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Statement by
Stephen S. Gardner
Vice Chairman
Board of Governors of the Federal Reserve System
before the
Committee on Government Operations
United States Senate
on
S. 2812, S. 3428, S. 2258, S. 2716, S. 2878 and S. 2903
May 24, 1976
It is a pleasure to appear before this Committee
on behalf of the
Board of Governors and to present the
Board's views on S. 2812 and S. 3428 and Senate Bills
2258,
2716, 2878, and 2903.
I am sure the Committee is aware that the Federal
Reserve Board's unique responsibility for monetary policy
not only gives rise to changes in the price and availa
bility of money and credit but also is implemented through
a modest amount of regulation that affects credit flows
in the economy.
But the reorganization bills are not
directed at monetary policy actions, and it might be well
to make this an explicit exception.
I would like to begin by discussing S. 2812.
The Board agrees with the objectives of this bill
as
expressed in the title and the findings and purposes of
the bill.
The proposed legislation was brought to the
Board's attention by Senator Percy.
In acknowledging his
letter, Chairman Burns warmly endorsed the broad and
responsible objectives contained in the proposal and con
curred that the cost of regulation places heavy burdens
on the economy.
I specifically refer to statements in the findings
and purposes that "Government economic regulation all too
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often has become a burden rather than a benefit."
There can be little doubt that regulatory agencies have
contributed to inflation and forced rigidities on our
economy by limiting competition and at times even contribu
ting to "monopolistic and cartel-like market patterns
contrary to the public interest."
The charge that regu
lators have often failed to set clear priorities
and have
contributed to excessive paperwork and delay in the regula
tory process is hard to deny.
The conclusion that regulatory
agencies "consistently fail to take consumer and small business
interests adequately into account" may have been particularly
true in years p a s t ,
but the Congress and the regulatory
agencies are obviously moving to correct this deficiency.
In view of this preface in the Act, it seems
appropriate to point out that in its regulatory role the
Federal Reserve does not set fares or prices or rates charged
to the public.
In addition in the matter of competition,
the Board cannot take actions that it determines to be anti
competitive under the provisions of the Bank Merger and
Bank Holding Company Acts unless these considerations are
ourweighed by other public interest factors of greater merit.
In administering the Acts the Board does deny application
on the basis of anticompetitive considerations even though
such adverse competitive issues are not of sufficient magnitude
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to constitute a violation reachable under antitrust
law.
Appendix A of my testimony is a summary of the
procedures the Board follows in assessing the competitive
impact of bank structural changes.
The Board has also been charged in recent years
by the Congress with a variety of responsibilities to
protect consumer interests.
This is a familiar role since
the Board must frequently work in concert with the Federal
Deposit Insurance Corporation and the Comptroller of the
Currency to protect depositors in prospective bank failures.
Appendix B is a digest of the
Board's regulations and
activities related to consumer protection.
If one compares the title and findings and
purposes stated in both S. 2812 and S. 3428 with the statutes
that the depository institution regulators are charged with
administering and assesses the competitive situation in the
industry being regulated,
it seems clear that much present
regulation of financial isntitutions is entirely consistent
with many of the purposes of the two regulatory reform pro
posals.
I do not mean, however,
to recommend exemption of
the depository institution regulators and their processes
from such reforms.
The regulation of banks and thrift
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institutions does involve considerable paperwork and
often delays the implementation of services that finan
cial institutions can offer.
In addition,
there is some
overlap among Federal agencies in the regulation of deposi
tories and frequently regulators have to face conflicting
mandates in trying to carry out their regulatory responsi
bilities.
I could cite the notorious Regulation Q which
limits the interest paid to small savers and competition
among financial institutions for the expressed and equally
desirable purpose of protecting the supply of mortgage
credit.
In other areas, Congress has frequently addressed
issues that have social merit but conflict with other
desirable goals.
For example, much financial institution
regulation is directed at protecting the public and main
taining sound financial institutions.
But Congress has
also expressed concerns about the availability of
credit
to small business and urban development and housing that
bears a higher than normal degree of risk.
The Board is very impressed with the mounting
evidence of serious interest of Congress and the Adminis
tration in meaningful and objective regulatory reform to
resolve the problems of regulation.
Having already
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endorsed the thrust of S. 2812, we also believe that
S. 3428 should be given careful consideration.
It is
obviously important to include all inter-related industry
regulations in the consideration of each agency reorganiza
tion plan as proposed in the Administration bill.
This is
particularly true, as you know, because both bills are
concerned with rationalizing conflicting Government agency
directives.
We have the further concern that the time
allowed for consideration of each industry or agency
review be sufficient to prevent the sheer size of the
project from affecting the ability of the Adminstration
and the Congress to act judiciously.
The initial date
of planned submission of S. 3428 of January 31, 1978,
may be more realistic than the March 31, 1977, date
prescribed in S. 2812.
We are also concerned about the provision in
S. 2812 which invalidates all rules and regulations of
an agency covered by a reorganization plan 15 months after
its submission, if the Congress has not completed action
on that plan in the meantime.
A rigid provision may result
in inadequately considered legislation changing or recon
stituting existing agencies, or a lapse in regulatory
authority that may be needed in the public interest.
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We believe it would be better not to create a legal
framework in which a regulatory lapse is the forcing
mechanism for action.
On the subject of review of agency regulations,
S. 2258, S. 2716, S. 2878 and S. 2903 all contain a pro
vision for Congressional veto of agency regulations.
Board opposes such a Congressional veto.
The
Delegations of
authority to the agencies to administer laws by rules and
regulations have been made by the Congress in most cases
because the subjects involved are of such technical or
specialized nature that the Congress has concluded they
should be governed by an expert body.
When
Congress
amended the Bank Holding Company Act in 1970, it rejected
the concept that specific holding company activities should
be determined by Congress and committed this responsibility
to the Board of Governors to be exercised under a broad
legislative standard.
We believe it would be a mistake
to take the authority for these determinations and comparable
actions of other agencies away from the organizations charged
with the day-to-day administration of the laws.
It would
seem preferable to consider changes in the governing standards
set forth in the substantive law when the Congress is dis
satisfied with agency administration, rather than to provide
for new procedures that could lead to less efficient adminis
tration.
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Many of the problems which give rise to these
proposals for a Congressional veto could be offset by
improved Congressional oversight.
The Board has recently
proposed to the banking committees a program for Congres
sional oversight of the bank supervision function under which
Congress would review the supervisory process with more fre
quency.
This proposal envisages providing the banking com
mittees with information as to trends of capital,
liquidity,
earnings, classified loans and portfolio losses.
The Board
believes these data and other information about the bank
examination process would provide a factual basis for the
banking committees to evaluate the effectiveness of bank
supervision and regulation.
Similar arrangements for furnishing information
and analyses could be arranged between other regulatory
agencies and the appropriate committees of the Congress
in order to provide for continuing and effective oversight.
S. 2878 also provides for the establishment of
an Office of Regulatory Policy Oversight.
The Board believes
that it is important for the Congress to give attention to
oversight jurisdiction to avoid duplication of oversight
activities and establish standards and principles for such
processes.
A review of oversight organization is as appro
priate as the proposed review of regulations.
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There is much that can be done to improve the
regulation of financial depository institutions but
I must point out
that this subject has received significant
Congressional attention in the last two years.
As you
know,
there have been recent and detailed hearings and Congres
sional interest in many phases of financial institution
regulation.
The banking committees of the Senate and the
House have both had hearings on reorganization proposals
in 1975 and 1976.
Governors of the Federal Reserve Board
have testified before these committees on proposals for
financial agency reorganization on four separate occasions
between July 1975 and March 1976.
Neither committee of
the Congress has agreed to adopt any of the various reorgani
zation proposals submitted to them.
a number of current
In addition,
there are
initiatives germane to the purpose of
this bill in other proposed legislation being debated in
the appropriate Senate and House committees.
Further, the
financial agencies have made a number of changes that are
addressed to improving regulatory procedures and performance.
Federal Reserve Board initiatives are listed in Appendix C.
The Board has also been monitoring the continuing need for
regulations and report forms.
The Board now has under review
an analysis of its regulations by a study group whose objec
tive was to find areas where simplification and reduction of
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regulations could take place.
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Appendix D lists changes in
Board reporting requirements since 1970.
Finally,
I would like to comment briefly on the
U.S. banking industry of itfhich the Federal Preserve is a
primary regulator.
We have supported the purposes and
objectives of S. 2812 and S. 3428 because we believe
that a balanced and objective assessment of banking and
bank regulation is in the public interest.
In this process
analyses of the competitiveness and safety of the banking
system will inevitably be made and contrasts
can be drawn
with the past and with systems developed in other indus
trialized nations.
I expect that attention will be focused
on the performance of banks and bank regulators during
extraordinarily difficult period of 1973-1975.
the
Our recent
experience does give us useful guidelines for improving
regulation and assessing the adequacy of the tools needed
by regulators.
But if we are to achieve effective regu
latory reforms it is also important to achieve a consensus
evaluation of the system.
It is our view that through growing liquidity,
improved earnings, and additions to capital,
the banking
system remains sound with its competitiveness undiminished.
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The Board commends the Committee's initiative in
undertaking this study of
these important, and complex,
problems and we would be pleased to contribute
further work of the Committee.
to the
APPENDIX A
BOARD PROCEDURES FOR ASSESSING COMPETITIVE
IMPACT OF BANK STRUCTURAL CHANGES
In assessing the competitive impact of a bank merger, a
holding company formation, or a proposed acquisition of a bank by
a holding company,
banking markets,
the Board usually focuses on the relevant local
for it is in these markets that bank customers
have the fewest alternatives.
Defining the relevant geographic
market is one of the more difficult aspects of such a competitive
analysis.
Information on prices,
types of services offered, com
muting and trade patterns, and the geographic coverage of local
news media are used to approximate a market boundary.
Local bank
ing markets are usually approximated by counties or metropolitan
areas.
If a holding company already has one or more banks in the
market in which it seeks to acquire another bank, the Board deter
mines the extent to which existing competition would be adversely
affected by the acquisition.
This determination depends primarily
on the market shares already held by the holding company’s banks and
the share held by the bank to be acquired; but factors affecting the
competitive strength of the acquired bank, such as the b a n k ’s
financial condition and management, are also important.
In assessing the competitive effects of a bank merger or
acquisition, it is also important to consider the implications for
the immediate area in which the bank to be merged or acquired is
located.
Because the choice of a bank by a customer is dictated
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largely by convenience considerations,
the number of banking a l
ternatives and other factors affecting competition in the target
b a n k ’s immediate area must be weighed.
If the holding company is not already represented in the
market of the bank to be acquired,
the Board assesses the likely
effects of the acquisition on future competition.
In making this
assessment, the Board judges first the possibility that a holding
company might enter the market de novo (that is, with a newly
chartered bank or branch) or through acquisition of a smaller bank,
should the proposed acquisition be denied.
This possibility depends
largely on the holding company’s characteristics--such as its over
all size and its aggressiveness--and on the general attractiveness
of the particular market.
The Board also determines on the basis
of the present structure of the market the extent to which de novo
or smaller bank entry into the market would be preferable to the
proposed acquisition.
The Board is most likely to give weight to
future competition in cases where (1) the market is concentrated;
(2) the holding company proposes to acquire the largest or one of
the largest banks in the market;
(3) the market is attractive for
de novo entry; and (4) the holding company is one of a few possible
entrants.
In assessing the competitive impact of proposed nonbanking
acquisitions, the Board determines in what product and geographic
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markets the company to be acquired operates, and to what extent,
if any, the holding company’s subsidiaries already compete in those
markets.
Market shares are computed and these are used, along with
other information,
effects.
to judge the magnitude of the competitive
In addition,
the Board considers whether the acquisition
would have any adverse effect on future competition.
APPENDIX B
DIGEST OF BOARD RULES AND REGULATIONS
RELATING TO CONSUMER PROTECTION ACTIVITIES
Regulation Z, Truth in Lending -- Regulation Z implements the Truth
in Lending Act, passed by Congress in 1968, and the Fair Credit Billing
Act, passed in 1974.
The purpose of the Regulation is to give consumers
meaningful, uniform disclosure of the cost of credit at the time a
loan is consummated or a credit card is issued.
The Regulation also
prohibits the unsolicited distribution of credit cards and limits a
consumer’s liability in the event of loss or theft of a credit card to
$50.
The Regulation sets forth specific requirements concerning the
advertising of consumer credit terms.
In addition, Regulation Z speci
fies^ how creditors must respond to billing complaints from consumers.
Regulation B, Equal Credit Opportunity -- Regulation B implements
Equal Credit Opportunity Act, passed by Congress in 1974.
originally enacted,
the
The Act, as
prohibits discrimination on the basis cf sex or
marital status in any aspect of a credit transaction.
Regulation B
defines permissible and nonpermissible activities by creditors, sets
certain record-keeping requirements, and describes available consumer
recourse,
including the filing of complaints with the appropriate regula
tory agency and the provision for individual and class action law suits.
Recent amendments to the Equal Credit Opportunity Act, signed into law
on March 23, 1976, extend the prohibited categories of discrimination
to include age, race, religion, color, national origin, receipt of public
assistance funds, and the exercise of rights under the Consumer Credit
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Prote.cti.on Act.
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The Board is now developing an amendment to Regulation
B to implement the legislative amendments that become effective on
March 23,
1977.
Unfair or Deceptive Acts and Practices -- Under the Federal Trade
Commission Improvement Act, passed in 1975, the Board was given the
authority to prohibit unfair or deceptive acts or practices of banks.
The Act requires the Board to establish a procedure for handling con
sumer complaints concerning unfair or deceptive acts or practices of
State member banks, gives the Board independent rule-writing authority,
and requires the Board to issue rules substantially similar to any
promulgated by the Federal Trade Commission for the rest of the financial
community unless the Board finds that such practices are not unfair or
deceptive with respect to banks, or would severely impair monetary
policy or the payments mechanism.
To date,
the Board has issued two
proposed rules in response to similar FTC action:
(1) the elimination
or limiting of certain credit collection and contract practices,
(2) the preservation of consumer claims and defenses.
and
This latter rule
would essentially eliminate the irholder in due course” doctrine by
relieving consumers, in certain circumstances, of the legal responsi
bility to pay for defective merchandise or servicej purchased on credit.
Fair Credit Reporting -- The Fair Credit Reporting Act, passed in 1970,
requires that consumer reporting agencies adopt procedures to assure
the maintenance of fair, accurate, and timely information in consumer
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credit history files.
The Act also specifies that creditors who deny
credit based on information supplied by a consumer reporting agency
must tell the applicant the name and address of the agency.
The Board
is responsible for enforcement with respect to State member banks.
Proposed Regulation C, Home Mortgage Disclosure -- This proposed
Regulation, published in response to the Home Mortgage Disclosure Act
of 1975, would require depository institutions that are subject to the
Act to disclose publicly where their mortgage loans are made.
The
Act will become effective on June 28, 1976.
Consumer Leasing -- The Consumer Leasing Act amends the Truizh in Lending
Act by requiring the accurate disclosure of the cpsts and terms of
consumer leases and of leasing terms in advertisements.
The Board is
currently preparing a proposed regulation to implement the Act, which
becomes effective March 23, 1977.
APPENDIX C
LIST OF LEGISLATIVE 'RECOMMENDATIONS AND REGULATORY AND ADMINISTRATIVE
ACTIONS TAKEN BY THE FEDERAL RESERVE WITHIN THE PAST TWO YEARS IN THE
AREA OF BANK SUPERVISION AND R E G U L A T I O N ______________ _
Legislative Recommendations
1.
A proposed bill relating to the supervision of foreign banks in
the United States (S. 958, H.R. 5617).
2.
A proposed bill to permit more expeditious handling of problem
bank and bank holding company situations and to permit acquisition
of a problem bank by an out-of-State bank holding company (H.R.
4008, S. 890).
3.
A proposed bill to:
(a) provide civil penalties for violations of
banking laws; (b) place aggregate limits on loans to insiders and
their interests; (c) permit easier removal of officers or directors
of a banking institution; and (d) permit the Board to order dives
titure of a bank holding company subsidiary (S. 2304, H.R. 9743 and
Title I of H.R. 10183).
4.
A proposed bill extending application of reserve requirements to
all depository institutions (S. 2050, S. 1961).
Regulatory Actions
1.
Changes in Regulation A relating to member b a n k s 1 access to longerterm emergency credit.
2.
Amendments to Regulations H and F requiring State member banks to
treat standby letters of credit and ineligible acceptances in the
same manner as loans.
3.
Proposed guidelines for evaluation of requests, and regulatory
changes to increase flexibility in the issuance of notes and
debentures by State member banks (Comments under review).
4.
Change in Regulation Y relating to acquisition by a bank holding
company of its own stock ("Bootstrapping").
Administrative Actions
1.
Increased efforts to identify potential problem State member banks.
2.
Increased efforts to identify potential liquidity problems of all
banks.
3.
Intensified and more uniform follow-up procedures when a problem
bank is identified, including progress reports, meetings with
directors, and special-purpose examinations.
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4.
Uniform procedures relating to identification of bank holding
company liquidity problems and on-site examinations.
5.
Introduction of interagency early warning system regarding sub
sidiaries of bank holding companies.
6.
Initiation of an expanded computerized surveillance system for
bank holding companies.
7.
Expanded efforts to identify risks associated with b a n k s 1 foreign
exchange trading and to improve b a n k s 1 audit and control procedures.
8.
Clarification of limitations on bank extensions of credit to their
holding company affiliates.
9.
Reorganization of the Board’s Division of Banking Supervision and
Regulation in order to strengthen bank and bank holding company
supervisory efforts.
10.
Increased efforts to expand and improve examiner training.
11.
Institution of limited bank examinations for banks with minimal
or no problems in order to insure the most effective use of examiner
personnel.
12.
Issuance of policy statement regarding joint ventures undertaken
abroad by U.S. banks.
13.
Review of all Federal Reserve Regulations with the objective of
simplifying and eliminating Regulations wherever feasible.
APPENDIX D
CHANGES IN BOARD REPORTING REQUIREMENTS SINCE 1970
Recurrent Reports Initiated Since 1.970
A.
Reports Initiated and Continuing
1.
FR 414a - Supplementary Report of Deposits
This weekly report (daily figures) was started
in
1973 when funds raised through affiliates and ineligible
acceptances that were made subject to reserve requirements
under Regulation D.
The report changes depend on Regula
tion D specifications.
In December 1974,
the number of
reporting banks was reduced from 900 to 50 when marginal
reserve reciuirements or large time deposits was eliminated.
2.
FR 502A - Quarterly Report on Foreign Branch and
Liabilities
Foreign branches of member banks located in specified
countries must report their assets and liabilities by country
of address of customer.
This reporting requirement was effective September 30,
1975.
3.
FR 835 a,b - Interest Rates Charged on Selected Types
of Loans
This monthly report by 375 banks was
initiated by the
Committee on Interest and Dividends in 1971 as part of its
Phase I program to monitor interest rates on loans to con
sumers, small businesses, and agricultural operations.
The
report has been continued by the Board and FDIC in view of
widespread interest in these data.
Alternatives to this
report are now under study by these agencies, and changes
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are expected in 1976.
4.
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(See also item IT).
FR 835c - Quarterly Supplement to FR 835a.
This report,
initially by 375 banks, was begun in
1972 as part of the Committee on Interest and Dividend's
Phase 3 surveillance program.
It includes two items on
compensating balance requirements.
this report will be eliminated
5.
It is expected
that
in 1976.
FR 886a - Report of Condition for U.S. Agencies,
Branches, and Domestic Bank Subsidiaries of Foreign
Banks
Monthly report by about 130 institutions,
1973.
begun in
This report is a full balance sheet used for a
variety of analytical purposes and in conjunction with
regulatory actions on voluntary foreign credit restraint
and marginal reserve reauirements.
6.
FR 886b - Report of Condition for Edge Act Corpora
tions Engaged
in Banking
Monthly report by 40 Edge Act Corporations similar
to FR 886a in item 1.5 above.
7.
Form F-1B, Registration of Securities of Certain
Successor Issuers.
This report was added in December 1975,
in order to
conform to the Board's regulation pertaining to State
member bank securities with SEC rules and regulations.
8.
Statement of Changes in Financial Position (Source
and Application of Funds).
This report requirement was added but for which no
- 3 guideline form was designed in order to conform to the
Board's regulation pertaining to State member bank securi
ties with SEC rules and regulations.
9.
FR U-3 - Statement of Purpose of Credit to be Extended
to Third Market Makers
10. FR U-5 - Statement of Purpose of Credit to be Extended
to Block Positioners
11. FR U-6 - Statement of Extension of Time in Respect to
Credit Extended to Block Positioners (under Sections
Sections 221.3(7), 221.3(z), and 221.3(z) respectively
of Regulation U)
These three-purpose statements (9, 10, and 11 above)
that commercial banks must obtain in connection with exempt
credit extended to block positioners and third market makers
were instituted in October 1972 by Board action.
12. FR Y-4 - Application for Prior Approval of an Acquisi
tion Pursuant to Section 4(c)(8) of the Bank Holding
Company Act of 1956, as amended.
This form completed by banks contains information on
proposed acquisitions that require Board approval.
It was
instituted in mid-1971 as a result of the 1970 amendir?nts
to the Bank Holding Company Act.
13. FR Y-8 - Report of Intercompany Transactions and Balances
This is a report of balances and assets transferred be
tween nonbanking subsidiaries and the bank or bank holding
company.
- 4 Report tested during first quarter 1975 with subse
quent reports to be filed quarterly starting with the
third quarter 1975.
14. Report of Negotiable Orders of Withdrawal (NOW)
Accounts (R&S 48)
This report was begun in 1974 to provide data for
monitoring growth in NOW
Accounts and competitive rela
tionships among banks and thrift institutions in
Massachusetts and New Hampshire.
With Congressional action which allowed the expansion
of NOW Accounts to all of the New England States,
the report
is now collected by the Federal Reserve Bank of Boston as
agent for the F H L B B , FDIC, and the Federal Reserve,
from
banks and thrift institutions in the New England States.
This change was effective March 1, 1976.
15. Officers Checks and Deposit Report
This report provides daily information on two items
from the branches and agencies of foreign banks and foreign
investment companies located in New York City that report
monthly on FR 886a (item 1.5 above).
The report was ini
tiated in April 1975 to provide data for use in current
money supply estimates.
16. Treasury Foreign Exchange and Foreign Currency Reports
The Federal Reserve Banks are collection agents for a
number of reports required by the Treasury Department.
Several new reports,
by the Treasury.
listed below, were initiated in 1974
The Treasury's Office of International
- 5 Affairs Reports
is responsible for any changes
in these
reports.
New Treasury Foreign Exchange reports:
B-la
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Monthly Report of Short-term Liabilities to
Foreigners in Selected Countries not Listed
Separately on Form B-l
B-2a
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Monthly Report of Short-term Claims on
Foreigners in Selected Countries not Listed
Separately on Form B-2
B-3a
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Monthly Report of Long-term Dollar Liabilities
to and Dollar Claims on Foreigners in Selected
Countries not Listed Separately on Form B-3
S-la
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Monthly Report of Purchases and Sales of Long
term Domestic Securities by Foreigners in
Selected Countries not Listed Separately on
Form S-l
New Foreign Currency reports:
FC-1
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Weekly Report of Positions in Specified
Foreign Currencies of Banks in the U.S.
FC-la -
Monthly Report of Assets, Liabilities, and
Positions in Specified Foreign Currencies ol
Banks in the U.S.
FC-2
Weekly Consolidated Report of Positions in
Specified Currencies of Foreign Branches
and Subsidiaries of U.S. Banks
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FC-2a -
Monthly Consolidated Report of Assets, Liabi
lities, and Positions in Specified Currencies
o f Fore ign Branches and Subsid ia r ies of U.S. Banks
Reports In it ia ted a nd D isc on L in ueel
1.
Supplement to FR 105 - Consolidated Report of ConditionBank Loan Commitments
Semi-annual
report by about
700 banks b<£*'im in lc)73 t.o
supplement the monthly sample survey (item 11).
Used to
- 6 monitor the volume and usage of loan commitments at
commercial banks, since these factors have important
implications for bank safety and monetary policy.
2.
Supplement to FR 296 - Survey of Time and Savings
Depos its
This monthly report by all member banks, begun in
October 1973, provided data on large time deposits of
$100,000 or more and also on consumer-type time deposits
of $1000 to $100,000 for purposes of monitoring changes
in these deposits
in connection with Regulation Q changes.
The report was discontinued
3.
in May 1974.
FR 414b - Special Reservable Liabilities Report Nonmember
This report was used by nonmember banks that cooperated
voluntarily with Federal Reserve monetary restraint actions
in 1973 and subsequently which placed marginal reserve reciuirements on large time deposits and on funds raised
through affiliates and ineligible acceptances.
A small
number of nonmember banks participated using this report
until December 1974, when marginal reserve reauirements
were discontinued.
4.
Supplement to FR 416 - l7eekly Condition Report of
Large Commercial Banks - Time Deposits Exempt from
Regulation Q Ceilings
This weekly report by the FR 416 sample was initiated
in the summer of 1973 for a short time to monitor growth
in newly authorized consumer time deposit instruments
maturing in four years or more that were exempt from
- 7 Regulation Q ceilings.
This supplement was discontinued
in November 1973 when these instruments were brought back
under interest rate ceilings.
5.
FR 416e - Savings Deposits by Ownership Categories
This report was discontinued because the information
requested was incorporated
in FR 416 - Weekly Report of
Cond it ion .
6.
FR 936 - Monthly Report on Foreign Assets
This report,
started in early 1973, required the r e
porting of claims,
export credits,
and banking institutions.
leases, etc., by banks
In addition, U.S. agencies and
branches of foreign banks also reported foreign liabili
ties.
The report was discontinued at the end of 1974 after
the termination of the Voluntary Foreign Credit Restraint
program.
7.
FR 937 - Quarterly Report on Foreign Assets
This report, started in early 1973, required the re
porting of various kinds of foreign assets by non-finaneia1
institutions and non-profit organizations with foreign
assets of $5 million or more.
It was discontinued in late
1.974 after the termination of the VFCR program.
8.
FR 977 - Quarterly Survey of Bank Accommodation to
Federal Advisory Committee Statement on Lending
Prac tices
This report initiated in October 1974, replaced a
survey of the Joint Economic Committee.
127 banks reported.
- 8 The report supplement data available from other reports
on bank lending to selected borrowers.
The survey was
discontinued in 1975.
9.
Supplement to FR 467 - Interest Rates on Loans to
Business Made During _____ 19___ Inclusive
This supplement was initiated in 1972 as part of the
Phase 3 surveillance program of the Committee on Interest
and Dividends.
It consisted of two items to provide in
formation on whether effective interest rates were being
altered through changes in compensating balance require
ments.
This supplement, which was applied to the 125
member banks reporting on FR 467, was discontinued in
the summer of 1973.
10. Special Survey of Loans to Nonbank Financial Institut ions.
This temporary weekly report by 35 large banks, begun
in late 1974, to provide data on loans to five categories
of financial institutions, was allowed to expire in March
1976.
II.
Significant Changes in Reports Existing on January 1, 1970
1.
FR 18a - Monthly Survey of Loan Commitments
This survey was changed from quarterly to monthly,
and the reporting sample was expanded from about 50 to
140 banks to include some nonmember banks.
The amount
of information requested was reduced by the elimination of
- 9 items on new commitments.
2.
FR 83a-e - Application for Membership in the Federal
Reserve System
These forms which had been in use since 1936
were updated in mid-1974 to better reflect current situa
tions.
Specifically,
three new sections dealing'with
newly formed, non-operating bank, existing bank and "phantom”
bank were added .
3.
FR 105 - Consolidated Report of Condition
As needs for information have changed,
the Consolidated
Report of Condition has been subject to several changes
the body or its Schedules or Supplements.
in
The major changes
are listed.
(a) Schedule B - Maturity of Investment Securities
The amount of information requested on this schedule was
drastically reduced in June 1975 and further change in
March 1976.
Formerly, Schedule B called for listings of
the amounts held of each U.S. Treasury and Federal Agency
security outstanding on the Call Report date.
The revised
form calls for a maturity distribution of three major cate
gories of securities--U.S. Treasury, Federal Agency, and
States and Political Subdivisions and other securities.
(b) Mobile Home Financing.
A supplement to the June
1970 Report of Condition required the reporting of loans
made to finance mobile homes.
Subsequently, and continuing
- 10 to date, reporting of this item was made part of Schedule
A of the Report of Condition.
(c) Large Time Dep osits.
Time Deposits in Denominations
of $100,000 or more owned by (1) Individuals, Partnerships
and Corporations and (2) All Others, was first collected on
a slipsheet with the December 1973 Report of Condition and
has been made a permanent part of Schedule K, to be collected
semi-annually, with the June 1974 Report of Condition.
With
the extensive revision of FR 105, effective March 31, 1976,
Schedule K was deleted and Large Time Deposits (Certificates
and Other) became memoranda
items.
(d) The FR 105 was extensively revised, effective March
31,
1976,to conform with disclosures requirements of SEC.
The basic report was redesigned, Schedules renumbered, and
the information contained in the various Schedules combined
and moved to a more logical place.
The major changes in
reporting requirements was the establishment of a three-way
allocation of the reserve for bad debt loan losses, fre
quency and date of reporting, rounding of information;
changes in unearned income on loans, capital notes and de=
bentures, corporate stock items, and internal changes in
many of the Schedules.
Further changes were the addition of Large Bank Supple
ments to the report.
These are Supplement A - Remaining
Maturities on Selected Loans, B - Maturity Distribution of
Deposits, C - Securities Held in Trading Accounts of
- 11 Domestic Offices and D - Summary of Loan Loss Experience
and Reserve for Possible Loan Lo ses and are required to
be reported by all banks with total consolidated assets
of $300 million or more on their previous year-end condi
tion statement.
4.
FR 107 - Consolidated Report of Income
This report was extensively revised, effective March
1976,
to conform with disclosure requirements of SEC.
The
major changes were to provide for semiannual reporting of
all banks and quarterly for ,flargeM banks,
format for pre
sentation of taxes and net income concepts, detail on
taxes, recording of "extraordinary items," interest on U.S.
Government obligations, reserves for loan losses, and
several others.
5.ER296 - Survey of Time and Savings Deposits
Outstanding and Rates Paid at Close of Business
on
.
The detailed breakdowns of data on this report have
changed several times to take account of changes in Regula
tion Q pertaining to ceiling rates on various types of
time and savings deposits.
A major revision of this report
has been completed and will be implemented in July 1976.
6.
FR 314 - Report of Condition of "Name of corporation"
(Corporations engaged in foreign banking and financing
under the Federal Reserve Act)
Some modifications have occurred since 1970 but
- 12 have been minor--simplification of some items; changes
resulting from changes in regulation, particularly
Regulation D; and changes to parallel the Consolidated
Report of Condition.
7.
FR 414 - Report of Deposits, Vault Cash, and Federal
Funds Transactions
This report has been changed occasionally to reflect
changes in Regulation D pertaining to.reserve requirements.
8.
FR 416 - Weekly Condition Report of Large Commercial
Banks
A memorandum was added to this report in December 1974
to provide data on large time deposits other than nego
tiable CD's of $100,000 or more.
This was not a new
request for data but sbustitued for information previously
requested on the FR 414a report.
The information on time
deposits (discontinued on the FR 414a)
is of such value
in analysis of changes in consumer time deposits that item
was added to the FR 416 report.
This report was amended in 1976 to include the informa
tion on savings accounts formerly on FR 416e and to con
form to changes in the Report of Condition (113d) .
9.
FR 416c
- Report of Loans Sold to and Outstanding
Commercial Paper Issued by Selected Institutions R e
lated to Weekly Reporting
This report was revised in August 1974 reducing the
number of items reported from about 20 to 5 and somewhat
increasing the size of the reporting panel.
- 13 10. FR 41.6d - Offering Rates on Negotiable Certificates
of Deposit.
The reporting banks for this telephone report have
been changed and the maturity intervals have been changed
to specific maturity dates.
11. FR 467 - Interest Rates on Loans to Business Made During
19__ Inclusive
This report was revised in 1971, reducing the number of
loans sampled considerably and incorporating other changes
designed to improve the calculation of interest rates.
If
a proposed new report-survey of Bank Terms of Lending is
approved,
this report will be discontinued in October 1976.
12. FR 571. - Commercial and Industrial Bank Report of
Commercial Credit
With the increasing movement of consumer financing from
permanent construction to mobile homes, a line for reporting
mobile home loans was added in mid-1971.
13.
FR 584a - Instalment Loans for New Automobiles by
Maturity Acquired During (_____________ )
Month, Year
In 1974, the frequency of this monthly report was
changed to quarterly, and the report was simplified to
focus on maturities of auto instalment loans on new
ca r s .
14. FR 584 b - Dealer Cost Ratios and Maturities on Auto
mobile Instalment Loans.
The maturity structure on this report was changed to
- 14 reflect longer maturities on automobile paper.
15. FR 835 - Interest Rates Charged on Selected Types of Loans
In the summer of 1975, this form was divided into FR 835a
and b to separate collection of data on agricultural and small
business loan rates from consumer loan rates.
The small busi
ness prime rate item was dropped in 1975.
16. Form F-4, Quarterly Report, Part B - Borrowing and Eouity
Capital was added in order to conform to the Board's regu
lation pertaining to State member bank securities with SEC
rules and regulations.
17. Form F-7, Initial Statement of Beneficial Ownership of
Securities.
This form, particularly Table II, was rede
signed and expanded in order to conform to the Board's
regulation pertaining to State member bank securities with
SEC rules and regulations.
18. Form F-8, Statement of Changes in Beneficial Ownership
of Securities.
This form, particularly Table II and trans
action price information was redesigned and expanded in
order to conform with the Board's regulation pertaining to
State member bank securities with SEC rules and regulations.
19. Form F-9D, Schedules in support of financial statements Schedule I and II Maturity tabulation of investment securi
ties were changed to require market value entries in order
to conform to the Board's regulation pertaining to State
member bank securities with SEC rules and regulations.
20. FR U-4a,m - Annual, Monthly Report of Outstanding Loans
- 15 to Purchase or Carry Securities
One item of information - loans not secured by stock for
the purpose of purchasing or carrying securities - was deleted
in early 1973.
21. FR Y-5 - Registration Statement
This report was changed
in 1971. to enable the Board to
obtain information considered necessary or appropriate for
its deliberations under the amendments to the Bank Holding
Company
\ct.
22. FRY-6 - Bank Holding Company Annual Report.
A supplement was added to this report in 1976 to provide
financial
information with standard definitions that could
be used for the computer screening program.
Ill.
Reports in Existence in 1970 and Since Discontinued
1. FR105-Supplement to Consolidated Report of Condition Credit Cards.
This supplement was initiated with the December 1970
Consolidated Report of Condition and continued on an annual
basis until December 1973.
Data collected
included type of
plan,amounts outstanding, retail sales, cash advance, number
of merchants, and gross revenue.
2. FR 105 - Schedule K - Supplemental Information on Trading
Account Securities and Federal Funds Sold and Securities
Purchased Under Agreements to Resell.
This schedule was dropped and the information included
in other Schedules in the revision of the Report of Condition
- 16 March 1976 (II 3c and d)
3. FR 220, 220a - Report of an Af filiate,also Publisher’s
Copy
Report contained descriptive information about bank
affiliates.
The report was started in 1933.
National banks
have not been required to report since 1961, and the report
was waived for State member banks in 1973.
4.
FR 501 - Monthly Report of U.S. Dollar (Eurodollar)
Deposits and Direct Borrowings
This report was initiated in 1969 to provide informa
tion on maturity of liabilities of foreign branches.
The
report was discontinued in 1973 after four years when a
determination was made that the data was not of sufficient
value to warrant continued collection; similar information
was available from other sources.
5.
FR 503 - Annual Supplement to Monthly Report on Foreign
Branch Assets and Liabilities (the FR 502)
This report was initiated in 1969 to provide data needed
for the Interest Equalization Act program.
The report was
terminated in 1973 when the Treasury Department determined
that it was no longer needed for supervision of the program
due to the small volume of foreign branch operations covered
by the report.
6.
Voluntary Foreign Credit Restraint Program
This program resulted in the initiation of several
foreign asset reports--FR 391, 391a monthly, and 392, 392a
quarterly--in 1965.
These reports provided data on foreign
asset holdings of banking and nonbank financial institutions
and were terminated with the program in 1974.
@FedFRASER