1970

Chipping Away at the Deposit Rate Ceiling

WASHINGTON, Nov. 10 — The Federal Reserve Board has proposed an amendment to Regulation Q, allowing banks to compute daily interest on time deposits, using a year of either 360 days or the 365 days currently required.

One commercial banker estimates that the use of 360 days, if permitted, would increase the interest paid on $1 million of time deposits by about $8 a year.

"We're really talking peanuts," he said, "so even if we were given permission to use 360 days I doubt very much that we would exercise it."

The Fed has given interested persons until Nov. 16 to submit data, views or arguments on the change.

According to the proposal, section 217.3(e) of Regulation Q would be changed to read:

"Computation of interest on time deposits. In the computation of simple daily interest, the time factor should be expressed as a fraction in which the actual number of days the funds are on deposit is the numerator, and the denominator is either 360 or 365. When a time deposit matures in one month, or multiples thereof, the bank may use 30 days in the numerator, or corresponding multiples thereof."

That section as it now stands permits the use of 360 in the denominator only on deposits of 30 days or multiples thereof and the use of 30 and multiples in the numerator on a deposit for one month of any multiple of a month.

The Fed said the proposed amendment would authorize the use of 360 as the denominator for any deposit and continue the present practice of authorizing a bank to consider one month as 30 days. And because of these changes, references to technical grace periods would be deleted.

1961

Number of 'Billion Dollar Banks' Grows … to 27

NEW YORK, Jan. 25 — Two commercial banks and one mutual savings bank entered the rank of institutions with more than $1 billion in deposits at the end of 1960, publication by the "American Banker" of the Billion Dollar Banks roster discloses.

The new members of this exclusive group, now numbering 23 commercial and four savings banks, are Philadelphia National Bank, with deposits of $1,049,004,620, Republic National Bank, Dallas, with deposits of $1,012,466,641, and Emigrant Industrial Savings Bank, New York, with deposits of $1,004,461,747.

Still the largest of the nation's 27 "billionaire" banks is Bank of America NT&SA, San Francisco, with deposits in excess of $10.8 billion. Bank of America is the world's largest privately-owned commercial bank.

In second place is Chase Manhattan Bank, New York, at $8.1 billion. Chase is only the second bank to reach the $8 billion level, and this is the first year-end it has posted such a deposit total.

Rounding out the top five are First National City Bank, New York, with deposits of $7.6 billion, Chemical Bank New York Trust Co., New York, deposits of $3.8 billion, and Morgan Guaranty Trust Co., New York, deposits of $3.6 billion.

The top mutual is still Bowery Savings Bank, New York, which reports deposits of $1,604,807,062. Bowery, ranked within the commercial banks, would be the nation's 18th largest.

Second among the mutuals is the Philadelphia Saving Fund Society, with deposits of $1.105 billion. This bank would rank 22nd among the commercials.

With a rank as the third largest mutual and 25th largest "billionaire" bank, Dime Savings Bank, Brooklyn, reports deposits of $1.043 billion.

The junior member of this exclusive group is Emigrant Industrial, fourth among the mutuals and 27th among the nation's commercial and mutual banks, with deposits just over the $1 billion mark, at $1.004 billion.

Within the table one bank, Chase Manhattan, entered the $8 billion level, as noted. Bankers Trust Co., New York, topped $3 billion for the first time; and Wells Fargo Bank American Trust Co., as a result of the merger of Wells Fargo Bank and American Trust Co., both San Francisco, cleared the $2 billion level for the first time, with $2.4 billion.

Gains in position within the "billionaires" were shown by Manufacturers Trust Co., up one to sixth place; Bankers Trust Co., up one to eighth; Wells Fargo Bank, up two to 11th; Irving trust Co., New York, up two to 12th; Hanover Bank, New York, up three to 14th; and Republic National, up one to 23rd.

The four leading mutuals retain their respective ranks from Dec. 31, 1959.

1970

Dark Green Grass Over the Signature Panel

NEW YORK, March 9 — "Scenic" or "fancy" checks can cause serious operational problems in "a slow-up of the through-put of checks in the banking system" unless precautions are taken in designing them, a banking industry task force investigation shows.

Such bright-colored specialty checks with pictures on them — running the gamut from pastoral scenes to psychedelic swirls — have been adopted by an increasing number of banks across the country.

And, as one member of the task force observed, "if ever there was a case where marketing and operations didn't communicate, it was with these checks."

In October 1969, the investigating committee began looking into potential problem areas with such checks — both in terms of man-readability and machine-processability.

Headed by C. Bickford Henchey, American Bankers Association director of standards, and including bank marketing and operations officers, as well as representative from bank printers, equipment suppliers and the Federal Reserve System, the task force ran tests on various types of the new picture checks and asked several banks that have been using them to do the same.

Most checks that the group tested or reviewed met ABA check standards. But, some had designs that created serious problems, primarily in terms of human readability.

"Essential areas of the checks could not be read by the human eye because of obscuring design features," the study group reported.

The problematic checks reviewed by the task force indicate simply a lack of common sense in designing them. "Dark green grass over a signature panel" or "heavy purple mountains over the amount column" obviously are difficult to read.

Raymond C. Kolb, senior vice president, Mellon National Bank & Trust Co., Pittsburgh, and chairman of the ABA automation subcommittee on standards, has prepared a letter, detailing the findings of the task force, which will be sent — within the next two weeks — to the chief executive officer of every commercial bank in the country.

Mr. Kolb emphasizes that the task force "found no reason for suggesting elimination of the use of scenic or fancy checks at this time."

"It did find, however, that unless certain caveats are observed in designing scenic checks, serious operational problems are presented which could result in a slow-up of the through-put of checks in the banking system, and an increase in errors and losses for both banks and bank customers," he added.

Moreover, Mr. Kolb charged "in these days of ever increasing check volumes and processing costs, such a result would be intolerable."

In the letter, Mr. Kolb pointed out that the "caveats" concern design considerations already covered by standards in check design, developed by the ABA, and described in ABA documents: 147R3, "The Common Machine Language," and Bulletin 150, "Check Standards."

The task force recommended that these documents be studied and followed in designing scenic or other checks.

The design problems are not such as to inhibit "attractively designed scenic or fancy checks," he stated.

"However," Mr. Kolb asserted, "it must be remembered that checks are operational documents and negotiable instruments. Checks must be read by human beings. The date, written amount, number amount, signature, and magnetic ink encoding area, in addition to other essential information, must be clearly readable by bank personnel, the customer, merchants, and other businesses. And, they must be readable whether typed or written in various colored inks."

Moreover, banks were cautioned that — since checks normally are microfilmed — check designs should be tested for microfilming quality, as well as human readability.

Copies of Mr. Kolb's letter and the report of the task force will be made available to check printers through the Bank Stationers Association and other printers trade groups.

The ABA further is preparing a supplementary document to 147R, "The Common Machine Language," which will contain guidelines on scenic checks and other information to help in designing checks and printing them for machine processing.

In addition, a full report of the task force's findings will be given at the ABA marketing-savings conference, March 8-11 in New York, and at the ABA automation conference April 26-29, in San Francisco.