Federal Reserve Bulletin, 1980-07

July 1980 FEDERAL RESERVE BULLETIN Monetary Policy Report to Congress Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE BULLETIN (USPS 351-150). Controlled Circulation Post­ age Paid at Richmond, Virginia. POSTMASTER: Send address changes to Pub­ lications 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

Volum e 66 □ Number 7 □ July 1980 FEDERAL RESERVE 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. The artwork is provided by the Graphic Communications Section under the direction of Peter G. Thomas. 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 531 MONETAR Y POLIC Y REPORT and Monetary Affairs of the House Com­ to Congress mittee on Government Operations, June 25, 1980. Submitted pursuant to the Full Employ­ ment and Balanced Growth Act of 1978, 555 Governor J. Charles Partee testifies on two the Board’s report states that economic banking bills: one would limit the insurance and financial developments over the next activities of bank holding companies, six months will lay tke groundwork for whereas the Board believes that banking the recovery—anticipated for 1981—from organizations should be allowed to sell the current recession. credit-related insurance; the other would subject acquisitions of banking organiza­ 543 Staff Studies tions to stricter standards than in the pres­ ent antitrust laws and would tighten the “Foreign Ownership and the Performance rules for expansion into nonbanking activi­ of U.S. Banks” examines the growth and ties by bank holding companies, although operations both of existing U.S. banks ac­ the Board believes the present procedures quired by foreign parties and of U.S. banks should be continued, before the Senate that were established by foreign banks. Committee on Banking, Housing and Ur­ ban Affairs, July 1, 1980. 545 INDUSTRIAL PRODUCTION Output declined 2.4 percent in June. 559 Announcements Phaseout of special measures of credit re­ 547 Statements to Congress straint. Governor Lyle E. Gramley discusses mea­ Change in discount rate. sures to improve control over federally as­ sisted credit programs; establishment of a Amendment to Regulation T. (See Legal credit budget will assist in the evaluation Developments.) and control of federal credit activities and Survey of foreign lending by large U.S. will enhance the long-run prospects for in­ banks. creased private capital formation, before the Special Subcommittee on Control of Adoption of standard terms and guidelines Federal Credit of the Senate Budget Com­ by the bank regulatory agencies. mittee, June 19, 1980. Meeting of Consumer Advisory Council. 550 Governor Henry C. Wallich gives the views Changes in Board staff. of the Board on the nonbanking activities of foreign bank holding companies, including Proposed procedures for nonmember de­ the nonbanking prohibitions of the Bank pository institutions. Holding Company Act, the exemptions the Availability of banking data for Edge and act provides for foreign bank holding com­ Agreement corporations. panies, and the Federal Reserve’s inter­ pretations of those exemptions, before the Admission of two state banks to member­ Subcommittee on Commerce, Consumer ship in the Federal Reserve System. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

565 Record of Policy Actions of the to the credit restraint program, and to regu­ Federal Open Market Committee lations of the Depository Institutions De­ regulation Committee; various bank hold­ At its meeting on May 20, 1980, the Com­ ing company and bank merger orders; and mittee agreed that open market operations pending cases. in the period until the next meeting should be directed toward expansion of reserve ag­ gregates consistent with growth of M-1A, Al Financial and Business Statistics M-1B, and M-2 at rates high enough to pro­ A3 Domestic Financial Statistics mote achievement of the Committee’s ob­ A46 Domestic Nonfinancial Statistics jectives for monetary growth for the year as A54 International Statistics a whole, provided that in the period before the next regular meeting the weekly aver­ A69 Guide to Tabular Presentation age federal funds rate remained within a and Statistical Releases range of 8V2 to 14 percent. Specifically, the Committee agreed that operations should A70 Board of Governors and be directed toward encouraging growth of Staff M-1A, M-1B, and M-2 over May and June at annual rates of 7 to llh percent, llh to 8 A ll Federal Open Market Committee percent, and about 8 percent respectively. AND STAFF; ADVISORY COUNCILS The Committee also agreed that, in light of the recent shortfall, moderately faster mon­ A73 Federal Reserve Banks, etary growth would be acceptable if that de­ Branches, and Offices veloped in response to a strengthening of the demand for money. A74 Federal Reserve Board P ublications 571 Legal Developments A76 Index to Statistical Tables Amendments, interpretations, or revisions to the Board’s Regulations D, T, G, and Y, A78 Map of Federal Reserve S ystem Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to Congress Report submitted to the Congress on July 22, tion of inflation. This was accomplished by fur­ 1980, pursuant to the Full Employment and Bal­ ther rapid growth in installment and mortgage anced Growth Act of 1978.1 credit in the late stages of the recent expansion, but with the result that debt service burdens— The O utlook for the Economy which already were at high levels historicallyand Monetary Policy Objectives continued to climb. Sharply higher interest rates and generally more stringent credit terms in late The Outlook for the Economy 1979 and early 1980 acted as additional deter­ rents to spending, encouraging households in The economy moved into recession in the first their efforts to reduce debt and to rebuild sav­ half of this year. A cyclical downturn had been ings. widely anticipated for some time, but the decline The falloff in final sales has caused business­ in spending, output, and employment, once un­ men to spend more cautiously. This tendency der way, has been steeper than most analysts had has been reinforced by financial factors as well. foreseen. The second-quarter decrease in real The liquidity position of businesses had deterio­ gross national product, at an annual rate of about rated appreciably during the expansion, particu­ 9 percent according to the Commerce Depart­ larly in the latter stages when there was a surge ment’s preliminary estimate, was considerably in short-term borrowing; many firms now are sharper than in the initial quarters of other post­ making strong efforts to restructure balance war recessions. sheets. The slump in activity has been most pro­ The unexpected rapidity of the current down­ nounced in the housing and auto industries—the turn thus far has led analysts to reassess their latter sector being adversely affected by structur­ view of the prospects for economic activity in the al problems as well as by general cyclical pres­ period ahead. Significant disagreement has aris­ sures. But the decline has not been limited to en with regard to whether recovery will be these sectors. Retail sales excluding autos have prompt and strong, with the recent relaxation of dropped considerably since January, and busi­ credit market conditions encouraging a resump­ ness outlays for equipment and new construction tion of normal spending patterns, or whether the also have fallen. cyclical adjustment will be prolonged and the The very sharp curtailment of spending on subsequent upturn possibly sluggish. The experi­ houses and consumer goods and services in the ence of the past year or so has demonstrated the current downturn probably is attributable in hazards of forecasting, and the uncertainties at large part to the cumulative effect of inflation on the present time clearly are substantial. Much consumers’ financial well-being. Real disposable will depend, for example, on the perceptions of personal income was virtually flat in 1979 and has businessmen about the longer-range prospects declined appreciably this year. Earlier, con­ for demand and the attractiveness of investment, sumers had reduced their rate of saving in the the response of consumers to the 1981-modelface of shortfalls in real income in an effort to year automobiles, and the strength of the maintain consumption standards and in anticipa- rebound in housing that may develop in the wake of the recent easing in mortgage market condi­ tions. There are signs that the contraction in some 1. The charts and appendixes for this report are available sectors may be nearing an end, but these are far on request from Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. from conclusive. Retail sales in June turned up Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

532 Federal Reserve Bulletin □ July 1980 slightly after four months of sharp decline; in the ery. On balance, the forecast is for a moderate first ten days of July auto sales were at the rebound in real GNP, accompanied by some fur­ strongest pace in three months. Housing starts ther slackening in the pace of inflation. Unem­ and sales of new homes strengthened in the most ployment, however, is likely to remain high recent months for which data are available. throughout the year. In reflection of the prevailing uncertainties, Should there be a tax cut in 1981, the impact there is a considerable range of views among the on economic performance will, of course, de­ members of the Federal Open Market Committee pend on its timing and composition. There is the (FOMC) regarding the movement of major eco­ distinct—and very troubling—possibility that a nomic variables over the remainder of the year. poorly designed tax reduction, or one not Most of the members believe that the recession coupled with adequate restraint on the expendi­ probably will persist into the fourth quarter, with ture side, might give rise to added inflationary a cumulative net drop in real gross national prod­ and financial pressures that would in time dis­ uct less than that in the downslide of 1973-75. sipate the beneficial short-term effects of the fis­ Although the decline should slow in the months cal stimulus. Any indication that the Congress ahead, employment may be cut back further, and and the administration were moving away from a the unemployment rate could rise beyond 8V2 commitment to rigorous fiscal discipline would percent by year-end. The increasing slack in la­ run the risk of reinvigorating the inflationary ex­ bor markets and in industrial capacity utilization pectations that have played such a major role in should at the same time help to moderate infla­ the economy’s difficulties. The Committee thus tionary pressures. feels it important that the question of a tax cut be The accompanying table presents ranges for approached cautiously; if a tax cut ultimately is key economic variables that generally encom­ enacted, it should be carefully structured to en­ pass the judgments of the individual FOMC hance the productive potential of our economy members about the probable performance of the and to yield the greatest relief from cost and economy this year and in 1981. price pressures over the longer run. Monetary Policy Objectives Actual Projected Item 1979 1980 1981 The task for monetary policy—and for stabiliza­ Change from fourth quar­ tion policy generally—in the current circum­ ter to fourth quarter, percent 9.9 5 to 7V: 8V2 to IIV2 stances obviously is a difficult one. Recession Nominal GNP .................. 1.0 —5 to -2V2 V2 to 3 naturally summons forth calls for stimulus to ag­ Real GNP......................... 8.9 9 to 10 VU to 9V2 Implicit GNP deflator ..... gregate demand. The prevailing high level of Average level in fourth quarter, percent unemployment and the exceptional weakness ap­ Unemployment rate ........ 5.9 8V2 to 9V4 8 to 9lU parent in particular industries and sectors of our economy certainly must be given careful consid­ eration in the formulation of public policy. But The outlook for 1981 is especially uncertain at caution must be exercised in the application of the current time. Economic and financial devel­ any broad countercyclical stimulus, especially in opments over the next six months should lay the the present environment of persistent inflation­ groundwork for the recovery anticipated in 1981. ary pressures. Indeed, there is no clearer lesson But, in addition, any actions taken in the fiscal from the experience of the past decade and a half arena would have an impact on the path of recov­ than that excessive stimulus is detrimental to the ery. The projections presented in the table, objective of achieving and sustaining nonwhich do not assume a tax cut in the next year, inflationary, balanced growth. indicate a turnaround in economic activity—al­ A primary and continuing goal of monetary though there is a considerable range of views policy must be to curb the accelerating inflation­ concerning the potential strength of the recov­ ary cycle. It now appears that some progress is Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to Congress 533 beginning to be made in that direction. Price in­ Money and Credit Growth creases have slowed considerably from the pace in 1980 and 1981 of early in the year, in part reflecting some relief in the food and energy sectors, but also as a re­ In February the Federal Reserve reported to the sult of the drop in demand pressures. In addition, Congress ranges of growth for the monetary ag­ recent attitudinal surveys point to a reduction in gregates in 1980 that it believed to be consistent inflationary expectations. The continuation of with the continuing objective of reducing infla­ this trend in expectations will result in a greatly tionary pressures over time while providing for improved economic and financial environment, sustainable growth in the nation’s production of one more conducive to long-term growth. We al­ goods and services. These ranges anticipated a ready have witnessed one benefit of an easing of substantial deceleration in monetary growth in inflationary fears: a substantial decline in long­ 1980 from the pace of the preceding year. Mea­ term interest rates from their highs earlier this sured from the fourth quarter of 1979 to the year and a revitalization of the bond markets. fourth quarter of 1980, the following ranges were The Federal Reserve’s pursuit of a policy of adopted: for M-1A, Vh to 6 percent; for M-1B, monetary restraint—evidenced this year by a 4 to 6V2 percent; for M-2, 6 to 9 percent; and for moderation of money growth—has been an im­ M-3, 6V2 to 9V2 percent. The associated range portant factor in this turn in expectations; a sus­ for bank credit expansion was 6 to 9 percent. tained commitment to the attainment of non- During the first half of 1980, growth of the inflationary rates of money and credit growth is monetary aggregates slowed considerably from essential if this progress is to be extended. the 1979 pace. The deceleration was particularly Despite the improvement that has occurred, marked for the narrower aggregates, M-l A and however, inflationary forces are far from sub­ M-1B, which grew at rates below the lower limits dued. The past years have left a legacy of ad­ of their longer-run ranges—at annual rates of verse cost trends that will not be reversed quick­ about V2 and VU percent respectively from the ly. Moreover, more extreme inflationary fourth quarter of 1979 to the second quarter of expectations easily could be reignited. In estab­ 1980. (M-lA is currency and demand deposits lishing its plans for growth in the monetary ag­ held by the public, while M-1B includes check­ gregates, the Federal Reserve will continue to able interest-bearing deposits as well.) At the place high priority on reducing inflation, believ­ same time, the broader aggregates, M-2 and M-3, ing that this is essential to fostering a sound and grew at annual rates of 6V2 and 63U percent re­ sustained recovery. Over the long term, a reduc­ spectively, which are somewhat above the lower tion in the underlying rate of inflation is essential limits of their ranges. In fact, by June, M-2— for a strong U.S. economy, for encouraging the which includes money market fund shares and all saving we will need to finance adequate capital deposits except large certificates of deposit investment, and for maintaining the position of (CDs) at banks and thrift institutions—was the dollar in international markets. around the midpoint of its longer-run range, and But it is clear also that if inflation is to be re­ M-3 slightly below, while the narrower aggre­ strained without undue disruption of economic gates were moving back toward their ranges, fol­ activity we cannot rely solely on monetary poli­ lowing an unusually sharp drop in early spring. cies. For example, fiscal discipline is essential to The contraction in the narrower aggregates ensure that excessive pressure is not placed on during the second quarter was much greater than the financial and real resources of the economy. would have been expected on the basis of the his­ The structure of our tax system should be exam­ torical relationships among money, income, and ined with an eye to the incentives it provides for interest rates. This unusual weakness may have productivity-expanding research and capital for­ reflected exceptional efforts by the public to pare mation. And the full range of governmental poli­ cash balances, such as have characterized some cies should be reviewed to ensure that they do other periods following a sharp upward adjustment not add needlessly to costs and do not stunt in­ in market interest rates to new record levels. There novation and competition. may also have been an impact from the surge in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

534 Federal Reserve Bulletin □ July 1980 debt repayments, especially at banks, after the ter, while the banks—concerned about the pos­ imposition of the credit control program in mid- sible erosion of profit margins by high-cost funds March, with some of the funds apparently com­ obtained earlier and seeking to conform to the ing out of cash balances. In light of these special guidelines of the March 14 special credit restraint circumstances affecting the public’s demand for program—pursued relatively tight lending poli­ transactions balances, and given the relative cies. Businesses, meanwhile, have met a sub­ strength of the broader aggregates and the usual stantial portion of their credit needs through is­ lags between changes in credit conditions and suance of commercial paper (which serves as a growth in the narrower aggregates, the FOMC close substitute for bank credit for many large believed it appropriate to foster a more gradual firms), by borrowing in bond markets, and by re­ return of M-l growth to the ranges established ducing holdings of liquid assets. Over the half earlier. year, the total of credit advanced by banks and in In connection with reserve-targeting proce­ the private short-term money markets rose at an dures, System open market operations supplied a annual rate of around l xh percent. large volume of nonborrowed reserves over the At its meeting in July, the Federal Open Mar­ course of the second quarter. Given the weak de­ ket Committee reassessed the ranges it had mand for money and bank credit, most of the adopted for monetary growth in 1980 and formu­ added nonborrowed reserves were used by lated preliminary goals for 1981. The Committee banks to repay borrowings from the Federal Re­ elected to retain the previously established serve discount window. Borrowings fell from a ranges for the aggregates over the remainder of high of $2.8 billion on average in March to mini­ 1980. This decision by the Committee took into mal levels recently, and the easing of bank re­ consideration the recent behavior of the money serve positions was reflected in a sharp decline in stock measures as well as emerging economic the federal funds rate. From their peaks of late conditions. In this regard it was recognized that, March or early April, short-term interest rates if the public continues to economize on cash bal­ have declined 7 to 9 percentage points and long­ ances to an unusual degree in the second half of term rates by roughly 2 to 3 percentage points. the year, growth in the narrower aggregates Expansion in the broader aggregates over the would likely fall toward the lower end of the es­ first half of the year reflected the very rapid tablished ranges. growth for much of the time in money market With respect to the broader aggregates, growth mutual fund shares, 6-month money market cer­ in the second half is likely to place them nearer tificates, and 2V2-year small saver certificates, in­ the midpoints of their respective ranges and, in struments that pay market rates of interest. Late the case of M-2, quite possibly in the upper half in the period, as short-term market interest rates of its range. Recent trends suggest that a contin­ declined sharply, the contraction in savings de­ ued substantial expansion in the interest-bearingposits at banks and other depository institutions nontransactions component of M-2 is likely. In halted, and the outstanding amount of those de­ the current cyclical environment, consumers posits began to rise. For part of the period, have begun to reevaluate their financial positions growth in M-3 was sustained also by continued and have reduced their borrowing and adjusted issuance of large time deposits by commercial upward their rate of saving. Thus, if the recent banks and thrift institutions, which are included lower level of interest rates persists, the outlook in M-3 but not in M-2; however, large time de­ is for an augmented flow of funds to depository posits began to contract in late spring as credit institutions along with continued, though slower, demands weakened substantially. growth in money market mutual funds. Bank credit growth greatly exceeded the The Committee also noted that the recent FOMC’s range in the first quarter of the year. sharp contraction in bank credit makes it quite The second quarter, however, saw a sharp con­ likely that this measure will fall below the 6 to 9 traction in this measure, and credit growth was percent growth range specified in February. A well below the FOMC-specified range as of mid­ resumption of bank credit expansion during the year. Demands for bank loans by households and second half is anticipated, but the strength of that businesses dropped abruptly in the second quar­ move will depend to a considerable extent on Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to Congress 535 patterns of corporate finance. The desire for bal­ to NOW accounts. The range for M-1B thus may ance sheet restructuring may well continue to have to accommodate a period of abnormal mute business loan demands, although weaker growth as the public adjusts to the availability of corporate cash flows and a narrowing of the a new instrument. The experience of the past spread of the prime rate over commercial paper year and a half with automatic transfer service rates likely will prompt some borrowing at (ATS) accounts has indicated the difficulty of es­ banks. Mortgage loan demands also should begin timating in advance the public’s demand for such to recover as the year progresses, and the runoff balances. Although growth in M-2 and M-3 will in consumer loans is expected to abate. not be affected by NOW account movements, One factor that contributed to the recent weak­ these broader aggregates include other relatively ness in bank lending was the Board’s special new financial instruments, the demand for which credit restraint program. As announced earlier, is still subject to uncertainty. The behavior of the program is being phased out this month be­ these instruments in coming months will aid the cause there is now no evident need for extraordi­ FOMC in determining appropriate growth ranges nary measures to hold bank lending within rea­ for the broader aggregates in the 1981 period. sonable bounds. In removing the special controls, the Board has emphasized its intention to continue to maintain aggregate growth in mon­ The Administration9s Short-Term ey and credit at rates consistent with a reduction Economic Goals and the Relationship in inflationary pressures. of Federal Reserve Objectives With regard to monetary policy over the longer to These Goals run, the FOMC reiterates its intent to seek re­ duced rates of monetary expansion over coming The administration, in association with its mid­ years, consistent with a return to price stability. year budget review, has updated its forecast of While there is broad agreement in the Committee the behavior of major economic variables for that it is appropriate to plan for some further 1980 and 1981. The revised figures are shown in progress in 1981 toward reduction of the targeted the accompanying table. ranges, most members believe it would be pre­ These estimates, which the administration has mature at this time to set forth precise ranges for indicated should be viewed as forecasts rather each monetary aggregate for next year, given the than as goals, show a considerably greater de­ uncertainty of the economic outlook and institu­ cline in real activity in 1980 than had been antici­ tional changes affecting the relationships among pated in the January Economic Report of the the aggregates. The extent and timing of adjust­ President. The outlook for growth in nominal ments in the targets will depend upon an apprais­ GNP through year-end has been lowered by a al of the outlook at the end of the year. The ap­ small amount, owing to a somewhat higher an­ propriate money growth in 1981 relative to 1980 ticipated rate of inflation for the four quarters of of course will depend to some extent on the out­ 1980. The administration’s projections for this come in this year—that is, on exactly where in the present ranges the various aggregates fall at Item 1980 1981 year-end. In addition, the various measures of money Change from fourth quarter to fourth quarter, percent will be affected in 1981 by shifts in the demand Nominal GNP ..................................................... 63U \2xh for different types of financial assets. The in­ Real GNP ............................................................. -3 IV2 Implicit price deflator ........................................ 10 93/4 troduction of negotiable order of withdrawal Average level in fourth quarter, percent (NOW) accounts on a nationwide basis in Janu­ Unemployment rate............................................ 8V2 8V2 ary will accelerate the shift from regular demand deposits into interest-earning transactions bal­ ances, thereby depressing M-l A growth next year fall within the ranges expected by the year. On the other hand, M-1B probably will be members of the FOMC. boosted somewhat next year by shifts from sav­ The administration has projected a resumption ings deposits and other interest-bearing assets in­ of output growth next year that places real GNP Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

536 Federal Reserve Bulletin □ July 1980 near the upper end of the range encompassed by ness outlays for equipment and new construction the forecasts of the members of the FOMC. At have declined. Although businesses were cau­ the same time, the administration’s estimates tious in building inventories during the expan­ place the rate of inflation somewhat above the sion, the severity of the recent decline in final range of the FOMC members’ expectations. sales has led to some involuntary stock accumu­ (Like the FOMC members’ projections, the ad­ lation; as in past cycles,,the resulting efforts to ministration’s forecast does not include a tax cut curb inventory growth have played a significant provision for 1981.) role in the weakening of orders and production. As indicated in the preceding section, the Fed­ Recent reductions in aggregate demand, eral Reserve intends to set monetary growth coupled with a slower rise of energy prices, ranges for 1981 that will help to restrain inflation­ meanwhile have brought some moderation in the ary pressures in the recovery period. As experi­ overall pace of inflation. The producer and con­ ence this year illustrates, considerable uncer­ sumer price indexes have risen at much less rap­ tainty attaches to any analysis of the id rates in the past few months than they did ear­ relationships over relatively short periods among lier in the year. Moreover, there are indications money, interest rates, and nominal GNP. How­ from consumer surveys that inflationary ex­ ever, a substantial expansion in demands for pectations have been lowered. Nevertheless, in­ goods and services, accompanied by a lack of flation still possesses a strong momentum, with progress on the inflation front—or worse, an ac­ unit labor costs continuing on a steep upward tual increase in inflation or inflationary ex­ trend. pectations—would raise the possibility of a con­ siderable firming of conditions in financial Personal Consumption Expenditures. Personal markets. Large and prolonged federal deficits consumption expenditures fell sharply in real would increase that risk. This possibility high­ terms during the first half. A number of adverse lights the urgency of concerted effort by the trends had characterized household finances for public and private sectors to reduce the rate of some time prior to the beginning of 1980. Real advance of costs and prices and the need to focus disposable income had stagnated after 1978, any discussions of fiscal action on approaches household liquidity positions had weakened as li­ that would serve to alleviate cost pressures and abilities increased faster than financial assets af­ bolster productivity. ter late 1976, and a near-record proportion of dis­ posable income had been committed to the servicing of debt. Moreover, consumer con­ A Review of Recent Economic and fidence, as measured by opinion surveys, had de­ Financial Developments teriorated to levels last seen in the 1973-75 reces­ sion. In the light of these trends, a downward Economic Activity adjustment of consumer outlays might have been During the First Half of 1980 expected last year; the fact that it did not occur appears attributable in part to growing ex­ Economic activity turned down early this year pectations of inflation that fostered a buy-infollowing almost five years of expansion. Be­ advance psychology. tween January and June, industrial production Between January and May, retail sales fell 6V2 fell 7V2 percent, employment declined about VU percent in nominal terms and more than 9V2 per­ million, and the unemployment rate jumped IV2 cent in real terms—the sharpest four-month drop percentage points. Real gross national product is in the postwar period. Preliminary estimates for estimated to have fallen at an annual rate of 9.1 June, however, indicate that sales moved up percent in the second quarter, with the decline in somewhat. As in past recessions, large decreases activity widespread among major sectors of the in sales this year have occurred for the relatively economy. Retail sales have decreased sub­ discretionary items of consumer expenditure. stantially since January, housing starts have Automobile sales in June averaged only 7.6 mil­ dropped to near-record postwar lows, and busi­ lion units at an annual rate, close to the May Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to Congress 537 pace, which was the slowest since late 1974. Fur­ sold new single-family dwellings on the market, niture and appliance sales also are down sharply these unsold units bulk larger relative to the re­ this year, in part because of the fall in housing cent slower rate of sales. At the May sales pace, sales. But weakness in consumer outlays has not which was up sharply from April, there was al­ been confined to the durable goods sector. Pur­ most a nine-month supply of unsold new single­ chases of nondurables in real terms also have family units on the market. The pickup in sales in been falling since late last year, with sizable de­ May is perhaps a sign of some increased interest clines recorded for clothing and general mer­ on the part of homebuyers, prompted by the re­ chandise. cent easing in financial markets; however, the Since January, real disposable income has de­ still large overhang of unsold homes is likely to creased substantially as employment and hours discourage a quick resumption of building in worked have fallen and prices have continued many localities. upward at a rapid pace; nonetheless, the re­ Multifamily housing starts began declining trenchment by consumers has lifted the saving sharply late last year and in the second quarter rate somewhat above the extraordinarily low lev­ were off about 35 percent from the already-re­ el of the fourth quarter of last year. It still re­ duced pace of the third quarter of 1979. The de­ mains low by historical standards, however, and cline in this sector has been less severe than in uncertainty about job and income prospects may the 1973-75 period, as low vacancy rates in many well prompt households to enlarge precautionary areas and an acceleration in rent increases begin­ savings, thereby contributing further to the ning in late 1979 have given builders an incentive weakness in personal consumption expenditures. to sustain a significant level of apartment con­ struction in the face of high construction costs Residential Construction. Homebuilding activ­ and tight financial conditions. In addition, de­ ity has experienced a severe decline. Housing mands for condominiums—a lower-cost alterna­ starts, which averaged nearly VU million units at tive to single-family homeownership—have pro­ an annual rate during the first nine months of vided support to multiunit activity. 1979, began to fall sharply last autumn. By De­ cember, starts were at a lV2-million-unit pace, Business Spending. Business spending on and by May they had declined to a rate of almost plant and equipment has slowed in recent months 900,000. June saw a pickup in starts to a VU mil­ as firms have sought to avoid expanding capacity lion annual rate. at the onset of a recession. Spending on non- In the single-family sector, starts dropped 45 residential structures, which accounted for much percent between the third quarter of 1979 and the of the gain in investment during 1979, peaked in second quarter of this year. Although demo­ January and declined substantially in the follow­ graphic factors remained quite favorable during ing months. Business purchases of trucks and au­ this period, the demand for such dwellings was tomobiles also have been falling since early this curtailed by the increased cost of homeowner­ year, as have outlays for other capital equip­ ship associated with higher house prices and the ment. rapid rise in mortgage interest rates. The month­ Weakness in capital spending in the first half of ly cost of interest and principal on an average- the year—as well as in forward-looking in­ priced new home financed with a conventional dicators of investment activity such as surveys, mortgage rose to $700 in May—a third higher construction contracts, and equipment orders— than six months earlier and 50 percent above the probably reflected businessmen’s anticipations same month of 1979. Households probably were that sales may remain sluggish for a while. In ad­ increasingly reluctant to undertake such heavy dition, corporate cash flows are diminishing, and financial obligations, especially as income and with liquidity positions already strained in many employment conditions weakened this year. instances, there may be a reluctance to under­ Home sales have dropped almost 40 percent take additional projects requiring external fi­ from the pace of last summer. Although produc­ nancing. Although interest rates have fallen dra­ tion adjustments have reduced the number of un­ matically from the high levels reached earlier this Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

538 Federal Reserve Bulletin □ July 1980 year, growing excess plant capacity suggests the al funding was cut back and municipal bond is­ likelihood of further decreases in real outlays, suance was constrained in the first quarter by while firms take advantage of lower long-term high interest rates. Despite the downward adjust­ rates to restructure their balance sheets. ments of outlays, the aggregate operating deficit Despite sizable cutbacks in production, some of the state and local government sector appar­ involuntary inventory accumulation appears to ently widened considerably in the spring. have occurred this spring as a consequence of the steep fall in sales. The stock-sales ratio for all International Trade and Payments. Real ex­ manufacturing and trade in real terms rose only ports of goods and services continued to grow moderately during the first quarter, but climbed rapidly in the first quarter of 1980, but the rise appreciably in April and May to near the level of appears to have slowed somewhat in the second late 1974. Since the start of the year, substantial quarter. The deceleration largely reflected the increases in the ratio have been registered in slowing of economic expansion abroad and the most major industries with especially large rises fading of the impact of the 1977-78 real deprecia­ for primary metals manufacturers, furniture and tion of the dollar. All of the growth in the first appliance retailers, and the motor vehicle indus­ half was concentrated in nonagricultural exports; try. Auto sales incentive programs and produc­ agricultural shipments were reduced, partly be­ tion adjustments in the first quarter of 1980 cause of the embargo on additional grain sales to largely eliminated excessive stocks that had re­ the Soviet Union imposed by the President in sulted from last summer’s gasoline shortages. January. However, beginning in mid-April, automobile The volume of imports, meanwhile, began to sales plummeted, and despite further curtail­ fall off as U.S. economic activity slackened and ments of production, some overhang of stocks at as higher prices and greater fuel efficiency acted dealers reappeared. to restrain oil imports. The volume of non-oil im­ ports rose slightly on balance in the first half of Government. Spending at all levels of govern­ 1980, but all of the increase was in the first quar­ ment has been restrained in recent months. Total ter. The quantity of oil imports fell, apparently federal expenditures, which grew rapidly in the reaching its lowest rate in four years in the sec­ early months of the year, moderated in the sec­ ond quarter. Despite a declining volume of oil ond quarter largely as a result of the March bud­ imports in the first quarter, higher prices by the get cuts. Growth in receipts fell off much more, Organization of Petroleum Exporting Countries however, as weakness in personal income and (OPEC) resulted in a continuation of the rapid profits offset the impact of additional revenue growth in the dollar value of oil imports. The oil from the windfall profits tax on oil producers. As import bill nearly doubled between the fourth a result, the federal deficit on a national income quarter of 1978 and the first quarter of 1980; in accounts basis probably deepened by about $30 the second quarter the value of oil imports billion, at an annual rate, between the fourth changed little as lower volume offset a further quarter of 1979 and the second quarter of 1980. rise in import prices. However, the high-employment budget, a better The U.S. merchandise trade deficit increased indicator of the thrust of discretionary fiscal pol­ about $6V2 billion at an annual rate in the first icy, showed a movement toward restraint during quarter of this year from the rate in the last quar­ this period. ter of 1979. The current account moved from a State and local government spending fell in deficit of about $7 billion at an annual rate in the real terms during the first half of 1980, as govern­ fourth quarter, and near balance for the year mental units curtailed outlays in response to the 1979, to a deficit of about $10 billion in the first slower growth of revenues caused by tax cuts quarter of 1980. Higher foreign earnings of U.S. enacted in 1979, the weakening economy, and oil companies offset part of the rise in the mer­ the March reductions of federal grants-in-aid. chandise trade deficit. Partial data indicate that The reduced pace of spending was most pro­ the trade and current-account deficits narrowed nounced for construction activity because feder­ in the second quarter. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to Congress 539 Labor Markets and Capacity Utilization tember 1975. In contrast, unemployment rates among white-collar workers have increased only Labor demand was relatively well-maintained marginally since the end of 1979. early in the year, but it fell off steeply in the The adjustments in output by firms, especially spring as firms responded to the sharp declines in in the second quarter, were reflected in a sharp sales by cutting their work forces and shortening decline in the index of industrial production. Be­ workweeks. Between January and June, the tween January and June, industrial production number of workers on the payrolls of nonfarm fell nearly 772 percent. Production declines in establishments fell almost 950,000; total employ­ auto-related industries and in industries sup­ ment, as measured by the household survey, fell plying construction materials began early in the more than VU million. With layoffs rising, the year, but by late spring cutbacks were occurring nation’s jobless rate jumped from 674 percent in in most other industries as well. Among manu­ January to VU percent in May and June. facturing firms, capacity utilization in June Much of the cutback in employment occurred dropped to 76 percent, almost 11 percentage in the construction sector and in durable goods points below its 1979 peak. manufacturing, especially motor vehicle and re­ lated industries. By June, the number of auto workers on indefinite layoff was nearly 250,000 Prices, Wages and Productivity (about 30 percent of total hourly workers in the industry), and substantial layoffs had occurred in After exploding upward in the early months of the steel and tire industries as well. Construction the year, rates of price increase moderated sig­ employment began to drop early in the year, and nificantly in the second quarter. The improve­ subsequently suppliers of building materials also ment resulted primarily from a stabilizing of en­ reduced their payrolls. During the spring, how­ ergy prices and from declines in the prices of ever, weakness in labor demand began to spread nonferrous metals, after a flurry of speculative throughout the economy; employment at trade activity earlier in the year. Increases in the prices establishments dropped 190,000 over the second of construction materials and components also quarter, and in June payrolls in the service-pro­ slowed noticeably in the second quarter with the ducing sector registered the first monthly decline decline in activity in the housing sector. since 1975. In the energy area, retail prices surged in Janu­ In addition to trimming payrolls, employers ary and February, in large part the result of the have curtailed work schedules in light of the hike in OPEC prices that occurred in late 1979, weakening of sales. Since January, the average but the pace of increase then slowed noticeably workweek at manufacturing establishments has in the spring, as inventories reached near-record been shortened almost IV4 hours. More general­ levels and demand continued to drop. The in­ ly, the number of workers on part-time schedules crease in energy prices also moderated at the for economic reasons rose sharply in the second producer level. Nonetheless, indirect effects of quarter, with former full-time jobholders ac­ earlier increases in the prices of fuels and petro­ counting for most of the increase. leum feedstocks were still evident through the The rise in joblessness has been widespread end of June in items such as plastics and rubber among demographic and occupational groups, products, industrial chemicals, and household with especially large increases reported among supplies. Moreover, a number of factors—in­ adult males. Since December, the jobless rate cluding the latest increases in OPEC prices, the among men has climbed almost 272 percentage curtailment of gasoline production, and the pro­ points, compared with an increase of 3U percent­ gressive decontrol of crude oil prices—suggest age point for adult women, and June marked the that further relief in the energy area is not to be first time in two decades that the rate for men expected. was higher than that for women. Unemployment Food prices generally have exerted a moder­ among blue-collar workers rose sharply to an ating influence on aggregate price measures since IIV2 percent rate in June, the highest since Sep­ the beginning of the year. At the producer level, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

540 Federal Reserve Bulletin □ July 1980 finished food prices fell at about a Alh percent around the end of the first quarter. These in­ annual rate between December and June. Steep creases were largely reversed in the second quar­ drops in wholesale prices through May—particu­ ter amid a substantial downslide in economic ac­ larly for livestock—alleviated cost pressures at tivity and contracting demands for money and the retail level, contributing to relatively stable credit. The upward pressure on yields at the turn retail food prices since the end of last year. How­ of the year resulted from a combination of fac­ ever, recent developments in the markets for tors, including a deterioration in inflationary ex­ livestock and fresh produce indicate that food pectations as actual price increases accelerated prices also are likely to rise more rapidly in the in January and February, the failure of incoming second half of the year. data to confirm the long-anticipated downturn in Inflationary pressures have persisted in sec­ activity, and international political developments tors outside food and energy since the beginning that raised the likelihood of an increase in federal of the year. In the consumer price index, increas­ deficit spending. In February, moreover, growth es in the homeownership component have been in money and credit surged, creating demands particularly large, as the measures of mortgage for bank reserves well in excess of the provision rates and home purchase prices both advanced of nonborrowed reserves consistent with the rapidly in the first half of this year; the recent Federal Reserve’s target ranges for growth in the easing of mortgage rates will likely hold down in­ monetary aggregates. In the Treasury bill mar­ creases in the consumer price index during the ket, in particular, the resulting rise in short-term next few months. In the producer price index, interest rates was reinforced by large sales of prices of capital equipment accelerated in the securities by foreign institutions to finance inter­ first half of 1980 from the rapid pace of 1979. vention in foreign exchange markets. Labor cost pressures remained intense in the On March 14, the Board of Governors took ac­ first half of 1980, as compensation increases were tions of a temporary nature designed to reinforce substantial while productivity declined further. the effectiveness of the measures announced in Output per hour in the private nonfarm business October 1979 and thus to provide greater assur­ sector dropped at about a 1V2 percent annual rate ance that the monetary goals reported to the in the first quarter, after falling 2 percent over the Congress in February would be met. These ac­ preceding year. At the same time, hourly com­ tions, some of which were taken under the au­ pensation accelerated to a percent annual thority of the Credit Control Act as part of a IOV4 rate, so that the unit labor costs of nonfarm busi­ broad government effort aimed at reducing infla­ nesses rose at about an ll3/4 percent rate in the tionary pressures, included the following: (1) a first quarter. Preliminary data for the second special credit restraint program directed toward quarter suggest that unit labor costs continued to limiting the growth in loans to U.S. customers by rise rapidly, as productivity contracted further. commercial banks and finance companies to Although cyclical reductions in overtime and the ranges consistent with the monetary and credit changing employment mix may restrain the objectives of the Federal Reserve; (2) a special growth in total compensation somewhat in com­ deposit requirement for all types of lenders on ing months, wage demands are likely to remain increases in certain categories of consumer cred­ strong, especially in light of past increases in it; (3) an increase in the marginal reserve require­ consumer prices. Thus, upward pressures on ment on managed liabilities of large member unit labor costs will probably remain substantial banks and U.S. branches and agencies of large over the near term. foreign banks; (4) a special deposit requirement on increases in managed liabilities of large non­ member banks; (5) a special deposit requirement Financial Developments on increases in total assets of money market mu­ During the First Half of 1980 tual funds; and (6) a surcharge of 3 percentage points on frequent borrowing by large member Interest Rates. Market rates of interest moved banks from Federal Reserve Banks. sharply higher in the early months of 1980, ex­ These measures hastened the movement to­ ceeding previous record levels and peaking ward reduced credit availability already in train Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to Congress 541 at many lenders, and apparently increased the re­ markets, and the dollar’s foreign exchange value solve of consumers to curtail their use of credit. fell in the April to June period. Foreign and U.S. In subsequent weeks, incoming data revealed a monetary authorities intervened to moderate this substantial slackening in money and credit decline by making net purchases of dollars. Even growth to well within the Federal Reserve’s ob­ so, by the end of June earlier gains were entirely jectives. In light of these developments, the erased, and the weighted-average exchange val­ Board amended the special credit program: on ue of the dollar at midyear was little changed May 6 the 3-percentage-point surcharge on dis­ from its value at the beginning of the year. count borrowing by large banks was eliminated, and on May 22 special deposit requirements were Domestic Credit Flows. Net funds raised in reduced by half and the special credit restraint credit markets by domestic nonfinancial sectors guidelines were modified. On July 3 the final of the U.S. economy totaled a sizable $391 bil­ phaseout of the program was announced. lion at an annual rate in the first quarter of 1980, The rise in most interest rates came to a halt in but contracted sharply to an estimated $193 bil­ late March and early April, and yields began to lion in the second period. This exceptionally move down as demands for money and credit large decline in borrowing reflected in large part dropped abruptly in response to developing slack the recent sudden weakening in production and in the economy. Most private short-term rates sales activity; also, monetary restraint, supple­ fell 7 to 9 percentage points, to their lowest levels mented by the special policy actions of mid-March, since the spring of 1978. In long-term securities contributed to tauter credit terms and reduced markets, bond yields retraced most or all of the availability of funds at many lenders. increases recorded earlier in the year, as market In the private sector, the volume of funds participants appeared to have lowered their ex­ raised in the first quarter was greatly enlarged by pectations of inflation. The restraining posture of a surge in borrowing on the part of nonfinancial monetary and fiscal policy, as well as moderating business firms. Some of this increased borrowing rates of price increase in the cyclical downturn, reflected needs to finance growth in inventories has contributed to this improved outlook for and fixed capital outlays, as the gap between price changes. such expenditures and internally generated funds of nonfinancial corporations widened. But fears Foreign Exchange Markets and the Dollar. that unchecked inflation would lead to the impo­ Movements in U.S. interest rates greatly influ­ sition of credit controls and a consequent reduc­ enced fluctuations in the foreign exchange value tion in credit availability apparently led to a burst of the dollar over the first half of 1980. The dollar of anticipatory borrowing by firms as well. As a was in strong demand early in the year when result, corporations added substantially to their U.S. interest rates rose sharply. The growing holdings of liquid assets in the first quarter and perception by market participants of accelerating appear to have drawn down these holdings in inflation and worsening payments deficits abroad subsequent months. gave added impetus to the dollar’s rise over this As interest rates moved up rapidly early in the period, as did the announcement of credit control year, businesses concentrated their credit de­ measures on March 14. Authorities in a number mands in short- and intermediate-term markets, of foreign countries also moved to tighten mone­ with borrowing at banks and in the commercial pa­ tary conditions, but the resulting increase in per markets especially heavy. Corporate bond fi­ foreign interest rates lagged well behind that of nancing remained relatively low as businesses, U.S. rates. The strengthening in the foreign ex­ especially industrial firms, were reluctant to is­ change value of the dollar in February and March sue long-term debt at historically high yields. was moderated somewhat by substantial inter­ This pattern of corporate financing shifted dra­ vention activities by U.S. and foreign monetary matically, however, when interest rates dropped authorities. rapidly in the spring. Public offerings of longer- The peaking and subsequent steep decline in term corporate bonds accelerated to unprece­ U.S. interest rates in early April triggered heavy dented levels, with the proceeds from many of selling pressure on the dollar in international these issues being used to pay down bank debt. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

542 Federal Reserve Bulletin □ July 1980 After March, commercial banks—concerned activity of thrift institutions and pushed mort­ both about pressures on their earnings margins gage rates to record levels in March. Many as interest rates dropped and about meeting the would-be homebuyers were deterred by the high loan growth guidelines of the voluntary special cost of mortgage credit. More recently, lower credit restraint program—tended to discourage market interest rates have helped to reduce cost business borrowers. In particular, adjustments in pressures for thrift institutions and haye contrib­ the bank prime lending rate lagged substantially uted to a pickup in deposit flows. Sharp drops in behind downward movements in other market mortgage rates since early April and reports of rates, greatly increasing the relative cost of this some easing in nonrate terms suggest that lend­ source of financing. As a result of the relatively ing institutions have become more active in seek­ high cost of bank credit, coupled with a desire of ing mortgage loans since early June. But mort­ businesses to adjust their balance sheets follow­ gage rates remain high by historical standards, ing the heavy reliance on short-term debt in pre­ while demands for housing and housing credit vious months, business loans at banks con­ continue to be damped by a weak economy and tracted markedly in the second quarter. by the liquidity concerns of households; con­ Although commercial paper issuance by firms re­ sequently, mortgage commitment activity appar­ mained very large, total short- and intermediate- ently has remained relatively sluggish. term business credit demands in the second quar­ The Treasury borrowed heavily in credit mar­ ter moderated appreciably from the first-quarter kets in the first half to finance the combined defi­ pace. Late in the second quarter, the prime rate cits of the federal government and off-budget began to move down, narrowing the gap with agencies. Normal seasonal patterns in federal market rates somewhat; survey data, furthermore, cash flows associated with the timing of tax suggest that banks in May were making a large receipts led to a concentration of the Treasury’s share of short-term business loans at below-prime borrowing in the first three months of the year. interest rates. Although the first-quarter deficit was further In the household sector, consumers greatly re­ deepened this year by unusually large tax re­ duced their use of installment credit during the funds associated with overwithholding in 1979, first half. The large growth of consumer install­ the Treasury was able to even out its borrowing ment and mortgage debt in 1979—both in abso­ pattern somewhat by permitting its cash balance lute terms and in relation to disposable income— to drop over the first quarter and then rebuilding had produced a marked deterioration in house­ it in the second. hold liquidity. The combination of resulting In contrast to the federal sector, net borrowing heavy debt burdens, high interest rates, and, in by state and local governments dropped off in the some states, restrictive usury ceilings acted to first quarter but accelerated appreciably in the slow growth of installment credit in late 1979 and second. Many municipal governments postponed the first quarter of 1980. The volume of out­ or canceled scheduled bond issues early in the standing installment credit contracted in the sec­ year because of high interest rates; for some gov­ ond quarter as consumers curtailed ex­ ernmental units, these actions were necessitated penditures and repaid debt against a backdrop of by the rise of interest rates above statutory limi­ rapidly declining real incomes and rising tations. But the volume of tax-exempt financing unemployment. Credit-tightening measures by picked up considerably in the second quarter lenders after the announcement of the credit- when interest rates fell and many previously control package on March 14 and uncertainty on postponed bond issues were brought to market. the part of consumers about the effects of those The financing needs of state and local units gen­ controls contributed further to the reduction in erally increased over the first half in response to credit use. slower growth of revenues and a consequent Household borrowing in mortgage markets al­ widening of their operating deficits. Also, the vol­ so slowed considerably in the first half. Reduced ume of tax-exempt securities issued continued to deposit flows and pressures on earnings margins be boosted by offerings of mortgage revenue from rising costs of funds constrained the lending bonds, designed to finance single-family housing. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

543 Staff Studies The staffs of the Board of Governors of the Fed­ In all cases the analyses and conclusions set eral Reserve System and of the Federal Reserve forth are those of the authors and do not neces­ Banks undertake studies that cover a wide range sarily indicate concurrence by the Board of Gov­ of economic and financial subjects. In some in­ ernors, by the Federal Reserve Banks, or by the stances the Federal Reserve System finances members of their staffs. similar studies by members of the academic pro­ Single copies of the full text of each of the fession. studies or papers summarized in the B ulletin From time to time the results of studies that are available without charge. The list of Federal are of general interest to the professions and to Reserve Board publications at the back of each others are summarized—or they may be printed B ulletin includes a separate section entitled in full—in this section of the Federal Reserve “Staff Studies” that lists the studies that are cur­ B ulletin. rently available. Study Summary Foreign Ownership and the Perform ance of U.S. Banks James V. Houpt— Staff, Board of Governors Prepared in early 1980 and distributed to congressional committees in connection with legislation regarding foreign ownership of U.S. banks. Foreign ownership of U.S. banks has increased foreign parties and of U.S. banks that were significantly in recent years, and as a result has established by foreign banks. Because foreign become the focus of regulatory and congressio­ ownership is a more important issue with respect nal interest. That interest was greatly sharpened to acquisitions, the thrust of the paper is in that by the requests of the Hong Kong and Shanghai direction. The first part of the study provides a Banking Corporation and other foreign banking background by identifying the major concerns organizations to buy large U.S. banks. With the about foreign ownership and by placing the consummation of these acquisitions, foreign movement in perspective in the domestic bank­ ownership of U.S. banks has taken on entirely ing industry. The second part presents the results new dimensions. The assets of U.S. banks con­ of an empirical study comparing foreign-owned trolled by foreign parties almost doubled be­ U.S. banks with their U.S.-owned peers, as de­ tween year-end 1978 and year-end 1979, and ac­ fined by size and location. The study first com­ count for 4 percent of the assets of this country’s pares the balance-sheet structure and profitability domestic banking system (excluding the assets of of the two groups for the period preceding U.S. branches and agencies of foreign banks). foreign ownership and again at year-end 1978. Consequently, it is important to assess the im­ It then examines changes in the operations of pact of foreign ownership on the performance the two groups during the period of foreign of these banks. ownership. This study examines the growth and opera­ Several operational characteristics are exam­ tions both of existing U.S. banks acquired by ined, including the banks’ growth in assets, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

544 Federal Reserve Bulletin □ July 1980 loans, and deposits; their lending and funding owned U.S. banks with a performance record un­ practices; their investment policies; and their der the new owners, its findings should be re­ profitability. The differences found between the garded as tentative, given the necessarily small foreign-owned banks and their peers generally number of banks analyzed and their relatively reflected a continuation of pre-existing differences. short experience under foreign ownership. At the The only statistically significant difference be­ same time, the findings provide important in­ tween the two groups of banks during the period sights into the experience to date and give no in­ of foreign ownership appeared with respect to dication that the foreign-owned U.S. banks or the investment policies of the banks. their communities have suffered from the change While the study included virtually all foreign- in ownership. □ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

545 Industrial Production Released for publication July 16 further sharp decreases in the output of steel and parts for equipment and consumer durables. Industrial production dropped an estimated 2.4 Nondurable goods materials, which showed rela­ percent further in June, reflecting widespread re­ tive strength last year, were down 4.2 percent ductions in output of both products and materials. in June and have shown increasingly sharp re­ This decline follows revised decreases of 2.4 per­ ductions in output since February. Production cent in May and 2.2 percent in April. At 141.2 in the textiles, paper, and chemical group de­ percent of the 1967 average, the production in­ clined more than 4 percent in June. Output of dex in June was 7.7 percent below its peak in energy materials also was reduced further. March 1979. Output of durable consumer goods decreased Seasonally adjusted, ratio scale, 1967=100 0.9 percent in June after declines of more than 5 percent in each of the two preceding months. The smaller overall decline was the result mainly of an increase in auto assemblies from their ex­ tremely low level in May; there were continued sharp reductions in most other consumer goods industries. Auto assemblies rose about 7 percent to an annual rate of 5.9 million units in June, but output of utility vehicles (mainly lightweight trucks) continued to decline. Production of goods for the home, such as furniture and appliances, declined 3.1 percent further, and output of non­ durable consumer goods was reduced 0.9 percent. Output of business equipment declined 2.3 percent in June, more than twice as much as in May, reflecting cutbacks in almost all equipment industries. Output of construction supplies was reduced 4.5 percent, bringing this component to a level about 18.2 percent below a year earlier. Production of durable goods materials was 1974 1976 1978 1980 1974 1976 1978 1980 Federal Reserve indexes, seasonally adjusted. Latest figures: June. again reduced almost 4 percent, largely reflecting Auto sales and stocks include imports. 1967 == 100 Percentage change from preceding month Percentage change Grouping 1980 1980 June 1979 to Mayp June6 Jan. Feb. Mar. Apr. May June June 1980 Total industrial production ........... 144.7 141.2 .3 -.2 -.4 -2.2 -2.4 -2.4 -7.5 Products, total .............................. 143.6 141.2 .2 -.1 -.4 -1.9 -1.9 -1.7 -6.0 Final products .......................... 142.7 140.8 .0 .3 -.2 -1.4 -1.6 -1.3 -4.6 Consumer goods ................... 141.9 140.6 -.2 .2 -.5 -2.0 -2.1 -.9 -7.4 Durable .............................. 129.4 128.2 -2.9 1.5 -.3 -5.1 -5.3 -.9 -19.2 Nondurable ........................ 146.8 145.5 .9 -.3 -.5 -.7 -1.0 -.9 -2.4 Business equipment .............. 172.3 168.3 .5 .5 .1 -.9 -1.1 -2.3 -1.9 Intermediate products .............. 146.8 142.3 .6 -.9 -1.0 -3.9 -3.1 -3.1 -10.8 Construction supplies ........... 134.6 128.5 .3 -1.3 -1.2 -7.3 -4.7 -4.5 -17.8 Materials ....................................... 146.4 141.3 .3 -.5 -.3 -2.7 -3.2 -3.5 -9.7 p Preliminary. e Estimated. Note. Indexes are seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

547 Statements to Congress Statement by Lyle E. Gramley, Member, Board rect, guaranteed, and sponsored—will increase of Governors of the Federal Reserve System, be­ more than $70 billion during fiscal year 1981. fore the Special Subcommittee on Control of If total credit flows in the coming year turn out to Federal Credit of the Senate Budget Committee, be roughly the same as in the past year, funds June 19, 1980. raised under federal credit assistance will ac­ count for more than one-sixth of the total net Mr. Chairman and members of this special sub­ funds raised in financial markets. committee on federal credit, I am pleased to be The widening in the range of economic activi­ here today to discuss measures to improve con­ ties sponsored by guaranteed loans has been par­ trol over federally assisted credit programs. ticularly notable. In the late 1950s, the home The need for more adequate budget treatment mortgage guarantee programs of the Federal and control of these activities has long been rec­ Housing Administration and the Veterans Ad­ ognized. Both the 1963 Report of the President's ministration accounted for 90 percent of the total Committee on Federal Credit Programs and the volume of guaranteed and insured loans out­ 1967 Report of the President’s Commission on standing. This proportion has since trended Budget Concepts called for reforms in the bud­ down, reaching 68 percent last year, mainly be­ getary treatment of federal credit. Until recently, cause of an expansion of loan guarantees into however, little progress was evident. In particu­ new areas—such as military sales, rural elec­ lar, the Congressional Budget Act of 1974 specif­ trification, and student loans. ically exempted loan guarantees from the budget The provision of federal credit assistance process and did not develop a comprehensive through direct loans and loan guarantees to framework for evaluating these activities. It was achieve particular social and economic objec­ therefore especially heartening that the adminis­ tives has been widely recognized as a legitimate tration recommended a new budgetary frame­ and valuable activity. Many credit programs work for controlling federal credit programs in its originally were established to correct imperfec­ 1981 budget and that the Congress has incorpo­ tions in capital markets that denied credit to rated a new federal credit budget into its First some groups or made its cost prohibitive. For ex­ Concurrent Resolution. ample, the loan programs insured by the Federal As you know, federal credit programs have ex­ Housing Administration were devised during the panded enormously, both in amount and in Great Depression to reduce the risks perceived scope. Direct loans and loan guarantees out­ by lenders. By pooling risks across a large num­ standing, for example, are projected to total ber of loans issued in a standardized fashion, the more than $425 billion in the fiscal year ending government program encouraged private lenders September 30. This is nearly triple the $164 bil­ to advance credit at a lower cost to borrowers lion level reached just 10 years ago. In addition, and on less restrictive terms than would other­ loans held by government-sponsored agencies wise have been possible. As a result, private in­ now are projected to be $176 billion at the end of dividuals were able to finance the purchase of fiscal year 1980, up $17 billion from the year be­ homes on terms involving more reasonable inter­ fore and more than four times the level of 10 est charges, more liberal loan-to-value ratios, years earlier. Federal credit activities, moreover, and longer maturities than before. Over time, are projected to continue growing rapidly in the these more liberal terms gained general accept­ years ahead. The administration forecasts that ance among all types of private lenders. net credit advanced under federal auspices—di­ Many other federal credit assistance programs Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

548 Federal Reserve Bulletin □ July 1980 have been introduced over the years to foster so­ thereby transfer command over resources from cial objectives. Increasingly, these programs the private to the public sector. The degree of have involved substantial interest subsidies. Ac­ such displacement depends on the extent to cording to estimates of the Office of Management which the economy’s real resources are being and Budget, the present value of the interest sub­ utilized and on conditions in credit markets. Dur­ sidy on new direct loan obligations and com­ ing recessionary periods, when credit supplies mitments to guarantee loans in fiscal 1981 will are readily available, credit assistance programs amount to almost $30 billion. In contrast to the may help promote a more intensive use of re­ home mortgage area, moreover, the default rate sources and an expansion in the level of econom­ in some of these programs—such as student ic activity. In this instance, the principal effect of loans and assistance for low-income housing— the increase in expenditures made possible by has been comparatively high. Thus, the govern­ the federal credit activity is likely to be an in­ ment has had to absorb sizable default losses in crease in aggregate demand rather than a redistri­ addition to providing a very large interest rate bution of resource use. On the other hand, when subsidy to borrowers. In the past few years, the little excess capacity exists in the economy and federal government has also guaranteed sizable credit supplies are tight, there is a much stronger loans to single borrowers that carry a large po­ tendency for credit extended under federal aus­ tential for default. pices to raise interest rates and to divert loanable funds, and therefore real resources, away from private producers. Moreover, when such pro­ Purposes of Controls over grams create additional demands on limited re­ Federal Credit Programs sources, they also add to pressures on prices. It would, however, be potentially misleading Improvement in the budgetary treatment of fed­ in a discussion of the crowding-out problem to eral credit programs should seek to achieve sev­ focus simply on the cyclical condition of the eral interrelated purposes. economy. The long-run potential for the diver­ First, it should encourage recognition by the sion of resources from private to public uses Congress and the public that resources used in stemming from federal credit programs is a seri­ programs financed by federal credit activities ous problem. may have been shifted away from more produc­ In recent years, the performance of productiv­ tive uses. In setting annual credit targets, the ity in our economy has been dismal. We do not Congress must not lose sight of the long-run con­ know all the reasons why, and that will limit our sequences resulting from such a shift in resource ability to deal effectively with the problem. We use. do know, however, that a substantial increase in Second, it should identify when possible the the share of national output will have to be de­ costs entailed in federal credit activities. These voted to capital formation if we are to have much costs include not only the interest subsidies, the hope of increasing the rate of advance in produc­ administrative expenses, and the default losses, tivity. Since the need for additional capital to but also the loss in public welfare that occurs deal with out nation’s energy and environmental when federal credit programs are expanded be­ problems will also be large, it will be critical to yond socially desirable and efficient levels. adopt tax and expenditure policies that free up Third, it should focus attention on the macro- resources—real resources as well as financial re­ economic effects of federal credit activities—on sources—to make that possible. employment and output, on prices, and on devel­ The need for a higher rate of business capital opments in credit markets. Information that formation is critical to the long-run health of our helps to assess these effects is, of course, espe­ economy. Holding down the share of gross na­ cially important to the Federal Reserve in its for­ tional product devoted to federal expenditures mulation of monetary policy. will contribute importantly to that effort. So also It has long been recognized that federal bor­ will the orientation of future tax cuts toward rowing can “crowd out” private borrowers—and business investment incentives. But these efforts Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 549 may go for naught if we do not control carefully charges vary with market rates of interest; more­ the share of national resources absorbed by fed­ over, increases in the quantity of credit available eral credit programs. from federal sources seldom are large enough to One of the problems that has impeded the de­ offset completely the declines in the quantity velopment of better budgetary treatment of feder­ available from private sources. It is true, none­ al credit programs is the lack of a good analytic theless, that assuring larger numbers of borrow­ framework in which to assess the economic ef­ ers ready access to credit requires higher interest fects of these programs. Some federal credit pro­ rates to achieve a given degree of monetary re­ grams affect the economy much like direct feder­ straint. This is one more reason for putting limits al expenditures. Loan guarantees for low-income on how fast federal credit programs can expand. housing and foreign military assistance are the most obvious examples. Others provide only marginally lower interest rates, or marginally Suggestions for Improvement better nonprice credit terms, to borrowers whose in the Budgetar y Treatment of credit needs otherwise would probably have Credit Programs been met by the private financial market. These differing effects, moreover, do not bear any nec­ Let me turn now to a few suggestions on ways to essary relation to whether credit is supplied sharpen the focus on the effects of federal credit through direct loans or loan guarantees. programs. Since research in the area of federal credit pro­ First, procedures should be developed that grams has barely begun, what appears extremely would permit policymakers to determine the complex today may appear more simple tomor­ tradeoffs between accomplishing social objec­ row. I suspect, however, that the problems we tives through direct outlays, on the one hand, face in this regard stem from the diverse nature and through federal credit programs on the other. of these credit programs. If so, we will have to be Similar criteria need to be developed to provide satisfied with statistical measures and budgetary guidance for choosing between giving credit as­ solutions for dealing with federal credit programs sistance through direct loans or giving credit that are inherently less than fully satisfactory. assistance through loan guarantees. For example, the proportion of total borrowing Second, further consideration might be given in financial markets that is federally assisted can to ways of controlling net as well as gross lend­ be used as an indicator of credit resources whose ing. The present credit limits apply to gross direction is governed by federal lending pro­ loans; that is, I believe, the appropriate place to grams. Similarly, the share of GNP accounted begin. Gross lending and guarantee activities re­ for by the total of federal expenditures plus cred­ flect the current scope of various programs, thus it activities is a rough measure of the proportion indicating the overall support being given to a of real resources whose use is directed by the sector by the federal government. On the other federal government. hand, the net change in such programs deter­ Summary measures such as these have inher­ mines the current impact of federal credit activi­ ent weaknesses because they add up things that ties on economic and financial market condi­ are really very different. But they are better than tions. So perhaps we ought to seek to limit the nothing. net, as well as the gross, increase in federal cred­ Your committee is rightly concerned about the it extensions. potential problems that federal credit programs Third, the budgetary treatment of nonrecourse may create for monetary policy. It is sometimes loans—such as those made by the Commodity argued that expansion in federal credit programs Credit Corporation to farmers—should be stud­ during periods of monetary restraint might frus­ ied in greater detail. Since nonrecourse loans trate the achievement of the objectives of mone­ need not be repaid, it is not clear whether these tary policy by insulating some borrower groups transactions should be treated as outlays or as from the discipline of the marketplace. For most loans at the time the funds are disbursed. federal credit programs, however, interest Fourth, the accounting treatment of loans Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

550 Federal Reserve Bulletin □ July 1980 made through the Federal Financing Bank, To satisfy this requirement the Congress should (FFB) could be further improved. FFB activities consider establishing a credit control office with­ in the past have reduced the accountability of in the Congressional Budget Office in order to federal credit programs because lending activi­ provide the Congress with detailed technical data ties typically have been attributed only to the on the costs and benefits of federal credit pro­ FFB rather than to the agency originating the grams and with up-to-date reports on federal transaction. The new budget rectifies a large part credit activities. These reports also would in­ of this difficulty by attributing FFB outlays to the clude a credit information system that encom­ originating agencies (within the FFB account) passes total federal lending activity by budget and by establishing limitations on the absolute function and by economic sector. Ideally, such a amount of credit—direct and guaranteed—that system would provide information that highlights can be financed by an agency in a given year. The the federal government’s total involvement in, and attribution process, however, is not yet complete assistance to, sectors in the form of direct out­ because the combined total of outlays and direct lays, direct loans, and loan guarantees. and guaranteed loans never appears in a consoli­ To sum up, the Board of Governors welcomes dated statement by function and agency. If this the progress that has been made in establishing a final step were taken, the unified budget accounts credit budget. It will improve our ability to eval­ would provide a more complete picture of the uate and control federal credit activities and en­ federal government’s support for particular pro­ hance the long-run prospects for increased pri­ grams and activities. vate capital formation. We will be happy to Finally, if the control system established by provide whatever assistance we can in refining the Congress is to be successful, it must be ac­ further the procedures for dealing with federal companied by a detailed scorekeeping system. credit programs in the budget. □ Statement by Henry C. Wallich, Member, Board ganization accords, I believe, with the thrust of of Governors of the Federal Reserve System, be­ the questions contained in your letter. fore the Subcommittee on Commerce, Consumer and Monetary Affairs of the Committee on Gov­ ernment Operations, U.S. House of Representa­ N onbanking Prohibitions of the tives, June 25, 1980. Bank H olding Company A ct Mr. Chairman, I am here today in response to The public policy in the United States that seeks your request for the views of the Board of Gover­ to maintain a general separation between bank­ nors of the Federal Reserve System about the ing and commerce is of very long standing. The nonbanking activities of foreign bank holding reasons for this policy are grounded in the eco­ companies. The questions you raise touch on nomic and social history of the country. A major some fundamental issues and I welcome the op­ concern has always been the fear of undue con­ portunity to address them. centration of economic power that might result In this statement, I shall direct my remarks to from bank control of commercial enterprises. A (1) the nature and public policy rationale of the somewhat related concern has been about unfair nonbanking prohibitions of the Bank Holding competition that might result from some firms Company Act; (2) the public policy reasons for being allied with banks and having access to the exemptions from these prohibitions that the credit and other financial services on terms not act provides for foreign bank holding companies; available to unaffiliated competitors. Still anoth­ and (3) the Federal Reserve’s interpretations er concern has been about possible conflicts of and administration of those exemptions. This or­ interest between a bank’s fiduciary responsibility Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 551 to its depositors and its own economic interests concerned with the structure of banking in this deriving from ownership of nonbanking firms. country. That concern is directed to the sound­ The tradition of separating banking and com­ ness of U.S. banking organizations and to the merce and the concerns underlying that tradition relationship of those organizations to other sec­ are so deeply ingrained in the public conscience tors of the U.S. economy. The domestic orienta­ as to make further elaboration unnecessary. In­ tion of that concern is clearly implicit in the lan­ deed, because of the strength of the tradition, I guage of section 4(c)(8). The Board is to follow a doubt that there has been much fundamental re­ two-step process in determining whether a par­ thinking of the continuing validity of the concept ticular activity should be permitted: first, it must in today’s circumstances. find that the activity is “closely related to bank­ In any event, because of this public policy, ing;” and second, it is required to find that the banks in general have been prevented by law resulting public benefits outweigh possible ad­ from holding ownership interests in commercial verse effects “such as undue concentration of re­ enterprises. Only limited exceptions have been sources, decreased or unfair competition, con­ allowed. The policy of separating banking and flicts of interests, or unsound banking prac­ commerce was clearly one of the cornerstones of tices.” These effects are primarily domestic in the bank holding company legislation in 1956 and character. again in 1970. In the latter instance, the debate was not about whether bank holding companies should be permitted to engage in nonfinancial Foreign Considerations in business; rather, it centered on the kinds of fi­ U.S. Banking Regulation nancial business in which bank holding com­ panies might be permitted to engage as ancillary I should now like to turn to some of the ways in to their banking business. which integration of the world economy has af­ The Bank Holding Company Act, as amended fected U.S. banking regulation. As part of that in 1970, prohibits bank holding companies from general phenomenon, U.S. banks over the past holding the shares of any company that is not a quarter century have spread their facilities and bank, with a limited number of exceptions. activities around the globe; they can now be These exceptions include shares of any compa­ found operating in a wide variety of countries ny so long as the ownership interest is less than 5 and providing banking and financial services un­ percent; shares in which national banks may by der a wide range of economic and social condi­ statute invest; shares held in a fiduciary capacity; tions. In more recent years, foreign banks have shares acquired in satisfaction of debts pre­ increasingly come to the United States to carry viously contracted; and shares of premises and on part of their international operations. Foreign of other companies that provide operating serv­ banks in this country now number about 150; ices for subsidiary banks. The central exception many of them operate branches, agencies, and to the general prohibition is contained in sec­ subsidiary banks in several states. tion 4(c)(8) of the act; that section conferred on These mutual incursions into national terri­ the Board the ability to determine which activi­ tories inevitably lead to potential conflicts of ties are closely related to banking and thus to al­ laws and of national policies. Banks from dif­ low bank holding companies to invest in com­ ferent national jurisdictions are subject to dif­ panies engaged in those activities. That ferent laws, rules, and traditions: some may be exception has been the most significant for the subject to different capital standards; some may development of the bank holding company be primarily government owned; and their pow­ movement and has been the one most sur­ ers will certainly vary. Accommodations and ad­ rounded by controversy. Finally, there were spe­ justments, both here and abroad, are necessary if cific exceptions relating to foreign activity, the benefits of a multinational banking system which I shall describe shortly. are to be obtained. Very often these accommoda­ The essence of the restrictions on nonbanking tions require careful and sensitive attention. activities is that these restrictions are basically The need for this kind of accommodation is Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

552 Federal Reserve Bulletin □ July 1980 clearly recognized in the bank holding company December 1971. In adopting these rules, the legislation. Whenever the Congress has consid­ Board followed the required procedures of pub­ ered such legislation it has been mindful that pro­ lishing proposals for public comment and then visions directed at domestic banking conditions reviewing those comments before adopting a fi­ might have unintended and unnecessary extra­ nal rule. territorial effects and has made special legislative These rules first defined the foreign bank hold­ provisions to that end. Two exemptions from the ing companies to which the exemption would ap­ nonbanking prohibitions of the act have been ply as those companies “organized under the specifically tailored for the special circumstances laws of a foreign country, more than half of of foreign banking organizations; they are con­ whose consolidated assets are located, or consol­ tained in section 2(h) and section 4(c)(9) of the idated revenues derived, outside the United act. In addition, the Congress provided a specific States.” At the time, this seemed a reasonable exemption for the foreign activities of domestic measure to assure that the companies affected bank holding companies in section 4(c)(13) of the were foreign in fact, as well as in name. The rules act. then went on to exempt (1) all activities con­ Turning to the exemptions for foreign banking ducted outside the United States, (2) activities organizations, section 2(h) of the act dates from conducted inside the United States incidental to 1966. As adopted, the section exempted from the international and foreign business, (3) ownership nonbanking prohibitions of section 4 of the act of companies principally engaged in the United “the shares of any company organized under the States in financing or facilitating international or laws of a foreign country that does not do any foreign transactions, and (4) ownership of up to business within the United States” if the shares 25 percent of the shares of any foreign company are owned by a bank holding company “princi­ more than half of whose assets are located or pally engaged in the banking business outside the revenues derived outside the United States. United States.” This exemption clearly indicated The first of these regulatory exemptions sim­ that the Congress had no intention of restricting ply extended the statutory exemption contained nonbanking activities by foreign banks when in section 2(h) to all foreign bank holding com­ such activities were conducted exclusively out­ panies whose activities were mainly outside the side the United States. United States and not just to those principally Section 4(c)(9) was added to the act in 1970. It engaged in banking outside the United States. authorizes the Board to exempt “shares held or The second exemption was rather limited since it activities conducted by any company organized permitted only “incidental” activities, by which under the laws of a foreign country the greater the Board means those having a direct and clear­ part of whose business is conducted outside the ly demonstrable relationship to international United States” upon a determination that the ex­ business. The third exemption was framed to emption “would not be substantially at variance permit the ownership of New York investment with the purposes of the act and would be in the companies by foreign banks; these companies public interest.” When this exemption was pro­ are in effect incorporated agencies of foreign posed, it was supported by the Board. Chairman banks in New York. The fourth exemption took Burns stated in Senate testimony: “We do not cognizance of the fact that in a number of foreign believe Congress intended the act to be applied countries banks are permitted to make portfolio in such a way as to impose our ideas of banking investments in nonbanking firms and that these on other countries. To do so might invite foreign firms in turn might have operations in the United retaliation against our banks operating abroad, to States. In addition to these general exemptions, the detriment of the United States.” provision was made for other activities and in­ As written, section 2(h) was essentially self- vestments to be allowed upon application to and administering and the Board issued no regula­ approval by the Board. tions to implement it. Section 4(c)(9), on the oth­ I noted earlier that the 1970 amendments to the er hand, was much more generally drawn and the act also contained an exemption for the foreign Board adopted rules implementing that section in activities of domestic bank holding companies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 553 That exemption applies to shares or activities of permitted under section 4(c)(8). The latter may companies doing no business in the United be conducted only in accordance with the States except as an incident to international or Board’s rules, including prior approval when foreign business if the Board concludes that an necessary. The statutory amendment does not exemption would not be “substantially at vari­ specify what is meant by being in the “same gen­ ance with the purposes of this act and would be eral line of business” but the Senate report on in the public interest.” This exemption paralleled the act suggested that the four-digit code of the provisions of law governing Edge corpora­ the standard industrial classification (SIC) be tions; the provisions allow the corporations to used for this purpose. conduct activities in the United States only to the By this amendment, the Congress again reaf­ extent that these activities are incidental to inter­ firmed its unwillingness to interfere with the non­ national or foreign business. No statutory re­ banking activities that foreign banking organiza­ strictions are placed on the kinds of activities in tions engage in abroad; in one sense the foreign countries that Edge corporations may en­ amendment enlarged the U.S.-connected activi­ gage in. However, the Board in regulating Edge ties that may be conducted by foreign companies corporations has, as a matter of policy, not al­ in which foreign bank holding companies have an lowed them to acquire controlling interests in ownership interest. The amendment has raised a foreign nonfinancial businesses. This policy has number of issues in connection with its regula­ been followed because of prudential concerns for tory implementation and with its relationship to the corporation and their parent banks. the existing rules under section 4(c)(9) of the act. The International Banking Act of 1978 made The Board recently considered these issues and two significant alterations in this legislative has now published proposed regulations for pub­ scheme. First, it subjected foreign banks oper­ lic comment, a copy of which is being submitted ating branches and agencies in this country to the for the record as part of this statement.1 nonbanking prohibitions of the Bank Holding As the explanatory material accompanying the Company Act, thereby greatly increasing the proposed rules makes clear, the Board had to re­ number of institutions to which those prohibi­ solve two general issues in implementing sec­ tions apply. Secondly, it revised the exemption tions 2(h) and 4(c)(9) of the Bank Holding Com­ contained in section 2(h) of the act. pany Act: (1) a determination of the kinds of When the International Banking Act legisla­ organizations that can qualify for these exemp­ tion was under consideration, a number of for­ tions from the nonbanking prohibitions; and (2) a eign banks became aware that the nonbanking determination of the standards to be applied in prohibitions would apply to them for the first exempting certain nonbanking activities in the time and expressed concern about the extra­ United States on the grounds that they are in the territorial reach of those prohibitions. They were same general line of business as the foreign not convinced that the Board’s authority to make parent. exemptions on a case-by-case basis under sec­ With respect to the first of these issues, the tion 4(c)(9) of the act would provide sufficient Board believes that foreign organizations con­ protection to what they thought was their legiti­ ducting a banking business in the United States mate business abroad. As a consequence, they should themselves be substantial banking organi­ sought a legislative solution. Section 2(h) was zations abroad. In this way, the U.S. banking op­ modified to meet these concerns and it now pro­ erations will benefit from financial and manage­ vides that a foreign bank holding company may rial expertise necessary to conduct a banking own shares in any foreign company, principally business in a safe and sound manner. Reflecting engaged in business outside the United States, this belief and the specific language of section which owns shares in a U.S. company so long as the latter is in the same general line of business. This exemption does not extend to companies 1. The attachments to this statement are available on engaged in the securities business in the United request from Publications Services, Board of Governors States nor does it apply to activities of the kind of the Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

554 Federal Reserve Bulletin □ July 1980 2(h), the Board’s proposals would limit the avail­ eign bank holding companies from the non­ ability of these exemptions only to foreign organ­ banking prohibitions of the act has been deter­ izations that are principally engaged in the bank­ mined by the Congress. The rules adopted by the ing business abroad. More specifically, in order Board have sought to implement that policy in to qualify, an organization would have to (1) be keeping with congressional intent, as expressed chartered under foreign law and have its non- in the language of the statute and in the debates U.S. assets or revenues exceed its U.S. assets or underlying the legislation. revenues, (2) have its banking assets or revenues The Board generally supports the concept that exceed its nonbanking assets or revenues, and activities of an essentially foreign character (3) have its banking assets or revenues outside should not be disturbed by U.S. laws and regula­ the United States be larger than its banking as­ tions unless they directly and significantly affect sets or revenues inside the United States. These U.S. institutions and policies. Relationships be­ tests would be made on a consolidated basis. tween foreign banks and nonbanking activities in With respect to the second of these issues, the foreign countries affect the structure and func­ Board proposals follow the legislative guidance tioning of foreign economies and financial mar­ provided by the Senate Banking Committee in its kets, which are not the responsibility of the U.S. report on the International Banking Act. In order government or its bank supervisory agencies. So to be exempt, nonfinancial activities in the long as those foreign relationships do not do vio­ United States would have to be of the same kind lence to the objectives of the Bank Holding Com­ as those of its foreign nonbank parent as defined pany Act relating to the structure and conduct of by the four-digit code of the SIC. The four-digit banking in this country, it is sensible public pol­ classification is a fairly narrow one. For ex­ icy in today’s world to make an accommodation ample, a foreign banking organization has a sub­ to the realities of the way in which international sidiary that manufactures automobiles abroad; banking is conducted. using the SIC as a guide, that foreign automobile I do not believe that accommodations of this manufacturer could invest in a company in the kind are inconsistent with the principle of nation­ United States that also manufactures or assem­ al treatment. The heart of that principle is that, bles automobiles but not in companies that man­ within national boundaries, activities conducted ufacture, say, tires or motorcycles. The Board by comparable institutions will be essentially believes that this is a reasonable way to imple­ treated alike. The International Banking Act of ment congressional intent but has specifically 1978 sought to accomplish this with respect to asked for comments on the use of this test. U.S. operations of foreign banking organiza­ Financial activities in the United States, on the tions. The fact that those organizations may con­ other hand, would not be exempt under the pro­ duct nonbanking activities abroad of the kinds posal unless they were of the kind permitted un­ not permitted U.S. banking organizations, either der 4(c)(8) of the act. This requirement would as­ domestically or abroad, does not violate that sure that foreign organizations would be treated principle. The concern and responsibility of the the same as domestic organizations with respect Federal Reserve and other U.S. banking to their U.S. banking activities and other activi­ agencies run to the promotion of safe and sound ties closely related to banking. domestic institutions. With regard to foreign These are the main features of the Board’s pro­ banks, our responsibility is related to that part of posed rules. Further details and justification may their banking business conducted in this country be found in the explanatory material accom­ and is not directly concerned with the parent in­ panying the proposal. stitution headquartered overseas. In your letter, Mr. Chairman, you asked how the position of nonbanking activities of foreign Concluding Comments bank holding companies applies to the Hong Kong and Shanghai Banking Corporation. I be­ To conclude, Mr. Chairman, the basic policy of lieve that Chairman Volcker’s letter to you of exempting foreign nonbanking activities of for­ January 14, 1980, addresses that question. I have Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 555 appended that letter to my statement and ask that which there can be only temporary and imperfect it be included in the record. solutions. In closing, I should like to reiterate my belief The dynamics of the situation call for con­ that the questions you have raised are important tinuous reappraisals and adjustments. These ones. The problem of accommodating our na­ will certainly be necessary as international bank­ tional policies and objectives to the realities of an ing evolves and as the role of foreign banks in the increasingly integrated world economy is one for U.S. economy continues to change. □ Statement by J. Charles Partee, Member, Board The Board consistently has opposed this of Governors of the Federal Reserve System, be­ bill because it seems to be anticompetitive and fore the Committee on Banking, Housing, and discriminatory. Many creditors, including fi­ Urban Affairs, U.S. Senate, July 1, 1980. nance companies and retailers, are permitted to sell insurance in connection with their credit- I am glad to appear today before this committee granting activities, but the proposed prohibitions to present the views of the Federal Reserve would apply only to bank holding companies. In Board on two banking bills that have been the this respect the bill clearly discriminates against subject of much attention and previous debate. customers of bank holding companies because One bill would limit the insurance activities of the finance company, retail, and other sectors bank holding companies. The other would sub­ would remain free to offer property and casualty ject acquisitions of banking organizations to insurance. The bill also may be misdirected, stricter standards than in the present antitrust since the available evidence suggests that any laws and would tighten the rules for expansion abuses are more likely to occur among nonbank into nonbanking activities by bank holding com­ lenders than among bank lenders. The evidence panies. clearly indicates a similar inconsistency in that The proposed H.R. 2255 would prohibit the potential abuses associated with the joint offering sale of credit-related property and casualty insur­ of credit and insurance are more likely to occur ance by bank holding companies with consoli­ in the sale of credit life than in the property and dated assets in excess of $50 million, with the fol­ casualty field. Yet the proposed legislation allows lowing exceptions: credit insurance but prohibits the sale of credit- 1. The sale of credit life, personal accident, related property and casualty insurance. and health insurance. The various exemptions also seem inconsis­ 2. The sale by finance company subsidiaries of tent with the purposes of the proposed bill and bank holding companies of property and casualty would appear to compound the inequities. The insurance on property used as collateral for a Board opposes both the $50-million-asset-size ex­ loan of $10,000 or less, indexed to future increas­ emption and the $ 10,000-transaction exemption es in the consumer price index. for subsidiary finance companies. Permitting a 3. The sale of general insurance in places of bank holding company or its subsidiary to engage 5,000 population or less, or where the Board de­ in an activity solely because of the asset size of termines that insurance agency facilities are in­ the bank holding company or the size of the adequate. transaction involved are not relevant criteria to 4. The sale of insurance pursuant to certain determining whether an activity is “closely re­ limited “grandfather” rights for organizations lated” to banking. By employing such a standard engaged in the activity before June 6, 1978, and a the Congress would be abandoning some well-es­ limited authority to continue to act as “managing tablished criteria that have been developed over general agents” with respect to insurance on real the years by the courts and have come to be rec­ and personal property and group life insurance ognized as appropriate for determining whether a for the banking organization or its employees. nonbanking activity is “closely related” to bank­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

556 Federal Reserve Bulletin □ July 1980 ing within the meaning of section 4(c)(8) of the closely regulated expansion by banking organiza­ act.1 In addition, the effect of the $50-million-as- tions. set-size exemption would be to permit expanded First, there has been a noticeable trend to­ sales of insurance by small bank holding com­ ward deconcentration of domestic banking re­ panies. The majority of these companies are lo­ sources at the national level, as well as in many cated in relatively concentrated markets where states and local markets. Most of the growth that the potential for abuse is greatest because market generated concern about increased concentra­ power is generally related to the relative rather tion in U.S. banking actually took place in the than the absolute size of the organizations in foreign sector. This growth masked the trend to­ such markets. The effect of lifting constraints on ward deconcentration of domestic banking assets the scope of insurance agency activities for small while it actually represented an improvement in bank holding companies and exempting finance the competitive position of U.S. banking organi­ company transactions of less than $10,000 prob­ zations in foreign markets. ably would be to increase the volume of insur­ Second, expansion of bank holding companies ance sold by holding companies. In fact, more in the nonbanking area has been strictly con­ than 60 percent of all bank holding companies trolled. Only those activities that are closely re­ would be able to expand the scope and volume of lated to banking and are a proper incident thereto their activities to include transactions clearly un­ have been authorized, and expansion has been related to banking. Such an occurrence appears mainly de novo rather than by acquisition of directly contradictory to the intent of the bill. existing organizations. This form of expansion The Board’s view continues to be that banking has been procompetitive and, on balance, has organizations should be allowed to sell credit-re­ brought benefits to the public. In our judgment, lated insurance, including property and casualty the flexibility of the present regulatory system insurance, to protect loan collateral. There are serves the nation well and will continue to pro­ several reasons to believe that the benefits of vide an appropriate regulatory framework for ex­ such activity outweigh the possible adverse ef­ pansion of the financial sector. fects. First, permitting banks and bank holding I might add that passage of the Depository In­ companies to provide these services is likely to stitutions Deregulation and Monetary Control be procompetitive. Second, sales of insurance by Act of 1980 has the potential for enhancing the subsidiary banks provide a useful and conve­ competitive structure of banking markets for nient service to the public, including sales at lo­ many financial services, for both depositors and cations that may be poorly served by others. Pro­ loan customers. Its passage should further alle­ hibiting the activity for larger banking organiza­ viate many of the concerns about concentration tions would surely inconvenience at least some reflected in S. 39, and the increased competition of the public—namely those borrowers who in banking markets that will result should act as would be forced by the prohibition to look else­ an additional deterrent to potential abuses of where for the needed insurance coverage. market power. Before commenting on specific provisions of The appendix to my testimony sets forth the S. 39, the Competition in Banking Act of 1979, positions of the Board on the specific provisions some general observations may be useful. Gov­ of S. 39, except for section 601, which I will dis­ ernor Coldwell testified before this committee in cuss briefly.2 The Board strongly objects to the 1978, and I testified before the House Banking additional hearing and administrative procedure Committee last year on these same proposals. In requirements contained in this section. both cases we indicated that the Board sees no Under section 601 the Board could be required need for additional legal restraints on the already to provide an adjudicative or trial-type hear­ ing in nearly every application or rulemaking 1. National Courier Association v. Board of Governors, 516, F.2d 1229, 1237 (D.C. Cir. 1975); Alabama Association of Independent Insurance Agents v. Board of Governors, 533 2. The attachments to this statement are available on F.2d 224, 241 (5th Cir. 1976); and NCNB Corporation v. request from Publications Services, Board of Governors of Board of Governors, 599 F.2d 609 (4th Cir. 1979). the Federal Reserve System, Washington D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 551 proceeding under section 4(c)(8) whether or cessfully accelerated its decisionmaking process not disputed facts are involved. This require­ by using a variety of procedural tools consistent ment represents a step backward to the burden­ with the Administrative Procedure Act. These some and time-consuming procedures of the include a formal hearing when there are disputed Bank Holding Company Act before the 1970 questions of fact. We believe that these proce­ amendments. The courts and other administra­ dures assure that the best possible, informed de­ tive law authorities have long recognized the cision is made in the shortest period of time. Ac­ distinction, established by the Administrative cordingly, we would strongly recommend that Procedure Act, between adjudication and rule- the present procedures be continued. making. Adjudication and a formal hearing may In closing, I would like to sound a note of cau­ be required to establish disputed facts about par­ tion. Our economy and financial system are ticular parties, their activities, businesses, and changing rapidly. Demands for financial services property. On the other hand, a rulemaking proce­ are increasing even faster and new techniques dure is less formal because the issues do not typi­ are making it possible to meet such demands in cally relate to disputed facts. The precedents in increasingly efficient and innovative ways. In administrative law demonstrate that the public this rapidly changing environment we believe interest is safeguarded and best served in rule- that adding to the rigidities of regulation would making by avoiding the cumbersome and unrea­ be a mistake. The present regulatory framework, sonably lengthy procedures of formal adversary while not perfect, has sufficient flexibility to hearings. adapt as necessary to changes in technology and Recognizing the imposition in 1970 by the Con­ services offered—a flexibility that needs to be gress of a time limit on the processing of appli­ preserved if the public is to continue to be best cations under section 4(c)(8), the Board has suc­ served by our evolving financial system. □ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

559 Announcements Phaseout of special deposit requirement that applies to in­ Credit Restraint Measures creases in covered consumer credit, effective for covered credit extended in June and thereafter. The Federal Reserve Board on July 3, 1980, an­ Thus, no further special deposits will be required nounced plans to complete the phaseout of the after the present deposit maintenance period special measures of credit restraint that had been ends on July 23. To permit orderly implementa­ put in place, or reinforced, on March 14, 1980. tion of changes now in process and to assure ade­ The special measures were designed to supple­ quate notice of such changes to credit users, the ment, temporarily, more general measures of Board’s rule permitting creditors to modify the credit and monetary control, and recent evidence terms of credit accounts will remain in effect for indicates that the need for those extraordinary notices mailed only on or before September 5.1 measures has ended. For the year to date, credit 3. Elimination of the remaining ll12 percent expansion, particularly at banks, is clearly run­ special deposit requirement that applies to in­ ning at a moderate pace. In recent months, con­ creases in covered assets of money market mu­ sumer borrowing has apparently contracted, an­ tual funds and other similar institutions. This ac­ ticipatory and speculative demands for credit tion applies to covered assets beginning July 28, seem to have subsided, and funds have been in and therefore no special deposits will be required more ample supply. beginning August 11. Whereas the special conditions necessitating 4. Phaseout of the special credit restraint pro­ the extraordinary credit restraints are no longer gram under which banking institutions and fi­ present, the Board emphasized that its general nance companies were asked to limit domestic goals of achieving restrained growth in money loan growth to a range of 6 to 9 percent in 1980. and credit aggregates are unchanged. Those con­ Available data for the first five months of this tinuing goals are closely related to the Board’s year indicate that bank loans to domestic bor­ concern with further reduction of inflationary rowers have increased at around a 3 percent an­ pressures in the economy. nual rate. Banking institutions with $300 million The Board on May 22 had halved the special or more in deposits were to complete reports (ei­ deposit requirements in connection with the ther the quarterly report or the monthly report credit restraint program and had modified the for the larger institutions) due on July 10 under guidelines for the special program for restraining this program for data as of June 30. After those bank credit growth. reports are received, discussions will be held The Board has now scheduled completion of with individual banks to review experience with the phaseout by taking the following measures: the special program. 1. Elimination of the remaining 5 percent mar­ In phasing out the aggregate 6 to 9 percent ginal reserve requirement on managed liabilities guideline for individual institutions, the Board of large banks and agencies and branches of for­ feels that normal competitive and market in­ eign banks. This action applies to managed liabil­ centives can again be relied on to assure the flow ities beginning July 10, for reserves required beginning July 24. In addition, the Board 1. Under the consumer credit restraint program, to make eliminated, effective the same date, the 2 percent certain changes in terms of accounts, a creditor must send a supplementary reserve requirement applicable to 30-day advance notice explaining the changes and giving the member banks on large time deposits. This re­ consumer the option of paying down the existing balance ac­ cording to the original terms. Subsequent use of the account quirement had been initiated in November 1978. by the consumer is deemed to be acceptance of the new 2. Elimination of the remaining llh percent terms. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

560 Federal Reserve Bulletin □ July 1980 of credit consistent with normal banking stan­ 3. Specialists and options market-makers will dards and that qualitative guidelines are there­ be able to use securities issued by the U.S. gov­ fore no longer appropriate. However, the Board ernment or its agencies as collateral in their spe­ remains concerned over the volume of credit that cialist accounts. appears to have flowed to essentially speculative 4. Several other changes, including a rule re­ purposes in the past and is considering the need stricting “free riding” on underlying stock posi­ for additional means of monitoring such develop­ tions carried in an options market-maker’s ac­ ments in the future. count that will apply only to market-makers whose own exchange has not adopted a rule on free riding approved by the Securities and Ex­ Change in Discount Rate change Commission; a rule affecting the with­ drawal of cash or securities from their accounts The Federal Reserve Board approved a reduc­ by specialists and market-makers; and a rule de­ tion in the discount rate from 12 percent to 11 fining positions that may be carried on preferen­ percent, effective June 13, 1980. The action was tial credit terms in the accounts of specialists and taken entirely in reflection of recent further de­ market-makers. clines in short-term market interest rates to lev­ The Board rescinded, effective August 11, sus­ els well below the existing discount rate. pension of the effective date of a rule, as it ap­ In making this technical change, the Board act­ plies to options specialists, establishing uniform ed on requests from the directors of the Federal margin requirements for the writing of options. Reserve Banks of New York, Philadelphia, The suspension, adopted in January 1977, was to Cleveland, Richmond, Chicago, St. Louis, Min­ remain in effect until the Board could consider a neapolis, Kansas City, Dallas, and San Fran­ separate, self-contained rule for options special­ cisco. (Subsequently, the Board approved simi­ ists. This has now been done and the suspension lar actions by the directors of the Federal is no longer necessary. Reserve Banks of Boston and Atlanta, effective June 16, 1980.) The discount rate is the interest rate that member banks are charged when they Country Exposure Lending Survey borrow from their district Federal Reserve Bank. The results of a survey of foreign lending by large U.S. banks as of December 31, 1979, have been Regulation T: Amendment made public by the Office of the Comptroller of the Currency, the Federal Deposit Insurance The Federal Reserve Board on June 12, 1980, an­ Corporation, and the Federal Reserve Board. nounced adoption of an amendment to its Regu­ The data cover claims on foreign residents held lation T (Credit by Brokers and Dealers) af­ by all domestic and foreign offices of 130 U.S. fecting specialists and options market-makers. banking organizations with significant foreign The amendment, which reflects comment re­ banking operations. ceived on a proposal, is effective August 11. The results indicate that cross-border and non­ The principal features of the amendment, are local currency claims increased moderately in as follows: 1979, rising 13 percent from $217 billion to $246 1. In general, the amendment permits good- billion. The increase in 1978 was 12 percent. faith financing of positions in securities in which Much of the growth represented increased claims a specialist makes a market, but requires a 25 on banks, largely related to increased money percent margin for positions in the related secu­ market activity. Cross-border and cross-cur­ rity acquired for hedging or covering purposes rency lending to public and private nonbank bor­ and the generally applicable margin (50 percent) rowers grew $9 billion during the year, a 9 per­ for other securities. cent increase. In addition, the survey indicates 2. Creditors extending credit to a specialist’s that local currency lending to local borrowers by joint account will no longer be required to partic­ foreign offices of U.S. banks increased $9 billion ipate in the account. in 1979 to a total of $67 billion. Most of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 561 growth in both types of lending occurred in the Type of Borrower second half of the year. Business with other banks accounted for the largest amount, equaling $136 billion. Most of the Types of Loans claims on banks were on those located in the G- 10 countries and the offshore banking centers. The survey concentrated on data involving lend­ Lending in the private nonbank sector totaled ing from a bank’s offices in one country to resi­ $67 billion, and loans to the public sector dents of another country as well as in a currency amounted to $43 billion. This last category in­ other than that of the borrowers. These are cludes foreign central governments, their politi­ referred to as cross-border and cross-currency cal subdivisions and agencies, foreign central loans. banks, and commercial nonbank enterprises Cross-border and cross-currency loans are owned by government. The distribution by type those most closely associated with country risk. of borrower varied significantly from country to Such claims totaled $246 billion at year-end 1979. country. Claims on residents of Switzerland and the Group of Ten (G-10) developed countries and “offshore banking centers” (countries in which Guarantees multinational banks conduct a large international money market business) represent 55 percent of Cross-border and cross-currency claims that are this total. Claims on residents of developing guaranteed by residents of another country are countries that are not members of the Organiza­ reallocated from the country or residence of the tion of Petroleum Exporting Countries (OPEC) borrower to another country in two major ways. amount to 25 percent of the total, up slightly First, claims on a bank branch located in one from 24 percent in 1978. country when the head office is located in anoth­ In addition, the banks reported $67 billion in er country are allocated to the country of the local currency claims that were held by their for­ head office. Since a branch is legally a part of the eign offices on residents of the country in which parent, claims on a branch are treated as being the office was located. An example would be guaranteed by the head office. Second, claims on claims in marks on German residents held by the a borrower in one country that are formally guar­ German branch of the reporting U.S. banks. anteed by a resident of another country are allo­ Most of these local currency claims were funded cated to the latter country. These reallocations by local currency liabilities due to local resi­ are thought to provide a better approximation of dents, which amounted to $56 million. country exposure in the banks’ portfolios than the unadjusted figures. Most of the shifts are accounted for by the Maturities transfer of claims on branches (and, when guar­ anteed, subsidiaries) of banks to their head of­ More than two-thirds of the reported cross-bor­ fices ($52 billion out of $64 billion). In general, der and cross-country claims had a maturity of the reallocations primarily affected the offshore one year or less. Only $19 billion in claims had a banking centers and some of the developed coun­ maturity in excess of five years. Short-term tries. For example, claims on the offshore bank­ claims are especially prominent in the G-10 coun­ ing centers decreased from $37 billion to $10 bil­ tries and the offshore banking centers where a lion and claims on the United Kingdom large volume of interbank lending takes place. decreased from $38 billion to $21 billion. For Such placements of deposits are usually for very most less developed countries, a relatively small short periods. portion of claims is externally guaranteed. The For most other groups of countries, short-term total for claims on foreigners by country of guar­ claims accounted for slightly less than half of the antor is about $220 billion or $26 billion less than total claims, although the proportion varied the total for claims by country of borrower. This among countries. results from U.S. residents guaranteeing about Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

562 Federal Reserve Bulletin □ July 1980 $33 billion in claims on foreign residents and for­ controls, and audit documentation. The text of eigners guaranteeing about $7 billion in claims on the guidelines will be published in the Federal U.S. residents. Register. Commitments to Meeting of Provide Funds for Foreigners Consumer Advisory Council The survey also provided information on contin­ The Federal Reserve Board has announced that gent claims on foreigners. The banks were asked its Consumer Advisory Countil met on July 30 to report only those contingent claims when the and 31, 1980. The council, with 30 members who bank had a legal obligation to provide funds. The represent a broad range of consumer and creditor amounts reported total $70 billion, 77 percent of interests, advises the Board on its responsibili­ the total being in the private sector, including ties regarding consumer credit protection legisla­ banks. tion and regulation at quarterly meetings. Standard Terms and Guidelines Change in Board Staff The Comptroller of the Currency, the Federal The Board of Governors has announced the fol­ Deposit Insurance Corporation, and the Federal lowing appointments. Reserve Board have adopted recommendations David L. Robinson as Assistant Director and made to them by the Federal Financial Institu­ Chief Federal Reserve Examiner, Division of tions Examination Council regarding terms to be Federal Reserve Bank Operations, effective June used in competitive factor reports and uniform 30, 1980. Mr. Robinson, who came to the Board guidelines for internal control of the foreign ex­ in May 1975 from the Federal Reserve Bank of change activities of commercial banks. Kansas City, holds a B.S. from Emporia State The agencies adopted, as standard terminol­ College and attended the Stonier School of Bank­ ogy to be used in their assessment of competitive ing. factors in proposed bank mergers, the following Robert E. Frazier as Assistant Director for terminology: Building Services, Division of Support Services, effective July 1, 1980. Mr. Frazier, formerly with Monopoly. Requires disapproval. the Military Traffic Management Command, U.S. Army, holds a B.A. from Hampton Insti­ Substantially adverse. Precludes approval un­ tute and an M.A. from Central Michigan Univer­ less anticompetitive effects of the proposed merg­ sity. er are outweighed by benefits to the public in The Board has also announced the resignation meeting the convenience and needs of the com­ of Richard H. Puckett, Assistant Secretary to the munity to be served. Board, effective June 30, 1980. Adverse. The proposed merger has anticom­ petitive effects material to the decision that would Proposed Actions not preclude approval. The Federal Reserve Board has proposed proce­ No significant effect. Anticompetitive effects, dures for nonmember depository institutions to if any, are not material to the decision. follow if they pass required reserves through an­ other depository institution to the Federal Re­ The agencies adopted the recommended uni­ serve, and procedures for these intermediaries to form guidelines for commercial banks on internal follow in handling the reserve balances of others. control of their foreign exchange operations cov­ The Board asked for comment by July 31, ering policy documentation, internal accounting 1980. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 563 Banking Data Board of Governors of the Federal Reserve Sys­ from Edge Corporations tem, Washington, D.C. 20551. The Board also will make available computer The Federal Reserve Board has announced the listings of individual banking Edge and Agree­ availability in magnetic tape form of data report­ ment corporation reports of condition at a cost of ed to the Board quarterly by individual banking 50 cents per report. These listings are released 60 Edge Act and Agreement corporations. The to 75 days after the report date. Requests for list­ data, based on balance sheet information in offi­ ings should be addressed to the Freedom of In­ cial reports of condition, begin with data as of formation Office, Board of Governors of the Fed­ December 31, 1979, and will be available about eral Reserve System, Washington, D.C. 20551. 60 to 75 days after each subsequent report date. The Board will make available the magnetic tapes, including complete documentation, at a System Membership: cost of $70.00 per reporting period, under a new Admission of State Banks service called the Banking Edge Act and Agree­ ment Corporation Subscription. Orders with re­ The following banks were admitted to member­ mittance should be addressed to the Office of the ship in the Federal Reserve System during the Controller, Board of Governors of the Federal period June 11, 1980, through July 10, 1980: Reserve System, Washington, D.C. 20551. Information about the content or format may New York be obtained by telephoning (202) 452-2816, or by Dongan H ills................Gateway State Bank writing the Data Request Coordinator in the Data Oregon Services Section, Division of Data Processing, Medford..........................Jefferson State Bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

565 Record of Policy Actions of the Federal Open Market Committee Meeting Held on length of the average workweek fell May 20,1980 for the third successive month. Private housing starts declined 1. Domestic Policy Directive throughout the first quarter and The information reviewed at this edged down further in April to an an­ meeting suggested that real output of nual rate of about 1 million units. goods and services was declining Building permits for new units were markedly in the current quarter after down substantially further in April. increasing at an annual rate of 0.6 In March sales of single-family percent in the first quarter. How­ homes fell for the sixth consecutive ever, average prices, as measured by month. the fixed-weight price index for The rise in producer prices of fin­ gross domestic business product, ished goods moderated appreciably were continuing to rise at a rapid in April, reflecting a large drop in pace following increases at an annu­ prices of consumer foods and a less al rate of about 11 percent in the first rapid advance in prices of energy-re­ quarter and nearly 10 percent during lated items than in earlier months. In 1979. the first quarter both producer prices The dollar value of total retail and consumer prices had risen at ac­ sales fell substantially further in celerated rates following rapid ad­ April after declining sharply in Feb­ vances in 1979. The index of average ruary and March. Unit sales of new hourly earnings of private nonfarm automobiles slowed markedly fur­ production workers rose at an annu­ ther in April to the lowest level since al rate of about 8 percent over the the spring of 1975 and apparently re­ first four months of the year, com­ mained exceptionally weak in early pared with an increase of 8V2 per­ May. cent during 1979. The index of industrial production In foreign exchange markets the fell 1.9 percent in April, following dollar had remained under down­ small reductions in February and ward pressure over most of the pre­ March. The April decline reflected vious four weeks. Such pressure, widespread cutbacks in output. The which had emerged in early April, rate of capacity utilization in manu­ reflected primarily a sharp decline in facturing fell 2 percentage points fur­ interest rates on dollar assets in rela­ ther in April to 81 percent, 6 percent­ tion to those on foreign-currency as­ age points below the recent peak in sets. The trade-weighted value of the March 1979. dollar against major foreign cur­ In April nonfarm payroll employ­ rencies had fallen about Vh percent ment declined substantially follow­ since the Committee’s meeting on ing a moderate reduction in March, April 22 and about ll 12 percent since and the rate of unemployment rose early April. from 6.2 to 7.0 percent. Decreases in The U.S. foreign trade deficit in­ employment were especially pro­ creased substantially from the fourth nounced in automobile- and con- quarter of 1979 to the first quarter of struction-related industries. The 1980 despite a considerable reduc­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

566 Federal Reserve Bulletin □ July 1980 tion in March from the average in IOV2 percent. In the statement week January and February. For the quar­ ending May 14, the funds rate aver­ ter as a whole, imports, including aged 107/s percent, down from an av­ both petroleum and nonpetroleum erage of about 183/8 percent in the products, rose at a much faster rate statement week ending April 16. than exports even though non- In April M-l A and M-1B con­ agricultural exports exhibited con­ tracted at annual rates of I8V2 and siderable strength. HV2 percent respectively following At its meeting on April 22, the small declines in March, while M-2 Committee had agreed that open fell at an annual rate of about 3 per­ market operations in the period until cent after increasing moderately in this meeting should continue to be March. As a result, expansion of directed toward expansion of re­ the monetary aggregates—especially serve aggregates consistent with M-1A and M-1B—over the first four growth over the first half of 1980 at months of the year averaged well be­ annual rates of Alh percent for M-l A low the growth paths set by the and 5 percent for M-1B, or some­ Committee for the first half; M-l A what less, provided that in the inter­ declined at an annual rate of IV2 per­ meeting period the weekly average cent over that period; M-1B was un­ federal funds rate remained within a changed; and M-2 expanded at an range of 13 to 19 percent. In the annual rate of 4V2 percent. In early Committee’s view, this short-run May, however, there were sub­ policy should be consistent with stantial increases in demand depos­ growth in M-2 at an annual rate of its and money market mutual funds. about VU percent over the first half Total credit outstanding at U.S. of the year. The Committee had also commercial banks contracted in agreed that if the constraint on the April after expanding at a sub­ federal funds rate appeared to be in­ stantially reduced pace during consistent with the objective for the March. The April decline reflected expansion of reserves, the Mana­ reductions in both investments and ger for Domestic Operations was loans, which included a drop in busi­ promptly to notify the Chairman, ness loans. Net issues of commercial who would then decide whether the paper by nonfinancial corporations situation called for supplementary moderated in April from an ex­ instructions from the Committee. ceptionally strong pace during the Immediately after the meeting, re­ first quarter. quired reserves and thus member Interest rates fell sharply further bank demands for reserves began to during the intermeeting period as fall substantially in relation to the market participants reacted to ac­ supply being made available through cumulating signs of a slowdown in open market operations, reflecting a economic activity, to sustained weak­ sharp weakening of the monetary ness in the money stock, and to the aggregates during April. Consequent­ decline in the federal funds rate. The ly, member bank borrowings for rate declines were especially pro­ adjustment purposes and the fed­ nounced in short-term debt markets, eral funds rate both declined sharp­ but bond yields also moved substan­ ly. On May 6, after the funds rate tially lower. Commercial banks re­ had fallen below the 13 percent duced their loan rate to prime busi­ lower limit of the Committee’s inter­ ness borrowers from 19V2 to I6V2 meeting range and available data had percent over the interval. In primary suggested that the demand for mon­ markets for home mortgages, average ey and for reserves had remained rates on new commitments at sam­ weak, the Committee voted to re­ pled savings and loan institutions fell duce the lower limit of the inter­ more than 2 percentage points to meeting range for the funds rate to about 14V8 percent. On May 6 the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 567 Federal Reserve announced the re­ tions might warrant, and also that moval of the surcharge of 3 percent­ short-run factors might cause con­ age points on frequent borrowings siderable variation in annual rates of from the Federal Reserve Banks by growth from one month to the next member banks with deposits of $500 and from one quarter to the next. million or more. This surcharge had In contemplating policy for the pe­ been imposed in mid-March as part riod immediately ahead, the Com­ of a broad program of credit re­ mittee took note of a staff analysis straint. indicating that growth of M-l A and Staff projections prepared for this M-1B over the first four months of meeting suggested a larger decline in the year had fallen considerably real GNP in the current quarter than short of the rates consistent with the had been anticipated a month ear­ objectives for the first half of the lier. Further declines were expected year that the Committee had estab­ in subsequent quarters, and unem­ lished at its meeting in March and ployment was projected to increase reaffirmed at its meeting in April. substantially. Prices of goods and Some rebound in growth of these ag­ services were projected to continue gregates was likely to occur over the under substantial upward pressure, May-June period, assuming interest although the rate of increase was not rates at around current levels and expected to be so rapid as in the first given the staff projection of expan­ quarter. sion in nominal GNP during the sec­ Committee members agreed that a ond quarter and the public’s likely marked contraction in real GNP was need to rebuild depleted cash bal­ under way in the current quarter. ances. It still seemed likely, how­ The rapidity of the decline, reflect­ ever, that growth of these aggregates ing in part the abrupt weakening in over the first half of 1980 would fall consumption expenditures, sug­ considerably short of the rates con­ gested a risk that the contraction sistent with the Committee’s ranges would prove to be deeper than was for the year from the fourth quarter widely expected. At the same time, of 1979 to the fourth quarter of 1980. inflation remained a serious prob­ Growth of M-2 and M-3 appeared to lem. The rise in prices appeared be less weak relative to the Com­ likely to remain rapid, even though mittee’s longer-run ranges than that there were grounds for anticipating of the narrowly defined aggregates. some moderation of the rise over the In the Committee’s discussion of months ahead. policy, the members agreed that op­ At its meeting on February 4-5, erations in the period immediately 1980, the Committee had agreed that ahead should be directed toward from the fourth quarter of 1979 to the expansion of monetary aggregates fourth quarter of 1980 average rates at rates high enough to promote of growth in the monetary aggre­ achievement of the Committee’s ob­ gates within the following ranges ap­ jectives for monetary growth over peared to be consistent with broad the year, recognizing that a number economic aims: M-1A, Vh to 6 per­ of months might well be required in cent; M-1B, 4 to 6V2 percent; M-2, 6 the process. They differed to some to 9 percent; and M-3, 6V2 to 9lh extent in their views concerning the percent. The associated range for speed with which that goal should be the rate of growth in commercial sought and about the further nearbank credit was 6 to 9 percent. It had term decline in the federal funds rate also been agreed that the longer-run that might be tolerated in its pursuit. ranges, as well as the particular ag­ Several members believed that if gregates for which such ranges were the demand for money were to re­ specified, would be reconsidered in main weak, the Committee should July or at any other time that condi­ move in a relatively gradual fashion Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

568 Federal Reserve Bulletin □ July 1980 over the balance of the year to re­ M-1B, and M-2 over May and store the desired longer-run rates of June at annual rates of 7 to 71 /2 per­ money growth. Concern was ex­ cent, l l12 to 8 percent, and about 8 pressed that a more aggressive ap­ percent respectively. The Com­ proach would lead to such sharp de­ mittee also agreed that, in light of the clines in the federal funds rate and recent shortfall, moderately faster other short-term interest rates in the monetary growth would be accept­ period immediately ahead that there able if that developed in response to could be a perverse impact on long­ a strengthening of the demand for term interest rates by exacerbating money. It was understood that if the inflationary expectations, and there demand for money and for bank re­ could also be strong adverse effects serves proved to be weak and the on the value of the dollar in foreign federal funds rate declined signifi­ exchange markets. Moreover, ag­ cantly within its specified range, the gressive efforts to promote monetary Committee would review the situa­ growth might have to be reversed tion in advance of the next regular before long, perhaps leading to sig­ meeting scheduled for July 9. In any nificant increases in interest rates case, if it appeared that the con­ in a period of substantial weakness straint on the federal funds rate was in the economy. The possibility was inconsistent with the objective for also suggested that the demand for the expansion of reserves, the Man­ money had shifted downward once ager for Domestic Operations was again, so that vigorous efforts in the promptly to notify the Chairman, short run to bring monetary growth who would then decide whether the into line with the Committee’s long­ situation called for supplementary er-run objectives could result in ex­ instructions from the Committee. cessive creation of money. The following domestic policy di­ Other members of the Committee rective was issued to the Federal Re­ preferred efforts to bring monetary serve Bank of New York: growth more promptly into line with The information reviewed at this the Committee’s objectives for the meeting suggests a marked contraction year. Such an approach, which they in real GNP in the current quarter. In regarded as more consistent with the April the dollar value of total retail sales operating procedures the Committee declined substantially for the third con­ secutive month. Industrial production had been following since early Octo­ and nonfarm payroll employment were ber 1979, could make an important curtailed sharply, and the unemployment contribution to moderating the se­ rate rose from 6.2 to 7.0 percent. Private verity of the recession. housing starts, which had declined At the conclusion of the dis­ throughout the first quarter to a relative­ ly low rate, edged down further in April. cussion, the Committee agreed that The overall rise in prices of goods and open market operations in the period services has remained rapid in recent until the next meeting should be di­ months, although in April the rise in pro­ rected toward expansion of reserve ducer prices of finished goods was slowed by a large decrease in foods and aggregates consistent with growth of by a lessening of the rapid rise in energy M-l A, M-1B, and M-2 at rates high items. Over the first four months of the enough to promote achievement of year, the rise in the index of average the Committee’s objectives for mon­ hourly earnings was somewhat less than the rapid pace recorded in 1979. etary growth for the year as a whole, The downward pressure on the dollar provided that in the period before in exchange markets that emerged in the next regular meeting the weekly early April has continued over most of average federal funds rate remained the past four weeks, in response primari­ within a range of 872 to 14 percent. ly to the sharp decline in U.S. interest rates relative to foreign interest rates; Specifically, the Committee agreed the trade-weighted value of the dollar that operations should be directed against major foreign currencies has de­ toward encouraging growth of M-l A, clined about Vh percent. The U.S. for­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 569 eign trade deficit was substantially larger erations toward achieving somewhat in the first quarter of 1980 than in the pre­ higher rates of monetary growth in ceding quarter, despite a considerable the May-June period. He also pre­ decline in March from the average in the ferred an intermeeting range for the preceding two months. M-l A and M-1B contracted sharply federal funds rate with a lower limit further in April, and M-2 also declined. below 8V2 percent, because such a Commercial bank credit, both loans and range would be less likely to inter­ investments, contracted in April after fere with re serve-supplying opera­ having slowed substantially in March. tions consistent with the objectives Over recent weeks, market interest rates have declined sharply further. for the aggregates. Taking account of past and prospec­ Mr. Roos dissented because in his tive economic developments, the Feder­ view the annual growth rate objec­ al Open Market Committee seeks to fos­ ter monetary and financial conditions tive of 3V2 to 6 percent for M-l A es­ that will resist inflationary pressures tablished by the Committee in Feb­ while encouraging moderate economic ruary 1980 was consistent with expansion and contributing to a sustaina­ reduction of inflation without aggra­ ble pattern of international transactions. vating recessionary pressures. He At its meeting on February 4-5, 1980, the Committee agreed that these objectives believed that the 8V2 to 14 percent would be furthered by growth of M-l A, constraint on the federal funds rate M-1B, M-2, and M-3 from the fourth was incompatible with that agreedquarter of 1979 to the fourth quarter of upon objective and would cause 1980 within ranges of Vh to 6, 4 to 6V2, 6 money growth to remain below it. to 9, and 6V2 to 9xh percent respectively. The associated range for bank credit was Such slow growth would unneces­ 6 to 9 percent. sarily exacerbate the current eco­ In the short run, the Committee seeks nomic slowdown. Historically, deep expansion of reserve aggregates consis­ recessions had inevitably brought tent with growth of M-l A, M-1B, and about countermeasures that in­ M-2 at rates high enough to promote achievement of the Committee’s objec­ tensified inflation. tives for monetary growth over the year, provided that in the period before the next regular meeting the weekly average federal funds rate remains within a range 2. Authorization for Foreign of 8V2 to 14 percent. Currency Operations If it appears during the period before the next meeting that the constraint on The Committee approved an in­ the federal funds rate is inconsistent with crease from $300 million to $500 mil­ the objective for the expansion of re­ serves, the Manager for Domestic Oper­ lion in the System’s swap arrange­ ations is promptly to notify the Chairman ment with the Bank of Sweden and who will then decide whether the situa­ the corresponding amendment to tion calls for supplementary instructions paragraph 2 of the authorization for from the Committee. foreign currency operations, ef­ fective May 23, 1980, for a period of Votes for this action: Messrs. Volckone year. With this change para­ er, Guffey, Morris, Rice, Schultz, Solomon, Mrs. Teeters, Messrs. Wal­ graph 2 read as follows: lich, and Winn. Votes against this ac­ tion: Messrs. Partee and Roos. 2. The Federal Open Market Com­ mittee directs the Federal Reserve Bank of New York to maintain reciprocal cur­ Mr. Partee dissented from this ac­ rency arrangements (“swap” arrange­ tion because he believed that it in­ ments) for the System Open Market Ac­ count for periods up to a maximum of 12 volved a risk of extending the short­ months with the following foreign banks, fall in monetary growth relative to which are among those designated by the the Committee’s growth ranges for Board of Governors of the Federal Re­ the year. In an effort to guard against serve System under Section 214.5 of Regulation N, Relations with Foreign the continuation of such a shortfall, Banks and Bankers, and with the ap­ which could worsen recessionary proval of the Committee to renew such prospects, he preferred to direct op­ arrangements on maturity: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

570 Federal Reserve Bulletin □ July 1980 Any changes in the terms of existing Amount of arrangement swap arrangements, and the proposed Foreign bank (millions of terms of any new arrangements that may dollars equivalent) be authorized, shall be referred for re­ view and approval to the Committee. Austrian National Bank .......................................250 National Bank of Belgium..................................1,000 Votes for this action: Messrs. Volck­ Bank of Canada .................................................2,000 er, Guffey, Morris, Partee, Rice, National Bank of Denmark ..................................250 Roos, Schultz, Solomon, Mrs. Tee­ Bank of England.................................................3,000 Bank of France....................................................2,000 ters, Messrs. Wallich, and Winn. German Federal Bank .......................................6,000 Votes against this action: None. Bank of Italy ......................................................3,000 Bank of Japan ....................................................5,000 Bank of Mexico ....................................................700 This action was taken to expand Netherlands Bank.................................................500 Bank of Norway....................................................250 the short-term financing facilities Bank of Sweden ....................................................500 available to the Bank of Sweden. Swiss National Bank..........................................4,000 Bank for International Settlements: Dollars against Swiss francs ............................600 Dollars against authorized European currencies other than Swiss francs ..........1,250 Records of policy actions taken by the Federal Open Market Committee at each meeting, in the form in which they will appear in the Board’s Annual Report, are made available a few days after the next regularly scheduled meeting and are later published in the Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

571 Legal Developments Correction to Regulation D Amendment Governors of the Federal Reserve System reports suitable for supplying current information regarding The Board’s reserves regulation, 12 C.F.R. Part 204- the use of specialist credit. Reserves of Member Banks is corrected by revising section 204.5(f)(3)(i), [66 Federal Reserve (2) Definitions. For the purpose of this subsection: Bulletin 492.] to read as follows: (i) “Joint account” means an account in which the creditor may participate and which by written (3) Managed liabilities base. * * * agreement permits the commingling of the secu­ rity positions of the participants and provides for (i) * * * outstanding during any computation period a sharing of profits and losses from the account on beginning after May 28, 1980, is lower than the low­ some predetermined ratio; est daily average of such loans and balances out­ (ii) “Underlying security” means the security standing during any computations period between which will be delivered upon exercise of the op­ March 6, 1980, and May 28, 1980, for which data tion and does not include a security convertible were reported on form FR 2414d. * * * into the underlying security; (iii) “Overlying option” means (A) a put option purchased or a call option written against an exist­ Amendments to Regulation T ing long position in a specialist’s or marketmaker’s account, or (B) a call option purchased or The Board of Governors has amended its Regulation a put option written against a short position in a T, Credit by Brokers and Dealers, to permit stock spe­ specialist’s or market-maker’s account. cialists and option market-makers to finance with a bro­ (iv) “In or at the money,” with respect to a call ker/dealer certain offsetting positions in related secu­ option, indicates that the current market price of rities on more advantageous terms than are available the underlying security is not more than one stan­ to the ordinary customer. This concession is given to dard exercise interval below the exercise price of those exchange-registered dealers who are obliged to the option, and, with respect to a put option, that promote fair and orderly markets in their specialty the current market price of the underlying secur­ securities. The present rule limits margin concessions ity is not more than one standard exercise inter­ to the financing of specialty securities only. This ac­ val above the exercise price of the option. tion derives from the advent of exchange-traded op­ (v) “In the money,” with respect to a call option, tions in 1973. indicates that the current market price of the un­ Effective August 11, 1980, section 220.4(g) is derlying security is not below the exercise price of amended as follows: the option and, with respect to a put option, that the current market price of the underlying secu­ Section 220.4—Special Accounts rity is not above the exercise price of the option. * * * * (3) Permitted offset positions. A specialist in op­ (g) Specialist’s Account. tions is permitted to establish in this account on a share-for-share basis a long or short position in the (1) Applicability. In a specialist’s account, a credi­ securities underlying the options in which the spe­ tor may clear and finance for a specialist who is a cialist makes a market, and a specialist in securities member of a national securities exchange the mem­ other than options is permitted to purchase or write ber’s specialist transactions or transactions of any options overlying the securities in which the special­ joint account in which all, participants, or all partici­ ist makes a market, only under one or more of the pants other than the creditor, are registered and act following conditions (such positions are referred to as specialists. The provisions of this subsection are in this paragraph as “permitted offset positions”): available to a specialist who is a member of a nation­ (i) The account holds a short option position al securities exchange which submits to the Board of which is “in or at the money” and is not offset by Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

572 Federal Reserve Bulletin □ July 1980 a long or short option position for an equal or tional margin is required as a result of transactions greater number of shares of the same underlying in the account, the creditor shall issue a call for a security which is “in the money”; deposit of cash or securities having loan value and (ii) The account holds a long option position may allow the specialist a maximum of five full busi­ which is “in or at the money” and is not offset by ness days to make a deposit sufficient to meet the a long or short option position for an equal or call. To prevent “free-riding” in the account, a greater number of shares of the same underlying creditor who has not obtained this deposit (and is security which is “in the money”; therefore required to liquidate sufficient securities to (iii) The account held a short option position meet the call) is prohibited for a 15 day period from against which an exercise notice was tendered; extending any further credit in the account to fi­ (iv) The account held a long option position nance transactions in securities in which the special­ which was exercised; ist is not registered to make a market. The acquisi­ (v) The account holds a net long position in a tion or liquidation of a permitted offset position shall security (other than an option) in which the spe­ not be subject to this “free-riding” penalty. The re­ cialist makes a market; or, striction on “free-riding” shall not apply to any na­ (vi) The account holds a net short position in a tional securities exchange adopting a “free-riding” security (other than an option) in which the spe­ rule applicable to specialists which has been ap­ cialist makes a market. proved by the Securities and Exchange Commis­ sion. (4) Maximum loan value. The maximum loan value of securities which may be used as collateral in the (7) Withdrawals. On any day when a specialist account shall be: requests a withdrawal of cash or securities from the (i) No more than 100 per cent of the current mar­ account, the creditor shall compute the status of the ket value of any long position in a security in account for non-specialist securities positions in ac­ which the specialist makes a market or a wholly- cordance with the provisions of section 220.8 (the owned margin security; Supplement to Regulation T), permitted offset posi­ (ii) 75 per cent of the current market value of any tions in accordance with the provisions of para­ underlying security or overlying option purchased graphs (g)(4)(ii) and (g)(5)(ii), and specialist posi­ and held in the account as a permitted offset posi­ tions on a “good faith” basis. Withdrawals shall be tion; permitted to the extent that the adjusted debit bal­ (iii) The maximum loan value prescribed by the ance in the account does not exceed the maximum Board in section 220.8 (the Supplement to Regula­ loan value of all of the collateral held in the account tion T) when a security purchased and held in the after the withdrawal has been made. account does not qualify as a specialist or permit­ ted offset position. (8) Deficit accounts. On any day when the account would liquidate to a deficit, the creditor shall not ex­ (5) Adjusted debit balance. The amount to be in­ tend any further credit in the account, and shall is­ cluded in the adjusted debit balance of the account sue a call for additional cash or collateral, which shall be: shall be met by noon of the following business day. (i) Not less than 100 per cent of the current mar­ In the event sufficient cash or collateral is not depos­ ket value of either a security sold short or an op­ ited the creditor shall liquidate existing positions in tion written where such position qualifies as a spe­ the account. cialist transaction; (ii) 125 per cent of the current market value of any security sold short or option written and held in the account as a permitted offset position; Correction to Credit Restraint (iii) The amount prescribed by the Board in sec­ Amendment tion 220.8 (the Supplement to Regulation T) when a security sold short in the account does not quali­ The Board’s Credit Restraint regulation, 12 C.F.R. fy as a specialist or permitted offset position plus, Part 229—Credit Restraint, Subpart C is corrected for a short position in a security other than an op­ by revising section 229.24(b)(1) [66 Federal Reserve tion, the current market value of the security sold Bulletin 494.] to read as follows: short. (b) Managed liabilities base. * * * (6) Additional margin; “free-riding.” Except as re­ (1) * * * outstanding during any computation peri­ quired by paragraph (g)(8), on any day when addi­ od beginning after May 28, 1980, is lower than the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 573 lowest daily average amount of such loans and bal­ plans complying with section 207.4(a) may be regarded ances outstanding during the base period or any as credit which is for the purpose of purchasing or car­ computation period between March 20, 1980 and rying a margin security within the meaning of section May 28, 1980. * * * 207.2(c). Since the combined loans are treated as pur­ pose credit, section 207.1(h) does not prohibit the transaction, irrespective of amount. Interpretation of Regulation G The Board of Governors has issued a final inter­ pretation of its Regulation G, Securities Credit by Per­ Revised Interpretation of Regulation Y sons other than Banks, Brokers or Dealers. This inter­ pretation allows plan lenders, as defined under section The Board of Governors has revised an interpretation 207.4 of Regulation G, who currently extend purpose of its Regulation Y, Bank Holding Companies and credit to employees under stock option plans, to also Change in Bank Control, that defines terms used to extend credit to employees covered by the plans to describe the competitive effects of proposed mergers. pay income taxes due as a result of the exercise of The revision standardizes descriptive terms used by such options. the Board in competitive factor reports with those Effective July 1, 1980, 12 CFR Part 207 is amended used by the Federal Deposit Insurance Corporation by adding a new § 207.111 to read as follows: and the Office of the Comptroller of the Currency. Effective June 11, 1980, § 250.182 is revised to read Section 207.111—Combined Credit for Exercising as follows: Employee Stock Options and Paying Income Taxes Incurred as a Result of Such Exercise Section 250.182—Terms Defining Competitive Effects of Proposed Mergers (a) The Board of Governors has been asked whether section 207.1(h) of Regulation G prevents a lender un­ Under the Bank Merger Act (12 U.S.C. 1828(c)), a der an employee stock option plan that meets the re­ Federal Banking agency receiving a merger appli­ quirements of section 207.4(a) from extending credit to cation must request the views of the other two banking an employee to pay the income taxes incurred as a re­ agencies and the Department of Justice on the com­ sult of the exercise of the stock option, in addition to petitive factors involved. Standard descriptive terms the credit to cover the purchase price of the stock. are used by the Board, the Federal Deposit Insurance (b) Section 207.1(h) prohibits a lender governed by Corporation, and the Comptroller of the Currency. Regulation G from extending purpose credit if it is se­ The terms and their definitions are as follows: cured by collateral including margin securities, which (a) The term “monopoly” means that the proposed also secures any other credit to the same person in ex­ transaction must be disapproved in accordance with cess of $5,000. Unless credit to pay income taxes is 12 U.S.C. 1828(c)(5)(A). also treated as purpose credit, it could not be extended (b) The term “substantially adverse” means that in an amount in excess of $5,000 when the borrower the proposed transaction would have anti­ also has a purpose loan outstanding with the lender, competitive effects which preclude approval unless secured by margin securities, since such collateral the anticompetitive effects are clearly outweighed in would be deemed to be also securing the income tax the public interest by the probable effect of the loan. “Purpose credit” is defined in section 207.2(c) of transaction in meeting the convenience and needs of the regulation as “credit which is for the purpose, the community to be served as specified in 12 whether immediate, incidental, or ultimate, of pur­ U.S.C. 1828(c)(5)(B). chasing or carrying a margin security.” (c) The term “adverse” means that proposed trans­ (c) Section 207.4(a), which provides special treatment action would have anticompetitive effects which for credit extended under employee stock option would be material to the decision but which would plans, was designed to encourage their use in recogni­ not preclude approval. tion of their value in giving an employee a proprietary (d) The term “no significant effect” means that the interest in the business. Taking a position that might anticompetitive effects of the proposed transaction, discourage the exercise of options because of tax com­ if any, would not be material to the decision. plications would conflict with the purpose of section 207.4(a). (d) Accordingly, the Board has concluded that the combined loans for the exercise of the option and the Depository Institutions Deregulation payment of the taxes in connection therewith under Committee Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

574 Federal Reserve Bulletin □ July 1980 Part 1204—Interest on Deposits Effective June 2, 1980, the Committee amends sec­ tion 1204.103 of 12 C.F.R. Part 1204 as follows: The Depository Institutions Deregulation Committee has adopted a rule providing that a penalty need not be Part 1204—Interest on Deposits applied to a withdrawal from an IRA or Keogh account time deposit prior to the maturity of the account, if the Section 1204.103—Penalty for Early With­ owner is disabled or age 59V2 or over. The rule applies drawals to all commercial banks, mutual savings banks, and savings and loan institutions subject to the authorities Where a time deposit with an original maturity of three conferred by section 19(j) of the Federal Reserve Act, months or more to one year, or any portion thereof, is section 18(g) of the Federal Deposit Insurance Act and paid before maturity, a depositor shall forfeit an section 5B(a) of the Federal Home Loan Bank Act. amount at least equal to three months of interest Effective June 2, 1980, the Committee amends Part earned, or that could have been earned, on the amount 1204 (Interest on Deposits) by adding section 107 as withdrawn at the nominal (simple interest) rate being follows: paid on the deposit, regardless of the length of time the funds withdrawn have remained on deposit. Where a Part 1204 —Interest on Deposits time deposit with an original maturity of less than three months, or any portion thereof, is paid before Section 1204.107—Early Withdrawal of IRA and maturity, a depositor shall forfeit an amount at least Keogh Accounts equal to the amount of interest that could have been earned on the amount withdrawn at the nominal A depository institution subject to the authorities con­ (simple interest) rate being paid on the deposit had the ferred by section 19(j) of the Federal Reserve Act (12 funds remained on deposit until maturity. Where a U.S.C. 371b), section 18(g) of the Federal Deposit In­ time deposit with an original maturity of more than one surance Act (12 U.S.C. 1828(g)), or section 5B(a) of year, or any portion thereof, is paid before maturity, a the Federal Home Loan Bank Act (12 U.S.C. 1425(a)) depositor shall forfeit an amount at least equal to six may pay a time deposit or certificate account before months of interest earned, or that could have been maturity without a reduction or forfeiture of earnings if earned, on the amount withdrawn at the nominal the time deposit or certificate account represents an (simple interest) rate being paid on the deposit, regard­ Individual Retirement Account or a Keogh (H.R. 10) less of the length of time the funds withdrawn have plan established under 26 U.S.C. §§ 408 or 401, and remained on deposit. the individual for whose benefit the account is main­ tained has attained age 59V2 or is disabled (as defined in 26 U.S.C. § 72(m)(7)). Bank Holding Company and Bank Merger Orders Issued by the Board of Governors Depository Institutions Deregulation Committee Orders Approved Under Section 3 of Bank Holding Company Act Part 1204—Interest on Deposits Dominion Bankshares Corporation, The Depository Institutions Deregulation Committee Roanoke, Virginia has adopted a technical amendment to Part 1204, Inter­ est on Deposits. This technical amendment clarifies Order Approving Merger of Bank Holding Companies the application of the early withdrawal penalty rule adopted by the Depository Institutions Deregulation Dominion Bankshares Corporation, Roanoke, Virginia Committee (“Committee”) on May 28, 1980, to with­ (“Dominion”), a bank holding company within the drawals from time deposits with original maturities of meaning of the Bank Holding Company Act (“Act”), less than three months. The rule provides that where a has applied for the Board’s approval under section time deposit with an original maturity of less than 3(a)(5) of the Act (12 U.S.C. § 1842(a)(5)) to merge three months, or any portion thereof, is paid before with Valley of Virginia Bankshares, Inc., Harrison­ maturity, a depositor shall forfeit an amount at least burg, Virginia (“Valley”), also a bank holding compa­ equal to the amount of interest that could have been ny, under the charter and title of Dominion. earned on the amount withdrawn at the nominal con­ Notice of the application, affording opportunity for tract rate if the funds had remained on deposit until interested persons to submit comments and views, has maturity. been given in accordance with section 3(b) of the Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 575 The time for filing comments and views has expired, While Dominion’s offices are primarily concentrated and the Board has considered the application and all in and around the Roanoke area and in the areas west comments received in light of the factors set forth in and south of Roanoke, Valley operates, with the ex­ section 3(c) of the Act.1 ception of Troutville Bank in the Roanoke market, in Dominion, the third largest banking organization in four banking markets located in the Shenandoah Val­ Virginia, controls ten banks with aggregate deposits of ley area (Rockingham, Frederick, Augusta, and Shen­ approximately $1.6 billion, representing 8.8 percent of andoah).5 In reviewing the competitive effects of the the total deposits in commercial banks in the state.2 proposal, the Board is of the opinion the most severe Valley, the tenth largest banking organization in the adverse competitive effects will be within the Rock­ state, controls five banks with aggregate deposits of ingham and Frederick banking markets where Valley’s approximately $250.0 million, representing 1.3 percent banking subsidiaries are, respectively, the largest of of the total deposits in commercial banks in the state. eight banking organizations (with 28.2 percent of mar­ Upon consummation of the proposed merger Domin­ ket deposits) and the second largest of five banking or­ ion would remain the third largest banking organiza­ ganizations (with 28.1 percent of market deposits). In tion in the state with 10.1 percent of the total com­ the two other banking markets in the Shenandoah mercial bank deposits in Virginia. On the basis of all area, Valley’s subsidiary banks rank sixth out of eight the facts of record, including the overall structure of banking organizations in the Augusta banking market banking in Virginia, the Board does not view the pro­ (with 6.1 percent of market deposits) and fourth out of posed merger as having any significantly adverse ef­ six banking organizations in the Shenandoah banking fects on the concentration of banking resources in Vir­ market (with 11.9 percent of market deposits). The ginia. banking structure of each of these markets has been The banking subsidiaries of Dominion and Valley, carefully examined to determine whether any signifi­ with the exception of the banking subsidiaries in the cantly adverse effects on potential or probable future Roanoke banking market,3 do not directly compete competition would result from consummation of the with each other in any banking market. The distances proposal. separating the closest of Dominion’s and Valley’s sub­ Dominion appears to have the capability to enter de sidiary banks, other than in the Roanoke banking mar­ novo the markets currently served by the banking sub­ ket, are approximately 40 miles. Dominion is the larg­ sidiaries of Valley. However, with respect to the com­ est of 14 banking organizations located in the Roanoke petitive effects within the Augusta and Shenandoah market, controlling 39.3 percent of market deposits, banking markets, based upon all the facts of record, Valley’s banking subsidiary, The First National Bank those markets do not appear attractive to de novo en­ of Troutville (“Troutville Bank”), is the market’s sev­ try; furthermore, in neither market is there any inde­ enth largest with 1.5 percent of market deposits. The pendent bank smaller than Valley’s subsidiary banks significantly adverse competitive effects that would that might serve as a foothold entry for Dominion. occur within the Roanoke banking market upon con­ With respect to the Rockingham and Frederick bank­ summation of the proposal will be eliminated by the ing markets, it is noted that each market is primarily divestiture of Troutville Bank prior to consummation rural in nature with only one commercial center in of the subject merger.4 Accordingly, in light of the each market, Harrisonburg in the Rockingham market, above and other facts of record, the Board finds that and Winchester in the Frederick market. Entry into consummation of the proposal will not result in the these two markets from outside the commercial cen­ elimination of significant existing competition. ters of Harrisonburg or Winchester is not very realis­ tic, while entry de novo into these commercial centers is also not very attractive in light of the number of banking offices already operating in those areas and 1. During its consideration of this application the Board received a protest from certain directors and shareholders of Valley after the ex­ other demographic data of record. Foothold entry is piration of the comment period specified in the Federal Register no­ likewise not very likely as there is no independent tice on this application. Under the Board’s Rules of Procedure, 12 bank remaining in Frederick County, and the two pos­ C.F.R. § 262.3(d), the Board is not required to and generally will not consider untimely protests. However, even if the protest had been sible entry points in Rockingham County are not very timely filed the Board finds that the record indicates that protestants’ meaningful alternatives, particularly in view of their financial and competitive objections do not warrant denial of this ap­ distances from Harrisonburg. plication. 2. Banking data are as of December 31, 1979, and reflect bank hold­ ing company formations and acquisitions approved as of March 31, 1980. 5. The four relevant banking markets are approximated by the fol­ 3. The Roanoke banking market is approximated by the Roanoke lowing geographical areas: Rockingham, by Rockingham County, in­ SMSA. cluding the city of Harrisonburg; Frederick, by Frederick County, in­ 4. Virginia National Bankshares, Inc., Norfolk, Virginia, a regis­ cluding the city of Winchester; Augusta, by Augusta County, tered bank holding company, has filed an application under section including the cities of Staunton and Waynesboro; and Shenandoah, by 3(a)(3) of the Act for Board approval to acquire Troutville Bank. Shenandoah County. Market data are as of June 30, 1978. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

576 Federal Reserve Bulletin □ July 1980 Valley, on its own, does not appear to be capable of U.S.C. § 1842(a)(3)) to acquire all of the outstanding expanding beyond its market area, and thus may not shares (less directors’ qualifying shares) of Garden be considered to be a likely entrant into any of the State National Bank, Paramus, New Jersey. markets currently served by banking subsidiaries of Notice of the application, affording opportunity for Dominion. Based upon its review of all the facts of interested persons to submit comments and views, has record, the Board is of the opinion that consummation been given in accordance with section 3(b) of the Act. of the proposal would have only slightly adverse ef­ The time for filing comments and views has expired, fects on competition. The Board believes, however, and the Board has considered the application and all that these effects when viewed in light of other consid­ comments received in light of the factors set forth in erations reflected in the record, are not serious enough section 3(c) of the Act (12 U.S.C. § 1842(c)). to warrant denial of the proposal. On the basis of the record, the application is ap­ The Board considers the financial and managerial re­ proved for the reasons set forth in the Board’s State­ sources and future prospects of Dominion and its sub­ ment, which will be released at a later date. sidiaries as generally satisfactory. Moreover, affilia­ By order of the Board of Governors, effective tion with Dominion should materially improve the June 5, 1980. financial and managerial resources and future pros­ pects of Valley’s subsidiary banks, and enhance their Voting for this action: Chairman Volcker and Governors abilities to serve the needs of their communities. In Schultz, Wallich, and Partee. Voting against this action: Gov­ addition, Dominion proposes to expand and improve ernors Teeters and Gramley. Present and not voting: Gover­ nor Rice. the services offered to the public by Valley’s subsidi­ ary banks. In light of the above, considerations relat­ (Signed) Griffith L. Garwood, ing to the convenience and needs of the community to [seal] Deputy Secretary of the Board. be served lend weight toward approval of the appli­ cation and outweigh the adverse competitive effects associated with this proposal. Accordingly, it is the Statement by Board of Governors of the Federal Board’s judgment that the subject proposal is in the Reserve System Regarding Application of public interest and that the application should be ap­ Fidelity Union Bancorporation to Acquire proved. Garden State National Bank On the basis of the record, the application is ap­ proved for the reasons summarized above. The trans­ By Order dated June 5, 1980, the Board approved the action shall not be made before the thirtieth calendar application of Fidelity Union Bancorporation, New­ day following the effective date of this Order, or later ark, New Jersey, for the Board’s approval under sec­ than three months after the effective date of this Order tion 3(a)(3) of the Bank Holding Company Act (12 unless such period is extended for good cause by the U.S.C. § 1842(a)(3)) to acquire all the outstanding Board, or by the Federal Reserve Bank of Richmond, shares (less directors’ qualifying shares) of Garden under delegated authority. State National Bank, Paramus, New Jersey. In this By order of the Board of Governors, effective Statement, the Board sets forth its reasons for approv­ June 17, 1980. ing the application. Applicant, with five subsidiary banks, is the fourth Voting for this action: Vice Chairman Schultz and Gover­ largest banking organization in New Jersey.1 It holds nors Wallich, Partee, Rice, and Gramley. Absent and not vot­ aggregate deposits of $1.7 billion, representing 6.2 per­ ing: Chairman Volcker and Governor Teeters. cent of total commercial bank deposits in the state. (Signed) Cathy L. Petryshyn Through its subsidiary banks, Applicant conducts its [seal] Assistant Secretary of the Board. banking business at a total of eighty-six banking of­ fices located in ten local banking markets in north­ eastern New Jersey.2 Bank, the twelfth largest bank­ Fidelity Union Bancorporation, ing organization in New Jersey, holds deposits of Newark, New Jersey $709.6 million, representing 2.5 percent of statewide deposits. Bank conducts its banking business through Order Approving Acquisition of Bank thirty-seven banking offices located in five local mar­ kets in northern New Jersey. Fidelity Union Bancorporation, Newark, New Jersey, a bank holding company within the meaning of the 1. All banking data are as of December 31, 1978. Bank Holding Company Act, has applied for the 2. In addition, Applicant’s subsidiary, Suburban Finance Compa­ Board’s approval under section 3(a)(3) of the Act (12 ny, operates 15 consumer finance offices in New Jersey. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 577 By Order dated November 16, 1979, the Board de­ might otherwise result from the proposal are dimin­ nied an earlier proposal by Applicant to acquire Bank. ished by these circumstances. In that decision the Board found that the previous pro­ Similarly, Applicant has submitted evidence con­ posal would have a serious adverse impact on the cerning the role of state mutual savings banks, as well banking structure and the concentration of banking re­ as state and federally-chartered savings and loan asso­ sources in New Jersey, and on potential competition in ciations, in New Jersey (generally referred to as several local banking markets in New Jersey, and that “thrifts”). Applicant points out that thrifts in New Jer­ these effects were not outweighed by the increased sey, which hold total deposits approximately equal to benefit to the convenience and needs of the commu­ those in commercial banks, are empowered to offer nities to be served that would have been derived from NOW accounts and also to make limited consumer, as the proposal. well as commercial, loans.4 While the Board continues In submitting the present application, Applicant has to view commercial banking as most relevant in deter­ presented additional evidence concerning the com­ mining the competitive effects of a proposal, it may be petitive and public benefits aspects of the proposal, in­ appropriate in particular cases to take into consid­ cluding actions it will take to address the concerns eration direct competition from thrifts in specific areas expressed by the Board in its previous denial. In in evaluating the various competitive influences.5 The particular, Applicant proposes to divest, as going con­ present case seems to be an appropriate one for such cerns, seven branches of Bank, as well as one branch analysis, particularly in view of the absolute size and of a subsidiary bank of Applicant holding aggregate de­ significant deposit-taking role of thrifts in New Jersey posits of $97 million, representing 0.4 of deposits in generally as well as their increasing powers. The commercial banks in the state.3 The proposed divesti­ Board believes that their influence is such as to further ture of branches would effectively reduce the overall diminish the importance of the effects of the proposed size of the institution to be acquired from the twelfth to acquisition on banking structure and concentration of the sixteenth largest in New Jersey, holding deposits resources in New Jersey. of $613 million. In addition, Applicant has proposed The Board has also considered the effects that con­ certain additions in banking services in further support summation of the proposed transaction would have on of approval of the application. existing and potential competition within each of the In evaluating the effects of the proposal on statewide local banking markets where Applicant or Bank com­ banking structure and concentration of resources in pete. Both Applicant and Bank serve the Paterson, New Jersey, Applicant urges the Board to take into New Jersey, banking market, where as of July 26, account the unique geographic position of that state 1979, they held, respectively, 0.7 and 3.1 percent of and the resulting out-of-state influences that this geo­ commercial bank deposits. In addition, Applicant and graphic position has on New Jersey banking. Appli­ Bank also compete in the metropolitan New York cant has submitted evidence to demonstrate the signif­ banking market, which includes portions of two New icant impact that New York banking institutions have Jersey counties. On July 26, 1979, Bank, the 20th larg­ on competition in northern New Jersey. From the rec­ est of 126 banking organizations, held only 0.4 percent ord it appears that New York institutions do have of the deposits in the market, while Applicant ranked banking relationships with individuals and small busi­ last in that market. Inasmuch as neither organization nesses in northern and central New Jersey. There is has a significant presence in either market in which also evidence in the record that large Philadelphia they both compete, the Board concludes that the pro­ banks may exert a similar competitive influence in posal would eliminate only a minimal amount of exist­ southern and central New Jersey. While the weight to ing competition between the two organizations.6 be accorded this influence is not certain, it does appear With regard to potential competition, the Board that New Jersey’s unique position between two large notes that Applicant serves eight New Jersey markets out-of-state financial centers does impact on the com­ petitive environment of New Jersey banks, and the 4. The Board notes that under the recently enacted Monetary Con­ Board believes that any adverse effects on statewide trol Act of 1980, the commercial lending and investment powers of banking structure and concentration of resources that federally-chartered thrift institutions were broadened. However, in view of the uncertainty with respect to the extent to which the thrifts will exercise their new powers, the Board believes that it would be 3. Applicant has also committed to make an effort to divest the premature to give full credence to thrift institutions as full competitors branches to organizations that are not strong competitors or are not of banks until the effects can be ascertained. represented in the respective markets where the branches are located. 5. United Bank Corporation of New York (Schenectady Trust Com­ Thus, the divestiture of branches could have a procompetitive effect in pany), 66 Federal Reserve Bulletin 61, 63 (January 1979). specific markets. In this regard, Applicant submitted evidence in­ 6. The United States Department of Justice has indicated its view dicating that, when branches are transferred to another banking or­ that the proposal would have much more serious effects on existing ganization, as a general rule customers tend to continue their estab­ competition. The Board notes, however, that this conclusion is based lished banking relationships with the branch despite the transfer of its on a much more expansive definition of the Newark banking market ownership. than the Board believes is warranted in this case. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

578 Federal Reserve Bulletin □ July 1980 where Bank does not presently have offices, while counts, as well as to lower the interest rates on con­ Bank serves three markets where Applicant is not now sumer loans. In addition, Applicant intends to under­ represented. Generally, elimination of potential com­ take a program to install trilingual electronic banking petition is regarded as most serious in the framework facilities at a number of Bank’s branches. Applicant of a concentrated market, where the party being ac­ has also committed to establish a $5 million commu­ quired is a dominant or one of the largest organizations nity loan pool for Hudson County to finance housing and the party making the acquisition is sizeable and rehabilitation in low income areas where residents ex­ perceived to be one of a limited number of likely en­ perience difficulty in obtaining credit. This pool would trants into the market. In this regard, three of the mar­ be of particular benefit to residents of low income kets in which Applicant is a sizeable organization areas of Hudson County where three of Bank’s (Freehold, Asbury Park and Newark) may be viewed branches are located. Finally, Applicant notes that it as somewhat concentrated with four banking organiza­ will assist Bank in increasing its commercial lending tions holding from 56 to 88 percent of commercial bank services through expertise provided by Applicant, and deposits in the market. However, in view of the pre­ that the availability of a greater lending capacity ceding discussion regarding the consideration of thrift through the holding company system may enable Bank organizations in evaluating market influences, the to become a more effective competitor in the Metro­ Board notes that, based on data furnished by Appli­ politan New York banking market. In the Board’s cant, in two of the three markets thrifts hold 36 percent view, the benefits to the public that may be expected of the total market deposits, while in the Newark mar­ from consummation of the proposed acquisition lend ket, they hold 60 percent of total deposits in the mar­ significant weight toward approval of the application, ket. In the Board’s judgment, the significant presence and are sufficient to outweigh any adverse effects that of New Jersey thrift organizations in each of these may result. Accordingly, it is the Board’s judgment three markets may serve to diminish Applicant’s com­ that the proposed transaction would be in the public petitive position in each market, and lessen the rele­ interest and that the application should be approved. vance of the concentration figures among commercial Based on the foregoing and other facts of record, the banks. Moreover, with respect to the number of likely application is hereby approved, subject to the condi­ entrants in those markets, New Jersey law permits tion that within one year of consummation Applicant statewide operations by both banks and bank holding divest the seven offices of Bank and one office of Ap­ companies, and the evidence before the Board sug­ plicant’s lead subsidiary bank as proposed in the appli­ gests that there are in fact numerous likely entrants cation. The Board expects that such offices will be di­ into each of these three markets, as well as into the vested as going concerns having substantially the same other markets in which either Applicant or Bank com­ business and assets as those offices held on Novem­ pete, depending upon the relative attractiveness of the ber 16, 1979. The transaction shall not be consummated market. Accordingly, based on the foregoing and other before the thirtieth calendar day following the ef­ facts of record, the Board concludes that while the fective date of the Board’s Order or later than three proposal would eliminate some potential competition, months after the effective date of the Order, unless the Board does not believe that the overall effects such period is extended for good cause by the Board of would be significant. Governors or by the Federal Reserve Bank of New The financial and managerial resources of Applicant York pursuant to delegated authority, but in any event and its subsidiaries are regarded as satisfactory, and no later than December 31, 1980. their future prospects appear favorable. The financial Board of Governors of the Federal Reserve System, and managerial resources and future prospects of June 26, 1980. Bank are considered to be generally satisfactory. While Applicant will incur a substantial amount of in­ (Signed) Griffith L. Garwood, debtedness in connection with the proposed transac­ [seal] Deputy Secretary of the Board. tion, it appears that Applicant possesses sufficient fi­ nancial flexibility to service the debt and remain a source of strength to its subsidiary banks. Accord­ Dissenting Statement of Governors Teeters and ingly, banking factors are consistent with approval of Gramley the application. With respect to the convenience and needs of the In considering the application of Fidelity Union Ban­ communities to be served, Applicant has indicated corporation to acquire Garden State National Bank, that it will improve Bank’s services to its customers we believe that the Board should use as its point of and the community in several important respects. In reference the previous denial of this proposed acquisi­ particular, Applicant intends to raise the interest rates tion on November 16, 1979. In that order the Board paid to Bank’s customers on certain time deposit ac­ found that consummation of the proposal would result Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 579 in serious adverse impacts on banking structure, on these banking markets. Furthermore, the distance concentration of resources, and on potential com­ separating the closest of Applicant’s and WMFC’s petition in New Jersey, and that these adverse effects subsidiary banks is approximately 65 miles. Accord­ were not outweighed by increased benefits to the con­ ingly, the Board concludes that no existing com­ venience and needs of the communities to be served. petition would be eliminated upon consummation of We have examined the record in the present appli­ the proposal. cation, and we have not found evidence that circum­ With respect to the competitive effects within the stances have changed significantly or that sufficient Traverse City and Big Rapids banking markets that new facts have been added to the record since the would result from consummation of the proposal, Board’s previous action to warrant approval of this ap­ WMFC’s banking subsidiaries hold commercial bank­ plication. Accordingly, in light of the Board’s previous ing deposits, respectively, of $31.5 million and $15.1 denial, we believe that the application should be de­ million, representing 5.9 and 11.6 percent of market nied. deposits. In view of all the facts of record, including June 26, 1980 the relative absolute size of WMFC’s banking sub­ sidiaries in these markets, their market shares, and the structure of each of these banking markets, the Board National Detroit Corporation, concludes that consummation of the proposal would Detroit, Michigan have no significant adverse effects upon potential com­ petition in these markets. Order Approving Acquisition of Bank Holding Cadillac Bank is the largest of four commercial Company banking organizations in the Cadillac banking market, and has $126.7 million in deposits, representing 66.5 National Detroit Corporation, Detroit, Michigan, a percent of market deposits. The Board’s concerns bank holding company within the meaning of the Bank with the possible adverse effects that consummation of Holding Company Act, has applied for the Board’s ap­ this proposal would have upon potential competition proval under section 3(a)(3) of the Act (12 U.S.C. § in the Cadillac market are mitigated by the fact that the 1842(a)(3)) to acquire 80 percent or more of the voting significant position of Cadillac Bank in the Cadillac shares of West Michigan Financial Corporation, Cadil­ banking market may be attributed to the fact that Cad­ lac, Michigan (“WMFC”), thereby indirectly acquir­ illac Bank was the only bank in Cadillac for the 67 ing voting shares of The Cadillac State Bank, Cadillac, years prior to 1962 and that there existed a lack of Michigan (“Cadillac Bank”), and The First National overall economic growth and bank chartering activity Bank of Evart, Evart, Michigan (“Evart Bank”). in the Cadillac area. In addition, the record indicates Notice of the application has been given in accord­ that the Cadillac market is not attractive to de novo ance with section 3 of the Act and the time for filing entry, particularly as evidenced by its population and comments and views has expired. The Board has con­ deposits-per-banking-office averages, which are signif­ sidered the application and all comments received in icantly lower than statewide averages (as of October light of the factors set forth in section 3(c) of the Act 1979). Moreover, while there are three other com­ (12 U.S.C. § 1842(c)). mercial banking organizations in the Cadillac market, Applicant, the largest banking organization in Mich­ none of them is a likely vehicle for foothold entry by igan, controls ten banks with aggregate deposits of Applicant and Michigan law precludes entry by Appli­ $6.1 billion, representing 15.5 percent of the total de­ cant into the Cadillac market by other means. In light posits in commercial banks in the state.1 Acquisition of the above and other facts of record, the Board is of WMFC, the 29th largest banking organization in unable to conclude that consummation of the proposal Michigan, with two subsidiary banks having combined would have such adverse competitive effects as to aggregate deposits of $173.4 million, would increase warrant denial of the application. Applicant’s share of commercial bank deposits in After considering the overall impact of consum­ Michigan by 0.4 percent. mation of this proposal, the Board has concluded that WMFC’s larger banking subsidiary, Cadillac Bank, approval of this application would generally be in the competes in both the Cadillac and Traverse City bank­ public interest. The Board recognizes that consum­ ing markets; its other banking subsidiary, Evart Bank, mation of the proposal would have some adverse com­ competes in the Big Rapids banking market.2 None of petitive effects in the Cadillac banking market, as well Applicant’s banking subsidiaries is located in any of Michigan. The Big Rapids banking market is approximated by all of 1. All banking data are as of June 30, 1979. Mecosta and the southern half of Osceola County, Michigan. The 2. The Traverse City banking market is approximated by all of An­ Cadillac market is approximated by all of Messaukee and Wefford trim, Benzie, Grand Traverse, Kalhaska and Leedanau Counties, Counties and the northern half of Osceola County, Michigan. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

580 Federal Reserve Bulletin □ July 1980 as a slight impact upon the concentration of banking under the name and charter of Republic of Texas Cor­ resources in Michigan. However, the Board does not poration (“Applicant”). believe that the adverse effects on competition within Applicant has also applied for the Board’s approval the Cadillac market and upon the concentration of under section 4(c)(8) of the Act (12 U.S.C. § banking resources within Michigan are so adverse as 1843(c)(8)) and section 225.4(b)(2) of the Board’s Reg­ to require denial of the proposal. ulation Y (12 C.F.R. § 225.4(b)(2)), to acquire all of the The financial and managerial resources of Appli­ outstanding shares of Fort Sam Life Insurance Com­ cant, its subsidiaries, and WMFC are regarded as sat­ pany, San Antonio, Texas (“Fort Sam Life”), a sub­ isfactory and the future prospects of Applicant and its sidiary of FSHB, and to engage in the sale of insurance subsidiaries appear favorable. Following consum­ directly related to extensions of credit by FSHB’s mation of this proposal Applicant proposes to expand banking subsidiaries. Fort Sam Life engages in under­ the services of WMFC’s banking subsidiaries by of­ writing credit life, and credit accident and health insur­ fering overdraft checking services and personal lines ance in connection with extensions of credit by of credit. Additionally, Applicant intends Cadillac and FSHB’s banking subsidiaries. These activities have Evart Banks to offer VA and FHA mortgage loans and been determined by the Board to be closely related to to resell WMFC’s existing mortgages in order to make banking (12 C.F.R. §§ 225.4(a)(9)(ii) and (10)). additional mortgage funds available to local custom­ Notice of the applications, affording opportunity for ers. Thus, the Board concludes that considerations re­ interested persons to submit comments and views has lating to the convenience and needs of the community been given in accordance with sections 3 and 4 of the to be served lend sufficient weight toward approval to Act (45 Federal Register 3668). The time for filing outweigh any adverse competitive effects associated comments and views has expired, and the applications with this proposal. and all comments received have been considered in Based upon the foregoing and other considerations light of the factors set forth in section 3(c) of the Act reflected in the record, it is the Board’s judgment that (12 U.S.C. § 1842(c)) and the considerations specified the proposed acquisition is in the public interest and in section 4(c)(8) of the Act. that the application should be approved. Applicant, the fourth largest banking organization in On the basis of the record the application is ap­ Texas, controls 22 banks with aggregate deposits of proved for the reasons summarized above. The trans­ approximately $5.0 billion,1 representing 7.4 percent action shall not be made before the thirtieth calendar of total deposits in commerical banks in the state.2 day following the effective date of this Order or later FSHB, the twentieth largest banking organization in than three months after the effective date of this Or­ Texas, has two subsidiary banks and has received ap­ der, unless such period is extended for good cause by proval to open a de novo bank, and controls total de­ the Board, or by the Federal Reserve Bank of Chicago posits of approximately $183.0 million, representing pursuant to delegated authority. 0.3 percent of total statewide commercial bank depos­ By order of the Board of Governors, effective its. Upon consummation, the resulting banking organi­ June 17, 1980. zation would rank as the fourth largest in the state, controlling about 7.7 percent of total deposits in com­ Voting for this action: Chairman Volcker and Governors mercial banks in Texas. While concentration of bank­ Schultz, Wallich, Partee, and Gramley. Voting against this ing resources in Texas has been a source of concern to action: Governors Teeters, and Rice. the Board, the Board concludes that consummation of the transaction would not have serious adverse effects (Signed) Cathy L. Petryshyn on the concentration of banking resources in the state. [seal] Assistant Secretary of the Board. Applicant ranks as the fifth largest of 42 banking or­ ganizations located in the San Antonio banking market (the relevant market)3 through its control of two sub­ Republic of Texas Corporation, sidiary banks with combined deposits of $175.6 mil­ Dallas, Texas lion, representing 4.8 percent of total commercial bank deposits in the market. FSHB, the fourth largest bank­ Order Denying Merger of Bank Holding Companies 1. All banking data are as of December 31, 1978, and reflect bank Republic of Texas Corporation, Dallas, Texas, a bank holding company formations and acquisitions approved as of January holding company within the meaning of the Bank 31, 1980. 2. By Order dated March 18, 1980, the Board approved the acquisi­ Holding Company Act, has applied for the Board’s ap­ tion by Applicant of Bank of Austin, Austin, Texas. Consummation of proval under section 3(a)(5) of the Act (12 U.S.C. § that acquisition would result in Applicant’s controlling 23 banks and 7.5 percent of total deposits in the state. 1842(a)(5)) to merge with Fort Sam Houston Bank- 3. The San Antonio banking market is approximated by the San Shares, Incorporated, San Antonio, Texas (“FSHB”), Antonio SMSA. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 581 ing organization in the market, through its two subsidi­ (“Fort Sam Bank”), is what is commonly termed a ary banks controls aggregate deposits of $183.0 “military bank” in that it is located at a military instal­ million, representing 5.0 percent of market deposits. lation and derives a significant amount of its deposit Consummation of the transaction would increase sig­ and loan business from military personnel located out­ nificantly Applicant’s share of market deposits, to 9.8 side the local banking market. Applicant asserts that percent, causing Applicant to become the third largest Fort Sam Bank’s market share should be reduced by organization in the market, and would result in the half to more fairly assess the competitive effects in the elimination of substantial existing competition be­ local market. This reduction would result in Applicant tween Applicant and FSHB. As the Board has in­ controlling, upon consummation of this proposal, dicated previously, a proposed combination of similar­ about 7.3 percent of total market deposits; however, ly-sized banking organizations within the same even shading Fort Sam Bank’s share of market depos­ banking market that are of a size to achieve economies its, the Board is of the opinion that consummation of of scale and attract capable management and are able the transaction would have serious adverse effects on to operate independently as aggressive competitors, competition. Although Fort Sam Bank may derive a would ordinarily have serious anticompetitive effects large portion of its business from military personnel, to and should not be approved except in compelling cir­ a certain degree all banks in the San Antonio market cumstances. compete for business from military personnel and, This proposal represents a large horizontal acquisi­ therefore, the shading of FSHB’s market share to the tion in a market where Applicant already has a signifi­ extent suggested by Applicant may overstate the sig­ cant presence through its two banks. The larger of nificance of Fort Sam Bank’s orientation. these banks, Bexar County National Bank of San An­ The Board has also considered the impact of thrift tonio, is a sizable organization in its own right and is institutions on competition within the San Antonio fully capable of marketing its services throughout the market. Although there are a number of large thrift in­ entire geographic market. The size of FSHB would in­ stitutions located in the San Antonio banking market, dicate that it also is able to compete effectively in the the Board in this instance is unable to conclude from market even absent affiliation with Applicant. More­ the evidence in the record that these institutions com­ over, consummation of the proposal would remove pete actively with commercial banks over a sufficient FSHB as a viable independent organizaton and as a range of financial services to mitigate significantly the possible entry vehicle for other holding companies not anticompetitive effects of the proposal. Thus, having currently represented in the market, and would signifi­ considered all of the facts of record in this application, cantly increase the concentration of banking resources the Board concludes that consummation of the pro­ in the San Antonio banking market. Based upon these posed transaction would have substantially adverse ef­ and other facts of record, the Board is of the opinion fects on competition in the San Antonio market. that consummation of this proposal would have sub­ The financial and managerial resources and future stantially adverse effects on competition in the rele­ prospects of Applicant, FSHB, and their subsidiaries vant banking market.4 are considered satisfactory. Accordingly, banking fac­ Consummation of the proposal would also foreclose tors are consistent with approval of the application. the possibility of increased competition in the future. Applicant proposes to develop the local customer and Applicant’s absolute size and total resources could commercial business of FSHB’s banks with particular support its expansion in this market de novo or by emphasis on development of Fort Sam Bank’s local foothold acquisition. Expansion by such means would business. However, FSHB appears to have the re­ foster rather than eliminate competition. The San An­ sources to develop these services independently of af­ tonio banking market is growing, and can support con­ filiation with Applicant. Applicant also intends to initi­ tinued expansion by existing firms while remaining at­ ate trust and international services. While these tractive for outside entry by de novo or foothold considerations may lend some weight toward approval means. In this regard, FSHB is also a large, well-man­ of the application, they are insufficient to outweigh aged organization fully capable of continued growth the anticompetitive effects of the merger especially in and expansion within the market, which is demon­ light of the loss to the community of a viable and ag­ strated by its recent de novo expansion in the market. gressive competitor that could continue to serve as an In reaching its conclusion on the competitive effects alternative source of banking services. Therefore, con­ of this proposal, the Board noted that FSHB’s lead siderations relating to the convenience and needs of subsidiary bank, National Bank of Fort Sam Houston the community to be served do not clearly outweigh the substantial anticompetitive effects that would re­ sult from consummation of the proposed transaction. 4. While Chairman Volcker agrees with the Board’s denial of this With respect to the application to acquire Fort Sam application, he does not agree with the Board’s characterization of the anticompetitive effects as being substantially adverse. Life, the Board has determined that the balance of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

582 Federal Reserve Bulletin □ July 1980 public interest factors prescribed by section 4(c)(8) of Shares, Inc. because I do not believe that this merger the Act warrant approval. There is no evidence that would have serious adverse effects on competition. On Applicant’s acquisition of Fort Sam Life alone would the contrary, it is my opinion that the affiliation of result in undue concentration of resources, decreased these two organizations would enable FSHB to com­ or unfair competition, conflicts of interest, unsound pete more aggressively in the local banking market, banking practices, or other adverse effects on the pub­ thus enhancing competition in the market and better lic interest. In the context of this proposal, however, serving the needs of the local community. Applicant could not consummate this acquisition with­ out acquiring control of FSHB. Accordingly, the June 11, 1980 Board concludes that this application must also be de­ nied. It is the Board’s judgment that consummation of the The Royal Bank of Canada, proposal would not be in the public interest and that Montreal, Canada the applications should be denied. Based on the fore­ going and other facts of record, the applications are Order Approving Acquisition of Bank hereby denied. By order of the Board of Governors, effective June The Royal Bank of Canada, Montreal, Canada (“Roy­ 11, 1980. al”), a bank holding company within the meaning of the Bank Holding Company Act, has applied for the Voting for this action: Chairman Volcker and Governors Board’s approval under section 3(a)(3) of the Act (12 Wallich, Partee, Teeters, Rice, and Gramley. Voting against U.S.C. § 1842(a)(3)) to acquire all of the voting shares this action: Governor Schultz. of the successor by merger to Banco de San Juan, Hato Rey, Puerto Rico (“Banco”). The bank into (Signed) Cathy L. Petryshyn, which Banco is to be merged has no significance ex­ [seal] Assistant Secretary of the Board. cept as a means to facilitate the acquisition of the vot­ ing shares of Banco. Accordingly, the proposed acqui­ sition of shares of the successor organization is treated Concurring Statement of Governor Wallich herein as the proposed acquisition of the shares of Banco. As I have indicated on previous occasions,1 because of Notice of the application, affording opportunity for the diverse group of financial products and services interested persons to submit comments and views, has that thrift institutions now offer in direct competition been given in accordance with section 3(b) of the Act. with commercial banks, thrift institutions should be in­ The time for filing comments and views has expired, cluded in the analysis of competition to a much greater and the Board has considered the application and all extent than has been the Board’s practice. I continue comments received, including those of the Secretary to adhere to that view. However, in light of all the of the Treasury of Puerto Rico, in light of the factors facts of record in this instance, including the absence set forth in section 3(c) of the Act. of sufficient evidence of active competition between Royal is the largest banking organization in Canada thrift institutions and commercial banks in this market, and the thirtieth largest in the world (as of year-end I agree with the majority’s action in denying this pro­ 1978), with total assets in U.S. dollars of approximate­ posal. ly $46.8 billion and total deposits of $41.0 billion.1 Royal provides a complete array of retail, commercial June 11, 1980 and international banking services through its 1,604 banking offices worldwide, including 1,522 branches in Canada. Royal has a wholly-owned subsidiary bank in Dissenting Statement of Governor Schultz the United States, The Royal Bank and Trust Compa­ ny, New York, New York ($181.8 million in depos­ I would approve the application of Republic of Texas its).2 Royal also operates a branch in Portland, Corporation to merge with Fort Sam Houston Bankagencies in New York City and San Francisco, and 1. Banking data are as of October 31, 1979, unless otherwise in­ 1. United Bank Corporation of New York (Schenectady Trust Com­ dicated. pany), 64 Federal Reserve Bulletin 894, 8% (1978); Independent 2. The Board has determined that Puerto Rico is not a “state” for Bank Corporation (The Old State Bank of Fremont), 65 Federal the purpose of the multi-state banking prohibitions of section 3(d) of Reserve Bulletin 867, 870 (1979); United Bank Corporation of the Bank Holding Company Act (12 U.S.C. § 1842(d)), and therefore New York (Schenectady Trust Company), 66 Federal Reserve the Board is not precluded from approving Royal’s acquisition of a Bulletin 61, 64 (1980). bank in Puerto Rico. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 583 maintains representative offices in Chicago, Dallas, can banks and the inability of foreign banks to obtain Denver, Houston, Los Angeles, and Pittsburgh.3 FDIC insurance for their branches. Royal, the fifth largest of 22 banking organizations in The San Juan banking market is dominated by two Puerto Rico (deposits of $405.4 million)4, has six non-Puerto Rico-based banking organizations, Chase branches controlling 5.6 percent of total deposits in Manhattan Corporation and Citicorp, both of New commercial banks in Puerto Rico. Banco, the ninth York, and Banco Popular de Puerto Rico. Together largest banking organization in Puerto Rico (deposits these three banking organizations control approxi­ of $256.8 million), has 14 branches controlling 3.1 per­ mately 68.8 percent of total deposits in the market, cent of total deposits in commercial banks in Puerto with Chase Manhattan Corporation and Citicorp each Rico. Upon consummation of the proposed acquisi­ controlling almost 25 percent of such deposits and tion, Royal would be the fifth largest of 21 banking or­ Banco Popular de Puerto Rico controlling slightly over ganizations in Puerto Rico with 8.7 percent of total 20 percent. Accordingly, even after consummation of commercial bank deposits in Puerto Rico. The four this proposal, the amount of deposits controlled by largest banking organizations in Puerto Rico together Royal would be only one half the amount controlled by control approximately 73.5 percent of total deposits in the next largest banking organization in the market. commercial banks in Puerto Rico, with the three larg­ The adverse competitive consequences that would est controlling approximately 61.6 percent of total de­ normally be expected to result from consummation of posits. Given the structure of banking in Puerto Rico, this proposal are mitigated not only by the dominance the Board finds that approval of this application would of the San Juan banking market by the three larger not have a significantly adverse effect upon the con­ banking organizations in the market, but also by other centration of banking resources in Puerto Rico. evidence of record reflecting the inability of Royal to Four of Royal’s branches and 12 of Banco’s offices be a fully competitive banking alternative for con­ operate in the San Juan banking market.5 Royal’s four sumers in Puerto Rico. The extent to which Royal and branches, with total deposits of $370.2 million or 6.8 Banco compete is constrained by Royal’s inability to percent of the market total, and Banco’s 12 branches, obtain FDIC deposit insurance7 and its inability to ex­ with total deposits of $198.8 million or 3.7 percent of pand by de novo branching.8 the market total, are, respectively, the fourth and sev­ Accordingly, while the Board might be expected to enth largest of 17 banking organizations located in the find that consummation of this proposal would have a San Juan market. Upon consummation of the pro­ seriously adverse effect on existing competition in the posal, Royal’s share of total market deposits would in­ San Juan market, in light of all the facts of record in crease to 10.5 percent and Royal would remain the this matter the Board is of the opinion that the com­ fourth largest banking organization in the market. petitive effect of this proposal is not so serious as to The Board has recently denied acquisitions in which preclude approval of this application, especially in the increase in market concentration would have been light of the outweighing convenience and needs con­ less than that resulting from this proposal.6 However, siderations set forth below. the Board finds that there are several significant fac­ In addition to their presence in the San Juan market, tors that distinguish the competitive effects of this pro­ Royal and Banco each have two additional branches, posal from those that the Board previously found war­ all of which are located in separate banking markets. ranted denial. Included among such factors are the Thus, there would be no decrease in existing com­ structure of the San Juan banking market as well as petition in any of these four markets. In addition, be­ restrictions on the branching ability of non-Puerto Ri­ cause of the restrictions on Royal’s abilities to branch and Banco’s inability to branch further because of its limited financial and managerial resources, the Board 3. Royal also engages in nonbanking activities in the United States finds that consummation of this proposal would not through two wholly-owned subsidiaries, U.S.A. Realty Holdings, Inc., and Femcroft Holdings, Inc., held pursuant to section 4(c)(1)(D) have an adverse effect on probable future competition. of the Act (12 U.S.C. § 1843(c)(1)(D)), and one wholly-owned indirect The financial and managerial resources and future subsidiary, Globe Building Corporation, held pursuant to section prospects of Royal are considered satisfactory. Royal 4(c)(1)(C) of the Act (12 U.S.C. § 1843(c)(1)(C)). In addition, Royal has a less than 25 percent interest in five Canadian corporations, each would be able to serve as a source of financial and of which has majority or wholly-owned subsidiaries engaged in non­ managerial strength for Banco, especially in view of banking activities in the United States. These investments are held by Royal’s commitment to add $10 million to Banco’s Royal pursuant to sections 2(h) and 4(c)(9) of the Act (12 U.S.C. §§ 1841(h)) and 1843(c)(9)) and section 225.4(g)(2)(v) of the Board’s Reg­ equity capital and its commitment to ensure that Banulation Y (12 C.F.R. § 225.4(g)(2)(v)). 4. All market data are as of June 30, 1979. 5. The San Juan banking market is approximated by the San Juan 7. The FDIC does not insure deposits held at the Puerto Rican SMSA. branches of foreign banks. 44 Federal Register 40,059 (1979). 6. Republic of Texas Corporation, 66 Federal Reserve Bulle­ 8. The Board notes that Royal last established a de novo office in tin 580 (June 1980); County National Bancorporation, 65 Federal 1966, and between 1968 and 1974 has repeatedly been denied per­ Reserve Bulletin 763 (1979). mission to establish an additional office. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

584 Federal Reserve Bulletin □ July 1980 co remains strongly capitalized. In addition, affiliation The time for filing comments and views has expired, with Royal would provide Banco with needed manage­ and the Board has considered the application and all rial expertise. Accordingly, considerations relating to comments received in light of the factors set forth in banking factors favor approval of the application. section 3(c) of the Act, 12 U.S.C. § 1842(c). As a result of the proposed acquisition, Banco Applicant, the third largest banking organization in would receive financial and managerial resources that Texas, controls 39 banks with aggregate deposits of would allow it to expand into new product and geo­ $5.4 billion, representing 7.8 percent of the total com­ graphic markets. Royal proposes that Banco will seek mercial bank deposits in the state.1 Bank, the 267th to establish additional offices in Puerto Rico and there­ largest banking organization in the state, has total de­ by increase its competitive presence in the Common­ posits of $34.5 million, or 0.05 percent of the state to­ wealth. Banco also, for the first time, will provide tal. Upon consummation of the proposal, Applicant personal and corporate fiduciary services to its cus­ would continue to rank third among banking organiza­ tomers. Accordingly, the Board finds that consid­ tions in Texas and would control 7.84 percent of state­ erations relating to the convenience and needs of the wide deposits, and the acquisition would not material­ communities to be served outweigh the anti­ ly alter statewide deposit concentration or the competitive effects that would result from consum­ structure of the banking system in Texas. mation of this proposal. Accordingly, it is the Board’s Bank is the ninth largest of 21 banking organizations judgment that the proposed acquisition is in the public in the Beaumont banking market; it controls $34.5 mil­ interest and that the application should be approved. lion in deposits, representing 2.7 percent of the mar­ On the basis of the record, the application is ap­ ket.2 Applicant is currently represented in the market proved for the reasons summarized above. The trans­ with one subsidiary bank, American National Bank of action shall not be made before the thirtieth calendar Beaumont (“American National”), which has total de­ day following the effective date of this Order, or later posits of $212.6 million, or 16.5 percent of the market, than three months after the effective date of this Or­ making Applicant the second largest banking organiza­ der, unless such period is extended for good cause by tion in the market. Acquisition of Bank would increase the Board or by the Federal Reserve Bank of New Applicant’s already substantial market share to 19.2 York pursuant to delegated authority. percent and would increase the proportion of market By order of the Board of Governors, effective deposits held by the four largest banking organizations June 30, 1980. from 64.1 percent to 66.8 percent. This acquisition would also eliminate competition Voting for this action: Chairman Volcker and Governors that exists between Bank and American National in Schultz, Wallich, Partee, Teeters, Rice, and Gramley. the Beaumont market. Applicant points out that Bank and American National are located in distinct urban (Signed) Griffith L. Garwood, centers, separated by several miles. However, com­ [seal] Deputy Secretary of the Board. muter travel between the two centers is relatively easy, and it appears that residents of the Port Neches area, where Bank is located, rely to some extent on Texas Commerce Bancshares, Inc., Beaumont, where American National is located, for Houston, Texas entertainment, cultural activities, and shopping needs, and there is other evidence of commercial interaction Order Denying Acquisition of Bank between Beaumont and Port Neches. With respect to the present banking operations of Bank and American Texas Commerce Bancshares, Inc., Houston, Texas, National, it appears that Bank already draws consid­ a bank holding company within the meaning of the erable business from American National’s primary Bank Holding Company Act, has applied for the service area, and American National serves a signifi­ Board’s approval under section 3(a)(3) of the Act, 12 cant percentage of Bank’s potential customers. This U.S.C. § 1842(a)(3), to acquire 100 percent of the vot­ acquisition would eliminate, in the Board’s view, a sig­ ing shares (less directors’ qualifying shares) of the suc­ nificant amount of existing competition and the possi­ cessor by merger to The First National Bank of Port bility of further developing competition between Bank Neches, Port Neches, Texas (“Bank”). The bank into and American National. which Bank would be merged has no significance ex­ cept as a means to facilitate the acquisition of Bank’s 1. Unless otherwise indicated, all banking data are of June 30, 1979, voting shares. and reflect bank holding company formations and acquisitions ap­ Notice of the application, affording opportunity for proved as of March 31, 1980. 2. The Beaumont banking market is approximated by Jefferson and interested persons to submit comments and views, has Hardin Counties and the cities of Vidor and Bridge City in Orange been given in accordance with section 3(b) of the Act. County. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 585 Furthermore, Applicant’s acquisition of Bank would Orders Under Section 4 of Bank Holding remove an attractive alternative means of entry for Company Act bank holding companies not now represented in the market. Currently, five of the state’s ten largest hold­ Citicorp, ing companies have subsidiaries in the Beaumont mar­ New York, New York ket. As one of the largest remaining independent banks in a relatively attractive market, Bank is a convenient Order for Hearing entry vehicle for any holding company that has not yet established a market presence. Under the circum­ Citicorp, New York, New York, a bank holding com­ stances, the Board cannot endorse acquisition of Bank pany within the meaning of the Bank Holding Compa­ by a holding company that already has such a signifi­ ny Act (the “Act”), has applied for the Board’s ap­ cant market presence. proval under section 4(c)(8) of the Act (12 U.S.C. § In view of the facts of record, the Board finds that 1843(c)(8)) and section 225.4(b)(2) of the Board’s Reg­ consummation of this proposal is likely to result in ulation Y (12 C.F.R. § 225.4(b)(2)) to engage in certain substantially adverse competitive effects in the Beau­ data processing activities through a subsidiary to be mont market.3 In the Board’s view these effects re­ known as Citishare Corporation. quire denial of this application unless they are clearly Under section 4(c)(8) of the Act, a bank holding outweighed in the public interest by the probable ef­ company or its subsidiaries may engage, with the fect of the transaction in meeting the convenience and Board’s prior approval, in any activity that the Board needs of the community to be served. has determined “to be so closely related to banking or Applicant proposes to introduce at Bank services managing or controlling banks as to be a proper in­ similar to those it can provide in the market through cident thereto.” The Board must also consider wheth­ American National or through expansion within the er the performance of a particular activity by a bank market that does not entail the elimination of a com­ holding company can reasonably be expected to pro­ petitive alternative source of banking services. The duce public benefits that outweigh possible adverse ef­ Board finds that considerations relating to the conve­ fects. This section authorizes the Board to make the nience and needs of the community to be served do not determination of whether an activity is closely related outweigh the substantially adverse competitive effects to banking by regulation. The Board used this author­ of this proposal. Banking factors are consistent with, ity in 1971 when it issued section 225.4(a)(8) of Regula­ but do not lend significant weight toward, approval. tion Y (12 C.F.R. § 225.4(a)(8)), permitting a bank The financial and managerial resources of Applicant, holding company to engage in the following activities: its subsidiaries, and Bank are regarded as generally satisfactory and future prospects appear favorable. (i) providing bookkeeping or data processing serv­ Based on the foregoing and other considerations re­ ices for the internal operations of the holding com­ flected in the record, it is the Board’s judgment that pany and its subsidiaries, and the proposed acquisition is not in the public interest (ii) storing and processing other banking, financial, and that the application should be, and hereby is, de­ or related economic data, such as performing pay­ nied. roll, accounts receivable or payable, or billing serv­ ices. By order of the Board of Governors, effective June 12, 1980. In 1975, the Board issued an interpretation (12 Voting for this action: Vice Chairman Schultz and Gover­ C.F.R. § 225.123(e)), stating that the purpose of sec­ nors Partee, Teeters, Rice, and Gramley. Absent and not vot­ tion 225.4(a)(8) of Regulation Y is to permit a bank ing: Chairman Volcker and Governor Wallich. holding company to process data for others of the kinds banks have traditionally processed, both in con­ (Signed) Cathy L. Petryshyn, ducting their internal operations and in accommodat­ [seal] Assistant Secretary of the Board. ing their customers, and to perform incidental activi­ ties necessary to carry on permissible data processing activities. The interpretation provides that such in­ cidental activities include, among others: (1) Making excess computer time available to any­ one so long as the only involvement by the holding 3. The Board has also considered the impact of thrift institutions on competition within the market and in this instance is unable to con­ company system is furnishing the facility and neces­ clude from the evidence in the record that these institutions compete sary operating personnel; and actively with commercial banks over a sufficient range of financial (2) Selling a byproduct of the development of a pro­ services to mitigate significantly the anticompetitive effects of the pro­ posal. gram for a permissible processing activity. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

586 Federal Reserve Bulletin □ July 1980 The Board interpretation excludes from the scope of concentration of resources, decreased or unfair com­ permissible activities the development of programs ei­ petition, conflicts of interests, or unsound banking ther upon a holding company’s own initiative or upon practices, that would not be outweighed by any benefit request, unless the data involved are financially orient­ to the public. ed. With regard to the permissibility of Citicorp’s pro­ The activities proposed to be engaged in by Citi- posal under Regulation Y, Protestants challenge, for share consist of the following: example, the proposed sale of excess computer time 1. Providing data processing for the internal opera­ and time-sharing services as means for evading restric­ tions of Citicorp and its subsidiaries; tions on processing non-financially related data. Pro­ 2. Developing, assembling, storing, processing, and testants contend that data processing technology has distributing financial, economic, and banking data, progressed over the past few years so as to enable a such as selected income statement and balance data processor to tailor its computer capacity to elimi­ sheet items, economic time-series, securities prices, nate the need for any significant amount of excess ca­ and foreign exchange rates; pacity. Furthermore, Protestants contend that since a 3. Selling computer “time-sharing” services to any purchaser of the proposed time-sharing service would person, which consists of providing access to data of have a computer terminal on its own site, it would not the types listed in (2) above and packaged financial be possible to monitor the purchaser’s use of the com­ systems via computer terminals in the purchasers’ puter services to prevent the impermissible processing offices; of non-financially oriented data. Although Citicorp dis­ 4. Providing packaged financial systems for installa­ putes Protestants’ claims, neither Citicorp nor Protes­ tion at sites to be chosen by purchasers of the sys­ tants have presented sufficient evidence to prove or tems; and disprove these contentions. In the Board’s judgment, 5. Selling to any person excess computer process­ these are questions of fact that are material to the ing capacity as may from time to time be available, Board’s decision on the application, and remain in dis­ on the condition that the only involvement by Citi- pute and unresolved by the parties’ written sub­ share Corporation would be furnishing the facility missions. Accordingly, the Board believes it appropri­ and necessary operating personnel, and performing ate to order a formal hearing on the application. other incidental activities necessary for the sale of In addition, Protestants claim that many of the pro­ such excess computer time. posed data processing services are not the kinds of ac­ tivities traditionally performed by banks. Protestants Providing data processing for the internal operations assert that technological developments in the industry of a bank holding company is explicitly authorized by have advanced the scope of data processing activities, section 225.4(a)(8)(i) of Regulation Y. Citicorp con­ including those proposed by Citicorp, beyond that tends that the other proposed activities constitute contemplated by the Board in 1971 when it determined “storing and processing . . . banking, financial, or re­ such activities to be permissible for bank holding com­ lated economic data” within the meaning of section panies. The Board believes that it would be appropri­ 225.4(a)(8)(ii) of Regulation Y. ate to address this issue at a hearing. Following publication of notice of the application, Finally, Protestants allege that consummation of the the Association of Data Processing Service Organiza­ proposal would result in adverse effects, especially un­ tions, Inc., Arlington, Virginia, and other interested fair competition and conflicts of interests, that would organizations (collectively “Protestants”) jointly filed not be outweighed by any benefit to the public. While written submissions in opposition to the application, these allegations would not, standing alone, warrant a and requested that the Board either deny the appli­ hearing, the Board believes that all outstanding issues cation or order a formal hearing on the application.1 in this matter should be resolved in one proceeding. Protestants contend that the proposed activities are Accordingly, it is hereby ordered, That a hearing not within the scope of those data processing activities with respect to this application be held before an Ad­ that the Board has previously determined to be per­ ministrative Law Judge to be designated by the Office missible and are not otherwise “so closely related to of Personnel Management. Such hearing shall be con­ banking or managing or controlling banks as to be a ducted in compliance with the Board’s Rules of Prac­ proper incident thereto” within the meaning of section tice for Hearings (12 C.F.R. Part 263); however, the 4(c)(8) of the Act. Protestants also allege that the pro­ Administrative Law Judge shall establish a schedule posal would result in adverse effects, such as undue whereby Citicorp and Protestants shall submit their di­ rect and rebuttal testimony in written form. Public, or­ al cross-examination shall then commence on a date 1. Other Protestants are ADP Network Services, Inc.; Comshare, designated by the Administrative Law Judge at the of­ Inc.; National CSS, Inc.; On-Line Systems, Inc.; Quantum Computer Services, Inc.; and, Tymshare, Inc. fices of the Board of Governors, Washington, D.C., or Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 587 at any other place that the Administrative Law Judge Des Peres, Missouri. CHI was organized to engage in may designate in the interest of fairness. The Adminis­ certain activities and hold certain assets formerly con­ trative Law Judge may, in his discretion, convene a ducted and held by Advance Mortgage Corporation prehearing conference or conferences at any conve­ (“Advance”), Southfield, Michigan. As successor to nient time or place. part of Advance’s business, CHI would continue to It is further ordered, That the issues to be consid­ make, acquire, and service extensions of credit se­ ered at such hearing are: (1) whether the data process­ cured by mobile homes, mobile home inventories, and ing activities proposed by Citicorp are “so closely re­ second liens on residential real estate, and it would be­ lated to banking or managing or controlling banks as to gin originating and servicing 1-4 family residential be a proper incident thereto,” within the meaning of mortgage loans. The Board has determined that these section 225.4(a) of Regulation Y (12 C.F.R. § 225.4(a)) activities are closely related to banking (12 C.F.R. § and section 4(c)(8) of the Bank Holding Company Act 225.4(a)(1) and (3)).1 (12 U.S.C. § 1843(c)(8)); and (2) whether the proposed Notice of the application, affording opportunity for activities “can reasonably be expected to produce interested persons to submit comments and views on benefits to the public, such as greater convenience, in­ the public interest factors, has been duly published (45 creased competition, or gains in efficiency, that out­ Federal Register 20,557 (1980)). The time for filing weigh possible adverse effects, such as undue concen­ comments and views has expired, and the Board has tration of resources, decreased or unfair competition, considered all comments received in light of the public conflicts of interests, or unsound banking practices.” interest factors set forth in section 4(c)(8) of the Act. It is further ordered, That any person desiring to Applicant, with total assets of $106.4 billion, is the give testimony, present evidence, or otherwise partici­ second largest banking organization in the nation.2 In pate in these proceedings should file with the Secre­ terms of domestic office deposits, it is the third largest tary, Board of Governors of the Federal Reserve Sys­ banking organization in New York State, wih 12.6 per­ tem, Washington, D.C. 20551, on or before July 10, cent of the state’s total deposits as of September 30, 1980, a written request containing a statement of the 1979. In addition to its two subsidiary banks, Appli­ nature of the petitioner’s interest in the proceedings, cant controls a number of domestic nonbank sub­ the extent of the participation desired, a summary of sidiaries engaging in such activities as consumer, the matters upon which the petitioner desires to give sales, and commercial finance, factoring, leasing, testimony or submit evidence, and the name and iden­ mortgage lending, issuance and sale of travelers’ tity of each witness who proposes to appear. Such checks, and sale and underwriting of credit-related in­ requests will be submitted to the designated Adminis­ surance. trative Law Judge for his disposition. CHI is the successor to Advance in those mobile By order of the Board of Governors, effective home finance and second mortgage activities which June 10, 1980. Advance began de novo after it became a subsidiary of Applicant in 1970. In 1979, after separating these activ­ Voting for this action: Vice Chairman Schultz and Gover­ ities into CHI, Applicant sold its shares of Advance to nors Partee, Teeters, Rice, and Gramley. Absent and not vot­ a partnership organized by Oppenheimer and Co., Inc. ing: Chairman Volcker and Governor Wallich. (“Oppenheimer”).3 Through this transaction the part­ nership basically acquired the traditional mortgage (Signed) Cathy L. Petryshyn, banking activities that Advance had engaged in before [seal] Assistant Secretary of the Board. Applicant bought it. Included in the sale were a mort­ gage servicing portfolio of $3.2 billion, assets of $99.8 million, and 27 offices operating through about 700 em­ Citicorp, New York, New York 1. CHI also operates through nine subsidiaries and has an interest, acquired with the Board’s consent under section 4(c)(13) of the Act, in Order Approving Retention of Citicorp Homeowners, First National Nippon Shinpan Co., Ltd., Tokyo, Japan. The Federal Inc. Reserve Bank of New York, pursuant to delegated authority, has per­ mitted Applicant to engage in certain credit-related insurance activi­ ties through two of these indirect subsidiaries. The remaining sub­ Citicorp, New York, New York, a bank holding com­ sidiaries are inactive or provide services related to CHI’s direct pany within the meaning of the Bank Holding Compa­ lending activities. 2. Banking data are as of December 31, 1979, unless otherwise ny Act of 1956, has applied for the Board’s approval, noted. under section 4(c)(8) of the Act (12 U.S.C. § 3. Under the Bank Holding Company Act, Applicant could not re­ 1843(c)(8)) and section 225.4(b)(2) of the Board’s Reg­ tain Advance after December 31, 1980, without the Board’s approval, ulation Y (12 C.F.R. § 225.4(b)(2)), to retain all the which it was unable to secure. Citicorp 64 Federal Reserve Bulle­ tin 321 (1978); First National City Corporation, 60 Federal Re­ voting shares of Citicorp Homeowners, Inc. (“CHI”), serve Bulletin 50 (1974). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

588 Federal Reserve Bulletin □ July 1980 ployees in 14 states. The partnership also purchased When it was acquired in 1970, Advance engaged in Advance’s subsidiary, Lakeland Assurance, Inc., traditional mortgage banking lines of business, primar­ which reinsures mortgage redemption life insurance ily originating FHA-VA insured 1-4 family residential and group accident, health, and accidental death insur­ mortgage loans and servicing those loans after sale to ance. All of Advance’s mobile home and second mort­ institutional investors and, to a lesser extent, originat­ gage loans and most of its conventional residential ing and servicing loans on income-producing proper­ mortgage loans, as well as the offices and employees ties and making construction loans.6 CHI’s current connected with the mobile home and second mortgage second mortgage and mobile home financing activities operations, were retained by Applicant in CHI. As of were commenced by Advance in 1973 and 1974. It is November 30, 1979, CHI had total assets of approxi­ likely that Applicant would have engaged in each of mately $1.5 billion. these activities through other subsidiaries if it had not As it did in denying applications to retain Advance, owned Advance.7 It is unlikely, on the other hand, that the Board must determine whether the retention of this Advance would have commenced either activity if it company “can reasonably be expected to produce had not been affiliated with Applicant. Advance had no benefits to the public, such as greater convenience, in­ specific expertise in either line of business, and there is creased competition, or gains in efficiency, that out­ no reason to believe that it would have undertaken in­ weigh possible adverse effects, such as undue concen­ dependently the cost of acquiring or training personnel tration of resources, decreased or unfair competition, and establishing the administrative and operational conflicts of interests, or unsound banking practices.” systems necessary to expand into these areas. Fur­ In its more recent denial, the Board recognized that ther, there is no secondary market for mobile home or the affiliation of Applicant and Advance had produced, second mortgage loans, and it is unlikely that an inde­ and the continuation of that affiliation could reason­ pendent Advance would have had the financial re­ ably be expected to produce, some public benefits of sources to offer such loans.8 Accordingly, Applicant’s significance. However, it was the Board’s judgment acquisition of Advance appears to have had no effect that these public benefits did not outweigh the possible on potential or probable future competition in the mo­ adverse effects of the affiliation on existing and future bile home and second mortgage finance areas. Neither competition and concentration of resources. is it likely that Applicant gained any significant com­ Applicant’s new proposal, in the Board’s judgment, petitive advantage in these areas through its ownership substantially changes that balance. Applicant has re­ of Advance.9 In contrast to Applicant’s retention of stored Advance to the market as a viable independent Advance, its retention of CHI’s existing business does competitor, and Applicant itself has been restored as a not entail significant adverse competitive consid­ potential entrant in the mortgage banking business.4 erations. Applicant proposes to retain only those lines of busi­ Applicant also intends that CHI commence tradi­ ness which it caused Advance to enter de novo after tional mortgage banking activities, and the Board re­ 1970.5 gards this de novo proposal as procompetitive. Addi­ tional sources of home financing will be provided in 4. Applicant’s sale of Advance established Oppenheimer, through diverse geographic markets. Similarly, the Board Advance, as the third largest firm in the mortgage banking industry. views CHI’s proposal to establish two new offices to Advance was the fourth largest before Applicant acquired it. As part of the sale, Applicant has also agreed to purchase, as a secondary institutional investor, $680 million of Advance’s conventional mort­ gage loans over a two-year period. 6. In 1976, Advance discontinued making mortgage loans on in­ 5. Bank holding companies should not be encouraged to believe come-producing property and construction loans. CHI proposes to re­ that the Board will look favorably upon the dismemberment of sub­ tain a portfolio of conventional residential mortgage loans, which the sidiaries they must divest because of the anticompetitive effects their Board views as essentially a passive investment without significant acquisitions entailed. Bank holding companies have no inherent claim competitive consequences. to retain any new activities a temporarily grandfathered subsidiary 7. In fact, Applicant engages in each to a more limited extent commences during the period of its affiliation. The subsidiary might through its subsidiary, Nationwide Financial Services Corporation. have commenced those activities if it had remained an independent Applicant’s decision to engage in mobile home and second mortgage organization, or they may have been commenced at the expense of the activities through Advance (and now CHI) appears to have been based subsidiary’s traditional activities. In either case a divestiture coupled on a business judgment regarding operational efficiency to be achieved with a retention of the new business would not achieve a return to the through common administration of these and Advance’s more tradi­ competitive status quo, or an approximation of it, that would be desir­ tional activities. able. The dismembered company would be a weaker competitor than 8. Of the ten largest mortgage bankers at mid-year 1978, none has it would have been but for the anticompetitive acquisition. This case, entered the second mortgage market; two have attempted to enter the however, is unusual. In the first place, a sale of a company of Ad­ mobile home financing market, but since 1975 they have ceased origi­ vance’s size clearly involves practical difficulties. Because of Ad­ nating such loans. vance’s size, few organizations that do not compete with Advance 9. In second mortgage lending it does not appear that Applicant has could purchase it intact. In the second place, there is ample evidence achieved a dominant position in any geographic market. Applicant that Applicant has divested a company that is probably a stronger does finance a substantial share of mobile home units financed in some competitor than it would have been absent the affiliation, and the busi­ areas, based on the best data available, but the Board does not regard ness Applicant proposes to retain does not cause the Board concern this with concern in view of the relative newness of mobile home fi­ about an undue concentration of resources. nancing and the absence of significant barriers to entry. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 589 engage in second mortgage lending as at least slightly clear that some actions by banks of the type of which procompetitive. Mr. Martin-Trigona complains have been, in general, There are other public benefits associated with this appropriate to temporary economic circumstances and proposal. Supplementing those outlined in the Board’s the achievement of the prevailing objectives of this na­ 1979 denial order, Applicant has pointed to a number tion’s economic policies. Mr. Martin-Trigona’s implic­ of specific instances where the public has benefited, it suggestion is that, as a price for permitting Applicant and where the public is likely to continue to benefit if to retain or expand it permissible nonbanking activi­ Applicant retains CHI. Applicant has made significant ties, the Board should extract a commitment that Citi­ efforts in making CHI innovative and responsive to bank will moderate credit differently, if at all, and con­ consumer needs, and it intends to continue those ef­ ceivably that it will price its banking services below forts. CHI will actively participate in the financing of market. This would be a policy of directing an alloca­ land-mobile home packages and will participate in the tion of a holding company’s resources to or away from development of an active secondary market in conven­ the provision of particular services that in other con­ tional mortgage-backed pass-through securities with texts the Board has specifically refused to embrace,12 institutional investors. In addition, CHI will provide and one that the Board considers unsuitable in con­ end-user loan commitments to developers of con­ nection with this application. The Board concludes dominium and co-operative housing projects and con­ that the protest raises no disputed material issue of versions. Further, CHI has indicated that through the fact requiring resolution through a formal hearing and, use of Applicant’s managerial, financial, and computer therefore, denies Mr. Martin-Trigona’s request for a resources CHI has been able to respond to customer formal hearing. The Board also believes that Mr. Mar­ loan applications in shorter average periods of time tin-Trigona’s comments present no facts that material­ than competitors. Finally, CHI is working to develop a ly alter its evaluation of the relative public benefits and system by which mortgage loans may be pre­ adverse effects likely or possible to result from Appli­ authorized. There is no evidence in the record in­ cant’s retention of CHI. dicating that retention of CHI would result in unfair Based upon the foregoing and other considerations competition, conflicts of interests, unsound banking reflected in the record, the Board has determined that practices, or other adverse effects. the balance of public interest factors it is required to In evaluating the public interest factors, the Board consider under section 4(c)(8) of the Act is favorable. has reviewed Mr. Anthony R. Martin-Trigona’s Accordingly, the application is approved. This deter­ request that it deny this application summarily or hold mination is subject to the conditions set forth in sec­ a formal hearing. Apart from noting that CHI may in­ tion 225.4(c) of Regulation Y and to the Board’s au­ volve a diversion of Applicant’s resources from its thority to require such modification or termination of other business, a possibility the Board has taken into the activities of a bank holding company or any of its account, Mr. Martin-Trigona chiefly complains of ac­ subsidiaries as the Board finds necessary to assure tions taken by Citibank, Applicant’s lead subsidiary compliance with the provisions and purposes of the bank, in response to recent Board actions intended to Act and the Board’s regulations and orders issued restrain the growth of credit and, in particular, a re­ thereunder, or to prevent evasion thereof. The de duction or elimination by Citibank of certain lines of novo activities proposed in the application shall be consumer credit.10 The protestant believes that Appli­ commenced no later than three months after the ef­ cant should not be permitted to expand its nonbank fective date of this Order unless that period is extend­ operations while reducing the availability of credit to ed for good cause by the Board or by the Federal Re­ customers of its subsidiary bank. serve Bank of New York pursuant to authority hereby These contentions involve no dispute of material delegated. facts that a hearing might illuminate. In the Board’s view, they involve instead a dispute regarding policy, and the Board does not believe its role in this pro­ ceeding is to evaluate the desirability of the particular Not only are these new objections untimely, but the protestant has not methods Citibank has chosen to restrain credit.11 It is offered substantiation of any of his claims or suggested that legal rem­ edies available to him are inadequate. Under the circumstances the Board does not believe that its consideration of this application should be delayed pending the resolution of the protestant’s dispute with Citi­ bank on matters essentially unrelated to the retention of CHI by Ap­ 10. Mr. Martin-Trigona also complains of various other actions by plicant. Citibank, which in the Board’s judgment do not present adverse con­ 12. See, Michigan National Corporation, 65 Federal Reserve siderations material to this application. Bulletin 247, 249 n. 10 (1980). Consideration of a particular bank 11. In a recent submission the protestant has advised the Board that holding company’s financial or managerial resources at a particular he has instituted a class action against Applicant, and he has raised time may dictate that it curtail significant expansion into new services several new objections to Citibank’s treatment of him and its handling or new markets, but the Board does not believe this application pre­ of his business, as well as to its reductions in lines of consumer credit. sents such a case. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

590 Federal Reserve Bulletin □ July 1980 By order of the Board of Governors, effective June Statement by Board of Governors of the Federal 3, 1980. Reserve System Regarding Application by Heritage Banks Inc. to Retain a Branch of Rochester Savings Bank and Trust Company Voting for this action: Vice Chairman Schultz and Gover­ nors Partee, Teeters, Rice, and Gramley. Absent and not vot­ ing: Chairman Volcker and Governor Wallich. Heritage Banks Inc., Rochester, New Hampshire, a bank holding company within the meaning of the Bank Holding Company Act has applied for the Board’s ap­ (Signed) Griffith L. Garwood, proval, under section 4(c)(8) of the Act (12 U.S.C. § [seal] Deputy Secretary of the Board. 1843(c)(8)) and section 225.4(b)(2) of the Board’s Reg­ ulation Y (12 C.F.R. § 225.4(b)(2)), to continue to en­ gage in guaranty savings bank activities at a branch of its subsidiary, Rochester Savings Bank and Trust Heritage Banks, Inc., Company (“Savings Bank”), Rochester, New Hamp­ Rochester, New Hampshire shire. These activities include the acceptance of time and savings deposits; the extension of consumer, real estate mortgage, VISA credit card and commercial Order Approving Retention of de novo Branch of loans; and trust and notarial services. Although the Rochester Savings Bank and Trust Company Board has not added the operation of a New Hamp­ shire guaranty savings bank to the list of activities Heritage Banks Inc., Rochester, New Hampshire, a specified in section 225.4(a) of Regulation Y as gener­ bank holding company within the meaning of the Bank ally permissible for bank holding companies, the Holding Company Act, has applied for the Board’s ap­ Board has determined that operation of such an insti­ proval under section 4(c)(8) of the Act (12 U.S.C. § tution is closely related to New Hampshire banking 1843(c)(8)) to continue to engage in guaranty savings and specifically approved Applicant’s acquisition of bank activities at a de novo branch of its subsidiary, Savings Bank. Profile Bankshares, Inc., 61 Federal Rochester Savings Bank and Trust Company, Roches­ Reserve Bulletin 901 (1975). ter, New Hampshire. Notice of the application, affording the opportunity Notice of the application, affording opportunity for for interested persons to submit comments and views, interested persons to submit comments and views, has has been duly published. The time for filing comments been duly published (45 Federal Register 6649 (1980)). and views has expired and the Board has considered The time for filing comments and views has expired, the application and all comments received, including and the Board has considered the application and all those of the New Hampshire Association of Savings comments received in light of the factors set forth in Banks, in light of the factors set forth in section 4(c)(8) section 4(c)(8) of the Act. of the Act. On the basis of the record, the application is ap­ Applicant, which has assets of $123.8 million on proved for the reasons set forth in the Board’s State­ December 31, 1979, has two subsidiaries: Savings Bank ment, which will be released at a later date. This deter­ (deposits of $97.9 million) and First National Bank of mination is subject to the conditions set forth in Rochester (“National Bank”), Rochester, New section 225.4(c) of Regulation Y and the Board’s au­ Hampshire (deposits of $16.2 million).1 Each office of thority to require such modification or termination of Savings Bank, including the branch that is the subject the activities of a holding company or any of its sub­ of this application, is operated at the same location as sidiaries to assure compliance with the provisions and an office of National Bank, and all these offices are purposes of the Act and the Board’s regulations and located in Rochester, New Hampshire. orders issued thereunder, or to prevent evasion there­ As noted, the Board in 1975 approved Applicant’s of. acquisition of Savings Bank. At that time Savings By order of the Board of Governors, effective Bank had one main office and one branch office. This June 20, 1980. application requests Board approval of Applicant’s re­ tention of a second branch office of Savings Bank, opened de novo on April 19, 1979, without the Board’s Voting for this action: Chairman Volcker and Governors prior approval, in violation of Regulation Y. In accord­ Wallich, Partee, Teeters, Rice, and Gramley. Voting against this action: Governor Schultz. ance with its policy regarding violations of the Act and upon its examination of all the facts of record, includ­ ing Applicant’s conduct, the nature of the violation, (Signed) Griffith L. Garwood, [seal] Deputy Secretary of the Board. 1. Deposit data are as of September 30, 1979. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 591 and Applicant’s undertakings to guard against future At the outset, the Board notes that this case in­ violations, the Board is persuaded that the opening of volves unusual mitigating factors. In 1975 the Board, this branch does not reflect so adversely on Appli­ cognizant of Applicant’s 42-year history of tandem op­ cant’s management as to require denial of this appli­ erations commenced and conducted before the estab­ cation. lishment of the current interest rate differential be­ Under the Act, the Board is required to assess the tween the two institutions and therefore not as a public interest factors in each section 4(c)(8) appli­ device for its evasion, approved the affiliation of Sav­ cation,2 including an application for a de novo branch ings Bank and National Bank. It has been argued that of an approved subsidiary. In making such an assess­ the two institutions might not have sought bank hold­ ment with respect to an application to retain activities ing company status had they known that their future where necessary prior Board approval was not ob­ expansion in tandem might be restricted. It is possible, tained, the Board applies the same standards that it in fact, that the Board in 1975 might have taken a dis­ applies for the commencement of such activities.3 tinctly favorable view of this branch operation. Therefore, the Board must determine whether the re­ The complexion of New Hampshire banking has tention of this office “can reasonably be expected to changed in several material respects since then, how­ produce benefits to the public, such as greater conve­ ever. In 1975 there were only six guaranty savings nience, increased competition, or gains in efficiency, banks in New Hampshire, a number that had remained that outweigh possible adverse effects, such as undue stable for a long time, and there was no prospect of a concentration of resources, decreased or unfair com­ proliferation of these institutions. In addition, each petition, conflicts of interests, or unsound banking savings bank was confined by state branching laws to practices.” The original acquisition of Savings Bank serving a relatively small local area. In that context by Applicant was essentially a reorganization whereby approval under the Act of Applicant’s subsidiaries’ ownership of Savings Bank and National Bank was longstanding relationship, or others like it, that prob­ shifted to a corporation owned by their common share­ ably would not have been broken up by denial, was holders, and the Board found that the increased effi­ unlikely to alter the structural and competitive envi­ ciency of operations, access to greater financial re­ ronment in New Hampshire in an unfavorable way. A sources, and long range increase in community modest trend away from common lobby operations, in services resulting from approval of the application fact, was in progress. Today savings banks can branch would produce public benefits. The Board found no more widely, and applications are pending that, if ap­ evidence of adverse effects on the public interest and, proved, would triple the number of guaranty savings therefore, approved the application. banks in New Hampshire. Moreover, with the ex­ Except for the fact that the branch applied for oper­ ception of First Financial Group of New Hampshire, ates in tandem with a branch of Applicant’s com­ Inc.’s proposed acquisition of an existing savings mercial bank, the public interest factors would clearly bank, which is not predicated upon the establishment favor approval of this application. The public conve­ of a tandem relationship with a commercial bank, this nience is enhanced by this new location for the provi­ initiative appears to be spurred by the clear desire of sion of savings bank services, and there is no evidence capable bank holding companies in the state to estab­ that if the branch were not operated in tandem any of lish new tandem offices. the adverse effects specified in section 4(c)(8) or other The Board, however, has taken particular note of material adverse effects might result from the estab­ the fact that Applicant’s branch was approved by both lishment of the branch. The Board, however, has ex­ the Federal Deposit Insurance Corporation and the ap­ pressed its clear view that serious adverse effects may propriate New Hampshire authorities, and that the result from tandem operation of these two types of in­ New Hampshire Association of Savings Banks, which stitutions,4 and this application accordingly requires has vigorously protested other attempts to expand tan­ closer analysis. dem operations in the state, considers this branch only an extension of the proposal the Board approved in 1975, and does not object to it. The location of the branch is within Savings Bank’s branching authority 2. The Board has confirmed its earlier determination that operating as it existed in 1975, and because of its proximity to a guaranty savings bank is closely related to New Hampshire banking. First Financial Group of New Hampshire, Inc., 66 Federal Reserve Savings Bank’s other offices the branch is likely to Bulletin 594 (1980). draw many customers for whom service before was 3. In these cases the Board assesses the public interest factors both conveniently available from the tandem offices which at the time the activity was commenced and at the time of the appli­ cation to retain the activity. However, because this application was the Board specifically approved. This fact mitigates submitted shortly after the branch office was opened and no significant the significance of the branch, and the fact that there is changes have occurred since the branch was opened, a single analysis no other nearby savings bank in Rochester for resi­ of the relevant factors was made. 4. First Financial Group of New Hampshire, Inc. dents to turn to magnifies somewhat the inconvenience Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

592 Federal Reserve Bulletin □ July 1980 that the branch’s customers would experience if the it put itself to the expense of opening the branch.2 Board ordered that the branch be closed. Having failed to do so, Applicant assumed the risk that Based upon the foregoing and other considerations divestiture would be ordered. In the second place, for reflected in the record, the Board has determined that any nonbank activity commenced illegally, I think un­ the balance of public interest factors the Board is re­ der the public interest factors of section 4(c)(8) the quired to consider under section 4(c)(8) marginally fa­ Board’s evaluation should focus on the hardship di­ vors approval of Applicant’s retention of this particu­ vestiture may cause to the public, rather than hardship lar branch office, although it is unlikely that proposals caused to the bank holding company, and I view the for further expansion of Applicant’s tandem opera­ record on that former point as inconclusive in this tions will satisfy that statutory test. This determination case. is subject to the conditions set forth in the Board’s Or­ For the foregoing reasons I would deny this appli­ der of June 20, 1980. cation unless Applicant agreed to terminate its tandem Board of Governors of the Federal Reserve System, operations promptly. June 25, 1980. June 25, 1980 (Signed) Griffith L. Garwood, [seal] Deputy Secretary of the Board. Application to Continue to Engage in Real Estate Advisory Services and Real Dissenting Statement of Governor Schultz Estate Appraisal Services and of Possible Rulemaking with Respect Thereto I would deny this application, or approve it only if Ap­ plicant agreed to terminate the tandem operation of its Summary: In connection with an application by First commercial bank and savings bank subsidiaries. The Chicago Corporation, Chicago, Illinois, to retain the Board has just expressed its view that only very com­ shares of a subsidiary, the Board has been requested pelling public benefits can justify tandem operations of to add to the list of activities permissible for bank hold­ these types of institutions under section 4(c)(8),1 and I ing companies certain real estate advisory and apprais­ consider it inconsistent to approve this application and al services. The Board requests comments as to thereby condone such a tandem operation without off­ whether the proposed activity of “performing apprais­ setting public benefits that are particularly con­ als of any type of real estate, other than single-family spicuous or weighty. residences” is closely related to banking or managing In effect, the Board’s Order in this case turns Appli­ or controlling banks. cant’s violation of Regulation Y into a positive factor Applicant states that certain real estate-related advi­ favoring approval of its application. If Applicant had sory services, provided to state and local govern­ applied in advance for the Board’s approval of this ments, have been previously specified by the Board as branch, as it should have done, I believe that appli­ being permissible for bank holding companies as “pro­ cation would probably have been denied, and I do not viding financial advice to state and local governments, think that result should be changed simply because such as with respect to the issuance of their secu­ Applicant failed, however innocently, to comply with rities.” The Board also requests comments as to the regulation. whether these proposed activities are closely related In this connection I am unable to sympathize either to banking. with the view that the Federal Reserve System some­ With respect to these activities and others that have how lulled Applicant into believing this branch would been previously determined to be closely related to be approved and that it therefore should not now order banking, the Board requests interested persons to divestiture, or with the view that divestiture would be comment on whether retention of the nonbanking an unwarranted hardship on Applicant. These consid­ company would result in public benefits that outweigh erations are not appropriate in this case for several possible adverse effects. reasons. In the first place, the Federal Reserve System certainly did not lull Applicant into violating Regula­ Date: Comments must be received by August 1,1980. tion Y. If Applicant had properly applied for the branch in advance, any misunderstanding it had about the Board’s views would have been cleared up before 2. In any event, I see nothing in the Board’s 1975 Order approving Applicant’s acquisition of Savings Bank suggesting that the Board 1. First Financial Group of New Hampshire, Inc., 66 Federal Re­ would look favorably upon any future branching or any other signifi­ serve Bulletin 594 (1980). cant alteration in Savings Bank’s activities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 593 Supplementary Information: The Board of Governors Applicant states that activity (5), “advising state has received an application filed pursuant to section and local governments about methods available to fi­ 4(c)(8) of the Bank Holding Company Act (12 U.S.C. § nance real estate development projects,” and activity 1843 (c)(8)) and section 225.4(b)(2) of the Board’s Reg­ (6), “evaluating projected income to determine for ulation Y (12 C.F.R. § 225.4(b)(2)) by First Chicago state and local governments whether debt resulting Corporation, Chicago, Illinois, for prior approval to from proposed development projects can be adequate­ retain shares of its subsidiary, Real Estate Research ly serviced,” are within the scope of the activity pre­ Corporation (“RERC”), Chicago, Illinois, a company viously determined by the Board to be permissible for engaged in a wide variety of real estate-related adviso­ bank holding companies in section 225.4(a)(5)(v) of ry and appraisal activities. Some of the activities that Regulation Y (12 C.F.R. § 225.4(a)(5)(v)). Applicant are the subject of the application have not previously cites as examples of these activities, (a) analyzing the been determined by the Board to be closely related to financial feasibility of converting obsolete urban build­ banking. ings to new uses, and (b) examining the impact of a Section 225.4(a) of Regulation Y provides that a proposed freeway on land use, property values, tax bank holding company may file an application to en­ receipts, and public expenditures. While the adminis­ gage in activities, other than those determined to be trative history of that provision of Regulation Y in­ permissible for bank holding companies, if it is of the dicates that the Board intended to restrict the scope of opinion that the proposed activity in the circumstances the activity, the Board believes nevertheless that these surrounding a particular case is closely related to proposed activities may be encompassed within the banking or managing or controlling banks. The regula­ language of the provision. In addition, it appears that tion further provides that the Board will publish in the the provision of such services by a banking organiza­ Federal Register a notice of opportunity for hearing tion may be consistent with factors considered by the regarding the proposed activity only if it believes that Board under its Regulation BB (12 C.F.R. § 228.7) in there is a reasonable basis for the bank holding compa­ assessing a state member bank’s record of perform­ ny’s opinion. ance under the Community Reinvestment Act (12 Applicant acquired RERC in June 1970, and has U.S.C. § 2901 et seq.). Therefore, regardless of wheth­ been engaged since that time1 in the following activi­ er these activities currently are specifically authorized, ties: (1) providing financial advice to state and local the Board believes it is reasonable to secure comments governments; (2) providing portfolio investment ad­ on whether these activities should be permissible for vice; (3) providing branch location, financial feasibil­ bank holding companies. ity, and specialized market studies for nonaffiliated Under guidelines established by a federal circuit banks; (4) providing general economic information and court,2 an activity may be found to be closely related advice, general economic statistical forecasting serv­ to banking if it is demonstrated (1) that banks generally ices, and industry studies; (5) advising state and local have in fact provided the proposed service; or (2) that governments about methods available to finance real banks generally provide services that are operationally estate development projects; (6) evaluating projected or functionally so similar to the proposed services as income to determine for state and local governments to equip them particularly well to provide the pro­ whether debt resulting from proposed development posed service; or (3) that banks generally provide serv­ projects can be adequately serviced; and (7) per­ ices that are so integrally related to the proposed serv­ forming appraisals of all types of real estate, other than ice as to require their provision in a specialized form.3 single-family residences. These activities are per­ The Board has previously found the National Courier formed from offices of RERC in Chicago, Illinois; At­ guidelines useful in determining whether there is a rea­ lanta, Georgia; Dallas and Houston, Texas; Miami, sonable basis for an applicant’s opinion that a proposed Florida; San Diego and San Francisco, California; and new nonbanking activity is closely related to banking.4 the District of Columbia. The geographic area served is the entire continental United States. RERC also en­ 2. National Courier Association v. Board of Governors of the Fed­ gages in other real estate advisory activities that are eral Reserve System, 516 F.2d 1229 (D.C. Cir. 1975) (hereinafter re­ not subjects of this notice because the Board has de­ ferred to as “National Courier”). termined that there is no reasonable basis for Appli­ 3. These guidelines are cited, for example, in NCNB Corporation v. Board of Governors of the Federal Reserve System, 599 F.2d 609 cant’s opinion that the activities are closely related to (4th Cir. 1979); Association of Bank Travel Bureaus, Inc. v. Board of banking. Governors of the Federal Reserve System, 568 F.2d 549, 551 (7th Cir. 1978); Alabama Association of Insurance Agents v. Board of Gover­ nors of the Federal Reserve System, 553 F.2d 224, 241 (5th Cir. 1976), 1. Section 4 of the Act provides, inter alia, that nonbanking activi­ rehearing denied 558 F.2d 729 (1977), cert, denied 435 U.S. 904(1978). ties acquired between June 30, 1968, and December 31, 1970, by a 4. NCNB Corporation (Superior Insurance Company and Superior company which became a bank holding company as a result of the Claim Service), 64 Federal Reserve Bulletin 506, 507 (1978); 1970 Amendments may not be retained beyond December 31, 1980, aflf’d sub nom. NCNB Corporation v. Board of Governors of the without Board approval. Federal Reserve System, 599 F.2d 609 (4th Cir. 1979). 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594 Federal Reserve Bulletin □ July 1980 With respect to the activity of performing appraisals dispute, summarizing the evidence that would be pre­ of real estate other than single-family residences sented at a hearing, and indicating how the party com­ (RERC’s activity (7)), the Board finds that the record menting would be aggrieved by approval of the pro­ of this application currently contains little evidence, posal. other than Applicant’s unsubstantiated assertions, that The application may be inspected at the offices of this activity meets the guidelines established by the the Board of Governors or at the Federal Reserve Board and the courts. There is evidence to indicate Bank of Chicago. that banks perform real estate appraisals for internal Board of Governors of the Federal Reserve System, use, but this is not a basis upon which an activity may June 26, 1980. be found to be closely related to banking; otherwise, any administrative support service could be found to (Signed) Griffith L. Garwood, be closely related to banking. Nevertheless, since the [seal] Deputy Secretary of the Board. Board is inviting comment on other aspects of the pro­ posal, it appears that it would be desirable to also se­ cure comments as to whether this activity is “so close­ ly related to banking or managing or controlling banks First Financial Group of New Hampshire, Inc., as to be a proper incident thereto.” It is noted that Manchester, New Hampshire appraisals accounted for a larger percentage of RERC’s sales in 1979 than any other single activity. Order Approving Acquisition of Guaranty Savings Under the Board’s Regulation Y, the Board’s decision Bank to publish notice of a proposed new activity does not obligate the Board to finally determine that the activity is closely related to banking or that the activity is per­ First Financial Group of New Hampshire, Inc., Man­ missible for bank holding companies. chester, New Hampshire, a bank holding company Interested persons may express their views on the within the meaning of the Bank Holding Company question of whether each of the above activities is Act, has applied for the Board’s approval under sec­ closely related to banking or managing or controlling tion 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)) to ac­ banks. Comments concerning this question should ad­ quire all of the outstanding shares of Guaranty Savings dress the National Courier guidelines. Bank (“Guaranty”), Salem, New Hampshire. Some of RERC’s activities proposed by First Chi­ Notice of the application, affording opportunity for cago to be continued beyond December 31, 1980, have interested persons to submit comments and views, has been specified by the Board in section 225.4(a) of Reg­ been duly published (44 Federal Register 55,657 ulation Y as permissible for bank holding companies, (1979)). The time for filing comments and views has subject to Board approval of individual proposals in expired, and the Board has considered the application accordance with the procedures of section 225.4(b). and all comments received in light of the factors set These activities are: (1) providing financial advice to forth in section 4(c)(8) of the Act. state and local governments; (2) providing portfolio in­ On the basis of the record, the Board has confirmed vestment advice; (3) providing branch location, finan­ that the operation of a guaranty savings bank is closely cial feasibility, and specialized market studies for non­ related to New Hampshire banking and has deter­ affiliated banks; and (4) providing general economic mined that, provided there is no tandem operation by information and advice, general economic forecasting Applicant of Guaranty and any commercial bank affili­ services, and industry studies. Interested persons may ate, the balance of public interest factors the Board also express their views on the question of whether the must consider under section 4(c)(8) of the Act is favor­ continued performance by Applicant of these activi­ able. Accordingly, the application is approved for the ties, as well as those activities proposed for rulemak­ reasons set forth in the Board’s Statement, which will ing discussed above, can “reasonably be expected to be released at a later date. This determination is sub­ produce benefits to the public, such as greater conve­ ject to the conditions set forth in section 225.4(c) of nience, increased competition, or gains in efficiency, Regulation Y (12 C.F.R. § 225.4(c)), to the condition that outweigh possible adverse effects, such as undue that Applicant will not operate Guaranty in tandem concentration of resources, decreased or unfair com­ with any commercial bank affiliate, and to the Board’s petition, conflicts of interests, or unsound banking authority to require such modification or termination practices.” of the activities of a holding company or any of its sub­ A request for a hearing on either question must be sidiaries as the Board finds necessary to assure com­ accompanied by a statement of the reasons a written pliance with the provisions and purposes of the Act presentation would not suffice in lieu of a hearing, and the Board’s regulations and orders issued there­ identifying specifically any questions of fact that are in under, or to prevent evasion thereof. 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Legal Developments 595 By order of the Board of Governors, effective June 4(c)(8) of the Act. In addition, in response to a request 20, 1980. by NAMSB, Applicant and several of the protestants made an oral presentation before Board staff on Janu­ Voting for this action: Chairman Volcker and Governors ary 10, 1980. Schultz, Rice, and Gramley. Voting against this action: Gov­ Applicant, the third largest commercial banking or­ ernors Wallich, Partee, and Teeters. ganization in New Hampshire, controls four banks (Signed) Griffith L. Garwood, with aggregate deposits of $217.8 million, representing [seal] Deputy Secretary of the Board. 9.5 percent of deposits in all commercial banks in the state.3 In addition, Applicant engages in limited grand­ fathered real estate activities and controls First Mort­ Statement by Board of Governors of the Federal gage Corporation, a mortgage banking subsidiary that Reserve System Regarding Application by First was reactivated this year with Board approval. Guar­ Financial Group of New Hampshire, Inc. to anty, which opened for business on July 27, 1978, is an Acquire First Guaranty Savings Bank independent state-chartered guaranty savings bank controlling $5.5 million in deposits as of December 31, First Financial Group of New Hampshire, Inc., Man­ 1979, representing 0.01 percent of the total deposits in chester, New Hampshire, a bank holding company New Hampshire’s mutual and guaranty savings banks. within the meaning of the Bank Holding Company Act Guaranty operates in the Boston banking market4 and (“Act”), has applied for the Board’s approval, under controls 0.2 percent of the total deposits of the savings section 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)) and banks in the Boston market. section 225.4(b)(2) of the Board’s Regulation Y (12 As noted, the Board has previously determined that C.F.R. § 225.4(b)(2)), to acquire First Guaranty Sav­ the operation of a New Hampshire guaranty savings ings Bank (“Guaranty”), Salem, New Hampshire, an bank by a New Hampshire bank holding company is organization currently engaged in the activities of a closely related to banking, and in the Board’s view no guaranty savings bank in New Hampshire.1 These ac­ serious challenge has been raised to this conclusion. In tivities include: accepting time and savings deposits, the ensuing years since the Board’s decision, changes including NOW accounts; investing in residential and in the structural and competitive circumstances rele­ commercial mortgages; investing in U.S. Government vant to that determination have been modest, although securities and other investments permitted by appli­ the complexion of New Hampshire banking has cable laws; making secured and unsecured loans; pro­ changed in other respects.5 Banks operating in the viding safe deposit services; and servicing mortgages state generally provide each of the main customer and other loans. In 1975, the Board approved the ac­ services offered by guaranty savings banks, and state quisition of a New Hampshire guaranty savings bank trust companies can conduct a savings bank business. by a New Hampshire bank holding company, deter­ Based on the record, the Board confirms its conclusion mining that the operation of such an institution was that the operation of a guaranty savings bank is closely closely related to banking in New Hampshire.2 How­ related to banking in New Hampshire. ever, the operation of a New Hampshire guaranty sav­ In acting on this application, however, the Board ings bank has not been specified by the Board in sec­ must also determine whether the proposed acquisition tion 225.4(a) of Regulation Y as permissible generally for bank holding companies. 3. Applicant’s four subsidiary banks are: The Manchester Bank, Notice of the application, affording opportunity for Manchester, New Hampshire, the largest commercial bank in the state (deposits of $153 million); The Colonial Bank, Nashua, New interested persons to submit comments and views, has Hampshire (deposits of $17 million); Claremont National Bank, Clare­ been duly published. The time for filing comments and mont, New Hampshire (deposits of $28.5 million); and First Bank and views has expired, and the Board has considered the Trust Company, Meredith, New Hampshire (deposits of $9.5 million). The Manchester Bank is the survivor by merger of a mutual savings application and all the comments received, including bank and a commercial bank and continues to operate a large savings those of Merchants Savings Bank, the National Asso­ department with 63 percent of total deposits in the form of time and ciation of Mutual Savings Banks (“NAMSB”), the savings deposits. Unless otherwise indicated, all banking data are as of June 30, 1979, and include bank holding company acquisitions as of New Hampshire Association of Savings Banks, Rock­ April 21, 1980. ingham County Trust Company, and Senator William 4. The Boston banking market is approximated by the Boston RMA, the eighth largest RMA in the United States, which is com­ Proxmire, in light of the factors set forth in section prised of 159 cities and towns or sections thereof. It includes all of Suffolk and Essex Counties, most of Middlesex, Norfolk, and Plymouth Counties, and small portions of Worchester and Bristol 1. Although guaranty savings banks differ from mutual savings Counties. Also included are the SMSA’s of Boston, Brocton, Lowell, banks in that they are stock corporations, they are otherwise essen­ and Lawrence-Haverhill. The area extends over the entire eastern tially the same as mutual savings banks and have federal deposit insur­ coast of Massachusetts, excluding Cape Cod, but including 13 towns ance available to them. in southern New Hampshire, one of which is Salem. 2. Profile Bankshares, Inc., 61 Federal Reserve Bulletin 901 5. See, Heritage Banks, Inc., 66 Federal Reserve Bulletin (1975). 590 (1980). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

596 Federal Reserve Bulletin □ July 1980 is a proper incident to banking, whether it “can rea­ affiliation of commercial banks and guaranty savings sonably be expected to produce benefits to the public, banks, and that involves the pairing or tandem opera­ such as greater convenience, increased competition, tion of the two types of institutions.8 Guaranty savings or gains in efficiency, that outweigh possible adverse banks, having asset and liability powers similar to effects such as undue concentration of resources, de­ those of other thrift institutions, are not banks within creased or unfair competition, conflicts of interests, or the meaning of the Act since they do not accept de­ unsound banking practices.” This is the question to mand deposits and engage in the business of making which the protestants have chiefly directed their com­ commercial loans. Although they have broad lending ments. powers and may make many of the same types of loans Several of the protestants have argued that the as do commercial banks, guaranty savings banks have Board’s denial in 1977, based on the same statutory traditionally concentrated their loan portfolios on resi­ test, of D. H. Baldwin Company’s retention of Empire dential lending. Under FDIC regulations, stock sav­ Savings, Building and Loan Association, 63 Federal ings banks operate under the same rate structure as Reserve Bulletin 280 (1977), precludes approval of mutual savings banks, thus allowing them to pay an this application. That decision, however, reflected a additional XU percent interest on deposits or accounts general Board policy against the affiliation of com­ provided for as an interest rate differential between mercial banks and savings and loan associations that thrifts and commercial banks. The Board believes that the Board enunciated three years before it permitted the establishment of a guaranty savings bank, autho­ the acquisition of a New Hampshire guaranty savings rized to pay a higher rate of interest than commercial bank under the Act, and from which policy other simi­ banks, at the same location as a commonly controlled lar combinations in New England, for similar historical commercial bank, would subvert the purpose of the reasons, were expressly excepted at the time.6 differential. So far as the public’s perception is con­ As the Board noted in Savings Banks Shares, Inc., cerned, these ostensibly competing institutions would 65 Federal Reserve Bulletin 767 (1979), D. H. be viewed as one institution, having a range of powers Baldwin evidences the Board’s serious concern about that neither Congress nor the New Hampshire legisla­ public policy implications of any affiliation of thrift in­ ture has conferred on any single institution. In the De­ stitutions and commercial banks. It does not, how­ pository Institutions Deregulation Act of 1980 Con­ ever, preclude a favorable finding on this application. gress has, in effect, prescribed that commercial banks The acquisition proposed in this application does not wait for the elimination of the differential. The Board involve the sharp institutional rivalry engendered by a believes a bank holding company must present com­ separate Congressionally established regulatory pelling public benefits under the Act in order to justify framework to which the Board’s discussion in D. H. indirectly avoiding that waiting period for its com­ Baldwin related. Neither would this proposal, as prec­ mercial bank subsidiaries through an artificial device edent, have the same broad national significance, nor that in the Board’s judgment will entail the clear poten­ would it lead to the creation of any bank holding com­ tial for serious conflicts of interests and may entail un­ pany subject to separate, conflicting Federal regula­ fair competition as well.9 tion.7 The same adverse effects are possible even where Although the protestants misinterpret D. H. Bald­ the two institutions are not paired at a single location win, the Board believes they have correctly identified but where they are located close to one another or op­ one substantive adverse consideration relative to the erated in close mutual support. But, by itself, common ownership of guaranty savings banks and commercial banks in separate markets, as proposed in this appli­ cation, does not raise a serious concern regarding the 6. 37 Federal Register 16,133 (1972); D. H. Baldwin, 63 Federal evasion of interest rate limitations. To the extent that Reserve Bulletin at 284 n. 10. As the Board stressed in 1975, the the purpose of the interest rate differential is to enhistorical relationship between commercial banks and guaranty sav­ ings banks in New Hampshire has been unlike historical relationships among other institutions and in other states. For that reason the Board’s policy against bank holding company acquisitions of savings 8. Protestants have also suggested, based on a 1978 decision of the and loan associations did not prevent its approval of Profile in 1975 State Board of Trust Company Incorporation (“BTCI”) denying an and, by the same token, approval of Profile or of this application is not application to charter a guaranty savings bank subsidiary of Appli­ considered relevant to proposals to acquire any institution other than cant, that affiliation of commercial banks and savings banks through a New Hampshire guaranty savings bank. bank holding companies may contravene the public policy of New 7. An application by an out-of-state bank holding company to ac­ Hampshire. In the Board’s view this suggestion was removed as a quire a New Hampshire guaranty savings bank would, because of the material factor bearing on this application on April 24, 1980, when the similarities of guaranty savings banks and commercial banks, face the BTCI, following a remand by the State Supreme Court for new find­ same objection expressed in D. H. Baldwin regarding out-of-state ac­ ings, approved organization of the savings bank. quisitions of savings and loan associations. However, the Act gives 9. Tandem operation of affiliated commercial banks and savings the Board authority to take actions necessary to prevent evasion of banks have been common in New Hampshire, but there has been a the Act’s purposes, and the question is not presented by this appli­ distinct trend in recent years away from tandem operations, and the cation by a New Hampshire bank holding company. Board considers this trend structurally desirable. 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Legal Developments 597 courage the deposit of funds in thrift institutions where Dissenting Statement of Governor Partee they will be more readily available for residential hous­ ing, that purpose may be served equally well whether a I agree with the majority of the Board that, consistent thrift institution is independent or owned by a bank with precedent, the operation of a guaranty savings holding company, as long as the thrift maintains its bank in New Hampshire by a New Hampshire bank separate consumer oriented operations. holding company is closely related to banking. How­ Applicant contends that the circumvention of the in­ ever, before approving an application under section 4 terest rate differential is not at issue in this proposal. of the Bank Holding Company Act the Board must No offices of Applicant’s commercial bank subsidi­ find not only that the proposed activity is closely re­ aries are within Guaranty’s market. Applicant affirms lated to banking, but also that the reasonably expected furthermore that, even apart from legal restrictions, it public benefits associated with the proposal outweigh would not try to move funds between Guaranty and the possible adverse effects. I am of the opinion that any commercial bank subsidiary; and since Applicant the public interest requires that this application be de­ has not formulated any plans to branch into Guaran­ nied, notwithstanding the imposition of a condition ty’s market, its acquisition of Guaranty and its plans prohibiting the establishment of tandem operations of for the institution are not dependent upon Guaranty’s Applicant’s commercial bank and guaranty savings becoming a symbiont of any commercial bank affiliate. bank subsidiaries. If, in fact, the question of tandem operation is re­ This proposal will result in the affiliation of a com­ moved from consideration in this case, the Board be­ mercial banking organization with a guaranty savings lieves the balance of public interest factors it is re­ bank. Guaranty savings banks are stock thrift institu­ quired to consider under section 4(c)(8) is favorable. tions which have asset and liability powers similar to Applicant and Guaranty, a very small institution, oper­ mutual savings banks. Like other thrift institutions, ate in separate markets, and there would be no signifi­ they are also permitted to pay the differential on sav­ cant adverse effects on competition from the acquisi­ ings deposits as allowed by federal deposit interest tion. In addition, the Board does not believe there is rate ceilings. Applicant would become the second of any substantive evidence in the record that the acqui­ approximately 70 commercial banking organizations in sition could result in undue concentration of re­ New Hampshire to be formally affiliated with a thrift sources, unfair competition, conflicts of interest, un­ institution. In my judgment, this affiliation will afford sound banking practices, or other adverse effects, so Applicant a competitive advantage, albeit slight, over long as Guaranty operates as a free-standing com­ other commercial banking organizations in the state. petitor in its market and its operations are not paired Moreover, it will serve as a precedent for similar affili­ with Applicant’s commercial bank operations. More­ ations in the state. This concern is heightened by the over, the acquisition is likely to result in public bene­ fact that several of the largest banking organizations in fits through improved services and increased com­ the state have recently initiated efforts to establish petitive effectiveness of Guaranty as an affiliate of similar subsidiary relationships. Undesirable trends in Applicant. statewide structure could well occur if the largest com­ These public benefits, however, are not sufficient to mercial banking organizations in the state are afforded outweigh the adverse effects the Board believes could a competitive advantage in terms of deposit gathering result from the establishment of a tandem relationship powers. between Guaranty and Applicant’s commercial banks, The majority notes that the recently passed Deposi­ at least so long as the interest rate differential between tory Institutions Deregulation Act of 1980 requires commercial and savings banks survives. Since Appli­ banks to wait up to six years before the differential is cant has not proposed a tandem relationship, based on eliminated. I would resist any effort by commercial the foregoing and other considerations reflected in the banking organizations to circumvent Regulation Q in­ record, the Board has approved this application in re­ terest ceiling differentials until such time as this matter liance on its understanding that assets and liabilities will not be shifted between Guaranty and Applicant’s 10. Applicant may apply for relief from this condition when the in­ other subsidiaries and subject to the condition that Ap­ terest rate differential has been eliminated, and the Board will review plicant will not establish a commercial banking facility the circumstances existing in New Hampshire at that time. While the condition is intended to prohibit only the colocation of a commercial at a location of Guaranty,10 and other conditions speci­ banking facility with Guaranty, any other pairing of Guaranty’s opera­ fied in the Board’s Order of June 20, 1980. tions and those of a commercial bank subsidiary could constitute a Board of Governors of the Federal Reserve System, significant alteration in Guaranty’s activities requiring application in accordance with section 225.4(c)(2) of Regulation Y. 12 C.F.R. § 225.4 June 25, 1980. (c)(2). The Board in particular expects Applicant to consult the Feder­ al Reserve System to determine whether the Board’s prior approval would be required under this section if in the future it forms an in­ (Signed) Griffith L. Garwood, tention to establish a commercial banking facility at a separate loca­ [seal] Deputy Secretary of the Board. tion within Guaranty’s market. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

598 Federal Reserve Bulletin □ July 1980 is dealt with by regulation or—after six years—the full Notice of the applications, affording opportunity for phase-out of the restrictions becomes effective. In the interested persons to submit comments on the public interim, I believe that all banking institutions com­ interest factors, has been duly published (45 Federal peting in the same markets should be made to do so on Register 30,539 (1980)). The time for filing comments equal terms. has expired, and the Board has considered the appli­ For the foregoing reasons, I would deny this appli­ cations and all comments received in the light of the cation. public interest factors set forth in section 4(c)(8) of the Act. June 25, 1980 Applicant, the second largest banking organization in Pennsylvania, controls First Pennsylvania Bank, N.A., Philadelphia, Pennsylvania, with total deposits First Pennsylvania Corporation, of approximately $5.0 billion.3 The assets of FPFS, Philadelphia, Pennsylvania IF&T and Pennamco that Applicant proposes to retain ($19.8 million in commercial finance receivables and a Order Approving Retention of Pennamco, Inc. and real estate portfolio of $163.0 million) will eventually certain other assets be liquidated and, based upon all the facts of record, the Board concludes that Applicant’s proposed reten­ First Pennsylvania Corporation, Philadelphia, Penn­ tion would not have any adverse competitive effects. sylvania, a bank holding company within the meaning Moreover, the proposed retention of these assets after of the Bank Holding Company Act, has applied for the December 31, 1980, would permit the orderly settle­ Board’s approval, under section 4(c)(8) of the Act (12 ment of the business of FPFS, IF&T and Pennamco, U.S.C. § 1843(c)(8)) and section 225.4(b)(2) of the which the Board believes to be in the public interest, Board’s Regulation Y (12 C.F.R. § 225.4(b)(2)), to re­ particularly in light of certain commitments made by tain Pannamco, Inc., Bala-Cynwyd, Pennsylvania Applicant regarding limitations on the activities of (“Pennamco”), and the commercial finance receiv­ these subsidiaries. ables of First Pennsylvania Financial Services, Inc., There is no evidence in the record indicating that Philadelphia, Pennsylvania (“FPFS”), and Industrial this retention would result in any undue concentration Finance & Thrift Corporation, New Orleans, Louisi­ of resources, unfair competition, conflicts of interests, ana (“IF&T”), both of which are wholly-owned sub­ unsound banking practices or other adverse effects. sidiaries of Applicant.1 The assets of FPFS and IF&T Based upon the foregoing and other considerations are to be transferred to First Pennsylvania Leasing, reflected in the record, the Board has determined that Inc. (“FPL”). FPL will engage in such commercial fi­ the balance of the public interest factors the Board is nance activities as are necessary to administer and liq­ required to consider under section 4(c)(8) is favorable. uidate the assets of FPFS and IF&T not acquired by Accordingly, the applications are hereby approved. Manufacturers Hanover Corporation, New York, This determination is subject to the conditions set New York, in a related transaction. Similarly, Pen­ forth in section 225.4(c) of Regulation Y(12C.F.R. § namco, a mortgage banker and servicer, will adminis­ 225.4(c)) and to the Board’s authority to require such ter and liquidate those portions of its assets not being modification or termination of the activities of a bank acquired by Manufacturers Hanover Corporation.2 holding company or any of its subsidiaries as the Such activities have been determined by the Board to Board finds necessary to assure compliance with the be closely related to banking (12 C.F.R. §§ 225.4(a)(1), provisions and purposes of the Act and the Board’s (3)). regulations and orders issued thereunder, or to pre­ vent evasion thereof. By order of the Board of Governors, effective June 2, 1980. 1. Section 4 of the Act provides, in relevant part, that nonbanking Voting for this action: Vice Chairman Schultz and Gover­ activities acquired between June 30, 1968, and December 31, 1970, by a company that became a bank holding company as a result of the 1970 nors Partee, Teeters, Rice, and Gramley. Absent and not vot­ Amendments to the Act may not be retained beyond December 31, ing: Chairman Volcker and Governor Wallich. 1980, without prior Board approval. Applicant became a bank holding company as a result of the 1970 Amendments and acquired Pennamco, FPFS and IF&T in 1970. Applicant is also engaged in land develop­ (Signed) Griffith L. Garwood, ment and property management activities that are not permissible for [seal] Deputy Secretary of the Board. bank holding companies. Applicant does not seek the Board’s approv­ al to retain these activities, and will divest them by December 31, 1980. 2. The Board, by separate action of this date, has approved the application of Manufacturers Hanover Corporation to acquire FPFS, IF&T, and certain assets of Pennamco. 3. All data are as of March 31, 1980. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 599 Manufacturers Hanover Corporation, and all comments received in the light of the public New York, New York interest factors set forth in section 4(c)(8) of the Act.3 Applicant, with total consolidated assets of $47.7 Order Approving Acquisition of Nonbanking billion, is the second largest banking organization in Companies New York and the fourth largest in the United States.4 Applicant engages through subsidiaries in a variety of Manufacturers Hanover Corporation, New York, nonbanking activities, including mortgage banking, New York (“Applicant”), a bank holding company leasing and factoring. within the meaning of the Bank Holding Company Act Through its subsidiary, Ritter Financial Corpora­ (“Act”), has applied for the Board’s approval, under § tion, Wyncote, Pennsylvania (“Ritter”), Applicant al­ 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)) and § so engages in consumer and commercial finance and 225.4(b)(2) of the Board’s Regulation Y (12 C.F.R. § credit-related insurance agency and underwriting ac­ 225.4(b)(2)), to acquire through a de novo subsidiary, tivities similar to those of Companies. Ritter operates M H Financial Corporation, all of the voting shares of 153 loan offices in 12 states, concentrated along the the following: (1) First Pennsylvania Financial Serv­ East coast of the United States, and is the 33rd largest ices, Inc., Philadelphia, Pennsylvania; (2) Continental non-captive finance company in the United States in Finance Corporation of America, Aurora, Colorado; terms of total capital.5 Ritter’s total assets approxi­ and (3) Ell wood Consumer Discount Company, Inc., mate $200 million. Ell wood City, Pennsylvania (collectively, “Com­ Companies, in the aggregate, are the 28th largest panies”). Applicant also seeks to acquire through its non-captive finance company in the United States on existing mortgage banking subsidiary, Manufacturers the basis of total capital,6 and have total assets ap­ Hanover Mortgage Corporation, the mortgage serv­ proximating $300 million. Companies operate 246 of­ icing portfolio and certain other assets of Pennamco, fices in 23 states, primarily in the mid-Atlantic states Inc., Bala Cynwyd, Pennsylvania (“Pennamco”), and thereafter service such portfolio. 3. On Friday, May 30, 1980, the Board received a protest by The Companies, directly and through subsidiaries, are Professional Insurance Agents of New Jersey (“Protestants”) regard­ engaged in the activities of consumer lending, sales fi­ ing that portion of the application dealing with the sale of property and nance, industrial banking, and second mortgage lend­ casualty insurance in New Jersey. Protestants contend that (1) there are no public benefits associated with Applicant’s proposal; (2) Appli­ ing, and selling as agent credit life, accident and health cant may “tie” the granting of credit to the purchase of insurance; (3) insurance and property and casualty insurance directly Applicant could have an advantage over independent insurance agents related to extensions of credit made by Companies. because of its access to depositor information; and (4) the Board should postpone action on the application while legislation to prohibit Companies also act as underwriter for credit life, acci­ insurance sales by holding companies is under consideration in the dent and health insurance1 directly related to exten­ Congress and in the New Jersey legislature. Protestants also urge the Board to sever the New Jersey property and casualty insurance por­ sions of credit made by Companies. Each of these ac­ tions of the application for consideration at a later time and to order a tivities has been determined by the Board to be closely hearing. related to banking (12 C.F.R. §§ 225.4(a)(1), (2), (3), Protestants’ comments and hearing request were not received with­ in the time specified in the Federal Register notice. The Board’s Rules (9) and (10)).2 of Procedure, 12 C.F.R. § 262.3(e), preclude consideration of untimely Notice of the application, affording opportunity for hearing requests. It is within the Board’s discretion to consider un­ interested persons to submit comments on the public timely comments under these rules, but the Board declines to exercise this discretion. Protestants’ comments consist of nothing more than interest factors, has been duly published (45 Federal unsubstantiated conclusions and allegations which, for the most part, Register 29,119). The time for filing comments has ex­ bear no relation to this particular application. The tying of credit ex­ tensions to insurance sales is prohibited by law (12 U.S.C. § 1972) and pired, and the Board has considered the application the possibility of the occurrence of either “involuntary” or “volun­ tary” tying is made quite remote by the provisions of the Board’s Regulation Z dealing with insurance, 12 C.F.R. § 226.4(a)(6). More­ over, the Board believes it is inappropriate to delay or sever an appli­ cation on the basis of an untimely protest, and the Board has pre­ viously indicated its belief that pending legislation will not stop the 1. Companies are engaged in certain activities that are impermis­ running of the 91-day limit on Board action contained in section 4(c) of sible for Applicant. Applicant does not propose to engage in those the Act. Finally, the substantial public benefits associated with this activities following consummation of the proposal. proposal are sufficient to outweigh the highly speculative adverse ef­ 2. Applicant has also applied under section 4(c) (13) of the Act for fects alleged by Protestants. Even if this public benefits analysis is the Board’s approval to acquire CommoLoCo., Inc., Hato Rey, made only with regard to the insurance portion of the application, the Puerto Rico (“CommoLoCo”). CommoLoCo is engaged in consumer procompetitive effect of maintaining an additional competitor in the and commercial lending and sales finance activities and the sale of market is sufficient to outweigh the speculative adverse effects de­ credit related insurance in Puerto Rico. Under section 211.2(f) of Reg­ scribed by Protestants. ulation K, Puerto Rico is treated as a foreign country. These activities 4. All financial data are as of December 31, 1979, unless otherwise are among those the Board has determined to be permissible in section indicated. 211.5(d) of Regulation K. The Board finds that this proposal is not at 5. American Banker, June 11, 1979. A “non-captive” finance com­ variance with the purposes of the Act and that its consummation pany is one that does not restrict its business to loans made in con­ would be in the public interest. Accordingly, the Board grants its spe­ nection with the purchase of a particular manufacturer’s product. cific consent for this proposal. 6. Id. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

600 Federal Reserve Bulletin □ July 1980 and across the middle and southern portions of the erations specified in section 4(c)(8) of the Act. Never­ United States. theless, the Board believes that such negative effects The Board believes that the relevant product market are somewhat tempered by the large number of other to be considered in evaluating the competitive effects competitors that will remain after consummation of of this proposal is the making of personal cash loans.7 the proposal, and when balanced against the public Consumer finance companies compete with commer­ benefits expected to result from this transaction, the cial banks in the area of personal loans, and the rele­ Board does not view the adverse effects associated vant geographic market is approximated by the local with the proposal as being so serious as to warrant de­ banking market.8 Ritter has loan offices in 17 local nial. In addition, while it might be preferable from a markets where Companies also have loan offices, and competitive standpoint to have this acquisition made from the record it appears that both Applicant and by another purchaser, in order to assure the immediate Companies hold a significant amount of the out­ benefits to the public that are expected to result from standing personal cash loans in many of those mar­ the prompt consummation of this proposal, the Board kets. Indeed, in four relatively small markets the com­ believes that approval is in the public interest. bined market shares of Ritter and Companies exceeds Affiliation of Companies and Pennamco with Appli­ 19 percent. Thus, it is the Board’s opinion that the ad­ cant will provide those organizations with access to verse affects on existing competition that would result Applicant’s financial and managerial resources and en­ from consummation of this proposal are serious. Were sure the continued availability of personal loans and it not for the substantial public benefits associated with related insurance services to Companies’ customers at this proposal, as discussed below, this factor would their present locations. The Board views these factors warrant denial of Applicant’s proposal. favorably in light of First Pennsylvania Corporation’s With regard to potential competition, the Board decision to concentrate its resources on its banking notes that Companies’ parent corporation, First Penn­ subsidiary. More significantly, the funds that First sylvania Corporation, Philadelphia, Pennsylvania, has Pennsylvania Corporation will derive from the pro­ decided to concentrate its financial and managerial re­ posed transaction will serve to strengthen the overall sources on its banking subsidiary. Accordingly, it does organization and improve its future prospects. The not appear that Companies are a likely entrant into the continued viability of Companies and the funds First local markets where Applicant presently has offices. Pennsylvania Corporation will receive as a result of On the other hand, Applicant has increased the num­ this transaction lend significant weight toward approv­ ber of its loan offices by one-fifth since 1975, and has al of the proposal. increased the number of states in which it is represent­ Applicant also has stated that following consum­ ed from six to twelve. Applicant apparently has the mation of the proposal Companies will offer at reduced potential to enter many of the local markets where premiums the several types of credit insurance policies Companies presently have offices. However, the large that they will underwrite.9 Since Applicant proposes number of other potential entrants into Companies’ lo­ to sell credit life and credit accident and health insur­ cal markets moderates somewhat the negative effects ance underwritten by Companies in each of the states on potential competition associated with the proposal. in which Companies operate, Applicant’s proposed Applicant also proposes to acquire the mortgage rate reductions vary according to the permissible rate servicing portfolio of Pennamco, which has a servicing structures in each respective state, and involve rate portfolio of $2.9 billion and ranks as the eighth largest reductions for reducing-term single and joint credit life mortgage servicer in the country. Applicant’s subsidi­ insurance at premium rates ranging from approximate­ ary, Manufacturers Hanover Mortgage Corporation, ly 2 percent to 15 percent below the rates presently services a mortgage portfolio of $2.5 billion, and is the charged in each of the respective states. nation’s 14th largest mortgage servicer. Thus, con­ On the basis of these and other facts of record, the summation of Applicant’s proposal also will eliminate Board concludes that the benefits to the public that an independent competitor in the mortgage servicing industry. In view of the size of the various companies in­ 9. With respect to underwriting credit life and credit accident and health insurance, which is generally made available by banks and oth­ volved in this proposal and based upon all the facts of er lenders and is designed to assure repayment of a loan in the event of record, consummation of the proposal would have death or disability of the borrower, the Board has stated: some negative effects with respect to other consid­ To assure that engaging in the underwriting of credit life and credit accident and health insurance can reasonably be expected to be in the public interest, the Board will only approve applications in which the Applicant demonstrates that approval will benefit the consumer or re­ 7. Security Pacific Corporation (American Finance System, Inc.), sult in other public benefits. Normally, such a showing would be made 65 Federal Reserve Bulletin 73 (1979). by a projected reduction in rates or increase in policy benefits due to 8. Bankers Trust Corporation (Public Loan Company), 59 Federal bank holding company performance of this service. (12 C.F.R. § Reserve Bulletin 694 (1973). 225.4(a)(10) n. 8). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 601 would result from Applicant’s acquisition of Com­ Notice of this application has been given as required panies and Pennamco are sufficient to outweigh the by the Board’s Rules of Procedure (12 C.F.R. § negative effects on competition and concentration of 262.3(b)), affording interested persons the opportunity resources that would result from the proposed acquisi­ to submit comments and views. The Board has re­ tion. Furthermore, there is no evidence in the record ceived comments on Applicant’s record under the to indicate that consummation of the proposed trans­ Community Reinvestment Act of 1977 (“CRA,” 12 action would result in unfair competition, conflicts of U.S.C. §§ 2901-05) from South Brooklyn Against In­ interest, unsound banking practices or any other ef­ vestment Discrimination (“Protestant”), as well as fects that would be adverse to the public interest. comments from a number of other groups. The Board Based upon the foregoing and other considerations has considered the application and all comments re­ reflected in the record, the Board has determined that ceived in light of section 9 of the Federal Reserve Act the balance of the public interest factors the Baord is and the CRA. required to consider under section 4(c)(8) is favorable. Applicant, with total foreign and domestic deposits Accordingly, the application is hereby approved, sub­ of $37.8 billion,1 currently operates 202 domestic ject to the conditions that: (1) Applicant will not en­ branches. Establishment of the proposed office would gage in any of the activities in which Companies are not adversely affect existing or potential competition. engaged that the Board has not determined to be close­ The financial and managerial resources and future ly related to banking, and (2) Applicant will maintain prospects of Applicant are considered generally satis­ on a continuing basis the public benefits that the Board factory, as are the future prospects of the proposed has found to be reasonably expected to result from this branch. Establishment of the proposed branch would proposal with regard to insurance underwriting activi­ provide a convenient additional source of banking ties. This determination is also subject to the condi­ services to the surrounding community. These factors tions set forth in § 225.4(c) of Regulation Y and to the are consistent with approval of the application. Board’s authority to require such modification or ter­ In addition to the factors considered above, the mination of the activities of a holding company or any Board is required by the CRA to assess the record of of its subsidiaries as the Board finds necessary to as­ Applicant of meeting the credit needs of its entire com­ sure compliance with the provisions and purposes of munity, including low and moderate income neighbor­ the Act and the Board’s regulations and orders issued hoods, consistent with safe and sound operation, and thereunder, or to prevent evasion thereof. The trans­ to take that record into account in its evaluation of this action shall be made not later than three months after application. In connection with this application, the the effective date of this Order, unless such period is Board conducted an extensive investigation of Appli­ extended for good cause by the Board or by the Feder­ cant’s record, including a full consumer compliance al Reserve Bank of New York pursuant to authority examination. Applicant has met all the procedural re­ hereby delegated. quirements of the CRA and has made a reasonable de­ By order of the Board of Governors, effective June lineation of its community. Applicant, which is a major 2, 1980. wholesale banking institution, also offers a wide range of retail banking services, emphasizing consumer and Voting for this action: Vice Chairman Schultz and Gover­ small business lending, throughout its community. Ap­ nors Partee, Teeters, Rice, and Gramley. Absent and not vot­ plicant has established a CRA task force and steering ing: Chairman Volcker and Governor Wallich. committee of senior officers to coordinate its efforts to meet community credit needs. One result of this pro­ (Signed) G riffith L. Garwood, cess has been numerous meetings with community or­ [seal] Deputy Secretary of the Board. ganizations throughout Applicant’s community, and a number of these organizations have submitted com­ ments in support of Applicant’s record. Applicant has also established an urban lending department which Manufacturers Hanover Trust Company, currently has outstanding $20 million in nonconven- New York, New York tional business loans and bridge loans for economic development and similar purposes. Order Approving Establishment of a Branch Protestant contends, however, that Applicant’s rec­ ord is deficient in several respects. Protestant states Manufacturers Hanover Trust Company, New York, that although Applicant has received deposits from the New York, has applied for the Board’s approval under Brooklyn area, it has bypassed the needs of the area section 9 of the Federal Reserve Act (12 U.S.C. § 321) to establish a branch at 6421-23 18th Avenue, Brook­ 1. Financial data are as of September 30, 1979, unless otherwise lyn, New York. noted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

602 Federal Reserve Bulletin □ July 1980 by lending outside New York City; that it has failed to also extended $178 million in Small Business Adminis­ serve the small business credit needs of the Brooklyn tration Loans as of June 1979. area; and that with respect to housing credit it has em­ In some respects, Applicant’s record of mortgage ployed restrictive mortgage policies, refused to extend lending bears out some of Protestant’s charges. Appli­ credit on residential properties containing more than cant, like other New York state chartered institutions, two units, and extended relatively little credit in ra­ has been subject to a state usury ceiling that affected cially mixed and low to moderate income neighbor­ the terms and kinds of loans that it made. Applicant hoods. Having considered the charges of Protestant in has not emphasized mortgage lending in New York, light of the record before it and the requirements of and has adopted relatively restrictive loan policies, in­ CRA, the Board has concluded that the application cluding a high income-to-mortgage-size requirement. should be approved. Applicant has made mortgage loans only for one- and With respect to the charge of disinvestment, the two-family homes. Similar to other large New York Board has previously stated: state chartered institutions, approximately one-half of Applicant’s mortgage portfolio consists of loans made “there are many reasons why particular neighbor­ outside the state. Its proportion of lending in low and hoods may generate more deposits than loan requests, moderate income areas is lower than the average for or more requests than deposits, and that disparity in a other state chartered institutions. Applicant’s 1978 particular local area between credit granted and depos­ Home Mortgage Disclosure Act data also reflect rela­ it totals is not prima facie evidence of discrimination. The Board is more concerned with lender sensitivity to tively few loans made in predominantly minority cen­ the needs of each area.”2 sus tracts. However, the number of such loans granted was proportionate to the number of applications re­ Moreover, the Board has indicated that the CRA does ceived, and examination of Applicant’s operations re­ not require the Board to dictate the product mix of a vealed no evidence of discriminatory practices in act­ commercial bank.3 Applicant is a major wholesale ing on applications. These mortgage lending patterns commercial bank involved in commercial lending and appear to result partly from Applicant’s lending poli­ finance throughout the United States and the world, cies, and also from Applicant’s lack of emphasis on and the Board does not regard Applicant’s efforts in mortgage lending, which is reflected, for example, in these lines as being inconsistent with helping to meet relatively ineffective communication with inner city the credit needs of its local community. Just as the real estate brokers. CRA was not intended to establish fixed ratios be­ During the course of this application, Applicant has tween deposits and loans in particular neighborhoods, met with Protestant on a number of occasions to dis­ it also cannot be read to require fixed proportions of cuss Protestant’s charges. As a result of those meet­ retail or commercial deposits to retail or commercial ings Applicant has agreed to eliminate its policy lending. against financing three- and four-family residences,4 With regard to small business lending, the record in­ and to institute a long term, low down payment mort­ dicates that Applicant is engaged in small business gage program utilizing private mortgage insurance. In lending throughout its community. As of June 1979, addition, Applicant has undertaken a home improve­ Applicant had over $750 million in small business ment loan campaign in Brooklyn, and, in response to loans outstanding in its community, and the distribu­ discussions with a Bronx community organization, has tion of those loans was similar to the distribution of joined with other area lenders in a housing stock loan small businesses in the counties comprising its com­ program in the Bronx. The Board believes that these munity. In particular, Brooklyn receives the largest steps reflect Applicant’s willingness to be responsive proportion of Applicant’s small business installment to community needs, and that they will serve to im­ loans and the second largest proportion, after Manhat­ prove Applicant’s lending record in the area of hous­ tan, of small business commercial loans. In December ing. 1978, Applicant instituted a “Small Business Base In view of these steps, Applicant’s generally good Rate” program to permit small businesses to borrow at record of meeting community credit needs, and the 1V4 percent below the prime rate, and it operates a added banking convenience of the proposed branch, “Quickfinance” loan program which allows rapid considerations relating to the convenience and needs turnaround on loan applications for small business of the community to be served, including CRA consid­ leasing and equipment purchase needs. Applicant has erations, are consistent with approval of this appli- 2. CRA Information Statement, 66 Federal Reserve Bulletin 30 (1980). See also AmeriTrust Corporation (Cincinnati Trust Com­ 4. Applicant does make loans on apartments with five or more pany) 66 Federal Reserve Bulletin 238 (1980). units, treating them as small business loans. Although it has made 3. Commerce Bancshares, Inc. (Manchester Financial Corpora­ relatively few such loans, a high proportion are in low and moderate tion), 64 Federal Reserve Bulletin 576 (1978). income areas. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 603 cation. Accordingly, the Board concludes that estab­ Company was organized in 1972 by Blount National lishment of the proposed branch would be in the public Bank of Maryville, Maryville, Tennessee (“Maryville interest and should be approved. Bank”), a subsidiary of Applicant, as trustee for the On the basis of the record, the application is ap­ Blount National Bank Retirement Plan (“Plan”). The proved for the reasons summarized above. The pro­ Plan covers certain employees of Bank, as well as Ap­ posed branch should be established not later than plicant and its other subsidiary banks. Company acts three months from the date of this Order unless the as reinsurer of credit life and credit accident and health time is extended for good cause by the Board or the insurance sold by Applicant’s subsidiary banks in con­ Federal Reserve Bank of New York, acting under nection with extensions of credit. In December 1978 delegated authority. the Plan was dissolved and the shares of Company By order of the Board of Governors, effective June constituted a surplus asset of the Plan which were eli­ 18, 1980. gible for distribution to Maryville Bank. Under nation­ al bank laws, however, Maryville Bank was not per­ Voting for this action: Vice Chairman Schultz and Gover­ mitted to hold such shares, and they were transferred nors Wallich, Partee, Rice, and Gramley. Absent and not vot­ to Applicant’s counsel to be held in trust for Applicant ing: Chairman Volcker and Governor Teeters. pending action on this application. Inasmuch as Company was formed de novo, the (Signed) Cathy L. Petryshyn, Board concludes that Applicant’s acquisition of Com­ [seal] Assistant Secretary of the Board. pany did not have any adverse effects on either exist­ ing or potential competition in any relevant area, and that Applicant’s retention of Company likewise would Tennessee National Bancshares, Inc., not have any adverse competitive effects. However, Maryville, Tennessee the Board regards Applicant’s indirect formation and acquisition of Company in 1972 as a violation of the Order Approving Retention of Southeastern Life prohibitions of section 4(a) of the Act against nonbank Insurance Company acquisitions.2 Similarly, the transfer in 1978 of the shares of Company to a trustee to be held for the bene­ Tennessee National Bancshares, Inc., Maryville, Ten­ fit of Applicant represented a continuation of Appli­ nessee, a bank holding company within the meaning of cant’s violation of section 4. While the Board regards the Bank Holding Company Act (“Act”), has applied this violation of the Act as a serious matter, Applicant for the Board’s approval under § 4(c)(8) of the Act (12 maintains that its actions with respect to Company U.S.C. § 1843(c)(8)) and § 225.4(b)(2) of the Board’s were taken on advice of counsel and did not represent Regulation Y (12 C.F.R. § 225.4(b)(2)) to acquire di­ an intention of Applicant to violate the provisions of rect control of all of the voting shares of Southeastern the Act. From the record, it does not appear that Ap­ Life Insurance Company, Maryville, Tennessee plicant has otherwise violated the Act, or that the ac­ (“Company”). Company engages in the activity of un­ quisition of Company is indicative of a pattern of dis­ derwriting, as reinsurer, credit life and credit accident regard by Applicant of its obligations under the and health insurance directly related to extensions of provisions of the Act. In addition, Applicant has com­ credit by Applicant’s banking subsidiaries. Such activ­ mitted to undertake an affirmative program of com­ ity has been determined by the Board to be closely pliance with the Act, including the designation as a related to banking (12 C.F.R. § 225.4(a)(10)). corporate official as Applicant’s compliance officer to Notice of the application, affording opportunity for oversee the program. Moreover, Applicant has com­ interested persons to submit comments and views on mitted to make restitution of the amount of net income the public interest factors, has been duly published (44 earned by Company since its formation in 1972 that Federal Register 45245 (1979)). The time for filing was in excess of the amount Company would have comments and views has expired, and the Board has earned if it had been charging reduced insurance pre­ considered the application and all comments received miums in accordance with the Board’s policy on bank in light of the public interest factors set forth in holding companies engaging in insurance under­ § 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)). writing. Accordingly, based on its review of the entire Applicant, the seventh largest banking organization in Tennessee, controls four subsidiary banks having total assets of approximately $144 million.1 Applicant does not engage in any other nonbanking activities. 2. Section 2(g)(2)(C) of the Act provides that shares controlled by trustees for the benefit of employees of a company are deemed to be controlled by the company. Thus, under section 2(g) of the Act, the shares of Company acquired and held by the Plan since 1972 are 1. All banking data are as of December 31, 1979. deemed to be controlled by Applicant. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

604 Federal Reserve Bulletin □ July 1980 record in this matter, the Board does not believe that By order of the Board of Governors, effective denial of this application is warranted. June 9, 1980. Credit life and credit accident and health insurance is generally made available by banks and other lenders Voting for this action: Chairman Volcker and Governors and is designed to assure repayment of a loan in the Partee, Teeters, Rice, and Gramley. Present and abstaining: Governors Schultz and Wallich. event of death or disability of the borrower. In con­ nection with its addition of the underwriting of such (Signed) G riffith L. Garwood, insurance to the list of permissible activities for bank holding companies, the Board stated that it will only [seal] Deputy Secretary of the Board. approve applications to engage in such activities where an applicant demonstrates that approval will Orders Under Section 2 of Bank Holding benefit the consumer or result in other public benefits, Company Act and that normally, such a showing would be made by a projected reduction in rates or increase in policy bene­ Dewco Agency Company, fits.3 Applicant has stated that following approval of Timber Lake, South Dakota this application, Company will offer at reduced pre­ miums, the several types of credit insurance policies Order Granting Determination Under the Bank that it underwrites. In particular, Company will offer Holding Company Act credit life insurance and credit disability insurance at premiums of 6.7 and 5 percent, respectively, below Dewco Agency Company (“Dewco”), Timber Lake, those currently being charged. Applicant has also South Dakota, a bank holding company within the committed to the Board that it will reduce its rates fur­ meaning of the Bank Holding Company Act of 1956 (12 ther in order to maintain on a continuous basis these U.S.C. § 1841 et seq.) (the “Act”), has requested a rate reductions if state rates should be reduced. determination under section 2(g)(3) of the Act (12 On the basis of these and other facts of record, the U.S.C. § 1841(g)(3)) that Dewco is not in fact capable Board concludes that the benefits to the public that of controlling Ziebach County Abstract Co., Inc. will result from Applicant’s retention of Company out­ (“Ziebach”), Dupree, South Dakota, although Zie­ weigh any adverse effects that may have resulted from bach is indebted to Dewco as a result of Ziebach’s in­ the affiliation. Moreover, it is the Board’s view that stallment purchase of all the assets of Dewey County approval of Applicant’s retention of Company can rea­ Title Company (“Company”). sonably be expected to produce benefits to the public Under the provisions of section 2(g)(3) of the Act, that would outweigh possible adverse effects. Further, shares transferred after January 1, 1966, by any bank there is no evidence in the record indicating that ap­ holding company to a transferee that is indebted to the proval of the application would result in any undue transferor are deemed to be indirectly owned or con­ concentration of resources, conflicts of interest, un­ trolled by the transferor unless the Board, after oppor­ sound banking practices, or other effects that would be tunity for hearing, determines that the transferor is not adverse to the public interest. in fact capable of controlling the transferee.1 No Based upon the foregoing and other considerations request for a hearing was made by Dewco. Instead, reflected in the record, including the commitments Dewco has submitted evidence to the Board to support made by Applicant upon which the approval of the ap­ its contention that it is not in fact capable of con­ plication is based, the Board has determined that the trolling Ziebach, and the Board has received no con­ balance of the public interest factors the Board is re­ tradictory evidence. quired to consider under § 4(c)(8) is favorable. Accord­ On the basis of the facts of record, it is hereby deter­ ingly, the application is hereby approved. This deter­ mined that Dewco is not in fact capable of controlling mination is subject to the conditions set forth in Ziebach. It appears that the sale of Company’s assets § 225.4(c) of Regulation Y and to the Board’s authority by Dewco was effected through arm’s-length negotia­ to require such modification or termination of the ac­ tions. Moreover, Dewco has indicated that all business tivities of a holding company or any of its subsidiaries between Dewco or Bank and Ziebach will be con­ as the Board finds necessary to assure compliance ducted on a nonpreferential basis. In addition, there with the provisions and purposes of the Act and the are no employee, officer, or director interlocks be- Board’s regulations and orders issued thereunder, or to prevent evasion thereof. 1. For purposes of section 2(g)(3) the Board deems the transfer of all or substantially all the assets of a company or the disposition of a separate activity of a company to involve a transfer of shares. 12 3. 12 C.F.R. § 225.4(a)(10), note 7. C.F.R. § 225.139(c)(3). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 605 tween Ziebach and Dewco or its subsidiary bank. Fur­ upon the evidence of record in this matter, including thermore, because of the structure of the transaction, the following facts. there is no significant likelihood that Dewco may reac­ Pan American divested its interest in Atico by a pro quire Company in the future. Finally, Dewco has un­ rata distribution of Atico’s shares to Pan American’s dertaken that it will not attempt to exercise control shareholders. At the date of the transfer, Mr. Wein­ over Ziebach, and Ziebach has committed that it will traub, the founder of Pan American and Atico, owned set policy and direct operations of Company independ­ 18.8 percent of Pan American’s voting shares, and up­ ently. on consummation of the distribution, he received 21.4 Accordingly, it is ordered that the request of Dewco percent of Atico’s voting shares. The total number of for a determination pursuant to section 2(g)(3) is grant­ shares owned by officers and directors of Pan Ameri­ ed. This determination is based on representations can, including Mr. Weintraub, slightly is in excess 25 made to the Board by Dewco and Ziebach. In the percent of Atico’s shares. Prior to the distribution, event that the Board should hereafter determine that twelve individuals served as common officers or direc­ facts material to this determination are otherwise than tors of Pan American and Atico. Upon consummation as represented, or that Dewco or Ziebach has failed to of the transfer, however, only Mr. Weintraub re­ disclose to the Board other material facts, this deter­ mained as a management official of both Pan American mination may be revoked, and any change in the facts and Atico. The presumption of control in section and circumstances relied upon by the Board in making 2(g)(3) arises because the Board has interpreted the this determination could result in the Board reconsid­ presumption to apply when a transferee, such as Mr. ering the determination made herein. Weintraub, is an officer, director, or trustee of the By order of the Board of Governors, acting through transferor (12 C.F.R. § 225.139(c)(2)). In view of Pan its General Counsel, pursuant to delegated authority American’s commitment that this final interlock will (12 C.F.R. § 265.2(b)(1)), effective June 20, 1980. be retained only for a short period to ensure an orderly transition of management of Atico, it does not appear (Signed) G riffith L. Garwood, that the retention of this interlock is intended as a [seal] Deputy Secretary of the Board. means for perpetuating Pan American’s control over Atico. While Atico was its subsidiary, Pan American had issued certain long and short term debt obligations of Pan American Bancshares, Inc., Atico, and Atico is indebted to Pan American. Based Miami, Florida on the facts of record, it appears that Atico has suf­ ficient resources to honor its debt obligations without Order Granting Determination Under the Bank requiring Pan American to fulfill its obligation as guar­ Holding Company Act antor, and there is no evidence in the record to in­ dicate that Atico will not repay these debts in accord­ Pan American Bancshares, Inc. (“Pan American”), ance with their terms. Miami, Florida, a bank holding company within the Finally, Pan American’s board of directors has meaning of the Bank Holding Company Act, has re­ adopted a resolution that it does not, and will not at­ quested a determination under section 2(g)(3) of the tempt to, exercise control, either directly or indirectly, Act (12 U.S.C. § 1841(g)(3)), that it is not in fact ca­ over Atico or any of its affiliates. Similarly, Atico’s pable of controlling Atico Financial Corporation board of directors has adopted a resolution that it is (“Atico”), Miami, Florida, notwithstanding the fact not, and will not be, controlled by Pan American. In that Mr. Joseph Weintraub, Pan American’s chairman, addition, Mr. Weintraub has filed an affidavit to the is also chairman of Atico, and that Pan American is effect that he will not represent the interests of Pan guarantor of certain debts of Atico. American in his management of voting his shares of Under section 2(g)(3) of the Act, shares transferred Atico. after January 1, 1966, by any bank holding company to Based on these and other facts of record, it is hereby a transferee that is indebted to the transferor or has determined that Pan American is not, in fact, capable one or more officers, directors, trustees, or ben­ of controlling Atico, and that the request of Pan Amer­ eficiaries in common with or subject to control by the ican for a determination pursuant to section 2(g)(3) be transferor are deemed to be indirectly owned or con­ and hereby is granted. This determination is also based trolled by the transferor unless the Board, after oppor­ on certain representations and commitments made to tunity for a hearing, determines that the transferor is the Board by Pan American, Atico, and Mr. Wein­ not in fact capable of controlling the transferee. It is traub. In the event the Board should hereafter deter­ hereby determined that Pan American is not in fact ca­ mine that facts material to this determination are oth­ pable of controlling Atico. This determination is based erwise than as represented, or that the parties have Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

606 Federal Reserve Bulletin □ July 1980 failed to disclose any material facts or to fulfill any In connection with this request, the following infor­ commitments and representations, this determination mation is deemed relevant, for purposes of issuing the may be revoked or reconsidered. requested certification.3 By order of the Board of Governors, acting through 1. First is a corporation organized under the laws of its General Counsel pursuant to delegated authority Arkansas on November 5, 1928. On July 24, 1953, (12 C.F.R. § 265.2(b)(1)), effective June 17, 1980. First acquired ownership and control of 28,550 shares, representing 95.2 percent of the outstanding (Signed) Cathy L. Petryshyn, voting shares, of Bank. On July 7, 1970, First held [seal] Assistant Secretary of the Board. 63,407 of the outstanding voting shares of Bank. Be­ tween July 7, 1970 and the present, First has ac­ quired an additional 225,876 shares of Bank in vari­ ous transactions and has sold 84,497 shares.4 Certification Pursuant to the Bank 2. First became a bank holding company on Decem­ Holding Company Tax Act of 1976 ber 31, 1970, as a result of the 1970 Amendments to the BHC Act, by virtue of its ownership and control First Pyramid Life Insurance Company, at that time of more than 25 percent of the out­ Little Rock, Arkansas standing voting shares of Bank, and it registered as such with the Board on August 15, 1971. First would Prior Certification Pursuant to the Bank Holding have been a bank holding company on July 7, 1970, Company Tax Act of 1976 if the BHC Act amendments of 1970 had been in ef­ fect on that date by virtue of its ownership and con­ [Docket No. TCR 76-179] trol on that date of more than 25 percent of the out­ standing voting shares of Bank. First presently owns First Pyramid Life Insurance Company (First) Little and controls 204,876 shares, representing 34.1 per­ Rock, Arkansas, has requested a prior certification cent of the outstanding voting shares, of Bank. pursuant to section 1101(b)(1) of the Internal Revenue 3. First holds property acquired by it on or before Code (“Code”) as amended by section 2(a) of the July 7, 1970, the disposition of which, but for the Bank Holding Company Tax Act of 1976 (“Tax Act”) proviso of section 4(a)(2) of the BHC Act, would be that its proposed divestiture of certain shares of a cor­ necessary or appropriate to effectuate section 4 of poration (“New Corporation”) to be formed to ac­ the BHC Act if First were to continue to be a bank quire City National Bank of Fort Smith (“Bank”) Fort holding company beyond December 31, 1980, and Smith, Arkansas, is necessary or appropriate to ef­ fectuate the policies of the Bank Holding Company Act (12 U.S.C. § 1841 et seq) (“BHC Act”).1 First 1101(b) is applicable. With respect to the shares of New Corporation proposes to exchange the 204,786 shares of Bank it to be received in exchange for the 181,755 shares of Bank that would be eligible to be distributed without recognition of gain under section presently owns for 225,264 shares of New Corpora­ 1101(b) (see note 4), First has indicated that these shares wll be ac­ tion, and immediately after the exchange, to distribute quired in a transaction described in section 368(a)(1)(A) of the Code in pro rata to the holders of common stock of First, those which gain would not be recognized. Accordingly, even though such shares of New Corporation would be acquired after July 7, 1970, those shares of New Corporation held by it that are received shares that are substituted for the 181,755 shares of Bank that would in exchange for shares by Bank held by First that be eligible for the benefits provided in section 1101(b) would never­ theless qualify as property eligible for the tax benefits provided in sec­ could be distributed without recognition of gain under tion 1101(b) of the Code, by virtue of section 1101(c)(1)(D), if those section 1101(b) of the Code.2 shares of New Corporation are in fact received in a transaction in which gain is not recognized under section 368(a)(1)(A) of the Code. 3. This information derives from First’s correspondence with the Board concerning its request for this certification, First’s Registration Statement filed with the Board pursuant to the BHC Act, and other 1. On January 24, 1980, the Board issued a prior certification pur­ records of the Board. suant to the Tax Act relating to the proposed divestiture by First of 4. As discussed in note 2, under section 1101(c) of the Code, prop­ shares of New Corporation recieved in a transaction under section erty acquired after July 7, 1970, generally does not qualify for the tax 1101(c)(3) of the Code. This certification relates to a proposal by First benefits of section 1101(b) when distributed by an otherwise qualified to acquire the shares of New Corporation under a different section of bank holding company. However, where such property was acquired the Code, and in turn to distribute them under section 1101(b) of the by a qualified bank holding company in a transaction in which gain Code. Accordingly, inasmuch as the facts of the transaction are other was not recognized under section 305(a) of the Code, then section than as described in the previous certification, the Board’s certifica­ 1101(b) is applicable. First has stated that 201,846 of the shares of tion of January 24, 1980, is hereby revoked. Bank it has received since July 7, 1970, were received in transactions 2. Under subsection (c) of section 1101 of the Code, property ac­ in which gain was not recognized under section 305(a) of the Code. quired after July 7, 1970, generally does not qualify for the tax benefits Accordingly, even though shares of Bank were acquired after July 7, of section 1101(b) when distributed by an otherwise qualified bank 1970, 118,348 of these shares woul be eligible for the benefits provided holding company. However, where such property is acquired by a in section 1101(b), by virtue of section 1101(c)(1)(A), if those shares of qualified bank holding company in a transaction in which gain is not Bank were in fact received in a transaction in which gain was not recognized under section 368(a)(1)(A) of the Code, then section recognized under section 305(a). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 607 which property, but for such proviso, would be (B) the shares of New Corporation that First will “prohibited property” within the meaning of section receive in exchange for shares of Bank will be all 1103(c) of the Code. Section 1103(g) of the Code or part of the property by reason of which First provides that any bank holding company may elect, controls (within the meaning of section 2(a) of the for the purposes of part VIII of subchapter O of BHC Act) a bank or bank holding company, and Chapter 1 of the Code, to have the determination of (C) the distribution to the shareholders of First of whether property is “prohibited property” or is the shares of New Corporation is necessary or ap­ property eligible to be distributed without recogni­ propriate to effectuate the policies of the BHC tion of gain under section 1101(b)(1) of the Code, Act. made under the BHC Act as if the Act did not con­ tain the proviso of section 4(a)(2). First has repre­ This certification is based upon the representations sented that it will make such an election prior to the and commitments made to the Board by First and up­ consummation of the proposed divestiture.5 on the facts set forth above. In the event the Board 4. First has committed to the Board that no officer, should hereafter determine that facts material to this director, or employee with policy-making functions certification are otherwise than as represented by of First or any of its subsidiaries (including honorary First, or that First has failed to disclose to the Board or advisory directors) will hold any such position other material facts or to fulfill any commitments made with New Corporation or any of its subsidiaries. to the Board in connection herewith, it may revoke First has further committed that all such inter­ this certification. locking relationships that now exist between First By order of the Board of Governors acting through and Bank will be terminated. its General Counsel, pursuant to delegated authority On the basis of the foregoing information, it is (12 C.F.R. § 265.2(b)(3), effective June 13, 1980. hereby certified that: (A) First is a qualified bank holding corporation within the meaning of subsection (b) of section 1103 of the Code, and satisfies the requirements of (Signed) Cathy L. Petryshyn, that subsection; [seal] Assistant Secretary of the Board. Orders Approved Under Bank Holding Company Act By the Board of Governors During June 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) First American Bank Corporation, First National Bank of South Central June 23,1980 Kalamazoo, Michigan Michigan, Quincy, Michigan Old Canal Bankshares II, Inc., Old Canal Bankshares, Inc., June 30,1980 Lockport, Illinois Lockport, Illinois 5. First proposes to retain a portion of the shares of New Corpora­ tion it will receive, which shares will represent less than 5 percent of company controls a bank, and section 2(a)(3) of the Bank Holding the shares of New Corporation. Section 1103(g) of the Code provides Company Act provides that a company holding less than 5 percent of that the final certification for a bank holding company such as First the shares of a bank is presumed not to control the bank, absent other that has made an election under that section must include a certifica­ facts indicating that First would continue to control Bank, it appears tion that the bank holding company has disposed of all banking prop­ that First may retain up to 5 percent of the shares of New Corporation erty. Inasmuch as banking property means those shares by which a and still meet the disposition requirements of section 1103(g). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

608 Federal Reserve Bulletin □ July 1980 Sections 3 and 4 Nonbanking company Reserve Effective Applicant Bank(s) (or activity) Bank date TEA, Incorporated, Farmers and Merchants Bank, to engage in the sale Chicago June 20, 1980 Shullsburg, Wisconsin Shullsburg, Wisconsin of general insurance WORTH BANCORP., Worth Bank and Trust, to act as agent or broker Chicago June 13,1980 Inc., Worth, Illinois in the sale of credit Chicago, Illinois life and credit health and accident insurance Orders Approved Under Bank Merger Act By the Board of Governors Effective Applicant Bank(s) date The Central Trust Company, The Farmers and Citizens Bank, June 10,1980 Reynoldsburg, Ohio Lancaster, Ohio 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 ADCO Company, Bank of Brule, Kansas City May 30, 1980 Brule, Nebraska Brule, Nebraska Ameribanc, Inc., Ameribanc Life Insurance Company, Kansas City May 23, 1980 St. Joseph, Missouri Phoenix, Arizona American Bancorporation of American Bank of Muskogee, Kansas City May 19,1980 Muskogee, Inc., Muskogee, Muskogee, Oklahoma Anna Bancshares, Inc., The First National Bank of Anna, Dallas June 12, 1980 Anna, Texas Anna, Texas Antioch Bancshares, Inc., The First National Bank of Antioch, Chicago June 24, 1980 Antioch, Illinois Antioch, Illinois Bank Corporation of Georgia, Bank of Fort Valley, Fort Valley, Atlanta June 16,1980 Fort Valley, Georgia Georgia, and First State Bank, Marshall ville, Georgia Bankshares of Park County, Inc., The Bank of Park County, Kansas City June 20,1980 Bailey, Colorado Bailey, Colorado Coastal Bankshares, Inc., The Coastal Bank of Georgia, Atlanta June 16,1980 St. Simons Island, Georgia St. Simons Island, Georgia Capital Bancorp, Capital City Bank, San Francisco June 16,1980 Salt Lake City, Utah Salt Lake City, Utah Clayton Bancshares Corporation, Crestwood Bank Shares Corporation and St. Louis June 5,1980 St. Louis, Missouri Hampton Bankshares Corporation, both of St. Louis, Missouri Columbia National Bankshares, Inc., Columbia National Bank, San Francisco June 24,1980 Longview, Washington Longview, Washington Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 609 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Cowden Bancorp, Inc., State Bank of Cowden, Chicago June 4, 1980 Springfield, Illinois Cowden, Illinois Crofton State Company, Crofton State Bank, Kansas City June 13, 1980 Crofton, Nebraska Crofton, Nebraska DETROITBANK Corporation, ISB Financial Corporation, Chicago June 9, 1980 Detroit, Michigan Kalamazoo, Michigan Elk River Bancshares, Inc. First National Bank of Minneapolis June 2, 1980 Elk River, Minnesota Elk River, Elk River, Minnesota Exchange Bancshares, Inc., The Exchange Bank, St. Louis June 20, 1980 Mayfield, Kentucky Mayfield, Kentucky F.N.B.C. of La Grange, Inc., First National of La Grange, Chicago June 19, 1980 La Grange, Illinois La Grange, Illinois FSB Bancorp, Inc., The Fayette State Bank, Atlanta June 3, 1980 Peachtree City, Georgia Peachtree City, Georgia Fifth Third Bancorp, The Fayette County Bank, Cleveland June 23, 1980 Cincinnati, Ohio Jeffersonville, Ohio FIRST BANCSHARES, INC., The First Bank of Whiting, Chicago June 18, 1980 Highland, Indiana Whiting, Indiana First Financial Group, Inc., Tobacco Exchange Bank, Chicago June 3, 1980 Janesville, Wisconsin Edgerton, Wisconsin First Guthrie Corp., The First State Bank and Trust Kansas City May 29, 1980 Guthrie, Oklahoma Company, Guthrie, Oklahoma First Mexia Bancshares, Inc., First Mexia Bank, Dallas June 19, 1980 Mexia, Texas Mexia, Texas First National Bancshares of Hico, Inc. The First National Bank of Hico, Dallas June 19, 1980 Hico, Texas Hico, Texas First National Charter Corporation, First State Bancshares, Inc., Kansas City May 19, 1980 Kansas City, Missouri Raytown, Missouri First Paris Holding Company, The First National Bank at St. Louis June 16,1980 Paris, Arkansas Paris, Paris, Arkansas Frazee Bancorporation, Inc., Peoples State Bank of Frazee, Minneapolis June 10, 1980 Frazee, Minnesota Frazee, Minnesota GREATER MILWAUKEE FINANCIAL CORP., Greater Milwaukee Bank, Chicago June 4, 1980 Milwaukee, Wisconsin Milwaukee, Wisconsin Harper Associates Bancshares Ltd., Bucklin State Bank of Bucklin, Missouri, Kansas City May 30, 1980 Bucklin, Missouri Bucklin, Missouri Hawkeye Bancorporation, Sibley Bancorporation, Sibley, Chicago June 23,1980 Des Moines, Iowa Iowa, and The First National Bank of Sibley, Sibley, Iowa Heritage Bancorporation, The City National Bank and Trust Philadelphia June 18,1980 Cherry Hill, New Jersey of Salem, Salem, New Jersey Horton Bancshares, Inc., Bank of Horton, Kansas City May 19, 1980 Horton, Kansas Horton, Kansas Independent Bankshares, Inc., The First State Bank, Dallas June 9, 1980 Abilene, Texas Abilene, Texas Iola Bancshares, Inc. Gilpin Insurance Agency, Kansas City June 5, 1980 Iola, Kansas Iola, Kansas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

610 Federal Reserve Bulletin □ July 1980 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Jefferson Bancshares, Inc., Jefferson Bank and Trust Company, Atlanta June 16, 1980 Metairie, Louisiana Metairie, Louisiana Liberty National Bancorp, Inc., Liberty National Bank and Trust St. Louis June 23,1980 Louisville, Kentucky Company, Louisville, Kentucky Marine Bancorp, Inc., Springfield Marine Bank, Chicago June 9,1980 Springfield, Illinois Springfield, Illinois Mills County Bancorp., Mills County State Bank, Chicago June 20,1980 Glenwood, Iowa Glenwood, Iowa Morton Bancshares, Inc., First State Bank, Dallas June 19, 1980 Morton, Texas Morton, Texas North Park National Corporation, NorthPark National Bank of Dallas June 16,1980 Dallas, Texas Dallas, Dallas, Texas Nasher Financial Corporation, NorthPark National Corporation Dallas June 16, 1980 Dallas, Texas Dallas, Texas Peoples Bancorp Inc., The Peoples Banking and Trust Cleveland June 26,1980 Marietta, Ohio Marietta, Ohio Republic of Texas Corporation, Oak Cliff Bank & Trust Company, Dallas June 16, 1980 Dallas, Texas Dallas, Texas Robinson Bank Holding Company, Security State Bank of Robinson, Minneapolis June 4,1980 Robinson, North Dakota Robinson, North Dakota Roger Billings, Inc., The State Bank of Delphos, Kansas City May 23, 1980 Delphos, Kansas Delphos, Kansas Slater Bancshares, Inc., State Bank of Slater, Kansas City May 19,1980 Slater, Missouri Slater, Missouri Southern Banks of Florida, Inc., High Springs Bank, Atlanta June 20,1980 Gainesville, Florida High Springs, Florida Stockton Bancshares, Inc., The Stockton National Bank, Kansas City June 20,1980 Stockton, Kansas Stockton, Kansas Tecumseh F & M Bancorp, Inc., The Farmers and Merchants Bank, Kansas City June 13,1980 Tecumseh, Oklahoma Tecumseh, Oklahoma Tolono Bancshares, Inc., Citizens Bank of Tolono, Chicago June 2,1980 Tolono, Illinois Tolono, Illinois United Ohio Bancs, Inc., The Third National Bank and Trust Cleveland June 3, 1980 Dayton, Ohio Company, Dayton, Ohio Waytru Bancorp., Wayne Bank and Trust Co., Chicago June 6, 1980 Cambridge City, Indiana Cambridge City, Indiana Wilson Bancshares, Inc., Bank of Weston, Kansas City May 30,1980 Weston, Missouri Weston, Missouri Windom State Investment Company, Windom State Bank, Minneapolis June 4,1980 Windom, Minnesota Windom, Minnesota Yorkville Bancshares, Inc., The Yorkville National Bank, Chicago June 19,1980 Yorkville, Illinois Yorkville, Illinois Section 4 Nonbanking company Reserve Effective Applicant (or activity) Bank date North Branch Investment, Inc., to continue to sell insurance as a Minneapolis June 16,1980 North Branch, Minnesota general insurance agent Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 611 Section 4—Continued Reserve Effective Applicant Bank(s) Bank date Tri-County State Agency, Inc., to continue to sell insurance as a Minneapolis June 24,1980 Ortonville, Minnesota general insurance agent in the town of Ortonville, Minnesota Kinban, Inc., Kinsley, Kansas to continue to engage in general in­ Kansas City June 20, 1980 surance agency activities Mid Iowa, Inc., Panora, Iowa to continue to engage in general in­ Chicago June 12,1980 surance activities First Oklahoma Bancorporation, Inc., American Mortgage and Investment Co. Kansas City May 23,1980 Oklahoma City, Oklahoma Oklahoma City, Oklahoma Fabank, Inc., Fayette, Iowa to continue to directly engage as agent Chicago May 30, 1980 in general insurance activities Clearwater Development Co., Inc., to continue to engage in general in­ Kansas City June 20, 1980 Clearwater Nebraska surance agency activities Circle Management Company, to continue to engage in the activity Kansas City June 5, 1980 Kearney, Nebraska of selling credit-related insurance Carleton Agency, Inc., to continue to engage in general in­ Kansas City June 5,1980 Carleton, Nebraska surance activities Ashton Investment Company, to continue to engage in general in­ Chicago June 25,1980 Rock Rapids, Iowa surance agency activities Wood Lake Corporation, to continue to sell insurance as a Minneapolis June 26,1980 Wood Lake, Minnesota general insurance agent in the town of Wood Lake, Minnesota Orders Approved Under Bank Merger Act Reserve Effective Applicant Bank(s) Bank date The Dime Bank of Northwest Ohio, The Dime Bank of Continental, Cleveland June 19,1980 Continental, Ohio Continental, Ohio, et al. Springfield Marine Bank, SM Bank Springfield, Illinois Chicago June 9, 1980 Springfield, Illinois Pending Cases Involving the Board of Governors* This list of pendng cases does not include suits against Louis J. Roussel v. Board of Governors, filed April the Federal Reserve Banks in which the Board of Gov­ 1980, U.S.D.C. for the District of Columbia. ernors is not named a party. Ulyssess S. Crockett v. United States, et al., filed April 1980, U.S.D.C. for the Eastern District of U.S. League of Savings Associations v. Depository North Carolina. Institutions Deregulation Committee, et al., filed Angela Belk v. Government of Iran, et al., filed April June 1980, U.S.D.C. for the District of Columbia. 1980, U.S.D.C. for the District for South Carolina, Edwin F. Gordon v. Board of Governors, et al., filed Columbia Division. June 1980, U.S. Supreme Court. Independent Bank Corporation v. Board of Gover­ Mercantile Texas Corporation v. Board of Governors, nors, filed October 1979, U.S.C. A. for the Sixth Cir­ filed May 1980, U.S.C.A. for the Fifth Circuit. cuit. Corbin, Trustee v. United States, filed May 1980, Wiley v. United States, et al., filed September 1979, United States Court of Claims. U.S.D.C. for the District of Columbia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

612 Federal Reserve Bulletin □ July 1980 County National Bancorporation and TGB Co. v. Independent Insurance Agents of America, et al., v. Board of Governors, filed September 1979, Board of Governors, filed March 1979, U.S.C.A. for U.S.C.A. for the Eighth Circuit. the District of Columbia. Edwin F. Gordon v. Board of Governors, et al., filed Credit and Commerce American Investment, et al., v. August 1979, U.S.D.C. for the Northern District of Board of Governors, filed March 1979 U.S.C.A. for Georgia. the District of Columbia. Gregory v. Board of Governors, filed July 1979, Independent Bankers Association of Texas v. First U.S.D.C. for the District of Columbia. National Bank in Dallas, et al., filed July 1978, Donald W. Riegel, Jr. v. Federal Open Market Com­ U.S.D.C. for the Northern District of Texas. mittee, filed July 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 Connecticut Bankers Association, et al., v. Board of the Ninth Circuit. Governors, filed May 1979, U.S.C.A. for the Dis­ Vickars-Henry Corp. v. Board of Governors, filed De­ trict of Columbia. cember 1977, U.S.C.A. for the Ninth Circuit. Independent Insurance Agents of America, et al., v. Investment Company Institute v. Board of Governors, Board of Governors, filed May 1979, U.S.C.A. for filed September 1977, U.S.D.C. for the District of the District of Columbia. Columbia. Independent Insurance Agents of America, et al., v. Roberts Farms, Inc. v. Comptroller of the Currency, Board of Governors, filed April 1979, U.S.C.A. for et al., filed November 1975, U.S.D.C. for the South­ the District of Columbia. ern District of California. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Al 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 and repurchase agreements of All Banks in New York City large member 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, Al Federal Reserve Bank interest rates partnerships, and corporations A8 Member bank reserve requirements A9 Maximum interest rates payable on time and savings deposits at federally insured institutions Financial Markets A10 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 Al 1 Condition and Federal Reserve note statements A26 Terms of lending at commercial banks A12 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 A12 Bank debits and deposit turnover A13 Money stock measures and components Federal Finance A14 Aggregate reserves and deposits of member banks A30 Federal fiscal and financing operations A15 Loans and securities 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

A2 Federal Reserve Bulletin □ July 1980 Securities Markets and International Statistics 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 A67 Claims on unaffiliated foreigners A46 Nonfinancial business activity—Selected measures A46 Output, capacity, and capacity utilization Interest and Exchange Rates A47 Labor force, employment, and unemployment A48 Industrial production—Indexes and gross value A68 Discount rates of foreign central banks A50 Housing and construction A68 Foreign short-term interest rates A51 Consumer and producer prices A68 Foreign exchange rates A52 Gross national product and income 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 Item Q2 Q3 Q4r Ql' Feb.' Apr.' May Monetary and credit aggregates (annual rates of change, seasonally adjusted in percent)1 Member bank reserves 1 Total........................................................................... -3.7 5.0 12.7 4.4 -1.4 -0.8 4.4 4.3 -.9 2 Required ................................................................... -3.5 4.7' 11.7 5.4 4.0 0.3 4.6 2.7 1.3 3 Nonborrowed ........................................................... -7.5 6.9 7.1 3.6 5.3 -12.7 -29.3 15.5 41.4 4 Monetary base2 ....................................................... 9.3 9.7 7.6 7.8 7.5 6.9 1.7 7.7 Concepts of money and liquid assets3 5 M-1A......................................................................... 7.2' 7.8' 4.5 4.8 3.6 9.4 -1.9 -17.7 .7 6 7 M M - - 1 2 B .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 0 0 . . 2 4' 1 9 0 . . 6 7 ' ' 5 7. . 1 0 5 7 . . 9 2 5 6 . . 3 9 9 9 . . 9 5 - 4 . . 3 7 -1 -1 4 . .1 9 -1 9 . . 2 1 8 9 M L -3 ... .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 9 3 . . 3 5' ' 1 1 0 2 . . 8 2 ' ' 9 8 . . 1 5 7 8. . 1 7 7 7 . . 9 6 1 11 1 . . 5 9 3 5 . .8 6 5. . 0 5 8.6 Time and savings deposits Commercial banks 10 Total....................................................................... 1.2' 9.1 12.4 8.4 6.9 14.6 8.5 15.0 6.6 1 1 1 2 S Sa m v a in ll g - s d 4 e n . o .. m ... i . n ... a . t .. i . o .. n .. ... t . i . m ... e .. 5 .. ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 8 1 . . 4 2 ' ' 22 . . 4 5 ' ' -1 3 6 2 . . 5 1 -1 2 9 9 . . 3 1 -1 2 2 1 . . 4 9 -2 2 2 5 . . 5 9 -3 4 5 2 . . 6 5 -4 5 3 4 . . 3 4 - 1 7 4 . . 5 1 13 Large-denomination time6 ................................ -7.7' 4.5' 19.7 11.3 7.4 34.0 7.6 16.2 8.5 14 Thrift institutions7 ................................................... 7.4 7.4 6.7 2.7 -.9 1.4 4.1 3.2 8.0 15 Total loans and securities at commercial banks8 11.5 13.4 8.7 12.8 18.7 2.6 -4.3 -6.1 1979 Q3 Q4 Ql Q2 Feb. Apr. May June Interest rates (levels, percent per annum) Short-term rates 16 Federal funds9 ................................................................................. 10.94 13.58 15.07 12.67 14.13 17.19 17.61 10.98 9.47 17 Federal Reserve discount10 .......................................................... 10.21 11.92 12.51 12.45 12.52 13.00 13.00 12.94 11.40 18 Treasury bills (3-month market yield)11...................................... 9.67 11.84 13.35 9.62 12.86 15.20 13.20 8.58 7.07 19 Commercial paper (3-month)1112................................................ 10.64 13.35 14.54 11.18 13.78 16.81 15.78 9.49 8.27 Long-term rates Bonds 20 U.S. government13...................................................................... 9.03 10.18 11.78 10.58 12.21 12.49 11.42 10.44 9.89 21 State and local government14.................................................... 6.28 7.20 8.23 7.95 8.16 9.17 8.63 7.59 7.63 22 Aaa utility (new issue)15............................................................ 9.64 11.21 13.22 11.78 13.57 14.00 12.90 11.53 10.95 23 Conventional mortgages16 ............................................................ 11.13 12.38 14.32 n.a. 14.10 16.05 15.55 13.20 12.45 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-denomination time deposits are those issued in amounts of less than are adjusted for discontinuities in series that result from changes in Regulations $100,000. D and M. 6. Large-denomination time deposits are those issued in amounts of $100,000 2. Includes total reserves (member bank reserve balances in the current week or more. Elus vault cash held two weeks earlier); currency outside the U.S. Treasury, Federal 7. Savings and loan associations, mutual savings banks, and credit unions. .eserve Banks, and the vaults of commercial banks; and vault cash of nonmember 8. Changes calculated from figures shown in table 1.23. banks. 9. Seven-day averages of daily effective rates (average of the rates on a given 3. M-1A: Averages of daily figures for (1) demand deposits at all commercial date weighted by the volume of transactions at those rates). banks other than those due to domestic banks, the U.S. government, and foreign 10. Rate for the Federal Reserve Bank of New York. banks and official institutions less cash items in the process of collection and 11. Quoted on a bank-discount basis. Federal Reserve float; and (2) currency outside the Treasury, Federal Reserve 12. Beginning Nov. 1977, unweighted average of offering rates quoted by at banks, and the vaults of commercial banks. least five dealers. Previously, most representative rate quoted by these dealers. M-1B: M-l A plus negotiable order of withdrawal and automated transfer service Before Nov. 1979, data shown are for 90- to 119-day maturity. accounts at banks and thrift institutions, credit union share draft accounts, and 13. Market yields adjusted to a 20-year maturity by the U.S. Treasury. demand deposits at mutual savings banks. 14. Bond Buyer series for 20 issues of mixed quality. M-2: M-1B plus savings and small-denomination time deposits at all depository 15. Weighted averages of new publicly offered bonds rated Aaa, Aa, and A by institutions, overnight repurchase agreements at commercial banks, overnight Moody’s Investors Service and adjusted to an Aaa basis. Federal Reserve com­ Eurodollars held by U.S. residents other than banks at Caribbean branches of pilations. member banks, and money market mutual fund shares. 16. Average rates on new commitments for conventional first mortgages on new M-3: M-2 plus large-denomination time deposits at all depository institutions homes in primary markets, unweighted and rounded to nearest 5 basis points, from and term RPs at commercial banks and savings and loan associations. Dept, of Housing and Urban Development. 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 Domestic Financial Statistics □ July 1980 1.11 FACTORS AFFECTING MEMBER BANK RESERVES Millions of dollars Monthly averages of Weekly averages of daily figures for week-ending daily figures Factors 1980 1980 Apr.P May? June? May 14 p May 2\p May 28p June 4p June IIP June ISp June 25p Supplying Reserve Funds 1 Reserve Bank credit outstanding.............................. 139,098 139,561 141,246 138,630 140,624 139,623 142,353 140,324 140,213 141,632 2 U.S. government securities1 ...................................... 118,636 120,689 122,336 119.953 122.295 120,851 123,192 121.586 121,141 122,735 3 Bought outright ....................................................... 118,268 120,282 121,623 119.953 122.295 120,125 121,183 121.586 120,059 122,003 368 407 713 726 2,009 1,082 732 5 Federal agency securities ........................................... 8,910 8,974 9,020 8.877 8.877 9,088 9,254 8.876 9,126 8,963 6 Bought outright ....................................................... 8,833 8,877 8,875 8.877 8.877 8,877 8,877 8.876 8,875 8,875 77 97 145 211 377 251 88 55 75 171 119 376 245 163 9 Loans ............................................................................. 2,444 1,028 365 1,021 839 1,123 459 401 396 318 10 Float ............................................................................... 3,902 3,642 3,997 3,218 3,875 3,532 3,984 4,352 3,858 3,930 11 Other Federal Reserve assets .................................. 5,151 5,153 5,357 5,561 4,738 4,909 5,089 5,108 5,446 5,522 12 Gold stock..................................................................... 11,172 11,172 11,172 11,172 11,172 11,172 11,172 11,172 11,172 11,172 13 Special drawing rights certificate account.............. 2,968 2,968 2,986 2,968 2,968 2,968 2,968 2,968 2,968 3,011 14 Treasury currency outstanding.................................. 13,215 13,266 13,280 13,253 13,262 13,267 13,383 13,275 13,278 13,285 Absorbing Reserve Funds 15 Currency in circulation ............................................... 123,717 124,738 126,326 124,713 124,750 125,187 125,854 126,213 126,536 126,311 16 Treasury cash holdings ............................................... 589 577 543 588 577 566 557 549 546 538 Deposits, other than member bank reserves, with Federal Reserve Banks 17 Treasury..................................................................... 2,647 2,828 2,923 2,807 3,020 2,614 3,886 2,884 2,023 3,192 18 Foreign....................................................................... 346 377 354 467 328 355 450 347 276 311 19 Other5 ....................................................................... 500 643 1,378 515 523 778 1,260 1,281 1,355 1,458 20 Other Federal Reserve liabilities and capital........ 4,990 5,078 4,971 5,069 5,066 5,043 4,999 4,960 5,080 4,907 21 Reserve accounts3 ....................................................... 33,663 32,726 32,189 31,863 33,762 32,486 32,871 31,504 31,815 32,383 End-of-month figures Wednesday figures 1980 1980 Apr .p MayP JuneP May 14P May 21 p May 28p June 4p June IIP June 18P June 25p Supplying Reserve Funds 22 Reserve bank credit outstanding .............................. 141,107 142,105 143,741 142,543 138,811 145,684 142,005 140,152 142,608 139,278 23 U.S. government securities1 ................................... 118.825 124,277 124,515 122.454 120.095 124,202 121,509 122.185 121,979 119.841 24 Bought outright ................................................... 118.825 121,371 124,058 122.454 120.095 121,200 120,573 122.185 121,542 119.841 25 Held under repurchase agreements ................ 0 2,906 457 3,002 936 437 26 Federal agency securities ...................................... 8.877 9,230 8,912 8.877 8.877 9,801 9,270 8.875 8,936 8.875 27 Bought outright ................................................... 8.877 8,877 8,875 8.877 8.877 8,877 8,877 8.875 8,875 8.875 28 Held under repurchase agreements ................ 0 353 37 924 393 61 29 Acceptances ............................................... 0 366 373 612 467 367 30 Loans ......................................................................... 4,770 602 215 1,585 886 2,400 252 329 798 364 31 Float ........................................................................... 3,072 2,475 4,167 3,777 4,008 3,605 5,396 3,579 5,039 4,483 32 Other Federal Reserve assets .............................. 5,563 5,155 5,559 5,850 4,945 5,064 5,111 5,184 5,489 5,715 33 Gold stock..................................................................... 11,172 11,172 11,172 11,172 11,172 11,172 11,172 11,172 11,172 11,172 34 Special drawing rights certificate account .............. 2,968 2,968 3,018 2,968 2,968 2,968 2,968 2,968 2,968 3,018 35 Treasury currency outstanding.................................. 13,410 13,530 13,293 13,260 13,266 13,271 13,275 13,275 13,285 13,285 Absorbing Reserve Funds 36 Currency in circulation ............................................... 123,963 125,694 126,859 125,027 125,089 125,949 126,252 126,831 126,773 126,766 37 Treasury cash holdings............................................... 584 554 528 587 574 562 555 552 545 534 Deposits, other than member bank reserves, with Federal Reserve Banks 38 Treasury..................................................................... 4,561 4,523 3,199 2,080 3,119 2,297 3,337 2,970 3,549 2,951 39 Foreign ................................................................... 648 380 691 351 350 383 517 315 254 295 40 Othe? ....................................................................... 553 1,160 1,332 478 528 1,163 1,314 1,348 1,400 1,525 41 Other Federal Reserve liabilities and capital........ 5,066 5,083 5,003 4,929 4,867 4,979 4,884 4,870 5,111 4,851 42 Reserve accounts3 ....................................................... 33,282 32,382 33,612 36,491 31,690 37,763 32,561 30,681 32,402 29,831 1. Includes securities loaned—fully guaranteed by U.S. government securities 3. Includes reserves of member banks. Edge Act corporations and U.S. agencies pledged with Federal Reserve Banks—and excludes (if any) securities sold and and branches of foreign banks. scheduled to be bought back under matched sale-purchase transactions. Note: For amounts of currency and coin held as reserves, see table 1.12 2. Includes special deposits under the credit restraint program held by money market mutual funds and other financial intermediaries, held by nonmember banks against managed liabilities, and held by any institution in conjunction with the consumer credit restraint program. 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 Reserve classification 1978 1979 1980 Dec. Oct. Nov. Dec. Jan. Feb. Mar./7 Apr .P May p June/7 All member banks Reserves 1 At Federal Reserve Banks............................ 31,158 31,455 32,030 32,473 32,712 31,878 32,400 33,663 32,726 32,189 2 Currency and coin ........................................... 10,330 10,681 10,737 11,344 12,283 11.063 10,729 10,895 10,998 11,137 3 Total held1 ......................................................... 41,572 42,279 42,908 43,972 45,170 43,156 43,352 44,769 43,933 43,531 4 Required ....................................................... 41,447 42,007 42,753 43,578 44,928 42.966 42,907 44,678 43,793 43,282 5 Excess’ ........................................................... 125 272 155 394 242 190 445 91 140 249 Borrowings at Reserve Banks2 6 Total ................................................................... 874 2,022 1.906 1,473 1,241 1,655 2,828 2,443 1,028 365 7 Seasonal ............................................................. 134 161 146 82 75 96 152 156 64 12 Large banks in New York Citv 8 Reserves held ....................................................... 7,120 6,915 6,913 7,401 7,758 7.168 7,276 7,603 7,596 7,482 9 Required ........................................................... 7,243 6.855 6,932 7,326 7,760 7,205 7,194 7,655 7,662 7,600 10 Excess ............................................................... -123 60 -19 75 -2 -37 82 -52 -66 -118 11 Borrowings2........................................................... 99 180 143 66 26 125 60 81 31 18 Large banks in Chicago 12 Reserves held ....................................................... 1,907 1,863 1,940 2,036 2,051 1,968 1,886 2.150 1,922 1,868 13 Required ........................................................... 1,900 1,859 1,950 2,005 2,063 1,941 1,961 2,173 1,906 1,868 14 Excess ............................................................... 7 4 -10 31 -12 27 -75 -23 16 0 15 Borrowings2........................................................... 10 136 122 90 60 97 137 60 28 1 Other large banks 16 Reserves held ....................................................... 16,446 16,840 16,970 17,426 18,078 17,246 17,029 17,644 17,379 17,049 17 Required ........................................................... 16,342 16,799 17,004 17,390 18,065 17,265 17,135 17,991 17,545 17,199 18 Excess ............................................................... 104 41 -34 36 13 -19 -106 -347 -166 -150 19 Borrowings2........................................................... 276 883 803 707 647 729 1,479 1,287 808 319 All other banks 20 Reserves held ....................................................... 16,099 16,571 16,582 16.734 16,904 16,403 16.261 16,314 16,271 16,248 21 Required ........................................................... 15,962 16,422 16,398 16,536 16,692 16,229 16,233 16,367 16,234 16,186 22 Excess ............................................................... 137 149 184 198 212 174 28 -53 37 62 23 Borrowings2........................................................... 489 823 838 610 508 704 1,152 1,015 161 27 Edge corporations 24 Reserves held ....................................................... n.a. 90 308 336 339 328 317 339 10,396 374 25 Required ........................................................... n.a. 72 288 303 323 303 300 299 9,132 332 26 Excess ............................................................... n.a. 18 20 33 16 25 17 40 1,264 42 U.S. agencies and branches 27 Reserves held ....................................................... n.a. n.a. 195 39 40 43 90 198 162 106 28 Required ........................................................... n.a. n.a. 181 18 25 23 84 193 151 97 29 Excess ............................................................... n.a. n.a. 14 21 15 20 6 5 11 9 Weekly averages of daily figures for week (in 1980) ending Apr. 23p Apr. 30/; May Ip May 14/' May 21 p May 28/’ June 4p June ll/7 June 18/7 June 25p All member banks Reserves 30 At Federal Reserve Banks............................ 35,289 33.735 32,911 31,863 33,762 32,486 32,871 31,504 31,815 32,383 31 Currency and coin .......................................... 10,184 11.299 11,413 11,419 10,196 10,924 11,096 11,256 11,413 10,692 32 Total held1 ......................................................... 45,681 45,244 44,535 43,491 44,167 43,619 44,174 42,967 43,435 43,284 33 Required ....................................................... 45.258 45,028 44,234 43,449 43,914 43,614 43,706 42,877 43,271 43,092 34 Excess1 ........................................................... 423 216 301 42 253 5 468 90 164 192 Borrowings at Reserve Banks2 35 Total ................................................................... 2.555 2,664 1,329 1,021 839 1,123 459 401 396 318 36 Seasonal ............................................................. 159 172 155 47 41 29 21 15 11 8 Large banks in New York City 37 Reserves held ....................................................... 7,926 7,671 7,628 7,313 8,042 7,351 8,152 7,258 7,499 7,362 38 Required ........................................................... 7,785 7.725 7,566 7,445 7,829 7,664 8,005 7,542 7,619 7,352 39 Excess ............................................................... 141 -54 62 -132 213 -313 147 -284 -120 10 40 Borrowings2........................................................... 44 92 0 89 0 48 0 0 79 0 Large banks in Chicago 41 Reserves held ....................................................... 1,984 2.209 1.950 1,813 2,057 1,813 1,828 1.791 2,062 1,591 42 Required ........................................................... 2,150 2.084 1,920 1,902 1,955 1,859 1,873 1,858 1,902 1,825 43 Excess ............................................................... - 166 125 30 -89 102 -46 -45 -67 160 -234 44 Borrowings2........................................................... 54 122 11 0 0 108 11 0 0 0 Other large banks 45 Reserves held ....................................................... 17,972 17,815 17,952 17,363 17,283 17,185 17,155 16,822 16,777 17,211 46 Required ........................................................... 18,347 18.210 17,905 17,540 17,471 17,400 17,232 16,995 17,217 17,202 47 Excess ............................................................... -375 -395 47 -177 -188 -215 -77 -173 -440 9 48 Borrowings2........................................................... 1,345 1,484 866 831 773 899 393 378 291 297 All other banks 49 Reserves held ....................................................... 16,332 16,628 16,474 16,119 16,194 16,289 16,272 15,925 16,222 16,367 50 Required ........................................................... 16,556 16,644 16,449 16,104 16,221 16,208 16,127 15,921 16,133 16,360 51 Excess ............................................................... -224 -16 25 15 -27 81 145 4 89 7 52 Borrowings2........................................................... 1,112 966 452 101 66 68 55 23 26 21 Edge corporations 53 Reserves held ....................................................... 328 317 317 338 321 348 367 386 407 346 54 Required ........................................................... 287 293 298 293 292 290 307 358 353 306 55 Excess ............................................................... 41 24 19 45 29 58 60 28 54 40 U.S. agencies and branches 56 Reserves held ....................................................... 141 80 105 188 158 188 173 217 60 57 57 Required ........................................................... 133 72 96 165 146 193 162 205 47 47 58 Excess ............................................................... 8 8 9 23 12 -5 11 12 13 10 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 FReAxiSstEinRg member bank, or when a nonmember bank joins the Federal http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Financial Statistics □ July 1980 1.13 FEDERAL FUNDS AND REPURCHASE AGREEMENTS Large Member Banks' Averages of daily figures, in millions of dollars 1980. week ending Wednesday By maturity and source May V May 14' May 21' May 28'' June 4 June 11 June 18 June 25 July 2 One day and continuing contract 1 Commercial banks in U.S.................................................... 46,327 46,714 47.006 45.234 46,784 51.163 50.083 47,170 47,578 2 Other depositary institutions, foreign banks and foreign official institutions, and U.S. government agencies 12,277 14,103 15.397 14.636 17,725 16,450 17.316 17,703 17,284 3 Nonbank securities dealers................................................ 1,076 962 1.233 1.177 1,579 964 1,046 1,541 1,245 4 All other ............................................................................... 13,264 12,496 13.197 14,059 14,582 13,590 13.381 14.981 15,567 All other maturities 5 Commercial banks in U.S.................................................... 6,033 5,907 5,967 6,500 6.037 5,362 4.825 4,430 3,969 6 Other depositary institutions, foreign banks and foreign official institutions, and U.S. government agencies 6,945 6,787 6,751 7,002 6,556 6,629 6,463 6,161 6,102 7 Nonbank securities dealers................................................ 2,441 2,315 2,546 2,476 2,678 2,798 2.772 2,760 2,956 8 All other ............................................................................... 9,614 10,161 8.542 9,234 9,325 10,601 9,122 9,486 9,167 Memo: Federal funds and resale agreement loans in ma­ turities of one day or continuing contract 9 Commercial banks in U.S.................................................... 16,131 15.542 16,597 14,807 16,297 16,144 16.984 15,013 15,326 10 Nonbank securities dealers................................................. 1,890 2,051 2.129 1,850 1.964 2,936 2.617 2,256 2,117 1. Banks with assets of $1 billion or more as of December 31, 1977. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A7 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per annum Current and previous levels Loans to member banks Under sec. 10(b)2 Loans to all others under sec. 13, last par.4 Federal Reserve Under secs. 13 and 13a1 Bank Regular rate Special rate3 Rate on Effective Previous Rate on Effective Previous Rate on Effective Previous Rate on Effective Previous 5/31/80 date rate 5/31/80 date rate 5/31/80 date rate 5/31/80 date rate B N P C R A h l o i e t e c i l w s l a v h t a n o e m d t l n Y e a a o l n o n p d r d h . . k . . . . i . . a . . . . . . . . . . . . . . . . . 1 1 1 11 1 1 1 1 1 1 1 6 6 6 6 6 6 / / / / / / 1 1 1 1 1 1 6 3 3 3 6 3/ / / / / / 8 8 8 8 8 8 0 0 0 0 0 0 1 1 11 1 1 2 2 2 2 22 1 l 1 l 1 1 l l 1 1 1 1 t t t t V V o oo o i i 6 6 6 6 6 6 / / / / / / 1 1 1 1 1 1 3 3 3 3 6 6 / / / / / / 8 8 8 8 8 8 0 0 0 0 0 0 Y 1 Y 1 Y Y 2 2 l l l l V V V V V to i i i i i 1 1 1 1 1 1 2 3 2 2 2 2 6 6 6 6 6 6 / / / / / / 1 1 1 1 1 1 6 6 3 3 3 3 / / / / / / 8 8 8 8 8 80 0 0 0 0 0 1 1 1 1 1 13 3 3 3 3 3 1 1 1 1 1 1 4 4 4 4 4 4 6 6 6 6 6 6/ / / / / / 1 1 1 1 1 1 6 6 3 3 3 3 / / / / / / 8 8 8 8 8 8 0 0 0 0 0 0 1 1 1 1 1 1 5 5 5 5 5 5 Chicago........ 11 6/13/80 12 11 to 6/13/80 12 to 12 6/13/80 13 14 6/13/80 15 S M D S K a t a a . i n l n n l L s n a F a s e o s r a u a p . n C i . o . s c i . l . i t _ i . s y s . _ c . . _ o . . . 1 1 1 1 1 1 1 1 1 1 6 6 6 6 6 / / / / / 1 1 1 1 1 3 3 3 3 3 / / / / / 8 8 8 8 8 0 0 0 0 0 1 1 1 1 1 2 2 2 2 2 1 l l1 1 l l 1 1 1t t t t to o o o o 6 6 6 6 6 / / / / / 1 1 1 1 1 3 3 3 3 3 / / / / / 8 8 8 8 8 0 0 0 0 0 n 1 1 1 n 2 2 2 v v t t o o i i 1 1 1 1 1 2 2 2 2 2 6 6 6 6 6 / / / / / 1 1 1 1 1 3 3 3 3 3 / / / / / 8 8 8 8 8 0 0 0 0 0 1 1 1 1 1 3 3 3 3 3 1 1 1 1 1 4 4 4 4 4 6 6 6 6 6 / / / / / 1 1 1 1 1 3 3 3 3 3 / / / / / 8 8 8 8 8 0 0 0 0 0 1 1 1 1 1 5 5 5 5 5 Range of rates in recent years5 Range (or F.R. Range (or F.R. Range (or F.R. Effective date A le l v l e F l) . — R. B o an f k Effective date A le l v l e F l) . — R. B o an f k Effective date A le l v l e F l) . — R. B o an f k Banks N.Y. Banks N.Y. Banks N.Y. I 1 n 9 7 e 1 f — fec J t a D n. e c. 8 3 1, ... 1 .. 9 . 7 .. 0 .. ... . . . . . . . . . . . . . . . . . . . . . . . . . . . 51/ 5 4 t - o 5 to 5to 1974— Apr. 2 3 5 0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 8 to-8 8 8 1978— Jan. 20 9 . . . . . . . . . . . .. .. . . . . . . . . .. .. . . . . . 6 6 -6 to to 6 6 t t o o 15 .......................... 5V4 5^4 Dec. 9 ................ 73/4-8 73/4 May 11 ................ 6to-7 7 19 .......................... 5-5 W 5Va 16 ................ 73/4 73/4 12 ................ 7 7 22 .......................... 5-51/4 5Va July 3 ................ 7-71/4 IVa 29 .......................... 5 5 1975— Jan. 6 ................ IVa IVa 10 ................ IVa-I^/a IVa Feb. 13 .......................... 43/4-5 5 10 ................ IVa IVa Aug. 21 ................ Va 73/4 July 1 16 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43/4 4 - 3/ 5 4 5 43/4 Feb. 24 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . & I M Va Va I 6 V 3/4 a S O e c p t. t . 2 1 2 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 8-8 to 8 8to 23 .......................... 5 5 7 ................ 63/4 63/4 20 ................ 8to 8to Nov. 11 .......................... 43/h5 5 Mar. 10 ................ 6!/4-63/4 6lA Nov. 1 ................ 8to-9to 9to 19 .......................... 43/4 5 14 ................ 6V4 6V4 3 ................ 9to 9to Dec. 13 .......................... 4to-43/4 43/4 May 16 ................ 6-6 Va 6 17 .......................... 4to-43/4 43/4 to 1979— July 20 ................ 10 10 1973— 24 .......................... 4to 4 4 t t o o 1976— Jan. 2 1 3 9 . . . . . . . .. . . .. . . .. . . .. . . .. . . .. . . . 5to 5 - t6o 5 5 to Aug. 2 1 0 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . lo l o i t o o to l l o o t t o o Jan. 15 .......................... 5 to Nov. 22 ................ 5to-5to 5>/4 Sept. 19 ................ ioto-11 11 Feb. 26 .......................... 5-5 5 26 ................ 5Va 51/4 21 ................ 11 11 Mar. 2 .......................... 5to 5to Oct. 8 ................ 11-12 12 Apr. 23 .......................... 5to-53/4 5to 1977— Aug. 30 ................ 5!/4—53/4 5to 10 ................ 12 12 May 4 .......................... 5^4 5to 31 ................ 51/+-53/4 53/4 11 .......................... 53A-6 53/4 Sept. 2 ................ 53/4 53/4 1980— Feb. 15 ................ 12-13 13 18 .......................... 6 to 6 Oct. 26 ................ 6 6 19 ................ 13 13 June 11 .......................... 6-6 6 May 29 ................ 12-13 13 15 .......................... 6to 6to 30 ................ 12 12 6to June 13 ................ 11-12 11 July 2 .......................... 7 to June 16 ................ 11 11 Aug. 14 .......................... 7-7 7to 23 .......................... 7to 7 7to In effect June 30, 1980 11 11 1. Discounts or eligible paper and advances secured by such paper or by U.S. 4. Advances to individuals, partnerships, or corporations other than member government obligations or any other obligations eligible for Federal Reserve Bank banks secured by direct obligations of, or obligations fully guaranteed as to prin­ purchase. cipal and interest by, the U.S. government or any agency thereof. 2. Advances secured to the satisfaction of the Federal Reserve Bank. Advances 5. Rates under secs. 13 and 13a (as described above). For description and earlier secured by mortgages on 1- to 4-family residential property are made at the section data, see the following publications of the Board of Governors: Banking and 13 rate. Monetary Statistics, 1914-1941 and 1941-1970; Annual Statistical Digest, 1971-1975, 3. Applicable to special advances described in section 201.2(e)(2) of Regulation 1972-1976, 1973-1977, and 1974-1978. A. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Financial Statistics □ July 1980 1.15 MEMBER BANK RESERVE REQUIREMENTS1 Percent of deposits Requirements in effect Previous requirements Type of deposit, and deposit interval June 30, 1980 in millions of dollars Percent Effective date Percent Effective date Net demand2 0-2 ...................... 7 12/30/76 iVi 2/13/75 2-10 .................... 9Vi 12/30/76 10 2/13/75 10-100 .................. ll3/4 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............................ 3/16/67 3 Vi 3/2/67 Time5 0-5, by maturity 30-179 days ............ 3 3/16/67 3 Vi 3/2/67 180 days to 4 years 2Vi 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 2 Vi 1/8/76 12/12/74 4 years or more ... 1 10/30/75 12/12/74 Legal limits 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 4. The average reserve requirement on savings and other time deposits must be Statistical Digest, 1971-1975 and for prior changes, see Board’s Annual Report for at least 3 percent, the minimum specified by law. 1976, table 13. 5. Effective Nov. 2, 1978, a supplementary reserve requirement of 2 percent 2. (a) Requirement schedules are graduated, and each deposit interval applies was imposed on large time deposits of $100,000 or more, obligations of affiliates, to that part of the deposits of each bank. Demand deposits subject to reserve and ineligible acceptances. requirements are gross demand deposits minus cash items in process of collection Effective with the reserve maintenance period beginning Oct. 25, 1979, a mar­ ana demand balances due from domestic banks. ginal reserve requirement of 8 percent was added to managed liabilities in excess (b) The Federal Reserve Act specifies different ranges of requirements for of a base amount, with the maintenance period beginning Apr. 3, 1980, the re­ reserve city banks and for other banks. Reserve cities are designated under a quirement was increased to 10 percent, and with the maintenance period beginning criterion adopted effective Nov. 9, 1972, by which a bank having net demand June 12, 1980, it was decreased to 5 percent. Managed liabilities are defined as deposits of more than $400 million is considered to have the character of business large time deposits, Eurodollar borrowings, repurchase agreements against U.S. of a reserve city bank. The presence of the head office of such a bank constitutes government and federal agency securities, federal funds borrowings from non­ designation of that place as a reserve city. Cities in which there are Federal Reserve member institutions, and certain other obligations. In general, the base for the Banks or branches are also reserve cities. Any banks having net demand deposits marginal reserve requirement was originally the greater of (a) $100 million or (b) of $400 million or less are considered to have the character of business of banks the average amount of the managed liabilities held by a member bank, Edge outside of reserve cities and are permitted to maintain reserves at ratios set for corporation, or family of U.S. branches and agencies of a foreign bank for the two banks not in reserve cities. For details, see the Board’s Regulation D. statement weeks ending Sept. 26, 1979. For the computation period beginning (c) Effective Aug. 24, 1978, the Regulation M reserve requirements on net Mar. 20, 1980, the base was lowered by (a) 7 percent or (b) the decrease in an balances due from domestic banks to their foreign branches and on deposits that institution’s U.S. office gross loans to foreigners and gross balances due from foreign branches lend to U.S residents were reduced to zero from 4 percent and foreign offices of other institutions between the base period (Sept. 13-26, 1979) 1 percent, respectively. The Regulation D reserve requirement on borrowings and the week ending Mar. 12, 1980, whichever is greater. For the computation from unrelated banks abroad was also reduced to zero from 4 percent. eriod beginning May 29,1980, the base was increased by 7V^ percent above the (d) Effective with the reserve computation period beginning Nov. 16, 1978, ase used to calculate the marginal reserve in the statement week of May 14-21, domestic deposits of Edge corporations are subject to the same reserve require­ 1980. In addition, beginning Mar. 19, 1980, the base is reduced to the extent that ments as deposits of member banks. foreign loans and balances decline. The minimum base remains $100 million. 3. Negotiable order of withdrawal (NOW) accounts and time deposits such as Christmas and vacation club accounts are subject to the same requirements as Note. Required reserves must be held in the form of deposits with Federal savings deposits. Reserve banks or vault cash. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A9 1.16 MAXIMUM INTEREST RATES PAYABLE on Time and Savings Deposits at Federally Insured Institutions Percent per annum Commercial banks Savings and loan associations and mutual savings banks Type and maturity of deposit In effect June 30, 1980 Previous maximum In effect June 30, 1980 Previous maximum Percent Effective Percent Effective Percent Effective Percent Effective date date date date 1 Savings ................................................................................... 5'/4 7/1/79 5 7/1/73 5>/2 7/1/79 5'/4 (') 2 Nepotiable order of withdrawal accounts 2.................... 5 1/1/74 (3) 5 1/1/74 (3) Time accounts 4 Fixed ceiling rates by maturity 3 30—89 days ......................................................................... 5'/4 8/1/79 5 7/1/73 (3) (3) 4 90 days to 1 year ............................................................. 5-V4 1/1/80 5 Vi 7/1/73 6 1/1/80 53/4 (') 5 6 2 1 t t o o 2 2 V y i e y ar e s a r 5 s . 5 .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ / 6 7/1/73 \/ 55-V!/24 1 1 / / 2 2 1 1 / / 7 7 0 0 \ 51/2 \ ) \ / 6 5-V4 1 1 / /2 2 1 1 / / 7 7 0 0 7 2Vi to 4 years 5................................................................. 6'/2 7/1/73 5-V4 1/21/70 6-V4 (') 6 1/21/70 8 4 to 6 years 6..................................................................... 71/4 11/1/73 (7) 71/1 11/1/73 (7) 9 6 to 8 years 6..................................................................... 1V1 12/23/74 71/4 11/1/73 VA 12/23/74 7>/2 11/1/73 10 8 years or more 6 ............................................................ VA 6/1/78 0) 8 6/1/78 (3) 11 Issued to governmental units (all maturities)8 .......... 8 6/1/78 VA 12/23/74 8 6/1/78 VA 12/23/74 12 Individual retirement accounts and Keogh (H.R. 10) plans (3 years or more)8-9...................................... 8 6/1/78 VA 7/6/77 8 6/1/78 VA 7/6/77 Special variable ceiling rates by maturity 1 13 4 2 6- V m i o y n ea th rs m o o r n m ey o r m e a .. r . k .. e .. t . .. t . i .. m ... e .. . d ... e .. p .. o .. s .. i . t . s .. 1 ... 0 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (,2) ( (" 12 ) ) C <" 3 > ) ( C " 3 ) ) ( ( 1 n 2 > ) ( ( l n 2 > ) ( C " 3 ) ) ( C " 3 ) ) 1. July 1, 1973, for mutual savings banks; July 6, 1973, for savings and loan month money market certificates issued beginning June 5, 1980. the interest rate associations. ceilings will be determined by the discount rate (auction average) of most recently 2. For authorized states only, federally insured commercial banks, savings and issued six-month U.S. Treasury bills as follows: loan associations, cooperative banks, and mutual savings banks in Massachusetts Bill rate Commercial bank ceiling Thrift ceiling and New Hampshire were first permitted to offer negotiable order of withdrawal 8.75 and above bill rate + }A percent bill rate + 'A percent (NOW) accounts on Jan. 1, 1974. Authorization to issue NOW accounts was 8.50 to 8.75 bill rate + 'A percent 9.00 extended to similar institutions throughout New England on Feb. 27, 1976. and 7.50 to 8.50 bill rate + {A percent bill rate + 1/2 percent in New York State on Nov. 10, 1978, and in New Jersey on Dec. 28, 1979. 7.25 to 7.50 7.75 bill rate 4- percent 3. No separate account category. Below 7.25 7.75 7.75 4. For exceptions with respect to certain foreign time deposits see the Federal The prohibition against compounding interest in these certificates continues. In Reserve Bulletin for October 1962 (p. 1279). August 1965 (p. 1084). and Feb­ addition, during the period May 29, 1980, through Nov. 1, 1980, commercial banks ruary 1968 (p. 167). may renew maturing six-month money market time deposits for the same depositor 5. No minimum denomination. Until July 1, 1979. a minimum of $1,000 was at the thrift institution ceiling interest rate. required for savings and loan associations, except in areas where mutual savings 12. Effective Jan. 1, 1980, commercial banks, savings and loan associations, and banks permitted lower minimum denominations. This restriction was removed for mutual savings banks were authorized to offer variable-ceiling nonnegotiable time deposits maturing in less than 1 year, effective Nov. 1, 1973. deposits with no required minimum denomination and with maturities of 21/: years 6. No minimum denomination. Until July 1, 1979, minimum denomination was or more. The maximum rate for commercial banks is -V4 percentage point below $1,000 except for deposits representing funds contributed to an Individual Retire­ the yield on 2x/2 year U.S. Treasury securities; the ceiling rate for thrift institutions ment Account (IRA) or a Keogh (H.R. 10) plan established pursuant to the is lA percentage point higher than that for commercial banks. Effective Mar. 1. Internal Revenue Code. The $1,000 minimum requirement was removed for such 1980, a temporary ceiling of 11-V4 per cent was placed on these accounts at com­ accounts in December 1975 and November 1976 respectively. mercial banks; thQ,temporary ceiling is 12 percent at savings and loan associations 7. Between July 1, 1973, and Oct. 31, 1973, there was no ceiling for certificates and mutual savings banks. Effective for all variable ceiling nonnegotiable time maturing in 4 years or more with minimum denominations of $1,000; however, deposits with maturities of 2x/i years or more issued beginning June 2, 1980, the the amount of such certificates that an institution could issue was limited to 5 ceiling rates of interest will be determined as follows: percent of its total time and savings deposits. Sales in excess of that amount, as Treasury yield Commercial bank ceiling Thrift ceiling well as certificates of less than $1,000, were limited to the 6!/2 percent ceiling on 12.00 and above 11.75 12.00 time deposits maturing in 2Vz years or more. 9.50 to 12.00 Treasury yield- lA percent Treasury yield Effective Nov. 1, 1973, ceilings were reimposed on certificates maturing in 4 Below 9.50 9.25 9.50 years or more with minimum denomination of $1,000. There is no limitation on Interest may be compounded on these time deposits. The ceiling rates of interest the amount of these certificates that banks can issue. at which these accounts may be offered vary biweekly. Throughout June, the 8. Accounts subject to fixed rate ceilings. See footnote 6 for minimum denom­ maximum allowable rate at commercial banks was 9.25, and at thrift institutions ination requirements. it was 9.50. 9. Effective January 1, 1980, commercial banks are permitted to pay the same 13. Between July 1, 1979, and Dec. 31, 1979, commercial banks, savings and rate as thrifts on IRA and Keogh accounts and accounts of governmental units loan associations, and mutual savings banks were authorized to offer variable when such deposits are placed in the new 2Vi year or more variable ceiling cer­ ceiling accounts with no required minimum denomination and with maturities of tificates or in 26-week money market certificates regardless of the level of the 4 years or more. The maximum rate for commercial banks was l'/4 percentage Treasury bill rate. points below the yield on 4-year U.S. Treasury securities; the ceiling rate for thrift 10. Must have a maturity of exactly 26 weeks and a minimum denomination of institutions was V\ percentage point higher than that for commercial banks. $10,000, and must be nonnegotiable. Note. Before Mar. 31, 1980, the maximum rates that could be paid by federally 11. Commercial banks, savings and loan associations, and mutual savings banks insured commercial banks, mutual savings banks, and savings and loan associations were authorized to offer money market time deposits effective June 1, 1978. The were established by the Board of Governors of the Federal Reserve System, the ceiling rate for commercial banks on money market time deposits entered into Board of Directors of the Federal Deposit Insurance Corporation, and the Federal before June 5, 1980, is the discount rate (auction average) on most recently issued Home Loan Bank Board under the provisions of 12 CFR 217. 329, and 526. six-month U.S. Treasury bills. Until Mar. 15. 1979, the ceiling rate for savings respectively. Title II of the Depository Institutions Deregulation and Monetary and loan associations and mutual savings banks was lA percentage point higher Control Act of 1980 (P.L. 96-221) transferred the authority of the agencies to than the rate for commercial banks. Beginning March 15, 1979, the '/4-percentage- establish maximum rates of interest payable on deposits to the Depository Insti­ point interest differential is removed when the six-month Treasury bill rate is 9 tutions Deregulation Committee. The maximum rates on time deposits in denom­ percent or more. The full differential is in effect when the six-month bill rate is inations of $100,000 or more with maturities of 30-89 days were suspended in June 8-V4 per cent or less. Thrift institutions may pay a maximum 9 percent when the 1970; such deposits maturing in 90 days or more were suspended in May 1973. For six-month bill rate is between 8^4 and 9 percent. Also effective March 15, 1979, information regarding previous interest rate ceilings on all types of accounts, see interest compounding was prohibited on six-month money market time deposits earlier issues of the Federal Reserve Bulletin, the Federal Home Loan Bank at all offering institutions. The maximum allowable rates in June for commercial Board Journal, and the Annual Report of the Federal Deposit Insurance Corpo­ banks were as follows: June 5, 8.415; June 12, 7.750; June 19, 7.750; June 26, ration. 7.750. The maximum allowable rates in May for thrift institutions were as follows: June 5, 8.665; June 12, 7-750; June 19, 7.750; June 26, 7.750. Effective for all six- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Financial Statistics □ July 1980 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS Millions of dollars 1979 1980 Type of transaction 1977 1978 1979 Nov. Dec. Jan. Feb. Mar. Apr. May U.S. Government Securities Outright transactions (excluding matched salepurchase transactions) Treasury bills 1 Gross purchases ................................................... 13,738 16,628 16,623 2,752 2,464 0 187 1,370 2,428 838 2 Gross sales ........................................................... 7,241 13,725 7,480 154 378 1,722 1,590 0 108 232 3 Exchange ............................................................... 0 0 0 0 0 0 0 0 0 0 4 Redemptions ......................................................... 2,136 2,033 2,900 300 0 790 400 0 0 0 Others within 1 year1 5 Gross purchases ................................................... 3,017 1,184 3,203 0 90 0 0 292 109 155 6 Gross sales ........................................................... 0 0 0 0 0 0 0 0 0 0 7 Maturity shift ....................................................... 4,499 -5,170 17,339 1,080 571 383 1,822 921 179 1,670 9 8 E R x e c d h e a m n p g t e i on .. s .. ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 2,500 0 -11 2 , , 3 6 0 0 8 0 -2,016 0 -727 0 -403 0 -2,177 0 -809 0 -459 0 -5,276 0 1 to 5 years 10 Gross purchases ................................................... 2,833 4,188 2,148 0 398 0 0 355 373 405 11 Gross sales ........................................................... 0 0 0 0 0 0 0 0 0 0 1 1 2 3 M Ex a c t h u a ri n t g y e sh .. i . f . t . .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . } -6,649 -178 -12 7 ,6 ,5 9 0 3 8 -1 1 ,0 ,3 8 0 0 2 -5 7 7 2 1 7 -3 4 8 0 3 3 - 1 3 ,3 7 7 4 7 -9 8 2 0 1 9 -1 4 7 5 9 9 -1 3 ,3 ,0 0 0 2 0 5 to 10 years 14 Gross purchases ................................................... 758 1,526 523 0 81 0 0 107 62 133 15 Gross sales ........................................................... 0 0 0 0 0 0 0 0 0 0 16 Maturity shift ....................................................... j- 584 2,803 -4,646 0 0 0 -1,364 0 0 -25 17 Exchange ............................................................... 2,181 400 0 0 450 0 0 1,300 Over 10 years 18 Gross purchases ................................................... 553 1,063 454 0 51 0 0 81 64 216 19 Gross sales ........................................................... 0 0 0 0 0 0 0 0 0 0 2 21 0 M Ex a c t h u a ri n t g y e sh .. i . f . t . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 1,565 2,545 1,619 0 314 0 0 0 0 0 - 3 8 5 4 0 0 0 0 0 -3 9 4 7 2 6 All maturities1 22 Gross purchases ................................................... 20,898 24,591 22,950 2,752 3,084 0 187 2,206 3,036 1,747 23 Gross sales ........................................................... 7,241 13,725 7,480 154 378 1,722 1,590 0 108 232 24 Redemptions ......................................................... 4,636 2,033 5,500 300 0 790 400 0 0 0 Matched sale-purchase transactions 25 Gross sales ........................................................... 425,214 511,126 626,403 45,204 53,681 53,025 54,541 55,658 57,316 49,934 26 Gross purchases ................................................... 423,841 510,854 623,245 45,979 49,738 55,557 54,584 54,636 57,479 50,965 Repurchase agreements 27 Gross purchases ................................................... 178,683 151,618 107,374 4,303 7,251 5,704 5,407 6,682 3,029 7,717 28 Gross sales ........................................................... 180,535 152,436 107,291 3,869 6,643 6,872 4,787 6,379 3,952 4,811 29 Net change in U.S. government securities.......... 5,798 7,743 6,896 3,507 -629 -1,148 -1,140 1,486 2,168 5,452 Federal Agency Obligations Outright transactions 30 Gross purchases .................................................. 1,433 301 853 0 0 0 0 0 668 0 31 Gross sales ........................................................... 0 173 399 0 0 0 0 0 0 0 32 Redemptions ......................................................... 223 235 134 * 5 0 * 5 2 0 Repurchase agreements 33 Gross purchases .................................................. 13,811 40,567 37,321 1,992 2,383 3,049 2,403 1,883 483 1,611 34 Gross sales ........................................................... 13,638 40,885 36,960 1,075 2,863 3,543 2,372 1,834 563 1,258 35 Net change in federal agency obligations............ 1,383 -426 681 917 -485 -494 31 45 586 353 Bankers Acceptances 36 Outright transactions, net....................................... -196 0 0 0 0 0 0 0 0 0 37 Repurchase agreements, net ................................ 159 -366 116 -48 434 -704 205 -34 -171 366 38 Net change in bankers acceptances...................... -37 -366 116 -48 434 -704 205 -34 -171 366 39 Total net change in System Open Market Account ............................................................. 7,143 6,951 7,693 4,376 -679 -2,345 -903 1,497 2,582 6,171 1. Both gross purchases and redemptions include special certificates created Note. Sales, redemptions, and negative figures reduce holdings of the System when the Treasury borrows directly from the Federal Reserve, as follows (millions Open Market Account; all other figures increase such holdings. Details may not of dollars): September 1977, 2,500; March 1979, 2,600. add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Reserve Banks All 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements Millions of dollars Wednesday End of month Account 1980 1980 May 28? June AP June 11 p June 18P June 25p April? MayP June/7 Consolidated condition statement Assets 1 Gold certificate account ..................................................... 11,172 11,172 11,172 11,172 11,172 11,172 11,172 11,172 2 Special drawing rights certificate account ...................... 2,968 2,968 2,968 2,968 3,018 2,968 2,968 3,018 3 Coin ....................................................................................... 383 384 390 397 394 387 401 408 Loans 4 Member bank borrowings.............................................. 2,400 252 329 798 364 4,770 602 215 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 ............................ 612 467 0 367 0 0 366 373 Federal agency obligations 8 Bought outright ............................................................... 8,877 8,877 8,875 8,875 8,875 8,877 8,877 8,875 9 Held under repurchase agreements ............................ 924 393 0 61 0 0 353 37 U.S. government securities Bought outright 10 Bills ............................................................................... 47,801 47,174 48,786 48,143 45,564 46,335 47,972 49,781 11 Certificates—Special ................................................... 0 0 0 0 0 0 0 0 12 Notes ............................................................................. 57,425 57,425 57,425 57,425 58,174 57,707 57,425 58,174 13 Bonds ............................................................................. 15,974 15,974 15,974 15,974 16,103 14,783 15,974 16,103 14 Total1 ............................................................................. 121,200 120,573 122.185 121,542 119.841 118.825 121,371 124,058 15 Held under repurchase agreements ............................ 3,002 936 0 437 0 0 2,906 457 16 Total U.S. government securities.................................... 124,202 121,509 122.185 121,979 119.841 118.825 124,277 124,515 17 Total loans and securities ................................................... 137,015 131,498 131,389 132,080 129,080 132,472 134,475 134,015 18 Cash items in process of collection.................................. 11,586 11,850 9,553 11,401 10,660 10,595 8,386 9,375 19 Bank premises ..................................................................... 445 450 444 451 441 433 448 441 Other assets 20 Denominated in foreign currencies2............................ 2,252 2,304 2,291 2,286 2,298 2,236 2,304 2,339 21 All other ........................................................................... 2,367 2,357 2,449 2,752 2,976 2,894 2,403 2,779 22 Total assets ........................................................................... 168,188 162,983 160,656 163,507 160,039 163,157 162,557 163,547 Liabilities 23 Federal Reserve notes......................................................... 113,622 113,916 114,498 114,429 114,409 111,524 113,118 114,502 Deposits Reserve accounts 24 Member banks ............................................................. 37,191 32,120 30,103 31,934 29,350 32,927 31,804 33,187 25 Edge Act corporations .............................................. 445 307 438 430 436 315 376 397 26 U.S. agencies and branches of foreign banks........ 127 134 140 38 45 40 202 28 27 Total............................................................................... 37,763 32,561 30,681 32,402 29,831 33,282 32,382 33,612 28 Special Deposits—Credit Restraint Program ............ 555 673 794 870 965 171 550 578 29 U.S. Treasury—General account ................................ 2,297 3,337 2,970 3,549 2,951 4,561 4,523 3,199 30 Foreign—Official accounts ............................................ 383 517 315 254 295 648 380 691 31 Other ..................................................................................... 608 641 554 530 560 382 610 754 32 Total deposits ....................................................................... 41,606 37,729 35,314 37,605 34,602 39,044 38,445 38,834 33 Deferred availability cash items ...................................... 7,981 6,454 5,974 6,362 6,177 7,523 5,911 5,208 34 Other liabilities and accrued dividends3.......................... 2,407 2,292 2,288 2,548 2,263 2,470 2,389 2,250 35 Total liabilities ..................................................................... 165,616 160,391 158,074 160,944 157,451 160,561 159,863 160,794 Capital Accounts 36 Capital paid in ..................................................................... 1,164 1,164 1,164 1,169 1,169 1,162 1,164 1,169 37 Surplus ................................................................................... 1,145 1,145 1,145 1,145 1,145 1,145 1,145 1,145 38 Other capital accounts ....................................................... 263 283 273 249 274 289 385 439 39 Total liabilities and capital accounts................................ 168,188 162,983 160,656 163,507 160,039 163,157 162,557 163,547 40 Memo: Marketable U.S. government securities held in custody for foreign and international account........ 74,877 76,712 79,045 79,749 81,128 74,045 75,691 82,226 Federal Reserve note statement 41 Federal Reserve notes outstanding (issued to Bank) .. 131,380 131,508 131,675 132,144 132,619 130,478 131,334 132,861 Collateral held against notes outstanding 42 Gold certificate account ................................................ 11,172 11,172 11,172 11,172 11,172 11,172 11,172 11,172 43 Special drawing rights certificate account .................. 2,968 2,968 2,968 2,968 3,018 2,968 2,968 3,018 44 Eligible paper................................................................... 435 29 9 578 79 1,613 42 29 45 U.S. government and agency securities...................... 116,805 117,339 117,526 117,426 118,350 114,725 117,152 118,642 46 Total collateral ..................................................................... 131,380 131,508 131,675 132,144 132,619 130,478 131,334 132,861 1. Includes securities loaned—fully guaranteed by U.S. government securities 2. Beginning Dec. 29,1978, such assets are revalued monthly at market exchange pledged with Federal Reserve Banks—and excludes (if any) securities sold and rates. scheduled to be bought back under matched sale-purchase transactions. 3. Includes exchange-translation account reflecting, beginning Dec. 29, 1978, the monthly revaluation at market exchange rates of foreign-exchange commit­ ments. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Financial Statistics □ July 1980 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holdings Millions of dollars Wednesday End of month Type and maturity groupings 1980 1980 May 28 June 4 June 11 June 18 June 25 Apr. 30 May 31 June 30 1 Loans—Total ....................................................................... 2,400 252 329 798 364 4,770 602 215 2 Within 15 days ................................................................. 2,395 244 321 795 361 4,716 594 211 3 16 days to 90 days ........................................................... 5 8 8 3 3 54 8 4 4 91 days to 1 year ............................................................. 0 0 0 0 0 0 0 0 5 Acceptances—Total ............................................................. 612 467 0 367 0 0 366 373 6 Within 15 days ................................................................. 612 467 0 367 0 0 366 373 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—Total ................................ 124,202 121,509 122,185 121,979 119,841 118,825 124,277 124,515 10 Within 15 days1 ............................................................... 6,623 4,585 6,080 6,996 4,894 7,519 4,821 3,633 11 16 days to 90 days ........................................................... 26,543 26,123 25,342 25,275 23,600 22,179 28,363 28,039 12 91 days to 1 year ............................................................. 31,292 31,194 31,156 30,101 30,983 34,155 31,349 31,686 13 Over 1 year to 5 years .................................................. 32,298 32,161 32,161 32,161 32,625 29,784 32,298 33,418 14 Over 5 years to 10 years................................................ 13,437 13,437 13,437 13,437 13,601 12,029 13,437 13,601 15 Over 10 years ................................................................... 14,009 14,009 14,009 14,009 14,138 13,159 14,009 14,138 16 Federal Agency obligations—Total.................................. 9,801 9,270 8,875 8,936 8,875 8,877 9,230 8,912 17 Within 15 days1 ............................................................... 1,099 496 0 185 186 48 528 223 18 16 days to 90 days ........................................................... 417 513 514 581 518 409 417 518 19 91 days to 1 year ............................................................. 1,612 1,588 1,677 1,486 1,486 1,627 1,612 1,499 20 Over 1 year to 5 years ................................................... 4,670 4,670 4,675 4,675 4,676 4,778 4,670 4,663 21 Over 5 years to 10 years................................................ 1,259 1,259 1,265 1,265 1,265 1,271 1,259 1,265 22 Over 10 years ................................................................... 744 744 744 744 744 744 744 744 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. 1980 Bank group, or type of customer 1977 1978 1979 Jan. Feb. Mar. Apr. May Debits to demand deposits1 (seasonally adjusted) 1 All commercial banks ......................................................... 34,322.8 40,297.8 49.786.9 59.086.2 59,948.9 58,795.9 57,837.6 61,448.2 2 Major New York City banks............................................ 13,860.6 15,008.7 18.511.9 23,678.0 23,636.7 22,417.8 23,792.5 25,508.8 3 Other banks ......................................................................... 20,462.2 25,289.1 31,275.0 35.408.2 36,312.2 36,378.0 34,045.0 35,939.4 Debits to savings deposits2 (not seasonally adjusted) 4 All customers 174.0 417.7 672.2 856.2 760.4 826.8 888.6 746.5 5 Business3 21.7 56.7 78.4 92.8 79.4 85.5 87.0 79.0 6 Others .......... 152.3 361.0 593.7 763.4 681.0 741.4 801.6 667.5 Demand deposit turnover1 (seasonally adjusted) 7 All commercial banks ........................................................ 129.2 139.4 163.2 189.1 191.9 188.9 196.2 203.3 8 Major New York City banks............................................ 503.0 541.9 646.2 763.4 760.6 721.3 805.9 871.8 9 Other banks ......................................................................... 85.9 96.8 113.2 125.8 129.1 129.8 128.3 131.6 Savings deposit turnover2 (not seasonally adjusted) 10 All customers ....................................................................... 1.6 1.9 3.2 4.3 3.9 4.3 4.7 4.0 11 Business3 ............................................................................... 4.1 5.1 7.2 9.3 8.2 9.4 10.1 8.9 12 Others ................................................................................... 1.5 1.7 3.0 4.0 3.6 4.0 4.5 3.8 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

Monetary Aggregates A13 1.21 MONEY STOCK MEASURES AND COMPONENTS Billions of dollars, averages of daily figures 1976 1977 1978 1979 Item Dec. Dec. Dec. Dec.' Apr.r May Seasonally adjusted Measures1 1 M-1A ............................................................................... 305.0 328.4 351.6 369.7 370.8 373.7 373.1 367.6 367.8 2 M-1B ............................................................................... 307.7 332.5 359.9 386.4 388.1 391.3 391.2 386.6 386.2 3 M-2 ................................................................................... 1,166.7 1,294.1 1401.6' 1525.5 1534.3 1546.5 1552.6 1550.1 1561.8 4 M-3 ................................................................................... 1.299.7 1,460.3 1623.6r 1775.4 1786.7 1804.4 1809.8 1810.5 1823.4 5 L2 ..................................................................................... 1,523.5 1,715.5 1927.7'' 2141.0 2155.1 2175.7 2186.3 2195.4 n.a. Components 6 Currency ......................................................................... 80.7 88.7 97.6 106.3 107.3 108.1 108.9 109.0 110.1 7 Demand deposits ........................................................... 224.4 239.7 253.9 263.4 263.5 265.6 264.2 258.6 257.7 8 Savings deposits ............................................................. 447.7 486.5 476.1'' 416.6 411.7 403.1 391.8 377.3 372.9 9 Small time deposits3 ..................................................... 396.6 454.9 533.8 656.5 661.7 671.3 687.5 708.3 718.4 10 Large time deposits4 ..................................................... 118.0 145.2 194.7 219.4 222.5 228.6 230.0 233.5 234.8 Not seasonally adjusted Measures1 11 M-1A ............................................................................... 313.5 337.2 360.9 379.2 375.6 365.5 366.3 370.9 362.1 12 M-1B ............................................................................... 316.1 341.3 369.3 396.0 392.9 383.0 384.4 389.9 380.5 13 M-2 ................................................................................... 1,169.1 1,295.9 1403.7'- 1527.2 1537.7 1538.4 1549.5 1558.3 1558.9 14 M-3 ................................................................................... 1.303.8 1.464.5 1629.2' 1780.7 1792.0 1796.4 1807.6 1816.7 1819.4 15 L2 ..................................................................................... 1.527.1 1.718.5 1931.1' 2143.5 2161.7 2173.2 2186.9 2203.4 n.a. Components 16 Currency ......................................................................... 82.1 90.3 99.4 108.2 106.5 106.8 107.9 108.7 109.9 17 Demand deposits ........................................................... 231.3 247.0 261.5 271.0 269.1 258.7 258.4 262.2 252.2 18 Other checkable deposits5 .......................................... 2.7 4.1 8.3 16.7 17.3 17.6 18.0 19.0 18.4 19 Overnight RPs and Eurodollars6................................ 13.6 18.6 23.9' 25.3 26.6 27.1 24.6 20.3 21.8 20 Money market mutual funds ...................................... 3.4 3.8 10.3 43.6 49.1 56.7 60.4 60.6 65.4 21 Savings deposits ............................................................. 444.9 483.2 472.9r 413.8 409.2 400.0 392.2 379.7 374.6 22 Small time deposits3 ..................................................... 393.5 451.3 529.8 651.5 662.8 674.5 690.9 710.9 719.5 23 Large time deposits4 ..................................................... 119.7 147.7 198.2 223.0 224.4 228.8 230.9 231.5 233.6 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-l A: 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-l A plus negotiable order of withdrawal and automatic transfer service money market mutual funds, and foreign banks and official institutions. accounts at banks and thrift institutions, credit union share draft accounts, and 5. includes ATS and NOW balances at all institutions, credit union share draft demand deposits at mutual savings banks. balances, and demand deposits at mutual savings banks. M-2: M-1B plus savings and small-denomination time deposits at all depositary 6. Overnight (and continuing contract) RPs are those issued by commercial institutions, overnight repurchase agreements at commercial banks, overnight banks to the nonbank public, and overnight Eurodollars are those issued by Ca­ Eurodollars held by U.S. residents other than banks at Caribbean branches of ribbean branches of member banks to U.S. nonbank customers. member banks, and money market mutual fund shares. Note. Latest monthly and weekly figures are available from the Board’s M-3: M-2 plus large-denomination time deposits at all depositary institutions H.6(508) release. Back data are available from the Banking Section, Division of and term RPs at commercial banks and savings and loan associations. Research and Statistics. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Financial Statistics □ July 1980 1.22 AGGREGATE RESERVES AND DEPOSITS Member Banks Billions of dollars, averages of daily figures 1979' 1980 Item D 19 e 7 c 7 . D 19 e 7 c 8 . D 19 e 7 c 9 / Oct. Nov. Dec. Jan/ Feb/ Mar/ Apr/ May Seasonally adjusted 1 Reserves1......................................................................................... 36.00 41.16 43.57 42.20 43.06 43.57 43.44 43.35 43.68 44.91 44.46 2 Nonborrowed ................................................................................. 35.43 40.29 42.10 40.18 41.15 42.10 42.20 41.70 40.85 42.45 43.44 3 Required......................................................................................... 35.81 40.93 43.13 41.93 42.81 43.13 43.19 43.14 43.47 44.64 44.28 4 Monetary base2 ............................................................................. 127.6 142.2 153.8 151.5 152.8 153.8 154.7 155.6 156.6 157.9 158.5 5 Deposits subject to reserve requirements3................................ 567.6 616.1 644.4 638.2 641.9 644.4 643.7 647.2 649.1 655.4 656.8 6 Time and savings........................................................................... 385.6 428.8 451.1 446.6 450.1 451.1 451.9 454.4 457.9 464.2 467.7 Demand 7 Private ......................................................................................... 178.5 185.1 191.5 189.8 190.0 191.5 189.5 190.9 189.4 188.7 187.3 8 U.S. government....................................................................... 3.5 2.2 1.8 1.7 1.9 1.8 2.3 1.9 1.8 2.4 1.8 Not seasonally adjusted 9 Monetary base2 ............................................................................. 129.8 144.6 156.3 151.3 153.5 156.3 155.9 154.0 154.9 157.6 157.8 10 Deposits subject to reserve requirements3................................ 575.3 624.0 652.6 637.8 642.2 652.6 652.1 643.9 648.0 657.7 651.5 11 Time and savings........................................................................... 386.4 429.6 452.0 445.7 449.2 452.0 454.6 455.8 460.6 464.7 467.7 Demand 12 Private ......................................................................................... 185.1 191.9 198.6 190.5 191.3 198.6 195.4 186.2 185.5 190.4 182.1 13 U.S. government....................................................................... 3.8 2.5 2.0 1.6 1.7 2.0 2.1 1.8 1.9 2.6 1.7 1. Member bank reserve series reflect actual reserves requirement percentages 2. Includes total reserves (member bank reserve balances in the current week with no adjustment to eliminate the effect of changes in Regulations D and M. plus vault cash held two weeks earlier); currency outside the U.S. Treasury, Federal Effective Nov. 2, 1978, a supplementary reserve requirement of 2 percentage Reserve Banks, and the vaults of commercial banks; and vault cash of nonmember points was imposed on time deposits of $100,000 or more. This action increased banks. required reserves approximately $3.0 billion in the week beginning Nov. 16, 1978. 3. Includes total time and savings deposits and net demand deposits as defined Effective Oct. 11, 1979, an 8 percentage point marginal reserve requirement was by Regulation D. Private demand deposits include all demand deposits except imposed on “managed liabilities” (liabilities that have been actively used to finance those due to the U.S. government, less cash items in process of collection and rapid expansion in bank credit). On Oct. 25, 1979, reserves of Edge Act corpo­ demand balances due from domestic commercial banks. rations were included in member bank reserves. This action raised required re­ serves $318 million. Effective Mar. 12, 1980, the marginal reserve requirement of Note. Latest monthly and weekly figures are available from the Board’s 8 percentage points was raised to 10 percentage points. In addition the base upon H.3(502) release. Back data and estimates of the impact on required reserves and which the marginal reserve requirement is calculated was reduced. This action changes in reserve requirements are available from the Banking Section, Division increased required reserves about $1,693 million in the week ending April 2, 1980. of Research and Statistics. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Aggregates A15 1.23 LOANS AND SECURITIES All Commercial Banks' Billions of dollars; averages of Wednesday figures 1980 1980 Category D 19 e 7 c 7 . D 19 e 7 c 8 . D 19 e 7 c 9 . 1977 1978 1979 Dec. Dec. Dec. Apr. May Apr.' May Seasonally adjusted Not seasonally adjusted 1 Total loans and securities2............................ 891.1 1,014.33 1,132.54 ,161.0 1,155.1 899.1 1,023.83 1,143.04 1,159.lr 1152.1 2 U.S. Treasury securities .............................. 99.5 93.4 93.8 93.2 94.6 100.7 94.6 95.0 96.1 95.2 3 Other securities ............................................. 159.6 173.13 191.5 196.2 199.7 160.2 173.93 192.3 196.6 200.1 4 Total loans and leases2................................ 632.1 747.83 847.24 871.6 860.7 638.3 755.43 855.74 866.4' 856.8 5 Commercial and industrial loans............ 211.25 246.56 290.54 301.3 297.8 212.65 248.26 292.44 301.9 298.5 6 Real estate loans ....................................... 175.25 210.5 242.44 250.1 250.6 175.55 210.9 242.94 248.9 249.6 7 Loans to individuals.................................. 138.2 164.9 182.7 182.2 178.3 139.0 165.9 183.8 179.9 177.3 8 Security loans ............................................. 20.6 19.4 18.3 16.5 15.8 22.0 20.7 19.6 16.2 15.0 9 Loans to nonbank financial institutions . 25.85 27.17 30.34 31.3 29.1 26.35 27.67 30.84 30.9 28.9 10 Agricultural loans...................................... 25.8 28.2 31.0 32.2 32.3 25.7 28.1 30.8 31.7 32.2 11 Lease financing receivables .................... 5.8 7.4 9.5 10.2 10.3 5.8 7.4 9.5 10.2 10.3 12 All other loans .......................................... 29.5 43.63 42.6 47.9' 46.4 31.5 46.63 45.9 46.9' 45.0 Memo; 13 Total loans and securities plus loans sold2*9 895.9 1,018.I3 1,135.34'8 ,163.6 1,157.7 903.9 1,027.63 1,145.74’8 1,161.7' 1154.8 14 Total loans plus loans sold2-9...................... 636.9 751.63 850.004-8 874.2 863.3 643.0 759.23 858.44-8 869.0' 859.4 15 Total loans sold to affiliates9...................... 4.8 3.8 2.88 2.6 2.6 4.8 3.8 2.88 2.6 2.6 16 Commercial and industrial loans plus loans sold9 ......................................................... 213.95 248.56-10 292.3 4-8 303.0 299.5 215.35 250.l6.io 294.24-8 303.5 300.2 17 Commercial and industrial loans sold9 .. 2.7 1.910 1.88 1.7 1.7 2.7 1.910 1.88 1.7 1.7 18 Acceptances held ....................................... 7.5 6.8 8.5 7.9' 8.4 8.6 7.5 9.4 7.7' 8.0 19 Other commercial and industrial loans .. 203.7 5 239.7 282.0 293.4' 289.4 203.95 240.9 283.1 294.2' 290.5 20 To U.S. addressees11 ............................ 193.8 s 226.6 263.2 273.2 269.4 193.75 226.5 263.2 274.2' 270.5 21 To non-U.S. addressees ...................... 9.9* 13.1 18.8 20.2' 20.0 10.3 s 14.4 19.8 20.0' 19.9 22 Loans to foreign banks................................ 13.5 21.2 18.7 20.4' 21.1 14.6 23.0 20.1 19.8' 20.3 23 Loans to commercial banks in the United States...................................... 54.1 57.3 77.8 83.7 92.4 56.9 60.3 81.9 86.8 88.2 1. Includes domestic chartered banks, U.S. branches, agencies, and New York J. As of Dec. 1, 1978, nonbank financial loans were reduced $0.1 billion as the investment company subsidiaries of foreign banks; and Edge Act corporations. re ult of reclassification. 2. Excludes loans to commercial banks in the United States. 3. As of Dec. 1, 1979, loans sold to affiliates were reduced $800 million and 3. As of Dec. 31, 1978, total loans and securities were reduced by $0.1 billion. cc nmercial and industrial loans sold were reduced $700 million due to corrections “Other securities” were increased by $1.5 billion and total loans were reduced by ol two banks in New York City. $1.6 billion largely as the result of reclassifications of certain tax-exempt obliga­ ). Loans sold are those sold outright to a bank’s own foreign branches, nontions. Most of the loan reduction was in “all other loans.” cc isolidated nonbank affiliates of the bank, the bank’s holding company (if not 4. As of Jan. 3, 1979, as the result of reclassifications, total loans and securities a tank), and nonconsolidated nonbank subsidiaries of the holding company. and total loans were increased by $0.6 billion. Business loans were increased by 10. As of Dec. 31, 1978, commercial and industrial loans sold outright were $0.4 billion and real estate loans by $0.5 billion. Nonbank financial loans were in reased $0.7 billion as the result of reclassifications, but $0.1 billion of this reduced by $0.3 billion. ar ount was offset by a balance sheet reduction of $0.1 billion as noted above. 5. As of Dec. 31, 1977, as the result of loan reclassifications, business loans 11. United States includes the 50 states and the District of Columbia. were reduced by $0.2 billion and nonbank financial loans by $0.1 billion; real estate loans were increased by $0.3 billion. Mote. Data are prorated averages of Wednesday data for domestic chartered 6. As of Dec. 31, 1978, commercial and industrial loans were reduced $0.1 b; iks, and averages of current and previous month-end data for foreign-related billion as a result of reclassifications. in titutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Financial Statistics □ July 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 Account Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May' June Domestically Chartered Commercial Banks1 1 Loans and investments .......................... 1,094.3 1,112.1 1,118.4 1.118.0 1,143.3 1,133.4 1,143.6 1,142.8 1,151.9 1,150.5 1,153.3 2 Loans, gross ............................................. 819.4 833.8 839.0 836.7 860.1 849.7 857.0 854.6 861.2 857.1 857.1 3 Interbank ............................................... 50.3 53.6 54.0 52.6 62.9 57.2 58.0 55.6 62.4 67.4 66.6 4 Commercial and industrial ................ 244.1 249.4 249.8 248.0 253.4 252.6 256.2 258.3 259.2 256.0 256.7 5 Other ..................................................... 525.0 530.9 535.3 536.1 543.7 540.0 542.9 540.7 539.6 533.7 533.8 6 U.S. Treasury securities ........................ 90.6 91.9 91.5 92.1 92.5 92.4 93.6 94.2 93.5 93.9 95.1 7 Other securities ....................................... 184.3 186.4 187.8 189.3 190.7 191.2 192.9 193.9 197.2 199.5 201.0 8 Cash assets, total ..................................... 145.7 148.5 160.7 158.1 146.4 148.4 149.9 153.8 168.2 172.4 150.5 9 Currency and coin .............................. 16.8 16.7 16.6 18.2 17.9 17.3 17.1 16.8 16.8 17.8 17.4 10 Reserves with Federal Reserve Banks 33.7 31.6 34.1 34.7 28.4 28.3 30.7 34.2 33.2 37.9 29.5 11 Balances with depository institutions 41.1 40.7 45.5 43.7 37.7 43.7 43.4 43.1 49.7 47.9 45.5 12 Cash items in process of collection .. 54.1 59.5 64.6 61.5 62.4 59.0 58.7 59.8 68.6 68.9 58.0 13 Other assets............................................... 53.8 57.5 57.8 59.3 61.2 63.1 65.0 66.1 73.3 72.7 77.1 14 Total assets/total liabilities and capital . 1,293.8 1,318.2 1,336.9 1,335.4 1,351.0 1,344.9 1,358.4 1,362.7 1,393.5 1,395.7 1,380.9 15 Deposits ..................................................... 982.9 996.6 1,023.6 1,017.6 1,030.6 1,022.5 1,028.9 1,032.1 1,060.0 1,057.3 1,044.7 16 Demand ................................................. 352.4 358.7 376.6 365.1 377.6 362.4 358.7 354.5 377.4 370.2 358.1 17 Savings ................................................... 216.6 213.4 207.6 205.0 203.4 200.6 199.9 196.5 189.3 192.3 197.8 18 Time ....................................................... 413.8 424.5 439.4 447.4 449.7 459.6 470.3 481.1 493.4 494.8 488.8 19 Borrowings ............................................... 140.1 147.0 137.4 135.6 140.5 143.1 145.1 142.1 147.0 154.1 152.5 20 Other liabilities......................................... 69.7 71.2 74.0 78.5 74.1 77.5 81.6 84.2 81.2 78.5 76.6 21 Residual (assets less liabilities) ............ 101.1 103.3 101.9 103.7 105.8 101.8 102.9 104.2 105.2 105.7 107.1 Memo: 22 U.S. Treasury note balances included in borrowing........................................... 8.6 17.8 8.4 5.0 12.8 15.0 8.1 9.4 14.3 5.1 13.1 23 Number of banks .................................... 14,607 14,616 14.605 14,608 14,610 14,594 14,609 14,626 14,629 14,639 14,646 All Commercial Banking Institutions2 24 Loans and investments .......................... 1,169.8 1,197.7 1,200.3 1,200.9 1,229.8 1,217.7 1,230.8 1,231.8 1,240.9 1,239.2 25 Loans, gross ............................................ 892.1 915.9 917.6 916.2 943.1 930.7 941.0 940.2 946.8 942.4 26 Interbank ............................................... 63.8 69.2 71.6 71.8 80.5 75.4 78.3 75.2 82.1 88.0 27 Commercial and industrial ................ 280.5 288.1 288.3 287.9 295.0 295.1 298.5 301.7 302.0 298.1 28 Other ..................................................... 547.8 558.6 557.7 556.6 567.6 560.1 564.2 563.4 562.7 556.2 29 U.S. Treasury securities ........................ 91.9 93.5 93.1 93.7 94.5 94.3 95.5 96.2 95.5 95.9 30 Other securities ...................................... 185.8 188.3 189.5 190.9 192.2 192.7 194.4 195.4 198.6 201.0 31 Cash assets, total .................................... 166.0 172.2 179.9 176.7 169.5 166.5 168.8 174.0 187.3 190.7 32 Currency and coin .............................. 16.8 16.7 16.6 18.2 17.9 17.3 17.1 16.8 16.8 17.8 33 Reserves with Federal Reserve Banks 34.5 32.5 34.9 35.6 29.0 28.9 31.3 35.0 33.9 38.7 34 Balances with depository institutions 59.3 62.4 62.5 60.0 59.0 59.8 60.5 61.1 66.6 63.8 35 Cash items in process of collection .. 55.3 60.6 65.9 62.9 63.7 60.4 60.0 61.2 69.9 70.4 36 Other assets.............................................. 70.9 76.7 76.5 78.5 81.0 83.7 86.8 91.6 99.0 98.1 37 Total assets/total liabilities and capital . 1,406.7 1,446.5 1,456.7 1,456.1 1,480.3 1,468.0 1,486.5 1,497.5 1,527.2 1,528.0 n.a. 38 Deposits .................................................... 1,020.9 1,043.6 1,062.6 1,058.5 1,076.3 1,063.1 1,070.0 1,073.5 1,101.1 1,097.1 39 Demand ................................................ 369.1 383.2 394.2 384.9 400.5 380.5 376.8 373.6 396.6 387.7 40 Savings .................................................. 217.6 214.2 208.3 205.9 204.3 201.3 200.3 196.7 189.5 192.6 41 Time ...................................................... 434.2 446.2 460.1 467.7 471.5 481.3 492.9 503.2 515.0 516.9 42 Borrowings .............................................. 169.5 182.1 171.6 169.5 180.5 179.5 182.9 186.5 190.8 196.3 43 Other liabilities........................................ 113.1 115.2 118.5 122.2 115.4 121.1 128.4 130.9 127.8 126.6 44 Residual (assets less liabilities) ............ 103.2 105.6 104.0 105.8 108.1 104.2 105.2 106.5 107.4 108.1 Memo: 45 U.S. Treasury note balances included in borrowing.......................................... 8.6 17.8 8.4 5.0 12.8 15.0 8.1 9.4 14.3 5.1 46 Number of banks.................................... 14,960 14,972 14,963 14,969 14,975 14,962 14,978 14,995 15,004 15,016 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 ] >ec. 31 June 30 Dec. 31 June 30 Dec. 31 June 30 Total insu ed 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 liabilities 1 ................................................ 1,003,970 1,040,945 ,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 (a 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 18 Gross ................................................................................ 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 liabilities 1 ................................................ 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 2,275 956 988 973 920 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 nor nember Total nonmember 33 Loans and investments, gross ........................................... 18,819 22,940 24,415 28,699 225,904 244,837 263,681 285,448 Loans 34 Gross ................................................................................. 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 liabilities 1 ................................................. 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 2,896 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 44 Interbank ........................................................................... 1,041 1,164 1,089 1,203 1,997 2,152 2,063 2,123 45 Other ................................................................................. 7,766 8,392 9,802 11,831 140,760 152,974 163,690 177,334 46 Borrowings ........................................................................... 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. F >r Note see table 1.24. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Financial Statistics □ July 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 Non­ Asset account commercial Large banks member banks Total All other banks1 New York City of Other City Chicago large 1 Cash bank balances, items in process ................................................ 158,380 134,955 43,758 5,298 47,914 37,986 23,482 2 Currency and coin ............................................................................... 12,135 8,866 867 180 2,918 4,901 3,268 3 Reserves with Federal Reserve Banks............................................ 28,043 28,041 3,621 1,152 12,200 11,067 3 4 Demand balances with banks in United States.............................. 41,104 25,982 12,821 543 3,672 8,945 15,177 5 Other balances with banks in United States.................................. 4,648 2,582 601 15 648 1,319 2,066 6 Balances with banks in foreign countries ...................................... 3,295 2,832 331 288 1,507 705 463 7 Cash items in process of collection.................................................. 69,156 66,652 25,516 3,119 26,969 11,049 2,504 8 Total securities held—Book value ...................................................... 262,199 179,877 20,808 7,918 58,271 92,881 82,336 9 U.S. Treasury ....................................................................................... 95,068 65,764 9,524 2,690 22,051 31,499 29,315 10 Other U.S. government agencies .................................................... 40,078 25,457 1,828 1,284 7,730 14,616 14,622 11 States and political subdivisions ...................................................... 121,260 85,125 9,166 3,705 27,423 44,831 36,136 12 All other securities ............................................................................. 5,698 3,465 291 240 1,048 1,887 2,234 n 94 66 19 47 28 14 Trading-account securities ................................................................ 6,833 6,681 3,238 708 2,446 290 151 15 U.S. Treasury................................................................................... 4,125 4,103 2,407 408 1,210 78 23 16 Other U.S. government agencies ................................................ 825 816 401 82 278 55 9 17 States and political subdivisions .................................................. 1,395 1,381 363 117 794 107 14 18 All other trading account securities............................................ 394 316 67 101 145 3 78 19 94 66 19 47 28 20 Bank investment portfolios .............................................................. 255,366 173,196 17,570 7,210 55,825 92,591 82,185 21 U.S. Treasury................................................................................... 90,943 61,661 7,117 2,282 20,840 31,422 29,293 22 Other U.S. government agencies ................................................ 39,253 24,641 1,426 1,201 7,452 14,561 14,613 23 States and political subdivisions .................................................. 119,865 83,745 8,803 3,588 26,629 44,724 36,123 24 All other portfolio securities ........................................................ 5,305 3,149 224 138 903 j ,884 2,156 25 Federal Reserve stock and corporate stock ...................................... 1,656 1,403 311 111 507 475 253 26 Federal funds sold and securities resale agreement.......................... 41,258 31,999 3,290 1,784 16,498 10,427 9,365 27 Commercial banks ............................................................................... 34,256 25,272 1,987 1,294 12,274 9,717 9,090 28 Brokers and dealers ........................................................................... 4,259 4,119 821 396 2,361 541 140 29 Others ................................................................................................... 2,743 2,608 482 94 1,863 169 135 30 Other loans, gross ................................................................................... 675,915 500,802 79,996 26,172 190,565 204,069 175,113 31 Less: Unearned income on loans........................................................ 17,019 11,355 675 107 3,765 6,809 5,664 32 Reserves for loan loss................................................................ 7,431 5,894 1,347 341 2,256 1,949 1,537 33 Other loans, net....................................................................................... 651,465 483,553 77,974 25,724 184,544 195,311 167,912 Other loans, gross, by category 34 Real estate loans ..................................................................................... 203,386 138,730 10,241 2,938 52,687 72,863 64,656 35 Construction and land development.............................................. 25,621 19,100 2,598 685 9,236 6,581 6,521 36 Secured by farmland........................................................................... 8,418 3,655 23 34 453 3,146 4,763 37 Secured by residential properties .......................................................... 117,176 81,370 5,362 1,559 31,212 43,236 35,806 38 1- to 4-family residences................................................................ 111,674 77,422 4,617 1,460 29,774 41,570 34,252 39 FHA-insured or VA-guaranteed.............................................. 7,503 6,500 508 44 3,446 2,502 1,003 40 Conventional ............................................................................... 104,171 70,922 4,109 1,417 26,328 39,068 33,249 41 Multifamily residences .................................................................. 5,502 3,948 746 99 1,438 1,665 1,554 42 FHA-insured ................................................................................. 399 340 132 27 88 92 59 43 Conventional ............................................................................... 5,103 3,609 613 72 1,350 1,573 1,495 44 Secured by other properties.............................................................. 52,171 34,605 2,258 660 11,786 19,901 17,566 45 Loans to financial institutions.............................................................. 37,072 34,843 12,434 4,342 15,137 2,930 2,228 46 REITs and mortgage companies...................................................... 8,574 8,162 2,066 801 4,616 680 412 47 Domestic commercial banks ............................................................ 3,362 2,618 966 165 1,206 281 744 48 Banks in foreign countries................................................................ 7,359 7,187 3,464 268 2,820 635 171 49 Other depositary institutions ............................................................ 1,579 1,411 290 76 785 261 167 50 Other financial institutions................................................................ 16,198 15,465 5,649 3,033 5,710 1,073 733 51 Loans to security brokers and dealers................................................ 11,042 10,834 6,465 1,324 2,846 199 207 52 Other loans to purchase or carry securities........................................ 4,280 3,532 410 276 1,860 985 747 53 Loans to farmers except real estate.................................................... 28,054 15,296 168 150 3,781 11,196 12,758 54 Commercial and industrial loans.......................................................... 213, 123 171,815 39,633 13,290 67,833 51,059 41,309 55 Loans to individuals ............................................................................... 161,599 110,974 7,100 2,562 40,320 60,993 50,624 56 Installment loans ................................................................................. 131,571 90,568 5,405 1,711 33,640 49,811 41,003 57 Passenger automobiles .................................................................. 58,908 37,494 1,077 209 11,626 24,582 21,414 58 Residential repair and modernization ........................................ 8,526 5,543 331 60 2,088 3,064 2,983 59 Credit cards and related plans...................................................... 21,938 19,333 2,268 1,267 9,736 6,062 2,605 60 Charge-account credit cards...................................................... 17,900 16,037 1,573 1,219 8,192 5,053 1,863 61 Check and revolving credit plans ............................................ 4,038 3,296 695 47 1,545 1,009 742 62 Other retail consumer goods........................................................ 19,689 13,296 427 57 5,242 7,570 6,393 63 Mobile homes............................................................................... 9,642 6,667 179 19 2,563 3,905 2,976 64 Other ............................................................................................. 10,047 6,629 249 38 2,678 3,664 3,417 65 Other installment loans ................................................................ 22,510 14,902 1,302 119 4,948 8,533 7,608 66 Single-payment loans to individuals ................................................ 30,027 20,406 1,694 851 6,680 11,182 9,621 67 All other loans......................................................................................... 17,360 14,778 3,545 1,290 6,100 3,844 2,582 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 11,323 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 Insured Non­ Liability or capital account commerical Large banks member banks Total All other banks1 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 78 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 45,731 36,293 21,379 119 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 28,922 250,804 300,789 257,062 123 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 N )TE. Data include consolidated reports, including figures for all bank-premises companies that are members of the Federal Reserve System. subs diaries and other significant majority-owned domestic subsidiaries. Securities 2. Demand deposits adjusted are demand deposits other than domestic com­ are eported 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 k iser detail were shown in previous issues of the Bulletin. collection. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Financial Statistics □ July 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 Account Apr. 30 May 7 May 14 May 21 May 28 June 4 June 11 June 18 June 25 1Cash items in process of collection............................ 56,422 49,875 52,586 47,651 56,919 53,685 51,339 53,778 48,195 2 Demand deposits due from banks in the United States ....................................................................... 20,855 20,136 17,205 17,565 18,660 17,641 17,855 18,834 17,957 3 All other cash and due from depository institutions 33,903 31,959 37,409 33,098 39,074 33,903 32,363 33,803 31,328 4 Total loans and securities ............................................. 520,602 516,857 514,754 514,938 515,848 519,227 516,434 517,866 515,411 Securities 5 U.S. Treasury securities ............................................... 35,281 34,384 33,749 35,412 35,568 37,413 37,455 36,332 36,546 6 Trading account ......................................................... 5,921 4,953 4,600 5,090 4,813 6,240 5,382 4,045 4,194 7 Investment account, by maturity............................ 29,360 29,430 29,149 30,322 30,755 31,173 32,072 32,287 32,352 8 One year or less..................................................... 6,823 6,514 6,056 6,027 6,352 6,449 6,464 6,167 6,231 9 Over one through five years .............................. 18,056 18,318 18,476 19,546 19,545 20,092 20,747 21,132 21,098 10 Over five years....................................................... 4,481 4,598 4,616 4,749 4,858 4,632 4,861 4,988 5,024 11 Other securities ............................................................. 74,543 74,420 75,999 75,235 75,355 75,053 75,894 74,973 75,358 12 Trading account ......................................................... 4,079 3,737 5,050 4,273 3,831 3,468 4,108 3,218 3,537 13 Investment account ................................................... 70,465 70,683 70,948 70,962 71,524 71,584 71,786 71,755 71,822 14 U.S. government agencies .................................. 15,918 16,128 16,349 16,374 16,577 16,632 16,672 16,627 16,559 15 States and political subdivision, by maturity ... 51,968 51,959 52,005 52,010 52,369 52,460 52,612 52,594 52,647 16 One year or less................................................. 6,497 6,522 6,505 6,271 6,524 6,540 6,623 6,553 6,494 17 Over one year..................................................... 45,471 45.436 45,500 45,739 45,845 45,920 45,989 46,042 46,154 18 Other bonds, corporate stocks and securities .. 2,578 2,596 2,594 2,577 2,578 2,493 2,501 2,533 2,615 Loans 19 Federal funds sold1 ....................................................... 24,655 25,385 23,495 24,595 25,110 26,800 24,898 26,688 23,646 20 To commercial banks ............................................... 20,608 20,909 19,800 21,131 21,908 22,676 20,369 22,162 19,339 21 To nonbank brokers and dealers in securities .... 3,016 3,256 2,789 2,572 2,286 3,348 3,681 3,667 3,459 22 To others..................................................................... 1,032 1,220 905 891 916 775 848 859 848 23 Other loans, gross ......................................................... 398,905 395,501 394,391 392,588 392,697 392,787 391,056 392,760 392,682 24 Commercial and industrial ...................................... 160,909 159,779 158,855 157,528 157,567 158,305 157,441 158,223 158,106 25 Bankers acceptances and commercial paper ... 4,354 4,597 4,728 4,616 4,910 5,519 5,186 5,056 5,047 26 All other ................................................................. 156,555 155,182 154,128 152,912 152,656 152,786 152,255 153,167 153,059 27 U.S. addressees ................................................. 150,409 149,161 148,171 147,077 146,849 147,032 146,435 147,390 147,412 28 Non-U.S. addressees ........................................ 6,146 6,021 5,956 5,835 5,807 5,754 5,820 5,777 5,647 29 Real estate ..................................................................... 104,285 104,365 104,628 104,862 104,914 104,870 104,963 105,076 105,244 30 To individuals for personal expenditures.............. 72,221 71,819 71,533 71,290 71,153 70,954 70,773 70,719 70,783 To financial institutions 31 Commercial banks in the United States............ 3,563 3,509 3,400 3,390 3,418 3,632 3,335 3,608 4,014 32 Banks in foreign countries .................................. 6,831 6,741 6,627 7,023 7,356 6,533 6,367 6,208 6,512 33 Sales finance, personal finance companies, etc . 8,972 8,750 8,636 8,396 8,566 8,413 8,334 8,357 8,189 34 Other financial institutions.................................. 16,061 15,882 15,320 15,218 14,932 14,776 14,619 14,555 14,364 35 To nonbank brokers and dealers in securities .... 6,678 5,622 6,724 6,067 5,562 6,034 6,768 6,788 6,357 36 To others for purchasing and carrying securities2 2,060 2,039 2,050 2,061 2,091 2,057 2,070 2,041 2,045 37 To finance agricultural production ........................ 5,039 5,061 5,063 5,087 5,060 5,102 5,102 5,111 5,146 38 All other ..................................................................... 12,287 11,933 11,554 11,667 12,077 12,110 11,283 12.075 11,922 39 Less: Unearned income .............................................. 7,340 7,342 7,361 7,374 7,358 7,241 7,262 7,282 7,257 40 Loan loss reserve .............................................. 5,444 5,491 5,519 5,517 5,525 5,585 5,607 5,606 5,564 41 Other loans, net................................................................... 386,122 382,668 381,512 379,696 379,814 379,961 378,187 379,872 379,861 42 Lease financing receivables ........................................ 8,471 8,481 8,524 8,527 8,540 8,583 8,589 8,646 8,660 43 All other assets............................................................... 69,849 69,594 71,326 71,643 71,348 74,005 75,637 75,304 75,032 44 Total assets ..................................................................... 710,102 696,903 701,806 693,422 710,388 707,043 702,219 708,230 696,583 Deposits 45 Demand deposits .......................................................... 201,144 188,583 189,250 185,913 194,911 196,122 191,550 194,984 187,079 46 Mutual savings banks .............................................. 761 717 637 563 680 689 604 583 546 47 Individuals, partnerships, and corporations.......... 134,331 128,111 130,962 125,838 132,409 133,359 132,367 134,437 129,307 48 States and political subdivisions ............................ 5,975 4,775 4,454 4,812 4,581 4,787 4,405 4,664 4,806 49 U.S. government ....................................................... 2,424 974 734 863 1,811 3,580 1,894 3,629 2,461 50 Commercial banks in the United States................ 37,598 34.968 32,885 34,589 35,489 33,745 32,970 33,558 32,518 51 Banks in foreign countries ...................................... 8,745 8,911 8,672 9,649 9,951 8,378 8,723 7,927 8,334 52 Foreign governments and official institutions .... 2,837 2,306 1,778 1,963 1,616 1,557 1,461 1,426 1,452 53 Certified and officers’ checks.................................. 8,474 7,821 9,127 7,636 8,374 10,027 9,125 8,759 7,655 54 Time and savings deposits .......................................... 278,011 278,926 279,122 278,742 278,736 278,177 278,396 277,894 277,454 55 Savings ......................................................................... 68,456 68,726 68,829 69,230 69,686 70,796 71,162 71,760 71,867 56 Individuals and nonprofit organizations............ 64,583 64,823 64,865 65,219 65,546 66,595 66,842 67,374 67,398 57 Partnerships and corporations operated for profit................................................................. 3,230 3,278 3,320 3,380 3,492 3,532 3,641 3,641 3,724 58 Domestic governmental units.............................. 632 616 631 620 639 658 669 729 730 59 All other ................................................................. 10 10 13 11 9 12 11 16 14 60 Time ............................................................................. 209,554 210,200 210,293 209,511 209,050 207,381 207,233 206,135 205,587 61 Individuals, partnerships, and corporations .... 176,018 176,521 176,991 176,483 175,623 174,832 175,254 174,456 174,148 62 States and political subdivisions ........................ 21,511 21,647 21,404 21,228 21,045 20,370 19,991 19,703 19,551 63 U.S. government .................................................. 402 384 360 357 343 336 307 297 286 64 Commercial banks in the United States............ 6,322 6,295 6,215 6,122 5,952 5,805 5,718 5,699 5,642 65 Foreign governments, official institutions, and banks ............................................................... 5,301 5,352 5,323 5,322 6,086 6,038 5,962 5,980 5,960 Liabilities for borrowed money 66 Borrowings from Federal Reserve Banks ............ 3,596 713 1,487 810 2,265 221 315 758 336 67 Treasury tax-and-loan notes.................................... 10,649 3,561 2,392 4,312 3,086 765 983 7,240 8,940 68 All other liabilities for borrowed money3............ 103,276 111,633 116,501 110,143 120,568 121,337 120,393 117,994 113,781 69 Other liabilities and subordinated note and debentures ............................................................... 66,268 66,283 65,794 66,387 63,600 63,039 62,944 61,973 61,579 70 Total liabilities ............................................................... 662,944 649,700 654,548 646,306 663,165 659,663 654,580 660,843 649,168 71 Residual (total assets minus total liabilities)4.......... 47,158 47,202 47,258 47,116 47,223 47,380 47,638 47,387 47,415 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 federal funds purchased and securities sold under agreements to repurchase; for information on these liabilities at banks with assets of $1 billion or more on Dec. 31, 1977, see table 1.13. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Banks A21 1.28 LARGE WEEKLY REPORTING COMMERCIAL BANK i with Domestic Assets of $1 Billion or More on December 31, 1977 Assets and Liabilities Millions of dollars, Wednesday figures Account April 30 May 7 May 14 May 21 May 28 June 4 June 11 June 18 June 25 1 Cash items in process of collection.............................................. 53,396 47,178 50,142 45,376 54,079 51,061 48,950 51,158 45,713 2 Demand deposits due from banks in the United States.......... 20,177 19,499 16,600 16,887 17,882 16,933 17,172 18,204 17,348 3 All other cash and due from depository institutions................ 31,732 30,100 35,128 31,237 37,064 31,936 30,490 31,529 29,309 4 Total loans and securities.............................................................. 486,263 482,318 480,639 480,631 481,572 484,539 481,681 483,167 481,167 Securities 5 U.S. Treasury securities ................................................................ 32,856 31,978 31,312 32,948 33,098 34,943 34,968 33,848 34,083 6 Trading account .......................................................................... 5,858 4,892 4,527 5,020 4,757 6,170 5,310 3,988 4,155 7 Investment account, by maturity.............................................. 26,997 27,086 26,785 27,928 28,341 28,773 29,659 29,859 29,928 8 One year or less...................................................................... 6,366 6,056 5,602 5,602 5,913 6,027 6,048 5,762 5,832 9 Over one through five years ................................................ 16,523 16,805 16,940 17,987 17,990 18,502 19,146 19,550 19,514 10 Over five years........................................................................ 4,108 4,224 4,243 4,340 4,438 4,244 4,465 4,547 4,582 11 Other securities .............................................................................. 68,572 68,456 70,006 69,265 69,388 69,097 69,902 69,001 69,380 12 Trading account .......................................................................... 3,939 3,599 4,917 4,137 3,694 3,337 3,969 3,079 3,392 13 Investment account .................................................................... 64,633 64,856 65,089 65,128 65,694 65,760 65,933 65,922 65,988 14 U.S.government agencies ...................................................... 14,753 14,965 15,166 15,230 15,442 15,493 15,525 15,504 15,446 15 States and political subdivision, by maturity...................... 47,467 47,461 47,497 47,488 47,841 47,940 48,074 48,054 48,096 16 One year or less.................................................................. 5,898 5,926 5,919 5,680 5,893 5,924 6,003 5,937 5,878 17 Over one year...................................................................... 41,568 41,535 41,577 41,807 41,948 42,016 42,070 42,117 42,218 18 Other bonds, corporate stocks and securities.................... 2,413 2,430 2,427 2,410 2,410 2,326 2,335 2,364 2,446 Loans 19 Federal funds sold1 ........................................................................ 22,461 22,872 21,430 22,266 22,756 23,976 22,087 23,940 21,307 20 To commercial banks ................................................................ 18,766 18,782 18,056 18,995 19,771 20,173 17,876 19,692 17,385 21 To nonbank brokers and dealers in securities...................... 2,688 2,921 2,502 2,399 2,084 3,044 3,377 3,404 3,092 22 To others...................................................................................... 1,007 1,169 872 872 900 759 834 844 829 23 Other loans, gross .......................................................................... 374,200 370,888 369,810 368,090 368,256 368,399 366,641 368,314 368,265 24 Commercial and industrial........................................................ 152,629 151,559 150,642 149,377 149,441 150,211 149,351 150,086 149,986 25 Bankers’ acceptances and commercial paper .................... 4,273 4,530 4,658 4,538 4,809 5,412 5,085 4,952 4,938 26 All other .................................................................................. 148,355 147,028 145,984 144,839 144,632 144,798 144,266 145,134 145,048 27 U.S. addressees .................................................................. 142,260 141,058 140,078 139,056 138,876 139,096 138,497 139,410 139,455 28 Non-U.S. addressees .......................................................... 6,095 5,970 5,906 5,783 5,755 5,702 5,769 5,723 5,593 29 Real estate .................................................................................. 98,055 98,131 98,397 98,623 98,654 98,621 98,725 98,808 98,984 30 To individuals for personal expenditures................................ 63,812 63,421 63,170 62,945 62,814 62,634 62,467 62,424 62,491 To financial institutions 31 Commercial banks in the United States.............................. 3,485 3,432 3,324 3,312 3,339 3,542 3,248 3,514 3,918 32 Banks in foreign countries.................................................... 6,763 6,672 6,564 6,944 7,290 6,476 6,270 6,106 6,423 33 Sales finance, personal finance companies, etc................ 8,792 8,564 8,453 8,222 8,405 8,249 8,177 8,194 8,022 34 Other financial institutions.................................................... 15,686 15,502 14,948 14,851 14,564 14,430 14,268 14,208 14,017 35 To nonbank brokers and dealers in securities...................... 6,617 5,560 6,646 5,995 5,511 5,984 6,716 6,737 6,299 36 To others for purchasing and carrying securities2................ 1,845 1,828 1,834 1,838 1,872 1,832 1,836 1,818 1,816 37 To finance agricultural production .......................................... 4,878 4,900 4,910 4,928 4,901 4,943 4,946 4,949 4,984 38 All other ...................................................................................... 11,639 11,320 10,923 11,052 11,465 11,476 10,636 11,469 11,325 39 Less; Unearned income ................................................................ 6,706 6,709 6,726 6,740 6,726 6,619 6,637 6,656 6,630 40 Loan loss reserve................................................................ 5,120 5,166 5,194 5,198 5,200 5,258 5,281 5,280 5,239 41 Other loans, net.............................................................................. 362,374 359,012 357,890 356,152 356,330 356,522 354,723 356,378 356,397 42 Lease financing receivables .......................................................... 8,236 8,244 8,287 8,288 8,299 8,342 8,349 8,403 8,418 43 All other assets ............................................................................... 67,784 67,557 69,298 69,647 69,313 71,997 73,638 73,281 72,976 44 Total assets ....................................................................................... 667,589 654,896 660,095 652,066 668,210 664,808 660,280 665,742 654,930 Deposits 45 Demand deposits ............................................................................. 188,817 176,977 177,909 174,598 182,835 184,063 179,913 182,962 175,651 46 Mutual savings banks ................................................................ 725 684 608 537 654 659 581 559 525 47 Individuals, partnerships, and corporations .......................... 124,830 118,999 121,769 116,880 123,089 123,868 123,052 125,141 120,379 48 States and political subdivisions .............................................. 5,357 4,140 3,932 4,214 3,997 4,217 3,911 3,976 4,222 49 U.S. government ......................................................................... 1,914 718 666 766 1,660 3,328 1,700 3,289 2,071 50 Commercial banks in the United States.................................. 36,311 33,745 31,674 33,284 34,003 32,392 31,689 32,254 31,331 51 Banks in foreign countries........................................................ 8,691 8,854 8,616 9,586 9,891 8,320 8,668 7,864 8,279 52 Foreign governments and official institutions........................ 2,836 2,294 1,778 1,962 1,609 1,554 1,460 1,425 1,444 53 Certified and officer’s checks.................................................... 8,153 7,542 8,866 7,368 7,932 9,725 8,851 8,454 7,400 54 Time and savings deposits ............................................................ 258,676 259,523 259,682 259,295 259,290 258,633 258,911 258,434 258,049 55 Savings........................................................................................... 63,298 63,526 63,625 64,000 64,422 65,450 65,784 66,345 66,460 56 Individuals and nonprofit organizations.............................. 59,712 59,930 59,970 60,290 60,596 61,562 61,793 62,282 62,328 57 Partnerships and corporations operated for profit............ 2,992 3,034 3,076 3,132 3,234 3,274 3,378 3,378 3,449 58 Domestic governmental units .............................................. 583 552 567 566 582 603 602 669 668 59 All other ................................................................................... 10 10 13 11 9 12 11 16 14 60 Time ............................................................................................... 195,379 195,996 196,057 195,295 194,869 193,182 193,127 192,089 191,589 61 Individuals, partnerships, and corporations ...................... 164,038 164,471 164,933 164,440 163,615 162,752 163,258 162,509 162,219 62 States and political subdivisions .......................................... 19,617 19,792 19,530 19,366 19,190 18,561 18,184 17,906 17,778 63 U.S. government .................................................................... 388 370 345 343 329 323 293 283 272 64 Commercial banks in the United States.............................. 6,035 6,011 5,925 5,824 5,649 5,509 5,430 5,411 5,360 65 Foreign governments, official institutions, and banks .... 5,301 5,352 5,323 5,322 6,086 6,038 5,962 5,980 5,960 Liabilities for borrowed money 66 Borrowings from Federal Reserve Banks.............................. 3,504 713 1,487 810 2,255 221 315 758 336 67 Treasury tax-and-loan notes...................................................... 9.973 3,296 2,207 4,025 2,850 690 888 6,820 8,449 68 All other liabilities for borrowed money3.............................. 97,746 105,430 110,370 104,362 114,710 115,304 114,244 111,926 107,969 69 Other liabilities and subordinated note and debentures .... 64,874 64,919 64,362 65,012 62,204 61,670 61,532 60,612 60,222 70 Total liabilities ................................................................................. 623,590 610,858 616,016 608,102 624,144 620,581 615,803 621,513 610,676 71 Residual (total assets minus total liabilities)4............................ 43,999 44,038 44,078 43,964 44,065 44,227 44,476 44,229 44,254 1. Includes securities purchased under agreements to resell. . This is not a measure of equity capital for use in capital adequacy analysis 2. Other than financial institutions and brokers and dealers. or :or other analytic uses. 3. Includes federal funds purchased and securities sold under agreement to repurchase; for information on these liabilities at banks with assets of $1 billion or more on Dec. 31, 1977, see table 1.13. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

All Domestic Financial Statistics □ July 1980 1.29 LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures 1980 Account Apr. 30 May 7 May 14 May 21 May 28 June 4 June 11 June 18 June 25 1 Cash items in process of collection.............................................. 20,987 18,546 20,568 17,570 21,118 20,722 20,339 21,232 19,238 2 Demand deposits due from banks in the United States.......... 15,445 14,676 12,308 12,380 13,073 12,114 12,935 13,851 13,039 3 All other cash and due from depository institutions................ 10,030 8,274 10,078 8,236 10,431 10,934 10,031 8,970 6,718 4 Total loans and securities1 ............................................................ 112,551 111,869 111,598 115,124 112,816 113,967 111,880 113,489 113,036 Securities 7 Investment account, by maturity.............................................. 5,752 5,716 5,504 6,647 6,827 6,892 7,066 7,280 7,282 8 One year or less....................................................................... 866 772 466 704 760 703 657 531 472 9 Over one through five years................................................ 4,268 4,307 4,412 5,216 5,269 5,410 5,532 5,790 5,795 10 Over five years......................................................................... 617 638 626 727 798 779 877 959 1,014 13 Investment account ..................................................................... 12,571 12,758 12,958 12,991 13,284 13,317 13,419 13,368 13,374 14 U.S. government agencies .................................................... 2,496 2,502 2,610 2,670 2,742 2,803 2,821 2,749 2,698 15 States and political subdivision, by maturity...................... 9,459 9,637 9,727 9,697 9,914 9,926 10,003 10,042 10,049 16 One year or less................................................................... 1,467 1,605 1,612 1,449 1,640 1,651 1,667 1,700 1,685 17 Over one year....................................................................... 7,993 8,032 8,115 8,248 8,274 8,275 8,336 8,342 8,364 18 Other bonds, corporate stocks and securities.................... 615 620 621 623 628 588 595 576 627 Loans 19 Federal funds sold3 ......................................................................... 6,381 7,219 6,572 9,726 6,145 6,731 5,211 6,160 6,550 20 To commercial banks ................................................................. 4,836 5,660 4,993 8,218 4,530 5,005 3,393 4,246 5,054 21 To nonbank brokers and dealers in securities...................... 1,226 1,130 1,291 1,257 1,222 1,466 1,547 1,744 1,288 22 To others....................................................................................... 319 430 288 251 393 261 271 171 208 23 Other loans, gross ........................................................................... 90,576 88,935 89,340 88,548 89,347 89,812 88,981 89,480 88,609 24 Commercial and industrial......................................................... 47,144 46,794 46,899 46,230 46,451 47,228 46,557 46,941 46,398 25 Bankers’ acceptances and commercial paper .................... 1,874 2,171 2,007 2,068 1,949 2,527 2,195 2,174 2,010 26 All other ................................................................................... 45,271 44,623 44,892 44,163 44,501 44,701 44,362 44,767 44,388 27 U.S. addressees ................................................................... 43,258 42,671 42,943 42,318 42,625 42,842 42,481 42,872 42,551 28 Non-U.S. addressees ........................................................... 2,012 1,952 1,950 1,845 1,876 1,859 1,882 1,894 1,836 29 Real estate ................................................................................... 12,997 12,972 13,085 13,167 13,176 13,175 13,214 13,276 13,328 30 To individuals for personal expenditures................................ 8,870 8,856 8,847 8,840 8,838 8,828 8,825 8,832 8,832 To financial institutions 31 Commercial banks in the United States.............................. 1,578 1,520 1,465 1,451 1,596 1,738 1,541 1,432 1,540 32 Banks in foreign countries.................................................... 3,050 2,911 2,977 3,443 3,816 3,037 2,917 2,670 2,857 33 Sales finance, personal finance companies, etc................... 3,667 3,619 3,565 3,504 3,648 3,525 3,466 3,519 3,452 34 Other financial institutions.................................................... 5,126 5,095 4,877 4,955 4,789 4,781 4,708 4,686 4,468 35 To nonbank brokers and dealers in securities...................... 4,018 3,227 3,925 3,362 3,193 3,344 4,220 4,104 3,800 36 To others for purchasing and carrying securities4................ 375 361 372 373 371 346 346 338 343 37 To finance agricultural production .......................................... 286 293 293 288 285 284 273 253 256 38 All other ....................................................................................... 3,464 3,286 3,035 2,933 3,184 3,525 2,913 3,429 3,334 39 Less: Unearned income ................................................................. 1,057 1,073 1,071 1,081 1,084 1,052 1,053 1,058 1,065 40 Loan loss reserve................................................................. 1,672 1,686 1,705 1,706 1,704 1,734 1,743 1,742 1,713 41 Other loans, net............................................................................... 87,847 86,175 86,564 85,761 86,559 87,026 86,185 86,681 85,831 42 Lease financing receivables .......................................................... 1,624 1,631 1,638 1,637 1,638 1,661 1,658 1,662 1,653 43 All other assets5............................................................................... 30,645 30,102 31,445 31,762 31,017 32,768 33,004 31,768 31,461 44 Total assets ....................................................................................... 191,282 185,099 187,634 186,710 190,092 192,166 189,848 190,972 185,146 Deposits 45 Demand deposits ............................................................................. 69,669 64,894 64,474 64,405 66,993 66,334 65,321 65,806 64,029 46 Mutual savings banks ................................................................ 353 365 296 267 342 339 302 263 265 47 Individuals, partnerships, and corporations .......................... 32,026 30,168 30,457 29,700 31,730 31,789 30,887 32,195 31,491 48 States and political subdivisions .............................................. 527 398 416 545 427 512 455 501 613 49 U.S. government ......................................................................... 411 135 127 153 390 860 417 1,054 507 50 Commercial banks in the United States.................................. 23,691 21,327 20,056 21,092 20,574 19,146 20,071 20,043 19,828 51 Banks in foreign countries........................................................ 6,593 6,951 6,787 7,612 7,897 6,550 6,766 5,859 6,523 52 Foreign governments and official institutions........................ 2,068 1,534 1,022 1,188 1,323 1,314 1,226 1,174 1,122 53 Certified and officers’ checks.................................................... 4,000 4,014 5,313 3,846 4,311 5,824 5,196 4,717 3,678 54 Time and savings deposits ............................................................. 48,352 48,863 49,147 48,904 48,837 48,838 49,159 49,067 48,592 55 Savings........................................................................................... 9,013 8,976 8,923 8,991 9,088 9,210 9,339 9,496 9,454 56 Individuals and nonprofit organizations.............................. 8,587 8,567 8,517 8,564 8,644 8,776 8,886 8,986 8,959 57 Partnerships and corporations operated for profit............ 277 280 282 290 298 302 314 323 323 58 Domestic governmental units .............................................. 143 125 177 131 142 127 135 179 166 59 All other ................................................................................... 5 4 6 6 4 5 4 7 5 60 Time............................................................................................... 39,340 39,887 40,224 39,913 39,749 39,629 39,820 39,571 39,138 61 Individuals, partnerships, and corporations ...................... 33,234 33,645 34,044 33,712 33,542 33,550 33,900 33,693 33,314 62 States and political subdivisions .......................................... 1,611 1,674 1,635 1,640 1,637 1,616 1,531 1,482 1,405 63 U.S. government .................................................................... 73 69 73 73 70 66 35 35 34 64 Commercial banks in the United States.............................. 1,519 1,598 1,570 1,598 1,513 1,471 1,460 1,465 1,512 65 Foreign governments, official institutions, and banks .... 2,901 2,901 2,903 2,889 2,987 2,926 2,895 2,896 2,873 Liabilities for borrowed money 66 Borrowings from Federal Reserve Banks.............................. 640 625 335 549 67 Treasury tax-and-loan notes...................................................... 2,481 823 549 1,036 675 72 151 2,410 2,671 68 All other liabilities for borrowed money6.............................. 32,225 31,609 34,834 33,087 35,988 39,610 37,252 35,446 33,446 69 Other liabilities and subordinated note and debentures.......... 23,450 24,479 23,560 24,860 22,740 22,730 23,320 23,126 21,894 70 Total liabilities ................................................................................. 176,818 170,668 173,190 172,293 175,569 177,585 175,103 176,405 170,632 71 Residual (total assets minus total liabilities)7............................ 14,464 14,431 14,444 14,417 14,524 14,581 14,646 14,568 14,514 1. Excludes trading account securities. 5. Includes trading account securities. 2. Not available due to confidentiality. 6. Includes federal funds purchased and securities sold under agreements to 3. Includes securities purchased under agreements to resell. repurchase. 4. Other than financial institutions and brokers and dealers. 7. This is not a measure of equity capital for use in capital adequacy analysis 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 1980 Apr. 30 May 7 May 14 May 21 May 28 June 4 June 11 June 18 June 25 Banks with Assets of $750 Million or More 1 Total loans (gross) and securities adjusted1 ................................. 509,214 505,272 504,433 503,308 503,405 505,744 505,599 504,984 504,879 2 Total loans (gross) adjusted1 ............................................................... 399,389 396,468 394,686 392,661 392,482 393,279 392,250 393,679 392,976 3 Demand deposits adjusted2 ................................................................. 104,700 102,766 103,044 102,810 100,692 105,113 105,347 104,019 103,905 4 Time deposits in accounts of $100,000 or more........................... 134,670 134,941 135,007 134,220 133,847 132,152 131,952 130,682 130,432 5 Negotiable CDs ................................................................................... 95,624 95,499 95,775 95,138 94,572 93,590 93,877 93,010 93,109 6 Other time deposits............................................................................ 39,046 39,442 39,232 39,082 39,275 38,562 38,075 37,671 37,323 7 Loans sold outright to affiliates3........................................................ 2,630 2,552 2,591 2,733 2,700 2,738 2,774 2,871 2,843 8 Commercial and industrial............................................................... 1,645 1,614 1,696 1,834 1,788 1,780 1,813 1,899 1,903 9 Other ....................................................................................................... 985 939 895 900 911 957 961 972 940 Banks with Assets of $1 Billion or More 10 Total loans (gross) and securities adjusted1 ................................. 475,838 471,979 471,179 470,261 470,388 472,700 472,475 471,897 471,732 11 Total loans (gross) adjusted1 ............................................................... 374,410 371,545 369,861 368,048 367,901 368,660 367,604 369,048 368,268 12 Demand deposits adjusted2 ................................................................. 97,196 95,336 95,427 95,172 93,093 97,282 97,574 96,262 96,536 13 Time deposits in accounts of $100,000 or more........................... 126,411 126,662 126,721 125,940 125,596 123,896 123,778 122,572 122,369 14 Negotiable CDs ................................................................................... 89,403 89,292 89,578 89,122 88,585 87,568 87,932 87,143 87,274 15 Other time deposits............................................................................ 37,008 37,370 37,142 36,818 37,010 36,328 35,846 35,429 35,095 16 Loans sold outright to affiliates3........................................................ 2,589 2,512 2,553 2,695 2,659 2,699 2,734 2,831 2,806 17 Commercial and industrial............................................................... 1,618 1,586 1,672 1,809 1,761 1,755 1,786 1,876 1,881 18 Other ....................................................................................................... 971 926 881 886 898 944 947 955 924 Banks in New York City 19 Total loans (gross) and securities adjusted14............................... 108,867 107,450 107,916 108,242 109,477 110,010 109,743 110,610 109,221 20 Total loans (gross) adjusted1 ............................................................... 90,544 88,975 89,454 88,604 89,366 89,801 89,258 89,963 88,566 21 Demand deposits adjusted2 ................................................................. 24,580 24,885 23,723 25,588 24,912 25,606 24,494 23,477 24,455 22 Time deposits in accounts of $100,000 or more........................... 30,221 30,665 31,007 30,663 30,562 30,467 30,609 30,248 29,868 23 Negotiable CDs ................................................................................... 21,805 22,156 22,527 22,277 22,312 22,258 22,488 22,324 22,116 24 Other time deposits............................................................................ 8,416 8,509 8,480 8,386 8,250 8,209 8,121 7,924 7,752 1. Exclusive of loans and federal funds transactions with domestic commercial 3 Loans sold are those sold outright to a bank’s own foreign branches, nonbanks. con alidated nonbank affiliates of the bank, the bank’s holding company (if not 2. All demand deposits except U.S. government and domestic banks less cash a b< ik), and nonconsolidated nonbank subsidiaries of the holding company. items in process of collection. 4 Excludes trading account securities. NOTES TO TABLE 1.311. 1. Commercial banks are those in the 50 states and the District of Columbia 5 As of Dec. 1, 1979, loans sold to affiliates were reduced $800 million due to with national or state charters plus U.S. branches, agencies, and New York in­ cori :ctions of two New York City banks. vestment company subsidiaries of foreign banks and Edge Act corporations. 6 Includes averages of daily figures for member banks and quarterly call report 2. Includes seasonally adjusted federal funds, RPs, and other borrowings from figu es for nonmember banks. nonbanks and not seasonally adjusted net Eurodollars and loans to affiliates. 7 Includes averages of current and previous month-end data until August 1979; Includes averages of Wednesday data for domestic chartered banks and averages beg- ining September 1979 averages of daily data. of current and previous month-end data for foreign-related institutions. 8 Based on daily average data reported by 122 large banks beginning February 3. Other borrowings are borrowings on any instrument, such as a promissory 198( and 46 banks before February 1980. note or due bill, given for the purpose of borrowing money for the banking business. 9. Includes U.S. Treasury demand deposits and Treasury tax-and-loan notes at This includes borrowings from Federal Reserve Banks and from foreign banks, con? nercial banks. Averages of daily data. term federal funds, overdrawn due from bank balances, loan RPs, and partici­ 1< . U.S. Treasury demand balances and time deposits in denomination of pations in pooled loans. Includes averages of daily figures for member banks and $10( ,000 or more have been benchmarked to the June and December 1979 call averages of current and previous month-end data for foreign-related institutions. rep< rts. 4. Loans initially booked by the bank and later sold to affiliates that are still 1 . Averages of Wednesday figures. held by affiliates. Averages of Wednesday data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Financial Statistics □ July 1980 1.31 LARGE WEEKLY REPORTING COMMERCIAL BANKS Domestic Classified Commercial and Industrial Loans Millions of dollars Outstanding Net change during Adjust­ Industry classification 1980 1979 1980 ment bank Feb. 27 Mar. 26 Apr. 30 May 28 June 25 01 02 Apr. May June 1 Durable goods manufacturing .............. 24,237 24,961 24,081 22,939 22,727 1,322 -2,234 -880 -1,142 -212 46 2 Nondurable goods manufacturing ........ 19,302 19,824 18,683 18,075 18,345 580 -1,479 -1,141 -608 269 39 3 Food, liquor, and tobacco.................. 4,885 4,923 4,176 3,859 3,701 -302 -1,222 -747 -317 -158 6 4 Textiles, apparel, and leather .......... 4,331 4,480 4,614 4,668 4,934 132 454 134 53 266 6 5 Petroleum refining .............................. 3,111 3,139 2,611 2,490 2,715 461 -424 -528 -122 225 1 6 Chemicals and rubber ........................ 3,714 3,911 3,903 3,761 3,712 61 -199 -8 -142 -48 14 7 Other nondurable goods.................... 3,260 3,370 3,379 3,299 3,282 229 -87 9 -80 -16 12 8 Mining (including crude petroleum and natural gas) .............................. 12,479 12,596 13,272 13,588 13,758 585 1,162 676 316 170 14 9 Trade ......................................................... 25,184 25,456 25,406 24,833 24,624 450 -832 -50 -572 -209 121 10 Commodity dealers ............................ 2,171 1,816 1,784 1,639 1,531 -323 -285 -32 -144 -108 6 11 Other wholesale .................................. 11,938 12,097 12,050 11,645 11,672 71 -424 -47 -405 28 34 12 Retail ..................................................... 11,076 11,543 11,572 11,549 11,421 702 -122 29 -23 -128 82 13 Transportation, communication, and other public utilities................ 17,884 18,292 18,832 18,507 18,735 448 443 540 -325 228 14 14 Transportation .................................... 7,238 7,516 7,692 7,543 7,599 376 83 176 -150 56 7 15 Communication.................................... 2,630 2,747 2,846 2,800 2,839 224 92 99 -46 39 1 16 Other public utilities .......................... 8,016 8,028 8,293 8,164 8,296 -152 268 265 -130 132 5 17 Construction ............................................ 5,772 5,874 5,902 5,832 5,973 73 99 28 -70 140 23 18 Services .................................................... 19,964 20,211 20,444 19,977 20,295 715 84 234 -468 318 96 19 All other1.................................................. 15,220 15,028 15,640 15,125 14,999 -77 -29 612 -515 -126 288 20 Total domestic loans................................ 140,043 142,242 142,260 138,876 139,455 4,096 -2,787 18 -3,384 579 641 21 Memo: Term loans (original maturity more than 1 year) included in do­ mestic loans...................................... 74,780 76,026 76,199 74,868 74,316 3,544 -1,709 173 -1,330 -552 33 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 series. The revised series is on a last-Wednesday-of-the-month basis. 1.311 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS' Monthly averages, billions of dollars December outstanding Outstanding in1979 and 1980 Source 1976 1977 1978 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Total nondeposit funds 1 Seasonally adjusted2 .................................................................. 54.7 61.8 85.4 129.9 124.0 118.8 122.5 129.2 133.4 124.2 120.1 2 Not seasonally adjusted ............................................................ 53.3 60.4 84.4 130.6 126.8 117.4 121.2 125.9 130.4 121.2 123.2 Federal funds, RPs, and other borrowings from nonbanks 3 Seasonally adjusted3 .................................................................. 47.1 58.4 74.8 91.9 85.9 88.0 92.0 97.2 97.9 94.8 94.2 4 Not seasonally adjusted ............................................................ 45.8 57.0 73.8 92.6 88.6 86.5 90.6 93.9 94.8 91.7 97.4 5 Net Eurodollar borrowings, not seasonally adjusted................ 3.7 -1.3 6.8 34.4 34.6 28.1 27.9 29.4 32.9 26.9 23.2 6 Loans sold to affiliates, not seasonally adjusted4-5.................. 3.8 4.8 3.8 3.6 3.6 2.8 2.7 2.6 2.6 2.6 2.6 Memo 7 Domestic chartered banks net positions with own foreign branches, not seasonally adjusted6...................................... -6.0 -12.5 -10.2 9.1 11.4 6.4 5.9 6.6 9.3 5.9 2.7 8 Gross due from balances .......................................................... 12.8 21.1 24.9 22.1 21.7 22.9 23.0 23.4 23.6 24.4' 27.3 9 Gross due to balances................................................................ 6.8 8.6 14.7 31.2 33.0 29.3 28.9 29.8 32.9 30.4 30.0 10 Foreign-related institutions net positions with directly related institutions, not seasonally adjusted7.................................. 9.7 11.1 17.0 25.3 23.2 21.7 22.0 22.8 23.6 20.9 20.5 11 Gross due from balances .......................................................... 8.3 10.3 14.2 25.7 26.5 28.9 29.6 30.4 32.0 28.5 27.9 12 Gross due to balances................................................................ 18.1 21.4 31.2 51.0 49.7 50.5' 51.6 53.2 55.6 49.4 48.3 13 Security RP borrowings, seasonally adjusted8 .......................... 27.9 36.3 44.8' 52.7 46.5' 49.2' 51.O' 49.5' 44.9' 41.5' 39.9 14 Not seasonally adjusted ............................................................ 27.0 35.1 43.6' 52.5 48.1' 47.9' 48.3' 48.2' 44.0' 40.5' 41.9 15 U.S. Treasury demand balances, seasonally adjusted9-10........ 3.9 4.4 8.7 12.9 5.8' 8.1' 12.7' 11.3' 7.5' 8.6' 9.4 16 Not seasonally adjusted ............................................................. 4.4 5.1 3.3 11.7 5.6' 9.6' 12.7' 11.7' 7.8' 9.0' 8.4 17 Time deposits, $100,000 or more, seasonally adjusted1011---- 137.7 162.0 213.0 226.4 228.5' 227.7' 229.1' 235.6' 237.1' 240.3' 242.0 18 Not seasonally adjusted ............................................................. 140.0 165.4 217.9 226.0 229.9' 233.0' 233.0' 236.8' 239.2' 238.4' 240.1 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 Corporations1 Billions of dollars, estimated daily-average balances Commercial banks Type of holder 19792 1980 1975 1976 1977 Dec. Dec. Dec. Sept. Sept. 1 All holders—Individuals, partnerships, and corporations............................................ 236.9 250.1 274.4 278.8 294.6 270.4 285.6 292.4 302.2 288.4 2 Financial business ........................................ 20.1 22.3 25.0 25.9 27.8 24.4 25.4 26.7 27.1 28.4 3 Nonfinancial business .................................. 125.1 130.2 142.9 142.5 152.7 135.9 145.1 148.8 157.7 144.9 4 Consumer ...................................................... 78.0 82.6 91.0 95.0 97.4 93.9 98.6 99.2 99.2 97.6 5 Foreign............................................................ 2.4 2.7 2.5 2.5 2.7 2.7 2.8 2.8 3.1 3.1 6 Other .............................................................. 11.3 12.4 12.9 13.1 14.1 13.5 13.7 14.9 15.1 14.4 Weekly reporting banks 1978 19793 1980 1975 1976 1977 Dec. Dec. Dec. Nov. Dec. Mar. June Sept. Dec. Mar. 7 All holders—Individuals, partnerships, and corporations........................................................... 124.4 128.5 139.1 142.7 147.0 121.9 128.8 132.7 139.3 133.6 8 Financial business ....................................................... 15.6 17.5 18.5 19.3 19.8 16.9 18.4 19.7 20.1 20.1 9 Nonfinancial business ................................................ 69.9 69.7 76.3 75.7 79.0 64.6 68.1 69.1 74.1 69.1 10 Consumer ..................................................................... 29.9 31.7 34.6 37.7 38.2 31.1 33.0 33.7 34.3 34.2 11 Foreign........................................................................... 2.3 2.6 2.4 2.5 2.5 2.6 2.7 2.8 3.0 3.0 12 Other ............................................................................. 6.6 7.1 7.4 7.5 7.5 6.7 6.6 7.4 7.8 7.2 1. Figures include cash items in process of collection. Estimates of gross deposits . 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 17 large commercial banks, each of which had total assets in domestic offices in each category are described in the June 1971 Bulletin, p. 466. ex eeding $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 M; y 1978 Bulletin. Beginning in March 1979, demand deposit ownership estisample was reduced to 232 banks from 349 banks, and the estimation procedure m< :es 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 ba ks 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 lollars for December 1978 have been constructed for the new large-bank panel; have been constructed using the new smaller sample; financial business, 27.0; fin tncial 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 otl er, 6.8. 1.33 COMMERCIAL PAPER AND BANKERS DOLLAR ACC iPTANCES OUTSTANDING Millions of dollars, end of period 1980 Instrument 1976 1977 Dec. Dec. Apr. May Commercial paper (seasonally adjusted) 1 All issuers ...................... 53,010 83,420 109,395 112,803 116,718 116,446 119,893 120,865 121,011 Financial companies2 Dealer-placed paper3 2 Total ............................ 7,263 12,300 16,765 17,579 17,768 17,308 18,254 18,881 18,526 3 Bank-related .............. 1,900 2,132 3,521 2,958 2,784 3,034 3,010 3,142 3,467 3,591 Directly placed paper4 4 Total ............................ 32,622 40,612 51,755 64,640 64,931 66,342 65,368 64,440 66,088 63,792 5 Bank-related .............. 5,959 7,102 12,314 18,339 17,598 19,221 19,922 19,338 19,143 18,824 6 Nonfinancial companies5 13,125 15,536 19,365 27,990 30,293 32,608 33,770 37,199 35,896 38,693 Ban ers dollar acceptances (not seasonally adjusted) 7 Total ............................................................................... 22,523 25,450 33,700 43,599 45,321 47,780 50,269 49,317 50,177 52,636 Holder 8 Accepting banks........................................................... 10,442 10,434 8,579 8,297 9,865 8,578 9,343 8,159 8,159 9,262 9 Own bills ................................................................... 8,769 8,915 7,653 7,514 8,327 7,692 8,565 7,560 7,488 8,768 10 Bills bought............................................................... 1,673 1,519 927 782 1,538 886 778 598 670 493 Federal Reserve Banks 11 Own account............................................................. 991 954 1 269 704 0 205 171 0 366 12 Foreign correspondents.......................................... 375 362 664 1,465 1,382 1,431 1,417 1,373 1,555 1,718 13 Others ........................................................................... 10,715 13,700 24,456 33,569 33,370' 37,771 39,303' 39,614 40,463 41,290 Basis 14. Imports into United States........................................ 4,992 6,378 8,574 10,354 10,270 11,217 11,393 10,926 10,946 11,651 15 Exports from United States...................................... 4,818 5,863 7,586 9,271 9,640 10,248 11,102 11,001 11,221 11,347 16 All other ....................................................................... 12,713 13,209 17,540 23,974 25,411 26,315 27,774 27,389 28,010 29,637 1. A change in reporting instructions results in offsetting shifts in the dealer- : Includes all financial company paper sold by dealers in the open market. placed and directly placed financial company paper in October 1979. z 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 tor . mercial, savings, and mortgage banking; sales, personal, and mortgage financing; f Includes public utilities and firms engaged primarily in such activities, as factoring, finance leasing, and other business lending; insurance underwriting; and coi imunications, construction, manufacturing, mining, wholesale and retail trade, other investment activities. tra sportation, and reserves. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Financial Statistics □ July 1980 1.35 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per annum Effective date Rate Effective Date Rate Month Average Month Average rate rate 1979—Dec 7 151/4 1980—Apr. 2 ................ 20 1979—Jan............................ 11.75 1979—Oct............................ 14.39 1980—Feb 19 153/4 18 ................ 19to Feb........................... 11.75 Nov........................... 15.55 22 I6V4-I6V2 May 1 .................. 18to—19 Mar........................... 11.75 Dec........................... 15.30 29.................. 163/4 2 .................. isto Apr........................... 11.75 1980—Jan............................. 15.25 Mar. 4 ................ 11 Va 7 .................. nto May ........................ 11.75 Feb............................ 15.63 7 .............. 173/4 16 .................. i6to June........................ 11.65 Mar........................... 18.31 14 ................ 18 to 23 .................. i4to July ........................ 11.54 Apr........................... 19.77 19 ................ 19 30 .................. 14 Aug.......................... 11.91 May ........................ 16.57 28 ................ 19to Sept.......................... 12.90 June........................ 12.23 1.35 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 5-10, 1980 Size of loan (in thousands of dollars) All Item sizes 1,000 1-24 25-49 50-99 100-499 500-999 and over Short-Term Commercial and Industrial Loans 1 Amount of loans (thousands of dollars)...................... 11,316,521 885,614 518,102 697,310 2,159,297 720,502 6,335,696 2 Number of loans ............................................................. 164,331 123,866 15,129 10,596 11,950 1,134 1,656 3 Weighted-average maturity (months) .......................... 2.8 3.2 4.0 3.4 2.7 3.0 2.6 4 Weighted-average interest rate (percent per annum) 17.75 17.90 18.78 18.95 18.49 19.13 17.10 5 Interquartile range1 ..................................................... 15.62-19.82 15.12-20.23 17.72-20.28 17.50-20.99 17.50-19.82 18.50-20.39 14.09-19.59 Percentage of amount of loans 6 With floating rate............................................................. 43.8 23.0 33.2 44.2 33.4 64.5 48.8 7 Made under commitment ............................................... 50.3 26.0 34.7 48.5 47.9 60.6 54.9 8 With no stated maturity................................................. 19.0 13.9 10.7 32.2 14.1 34.5 18.8 Long-Term Commercial and Industrial Loans 9 Amount of loans (thousands of dollars)...................... 1,339,749 171,216 181,145 105,761 881,627 10 Number of loans ............................................................. 15,243 13,992 845 152 254 11 Weighted-average maturity (months) .......................... 42.8 33.9 44.6 42.4 44.2 12 Weighted-average interest rate (percent per annum) 18.37 18.26 18.64 18.62 18.30 13 Interquartile range1 ..................................................... 17.50-20.00 15.00-21.34 17.75-20.50 18.00-20.06 17.51-19.75 Percentage of amount of loans 14 With floating rate............................................................. 74.0 30.1 76.7 69.4 82.5 15 Made under commitment............................................... 71.1 29.4 68.6 71.8 79.7 Construction and Land Development Loans 16 Amount of loans (thousands of dollars)...................... 1,110,511 91,724 114,305 199,312 494,589 210,581 17 Number of loans ............................................................. 16,924 8,317 3,208 2,904 2,292 203 18 Weighted-average maturity (months) .......................... 7.4 3.7 4.3 7.3 8.0 9.5 19 Weighted-average interest rate (percent per annum) 18.32 17.14 15.68 18.69 19.56 16.99 20 Interquartile range1 ..................................................... 17.50-20.40 14.75-19.56 13.10-18.00 18.00-20.48 20.00-20.32 13.00-19.66 Percentage of amount of loans 21 With floating rate............................................................. 71.0 23.2 35.8 48.3 92.4 82.3 22 Secured by real estate..................................................... 94.4 82.0 96.9 97.9 97.5 87.7 23 Made under commitment............................................... 45.1 74.3 64.4 39.7 25.9 72.2 24 With no stated maturity ................................................. 11.9 11.0 10.0 7.2 7.8 27.1 Type of construction 25 1- to 4-family ................................................................... 35.5 77.0 86.0 70.9 8.7 19.5 26 Multifamily ....................................................................... 5.5 1.9 3.3 4.4 5.5 9.5 27 Nonresidential ................................................................. 58.9 21.1 10.7 24.7 85.8 70.9 All 250 sizes 1-9 10-24 25-49 50-99 100-249 and over Loans to Farmers 28 Amount of loans (thousands of dollars)...................... 1,211,479 163,850 168,002 168,990 133,979 241,236 335,423 29 Number of loans ............................................................. 64,652 44,177 11,340 5,257 1,931 1,600 347 30 Weighted-average maturity (months) .......................... 6.6 6.4 6.1 7.0 5.7 5.2 8.7 31 Weighted-average interest rate (percent per annum) 17.38 16.46 16.98 17.10 17.38 17.40 18.14 32 Interquartile range1 ..................................................... 16.64-18.50 14.84-17.81 15.79-18.67 15.56-18.40 16.54-18.68 16.60-18.27 17.24-18.64 By purpose of loan 33 Feeder livestock ............................................................... 17.67 16.35 17.01 17.63 17.74 17.56 17.98 34 Other livestock................................................................. 16.64 16.54 14.89 16.62 17.37 2 2 35 Other current operating expenses................................ 17.49 16.54 17.20 17.45 18.48 17.27 18.61 36 Farm machinery and equipment.................................. 16.44 16.23 16.41 16.64 2 2 2 37 Other ................................................................................. 17.15 16.36 17.28 15.31 15.35 17.36 18.02 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 A ll 1.36 INTEREST RATES Money and Capital Markets Averages, percent per annum 1980 1980, week ending Instrument 1977 1978 1979 Mar. Apr. May June June 6 June 13 June 20 June 27 July 4 Money market rates 1 Federal funds1 ............................................. 9.68 Commercial paper2-3 2 1-month ..................................................... 5.42 7.76 10.86 16.55 16.10 9.60 8.56 9.09 8.32 8.39 8.39 8.75 3 3-month ..................................................... 5.54 7.94 10.97 16.81 15.78 9.49 8.27 8.82 8.11 8.04 8.06 8.44 4 6-month .................................................... 5.60 7.99 10.91 16.50 14.93 9.29 8.03 8.50 7.93 7.78 7.89 8.26 Finance paper, directly placed2-3 5 1-month .................................................... 5.38 7.73 10.78 16.30 15.70 9.30 8.01 8.40 8.03 7.81 7.79 8.12 6 3-month .................................................... 5.49 7.80 10.47 15.36 14.05 9.09 7.59 7.90 7.70 7.42 7.38 7.60 8 7 Pri 6 m -m e o b n a th n ke .. r .. s . .. a .. c .. c .. e .. p .. t . a .. n .. c .. e .. s .. , . .. 9 .. 0 .. - . d .. a .. y .. 3 .. - . 4 . ... . . . .. . 5 5 . . 5 5 0 9 7 8. . 1 7 1 8 1 1 0 1 . . 2 0 5 4 1 1 4 7 . . 7 1 0 0 1 1 3 5 . . 6 6 8 3 9 9 . . 0 6 1 0 7 8 . .3 4 1 2 7 8 . . 8 6 8 8 7 8 . . 4 0 1 6 7 8 . . 1 0 3 8 7 8 . . 2 3 5 3 7 8 . . 6 6 0 6 Certificates of deposit, secondary market5 9 1-month .................................................... 5.48 7.88 11.03 16.81 16.23 9.77 8.53 8.96 8.36 8.31 8.43 8.69 10 3-month .................................................... 5.64 8.22 11.22 17.57 16.14 9.79 8.49 8.92 8.34 8.25 8.41 8.70 11 6-month .................................................... 5.92 8.61 11.44 17.74 15.80 9.78 8.33 8.69 8.07 8.16 8.31 8.85 12 Eurodollar deposits, 3-month6 ................ 6.05 8.74 11.96 18.72 17.81 11.20 9.41 10.08 9.45 8.99 9.25 9.61 U.S. Treasury bills3-7 Secondary market 13 3-month ................................................ 5.27 7.19 10.07 15.20 13.20 8.58 7.07 7.51 6.44 6.76 7.42 7.92 14 6-month ................................................ 5.53 7.58 10.06 15.03 12.88 8.65 7.30 7.77 6.91 6.93 7.48 7.88 15 1-year .................................................... 5.71 7.74 9.75 14.03 11.97 8.66 7.54 7.91 7.23 7.30 7.65 7.86 Auction average8 16 3-month ................................................ 5.265 7.221 10.041 15.526 14.003 9.150 6.995 8.035 6.500 6.369 7.077 8.149 17 6-month ................................................ 5.510 7.572 10.017 15.100 13.618 9.149 7.218 8.165 6.935 6.662 7.108 8.097 Capital market rates U.S. Treasury Notes and Bonds Constant maturities9 18 1-year ...................................................... 6.09 8.34 10.67 15.82 13.30 9.39 8.16 8.56 7.89 7.87 8.23 8.51 19 2-year...................................................... 6.45 8.34 10.12 14.88 12.50 9.45 8.73 9.06 8.58 8.49 8.74 8.94 20 21^-year10 .............................................. 14.65 11.25 9.05 9.00 8.60 9.05 21 3-year ...................................................... 6.69 8.29 9.71 14.05 12.02 9.44 8.91 9.23 8.78 8.64 8.96 9.15 22 5-year....................................................... 6.99 8.32 9.52 13.47 11.84 9.95 9.21 9.58 9.08 8.90 9.23 9.47 23 7-year....................................................... 7.23 8.36 9.48 13.00 11.49 10.09 9.45 9.80 9.32 9.16 9.47 9.74 24 10-year ..................................................... 7.42 8.41 9.44 12.75 11.47 10.18 9.78 10.07 9.66 9.51 9.80 10.11 25 20-year..................................................... 7.67 8.48 9.33 12.49 11.42 10.44 9.89 10.29 9.78 9.59 9.86 10.15 26 30-year..................................................... 8.49 9.29 12.34 11.40 10.36 9.81 10.17 9.70 9.54 9.81 10.06 Composite11 27 3 to 5 years12 ......................................... 6.85 8.30 9.58 13.41 28 Over 10 years (long-term) .................. 7.06 7.89 8.74 11.87 9.31 9.13 State and Local Notes and Bonds Moody’s series13 2 3 9 0 B Aa a a a ... .. .. . . .. .. .. * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 5 . . 1 2 2 0 6 5 . . 2 5 7 2 5 6 . . 9 7 2 3 1 8 0 . . 1 3 6 0 7 9 . . 9 1 5 9 6 8 . .0 8 2 0 7 7 . . 1 9 1 8 7 8 . .0 40 0 7 8 . . 2 0 5 0 6 7 . . 8 8 0 0 7 8 . . 0 10 0 7 8 . . 0 25 0 31 Bond Buyer series14 ................................ 5.68 6.03 6.52 9.17 8.63 7.59 7.63 7.67 7.53 7.55 7.76 7.88 Corporate Bonds 32 Seasoned issues, all industries15............ 8.43 9.07 10.12 13.73 13.21 12.11 11.64 11.95 11.69 11.47 11.47 11.67 By rating group 33 Aaa ......................................................... 8.02 8.73 9.63 12.96 12.04 10.99 10.58 10.88 10.53 10.34 10.53 10.84 34 Aa ........................................................... 8.24 8.92 9.94 13.51 13.06 11.91 11.39 11.86 11.46 11.11 11.14 11.29 35 A ............................................................. 8.49 9.12 10.20 13.97 13.55 12.35 11.89 12.13 11.92 11.81 11.72 11.90 36 Baa........................................................... 8.97 9.45 10.69 14.45 14.19 13.17 12.71 12.92 12.82 12.60 12.48 12.66 Aaa utility bonds16 3 3 7 8 N R e e w ce n i t s l s y u e o ff . e .. r .. e .. d .. .. i . s .. s .. u ... e .. s .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 8 . . 1 1 9 9 8 8 . . 9 9 6 7 1 1 0 0 . . 0 0 2 3 1 1 4 3 . . 0 9 0 0 1 12 2 . . 9 9 1 0 1 1 1 1 . . 5 6 3 4 1101..9060 1 1 1 1 . . 4 2 5 8 1 1 0 0 . . 9 8 1 5 1 1 0 0 . . 5 7 3 9 1 1 0 1 . . 9 0 0 8 1 1 1 1. . 1 5 8 0 Memo: Dividend/price ratio17 39 Preferred stocks..................................... 7.60 8.25 9.07 11.26 11.06 10.20 9.78 10.06 9.85 9.65 9.57 9.79 40 Common stocks ..................................... 4.56 5.28 5.46 5.77 6.05 5.77 5.39 5.56 5.41 5.31 5.29 5.36 1. Weekly figures are seven-day averages of daily effective rates for the week 2, 1980. Each weekly figure shown is calculated on a biweekly basis and is the ending Wednesday; the daily effective rate is an average of the rates on a given average of five business days ending on the Monday following the calendar week. day weighted by the volume of transactions at these rates. Beginning June 2, the biweekly rate is used to determine the maximum interest 2. Beginning November 1977, unweighted average of offering rates quoted by rate payable in the following two-week period on small saver certificates. (See at least five dealers (in the case of commercial paper), or finance companies (in table 1.16.) the case of finance paper). Previously, most representative rate quoted by those 11. Unweighted averages for all outstanding notes and bonds in maturity ranges dealers and finance companies. Before November 1979, maturities for data shown shown, based on daily closing bid prices. “Long-term” includes all bonds neither are 30-59 days, 90-119 days, and 120-179 days for commercial paper; and 30-59 due nor callable in less than 10 years, including several very low yielding “flower” days, 90—119 days, and 150-179 days for finance paper. bonds. 3. Yields are quoted on a bank-discount basis. 12. The three- to five-year series has been discontinued. 4. Average of the midpoint of the range of daily dealer closing rates offered for 13. General obligations only, based on figures for Thursday, from Moody’s domestic issues. Investors Service. 5. Five-day average of rates quoted by five dealers (three-month series was 14. Twenty issues of mixed quality. previously a seven-day average). 15. Averages of daily figures from Moody’s Investors Service. 6. Averages of daily quotations for the week ending Wednesday. 16. Compilation of the Board of Governors of the Federal Reserve System. 7. Except for auction averages, yields are computed from daily closing bid prices. Issues included are long-term (20 years or more). New-issue yields are based on 8. Rates are recorded in the week in which bills are issued. quotations on date of offering; those on recently offered issues (included only for 9. Yield on the more actively traded issues adjusted to constant maturities by first 4 weeks after termination of underwriter price restrictions), on Friday closethe U.S. Treasury, based on daily closing bid prices. of-business quotations. 10. Each monthly figure is an average of only five business days near the end 17. Standard and Poor’s corporate series. Preferred stock ratio based on a sample of the month. The rate for each month was used to determine the maximum of ten issues: four public utilities, four industrials, one financial, and one trans­ interest rate payable in the following month on small saver certificates, until June 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 Financial Statistics □ July 1980 1.37 STOCK MARKET Selected Statistics 1979 1980 Indicator 1977 1978 1979' Dec. Jan.' Feb.' Mar.' Apr.' May' June 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 61.75 63.74 66.05 59.52 58.47 61.38 65.43 2 Industrial ..................................................... 57.84 58.30 61.82 69.82 72.67 76.42 68.71 66.31 69.39 74.47 3 Transportation ........................................... 41.07 43.25 45.20 50.59 52.61 57.92 51.77 48.62 51.07 54.04 4 Utility ........................................................... 40.91 39.23 36.46 37.29 37.08 36.22 33.38 35.29 37.31 38.50 5 Finance ....................................................... 55.23 56.74 58.65 63.21 64.22 61.84 54.71 57.32 61.47 65.16 6 Standard & Poor’s Corporation (1941-43 == 10)1 . 98.18 96.11 98.34 107.78 110.87 115.34 104.69 102.97 107.69 114.55 7 American Stock Exchange (Aug. 31, 1973 = 100) 116.18 144.56 186.56 238.83 259.54 288.99 259.79 242.60 258.45 286.21 Volume of trading (thousands of shares) 8 New York Stock Exchange ........................ 20,936 28,591 32,233 35,510 52,647 47,827 41,736 32,102 36,425 39,518 9 American Stock Exchange .......................... 2,514 3,622 4,182 5,389 9,363 6,903 5,947 3,428 3,799 5,240 Customer financing (end-of-period balances, in millions of dollars) 10 Regulated margin credit at brokers/dealers2 11,035 11,615 11,619' 11,987' 12,638 11,914 11,309 11,441 11 Margin stock3 ................................................... 9,740 10,830 11,450 11,450 11,820 12,460 11,740 11,140 11,270 1 13 2 C Su o b n s v c e r r ip ti t b io le n b is o s n u d e s s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250 3 205 1 164 1 16 2 7 ' ' 16 2 5 ' ' 175 3 171 3 167 2 167 4 Free credit balances at brokers4 14 Margin-account................................................. 640 835 1,050 1,105 1,180 1,320 1,365 1,290 1,270 15 Cash-account..................................................... 2,060 2,510 4,060 4,060 4,680 4,755 5,000 4,790 4,750 Margin-account debt at brokers (percentage distribution, end of period) 16 Total .................................... By equity class (in percent)5 17 Under 40 ............................ 18.0 33.0 16.0 16.0 13.0 16.0 45.0 28.0 19.0 18 40-49 .................................. 36.0 28.0 26.0 31.0 29.0 29.0 22.0 31.0 32.0 2 2 2 1 1 0 2 9 5 6 7 80 0 0 0 - - - o 5 7 6 r 9 9 9 m . . . . . . o . . . . . . r . . . . . . e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1 3 6 5 1 . . . . 0 0 0 0 1 1 6 5 0 8 . . . . 0 0 0 0 2 1 4 8 7 4 . . . . 0 0 0 0 2 1 4 7 8 4 . . . . 0 0 0 0 2 1 5 9 8 6 . . . . 0 0 0 0 2 1 5 9 7 4 . . . . 0 0 0 0 1 9 6 5 3 . . . . 0 0 0 0 1 1 6 7 0 8 . . . . 0 0 0 0 2 1 2 7 7 2 . . . . 0 0 0 0 Special miscellaneous-account balances at brokers (end of period) 23 Total balances (millions of dollars)6 ........................ 9,910 13,092 16,150 16,150' 16,303 16,498 16,687 16,339 16,543 f Distribution by equity status (percent) 1 24 Net credit status........................................................... 43.4 41.3 44.2 44.2 42.8 44.1 45.7 44.3 45.8 n.a. Debt status, equity of 1 25 60 percent or more ................................................. 44.9 45.1 47.0 47.0 49.0 47.4 41.9 44.0 43.6 1 26 Less than 60 percent............................................... 11.7 13.6 8.8 8.8 8.2 8.4 12.4 11.7 10.6 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 pro­ related 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 of 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 1980 Account 1977 1978 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May? Savings and loan associations 1 Assets ............................................................. 459,241 523,542 566,493 570,479 576,251 578,922 579,307 582,252 585,685 589,498 591,108 593,225 2 Mortgages ..................................................... 381,163 432,808 464,609 468,307 472,198 474,678 475,797 476,448 477,303 479,078 480,165 480,026 3 Cash and investment securities' ................ 39,150 44,884 50,007 49,3013 49,220 48,180 46,541 48,473 50,168 50,899 50,576 52,636 4 Other ............................................................. 38,928 45,850 51,877 52,871 54,833 56,064 56,969 57,331 58,214 59,521 60,367 60,563 5 Liabilities and net worth............................ 459,241 523,542 570,479 566,493 576,251 578,922 579,307 582,252 585,685 589,498 591,108 593,225 6 Savings capital ............................................ 386,800 430,953 457,856 462,626 464,489 465,646 470,171 472,236 473,862 478,265 478,591 481,661 7 Borrowed money ........................................ 27,840 42,907 50,437 52,738 54,268 54,433 55,375 55,233 55,276 57,346 57,407 55,265 8 FHLBB .................................................... 19,945 31,990 36,009 37,620 39,223 39,638 40,441 40,364 40,337 42,413 42,724 41,542 9 Other ........................................................ 7,895 10,917 14,428 15,118 15,045 14,795 14,934 14,869 14,939 14,933 14,683 13,723 10 Loans in process.......................................... 9,911 10,721 11,047 10,909 10,766 10,159 9,511 8,735 8,269 8,079 7,660 7,122 11 Other ............................................................ 9,506 9,904 15,712 12,497 14,673 16,324 11,684 13,315 15,385 12,683 14,260 16,192 12 Net worth2.................................................... 25,184 29,057 31,441 31,709 32,055 32,360 32,566 32,733 32,893 33,125 33,190 32,985 13 Memo: Mortgage loan com­ mitments outstanding3 ........................ 19,875 18,911 22,282 22,397 20,930 18,029 16,007 15,559 16,744 15,844 14,193 13,881 Mutual savings banks4 14Assets ............................................................ 14,287 158,174 163,388 163,431 163,133 163,205 163,405 163,252 164,270 165,107 165,366 Loans 15 Mortgage .................................................. 88,195 95,157 97,637 97,973 98,304 98,610 98,908 98,940 99,220 99,151 99,045 16 Other ........................................................ 6,210 7,195 10,430 9,982 9,510 9,449 9,253 9,804 10,044 10,131 10,187 Securities 17 U.S. government5.................................... 5,895 4,959 7,921 7,891 7,750 7,754 7,658 7,387 7,436 7,629 7,548 18 State and local government .................. 2,828 3,333 3,149 3,150 3,100 3,003 2,930 2,887 2,853 2,824 2,791 19 Corporate and other6.............................. 37,918 39,732 37,125 37,076 37,210 37,036 37,086 37,114 37,223 37,493 37,801 20 Cash .............................................................. 2,401 3,665 2,866 3,020 2,909 3,010 3,156 2,703 3,012 3,361 3,405 21 Other assets.................................................. 3,839 4,131 4,260 4,339 4,351 4,343 4,412 4,417 4,481 4,518 4,588 22 Liabilities ...................................................... 147,287 158,174 163,388 163,431 163,133 163,205 163,405 163,252 164,270 165,107 165,366 n.a. 23 Deposits ........................................................ 134,017 142,701 145,713 146,252 145,096 144,828 146,006 145,044 145,171 146,328 145,821 24 Regular7 .................................................... 132,744 141,170 143,731 144,258 143,263 143,064 144,070 143,143 143,284 144,214 143,765 25 Ordinary savings.................................. 78,005 71,816 66,733 65,676 62,672 61,156 61,123 59,252 58,234 56,948 54,247 26 Time and other.................................... 54,739 69,354 76,998 78,572 80,591 81,908 82,947 83,891 85,050 87,266 89,517 27 Other ........................................................ 1,272 1,531 1,982 2,003 1,834 1,764 1,936 1,901 1,887 2,115 2,056 28 Other liabilities............................................ 3,292 4,565 6,350 5,790 6,600 6,872 2,220 2,557 3,127 2,607 2,867 29 General reserve accounts .......................... 9,978 10,907 11,324 11,388 11,437 11,504 163,405 11,544 11,615 11,643 11,629 30Memo: Mortgage loan com­ mitments outstanding8 ........................ 4,066 4,400 4,071 4,123 3.749 3,619 3,182 2,919 2,618 2,397 2,097 Life insurance companies 31 Assets ............................................................ 351,722 389,924 418,350 421,660 423,760 427,496 431,453 436,378 439,119 440,181 443,101 Securities 32 Government ............................................ 19,553 20,009 20,472 20,379 20,429 20,486 20,294 20,281 20,317 20,686 20,612 33 United States9...................................... 5,315 4,822 5,229 5,067 5,075 5,122 4,984 4,896 4,953 5,164 5,202 34 State and local .................................... 6,051 6,402 6,258 6,295 6,339 6,354 6,392 6,417 6,516 6,496 6,404 35 Foreign10 .............................................. 8,187 8,785 8,985 9,017 9,015 9,010 8,918 8,968 8,850 9,026 9,006 n.a. 36 Business ..................................................... 175,654 198,105 215,252 216,500 216,183 217,856 218,284 222,475 223,998 221,466 222,345 37 Bonds ..................................................... 141,891 162,587 176,920 177,698 178,633 179,158 178,828 182,305 183,383 183,088 183,251 38 Stocks ..................................................... 33,763 35,518 38,332 38,802 37,550 38,698 39,456 40,170 40,615 38,378 39,094 39 Mortgages ..................................................... 96,848 106,167 113,102 114,368 115,991 117,253 118,784 120,083 121,100 122,471 123,533 40 Real estate.................................................... 11,060 11,764 12,738 12,740 12,816 12,906 13,047 13,076 13,241 13,480 13,672 41 Policy loans ................................................... 27,556 30,146 32,713 33,046 33,574 34,220 34,761 35,261 35,784 36,839 38,107 42 Other assets................................................... 21,051 23,733 24,073 24,627 24,767 24,775 26,283 25,202 24,677 25,239 24,832 Credit unions 43 Total assets/liabilities and capital .................................................... 53,755 62,348 65,547 66,280 65,063 65,419 65,854 64,506 64,857 65,678 65,190 66,103 44 Federal .......................................................... 29,564 34,760 35,724 36,151 35,537 35,670 35,934 35,228 35,425 36,091 35,834 36,341 45 State .............................................................. 24,191 27,588 29,823 30,129 29,526 29,749 29,920 29,278 29,432 29,587 29,356 29,762 46 Loans outstanding ...................................... 41,845 50,269 52,970 53,545 53,533 56,267 53,125 52,089 51,626 51,337 50,344 49,469 47 Federal ...................................................... 22,634 27,687 28,848 29,129 29,020 30,613 28,698 28,053 27,783 27,685 27,119 26,550 48 State .......................................................... 19,211 22,582 24,122 24,416 24,513 25.654 24,426 24,036 23,843 23,652 23,225 22,919 49 Savings .......................................................... 46,516 53,517 56,583 57,255 55,739 55,797 56,232 55,447 55,790 56,743 56,338 57,197 50 Federal (shares) ...................................... 25,576 29,802 30,761 31,097 30,366 30,399 35,530 30,040 32,256 30,948 30,851 31,403 51 State (shares and deposits).................... 20,940 23,715 25,822 26,158 25,373 25,398 25,702 25,407 25,534 25,795 25,487 25,794 For notes see bottom of page A30. 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A30 Domestic Financial Statistics □ July 1980 1.39 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year Fiscal Fiscal Fiscal Type of account or operation year year year 1978 1979 1980 1977 1978 1979 H2 HI H2 Mar. Apr. May U.S. budget 1 Receipts* ....................................................... 357,762 401,997 465,940 206,275 246,574 233,952 33,351 61,097 36,071 2 Outlays1 ......................................................... 402,725 450,836 493,673 238,186 245,616 263,044 46,566 51,237 50,198 3 Surplus, or deficit(-) ................................ -44,963 -48,839 -27,733 -31,912 958 -29,093 -13,215 9,860 -14,127 4 Trust funds ............................................... 9,497 12,693 18,335 11,754 4,041 9,679 -1,590 -153 6,463 5 Federal funds2........................................... -54,460 -61,532 -46,069 -43,666 -4,999 -38,773 -11,625 10,013 -20,590 Off-budget entities (surplus, or deficit 6 Federal Financing Bank outlays .............. -8,415 -10,661 -13,261 -5,082 -7,712 -5,909 -2,016 1,848 1,827 7 Other3 ........................................................... -269 334 832 1,843 -447 805 -118 24 364 U.S. budget plus off-budget, including Federal Financing Bank 8 Surplus, or deficit (-) .............................. -53,647 -59,166 -40,162 -35,151 -7,201 -34,197 -15,349 8,036 -11,936 Source or financing 9 Borrowing from the public.................... 53,516 59,106 33,641 30,314 6,039 31,320 11,802 4,631 5,350 10 Cash and monetary assets (decrease, or increase (-))*................................... -2,247 -3,023 -408 3,381 -8,878 3,059 3,231 -13,542 9,841 11 Other5 ....................................................... 2,378 3,083 6,929 1,456 10,040 -182 315 875 -3,255 Memo; 12 Treasury operating balance (level, end of period) ................................................... 19,104 22,444 24,176 16,291 17,485 15,924 8,154 18,430 10,662 13 Federal Reserve Banks.......................... 15,740 16,647 6,489 4,196 3,290 4,075 2,334 4,561 4,523 14 Tax and loan accounts............................ 3,364 5,797 17,687 12,095 14,195 11,849 5,820 13,869 6,139 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 2. Half-year figures are calculated as a residual (total surplus/deficit less trust IMF valuation adjustment; and profit on the sale of gold. fund surplus/deficit). 3. Includes Pension Benefit Guaranty Corporation; Postal Service Fund; Rural Source. “Monthly Treasury Statement of Receipts and Outlays of the U.S. Electrification 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 1981. 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 In­ assets.” 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. Beginning April 1979, includes obligations of U.S. government agencies. Life insurance companies: Estimates of the American Council of Life Insurance Before 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 Fiscal Fiscal Fiscal Source or type year year vear 1978 1979 1980 1977 1978 1979 H2 HI H2 Mar. Apr. May Receipts 1 All sources1 .................................................. 357,762 401,997 465,940 206,275 246,574 233,952 33,351 61,097 36,071 2 Individual income taxes, net .................... 157,626 180,988 217,841 98,854 111.603 115,488 9,056 31,488 9,275 3 Withheld .................................................. 144,820 165,215 195,295 90,148 98,683 105.764 18,077 17,136 18,104 4 Presidential Election Campaign Fund . 37 39 36 3 32 3 9 7 7 5 Nonwithheld ............................................ 42,062 47,804 56,215 10,777 44,116 12,355 2,998 24,937 2,101 6 Refunds1 .................................................. 29,293 32,070 33,705 2,075 31,228 2,634 12.027 10,592 10,937 Corporation income taxes 7 Gross receipts .......................................... 60,057 65,380 71,448 28,536 42,427 29.169 10.255 10,244 1,866 8 Refunds .................................................... 5,164 5,428 5,771 2,757 2,889 3.306 747 1,073 635 9 Social insurance taxes and contributions. net .......................................................... 108,683 123,410 141,591 61,064 75,609 71,031 11.499 15.886 20,787 10 Payroll employment taxes and contributions2 .................................. 88,196 99,626 115,041 51,052 59.298 60,562 10.346 10,122 15,376 11 Self-employment taxes and contributions3 .................................. 4,014 4,267 5,034 369 4,616 417 401 3,545 376 12 Unemployment insurance ...................... 11,312 13,850 15,387 6,727 8,623 6,899 208 1,646 4,495 13 Other net receipts4.................................. 5,162 5,668 6,130 2.917 3,072 3.149 544 573 540 14 Excise taxes.................................................. 17,548 18,376 18,745 9,879 8,984 9,675 1,289 2,269 2,502 15 Customs deposits ........................................ 5,150 6,573 7,439 3,748 3,682 3,741 584 559 557 16 Estate and gift taxes .................................. 7,327 5,285 5,411 2,691 2,657 2,900 494 459 623 17 Miscellaneous receipts5 .............................. 6,536 7,413 9,237 4,260 4,501 5,254 920 1.265 1,098 Outlays 18 All types1 ...................................................... 402,725 450,836 493,673 238,186 245,616 263,044 46,566 51,237 50,198 19 National defense.......................................... 97,501 105,186 117,681 55,124 57,643 62.002 11.742 11,593 11,543 20 International affairs .................................... 4,813 5,922 6,091 2,060 3,538 4,617 1,048 837 648 21 General science, space, and technology .. 4,677 4,,742 5,041 2,383 2,461 3,299 526 508 516 22 Energy .......................................................... 4,172 5,861 6,856 4,279 4,417 3,281 311 625 624 23 Natural resources and environment ........ 10,000 10,925 12,091 6,020 5,672 7,350 970 1,123 1,130 24 Agriculture .................................................. 5,532 7.731 6,238 4,967 3,020 1,709 340 156 478 25 Commerce and housing credit .................. -44 3,324 2,565 3,292 60 3,002 579 696 1,133 26 Transportation ............................................ 14,636 15,445 17,459 8,740 7,688 10,298 1.469 1,655 1,419 27 Community and regional development ... 6,348 11,039 9,482 5,844 4,499 4,855 611 718 836 28 Education, training, employment, social services .................................................. 20,985 26,463 29,685 14,247 14,467 14.579 2.727 2,861 2,521 29 Health .......................................................... 38,785 43,676 49,614 23,830 24,860 26,492 4,745 5,094 4,970 30 Income security1 .......................................... 137,915 146,212 160,198 73,127 81,173 86,007 15.792 16,456 16,115 31 Veterans benefits and services.................. 18,038 18,974 19,928 9,532 10,127 10,113 746 2,006 2,795 32 Administration of justice .......................... 3,600 3,802 4,153 1,989 2,096 2,174 367 417 397 33 General government .................................. 3,312 3,737 4,153 2,304 2,291 2,103 616 229 382 34 General-purpose fiscal assistance ............ 9,499 9,601 8,372 4,610 3,890 4,286 61 1,739 238 35 Interest6 ........................................................ 38,009 43,966 52,556 24,036 26,934 29,045 4,630 5,177 5,299 36 Undistributed offsetting receipts6-7 .......... - 15,053 -15,772 - 18,489 -8,199 -8,999 -12,164 -714 -654 845 1. Effective June 1978. earned income credit payments in excess of an indi­ 6. Effective September 1976, ‘interest’’ and “Undistributed offsetting receipts" vidual’s tax liability, formerly treated as income tax refunds, are classified as reflect the accounting conversion for the interest on special issues for U.S. gov­ outlays retroactive to January 1976. ernment 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 1981. ceipts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Financial Statistics □ July 1980 1.41 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1977 1978 1979 1980 Item Dec. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31. Mar. 31 1 Federal debt outstanding.................................................... 729.2 758.8 780.4 797.7 804.6 812.2 833.8 852.2 870.4 2 Public debt securities........................................................... 718.9 749.0 771.5 789.2 796.8 804.9 826.5 845.1 863.5 3 Held by public ................................................................. 564.1 587.9 603.6 619.2 630.5 626.4 638.8 658.0 677.1 4 Held by agencies ............................................................. 154.8 161.1 168.0 170.0 166.3 178.5 187.7 187.1 186.3 5 Agency securities ................................................................. 10.2 9.8 8.9 8.5 7.8 7.3 7.2 7.1 7.0 6 Held by public ................................................................. 8.4 8.0 7.4 7.0 6.3 5.9 5.8 5.6 5.5 7 Held by agencies ............................................................. 1.8 1.8 1.5 1.5 1.5 1.5 1.5 1.5 1.5 8 Debt subject to statutory limit.......................................... 720.1 750.2 772.7 790.3 797.9 806.0 827.6 846.2 864.5 9 Public debt securities........................................................... 718.3 748.4 770.9 788.6 796.2 804.3 825.9 844.5 862.8 10 Other debt1 ........................................................................... 1.7 1.8 1.8 1.7 1.7 1.7 1.7 1.7 1.7 11 Memo. Statutory debt limit .............................................. 752.0 752.0 798.0 798.0 798.0 830.0 830.0 879.0 879.0 1. Includes guaranteed debt of government agencies, specified participation Note. Data from Treasury Bulletin (U.S. Treasury Department), certificates, 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 1980 Type and holder 1976 1977 1978 1979 Feb. Mar. Apr. May June 1 Total gross public debt ....................................................... 653.5 718.9 789.2 845.1 854.6 863.5 870.0 877.9 877.6 By type 2 Interest-bearing debt ........................................................... 652.5 715.2 782.4 844.0 853.4 862.2 868.9 873.5 876.3 3 Marketable ........................................................................... 363.2 459.9 487.5 530.7 540.6 557.5 564.9 567.6 566.7 4 Bills ................................................................................... 164.0 161.1 161.7 172.6 177.4 190.8 195.3 195.4 184.7 5 Notes ................................................................................. 216.7 251.8 265.8 283.4 286.8 290.4 291.8 291.5 301.5 6 Bonds ................................................................................. 40.6 47.0 60.0 74.7 76.4 76.3 77.7 80.6 80.6 7 Nonmarketable1 ................................................................... 231.2 255.3 294.8 313.2 312.7 304.7 304—.0 306—.0 309—.5 8 Convertible bonds2 ......................................................... 2.3 2.2 2.2 2.2 2.2 2.2 9 State and local government series................................ 4.5 13.9 24.3 24.6 24.5 23.9 23.7 23.6 23.6 10 Foreign issues3 ................................................................. 22.3 22.2 29.6 28.8 29.6 26.9 26.3 25.9 25.2 11 Government ................................................................. 22.3 22.2 28.0 23.6 23.2 20.5 19.8 19.5 21.0 12 Public ............................................................................. 0 0 1.6 5.3 6.4 6.4 6.4 6.4 4.2 13 Savings bonds and notes................................................ 72.3 77.0 80.9 79.9 77.7 76.0 74.2 73.6 73.4 14 Government account series4.......................................... 129.7 139.8 157.5 177.5 178.4 175.5 179.7 182.6 186.8 15 Non-interest-bearing debt................................................... 1.1 3.7 6.8 1.2 1.2 1.2 1.1 4.4 1.3 By holder5 16 U.S. government agencies and trust funds.................... 147.1 154.8 170.0 187.1 189.3' 186.2' 188.2 17 Federal Reserve Banks....................................................... 97.0 102.5 109.6 117.5 115.2 116.7 118.8 18 Private investors................................................................... 409.5 461.3 508.6 540.5 551.6 560.5' 563.0 19 Commercial banks ............................................................... 103.8 101.4 93.4 97.0 97.8 99.3 99.2 20 Mutual savings banks ........................................................ 5.9 5.9 5.2 4.2 4.0 4.2 4.1 21 Insurance companies ........................................................... 12.7 15.1 15.0 14.4 14.3 14.5 14.2 22 Other companies ................................................................. 27.7 22.7 20.6 23.9 23.6 25.7 25.7 n.a. n.a. 23 State and local governments ............................................ 41.6 55.2 68.6 68.2 72.1 74.6 73.9 Individuals 24 Savings bonds ................................................................... 72.0 76.7 80.1 79.9 77.7' 76.0 74.2 25 Other securities ............................................................... 28.8 28.6 33.7 34.2 36.7 40.7 43.8 26 Foreign and international6 ................................................ 78.1 109.6 120.6 123.8 124.8 119.8 116.4 27 Other miscellaneous investors7 ........................................ 38.9 46.1 88.3 94.8 100.5 105.7' 111.5 1. Includes (not shown separately): Securities issued to the Rural Electrification 6. Consists of the investments of foreign balances and international accounts in Administration, depository 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 pen­ be 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 (line 5). 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 1980 1980 Type of holder 1978 1979 1978 1979 Mar. Apr. Mar. Apr. All maturities 1 to 5years 1 AH holders............................................................................................. 487,546 530,731 557,493 564,869 162,886 164,198 169,599 178,231 2 U.S. government agencies and trust funds.................................... 12.695 11,047 10,800 10,760 3,310 2.555 2,281 2,241 3 Federal Reserve Banks....................................................................... 109,616 117,458 116,657 118,825 31,283 28.469 29,803 31,036 4 Private investors.................................................................................. 365.235 402,226 430,036 435,284 128,293 133,173 137,515 144,954 5 Commercial banks .......................................................................... 68.890 69,076 69,266 67,715 38,390 38.346 39,149 39,019 6 Mutual savings banks .................................................................... 3.499 3.204 3,172 3,121 1.918 1.668 1,603 1,609 11,635 11,496 11.666 11,425 4,664 4.518 4,296 4,340 8 Nonfinancial corporations ............................................................ 8,272 8,433 8,328 8,327 3,635 2.844 2,173 2,880 9 Savings and loan associations ...................................................... 3.835 3,209 3,057 3,049 2,255 1.763 1,728 1,770 10 State and local governments ........................................................ 18,815 15,735 18,747 17,695 3,997 3.487 4,434 4,181 11 All others ......................................................................................... 250,288 291,072 315,799 323,950 73,433 80.546 84,131 91,154 Total, within 1 year 5 to 10 years 12 All holders............................................................................................. 228,516 255,252 271,642 268,964 50,400 50,440 53,822 53,790 13 U.S. government agencies and trust funds.................................... 1,488 1,629 1,363 1,363 1,989 871 1,650 1,650 14 Federal Reserve Banks...................................................................... 52,801 63,219 61,737 62,601 14,809 12.977 12,021 12,029 15 Private investors................................................................................... 174,227 190,403 208,542 205,000 33,601 36.592 40,151 40,111 16 Commercial banks .......................................................................... 20,608 20.171 20,108 18,752 7,490 8.086 7,583 7,451 17 Mutual savings banks .................................................................... 817 836 839 786 496 459 473 485 18 Insurance companies...................................................................... 1.838 2,016 1,976 1,730 2,899 2.815 3,197 3,170 19 Nonfinancial corporations ............................................................ 4.048 4,933 4.905 4,126 369 308 387 393 20 Savings and loan associations ...................................................... 1,414 1,301 1,178 1,051 89 69 93 160 21 State and local governments ........................................................ 8.194 5,607 7,060 6,145 1,588 1.540 1,953 1,959 22 All others ......................................................................................... 137,309 155,539 172,472 172,409 20,671 23.314 26,464 26,493 Bills, within 1 year 10 to 20 years 23 All holders............................................................................................. 161,747 172,644 190,780 195,296 19,800 27,588 29,300 30,754 24 U.S. government agencies and trust funds.................................... 2 0 1 3,876 4.520 3,772 3,772 25 Federal Reserve Banks...................................................................... 42.397 45,337 43,939 46,335 2,088 3.272 3,803 3,842 26 Private investors................................................................................... 119.348 127,306 146,841 148,960 13,836 19.796 21,725 23,140 27 Commercial banks .......................................................................... 5,707 5,938 6,576 6,693 956 993 1,077 1,139 28 Mutual savings banks .................................................................... 150 262 207 182 143 127 172 172 29 Insurance companies ...................................................................... 753 473 584 379 1,460 1.305 1,242 1,259 30 Nonfinancial corporations ............................................................ 12 2,793 3,053 2,294 86 218 348 380 31 Savings and loan associations ...................................................... 262 219 269 211 60 58 44 54 32 State and local governments ........................................................ 5,524 3,100 4.110 4,007 1,420 1.762 2,007 2,231 33 All others ......................................................................................... 105,161 114,522 132.041 135,195 9,711 15.332 16,834 17,907 Other, within 1 year Over 20 years 34 All holders............................................................................................. 66,769 82,608 80,862 73,668 25,944 33,254 33,130 33,130 35 U.S. government agencies and trust funds.................................... 1.487 1,629 1,363 1,362 2,031 1.472 1,734 1,734 36 Federal Reserve Banks....................................................................... 10.404 17,882 17.799 16,266 8,635 9.520 9,293 9,318 37 Private investors................................................................................... 54.879 63,097 61.701 56,040 15,278 22.262 22,104 22,079 38 Commercial banks ........................................................................... 14,901 14,233 13,532 12,059 1,446 1.470 1,350 1,354 39 Mutual savings banks ..................................................................... 667 574 631 604 126 113 85 69 40 Insurance companies ....................................................................... 1,084 1,543 1,392 1.351 774 842 954 927 41 Nonfinancial corporations ............................................................ 2,256 2,140 1,852 1,833 135 130 515 548 42 Savings and loan associations ....................................................... 1,152 1,081 909 841 17 19 14 13 43 State and local governments ......................................................... 2,670 2,508 2.950 2,138 3,616 3.339 3,293 3,180 44 All others ......................................................................................... 32,149 41,017 40,435 37,214 9,164 16.340 15,893 15,988 Note. Direct public issues only. Based on Treasury Survey of Ownership from 460 mutual savings banks, and 723 insurance companies, each about 80 percent; Treasury Bulletin (U.S. Treasury Department). (2) 416 nonfinancial corporations and 481 savings and loan associations, each about Data complete for U.S. government agencies and trust funds and Federal Re­ 50 percent; and (3) 492 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 Apr. 30, 1980: (1) 5,368 commercial banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic Financial Statistics □ July 1980 1.44 U.S. GOVERNMENT SECURITIES DEALERS Transactions Par value; averages of daily figures, in millions of dollars 1980 1980, week ending Wednesday Feb. Mar. Apr Feb. 27 Mar. 5 Mar. 12 Mar. 19 Mar. 26 Apr. 2 1 U.S. government securities 10,838 10,285 13,183 17,508 17,352 19,725 17,427 17,997 15,430 15,267 19,629 20,826 By maturity 2 Bills............................ 6,746 6,173 7,915'' 9,714 11,723 12,885 9,214 11,499 10,082 10,524 12,927 15,264 3 Other within 1 year 237 392 454 357 380 372 288 352 376 305 422 493 4 1-5 years ................ 2,320 1,889 2,417 3,678 2,780 3,610 4,018 2,768 2,072 2,111 3,977 3,059 5 5-10 years .............. 1,148 965 1,121 2,006 1,339 1,138 2,433 2,030 1,635 1,330 1,211 899 6 Over 10 years........ 867 1,276 1,753 1,130 1,720 1,474 1,348 1,265 997 1,092 1,112 By type of customer 7 U.S. government securities dealers ........................ 1,268 1,135 1,448 1,363 1,384 1,492 1,917 1,637 8 U.S. government securities brokers ........................ 3,709 3,838 5,170 7,399 6,934 8,128 6,965 7,133 6,213 6,055 7,971 7,949 9 Commercial banks ............ 2,294 1,804 1,905 2,243 2,313 2,875 1,934 2,220 1,807 2,077 2,637 3,052 10 All others1 .......................... 3,567 3,508 4,660 6,504 6,614 7,115 7,144 7,504 5,918 5,633 7,105 8,190 11 Federal agency securities 1,644 1,685 2,724 3,049 2,773 2,638 3,490 3,357 1. Includes, among others, all other dealers and brokers in commodities and Transactions are market purchases and sales of U.S. government securities deal­ securities, 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 1980 1979 and 1980, week ending Wednesday 1977 1978 1979 Feb. Apr. Feb. 6 Feb. 13 Feb. 20 Feb. 27 Mar. 5 Mar. 12 Positions1 1 U.S. government securities 5,172 2,656 3,223 2,729 2,341 8,036 4,128 3,327 1,742 2,481 2,453 2,794 2 Bills...................................... 4,772 2,452 3,813 2,939 3,000 7,870 5,009 3,200 2,175 2,327 2,743 3,778 3 Other within 1 year.......... 99 260 -325 -792 -764 -108 -924 -829 -693 -735 -689 -672 4 1-5 years ............................ 60 -92 -455 28 -518 683 83 5 -355 428 -532 -995 5 5-10 years .......................... 92 40 160 327 336 61 -1135 658 320 271 623 390 6 Over 10 years .................... 149 -4 30 226 286 505 94 292 295 191 307 292 7 Federal agency securities .. 693 606 1,471 236 284 1,207 785 396 77 -23 44 -36 Financing2 8 All sources .................................... 9,877 10,204 16,003 15,997 14,236 19,829 17,378 16,447 15,769 15,055 15,068 16,953 Commercial banks 9 New York City........................ 1,313 599 1,396 749 -297 574 1,254 987 428 555 580 520 10 Outside New York City.......... 1,987 2,174 2,868 3,661 3,414 4,215 4,225 3,530 3,631 3,563 3,332 3,752 11 Corporations3 .............................. 2,358 2,379 3,373 3,731 3,205 4,387 3,901 4,134 3,840 3,289 3,168 3,690 12 All others...................................... 4,158 5,052 4,104 7,856 7,913 10,653 7,918 7,797 7,870 7,648 7,988 8,991 1. Net amounts (in terms of par values) of securities owned by nonbank dealer agency securities (through both collateral loans and sales under agreements to firms and dealer departments of commercial banks on a commitment, that is, repurchase), plus internal funds used by bank dealer departments to finance po­ trade-date basis, including any such securities that have been sold under agree­ sitions in such securities. Borrowings against securities held under agreeement to ments to repurchase. The maturities of some repurchase agreements are sufficiently resell are excluded when the borrowing contract and the agreement to resell are long, however, to suggest that the securities involved are not available for trading equal in amount and maturity, that is, a matched agreement. purposes. 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 1980 Agency 1976 1977 1978 Nov. Dec. Jan. Feb. Mar. Apr. 1 Federal and federally sponsored agencies1 ...................... 103,848 112,472 137,063 161,653 163,290 165,819 167,813 173,216 176,880 2 Federal agencies................................................................... 22,419 22,760 23,488 24,224 24,715 24,883 25,013 25,583 25,776 3 Defense Department2 .................................................... 1,113 983 968 748 738 729 719 709 688 4 Export-Import Bank3-4 .................................................. 8,574 8,671 8,711 8,812 9,191 9,176 9,144 9,627 9,615 5 Federal Housing Administration5 ................................ 575 581 588 545 537 539 546 550 537 6 Government National Mortgage Association participation certificates6 ...................................... 4,120 3,743 3,141 3,004 2,979 2,979 2,979 2,979 2,937 7 Postal Service7 ................................................................. 2,998 2,431 2,364 1,837 1,837 1,837 1,837 1,837 1,837 8 Tennessee Valley Authority.......................................... 4,935 6,015 7,460 8,825 8,997 9,182 9,347 9,440 9,695 9 United States Railway Association7............................ 104 336 356 453 436 441 441 441 467 10 Federally sponsored agencies1 .......................................... 81,429 89,712 113,575 137,429 138,575 140,936 142,800 147,633 151,104 11 Federal Home Loan Banks .......................................... 16,811 18,345 27,563 33,296 33,330 33,122 33,102 35,309 36,352 12 Federal Home Loan Mortgage Corporation .............. 1,690 1,686 2,262 2,621 2,771 2,769 2,764 2,644 2,643 13 Federal National Mortgage Association...................... 30,565 31,890 41,080 47,278 48,486 49,031 50,139 51,614 52,456 14 Federal Land Banks ...................................................... 17,127 19,118 20,360 16,006 16,006 15,106 15,106 15,106 13,940 15 Federal Intermediate Credit Banks ............................ 10,494 11,174 11,469 2,676 2,676 2,144 2,144 2,144 2,144 16 Banks for Cooperatives ................................................ 4,330 4,434 4,843 584 584 584 584 584 584 17 Farm Credit Banks1 ............................................ 2,548 5,081 33,547 33,216 36,584 37,240 38,446 41,039 18 Student Loan Marketing Association8........................ 410 515 915 1,420 1,505 1,595 1,720 1,785 1,945 19 Other ................................................................................. 2 2 2 1 1 1 1 1 1 Memo: 20 Federal Financing Bank debt7’9........................................ 28,711 38,580 51,298 66,281 67,383 68,294 69,268 71,885 74,009 Lending to federal and federally sponsored agencies 21 Export-Import Bank4 ........................................................ 5,208 5,834 6,898 7,953 8,353 8,353 8,353 8,849 8,849 22 Postal Service7 .................................................................... 2,748 2,181 2,114 1,587 1,587 1,587 1,587 1,587 1,587 23 Student Loan Marketing Association8............................ 410 515 915 1,420 1,505 1,595 1,720 1,785 1,945 24 Tennessee Valley Authority.............................................. 3,110 4,190 5,635 7,100 7,272 7,457 7,622 7,715 7,970 25 United States Railway Association7................................ 104 336 356 453 436 441 441 441 467 Other Lending10 26 Farmers Home Administration ........................................ 10,750 16,095 23,825 31,950 32,050 32,145 32,565 33,410 34,755 27 Rural Electrification Administration .............................. 1,415 2,647 4,604 6,272 6,484 6,701 6,874 7,039 7,155 28 Other ..................................................................................... 4,966 6,782 6,951 9,546 9,696 10,015 10,106 11,059 11,281 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 As­ consolidated 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 par­ curities 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 □ July 1980 1.47 NEW SECURITY ISSUES of State and Local Governments Millions of dollars 1979 1980 Type of i o s r s u u e s e or issuer, 1977 1978 1979 Sept. Oct. Nov. Dec. Jan.? Feb.? 1 All issues, new and refunding1 ....................................................... 46,769 48,607 43,490 2,479 4,229 4,172 3,583 3,013 2,350 Type of issue 2 General obligation ........................................................................... 18,042 17,854 12,109 699 1,037 805 855 1,151 987 3 Revenue ........................................................................................... 28,655 30,658 31,256 1,773 3,180 3,355 2,712 1,856 1,353 4 Housing Assistance Administration2 .......................................... 5 U.S. government loans................................................................... 72 95 125 7 12 12 16 6 10 Type of issuer 6 State ................................................................................................... 6,354 6,632 4,314 113 294 274 569 699 327 7 Special district and statutory authority ...................................... 21,717 24,156 23,434 1,404 2,749 2,697 2,102 1,379 1,202 8 Municipalities, counties, townships, school districts................ 18,623 17,718 15,617 955 1,174 1,189 896 929 811 9 Issues for new capital, total .......................................................... 36,189 37,629 41,505 2,436 4,171 3,702 3,186 3,000 2,340 Use of proceeds 10 Education ......................................................................................... 5,076 5,003 5,130 218 311 298 408 220 366 11 Transportation ................................................................................. 2,951 3,460 2,441 38 562 97 214 172 176 12 Utilities and conservation............................................................... 8,119 9,026 8,594 336 1,426 515 409 547 326 13 Social welfare ................................................................................... 8,274 10,494 15,968 1,082 1,191 2,042 1,724 1,285 1,050 14 Industrial aid ................................................................................... 4,676 3,526 3,836 382 427 369 157 51 68 15 Other purposes................................................................................. 7,093 6,120 5,536 380 254 381 274 725 354 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 contri­ butions to tne local authority. 1.48 NEW SECURITY ISSUES of Corporations Millions of dollars 1979" 1980 Type of issue or issuer. 1977 1978 1979r Sept. Oct. Nov. Dec. Jan/ Feb/ Mar. 1 All issues1 ..................................................................... 53,792 47,230 51,464 4,587 4,601 3,831 3,801 6,210 4,452 4,353 2 Bonds ............................................................................. 42,015 36,872 40,139 3,300 3,572 2,612 2,475 4,834 2,856 2,771 Type of offering 3 Public ............................................................................. 24,072 ‘ 19,815 25,814 2,167 2,669 1,583 1,500 2,450 1,426 1,985 4 Private placement ....................................................... 17,943 17,057 14,325 1,133 903 1,029 975 2,384 1,430 786 Industry group 5 Manufacturing ............................................................. 12,204 9,572 9,667 1,147 1,336 319 308 943 960 693 6 Commercial and miscellaneous ................................ 6,234 5,246 3,941 412 221 207 375 634 262 215 7 Transportation ............................................................. 1,996 2,007 3,102 213 295 289 194 431 227 94 8 Public utility ................................................................. 8,262 7,092 8,118 670 1,124 658 763 1,338 635 1,423 9 Communication ........................................................... 3,063 3,373 4,219 418 435 854 74 483 533 196 10 Real estate and financial............................................ 10,258 9,586 11,095 440 161 287 762 1,006 238 152 11 Stocks ............................................................................. 11,777 10,358 11,325 1,287 1,029 1,219 1,326 1,376 1,596 1,582 Type 12 Preferred ....................................................................... 3,916 2,832 3,574 698 195 443 282 287 88 525 13 Common ....................................................................... 7,861 7,526 7,751 589 834 776 1,044 1,089 1,508 1,057 Industry group 14 Manufacturing ............................................................. 1,189 1,241 1,679 394 151 158 224 333 380 598 15 Commercial and miscellaneous ................................ 1,834 1,816 2,623 218 98 286 430 313 426 404 16 Transportation ............................................................. 456 263 255 4 2 59 58 36 17 Public utility ................................................................. 5,865 5,140 5,171 527 662 607 365 535 627 408 18 Communication ........................................................... 1,379 264 303 83 47 2 1 39 27 19 Real estate and financial............................................. 1,049 1,631 1,293 61 70 165 306 135 65 109 1. Figures, which represent gross proceeds of issues maturing in more than one 1933, employee stock plans, investment companies other than closed-end, intra­ year, 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 $10(),0(X), 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 1980 Item 1978 1979 Nov. Dec. Jan. Feb. Mar. Apr.' May Investment Companies' 1 Sales of own shares2 ........................................................... 6,645 7,495 690 748 957 773 723 1,010 1,175 2 Redemptions of own shares3 ............................................ 7,231 8,393 579 743 776 882 892 762 647 3 Net sales ............................................................................... -586 -898 111 5 181 - 109 -169 248 528 4 Assets4 ................................................................................... 44,980 49,493 48,613 49,277 51,278 49,512 44,581 47,270 50,539 5 Cash position5.................................................................. 4,507 4,983 4,984 4,983 5,702 5,895 5.644 5,862 6,200 6 Other ................................................................................. 40,473 44,510 43,629 44,294 45,576 43,617 38,937 41.708 44,339 1. Excluding money market funds. 5. Also includes all U.S. government securities and other short-term debt se­ 2. Includes reinvestment of investment income dividends. Excludes reinvest­ curities. ment of capital gains distributions and share issue of conversions from one fund to another in 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 Se­ other 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 1980 Account 1977 1978 1979 03 04 01 02 03 04 Ql 1 Profits before tax ........................................................ 177.1 206.0 236.6 212.0 227.4 233.3 227.9 242.3 243.0 257.1 2 Profits tax liability ...................................................... 72.6 84.5 92.5 87.5 95.1 91.3 88.7 94.0 96.1 101.7 3 Profits after tax .......................................................... 104.5 121.5 144.1 124.5 132.3 142.0 139.3 148.3 146.9 155.4 4 Dividends ................................................................. 42.1 47.2 52.7 47.8 49.7 51.5 52.3 52.8 54.4 56.7 5 Undistributed profits .............................................. 62.4 74.3 91.4 76.8 82.6 90.5 87.0 95.5 92.5 98.7 6 Capital consumption allowances .............................. 109.3 119.8 131.0 120.6 123.1 125.5 130.4 132.8 135.2 137.4 7 Net cash flow ............................................................... 171.7 194.1 222.4 197.3 205.7 216.0 217.3 228.3 227.7 236.1 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 Financial Statistics □ July 1980 1.51 NONFINANCIAL CORPORATIONS Current Assets and Liabilities Billions of dollars, except for ratio 1978 1979 Account 1975 1976 1977 Q2 Q3 Q4 Ql Q2 Q3 Q4 1 Current assets............................................................... 759.0 826.3 900.9 954.2 992.6 1,028.1 1,078.6 1,110.6 1,169.6 1,199.9 2 Cash ............................................................................... 82.1 87.3 94.3 91.3 91.7 103.7 102.4 100.1 103.6 116.2 3 U.S. government securities ...................................... 19.0 23.6 18.7 17.3 16.1 17.8 19.2 20.8 17.8 17.8 4 Notes and accounts receivable.................................. 272.1 293.3 325.0 356.0 376.4 381.9 405.3 419.0 448.9 451.7 5 Inventories ................................................................... 315.9 342.9 375.6 399.3 415.5 428.3 452.6 469.2 492.7 503.9 6 Other ............................................................................. 69.9 79.2 87.3 90.3 92.9 96.3 99.1 101.5 106.7 110.3 7 Current liabilities ......................................................... 451.6 492.7 546.8 593.5 626.0 661.9 701.6 723.9 773.7 803.7 8 Notes and accounts payable ...................................... 264.2 282.0 313.7 338.0 356.2 375.1 392.6 410.8 443.1 460.8 9 Other ............................................................................. 187.4 210.6 233.1 255.6 269.7 286.8 309.0 313.2 330.6 342.8 10 Net working capital ..................................................... 307.4 333.6 354.1 360.6 366.6 366.2 377.0 386.7 395.9 396.3 11 Memo: Current ratio 1 ............................................... 1.681 1.677 1.648 1.608 1.586 1.553 1.537 1.534 1.512 1.493 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. 1979 1980 Industry 1978 01 02 03 04 Ql Q22 Q32 Q42 1 All industries.......................... 177.09 165.94 173.48 179.33 Manufacturing 2 Durable goods industries ... 31.66 38.23 34.00 36.86 39.72 41.30 42.30 42.18 43.70 44.06 3 Nondurable goods industries 35.96 40.69 37.56 39.56 40.50 43.88 45.01 44.64 47.28 48.07 Nonmanufacturing 4 Mining .................................... 6.14 Transportation 5 Railroad .............................. 3.32 3.93 4.02 3.66 4.03 4.20 4.40 3.80 3.58 4.16 6 Air ...................................... 2.30 3.24 3.35 3.26 3.10 3.39 2.98 4.33 4.23 3.47 7 Other .................................. 2.43 2.95 2.71 2.79 3.16 3.15 2.94 3.03 3.17 3.58 Public utilities 8 Electric................................ 29.48 32.56 27.70 28.06 28.32 26.02 28.78 27.43 27.02 25.98 9 Gas and other.................... 4.70 5.07 4.66 5.18 5.01 5.50 5.57 5.44 5.69 6.19 10 Communication .................... 18.16 20.56 18.75 20.29 20.41 22.71 22.48 11 Commercial and other1 ........ 25.71 29.35 27.73 28.51 29.66 30.72 30.86 1. Includes trade, service, construction, finance, and insurance. ture; real estate operators; medical, legal, educational, and cultural service; and 2. Anticipated by business. nonprofit organizations. Note. Estimates for corporate and noncorporate business, excluding agricul- 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 1979 1980 Account 1974 1975 1976 1977 1978 01 02 03 04 01 Assets Accounts receivable, gross 1 Consumer ............................................................................ 36.1 36.0 38.6 44.0 52.6 54.9 58.7 62.3 65.7 67.7 2 Business ................................................................................. 37.2 39.3 44.7 55.2 63.3 66.7 70.1 68.1 70.3 70.6 3 Total ................................................................................... 73.3 75.3 83.4 99.2 116.0 121.6 128.8 130.4 136.0 138.4 4 Less: Reserves for unearned income and losses ... 9.0 9.4 10.5 12.7 15.6 16.5 17.7 18.7 20.0 20.4 5 Accounts receivable, net................................................. 64.2 65.9 72.9 86.5 100.4 105.1 111.1 111.7 116.0 118.0 6 Cash and bank deposits ................................................. 3.0 2.9 2.6 2.6 3.5 7 Securities .............................................................................. .4 1.0 1.1 .9 1.3 23.8' 24.6 25.8 24.9 23.7 8 All other .............................................................................. 12.0 11.8 12.6 14.3 17.3 9 Total assets .................................................................. 79.6 81.6 89.2 104.3 122.4 128.9 135.8 137.4 140.9 141.7 Liabilities 10 Bank loans .......................................................................... 9.7 8.0 6.3 5.9 6.5 6.5 7.3 7.8 8.5 9.7 11 Commercial paper ............................................................. 20.7 22.2 23.7 29.6 34.5 38.1 41.0 39.2 43.3 40.8 Debt 12 Short-term, n.e.c.............................................................. 4.9 4.5 5.4 6.2 8.1 6.7 8.8 9.1 8.2 7.4 13 Long-term n.e.c............................................................... 26.5 27.6 32.3 36.0 43.6 44.5 46.0 47.5 46.7 48.9 14 Other ................................................................................. 5.5 6.8 8.1 11.5 12.6 15.1 14.4 15.4 14.2 15.7 15 Capital, surplus, and undivided profits .................... 12.4 12.5 13.4 15.1 17.2 18.0 18.2 18.4 19.9 19.2 16 Total liabilities and capital ........................................ 79.6 81.6 89.2 104.3 122.4 128.9 135.8 137.4 140.9 141.7 1. Beginning Ql 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 Accounts receivable receivable Type ou A ts p t r a . n d 30 in , g 1980 1980 1980 19801 Feb. Mar. Apr. Feb. Mar. Apr. Feb. Mar. Apr. I Total ...................................................................... 70,921 302 -5 277 17,843 17,370 14,754 17,541 17,375 14,477 2 Retail automotive (commercial vehicles)........ 14,586 24 -250 -364 1,172 952 844 1,148 1,202 1,208 3 Wholesale automotive ........................................ 12,831 -315 -415 39 5,339 4,917 4,502 5,654 5,332 4,463 4 Retail paper on business, industrial and farm equipment .......................................... 19,823 419 680 403 1,529 1,614 1,304 1,110 934 901 5 Loans on commercial accounts receivable and factored commercial accounts receivable . 7,366 111 153 -233 7,782 7,908 6,269 7,671 7,755 6,502 6 All other business credit .................................... 16,315 63 -173 432 2,021 1,979 1,835 1,958 2,152 1,403 1. Not seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Financial Statistics □ July 1980 1.55 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1979 1980 Item 1976 1977 1978 Dec. Jan. Feb. Mar. Apr. May 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 79.4 76.9 79.8 77.7 83.1 88.0 2 Amount of loan (thousands of dollars)----- 35.9 40.5 45.9 56.0 54.4 56.6 55.1 59.4 61.3 3 Loan/price ratio (percent) ............................ 74.2 76.3 75.3 72.9 73.0 72.5 72.0 73.6 72.4 4 5 M Fe a e t s u r a i n ty d ( c y h e a a r r g s e ) s . ( . p .. e .. r .. c .. e .. n .. t . .. o .. f . .. l . o .. a .. n .. .. a .. m ... o .. u ... n .. t . ) .. 2 . 2 1 7 .4 .2 4 2 1 7 .3 .9 3 2 1 8 .3 .0 9 2 1 8 .8 .8 5 2 2. 8 1 .1 1 2 1 8 .7 .8 9 2 1 7 .9 .4 8 2 2 8 .0 .3 4 2 2 8 .1 . 7 8 6 Contract rate (percent per annum).............. 8.76 9.30 11.30 11.48 11.60 12.25 12.64 13.26 Yield (percent per annum) 7 FHLBB series-3 ................................................. 8.99 9.01 9.54 11.64 11.87 11.93 12.62 13.03 13.68 8 HUD series4 ..................................................... 8.99 8.95 9.68 12.50 12.80 14.10 16.05 15.55 13.20 Secondary Markets Yield (percent per annum) 9 FHA mortgages (HUD series)5.................... 8.82 8.68 12.24 12.60 14.63 13.45 11.99 10 GNMA securities6 ........................................... 8.17 8.04 11.35 11.94 13.16 13.79 12.55 11.30 FNMA auctions7 11 Government-underwritten loans .............. 8.99 8.73 9.77 12.48 12.90 14.48 15.64 14.61 12.87 12 Conventional loans ..................................... 9.11 8.98 10.01 12.98 13.20 14.12 16.62 16.29 13.54 Activity in secondary markets Federal National Mortgage Association Mortgage holdings (end of period) 13 Total.......................................................................................... 32,904 34,370 43,311 51,091 52,106 53,063 53,990 54,843 55,328 14 FHA-insured ...................................................................... 18,916 18,457 21,243 24,489 24,906 25,146 n.a. n.a. n.a. 15 VA-guaranteed ................................................................. 9,212 9,315 10,544 10,496 10,653 10,885 n.a. n.a. n.a. 16 Conventional...................................................................... 4,776 6,597 11,524 16,106 16,546 16,853 17,079 17,453 17,858 Mortgage transactions (during period) 17 Purchases................................................................................. 3,606 4,780 12,303 893 1,163 1,087' 1,063 1,021 589 18 Sales .......................................................................................... 86 67 5 0 0 0 0 0 0 Mortgage commitments8 19 Contracted (during period) ............................................. 6,247 9,729 18,960 402 508 999 825 507 391 20 Outstanding (end of period) ........................................... 3,398 4,698 9,201 6,409 5,671 5,504 5,078 4,371 4,064 Auction of 4-month commitments to buy Government-underwritten loans 21 Offered9 ............................................................................... 4,929.8 7,974.1 12,978 649.2 516.0 1,169.4 1,267.3 493.7 608.7 22 Accepted ............................................................................ 2,787.2 4,846.2 6,747.2 249.3 213.8 563.7 426.1 199.4 214.1 Conventional loans 23 Offered9 ............................................................................... 2,595.7 5.675.2 9,933.0 413.2 443.1 412.1 918.6 135.2 279.7 24 Accepted ............................................................................ 1,879.2 3,917.8 5,110.9 .152.4 247.2 147.8 239.9 65.8 109.1 Federal Home Loan Mortgage Corporation Mortgage holdings (end of period)10 25 Total.......................................................................................... 4,269 3,276 3,064 4,035 4,124 4,145 4,235 4,255 4,031 26 FHA/VA ............................................................................ 1,618 1,395 1,243 1,102 1,098 1,092 1,086 1,080 1,076 27 Conventional...................................................................... 2,651 1,881 1,822 2,933 3,026 3,052 3,149 3,175 2,955 Mortgage transactions (during period) 28 Purchases................................................................................. 1,175 3,900 6,524 403 280 248 193 231 176 29 Sales .......................................................................................... 1,396 4,131 6,211 361 180 207 106 199 391 Mortgage commitments11 30 Contracted (during period) ........................................ 1,477 5,546 7,451 199 296 197 186 189 491 31 Outstanding (end of period) ...................................... 333 1,063 1,410 797 779 726 700 643 932 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 mort­ institutional 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 1979 1980 Type of holder, and type of property 1977 1978 1979 01 02 03 04 01 1All holders............................................................................. 1,023,505 1,172,754 l,333,550r 1,206,213 1,252,426 1,295,935" 1,333,550" 1,362,802 2 1- to 4-family ....................................................................... 656,566 761,843 872,068" 784,546 816,940 846,287" 872,068" 890,189 3Multifamily ........................................................................... 111,841 121,972 130,713" 123,965 125,916 128,270" 130,713" 132,795 4Commercial ........................................................................... 189,274 212,746 238,412" 217,495 224,499 232,208" 238,412" 243,839 5Farm....................................................................................... 65,824 76,193 92,357" 80,207 85,071 89,170" 92,357" 95,979 6Major financial institutions .............................................. 745,011 848,095 939,487" 865,974 894,385 920,231" 939,487" 951,898 7 Commercial banks1 ......................................................... 178,979 213,963 245,998" 220,063 229,564 239,627" 245,998" 251,198 8 1- to 4-family ............................................................... 105,115 126,966 145,975" 130,585 136,223 142,195" 145,975" 149,061 9 Multifamily ................................................................... 9,215 10,912 12,546" 11,223 11,708 12,221" 12,546" 12,811 10 Commercial ................................................................... 56,898 67,056 77,096" 68,968 71,945 75,099" 77,096" 78,725 11 Farm ............................................................................... 7,751 9,029 10,381" 9,287 9,688 10,112" 10,381" 10,601 12 Mutual savings banks .................................................... 88,104 95,157 98,908" 96,136 97,155 97,929 98,908" 99,151 13 1- to 4-family .............................................................. 57,637 62,252 64,706" 62,892 63,559 64.065 64,706" 64,865 14 Multifamily ................................................................... 15,304 16,529 17,180" 16,699 16,876 17,010 17,180" 17,223 15 Commercial ................................................................... 15,110 16,319 16,963" 16,488 16,662 16,795 16,963" 17,004 16 Farm ............................................................................... 53 57 59 57 58 59 59 59 17 Savings and loan associations........................................ 381,163 432,808 475,797 441,358 456,543 468,307 475,797 479,078 18 1- to 4-family ............................................................... 310,686 356,114 394,436 363,723 377,516 387,992 394,436 397,156 19 Multifamily ................................................................... 32,513 36,053 37,588 36,677 37,071 37,277 37,588 37,847 20 Commmercial ............................................................... 37,964 40,641 43,773 40,958 41,956 43,038 43,773 44,075 21 Life insurance companies .............................................. 96,765 106,167 118,784 108,417 111,123 114,368 118,784 122,471 22 1- to 4-family ............................................................... 14,727 14,436 16,193 14,507 14,489 14,884 16,193 16,850 23 Multifamily ................................................................... 18,807 19,000 19,274 19,080 19,102 19,107 19,274 19,590 24 Commercial ................................................................... 54,388 62,232 71,137 63,908 66,055 68,513 71,137 73,618 25 Farm ............................................................................... 8,843 10,499 12,180 10,922 11,477 11,864 12,180 12,413 26 Federal and related agencies............................................ 70,006 81,853 97,293 86,689 90,095 93,143 97,293 104,045 27 Government National Mortgage Association ............ 3,660 3,509 3,852 3,448 3,425 3,382 3,852 3,919 28 1- to 4-family .............................................................. 1,548 877 763 821 800 780 763 749 29 Multifamily ................................................................... 2,112 2,632 3,089 2,627 2,625 2,602 3,089 3,170 30 Farmers Home Administration .................................... 1,353 926 1,274 956 1,200 1,383 1,274 2,757 31 1- to 4-family ............................................................... 626 288 417 302 363 163 417 1,139 32 Multifamily ................................................................... 275 320 71 180 75 299 71 408 33 Commercial ................................................................... 149 101 174 283 278 262 174 409 34 Farm ............................................................................... 303 217 612 191 484 659 612 801 35 Federal Housing and Veterans Administration ........ 5,212 5,419 5,764 5,522 5,597 5,672 5,764 5,833 36 1- to 4-family ............................................................... 1,627 1,641 1,863 1,693 1,744 1,795 1,863 1,908 37 Multifamily ................................................................... 3,585 3,778 3,901 3,829 3,853 3,877 3,901 3,925 38 Federal National Mortgage Association...................... 34,369 43,311 51,091 46,410 48,206 49,173 51,091 53,990 39 1- to 4-family ............................................................... 28,504 37,579 45,488 40,702 42,543 43,534 45,488 48,394 40 Multifamily ................................................................... 5,865 5,732 5,603 5,708 5,663 5,639 5,603 5,596 41 Federal Land Banks ....................................................... 22,136 25,624 31,277 26,893 28,459 29,804 31,277 33,311 42 1- to 4-family ............................................................... 670 927 1,552 1,042 1,198 1,374 1,552 1,708 43 Farm ............................................................................... 21,466 24,697 29,725 25,851 27,261 28,430 29,725 31,603 44 Federal Home Loan Mortgage Corporation.............. 3,276 3,064 4,035 3,460 3,208 3,729 4,035 4,235 45 1- to 4-family ............................................................... 2,738 2,407 3,059 2,685 2,489 2,850 3,059 3,210 46 Multifamily ................................................................... 538 657 976 775 719 879 976 1,025 47 Mortgage pools or trusts2................................................... 70,289 88,633 119,278 94,551 102,259 110,648 119,278 124,097 48 Government National Mortgage Association ............ 44,896 54,347 76,401 57,955 63,000 69,357 76,401 80,905 49 1- to 4-family ............................................................... 43,555 52,732 74,546 56,269 61,246 67,535 74,546 78,934 50 Multifamily ................................................................... 1,341 1,615 1,855 1,686 1,754 1,822 1,855 1,971 51 Federal Home Loan Mortgage Corporation.............. 6,610 11,892 15,180 12,467 13,708 14,421 15,180 15,454 52 1- to 4-family ............................................................... 5,621 9,657 12,149 10,088 11,096 11,568 12,149 12,359 53 Multifamily ................................................................... 989 2,235 3,031 2,379 2,612 2,853 3,031 3,095 54 Farmers Home Administration .................................... 18,783 22,394 27,697 24,129 25,551 26,870 27,697 27,738 55 1- to 4-family ............................................................... 11,397 13,400 14,884 13,883 14,329 14,972 14,884 14,926 56 Multifamily ................................................................... 759 1,116 2,163 1,465 1,764 1,763 2,163 2,159 57 Commercial ................................................................... 2,945 3,560 4,328 3,660 3,833 4,054 4,328 4,495 58 Farm ............................................................................... 3,682 4,318 6,322 5,121 5,625 6,081 6,322 6,158 59 Individual and others3......................................................... 138,199 154,173 177,492" 158,999 165,687 171,913" 177,492" 182,762 60 1- to 4-family ................................................................... 72,115 82,567 96,037" 85,354 89,345 92,580" 96,037" 98,930 61 Multifamily ....................................................................... 20,538 21,393 23,436" 21,637 22,094 22,921" 23,436" 23,975 62 Commerical ....................................................................... 21,820 22,837 24,941" 23,230 23,770 24,447" 24,941" 25,513 63 Farm................................................................................... 23,726 27,376 33,078" 28,778 30,478 31,965" 33,078" 34,344 1. Includes loans held by nondeposit trust companies but not bank trust depart­ Note. Based on data from various institutional and governmental sources, with ments. 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, state terpolations and extrapolations when required, are estimated mainly by the Federal 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 Financial Statistics □ July 1980 1.57 CONSUMER INSTALLMENT CREDIT* Total Outstanding, and Net Change Millions of dollars 1979 1980 Holder, and type of credit 1977 1978 1979 Nov. Dec. Jan. Feb. Mar. Apr. May Amounts outstanding (end of period) 1 Total ........................................................... 230,829 275,629 311,122 307,641 311,122 308,984 308,190 307,621 306,131 303,759 By major holder 2 Commercial banks .................................. 112,373 136,189 149,604 149,057 149,604 148,868 148,249 147,315 145,405 143,174 3 Finance companies.................................. 44,868 54,298 68,318 67,164 68,318 68,724 69,545 70,421 71,545 72,101 4 Credit unions ........................................... 37,605 45,939 48,186 48,673 48,186 47,270 46,707 46,521 45,731 44,907 5 Retailers2 ................................................... 23,490 24,876 27,916 25,732 27,916 26,985 26,309 25,841 25,746 25,792 6 Savings and loans.................................... 7,354 8,394 10,361 10,241 10,361 10,320 10,543 10,755 10,887 10,930 7 Gasoline companies ................................ 2,963 3,240 4,316 4,281 4,316 4,433 4,467 4,421 4,503 4,581 8 Mutual savings banks.............................. 2,176 2,693 2,421 2,493 2,421 2,384 2,370 2,347 2,314 2,274 By major type of credit 9 Automobile ............................................... 82,911 102,468 115,022 115,121 115,022 114,761 115,007 115,281 115,014 114,318 10 Commercial banks .............................. 49,577 60,564 65,229 65,646 65,229 64,824 64,544 64,047 62,978 61,928 11 Indirect paper .................................. 27,379 33,850 37,209 37,334 37,209 37,020 36,949 36,821 36,325 35,791 12 Direct loans....................................... 22,198 26,714 28,020 28,312 28,020 27,804 27,595 27,226 26,653 26,137 13 Credit unions......................................... 18,099 21,967 23,042 23,275 23,042 22,604 22,335 22,246 21,868 21,474 14 Finance companies............................... 15,235 19,937 26,751 26,200 26,751 27,333 28,128 28,988 30,168 30,916 15 Revolving................................................... 39,274 47,051 55,330 52,060 55,330 54,420 53,522 52,662 52,217 51,823 16 Commercial banks .............................. 18,374 24,434 28,954 27,827 28,954 28,841 28,575 28,241 27,889 27,456 17 Retailers................................................. 17,937 19,377 22,060 19,952 22,060 21,146 20,480 20,000 19,825 19,786 18 Gasoline companies ............................ 2,963 3,240 4,316 4,281 4,316 4,433 4,467 4,421 4,503 4,581 19 Mobile home............................................. 15,141 16,042 17,409 17,349 17,409 17,387 17,476 17,596 17,668 17,642 20 Commercial banks .............................. 9,124 9,553 9,991 10,036 9,991 9,968 9,974 9,978 9,965 9,927 21 Finance companies.............................. 3,077 3,152 3,390 3,321 3,390 3,415 3,428 3,475 3,523 3,529 22 Savings and loans................................ 2,538 2,848 3,516 3,475 3,516 3,502 3,578 3,650 3,694 3,709 23 Credit unions........................................ 402 489 512 517 512 502 496 494 486 477 24 Other ......................................................... 93,503 110,068 123,361 123,111 123,361 122,416 122,185 122,082 121,232 119,976 25 Commercial banks .............................. 35,298 41,638 45,430 45,548 45,430 45,235 45,156 45,049 44,573 43,863 26 Finance companies.............................. 26,556 31,209 38,177 37,643 38,177 37,976 37,989 37,958 37,854 37,656 27 Credit unions........................................ 19,104 23,483 24,632 24,881 24,632 24,164 23,876 23,781 23,377 22,956 28 Retailers................................................. 5,553 5,499 5,856 5,780 5,856 5,839 5,829 5,841 5,921 6,006 29 Savings and loans................................ 4,816 5,546 6,845 6,766 6,845 6,818 6,965 7,106 7,193 7,221 30 Mutual savings banks.......................... 2,176 2,693 2,421 2,493 2,421 2,384 2,370 2,347 2,314 2,274 Net change (during period)3 31 Total ........................................................... 35,278 44,810 35,491 2,407 1,349 1,372 2,295 1,437 -1,985 -3,434 By major holder 32 Commercial banks .................................. 18,645 23,813 13,414 283 218 433 783 17 -2,237 -2,495 33 Finance companies.................................. 5,948 9,430 14,020 1,340 1,087 1,096 1,376 1,174 984 105 34 Credit unions ........................................... 6,436 8,334 2,247 -44 -455 -324 -373 -215 -743 -977 35 Retailers2 ................................................... 2,654 1,386 3,040 477 282 120 53 243 -65 -58 36 Savings and loans.................................... 1,111 1,041 1,967 143 165 7 306 204 83 75 37 Gasoline companies................................ 132 276 1,076 218 115 50 166 48 14 -42 38 Mutual savings banks.............................. 352 530 -273 -10 -63 -10 -16 -34 -21 -42 By major type of credit 39 Automobile ............................................... 15,204 19,557 12,554 533 682 972 881 395 -645 -1,343 40 Commercial banks .............................. 9,956 10,987 4,665 -76 122 83 22 -412 -1,335 -1,246 41 Indirect paper .................................. 5,307 6,471 3,359 40 260 72 48 -86 -698 -626 42 Direct loans...................................... 4,649 4,516 1,306 -116 -138 11 -26 -326 -637 -620 43 Credit unions......................................... 2,861 3,868 1,075 -24 -213 -134 -177 -82 -373 -482 44 Finance companies.............................. 2,387 4,702 6,814 633 773 1,023 1,036 889 1,063 385 45 Revolving................................................... 6,248 7,776 8,279 799 432 289 575 611 -388 -488 46 Commercial banks .............................. 4,015 6,060 4,520 136 24 109 383 395 -260 -308 47 Retailers................................................. 2,101 1,440 2,683 445 293 130 26 168 -142 -138 48 Gasoline companies ............................ 132 276 1,076 218 115 50 166 48 14 -42 49 Mobile home............................................. 565 897 1,366 103 108 120 198 128 36 -33 50 Commercial banks .............................. 387 426 437 33 -22 68 57 17 -30 -54 51 Finance companies.............................. -189 74 238 19 84 48 32 57 41 5 52 Savings and loans................................ 297 310 668 52 51 10 115 57 33 23 53 Credit unions......................................... 70 87 23 -1 -5 -6 -6 -3 -8 -7 54 Other ......................................................... 13,261 16,580 13,292 972 127 -9 641 303 -988 -1,570 55 Commercial banks .............................. 4,287 6,340 3,792 190 94 173 321 17 -612 -887 56 Finance companies.............................. 3,750 4,654 6,968 688 230 25 308 228 -120 -285 57 Credit unions......................................... 3,505 4,379 1,149 -19 -237 -184 -190 -130 -362 -488 58 Retailers................................................. 553 -54 357 32 -11 -10 27 75 77 80 59 Savings and loans................................ 814 731 1,299 91 114 -3 191 147 50 52 60 Mutual savings banks.......................... 352 530 -273 -10 -63 -10 -16 -34 -21 -42 l.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 $70.9 billion at the end of 1979, $64.7 billion at the and scheduled to be repaid (or with the option of repayment) in two or more end of 1978, $58.6 billion at the end of 1977, and $55.4 billion at the end of 1976. installments. 2.Includes auto dealers and excludes 30-day charge credit held by travel and 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; monthly data are seasonally adjusted. 1979 1980 Holder, and type of credit 1977 1978 1979 Nov. Dec. Jan. Feb. Mar. Apr. May Extensions 1 Total ................................ ........ 254,071 298,351 322,558 26,464 25,671 26,702 27,076 26,620 22,548 21,239 By major holder 2 Commercial banks ...................................................... 117,896 142,720 149.599 11.738 11,370 12,126 12,004 11,315 9,338 8,812 3 Finance companies...................................................... 41.989 50,505 61,518 5.105 5,249 5.540 5,639 5.700 4,841 4,304 4 Credit unions .............................................................. 34,028 40,023 36.778 2,808 2,396 2.527 2.495 2,501 1,865 1,615 5 Retailers1 ...................................................................... 39.133 41,619 46,092 4,161 4,054 4.010 4,042 4,358 3,870 3,880 6 Savings and loans........................................................ 4,485 5,050 7.333 606 632 485 775 665 555 536 7 Gasoline companies .................................................... 14,617 16,125 19,607 1.913 1,895 1,889 2.004 1.987 1,978 2,011 8 Mutual savings banks ................................................ 1,923 2,309 1,631 133 75 125 117 94 101 81 Bv major type of credit 9 Automobile .................................................................. 75,641 88,987 91,847 7.066 7.131 7.780 7,659 7.240 5,725 5,192 10 Commercial banks .................................................. 46,363 53,028 50,596 3.640 3,808 4,026 3,936 3.394 2,398 2,354 11 Indirect paper ...................................................... 25,149 29,336 28,183 2.009 2,181 2.154 2,096 1.978 1,433 1,353 12 Direct loans.......................................................... 21,214 23,692 22,413 1,631 1,627 1,872 1,840 1,416 965 1,001 13 Credit unions .......................................................... 16,616 19,486 18.301 1,399 1,223 1,348 1.338 1,306 962 838 14 Finance companies.................................................. 12,662 16,473 22.950 2,027 2,100 2.406 2,385 2,540 2,365 2,000 15 Revolving .................................................................... 86.756 104,587 120.728 10,613 10,196 10.475 10.458 11,038 10.293 10,089 16 Commercial banks .................................................. 38,256 51,531 60,406 5.014 4,683 5.030 4.920 5,200 4,929 4,745 17 Retailers .................................................................. 33,883 36,931 40.715 3,686 3.618 3,556 3.534 3,851 3,386 3,333 18 Gasoline companies ................................................ 14,617 16,125 19,607 1.913 1.895 1.889 2,004 1,987 1,978 2,011 19 Mobile home................................................................ 5,425 6,067 6,395 515 490 558 597 506 436 324 20 Commercial banks .................................................. 3,466 3,704 3.720 294 245 351 304 263 220 166 21 Finance companies.................................................. 643 886 797 69 97 87 80 90 84 52 22 Savings and loans.................................................... 1.120 1,239 1,687 139 140 112 207 143 128 103 23 Credit unions .......................................................... 196 238 191 13 8 8 6 10 4 3 24 Other ............................................................................ 86,249 98,710 103,588 8,270 7.854 7,889 8,362 7,836 6.094 5,634 25 Commercial banks .................................................. 29,811 34,457 34,877 2.790 2.634 2.719 2,844 2,458 1,791 1,547 26 Finance companies.................................................. 28,684 33,146 37,771 3,009 3.052 3,047 3,174 3,070 2,392 2,252 27 Credit unions .......................................................... 17,216 20,299 18,286 1,396 1,165 1,171 1,151 1,185 899 774 28 Retailers .................................................................. 5,250 4,688 5,377 475 436 454 508 507 484 547 29 Savings and loans.................................................... 3,365 3,811 5,646 467 492 373 568 522 427 433 30 Mutual savings banks ............................................ 1,923 2,309 1,631 133 75 125 117 94 101 81 Liquidations 31 Total ................................ ........ 218,793 253,541 287,067 24,057 24,322 25,330 24,781 25,183 24,533 24,673 By major holder 32 Commercial banks ...................................................... 99,251 118,907 136,185 11,455 11,152 11,693 11.221 11,298 11,575 11,307 33 Finance companies...................................................... 36,041 41,075 47,498 3,765 4,162 4.444 4,263 4,526 3,857 4,199 34 Credit unions .............................................................. 27,592 31,689 34,531 2,852 2.851 2.851 2.868 2,716 2,608 2,592 35 Retailers1 ...................................................................... 36,479 40,233 43,052 3,684 3,772 3.890 3,989 4,115 3,935 3,938 36 Savings and loans........................................................ 3.374 4,009 5,366 463 467 478 469 461 472 461 37 Gasoline companies.................................................... 14,485 15,849 18,531 1,695 1.780 1,839 1,838 1,939 1,964 2,053 38 Mutual savings banks ................................................ 1,571 1,779 1.904 143 138 - 135 133 128 122 123 By major type of credit 39 Automobile ................................................................... 60,437 69,430 79,293 6,533 6,449 6,808 6.778 6,845 6,370 6,535 40 Commercial banks ................................................... 36,407 42,041 45,931 3.716 3,686 3,943 3,914 3,806 3,733 3,600 41 Indirect paper ....................................................... 19,842 22,865 24,824 1.969 1.921 2.082 2,048 2,064 2,131 1,979 42 Direct loans........................................................... 16,565 19,176 21,107 1,747 1.765 1.861 1,866 1,742 1,602 1,621 43 Credit unions ........................................................... 13,755 15,618 17.226 1,423 1,436 1.482 1,515 1,388 1,335 1,320 44 Finance companies.................................................. 10,275 11,771 16,136 1,394 1,327 1.383 1,349 1,651 1,302 1,615 45 Revolving ..................................................................... 80,508 96,811 112,449 9,814 9,764 10.186 9,883 10,427 10,681 10,577 46 Commercial banks ................................................... 34,241 45,471 55.886 4.878 4,659 4,921 4,537 4,805 5,189 5,053 47 Retailers ................................................................... 31,782 35,491 38,032 3.241 3,325 3,426 3,508 3,683 3,528 3,471 48 Gasoline companies ................................................ 14,485 15,849 18,531 1.695 1,780 1,839 1,838 1,939 1,964 2,053 49 Mobile home................................................................. 4,860 5,170 5,029 412 382 438 399 378 400 357 50 Commercial banks ................................................... 3,079 3,278 3,283 261 267 283 247 246 250 220 51 Finance companies................................................... 832 812 559 50 13 39 48 33 43 47 52 Savings and loans..................................................... 823 929 1,019 87 89 102 92 86 95 80 53 Credit unions ........................................................... 126 151 168 14 13 14 12 13 12 10 54 Other ............................................................................. 72,988 82,130 90,296 7.298 7,727 7,898 7,721 7,533 7,082 7,204 55 Commercial banks ................................................... 25,524 28,117 31,085 2.600 2.540 2,546 2,523 2,441 2,403 2,434 56 Finance companies.................................................. 24,934 28,492 30,803 2.321 2,822 3,022 2,866 2,842 2,512 2,537 57 Credit unions ........................................................... 13,711 15,920 17,137 1,415 1,402 1,355 1,341 1,315 1,261 1,262 58 Retailers ................................................................... 4,697 4.742 5,020 443 447 464 481 432 407 467 59 Savings and loans..................................................... 2,551 3,080 4,347 376 378 376 377 375 377 381 60 Mutual savings banks ............................................ 1,571 1,779 1,904 143 138 135 133 128 122 123 1. 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 Financial Statistics □ July 1980 1.59 FUNDS RAISED IN U.S. CREDIT MARKETS Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1977 1978 1979 Transaction category, sector 1974 1975 1976 1977 1978 1979 HI H2 HI H2 HI H2 Nonfinancial sectors 1Total funds raised......................................................... 191.3 210.8 271.9 338.5 400.3 395.2 298.1 378.9 384.5 416.1 383.2 408.5 2 Excluding equities ....................................................... 187.4 200.7 261.1 335.4 398.2 390.9 296.9 373.8 387.1 409.3 380.5 402.5 B\ sector and instrument 3U.S. government ......................................................... 11.8 85.4 69.0 56.8 53.7 37.4 46.1 67.4 61.4 46.0 27.3 47.4 4 Treasury securities ................................................... 12.0 85.8 69.1 57.6 55.1 38.8 46.7 68.6 62.3 47.9 29.6 47.9 5 Agencv issues and mortgages................................ - .2 -.4 -.1 -.9 -1.4 - 1.4 -.6 -1.2 -.9 -1.9 -2.3 -.5 6 All other nonfinancial sectors .................................. 179.5 125.4 202.9 281.8 346.6 357.9 252.0 311.5 323.1 370.2 355.9 361.2 7 Corporate equities ................................................... 3.8 10.1 10.8 3.1 2.1 4.4 1.2 5.1 -2.6 6.8 2.7 6.0 X Debt instruments ..................................................... 175.6 115.3 192.0 278.6 344.5 353.5 250.8 306.4 325.7 363.4 353.2 355.2 9 Private domestic nonfinancial sectors.................. 164.1 112.1 182.0 267.9 314.4 335.9 241.5 294.2 302.5 326.3 340.2 333.1 10 Corporate equities ............................................... 4.1 9.9 10.5 2.7 2.6 3.5 .5 4.9 -1.8 7.0 2.8 4.1 11 Debt instruments ................................................. 160.0 102.1 171.5 265.1 311.8 332.4 241.0 289.3 304.3 319.2 337.4 329.0 12 Debt capital instruments................................ 98.0 98.4 123.5 175.6 196.6 201.9 158.7 192.5 188.0 205.1 202.6 201.5 13 State and local obligations ........................ 16.5 16.1 15.7 23.7 28.3 21.4 22.3 25.0 27.8 28.7 17.4 25.3 14 Corporate bonds........................................... 19.7 27.2 22.8 21.0 20.1 21.2 16.6 25.4 20.6 19.6 23.2 19.4 Mortgages 15 Home ......................................................... 34.8 39.5 63.7 96.4 104.5 110.2 89.7 103.1 99.8 109.2 111.0 109.4 16 Multifamily residential .................. 6.9 * 1.8 7.4 10.2 8.9 6.4 8.4 9.3 11.2 8.1 9.8 17 Commercial ............................................... 15.1 11.0 13.4 18.4 23.3 25.2 14.8 21.9 21.2 25.4 25.7 24.7 18 Farm ........................................................... 5.0 4.6 6.1 8.8 10.2 15.0 9.0 8.7 9.3 11.1 17.1 13.0 19 Other debt instruments.................................. 62.0 3.8 48.0 89.5 115.2 130.5 82.3 96.7 116.3 114.1 134.8 127.4 20 Consumer credit ........................................... 9.9 9.7 25.6 40.6 50.6 42.3 36.6 44.5 50.1 51.0 47.3 37.2 21 Bank loans n.e.c............................................ 31.7 -12.3 4.0 27.0 37.3 50.0 27.3 26.7 43.1 31.4 47.7 53.5 11 Open market paper ..................................... 6.6 -2.6 4.0 2.9 5.2 10.9 3.4 2.4 5.3 5.1 10.8 10.9 23 Other ............................................................. 13.7 9.0 14.4 19.0 22.2 27.3 14.9 23.2 17.8 26.5 29.0 25.8 24 By borrowing sector ........................................... 164.1 112.1 182.0 267.9 314.4 335.9 241.5 294.2 302.5 326.3 340.2 333.1 25 State and local governments.......................... 15.5 13.7 15.2 20.4 23.6 18.0 15.7 25.0 21.0 26.1 14.4 21.6 26 Households ....................................................... 51.2 49.5 90.7 139.9 162.6 164.2 129.4 150.4 156.1 169.1 167.7 160.5 27 Farm ................................................................... 8.0 8.8 10.9 14.7 18.1 24.6 15.7 13.8 15.3 20.8 23.4 25.8 28 Nonfarm noncorporate .................................. 7.7 2.0 5.4 12.5 15.4 15.5 13.4 12.5 16.3 14.5 15.0 16.1 29 Corporate ......................................................... 81.7 38.1 59.8 80.3 94.7 113.6 67.3 92.4 93.7 95.8 119.6 109.2 30 Foreign ....................................................................... 1_5 .4 13.3 20.8 13.9 32.3 22.0 10.5 17.3 20.6 43.9 15.7 28.1 31 Corporate equities ............................................... 2 2 .3 .4 - 5 .9 .6 .2 -.8 -.2 -.1 1.9 32 Debt instruments ................................................. 1:5.7 13^2 20.5 13.5 32.8 21.1 9.9 17.1 21.4 44.1 15.8 26.2 33 Bonds ................................................................. 2.1 6.2 8.6 5.1 4.0 4.1 4.4 5.7 5.0 3.0 3.5 4.7 34 Bank loans n.e.c................................................ 4.7 3.9 6.8 3.1 18.3 2.9 -.4 6.5 9.3 27.3 3.1 2.3 35 Open market paper ......................................... 7.3 .3 1.9 2.4 6.6 11.2 2.7 2 2 3.6 9.6 6.1 16.3 36 U.S. government loans .................................. 1.6 2.8 3.3 3.0 3.9 3.0 3.1 2*9 3.6 4.2 3.1 2.8 Financial sectors 37 Total funds raised......................................................... 39.2 12.7 24.1 54.0 81.4 86.2 47.7 60.3 80.7 82.1 87.9 84.5 By instrument 38 U.S. government related .......................................... 23.1 13.5 18.6 26.3 41.4 52.4 22.6 29.9 38.5 44.3 45.9 58.9 39 Sponsored credit agency securities ...................... 16.6 2.3 3 3 7.0 23.1 24.3 7.1 6.8 21.9 24.3 21.7 26.8 40 Mortgage pool securities........................................ 5.8 10.3 15.7 20.5 18.3 28.1 17.9 23.1 16.6 20.1 24.2 32.0 41 Loans from U.S. government .............................. .7 .9 -.4 - 1.2 0 0 -2.3 0 0 0 0 0 42 Private financial sectors ............................................ 16.2 -.8 S S 27.7 40.0 33.8 25.1 30.4 42.2 37.8 41.9 25.7 43 Corporate equities ................................................... .3 .6 1.0 .9 1.7 .9 .9 .8 2.2 1.1 2.7 -1.0 44 Debt instruments ..................................................... 15.9 - 1.4 4.4 26.9 38.3 32.9 24.2 29.6 40 T) 36.7 39.2 26.7 45 Corporate bonds................................................... 2.1 2.9 5.8 10.1 7.5 6.9 10.2 10.1 8.5 6.4 8.9 5.0 46 Mortgages ............................................................. - 1.3 2.3 2.1 3.1 .9 - 1.2 3.1 3.0 2.1 -.3 -.4 -1.9 47 Bank loans n.e.c.................................................... 4.6 -3.7 -3.7 - .3 2.8 -.4 -1.8 1.2 2.5 3.1 - 1.4 .5 48 Open market paper and repurchase 3.8 1.1 i i 9.6 14.6 18.4 9.8 9/5 13.5 15.7 24.4 12.4 agreements ........................................................... 49 Loans from Federal Home Loan Banks.......... 6.7 -4.0 -2.0 4.3 12.5 9.2 2.9 5.8 13.2 11.8 7.7 10.6 Bv sector 50 Sponsored credit agencies.......................................... 17.3 3.2 2.6 5.8 23.1 24.3 4.7 6.8 21.9 24.3 21.7 26.8 51 Mortgage pools............................................................. 5.8 10.3 15.7 20.5 18.3 28.1 17.9 23.1 16.6 20.1 24.2 32.0 52 Private financial sectors ............................................. 16.2 -.8 5 5 27.7 40.0 33.8 25.1 30.4 42.2 37.8 41.9 25.7 53 Commercial banks ................................................... 1.2 1.2 2.3 1.1 1.3 1.6 .8 1.5 1.5 1.1 1.3 1.8 54 Bank affiliates........................................................... 3.5 .3 - .8 1.3 6.7 4.5 1.3 1.2 5.8 6.2 2.9 55 Savings and loan associations................................ 4.8 -2.3 .1 9.9 14.3 9.8 8.3 11.5 16.4 12*2 9.9 9.7 56 Other insurance companies .................................. .9. 1.0 .9 .9 1.1 1.0 .9 1.0 1.0 1.1 1.0 .9 57 Finance companies................................................... 6.0 .5 6.4 17.6 18.6 1_9 .2 16.7 18.5 18.9 18.2 24.3 14.2 58 REITs ....................................................................... .6 - 1.4 -2.4 -2.2 - 1.0 2 -2.4 -2.0 - 1.0 - 1.0 -.5 .1 59 Open-end investment companies.......................... -.7 -.1 - 1.0 -.9 - 1.0 -2.1 -.6 -1.3 -.5 - 1.5 -.3 -3.9 All sectors 60 Total funds raised, by instrument............................ 230.5 223.5 296.0 392.5 481.7 481.4 345.8 439.2 465.2 498.3 471.0 493.1 61 Investment company shares ...................................... -.7 -.1 - 1.0 -.9 - 1.0 -2.1 -.6 -1.3 -.5 -1.5 -.3 -.3.9 62 Other corporate equities............................................. 4.8 10.8 12.9 4.9 4.7 7.3 2.6 7.2 .1 9.4 5.7 8.9 63 Debt instruments ......................................................... 226.4 212.8 284.1 388.5 478.0 476.2 343.8 433.3 465.5 490.4 465.6 488.1 64 U.S. government securities .................................. 34.3 98.2 88.1 84%.3 95.2 89.9 71.2 97.4 100.0 90.4 73.4 106.3 65 State and local obligations .................................... 16.5 16.1 15.7 23.7 28.3 21.4 22.3 25.0 27.8 28.7 17.4 25.3 66 Corporate and foreign bonds................................ 23.9 36.4 37.2 36.1 31.6 32.2 31.2 41.1 34.2 29.1 35.5 29.1 67 Mortgages ................................................................. 60.5 57.2 87.1 134.0 149.0 158.1 122.9 145.1 141.6 156.4 161.4 154.8 68 Consumer credit ....................................................... 9.9 9.7 25.6 40.6 50.6 42.3 36.6 44.5 50.1 51.0 47.3 37.2 69 Bank loans n.e.c........................................................ 41.0 -12.2 7.0 29.8 58.4 52.5 25.1 34.4 54.9 61.8 49.5 56.3 70 Open market paper and RPs ................................ 17.7 -1.2 8.1 15.0 26.4 40.5 15.9 14.0 22.4 30.4 41.3 39.7 71 Other loans ............................................................... 22.7 8.7 15.3 25.2 38.6 39.5 18.5 31.8 34.6 42.5 39.8 39.2 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 1977 1978 1979 Transaction category, or sector 1974 1975 1976 1977 1978 1979 HI H2 HI H2 HI H2 1 Total funds advanced in credit markets to nonfinancial sectors ........................................................................... 187.4 200.7 261.1 355.4 398.2 390.9 296.9 373.8 387.1 409.3 380.5 402.5 Bv public agencies and foreign 2 Total net advances.............................................................. 53.7 44.6 54.3 85.1 109.7 80.3 66.1 104.2 102.8 116.6 43.6 117.6 3 U.S. government securities .......................................... 11.9 22.5 26.8 40.2 43.9 2.2 27.1 53.3 43.7 44.0 -27.5 32.1 4 Residential mortgages .................................................... 14.7 16.2 12.8 20.4 26.5 36. T 18.9 22.0 22.2 30.7 33.7 38.5 5 FHLB advances to savings and loans.......................... 6.7 -4.0 -2.0 4.3 12.5 9.2 2.9 5.8 \3.2 11.8 7.7 10.6 6 Other loans and securities ............................................ 20.5 9.8 16.6 20.2 26.9 32.8 17.2 23.1 23.7 30.1 29.7 36.4 Total advanced, bv sector 7 U.S. government ................................................................ 9.8 15.1 8.9 11.8 20.4 22.6 5.9 17.8 19.4 21.4 24.3 20.9 8 Sponsored credit agencies ................................................ 26.5 14.8 20.3 26.8 44.6 57.7 21.6 32.0 39.4 49.8 50.6 64.9 9 Monetary authorities .......................................................... 6.2 8.5 9.8 7.1 7.0 7.7 10.2 4.0 13.4 .5 -.8 16.4 10 Foreign ................................................................................. 11.2 6.1 15.2 39.4 37.7 -7.7 28.3 50.4 30.6 44.9 -30.4 15.4 11 Agency borrowing not included in line 1 ........................ 23.1 13.5 18.6 26.3 41.4 52.4 22.6 29.9 38.5 44.3 45.9 58.9 Private domestic funds advanced 12 Total net advances.............................................................. 156.8 169.7 225.4 276.5 330.0 363.0 253.5 299.6 322.8 337.1 382.8 343.8 13 U.S. government securities .......................................... 22.4 75.7 61.3 44.1 51.3 87.6 44.1 44.1 56.3 46.4 100.9 74.2 14 State and local obligations ............................................ 16.5 16.1 15.7 23.7 28.3 21.4 22.3 25.0 27.8 28.7 17.4 25.3 15 Corporate and foreign bonds........................................ 20.9 32.8 30.5 21 5 22.5 25.8 18.0 27.0 24.1 20.9 28.3 23.6 16 Residential mortgages .................................................... 26.9 23 ^ 52.7 83.3 88.2 82.9 77.1 89.4 86.7 89.6 85.3 80.5 17 Other mortgages and loans .......................................... 76.8 17.9 63.3 107.3 152.2 154.4 94.9 119.7 141.1 163.3 158.6 150.7 18 Less: Federal Home Loan Bank advances................ 6.7 -4.0 -2.0 4.3 12.5 9.2 2.9 5.8 13.2 11.8 7.7 10.6 Private financial intermediation 19 Credit market funds advanced by private financial institutions .................................................................... 125.5 122.5 190.3 255.9 296.9 293.0 249.1 265.0 301.7, 292.0 314.4 272.9 20 Commercial banking ...................................................... 66.6 29.4 59.6 87.6 128.7 121.1 84.6 90.7 132.5 125.0 128.7 115.0 21 Savings institutions ........................................................ 24.2 53.5 70.8 82.0 75.9 54.6 81.4 82.6 75.8 75.9 57.8 51.4 22 Insurance and pension funds ........................................ 29.8 40.6 49.9 67.9 73.5 72.9 65.2 70.6 76.9 70.2 75.4 70.5 23 Other finance .................................................................. 4.8 - 1.0 10.0 18.4 18.7 44.3 18.0 21.2 16.6 20.8 52.5 36.1 24 Sources of funds.................................................................. 125.5 122.5 190.3 255.9 296.9 293.0 249.1 265.0 301.7 292.0 314.4 272.9 25 Private domestic deposits .............................................. 67.5 92.0 124.6 141.2 142.5 135.5 138.6 143.8 138.3 146.7 118.4 152.0 26 Credit market borrowing .............................................. 15.9 - 1.4 4.4 26.9 38.3 32.9 24.2 29.6 40.0 36.7 39.2 26.7 27 Other sources .................................................................. 42.1 32.0 61.3 87.8 116.0 124.5 86.2 91.7 123.5 108.6 156.8 94.3 28 Foreign funds .............................................................. 10.3 -8.7 -4.6 1.2 6.3 26.3 1.6 .8 5.7 6.9 53.2 -.6 29 Treasury balances ...................................................... -5.1 - 1.7 -.1 4.3 6.8 .4 .1 8.5 1.9 11.6 5.5 -4.7 30 Insurance and pension reserves................................ 26.2 29.7 34.5 49.4 62.7 54.0 45.3 53.4 66.2 59.2 55.9 52.1 31 Other, net .................................................................... 10.6 12.7 31.4 32.9 40.3 43.8 39.3 29.0 49.6 31.0 42.2 47.4 Private domestic nonfinancial investors 32 Direct lending in credit markets...................................... 47.2 45.8 39.5 47.5 71.4 102.9 28.6 64.1 61.1 81.7 107.6 97.5 33 U.S. government securities .......................................... 18.9 24.1 16.1 23.0 33.2 56.2 11.9 34.2 32.1 34.4 64.4 47.5 34 State and local obligations ............................................ 9.3 8.4 3.8 2.6 4.5 - .5 5.7 7.0 2.0 -.1 35 Corporate and foreign bonds........................................ 5.1 8.4 5.8 -3.3 - 1.4 9.3 -.1 -6.5 - 3.7 1.0 8.2 10.6 36 Commercial paper .......................................................... 5.8 - 1.3 1.9 9.5 16.3 10.7 8.2 10.8 8.2 24.4 10.4 10.6 37 Other ................................................................................ 8.0 6.2 11.8 15.7 18.7 26.7 9.2 19.9 17.5 20.0 24.6 28.9 38 Deposits and currency........................................................ 73.8 98.1 131.9 149.5 151.8 143.5 144.5 154.5 148.7 154.8 128.4 157.9 39 Security RPs ..................................................................... -2.2 i 2.3 2.2 7.5 6.6 4.3 .2 9.8 5.1 18.5 -5.3 40 Money market fund shares............................................ 2.4 1.3 .2 6.9 34.4 - .5 .9 6.1 7.7 30.2 38.6 41 Time and savings accounts............................................ 65.4 84.0 113.5 121.0 115.2 83.3 115.3 126.7 110.7 119.8 73.7 92.6 42 Large at commercial banks ...................................... 18.4 - 14.3 - 13.6 9.0 10.8 - .7 -4.5 22.6 10.1 11.4 -25 5 24.2 43 Other at commercial banks ...................................... 2^ 3 38.8 57.9 43.0 43.3 39.3 47.5. 38.4 42.1 44.5 43.7 34.7 44 At savings institutions ................................................ 21.8 59.4 69.1 69.0 61.1 44.7 72.3 65.7 58.5 63.8 55.5 33.7 45 Money ............................................................................... 8.2 12.6 16.1 26.1 22.2 19.1 25.4 26.8 22.1 22.3 6.0 32.0 46 Demand deposits ........................................................ 1.9 6.4 8.8 17.8 12.9 11.2 19.6 16.1 11.6 14.2 -4.0 26.1 47 Currency ....................................................................... 6.3 6.2 7.3 8.3 9.3 7.9 5.8 10.8 10.5 8.1 10.0 5.9 48 Total of credit market instruments, deposits and currency ......................................................................... 121.0 143.9 171.4 197.0 223.2 246.4 173.1 218.6 209.8 236.6 236.0 255.4 49 Public support rate (in percent) .................................. 28.7 22 2 20.8 25.4 27.5 20.5 22.2 27.9 26.5 28.5 11.5 29.2 50 Private financial intermediation (in percent) ............ 80.0 72.2 84.4 92.5 90.0 80.7 98'2 88.5 93.5 86.6 82.1 79.4 51 Total foreign funds ......................................................... 21.5 -2.6 10.6 40.5 44.0 18.7 29.9 51.2 36.3 51.8 22.8 14.9 Memo: Corporate equities not included above 52 Total net issues..................................................................... 4.1 10.7 11.9 4.0 3.7 5.2 2.1 5.9 -.4 7.9 5.4 5.0 53 Mutual fund shares ......................................................... -.7 -.1 - 1.0 -.9 - 1.0 .-2.1 - .6 - 1.3 - .5 - 1.5 -.3 -3.9 54 Other equities................................................................... 4.8 10.8 12.9 4.9 4.7 7.3 2.6 7.2 .1 9.4 5.7 8.9 55 Acquisitions by financial institutions .............................. 5.8 9.6 12.3 7.4 7.6 16.6 6.8 8.1 .4 14.7 14.5 18.7 56 Other net purchases ........................................................... - 1.7 1.1 -.4 -3.4 -3.8 - 11.4 -4.7 — 2 2 -.8 -6.8 -9.1 - 13.6 Notes by line number. 30. Excludes net investment of these reserves in corporate equities. 1. Line 2 of p. A-44. 31. Mainly retained earnings and net miscellaneous liabilities. 2. Sum of lines 3-6 or 7-10. 32. Line 12 less line 19 plus line 26. 6. Includes farm and commercial mortgages. 33-37. Lines 13-17 less amounts acquired by private finance. Line 37 includes 11. Credit market funds raised by federally sponsored credit agencies, and net mortgages. issues of federally related mortgage pool securities. Included below in lines 47. Mainly an offset to line 9. 3, 13, 33. 48. Lines 32 plus 38. or line 12 less line 27 plus 45. 12. Line 1 less line 2 plus line 11. Also line 19 less line 26 plus line 32. Also sum 49. Line 2 line 1. of lines 27, 32, 39, 40, 41, and 46. 50. Line 19/line 12. 17. Includes farm and commercial mortgages. 51. Sum of lines 10 and 28. 25. Sum of lines 39, 40, 41, and 46. 52. 54. Includes issues bv financial institutions. 26. Excludes equity issues and investment company shares. Includes line 18. Note. Full statements for sectors and transaction types quarterly, and annually 28. Foreign deposits at commercial banks, bank borrowings from foreign branches, for flows and for amounts outstanding, may be obtained from Flow of Funds and liabilities of foreign banking agencies to foreign affiliates. Section. Division of Research and Statistics. Board of Governors of the Federal 29. Demand deposits at commercial banks. Reserve System. Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics □ July 1980 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures 1967 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1979 1980 Measure 1977 1978 1979 Nov. Dec. Jan. Feb. Mar. Apr. May June 1 Industrial production1........................................................... 138.2 146.1 152.2 152.1 152.2 152.6 152.3 151.7 148.3 144.7 141.2 Market groupings 2 Products, total ....................................................................... 137.9 144.8 149.7 149.4 149.7 150.0 149.9 149.3 146.4 143.6 141.2 3 Final, total ......................................................................... 135.9 142.2 147.0 146.6 147.0 147.0 147.4 147.1 145.0 142.7 140.8 4 Consumer goods ........................................................... 145.3 149.1 150.5 148.9 148.5 148.2 148.5 147.8 144.9 141.9 140.6 5 Equipment ..................................................................... 123.0 132.8 142.2 143.6 145.0 145.4 146.0 146.1 145.2 143.8 141.2 6 Intermediate ....................................................................... 145.1 154.1 160.0 159.8 159.9 160.8 159.3 157.7 151.5 146.8 142.3 7 Materials ................................................................................. 138.6 148.3 156.0 156.4 156.2 156.7 155.9 155.4 151.2 146.4 141.3 Industry groupings 8 Manufacturing ....................................................................... 138.4 146.8 153.2 153.0 152.8 153.4 152.7 151.9 148.2 144.2 140.3 Capacity utilization (percent)1-2 9 Manufacturing ................................................................... 81.9 84.4 85.7 84.6 84.3 84.4 83.8 83.1 80.8 78.4 76.1 10 Industrial materials industries........................................ 82.7 85.6 87.2 86.4 87.2 86.0 85.4 84.9 82.4 79.5 76.5 11 Construction contracts3 ....................................................... 160.5 174.3 156.0 183.0 190.0 171.0 155.0 130.0 125.0 n.a. 12 Nonagricultural employment, total4.................................. 125.3 131.4 136.0 137.6' 137.8' 138.3' 138.6' 138.5' 138.2' 137.7' 136.9 13 Goods-producing, total..................................................... 104.5 109.8 114.0 113.7' 114.1' 114.6' 114.2' 113.6' 112.1' 110.5' 108.8 14 Manufacturing, total ..................................................... 101.2 105.3 107.9 107.8' 107.9' 107.8' 107.8' 107.7' 106.1' 104.3' 102.7 15 Manufacturing, production-worker............................ 98.8 102.8 104.9 104.5' 104.5' 104.2' 103.9' 103.8' 101.7' 99.1' 97.3 16 Service-producing ............................................................. 136.7 143.2 148.1 150.7' 150.8' 151.3' 151.9' 152.2' 152.6' 152.6' 152.3 17 Personal income, total5 ....................................................... 244.4 274.1 307.1r 320.1 323.7 326.6 328.1 330.4 329.9 330.4' n.a. 18 Wages and salary disbursements .................................. 230.2 258.1 287.2' 294.1 300.1' 302.5 305.1 307.4 305.8 305.5' n.a. 19 Manufacturing ............................................................... 198.3 222.4 246.8 251.7 254.7 256.7 259.2 260.8 257.8 255.0 n.a. 20 Disposable personal income ............................................... 194.8 217.7 242.5' 251.3 259.4 261.9 n.a. 21 Retail sales6 ........................................................................... 229.8 253.8 280.9 292.0 294.8 303.6 301.8 292.4 286.6 283.8 287.9 Prices7 22 Consumer ........................................................................... 181.5 195.4 217.4 227.5 229.9 233.2 236.4 239.8 242.5 n.a. 244.9 23 Producer finished goods................................................... 180.6 194.6 216.1' 226.3 228.1 232.4 235.7' 238.2 240.0 241.0 242.6 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 Co 4 m . p B a a n s y e , d F o . n W d . a D ta o d in g e E D m i p v l i o s y io m n e . nt and Earnings (U.S. Department of Labor). 6, N an o d t e i : n d B e a x s e ic s d fo a r ta s e (n ri o e t s i m nd e e n x t io n n u e m d b e in rs ) n o fo te r s s 3 e ri a e n s d m 7 e n m ti a o y n e a d ls o in b n e o t f e o s u n 4 d , 5 in , a t n h d e Series covers employees only, excluding personnel in the Armed Forces. Survey of Current Business (U.S. Department of Commerce). Monthly data for lines 12 throuth 16 reflect March 1979 benchmarks; only sea­ Figures for industrial production for the last two months are preliminary and sonally adjusted data are presently available. estimated, respectively. 5. Based on data in Survey of Current Business (U.S. Department of Commerce). Series for disposable income is quarterly. 2.11 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION• Seasonally adjusted 1979 1980 1979 1980 1979 1980 Series Q3 04 01' 02 03 04 Ql Q2 Q3 04 Ql' Q2 Output (167 = 100) Capacity (percent of 1967 ioutput) Utilization rate (percent) 1 Manufacturing ..................................................... 152.9 153.0 152.7 144.2 179.5 180.8 182.3 183.8 84.6 84.6 83.8 78.4 2 Primary processing............................................... 161.8 161.8 160.1 146.4 185.7 187.2 188.7 190.2 86.5 86.4 84.9 77.0 3 Advanced processing ........................................... 148.1 148.2 148.7 142.9 176.2 177.4 178.8 180.4 83.5 83.6 83.1 79.2 4 Materials ............................................................... 156.3 156.3 156.0 146.3 179.5 181.0 182.5 184.1 86.3 86.3 85.4 79.5 5 Durable goods ..................................................... 156.1 156.3 155.2 143.1 184.5 186.0 187.7 189.3 83.9 84.0 82.7 75.6 6 Metal materials................................................. 119.5 119.5 117.2 140.7 141.1 141.5 84.7 84.7 82.9 7 Nondurable goods ............................................... 178.2 178.3 178.5 167.1 195.3 197.3 199.1 201.3 90.3 90.4 89.6 83.0 8 Textile, paper, and chemical ........................ 187.0 186.9 186.2 174.3 203.2 205.3 207.3 209.6 91.1 91.0 89.8 83.2 9 Textile ........................................................... 123.7 123.7 121.5 137.7 138.1 138.5 89.6 89.6 87.7 10 Paper ............................................................. 148.4 148.4 142.7 150.6 151.6 152.9 97.9 97.9 93.3 11 Chemical ....................................................... 230.4 230.2 232.1 253.3 256.3 259.4 89.8 89.8 89.5 12 Energy ................................................................... 129.9 129.1 129.9 128.4 148.3 149.2 149.8 150.5 86.8 86.6 86.7 85.3 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 Category 1977 1978 1979 Dec.' Jan.' Feb.' Mar.r Apr/ May' June Household Survey Data 1 Noninstitutional population 1 ...................... 158,559 161,058 163,620 164,898 165,101 165,298 165,506 165,693 165,886 166,105 2 Labor force (including Armed Forces)1 .. 99,534 102,537 104,996 106,088 106,310 106,346 106,184 106,511 107,230 106,634 3 Civilian labor force ................................... 97,401 100,420 102,908 103,999 104,229 104,260 104,094 104,419 105,142 104,542 Employment 4 Nonagricultural industries2 ................ 87,302 91,031 93,648 94,553 94,534 94,626 94,298 93,912 93,609 93,346 5 Agriculture .......................................... 3,244 3,342 3,297 3,359 3,270 3,326 3,358 3,242 3,379 3,191 Unemployment 6 Number ................................................ 6,855 6,047 5,963 6,087 6,425 6,307 6,438 7,265 8,154 8,006 7 Rate (percent of civilian labor force) 7.0 6.0 5.8 5.9 6.2 6.0 6.2 7.0 7.8 7.7 8 Not in labor force........................................ 59,025 58,521 58,623 58,810 58,791 58,951 59,322 59,182 58,657 59,471 Establishment Survey Data 9 Nonagricultural payroll employment 3 .... 82,423 86,446 89,497 90,678 91,031 91,186 91,144 90,951 90,602 90,088 10 Manufacturing.................................................... 19,682 20.476 20,979 20,983 20,971 20,957 20,938 20,642 20,282 19,969 11 Mining .......................................................... 813 851 958 992 999 1,007 1,009 1,012 1,023 1,021 12 Contract construction ................................ 3,851 4,271 4,642 4,615 4,745 4,659 4,529 4,467 4,441 4,377 13 Transportation and public utilities .......... 4,713 4,927 5,154 5,212 5,202 5,198 5,202 5,178 5,162 5,143 14 Trade ............................................................ 18,516 19,499 20,140 20,448 20,529 20,637 20,610 20,531 20,496 20,422 15 Finance ................................................................. 4,467 4,727 4,964 5,064 5,091 5,101 5,115 5,119 5,139 5,153 16 Service .......................................................... 15,303 16,220 17,047 17,362 17,462 17,540 17,580 17,618 17,668 17,618 17 Government ................................................ 15,079 15.476 15,613 16,002 16,032 16,087 16,161 16,384 16,391 16,385 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. Department of La­ workers, and members of the Armed Forces. Data are adjusted to the March 1979 bor). benchmark and only seasonally adjusted data are available at this time. Based on 2.Includes self-employed, unpaid family, and domestic service workers. data from Employment and Earnings (U.S. Department of Labor). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics □ July 1980 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value' Monthly data are seasonally adjusted. 1967 1979 1980 Grouping p p ti o r o o r n ­ ­ a 1 a v 9 g e 7 e r 9 ­ June Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar.r Apr. MayP June6 Index (1967 - 100) Major Market 1 Total index..................................................... 100.00 152.2 152.6 151.6 152.4 152.2 152.1 152.2 152.6 152.3 151.7 148.3 144.7 141.2 2 Products ......................................................... 60.71 149.7 150.2 148.7 149.9 149.6 149.4 149.7 150.0 149.9 149.3 146.4 143.6 141.2 3 Final products ........................................... 47.82 147.0 147.6 145.6 147.2 146.8 146.6 147.0 147.0 147.4 147.1 145.0 142.7 140.8 4 Consumer goods................................... 27.68 150.5 151.8 148.2 149.7 149.7 148.9 148.5 148.2 148.5 147.8 144.9 141.9 140.6 5 Equipment ............................................. 20.14 142.2 141.9 141.8 143.9 142.9 143.6 145.0 145.4 146.0 146.1 145.2 143.8 141.2 6 Intermediate products ............................ 12.89 160.0 159.5 160.6 159.8 159.8 159.8 159.9 160.8 159.3 157.7 151.5 146.8 142.3 7 Materials ....................................................... 39.29 156.0 156.5 156.0 156.3 156.3 156.4 156.2 156.7 155.9 155.4 151.2 146.4 141.3 Consumer goods 8 Durable consumer goods .......................... 7.89 155.5 158.6 147.5 151.8 152.6 149.2 146.6 142.4 144.5 144.0 136.9 129.4 128.2 9 Automotive products .............................. 2.83 167.7 175.9 147.3 157.6 159.2 150.6 141.8 131.3 142.1 141.0 126.6 119.7 123.8 10 Autos and utility vehicles.................. 2.03 154.3 167.4 125.1 139.7 142.4 131.0 121.4 108.7 124.6 122.0 102.3 92.8 98.5 11 Autos ................................................. 1.90 136.7 148.0 118.5 128.0 129.0 118.3 110.2 98.0 116.8 114.9 97.1 88.4 95.3 80 201.6 197.5 203.7 203.0 202.1 200.3 193.6 188.5 186.7 189.1 188.2 188.1 188.2 13 Home goods ............................................. 5.06 148.7 148.8 147.7 148.5 148.8 148.4 149.3 148.6 145.8 145.7 142.2 134.9 130.7 14 Appliances, A/C, and TV.................. 1.40 127.5 129.3 121.2 129.6 128.0 129.7 134.2 128.9 122.4 122.1 114.8 102.5 99.4 15 Appliances and TV ........................ 1.33 129.3 131.2 124.1 132.2 130.2 132.4 136.5 130.0 124.4 125.0 117.5 105.7 16 Carpeting and furniture...................... 1.07 170.6 170.6 171.7 169.7 169.2 169.1 168.8 171.2 168.6 169.1 166.0 157.5 17 Miscellaneous home goods................ 2.59 151.1 150.5 152.1 150.0 151.7 150.0 149.4 149.9 149.1 148.8 147.3 143.1 139.5 18 Nondurable consumer goods .................... 19.79 148.5 149.1 148.5 148.9 148.6 148.7 149.2 150.5 150.1 149.3 148.3 146.8 145.5 19 Clothing ..................................................... 4.29 129.1 130.7 128.0 129.0 127.7 129.1 129.1 128.3 126.8 126.2 125.0 20 Consumer staples .................................... 15.50 153.8 154.2 154.2 154.3 154.3 154.2 154.8 156.7 156.5 155.6 154.7 153.4 152.0 21 Consumer foods and tobacco............ 8.33 145.4 146.2 145.3 146.5 146.7 145.9 146.8 148.4 148.3 147.9 147.7 147.0 22 Nonfood staples .................................. 7.17 163.6 163.5 164.6 163.5 163.2 163.8 164.2 166.4 166.1 164.6 162.8 160.9 160.0 23 Consumer chemical products ........ 2.63 205.5 205.9 209.2 207.2 206.4 207.9 207.8 210.5 210.7 208.9 206.9 204.2 24 Consumer paper products.............. 1.92 120.8 121.1 121.2 121.1 121.6 119.3 121.0 123.7 122.3 121.5 120.4 118.5 25 Consumer energy products............ 2.62 153.0 152.0 151.6 150.8 150.5 152.2 152.2 153.4 153.3 151.8 149.6 148.4 26 Residential utilities...................... 1.45 165.2 162.3 163.5 162.2 164.2 166.7 166.3 164.6 165.9 Equipment 27 Business ......................................................... 12.63 171.3 171.5 171.5 173.6 172.0 172.5 174.1 175.0 175.8 175.9 174.3 172.3 168.3 28 Industrial ................................................... 6.77 152.1 152.0 151.7 153.5 151.2 153.3 153.1 157.4 158.8 159.0 159.2 158.1 154.7 29 Building and mining............................ 1.44 206.1 205.3 210.6 212.0 200.6 204.4 204.4 222.9 230.2 235.2 239.6 240.2 236.1 30 Manufacturing ....................................... 3.85 130.3 130.1 131.1 130.4 130.8 132.5 132.1 132.6 132.8 132.4 131.5 130.4 127.6 31 Power ..................................................... 1.47 156.3 156.8 147.7 156.3 156.3 157.6 157.8 158.1 156.7 153.7 153.0 150.2 145.9 32 Commercial transit, farm ...................... 5.86 193.4 194.0 194.4 196.8 195.9 194.6 198.4 195.3 195.4 195.5 191.7 188.7 184.0 33 Commercial .......................................... 3.26 227.8 226.4 230.5 231.4 234.2 232.2 236.9 237.8 237.7 239.9 235.6 233.0 227.2 34 Transit ................................................... 1.93 152.2 155.3 149.4 156.3 154.9 150.3 153.3 143.8 146.6 143.3 143.8 137.1 134.1 35 Farm ....................................................... 67 144.9 148.1 148.3 145.3 128.0 139.5 141.0 137.1 129.9 129.6 116.4 122.1 36 Defense and space ...................................... 7.51 93.2 92.3 92.0 94.0 94.0 95.0 95.9 95.8 96.0 96.1 96.2 95.9 95.8 Intermediate products 37 Construction supplies.................................. 6.42 156.9 156.3 157.3 156.3 156.8 156.7 156.0 156.4 154.3 152.4 141.3 134.6 128.5 38 Business supplies ........................................ 6.47 163.1 162.6 163.8 163.2 162.7 162.9 163.8 165.0 164.2 163.0 161.7 158.8 39 Commercial energy products ................ 1.14 172.3 169.4 170.7 169.8 172.2 174.4 175.7 172.3 169.0 171.3 172.2 171.6 Materials 40 Durable goods materials............................ 20.35 157.8 159.5 157.7 157.6 157.2 156.0 155.6 156.3 154.9 154.5 148.8 142.9 137.5 41 Durable consumer parts ........................ 4.58 137.1 141.8 129.7 132.2 132.0 126.8 123.8 122.2 120.9 121.0 111.0 102.9 100.4 42 Equipment parts...................................... 5.44 189.9 191.0 190.7 192.0 192.7 195.1 196.6 199.8 199.3 199.9 196.3 192.0 185.3 43 Durable materials n.e.c............................ 10.34 150.0 150.8 152.7 150.7 149.6 148.3 148.0 148.6 146.6 145.5 140.5 134.8 128.7 44 Basic metal materials.......................... 5.57 124.0 126.1 127.7 124.8 121.4 119.9 117.7 118.8 116.5 116.8 109.5 102.4 45 Nondurable goods materials...................... 10.47 174.9 173.4 175.8 176.7 177.2 178.3 179.5 180.8 178.3 176.5 173.7 167.3 160.3 46 Textile, paper, and chemical materials . 7.62 182.9 181.7 184.3 185.9 186.1 186.7 187.8 188.6 185.7 184.3 181.4 174.5 167.0 47 Textile materials.................................. 1.85 121.0 122.9 120.6 124.4 124.3 123.2 123.7 122.3 122.5 119.8 117.9 114.4 48 Paper materials..................................... 1.62 143.2 141.1 146.7 148.1 148.6 148.4 148.2 146.3 139.9 141.8 140.9 137.2 49 Chemical materials.............................. 4.15 226.1 223.9 227.5 228.2 228.4 230.2 232.0 234.8 231.8 229.8 225.6 216.0 50 Containers, nondurable .......................... 1.70 164.5 159.2 162.9 161.8 166.1 168.1 169.6 174.1 172.6 167.7 165.8 156.8 51 Nondurable materials n.e.c...................... 1.14 136.7 139.0 138.2 136.9 134.4 137.4 138.8 138.5 137.2 137.2 133.7 134.2 52 Energy materials ........................................ 8.48 128.4 128.3 127.7 128.1 128.5 130.1 128.7 127.7 130.5 131.6 129.3 128.8 127.2 53 Primary energy ........................................ 4.65 113.0 112.4 112.0 113.6 114.6 114.9 113.5 113.1 113.5 115.6 116.1 115.5 54 Converted fuel materials........................ 3.82 147.2 147.6 146.9 145.7 145.3 148.7 147.3 145.3 151.3 151.1 145.3 145.1 Supplementary groups 55 Home goods and clothing.......................... 9.35 139.7 140.5 138.6 139.5 139.1 139.5 140.0 139.3 137.1 136.7 134.3 129.5 126.6 56 Energy, total................................................. 12.23 137.8 137.2 136.8 136.8 137.2 139.0 138.1 137.3 139.0 139.6 137.6 137.0 135.7 57 Products ..................................................... 3.76 158.8 157.3 157.4 156.5 157.1 159.0 159.3 159.1 158.1 157.7 156.5 155.4 58 Materials ................................................... 8.48 128.4 128.3 127.7 128.1 128.5 130.1 128.7 127.7 130.5 131.6 129.3 128.8 127.2 For notes see opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Output A49 2.13 Continued 1967 1979 1980 Grouping pro­ 1979 SIC por­ code tion June Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May/' June1' Index (1967 = 100) Major Industry 1 Mining and utilities .................... 12.05 144.5 143.0 144.9 144.5 146.0 147.7 148.3 147.4 148.6 150.2 148.9 148.8 148.4 2 Mining ...................................... 6.36 125.3 123.9 126.4 125.8 128.1 130.0 131.6 132.6 132.8 132.9 133.6 133.4 132.9 3 Utilities...................................... 5.69 166.1 164.2 165.5 165.3 166.1 167.4 167.0 163.9 166.1 169.6 166.1 165.9 165.7 4 Electric .................................. 3.88 185.8 182.4 183.6 184.1 184.3 185.7 186.0 183.0 185.0 5 Manufacturing .............................. 87.95 153.2 153.9 152.4 153.5 153.2 153.0 152.8 153.4 152.7 151.9 148.2’ 144.2 140.3 6 Nondurable .............................. 35.97 163.3 163.0 164.3 164.6 164.0 164.5 164.7 166.1 165.1 164.4 161.8 158.6 155.1 7 Durable .................................... 51.98 146.3 147.6 144.2 145.9 145.7 145.0 144.5 144.7 144.1 143.3 138.7 134.2 130.0 Mining 8 Metal ............................................ 10 .51 126.8 123.2 126.5 122.1 124.1 132.0 136.8 137.6 136.6 132.7 124.3 117.9 9 Coal .............................................. 11,12 .69 133.6 137.5 144.1 142.6 144.7 141.9 145.0 141.0 136.0 137.2 143.4 143.0 143.1 10 Oil and gas extraction................ 13 4.40 121.7 119.6 121.6 121.6 124.2 126.0 127.2 128.5 130.3 131.6 133.3 134.0 134.5 11 Stone and earth minerals .......... 14 .75 137.6 137.3 138.3 137.5 138.2 141.2 141.0 145.3 142.0 136.8 133.3 131.9 Nondurable manufactures 12 Foods ............................................ 20 8.75 147.9 149.5 148.1 148.8 148.6 148.3 148.9 150.0 150.2 150.3 149.0 149.3 13 Tobacco products ........................ 21 .67 117.1 118.3 107.5 115.6 115.6 113.0 116.6 118.7 120.0 123.1 121.9 14 Textile mill products .................. 22 2.68 143.8 144.6 144.1 146.9 146.0 147.9 147.1 147.8 143.7 141.9 140.2 135.3 15 Apparel products ........................ 23 3.31 130.7 132.0 130.1 131.2 128.5 128.8 128.3 127.2 128.0 128.0 126.0 16 Paper and products .................... 26 3.21 150.8 148.0 153.9 155.3 154.1 153.3 154.7 156.0 150.5 151.6 148.3 142.4 135.8 17 Printing and publishing.............. 27 4.72 136.9 136.9 137.7 137.1 137.2 136.2 137.8 138.9 139.9 139.2 136.5 135.5 134.0 18 Chemicals and products.............. 28 7.74 210.4 207.8 213.1 212.0 211.4 215.1 216.5 217.7 216.0 214.5 210.2 204.7 19 Petroleum products .................... 29 1.79 143.6 143.9 143.0 143.1 141.1 142.1 142.6 146.7 144.4 141.6 137.2 132.6 131.5 20 Rubber and plastic products .... 30 2.24 270.0 270.0 275.7 272.9 274.5 271.3 262.3 266.9 267.9 264.8 264.0 254.8 21 Leather and products.................. 31 .86 71.3 70.1 69.7 70.8 70.1 70.4 71.2 73.2 71.9 71.7 69.8 67.9 Durable manufactures 22 Ordnance, private and government .......................... 19,91 3.64 75.5 75.1 74.9 75.3 75.3 77.0 77.0 76.6 76.7 76.9 77.3 77.3 77.4 23 Lumber and products.................. 24 1.64 136.9 136.8 138.0 138.6 138.7 136.1 131.7 131.6 130.2 125.4 106.5 100.6 24 Furniture and fixtures ................ 25 1.37 161.4 159.6 161.7 162.0 163.3 162.9 161.0 161.0 159.2 159.5 158.2 152.0 25 Clay, glass, stone products........ 32 2.74 163.3 162.7 161.4 160.6 162.3 162.8 164.4 165.1 162.6 156.5 149.4 143.8 26 Primary metals ............................ 33 6.57 121.2 124.3 121.0 121.7 118.0 117.2 115.4 116.4 111.9 113.6 106.9 98.0 90.4 27 Iron and steel .......................... 331.2 4.21 113.2 118.1 112.0 115.0 108.2 108.0 106.6 107.2 103.4 106.0 97.4 84.2 28 Fabricated metal products.......... 34 5.93 148.5 149.3 147.6 146.5 147.5 146.9 146.1 145.0 145.3 144.7 141.9 136.1 130.6 29 Nonelectrical machinery ............ 35 9.15 163.6 164.5 166.2 165.1 162.3 162.8 162.9 166.9 166.1 166.0 163.3 161.9 157.5 30 Electrical machinery .................. 36 8.05 175.0 175.1 171.7 176.7 177.3 179.5 181.2 181.7 179.7 179.5 177.3 172.0 165.9 31 Transportation equipment.......... 37 9.27 135.3 139.4 124.7 131.7 133.7 128.2 125.9 122.4 126.2 124.3 114.9 110.3 109.0 32 Motor vehicles and parts........ 371 4.50 160.0 169.6 138.5 150.6 150.6 139.9 135.4 127.6 135.4 131.7 115.0 106.6 106.9 33 Aerospace and miscellaneous transportation equipment 372-9 4.77 112.0 111.0 111.8 113.9 117.7 117.1 117.0 117.5 117.5 117.2 114.8 113.9 111.0 34 Instruments .................................. 38 2.11 174.9 175.9 173.9 172.9 175.0 173.3 175.0 175.8 175.0 173.8 174.3 172.0 172.1 35 Miscellaneous manufactures .... 39 1.51 153.7 152.7 155.7 153.6 154.5 155.3 153.7 154.0 152.0 152.0 151.3 147.0 142.4 Gross value (billions of 1972 dollars, annual rates) Major Market 36 Products, total.............................. 507.4 624.1 628.7 613.0 622.6 621.6 617.8 619.0 617.1 620.8 615.5 600.5 588.4 578.5 37 Final .............................................. 390.92 479.9 485.1 468.8 478.8 477.6 474.4 475.2 472.7 477.5 473.9 465.0 457.0 451.3 38 Consumer goods ...................... 277.52 326.3 329.8 319.2 323.6 324.6 321.9 321.6 319.6 321.8 320.0 313.3 306.8 304.3 39 Equipment ................................ 113.42 153.7 155.4 149.6 155.2 153.0 152.5 153.6 153.1 155.7 153.8 151.7 150.2 146.9 40 Intermediate ................................ 116.62 144.2 143.6 144.2 143.8 144.0 143.4 143.8 144.5 143.3 141.7 135.5 131.4 127.2 1. The industrial production 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 □ July 1980 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates except as noted. 1979' 1980 Item 1977 1978 1979' Nov. Dec. Jan.r Feb/ Mar/ Apr/ May Private residential real estate activity (thousands of units) New Units 1 Permits authorized .................................. 1,677 1,801 1,552 1,287 1,247 1,271 1,168 968 789 806 2 1-family ................................................. 1,125 1,183 981 773 776 780 708 556 473 489 3 2-or-more-family .................................. 551 618 570 514 471 491 460 412 316 317 4 Started ....................................................... 1,987 2,020 1,745 1,522 1,548 1,419 1,330 1,041 1,039 920 5 1-family ................................................. 1,451 1,433 1,194 980 1,055 1,002 786 617 631 616 6 2-or-more-family .................................. 536 587 551 542 493 417 544 424 408 304 7 Under construction, end of period1 ... 1,208 1,310 1,140 1,188 1,160 1,163 1,095 1,064 989 n.a. 8 1-family ................................................. 730 765 639 687 662 669 622 590 540 n.a. 9 2-or-more-family .................................. 478 546 501 501 498 494 473 474 449 n.a. 10 Completed ................................................. 1,656 1,868 1,855 1,831 1,880 1,787 1,832 1,666 1,895 n.a. 11 1-family ................................................. 1,258 1,369 1,286 1,240 1,328 1,276 1,230 1,091 1,128 n.a. 12 2-or-more-family .................................. 399 498 570 591 552 511 602 575 767 n.a. 13 Mobile homes shipped............................ 277 276 277 251 241 276 270 226 201 n.a. Merchant builder activity in 1-family units 14 Number sold ............................................ 820 818 709 617 571 584 548 458 350 488 15 Number for sale, end of period1 .......... 408 419 402 399 398 396 384 379 366 350 Price (thousand of dollars)2 Median 16 Units sold ............................................ 49.0 55.8 62.7 63.9 61.5 63.2 64.8 62.3 63.2 62.6 Average 17 Units sold ............................................ 54.4 62.7 71.9 74.2 72.6 72.5 76.6 70.9 73.7 73.4 Existing Units (1-family) 18 Number sold ............................................. 3,572 3,905 3,742 3,450 3,350 3,210 2,990 2,750 2,420 2,310 Price of units sold (thous. of dollars)2 19 Median ....................................................... 42.8 48.7 55.5 55.6 56.5 57.9 59.0 59.5 60.4 61.2 20 Average ..................................................... 47.1 55.1 64.0 64.6 65.2 68.2 69.4 69.4 70.6 71.2 Value of new construction3 (millions of dollars) Construction 21 Total put in place.................................... 173,998 206,223 226,885 238,707 237,698 242,009 249,966 237,132 226,567 218,477 22 Private ...................................................... 135,824 160,403 178,168 185,948 185,802 189,906 190,558 180,616 172,400 165,714 23 Residential............................................ 80,957 93,425 97,574 100,663 101,088 101,982 99,654 93,991 84,534 78,375 24 Nonresidential, total .......................... 54,867 66,978 80,594 85,285 84,714 87,924 90,904 86,625 87,866 87,339 Buildings 25 Industrial ...................................... 7,713 10,993 14,424 15,019 15,022 15,249 15,559 13,916 13,611 13,585 26 Commercial .................................. 14,789 18,568 24,234 26,663 26,923 28,857 30,707 29,911 30,878 30,196 27 Other ............................................ 6,200 6,739 7,352 7,851 7,722 8,194 9,090 8,515 8,220 8,252 28 Public utilities and other................ 26,165 30,678 34,584 35,752 35,047 35,624 35,548 34,283 35,157 35,306 29 Public ........................................................ 38,172 45,821 48,722 52,759 51,895 52,103 59,409 56,516 54,167 52,764 30 Military ................................................ 1,428 1,498 1,629 1,778 1,742 1,724 1,844 1,895 1,931 1,551 31 Highway ................................................ 8,984 10,286 11,167 14,518 11,900 12,495 15,586 12,574 n.a. n.a. 32 Conservation and development ........ 3,862 4,436 4,736 4,291 4,955 5,186 5,225 5,582 n.a. n.a. 33 Other4.................................................... 23,898 29,601 31,190 32,172 33,298 32,698 36,754 36,465 n.a. n.a. 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 Index level Item 1979 1980 1980 M 19 a 8 y 0 1979 1980 (1967 May May May = 100)' June Sept. Dec. Mar. Jan. Feb. Mar. Apr. 2 Consumer Prices 1 AH items............................................................... 10.8 14.4 12.8 13.8 13.7 18.1 1.4 1.4 1.4 .9 .9 244.9 2 Commodities ................................................ 10.9 12.4 12.7 13.3 12.5 16.1 1.4 1.2 1.2 .5 .3 231.4 3 Food .......................................................... 11.4 6.9 6.4 6.5 12.1 3.8 0.0 0.0 1.0 .5 .3 250.4 4 Commodities less food .......................... 10.8 14.9 15.6 16.4 12.7 22.1 2.0 1.7 1.3 .5 .4 220.2 5 Durable ................................................ 10.0 9.5 9.4 9.1 13.2 7.6 1.1 .5 .2 .5 .6 207.1 6 Nondurable .......................................... 11.8 21.9 24.7 25.2 12.8 39.8 3.2 3.0 2.4 .6 .2 235.5 7 Services ........................................................ 10.3 17.3 13.2 14.3 15.8 20.9 1.4 1.5 1.9 1.5 1.6 269.2 8 Rent .......................................................... 6.8 8.7 8.2 10.2 9.0 8.3 .7 .8 .5 .2 1.0 188.9 9 Services less rent .................................... 10.9 18.6 13.9 14.9 16.9 22.8 1.5 1.7 2.0 1.7 1.7 284.4 Other groupings 10 All items less food...................................... 10.5 16.1 4.4 15.4 14.2 21.7 1.8 1.6 1.5 1.1 1.0 242.6 11 All items less food and energy.................. 9.5 13.2 10.1 10.9 13.9 15.7 1.3 1.1 1.2 1.1 1.0 231.0 12 Homeownership .......................................... 14.6 22.8 17.8 19.5 25.6 24.1 1.9 1.5 2.1 1.9 1.8 312.9 Producer Prices 13 Finished goods ............................................ 10.2 13.3 7.9 16.1 13.3 18.9 1.6 1.4 1.3 .5 .3 241.0 14 Consumer ................................................ 10.6 14.7 7.1 20.7 14.6 21.2 1.6 1.7 1.5 0.0 .4 242.8 15 Foods .................................................... 9.6 1.5 -9.2 15.3 8.6 -1.2 -.9 -.4 1.0 -2.8 .1 230.0 16 Excluding foods .................................. 11.1 22.1 17.2 23.4 17.9 34.2 2.9 2.8 1.7 1.4 .4 246.8 17 Capital equipment .................................. 9.2 9.7 9.4 5.9 10.0 12.7 1.6 .7 .7 1.9 0.0 236.0 18 Materials ...................................................... 12.6 13.7 12.8 19.7 15.8 16.4 2.0 2.0 -.1 - .6 .6 280.7 19 Intermediate3 .......................................... 11.5 16.2 15.4 19.4 17.0 23.1 3.0 1.8 .5 .3 .1 278.0 Crude 20 Nonfood ................................................ 20.2 20.8 23.1 25.1 27.8 21.4 3.2 3.3 -1.5 -.5 .1 410.4 21 Food ...................................................... 15.0 -3.6 -4.5 16.4 5.7 -16.7 -3.8 2.2 -2.7 -6.1 2.4 242.9 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 □ July 1980 2.16 GROSS NATIONAL PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates. 1978 1980 04 Ql Q2 Q3 04 Ql' Gross National Product 1 Total ................................................................................... 2,127.6 2,368.8 2,235.2 2,292.1 2,329.8 2,456.9C 2,520.8 By source 2 Personal consumption expenditures ....................... 1,210.0 1,350.8 1,509.8 1,415.4 1,454.2 1,475.9 1,528.6 1,580.4 1,629.5 3 Durable goods ........................................................... 178.8 200.3 213.0 212.1 213.8 208.7 213.4 216.2 220.2 4 Nondurable goods .................................................... 481.3 530.6 596.9 558.1 571.1 581.2 604.7 630.7 652.0 5 Services ........................................................................ 549.8 619.8 699.8 645.1 669.3 686.0 710.6 733.5 757.3 6 Gross private domestic investment......................... 303.3 351.5 387.2 370.5 373.8 395.4 392.3 387.2 387.7 7 Fixed investment ...................................................... 281.3 329.1 369.0 349.8 354.6 361.9 377.8 381.7 383.0 8 Nonresidential ...................................................... 189.4 221.1 254.9 236.1 243.4 249.1 261.8 265.2 272.6 9 Structures............................................................. 62.6 76.5 92.6 84.4 84.9 90.5 95.0 100.2 103.3 10 Producers’ durable equipment.................... 126.8 144.6 162.2 151.8 158.5 158.6 166.7 165.1 169.4 11 Residential structures ......................................... 91.9 108.0 114.1 113.7 111.2 112.9 116.0 116.4 110.4 12 Nonfarm............................................................... 104.4 110.2 110.0 107.8 109.1 112.0 112.1 105.9 13 Change in business inventories........................... 21.9 22.3 18.2 20.6 19.1 33.4 14.5 5.6 4.7 14 Nonfarm ................................................................. 20.7 21.3 16.5 19.3 18.8 32.6 12.6 2.1 4.4 15 Net exports of goods and services........................... -9.9 -10.3 -4.6 -4.5 4.0 -8.1 -2.3 -11.9 -13.6 16 Exports ........................................................................ 175.9 207.2 257.5 224.9 238.5 243.7 267.3 280.4 308.1 17 Imports ........................................................................ 185.8 217.5 262.1 229.4 234.4 251.9 269.5 292.4 321.7 18 Government purchases of goods and services ... 396.2 435.6 476.4 453.8 460.1 466.6 477.8 501.2 517.2 19 Federal .......................................................................... 144.4 152.6 166.6 159.0 163.6 161.7 162.9 178.4 186.2 20 State and local .......................................................... 251.8 283.0 309.8 294.8 296.5 304.9 314.9 322.8 331.0 By major type of product 21 Final sales, total............................................................. 1,877.6 2,105.2 2,350.6 2.214.5 2,272.9 2,296.4 2.381.9 2,451.4 2.516.1 22 Goods............................................................................ 842.2 930.0 1.030.5 983.8 1,011.8 1,018.1 1,036.0 1.056.3 1.086.2 23 Durable ................................................................... 345.9 380.4 423.1 402.3 425.5 422.4 424.4 420.2 421.5 24 Nondurable ............................................................. 496.3 549.6 607.4 581.6 586.2 595.7 611.6 636.1 664.8 25 Services ........................................................................ 866.4 969.3 1,085.1 1,005.3 1,041.4 1.064.2 1,100.6 1,134.0 1,169.5 26 Structures ................................................................... 190.9 228.2 253.2 246.0 238.9 247.5 259.8 266.6 265.1 27 Change in business inventories ............................... 21.9 22.3 18.2 20.6 19.1 33.4 14.5 5.6 4.7 28 Durable goods .......................................................... 11.9 13.9 13.0 13.4 18.4 24.3 7.3 1.8 -9.3 29 Nondurable goods .................................................... 10.0 8.4 5.2 7.2 .7 9.1 7.2 3.8 14.0 30 Memo: Total GNP in 1972 dollars......................... 1,340.5 1.431.6 1.426.6 1,430.6 1.422.3 1,433.3 1.440.3 1,444.7 National Income 31 Total ................................................................................... 1.525.8 1,724.3 1,925.6 1,820.0 1,869.0 1,897.9 1.941.9 1.990.4 2,035.4 32 Compensation of employees .................................... 1.156.9 1.304.5 1,227.4 1,364.8 1,411.2 1,439.7 1.472.9 1,513.2 1,555.2 33 Wages and salaries.................................................... 984.0 1.103.5 1,459.2 1,154.7 1,189.4 1,211.5 1,238.0 1,270.7 1,303.6 34 Government and government enterprises .. 201.3 218.0 233.5 225.1 228.1 231.2 234.4 240.2 243.5 35 Other ........................................................................ 782.7 885.5 993.9 929.6 961.3 980.3 1,003.6 1.030.5 1,060.1 36 Supplement to wages and salaries...................... 172.9 201.0 231.8 210.1 221.8 228.2 234.8 242.5 251.6 37 Employer contributions for social insurance 81.2 94.6 109.1 98.2 105.8 107.9 109.9 113.0 117.2 38 Other labor income............................................. 91.8 106.5 122.7 111.9 116.0 120.3 124.9 129.6 134.4 39 Proprietors’ income1 ................................................... 100.2 116.8 130.8 125.7 129.0 129.3 130.3 134.5 130.0 40 Business and professional1 .................................... 80.5 89.1 98.0 94.4 94.8 95.5 99.4 102.1 102.3 41 Farm1 ............................................................................ 19.6 27.7 32.8 31.3 34.2 33.7 30.9 32.5 27.7 42 Rental income of persons2........................................ 24.7 25.9 26.9 27.1 27.3 26.8 26.6 27.0 27.0 43 Corporate profits1 ........................................................ 150.0 167.7 179.0 184.8 178.9 176.6 180.8 176.4 175.0 44 Profits before tax3 ................................................... 177.1 206.0 237.4 227.4 233.3 227.9 242.3 243.0 260.4 45 Inventory valuation adjustment........................... -15.2 -25.2 -41.8 -28.8 -39.9 -36.6 -44.0 -46.5 -63.2 46 Capital consumption adjustment........................ - 12.0 -13.1 -16.7 -13.8 -14.5 -14.7 -17.6 - 20.1 - 22.2 47 Net interest ..................................................................... 94.0 109.5 129.7 117.6 122.6 125.6 131.5 139.2 148.1 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. 1978 Account 1977 1978 1979' Q4 01 02 03 04 Ql' Personal Income and Saving 1 Total personal income........................................................ 1.531.6 1,717.4 1.924.2 1.803.1 1.852.6 1,892.5 1.946.6 2.005.0 2.057.4 2 Wage and salary disbursements...................................... 984.0 1.103.3 1,227.6 1.154.3 1,189.3 1.212.4 1,238.1 1,270.5 1,303.7 3 Commodity-producing industries............................... 343.1 387.4 435.2 408.6 423.0 431.7 438.3 447.8 460.0 4 Manufacturing............................................................... 266.0 298.3 330.9 312.7 324.8 328.5 331.9 338.3 347.2 5 Distributive industries ................................................... 239.1 269.4 300.8 281.6 291.1 295.8 304.0 312.4 320.1 6 Service industries ............................................................ 200.5 228.7 257.9 239.4 247.2 252.8 261.3 270.2 280.0 7 Government and government enterprises............. 201.3 217.8 233.7 224.7 228.0 232.1 234.5 240.1 243.6 8 Other labor income ............................................................ 91.8 106.5 122.7 111.9 116.0 120.3 124.9 129.6 134.4 9 Proprietors’ income1 .......................................................... 100.2 116.8 130.8 125.7 129.0 129.3 130.3 134.5 130.0 10 Business and professional1 ........................................... 80.5 89.1 98.0 94.4 94.8 95.5 99.4 102.1 102.3 11 Farm1 ................................................................................... 19.6 27.7 32.8 31.3 34.2 33.7 30.9 32.5 27.7 12 Rental income of persons2............................................... 24.7 25.9 26.9 27.1 27.3 26.8 26.6 27.0 27.0 13 Dividends .............................................................................. 42.1 47.2 52.7 49.7 51.5 52.3 52.8 54.4 56.7 14 Personal interest income................................................... 141.7 163.3 192.1 174.3 181.0 187.6 194.4 205.5 217.2 15 Transfer payments ............................................................... 208.4 224.1 252.0 231.8 237.3 243.6 260.8 266.5 274.9 16 Old-age survivors, disability, and health insurance benefits ..................................................................... 105.0 116.3 132.4 121.5 123.8 127.1 138.7 140.0 142.0 17 Less: Personal contributions for social insurance . 61.3 69.6 80.7 71.8 78.7 79.8 81.2 82.9 86.6 18 Equals: Personal income ............................................... 1.531.6 1.717.4 1.924.2 1.803.1 1.852.6 1.892.5 1.946.6 2.005.0 2.057.4 19 Less: Personal tax and nontax payments................ 226.4 259.0 299.9 278.2 280.4 290.7 306.6 321.9 320.0 20 Equals: Disposable personal income ......................... 1.305.1 1.458.4 1.629.3 1,524.8 1,572.2 1.601.7 1,640.0 1.683.1 1.737.4 21 Less: Personal outlays.................................................... 1.240.2 1.386.4 1,550.5 1.453.4 1,493.0 1.515.8 1.569.7 1,623.4 1,672.9 22 Equals: Personal saving ................................................. 65.0 72.0 73.8 71.5 79.2 85.9 70.3 59.7 64.4 Memo: Per capita (1972 dollars) 23 Gross national product ................................................. 6,181 6,402 6,494 6,506 6,514 6,459 6,494 6,509 6,514 24 Personal consumption expenditures ......................... 3,974 4,121 4,194 4,197 4,197 4,155 4,195 4,227 4,222 25 Disposable personal income........................................ 4,285 4,449 4,512 4,522 4,536 4,510 4,501 4,502 4,502 26 Saving rate (percent).......................................................... 5.0 4.9 4.5 4.7 5.0 5.4 4.3 3.5 3.7 Gross Saving 27 Gross saving .......................................................................... 276.1 324.6 363.9 346.9 362.2 374.3 367.3 351.9 346.6 28 Gross private saving .......................................................... 295.6 324.9 350.1 336.1 345.2 360.5 352.1 340.7 343.7 29 Personal saving...................................................................... 65.0 72.0 73.8 71.5 79.2 85.9 70.3 59.7 64.4 30 Undistributed corporate profits1 .................................... 35.2 36.0 33.4 40.1 36.1 35.6 34.0 25.9 15.9 31 Corporate inventory valuation adjustment ................ -15.2 -25.2 -41.8 -28.8 -39.9 -36.6 -44.0 -46.5 -63.2 Capital consumption allowances 32 Corporate ............................................................................... 121.3 132.9 147.7 136.8 139.9 145.1 150.4 155.3 159.6 33 Noncorporate ........................................................................ 74.1 84.0 95.3 87.7 89.9 93.9 97.5 99.8 103.7 34 Wage accruals less disbursements.................................. 35 Government surplus, or deficit (-), national income and product accounts................................................. -19.5 -.3 13.5 10.8 15.8 12.7 14.0 10.0 1.7 36 Federal ................................................................................. -46.3 -27.7 -11.2 -16.3 -11.7 -7.0 -11.3 -15.7 -22.9 37 State and local ................................................................. 26.8 27.4 24.7 27.1 27.6 19.7 25.3 25.8 24.6 38 Capital grants received by the United States, net .. 1.1 1.1 1.1 1.1 1.1 1.2 39 Gross investment ................................................................. 367.6 362.8 373.1 375.6 359.1 357.5 40 Gross private domestic...................................................... 303.3 351.5 387.2 370.5 373.8 395.4 392.3 387.2 387.7 41 Net foreign ............................................................................. -19.6 -23.5 -19.5 -19.4 -11.0 -22.3 -16.7 -28.1 -30.2 42 Statistical discrepancy ........................................................ 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 □ July 1980 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data are seasonally adjusted except as noted.1 1979' 1980 Item credits or debits 1977r 1978' 1979' 01 02 03 Q4 01 1 Balance on current account ..................................................... -14,068 -14,259 -788 1,408 -1,493 1,099 -1,802 -2,567 2 Not seasonally adjusted......................................................... 1,697 -61 -2,909 486 -2,405 3 Merchandise trade balance2 ................................................ -30,873 -33,759 -29,469 -5,114 -8,070 -7,060 -9,225 -10,875 4 Merchandise exports ......................................................... 120,816 142,054 182,055 41,805 42,815 47,198 50,237 54,708 5 Merchandise imports ......................................................... -151,689 -175,813 -211,524 -46,919 -50,885 -54,258 -59,462 -65,583 6 Military transactions, net ..................................................... 1,628 886 -1,274 -29 -102 -443 -700 -700 7 Investment income, net3....................................................... 17,988 20,899 32,509 7,038 7,271 9,319 8,883 10,123 8 Other service transactions, net............................................ 1,794 2,769 3,112 837 791 690 792 761 9 MEMO: Balance on goods and services3-4........................ -9,464 -9,204 4,878 2,732 -110 2,506 -250 -691 10 Remittances, pensions, and other transfers...................... -1,830 -1,884 -2,142 -464 -484 -529 -665 -564 11 U.S. government grants (excluding military).................... -2,775 -3,171 -3,524 -860 -899 -878 -887 -1,312 12 Change in U.S. government assets, other than official re­ serve assets, net (increase, - ) ........................................ -3,693 -4,644 -3,783 -1,102 -991 -766 -925 -1,461 13 Change in U.S. official reserve assets (increase, - ) .......... -375 732 -1,106 -3,585 343 2,779 -644 -3,246 14 Gold ......................................................................................... -118 -65 -65 0 0 0 -65 0 15 Special drawing rights (SDRs)............................................ -121 1,249 -1,136 -1,142 6 0 0 -1,152 16 Reserve position in International Monetary Fund.......... -294 4,231 -189 -86 -78 -52 27 -34 17 Foreign currencies ................................................................. 158 -4,683 283 -2,357 415 2,831 -606 -2,060 18 Change in U.S. private assets abroad (increase, -)3........ -31,725 -57,279 -56,858 -3,081 -14,631 -27,228 -11,918 -7,110 19 Bank-reported claims............................................................. -11,427 -33,631 -25,868 6,181 -7,839 -16,997 -7,213 -978 20 Nonbank-reported claims ..................................................... -1,940 -3,853 -2,029 -2,442 935 -932 410 n.a. 21 U.S. purchase of foreign securities, net............................ -5,460 -3,450 -4,643 -1,001 -513 -2,143 -986 -787 22 U.S. direct investments abroad, net3................................ -12,898 -16,345 -24,318 -5,819 -7,214 -7,156 -4,129 -5,345 23 Change in foreign official assets in the United States (increase, + )....................................................................... 36,574 33,292 -14,270 -8,744 -10,095 5,789 -1,221 -7,765 24 U.S. Treasury securities ....................................................... 30,230 23,523 -22,356 -8,752 -12,859 5,024 -5,769 -5,503 25 Other U.S. government obligations .................................. 2,308 666 465 -5 94 335 41 801 26 Other U.S. government liabilities5 .................................... 1,159 2,220 -714 -128 122 216 -924 -43 27 Other U.S. liabilities reported by U.S. banks.................. 773 5,488 7,219 -72 2,354 56 4,881 -3,365 28 Other foreign official assets6 .............................................. 2,105 1,395 1,116 213 195 158 550 345 29 Change in foreign private assets in the United States (increase, + )3 ..................................................................... 14,167 30,804 51,845 10,945 16,502 19,152 5,246 12,781 30 U.S. bank-reported liabilities............................................... 6,719 16,259 32,668 7,001 12,082 13,185 400 5,902 31 U.S. nonbank-reported liabilities........................................ 473 1,640 1,692 -543 579 606 1,050 n.a. 32 Foreign private purchases of U.S. Treasury securities. net ..................................................................................... 534 2,197 4,830 2,564 - 120 1,466 920 3,279 33 Foreign purchases of other U.S. securities, net .............. 2,713 2,811 2,942 803 1,149 677 313 2,477 34 Foreign direct investments in the United States, net3 ... 3,728 7,896 9,713 1,120 2,812 3,217 2,564 1,123 35 Allocation of SDRs ................................................................... 0 0 1,139 1,139 0 0 0 1,152 36 Discrepancy ................................................................................. -880 11,354 23,822 3,020 10,364 -825 11,264 8,215 37 Owing to seasonal adjustments .......................................... 74 1,167 -3,641 2,400 -115 38 Statistical discrepancy in recorded data before seasonal adjustment ....................................................................... -880 11,354 23,822 2,946 9,197 2,816 8,864 8,330 Memo: Changes in official assets 39 U.S. official reserve assets (increase, - ) .......................... -375 732 -1,106 -3,585 343 2,779 -644 -3,246 40 Foreign official assets in the United States (increase, + ) ................................................................... 35,416 31,072 -13,556 -8,616 - 10,216 5,573 -297 -7,722 41 Change in Organization of Petroleum Exporting Countries official assets in the United States (part of line 23 above) .................................................................................. 6,351 -1,137 5,508 -1,361 238 1,676 4,955 2,721 42 Transfers under military grant programs (excluded from lines 4, 6, and 11 above).................................................. 204 236 305 29 49 88 139 91 1. Seasonal factors are no longer calculated for lines 13 through 42. 5. Primarily associated with military sales contracts and other transactions ar­ 2. Data are on an international accounts (IA) basis. Differs from the census ranged with or through foreign official agencies. basis primarily because the IA basis includes imports into the U.S. Virgin Islands, 6. Consists of investments in U.S. corporate stocks and in debt securities of and it excludes military exports, which are part of line 6. private corporations and state and local governments. 3. Includes reinvested earnings of incorporated affiliates. 4. Differs from the definition of “net exports of goods and services” in the Note. Data are from Bureau of Economic Analysis, Survey of Current Business national income and product (GNP) account. The GNP definition makes various (U.S. Department of Commerce). adjustments to merchandise trade and service transactions. 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 1980 Item 1977 1978 1979 Nov. Dec. Jan. Feb. Mar. Apr. May 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments .......................................... 121,150 143,578 181,637 16,928 16,742 17,348 17.233 18,534 18,468 17,678 2 GENERAL IMPORTS including mer­ chandise for immediate consump­ tion plus entries into bonded warehouses ...................................... 147,685 171,978 206,326 18,548 19,665 20,945 21,640 20,607 19,308 20,528 3 Trade balance .......................................... -26,535 -28,400 -24,690 -1,620 -2,923 -3,597 -4,407 -2,073 -840 -2,850 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 repoirted separately in the “service account"). 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1979 1980 Type 1977 1978 1979 Dec. Jan. Feb. Mar. Apr. May June 1 Total i ........................................................ 19,312 18,650 18,928 18,928 20,962 20,840 21,448 21,521 21,794 21,921 2 Gold stock, including Exchange Stabili­ zation Fund1 .................................... 11,719 11,671 11,172 11,172 11,172 11,172 11,172 11,172 11,172 11,172 3 Special drawing rights2-3 ........................ 2,629 1,558 2,724 2,724 3,871 3,836 3,681 3,697 3,744 3,782 4 Reserve position in International Mone­ tary Fund2 ........................................ 4,946 1,047 1,253 1,253 1,251 1,287 1,222 1,094 1,157 1,385 5 Foreign currencies4 ................................ 18 4,374 3,779 3,779 4,668 4,545 5,373 5,558 5,721 5,582 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; $1,124 million on Jan. 1, 1979; and $1,150 million Jan. 1, 1980; plus net 2. Beginning July 1974, the IMF adopted a technique for valuing the SDR based transactions in SDRs. on a weighted average of exchange rates for the currencies of 16 member countries. 4. Beginning November 1978, valued at current market exchange rates. 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 □ July 1980 3.13 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data Millions of dollars, end of period 1979 1980 Asset account 1976 1977 1978' Oct. Nov. Dec. Jan. Feb. Mar. Apr .p All foreign countries 1 Total, all currencies................................ 219,420 258,897 306,795 358,320 365,587 364,166 360,373 372,099' 371,483 375,940 2 Claims on United States........................ 7,889 11,623 17,340 34,880 37,606 32,282 31,573 39,678' 35,592 34,235 3 Parent bank........................................... 4,323 7,806 12,811 28,046 31,133 25,929 24,788 32,192' 28,224 26,345 4 Other ..................................................... 3,566 3,817 4,529 6,834 6,473 6,353 6,785 7,486 7,368 7,890 5 Claims on foreigners .............................. 204,486 238,848 278,135 309,652 313,409 317,130 313,846 317,051 319,812 325,367 6 Other branches of parent bank........ 45,955 55,772 70,338 80,126 79,076 79,661 75,419 78,185 80,574 79,541 7 Banks ..................................................... 83,765 91,883 103,111 119,253 122,004 123,335 125,052 124,422 126,138 130,067 8 Public borrowers2................................ 10,613 14,634 23,737 25,288 25,568 26,060 25,784 26,032 25,458 25,202 9 Nonbank foreigners ............................ 64,153 76,560 80,949 84,985 86,761 88,074 87,591 88,412 87,642 90,557 10 Other assets.............................................. 7,045 8,425 11,320 13,788 14,572 14,754 14,954 15,370 16,079 16,338 11 Total payable in U.S. dollars................ 167,695 193,764 224,940 263,094 266,544 267,645 265,157 276,017' 276,711 277,692 12 Claims on United States........................ 7,595 11,049 16,382 33,638 36,362 31,151 30,488 38,461' 34,412 32,951 13 Parent bank........................................... 4,264 7,692 12,625 27,674 30,652 25,632 24,516 31,812' 27,872 25,975 14 Other ..................................................... 3,332 3,357 3,757 5,964 5,710 5,519 5,972 6,649 6,540 6,976 15 Claims on foreigners .............................. 156,896 178,896 203,498 222,543 223,201 229,074 226,811 229,071 233,781 235,804 16 Other branches of parent bank......... 37,909 44,256 55,408 61,918 60,397 61,525 58,084 60,217 63,434 61,787 17 Banks ........................................................... 66,331 70,786 78,686 90,911 92,730 96,183 97,887 97,193 99,473 103,148 18 Public borrowers2................................ 9,022 12,632 19,567 20,909 21,160 21,618 21,523 21,777 21,354 20,985 19 Nonbank foreigners ............................ 43,634 51,222 49,837 48,805 48,914 49,748 49,317 49,884 49,520 49,884 20 Other assets.............................................. 3,204 3,820 5,060 6,913 6,981 7,420 7,858 8,485 8,518 8,937 United Kingdom 21 Total, all currencies................................ 81,466 90,933 106,593 127,949 131,959 130,873 128,417 133,793 136,654 138,915 22 Claims on United States........................ 3,354 4,341 5,370 11,653 11,841 11,117 10,147 10,697 11,990 11,533 23 Parent bank.......................................... 2,376 3,518 4,448 9,643 9,892 9,338 8,207 8,584 9,838 9,300 24 Other .................................................... 978 823 922 2,010 1,949 1,779 1,940 2,113 2,152 2,233 25 Claims on foreigners .............................. 75,859 84.016 98,137 112,450 115,656 115,123 113,617 118,212 119,290 122,105 26 Other branches of parent bank......... 19,753 22.017 27,830 32,464 33,487 34,291 31,995 35,187 35,536 36,015 27 Banks ..................................................... 38,089 39,899 45,013 51,466 52,580 51,343 52,177 53,127 52,509 54,020 28 Public borrowers2................................ 1,274 2,206 4,522 4,646 4,868 4,919 4,559 4,499 5,860 5,578 29 Nonbank foreigners ............................ 16,743 19,895 20,772 23,874 24,721 24,570 24,886 25,399 25,385 26,492 30 Other assets.............................................. 2,253 2,576 3,086 3,846 4,462 4,633 4,653 4,884 5,374 5,277 31 Total payable in U.S. dollars................ 61,587 66,635 75,860 91,485 93,502 94,287 91,760 96,228 99,711 100,628 32 Claims on United States........................ 3,275 4,100 5,113 11,164 11,352 10,746 9,820 10,285 11,620 11,071 33 Parent bank.......................................... 2,374 3,431 4,386 9,485 9,697 9,297 8,161 8,467 9,778 9,179 34 Other .......................................................... 902 669 727 1,679 1,655 1,449 1,659 1,818 1,842 1,892 35 Claims on foreigners .............................. 57,488 61,408 69,416 78,428 80,127 81,294 79,740 83,603 85,452 86,818 36 Other branches of parent bank......... 17,249 18,947 22,838 27,092 27,993 28,928 26,842 29,907 30,204 29,980 37 Banks .................................................... 28,983 28,530 31,482 36,183 36,604 36,760 37,487 38,185 37,768 39,159 38 Public borrowers2.................................... 846 1,669 3,317 3,206 3,311 3,319 3,274 3,253 4,589 4,277 39 Nonbank foreigners ............................ 10,410 12,263 11,779 11,947 12,219 12,287 12,137 12,258 12,891 13,402 40 Other assets.............................................. 824 1,126 1,331 1,893 2,023 2,247 2,200 2,340 2,639 2,739 Bahamas and Caymans 41 Total, all currencies................................ 66,774 79,052 91,735 106,484 108,872 108,910 110,946 117,839' 114,748 115,821 42 Claims on United States........................ 3,508 5,782 9,635 21,394 23,856 19,104 19,650 27,096' 21,742 20,136 43 Parent bank........................................... 1,141 3,051 6,429 17,131 19,868 15,196 15,366 22,414' 17,298 15,348 44 Other ..................................................... 2,367 2,731 3,206 4,263 3,988 3,908 4,284 4,682 4,444 4,788 45 Claims on foreigners .................................. 62,048 71,671 79,774 82,068 81,959 86,673 87,868 86,887 89,343 91,590 46 Other branches of parent bank......... 8,144 11,120 12,904 10,514 8,854 9,689 10,242 10,265 13,659 13,438 47 Banks .......................................................... 25,354 27,939 33,677 38,820 40,050 43,111 44,044 42,440 44,455 47,131 48 Public borrowers2................................ 7,105 9,109 11,514 12,355 12,658 12,893 12,895 13,108 11,309 11,345 49 Nonbank foreigners ............................ 21,445 23,503 21,679 20,379 20,397 20,980 20,687 21,074 19,920 19,676 50 Other assets............................................... 1,217 1,599 2,326 3,022 3,057 3,133 3,428 3,856 3,663 4,095 51 Total payable in U.S. dollars................ 62,705 73,987 85,417 99,715 101,932 102,302 105,013 111,504' 108,550 109,710 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 1980 Liability account 1976 1977 1978' Oct. Nov. Dec! Jan. Feb. Mar. Apr.? All foreign countries 52 Total, all currencies ................................ 219,420 258,897 306,795 358,320 365,587 364,166 360,373 372,099' 371,483 375,940 53 To United States .................................... 32,719 44,154 57,948 65,998 62,179 66,567 70,337' 71,111' 67,618 69,481 54 Parent bank .......................................... 19,773 24,542 28,464 21,317 19.274 24,275 24,762' 22,866' 22,383 24,320 5 5 5 6 N Ot o h n e b r a b n a k nk s. s . .. i . n .. .. U ... n .. i . t . e .. d ... . S ... t .. a .. t . e ... s .. . . . . . . . . . . . . . . . . . . . . . . . | 12,946 19,613 1 1 2 7 , , 3 1 3 4 8 6 2 1 9 4 , , 9 7 6 13 8 2 1 9 3 , , 0 8 0 97 8 2 1 7 5 , , 1 1 6 2 3 9 3 1 2 3 , , 4 1 0 75 0 3 1 3 4 , , 3 8 5 8 9 6 3 1 2 2 , , 8 35 8 1 4 3 1 2 2 , , 3 77 9 1 0 57 To foreigners............................................ 179,954 206,579 238,912 279,240 289,555 283,330 276,192 286,249' 289,473 291,005 58 Other branches of parent bank........ 44,370 53,244 67,496 78,005 77,188 77,601 72,846 73,582 76,709 75,041 59 Banks .................................................... 83,880 94,140 97.711 116,058 128,024 122,832 122,043 130,255 129,306 130,762 60 Official institutions.............................. 25,829 28,110 31,936 35,921 34.958 35,664 33,195 34,221 34,806 35,007 61 Nonbank foreigners ............................ 25,877 31,085 41,769 49,256 49.385 47,233 48,108 48,191' 48,652 50,195 62 Other liabilities........................................ 6,747 8,163 9.935 13,082 13.853 14,269 13,844' 14,739' 14,392 15,454 63 Total payable in U.S. dollars................ 173,071 198,572 230,810 268,769 272,166 273,752 270,597 282,200' 282,666 283,695 64 To United States .................................... 31,932 42,881 55,811 63,408 59,889 64,479 67,953' 68.592' 65,357 67,127 65 Parent bank .......................................... 19,599 24,213 27,393 20,089 18,089 23,216 23,623' 21.636' 21,195 23,075 6 67 6 O N t o h n e b r a b n a k n s k . s . .. i . n .. .. U ... n .. i . t .. e . d ... . S ... t .. a .. t . e ... s .. . . . . . . . . . . . . . . . . . . . . . . . | 12,373 18,669 1 1 6 2 , , 3 0 3 8 4 4 2 1 8 4 , , 9 3 4 75 4 2 1 8 3 . , 1 6 0 9 2 8 2 1 6 4 , , 3 9 3 3 1 2 3 1 1 2 , , 4 8 8 4 5 5 3 1 2 4 , , 4 4 7 7 7 9 3 1 2 2 , , 1 0 5 0 8 4 3 1 1 2 , , 5 5 3 2 0 2 68 To foreigners............................................ 137,612 151,363 169,927 198.229 204.654 201,462 195,232 205,518' 209,164 207,803 69 Other branches of parent bank........ 37,098 43,268 53,396 60,413 59,429 60,513 56,779 57,714 61,249 59,375 70 Banks .................................................... 60,619 64,872 63,000 74,852 83,605 80,674 80,987 89,241 88,055 87,683 71 Official institutions.............................. 22,878 23,972 26,404 29,653 28,521 29,048 26,813 27,727 28,321 28,612 72 Nonbank foreigners ............................ 17,017 19,251 27.127 33,311 33,099 31,277 30,653 30,836' 31,539 32,133 73 Other liabilities........................................ 3,527 4,328 5,072 7,132 7,623 7,811 7,412' 8,090' 8,145 8,765 United Kingdom 74 Total, all currencies................................ 81,466 90,933 106,593 127,949 131,959 130,873 128,417 133,793 136,654 138,915 75 To United States ..................,................ 5,997 7,753 9,730 19,730 19.612 20,986 20,378 20,808 19,921 20,838 76 Parent bank .......................................... 1,198 1,451 1,887 2,258 2,516 3,104 3,014 2,758 2,140 2,301 7 7 8 7 N Ot o h n e b r a b n a k n s k . s . .. i . n .. .. U ... n .. i . t .. e . d ... . S ... t .. a .. t . e ... s .. . . . . . . . . . . . . . . . . . . . . . . . | 4,798 6,302 4 3, , 6 2 1 3 1 2 9 8 , , 4 0 6 0 8 4 9 7 , , 7 38 1 1 5 9 8 , , 1 7 6 1 7 5 9 7 , , 7 63 3 1 3 1 7 0 , , 6 4 2 23 7 1 6 1 , , 5 2 0 7 2 9 1 6 2 , , 3 1 8 55 2 79 To foreigners............................................ 73,228 80,736 93,202 103,093 106,766 104,032 102,117 106,524 110,473 111,375 80 Other branches of parent bank........ 7,092 9,376 12,786 13,139 12,463 12,567 11,458 11,099 14,799 14,268 81 Banks .................................................... 36,259 37,893 39,917 44,440 49,299 47,620 48,872 53,031 53,204 53,955 82 Official institutions.............................. 17,273 18,318 20,963 24,438 23,060 24,202 21,944 22,890 23,303 23,453 83 Nonbank foreigners ............................ 12,605 15,149 19,536 21,076 21,944 19,643 19,843 19,504 19,167 19,699 84 Other liabilities........................................ 2,241 2,445 3.661 5,126 5,581 5,855 5,922 6,461 6,260 6,702 85 Total payable in U.S. dollars................ 63,174 67,573 77,030 92,817 94,983 95,449 92,771 97,391' 101,293 101,629 86 To United States .................................... 5,849 7,480 9,328 19,187 19,138 20,552 19,827 20,206 19,381 20,337 87 Parent bank .......................................... 1,182 1,416 1.836 2,196 2,467 3,054 2,968 2,724 2,089 2,252 88 Other banks in United States............ | 4,667 6,064 4,144 7,940 7,338 8,673 7,569 7,467 6,351 6,318 89 Nonbanks............................................... 3,348 9,051 9,333 8,825 9,290 10,015 10,941 11,767 90 To foreigners............................................. 56,372 58,977 66,216 71,561 73,542 72,397 70,597 74,705 79,251 78,296 91 Other branches of parent bank........ 5,874 7,505 9,635 8,955 8,337 8,446 7,793 7,322 10,894 10,468 92 Banks ..................................................... 25,527 25,608 25,287 26,132 29,424 29,424 30,988 34,694 35,300 34,485 93 Official institutions.............................. 15,423 15,482 17,091 20,457 19,139 20,192 18,117 18,923 19,255 19,554 94 Nonbank foreigners ............................ 9,547 10,382 14,203 16,017 16,642 14,335 13,699 13,766 13,802 13,789 95 Other liabilities........................................ 953 1,116 1,486 2,069 2,303 2,500 2,347 2,480' 2,661 2,996 Bahamas and Caymans 96 Total, all currencies ................................ 66,774 79,052 91,735 106,484 108,872 108,910 110,946 117,839' 114,748 115,821 97 To United States .................................... 22,721 32,176 39,431 38,294 34,995 37,668 43,088' 43,573' 40,890 41,859 98 Parent bank .......................................... 16,161 20,956 20,356 12,864 10,937 15,080 16,800' 15,099' 15,341 17,068 1 9 0 9 0 N Ot o h n e b r a b n a k nk s. s . .. i . n .. .. U ... n .. i . t .. e . d ... . S ... t .. a .. t .. e .. s .. . . . . . . . . . . . . . . . . . . . . . . . j 6,560 11,220 1 6 2 , , 1 8 9 7 9 6 1 5 9 , , 7 6 5 7 7 3 1 5 8 , , 5 5 4 1 5 3 1 5 7 , , 3 2 4 4 3 5 2 4 1 , , 6 6 0 7 9 9 2 6 2 , , 3 1 4 2 8 6 20 4 , , 7 7 7 7 1 8 1 5 9 , , 3 4 5 3 6 5 101 To foreigners............................................ 42,899 45,292 50,447 65,822 71,259 68,584 65,232 71,139' 70,811 70,644 102 Other branches of parent bank........ 13,801 12,816 16,094 19,206 21,078 20,875 20,559 22,150 22,401 22,470 103 Banks ..................................................... 21,760 24,717 23,104 32,266 36,498 33,614 30,503 34,704 33,760 33,089 104 Official institutions.............................. 3,573 3,000 4,208 4,712 5,176 4,866 5,020 5,016 4,958 5,435 105 Nonbank foreigners ............................ 3,765 4,759 7,041 9,638 8,507 9,229 9,150 9,269' 9,692 9,650 106 Other liabilities......................................... 1,154 1,584 1,857 2,368 2,618 2,658 2,626' 3,127' 3,047 3,318 107 Total payable in U.S. dollars................ 63,417 74,463 87,014 100,820 103,339 103,393 105,997 112,929' 110,074 111,468 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 □ July 1980 3.14 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1979 1980 Item 1977 1978 1979 Nov. Dec. Jan. Feb. Mar. Apr .p May p 1 Total1 ............................................................................. 131,097 162,521 149,508 141,575 149,508 145,985 145,013 142,045 140,473 143,201 By type 2 Liabilities reported by banks in the United States2 18.003 23.258 30,476 26,857 30.476 24,750 24,491 27,226 27.921 28,233 3 U.S. Treasury bills and certificates3........................ 47,820 67.671 47.666 43,921 47.666 48.864 48,234 42,797 40.527 42,749 U.S. Treasury bonds and notes 4 Marketable ............................................................... 32,164 35.892 37.667 37,120 37.667 38.148 37,884 37.781 37.714 38,100 5 Nonmarketable4 ....................................................... 20.443 20.970 17,387 17,837 17,387 17.434 17,384 16,784 16.384 16,184 6 U.S. securities other than U.S. Treasury securities5 12,667 14.730 16.312 15,840 16,312 16,789 17,020 17,457 17.927 17,935 By area 7 Western Europe1 ......................................................... 70,748 93,026 85,650 80,838 85,650 82.623 79,828 77,094 74.130 73,890 8 Canada ........................................................................... 2,334 2.486 1.898 1,971 1,898 1,922 2,347 1,644 1.902 2,134 9 Latin America and Caribbean .................................. 4,649 5,046 6.371 4,579 6,371 4.780 4,916 6,099 5,979 6,035 10 Asia ............................................................................... 50.693 58.812 52.693 51.420 52,693 53.448 54,602 53,997 54,400 57,327 11 Africa ...................................................................................... 1,742 2,408 2.412 2,215 2,412 2,480 2,392 2,419 3,316 2,889 12 Other countries6................................................................. 931 743 484 552 484 732 928 792 746 926 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 acceptances, 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 1980 Item 1976 1977 Dec. June Sept. Dec. Mar. 1 Banks’ own liabilities ................................................................................. 781 925 2,235 1,931 2,312 1,824 2,289 2 Banks' own claims' ..................................................................................... 1.834 2.356 3,504 2,467 2,564 2,443 3,242 3 Deposits ................................................................................................... 1.103 941 1,633 1.271 1.220 1,017 1,490 4 Other claims ............................................................................................. 731 1,415 1.871 1,196 1.343 1,425 1,751 5 Claims of banks' domestic customers2.................................................... 367 574 616 592 1,056 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 customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-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 Holder and type of liability Mar. Apr. MayP 1 All foreigners ..................................................... 110,657 126,168 167,080 184,466 187,749 185,087 193,788 185,977' 180,724 182,421 2 Banks’ own liabilities ...................................... 78,987 117,282 117,561 113.791 122,479 119,118' 115,745 115,866 3 Demand deposits ........................................... 16,803 18,996 19.211 23,338 23,367 20.810 22,550 22,678' 22,305 22,599 4 Time deposits1 ............................................... 11,347 11.521 12,441 12,649 13,641 12,481 12,732 12,877' 12.717 12,660 5 Other2 ............................................................. 9,713 12,723 16.268 12,703 12,461 14,611' 15.103 15,776 6 Own foreign offices3 .................................... 37,622 68.572 64,286 67.797 74,735 68,951' 65.620 64,831 7 Banks' custody liabilities4................................ 88.093 67.184 70,187 71.296 71,309 66,859' 64,979 66,555 8 U.S. Treasury bills and certificates5.......... 40,744 68.202 45,005 48,573 49.855 49,360 44.408' 42.232 44,111 9 Other negotiable and readily transferable instruments6 .......................................... 17,396 19,802 19.270 18.931 19,407 19,701' 19.964 19,651 10 Other ............................................................... 2,495 2,376 2,344 2.509 2,542 2,750' 2.783 2,793 11 Nonmonetary international and regional organizations7 ............................................ 1,712 1,758 2,064 1,845 12 Banks’ own liabilities ...................................... 906 753 710 444 393 383 744 447 13 Demand deposits .......................................... 290 231 330 214 260 164 153 160 241 144 14 Time deposits1 .............................................. 205 139 84 80 152 89 78 79 93 88 15 Other2 ............................................................. 492 459 298 191 162 144 410 215 16 Banks’ custody liabilities4 ................... .......... 1,701 1,964 1,643 783 1,319 1,376 1.320 1,398 17 U.S. Treasury bills and certificates............ 2,701 201 258 102 102 114 157 87 82 18 Other negotiable and readily transferable instruments6 .......................................... 1.499 1.605 1,538 681 1,206 1,218 1.233 1,317 19 Other ............................................................... 1 101 2 0 0 0 0 0 20 Official institutions8 .......................................... 90,674 70,779 78,143 73,614 72,725 70,023' 68,448 70,982 21 Banks' own liabilities ...................................... 12.097 14,390 18,229 12,358 12,151 14,527' 14.545 15.097 22 Demand deposits .......................................... 3.394 3.528 3.390 5.652 4,724 3,745 3,680 3,928' 4,734 4,414 23 Time deposits1 .............................................. 2,321 1.797 2,550 1.972 3,071 2,289 2,367 2,397 2,392 2,532 24 Other2 ............................................................. 6,157 6.767 10,434 6,324 6,104 8,202' 7.419 8,150 25 Banks' custody liabilities4................................ 78,577 56.388 59,914 61,256 60,575 55,497' 53.903 55,885 26 U.S. Treasury bills and certificates5.......... 37,725 47,820 67,415 43,921 47,666 48,864 48,234 42,797' 40,527 42,749 27 Other negotiable and readily transferable instruments6 .......................................... 10,992 12,411 12,196 12,357 12,303 12,668' 13,341 13.097 28 Other ............................................................... 170 56 52 35 37 32 35 40 29 Banks9 ................................................................. 42,335 57,779 92,716 88,694 91,628 100,209 95,162' 92,016 91,845 30 Banks' own liabilities ...................................... 52,994 87,511 83,699 86,246 94.734 89,381' 86.201 86,018 31 Unaffiliated foreign banks .......................... 15,372 18,939 19,413 18,449 19,999 20,430' 20.581 21,187 32 Demand deposits ...................................... 9,104 10,933 11,249 12,879 13,262 11,822 13,345 13,371' 12.667 13,161 33 Time deposits1 .......................................... 2,297 2,040 1,453 1.606 1,663 1.275 1,295 1,574' 1.513 1,464 34 Other2 ......................................................... 2,670 4,454 4,488 5,353 5,359 5,485' 6.401 6,561 35 Own foreign offices3 .................................... 37,622 68,572 64,286 67,797 74.735 68,951' 65.620 64,831 36 Banks' custody liabilities4................................ 4,785 5,205 4,995 5,382 5,475 5,781' 5,815 5,828 37 U.S. Treasury and certificates.................... 300 451 422 533 566 675' 771 769 38 Other negotiable and readily transferable instruments6 ........................................... 2,425 2,611 2.405 2,573 2,559 2,559' 2,462 2,486 39 Other ............................................................... 2.060 2,143 2,168 2.276 2,350 2,547' 2,582 2,574 40 Other foreigners ................................................. 12,814 16,020 18,254 18,560 18,617 19,141 19,033' 18,196 17,748 41 Banks' own liabilities ....................................... 12.990 14,627 14,924 14,743 15,201 14,828' 14,255 14,305 42 Demand deposits ........................................... 4,015 4,304 4.242 4,594 5,121 5,079 5,373 5,219' 4,663 4,880 43 Time deposits ................................................. 6,524 7,546 8,353 8,991 8,755 8,828 8,992 8,827 8,720 8,576 44 Other2 ............................................................. 394 1,043 1,048 835 836 781 873 849 45 Banks' custody liabilities4................................ 3,030 3,626 3,636 3,875 3,939 4,205 3,941 3,443 46 U.S. Treasury bills and certificates............ 285 375 382 356 446 777' 847 511 47 Other negotiable and readily transferable instruments6 ........................................... 2,481 3,175 3,131 3,320 3,339 3,256 2,928 2,752 48 Other ............................................................... 264 76 123 199 154 172' 166 180 49 Memo: Negotiable time certificates of deposit in custody for foreigners.......................... 11,007 10,821 10,906 11,395 11,236' 11.670 11,656 1. Excludes negotiable time certificates of deposit, which are included in “Other 5. Includes nonmarketable certificates of indebtedness and Treasury bills issued negotiable and readily transferable instruments." Data for time deposits prior to to official institutions of foreign countries. April 1978 represent short-term only. 6. Principally bankers acceptances, commercial paper, and negotiable time cer­ 2. Includes borrowing under repurchase agreements. tificates of deposit. 3. U.S. banks: includes amounts due to own foreign branches and foreign sub­ 7. Principally the International Bank for Reconstruction and Development, and sidiaries consolidated in “Consolidated Report of Condition" filed with bank reg­ the Inter-American and Asian Development Banks. ulatory agencies. Agencies, branches, and majority-owned subsidiaries of foreign 8. Foreign central banks and foreign central governments and the Bank for banks: principally amounts due to head office or parent foreign bank, and foreign International Settlements. branches, agencies or wholly owned subsidiaries of head office or parent foreign 9. Excludes central banks, which are included in “Official institutions.” bank. 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 □ July 1980 3.16 LIABILITIES TO FOREIGNERS Continued 1979 1980 Area and country 1976 1977 1978 Nov. Dec. Jan. Feb. Mar. Apr. May/7 1Total ............................................................................... 110,657 126,168 167,080 184,466 187,749 185,087 193,788 185,977' 180,724 182,421 2 Foreign countries ......................................................... 104,943 122,893 164,473 181,748 185,396 183,860 192,075 184,218' 178,659 180,576 3 Europe ........................................................................... 47,076 60,295 85,447 87,488 91,411 87,294 85,747 85,278' 82,806 82,540 4 Austria ....................................................................... 346 318 513 404 413 378 379 335 444 353 5 Belgium-Luxembourg ............................................. 2,187 2,531 2,552 2,786 2,364 2,108 2,406 2,365' 2,369 2,795 6 Denmark ................................................................... 356 770 1,946 1,166 1,092 955 587 613' 615 588 7 Finland ....................................................................... 416 323 346 390 398 455 544 484' 522 435 8 France ....................................................................... 4,876 5,269 9,208 10,301 10,401 10,534 11,247 11,004 11,303 10,839 9 Germany ................................................................... 6,241 7,239 17,286 10,801 12,935 10,345 8,960 8,618' 5,320 5,427 10 Greece ....................................................................... 403 603 826 792 635 832 627 618' 617 610 11 Italy ........................................................................... 3,182 6,857 7,739 8,345 7,782 7,825 7,394 7,399' 7,429 6,942 12 Netherlands ............................................................... 3,003 2,869 2,402 2,165 2,327 2,529 2,485 2,377 2,022 2,128 13 Norway ..................................................................... 782 944 1,271 1,407 1,267 1,229 1,156 1,500 1,391 1,221 14 Portugal ..................................................................... 239 273 330 595 557 550 438 314 537 339 15 Spain ......................................................................... 559 619 870 1,184 1,259 1,192 1,146 1,242 1,418 1,409 16 Sweden ....................................................................... 1,692 2,712 3,121 2,064 2,005 1,845 1,978 1,692' 1,847 1,632 17 Switzerland ............................................................... 9,460 12,343 18,560 17,206 18,501 17,311 16,947 15,625' 14,859 14,658 18 Turkey ....................................................................... 166 130 157 145 120 232 118 138 136 136 19 United Kingdom....................................................... 10,018 14,125 14,265 24,043 24,665 25,081 25,298 26,810' 27,187 27,165 20 Yugoslavia ................................................................. 189 232 254 147 266 157 149 115 122 144 21 Other Western Europe1 ........................................ 2,673 1,804 3,393 3,248 4,070 3,474 3,455 3,693' 4,301 5,324 22 U.S.S.R....................................................................... 51 98 82 39 52 46 41 37' 33 40 23 Other Eastern Europe2.......................................... 236 236 325 261 302 217 390 300' 334 354 24 Canada........................................................................... 4,659 4,607 6,969 7,280 7,379 9,541 9,556 8,507 8,048 8,192 25 Latin America and Caribbean .................................. 19,132 23,670 31,606 51,624 49,565 50,537 57,728 51,583' 48,950 48,653 26 Argentina ................................................................. 1,534 1,416 1,484 1,573 1,582 1,635 1,632 1,582' 1,679 1,913 27 Bahamas ................................................................... 2,770 3,596 • 6,752 18,540 15,311 16,322 22,085 16,352' 14,454 16,342 28 Bermuda ................................................................... 218 321 428 404 430 447 560 534 479 512 29 Brazil ......................................................................... 1,438 1,396 1,125 1,051 1,005 1,405 1,156 1,367 1,645 1,530 30 British West Indies ................................................. 1,877 3,998 5,991 12,534 11,049 11,908 12,956 11,812' 11,585 9,460 31 Chile ........................................................................... 337 360 399 356 469 396 471 445 444 1,030 32 Colombia ................................................................... 1,021 1,221 1,756 2,377 2,617 2,882 2,840 2,825 2,905 2,166 33 Cuba........................................................................... 6 6 13 12 13 10 5 6 23 7 34 Ecuador ..................................................................... 320 330 322 476 425 386 412 459 357 337 35 Guatemala3 ............................................................... 416 374 414 394 391 426 403 350 36 Jamaica3 .. ........ ................................ 52 74 76 96 90 97 132 138 37 Mexico ....................................................................... 2,870 2,876 3,417 3,666 4,096 3,980 3,973 4,001' 4,302 4,104 38 Netherlands Antilles ............................................... 158 196 308 460 499 344 524 419' 411 335 39 Panama ..................................................................... 1,167 2,331 2,968 4,290 4,483 4,770 4,646 4,418' 4,505 4,082 40 Peru ........................................................................... 257 287 363 417 383 376 388 363 392 412 41 Uruguay ..................................................................... 245 243 231 185 202 216 210 240 216 208 42 Venezuela ................................................................. 3,118 2,929 3,821 3,014 4,192 3,083 3,518 4,075' 3,179 3,953 43 Other Latin America and Carribbean ................ 1,797 2,167 1,760 1,822 2,318 1,886 1,872 2,161 1,837 1,775 44 Asia ............................................................................... 29,766 30,488 36,487 31,272 32,898 32,043 34,511 34,222' 33,519 35,984 China 45 Mainland ............................................................... 48 53 67 45 49 46 32 34 35 27 46 Taiwan ................................................................... 990 1,013 502 1,413 1,393 1,386 1,567 1,188 1,076 1,635 47 Hong Kong ............................................................... 894 1,094 1,256 1,624 1,672 1,694 1,776 1,897 1,857 1,708 48 India ........................................................................... 638 961 790 580 527 544 579 558 576 740 49 Indonesia ................................................................... 340 410 449 478 504 743 693 658 935 670 50 Israel ......................................................................... 392 559 688 574 707 517 501 759 569 570 51 Japan ......................................................................... 14,363 14,616 21,927 7,867 8,886 9,429 10,664 9,651' 9,374 10,792 52 Korea ......................................................................... 438 602 795 951 993 959 1,019 1,069' 1,008 988 53 Philippines ................................................................. 628 687 644 671 800 729 772 669 789 885 54 Thailand..................................................................... 277 264 427 415 281 408 284 414' 407 472 55 Middle-East oil-exporting countries4 .................. 9,360 8,979 7,529 14,788 15,212 14,081 14,992 15,686' 15,189 15,724 56 Other Asia ............................................................... 1,398 1,250 1,414 1,876 1,871 1,506 1,631 1,638 1,704 1,771 57 Africa ............................................................................. 2,298 2,535 2,886 3,105 3,239 3,330 3,170 3,325' 4,203 3,810 58 Egypt ......................................................................... 333 404 404 380 475 449 332 318 438 376 59 Morocco..................................................................... 87 66 32 36 33 50 33 31 41 31 60 South Africa ............................................................. 141 174 168 213 184 268 195 313' 294 316 61 Zaire........................................................................... 36 39 43 104 110 128 93 102 84 86 62 Oil-exporting countries5 ........................................ 1,116 1,155 1,525 1,513 1,635 1,503 1,665 1,660 2,462 2,231 63 Other Africa ............................................................. 585 698 715 859 804 932 852 901 885 768 64 Other countries ........................................................... 2,012 1,297 1,076 980 904 1,114 1,363 1,304' 1,133 1,396 65 Australia ..................................................<.............. 1,905 1,140 838 714 684 853 1,054 992' 881 1,149 66 All other ................................................................... 107 158 239 266 220 261 309 312 252 247 67 Nonmonetary international and regional organizations ......................................................... 5,714 3,274 2,607 2,717 2,352 1,227 1,712 1,758 2,064 1,845 68 International ............................................................. 5,157 2,752 1,485 1,504 1,232 823 618 652 959 766 69 Latin American regional........................................ 267 278 808 790 813 90 780 746 813 790 70 Other regional6........................................................ 290 245 314 423 308 314 315 361 292 289 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, the German Dem­ 5. Comprises Algeria, Gabon, Libya, and Nigeria. ocratic 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 Settlements, which is included in “Other Western Europe.” Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-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 1980 Area and country 1976 1977 1978 Nov. Dec. Jan. Feb. Mar. Apr. MayP 1Total ............................................................................... 79,301 90,206 115,610 124,466 133,586 127,290 130,766 130,775' 133,349 139,498 2Foreign countries ........................................................ 79,261 90,163 115,554 124,422 133,554 127,254 130,733 130,739' 133,316 139,465 3Europe ........................................................................... 14,776 18,114 24,202 25,890 28,314 24,821 25,575 25,810' 24,533 26,099 4 Austria ....................................................................... 63 65 140 168 284 258 315 331 338 291 5 Belgium-Luxembourg ............................................ 482 561 1,175 1,402 1,328 1,416 1,524 1,631 1,591 1,471 6 Denmark .................................................................. 133 173 254 149 147 126 156 207' 203 168 7 Finland ...................................................................... 199 172 305 182 202 262 237 188r 223 273 8 France ....................................................................... 1,549 2,082 3,735 3,305 3,302 3,086 3,197 2,984' 2,811 2,740 9 Germany ................................................................... 509 644 845 1,396 1,159 921 1,209 1,308 1,154 1,104 10 Greece ....................................................................... 279 206 164 171 154 136 141 191 244 329 11 Italy ........................................................................... 993 1,334 1,523 1,259 1,572 1,345 1,405 1,488 1,464 1,748 12 Netherlands .............................................................. 315 338 677 603 514 472 610 535 481 457 13 Norway .................................................................... 136 162 299 257 276 177 175 254r 170 172 14 Portugal .................................................................... 88 175 171 352 330 288 213 227 247 246 15 Spain ........................................................................ 745 722 1,115 1,050 1,051 948 1,015 914' 1,020 1,106 16 Sweden ...................................................................... 206 218 537 548 542 747 702 593' 618 661 17 Switzerland .............................................................. 379 564 1,283 1,232 1,162 935 1,359 1,356 827 916 18 Turkey ...................................................................... 249 360 300 151 149 128 131 123 132 151 19 United Kingdom...................................................... 7,033 8,964 10,172 11,426 13,789 11,334 10,877 10,950' 10,462 11,735 20 Yugoslavia................................................................ 234 311 363 582 611 569 565 598' 593 614 21 Other Western Europe1 ........................................ 85 86 122 185 175 203 227 225 330 276 22 U.S.S.R....................................................................... 485 413 366 311 290 263 265 253 257 247 23 Other Eastern Europe2.......................................... 613 566 657 1,160 1,277 1,205 1,251 1,453 1,366 1,394 24 Canada .......................................................................... 3,319 3,355 5,152 4,365 4,347 4,221 4,142 4,186 3,924 4,283 25 Latin America and Caribbean.................................. 38,879 45,850 57,374 62,328 67,632 65,166 65,947 65,152' 68,248 71,547 26 Argentina ................................................................ 1,192 1,478 2,281 4,157 4,415 4,683 4,899 4,969 4,992 5,115 27 Bahamas .................................................................. 15,464 19,858 21,420 16,046 18,681 20,443 19,005 19,262' 21,045 23,291 28 Bermuda .................................................................. 150 232 184 462 496 434 314 313 321 296 29 Brazil ......................................................................... 4,901 4,629 6,251 7,497 7,767 7,555 7,618 8,010' 8,112 8,044 30 British West Indies ................................................ 5,082 6,481 9,692 9,149 9,762 7,816 10,136 7,364 8,584 8,968 31 Chile ........................................................................... 597 675 972 1,349 1,438 1,376 1,430 1,367 1,329 1,353 32 Colombia .................................................................. 675 671 1,012 1,523 1,614 1,655 1,698 1,526 1,539 1,408 33 Cuba........................................................................... 13 10 * 4 4 4 4 4 5 4 34 Ecuador ..................................................................... 375 517 705 1,007 1,025 1,001 1,025 1,023 1,011 1,007 35 Guatemala3 .. ................................ 94 115 134 114 105 109 108 107 36 Jamaica3..................................................................... 40 34 47 51 44 42 43 43 37 Mexico ....................................................................... 4,822 4,909 5,430 8,360 8,971 8,829 8,928 9,231 9,191 9,723 38 Netherlands Antilles .............................................. 140 224 273 227 248 325 397 513 663 703 39 Panama ..................................................................... 1,372 1,410 3,089 5,774 5,986 4,432 3,919 4,652' 4,633 4,525 40 Peru ........................................................................... 933 962 918 604 652 585 634 701' 654 632 41 Uruguay ..................................................................... 42 80 52 71 105 100 82 90 84 154 42 Venezuela ................................................................. 1,828 2,318 3,474 4,392 4,689 4,244 4,194 4,457 4,232 4,527 43 Other Latin America and Caribbean.................. 1,293 1,394 1,487 1,557 1,598 1,518 1,515 1,520 1,701 1,648 44 19,204 19,236 25,616 29,057 30,624 30,169 32,337 32,827' 33,930 34,892 China 45 Mainland ............................................................... 3 10 4 31 35 28 51 49 48 40 46 Taiwan ................................................................... 1,344 1,719 1,499 1,805 1,821 1,700 1,691 1,524' 1,619 1,889 47 Hong Kong ............................................................... 316 543 1,679 1,794 1,804 1,804 2,127 1,888' 2,001 2,362 48 India ........................................................................... 69 53 54 69 92 136 90 120 87 61 49 Indonesia ................................................................... 218 232 143 135 131 117 128 132 166 128 50 Israel ......................................................................... 755 584 888 842 990 812 787 734 829 989 51 Japan ......................................................................... 11,040 9,839 12,681 16,155 16,925 17,027 18,899 19,433' 20,336 20,254 52 Korea ......................................................................... 1,978 2,336 2,282 3,732 3,796 4,080 4,356 4,726' 4,853 5,057 53 Philippines ................................................................. 719 594 680 642 737 649 645 696' 693 717 54 Thailand..................................................................... 442 633 758 972 935 971 993 877 857 918 55 Middle East oil-exporting countries4 .................. 1,459 1,746 3,145 1,107 1,544 1,397 1,211 1,437 1,179 978 56 Other Asia ............................................................... 863 947 1,804 1,776 1,813 1,448 1,359 1,211' 1,263 1,499 57 Africa ............................................................................. 2,311 2,518 2,221 1,865 1,785 1,899 1,775 1,729' 1,800 1,760 58 Egypt ......................................................................... 126 119 107 91 112 130 154 128 135 134 59 Morocco..................................................................... 27 43 82 73 103 106 109 118 128 107 60 South Africa ............................................................. 957 1,066 860 565 445 412 342 337' 362 465 61 Zaire........................................................................... 112 98 164 135 142 146 144 143 144 108 62 Oil-exporting countries5 ......................................... 524 510 452 442 391 507 451 353 443 325 63 Other ......................................................................... 565 682 556 559 592 599 574 649 588 622 64 Other countries ........................................................... 772 1,090 988 916 853 978 958 1,035' 880 883 65 Australia ................................................................... 597 905 877 741 673 803 789 803' 713 695 66 All other ................................................................... 175 186 111 176 180 175 170 232 167 187 67 Nonmonetary international and regional organizations6 ....................................................... 40 43 56 44 32 35 33 36 33 34 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, Czechoslovakia, the German Dem­ Western Europe.” ocratic 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 □ July 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 Type of claim Feb. Apr. May? 1 Total ................................................................................... 79,301 90,206 126,829 153,534 153,147r 2 Banks’ own claims on foreigners.......................... 115,610 124,466 133,586 127,290 130,766 130,775'' 133,349 139,498 3 Foreign public borrowers....................................... 10,168 13,753 15,054 14,862 15,052 15,428' 15,146 15,084 4 Own foreign offices1 ............................................... 41,697 43,646 47,056 46,075 46,801 45,248' 46,163 50,027 5 Unaffiliated foreign banks .................................... 40,467 37,831 40,902 36,140 38,902 36,692' 40,994 42,765 6 Deposits ................................................................. 5,456 5,509 6,217 4,985 5,125 5,479' 6,104 6,478 7 Other ..................................................................... 35,011 32,322 34,685 31,155 33,778 34,213' 34,890 36,286 8 All other foreigners................................................. 23,278 29,236 30,574 30,214 30,011 30,407' 31,047 31,623 9 Claims of banks’ domestic customers2................ 11,219 19,948 22,372' 10 Deposits..................................................................... 480 955 1,208' 11 Negotiable and readily transferable instruments3 5,385 12,974 14,559 12 Outstanding collections and other claims4.......... 5,756 6,176 5,353 6,019 6,605' 13 Memo: Customer liability on acceptances.......... 14,919 21,170 20,095' Dollar deposits in banks abroad, reported by non­ banking business enterprises in the United States5 ................................................................. 12,804 22,069 21,259 23,883' 25,450' 24,810' 24,099 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 certif­ banks: principally amounts due from head office or parent foreign bank, and icates of deposit denominated in U.S. dollars issued by banks abroad. For de­ foreign orancnes, 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 1980 Maturity; by borrower and area Sept. Dec. Mar. June Sept. Dec. Mar. 1 Total........................................................................................................... 60,091 73,696 71,566 77,662 87,477 86,268 85,265 By borrower 2 Maturity of 1 year or less1 ..................................................................... 47,226 58,418 55,387 60,012 68,311 65,134 63,901 3 Foreign public borrowers................................................................... 3,711 4,583 4,627 4,604 6,057 6,991 6,843 4 All other foreigners............................................................................. 43,515 53,835 50,760 55,408 62,254 58,143 57,058 5 Maturity of over 1 year1......................................................................... 12,866 15,278 16,179 17,650 19,166 21,134 21,364 6 Foreign public borrowers................................................................... 4,235 5,338 5,940 6,411 7,638 8,085 8,419 7 All other foreigners............................................................................. 8,631 9,939 10,239 11,239 11,528 13,049 12,945 By area Maturity of 1 year or less1 8 Europe................................................................................................... 10,513 15,169 12,389 14,019 16,786 15,208 13,850 9 Canada ................................................................................................... 1,953 2,670 2,514 2,703 2,471 1,846 1,818 10 Latin America and Caribbean.......................................................... 18,624 20,934 21,660 23,096 25,612 24,851 23,177 11 Asia ....................................................................................................... 14,010 17,579 16,992 18,191 21,519 21,658 23,386 12 Africa..................................................................................................... 1,535 1,496 1,290 1,438 1,399 1,078 1,043 13 All other2 ............................................................................................. 591 569 541 565 524 493 622 Maturity of over 1 year1 14 Europe................................................................................................... 3,102 3,142 3,103 3,486 3,660 4,134 4,253 15 Canada ;................................................................................................. 794 1,426 1,456 1,221 1,364 1,453 1,214 16 Latin America and Caribbean.......................................................... 6,877 8,452 9,325 10,265 11,757 12,796 13,397 17 Asia ....................................................................................................... 1,303 1,407 1,486 1,881 1,574 1,930 1,728 18 Africa..................................................................................................... 580 637 629 614 623 652 620 19 All other2 ............................................................................................. 211 214 180 183 188 169 121 1. Remaining time to maturity. 2. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-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 1978 1979 1980 Area or Country 1976 1977 Mar. June2 Sept. Dec. Mar. June Sept. Dec. Mar.P 1 Total....................................................................................................... 206.8 240.0r 244.7 247.1 247.6 266.4' 263.8 275.5' 293.8' 303.6' 307.7 2 G-10 countries and Switzerland ....................................................... 100.3 116.4 116.9 112.6' 113.5' 124.8' 119.0' 125.3 135.8 138.1' 140.5 3 Belgium-Luxembourg ..................................................................... 6.1 8.4 8.3 8.3 8.4 9.0 9.4 9.7 10.7 11.1 10.8 4 France ............................................................................................... 10.0 11.0 11.4 11.4 11.7 12.2 11.7 12.7 12.0 11.6 12.0 5 Germany ........................................................................................... 8.7 9.6 9.0 9.1 9.7 11.3' 10.5 10.8 12.8' 12.2' 11.4 6 Italy ................................................................................................... 5.8 6.5 6.0 6.4 6.1 6.7' 5.7 6.1 6.1 6.3 6.2 7 Netherlands....................................................................................... 2.8 3.5 3.4 3.4 3.5 4.4 3.9 4.0 4.7 4.8 4.3 8 Sweden ............................................................................................. 1.2 1.9 2.0 2.1 2.2 2.1 2.0 2.0 2.3 2.4 2.4 9 Switzerland ....................................................................................... 3.0 3.6 4.0 4.1 4.3 5.4 4.5 4.8 5.0- 4.8 4.4 10 United Kingdom ............................................................................. 41.7 46.5 46.7 44.9' 44.2' 47.3 46.4' 50.3' 53.7' 56.0' 57.4 11 Canada ............................................................................................... 5.1 6.4 7.0 5.1 4.9' 6.0 5.9 5.5 6.0 6.5' 6.8 12 Japan ................................................................................................. 15.9 18.8 19.1 17.9 18.5' 20.6 19.0 19.6' 22.4' 22.4 25.0 13 Other developed countries................................................................. 15.0 18.6 19.7 19.4 18.6 19.4 18.2 18.2 19.7 19.9 18.8 14 Austria............................................................................................... 1.2 1.3 . 1.5 1.5 1.5 1.7 1.7 1.8 2.0 2.0 1.7 15 Denmark ........................................................................................... 1.0 1.6 1.8 1.7 1.9 2.0 2.0 1.9 2.0 2.2 2.2 16 Finland............................................................................................... 1.1 1.2 1.2 1.1 1.0 1.2 1.1 1.2 1.2 1.1 17 Greece ............................................................................................... 1.7 2.2 2.1 2.3 2.2 2.3 2.2 2.3 2.4 2.4 18 Norway ............................................................................................. 1.5 1.9 1.9 2.1 2.1 2.1 2.1 2.3 2.3 2.4 19 Portugal ............................................................................................. .4 .6 .7 .6 .5 .6 .5 .7 .7 .6 20 Spain ................................................................................................. 2.8 3.6 3.6 3.6 3.5 3.4 3.0 3.0 3.3 3.5 3.5 21 Turkey ............................................................................................... 1.3 1.5 1.4 1.4 1.5 1.5 1.4 1.4 1.4 1.4 1.4 22 Other Western Europe ................................................................... .7 .9 1.5 1.2 . .9 1.3 1.1 .9' 1.3' 1.4 1.4 23 South Africa..................................................................................... 2.2 2.4 2.5 2.4 2.2 2.0 1.7 1.8 1.7 1.3 1.1 24 Australia ........................................................................................... 1.2 1.4 1.5 1.4 1.3 1.4 1.3 1.4 1.3 1.3 1.1 25 Oil-exporting countries3 ..................................................................... 12.6 17.6 19.2 19.2 20.4 22.7 22.6 22.7 23.4 22.9' 21.9 26 Ecuador ............................................................................................. .7 1.1 1.3 1.4 1.6 1.6 1.5 1.6 1.6 1.7 1.8 27 Venezuela ......................................................................................... 4.1 5.5 5.5 5.6 6.2 7.2 7.2 7.6 7.9 8.7 7.9 28 Indonesia........................................................................................... 2.2 2.2 2.1 1.9 1.9 2.0 1.9 1.9 1.9 1.9 1.9 29 Middle East countries..................................................................... 4.2 6.9 8.3 8.4 8.7 9.5 9.4 9.0 9.2 8.0 7.8 30 African countries ............................................................................. 1.4 1.9 2.0 1.9 2.0 2.5 2.6 2.6 2.8 2.6 2.5 31 Non-oil developing countries............................................................. 44.2 48.7 49.7 49.1 49.6 52.5 53.8 55.8' 58.7' 62.7' 64.0 Latin America 32 Argentina ......................................................................................... 1.9 2.9 3.0 3.0 2.9 3.0 3.1 3.5 4.1 5.1 5.6 33 Brazil ................................................................................................. 11.1 12.7 13.0 13.3 14.0 14.9 14.9 15.1 15.1 15.3 15.1 34 Chile................................................................................................... .8 .9 1.1 1.3 1.3 1.6 1.7 1.8 2.2 2.5 2.5 35 Colombia........................................................................................... 1.3 1.3 1.2 1.3 1.3 1.4 1.5 1.5 1.7 2.2 2.2 36 Mexico ............................................................................................... 11.7 11.9 11.2 11.0 10.7 10.7' 10.9 10.7' 11.3' 11.9' 12.2 37 Peru ................................................................................................... 1.8 1.9 1.7 1.8 1.8 1.7 1.6 1.4 1.4 1.5 1.2 38 Other Latin America ..................................................................... 2.8 2.6 3.4 3.3 3.4 3.6 3.5 3.3 3.6 3.7 3.7 Asia China 39 Mainland ....................................................................................... .0 .0 .0 .0 .0 .0 .1 .1 .1 .1 .1 40 Taiwan ........................................................................................... 2.4 3.1 3.1 2.5 2.4 2.9 3.1 3.3 3.5 3.4' 3.6 41 India................................................................................................... .2 .3 .3 .2 .3 .2 .2 .2 .2 .2 42 Israel ................................................................................................. 1.0 .9 .8 .7 .7 1.0 1.0 .9 1.0 1.3 .9 43 Korea (South) ................................................................................. 3.1 3.9 3.6 3.6 3.5 3.9 5.0 5.3 5.5 6.4 44 Malaysia4 ........................................................................................... .5 .7 .7 .6 .6 .6 .7 .7 .9 .8 45 Philippines......................................................................................... 2.2 2.5 2.6 2.7 2.8 2.8 3.7 3.7 4.2' 4.4 46 Thailand ........................................................................................... .7 1.1 1.1 1.1 1.1 1.2 1.4 1.6 1.6 1.4 47 Other Asia ....................................................................................... .5 .4 .4 .3 .3 .2 '.3 .4 .3 .4 .4 Africa 48 Egypt ................................................................................................. .4 .3 .3 .3 .4 .4 .5 .7 .6 .6 .7 49 Morocco ........................................................................................... .3 .5 .4 .5 .5 .6 .6 .5 .5 .6 .5 50 Zaire ................................................................................................. .2 .3 .3 .2 .2 .2 .2 .2 .2 .2 .2 51 Other Africa5 ................................................................................... 1.2 .7 1.4 1.2 1.3 1.4 1.4 1.5 1.6 1.7 1.8 52 Eastern Europe ................................................................................... 5.2 6.3 6.3 6.4 6.6 6.9 6.7 6.7 7.2 7.6' 7.3 53 U.S.S.R............................................................................................... 1.5 1.6 1.4 1.4 1.4 1.3 1.1 .9 .9 1.0 .6 54 Yugoslavia......................................................................................... .8 1.1 1.2 1.3 1.3 1.5 1.6 1.7 1.8 1.8 1.9 55 Other ................................................................................................. 2.9 3.7 3.7 3.7 3.9 4-1 4.0 4.1 4.6 4.8' 4.9 56 Offshore banking centers................................................................... 24.7 26.1 28.8 32.4' 30.2' 31.1' 33.7' 36.9' 38.5' 40.4' 42.2 57 Bahamas ........................................................................................... 10.1 9.8 11.3 12.1' 11.6' 10.3' 12.1' 14.3' 12.9' 13.5 13.6 58 Bermuda ........................................................................................... .5 .6 .6 .7 .7 .7 .6 .7 .7 .8' .6 59 Cayman Islands and other British West Indies ........................ 3.8 3.8 4.6 7.2' 6.8' 7.4' 7.2' 7.5' 9.5' 9.5 11.2 60 Netherlands Antilles ....................................................................... .6 .7 .7 .6 .6 .8 .8 1.0 1.1 1.2 .9 61 Panama6 ........................................................................................... 3.0 3.1 3.1 3.3 3.1 3.0 3.4 3.8' 3.4' 4.3' 4.9 62 Lebanon ........................................................................................... .1 .2 .2 .1 .1 .1 .1 .1 .2 .2 .2 63 Hong Kong....................................................................................... 2.2 3.7 4.1 4.1 4.0 4.4' 4.8 4.9 5.5 6.0 5.7 64 Singapore ......................................................................................... 4.4 3.7 3.9 3.8 2.9 3.9 4.2 4.2 4.9 4.5 4.7 65 Others7 ............................................................................................. .0 .5 .3 .5 .5 .5 .4 .4 .4 .4 .4 66 Miscellaneous and unallocated8......................................................... 5.0 5.3 5.9 8.1 8.6 9.1 9.5 9.9 10.6 11.7' 13.1 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. Includes Canal Zone beginning December 1979. see also footnote 2. 7. Foreign branch claims only. 2. For June 1978 and subsequent dates, the claims of the U.S. offices 8. Includes New Zealand, Liberia, and international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics □ July 1980 3.21 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Holdings and Transactions Millions of dollars 1980 1980 Country or area Jan- May? Nov. Dec. Apr. May? Holdings (end of period)1 1 Estimated total2 ............................................. 44,938 50,306 52,828 53,199 52,995 52,084 51,360 2 Foreign countries2 .................................... 39,817 44,975 44,276 44,875 46,777 46,555 46,532 46,423 46,898 3 Europe2 ....................................................... 17,072 23,705 21,910 23,705 25,351 24,609 24,002 24,069 4 Belgium-Luxembourg .......................... 19 60 60 60 60 27 28 28 5 Germany2 ............................................... 8,705 12,937 11,337 12,937 14,081 13,489 13,203 13,221 6 Netherlands ............................................. 1,358 1,466 1,490 1,466 1,407 1,453 1,473 1,412 7 Sweden ..................................................... 285 647 593 647 640 633 642 653 8 Switzerland2 ........................................... 977 1,868 1,961 1,868 1,894 1,534 1,528 1,574 9 United Kingdom..................................... 5,373 6,236 5,955 6,236 6,755 6,993 6,601 6,663 10 Other Western Europe ........................ 354 491 513 491 514 478 527 519 11 Eastern Europe ..................................... 12 Canada ......................................................... ’'' 152' ’'' 232' ’ ’' 234' ''' 232' '"231’ 389 '' ’ 394’ ’'‘381 " " 385 13 Latin America and Caribbean................ 416 546 539 546 546 547 552 581 588 14 Venezuela ............................................... 144 183 183 183 183 183 183 183 183 15 Other Latin American and Caribbean 110 200 192 200 200 201 206 199 205 16 Netherlands Antilles ............................ 162 163 164 163 163 164 164 199 200 17 Asia ............................................................. 21,488 19,804 21,005 19,804 20,061 20,130 20,390 20,872 21,269 18 Japan ....................................................... 11,528 11,175 12,502 11,175 10,844 10,420 9,631 9,533 9,543 19 Africa ........................................................... 691 591 591 591 591 591 591 593 593 20 All other ..................................................... -3 -3 -3 -3 -3 -3 -3 -6 -7 21 Nonmonetary international and regional organizations ...................................... 5,121 5,431 5,431 6,051 6,644 6,463 5,661 4,462 22 International ........................................... 5,089 5,388 5,463 5,388 6,016 6,592 6,407 5,606 4,401 23 Latin American regional...................... 33 40 40 35 53 53 53 63 Transactions (net purchases, or sales ( —), during period) 24 Total2 ..................................................... 6,297 5,368 1,058 - 1,110 2,525 25 Foreign countries2 .................................. 5,921 5,059 2,022 -930 600 1,902 -223 -22 -109 475 26 Official institutions.............................. 3,727 1,775 433 -1,037 547 481 -264 -103 -67 386 27 Other foreign2...................................... 2,195 3,283 1,588 108 53 1,422 41 79 -42 28 Nonmonetary international and regional organizations .................................... 375 311 -73 624 594 -185 -1,194 Memo: Oil-exporting countries 3 29 0 A M f i r d i d c l a e 4 E .. a .. s .. t . 3 . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1,7 3 8 2 5 9 -1-,100105 -10 6 0 4 168 550 500 1,014 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 denominated in foreign currencies. 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 Assets 1977 1978 1979 Dec. Jan. Feb. Mar. Apr. May? June? 1 Deposits ......................................................................... 424 367 429 429 439 450 468 618 380 691 Assets held in custody 2 U.S. Treasury securities1 .......................................... 91,962 117,126 95,075 95,075 97,116 96,200 89,290 85,717 88,489 93,661 3 Earmarked gold2 ......................................................... 15,988 15,463 15,169 15,169 15,138 15,109 15,087 15,057 15,037 15,034 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 1980 1979 1980 Transactions, and area or country 1978 1979 Jan.- MayP Nov. Dec. Jan. Feb. Mar. Apr. May p U.S. corporate securities Stocks 1 Foreign purchases ....................................................... 20,142 22,595 14,188 1,876 2,359 3,104 4,436 2,724 1,985 1,940 2 Foreign sales................................................................. 17,723 20,974 11,792 1,687 2,182 2,417 3,319 2,380 1,719 1,958 3 Net purchases, or sales (-)...................................... 2,420 1,621 2,396 189 177 687 1,117 344 266 -17 4 Foreign countries ......................................................... 2,466 1,605 2,390 192 173 686 1,119 342 263 -19 5 Europe ........................................................................... 1,283 216 1,751 77 75 506 855 156 129 105 6 France ....................................................................... 47 122 191 -18 8 71 133 -49 14 23 7 Germany ................................................................... 620 -221 78 -18 -10 35 51 -25 3 14 8 Netherlands ............................................................... -22 -71 -108 12 -25 8 -41 -6 -30 -40 9 Switzerland ............................................................... -585 -519 401 -148 -68 153 375 -36 -75 -17 10 United Kingdom...................................................... 1,230 964 1,124 278 155 215 332 277 194 106 11 Canada ........................................................................... 74 550 318 14 47 40 125 130 66 -42 12 Latin America and Caribbean.................................. 151 -18 81 -7 40 92 35 -49 6 -4 13 Middle East1 ................................................................. 781 656 248 133 32 15 50 97 145 -60 14 Other Asia ................................................................... 187 208 -6 -29 -21 30 58 8 -81 -21 15 Africa ............................................................................. -13 -14 0 1 -3 0 -1 2 0 0 16 Other countries ........................................................... 3 7 -2 2 2 2 -3 -2 -2 3 17 Nonmonetary international and regional organizations ........................................................ -46 17 6 -3 4 1 -2 2 3 2 Bonds2 18 Foreign purchases ...................................................... 7,975 8,840 6,255 732 964 1,149 934' 1,237 1,654 1,280 19 Foreign sales ................................................................ 5,587 7,581 4,280 913 550 494 594 838 1,137 1,217 20 Net purchases, or sales (-) ...................................... 2,388 1,259 1,975 -181 414 655 340r 399 518 63 21 Foreign countries ......................................................... 1,979 1,360 2,063 -118 429 523 275' 407 568 289 22 Europe ........................................................................... 837 638 944 -205 33 205 42' 315 251 132 23 France ....................................................................... 30 11 78 11 1 8 1' 15 7 47 24 Germany ................................................................... 68 83 221 2 2 -5 6 11 104 104 25 Netherlands ............................................................... 12 -202 -62 -15 -20 -3 -30 0 -14 -14 26 Switzerland ............................................................... -170 -98 106 -53 7 6 8 3 79 11 27 United Kingdom....................................................... 930 816 533 -124 36 195 71 265 36 -34 28 Canada ........................................................................... 102 90 72 -1 -16 25 28 8 2 9 29 Latin America and Caribbean.................................. 98 112 71 12 15 14 10 9 13 25 30 Middle East1 ................................................................. 810 424 940 71 406 280 181 79 295 104 31 Other Asia ................................................................... 131 94 24 5 -10 0 3 -4 7 17 32 Africa ............................................................................. -1 1 3 0 0 0 2 0 0 1 33 Other countries ........................................................... 1 1 8 0 0 0 8 0 0 0 34 Nonmonetary international and regional organizations ......................................................... 409 -102 -88 -63 -14 132 65 -8 -50 -226 Foreign securities 35 Stocks, net purchases, or sales (-)........................ 527 -786 -942 -84 -130 -233 -426 -2 -40 -241 36 Foreign purchases ................................................... 3,666 4,615 2,946 365 406 624 804 665 402 450 37 Foreign sales............................................................. 3,139 5,401 3,888 449 536 858 1,230 667 442 691 38 Bonds, net purchases, or sales (-) ........................ -4,052 -3,863 -388 -334 -295 -72 -71 17 -12 -251 39 Foreign purchases ................................................... 11,043 12,362 6,390 1,081 1,124 1,279 1,379 1,181 1,072 1,479 40 Foreign sales ............................................................. 15,094 16,224 6,779 1,415 1,419 1,351 1,450 1,164 1,084 1,730 41 Net purchases, or sales ( —), of stocks and bonds .. -3,525 -4,649 -1,330 -419 -425 -305 -497 15 -52 -491 42 Foreign countries ......................................................... -3,338 -3,889 -1,484 -300 -563 -382 -498 -33 -72 -498 43 Europe ........................................................................... -64 -1,600 -188 -118 -282 176 -123 54 -80 -214 44 Canada........................................................................... -3,238 -2,600 -1,158 -97 -142 -330 -415 -161 3 -256 45 Latin America and Caribbean.................................. 201 378 195 29 -14 5 101 29 14 45 46 Asia ............................................................................... 350 -79 -320 -118 -128 -228 -47 49 -12 -82 47 Africa ............................................................................. -441 -14 4 1 2 -2 -1 0 3 4 48 Other countries ........................................................... -146 25 -15 3 3 -4 -13 -3 0 5 49 Nonmonetary international and regional organizations ......................................................... -187 -760 153 -118 138 78 1 48 20 7 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 □ July 1980 3.24 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1979 Type, and area or country 1976 1977 Sept. Mar.' June' Sept. Dec.' 1 Total .............................................................. 10,099 11,085 11,870 12,786 14,418 15,305 15,490 16,889 2 Payable in dollars........................................ 9,390 10,284 11,500 11,044 11,955 11,497 12,528 12,578 13,895 3 Payable in foreign currencies2.................. 709 801 3,308 825 831 2,921 2,777 2,912 2,994 By type 4 Financial liabilities...................................... 6,253 5,995 5,890 5,951 7,281 5 Payable in dollars.................................... 3,844 3,793 3,822 3,790 5,078 6 Payable in foreign currencies................ 2,409 2,202 2,068 2,161 2,203 7 Commercial liabilities ................................ 8,555 8,423 9,415 9,539 9,608 8 Trade payables ........................................ 4,062 3,569 4,317 4,084 4,347 9 Advance receipts and other liabilities . 4,493 4,854 5,098 5,455 5,261 10 Payable in dollars.................................... 7,656 7,703 8,706 8,788 8,818 11 Payable in foreign currencies................ 899 719 709 750 790 By area or country Financial liabilities 12 Europe ...................................................... 3,855 3,601 3,429 3,553 4,549 13 Belgium-Luxembourg ........................ 289 266 315 277 345 14 France ................................................... 167 139 134 126 168 15 Germany ............................................... 366 311 283 381 497 16 Netherlands .......................................... 389 422 401 520 834 17 Switzerland .......................................... 248 244 235 190 168 18 United Kingdom.................................. 2,063 2,007 1,842 1,860 2,342 19 Canada ....................................................... 244 252 290 300 445 20 Latin America and Caribbean.............. 1,353 1,343 1,389 1,330 1,483 21 Bahamas ............................................... 426 411 442 345 347 22 Bermuda ............................................... 56 41 37 37 109 23 Brazil ..................................................... 10 13 19 14 18 24 British West Indies ............................ 190 197 185 194 514 25 Mexico .................................................. 102 101 131 122 121 26 Venezuela ............................................ 49 55 68 71 72 27 Asia .......................................................... 791 790 772 757 795 28 Japan .................................................... 714 714 706 700 723 29 Middle East oil-exporting countries3 32 23 25 19 31 30 Africa ........................................................ 5 5 6 5 4 31 Oil-exporting countries4 .................... 2 1 2 1 1 32 All other5 ................................................ 5 5 5 4 Commercial liabilities 33 Europe ...................................................... 3,033 3,003 3,306 3,395 3,620 34 Belgium-Luxembourg ........................ 75 70 81 103 137 35 France .................................................. 321 350 353 394 460 36 Germany .............................................. 529 395 471 539 531 37 Netherlands .......................................... 246 224 230 206 221 38 Switzerland .......................................... 302 329 439 348 310 39 United Kingdom.................................. 824 870 997 1,015 1,077 40 Canada ...................................................... 667 614 645 709 852 41 Latin America ........................................ 997 1,168 1,322 1,387 1,306 42 Bahamas .............................................. 25 16 65 89 69 43 Bermuda .............................................. 97 42 82 48 32 44 Brazil .................................................... 74 61 165 186 203 45 British West Indies ............................ 53 89 121 21 21 46 Mexico .................................................. 106 236 203 256 242 47 Venezuela ............................................ 303 356 323 359 301 48 Asia .......................................................... 2,912 2,622 3,007 2,985 2,864 49 Japan .................................................... 429 401 489 506 481 50 Middle East oil-exporting countries3 1,523 1,122 1,225 1,070 1,026 51 Africa ...................................................... 743 779 891 775 728 52 Oil-exporting countries4 .................. 312 343 410 370 384 53 All other5 .............................................. 203 237 243 287 237 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 States1 Millions of dollars, end of period 1978 1979 Type, and area or country June Sept. Mar.r June' Sept. Dec.r 1 Total .............................................................. 19,350 21,298 23,229 23,260 30,117 29,522 30,072 30,133 2 Payable in dollars........................................ 18,300 19,880 24,600 21,665 21,292 27,307 26,627 27,407 27,081 3 Payable in foreign currencies2.................. 1,050 1,418 2,994 1,564 1,968 2,811 2,895 2,665 3,052 By type 4 Financial claims .......................................... 16,323 19,400 18,534 18,296 17,456 5 Deposits.................................................... 10,847 13,933 12,905 12,886 11,810 6 Payable in dollars................................ 9,785 13,013 11,967 11,987 10,927 7 Payable in foreign currencies............ 1,062 920 938 899 883 8 Other financial claims............................ 5,476 5,467 5,629 5,410 5,646 9 Payable in dollars................................ 3,880 3,920 4,042 4,013 3,883 10 Payable in foreign currencies............ 1,597 1,547 1,587 1,397 1,763 11 Commercial claims...................................... 11,332 10,718 10,988 11,776 12,677 12 Trade receivables.................................... 10,744 10,012 10,330 11,016 11,987 13 Advance payments and other claims .. 588 706 658 760 690 14 Payable in dollars.................................... 10,995 10,374 10,618 11,407 12,271 15 Payable in foreign currencies................ 336 344 370 369 406 By area or country Financial claims 16 Europe ...................................................... 5,050 5,180 5,475 6,403 6,066 17 Belgium-Luxembourg ........................ 48 63 54 33 32 18 France .................................................. 178 171 183 191 177 19 Germany .............................................. 510 266 361 391 401 20 Netherlands .......................................... 103 85 62 51 53 21 Switzerland .......................................... 98 96 81 85 73 22 United Kingdom.................................. 3,856 4,261 4,488 5,365 5,009 23 Canada ...................................................... 4,521 5,196 5,132 4,736 4,777 24 Latin America and Carribbean ............ 5,594 7,939 6,839 5,993 5,624 25 Bahamas .............................................. 2,902 4,148 3,216 2,831 2,294 26 Bermuda .............................................. 80 63 57 31 30 27 Brazil .................................................... 151 156 141 133 163 28 British West Indies ............................ 1,280 2,443 2,281 1,717 1,851 29 Mexico .................................................. 162 160 158 155 158 30 Venezuela ............................................ 150 142 151 139 133 31 Asia ........................................................... 922 829 800 818 693 32 Japan .................................................... 307 207 216 222 190 33 Middle East oil-exporting countries3 18 16 17 21 16 34 Africa ......................................................... 181 204 227 277 253 35 Oil-exporting countries4 .................... 10 26 23 41 49 36 All other5 ................................................ 52 61 69 44 Commercial claims 37 Europe ...................................................... 3,979 3,805 3,827 4,121 4,885 38 Belgium-Luxembourg ........................ 144 173 170 179 203 39 France .................................................. 609 490 470 518 724 40 Germany .............................................. 399 504 421 448 580 41 Netherlands .......................................... 267 275 307 262 298 42 Switzerland .......................................... 198 230 232 224 269 43 United Kingdom.................................. 827 676 731 818 905 44 Canada ....................................................... 1,094 1,109 1,104 1,171 847 45 Latin America and Caribbean.............. 2,547 2,395 2,406 2,598 2,859 46 Bahamas ............................................... 109 117 98 16 21 47 Bermuda ............................................... 215 241 118 154 197 48 Brazil ..................................................... 629 495 503 568 647 49 British West Indies ............................ 9 10 25 13 16 50 Mexico ................................................... 506 489 584 650 704 51 Venezuela ............................................. 292 274 296 346 342 52 Asia ........................................................... 3,085 2,765 2,970 3,116 3,292 53 Japan ..................................................... 979 896 1,005 1,128 1,127 54 Middle East oil-exporting countries3 717 682 685 701 688 55 Africa ......................................................... 447 443 487 549 556 56 Oil-exporting countries4 .................... 136 131 139 140 133 57 All other5 ................................................ 179 200 194 220 239 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 □ July 1980 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per annum Rate on June 30, 1980 Rate on .June 30, 1980 Rate on .lune 30. 1980 Country Country Country Per­ Month Per­ Month Per­ Month cent effective cent effective cent effective Argentina .......................... 18.0 Feb. 1972 France ................................ 9.5 Aug. 1977 Norway .............................. 9.0 Nov. 1979 Austria .............................. 6.75 Mar. 1980 Germany, Fed. Rep. of .. 7.5 Mav 1980 Sweden .............................. 10.0 Jan. 1980 Belgium ............................ 13.0 June 1980 Italy .................................... 15.0 Dec. 1979 Switzerland ...................... 3.0 Feb. 1980 Brazil ................................ 33.0 Nov. 1978 Japan ................................ 9.0 Mar. 1980 United Kingdom .............. 17.0 Nov. 1979 Canada .............................. 10.63 June 1980 Mexico .............................. 4.5 June 1942 Venezuela ........................ 8.5 May 1979 Denmark .......................... 13.0 Feb. 1980 Netherlands ...................... 9.5 June 1980 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 government 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 Country, or type 1977 1978 1979 Dec. Jan. Feb. Mar. Apr. May June I Eurodollars .............................................. 6.03 8.74 11.96 14.51 14.33 15.33 18.72 17.81 11.20 9.41 2 United Kingdom...................................... 8.07 9.18 13.60 16.71 17.30 17.72 18.07 17.70 16.97 16.68 3 Canada ....................................................... 7.47 8.52 11.91 14.02 13.93 13.96 14.72 16.31 13.23 11.73 4 Germany .................................................. 4.30 3.67 6.64 9.54 8.79 8.94 9.51 10.12 10.18 10.00 5 Switzerland .............................................. 2.56 0.74 2.04 5.67 5.45 5.19 6.57 6.87 5.85 5.64 6 Netherlands .............................................. 4.73 6.53 9.33 14.56 11.85 11.99 11.48 10.76 11.18 10.72 7 France ...................................................... 9.20 8.10 9.44 12.55 12.31 12.63 13.94 12.84 12.62 12.37 8 Italy .......................................................... 14.26 11.40 11.85 16.01 17.00 17.88 18.12 16.91 17.20 17.25 9 Belgium .................................................... 6.95 7.14 10.48 14.49 14.38 14.45 16.23 17.10 16.31 14.69 10 Japan ........................................................ 6.22 4.75 6.10 8.42 8.44 9.10 12.37 13.51 13.63 13.51 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 Country/currency 1977 1978 1979 Dec. Jan. Feb. Mar. Apr. May June 1 Australia/dollar ........................ 110.82 114.41 111.77 110.30 110.97 110.41 109.03 109.10 113.02 115.29 2 Austria/schilling ...................... 6.0494 6.8958 7.4799 8.0039 8.0689 7.9815 7.5539 7.4513 7.8112 7.9421 3 Belgium/franc .......................... 2.7911 3.1809 3.4098 3.5423 3.5688 3.5221 3.3395 3.3156 3.4759 3.5335 4 Canada/dollar .......................... 94.112 87.729 85.386 85.471 85.912 86.546 85.255 84.311 85.178 86.836 5 Denmark/krone ........................ 16.658 18.156 19.010 18.618 18.568 18.326 17.325 17.104 17.859 18.215 6 Finland/markka ........................ 24.913 24.337 27.732 26.830 27.082 26.912 25.998 26.158 27.084 27.448 87 G Fr e a r n m c a e n / y fr /d a e n u c t . s .. c .. h .. e .. .. m ... a .. r .. k .. ... . . . . . . . . . . . . . . . 4 2 3 0 . . 0 3 7 4 9 4 4 2 9 2 . .2 86 18 7 2 5 3 4. . 5 5 6 0 1 4 2 57 4 . . 6 6 7 1 1 4 2 5 4 7 . . 7 9 5 8 0 6 2 5 4 7 . . 4 2 1 0 3 3 2 5 3 4 . . 1 0 8 3 8 9 2 5 2 3 . . 9 3 8 1 5 0 2 5 3 5 . . 9 8 2 2 0 8 2 5 4 6 . . 3 5 1 8 0 4 9 India/rupee .............................. 11.406 12.207 12.265 12.350 12.519 12.529 12.270 12.395 12.727 12.751 10 Ireland/pound .......................... 174.49 191.84 204.65 212.76 214.31 211.59 202.25 198.98 207.41 211.16 11 Italy/lira .................................... .11328 .11782 .12035 .12329 .12427 .12346 .11635 .11417 .11860 .11973 12 Japan/yen .................................. .37342 .47981 .45834 .41613 .42041 .40934 .40246 .39980 .43766 .45894 13 Malaysia/ringgit ........................ 40.620 43.210 45.720 45.931 45.868 45.896 44.956 43.817 45.691 46.625 14 Mexico/peso.............................. 4.4239 4.3896 4.3826 4.3768 4.3780 4.3789 4.3739 4.3779 4.3763 4.3684 15 Netherlands/guilder ................ 40.752 46.284 49.843 52.092 52.527 51.886 49.270 48.570 50.673 51.578 16 New Zealand/dollar .................. 96.893 103.64 102.23 98.100 98.690 97.960 95.451 94.704 97.641 98.729 17 Norway/krone ............................. 18.789 19.079 19.747 20.092 20.373 20.483 19.815 19.739 20.377 20.608 18 Portugal/escudo........................ 2.6234 2.2782 2.0437 2.0036 2.0051 2.0634 2.0116 1.9798 2.0298 2.0422 19 South Africa/rand.................... 114.99 115.01 118.72 120.79 121.64 122.90 123.59 123.88 126.43 129.00 20 Spain/peseta.............................. 1.3287 1.3073 1.4896 1.5039 1.5124 1.5006 1.4446 1.3918 1.4104 1.4280 21 Sri Lanka/rupee ......................... 11.964 6.3834 6.4226 6.4300 6.4323 6.4350 6.4098 6.1500 6.1900 6.2186 22 Sweden/krona .......................... 22.383 22.139 23.323 23.935 24.112 23.974 23.008 22.872 23.731 23.995 23 Switzerland/franc .................... 41.714 56.283 60.121 62.542 62.693 60.966 56.710 56.857 60.131 61.207 24 United Kingdom/pound.......... 174.49 191.84 212.24 220.07 226.41 228.91 220.45 220.94 230.20 233.59 Memo: 25 United States/dollar1 .............. 103.31 92.39 88.09 86.32 85.52 86.37 90.26 91.09 86.96 85.29 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

A69 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 mil­ lions) 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 ....................................................................... June 1980 A-80 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Federal Reserve Board of Governors Paul A. V olcker, Chairman H enry C. W allich Frederick H. Schu ltz, Vice Chairman J. C harles Partee Office of Board Members Office of Staff Director for Monetar y and Financial Polic y 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 Michael J. Prell, Associate Director Robert A. Eisenbeis, Senior Deputy Associate Director tJoHN J. Mingo, Senior Deputy Associate Director Office of the Secretary Eleanor J. Stockwell, Senior Deputy Associate Director Jared J. Enzler, Deputy Associate Director Theodore E. Allison, Secretary J. Cortland G. Peret, Deputy Associate Director Griffith L. Garwood, Deputy Secretary Helmut F. Wendel, Deputy Associate Director Barbara R. Lowrey, Assistant Secretary Martha Bethea, Assistant Director *Cathy L. Petryshyn, Assistant Secretary 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 C. Plows, Assistant Director Robert F. Gemmill, Associate Director George B. Henry, Associate Director Charles J. Siegman, Associate Director Division of Banking Samuel Pizer, Staff Adviser Supervision and Regulation Jeffrey R. Shafer, Deputy Associate Director Dale W. Henderson, Assistant Director John E. Ryan, Director Larry J. Promisel, Assistant Director Frederick R. Dahl, Associate Director Ralph W. Smith, Jr., Assistant Director William Taylor, Associate 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

A71 and Official Staff Nancy H. Teeters Lyle E. Gramley Emmett J. Rice 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 David L. Robinson, Assistant Director Division of Personnel Raymond L. Teed, Assistant Director 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 Robert E. Frazier, Assistant Director Walter W. Kreimann, Associate Director *On loan from the Federal Reserve Bank of Cleveland. tOn leave of absence. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Federal Reserve Bulletin □ July 1980 FOMC and Advisory Councils Federal Open Market Committee Paul A. Volcker, Chairman Anthony M. Solomon, Vice Chairman Lyle E. Gramley J. Charles Partee Nancy H. Teeters Roger Guffey Emmett J. Rice Henry C. Wallich Frank E. Morris Lawrence K. Roos Willis J. Winn Frederick H. Schultz Murray Altmann, Secretary Richard G. Davis, Associate Economist Normand R. V. Bernard, Assistant Secretary Thomas Davis, Associate Economist Neal L. Petersen, General Counsel Robert Eisenmenger, Associate Economist James H. Oltman, Deputy General Counsel Edward C. Ettin, Associate Economist Robert E. Mannion, Assistant General Counsel George B. Henry, Associate Economist Stephen H. Axilrod, Economist Peter M. Keir, Associate Economist Alan R. Holmes, Adviser for Market Operations James L. Kichline, Associate Economist Anatol Balbach, Associate Economist Edwin M. Truman, Associate Economist John 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 Clarence C. Barksdale, Eighth District, President James D. Berry, Eleventh District, Vice President Henry S. Woodbridge, Jr., First District Robert Strickland, Sixth District Donald C. Platten, Second District Roger E. Anderson, Seventh 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 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

A73 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, Esq. 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. Showaiter Pittsburgh.....................15230 William H. Knoell Robert D. Duggan RICHMOND* ................23261 Maceo A. Sloan Robert P. Black Steven Muller Jimmie R. Monhollon Baltimore......................21203 Catherine Byrne Doehler Robert D. McTeer, Jr. Charlotte ......................28230 Robert E. Elberson Stuart P. Fishbume Culpeper Communications and Records Center 22701 Albert D. Tinkelenberg ATLANTA .................... 30303 William A. Fickling, Jr. Vacancy 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. Mathews, 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 Charles S. Youngblood Robert E. Matthews MINNEAPOLIS............ 55480 Stephen F. Keating Vacancy 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 L. 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 Vacancy 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

A74 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 volume $1.00; 10 or more of same volume to one ad­ the United States, its possessions, Canada, and Mexico; dress, $.85 each. 10 or more of same issue to one address, $13.50 per year or $.35 each. Elsewhere, $20.00 per year or $.50 each. Federal Reserve Measures of Capacity and Capacity Utilization. 1978. 40 pp. $1.75 each; 10 or more to one The Federal Reserve Act, as amended through December address, $1.50. each. 1976, with an appendix containing provisions of certain 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 Accounts. 1949-1978. 1979. 171 pp. each; 10 or more to one address, $4.00 each. $1.75 each; 10 or more to one address, $1.50 each. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A75 Consumer Education Pamphlets Measurement of Capacity Utilization: Problems and Short pamphlets suitable for classroom use. Multiple Tasks, by Frank de Leeuw, Lawrence R. Forest, Jr., copies available without charge. Richard D. Raddock, and Zoltan E. Kenessey. July 1979. 264 pp. Alice in Debitland The Market for Federal Funds and Repurchase The Board of Governors of the Federal Reserve System Agreements, by Thomas D. Simpson. July 1979. 106 pp. Consumer Handbook To Credit Protection Laws Impact of Bank Holding Companies on Competition The Equal Credit Opportunity Act and . . . Age and Performance in Banking Markets, by Stephen The Equal Credit Opportunity Act and . . . Credit Rights in A. Rhoades and Roger D. Rutz. Aug. 1979. 30 pp. Housing The GNMA-Guaranteed Passthrough Security: Mar­ The Equal Credit Opportunity Act and . . . Doctors, ket Development and Implications for the Growth Lawyers, Small Retailers, and Others Who May Provide and Stability of Home Mortgage Lending, by Incidental Credit David F. Seiders. Dec. 1979. 65 pp. The Equal Credit Opportunity Act and . . . Women Foreign Ownership and The Performance of U.S. Fair Credit Billing Banks, by James V. Houpt. July 1980. 27 pp. The Federal Open Market Committee Federal Reserve Bank Board of Directors Federal Reserve Banks Federal Reserve Glossary Printed in Full in the Bulletin How to File A Consumer Credit Complaint An Assessment of Bank Holding Companies, by If You Borrow To Buy Stock Robert J. Lawrence and Samuel H. Talley. January 1976. If You Use A Credit Card Truth in Leasing U.S. Currency What Truth in Lending Means to You Reprints Except for Staff Studies, and some leading articles, most Staff Studies of the articles reprinted do not exceed 12 pages. Studies and papers on economic and financial subjects that are of general interest. Measures of Security Credit. 12/70. Revision of Bank Credit Series. 12/71. Summaries Only Printed in the Bulletin Assets and Liabilities of Foreign Branches of U.S. Banks. Requests to obtain single copies of the full text or to be 2/72. added to the mailing list for the series may be sent to Pub­ Bank Debits, Deposits, and Deposit Turnover—Revised lications Services. Series. 7/72. Yields on Newly Issued Corporate Bonds. 9/72. Interest Rate Ceilings and Disintermediation, by Ed­ Yields on Recently Offered Corporate Bonds. 5/73. ward F. McKelvey. Sept. 1978. 105 pp. Rates on Consumer Instalment Loans. 9/73. The Relationship Between Reserve Ratios and the New Series for Large Manufacturing Corporations. 10/73. Monetary Aggregates Under Reserves and Fed­ The Structure of Margin Credit. 4/75. eral Funds Rate Operating Targets, by Kenneth J. Industrial Electric Power Use. 1/76. Kopecky. Dec. 1978. 58 pp. Revision of Money Stock Measures. 2/76. Tie-ins Between the Granting of Credit and Sales of Revised Series for Member Bank Deposits and Aggregate Re­ Insurance by Bank Holding Companies and Other serves. 4/76. Lenders, by Robert A. Eisenbeis and Paul R. Schweitzer. Industrial Production— 1976 Revision. 6/76. Feb. 1979. 75 pp. Federal Reserve Operations in Payment Mechanisms: A Geographic Expansion of Banks and Changes in Bank­ Summary. 6/76. ing Structure, by Stephen A. Rhoades. Mar. 1979. 40 New Estimates of Capacity Utilization: Manufacturing and pp. Materials. 11/76. Impact of the Dollar Depreciation on the U.S. Price The Commercial Paper Market. 6/77. Level: An Analytical Survey of Empirical Esti­ The Federal Budget in the 1970’s. 9/78. mates, by Peter Hooper and Barbara R. Lowrey. Apr. Redefining the Monetary Aggregates. 1/79. 1979. 53 pp. Implementation of the International Banking Act. 10/79. Changes in Bank Lending Practices, 1977-79. 10/79. Innovations in Bank Loan Contracting: Recent Evi­ dence by Paul W. Boltz and Tim S. Campbell. May 1979. U.S. International Transactions in 1979: Another Round of 40 pp. Oil Price Increases. 4/80. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Index to Statistical Tables References are to pages A-3 through A-68 although the prefix “A” is omitted in this index ACCEPTANCES, bankers, 10, 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 Assets and liabilities (See also Foreigners) Federal Reserve Banks, 4,11 Banks, by classes, 16, 17, 18, 20-23, 29 Subject to reserve requirements, 14 Domestic finance companies, 39 Turnover, 12 Federal Reserve Banks, 11 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, 10, 11, 12, 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, 11 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, 11 Weekly reporting banks, 20,21,22,23,24 Discount rates (See Interest rates) Commercial banks U.S. government securities held, 4, 11, 12, 32, 33 Assets and liabilities, 3, 15-19, 20-23 Federal Reserve credit, 4, 5, 11, 12 Business loans, 26 Federal Reserve notes, 11 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, 11 Consumption expenditures, 52, 53 Deposits in U.S. banks, 4, 11, 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, 13 GOLD Customer credit, stock market, 28 Certificates, 11 Stock, 4,55 DEBITS to deposit accounts, 12 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, 12, 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, 14 Installment loans, 42,43 Turnover, 12 Insurance companies, 29, 32, 33,41 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A77 Insured commercial banks, 17, 18, 19 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 Repurchase agreements and federal funds, 6 Federal Reserve Banks, 3, 7 Reserve requirements, member banks, 8 Foreign countries, 68 Reserves Money and capital markets, 3, 27 Commercial banks, 16, 18, 20,21,22 Mortgages, 3,40 Federal Reserve Banks, 11 Prime rate, commercial banks, 26 Member banks, 3, 4, 5, 14, 16, 18 Time and savings deposits, 9 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, 9, 29, 33, 41, 44 Federal Reserve Banks, 11, 12 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, 11, 54, 55 Commercial banks, 3, 15-18, 20-23, 24, 26 State and local governments Federal Reserve Banks, 3, 4, 5, 7, 11, 12 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, 11 TAX receipts, federal, 31 Federal funds and repurchase agreements, 6 Time deposits, 3, 9, 12, 14, 16, 17, 19, 20, 21, 22, 23 Number, by classes, 16, 17, 19 Trade, foreign, 55 Reserve requirements, 8 Treasury currency, Treasury cash, 4 Reserves and related items, 3, 4, 5, 14 Treasury deposits, 4, 11, 30 Mining production, 49 Treasury operating balance, 30 Mobile home shipments, 50 Monetary aggregates, 3, 14 UNEMPLOYMENT, 47 Money and capital market rates (See Interest rates) U.S. balance of payments, 54 Money stock measures and components, 3, 13 U.S. government balances Mortgages (See Real estate loans) Commercial bank holdings, 19, 20, 21, 22 Mutual funds (See Investment companies) Member bank holdings, 14 Mutual savings banks, 3, 9, 20-22, 29, 32, 33, 41 Treasury deposits at Reserve Banks, 4, 11, 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, 11, 12, 32, 33 Nonmember banks, 17, 18, 19 Foreign and international holdings and transactions, 11, 32, 64 OPEN market transactions, 10 Open market transactions, 10 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

A78 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories Detroit Chicago CleveW f iSalt Lake City a*Frai Denver Kansas Louisville t. Louis ^arlotte. Oklahoma Cit) Nashvilh '"geles Jttle Rock Birminghai\ A t 0 la nta > Dallas® Houston i 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