Full text of The Northwestern Banker : January 1, 1968, No. 1073

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O ld e s t F in a n c ia l J o u r n a l W e s t o f th e M is s is s ip p i

January 1,1968__________

Des Moines, Iowa

May Kill Profit in Credit Life Sales
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Legislation to prohibit banks,
other lenders and sellers from
making a profit either directly
or indirectly on the sale of
credit insurance in connection
with business transactions may
be introduced this year by Chair
man Philip A;. Hart of the Senate
Antitrust and Monopoly Subcom
mittee.
Senator Hart gave this indi
cation recently following a se
ries of hearings staged by the
subcommittee at which both in
surance companies and lending
institutions testified on their
credit insurance practices.
“ One fact is crystal clear
from these subcommittee hear
ings on consumer credit insur
ance - some lenders and sellers
on credit are making windfall
profits at the expense of the
borrower,”
Senator Hart de
clared. Except for “ primarily
credit unions and a few banks”
that pay the premiums them
selves, Senator Hart said, bor
rowers are being charged more
for credit insurance than normal
competition, if existing, would
permit.
In credit insurance, he said,

“ competition is for the business
of the lender or seller, not for
the business of the ultimate
consumer. Therefore, assorted
methods of rewarding the lender
or seller have been devised —
captive insurance companies,
reinsurance arrangements, re
bates,
commissions, interest
free
accounts, compensating
balances, to name a few.” In
each case, he said, “ the bonus
to the lender or seller ultimately
comes out of the premiums paid
by the consumer.”
With state laws currently
being inadequate to handle the
situation and the McCarran Act
insulating most cases from Fed
eral unfair competition and anti
trust laws, Hart said some Fed
eral action may be needed to
give the public needed protec
tion.
This does “ not necessarily”
mean that Federal rate regula
tion is the only action, he said.
He suggested that forbidding a
profit by lenders and sellers
on credit insurance sales would
provide another solution. It
“ would dispense with all rate
regulation —remove the impedi-

ment to the free flow of competition and let forces in the
marketplace determine rate lev
e ls .”
Senator Ha^ said he has
directed the subcommittee staff
to begin drafting such leg is
lation. He also said he is ask
ing the National Association of
Insurance Commissioners tosubmit its views on what should
be done in light of the subcom
mittee hearings.
But for the present at least,
Senator Hart said, a law for
bidding profit on credit insur
ance sales by lenders and se ll
ers “ makes the best sense for
everyone concerned—particularly
the consumer, the forgotten man.
in the credit insurance field.”

Treasury Bill Yield Up
Yields on the Treasury’ s latest
issue of nine-month and oneyear bills last week climbed to
their highest levels in more
than a year.
The average yield to inves
tors on the nine-month bills was
5.555%.
The average return on the
companion issue of one-year
bills was 5.544%.

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IOWA NEWS
APLINGTON: M. K. Campbell, as
sistant cashier, State Savings Bank,
has resigned as of December 30.
BETTENDORF: Jack R. Grothusen
has been advanced from assistant
vice president to vice president by
the Bettendorf Bank & Trust Co.
Other promotions include: T. R.
(Tom) Brimeyer, from assistant
cashier to assistant vice president;
David A. Laing, to assistant cash
ier. George C. Heninger continues
as vice president, and Larry E.
Makoben continues as cashier and
auditor. Douglas S. Grinde, former
president of the bank and now
president of Burlington Bank &
Trust Co., will continue as a di
rector and consultant at Bettendorf.
CHARITON: Funeral services were
held last week for Mrs. George
Garton, 61, wife of George Garton,
president, First State Bank.
CLINTON: David J. Van Every has
joined the installment loan depart
ment of the Clinton National Bank.
He has had 13 years experience in
the consumer finance field.
DES MOINES: The Northwest Des
Moines National Bank has advanced
Mrs. Jerry Joelson from assistant
cashier to assistant vice president.
Donald L. Calkins and James W„
Angstead have joined the bank as
assistant cashiers.
EVANSDALE: The First National

Bank has applied for a change of
charter, which if granted could
move the bank to a new address at
the Crossroads Shopping Center in
Waterloo. An office would be main
tained in Evansdale. The Cross
roads Center is scheduled for com
pletion in 1969. Five Waterloo men
had previously applied for a na
tional bank charter in the Center,
entering the application in early
October.
JEFFERSON: Rodney Burnett has
been advanced from assistant cash
ier to assistant vice president at
the Jefferson State Bank.
NEW VIENNA: The Iowa State
Banking Board has denied a bank
ing office at Holy Cross for the
New Vienna Savings Bank.
PIERSON: James Sheehan of LeMars has purchased controlling
interest in the Farmers Savings
Bank. He will serve as president
of the bank, succeeding Vernon P.
Weyhrich, who has moved to Lamberton, Minn, to take over active
management of the Farmers and
Merchants State Bank there. Mr.
Weyhrich purchased the Lamberton
bank in October and sold his in
terests to Mr. Sheehan in early
December. Mr. Sheehan has been
a loan officer at the First National
Bank, LeMars. He was also associ
ated with his family’ s poultry busi
ness there.

NEBRASKA NEWS
LINCOLN: First National Bank &

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Trust Company has elected Robert
D. Northrop as vice president in
charge of the municipal bond de
partment. He joined the bank in
February, 1967.
LINCOLN: State Supreme Court
Clerk George Turner has reported
the Court has refused to reopen
the case involving issuance of a
state charter for a third bank in
Beatrice. A request for a rehearing
was made by the First National
Bank and Trust Company, Beatrice.
On October 27 the Court upheld
former State Banking Director
Henry Ley’ s order granting the
charter to the Beatrice State Bank.
This decision was unanimous.
The First National Bank had
challenged Mr. Ley’s action.

MINNESOTA NEWS
DULUTH: Russell M. Walters and
Joseph J. Nowak have been ad
vanced from assistant vice pres
ident to vice president at Northern
City National Bank. Alfred B.
Stevens has been named vice pres
ident and controller, and John Har
ris named vice president and trust
investment officer. Elected to the
office of assistant vice president
were: Robert M. Hammerstrom, Clif
ford L. Olson and Robert W. Nor
man. Promoted to trust officer was
Joseph Sauntry.
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ident, Marquette National Bank, has
been named general chairman for
the 78th annual convention of the
Minnesota Bankers Association,
June 10-12 at Hotel Radisson.

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MINNEAPOLIS: J. Patrick Ferry
and Richard A. Sorenson have been
elected to the office of assistant
vice president at the Fourth North
western National Bank. Mr. Soren
son is manager of the credit de
partment. Mr. Ferry is manager of
installment loans.

OLIVIA: Citizens State Bank has
increased its capital from $100,000
to $150,000 by a stock dividend.

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ST. PAUL: Initial hearing on a
charter application for the Security
State Bank, Mankato, will be held
January 18 by the Minnesota Com
merce Commission.

NORTH DAKOTA NEWS
ROLETTE: Funeral services were
held recently for C. Oscar Myhré,
77, president, Rolette State Bank.
A banker for over 50 years, he had
served as president at Rolette
since 1928.
WILLISTON: Lyle C. Sorum has
been advanced to vice president by
the American State Bank. He joined
the bank as an assistant vice pres
ident in June, 1965. He heads the
marketing department’ of the bank,
working closely with the president
and board of directors.
The following changes have

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been made in the installment loan
department: James Bailey has been
promoted as the assistant to D. A.
Nyquist, assistant vice president.
Vernon Owan will supervise the
collection activities. James Amstad has been made an assistant
to K. M. McConnell, vice president
in the commercial and ranch-farm
loan department.
Ralph Mode, vice president, has
been designated operations officer
and his duties will include the
directing of the activities in the
EDP department.

SOUTH DAKOTA NEWS
ABERDEEN: Ronald Sonnenfeld
has been elected an assistant
cashier by the Aberdeen National
Bank. He is responsible for the
bank’s advertising and public rela
tions. Joining the bank in 1964, he
has spent three years in the in
stallment loan department.

MONTANA NEWS
BOZEMAN: Montana Bankers are
registering now for the annual ag
ricultural credit conference sched
uled here January 18—20.

NATIONAL NEWS
ROCKFORD, ILL.: Thomas H. De
trick was recently elected vice
president of the Central National
Bank and Trust Co. He was former
ly an assistant cashier of the
Winters National Bank, Dayton,
Ohio, where he was responsible
for automated business services.
In his new position, he will be
responsible for business develop
ment activities, including auto
mated customer services. In addi
tion, he will direct automation of
checking
accounts,
installment
loans q.nd other bank functions.
The bank recently increased its

capital and surplus funds from
$1,500,000 to $2 ,000,000, accom
plished by $100,000 additional
funds and moving $400,000 from
undivided profits to surplus ac
counts.

Fed Increases Bank
Reserve Requirements
WASHINGTON, D.C.: The Fed
eral Reserve Board acted to further
curb the lending ability of com
mercial banks by a $550 million
increase in the reserves they must
keep idle behind demand deposits.
The increase of one-half per
centage point to 17% for Reserve
city banks and to 12*4% f°r large
“ country” banks will take effect
on differing dates in January.
The higher level for Reserve
city banks will take effect for the
reserve computation period begin
ning January 11, the board said..
For the others, it’ s effective with
the period beginning January 18.
The dates were chosen, the board’ s
statement said, “ to coincide with
a period when the banks’ need for
reserves will be undergoing the
usual seasonal drop from the preChristmas peak.”
The change in reserve require
ments is the first one affecting
demand, or checking-account type,
deposits in about a decade. The
current level of 16^% at Reserve
city banks was set in April 1958
and the current 12% level at the
others was set in November 1960.
Officials emphasized that the
order exempts some 4,000 small
member banks that have no more
than $5 million each in demand
deposits.
Presumably, the small banks
were excluded because the board
doesn’t want to reduce their com
petitive ability in relation to their
many rivals that aren’t members
of the Reserve system.

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COLORADO NEWS
DENVER: Earl L. Fedder has been
elected vice president in charge
of the real estate department of
the Bank of Denver. He joined the
bank in 1958.
DENVER: Lowell F. Wingert, pres
ident, Mountain States Telephone,
and King D. Shwayder, president,
Samsonite Corporation, have been
nominated for directors of the
Denver U..S. National Bank.
NORTH GLENN: Glenn R. Haefliger,
who has been with the First Natl.
Bank o f North Glenn since it opened
in November, 1953, has been elec
ted a director. He serves as q, vice
president. Eugene H. Edler was
advanced from assistant cashier to
cashier, and Mrs. Elsie Nixon was
named assistant cashier. Mr. Ed
ler worked in banks in Tipton and
Bennett, Iowa, before joining the
First Natl, of Denver in 1961. He
has been at the North Glenn bank
since 1963.
DENVER: An ‘ anonymous’ Check’ n
Credit plan has been launched by
the American National Bank. Under
the plan, the bank customer ap
plies for a line of credit. Once
approved, the customer can write
a check for an amount larger than

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No. 1073 Northwestern Banker is published five times monthly by the Northwestern Banker Company, 306 Fifteenth Street, Des
Moines, Iowa 50309. Subscriptions 50^ per copy, $6 per year. Second c la ss postage paid at D es Moines, Iowa. Address all mail
subscriptions, changes o f addréss (Forms 3579), manuscripts, mail items to above address.

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Full text of The Northwestern Banker : January 1, 1968, No. 1073

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