Full text of Federal Reserve Notes : October 1976

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Federal Fteserve Notes
FEDERAL RESERVE BANK OF SAN FRANCISCO • OCTOBER 1976
Serving Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Utah & Washington

SOUTHEAST ARIZONA
BANKS ENTER DISTRICT

~n
Graham

\

A three-day conference for central-

Pirn.

In a move to improve banking serv

Cochise

ices in Arizona, the Federal Reserve

1

Board ot Governors this month ap

proved the transfer of the state's five
enth (Dallas) to the Twelfth (San Fran
cisco) Federal Reserve District.

Phoenix

•-^

bank governors and finance ministers

^CtUZ

/

Reserve Bank of San Francisco.

'

The conference discussed means of

stimulating regional trade and chan
neling more funds to the poorest Latin

Tucson

The boundary change will become
effective January 1, 1977, and will
extend the Twelfth District so that it

includes the entire state of Arizona.

American

Banking offices in the five-county
area account for almost one-fourth of

Under the new set-up, the southeast
Arizona area will be serviced predom
inantly by the Los Angeles Branch of
the Federal

Reserve Bank of San

Balles. "The action was taken after

Francisco. Services are now provided
by the El Paso Branch of the Federal

extended studies by our bank and the

Reserve Bank of Dallas.

The shift makes iteasierfortheFedto
deal with Arizona's statewide banks

as single entities. At present there are
321 banking offices in the Twelfth
District's Arizona segment, 107 bank
ing offices in the Eleventh District's

jurisdiction. However, all but four of
the 107 banking offices in the latter
area have Twelfth District headquar
ters. The boundary transfer recog

American

sented at the discussions. The meet

ing served as a curtain-raiser to this
month's IMF-IBRD Annual Meetings
in Manila, which brought together
member

nations

from

around

the

world.

"We need to increase flows of funds

Federal Reserve Bank of Dallas in

concert with the banking community."

Latin

and Development (IBRD) were repre

"The transfer was motivated by the

prove service to commercial banks
and the public and to improve the
payments mechanism," said San
Francisco Fed president John J.

nations.

and Philippine Governors of the Inter
national Monetary Fund (IMF) and the
International Bank for Reconstruction

the total deposits in Arizona.
desire of both Reserve Banks to im

from 24 Latin American nations was

hosted last month by the Federal

/

ARIZONA

southeastern counties from the Elev

FED HOSTS CONFERENCE
FOR LATIN OFFICIALS

As a result of the redistricting, checkcollection services will be improved
significantly because of better utiliza
tion of normal transportation patterns.
Currency and coin servicesto the five
affected counties will be continued by

substantially for the nations of Central
and South America," Dr. Francisco
Suarez said, "so they can compete
better in world markets." Dr. Suarez is

Executive Director for Mexico and
Central America of the International

the El Paso Branch until the first of the

Monetary Fund. "In many cases the

year. After that time, these services
will be performed by either Los An
geles or El Paso, whichever can pro

funds

vide more efficient cash services to

events."

available to

Latin American

countries are inadequate, consider
ing the impact of recent inflationary

these counties.

In the area of trade financing, the

nizes the reality of this western orien
tation, and facilitates serving all 16 of

At the time of the creation of the

Arizona's

428

branches statewide.

Federal Reserve System 63 years
ago, there was logic for dividing Arizo
na between the Eleventh and Twelfth

central-bank governors approved in
concept a new program that would
provide additional funds for the fi
nancing of Latin American foreign

The transferred area encompasses

Federal Reserve Districts. At that time

trade. Undertheproposal, anew bank

Cochise, Graham, Greenlee, Pima

mail was delivered by rail, and banks

would be established in Panama with

and Santa Cruz counties with a total

in

multi-national funding.

population of almost 700,000. Tuc

served by a transportation corridor

son, the financial center of this region,
is the second largest city in the state.

that tied them to El Paso. But with the

The bank would finance short-term

(continued on page 4)

(continued on page 4)

banks

and

their

southern

Arizona

were

better

FOUR FROM WEST JOIN

tives of consumer and creditor inter

CONSUMER COUNCIL

ests from 16 states and the District of

Columbia. Among the members are
individuals associated with business,

The Federal Reserve Board of Gover

education, the financial industry, con

nors has selected four Westerners to
serve on a

sumerism and human relations.

blue-ribbon council au

thorized by Congress to advise the

The first meeting of the Council is
scheduled for late in 1976. Its agenda
at the meeting will include Federal

Fed on consumer-credit matters.
The four include Dr. William D. War

Reserve procedures for determining
whether banks are engaging in prac
tices that may call for regulatory ac

ren, Dean of the School of Law of the

University of California at Los An
geles; Roland E. Brandel of San Fran
cisco, a partner in the law firm of
Morrison

and

Foerster;

tion under the Federal Trade Com

mission Improvement Act of 1975.

Robert R.

Dockson of Los Angeles, President
and

chief executive officer of the

California Federal Savings and Loan
Association; and Percy Loy of Port
land, Oregon, President of the Kubla
Khan Food Company.
Congress established the new Con
sumer Advisory Council to advise the
Board of Governors regarding the
implementation of legislation passed
under the Consumer Credit Protec

tion Act. The act encompasses Truth
in Lending, Fair Credit Billing, Equal
Credit Opportunity, Fair Credit Re
porting, and Consumer Leasing.
However, the Board can also place

and-loan activities, has served as

other consumer-related matters be

dean of the School of Business and

fore the Council for its consideration.

the

R.E. Brandel

R.R. Dockson

Dockson, in addition to his savings-

Graduate

School

of

Business

Administration of the University of
Warren has been named Vice Chair

Southern California.

man of the Council. He will also serve

as interim Chairman until this coming

The fourth Western member of the

January, when Mrs. Leonor K. Sulli

Advisory Council is Percy Loy, who

van (D-Mo.) retires from Congress to
assume the position of Chairperson.

Khan Food Company. Loy is serving

heads

the

Portland-based

Kubla

Dr. Warren has been a consultant on

his third term as a

consumer

District Advisory Council of the Small

law

and

debtor-creditor

member of the

law to the National Commission on

Business

Consumer Finance and several Cali

member

fornia agencies. He taught law at
Stanford Universityand the University
of Illinois before joining UCLA.

Committee of the Business School of

The two other Californians on the

Council also have noteworthy aca
demic credentials and practical
experience relating to the consumer

Administration.
of

the

He

Business

is

a

Liaison

the University of Oregon, and is a past
president of the Frozen Foods Council
of Oregon and a past member of the
Marketing Advisory Council of the
Business School of the University of
Oregon. He is also a member of the
Board

of Overseers of Lewis and

and the credit industry.

Clark College.

Brandel is a member of the Commit
tee of the American Bar Association

The Council was designed to achieve
fair representation for the interests of

on the Regulation of Consumer Cred

both creditors and consumers. Over

it. He has worked extensively in the

400

field of bank credit-card law. He has

screened by the Board of Governors
in selecting the 26 council members.
Its membership includes representa

also been visiting professor of law at

the University of California (Berkeley).

candidates

nationwide

were

P. Loy
In addition, the Council's advice will

be sought on revisions the Board has
proposed to its Regulation B to imple
ment the 1976 amendments of the

Equal Credit Opportunity Act. Con
gress has amended this Act to forbid
discrimination in the granting of credit
on the basis of race, color, religion,
national origin, age, and the receipt of
income from public-assistance pro
grams. In the original Act, Congress
explicitly prohibited discrimination
only on the basis of sex or marital

status. Iff

Welcome to the System

CONSUMER COMPLAINT PROCEDURES ESTABLISHED

TRACY-COLLINS BANK

The Federal Reserve Board of Gover

Tracy-Collins Bank and Trust of Salt
Lake City is Utah's newest member of
the Federal Reserve System.

nors published a new regulation last
month establishing procedures for
handling complaints by consumers
alleging unfair or deceptive practices
by banks.

Gilbert L. Shelton, President of Tracy-

size where Federal Reserve member

The new Regulation AA is effective
immediately. Any consumer can have
a complaint investigated by submit
ting it—preferably in writing—to the

ship provides services that are nec
essary for our continued growth,"

San Francisco District, an individual

Collins, cited the benefits of Fed
member services for his decision to

join. "Tracy-Collins has grown to the

nearest Federal Reserve office. In the

Otherwise, it will acknowledge the
complaint within 15 days and set a
reasonable time to reply with a sub
stantive response.

Complaints can be made regarding
any bank. The Fed will handle com
plaints directly where the banks con
cerned are state-chartered member

banks, and in other cases it will refer

complaints to the proper regulatory
agency. The Comptroller of the Cur
rency regulates national banks, while
the Federal Deposit Insurance Cor
poration has responsibility for statechartered banks that are not System

Shelton said. "Being a member of the
System will enable us to improve our
own services for correspondent

can contact the Consumer Affairs

banks in Utah, Idaho and Wyoming,

cisco, CA 94120. Phone (415) 5442226. Alternatively, consumers can

members.

write to the Director of the Division of

"Procedures for dealing with con
sumer complaints are designed to
accomplish two primary purposes,"

as well as our own commercial cus
tomers."

Unit, Federal Reserve Bank of San
Francisco, P.O. Box 7702, San Fran

Consumer Affairs, Board of Gover

Tracy-Collins has a long and interest
ing history. It was founded in 1884 by
a rugged individualist named Russel
L. Tracy, who served as a scout for
the U.S. Cavalry. In 1945, the name
was changed to Tracy-Collins when

nors of the Federal Reserve System,
Washington, D.C. 20551.

James W. Collins became the institu

both the bank concerned and the

tion's president.

person submitting the matter. The
Federal Reserve will attempt to make
a substantive reply within 15 days.

sumers of prompt and responsive
The complaint should describe the
bank practice or action objected to,
and give the names and addresses of

of

customers

from

eleven

branch offices in Salt Lake and Davis

Counties. It also operates two free
standing
24-hour
automated
branches, including one at the Salt
Lake Airport.
In 1970 Tracy-Collins moved into a
new era when Gilbert L. Shelton was

elected Chairman of the Board, suc

ceeding Newell Dayton, a veteran of
48 years with the institution. Before
his selection, Shelton was a partner in
charge of management services for

the Board."

Collins, the bank's assets have in
creased from $45 to $145 million.

the Division of Consumer Affairs, ad

senior

bank

officers

are

go, both Executive Vice Presidents.

sands

member banks, and prompt referral of
complaints involving other banks.
Secondly, through appropriate re
cords, to provide the means to single
out banking practices or acts that are
widespread or frequent enough to
warrant possible regulatory action by

The Board established an Office of
Saver and Consumer Affairs two

Other

With over 90 years of tradition behind
it, Tracy-Collins today serves thou

action on complaints involving state

Touche, Ross and Company, of San
Francisco. His specialized area of
consulting was the banking industry.
Since his association with Tracy-

Charles Canfield and Ronald Carna-

G.L. Shelton

the Board said. "First, to assure con

In keeping with its expanding role in
the banking community, TracyCollins recently moved into its new
Tracy Financial Center in Salt Lake
City. The bank also has subsidiary
companies engaged in mortgage,
real estate and insurance operations.

years ago. This office, redesignated
ministers consumer legislation for
which the Board writes regulations or
has other responsibilities. These laws
now include the Truth in Lending Act,
the Fair Credit Billing Act, the Equal
Credit Opportunity Act, the Home
Mortgage Disclosure Act, the Con
sumer Leasing Act, and the Fair Cred
it Reporting Act, as well as provisions
against unfair and deceptive bank
practices in recent amendments to
the Federal Trade Commission Act.

Collins to serve its customers in the

"Any person with knowledge of an act
or practice which that person consid
ers unfair or deceptive may utilize the
complaint procedures," the Board
states. "A consumer complaint may
arise under an existing Federal stat
ute or Board regulation, but it may
also be directed at an act or practice
which is either expressly authorized
or not prohibited by current Federal or

booming West, ijfp

state laws or regulations." Ijflp

As Gilbert Shelton sees it, the bank

founded by an old pony soldier has its
feet firmly planted on the ground. He
sees solid growth for Utah's economy
over the next few years as the state's
energy resources and recreational
benefits are developed, and as more
opportunities develop for Tracy-

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ARIZONA—Continued

CONFERENCE—Continued

growth of air and truck traffic, out-of-

paper in the Panamanian internation
al market, and would also provide
direct financing of exports on a

state mail can now be transported

MULTINATIONAL BANK
STUDY UNDERWAY

of Arizona—Phoenix and Tucson—

medium-term basis. Dr. Antonio Dud

The Senate Banking Committee re
cently began a study of multinational
banking to assess the need for new

and Los Angeles. Thus, there is little
reason to continue segmenting the

ley, executive secretary of the Nation

regulations or legislation in that field.

al Bank Commission of Panama, said

In its last session, Congress consid
ered legislation proposed by the Fed
eral Reserve System and other agen

quickly between the financial centers

state with 14 counties in the Twelfth

District, and the remaining five in the

he is hopeful that the new bank would
be in operation in 1977.

Eleventh.

cies,
"Such a

District restructuring of this kind has
been necessary in the past to reflect
the nation's changing population and
transportation patterns. For example,
the Federal Reserve Bank of San

multi-national bank would

provide Latin America with its own
financial regional center," Dr. Dudley
said. "We see this as an important
step forward in providing credit that
complements the existing sources

Francisco established its first branch

available to Latin American nations.

in Spokane in 1917, but later trans

Such a bank is important to Latin

ferred its activities to branches in

American nations because it will con

Seattle and Portland. More recently
(1971), 24 western Missouri counties
were transferred from the Eighth Dis

sider the special needs of businesses
throughout the region."

trict under the Federal Reserve Bank

The Latin American officials also dis

of St. Louis to the Kansas City Fed's

cussed balance-of-payments prob

Tenth District in the interests of serv

lems of the Central and South Ameri

ice and economy.

can nations. A number of proposals
were made to increase the amounts

The Federal Reserve Bank of San

of credit available to the small coun

Francisco serves the largest geo

tries of the region, and to ease exist
ing technical restrictions so that the
procedures for qualifying for loans
would be simplified.

graphic area in the System. It has
offices in Los Angeles, Portland, Salt
Lake City, San Francisco and Seattle.
With the addition of southeastern Ar

izona, the District will now encompass

population of over 33 million persons

the entire states of Alaska, Arizona,
California, Hawaii, Idaho, Nevada,

and

Oregon, Utah and Washington, with a

banking offices, ijflp

more than 6,600 commercial

but failed
adjournment.

to

act

before

The committee's study outline makes
the point that regulation here and
abroad was not designed with multi
national banking in mind. Conse
quently, there are twin dangers of
"understeering" or "oversteering" by
regulators
in
response
to
multinational-bank problems.
Among the central issues to be ex
plored are whether changes in the
existing bank regulatory structure are
necessary to assure uniform supervi
sion. Another study topic is whether
regulatory agencies are examining
loans to foreign nations adequately.
The study will also assess whether
foreign banks enjoy a competitive
advantage with their multistate bank
ing operations and securities affili
ates, and whether they should be
subject to Federal Reserve regula
tions and reserve requirements, as
well as Federal Deposit Insurance

Corporation regulations, ijjfp