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Serving Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Utah & Washington
The Federal Reserve Board of Gover

nors has decided not to delay the
effective date of its rule permitting
automatic transfer of funds from sav

ings to checking accounts. Several
organizations had asked the Board
not to allow this service to begin as
planned on November 1.
Kent O. Sims (dark suit, center), Senior Vice President, greets a number of bankers




rangement, funds could be shifted
automatically from savings to check
ing accounts to cover overdrafts or to
maintain specified balances. The ser
vice would be available only to indi
vidual customers—not to businesses

representing Pacific Basin countries. To his left are Dr. Kermit Hanson, Dean, School of

Business Administration, and Dr. Charles N. Henning, both from the University of Washing
ton. To Sims' right is Assistant Vice President and Economist Hang-Sheng Cheng, who
also participated in the conference.


or government agencies.

Some fifty bankers from twelve Pacif
ic Basin countries attended a confer

In a letter to the Independent Bankers
Association (IBA), the Board said,

ence this month at the Federal Re

"The benefits that will accrue from the

serve Bank of San Francisco, which
featured briefings on a number of

automatic-transfer service outweigh
the possible benefits of further delay
in the introduction of this service."

The IBA had requested either a delay
or the creation of a new bank savingsaccount category providing rate pari
ty with similar thrift-institution ac
counts. Thrift institutions can pay up
to a quarter percent more interest
than commercial banks can pay on
savings deposits.
In rejecting the IBA suggestion, the
Board stated, "After careful consider

ation of the petition and other similar
requests, we have determined it
would not be appropriate. . The
Board has recently urged Congress
to provide rate parity among all insti
tutions for savings-type accounts that
are tied to third-party transfer ac
counts. The Board believes legisla

an active part in both the 1977 and
1978 Pacific Rim programs. "We view
the program as an extension of the
Bank's ongoing involvement in econ
omic research on the Pacific Basin,

economic and financial issues. Par

and as an opportunity to maintain

ticipants included bankers from Aus
tralia, Hong Kong, Indonesia, Japan,
Korea, Malaysia, New Zealand, the

active contact with banks in that re

Philippines, Singapore, Taiwan, Thai

sive and growing business and finan

land and the United States.

cial ties that the United States—and

gion," Sims said. "The bank's interest
in the Pacific Basin reflects the exten

particularly the West Coast—main




tain with these countries."

San Francisco Fed made presenta
tions at the conference on such top
ics as international lending, the
growth of Third World debt, the as
sessment of lending risks, Asian fi

mist Hang-Sheng Cheng added that
the Bank also publishes a quarterly
statistical bulletin on the region—the

nancial markets and the structure of

Pacific Basin Economic Indicators—

the Federal Reserve System. The
program was held in conjunction with
the Pacific Coast Banking School,
which sponsors the Pacific Rim pro
gram administered by the Graduate

as well as a semi-annual Bulletin of

School of Business Administration of

the University of Washington.

tive actions it has recommended con-

Assistant Vice President and Econo

the Clearinghouse of Pacific Basin
Central Bank Economic


and numerous economic studies of

Pacific Basin countries. Copies of
these publications are available from
the Public Information Section, Feder
al Reserve Bank of San Francisco,

Senior Vice President Kent Sims not

(continued on page 4)

ed that the Reserve Bank had taken

(continued on page 3)



The Board of Governors announced three actions affecting
its Truth in Lending Regulation Z. The Board adopted an
amendment that would simplify the computation of the
annual percentage rate for graduated-payment mort
gages, as well as for other long-term transactions that
involve minor irregularities in the repayment schedule.
Certain irregular-payment amounts and payment periods
would be considered "regular" for the purpose of calculat
ing the annual percentage rate. Unlike an earlier proposal
issued last May, the final ruling applies to all long-term
credit transactions with minor irregularities in the repay
ment schedule—not just mortgage credit—and applies to
all contracts with maturities of 10 years or more.

The San Francisco Reserve Bank recently made several

The Board also adopted an amendment to permit creditors
to use as many pages as necessary when disclosing
schedules of variable payments. In doing so, the Board
withdrew a proposed version that would have allowed the
use of abbreviated schedules. In a third Reg Z action, the
Board asked for comment on an interpretation which would

require disclosure of loss of interest when a time deposit is
used as security for a loan. Currently, lenders do not have
to disclose such information when a loss results because

changes in check-collection procedures. The Salt Lake
City Branch began offering a Fine Sort Deposit program.
Under this program, commercial banks can presort certain
checks, which qualifies them for later deadlines. Also, the
Portland Branch changed its closing hour to 9 a.m. from 10
a.m. on Monday through Friday for checks payable in the
city of Portland.
Moreover, the Reserve Bank announced that banks can

now deposit postal money orders and government checks
commingled with other RCPC items up to a daily average
volume of 300 items at all offices. (RCPC's are Regional
Check Processing Centers.) But banks can continue to
meet the present 4 p.m. deadline by separately sorted
postal money orders and government checks.
These changes were outlined in an updated Circular I

(Collection of Cash Items) distributed to all District banks.
The circular also outlines the procedures for processing
government checks under the simplified "truncation" pro
gram. For further information, contact the Check Officer at
your nearest Federal Reserve office.

of compliance with state law. For further information,
contact the Reserve Bank's Consumer Affairs Unit (415)



The Board of Governors has changed reserve require
ments on foreign borrowings to make it more attractive for

The Securities and Exchange Commission (SEC) is ana

member banks to borrow funds in the Eurodollar market.

lyzing public comments regarding the continuation of its
Lost and Stolen Securities Program. The SEC established a
pilot program early this year for processing reports and
inquiries dealing with lost and stolen securities. The com
mission will now decide ifthe program should be extended
beyond its scheduled December 31 phase-out date. For

The amendment to Regulation D (Reserves) and M (For
eign Branches) was designed to improve the international
position of the dollar. Specifically, the Board reduced from 4
percent to zero the reserve requirement on member banks'
foreign borrowings—primarily Eurodollars—from their for

further information, contact the Fiscal Department at any of
the Reserve Bank's branches.


The Board of Governors has published a statement to

answer the most frequently-raised questions concerning
the new 26-week savings certificate issued by banks and
thrift institutions. This new category of time deposit can be
issued in denominations of $10,000 or more. The maximum

permissible rate of interest is based on the rate established
for six-month Treasury bills issued on or immediately prior
to the date of deposit. The rate is calculated on the auction
average on a discount basis—not the coupon equivalent
rate. Savings banks and savings-and-loan associations
are allowed a one-quarter point differential. The Board
issued the guidelines after consultation with the Comptrol
ler of the Currency. The Federal Deposit Insurance Corpor
ation issued similar guidelines for nonmember banks, and
the Federal Home Loan Bank Board did likewise for thrift

institutions. For further information, contact the Reserve

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

eign branches and other foreign banks. It also reduced
from 1 percent to zero the reserve ratio on foreign-branch
loans to U.S. borrowers. The ruling also affects the U.S.
offices of foreign-owned banking institutions, which have
voluntarily maintained reserves on increases in net foreign
borrowings since mid-1973.
The Board said that its reserve reduction was intended to

encourage member banks to substitute Eurodollar borrow
ings for domestic borrowings as a source of funds. It also
reemphasized its previous request for U.S. banks not to
solicit or encourage deposits by U.S. residents at their
foreign branches unless such deposits serve a definite
international purpose. For further information, contact the
Reserve Bank's Supervision, Regulation and Credit De
partment (415) 544-2266.

The Reserve Bank's Salt Lake City Branch will be closed on
October 9 in observance of Discovery Day. All other Bank
offices will remain open.



The Federal Reserve raised its dis
count rate on member-bank borrow

Federal Reserve Governor Phillip C.
Jackson, Jr., in a Salt Lake City ad

ings late this month, from 73A to 8
percent, reflecting the continuation of
the upward trend of interest rates that
began in late 1977.

ed effort by all sectors of the economy
to combat inflation and strengthen the
nation's economic system. Jackson

dress this month, called for a concert

addressed an audience of Salt Lake


City community leaders, meeting with
Interest Rates




\^Fed Funds








Federal Reserve ^A

Jackson argued that a viable eco


nomic system requires the support of
all the individual members of the sys
tem. "The Fed is only part of the sys
tem," he said. "The real problem with
inflation is that we are all too prone to

Discount Rate ,-i=iJ



. A, A*~^


, 1 , , i 1 , 1 1 1 1' 1 1

head-office and branch directors of
the Federal Reserve Bank of San


1 I 1

The Board of Governors, acting on
requests from the directors of all
twelve Reserve Banks, commented,

"Action was taken in recognition of
recent increases in other short-term

interest rates, to bring the discount
rate into closer alignment with shortterm rates generally, and as a further
step to strengthen the dollar."
The Fed in recent months has acted

to curb inflation and to strengthen the

dollar by limiting the growth of bank
reserves. These actions thus have

put upward pressure on the Federalfunds rate, the rate governing banks'
overnight borrowings of unused re
serves. By late September, the funds

rate had risen above 8V2 percent, ifr

shirk our responsibilities and shove

P. C. Jackson

them off onto somebody else. We're
more prone to depend on government

"Competitive private banks cannot
make the services available to rural

to solve all our problems, and then

communities at competitive prices,"

blame government when the prob

he said. He contended that this kind of

burden could not be "turned over

lems are not solved."

The Fed governor said, "In my opin
ion, monetary policy must be very
delicately and carefully administered

today. It must lean against inflationary
pressures. But monetary restraint
must not brake so severely that it
damages the economy and throws it
into recession. Monetary policy has
an important part to play in our fight
against inflation. But it should not be
left to do the job alone."

entirely to private banks in a noncontrolled free-enterprise system."

Jackson said every country needs a
currency—a sound one—and it
needs a method of distributing that
currency. "Who is going to do it?" he
asked. "Our system dictates that the

Fed will do it. And Ithink itdoes a good
job of supplying the currency at rela

tively low costs."'f'

Jackson argued that the nation must
reduce fiscal deficits in prosperous
times. Otherwise the burden of debt
could reach intolerable levels when


(continued from page 1)

P.O. Box 7702, San Francisco, Ca.

94120, whose phone number is (415)

He noted also that the Bank maintains

a Pacific Basin Reading Room in its
Research Library. The Reading Room
contains current material on the Pa

cific Basin economies. The Research

Library, which is located on the 8th
Floor of the Insurance Center, 450
Sansome Street, San Francisco, is
open to the public during business

hours, iff




"Unless we restrain the growth of
government spending and encourage
expansion of our private capacity, we
cannot win the fight against inflation.
But fiscal policy has the same con
straints from overkill as monetary
policy. It too must avoid going too far
even in the right direction."
Jackson defended the Fed's role in

providing central banking services,
alluding to the distribution of coin and
currency as an example. He said the
Fed serves as a focal point in the
nation's financial system by providing
services to banks throughout the
country in an efficient manner.

The Federal Reserve Bank of San

Francisco has approved the merger
of Bank of Utah and Bank of Northern

Utah. Bank of Utah, headquartered in
Ogden, operates 13 branches with
deposits of over $92 million. Bank of
Northern Utah has its head office and

sole banking operation in Clearfield,
Utah. It has deposits of just over $6

After the merger, the present office of
Bank of Northern Utah will become a
Bank of Utah branch office. Bank of
Utah will continue as a state member

bank of the Federal Reserve System.

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(continued from page 1)

tinue to be the most appropriate
approach at this time for finding an
early solution to any competitive
problems that may be occasioned by

A new film describing the functions of

the automatic transfer service."


The Board's analysis of its correspon

Bank," goes behind the scenes to
show how the Fed helps keep the
amount of money and credit in line

dence on this matter indicated that

of San Francisco. The film, which is

Fed. . .Our


with the nation's economic needs.
The film also illustrates how the Fed

changes to institute the new service
by November 1. But it added that it

clears checks, puts coin and curren
cy into circulation, destroys old cur
rency, supervises banks and admin

tion should call for them. ifr
M. J. Murray

promoted Michael J. Murray to Direc
tor of Corporate Personnel, where he
is responsible for the development
and implementation of District-wide
personnel policies and programs.
These include employment, training,
employee relations, compensation,
affirmative action, benefits, employee
communication and policy adminis
tration. Murray previously served as

able from the Federal Reserve Bank

most financial institutions will be able

ic transfers, and make any necessary
adjustments if the competitive situa

The San Francisco Reserve Bank has

the nation's central bank is now avail

to make the necessary operational

would monitor the effects of automat



The Bank also named Connie Russell

isters consumer-credit laws.

Recently the film was selected by the
International Communications Agen
cy (formerly the United States Infor
mation Agency) as one of five U.S.
government films to be shown in a
traveling film festival in major foreign

as Personnel Officer at its San Fran

cities. It has also been nominated for

cisco office. Ms. Russell was Manag

an award by the prestigious C.I.N.E.

er of Compensation and Benefits in
Corporate Personnel, and now as


sumes additional officer responsibili

ties in the personnel function. ^


institutions, schools and

other interested audiences can book

the film by contacting the Public Infor
mation Unit, Federal Reserve Bank of
San Francisco, P.O. Box 7702, San
Francisco, Ca. 94120, phone (415)

Assistant Vice President of Personnel

544-2184—or by calling the Bank and
Public Services Department at any of

at the Bank's San Francisco office.

the Bank's offices.^