Full text of Roundup : February 1985
The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
X DALLAS Federal Reserve Bank of Dallas February 1985 Boykin Lauds Progress Dallas Fed President Reviews Volcker’s Statement On February 20, Federal Reserve Board Chairman Paul Volcker presented to the Senate Banking Commit tee his semiannual report on monetary policy. Following are comments on that report from the president of the Federal Reserve Bank of Dallas, Robert Boykin. Q . What do you consider the key por tion of Chairman Volcker’s statement to Congress? A. Clearly the main message was that we are in the midst of an ongoing economic recovery with relatively stable prices. For example, 1984 was a good year with respect to both infla tion and economic growth. Real GNP was up nearly 6 percent and the unemployment rate down more than 1 percent over the year. In fact, last December marked the seventeenth consecutive month of increasing U.S. employment and the twenty-third con secutive month of rising personal in come. We can look back at two years of high economic growth and low infla tion with the realistic expectation that 1985 will continue this favorable environment. Q . Were you surprised at how well domestic borrowing in 1984, more than doubling the already advanced pace of inflow during 1983. Do you view this foreign investment favorably? A. President Boykin the economy has turned out? A. Surprised is too strong a word. I was pleased, but had some expecta tion of success. I think the Federal Reserve played a very large part in the good performance of the economy in 1983 and 1984. Q . Do you agree with Volcker’s con tinuing concern with the domestic budget deficit? A. There is no question that something has to be done about these deficits. While they tend to stimulate the economy temporarily, their contin uance presents real problems. For ex ample, most economists would agree the large continuing deficits greatly increase the chances of reigniting inflation. Q . Volcker stated that foreign sav ings financed a large share of In one sense, yes. Added funding from overseas has kept pressure off in terest rates. This is one of the reasons the projected “ credit crunch” has not materialized. The risk, however, is that we become too reliant on this foreign money that could evaporate very quickly. Q . Volcker noted the need for more forceful efforts by banks to deal with non-performing loans and changing financial instruments. Do you see a stable banking environment for 1985? A. It is a difficult time for the bank ing industry today, with so many more players and so much more competi tion. Banks largely are going through a transition period—adjusting to both deregulation and disinflation. While there naturally is some settling to be done, the process should result in a healthier, more competitive financial system—which was the intent. INSIDE__________ ■ BRANCH BOARDS ■ BULLETIN 5 REVISED ■ REG J REVISED Appointments to Branch Boards Announced Appointments and elections to the Branch boards of the Federal Reserve Bank of Dallas for 1985 have been announced. The board of directors of each Branch is made up of seven members. Three members are appointed by the Board of Governors in Washington, D.C., and four members are appointed by the board of directors of the Dallas Fed. The Branch chairman and chairman pro tern are elected from among the Board appointees. EL PASO HOUSTON SAN ANTONIO John R. Sibley, president of Delaware Mountain Enterprises in Carlsbad, New Mexico, has been elected chairman of the board of direc tors of the El Paso Branch. Peyton Yates, president of Yates Drilling Com pany in Artesia, New Mexico, has been elected chairman pro tern. Hector Holguin, founder and chair man of the board of Holguin Associates Inc. in El Paso, and Tony A. Martin, chairman of the board of First City National Bank of Midland, have been appointed directors of the El Paso Branch. Mary Carmen Saucedo, associate superintendent of the cen tral area office of the El Paso Indepen dent School District, and Gerald W. Thomas, president emeritus and pro fessor of Animal and Range Sciences for International Programs of New Mexico State University in Las Cruces, have been reappointed directors. The other director of the El Paso board is David L. Stone, president of The Portales National Bank. Robert T. Sakowitz, chairman of the board and president of Sakowitz Inc. in Houston, has been elected chairman of the board of directors of the Houston Branch. Walter M. Mischer, Jr., presi dent of The Mischer Corporation in Houston, has been appointed a direc tor and elected chairman pro tern. Andrew L. Jefferson, Jr., Houston at torney, and David E. Sheffield, presi dent and chief executive officer of First Victoria National Bank, have been ap pointed directors of the Houston Branch. Thomas B. McDade, vice chair man of Texas Commerce Bancshares Inc. in Houston, has been reappointed a director. The other directors of the Houston board are Marcella D. Perry, president and chief executive officer of Heights Savings Association in Houston, and Will E. Wilson, chairman of the exec utive committee of First City Bank of Beaumont. Robert F. McDermott, chairman of the board and president of United Ser vices Automobile Association (USAA) in San Antonio, has been elected chair man of the board of the San Antonio Branch. Lawrence L. Crum, professor of banking and finance at the Univer sity of Texas at Austin, has been elected chairman pro tern. Ruben M. Garcia, president and chief executive officer of Modern Machine Shop Inc. in Laredo, and Robert T. Rork, chairman of the board and chief executive officer of RepublicBank in San Antonio, have been ap pointed directors of the San Antonio Branch. Joe D. Barbee, president and chief executive officer of BarbeeNeuhaus Implement Company in Weslaco, has been reappointed a director. The other directors of the San An tonio board are George Brannies, chairman of the board and president of The Mason National Bank, and C. Ivan Wilson, chairman of the board and chief executive officer of First City Bank of Corpus Christi. NEWS IN BRIEF Revised Bulletin The Federal Reserve Bank of Dallas issued a revised Bulletin 5 to reflect changes in cash transporta tion services, food coupon regula tions and reporting discrepancies in packages of new currency. In addi tion, the revised bulletin established the Eleventh D istrict currency verification policy. With the revised bulletin, the Bank discontinued Federal Reservecontracted armored carrier service for transportation of currency and coin to depository institutions located in Dallas, Houston, San An tonio and El Paso non-regulated metropolitan zones and to the depository institutions located in New Mexico that are serviced by the El Paso Branch. Financial institu tions affected by this change were previously notified by letter. Bulletin 5 was also amended to conform to new Food and Nutrition Service regulations which absolved the FNS of liability for shipments of food coupons lost while in transit to the Reserve Bank or to FNS. Other changes to the bulletin were the incorporation of the Treasury Department’s procedure for reporting discrepancies in cur rency packaged by the Bureau of Engaving and Printing and the inclu sion of the Reserve Bank’s currency verification policy. Reg J Changes Adopted Regulation J, which governs checks, has been amended by the Board of Governors in an effort to improve the system of notification of nonpayment for large checks that are processed through the Federal Reserve System. At the same time, the Board approved a proposal that would enhance the notification ser vice currently provided by Reserve Banks as part of the check collec tion process. Both actions become effective in October 1985. Under the amendment, a payor in stitution that returns a check of $2500 or more must provide notice of nonpayment to the institution of first deposit, with such notice to be received by midnight of the second banking day following the day on which the payor institution is re quired to dishonor the check. The regulation applies only to those checks collected through the Federal Reserve—approximately one-third of all checks written. A payor institution that failed to exercise ordinary care in providing timely and accurate notification could incur liability up to the amount of the item for resulting losses incurred by the institution of first deposit. Considerable attention has been focused recently on the practice of some depository institutions of delaying a depositor’s ability to withdraw funds deposited by check. The Board believes that the modifications made to Regulation J will prove to be an effective way of reducing risk to institutions of first deposit and, thus, encourage depository institutions to reevaluate the length of their hold periods. The Federal Reserve Bank of Dallas and its Branch Offices will continue to provide notification of nonpayment to the institution of first deposit under the terms and conditions of the return item pilot for the duration of the pilot. The Eleventh District will also make an enhanced n o tific a tio n service available to depository institutions for checks collected outside the Federal Reserve. ing service to recover the cost of sending a registered security to the transfer agent for reregistration. A second result of the Board’s action is the introduction of a fee to cover the higher costs of safekeeping coupon-bearing s e c u ritie s as opposed to registered securities. Concurrently, account maintenance fees have been lowered. The Board also approved several changes to the fee structure for non cash collection service. Noncash collection provides a payments mechanism designed to collect items, such as maturing bonds, debentures or coupons, that cannot be processed through normal check collection channels. The changes to the noncash collection service in clude the addition of a fee for hand ling returned coupons and the ex pansion of a mixed deposit program to all depository financial institu tions. Fees for handling local and inter-district coupons deposited by in-district depository financial in stitutions have been increased but now include postage and insurance, which were previously priced sepa rately for those not participating in the mixed deposit pilot program. The fees for bond redemptions and sales have also been increased. 1985 Securities and Noncash Collection Prices D E F IN IT IV E S A F E K E E P IN G ( p r ic e p e r t r a n s a c t i o n ) D e p o s its $ 1 0 .0 0 W ith d r a w a ls ' $ 1 0 .0 0 M a in te n a n c e 2 (p e r re c e ip t) 1 - 4 0 0 re c e ip ts $ 2 .2 5 2 4 0 0 + r e c e ip ts $ 2 .0 0 2 P u rc h a s e s & S a le s $ 2 6 .5 0 New Fee Schedules R e -r e g is tr a tio n s ' $ 1 0 .0 0 New fee schedules for definitive securities safekeeping and noncash collection are effective Feb. 28. Definitive securities safekeeping involves vault storage of, primarily, municipal and corporate securities. A reregistration fee has been added to the definitive securities safekeep N O N C A S H C O L L E C T IO N L o c a l C o u p o n ( p e r e n v e lo p e ) $ 3 .0 0 I n t e r - d i s t r i c t C o u p o n ( p e r e n v e lo p e ) F in e S o rt $ 3 .2 5 M ix e d $ 4 .5 0 B o n d R e d e m p tio n s & S a le s ' $ 2 0 .0 0 (p e r tra n s a c tio n ) 1A c tu a l s h ip p in g c o s ts a d d itio n a l. 2P lu s $0,008 p e r $1,000 p a r v a lu e p e r m o n th (a p p lie d to c o u p o n -b e a r in g s e c u r itie s o n ly ). All That Glitters.. . A gold bar worth approximately $121,500 w ill be on permanent display in the Dallas Fed lobby. The 405.359 troy ounces of fine gold is on loan from the Department of the Treasury. > c/i (/) Uc 0 CD 30 3 = 0) Q- 0 O D C 2 . 3 7C 3 0 S > 9. c o "2.5CD —• O "O O Z5 0 — D n —0 CD O r- 3 El o' D Q . (/) ^CD I 5 3 5 Oo § CD O m Z 0 "< g 8 » cr 57 a; o ozr o 3 o2 y o “T 3 ^ c/> O c ?0 0 — o 5 - cn Q) 0 = J< Q. 0