Z o Federal Reserve Notes FEDERAL RESfiWEefiQN&PF SAN FRANCISCO • OCTOBER 1975 Serving Alaska, Ari26nwpOati|©iRia, Hawaii, Idaho, Nevada, Oregon, Utah & Washington NOV 4 ig7g FEDACT.VATES L"»RAR* WHAT THE NEW LAWS MEAN CONSUMER AFFAIRS UNIT The Fair Credit Billingand Equal Credit Opportunity Acts passed by Congress A consumer-affairs unit has been and approved by the President last year became effective on October 28, formed by the Federal Reserve Bank 1975. Both pieces of legislation will have a major impact on consumer-credit of San Francisco to assist consumers matters. Here are some of the key points which bankers should know about and businesses in understanding these laws. their rights and responsibilities under the Federal Government's new fair- Q. What is the purpose of the Fair Credit Billing Act? credit legislation, President John J. A. The Fair Credit Billing Act is an extension of the Truth in Lending Act. The Balles has announced. purpose of this legislation is to assist consumers in resolving credit-billing "This complex new legislation could disputes in a fair and timely manner. The act prohibits certain billing and not be implemented until new regula credit-card practices. tions were set in place," Balles said. Q. What is the purpose of the Equal Credit Opportunity Act? "With the help of voluminous com ments from a large number of interest A. This act prohibits discrimination on the basis of sex or marital status with groups, the Federal Reserve has now respect to any aspect of a credit transaction. developed a detailed set of regula tions to govern problems arising in the Q. When do these laws go into effect? consumer-credit field. OurConsumer Banking Affairs Unit will interpret A. Federal Reserve Bank regulations implementing the Fair Credit Billing and these regulations for consumers and Equal Credit Opportunity Laws became effective on October 28, 1975. creditors in the nine Western states." However, there is a transition period for some provisions, to allow enough time for the printing of new forms as well as the implementation of technical Balles said the new unit will process program modifications and operations changes. This transition period has inquiries and complaints regarding been provided to allow creditors reasonable time to comply with the provisions of the Fair Credit Billing provisions involved. Act, which is a new part of the existing Truth-in-Lending Act. The Consumer Q. What creditors are covered by this legislation? Banking Affairs Unit will also handle problems arising under the Equal A. Institutions which regularly extend credit to individuals, such as banks, Credit Opportunity Act, which forbids finance companies, department stores, credit-card issuers and govern discrimination by creditors on the ment agencies. basis of sex or marital status. Most of the provisions of this legislation A. What Federal agencies are responsible for administering these provi became effective on October 28. sions? Several federal agencies are respon sible for administering various A. The Federal Reserve System was given the responsibility for writing the aspects of this important new law, but implementing regulations, as well as enforcing the provisions for such the Federal Reserve has played a key creditors as state-chartered banks who are members of the Federal role by drafting the basic regulations Reserve System. However, other federal agencies also have supervisory governing this activity. responsibility with respect to the new laws. In addition to the Federal Reserve System, these include the Federal Trade Commission, the "We believe an immediate need Federal Deposit Insurance Corporation, the Comptroller of the Currency exists to inform consumers of their and nine other Federal agencies. (continued on page 2) NEED INFORMATION? HERE'S WHO TO CONTACT

If you have questions about Truth in Lending or Equal Credit Opportunity as they may apply to a particular business, you may get further information from the federal agency which enforces the law for that business. These agencies, and the businesses they cover, are listed below.

Business Address Telephone

Retail, Department Stores, Consumer Finance Division of Consumer Credit 556-1270 Companies, and all Other Creditors not Federal Trade Commission Listed Below 450 Golden Gate Avenue San Francisco, CA94102

National Banks Regional Administrator of 781 -4438 National Banks 555 California Street San Francisco, CA 94120

State Chartered Banks that are Members of Federal Reserve Bank of 397-1137, the Federal Reserve System San Francisco ext. 308 Division of Consumer Affairs or 392 400 Sansome Street San Francisco, CA 94111 O. P. Celli State Chartered Nonmember Banks that are Regional Director 556-2736 Insured by the Federal Deposit Insurance Federal Deposit Insurance (continued from page 1) Corporation (FDIC) Corporation 44 Montgomery Street new rights under this legislation and San Francisco, CA 94104 to communicate with creditors con Savings Institutions Insured by the Federal Manager of Supervision 981-1001 cerning their expanded obligations," Savings and Loan Insurance Corporation and Federal Home Loan Bank of Balles said. "Our intent is to serve Members of the Federal Home Loan Bank System San Francisco both parties to a transaction, so that (Except for savings banks insured by FDIC) P.O. Box 7948 San Francisco, CA 94120 the public interest is served in an equitable and efficient manner. Federal Credit Unions Regional Director 556-6277 Unquestionably there will be a tran National Credit Union Administration sitional period of adjustment in many 760 Market Street cases, since new forms, procedures San Francisco, CA 94I02 and training will have to be devised Airlines and Other Creditors Subject to Director, Bureau of Enforcement and instituted by literally thousands of Civil Aeronautics Board Civil Aeronautics Board organizations across the nation." 1825 Connecticut Avenue, N.W. Washington, DC. 20428

Balles said the new Fed unit has Meatpackers, Poultry Processors and Other Packers and Stockyards direct jurisdiction over consumer Creditors Subject to Packers Administration credit matters relating to state- and Stockyards Act Department of Agriculture Washington, D.C. 20250 chartered commercial banks which are members of the Federal Reserve Federal Land Banks, Federal Land Bank Farm Credit Administration System. However, the Federal Re Associations, Federal Intermediate Credit 490 L'Enfant Plaza East, S.W. Banks and Production Credit Associations Washington, D.C. 20578 serve will have an impact across the entire spectrum of consumer-creditor transactions because of its role in FED REDUCES CERTAIN RESERVE REQUIREMENTS developing credit regulations. Fur thermore, the Fed will act as a The Federal Reserve Board of Gover Under the restructuring action, re clearinghouse for consumer inquir nors this month reduced reserve serve requirements on these long- ies, referring individuals to the proper requirements on member-bank time term deposits will be reduced from 3 government agency authorized to deposits with an original maturity of percent to 1 percent. In no case, investigate their concerns. four years or more. The action will however, may the average of re release about $350 million in reserves serves on time-and-savings deposits The key contact point in the San to the banking system. at each bank be less than 3 percent, Francisco Reserve District will be the the minimum level specified by law. Consumer Banking Affairs Unit at the This action is designed primarily to San Francisco office, headed by encourage banks to lengthen the The new reserve ratio will apply to the Oscar P. Celli, Credit and Consumer structure of their liabilities. It will also level of deposits beginning the week Affairs Officer. Consumer units have help meet seasonal needs for bank of October 16-22, and will affect also been established at the Bank's reserves and facilitate moderate required reserves beginning the other offices in Los Angeles, Portland, growth in the money supply. statement week of October 30- Seattle, and Salt Lake City, ijf November 5. Ijjjfp "aMW* - New Member Bank EL CAPITAN NATIONAL BANK JOINS SYSTEM

Early this year a group of Northern ers, Sonora sees a steady stream of California, heads a staff of 11 at the California businessmen mailed off campers, fishermen, hunters and facility. James K. Angelo is Vice their application for a charter for a nature lovers. As the gateway to President, and George Langley is new National Bank. The group was Yosemite National Park and the high Cashier and Director of Operations. representative of the citizens who are Sierra, the community is a magnet for active in the affairs of a small but vital thousands of Californians and out-of- "We're a growing community," says city—a doctor, a druggist, a banker, state visitors. President Ward, "with a vigorous an undertaker, the publisher of the economy that banks on cattle, agri local newspaper, and the owner of the According to Chairman Maurice R. culture, lumber and tourism. Sonora is local telephone company. Foster and President Bill Ward, the also attracting many retired persons progress of the new bank has been who are moving into the foothills from

This summertheir El Capitan National •• .1 California's large cities." Ward added Bank opened its doors for business as that Sonora is a "must" on every a new member of the Federal Reserve traveler's list. -% System. The bank's assets include not only a capitalization of $1 million, BORROWING COSTS RISE but also its location in the heart of the Mother Lode gold country in Sonora, Business borrowing costs at major California. Sonora retains much of the West Coast banks rose in August, architecture of its historic golden bringing a halt to the downward trend past. Its buildings, like those in the which began last fall, according to the nearby state historic park of Colum latest quarterly interest-rate survey bia, California, reflect a bygone era conducted by the Federal Reserve when millions of dollars of precious Bank of San Francisco. Following the yellow metal were mined and pro August survey, however, the pressure cessed following the 1849 gold rush. on rates again eased, reflecting a shift in monetary policy as well as market But El Capitan National Bank symbol factors. izes another day and age that is W. J. Ward epitomized by the latest in innovative During the August 1-15 survey period, banking. Its modernistic office offers a excellent since its summer opening. the average rate of regular short-term full line of services for the 25,000 President Ward, who was formerly business loans was 8.45 percent—12 people who live in Sonora and its president and chairman of Los Pa basis points above last May's figure, environs. Today instead of goldmin- dres National Bank in Santa Maria, (continued on page 4) zeuL-zse (gut-) suoqd

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GRIFFITH NEW FED VP (continued from page 3) However, this level was still 370 basis Richard T. Griffith has been appointed points below last August's record high Vice President in charge of Computer of 12.15 percent. (One hundred basis Information Systems at the San points equal one percentage point.) Francisco Fed's headquarters office. This rise, like the comparable rise on In this capacity, he will be responsible revolving credit loans to 8.02 percent, for all data-processing activities in the reflected the generally higher level of Twelfth Federal Reserve District. money-market rates and an increase in the prime rate since the previous Before joining the bank, Griffith held survey period. several key posts in data-processing work and banking operations. He Rate changes for large loans were previously served as Vice President greater than for small loans. For and Deputy Administrator of Opera example, on regular short-term loans tions Administration at Crocker Na of $1 million or more, the average rate tional Bank. Griffith also was Execu rose 19 basis points to 8.37 percent in tive Vice President of the Banking August. For the smallest category- Division of Teknekron, Inc. He at loans under $10,000—the average tended Pepperdine College in Los actually declined 5 basis points to Angeles. if. R. T. Griffith 9.67 percent, lijflj!

BUSINESS SAVINGS ACCOUNTS OKAYED

The Federal Reserve Board of Gover asked the banks to classify their helping to remove the competitive nors this month permitted business business savings accounts as a edge which thrift institutions now firms to maintain savings accounts at separate item for reporting purposes. have over commercial banks. Last member banks, by changing the month, the Fed empowered member Savings accounts generally have not definition of savings deposits in its banks to offer a bill-paying service to been available to profitmaking busi Regulations D and O. The amend their customers through the pre- ness organizations at member banks, ments, effective November 10, place authorized transfer of funds from as they are at thrift institutions. The a ceiling on business savings depos savings accounts. Member banks are new regulatory amendments thus will its of $150,000. The ceiling is in now permitted to make third-party enable member banks to compete tended to limit such accounts to small payments for their customers on all more effectively with savings institu businesses that do not have access types of transactions except bank tions. to the money markets to earn interest overdrafts—and not simply for real- on temporarily idle funds. The Board This is the second recent action estate loan payments, as before, -at