Full text of Roundup : June 1985
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DALLAS Federal Reserve Bank of Dallas June 1985 D a lla s Fed Fo rm s A d viso ry C o u n c ils The Dallas Federal Reserve Bank has announced the formation of two advisory councils. The Advisory Coun cil of Financial Institutions is being chaired by A. W. Riter Jr., chairman and chief executive officer of InterFirst Bank Tyler, N.A. The Advisory Council of Small Business and Agriculture is being chaired by J. Wayland Bennett, the Charles C. Thompson Professor of Agricultural Finance and associate dean of the College of Agricultural Sciences at Texas Tech University in Lubbock. Each of the 12 Federal Reserve Banks is establishing one or more ad visory councils for small business, agriculture, financial institutions and other groups, depending on existing ar rangements and economic characteris tics of their respective Federal Reserve Districts. The councils will provide Reserve Banks with information useful in their analysis, evaluation and research of regional and national economic activity, and business and banking conditions. The councils will provide Reserve Banks with infor mation useful in their analysis, evaluation and research of regional and national economic activity, and business and banking conditions. The councils will meet at least twice a year with senior management of the Reserve Banks. Council chairmen will meet annually with the Board of Gover nors in Washington, D.C. Advisory Council of Small Business and Agriculture The Dallas Fed’s councils recently held their first meetings. On May 29, the A dvisory C ouncil of Small Business and Agriculture reviewed re cent national economic trends and regional business activities. In com menting on small business conditions, the council noted that hidden business costs such as insurance and employ ment benefits are jeopardizing the sur vival of small enterprises. Second, the council reported some small busi nesses are having difficulty financing accounts receivables and suggested that the banking industry might establish national standards as to credit policy relating to receivables. Third, the econom y along the U.S.-Mexican border was regarded as significant because of the many manufacturing operations being at tracted to the region by the less costly labor market. Regarding agriculture, the council was concerned over evidence of a con tinuing decline in margins, earnings and export markets that is pervading the industry. Interest costs, which represent 30 to 40 percent of agricul tural operating costs, and poor marketing were targeted for improve ment. The council noted that livestock has remained a viable part of the in dustry and attributed its vitality to less government interference and the abil ity of producers to rapidly adjust sup ply to demand. Finally, the council discussed the importance of the Small Business Administration’s role in the financing of agriculture. The council agreed that a sharper focus of national policy and its objec tives in both agriculture and small business could play a constructive role attracting investors and new markets and would assist in developing the creditability with producers and small business enterprises necessary to sus tain efficient operations and enhance growth. Advisory Council of Financial Institutions The Advisory Council of Financial In stitutions met on May 30. Topics of (continued on page 2) INSIDE____________ ■ SECURITIES FEES ■ COUNCIL NOMINATIONS ■ DISCOUNT RATE Councils, continued discussion included business and banking conditions. The council discussed commercial and residential construction, reporting that recent regulations affecting the growth of savings and loan institutions would not stem the pace of construction, but feeling some concern over the high in ventory of commercial office space in Dallas, Houston and Austin. The agricultural situation, particu larly the loss of export markets, was cause for concern among council members. Some members expressed the view that the agricultural industry, in general, may be suffering from a lack of information credibility with the marketplace, the business industry and others. The council agreed that a sharper focus of national policy and its objectives in both agriculture and small business could play a constructive role attracting in vestors and new markets... The energy sector—and, particu larly, the petrochemical industry on the Gulf Coast—was reported to be de pressed due to a surplus of oil and, more importantly, the number of new plants, refining and processing capac ity that has been transferred to foreign shores, where higher efficiency and lower labor costs have made these ac tivities more attractive. In regard to the financial industry, it was noted that almost half of all de novo national banks chartered in 1984 were located in Texas, which could create earnings difficulties for some banks. Credit union represen tatives reported their industry was in good condition in the Eleventh Federal Reserve District. Lastly, the council was desirous of ways to answer the criticism being levied regarding funds availability and lifeline accounts. The council felt that the industry has a highly creditable record in this regard. Members of the Dallas Federal Reserve Bank’s Advisory Council of Financial Institutions William E. Brady, President Denton Savings Denton, TX. Kenneth L. Burgess, Vice Chairman of the Board First State Bank Abilene, Tx. Paul Mitchell, President Food Industries Credit Union Houston, Tx. Gary Owen, President First Federal Savings Bank of New Mexico Roswell, N. M. Ronald Brown, Chairman and Chief Executive Officer RepublicBank Houston Houston, Tx. H. O. Bursum III, Chief Executive Officer and Executive Vice President First State Bank ____ Socorro, N.M. Marvin H. Hancock Jr., President and Chief Executive Officer Capital Bank Dallas, Tx. T. D. Wallace, President Louisiana Credit Union League Shreveport, La. James A. Altick, President and Chief Executive Officer Central Bank Monroe, La. John H. Dalton, Chairman and Chief Executive Officer Freedom Capital Corp. San Antonio, Tx. Charles T. Doyle, Chairman and President Texas Independent Bancshares Texas City, Tx. A. W. Riter Jr., Chairman and Chief Executive Officer InterFirst Bank Tyler, N.A. Tyler Tx. Members of the Dallas Federal Reserve Bank’s Advisory Council of Small Business and Agriculture Robert M. Carter, Farmer Plainview, Tx. John O. Chapman, Rancher Corpus Christi, Tx. Lloyd E. Cline, Farmer Lamesa, Tx. Sharon Jobe, Chief Financial Officer TCP Industries Inc. Dallas, Tx. Carolyn Draper, President 3-D Distribution Systems Inc. Dallas, Tx. Robert W. Philip, Partner Arthur Andersen & Co. Dallas, Tx. Dan Pustejovsky, Farmer Hillsboro, Tx. James Washington, President Focus Communications Group Dallas, Tx. J. Wayland Bennett, Charles C. Thompson Professor of Agricultural Finance and Associate Dean College of Agricultural Sciences Texas Tech University Lubbock, Tx. J. B. Cooper, Farmer Roscoe, Tx. William P. Stephens, Director New Mexico Department of Agriculture Las Cruces, N. M. Carlos A. Zuniga, Owner Laredo Freight Services Inc. Laredo, Tx. Book-Entry Securities Fees Approved A new fee schedule for book-entry U.S. Treasury securities will become effective Oct. 1, 1985. The new schedule will reduce fees for bookentry transfers and eliminate monthly account maintenance fees. The new fees stem from a recent rul ing by the Treasury Department stating that secondary market book-entry securities transfers provided by Federal Reserve Banks should be treated as a fiscal agency activity per formed on behalf of the Treasury and not as part of the regular priced ser vices Reserve Banks offer to financial institutions. As a result, the Treasury determined the following: 1. Any fees charged by Reserve Banks in conjunc tion with Treasury book-entry activities should be clearly identified and collected as Treasury fees. 2. The Treasury will con tinue to impose a fee for transfers of book-entry securities between accounts held at the same or different Federal Reserve Banks. 3. All fees previously im posed for account mainte nance will be eliminated. A book-entry securities transfer generally is comprised of two com ponents—the securities transfer and the accompanying funds settlement. The Treasury determined that the funds settlement portion of the transfer is not a fiscal agency activity and, therefore, a separate price will be charged for it by Reserve Banks. The fee for funds settlement will be 75 cents to cover the direct, support, overhead and float costs associated with the funds settlement activity. Prices established for book-entry securities transfers are $1.50 per trans action for on-line transfers and $6.25 per tra n s a c tio n fo r o ff-lin e transfers—whether sent or received. These prices are in addition to the 75 cents charged for funds settlement. In a d d itio n , the Treasury is eliminating all charges for account maintenance. Previously the monthly fees for this were 50 cents per issue and $15.00 per account. Reserve Banks have been instructed to assess these charges to financial in stitutions on a daily basis. Therefore, the fees for book-entry securities transfers and the related funds settle- ment will be collected daily by direct charges to reserve or clearing ac counts, and not as part of priced ser vice billings. It should also be noted that clearing account earnings credits cannot be applied. Current prices for non-Treasury book-entry securities services will re main unchanged. Treasury Securities Fee Structure Current Prices New Fees On-line Transfers Originated Funds Settlement $ 3.00 $1.50 $0.75 Off-line Transfers Sent or Received Funds Settlement $10.00 Monthly Account Maintenance Per issue Per Account $6.25 $0.75 $ 0.50 $15.00 Nominations Sought for Consumer Advisory Council The Federal Reserve Board is seek ing nominations for 11 appointments to its Consumer Advisory Council to replace members whose terms expire Dec. 31, 1985. Nominations must be received by August 9, 1985. The council was established by Con gress in 1976 to advise the Board on consumer financial protection laws and other topics of consumer interest. Members serve three-year terms and meet in Washington, D.C. three times a year. Coucil members whose terms are ex piring this year include Chairman Timothy D. Marrinan, senior corporate counsel, First Bank System, Inc., Min- neapolis and Vice Chairman Thomas L. Clark, Jr., deputy superintendent of banks, New York State Banking Department. Nominations should be submitted in writing to Dolores S. Smith, Assistant Director, Division of Consumer and Community Affairs, Board of Gover nors of the Federal Reserve System, W a sh in g to n , D.C. 20551. The nominee’s address and telephone number should be included, along with information about past and present positions held and special knowledge or interests related to consumer credit or other consumer financial services. Discount Rate Lowered The Federal Reserve Bank of Dallas lowered the discount rate to 7.5 per cent from 8 percent effective May 20, 1985. The rate is at its lowest level since August 1978 when it was 7.25 percent. The discount rate is the interest rate the Fed charges on loans to other financial institutions. With the exception of the rate in creasing a half of a percent in April 1984, the discount rate has been on a gradual decline since its record high of 14 percent in the spring of 1981. For additional information on the discount rate or other interest rates regarding government securities, call the Dallas Fed recorded message at (214) 651-6177 or metro number (214) 263-1093. DISCOUNT RATE 15 PERCENT > O C/> T | ^ r- > O m r H rn im ° H 3 TT m *a > S x > W cn C D JD u C CD CD O «. % o 3 =3 DH CD - • o CD "O O C o > CZ) zf; >i cn 2 mro ro o ro m CZ) m 30 < m CD > —■ CD =3 "O |D § - 3 S o > > CZ) CD O CL (/)" r 3 CD o ? * © CD 5 3 3 O o 2. 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