Federal Reserve Bulletin, 1980-02

FEBRUARY 1980 FEDERAL RESERVE BULLETIN The Community Reinvestment Act: A Progress Report The Redefined Monetary Aggregates Domestic Financial Developments in the Fourth Quarter of 1979 Production of Motor Vehicles in 1979 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE BULLETIN (USPS 351-150). Controlled Circulation Postage Paid at Richmond, Virginia. POSTMASTER: Send address changes to Publications Services, MP-510, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. A copy of the FEDERAL RESERVE BULLETIN is sent to each member bank without charge; member banks desiring additional copies may secure them at a special $10.00 annual rate. The regular subscription price in the United States and its possessions, and in Bolivia, Canada, Chile, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, Guatemala, Haiti, Republic of Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, El Salvador, Uruguay, and Venezuela is $20.00 per annum or $2.00 per copy; elsewhere, $24.00 per annum or $2.50 per copy. Group subscriptions in the United States for 10 or more copies to one address, $1.75 per copy per month, or $18.00 for 12 months. The BULLETIN may be obtained from Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551, and remittance should be made payable to the order of the Board of Governors of the Federal Reserve System in a form collectible at par in U.S. currency. (Stamps and coupons are not accepted.) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

VOLUME 66 • NUMBER 2 • FEBRUARY 1980 FEDERAL RESERVE BULLETIN Board of Governors of the Federal Reserve System Washington, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • Stephen H. Axilrod • John M. Denkler Janet O. Hart • James L. Kichline • Neal L. Petersen • Edwin M. Truman Michael J. Prell, Staff Director The FEDERAL RESERVE BULLETIN is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. Direction for the art work is provided by Mack R. Rowe. Editorial support is furnished by the Economic Editing Unit headed by Mendelle T. Berenson. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 87 THE COMMUNITY REINVESTMENT ACT: Housing, and Urban Affairs, January 24, A PROGRESS REPORT 1980. The Board's progress in determining the ex- 132 Governor Philip E. Coldwell discusses the tent to which banks have attempted to as- Federal Reserve System's budget performcertain and meet the credit needs of their ance for 1979 and the outlook for 1980, becommunities is discussed. fore the Senate Committee on Banking, Housing, and Urban Affairs, January 25, 97 THE REDEFINED 1980. MONETARY AGGREGATES 137 Chairman Paul A. Volcker presents his New definitions of money for use in the con- views on the state of the economy and the duct of monetary policy are described. advisable course for economic policy, testifying that despite the moderation in output 115 DOMESTIC FINANCIAL DEVELOPMENTS in 1979, inflation worsened so that not only IN THE FOURTH QUARTER OF 1979 the stability of the U.S. economy but also our position in the world economy was According to the quarterly report to the threatened; with regard to monetary policy, Congress, economic expansion slowed he points up the need to avoid excessive somewhat, and growth in the monetary agstimulus and to keep the goal of balancing gregates weakened over the period. the budget in the forefront of spending and revenue decisions, before the Joint Eco- 123 PRODUCTION OF MOTOR VEHICLES IN nomic Committee of the Congress, Febru- 1979 ary 1, 1980. The sharp decline in the auto industry in 1979 was a major factor in the deceleration 143 Chairman Volcker testifies that the stream of growth in total industrial production. of member banks withdrawing from the Federal Reserve System will reach flood 129 INDUSTRIAL PRODUCTION proportions and that it has become progressively more costly and more difficult for Output increased 0.3 percent in January. banks to justify continuing their membership; in this context, Chairman Volcker ad- 130 STATEMENTS TO CONGRESS vocates legislation containing certain prin- Governor J. Charles Partee says that both ciples, including the application of a reserve commercial banks and thrift insitutions requirement to all transaction accounts, have lost deposits to money market mutual equality of reserve requirements for all defunds but that the introduction of the 272- positary institutions offering comparable acyear "small saver" certificate should en- counts, access to Federal Reserve services hance the competitive position of depos- for all depositary institutions with transacitary institutions, and offers the view that tion accounts, and voluntary membership in extending reserve requirements to money the Federal Reserve, before the Senate market mutual funds is not necessary, be- Committee on Banking, Housing, and Urfore the Senate Committee on Banking, ban Affairs, February 4, 1980. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

149 ANNOUNCEMENTS AI FINANCIAL AND BUSINESS STATISTICS Adoption of new definitions of money to be A3 Domestic Financial Statistics used in the conduct of monetary policy. A46 Domestic Nonfinancial Statistics A54 International Statistics Adoption of further final rules for Regulation E on electronic fund transfers. (See Legal Developments.) A69 GUIDE TO TABULAR PRESENTATION AND STATISTICAL RELEASES Change in Board's rules in order to speed up collection of large dollar-value checks. A70 BOARD OF GOVERNORS AND STAFF Meeting of the Consumer Advisory Council. All FEDERAL OPEN MARKET COMMITTEE AND STAFF; ADVISORY COUNCILS Change in Board staff. Addition of slide show to the Board's public A73 FEDERAL RESERVE BANKS, BRANCHES, tour program. AND OFFICES Admission of five state banks to membership in the Federal Reserve System. A74 FEDERAL RESERVE BOARD PUBLICATIONS 153 LEGAL DEVELOPMENTS Amendments to Regulation E; bank hold- A76 INDEX TO STATISTICAL TABLES ing company and bank merger orders; and pending cases. A78 MAP OF FEDERAL RESERVE S YSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Community Reinvestment Act: A Progress Report Glenn Canner and Joe M. Cleaver of the Board's determine the extent to which the institution has Division of Research and Statistics prepared this attempted to ascertain and meet the credit needs article. of the communities it serves. The Community Reinvestment Act of 1977 is intended to encourage federally insured com- LEGISLATIVE INTENT mercial banks, mutual savings banks, and savings and loan associations to help meet the credit The legislative history of the CRA provides a needs of the local communities in which they are background for understanding the direction and chartered. The CRA directs the four federal su- scope of Regulation BB. The congressional depervisory agencies—the Board of Governors of bate over the CRA indicates that the Congress the Federal Reserve System, the Comptroller of was concerned primarily with inner-city neighthe Currency, the Federal Deposit Insurance borhoods in general, and with blighted and eco- Corporation, and the Federal Home Loan Bank nomically depressed areas in particular. The pro- Board—to consider an institution's CRA record ponents of the CRA believed that the failure of in evaluating any application for a charter, de- financial institutions to take advantage of sound posit insurance, branch or other deposit facility, lending opportunities in these neighborhoods acoffice relocation, merger, or acquisition. The act celerated the process of economic decay and inalso requires that, in connection with the exami- hibited private revitalization efforts. Congresnation of a financial institution, the appropriate sional supporters of the legislation expressed supervisory agency shall "assess the institu- concern about the adequacy of a variety of neightion's record and encourage it to meet the credit borhood-oriented loan programs, such as those needs of its entire community, including low- and for small businesses, community development, moderate-income neighborhoods, consistent and housing. Support of the residential mortgage with safe and sound operation of such institu- market and provision for home improvement and tion." rehabilitation credit by institutional lenders were In accordance with the CRA, the Federal Re- viewed as necessary to neighborhood revitalizaserve Board issued Regulation BB. That regula- tion and stability. tion, effective November 8, 1978, lists the cri- While congressional supporters of the CRA teria that the Board considers in evaluating the appeared to focus primarily on housing-related CRA record of a covered institution. Neither the loans, they expressed a general concern for the CRA nor the implementing regulation was de- importance of community-oriented lending. Loans signed to inject hard and fast rules into the exam- to industrial and commercial establishments, ination or application process. Rather, the CRA the purchase of municipal debt, and participaexamination is intended to be a judgmental eval- tion in student loan programs are examples of uation of the performance of a lender in meeting other types of credit extensions that may be imthe credit needs of its entire community. The reg- portant to a lender's CRA evaluation. ulatory agencies are expected to take into ac- The Congress was rather clear about the types count differences in absolute size of the in- of credit extensions it considered relevant to a stitution, legal impediments, local economic CRA evaluation but was not explicit about the conditions, and community needs. Given these way to measure credit "needs." The legislative circumstances, the appropriate agencies must debate over the CRA indicates that the Congress Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

88 Federal Reserve Bulletin • February 1980 did not support nonmarket methods of credit al- product lines, which may be smaller than the location, such as quotas, to meet the credit needs geographic scope of the market in which it operof the local community. It might be inferred from ates. For example, a portion of a SMSA or counthis position that the Congress intended credit ty may reasonably define the area a small bank is needs to be measured by the effective demand at expected to serve. Staff analysis of a banking orthe going market price, with due consideration of ganization's community delineation tends to forisk. However, the Congress failed to provide cus on office locations and the geographic distrithe regulatory agencies with any guidance in as- bution of the organization's credit extensions. sessing a community's credit needs or in deter- The staff considers the geographic location of a mining how well a particular institution is meet- bank's housing-related loans, if any, but other ing those needs. Therefore, the agencies have types of credit extensions are relevant to the rebegun to evolve their own standards on a case- view of the community delineation. by-case basis and have examined a variety of evi- The overriding concern in the regulation is that dence in the evaluation of a lender's CRA per- whatever reasonable criterion the institution formance. In addition to the procedural require- chooses, it may not arbitrarily exclude low- and ments of Regulation BB, the specific assessment moderate-income neighborhoods. Because the factors the Board considers in a CRA evaluation CRA does not explicitly define such areas, the are listed in section 228.7 of that regulation. four supervisory agencies have adopted the definition that the Department of Housing and Urban Development used in its community develop- EVALUATING THE RECORD ment block grant program. In this program, lowand moderate-income areas are defined as those Regulation BB outlines procedural requirements census tracts with median family income of less from the act that all institutions regulated by the than 80 percent of the median family income for Federal Reserve must meet; it also specifies fac- the entire SMSA. Gerrymandering the commutors that will be considered in connection with an nity delineation to exclude low- and moderateinstitution's CRA record. The procedures call for income neighborhoods could constitute a prima public disclosure of the credit services available facie case of noncompliance with the CRA. at the institution, ask the institution to define the A second prominent factor to be considered in local community that it expects to serve, and di- assessing an institution's CRA record is the disrect the institution to maintain a file of public tribution of the lender's credit extensions. Under comments relating to CRA matters. Compliance Regulation BB, consumer compliance examiners with procedural requirements is not sufficient to are directed to consider the amount of CRA-type establish that a lender has been satisfactorily credit an institution extends to its local commuserving local credit needs. Equally important, nity and the geographic pattern of that lending noncompliance does not imply failure by the within the community. No restrictions are placed lender to meet those needs. on an institution's level of lending outside the lo- Several factors are particularly important in cal area. If a substantial portion of the lender's the assessment of CRA records. The first is the CRA-type credit is extended outside the local reasonableness of the community delineations. community, however, the institution will likely Regulation BB gives banking organizations flexi- draw closer scrutiny. CRA examiners also focus bility in defining their local communities. De- on gaps (geographic, racial, or ethnic) in the pending on the circumstances, an institution may lender's credit extensions within the local comuse a recognized geographic entity such as a munity. A distribution of loans skewed toward standard metropolitan statistical area (SMSA) or specific areas or groups does not give an institua county to define its local community; it may tion a poor CRA record if that distribution results also rely on its local banking market or any other from apparent variations in demand across reasonable concept. The Board recognizes that a neighborhoods and groups. But it will alert the small bank may not reasonably be expected to regulators to the need for closer scrutiny of the extend its marketing and credit activities beyond loan pattern. the practical geographic limitations of its basic Local credit demand is the third factor that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Community Reinvestment Act 89 must be considered in an institution's CRA eval- as deposit services. ..." The institution's CRA uation, and is the most difficult to assess. As record is incorporated as part of the convennoted, an uneven loan pattern based on geo- ience-and-needs factors in assessing the likely graphic, racial, or ethnic criteria may not in- impact of an application. When considering a dicate a poor CRA record if differences in ef- proposed bank acquisition or merger, the Board fective demand explain it. Although precise must weigh both the likely competitive effects of measurement of neighborhood credit demand is the application and the convenience-and-needs extremely difficult, a variety of proxies may be factors (section 3A of the Bank Holding Compaused to make inferences about demand—for ex- ny Act, 12 USC § 1842(a), and the Bank Merger ample, proxies for residential loan demand might Act, 12 USC 1828). If a transaction is likely include the number of residential loan appli- to have a seriously anticompetitive impact, the cations in a neighborhood, the composition of Board may approve the application only if the the housing stock in a neighborhood, and data on convenience-and-needs factors dominate in the residential property transfers, that is, deed trans- weighing of the public interest effects of the fers recorded. Because the level of demand is so transaction. difficult to assess, Regulation BB directs examin- As a factor in convenience and needs, the ers to consider those activities on the part of the CRA record may influence the Board's decisions institution that are designed to promote lending in various ways. When an application involves in the local community. If a bank has a good rec- no significant competitive, managerial, or finanord of advertising and promoting its credit ser- cial issues, the determining factor in a decision is vices in all areas of its community, there will be the balance among the applicant's CRA record, less concern that the needs of creditworthy bor- commitments for future actions, and other conrowers are unrecognized. This is particularly venience-and-needs aspects of the application. true if special efforts are made by the bank to The Board may approve the transaction even communicate with individuals and small busi- when the CRA record is unsatisfactory, if comnesses that are located in low- and moderate-in- mitments or other convenience-and-needs concome neighborhoods. siderations outweigh the negative aspects of the In addition to communication and promotion application. (See the information statement on of its CRA-type activities, lending institutions the CRA in the FEDERAL RESERVE BULLETIN, are encouraged to ascertain the credit needs of volume 66, January 1980, pages 30-32.) If an their local communities. Market research stud- application has anticompetitive effects, a favories, regular meetings with community groups, able convenience-and-needs assessment is reand communication with realtors provide addi- quired for approval of the application. In such a tional evidence of efforts to meet various types of case, a positive or at least neutral CRA record local credit needs. Finally, participation in spe- would generally be necessary to obtain Board cial credit programs and investment in local mu- approval. Finally, the Board may consider an innicipal or state securities, particularly those re- stitution's CRA record so deficient that it outlated to housing needs, indicate a willingness to weighs any favorable aspects of the record and help meet the credit requirements of the local deny the application solely on that basis. communities. ANALYSIS OF CRA PROTESTS BY TAKING THE RECORD INTO ACCOUNT THE FEDERAL RESERVE SYSTEM STAFF Section 802 of the Community Reinvestment Act When the Board receives a CRA protest, a copy reasserts the intention of Congress, embodied in is automatically forwarded to the applicant. The previous law, that "regulated financial institu- Legal Division of the Board, in consultation with tions demonstrate that their deposit facilities the Division of Research and Statistics and the serve the convenience and needs of the commu- appropriate district Reserve Bank, then deternities in which they are chartered to do business mines whether the allegations raised in the pro- . . . including the need for credit services as well test are substantive. If they are, the appropriate Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

90 Federal Reserve Bulletin • February 1980 Federal Reserve Bank attempts to arrange a ments largely on statistical analysis of the applimeeting between the applicant and the protes- cant's HMDA statements. tant. The hope is that direct exchanges will help The essential problem with HMDA statements define the issues in the protest and narrow the is that they provide no information about the levdifferences. The Board believes that it is in the el of, or variations in, housing loan demand best interest of all parties if meetings and nego- across neighborhoods. This shortcoming is not tiations can resolve differences and permit a surprising because the data were not designed for withdrawal of the protest. The withdrawal of a that purpose. Many of the protestants have rec- CRA protest, or the withdrawal of an institu- ognized this critical shortcoming and have attion's application after a CRA protest is lodged, tempted to control for variations in demand by does not, however, relieve the Board of its re- presenting the HMDA loan patterns on a per capsponsibility to evaluate the institution's CRA ita or per housing unit basis. performance. System research staff recognizes the diffi- Of the protested CRA cases handled by the culties that arise in attempting to control for vari- Board, a few have been resolved by direct ex- ations in housing credit demand across neighborchanges between applicant and protestant. hoods. The staff analysis makes use of bank loan Moreover, experience indicates that direct ex- applications and available records of real estate changes do serve to narrow differences and clari- deed transfers. Variation in loan application levfy positions, even when they do not resolve the els across neighborhoods is one indicator of geoissues. graphic differences in demand for an institution's Whether or not exchanges between the appli- credit. The reliability of application data as a cant and the protestant resolve differences, the measure of credit demand rests critically on the System research staff begins an analysis of the absence of prescreening, the perceptions of the issues raised in the protest. The staff analysis bank by the residents of the community, the exrelies on a variety of data sources. The most tent of promotional activity by the institution, valuable sources of information have been Home and the actions of competitors in various neigh- Mortgage Disclosure Act (HMDA) data, bank borhoods. consumer compliance examinations, U.S. Cen- The number of real estate transfers in a neighsus information, protestant and applicant sub- borhood during a given period of time closely apmissions, real estate transfer records, data from proximates the potential number of real estate the Department of Housing and Urban Develop- exchanges that lending institutions could have fiment on Federal Housing Administration mort- nanced in an area. As such, that number progage insurance activity, and information from vides a rough measure of the effective demand city planning departments. for mortgage credit in a neighborhood. Although The analytical methods used by the System re- the number of deed transfers may be a proxy for search staff to address the specific issues raised mortgage credit demand, it is an imperfect one. by protestants vary with the quantity and quality Some property sales involve installment conof data. The primary source of information on tracts and do not show up in deed transfer rechousing-related loan activity by an applicant and ords at the time of the sale. In addition, deed other institutional lenders in a geographic area is transfers reflect only those transactions that ac- HMDA statements. The Home Mortgage Dis- tually occur. If the market for first mortgages closure Act requires that institutional lenders is not highly competitive or if regulatory concovered by the act disclose their annual residen- straints such as usury laws exist, some potential tial mortgage and home improvement loan exten- property exchanges at competitive market prices sions by census tract or zip code. The data allow might not take place. In that case, deed transfer users to identify the number and dollar volume of records may understate potential demand. The housing-related loans in various areas of an research staff has used ratios of mortgage loans applicant's delineated community and beyond. to transfers for cross-sections of neighborhoods Those protestants that have alleged failure by an as an indicator of an applicant's efforts to meet applicant to serve the residential credit needs of the housing credit needs of the local community. the entire community have based their argu- The research staff also focuses on other loan Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Community Reinvestment Act 91 extensions that relate to the CRA—for example, Ohio Citizens Trust Corporation (for the second loans to small businesses and for consumer in- time), and Society Corporation of Cleveland. Ten stallment purchases, community development, of the eleven CRA protests have been lodged by and farm purposes. The CRA review by the re- community groups. The protest involving First search staff goes beyond an analysis of the appli- National Boston Corporation was brought by a cant's lending activity and addresses each of the competitor of its proposed acquisition in New other assessment factors listed in Regulation BB. Bedford, Massachusetts. The discussion that fol- Emphasis in the assessment process is placed on lows is based on a review of the six CRA protests the applicant's promotional and marketing ef- that have been resolved by negotiated settlement forts in the low- and moderate-income sections or decided by the Board. of its community. In addition, the applicant's systematic efforts to survey the credit needs of its entire community are important to the CRA CRA PROTESTS RESOLVED review. After assessing an applicant's entire BY BOARD ORDERS CRA performance, including the findings of completed CRA examinations, the research staff As of January 15, Board orders had been issued makes a recommendation to the Board on the on three applications that had spurred CRA pro- CRA section of the application. tests that had not been withdrawn. The first protested application to come before the Board involving CRA issues was lodged by the BOARD EXPERIENCE TO DATE: Manchester-Tower Grove Community Organiza- CRA PROTESTS tion of St. Louis, an affiliate of the Missouri Association of Community Organizations for Reform Community organizations and citizens groups Now (ACORN), against Manchester Financial have actively voiced their concerns when they Corporation, also of St. Louis. The ACORN prohave perceived a lending problem that appeared test alleged primarily that the corporation's to be covered by the CRA. These perceptions lead bank, Manchester Bank, and two subsidiary have been manifested in several protests lodged banks located within St. Louis had not adequateagainst banking organizations filing applications ly served the convenience and needs of their with the Board. The Board's experience with entire community. The protestant's submission such protests has, however, been limited. As of focused on the Manchester Bank's limited ex- January 15, 1980, the Board had acted on three tension of mortgage, home improvement, and cases involving CRA protests that could not be small business loans in the Manchester-Tower resolved by meetings and negotiations; they in- Grove area of St. Louis. volved Ohio Citizens Trust Company, Toledo, An interesting aspect of the Manchester case is Commerce Bancshares, Kansas City, Mo., and that the receipt of the application in August 1977 Michigan National Corporation, Bloomfield predated the passage of the CRA. Moreover, the Hills, Michigan. CRA protests involving Mid- protest itself was lodged well before the CRA be- Continent Bancshares and Landmark Banc- came effective in November 1978. During the shares were withdrawn in October and Novem- hearings on the CRA bill, the Board expressed ber 1979, respectively, following successful ne- the view that the existing convenience-and-needs gotiations between the applicants and the standard in section 3(a) of the Bank Holding protestants. In July 1979 a third protest based on Company Act required the Board to consider CRA issues, involving the Trust Company of whether applicants were helping to meet the Georgia in a proposed nonbank acquisition under credit needs of their communities. The Board section 4(c)(8) of the Bank Holding Company granted the interested parties an informal public (BHC) Act, was resolved through negotiation. hearing, which took place in St. Louis in March Currently, the Federal Reserve System has five 1978. unresolved CRA protests. They involve Ameri- ACORN requested that the Board either deny Trust Corporation, First National Boston Corpo- the application or condition an approval upon ration, Manufacturers Hanover Trust Company, detailed written commitments by the applicant Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

92 Federal Reserve Bulletin • February 1980 promising to improve its record of meeting the extended. The law permits each bank to choose how it should fulfill its responsibility to help credit needs of the Manchester-Tower Grove meet the convenience and needs (including the neighborhoods. ACORN proposed that the applicredit needs) of its community. The Board's recant's commitments include the establishment of sponsibility under the BHC Act as well as the a community advisory committee at the bank, CRA is to evaluate the record(s) of applicant and the appointment of a community reinvestment bank(s) involved and to determine whether the officer, the adoption of an affirmative marketing convenience and needs of the community have been and are likely to be served. program of housing-related credit in the Manchester-Tower Grove neighborhood, and a listing of the criteria and specific terms of housing The second CRA protest resolved by the and small business loans. Board involved a protest filed by the Greater To- Board analysis revealed that, despite the Man- ledo Housing Coalition against the Ohio Citizens chester Bank's emphasis on commercial and in- Trust Company. The principal allegation by the dustrial loans and the exodus in recent years of protestant was that the applicant's policies for business and industry from the bank's local ser- mortgage and home improvement lending had vice area, the applicant had not ignored the retail the effect of discriminating against minorities credit needs of the individuals in its local com- and older neighborhoods. The protestant's conmunity. In addition, the Board found that the tentions were based on an analysis of the appli- Manchester Bank had been active in extending cant's HMDA records. Analysis by the Federal residential credit in low- and moderate-income Reserve Bank of Cleveland disclosed the fact areas, including the protestant's section of the that the applicant had extended comparatively community. Staff analysis revealed that, as of few housing loans in the low- and moderate-in- March 31, 1978, the Manchester Bank had ex- come sections of the community. tended a greater number of residential real estate The staff analysis noted that several factors, loans in the zip code area that contained the including the percentage of owner-occupied resi- Manchester-Tower Grove neighborhoods than dences, low average household income, and exin any other zip code area in its entire market. tensive demolition owing to urban renewal proj- These 52 loans represented 17.3 percent of the ects, had contributed to the applicant's low level bank's total residential loans by number and 11.4 of activity in these neighborhoods. In addition, percent by dollar volume. Taking account of the the higher rejection rate for mortgage loans in applicant's overall loan record and other sup- low- and moderate-income areas, compared with portive evidence, such as the bank's participa- the rate in other neighborhoods, did not appear tion in a nonprofit housing corporation and its ef- to stem from discriminatory or unreasonable forts to maintain and promote a redevelopment lending standards. The Board order noted that corporation in the city, the Board approved the the applicant's marketing practices revealed no Manchester applications. intent or effort to discourage loan applications The Board order in the Manchester case ex- from low- and moderate-income neighborhoods. plicitly stated the Board's position with respect Nonetheless, the Board concluded that the applito its responsibilities under both the CRA and cant had not appeared to make a sufficient effort the convenience and needs section of the Bank to lend in the low- and moderate-income sections Holding Company Act as shown in the following of its community and that its lending activity quotation from the FEDERAL RESERVE BULLETIN, there was low in certain respects. Acting on volume 64, July 1978, p. 579: these findings, the Board obtained a commitment from the applicant to increase its efforts to com- The Board finds nothing in the BHC Act that municate with members of its community, thererequires or authorizes the Board to dictate a by enabling the applicant to better serve the bank's product mix (which credit or deposit credit needs of its low- and moderate-income services a bank should emphasize) or to dictate neighborhoods. Given the applicant's commitwhat proportion or amount of an institution's ments and other positive aspects of the record, funds must, or even should, be allocated to any particular credit need, borrower or neighbor- the Board approved the Ohio Citizens applicahood, or on what specific terms credit should be tion. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Community Reinvestment Act 93 A recent CRA protest resolved by the Board date of the CRA, should not be considered by the involved a protest lodged by the Michigan Com- Board. The Board found no merit in this assermittee on Law and Housing against Michigan tion, noting that it believed the convenience-and- National Corporation. The five applications needs standard contained in section 3 of the raised no significant competitive problems. The Bank Holding Company Act of 1956 required only issue was whether the applicant's record consideration of an applicant's record in meetwas acceptable in light of the Community Rein- ing the credit needs of its community. vestment Act. In considering the CRA record of the Michigan The protestant set out four allegations. The National Corporation the Board examined the first charged that longstanding violations of pro- submissions of both the protestant and the applicedural requirements of HMDA and CRA regula- cant, and reviewed the results of a consumer tions indicated a negative management attitude compliance examination of each of the applitoward the CRA. The second allegation chal- cant's banking subsidiaries by the Office of the lenged the community delineation by the appli- Comptroller of the Currency. From the entire cant's Oakland subsidiary, which it argued, arbi- record the Board found that some of the applitrarily excluded some low- and moderate-income cant's banking subsidiaries had failed to comply areas located in Pontiac from its community de- with all of the procedural requirements of the lineation. The third allegation charged that the CRA and HMDA. The Board viewed this nonapplicant's nine Detroit-area banking subsidi- compliance as a serious matter and indicated that aries had failed to provide adequate housing- the applicant should be in full compliance before related credit to low- and moderate-income consummation of the applications. The Board neighborhoods throughout the greater Detroit further found that the community delineation by area. The protestant's submissions used data de- the Oakland subsidiary was reasonably based on rived from the 1970 Census and the applicant's the bank's total lending pattern. In addition, HMDA statements to support this contention. the Board noted that the low- and moderate- For example, the protestants used the ratio of income neighborhoods that were alleged to have mortgage loans to housing units to demonstrate been excluded were incorporated into the lendthat the applicant's largest Detroit subsidiary ing area of another of the applicant's subsidiary granted about 14 times as many loans in census banks, Michigan National Bank-North Metro. tracts with above moderate income as it did in The Board analysis also focused on the two allow- and moderate-income tracts. The protes- legations about mortgage lending patterns. The tant's final charge was that the applicant had en- Board found that the applicant's record of exgaged in racial discrimination in its housing-re- tending mortgage credit in different areas lated lending in the Detroit tri-county region. grouped by median family income partially re- Prior to the Board's action last November, the flected variations in mortgage demand across Federal Reserve Bank of Chicago arranged a se- these neighborhoods, and the applicant's mortries of meetings between the protestant and the gage lending pattern appeared to reflect the applicant in the hope of resolving the protest. Al- pattern of applications it received. Further, the though agreement was reached on five com- Board noted that the applicant's mortgage lending mitments, Michigan National Corporation re- in low- and moderate-income areas was somefused to alter the Oakland community delinea- what better than the average for other large tion or to accept the protestant's demand that Detroit lending institutions. Yet Board analysis the applicant equal or better the lending record revealed several weaknesses in the applicant's of every other bank in Detroit for every type record that may have contributed to the disof housing-related credit it offered. parate lending levels across neighborhoods. An important aspect of the Board's decision These included the applicant's failure systemawas the reaffirmation of the position that the tically to determine the residental credit needs Board had taken in the Commerce Bancshares of the Detroit area and the deposit orientation of CRA protest. The Michigan National Corpora- its advertising. The Board order stated that the tion submission asserted that its lending perform- applicant should broaden its efforts to make ance before November 6, 1978, the effective creditworthy loans in the low- and moderate- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

94 Federal Reserve Bulletin • February 1980 income areas of its community. The Board ture with respect to providing credit and other found that, in light of other information, the services in such areas." After the satisfactory statistics submitted by the protestant did not outcome of the negotiations, the community permit a conclusion that racial discrimination group withdrew its protest. (See Federal Reserve had occurred and that there was no evidence of press release dated July 16, 1979.) such discrimination against particular applicants. Prior to the application by the Trust Company An important aspect of the Board action was of Georgia, the Board had determined in a Citiits view regarding the protestant's demand that corp application protested by Connecticut Bankthe applicant achieve specified levels of housing- ers Association that section 4(c)(8) applications related lending. The Board did not regard the im- are not covered by the CRA. However, because position of such requirements as appropriate and the protest was withdrawn, the Board did not did not believe that the CRA required such com- consider whether this protest needed to be given mitments. any weight under the statutory considerations Michigan National Corporation made several governing section 4(c)(8) cases. (See FEDERAL commitments to the Board designed to remedy RESERVE BULLETIN, volume 65, June 1979, page deficiencies in its CRA performance. These com- 511.) mitments involved an increase in its credit-ori- The second CRA protest to be withdrawn folented marketing efforts in low- and moderate-in- lowing direct negotiations was lodged by the come areas, participation in additional special East St. Louis Neighborhood Development Corlending programs, and designation of CRA offi- poration against Mid-Continent Bancshares, Inc. cers to meet with the public regarding the appli- The community group had two principal concant's CRA performance. Upon consideration of cerns: first, that the applicant's Belleville Subsidthese commitments and other positive aspects of iary, Belleville National Savings Bank (BSNB), the applicant's overall record in serving its com- had failed to include St. Clair County in its community, the Board approved the Michigan Na- munity delineation; and second, that BSNB had tional Corporation applications. failed to serve adequately the residential credit needs of the residents of East St. Louis. As the result of a series of direct exchanges BOARD EXPERIENCE IN between the East St. Louis Community Group NEGOTIATED CRA SETTLEMENTS and BSNB, a negotiated settlement of the CRA protest was reached in October 1979 and the pro- Three of the eleven CRA protests have been re- test was withdrawn. In the settlement, BSNB solved by direct negotiation between the protes- agreed to expand its local community delineation tants and applicants. The first CRA protest to be to include St. Clair County and to undertake an withdrawn following negotiations involved the affirmative action program applicable to resi- Trust Company of Georgia. The applicant's pro- dents of East St. Louis. As a cornerstone to the posed section 4(c)(8) acquisition of Fickling and agreement, BSNB committed itself to cooperate Walker Incorporated, a mortgage company, was to improve the availability of residential real esprotested by a community organization, the City- tate loans and small business loans to St. Clair wide League of Neighborhoods, of Atlanta, County residents. The agreement included spe- Georgia. The protestant alleged that the appli- cific steps that BSNB was to undertake in its afcant's lead banks and wholly owned mortgage firmative action program. Specific commitments banking subsidiary, Adair Mortgage Company, included expanding the bank's credit-oriented adhad failed to meet the credit needs of low- and vertising program, sending letters to realtors admoderate-income neighborhoods in Atlanta. As vising them of BSNB's willingness to extend the result of direct negotiations between the ap- residential loans to creditworthy applicants, plicant and protestant, "applicant agreed to initi- conducting up to 10 credit-oriented educational ate and promote a mortgage lending program in workshops in East St. Louis in 1980, and particilow- and moderate-income neighborhoods in At- pating on a voluntary basis with other lenders in lanta and to consult with the protestant in the fu- St. Clair County in workshops or meetings origi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Community Reinvestment Act 95 nated by the protestant to discuss credit and meetings and negotiations. Experience indicates banking needs of residents of East St. Louis. that negotiations between the parties in such cas- The most recent CRA protest to be withdrawn es can be successful. In July, October, and Noas a result of a negotiated settlement was lodged vember 1979, CRA protests were successfully reby the Missouri Association of Community Or- solved through negotiation. In these cases, the ganizations for Reform Now against Landmark applicants made a series of commitments to the Bancshares Corporation of Clayton, Missouri. protestants that became a part of the record and The protest focused on the .protestant's belief are thus subject to review by the appropriate suthat the applicant would use the purchase of the pervisory agency. The Board may determine that suburban Ladue Bank and Trust Company as a specific commitments by a member institution means to remove the assets of the applicant's are inconsistent with basic safety-and-soundness Wellston subsidiary. In addition, the protestant considerations or with the intent of the CRA. alleged that the applicant had a "poor lending The legislative history of the CRA clearly inrecord" in Wellston. After a series of meetings, a dicates that the Congress did not intend the act to wide-ranging agreement was reached between become a vehicle for credit allocation. Three of the applicant and the protestant. The applicant's the commitments reached in the Landmark nego- Wellston subsidiary promised to reserve approx- tiations raise the specter of credit allocation. imately $1 million in 1980 for home improvement First, the applicant's Wellston subsidiary agreed and mortgage loans to qualified borrowers and to to earmark $1 million for conventional housoffer FHA title I and FHA title II home improve- ing-related loans and to offer these funds at a ment loans with a xh percent discount in the pro- discount set V2 percent below the prevailing testant's community. The institution promised to competitive rates to borrowers who reside in hire a full-time community investment coordina- Wellston. Second, the applicant agreed to offer tor whose responsibilities include counseling for similar below-market interest rates on FHA title depositors and borrowers, handling complaints, I and FHA title II home improvement loans in and writing a quarterly report to the protestants the Wellston section of the applicant's lending on the bank's progress in meeting its commit- area. Finally, the applicant promised not to take ments. The applicant also agreed to pay all the any direct or indirect action to remove deposits expenses related to locating and hiring a city from the applicant's Wellston subsidiary. The orplanning group for the Wellston community, to der in the Landmark case clearly reflected the provide the start-up funds and other support to Federal Reserve System's view with respect to establish a Wellston chamber of commerce, to credit allocation (Federal Reserve Bank of St. adopt more flexible loan standards, to extend its Louis, news release, November 30, 1979): Saturday office hours in the local community, and to continue its efforts to establish a job train- In assessing applicant's record of serving the ing program in the local area. convenience and needs of its communities, the Reserve Bank has taken note of applicant's disposition to consult and cooperate with community representatives. However, since the Board PROBLEMS AND PROSPECTS of Governors has stated that neither the Bank Holding Company Act nor the Community Reinvestment Act, 12 U.S.C. §§ 2901 et seq., re- Much uncertainty has been associated with the quires that the Board impose commitments to alimplementation of Regulation BB. Many of these locate credit, the Reserve Bank does not questions have not yet been resolved, and given endorse any term of the agreement between apthe Board's limited experience with CRA pro- plicant and protestant which may have such a tests, it is difficult to draw conclusions about how result. specific issues raised in a protest will be treated. One area of uncertainty is Board reaction to (See also the CRA information statement in the voluntary commitments between applicants and January 1980 BULLETIN; the Board's press reprotestants. In general, the Board desires to see lease on Michigan National Corporation, Novemthe issues raised in a CRA protest settled through ber 30, 1979; and "Commerce Bancshares, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

96 Federal Reserve Bulletin • February 1980 Inc.," FEDERAL RESERVE BULLETIN, volume to provide some guidance about the types and 63, July 1978, pages 576-83.) amount of information that will be required be- Aside from the area of commitments, a num- fore an adequate analysis of the record has been ber of significant issues related to the evaluation developed. From the perspective of the public inof an applicant's CRA record need to be resolved terest, it is necessary to determine at what point in Board actions. The Board has yet to decide the costs of additional expenditures on a CRA how much weight to give particular factors in the evaluation are likely to exceed the benefits in CRA assessment process. For example, how terms of formulating a more extensive record upmight an institution's strong performance in on which to decide a case. An important dimenhome improvement lending in low- and moder- sion of the cost of deciding a protested appliate-income neighborhoods be weighed against a cation is the six- to ten-month lag between the poor record of first mortgage lending in the same time the application is submitted and a Board orcommunities? How might the Board view two der is issued. similar institutions—one with a poor mortgage Another area of concern is the potential for lending record in low- and moderate-income abuse of the CRA protest process by competitors areas and the other with no lending record at all of applicants. A CRA protest by a competing because the institution chose not to offer mort- banking organization could be an attempt to gage credit as one of its services? If the latter delay Board action on an applicant's proposal. institution is viewed more favorably in terms of To date, one of the eleven CRA protests received the CRA, will that action induce the former insti- by the Board has been submitted by a banking tution to drop out of the mortgage business? organization. The Congress did not intend the Even more fundamentally, what constitutes a CRA to be used by competing organizations as a satisfactory residential lending record? Does a device to delay action on applications. Thus a favorable comparison with the experience of proliferation of such protests would raise imporlending by other local lenders constitute a satis- tant questions regarding an abuse of the act. factory record, or is some absolute level of lend- A final area of concern, closely related to the ing the measure of a bank's performance? Finally, CRA, is the future of the Home Mortgage Disshould an institution that closes unprofitable closure Act. That act was given a four-year trial branches in low- and moderate-income neighbor- period and is scheduled to expire in June 1980. hoods get a negative rating on this CRA assess- To date, the act has not been renewed, nor have ment factor? reports on a cost-benefit analysis been com- It is expected that Board decisions will begin pleted. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

97 The Redefined Monetary Aggregates Thomas D. Simpson of the Board's Division of plexity of the monetary system. As a con- Research and Statistics prepared this article. sequence, it is recognized that no one set of monetary aggregates can satisfy every purpose The Federal Reserve has redefined the monetary or every user. For this reason, the principal comaggregates. This action was prompted by the ponents of the new measures, along with several many financial developments that have altered related series, will be published regularly with the meaning and reduced the significance of the the new aggregates. In this way, users will be old measures. Some of these developments have able to analyze separately the components and to been associated with the emergence in recent construct alternative measures. years of new monetary assets—for example, ne- The first section presents the new aggregates gotiable order of withdrawal (NOW) accounts and compares them with the old measures. There and money market mutual fund shares; others follows a discussion of the rationale underlying have altered the basic character of standard mon- the redefinition and then an examination of the etary assets—for example, the growing similarity historical behavior of the new aggregates. A final of and the growing substitution between the de- section discusses some technical issues associatposits of thrift institutions and those of com- ed with the redefined measures: consolidation mercial banks.1 In the process of redefinition, a and seasonal adjustment procedures used in conset of proposals by the staff of the Board of Gov- structing the redefined aggregates and new data ernors was published in January 1979.2 Com- sources used in the redefinition. Three appendix ments on these proposals received from the pub- tables contain annual and quarterly rates of lic and from invited experts, together with growth of the new measures and their old coundeliberations within the Federal Reserve System terparts. and further research by Federal Reserve staff, contributed to the Board's selection of the newly defined measures. THE NEW MONETARY AGGREGATES Given the changes in financial practices in recent years, the new measures should aid both the Four newly defined monetary aggregates replace Federal Reserve and the public in interpreting the old M-l through M-5 measures, and in addimonetary developments. However, many of the tion, a broad measure of liquid assets has been changes in the payments mechanism and in the adopted. The new aggregates are presented in character of financial assets that necessitated table 1. Two narrow transaction measures, such a redefinition—some of which are ongo- M-l A and M-1B, have been adopted. M-l A is ing—have also added significantly to the com- basically the same as the old M-l aggregate, except that it excludes demand deposits held by foreign commercial banks and official institu- 1. A discussion of many of these developments can be tions.3 The other narrow measure—M-lB—adds found in "A Proposal for Redefining the Monetary Aggregates," FEDERAL RESERVE BULLETIN, vol. 65 (January to M-l A interest-earning checkable deposits at 1979), pp. 14-17. all depositary institutions—namely, NOW ac- 2. See "A Proposal," pp. 13-42. The potential need for counts, automatic transfer from savings (ATS) redefinition, in light of numerous financial innovations, was recognized by the Advisory Committee on Monetary Statistics. See Improving the Monetary Aggregates: Report of the 3. The removal of demand deposits due to foreign com- Advisory Committee on Monetary Statistics (Board of Gover- mercial banks and official institutions follows a recommendanors of the Federal Reserve System, June 1976), pp. 5-6, tion of the Advisory Committee on Monetary Statistics. See 9-12. Improving the Monetary Aggregates: Report, pp. 15-19. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

98 Federal Reserve Bulletin • February 1980 accounts, and credit union share draft balanc- 1. New measures of money and liquid assets1 es—as well as a small amount of demand depos- Billions of dollars, not seasonally adjusted, November 1979 its at thrift institutions that cannot, with present Aggregate and component Amount data sources, be separated from interest-earning checkable deposits.4 The new M-2 measure adds M-1A 372.2 Currency 106.6 to M-1B overnight repurchase agreements (RPs) Demand deposits2 265.6 issued by commercial banks and certain over- M-1B 387.9 M-1A 372.2 night Eurodollars held by U.S. nonbank resi- Other checkable deposits3 15.7 dents,5 money market mutual fund shares, and M-2 1,510.0 savings and small-denomination time deposits at M-1B 387.9 all depositary institutions.6 Also, in order to O O v v e e r r n n i i g g h h t t E R u P r s o i d s o su ll e a d r d by ep c o o s m it m s h e e r l c d ia b l y b a U n . k S s . nonbank 20.3 avoid double counting of some deposits in this residents at Caribbean branches of U.S. banks 3.2 Money market mutual fund shares 40.4 aggregate, the construction of the new M-2 in- Savings deposits at all depositary institutions 420.0 Small time deposits at all depositary institutions4 640.8 volves subtracting a consolidation component— M-2 consolidation component5 -2.7 an estimate of those demand deposits used by M-3 1,759.1 thrift institutions in servicing their savings and M-2 1,510.0 Large time deposits at all depositary institutions6 219.5 time deposit liabilities included in this aggre- Term RPs issued by commercial banks 21.5 gate.7 Redefined M-3 is equal to new M-2 plus Term RPs issued by savings and loan associations 8.2 large-denomination time deposits at all depos- L 2,123.8 M-3 1,759.1 itary institutions (including negotiable CDs) plus Other Eurodollar deposits of U.S. residents other than banks 34.5 term RPs issued by commercial banks and sav- Bankers acceptances 27.6 ings and loan associations.8 Finally, the very Commercial paper 97.1 Savings bonds 80.0 broad measure of liquid assets, L, equals new Liquid Treasury obligations 125.4 M-3 plus other liquid assets consisting of other 1. Components of M-2, M-3, and L measures generally exclude amounts held by domestic depositary institutions, foreign commercial banks and official institutions, the U.S. government (including the 4. M-1B is the same as the M-l measure that was proposed Federal Reserve), and money market mutual funds. Exceptions are by the Board staff in January 1979. See "A Proposal," pp. bankers acceptances and commercial paper for which data sources 17-20. permit the removal only of amounts held by money market mutual 5. Overnight Eurodollars in M-2 are those issued by Carib- funds and, in the case of bankers acceptances, amounts held by acbean branches of member banks. Other overnight Eu- cepting banks, the Federal Reserve, and the Federal Home Loan Bank System. rodollars and longer-term Eurodollars of U.S. residents are 2. Net of demand deposits due to foreign commercial banks and included in the broad measure of liquid assets, L. Data on official institutions. overnight Eurodollars included in M-2 are available on a 3. Includes NOW, ATS, and credit union share draft balances and timely basis, but data on other Eurodollars—at both U.S. and demand deposits at thrift institutions. non-U.S. banks abroad—are available only with a lengthy lag 4. Time deposits issued in denominations of less than $100,000. and do not permit a separation of overnight from term Eu- 5. In order to avoid double counting of some deposits in M-2, those rodollars. As improved data sources become available, ad- demand deposits owned by thrift institutions (a component of M-1B), justments may be made to the new measures. For example, which are estimated to be used for servicing their savings and small time deposit liabilities in M-2, are removed. the possible inclusion of Eurodollars held by nonresidents 6. Time deposits issued in denominations of $100,000 or more. other than banks and official institutions could be reviewed. Moreover, with Eurodollar data on a more timely basis, con- Eurodollar holdings of U.S. residents other than sideration could be given to including Eurodollars of maturibanks,9 bankers acceptances, commercial paper, ties longer than overnight in a broader monetary aggregate, rather than only in L. savings bonds, and marketable liquid Treasury 6. Small-denomination time deposits are those issued in obligations.10 denominations of less than $100,000. Depositary institutions are commercial banks (including U.S. agencies and branches of foreign banks, Edge Act corporations, and foreign invest- 9. Consists of Eurodollar deposits held by U.S. nonbank ment companies), mutual savings banks, savings and loan as- residents (other than those included in M-2) at all banking sociations, and credit unions. offices in the United Kingdom and Canada and at branches of 7. At present, because of the small amount of checkable U.S. banks in other countries, which account for nearly all deposits at thrift institutions, this M-2 consolidation adjust- holdings of U.S. residents other than banks. See note 5. ment removes all demand deposit holdings of mutual savings 10. In general, the components of M-2, M-3, and L exclude banks and savings and loan associations. See the section on amounts held by depositary institutions, money market mutechnical issues for a further discussion of consolidation pro- tual funds, the federal government (including the Federal Recedures. serve), and foreign commercial banks and official institutions. 8. Large-denomination time deposits are those issued in Marketable liquid Treasury obligations are those with less denominations of $100,000 or more. than 18 months remaining to maturity. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Redefined Monetary Aggregates 99 2. Relation between new and old monetary differences between the new M-2 and old M-3 aggregates measures are that new M-2 includes money mar- Billions of dollars, not seasonally adjusted, November 1979 ket mutual fund shares, overnight RPs, and over- Aggregate and component Amount night Eurodollars—none of which appeared in any of the old monetary aggregates—and that it Old M-l 382.6 Less demand deposits of foreign commercial excludes all large-denomination time deposits. banks and official institutions 10.4 The only class of large-denomination time depos- EQUALS: New M-1A1 372.2 Plus other checkable deposits 15.7 its not included in the old M-3 (and the old M-2) EQUALS: New M-1B 387.9 measure was negotiable CDs at large commercial Old M-2 945.3 banks, which amounted to $95.9 billion in No- Plus savings and time deposits at thrift institutions 664.2 EQUALS: Old M-3 1,609.5 vember 1979; as table 2 shows, that measure con- Plus overnight RPs and Eurodollars 23.4 Plus money market mutual fund shares 40.4 tained $151.2 billion of other large-denomination Plus demand deposits at mutual savings banks2 1.0 Less large time deposits at all depositary institutions time deposits at both commercial banks and in current M-3 151.2 thrift institutions. By including all large-denomi- Less demand deposits of foreign commercial banks and official institutions 10.4 nation time deposits at all depositary institutions, Less consolidation component3 2.7 the new M-3 is closer in concept to the old M-5 EQUALS: New M-2 1,510.0 Plus large time deposits at all depositary institutions 219.5 measure than to the old M-4 (both shown as Plus term RPs at commercial banks and savings and loan institutions 29.8 memo items in table 2). Of course, the new M-3 EQUALS: New M-3 1,759.1 aggregate is more inclusive than the old M-5 MEMO since it contains RPs, certain overnight Eu- Old M-2 945.3 Plus negotiable CDs at large commercial banks 95.9 rodollar deposits, and money market mutual EQUALS: Old M-4 1,041.2 fund shares. Old M-3 1,609.5 Plus negotiable CDs at large commercial banks 95.9 Some of the new aggregates and their com- EQUALS: Old M-5 1,705.4 ponents will continue to be published on a week- 1. Also includes a very small amount of M-l-type balances at cer- ly basis while others will be available only tain U.S. banking offices of foreign banks outside New York City monthly. The publication schedule calls for pubwhich were not in the old M-l measure. 2. Demand deposits at mutual savings banks were not included in lication of weekly and monthly data on the new any of the old monetary aggregates. M-l A and M-1B measures.12 Data on redefined 3. Consists of an estimate of demand deposits included in M-1B that are held by thrift institutions for use in servicing their savings and M-2 and M-3 will be available only on a monthly small time deposit liabilities included in the new M-2. basis, on a schedule similar to that for old M-3.13 In addition, data on the domestic commercial The relation between the redefined and the old bank components of the new measures, and on monetary aggregates is shown in table 2. As alcurrency, money market mutual fund shares, and ready noted, the new M-l A measure is very simiovernight Eurodollars, will be published on a lar to the old M-l and differs in excluding deweekly basis, while the other components will be mand deposits owned by foreign commercial available only on a monthly basis. banks and official institutions.11 M-1B thus differs from the old M-l, on the one hand, by excluding these deposits, and on the other, by in- UNDERLYING RATIONALE cluding other checkable deposits at both commercial banks and thrift institutions. New The organizing principle underlying the rede- M-2 is closer in concept to old M-3, which infined monetary aggregates is that of combining cluded savings and time deposit liabilities of all depositary institutions (other than negotiable CDs at large commercial banks), than it is to old 12. The Federal Reserve intends to publish M-l A and M-1B on Fridays (except occasionally when holiday periods M-2, which excluded the public's holdings of are involved), for the statement week ending nine days earthese liabilities of thrift institutions. The major lier. 13. Monthly data on the new M-2 and M-3 measures normally will be published about 10 to 15 days after the end of 11. The new M-l A also includes a very small amount of the month. Because of lengthier delays associated with some M-l-type balances at certain U.S. banking offices of foreign of the other components of L, this aggregate will be published banks outside New York City, which are not in the old M-l. about 6 to 8 weeks after the end of each month. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

100 Federal Reserve Bulletin • February 1980 similar kinds of monetary assets at each level of action balances.17 M-1A, in contrast, would tend aggregation. This principle has the largest impact to understate such growth, as households conon the new M-1B, M-2, and M-3 measures. Thus verted demand deposit balances into NOW ac- M-1B combines checkable deposits at thrift insti- counts. In practice, because the extent of the tutions—NOW deposits, credit union share draft shift from demand deposits and other accounts to balances, and demand deposits at mutual savings NOW accounts is uncertain, the availability of banks—with demand, NOW, and ATS balances both M-l measures is expected to help in the inat commercial banks.14 Ordinary savings and terpretation of growth in the narrow money stock small-denomination time deposits at commercial during the transition period, should NOW acbanks and thrift institutions are included in the counts be offered nationwide. new M-2. Moreover, money market mutual fund Other financial assets have been recommended shares, whose liquidity characteristics are most for inclusion at the M-l level, but for several realike those of savings accounts, are also included sons were excluded from the new M-l A and Min this measure, as are overnight RPs and Eu- 1B. The most common recommendations have rodollars. M-3 includes large-denomination time involved shares in money market mutual funds, deposits at both commercial banks and thrift in- RPs, and certain Eurodollars owned by U.S. stitutions, as well as term RPs.15 residents. Each of these assets has transaction- Two M-l measures were adopted primarily be- related characteristics. Many money market mucause of uncertainties that would arise during a tual funds offer their customers check-writing transition period should NOW accounts be per- privileges, subject to a minimum amount per mitted nationwide. NOW accounts have proper- check, which has typically been $500; and balties of both a transaction account and a savings ances placed in overnight RPs and in certain account, and thus newly opened NOW accounts overnight Eurodollars are available for spending would attract funds both from household demand the next business day.18 deposits and from savings accounts and other liq- However, these instruments also have attracuid assets.16 Experience with NOW accounts in tive characteristics as liquid investments, and New England and New York State clearly in- their behavior in many portfolios appears to be dicates that during the transition period, when influenced by such considerations. Evidence on the bulk of NOW accounts was opened, growth turnover rates indicates that balances in money in total NOW balances was indeed buoyed by market funds turn over much like balances in orshifts from savings balances and other liquid as- dinary savings accounts—about three times per sets. This evidence suggests that during a con- year—and thus on the average are not being acversion period associated with nationwide NOW tively used for transaction purposes.19 Profesaccounts, growth in M-1B could significantly overstate underlying growth in the public's trans- 17. The problem of seasonal adjustment would also be magnified by nationwide NOW accounts; the currency and demand deposit components of M-l A can be seasonally adjusted by using historical data, but historical data on NOW accounts and the other checkable balances appearing in M-lB 14. The Federal Reserve intends to include the volume of are not yet sufficient for reliable seasonal adjustment. Contravelers checks of nonbank issuers at the M-l level, once all versions from demand deposit accounts to NOW accounts major issuers begin submitting such data regularly to the Fed- could also influence the seasonal behavior of the demand deeral Reserve and once these data have been thoroughly re- posit component of M-l A, should the funds shifted from deviewed. Travelers checks likely will be added to the new ag- mand accounts and those funds remaining in these accounts gregates in conjunction with a benchmark or annual revision. have different characteristics. 15. Available evidence indicates that savings and loan as- 18. Only Eurodollars settled in same-day or immediately sociations are the only thrift institutions with a significant available funds meet this condition. By contrast, an overnight amount of RP liabilities outstanding. Moreover, nearly all of Eurodollar deposit arranged in clearinghouse funds is not the savings and loan RPs are believed to be of the term varie- available for spending for two business days. Because of ty. time-zone considerations and other conveniences, the bulk of 16. Turnover data on NOW accounts corroborate this overnight Eurodollars arranged in immediately available point. The turnover rate of NOW accounts at both com- funds is believed to be at Caribbean branches. mercial banks and thrift institutions is approximately 10 per 19. Furthermore, empirical research by the staff indicates year; for comparison, the turnover rate for ordinary savings that the addition of money market mutual fund shares to accounts is about 3 per year and that of consumer demand M-1B has not on balance enhanced the performance of this deposit accounts is estimated to be about 35 per year. aggregate since mid-1974. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Redefined Monetary Aggregates 101 sional opinion currently is divided over whether deposits are included at the M-2 level. Savings RPs are mainly liquid investments or transaction deposits and small-denomination time deposits balances. Some observers hold that RPs are very have different liquidity characteristics.21 Neversimilar to demand deposits and that the unex- theless, recent innovations—most importantly pected weakness in the public's demand for M-l- the six-month money market certificate and more type measures at times since the mid-1970s can recently the 272-year, variable-ceiling certifibe traced largely to the behavior of RPs. Others cate—constitute new, attractive alternatives to stress that in practice RPs are qualitatively dif- holding savings balances and have drawn savings ferent from demand deposits—that they are more into these new time deposits at all depositary like other short-term investments—and that re- institutions. In addition, the six-month money cent weakness in the public's demand for the market certificate has tended to reverse a trend narrow money stock was not mirrored in any toward longer maturities of small-denomination single liquid asset, including RPs.20 time deposits and thus to increase the overall li- Nevertheless, in recognition of the increas- quidity of such deposits. ingly prominent role played by these assets and The share of small-denomination time deposits their potential transaction-related features, data at commercial banks has been affected by regulaon money market mutual fund shares, overnight tory changes applying to the ceiling rates that RPs, and overnight Eurodollars will be conven- commercial banks have been able to offer on ceriently shown along with figures for M-l A and tain time accounts relative to ceilings applicable M-1B, on the first page of the weekly release to thrift institutions.22 As a consequence, the hiscontaining the money stock measures. Also, these torical relationship between the public's deitems will be included in the new M-2 measure, mands for small-denomination time deposits at as noted above. commercial banks and at thrift institutions has In addition to money market mutual fund been altered in ways that cannot be fully detershares, overnight RPs, and overnight Eu- mined at this time. Because the small-denominarodollars, savings and small-denomination time tion time deposits at both kinds of institutions are combined in the M-2 aggregate, along with the savings deposit liabilities of both, shifts of these 20. For those studies emphasizing the transaction proper- kinds affect only the composition of M-2 and not ties of RPs, see Peter A. Tinsley, Bonnie Garrett, and Monica its size or rate of growth. Similarly, the growing Friar, "The Measurement of Money Demand" (Board of Governors of the Federal Reserve System, Division of Re- availability of money market mutual fund shares search and Statistics, Special Studies Section, November has tended to reduce the public's demand for 1978; processed); Gillian Garcia and Simon Pak, "Some savings and small-denomination time deposits at Clues in the Case of the Missing Money," American Ecocommercial banks and thrift institutions, but nomic Review, vol. 69 (May 1979), pp. 330-34; and John Wenninger and Charles Sivesind, "Changing the M-l Defini- such shifts are captured within the new M-2 agtion: An Empirical Investigation" (Federal Reserve Bank of gregate inasmuch as it includes money market New York, April 1979; processed). An alternative interpretation can be found in Richard D. Porter, Thomas D. Simpson, and Eileen Mauskopf, "Financial Innovation and the Monetary Aggregates," Brookings Papers on Economic Activity, 1:1979, pp. 213-29; Richard D. Porter and Eileen 21. Customers can normally withdraw funds from ordinary Mauskopf, "Cash Management and the Recent Shift in the savings accounts when they wish, often by telephone, Demand for Demand Deposits" (Board of Governors of the although depositary institutions have the right to require a Federal Reserve System, Division of Research and Statistics, 30-day notification before withdrawal. Time deposits, in con- Econometric and Computer Applications Section, November trast, are subject to a substantial penalty for withdrawal be- 1978; processed); and Thomas D. Simpson, "The Market for fore maturity. Federal Funds and Repurchase Agreements," Staff Studies 22. The shares of thrift institutions in small-denomination 106 (Board of Governors of the Federal Reserve System, July time deposits were augmented following the introduction of 1979), pp. 43-58. A summary and evaluation of some re- the six-month certificate by a regulatory ceiling that permitsearch on this subject can be found in John H. Kalchbrenner, ted them to offer the auction rate on six-month Treasury bills; "Recent Innovations in Financial Markets and Their Rela- by comparison, the ceiling rate on these deposits at comtionship to Money Demand," paper presented at the XI mercial banks was 25 basis points below the auction rate. Meeting of Technicians of Central Banks of the American However, in March 1979 the differential on ceiling rates on Continent, Port-of-Spain, Trinidad, November 19-24, 1978 money market certificates was removed—for auction rates on (Board of Governors of the Federal Reserve System, Novem- six-month bills in excess of 9 percent—and the commercial ber 1978; processed). bank share of these deposits subsequently tended to expand. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

102 Federal Reserve Bulletin • February 1980 mutual fund shares.23 Furthermore, growth in especially meaningful because many financial innew M-2 likely would not be affected much by novations in recent years have altered the pubconversions to NOW accounts, should they be- lic's demands for narrower measures. They arcome available nationwide, because funds ab- gue that these kinds of shifts are absorbed in a sorbed by these accounts would be drawn mainly very broad aggregate, such as L, because reducfrom other kinds of accounts included in this ag- tions in demands for narrower measures of mongregate. ey are mirrored in increases in the demands for Because it includes large-denomination time other components of the broadest measure, leavdeposits, the new M-3 aggregate is most com- ing demand for the total unaffected. Others, who parable to the old M-5 measure. The new M-3 focus on the volume of credit, view such an agalso includes term RPs, which have some similar- gregate as a better reflection of the amount of ities to large time deposits. The new M-3 defini- credit extended to the economy, both through the tion is based on the view that large-denomination commercial banking system and through other time deposits and term RPs substitute for each channels. other in many portfolios and that these items, especially negotiable CDs, are relatively liquid. The liquid assets, or L, measure adds to M-3 HISTORICAL BEHAVIOR OF other liquid assets held by the public.24 Some of THE NEW AGGREGATES these are liabilities of depositary institutions— term Eurodollars held by U.S. residents other An examination of the growth rates and velocithan banks and bankers acceptances—while oth- ties of the new measures affords a better underers are obligations of the U.S. Treasury—savings standing of their behavior and their relationship bonds and liquid marketable debt.25 The com- to the old measures.26 Chart 1 shows the growth mercial paper component consists of obligations rates of M-1A and M-1B and old M-l.27 All three of a variety of issuers, both financial institutions narrow measures have generally moved closely and nonfinancial corporations. Some observers together. In recent years, M-1B has tended to innote that such a broad measure of liquid assets is crease more rapidly than either M-l A or old M-l because of growth of NOW and ATS accounts. 23. Empirical analyses by the staff indicate that the behav- During 1979, for example, with shifts in holdings ior of new M-2 in recent years, unlike that of old M-2 and of monetary assets in response to the availability some other measures of money, has generally not departed of new deposit services, M-1B expanded at a rate far from expectations based on longer-term historical relationships. See David J. Bennett, Flint Brayton, Eileen Maus- that was 2lh percentage points faster than M-1A kopf, Edward K. Offenbacher, and Richard D. Porter, and old M-l; this difference reflected con- "Econometric Properties of the Redefined Monetary Aggreversions to NOW accounts in New York State gates" (Board of Governors of the Federal Reserve System, Division of Research and Statistics, Econometric and Com- and to ATS accounts nationwide.28 Average puter Applications Section, February 1980; processed). rates of growth of these measures over two long 24. In addition, the staff is experimenting with indexes of periods and several cycles are shown in table 3. liquid assets. In such indexes, a dollar's worth of a highly liquid asset is given a greater weight than a dollar's worth of a The three growth rates have been very similar to less liquid one. See William A. Barnett and Paul A. Spindt, one another, both on a trend and on a cyclical "The Velocity Behavior and Information Content of Divisia basis, except in the most recent expansion; at Monetary Aggregates" (Board of Governors of the Federal Reserve System, Division of Research and Statistics, Econo- that time, as the public adjusted to new deposit metric and Computer Applications and Special Studies Sections, January 1980; processed). 25. Eurodollar deposits of U.S. residents other than banks, except those overnight Eurodollars that are already 26. For econometric evidence on the new aggregates, see incorporated at the M-2 level, might appropriately be in- Bennett and others, "Econometric Properties." cluded in the new M-3 measure, since they share many char- 27. Appendix table 1 contains growth rates for these aggreacteristics with domestically issued, large-denomination time gates annually over the years 1960-79 and quarterly over deposits. However, lags on obtaining data on such Eurodol- the years 1973-79. lars are much longer than for the other components of this 28. A portion of this differential in growth rates can be ataggregate, and staff work suggests that estimations of this tributed to conversions from demand deposit accounts to component based on information that might be available on ATS and NOW accounts, and the remainder represents shifts an earlier schedule would be subject to large revisions. from ordinary savings accounts and other liquid assets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Redefined Monetary Aggregates 103 1. Rates of growth of new and old M-1 Percent '59 '63 '61 71 75 79 P Peak. Data are seasonally adjusted at annual rates. T Trough. services, average annual growth in M-1B ex- The public's demands for these M-l measures ceeded growth in M-l A and old M-l by slightly relative to the gross national product vary inmore than 3U percentage point. Should NOW ac- versely with their velocities, which are shown in count powers be permitted nationwide, a wider chart 2. Shown also is the Treasury bill rate, repdifferential in rates of growth between M-l A and resenting the return on a money market alterna- M-1B could persist for some time. tive to holding M-l balances. Since growth in 3. Trend and cyclical behavior of growth rates of new and old measures of money Average annual rates of growth in percent New New Old New Old Old New Old Old Period M-1A M-1B M-l M-2 M-2 M-3 M-3 M-4 M-5 1960-79 4.9 5.1 4.9 8.3 7.6 8.5 9.0 8.1 8.8 1960-69 3.7 3.8 3.8 6.9 6.2 7.0 7.2 6.5 7.2 1970-79 6.0 6.4 6.1 9.6 8.9 9.9 10.8 9.6 10.3 Peak to trough1 1960 Q2-1961 Q1 1.9 1.9 1.9 6.5 5.6 7.1 7.0 5.7 7.2 1969 Q4-1970 Q4 4.8 4.8 4.8 5.7 7.1 7.2 8.7 9.8 8.9 1973 Q4-1975 Q1 4.2 4.3 4.4 6.2 7.3 7.3 8.2 9.7 8.8 Trough to peak2 1961 Ql-1969 Q4 4.2 4.2 4.2 7.2 6.7 7.3 7.5 7.0 7.5 1970 Q4-1973 Q4 6.8 6.8 6.9 10.8 10.1 11.4 12.9 11.8 12.5 1975 Ql-1979 Q43 6.2 7.1 6.3 10.6 9.1 10.3 10.6 8.1 9.7 1. Averages of annualized quarter-to-quarter rates of growth. The base quarter for each calculation is the quarter following the peak (peak is first quarter shown). 2. Averages of annualized quarter-to-quarter rates of growth. The base quarter for each calculation is the quarter following the trough (trough is first quarter shown). 3. Data for 1979 Q4 are most recent quarterly data available, and this quarter may not be a cyclical peak. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

104 Federal Reserve Bulletin • February 1980 2. Velocities of new and old M-1 Percent P Peak. Data are seasonally adjusted at annual rates. T Trough. these aggregates has been quite similar, move- Growth in the new M-2 measure is shown in ments in their velocities have been very close, chart 3, along with growth in the old M-2 and M-3 although the velocity of M-lB has risen less rap- aggregates.29 The chart also displays the difidly in recent years than have the velocities of M- ferential between the yield on Treasury bills and 1A and old M-l, reflecting shifts to NOW and the ceiling rate on passbook savings accounts at ATS accounts of funds held in demand deposit commercial banks, which can be viewed as an accounts and in relatively inactive savings ac- indicator of the attractiveness of money market counts. Average rates of increase in these veloci- instruments relative to the interest-earning deties over longer intervals and over cycles are pre- posit components of these aggregates. Chart 3 ilsented in table 4. During economic expansions lustrates that growth in new M-2 has tended to the velocities of all three measures have tended vary closely with that of old M-3 and, to a lesser to rise at annual rates in excess of 3 percentage extent, that of old M-2. In addition, growth in points, while in economic contractions all three new M-2, along with growth of the two other velocities have tended to decline or at least their growth slackens. Further, in more recent cycles all three velocities have expanded at succes- 29. Appendix table 2 contains annual and recent quarterly sively more rapid rates. growth rates for these measures. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Redefined Monetary Aggregates 105 4. Trend and cyclical behavior of velocities of new and old measures of money Average annual rates of growth in percent New New Old New Old Old New Old Old Period M-l A M-1B M-l M-2 M-2 M-3 M-3 M-4 M-5 1960-79 3.2 3.0 3.2 -.1 .5 -.3 -.8 .1 -.6 1960-69 2.9 2.9 2.9 -.2 .4 -.3 -.6 .1 -.5 1970-79 3.6 3.1 3.5 0 .6 -.3 -1.1 0 -.7 Peak to trough1 1960 Q2-1961 Q1 -1.7 -1.7 -1.7 -6.3 -5.3 -6.8 -6.7 -5.5 -6.9 1969 Q4-1970 Q4 -.3 -.3 -.3 -1.2 -2.6 -2.5 -4.1 -5.2 -4.3 1973 Q4-1975 Q1 1.5 1.4 1.3 -.5 -1.5 -1.4 -2.4 -3.9 -3.0 Trough to peak2 1961 Ql-1969 Q4 3.1 3.1 3.1 .1 .6 0 -.2 .3 -.2 1970 Q4-1973 Q4 3.6 3.5 3.5 -.4 .3 -1.0 -2.4 -1.4 -2.0 1975 Ql-1979 Q43 4.9 4.1 4.9 .6 2.1 .9 .6 3.0 1.5 1. Averages of annualized quarter-to-quarter rates of growth. The base quarter for each calculation is the quarter following the peak (peak is first quarter shown). 2. Averages of annualized quarter-to-quarter rates of growth. The base quarter for each calculation is the quarter following the trough (trough is first quarter shown). 3. Data for 1979 Q4 are most recent quarterly data available, and this quarter may not be a cyclical peak. measures shown, has been sensitive to the yield played a tendency to vary directly with the spread, tending to slow as market rates have ad- spread between market rates of interest and regvanced above deposit ceiling rates. The new M-2 ulatory ceilings. By contrast, the velocity of old should, however, become less interest-sensitive M-2 tended to increase, especially in recent if the proportion of this aggregate comprising years, while the velocity of old M-3 has shown a components with yields tied to the money market very slight tendency to decline over the 1960s continues to expand. As shown in chart 4, the and 1970s.31 share of new M-2 in money market certificates The rate of growth of new M-3 is shown in has risen sharply since these accounts were in- chart 6, along with rates of growth of the old M-4 troduced in mid-1978, and the shares in money and M-5 measures. Also shown in chart 6 is the market mutual funds, overnight RPs, and over- rate of growth of L, the broad measure of liquid night Eurodollars have also increased in recent assets.32 Chart 6 illustrates the closely parallel years. By contrast, the shares of M-l A and or- rates of growth in new M-3 and old M-5, which dinary savings accounts have generally declined. are similar in content, although expansion in new Trend and cyclical growth rates of new M-2 M-3 has generally exceeded that of both of its old and old M-2 and M-3 are shown in table 3. Over counterparts. The disparity between growth in longer periods, especially during economic ex- new M-3 and in old M-4 and M-5 widened in the pansions, new M-2 has grown faster than old late 1970s with sizable increases in RPs, money M-2. Compared with old M-3, new M-2 has market mutual fund shares, and overnight Euexpanded more slowly, except during the most rodollars; these items are components of the new recent economic expansion when sharp increas- M-3 aggregate but not of the old M-4 and M-5 es in money market mutual fund shares and ex- aggregates. pansion in overnight RPs and overnight Euro- Growth in total liquid assets, L, has been simidollars contributed to somewhat more rapid lar to—although somewhat steadier than—that of growth in new M-2.30 new M-3. In recent years, L has tended to grow The velocity of new M-2, along with the veloc- more rapidly than M-3 and other broad monetary ities of old M-2 and M-3, is shown in chart 5. aggregates, reflecting a growing proportion of liq- New M-2 velocity has shown very little trend over the past two decades, although it has dis- 31. Trend and cyclical rates of growth of the velocities of these three measures are shown in the middle three columns of table 4. 30. During economic contractions, new M-2 has tended to 32. Annual and quarterly rates of growth of the new M-3 weaken relative to old M-2 and M-3, mainly because growth and L measures and the old M-4 and M-5 measures are prein those two aggregates was buoyed by their large-denomina- sented in appendix table 3, along with rates of growth of their tion time deposit components. velocities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

106 Federal Reserve Bulletin • February 1980 16 8 0 8 + 0 6 + is uid assets that is being issued outside domestic deposits in 1970 and on removal of those on the depositary institutions. remainder in 1973. The velocity of L has also de- Chart 7 depicts the velocity of the new M-3, clined over the period. together with the velocities of L and of old M-4 and M-5. While the velocity of new M-3 has generally declined over the period shown, in recent years it has displayed some tendency to level off. SOME TECHNICAL ISSUES The responsiveness of new M-3, and the old M-4 and M-5 measures, to changes in the interest rate The new aggregates incorporate consolidation spread was dampened by the removal of regula- and seasonal adjustments. In addition, their contory ceilings on some large-denomination time struction relies on new data sources. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Redefined Monetary Aggregates 107 4. Principal components of new M-2 Percent Other checkable deposits Savings deposits Small-denomination time deposits less MMCs MMCs Money market mutual fund shares^ Overnight RPs and Eurodollars j M-l A, savings deposits, and small-denomination time deposits are seasonally adjusted, Consolidation justment involves the netting of deposits held by depositary institutions with other depositary in- Consolidation adjustments have been made in stitutions. In constructing M-1A, demand deposthe construction of each of the new measures, in its held by commercial banks with other comorder to avoid double counting of the public's mercial banks have been removed. The monetary assets.33 One major consolidation ad- procedure also calls for the removal from M-1B of those demand deposit holdings of thrift institutions that are estimated to be used in servicing 33. A discussion of consolidation issues can be found in their checkable deposits; at present the amount Improving the Monetary Aggregates: Report, pp. 12-14, 31- 37, and in "A Proposal," pp. 32, 40-41. is negligible. Similarly, at the M-2 level all other Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

108 Federal Reserve Bulletin • February 1980 5. Velocities of new M-2 and old M-2 and M-3 P Peak. Data are seasonally adjusted at annual rates. Yield spread is Treasury T Trough. bill rate less passbook ceiling rate. demand deposit holdings of thrift institutions are issue shares to the public and use the proceeds to deducted; currently that means all such demand acquire a variety of liquid assets that are comdeposits are netted from M-2.34 Savings and time ponents of the new M-2, M-3, and L measures. deposits held by depositary institutions are also To avoid counting these amounts first as money appropriately netted at the M-2 and M-3 levels. market mutual fund shares and then again as The other major consolidation adjustment in- money market fund holdings of RPs, CDs, comvolves removing the assets held by money mar- mercial paper, and so forth, holdings of each of ket mutual funds from several components of the these assets by money market funds are sub- M-2, M-3, and L measures.35 These institutions tracted from the relevant components. Thus holdings by money market funds of RPs are deducted in constructing the public's overnight RPs 34. It has been assumed that all demand deposits owned by for M-2, holdings of domestic CDs are deducted thrift institutions are held to service their checkable deposits from the large-denomination time deposits for and their ordinary savings deposits. The portion of thrift institution holdings of demand deposits to be removed at the M-3, and holdings of each of the other assets ap- M-1B level is determined by the ratio of checkable deposits pearing in L are appropriately netted. at thrift institutions to the sum of their checkable and savings Each of the principal components of the new deposit liabilities. 35. In general, the components against which a money aggregates will be published in the money stock market mutual fund adjustment is made exclude holdings by release on a consolidated, not a gross, basis, as it depositary institutions, the U.S. government (including the appears in the new aggregates. Thus differences Federal Reserve), and foreign commercial banks and official institutions. between the published M-1B and M-2 aggregates Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Redefined Monetary Aggregates 109 6. Rates of growth of new M-3 and L and old M-4 and M-5 P Peak. T Trough. Data are seasonally adjusted at annual rates. Yield spread is Treasury bill rate less passbook ceiling rate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

110 Federal Reserve Bulletin • February 1980 7. Velocities of new M-3 and L and old M-4 and M-5 P Peak. Data are seasonally adjusted at annual rates. Yield spread is Treasury T Trough. bill rate less passbook ceiling rate. and the sum of their published components will ponents that have not yet been seasonally adequal the consolidation components associated justed (and the aggregate in which they first with thrift institution demand deposits. appear) are as follows: 1. Other checkable deposits (M-1B). 2. Overnight RPs and Eurodollars (M-2). Seasonal Adjustment 3. Money market mutual fund shares (M-2). 4. Term RPs at both commercial banks and The procedure for seasonal adjustment of the savings and loan associations (M-3). new aggregates involves seasonal adjustment of 5. Other Eurodollars held by U.S. residents each component, whenever possible, and then a (L). summation of the components to derive the A standard option of the Census X-ll program appropriate total. Some components cannot be was used in the seasonal adjustment of the sepaseasonally adjusted until sufficient historical data rate components of the new aggregates, followare available.36 The most important of the com- ing an examination of several alternative options. However, it should be noted that the overall issue of seasonal adjustment of the monetary ag- 36. In some cases, even though enough historical data are gregates has been under review by a panel of outavailable for a seasonal adjustment, the series are dominated side experts, the Committee of Experts on by a strong trend, so that it is unlikely that actual seasonal patterns can be measured accurately. Seasonal Adjustment Techniques, under the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Redefined Monetary Aggregates 111 5. New data sources for constructing the redefined monetary aggregates Component Lag and aggregate in Coverage Frequency (weeks) which it first appears Demand deposits (M-1A) Nonmember banks1 sample weekly (daily average) 2-3 Other checkable deposits (M-1B) Member banks (ATS and NOW) universe weekly (daily average) Nonmember banks (ATS and NOW) sample weekly (daily average) 2-3 Mutual savings banks (NOW and demand deposits) sample weekly (Wednesday) 2-3 Savings and loans (NOW) sample thrice-monthly 1 Credit unions (share drafts)2 sample weekly (Wednesday) 2-3 Savings and small-denomination time deposits (M-2) Nonmember banks sample weekly (daily average) 2-3 Mutual savings banks sample weekly (Wednesday) 2-3 Savings and loans sample thrice-monthly 1 Credit unions2 sample weekly (Wednesday) 2-3 Overnight repurchase agreements (M-2) Member banks 125 large member banks weekly (daily average) 1 Overnight Eurodollars at Caribbean branches (M-2) Member banks approximate universe weekly (daily average) 1 Money market mutual fund shares (M-2) universe weekly (Wednesday) 1 Large-denomination time deposits (M-3) Nonmember banks sample weekly (daily average) 2-3 Mutual savings banks sample weekly (Wednesday) 2-3 Savings and loans sample thrice-monthly 1 Term repurchase agreements (M-3) Member banks 125 large member banks weekly (daily average) 1 1. In addition, data on demand deposits of U.S. branches and agencies of foreign banks would be collected on a regulatory report of deposits with an application of reserve requirements of these institutions under the International Banking Act. At present, all U.S. branches and agencies of foreign banks report their deposits once each month and large institutions in New York City report deposits on a daily basis. 2. Scheduled to begin in March 1980. Weekly sample consists of approximately 70 of the largest credit unions. In addition, a sample of smaller credit unions will be collected once each month, as of the last Wednesday of the month. chairmanship of Geoffrey H. Moore, which is begin in early 1980.38 The most important new scheduled to report to the Board in a few series are shown in table 5. Most of these series months.37 are collected on a sample basis and are then benchmarked to less frequent reports of condition in order to obtain timely estimates of the to- New Data Sources tal volume of each item. A sample of nonmember banks serves to estimate demand deposits, other Several new data sources are being used in con- checkable deposits, and small- and large-denominection with the redefined aggregates. Most of nation time deposits on a weekly basis. Similarthese new sources are associated with com- ly, a sample of mutual savings banks, which beponents that either are new or appear separately gan to be surveyed in early 1980, is being used to for the first time, and they have been obtained in construct the components of deposits at these inorder to improve the accuracy and the timeliness stitutions. In 1979 the Federal Home Loan Bank of the redefined measures. The staff believes that Board started collecting sample data three times their use will make the quality of monetary statis- a month from savings and loan associations on tics for the new measures at least comparable to the various components of the new aggregates. A that of the old measures. new sample of credit unions is scheduled for im- A number of new data series began around plementation in the spring of 1980 and should year-end 1979 and some others are scheduled to provide timely data on several components for these institutions. Data on money market mutual 37. Other members of this committee are George Box, Hy- 38. Other data sources are discussed in "A Proposal," pp. man Kaitz, James Stephenson, and Arnold Zellner. 33-40. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

112 Federal Reserve Bulletin • February 1980 fund shares are being collected in a new weekly being collected on a daily basis from all member survey by the Investment Company Institute. In banks with significant amounts of these deposits. addition, this institute collects monthly data on Finally, a new daily report on selected federal the industry's holdings of various assets, for use funds and RP borrowings of 125 large member in the consolidation process. Data on overnight banks is used in constructing the overnight and Eurodollars at offices in the Caribbean are now term RP series. A1. Rates of monetary and velocity growth for new and old M-1 Percent Monetary growth Velocity growth NewM-lA New M-1B Old M-l New M-1A New M-1B Old M-l Year1 1960 .6 .6 .4 1.7 1.7 1.8 1961 2.8 2.8 2.8 4.3 4.3 4.2 1962 1.8 1.8 1.4 4.0 4.0 4.4 1963 4.0 4.0 4.0 2.6 2.6 2.6 1964 4.3 4.4 4.5 1.4 1.4 1.3 1965 4.4 4.4 4.3 5.8 5.8 5.8 1966 2.7 2.7 2.9 5.3 5.3 5.1 1967 6.4 6.3 6.4 -.3 -.2 -.3 1968 7.4 7.4 7.6 1.8 1.7 1.6 1969 3.8 3.8 3.9 2.6 2.6 2.5 1970 4.8 4.8 4.8 -.3 -.3 -.3 1971 6.6 6.6 6.6 2.7 2.7 2.8 1972 8.5 8.5 8.4 3.0 3.0 3.1 1973 5.7 5.8 6.2 5.2 5.1 4.6 1974 4.7 4.7 5.1 2.4 2.4 2.0 1975 4.7 4.9 4.6 5.1 4.9 5.2 1976 5.5 6.0 5.8 4.2 3.7 3.9 1977 7.7 8.1 7.9 4.2 3.9 4.0 1978 7.4 8.2 7.2 5.6 4.8 5.8 1979 5.5 8.0 5.5 4.2 1.8 4.2 Quarter2 1973-1 8.2 8.4 8.5 6.7 6.5 6.4 2 4.9 4.9 5.1 2.4 2.4 2.2 3 4.4 4.5 5.2 4.6 4.5 3.8 4 4.8 4.8 5.4 6.5 6.6 5.9 1974-1 6.7 6.7 7.3 -2.6 -2.6 -3.1 2 3.6 3.6 4.1 5.4 5.4 4.9 3 3.1 3.1 4.1 5.4 5.4 4.5 4 4.9 5.0 4.6 1.4 1.2 1.6 1975-1 2.6 2.9 2.0 -2.0 -2.3 -1.3 2 5.9 5.9 5.8 6.0 6.1 6.2 3 7.0 7.3 7.2 10.3 10.0 10.0 4 2.9 3.2 3.0 5.7 5.4 5.6 1976-1 5.4 5.7 4.6 8.4 8.1 9.2 2 5.8 6.3 6.4 1.3 .8 .7 3 3.4 3.9 4.1 4.3 3.8 3.6 4 7.0 7.6 7.4 2.4 1.8 1.9 1977-1 8.8 9.3 7.4 5.6 5.2 7.0 2 6.7 6.9 7.4 5.5 5.3 4.8 3 6.0 6.5 8.6 5.6 5.0 2.9 4 8.4 8.7 7.4 .1 -.2 1.1 1978-1 7.6 7.9 6.6 .5 .2 1.4 2 8.7 9.1 9.2 9.6 9.1 9.0 3 7.1 7.3 7.9 3.4 3.2 2.6 4 5.6 7.4 4.3 8.3 6.5 9.6 1979-1 .2 4.8 -1.3 9.9 5.3 11.6 2 7.8 10.7 8.1 -1.2 -4.0 -1.5 3 8.8 10.1 9.7 2.6 1.3 1.7 4 4.7 5.3 5.0 5.1 4.6 4.8 1. Fourth-quarter over fourth-quarter growth rates. 2. Annualized growth rates based on seasonally adjusted data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Redefined Monetary Aggregates 113 A2. Rates of monetary and velocity growth for new M-2 and old M-2 and M-3 Percent Monetary growth Velocity growth PPeerriioodd New-M-2 Old M-2 Old M-3 New M-2 Old M-2 Old M-3 Year1 1960 4.6 2.6 4.8 -2.3 -.3 -2.4 1961 7.1 5.4 7.1 0 1.7 0 1962 8.0 5.9 7.7 -2.0 0 -1.7 1963 8.6 7.0 8.7 -1.8 -.3 -1.9 1964 7.9 6.7 8.3 -2.0 -.8 -2.2 1965 8.0 8.6 8.6 2.2 1.7 1.7 1966 4.9 6.0 5.4 3.1 2.0 2.7 1967 9.3 9.9 9.7 -2.9 -3.4 -3.3 1968 8.0 9.0 8.1 1.2 .3 1.1 1969 4.2 3.2 3.6 2.3 3.2 2.8 1970 5.8 7.2 7.2 -1.2 -2.6 -2.5 1971 13.5 11.3 13.5 -3.5 -1.6 -3.5 1972 12.9 11.2 13.3 -1.0 .5 -1.3 1973 7.3 8.8 9.0 3.5 2.1 1.9 1974 6.0 7.7 7.1 1.1 -.5 .1 1975 12.3 8.4 11.1 -2.0 1.5 -1.0 1976 13.7 10.9 12.7 -3.3 -.9 -2.5 1977 11.5 9.8 11.7 .7 2.2 .5 1978 8.4 8.7 9.5 4.6 4.3 3.6 1979 8.8 8.3 8.1 1.0 1.4 1.6 Quarter2 1973-1 10.3 9.8 10.9 4.7 5.2 4.1 2 6.9 7.7 8.3 .4 -.4 -1.0 3 6.0 7.7 7.4 3.0 1.3 1.6 4 5.4 9.0 8.2 6.0 2.4 3.1 1974-1 8.0 10.3 9.6 -3.9 -6.1 -5.3 2 5.2 7.0 6.4 3.8 2.1 2.6 3 4.4 6.1 5.2 4.2 2.4 3.3 4 5.8 6.6 6.4 .5 -.4 -.2 1975-1 7.8 6.4 8.2 -7.1 -5.7 -7.5 2 14.9 9.5 12.4 -2.7 2.5 -.3 3 14.6 10.0 12.8 2.8 7.2 4.5 4 9.9 6.8 9.4 -1.1 1.9 -.7 1976-1 13.0 10.5 12.0 .9 3.3 1.9 2 12.7 10.0 11.9 -5.4 -2.8 -4.7 3 11.3 8.9 11.0 -3.4 -1.1 -3.1 4 15.2 12.6 13.8 -5.6 -3.1 -4.3 1977—1 13.7 10.9 12.4 .9 3.6 2.1 2 11.2 9.0 10.5 1.0 3.2 1.7 3 9.6 10.1 11.8 1.9 1.5 -.2 4 9.7 7.9 10.1 -1.2 .5 -1.6 1978-1 7.5 7.0 8.1 .6 1.1 0 2 7.5 8.4 8.4 10.8 9.9 9.8 3 8.2 9.8 10.3 2.3 .8 .3 4 9.5 8.5 9.8 4.4 5.4 4.1 1979-1 6.3 2.8 5.3 3.9 7.3 4.8 2 10.2 8.8 7.9 -3.5 -2.1 -1.3 3 10.3 11.9 10.5 1.1 -.5 .9 4 7.2 8.9 7.8 2.7 1.0 2.1 1. Fourth-quarter over fourth-quarter growth rate. 2. Annualized growth rates based on seasonally adjusted data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

114 Federal Reserve Bulletin • February 1980 A3. Rates of monetary and velocity growth for new M-3 and L and old M-4 and M-5 Percent Monetary growth Velocity growth PPeerriioodd New M-3 New L Old M-4 Old M-5 New M-3 New L Old M-4 Old M-5 Year1 1960 4.8 3.5 2.6 4.8 -2.5 -1.2 -.3 -2.4 1961 7.7 6.2 6.5 7.9 -.5 .9 .6 -.7 1962 8.8 8.0 7.1 8.5 -2.7 -2.0 -1.2 -2.4 1963 9.5 8.4 8.3 9.6 -2.6 -1.6 -1.6 -2.7 1964 8.9 7.3 7.8 9.0 -2.8 -1.4 -1.8 -2.9 1965 9.2 8.1 9.5 9.1 1.1 2.2 .9 1.2 1966 5.2 5.5 5.5 5.0 2.8 2.5 2.6 3.0 1967 10.4 8.5 10.7 10.3 -3.9 -2.2 -4.2 -3.8 1968 8.7 9.5 9.3 8.3 .6 -.2 .0 .9 1969 1.5 4.4 .1 1.5 5.0 2.0 6.4 4.9 1970 8.9 6.5 10.2 9.2 -4.1 -1.9 -5.1 -4.3 1971 14.8 10.4 12.8 14.3 -4.6 -.8 -2.9 -4.2 1972 14.0 12.9 12.3 13.9 -2.0 -1.0 -.5 -1.9 1973 11.7 12.3 12.0 11.0 -.5 -1.1 -.8 .1 1974 8.7 9.6 10.7 9.0 -1.4 -2.2 -3.1 -1.7 1975 9.4 9.8 6.6 9.7 .6 .2 3.3 .3 1976 11.4 11.0 7.1 10.2 -1.3 -1.0 2.6 -.3 1977 12.6 12.6 10.1 11.7 -.3 -.3 2.0 .5 1978 11.3 12.3 10.6 10.6 1.9 1.0 2.5 2.5 1979 9.5 n.a. 7.5 7.6 .3 n.a. 2.2 2.1 Quarter2 1973-1 14.0 14.0 14.2 13.7 1.0 1.1 .9 1.3 2 11.7 12.3 13.8 12.2 -4.3 -4.8 -6.3 -4.7 3 11.2 11.8 11.0 9.6 -2.2 -2.7 -1.9 -.6 4 8.0 9.1 7.0 7.1 3.3 2.2 4.4 4.3 1974-1 10.1 11.0 11.4 10.2 -5.9 -6.7 -7.1 -6.0 2 10.6 11.1 12.8 10.3 -1.5 -1.9 -3.6 -1.2 3 7.7 8.4 9.9 7.8 .9 .1 -1.3 .8 4 5.4 6.6 6.9 6.7 .8 -.3 -.7 -.4 1975-1 7.2 7.1 7.6 8.9 -6.4 -6.4 -6.9 -8.1 2 9.4 9.5 5.5 9.5 2.6 2.5 6.5 2.5 3 10.7 10.5 6.2 10.1 6.5 6.8 11.1 7.1 4 9.1 10.7 6.2 8.8 -.4 -1.9 2.4 -.1 1976-1 9.9 10.1 6.0 9.0 4.0 3.7 7.8 4.8 2 11.3 11.1 6.0 9.4 -4.1 -3.9 1.0 -2.2 3 10.3 10.0 6.3 9.2 -2.5 -2.2 1.5 -1.4 4 12.1 10.8 9.5 11.8 -2.6 -1.4 -.1 -2.3 1977-1 12.4 11.5 10.1 11.8 2.2 3.0 4.4 2.7 2 11.4 11.8 8.3 10.0 .8 .4 3.9 2.2 3 11.7 12.2 10.0 11.7 -.1 -.6 1.6 -.1 4 12.5 12.8 10.4 11.5 -3.9 -4.2 -1.9 -2.9 1978-1 10.5 11.2 10.2 10.0 -2.3 -.3 -2.1 -1.8 2 11.1 12.4 10.6 9.8 7.2 5.9 7.6 8.4 3 10.3 11.3 9.9 10.4 .2 -.7 .6 .2 4 11.5 12.2 10.1 10.7 2.4 1.8 3.8 3.3 1979-1 7.9 10.4 5.4 6.8 2.3 -.2 4.7 3.4 2 8.8 13.1 3.7 4.9 -2.2 - 6.3 2.9 1.7 3 10.3 11.7 9.2 8.9 1.1 -.3 2.2 2.5 4 9.8 n.a. 11.0 9.1 .1 n.a. -1.0 .8 1. Fourth-quarter over fourth-quarter growth rates. 2. Annualized growth rates based on seasonally adjusted data, n.a. Not available as data for December 1979 are incomplete. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

115 Domestic Financial Developments in the Fourth Quarter of 1979 This report, which was sent to the Joint Economic ing rates of increase announced earlier for the Committee of the U.S. Congress on February 6, year as whole. The discount rate was increased a 1980, highlights the important developments in full percentage point, to 12 percent. In addition, domestic financial markets during the fall and a marginal reserve requirement of 8 percent was early winter. made applicable to any increase over base-period levels in managed liabilities issued by large mem- As the fourth quarter opened, the monetary ag- ber banks and by branches and agencies of cergregates were expanding rapidly in an environ- tain foreign banks. Such managed liabilities inment of double-digit inflation, a depreciating dol- clude time deposits issued in denominations of lar in foreign exchange markets, and increasing $100,000 or more maturing within one year, as speculative activity in metals and other basic well as net borrowings from own foreign commodities markets. On October 6, the Federal branches and certain other Eurodollar transac- Reserve announced a policy package designed to tions; also included are federal funds purchased address this situation by slowing the growth of and securities sold under repurchase agreemoney and bank credit with the intent of achiev- ments, net of a trading-account exemption, Interest rates Percent per annum State and local government bonds f 1977 1978 1979 1980 1977 1978 1979 1980 Monthly averages except for Federal Reserve discount rate and ing and Urban Development; Aaa utility bonds, weighted averages of conventional mortgages (based on quotations for one day each new publicly offered bonds rated Aaa, Aa, and A by Moody's Inmonth). Yields: U.S. Treasury bills, market yields on three-month is- vestors Service and adjusted to Aaa basis; U.S. government bonds, sues; prime commercial paper, dealer offering rates; conventional market yields adjusted to 20-year constant maturity by U.S. Treasury; mortages, rates on first mortgages in primary markets, unweighted state and local government bonds (20 issues, mixed quality), Bond and rounded to nearest 5 basis points, from U.S. Department of Hous- Buyer. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

116 Federal Reserve Bulletin • February 1980 Changes in selected monetary aggregates1 Seasonally adjusted annual rates of change, in percent 1978 1979 IItteemm 11997777 11997788 11997799 Q4 Q1 Q2 Q3 Q4 Member bank reserves2 Total 5.3 6.7 2.8 2.4 -3.0 -5.0 6.3 13.1 Nonborrowed 3.1 6.8 .8 4.7 -3.4 -8.8 8.2 7.5 Monetary base3 8.3 9.1 7.6 8.5 5.6 3.9 9.8 10.1 Concepts of money4 M-l 7.9 7.2 5.5 4.3 -1.3 8.1 9.7 5.1 M-2 9.8 8.7 8.3 8.5 2.8 8.8 11.9 8.9 M-3 11.7 9.5 8.1 9.8 5.3 8.0 10.5 7.8 Time and savings deposits in M-2 .. 11.2 9.7 10.4 11.5 5.8 9.3 13.3 11.5 Small time plus total savings5 .... 10.5 6.1 10.8 7.6 2.7 15.0 15.7 8.3 Savings 11.1 1.8 -5.8 -1.2 -11.8 -3.5 5.8 — 13.8 Small time 9.7 11.9 31.0 19.2 20.3 35.9 25.7 30.0 Time and savings in M-2 excluding MMCs -5.2 2.5 -8.2 -5.0 1.7 -9.6 Thrift deposits in M-3 14.5 10.6 7.8 11.6 8.8 6.8 8.4 6.3 Excluding MMCs --1100..11 --55..77 --33..88 --2211..33 --11..00 --1155..55 MEMO (change in billions of dollars, seasonally adjusted) Managed liabilities 27.5 68.3 49.6 19.7 20.8 4.0 12.8 12.8 Large negotiable CDs at large banks 8.0 23.1 0.0 5.5 7.0 -10.3 -4.0 7.3 All other large time deposits .. 10.8 22.1 9.2 6.7 4.7 -3.3 1.1 6.7 Nondeposit funds 8.7 23.1 40.7 7.5 9.1 17.6 15.7 -1.2 Net due to related foreign institutions -3.8 6.6 26.0 3.9 4.3 11.9 9.1 .7 Other6 12.4 16.5 14.7 3.7 4.8 5.7 6.6 -1.9 1. Changes are calculated from the average amounts outstanding in each quarter. 2. Annual rates of change in reserve measures have been adjusted for changes in reserve requirements. 3. Includes total reserves (member bank reserve balances in the current week plus vault cash held two weeks earlier), currency in circulation (currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of commercial banks), and vault cash of nonmember banks. 4. M-l is currency plus private demand deposits adjusted. M-2 is M-l plus bank time and savings deposits other than negotiable CDs in denominations of $100,000 or more. M-3 is M-2 plus deposits at mutual savings banks and savings and loan associations plus shares in credit unions. 5. Interest-bearing deposits subject to Regulation Q. 6. Includes borrowings from other than commercial banks through federal funds purchased and securities sold under repurchase agreements, plus loans sold to affiliates, loan RPs, and other borrowings. from sources other than member banks, U.S. eraged just under 12 percent the week preceding branches and agencies of foreign banks, and the announcement, peaked above 15V2 percent Edge Act corporations. two weeks later; other short-term rates also rose The policy package also included a change in abruptly though by less. At banks, the prime the System's daily operating procedures to em- lending rate reached 153/4 percent in mid-Nophasize control of the volume of member bank vember compared with 13V2 percent on October reserves as the means of achieving desired mone- 6. Medium- and long-term rates rose between 1 tary growth rates. Previously, open market oper- and IV2 percentage points, and stock prices ations had focused attention primarily on main- dropped markedly—by 10 percent or so on avertaining the federal funds rate at a level thought age. By the middle of November, however, upconsistent with monetary growth objectives. ward pressures on interest rates dissipated as This procedure had become less satisfactory as markets adjusted to the System's new operating institutional innovations and changing inflation- procedure and as growth in credit flows and in ary expectations made it more difficult to ascer- the monetary aggregates slowed. By mid-Decemtain the short-run relationship between interest ber, interest rates were down from their mid-Norates and the monetary aggregates. vember peaks, the bank prime rate had been re- Interest rates increased sharply during the duced to 15V4 percent, and stock price averages three weeks following the October 6 action, and had recovered to about September month-end short-term rates exhibited unusual day-to-day levels. volatility. The federal funds rate, which had av- As a result of the new policy procedures, the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Financial Developments, Q4 1979 117 accompanying sharp increase in interest rates, bearing savings accounts subject to automatic and further slowing in the expansion of real and transfer service (ATS) or negotiable order of nominal GNP, growth in money and credit withdrawal (NOW). Such transfers declined in slowed sharply in the fourth quarter. Narrowly volume as the year progressed, however; in the defined money, M-l, grew at an annual rate of 5 fourth quarter they had a negligible impact on percent, on a quarterly average basis, little more M-l growth. than half the pace of the preceding three months. The sharp changes in market yields in the Inflows of time and savings deposits included in fourth quarter had a marked effect on the structhe broader aggregates (M-2 and M-3) also weak- ture of the interest-bearing component of M-2. ened, and excluding 6-month money market cer- Savings accounts contracted at a record annual tificates (MMCs), those deposits declined. M-l rate of 133A percent, as yields on MMCs and on and M-3 were within, and M-2 was only slightly market instruments rose to almost twice the ceilabove, the growth ranges established by the Fed- ing rates on savings accounts. Reflecting entirely eral Open Market Committee (FOMC) for the the robust gains in MMCs, particularly during year ending with the fourth quarter of 1979. November, small-denomination time deposits at Bank credit expansion also slowed sharply in commercial banks grew at a near-record annual the quarter, with business loans increasing at rate of 30 percent. Large-denomination time deonly a 6 percent annual rate, compared with more posits included in M-2 also expanded at a subthan 20 percent during the spring and summer. stantial 25 percent annual rate over the quarter. Indeed, credit flows to the private sector in gen- Overall, the time and savings deposit component eral diminished in the fourth quarter. Substan- of M-2 increased at a rate only slightly below that tially increased credit costs discouraged some of the third quarter. Thus, the slowing in M-2 borrowing, and the supply of funds was con- growth was less pronounced than that for M-l. strained as usury ceilings became binding in MMCs also were the primary source of funds certain states and as lenders instituted new re- to thrift institutions during the fourth quarter. As strictions on nonprice terms. Households reduced their borrowing in the consumer install- Treasury yield curves and deposit rate ceilings ment credit and residential mortgage markets. In the public sector, Treasury borrowing was rela- Percent per annum tively sizable, reflecting the large fourth-quarter 13 deficit, and state and local financing also remained quite high. MONETAR Y A GGREGA TES AND BANK CREDIT The reduced pace of M-l growth in the fourth quarter brought its growth rate for the year to 5V2 percent, within the 3 to 6 percent range established by the FOMC.1 Growth over the course of the year is estimated to have been reduced slightly less than IV2 percentage points by a diversion of funds from demand deposits into interest- This point marks the maximum yield on money market time deposits at commercial banks and thrift institutions for December 31, 1. The Committee had originally adopted a range of IV2 to 1979. tThis point marks the maximum yield on 2 1/2-year floating ceiling 4V2 percent, on the assumption that shifting to newly authoaccounts authorized January 1, 1980 (thrift institutions, 11.12 perrized ATS and NOW accounts would depress growth of M-l cent; commercial banks, 10.84 percent). by 3 percentage points. When such shifting appeared likely to Data reflect annual effective yields. Ceiling rates are yields derived be no more than half that amount, the range was adjusted to 3 from continuous compounding of the nominal ceiling rates. Marketto 6 percent. yield data are on an investment-yield basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

118 Federal Reserve Bulletin • February 1980 at banks, depositors at thrift institutions with- At year-end, the federal regulatory agencies drew funds from low-ceiling passbook accounts further increased the opportunity for savers with and placed them in MMCs; such shifts during the limited financial resources to earn near-market past year and a half have substantially altered the rates of return on their deposits. Specifically, efinstitution's liability mix toward high-cost short- fective January 1, 1980, banks and thrift instituterm instruments. During the fourth quarter, sav- tions are permitted to offer an account with a ings and loan associations—particularly the big- minimum maturity of two and one-half years in ger institutions—issued large-denomination time any size they choose and with an offering yield deposits to supplement reduced deposit flows tied to the market yield on 30-month U.S. Treasfrom the household sector. In total, however, ury securities; the return, once established, regrowth in deposits at thrift institutions slowed mains fixed throughout the life of the deposit. considerably toward year-end. Consequently, The ceiling rate is 75 and 50 basis points below the pace of expansion in M-3 abated to a VU per- the Treasury yield for banks and thrift institucent rate in the fourth quarter—from a IOV2 per- tions respectively; with continuous compoundcent rate in the preceding three months. ing, the effective ceiling yield at thrift institu- Households also acquired a substantial volume tions is nearly equal to the yield of the Treasury of nondeposit assets as they sought to benefit security. In January, the effective yields on the from higher market yields available during the 2V2-year certificates were 11.12 percent at thrift quarter. Money market mutual funds continued institutions and 10.84 percent at commercial to attract investors' funds; their assets increased banks. Regulators also authorized an increase of an average $3V2 billion per month. Direct ac- XU percentage point in the ceiling on 90-day to quisitions of short-term U.S. Treasury securities 1-year time accounts applicable to both banks also appealed to more savers than earlier in the and thrift institutions. year, and noncompetitive tenders at Treasury Total member bank reserves grew at a 13 perauctions swelled during November to a high for cent annual rate during the fourth quarter—exthe year. ceeding growth of required reserves by 1 percentage point—as banks, as a group, evidenced a desire for larger excess reserves in the aftermath Components of Major categories of bank credit bank loans of the System's October 6 actions. Nonborrowed reserves grew a great deal more slowly than total Change, billions of dollars TREASURY SECURITIES 4 I BUSINESS reserves with member banks meeting a larger + 16 — m~ 0 I proportion of their reserve needs at the discount ;i2 nr J 8 window. The managed liabilities of commercial banks OTHER SECURITI rh 4 I4 increased $123/4 billion during the fourth quarter, n . nn n * 10 0 the same as during the third. For the first time in TOTAL LOANS J 40 RnEAL. ESnTATEn nn B 12 six months, domestic offices issued substantial amounts of large-denomination time deposits, 32 but this growth was partially offset by runoffs in nondeposit funds. Large banks relied much less 24 CONSUMER on increased borrowing from their overseas offices; and other nondeposit borrowings, a composite that includes federal funds and repurchase n m agreements (RPs), actually declined. With credit NONBANK FINANCIAL a 8 4 demands apparently weakening and with the 8 r-i., err*.. 1 I I I —t, Q percent marginal reserve requirement adding to o I H • • the already high costs for managed liabilities, Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 many banks sought to keep their balances below 1978 1979 1978 1979 base-period levels. By year-end, a number of Seasonally adjusted. Total loans and business loans are adjusted large member banks and most U.S. agencies and for transfers between banks and their holding companies, affiliates, branches of foreign banks had accomplished this subsidiaries, or foreign branches. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Financial Developments, Q4 1979 119 objective, despite growth in their loan portfolios. Business loans and short- In total, managed liabilities subject to the mar- and intermediate-term business credit ginal reserve requirement averaged about $5!/2 Seasonally adjusted annual rates of change, in percent1 billion in the second half of October but dropped Short- and Business loans to about $374 billion in December. Period at banks2 in b te u r s m in e e d s i s a c te r - e t d e i r t m 3 With slackening economic expansion and with firmer credit market conditions, total loans and 1973 21.8 21.5 investments at commercial banks grew at a pace 1974 19.3 23.5 1975 -3.8 -4.0 of only VU percent during the fourth quarter, 1976 1.3 4.4 down sharply from 153A percent in the previous 1 1 9 9 7 7 8 7 1 1 6 0. . 5 3 1 1 8 3 . . 3 6 quarter. Investments grew only marginally. 1979 17.4 20.0 Treasury securities were liquidated for the first 1979-Q1 20.5 20.8 Q2 16.6 20.1 time since a year earlier, but the decline was Q3 22.7 27.4 more than offset by acquisitions of other securi- Q4e 5.8 6.3 ties, primarily state and local obligations. Growth 1. Growth rates calculated between last months of period. in total loans outstanding at banks dropped from 2. Based on monthly averages of Wednesday data for domestically chartered banks and an average of current and previous month-end an annual rate of I8V4 percent in the third quardata for foreign-related institutions. Adjusted for outstanding amounts ter to 3V4 percent in the fourth, largely reflecting of loans sold to affiliates. 3. Short- and intermediate-term business credit is business loans at a reduction in business loan growth and slower commercial banks plus nonfinancial commercial paper plus finance growth in consumer loans. company loans to businesses and bankers acceptances outstanding outside banks. Commercial paper reflects prorated averages of Wednesday data. Finance company loans and bankers acceptances outstanding reflect averages of current and previous month-end data. e Estimated. BUSINESS FINANCE Total funds raised by businesses in financial mar- financial firms fell, and growth in bankers acceptkets decreased substantially in the fourth quar- ances slowed early in the fourth quarter. In Deter. Among nonfinancial corporations, external cember, however, business borrowing in these financing needs fell to their lowest level since markets strengthened again. 1977, as a further slowing in inventory accumula- Gross offerings of bonds and stocks by both tion reduced capital expenditures while inter- nonfinancial and financial corporations fell to a nally generated funds continued to rise moder- seasonally adjusted annual rate of $44 billion, the ately. Reduced short- and intermediate-term lowest level recorded in 1979 and down from $58 borrowing accounted for much of the resultant billion in the third quarter. Public offerings of decline in financing activity. In long-term mar- bonds by nonfinancial corporations are estimated kets, nonfinancial businesses continued to make to have declined somewhat in the fourth quarter, substantial use of commercial mortgages, but net largely because of a relatively low level of bond issuance of bonds and stocks remained well be- issuance by industrial firms following the sharp low the first-half pace. rise in rates after October 6. The volume of pub- Business loan growth at commercial banks fell lic offerings by utilities picked up in the quarter, off quite sharply in the fourth quarter. In part, however, with most of that increase in October this reduction was a reaction of firms to a sizable and November. Financial businesses markedly increase in the cost of bank loans; the prime rate reduced their issuance of bonds during the quarincreased 2 percentage points during the Octo- ter; this drop partly reflected a slowdown in ofber-December period, reaching a high of 153/4 ferings of mortgage-backed bonds by savings and percent in late November. In addition, data loan associations. Intermediate- and long-term available for large banks indicate that nonprice bond offerings by financial companies accounted lending terms and standards of creditworthiness for about 40 percent of total public offerings in tightened, with banks becoming more reluctant the first half of 1979, but only about 20 percent of to lend to new customers and more strict about the second-half total. compensating balance requirements. Takedowns of private bond placements in the The outstanding commercial paper of non- fourth quarter are estimated to have remained Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

120 Federal Reserve Bulletin • February 1980 near the pace of the third quarter, well below the were concentrated in public utility issues. By levels recorded in the first half of 1979. Life in- year-end, stock prices generally had retraced surance companies (the principal lenders in the their fourth-quarter declines. The American private placement market) appear to be chan- Stock Exchange composite index was at a new neling a large volume of their funds into mort- high at the end of the quarter; the National Assogages—especially commercial mortgages. In ad- ciation of Securities Dealers index posted sufdition, investable funds of these institutions were ficient gains late in the quarter to end the year reduced by a sharp rise in loans on insurance pol- just below a record level set on October 5; and icies after October 6. the New York Stock Exchange composite index Yields on corporate bonds increased appre- ended the quarter near its high for the year. ciably during the fourth quarter. Bond yields jumped 75 to 125 basis points between the Federal Reserve's October 6 policy announcement and GOVERNMENT FINANCE the month-end, and reached new highs in early November; over the remainder of the quarter, Gross bond offerings by state and local governthey changed little on balance. The upward ments increased substantially in the fourth quarmovement in corporate bond yields and the un- ter, on a seasonally adjusted basis, despite the certainty about economic and financial prospects postponement or cancellation of a large volume accompanying the System's policy actions gave of issues as interest rates rose in October. The rise to an increased sensitivity by investors to volume of offerings continued to be bolstered by differences in risk. By the end of the fourth quar- borrowing to finance housing, which, as in the ter, the spreads between rates on higher and third quarter, was dominated by single-family lower quality bonds had diminished considerably housing issues. These bonds were sold on the from their mid-October levels but were still gen- basis of indications from the Congress that they erally about twice as large as before October 6. would be exempt from any new restrictions that Stock prices declined sharply after October 6, federal legislation, if passed, would impose on reflecting investor concern that higher interest home mortgage financing by state and local aurates and reduced credit availability would de- thorities. tract significantly from economic activity and Like yields in other markets, interest rates on corporate profits in the future. The fall in stock state and local obligations rose appreciably in the values prompted several corporations to post- fourth quarter. The Bond Buyer index of yields pone or to cancel scheduled equity offerings, on general obligations rose 60 basis points to end which contributed to the reduction in total stock the quarter at 7.2 percent. Yields on taxable isofferings during the fourth quarter. The stock of- sues increased much more, however, and the raferings that came to market during the quarter tio of tax-exempt to corporate bond yields declined to a new low in the fourth quarter. Continued strong demands for tax-exempt bonds Gross offerings of new security issues by commercial banks and property-casualty in- Seasonally adjusted annual rates, in billions of dollars surance companies apparently tempered the rise in municipal rates. 1978 1979 TTyyppee ooff sseeccuurriittyy Treasury net cash borrowing from the public Q4 Qi Q2 Q3r Q4e increased in the fourth quarter to $18.9 billion, Corporate 42 47 58 58 44 not seasonally adjusted. The combined federal deficit—including off-budget items—rose to Bonds 30 39 51 40 35 Publicly offered 18 17 35 29 23 about $26 billion and was financed in part by Privately placed 12 22 16 11 12 Stocks 12 8 7 18 9 drawing down the Treasury's operating cash bal- Foreign 5 3r ?r 9 5 ance. In contrast to the wide range of movements State and local government 48 39 42r 43 50 over the preceding two quarters, there was little net change during the fourth quarter in the outr Revised, e Estimated. standing volume of nonmarketable Treasury ob- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Financial Developments, Q4 1979 121 Federal government borrowing and cash balance Not seasonally adjusted, in billions of dollars 1977 1978 1979 IItteemm Q4 Ql Q2 Q3 Q4 Ql Q2 Q3 Q4 Treasury financing Budget surplus, or deficit (-) -28.8 -25.8 14.0 -8.1 -23.8 -20.4 21.4 -4.4 -24.6 Off-budget deficit1 -1.3 -3.7 -2.2 -3.1 — .1 -3.0 -5.2 -4.2 -.9 New cash borrowings, or repayments (-) 20.7 20.8 2.5 15.1 15.3 10.62 -4.6 12.4 18.9 Other means of financing3 2.6 2.8 -3.2 1.0 2.6 4.2 -1.9 2.9 -1.7 Change in cash balance -6.8 -5.9 11.1 4.9 -6.1 -8.6 9.8 6.7 -8.3 Federally sponsored credit agencies, net cash borrowings4 2.0 4.5 6.5 6.1 5.2 6.3 5.5 4.7 7.3e 1. Includes outlays of the Pension Guaranty Corporation, Postal Service Fund, Rural Electrification and Telephone Revolving Fund, Rural Telephone Bank, Housing for the Elderly or Handicapped Fund, and Federal Financing Bank. All data have been adjusted to reflect the return of the Export-Import Bank to the unified budget. 2. Includes $2.6 billion of borrowing from the Federal Reserve on March 31, which was repaid April 4 following enactment of a new debt-ceiling bill. 3. Checks issued less checks paid, accrued items, and other transactions. 4. Includes debt of the Federal Home Loan Mortgage Corporation, Federal Home Loan Banks, Federal Land Banks, Federal Intermediate Credit Banks, Banks for Cooperatives, and Federal National Mortgage Association (including discount notes and securities guaranteed by the Government National Mortgage Association). e Estimated. ligations. Most of the Treasury's borrowing was pated in the first quarter of 1980. Interest rates on accomplished through domestic sales of market- long-term government bonds increased about 1 able securities to the public, both coupon issues percentage point for the quarter, somewhat beand bills. Given the need for large amounts of low the increases in yields on long-term corponew money at a time when a sizable volume of rate bonds, in line with the greater risk aversion coupon issues was maturing, the Treasury made noted earlier. significant net additions to the weekly bill auctions for the first time since 1976. New funds raised in this manner totaled about $3.5 billion MORTGAGE AND CONSUMER CREDIT for the quarter. The Treasury also issued about $7.5 billion of cash management bills dated to Mortgage credit conditions tightened markedly mature in the spring, substantially more than the after October 6. The average interest rate at savvolume of such bills issued in the fourth quarters ings and loan associations on new commitments of other years. for conventional home mortgages with 80 per- Net borrowing by federally sponsored cent loan-to-value ratios rose more than IV2 peragencies totaled a record $7.3 billion in the fourth centage points in the fourth quarter and in generquarter, not seasonally adjusted. The increased al nonprice lending terms firmed. Many savings borrowing reflected efforts by the Federal Home and loan associations drastically reduced or com- Loan Bank System and the Federal National pletely halted their commitment activity in Octo- Mortgage Association (FNMA) to buttress resi- ber, and although there was some indication of a dential mortgage credit flows and by the Farm liberalization of lending policies in late Novem- Credit System to meet demands for agricultural ber and December, on the whole conditions recredit usually provided by banks and life insur- mained much more stringent than in the previous ance companies. quarter. Interest rates on Treasury securities increased The curtailment of credit availability was espeappreciably during the fourth quarter, along with cially marked in states where usury ceilings prerates on private debt securities. Yields on shorter vented home mortgage rates from adjusting updated bills rose slightly more than those on com- ward. During December, 16 states had fixed parable private issues, however, largely because ceilings below the national average for convenof the sizable net issuance of bills in the fourth tional mortgage rates, and in several other states quarter and the substantial sales of bills antici- floating-rate ceilings tied to Treasury yields were Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

122 Federal Reserve Bulletin • February 1980 Net change in mortgage debt outstanding mitment and lending activity at savings and loan Seasonally adjusted annual rates, in billions of dollars associations was largely a response to the uncertainty about future deposit flows in view of the 1978 1979 MMoorrttggaaggee ddeebbtt firming in credit markets. With a slowing in de- Q4 Q1 Q2 Q3 Q4e posit growth in the fourth quarter and a jump in By type of debt the cost of borrowing from Federal Home Loan Total 160 158 164 160 157 Banks (FHLBs) and other sources, savings and Residential 124 119 118 114 109 Other1 36 39 46 46 48 loans drew down holdings of liquid assets, caus- By type of holder ing the average liquidity ratio—cash and liquid Commercial banks .... 35 33 34 34 33 Savings and loans 52 45 51 43 33 assets divided by the sum of short-term borrow- Mutual savings banks 6 6 4 4 3 ings and deposits—to fall. To encourage savings Life insurance companies 13 11 11 13 17 and loans to free more funds for mortgages, the FNMA and GNMA.... 9 12 8 2 10 Other2 45 51 56 64 61 Federal Home Loan Bank Board reduced minimum liquidity ratios near the end of the quar- 1. Includes commercial and other nonresidential as well as farm ter and proposed a liberalization of limits on properties. 2. Includes mortgage pools backing securities guaranteed by the borrowing from sources other than FHLBs. Net Government National Mortgage Association, Federal Home Loan borrowing from FHLBs by savings and loan Mortgage Corporation, or Farmers Home Administration, some of which may have been purchased by the institutions shown separately. associations declined somewhat in the fourth e Partially estimated. quarter. Growth in consumer installment credit outbelow market mortgage yields. It was against this standing slowed substantially during the fourth backdrop that the Congress passed and the Presi- quarter. The slackening was most pronounced dent signed into law on December 28 a bill that for auto credit, presumably related to the subtemporarily exempts from state usury limits the stantial drop in auto sales. The moderation also conventional first mortgages made by most types may have reflected some retrenchment on the of lenders for the purchase of residential proper- part of households, whose debt burdens have ty. Unless revoked by state action, the exemp- mounted over the course of the economic expantion will apply until March 31, 1980, and covers sion. The amount of installment loans outnew mortgage commitments made, as well as standing at credit unions contracted during the loans closed, during the suspension period. October-December period, the first quarterly de- Net mortgage lending, which largely reflected cline in more than seven years. Primary reasons earlier commitment activity, moderated slightly for the falloff in new loan extensions by credit in the fourth quarter. The decline was concen- unions were the net redemption of shares in the trated in the residential sector and represented a fourth quarter and the 12 percent ceiling imposed marked reduction in mortgage acquisitions by on consumer loan finance rates at federally charsavings and loan associations. Purchases of resi- tered and most state-chartered credit unions. dential mortgages by FNMA increased sharply in Rate ceilings were also a factor limiting conthe fourth quarter, and issues of mortgage-back- sumer installment loans at some commercial ed securities guaranteed by the Government Na- banks; in 16 states, for instance, the statutory tional Mortgage Association (GNMA) reached a ceilings on new auto loans extended by comrecord level. An increase in net mortgage lending mercial banks were 13 percent or lower (annual by life insurance companies contributed to a rise percentage rate), which was about the same as in commercial mortgage loans. the marginal cost of lendable funds for banks during the fourth quarter. • The relatively large decline in mortgage com- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

123 Production of Motor Vehicles in 1979 This article was prepared by Drucilla R. Hopper, 1. Motor vehicle production and total industrial output Joan D. Hosley, and Dixon A. Tranum of the 1967=100 Board's Division of Research and Statistics. Production of motor vehicles and parts was cut back substantially during 1979, and by December was one-fourth below its level a year earlier. This reduction was related to a contraction in demand for large and less fuel-efficient models because of several factors: reduced availability of gasoline in the spring, concerns about future fuel shortages, extraordinary price increases in petroleum products, and the overall slowing of economic activity. Stocks of most new domestic cars and light-duty trucks reached excessive levels in the spring, and inventories remained high for many models throughout the year. Reflecting this situation, auto production was curtailed by temporary plant shutdowns and, later, by termination of second shifts at some plants. By year-end, more than 140,000 auto workers were on indefinite laynounced than had been expected and could not off status; some permanent closings of plants be fully met by expansion in domestic production were also planned for early 1980. of small fuel-efficient cars and trucks. The accom- The decline in motor vehicle production was a modation to unexpected large-scale production major factor retarding the growth of industrial shifts is limited by long and rigid lead times. output in 1979. At year-end, total industrial pro- However, a shift to more fuel-efficient cars alduction was only fractionally above its Decemready had been started by the industry in the ber 1978 level (chart 1), but excluding motor veplanning, redesigning, and retooling for prohicles and parts, output was about 2 percent duction of motor vehicles in order to meet the higher than a year earlier. Last year's decline in government-mandated fuel efficiency requireauto output was about half as great as that from ments.1 the first quarter of 1973 to the first quarter of During most of the 1979 model year, despite 1975. declining sales, production schedules for larger The energy problems encountered throughout cars were not pared fast enough to avoid a large 1979 led to marked shifts in the demand for mobuildup in inventories of such vehicles. Auto tor vehicles toward smaller, more fuel-efficient makers continued to assemble large cars at a relcars—including subcompacts, some compacts, atively high rate for several reasons: (1) car mandiesels, and imported vehicles. With sales of ufacturers had anticipated another near-record small cars increasing as a proportion of the total, year of auto sales for 1979; (2) with the possi- U.S. producers generally did not fare well because their output was still weighted heavily toward the larger units for which demand was 1. The Energy Policy and Conservation Act of 1975 set the lower (table 1). average fuel efficiency goals for autos at 19 miles per gallon The shift in demand in 1979 was more pro- for 1979, 20 for 1980, and 27.5 for 1985. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

124 Federal Reserve Bulletin • February 1980 1. Automobile production and sales Millions of units Sales YYYYeeeeaaaarrrr,,,, oooorrrr PPPPrrrroooodddduuuuccccttttiiiioooonnnn Small cars qqqquuuuaaaarrrrtttteeeerrrr UUUU....SSSS.... TTToootttaaalll Domestic SSStttaaannndddaaarrrddd IIInnnttteeerrrmmmeeedddiiiaaattteee UUU...SSS... aaannnddd TToottaall FFoorreeiiggnn cccaaarrrsss cccaaarrrsss fffooorrreeeiiigggnnn mmooddeellss'' Compact Subcompact 1973 9.7 11.4 4.5 1.7 1.7 1.1 4.7 2.2 1974 7.3 8.8 4.0 1.4 1.8 .8 3.1 1.8 1975 6.7 8.7 4.7 1.6 2.4 .7 1.9 2.1 1976 8.5 10.1 4.9 1.5 2.8 .6 2.4 2.8 1977 9.2 11.2 5.4 2.1 2.3 1.0 2.8 3.0 1978 9.2 11.3 5.6 2.0 2.4 1.2 2.7 3.1 1979 8.4 10.7 6.1 2.3 2.1 1.7 2.1 2.4 19782 Q3 9.2 11.2 5.5 2.0 2.4 1.1 2.5 3.2 Q4 9.5 11.1 5.4 1.9 2.2 1.3 2.7 2.9 19792 Ql 9.0 11.6 6.6 2.3 2.0 1.9 2.7 2.7 Q2 8.8 10.7 5.9 2.5 2.2 1.8 1.9 2.2 Q3 8.1 10.8 5.8 2.2 2.3 1.5 2.2 2.7 Q4 7.3 9.8 5.9 2.4 2.0 1.5 1.9 2.1 1. Includes standard foreign cars. 2. Quarterly data are seasonally adjusted at annual rates. bility of production being interrupted by a strike 1979. Such overall comparisons, however, obin September, producers were willing to have scure the divergent movements in the output of stocks of cars on hand somewhat larger than nor- large (standard and intermediate) and small mal; (3) contracts for parts and components had (compact and subcompact) autos (table 2). Total already been made by the industry for the re- small-car production rose somewhat from 1978, mainder of the 1979 model year; and (4) the in- reflecting strong demand for smaller models dustry apparently anticipated a swing in demand and expanded capacity for their production. In back to large cars such as the one that occurred particular, assemblies of subcompacts rose after the 1973 energy crisis. sharply, increasing more than a fourth from 1978 The drop in auto and truck production in 1979 to 1.5 million units, more than two and one-half also affected output in related industries, as times the 1977 total. Output of large cars, on the could be expected. The amount of steel used by other hand, declined nearly a million units from the motor vehicle industry declined significantly; 1978. original equipment tire production was cut sharp- The change in the composition of output was ly (a midyear strike occurred as well); and pro- especially marked in the second half of last year. duction of other auto-related goods, such as met- Production of many 1980 models was delayed to al stampings, auto glass, and radios, was permit reduction of inventories, and in August curtailed during the year. However, these related the output of small cars exceeded, for the first declines were not nearly so important for total time, that of larger cars in terms of contribution industrial production as the decrease in the out- to total industrial production. Large-car producput of motor vehicles and parts. tion was again reduced in November and December in response to renewed weakness in sales. In comparison, small-car output peaked during the A UTO PRODUCTION third quarter but then declined in the last quarter, as demand for these cars also weakened. The Domestic production of autos totaled 8.4 million shift in demand from large to small cars was simiunits in 1979, about 740,000 units less than in the lar to the changes experienced during the 1973preceding year; assemblies declined by about 30 74 oil embargo, but in 1979 small cars accounted percent between November 1978 and December for a much larger share of total auto output than Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Production of Motor Vehicles in 1979 125 2. Domestic auto and truck production Percent change from preceding year Type 1973 1974 1975 1976 1977 1978 1979 Dec. 1979/ Dec. 1978 Autos 7.5 -22.0 -6.3 30.7 12.3 ! -8.0 -27.5 Large 5.2 -33.2 -14.5 35.8 22.5 —8.4 -16.8 -44.1 Small 16.8 19.8 10.7 22.4 -5.4 19.5 7.7 4.4 Trucks 17.7 -5.0 -18.4 31.7 22.9 9.0 -14.4 -45.4 Personal use 24.0 -1.1 -4.9 37.4 15.8 10.2 -20.6 -46.1 Business 13.3 -8.0 -29.5 25.2 31.4 7.7 -7.7 -44.7 in the earlier period. Moreover, by early 1980 year below the rate at the beginning. As buyers there was no indication of a shift back to larger took advantage of the discounts to purchase models. large cars, sales of small cars declined a little in the third quarter, but ended the year at a rate higher than that at the beginning. AUTO SALES AND STOCKS The sales incentives and curtailed production for the larger cars reduced inventories of these The shift in demand toward small, fuel-efficient models by the end of the third quarter, but invenvehicles began early in 1979, as concern began to tories rose again in the fourth quarter. Stocks of mount about a possible gasoline shortage after small cars rose to normal levels during the third the cutoff of oil supplies from Iran. Consumers quarter, but rising sales at the end of the year increased their purchases of subcompacts and reduced them to the lowest level since May. foreign cars and reduced their purchases of For 1979 as a whole, of a total 10.7 million larger cars and trucks. In the second quarter, sold, a record 22 percent were imported models with severe gasoline shortages occurring in many (table 1). This shift in sales was stimulated by parts of the country, sales of large cars dropped the decline in the value of the Japanese yen relaby a fourth (chart 2), and stocks of large cars at tive to the dollar during 1979, which allowed dealers increased substantially further. relatively stable prices on Japanese imports Consequently, the 4'days supply" (inventories while prices of U.S. makes were being increased. related to the daily average of sales) of large cars In 1978, by comparison, prices of both Japareached a new high in June; the previous high nese and German cars had been increased frehad occurred in November 1974. Meanwhile, quently because of the declining foreign exchange during the first six months of 1979, overall inven- value of the dollar, and these cars had lost their tories of small cars were reduced sharply, mostly in the subcompact group. Stocks of several of the newer downsized compact cars, with fuel econo- 2. Sales of new U.S. and foreign autos my comparable to some of the subcompacts, re- Seasonally adjusted annual rates, millions of units mained at low levels throughout most of the . Total year. During the third quarter, in an effort to reduce large-car inventories, auto makers offered price discounts and rebates to buyers of most 1979 models to stimulate sales. And as mentioned earlier, producers delayed the introduction of the Large U.S. large 1980 models. But after the rebates were discontinued and the 1980 models were introduced at higher prices, large-car sales again fell sharply. Late in the year, new sales incentives were offered for certain 1979 and 1980 models; large-car sales again picked up somewhat but ended the 1973 1975 1977 1979 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

126 Federal Reserve Bulletin • February 1980 3. Dealer stocks of new domestic cars, 19791 With the energy crisis in the spring of 1979, sales of light-duty trucks plunged and stocks ac- Stocks (millions of units) Days supply2 cumulated rapidly. During the second quarter, Large Small Large Small output was reduced substantially, and produc- Month Total cars cars Total cars cars tion lost during the transportation strike in April January 1.84 1.05 .79 62.2 57.0 70.0 was not made up. In the third quarter, sales of February ... 1.86 1.10 .77 62.3 64.4 59.9 March 1.87 1.16 .71 59.5 68.4 49.3 the lightweight trucks recovered somewhat, but April 1.80 1.16 .64 62.7 78.0 46.1 May 1.91 1.31 .60 70.3 98.2 43.7 inventory levels remained high relative to sales June 2.00 1.34 .66 83.9 114.9 54.9 and production schedules were again cut. Be- July 2.09 1.38 .71 77.1 96.1 55.3 August 1.94 1.23 .72 67.0 69.6 61.7 tween the December 1978 production high and September . 1.86 1.09 .77 65.8 67.6 64.3 October 1.91 1.22 .70 81.7 93.1 64.6 the August 1979 low, output was reduced more November . 1.88 1.20 .68 81.9 97.2 63.7 December .. 1.79 1.16 .64 68.7 84.5 51.6 than three-fifths. This reduction, coupled with incentives that boosted sales in the latter part of 1. Data are seasonally adjusted. the year, resulted in some paring of inventories 2. The days supply is the ratio of car inventories in units to the daily average of car sales. A 60-day supply of cars is considered adequate. from earlier highs. In contrast to the sales decline in these light-duty trucks, sales of imported earlier relative competitive price advantage over trucks (mainly Japanese), which are smaller and American-made subcompacts. more fuel-efficient, increased 39 percent from Sales of foreign cars, generally more fuel-effi- 1978. cient than American cars, increased 16 percent in Production of trucks for business use also was 1979. These sales increased sharply in the first curtailed substantially in 1979. During the first quarter of the year from the fairly stable pace half of the year, output of these vehicles inthat had prevailed throughout 1978 and contin- creased slightly despite the strike-related decline ued to rise in the second quarter, as the gasoline in April. However, their production peaked in situation worsened (chart 2). Third-quarter sales May and then fell sharply for three successive slowed, probably reflecting tight supplies of im- months, reflecting continued market weakness ported cars as well as the price reductions and in light-duty, business-use trucks and the first better delivery schedules for the large American signs of weakening demand for medium- and cars. During the fourth quarter, sales returned to heavy-duty trucks. Sales of these larger trucks— the record rate in the second quarter. frequently purchased on special order—decreased very slightly during the first half of 1979. Output of all business vehicles fell almost 45 per- TRUCKS cent from May to August. After a partial recovery in production in September, output dropped During 1979, production of utility (personal-use) again in the fourth quarter. In the last recession, vehicles was also severely curtailed.2 In recent the decline from the January 1973 peak to the years, consumers had increased their purchases March 1975 trough had been about 45 percent. of personal-use vehicles, and by the end of 1978, production was almost double the level of late 1974. With the growing popularity of these multipurpose vehicles, manufacturers had installed O UTLOOK FOR EARL Y1980 more comfortable cabs and more accessories, with accompanying increases in size and weight. Sales of domestic cars improved somewhat in Since these changes had reduced the already low January 1980, reflecting in part special profuel efficiency of these vehicles, sales were par- grams to sell the remaining supplies of 1979-modticularly hard hit by concerns about fuel avail- el large cars. Sales exceeded output during the ability and cost. month, and stocks of these units were reduced to more acceptable levels. Nevertheless, invento- 2. The utility vehicles group includes about two-thirds of ries of many models of cars remained high, and lightweight truck production—a key component of the group. relatively low overall production schedules for The lightweight truck group also includes vans and recreation vehicles. the first quarter have been announced by the pro- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Production of Motor Vehicles in 1979 127 ducers. In addition, programs promoting sales in a further small cutback in production schedhave been extended to some slow-selling 1980- ules for both personal-use and business trucks model cars. Output of subcompact cars is ex- in early 1980. pected to increase somewhat, while a further cut- In contrast to sales of domestic-model cars back in production of large cars is planned. Total generally, sales of imported cars in January rose auto output in the first quarter of 1980 is now sharply and accounted for a record 27 percent of scheduled to be about 7 percent below the fourth the car market. Foreign car producers, particuquarter of 1979 and roughly 25 percent below the larly the Japanese, are being urged to begin prolevel of the first quarter of 1979. duction of motor vehicles in the United States, The recent weakness in the medium- and as one German maker did in 1978. This producer heavy-duty truck market and the continuing sub- also began production of light-duty trucks in this stantial inventories of light trucks have resulted country in December 1979. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

129 Industrial Production Released for publication February 15 Output of durable goods materials edged up in January as production of equipment parts ad- Industrial production increased in January by an vanced further; however, output of basic metals, estimated 0.3 percent; little change is now indi- particularly raw steel, and parts for consumer cated for the three preceding months. In January, durables continued to decline. Production of the output of business equipment rose strongly nondurable goods materials increased for the for the second month, and production of mate- seventh successive month with another large gain rials and consumer goods other than automotive for chemicals. Output of energy materials rose products moved up further. Motor vehicles and 0.8 percent. parts output again declined sharply. The total Seasonally adjusted, ratio scale, 1967 = 100 index for January, at 152.7 percent of its 1967 average, was 0.8 percent above its level a year earlier but fractionally below the March 1979 high. Output of consumer goods declined slightly in January as auto assemblies—at an annual rate of 6.0 million units—were about 11 percent below the rate of 6.8 million units in December. Production of other consumer durable goods rose 0.3 percent in January, and production of consumer nondurable goods, paced by advances in output of consumer fuels and chemical products, rose 0.4 percent. A further rise of 1.0 percent in output of business equipment reflected strength in commercial and manufacturing equipment and a large increase in the production of building and mining equipment. The latter represented both continued strength in oil and gas well drilling and a post-strike rebound in output of construction and mining machinery. Production of Federal Reserve indexes, seasonally adjusted. Latest figures: Januconstruction supplies again declined slightly. ary. Auto sales and stocks include imports. 1967 = 100 Percentage change from preceding month PPPeeerrrccceeennntttaaagggeee ccchhhaaannngggeee IIInnnddduuussstttrrriiiaaalll ppprrroooddduuuccctttiiiooonnn 1979 1980 1979 1980 JJJaaannn... 111999777999 tttooo Dec.p Jan.e Aug. Sept. Oct. Nov. Dec. Jan. JJJaaannn... 111999888000 Total 152.3 152.7 -.8 .5 -.1 .1 .3 .8 Products, total 149.9 150.1 -.7 .8 -.2 -J .3 .1 .6 Final products 147.2 147.4 -1.0 1.1 -.3 -.1 .3 .1 .9 Consumer goods 148.9 148.4 -1.7 1.0 0 -.5 0 -.3 -1.5 Durable 147.6 144.4 -6.2 2.9 .5 -2.2 -1.1 -2.2 -10.0 Nondurable 149.4 150.0 .2 .3 -.2 .1 .5 .4 2.2 Business equipment 174.5 176.3 .1 1.2 -.9 .4 1.0 1.0 4.9 Intermediate products 159.8 160.1 .8 -.5 0 -.1 .1 .2 -.4 Construction supplies 156.3 156.2 .6 -.6 .3 -.1 -.3 -.1 -1.8 Materials 156.1 156.6 -1.0 .2 0 -.1 -.1 .3 1.0 p Preliminary. e Estimated. NOTE. Indexes are seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

130 Federal Reserve Bulletin • February 1980 Statements to Congress Statement by J. Charles Partee, Member, Board vided the market's most successful response to of Governors of the Federal Reserve System, be- rate controls on deposits. fore the Subcommittee on Financial Institutions Thrift institutions and many commercial banks of the Committee on Banking, Housing, and Ur- are constrained in their capacity to pay market ban Affairs, U.S. Senate, January 24, 1980. rates of return on all deposit liabilities because a substantial share of their assets, being long-term I appreciate the opportunity to appear before this in character, carry the lower interest rate returns committee today to discuss questions relating to of the past. Indeed, the increased attractiveness money market mutual funds. The spectacular to depositors of market instruments, including growth of these relatively new intermediaries the shares of money market mutual funds, has certainly must be regarded as one of the major led banks and thrift institutions to promote agfinancial events of the past year. The assets of gressively the money market certificate—their money market funds are rapidly approaching the one short-term deposit instrument whose ceiling $50 billion mark, an almost fivefold increase rate rises in tandem with six-month Treasury bill since the end of 1978. The number of shareholder rates. This has increased markedly the average accounts over the same span has risen from cost of deposits, so that many depositary instituabout 500,000 to close to 2 million. tions—especially those with large mortgage port- The substantial growth in both total assets and folios—have been experiencing substantial the number of shareholders indicates that many downward pressure on their earnings margins. households, businesses, and institutional inves- Both commercial banks and thrift institutions tors have elected to allocate at least a portion of have undoubtedly lost deposits to money market their investable funds and transaction balances mutual funds. To be sure, large money center to money market fund accounts. For investors banks, as well as a few of the thrift institutions, with limited resources, the funds are a conven- have been able to recover some of these losses ient substitute for investing directly in the mon- through reinvestments by the mutual funds in ey market. For a management fee, the funds pass their large-denomination certificates of deposit through the earnings of a diversified portfolio of (CDs) and other liabilities. On net, money marlarge-denomination, short-term investments. Di- ket fund acquisitions more than accounted for versification in such market instruments would the increase in large CD balances at banks in otherwise be beyond the means or expertise of 1979. Money market funds, however, also invest most households and many institutional inves- in the deposits of overseas banks and branches tors. (Eurodollars) and in commercial paper and other The escalation of interest rates on money mar- domestic money market instruments. It is imposket obligations to levels well above the rate ceil- sible to assess with any precision the ultimate ings applicable to time and savings deposit ac- consequences for the distribution of credit of this counts at banks and thrift institutions has greatly rechanneling of funds flows, but one result clearenhanced the competitive position of money ly has been some net shifting of financial remarket mutual funds. To be sure, there would sources away from local credit users and away have been a substantial increase in direct market from the mortgage market. investment in any event, given the rate dif- The introduction this month of the two and ferentials that have prevailed. But the money one-half year "small-saver" certificate, permitmarket mutual funds, by offering an alternative ting both banks and thrift institutions to pay rates investment tailored to customer needs, have pro- of return indexed to changes in market rates, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 131 should enhance the competitive position of de- ket so as to render the securities virtually illiquid positary institutions, especially if short-term in certain circumstances. Moreover, there is market rates begin to decline and if expectations some exposure to a change in capital values in of further declines become widespread. The ef- the event of dramatic changes in interest rates, fective ceiling rate is about equal to yields on although this risk is not appreciable so long as comparable market instruments, and both thrift average asset maturities are kept short. Portfolio institutions and banks have the advantage of a maturities currently average only about 40 days, local presence. Other things being equal, I am but there is no assurance that they may not convinced that most people prefer dealing with lengthen in the future. Also, there is always the local institutions. possibility of loss on fund assets, through In recent years, the financial regulatory defaults by commercial paper issuers or other agencies have taken a number of such steps to borrowers, though this is minimized by the highprovide the opportunity for savers to obtain quality commitment on paper held. something more nearly approaching a market-de- Money market mutual funds operate Under the termined rate of return at depositary institutions. rules of the SEC, as stipulated by the Investment This is admittedly a slow process, because of the Company Act of 1940. Oversight by the SEC earnings constraints imposed by the heritage of generally encompasses such considerations as low-rate, long-term assets at many of the institu- the truthfulness of advertising, the fairness of tions. But I believe that our actions are quite valuation methods, and the use of legitimate inconsistent with our commitment to the gradual vestment and management practices. I presume deregulation of maximum rates payable on de- that these and similar factors are being efposit instruments. The extension of Regulation fectively monitored by the SEC, thus providing Q-type ceilings to money market mutual funds, protection against risk of loss as a result of manwhich some have proposed, would run counter agement impropriety. to this thrust. Money market mutual funds generally allow To limit the yields on money market funds not shares to be transferred to third parties by wire only would be anticonsumer—and inconsistent and, often, by the use of check-like drafts. Sharewith the nation's need to encourage saving—but holders thus are able to use these accounts for would also fail to recognize the inherent dis- transaction purposes above specified minimum tinctions between deposits and money market amounts. As substitutes in part for demand defund shares. Deposits at federally insured institu- posit checking accounts and for savings actions offer the saver assets that are absolutely counts, the rapid growth of the money market free of risk of loss of principal, up to the $40,000 funds clearly has had an impact on the performinsurance limit per account, and that bear a fixed ance of the monetary aggregates. yield to maturity. Money market fund shares, on Data regarding the transaction uses of balthe other hand, are uninsured investments that ances in money market mutual funds are very offer no certainty with respect to the yield that limited, but reported average turnover rates are will be earned over time. I do not want to leave relatively low—much lower than those for dethe impression that there is a substantial degree mand deposits and about in line with those for of risk in money market funds—that does not ap- savings deposits. This may indicate that high pear to be the case. But they do entail some un- minimum check sizes or check charges limit concertainties not shared by deposits, and these siderably the use of money market funds for should be understood by savers. transaction purposes. It may also be that the The statements of policy that money market major portion of the amounts held in such acfunds must file with the Securities and Exchange counts is intended for investment purposes, with Commission (SEC) generally restrict the invest- only a small portion being regarded by holders as ments to high-quality, short-term money market balances available to support ordinary transaction instruments. There is the possibility, however, needs. In recognition of the substitutability of that a fund's investment in a particular asset money market mutual fund shares for transaction could represent a large enough share of the mar- and savings balances at depositary institutions, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

132 Federal Reserve Bulletin • February 1980 however, the Board plans to include such shares hibit more clearly the characteristics of transacin its redefinition of the monetary aggregates to tion accounts, we may have to reconsider our pobe published next month. sition. So long as balances may be accessed by This brings me logically to the question of checkwriting or other immediate transferability whether reserve requirements need to be applied features, the possibility remains that they may to money market funds in order to enhance mon- develop into a substitute payments system. If so, etary control. The Board's answer at this point is and in the context of our pressing need for a systhat it does not appear to be a critical problem. tem of universal reserves on transaction balances There are, after all, a wide variety of financial as a means to insure effective monetary control, instruments, having varying degrees of liquidity, extension of the concept to money market muthat may act as substitutes for deposits. But if tual fund shares would then come to be in the money market fund shares over time begin to ex- public interest. • Statement by Philip E. Coldwell, Member, Board million or 5.6 percent above 1978 actual exof Governors of the Federal Reserve System, be- penses. Total expenses for 1979 are now estifore the Committee on Banking, Housing, and mated to be $762.1 million, $47.4 million or 6.6 Urban Affairs, U.S. Senate, January 25, 1980. percent above the year earlier. The biggest contributing factor to the budget overrun of 1 per- Mr. Chairman, I welcome the opportunity to ap- cent was the largely uncontrollable expense for pear before your committee today to discuss the the cost of Federal Reserve currency. Federal Reserve System's budget performance Despite mounting work pressures in 1979, the for 1979 and budget outlook for 1980. This marks Reserve Banks were able to reduce staff by 1.3 the fourth consecutive year I have testified be- percent from the 1978 level, as compared with a fore your distinguished committee, and as be- budgeted decline of 1.1 percent. Our estimates fore, I am pleased to report continuing success in for 1979 further reveal that Reserve Bank unit holding the line on expense growth while achiev- costs continued to decline in 1979, and producing unit cost reductions and productivity increas- tivity gains continued to exceed those in the pries in the face of increased responsibilities, infla- vate sector. tion, and volume expansion. This success is a Operating expenses for the Board of Govertribute to the exceptional Reserve Bank manage- nors for 1979 are estimated at $51,454,000 or ment and Board senior and line management, to about 3 percent over the initially authorized budthe planning and budget control processes, and get of $49,862,000, reflecting both new demands to the painstaking efforts of all involved in pre- placed on the Board during the year and the addiparing and adjusting to the budgets of the District tional costs for the semiannual cost-of-living al- Banks and of the Board. lowance for retirees. Expenses for the renovation of the old building and completion of the podium enclosure of the new building were other 1979 BUDGET PERFORMANCE added factors. Before commenting on the System's 1980 budget, I would like to review our budget experience 1980 BUDGET FOR THE in 1979. As indicated in my testimony last year, FEDERAL RESERVE BANKS the 1979 Reserve Bank budgets were adjusted upward for implementation of the Community The Board of Governors has approved 1980 Re- Reinvestment Act and improved civil rights ex- serve Bank operating expense budgets totaling amination procedures, bringing the approved $832.1 million, an increase of $70.0 million or 9.2 1979 budget to a level of $754.4 million-$39.9 percent over estimated 1979 expenses. This in- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 133 crease compares with an average annual expense fuel and labor costs, and System-directed efforts growth of 13.6 percent from 1970 through 1974 to decrease float and improve service. In addiand an average increase of 6.8 percent from 1974 tion, the System's compliance with the Service through 1979. Contract Act affects our contracts for the trans- Approved Reserve Bank capital schedules portation of cash and checks by requiring venproject 1980 outlays of $134.7 million, an in- dors to pay "prevailing wages" set by the Decrease of $66.1 million over estimated 1979 capi- partment of Labor. Obtaining full compliance tal outlays. with the Service Contract Act adds $500,000 to The 1980 staffing level was established at our 1980 budget increase. 23,095, a decline of 73 or 0.3 percent from the Six percent of the total budget increase reflects 1979 estimated level. This staffing level would the $4.0 million rise in the cost of Federal Rebring the net reduction in staff to 3,624 or 13.6 serve currency after the 13.3 percent increase in percent since 1974. From 1974 through 1979 the 1979. A marked increase in the rate of currency System's productivity improvements have been payments in some Districts continues both beaveraging 9 percent per annum. The budget-year cause of the proliferation of automated teller maestimate of productivity gain is 8 percent. chines, which require new or high-quality used The budgeted expense increase for 1980 re- currency in order to function reliably, and besults from the upward pressure on costs due to cause of our attempts to improve the quality of exogenous factors such as inflation, volume lev- currency in circulation. A System effort to estabels, labor market conditions, and legislative man- lish an overall currency quality standard and new dates, as well as endogenous factors such as up- technological advances in automated teller magrading and improving System services, chine technology, which allow equipment to imfacilities, internal management systems and pro- prove handling of currency of mixed grade qualicedures, and our investment in the people who ty, should provide some cost relief in future work for the System. years. Of the $70.0 million increase, salaries and ben- The five objects of expense—salaries, beneefits account for $40.2 million or 57 percent of the fits, equipment, shipping, and Federal Reserve increase. Officers' and employees' salary ex- currency—account for 85 percent of the total penses are increasing 7.8 percent or $26.6 mil- budgeted increase for 1980. Other sizable inlion. Expenses for retirement and other benefits creases are expected in costs for materials, forms are increasing $13.6 million, primarily due to in- and supplies, utilities, travel, and rent, which tocreased benefits to current staff and retirees, the gether account for 9 percent of the total budget social security base increase, and hospital-medi- advance. cal insurance increases. The 1980 budget review On a service line basis, the largest percentage process focused on assuring that the Reserve expense increase in 1980 is expected in super- Banks' personnel compensation programs would vision and regulation in which the 1980 budget remain within the wage guidelines of the Council totals $77.1 million, an increase of 12.3 percent, on Wage and Price Stability. or $8.4 million. These activities are highly labor Total equipment expense for 1980 is expected intensive, and the increase in fact reflects a net to increase $9.1 million, accounting for 13 per- staff addition of 53 in 1980 primarily for: (1) full cent of the total budget rise. Higher maintenance implementation of the Community Reinvestment fees on equipment, particularly the new high- and Electronic Fund Transfer Acts; (2) expanded speed currency equipment, and higher deprecia- compliance reviews related to consumer protion costs for capital purchases in 1979 and those tection and civil rights laws; (3) full implementaplanned for 1980 are partially offset by a decline tion of the Board's expanded bank holding comin rentals. pany inspection program; (4) expansion in the Shipping expenses are expected to advance scope of examinations for the Financial Institu- $6.0 million and account for 9 percent of the total tions Regulatory and Interest Rate Control Act budget increase. The sharp rise in shipping costs (FIRA), and interagency electronic data processis a result of courier-rate increases due to higher ing examination procedures; (5) intensified ef- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

134 Federal Reserve Bulletin • February 1980 forts to detect problem situations in bank holding propriate to maintaining an efficient check-colcompanies and member banks; and (6) assistance lection system without incurring excessive costs as required by the states in the examination of and without exacerbating our membership probuninsured state-chartered branches and agencies lem. Because the level of float experienced over of foreign banks under the International Banking the last several years is of particular concern to Act (IBA). The 1980 budget provides for an in- me, and to you also, let me digress for a moment crease of $1.0 million for the impact of the IB A. to inform you of our varied efforts to reduce the The System has experienced relatively high level of float without jeopardizing the achieveturnover in the examination staffs in several Dis- ment of other System goals. tricts in 1979 due to the competitive demand for A reduction in float can be accomplished in qualified people for bank management and other several ways. Actions taken during the past year industry jobs. This problem will continue to add and those actions endorsed for 1980 fall into the to expenditures in order to maintain and recruit categories of managerial techniques to improve qualified staff and to enhance training and educa- the efficiency of check clearing operations, retion programs. source expenditures to speed up Federal Reserve Expenses for services to financial institutions processing, and policy changes regarding operaand the public constitute the largest portion of tions. These actions include (1) discouraging the the System's total 1980 budget and are expected use of remote disbursement, (2) developing and to increase by 9.2 percent, or $52.6 million. Ex- improving systems to monitor System float to repenses for services to the U.S. Treasury and duce direct shipment float, (3) establishing annugovernment agencies are projected to increase al float targets for each Reserve Bank, (4) reduc- 6.9 percent, or $5.6 million partly as a result of a ing holdover float by increasing staff and projected increase in volume of 7.9 percent. equipment, and (5) reducing interterritory float Even without adjusting for inflation, unit costs by improving the design, flexibility, and timeare expected to decline at an average annual rate liness of our interoffice transportation. These efof about 3.3 percent from 1977 through 1980. forts have reduced the level of float from a high Staff reductions totaling 165 are budgeted for of $9.6 billion in January, to $6.4 billion in June, these service lines. and to $5.9 billion in December 1979. Attach- Major System initiatives are under way in the ment 1 shows actual System float levels by quarpayments mechanism area, which affect the in- ter since 1975.1 Given historical experience, we crease in expenses for services to financial insti- could have expected a fourth-quarter level of tutions and the public. During 1979 and contin- float around $9 billion to $11 billion without Sysuing into 1980, considerable energy has been tem intervention in the form of the above acexpended on encouraging the use of automated tions. The effect of these programs on the 1980 budget increase is $1.8 million, exclusive of clearinghouse (ACH) services in place of the curtransportation improvements currently under rent check-clearing system in order to serve betstudy. ter the needs of the financial and business communities and to reduce float from transportation To achieve further substantial reductions in delays. Two obstacles to ACH expansion have float requires a change in System policy, which been overcome by linking regional ACHs into a may increase operating costs for member banks nationwide network and by improving the ACH and could affect our membership problem. Nevfunds availability and deposit deadline sched- ertheless, the Board has endorsed changing the ules. The expanded ACH schedules went into ef- methods for handling large dollar value checks fect in the latter half of 1979, along with efforts to by requiring the sorting out of all checks of improve the commercial sector's understanding $250,000 and above and has asked staff for and participation in ACH payments services. We estimate an incremental $1.2 million will be expended in 1980 to improve ACH services. 1. Attachments to this statement are available on request System efforts are also being mobilized to from Publications Services, Board of Governors of the Federachieve a level of float that is acceptable and ap- al Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 135 prompt preparation of a plan for electronic check plementation of a successor to the present data presentment. In addition, the Board has instruct- communications network. Such a successor ed staff to review other means of reducing float would satisfy the internal communications resuch as increasing the on-time performance re- quirements of the System, including contingency quirements for direct-sending banks. Length- backup, standardization, resource sharing, and ening the availability schedules to reflect more flexibility, and would provide a communications closely actual collection experience was rejected capability for services to the financial commuas a regressive step in the improvement of the nity, the Treasury, and other government payments mechanism and as a reduction in Fed- agencies. The impact on the 1980 budget increase eral Reserve services. is $1.1 million. The steps we are taking to reduce float may be Another key automation effort influencing the perceived by the banks as increasing the burden 1980 budget is the implementation of high-speed of membership, which adds to the urgent need currency equipment to achieve improvements in for the Congress to act on membership legisla- operating efficiency and productivity. Installation. Just as float is seen as reducing Federal Re- tion of these machines began in 1978 and will serve earnings returned to the Treasury, the continue through 1982. Several different vendors withdrawal of more member banks from the Sys- were involved in developing prototypes, for tem, because of efforts to reduce float, would al- competitive purposes, but only two appear to ofso diminish System earnings returned to the fer a cost-effective potential. Although the ma- Treasury. It should be noted that Federal Re- chines require a heavy capital expenditure, the serve payments to the Treasury rose $2.3 billion, benefits are substantial in terms of increased effior 32.4 percent, to $9,279 billion in 1979. ciency, security, and long-run staff reductions. Returning to our 1980 budget, there are several The projected staff declines in 1980 for servautomation efforts being undertaken that have a ices to financial institutions and the public (a resignificant effect on the direct and support ex- duction of 135) and services to the U.S. Treasury pense increases for services to financial institu- and government agencies (a reduction of 30) are tions and the public and services to the U.S. the result of completed automation programs and Treasury and government agencies. The Sys- operational improvements. The new currency tem has formulated a long-range automation plan processing equipment is already yielding savings designed to standardize operating environments in the New York, Cleveland, Atlanta, Chicago, to allow standardized application software. Im- and Minneapolis Districts. Automation efforts in plementation of the plan, which has as its goal to the areas of return items, cash functions, savings increase the commonality of data processing op- bond operations, and government securities have erations in the twelve Districts and the Board, is yielded staff reductions in several Districts. Bosto begin in 1980. The 1980 budget increase in- ton, Cleveland, and Richmond have found staff cludes $4.5 million in operating expenses for sal- savings through consolidating fiscal departments aries, benefits, software, travel, education, and and centralizing the savings bond activity. The equipment expenses to support the standard- completion of revised custody control standards ization program. The benefits of such a plan fo- has allowed New York to reduce staff, and the cus on the increased responsiveness of the Sys- Minneapolis program to reduce coin wrapping tem to policy changes and technological has allowed that District to cut staff. Chicago aninnovations, faster response to changing service ticipates the reduction of 80 people in 1980 needs of the national market, and a lessened through the expansion of the regional check progrowth of data processing personnel. cessing center clearing territory in late 1979. During 1979 the network design and implemen- The fourth service line is monetary and ecotation planning phase for a new Federal Reserve nomic policy, which includes the Open Market Communications System were completed. In function at New York and the research and sta- 1980 we will turn toward software development, tistical function in all the Reserve Banks. Exequipment acquisition, and pilot operations. The penses are expected to increase 8.7 percent, or project, referred to as FRCS-80, involves the im- $3.4 million, while employment is expected to in- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

136 Federal Reserve Bulletin • February 1980 crease by 13, or 2.2 percent. The increases in ex- total of operating and capital expenditures for penses and employment are primarily attribut- 1979. This increase compares with our estimate able to new and revised Board-mandated data of the federal government's fiscal year 1980 inreporting requirements for more effective mone- crease over 1979 of something like 13 percent tary control. and fiscal year 1981 increase over fiscal year 1980 Capital outlays for 1980 are significantly higher of about 9.5 percent. There are no capital funds than estimates for 1979 and are primarily for au- for 1980 for the Board. tomation requirements and construction and ren- The Board-authorized staffing level for 1980 is ovation programs for our facilities. Outlays for 1,561, which compares with 1,537 and 1,578 for data processing-data communications equipment 1979 and 1978 respectively. The increase from total $45.6 million and include computer systems 1979 to 1980 is largely a result of new legislative at Richmond, St. Louis, Minneapolis, Kansas requirements and the System's automation stan- City, and Dallas; telecommunications equipment dardization plans. It should be pointed out that at New York; and acquisition of check process- there was a 2.6 percent drop in authorized posiing equipment in the New York, Philadelphia, tions from 1978 to 1979. Actual employment is, Chicago, Dallas, and San Francisco Districts. of course, somewhat less than authorized, and Outlays for other equipment total $16.8 million we accommodate the difference by funding our primarily for high-speed currency processing staff at a level lower than full authorization. equipment. The budgeted outlays for building The Board's budget continues the trend of inmachinery and equipment ($8.3 million), furni- creases in the regulatory areas consistent with ture, furnishings, and fixtures ($7.4 million), and new legislative responsibilities, particularly with buildings ($49.6 million) are primarily for new respect to the Community Reinvestment Act, buildings at Baltimore, Miami, and San Fran- International Banking Act, and Financial Incisco, and renovation projects at New York, stitutions Regulatory and Interest Rate Control Omaha, Kansas City, and offices in the Dallas Act, other new consumer legislation, and Equal District. Employment Opportunity requirements. In- The 1980 budget planning process began in creased expenses also reflect support to the early 1979 and culminated in the approval of a new Federal Financial Institutions Examination 1980 Reserve Bank budget objective setting an Council and a continuing effort to improve our upper limit of 8.0 percent on expense growth for regulations. known factors and adding 1.0 percent to cover Since personal services account for 82 percent the uncertain impact of legislation and System- of the Board's budget, the federal government's directed programs in the areas of communica- pay policies, which we largely follow, have a sigtion, automation, and the payments mechanism. nificant effect and, indeed, the 11 percent in- Exclusive of resources budgeted for these devel- crease in personal services costs had to be offset opments, the 1980 Reserve Bank budget increase by a much lower increase in nonpersonal servis 7.9 percent—within the established budget tar- ices to meet the final 9 percent budget. The lower get. Our success in meeting budget targets for the nonpersonal services increase of 5 percent is a last several years is attributable to the detailed result of savings in space rentals, now that we planning efforts that go into coordinating the are contained in our two owned buildings, and adoption of System policies in line with resource continued economy measures. In addition we objectives. have imposed a $400,000 savings target, which we expect to meet through managerial actions to be taken during the year. The multiyear construction projects to renovate the Board building 1980 BUDGET FOR THE and provide new space in our Annex building BOARD OF GOVERNORS have been completed. The Board's 1980 budget formulation process The 1980 Board of Governors' budget is $56.1 was built upon the extensive 1979 zero-base remillion, an increase of 9 percent over 1979 esti- views. By concentrating on increments couched mated operating expenses and 6 percent over the within the zero-base format, providing early bud- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 137 get guidance, and instituting additional auto- put per manhour while maintaining the integrity, mated budget presentation aids, the Board was security, reliability, and quality of Federal Reable to reduce paperwork by 35 percent while in- serve services. creasing productivity of budget preparation and This year will be a year of challenge for the review. The Board's 1980 budget continues the Federal Reserve System as changes in the financonstraints of the past few years with internal cial industry and the economic and financial enreallocations and minimal increases in staff to vironment demand intensive regulatory, supervimeet high-priority initiatives. sory, and monetary analysis. The cost control and employment reductions of the past provide a streamlined organization to which in 1980 will be SUMMARY added emphasis on the quality and levels of System services, improvements in the operating We are proud of our record of keeping expense work environments in the Districts, and a spirit increases well below the inflation rate, of reduc- of increased cooperative sharing of ideas, taling cost per unit of output, and of improving out- ents, and resources. • Statement by Paul A. Volcker, Chairman, Board pectations. While much of the acceleration in of Governors of the Federal Reserve System, be- prices can be attributed to rising energy costs, fore the Joint Economic Committee of the U.S. our dismal performance in productivity has also Congress, February 1, 1980. contributed appreciably. In financial markets, high interest rates—themselves a by-product of I am pleased to be here today to participate in rapid inflation—have induced further financial inthese hearings on the President's Economic Re- novation and institutional changes, which in part port, to present to you my views on the state of have required changes in the way monetary polthe economy and to comment on what I consider icy is now conducted. to be the advisable course for economic policy. I The uncertainties created by these developbelieve there is now widespread recognition of ments are perhaps best highlighted by the almost the priority that must be given to controlling in- universal failure of forecasts made at this time flation. I welcome this opportunity to discuss the last year, and throughout most of the year, to role of monetary policy in achieving the goal of predict accurately the continued expansion of ecprice stability and to explore ways in which other onomic activity in 1979. Despite the shocks from policies also can contribute toward this end. very large oil price hikes, fuel shortages, and ma- Shaping economic policy is not an easy task jor strikes, as well as the imposition of restraineven at the best of times. But the task has been ing macroeconomic policies, the economy made considerably more difficult by the dramatic proved to be remarkably resilient. Growth in real changes that have been occurring recently in the economic activity did slow in 1979 from the uneconomic environment, both at home and sustainable 5 percent rate posted in the preceding abroad. Actions by the Organization of Petro- year, but real gross national product still adleum Exporting Countries continue to place vanced 1 percent over the four quarters of 1979; sharp upward pressures on the price of oil im- the much-heralded recession never appeared. ported into the United States, while political dis- The 1979 experience underscores how limited turbances in Iran and Afghanistan—among other our ability is to project future developments. It things—have increased uncertainties about fu- reinforces the wisdom of holding firmly to moneture petroleum supplies and defense spending. tary and other economic policies directed toward Here at home inflationary pressures have in- the evident continuing problems of the econotensified, and these pressures have been accom- my—of which inflation ranks first—rather than panied by a heightening of inflationary ex- reacting to possibly transitory and misleading Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

138 Federal Reserve Bulletin • February 1980 movements in the latest statistics or relying too lowest level since 1975. Indeed, sales have heavily on uncertain economic and financial fore- dropped to the point that much of that adjustcasts. In retrospect, recharting policy to respond ment may be completed. to tentative signs of a faltering economy last year Housing sector activity also slackened subwould have proven extremely costly to our anti- stantially. The rate of private housing starts inflation effort. moved down early in 1979 from the 2-million-unit One of the major reasons why the forecasts for pace that prevailed in 1978 and averaged VU mil- 1979 went wrong was the unanticipated behavior lion units during the first three quarters of 1979. of consumers. Despite the virtual cessation of Late last year starts fell again, to an average of growth in real disposable income over the year, 172 million units in the final two months; permits consumption outlays continued to advance. The for new construction declined even faster. The desire of households to accumulate goods was, decline in residential construction last year reno doubt, induced in part by the expectation of flected tighter conditions in mortgage markets as worsening inflation. Indeed, surveys of con- well as some reduction of demands owing to sumer attitudes showed inflationary expectations weaker financial positions of potential homein the double-digit range virtually throughout the buyers. year. Consumers could see both their savings In the business sector, there was a loss of moand income being eroded by inflation and were mentum in capital outlays during 1979 as the funwilling to incur more debt and to save less in or- damental determinants of spending became less der to sustain their standards of living or to buy favorable. Growth of final sales slowed considtangible assets in anticipation of further price erably after the first quarter, the capacity utilizarises. As a result, debt burdens reached new highs tion rate in manufacturing edged lower, nominal in 1979 and the saving rate at the end of the year financing costs rose throughout the year, and was down to its lowest level since the Korean business sector balance sheets came under in- War. One of the major uncertainties as we enter creasing financial pressure. Reflecting these de- 1980 is how long consumers may be willing and velopments, advance indicators of capital spendable to maintain behavior without much earlier ing—such as orders and contracts—showed no precedent. real growth during the year, and surveys of It was encouraging that the nation's trade bal- planned outlays for 1980 also suggest a further ance improved somewhat last year despite a dra- moderation in real capital outlays. matic increase in the value of our oil imports. Ex- The slowing of economic activity during 1979 port volume—for both agricultural and was accompanied by a less rapid increase in emnonagricultural products—increased by about 10 ployment, but the moderation in employment percent. Export markets thereby helped signifi- growth did not keep pace with the deceleration in cantly in sustaining domestic production in 1979. output growth. Although real output rose by 1 If the forecasts have proven to be wrong about percent over the year, total employment ina recession in 1979, they do, I believe, reflect ele- creased 2 percent. At the same time, however, ments of potential weakness in some key sectors growth of the labor force slowed. As a result, the and an increased overall vulnerability following overall unemployment rate remained within a five years of expansion accompanied by the dis- narrow range of 53A to 6 percent. tortions of inflation. One major area of weakness Despite the moderation of output growth last has already been evident—the auto sector. Auto year, inflation worsened, and inflationary exdemand was damped last year by a series of pectations became more deeply imbedded. The shocks—large gasoline price hikes, gas short- acceleration in overall inflation in 1979 was due ages, and concerns about future fuel availability. in significant measure to the sharp rise in the Car sales dropped sharply in the spring and car price of imported crude oil that resulted from the stocks backed up. Price cutting and company- series of price hikes instituted by OPEC. In addisponsored incentive programs helped work off tion, prices of domestic crude oil and many other excessive inventories in the summer. On bal- energy items also rose dramatically. Inflation, ance, however, demand appears to have weak- however, was not confined to the energy sector ened, with auto sales in the fourth quarter at the as underlying cost pressures intensified through- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 139 out the economy, and prices, excluding energy those objectives could be achieved. Indeed, our and food, rose faster than in the year earlier. immediate objective was to rein in money and By last fall it was evident that inflationary con- credit growth. ditions had deteriorated further and threatened Although explicit targets for monetary growth not only the stability of the U.S. economy but have been a central feature of monetary policy also our position in the world economy. In re- for several years, the operational guide for daysponse to the measures taken in November 1978, to-day open market operations before October the value of the dollar had risen, and this strength had typically been the federal funds rate. Howcontinued into the first five months of 1979. ever, the translation of money stock objectives However, the failure of the U.S. inflation rate to into day-to-day management of this rate premoderate, an acceleration of money and credit, supposes a stable and predictable relationship and the rapid rise in oil prices all contributed to between the public's demand for cash balances downward pressure on the dollar in the summer. and short-term market rates of interest. This The dollar's weakness intensified in September relationship becomes particularly difficult to apdespite heavy intervention purchases of dollars praise in an environment of rapid price increases, by U.S. and foreign authorities. changing inflationary expectations, and financial innovations. Consequently, the Federal Open Market Committee decided to emphasize con- MONETAR Y FOLIC Y IN 1979 trolling the volume of reserves available to support deposits in the banking system.1 This Early in 1979, growth of the monetary aggregates change in procedure was supported by two other was effectively under control. But during the measures—an increase in the discount rate and a spring and summer, money growth was much marginal reserve requirement on increases in the faster than the Federal Reserve's longer-run tar- managed liabilities of larger banks. Our purpose gets. The System took a series of actions, in this program was to signal clearly and forcibly through its open market operations and through our unwillingness to finance an accelerating rate increases in the discount rate, designed to con- of inflation and our desire to "wind down" inflatain excessive growth of money and credit. But tionary pressures. with continuing rapid growth of the aggregates Following these actions taken nearly four and with foreign exchange developments con- months ago, there was a period of turmoil and tributing additional upward price pressure and unsettlement as the markets appraised and exacerbating inflationary expectations, it became adjusted to the new approach to implementing clear that firm action was needed to avoid even monetary policy. Initial reactions in some marhigher inflation. The risks were underscored by kets may have been exaggerated, but at least an apparent buildup of speculative pressures in they reflected an appreciation of the seriousness commodity markets in September. The danger with which we viewed the problem of containing was that the bidding up of prices in these markets inflation. Now the financial markets appear to be not only would in itself reinforce the inflationary functioning in a more orderly fashion. trends but that it would also lead to an unsustain- With regard to our immediate objectives of able surge of buying. This was the setting in controlling monetary and credit developments, I which the Federal Reserve took its October 6 can report that the overall results have been repolicy actions to deal with inflationary pressures markably in line with our intentions. Specificaland defuse expectational forces. It was a setting, ly, there has been a clear and significant modertoo, that emphasized the fundamental point that ation in the growth of money and credit. Growth defense of the dollar internationally depends first in M-l over the September to December interval of all on actions at home to deal with our domes- was well within the interim target of 4V2 percent tic economic problems. or lower set by the Federal Open Market Com- As I have indicated on previous occasions, the new steps did not involve any change in our basic 1. A technical description of the new procedures is available on request from Publications Services, Board of Govertargets for the various monetary aggregates in nors of the Federal Reserve System, Washington, D.C. 1979, but they did provide added assurance that 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

140 Federal Reserve Bulletin • February 1980 mittee in early October, and growth rates for vir- tionary process—prices respond to a host of factually all the aggregates have subsided markedly tors, including credit growth, demand managefrom the excessive pace of the spring and early ment policies, external price shocks, productivisummer of last year. ty trends, expectations, and many others. In In terms of our ultimate goals, the picture is view of this, I believe that we must develop much less clear. Fears expressed by some of a a coordinated set of policies designed to attack precipitous drop in economic activity have not inflation from a number of directions rather than been borne out, as the economy has continued to placing the entire burden on monetary policy. In grow at a modest pace in spite of the tighter poli- theory, monetary policy could do the job alone; cies. But the economy's strength reflects in part in practice, complementary policies are needed consumer buying on credit or out of savings in to smooth the path and build the base for susanticipation of continued inflation, and this does tained growth. Moreover, if we are to return to a not bode well for the long run. Other develop- noninflationary environment, it must be recogments since October have not been encouraging. nized that persistent application of anti-inflation Inflation remains about where it was, and gold policies over an extended period is essential. I and commodity markets are once again highly am happy to note that the administration has emvolatile—a development certainly related in large phasized these points in its discussion of policies part to international political and economic de- for stability and growth. velopments. These same developments had an As we develop such policies, I would note that impact on exchange markets. The dollar retraced our margins for error in some important respects most of its rise after October 6 but has held are smaller today than they used to be. In particsteady in recent weeks. ular, I would underscore the importance of We could not reasonably have expected to see avoiding errors on the side of excessive stimulus any significant damping of inflation over such a in an environment in which inflation is already short period of time. But, we must also recognize deeply imbedded, a point also stressed in the that clear progress on the price front has prob- President's Economic Report. When inflationary ably been set back by at least a further quarter or expectations are so volatile, we run the grave two as a direct result of the round of oil price risk that stimulation will be dissipated to a large changes since early December, and the inter- extent in higher prices rather than increased outnational disturbances have seemed to reinforce put. That is one price we pay for permitting inflaconcern about future inflation. This part of the tion to make the headway it has for so long. The picture is not a happy one. But, I would remind potential costs of acting on the basis of forecasts you that lags between action and reactions are of slack that later prove to be incorrect are all the well-known, so we should be neither surprised higher in view of potential strains or disruptions nor disheartened by the recent data. Monetary that could arise—for example, in the energy secpolicy—restraint on growth of money and cred- tor—that would further exacerbate inflationary it—is only effective over time; but experience pressures. In that connection, I am aware, as I shows that, with perseverance, it can and will be am sure you are, that decisions on defense effective. Recent events seem to me only to rein- spending will need to be taken into account in force the need for disciplined policy, and I re- appraising the outlook. main hopeful that signs of progress will emerge I know the committee does not expect me to over the next year. deal in detail with our monetary objectives, pending testimony in relation to the Humphrey- Hawkins procedure. However, in terms of the LOOKING AHEAD broad posture of monetary policy, these considerations translate into a prescription for per- With this background in mind, let me now turn to sistently working toward noninflationary growth a discussion of appropriate public policies over of the money supply. There are questions on how the near term. Monetary policy has a central role fast money growth should be cut back and techto play in combating inflation. But our recent ex- nical issues of how to implement monetary polperience underscores the complexity of the infla- icy, but I see no satisfactory alternative to slow- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 141 ing the growth of money. Our policy, viewed in a spending to total GNP be reduced. In the current long-term perspective, rests on a very simple international environment, that may not be feapremise—that the inflationary process is ulti- sible every year, but if and as defense priorities mately related to excessive growth in money and rise, the clear implication is that we cannot credit. This relationship is of course a complex shrink away from even more intense scrutiny of one, and there are many facets of it that are sen- nondefense spending. Moreover, budget revesitive to nonmonetary economic variables. But, nues must be managed prudently, and I espein spite of all the nuances, it is clear that inflation cially applaud the President's decision to refrain cannot persist over the long run in the absence of from recommending any new stimulative tax inexcessive monetary growth. centives at this time. In this context, let me make an important ana- I am well aware that a strong case can be made lytic point—maintenance of restraint on money for well-structured tax changes; as the chairman and credit is consistent with movements in inter- of this committee has often pointed out, we est rates in response to market forces as they re- should act to remove "supply-side" disflect credit demands, trends in economic activi- incentives in the tax system. But desirable as ty, and, over time, inflation. Whether, when, and some types of tax cuts may be, particularly to to what extent interest rates move higher or help deal with the urgent underlying problems of lower, these changes should not be misinterpret- productivity, costs, and incentives, such a proed or misconstrued as a departure from our in- gram needs to respect the fiscal priorities. Othertent to maintain disciplined growth in money and wise the potential favorable effects would be credit over time. In that connection, I would em- swamped by a new spur to inflation, even more phasize that the prospects for sustaining any de- congested credit markets, and more economic inclines in interest rates that might develop in any stability. Put simply, net tax reduction can only cyclical downturn will ultimately depend on suc- be earned by restraint in expenditures over time, cess in the fight against inflation. In that con- and that time has not yet come. text—but only in that context—lower interest When the time does come for tax reduction, it rates would not only be appropriate in facilitating should be designed with a sharp focus on achievrecovery, but they would also be evidence that ing the nation's goals. A number of possible tax the foundations were being laid for a healthier measures to reduce costs could be considered in domestic economic situation and one consistent this regard, including for example reexamination with a stronger dollar internationally. of the extent to which we rely on payroll taxes. But, it seems to me, tax restructuring should place major emphasis on stimulating business in- OTHER ANTI-INFLATION POLICIES vestment and enhancing productivity growth. To my mind, it would be a policy mistake of the first I pointed out earlier the need for a coordination magnitude to dissipate opportunities for tax reof policies in order to avoid unnecessary costs duction, when and if they do arise, in measures and disruptions as we work to restrain inflation. that simply add to spending without helping to Fiscal policy potentially can play a key role. In resolve the underlying problems. the past, however, there has been far too much Over the longer run, productivity growth is of a willingness to accept budget deficits, in good one of the keys to containing inflation, as well as as well as bad years. being the prerequisite for raising living stan- I believe it is imperative to keep the goal of dards. Recent performance in that respect has budgetary balance in the forefront of our thinking been dismal. During the two decades following about spending and revenue decisions, even World War II, output per hour worked was rising though our progress may at times be interrupted on average about 3 percent per year; since the by cyclical developments. It is particularly im- mid-sixties, the increase has trended lower, cliportant, in my view, that tight control be exer- maxed by an actual decline in 1979. cised on total expenditures, and that we work One of the reasons for the slowdown in proaway at the objective often stated by the Presi- ductivity growth over the past decade has been a dent in the past that the share of government slackening in the rate of capital formation. In- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

142 Federal Reserve Bulletin • February 1980 deed, the nation's stock of capital grew at only a voluntary programs by way of educating busi- 2V2 percent rate over the last five years—about ness and labor as to the need for restraint and in half the pace of the preceding decade. Capital ac- heading off excesses. An effective program, emcumulation per member of the labor force has phasizing the ultimate futility of attempts to reslowed even more dramatically; the stock of cap- cover losses of real income required by producital per worker has actually declined on average tivity declines or external shocks potentially can since 1975, and more of our present capital stock dampen a ratcheting up of the wage-price spiral. appears less directly "productive" in the sense But let us recognize, too, that experience here that it is motivated by environmental or other and abroad confirms that such programs cannot considerations. It is clear, then, that we must de- be the backbone of an anti-inflation policy. And, sign our economic policies in a way that will en- let us also appreciate, and avoid, the risk that courage saving and investment, and improve the such programs may lull us into thinking they are rate of capital formation, if we are to ensure the a substitute for monetary and budgetary disability of the economy to provide sustained ad- cipline; in that event, the net effect would be vances in living standards and to meet those counterproductive. other objectives not captured in the production Of course, we will remain highly vulnerable to statistics. external developments so long as we are heavily Another element in the long-range program to dependent on imported oil. I will note, without increase productivity and living standards, and belaboring a point that has been made so many reduce inflation, would be a new look at the fed- times, that recent events only underscore the eral government's regulatory activities—both so- need to come to grips with this problem. cial regulations and economic regulations. This Part of the solution seems to me to require that year's Economic Report discusses the need for we recognize the need to allow increases in the striking a proper balance in regulation, an area price of oil and related products to reflect their where, I sense, sound concepts of comparing true scarcity. Sometimes the short-term impact costs with benefits have been sorely lacking. I do of such a policy on the price indexes is cited as not underestimate the difficulty; reality is com- an almost insuperable obstacle to such an applex and each new regulation seems to generate proach. To be sure, the short-term dilemma reinits own vested interests, with talented and vocal forces the need for firm anti-inflation policies to advocates. Yet, instances where obsolete gov- avoid further increases in inflationary exernment intervention actually hurts, rather than pectations. But benefits over time would be subhelps, the consuming public have often been stantial, for the longer we delay adjusting to the cited, and newer regulations can be challenged realities of the energy markets, the longer we will on the same grounds. Even in areas where elimi- be vulnerable to spiraling prices at inopportune nation of government regulation would clearly be times, to say nothing of physical shortages. inappropriate—such as the protection of the en- The period we are now in surely will test our vironment, health, and safety—I feel certain we patience, our wisdom, and our common sense. can do a better job in assuring that the benefits of The problems we face are not easy ones, and the protection are weighed carefully against the policy decisions they call forth are not necessaricosts of achieving them. ly going to win popularity contests today. Yet, In the context of declining productivity, it is what strikes me is the understanding by the even more apparent that moderation in wage American people of some basic truths: the need growth is needed if we are to gain control over for economic restraint, applied consistently and inflation. Last year, hourly compensation in- persistently; the fact that creation of money is no creased about 9 percent. Combined with an ac- substitute for production and productivity; the tual decline in productivity of more than 2 per- absence of painless quick fixes. cent, these wage increases drove unit labor costs You are better judges of the national mood up more than 11 percent—a marked acceleration than I. But I do have certain convictions. Events from 1978 and thus a substantial source of added of recent years have given all of us—from our inflationary pressures. I welcome any assistance national leaders to the most humble citizenthat can be obtained through cooperative and some insight into what it means to really have to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 143 worry about the value of the dollar, at home and the inflationary screw as a by-product of buying abroad, not just its implications for economic our way out of stagnation or slump. I also know stability and for our national pride, but for our the "payoff" over time from policies to restore sense of value and our ability to exercise lead- stability and productivity can be huge for all ership in the world. There is no longer any soft or Americans. That is why I feel so strongly we easy option of simply accepting another turn of must "stick with it" until the job is done. • Statement by Paul A. Volcker, Chairman, Board Federal Reserve membership intensifies. In the of Governors of the Federal Reserve System, be- three years that the Congress has debated this fore the Committee on Banking, Housing, and issue, the proportion of bank deposits held by Urban Affairs, U.S. Senate, February 4, 1980. member banks dropped from 73 percent to about 70 percent. That drop occurred despite the fact I am grateful for this opportunity to testify once that many institutions have been willing to defer again on certain proposals this committee is con- withdrawal from membership while awaiting legsidering to ensure the continued capacity of the islation that would result in more equitable con- Federal Reserve System to conduct effective ditions. Now, it is evident that patience has run monetary policy in the years ahead. I am con- thin. During the fourth quarter of 1979 and the vinced that, after long debate and with a final ef- first few weeks of 1980, 69 banks with about $7 fort by this committee, a fully satisfactory legis- billion in deposits have given notice of withlative solution can be enacted in a matter of drawal from membership. The loss of deposits in weeks—legislation that would have broad sup- this short period exceeds that of any full year. port from the interested constituencies, would The recent withdrawals by two very sizable fall within acceptable limits of cost to the Treas- banks in Pennsylvania, with more than $3 billion ury, and most important, would enable the Fed- in deposits between them, seems to me espeeral Reserve to maintain disciplined control of cially significant. They show that much larger inthe money supply and to meet its other responsi- stitutions than before are now prepared to take bilities for protecting the safety and soundness of the step. As one banker has put it, the cost of the banking system. membership is "too high a price to be a member The need for legislation is strongly reinforced of anything." by the decision of the Federal Reserve to adopt It is my judgment, and that of many others, new operating procedures on October 6. These that, in the absence of legislative action, the new procedures—which are described in an at- stream of member banks that withdraw will tachment to this testimony—place much greater reach flood proportions. Financial innovation, emphasis on reserves as the instrument for con- shifting competitive patterns, and strong inflatrolling money growth.1 Thus far, the procedures tionary pressures with their related high interest have worked reasonably well. But their ef- rates, all have contributed to an increasing burfectiveness will be undercut as the share of mon- den of membership. It has become progressively ey not subject to reserve requirements set by the more costly and more difficult for banks to justify Federal Reserve increases. Legislation to keep continuing their membership. It was not so long Federal Reserve control over the nation's re- ago that, among medium-sized and larger banks, serve base from atrophying further is, in that membership was pretty much taken for granted. context, an essential element in our anti-inflation Now in more and more areas of the country, that program. attitude is being reversed; it is continued mem- As we deliberate, the problem of attrition from bership that has to be justified to the stockholders and customers that ultimately shoulder the burden. Even banks conscious of the impor- 1. The attachments to this statement are available on retance of a strong central bank and reluctant to quest from Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. give up a national charter find that justification Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

144 Federal Reserve Bulletin • February 1980 increasingly difficult or impossible in light of the Finally, the structural consideration so central heavy burden involved. to the formation of the Federal Reserve System A recent survey by Reserve Banks, based en- would become relevant again as larger and larger tirely on information volunteered by members in segments of the banking industry come to hold the normal course of business, found that 320 their entire operating and liquidity reserves at member banks were considered certain or prob- other commercial banks rather than maintaining able to withdraw. Another 350 were actively con- balances with the Federal Reserve Banks. In this sidering withdrawal. These 670 banks—some of setting, localized strains may more readily be which have already initiated withdrawal proce- transmitted to other banks, and individual faildures—represent more than 10 percent of the ures could have more serious repercussions. System's membership and have in excess of $71 Among the relevant criteria for evaluating any billion in deposits. If these banks, in fact, with- proposed legislation are how many banks are draw, deposits of banks holding federal reserves covered, the proportion of deposits held by those will decline to 64 percent of the deposits of the banks, and the size of the reserve base itself in banking system. And there is no doubt in my relation to deposit totals. We have no formula for mind that many more banks are considering deciding precisely how large reserve balances withdrawal than have come to our attention and need be, or how they should be distributed, to that the momentum will build further. ensure effective monetary control and a well- I would remind you that loss of members has functioning banking system. I am convinced that several adverse effects on monetary control, the reserve requirements must be more equitably soundness of the banking system, and the strength distributed among the nation's banks, and I also of the Federal Reserve. As attrition causes the feel quite sure the Federal Reserve can meet its total amount of reserves held at Federal Reserve reponsibilities with a smaller reserve base than Banks to decline, the "multiplier" relationship we now have. But I have grave doubts whether between reserves and money increases and tends coverage and the reserve base could be reduced to become less stable. Consequently, fluctuations as drastically as in the bill (H.R. 7) passed by the in the amount of reserves supplied—and these House without serious adverse implications for fluctuations inevitably have a range of uncer- monetary management. tainty—can cause magnified and unintended Theorists have put forward arguments that, changes in the money supply. As attrition in- under certain operating hypotheses, required recreases the proportion of deposits held by non- serves may not be needed at all, let alone in sizmember banks, the possibility of unanticipated able amounts. The rather abstruse arguments (and unpredictable) shifts of deposits between may or may not be valid in certain circummember and nonmember banks increases, de- stances. But we at the Federal Reserve are not stabilizing the relationship between reserves and prepared—least of all at this critical juncture for money. our economy—to commit ourselves to experi- As banks leave the System, they also lose ments with monetary policy on the basis of unready access to the Federal Reserve discount tested theorizing about operating without sufwindow. Operation of the window not only can ficient reserve balances. You will properly hold assist otherwise sound banks to weather unex- us accountable for contributing to progress in pected deposit outflows but also can provide an dealing with inflation and the other economic essential safety-valve function for the monetary problems that beset us. For our part, we must system as a whole by enabling individual institu- have adequate tools to meet that challenge. tions to adjust more smoothly and without dis- In our opinion, a reduction in reserve balances ruptions to changing credit conditions. At the held at Federal Reserve Banks (expressed in same time, the Federal Reserve is losing the in- 1977 terms) to as little as $10 to $15 billion—or timate supervisory surveillance of individual in- about $11.5 to $17 billion in 1979 terms—could stitutions important to the administration of the prove adequate to conduct monetary policy, prodiscount window and the effective discharge of vided it is distributed equitably across depositary our supervisory and regulatory responsibilities. institutions having transaction accounts. But we Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 145 are not certain of that outcome, and that level of of, market rates. Access to services would be rebalances—some 4 to 6 percent of transaction stricted to members and to other institutions volbalances and less than 1.5 percent of total depos- untarily maintaining balances in an amount equal its in depositary institutions—might not even to those required of a member of the same deposadequately support Federal Reserve operational it size and configuration. Those services would requirements. For that reason we would strongly be fully priced. urge at least standby capacity to obtain some- Senator Tower's bill, unlike H.R. 7 and S. 85, what larger balances—up to $20 billion or more provides for reserves on all savings deposits and in 1977 terms. H.R. 7, in contrast, provides for on all time deposits of less than 180-day maturless than $8 billion of balances (in 1977 terms), ity. Such reserves would be interest bearing, and distributed among only 450 banks. therefore would not have the same "tax" effect The monetary policy need for an adequate lev- associated with such reserves in a mandatory el of reserve balances creates something of a framework. Thus, there would not be so strong quandary. Reduction of reserve balances of mem- an incentive to shift funds from these types of ber banks to that level would not be sufficient accounts because of the reserve requirement, a to stem attrition in a purely voluntary system, phenomenon that has been of great concern to because it plainly would not eliminate the bur- the Board in the context of mandatory reserves den of sterile reserves of federal members. On on time and savings accounts. Nevertheless, it the other hand, a reduction in reserve require- seems apparent that members would still feel ments large enough to stop attrition would not somewhat burdened relative to other instituprovide a satisfactory level of reserve balances tions. In that connection, I would point out that, from the viewpoint of monetary policy. S. 353 to maintain an adequate reserve base, actual rewould attempt to resolve this quandary, within serve requirements imposed within the framethe context of a voluntary system, by paying in- work of S. 353 would need to be in the upper part terest on the reserves held after some reduction. of the ranges specified in the bill. S. 85 and H.R. 7 approach the problem by making I have examined this approach with care and lower, non-interest-bearing reserve requirements have sympathy for its objectives because, as I mandatory for all depositary institutions having have indicated to the committee before, I undertransaction types of accounts. However H.R. 7 stand and share the nostalgia for retaining eleprovides too small a reserve base covering too ments of voluntarism in the operations of the few institutions. S. 85 would achieve a much Federal Reserve System. But, we simply cannot more sizable reserve base than H.R. 7. But it rely on nostalgia in conducting monetary policy. does so at the expense of sizable requirements on It is the considered conclusion of the Federal Retime deposits—requirements high enough to bur- serve Board that the voluntary approach cannot den significantly covered institutions relative to practically be made effective within the framecompeting market instruments. work of acceptable revenue loss to the Treasury and other objectives. Indeed, it is our judgment that membership attrition would probably con- THE FEDERAL RESERVE tinue, although at a much slower rate. MODERNIZATION ACT (S. 353) Based on 1977 data, the cost analyses of the basic provisions of S. 353 that I have attached As I just indicated, the amended version of S. show that the net cost to the Treasury of imple- 353, proposed by Senator Tower, would deal menting that bill would fall in the range from $450 with attrition from Federal Reserve membership to $520 million annually. This appears to be far in in the context of a fully voluntary system. The excess of amounts acceptable to the administrabill seeks to eliminate the burden of membership tion or to many members of the Congress. The bill by reducing requirements against most deposits also encompasses the possibility of a mandatory and mandating that all balances held at the Fed- supplemental deposit on transaction balances in eral Reserve to meet reserve requirements earn an "emergency." As the appendix table ininterest at rates close to, but still somewhat short dicates, with such supplementary deposits yield- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 146 Federal Reserve Bulletin • February 1980 ing IV2 percentage points less than a market rate constitutional function of the federal government, (as would be the case under the amendment to S. even at the expense of impairing the effective- 353 supplied to the Board by Senator Tower), the ness with which that function is discharged. net cost would still not be reduced to acceptable levels even if the supplemental provision were to be invoked. SUPPLEMENTARY DEPOSITS The dilemma is that without payment of interest on reserves at or very near market rates, a It is possible to reconcile the seemingly conflictpurely voluntary system cannot stem attrition, ing objectives of equity for financial institutions, but the payment of that interest drives up the acceptable limits on the loss of Treasury revecost. Moreover, it seems unlikely that—in view nues, and the provision of a large enough reserve of the highly efficient correspondent banking net- base to ensure the effective conduct of monetary work throughout the country—many nonmember policy by use of a standby authority for interestinstitutions would be prepared to place equiva- earning supplemental deposits at Reserve Banks lent balances with the Federal Reserve to ob- along the lines that I suggested to the committee tain access to services. Indeed, under S. 353 last fall. Provision for such a supplemental dethe effectiveness of monetary policy, whether posit would permit us to attempt to operate with viewed in terms of the size of the reserve base or a relatively small reserve base, while providing a ongoing access to the discount window, might ul- "safety net" should experience prove that base timately swing on the extent to which non- inadequate to obtain sufficiently precise control member institutions maintained balances to ob- over the money supply. It would entail no added tain federal services. In any event, we would be cost to the Treasury and virtually no cost to the left with the increasingly awkward problem of banking system. And, from a legislative viewdiscriminating between members and nonmem- point, it could easily be made part of any of the bers in the provision of certain services, such as bills before the Congress. automated clearinghouse payments, which for The amendment proposed for S. 353 in fact practical reasons cannot operate efficiently unless seems to accept the general logic of that apopen to all depositary institutions. Indeed, even proach. However, the preconditions for the imnow nonmembers have access to those automated position and retention of the supplement as specservices. ified in the amendment appear so restrictive as to Therefore, I must conclude that attention should impair its value. The amendment stipulates, for be directed toward approaches that would apply example, that the Board must find that the supreserve requirements to depositary institutions plemental deposit is the only means to maintain on a universal and mandatory basis. Such a uni- effective control over monetary growth, and it versal approach has the enormous benefit of requires a unanimous vote of the Board, proviequitably applying reserve requirements to com- sions that might make it impossible to use the auparable accounts—at thrifts as well as banks, at thority even if the overwhelming majority of the members as well as nonmembers. This is particu- Board felt it had enormous advantages over any larly important with respect to rapidly growing conceivable alternative. components of the nation's basic money supply, The provision in the amendment that stipulates negotiable order of withdrawal (NOW) and auto- that the authority for the supplemental deposit matic transfer service (ATS) accounts, many of will expire after four years is perhaps a still more which now escape reserve requirements alto- serious flaw. It may or may not be needed in four gether. years. But, if the expiration date came at a time I can readily sympathize with the desire to when supplemental deposits were in place, an maintain a voluntary system wherever possible obvious problem would be created because the in the provision of governmental services. But, it authority would not be in use at that time unless would be ironic indeed to insist upon the ap- it was needed. On the other hand, the fact that it proach for philosophical reasons in an area— had not been used in four years should not incontrol of money—that is clearly a specified dicate that it would never be necessary. We have Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 147 no dispute with the point that the authority quirements. We are prepared to supply an approshould not be used lightly, and we would be glad priate amendment that could be attached to S. to propose procedural safeguards to reinforce 353 or to any bill that would deal with the probthat point without vitiating its potential useful- lem. ness in a time of need. CONCLUSION PROVISIONS OF SERVICES AND OTHER ISSUES I am convinced the essential elements of legislation to provide the Federal Reserve with the The amendments to S. 353 offered by Senator tools it needs to meet its responsibilities are at Tower to require charges for Reserve Bank serv- hand. The Board of Governors believes these ices and for float are, in principle, acceptable to elements should give concrete embodiment to the Federal Reserve, and similar provisions are the following principles, and these principles can in other bills. We believe that pricing is a natural be achieved without revenue loss. corollary to open access—but I would also em- 1. Reserves should be applied to all transacphasize, however, that open access and pricing tion accounts. Some relatively low exemption are practicable only after reserve requirements level or a system of graduated requirements for are restructured and applied to all depositary inthe smallest institutions can be accommodated stitutions. within this principle. Pricing of System services likely will induce 2. When and if reserve requirements are immajor changes in existing banking relationships. posed on time deposits, they should be confined It may have differential effects on large and to short-term, nonpersonal accounts and should small, or city and rural, institutions. Overly rigid be at a relatively low level. application of the principles, however sound 3. To establish comparable competitive condithese principles are, could cause disruptions in tions, reserve requirements should be equal for banking markets. Consequently, I would urge all despositary institutions offering comparable that the pricing provision allow a degree of flexiaccounts. bility in timing and implementation. For instance, 4. Authority should be provided to ensure that it should be clear that the Federal Reserve need the reserve base is of adequate size for the effinot precisely match costs and revenues for every cient and effective conduct of monetary policy. service. 5. Access to Federal Reserve services should I would also urge that the Board be given aube open to all depositary institutions with transthority, similar to that provided in H.R. 7, to peraction accounts, and the Reserve Banks should, mit exceptions to full-cost coverage where rein principle, aim to recover the full cost of those quired by the public interest, competitive services from pricing—provided all institutions condition, or the provision of an adequate level have a comparable reserve burden. of services nationwide. Indeed, the Board ques- 6. Consistent with the dual banking system, tions whether a charge for the receipt and disinstitutions should remain free to choose a state bursement of a new currency is appropriate at or federal charter, and membership in the Federal all. The government might normally be expected Reserve System, with its implications for certain to provide that service, and in any event, the supervisory matters and for the election of Fed- Treasury already earns some $7 billion per year eral Reserve Bank directors, should remain volfrom the provision of currency through the interuntary. est earned on securities held by the Federal Reserve as collateral against that currency. These principles already are incorporated into, The committee also should note that S. 353 or could readily be added to, two bills that are does not address the technical problems relating before you: S. 85 and H.R. 7. Last September I to collateralization of Federal Reserve notes that testified at length on specific modifications to imcan rise under legislation that reduces reserve re- prove S. 85 or H.R. 7 to bring them more fully Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 148 Federal Reserve Bulletin • February 1980 into line with the essential objectives, and I have the enormous challenge of dealing with inflation, little to add to the comments I made at that time. we cannot responsibly permit attrition from mem- In conclusion, let me express again the Board's bership to grow to the stage where it seriously deep concern that prompt action be taken to disrupts monetary management and calls into ensure that the Federal Reserve has, and for question the strength and independence of the years to come will continue to have, adequate nation's central bank. I fear we will soon be tools to manage the nation's monetary affairs perilously close to that point. The principles I and to ensure a sound and safe banking sys- have stated are consistent with prompt action. tem. In light of the many new uncertainties We must not permit the opportunity before us to facing our nation both at home and abroad, and slip away. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

149 Announcements NEW DEFINITIONS OF MONEY rodollars held by U.S. residents other than banks, bankers acceptances, commercial paper, The Federal Reserve Board on February 7, 1980, Treasury bills and other liquid Treasury securannounced new definitions of money that will ities, and U.S. savings bonds. be used in the conduct of monetary policy. In addition to regular publication of these new The redefinitions, which have been under measures, the Board will publish their principal study for several years, were prompted by many components. financial developments that have reduced the sig- A detailed explanation of the new measures is nificance of the old measures. Among these de- published in this issue of the FEDERAL RESERVE velopments are the emergence of negotiable or- BULLETIN. der of withdrawal (NOW) accounts, automatic transfer services (ATS), and money market mutual funds and a growing similarity between de- REGULATION E: FINAL RULES posits in commercial banks and thrift institutions. The Federal Reserve Board on January 31, 1980, One of the new definitions is essentially the announced adoption of additional final rules to same as the old narrowly defined money supply complete its Regulation E (Electronic Fund (M-l) while a second concept will include trans- Transfers) and to implement the Electronic Fund action accounts of all depositary institutions. Transfer Act. The new definitions of money are as follows: The Board previously had adopted regulatory M-l A is currency plus demand deposits at rules to carry out sections of the act effective commercial banks. This is essentially the same February 1979 and May 10, 1980. The new rules as the old M-l with one exception—it excludes concern other provisions of the act becoming efdemand deposits held by foreign banks and offi- fective in May. cial institutions. The new rules are revisions of proposals pub- M-1B equals M-l A plus other checkable de- lished by the Board in October. In general, they posits at all depositary institutions including deal with requirements for documentation of NOW accounts, ATS, credit union share drafts, electronic fund transfers by financial institutions; and demand deposits at mutual savings banks. notification requirements in connection with pre- M-2 equals M-1B plus savings and small-de- authorized electronic receipt of funds; requirenomination time deposits at all depositary insti- ments for prompt crediting of funds received tutions, overnight repurchase agreements (RPs) electronically; procedures for resolving errors; at commercial banks, overnight Eurodollars held and responsibility for compliance when an EFT by U.S. residents other than banks at Caribbean card or similar device is issued to a consumer by branches of member banks, and money market an EFT service provider who does not hold the mutual fund shares. consumer's account. M-3 equals M-2 plus large-denomination time The Board decided to take no action at this deposits at all depositary institutions and term time on a proposal made in October concerning RPs at commercial banks and savings and loan charges made by financial institutions in conassociations. nection with error resolution. The Board said it The Board also adopted a broad measure of will monitor industry practice regarding such liquid assets, L. L equals M-3 plus other liquid charges and will take action if consumers appear assets not included elsewhere such as term Eu- to need protection in this area. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 150 Federal Reserve Bulletin • February 1980 The Electronic Fund Transfer Act1 protects receipt of preauthorized deposits to a conconsumers in their use of EFT services. EFT sumer's account (such as sending the consumer services permit consumers and others to transfer notice of receipt of a deposit, for instance, of a funds without the use of checks. One means by direct electronic deposit of social security benewhich funds can be transferred is through use of fits) or negative notice (sending a notice that a an EFT card. Consumers can use EFT cards to scheduled deposit had not been received), unless make payments—for example, at the point of the payor has given the consumer notice that the sale to authorize a debit of the consumer's ac- transfer has been started (such as notice that an count at a financial institution in payment for the employer has initiated a payroll deposit). purchase of goods or services. This usage differs The Board adopted provisions in Regulation E from a credit card in that the EFT card autho- to implement these requirements. As an alternarizes funds to be taken directly out of the con- tive, the Board provided, as it had suggested in a sumer's account while the credit card creates a proposal made in April 1979, that institutions debt that the consumer pays at a later time. The may provide consumers with a telephone number EFT card may also be used at automated tellers to be used to verify whether a transfer has or has to withdraw cash from the consumer's account. not been made. Institutions that adopt this alter- Consumers may use other EFT services to au- native are required to provide readily available thorize the electronic deposit of payments due to telephone service and to inform the consumer of them (such as electronic deposit of wages, social the telephone number as an initial disclosure of security benefits, dividends, and similar repeti- terms of the institution's EFT service, and also tive deposits) or for payment of their bills. on periodic statements to the consumer. The new rules adopted as part of Regulation E 3. Availability of funds. Financial institutions include these details: must make electronically deposited funds avail- 1. Documentation of transfers. The act re- able to consumers promptly. quires that financial institutions document elec- 4. Procedures for processing errors. The act— tronic transfers by making receipts available at and Regulation E as adopted—require generally automated teller machines or point-of-sale termi- that financial institutions resolve asserted errors nals, and by sending consumers of EFT services in electronic fund transfers within 10 business periodic statements. Regulation E includes the days of notification by the consumer, either following requirements: (a) Financial institutions orally or in writing. Alternatively, institutions must show on periodic statements the date a may take up to 45 calendar days to resolve a transfer was debited or credited to the con- complaint, if the account is provisionally recredsumer's account. (An earlier proposal to require ited within 10 business days for the amount in the date the transfer was initiated was not dispute. Recrediting need not take place unless adopted.) (b) A financial institution may show written confirmation of an oral report of error is the location of an automated teller terminal in received within 10 business days of the oral reany of three ways: street address; name of an or- port by an institution that has advised the conganization (such as the name of a store); or name sumer that it requires a written report and has of a readily identifiable location (such as O'Hare provided an address. Airport), where the terminal is situated. When an institution determines that no error In order to facilitate compliance with the docu- has been committed, it must notify the consumer mentation provisions of the act and Regulation that the account is being debited again for the E, the Board proposed to delay the effective amount that was credited. It must honor, for the dates for other requirements. Comment on the period of investigation and for five business days proposal was requested through March 7, 1980. after mailing of a redebiting notice, checks that 2. Preauthorized credits. The act requires that are payable to third parties up to the amount in financial institutions give either positive notice of dispute. The institution may limit its investigation to the "four walls" of the institution, when a third 1. Title XX of the Financial Institutions Regulatory and Interest Rate Control Act of 1978. party—with which the institution has no agree- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 151 ment—is involved (including the Social Security Federal Reserve float—now running at about Administration). $5.5 billion daily, on the average—is the amount 5. EFT card issued by a financial institution of money that the Federal Reserve has paid to not holding the consumer's account. The institu- banks that have sent checks received by them to tion offering the services would be responsible the System for collection, but that has not yet for compliance, with limited exceptions for dis- been collected from the banks whose customers closures having to do with the relationship of the wrote the checks. institution holding the consumer's account to To reduce such float, the Board directed the that consumer. System's Conference of First Vice Presidents to The Board's rules for consumer protection un- develop, as soon as practicable, procedures under the act and Regulation E, as previously der which banks sending checks to the Federal adopted, include the following, effective May 10, Reserve for collection will sort out all checks of 1980: (a) requirements for disclosures to con- $250,000 or more. These large checks will be givsumers who use EFT services; (b) exemptions en special handling by the System to speed up for transfers of funds within an institution; (c) their collection. Checks of this size account for record retention ; and (d) the relation of the feder- approximately a quarter of average daily float. al Electronic Fund Transfer Act to state law. At the same time, the Board also asked the The following previously adopted final rules System's Conference of First Vice Presidents to are already in effect: (a) limitations on a con- complete a plan for the processing of large dollarsumer's liability for unauthorized use of an EFT value checks received by the Federal Reserve, card, including: the provision that consumers so the necessary information for collection can cannot be held liable for unauthorized use of EFT be electronically transferred to the banks on cards if the card issuer has not disclosed what which these checks are drawn and float can be liability the consumer will have for unauthorized reduced by speeding up payment. use of the card, the telephone number and address The Board will consider, and will request for reporting a lost or stolen card, and the institu- member bank comment on, any proposed election's business days; and the provision that writ- tronic check presentment plan. ten notice of loss or theft of an EFT card is effective when the consumer mails or otherwise transmits the notice to the card issuer and (b) CONSUMER ADVISORY COUNCIL MEETING conditions under which EFT cards may be issued. The Federal Reserve Board announced that its Consumer Advisory Council met on January 28 CHANGE IN CHECK COLLECTION RULES and 29, 1980. The Council, whose 30 members are represen- The Federal Reserve Board announced on Janu- tative of a broad range of consumer and credit ary 14, 1980, a change in its check collection interests, advises the Board on its responsibilirules to speed up collection of large dollar-value ties with respect to consumer credit protection checks—$250,000 or more—as a means of im- legislation at meetings held generally four times proving the nation's payments system and of cut- a year. ting down the amount of Federal Reserve float. The Council's agenda at the January meetings At the same time, and with the same objec- included the following: tives, the Board asked the Federal Reserve 1. Recommendations for changes in laws and Banks to complete development of a plan first regulations to integrate provisions under the suggested by the Board last May for presenting Truth in Lending and Electronic Fund Transfer large dollar-value checks for collection electroni- Acts relating to consumer liability and resolution cally, instead of initially presenting them by de- of errors. livery of the paper checks. This plan could have 2. Discussion of credit-scoring systems and the added benefit of conserving fuel used in how they operate under Regulation B (Equal check collection. Credit Opportunity). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 152 Federal Reserve Bulletin • February 1980 3. Discussion of the Board's policy and proce- gram. The show explains the role and responsidures in enforcing the Community Reinvestment bilities of the Federal Reserve System, the na- Act. tion's central bank, and highlights architectural 4. Presentation by the Board's staff on the features of the Board Building that are a part of 1980 legislative outlook. the guided tour. CHANGE IN BOARD STAFF S YSTEM MEMBERSHIP: The Board of Governors has announced the fol- ADMISSION OF STATE BANKS lowing appointment. Robert C. Plows as Assistant Director, Divi- The following banks were admitted to membersion of Consumer and Community Affairs, ef- ship in the Federal Reserve System during the fective January 13, 1980. Mr. Plows was with a period January 11 through February 10, 1980: private law firm before joining the Board's staff in 1976. He holds a B.A. degree from Oberlin California College, an M.A. degree from Yale Divinity Salvang Community Bank of School, and a J.D. degree from George Washing- Santa Ynez Valley ton University. Colorado Conifer Mountain Valley Bank Pueblo Pueblo Boulevard Bank ADDITION TO PUBLIC TOUR PROGRAM Texas Alief Alief Alamo Bank The Federal Reserve Board has announced the Wyoming addition of a slide show to its public tour pro- Aft on First State Bank at Afton Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

153 Legal Developments AMENDMENTS TO REGULATION E Section 205.7—Initial Disclosure of Terms and Conditions Effective May 10, 1980, Regulation E, Electronic Fund Transfers (Part 205) is amended as follows: (a) Content of disclosures. At the time a consumer contracts for an electronic fund transfer service or be- 1. Section 205.2 is amended by revising the heading, fore the first electronic fund transfer is made involving adding a sentence at the end of paragraph (g), and by a consumer's account, a financial institution shall disadding paragraph (m), to read as follows: close to the consumer, in a readily understandable written statement that the consumer may retain, the following terms and conditions of the electronic fund Section 205.2—Definitions and transfer service, as applicable: Rules of Construction 5. The final sentence of § 205.8(a) is amended, to read (g) "Electronic fund transfer" *** The term does as follows: not include payments made by check, draft, or similar paper instrument at an electronic terminal. Section 205.8—Change in Terms; Error Resolution Notice * * * * * (m) Footnotes have the same legal effect as the text (a) Change in terms. ***However, if such a change of the regulation. is to be made permanent, the financial institution shall provide written notice of the change to the consumer 2. Section 205.4 is amended by redesignating para- on or with the next regularly scheduled periodic stategraph (c) as paragraph (b) and paragraph (d) as para- ment or within 30 days, unless disclosure would jeopgraph (c). ardize the security of the system or account. 3. Section 205.5(a) is amended, to read as follows: 6. Sections 205.9; 205.10(a), and 205.11 are added, to Section 205.5—Issuance of Access Devices read as follows: (a) General rule. *** (3) As a renewal of, or in substitution for, an access device issued before February Section 205.9—Documentation of Transfers 8, 1979 (other than an accepted access device, which can be renewed or substituted under paragraph (a)(2) (a) Receipts at electronic terminals. At the time an of this section), provided that the disclosures set forth electronic fund transfer is initiated at an electronic terin §§ 205.7(a)(1), (2), and (3) accompany the renewal or minal by a consumer, the financial institution shall substitute device; except that for a renewal or sub- make available2 to the consumer a written receipt of stitution that occurs before July 1, 1979, the dis- the transfer(s) that clearly sets forth the following inclosures may be sent within a reasonable time after the formation, as applicable: renewal or substitute device is issued. (1) The amount of the transfer. A charge for the transfer may be included in this amount if the terminal is owned or operated by a person other than the finan- 2. A financial institution may arrange for a third party, such as a 4. Section 205.7(a) is amended, to read as follows: merchant, to make the receipt available. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 154 Federal Reserve Bulletin • February 1980 cial institution holding the consumer's account, pro- the receipt or, if an identification (such as a code or vided the amount of the charge is disclosed on the terminal number) was used, that identification and one receipt and on a sign posted on or at the terminal. of the following descriptions of the terminal's location: (2) The calendar date the consumer initiated the (A) The address, including number and street (the transfer. number may be omitted if the street alone uniquely (3) The type of transfer and the type of the con- identifies the terminal location) or intersection, city, sumer's account(s)3 to or from which funds are trans- and state or foreign country;5 ferred, such as "withdrawal from checking," "trans- (B) A generally accepted name for a specific locafer from savings to checking," or "payment from tion (such as a branch of the financial institution, a savings." These descriptions may be used for trans- shopping Center, or an airport), city, and state or forfers to or from accounts that are similar in function to eign country;6 or checking accounts (such as share draft or negotiable (C) The name of the entity at whose place of busiorder of withdrawal accounts) or to savings accounts ness the terminal is located or which owns or operates (such as share accounts). Codes may be used only if the terminal (such as the financial institution7 ot the they are explained elsewhere on the receipt. seller of goods or services), city, and state or foreign (4) A number or code that uniquely identifies the country.8 consumer initiating the transfer, the consumer's ac- (v) The name of any third party to or from whom counts), or the access device used to initiate the trans- funds were transferred.9 If the transfer was initiated by fer. the consumer at an electronic terminal and a code was (5) The location (in a form prescribed by paragraph used on the receipt to identify the third party, the (b)(l)(iv) of this section) of the terminal at which the statement shall include the code and the name of the transfer was initiated or an identification (such as a third party. code or terminal number). (2) The number(s) of the consumer's account(s) for (6) The name of any third party to or from whom which the statement is issued. funds are transferred; a code may be used only if it is (3) The total amount of any fees or charges, other explained elsewhere on the receipt. This requirement than a finance charge under 12 CFR 226.7(b)(l)(iv), asdoes not apply if the name is provided by the con- sessed against the account during the statement period sumer in a form that the electronic terminal cannot du- for electronic fund transfers or for the right to make plicate on the receipt. such transfers. (4) The balances in the consumer's account(s) at the (b) Periodic statements. For any account to or from beginning and at the close of the statement period. which electronic fund transfers can be made, the finan- (5) The address and telephone number to be used for cial institution shall mail or deliver a statement for inquiry or notice of errors, preceded by "Direct Ineach monthly or shorter cycle in which an electronic quiries To:" or similar language. Alternatively, the adfund transfer has occurred, but at least a quarterly dress and telephone number may be provided on the statement if no transfer has occurred. The statement notice of error resolution procedures set forth in shall include the following, as applicable: § 205.8(b). (1) For each electronic fund transfer occurring dur- (6) If the financial institution uses the notice proceing the cycle, 4 dure set forth in § 205.10(a)(l)(iii), the telephone num- (i) The amount of the transfer. If a transfer charge ber the consumer may call to ascertain whether a prewas added at the time of initiation by the owner or authorized transfer to the consumer's account has operator of an electronic terminal in accordance with occurred. paragraph (a)(1) of this section, that charge may be included in the amount of the transfer. (ii) The date the transfer was credited or debited to 5. The city and state may be omitted if all the terminals owned or the consumer's account. operated by the financial institution providing the statement (or by the (iii) The type of transfer and the type of the con- system in which it participates) are located in the same city. The state may be omitted if all the terminals owned or operated by the financial sumer's account(s) to or from which funds were transinstitution providing the statement (or by the system in which it particferred. ipates) are located in that state. (iv) For each transfer initiated by the consumer at 6. See footnote 5. 7. If the financial institution providing the statement owns or operan electronic terminal, the location that appeared on ates terminals at more than one location, it shall describe the location of its electronic terminals by use of paragraphs (b)(l)(iv)(A) or (B) of 3. If more than one account of the same type may be accessed by a this section. single access device, the accounts must be uniquely identified. 8. See footnote 5. 4. The information required by paragraph (b)(1) of this section may 9. A financial institution need not identify third parties whose be provided on accompanying documents. Codes explained on the names appear on checks, drafts, or similar paper instruments deposstatement or on accompanying documents are acceptable. ited to the consumer's account at an electronic terminal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 155 (c) Documentation for certain passbook accounts. Section 205.11—Procedures for Resolving In the case of a consumer's passbook account which Errors may not be accessed by any electronic fund transfers other than preauthorized transfers to the account, the (a) Definition of error. For purposes of this section, financial institution may, in lieu of complying with the term "error" means: paragraph (b) of this section, upon presentation of the (1) An unauthorized electronic fund transfer; consumer's passbook, provide the consumer with doc- (2) An incorrect electronic fund transfer to or from umentation by entering in the passbook or on a sepa- the consumer's account; rate document the amount and date of each electronic (3) The omission from a periodic statement of an fund transfer made since the passbook was last pre- electronic fund transfer to or from the consumer's acsented. count that should have been included; (4) A computational or bookkeeping error made by (d) Periodic statements for certain non-passbook the financial institution relating to an electronic fund accounts. If a consumer's account other than a pass- transfer; book account may not be accessed by any electronic (5) The consumer's receipt of an incorrect amount fund transfers other than preauthorized transfers to of money from an electronic terminal; the account, the financial institution need provide the (6) An electronic fund transfer not identified in periodic statement required by paragraph (b) of this accordance with the requirements of §§ 205.9 or section only quarterly. 205.10(a); or (7) A consumer's request for any documentation re- (e) Use of abbreviations. A financial institution may quired by §§ 205.9 or 205.10(a), or for additional inforuse commonly accepted or readily understandable ab- mation or clarification concerning an electronic fund breviations in complying with the documentation re- transfer. This includes any request for documentation, quirements of this section. information, or clarification in order to assert an error within the meaning of paragraphs (a)(1) through (6) of this section. It does not include a routine inquiry about Section 205.10—Preauthorized Transfers the balance in the consumer's account or a request for duplicate copies of documentation or other informa- (a) Preauthorized transfers to a consumer's ac- tion that is made only for tax or other record-keeping count. (1) Where a consumer's account is scheduled to purposes. be credited by a preauthorized electronic fund transfer from the same payor at least once every 60 days, (b) Notice of error from consumer. (1) A notice of except where the payor provides positive notice to the an error is an oral or written notice from the consumer consumer that the transfer has been initiated, the that financial institution shall provide notice by one of the (i) Is received by the financial institution10 no later following means: than 60 days after the institution (1) The institution shall transmit oral or written no- (A) Transmitted a periodic statement or provided tice to the consumer, within 2 business days after the documentation under § 205.9(c) on which the alleged transfer, that the transfer occurred; error is first reflected; or (ii) The institution shall transmit oral or written no- (B) Transmitted additional information, claritice to the consumer, within 2 business days after the fication, or documentation described in paragraph date on which the transfer was scheduled to occur, (a)(7) of this section that was initially requested in acthat the transfer did not occur; or cordance with paragraph (b)(l)(i)(A) of this section; (iii) The institution shall provide a readily available (ii) Enables the financial institution to identify the telephone line that the consumer may call to ascertain consumer's name and account number; and whether or not the transfer occurred, and shall dis- (iii) Except for errors described in paragraph (a)(7) close the telephone number on the initial disclosures of this section, indicates the consumer's belief, and the required by § 205.7 and on each periodic statement. reasons for that belief, that an error exists in the con- (2) A financial institution that receives a pre- sumer's account or is reflected on documentation reauthorized transfer of the type described in paragraph quired by §§ 205.9 or 205.10(a), and indicates to the (a)(1) of this section shall credit the amount of the transfer as of the day the funds for the transfer are received. 10. A financial institution may require the consumer to give notice only at the telephone number or address disclosed by the institution, provided the institution maintains reasonable procedures to refer the consumer to the specified telephone number or address if the consumer attempts to give notice to the institution in a different manner. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 156 Federal Reserve Bulletin • February 1980 extent possible the type, the date, and the amount of mitting the requested information, clarification, or the error. documentation within the time limits set forth in para- (2) A financial institution may require a written con- graph (c) of this section. If the institution has provifirmation to be received within 10 business days of an sionally recredited the consumer's account in accordoral notice if, when the oral notice is given, the con- ance with paragraph (c)(2) of this section, it may debit sumer is advised of the requirement and of the address the amount upon transmitting the requested informato which confirmation must be sent. tion, clarification, or documentation. (2) Except in the case of services covered by (c) Investigation of errors. (1) After receiving a no- § 205.14, a financial institution's review of its own rectice of an error, the financial institution shall promptly ords regarding an alleged error will satisfy its investiinvestigate the alleged error, determine whether an gation responsibilities under paragraph (c) of this secerror occurred, and transmit the results of its investiga- tion if the alleged error concerns a transfer to or from a tion and determination to the consumer within 10 busi- third party and there is no agreement between the finess days. nancial institution and the third party11 regarding the (2) As an alternative to the 10-business-day require- type of electronic fund transfer alleged in the error. ment of paragraph (c)(1) of this section, the financial (3) A financial institution may make, without invesinstitution shall investigate the alleged error and deter- tigation, a final correction to a consumer's account in mine whether an error occurred, promptly but in no the amount or manner alleged by the consumer to be in event later than 45 calendar days after receiving a no- error, but must comply with all other applicable retice of an error, and shall transmit the results of its quirements of this section. investigation and determination to the consumer, provided (e) Procedures after financial institution determines (i) The financial institution provisionally recredits that error occurred. If the financial institution deterthe consumer's account in the amount of the alleged mines that an error occurred, it shall error (including interest where applicable) within 10 (1) Promptly, but no later than 1 business day after business days after receiving the notice of error. If the its determination, correct the error (subject to the liafinancial institution has a reasonable basis for believ- bility provisions of §§ 205.6(a) and (b)), including, ing that an unauthorized electronic fund transfer may where applicable, the crediting of interest and the rehave occurred and that it has satisfied the require- funding of any fees or charges imposed, and ments of § 205.6(a), it may withhold a maximum of $50 (2) Promptly, but in any event within the 10-busifrom the amount recredited; ness-day or 45-day time limits, orally report or mail or (ii) The financial institution, promptly but no later deliver to the consumer notice of the correction and, if than 2 business days after the provisional recrediting, applicable, notice that a provisional credit has been orally reports or mails or delivers notice to the con- made final.12 sumer of the amount and date of the recrediting and of the fact that the consumer will have full use of the (f) Procedures after financial institution determines funds pending the determination of whether an error that no error occurred. If the financial institution deoccurred; termines that no error occurred or that an error oc- (iii) The financial institution gives the consumer full curred in a different manner or amount from that deuse of the funds provisionally recredited during the in- scribed by the consumer, vestigation; and (1) The financial institution shall mail or deliver to (iv) If the financial institution determines that no the consumer a written explanation of its findings witherror occurred and debits the account, the institution in 3 business days after concluding its investigation, gives notice of the debiting and continues to honor cer- but in no event later than 10 business days after receivtain items as required by paragraph (f)(2) of this section. (3) A financial institution that requires but does not receive timely written confirmation of oral notice of an 11. Institutions do not have an agreement for purposes of paragraph error shall comply with all requirements of this section (d)(2) of this section solely because they participate in transactions under the federal recurring payments program, or that are cleared except that it need not provisionally recredit the conthrough an automated or other clearing house or similar arrangement sumer's account. for the clearing and settlement of fund transfers generally, or because they agree to be bound by the rules of such arrangements. An agreement that a third party will honor an access device is an agreement for (d) Extent of required investigation. (1) A financial purposes of this paragraphy. institution complies with its duty to investigate, cor- 12. This notice requirement may be satisfied by a notice on a periodic statement that is mailed or delivered within the 10-business-day rect, and report its determination regarding an error or 45-day time limits and that clearly identifies the correction to the described in paragraph (a)(7) of this section by trans- consumer's account. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 157 ing notice of the error if the institution is proceeding Section 205.13—Administrative Enforcement under paragraph (c)(1) of this section. The explanation shall include notice of the consumer's right to request the documents upon which the institution relied in making its determination. (b) Issuance of staff interpretations. (2) Upon debiting a provisionally recredited amount, the financial institution (i) Shall orally report or mail or deliver notice to the consumer of the date and amount of the debiting and (2)(i)***Any request for an official staff interthe fact that the financial institution will honor checks, pretation of this regulation shall be made in writing and drafts, or similar paper instruments payable to third addressed to the Director of the Division of Consumer parties and preauthorized transfers from the con- and Community Affairs, Board of Governors of the sumer's account (using the provisionally recredited Federal Reserve System, Washington, D.C. 20551. funds) for 5 business days after transmittal of the notice. * * * * * (ii) Shall honor checks, drafts, or similar paper instruments payable to third parties and preauthorized (4) Pursuant to § 915(d) of the Act, the Board has transfers from the consumer's account (without charge designated the Director and other officials of the Divito the consumer as a result of an overdraft) for 5 busi- sion of Consumer and Community Affairs as officials ness days after transmittal of the notice. The institu- "duly authorized" to issue, at their discretion, official tion need only honor items that it would have paid if staff interpretations of this regulation. the provisionally recredited funds had not been debited. (c) Record retention. (3) Upon the consumer's request, the financial institution shall promptly mail or deliver to the consumer copies of the documents on which it relied in making its determination. (2) Any person subject to the Act and this regulation that has actual notice that it is being investigated (g) Withdrawal of notice of error. The financial in- or is subject to an enforcement proceeding by an agenstitution has no further error resolution responsibilities cy charged with monitoring that person's compliance as to a consumer's assertion of an error if the con- with the Act and this regulation, or that has been sumer concludes that no error did in fact occur and served with notice of an action filed under §§ 910, 915, voluntarily withdraws the notice. or 916(a) of the Act, shall retain the information required in paragraph (c)(1) of this section that pertains (h) Reassertion of error. A financial institution that to the action or proceeding until final disposition of the has fully complied with the requirements of this sec- matter, unless an earlier time is allowed by order of the tion with respect to an error has no further responsibil- agency or court. ities under this section if the consumer subsequently reasserts the same error, regardless of the manner in 8. Section 205.14 is added, to read as follows: which it is reasserted. This paragraph does not preclude the assertion of an error defined in paragraphs (a)(1) through (6) of this section following the assertion of an error described in paragraph (a)(7) of this section Section 205.14—Services Offered by Financial regarding the same electronic fund transfer. Institutions Not Holding Consumer's Account (i) Relation to Truth in Lending. Where an electron- (a) Compliance by service-providing institution. ic fund transfer also involves an extension of credit Except as provided in this section, where a financial under an agreement between a consumer and a finan- institution issues an access device to a consumer to be cial institution to extend credit when the consumer's used for initiating electronic fund transfers to or from account is overdrawn or to maintain a specified mini- the consumer's account held by another financial instimum balance in the consumer's account, the financial tution, and the service-providing institution does not institution shall comply with the requirements of this have an agreement with the account-holding institusection rather than those of 12 CFR 226.2(j), 226.2(cc), tion regarding the service, the service-providing instiand 226.14(a) governing error resolution. tution shall comply with all requirements of the Act and this regulation that relate to the service or the elec- 7. Section 205.13 is amended, to read as follows: tronic fund transfers made by the consumer under the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 158 Federal Reserve Bulletin • February 1980 service. For this purpose, the following special rules tion of the service) which sets forth the rights and oblishall apply: gations of the institutions with respect to a service (1) Section 205.6 shall require the service-providing involving the issuance of an access device to the coninstitution to reimburse the consumer for unauthorized sumer. Institutions do not have such an agreement electronic fund transfers in excess of the limits set by solely because they participate in transactions that are that section. cleared through an automated or other clearing house (2) Sections 205.7, 205.8, and 205.9 shall require the or similar arrangement for the clearing and settlement service-providing institution to provide those dis- of fund transfers generally, or because they agree to be closures and documentation that are within its knowl- bound by the rules of such an arrangement. edge and the purview of its relationship with the consumer. 9. Appendix A is amended by deleting the material en- (3) Section 205.1 l(b)(l)(i) shall require the service- closed in parentheses in each section caption, and subproviding institution to extend by a reasonable time stituting therefor the following: in § A(l), tk§ the time periods within which notice of an error must 205.5(b)(3)"; in § A(2), "§ 205.7(a)(1)"; in § A(3), be received if a delay in notifying the service-providing kt§ 205.7(a)(2)"; in § A(4), tk§ 205.7(a)(3)"; in institution was due to the fact that the consumer ini- "§ A(5), 205.7(a)(4)"; in § A(6), "§ 205.7(a)(5)"; in § A(7), tially notified or attempted to notify the account- § 205.7(a)(9)"; in § A(8), "§ 205.7(a)(6)"; in § A(9), holding institution. 205.7(a)(6),(7), and (8)"; and in § A(10), "§ (4) Sections 205.1 l(c)(2)(i) and (e)(1) shall require 205.7(a)(8)". the service-providing institution to transfer funds, in the appropriate amount and within the applicable time 10. Appendix A is further amended by adding § A(8)(b) period, to the consumer's account at the account-hold- and by revising § A(10)(a), to read as follows: ing institution. (5) Section 205.1 l(c)(2)(ii) shall require the service- Appendix A—Model Disclosure Clauses providing institution to disclose the date on which it initiates a transfer to effect the provisional recredit. (6) Section 205.11(f)(2) shall require the serviceproviding institution to notify the account-holding institution of the date until which the account-holding Section A(8)—Disclosure of Right To Receive institution must honor any debit to the account as re- Documentation of Transfers (§ 205.7(a)(6)) quired by § 205.11(f)(2). If an overdraft results, the service-providing institution shall promptly reimburse the account-holding institution in the amount of the overdraft. (b) Preauthorized credits. If you have arranged to (b) Compliance by account-holding institution. An have direct deposits made to your account at least account-holding institution described in paragraph (a) once every 60 days from the same person or company, of this section need not comply with the requirements of the Act and this regulation with respect to electronic (we will let you know if the deposit is [not] made.) fund transfers to or from the consumer's account made by the service-providing institution, except that the ac- (the person or company making the deposit will tell count-holding institution shall comply with § 205.11 by you every time they send us the money.) (1) Promptly providing, upon the request of the service-providing institution, information or copies of (you can call us at [insert telephone number] to find documents required for the purpose of investigating al- out whether or not the deposit has been made.) leged errors or furnishing copies of documents to the consumer; and (2) Honoring debits to the account in accordance with § 205.11(f)(2). Section A(10)—Disclosure of Financial Institu- (c) Definition of agreement. For purposes of this tion's Liability for Failure to Make Transfers (§ section, an agreement between the service-providing 205.7(a)(8)) and the account-holding institutions regarding the electronic fund transfer service refers to a specific (a) Liability for failure to make transfers. If we do agreement (s) among institutions (or among institu- not complete a transfer to or from your account on tions and another person that participates in the opera- time or in the correct amount according to our agree- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 159 ment with you, we will be liable for your losses or trol the 55th largest of 452 banks in Nebraska and damages. However, there are some exceptions. We would hold approximately 0.34 percent of the total dewill not be liable, for instance: posits of commercial banks in the state. Bank is the largest of five banks in the relevant —If, through no fault of ours, you do not have banking market and holds 48.8 percent of the total deenough money in your account to make the transfer. posits in commercial banks in the market.2 While two —If the transfer would go over the credit limit on of Applicant's principals are associated with two other your overdraft line. one-bank holding companies and their subsidiary —If the automated teller machine where you are banks, those organizations, located in Lincoln, Nemaking the transfer does not have enough cash. braska, and Des Moines, Iowa, operate in separate —If the (terminal)(system) was not working prop- banking markets from Bank. It appears that consumerly and you knew about the breakdown when you mation of the proposal would not eliminate comstarted the transfer. petition or increase the concentration of banking re- —If circumstances beyond our control (such as fire sources in any relevant area. Accordingly, the Board or flood) prevent the transfer, despite reasonable pre- concludes that competitive considerations are consiscautions that we have taken. tent with approval of the application. —There may be other exceptions stated in our The Board has indicated on previous occasions that agreement with you. a holding company should serve as a source of financial and managerial strength to its subsidiary bank, and that the Board will closely examine the condition of an * * * ** applicant in each case with this consideration in mind.3 Furthermore, where principals of an applicant are en- BANK HOLDING COMPANY AND gaged in operating a chain of banking organizations, BANK MERGER ORDERS ISSUED BY THE the Board, in addition to analyzing the one-bank hold- BOARD OF GOVERNORS ing company proposal before it, also considers the total chain and analyzes the financial and managerial re- Orders Under Section 3, of sources and future prospects of the chain within the Bank Holding Company Act context of the Board's multi-bank holding company standards. Having examined such factors in light of American National Sidney Corp., the record in this application, the Board concludes that Sidney, Nebraska the record presents adverse considerations as they relate to the applicant company that warrant denial of its Order Denying proposed acquisition of Bank. Formation of Bank Holding Company As stated, Applicant's officers and principal shareholders are also officers and principal shareholders of American National Sidney Corp., Sidney, Nebraska, two other one-bank holding companies. The operahas applied for the Board's approval under section tions of both bank holding companies have fallen short 3(a)(1) of the Bank Holding Company Act (12 U.S.C. § of those expected by the Board and projected by those 1842(a)(1)) of formation of a bank holding company by companies in their application to become bank holding acquiring 100 percent, less directors' qualifying companies. From the record, it appears that these reshares, of the voting shares of American National sults are due in major part to certain management poli- Bank of Sidney ("Bank"), Sidney, Nebraska. cies and practices of Applicant's principals. The oper- Notice of the application affording opportunity for ating history and overall condition of each of these interested persons to submit comments and views, has bank holding companies do not support a finding that been given in accordance with section 3(b) of the Act. Applicant's principals have demonstrated a history of The time for filing comments and views has expired, satisfactory managerial performance that would warand the Board has considered the application and all rant a favorable finding by the Board at this time with comments received in light of the factors set forth in section 3(c) of the Act (12 U.S.C. § 1842(c)). 2. The relevant banking market is approximated by Cheyenne Applicant is a nonoperating corporation formed for County. the purpose of becoming a bank holding company by 3. The Bank Holding Company Act requires that before an organization is permitted to become a bank holding company and thus obtain acquiring Bank, which holds deposits of $25.8 milthe benefits associated with the holding company structure, it must lion.1 Upon acquisition of Bank, Applicant would con- secure the Board's approval. Section 3(c) of the Act provides that the Board must, in every case, consider, among other things, the financial and managerial resources of both the applicant company and the bank to be acquired. The Board's action in this case is based on a consid- 1. All banking data are as of June 30, 1978. eration of such factors. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 160 Federal Reserve Bulletin • February 1980 respect to Applicant's managerial resources and future Childress Bancshares, Inc., prospects.4 Childress, Texas With respect to Applicant's and Bank's financial resources the Board notes that Applicant would incur a Order Denying sizable debt in connection with the proposed acquisi- Formation of Bank Holding Company tion of Bank's shares. Although Applicant's final retirement of subordinated debentures issued in con- Childress Bancshares, Inc., Childress, Texas, has apnection with this acquisition is scheduled to take place plied for the Board's approval under section 3(a)(1) of in the twentieth year following consummation, earn- the Bank Holding Company Act (12 U.S.C. § ings prospects for Bank based upon Bank's historical 1842(a)(1)) of formation of a bank holding company by performance appear to provide Applicant with suf- acquiring 95 percent or more of the voting shares of ficient financial flexibility to retire the entire acquisi- The First National Bank in Childress, Childress, Textion debt in 12 years while maintaining adequate capi- as ("Bank"). tal in Bank. However, in light of the records of the Notice of the application, affording opportunity for other two bank holding companies in meeting their interested persons to submit comments and views, has projections, the Board believes that Applicant's pro- been given in accordance with section 3(b) of the Act. jections in this case appear somewhat optimistic. Ac- The time for filing comments and views has expired, cordingly, the Board is of the view that the consid- and the Board has considered the application and all erations relating to financial and managerial resources comments received in light of the factors set forth in and future prospects are so adverse as to warrant de- section 3(c) of the Act (12 U.S.C § 1842(c)). nial of this application. Applicant, a nonoperating company with no sub- No significant changes in Bank's operations or in the sidiaries, was organized for the purpose of becoming a services offered to customers are anticipated to follow bank holding company through the acquisition of from consummation the proposed acquisition. Con- Bank. Bank ($13.7 million in deposits) is one of the sequently, convenience and need factors lend no smaller banks in Texas, holding less than 0.1 percent weight towards approval of this application. of the total deposits in commercial banks in the state.1 On the basis of the circumstances concerning this Bank is the larger of the two banks located in the application, the Board concludes that the banking con- Childress County banking market and holds 66.7 persiderations involved in this proposal present adverse cent of the market's total commercial bank deposits.2 factors bearing upon financial and managerial re- This proposal involves a restructuring of Bank's ownsources and future prospects of Applicant and Bank. ership from an individual to a corporation owned by Such adverse factors are not outweighed by any pro- the same individual. Applicant neither engages in any competitive effects or by benefits that would result in activity directly nor holds shares of any other bank. In better serving the convenience and needs of the com- analyzing the competitive effects of this proposal munity. Accordingly, it is the Board's judgment that it is necessary to consider that when Applicant's approval of the application would not be in the public principal purchased controlling interest in Bank in interest and the application should be denied. March 1979, he also purchased controlling interest in On the basis of the facts of record, the application is Farmers and Mechanics Trust Company, Childress, denied for the reason summarized above. Texas ("F&M"), a registered bank holding company By order of the Board of Governors, effective Janu- controlling First State Bank, Childress, Texas ("First ary 25, 1980. State Bank"), the only other bank located in the relevant banking market. First State Bank ($6.8 million in deposits) is the second bank in the relevant market and holds 33.3 percent of the market's commercial bank Voting for this action: Chairman Volcker and Governors Schultz, Wallich, Coldwell, Partee, and Rice. Absent and not deposits. The purchase of control of Bank and F&M voting: Governor Teeters. by Applicant's principal occurred only two days before the effective date of the Change in Bank Control Act of 1978 (12 U.S.C. § 1817(j)), and thus escaped (Signed) GRIFFITH L. GARWOOD, scrutiny under that Act. The Change in Bank Control [SEAL] Deputy Secretary of the Board. Act requires individuals to notify the appropriate Federal banking regulatory agency prior to acquiring con- 1. Unless otherwise indicated, all banking data are as of December 4. The Board has previously stated that it believes that it is reason- 31, 1978, and reflect bank holding company formations and acquisiable to expect an applicant to demonstrate a record of satisfactory tions approved as of November 30, 1979. managerial performance. See e.g., Chickasha Bancshares, Inc., 63 2. The relevant banking market is approximated by Childress FEDERAL RESERVE BULLETIN 1082 (1977). County, Texas. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 161 trolling interest in a bank or bank holding company in posal may not immediately result in a complete termiorder that the agency may review, inter alia, the com- nation of the anticompetitive situation, it would petitive consequences of the acquisition and dis- preserve the distinct possibility that Bank could again approve any acquisition that does not meet the stan- become an independent and competing organization in dards of that Act. the future. Alternatively, approval would solidify and The facts of record indicate that Bank and First strengthen the common ownership of the two banks State Bank have been affiliated for a long period of and would diminish the possibility of disaffiliation in time and the nature of this relationship was such that the future. little, if any, meaningful competition existed between On the basis of the foregoing and the facts of record, Bank and First State Bank when Applicant's principal the Board concludes that approval of the application purchased control of Bank and F&M in March 1979. would have significant adverse competitive effects. However, the sale of control of Bank and F&M in 1979 Accordingly, under the standards set forth in the Bank presented an opportunity to sever this relationship and Holding Company Act, the proposal may not be apintroduce competition into the relevant banking mar- proved unless the adverse competitive factors are ket. clearly outweighed by other public interest consid- Section 3(c) of the Bank Holding Company Act pre- erations reflected in the record. In this case, the Board cludes the Board from approving any acquisition by a finds that the adverse competitive aspects are not outbank holding company that (1) would result in a mo- weighed. nopoly or be in a furtherance of any combination to Where principals of an applicant are engaged in opmonopolize or attempt to monopolize a banking mar- erating a chain of banking organizations, the Board, in ket, or that (2) may substantially lessen competition or addition to analyzing the one-bank holding company tend to create a monopoly or be in restraint of trade in proposal before it, also considers the total chain and any banking market, unless the Board finds that the analyzes the financial and managerial resources and anticompetitive effects are clearly outweighed by the future prospects of the chain within the context of the convenience and needs of the community to be served. Board's multibank holding company standards. Based In the Board's view, the subject proposal presents a upon such analysis in this case, the managerial recompelling case where the holding company form is sources and future prospects of Applicant and Bank being used to further an anti-competitive arrangement. appear to be satisfactory. Therefore, considerations Acquisition of control of Bank and F&M by Appli- relating to banking factors are consistent with approvcant's principal resulted in his controlling all the com- al of the subject application. No significant changes in mercial banking deposits in the relevant banking mar- the services offered by Bank are expected to result ket and was clearly anticompetitive in its inception, a from consummation of the proposed acquisition. factor the Board has regarded as significant and rele- Thus, convenience and needs factors are consistent vant to a consideration of the competitive aspects of with, but lend no weight toward, approval. In light of an acquisition.3 In addition, Applicant's principal con- the above, it is the Board's judgment that approval of trols, either directly or indirectly, two other banks lo- this application would not be in the public interest and cated in banking markets which are adjacent to the that the application should be denied. Childress banking market. In light of all the facts of On the basis of the facts of record, and in light of the record, the market shares of the organizations in- factors set forth in section 3(c) of the Act, it is the volved and their collective position in the relevant Board's judgment that consummation of the proposal market (Bank and First State Bank are the only com- to form a bank holding company would not be in the mercial banking alternatives in the market), the Board public interest and that the application should be and is of the opinion that the application should be denied hereby is denied for the reasons summarized herein. since approval of this proposal would serve to perpetu- By order of the Board of Governors, effective Januate a substantially adverse competitive situation in the ary 28, 1980. relevant banking market.4 The subject proposal presents a situation where the holding company form is being used to further an anticompetitive arrangement. While denial of this pro- (1978), the Supreme Court upheld the Board's authority to deny approval for formation of a one-bank holding company on the basis of preexisting, unfavorable aspects even though the formation will nei- 3. See the Board's Order of May 11, 1977, denying an application ther cause nor enhance the already existing adverse aspects. Thus, the by Mahaska Investment Company, Oskaloosa, Iowa (63 FEDERAL RE- Board may deny approval due to conditions that predate the proposed SERVE BULLETIN 579 (1977)); and the Board's Order of November 18, holding company formation. Although the First Lincolnwood case in- 1977, denying an application by Citizens Bancorp, Inc., Hartford City, volved adverse financial factors, the rationale of the Board's authority Indiana (63 FEDERAL RESERVE BULLETIN 1083 (1977)). to deny a bank holding company formation is equally applicable to an 4. In this regard, the Board notes that in Board of Governors of the anticompetitive arrangement, especially in light of the Act's strong Federal Reserve System v. First Lincolnwood Corp., 439 U.S. 234 emphasis against anticompetitive combinations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 162 Federal Reserve Bulletin • February 1980 Voting for this action: Chairman Volcker and Governors quired in this instance, the Board could in its Schultz, Wallich, Partee, and Rice. Absent and not voting: discretion order a formal or informal proceeding con- Governors Coldwell and Teeters. cerning the application if it determines that there are material questions of facts in dispute that can only be resolved by means of such a proceeding. Accordingly, (Signed) GRIFFITH L. GARWOOD, the Board has scrutinized the record in this appli- [SEAL] Deputy Secretary of the Board. cation, and has determined that there are no material factual differences that would necessitate a hearing on this application.3 Rather, Protestant submits argu- First National Boston Corporation, ments concerning the interpretation or significance Boston, Massachusetts that should be accorded to certain facts in the record. Inasmuch as the Board itself is charged by statute with Order Approving Acquisition of a Bank making these judgments, and in view of the fact that all parties have been afforded ample opportunity to pre- First National Boston Corporation, Boston, Massa- sent their arguments in written submissions to the recchusetts, a bank holding company within the meaning ord in this application, the Board has denied Protesof the Bank Holding Company Act of 1956 (the tant's request for a formal hearing. Accordingly, the "Act"), has applied for the Board's approval under Board will proceed to consider the application, as well section 3 of the Act (12 U.S.C. §1842) to indirectly ac- as Protestant's objections to the proposal, on their quire1 100 percent (less directors' qualifying shares) of merits. the shares of Southeastern Bank and Trust Company Applicant, the largest commercial banking organiza- ("Bank"), New Bedford, Massachusetts. tion in Massachusetts, controls seven subsidiary Notice of the applications, affording an opportunity banks with aggregate domestic deposits of $3.51 bilfor interested persons to submit comments and views, lion, representing 21.3 percent of total deposits held in has been given in accordance with section 3(b) of the commercial banks in the state.4 Bank, with deposits of Act. The time for filing comments and views has ex- $45.4 million, is the 178th largest commercial bank in pired and the Board has considered the applications the state. While banking resources in Massachusetts and all comments received, including those of The are somewhat concentrated among several large or- First National Bank of New Bedford, New Bedford, ganizations, including Applicant, in this case the addi- Massachusetts ("Protestant"), in light of the factors tion of 0.28 percent of state-wide deposits held by set forth in section 3(c) of the Act. Bank would represent only a nominal increase of the In addition to interposing numerous objections to share of deposits controlled by Applicant in the state. the proposed acquisition, Protestant has requested Accordingly, consummation of the proposal would not that the Board order a formal hearing to air the issues have an appreciable effect upon the concentration of raised by Protestant's objections. Section 3(b) of the banking resources in Massachusetts. Act requires that the Board hold a formal hearing con- Bank, with four banking offices, is the third largest cerning an application only where the appropriate of eight commercial banks in the New Bedford bankstate banking authority makes a timely written recom- ing market,5 and holds 19.7 percent of commercial mendation of denial of the application, and no such bank deposits in the market. While Applicant's subsidrecommendation has been received from the Massa- iary banks have 75 branches in seven Massachusetts chusetts Commissioner of Banks with respect to Applicant's proposal.2 While no formal hearing is resection 3(b). The Board finds this contention to be without merit since section 3(b) provides that a specific written recommendation be sub- 1. Applicant has applied under section 3(a)(1) of the Act (12 U.S.C. mitted by the state authority to the Board. In any event, the order of § 1842(a)(1)) for approval to merge its wholly-owned inactive subsidi- which the dissenting vote was a part was overturned by the Massachuary, First of Boston Bristol Corporation ("First Bristol"), with Bank's setts courts, and in a subsequent ruling the application was unaniparent holding company, Southeastern Bancorp. Inc., New Bedford, mously approved by the Massachusetts Board. Massachusetts, thereby causing First Bristol to become a bank hold- 3. In this connection, the Board notes that Protestant and Applicant ing company. At the same time, Applicant has applied under section have had ample opportunity to resolve any factual discrepancies on 3(a)(3) (12 U.S.C. § 1842(a)(3)) for approval to indirectly acquire Bank three occasions in hearings held before Massachusetts banking auat the time First Bristol merges with Southeastern Bancorp, Inc. Ap- thorities concerning the proposed acquisition. A complete transcript plicant has also applied under section 3(a)(5) of the Act (12 U.S.C. § of the most recent hearing, including submissions by the parties, has 1842(a)(5)) for approval to merge with First Bristol, following consum- been made a part of the record in this application. mation of the prior transactions. Both First Bristol and Southeastern 4. All banking data are as of September 30, 1978. Bancorp. Inc. have no significance except as a means to facilitate the 5. The New Bedford banking market is approximated by the city of acquisition of voting shares of Bank by Applicant. Accordingly, all of New Bedford and six surrounding towns, including Dartmouth, Freethe above-described transactions are treated together herein as one town, Acushnet, and Fairhaven in Bristol County, and Mattapoisett application for the acquisition of shares of Bank. and Marion in Plymouth County. Protestant contends that the relevant 2. Protestant contends that a dissenting vote by one member of the banking market for the proposal is the New Bedford SMSA. While not Massachusetts Board of Bank Incorporation on an application for identical, the market defined herein is substantially equivalent to the state approval of the proposal triggered the hearing requirement of New Bedford SMSA. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 163 counties, none of those offices are located in the New under. In so doing, the Board has scrutinized the ob- Bedford banking market. Protestant contends that the jections of Protestant concerning Applicant's record of proposed acquisition of Bank by Applicant will elimi- performance with respect to CRA factors. In this renate a significant amount of direct competition in the gard, Protestant alleges that Applicant's efforts to as- New Bedford market since Applicant's lead subsidiary certain local credit needs are inadequate; that Applibank, First National Bank of Boston ("FNBB"), de- cant has disregarded community needs by closing rives approximately $20.2 million in loans and $6.7 branches in low- and moderate-income neighbormillion in deposits from the New Bedford area. How- hoods; that Applicant does not meet local credit needs ever, from the record it appears that FNBB's New as evidenced by the small percentage of its total loans Bedford loans are large commercial loans of which a represented by mortgage loans within its defined comlarge portion are made to several sizeable firms. Simi- munity; that Applicant's participation in community larly, a large portion of the deposit accounts are ac- development programs is insignificant in comparison counts of $100,000 or more, and are related to loans. with its resources; and that Applicant engages in com- Inasmuch as FNBB has no banking offices to serve the munity disinvestment by requiring its smaller subsidiindividual or small business customer in the New Bed- ary banks to join in loan participations with FNBB. ford banking market, and in view of the fact that busi- Protestant has submitted information regarding each ness derived from that market by FNBB is attributable of these allegations including information developed in to large commercial customers, the Board does not re- extended proceedings at the State level. Furthermore, gard FNBB as a competitor in the local New Bedford the proposed acquisition has been the subject of public market. Accordingly, the Board concludes that con- hearings before the Massachusetts Board during which summation of the proposal would not result in the Protestant presented information concerning its allegaelimination of existing competition in the New Bed- tions. Upon submission of the record of the latest proford banking market. ceeding to the Board, Applicant was requested to re- With respect to potential competition, the Board spond to Protestant's allegations concerning notes that Applicant has the resources to enter the Applicant's record of performance and made several market de novo. However, with a relatively low per subsequent submissions for the record. The Board has capita income and high unemployment rate, the New examined the submissions of Protestant and Applicant Bedford market is not considered attractive for de regarding the issues raised by Protestant. Inasmuch as novo entry at this time. Moreover, Massachusetts Protestant's objections focus primarily on the CRA places restrictions on branching across county lines, performance of FNBB, the Board has also considered and none of Applicant's subsidiary banks is authorized the conclusions reached by the Office of the Comptrolto branch into the New Bedford market. Therefore, ler of the Currency resulting from an examination of consummation of the acquisition would have no seri- FNBB that included an assessment of FNBB's record ous adverse effects on potential competition. in meeting the requirements of the CRA. At the outset, The financial and managerial resources of Applicant the Board notes that no procedural violations by and its subsidiary banks are considered generally satis- FNBB of CRA requirements were found. Accordfactory and the future prospects for each appear favor- ingly, on the basis of its review of the entire record, able. Upon consummation of the acquisition of Bank the Board makes the following findings concerning by Applicant, the financial resources of Bank may be Protestant's allegations. regarded as adequate and its future prospects favor- With respect to Applicant's efforts to ascertain and able, particularly in light of Applicant's commitment meet the credit needs of its community, it appears to provide additional capital to Bank. In addition, affil- from the record that FNBB has taken a number of iation of Bank with Applicant will provide Bank with steps to communicate more effectively with local comaccess to Applicant's managerial resources and partic- munity groups in an effort to ascertain the credit needs ularly managerial expertise in the areas of loan portfo- of the local community.6 Specifically, FNBB has eslio review, automated accounting and internal auditing tablished a community investment department whose and budget controls. Thus, the Board concludes that purpose is to develop an effective community contact banking factors lend some weight toward approval of program and to coordinate and supervise CRA comthe application. pliance. In addition, FNBB's Board of Directors has In considering the effects of the proposed acquisi- established a committee composed of those Board tion on the convenience and needs of the community members with responsibility for developing policies to be served, the Board has examined the Applicant's relating to the CRA and evaluating the implementation record of performance in meeting the credit needs of its community as provided in the Community Reinvestment Act (12 U.S.C. § 2901) ("CRA") and the 6. FNBB's definition of its community as encompassing all of Suffolk County appears to be reasonable, does not exclude any low- to Board's Regulation BB (12 CFR § 228) issued theremoderate-income neighborhoods, and is not disputed by Protestant. 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A 164 Federal Reserve Bulletin • February 1980 of those policies. To date meetings with community fair and nondiscriminatory manner the type of credit groups have tended to be initiated by the community listed in its CRA statement and to make known to its groups, rather than FNBB. However, in light of Appli- community that such credit is available. Applicant has cant's willingness to improve its performance in this stated that FNBB's policy of accepting mortgage aparea, the Board expects that FNBB will take affirm- plications only from existing depositors has been disative action to intensify its efforts to meet with such continued in an effort to promote additional appligroups. cations. In addition, Applicant states that it is making With regard to FNBB's alleged closing of two efforts and developing plans to advise its community branches located in low- and moderate-income neigh- of the availability of mortgage and home-improvement borhoods, the Board notes that FNBB transferred its credit. The board has relied on Applicant's representa- Mattapan branch to minority-controlled Unity Bank tions in this regard, and the Board expects that Appliand Trust Company, Boston, Massachusetts, which cant will intensify its efforts to upgrade its comassumed operation of the branch with no interruption mitment to extending mortgage credit throughout in service to the community. Moreover, since the FNBB's entire community, particularly to the low- to transfer, FNBB has assisted Unity in its continued op- moderate-income areas of that community. eration of the Mattapan branch by training lending offi- With respect to the allegation that FNBB's commucers, and providing marketing assistance and staffing. nity development efforts are insignificant in relation to FNBB has also helped to strengthen Unity's overall Applicant's resources, the Board notes that in its refinancial position by investing in Unity's capital notes cent information statement regarding consideration of and affording Unity the opportunity to purchase cer- relevant factors under CRA, the Board stressed that it tain loans from FNBB order to provide it with addi- is not so much concerned with the ratio of loans to a tional earnings. Applicant plans to dispose of another particular area or activity as with lender sensitivity to of FNBB's branches in a similar manner. While the credit needs of a particular segment. In this regard it Board may not prescribe the manner in which an appli- appears that Applicant has a positive record of atcant conducts its business transactions provided such tempting to assess and meet credit needs of local comtransactions comply with applicable laws and conform munity and minority-owned small businesses. For exto principles of banking safety and soundness, the ample, since 1970, FNBB has operated an urban Board does expect an applicant to conduct its opera- marketing program that specializes in financing inner tions with due regard to serving the needs of its com- city minority businesses. Credit-worthy borrowers are munity. From the record it appears that Applicant and sought through contact with local community groups FNBB have found a reasonable means of disposing of and most of the loans are advanced under the auspices the branches in question while at the same time assur- of the small business groups. As a result of these efing that the localities and customers served by these forts, over the past five years FNBB has extended apbranches will continue to have an adequate source of proximately $4 million in loans through its urban marcredit and other banking services. Accordingly, the keting program to small businesses located in low- and Board is unable to conclude that the disposal of the moderate-income areas in Suffolk County, 80 percent two branches in question is evidence that Applicant of which are minority-owned. and FNBB are not attempting to meet the needs of In addition to its urban marketing program, Appli- FNBB's community. cant has made a major commitment to small business With respect to FNBB's record of residential mort- lending generally by offering reduced rates on such gage lending, from the record it appears that both the loans. Specifically, in December 1978 FNBB innumber and dollar volume of such loans are low. Fur- troduced a special small business index rate (SBIR) for thermore, the record indicates that there are a number loans to small business and nonprofit corporations of low- and moderate-income neighborhoods where owned in New England that is 1.25 percent below Ap- FNBB has originated no mortgage or home-improve- plicant's basic business loan rate. As a result, as of ment loans. FNBB attributes the small volume of May 1979, 3,660 loans totalling $108 million had been mortgage loans to management's prior policy of ac- extended under the SBIR program. FNBB has also cepting loan applications only from individuals who demonstrated a commitment to student loan programs, had a depository relationship with FNBB. Moreover, and as of May 1979, FNBB had a total of 10,300 stuuntil two years ago, FNBB had made mortgage loans dent loans outstanding with a total dollar value of only as an accommodation to corporate clients, and $12.8 million, of which $7.1 million represented 3,500 this limitation has contributed to the current low vol- Higher Education Loan Plan loans primarily to stuume of mortgages outstanding. However, FNBB has dents from low- to moderate-income families. included mortgage loans in its CRA statement as one In addition to its efforts regarding small business of the types of credit offered, and the Board expects loans, Applicant has participated in a number of other every organization to provide to the community in a community-oriented lending programs. Applicant has Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 165 been an active participant in the principal Boston com- opinion that considerations relating to the convenience munity development program, "The Boston Plan," and needs of the community to be served are favorable that is targeted, among other things, to develop and and lend some weight toward approval of the applisupport commercial enterprises in one of Boston's cation. low-income neighborhoods. Applicant has committed Based on the foregoing, it is the Board's judgment $1.6 million to this plan and has indicated a com- that approval of the applications would be in the public mitment to the residential rehabilitation portion of the interest and that the applications should be approved. neighborhood's renovation program. In addition, since On the basis of the record, the applications are ap- 1974, Applicant has participated in the management proved for the reasons summarized above. These and operation of the Boston Neighborhood Housing transactions shall not be made before the thirtieth cal- Services program and has recently commited to sup- endar day following the effective date of this Order or port a community development block grant program in later than three months after the effective date of this the town of Winthrop. Finally, by purchasing and un- Order, unless such period is extended for good cause derwriting the securities of Massachusetts Housing Fi- by the Board or by the Federal Reserve Bank of Bosnance Agency (MHFA), Applicant indirectly provides ton, pursuant to delegated authority. funds to meet the low- and moderate-income housing By Order of the Board of Governors, effective needs in Suffolk County, which constitute the primary January 28, 1980. use of the proceeds of the sale of MHFA securities. With regard to the allegation that Applicant's record Voting for this action: Chairman Volker and Governors with respect to its other subsidiary banks demon- Schultz, Wallich, Cold well, Partee, and Rice. Absent and not strates significant disinvestment in the local commu- voting: Governor Teeters. nities, data submitted by Protestant indicated that loan participations between FNBB and Applicant's other (Signed) GRIFFITH L. GARWOOD, subsidiary banks resulted in a $10.9 million outflow of [SEAL] Deputy Secretary of the Board. funds from these smaller banks. The Board is of the opinion that the entire record does not support a finding of community disinvestment. A loan participation Guaranty Development Company, schedule submitted by Applicant shows that as of De- Livingston, Montana cember 31, 1978, the six smaller subsidiary banks had purchased $13.6 million in loans from FNBB and sold Order Approving Acquisition of Bank $2.7 million in loans to FNBB. However, during this period, Applicant supplied $13 million in new capital Guaranty Development Company, Livingston, Monto these subsidiaries resulting in a net inflow to the tana, a bank holding company within the meaning of subsidiaries of $2.1 million. Thus, the Board concludes the Bank Holding Company Act, has applied for the that Protestant's allegation in this regard is not sup- Board's approval under section 3(a)(3) of the Act (12 ported by the facts of record. U.S.C. § 1842(a)(3)) to acquire 53.8 percent of the vot- The Board also notes that upon consummation of ing shares of First Security Bank of Big Timber acquisition, Applicant states that it will cause Bank to ("Bank"), Big Timber, Montana. offer its customers a number of new services: NOW Notice of the application, affording opportunity for accounts, credit card services, and commercial ac- interested persons to submit comments and views, has counts receivable, chattel mortgage and floor plan fi- been given in accordance with section 3(b) of the Act. nancing. In addition, within six months, Applicant The time for filing comments and views has expired, would cause Bank to lower to $100 the minimum de- and the Board has considered the application and all posit required on its 1 to 4 year certificates of deposit comments received in light of the factors set forth in and to eliminate the $300 minimum deposit required on section 3(c) of the Act (12 U.S.C. § 1842(c)). Bank's 90-day notice account. Protestant asserts that Applicant, a one-bank holding company that bethese services are available from other banks in the came a bank holding company as a result of the 1970 market and that their benefits are therefore illusory. Amendments to the Act, ccoitrols one bank with de- The Board believes that the benefits resulting from this posits of $31.3 million, representing 0.8 percent of the transaction are of benefit to the community to be total deposits in commercial banks in the state.1 Acserved and that the introduction of these services will quistion of Bank, which holds deposits of $5.3 million, enhance competition in the New Bedford banking mar- would increase Applicant's share of statewide deposits ket. Thus, based on its evaluation of the entire record by 0.1 percent and would not result in a significant inon this application, including Applicant's and FNBB's overall record of performance with respect to the factors to be considered under CRA, the Board is of the 1. All banking data are as of September 30, 1978. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 166 Federal Reserve Bulletin • February 1980 crease in the concentration of banking resources in Based on the foregoing, it is the Board's judgment Montana. that the proposed transaction would be consistent with Bank is the smaller of two banks operating in the the public interest and that the application should be relevant banking market2 controlling 24.8 percent of approved. Accordingly, the application is approved market deposits. Applicant's banking subsidiary is lo- for the reasons summarized above. The transaction cated in a separate, though adjacent, banking market shall not be made before the thirtieth calender day foland no significant existing competition would be elimi- lowing the effective date of this Order or later than nated by consummation of this proposal. Although three months after the effective date of the Order, un- Applicant is capable of entering the market de novo, it less such period is extended for good cause by the does not appear from the facts of record that the mar- Board, or by the Federal Reserve Bank of Minneapolis ket is particularly attractive for de novo entry. On the pursuant to delegated authority. basis of the above and other facts of record, the Board By order of the Board of Governors, effective Januconcludes that competitive considerations are consis- ary 25, 1980. tent with approval of the application. The financial and managerial resources of Appli- Voting for this action: Chairman Volcker and Governors Schultz, Wallich, Partee, and Rice. Absent and not voting: cant, its subsidiary bank, and Bank are regarded as Governors Coldwell and Teeters. satisfactory and their future prospects appear favorable. Accordingly, banking factors are consistent with (Signed) GRIFFITH L. GARWOOD, approval of the application. Although Applicant pro- [SEAL] Deputy Secretary of the Board. poses no immediate changes in the services offered by Bank, considerations relating to the convenience and needs of the community to be served are consistent The Marine Corporation, with approval of the application. Milwaukee, Wisconsin Applicant currently engages in certain nonbanking activities pursuant to section 4(c)(ii) of the Act, which Order Approving Acquisition of Bank provides a total exemption from the prohibitions of section 4 of the Act against nonbanking activities.3 The Marine Corporation, Milwaukee, Wisconsin, a Based upon its review of the legislative intent of Con- bank holding company within the meaning of the Bank gress in providing this exemption, it is the Board's Holding Company Act, has applied for the Board's apjudgment that the exceptionally broad exemption af- proval under section 3(a)(3) of the Act (12 U.S.C. § forded by section 4(c)(ii) must be limited to family- 1842(a)(3)) to acquire 80 percent or more of the voting owned one-bank holding companies that are not en- shares of Commercial State Bank, Madison, Wiscongaged in the management of banks. Moreover, in the sin ("Bank"). Board's view, upon the acquisition of an additional Notice of the application, affording opportunity for bank, a one-bank holding company that is exempt un- interested persons to submit comments and views, has der section 4(c)(ii) of the Act, would become engaged been given in accordance with section 3(b) of the Act in the management of banks, and would thereby termi- (12 U.S.C. § 1842(b)). The time for filing comments and nate its eligibility for the exemption. In addition, the views has expired, and the application and all com- Board believes that to permit unsupervised nonbank ments received, including the submission from Lake expansion by a multibank holding company would City Bank, Madison, Wisconsin ("Lake City Bank"), constitute an evasion of the Act, which the Board is have been considered by the Board in light of the facauthorized to prevent pursuant to section 5(b) of the tors set forth in section 3(c) of the Act (12 U.S.C. § Act. Accordingly, the Board concludes that upon the 1842(c)). acquisition of Bank, Applicant will no longer be eli- Applicant, the third largest banking organization in gible for the exemption for its nonbanking activities Wisconsin, controls 17 banks with aggregate deposits afforded by section 4(c)(ii) of the Act.4 of approximately $1.3 billion, representing 6.6 percent of total deposits in commercial banks in the state.1 Ac- 2. The relevant market is approximated by Sweet Grass County, Montana. banking subsidiary) appear to be exempt under section 4(c)(1) (C) of 3. Section 4(c)(ii) exempts from the prohibitions of section 4 the Act. Applicant also has one small loan outstanding to one of its "a company covered in 1970 more than 85 percentum of the principals. In view of the size of this loan, and the circumstances unvoting stock of which was collectively owned on June 30, 1968 der which it was made, the Board does not regard Applicant as being and continuously thereafter, directly or indirectly by or for engaged in lending activities. However, Applicant may not make any members of the same family, or their spouses, who are lineal additional loans without obtaining the Board's prior approval under descendants of common ancestors:" section 4 of the Act. 4. Absent the exemption afforded by section 4(c)(ii), Applicant's 1. All banking data are as of December 31, 1978, and reflect bank existing nonbanking activities (leasing a condominum and airplane for holding company formations and acquisitions approved as of October use in its bank business and furnishing data processing services to its 30, 1979. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 167 quisition of Bank ($29.8 million in deposits), the 164th tors associated with the proposal. In this regard, the largest banking organization in Wisconsin, will in- Board notes that the largest banking organization in crease Applicant's share of commercial bank deposits the Madison banking market, First Wisconsin Corpoby only 0.2 percent and will not alter Applicant's rank- ration ("First Wisconsin"), controlling 26.8 percent of ing in the state. market deposits, is also the largest banking organiza- Bank is the ninth largest of 23 banking organizations tion in the state. In addition, the market share held by in the Madison banking market (the relevant market)2 First Wisconsin and the second largest banking organiand controls 2.5 percent of total commercial bank de- zation in the market is over 47 percent or nearly six posits therein. Applicant is the fourth largest banking times the market share that will be controlled by Aporganization in the Madison market through its control plicant. The Board also believes that consideration of Security Marine Bank ("Security Bank") ($70.9 should be given to the fact that the organization to be million in deposits), holding 6.1 percent of the mar- acquired is a relatively small institution. Accordingly, ket's commercial bank deposits. Upon consummation the Board concludes that the overall competitive efof the proposal Applicant's market share will increase fects of this proposal do not warrant denial; futherto 8.6 percent, but due to the presence of significantly more, any anticompetitive effects are outweighed by larger banking organizations in the market, its ranking the convenience and needs considerations associated will remain unchanged. In light of the above and other with this application. facts of record, the Board finds that consummation of The financial and managerial resources and future this proposal will result in the elimination of existing prospects of Applicant, its subsidiaries, and Bank are competition between Security Bank and Bank,3 will regarded as generally satisfactory, particularly in light remove an independent competitor from the Madison of steps Applicant will undertake to strengthen and immarket and will increase the concentration of banking prove Bank's overall condition. Applicant also intends resources in the market. These facts would appear to to inject capital into certain of its other subsidiary warrant a finding that consummation of this proposal banks. In addition to the fact that affiliation with Appliwould have serious adverse competitive effects4. cant, will strengthen Bank's overall condition, it will However, the Board notes there are other facts in the enable Bank to introduce new and expanded services record bearing upon the competitive effects of the pro- to its customers. Upon consummation of this proposal and, based upon its consideration of all the facts, posal, Applicant intends to assist Bank in developing concludes that such a finding is not warranted. its commercial loan portfolio and in offering lease fi- The Board believes that proposals involving the ac- nancing, increasing its agricultural loans, and its marquisition of an independent banking organization by an keting, computer and management services. Applicant organization already represented in a market must be also intends to assist Bank in improving its physical analyzed carefully, giving attention to all of the facts facilities. In light of the above, considerations relating presented in each case, such as the structural charac- to the convenience and needs of the community to be teristics of the market as well as the quantitative fac- served lend significant weight toward approval of the application and outweigh the adverse competitive effects that might result from consummation of this pro- 2. The Madison banking market is approximated by the Madison, Wisconsin RMA. posal. Accordingly, the Board has determined that the 3. Lake City Bank, in its submission to the Board, states that it application should be approved. does not object to Applicant's acquisition of Bank but only to the acquisition of Bank's Milwaukee Street Branch ("Branch") because On the basis of the record, the application is apsuch an acquisition will effectively eliminate existing competition in proved for the reasons summarized above. The transthe area served by Branch. The Board notes that offices of Security action shall not be made before the thirtieth calendar Bank are convenient banking alternatives to Branch and that consummation of this proposal will eliminate meaningful existing competition, day following the effective date of this Order, or later particularly in the northeast portion of the Madison banking market; than three months after the effective date of this Order however, for the reasons discussed below, the Board finds denial of unless such period is extended for good cause by the the proposal is not warranted. 4. In an analysis based solely on market share, the competitive ef- Board, or by the Federal Reserve Bank of Chicago, fects of this proposal are similar to those presented in an application pursuant to delegated authority. the Board recently denied (County National Bancorporation/T.G.B., By order of the Board of Governors, effective Janu- 65 FEDERAL RESERVE BULLETIN, 763 (1979) ("County National")). However, the Board's Order in County National reflects the Board's ary 11, 1980. determination that market share is not the only factor the Board considers in assessing the competitive effects of a proposal. In County National, the Board found significant that the proposal would result in Voting for this action: Vice Chairman Schultz, Governors the merger of two sizeable "banking organizations comparably bal- Wallich, Cold well, Teeters, and Rice. Voting against this acanced and poised as natural competitors for the same range of busi- tion: Governor Partee. Absent and not voting: Chairman ness within the market" (See footnote 3 in County National Order). In Volcker. addition, the Board noted that the County National proposal would have eliminated a lead bank and its independent holding company from the St. Louis banking market. Neither of these facts is present in (Signed) GRIFFITH L. GARWOOD, the subject proposal. [SEAL] Deputy Secretary of the Board. 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A 168 Federal Reserve Bulletin • February 1980 Dissenting Statement of Governor Partee Chase's application had been protested by the Independent Insurance Agents of America, formerly the I would deny the application of The Marine Corpora- National Association of Insurance Agents, Inc., and tion to acquire Commercial State Bank. I believe that the Florida Association of Insurance Agents, Inc. (tothe issue presented by this application was addressed gether referred to herein as "Protestants"). The Board by the Board when it considered the application by had directed that public hearings on the Chase appli- County National Bancorporation, Clayton, Missouri, cation be held before an Administrative Law Judge a bank holding company, to acquire control of another ("ALJ") and such hearings were held between June 11 bank holding company, T. G. Bancshares, Co., St. and June 21, 1975. The ALJ made certain findings and Louis, Missouri, operating in the same market as recommended that, with certain conditions, Chase's County National. (65 FEDERAL RESERVE BULLETIN application be approved. Immediately thereafter, the 763 (1979)). In that case, the resulting organization Florida legislature enacted a law limiting the permiswould have controlled 5.6 percent of the St. Louis sible insurance agency activities of bank holding combanking market's commercial bank deposits, and panies in Florida.2 After reviewing the findings and would have become the market's fourth largest bank- recommendations of the ALJ and the effect of the newly ing organization. enacted statute on the scope of the proposal, the Board In view of the Board's denial of the County National approved Chase's application. Protestants subsequently proposal, it would seem to me consistent that the petitioned for judicial review of the Board's action. Board deny this application as well. The market shares On March 19, 1979, the United States Court of Apat issue in this proposal are larger than was the case in peals for the Fifth Circuit remanded the matter of County National. Futhermore, I do not believe the se- Chase's application to the Board for further developriously adverse competitive effects of this proposal, as ment of evidence with respect to the effect of the interreflected in a market share analysis, are mitigated by vening Florida law upon the Board's findings on the convenience and needs considerations or any special public benefits associated with Chase's application characteristics of the Madison market. Accordingly, and with instructions to explain the conclusions of the while I would not have denied County National in the Board in this regard that differed from those of the first instance, I believe that based upon the Board's ALJ.3 In response to the Court's instructions, the action in that case and the facts of record in the instant Board directed Chase to supplement the record with proposal, this case should be denied. information on these issues and afforded to Protestants the opportunity to comment on Chase's submissions. Chase amended its application so as to limit its pro- Orders Under Section 4 posal to insurance agency activities permitted by Florof Bank Holding Company Act ida law and detailed the public benefits expected to result from its proposal. Thereafter, by letter of August Chase Manhattan Corporation, 17, 1979, Protestants withdrew their opposition to the New York, New York Chase application. Accordingly, there appears to be no reason for further proceedings before an Adminis- Order Granting Amended Application to trative Law Judge. The Board had reviewed the entire Engage in Certain Insurance Agency Activities record relating to the application, including Chase's recent submissions and Protestant's response thereto, On September 22, 1975, the Board of Governors is- and makes the following findings as to the facts and the sued an Order modifying its previous Order of July 14, conclusions to be drawn therefrom. 1975, and approving the application of Chase Manhat- Chase, a bank holding company within the meaning tan Corporation, New York, New York ("Chase"), to of the Act, has amended its application under section engage de novo through its subsidiary, Housing In- 4(c)(8) of the Act and section (b) (1) of the Board's vestment Corporation of Florida ("HIC") in the sale Regulation Y to engage de novo through HIC in the pursuant to section 4(c)(8) of the Bank Holding Com- sale of (1) insurance that assures repayment of mortpany Act, 12 U.S.C. § 1841 et seq. ("Act"), of credit- gage loans made by HIC in the event of death or disrelated property and liability insurance, credit life, ability of the borrower, and (2) insurance that protects credit accident and health insurance, mortgage re- property that is collateral for a mortgage loan against demption insurance and homeowners comprehensive loss or damage, but excluding insurance customarily policies.1 written under an inland marine form. Chase has committed to engage in the sale of such insurance in con- 1. At the same time, the Board approved the applications of several other bank holding companies to engage in similar insurance agency activities. However, following the litigation described later in the text, 2. Florida Statue § 626.988 (1977). Chase is the only one of these bank holding companies that requested 3. Florida Association of Insurance Agents, Inc. v. Board of Govthe Board to consider its amended application. ernors. 591 F2d 334 (5th Cir. 1979). 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Legal Developments 169 formance with Florida law (including that enacted sub- adverse effects would result from approval of the apsequent to the ALJ's decision in this case) and the plication.6 The Board in its September 22, 1975, Order Board's regulations. In particular, Chase will engage found that no such adverse effects would result. Upon in this activity only to the extent that such insurance is reconsideration of the evidence of record, the Board directly related to real estate mortgage loans made or remains of the view that no reasonably forseeable or brokered by licensees under chapter 494, Florida Stat- possible adverse effects would result from approval of utes, and only to the extent necessary to protect this application. In particular, the record shows that against loss or damage to the real property that is sub- HIC was organized in 1972 and originates less than 0.1 ject to mortgage, on residential property consisting of percent of the residential mortgage loans in Florida. not more than four individual dwelling units. Futhermore, there are numerous alternative sources of The Administrative Law Judge and the Board pre- mortgage credit and insurance in Florida, HIC proviously found that insurance activities proposed by poses to engage in its insurance agency activities de Chase are authorized by section 225.4 (a)(9) of Regula- novo and the scope of insurance activities in which tion Y and are so closely related to banking or manag- HIC may permissibly engage is severely restricted by ing or controlling banks as to be a proper incident Florida law, as described above, and by the Board's thereto. The Fifth Circuit Court of Appeals, in the regulations. Based upon this information, it does not Florida case, left this determination undisturbed. appear that approval of this application will result in a Therefore, the Board believes that it is neither neces- concentration of resources in any market, any unfair sary nor appropriate to reconsider these conclusions. competitive advantages for HIC or Chase, decreased Upon consideration of Chase's amended appli- competition within the insurance industry or reduction cation, the Board is of the view that, even in light of of opportunities for individual entrepeneurs. Furtherthe limited scope of insurance activities permitted un- more, there is no evidence in the record to indicate any der amended Florida law, the performance of the pro- other adverse effects that would result from approval posed insurance agency activities by Chase through of the application. HIC reasonably can be expected to produce benefits to Based upon the foregoing, the Board has determined the public that outweigh possible adverse effects. In in accordance with the provisions of section 4(c)(8) particular, approval of the application would favor the that consummation of the proposal can reasonably be public interest by introducing into the communities expected to produce public benefits that outweigh posserved by HIC4 an additional source of mortgage-re- sible adverse effects. Accordingly, Chase's application lated insurance, thereby increasing overall com- to sell the limited insurance coverages enumerated petition in these communities and the surrounding above and expressly permitted under Florida law is areas. The Board has long recognized that de novo en- hereby approved. try is pro-competitive and provides a public benefit.5 This determination supersedes the Board's Order of Additionally, approval of the application will result in September 22, 1975, and is conditioned upon Applisome gain in efficiency as Chase will utilize present cant's conduct of these activities in accordance with physical locations, office equipment, computer hard- all applicable Florida insurance laws. This determinaware and software, and various personnel support tion is further subject to the conditions set forth in service capabilities to generate additional revenue. Ul- § 225.4(c) of Regulation Y and to the Board's authority timately, the more efficient use of its investments to require such modification or termination of the acshould result in lower prices to HIC's customers. Final- tivities of a holding company or any of its subsidiaries ly, approval of this application will provide mortgage as the Board finds necessary to assure compliance customers of HIC the advantages of one-stop shop- with the provisions and purposes of the Act and the ping. HIC will offer insurance through four of its sub- Board's regulations and orders issued thereunder or to sidiary offices and plans to have at least one insurance prevent evasion thereof. The transactions herein apagent located on the premises of each of those offices. proved shall be executed not later than three months Accordingly, customers will be able to purchase their after the effective date of this Order, unless such period mortgage-related insurance at the same place and time is extended for good cause by the Board or by the that they receive their mortgage and also will be af- Federal Reserve Bank of New York, pursuant to deleforded the convenience of centralized billing. gated authority. In connection with Chase's original application, the By order of the Board of Governors, effective Janu- Administrative Law Judge found that certain possible ary 11, 1980. 4. HIC will sell insurance at offices located in Miami, Jacksonville, Tampa, and Alamonte Springs, Florida. 6. It should be noted that because Chase does no banking business 5. See e.g., U.N. Bancshares, Inc., 59 FEDERAL RESERVE in Florida, the ALJ found relatively fewer adverse affects in con- BULLETIN 204 (1973) and Citicorp-Westport, 64 FEDERAL RESERVE nection with Chase's application than with the other applications, BULLETIN 510 (1979). which since have been abandoned, as described in footnote 1 supra. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 170 Federal Reserve Bulletin • February 1980 Voting for this action: Vice Chairman Schultz and Gover- comments and views has expired and the Board has nors Coldwell, Partee, and Rice. Present and not voting: considered the applications and all comments received Governor Wallich. Absent and not voting: Chairman Volcker in light of the public interest factors set forth in section and Governor Teeters. 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)). NCNB, the second largest banking organization in (Signed) GRIFFITH L. GARWOOD, North Carolina, is a one-bank holding company with [SEAL] Deputy Secretary of the Board. deposits of approximately $3.9 billion, representing 18.2 percent of the total deposits in commercial banks in the state.3 Through its subsidiary, NCNB Mortgage NCNB Corporation, Corporation, NCNB engages in the mortgage banking Charlotte, North Carolina business from offices in North Carolina, South Carolina, Georgia, and Florida. First Atlanta Corporation, Merchants Corporation, the fourth largest banking Atlanta, Georgia organization in Virginia, is a one-bank holding company with deposits of approximately $1.6 billion, repre- First and Merchants Corporation, senting 8.4 percent of total deposits in commercial Richmond, Virginia banks in the state. Through its subsidiary, First Mortgage Corporation, Merchants Corporation engages in Order Approving the mortgage banking business, primarily in the State Retention of Tri-South Management Associates of Virginia. Atlanta Corporation, the second largest banking or- NCNB Corporation, Charlotte, North Carolina ganization in Georgia, has three banking subsidiaries ("NCNB") (through its direct subsidiary, NCNB Tri- with aggregate deposits of $1.9 billion, representing South Corporation, Charlotte, North Carolina), First 12.0 percent of total deposits in commercial banks in and Merchants Corporation, Richmond, Virginia the state. Through its subsidiary, Tharpe & Brooks, ("Merchants Corporation") (through its direct subsid- Inc., Atlanta Corporation engages in the mortgage iary, First and Merchants Tri-South Corporation, banking business serving the states of Georgia and Richmond, Virginia), and First Atlanta Corporation, Florida. Atlanta, Georgia ("Atlanta Corporation") (through its Applicants jointly commenced Associates in 1970 indirect subsidiary, First Atlanta Tri-South Corpora- when each Applicant was a one-bank holding company tion, which is a subsidiary of T & B.P.C., Inc., At- within the meaning of the 1970 Amendments to the lanta, Georgia, a direct subsidiary of Atlanta Corpora- Act. Pursuant to the provisions of section 4(a)(2) of the tion), (together, "Applicants"), bank holding Act, Applicants have until December 31, 1980, to dicompanies within the meaning of the Bank Holding vest of their interests in Associates or file applications Company Act, as amended, 12 U.S.C. § 1841 et seq. to retain such interests. The Board regards the stan- (the "Act"), have applied for the Board's approval, dards under section 4(c)(8) for retention of activities to under section 4(c)(8) of the Act and section 225.4(b) of be the same as the standards for a proposed acquisithe Board's Regulation Y, to retain until December 31, tion of a section 4(c)(8) activity. 1983, voting shares of Tri-South Management Associ- Applicants propose to jointly continue to act as inates ("Associates"),1 a partnership whose only activity vestment adviser and financial consultant to Company is to act as investment adviser to Tri-South Mort- through their respective interests in Associates. Assogage Investors ("Company"), a Massachusetts ciates' only client has been and continues to be Combusiness trust operating as a real estate investment pany. The extent to which this joint venture eliminated trust.2 This activity has been determined to be per- existing competition is determined by the facts that exmissible for bank holding companies (12 C.F.R. § isted at the time Applicants entered into the activity.4 225.4(a)(5)). The record indicates that at that time none of the Ap- Notice of the applications, affording opportunity for plicants was engaged in acting as investment adviser to interested persons to submit comments and views on a real estate investment trust and that this joint venthe public interest factors, has been duly published ture represented de novo entry by each Applicant into (44 Federal Register 64567 (1979)). The time for filing the activity. Therefore, no existing competition was eliminated. 1. In addition, Applicants each own shares of Company. In view of the fact that no one of the Applicants control 5 percent of Company's 3. Banking data for NCNB and Merchants Corporation are as of stock, no application is required with respect to these shares. (12 June 30, 1979. Banking data for Atlanta Corporation are as of Decem- U.S.C. § 1843(c)(6)). ber 31, 1978. 2. Company is a publicly held real estate investment trust. 4. United States v. Penn-Olin Chemical Co., 378 U.S. 158 (1964). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 171 The Board also considers whether, at its inception, Order Under Section 2 any potential competition between the Applicants may of Banking Holding Company Act have been eliminated by this joint venture. In answering this question, the Board considers whether, absent Comanche Land and Cattle Company, this joint venture, any one of the Applicants would Comanche, Texas have entered the market on its own. From the record, it appears that each Applicant separately considered Order Granting Determination Under the engaging in this activity but determined that such an Bank Holding Company Act undertaking was not economically feasible. Accordingly, it does not appear that the joint venture had any Comanche Land and Cattle Company, Comanche, adverse effects on potential competition. At the time Texas ("'Comanche"), a bank holding company within Applicants entered into this joint venture it was pro- the meaning of the Bank Holding Company Act of posed that Associates would advise Company about 1956, as amended,1 has requested a determination purinvestment opportunities, including evaluating specific suant to section 2(g)(3) of the Act (12 U.S.C. § loans and supervising Company's investment opera- 1842(g)(3)) that it is not in fact capable of controlling tions. However, since 1974, Associates' sole function First State Bank of Bangs, Bangs, Texas ("Bank"), or has been to administer existing loan contracts and the individual to whom it transferred 28 percent of there are no present plans to expand its activities. Ac- Bank's voting shares, notwithstanding the fact that cordingly, the Board concludes that the formation of such transferee is a director and officer of Comanche. this joint venture had no significant effects on com- Under the provisions of section 2(g)(3) of the Act, petition and that Applicants' retention of Associates shares transferred after January 1, 1966, by any bank would not have any significant competitive effects. holding company to a transferee that is indebted to the Furthermore, there is no evidence in the record in- transferor or has one or more officers, directors, dicating that the proposal would result in undue con- trustees, or beneficiaries in common with or subject to centration of resources, unfair competition, conflicts control by the transferor, are deemed to be indirectly of interests, unsound banking practices or other ad- owned or controlled by the transferor unless the verse effects. Board, after opportunity for hearing, determines that It is the Board's judgment that this joint venture re- the transferor is not in fact capable of controlling the sulted in public benefits through the addition of anoth- transferee.2 It is hereby determined that Comanche is er competitor in the market, and that Applicants' tem- not in fact capable of controlling the individual transporary retention of their interests continues to be in feree or Bank. This determination is based upon the the public interest. evidence of record in this matter, including the follow- Based upon the foregoing and other considerations ing facts. reflected in the record, the Board has determined that Comanche is a closely-held corporation with four the balance of the public interest factors the Board is shareholders. Comanche, which once held 65 percent required to consider under section 4(c)(8) is favorable. of the shares of Bank, reduced its ownership to 24 per- Accordingly, the applications are hereby approved. cent by distributing 41 percent of the shares of Bank to This determination is subject to the conditions set its shareholders. Comanche held 25 percent or more of forth in section 225.4(c) of Regulation Y and to the Bank's shares for only slightly more than one year. Board's authority to require such modification or ter- One of Comanche's shareholders, who received 28 mination of the activities of a holding company or any percent of Bank's shares, is also a director and officer of its subsidiaries as the Board finds necessary to as- of Comanche. However, it appears that since this indisure compliance with the provisions and purposes of vidual owns 70 percent of Comanche's shares. Cothe Act and the Board's regulations and orders issued manche should be regarded as his alter ego, and there is thereunder, or to prevent evasion thereof. no evidence in the record to contradict this con- By order of the Board of Governers, effective clusion. January 11, 1980. With respect to its continued ownership of shares of Bank, Comanche has committed that it will not vote its shares of Bank, and that all transactions between Co- Voting for this action: Vice Chairman Schultz and Governors Wallich, Cold well, Partee, and Rice. Absent and not voting: Chairman Volcker and Governor Teeters. 1. The granting of this request will terminate Comanche's status as a bank holding company. 2. In its January 26, 1978 interpretation of section 2(g)(3), the Board stated that the presumption would apply where shares are transfered (Signed) GRIFFITH L. GARWOOD, directly to one or more persons who are directors or officers of the [SEAL] Deputy Secretary of the Board. transferor. 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A 172 Federal Reserve Bulletin • February 1980 manche and Bank will be conducted in the ordinary Bank Holding Company Tax Act of 1976, that its procourse of business. Moreover, Comanche has com- posed divestiture of all of the 218,166 shares (36 permitted that it will not have any directors or officers in cent) of City National Bank of Fort Smith, (Bank) Fort common with Bank, and it has terminated all manage- Smith, Arkansas, presently held by First, through the ment interlocks with Bank that existed at the time of pro rata distribution to First's stockholders of the transfer. Finally, Comanche's board of directors has stock of a corporation (New Corporation) created and adopted a resolution to the effect that Comanche does availed of solely for the purpose of receiving First's not, and will not attempt to, exercise a controlling in- Bank shares, is necessary or appropriate to effectuate fluence over Bank or the transferee of Bank's shares. the policies of the Bank Holding Company Act (12 Similarly, the board of directors of Bank have adopted U.S.C. § 1841 et seq) (BHC Act). First proposes to a resolution to the effect that it is not and will not be exchange the 216,166 shares of Bank it presently owns controlled by Comanche, and the individual transferee for all of the shares of New Corporation. After; the exhas made an affidavit that he is not, and will not be, change, First proposes immediately to distribute all of subject to Comanche's control. New Corporation's shares pro rata to the holders of On the basis of the foregoing and other facts of rec- common stock of First. ord, it is hereby determined that control of the di- In connection with this request, the following inforvested shares of Bank rest with the transferee as an mation is deemed relevant, for purposes of issuing the individual, and there is no evidence that Comanche requested certification:1 controls or is capable of controlling Bank or its princi- 1. First is a corporation organized under the laws of pal shareholder in his capacity as transferee of the Arkansas on November 5, 1928. On July 24, 1953, stock of Bank. Accordingly, it is ordered, that the First acquired ownership and control of 28,550 shares, request of Comanche for a determination pursuant to representing 95.2 percent of the outstanding voting section 2(g)(3) be granted. This determination is based shares, of Bank. On July 7, 1970 First held 148,872 on the representations made to the Board by Co- shares, representing 71.8 percent of the outstanding manche and the transferee of Bank's shares. In the event voting shares, of Bank. On February 28, 1978, First that the Board should hereafter determine that facts acquired an additional 131,980 shares of Bank in a material to this determination are otherwise than as transaction in which 2 shares of Bank common stock represented, or that Comanche or the transferee have were issued to shareholders of Bank for every one failed to disclose to the Board other material facts, this share of common stock held by such shareholder.2 determination may be revoked, and any change in the 2. First became a bank holding company on Decemfacts and circumstances relied upon by the Board in ber 31, 1970, as a result of the 1970 Amendments to the making this determination could result in the Board re- BHC Act, by virtue of its ownership and control at considering the determination made herein. that time of more than 25 percent of the outstanding By order of the Board of Governors, acting through voting shares of Bank, and it registered as such with its General Counsel, pursuant to delegated authority the Board on August 15, 1971. First would have been a (12 C.F.R. § 265.2(b)(1), effective January 15, 1980. bank holding company on July 7, 1970, if the BHC Act Amendments of 1970 had been in effect on that date by (Signed) GRIFFITH L. GARWOOD, virtue of its ownership and control on that date of [SEAL] Deputy Secretary of the Board. more than 25 percent of the outstanding voting shares of Bank. First presently owns and controls 218,166 Certification Pursuant to the Bank Holding Company Tax Act of 1976 1. This information derives from First's correspondence with the Board concerning its request for this certification, First's Registration First Pyramid Life Insurance Company, Statement filed with the Board pursuant to the BHC Act, and other Little Rock, Arkansas records of the Board. 2. Under subsection (c) of section 1101 of the Code, property acquired after July 7, 1970, generally does not qualify for the tax benefits Prior Certification Pursuant to the of section 1101(b) when distributed by an otherwise qualified bank Bank Holding Company Tax Act of 1976 holding company. However, where such property was acquired by a qualified bank holding company in a transaction in which gain was not recognized under § 305(a) of the Code, then section 1101(b) is appli- [Docket No. TCR 76-179] cable. First has stated that the shares it received on February 28,1978, were received in a transaction in which gain was not recognized under section 305(a) of the Code. Accordingly, even though 131,980 shares First Pyramid Life Insurance Company, (First) Little of Bank common stock were acquired by First after July 7,1970, those Rock, Arkansas, has requested a prior certification shares would nevertheless qualify as property eligible for the tax benefits provided in section 1101(b) of the Code if those shares were, in pursuant to section 1101(c)(3) of the Internal Revenue fact, received in a transaction in which gain was not recognized under Code ("Code"), as amended by section 2(a) of the section 305(a) of the Code. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 173 shares, representing 36 percent of the outstanding vot- (A) First is a qualified bank holding corporation ing shares, of Bank. within the meaning of subsection (b) of section 1103 of 3. First holds property acquired by it on or before the Code, and satisfies the requirements of that sub- July 7, 1970, the disposition of which but for the provi- section; so of section 4(a)(2) of the BHC Act would be neces- (B) The shares of Bank that First proposes to exsary or appropriate to effectuate section 4 of the BHC change for shares of New Corporation are all or part of Act if First were to continue to be a bank holding com- the property by reason of which First controls (within pany beyond December 31, 1980, and which property, the meaning of section 2(a) of the BHC Act) a bank or but for such proviso, would be "prohibited property" bank holding company, and within the meaning of section 1103(c) of the Code. Sec- (C) exchange of the shares of Bank for the shares of tion 1103(g) of the Code provides that any bank hold- New Corporation and the distribution to the shareing company may elect, for the purposes of part VIII holders of First of the shares of New Corporation are of subchapter O of Chapter 1 of the Code, to have the necessary or appropriate to effectuate the policies of determination of whether property is "prohibited the BHC Act. property" or is property eligible to be distributed with- This certification is based upon the representations out recognition of gain under section 1101(b)(1) of the and commitments made to the Board by First and up- Code, made under the BHC Act as if the Act did not on the facts set forth above. In the event the Board contain the proviso of section 4(a)(2). First has repre- should hereafter determine that facts material to this sented that it will make such an election prior to the certification are otherwise than as represented by consummation of the proposed divestiture. First, or that First has failed to disclose to the Board 4. First has committed to the Board that no officer, other material facts or to fulfill any commitments made director or employee with policy-making functions of to the Board in connection herewith, it may revoke First or any of its subsidiaries (including honorary or this certification. advisory directors) will hold any such position with By order of the Board of Governors acting through New Corporation or any of its subsidiaries. First has its General Counsel, pursuant to delegated authority further committed that all such interlocking relation- (12 C.F.R.§ 265.2(b)(3), effective January 24, 1980. ships that now exist between First and Bank will be terminated. On the basis of the foregoing information, it is here- (Signed) THEODORE E. ALLISON, by certified that: [SEAL] Secretary of the Board. ORDERS APPROVED UNDER BANK HOLDING COMPANY ACT By the Board of Governors During January 1980 the Board of Governors approved the applications listed below. Copies are available upon request to Publications Services, Division of Support Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 3 Board action (effective Applicant Bank(s) date) Fannin Bancshares, Inc., Houston, Texas Fannin Bank, January 11,1980 Houston, Texas Green River Company, Green River, First National Bank of Green River, January 25,1980 Wyoming Green River, Wyoming Seaway Bancshares, Inc., Chicago, Illinois Seaway National Bank of Chicago, January 14,1980 Chicago, Illinois Western Bancorporation, Houston, Texas Western Bank, January 18,1980 Houston, Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 174 Federal Reserve Bulletin • February 1980 By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies of the orders are available upon request to the Reserve Banks. Section 3 Reserve Effective Applicant Bank(s) Bank date Banc One Corporation, The Pomeroy National Bank, Cleveland January 7,1980 Columbus, Ohio Pomeroy, Ohio Beutler, Inc., The First State Bank, Kansas City January 4,1980 Ness City, Kansas Ness City, Kansas Cattle Crossing, Inc., The Cattle National Bank of Kansas City January 3,1980 Seward, Nebraska Seward, Seward, Nebraska F & M Bank Shares, Inc., The Farmers and Merchants Kansas City January 3, 1980 Hennessey, Oklahoma National Bank of Hennessey, Hennessey, Oklahoma Falmouth Bancorporation, The Falmouth Deposit Bank, Cleveland January 4, 1980 Falmouth, Kentucky Falmouth, Kentucky Illinois Holding Company, Farmers State Bank of Chicago January 11,1980 Sherrard, Illinois Sherrard, Sherrard, Illinois First Forest Park Corporation, Forest Park National Bank, Chicago December 31,1979 Forest Park, Illinois Forest Park, Illinois First Naperville Bancorporation, Inc., The First Bank, Naperville, Chicago December 28, 1979 Naperville, Illinois Naperville, Illinois First National Charter Corporation, Farmers Savings Bank, Kansas City January 15,1980 Marshall, Missouri San Antonio Bancshares, Inc., Bank of San Antonio, Dallas January 7, 1980 San Antonio, Texas San Antonio, Texas Lakota Bank Holding Company, Inc., State Bank of Lakota, Minneapolis January 4, 1980 Lakota, North Dakota Lakota, North Dakota Leigh Corporation, Bank of Leigh, Kansas City December 28, 1979 Leigh, Nebraska Leigh, Nebraska McGregor Bancshares, Inc., State Bank of McGregor, Minnesota January 21,1980 McGregor, Minnesota McGregor, Minnesota Manco, Inc., Mancos State Bank, Kansas City January 17,1980 Mancos, Colorado Mancos, Colorado MansuraBancshares, Inc., Mansura, Mansura State Bank, Mansura, Atlanta January 21, 1980 Illinois Louisiana Nekoosa Port Edwards Nekoosa Port Edwards State Chicago January 4,1980 Bancorporation, Nekoosa, Bank, Nekoosa, Wisconsin Wisconsin Peoples Bancshares, Inc., Van Buren, Peoples Bank & Trust St. Louis January 18,1980 Arkansas Company, Van Buren, Arkansas Trust Company of Georgia, Atlanta, Citizens and Southern Bank of Atlanta January 23,1980 Georgia Rockdale, Conyers, Colorado United Bank Corporation of New Peninsula National Bank, New York January 8,1980 York, Albany, New York Cedarhurst, New York Bucklin Bankshares, Inc., Bucklin, The Farmers State Bank of Kansas City January 25, 1980 Kansas Bucklin, Kansas, Bucklin, Kansas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 175 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Elsie, Inc., Elsie, Nebraska Commercial State Bank, Elsie, Kansas City January 24, 1980 Nebraska First Denham Bancshares, Inc., First National Bank of Denham Atlanta January 21,1980 Denham Springs, Louisiana Springs, Denham Springs, Louisiana First of Chadron Bank Corporation, The First National Bank of Kansas City January 24,1980 Chadron, Nebraska Chadron, Chadron, Nebraska First National Boston Corporation, Pittsfield National Bank, Boston January 28, 1980 Boston, Massachusetts Pittsfield, Massachusetts Louisburg Bancshares, Inc., The Bank of Louisburg, Kansas City January 25,1980 Louisburg, Kansas Louisburg, Kansas Midlantic Banks Inc., West Orange, Atlantic National Bank, New York January 28,1980 New Jersey Atlantic City, New Jersey Roy all Financial Corporation, The Royall National Bank of Dallas January 28, 1980 Palestine, Texas Palestine, Palestine, Texas Security Financial Services, Inc., Eldorado State Bank, Chicago January 28, 1980 Sheboygan, Wisconsin Eldorado, Wisconsin Walker Bancshares Corp., Walker State Bank, Walker, Chicago January 2, 1980 Crawfordsville, Iowa Iowa Wolfe City Bancshares, Inc., Wolfe The Wolfe City National Bank, Dallas January 28,1980 City, Texas Wolfe City, Texas Sections 3 and 4 Nonbanking company Reserve Effective Applicant Bank(s) (or activity) Bank date First Tahlequah Corp., First National Bank, Credit related Kansas City January 17, 1980 Tahlequah, Oklahoma Tahlequah, Oklahoma insurance activities Section 4 Nonbanking company Reserve Effective Applicant (or activity) Bank date First Atlantic Corporation, Atlanta, Underwriting of credit life and Atlanta January 10,1980 Georgia disability insurance U.S. Bancorp, Portland, Oregon State Finance & Thrift San Francisco January 4,1980 Company, Inc., Logan, Utah Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 176 Federal Reserve Bulletin • February 1980 PENDING CASES INVOLVING THE BOARD OF GOVERNORS Does not include suits against the Federal Reserve Memphis Trust Company v. Board of Governors, filed Banks in which the Board of Governors is not named a May 1979, U.S.C.A. for the Sixth Circuit. party. Independent Insurance Agents of America, et al., v. Board of Governors, filed May 1979, U.S.C.A. for American Trust Co. of Hawaii, et al., v. Board of Gov- the District of Columbia. ernors, filed January 1980, U.S.D.C. for the District Independent Insurance Agents of America, et al., v. of Columbia. Board of Governors, filed April 1979, U.S.C.A. for Boggs, et al. v. Board of Governors, filed October the District of Columbia. 1979, U.S.C.A. for the Eighth Circuit. Independent Insurance Agents of America, et al., v. Independent Bank Corporation v. Board of Gover- Board of Governors, filed March 1979, U.S.C.A. for nors, filed October 1979, U.S.C.A. for the Sixth Cir- the District of Columbia. cuit. Credit and Commerce American Investment, et al., v. Wiley v. United States, et al., filed September 1979, Board of Governors, filed March 1979 U.S.C.A. for U.S.D.C. for the District of Columbia. the District of Columbia. County National Bancorp oration and TGB Co. v. Consumers Union of the United States, v. G. William Board of Governors, filed September 1979, Miller, et al., filed December 1978, U.S.D.C. for the U.S.C.A. for the Eighth Circuit. District of Columbia. State of Indiana v. The United States of America, et Manchester-Tower Grove Community Organization! al., filed September 1979, U.S.D.C. for the District ACORN v. Board of Governors, filed September of Columbia. 1978, U.S.C.A. for the District of Columbia. Edwin F. Gordon v. Board of Governors, et al., filed Independent Bankers Association of Texas v. First August 1979, U.S.D.C. for the Northern District of National Bank in Dallas, et al., filed July 1978, Georgia. U.S.D.C. for the Northern District of Texas. Edwin F. Gordon v. Board of Governors, et al., filed Mid-Nebraska Bancshares, Inc. v. Board of Gover- August 1979, U.S.C.A. for the Fifth Circuit. nors, filed July 1978, U.S.C.A. for the District of American Bankers Association v. Board of Governors, Columbia. et al., filed August 1979, U.S.D.C. for the District of Security Bancorp and Security National Bank v. Columbia. Board of Governors, filed March 1978, U.S.C.A. for Gregory v. Board of Governors, filed July 1979, the Ninth Circuit. U.S.D.C. for the District of Columbia. Vickars-Henry Corp. v. Board of Governors, filed De- Donald W. Riegel, Jr. v. Federal Open Market Com- cember 1977, U.S.C.A. for the Ninth Circuit. mittee, filed July 1979, U.S.D.C. for the District of Investment Company Institute v. Board of Governors, Columbia. filed September 1977, U.S.D.C. for the District of Connecticut Bankers Association, et al., v. Board of Columbia. Governors, filed May 1979, U.S.C.A. for the Dis- Roberts Farms, Inc. v. Comptroller of the Currency, trict of Columbia. etal., filed November 1975, U.S.D.C. for the South- Ella Jackson et al., v. Board of Governors, filed May ern District of California. 1979, U.S.C.A. for the Fifth Circuit. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1 Financial and Business Statistics CONTENTS Domestic Financial Statistics WEEKLY REPORTING COMMERCIAL BANKS A3 Monetary aggregates and interest rates Assets and liabilities A4 Factors affecting member bank reserves A20 All reporting banks A5 Reserves and borrowings of member banks A21 Banks with assets of $ 1 billion or more A6 Federal funds transactions of money market All Banks in New York City banks A23 Balance sheet memoranda A24 Commercial and industrial loans POLICY INSTRUMENTS A24 Major nondeposit funds of commercial banks A25 Gross demand deposits of individuals, A8 Federal Reserve Bank interest rates partnerships, and corporations A9 Member bank reserve requirements A10 Maximum interest rates payable on time and savings deposits at federally insured institutions FINANCIAL MARKETS A11 Federal Reserve open market transactions A25 Commercial paper and bankers dollar acceptances outstanding FEDERAL RESERVE BANKS A26 Prime rate charged by banks on short-term business loans A12 Condition and Federal Reserve note statements A26 Terms of lending at commercial banks A13 Maturity distribution of loan and security All Interest rates in money and capital markets holdings A28 Stock market—Selected statistics A29 Savings institutions—Selected assets and MONETARY AND CREDIT AGGREGATES liabilities A13 Bank debits and deposit turnover A14 Money stock measures and components FEDERAL FINANCE A15 Aggregate reserves and deposits of member banks A30 Federal fiscal and financing operations A15 Loans and investments of all commercial banks A31 U.S. budget receipts and outlays A32 Federal debt subject to statutory limitation A32 Gross public debt of U.S. Treasury—Types and COMMERCIAL BANK ASSETS AND LIABILITIES ownership A33 U.S. government marketable securities- A16 Last-Wednesday-of-month series Ownership, by maturity A17 Call-date series A34 U.S. government securities dealers— A18 Detailed balance sheet, September 30, 1978 Transactions, positions, and financing A35 Federal and federally sponsored credit agencies—Debt outstanding Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 2 Federal Reserve Bulletin • February 1980 International Statistics SECURITIES MARKETS AND CORPORATE FINANCE A54 U.S. international transactions—Summary A36 New security issues—State and local A55 U.S. foreign trade governments and corporations A55 U.S. reserve assets A37 Open-end investment companies—Net sales and A56 Foreign branches of U.S. banks—Balance sheet asset position data A37 Corporate profits and their distribution A58 Selected U.S. liabilities to foreign official A38 Nonfinancial corporations—Assets and liabilities institutions A38 Business expenditures on new plant and equipment A39 Domestic finance companies—Assets and REPORTED BY BANKS IN THE UNITED STATES liabilities; business credit A58 Liabilities to and claims on foreigners A59 Liabilities to foreigners REAL ESTATE A61 Banks' own claims on foreigners A62 Banks' own and domestic customers' claims on A40 Mortgage markets foreigners A41 Mortgage debt outstanding A62 Banks' own claims on unaffiliated foreigners A63 Claims on foreign countries—Combined domestic offices and foreign branches CONSUMER INSTALLMENT CREDIT A42 Total outstanding and net change SECURITIES HOLDINGS AND TRANSACTIONS A43 Extensions and liquidations A64 Marketable U.S. Treasury bonds and notes- Foreign holdings and transactions FLOW OF FUNDS A64 Foreign official assets held at Federal Reserve Banks A44 Funds raised in U.S. credit markets A65 Foreign transactions in securities A45 Direct and indirect sources of funds to credit markets REPORTED BY NONBANKING BUSINESS ENTERPRISES IN THE UNITED STATES Domestic Nonfinancial Statistics A66 Liabilities to unaffiliated foreigners A46 Nonfinancial business activity—Selected A67 Claims on unaffiliated foreigners measures A46 Output, capacity, and capacity utilization A47 Labor force, employment, and unemployment INTEREST AND EXCHANGE RATES A48 Industrial production—Indexes and gross value A50 Housing and construction A68 Discount rates of foreign central banks A51 Consumer and producer prices A68 Foreign short-term interest rates A52 Gross national product and income A68 Foreign exchange rates A53 Personal income and saving A69 Guide to Tabular Presentation and Statistical Releases Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Financial Statistics A3 1.10 MONETARY AGGREGATES AND INTEREST RATES 1979 1979 Item Q1 Q2 Q3 Q4 Aug. Sept. Oct. Nov. Dec. Monetary and credit aggregates (annual rates of change, seasonally adjusted in percent)1 Member bank reserves 1 Total -2.3 -3.6 5.1 12.4 6.7 11.1 17.4 6.3 16.9 2 Required -2.2 -3.5 4.8 11.6 6.4 12.0 15.4 6.9 12.6 3 Nonborrowed -2.8 -7.5 7.0 6.8 9.5 3.8 -2.3 9.9 30.6 4 Monetary base2 5.9 4.8 9.3 9.5 11.2 12.2 10.2 5.4 7.8 Concepts of money and liquid assets3 5 M-1A 0.2 7.8 8.8 4.7 7.3 6.9 1.6 5.2 6.2 6 M-1B 4.8 10.7 10.1 5.3 8.6 7.9 2.2 4.4 7.5 7 M-2 6.3 10.2 10.3 7.2 10.6 8.2 6.0 5.8 7.4 8 M-3 7.9 8.8 10.3 9.8 11.6 13.2 9.4 7.3 6.5 9 L 10.3 13.1 11.7 n.a. 10.3 16.4 6.9 5.3 n.a. Time and savings deposits Commercial banks 10 Total 20.9 6.5 13.7 25.4 -1.7 16.8 20.8 28.4 27.8 11 Savings4 -17.0 -9.7 -1.5 -21.0 -1.9 -13.3 -25.3 -37.7 -12.5 12 Small denomination time5 24.8 20.4 14.4 24.4 15.3 19.1 26.0 35.0 14.1 13 Large-denomination time6 19.8 -4.8 9.5 29.5 18.2 41.9 35.9 26.4 -2.2 14 Thrift institutions7 8.3 7.4 7.4 6.7 7.4 7.0 6.6 6.2 6.3 15 Total loans and investments at commercial banks8 13.3 11.9 15.8 3.4 11.6 21.7 6.6r -.5 4.1 1979 1979 1980 Q1 Q2 Q3 Q4 Sept. Oct. Nov. Dec. Jan. Interest rates (levels, percent per annum) Short-term rates 16 Federal funds9 10.07 10.18 10.94 13.58 11.43 13.77 13.18 13.78 13.82 17 Federal Reserve discount10 9.50 9.50 10.21 11.92 10.70 11.77 12.00 12.00 12.00 18 Treasury bills (3-month market yield)11 9.38 9.38 9.67 11.84 10.26 11.70 11.79 12.04 12.00 19 Commercial paper (3-month)111* 10.04 9.85 19.64 13.35 11.63 13.23 13.57 13.24 13.04 Long-term rates Bonds 20 U.S. government13 9.03 9.08 9.03 10.18 9.21 9.99 10.37 10.18 10.65 21 State and local government14 6.37 6.22 6.28 7.20 6.52 7.08 7.30 7.22 7.35 22 Aaa utility (new issue)15 9.58 9.66 9.64 11.21 9.93 10.97 11.42 11.25 11.73 23 Conventional mortages16 10.33 10.35 11.13 12.38 11.35 12.15 12.50 12.50 12.80 1. Unless otherwise noted, rates of change are calculated from average amounts 4. Savings deposits exclude NOW and ATS accounts at commercial banks. outstanding in preceding month or quarter. Growth rates for member bank reserves 5. Small time deposits are those issued in amounts of less than $100,000. are adjusted for discontinuities in series that result from changes in Regulations 6. Large time deposits are those issued in amounts of $100,000 or more. D and M. 7. Savings and loan associations, mutual savings banks, and credit unions. 2. Includes total reserves (member bank reserve balances in the current week 8. Quarterly changes calculated from figures shown in table 1.23. Elus vault cash held two weeks earlier); currency outside the U.S. Treasury, Federal 9. Seven-day averages of daily effective rates (average of the rates on a given Reserve Banks and the vaults of commercial banks; and vault cash of nonmember date weighted by the volume of transactions at those rates). banks. 10. Rate for the Federal Reserve Bank of New York. 3. M-l A: Averages of daily figures for (1) demand deposits at all commercial 11. Quoted on a bank-discount basis. banks other than those due to domestic banks, the U.S. government, and foreign 12. Beginning Nov. 1977. unweighted average of offerintg rates quoted by at banks and official institutions less cash items in the process of collection and least five dealers. Previously, most representative rate quoted by these dealers. Federal Reserve float; and (2) currency outside the Treasury, Federal Reserve Before Nov. 1979, data shown are for 90- to 119-day maturity. banks, and the vaults of commercial banks. 13. Market yields adjusted to a 20-year maturity by the U.S. Treasury. M-1B: M-1A plus NOW and ATS accounts at banks and thrift institutions, 14. Bond Buyer series for 20 issues of mixed quality. credit union share draft accounts, and demand deposits at mutual savings banks. 15. Weighted averages of new publicly offered bonds rates Aaa. Aa and A by M-2: M-1B plus savings and small denomination time deposits at all depositary Moody's Investors Service and adjusted to an Aaa basis. Federal Reserve cominstitutions, overnight RPs at commercial banks, overnight Eurodollars held by pilations. U.S. residents other than banks at Caribbean branches of member banks, and 16. Average rates on new commitments for conventional first mortgages on new money market mutual fund shares. homes in primary markets, unweighted and rounded to nearest 5 basis points, from M-3: M-2 plus large denomination time deposits at all depositary institutions Dept. of Housing and Urban Development. and term RPs at commercial banks and savings and loan associations. L: M-3 plus other liquid assets such as term Eurodollars held by U.S. residents other than banks, bankers acceptances, commercial paper. Treasury bills and other liquid Treasury securities and U.S. savings bonds. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 DomesticN onfinancial Statistics • February 1980 1.11 FACTORS AFFECTING MEMBER BANK RESERVES Millions of dollars Monthly aver f a ig g u e r s e s o f daily Weekly averages of daily figures for week-ending Factors Nov.P Dec.P Jan./7 Dec. 26P Jan. 2P Jan. 9P Jan. 16p Jan. 23p SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 136,696 140,008 138,855 139,051 141,347 143,400 141,018 139,613 138,118 2 U.S. government securities1 115,240 117,821 117,855 117,538 118,393 119,035 118,789 118,713 117,695 4 3 H Bo el u d g h u t n o d u er t ri r g e h p t u rchase agreements 114,8 4 1 2 5 5 117,1 6 9 2 5 6 117,4 3 9 6 3 2 117,3 2 2 1 6 2 117 1, , 0 3 6 2 5 8 117 1 , , 4 5 9 3 6 9 118,789 0 118,713 0 117,3 3 2 7 3 2 5 Federal agency securities 8,363 8,455 8,383 8,353 8,401 8,805 8,216 8,216 8,481 6 7 B H o el u d g ; h u t n o d u e t r r i r g e h p t urchase agreements 8,2 1 2 4 1 2 8,2 2 1 3 8 7 8,2 1 1 6 6 7 8,2 1 1 3 6 7 8,2 1 1 8 6 5 8,2 5 1 8 6 9 8,216 0 8,216 0 8,2 2 1 6 6 5 8 Acceptances 116 353 104 31 826 0 0 61 9 Loans 1,908 1,454 1,264 1,684 1,224 1,431 732 1,226 1,197 10 Float 6,119 6,499 5,825 6,128 6,857 7,682 7,653 6,135 5,327 11 Other Federal Reserve assets 4,950 5,426 5,424 5,318 5,667 5,622 5,628 5,324 5,357 12 Gold stock 11,159 11,112 11,156 11,112 11,112 11,112 11,112 11,172 11,172 13 Special drawing rights certificate account 1,800 1,800 2,064 1,800 1,800 1,800 1,800 1,800 1,800 14 Treasury currency outstanding 12,828 12,913 12,978 12,911 12,938 12,947 12,956 12,973 12,989 ABSORBING RESERVE FUNDS 15 Currency in circulation 121,397 123,836 122,934 123,682 124,738 125,475 124,841 123,368 122,060 16 Treasury cash holdings 397 426 441 431 430 426 432 437 444 Deposits, other than member bank reserves, with Federal Reserve Banks 17 Treasury 3,050 2,963 3,110 2,640 3,095 3,607 2,812 3,281 3,073 18 Foreign 353 318 331 326 266 351 372 283 320 19 Other 294 355 434 332 316 820 432 321 346 20 Other Federal Reserve liabilities and capital 4,894 5,349 5,080 5,149 5,445 5,402 4,741 5,006 5,166 21 Member bank reserves with Federal Reserve Banks 32,098 32,585 32,724 32,314 32,908 33,177 33,264 32,862 32,671 End-of-month figures Wednesday figures 1979 1980 Nov.P Dec.P Dec. 19P Dec. 26p Jan. 2P Jan. 9P Jan. 16P Jan. 23P Jan. 30? SUPPLYING RESERVE FUNDS 22 Reserve bank credit outstanding 138,008 140,705 135,202 137,207 137,836 146,060 139,987 136,420 140,386 23 U.S. government securities1 118,087 117,458 116,311 115,186 113,057 119,070 117,639 114,774 118,610 24 Bought outright 117,528 116,291 116,311 115,186 112,856 116,406 117,639 114,774 116,950 25 Held under repurchase agreements 559 1,167 0 201 2,664 0 0 1,660 26 Federal agency securities 9,194 8,709 8,216 8,216 8,331 9,338 8,216 8,216 9,123 27 Bought outright 8,221 8,216 8,216 8,216 8,216 8,216 8,216 8,216 8,216 28 Held under repurchase agreements 973 493 0 115 1,122 0 0 907 29 Acceptances 269 704 0 415 1,078 0 0 327 30 Loans 2,034 1,454 1,561 1,982 2,060 1,250 1,740 1,116 31 Float 3,729 6,767 4,610 6,690 8,030 8,777 7,577 6,393 5,831 32 Other Federal Reserve assets 4,695 5,613 5,237 5,554 6,021 5,737 5,305 5,297 5,379 33 Gold stock 11,112 11,112 11,172 11,112 11,112 11,112 11,172 11,172 11,172 34 Special drawing rights certificate account 1,800 1,800 2,968 1,800 1,800 1,800 1,800 1,800 1,800 35 Treasury currency outstanding 13,020 12,947 13,006 12,937 12,947 12,947 12,970 12,979 12,989 ABSORBING RESERVE FUNDS 36 Currency in circulation 122,082 125,473 121,004 124,449 125,595 125,590 124,286 122,959 121,781 37 Treasury cash holdings 427 426 460 431 430 426 434 438 448 Deposits, other than member bank reserves, with Feaeral Reserve Banks 38 Treasury 2,590 4,075 2,931 3,061 2,883 3,961 3,472 3,468 3,309 39 Foreign 490 429 440 274 216 379 299 250 242 40 Other 352 1,412 339 303 370 1,821 324 307 357 41 Other Federal Reserve liabilities and capital 5,378 4,957 5,682 5,235 5,681 4,905 4,907 4,986 5,345 42 Member bank reserves with Federal Reserve Banks 32,617 29,792 31,492 29,302 28,520 34,837 32,207 29,963 34,865 1. Includes securities loaned—fully guaranteed by U.S. government securities NOTE: For amounts of currency and coin held as reserves, see table 1.12 pledged with Federal Reserve Banks—and excludes (if any) securities sold and scheduled to be bought back under matched sale-purchase transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Member Banks A5 1.12 RESERVES AND BORROWINGS Member Banks Millions of Dollars Monthly averages of daily figures RReesseerrvvee ccllaassssiiffiiccaattiioonn 1978 1979 1980 Dec. May June July Aug. Sept. Oct./' NOV.P Dec.P Jan .P All member banks Reserves 1 At Federal Reserve Banks 31,158 30,208 29,822 30,191 30,006 29,986 31,599 32,098 32,585 32,724 2 Currency and coin 10,330 10,044 10,154 10,552 10,523 10,726 10,681 10.740 11,323 12,318 3 Total held1 : 41,572 40,382 40,105 40.900 40,687 40,868 42,423 42,979 44,063 45,217 4 Required 41,447 40,095 39,884 40,710 40,494 40,863 42,002 42,770 43,560 44,902 5 Excess1 125 287 221 190 193 5 421 209 503 315 Borrowings at Reserve Banks2 6 Total 874 1,777 1,396 1,179 1,097 1,344 2,022 1,908 1,454 1,264 7 Seasonal 134 173 188 168 177 169 161 141 81 74 Large banks in New York City 8 Reserves held 7,120 6,658 6,346 6,605 6,408 6,437 6,655 6,695 7,206 7,781 9 Required 7,243 6,544 6,415 6,586 6,427 6,378 6,851 6,932 7,329 7,758 10 Excess -123 114 -69 19 -19 59 -196 -237 -123 23 11 Borrowings2 99 150 78 97 79 87 183 139 63 32 Large banks in Chicago 12 Reserves held 1,907 1,730 1,726 1,709 1,694 1,654 1,790 1,869 1,990 2,021 13 Required 1,900 1,712 1,697 1,713 1,706 1,760 1,859 1,950 2,001 2,059 14 Excess 7 18 29 -4 -12 -106 -69 -81 -11 -38 15 Borrowings2 10 60 64 45 6 80 136 118 79 76 Other large banks 16 Reserves held 16,446 15,926 15,989 16,374 16,370 16,426 16,519 16,663 17,336 17,719 17 Required 16,342 15,893 15,877 16,339 16,321 16,491 16,796 17,000 17,369 17,967 18 Excess 104 33 112 35 49 -65 -277 -337 -33 -248 19 Borrowings2 276 721 586 517 484 600 856 804 697 642 All other banks 20 Reserves held 16,099 16,068 16,044 16,212 16,215 16,351 16,495 16,496 16,621 16,843 21 Required 15,962 15,946 15,895 16,072 16,040 16,234 16,424 16,420 16,539 16,779 22 Excess 137 122 149 140 175 117 71 76 82 64 23 Borrowings2 489 846 668 520 528 577 847 847 615 514 Edge corporations 24 Reserves held n.a. n.a. n.a. n.a. n.a. n.a. 90 308 333 336 25 Required n.a. n.a. n.a. n.a. n.a. n.a. 72 287 302 314 26 Excess n.a. n.a. n.a. n.a. n.a. n.a. 18 21 31 22 U.S. agencies and branches 27 Reserves held n.a. n.a. n.a. n.a. n.a. n.a. n.a. 185 26 29 28 Required n.a. n.a. n.a. n.a. n.a. n.a. n.a. 181 20 25 29 Excess n.a. n.a. n.a. n.a. n.a. n.a. n.a. 4 6 4 Weekly averages of daily figures for week (in 1979 and 1980) ending Nov. 28P Dec. 5P Dec. 12 P Dec. 19 P Dec. 26P Jan. IP Jan. 9P Jan. 16 P Jan. 23P Jan. 30P All member banks Reserves 30 At Federal Reserve Banks 32,341 32,436 31,752 32,314 32,908 33,177 33,264 32,862 32,671 32,242 31 Currency and coin 10,542 11,038 11,772 11,341 10,984 11,429 11,359 13,506 12,482 12,251 32 Total held1 43,022 43,614 43,668 43,816 44,056 44,767 44,807 46,539 45,325 44,665 33 Required 42,887 43,379 43,082 43,697 43,560 44,217 44,568 45,988 45,082 44,386 34 Excess1 135 235 586 119 496 550 239 551 243 279 Borrowings at Reserve Banks2 35 Total 2,021 1,819 1,291 1,684 1,224 1,431 732 1,226 1,197 1,821 36 Seasonal 136 100 80 83 80 64 61 74 78 87 Large banks in New York City 37 Reserves held 6,669 7,275 7,082 7,439 7,056 7,547 7,383 8,346 7,693 7,546 38 Required 6,779 7,271 7,290 7,506 7,138 7,464 7,752 8,329 7,651 7,469 39 Excess . -80 4 -208 -67 -82 83 -369 17 42 77 40 Borrowings2 239 136 12 90 129 33 46 0 0 Large banks in Chicago 41 Reserves held 1,875 1,940 1,843 1,967 1,953 2,131 1,967 2,143 2,002 2,093 42 Required 1,960 2,005 1,884 2,054 2,015 2,066 2,089 2,102 2,045 2,009 43 Excess -85 -65 -41 -87 -62 65 -122 41 -43 84 44 Borrowings2 424 69 178 74 21 111 0 0 0 236 Other large banks 45 Reserves held 16,969 16,946 17,181 16,980 17,630 17,365 17,497 18,202 17,881 17,723 46 Required 17,197 17,261 17,245 17,357 17,414 17,603 17,769 18,298 18,134 17,849 47 Excess -228 -315 -64 -377 216 -238 -272 -96 -253 -126 48 Borrowings2 601 814 584 990 464 663 318 756 650 883 All other banks 49 Reserves held 16,567 16,627 16,301 16,563 16,834 16,873 16,619 17,003 16,883 16,851 50 Required 16,565 16,518 16,342 16,471 16,676 16,739 16,598 16,866 16,936 16,774 51 Excess 2 109 -41 92 158 134 21 137 -53 77 52 Borrowings2 757 800 529 608 649 528 381 424 547 702 Edge corporations 53 Reserves held 310 304 349 319 336 347 338 376 315 338 54 Required 298 286 298 302 307 315 329 367 281 277 55 Excess 12 18 51 17 29 32 9 9 34 61 U.S. agencies and branches 56 Reserves held 91 39 31 33 14 14 28 28 37 31 57 Required 88 38 23 7 10 30 31 26 35 8 58 Excess 3 1 8 26 4 -16 -3 2 2 23 1. Adjusted to include waivers of penalties for reserve deficiencies in accordance Reserve System. For weeks for which figures are preliminary, figures by class of with Board policy, effective Nov. 19, 1975, of permitting transitional relief on a bank do not add to total because adjusted data by class are not available. graduated basis over a 24-month period when a nonmember bank merged into an 2. Based on closing figures. Digitized for eFxRistAinSg EmRe mber bank, or when a nonmember bank joins the Federal http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic NonfinancialS tatistics • February 1980 1.13 FEDERAL FUNDS TRANSACTIONS Money Market Banks Millions of dollars, except as noted 1979, week ending Wednesday 1980, week ending Wednesday Type Dec. 5 Dec. 12 Dec. 19 Dec. 26 Jan. 2 Jan. 9 Jan. 16 Jan. 23 Jan. 30 Total, 46 banks Basic reserve position 1 Excess reserves1 46 77 32 186 324 -15 26 7755 6633 LESS: 2 Borrowings at Federal Reserve Banks 489 332 362 128 404 130 228899 118811 662244 3 Net interbank federal funds transactions 18,871 24,250 22,439 21,490 22,206 2244,,775599 2255,,771122 2244,,220099 2222,,775544 EQUALS: Net surplus, or deficit (-) 4 Amount -19,314 -24,504 -22,770 -21,433 -22,285 --2244,,990044 --2255,,997755 --2244,,331144 --2233,,331155 5 Percent of average required reserves 102.8 130.8 119.0 114.6 116.2 126.6 126.4 124.4 121.8 Interbank federal funds transactions Gross transactions 6 Purchases 27,432 31,488 29,642 28,792 31,238 32,300 32,694 31,086 29,442 8 7 Tw S o a - l w es a y transactions2 8 6 , , 5 1 6 1 1 3 6 7 , , 5 2 8 3 4 9 6 7 , , 6 20 3 3 3 7 7 , , 0 3 3 0 9 1 9 7 , , 0 6 3 7 2 2 6 7 , , 9 5 4 4 1 1 6 6 , , 9 7 8 8 2 2 6 55,, , 99 8 66 7 00 8 6 66 , ,, 6 3300 8 00 8 Net transactions 9 Purchases of net buying banks 21,318 24,904 23,009 21,753 23,567 25,359 25,912 25,127 23,142 10 Sales of net selling banks 2,448 655 599 262 1,360 559 200 918 388 Related transactions with U.S. government securities dealers 1 1 1 2 L B o o a rr n o s w t i o n g d s e a f l r e o r m s3 dealers4 2 2 , , 6 3 7 8 6 3 2 1 , , 3 5 2 1 2 5 2 1 , , 3 6 4 3 7 7 3 1 , , 0 7 3 3 6 2 2 2, , 7 5 4 6 4 3 2 1 , , 2 3 4 7 7 2 2 1 , , 5 7 6 5 2 4 2 1 , , 3 8 2 1 4 1 2 1 , , 2 9 6 9 1 8 13 Net loans 293 808 710 1,314 -181 875 807 513 -263 8 banks in New York City Basic reserve position 14 Excess reserves1 48 87 41 40 123 -43 53 4466 1155 LESS: 15 Borrowings at Federal Reserve Banks 71 0 0 83 129 33 3366 00 00 16 Net interbank federal funds transactions 3,598 6,890 4,849 4,617 5,592 66,,446600 66,,884466 66,,885555 55,,551166 EQUALS: Net surplus, or deficit (-) 17 Amount -3,621 -6,803 -4,807 -4,660 -5,958 --66,,553366 --66,,882299 --66,,880099 --55,,550011 18 Percent of average required reserves 55.5 103.7 71.0 72.8 88.6 93.2 90.6 98.3 81.7 Interbank federal funds transactions Gross transactions 19 Purchases 6,184 8,775 7,084 6,438 8,018 8,215 8,322 8,071 7,181 2 2 0 1 Tw S o a - l w es a y transactions2 2 1 , , 5 6 8 6 6 4 1 1 , , 8 8 8 8 5 5 2 2, , 0 2 1 3 4 6 1 1 , , 8 8 2 2 2 2 2 2 , , 0 0 6 6 6 6 1 1 , , 7 7 5 5 4 4 1 1 , , 4 4 7 7 6 6 1 11 , ,, 2 22 1 11 6 66 1 11 , ,, 6 66 6 66 5 66 Net transactions 22 Purchases of net buying banks 4,520 6,890 5,070 4,617 5,952 6,461 6,846 6,855 5,516 23 Sales of net selling banks 923 0 222 0 0 0 0 0 0 Related transactions with U.S. government securities dealers 2 2 4 5 L B o o a rr n o s w t i o n g d s e a f l r e o r m s3 dealers4 1,8 5 7 5 4 9 1,5 5 9 4 4 5 1,5 6 8 9 4 4 2,0 8 7 1 4 8 1,7 5 6 1 5 4 1,4 5 4 0 6 2 1,7 7 8 6 5 0 1,5 6 8 7 3 4 1,4 9 0 8 1 5 26 Net loans 1,315 1,049 890 1,256 1,251 944 1,025 909 415 38 banks outside New York City Basic reserve position 27 Excess reserves1 -2 -9 -9 146 201 28 --2277 2299 4477 LESS: 28 Borrowings at Federal Reserve Banks 418 332 362 45 275 97 225544 118811 662244 29 Net interbank federal funds transactions 15,274 17,360 17,591 16,874 16,254 18,299 1188,,886666 1177,,335533 1177,,223388 EQUALS: Net surplus, or deficit (-) 30 Amount -15,694 -17,701 - 17,963 -16,773 -16.328 - 18,368 --1199,,114466 --1177,,550055 --1177,,881155 31 Percent of average required reserves 127.8 145.3 145.4 136.4 131.1 145.2 147.2 138.6 143.5 Interbank federal funds transactions Gross transactions 32 Purchases 21,248 22,713 22,558 22,353 23,220 24,085 24,372 23,015 22,261 3 3 3 4 Tw S o a - l w es a y transactions2 4 5 , , 4 9 5 7 0 4 4 5 , , 6 3 9 5 9 4 4 4 , , 9 6 6 1 7 9 5 5 , , 4 2 8 1 0 7 6 5 , . 9 6 6 0 6 6 5 5 . , 1 7 8 8 7 6 5 55 , ,, 5 33 0 00 6 66 5 44 , ,, 6 77 6 44 2 33 5 44 ,,66 0 33 2 55 3 Net transactions 35 Purchases of net buying banks 16,798 18,014 17,399 17,136 17,615 18,899 19.066 18,272 17,626 36 Sales of net selling banks 1,525 655 348 262 1.360 599 200 918 388 Related transactions with U.S. government securities dealers 3 3 8 7 B Lo o a rr n o s w t i o n g d s e a f l r e o r m s3 dealers4 1,8 8 2 0 4 2 9 7 6 2 9 8 9 76 4 2 3 9 9 6 0 2 5 2.2 7 3 9 0 8 8 8 0 7 1 0 9 7 9 7 4 7 1,1 7 3 4 6 1 1,2 5 7 9 6 7 39 Net loans -1,021 -241 -180 57 -1,432 -69 -217 -396 -678 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Funds A7 1.13 Continued Millions of dollars, except as noted 1979, week ending Wednesday 1980, week ending Wednesday TTyyppee Dec. 5 Dec. 12 Dec. 19 Dec. 26 Jan. 2 Jan. 9 Jan. 16 Jan. 23 Jan. 30 5 banks in City of Chicago Basic reserve position 40 Excess reserves1 18 -1 -2 1 90 4 -18 0 1155 LESS: 41 Borrowings at Federal Reserve Banks 56 164 43 11 100 0 0 0 223366 42 Net interbank federal funds transactions 7,304 7,281 7,171 7,375 8,114 7,798 8,121 7,824 7,906 EQUALS: Net surplus, or deficit (-) 43 Amount -7,341 -7,446 -7,216 -7,385 -8,125 -7,795 -8,138 -7,824 -8,127 44 Percent of average required reserves 390.6 423.2 381.7 390.1 418.5 397.1 408.6 407.4 431.2 Interbank federal funds transactions Gross transactions 45 Purchases 8,373 8,460 8,272 8,652 9.356 15,028 9,521 9,108 9,102 46 Sales 1,069 1,179 1,101 1,277 1,242 4,528 1,400 1,284 1,196 47 Two-way transactions2 1,069 1,179 1,101 1,277 1,242 3,928 1,400 1,284 1,196 Net transactions 48 Purchases of net buying banks 7,034 7,281 7,171 7,375 8,114 11,100 8,121 7,824 7,906 49 Sales of net selling banks 0 0 0 0 0 599 0 0 0 Related transactions with U.S. government securities dealers 50 Loans to dealers3 181 145 89 187 123 678 136 138 110 51 Borrowings from dealers4 174 54 78 19 221 840 51 56 77 52 Net loans 7 91 11 168 -98 -162 85 82 32 33 other banks Basic reserve position 53 Excess reserves1 -20 -8 -7 145 111 25 -9 29 32 LESS: 54 Borrowings at Federal Reserve Banks 362 168 320 35 175 97 254 181 389 55 Net interbank federal funds transactions 7,970 10,079 10,420 9,499 8,140 10,501 10,745 9,529 9,332 EQUALS: Net surplus, or deficit (-) 56 Amount -8,352 -10,255 -10,747 -9,388 -8,203 -10,574 -11,008 -9,681 -9,688 57 Percent of average required reserves 80.3 98.4 102.7 90.2 78.0 98.9 100.0 90.4 92.0 Interbank federal funds transactions Gross transactions 58 Purchases 12,875 14,253 14,286 13,702 13,864 9,097 14,851 13,907 13,159 59 Sales 4,906 4,174 3,866 4,203 5,725 1,259 4,106 4,378 3,826 60 Two-way transactions2 3,381 3,519 3,518 3,940 4,364 1,259 3,906 3,459 3,439 Net transactions 61 Purchases of net buying banks 9,495 10,734 10,768 9,762 9,500 7,798 10,945 10,448 9,720 62 Sales of net selling banks 1,525 655 348 262 1,360 0 200 918 388 Related transactions with U.S. government securities dealers 63 Loans to dealers3 621 583 674 775 675 123 641 603 488 64 Borrowings from dealers4 1,650 915 865 886 2,009 31 944 1,081 1,198 65 Net loans -1,028 -332 -191 -111 -1,334 92 -303 -474 -711 1. Based on reserve balances, including adjustments to include waivers of pen- 4. Federal funds borrowed, net funds acquired from each dealer by clearing alties for reserve deficiencies in accordance with changes in policy of the Board banks, reverse repurchase agreements (sales of securities to dealers subject to of Governors effective Nov. 19, 1975. repurchase), resale agreements, and borrowings secured by U.S. government or 2. Derived from averages for individual banks for entire week. Figure for each other securities. bank indicates extent to which the bank's average purchases and sales are offsetting. NOTE. Weekly averages of daily figures. For description of series, see August 3. Federal funds loaned, net funds supplied to each dealer by clearing banks, 1964 BULLETIN, pp. 944-53. Back data for 46 banks appear in the Board's Annual repurchase agreements (purchase from dealers subject to resale), or other lending Statistical Digest, 1971-1975, table 3. arrangements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Nonfinancial Statistics • February 1980 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per annum Current and previous levels Loans to member banks FFFFeeeeddddeeeerrrraaaallll RRRReeeesssseeeerrrrvvvveeee UUnnddeerr sseeeess.. 1133 aanndd 1133aa33 Under sec. 10(b)' uuunnnddd LLL eee ooo rrr aaa nnn ssseee sss ccc ttt ... ooo 111 aaa 333 lll ,,, lll lll ooo aaa ttt sss hhh ttt eee ppp rrrsss aaa rrr...222 BBBBaaaannnnkkkk Regular rate Special rate4 Rate on Effective Previous Rate on Effective Previous Rate on Effective Previous Rate on Effective Previous 1/31/80 date rate 1/31/80 date rate 1/31/80 date rate 1/31/80 date rate C A B N P R h l o i e t e c l i w s a l v h t a n o e m d t n l Y a e a o l n o n p d r d h k i a 1 1 1 1 1 1 2 2 2 2 2 2 1 1 1 1 1 1 0 0 0 0 0 0 / / / / / / 8 8 1 8 9 8 / / 0 / / / 7 7 7 7 7 /7 9 9 9 9 9 9 1 1 1 1 1 1 1 1 1 1 1 1 l \ \ i \ 1 2 2 2 2 2 k 2 > V V V V V i i i i i 1 1 1 1 1 1 0 0 0 0 0 0 / / / / / / 8 1 8 8 9 8 / 0 / / / / 7 7 7 7 7 /7 9 9 9 9 9 9 U U \ I 1 1 \ 1 1 V V V V V V / i 2 i i i z 1 1 1 1 1 1 3 3 3 3 3 3 1 1 1 1 1 1 0 0 0 0 0 0 / / / / / / 8 8 8 1 9 8 / / / 0 / / 7 7 7 7 7 /7 9 9 9 9 9 9 1 1 1 1 1 1 2 2 2 2 2 2 1 1 1 1 1 1 5 5 5 5 5 5 1 1 1 1 1 1 0 0 0 0 0 0 / / / / / / 8 1 8 8 9 8 / 0 / / / / 7 7 7 7 7 /7 9 9 9 9 9 9 1 1 1 1 1 1 4 4 4 4 4 4 S C S D K M t a h a a . i n i n n l c l L s n a a F a e s o g s r a u o a p i n C s o c i l i t i s y s c o 1 1 1 1 1 1 2 2 2 2 2 2 1 1 1 1 1 1 0 0 0 0 0 0 / / / / / / 8 9 8 9 8 9 / / / / / / 7 7 7 7 7 7 9 9 9 9 9 9 1 1 1 1 1 1 1 1 1 1 1 1 \ \ \ \ 1 \ 2 2 2 2 2 2 V V Y V V V i i i i i i 1 1 1 1 1 1 0 0 0 0 0 0 / / / / / / 8 9 9 8 8 9 / / / / / / 7 7 7 7 7 7 9 9 9 9 9 9 l \ 1 \ U 1 l \ \ l 1 1 / V V 2V V '/ 2 l i i i 1 1 1 1 1 1 3 3 3 3 3 3 1 1 1 1 1 1 0 0 0 0 0 0 / / / / / / 8 9 9 8 8 9 / / / / / / 7 7 7 7 7 7 9 9 9 9 9 9 1 1 1 1 1 1 2 2 2 2 2 2 1 1 1 1 1 1 5 5 5 5 5 5 1 1 1 1 1 1 0 0 0 0 0 0 / / / / / / 9 9 8 8 9 8 / / / / / / 7 7 7 7 7 7 9 9 9 9 9 9 1 1 1 1 1 1 4 4 4 4 4 4 Range of rates in recent years5 Range F.R. Range F.R. Range F.R. (or Bank (or Bank (or Bank Effective date level)— of Effective d< level)— of Effective date level)— of All F.R. N.Y. All F.R. N.Y. All F.R. N.Y. Banks Banks Banks In effect Dec. 31, 1970 5^ 5Vi 1973— July 2 7 7 11997777—— AAuugg.. 30 5l/4-53/4 51/4 AAuugg.. 14 1-1 Vi IVi 31 5!/4-53/4 53/4 1971— Jan. 8 5V*-5Vi 5^4 23 IVI IVi Sept. 2 53/4 5^4 15 5V4 5Va Oct. 26 6 6 19 5-51/4 5Vi 1974— AApprr.. 25 IV1-8 8 22 5-51/4 5 30 8 8 1978— Jan. 9 6-6 Vi 6V2 Feb. 2 1 9 3 43 5 /4 -5 5 5 Dec. 1 9 6 73 7 /4 3 - / 8 4 7 73 3 / / 4 4 MMaayy 2 1 0 1 bV 6 b - V 1 i 1 6 Vi July 1 1 6 9 43 4 /4 ^/ - 4 5 5 43 /4 1975— Jan. 6 71/4—7^/4 73/4 JJuullyy 1 3 2 1 1 -1 VI 1 7V 4 23 5 5 10 IV^V/A 71/4 10 m 71/4 D N e o c v . . 1 1 1 1 3 9 1 7 4 4 4V ^ 3 4 / - 4 2 4 3 - - 3 / 4 5 / 4 4 3 /4 5 4 4 \V 3 3 i / / 4 4 M Fe a b r . . 2 1 5 7 4 0 6 6V 3 6 m / 4 4 3 - ~ 6 /4 7 3/ !/ 4 4 6 6 6 7 V 1 3 3 / / / 4 4 4 4 S O A e c u p t g . t . . 2 2 2 1 2 1 0 6 8 8 8 7 h - 3 8 / 4 V i 8 S 8 7 V V 3/ i i 4 24 4Vi 4 Vi 14 61/4 61/4 Nov. 1 81^-9 Vi 9 Vi May 16 6-61/4 6 3 9Vi 9V2 1973— Jan. 15 5 5 23 6 6 Feb. 26 5-5 Vi 5Vi 1979— July 20 10 10 A M M p a a r y r . . 23 4 2 5 k 5 5 z Y 3 - / 5 i 4 3 /4 5 5 5 V V 3/ i i 4 1976— J N a o n v . . 2 2 1 3 2 9 5 5 1 1 / 5 / 2 4 h - -5 6 Vi 5 5 5 V W Y i i SS AA ee uu pp gg tt .. .. 2 1 1 0 9 7 1 1 0 0 ^ 1 - - 0 1 1 0 V 1 i V i 1 1 1 1 0 0 V V i i 11 53/+-6 6 26 5^4 5^4 21 11 11 June 1 1 1 1 8 5 6 6 6 - V 6 i V i 6 6 6 V V 2 2 Oct. 1 8 0 1 1 1 2 - 12 1 1 2 2 In effect Jan. 31, 1980 12 12 1. Advances secured to the satisfaction of the Federal Reserve Bank. Advances U.S. government obligations or any other obligations eligible for Federal Reserve secured by mortgages on 1- to 4-family residential property are made at the section Bank purchase. 13 rate. 4. Applicable to special advances described in section 201.2(e)(2) of Regulation 2. Advances to individuals, partnerships, or corporations other than member A. banks secured by direct obligations of, or obligations fully guaranteed as to prin- 5. Rates under sees. 13 and 13a (as described above). For description and earlier cipal and interest by, the U.S. government or any agency thereof. data, see the following publications of the Board of Governors: Banking and 3. Discounts or eligible paper and advances secured by such paper or by Monetary Statistics, 1914-1941 and 1941-1970; Annual Statistical Digest, 1971- 1975, 1972-1976, and 1973-1977. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A9 1.15 MEMBER BANK RESERVE REQUIREMENTS1 Percent of deposits Requirements in effect Previous requirements Type of deposit, and deposit interval January 31, 1979 in millions of dollars Effective date Percent Effective date Net demand2 iVi 0-2 7 12/30/76 2/13/75 2-10 9 Vi 12/30/76 10 2/13/75 10-100 113/4 12/30/76 12 2/13/75 100-400 123/4 12/30/76 13 2/13/75 Over 400 16V4 12/30/76 16 Vi 2/13/75 Time and savings2'3-4 Savings 3 Vi Time5 0-5, by maturity 30-179 days 32 Vi 3/16/67 3 Vi 3/2/67 180 days to 4 years 1/8/76 3 3/16/67 4 years or more .... 1 10/30/75 3 3/16/67 Over 5, by maturity 30-179 days 6 12/12/74 10/1/70 180 days to 4 years 1/8/76 12/12/74 4 years or more .... 1 10/30/75 12/12/74 Legal limits Minimum Net demand Reserve city banks 10 22 Other banks 7 14 Time 3 10 Borrowings from foreign banks 0 22 1. For changes in reserve requirements beginning 1963, see Board's Annual (d) Effective with the reserve computation period beginning Nov. 16, 1978, Statistical Digest, 1971-1975 and for prior changes, see Board's Annual Report for domestic deposits of Edge corporations are subject to the same reserve require- 1976, table 13. ments as deposits of member banks. 2. (a) Requirement schedules are graduated, and each deposit interval applies 3. Negotiable order of withdrawal (NOW) accounts and time deposits such as to that part of the deposits of each bank. Demand deposits subject to reserve Christmas and vacation club accounts are subject to the same requirements as requirements are gross demand deposits minus cash items in process of collection savings deposits. ana demand balances due from domestic banks. 4. The average reserve requirement on savings and other time deposits must be (b) The Federal Reserve Act specifies different ranges of requirements for at least 3 percent, the minimum specified by law. reserve city banks and for other banks. Reserve cities are designated under a 5. Effective Nov. 2, 1978, a supplementary reserve requirement of 2 percent criterion adopted effective Nov. 9, 1972, by which a bank having net demand was imposed on large time deposits of $100,000 or more, obligations of affiliates, deposits of more than $400 million is considered to have the character of business and ineligible acceptances. of a reserve city bank. The presence of the head office of such a bank constitutes Effective with the reserve maintenance period beginning Oct. 25, 1979, a mardesignation of that place as a reserve city. Cities in which there are Federal Reserve ginal reserve requirement of 8 percent was added to managed liabilities in excess Banks or branches are also reserve cities. Any banks having net demand deposits of a base amount. Managed liabilities are defined as large time deposits. Eurodollar of $400 million or less are considered to have the character of business of banks borrowings, repurchase agreements against U.S. government and federal agency outside of reserve cities and are permitted to maintain reserves at ratios set for securities, federal funds borrowings from nonmember institutions, and certain banks not in reserve cities. For details, see the Board's Regulation D. other obligations. In general, the base for the marginal reserve requirement is (c) Effective Aug. 24, 1978, the Regulation M reserve requirements on net $100 million or the average amount of the managed liabilities held by a member balances due from domestic banks to their foreign branches and on deposits that bank. Edge corporation, or family of U.S. branches and agencies of a foreign bank foreign branches lend to U.S residents were reduced to zero from 4 percent and for the two statement weeks ending Sept. 26, 1979. 1 percent, respectively. The Regulation D reserve requirement on borrowings from unrelated banks abroad was also reduced to zero from 4 percent. NOTE. Required reserves must be held in the form of deposits with Federal Reserve banks or vault cash. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Nonfinancial Statistics • February 1980 1.16 MAXIMUM INTEREST RATES PAYABLE on Time and Savings Deposits at Federally Insured Institutions Percent per annum Commerical banks Savings and loan associations and mutual savings banks Type and maturity of deposit In effect Jan. 31, 1980 Previous maximum In effect Jan. 31, 1980 Previous maximum Percent Effective Effective Effective Effective date date date date 5VA 1 Savings 7/1/79 7/1/79 5VA 2 Negotiable order of withdrawal accounts 2 5 1/1/74 (3) 1/1/74 (3) Time accounts 4 Fixed ceiling rates by maturity 3 4 9 3 0 0 d 89 a ys d a t y o s 1 year 5 5k V4 > 9 7 / / 1 1 / / 7 7 9 3 5 5 7 ( /51 ) / 73 53/46 (') (3) 5 VA 1/21/70 5 6 7 2 2 1 V t t 2 o o t 2 o 2 y Y 4 e i a r y y s e e a a 6. r r s s 6 6 6V1 7 7 / / 1 1 / / 7 7 3 3 5 5 3 3 / / 4 4 1 1 1 / / / 2 2 2 1 1 1 / / / 7 7 7 0 0 0 6 63 / V 4 i ( 0 ') ) 6 6 5 3/4 1 1 1 / / / 2 2 2 1 1 1 / / / 7 7 7 0 0 0 1 9 8 0 8 6 4 y t t o o e a 8 6 rs y y o e e r a a r r m s s o 7 7 re 7 I I 7 V V 3 A / I 4 12 1 6 / 1 2 / / 1 3 1 / / / 7 7 7 4 8 3 ( (3 8 ) ) I7 V A 11/1/73 71 Y -y i 4 12 1 6 / 1 2 / / 1 3 1 / / / 7 7 7 4 8 3 ( ( 8 3I ) )VI , 11/1/73 11 Issued to governmental units (all maturities) 6/1/78 73/4 12/23/74 6/1/78 73/4 12 Individual retirement accounts and Keogh (H.R. 10) plans (3 years or more)9 6/1/78 73/4 7/6/77 6/1/78 73/4 7/6/77 Special variable ceiling rates by maturity 13 6 months money market time deposits)10 (n) 14 4 years or more M W 1. July 1, 1973, for mutual savings bank; July 6, 1973 for savings and loan 11. Commercial banks, savings and loan associations, and mutual savings banks associations. were authorized to offer money market time deposits effective June 1, 1978. The 2. For authorized states only. Federally insured commercial banks, savings and ceiling rate for commercial banks is the discount rate on most recently issued 6loan associations, cooperative banks, and mutual savings banks in Massachusetts month U.S. Treasury bills. Until Mar. 15, 1979, the ceiling rate for savings and and New Hampshire were first permitted to offer negotiable order of withdrawal loan associations and mutual savings banks was VA percentage point higher than (NOW) accounts on Jan. 1, 1974. Authorization to issue NOW accounts was the rate for commercial banks. Beginning Mar. 15, 1979, the VA percentage point extended to similar institutions throughout New England on Feb. 27, 1976, and interest differential is removed when the 6-month Treasury bill rate is 9 percent in New York State on Nov. 10, 1978. or more. The full differential is in effect when the 6-month bill rate is 83/4 percent 3. No separate account category. or less. Thrift institutions may pay a maximum 9 percent when the 6-month bill 4. For exceptions with respect to certain foreign time deposits see the FEDERAL rate is between 83/4 and 9 percent. Also effective March 15, 1979 interest com- RESERVE BULLETIN for October 1962 (p. 1279), August 1965 (p. 1094), and Feb- pounding was prohibited on money market time deposits at all offering institutions. ruary 1968 (p. 167). For both commerical banks and thrift institutions, the maximum allowable rates 5. Multiple maturity: July 20, 1966; single maturity: September 26, 1966. in January were as follows: Jan. 3, 11.93; Jan. 10, 11.73; Jan. 17, 11.77; Jan. 24, 6. No minimum denomination. Until July 1, 1979, a minimum of $1,000 was 11.88; Jan. 31, 11.96. required for savings and loan associations, except in areas where mutual savings 12. Effective Jan. 1, 1980, commerical banks, savings and loan associations, and banks permitted lower minimum denominations. This restriction was removed for mutual savings banks are authorized to offer variable ceiling accounts with no deposits maturing in less than 1 year, effective Nov. 1, 1973. required minimum denomination and with maturities of 2VI years or more. The 7. No minimum denomination. Until July 1, 1979, minimum denomination ws maximum rate for commercial banks is 13/A percentage points below the yield on $1,000 except for deposits representing funds contributed to an Individual Retire- 2VI year U.S. Treasury securities; the ceiling rate for thrift institutions is VA perment Account (IRA) or a Keogh (H.R. 10) Plan established pursuant to the centage point higher than that for commercial banks. In January, the ceiling at Internal Revenue Code. The $1,000 minimum requirement was removed for such commercial banks was 10.15 percent, and the ceiling at thrift institutions was 10.4 accounts in December 1975 and November 1976, respectively. percent. 8. Between July 1, 1973, and Oct. 31, 1973, there was no ceiling for certificates 13. Between July 1, 1979, and Dec. 31, 1979, commercial banks, savings and maturing in 4 years or more with minimum denominations of $1,000; however, loan associations, and mutual savings banks were authorized to offer variable the amount of such certificates that an institution could issue was limited to 5 ceiling accounts with no required minimum denomination and with maturities of percent of its total time and savings deposits. Sales in excess of that amount, as 4 years or more. The maximum rate for commercial banks was WA percentage well as certificates of less than $1,000, were limited to the 6V2 percent ceiling on points below the yield on 4-year U.S. Treasury securities; the ceiling rate for thrift time deposits maturing in 2Vi years or more. institutions is VA percentage point higher than that for commerical banks. Effective Nov. 1, 1973, ceilings wre reimposed on certificates maturing in 4 years NOTE: Maximum rates that can be paid by federally insured commercial banks, or more with minimum denomination of $1,000. There is no limitation on the mutual savings banks, and savings and loan associations are established by the amount of these certificates that banks can issue. Board of Governors of the Federal Reserve System, the Board of Directors of the 9. Accounts maturing in less than 3 years subject to regular ceilings. Federal Deposit Insurance Corporation, and the Federal Home Loan Bank Board 10. Must have a maturity of exactly 26 weeks and a minimum denomination of under the provisions of 12 CFR 217, 329, and 526, respectively. The maximum $10,000, and must be nonnegotiable. rates on time deposits in denominations of $100,000 or more with maturities of 30-89 days were suspended in June 1970; such deposits maturing in 90 days or more were suspended in May 1973. For information regarding previous interest rate ceilings on all types of accounts, see earlier issues of the interest rate ceilings on all types of accounts, see earlier issues of the FEDERAL RESERVE BULLETIN, the Federal Home Loan Bank Board Journal and the Annual Report of the Federal Deposit Insurance Corporation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments All 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS Millions of dollars 1979 TTyyppee ooff ttrraannssaaccttiioonn 11997777 11997788 11997799 June July Aug. Sept. Oct. Nov. Dec. U.S. GOVERNMENT SECURITIES Outright transactions (excluding matched salepurchase transactions) Treasury bills 1 Gross purchases 13,738 16,628 17,930 i 518 2,252 2,351 1,692 1,528' 2,752 2,464 2 Gross sales 7,241 13,725 7,480 623 0 380 353 780 154 378 3 Redemptions 2,136 2,033 4,208 1 0 0 0 200 968' 300 0 Others within 1 year2 4 Gross purchases 3,017 1,184 3,203 42 218 57 120 28 0 90 5 Gross sales 0 0 0 0 0 0 0 0 0 0 6 Exchange, or maturity shift 4,499 -5,170 7,499 1,152 33 1,526 876 -116 -937 -155 7 Redemptions 2,500 0 3,908 1 0 0 0 0 668' 0 0 1 to 5 years 8 Gross purchases 2,833 4,188 3,456 1 0 237 699 354 703' 0 398 9 Gross sales 0 0 0 0 0 0 0 0 0 0 10 Exchange, or maturity shift -6,649 -178 -6,653 -1,152 -33 -1,591 -876 116 222 155 5 to 10 years 11 Gross purchases 758 1,526 523 0 96 140 73 0 0 81 12 Gross sales 0 0 0 0 0 0 0 0 0 0 13 Exchange, or maturity shift 584 2,803 -2,465 0 0 -240 0 0 400 0 Over 10 years 14 Gross purchases 553 1,063 454 0 142 81 87 0 0 51 15 Gross sales 0 0 0 0 0 0 0 0 0 0 16 Exchange, or maturity shift 1,565 2,545 1,619 0 0 305 0 0 314 0 All maturities2 17 Gross purchases 20,898 24,591 25,565' 561 2,945 3,327 2,326 2,259' 2,752 3,084 18 Gross sales 7,241 13,725 7,480 623 0 380 353 780 154 378 19 Redemptions 4,636 2,033 8,116' 0 0 0 200 1,636' 300 0 Matched sale-purchase transactions 20 Gross sales 425,214 511,126 626,403 52,640 40,310 35,159 41,395 58,656 45,204 53,681 21 Gross purchases 423,841 510,854 623,245 52,949 40,300 35,480 41,583 58,671 45,979 49,738 Repurchase agreements 22 Gross purchases 178,683 151,618 107,374 15,531 18,464 10,539 10,850 10,599 4,303 7,251 23 Gross sales 180,535 152,436 107,291 12,226 19,690 12,226 10,380 11,336 3,869 6,643 24 Net change in U.S. government securities 5,798 7,743 6,896 3,552 1,708 1,582 2,431 -878 3,507 -629 FEDERAL AGENCY OBLIGATIONS Outright transactions 25 Gross purchases 1,433 301 853 371 482 0 0 0 0 0 26 Gross sales 0 173 399 0 0 0 0 0 0 0 27 Redemptions 223 235 134 33 0 * 18 3 * 5 Repurchase agreements 28 Gross purchases 13,811 40,567 37,321 4,443 7,247 4,057 5,016 5,146 1,992 2,383 29 Gross sales 13,638 40,885 36,960 3,617 7,434 4,544 4,069 6,188 1,075 2,863 30 Net change in federal agency obligations ' 1,383 -426 681 1,163 295 -487 928 -1,045 917 -485 BANKERS ACCEPTANCES 31 Outright transactions, net -196 0 0 0 0 0 0 0 0 0 32 Repurchase agreements, net 159 -366 116 1,400 -241 -684 578 -735 -48 434 33 Net change in bankers acceptances -37 -366 116 1,400 -241 -684 578 -735 -48 434 34 Total net change in System Open Market Account 7,143 6,951 7,693 6,115 1,761 412 3,937 -2,658 4,376 -679 1. In April 1979, the System acquired $640 million of 2-day cash management 2. Both gross purchases and redemptions include special certificates created bills in exchange for maturing 2-year notes. New 2-year notes were later obtained when the Treasury borrows directly from the Federal Reserve, as follows (millions in exchange for the maturing bills. In Oct. 1979, $668 million of maturing 2- and of dollars): Sept. 1977, 2,500; Mar. 1979, 2,600. 4- year notes were exchanged for a like amount of short-term bills, later exchanged for new 2- and 4-year notes. Each of these transactions is treated in the table as NOTE. Sales, redemptions, and negatfve figures reduce holdings of the System both a purchase and a redemption. Open Market Account; all other figures increase such holdings. Details may not add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 DomesticN onfinancial Statistics • February 1980 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements Millions of dollars Wednesday End of month Account 1980 1980 Jan. IP Jan. 9P Jan. 16P Jan. 23P Jan. 30? Jan .P Consolidated condition statement ASSETS 1 Gold certificate account 11,112 11,172 11,172 11,172 11,172 11,112 11,112 11,172 2 Special drawing rights certificate account 1,800 1,800 1,800 1,800 2,968 1,800 1,800 2,968 3 Coin 408 405 427 441 462 415 403 469 Loans 4 Member bank borrowings 2,060* 1,250 1,740 1,116 924 2,034 1,454 828 5 Other 0 0 0 0 0 0 0 0 Acceptances 6 Bought outright 0 0 0 0 0 0 0 0 7 Held under repurchase agreements 1,078 0 0 327 0 269 704 0 Federal agency obligations 8 Bought outright 8,216 8,216 8,216 8,216 8,216 8,221 8,216 8,216 9 Held under repurchase agreements 1,122 0 0 907 0 973 493 0 U.S. government securities Bought outright Bills 45,359 46,592 43,727 45,903 41,431 47,101 45,244 45,264 Certificates—Special 0 0 0 0 0 0 0 0 Notes 56,494 56,494 56,494 56,494 56,494 55,928 56,494 56,494 Bonds 14,553 14,553 14,553 14,553 14,553 14,499 14,553 14,553 Total1 116,406 117,639 114,774 116,950 112,478 117,528 116,291 116,311 Held under repurchase agreements 2,664 0 0 1,660 0 559 1,167 0 16 Total U.S. government securities . 119,070 117,639 114,774 118,610 112,478 118,087 117,458 116,311 17 Total loans and securities . 131,546 127,105 124,730 129,176 121,618 129,584 128,325 125,355 18 Cash items in process of collection 15,957 14,748 14,454 12,696 10,905 10,137 13,571 10,050 19 Bank premises 407 408 409 411 410 403 408 411 20 Denominated in foreign currencies2 . 2,483 2,310 2,338 2,276 2,376 2,607 2,483 2,192 21 All other 2,847 2,587 2,550 2,692 2,800 1,685 2,722 2,634 22 Total assets 166,560 160,535 157,880 160,664 152,711 157,743 160,824 155,251 LIABILITIES 23 Federal Reserve notes 113,477 112,155 110,845 109,681 109,095 109,908 113,355 108,927 Deposits Reserve accounts 24 Member banks 34,525 31,876 29,517 34,538 27,864 32,280 29,520 31,232 25 Edge Act Corporations 304 316 418 293 355 296 265 244 26 U.S. agencies and branches of foreign banks . 8 15 28 34 50 41 7 16 27 Total 34,837 32,207 29,963 34,865 28,269 32,617 29,792 31,492 28 U.S. Treasury—General account 3,961 3,472 3,468 3,309 3,051 2,590 4,075 2,931 29 Foreign—Official accounts 379 299 250 242 249 490 429 440 30 Other 1,821 324 307 357 261 352 1,412 339 31 Total deposits 40,998 36,302 33,988 38,773 31,830 36,049 35,708 35,202 32 Deferred availability cash items 7,180 7,171 8,061 6,865 6,437 6,408 6,804 5,440 33 Other liabilities and accrued dividends3 2,564 2,345 2,209 2,353 2,147 2,313 2,667 2,425 34 Total liabilities 164,219 157,973 155,103 157,672 149,509 154,678 158,534 151,994 CAPITAL ACCOUNTS 35 Capital paid in 1,146 1,146 1,150 1,152 1,153 1,142 1,145 1,153 36 Surplus 1,145 1,145 1,145 1,145 1,145 1,078 1,145 1,145 37 Other capital accounts 50 271 482 695 904 845 0 959 38 Total liabilities and capital accounts 166,560 160,535 157,880 160,664 152,711 157,743 160,824 155,251 39 MEMO: Marketable U.S. government securities held in custody for foreign and international account 80,963 80,715 79,426 80,192 80,799 74,403 80,828 81,039 Federal Reserve note statement 40 Federal Reserve notes outstanding (issued to Bank) 125,217 125,131 125,496 125,601 125,698 124,864 125,301 125,707 Collateral held against notes outstanding 41 Gold certificate account 11,112 11,172 11,172 11,172 11,172 11,112 11,112 11,172 42 Special Drawing Rights certificate account ... 1,800 1,800 1,800 1,800 2,968 1,800 1,800 2,968 43 Eligible paper 691 673 942 793 583 1,246 894 635 44 U.S. government and agency securities 111,614 111,486 111,582 111,836 110,975 110,706 111,495 110,932 45 Total collateral 125,217 125,131 125,496 125,601 125,698 124,864 125,301 125,707 1. Includes securities loaned—fully guaranteed by U.S. government securities 2. Beginning December 29, 1978, such assets are revalued monthly at market pledged with Federal Reserve Banks—and excludes (if any) securities sold and exchange rates. scheduled to be bought back under matched sale-purchase transactions. 3. Includes exchange-translation account reflecting, beginning December 29, 1978, the monthly revaluation at market exchange rates of foreign-exchange commitments. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Reserve Banks A13 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holdings Millions of dollars Wednesday End of month TTTyyypppeee aaannnddd mmmaaatttuuurrriiitttyyy 1980 1979 1980 Jan. 2 Jan. 9 Jan. 16 Jan. 23 Jan. 30 Nov. 30 Dec. 31 Jan. 31 1 Loans 2,060 1,250 1,718 1,116 924 2,034 1,453 828 2 -Within 15 days 2,027 1,219 1,510 1,096 873 1,894 1,441 813 3 16 days to 90 days 33 31 208 20 51 140 12 15 4 91 days to 1 year 0 0 0 0 0 0 0 0 5 Acceptances 1,078 0 0 327 0 269 704 0 6 Within 15 days 1,078 0 0 327 0 269 704 0 7 16 days to 90 days 0 0 0 0 0 0 0 0 8 91 days to 1 year 0 0 0 0 0 0 0 0 9 U.S. government securities 119.070 117,639 114,774 118,610 112,478 118,087 117,458 116,311 10 Within 15 days1 5,985 2,412 4,356 6,226 4,397 4,402 3,133 3,878 11 16 days to 90 days 24,337 25,750 21,524 23,399 20,336 24,787 23,708 22,815 12 91 days to 1 year 35,362 36,091 35,508 35,599 34,359 36,196 37,231 36,211 13 Over 1 year to 5 years 27,864 27,864 27,864 27,864 27,864 27,311 27,864 27,885 14 Over 5 years to 10 years 12,774 12,774 12,774 12,774 12,774 12,694 12,774 12,774 15 Over 10 years 12,748 12,748 12,748 12,748 12,748 12,697 12,748 12,748 16 Federal agency obligations 9,338 8,216 8,216 9,123 8,216 9,194 8,709 8,216 17 Within 15 days1 1,123 42 42 986 79 1,098 644 79 18 16 days to 90 days 558 516 579 546 546 420 457 546 19 91 days to 1 year 1,338 1,355 1,292 1,277 1,277 1,363 1,307 1,277 20 Over 1 year to 5 years 4,252 4,236 4,236 4,238 4,238 4,168 4,234 4,238 21 Over 5 years to 10 years 1,325 1,325 1,325 1,356 1,356 1,403 1,325 1,356 22 Over 10 years 742 742 742 720 720 742 742 720 1. Holdings under repurchase agreements are classified as maturing within 15 days in accordance with maximum maturity of the agreements. 1.20 BANK DEBITS AND DEPOSIT TURNOVER Debits are shown in billions of dollars, turnover as ratio of debits to deposit. Monthly data are at annual rates. 1979 BBaannkk ggrroouupp,, oorr ttyyppee 1976 1977 1978 ooff ccuussttoommeerr July Aug. Sept. Oct. Nov. Debits to demand deposits1 (seasonally adjusted) 1 All commercial banks 29,180.4 34,322.8 40,300.3 52,102.7 52,402.5 54,233.1 53,324.9 51,884.8 2 Major New York City banks 11,467.2 13,860.6 15,008.7 20,480.5 20,357.2 21,117.6 19.740.2 19,223.0 3 Other banks 17,713.2 20,462.2 25,291.6 31,622.2 32,045.3 33,115.5 33,584.7 32,661.9 Debits to savings deposits2 (not seasonally adjusted) 4 All customers 174.0 418.1 732.8 735.8 667.6 843.6 761.2 5 Business3 21.7 56.7 74.1 78.2 74.5 90.8 82.1 6 Others 152.3 361.4 658.8 657.6 593.1 752.8 679.0 Demand deposit turnover1 (seasonally adjusted) 7 All commercial banks 116.8 129.2 139.4 171.9 173.1 175.0 172.0 168.1 8 Major New York City banks 411.6 503.0 541.9 717.7 709.1 711.5 641.2 643.0 9 Other banks 79.8 85.9 96.7 115.2 116.9 118.2 120.2 117.2 Savings deposit turnover2 (not seasonally adjusted) 10 All customers 1.6 1.9 3.4 3.4 3.1 4.0 3.7 11 Business3 4.1 5.1 7.2 7.4 7.0 8.6 8.0 12 Others 1.5 1.7 3.2 3.2 2.9 3.8 3.5 1. Represents accounts of individuals, partnerships, and corporations, and of NOTE. Historical data—estimated for the period 1970 through June 1977, partly states and political subdivisions. on the basis of the debits series for 233 SMSAs, which were available through June 2. Excludes negotiable order of withdrawal (NOW) accounts and special club 1977—are available from Publications Services, Board of Governors of the Federal accounts, such as Christmas and vacation clubs. Reserve System, Washington, D.C. 20551. Debits and turnover data for savings 3. Represents corporations and other profit-seeking organizations (excluding deposits are not available prior to July 1977. commercial banks but including savings and loan associations, mutual savings banks, credit unions, the Export-Import Bank, and federally sponsored lending agencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • February 1980 1.21 MONEY STOCK MEASURES AND COMPONENTS Billions of dollars, averages of daily figures 1979 11997766 11997777 11997788 11997799 DDeecc.. DDeecc.. DDeecc.. DDeecc.. IIIttteeemmm July Aug. Sept. Oct. Nov. Dec. Seasonally adjusted MEASURES1 1 M-1A 305.0 328.4 351.6 371.5 363.2 365.4 367.5 368.0 369.6 371.5 2 M-1B 307.7 332.5 359.9 387.7 378.0 380.7 383.2 383.9 385.3 387.7 3 M-2 1,166.7 1,294.1 1,400.8 1,523.9 1,476.4 1,489.5 1,499.7 1,507.2 1,514.5 1,523.9 4 M-3 1,299.7 1,460.3 1,622.2 1.772.1 1,702.9 1,719.3 1,738.2 1,751.8 1,762.5 1,772.1 5 L2 1,523.5 1,715.5 1,926.3 n.a. 2,057.3 2,074.9 2,103.3 2,115.4 2,124.8 n.a. COMPONENTS 6 Currency 80.7 88.7 97.6 106.1 102.6 103.7 104.8 105.4 105.9 106.1 7 Demand deposits 224.4 239.7 253.9 265.4 260.6 261.7 262.7 262.6 263.7 265.4 8 Savings deposits 447.7 486.5 476.0 417.8 451.0 450.3 445.3 435.9 422.2 417.8 9 Small time deposits3 396.6 454.9 533.8 653.4 597.0 604.6 614.2 • 627.5 645.8 653.4 10 Large time deposits4 118.0 145.2 194.7 217.9 197.4 200.4 207.4 213.6 218.3 217.9 Not seasonally adjusted MEASURES1 11 M-1A 313.5 337.2 360.9 381.1 365.1 363.2 367.0 369.7 372.2 381.1 12 M-1B 316.1 341.3 369.3 397.3 379.9 378.6 382.7 385.5 387.9 397.3 13 M-2 1,169.1 1,295.9 1,402.9 1,526.0 1,482.1 1,486.8 1,498.2 1,507.1 1,509.9 1,526.0 14 M-3 1,303.8 1,464.5 1,627.8 1,777.6 1,706.1 1,716.3 1,736.1 1,752.4 1,759.1 1,777.6 15 L2 1,527.1 1,718.5 1,929.8 n.a. 2,059.2 2,071.0 2,094.6 2,113.6 2,123.8 n.a. COMPONENTS 16 Currency 82.1 90.3 99.4 108.0 103.2 103.9 104.5 105.2 106.6 108.0 17 Demand deposits 231.3 247.0 261.5 273.0 261.9 259.3 262.5 264.4 265.6 273.0 18 Other checkable deposits5 2.7 4.1 8.3 16.2 14.8 15.3 15.7 15.8 15.7 16.2 19 Overnight RPs and Eurodollars6 13.6 18.6 23.3 24.2 25.0 25.2 26.1 25.6 23.5 24.2 20 Money market mutual funds 3.4 3.8 10.3 43.6 28.0 31.2 33.7 36.9 40.4 43.6 21 Savings deposits 444.9 483.2 472.8 414.9 454.4 451.1 445.6 434.6 420.0 414.9 22 Small time deposits3 393.5 451.3 529.8 648.7 597.4 603.3 612.7 627.3 640.8 648.7 23 Large time deposits4 119.7 147.7 198.2 221.5 194.9 200.0 206.8 214.2 219.5 221.5 1. Composition of the money stock measures is as follows: 2. L: M-3 plus other liquid assets such as term Eurodollars held by U.S. residents M-1A: Averages of daily figures for (1) demand deposits at all commercial banks other than banks, bankers acceptances, commercial paper. Treasury bills and other other than those due to domestic banks, the U.S. government, and foreign banks liquid Treasury securities, and U.S. savings bonds. and official institutions less cash items in the process of collection and Federal 3. Small time deposits are those issued in amounts of less than $100,000. Reserve float; and (2) currency outside the Treasury, Federal Reserve banks, and 4. Large time deposits are those issued in amounts of $100,000 or more and are the vaults of commercial banks. net of the holdings of domestic banks, thrift institutions, the U.S. government, M-1B: M-1A plus NOW and ATS accounts at banks and thrift institutions, credit money market mutual funds, and foreign banks and official institutions. union share draft accounts, and demand deposits at mutual savings banks. 5. Includes ATS and NOW balances at all institutions, credit union share draft M-2: M-1B plus savings and small-denomination time deposits at all depositary balances, and demand deposits at mutual savings banks. institutions, overnight RPs at commercial banks, overnight Eurodollars held by 6. Overnight (and continuing contract) RPs are those issued by commercial U.S. residents other than banks at Caribbean branches of member banks, and banks to the nonbank public, and overnight Eurodollars are those issued by Carmoney market mutual fund shares. ibbean branches of member banks to U.S. nonbank customers. M-3: M-2 plus large-denomination time deposits at all depositary institutions NOTE. Latest monthly and weekly figures are available from the Board's and term RPs at commercial banks and savings and loan associations. H.6(508) release. Back data are available from the Banking Section, Division of Research and Statistics. NOTES TO TABLE 1.23: 1. Includes domestic chartered banks, U.S. branches, agencies, and New York 6. As of Dec. 31, 1978, commercial and industrial loans were reduced $0.1 investment company subsidiaries of foreign banks; and Edge Act corporations. billion as a result of reclassifications. 2. Excludes loans to commercial banks in the United States. 7. As of Dec. 31, 1978, nonbank financial loans were reduced $0.1 billion as 3. As of Dec. 31,1978, total loans and investments were reduced by $0.1 billion. the result of reclassifications. "Other securities" were increased by $1.5 billion and total loans were reduced by 8. Loans sold are those sold outright to a bank's own foreign branches, non- $1.6 billion largely as the result of reclassifications of certain tax-exempt obliga- consolidated nonbank affiliates of the bank, the bank's holding company (if not tions. Most of the loan reduction was in "all other loans." a bank), and nonconsolidated nonbank subsidiaries of the holding company. 4. As of Jan. 3,1979, as the result of reclassifications, total loans and investments 9. As of Dec. 31, 1978, commercial and industrial loans sold outright were and total loans were increased by $0.6 billion. Business loans were increased by increased $0.7 billion as the result of reclassifications, but $0.1 billion of this $0.4 billion and real estate loans by $0.5 billion. Nonbank financial loans were amount was offset by a balance sheet reduction of $0.1 billion as noted above. reduced by $0.3 billion. 10. United States includes the 50 states and the District of Columbia. 5. As of Dec. 31, 1977, as the result of loan reclassifications, business loans were reduced by $0.2 billion and nonbank financial loans by $0.1 billion; real NOTE. Data are prorated averages of Wednesday data for domestic chartered estate loans were increased by $0.3 billion. banks, and averages of current and previous month-end data for foreign-related institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Aggregates A15 1.22 AGGREGATE RESERVES AND DEPOSITS Member Banks Billions of dollars, averages of daily figures 1979 IItteemm DD 1199 ee 77 cc 66 .. DD 1199 ee 77 cc 77 .. DD 1199 ee 77 cc 88 .. Apr. May June July Aug. Sept. Oct. Nov. Seasonally adjusted 1 Reserves1 34.89 36.10 41.27 40.65 40.48 40.42 40.82 41.07 41.46 42.32 43.13 2 Nonborrowed 34.84 35.53 40.40 39.73 38.72 39.00 39.65 39.98 40.12 40.30 41.22 3 Required 34.61 35.91 41.04 40.47 40.34 40.20 40.61 40.85 41.27 42.04 42.88 4 Monetary base2 118.4 127.8 142.3 144.5 144.9 145.6 146.9 148.4 150.1 151.6 152.8 5 Deposits subject to reserve requirements3 528.6 568.6 616.7 618.6 613.9 613.1 618.7 623.7 630.5 639.0 644.1 6 Time and savings 354.1 386.7 429.4 432.0 428.7 425.9 429.4 434.4 439.8 445.6 451.8 Demand 7 Private 171.5 178.5 185.1 184.7 183.5 184.8 187.5 187.1 189.0 191.7 190.4 8 U.S. government 3.0 3.5 2.3 1.8 1.7 2.4 1.8 2.2 1.8 1.8 2.0 Not seasonally adjusted 9 Monetary base2 120.3 129.8 144.6 144.2 144.4 145.6 147.9 148.4 149.4 151.3 153.5 10 Deposits subject to reserve requirements3 534.8 575.3 624.0 621.1 610.9 613.9 619.2 620.4 629.0 638.6 642.2 11 Time and savings 353.6 386.4 429.6 432.3 429.8 427.2 429.8 434.1 439.4 445.7 449.7 Demand 12 Private 177.9 185.1 191.9 186.8 179.2 183.9 187.8 184.5 187.5 191:4 191.4 13 U.S. government 3.3 3.8 2.5 2.0 1.8 2.8 1.6 1.7 2.1 1.6 1.7 1. Series reflects actual reserve requirement percentages with no adjustment to 3. Includes total time and savings deposits and net demand deposits as defined eliminate the effect of changes in Regulations D and M. There are breaks in series by Regulation D. Private demand deposits include all demand deposits except because of changes in reserve requirements effective Jan. 8 and Dec. 30, 1976; those due to the U.S. government, less cash items in process of collection and and Nov. 2, 1978. In addition, effective Jan. 1, 1976, statewide branching in New demand balances due from domestic commercial banks. York was instituted. The subsequent merger of a number of banks raised required reserves because of higher reserve requirements on aggregate deposits at these NOTE. Back data and estimates of the impact on required reserves and changes banks. in reserve requirements are shown in table 14 of the Board's Annual Statistical 2. Includes total reserves (member bank reserve balances in the current week Digest, 1971-1975. Slus vault cash held two weeks earlier); currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of commercial banks; and vault cash of nonmember banks. 1.23 LOANS AND INVESTMENTS All Commercial Banks' Billions of dollars; averages of Wednesday figures 11997799 11997799 CCaatteeggoorryy D 19 e 7 c 7 . D 1199 e 77 c 88 . D 19 e 7 c 7 . D 19 e 7 c 8 . Oct.? Nov./7 Dec.P Oct.P NOV.P Dec .P Seasonally adjusted Not seasonally adjusted 1 Total loans and securities2 891.1 1,014.33 1,129.1 1,128.6 1,132.5 899.1 1,023.83 1,131.0 1,130.7 1,142.8 2 U.S. Treasury securities 99.5 93.4 95.3 94.3 93.8 100.7 94.6 93.2 93.3 95.0 3 Other securities 159.6 173.13 188.8 190.5 191.5 160.2 173.93 189.0 190.7 192.3 4 Total loans and leases2 632.1 747.83 845.0 843.8 847.2 638.3 755.43 848.8 846.7 855.7 5 Commercial and industrial loans 211.25 246.5 6 288.6 288.3 290.4 212.65 248.2 6 288.4 288.3 292.4 6 Real estate loans 175.2 5 210.5 237.1 239.7 242.4 175.5 5 210.9 238.3 240.9 242.9 7 Loans to individuals 138.2 164.9 181.3 182.3 182.9 139.0 165.9 183.3 183.7 184.0 8 Security loans 20.6 19.4 20.6 18.4 18.3 22.0 20.7 20.8 18.8 19.6 9 Loans to nonbank financial institutions .. 25.85 27.17 30.9 30.9 30.3 26.3 5 21.T1 31.0 31.0 30.8 10 Agricultural loans 25.8 28.2 30.0 29.4 31.0 25.7 28.1 30.3 29.5 30.8 11 Lease financing receivables 5.8 7.4 8.9 9.1 9.4 5.8 7.4 8.9 9.1 9.4 12 All other loans 29.5 43.63 47.5 45.7 42.3 31.5 46.63 47.7 45.4 45.7 MEMO: 13 Total loans and investments plus loans sold2-8 895.9 1,018.13 1,132.7 1,132.2 1,135.3 903.9 11,,002277..6633 1,134.6 1,134.3 1,145.6 14 Total loans plus loans sold2-8 636.9 751.63 848.6 847.4 849.9 643.0 759.23 852.4 850.3 858.4 15 Total loans sold to affiliates8 4.8 3.8 3.6 3.6 2.8 4.8 3.8 3.6 3.6 2.8 16 Commercial and industrial loans plus loans sold8 213.95 248.5 9 291.3 290.9 292.2 215.35 250.1 9 291.1 290.9 294.2 17 Commercial and industrial loans sold8 2.7 1.99 2.7 2.5 1.8 2.7 1.99 2.7 2.5 1.8 18 Acceptances held 7.5 6.8 8.0 7.9 8.5 8.6 7.5 7.9 8.2 9.4 19 Other commercial and industrial loans 203.7 5 239.7 280.6 280.4 282.0 203.9 s 240.9 280.6 280.1 283.0 20 To U.S. addressees10 193.85 226.6 261.1 261.2 263.2 193.7 5 226.5 261.3 260.7 263.2 21 To non-U.S. addressees 9.9 5 13.1 19.5 19.3 18.8 10.3 s 14.4 19.2 19.4 19.8 22 Loans to foreign banks 13.5 21.2 23.1 19.6 18.7 14.6 23.0 22.6 19.1 20.1 23 Loans to commercial banks in the United States 54.1 57.3 76.4 75.1 77.8 56.9 60.3 74.2 76.5 81.9 For notes see bottom of opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Nonfinancial Statistics • February 1980 1.24 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series Billions of dollars except for number of banks 1979 1980 AAccccoouunntt Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan. DOMESTICALLY CHARTERED COMMERCIAL BANKS1 1 Loans and investments 1,031.4 1,048.3 1,059.4 1,071.3 1,081.8 1,094.3 1,112.1 1,118.4 1,118.0 1,143.3 1,133.4 2 Loans, gross 759.8 773.9 785.3 797.9 807.6 819.4 833.8 839.0 836.7 860.1 849.7 3 Interbank 42.3 44.4 45.9 46.3 48.1 50.3 53.6 54.0 52.6 62.9 57.2 4 Commercial and industrial 227.8 233.0 236.4 240.5 242.0 244.1 249.4 249.8 248.0 253.4 252.6 5 Other 489.6 496.5 503.0 511.2 517.4 525.0 530.9 535.3 536.1 543.7 540.0 6 U.S. Treasury securities 93.6 94.2 93.2 91.6 92.1 90.6 91.9 91.5 92.1 92.5 92.4 7 Other securities 178.0 180.2 181.0 181.7 182.1 184.3 186.4 187.8 189.3 190.7 191.2 8 Cash assets, total 135.8 139.9 158.8 146.3 140.2 145.7 148.5 160.7 158.1 146.4 148.4 Y Currency and coin 15.2 15.6 16.0 16.3 16.1 16.8 16.7 16.6 18.2 17.9 17.3 10 Reserves with Federal Reserve Banks 30.0 33.9 32.8 32.6 29.6 33.7 31.6 34.1 34.7 28.4 28.3 11 Balances with depositary institutions 36.8 39.0 44.6 40.8 41.2 41.1 40.7 45.5 43.7 37.7 43.7 12 Cash items in process of collection ... 53.7 51.4 65.4 56.5 53.4 54.1 59.5 64.6 61.5 62.4 59.0 13 Other assets 58.9 55.8 52.7 55.1 53.9 53.8 57.5 57.8 59.3 61.2 63.1 14 Total assets/total liabilities and capital .. 1,226.1 1,244.0 1,270.9 1,272.7 1,275.9 1,293.8 1,318.2 1,336.9 1,335.4 1,351.0 1,344.9 15 Deposits 954.9 964.4 975.5 971.3 975.2 982.9 996.6 1,023.6 1,017.6 1,030.6 1,022.5 16 Demand 335.0 348.0 357.8 352.4 352.6 352.4 358.7 376.6 365.1 377.6 362.4 17 Savings 216.8 215.9 215.5 216.4 218.3 216.6 213.4 207.6 205.0 203.4 200.6 18 Time 403.0 400.5 402.3 402.5 404.2 413.8 424.5 439.4 447.4 449.7 459.6 19 Borrowings 115.2 123.5 132.0 137.1 137.2 140.1 147.0 137.4 135.6 140.5 143.1 20 Other liabilities 60.9 60.8 65.4 65.5 64.9 69.7 71.2 74.0 78.5 74.1 77.5 21 Residual (assets less liabilities) 95.1 95.3 98.1 98.9 98.7 101.1 103.3 101.9 103.7 105.8 101.8 MEMO: 22 U.S. Treasury note balances included in borrowing 4.8 5.9 4.9 12.9 11.9 8.6 17.8 8.4 5.0 12.8 15.0 23 Number of banks 14,597 14,610 14,616 14,620 14,584 14,607 14,616 14,605 14,608 14,610 14,594 ALL COMMERCIAL BANKING INSTITUTIONS2 24 Loans and investments 1,101.4 1,114.8 1,131.2 1,146.9 1,153.1 1,169.8 1,197.7 1,200.3 1,200.9 1,229.8 25 Loans, gross 827.2 837.7 854.2 870.7 876.2 892.1 915.9 917.6 916.2 943.1 26 Interbank 56.1 57.3 61.8 60.4 60.6 63.8 69.2 71.6 71.8 80.5 27 Commercial and industrial 259.8 264.7 268.8 274.6 276.9 280.5 288.1 288.3 287.9 295.0 28 Other 511.3 515.6 523.6 535.7 538.6 547.8 558.6 557.7 556.6 567.6 29 U.S. Treasury securities 94.9 95.6 94.6 93.1 93.5 91.9 93.5 93.1 93.7 94.5 30 Other securities 179.4 181.5 182.3 183.1 183.5 185.8 188.3 189.5 190.9 192.2 31 Cash assets, total 157.0 156.6 176.5 167.8 160.4 166.0 172.2 179.9 176.7 169.5 32 Currency and coin 15.2 15.6 16.1 16.3 16.1 16.8 16.7 16.6 18.2 17.9 33 Reserves with Federal Reserve Banks 30.7 34.6 33.5 33.4 30.4 34.5 32.5 34.9 35.6 29.0 34 Balances with depositary institutions 56.0 53.9 60.3 60.3 59.3 59.3 62.4 62.5 60.0 59.0 35 Csh items in process of collection .... 55.1 52.5 66.6 57.7 54.7 55.3 60.6 65.9 62.9 63.7 36 Other assets 74.1 70.8 67.7 71.4 69.7 70.9 76.7 76.5 78.5 81.0 37 Total assets/total liabilities and capital .. 1,332.5 1,342.1 1,375.5 1,386.1 1,383.2 1,406.7 1,446.5 1,456.7 1,456.1 1,480.3 n.a. 38 Deposits 994.0 997.4 1,013.2 1,015.6 1,012.3 1,020.9 1,043.6 1,062.6 1,058.5 1,076.3 39 Demand 355.7 362.0 375.8 376.4 369.7 369.1 383.2 394.2 384.9 400.5 40 Savings 218.0 216.9 216.7 217.2 219.1 217.6 214.2 208.3 205.9 204.3 41 Time 420.3 418.5 420.7 422.0 432.5 434.2 446.2 460.1 467.7 471.5 42 Borrowings 141.7 150.5 159.5 165.4 165.8 169.5 182.1 171.6 169.5 180.5 43 Other liabilities 99.8 97.1 102.8 104.2 104.4 113.1 115.2 118.5 122.2 115.4 44 Residual (assets less liabilities) 97.1 97.2 100.0 100.9 100.8 103.2 105.6 104.0 105.8 108.1 MEMO: 45 U.S. Treasury note balances included in borrowing 4.8 5.9 4.9 12.9 11.9 8.6 17.8 8.4 5.0 12.8 46 Number of banks 14,930 14,946 14,954 14,968 14,933 14,960 14,972 14,963 14,969 14,975 1. Domestically chartered commercial banks include all commercial banks in the NOTE. Figures are partly estimated. They include all bank-premises subsidiaries United States except branches of foreign banks; included are member and non- and other significant majority-owned domestic subsidiaries. Data for domestically member banks, stock savings banks, and nondeposit trust companies. chartered commercial banks are for the last Wednesday of the month; data for 2. Commercial banking institutions include domestically chartered commercial other banking institutions are for last Wednesday except at end of quarter, when banks, branches and agencies of foreign banks, Edge Act and Agreement cor- they are for the last day of the month. porations, and New York state foreign investment corporations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A17 1.25 COMMERCIAL BANK ASSETS AND LIABILITIES Call-Date Series Millions of dollars, except for number of banks 1976 1977 1978 1976 1977 1978 Account Dec. 31 June 30 Dec. 31 June 30 Dec. 31 June 30 Dec. 31 June 30 Total insured National (all insured) 1 Loans and investments, gross 827,696 854,733 914,779 956,431 476,610 488,240 523,000 542,218 Loans 2 Gross 578,734 601,122 657,509 695,443 340,691 351,311 384,722 403,812 3 Net 560,077 581,143 636,318 672,207 329,971 339,955 372,702 390,630 Investments 4 U.S. Treasury securities 101,461 100,568 99,333 97,001 55,727 53,345 52,244 50,519 5 Other 147,500 153,042 157,936 163,986 80,191 80,583 86,033 87,886 6 Cash assets 129,562 130,726 159,264 157,393 76,072 74,641 92,050 90,728 7 Total assets/total liabilities1 1,003,970 1,040,945 1,129,712 1,172,772 583.304 599,743 651,360 671,166 8 Deposits 825,003 847,372 922,657 945,874 469,377 476,381 520,167 526,932 Demand 9 U.S. government 3,022 2,817 7,310 7,956 1,676 1,632 4,172 4,483 10 Interbank 44,064 44,965 49,843 47,203 23,149 22,876 25,646 22,416 11 Other 285,200 284,544 319,873 312,707 163,346 161,358 181,821 176,025 Time and savings 12 Interbank 8,248 7,721 8,731 8,987 4,907 4,599 5,730 5,791 13 Other 484,467 507,324 536,899 569,020 276,296 285,915 302,795 318,215 14 Borrowings 75,291 81,137 89,339 98,351 54,421 57,283 63,218 68,948 15 Total capital accounts 75,061 75,502 79,082 83,074 41,319 43,142 44,994 47,019 16 MEMO: Number of banks 14,397 14,425 14,397 14,381 4,735 4,701 4,654 4,616 State member (all insured) Insured nonmember 17 Loans and investment, gross 144,000 144,597 152,514 157,464 207,085 221,896 239,265 256,749 Loans 102,277 102,117 110,243 115,736 135,766 147,694 162,543 175,894 19 Net 99,474 99,173 107,205 112,470 130,630 142,015 156,411 169,106 Investments 20 U.S. Treasury securities 18,849 19,296 18,179 16,886 26,884 27,926 28,909 29,595 21 Other 22,874 23,183 24,091 24,841 44,434 46,275 47,812 51,259 22 Cash assets 32,859 35,918 42,305 43,057 20,631 20,166 24,908 23,606 23 Total assets/total liabilities1 189,579 195,452 210,442 217,384 231,086 245,748 267,910 284,221 24 Deposits 149,491 152,472 163,436 167,403 206,134 218,519 239,053 251,539 Demand 25 U.S. government 429 371 1,241 1,158 917 813 1,896 2,315 26 Interbank 19,295 20,568 22,346 23,117 1,619 1,520 1,849 1,669 27 Other 52,204 52,570 57,605 55,550 69,648 70,615 80,445 81,131 Time and savings 28 Interbank 2,384 2,134 2,026 2,275 956 988 973 992200 29 Other 75,178 76,827 80,216 85,301 132,993 144,581 153,887 165,502 30 Borrowings 17,310 19,697 21,736 23,167 3,559 4,155 4,384 6,235 31 Total capital accounts 13,199 13,441 14,182 14,670 17,542 18,919 19,905 21,384 32 MEMO: Number of banks 1,023 1,019 1,014 1,005 8,639 8,705 8,729 8,760 Noninsured nonmember Total nonmember 33 Loans and investments, gross 18,819 22,940 24,415 28,699 225,904 244,837 263,681 285,448 Loans 16,336 20,865 22,686 26,747 152,103 168,559 185,230 202,641 35 Net 16,209 20,679 22,484 26,548 146,840 162,694 178,896 195,655 Investments 36 U.S. Treasury securities 1,054 993 879 869 27,938 28,919 29.788 30,465 37 Other 1,428 1,081 849 1,082 45,863 47,357 48,662 52,341 38 Cash assets 6,496 8,330 9,458 9,360 27,127 28,497 34,367 32,967 39 Total assets/total liabilities1 26,790 33,390 36,433 42,279 257,877 279,139 304,343 326,501 40 Deposits 13,325 14,658 16,844 19,924 219,460 233,177 255,898 271,463 Demand 41 U.S. government 4 8 10 8 921 822 1,907 2,323 42 Interbank 1,277 1,504 1,868 2,067 2,8% 3,025 3,718 3,736 43 Other 3,236 3,588 4,073 4,814 72,884 74,203 84,518 85,946 Time and savings 1,041 1,164 1,089 1,203 1,997 2,152 2,063 22,,112233 45 Other 7,766 8,392 9,802 11,831 140,760 152,974 163,690 177,334 4,842 7,056 6,908 8,413 8,401 11,212 11,293 14,649 47 Total capital accounts 818 893 917 962 18,360 19,812 20,823 22,346 48 MEMO: Number of banks 275 293 310 317 8,914 8,998 9,039 9,077 1. Includes items not shown separately. For Note see table 1.24 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Nonfinancial Statistics • February 1980 1.26 COMMERCIAL BANK ASSETS AND LIABILITIES Detailed Balance Sheet, September 30, 1978 Millions of dollars, except for number of banks Member banks' Insured Asset account commercial Large banks banks All other New York City of Other Citv Chicago large 1 Cash bank balances, items in process 158.380 134.955 43.758 5,298 47,914 37,986 2 Currency and coin 12.135 8.866 867 180 2,918 4,901 3 Reserves with Federal Reserve Banks 28.043 28,041 3.621 1.152 12,200 11,067 4 Demand balances with banks in United States . 41.104 25.982 12.821 543 3,672 8,945 5 Other balances with banks in United States 4,648 2.582 601 15 648 1,319 6 Balances with banks in foreign countries 3,295 2.832 331 288 1,507 705 7 Cash items in process of collection 69.156 66.652 25.516 3,119 26,969 11,049 8 Total securities held—Book value ... 262,199 179,877 20.808 7.918 58,271 92,881 9 U.S. Treasury 95.068 65,764 9,524 2,690 22,051 31,499 1 1 0 1 S O t t a h t e e r s a U n . d S . p g o o li v ti e c r a n l m s e u n b t d i a v g is e i n o c n i s e s .. . . 1 4 2 0 1 . . 0 2 7 6 8 0 2 8 5 5 , . 4 1 5 2 7 5 9 1 . . 1 8 6 2 6 8 3 1 , , 7 2 0 8 5 4 2 7 7 , , 7 4 3 2 0 3 4 1 4 4 , , 8 6 3 1 1 6 12 All other securities 5,698 3,465 291 240 1,048 1,887 13 Unclassified total 94 66 19 47 14 Trading-account securities 6,833 6.681 3.238 708 2,446 290 15 U.S. Treasury 4,125 4,103 2,407 408 1,210 78 16 Other U.S. government agencies .... 825 816 401 82 278 55 17 States and political subdivisions 1,395 1,381 363 117 794 107 18 All other trading account securities . 394 316 67 101 145 3 19 Unclassified 94 66 19 47 20 Bank investment portfolios 255,366 173.196 17.570 7,210 55,825 92,591 21 U.S. Treasury 90.943 61,661 7.117 2,282 20,840 31,422 22 Other U.S. government agencies . 39,253 24,641 1,426 1,201 7,452 14,561 23 States and political subdivisions ... 119,865 83,745 8,803 3,588 26,629 44,724 24 All other portfolio securities 5.305 3,149 224 138 903 1,884 25 Federal Reserve stock and corporate stock 1,656 1,403 311 111 507 475 26 Federal funds sold and securities resale agreement . 41.258 31,999 3,290 1,784 16,498 10,427 27 Commercial banks 34,256 25,272 1.987 1,294 12,274 9,717 28 Brokers and dealers 4,259 4.119 821 396 2,361 541 29 Others 2.743 2,608 482 94 1,863 169 30 Other loans, gross 675,915 500,802 79,996 26,172 190,565 204,069 31 LESS: Unearned income on loans . 17,019 11,355 675 107 3,765 6,809 32 Reserves for loan loss 7,431 5,894 1.347 341 2,256 1,949 33 Other loans, net 651,465 483,553 77.974 25,724 184,544 195,311 Other loans, gross, by category 34 Real estate loans 203,386 138,730 10,241 2,938 52,687 72,863 35 C Se o c n u s r t e ru d ct b i y o n fa a r n m d la l n a d n d development .. 25 8 , , 6 4 2 1 1 8 1 3 9 , , 6 1 5 0 5 0 2.59 2 8 3 68 3 5 4 9,2 4 3 5 6 3 6 3 , , 5 1 8 4 1 6 Secured by residential properties 117,176 81,370 5.362 1,559 31,212 43.236 1- to 4-family residences 111,674 77,422 4,617 1,460 29,774 41,570 FHA-insured or VA-guaranteed . 7,503 6,500 508 44 3,446 2,502 Conventional 104,171 70,922 4,109 1,417 26,328 39,068 Multifamily residences 5,502 3,948 746 99 I,438 1,665 FHA-insured 399 340 132 27 88 92 Conventional 5,103 3.609 613 72 1,350 I,573 Secured by other properties 52,171 34,605 2,258 660 11,786 19,901 45 Loans to financial institutions . 37,072 34,843 12,434 4,342 15,137 2,930 46 REITs and mortgage companies 8,574 8,162 2.066 801 4,616 680 47 Domestic commercial banks 3,362 2,618 966 165 1,206 281 48 Banks in foreign countries 7,359 7,187 3.464 268 2,820 635 49 Other depositary institutions 1,579 1,411 290 76 785 261 50 Other financial institutions 16,198 15,465 5,649 3,033 5,710 1,073 51 Loans to security brokers and dealers 11,042 10,834 6.465 1,324 2,846 199 52 Other loans to purchase or carry securities . 4,280 3,532 410 276 1,860 985 53 Loans to farmers except real estate 28,054 15,296 168 150 3,781 11,196 54 Commercial and industrial loans 213, 123 171,815 39,633 13,290 67,833 51,059 55 Loans to individuals 161,599 110,974 7,100 2,562 40,320 60,993 5 5 6 7 Ins P t a a s ll s m en e g n e t r l a o u a t n o s m obiles 1 5 3 8 1 , , 9 57 0 1 8 9 37 0 , , 4 5 9 6 4 8 5 I, , 0 4 7 0 7 5 1,7 2 1 0 1 9 3 II 3 , , 6 6 2 40 6 4 2 9 4 , , 8 5 1 8 1 2 58 Residential repair and modernization . 8,526 5,543 331 60 2,088 3,064 59 Credit cards and related plans 21,938 19,333 2,268 1,267 9,736 6,062 6 6 6 6 6 6 6 6 0 2 1 3 4 5 6 7 All S i o n O O t g h t t C l M C O h h e e e h r e h t - o r r h p a e b l a e r c o i r i g r k y l e n a e e m t s n - a a t s e a i a h n l n c l d o t l c c m m o o r l u e e e o n s n n v a s t t o n u l s m c v lo r i t e e n o a r d g n i i s g t n c o d r c o e i a v d d r s i i d d t s u p a l l a s ns ... 2 3 1 1 1 1 4 9 2 0 7 0 9 7 , , , , , , , , 6 0 9 5 0 0 6 3 4 0 3 1 4 2 8 6 2 0 8 0 7 7 9 0 2 1 1 1 1 6 6 3 0 6 3 4 4 , , , , , , , , 6 6 2 0 4 2 9 7 6 2 9 3 9 0 0 7 7 9 6 7 6 6 2 8 3 1 1 1 , , , , 4 5 6 5 2 3 6 1 2 9 7 4 0 4 9 7 7 5 3 9 2 5 4 9 1 1 , , 2 2 8 1 1 4 5 3 5 9 1 1 9 7 7 8 1 0 9 9 8 5 2 2 4 6 6 1 , , , , , , , , 1 2 5 6 9 6 5 1 9 4 6 7 4 4 8 0 2 2 3 8 8 5 0 0 I 5 3 3 7 8 I 3 1 , , , , , , , , 9 1 6 0 5 5 0 8 0 8 6 5 7 0 3 4 2 5 4 3 0 9 3 4 68 Total loans and securities, net . 956,579 696,833 102,383 35,536 259,820 299,094 259,867 69 Direct lease financing 6,717 6,212 1,145 96 3,931 1,041 505 70 Fixed assets—Buildings, furniture, real estate . 22,448 16,529 2,332 795 6,268 7,133 5,926 71 Investment in unconsolidated subsidiaries 3,255 3,209 1,642 188 1,282 96 46 72 Customer acceptances outstanding 16,557 16,036 8,315 1,258 6,054 409 521 73 Other assets 34,559 30,408 II,323 1,000 12,810 5,275 4,249 74 Total assets . 1,198,495 904,182 170,899 44,170 338,079 351,034 294,595 For notes see opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A19 1.26 Continued Member banks1 IIInnnsssuuurrreeeddd NNNooonnn--- LLLiiiaaabbbiiillliiitttyyy ooorrr cccaaapppiiitttaaalll aaaccccccooouuunnnttt cccooommmmmmeeerrrccciiiaaalll Large banks mmmeeemmmbbbeeerrr bbbaaannnkkksss TToottaall AAllll ootthheerr bbbaaannnkkksss111 New York City of Other City Chicago large 75 Demand deposits 369,030 282,450 66,035 10,690 100,737 104,988 86,591 76 Mutual savings banks 1,282. 1,089 527 1 256 305 194 77 Other individuals, partnerships, and corporations 279,651 205,591 31,422 7,864 79,429 86,876 74,061 /8 U.S. government 7,942 5,720 569 188 1,987 2,977 2,222 79 States and political subdivisions 17,122 11,577 764 252 3,446 7,116 5,545 80 Foreign governments, central banks, etc 1,805 1,728 1,436 19 211 62 77 81 Commercial banks in United States 39,596 38,213 21,414 1,807 10,803 4,189 1,393 82 Banks in foreign countries 7,379 7,217 5,461 207 1,251 298 162 83 Certified and officers' checks, etc 14,253 11,315 4,443 352 3,354 3,166 2,937 84 Time deposits 368,562 266,496 38,086 15,954 98,525 113,931 102,066 85 Accumulated for personal loan payments 79 66 0 0 1 65 13 86 Mutual savings banks 399 392 177 40 148 27 7 87 Other individuals, partnerships, and corporations 292,120 210,439 29,209 12,074 76,333 92,824 81,680 88 U.S. government 864 689 61 40 356 232 175 89 States and political subdivisions 59,087 40,010 1,952 1,554 16,483 20,020 19,077 90 Foreign governments, central banks, etc 6,672 6,450 3,780 1,145 1,401 124 222 91 Commercial banks in United States 7,961 7,289 2,077 999 3,585 629 672 92 Banks in foreign countries 1,381 1,161 829 103 219 9 220 93 Savings deposits 223,326 152,249 10,632 2,604 54,825 84,188 71,077 94 Individuals and nonprofit organizations 207,701 141,803 9,878 2,448 51,161 78,316 65,897 95 Corporations and other profit organizations 11,216 7,672 519 148 3,195 3,809 3,544 96 U.S. government 82 65 2 3 24 35 17 97 States and political subdivisions 4,298 2,682 215 4 437 2,025 1,616 98 All other 30 27 18 * 8 2 3 99 Total deposits 960,918 701,195 114,753 29,248 254,087 303,107 259,733 100 Federal funds purchased and securities sold under agreements to repurchase 91,981 85,582 21,149 8,777 41,799 13,857 6,398 101 Commercial banks 42,174 39,607 6,991 5,235 21,609 5,773 2,566 102 Brokers and dealers 12,787 11,849 2,130 1,616 6,381 1,722 939 103 Others 37,020 34,126 12,028 1,926 13,809 6,362 2,894 104 Other liabilities for borrowed money 8,738 8,352 3,631 306 3,191 1,225 386 105 Mortgage indebtedness 1,767 1,455 234 27 701 491 316 106 Bank acceptances outstanding 16,661 16,140 8,398 1,260 6,070 412 521 107 Other liabilities 27,124 23,883 8,600 1,525 9,020 4,477 3,494 108 Total liabilities 1,107,188 836,607 157,026 41,144 314,868 323,569 270,849 109 Subordinated notes and debentures 5,767 4,401 1,001 79 2,033 1,287 1,366 110 Equity capital 85,540 63,174 12,871 2,947 21,177 26,178 22,380 111 Preferred stock 88 36 0 0 5 31 52 112 Common stock 17,875 12,816 2,645 570 4,007 5,594 5,064 113 Surplus 32,341 23,127 4,541 1,404 8,148 9,034 9,217 114 Undivided profits 33,517 26,013 5,554 921 8,680 10,858 7,509 115 Other capital reserves 1,719 1,182 132 52 337 661 538 116 Total liabilities and equity capital 1,198,495 904,182 170,899 44,170 338,079 351,034 294,595 MEMO: 117 Demand deposits adjusted2 252,337 171,864 18,537 5,576 60,978 86,774 80,472 Average for last 15 or 30 days 118 Cash and due from bank 146,283 124,916 36,862 6,030 4455,,773311 36,293 2211,,337799 119 Federal funds sold and securities purchased under agreements to resell 43,873 33,682 4,272 1,887 16,007 11,517 10,307 120 Total loans 651,874 483,316 76,750 25,722 184,790 196,054 168,558 121 Time deposits of $100,000 or more 183,614 150,160 32,196 13,216 65,776 38,972 33,454 122 Total deposits 944,593 687,543 107,028 28,922 250,804 300,789 225577,,006622 123 Federal funds purchased and securities sold under agreements to repurchase 92,685 86,635 22,896 9,473 40,541 13,725 6,053 124 Other liabilities for borrowed money 8,716 8,326 3,679 370 3,211 1,067 390 125 Standby letters of credit outstanding 18,820 17,658 10,063 1,477 4,820 1,297 1,162 126 Time deposits of $100,000 or more 186,837 152,553 32,654 13,486 66,684 39,728 34,284 127 Certificates of deposit 160,227 129,667 27,950 11,590 56,383 33,743 30,560 128 Other time deposits 26,610 22,886 4,704 1,896 10,301 5,985 3,724 129 Number of banks 14,390 5,593 12 9 153 5,419 8,810 1. Member banks exclude and nonmember banks include 13 noninsured trust NOTE. Data include consolidated reports, including figures for all bank-premises companies that are members of the Federal Reserve System. subsidiaries and other significant majority-owned domestic subsidiaries. Securities 2. Demand deposits adjusted are demand deposits other than domestic com- are reported on a gross basis before deductions of valuation reserves. Back data mercial interbank and U.S. government, less cash items reported as in process of in lesser detail were shown in previous issues of the BULLETIN. collection. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 DomesticN onfinancial Statistics • February 1980 1.27 ALL LARGE WEEKLY REPORTING COMMERCIAL BANKS with Domestic Assets of $750 Million or More on December 31, 1977, Assets and Liabilities Millions of Dollars, Wednesday figures 1979 1980 Account Dec. 5 Dec. 12 Dec. 19 Dec. 26 Jan. 2P Jan. 9P Jan. 16p Jan. 23P Jan. 30> 1 Cash items in process of collection 54,832 53,254 54,391 50,218 59,660 51,467 57,368 51,844 49,080 2 Demand deposits due from banks in the United States 16,522 15,151 18,836 9,090 17,918 16,573 16,813 17,570 18,217 3 All other cash and due from depositary institutions 33,266 33,161 30,242 27,986 36,197 33,397 31,304 35,126 28,563 4 Total loans and securities 509,020 505,753 512,758 518,148 529,669 520,067 518,117 510,790 515,050 Securities 5 U.S. Treasury securities 36,954 37,271 36,381 35,580 36,089 35,956 35,885 35,456 35,638 6 Trading account 6,049 6,314 5,483 5,030 4,890 5,109 5,415 5,206 5,243 7 Investment account, by maturity 30,905 30,958 30,898 30,550 31,200 30,847 30,470 30,251 30,395 8 One year or less 7,931 8,030 8,095 7,951 8,003 7,551 7,241 7,313 7,371 9 Over one through five years 18,354 18,295 18,281 18,079 18,596 18,715 18,615 18,310 18,312 10 Over five years 4,620 4,632 4,522 4,520 4,600 4,581 4,614 4,628 4,712 11 Other securities 71,669 71,711 71,499 71,418 71,998 72,619 72,596 72,510 72,545 12 Trading account 4,450 4,208 3,740 3,597 3,532 3,669 3,553 3,457 3,427 13 Investment account 67,219 67,503 67,759 67,821 68,466 68,950 69,043 69,053 69,118 14 U.S. government agencies 15,458 15,590 15,679 15,691 15,851 15,813 15,855 15,869 15,858 15 States and political subdivision, by maturity .. 49,125 49,257 49,424 49,474 49,964 50,482 50,526 50,524 50,584 16 One year or less 6,428 6,425 6,439 6,361 6,239 6,344 6,255 6,231 6,333 17 Over one year 42,697 42,832 42,984 43,114 43,725 44,138 44,270 44,293 44,251 18 Other bonds, corporate stocks and securities 2,636 2,656 2,657 2,655 2,651 2,656 2,663 2,660 2,676 Loans 19 Federal funds sold 26,217 25,288 27,356 30,901 34,194 28,447 27, 638 24,776 27,739 20 To commercial banks 19,010 18,952 20,589 22,880 27,939 21,737 20,344 19,252 20,256 21 To nonbank brokers and dealers in securities ... 5,159 4,667 5,100 5,663 4,698 4,928 5,157 4,093 5,054 22 To others 2,048 1,669 1,667 2,358 1,557 1,781 2,136 1,430 2,429 23 Other loans, gross 386,280 383,640 389,781 392,492 399,672 395,424 394,373 390,442 391,574 24 Commercial and industrial 153,444 152,629 155,481 156,797 159,155 157,654 157,013 156,471 156,605 25 Bankers' acceptances and commercial paper . 4,738 4,512 4,848 5,388 5,177 4,737 4,560 4,176 4,287 26 All other 148,705 148,117 150,633 151,408 153,979 152,917 152,453 152,295 152,318 27 U.S. addresses 142,175 141,605 144,112 144,881 147,379 146,338 145,919 145,819 145,858 28 Non-U.S. addresses 6,531 6,512 6,520 6,527 6,599 6,579 6,534 6,476 6,459 29 Real estate 97,464 97,990 98,277 98,211 99,916 100,250 100,456 100,768 101,042 30 To individuals for personal expenditures 70,636 70,843 71,224 71,702 73,359 73,648 73,298 73,260 73,499 To financial institutions 31 Commercial banks in the United States 3,487 3,140 3,332 3,715 3,792 3,711 3,461 2,854 2,792 32 Banks in foreign countries 6,974 6,8% 6,974 6,796 7,468 6,909 7,201 6,051 6,420 33 Sales finance, personal finance companies, etc 9,146 8,677 8,821 9,322 9,462 8,798 9,000 8,580 8,634 34 Other financial institutions 16,814 16,714 17,001 16,957 17,106 16,852 16,577 16,243 16,142 35 To nonbank brokers and dealers in securities ... 8,375 7,043 8,180 7,483 7,737 7,340 7,301 6,357 6,303 36 To others for purchasing and carrying securities2 2,540 2,573 2,607 2,588 2,533 2,506 2,528 2,506 2,503 37 To finance agricultural production 4,848 4,823 4,850 4,889 5,047 4,993 4,954 4,898 4,922 38 All other 12,552 12,311 13,033 14,032 14,096 12,762 12,584 12,453 12,711 39 LESS: Unearned income 6,892 6,939 7,039 7,051 7,101 7,173 7,166 7,174 7,204 40 Loan loss reserve 5,209 5,218 5,222 5,191 5,182 5,205 5,210 5,219 5,242 41 Other loans, net 374,180 371,483 377,520 380,249 387,388 383,045 381,997 378,048 379,128 42 Lease financing receivables 7,675 7,784 7,810 7,842 7,967 8,079 8,085 8,103 8,100 43 All other assets 61,048 61,533 62,458 61,365 65,508 61,746 61,824 62,158 64,512 44 Total assets 682,363 676,636 686,4% 674,649 716,919 691,330 693,510 685,590 683,521 Deposits 45 Demand deposits 196,858 193,130 199,303 188,853 219,190 195.993 202,340 190,598 189,508 46 Mutual savings banks 717 602 638 657 916 744 769 622 619 47 Individuals, partnerships, and corporations 134,685 136,482 137,067 144,835 155,769 140,106 142,498 133,631 131,981 48 States and political subdivisions 4,560 4,562 5,112 4,805 5,942 5,105 5,030 4,921 5,240 49 U.S. government 2,703 1,774 3,082 839 863 963 1,265 964 772 50 Commercial banks in the United States 33,394 29,706 34,669 20,597 35,975 30,429 32,793 32,318 31,576 51 Banks in foreign countries 8,195 8,305 7,678 8,670 8,337 7,828 8,590 6,892 8,232 52 Foreign governments and official institutions ... 1,891 2,463 1,894 1,902 1,777 1,937 2,175 2,115 2,211 53 Certified and officers' checks 10,713 9,236 9,163 6,549 9,610 8,880 9,219 9,134 8,876 54 Time and savings deposits 265,622 265,460 265,452 265,004 267,415 270,030 269,036 268,405 269,086 55 Savings 72,722 72,464 72,413 72,223 74,604 74,733 73,847 73,221 72,648 56 Individuals and nonprofit organizations 68,094 67,845 67,898 67,729 70,048 70,151 69,404 68,752 68,201 57 Partnerships and corporations operated for profit 3,924 3,896 3,805 3,796 3,773 3,784 3,703 3,720 3,721 58 Domestic governmental units 684 696 688 674 759 774 718 731 704 59 All other 21 27 23 23 24 23 21 18 22 60 Time 192,900 192,996 193,039 192,782 192,812 195,297 195,189 195,184 196,437 61 Individuals, partnerships, and corporations ... 159,941 159,563 159,817 159,572 159,993 161.994 162,220 162,191 163,484 62 States and political subdivisions 22,079 22,056 21,682 21,651 21,374 21,692 21,968 22,099 22,272 63 U.S. government 494 493 493 492 467 477 446 ' 426 424 64 Commercial banks in the United States 5,485 5,485 5,252 5,217 5,128 5,260 5,320 5,473 5,3% 65 Foreign governments, official institutions and banks 4,901 5,398 5,795 5,849 5,849 5,873 5,234 4,995 4,862 66 Federal funds purchased3 95,767 95,720 92,667 90,579 100,898 101,828 95,947 95,945 90,717 Other liabilities for borrowed money 67 Borrowings from Federal Reserve Banks 1,620 1,285 951 1,410 1,545 842 1,290 445 299 68 Treasury tax-and-loan notes 434 574 6,566 8,203 6,926 1,670 4,385 8,213 9,815 69 All other liabilities for borrowed money 13,649 13,440 13,545 14,822 14,498 14,145 13,642 13,986 14,984 70 Other liabilities and subordinated note and debentures 63,409 61,873 63,020 60,800 60,887 61,039 61,068 62,151 63,211 71 Total liabilities 637,360 631,482 641,505 629,672 671,360 645,547 647,708 639,742 637,620 72 Residual (total assets minus total liabilities)4 45,003 45,154 44,977 45,559 45,783 45,802 45,848 45,901 1. Includes securities purchased under agreements to resell. 4. This is not a measure of equity capital for use in capital adequacy analysis 2. Other than financial institutions and brokers and dealers. or for other analytic uses. 3. Includes securities sold under agreements to repurchase. A See p. A-23. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Banks A21 1.28 LARGE WEEKLY REPORTING COMMERCIAL BANKS with Domestic Assets of $1 Billion or More on December 31, 1977 Assets and Liabilities Millions of dollars, Wednesday figures bank, Dec. 5 Dec. 12 Dec. 19 Dec. 26 Jan. 2P Jan. 9p Jan. 16p Jan. 23p Jan. 3OP 1979 A 1 Cash items in process of collection 52,343 50,880 51,803 47,391 56,372 49,126 54,585 49,462 46,913 29 2 Demand deposits due from banks in the United States 15,715 14,344 17,999 8,353 17,019 15,757 15,902 16,719 17,338 78 3 All other cash and due from depositary institutions 31,540 31,338 28,599 26,233 33,962 31,502 29,468 32,948 26,616 77 4 Total loans and securities 476,548 473,323 479,954 485,271 494,902 485,232 483,152 476,322 480,509 1,860 Securities 5 U.S. Treasury securities 34,655 34,961 34,064 33,263 33,628 33,477 33,423 32,963 33,155 194 6 Trading account 6,008 6,277 5,445 4,999 4,860 5,061 5,380 5,143 5,206 7 Investment account, by maturity 28,647 28,684 28,620 28,264 28,768 28,416 28,043 27,821 27,950 194 8 One year or less 7,411 7,511 7,586 7,440 7,493 7,037 6,728 6,800 6,863 102 9 Over one through five years 16,931 16,858 16,839 16,637 17,070 17,193 17,096 16,789 16,787 82 10 Over five years 4,304 4,315 4,194 4,187 4,205 4,186 4,218 4,232 4,300 10 11 Other securities 66,292 66,332 66,099 66,012 66,286 66,922 66,882 66,792 66,795 280 12 Trading account 4,328 4,110 3,628 3,488 3,415 3,570 3,449 3,377 3,311 13 Investment account 61,964 62,222 62,471 62,524 62,871 63,351 63,433 63,416 63,484 280 14 U.S.government agencies 14,391 14,516 14,597 14,610 14,786 14,738 14,780 14,782 14,778 59 15 States and political subdivision, by maturity .. 45,090 45,203 45,372 45,413 45,592 46,115 46,148 46,132 46,188 217 16 One year or less 5,873 5,868 5,875 5,798 5,651 5,766 5,678 5,650 5,752 46 17 Over one year 39,217 39,335 39,496 39,615 39,940 40,349 40,470 40,482 40,436 170 18 Other bonds, corporate stocks and securities 2,483 2,503 2,503 2,502 2,493 2,498 2,504 2,502 2,518 4 Loans 19 Federal funds sold1 23,657 22,589 24,445 28,084 31,401 25,498 24,551 22,133 25,097 146 20 To commercial banks 16,820 16,762 18,081 20,543 25,562 19,261 17,856 17,225 18,224 53 21 To nonbank brokers and dealers in securities ... 4,844 4,219 4,749 5,236 4,339 4,515 4,615 3,534 4,494 93 22 To others 1,993 1,608 1,614 2,306 1,500 1,723 2,079 1,374 2,380 23 Other loans, gross 363,193 360,747 366,746 369,296 374,955 370,793 369,749 365,901 366,984 1,304 24 Commercial and industrial 146,036 145,265 148,073 149,350 151,235 149,753 149,082 148,544 148,666 262 25 Bankers' acceptances and commercial paper . 4,667 4,443 4,768 5,310 5,099 4,658 4,480 4,089 4,197 26 All other 141,370 140,822 143,304 144,039 146,136 145,095 144,602 144,455 144,469 262 27 U.S. addressees 134,885 134,358 136,833 137,561 139,581 138,562 138,114 138,026 138,056 262 28 Non-U.S. addressees 6,484 6,463 6,471 6,478 6,555 6,532 6,488 6,429 6,413 1 29 Real estate 91,771 92,274 92,550 92,484 93,718 94,080 94,271 94,570 94,800 500 30 To individuals for personal expenditures 62,536 62,905 63,230 63,656 64,800 65,067 64,732 64,708 64,908 494 To financial institutions 31 Commercial banks in the United States 3,417 3,070 3,268 3,647 3,714 3,639 3,391 2,784 2,719 6 32 Banks in foreign countries 6,899 6,817 6,883 6,714 7,390 6,829 7,121 5,978 6,338 33 Sales finance, personal finance companies, etc 8,954 8,482 8,622 9,128 9,270 8,611 8,811 8,393 8,466 34 Other financial institutions 16,354 16,254 16,557 16,524 16,653 16,394 16,144 15,818 15,703 35 To nonbank brokers and dealers in securities ... 8,293 6,959 8,095 7,375 7,605 7,213 7,205 6,280 6,224 36 To others for purchasing and carrying securities2 2,316 2,343 2,377 2,355 2,301 2,276 2,294 2,280 2,270 1 37 To finance agricultural production 4,681 4,656 4,685 4,722 4,884 4,828 4,792 4,736 4,762 18 38 All other 11,934 11,721 12,406 13,341 13,385 12,103 11,904 11,808 12,127 22 39 LESS: Unearned income 6,321 6,366 6,464 6,478 6,486 6,555 6,546 6,553 6,586 52 40 Loan loss reserve 4,928 4,940 4,936 4,907 4,882 4,903 4,907 4,915 4,936 13 41 Other loans, net 351,944 349,441 355,345 357,911 363,587 359,335 358,296 354,432 355,461 1,239 42 Lease financing receivables 7,469 7,578 7,603 7,633 7,757 7,867 7,872 7,888 7,885 43 All other assets 59,305 59,832 60,706 59,602 63,747 60,035 60,127 60,477 62,731 87 44 Total assets 642,920 637,296 646,663 634,484 673,760 649,520 651,107 643,817 641,992 2,132 Deposits 45 Demand deposits 185,036 181,345 187,245 176,716 205,400 183,782 189,629 178,629 177,846 672 46 Mutual savings banks 690 578 613 635 884 713 736 599 592 47 Individuals, partnerships, and corporations 125,418 127,096 127,800 135,201 144,850 130,354 132,467 124,218 122,733 609 48 States and political subdivisions 4,056 4,018 4,406 4,151 5,225 4,536 4,383 4,197 4,595 32 49 U.S. government 2,497 1,639 2,845 770 784 841 1,077 733 687 4 50 Commercial banks in the United States 31,936 28,369 33,211 19,188 34,375 29,072 31,384 31,078 30,281 1 51 Banks in foreign countries 8,127 8,236 7,626 8,613 8,268 7,760 8,539 6,835 8,182 52 Foreign governments and official institutions ... 1,890 2,456 1,893 1,900 1,776 1,936 2,175 2,114 2,211 53 Certified and officer's checks 10,422 8,954 8,851 6,258 9,238 8,569 8,866 8,856 8,566 24 54 Time and savings deposits 247,869 247,713 247,796 247,333 248,577 250,967 249,863 249,175 249,844 1,207 55 Savings 67,512 67,271 67,240 67,084 69,020 69,131 68,282 67,700 67,170 552 56 Individuals and nonprofit organization 63,244 63,006 63,076 62,932 64,796 64,896 64,177 63,569 63,063 530 57 Partnerships and corporations operated for profit 3,633 3,605 3,520 3,514 3,492 3,501 3,427 3,443 3,442 21 58 Domestic governmental units 614 633 621 614 709 710 657 670 644 1 59 All other 20 26 22 23 24 23 21 18 21 60 Time 180,357 180,443 180,555 180,249 179,556 181,836 181,581 181,475 182,675 655 61 Individuals, partnerships, and corporations ... 149,637 149,242 149,455 149,196 148,977 150,809 150,922 150,808 152,051 570 62 States and political subdivisions 20,136 20,119 19,845 19,778 19,430 19,712 19,952 20,067 20,232 80 63 U.S. government 488 487 486 484 458 469 438 418 415 4 64 Commercial banks in the United States 5,200 5,202 4,979 4,946 4,846 4,977 5,039 5,191 5,125 65 Foreign governments, official institutions, and banks 4,896 5,393 5,791 5,845 5,845 5,869 5,230 4,991 4,852 66 Federal funds purchased3 90,538 90,688 87,557 85,516 95,692 96,221 90,552 90,658 85,620 42 Other liabilities for borrowed money 67 Borrowings from Federal Reserve Banks 1,568 1,261 884 1,294 1,487 756 1,196 417 286 68 Treasury tax-and-loan notes 400 528 6,095 7,691 6,398 1,538 4,046 7,633 9,131 69 All other liabilities for borrowed money 13,336 12,888 13,199 14,420 14,169 13,793 13,291 13,563 14,493 15 70 Other liabilities and subordinated note and debentures 62,022 60,574 61,722 59,409 59,538 59,747 59,789 60,973 61,932 35 71 Total liabilities 600,768 594,996 604,496 592,380 631,261 606,805 608,365 601,049 599,153 1,971 72 Residual (total assets minus total liabilities)4 42,152 42,300 42,167 42,104 42,498 42,715 42,741 42,768 42,838 161 1. Includes securities purchased under agreements to resell. 4. This is not a measure of equity capital for use in capital adequacy analysis 2. Other than financial institutions and brokers and dealers. or for other analytic uses. 3. Includes securities sold under agreements to repurchase. A See p. A-23. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Nonfinancial Statistics • February 1980 1.29 LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures 1979 1980 Account Dec. 5 Dec. 12 Dec. 19 Dec. 26 Jan. 2P Jan. 9P 1 Cash items in process of collection 19,442 19,083 19,078 14,205 19,333 18,931 21,372 20,354 2 Demand deposits due from banks in the United States 11,036 9,655 12,339 3,369 11,359 10,524 11,021 12,160 3 All other cash and due from depositary institutions 8,076 8,291 6,658 4,692 10,296 7,895 6,985 8,693 4 Total loans and securities1 110,699 108,335 112,927 115,511 117,132 112,809 112,951 108,416 Securities 5 U.S. Treasury securities2 6 Trading account2 7 Investment account, by maturity 6,342 6,165 6,055 5,857 6,255 5,951 5,881 5,695 8 One year or less 1,265 1,165 1,165 1,165 1,259 1,019 1,014 1,032 9 Over one through five years 4,461 4,281 4,284 4,066 4,385 4,319 4,211 4,004 10 Over five years 616 720 605 626 611 613 656 659 11 Other securities2 12 Trading account2 13 Investment account 12,166 12,204 12,412 12,419 12,347 12,347 12,308 12,245 14 U.S. government agencies 2,539 2,546 2,550 2,530 2,532 2,518 2,479 2,426 15 States and political subdivision, by maturity 9,066 9,083 9,269 9,301 99,,222222 9,226 9,224 9,213 16 One year or less 1,471 1,472 1,524 1,551 11,,449988 1,477 1,450 1,454 17 Over one year 7,595 7,611 7,745 7,749 7,725 7,750 7,774 7,759 18 Other bonds, corporate stocks and securities 561 576 592 588 592 603 605 606 Loans 19 Federal funds sold3 7,188 6,210 7,411 10,166 9,199 7,2% 7,644 6,072 20 To commercial banks 4,745 4,230 5,415 7,870 7,470 5,446 5,490 4,521 21 To nonbank brokers and dealers in securities 1,790 1,509 1,376 1,502 1,233 1,237 1,480 1,148 22 To others 653 471 621 794 496 612 673 402 23 Other loans, gross 87,608 86,381 89,724 89,740 91,915 89,813 89,724 87,008 24 Commercial and industrial 45,598 45,347 46,963 47,143 47,977 47,505 47,264 46,886 25 Bankers' acceptances and commercial paper 1,661 1,682 1,836 1,929 1,897 1,885 1,716 1,364 26 All other 43,936 43,665 45,127 45,214 46,080 45,621 45,547 45,522 27 U.S. addressees 41,838 41,595 43,034 43,101 43,854 43,385 43,337 43,325 28 Non-U.S. addressees 2,098 2,070 2,093 2,113 2,226 2,235 2,210 2,197 29 Real estate 12,137 12,191 12,243 12,284 12,321 12,298 12,343 12,386 30 To individuals for personal expenditures 8,188 8,419 8,469 8,495 8,496 8,554 8,562 8,559 To financial institutions 31 Commercial banks in the United States 1,469 1,272 1,260 1,389 1,465 1,463 1,443 1,070 32 Banks in foreign countries 3,166 3,167 3,154 2,924 3,590 3,304 3,511 2,618 33 Sales finance, personal finance companies, etc 3,784 3,560 3,547 3,874 3,920 3,528 3,682 3,456 34 Other financial institutions 4,972 4,921 5,274 5,262 5,331 5,186 5,052 4,972 35 To nonbank brokers and dealers in securities 4,745 4,033 5,133 4,423 4,626 4,300 4,220 3,566 36 To others for purchasing and carrying securities4 425 421 422 426 422 425 432 438 37 To finance agricultural production 264 252 276 290 282 262 267 250 38 All other 2,860 2,796 2,983 3,228 3,485 2,987 2,947 2,807 39 LESS: Unearned income 972 983 1,039 1,050 975 996 1,002 999 40 Loan loss reserve 1,633 1,643 1,636 1,621 1,609 1,601 1,603 1,605 41 Other loans, net 85,003 83,755 87,049 87,069 89,331 87,216 87,118 84,404 42 Lease financing receivables 1,504 1,498 1,501 1,505 1,549 1,565 1,570 1,573 43 All other assetsS 29,308 30,350 29,630 28,110 30,546 27,919 27,512 28,019 44 Total assets 180,067 177,212 182,134 167,394 190,215 179,642 181,411 179,215 Deposits 45 Demand deposits 63,763 60,850 65,120 51,261 69,403 61,648 66,198 63,836 46 Mutual savings banks 360 311 351 347 519 393 409 322 47 Individuals, partnerships, and corporations 29,882 30,933 32,027 33,368 37,201 32,721 34,152 32,139 48 States and political subdivisions 470 340 407 431 483 605 557 460 49 U.S. government 718 352 758 104 96 164 242 110 50 Commercial banks in the United States 18,926 16,110 20,470 6,727 19,500 16,619 18,436 19,437 51 Banks in foreign countries 6,238 6,377 5,635 6,509 6,321 5,953 6,662 5,154 52 Foreign governments and official institutions 1,069 1,545 1,061 1,086 932 1,085 1,304 1,331 53 Certified and officers' checks 6,098 4,880 4,410 2,689 4,351 4,108 4,436 4,885 54 Time and savings deposits 44,652 44,972 45,646 45,359 44,891 45,371 44,962 44,788 55 Savings 9,423 9,431 9,408 9,448 9,623 9,682 9,589 9,472 56 Individuals and nonprofit organizations 8,935 8,922 8,927 8,965 9,121 9,182 9,104 8,990 57 Partnerships and corporations operated for profit .... 353 351 338 345 334 336 329 327 58 Domestic governmental units 125 143 131 126 156 150 144 145 59 All other 9 15 12 12 12 13 11 10 60 Time 35,229 35,541 36,239 35,911 35,269 35,689 35,373 35,316 61 Individuals, partnerships, and corporations 29,213 29,109 29,591 29,233 28,816 29,234 29,455 29,466 62 States and political subdivisions 1,672 1,613 1,591 1,569 1,439 1,456 1,501 1,492 63 U.S. government 42 41 47 46 45 54 53 51 64 Commercial banks in the United States 1,589 1,576 1,442 1,379 1,250 1,249 1,263 1,393 65 Foreign governments, official institutions, and banks 2,714 3,201 3,568 3,684 3,718 3,697 3,100 2,914 66 Federal funds purchased6 27,518 28,693 25,299 25,018 32,043 29,878 26,074 25,564 Other liabilities for borrowed money 67 Borrowings from Federal Reserve Banks 500 631 229 250 68 Treasury tax-and-loan notes 3 49 1,820 2,058 1,602 330 912 1,913 69 All other liabilities for borrowed money 6,430 6,020 6,301 7,234 6,408 6,346 6,094 6,452 70 Other liabilities and subordinated note and debentures ... 23,311 22,700 24,061 21,986 21,908 21,868 22,847 22,592 71 Total liabilities 166,177 163,285 168,247 153,547 176,255 165,671 167,338 165,146 72 Residual (total assets minus total liabilities)7 13,890 13,926 13,887 13,846 13,960 13,972 14,073 14,069 1. Excludes trading account securities. 5. Includes trading account securities. 2. Not available due to confidentiality. 6. Includes securities sold under agreements to repurchase. 3. Includes securities purchased under agreements to resell. 7. This is not a measure of equity capital for use in capital adequacy analysis 4. Other than financial institutions and brokers and dealers. or for other analytic uses. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Banks A23 1.30 LARGE WEEKLY REPORTING COMMERCIAL BANKS Balance Sheet Memoranda Millions of dollars, Wednesday figures 1979 1980 Adjust- Category ment bank, Dec. 5 Dec. 12 Dec. 19 Dec. 26 Jan. 2P Jan. 9P Jan. \6P 1979A BANKS WITH ASSETS OF $750 MILLION OR MORE 1 Total loans (grossl and investments adjusted1 ... 498,624 495,818 501,098 503,796 510,222 506,997 506,687 501,077 504,448 3,651 2 Total loans (gross) adjusted1 390,001 386,836 393,217 396,798 402,134 398,422 398,205 393,110 396,265 2,682 3 Demand deposits adjusted 2 105,929 108,396 107,161 117,199 122,692 113,134 110,914 105,472 108,080 1,146 4 Time deposits in accounts of $100,000 or more .. 130,518 130,352 130,213 129,698 128,367 129,628 129,364 128,965 129,930 324 5 Negotiable CDs 93,791 93,170 92,972 92,581 91,498 92,266 92,405 91,820 92,615 238 6 Other time deposits 36,727 37,182 37,242 37,118 36,869 37,363 36,958 37,145 37,315 86 7 Loans sold outright to affiliates3 3,146 3,184 3,200 2,707 2,749 2,646 2,662 2,612 2,655 8 Commercial and industrial 2,070 2,097 2,110 1,780 1,819 1,711 1,728 1,705 1,749 9 Other 1,077 1,087 1,090 927 930 934 934 907 906 BANKS WITH ASSETS OF $1 BILLION OR MORE 10 Total loans (grossl and investments adjusted1 ... 467,560 464,797 470,005 472,466 476,994 473,790 473,357 467,781 471,089 1,865 11 Total loans (gross) adjusted1 366,613 363,504 369,841 373,190 377,080 373,392 373,051 368,025 371,139 1,391 12 Demand deposits adjusted2 98,260 100,456 99,385 109,367 113,868 104,743 102,582 97,356 99,966 638 13 Time deposits in accounts of $100,000 or more .. 122,588 122,434 122,367 121,830 120,267 121,416 121,032 120,582 121,496 140 14 Negotiable CDs 87,898 87,302 87,111 86,710 85,403 86,078 86,134 85,501 86,262 67 15 Other time deposits 34,690 35,132 35,255 35,120 34,864 35,338 34,898 35,081 35,234 74 16 Loans sold outright to affiliates3 3,082 3,120 3,140 2,649 2,696 2,597 2,614 2,562 2,606 17 Commercial and industrial 2,038 2,066 2,080 1,752 1,796 1,687 1,704 1,674 1,719 18 Other 1,044 1,054 1,060 901 910 909 887 BANKS IN NEW YORK CITY 19 Total loans (gross) and investments adjusted1-4 . 107,091 105,459 108,927 108,923 110,781 108,497 108,623 105,429 107,391 20 Total loans (gross) adjusted1 88,582 87,089 90,460 90,647 92,179 90,200 90,434 87,489 89,373 21 Demand deposits adjusted2 24,676 25,305 24,812 30,225 30,474 25,933 26,148 23,936 25,441 22 Time deposits in accounts of $100,000 or more .. 28,187 28,479 29,106 28,760 28,046 28,435 28,009 27,918 28,444 23 Negotiable CDs 20,192 20,109 20,447 20,214 19,576 19,838 20,051 19,864 20,316 24 Other time deposits 7,994 8,370 8,659 8,546 8,470 8,598 7,958 8,054 8,128 1. Exclusive of loans and federal funds transactions with domestic commercial 4. Excludes trading account securities. banks. A Revised. These amounts represent accumulated adjustments originally made 2. All demand deposits except U.S. government and domestic banks less cash to offset the cumulative effects of mergers. A "positive" adjustment bank should items in process of collection. be added to, and a "negative" adjustment bank subtracted from, outstanding data 3. Loans sold are those sold outright to a bank's own foreign branches, non- for any date in the year to establish comparability with any date in the subsequent consolidated nonbank affiliates of the bank, the bank's holding company (if not year. a bank) and nonconsolidated nonbank subsidiaries of the holding company. NOTES TO TABLE 1.311. 1. Commercial banks are those in the 50 states and the District of Columbia and participations in pooled loans. Includes averages of daily figures for member with national or state charters plus U.S. branches, agencies, and New York in- banks and averages of current and previous month-end data for foreign-related vestment company subsidiaries of foreign banks and Edge Act corporations. institutions. 2. Includes seasonally adjusted Federal funds, RPs, and other borrowings from 4. Loans initially booked by the bank and later sold to affiliates that are still nonbanks and not seasonally adjusted net Eurodollars and loans to affiliates. held by affiliates. Averages of Wednesday data. Includes averages of Wednesday data for domestic chartered banks and averages 5. Includes averages of daily figures for member banks and quarterly call report of current and previous month-end data for foreign-related institutions. figures for nonmember banks. 3. Other borrowings are borrowings on any instrument, such as a promissory 6. Includes averages of current and previous month-end data. note or due bill, given for the purpose of borrowing money for the banking business. 7. Based on daily average data reported by 46 large banks. This includes borrowings from Federal Reserve Banks and from foreign banks, 8. Includes U.S. Treasury demand deposits and Treasury tax and loan notes at term federal funds, overdrawn due from bank balances, loan RPs, commercial banks. Averages of daily data. 9. Averages of Wednesday figures. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Nonfinancial Statistics • February 1980 1.31 LARGE WEEKLY REPORTING COMMERCIAL BANKS Domestic Classified Commercial and Industrial Loans Millions of Dollars Outstanding Net change during AAAdddjjjuuusssttt--- IIInnnddduuussstttrrryyy ccclllaaassssssiiifffiiicccaaatttiiiooonnn 1979 1980 1979 1980 mmmeeennnttt bbbaaannnkkk222 Sept. 26 Oct. 31 Nov. 28 Dec. 26 Jan. 30 Q3 Q4 Nov. Dec. Jan. 1 Durable goods manufacturing 23,954 23,472 22,856' 23,593 23,721 2,689 1 -616' 737 2 Nondurable goods manufacturing 18,907 19,121 18,379 19,205 19,211 1,503 298 -741 826 3 Food, liquor, and tobacco 4,906 5,024 4,968 5,220 4,963 535 314 -57 252 4 Textiles, apparel, and leather 5,029 4,849 4,608 4,342 4,153 328 -686 -241 -266 5 Petroleum refining 1,972 2,182 1,873 2,677 3,206 6 705 -309 805 6 Chemicals and rubber 3,627 3,810 3,749 3,836 3,744 179 209 -61 87 7 Other nondurable goods 3,372 3,255 3,182 3,129 3,145 456 -243 -73 -53 8 Mining (including crude petroleum and natural gas 11,681 11,697 11,502 11,998 12,244 673 317 -195 495 9 Trade 24,655 25,410 25,077 24,885 24,230 685 230 -332' -192 n.a. n.a. 10 Commodity dealers 1,859 2,191 1,861 2,134 2,118 -58 275 -330 273 11 Other wholesale 11,940 12,170 11,902 11,992 11,730 199 52 -268 90 12 Retail 10,855 11,049 11,314' 10,759 10,382 544 -96 265' -555 13 Transportation, communication, and other public utilities 16,760 16,885 17,212 17,830 18,058 1,434 1,070' 327 618 14 Transportation 6,833 7,065 7,075 7,133 7,230 380 300 10 58 15 Communication 2,325 2,404 2,475 2,522 2,633 274 197 70 47 16 Other public utilities 7,602 7,416 7,662 8,176' 8,195 779 574' 247 513 17 Construction 5,892 5,687 5,703' 5,759' 5,757 309 -133r 16' 56 18 Services 18,359 18,782 18,924' 19,399 19,776 1,108 1,040 142 475 19 All other i 14,525' 14,494' 14,505' 14,892' 15,058 -1,335 367 11' 387 20 Total domestic loans 134,373 ' 135,547' 134,158r 137,561 ' 138,056 7,066 3,189r -1,389 3,403 168 262 21 MEMO: Term loans (original maturity more than 1 year) included in domestic loans) 68,372' 69,010' 69,731' 72,447' 75,469 3,826 4,074' 721' 2,716 n .a. n .a. 1. Includes commercial and industrial loans at a few banks with assets of $1 NOTE. New series. The 134 large weekly reporting commercial banks with dobillion or more that do not classify their loans. mestic assets of $1 billion or more as of December 31, 1977 are included in this 2. Data for adjustment bank for individual categories are not yet available. series. The revised series is on a last-Wednesday-of-the-month basis. Previously published data are incorrect. Revised data will be published when available. 1.311 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS' Monthly averages, billions of dollars December outstanding Outstanding in 1979' SSoouurrccee 1976 1977 1978 May June July Aug. Sept. Oct. Nov. Dec. Total nondeposit funds 1 Seasonally adjusted2 54.6 61.8 85.4' 111.4 115.3 118.8 129.7 131.0 129.8 125.6 119.9 2 Not seasonally adjusted 53.3 60.4 84.9' 113.5 115.1 121.5 131.3 131.2 130.5 128.4 118.5 Federal funds, RPs, and other borrowings from nonbanks3 3 Seasonally adjusted3 47.1 58.4 74.8 84.3 84.5 86.6 92.9 91.3 91.9 85.9 87.9 4 Not seasonally adjusted 45.8 57.0 73.8 86.5 84.3 89.3 94.5 91.5 92.6 88.6 86.5 5 Net Eurodollar borrowings, not seasonally adjusted 3.7 -1.3 6.8 23.4 27.1 28.4 33.1 35.9 34.3 36.2 29.2 6 Loans sold to affiliates, not seasonally adjusted4 3.8 4.8 3.8 3.7 3.8 3.7 3.7 3.7 3.6 3.6 2.8 MEMO 7 Domestic chartered banks net positions with own foreign branches, not seasonally adjusted5 -6.0 -12.5 -10.2 2.8 5.4 5.6 8.2 10.5 9.1 11.4 6.4 8 Gross due from balances 12.8 21.1 24.9 19.5 20.1 20.3 19.5 21.7 22.1 21.7 22.9 9 Gross due to balances 6.8 8.6 14.7 22.3 25.5 26.0 27.7 32.2 31.2 33.0 29.3 10 Foreign-related institutions net positions with cnrectly related institutions, not seasonally adjusted6 9.7 11.1 17.0 20.6 21.7 22.8 24.9 25.4 25.3 24.8 22.8 11 Gross due from balances 8.3 10.3 14.2 15.9 17.6 17.6 16.2 18.1 20.5 21.9 24.2 12 Gross due to balances 18.1 21.4 31.2 36.5 39.3 40.4 41.0 43.5 45.7 46.8 47.0 13 Security RP borrowings, seasonally adjusted7 27.9 36.3 43.8 44.4 47.3 45.1 43.0 45.0 46.9 41.8 46.7 14 Not seasonally adjusted 27.0 35.1 42.4 47.1 46.7 44.7 44.7 46.8 46.4 43.9 45.2 15 U.S. Treasury demand balances, seasonally adjusted® 3.9 4.4 8.6 9.3 9.2 15.3 12.4 11.1 12.9 5.7 8.0 16 Not seasonally adjusted 4.4 5.1 10.2 8.4 10.8 13.2 9.8 12.4 11.7 5.5 9.5 17 Time deposits, $100,000 or more, seasonally adjusted9 136.0 159.8 204.4 199.0 191.7 119922..55 194.7 199.5 220066..11 221122..11 221100..22 18 Not seasonally adjusted 138.4 162.5 207.8 198.2 191.6 191.0 194.9 200.8 207.5 212.1 213.8 For notes see bottom of page A23. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Deposits and Commercial Paper A25 1.32 GROSS DEMAND DEPOSITS of Individuals, Partnerships, and Corporations' Billions of dollars, estimated daily-average balances Commercial banks TTyyppee ooff hhoollddeerr 1978 19792 11997755 11997766 11997777 DDeecc.. DDeecc.. DDeecc.. June Sept. Dec. Mar. June Sept. Dec. 1 All holders—Individuals, partnerships, and corporations 236.9 250.1 274.4 271.2 278.8 294.6 270.4 285.6 292.4 302.2 2 Financial business 20.1 22.3 25.0 25.7 25.9 27.8 24.4 25.4 26.7 27.1 3 Nonfinancial business 125.1 130.2 142.9 137.7 142.5 152.7 135.9 145.1 148.8 157.7 4 Consumer 78.0 82.6 91.0 92.9 95.0 97.4 93.9 98.6 99.2 99.2 5 Foreign 2.4 2.7 2.5 2.4 2.5 2.7 2.7 2.8 2.8 23.1 6 Other 11.3 12.4 12.9 12.4 13.1 14.1 13.5 13.7 14.9 15.1 Weekly reporting banks 1978 19793 11997755 11997766 11997777 DDeecc.. DDeecc.. DDeecc.. Oct. Nov. Dec. Mar. June Sept. Dec. 7 All holders—Individuals, partnerships, and corporations 124.4 128.5 139.1 141.3 142.7 147.0 121.9 128.8 132.7 139.3 8 Financial business 15.6 17.5 18.5 19.1 19.3 19.8 16.9 18.4 19.7 20.1 9 Nonfinancial business 69.9 69.7 76.3 75.0 75.7 79.0 64.6 68.1 69.1 74.1 10 Consumer 29.9 31.7 34.6 37.5 37.7 38.2 31.1 33.0 33.7 34.3 11 Foreign 2.3 2.6 2.4 2.5 2.5 2.5 2.6 2.7 2.8 3.0 12 Other 6.6 7.1 7.4 7.2 7.5 7.5 6.7 6.6 7.4 7.8 1. Figures include cash items in process of collection. Estimates of gross deposits 3. After the end of 1978 the large weekly reporting bank panel was changed to are based on reports supplied by a sample of commercial banks. Types of depositors 170 large commercial banks, each of which had total assets in domestic offices in each category are described in the June 1971 BULLETIN, p. 466. exceeding $750 million as of Dec. 31, 1977. See "Announcements," p. 408 in the 2. Beginning with the March 1979 survey, the demand deposit ownership survey May 1978 BULLETIN. Beginning in March 1979, demand deposit ownership estisample was reduced to 232 banks from 349 banks, and the estimation procedure mates for these large banks are constructed quarterly on the basis of 97 sample was modified slightly. To aid in comparing estimates based on the old and new banks and are not comparable with earlier data. The following estimates in billions reporting sample, the following estimates in billions of dollars for December 1978 of dollars for December 1978 have been constructed for the new large-bank panel; have been constructed using the new smaller sample; financial business, 27.0; financial business, 18.2; nonfinancial business, 67.2; consumer, 32.8; foreign, 2.5; nonfinancial business, 146.9; consumer, 98.3; foreign, 2.8; and other, 15.1 other, 6.8. 1.33 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period 1979 IInnssttrruummeenntt 11997766 11997777 11997788 DDeecc.. DDeecc.. DDeecc.. June July Aug. Sept. Oct.1 Nov. Dec. Commercial paper (seasonally adjusted) 1 All issuers 52,971 65,101 83,665 101,516 102,447 103,907 107,621 106,613 108,965 113,282 Financial companies2 Dealer-placed paper3 2 Total 7,261 8,884 12,296 16,537 17,042 17,379 18,207 16,085 16,702 17.574 3 Bank-related 1,900 2,132 3,521 3,826 3,951 4,062 4,485 3,052 2,958 2,784 Directly placed paper4 4 Total 32,511 40,484 51,360 61,256 60,532 60,402 61,369 62,761 64,236 64,757 5 Bank-related 5,959 7,102 12,314 15,130 14,722 15,817 15,930 18,024 18,339 17,598 6 Nonfinancial companies5 13,199 15,733 19,739, 23,723 24,873 26,126 28,045 27,767 28,027 30,951 Bankers of dollar acceptances (not reasonably adjusted) 7 Total 22,523 25,450 33,700 36,989 39,040 42,354 42,147 43,486 43,599 45,321 Holder 8 Accepting banks 10,442 10,434 8,579 8,180 8,288 7,994 8,119 7,785 8,297 9,867 9 Own bills 8,769 8,915 7,653 6,956 7,243 7,138 7,288 7,121 7,514 8,329 10 Bills bought 1,673 1,519 927 1,224 1,045 856 831 664 782 1,538 Federal Reserve Banks 11 Own account 991 954 1 1,400 1,159 475 1,053 317 269 704 12 Foreign correspondents 375 362 664 971 952 957 1,470 1,498 1,465 1,382 13 Others 10,715 13,700 24,456 26,439 28,641 32,928 31,505 33,886 33,569 33,368 Basis 14. Imports into United States 4,992 6,378 8,574 9,202 9,499 9,847 9,724 10,129 10,354 10,270 15 Exports from United States 4,818 5,863 7,586 8,599 8,784 9,578 9,354 9,519 9,271 9,640 16 All other 12,713 13,209 17,540 19,189 20,756 22,929 23,069 23,838 23,974 25,411 1. A change in reporting instructions results in offsetting shifts in the dealer- 3. Includes all financiel company paper sold by dealers in the open market. placed and directly placed financial company paper in October. 4. As reported by financial companies that place their paper directly with inves- 2. Institutions engaged primarily in activities such as, but not limited to, com- tors. mercial, savings, and mortage banking; sales, personal and mortgage financing; 5. Includes public utilities and firms engaged primarily in activities, such as factoring, finance leasing, and other business lending; insurance underwriting; and communications, construction, manufacturing, mining, wholesale and retail trade, Digitized foort hFerR iAnvSesEtmRen t activities. transportation and reserves. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Nonfinancial Statistics • February 1980 1.34 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per annum Effective date Rate Effective Date Rate Month Average rate \AVi 1979—June 19 \\Vi 1979—Oct. 9 1979—Jan . 11.75 1979—July July 27 11^4 23 15 Feb. 11.75 Aug. Aug. 16 12 Nov. 1 15 V4 Mar. 11.75 Sept. 28 12 V4 9 15k> Apr. 11.75 Oct. Sept. 7 12^4 16 153/4 May 11.75 Nov. 14 13 30 15k> June 11.65 Dec. 21 13V4 Dec. 7 15V4 1980—Jan. 28 13 Vi 1.35 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 5-10, 1979 Size of loan (in thousands of dollars) All Item sizes 1,000 1-24 25-49 50-99 100-499 50-999 and over SHORT-TERM COMMERCIAL AND INDUSTRIAL LOANS 1 Amount of loans (thousand of dollars) 8,107,372 696,629 369,217 431,935 1,724,393 685,208 4,199,992 2 Number of loans 128,317 97,398 11,174 6,984 10,369 1,062 1,330 3 Weighted average maturity (months) 3.0 3.6 3.3 3.3 3.5 3.9 2.5 4 Weighted average interest rate (percent per annum) 15.81 14.77 14.92 15.93 15.40 16.01 16.19 5 Interquartile range1 15.25-16.82 12.68-16.99 13.21-16.83 14.58-17.48 13.65-16.91 15.25-16.86 15.31-16.70 Percentage of amount of loans 6 With floating rate 52.6 17.1 2211..77 44.7 36.4 66.6 66.3 7 Made under commitment 49.4 19.6 26.1 38.4 43.6 61.1 58.0 LONG-TERM COMMERCIAL AND INDUSTIRAL LOANS 8 Amount of loans (thousand of dollars) 1,646,325 325,742 204,389 137,391 978,803 9 Number of loans 28,827 27,356 1,020 206 244 10 Weighted average maturity (months) 48.5 35.1 39.0 35.7 56.7 11 Weighted average interest rate (rate percent per annum) 1155..5555 1144..7766 1155..6666 1155..4433 1155..8811 12 Interquartile range1 15.25-16.50 13.00-16.14 15.00-17.23 15.25-17.00 15.25-16.25 Percentage of amount of loans 13 With floating rate 7711..77 2277..88 6666..44 7744..11 8877..00 14 Made under commitment 63.3 33.1 60.3 62.0 74.1 CONSTRUCTION AND LAND DEVELOPMENT LOANS 15 Amount of loans (thousand of dollars) 1,056,988 205,277 195,753 145,500 276,070 234,388 16 Number of loans 34,676 25,307 5,348 2,274 1,568 178 17 Weighted average maturity (months) 9.7 7.9 18.5 6.3 7.4 9.1 18 Weighted average interest rate (percent per annum 1155..5511 1144..2200 1155..7733 1155..7722 1155..8833 1155..%% 19 Interquartile range1 14.49-17.25 11.77-16.31 14.58-17.18 13.75-16.99 14.50-17.60 15.50-17.50 Percentage of amount of loans 20 With floating rate 40.2 16.2 12.8 29.6 5588..22 69.7 21 Secured by real estate 76.9 70.2 65.8 61.1 90.9 85.3 22 Made under commitment 40.4 31.3 26.4 31.2 53.0 50.9 Type of construction 23 1- to 4-family 38.7 58.5 49.4 20.4 44.2 17.3 24 Multifamily 7.4 1.3 1.5 4.7 10.9 15.1 25 Nonresidential 53.9 40.2 49.1 74.8 45.0 67.5 All 250 sizes 1-9 10-24 25-49 50-99 100-249 and over LOANS TO FARMERS 26 Amount of loans (thousands of dollars) 1,1%, 869 160,264 184,426 181,529 234,651 248,311 187,688 27 Number of loans 65,936 42,480 12,830 4,933 3,610 1,674 409 28 Weighted average maturity (months) 6.9 7.3 7.1 6.9 7.3 5.8 7.3 29 Weighted average interest rate (percent per 1133..6633 1122..8888 1133..2200 1133..3322 1133..1111 1133..8866 1155..3355 30 Interquartile range1 12.42-14.49 11.83-13.80 11.72-14.42 12.00-14.41 12.00-14.00 13.42-13.80 13.42-17.55 By purpose of loan 3 3 2 1 F O e t e h d e e r r li l v iv es e t s o t c o k c k 1 1 3 2 . . 5 9 1 2 11 1 22 2 .. .1 00 7 33 11 1 33 2 .. .5 22 5 00 11 1 22 4 .. . 88 1 77 9 11 1 33 1 .. . 44 5 44 7 (2 11 ) 33.. 4455 (2 11 ) 44 ..6644 2 3 4 3 O Fa t r h m er m cu a r c r h e i n n t e r o y p e a r n a d t in e g q u e ip x m pe e n n s t e s 1 1 3 3 . . 6 1 4 6 1 1 3 3 . . 0 0 3 3 1 1 3 3 . . 7 2 5 8 1 1 3 3 . . 8 5 1 3 1 12 2 . . 0 % 9 (2 1 ) 5 .45 (2L 15 .24 , 35 Other 14.55 13.39 12.94 13.30 14.16 14.22 16.77 1. Interest rate range that covers the middle 50 percent of the total dollar amount NOTE. For more detail, see the Board's E.2(416) statistical release, of loans made. 2. Fewer than 10 sample loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Markets All 1.36 INTEREST RATES Money and Capital Markets Averages, percent per annum 1979 1980 1980, week ending Instrument 1977 1978 1979 Oct. Nov. Dec. Jan. Jan. 5 Jan. 12 Jan. 19 Jan. 26 Feb. 2 Money market rates 1 Federal funds1 5.54 7.94 11.20 13.77 13.18 13.78 13.82 14.04 13.94 13.91 13.77 13.54 Commercial paper2-3 2 1-month 5.42 7.76 10.86 13.06 13.34 13.35 13.07 13.26 13.08 13.01 13.05 13.02 3 3-month 5.54 7.94 10.97 13.23 13.57 13.24 13.04 13.11 13.02 12.97 13.06 13.06 4 6-month 5.60 7.99 10.91 13.23 13.26 12.80 12.66 12.64 12.56 12.63 12.71 12.80 Finance paper, directly placed2-3 5 1-month 5.38 7.73 10.78 12.85 13.25 13.27 13.01 13.32 12.97 12.96 12.96 12.96 6 3-month 5.49 7.80 10.47 12.24 12.52 11.74 11.96 11.89 11.95 11.97 11.98 12.03 7 6-month 5.50 7.78 10.25 11.50 12.00 11.68 11.79 11.73 11.79 11.75 11.82 11.83 8 Prime bankers acceptances, 90-day3 4 5.59 8.11 11.04 13.44 13.53 13.31 13.15 13.29 13.09 13.04 13.24 13.11 Certificates of deposit, secondary market5 9 1-month 5.48 7.88 11.03 13.36 13.60 13.36 13.26 13.34 13.30 13.21 13.29 13.16 10 3-month 5.64 8.22 11.22 13.66 13.90 13.43 13.39 13.45 13.38 13.33 13.42 13.36 11 6-month 5.92 8.61 11.44 13.83 13.97 13.42 13.48 13.49 13.39 13.34 13.57 13.59 12 Eurodollar deposits, 3-month6 6.05 8.74 11.96 14.59 15.00 14.51 14.33 14.58 14.56 14.18 14.20 14.41 U.S. Treasury bills3-7 Secondary market 13 3-month 5.27 7.19 10.07 11.70 11.79 12.04 12.00 12.10 11.72 11.91 12.17 12.15 14 6-month 5.53 7.58 10.06 11.66 11.82 11.84 11.84 11.93 11.73 11.77 11.88 11.96 15 1-year 5.71 7.74 9.75 11.23 11.22 10.92 10.96 10.97 10.78 10.83 11.05 11.23 Auction average8 16 3-month 5.265 7.221 10.041 11.472 11.868 12.071 12.036 12.105 11.943 11.904 12.189 12.038 17 6-month 5.510 7.572 10.017 11.339 11.856 11.847 11.851 11.880 11.858 11.783 11.886 11.846 Capital market rates U.S. TREASURY NOTES AND BONDS Constant maturities9 18 1-year 6.09 8.34 10.67 12.44 12.39 11.98 12.06 12.02 11.90 11.92 12.11 12.36 19 2-year 6.45 8.34 10.12 11.49 11.81 11.39 11.50 11.39 11.27 11.37 11.63 11.86 20 2^-year10 10 90 11.15 21 3-year 6.69 8.29 9.71 10.95 11.18 10.71 10.88 10.75 10.69 10.78 10.96 11.24 22 4-year10 11.55 10.85 23 5-year 6.99 8.32 9.52 10.63 10.93 10.42 10.74 10.52 10.54 10.64 10.87 11.15 24 7-year 7.23 8.36 9.48 10.47 10.80 10.42 10.77 10.52 10.57 10.66 10.91 11.17 25 10-year 7.42 8.41 9.44 10.30 10.65 10.39 10.80 10.52 10.59 10.71 10.95 11.19 26 20-year 7.67 8.48 9.33 9.99 10.37 10.18 10.65 10.30 10.35 10.52 10.86 11.19 2277 30-year 88..4499 99..2299 99..8855 1100..3300 1100..1122 1100..6600 1100..2255 1100..3311 1100..4466 1100..8800 1111..1122 Composite11 28 3 to 5 years 6.85 8.30 9.58 10.75 10.98 10.45 10.76 10.59 10.58 10.66 10.87 11.13 29 Over 10 years (long-term) 7.06 7.89 8.74 9.44 9.80 9.59 10.03 9.73 9.80 9.93 10.20 10.48 STATE AND LOCAL NOTES AND BONDS Moody's series12 30 Aaa 5.20 5.52 5.92 6.25 6.49 6.50 6.58 6.50 6.60 6.60 6.60 6.80 31 Baa 6.12 6.27 6.73 7.34 7.66 7.42 7.60 7.60 7.60 7.60 7.60 7.60 32 Bond Buyer series13 5.68 6.03 6.52 7.08 7.30 7.22 7.35 7.32 7.30 7.28 7.33 7.52 CORPORATE BONDS 33 Seasoned issues, all industries14 8.43 9.07 10.12 10.71 11.37 11.35 11.74 11.54 11.60 11.67 11.83 12.06 By rating groups 34 Aaa 8.02 8.73 9.63 10.13 10.76 10.74 11.09 10.88 10.91 10.99 11.22 11.49 35 Aa 8.24 8.92 9.94 10.46 11.22 11.15 11.56 11.35 11.40 11.50 11.64 11.87 36 A 8.49 9.12 10.20 10.83 11.50 11.46 11.88 11.61 11.73 11.83 11.98 12.20 37 Baa 8.97 9.45 10.69 11.40 11.99 12.06 12.42 12.29 12.34 12.34 12.46 12.69 Aaa utility bonds15 38 New issue 8.19 8.96 10.03 10.97 11.42 11 25 11.73 11 51 11 61 12 08 39 Recently offered issues 8.19 8.97 10.02 10.91 11.36 11.33 11.77 11.44 11.54 11.69 12! 11 12.35 MEMO: Dividend/price ratio16 40 Preferred stocks 7.60 8.25 9.07' 9.46' 9.95' 10.06' 10.14 10.20 10.17 10.04 10.14 10.17 41 Common stocks 4.56 5.28 5.46' 5.56 5.71 5.53 5.40 5.66 5.49 5.40 5.28 5.21 1. Weekly figures are 7-day averages of daily effective rates for the week ending 10. Each figure is an average of only five business days near the end of the Wednesday; the daily effective rate is an average of the rates on a given day month. The rate for each month is used to determine the maximum interest rate weighted by the volume of transactions at these rates. payable in the following month on small saver certificates. (See table 1.16). 2. Beginning November 1977, unweighted average of offering rates quoted by 11. Unweighted averages for all outstanding notes and bonds in maturity ranges at least five dealers (in the case of commercial paper), or finance companies (in shown, based on daily closing bid prices. "Long-term" includes all bonds neither the case of finance paper). Previously, most representative rate quoted by those due nor callable in less than 10 years, including several very low yielding "flower" dealers and finance companies. Before Nov. 1979, maturities for data shown are bonds. 30-59 days, 90-119 days, and 120-179 days for commercial paper; and 30-59 days, 12. General obligations only, based on figures for Thursday, from Moody's 90-119 davs, and 150-179 days for finance paper. Investors Service. 3. Yields are quoted on a bank-discount basis. 13. Twenty issues of mixed quality. 4. Average of the midpoint of the range of daily dealer closing rates offered for 14. Averages of daily figures from Moody's Investors Service. domestic issues. 15. Compilation of the Board of Governors of the Federal Reserve System. 5. Five-day average of rates quoted by five dealers (3-month series was previously Issues included are long-term (20 years or more). New-issue yields are based a 7-day average). on quotations on date of offering; those on recently offered issues (included only 6. Averages of daily quotations for the week ending Wednesday. for first 4 weeks after termination of underwriter price restrictions), on Friday 7. Except for auction averages, yields are computed from daily closing bid prices. close-of-business quotations. 8. Rates are recorded in the week in which bills are issued. 16. Standard and Poor's corporate series. Preferred stock ratio based on a sample 9. Yield on the more actively traded issues adjusted to constant maturities by of ten issues: four public utilities, four industrials, one financial, and one transthe U.S. Treasury, based on daily closing bid prices. portation. Common stock ratios on the 500 stocks in the price index. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Nonfinancial Statistics • February 1980 1.37 STOCK MARKET Selected Statistics 1979 1980 Indicator 1977 1978 1979 July Aug. Sept. Oct. Nov. Dec. Jan. Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50 53.67 53.76 55.67 58.38 61.19 61.89 59.27 59.02 61.75 63.74 2 Industrial 57.84 58.30 61.82 56.24 67.71 69.17 66.68 66.45 69.82 72.67 3 Transportation 41.07 43.25 45.20 48.85 52.48 52.21 48.07 47.61 50.59 52.61 4 Utility 40.91 39.23 36.46 38.88 39.26 38.39 36.58 36.55 37.29 37.08 5 Finance 55.23 56.74 58.65 64.43 68.40 67.21 61.64 60.64 63.21 64.22 6 Standard & Poor's Corporation (1941^13 = 10)1 .. 98.18 96.11 98.34 102.71 107.36 108.60 104.47 103.66 107.78 110.87 7 American Stock Exchange (Aug. 31, 1973 = 100) .. 116.18 144.56 186.56 197.63 208.29 223.00 212.33 216.58 238.83 259.54 Volume of trading (thousands of shares) 8 New York Stock Exchange 20,936 28,591 32,233 32,416 35,870 37,576 37,301 31,126 35,510 52,647 9 American Stock Exchange 2,514 3,622 4,182 3,890 4,503 5,405 5,446 3,938 5,389 9,363 Customer financing (end-of-period balances, in millions of dollars) 10 Regulated margin credit at brokers/dealers2 9,993 11,035 11,615 12,019 12,236 12,178 11,483 11,083 11,615 • 11 Margin stock3 9,740 10,830 11,450 11,840 12,060 12,000 11,310 10,920 11,450 1 12 Convertible bonds 250 205 164 178 176 177 173 161 164 13 Subscription issues 3 1 1 1 1 2 1 n.a. * Free credit balances at brokers4 1 14 Margin-account 640 835 1,050 885 910 960 950 955 1,050 I 15 Cash-account 2,060 2,510 4,060 3,025 2,995 3,325 3,490 3,435 4,060 f Margin-account debt at brokers (percentage distributions, end of period) 16 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 tA By equity class (in percent)5 17 Under 40 18.0 33.0 16.0 19.0 14.0 16.0 27.0 17.0 16.0 18 40-49 36.0 28.0 31.0 28.0 26.0 26.0 31.0 31.0 31.0 n.a. 2 2 2 1 1 2 0 9 6 7 8 5 0 0 0 0 - - - 7 6 5 o 9 9 9 r more 2 1 6 3 1 55 . . . .. 0 0 00 0 1 1 6 5 0 8 . . . . 0 0 0 0 2 1 4 8 7 4 . . . . 0 0 0 0 2 1 7 6 8 2 . . . . 0 0 0 0 3 1 8 7 1 4 . . . . 0 0 0 0 3 1 6 8 0 4 . . . . 0 0 0 0 2 1 6 6 0 0 . . . . 0 0 0 0 2 1 7 7 5 3 . . . . 0 0 0 0 2 1 8 7 4 4 . . . . 0 0 0 0 • I 1 Special miscellaneous-account balances at brokers (end of period) 23 Total balances (million dollars)6 9,910 13,092 16,290 13,280 14,130 14,460 14,800 14,995 16,290 f Distribution by equity status (percent) 1 24 Net credit status 43.4 41.3 48.5 43.5 44.1 45.3 44.5 46.5 48.5 n.a. Debt status, equity of 1 25 60 percent or more 44.9 45.1 43.6 47.1 47.8 46.4 45.5 45.0 4433..66 26 Less than 60 percent 11.7 13.6 7.9 9.4 8.1 8.3 10.0 8.5 7.9 t Margin requirements (percent of market value and effective date)7 Mar. 11. 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 27 Margin stocks 70 80 65 55 65 50 28 Convertible bonds 50 60 50 50 50 50 29 Short sales 70 80 65 55 65 50 1. Effective July 1976, includes a new financial group, banks and insurance 5. Each customer's equity in his collateral (market value of collateral less net companies. With this change the index includes 400 industrial stocks (formerly debit balance) is expressed as a percentage of current collateral values. 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40 6. Balances that may be used by customers as the margin deposit required for financial. additional purchases. Balances may arise as transfers based on loan values of other 2. Margin credit includes all credit extended to purchase or carry stocks or collateral in the customer's margin account or deposits of cash (usually sales prorelated equity instruments and secured at least in part by stock. Credit extended ceeds) occur. is end-of-month data for member firms of the New York Stock Exchange. 7. Regulations G, T, and U of the Federal Reserve Board of Governors, pre- In addition to assigning a current loan value to margin stock generally, Regu- scribed in accordance with the Securities Exchange Act or 1934, limit the amount lations T and U permit special loan values for convertible bonds and stock acquired of credit to purchase and carry margin stocks that may be extended on securities through exercise of subscription rights. as collateral by prescribing a maximum loan value, which is a specified percentage 3. A distribution of this total by equity class is shown on lines 17-22. of the market value of the collateral at the time the credit is extended. Margin 4. Free credit balances are in accounts with no unfulfilled commitments to the requirements are the difference between the market value (100 percent) and the brokers and are subject to withdrawal by customers on demand. maximum loan value. The term "margin stocks" is defined in the corresponding regulation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Thrift Institutions A29 1.38 SAVINGS INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1979 AAccccoouunntt 11997777 11997788 Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.P Savings and loan associations 1 Assets 459,241 523,542 539,582 543,320 549,031 555,409 561,037 566,493 570,479 576,251 578,922 579,132 2 Mortgages 381,163 432,808 441,358 445,638 450,978 456.544 460.620 464,609 468.307 472,198 474,678 475,664 3 Cash and investment securities1 39,150 44,884 50,153 48,698 48.280 48,253 49,496 50.007 49,301 49.220 48,180 46,457 4 Other 38,928 45,850 48,071 48.984 49,773 50.612 50,721 51.877 52.871 54.833 56,064 57,011 5 Liabilities and net worth 459,241 523,542 539,582 543,320 549,031 555,409 561,037 570,479 566,493 576,251 578,922 579,132 6 Savings capital 386,800 430,953 446,898 445,751 447,788 454.642 456,657 457,856 462,626 464.489 465,646 470.138 7 Borrowed money 27,840 42,907 41,538 43,710 44,324 46.993 48.437 50,437 52.738 54.268 54,433 55,303 8 FHLBB 19,945 31,990 31,123 32,389 33.003 34.266 35,286 36,009 37.620 39,223 39,638 40,335 9 Other 7,895 10,917 10,415 11,321 11,321 12.727 13,151 14.428 15.118 15.045 14,795 14,968 10 Loans in process 9,911 10.721 10,331 10,690 11,118 11,260 11,309 11.047 10.909 10,766 10,159 9,516 11 Other 9,506 9.904 10,905 12.950 15,259 11.681 13,503 15.712 12.497 14.673 16,324 11,645 12 Net worth2 25,184 29,057 29,910 30,219 30.542 30.833 31,131 31.441 31.709 32.055 32,360 32,530 13 MEMO: Mortgage loan commitments outstanding3 19,875 18,911 21,082 22,915 23.560 22.770 22,360 22.282 22.397 20.930 18.029 15,935 Mutual savings banks4 14 Assets 14,287 158,174 161,866 161,231 161,380 161,814 162,598 163,388 163,431 163,133 163,205 i i Loans 15 Mortgage 88,195 95.157 96,136 95,900 96,239 96.743 97,238 97.637 97.973 98.304 98.610 16 Other 6,210 7.195 9,421 9.290 9.444 9.577 10,282 10.430 9.982 9.510 9.449 Securities 17 U.S. government5 5.895 4,959 4,814 8.193 8,148 8.029 7.992 7.921 7,891 7.750 7.754 18 State and local government .... 2,828 3.333 3,126 3,326 3,264 3.175 3.154 3,149 3.150 3.100 3,003 19 Corporate and other6 37,918 39,732 40,658 37,211 37,304 37.281 37.171 37,125 37.076 37.210 37.036 20 Cash 2,401 3,665 3,410 3,072 2,785 2.764 2., 540 2,866 3,020 2,909 3,010 21 Other assets 3,839 4,131 4,300 4,239 4,198 4.245 4,220 4.260 4,339 4.351 4.343 22 Liabilities 147,287 158,174 161,866 161,231 161,380 161,814 162,598 163,388 163,431 163,133 163,205 n.a. 23 Deposits 134,017 142,701 145,650 145,096 145,056 146.057 145,757 145,713 146.252 145,096 144,828 24 Regular7 132,744 141,170 144,042 143.210 143.271 144.161 143,843 143,731 144,258 143.263 143,064 25 Ordinary savings 78,005 71.816 68,829 67,758 67,577 68.104 67.537 66,733 65,676 62.672 61,156 26 Time and other 54,739 69.354 75,213 75.452 75,694 76.057 76,306 76,998 78.572 80.591 81,908 27 Other 1,272 1.531 1,608 1.886 1,784 1.896 1,914 1.982 2,003 1,834 1,764 28 Other liabilities 3,292 4,565 5,048 5.050 5,172 4,545 5.578 6,350 5,790 6,600 6,872 29 General reserve accounts 9,978 10.907 11,167 11.085 11.153 11.212 11,264 11,324 11,388 11.437 11,504 30 MEMO: Mortgage loan commitments outstanding8 4,066 4,400 4,482 4,449 4.352 4.469 4,214 4,071 4,123 3,749 3,619 1 r Life insurance companies 31 Assets 351,722 389,924 399,579 402,963 405,627 409,853 414,120 418,350 421,660 423,760 i i i i Securities 32 Government 19,553 20,009 20,463 20,510 20,381 20,397 20.468 20,472 20,379 20,429 33 United States9 5,315 4,822 5,234 5,272 5,149 5.178 5.228 5,229 5.067 5.075 34 State and local 6,051 6,402 6,259 6,268 6,272 6,.241 6,243 6,258 6,295 6,339 35 Foreign10 8,187 8,785 8,970 8,970 8,960 8,978 8,997 8,985 9,017 9,015 36 Business 175,654 198,105 204,895 206,160 207,775 209,804 212,876 215,252 216,500 216.183 n.a. n.a. 37 Bonds 141,891 162,587 168,622 169,817 171.762 173.130 175,854 176,920 177,698 178.633 38 Stocks 33,763 35,548 36,273 36,343 36,013 36.674 37.022 38,332 38,802 37.550 39 Mortgages 96,848 106,167 108,417 109,198 110,023 111,123 112,120 113,102 114,368 115.991 40 Real estate 11,060 11,764 11,484 12,086 12,101 12.199 12.351 12.738 12,740 12.816 41 Policy loans 27,556 30,146 31,160 31,512 31.832 32.131 32,390 32.713 33,046 33,574 42 Other assets 21,051 23,733 23,160 23,497 23,515 24.199 23,915 24,073 24,627 24,767 Credit unions 43 Total assets/liabilities and capital 53,755 62,348 63,671 63,030 64,158 65,435 68,840 65,547 66,280 65,063 65,419 65,854 44 Federal 29,564 34,760 35,406 34.758 35,379 36,146 35,413 35,724 36,151 35,537 35,670 35,934 45 State 24,191 27,588 28,265 28,272 28,779 29,289 29,427 29,823 30,129 29,526 29,749 29,920 46 Loans outstanding 41,845 50,269 50,828 50.846 51,351 52,028 52,083 52,970 53,545 53,533 56,267 53,125 47 Federal 22,634 27,687 27,961 27,869 28,103 28.487 28,379 28,848 29,129 29,020 30,613 28,698 48 State 19,211 22,582 22,867 27,977 23,248 23.541 23,704 24,122 24,416 24,513 25,654 24,426 49 Savings 46,516 53.517 54,713 54,199 55,107 56.437 56,393 56,583 57,255 55,739 55,797 56,232 50 Federal (shares) 25,576 29,802 30,212 29.796 30,222 31,048 30,732 30,761 31,097 30,366 30,399 35,530 51 State (shares and deposits) .... 20,940 23,715 24,501 24,403 24,885 25,839 25,661 25,822 26,158 25,373 25,398 25,702 For notes see bottom of page A30. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Financial Statistics • February 1980 1.39 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year FFiissccaall FFiissccaall FFiissccaall Type of account or operation yyeeaarr yyeeaarr yyeeaarr 1978 1979 1979 11997777 11997788 11997799 H2 HI H2 Oct. Nov. Dec. U.S. budget 1 Receipts' 357,762 401,997 465,940 206,275 246,574 233,952 33,099 38,320 42,617 2 Outlays1 402,725 450,938 493,221 238,186 245,616 263,044 47,807 46,841 44,010 3 Surplus, or deficit( -) -44,963 -48,940 -27,281 -31,912 958 -29,093 -14,708 -8,522 -1,393 4 Trust funds 9,497 12,693 18,335 11,754 4,041 9,679 -6,555 8,108 565 5 Federal funds2 -54,460 -61,633 -45,616 -43,666 -4,999 -38,773 -8,153 -16,630 -1,959 Off-budget entities surplus, or deficit (-) 6 Federal Financing Bank outlays -8,415 -10,661 -13,261 -5,082 -7,712 -5,909 -1,536 -538 -735 7 Other3 -264 355 832 1,843 -447 805 1,598 118 131 U.S. budget plus off-budget, including Federal Financing Bank 8 Surplus, or deficit (-) -53,642 -59,246 -39,710 -35,151 -7,201 -34,197 -14,646 -8,942 -1,997 Source or financing 9 Borrowing from the public 53,516 -59,106 33,641 30,314 6,039 31,320 2,217 5.548 11,207 10 Cash and monetary assets (decrease, or increase (-))4 -2,247 -3,023 -408 3,381 -8,878 3,059 14.220 4,533 -10,378 11 Other5 2,373 3,163 6,477 1,456 10,040 -182 -1,791 -1,139 -1,168 MEMO: 12 Treasury operating balance (level, end of period) 19,104 22,444 24,176 16,291 17,485 15,924 10,460 5,591 15,924 13 Federal Reserve Banks 15,740 16,647 6,489 4,196 3,290 4,075 2,209 2,590 4,075 14 Tax and loan accounts 3,364 5,797 17,687 12,095 14,195 11,849 8,251 3,001 11,849 1. Effective June 1978, earned income credit payments in excess of an indi- 5. Includes accrued interest payable to the public; deposit funds; miscellaneous vidual's tax liability, formerly treated as income tax refunds, are classified as liability (including checks outstanding) and asset accounts; seignorage; increment outlays retroactive to January 1976. on gold; net gain/loss for U.S. currency valuation adjustment; net gain/loss for IMF 2. Half-year figures calculated as a residual (total surplus/deficit less trust fund valuation adjustment; and profit on the sale of gold. surplus/deficit). 3. Includes Pension Benefit Guaranty Corp.; Postal Service Fund; Rural Elec- SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S. trification and Telephone Revolving Fund; and Rural Telephone Bank. Government," Treasury Bulletin, and the Budget of the United States Government, 4. Includes U.S. Treasury operating cash accounts; special drawing rights; gold Fiscal Year 1980. tranche drawing rights; loans to International Monetary Fund; and other cash and monetary assets. NOTES TO TABLE 1.38 1. Holdings of stock of the Federal Home Loan Banks are included in "other 10. Issues of foreign governments and their subdivisions and bonds of the Inassets." ternational Bank for Reconstruction and DEvelopment. 2. Includes net undistributed income, which is accrued by most, but not all, associations. NOTE. Savings and loan associations: Estimates by the FHLBB for all associa- 3. Excludes figures for loans in process, which are shown as a liability. tions in the United States. Data are based on monthly reports of federally insured 4. The NAMSB reports that, effective April 1979, balance sheet data are not associations and annual reports of other associations. Even when revised, data for strictly comparable with previous months. Beginning April 1979, data are reported current and preceding year are subject to further revision. on a net-of-valuation-reserves basis. Prior to that date, data were reported on a Mutual savings banks: Estimates of National Association of Mutual Savings gross-of-valuation-reserves basis. Banks for all savings banks in the United States. 5. Begining April 1979, includes obligations of U.S. government agencies. Prior Life insurance companies: Estimates of the American Council of Life Insurance to that date, this item was included in "Corporate and other." for all life insurance companies in the United States. Annual figures are annual- 6. Includes securities of foreign governments and international organizations statement asset values, with bonds carried on an amortized basis and stocks at and, prior to April 1979, nonguaranteed issues of U.S. government agencies. year-end market value. Adjustments for interest due and accrued and for differ- 7. Excludes checking, club, and school accounts. ences between market and book values are not made on each item separately but 8. Commitments outstanding (including loans in process) of banks in New York are included, in total, in "other assets." State as reported to the Savings Banks Association of the State of New York. Credit unions: Estimates by the National Credit Union Administration for a 9. Direct and guaranteed obligations. Excludes federal agency issues not guar- group of federal and state-chartered credit unions that account for about 30 percent anteed, which are shown in the table under "business" securities. of credit union assets. Figures are preliminary and revised annually to incorporate recent benchmark data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A31 1.40 U.S. BUDGET RECEIPTS AND OUTLAYS Millions of dollars Calendar year FFFiiissscccaaalll FFFiiissscccaaalll FFFiiissscccaaalll SSSooouuurrrccceee ooorrr tttyyypppeee yyyeeeaaarrr yyyeeeaaarrr yyyeeeaaarrr 1978 1979 1979 111999777777 111999777888 111999777999 H2 HI H2 Oct. Nov. Dec. RECEIPTS 1 All sources1 357,762 401,997 465,940 206,275 246,574 233,952 33,099 38,320 42,617 2 Individual income taxes, net 157,626 180,988 217,841 98,854 111,603 115,488 18,682 18,972 20,192 3 Withheld 144,820 165,215 195,295 90,148 98,683 105,764 17,777 18,725 1199,,440022 4 Presidential Election Campaign Fund 37 39 36 3 32 3 0 0 0 5 Nonwithheld 42,062 47,804 56,215 10,777 44,116 12,355 1,183 589 952 6 Refunds1 29,293 32,070 33,705 2,075 31,228 2,634 278 342 163 Corporation income taxes 7 Gross receipts 60,057 65,380 71,448 28,536 42,427 29,169 2,543 1,684 10,667 8 Refunds 5,164 5,428 5,771 2,757 2,889 3,306 1,068 523 460 9 Social insurance taxes and contributions, net 108,683 123,410 141,591 61,064 75,609 71,031 9,384 14,433 8,675 10 Payroll employment taxes and contributions2 88,196 99,626 115,041 51,052 59,298 60,562 8,013 12,259 7,963 11 Self-employment taxes and contributions3 4,014 4,267 5,034 369 4,616 417 0 0 0 12 Unemployment insurance 11,312 13,850 15,387 6,727 8,623 6,899 840 1,650 204 13 Other net receipts4 5,162 5,668 6,130 2,917 3,072 3,149 530 524 507 14 Excise taxes 17,548 18,376 18,745 9,879 8,984 9,675 1,547 1,653 1,658 15 Customs deposits 5,150 6,573 7,439 3,748 3,682 3,741 646 605 595 16 Estate and gift taxes 7,327 5,285 5,411 2,691 2,657 2,900 526 518 425 17 Miscellaneous receipts5 6,536 7,413 9,237 4,260 4,501 5,254 838 977 866 OUTLAYS 18 All types1 402,725 450,938 493,221 238,186 245,616 263,044 47,807 46,841 44,010 19 National defense 97,501 105,192 116,491 55,124 57,643 62,002 10,448 10,734 10,566 20 International affairs 4,813 6,083 5,419 2,060 3,538 4,617 1,263 1,190 899 21 General science, space, and technology 4,677 4,,721 5,620 2,383 2,461 3,299 451 515 432 22 Energy 4,172 5,901 7,855 4,279 4,417 3,281 52 643 625 23 Natural resources and environment 10,000 11,167 12,346 6,020 5,672 7,350 1,433 538 1,597 24 Agriculture 5,532 7,618 6,410 4,967 3,020 1,709 402 769 1,150 25 Commerce and housing credit -44 3,319 2,592 3,292 60 3 ,,002 2,078 222 516 26 Transportation 14,636 15,462 17,013 8,740 7,688 10,298 1,923 1,670 1,862 27 Community and regional development 6,286 11,263 9,735 5,844 4,499 4,855 630 973 614 28 Education, training, employment, social services 20,985 25,890 28,524 14,247 14,467 14,579 2,330 2,330 2,461 29 Health 38,785 43,676 49,614 23,830 24,860 26,492 4,662 4,449 4,532 30 Income security1 137,915 146,503 160,496 73,127 81,173 86,007 14,477 15,370 14,286 31 Veterans benefits and services 18,038 18,987 19,916 9,532 10,127 10,113 1,809 2,701 1,778 32 Administration of justice 3,600 3,786 4,138 1,989 2,096 2,174 460 350 350 33 General government 3,374 3,723 4,671 2,304 2,291 2,103 209 342 422 34 General-purpose fiscal assistance 9,499 9,377 8,234 4,610 3,890 4,286 1,822 378 102 35 Interest6 38,009 44,040 52,634 24,036 26,934 29,045 4,082 4,719 8,695 36 Undistributed offsetting receipts6 7 -15,053 -15,772 -18,489 -8,199 -8,999 -12,164 -722 -1,052 -6,879 1. Effective June 1978, earned income credit payments in excess of an indi- 6. Effective September 1976, "Interest" and "Undistributed Offsetting Revidual's tax liability, formerly treated as income tax refunds, are classified as ceipts" reflect the accounting conversion for the interest on special issues for U.S. outlays retroactive to January 1976. government accounts from an accrual basis to a cash basis. 2. Old-age, disability, and hospital insurance, and railroad retirement accounts. 7. Consists of interest received by trust funds, rents and royalties on the Outer 3. Old-age, disability, and hospital insurance. Continental Shelf, and U.S. government contributions for employee retirement. 4. Supplementary medical insurance premiums, federal employee retirement contributions, and Civil Service retirement and disability fund. SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S. 5. Deposits of earnings by Federal Reserve Banks and other miscellaneous re- Government" and the Budget of the U.S. Government, Fiscal Year 1980. ceipts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Financial Statistics • February 1980 1.41 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1977 1978 1979 IItteemm June 30 Sept. 30 Dec. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 1 Federal debt outstanding 685.2 709.1 729.2 758.8 780.4 797.7 804.6 812.2 833.8 2 Public debt securities 674.4 698.8 718.9 749.0 771.5 789.2 796.8 804.9 826.5 3 Held by public 523.2 543.4 564.1 587.9 603.6 619.2 630.5 626.4 638.8 4 Held by agencies 151.2 155.5 154.8 161.1 168.0 170.0 166.3 178.5 187.7 5 Agency securities 10.8 10.3 10.2 9.8 8.9 8.5 7.8 7.3 7.2 6 Held by public 9.0 8.5 8.4 8.0 7.4 7.0 6.3 5.9 5.8 7 Held by agencies 1.8 1.8 1.8 1.8 1.5 1.5 1.5 1.5 1.5 8 Debt subject to statutory limit 675.6 700.0 720.1 750.2 772.7 790.3 797.9 806.0 827.6 9 Public debt securities 673.8 698.2 718.3 748.4 770.9 788.6 796.2 804.3 825.9 10 Other debt1 1.7 1.7 1.7 1.8 1.8 1.7 1.7 1.7 1.7 11 MEMO. Statutory debt limit 700.0 700.0 752.0 752.0 798.0 798.0 798.0 830.0 830.0 1. Includes guaranteed debt of government agencies, specified participation cer- NOTE. Data from Treasury Bulletin (U.S. Treasury Department), tificates, notes to international lending organizations, and District of Columbia stadium bonds. 1.42 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership Billions of dollars, end of period 1979 1980 TTyyppee aanndd hhoollddeerr 11997755 11997766 11997777 11997788 Sept. Oct. Nov. Dec. Jan. 1 Total gross public debt 576.6 653.5 718.9 789.2 826.5 826.8 833.8 845.1 847.7 By type 2 Interest-bearing debt 575.7 652.5 715.2 782.4 819.0 825.7 832.7 844.0 846.5 3 Marketable 363.2 421.3 459.9 487.5 506.7 515.0 519.6 530.7 535.7 4 Bills 157.5 164.0 161.1 161.7 161.4 161.7 165.1 172.6 175.5 5 Notes 167.1 216.7 251.8 265.8 274.2 280.8 279.7 283.4 284.0 6 Bonds 38.6 40.6 47.0 60.0 71.1 72.5 74.8 74.7 76.1 7 Nonmarketable1 212.5 231.2 255.3 294.8 312.3 310.7 313.2 313.2 310.9 8 Convertible bonds2 2.3 2.3 2.2 2.2 2.2 2.2 2.2 2.2 2.2 9 State and local government series 1.2 4.5 13.9 24.3 24.6 24.4 24.5 24.6 24.8 10 Foreign issues3 21.6 22.3 22.2 29.6 28.1 28.0 29.2 28.8 30.0 11 Government 21.6 22.3 22.2 28.0 24.0 23.9 23.9 23.6 23.6 12 Public 0 0 0 1.6 4.2 4.2 5.3 5.3 6.4 13 Savings bonds and notes 67.9 72.3 77.0 80.9 80.0 80.5 80.0 79.9 78.6 14 Government account series4 119.4 129.7 139.8 157.5 176.4 175.3 177.0 177.5 174.9 15 Non-interest-bearing debt 1.0 1.1 3.7 6.8 7.5 1.1 1.1 1.2 1.2 By holder5 1 1 6 7 U Fe .S de . r g al o v R er e n s m er e v n e t B a a g n en k c s ies and trust funds 1 8 3 9 9 . . 8 1 1 9 4 7 7 . . 0 1 1 10 5 2 4 . . 5 8 1 1 0 7 9 0 . . 6 0 1 1 8 1 7 5 . . 7 8 ' 1 1 8 1 5 4 . . 7 6 1 1 8 1 7 8 . . 1 1 i i i i 18 Private investors 349.4 409.5 461.3 508.6 524.0 526.5 528.6 19 Commercial banks 85.1 103.8 101.4 93.4 92.3 93.5 95.0 20 Mutual savings banks 4.5 5.9 5.9 5.2 4.7 4.5 4.3 21 Insurance companies 9.5 12.7 15.1 15.0 14.6 14.8 14.4 22 Other companies 20.2 27.7 22.7 20.6 23.7 24.1 24.0 n. a. n. a. 23 State and local governments 34.2 41.6 55.2 68.6 68.9 69.7 68.2 Individuals 24 Savings bonds 67.3 72.0 76.7 80.7 80.6 80.5 80.1 25 Other securities 24.0 28.8 28.6 30.0 32.6 32.9 33.7 26 Foreign and international6 66.5 78.1 109.6 137.8 125.2 124.4 120.6 27 Other miscellaneous investors7 38.0 38.9 46.1 57.4 81.3 82.0 88.3 1. Includes (not shown separately): Securities issued to the Rural Electrification 6. Consists of the investments of foreign balances and international accounts in Administration, depositary bonds, retirement plan bonds, and individual retire- the United States. Beginning with July 1974, the figures exclude non-interestment bonds. bearing notes issued to the International Monetary Fund. 2. These nonmarketable bonds, also known as Investment Series B Bonds, may 7. Includes savings and loan associations, nonprofit institutions, corporate penbe exchanged (or converted) at the owner's option for 1 Vi percent, 5-year mar- sion trust funds, dealers and brokers, certain government deposit accounts, and ketable Treasury notes. Convertible bonds that have been so exchanged are re- government sponsored agencies. moved from this category and recorded in the notes category above. NOTE. Gross public debt excludes guaranteed agency securities and, beginning 3. Nonmarketable dollar-denominated and foreign currency denominated series in July 1974, includes Federal Financing Bank security issues. held by foreigners. Data by type of security from Monthly Statement of the Public Debt of the United 4. Held almost entirely by U.S. government agencies and trust funds. States (U.S. Treasury Department); data by holder from Treasury Bulletin. 5. Data for Federal Reserve Banks and U.S. government agencies and trust funds are actual holdings; data for other groups are Treasury estimates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A33 1.43 U.S. GOVERNMENT MARKETABLE SECURITIES Ownership, by maturity Par value; millions of dollars, end of period 1979 1979 Type of holder 1977 1978 11997777 1978 Oct. Nov. Oct. Nov. All maturities 1 to 5 years 1 All holders 459,927 487,546 515,124 520,573 151,264 162,886 164,448 164,395 2 U.S. government agencies and trust funds 14,420 12,695 11.379 11,047 4,788 3,310 3,099 2,560 3 Federal Reserve Banks 101,191 109,616 114,580 108,087 27,012 31,283 27,139 27,554 4 Private investors 344,315 365,235 389,165 401,439 119,464 128,293 134,210 134,281 5 Commercial banks 75,363 68,890 67,575 67,771 38,691 38,390 37,663 37,734 6 Mutual savings banks 4,379 3,499 3,100 3,280 2,112 1,918 1,626 1,700 7 Insurance companies 12,378 11,635 12,005 11,645 4,729 4,664 5,138 4,573 8 Nonfinancial corporations 9,474 8,272 9,146 8,918 3,183 3,635 3,337 3,238 9 Savings and loan associations 4,817 3,835 3,512 3,370 2,368 2,255 1,980 1,944 10 State and local governments 15,495 18,815 18,145 15,999 3,875 3,997 3,946 3,613 11 All others 222,409 250,288 275,682 290,457 64,505 73,433 80,519 81,478 Total, within 1 year 5 to 10 years 12 All holders 230,691 228,516 246,462 247,397 45,328 50,400 45,500 47,904 13 U.S. government agencies and trust funds 1,906 1,488 1,416 1,624 2,129 1,989 872 871 14 Federal Reserve Banks 56,702 52,801 62,754 55,101 10,404 14,809 12,303 12,714 15 Private investors 172,084 174,227 182,292 190,671 32,795 33,601 32,325 34,319 16 Commercial banks 29,477 20,608 20,410 20,357 6,162 7,490 6,982 7,064 17 Mutual savings banks 1,400 817 790 870 584 496 465 461 18 Insurance companies 2,398 1,838 1,918 2,068 3,204 2,899 2,608 2,736 19 Nonfinancial corporations 5,770 4,048 5,105 4,977 307 369 267 259 20 Savings and loan associations 2,236 1,414 1,390 1,285 143 89 68 64 21 State and local governments 7,917 8,194 6,169 5,795 1,283 1,588 1,694 1,509 22 All others 122,885 137,309 146,510 155,319 21,112 20,671 20,241 22,225 Bills, within 1 year 10 to 20 years 23 All holders 161,081 161,747 161,692 165,100 12,906 19,800 27,778 27,624 24 U.S. government agencies and trust funds 32 2 * 0 3,102 3,876 4,520 4,520 25 Federal Reserve Banks 42,004 42,397 44,072 37,310 1,510 2,088 3,229 3,239 26 Private investors 119,035 119,348 117,619 127,790 8,295 13,836 20,029 19,866 27 Commercial banks 11,996 5,707 5,138 5,863 456 956 1,072 1,017 28 Mutual savings banks 484 150 167 282 137 143 124 134 29 Insurance companies 1,187 753 455 466 1,245 1,460 1,389 1,394 30 Nonfinancial corporations 4,329 1,792 2,562 2,632 133 86 276 230 31 Savings and loan associations 806 262 202 217 54 60 58 58 32 State and local governments 6,,092 5,524 3,241 3,091 890 1,420 2,033 1,769 33 All others 94,152 105,161 105,854 115,240 5,380 9,711 15,077 15,263 Other, within 1 year Over 20 years 34 All holders 69,610 66,769 84,770 82,297 19,738 25,944 30,937 33,253 35 U.S. government agencies and trust funds 1,874 1,487 1,416 1,624 2,495 2,031 1,472 1,472 36 Federal Reserve Banks 14,698 10,404 18,682 17,791 5,564 8,635 9,156 9,479 37 Private investors 53,039 54,879 64,672 62,881 11,679 15,278 20,309 22.302 38 Commercial banks 15,482 14,901 15,272 14,494 578 1,446 1,449 1,599 39 Mutual savings banks 916 667 623 589 146 126 94 113 40 Insurance companies 1,211 1,084 1,463 1,603 802 774 952 873 41 Nonfinancial corporations 1,441 2,256 2,543 2,345 81 135 161 213 42 Savings and loan associations 1,430 1,152 1,188 1,068 16 17 15 19 43 State and local governments 1,825 2,670 2,928 2,704 1,530 3,616 4,303 3,314 44 All others 28,733 32,149 40,655 40,078 8,526 9,164 13,335 16,172 NOTE. Direct public issues only. Based on Treasury Survey of Ownership from banks, 460 mutual savings banks, and 724 insurance companies, each about 80 Treasury Bulletin (U.S. Treasury Department). percent; (2) 419 nonfinancial corporations and 483 savings and loan associations, Data complete for U.S. government agencies and trust funds and Federal Re- each about 50 percent; and (3) 491 state and local governments, about 40 percent. serve Banks, but data for other groups include only holdings of those institutions "All others," a residual, includes holdings of all those not reporting in the that report. The following figures show, for each category, the number and pro- Treasury Survey, including investor groups not listed separately. portion reporting as of Nov. 30, 1979: (1) 5,399 commercial Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic Nonfinancial Statistics • February 1980 1.44 U.S. GOVERNMENT SECURITIES DEALERS Transactions Par value; averages of daily figures, in millions of dollars 1979, week ending Wednesday 1976 Nov. Oct. 10 Oct. 17 Oct. 24 Oct. 31 Nov. 7 Nov. 14 1 U.S. government securities 10,449 10,838 14,485 14,585 14,410 12,880 15,252 17,237 Bv maturity 2 Bills 6,676 6.746 6,173 7,856 9,787 10,232 8,144 8,223 7,983 6,736 8,293 9,908 3 Other within 1 year 210 237 392 430 607 560 357 414 361 495 299 663 4 1-5 years 2.317 2,320 1,889 3,076 3,119 2.520 3,764 2,498 3,527 3,682 2,722 3,348 5 5-10 years 1.019 1,148 965 955 1,592 1,292 961 1,034 981 888 1,650 1,683 6 Over 10 years 229 388 866 1,529 1,572 1,026 1,259 2,416 1,558 1,079 2,288 1,635 By type of customer 7 U.S. government securities dealers 1,135 1,613 1,973 1.719 1,222 1,901 1,157 1,433 1,966 8 U.S. government securities brokers 3.407 3,709 3,838 6.123 6,439 6.296 6,607 6,401 7.018 5,789 5,532 7,207 9 Commercial banks 2,426 2,295 1,804 1,823 2,259 2.033 2,103 1,839 1,826 1,734 2,160 2,407 10 All others' 3,257 3,568 3,508 4,288 6,005 6.596 4,553 4,444 4,409 3,925 5,594 5,425 11 Federal agency securities .. 1,894 3,151 3,324 3,225 3,113 3,230 3,059 3,583 2,921 3,533 1. Includes, among others, all other dealers and brokers in commodities and Transactions are market purchases and sales of U.S. government securities dealsecurities, foreign banking agencies, and the Federal Reserve System. ers reporting to the Federal Reserve Bank of New York. The figures exclude allotments of, and exchanges for, new U.S. government securities, redemptions NOTE. Averages for transactions are based on number of trading days in the of called or matured securities, or purchases or sales of securities under repurchase, period. reverse repurchase (resale), or similar contracts. 1.45 U.S. GOVERNMENT SECURITIES DEALERS Positions and Sources of Financing Par value; averages of daily figures, in millions of dollars 1979 1979, week ending Wednesday Item 1976 1977 1978 Oct. Nov. Dec./' Sept. 19 Sept. 26 Oct. 3 Oct. 10 Oct. 17 Oct. 24 Positions1 1 U.S. government securities 7,592 5,172 2,656 700 3,,931 3,900 999 915 -693 653 1,157 671 2 Bills 6,290 4,772 2,452 2,291 4.446 5,760 2,603 2,414 1,805 2,102 2,771 2,399 3 Other within 1 year 188 99 260 -800 -896 - 1,548 -259 -422 -878 -799 -828 -735 4 1-5 years 515 60 -92 - 535 - 197 -681 - 1,146 - 1,068 -1,461 -307 -641 -788 5 5-10 years 402 92 40 17 347 385 132 174 129 61 59 -7 6 Over 10 years 198 149 -4 -272 231 57 - 332 - 184 -288 -405 -206 -199 7 Federal agency securities . 729 693 606 1,809 1,534 1,308 1,966 2,549 2,280 1,947 1,824 1,567 Financing2 8 AH sources 8,715 9,877 10,204 16,021 19,122 21,391 18,047 18,697 16,946 15,711 16,628 16,744 Commercial banks 9 New York City 1.896 1,313 599 1.152 1.778 1,729 1,501 1,373 1,035 1,406 1,463 1,220 10 Outside New York City 1,660 1,987 2,174 3.247 3,386 3,778 3,682 3,438 3,483 3,368 3,637 3,227 11 Corporations3 1,479 2,423 2,370 3.131 4,102 4,832 4,074 3,765 3,117 3.120 3,123 3,312 12 All others 3,681 4,155 5,052 8.491 9,857 11,054 8,789 10,122 9,311 7,816 8,403 8,985 1. New ammounts (in terms of par values) of securities owned by nonbankdealer agency securities (through both collateral loans and sales under agreements to firms and dealer department of commercial banks on a commitment, that is, trade- repurchase), plus internal funds used by bank dealer departments to finance podate basis, including any such securities that have been sold under agreements to sitions in such securities. Borrowings against securities held under agreeementto repurchase. The maturities of some repurchase agreements are sufficiently long, resell are excluded where the borrowing contract and the agreement to resell are however, to suggest that the securities involved are not available for trading pur- equal in amount and maturity, that is, a matched agreement. poses. Securities owned, and hence dealer positions, do not include securities 3. All business corporations except commercial banks and insurance companies. purchased under agreement to resell. 2. Total amounts outstanding of funds borrowed by nonbank dealer firms and NOTE. Averages for positions are based on number of trading days in the period; dealer departments of commercial banks against U.S. government and federal those for financing, on the number of calendar days in the period. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A35 1.46 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt outstanding Millions of dollars, end of period 1979 AAggeennccyy 11997766 11997777 11997788 May June July Aug. Sept. Oct. 1 Federal and federally sponsored agencies1 103,848 112,472 137,063 146,429 149,612 152,653 153,788 154,753 158,300 2 Federal agencies 22,419 22,760 23,488 23,366 24,170 24,274 24,415 24,341 24,153 3 Defense Department2 1,113 983 968 807 796 787 777 767 759 4 Export-Import Bank3-4 8,574 8,671 8,711 8,107 8,806 8,783 8,781 8,886 8,881 5 Federal Housing Administration5 575 581 588 568 562 559 552 551 547 6 Government National Mortgage Association participation certificates6 4,120 3,743 3,141 3,099 3,039 3,004 3,004 3,004 3,004 7 Postal Service7 2,998 2,431 2,364 2,202 2,202 2,202 2,202 1,837 1,837 8 Tennessee Valley Authority 4,935 6,015 7,460 8,155 8,335 8,495 8,655 8,850 8,670 9 United States Railway Association7 104 336 356 428 430 444 444 446 455 10 Federally sponsored agencies1 81,429 89,712 113,575 123,063 125,442 128,379 129,373 130,412 134,147 11 Federal Home Loan Banks 16,811 18,345 27,563 28,577 28,758 29,600 29,994 30,303 31,874 12 Federal Home Loan Mortgage Corporation 1,690 1,686 2,262 2,323 2,522 2,522 2,720 2,622 2,621 13 Federal National Mortgage Association 30,565 31,890 41,080 44,639 45,775 46,341 46,108 46,378 46,861 14 Federal Land Banks 17,127 19,118 20,360 18,389 18,389 17,075 17,075 17,075 16,006 15 Federal Intermediate Credit Banks 10,494 11,174 11,469 5,958 5,122 4,269 3,427 2,676 2,676 16 Banks for Cooperatives 4,330 4,434 4,843 1,483 785 785 785 785 584 17 Farm Credit Banks1 2,548 5,081 20,597 22,949 26,606 28,033 29,297 32,189 18 Student Loan Marketing Association8 410 515 915 1,095 1,140 1,180 1,230 1,275 1,335 19 Other 2 2 2 2 2 1 1 1 1 MEMO: 20 Federal Financing Bank debt7 9 28,711 38,580 51,298 58,186 60,816 61,798 62,880 64,211 65,583 Lending to federal and federally sponsored agencies 21 Export-Import Bank4 5,208 5,834 6,898 7,131 7,846 7,846 7,846 7,953 7,953 22 Postal Service7 2,748 2,181 2,114 1,952 1,952 1,952 1,952 1,587 1,587 23 Student Loan Marketing Association8 410 515 915 1,095 1,140 1,180 1,230 1,275 1,335 24 Tennessee Valley Authority 3,110 4,190 5,635 6,430 6,610 6,770 6,930 7,125 6,945 25 United States Railway Association7 104 336 356 428 430 444 444 446 455 Other Lending10 26 Farmers Home Administration 10,750 16,095 23,825 28,050 29,200 29,765 30,445 31,080 31,670 27 Rural Electrification Administration 1,415 2,647 4,604 5,253 5,497 5,639 5,754 5,926 6,157 28 Other .' 4,966 6,782 6,951 7,847 8,141 8,202 8,279 8,819 9,481 1. In September 1977 the Farm Credit Banks issued their first consolidated of Housing and Urban Development; Small Business Administration; and the bonds, and in January 1979 they began issuing these bonds on a regular basis to Veterans Administration. replace the financing activities of the Federal Land Banks, the Federal Interme- 7. Off-budget. diate Credit Banks, and the Banks for Cooperatives. Line 17 represents those 8. Unlike other federally sponsored agencies, the Student Loan Marketing Asconsolidated bonds outstanding, as well as any discount notes that have been sociation may borrow from the Federal Financing Bank (FFB) since its obligations issued. Lines 1 and 10 reflect the addition of this item. are guaranteed by the Department of Health, Education, and Welfare. 2. Consists of mortgages assumed by the Defense Department between 1957 9. The FFB, which began operations in 1974, is authorized to purchase or sell and 1963 under family housing and homeowners assistance programs. obligations issued, sold, or guaranteed by other federal agencies. Since FFB incurs 3. Includes participation certificates reclassified as debt beginning Oct. 1, 1976. debt solely for the purpose of lending to other agencies, its debt is not included 4. Off-budget Aug. 17, 1974, through Sept. 30, 1976; on-budget thereafter. in the main portion of the table in order to avoid double counting. 5. Consists of debentures issued in payment of Federal Housing Administration 10. Includes FFB purchases of agency assets and guaranteed loans; the latter insurance claims. Once issued, these securities may be sold privately on the se- contain loans guaranteed by numerous agencies with the guarantees of any parcurities market. ticular agency being generally small. The Farmers Home Administration item 6. Certificates of participation issued prior to fiscal 1969 by the Government consists exclusively of agency assets, while the Rural Electrification Administration National Mortgage Association acting as trustee for the Farmers Home Admin- entry contains both agency assets and guaranteed loans. istration; Department of Health, Education, and Welfare; Department Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic Financial Statistics • February 1980 1.47 NEW SECURITY ISSUES of State and Local Governments Millions of dollars 1979 TTyyppee ooff iissssuuee oorr iissssuueerr,, 11997766 11997777 11997788 oorr uussee June' July' Aug/ Sept/ Oct/ Nov. 1 All issues, new and refunding1 35,313 46,769 48,607 4,736 3,399 4,261 2,479 4,235 4,105 Type of issue 2 General obligation 18,040 18,042 17,854 1,543 789 743 699 1,044 804 3 Revenue 17,140 28,655 30,658 3,174 2,607 3,508 1,773 3,179 3,289 4 Housing Assisstance Administration2 5 U.S. government loans 133 72 95 19 3 10 7 12 12 Type of issuer 6 State 7,054 6,354 6,632 642 234 200 113 294 274 7 Special district and statutory authority 15,304 21,717 24,156 2,068 1,606 2,560 1,414 2,750 2,661 8 Municipalities, counties, townships, school districts 12,845 18,623 17,718 2,007 1,556 1,490 945 1,179 1,158 9 Issues for new capital, total 32,108 36,189 37,629 4,389 2,902 4,197 2,436 4,177 3,635 Use of proceeds 10 Education 4,900 5,076 5,003 527 383 556 218 311 298 11 Transportation 2,586 2,951 3,460 278 149 151 38 562 97 12 Utilities and conservation 9,594 8,119 9,026 988 608 817 336 1,431 509 13 Social welfare 6,566 8,274 10,494 1,454 1,166 1,749 1,082 1,182 2,031 14 Industrial aid 483 4,676 3,526 344 328 417 382 427 321 15 Other purposes 7,979 7,093 6,120 798 268 507 380 264 379 1. Par amounts of long-term issues based on date of sale. SOURCE. Public Securities Association 2. Only bonds sold pursuant to the 1949 Housing Act, which are secured by contract requiring the Housing Assistance Administration to make annual contributions to tne local authority. 1.48 NEW SECURITY ISSUES of Corporations Millions of dollars 1979 TTyyppee ooff iissssuuee oorr iissssuueerr,, 11997766 11997777 11997788 oorr uussee May June July' Aug/ Sept. Oct. 1 All issues1 53,488 53,792 47,230 4,167 6,247 4,095 4,083 4,308 4,561 2 Bonds 42,380 42,015 36,872 3,575 5,356 3,114 2,859 3,021 3,532 Type of offering 3 Public 26,453 24,072 19,815 1,999 4,171 2,247 1,973 2,167 2,669 4 Private placement 15,927 17,943 17,057 1,576 1,185 867 886 854 863 Industry group 5 Manufacturing 13,264 12,204 9,572 1,208 1,146 968 806 1,095 1,334 6 Commercial and miscellaneous 4,372 6,234 5,246 267 573 241 413 361 214 7 Transportation 4,387 1,996 2,007 205 423 380 171 175 296 8 Public utility 8,297 8,262 7,092 638 1,125 174 137 620 1,107 9 Communication 2,787 3,063 3,373 102 379 26 336 418 433 10 Real estate and financial 9,274 10,258 9,586 1,154 1,710 1,325 996 353 147 11 Stocks 11,108 11,777 10,358 592 891 981 1,224 1,287 1,029 Type 12 Preferred 2,803 3,916 2,832 174 278 392 401 698 195 13 Common 8,305 7,861 7,526 418 613 589 823 589 834 Industry group 14 Manufacturing 2,237 1,189 1,241 85 47 38 360 394 151 15 Commercial and miscellaneous 1,183 1,834 1,816 203 363 173 266 218 98 Transportation 24 456 263 49 3 142 4 17 Public utility 6,121 5,865 5,140 227 248 598 366 527 662 18 Communication . 776 1,379 264 7 30 68 83 47 19 Real estate and financial 771 1,049 1,631 21 200 103 91 61 70 1. Figures, which represent gross proceeds of issues maturing in more than one 1933, employee stock plans, investment companies other than closed-end, intrayear, sold for cash in the United States, are principal amount or number of units corporate transactions, and sales to foreigners. multiplied by offering price. Excludes offerings of less than $100,000, secondary offerings, undefined or exempted issues as defined in the Securities Act of SOURCE. Securities and Exchange Commission. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Corporate Finance A37 1.49 OPEN-END INVESTMENT COMPANIES Net Sales and Asset Position Millions of dollars 1979 IItteemm 11997788 11997799 June July Aug. Sept. Oct. Nov. Dec. INVESTMENT COMPANIES1 1 Sales of own shares2 6,645 7,495 676 744 675 580 617 690r 748 2 Redemptions of own shares3 7,231 8,393 667 706 832 784 805 579 743 3 Net sales -586 -898 9 38 -157 -204 -188 111 5 4 Assets4 44,980 49,493 48,064 48,771 50,802 50,147 46,271 48,613 49,493 5 Cash position5 4,507 4,983 5,012 5,052 4,924 5,016 4,521 4,984 4,983 6 Other 40,473 44,510 43,052 43,719 45,878 45,131 41,750 43,629 44,510 1. Excluding money market funds. 5. Also includes all U.S. government securities and other short-term debt secu- 2. Includes reinvestment of investment income dividends. Excludes reinvest- rities. ment of capital gains distributions and share issue of conversions from one fund to another m the same group. NOTE. Investment Company Institute data based on reports of members, which 3. Excludes share redemption resulting from conversions from one fund to an- comprise substantially all open-end investment companies registered with the Seother in the same group. curities and Exchange Commission. Data reflect newly formed companies after 4. Market value at end of period, less current liabilities. their initial offering of securities. 1.50 CORPORATE PROFITS AND THEIR DISTRIBUTION Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1978 1979 AAccccoouunntt 11997766 11997777 11997788 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1 Profits before tax 156.0 177.1 206.0 177.5 207.2 212.0 227.4 233.3 227.9 242.3 2 Profits tax liability 63.8 72.6 84.5 70.8 84.7 87.5 95.1 91.3 88.7 94.0 3 Profits after tax 92.2 104.5 121.5 106.7 122.4 124.5 132.3 142.0 139.3 148.3 4 Dividends 37.5 42.1 47.2 45.1 46.0 47.8 49.7 51.5 52.3 52.8 5 Undistributed profits 54.7 62.4 74.3 61.6 76.4 76.8 82.6 90.5 87.0 95.5 6 Capital consumption allowances 97.1 109.3 119.8 116.5 119.1 120.6 123.1 125.5 130.4 132.8 7 Net cash flow 151.8 171.7 194.1 178.1 195.5 197.3 205.7 216.0 217.3 228.3 SOURCE. Survey of Current Business (U.S. Department of Commerce.). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Nonfinancial Statistics • February 1980 1.51 NONFINANCIAL CORPORATIONS Current Assets and Liabilities Billions of dollars, except for ratio 1978 1979 AAccccoouunntt 11997755 11997766 11997777 Q1 Q2 Q3 04 Q1 Q2 Q3 1 Current assets 759.0 826.3 900.9 925.0 954.2 992.6 1,028.1 1,078.6 1,110.6 1,169.6 2 Cash 82.1 87.3 94.3 88.8 91.3 91.6 103.5 102.4 100.1 103.6 3 U.S. government securities 19.0 23.6 18.7 18.6 17.3 16.1 17.8 19.2 20.8 17.8 4 Notes and accounts receivable 272.1 293.3 325.0 337.4 356.0 376.4 381.9 405.3 419.0 448.9 5 Inventories 315.9 342.9 375.6 390.5 399.3 415.5 428.3 452.6 469.2 492.7 6 Other 69.9 79.2 87.3 89.6 90.3 92.9 96.5 99.1 101.5 106.7 7 Current liabilities 451.6 492.7 546.8 574.2 593.5 626.3 662.2 701.9 723.9 773.7 8 Notes and accounts payable 264.2 282.0 313.7 325.2 337.9 356.2 375.1 392.6 410.8 443.1 9 Other 187.4 210.6 233.1 249.0 255.6 270.0 287.1 309.2 313.2 330.6 10 Net working capital 307.4 336.6 354.1 350.7 360.7 366.3 365.9 376.7 386.1 395.9 11 MEMO: Current ratio 1 1.681 1.677 1.648 1.611 1.608 1.585 1.552 1.537 1.534 1.512 1. Ratio of total current assets to total current liabilities. All data in this table reflect the most current benchmarks. Complete data are available upon request from the Flow of Funds Section, Division of Research and NOTE: For a description of this series, see "Working Capital of Nonfinancial Statistics. Corporations" in the July 1978 BULLETIN, pp. 533-37. SOURCE. Federal Trade Commission. 1.52 BUSINESS EXPENDITURES on New Plant and Equipment Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1978 1979 1980 IInndduussttrryy 11997788 11997799pp 03 Q4 01 Q2 03' Q42 Ql2 Q22 1 All industries 153.82 176.37 155.41 163.96 165.94 173.48 179.33 184.32 189.32 195.76 Manufacturing 2 Durable goods industries 31.66 37.89 32.25 33.99 34.00 36.86 39.72 40.16 42.32 44.44 3 Nondurable goods industries 35.96 40.41 35.50 39.26 37.56 39.56 40.50 42.88 42.70 44.68 Nonmanufacturing 4 Mining 4.78 5.52 4.99 4.98 5.46 5.31 5.42 5.91 4.95 5.04 Transportation 5 Railroad 3.32 3.88 3.38 3.49 4.02 3.66 4.03 4.00 3.92 3.68 6 Air 2.30 3.34 2.20 2.39 3.35 3.26 3.10 3.74 5.09 3.89 7 Other 2.43 2.97 2.47 2.55 2.71 2.79 3.16 3.22 3.75 3.98 Public utilities 8 Electric 29.48 33.18 24.92 26.95 27.70 28.06 28.32 28.53 27.72 28.32 9 Gas and other 4.70 4.99 4.70 4.78 4.66 5.18 5.01 5.24 5.35 6.13 1 1 0 1 C C o o m m m me u r n c i i c a a l ti a o n n d other1 2 1 5 8 . . 7 1 1 6 2 2 0 8 . . 1 9 8 8 2 1 6 8 , . 0 9 9 0 2 1 7 8 . . 1 4 2 6 2 1 7 8 . . 7 7 3 5 2 2 0 8 . . 2 5 9 1 2 29 0 . . 6 4 6 1 50 65 53 52 55 60 1. Includes trade, service, construction, finance, and insurance. agriculture; real estate operators; medical, legal, educational, and cultural service; 2. Anticipated by business. and noprofit organizations. NOTE. Estimates for corporate and noncorporate business, excluding Source. Survey of Current Business (U.S. Dept. of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Corporate Finance A39 1.53 DOMESTIC FINANCE COMPANIES Assets and Liabilities Billions of dollars, end of period 1978 1979 AAccccoouunntt 11997733 11997744 11997755 11997766 11997777 Q3 04 Q1 Q2 Q3 ASSETS Accounts receivable, gross 1 Consumer 35.4 36.1 36.0 38.6 44.0 49.7 52.6 54.9 58.7 62.3 2 Business 32.3 37.2 39.3 44.7 55.2 58.3 63.3 66.7 70.1 68.1 3 Total 67.7 73.3 75.3 83.4 99.2 108.0 116.0 121.6 128.8 130.4 4 LESS: Reserves for unearned income and losses .... 8.4 9.0 9.4 10.5 12.7 14.3 15.6 16.5 17.7 18.7 5 Accounts receivable, net 59.3 64.2 65.9 72.9 86.5 93.7 100.4 105.1 111.1 111.7 6 Cash and bank deposits 2.6 3.0 2.9 2.6 2.6 2.7 3.5 7 Securities .8 .4 1.0 1.1 .9 1.8 1.3 23.81 24.6 25.8 8 All other 10.6 12.0 11.8 12.6 14.3 17.1 17.3 9 Total assets 73.2 79.6 81.6 89.2 104.3 115.3 122.4 128.9 135.8 137.4 LIABILITIES 10 Bank loans 7.2 9.7 8.0 6.3 5.9 5.4 6.5 6.5 7.3 7.8 11 Commercial paper 19.7 20.7 22.2 23.7 29.6 29.3 34.5 38.1 41.0 39.2 12 Short-term, n.e.c 4.6 4.9 4.5 5.4 6.2 6.8 8.1 6.7 8.8 9.1 13 Long-term n.e.c 24.6 26.5 27.6 32.3 36.0 41.3 43.6 44.5 46.0 47.5 14 Other 5.6 5.5 6.8 8.1 11.5 15.2 12.6 15.1 14.4 15.4 15 Capital, surplus, and undivided profits 11.5 12.4 12.5 13.4 15.1 17.3 17.2 18.0 18.2 18.4 16 Total liabilities and capital 73.2 79.6 81.6 89.2 104.3 115.3 122.4 128.9 135.8 137.4 1. Beginning Q1 1979, asset items on lines 6, 7, and 8 are combined. NOTE. Components may not add to totals due to rounding. 1.54 DOMESTIC FINANCE COMPANIES Business Credit Millions of dollars, seasonally adjusted except as noted Changes in accounts Extensions Repayments AAAccccccooouuunnntttsss receivable rrreeeccceeeiiivvvaaabbbllleee TTTyyypppeee ooouuutttssstttaaannndddiiinnnggg NNNooovvv... 333000,,, 1979 1979 1979 111999777999''' Sept. Oct. Nov. Sept. Oct. Nov. Sept. Oct. Nov. 1 Total 70,225 -1,245 399 242 15,310 16,354 16,505 16,555 15,955 16,263 2 Retail automotive (commercial vehicles 15,308 94 -16 -41 1,236 1,151 1,135 1,142 1,167 1,176 3 Wholesale automotive 14,075 -1,453 -408 -319 5,320 6,079 5,082 6,773 6,487 5,401 4 Retail paper on business, industrial and farm equipment 18,516 135 369 261 1,172 1,300 1,252 1,037 931 991 6 5 F L a o c a t n o s r e o d n c c o o m m m m e e r r c c i i a a l l a a c c c c o o u u n n ts ts r r e e c c e e i i v v a a b b l l e e 2 2 .... 6,714 -281 168 304 5,369 5,200 6,635 5,650 5,032 6,331 7 All other business credit 15,612 260 286 37 2,213 2,624 2,401 1,953 2,338 2,364 1. Not seasonally adjusted. 2. Beginning January 1979 the categories "Loans on commercial accounts receivable" and "Factored commercial accounts receivable" are combined. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • February 1980 1.55 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1979 Item 1976 1977 1978 July Aug. Sept. Oct. Nov. Dec. Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms1 1 Purchase price (thousands of dollars) 48.4 54.3 62.6 74.3 80.0 75.5 76.4 771 79.2 2 Amount of loan (thousands of dollars) 35.9 40.5 45.9 52.7 56.9 53.9 54.9 54.5' 55.8 3 Loan/price ratio (percent) 74.2 76.3 75.3 73.0 73.1 73.4 73.7 73.8 72.8 4 Maturity (years) 27.2 27.9 28.0 28.1 28.1 28.6 28.5 28.5 28.7 5 Fees and charges (percent of loan amount)2 1.44 1.33 1.39 1.63 1.60 1.67 1.70 1.82 1.86 6 Contract rate (percent per annum) 8.76 8.80 9.30 10.49 10.73 10.72 10.91 11.04 11.31 Yield (percent per annum) 1 FHLBB series3 8.99 9.01 9.54 10.78 11.01 11.02 11.21 11.37 11.65 8 HUD series4 8.99 8.95 9.68 10.95 11.10 11.35 12.15 12.50 12.50 SECONDARY MARKETS Yield (percent per annum) 9 FHA mortgages (HUD series)5 8.82 8.68 9.70 10.46 10.58 11.37 n.a. 12.41 12.24 10 GNMA securities6 8.17 8.04 8.98 9.77 9.91 10.31 11.25 11.57 11.34 FNMA auctions7 11 Government-underwritten loans 8.99 8.73 9.77 10.66 10.66 11.08 12.52 12.75 12.48 12 Conventional loans 9.11 8.98 10.01 11.52 11.52 11.75 12.85 13.66 12.98 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 13 Total 32,904 34,370 43,311 48,539 48,909 49,173 49,744 50,350c 51,091 14 FHA-insured 18,916 18,457 21,243 23,378 23,526 n.a. n.a. n.a. n.a. 15 VA-guaranteed 9,212 9,315 10,544 10,450 10,386 n.a. n.a. n.a. n.a. 16 Conventional 4,776 6,597 11,524 14,710 14,997 15,203 15,517 15,797 16,106 Mortgage transactions (during period) 17 Purchases 3,606 4,780 12,303 660022 646 545 859 872 893 18 Sales 86 67 5 0 0 0 0 0 0 Mortgage commitments8 19 Contracted (during period) 6,247 9,729 18,960 354 593 1,407 2,369 496 n.a. 20 Outstanding (end of period) 3,398 4,698 9,201 5,912 5,692 6,352 7,472 6,974 n.a. Auction of 4-month commitments to buy Government-underwritten loans 21 Offered9 4,929.8 7,974.1 12,978 133.2 162.3 1,421.1 2,943.4 558.4 649.2 22 Accepted 2,787.2 4,846.2 6,747.2 69.6 82.7 599.9 1,130.4 264.6 249.3 Conventional loans 23 Offered9 2,595.7 5.675.2 9,933.0 93.5 245.9 527.3 1,049.9 366.1 413.2 24 Accepted 1,879.2 3,917.8 5,110.9 69.9 184.1 325.6 431.2 190.2 152.4 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)m 25 Total 4,269 3,276 3,064 3,487 3,549 3,729 3,726 3,990 4,035 26 FHA/VA 1,618 1,395 1,243 1,156 1,145 1,132 1,120 1,112 1,102 27 Conventional 2,651 1,881 1,822 2,331 2,404 2,597 2,606 2,879 2,933 Mortgage transactions (during period) 28 Purchases 1,175 3,900 6,524 518 636 537 552 458 403 29 Sales 1,396 4,131 6,211 321 554 347 530 186 361 Mortgage commitments11 30 Contracted (during period) 1,477 5,546 7,451 528 655 437 504 221 199 31 Outstanding (end of period) 333 1,063 1,410 1,572 1,536 1,400 1,312 1,036 797 1. Weighted averages based on sample surveys of mortgages originated by major securities, assuming prepayment in 12 years on pools of 30-year FHA/VA mortinstitutional lender groups. Compiled by the Federal Home Loan Bank Board in gages carrying the prevailing ceiling rate. Monthly figures are unweighted averages cooperation with the Federal Deposit Insurance Corporation. of Monday quotations for the month. 2. Includes all fees, commissions, discounts, and "points" paid (by the borrower 7. Average gross yields (before deduction of 38 basis points for mortgage or the seller) in order to obtain a loan. servicing) on accepted bids in Federal National Mortgage Association's auctions 3. Average effective interest rates on loans closed, assuming prepayment at the of 4-month commitments to purchase home mortgages, assuming prepayment in end of 10 years. 12 years for 30-year mortgages. No adjustments are made for FNMA commitment 4. Average contract rates on new commitments for conventional first mortgages, fees or stock related requirements. Monthly figures are unweighted averages for rounded to the nearest 5 basis points; from Department of Housing and Urban auctions conducted within the month. Development. 8. Includes some multifamily and nonprofit hospital loan commitments in ad- 5. Average gross yields on 30-year, minimum-downpayment, Federal Housing dition to 1- to 4-family loan commitments accepted in FNMA's free market auction Administration insured first mortgages for immediate delivery in the private sec- system, and through the FNMA-GNMA tandem plans. ondary market. Any gaps in data are due to periods of adjustment to changes in 9. Mortgage amounts offered by bidders are total bids received. maximum permissible contract rates. 10. Includes participation as well as whole loans. 6. Average net yields to investors on Government National Mortgage Associ- 11. Includes conventional and government-underwritten loans. ation guaranteed, mortgage-backed, fully modified pass-through Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate Debt A41 1.56 MORTGAGE DEBT OUTSTANDING Millions of dollars, end of period 1978 1979 TTyyppee ooff hhoollddeerr,, aanndd ttyyppee ooff pprrooppeerrttyy 11997766 11997777 11997788 Q3 04 01 02 03 1 All holders 889,327 1,023,505 1,172,502 1,133,503 1,172,737 1,206,280 1,252,519 1,295,449 2 1- to 4-family 556,557 656,566 761,905 734,709 761,892 784,602 817,018 845,284' 3 Multifamily 104,516 111,841 122,004 119,381 121,978 123,970 125,923 129,079 4 Commercial 171,223 189,274 212,597 205,629 212,743 217,501 224,507 232,084 5 Farm 57,031 65,824 75,996 73,784 76,124 80,207 85,071 89,002 6 Maior financial institutions 647,650 745,011 847,910 821,988 848,145 866,036 894,471 919,984 7 Commercial banks1 151,326 178,979 213,963 205,445 213,963 220,063 229,564 239,363 8 1- to 4-family 86,234 105,115 126,966 121,911 126,966 130,585 136,223 142,038 9 Multifamily 8,082 9,215 10,912 10,478 10,912 11,223 11,708 12,208 10 Commercial 50,289 56,898 67,056 64,386 67,056 68,968 71,945 75,016 11 Farm 6,721 7,751 9,029 8,670 9,029 9,287 9,688 10,101 12 Mutual savings banks 81,639 88,104 95,157 93,403 95,157 96,136 97,155 97,929 13 1- to 4-family 53,089 57,637 62,252 61,104 62,252 62,892 63,559 64,065 14 Multifamily 14,177 15,304 16,529 16,224 16,529 16,699 16,876 17,010 15 Commercial 14,313 15,110 16,319 16,019 16,319 16,488 16,663 16,795 16 Farm 60 53 57 56 57 57 58 59 17 Savings and loan associations 323,130 381,163 432,858 420,971 432,858 441,420 456,629 468,324 18 1- to 4-family 260,895 310,686 356,156 345,617 356,156 363,774 377,587 387,257 19 Multifamily 28,436 32,513 36,057 35,362 36,057 36,682 37,078 38,028 20 Commmercial 33,799 37,964 40,645 39,992 40,645 40,964 41,964 43,039 21 Life insurance companies 91,555 96,765 105,932 102,169 106,167 108,417 111,123 114,368 ?,? 1- to 4-family 16,088 14,727 14,449 14,158 14,436 14,507 14,489 14,884 73 Multifamily 19,178 18,807 19,026 18,742 19,000 19,080 19,102 19,107 7,4 Commercial 48,864 54,388 62,086 59,153 62,232 63,908 66,055 68,513 25 Farm 7,425 8,843 10,371 10,116 10,499 10,922 11,477 11,864 26 Federal and related agencies 66,753 70,006 81,853 78,672 81,853 86,689 90,095 93,143 27 Government National Mortgage Assn 4,241 3,660 3,509 3,560 3,509 3,448 3.425 3,382 28 1- to 4-family 1,970 1,548 877 897 877 821 800 780 29 Multifamily 2,271 2,112 2,632 2,663 2,632 2,627 2,625 2,602 30 Farmers Home Administration 1,964 1,353 926 1,384 926 956 1,200 1,383 31 1- to 4-family 454 626 288 460 288 302 363 163 32 Multifamily 218 275 320 240 320 180 75 299 33 Commercial 72 149 101 251 101 283 278 262 34 Farm 320 303 217 433 217 191 484 659 35 Federal Housing and Veterans Admin 5,150 5,212 5,419 5,295 5,419 5,522 5,597 5,672 36 1- to 4-family 1,676 1,627 1,641 1,565 1,641 1,693 1,744 1,795 37 Multifamily 3,474 3,585 3,778 3,730 3,778 3,829 3,853 3,877 38 Federal National Mortgage Association 32,904 34,369 43,311 41,189 43,311 46,410 48,206 49,173 39 1- to 4-family 26,934 28,504 37,579 35,437 37,579 40,702 42,543 43,534 40 Multifamily 5,970 5,865 5,732 5,752 5,732 5,708 5,663 5,639 41 Federal Land Banks 19,125 22,136 25,624 24,758 25,624 26,893 28,459 29,804 42 1- to 4-family 601 670 927 819 927 1,042 1,198 1,374 43 Farm 18,524 21,466 24,697 23,939 24,697 25,851 27,261 28,430 44 Federal Home Loan Mortgage Corp 4,269 3,2767 3,064 2,486 3,064 3,460 3,208 3,729 45 1- to 4-family 3,889 2,738 2,407 1,994 2,407 2,685 2,489 2,850 46 Mutlifamily 380 538 657 492 657 775 719 879 47 Mortgage pools or trusts2 49,801 70,289 88,633 82,730 88,633 94,551 102,259 110,648 48 Government National Mortgage Assn 30,572 44,896 24,347 50,844 54,347 57,955 63,000 69,357 49 1- to 4-family 29,583 43,555 52,732 49,276 52,732 56,269 61,246 67,535 50 Multifamily 989 1,341 1,615 1,568 1,615 1,686 1,754 1,822 51 Federal Home Loan Mortgage Corp 2,671 6,610 11,892 10,511 11,892 12,467 13,708 14,421 52 1- to 4-family 2,282 5,621 9,657 8,616 9,657 10,088 11,096 11,568 53 Multifamily 389 989 2,235 1,895 2,235 2,379 2,612 2,853 54 Farmers Home Administration 16,558 18,783 22,394 21,375 22,394 24,129 25,551 26,870 55 1- to 4-family 10,219 11,379 13,400 12,851 13,400 13,883 14,329 14,972 56 Multifamily 532 759 1,116 1,116 1,116 1,465 1,764 1,763 57 Commercial 2,440 2,945 3,560 3,369 3,560 3,660 3,833 4,054 58 Farm 3,367 3,682 4,318 4,039 4,318 5,121 5,625 6,081 59 Individual and others3 125,123 138,199 154,106 150,113 154,106 158,014 165,694 171,674 60 62,643 72,115 82,574 80,004 82,574 85,056 89,352 92,469 61 20,420 20,538 21,395 21,119 21,395 21,670 22,094 22,992 62 Commerical 21,446 21,820 212,830 22,459 22,830 23,292 23,770 24,405 63 Farm 20,614 23,726 27,307 26,531 27,307 27,996 30,478 31,808 1. Includes loans held by nondeposit trust companies but not bank trust de- NOTE. Based on data from various institutional and government sources, with partments. some quarters estimated in part by the Federal Reserve in conjunction with the 2. Outstanding principal balances of mortgages backing securities insured or Federal Home Loan Bank Board and the Department of Commerce. Separation guaranteed by the agency indicated. of nonfarm mortgage debt by type of property, if not reported directly, and in- 3. Other holders include mortgage companies, real estate investment trusts, terpolations and extrapolations when required, are estimated mainly by the Federal state and local credit agencies, state and local retirement funds, noninsured pension Reserve. Multifamily debt refers to loans on structures of five or more units. funds, credit unions, and U.S. agencies for which amounts are small or separate data are not readily available. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Nonfinancial Statistics • February 1980 1.57 CONSUMER INSTALLMENT CREDIT' Total Outstanding, and Net Change Millions of dollars 1979 Holder, and type of credit 1976 1977 1978 June July Aug. Sept. Oct. Nov. Dec. Amounts outstanding (end of period) 1 Total 193,977 230,829 275,629 291,856 295,052 299,813 303,902 305,217 307,641 311,339 By major holder 2 Commercial banks 93,728 112,373 136,189 144,035 145,169 147,312 148,657 149,152 149,057 149,821 4 3 5 C F R i r e n e t a d a n i i l t c e e r u s n 2 c i o o m ns p anies 3 3 1 8 1 9 , , , 9 1 2 1 6 6 9 9 0 2 3 4 7 3 4 , , , 6 4 8 0 9 6 5 0 8 4 2 5 5 4 4 , , , 9 8 2 3 7 9 9 6 8 4 2 6 7 3 0 , , , 4 6 9 7 7 9 8 2 6 4 2 6 7 3 2 , , , 7 7 4 7 1 6 2 3 3 4 2 6 8 3 4 , , , 6 3 1 3 6 1 1 2 4 4 2 6 9 4 4 , , , 2 8 4 1 2 4 4 2 6 4 6 2 8 5 4 , , , 7 6 8 7 9 6 0 2 0 4 6 2 8 7 5 , , , 6 1 73 7 6 2 3 4 4 6 2 8 8 7 , , , 1 3 9 8 1 1 6 8 6 6 Savings and loans 6,246 7,354 8,394 9,290 9,425 9,760 9,972 10,073 10,241 10,361 7 Gasoline companies .... 2,830 2,963 3,240 3,704 3,872 4,048 4,244 4,174 4,281 4,316 8 Mutual savings banks .. 1,825 2,176 2,693 2,681 2,638 2,586 2,547 2,496 2,493 2,421 By major type of credit 1 9 0 Au C to o m m o m b e i r le c ial banks ... 6 3 7 9 , , 7 6 0 2 7 1 4 8 9 2 , , 5 9 7 1 7 1 1 6 0 0 2 , , 5 4 6 6 4 8 1 6 1 4 0 , , 4 93 8 0 0 1 6 1 4 1 , ,9 8 5 2 2 6 1 6 1 5 3 , , 3 3 8 5 9 1 1 6 1 5 4 , ,7 8 6 1 5 3 1 6 1 5 4 , , 9 87 7 6 3 1 6 1 5 5 , , 6 12 4 1 6 1 6 1 5 5 , , 2 02 2 2 9 11 Indirect paper 22,072 27,379 33,850 36,251 36,475 36,887 37,267 37,469 37,334 37,209 12 Direct loans 17,549 22,198 26,714 28,229 28,351 28,502 28,546 28,504 28,312 28,020 13 Credit unions 15,238 18,099 21,967 22,703 22,844 23,255 23,534 23,322 23,275 23,042 14 Finance companies ... 12,848 15,235 19,937 23,747 24,282 24,707 25,418 25,581 26,200 26,751 15 Revolving 17,189 39,274 47,051 47,458 47,894 49,270 50,422 50,883 52,060 55,547 16 Commercial banks ... 14,359 18,374 24,434 25,652 25,927 26,782 27,446 27,600 27,827 29,171 17 Retailer 17,937 19,377 18,102 18,095 18,440 18,732 19,109 19,952 22,060 18 Gasoline companies . 22,,883300 2,963 3,240 3,704 3,872 4,048 4,244 4,174 4,281 4,316 19 Mobile home 14,573 15,141 16,042 16,607 16,719 16,972 17,105 17,244 17,349 17,409 20 Commercial banks ... 8,737 9,124 9,553 9,759 9,801 9,912 9,940 10,013 10,036 9,991 21 Finance companies ... 3,263 3,077 3,152 3,191 3,212 3,231 3,258 3,295 3,321 3,390 22 Savings and loans .... 2,241 2,538 2,848 3,152 3,198 3,312 3,384 3,418 3,475 3,516 23 Credit unions 332 402 489 505 508 517 523 518 517 512 24 Other 94,508 93,503 110,068 116,861 118,487 120,220 121,610 122,214 123,111 123,361 25 Commercial banks ... 31,011 35,298 41,638 44,144 44,615 45,229 45.458 45,566 45,548 45,430 26 Finance companies ... 22,808 26,556 31,209 34,058 34,969 35,424 36,146 36,816 37,643 38,177 27 Credit unions 15,599 19,104 23,483 24,270 24,420 24,859 25,157 24,930 24,881 24,632 28 Retailers 19,260 5,553 5,499 5,570 5,618 5,674 5,714 5,751 5,780 5,856 29 Savings and loans .... 4,,005 4,816 5,546 6,138 6,227 6,448 6,588 6,655 6,766 6,845 30 Mutual savings banks 1,825 2,176 2,693 2,681 2,638 2,586 2,547 2,496 2,493 2,421 Net change (during period)3 31 Total 21,647 35,278 44,810 2,558 2,443 2,446 4,446 2,186 2,407 1,550 By major holder 32 Commercial banks 10,792 18,645 23,813 984 662 866 1,521 771 283 419 33 Finance companies 2,946 5,948 9,430 913 1,185 549 1,773 1,076 1,340 1,087 3 3 4 5 C R r e e ta d i i l t e r u s n 1 ions 5 1 , , 5 0 0 5 3 9 6 2 , , 4 6 3 5 6 4 8 1 , , 3 3 3 8 4 6 2 1 8 4 8 4 3 1 4 8 2 0 3 3 9 3 1 2 4 4 1 4 1 3 -1 3 5 3 2 5 - 4 4 7 4 7 -4 2 5 8 5 2 36 Savings and loans 1,085 1,111 1,041 240 120 253 207 76 143 165 37 Gasoline companies .... 124 132 276 39 2 116 127 122 218 115 38 Mutual savings banks .. 138 352 530 -50 -48 -61 -36 -42 -10 -63 By major type of credit 39 Automobile 10,465 15,204 19,557 690 616 594 1,823 487 533 682 40 Commercial banks ... 6,334 9,956 10,987 123 72 172 762 203 -76 122 41 Indirect paper 2,742 5,307 6,471 87 51 188 542 237 40 260 42 Direct loans 3,592 4,649 4,516 36 21 -16 220 -34 -116 -138 43 Credit unions 2,497 2,861 3,868 45 183 177 218 -79 -24 -213 44 Finance companies ... 1,634 2,387 4,702 522 361 245 843 363 633 773 45 Revolving 2,170 6,248 7,776 796 429 787 1,057 664 799 633 46 Commercial banks ... 2,046 4,015 6,060 494 303 365 546 253 136 225 47 Retailers 2,101 1,440 263 124 306 384 289 445 293 48 Gasoline companies . 112244 132 276 39 2 116 127 122 218 115 49 Mobile home 140 565 897 102 72 182 89 150 103 108 50 Commercial banks ... 70 387 426 12 17 59 10 105 33 -22 51 Finance companies ... -182 -189 74 14 11 13 17 27 19 84 52 Savings and loans .... 192 297 310 74 41 106 57 21 52 51 53 Credit unions 60 70 87 2 3 4 5 -3 -1 -5 54 Other 8,872 13,261 16,580 970 1,326 883 1,477 885 972 127 55 Commercial banks ... 2,342 4,287 6,340 355 270 270 203 210 119900 94 56 Finance companies ... 1,494 3,750 4,654 377 813 291 913 686 668888 230 57 Credit unions 2,946 3,505 4,379 97 156 210 188 -70 -19 -237 58 Retailers 1,059 553 -54 25 56 26 59 46 32 -11 59 Savings and loans .... 893 814 731 166 79 147 150 55 91 114 60 Mutual savings banks 138 352 530 -50 -48 -61 -36 -42 -10 -63 1. The Board's series cover most short- and intermediate-term credit extended NOTE. Total consumer noninstallment credit outstanding—credit scheduled to to individuals through regular business channels, usually to finance the purchase be repaid in a lump sum, including single-payment loans, charge accounts, and of consumer goods and services or to refinance debts incurred for such purposes, service credit—amounted to $64.3 billion at the end of 1978, $58.6 billion at the and scheduled to be repaid (or with the option of repayment) in two or more end of 1977, $54.8 billion at the end of 1976, and $50.9 billion at the end of 1975. installments. Comparable data for Dec. 31, 1979, will be published in the February 1980 BUL- 2. Includes auto dealers and excludes 30-day charge credit held by travel and LETIN. entertainment companies. 3. Net change equals extensions minus liquidations (repayments, charge-offs, and other credit); figures for all months are seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Consumer Debt A43 1.58 CONSUMER INSTALLMENT CREDIT Extensions and Liquidations Millions of dollars 1979 HHoollddeerr,, aanndd ttyyppee ooff ccrreeddiitt 1976 1977 1978 June July Aug. Sept. Oct. Nov. Dec. Extensions1 1 Total 211,028 254,071 298,351 26,139 26,848 27,583 28,634 27,695 26,464 25,805 By major holder 2 Commercial banks 97,397 117,896 142,720 12,278 12,292 12,700 13,172 12,718 11,738 11,504 3 Finance companies 36,129 41,989 50,505 4,641 5,353 5,133 5,489 5,642 5,105 5,249 4 Credit unions 29,259 34,028 40,023 2,986 3,282 3,361 3,363 2,942 2,808 2,396 5 Retailers2 29,447 39,133 41,619 3,853 3,687 3,921 4,082 3,930 4,161 4,054 6 Savings and loans 3,898 4,485 5,050 682 592 728 678 571 606 632 7 Gasoline companies 13,387 14,617 16,125 1,589 1,525 1,640 1,734 1,773 1,913 1,895 8 Mutual savings banks 1,511 1,923 2,309 110 117 100 116 119 133 75 By major type of credit 9 Automobile 63,743 75,641 88,987 7,178 7,447 7,667 8,430 7,676 7,066 7,131 10 Commercial banks 37,886 46,363 53,028 3,952 3,936 4,085 4,544 4,185 3,640 3,808 11 Indirect paper 20,576 25,149 29,336 2,146 2,151 2,276 2,569 2,376 2,009 2,181 12 Direct loans 17,310 21,214 23,692 1,806 1,785 1,809 1,975 1,809 1,631 1,627 13 Credit unions 14,688 16,616 19,486 1,485 1,611 1,661 1,655 1,434 1,399 1,223 14 Finance companies 11,169 12,662 16,473 1,741 1,900 1,921 2,231 2,057 2,027 2,100 15 Revolving 43,934 86,756 104,587 10,136 9,856 10,371 10,699 10,424 10,613 10,330 16 Commercial banks 30,547 38,256 51,531 5,166 5,078 5,280 5,398 5,165 5,014 4,817 17 Retailers 33,883 36,931 3,381 3,253 3,451 3 567 3 486 3,686 3 618 18 Gasoline companies 13,387 14,617 16,125 1,589 1,525 1,640 1>34 1J73 L913 L895 19 Mobile home 4,859 5,425 6,067 547 519 655 531 582 515 490 20 Commercial banks 3,064 3,466 3,704 304 297 362 294 374 294 245 21 Finance companies 702 643 886 59 71 67 69 83 69 97 22 Savings and loans 929 1,120 1,239 167 133 206 148 114 139 140 23 Credit unions 164 196 238 17 18 20 20 11 13 8 24 Other 98,492 86,249 98,710 8,278 9,026 8,890 8,974 9,013 8,270 7,854 25 Commercial banks 25,900 29,811 34,457 2,856 2,981 2,973 2,936 2,994 2,790 2,634 26 Finance companies 24,258 28,684 33,146 2,841 3,382 3,145 3,189 3,502 3,009 3,052 27 Credit unions 14,407 17,216 20,299 1,484 1,653 1,680 1,688 1,497 1,396 1,165 28 Retailers 29,447 5,250 4,688 472 434 470 515 444 475 436 29 Savings and loans 2,969 3,365 3,811 515 459 522 530 457 467 492 30 Mutual savings banks 1,511 1,923 2,309 110 117 100 116 119 133 75 Liquidations1 31 Total 189,381 218,793 253,541 23,581 24,405 25,137 24,188 25,509 24,057 24,255 By major holder 32 Commercial banks 86,605 99,251 118,907 11,294 11,630 11,834 11,651 11,947 11,455 11,085 33 Finance companies 33,183 36,041 41,075 3,728 4,168 4,584 3,716 4,566 3,765 4,162 34 Credit unions 23,756 27,592 31,689 2,842 2,940 2,970 2,952 3,094 2,852 2,851 35 Retailers2 28,388 36,479 40,233 3,565 3,507 3,589 3,639 3,595 3,684 3,772 36 Savings and loans 2,813 3,374 4,009 442 472 475 471 495 463 467 37 Gasoline companies 13,263 14,485 15,849 1,550 1,523 1,524 1,607 1.651 1,695 1,780 38 Mutual savings banks 1,373 1,571 1,779 160 165 161 152 161 143 138 By major type of credit 39 Automobile 53,278 60,437 69,430 6,488 6,831 7,073 6,607 7,189 6,533 6,449 40 Commercial banks 31,552 36,407 42,041 3,829 3,864 3,913 3,782 3.982 3,716 3,686 41 Indirect banks 17,834 19,842 22,865 2,059 2,100 2,088 2,027 2.139 1,969 1,921 42 Direct loans 13,718 16,565 19,176 1,770 1,764 1,825 1,755 1,843 1,747 1,765 43 Credit unions 12,191 13,755 15,618 1,440 1,428 1,484 1,437 1,513 1,423 1,436 44 Finance companies 9,535 10,275 11,771 1,219 1,539 1,676 1,388 1,694 1,394 1,327 45 Revolving 41,764 80,508 96,811 9,340 9,427 9,584 9,642 9,760 9,814 9,697 46 Commercial banks 28,501 34,241 45,471 4,672 4,775 4,915 4,852 4,912 4,878 4,592 47 Retailers 31,782 35,491 3,118 3 129 3,145 3,183 3,197 3 241 3,325 48 Gasoline companies 13,263 14,485 15,849 1,550 L523 L524 L607 L651 L695 1J80 49 Mobile home 4,719 4,860 5,170 445 447 473 442 432 412 382 50 Commercial banks 2,994 3,079 3,278 292 280 303 284 269 261 267 51 Finance companies 884 832 812 45 60 54 52 56 50 13 52 Savings and loans 737 823 929 93 92 100 91 93 87 89 53 Credit unions 104 126 151 15 15 16 15 14 14 13 54 Other 89,620 72,988 82,130 7,308 7,700 8,007 7,497 8,128 7,298 7,727 55 Commercial banks 23,558 25,524 28,117 2,501 2,711 2,703 2,733 2,784 2,600 2,540 56 Finance companies 22,764 24,934 28,492 2,464 2,569 2,854 2,276 2,816 2,321 2,822 57 Credit unions 11,461 13,711 15,920 1,387 1,497 1,470 1,500 1,567 1,415 1,402 58 Retailers 28,388 4,697 4,742 447 378 444 456 398 443 447 59 Savings and loans 2,076 2,551 3,080 349 380 375 380 402 376 378 60 Mutual savings banks 1,373 1,571 1,779 160 165 161 152 161 143 138 1. Monthly figures are seasonally adjusted. 2. Includes auto dealers and excludes 30-day charge credit held by travel and entertainment companies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic Nonfinancial Statistics • February 1980 1.59 FUNDS RAISED IN U.S. CREDIT MARKETS Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1976 1977 1978 1979 Transaction category, sector 1973 1974 1975 1976 1977 1978 H2 HI H2 HI H2 HI Nonfinancial sectors 1 Total funds raised 203.1 191.3 210.8 271.9 338.5 400.3 274.9 298.1 378.9 384.5 416.1 386.5 2 Excluding equities 195.4 187.4 200.7 261.1 335.4 398.2 266.8 296.9 373.8 387.1 409.3 383.8 By sector and instrument 3 U.S. government 8.3 11.8 85.4 69.0 56.8 53.7 61.4 46.1 67.4 61.4 46.0 27.1 4 Treasury securities 7.9 12.0 85.8 69.1 57.6 55.1 61.8 46.7 68.6 62.3 47.9 29.4 5 Agency issues and mortgages .4 -.2 -.4 -.1 -.9 -1.4 -.3 -.6 -1.2 -.9 -1.9 -2.3 6 All other nonfinancial sectors 194.9 179.5 125.4 202.9 281.8 346.6 213.4 252.0 311.5 323.1 370.2 359.4 7 Corporate equities 7.7 3.8 10.1 10.8 3.1 2.1 8.1 1.2 5.1 -2.6 6.8 2.7 8 Debt instruments 187.2 175.6 115.3 192.0 278.6 344.5 205.4 250.8 306.4 325.7 363.4 356.7 9 Private domestic nonfinancial sectors 188.8 164.1 112.1 182.0 267.9 314.4 192.3 241.5 294.2 302.5 326.3 344.1 10 Corporate equities 7.9 4.1 9.9 10.5 2.7 2.6 7.7 .5 4.9 -1.8 7.0 2.8 11 Debt instruments 180.9 160.0 102.1 171.5 265.1 311.8 184.6 241.0 289.3 304.3 319.2 341.3 12 Debt capital instruments 105.1 98.0 98.4 123.5 175.6 196.6 126.5 158.7 192.5 188.0 205.1 204.8 13 State and local obligations .... 14.7 16.5 16.1 15.7 23.7 28.3 10.9 22.3 25.0 27.8 28.7 17.5 14 Corporate bonds 9.2 19.7 27.2 22.8 21.0 20.1 22.9 16.6 25.4 20.6 19.6 23.7 Mortgages 15 Home 46.4 34.8 39.5 63.7 96.4 104.5 70.0 89.7 103.1 99.8 109.2 112.7 16 Multifamily residential 10.4 6.9 * 1.8 7.4 10.2 3.1 6.4 8.4 9.3 11.2 8.2 17 Commercial 18.9 15.1 11.0 13.4 18.4 23.3 12.5 14.8 21.9 21.2 25.4 25.8 18 Farm 5.5 5.0 4.6 6.1 8.8 10.2 7.3 9.0 8.7 9.3 11.1 17.1 19 Other debt instruments 75.8 62.0 3.8 48.0 89.5 115.2 58.0 82.3 96.7 116.3 114.1 136.5 20 Consumer credit 26.0 9.9 9.7 25.6 40.6 50.6 27.6 36.6 44.5 50.1 51.0 47.7 21 Bank loans n.e.c 37.1 31.7 -12.3 4.0 27.0 37.3 10.8 27.3 26.7 43.1 31.4 48.9 22 Open market paper 2.5 6.6 -2.6 4.0 2.9 5.2 2.3 3.4 2.4 5.3 5.1 10.8 23 Other 10.3 13.7 9.0 14.4 19.0 22.2 17.4 14.9 23.2 17.8 26.5 29.1 24 By borrowing sector 188.8 164.1 112.1 182.0 267.9 314.4 192.3 241.5 294.2 302.5 326.3 344.1 25 State and local governments .... 13.2 15.5 13.7 15.2 20.4 23.6 11.7 15.7 25.0 21.0 26.1 14.6 26 Households 80.1 51.2 49.5 90.7 139.9 162.6 98.8 129.4 150.4 156.1 169.1 168.5 27 Farm 9.6 8.0 8.8 10.9 14.7 18.1 11.9 15.7 13.8 15.3 20.8 23.2 28 Nonfarm noncorporate 13.0 7.7 2.0 5.4 12.5 15.7 5.8 13.4 12.5 16.3 14.5 15.1 29 Corporate 73.0 81.7 38.1 59.8 80.3 94.5 64.1 67.3 92.4 93.7 95.8 122.7 30 Foreign 6.1 15.4 13.3 20.8 13.9 32.3 21.1 10.5 17.3 20.6 43.9 15.3 31 Corporate equities -.2 -.2 .2 .3 .4 -.5 .3 .6 .2 -.8 -.2 32 Debt instruments 6.3 15.7 13.2 20.5 13.5 32.8 20.8 9.9 17.1 21.4 44.1 15^4 33 Bonds 1.0 2.1 6.2 8.6 5.1 4.0 9.7 4.4 5.7 5.0 3.0 3.5 34 Bank loans n.e.c 2.7 4.7 3.9 6.8 3.1 18.3 5.1 -.4 6.5 9.3 27.3 2.8 35 Open market paper .9 7.3 .3 1.9 2.4 6.6 2.4 2.7 2.2 3.6 9.6 6.1 36 U.S. government loans 1.7 1.6 2.8 3.3 3.0 3.9 3.6 3.1 2.9 3.6 4.2 3.1 Financial sectors 37 Total funds raised 44.8 39.2 12.7 24.1 54.0 81.4 28.5 47.7 60.3 80.7 82.1 90.9 By instrument 38 U.S. government related 19.9 23.1 13.5 18.6 26.3 U.4 20.7 22.6 29.9 38.5 44.3 48.0 39 Sponsored credit agency securities 16.3 16.6 2.3 3.3 7.0 23.1 4.3 7.1 6.8 21.9 24.3 21.4 40 Mortgage pool securities 3.6 5.8 10.3 15.7 20.5 18.3 17.2 17.9 23.1 16.6 20.1 26.6 41 Loans from U.S. government 0 .7 .9 -.4 -1.2 0 -.7 -2.3 0 0 0 0 42 Private financial sectors 24.9 16.2 -.8 5.5 27.7 40.0 7.8 25.1 30.4 42.2 37.8 42.9 43 Corporate equities 1.5 .3 .6 1.0 .9 1.7 2.3 .9 .8 2.2 1.1 2.3 44 Debt instruments 23.4 15.9 -1.4 4.4 26.9 38.3 5.6 24.2 29.6 40.0 36.7 40.5 45 Corporate bonds 3.5 2.1 2.9 5.8 10.1 7.5 5.1 10.2 10.1 8.5 6.4 10.1 46 Mortgages -1.2 -1.3 2.3 2.1 3.1 .9 2.8 3.1 3.0 2.1 -.3 -.4 47 Bank loans n.e.c 9.0 4.6 -3.7 -3.7 -.3 2.8 -5.3 -1.8 1.2 2.5 3.1 -1.4 48 Open marketpaper and RPs .... 4.9 3.8 1.1 2.2 9.6 14.6 5.0 9.8 9.5 13.5 15.7 24.5 49 Loans from FHLBs 7.2 6.7 -4.0 -2.0 4.3 12.5 -2.0 2.9 5.8 13.2 11.8 7.7 By sector 50 Sponsored credit agencies 16.3 17.3 3.2 2.6 5.8 23.1 3.5 4.7 6.8 21.9 24.3 21.4 51 Mortgage pools 3.6 5.8 10.3 15.7 20.5 18.3 17.2 17.9 23.1 16.6 20.1 26.6 52 Private financial sectors 24.9 16.2 -.8 5.5 27.7 40.0 7.8 25.1 30.4 42.2 37.8 42.9 53 Commercial banks 1.2 1.2 1.2 2.3 1.1 1.3 2.1 .8 1.5 1.5 1.1 1.1 54 Bank affiliates 2.2 3.5 .3 -.8 1.3 6.7 -.3 1.3 1.2 5.8 7.6 6.2 55 Savings and loan associations 6.0 4.8 -2.3 .1 9.9 14.3 .3 8.3 11.5 16.4 12.2 10.4 56 Other insurance companies .5 .9 1.0 .9 .9 1.1 .9 .9 1.0 1.0 1.1 1.0 57 Finance companies 9.5 6.0 .5 6.4 17.6 18.6 7.2 16.7 18.5 18.9 18.2 24.7 58 REITs 6.5 .6 -1.4 -2.4 -2.2 -1.0 -2.7 -2.4 -2.0 -1.0 -1.0 -.4 59 Open-end investment companies .. -1.2 -.7 -.1 -1.0 -.9 -1.0 .4 -.6 -1.3 -.5 -1.5 -.3 All sectors 60 Total funds raised, by instrument 248.0 230.5 223.5 296.0 392.5 481.7 303.4 345.8 439.2 465.2 498.3 477.4 61 Investment compnay shares -1.2 -.7 -.1 -1.0 -.9 -1.0 .4 -.6 -1.3 -.5 -1.5 -.3 62 Other corporate equities 10.4 4.8 10.8 12.9 4.9 4.7 9.9 2.6 7.2 .1 9.4 5.3 63 Debt instruments 238.8 226.4 212.8 284.1 388.5 478.0 293.1 343.8 433.3 465.5 490.4 472.4 64 U.S. government securities 28.3 34.3 98.2 88.1 84.3 95.2 82.9 71.2 97.4 100.0 90.4 75.3 65 State and local obligations 14.7 16.5 16.1 15.7 23.7 28.3 10.9 22.3 25.0 27.8 28.7 17.5 66 Corporate and foreign bonds 13.6 23.9 36.4 37.2 36.1 31.6 37.7 31.2 41.1 34.2 29.1 37.2 67 Mortgages 79.9 60.5 57.2 87.1 134.0 149.0 95.5 122.9 145.1 141.6 156.4 163.2 68 Consumer credit 26.0 9.9 9.7 25.6 40.6 50.6 27.6 36.6 44.5 50.1 51.0 47.7 69 Bank loans n.e.c 48.8 41.0 -12.2 7.0 29.8 58.4 10.6 25.1 34.4 54.9 61.8 50.3 70 Open market paper and RPs 8.3 17.7 -1.2 8.1 15.0 26.4 9.6 15.9 14.0 22.4 30.4 41.3 71 Other loans 19.1 22.7 8.7 15.3 25.2 38.6 18.23 18.5 31.8 34.6 42.5 39.9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A45 1.60 DIRECT AND INDIRECT SOURCES OF FUNDS TO CREDIT MARKETS Billions of dollars, except as noted; quarterly data are at seasonally adjusted annual rates 1976 1977 1978 1979 TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 11997733 11997744 11997755 11997766 11997777 11997788 H2 HI H2 HI H2 HI 1 Total funds advanced in credit markets to nonfinancial sectors 195.4 187.4 200.7 261.1 355.4 398.2 266.8 296.9 373.8 387.1 409.3 383.8 By public agencies and foreign 2 Total net advances 31.8 53.7 44.6 54.3 85.1 109.7 60.3 66.1 104.2 102.8 116.6 47.3 3 U.S. government securities 9.5 11.9 22.5 26.8 40.2 43.9 30.2 27.1 53.3 43.7 44.0 -27.4 4 Residential mortgages 8.2 14.7 16.2 12.8 20.4 26.5 14.7 18.9 22.0 22.2 30.7 36.2 5 FHLB advances to S&Ls 7.2 6.7 -4.0 -2.0 4.3 12.5 -2.0 2.9 5.8 13.2 11.8 7.7 6 Other loans and securities 6.9 20.5 9.8 16.6 20.2 26.9 17.4 17.2 23.1 23.7 30.1 30.7 Total advanced, by sector 7 U.S. government 2.8 9.8 15.1 8.9 11.8 20.4 11.9 5.9 17.8 19.4 21.4 24.4 8 Sponsored credit agencies 19.1 26.5 14.8 20.3 26.8 44.6 22.2 21.6 32.0 39.4 49.8 52.9 9 Monetary authorities 9.2 6.2 8.5 9.8 7.1 7.0 6.2 10.2 4.0 13.4 .5 -.6 10 Foreign .6 11.2 6.1 15.2 39.4 37.7 20.0 28.3 50.4 30.6 44.9 -29.5 11 Agency borrowing not included in line 1 19.9 23.1 13.5 18.6 26.3 41.4 20.7 22.6 29.9 38.5 44.3 48.0 Private domestic funds advanced 12 Total net advances 183.6 156.8 169.7 225.4 276.5 330.0 227.2 253.5 299.6 322.8 337.1 384.6 13 U.S. government securities 18.8 22.4 75.7 61.3 44.1 51.3 52.7 44.1 44.1 56.3 46.4 102.6 14 State and local obligations 14.7 16.5 16.1 15.7 23.7 28.3 10.9 22.3 25.0 27.8 28.7 17.5 15 Corporate and foreign bonds 10.0 20.9 32.8 30.5 22.5 22.5 31.8 18.0 27.0 24.1 20.9 28.4 16 Residential mortgages 48.4 26.9 23.2 52.7 83.3 88.2 58.2 77.1 89.4 86.7 89.6 84.5 17 Other mortgages and loans 98.8 76.8 17.9 63.3 107.3 152.2 71.6 94.9 119.7 141.1 163.3 159.3 18 LESS: FHLB advances 7.2 6.7 -4.0 -2.0 4.3 12.5 -2.0 2.9 5.8 13.2 11.8 7.7 Private financial intermediation 19 Credit market funds advanced by private financial institutions 161.3 125.5 122.5 190.3 255.9 296.9 202.2 249.1 265.0 301.7 292.0 324.4 20 Commercial banking 84.6 66.6 29.4 59.6 87.6 128.7 68.3 84.6 90.7 132.5 125.0 131.4 21 Savings institutions 35.1 24.2 53.5 70.8 82.0 75.9 70.4 81.4 82.6 75.8 75.9 59.3 22 Insurance and pension funds 23.7 29.8 40.6 49.9 67.9 73.5 47.9 65.2 70.6 76.9 70.2 81.3 23 Other finance 17.9 4.8 -1.0 10.0 18.4 18.7 15.5 18.0 21.2 16.6 20.8 52.4 24 Source of funds 161.3 125.5 122.5 190.3 255.9 296.9 202.2 249.1 265.0 301.7 292.0 324.4 25 Private domestic deposits 97.3 67.5 92.0 124.6 141.2 142.5 132.4 138.6 143.8 138.3 146.7 111.8 26 Credit market borrowing 23.4 15.9 -1.4 4.4 26.9 38.3 5.6 24.2 29.6 40.0 36.7 40.5 27 Other sources 40.6 42.1 32.0 61.3 87.8 116.0 64.2 86.2 91.7 123.5 108.6 172.1 28 Foreign funds 3.0 10.3 -8.7 -4.6 1.2 6.3 -2.8 1.6 .8 5.7 6.9 52.2 29 Treasury balances -1.0 -5.1 -1.7 -.1 4.3 6.8 -3.9 .1 8.5 1.9 11.6 5.5 30 Insurance and pension reserves 18.4 26.2 29.7 34.5 49.4 62.7 33.2 45.3 53.4 66.2 59.2 60.8 31 Other, net 20.2 10.6 12.7 31.4 32.9 40.3 37.8 39.3 29.0 49.6 31.0 53.6 Private domestic nonfinancial investors 32 Direct lending in credit markets 45.7 47.2 45.8 39.5 47.5 71.4 30.6 28.6 64.1 61.1 81.7 100.7 33 U.S. government securities 18.8 18.9 24.1 16.1 23.0 33.2 11.0 11.9 34.2 32.1 34.4 66.5 34 State and local obligations 5.4 9.3 8.4 3.8 2.6 4.5 -1.5 -.5 5.7 7.0 2.0 -3.0 35 Corporate and foreign bonds 2.0 5.1 8.4 5.8 -3.3 -1.4 6.0 -.1 -6.5 -3.7 1.0 3.8 36 Commercial paper 9.8 5.8 -1.3 1.9 9.5 16.3 1.6 8.2 10.8 8.2 24.4 9.4 37 Other 9.7 8.0 6.2 11.8 15.7 18.7 13.5 9.2 19.9 17.5 20.0 24.1 38 Deposits and currency 101.2 73.8 98.1 131.9 149.5 151.8 141.0 144.5 154.5 148.7 154.8 121.8 39 Security RPs 11.0 -2.2 .2 2.3 2.2 7.5 3.2 4.3 .2 9.8 5.1 10.5 40 Money market fund shares 2.4 1.3 * .2 6.9 5 -.5 .9 6 1 7.7 30 2 41 Time and savings accounts 75.7 65.4 84.0 113.5 121.0 115.2 122.9 115.3 126.7 110.7 119.8 77.2 42 Large negotiable CDS 17.8 18.4 -14.3 -13.6 9.0 10.8 -7.8 -4.5 22.6 10.1 11.4 -39.4 43 Other at commercial banks 29.5 25.3 38.8 57.9 43.0 43.3 61.5 47.5 38.4 42.1 44.5 61.1 44 At savings institutions 28.5 21.8 59.4 69.1 69.0 61.1 69.3 72.3 65.7 58.5 63.8 55.5 45 Money 14.5 8.2 12.6 16.1 26.1 22.2 14.3 25.4 26.8 22.1 22.3 3.8 46 Demand depostis 10.6 1.9 6.4 8.8 17.8 12.9 5.8 19.6 16.1 11.6 14.2 -6.1 47 Currency 3.9 6.3 6.2 7.3 8.3 9.3 8.6 5.8 10.8 10.5 8.1 10.0 48 Total of credit market instrument, deposits and currency 146.9 121.0 143.9 171.4 197.0 223.2 171.6 173.1 218.6 209.8 236.6 222.5 49 Public support rate (in percent) 16.3 28.7 22.2 20.8 25.4 27.5 22.6 22.2 27.9 26.5 28.5 12.3 50 Private financial intermediation (in percent) 87.9 80.0 72.2 84.4 92.5 90.0 89.0 98.2 88.5 93.5 86.6 84.4 51 Total foreign funds 3.6 21.5 -2.6 10.6 40.5 44.0 17.3 29.9 51.2 36.3 51.8 22.7 MEMO: Corporate equities not included 52 Total net issues 9.2 4.1 10.7 11.9 4.0 3.7 10.3 2.1 5.9 -.4 7.9 5.0 53 Mutual fund shares -1.2 -.7 -.1 -1.0 -.9 -1.0 .4 -.6 -1.3 -.5 -1.5 -.3 54 Other equities 10.4 4.8 10.8 12.9 4.9 4.7 9.9 2.6 7.2 .1 9.4 5.3 55 Acquisitions by financial institutions 13.1 5.8 9.6 12.3 7.4 7.6 11.8 6.8 8.1 .4 14.7 14.2 56 Other net purchases -3.9 -1.7 1.1 -.4 -3.4 -3.8 -1.5 -4.7 -2.2 -.8 -6.8 -9.2 NOTES BY LINE NUMBER. 29. Demand deposits at commercial banks. 1. Line 2 of p. A-44. 30. Excludes net investment of these reserves in corporate equities. 2. Sum of lines 3-6 or 7-10. 31. Mainly retained earnings and net miscellaneous liabilities. 6. Includes farm and commercial mortgages. 32. Line 12 less line 19 plus line 26. 11. Credit market funds raised by federally sponsored credit agencies, and net 33-37. Lines 13-17 less amounts acquired by private finance. Line 37 includes issues of federally related mortgage pool securities. Included below in lines mortgages. 3, 13, 33. 45. Mainly an offset to line 9. 12. Line 1 less line 2 plus line 11. Also line 19 less line 26 plus line 32. Also sum 46. Lines 32 plus 38, or line 12 less line 27 plus 45. of lines 27, 32, 39, and 44. 47. Line 2/line 1. 17. Includes farm and commercial mortgages. 48. Line 19/line 12. 25. Sum of lines 39 and 44. 49. Sum of lines 10 and 28. 26. Excludes equity issues and investment company shares. Includes line 18. 50. 52. Includes issues by financial institutions. 28. Foreign deposits at commercial banks, bank borrowings from foreign branches, NOTE. Full statements for sectors and transaction types quarterly, and annually and liabilities of foreign banking agencies to foreign affiliates. for flows and for amounts outstanding, may be obtained from Flow of Funds Digitized for FRASER Section, Division of Research and Statistics, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • February 1980 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures 1967 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1979 1980 MMeeaassuurree 11997777 11997788 11997799 June July Aug. Sept. Oct.' Nov.r Dec.' Jan. 1 Industrial production1 138.2 146.1 152.2 152.6 152.8 151.6 152.4 152.2 152.1 152.3 152.7 Market groupings 2 Products, total 137.9 144.8 149.8 150.2 149.7 148.7 149.9' 149.6 149.4 149.9 150.1 3 Final, total 135.9 142.2 147.0 147.6 147.1 145.6 147.2' 146.8 146.7 147.2 147.4 4 Consumer goods 145.3 149.1 150.5 151.8 150.8 148.2 149.7' 149.7 148.9 148.9 148.4 5 Equipment 123.0 132.8 142.2 141.9 142.1 141.8 143.9' 142.9 143.7 144.9 146.1 6 Intermediate 145.1 154.1 160.0 159.5 159.4 160.6 159.8r 159.8 159.7 159.8 160.1 7 Materials 138.6 148.3 156.0 156.5 157.6 156.0 156.3' 156.3 156.2 156.1 156.6 Industry groupings 8 Manufacturing 138.4 146.8 153.3 153.9 154.1 152.4 153.5' 153.2 152.9 152.9 153.3 Capacity utilization (percent2 9 Manufacturing 81.9 84.4 85.7 86.2 86.1 84.9 85.3 84.9 84.6 84.3 84.3 10 Industrial materials industries 82.7 85.6 85.6 87.5 87.9 86.8 86.7 86.6 86.3 85.9 86.0 11 Construction contracts3 160.5 174.3 177.0 165.0 164.0 185.0 171.0 156.0 183.0 n.a. 12 Nonagricultural employment, total4 125.3 131.4 136.0 136.2 136.3 136.4 136.5 136.8 136.9 137.1 137.6 13 Goods-producing, total 104.5 109.8 114.0 114.4 114.7 114.1 114.1 114.0 113.8 114.4 114.6 14 Manufacturing, total 101.2 105.3 107.9 108.3 108.4 107.8 107.7 107.5 107.1 107.4 107.3 15 Manufacturing, production-worker 98.8 102.8 104.9 105.5 105.5 104.5 104.5 104.1 103.6 103.9 103.7 16 Service-producing 136.7 143.2 148.1 148.1 148.2 148.7' 148.8' 149.3 149.6 149.6 150.2 17 Personal income, total5 244.4 274.1 306.9 304.0 308.5 310.6r 312.8' 315.9 319.2 322.8 n.a. 18 Wages and salary disbursements 230.2 258.1 287.1 285.5 287.7 289.2 291.9r 294.1 297.1 300.0 n.a. 19 Manufacturing 198.3 222.4 246.8 245.9 247.6 246.3 248.7r 250.6 251.9 255.0 n.a. 20 Disposable personal income 119944..88 221177..77 224444..88 225500..66 nn..aa.. 21 Retail sales6 229.8 253.8 280.9 274.4 276.5 285.8 293.9 288.9 292.0 293.5 300.1 Prices1 22 Consumer 181.5 195.4 216.6 218.9 221.1 223.4 225.4 227.5 229.9 n.a. 23 Producer finished goods 118800..66 119944..66 221133..77 221166..22 221177..33 222200..44 222233..77 222255..99 222277..88 nn..aa.. 1. The industrial production and capacity utilization series have been revised. 6. Based on Bureau of Census data published in Survey of Current Business For a description of the changes see the August 1979 BULLETIN, pp. 603-07. (U.S. Department of Commerce). 2. Ratios of indexes of production to indexes of capacity. Based on data from 7. Data without seasonal adjustment, as published in Monthly Labor Review Federal Reserve, McGraw-Hill Economics Department, and Department of Com- (U.S. Department of Labor). Seasonally adjusted data for changes in the price merce. indexes may be obtained from the Bureau of Labor Statistics, U.S. Department 3. Index of dollar value of total construction contracts, including residential, of Labor. nonresidential, and heavy engineering, from McGraw-Hill Information Systems Company, F. W. Dodge Division. NOTE: Basic data (not index numbers) for series mentioned in notes 4, 5, and 4. Based on data in Employment and Earnings (U.S. Department of Labor). 6, and indexes for series mentioned in notes 3 and 7 may also be found in the Series covers employees only, excluding personnel in the Armed Forces. Survey of Current Business (U.S. Department of Commerce). 5. Based on data in Survey of Current Business (U.S. Department of Commerce). Figures for industrial production for the last two months are preliminary and Series for disposable income is quarterly. estimated, respectively. 2.11 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION' Seasonally adjusted 1979 1979 1979 Q1 Q2 Q3 Q4 Q1 Q2 Q3' Q4' Q1' Q2' Q3 Q4R Output (167 = 100) Capacity (percent of 1967 output) Utilization rate (percent) 1 Manufacturing 153.4 153.1 153.3 153.0 176.9 178.2 179.5 180.8 86.7 85.9 85.4 84.6 2 Primary processing 162.1 161.9 163.4 161.9' 182.7 184.2 185.7 187.2 88.7 87.9 88.0 86.5 148.7 148.5 148.1 148.2 173.8 175.0 176.2 177.4 85.6 84.8 84.0 83.5 3 Advanced processing 155.5 155.6 156.6 156.2 ' 176.7 ' 178.1 179.5 181.0 88.0 87.3 87.2' 86.3 4 Materials 158.4 157.7 158.7 156.2' 181.5 183.0 184.5 186.0 87.3 86.2 86.0 84.0 5 Durable goods 124.7 124.3 126.9 119.6 139.8 140.3 140.7 141.1 89.2 88.5 90.2 84.8 6 Metal materials 172.2 173.4 175.7 177.8r 191.7' 193.5' 195.3 197.3 89.8 89.6 89.9' 90.1 7 Nondurable goods 179.1 181.3 184.3 186.4r 199.4' 201.3' 203.2 205.3 89.8 90.0 90.7' 90.8 8 Textile, paper, and chemical 118.2 119.6 122.4 123.6 136.9 137.3 137.7 138.1 86.3 87.1 88.9 89.5 9 Textile 136.9 140.7 147.0 148.1 148.6' 149.6' 150.6 151.6 92.1 94.0 97.6' 97.6 10 Paper 222.7 224.8 226.6 229.5 247.2' 250.3' 253.3 256.3 90.1 89.8 89.5' 89.5 11 Chemical 127.9 128.1 128.3 129.4' 146.7 147.5 148.3 149.2 87.1 86.9 86.5 86.7 12 Energy 1. The capacity utilization series has been revised. For a description of the changes, see the August 1979 BULLETIN, pp. 606-07. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Labor Market A47 2.12 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data are seasonally adjusted. Exceptions noted. 1979 1980 CCaatteeggoorryy 11997777 11997788 11997799 July Aug. Sept. Oct. Nov. Dec. Jan. HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 158,559 161,058 163,620 163,685 163,891 164,106 164,468 164,682 164,898 165,101 2 Labor force (including Armed Forces)1 99,534 102,537 104,996 105,141 105,218 105,586 105,688 105,744 106,088 106,310 3 Civilian labor force 97,401 100,420 102,908 103,059 103,128 103,494 103,595 103,652 103,999 104,229 Employment 4 Nonagricultural industries2 87,302 91,031 93,648 93,949 93,689 94,, 140 94,180 94,223 94,553 94,534 5 Agriculture 3,244 3,342 3,297 3,262 3,315 3,364 3,294 3,385 3,359 3,270 Unemployment 6 Number 6,855 6,047 5,963 5,848 66,,112244 55,,999900 66,,112211 66,,004444 66,,008877 66,,442255 7 Rate (percent of civilian labor force) 7.0 6.0 5.8 5.7 5.9 5.8 5.9 5.8 5.9 6.2 8 Not in labor force 59,025 58,521 58,623 58,545 58,673 58,519 58,780 59,937 58,810 58,791 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 82,423 86,446 89,497 89,713 89,762 89,803 89,982 90,100' 90,231' 90,536 10 Manufacturing 19,682 20,476 20,979 21,079 20,957 20,949 20,899 20,836' 20,882' 20,867 11 Mining 813 851 958 956 968 973 979 983' 992' 995 12 Contract construction 3,851 4,271 4,642 4,688 4,674 4,671 4,694 4,714' 4,780' 4,843 13 Transportation and public utilities 4,713 4,927 5,154 5,169 5,194 5,180 5,218 5,229' 5,206' 5,236 14 Trade 18,516 19,499 20,140 20,122 20,126 20,169 20,243 20,308r 20,246' 20,378 15 Finance 4,467 4,727 4,964 4,972 5,003 4,997 5,018 5,039' 5,054' 5,071 16 Service 15,303 16,220 17,047 17,092 17,141 17,191 17,257 17,298' 17,360' 17,414 17 Government 15,079 15,476 15,613 15,635 15,699 15,673 15,674 15,693' 15,711' 15,732 1. Persons 16 years of age and over. Monthly figures, which are based on sample 3. Data include all full- and part-time employees who worked during, or data, relate to the calendar week that contains the 12th day; annual data are received pay for, the pay period that includes the 12th day of the month, and averages of monthly figures. By definition, seasonality does not exist in population exclude proprietors, self-employed persons, domestic servants, unpaid family figures. Based on data from Employment and Earnings (U.S. Dept. of Labor). workers, and members of the Armed Forces. Data are adjusted to the February 2. Includes self-employed, unpaid family, and domestic service workers. 1977 benchmark. Based on data from Employment and Earnings (U.S. Dept. of Labor). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • February 1980 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value' Monthly data are seasonally adjusted. 1967 1979 1978 1979 1979 1980 GGrroouuppiinngg Avertion age Nov. Dec. Jan. May June July Aug. Sept. Oct/ Nov. Dec.P Jan/ Index (1967 = 100) MAJOR MARKET 1 Total index 100.00 152.2 150.6 151.8 151.5 152.4 152.6 152.8 151.6 152.4 152.2 152.1 152.3 152.7 2 Products 60.71 149.8 148.0 149.0 149.2 150.3 150.2 149.7 148.7 149.9 149.6 149.4 149.9 150.1 3 Final products 47.82 147.0 145.3 146.1 146.1 147.8 147.6 147.1 145.6 147.2 146.8 146.7 147.2 147.4 4 Consumer goods 27.68 150.5 151.3 151.5 150.6 152.0 151.8 150.8 148.2 149.7 149.7 148.9 148.9 148.4 5 Equipment 20.14 142.2 137.1 138.6 139.9 141.9 141.9 142.1 141.8 143.9 142.9 143.7 144.9 146.1 6 Intermediate products 12.89 160.0 157.8 159.9 160.8 159.5 159.5 159.4 160.6 159.8 159.8 159.7 159.8 160.1 7 Materials 39.29 156.0 154.5 156.2 155.0 155.7 156.5 157.6 156.0 156.3 156.3 156.2 156.1 156.6 Consumer goods 8 Durable consumer goods 7.89 155.6 162.9 161.8 160.4 160.5 158.6 157.2 147.5 151.8 152.6 149.3 147.6 144.4 Y Automotive products 2.83 167.9 190.2 186.9 181.4 182.7 175.9 170.3 147.3 157.6 159.2 150.6 143.3 133.8 1U Autos and utility vehicles 2.03 154.3 185.0 179.2 173.2 176.3 167.4 155.6 125.1 139.7 142.4 131.0 121.2 108.2 11 Autos 1.90 136.7 159.7 151.9 145.8 153.1 148.0 141.8 118.5 128.0 129.0 118.3 110.2 98.5 12 Auto parts and allied goods 80 202.3 203.2 206.5 202.2 199.0 197.5 207.8 203.7 203.0 202.1 200.3 199.7 199.0 13 Home goods 5.06 148.7 147.6 147.7 148.6 148.1 148.8 149.8 147.7 148.5 148.8 148.5 149.9 150.3 14 Appliances, A/C, and TV 1.40 127.4 129.1 129.8 124.0 128.4 129.3 129.7 121.2 129.6 128.0 128.6 135.9 113355..00 15 Appliances and TV 1.33 129.3 130.1 130.6 124.8 130.2 131.2 131.6 124.1 132.2 130.2 131.4 138.2 16 Carpeting and furniture 1.07 170.7 164.2 164.3 170.7 170.2 170.6 171.9 171.7 169.7 169.2 170.3 168.5 17 Miscellaneous home goods 2.59 151.2 150.7 150.6 152.8 149.6 150.5 151.6 152.1 150.0 151.7 150.3 149.9 150.8 18 Nondurable consumer goods 19.79 148.5 146.7 147.3 146.7 148.7 149.1 148.2 148.5 148.9 148.6 148.7 114499..44 115500..00 19 4.29 132 4 132 2 130.1 128 6 130.7 126 9 128 0 129 0 127 7 129 1 20 Consumer staples 15.50 153.9 150.6 151.5 151.3 154*2 154.2 154^1 154^2 154*3 1543 154.2 155.1 115555..77 21 Consumer foods and tobacco 8.33 145.4 141.7 143.2 141.8 145.7 146.2 147.0 145.3 146.5 146.7 145.7 146.5 22 Nonfood staples 7.17 163.7 161.0 161.2 162.4 164.1 163.5 162.4 164.6 163.5 163.2 164.0 165.1 116666..66 23 Consumer chemical products 2.63 205.7 195.9 196.5 200.3 205.2 205.9 206.1 209.2 207.2 206.4 207.9 209.8 24 Consumer paper products 1.92 120.9 119.0 118.0 119.2 121.3 121.1 119.9 121.2 121.1 121.6 120.3 120.9 25 Consumer energy products 2.62 153.0 156.8 157.6 156.0 154.3 152.0 149.8 151.6 150.8 150.5 151.9 115522..66 2266 Residential utilities 11..4455 116622..77 116622..55 116666..22 116677..88 116622..33 115588..55 116633..55 116622..22 164.2 166.7 Equipment 27 Business 12.63 171.4 165.0 166.8 168.1 171.4 171.5 171.4 171.5 173.6 172.0 172.7 174.5 176.3 28 Industrial 6.77 152.2 147.6 148.4 151.4 151.8 152.0 151.3 151.7 153.5 151.2 153.3 154.8 159.8 29 Building and mining 1.44 206.4 207.8 206.3 208.8 203.7 205.3 207.4 210.6 212.0 200.6 204.4 209.0 229.4 30 Manufacturing 3.85 130.4 123.3 124.5 127.4 130.1 130.1 130.3 131.1 130.4 130.8 132.5 133.2 134.0 31 Power 1.47 156.3 152.1 154.2 157.8 157.7 156.8 151.0 147.7 156.3 156.3 157.6 157.9 158.9 32 Commercial transit, farm 5.86 193.4 185.0 188.0 187.4 193.9 194.0 194.6 194.4 196.8 195.9 195.2 197.4 195.4 33 Commerical 3.26 227.8 217.8 218.7 220.8 224.9 226.4 227.0 230.5 231.4 234.2 233.2 235.1 236.3 34 Transit 1.93 152.2 145.7 151.0 146.8 156.7 155.3 155.2 149.4 156.3 154.9 150.3 153.9 114455..88 35 Farm 67 144.8 138.5 144.6 142.0 150.8 148.1 151.0 148.3 145.3 128.0 139.5 139.5 36 Defense and space 7.51 93.2 90.3 91.4 92.4 92.5 92.3 92.8 92.0 94.0 94.0 94.8 95.0 95.2 Intermediate products 37 Construction supplies 6.42 156.9 156.1 158.3 159.1 156.4 156.3 156.4 157.3 156.3 156.8 156.7 156.3 115566..22 38 Business supplies 6.47 163.0 159.6 161.5 162.5 162.5 162.6 162.4 163.8 163.2 162.7 162.6 163.2 39 Commercial energy products 1.14 172.2 171.3 173.0 173.6 172.6 169.4 167.8 170.7 169.8 172.2 174.4 175.0 Materials 40 Durable goods materials 20.35 157.7 157.0 159.5 158.1 157.9 159.5 160.7 157.7 157.6 157.2 155.9 155.5 155.7 41 Durable consumer parts 4.58 137.1 147.2 148.6 148.5 142.5 141.8 138.5 129.7 132.2 132.0 126.8 123.7 122.5 42 Equipment parts 5.44 189.9 176.7 179.2 182.2 188.0 191.0 192.1 190.7 192.0 192.7 195.1 196.4 198.7 43 Durable materials n.e.c 10.34 150.0 151.0 154.0 149.7 149.0 150.8 154.0 152.7 150.7 149.6 148.2 148.0 114477..77 44 Basin metal materials 5.57 124.1 130.2 132.0 124.4 122.9 126.1 130.5 127.7 124.8 121.4 119.9 118.3 45 Nondurable goods materials 10.47 174.8 170.2 171.9 171.0 173.8 173.4 174.6 175.8 176.7 177.2 177.7 178.6 179.3 46 Textile, paper, and chemical materials . 7.62 182.8 177.1 178.9 177.5 181.5 181.7 182.8 184.3 185.9 186.1 185.9 187.2 118888..33 47 Textile materials 1.85 121.0 118.8 120.1 118.3 118.8 122.9 122.2 120.6 124.4 124.3 123.2 123.3 48 Paper materials 1.62 143.1 137.9 139.1 133.3 140.1 141.1 146.2 146.7 148.1 148.6 148.4 147.2 49 Chemical materials 4.15 225.9 218.4 220.8 221.2 225.7 223.9 224.1 227.5 228.2 228.4 228.6 231.5 50 Containers, nondurable 1.70 164.5 163.1 164.8 167.8 163.3 159.2 163.1 162.9 161.8 166.1 167.8 167.9 51 Nondurable materials n.e.c 1.14 136.6 135.2 135.7 132.5 138.4 139.0 137.5 138.2 136.9 134.4 137.8 136.5 52 Energy materials 8.48 128.5 129.3 128.8 127.8 127.7 128.3 129.1 127.7 128.1 128.5 130.0 129.6 113300..77 53 Primary energy 4.65 113.1 117.0 116.1 111.9 111.7 112.4 112.8 112.0 113.6 114.6 114.6 114.7 54 Converted fuel materials 3.82 147.2 144.4 144.4 147.0 147.2 147.6 148.8 146.9 145.7 145.3 148.8 147.8 Supplementary groups 5555 Home goods and clothing 9.35 139.7 140.6 140.6 140.1 139.1 140.5 139.3 138.6 139.5 139.1 139.6 140.4 140.7 56 Energy, total 12.23 137.8 139.1 139.1 138.1 137.6 137.2 137.1 136.8 136.8 137.2 138.9 138.8 114400..00 57 Products 3.76 158.8 161.2 162.2 161.4 159.9 157.3 155.2 157.4 156.5 157.1 158.7 159.4 58 Materials 8.48 128.5 129.3 128.8 127.8 127.7 128.3 129.1 127.7 128.1 128.5 130.0 129.6 130.7 For notes see opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Output A49 2.13 Continued 1967 1978 1979 1980 Grouping pro- 1979 SIC por- Avercode tion age Nov.c Dec. Jan. May June July Aug.c Sept. Oct.r Nov. Dec .P Jan.4, Index (1967 = 100) MAJOR INDUSTRY 1 Mining and utilities 12 05 144.6 144.8 145.0 143.9 143.4 143.0 143.7 144.9 144.5 146.0 147.6 149.0 149.7 2 Mining 6.36 125.3 128.0 127.4 123.8 122.8 123.9 124.7 126.4 125.8 128.1 129.8 132.0 132.9 3 Utilities 5.69 166.2 163.7 164.7 166.2 166.5 164.2 164.8 165.5 165.3 166.1 167.4 168.0 168.4 4 Electric 3.88 185.2 186.7 188.4 186.4 182.4 182.2 183.6 184.1 184.3 5 Manufacturing 87.95 153.3 151.6 152.9 152.5 153.8 153.9 154.1 152.4 153.5 153.2 152.9 152.9 153.3 6 Nondurable 35.97 163.3 160.4 161.7 160.7 162.8 163.0 164.1 164.3 164.6 164.0 164.4 164.7 165.5 7 Durable 51.98 146.4 145.5 146.8 146.8 147.6 147.6 147.2 144.2 145.9 145.7 144.9 144.7 144.8 Mining 8 Metal 10 .51 126.7 124.3 123.8 124.2 123.1 123.2 128.6 126.5 122.1 124.1 132.0 135.7 9 Coal 11,12 .69 133.6 144.6 144.7 115.9 133.4 137.5 137.1 144.1 142.6 144.7 141.9 147.7 147.3 10 Oil and gas extraction 13 4.40 121.7 124.8 123.8 123.0 118.6 119.6 120.4 121.6 121.6 124.2 125.7 127.7 129.0 11 Stone and earth minerals 14 .75 137.5 133.8 134.8 135.9 137.8 137.3 136.4 138.3 137.5 138.2 141.2 140.3 Nondurable manufacturers 12 Foods 20 8.75 147.9 143.7 144.7 143.9 149.2 149.5 149.4 148.1 148.8 148.6 148.3 148.2 13 Tobacco products 21 .67 117.2 118.8 119.1 120.6 120.2 118.3 118.9 107.5 115.6 115.6 114.7 14 Textile mill products 22 2.68 143.8 140.4 141.7 141.6 141.5 114.6 143.0 144.1 146.9 146.0 147.4 146.6 15 Apparel products 23 3.31 130.8 135.8 136.5 130.3 128.2 132.0 129.7 130.1 131.2 128.5 129.3 16 Paper and products 26 3.21 150.8 146.7 148.5 144.6 147.9 148.0 154.0 153.9 155.3 154.1 153.3 153.9 154.4 17 Printing and publishing 27 4.72 136.9 133.7 134.4 135.6 136.8 136.9 135.6 137.7 137.1 137.2 136.5 137.9 139.3 18 Chemicals and products 28 7.74 210.4 204.6 207.2 206.5 209.7 207.8 210.5 213.1 212.0 211.4 214.5 216.6 19 Petroleum products 29 1.79 143.6 150.2 151.3 147.0 142.4 143.9 143.9 143.0 143.1 141.1 141.6 142.5 145.0 20 Rubber and plastic products ... 30 2.24 270.4 263.0 263.3 267.4 270.0 270.0 278.0 275.7 272.9 274.5 271.1 266.0 21 Leather and products 31 .86 71.2 73.4 73.8 74.8 72.3 70.1 69.7 69.7 70.8 70.1 70.4 70.9 Durable manufactures 22 Ordnance, private and government 19,91 3.64 75.3 74.2 74.6 74.9 75.3 75.1 74.6 74.9 75.3 75.3 75.9 75.7 75.5 23 Lumber and products 24 1.64 136.9 140.1 144.0 137.3 136.1 136.8 135.2 138.0 138.6 138.7 135.6 133.4 24 Furniture and fixtures 25 1.37 161.4 158.6 157.6 161.7 159.6 159.6 159.5 161.7 162.0 163.3 162.9 160.7 25 Clay, glass, stone products 32 2.74 163.2 162.1 164.0 167.4 163.8 162.7 163.3 161.4 160.6 162.3 162.8 163.5 26 Primary metals 33 6.57 121.3 130.8 132.1 123.4 121.0 124.3 127.1 121.0 121.7 118.0 117.2 116.4 114.6 27 Iron and steel 331,2 4.21 113.3 124.4 125.3 113.3 114.3 118.1 119.0 112.0 115.0 108.2 108.0 107.8 28 Fabricated metal products 34 5.93 148.6 145.6 147.1 149.1 150.3 149.3 149.3 147.6 146.5 147.5 146.9 146.8 146.7 29 Nonelectrical machinery 35 9.15 163.7 157.8 158.1 161.2 164.3 164.5 165.3 166.2 165.1 162.3 163.1 162.5 167.9 30 Electrical machinery 36 8.05 175.0 165.2 167.7 170.9 174.7 175.1 174.4 171.7 176.7 177.3 179.4 181.4 182.2 31 Transportation equipment 37 9.27 135.3 142.1 142.9 141.2 141.9 139.4 135.5 124.7 131.7 133.7 128.2 126.2 121.8 32 Motor vehicles and parts 371 4.50 160.0 181.9 182.1 177.9 176.3 169.6 160.2 138.5 150.6 150.6 139.9 135.4 126.7 33 Aerospace and miscellaneous transportation equipment . 372-9 4.77 112.0 104.7 106.0 106.6 109.6 111.0 112.2 111.8 113.9 117.7 117.1 117.6 117.3 34 Instruments 38 2.11 174.9 171.3 173.1 175.2 174.7 175.9 174.0 173.9 172.9 175.0 173.4 175.9 175.7 35 Miscellaneous manufactures .... 39 1.51 153.9 151.1 151.7 152.0 150.7 152.7 155.7 155.7 153.6 154.5 155.3 156.0 156.1 Gross value (billions of 1972 dollars, annual rates) MAJOR MARKET 36 Products, total 507.4 623.9 625.0 631.1 626.8 632.3 628.7 622.7 613.0 622.6 621.6 617.0 618.0 617.4 37 Final 390.9 2 479.8 482.8 486.6 481.7 488.2 485.1 479.6 468.8 478.8 477.6 473.7 474.6 473.6 38 Consumer goods 277.5 2 326.2 332.8 334.1 328.9 331.5 329.8 326.0 319.2 323.6 324.6 321.8 321.4 319.2 39 Equipment 113.42 153.6 150.0 152.4 152.9 156.7 155.4 153.6 149.6 155.2 153.0 151.9 153.2 154.4 40 Intermediate 116.62 144.1 142.3 144.5 145.1 144.2 143.6 143.2 144.2 143.8 144.0 143.3 143.4 143.8 1. The industrial prodcution series has been revised. For a description of the NOTE. Published groupings include some series and subtotals not shown sepachanges, see "Revision of Industrial Production Index" in the August 1979 BUL- rately. For description and historical data, see Industrial Production—1976 Revision LETIN, pp. 603-05. (Board of Governors of the Federal Reserve System: Washington, D.C.), Decem- 2. 1972 dollars. ber 1977. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics • February 1980 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates except as noted. 1979 Item 1977 1978 1979 June July Aug. Sept. Oct. Nov. Dec .P Private residential real estate activity (thousand of units) NEW UNITS 1 Permits authorized 1,677 1,801 1,537 1,639 1,528 1,654 1,775 1,542 1,263 1,204 2 1-family 1,125 1,183 970 1,012 1,001 1,030 1,015 927 751 768 3 2-or-more-family 551 618 566 627 527 624 760 615 512 436 4 Started 1,987 2,020 1,743 1,923 1,786 1,793 1,921 1,764' 1,522 1,527 5 1-family 1,451 1,433 1,193 1,288 1,220 1,239 1,254 1,159' 985 1,071 6 2-or-more-family 536 587 549 635 568 554 667 605' 537 456 7 Under construction, end of period1 1,208 1,310 n.a. 1,247 1,237 1,232 1,226' 1,218' 1,198 n.a. 8 1-family 730 765 n.a. 723 715 714 717' 708' 691 n.a. 9 2-or-more-family 478 546 n.a. 524 522 518 508' 510' 507 n.a. 10 Completed 1,656 1,868 n.a. 1,866 1,745 1,739 1,943' 1,824' 1,827 n.a. 11 1-family 1,258 1,369 n.a. 1,345 1,192 1,199 1,197' 1,259' 1,205 n.a. 12 2-or-more-family 399 498 n.a. 521 553 540 746' 565' 622 n.a. 13 Mobile homes shipped 277 276 n.a. 279 282 277 268 293 257 n.a. Merchant builder activity in 1-family units 1 1 4 5 P N N r u u ic m m e b b ( e e t r r h o f s u o o s r l a d n s d al e o , f en d d o l o la f r s p ) e 2 riod1 8 4 2 0 0 8 4 8 1 1 9 8 7 4 0 0 6 7 6 4 8 1 9 8 7 4 7 1 8 6 7 4 4 1 6 6 4 7 1 1 3 7 ' 4 6 0 9 9 2 ' 4 5 0 9 0 0 5 4 5 0 9 3 Median 16 Units sold 49.0 55.8 62.7 64.2 63.8 64.0 65.0' 62.1' 63.4 62.3 17 Units for sale 48.2 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Average 18 Units sold 54.4 62.7 72.1 74.3 71.9 74.0 76.8' 71.3' 74.2 75.1 EXISTING UNITS (1-family) 19 N Pr u ic m e b o e f r u s n o i l t d s sold (thous. of dollars)2 3,572 3,905 3,742 3,560 3,770 3,850 4,010 3,990 3,560 3,420 20 Median 42.8 48.7 55.5 56.8 57.9 57.7 57.3 56.3 55.6 56.5 21 Average 47.1 55.1 64.0 66.1 66.7 66.3 66.1 65.2 64.6 65.2 Value of new construction3 (millions of dollars) CONSTRUCTION 22 Total put in place 173,998 206,223 226,744 224,331 231,068 230,303 232,559 238,446' 237,442 239,552 23 Private 135,824 160,403 178,079 178,348 180,103 180,635 181,626 185,566' 185,573 188,390 24 Residential 80,957 93,425 97,160 96,937 97,022 97,537 98,996 99,240' 99,146 99,764 25 Nonresidential, total 54,867 66,978 80,919 81,411 83,081 83,098 82,630 86,326 86,427 88,626 Buildings 26 Industrial 7,713 10,993 14,375 14,697 15,547 13,751 13,698 15,019 15,022 14,669 27 Commercial 14,789 18,568 24,223 24,785 24,785 25,818 25,693 26,663 26,923 28,717 28 Other 6,200 6,739 7,354 7,306 7,427 7,532 7,331 7,851 7,722 8,227 29 Public utilities and other .... 26,165 30,678 34,967 34,623 35,322 35,997 35,908 36,793 36,760 37,013 30 Public 38,172 45,821 48,665 45,983 50,965 49,669 50,932 52,880 51,870 51,161 31 Military 1,428 1,498 1,627 1,787 1,500 1,859 1,658 1,855 1,660 1,702 32 Highway 8,984 10,286 11,127 10,315 11,166 11,507' 12,345 14,518 11,900 11,891 33 Conservation and development 3,862 4,436 4,732 3,571 5,255' 5,036' 4,900 4,296 4.960 5,124 34 Other4 23,898 29,601 31,179 30,310 33,044' 31,267' 32,029 32,211 33,350 32,444 1. Not at annual rates. NOTE. Census Bureau estimates for all series except (a) mobile homes, which 2. Not seasonally adjusted. are private, domestic shipments as reported by the Manufactured Housing Institute 3. Value of new construction data in recent periods may not be strictly com- and seasonally adjusted by the Census Bureau, and (b) sales and prices of existing parable with data in prior periods due to changes by the Bureau of the Census in units, which are published by the National Association of Realtors. All back and its estimating techniques. For a description of these changes see Construction current figures are available from originating agency. Permit authorizations are Reports (C-30-76-5), issued by the Bureau in July 1976. those reported to the Census Bureau from 14,000 jurisdictions through 1977, and 4. Beginning January 1977 Highway imputations are included in Other. 16,000 jurisdictions beginning with 1978. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Prices A51 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data, except as noted 12 months to 3 months (at annual rate) to 1 month to IIInnndddeeexxx llleeevvveeelll DDDeeeccc... IIIttteeemmm 11997788 11997799 1979 1979 ((( 111 111 999 999 777 666 999 777 DDeecc.. DDeecc.. === 111000000)))111 Mar. June Sept. Dec. Aug. Sept. Oct. Nov. Dec. CONSUMER PRICES2 1 All items 9.0 13.3 13.0 13.4 13.2 13.5 1.1 1.1 1.0 1.0 1.2 229.9 2 Commodities 8.9 13.0 14.5 13.3 12.3 12.1 .9 1.1 .8 .9 1.1 219.4 3 Food 11.8 10.2 17.7 7.5 4.2 11.1 0 .9 .8 .5 1.3 241.9 4 Commodities less food 7.7 14.3 12.9 15.8 16.2 12.7 1.3 1.2 .8 1.1 1 i 207.2 5 Durable 9.2 10.3 10.0 9.1 8.7 13.2 .7 .7 .7 1.5 .9 199.8 6 Nondurable 8.7 14.8 16.5 25.8 25.7 11.9 1.9 1.8 .7 .6 1.1 228.2 7 Services 9.3 13.7 10.6 13.8 14.3 15.0 1.2 1.1 1.2 1.1 1.3 249.3 8 Rent 7.3 7.9 3.6 8.7 10.7 8.5 .9 .8 1.3 .4 .3 182.9 9 Services less rent 9.6 14.6 11.7 14.5 15.1 16.7 1.3 1.1 1.2 1.2 1.5 261.6 Other groupings 10 All items less food 8.5 14.0 12.0 14.9 15.4 14.0 1.3 1.2 1.0 1.1 1.2 226.4 11 All items less food and energy 8.5 11.3 9.3 11.2 11.5 13.1 1.0 1.0 1.0 1.2 .9 218.1 12 Homeownership 12.4 19.8 16.7 18.0 19.3 25.8 1.7 1.4 1.9 2.1 1.7 286.9 PRODUCER PRICES 13 Finished goods 9.2 12.5 14.3 7.5 15.0 13.3 1.0 1.4 1.0 1.3 .8 227.8 14 Consumer 9.6 14.1 16.0 6.7 19.6 14.4 1.5' 1.7' 1.0 1.6 .8 228.8 15 Foods 11.9 7.5 21.0 -11.3 13.1 10.0 1.2' 1.7' -.1 2.6 — l 232.0 16 Excluding foods 8.4 17.8 13.4 17.9 23.2 16.9 1.7' 1.8' 1.6 1.0 1.3 225.0 17 Capital equipment 8.0 8.7 10.3 9.8 4.3 10.8 -.3' .6' 1.2 .5 .9 225.1 18 Materials 10.2 10.2 17.4 12.0 18.5 17.1 1.0' 1.5' 1.7 1.1 1.2 268.2 19 Intermediate3 8.3 16.3 14.0 15.3 18.8 17.1 1.4' 1.3' 1.9 .9 1.2 260.1 Crude: 20 Nonfood 15.6 26.6 29.2 22.2 21.0 34.4 .7 2.9 2.8 2.0 2.7 385.8 21 Food 18.3 11.1 31.0 -7.1 13.9 9.8 -.2 1.4' .5 2.0 -.1 249.7 1. Not seasonally adjusted 3. Excludes intermediate materials for food manufacturing and manufactured 2. Figures for consumer prices are those for all urban consumers. animal feeds. SOURCE. Bureau of Labor Statistics. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 Domestic Nonfinancial Statistics • February 1980 2.16 GROSS NATIONAL PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates. 1978 1979 AAccccoouunntt 11997766 11997777 11997788 Q3 Q4 Ql Q2 Q3 Q4P GROSS NATIONAL PRODUCT 1 Total 1,702.2 1,899.5 2,127.6 2,159.6 2,235.2 2,292.1 2,329.8 2,396.5 2,455.8 By source 2 Personal consumption expenditures 1,089.9 1,210.0 1,350.8 1,369.3 1,415.4 1,454.2 1,475.9 1,528.6 1,580.4 3 Durable goods 157.4 178.8 200.3 203.5 212.1 213.8 208.7 213.4 215.5 4 Nondurable goods 443.9 481.3 530.6 536.7 558.1 571.1 581.2 604.7 631.0 5 Services 488.5 549.8 619.8 629.1 645.1 669.3 686.0 710.6 733.9 6 Gross private domestic investment 243.0 303.3 351.5 356.2 370.5 373.8 395.4 392.3 383.3 7 Fixed investment 233.0 281.3 329.1 336.1 349.8 354.6 361.9 377.8 376.9 8 Nonresidential 164.9 189.4 221.1 225.9 236.1 243.4 249.1 261.8 261.3 9 Structures 57.3 62.6 76.5 79.7 84.4 84.9 90.5 95.0 98.7 10 Producer's durable equipment 107.6 126.8 144.6 146.3 151.8 158.5 158.6 166.7 162.6 11 Residential structures 68.1 91.9 108.0 110.2 113.7 111.2 112.9 116.0 115.6 12 Nonfarm 65.7 88.8 104.4 106.4 110.0 107.8 109.1 112.0 111.2 13 Change in business inventories 10.0 21.9 22.3 20.0 20.6 19.1 33.4 14.5 6.4 14 Nonfarm 12.1 20.7 21.3 18.5 19.3 18.8 32.6 12.6 2.3 15 Net exports of goods and services 8.0 -9.9 -10.3 -6.8 -4.5 4.0 -8.1 -2.3 -7.7 16 Exports 163.3 175.9 207.2 213.8 224.9 238.5 243.7 267.3 280.0 17 Imports 155.4 185.8 217.5 220.6 229.4 234.4 251.9 269.5 287.7 18 Government purchases of goods and services 361.3 396.2 435.6 440.9 453.8 460.1 466.6 477.8 499.8 19 Federal 129.7 144.4 152.6 152.3 159.0 163.6 161.7 162.9 177.0 20 State and local 231.6 251.8 283.0 288.6 294.8 296.5 304.9 314.9 322.8 By major type of product 21 Final sales, total 1,692.1 1,877.6 2,105.2 2,139.5 2,214.5 2,272.9 2,296.4 2.381.9 2,449.5 22 Goods 762.7 842.2 930.0 940.9 983.8 1,011.8 1,018.1 1,036.0 1,056.2 23 Durable 305.9 345.9 380.4 382.6 402.3 425.5 422.4 424.4 421.0 24 Nondurable 456.8 496.3 549.6 558.3 581.6 586.2 595.7 611.6 635.2 25 Services 776.7 866.4 969.3 981.7 1,005.3 1,041.4 1,064.2 1,100.6 1,135.0 26 Structures 162.7 190.9 228.2 237.0 246.0 238.9 247.5 259.8 264.6 27 Change in business inventories 10.0 21.9 22.3 20.0 20.6 19.1 33.4 14.5 6.4 28 Durable goods 5.3 11.9 13.9 10.3 13.4 18.4 24.3 7.3 4.6 29 Nondurable goods 4.7 10.0 8.4 9.7 7.2 .7 9.1 7.2 1.8 30 MEMO. Total GNP in 1972 dollars 1,273.0 1,340.5 1,399.2 1,407.3 1,426.6 1,430.6 1,422.3 1,433.3 1,438.4 NATIONAL INCOME 31 Total 1,359.8 1,525.8 1,724.3 1,752.5 1,820.0 1,869.0 1,897.9 1,941.9 n.a. 32 Compensation of employees 1,037.8 1,156.9 1,304.5 1,321.1 1,364.8 1,411.2 1,439.7 1,472.9 1,512.8 33 Wages and salaries 890.0 984.0 1,103.5 1,117.4 1.154.7 1.189.4 1,211.5 1,238.0 1,270.3 34 Government and government enterprises 188.0 201.3 218.0 219.2 225.1 228.1 231.2 234.4 240.2 35 Other 702.0 782.7 885.5 898.1 929.6 961.3 980.3 1,003.6 1,030.0 36 Supplement to wages and salaries 147.8 172.9 201.0 203.7 210.1 221.8 228.2 234.8 242.6 37 Employer contributions for social insurance 70.4 81.2 94.6 95.5 98.2 105.8 107.9 109.9 113.0 38 Other labor income 77.4 91.8 106.5 108.2 111.9 116.0 120.3 124.9 129.6 39 Proprietors' income1 89.3 100.2 116.8 117.4 125.7 129.0 129.3 130.3 131.5 40 Business and professional1 71.0 80.5 89.1 91.3 94.4 94.8 95.5 99.4 102.0 41 Farm1 18.3 19.6 27.7 26.1 31.3 34.2 33.7 30.9 29.5 42 Rental income of persons2 22.1 24.7 25.9 26.8 27.1 27.3 26.8 26.6 27.0 4 4 3 4 Co P r r p o o f r i a ts t e b e p f r o o r f e i ts t 1 a x3 1 1 2 5 6 6. . 0 8 1 1 5 7 0 7 . . 0 1 2 1 0 6 6 7 . . 0 7 2 1 1 7 2 5 . . 0 2 2 1 2 8 7 4 . . 4 8 2 1 3 7 3 8 . . 3 9 2 1 2 7 7 6 . . 9 6 2 1 4 8 2 0 . . 3 8 n n . . a a . . 45 Inventory valuation adjustment -14.6 -15.2 -25.2 -23.0 -28.8 -39.9 -36.6 -44.0 -46.9 46 Capital consumption adjustment -14.5 -12.0 -13.1 -13.8 -13.8 -14.5 -14.7 -17.6 -20.1 47 Net interest 83.8 94.0 109.5 111.9 117.6 122.6 125.6 131.5 138.9 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.50. 2. With capital consumption adjustments. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

National Income Accounts A53 2.17 PERSONAL INCOME AND SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1976 1977 1978 Q3 Q4 01 02 Q3 PERSONAL INCOME AND SAVING 1 Total personal income 1,381.6 1,531.6 1,717.4 1,742.5 1,803.1 1,852.6 1,892.5 1,946.6 2 Wage and salary disbursements 890.0 984.0 1,103.3 1,116.8 1,154.3 1,189.3 1,212.4 1,238.1 3 Commodity-producing industries 307.2 343.1 387.4 393.7 408.6 423.0 431.7 438.3 4 Manufacturing 237.4 266.0 298.3 300.8 312.7 324.8 328.5 331.9 5 Distributive industries 216.3 239.1 269.4 272.5 281.6 291.1 295.8 304.0 6 Service industries 178.5 200.5 228.7 231.9 239.4 247.2 252.8 261.3 7 Government and government enterprises 188.0 201.3 217.8 218.7 224.7 228.0 232.1 234.5 8 Other labor income 77.4 91.8 106.5 108.2 111.9 116.0 120.3 124.9 9 Proprietors' income1 89.3 100.2 116.8 117.4 125.7 129.0 129.3 130.3 10 Business and professional1 71.0 80.5 89.1 91.3 94.4 94.8 95.5 99.4 11 Farm1 18.3 19.6 27.7 26.1 31.3 34.2 33.7 30.9 12 Rental income of persons2 22.1 24.7 25.9 26.8 27.1 27.3 26.8 26.6 13 Dividends 37.5 42.1 47.2 47.8 49.7 51.5 52.3 52.8 14 Personal interest income 127.0 141.7 163.3 167.2 174.3 181.0 187.6 194.4 15 Transfer payments 193.8 208.4 224.1 228.3 231.8 237.3 243.6 260.8 16 Old-age survivors, disability, and health insurance benefits 92.9 105.0 116.3 119.8 121.5 123.8 127.1 138.7 17 LESS: Personal contributions for social 55.6 61.3 69.6 70.2 71.8 78.7 79.8 81.2 insurance ,381.6 1,531.6 1,717.4 1,742.5 1,803.1 1,852.6 1,892.5 1.946.6 18 EQUALS: Personal income 197.1 226.4 259.0 266.0 278.2 280.4 290.7 306.6 19 LESS: Personal tax and nontax payments ,184.5 1.305.1 1,458.4 1.476.5 1,524.8 1,572.2 1.601.7 1,640.0 20 EQUALS: Disposable personal income ,115.9 1.240.2 1,386.4 1.405.6 1,453.4 1,493.0 1.515.8 1.569.7 21 LESS: Personal outlays 68.6 65.0 72.0 70.9 71.5 79.2 85.9 70.3 22 EQUALS: Personal saving MEMO: Per capita (1972 dollars) 5,916 6,181 6,402 6,433 6,506 6,514 6,459 6,494 23 Gross national product 3,813 3,974 4,121 4,138 4,197 4,197 4,155 4,195 24 Personal consumption expenditures 4,144 4,285 4,449 4,462 4,522 4,536 4,510 4,501 25 Disposable personal income 5.8 5.0 4.9 4.8 4.7 5.0 5.4 4.3 26 Saving rate (percent) GROSS SAVING 27 Gross private saving 324.9 330.4 336.1 345.2 28 Personal saving 68.6 65.0 72.0 70.9 71.5 79.2 85.9 70.3 29 Undistributed corporate profits1 25.5 35.2 36.0 40.0 40.1 36.1 35.6 34.0 30 Corporate inventory valuation adjustment -14.6 -15.2 -25.2 -23.0 -28.8 -39.9 -36.6 -44.0 Capital consumption allowances 31 Corporate 111.6 121.3 132.9 134.3 136.8 139.9 145.1 150.4 32 Noncorporate 66.1 74.1 84.0 85.2 87.7 89.9 93.9 97.5 33 Wage accruals less disbursements 34 Government surplus, or deficit (-), national income and produce accounts -35.7 -19.5 -.3 -2.3 10.8 15.8 12.7 14.0 35 Federal -53.6 -46.3 -27.7 -20.4 -16.3 -11.7 -7.0 -11.3 36 State and local 17.9 26.8 27.4 22.7 27.1 27.6 19.7 25.3 37 Capital grants received by the United States, net 38 Investment 242.3 283.6 327.9 336.5 351.0 362.8 373.1 375.6 39 Gross private domestic 243.0 303.3 351.5 356.2 370.5 373.8 395.4 392.3 40 Net foreign -.1 -19.6 -23.5 -19.6 -19.4 -11.0 -22.3 -16.7 41 Statistical discrepancy 7.5 3.3 3.9 4.1 1. With inventory valuation and capital consumption adjustments. SOURCE. Survey of Current Business (Department of Commerce). 2. With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • February 1980 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data are seasonally adjusted except as noted.1 Item credits or debits 1976 1977 1978 03 04 01 02 03 1 Balance on current account 4,605 -14,092 -13,478 -3,164 85 415 -1,056 762 2 Not seasonally adjusted -5,892 1,120 1,731 -182 -3,080 3 Merchandise trade balance2 -9,306 -30,873 -33,770 -7,949 -5,971 -6,115 -7,716 -7,282 4 Merchandise exports 114,745 120,816 142,052 36,532 39,412 41,348 42,792 47,337 5 Merchandise imports -124,051 -151,689 -175,822 -44,481 -45,383 -47,463 -50,508 -54,619 6 Military transactions, net 674 1,679 492 247 -239 34 -217 -384 7 Investment income, net3 15,975 17,989 21,645 4,952 6,599 6,864 7,465 8,794 8 Other service transactions, net 2,260 1,783 3,241 819 1,010 954 775 1,008 9 Memo: Balance on goods and services3-4 9,603 -9,423 -8,392 -1,931 1,399 1,737 307 2,136 10 Remittances, pensions, and other transfers -1,851 -1,895 -1,934 -463 -524 -517 -466 -504 11 U.S. government grants (excluding military) -3,146 -2,775 -3,152 -770 -790 -805 -897 -870 12 Change in U.S. government assets, other than official reserve assets, net (increase, -) -4,214 -3,693 -4,656 -1,390 -994 -1,094 -1,001 -756 13 Change in U.S. official reserve assets (increase, -) -2,558 -375 732 115 182 -3,585 343 2,779 14 Gold 0 -118 -65 0 -65 0 0 0 15 Special drawing rights (SDR) -78 -121 1,249 -43 1,412 -1,142 6 0 16 Reserve position in International Monetary Fund -2,212 -294 4,231 195 3,275 -86 -78 -52 17 Foreign currencies -268 158 -4,683 -37 -4,440 -2,357 415 2,831 18 Change in U.S. private assets aboard (increase, -)3 -44,498 -31,725 -57,033 -8,774 -29,442 -2,958 -15,507 -25,348 19 Bank-reported claims -21,368 -11,427 -33,023 -5,488 -21,980 6,572 -8,266 -15,956 20 Nonbank-reported claims -2,296 -1,940 -3,853 -29 -1,898 -2,719 668 n.a. 21 U.S. purchase of foreign securities, net -8,885 -5,460 -3,487 -475 -918 -1,056 -629 -2,111 22 U.S. direct investments abroad, net3 -11,949 -12,898 -16,670 -2,782 -4,646 -5,755 -7,280 -7,281 23 Change in foreign official assets in the United States (increase, +) 17,573 36,656 33,758 4,641 18,764 -9,391 -10,043 5,562 24 U.S. Treasury securities 9,319 30,230 23,542 3,029 13,422 -8,872 -12,859 5,030 25 Other U.S. government obligations 573 2,308 656 443 -115 -5 94 335 26 Other U.S. government liabilities5 4,507 1,240 2,754 122 2,045 -164 257 191 27 Other U.S. liabilities reported by U.S. banks 969 773 5,411 963 3,156 -563 2,321 -100 28 Other foreign official assets6 2,205 2,105 1,395 84 256 213 145 106 29 Change in foreign private assets in the United States (increase, + ) 18,826 14,167 29,956 10,717 10,475 10,868 16,100 17,497 30 U.S. bank-reported liabilities 10,990 6,719 16,975 7,958 7,556 7,157 12,067 13,009 31 U.S. nonbank-reported liabilities -578 473 1,640 1,004 -177 -651 1,086 n.a. 32 Foreign private purchases of U.S. Treasury securities, net ... 2,783 534 2,180 -1,053 1,549 2,583 -239 1,579 33 Foreign purchases of other U.S. securities, net 1,284 2,713 2,867 528 540 790 1,161 591 34 Foreign direct investments in the United States, net3 4,347 3,728 6,294 2,280 1,008 989 2,025 2,317 35 Allocation of SDRs 0 0 0 0 0 1,139 0 0 36 Discrepancy 10,265 -937 10,722 -2,145 930 4,606 11,163 -495 37 Owing to seasonal adjustments -2,716 1,301 985 737 -3,756 38 Statistical discrepancy in recorded data before seasonal adjustment 10,265 -937 10,722 571 3,261 MEMO: Changes in offical assets 39 U.S. official reserve assets (increase, -) -2,558 -375 732 115 182 -3,585 343 2,779 40 Foreign offical assets in the United States (increase, + ) 13,066 35,416 31,004 4,519 16,719 -9,227 -10,299 5,371 41 Change in Organization of Petroleum Exporting Countries offical assets in the United States (part of line 25 above) . 9,581 6,351 -727 -1,794 1,803 -1,916 151 1,488 42 Transfers under military grant programs (excluded from lines 4, 6, and 11 above) 373 204 259 69 63 31 48 85 1. Seasonal factors are no longer calculated for lines 13 through 42. various adjustments to merchandise trade and service transactions. 2. Data are on an international accounts (IA) basis. Differs from the census 5. Primarily associated with military sales contracts and other transactions arbasis primarily because the IA basis includes imports into the U.S. Virgin Islands, ranged with or through foreign official agencies. and it excludes military exports, which are part of line 6. 6. Consists of investments in U.S. corporate stocks and in debt securities of 3. Includes reinvested earnings of incorporated affiliates. private corporations and state and local governments. 4. Differs from the definition of "net exports of goods and services" in the national income and product (GNP) account. The GNP definition makes Note. Data are from Bureau of Economic Analysis, Survey of Current Business (U.S. Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Trade and Reserve Assets A55 3.11 U.S. FOREIGN TRADE Millions of dollars; monthly data are seasonally adjusted. 1979 IItteemm 11997777 11997788'' 11997799 June July Aug. Sept. Oct. Nov. Dec. 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments 121,150 143,578 181,637 15,038 15,669 15,821 15,832 16,838 17,004 16,792 2 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 147,685 171,978 206,326 16,937 16,777 18,177 18,666 18,856 18,422 19,870 3 Trade balance -26,535 -23,400 -24,690 -1,900 -1,108 -2,357 -2,833 -2,018 -1,418 -3,078 NOTE. Bureau of Census data reported on a free-alongside-ship (f.a.s.) value On the import side, the largest single adjustment is the addition of imports into basis. Effective January 1978, major changes were made in coverage, reporting, the Virgin Islands (largely oil for a refinery on St. Croix), which are not included and compiling procedures. The international-accounts-basis data adjust the Census in Census statistics. basis data for reasons of coverage and timing. On the export side, the largest adjustments are: (a) the addition of exports to Canada not covered in Census SOURCE. FT 900 "Summary of U.S. Export and Import Merchandise Trade" statistics, and (b) the exclusion of military exports (which are combined with other (U.S. Department of Commerce, Bureau of the Census). military transactions and are reported separately in the "service account"). 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1979 TTyyppee 1976 1977 1978 July Aug. Sept. Oct. Nov. Dec. Jan .P 1 Total1 18,747 19,312 18,650 20,023 20,023 18,534 17,994 19,261 18,928r 20,962 2 Gold stock, including exchange Stabilization Fund1 11,598 11,719 11,671 11,290 11,259 11,228 11,194 11,112 11,172 11,172 3 Special drawing rights2 3 2,395 2,629 1,558 2,690 2,689 2,725 2,659 2,705 2,724 3,871 4 Reserve position in International Monetary Fund2 4,434 4,946 1,047 1,200 1,277 1,280 1,238 1,322 1,253 1,251 5 Foreign Currencies4 320 18 4,374 4,843 4,798 3,301 2,903 4,122 3,779 4,668 1. Gold held under earmark at Federal Reserve Banks for foreign and inter- 3. Includes allocations by the International Monetary Fund of SDRs as follows: national accounts is not included in the gold stock of the United States; see table $867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; $710 million on Jan. 3.22 1, 1972; and $1,139 million on Jan. 1, 1979; plus net transactions in SDRs. 2. Beginning July 1974, the IMF adopted a technique for valuing the SDR based 4. Beginning November 1978, valued at current market exchange rates. on a weighed average of exchange rates for the currencies of 16 member countries. The U.S. SDR holdings and reserve position in the IMF also are valued on this basis beginning July 1974. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics • February 1980 3.13 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data Millions of dollars, end of period 1979 Asset account 1976 1977 19781 May June July Aug. Sept. Oct. NOV.P All foreign countries 1 Total, all currencies 219,420 258,897 306,795 311,334 327,012 326,545 350,441 360,716' 358,320 365,767 2 Claims on United States 7,889 11,623 17,340 24,624 29,293 26,605 41,917 37,685 34,880 37,836 3 Parent bank 4,323 7,806 12,811 18,014 22,641 19,734 35,203 29,931 28,046 31,133 4 Other 3,566 3,817 4,529 6,610 6,652 6,871 6,714 7,754 6,834 6,703 5 Claims on foreigners 204,486 238,848 278,135 274,384 284,595 286,590 295,011' 309,004' 309,652 313,358 6 Other branches of parent bank 45,955 55,772 70,338 65,967 69,608 70,124 74,749 80,106' 80,126 79,576 7 Banks 83,765 91,883 103,111 103,329 107,673 107,957 111,190' 117,994' 119,253 121,954 8 Public borrowers2 10,613 14,634 23,737 24,691 24,835 24,580 25,132' 25,777' 25,288 24,845 9 Nonbank foreigners 64,153 76,560 80,949 80,397 82,479 83,929 83,940' 85,127' 84,985 86,983 10 Other assets 7,045 8,425 11,320 12,326 13,124 13,350 13,513' 14,027' 13,788 14,573 11 Total payable in U.S. dollars 167,695 193,764 224,940 228,587 238,298 234,445 259,035 263,557 263,094 266,724 12 Claims on United States 7,595 11,049 16,382 23,676 28,223 25,536 40,799 36,454 33,638 36,592 13 Parent bank 4,264 7,692 12,625 17,832 22,387 19,478 34,939 29,700 27,674 30,652 14 Other 3,332 3,357 3,757 5,844 5,836 6,058 5,860 6,754 5,964 5,940 15 Claims on foreigners 156,896 178,896 203,498 198,717 203,729 202,426 211,663 220,665 222,543 223,150 16 Other branches of parent bank 37,909 44,256 55,408 50,790 53,136 53,629 58,255 62,058 61,918 60,897 17 Banks 66,331 70,786 78,686 79,089 81,392 79,951 83,466r 88,882' 90,911 92,680 18 Public borrowers2 9,022 12,632 19,567 20,816 20,553 20,188 20,988' 21,439' 20,909 20,437 19 Nonbank foreigners 43,634 51,222 49,837 48,022 48,648 48,658 48,954 48,286 48,805 49,136 20 Other assets 3,204 3,820 5,060 6,194 6,346 6,483 6,573 6,438 6,913 6,982 United Kingdom 21 Total, all currencies 81,466 90,933 106,593 104,915 112,881 115,217 120,703 126,018 127,949 132,139 22 Claims on United States 3,354 4,341 5,370 6,303 7,492 8,408 10,559 10,614 11,653 11,841 23 Parent bank 2,376 3,518 4,448 4,410 5,495 6,177 8,520 8,322 9,643 9,892 24 Other 978 823 922 1,893 1,997 2,231 2,039 2,292 2,010 1,949 25 Claims on foreigners 75,859 84,016 98,137 95,266 101,693 103,033 106,394 111,598 112,450 115,836 26 Other branches of parent bank 19,753 23,017 27,830 25,248 29,158 28,376 31,800 32,998 32,464 33,487 27 Banks 38,089 39,899 45,013 43,657 44,800 46,291 46,625 49,938 51,466 52,760 28 Public borrowers2 1,274 2,206 4,522 4,579 4,872 4,489 4,639 4,882 4,646 4,868 29 Nonbank foreigners 16,743 19,895 20,772 21,782 22,863 23,877 23,330 23,780 23,874 24,721 30 Other assets 2,253 2,576 3,086 3,346 3,696 3,776 3,750 3,806 3,846 4,462 31 Total payable in U.S. dollars 61,587 66,635 75,860 73,480 78,155 79,211 85,380 88,959 91,485 93,682 32 Claims on United States 3,375 4,100 5,113 5,981 7,033 7,956 10,146 10,096 11,164 11,352 33 Parent bank 2,374 3,431 4,386 4,374 5,386 6,060 8,443 8,270 9,485 9,697 34 Other 902 669 727 1,607 1,647 1,896 1,703 1,826 1,679 1,655 35 Claims on foreigners 57,488 61,408 69,416 65,968 65,451 69,496 73,503 77,145 78,428 80,307 36 Other branches of parent bank 17,249 18,947 22,838 20,505 23,999 23,481 26,983 26,631 27,092 27,993 37 Banks 28,983 28,530 31,482 30,211 29,803 30,626 31,318 34,276 36,183 36,784 38 Public borrowers2 846 1,669 3,317 3,331 3,396 3,166 3,210 3,336 3,206 3,311 39 Nonbank foreigners 10,410 12,263 11,779 11,921 12,253 12,223 11,992 11,902 11,947 12,219 40 Other assets 824 1,126 1,331 1,531 1,671 1,759 1,731 1,718 1,893 2,023 Bahamas and Caymans 41 Total, all currencies 66,774 79,052 91,735 98,057 103,387 98,839 113,512 109,925 106,484 108,872 42 Claims on United States 3,508 5,782 9,635 16,360 20,001 16,613 29,021 24,731 21,394 24,086 43 Parent block 1,141 3,051 6,429 12,244 15,956 12,566 24,929 19,919 17,131 19,868 44 Other 2,367 2,731 3,206 4,116 4,045 4,047 4,092 4,812 4,263 4,218 45 Claims on foreigners 62,048 71,671 79,774 78,869 80,579 79,476 81,370 82,296 82,086 81,728 46 Other branches of parent bank 8,144 11,120 12,904 11,886 11,295 11,760 10,745 10,834 10,514 9,354 47 Banks 25,354 27,939 33,677 34,063 36,542 35,053 37,261' 38,425' 38,820 39,820 48 Public borrowers2 7,105 9,109 11,514 12,703 12,445 12,301 12,619' 12,757' 12,355 11,935 49 Nonbank foreigners 21,445 23,503 21,679 20,217 20,297 20,362 20,745 20,280 20,379 20,619 50 Other assets 1,217 1,599 2,326 2,828 2,807 2,750 3,121 2,898 3,022 3,058 51 Total payable in U.S. dollars 62,705 73,987 85,417 91,829 96,995 92,216 106,767 103,034 99,715 101,932 For notes see opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Overseas Branches A57 3.13 Continued 1979 LLiiaabbiilliittyy aaccccoouunntt 1976 1977 19781 May June July Aug. Sept. Oct. No \.P All foreign countries 52 Total, all currencies 219,420 258,897 306,795 311,334 327,012 326,545 350,441 360,716r 358,320 365,767 53 To United States 32,719 44,154 57,948 57,620 61,064 60,097 67,744 67,558 66,034 62,377 54 Parent bank 19,773 24,542 28,464 23,343 19,355 20,256 20,242 21,420 21,352 19,472 55 Other banks in United States 12,338 9,884 15,008 12,436 17,785 18,617r 14,740 13,855 56 Nonbanks 17,146 24,393 26,701 27,405 29,717 27,521r 29,942 29,050 57 To foreigners 179,954 206,579 238,912 242,513 254,050 253,785 270,328 280,246r 279,229 289,492 58 Other branches of parent bank 44,370 53,244 67,496 63,731 66,631 67,961 72,977 78,345r 78,068 77,170 59 Banks 83,880 94,140 97,711 101,936 109,295 105,296 117,794 118,250r 116,076 128,024 60 Official institutions 25,829 28,110 31,936 34,107 34,303 35,363 33,511 35,722r 35,920 34,958 61 Nonbank foreigners 25,877 31,085 41,769 42,739 43,821 45,165 46,046 47,929 49,165 49,340 62 Other liabilities 6,747 8,163 9,935 11,201 11,898 12,663 12,369 12,912 13,057 13,898 63 Total payable in U.S. dollars 173,071 198,572 230,810 232,515 243,521 240,452 264,339 269,738 ' 268,769 272,346 64 To United States 31,932 42,881 55,811 55,488 58,524 57,455 65,126 64,921 63,444 60,069 65 Parent bank 19,599 24,213 27,393 22,406 18,333 19,218 19,192 20,254 20,124 18,269 66 Other banks in United States 12,084 9,651 14,711 12,130 17,345 18,162r 14,402 13,656 67 Nonbanks 16,334 23,431 25,480 26,107 28,589 26,505' 28,918 28,144 68 To foreigners 137,612 151,363 169,927 170,847 178,631 176,613 192,481 197,890 198,291 204,684 69 Other branches of parent bank 37,098 43,268 53,396 49,442 51,101 52,048 56,840 60,588 60,476 59,429 70 Banks 60,619 64,872 63,000 65,404 71,041 65,945 78,006 76,443' 74,869 83,605 71 Official institutions 22,878 23,972 26,404 28,310 28,117 29,497 27,468 29,486' 29,653 28,521 72 Nonbank foreigners 17,017 19,251 27,127 27,691 28,372 29,123 30,167 31,373 33,293 33,129 73 Other liabilities 3,527 4,328 5,072 6,180 6,366 6,384 6,732 6,927r 7,034 7,593 United Kingdom 74 Total, all currencies 81,466 90,933 106,593 104,915 112,881 115,217 120,703 126,018 127,949 132,139 75 To United States 5,997 7,753 9,730 11,697 12,779 13,626 17,174 18,451 19,731 19,792 76 Parent bank . 1,198 1,451 1,887 2,113 1,505 1,706 2,669 2,079 2,258 2,696 7 7 7 8 N O o th n e b r a n b k a s n ks in Untied States v 4 JGG 6 302 4 3 , , 2 6 3 1 2 1 6 3 , , 2 3 2 6 4 0 4 7 , , 2 0 4 2 5 9 4 7 , , 8 0 2 9 2 8 6 8 , , 1 3 5 5 5 0 8 7 , , 5 7 8 9 2 0 r ' 9 8 , , 4 0 4 3 2 1 9 7 , , 7 3 1 8 5 1 79 To foreigners 73,228 80,736 93,202 88,796 95,385 96,258 98,557 102,520 103,092 106,766 80 Other branches of parent bank 7,092 9,376 12,786 10,931 11,353 11,193 11,507 13,045 13,139 12,463 81 Banks 36,259 37,893 39,917 38,417 42,297 41,336 46,256 45,346 44,458 49,299 82 Official institutions 17,273 18,318 20,963 21,312 23,140 24,017 21,825 24,015 24,437 23,060 83 Nonbank foreigners 12,605 15,149 19,536 18,136 18,595 19,712 18,969 20,114 21,058 21,944 84 Other liabilities 2,241 2,445 3,661 4,422 4,717 5,333 4,972 5,047 5,126 5,581 85 Total payable in U.S. dollars 63,174 67,573 77,030 74,127 79,256 80,398 86,642 90,609 92,817 95,163 86 To United States 5,849 7,480 9,328 11,200 12,199 13,077 16,572 17,817 19,188 19,318 87 Parent bank 1,182 1,416 1,836 2,047 1,460 1,637 2,613 1,975 2,196 2,647 8 8 8 9 N O o th n e b r a n b k a s n ks in United States ) ) 4 667 6 064 4 3 , , 1 3 4 4 4 8 5 3 , , 8 3 5 0 2 1 6 4 , , 5 1 6 7 5 4 4 6 , , 7 6 5 8 7 3 6 7 , , 0 89 6 1 8 8 7, , 7 1 1 2 5 7 r r 9 7, , 9 0 6 2 7 5 7 9 , , 3 3 3 3 8 3 90 To foreigners 56,372 58,977 66,216 60,948 65,081 65,403 68,035 70,717 71,560 73,542 91 Other branches of parent bank 5,874 7,505 9,635 7,777 7,711 7,377 7,720 8,663 8,955 8,337 92 Banks 25,527 25,608 25,287 22,684 25,436 23,893 28,698 27,284 26,149 29,424 93 Official institutions 15,423 15,482 17,091 17,486 19.093 20,288 18,119 20,257 20,457 19,139 94 Nonbank foreigners 9,547 10,382 14,203 13,001 12,841 13,845 13,498 14,513 15,999 16,642 95 Other liabilities 953 1,116 1,486 1,979 1,976 1,918 2,035 2,075 2,069 2,303 Bahamas and Caymans 96 Total, all currencies 66,774 79,052 91,735 98,057 103,387 98,839 113,512 109,925 106,484 108,872 97 To United States 22,721 32,176 39,431 38,713 40,023 37,939 41,734 40,582 38,294 35,013 98 Parent bank 16,161 20,956 20,356 15,957 12,276 12,232 11,117 13,525 12,864 10,955 1 9 0 9 0 O N t o h n e b r a n b k a s n ks in United States FI. DA,D Oc^Un 11 220 1 6 2 , , 1 8 9 7 9 6 1 5 7 , , 4 3 0 5 4 2 1 8 8 , , 9 7 7 7 3 4 1 6 9 , , 3 3 4 6 2 5 2 1 0 0 , , 4 1 2 9 5 2 1 8 8 , , 9 1 4 1 7 0 1 5 9 , , 7 6 5 7 7 3 1 5 8 , , 5 5 0 5 3 5 101 To foreigners 42,899 45,292 50,447 57,184 61,216 58,724 69,373 67,017 65,920 71,271 102 Other branches of parent bank 13,801 12,816 16,094 15,997 17,104 18,223 20,246 20,730 19,304 21,060 103 Banks 21,760 24,717 23,104 28,599 31,662 28,204 35,121 32,799 32,266 36,498 104 Official institutions 3,573 3,000 4,208 4,970 4,074 4,375 4,751 4,418 4,712 5,176 105 Nonbank foreigners 3,765 4,759 7,041 7,618 8,376 7,922 9,255 9,070 9,638 8,537 106 Other liabilities 1,154 1,584 1,857 2,160 2,148 2,176 2,405 2,326 2,270 2,588 107 Total payable in U.S. dollars 63,417 74,463 87,014 92,797 97,993 93,470 107,623 104,113 100,820 103,339 1. In May 1978 the exemption level for branches required to report was in- rowers, including corporations that are majority owned by foreign governments, creased, which reduced the number of reporting branches. replaced the previous, more narrowly defined claims on foreign official institutions. 2. In May 1978 a broader category of claims on foreign public bor- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • February 1980 3.14 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1979 Item 1976 1977 1978 June' Julyr Aug.r Sept.r Oct. NOV.p Dec .P 1 Total1 95,634 131,097 162,567 144,223 148,017 148,726 149,780 146,728 141,298 148,821 By type 2 Liabilities reported by banks in the United States2 17,231 18,003 23,274 25,535 25,809 25,398 25,619 24,951 26,635 29,843 3 U.S. Treasury bills and certificates3 37,725 47,820 67,671 46,304 49,425 50,146 50,842 49,411 43,921 47,668 U.S. Treasury bonds and notes 4 Marketable 11,788 32,164 35,912 36,458 37,490 38,005 38,106 38,162 37,125 37,672 5 Nonmarketable4 20,648 20,443 20,970 20,697 19,797 19,547 19,547 18,497 17,837 17,387 6 U.S. securities other than U.S. Treasury securities5 8,242 12,667 14,740 15,229 15,496 15,630 15,666 15,707 15,780 16,251 By area 7 Western Europe1 45,882 70,748 92,989 83,553 86,668 86,485 87,117 85,467 80,838 85,502 8 Canada 3,406 2,334 2,506 1,979 2,116 2,185 2,412 1,954 1,971 1,898 9 Latin America and Caribbean 4,926 4,649 5,045 4,610 5,397 4,497 4,890 4,559 4,579 6,322 10 Asia 37,767 50,693 58,858 50,767 50,537 51,928 52,414 51,782 51,143 52,205 11 Africa 1,893 1,742 2,423 2,597 2,613 3,219 2,513 2,583 2,215 2,412 12 Other countries6 1,760 931 746 717 686 412 434 383 552 482 1. Includes the Bank for International Settlements. 5. Debt securities of U.S. government corporations and federally sponsored 2. Principally demand deposits, time deposits, bankers acceptance, commercial agencies, and U.S. corporate stocks and bonds. paper, negotiable time certificates of deposit, and borrowings under repurchase 6. Includes countries in Oceania and Eastern Europe. agreements. 3. Includes nonmarketable certificates of indebtedness (including those payable NOTE: Based on Treasury Department data and on data reported to the Treasury in foreign currencies through 1974) and Treasury bills issued to official institutions Department by banks (including Federal Reserve Banks) and securities dealers of foreign countries. in the United States. 4. Excludes notes issued to foreign official nonreserve agencies. Includes bonds and notes payable in foreign currencies. 3.15 LIABILITIES TO AND CLAIMS ON FOREIGNERS Reported by Banks in the United States Payable in Foreign Currencies Millions of dollars, end of period 1978 1979 IItteemm 11997766 11997777 Sept. Dec. Mar. June Sept. 1 Banks' own liabilities 781 925 1,771 2,235 1,781 1,963 2,323 2 Banks' own claims1 1,834 2,356 2,950 3,504r 2,602 2,519r 2,607 3 Deposits 1,103 941 1,375 1,633r 1,121 1,324r 1,228 4 Other claims 731 1,415 1,575 1,871 1,481 1,196' 1,379 5 Claims of banks' domestic customers2 444466 336677 447766 552200 661122 1. Includes claims of banks' domestic customers through March 1978. NOTE: Data on claims exclude foreign currencies held by U.S. monetary au- 2. Assets owned by customers of the reporting bank located in the United States thorities. that represent claims on foreigners held by reporting banks for the accounts of their domestic customeers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A59 3.16 LIABILITIES TO FOREIGNERS Reported by Banks in the United States Payable in U.S. dollars Millions of dollars, end of period 1979 Holder and type of liability 1978 June' July' Aug.' Sept.' Oct. Nov.? Dec .P 1 All foreigners 110,657 126,168 166,997' 168,082 168,992 191,719 185,695 180,656 184,259 186,958 2 Banks' own liabilities 78,904' 100,054 97,262 117,880 111,716 107,873 117,075 116,817 3 Demand deposits 16,803 18,996 19,201 19,326 19,084 18,910 20,163 17,898 23,332 23,348 4 Time deposits1 11,347 11,521 12,473 12,666 12,577 12,747 13,048 12,260 12,556 13,383 5 Other2 9,702' 12,712 12,967 12,627 12,694 12,774 12,619 16,032 6 Own foreign offices3 37,563' 55,350 52,635 73,595 65,811 64,941 68,568 64,053 7 Banks' custody liabilities4 88,093' 68,028 71,730 73,839 73,978 72,783 67,184 70,141 8 U.S. Treasury bills and certificates5 40,744 48,906 68,202 47,545 51,467 52,258 52,429 50,452 45,005 48,575 9 Other negotiable and readily transferable instruments6 17,396 18,186 18,047 19,297 19,312 20,141 19,802 19,204 10 Other 2,495' 2,298 2,216 2,284 2,237 2,190 2,376 2,362 11 Nonmonetary international and regional organizations7 5,714 3,274 2,607' 2,977 3,437 3,479 2,909 2,389 2,730 2,441 12 Banks' own liabilities 906' 1,508 844 603 491 566 766 710 13 Demand deposits 290 231 330 264 216 154 161 143 214 260 14 Time deposits1 205 139 84' 94 69 77 82 82 80 152 15 Other2 492 1,150 559 372 248 342 472 298 16 Banks' custody liabilities4 1,701 1,469 2,593 2,876 2,418 1,823 1,964 1,732 17 U.S. Treasury bills and certificates 201 318 1,345 1,442 912 327 258 102 18 Other negotiable and readily transferable instruments6 1,499 1,151 1,247 1,433 1,505 1,494 1,605 1,627 19 Other 1 1 1 1 1 2 101 2 20 Official institutions8 54,956 65,822 90,650' 71,840 75,235 75,545 76,460 74,362 70,556 77,512 21 Banks' own liabilities 12,073' 13,490 14,382 12,945 13,488 11,981 14,168 17,728 22 Demand deposits 3,394 3,528 3,390 3,196 2,850 2,397 3,139 2,372 5,652 4,722 23 Time deposits1 2,321 1,797 2,531' 2,491 2,575 2,392 2,320 1,859 1,850 2,735 24 Other2 6,152' 7,803 8,957 8,155 8,029 7,749 6,666 10,270 25 Banks' custody liabilities4 78,577 58,350 60,853 62,600 62,972 62,381 56,388 59,784 26 U.S. Treasury bills and certificates5 67,415 46,304 49,425 50,146 50,842 49,411 43,921 47,668 27 Other negotiable and readily transferable instruments6 10,992 12,006 11,377 12,402 12,080 12,913 12,411 12,064 28 Other 170 40 50 52 51 57 56 52 29 Banks9 37,174 42,335 57,720' 76,310 73,085 95,469 88,947 86,(55 92,709 88,570 30 Banks' own liabilities 52,935' 71,211 68,134 90,448 83,800 81,055 87,504 83,463 31 Unaffiliated foreign banks 15,372' 15,861 15,499 16,853 17,989 16,114 18,936 19,409 32 Demand deposits 9,104 10,933 11,239 11,138 11,357 11,757 12,425 10,603 12,872 13,252 33 Time deposits1 2,297 2,040 1,468' 1,372 1,197 1,525 1,752 1,551 1,627 1,736 34 Other2 2,664' 3,351 2,945 3,571 3,813 3,960 4,437 4,421 35 Own foreign offices3 37,563' 55,350 52,635 73,595 65,811 64,941 68,568 64,053 36 Banks' custody liabilities4 4,785 5,099 4,951 5,020 5,147 5,100 5,205 5,108 37 U.S. Treasury and certificates 119 141 300 407 347 384 406 400 451 422 38 Other negotiable and readily transferable instruments6 2,425 2,547 2,556 2,509 2,625 2,684 2,611 2,514 39 Other 2,060 2,145 2,048 2,127 2,116 2,017 2,143 2,172 40 Other foreigners 12,814 14,736 16,020' 16,955 17,235 17,227 17,379 17,750 18,263 18,434 41 Banks' own liabilities 12,990' 13,845 13,901 13,884 13,937 14,271 14,637 14,917 42 Demand deposits 4,015 4,304 4,242 4,729 4,661 4,602 4,439 4,779 4,594 5,114 43 Time deposits 6,524 7,546 8,353 8,708 8,735 8,753 8,894 8,769 8,999 8,760 44 Other2 394' 409 505 529 604 724 1,044 1,043 45 Banks'custody liabilites4 3,030 3,110 3,333 3,343 3,442 3,479 3,626 3,517 46 U.S. Treasury bills and certificates 285 516 350 285 269 315 375 382 47 Other negotiable and readily transferable instruments6 2,481' 2,482 2,867 2,953 3,103 3,050 3,175 2,999 48 Other 264 112 117 105 70 114 76 137 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 11,007 10,633 10,732 11,099 11,264 11,346 10,821 10,848 1. Excludes negotiable time certificates of deposit, which are included in "Other 5. Includes nonmarketable certificates of indebtedness (including those payable negotiable and readily transferable instruments." Data for time deposits prior to in foreign currencies through 1974) and Treasury bills issued to official institutions April 1978 represent short-term only. of foreign countries. 2. Includes borrowing under repurchase agreements. 6. Principally bankers acceptances, commercial paper, and negotiable time cer- 3. U.S. banks: includes amounts due to own foreign branches and foreign sub- tificates of deposit. sidiaries consolidated in "Consolidated Report of Condition" filed with bank reg- 7. Principally the International Bank for Reconstruction and Development, and ulatory agencies. Agencies, branches, and majority-owned subsidiaries of foreign the Inter-American and Asian Development Banks. banks: principally amounts due to head office or parent foreign bank, and foreign 8. Foreign central banks and foreign central governments and the Bank for branches, agencies or wholly owned subsidiaries of head office or parent foreign International Settlements. bank. 9. Excludes central banks, which are included in "Official institutions." 4. Financial claims on residents of the United States, other than long-term securities, held by or through reporting banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • February 1980 3.16 LIABILITIES TO FOREIGNERS Continued 1979 Area and country 11997766 11997777 11997788 June July Aug. Sept. Oct. N OV.P Dec .P 1 Total 110,657 126,168 166,997' 168,082' 168,992' 191,719' 185,695 180,656 184,259 186,958 2 Foreign countries 104,943 122,893 164,390' 165,105' 165,555' 188,241' 182,786 178,267 181,528 184,516 3 Europe 47,076 60,295 85,382' 79,509' 81,497' 86,112' 88,584 88,008 87,499 91,317 4 Austria 346 318 513 449 444 446 444 426 404 413 5 Belgium-Luxembourg 2,187 2,531 2,552 2,419 2,493 2,714 2,920 2,710 2,786 2,364 6 Denmark 356 770 1,946 1,165 1,560 1,412 1,100 1,001 1,166 11,,009922 7 Finland 416 323 346 457 466 508 415 334 390 339988 8 France 4,876 5,269 9,208 9,594 9,616 9,985 10,499 9,340 10,301 10,387 9 Germany 6,241 7,239 17,286 8,492 10,724 10,434 13,129 13,154 10,801 12,935 10 Greece 403 603 826 684 760 695 691 632 792 635 11 Italy 3,182 6,857 7,674 9,658' 8,460' 9,678' 8,551 8,481 8,346 7,778 12 Netherlands 3,003 2,869 2,402 2,628 2,355 2,627 2,281 2,174 2,165 2,327 13 Norway 782 944 1,271 1,348 1,263 1,320 1,402 1,393 1,407 1,267 14 Portugal 239 273 330 353 303 411 554 620 595 557 15 Spain 559 619 870 1,211 1,107 1,060 1,133 1,103 1,184 1,259 16 Sweden 1,692 2,712 3,121 2,437 2,227 2,368 2,062 2,165 2,064 2,005 17 Switzerland 9,460 12,343 18,560' 15,950' 16,687' 15,717' 16,642 16,643 17,220 18,551 18 Turkey 166 130 157 156 193 160 135 150 145 119 19 United Kingdom 10,018 14,125 14,265 18,005' 18,745' 22,579 22,622 24,138 24,055 24,679 2 2 0 1 O Yu th g e o r s la W vi e a s tern Europe1 2,6 1 7 8 3 9 1,8 2 0 3 4 2 3, 2 3 5 9 4 3 ' 4,0 15 1 1 1 ' 3,6 15 1 9 0 ' 3,5 1 0 4 4 9 3,4 1 9 4 3 2 3,0 1 8 4 7 7 3,2 1 3 4 3 7 3,9 2 3 6 1 6 2 2 2 3 U O . t S he .S r .R E astern Europe2 2 5 3 1 6 2 9 3 8 6 32 8 5 2 2 6 7 2 7 2 6 6 3 0 26 8 5 0 3 5 1 2 7 2 5 5 3 9 2 3 6 9 1 3 5 0 2 2 24 Canada 4,659 4,607 6,966 6,674 7,610 8,376 8,319 8,644 7,280 7,357 25 Latin America and Caribbean 19,132 23,670 31,606' 44,771' 41,242' 56,889' 49,408 47,097 51,604 49,313 26 Argentina 1,534 1,416 1,484 1,896' 1,697' 1,761' 1,935 1,693 1,573 1,582 27 Bahamas 2,770 3,596 6,752' 16,458' 13,107' 24,085 18,372 15,377 18,533 15,300 28 Bermuda 218 321 428 402 339 415 392 399 404 435 29 Brazil 1,438 1,396 1,125 1,332 1,294 1,040 1,198 994 1,051 1,005 30 British West Indies 1,877 3,998 5,991 8,723' 7,840' 13,367 11,202 11,372 12,522 10,807 31 Chile 337 360 399 403 465 459 420 425 356 469 32 Colombia 1,021 1,221 1,756 2,402 2,292 2,378 2,188 2,243 2,377 2,617 33 Cuba 6 6 13 7 7 6 9 7 12 13 3 3 3 4 5 6 J E G a c u m u a a a te d ic m o a r 3 a la3 320 330 44 32 11 55 2 66 22 3 33 44 9 11 66 1 99 4 33 11 4 11 00 3 99 44 4 33 4 66 22 9 77 00 33 3 11 33 6 77 55 4 55 4 33 1 8 66 1 2 11 3 4 3 7 7 7 6 4 4 4A 4 11 2 J 5 37 Mexico 22,,887700 2,876 3,417 3,392 3,632 3.658 3,549 3,528 3,666 4,094 38 Netherlands Antilles 158 196 308 414 422 366' 359 609 460 499 39 Panama 1,167 2,331 2,968' 3,148' 3,070 3.049 3,336 3,926 4,290 4,483 40 Peru 257 287 363 382 425 391 477 388 417 383 41 Uruguay 245 243 231 248 231 222 217 217 185 202 42 Venezuela 3,118 2,929 3,821 2,982 3,920 3,180 2,903 3,168 3,014 4,192 43 Other Latin America and Carribbean 1,797 2,167 1,760 1,825 1,636 1,675 1,977 1,795 1,822 2,317 44 Asia 29,766 30,488 36,473' 29,734' 30,818' 32,219' 32,505 30,615 31,061 32,394 China 45 Mainland 48 53 67 46 42 41 45 49 45 49 46 Taiwan 990 1,013 502 739 769 1.027 1,231 1,339 1.413 1,393 47 Hong Kong 894 1,094 1,256 1,555 1.452 1,571 1,634 1,542 1,624 1,667 48 India 638 961 790 940 873 704 674 496 582 527 49 Indonesia 340 410 449 409 509 317 463 555 478 504 50 Israel 392 559 674 708' 624' 627' 626 621 574 663 51 Japan 14,363 14,616 21,927 12,572 13,104 13,094 13,292 10,885 7,867 8,930 52 Korea 438 602 795 809 816 825 938 950 951 995 53 Philippines 628 687 644 690 640 603' 632 598 671 800 5 5 4 5 T M h i a d i d la le n - d E ast oil-exporting countries4 . 9,3 2 6 7 0 7 8,9 2 7 6 9 4 7, 4 5 2 2 7 9 ' 9, 4 2 1 2 3 2 ' 9, 3 8 0 5 7 3 ' 11, 3 3 3 0 0 6 ' 10, 4 6 2 8 1 8 11,3 30 1 4 3 14,5 4 6 1 5 5 14,7 2 1 8 2 1 56 Other Asia 1,398 1,250 1,414 1,632 1,830 1,773 1,862 1,963 1,876 1,873 57 Africa 2,298 2,535 2,886 3,237 3,226 3,818 3,194 3,141 3,105 3,230 58 Egypt 333 404 404 306 378 302 245 294 380 475 59 Morocco 87 66 32 45 35 40 40 30 36 32 60 South Africa 141 174 168 316 196 174 235 194 213 184 61 Zaire 36 39 43 56 37 49 73 112 104 110 62 Oil-exporting countries5 1,116 1,155 1,525 1,566 1,699 2,441 1,832 1,711 1,513 1,627 63 Other Africa 585 698 715 948 881 811 768 800 859 803 64 Other countries 2,012 1,297 1,076 1,181 1,162 826 776 762 979 906 65 Australia 1,905 1,140 838 891 806 621 549 528 714 684 66 All other 107 158 239 290 355 205 227 234 266 222 67 Nonmonetary international and regional organizations 5,714 3,274 2,607' 2,977' 3,437 3,479 2,909 2,389 2,730 2,441 68 International 5,157 2,752 1,485 1,865' 2,257 2,427 1,810 1,343 1,517 1,321 69 Latin American regional 267 278 808 829 917 793 824 755 790 813 70 Other regional 290 245 314' 284 263 258' 275 291 423 308 1. Includes the Bank for International Settlements. Beginning April 1978, also 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and includes Eastern European countries not listed in line 23. United Arab Emirates (Trucial States). 2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, German Demo- 5. Comprises Algeria, Gabon, Libya, and Nigeria. cratic Republic, Hungary, Poland, and Romania. 6. Asian, African, Middle Eastern, and European regional organizations, except 3. Included in "Other Latin America and Caribbean" through March 1978. the Bank for International Settlement, which is included in "Other Western Europe." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A61 3.17 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States Payable in U.S. Dollars Millions of dollars, end of period 1979 AArreeaa aanndd ccoouunnttrryy 11997766 11997777 11997788 June July Aug. Sept. Oct. NOV.P Dec .P 1 Total 79,301 90,206 115,307 115,134' 113,502' 125,633' 127,247 121,086' 124,368 134,338 2 Foreign countries 79,261 90,163 115,251' 115,088' 113,455' 125,582' 127,1% 121,049' 124,324 134,306 3 Europe 14,776 18,114 24,230' 24,370' 24,138' 25,774 28,380 26,178' 26,044 28,354 4 Austria 63 65 140 151 188 223 191 190' 167 285 5 Belgium-Luxembourg 482 561 1,200 1,696' 1,669' 1,483 1,737 1,559' 1,420 1,327 6 Denmark 133 173 254 140 137 141 166 116 149 147 7 Finland 199 172 305 186 220 247 227 230 182 202 8 France 1,549 2,082 3,742 3,545' 3,237' 3,260 3,766 2,736 3,305 3,303 9 Germany 509 644 895' 838' 939' 883' 1,840 1,309 1,409 1,168 10 Greece 279 206 164 167 130 267 194 282 171 154 11 Italy 993 1,334 1,508 1,332 1,196 1,474 1,566 1,424 1,262 1,591 12 Netherlands 315 338 675' 506' 792 559 631 618 603 514 13 Norway 136 162 299 200 181 227 238 236 257 276 14 Portugal 88 175 171 172 235 297 325 349 352 333 15 Spain 745 722 1,110 994 999 969 1,126 1,117 1,050 1,061 16 Sweden 206 218 537 247 401 482 459 603 548 542 17 Switzerland 379 564 1,283 1,071 1,027 714 1,179 1,171 1,232 1,163 18 Turkey 249 360 283 135 118 148 119 141 151 149 19 United Kingdom 7,033 8,964 10,156 11,259' 10,693' 12,347 12,394 11,839' 11,546 13,787 20 Yugoslavia 234 311 363 535 541 571 584 578 582 611 21 Other Western Europe1 85 86 122 187 199 216 247 154 185 175 22 U.S.S.R 485 413 366 300 282 292 326 349 311 290 23 Other Eastern Europe2 613 566 657' 709' 955' 974' 1,064 1,175' 1,160 1,277 24 Canada 3,319 3,355 5,152 4,900' 5,063 5,017 4,787 4,335' 4,367 5,562 25 Latin America and Caribbean 38,879 45,850 57,166 57,131' 53,941' 62,932' 62,465 59,225' 62,080 67,057 26 Argentina 1,192 1,478 2,281 3,202' 3,341' 3,259' 3,285 3,653 4,157 4,225 27 Bahamas 15,464 19,858 21,515 19,113 16,769' 19,931 19,146 17,393' 16,030 18,681 28 Bermuda 150 232 184 128' 179' 167 172 485 458 469 29 Brazil 4,901 4,629 6,251 6,121 6,168' 6,548 7,286 7,567 7,499 7,754 30 British West Indies 5,082 6,481 9,391 9,001' 6,244' 10,723' 9,176 6,742' 8,913 9,685 31 Chile 597 675 972 1,089 1,120 1,173 1,323 1,396 1,348 1,423 32 Colombia 675 671 1,012 1,089 1,196 1,220 1,259 1,451 1,522 1,611 33 Cuba 13 10 * 4 4 6 4 4 4 6 34 Ecuador 375 517 705 908 916 921 943 1,000 1,007 1,025 35 Guatemala3 94 95 98 100 103 110 115 136 36 Jamaica3 40 40 47 30 32 29 34 247 37 Mexico 4,822 4,909 5,423 6,428' 7,172' 7,699 8,430 8,416 8,336 8,925 38 Netherlands Antilles 140 224 273 280 392 342 301 230 227 246 39 Panama 1,372 1,410 3,094 3,603' 4,212' 4,400 4,523 4,268 5,774 5,983 40 Peru 933 962 918 720 727 730 716 607 604 652 41 Uruguay 42 80 52 58 56 66 60 72 71 112 42 Venezuela 1,828 2,318 3,474 3,803' 3,817' 4,040' 4,176 4,349' 4,392 4,477 43 Other Latin America and Caribbean 1,293 1,394 1,487 1,447 1,483 1,577' 1,531 1,455 1,587 1,600 44 19,204 19,236 25,494' 25,576' 27,217' 28,963' 2288,,554466 28,457' 2299,,005544 30,692 China 45 Mainland 3 10 4 9 35 29 25 55 31 86 46 Taiwan 1,344 1,719 1,499 1,884' 1,876' 1,970 1,935 1,930 1,805 1,833 47 Hong Kong 316 543 1,579' 1,863' 1,978 1,788 1,859 1,737 1,794 1,803 48 India 69 53 54 82 43 75 74 68 69 93 49 Indonesia 218 232 143 138 131 156 140 147 138 131 50 Israel 755 584 870 842 865 857 882 891 842 1,004 51 Japan 11,040 9,839 12,686 12,764' 13,950' 15,050' 14,656 14,983' 16,149 16,971 52 Korea 1,978 2,336 2,282 3,388' 3,469' 3,612 3,750 3,839 3,732 3,795 53 Philippines 719 594 680 678 743 793 638 724 642 745 54 Thailand 442 633 758 895 925 919 1,036 956 971 937 55 Middle East oil-exporting countries4 1,459 1,746 3,135 1,595' 1,807' 1,689 1,914 1,190 1,107 1,489 56 Other Asia 863 947 1,804 1,437' 1,395' 2,026 1,637 1,939 1,775 1,805 57 Africa 2,311 2,518 2,221 2,128 2,082' 1,969 2,101 1,926 1,865 1,785 58 Egypt 126 119 107 178 115 126 120 122 91 112 59 Morocco 27 43 82 37 34 31 23 66 73 103 60 South Africa 957 1,066 860 745 745 730 704 602 565 445 61 Zaire 112 98 164 151 189 151 149 135 135 142 62 Oil-Exporting Countries5 524 510 452 478 491' 398 563 435 442 391 63 Other 565 682 556 539 508 533 542 566 559 593 64 Other Countries 772 1,090 988 984 1,013 926 916 928 915 856 65 Australia 597 905 877 779 765 756 744 748 740 677 66 All other 175 186 111 205 248 170 172 180 175 179 67 Nonmonetary international and regional organizations6 40 43 56 45 47 51 50 36 44 32 1. Includes the Bank for International Settlements. Beginning April 1978, also 5. Comprises Algeria, Gabon, Libya, and Nigeria. includes Eastern European countries not listed in line 23. 6. Excludes the Bank for International Settlements, which is included in "Other 2. Beginning April 1978 comprises Bulgaria, Czechoslavakia, German Demo- Western Europe." cratic Republic, Hungary, Poland, and Romania. 3. Included in "Other Latin America and Caribbean" through March 1978. NOTE. Data for period prior to April 1978 include claims of banks' domestic 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and customers on foreigners. United Arab Emirates (Trucial States). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics • February 1980 3.18 BANKS' OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the United States Payable in U.S. Dollars Millions of dollars, end of period 1979 TTyyppee ooff ccllaaiimm 11997766 11997777 11997788rr Juner July' Aug.r Sept. Oct.' Nov. Dec.P 1 Total 7799,,330011 9900,,220066 111111122222226666666,,,,,,,444444488888885555555 111111122222229999999,,,,,,,000000022222227777777 111111144444445555555,,,,,,,999999977777775555555''''''' 2 Banks' own claims on foreigners 111111111111115555555,,,,,,,333333300000007777777 111111111111115555555,,,,,,,111111133333334444444 113,502 125,633 111111122222227777777,,,,,,,222222244444447777777 121,086 124,368 134,338 3 Foreign public borrowers 11111110000000,,,,,,,111111133333330000000 11111111111111,,,,,,,333333322222224444444 11,891 12,510 11111113333333,,,,,,,888888800000008888888 14,103 13,639 14,911 4 Own foreign offices1 44444441111111,,,,,,,444444477777771111111 33333337777777,,,,,,,111111166666664444444 36,213 40,237 33333339999999,,,,,,,444444499999993333333 38,164 43,546 48,104 5 Unaffiliated foreign banks 44444440000000,,,,,,,444444422222220000000 44444441111111,,,,,,,444444488888889999999 38,793 45,048 44444446666666,,,,,,,000000011111110000000 39,799 37,903 40,800 6 Deposits 5555555,,,,,,,444444455555558888888 7777777,,,,,,,333333300000004444444 6,973 7,549 7777777,,,,,,,333333399999994444444 6,745 5,710 6,276 7 Other 33333334444444,,,,,,,999999966666662222222 33333334444444,,,,,,,111111188888885555555 31,820 37,498 33333338888888,,,,,,,666666611111116666666 33,054 32,193 34,523 8 All other foreigners 22222223333333,,,,,,,222222288888886666666 22222225555555,,,,,,,111111155555557777777 26,605 27,838 22222227777777,,,,,,,999999933333335555555 29,021 29,280 30,523 9 Claims of banks' domestic customers2 11111111111111,,,,,,,111111177777778888888 11111113333333,,,,,,,888888899999993333333 11111118888888,,,,,,,777777722222229999999''''''' 10 Deposits 444444488888880000000 666666688888883333333 999999977777775555555''''''' 1111 NNeeggoottiiaabbllee aanndd rreeaaddiillyy ttrraannssffeerraabbllee iinnssttrruummeennttss33 .... 5555555,,,,,,,333333344444444444444 7777777,,,,,,,333333311111112222222 11111111111111,,,,,,,555555588888880000000''''''' 1122 OOuuttssttaannddiinngg ccoolllleeccttiioonnss aanndd ootthheerr ccllaaiimmss44 55,,775566 66,,117766 5555555,,,,,,,333333355555553333333 5555555,,,,,,,888888899999999999999 6666666,,,,,,,111111177777774444444''''''' 13 MEMO: Customer liability on acceptances 11111114444444,,,,,,,999999911111119999999 11111116666666,,,,,,,888888866666664444444 11111119999999,,,,,,,777777733333333333333''''''' Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States5 12,804 17,326 20,537 20,808 18,734 21,615 20,060 n.a. 1. U.S. banks: includes amounts due from own foreign branches and foreign 4. Data for March 1978 and for period prior to that are outstanding collections subsidiaries consolidated in "Consolidated Report of Condition" filed with bank only. regulatory agencies. Agencies, branches, and majority-owned subsidiaries of foreign 5. Includes demand and time deposits and negotiable and nonnegotiable certifbanks: principally amounts due from head office or parent foreign bank, and icates of deposit denominated in U.S. dollars issued by banks abroad. For deforeign branches, agencies, or wholly owned subsidiaries of head office or parent scription of changes in data reported by nonbanks, see July 1979 BULLETIN, p. 550. foreign bank. 2. Assets owned by customers of the reporting bank located in the United States NOTE: Beginning April 1978, data for banks' own claims are given on a monthly that represent claims on foreigners held by reporting banks for the account of their basis, but the data for claims of banks' own domestic customers are available on domestic customers. a quarterly basis only. 3. Principally negotiable time certificates of deposit and bankers acceptances. 3.19 BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States Payable in U.S. Dollars Millions of dollars, end of period 1978 1979 MMaattuurriittyy;; bbyy bboorrrroowweerr aanndd aarreeaa June Sept. Dec. Mar. June Sept. 1 Total 55,902 60,096 73,632' 71,528 77,662' 87,233 By borrower 2 Maturity of 1 year or less1 44,558 47,230 58,363' 55,363' 60,014' 67,877 3 Foreign public borrowers 3,128 3,709 4,589' 4,643' 4,594' 5,949 4 All other foreigners 41,430 43,521 53,774' 50,720 55,420' 61,928 5 Maturity of over 1 year1 11,343 12,866 15,269' 16,165' 17,648' 19,356 6 Foreign public borrowers 3,243 4,230 5,343' 5,944' 6,427' 7,637 7 All other foreigners 8,101 8,635 9,926' 10,221' 11,221' 11,719 By area Maturity of 1 year or less1 9,710 10,513 15,126' 12,376 14,019' 16,754 9 Canada 1,598 1,953 2,670 2,512 2,703' 2,462 10 Latin American and Caribbean 17,439 18,624 20,927' 21,651' 23,090' 25,556 11 Asia 13,831 14,014 17,575' 16,993 18,199' 21,182 12 Africa 1,457 1,535 1,496 1,290 1,438 1,400 13 All other2 523 591 569 541 565 523 Maturity of over 1 year1 14 Europe 2,920 3,102 3,142' 3,103' 3,484' 3,667 15 Canada 344 794 1,426 1,456 1,221 1,371 16 Latin America and Caribbean 5,900 6,877 8,452' 9,325' 10,265' 11,794 17 Asia 1,297 1,303 1,399 1,471 1,881' 1,713 18 Africa 631 580 636 629 614 622 19 All other2 252 211 214 180 183 189 1. Remaining time to maturity. NOTE. The first available data are for June 1978. 2. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A63 3.20 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks' Billions of dollars, end of period 1977 1978 1979 AArreeaa oorr CCoouunnttrryy 11997755 11997766 Sept. Dec. Mar. June2 Sept. Dec. Mar. June Sept. 1 Total 167.0 207.7 226.7 239.4 247.2 245.7 246.7 265.4 263.6 274.4 293.8 2 G-10 countries and Switzerland 88.0 100.1 108.8 115.3 116.6 112.8 113.7 124.9 118.9 125.0 135.8' 3 Belgium-Luxembourg 5.3 6.1 7.1 8.4 8.3 8.3 8.4 9.0 9.4 9.7 10.7 4 France 8.5 10.0 10.5 11.0 11.4 11.4 11.7 12.2 11.7 12.7 12.0 5 Germany 7.8 8.7 8.6 9.6 9.0 9.1 9.7 11.4 10.5 10.8 12.9 6 Italy 5 2 5.8 6.0 6.5 6.0 6.4 6.0 6.6 5.7 6.1 6.1 7 Netherlands 2.8 2.8 3.0 3.5 3.4 3.4 3.5 4.4 3.8 4.0 4.7 8 Sweden 1.0 1.2 1.9 1.9 2.0 2.1 2.2 2.1 2.0 2.0 2.3 9 Switzerland 2.4 3.0 3.3 3.3 4.0 4.1 43 5.4 4.5 4.8 5.0 10 United Kingdom 36.3 41.5 44.1 46.5 46.5 45.0 44.4 47.2 46.5 50.3 53.8' 11 Canada 3.8 5.1 6.6 5.8 6.9 5.1 4.9 5.9 5.8 5.5 6.0 12 Japan 14.9 15.9 17.6 18.8 19.1 17.9 18.6 20.7 19.0 19.1 22.3 13 Other developed countries 10.7 15.1 18.1 18.6 20.5 19.3 18.7 19.4 18.3 18.4 19.7 14 Austria .7 1.2 1.3 1.3 1.5 1.5 1.5 1.7 1.7 1.8 2.0 15 Denmark .6 1.0 1.5 1.6 1.6 1.7 1.9 2.0 2.0 2.0 2.0 16 Finland .9 1.1 1.2 1.2 1.2 1.1 1.0 1.2 1.1 1.1 1.2 17 Greece 1.4 1.7 2.0 2.2 2.7 2.3 2.2 2.3 2.3 2.2 2.3 18 Norway 1.4 1.5 1.8 L9 1.9 2.1 2.\ 2.1 2.1 2.1 2.3 19 Portugal .3 .4 .6 .6 .7 .6 .5 .6 .6 .5 .7 20 Spain 1.9 2.8 3.5 3.6 3.6 3.6 3.5 3.4 3.0 3.0 3.3 21 Turkey .6 1.3 1.4 1.5 1.5 1.4 1.5 1.5 1.4 1.4 1.4 22 Other Western Europe .6 .7 1.2 .9 1.4 1.2 1.0 1.2 1.1 1.2 1.5 23 South Africa 1.2 2.2 2.3 2.4 2.5 2.4 2.2 2.0 1.7 1.8 1.7 24 Australia 1.3 1.2 1.5 1.4 1.9 1.4 L3 1.4 1.3 1.3 1.3 25 Oil-exporting countries3 6.9 12.6 16.5 17.6 19.2 19.1 20.4 22.7 22.6 22.7 23.3 26 Ecuador .4 .7 1.1 1.1 1.3 1.4 1.6 1.6 1.5 1.6 1.6 27 Venezuela 2.3 4.1 5.1 5.5 5.5 5.6 6.2 7.2 7.2 7.5 7.9 28 Indonesia 1.6 2 2 2.2 2.2 2.1 1.9 1.9 2.0 1.9 1.9 1.9 29 Middle East countries 1.6 4.2 6.3 6.9 8.3 8.3 8.7 9.4 9.4 9.1 9.1 30 African countries 1.0 1.4 1.9 1.9 2.0 1.9 2.0 2.5 2.6 2.6 2.8 31 Non-oil developing countries 34.2 43.1 47.6 50.0 49.9 48.9 49.5 52.4 53.8 56.1 59.2' Latin America 32 Argentina 1.7 1.9 2.4 2.9 3.0 3.0 2.9 3.0 2.9 3.5 4.1 33 Brazil S.O 11.1 11.8 12.7 13.0 13.3 14.0 14.9 15.2 15.0 15.1 34 Chile .5 .8 .8 .9 1.1 1.3 1.3 1.6 1.7 1.8 2.2 35 Colombia 1.2 1.3 1.2 1.3 1.3 1.3 1.3 1.4 1.5 1.5 1.7 36 Mexico 9.0 11.7 12.6 11.9 11.2 11.0 10.7 10.8 10.9 11.0 11.6 37 Peru 1.4 1.8 1.9 1.9 1.7 1.8 1.8 1.7 1.6 1.4 1.4 38 Other Latin America 2.6 2.7 2.5 2.7 3.5 3.3 3.4 3.6 3.5 3.3 3.7 Asia China 39 Mainland * * * * .1 .1 .1 40 Taiwan 1.7 2.3 2.9 3.1 2.5 2.4 2.4 2.9 3.1 3.3 3.5 41 India .2 2 .3 .3 .3 .2 .3 .2 .2 .2 .2 42 Israel .9 L0 .7 .9 .8 .7 .7 1.0 1.0 .9 1.0 43 Korea (South) 2.4 3.1 3.6 3.9 3.7 3.6 3.5 3.9 4.2 5.0 5.3 44 Malaysia4 .5 .7 .7 .6 .6 .6 .6 .6 .7 .7 45 Philippines 1.7 2.2 2.4 2.5 2.6 2.7 2.8 2.8 3.2 3.7 3.7 46 Thailand .7 .7 .9 1.7 1.1 1.1 1.1 1.2 1.2 1.4 1.6 47 Other Asia .4 .4 .4 .3 .4 .3 .3 .2 .3 .4 .3 Africa 48 Egypt .4 .4 .4 .3 .3 .3 .4 .4 .4 .7 .6' 49 Morocco .1 .2 .4 .5 .4 .5 .5 .6 .6 .5 .5 50 Zaire .3 2 .3 .3 .3 .2 .2 .2 .2 .2 .2 51 Other Africa5 .5 .6 1.2 1.2 1.4 1.2 1.3 1.4 1.4 1.5 1.7 52 Eastern Europe 3.7 5.2 5.5 6.5 6.3 6.4 6.6 6.9 6.7 6.7 7.3 53 U.S.S.R 1.0 1.5 1.5 1.6 1.4 1.4 1.4 1.3 1.1 .9 .9 54 Yugoslavia .6 .8 1.0 1.1 1.2 1.3 1.3 1.5 1.6 1.7 1.8 55 Other 2.1 2.8 3.0 3.8 3.7 3.7 3.9 4.1 4.0 4.1 4.6 56 Offshore banking centers 19.4 26.2 25.3 26.1 29.0 31.1 29.2 30.0 33.8 35.6 37.9 57 Bahamas 7.3 11.8 9.9 9.8 11.3 11.8 11.1 9.9 12.9 13.3 13.0 58 Bermuda .5 .5 .5 .6 .6 .7 .7 .7 .6 .7 .7 59 Cayman Islands and other British West Indies 2.5 3.8 4.3 3.8 4.5 6.3 6.2 6.9 6.7 7.2 9.1 60 Netherlands Antilles .6 .6 .6 .7 .7 .6 .6 .8 .8 1.0 1.1 61 Panama 2.6 2.7 2.8 3.1 3.2 3.2 3.1 2.9 3.3 3.5 3.0 62 Lebanon .2 .1 .1 .2 2 .1 .1 .1 .1 .1 .2 63 Hong Kong 1.6 2.3 3.1 3.7 4.0 4.1 4.0 4.3 4.7 5.2 5.5 64 Singapore 3.8 4.4 3.9 3.7 4.0 3.8 2.9 3.9 4.2 4.2 4.9 65 Others6 .1 .1 .5 .5 .5 .5 .5 .5 .4 .4 66 Miscellaneous and unallocated7 4.1 5.4 5.0 5.3 5.7 8.1 8.6 9.1 9.5 9.9 10.6 1. The banking offices covered by these data are the U.S. offices and foreign in this table include only banks' own claims payable in dollars. For earlier dates branches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks. the claims of the U.S. offices also include customer claims and foreign currency Offices not covered include (1) U.S. agencies and branches of foreign banks, and claims (amounting in June 1978 to $10 billion). (2) foreign subsidiaries of U.S. banks. To minimize duplication, the data are 3. Includes Algeria, Bahrain, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria,Oman, adjusted to exclude the claims on foreign branches held by a U.S. office or another Qatar, Saudi Arabia, and United Arab Emirates in addition to countries shown foreign branch of the same banking institution. The data in this table combine individually. foreign branch claims in table 3.13 (the sum of lines 7 through 10) with the claims 4. Foreign branch claims only through December 1976. of U.S. offices in table 3.17 (excluding those held by agencies and branches of 5. Excludes Liberia. foreign banks and those constituting claims on own foreign branches). However, 6. Foreign branch claims only. see also footnote 2. 7. Includes New Zealand, Liberia, and international and regional organizations. 2. For June 1978 and subsequent dates, the claims of the U.S. offices Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics • February 1980 3.21 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Holdings and Transactions Millions of dollars 1979 1979 CCoouunnttrryy oorr aarreeaa 11997777 11997788 Jan.- Dec.P June July Aug. Sept. Oct. NOV.P Dec.P Holdings (end of period)1 1 Estimated total2 38,640 44,938 47,494 48,991 49,575 50,257 50,888 49,779 50,306 2 Foreign countries2 33,894 39,817 43,454 44,544 44,979 45,060 45,206 44,276 44,875 3 Europe2 13,936 17,072 21,047 22,213 22,558 22,599 22,692 21,910 23,705 4 Belgium-Luxembourg 19 19 24 24 24 65 65 60 60 5 Germany2 3,168 8,705 10,751 10,781 10,952 10,953 11,082 11,337 12,937 6 Netherlands 911 1,358 1,695 1,655 1,577 1,667 1,660 1,490 1,466 7 Sweden 100 285 484 481 525 588 600 593 647 8 Switzerland 497 977 1,582 1,843 2,048 2,496 2,427 1,961 1,868 9 United Kingdom 8,888 5,373 6,016 6,938 6,895 6,193 6,191 5,955 6,236 10 Other Western Europe 349 354 496 491 538 637 666 513 491 11 Eastern Europe 4 12 Canada 288 152 227 232 233 233 235 234 232 13 Latin America and Caribbean 551 416 387 537 539 539 541 539 546 14 Venezuela 199 144 183 183 183 183 183 183 183 15 Other Latin American and Caribbean 183 110 42 192 192 192 194 192 200 16 Netherlands Antilles 170 162 162 162 165 165 164 164 163 17 Asia 18,745 21,488 21,103 20,874 20,960 21,000 21,050 21,005 19,804 18 Japan 6,860 11,528 13,040 13,090 12,818 12,789 12,591 12,502 11,175 19 Africa 362 691 691 691 691 691 691 591 591 20 All other 11 -3 -3 -3 -3 -3 -3 -3 -3 21 Nonmonetary international and regional organizations 4,746 5,121 4,040 4,447 4,596 5,197 5,682 5,503 5,431 22 International 4,646 5,089 3,993 4,400 4,551 5,150 5,636 5,463 5,388 23 Latin American regional 100 33 48 48 46 46 46 40 40 Transactions (net purchases, or sales (-), during period) 24 Total2 22,843 6,297 5,368 111 1,497 584 681 632 -1,110 527 25 Foreign countries2 21,130 5,921 5,058 399 1,090 435 81 146 -930 600 26 Official institutions 20,377 3,727r 1,781 298 1,033 515 101 56 -1,037 547 27 Other foreign2 753 2,195r 3,277 101 57 -81 -20 89 108 53 28 Nonmonetary international and regional organizations 1,713 375 311 -121 407 149 600 487 -180 -73 MEMO: Oil-exporting countries 29 Middle East3 4,451 - 1,785 -1,015 8 -193 394 72 299 64 168 30 Africa4 --118811 332299 --110000 --110000 1. Estimated official and private holdings of marketable U.S. Treasury securities 2. Beginning December 1978, includes U.S. Treasury notes publicly issued to with an original maturity of more than 1 year. Data are based on a benchmark private foreign residents. survey of holdings as of Jan. 31, 1971, and monthly transactions reports. Excludes 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and nonmarketable U.S. Treasury bonds and notes held by official institutions of for- United Arab Emirates (Trucial States). eign countries. 4. Comprises Algeria, Gabon, Libya, and Nigeria. 3.22 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS Millions of dollars, end of period 1979 1980 AAsssseettss 11997766 11997777 11997788 July Aug. Sept. Oct. Nov. Dec. Jan .P 1 Deposits 352 424 367 372 325 347 351 490 429 439 Assets held in custody 2 U.S. Treasury securities1 66,532 91,962 117,126 99,004 98,794 100,383 97,965 90,874 95,075 97,116 3 Earmarked gold2 16,414 15,988 15,463 15,322 15,296 15,294 15,253 15,230 15,169 15,138 1. Marketable U.S. Treasury bills, notes, and bonds; and nonmarketable U.S. NOTE. Excludes deposits and U.S. Treasury securities held for international and Treasury securities payable in dollars and in foreign currencies. regional organizations. Earmarked gold is gold held for foreign and international 2. The value of earmarked gold increased because of the changes in par value accounts and is not included in the gold stock of the United States, of the U.S. dollar in May 1972 and in October 1973. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Investment Transactions A65 3.23 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1979 1979 TTTrrraaannnsssaaaccctttiiiooonnnsss,,, aaannnddd aaarrreeeaaa ooorrr cccooouuunnntttrrryyy 11997777 11997788 Jan.- Dec.P June July Aug. Sept. Oct. NOV.P Dec./' U.S. corporate securities STOCKS 1 Foreign purchases 14,155 20,142 22,593 1,861' 1,768' 2,382 2,074 2,385 1,876 2,359 2 Foreign sales 11,479 17,723 20,974 1,794 1,775' 2,224 2,023 2,372 1,687 2,182 3 Net purchases, or sales (-) 2,676 2,420 1,619 66 -7' 158 51 13 189 177 4 Foreign countries 2,661 2,466 1,604 67 -7' 156 58 13 192 173 5 Europe 1,006 1,283 216 11 -42 -48 -107 -34 77 75 6 France 40 47 122 41 18 19 -20 -48 -18 8 7 Germany 291 620 -221 -16 -19 -30 -37 -32 -18 -10 8 Netherlands 22 -22 -71 -15 8 -3 * 38 12 -25 9 Switzerland 152 -585 -519 -3 -52 -87 -64 -68 -148 -68 10 United Kingdom 613 1,230 964 5 -12 97 19 83 278 155 11 Canada 65 74 550 33 30 78 145 67 14 47 12 Latin America and Caribbean 127 151 -18 -28 -17 45 -8 -93 -7 40 13 Middle East1 1,390 781 656 15 -7 44 41 59 133 32 14 Other Asia 59 187 207 39 32 34 -12 18 -29 -21 15 Africa 5 -13 -14 -3 -3' -4 -2 -1 1 -3 16 Other countries 8 3 7 -1 1 7 1 -3 2 2 17 Nonmonetary international and regional organizations 15 -46 15 * 2 -7 * -3 4 BONDS2 18 Foreign purchases 7,739 7,975 8,790 1,131' 869 729 398 827 732 964 19 Foreign sales 3,560 5,517 7,544 793 648 673 288 639 913 550 20 Net purchases, or sales (-) 4,179 2,458 1,246 338' 221 56 110 188 -181 414 21 Foreign countries 4,083 2,049 1,348 304' 222 71 23 48 -118 429 22 Europe 1,850 908 675 163 159 -5 19 88 -205 33 23 France -34 30 11 8 -34 -3 -1 1 11 1 24 Germany -20 68 83 24 -11 -10 -1 -7 2 2 25 Netherlands 72 12 -202 -32 -9 -19 -2 -7 -15 -20 26 Switzerland 94 -100 -61 -1 -4 -8 4 * -53 7 27 United Kingdom 1,690 930 816 169 232 24 23 103 -124 36 28 Canada 141 102 90 * 8 9 17 8 -1 -16 29 Latin America and Caribbean 64 98 112 -10 11 10 -4 6 12 15 30 Middle East* 1,695 810 374 102' 40 50 -7 -39 71 406 31 Other Asia 338 131 94 48 5 7 -4 -16 5 -10 32 Africa -6 -1 1 * * # 1 * * * 33 Other countries * 1 1 * * * * 1 * * 34 Nonmonetary international and regional organizations 96 409 -102 34 -14 87 140 -63 -14 Foreign securities 35 Stocks, net purchases, or sales (-) -410 527 -993 -18 -132' -117' -338 -198 -84 -130 36 Foreign purchases 2,255 3,666 4,512 402' 327' 377 420 466 365 406 37 Foreign sales 2,665 3,139 5,504 421 459' 494' 758 663 449 536 38 Bonds, net purchases, or sales (-) -5,096 -4,052' -3,916 -693' -373' -543 -725 -75 -335 -222 39 Foreign purchases 8,040 11,043' 12,374 1,011 984 1,575 829 1,081 1,080 1,124 40 Foreign sales 13,136 15,094' 16,290 1,704' 1,357' 2,118 1,554 1,156 1,415 1,346 41 Net purchases, or sales (-) of stocks and bonds -5,506 — 3,525' -4,908 -711' -505' -660' -1,063 -273 -420 -352 42 Foreign countries -3,949 — 3,338' -4,149 -429' -529' -577' -914 -277 -301 -490 43 Europe -1,100 -64' -1,734 -148' -397' -290 -120 -38 -119 -282 44 Canada -2,404 -3,238' -2,614 -221 -178 -128 -891 -358 -97 -80 45 Latin America and Caribbean -82 201 399 53 30 - 12' * 11 29 -5 46 Asia -97 350 -212 -114 16 -172 92 112 -118 -128 47 Africa 2 -441 -13 4 -2' -1 * -6 1 3 48 Other countries -267 -146 25 -4 2 2 5 2 3 3 49 Nonmonetary international and regional organizations -1,557 -187 -760 -282 24 -83 -150 4 -118 138 1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, 2. Includes state and local government securities, and securities of U.S. gov- Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). ernment agencies and corporations. Also includes issues of new debt securities sold abroad by U.S. corporations organized to finance direct investments abroad Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 International Statistics • February 1980 3.24 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States> Millions of dollars, end of period 1978 1979 Type, and area or country 1977 June Sept. Mar. June' Sept.P Dec. 1 Total 10,099 11,085 14,468' 11,870 12,786 13,953' 15,164 15,372 2 Payable in dollars 9,390 10,284 11,412' 11,044 11,955 11,254' 12,415 12,477 3 Payable in foreign currencies2 709 801 3,056 825 831 2,699 2,749 2,895 By type 4 Financial liabilities 6,011' 5,775' 5,781 5,881 5 Payable in dollars 3,745' 3,703' 3,735 3,738 6 Payable in foreign currencies 2,265 2,072 2,046 2,143 7 Commercial liabilities 8,458 8,178 9,384 9,491 8 Trade payables 3,929 3,445 4,244 4,015 9 Advance receipts and other liabilities 4,529 4,733 5,140 5,476 10 Payable in dollars 7,667 7,551 8,680 8,739 11 Payable in foreign currencies 791 627 703 753 By area or country Financial liabilities 12 Europe 3,772 3,528 3,394 3,426 13 Belgium-Luxembourg 287 264 313 276 14 France 162 138 134 125 15 Germany 371 329 271 370 16 Netherlands 364 396 378 407 17 Switzerland 204 190 231 185 18 United Kingdom 2,064 2,009 1,852 1,866 19 Canada 203 224 292 311 20 Latin America and Caribbean 1,272' 1,267' 1,325 1,381 21 Bahamas 422 407 442 345 22 Bermuda 56 41 37 37 23 Brazil 10 13 19 14 24 British West Indies 122 132 127 139 25 Mexico 102 101 131 121 26 Venezuela 46 52 65 68 27 Asia 754 745 759 752 2 2 8 9 J M a i p d a d n l e East oil-exporting countries3 67 4 1 8 66 3 7 6 70 1 6 9 70 1 0 9 30 Africa 5 5 6 5 31 Oil-exporting countries4 2 1 2 1 32 All other5 5 5 5 Commercial liabilities 3 3 3 3 3 3 3 3 4 5 6 8 9 7 Eu S U G B F N r w r o e n e e a l p r t i i n g h t t m e z e c i e d u e e a r r m n l l a y K a - n n L i d d n u s g x d e o m m b ourg 2,9 3 5 2 3 7 3 1 6 1 0 2 7 0 4 0 7 8 9 5 2,8 3 3 3 8 1 0 3 9 7 0 2 9 4 9 4 0 4 9 4 3,2 4 4 9 3 2 5 7 3 8 3 8 0 5 9 9 1 9 1 2 3,3 9 3 3 5 1 1 9 4 4 7 5 0 7 2 3 8 9 3 3 8 40 Canada 663 612 651 715 41 Latin America 990 1,138 1,319 1,384 42 Bahamas 25 16 65 89 43 Bermuda 95 40 80 45 44 Brazil 74 61 165 186 45 British West Indies 53 89 121 21 46 Mexico 105 236 203 256 47 Venezuela 303 356 323 359 48 Asia 2,946 2,632 3,021 2,985 49 Japan 431 412 499 516 50 Middle East oil-exporting countries3 1,543 1,117 1,216 1,039 5 5 1 2 Af O ri i c l a - exporting countries4 3 7 1 2 3 4 3 7 4 5 5 4 4 8 1 9 0 1 7 38 7 5 5 53 All other5 205 239 246 290 1. For a description of the changes in the International Statistics tables, see July 3. Comprises Bahrain, Iran. Iraq, Kuwait, Oman Qatar Saudi Arabia and 1979 BULLETIN, p. 550. United Arab Emirates (Trucial States). 2. Before December 1978, foreign currency data include only liabilities denom- 4. Comprises Algeria, Gabon, Libya, and Nigeria. inated in foreign currencies with an original maturity of less than one year. 5. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A67 3.25 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States* Millions of dollars, end of period 1979 Type, and area or country 1976 1977 1978 June Sept. Sept.? Dec. 1 Total 21,298 27,194 23,229 23,260 29,714 29,138 29,808 2 Payable in dollars 18,300 19,880 24,223 21,665 21,292 26,939 26,235 27,109 3 Payable in foreign currencies 2 1,050 1,418 2,971 1,564 1,968 2,775 2,904 2,699 By type 4 Financial claims 15,885 18,995 18,122 18,034 5 Deposits 10,770 13,899 12,807 12,661 6 Payable in dollars 9,707 12,991 11,871 11,759 7 Payable in foreign currencies 1,063 908 936 901 8 Other financial claims 5,115 5,096 5,315 5,373 9 Payable in dollars 3,541 3,567 3,752 3,984 10 Payable in foreign countries 1,574 1,529 1,563 1,389 11 Commercial claims 11,309 10,719 11,016 11,774 12 Trade receivables 10,662 9,963 10,311 10,965 13 Advance payments and other claims ... 647 756 705 809 14 Payable in dollars 10,976 10,381 10,612 11,366 15 Payable in foreign currencies 333 338 404 408 By area or country Financial claims 16 Europe 5,010 5,191 5,458 6,387 17 Belgium-Luxembourg 48 63 54 33 18 France 174 170 183 191 19 Germany 530 266 361 391 20 Netherlands 103 86 62 51 21 Switzerland 98 96 81 85 22 United Kingdom 3,814 4,283 4,478 5,357 23 Canada 4,463 5,137 5,066 4,538 24 Latin America and Carribbean 5,271 7,598 6,512 5,943 25 Bahamas 2,857 4.098 3,173 2,773 26 Bermuda ....! 80 62 57 61 27 Brazil 151 137 122 114 28 British West Indies 1,275 2,438 2,278 1,711 29 Mexico 168 166 158 155 30 Venezuela 148 141 148 137 31 Asia 918 826 800 818 32 Japan 306 206 216 222 33 Middle East oil-exporting countries3 18 17 17 21 34 Africa 182 204 227 278 10 26 23 41 35 Oil-exporting countries4 36 All other5 Commercial claims 3,940 3,818 3,842 4,170 37 Europe 143 172 174 184 38 Belgium-Luxembourg 609 490 473 549 39 France 395 501 435 467 40 Germany 257 271 306 262 41 Netherlands 208 248 232 224 42 Switzerland 803 681 724 815 43 United Kingdom 44 Canada 1,105 1,113 1,127 1,174 45 Latin America and Caribbean 2,535 2,382 2,403 2,562 46 Bahamas 109 117 98 16 47 Bermuda 215 241 118 152 48 Brazil 625 490 499 565 49 British West Indies 9 10 25 13 50 Mexico 506 488 584 647 51 Venezuela 292 273 296 345 52 Asia 3,090 2,757 2,969 3,106 53 Japan 977 895 1,003 1,129 54 Middle East oil-exporting countries3 712 670 685 661 55 Africa 451 466 487 548 56 Oil-exporting countries4 137 132 139 139 57 All other5 188 213 1. For a description of the changes in the International Statistics tables, see July 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and 1979, BULLETIN, p. 550. United Arab Emirates (Trucial States). 2. Prior to December 1978, foreign currency data include only liabilities de- 4. Comprises Algeria, Gabon, Libya, and Nigeria. nominated in foreign currencies with an original maturity of less than one year. 5. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 International Statistics • February 1980 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per annum Rate on Jan. 31, 1980 Rate on Jan. 31, 1980 Rate on Jan. 31, 1980 Country Country Country Per- Month Per- Month Percent effective cent effective cent Argentina 18.0 Feb. 1972 France 9.5 Aug. 1977 Norway 9.0 Austria .. 5.25 Jan. 1980 Germany, Fed. Rep. of 6.0 Nov. 1979 Sweden 10.0 Belgium . 10.5 Dec. 1979 Italy 15.0 Dec. 1979 Switzerland 2.0 Brazil .... 33.0 Nov. 1978 Japan 6.25 Nov. 1979 United Kingdom 17.0 Canada .. 14.0 Oct. 1979 Mexico 4.5 June 1942 Venezuela 8.5 Denmark 11.0 Sept. 1979 Netherlands 9.5 Nov. 1979 NOTE. Rates shown are mainly those at which the central bank either more than one rate applicable to such discounts or advances, the rate discounts or makes advances against eligible commercial paper and/or shown is the one at which it is understood the central bank transacts the governments securities for commercial banks or brokers. For countries with largest proportion of its credit operations. 3.27 FOREIGN SHORT-TERM INTEREST RATES Percent per annum, averages of daily figures 1979 1980 CCoouunnttrryy,, oorr ttyyppee 11997777 11997788 11997799 Aug. Sept. Oct. Nov. Dec. Jan. 1 Eurodollars 6.03 8.74 11.96 11.53 12.61 14.59 15.00 14.51 14.33 2 United Kingdom 8.07 9.18 13.60 14.06 14.11 14.12 16.09 16.71 17.30 3 Canada 7.47 8.52 11.91 11.78 11.89 13.34 14.19 14.02 13.93 4 Germany 4.30 3.67 6.64 7.04 7.82 8.84 9.57 9.54 8.79 5 Switzerland 2.56 0.74 2.04 1.67 1.94 2.57 3.97 5.67 5.45 6 Netherlands 4.73 6.53 9.33 9.51 9.82 10.09 11.86 14.56 11.85 7 France 9.20 8.10 9.44 10.85 11.67 12.14 12.72 12.55 12.31 8 Italy 14.26 11.40 11.85 11.50 11.51 12.71 13.12 16.01 17.00 9 Belgium 6.95 7.14 10.48 11.42 11.88 12.99 14.17 14.49 14.38 10 Japan 6.22 4.75 6.10 7.00 7.00 7.01 8.13 8.42 8.44 NOTE. Rates are for 3-month interbank loans except for the following: francs and over; and Japan, loans and discounts that can be called after Canada, finance company paper; Belgium, time deposits of 20 million being held over a minimum of two month-ends. 3.28 FOREIGN EXCHANGE RATES Cents per unit of foreign currency 1979 1980 CCoouunnttrryy//ccuurrrreennccyy 11997777 11997788 11997799 Aug. Sept. Oct. Nov. Dec. Jan. 1 Australia/dollar 110.82 114.41 111.77 112.83 112.63 111.31 109.34 110.30 110.97 2 Austria/schilling 6.0494 6.8958 7.4799 7.4786 7.7211 7.7570 7.8345 8.0039 8.0689 3 Belgium/franc 2.7911 3.1809 3.4098 3.4140 3.4684 3.4656 3.4822 3.5423 3.5688 4 Canada/dollar 94.112 87.729 85.386 85.425 85.814 85.084 84.771 85.471 85.912 5 Denmark/krone 16.658 18.156 19.010 18.964 19.279 19.110 19.034 18.618 18.568 6 Finland/markka 24.913 24.337 27.732 26.075 26.242 26.483 26.428 26.830 27.082 7 France/franc 20.344 22.218 23.504 23.491 23.826 23.809 24.065 24.614 24.750 8 Germany/deutsche mark 43.079 49.867 54.561 54.666 55.758 55.884 56.470 57.671 57.986 9 India/rupee 11.406 12.207 12.265 12.484 12.289 12.159 12.209 12.350 12.519 10 Ireland/pound 174.49 191.84 204.65 205.79 209.18 208.28 208.70 212.76 214.31 11 Italy/lira .11328 .11782 .12035 .12219 .12326 .12112 .12112 .12329 .12427 12 Japan/yen .37342 .47981 .45834 .45890 .44963 .43405 .40834 .41613 .42041 13 Malaysia/ringgit 40.620 43.210 45.720 46.363 46.382 46.074 45.661 45.931 45.868 14 Mexico/peso 4.4239 4.3896 4.3826 4.3804 4.3858 4.3825 4.3726 4.3768 4.3780 15 Netherlands/guilder 40.752 46.284 49.843 49.805 50.635 50.379 50.686 52.092 52.527 16 New Zealand/dollar 96.893 103.64 102.23 101.40 100.28 98.564 96.813 98.100 98.690 17 Norway/krone 18.789 19.079 19.747 19.877 20.080 20.143 19.928 20.092 20.373 18 Portugal/escudo 2.6234 2.2782 2.0437 2.0332 2.0297 1.9992 1.9852 2.0036 2.0051 19 South Africa/rand 114.99 115.01 118.72 119.38 119.91 120.79 120.32 120.79 121.64 20 Spain/peseta 1.3287 1.3073 1.4896 1.5132 1.5135 1.5117 1.5051 1.5039 1.5124 21 Sri Lanka/rupee 11.964 6.3834 6.4226 6.4174 6.4126 6.4000 6.4053 6.4300 6.4323 22 Sweden/krona 22.383 22.139 23.323 23.693 23.860 23.747 23.677 23.935 24.112 23 Switzerland/franc 41.714 56.283 60.121 60.349 62.087 61.350 60.870 62.542 62.693 24 United Kingdom/pound 174.49 191.84 212.24 223.68 219.66 214.38 213.52 220.07 226.41 MEMO: 25 United States/dollar1 103.31 92.39 88.09 87.24 86.73 87.67 88.12 86.32 85.52 1. Index of weighted average exchange value of U.S. dollar against cur- the Weighted-Average Exchange Value of the U.S. Dollar: Revision" on page rencies of other G-10 countries plus Switzerland. March 1973 = 100. 700 of the August 1978 BULLETIN. Weights are 1972-76 global trade of each of the 10 countries. Series revised as of August 1978. For description and back data, see "Index of NOTE. Averages of certified noon buying rates in New York for cable transfers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 69 Guide to Tabular Presentation and Statistical Releases GUIDE TO TABULAR PRESENTATION Symbols and Abbreviations c Corrected 0 Calculated to be zero e Estimated n.a. Not available P Preliminary n.e.c. Not elsewhere classified r Revised (Notation appears on column heading IPCs Individuals, partnerships, and corporations when more than half of figures in that column REITs Real estate investment trusts are changed.) RPs Repurchase agreements Amounts insignificant in terms of the last decimal SMSAs Standard metropolitan statistical areas place shown in the table (for example, less than Cell not applicable 500,000 when the smallest unit given is millions) General Information Minus signs are used to indicate (1) a decrease, (2) a negative gations of the Treasury. "State and local government" also figure, or (3) an outflow. includes municipalities, special districts, and other political "U.S. government securities" may include guaranteed is- subdivisions. sues of U.S. government agencies (the flow of funds figures In some of the tables details do not add to totals because of also include not fully guaranteed issues) as well as direct obli- rounding. STATISTICAL RELEASES List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for individual releases December 1979 A-76 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 70 Federal Reserve Board of Governors PAUL A. VOLCKER, Chairman HENRY C. WALLICH FREDERICK H. SCHULTZ, Vice Chairman PHILIP E. COLDWELL OFFICE OF BOARD MEMBERS OFFICE OF STAFF DIRECTOR FOR MONETARY AND FINANCIAL POLICY JOSEPH R. COYNE, Assistant to the Board JAY PAUL BRENNEMAN, Special Assistant to the Board STEPHEN H. AXILROD, Staff Director FRANK O'BRIEN, JR., Special Assistant to the Board EDWARD C. ETTIN, Deputy Staff Director JOSEPH S. SIMS, Special Assistant to the Board MURRAY ALTMANN, Assistant to the Board DONALD J. WINN, Special Assistant to the Board PETER M. KEIR, Assistant to the Board STANLEY J. SIGEL, Assistant to the Board NORMAND R. V. BERNARD, Special Assistant to the Board LEGAL DIVISION NEAL L. PETERSEN, General Counsel DIVISION OF RESEARCH AND STATISTICS ROBERT E. MANNION, Deputy General Counsel CHARLES R. MCNEILL, Assistant to the General Counsel JAMES L. KICHLINE, Director J. VIRGIL MATTINGLY, Assistant General Counsel JOSEPH S. ZEISEL, Deputy Director GILBERT T. SCHWARTZ, Assistant General Counsel JOHN H. KALCHBRENNER, Associate Director MICHAEL J. PRELL, Associate Director ROBERT A. EISENBEIS, Senior Deputy Associate Director OFFICE OF THE SECRETARY +JOHN J. MINGO, Senior Deputy Associate Director ELEANOR J. STOCKWELL, Senior Deputy Associate Director THEODORE E. ALLISON, Secretary JAMES M. BRUNDY, Deputy Associate Director GRIFFITH L. GARWOOD, Deputy Secretary JARED J. ENZLER, Deputy Associate Director * WILLIAM N. MCDONOUGH, Assistant Secretary J. CORTLAND G. PERET, Deputy Associate Director RICHARD H. PUCKETT, Manager, Regulatory Improvement HELMUT F. WENDEL, Deputy Associate Director Project ROBERT M. FISHER, Assistant Director FREDERICK M. STRUBLE, Assistant Director STEPHEN P. TAYLOR, Assistant Director DIVISION OF CONSUMER LEVON H. GARABEDIAN, Assistant Director (Administration) AND COMMUNITY AFFAIRS JANET O. HART, Director DIVISION OF INTERNATIONAL FINANCE NATHANIEL E. BUTLER, Associate Director JERAULD C. KLUCKMAN. Associate Director EDWIN M. TRUMAN, Director ROBERT F. GEMMILL, Associate Director GEORGE B. HENRY, Associate Director DIVISION OF BANKING CHARLES J. SIEGMAN, Associate Director SUPERVISION AND REGULATION SAMUEL PIZER, Staff Adviser JEFFREY R. SHAFER, Deputy Associate Director DALE W. HENDERSON, Assistant Director JOHN E. RYAN, Director FREDERICK R. DAHL, Associate Director LARRY J. PROMISEL, Assistant Director WILLIAM TAYLOR, Associate Director RALPH W. SMITH, JR., Assistant Director WILLIAM W. WILES, Associate Director JACK M. EGERTSON, Assistant Director ROBERT A. JACOBSEN, Assistant Director DON E. KLINE, Assistant Director ROBERT S. PLOTKIN, Assistant Director THOMAS A. SIDMAN, Assistant Director SAMUEL H . TALLEY, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 71 and Official Staff J. CHARLES PARTEE EMMETT J. RICE NANCY H. TEETERS OFFICE OF OFFICE OF STAFF DIRECTOR FOR STAFF DIRECTOR FOR MANAGEMENT FEDERAL RESERVE BANK ACTIVITIES JOHN M. DENKLER, Staff Director WILLIAM H. WALLACE, Staff Director EDWARD T. MULRENIN, Assistant Staff Director HARRY A. GUINTER, Assistant Director for Contingency JOSEPH W. DANIELS, SR., Director of Equal Employment Op- Planning portunity DIVISION OF FEDERAL RESERVE DIVISION OF DATA PROCESSING BANK OPERATIONS CHARLES L. HAMPTON, Director JAMES R. KUDLINSKI, Director BRUCE M. BEARDSLEY, Associate Director CLYDE H. FARNSWORTH, JR., Deputy Director UYLESS D. BLACK, Assistant Director WALTER ALTHAUSEN, Assistant Director GLENN L. CUMMINS, Assistant Director CHARLES W. BENNETT, Assistant Director ROBERT J. ZEMEL, Assistant Director LORIN S. MEEDER, Assistant Director P. D. RING, Assistant Director RAYMOND L. TEED, Assistant Director DIVISION OF PERSONNEL DAVID L. SHANNON, Director JOHN R. WEIS, Assistant Director CHARLES W. WOOD, Assistant Director OFFICE OF THE CONTROLLER JOHN KAKALEC, Controller GEORGE E. LIVINGSTON, Assistant Controller DIVISION OF SUPPORT SERVICES DONALD E. ANDERSON, Director WALTER W. KREIMANN, Associate Director *On loan from the Federal Reserve Bank of Boston. +On leave of absence. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 72 Federal Reserve Bulletin • February 1980 FOMC and Advisory Councils FEDERAL OPEN MARKET COMMITTEE PAUL A. VOLCKER, Chairman JOHN BALLES MONROE KIMBREL FREDERICK H. SCHULTZ ROBERT BLACK ROBERT MAYO NANCY H. TEETERS PHILIP E. COLD WELL J. CHARLES PARTEE HENRY C. WALLICH EMMETT J. RICE MURRAY ALTMANN, Secretary EDWARD C. ETTIN, Associate Economist NORMAND R. V. BERNARD, Assistant Secretary GEORGE B. HENRY, Associate Economist NEAL L. PETERSEN, General Counsel PETER M. KEIR, Associate Economist JAMES H. OLTMAN, Deputy General Counsel MICHAEL KERAN, Associate Economist ROBERT E. MANNION, Assistant General Counsel JAMES L. KICHLINE, Associate Economist STEPHEN H. AXILROD, Economist JAMES PARTHEMOS, Associate Economist ALAN R. HOLMES, Adviser for Market Operations KARL SCHELD, Associate Economist HARRY BRANDT, Associate Economist EDWIN M. TRUMAN, Associate Economist RICHARD G. DAVIS, Associate Economist JOSEPH S. ZEISEL, Associate Economist PETER D. STERNLIGHT, Manager for Domestic Operations, System Open Market Account SCOTT E. PARDEE, Manager for Foreign Operations, System Open Market Account FEDERAL ADVISORY COUNCIL HENRY S. WOODBRIDGE, JR., First District ROGER E. ANDERSON, Seventh District DONALD C. PLATTEN, Second District CLARENCE C. BARKSDALE, Eighth District WILLIAM B. EAGLESON, JR., Third District CLARENCE G. FRAME, Ninth District MERLE E. GILLIAND, Fourth District GORDON E. WELLS, Tenth District J. OWEN COLE, Fifth District JAMES D. BERRY, Eleventh District ROBERT STRICKLAND, Sixth District CHAUNCEY E. SCHMIDT, Twelfth District HERBERT V. PROCHNOW, Secretary WILLIAM J. KORSVIK, Associate Secretary CONSUMER ADVISORY COUNCIL WILLIAM D. WARREN, Los Angeles, California, Chairman MARCIA A. HAKALA, Omaha, Nebraska, Vice Chairman JULIA H. BOYD, Washington, D.C. HARVEY M. KUHNLEY, Minneapolis, Minnesota ROLAND E. BRANDEL, San Francisco, California THE REV. ROBERT J. MCEWEN, S.J., Boston, Massachusetts ELLEN BROADMAN, Washington, D.C. R. C. MORGAN, El Paso, Texas JAMES L. BROWN, Milwaukee, Wisconsin MARGARET REILLY-PETRONE, Upper Montclair, New Jersey MARK E. BUDNITZ, Atlanta, Georgia RENE REIXACH, Rochester, New York ROBERT V. BULLOCK, Frankfort, Kentucky FLORENCE M. RICE, New York, New York RICHARD S. D'AGOSTINO, Philadelphia, Pennsylvania RALPH J. ROHNER, Washington D.C. JOANNE FAULKNER, New Haven, Connecticut HENRY B. SCHECHTER, Washington, D.C. VERNARD W. HENLEY, Richmond, Virginia PETER D. SCHELLIE, Washington, D.C. JUAN JESUS HINOJOSA, McAllen, Texas E. G. SCHUHART, II, Amarillo, Texas SHIRLEY T. HOSOI, LOS Angeles, California CHARLOTTE H. SCOTT, Charlottesville, Virginia F. THOMAS JUSTER, Ann Arbor, Michigan RICHARD A. VAN WINKLE, Salt Lake City, Utah RICHARD F. KERR, Cincinnati, Ohio RICHARD D. WAGNER, Simsbury, Connecticut ROBERT J. KLEIN, New York, New York MARY W. WALKER, Monroe, Georgia Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 73 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK, Chairman President Vice President branch, or facility Zip Deputy Chairman First Vice President in charge of branch BOSTON* 02016 Robert M. Solow Frank E. Morris Robert P. Henderson James A. Mcintosh NEW YORK* 10045 Robert H. Knight Anthony M. Solomon Boris Yavitz Thomas M. Timlen Buffalo ..14240 Frederick D. Berkeley, III John T. Keane PHILADELPHIA, , ,19105 John W. Eckman David P. Eastburn Werner C. Brown Richard L. Smoot CLEVELAND* 44101 Robert E. Kirby Willis J. Winn J. L. Jackson Walter H. MacDonald Cincinnati ,45201 Lawrence H. Rogers, II Robert E. Showalter Pittsburgh ..15230 William H. Knoell Robert D. Duggan RICHMOND* 23261 Maceo A. Sloan Robert P. Black Steven Muller George C. Rankin Baltimore 21203 Catherine Byrne Doehler Jimmie R. Monhollon Charlotte 28230 Robert E. Elberson Stuart P. Fishburne Culpeper Communications and Records Center 22701 Albert D. Tinkelenberg ATLANTA 30303 William A. Fickling, Jr. Monroe Kimbrel John H. Weitnauer, Jr. Robert P. Forrestal Birmingham 35202 Harold B. Blach, Jr. Hiram J. Honea Jacksonville 32203 Joan W. Stein Charles D. East Miami 33152 David G. Robinson F. J. Craven, Jr. Nashville ,37203 Robert C. H. Matthews, Jr. Jeffrey J. Wells New Orleans 70161 George C. Cortright, Jr. Pierre M.Viguerie CHICAGO* 60690 John Sagan Robert P. Mayo Stanton R. Cook Daniel M. Doyle Detroit 48231 Howard F. Sims William C. Conrad ST. LOUIS ,63166 Armand C. Stalnaker Lawrence K. Roos William B. Walton Donald W. Moriarty, Jr. Little Rock 72203 E. Ray Kemp, Jr. John F. Breen Louisville 40232 Richard O. Donegan Donald L. Henry Memphis 38101 Frank A. Jones, Jr. L. Terry Britt MINNEAPOLIS 55480 Stephen F. Keating Mark H. Willes William G. Phillips Thomas E. Gainor Helena 59601 Patricia P. Douglas Betty J. Lindstrom KANSAS CITY , 64198 Joseph H. Williams Roger Guffey Paul H. Henson Henry R. Czerwinski Denver 80217 Caleb B. Hurtt Wayne W. Martin Oklahoma City 73125 Christine H. Anthony William G. Evans Omaha 68102 Robert G. Lueder Robert D. Hamilton DALLAS 75222 Irving A. Mathews Ernest T. Baughman Gerald D. Hines Robert H. Boykin El Paso 79999 Chester J. Kesey Joel L. Koonce Jr. Houston 77001 Gene M. Woodfin J. Z. Rowe San Antonio 78295 Carlos A. Zuniga Carl H. Moore SAN FRANCISCO 94120 Cornell C. Maier John J. Balles Caroline Ahmanson John B. Williams Los Angeles 90051 Harvey A. Proctor Richard C. Dunn Portland 97208 Loran L. Stewart Angelo S. Carella Salt Lake City , 84125 Wendell J. Ashton A. Grant Holman Seattle 98124 Lloyd E. Cooney Gerald R. Kelly *Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; Cranford, New Jersey 07016; Jericho, New York 11753; Utica at Oriskany, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311; Des Moines, Iowa 50306; Indianapolis, Indiana 46204; and Milwaukee, Wisconsin 53202. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 74 Federal Reserve Board Publications Copies are available from PUBLICATIONS SERVICES. request and be made payable to the order of the Board of ROOM MP-510, BOARD OF GOVERNORS OF THE FED- Governors of the Federal Reserve System. Remittance from ERAL RESERVE SYSTEM, WASHINGTON, D.C. 20551. foreign residents should be drawn on a U.S. bank. Stamps When a charge is indicated, remittance should accompany and coupons are not accepted. THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNC- BANK CREDIT-CARD AND CHECK-CREDIT PLANS. 1968. 102 TIONS. 1974. 125 pp. pp. $1.00 each; 10 or more to one address, $.85 each. ANNUAL REPORT. SURVEY OF CHANGES IN FAMILY FINANCES. 1968. 321 pp. FEDERAL RESERVE BULLETIN. Monthly. $20.00 per year or $1.00 each; 10 or more to one address, $.85 each. $2.00 each in the United States, its possessions, Canada, REPORT OF THE JOINT TREASURY-FEDERAL RESERVE STUDY and Mexico; 10 or more of same issue to one address, OF THE U.S. GOVERNMENT SECURITIES MARKET. 1969. $18.00 per year or $1.75 each. Elsewhere, $24.00 per 48 pp. $.25 each; 10 or more to one address, $.20 each. year or $2.50 each. JOINT TREASURY-FEDERAL RESERVE STUDY OF THE GOV- BANKING AND MONETARY STATISTICS, 1914-1941. (Reprint ERNMENT SECURITIES MARKET: STAFF STUDIES—PART of Part I only) 1976. 682 pp. $5.00. 1. 1970. 86 pp. $.50 each; 10 or more to one address, $.40 BANKING AND MONETARY STATISTICS, 1941-1970. 1976. each. Part 2, 1971. 153 pp. and Part 3. 1973. 131 pp. Each 1,168 pp. $15.00. volume $1.00; 10 or more to one address, $.85 each. ANNUAL STATISTICAL DIGEST OPEN MARKET POLICIES AND OPERATING PROCEDURES— 1971-75. 1976. 339 pp. $4.00 per copy for each paid sub- STAFF STUDIES. 1971. 218 pp. $2.00 each; 10 or more to scription to Federal Reserve Bulletin; all others $5.00 one address, $1.75 each. each. REAPPRAISAL OF THE FEDERAL RESERVE DISCOUNT MECHA- 1972-76. 1977. 377 pp. $10.00 per copy. NISM. Vol. 1. 1971. 276 pp. Vol. 2. 1971. 173 pp. Vol. 3. 1973-77. 1978. 361 pp. $12.00 per copy. 1972. 220 pp. Each volume $3.00; 10 or more to one ad- 1974-78. 1980. 305 pp. $10.00 per copy. dress, $2.50 each. FEDERAL RESERVE CHART BOOK. Issued four times a year in THE ECONOMETRICS OF PRICE DETERMINATION CONFER- February, May, August, and November. Subscription ENCE, October 30-31, 1970, Washington, D.C. 1972. 397 includes one issue of Historical Chart Book. $7.00 per pp. Cloth ed. $5.00 each; 10 or more to one address, year or $2.00 each in the United States, its possessions, $4.50 each. Paper ed. $4.00 each; 10 or more to one ad- Canada, and Mexico. Elsewhere, $10.00 per year or dress, $3.60 each. $3.00 each. FEDERAL RESERVE STAFF STUDY: WAYS TO MODERATE HISTORICAL CHART BOOK. Issued annually in Sept. Subscrip- FLUCTUATIONS IN HOUSING CONSTRUCTION. 1972. 487 tion to Federal Reserve Chart Book includes one issue. pp. $4.00 each; 10 or more to one address, $3.60 each. $1.25 each in the United States, its possessions, Canada, LENDING FUNCTIONS OF THE FEDERAL RESERVE BANKS. and Mexico; 10 or more to one address, $1.00 each. Else- 1973. 271 pp. $3.50 each; 10 or more to one address, where, $1.50 each. $3.00 each. CAPITAL MARKET DEVELOPMENTS. Weekly. $15.00 per year IMPROVING THE MONETARY AGGREGATES: REPORT OF THE or $.40 each in the United States, its possessions, Cana- ADVISORY COMMITTEE ON MONETARY STATISTICS. da, and Mexico; 10 or more of same issue to one address, 1976. 43 pp. $1.00 each; 10 or more to one address, $.85 $13.50 per year or $.35 each. Elsewhere, $20.00 per year each. or $.50 each. ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— Regulation Z) Vol. I (Regular Transactions). 1969. 100 SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SE- RIES OF CHARTS. Weekly. $15.00 per year or $.40 each in pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each the United States, its possessions, Canada, and Mexico; volume $1.00; 10 or more of same volume to one ad- 10 or more of same issue to one address, $13.50 per year dress, $.85 each. or $.35 each. Elsewhere, $20.00 per year or $.50 each. FEDERAL RESERVE MEASURES OF CAPACITY AND CAPACITY THE FEDERAL RESERVE ACT, as amended through December UTILIZATION. 1978. 40 pp. $1.75 each; 10 or more to one 1976, with an appendix containing provisions of certain address, $1.50. each. other statutes affecting the Federal Reserve System. 307 THE BANK HOLDING COMPANY MOVEMENT TO 1978: A pp. $2.50. COMPENDIUM. 1978. 289 pp. $2.50 each; 10 or more to one address, $2.25 each. REGULATIONS OF THE BOARD OF GOVERNORS OF THE FED- IMPROVING THE MONETARY AGGREGATES: STAFF PAPERS. ERAL RESERVE SYSTEM 1978. 170 pp. $4.00 each; 10 or more to one address, PUBLISHED INTERPRETATIONS OF THE BOARD OF GOVER- $3.75 each. NORS, as of Dec. 31, 1979. $7.50. 1977 CONSUMER CREDIT SURVEY. 1978. 119 pp. $2.00 each. INDUSTRIAL PRODUCTION: 1976 Edition. 1977. 304 pp. $4.50 FLOW OF FUNDS. 1949-1978. 1979. 171 pp. $1.75 each; 10 or each; 10 or more to one address, $4.00 each. more to one address, $1.50 each. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 75 CONSUMER EDUCATION PAMPHLETS Short pamphlets suitable for classroom use. Multiple INNOVATIONS IN BANK LOAN CONTRACTING: RECENT EVIcopies available without charge. DENCE by Paul W. Boltz and Tim S. Campbell. May 1979. 40 pp. The Board of Governors of the Federal Reserve System MEASUREMENT OF CAPACITY UTILIZATION: PROBLEMS AND Consumer Handbook To Credit Protection Laws TASKS, by Frank de Leeuw, Lawrence R. Forest, Jr., The Equal Credit Opportunity Act and . . . Age Richard D. Raddock, and Zoltan E. Kenessey. July 1979. The Equal Credit Opportunity Act and . . . Credit Rights in 264 pp. Housing THE MARKET FOR FEDERAL FUNDS AND REPURCHASE The Equal Credit Opportunity Act and . . . Doctors, AGREEMENTS, by Thomas D. Simpson. July 1979. 106 pp. Lawyers, Small Retailers, and Others Who May Provide IMPACT OF BANK HOLDING COMPANIES ON COMPETITION Incidental Credit AND PERFORMANCE IN BANKING MARKETS, by Stephen The Equal Credit Opportunity Act and . . . Women A. Rhoades and Roger D. Rutz. Aug. 1979. 30 pp. Fair Credit Billing THE GNMA-GUARANTEED PASSTHROUGH SECURITY: MAR- The Federal Open Market Committee KET DEVELOPMENT AND IMPLICATIONS FOR THE GROWTH Federal Reserve Bank Board of Directors AND STABILITY OF HOME MORTGAGE LENDING, by Federal Reserve Banks David F. Seiders. Dec. 1979. 65 pp. Federal Reserve Glossary How to File A Consumer Credit Complaint Printed in Full in the Bulletin If You Borrow To Buy Stock AN ASSESSMENT OF BANK HOLDING COMPANIES, by If You Use A Credit Card Robert J. Lawrence and Samuel H. Talley. January 1976. Truth in Leasing U.S. Currency What Truth in Lending Means to You REPRINTS Except for Staff Studies, and some leading articles, most of the articles reprinted do not exceed 12 pages. STAFF STUDIES Measures of Security Credit. 12/70. Studies and papers on economic and financial subjects that Revision of Bank Credit Series. 12/71. are of general interest. Assets and Liabilities of Foreign Branches of U.S. Banks. 2/72. Summaries Only Printed in the Bulletin Bank Debits, Deposits, and Deposit Turnover—Revised Requests to obtain single copies of the full text or to be Series. 7/72. added to the mailing list for the series may be sent to Pub- Yields on Newly Issued Corporate Bonds. 9/72. lications Services. Yields on Recently Offered Corporate Bonds. 5/73. Rates on Consumer Instalment Loans. 9/73. INTEREST RATE CEILINGS AND DISINTERMEDIATION, by Ed- New Series for Large Manufacturing Corporations. 10/73. ward F. McKelvey. Sept. 1978. 105 pp. The Structure of Margin Credit. 4/75. THE RELATIONSHIP BETWEEN RESERVE RATIOS AND THE Industrial Electric Power Use. 1/76. MONETARY AGGREGATES UNDER RESERVES AND FED- Revision of Money Stock Measures. 2/76. ERAL FUNDS RATE OPERATING TARGETS, by Kenneth J. Revised Series for Member Bank Deposits and Aggregate Re- Kopecky. Dec. 1978. 58 pp. serves. 4/76. TIE-INS BETWEEN THE GRANTING OF CREDIT AND SALES OF Industrial Production— 1976 Revision. 6/76. INSURANCE BY BANK HOLDING COMPANIES AND OTHER Federal Reserve Operations in Payment Mechanisms: A LENDERS, by Robert A. Eisenbeis and Paul R. Schweitzer. Summary. 6/76. Feb. 1979. 75 pp. New Estimates of Capacity Utilization: Manufacturing and GEOGRAPHIC EXPANSION OF BANKS AND CHANGES IN BANK- Materials. 11/76. ING STRUCTURE, by Stephen A. Rhoades. Mar. 1979. 40 The Commercial Paper Market. 6/77. pp. The Federal Budget in the 1970's. 9/78. IMPACT OF THE DOLLAR DEPRECIATION ON THE U.S. PRICE Redefining the Monetary Aggregates. 1/79. LEVEL: AN ANALYTICAL SURVEY OF EMPIRICAL ESTI- U.S. International Transactions in 1978. 4/79. MATES, by Peter Hooper and Barbara R. Lowrey. Apr. Implementation of the International Banking Act. 10/79. 1979. 53 pp. Changes in Bank Lending Practices, 1977-79. 10/79. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 76 Index to Statistical Tables References are to pages A-3 through A-72 although the prefix "A" is omitted in this index ACCEPTANCES, bankers, 11, 25,27 Deposits (See also specific types) Agricultural loans, commercial banks, 18,20-22, 26 Banks, by classes, 3, 16, 17, 19, 20-23, 29, 69-72 Assets and liabilities (See also Foreigners) Federal Reserve Banks, 4, 12 Banks, by classes, 16, 17,18,20-23,29 Subject to reserve requirements, 15 Domestic finance companies, 39 Turnover, 13 Federal Reserve Banks, 12 Discount rates at Reserve Banks (See Interest rates) Nonfinancial corporations, current, 38 Discounts and advances by Reserve Banks (See Loans) Automobiles Dividends, corporate, 37 Consumer installment credit, 42,43 Production, 48,49 EMPLOYMENT, 46, 47 Eurodollars, 27 BANKERS balances, 16, 18, 20, 21, 22. (See also Foreigners) Banks for Cooperatives, 35 FARM mortgage loans, 41 Bonds (See also U.S. government securities) Farmers Home Administration, 41 New issues, 36 Federal agency obligations, 4,11,12,13, 34 Yields, 3 Federal and federally sponsored credit agencies, 35 Branch banks Federal finance Assets and liabilities of foreign branches of U.S. banks, 56 Debt subject to statutory limitation and types and Liabilities of U.S. banks to their foreign branches, 23 ownership of gross debt, 32 Business activity, 46 Receipts and outlays, 30, 31 Business expenditures on new plant and equipment, 38 Treasury operating balance, 30 Business loans (See Commercial and industrial loans) Federal Financing Bank, 30,35 Federal funds, 3,6, 18, 20, 21, 22,27,30 CAPACITY utilization, 46 Federal Home Loan Banks, 35 Capital accounts Federal Home Loan Mortgage Corporation, 35,40,41 Banks, by classes, 16, 17, 19,20 Federal Housing Administration, 35,40,41 Federal Reserve Banks, 12 Federal Intermediate Credit Banks, 35 Central banks, 68 Federal Land Banks, 35,41 Certificates of deposit, 23, 27 Federal National Mortgage Association, 35,40,41 Commercial and industrial loans Federal Reserve Banks Commercial banks, 15, 18,26 Condition statement, 12 Weekly reporting banks, 20, 21, 22, 23, 24 Discount rates (See Interest rates) Commercial banks U.S. government securities held, 4, 12, 13, 32, 33 Assets and liabilities, 3, 15-19, 20-23, 69-72 Federal Reserve credit, 4, 5, 12,13 Business loans, 26 Federal Reserve notes, 12 Commercial and industrial loans, 24, 26 Federally sponsored credit agencies, 35 Consumer loans held, by type, 42,43 Finance companies Loans sold outright, 23 Assets and liabilities, 39 Number, by classes, 16, 17, 19 Business credit, 39 Real estate mortgages held, by type of holder and Loans, 20, 21, 22, 42, 43 property, 41 Paper, 25, 27 Commercial paper, 3, 25, 27, 39 Financial institutions, loans to, 18, 20-22 Condition statements (See Assets and liabilities) Float, 4 Construction, 46, 50 Flow of funds, 44,45 Consumer installment credit, 42,43 Foreign Consumer prices, 46, 51 Currency operations, 12 Consumption expenditures, 52, 53 Deposits in U.S. banks, 4,12,19,20,21,22 Corporations Exchange rates, 68 Profits, taxes, and dividends, 37 Trade, 55 Security issues, 36, 65 Foreigners Cost of living (See Consumer prices) Claims on, 56, 58,61,62,63,67 Credit unions, 29,42, 43 Liabilities to, 23, 56-60,64-66 Currency and coin, 5, 16, 18 Currency in circulation, 4, 14 GOLD Customer credit, stock market, 28 Certificates, 12 Stock, 4,55 DEBITS to deposit accounts, 13 Government National Mortgage Association, 35,40,41 Debt (See specific types of debt or securities) Gross national product, 52, 53 Demand deposits Adjusted, commercial banks, 13,15,19 HOUSING, new and existing units, 50 Banks, by classes, 16, 17, 19,20-23 Ownership by individuals, partnerships, and INCOME, personal and national, 46, 52, 53 corporations, 25 Industrial production, 46,48 Subject to reserve requirements, 15 Installment loans, 42,43 Turnover, 13 Insurance companies, 29, 32,33,41 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 77 Insured commercial banks, 17, 18, 19, 69-72 Real estate loans—continued Interbank loans and deposits, 16,17 Life insurance companies, 29 Interest rates Mortgage terms, yields, and activity, 3,40 Bonds, 3 Type of holder and property mortgaged, 41 Business loans of banks, 26 Reserve position, basic, member banks, 6 Federal Reserve Banks, 3,8 Reserve requirements, member banks, 9 Foreign countries, 68 Reserves Money and capital markets, 3,27 Commercial banks, 16, 18, 20,21,22 Mortgages, 3,40 Federal Reserve Banks, 12 Prime rate, commercial banks, 26 Member banks, 3,4, 5, 15, 16,18 Time and savings deposits, 10, 72 U.S. reserve assets, 55 International capital transactions of the United States, 56-67 Residential mortgage loans, 40 International organizations, 56-61,64-67 Retail credit and retail sales, 42,43,46 Inventories, 52 Investment companies, issues and assets, 37 SAVING Investments (See also specific types) Flow of funds, 44,45 Banks, by classes, 16,17,18,20,21,22,29 National income accounts, 53 Commercial banks, 3,15,16,17,18 Savings and loan assns., 3, 10,29,33,41,44 Federal Reserve Banks, 12,13 Savings deposits (See Time deposits) Life insurance companies, 29 Savings institutions, selected assets, 29 Savings and loan associations, 29 Securities (See also U.S. government securities) Federal and federally sponsored agencies, 35 LABOR force, 47 Foreign transactions, 65 Life insurance companies (See Insurance companies) New issues, 36 Loans (See also specific types) Prices, 28 Banks, by classes, 16, 17, 18, 20-23, 29 Special drawing rights, 4, 12, 54, 55 Commercial banks, 3,15-18,20-23,24,26 State and local governments Federal Reserve Banks, 3,4, 5,8,12,13 Deposits, 19,20,21,22 Insurance companies, 29,41 Holdings of U.S. government securities, 32, 33 Insured or guaranteed by United States, 40,41 New security issues, 36 Savings and loan associations, 29 Ownership of securities of, 18,20,21,22,29 Yields of securities, 3 MANUFACTURING State member banks, 17 Capacity utilization, 46 Stock market, 28 Production, 46,49 Stocks (See also Securities) Margin requirements, 28 New issues, 36 Member banks Prices, 28 Assets and liabilities, by classes, 16,17,18 Borrowings at Federal Reserve Banks, 5,12 TAX receipts, federal, 31 Number, by classes, 16, 17,19 Time deposits, 3, 10, 13, 15, 16, 17, 19, 20, 21, 22, 23, 69-72 Reserve position, basic, 6 Trade, foreign, 55 Reserve requirements, 9 Treasury currency, Treasury cash, 4 Reserves and related items, 3,4,5,15 Treasury deposits, 4, 12, 30 Mining production, 49 Treasury operating balance, 30 Mobile home shipments, 50 Monetary aggregates, 3,15 UNEMPLOYMENT, 47 Money and capital market rates (See Interest rates) U.S. balance of payments, 54 Money stock measures and components, 3,14 U.S. government balances Mortgages (See Real estate loans) Commercial bank holdings, 19, 20, 21,22 Mutual funds (See Investment companies) Member bank holdings, 15 Mutual savings banks, 3, 10, 20-22,29, 32, 33,41 Treasury deposits at Reserve Banks, 4,12, 30 U.S. government securities NATIONAL banks, 17 Bank holdings, 16, 17, 18, 20, 21, 22, 29, 32, 33 National defense outlays, 31 Dealer transactions, positions, and financing, 34 National income, 52 Federal Reserve Bank holdings, 4,12,13,32, 33 Nonmember banks, 17,18,19 Foreign and international holdings and transactions, 12, 32, 64 OPEN market transactions, 11 Open market transactions, 11 Outstanding, by type and ownership, 32, 33 PERSONAL income, 53 Rates, 3,27 Prices Utilities, production, 49 Consumer and producer, 46, 51 Stock market, 28 VETERANS Administration, 40,41 Prime rate, commercial banks, 26 Production, 46,48 WEEKLY reporting banks, 20-24 Profits, corporate, 37 Wholesale prices, 46, 51 REAL estate loans YIELDS (See Interest rates) Banks, by classes, 18,20-22,29,41 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

78 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories Minneapolis Chicago Kansas City Louisville Jhorlottej lOklahoma City Nashvillt l»ge/es Aittle Rock Bjrminghai\ A t®la nta > Dallas® Houston January 1978 ALASKA HAWAII LEGEND Boundaries of Federal Reserve Districts ® Federal Reserve Bank Cities Boundaries of Federal Reserve Branch • Federal Reserve Branch Cities Territories • Federal Reserve Bank Facility © Board of Governors of the Federal Reserve System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis