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Federal Reserve Bank of Dallas

February 1983

Dallas to Test Return Item Service
The Federal Reserve Bank of Dallas
has been chosen to test a new return
item service in the Eleventh District
before consideration is given to im­
plementation of such a service at all
Federal Reserve Banks. The service is
designed to allow the Dallas Fed to
process all return items regardless of
whether they were originally entered
for collection through the Federal
Reserve System and deliver them to
the financial institution of first deposit.
The pilot program will be implemented
in three phases.
During phase one of the return item
pilot program, which will go into effect
February 24, Eleventh District offices
will accept only those returns which
were originally presented for collection

through Federal Reserve Banks and
will return them to the immediately
prior endorsing institution through the
normal collection process. Telephone
notification of nonpayment on all
returns of $2500 and over will be pro­
vided, and the payor institution will be
charged a fee of 50 cents per item for
each return item deposited. Other
checks prices will be reduced accord­
ingly because of the separate pricing
of returns (see inside article).
During phase two of the program, to
be implemented at a later date, return
items will be returned to the institution
of first deposit if that institution is
located within the Eleventh District. If
not, the items will be returned to the
Reserve Bank of last endorsement.

Also during the second phase, the
Dallas Fed will introduce a price break
of 25 cents per item for returns
deposited that are fine sorted to the in­
stitution of first deposit or that are
prepared for automated processing.
The Dallas Fed and its branches will
accept all return items for processing
during phase three of the pilot program
even if they were originally presented
for collection outside the Federal
Reserve System. In addition, return
items will be returned to the Reserve
office of the institution of first deposit
if that institution is located outside the
Eleventh District.
The return item service will allow
financial institutions several benefits
such as a reduced sorting burden for
returns, immediate credit for returns
deposited with the Fed, expedited col­
lection of return items, reduced risk of
loss because of notification of all large
return items, and reduced costs for
other check processing services. The
Dallas Fed is conducting a series of
seminars around the District during
February for institutions wishing to
know more about this new service.

• Cash Ordering
• Check Collection
• Economic Outlook

Electronic Cash Ordering Implemented
Currency and coin ordering through
the Federal Reserve Bank of Dallas
RESPONSE communicatons network
was implemented February 1. For
financial institutions on-line with the
Fed’s computer through RESPONSE,
this new application can replace the
need for initiating such orders over the
The RESPONSE network provides
fast and efficient access to such Fed
services as receiving reserve state­
ment in fo rm a tio n , tra n s fe rrin g
securities, sending and receiving funds
transfers, and receiving ceiling rate in­
formation for money market CDs, in ad­
dition to the new currency and coin
ordering option. The network, which
was introduced in the spring of 1982,
has been successful in increasing on­
line participation. At the end of 1982,
226 financial institutions were on-line
with the Dallas Fed through one of
three available options.

Ordering cash is made easier through the RESPONSE network.

For additional information about the
new currency and coin ordering service
offered by the Dallas Fed, please con­
tact Mr. Charles Worley at (214)

698-4275, and for information regard­
ing the RESPONSE network itself,
please contact Mr. Vance Smith at
(214) 651-4322.

Penalties Lifted
On Deposits

New Dallas Fed Department
To Offer Responsive Service

Penalties associated with the
early withdrawal of time deposits
were recently suspended for
parts of Louisiana by the Federal
Reserve Board of Governors. This
action was taken in response to
the severe flooding that hit
Catahoula, Grant, LaSalle, Winn,
Natchitoches, and Ouachita
Parishes. The Board’s action per­
mits a member bank, wherever
located, to pay a time deposit
before maturity without imposing
the penalty established by
Regulation Q. The depositor must
provide a signed statement
describing the loss.
The suspension has been
made retroactive to deposits
withdrawn on or after January 11,
1983, and will remain in effect un­
til midnight July 11, 1983.

In January, the Federal Reserve
Bank of Dallas created a Corporate
Banking Department designed to pro­
vide a liaison between the financial in­
stitutions in the Eleventh District and
the services and resources of the
Bank. The new department has respon­
sibility for market research and
analysis, product development, prod­
uct information and promotion, client
services, and pricing strategy, as well
as for providing support to the call pro­
gram, which was introduced to allow
both officers and employees of finan­
cial institutions learn about Fed ser­
vices. Representatives from the Dallas
Fed make regular visits in connection
with the call program to financial in­
stitutions to provide them with first­
hand information and answer any
To insure continued instructive and
informational support, the Corporate

Banking Department was created as
the central contact point for financial
institutions seeking guidance on old
and new services and prices.
The implementation of priced ser­
vices, which began in 1981, created a
need for a centralized department
responsible for coordinating market
and product research and analysis, as
well as for planning informational pro­
grams for the financial institutions
throughout the District. The Corporate
Banking Department will conduct
seminars on a District-wide basis on
topics of concern such as new services
to be offered by either the Federal
Reserve or financial institutions. Tony
J. Salvaggio, Robert Smith, III, and
Richard D. Ingram have senior, general,
and direct responsibility respectively
for the new department. Helen E.
Holcomb will serve as department

Major Check Service Changes Announced
The Federal Reserve Bank of Dallas
has announced la te r d e p o sit
deadlines, improved availabilities, and
new prices to correspond with major
changes in Federal Reserve check col­
lection services scheduled to take ef­
fect at all Federal Reserve Banks
February 24. The major purpose of
these changes is to speed up the col­
lection of checks and to, in general,
make the nation’s payments mecha­
nism more efficient. At least $3 billion
of checks handled by the Fed will be
cleared one day earlier than before
as a result of the checks service
As one of the major elements of the
announced changes, all Federal
Reserve Banks will have checks
available for presentment or dispatch
to city paying institutions no later than
12:00 noon local time. The transition to
12:00 noon presentment will be ac­
complished in two steps. First, on
February 24, presentment will be

moved to 11:00 a.m. Then, on May 2,
presentment will be moved to 12:00
noon. This later presentment program
will also apply to RCPC and country
paying institutions that receive a
substantial dollar value of checks.
The Federal Reserve’s Interdistrict
Transportation Network, the system
the Fed uses to transport checks be­
tween Federal Reserve offices around
the country, has also undergone a ma­
jor reorganization. The network has
been completely re-figured to affect
the timing of and dispatch to Fed of­
fices and the availability that can be of­
fered on certain interterritory checks.
Each Federal Reserve Bank’s resulting
later deposit deadlines will be made
available to all depositors, those
within the district and those which
choose to send items directly to other
Fed offices or use the Federal
Reserve’s network to send items to
other offices in a consolidated

New Check Prices
(effective February 24, 1983)

Type of item

Old price
(cents per item)

New price
(cents per item)


M ixed..................... .......



C ity......................... .......




R eg u lar............. .......
Prem ium ............ -----




C ountry.................




Other Fed...............




Group S o rt.............. ___




Package Sort.......... ............... 99





Local ................. . . . .
Other Fed............ . . . .



In general, the Dallas Fed’s new
deposit schedule allows institutions
later deposit tim es and earlier
availabilities. All of the deposit options
which were previously available were
retained, and several new options were
added. These include a new 7:00 p.m.
deposit option for mixed cash letters
at the Dallas and San Antonio offices
and a 1:15 a.m. deposit arrangement
for RCPC items at the Dallas, Houston,
and San Antonio offices.
New prices for check processing ser­
vices at the Federal Reserve Bank of
Dallas will take effect February 24. Im­
plementation of the return item pilot
program in the Eleventh District has
allowed the Dallas Fed to lower prices
on some check deposit options since
return item costs were unbundled and
the items were priced separately (see
front page article). The pilot program
also allowed limited increases on other
check deposit options. Depositing in­
stitutions in the Eleventh District will
be charged lower prices than those in­
stitutions depositing from outside the
District because of the return item
Among the check service prices
which were lowered from previous
prices are city items, which were
reduced from 1.74 cents to 1.6 cents
per item. RCPC items were reduced
from 2.22 to two cents per item, and
package sort items were reduced from
.99 cents to .9 cents per item.
Prices for Eleventh District institu­
tions are lower than prices charged in­
stitutions outside the District for city
items, 1.6 cents per item vs. 1.8 cents
per item, and for regular RCPC items,
two cents per item vs. 2.2 cents per
item. A new premium RCPC option
which allows a later deposit time of
1:15 a.m. is priced at three cents per
item for Eleventh District institutions
and 3.3 cents per item for others. Coun­
try items are 2.4 cents per item for
Eleventh District institutions, as op­
posed to 2.7 cents for others; group
sort items are 1.9 cents per item, as op­
posed to 2.1 cents; and package sort
items are .9 cents per item, as opposed
to one cent.


Boykin Sees Recovery Possibilities for 1983
The current state of the economy
and the possibility of economic
recovery in 1983 were topics discussed
in a recent speech by Dallas Fed Presi­
dent Robert H, Boykin. Entitled “A Per­
sonal Perspective on the Economy,”
the speech was delivered to the 51st
Assembly of Bank Directors in Boca
Raton, Florida. Boykin addressed four
areas of concern important to the cur­
rent economic situation.
In regard to the domestic economy,
Boykin noted that, while there appears
to be an economic upturn, several fac­
tors have contributed to the delayed
recovery. Those factors include uncer­
tainty in the business environment, the
failure of interest rates to fall as
steadily as the inflation rate, and the
concurrent recession experienced in
international economies. Even with
these problems, at the end of 1982
several economic indicators were
showing signs of improvement and, as

a result, Boykin stated, “ I am cautious­
ly optimistic . . . that we are seeing the
beginnings of positive and sustained
growth that will start materializing in
this quarter.”
Problems faced in international
economics could start to diminish as
major industrial nations begin to
witness modest recoveries. These
recoveries abroad “combined with a
reduction in the value of the dollar
should be elements of strength in our
export sector,” Boykin said. Fear of a
worldwide collapse in the international
financial system as a result of defaults
on loans to developing countries
should diminish as a result of recent
efforts to help those countries con­
tinue to restructure their debts.
According to Boykin, “ It is important
for us to remember that there are great
differences among those developing
countries. The difficulties experienced
by a few should not call into question

the creditworthiness of all others.”
In the area of monetary policy,
Boykin sees an increased recovery ap­
parent by the increased slowing of in­
flation, continuing efforts to decrease
unemployment, and maintenance of a
competitive balance of trade position.
Monetary policy efforts designed to
lessen inflation have been successful
in producing a firm foundation for sus­
tainable economic recovery.
The area that will experience the
most difficulty in 1983 is fiscal policy.
Growing budget deficits “divert money
from private investment,” Boykin said.
Even as the other three areas see signs
of economic recovery, Boykin feels
that the deficit problem is a major
reason interest rates have stayed as
high as they have and the economy has
remained weak. “ I do not see large and
growing budget deficits . . . as being a
stimulant to economic activity,” he

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