-paying service to
their customers through the preauthorized

transfer

of

funds

from

savings accounts. Member banks are
now permitted to make third-party
payments for their customers on all
types of transactions except bank
overdrafts—and not simply for realestate loan payments, as before, -at