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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.

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