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Federal Reserve Bank of Dallas

May 1986



Volume 5, Number 5

Security controls addressed
At a recent Dallas Fed conference
on computer security, many ideas
discussed were aimed at preventing
computer fraud. The computer secur­
ity conference was designed to assist
Eleventh District depository financial
institutions in ensuring the integrity
of computer systems within their
Participants learned that, of the

$100 billion lost annually in financial
transactions, 83 percent is lost
through electronic funds transfers,
while 12 percent is lost through
checks and only five percent through
cash transactions.
These statistics are the reason the
Dallas Fed developed the computer
security conference and why the
Federal Reserve System plans to en­

crypt its total national FedWire net­
work by the end of 1987. Encryption is
encoding and decoding computer in­
formation to make it unintelligible
other than between authorized
Speakers with a variety of back­
grounds attended the conference to
cite individual incidences of computer
fraud and how corporations could
have curtailed it.
Robert Huber, president of Dataline
Corporation, Minneapolis, stressed
that employee guidelines and pro­
cedures will be what saves com­
panies from this unfortunate white
collar crime.
Statistics he obtained from the FBI
indicated that seven percent of these
crimes are committed by specialists,
while 35 percent are done by skilled
laborers. “The bulk (58 percent) of
white collar crimes are committed by
clerical or data entry clerks,” Huber
Huber cited figures from the
Uniform Crime Report as follows: In
1980, 7300 bank robberies averaged a
$6,100 loss per robbery, while 6800
(Continued on page 2)

First Vice President W illiam H. Wallace welcomes participants to the Security con­
ference. Speakers Frank W. Abagnale, Jr. (left), author of C atch Me If You Can, and Neil
B. Ryan, (right) FRB senior vice president, are seated at head table.

■ PENNIES SAVED__________

Treasury changes U.S. currency
As an additional anticounterfeiting
deterrent, the U.S. Treasury will soon
modify the production characteristics
of United States currency.
The decision to alter our national
currency arose out of an acknowledg­
ment of the advancing technology in
color reproduction. Widespread ac­
cess to sophisticated copy machines
suggested to the Treasury and
Federal Reserve officials that
response to this development was
In announcing the forthcoming
changes, the Treasury stressed that
no major design or color change was
contemplated and reassured that the
move would not affect the value and
negotiability of existing currency.
A security thread is the main
change contemplated at this point. A
clear, polyester thread will be incor­

porated into the paper. It will be ar­
ranged vertically, through a narrow
clear field on the notes and will be
able to be seen with the human eye
when held to a light source. Each
denomination is expected to have a
distinctly identifiable printed pattern
on the thread.
On all notes except the one dollar,
the thread will be located between
the left border of the face of the note
and the Federal Reserve seal. On the
one dollar note, the thread will run be­
tween the Federal Reserve seal and
George Washington’s portrait. The
thread, embedded in the paper used
for U.S. currency, will only be able to
be detected with transmitted light.
Copiers use reflected light and are
unable to reproduce the patterns on
the thread.
Secondly, there will be microprint­

ing on the face of the note. The words
“ United States of America” will be
engraved repeatedly around the por­
trait on the face of the note. Few
copiers now have the capability to ac­
curately reproduce this kind of
These new features are expected to
deter the casual counterfeiter and
complicate the task of the profes­
sional counterfeiter.
Both the new and existing currency
will circulate as legal tender. Over
time, the old currency will be removed
from circulation in the normal course
of currency processing at the Federal
Reserve banks and branches.
Production of the new currency is
scheduled to begin in about a year
and the first notes will enter circula­
tion three to six months later.

institutions label classified informa­
tion as “ proprietary,” “ restricted,” or
“ private” where each case applies
and to try to limit the number of
passwords given for each class of
They also encourage financial in­
stitutions to install recognition and
incentive programs in order to keep
valued employees on the staff.
Carlton added, “When people are
careless with information, you can be
assured others will use that informa­
tion.” A former employee represents a
dangerous threat, particularly if
he/she remains in the same industry.
Frank W. Abagnale, Jr., author of
Catch Me If You Can and president of
his own consulting firm in Tulsa,
Oklahoma, pointed out many in­
teresting facts about forgery and how
financial institutions can alert their
tellers to be aware of forgers.
His statistics showed that the
average forged check averaged
$140.50 in 1985 compared to $26.40 in
1980. “ Forgers get 410 times more
money than bank robbers and a mere

eight percent are convicted,” says
Abagnale. He also pointed out that
since 1954, 70 percent of all white
collar crimes have been committed in
the last quarter of the year.
Abagnale suggests that financial
institutions should be alert of clients
who have low balances in their ac­
counts and want to make large check
Abagnale stressed three points for
tellers. First, that they know all
Federal Reserve Banks’ District
numbers which are encoded along the
bottom edge of the check. He said
that “ Nine out of ten forged checks
have an incorrect Federal Reserve
Bank routing number." Secondly, that
tellers should make sure the check is
perforated along at least one edge.
Finally, that tellers should inspect the
magnetic numbers at the bottom of
the check because they should not
shine or have a reflection (glare)
come off them when held under a
direct light. “ If they do shine,
chances are the check may be worth­
less,” concluded Abagnale.

Security, cent.
bank frauds averaged a $34,000 loss
per fraud. Between 1978-80; however,
1102 cases involving computer crime
averaged $437,000 in losses per
Roger A. Shaw, Jr., national data
security programs manager for IBM’s
information systems group, Irving,
Texas, stated “Outsiders are only
responsible for five percent of com­
puter fraud. Fifty to eighty percent of
computer loss comes through a com­
pany’s own employees.’’
Shaw’s main theme was that secur­
ity is a management issue. It is
management’s responsibility, he
believes, to set and enforce a cor­
porate policy.
Stephen A. Carlton, president of
Security Analysts, Inc., Minneapolis,
also reemphasized this point by
noting that, “ In a competitive in­
dustry, especially banking, the protec­
tion of information is essential. Don’t
try to do anything (to curtail computer
crime) you can’t keep up as a
The experts stressed that financial

Customer Assistance Division expands

Pennies saved

The Federal Reserve Bank of Dallas
is pleased to announce the further ex­
pansion of its Customer Assistance
Division. Effective immediately, finan­
cial institutions located in the Dallas
office territory will be able to call
Customer Assistance to obtain infor­
mation regarding cash letter ad­
justments. In addition, inquiries
regarding Treasury Tax and Loan ac­
counts, reserve account information
on securities debits and credits, and
requests for information about cash
services will be handled by Customer
Assistance. Special direct telephone
lines have been installed to speed
processing of calls. Institutions
located in the El Paso, Houston and
San Antonio branch territories should
continue to call operating depart­
ments directly—except for questions
regarding reserve account state­
ments, which can be directed to
Customer Assitance.
The Customer Assistance Division
serves as a central contact point and
will make sure questions and prob­
lems are handled and resolved. Cur­
rently, questions related to federal
reconcilement, verification of reserve
account balances for reserve account
maintenance and missing bundles
from cash letters are handled by
Customer Assistance.
Throughout 1986, the Customer
Assistance area will be expanded to
accommodate questions relating to
other Fed services. By handling these
questions at a central location, the
Customer Assistance Division will be
able to serve institutions better and
more efficiently. Financial institutions
will be informed by circular as each
new function is added to the
Customer Assistance area.
The Customer Assistance Division
was created in January of last year
and originally served financial institu­
tions connected to the Bank’s
RESPONSE network—which provides
on-line electronic access to Federal
Reserve services. Expansion to serve
all types of institutions began this
past January and will be done on a
step-by-step basis throughout 1986.

In a special survey recently con­
ducted for the U.S. Mint by the
members of the Epcot Center in Walt
Disney World, nearly 12,000 visitors
were polled about their coin usage.
The Epcot Poll showed that half of
the adult respondents use their pen­
nies daily, but four out of ten save
them and nearly six out of ten
children save them. More than onethird of the adults reported having
more than $10 worth of pennies at
Results indicated that more than
one-third of the adults reported hav­
ing more than $10 worth of pennies at
In 1985, the U.S. Mint produced 11
billion, 330 million pennies, but not all
of those remain in circulation today.
One might ask...what really happens
to pennies? Well, half of the adults
surveyed reported using pennies
daily, while half of those who save
pennies eventually take them to the
The remainder either say they col­
lect pennies or “just save them.”
Three percent of those surveyed
throw pennies away.
Results indicate that men are more
likely to save pennies than women.
Also, the younger the respondent the
greater the likelihood of their saving
On average, the adult respondents
report an average of $9.93 worth of
pennies at home—that’s nearly one
thousand pennies. Children under 18
report an average of $10.77.
The Epcot Center also reported to
the Mint that quarters are the most
widely used coin, with half dollars the
least used.
As far as the most and least used
coins go, nine out of ten use quarters
most, while 79% use the half dollar
least. Second on the least-used list
was the penny.
The Epcot Poll is a daily activity at
Epcot Center’s Electronic Forum con­
ducted in association with the market
research firm of ASK Associates, Inc.
Sampling size for this survey was
10,532 U.S. adults and 1,462 under 18.

For questions relating to the follow­
ing, call Customer Assistance:

• Adjustments
• Federal reconcilement
• Treasury Tax and Loan account
• Verification of reserve account
• Missing cash letters
• Information of the Dallas Fed’s
automated cash ORDERECORDER
• Currency and coin related debits/
credits on reserve account
• Securities related debit/credits
on reserve account statements
• General information on cash
Customer Assistance Numbers

Louisiana and
New Mexico

(214) 698-4246
(800) 443-1548
(800) 527-9200

Effective May 1, 1986,
the transaction fee for
interregional ACH pre­
sorted deposits was
reduced from 1.2 cents
per item to 1.0 cent per
item for the remainder
of 1986. This announce­
ment is made with the
understanding that the
fee may be revised
when fees for 1987 are

New Mexico economic conditions
New Mexico is expected to ex­
perience difficult times in 1986 and
1987, as national economic forces
work against the state, according to
Richard Zimmerman, economist for
New Mexico Business.
Zimmerman believes the state
revenue picture will be damaged by
the unexpected drop in oil prices. He
also believes more marginal pro­
ducers will stop drilling as their costs
surpass world oil prices.
As a result of the Gramm-Rudman-

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Hollings bill, Zimmerman expects
New Mexico’s large government sec­
tor to remain flat. He sees the effects
of Gramm-Rudman-Hollings hitting
New Mexico’s revenue sharing, social
services and defense.
Also, New Mexico’s economic
growth tapered off during 1985. Dur­
ing the first half of the year the state
experienced modest growth; however,
with the exception of the Albuquer­
que economy, the second half was
not quite as fruitful.

According to the New Mexico
Business Current Economic Report,
slower economic growth has evi­
denced in mining, manufacturing, and
construction sectors.
Moderate employment gains were
seen in trade and services, while
growth in personal income slipped
during 1985 due to less employment,
smaller wage increases and lower in­
terest rates.