Full text of Roundup : July 1985

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DALLAS
Federal Reserve Bank of Dallas

July 1985

Dallas Program Enhances Communication
Three years ago the Federal Reserve
Bank of Dallas set out to build an of­
fice automation network within the
Eleventh District. Last month the Bank
went beyond its original objective
when the first messages were sent be­
tween the Dallas Fed and the Board of
Governors in Washington, D.C. via an
electronic mail system.
The system, known as DISOSS (an
acronym for D istribu ted O ffice
S ystem s), a llo w s d o cu m e n ts,
messages and facsimile images to be
transmitted between computer ter­
minals. These enhanced communica­
tion facilities are far speedier than in­
traoffice mail or overnight courier. In
addition, DISOSS provides traditional
office automation capabilities such as
the electronic filing, searching and
retrieval of documents.
But most significant is the ability
DISOSS offers individuals to manip­
ulate documents. The terminals can
function as word processors or as
mainframe computer terminals, en­
abling the user to merge data from the
mainframe computer with text devel­
oped at his desk. Further information
created by one individual may be
edited by another. Because data or text
does not have to be rekeyed, the data
analysis process is accelerated.
“ Information can be communicated
between individuals in an easily
revisable form,” said Ron Elswick,
director of the Dallas Fed’s Informa­
tion Center. “ T h a t’s im portant,
especially when diverse groups con­
cerned with legal and technical issues

Assistant Vice President Basil Asaro of Supervision and Regulations

His department is a heavy user of the computer network.

must provide input to the decision­
making process.”
To date, terminals have been in­
stalled in all departments of the Dallas
head office. The Houston Branch is
scheduled to be linked to the network
in August, with the San Antonio
Branch joining in September and the El
Paso Branch in October.
“ The network is now in place, and
we’re beginning to apply it on a pretty
broad scale,” Elswick said. “ The bot­
tom line is that management has made
a total commitment to put the power of
the computer into the hands of the peo­
ple that need it.”
The benefits of the system have
been particularly apparent in the
Supervision and Regulations Depart­
ment. Financial analysts, who each
handled approxim ately 50 bank
holding companies three years ago,

now service about 85 holding com­
panies. The analysts use office
automation terminals to develop, edit
and route documents faster, as well as
to analyze financial statements. Assis­
tant Vice President Basil Asaro noted
that, while the volume of holding com­
pany inspection reports has roughly
doubled, the number of word process­
ing personnel required to handle the in­
spection report workload has been
reduced.
(continued on page 2)

INSIDE_______________
■ RISK REDUCTION POLICY
■ SAVINGS BOND BROCHURE
■ AGRICULTURE COMMITTEE

Communication, cont.
“ Providing a computer terminal for
each individual is cost effective if he
uses only one or two of the available
facilities,” said Bill Dusek, vice presi­
dent of Management Information Sys­
tems. “ When an individual begins to
use three or four of the available tools,
the productivity improvements are
tremendous.”
Benefits of the program extend
beyond obvious productivity increases.
An improvement in the quality of the
output, for example, is an important
yet intangible benefit. According to
Elswick, the system allows users to
blend their own creativity and abilities
with powerful computer-based tools.
Office automation is one facet of a
full end-user computing support and
training program begun at the Dallas
Fed in 1982. Two other support groups
help individuals utilize mainframe and
micro- computers to enhance data
analysis. The Information Center sup­
ports mainframe-based data analysis
and has, to date, helped develop over
600 application programs. The Ex­
ecutive Information Systems group
provides micro-computer-based deci­
sion support.
Interfaces permit information to be
exchanged among the various sys­
tems, whether mainframe, mini- or
micro-computer-based. The decision­
maker can select data from the main­
frame computer, download it to a
micro-computer for local analysis,
merge his findings with the data into a
single document and transmit that
document to any other individual on
the network.
The Bank’s initial objective in im­
plementing the office automation pro­
gram was to employ the power of the
computer to handle the growing work­
load associated with the rapidly chang­
ing financial community in the District.
In 1984 this goal was expanded, and in
June a link was opened between the
Supervision and Regulations Depart­
ment and the Federal Reserve Board.
This summer the link will be opened to
other departments in both Dallas and
Washington, D.C.

Board Sets Risk Reduction Policy
Having analyzed public comment,
the Federal Reserve Board has for­
mulated a policy to control and reduce
the risks to depository institutions
from their participation in large-dollar
wire transfer systems.
Wire transfer systems allow finan­
cial institutions to send and receive
funds for their own account and the ac­
counts of their customers. The largest
such system is operated by the Federal
Reserve and is known as Fedwire.
Debits and credits are effected through
an in s titu tio n ’s accounts at its
regional Federal Reserve office.
The new policy, which becomes ef­
fective on March 27,1986, initially calls
on private networks and depository in­
stitutions to reduce their own credit
risks voluntarily. It also depends, in
part, on the role of the Federal Reserve
and other fin a n c ia l in s titu tio n
regulators in examining, monitoring
and counseling institutions.
Large-dollar networks are an integral
part of the payments and clearing
mechanism. Current data indicate that
total daylight overdrafts average $110
billion to $120 billion per day. A
daylight overdraft occurs when an in­

stitution has sent more funds over Fed­
wire than the balance in its reserve or
clearing account—or has sent more
funds over a private wire network than
it has received.
Because a failure of a participant to
settle its net position on a private
large-dollar network could cause
substantial disruption in financial
markets, one of the Board’s major ob­
jectives in establishing its policy is to
reduce the possibility of a settlement
failure. This would be accomplished
primarily through a reduction in the
volume of daylight overdrafts and by
encouraging institutions to exercise
better control over the exposures that
remain.
In establishing its policy, the Board
made it clear that, while it may be im­
practical to expect the total elimina­
tion of intra-day credit, the Board ex­
pects to see, over time, a reduction in
both the total volume of daylight over­
drafts and the number of institutions
with a pattern of substantial reliance
on such credit. After reviewing the ini­
tial impact of the new policy, the Board
may adopt additional guidelines to
reduce further the volume and in­

cidence of daylight overdrafts and
other use of intra-day credit.
The Board is encouraging each
depository institution that incurs
daylight overdrafts on Fedwire or par­
ticipates in private large-dollar wire
networks voluntarily to adopt by Dec.
31, 1985, a cross-system sender net
debit cap following the guidelines that
the Board has established. A sender
net debit cap is a ceiling on a sender’s
aggregate net debit position across all
wire transfer systems—in other words,
a limit on the value of all “ sends” in ex­
cess of the value of all “ receives” .
The policy also states that no largedollar payment network will be eligible
for Federal Reserve net settlement ser­
vices unless it satisfies certain addi­
tional conditions.
The Federal Reserve System is in the
process of developing materials that
will assist financial institutions in
complying with the new policy, and the
Dallas Fed has announced that it will
hold educational meetings for the
depository institutions most likely to
be affected. Details on these meetings
will be provided to the institutions con­
cerned at a later date.

■

Savings Bond Booklet Now Available
The latest market-based rate for
Series EE U.S. Savings Bonds was set
at 9.49 percent for May 1 through Oct.
31. The interest rate is reset every six
months and represents 85 percent of
the average return on outstanding fiveyear Treasury securities.
An explanation of the variable in­
terest rate system is contained in “ U.S.
Savings Bonds,” a new full-color
brochure now available from the Dallas
Fed. The 28-page booklet is a handy
reference to both Series EE and Series
HH Savings Bonds and features highquality reproductions of historical U.S.
bond poster art.
Please write to the Public Affairs
Department, Federal Reserve Bank of
Dallas, Station K, Dallas, Texas 75222
for a free copy.

Future interest rates cannot be predicted. For information pur­
poses only, past market-based rates calculated by the Treasury
Department have been:

Through April 30,1983 ...................................... 11.09%
May 1,1983—Oct. 31,1983 ..............................

8.64%

Nov. 1,1983—April 30,1984..............................

9.38%

May 1,1984—Oct. 31,1984 ..............................

9.95%

Nov. 1,1984—April 30,1985...............................

10.94%

May 1,1985—Oct. 31,1985 ..............................

9.49%

Dallas Fed Hosts
Agriculture Meeting
Members of the
Federal Reserve
System’s Commit­
tee for Agriculture
and Rural Develop­
ment met May 30
fo r its annual
spring m e e tin g - Smith
hosted this year by the Dallas Fed.
The Committee for Agriculture and
Rural Development, one of several
committees which evolved from the
System Research Advisory Committee,
analyzes movements in the agricul­
tural economy, according to Hilary
Smith, Dallas Fed economist and
spring meeting coordinator.
Topics discussed this year included
the rationale behind government
market intervention in agriculture,
p ro s p e c tiv e
farm
le g is la tio n ,
agricultural trade issues and the cur­
rent farm financial crisis.

“ Agriculture is in transition. The
export-led boom of the 1970’s has
faded. New conditions, such as higher
interest rates and higher exchange
rates, have put pressure on all farm
and ranch operators,” Smith said.
“ More questions are being asked
about the proper role of government in
agriculture.”
At present, the committee’s in­
terests include (1) farm legislation,
enacted in four-year cycles, and due to
expire this year, (2) exports of
agricultural commodities which “ over
the last four years have tailed off con­
siderably” according to Smith and (3)
the farm financial situation, which has
an economic and social impact on
farmers as well as lending institutions.
Members of the 1985-1986 Commit­
tee on Agriculture and Rural Develop­
ment include: Gary L. Benjamin, chair­
man, Chicago; Carl J. Palash, New
York; Gerald Carlino, Philadelphia;
Raymond E. Owens III, Richmond;
Gene Sullivan, Atlanta; Michael T.
Belongia, St. Louis; Richard M. Todd,

Minneapolis; Marvin Duncan, Kansas
City; Carolyn Sherwood-Cal, San Fran­
cisco; Hilary Smith, Dallas, and John
Rosine, secretary and Emanuel
Melichar, representatives from the
Board.
Smith has been an economist with
the Dallas Fed since October 1982. His
field of concentration is primarily
agricultural economics, but he also
has interests in natural resource and
environmental issues. He received a
bachelor’s degree in mechanical
engineering from Virginia Polytechnic
Institute and State University, a
bachelor’s degree in economics from
American University, a master’s degree
in economics from Georgetown Univer­
sity and a doctorate degree in
economics from Iowa State University.
He is a member of the American
Economic A ssociatio n and the
American, Southern and Western
Associations of Agricultural Econom­
ics. He is a frequent contributor to
A g ric u ltu ra l H ig h lig h ts , a sister
publication to the Roundup.

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