Full text of Roundup : February 1984

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DALLAS
Federal Reserve Bank of Dallas

February 1984

Electronic Deposit Reporting to Begin
The Federal Reserve
Bank of D a lla s has
developed an enhancement
to its RESPONSE com­
munications network which
will allow the electronic
transmission of deposit
data to the Fed through
either dedicated terminals
or personal computers. This
service will be available to
on-line financial institu­
tio n s in the Eleventh
District who are required to
send deposit reports to the Fed weekly
for use in determining bank reserves.
The Dallas Reserve Bank is the first in
the Federal Reserve System to utilize
this type of process.
The implementation of contem­
poraneous reserve accounting (CRR)
February 2 creates the need for more
immediate reserve position statements
for weekly reporting institutions. Under
CRR, each reserve maintenance period
ends only two days following the com­
pletion of the computation period for
transaction accounts. The process of
mailing reports of deposit to the Fed
will prevent most institutions from
knowing their reserve positions before
the end of the maintenance period.
Therefore, CRR requires that each in­
stitution calculate its reserve require­
ment on its own.
The new enhancement will speed up
this process. On-line institutions will
transmit reports of deposit directly by
computer instead of through the mail.
Then the Fed will be able to provide

allows financial institutions
to calculate their reserve re­
quirem ents using e s ti­
mated data. This program
does not depend on elec­
tronic transmission of ac­
tual data and is available to
all weekly reporting institu­
tions immediately, either
o n -lin e
through
the
RESPONSE network or over
the telephone.
The new computer pro­
gram allows the computa­
tion of reserve requirements directly
on-line rather than manually and
should help with the management of
reserve accounts on a day-to-day
basis. The “what if” reserve require­
ment furnished by the program is
based on an institution’s estimated
figures for transaction accounts.
The RESPONSE communications
network provides a link between finan­
cial institutions and the computer at
the Dallas Fed through several on-line
options. These include terminals con­
nected by dedicated communication
lines as well as personal computers
which use dial-up telephone pro­
cedures to establish the connection.

A new enhancem ent to
the RESPONSE network
will allow the transm is­
sion of deposit data to
the Fed and will facilitate
the im plem entation of
contemporaneous reserve
accounting.

the reserve position statements over
the RESPONSE network before the end
of the maintenance period. There will
be no fees associated with using these
services.
Eight financial institutions in the
Eleventh District are in the process of
testing the new reporting procedure.
Other weekly reporting on-line institu­
tions will be asked to begin using the
service according to a phase-in
schedule developed by the Dallas Fed.
These institutions will be contacted in­
dividually during the next 12 months
and will be given the chance to par­
ticipate in the program. Currently,
there are approximately 1,600 weekly
reporting financial institutions in the
Eleventh District, 500 of which have
either personal computers or dedi­
cated terminals for use with the
RESPONSE network.
In addition to the new procedure for
transmission of deposit data, the
Dallas Fed has announced the avail­
ability of a computer program which

INSIDE____________
■

NEW FED CHAIRMAN

■ WITHDRAWAL PENALTY
■

HOLDING COMPANIES

Bob Rogers
New Dallas Fed chairman describes role

I really felt that it
was going to be
very difficult for the
Fed to improve its
productivity and
become com peti­
tive. It has done a
far better job than I
anticipated.

Robert D. Rogers, president and chief
executive officer of Texas Industries,
Inc. in Dallas, became chairman of the
board of the Federal Reserve Bank of
Dallas January 1. Since receiving a
degree in intensive economics from
Yale and an MBA from Harvard, Rogers
has spent most of his career with
Texas Industries. He also has served
as a director for several corporations
and has been very active in community
affairs. Roundup recently had the
opportunity to interview Rogers about
his views and duties as chairman.

member is like, are not necessarily very
strong in people’s minds. I didn’t have
any strong expectations when I came
to the board, but one thing that has im­
pressed me is the caliber and dedica­
tion of the employees and directors of
the Bank. That’s been a very pleasant
surprise because I’ve never been
associated with a creature of Con­
gress-m uch less a direct part of a
federal organization—and I certainly
had the impression of the stereotype
that it would be inefficient and that the
people would not be highly motivated.
But I found that not to be the case here.

With all your other activities,
how do you find time to be chairman of
the Federal Reserve Bank of Dallas?

You came to the Fed at an in­
teresting time in its history. There have
been many changes that have taken
place since 1980 as a result of the
Monetary Control Act. How do you feel
about those changes?

A

I think it’s a matter of making
time for activities that you think are im­
portant or that you are very interested
in. It’s normally the busy people who
are most available to make time for
new or worthwhile activities.
What do you see as the major
roles of chairman?

A

think the major roles are to
continue to attract capable board
members and to be a help to the of­
ficers of the Dallas Bank. I think that’s
the major job of the board and certainly
of the chairman.
You first came to the Dallas
Fed as a director in 1980. Has your
experience here lived up to your
expectations?

A

Yes, it has. Although I think the
Federal Reserve is somewhat a
mystery to a lot of people and so the
expectations of what the Federal
Reserve is like, or what being a board

A

I think they are probably
necessary changes. I don’t think they
were thought of as being desirable
when they came about, but I think the
Fed has made that transition better
than I would have thought. I really felt
that it was going to be very difficult for
the Fed to improve its productivity and
become competitive in the sale of ser­
vices rather than offering services. It
has done a far better job than I
anticipated.
What specific areas about the
Fed interest you the most?

A

There’s no question that the
monetary policy aspect of the Federal
Reserve—which has the highest visi­
bility—is an important one. But also I
think the impression within the District
of the Bank as a stabilizing, worthwhile
part of the system that promotes finan­
cial stability in our country is probably
of equal importance.

You m entioned m onetary
policy and you do have a degree in
economics. Has that helped you in
serving on the board?

Yes, it has helped me a great
deal. However, I’ve never known more
about economics than when I was a
major in intensive economics as an
undergraduate. There were three of us
in that major and we would sit around
with the senior professors—many of
whom have been on the president’s
Council of Economic Advisors and one
of whom is on the Board of Governors
of the Federal Reserve in Washington
today. We would sit around until five
o’clock in the afternoon and sip sherry
and solve all the problems of the world.
They were so easy then. I really felt I
knew a lot about economics. I’ve found
that, being on the board, we are so in­
undated with statistics that I know less
and less with each passing month.
Directors at Federal Reserve
Banks are different from corporate
directors. In your view, how can
Reserve Bank directors make the most
effective contribution?

A

L r \A Many companies —including
Texas Industries—have all outside
directors except for the president. So
corporations over the years have gone
in the direction that the Fed has had
for a long time. I think it’s important to
have outside directors because they
can bring to the system, or to the
organization, points of view which are
not otherwise easily available. The in­
ternal points of view are available to
the board and the organization, so I’m
very much in favor of outside directors.
I think there are two major func­
tions—and I may be old-fashioned in
this respect—of any board of direc­
tors. The first involves the hiring and
firing of the chief executive officer, and
the second is to support the mangement of the company in what it’s trying
to do. I think those are the major roles
of any director. Now certainly in order
to be able to do those two jobs one

must know enough about what is hap­
pening within the organization and be
able to help in the establishment of
policy. Unique to the Federal Reserve
are suggestions on monetary policy
and discount rates either indirectly
through the president, who is a
member or alternate of the FOMC
(Federal Open Market Committee), or
directly to the Board in Washington.
What do you feel are the prin­
cipal challenges facing the country
today?

A

In the fields that the Federal
Reserve is most concerned with—
which are those of financial stability
and economic growth—I don’t think
there is any question that the size of
the federal deficit, and the unwill­
ingness of the administration and Con­
gress to do anything about it, is the
greatest single threat.

One thing that has
impressed me is
the caliber and
dedication of the
employees and
directors of the
Bank.

What are the challenges facing
the Federal Reserve over the next five
years?

I think maintaining its in­
dependence. Maintaining its degree of
independence is probably the major
challenge facing the Federal Reserve
System. The topic comes up all the
time, but it seems like it’s coming up
now as a more serious threat than it
has in other years.
Do you think the Fed should re­
main independent?

&

Without a doubt. I think it
should maintain its maximum degree
of independence and I think it would
have its maximum value to the country
if it did. But there are others who feel to
the contrary, who suggest either taking
away its regulatory functions or in
some cases taking away its ability to
act in the field of short-term monetary
policy without disclosures which
would make monetary policy very
much more ineffective. I think that’s
the major challenge—independence.

M aintaining its
degree of indepen­
dence is probably
the major challenge
facing the Federal
Reserve System.

New Activities Permitted
Five new activities have been added
to the list of nonbanking activities in
which bank holding companies may
engage. These include the following:
issuing money orders, arranging com­
mercial real estate equity financing,
underwriting and dealing in govern­
ment and certain money market obliga­
tions, providing foreign exchange ad­
visory and transactional services, and
acting as a futures commission
merchant.
The Federal Reserve Board of Gover­
nors added these activities as part of a
complete revision of Regulation Y, ef­
fective February 4, 1984. This regula­
tion is the Board’s rule dealing with the
regulation of bank holding companies,
and it is issued under the Bank Holding
Company Act of 1956 as amended.
The revision also reduces the time
now required for handling applications
of banks wishing to become bank
holding companies. A Reserve Bank

receiving a bank application must ac­
cept it for processing or ask for more
information within 10 business days
and must approve the application
within 30 calendar days of acceptance,
if appropriate, under delegated authori­
ty. Applications for establishing new
offices of an existing and approved
non-bank subsidiary have been
eliminated. Acquisition of small non­
bank growing concerns with up to $15
million in assets will be permitted if 15
days of notice is provided. These revi­
sions became effective January 1,
1984.
The completely revised Regulation Y
follows review of some 800 letters of
comment received after publication
last May of a proposed overhaul of the
regulation. The process is part of a
Federal Reserve Board project for
reviewing and modernizing its regula­
tions and lightening the burden of
compliance.

Penalty Lifted
After Freeze
The Board of Governors of the
Federal Reserve System has
granted a temporary suspension
of the Regulation Q early
w ith d ra w a l
p e n a lty
fo r
depositors who incurred losses
in certain Texas counties as a
re s u lt of severe fre e zin g
temperatures beginning approx­
imately December 22, 1983. The
Board’s action permits a member
bank, wherever located, to pay a
time deposit before maturity
without imposing penalties for
depositors who suffered losses
in Cameron, Hidalgo, Starr and
Willacy counties.
This action is retroactive to
January 7, 1984, and remains ef­
fective until midnight, July 7,
1984.

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