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Federal Reserve Bank of Dallas



November/December 1986

Volume 5, Number 9

Savings Bonds interest decreases
Due to a decline in the key market
interest rates, the guaranteed
minimum for Series EE U.S. Savings
Bonds has also taken a dip. Effective
Nov. 1, 1986, the guaranteed
minimum became 6.0 percent, down
from 7.5 percent for bonds purchased
between Nov. 1, 1982 until Oct. 31,
Also, on November 1, the semi­
annual interest rate went to 6.06 per­
cent, from 7.02 percent for the
previous six months from May 1
through Oct. 31, 1986. Semiannual
market-based rates are announced
each May and November, based on 85
percent of the market rates on fiveyear Treasury securities during the
preceding six months. These rates, in
turn, form the basis for the rate on a
bond held five years or longer.
The current minimum rate will af­
fect all EE Bonds purchased on and
after Nov. 1, 1986, until such time as
market conditions may again require
a change. Older bonds will retain
their original or current extended
maturity period and their minimum
guaranteed returns—generally, 7.5
percent or higher depending on the
age of the bond.
In addition to the decline in the
guaranteed minimum, new Series EE

Bonds will have a maturity period of
12 years. Savings Bonds maturities
are based on the time it takes a bond
to increase in value from its issue
price to face amount at the minimum
rate current at the time of purchase.
If the market-based rate applying to a
bond is higher than the current
minimum, it will double in value
(reach its face amount) sooner, and
continue to earn interest to maturity.
Bonds held less than five years earn
interest at fixed, graduated rates
depending on how long they are held
and the scale in effect on the date of
Those holders of HH and H Bonds
will experience similar changes.
Beginning Nov. 1, new issues of
Series HH Savings Bonds, available
only in exchange for Series EE and E
Bonds and Savings Notes with com­
bined redemption values of $500 or
more, will earn interest at a flat 6.0
percent rate over a 10-year maturity
period. Older HH and H Bonds retain
their current interest rates to the end
of their current original or extended
maturity periods. Interest on both H
and HH Bonds is paid semiannually
by check or by direct deposit to the
owner’s account at the financial in­
stitution of their choice.

Savings Bonds continue to be a
cost-effective way to manage a por­
tion of the public debt. Periodic revi­
sions in the current minimum rate to
reflect changes in the cost of market
borrowing will provide the Treasury
with a continued source of costeffective borrowing, while assuring a
competitive rate of return for the
small saver and investor.
Treasury officials report that since
speculation began earlier this year
that a reduction in the guaranteed
minimum rate was being considered,
savings bond sales have increased
dramatically. The Treasury said about
$1.2 billion of Series EE Bonds were
sold during August, the largest
amount for any month since the
government began offering variablerate savings bonds nearly four years


‘American Eagle’ coins heralded
The Federal Reserve Bank hosted a
continental breakfast reception on
Friday, Oct. 10, to introduce the new
“American Eagle” gold coin series, as
well as to honor Mi ley Busiek, a
Dallas artist whose “ Family of
Eagles” design is displayed on the
The coins, currently sold through
coin shop dealers, brokerage firms,
and some financial institutions, can
be purchased in $50, $25, $10 and $5
denominations. Weights of the coins
are one-ounce, half-ounce, quarterounce, and one-tenth ounce, respec­
Prices of each of the coins in the
“American Eagle” coin series fluc­
tuate day-to-day with the market price
of gold per ounce, plus a premium is
charged by each of the distributors.
Dallas Fed President Robert H.
Boykin welcomed some 135 members
of the community in attendance while
First Vice President William H.
Wallace introduced the keynote
speaker, Katherine D. Ortega,
Treasurer of the United States.

Hugh G. Robinson, a Dallas Fed Board
member and president of Cityplace
Development Corporation, shakes hands
with Tom Landry, Dallas Cowboys head
football coach, at the gold bar exhibit dur­
ing the ceremony which honored Ortega
and Busiek.

Ortega told the crowd of many
local business persons that the U.S.
expects to sell 2.2 million ounces of
the coin in its first year, which would
add up quickly at approximately $400
an ounce.
Ortega gave some background on
how Busiek had to solicit letters to
local business persons and members
of Congress in order to receive an en­
dorsement from Congress for her
design to be accepted.
Busiek told those in attendance
that she used the “eagle family” on
the coin series design since it is an
important national symbol. In her opinion, the purpose of the design
symbolically represents the United
States of America as a peace-loving,
caring nation.
“The adult family of the American
Bald Eagles depicts strong leader­
ship, compassion and unity of pur­
pose,” stated Busiek.
"The newly-hatched eaglets are
positioned with one slightly separated
from the mother and the other nestled
in her wing; the first represents youth,
depicting those who are equipped
and eagerly anticipating the
challenges of the future. The second
stands for those among us who need
special care and nurturing. In this
way, every American possesses per­
sonal worth and dignity, added
The design contains an olive
branch, which Busiek feels sym­
bolizes our responsibility to pass on
our heritage of peace, democracy and
In conclusion, Busiek stated, “ It is
my hope that every American can
identify with some element of this
design and know that it personally
honors them and the values we hold
dear in this great nation. And, as
these coins are exchanged
throughout the world, it is my dream
that the design will symbolically carry
an uplifting message of hope and

Miley Busiek, Dallasite designer of the
new “ American Eagle” gold coin series,
stands next to Katherine D. Ortega, U.S.
Treasurer, at a reception hosted at the
Dallas Fed to honor them.

Credit guidance offered
Interested in learning more about
business credit and the protections
provided by the Equal Credit Oppor­
tunity Act? Then, the Federal Reserve
Bank of Dallas has a new pamphlet
for you—“A Guide to Business Credit
and the Equal Credit Opportunity
The pamphlet, written to facilitate
and improve access to credit for
business owners (particularly first­
time borrowers), describes the credit
application process from the lender’s
perspective and provides guidance on
the preparation of effective loan pro­
posals. In addition, it explains how
the business applicant must be in­
formed of a lender’s reasons for a
credit denial.
The booklet was prepared in con­
sultation with the National Associa­
tion of Bank Women, the Consumer
Bankers Association, the Independent
Bankers Association of America, the
National Bankers Association and
U.S. Small Business Administration.
The Dallas Fed will mail copies of the
pamphlet to those who contact the
Public Affairs Department at (214)

New exchange rate index created
W. Michael Cox, a senior
economist and policy advisor at the
Federal Reserve Bank of Dallas, has
developed a new exchange rate index.
Cox, who became interested in
trade and exchange rates in doing an
economic forecast for 1986, projected
a 3 percent growth in real GNP for
1986, assuming that the dollar would
decline by 5-10 percent during the
year. The results Cox expected to see
from the declining dollar were im­
provements in the U.S. international
trade deficit and a boost to the na­
tional economy.
Instead, when the trade deficit
worsened and GNP growth slowed,
Cox did more research to see what
had happened. He found that the
dollar had not declined as much as
had been claimed by standard
measures of the dollar’s value.
“The answer is in the exchange
rate indexes. Most of them contain
the currencies of only 10 to 22 coun­
tries, whereas the U.S. presently
trades with 131 countries,” Cox said.
Cox expanded the existing

10-country index used by the Federal
Reserve Board to include the curren­
cies of all 131 U.S. trading partners,
and thus termed his dollar index the
X-131 Dollar Index (“X” for exchange
rate and “ 131” to indicate the number
of countries involved).
Using this new index, Cox found
the dollar’s decline over the past 20
months to be just 6 percent, as op­
posed to the 34 percent reported by
the Federal Reserve Board in their ex­
change rate index computation.
“ National policy succeeded in forc­
ing down the value of the dollar
relative to the countries with which
the U.S. attempted to coordinate, but
not relative to other countries’ curren­
cies, against which the dollar has ac­
tually appreciated over the same
period,” added Cox.
In studying this issue, Cox found
that the goods of Europe and Japan
have become relatively much more ex­
pensive over the past few years while
those of Latin America, Canada, the
Pacific Newly Industrialized Coun­
tries, and the rest of the world have

ACH postal conversion
U.S. postal service employees na­
tionwide are beginning to see a
change in the way they are paid. As a
result of a new program, these
employees get their payroll checks in
one of two ways. They can receive a
paper check or they can have a direct
deposit payment made to the finan­
cial institution of their choice through
the automated clearinghouse (ACH).
This is a change from the past, where
an employee could have the paper
check delivered to their institution. In
an effort to streamline operations,
this option is no longer available.
“The postal conversion, which took
place in October for approximately
600,000 employees, is one stage of ef­
forts by the Federal Reserve and U.S.
Treasury to convert all U.S. govern­

ment, civilian, military and postal ser­
vice employees payroll checks to
direct deposit,” said Larry Ripley,
assistant vice president of ACH
operations at the Dallas Fed.
“ Direct deposit is growing in
popularity amoung our customers for
payroll check services because
employees have access to their funds
earlier on payday and employers don’t
have to contend with replacing lost
checks,” added Ripley.
Financial institutions that choose
to receive postal service or other
government payroll related checks
through ACH will not incur any addi­
tional charges for that service. For
more information on ACH direct
deposit, contact Larry Ripley at (214)

become relatively cheaper. Thus Cox
feels that, rather than seeing big
reductions in the U.S. international
trade deficit, we will mainly be
substituting one country’s products
for another’s which will result in
changes in the pattern of U.S. trade.
Cox, an economist at the Dallas
Fed for the past two years, holds a
Ph.D. in economics from Tulane
University. He writes articles on
economics for Dallas Fed publica­
tions and for national journals.
In January 1987, the Dallas Fed will
begin a new monthly statistical
release, "Trade-Weighted Value of the
Dollar”, that will contain the X-131 In­
dex. In addition, it will include related
data on the dollar’s value interna­
tionally. The annual subscription fee
for this release is $48.00. Anyone in­
terested in having their name added
to the mailing list should send a
check or money order made payable
to the Federal Reserve Bank of Dallas
and mail to: Public Affairs Depart­
ment, Federal Reserve Bank of
Dallas, Station K, Dallas, TX 75222.

Tell Us Your Story
The Dallas Fed’s Community
Affairs Office hopes to serve as
an important source of informa­
tion on community development
issues and techniques. We’re
anxious to learn of instances
where banks have contributed to
their communities’ economic
and social development. Future
issues of Roundup will publicize
these examples. Don’t be shy!
Let us know of your accomplish­
ments. Write us at: Community
Affairs Office, Federal Reserve
Bank of Dallas, Station K,
Dallas, TX 75222.

Pricing set on binders
Sets of binders containing
Federal Reserve System
regulations and Dallas Fed
operating bulletins are
available to financial institu­
tions and the general public
from the Federal Reserve
Bank of Dallas. There is no
limit on the number of sets
that can be requested. There
is a charge of $30 for han­
dling and postage for each
two-volume set. Checks or
money orders should be
made out to the Federal
Reserve Bank of Dallas and
sent to the Public Affairs
Department, Federal Reserve
Bank of Dallas, Station K,
Dallas, TX 75222.

On September 11, the Dallas Fed hosted a joint meeting of the boards of directors of the
Federal Reserve Banks of Dallas and Kansas City. The directors discussed issues of
mutual concern, including agriculture and energy. Pictured above are (from left) Robert H.
Boykin, President of the Dallas Fed; Robert Guffey, President of the Kansas City Fed;
Robert D. Rogers, President and Chief Executive Officer of Texas Industries, Inc., Dallas,
and Chairman of the Dallas Fed Board; Irvine 0 . Hockaday, Jr., President and CEO,
Hallmark Cards, Inc., Kansas City, and Chairman of the Kansas City Fed Board; and
Robert G. Lueder, Chairman of the Board, Lueder Construction Company, Omaha,
Nebraska, and Deputy Chairman of the Kansas City Fed Board.

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