Federal Reserve Bulletin, 1981-09

VOLUME 67 • NUMBER 9 • SEPTEMBER 1981 FEDERAL RESERVE BULLETIN Board of Governors of the Federal Reserve System Washington, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • Stephen H. Axilrod • Michael Bradfield Janet O. Hart • James L. Kichline • Tony J. Salvaggio • Edwin M. Truman Naomi P. Salus, Coordinator 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 647 BANK LENDING TO DEVELOPING credit program for depository institutions COUNTRIES: RECENT DEVELOPMENTS facing liquidity strains. IN HISTORICAL PERSPECTIVE Amendment of Regulation J to make Feder- International banks became important lend- al Reserve check collection services availers to the developing countries of Latin able to all depository institutions. (See Le- America, Asia, and Africa during the 1970s gal Developments.) and have stepped up their lending further Admission of one state bank to membership over the past two years. in the Federal Reserve System. 657 PROFITABILITY OF 712 RECORD OF POLICY ACTIONS OF THE INSURED COMMERCIAL BANKS FEDERAL OPEN MARKET COMMITTEE In an environment of high and widely fluc- At the meeting on July 6-7, 1981, in accortuating interest rates, commercial banks dance with the Full Employment and Balexperienced relatively strong profitability anced Growth Act of 1978 (the Humphreyduring 1980. Hawkins Act), the Committee reviewed its ranges for growth of the monetary and 671 CHANGES IN BANK LENDING credit aggregates for the period from the PRACTICES, 1979-81 fourth quarter of 1980 to the fourth quarter Large banks generally relaxed their non- of 1981 and gave preliminary consideration price terms of credit in the second half of to objectives for monetary growth that 1980 and the first three quarters of 1981. might be appropriate for 1982. The Committee agreed to retain the pre- 687 TREASUR Y AND FEDERAL RESER VE viously established ranges for the monetary FOREIGN EXCHANGE OPERATIONS aggregates for 1981. These ranges, abstracting from the impact of NOW accounts on a The U.S. dollar advanced strongly against nationwide basis, were 3 to 5VZ percent for all currencies in the period from February Ml-A, V/i to 6 percent for Ml-B, 6 to 9 through July 1981. percent for M2, and 6V2 to 9VI percent for M3. The associated range for bank credit 707 INDUSTRIAL PRODUCTION was 6 to 9 percent. In light of its desire to Output decreased about 0.4 percent in maintain moderate growth in money over August. the balance of the year, the Committee wished to affirm that growth in Ml-B near the lower end of its range would be accept- 709 ANNOUNCEMENTS able and desirable. At the same time, the Establishment of new discount rate for ex- Committee recognized that growth in the tended credit to banks and thrift institutions broader monetary aggregates might be high that are under sustained liquidity pressures. in their ranges. Administrative guidance to aid Federal Re- The Committee tentatively agreed that serve Banks in implementing provisions of for the period from the fourth quarter of Regulation A pertaining to the extended 1981 to the fourth quarter of 1982, growth of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Ml, M2, and M3 within ranges of 2VI to SVI Ai FINANCIAL AND BUSINESS STATISTICS percent, 6 to 9 percent, and 6V2 to 9V2 A3 Domestic Financial Statistics percent would be appropriate. The upper A46 Domestic Nonfinancial Statistics and lower ends of the range for Ml were A54 International Statistics reduced V2 percentage point and 1 percentage point respectively from the 1981 range A69 GUIDE TO TABULAR PRESENTATION, for Ml-B. The ranges for the broader aggre- STATISTICAL RELEASES, AND SPECIAL gates were unchanged from those for 1981. TABLES However, given the expectation that growth of these aggregates in 1981 would be A70 BOARD OF GOVERNORS AND STAFF around the upper end of the ranges and looking toward results in 4982 more toward A72 FEDERAL OPEN MARKET COMMITTEE the middle of the ranges, the new ranges AND STAFF; ADVISORY COUNCILS were fully consistent with year-to-year reductions in growth. A73 FEDERAL RESERVE BANKS, BRANCHES, AND OFFICES LEGAL DEVELOPMENTS Revision of Regulation C; amendments to A74 FEDERAL RESERVE BOARD Regulations J and K; various rules and bank PUBLICATIONS holding company and bank merger orders; and pending cases. A76 INDEX TO STATISTICAL TABLES A78 MAP OF FEDERAL RESERVE SYSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank Lending to Developing Countries Recent Developments in Historical Perspective This article was prepared by David P. Dod of the countries has shifted markedly the composition Board's Division of International Finance. of their external debt and has created a more complex task of debt management than they Developing countries of Latin America, Asia, faced a decade ago. Compared with debt to and Africa became important borrowers from foreign official lenders, which were once the international banks during the 1970s and have predominant creditors for all developing counstepped up their borrowing over the past two tries, debt to banks bears shorter maturities and years. Part of the recent increase can be attribut- requires more frequent refinancing. It also bears ed to demands by the developing countries for higher and more variable interest costs. Major external credit to cushion the impact of external borrowers from banks have therefore had to pay strains on their economies. The prominent con- increasing attention to external debt-service oblitributing factors have been the escalation of gations when formulating objectives for their world oil prices in 1979-80, the related slowdown balance of payments and their domestic econoof economic activity in industrial countries and mies. downturn of world prices for nonfuel commodities, and the rising interest cost of outstanding borrowings by developing countries from world BALANCE OF PAYMENTS NEEDS financial markets. A large share of the recent borrowing by Needs for external financing of the developing developing countries might have been expected countries apart from those in the Organization of in any event, in view of their tendency to sustain Petroleum Exporting Countries have risen sharpexternal deficits and in light of the international ly during 1979-81 (chart 1). For some—Korea, banking relationships they have built up over the Taiwan, Thailand—costs for oil imports have past decade. For a number of developing countries, a long-range program of borrowing from 1. Current account deficits of the non-OPEC international commercial banks has been a spe- developing countries cific objective of public policy. Central govern- Percent of GNP ments and state enterprises have undertaken substantial long-term borrowing from interna- 66 tional banks. Governments in most developing countries have significantly regulated the terms on which private companies may borrow abroad 44 and have often applied direct financial incentives or disincentives. An increase in public-sector and private borrowing combined has been neces- 9L sary in view of economic policies in developing countries that have contributed to higher, sustained deficits in the current account of their balance of payments. 1973 1975 1977 1979 1981 The persistence of high levels of borrowing Current account is balance of payments for goods, services, and private and official transfers. from international banks by some developing SOURCES. IMF, World Bank, and Federal Reserve staff estimates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

648 Federal Reserve Bulletin • September 1981 2. Economic activity and inflation in the It depends in part on factors that are beyond non-OPEC developing countries their control, notably future shifts in their terms Percent per annum Percent per annum of trade that may offset or compound their recent setbacks. It also depends upon their view of the average level of current account deficit that they believe is desirable over the longer term and upon the willingness of foreign creditors to supply the implied financing. Developing countries have not been adjusting quickly to the oil shock of 1979-80, judging by relative growth in the volume of exports and imports. Rapid export expansion has been maintained on average, but growth in the volume of 1973 1975 1977 1979 1981 imports does not yet appear to have slowed Inflation is change in consumer prices. significantly (chart 3). At this stage, non-OPEC GDP is gross domestic product. developing countries appear to be adjusting less SOURCE: IMF World Economic Outlook and Federal Reserve staff adjustments. vigorously to recent adversities than they did in increased by 4 to 5 percent of national income, a response to the oil shock of late 1973 and to the more severe impact, relatively, than that experi- related collapse of nonfuel commodity prices in enced in any of the major industrial countries. 1974-75. To some extent the recent slow adjust- For others, the 1980-81 slowdown in economic ment may be attributed to a lag in curtailing growth of the industrial countries has slowed the expansionary fiscal policies adopted by many growth of export markets and has contributed to developing countries in 1979-80, before the full the cyclical weakening in world market prices for dimensions of the second oil shock became clear. their exports of primary commodities. For countries with high levels of net external debt, rising 3. Volume of exports and imports by interest rates on world financial markets have non-OPEC developing countries imposed additional needs for external financing. Recent external forces affecting the non-OPEC 1973=100 developing countries have been broadly similar 130 to those at work following the first world oil Exports shock of late 1973. The initial responses of I policymakers in the developing countries have 120 also been broadly similar, as they have again Imports sought to maintain reasonably high levels of 110 economic activity and, on average, have been I willing to tolerate some acceleration in price inflation (chart 2). 100 1973 1974 1975 1976 1977 1978=100 THE ADJUSTMENT PROCESS While the circumstances of individual countries vary, most developing countries now confront a need to adjust to adverse developments in their external payments positions. The adjustment process must basically consist of policies to expand the volume of their exports and to restrain the volume of imports. 1978 1979 1980 1981 The severity of the required adjustment effort SOURCES. IMF World Economic Outlook and Federal Reserve staff by developing countries is somewhat uncertain. adjustments. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank Lending to Developing Countries 649 More recently, the tendency of some countries EXTERNAL FINANCING to resist depreciation of their currencies against FROM BANKS IN THE 1970S the U.S. dollar has inhibited balance of payments adjustment. As the exchange value of the dollar Bank lending to developing countries has taken has risen strongly over the past year against three principal forms: short-term private trade European and Japanese currencies, such resist- financing; long-term loans guaranteed by the ance has eroded the competitiveness of the inter- governments of industrial countries to promote nationally tradable goods and services of many exports of capital goods; and long-term, nondeveloping countries. guaranteed loans arranged in large blocks The apparent sluggishness of recent actions through syndicates of international banks. The toward balance of payments adjustment may volume of each form of bank lending expanded signify only a lag by developing countries in rapidly through the 1970s. recognizing their adjustment needs. Or it may Before the sharp increase in needs for balance signify a perception by many of these countries of payments financing that followed the oil shock that they can aim for and sustain higher levels of of 1973-74, external borrowing from banks by current account deficits in the future than they developing countries was already growing vigorsustained in the 1970s (chart 4). In the latter case, ously (chart 5). The early 1970s had been a the external debt of developing countries would period of unusually favorable terms of trade, be expected to expand at a correspondingly more strong external payments positions, and rapidly rapid pace through the 1980s. rising reserves for most developing countries. Yet the fragmentary data that are available sug- 4. Average current account deficits gest that their debt to banks more than doubled in relation to GDP in dollar terms between the end of 1970 and the end of 1973, reaching about $35 billion. The fastest growing component of that debt was medium-term syndicated loans from commercial 5. Net external borrowing from banks by the non-OPEC developing countries Billions of dollars The ten major borrowers are Argentina, Brazil, Chile, Colombia, Korea, Mexico, Peru, the Philippines, Taiwan, Thailand. SOURCES. IMF and World Bank. A high-deficit, high-debt strategy by developing countries is sometimes rationalized as a means to finance a higher level of capital forma- banks tion, which, if effectively utilized, facilitates more rapid economic growth by the borrower. Although some countries (Colombia, Taiwan, Malaysia) have prospered without recourse to this strategy, the high-deficit approach to eco- J2ZQ 1222 \m 197fi' ' 1978' ' 1980 nomic growth remains appealing to many devel- Total is lending from U.S. banks and banks headquartered in other oping countries. The feasibility of such a strate- industrial countries whose authorities provide statistical reports to the Bank for International Settlements (BIS). gy, however, depends on the ability of the U.S.-chartered banks include U.S. offices and foreign branch borrowing country to attract external financing offices and exclude lending denominated in local currency. SOURCES. BIS, Fifty-First Annual Report, 1980/1981, BULLETIN from banks and other foreign creditors. table 3.20, and Federal Reserve staff estimates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

650 Federal Reserve Bulletin • September 1981 banks. Measured on the basis of new credit rates or changes in the exchange rate system announcements, the flow of such loans rose from offered effective inducements to banks and nonless than $1 billion in 1971 to %AVi billion in 1973, bank private borrowers to assume a compensatwith the bulk of the loans being arranged .for ing, more active role in foreign borrowing. borrowers in four Latin American countries— Brazil, Mexico, Peru, and Argentina. A critical institutional innovation helping to OFFICIAL AND NONBANK popularize syndicated term loans among the PRIVATE CAPITAL FLOWS banks was the use of "floating" rates of interest, adjusted at regular intervals to reflect market Throughout the 1970s nonbank private investors conditions. In a period of relatively volatile and provided relatively little new external financing rising interest rates, banks favored that feature of for developing countries, considering that they internationally syndicated loans as a means of had entered the decade with a larger stock of avoiding the interest-rate risk inherent in alterna- claims on these countries than the banks. Direct tive, fixed-interest investments such as bonds investment in foreign-controlled companies (fiand mortgages. nanced by equity capital or by loans from the During 1973-74, demands by developing coun- parent company) has been and continues to be tries for external, trade-related financing also the most important vehicle for nonbank private accelerated sharply. Fueled by high levels of capital flows to developing countries. Such flows public spending, the volume of their imports appear to have amounted to about $8 billion in jumped about one-third. Meanwhile, the prices 1980 (chart 6), but they may be subject to someof their imports rose by two-thirds, under the what more undercounting than other capital combined influence of the sharp increase in oil flows. prices by OPEC and the general uptrend of world Official external grants and loans recorded by inflation. the non-OPEC developing countries averaged Immediate needs for balance of payments fi- about 2Vi percent of their gross national product nancing during the mid-1970s generated higher through the 1970s. Those resources have been demand by developing countries for all types of heavily and increasingly concentrated upon lowbank lending (chart 5). On the supply side, three er-income countries by both the governments of factors helped to ease their access to internation- the industrial countries and the multilateral deal banking markets: the rapid buildup of deposits velopment banks. For the 10 major borrowers with international banks by OPEC members, the downturn in loan demand in industrial countries 6. Major sources of official and nonbank that were experiencing a deep recession, and the private financing expansion in guarantees and subsidies by governments of the industrial countries on certain export credits extended by banks. The surge of bank lending to developing countries since 1978 has again been in response to rising overall needs for balance of payments financing, associated with rapid import growth and, more recently, their deteriorating terms of trade. However, the composition of bank lending seems to have shifted toward short-term financing and toward private-sector borrowers. Publicsector borrowers in several major borrowing countries—Argentina, Chile, Colombia, Mexico, and Peru—appear to have reduced their role in arranging external financing from banks. In each case, upward adjustments in domestic interest SOURCES. IMF Annual Reports and World Economic Outlook and Federal Reserve staff estimates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank Lending to Developing Countries 651 from banks (see note to chart 4), the relative profile demand increased skill in debt manageimportance of foreign official capital inflows de- ment and flexibility in adapting economic policy clined sharply during the 1960s and 1970s. to changing circumstances. Most developing countries borrowed from the Flexible exchange rate and interest rate poli- International Monetary Fund at some point dur- cies have proven to be important tools for maning the 1970s. Net disbursements from the IMF aging balance of payments financing problems of tend not to be an important source of financing many of the major borrowers. In a number of because of the revolving character of its re- recent instances, upward adjustments in interest sources. Nevertheless, those resources play an rates have been used to induce increased exterimportant role in meeting needs for exceptional nal borrowing and to reverse capital flight by the financing during periods of global economic private sector. In other instances, countries that strain. have clung to a rigid structure of interest rates and foreign exchange rates have found their fundamental problems of external adjustment exacerbated by private capital outflows. EXTERNAL INDEBTEDNESS OF THE DEVELOPING COUNTRIES For most low-income developing countries external debt through the 1970s continued to take A decade of relatively high current account defi- the form mainly of concessional (low-interest), cits, and of increased dependence upon non- long-maturity loans from foreign official lenders. concessional loans, has markedly altered the Debt of these countries to foreign banks has structure of external debt for the major develop- consisted predominantly of short-term credits or ing-country borrowers (chart 7). As a result, externally guaranteed loans related to the purinterest costs are relatively higher and the aver- chase of specific imports. age maturity of their debt is much shorter than in 1970. These characteristics of the current debt IMPACT OF RISING INTEREST RATES 7. External debt of the non-OPEC The upswing in world interest rates over the past developing countries, by type of credits two years has had a varying impact on the debt burdens of developing countries. Judged against conditions in the 1970s, the burden of their market-based debt has certainly risen. Market rates of interest have moved up faster than inflation rates in the major capital-market countries, especially during the past 18 months. Thus the "real" cost of borrowing, approximated by the difference between the external interest rate Ten major borrowers facing borrowers of dollars, marks, or yen, and $65 billion $215 billion the concurrent rate of inflation in world prices measured in the respective currency, has risen to exceptionally high levels. For most low-income developing countries, • Official creditors changes in world inflation have had the decisive • Banks influence on the real burden of external debt over • Other creditors the past decade (chart 8). Fixed-interest, conces- Others sional loans have remained the principal compo- $150 billion nent of their external debt, and the average nominal interest rate on concessional debt has actually declined since 1970. As part of an effort SOURCES. World Bank, BIS, and Federal Reserve staff esti- to increase real transfers of resources to lowmates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

652 Federal Reserve Bulletin • September 1981 8. Indicators of real interest cost confronting 9. Indicators of real interest cost of major borrowers low-income developing countries from banks Percent per annum 30 20 10 World inflation is unit value of world trade in SDR terms. World inflation is unit value of world trade in dollar terms. Cost of fixed-interest debt (all currency denominations) is an SOURCES. IMF and Federal Reserve staff estimates. average for all developing countries, based on reports from creditor sources; average cost of fixed-interest debt of the low-income countries is less. nal indebtedness of the major borrowers. More SOURCES. IMF and OECD. than four-fifths of the external debt to banks of income countries during the 1970s, bilateral-aid the 10 largest borrowers cited previously is estidonors within the Development Assistance Com- mated to be denominated in U.S. dollars. Over mittee of the Organisation of Economic Co- the past two years, U.S. dollar rates of interest operation and Development have striven to in- have risen more than interest rates on other crease the average degree of concessionality major currencies. (that is, the discount from market terms) on More recently, the dollar has also appreciated economic development assistance. Interest rates sharply in foreign exchange markets, and this on other fixed-interest debt of the developing development has tended to reduce, in dollar countries—notably, official and guaranteed ex- terms, the prices of goods and services traded in port credits and loans from the multilateral de- world markets. As a result, dollar debtors in the velopment banks—have risen since the mid- world economy must export a larger volume of 1970s but have lagged far behind contemporary goods and services in order to help finance the market rates of interest. The resulting average debt-service payments on their dollar-denomirate of interest on all forms of fixed-interest debt nated debt. This situation reverses that of 1973, has risen by only 2 percentage points since 1970. when a sharp depreciation in the exchange value Because of high average rates of world inflation, of the dollar produced windfall gains for dollar the real interest cost of external debt for most debtors. low-income countries has been strongly negative The balance of payments impact of rising throughout the past decade. interest rates depends not only on the changing The major borrowers from banks also enjoyed level of these rates but also on the size of a low real costs of borrowing during the 1970s but, country's external debt. Moreover, rising intersubsequently, have experienced by any measure est payments on a country's external debt may an abrupt increase in such costs. One contribut- be counterbalanced by rising interest receipts on ing factor has been the large fraction of their total its external assets (chart 10). For the 10 major debt that is subject to variable, market rates of bank borrowers, more than half the increase in interest. Short-term commercial and syndicated net external interest payments during the past term loans loom large for these countries, and two years can be attributed to growth in net the interest rates payable on such debt have been external debt; rapid growth in gross external debt marked up quickly in response to the rising has been accompanied by less rapid growth or short-term rates of interest in world financial sharp decline (Brazil) in their external assets. markets (chart 9). Recent increases in net external interest bur- A second factor has been the high proportion dens of major developing countries are large in of dollar-denominated debt in the overall exter- relation to those of any other modern episode. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank Lending to Developing Countries 653 10. Interest payments and receipts lasting unsettling effects on a borrower's access to international capital markets. In addition, re- Billions of dollars scheduled external bank debt normally bears an interest cost as high as, or higher than, that on the original loans. Nevertheless, debtor governments have requested rescheduling of their external bank debt more frequently in the past two years (table 1). One factor contributing to bank reschedulings has been the linkage to debt reschedulings by official creditors under the informal Paris Club framework. Borrowing governments have been seeking and obtaining more frequent debt rescheduling from official creditors, some of which have Payments and receipts are external interest payments and receipts offered interest rate concessions. As a condition of the ten major borrowers. SOURCES. National balance of payments data and Federal Reserve of Paris Club agreements, creditor governments staff estimates. normally oblige the debtor to seek a comparable However, even at the current level of interest rescheduling of its debts to other major creditors. rates, net interest payments abroad exceed 4 or 5 Fulfillment of this condition in several instances percent of national income in only a few coun- has required a separate rescheduling arrangetries. The capacity to finance such interest trans- ment involving only the commercial banks. fers appears on average to be well within the A second institutional factor leading to publimeans of the borrowing enterprises. The total of cized debt reschedulings by developing countries tax revenue and operating income of major bor- has been the dispersion among small banks of rowing entities within these countries—the gov- participations in syndicated long-term loans to ernment sector and private investors—often public-sector borrowers. A wider body of crediamounts to more than half of national income. tors raises the need for a formal negotiating framework and has increased the public visibility of debt reschedulings. CONSTRAINTS ON BANK LENDING TO DEVELOPING COUNTRIES Risk and Return on Bank Lending While the external interest burdens on developing countries may appear to be modest in relation During the 1970s the returns to U.S. banks on to the real resources that they command, the foreign loans were attractive, on average, while priority of claims by foreign creditors over other loan losses were low. Loan losses reported by claims on a country's resources can never be banks on their international loans were and have fully assured. There is a risk that government remained lower than those reported on domestic borrowers, under adverse political or economic loans. The loss experience on loans to developcircumstances, will accommodate domestic ing countries has also been favorable, although needs at the expense of their obligations to banks seldom cite separately statistics for that foreign creditors. Where the government re- component of their international lending. stricts the access of private borrowers to foreign The returns to U.S. banks on their internationexchange, private borrowers may also face no al lending have become less attractive compared alternative but to suspend payments on their with returns on domestic lending since the midexternal obligations. These so-called country 1970s. On international syndicated credits, a risks in international lending may lead borrowers decline has occurred in the average "spread" to request rescheduling of their debt-service obli- earned by the lender above the base rate of gations. interest on interbank funds in the Eurodollar Recourse to delays in debt service and to market. Moreover, in 1980-81, the base rate in formal requests for debt rescheduling may have the Eurodollar market has also declined relative Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

654 Federal Reserve Bulletin • September 1981 1. Recent cases of multilateral debt rescheduling requested by national governments from international banks Date of Participating Types of debt to banks rescheduled Country agreement creditors or restructured September 19781 April 1978 Jamaica commercial banks long-term debt of government borrowers July 1981 J December 1978 Peru commercial banks, preceded by separate long-term debt of government borrowers rescheduling by foreign governments June/August 1979 Turkey commercial banks, preceded and followed by short-term government-guaranteed debt separate reschedulings with foreign governments and nonbank private creditors Pending Sudan commercial banks, preceded by separate short- and long-term debt of government rescheduling by foreign governments borrowers April 1980 1 Zaire commercial banks, preceded and followed by f long-term debt of government borrowers Under negotiation/ separate reschedulings by foreign < nonsyndicated long-term debt of governments I government borrowers September 1980 and Bolivia commercial banks long-term debt of government borrowers pending December 1980 Nicaragua commercial banks long-term debt of government borrowers Pending Poland commercial banks, preceded by separate long-term debt of government borrowers rescheduling by foreign governments Under negotiation Liberia commercial banks, preceded by separate long-term debt of government borrowers rescheduling by foreign governments UUnnddeerr nneeggoottiiaattiioonn Costa Rica commercial banks short- and long-term debt of government borrowers to the prime rate of interest established for restraining their exposure in the long-term end of borrowers in the domestic U.S. market for bank the market. Since mid-1979, however, their loans. As a result of these two factors, the short-term lending to developing countries has apparent average yield on new syndicated loans grown rapidly, suggesting that yields on unpublito developing countries, which had averaged cized, short-maturity loans may have become about 1 percentage point higher than the U.S. somewhat more attractive. Banks headquartered prime rate during 1973-78, has fallen significant- in other industrial countries also shortened the ly below prime during 1980-81. average maturity of their loans to developing In the late 1970s, U.S. commercial banks countries during 1980 (chart 11). responded to the apparent declining relative The interest and participation by U.S. banks in profitability of syndicated term loans by sharply syndicated term loans to developing countries appear to have revived since late 1980, partly 11. Outstanding external bank claims on because banks now face financially more attracnon-OPEC developing countries tive options to set the floating interest rate on many such loans at some margin above the prime Billions of dollars rate in the United States rather than to link it to the interbank rates prevailing in the Eurodollar market. Country Exposure of Banks While the competition among banks may suffice to maintain a reasonable balance over time between risk and return on banks' loans to developing countries, the loan exposure of some banks in Long-term some countries still warrants close analysis. As a bank's loans to a given country rise to a high 1976 1977 1978 _ 1979 1980 level relative to the capital of the bank, that SOURCES. BIS, U.S. country exposure lending survey, and Federal Reserve staff estimates. "country exposure" tends to arouse anxiety: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank Lending to Developing Countries 655 among the bank's management, who are averse The exposure of a bank in all developing to a possible severe loss; among bank supervi- countries combined is not necessarily a matter for sors, whose agencies may insure or must other- concern. The economic fortunes, financial bewise protect the bank's depositors; and among havior, and repayment capabilities of foreign the authorities of the borrowing country, whose borrowers are highly diverse—probably more ability in the event of need to expand or even to diverse than those of domestic borrowers. High maintain that country's access to external bank concentration of a bank's loans in a single foreign credits may come into question. These factors country is in principle a more valid point for place a real, if indeterminate, limit on the expo- concern. Since the mid-1970s, U.S. banks on sure in a country that bank creditors, as a group, average have maintained loan exposures in Braor the government of the borrowing country will zil and Mexico that are exceeded only by their find acceptable. claims on the United Kingdom or Japan but, of Overall exposure of U.S. commercial banks in course, are only a small fraction of the claims on developing countries has tended to rise in rela- borrowers in the United States. The exposure of tion to the banks' capital funds during the past U.S. banks in Brazil and Mexico has grown less two years. This development follows a period in rapidly on average over the past few years than which the bulk of new lending was provided by their exposure with other developing-country large, non-U.S. banks that previously had borne borrowers. lower levels of exposure in developing countries Just as there is diversity among countries in than the largest U.S. banks. In that period, U.S. the management of external debt, there is also banks in all size classes, including those with low diversity in the performance of different categoloan exposure in developing countries, had ries of borrowers or credits within a particular abruptly slowed the pace of their net lending country. Policies that limit a government's abilito developing countries (chart 12). ty to service its debt may not prevent privatesector borrowers from meeting their debt-service 12. U.S. bank exposure in relation to bank capital obligations. Conditions that lead to disruption or rescheduling of term loans may not cause serious delays in the repayment of trade-related loans. 2 Balance of Payments Objectives and Borrowing Needs Policies and objectives for balance of payments adjustment by developing countries tend to determine their needs for external borrowing from 1 banks. Alternative sources of financing have been and are likely to remain less responsive to shifts in current account deficits. Changes in external reserves may act as a buffer to short-run variations in the current account and, thus, may increase (as in 1972-73 and 1976-78) or relieve (as in 1974-75 and 1980-81) the need for external borrowing. For the longer run, the scope for .3 attracting external capital from new nonbank sources—institutional investors, nonfinancial .2 corporate investors, direct public issues of bonds on international capital markets—appears rather narrow. That narrowness of alternative, nonbank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

656 Federal Reserve Bulletin • September 1981 channels of finance has been a principal subject Proponents of capital flows to developing of scrutiny for the multilateral World Bank-IMF countries postulate that investment begets Development Committee that was established in growth and that net foreign savings, which fi- 1974. Progress toward widening these channels nances the current account deficit, begets investhas been slow, and techniques proposed to ment. However, there may be slippages in the achieve faster results have encountered philo- transmutation of foreign savings into incremental sophical objections from governments of the investment. In particular, the tighter fiscal policy prospective investing and recipient countries. that would help a country to achieve a lower Constraints on official and nonbank private current account deficit would at the same time inflows of capital imply that decisions by devel- tend to produce a higher level of domestic savoping countries to maintain high current account ings. There may also be uncertainty over the deficits will require high ongoing levels of exter- value of benefits to be achieved from that increnal borrowing from banks. A set of fiscal and mental investment. Such slippages and uncermonetary policies and policies on wages, prices, tainty warrant careful reevaluation by national and exchange rates that produced a lower deficit authorities in light of the higher real cost that in the current account would, conversely, gener- borrowings from international capital markets ate a lower level of borrowing. now appear to carry. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

657 Profitability of Insured Commercial Banks Barbara Negri Opper of the Board's Division of amounts of rate-sensitive assets and liabilities; Research and Statistics prepared this article.' other large banks, with reduced interest margins, generally had an excess of rate-sensitive liabil- High and widely fluctuating interest rates during ities. Similarly, small banks whose interest mar- 1980 created opportunities for profit but also gins increased had significantly closer alignment potential for loss. In this environment, insured of rate-sensitive assets and liabilities than banks commercial banks experienced relatively strong whose margins declined, although most small profitability. Industrywide returns on assets and banks had some excess of rate-sensitive liabilon equity during 1980 nearly matched the decade ities. Because many interest rate relationships peak reached in 1979, and dollar profits slightly were distorted at times during 1980, the timing of surpassed the record set last year. asset growth within the year had an important As a group, only the smaller institutions were influence on changes in bank interest margins. able to increase rates of return on assets from Noninterest income grew faster than assets 1979. Small banks increased their interest mar- during 1980, due in part to fiduciary and service gins by shifting asset allocations dramatically income, as well as to the gains in trading actoward money market instruments, which al- counts at money center and other large commerlowed them to reap short-run profits from an cial banks. Operating costs also expanded rapidinverted yield curve and to repair asset and ly and in many cases offset gains in noninterest liability maturity imbalances caused by their revenue. Loan loss provisions grew slightly fastcontinued reliance on six-month money market certificates (MMCs). At large banks, yields on 1. Income and expense as percent of average assets, interest-earning assets increased sharply from all insured commercial banks, 1978-80' 1979, but costs of interest-bearing liabilities in- Item 1978 1979 1980 creased even faster, cutting into interest margins. Large banks as a class were able to take Gross interest earned 7.24 8.62 9.87 Gross interest expense 4.17 5.50 6.78 advantage of swings in market interest rates, Net interest margin 3.07 3.12 3.09 however, as profits on trading accounts exceed- Noninterest income .74 .78 .89 Loan-loss provision .25 .24 .25 ed those of a year earlier and more than offset Other noninterest expense 2.50 2.54 2.63 Income before tax 1.06 1.12 1.10 enlarged losses on securities transactions. Some .29 .28 .28 Other3 -.02 -.04 -.03 large banks were buffeted by these rate move- Net income .76 .80 .79 ments, however, and incurred trading-account Cash dividends declared .26 .28 .29 losses. Net retained earnings .50 .52 .50 Table 1 summarizes, for all insured commer- MEMO Net interest margin, cial banks, income and expenses relative to taxable equivalent4 3.48 3.48 3.46 average assets. Appendix table A.l presents Average assets (billions of dollars)1... 1,419 1,594 1,768 dollar amounts of income and expenses in detail. 1. Average assets are fully consolidated and net of loan loss Exposure to interest rate risk appeared to have reserves; averages are based on amounts outstanding at the beginning and end of each year. had a predominantly negative effect on net inter- 2. Includes all taxes estimated to be due on income, on extraordiest margins during 1980, despite providing peri- nary gains, and on securities gains. 3. Includes securities and extraordinary gains or losses (-) before odic profit opportunities. Large banks that expe- taxes. rienced increased margins held about equal 4. For each bank with profits before tax greater than zero, income from state and local obligations was increased by [1/(1 - f) - 11 times the lesser of profits before tax or interest earned on state and local obligations (t is the marginal federal income tax rate.) This adjustment 1. The data base was developed by Nancy Pittman, and approximates the equivalent pretax return on state and local obligaresearch assistance was provided by Mary McLaughlin. tions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

658 Federal Reserve Bulletin • September 1981 er than assets industrywide, especially at small sources of funds. In their loan portfolios, small banks. banks shifted away from consumer loans, on With lower net interest margins prevailing on which usury ceilings tended to bind and turnover foreign office business, and with that business to be slow, and toward business loans carrying accounting for an increased fraction of consoli- either short maturities or variable interest rates. dated assets, consolidated net interest margins Returns from securities portfolios at all banks fell at commercial banks with foreign offices. increased 92 basis points after adjustment for Gains in trading accounts and other noninterest taxable equivalence. With about one-fifth of income only partially offset the decrease in net bank securities portfolios maturing during 1980, interest margins, and consolidated profitability part of the increase in portfolio yield reflects of banks with foreign branches declined slightly rollover of portfolios at higher market interest from 1979. rates. Another part reflects the impact of concentrating acquisitions in shorter maturities at interest rates above those prevailing on longer maturi- INTEREST INCOME ties. The shift toward shorter-term securities was most pronounced at small commercial banks, at Loan portfolio yields at all banks increased 170 which the proportion of outstanding securities basis points on average (table 2). Loan yields at portfolios maturing within one year rose from 17 money center banks increased almost one-third percent to 24 percent during 1980. On average, banking industry assets allocated 2. Rates of return on fully consolidated portfolios, to loans declined marginally during 1980 (table all insured commercial banks, 1978-80' 3). Allocations to federal funds sold, security Percent resale agreements, and holdings of interest-bearing interbank balances increased, which is con- Item 1978 1979 1980 sistent with heightened variability in liability Securities, total 6.47 7.05 7.88 interest costs and enlarged dependence on short- U.S. government 7.37 8.25 9.38 State and local government 5.24 5.58 6.03 term liabilities. This portfolio shift was most Other 8.80 9.24 10.55 Loans, gross 10.32 12.01 13.71 pronounced at banks that experienced the great- Net of loan loss provision 9.82 11.55 13.19 Taxable equivalent2 est change in their liability structures. Acquisi- Total securities 8.89 9.31 10.23 tions of money market assets and of short-term State and local 10.62 10.44 11.13 Total securities and gross loans .. 9.95 11.37 12.88 government securities represented one-third of the asset growth of small banks, far higher than 1. Calculated as described in the "Technical note," BULLETIN, vol. 65 (September 1979), p. 704. the fraction of outstanding assets of small banks 2. See note 4 to table 1. that these instruments represent. By contrast, money center banks, funded by money market faster than the industry average because floating- instruments for many years, allocated an even rate and short-term loans dominate their portfo- larger proportion of assets to loans in 1980 than a lios. Loan yields at small banks also increased. year earlier. At 155 basis points, the yield improvement at Interest income scaled to average consolidated small banks exceeded average increases record- assets increased 125 basis points for all insured ed by all other nonmoney center groups.2 Earlier banks taken together and grew about one-fourth in the 1970s, changes in loan portfolio yields of faster at money center banks. At small banks, small banks lagged changes registered at other interest income increased at about the industry banks. However, yields increased rapidly during average, and unlike past periods of rising market 1980 as small banks took several actions to interest rates, increased faster than at larger protect near-term profitability in order to offset nonmoney center banks (chart 1). This heightthe shift to higher-cost, more market-sensitive ened responsiveness resulted partly from the asset reallocation described earlier and partly from above-average asset growth, which allowed 2. Appendix table A.2 contains summary statistics by class small banks to acquire instruments carrying curof bank. A similar table presented 1979 data (FEDERAL RESERVE BULLETIN, vol. 66, September 1980, p. 705). rent market yields. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks 659 3. Portfolio composition as percent of total assets including loan loss reserves, all insured commercial banks, 1978-801 Average during year Domestic Fully consolidated IItteemm 1978 1979 1980 1978 1979 1980 Interest-earning assets 79.2 80.4 80.2 82.4 83.0 82.9 Loans 53.3 56.0 55.1 54.6 56.3 55.4 Securities 21.3 20.0 20.1 18.4 17.2 17.0 U.S. Treasury 7.7 6.6 6.4 6.5 5.5 5.3 U.S. government agencies 3.2 3.4 3.7 2.7 2.8 3.0 State and local governments 9.8 9.5 9.4 8.3 8.0 7.8 Other bonds and stocks .6 .5 .5 .9 .8 .8 Gross federal funds sold and reverse RPs 4.0 4.0 4.4 3.3 3.4 3.7 Interest-bearing deposits2 .6 .4 .6 6.1 6.2 6.8 MEMO: Average gross assets (billions of dollars) 1,198 1,329 1,460 1,406 1,593 1,768 1. Percentages are based on aggregate data and thus reflect the 2. Interest-bearing deposits first were reported on a fully consolidatheavier weighting of large banks. Data are based on averages for call ed basis in December 1978. The number shown for 1978 is an average dates in December of the preceding year and June and December of based on the reported December amount and estimates for the earlier the current year. call report dates. INTEREST EXPENSE trend, demand deposits diminished in relative importance as a source of funds and for the first Interest costs for liabilities not covered by de- time financed less than one-fourth of total assets posit rate ceilings increased more than 200 basis at commercial banks (table 5). In the past, much points during 1980 (table 4). Much of this in- of the shifting from demand deposits seemed crease reflects the behavior of market interest attributable to sophisticated cash management rates affecting large certificates of deposit (CDs), techniques of corporations and the U.S. governfederal funds, and other liabilities issued in the ment. In 1980, however, consumers also shifted U.S. money markets. Interest costs on deposits by substituting automatic transfer service (ATS) issued by foreign offices also rose rapidly, al- accounts for demand deposits in response to though they affected a much smaller proportion ATS plans marketed in anticipation of the nationof banking system liabilities. wide extension of negotiable order of withdrawal Interest costs for savings and small time de- (NOW) accounts on January 1, 1981.3 This early posits increased 145 basis points at all banks, and 3. In 1980, commercial banks outside New York and New they increased even more at small banks. Since England—where NOW accounts already existed—lost $12 fixed deposit ceilings were maintained well be- billion of nontransaction savings accounts and $3 billion of low market interest rates, growth in deposits demand deposits of individuals, partnerships, and corporations; their interest-bearing transaction accounts grew $7 with variable rate ceilings, together with an inbillion. crease in average market yields, accounted for the rise in interest costs. The money market certificate (MMC), carrying costs equal to the 4. Rates paid for fully consolidated liabilities, all insured commercial banks, 1978-80' discount rate on six-month Treasury bills, was the dominant retail time deposit, increasing from Percent 15 percent to more than 30 percent of bank Item 1978 1979 1980 savings and small time deposits during the year. Time and savings accounts 6.76 10.66 Interest rates offered on MMCs increased on Negotiable CDs2 7.85 10.52 12.56 average from IOV2 percent in 1979 to 12 percent D O e th p e o r s i d ts e p i o n s f it o s r eign offices 8 5. . 8 0 1 4 1 6 1 . . 6 3 5 8 1 8 4 . .0 10 3 in 1980. The small saver certificate (SSC), autho- Subordinated notes and debentures.... 7.77 8.41 8.90 Gross federal funds purchased and RPs , 8.68 12.95 14.68 rized on January 1, 1980, and pegged to the Other liabilities for borrowed money.... 7.00 9.17 11.34 thirty-month Treasury yield, attracted $30 billion Total 6.81 9.13 11.10 of intermediate-term deposits, but inflows were MEMO: Not covered by regulatory ceilings2 8.02 11.20 13.45 restrained during part of the year by the 11.75 1. Calculated as described in the "Technical note," BULLETIN percent interest "cap" imposed in March. (September 1979) p. 704. 2. Does not include nonnegotiable time deposits of $100,000 or Continuing what has become a long-standing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

660 Federal Reserve Bulletin • September 1981 1. Components of interest margins 1). As expected, such costs rose fastest at money center banks, reflecting especially large in- Percent of average assets creases in money market rates. Uncharacteristic, however, was the increase in interest costs at small banks, which approached that at large nonmoney center banks and exceeded that at medium-sized banks. This rise reflected both the shift out of demand balances into interest-bearing deposits, especially pronounced at small banks, and the shift within interest-bearing deposits to escalating-cost MMCs. NET INTEREST MARGINS With interest costs increasing faster than interest income, the average net interest margin of all insured commercial banks fell slightly during 1980. Large banks experienced reductions in interest margins; banks with less than $1 billion in assets showed gains. Interest margins of money center banks fell 8 basis points in 1980. Some of the decline may reflect the increase in the share of assets in foreign offices, at which margins tend to be lower than at domestic offices. Some also may reflect intensified domestic and foreign competition from suppliers of short-term funds to major corporate borrowers, manifested by the spread of NET INTEREST MARGINS loan pricing options favorable to borrowers. In addition, variations in interest rates during the year brought profound changes to relationships between the prime rate and typical money center bank funding costs; consequently, the timing within the year when domestic liabilities matured and had to be reissued had a material impact on net interest margins. Net interest margins of nonmoney center large 1970 1972 1974 1976 1978 1980 banks also fell in 1980. Some of these institutions Size categories are based on year-end consolidated assets. expanded their foreign office operations, and as Gross interest income is adjusted for taxable equivalence. Net interest margins are gross interest income adjusted for taxable equiva- with money center banks, this alteration in busilence minus gross interest expense. ness mix could have exerted downward pressure Data are for domestic operations until 1976, when foreign office operations of U.S. banks were consolidated into the totals. on margins. In addition, many of these banks are still adjusting to financing by a larger volume of shifting from consumer demand deposits to inter- liabilities with costs sensitive to movements in est-bearing transaction accounts had some im- market rates of interest. pact on commercial bank costs, hinting at the Although more small banks experienced erolarger effect likely after a full transition to NOW sion in net interest margins in 1980 than in 1979— accounts. 37 percent versus 29 percent—enough banks had Interest costs scaled to average assets increased expanded margins to bring the average margin at all size groups of commercial banks (chart for the entire group above that in 1979 (table 6). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks 661 5. Composition of financial liabilities as percent of total assets including loan loss reserves, all insured commercial banks, 1978-801 Average during year Domestic Fully consolidated IItteemm 1978 1979 1980 1978 1979 1980 Financial claims 89.1 88.0 87.6 90.2 89.7 89.1 Demand deposits 31.9 30.3 29.1 26.9 25.3 24.0 Interest-bearing claims 57.2 57.7 58.5 63.3 64.4 65.1 Time and savings accounts 48.3 47.3 47.8 55.2 55.0 55.5 Large time2 15.0 15.2 15.5 12.7 12.7 12.8 14.5 15.6 16.1 Other domestic 33.3 32.1 32.3 28.1 26.7 26.7 Subordinated notes and debentures .5 .4 .4 .4 .4 .4 Other borrowings 1.1 2.0 1.9 1.5 2.4 2.3 Gross federal funds purchased and repurchase agreements 7.3 7.9 8.4 6.2 6.6 6.9 MEMO Managed liabilities3 23.9 25.6 26.1 35.3 37.6 38.4 Average gross assets (billions of dollars) 1,198 1,329 1,460 1,406 1,593 1,768 1. Percentages are based on aggregate data and thus reflect the 2. Deposits of $100,000 and over issued by domestic offices. heavier weighting of large banks. Data are based on averages for call 3. Large time deposits issued by domestic offices, deposits issued dates in December of the preceding year and June and December of by foreign offices, subordinated notes and debentures, RPs, gross the current year. federal funds purchased, and other borrowings. By contrast, half of the large nonmoney center the average estimated fraction of assets exposed banks experienced erosion in interest margins in to market interest rate changes (column 3 of table 1980, about the same as last year, but those 6) was significantly smaller at banks with inlosses were sufficient to reduce the average creased margins than at their peers. Also, though margin for the group as a whole. not shown in the table, the fraction of assets A number of balance-sheet characteristics dif- financed by rate-sensitive liabilities grew less at ferentiated banks with increased net interest nonmoney center banks with increased margins. margins from others within groups. One is that At small banks with improved margins, more- 6. Factors associated with the 1979-80 change in net interest margins, all insured commercial banks1 Percent except for number of banks Rate-sensitivity2 Average interest margin3 Asset growth AAsssseettss,, Number yyeeaarr--eenndd 11998800 (1) Assets Assets less 1980 1979 Percent HI H2 (2) liab ( i 3 li ) t ies (4) (5) ch ( a 6 n ) g e (7) (8) Less than $25 million Increased margins 4,768 16.9 -8.3 5.47 4.70 16.4 3.8 9.3 Others 2,804 16.8+ -11.9 4.61 5.09 -9.4 6.9 9.1 + $25 million to $100 million Increased margins 3,077 14.3 -14.1 5.15 4.72 9.2 2.4 7.3 Others 1,971 13.0 -16.8 4.33 4.66 -7.1 3.7 7.3+ $100 million to $1 billion Increased margins 729 20.3 -12.5 4.73 4.38 7.9 1.2 7.3 Others 599 16.6 -16.0 4.08 4.42 -7.7 2.9 5.9 13 money center Increased margins 5 58.7 -3.0 2.02 1.94 4.0 8.5 3.9 Others 8 57.6t -5.3+ 2.15+ 2.29 -6.2 4.6+ 3.6+ Others $1 billion or more Increased margins 79 42.8 .1 3.80 3.52 7.9 -.2 8.3 Others 78 37.4 -6.2 3.42 3.73 -8.3 2.8 5.9* 1. Differences between means are statistically significant at the .01 loans with floating rates. Small banks do not report the loan detail, so level except when noted by an asterick (*), which are significant at the their holdings of loans to financial institutions, construction loans, and .05 level, and a dagger (f), which are not within the .05 range. purpose loans are included. Rate-sensitive liabilities: large time depos- 2. Average, as a percent of total assets, on the December 1979 and its and foreign office deposits due in one year or less, federal funds, March, June, September, and December 1980 call dates. Rate-sensi- RPs, MMCs, and other short-term borrowings. tive assets: interest-bearing deposits, federal funds sold, reverse RPs, 3. Taxable equivalent, as a percent of average assets. loans and government debt maturing in one year or less, and other Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

662 Federal Reserve Bulletin • September 1981 over, the estimated fraction of assets invested in margin of a typical small bank. Any federal rate-sensitive instruments increased faster than funds-MMC transaction entered into during the at their peers. first six months of 1980 would have resulted in Finally, nonmoney center banks with im- below-average net earnings. In both instances, proved interest margins grew significantly more above-average net returns would have been assoslowly than their peers during the first half of ciated with transactions consummated in the 1980 (columns 7 and 8, table 6). Within the first summer and early fall. Banks' intrayearly growth half, the economy slumped and special credit patterns clearly were material in determining restraints were imposed; in association with whether these shifting relationships would result those events market interest rates peaked and in gains or losses. then dropped sharply. Speeds of adjustment var- As in the previous two years, small banks ied among interest rates, causing distortions in relying heavily on MMCs for their funding expecertain traditional relationships upon which prof- rienced significantly lower net interest margins itable intermediation depended. than those with below-average amounts of those Chart 2 illustrates rate relationships for three deposits. The difference in 1980 after adjustment common, hypothetical, commercial bank trans- for taxable equivalence amounted to 79 basis actions. One transaction is a one-month loan tied points (table 7). That difference incorporates the to the prime rate and financed by reservable 30- much higher gross interest expenses, only parday CDs; that bar in the chart shows the annual tially offset by higher interest income, of the rate of net interest earned on that transaction group most intensively using MMCs. Unlike repeated monthly during 1980. The other two earlier years, however, the two groups of small transactions, more typical for small banks, in- banks did not differ in the rate of growth of total volve net interest earned by issuing reservable assets. In 1980, the low-MMC group financed its six-month MMCs at average interest rates prevailing each month. One bar shows the an- 7. Comparison of operating results in 1980, small nualized net return from investing the pro- insured commercial banks with greatest and least ceeds of an MMC issued in that month in federal reliance on MMCs1 funds, rolled over at the average funds rate in the Means in percent current and ensuing five months. Another bar Quartile shows the net return from investing in a six- Item Highest Lowest month loan yielding a fixed 16 percent interest, such as a consumer loan. With net interest Growth in total assets (percent), 13.5* 13.6 margins of most small banks ranging between 4LA Income and expense scaled to average consolidated assets percent and 5Vi percent, clearly the fixed-rate Interest income 9.93 9.65 transaction initiated during the first four months Interest expense 5.69 4.57 Net interest margin, taxable equivalent 4.69 5.48 of 1980 would have depressed the net interest Noninterest income .48 .84 Loan loss provision .27 .32 Other noninterest expense 2.79 3.97 2. Net interest earned on selected Profit before tax 1.66* 1.64 Net income 1.25* 1.21 commercial bank transactions, 1980 As percent of year-end financial claims Percentage points Transactions balances 26.3 37.7 NOW, ATS .7 1.3 Passbook, small time except MMCs ... 32.2 34.4 MMCs 34.1 12.1 Managed liabilities 7.4 15.7 Average change in 1980 (thousands of dollars) Total financial claims 2,087 2,380 Transactions -16 559 NOW, ATS 107 210 Passbook, small time except MMCs -1,104 -411 MMCs 3,013 1,339 Managed liabilities 196 893 1. Top and bottom quartiles, as determined by MMCs as a percent of total financial claims at the end of 1980, of all banks with year-end assets below $100 million. The differences between means of the two groups are all statistically Interest is at an annual rate. significant at the 1 percent level except where indicated (*). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks 663 asset growth by issuing more transaction ac- 3. Net loan losses charged1 counts and managed liabilities (large time depos- Percent of average assets its) and by retaining more passbook and non- MMC small-denomination time deposits than the group that relied principally on MMCs. This difference in funding sources also carried noninterest implications; the low-MMC group earned higher rates of noninterest income, perhaps in association with deposit service fees, and paid higher noninterest expenses, presumably to service the higher volume of transaction accounts. In 1980, the interest and noninterest differences T97QA 1\912 'l974 '1976' >1978' 'l980 between these two groups were offsetting; their 1. As a percent of average consolidated assets net of loan-loss profit rates were about equal. reserves, all insured commercial banks. LOAN LOSSES AND OTHER NONINTEREST large banks, the increased net personal loan INCOME AND EXPENSE charge-offs were not associated with growth in outstanding consumer loans. Possibly some of Bank loan loss provisions grew, but did not keep the personal loan charge-offs experienced during pace with increases in actual losses charged net 1980 might have occurred earlier except that of recoveries (table 8). All size groups experi- some 1979 bankruptcies were postponed to beneenced trivial changes in cash recoveries and fit from liberalized personal bankruptcy provisubstantial increases in loan charge-offs. Net sions that became effective October 1, 1979; loan losses increased relative to assets at all size some other portion of these charge-offs might be groups (chart 3). attributed to the liberalization per se. At insured commercial banks with assets ex- Most categories of noninterest income and ceeding $300 million, the dollar increase in loan expense increased relative to assets, in about losses charged net of recoveries is about equally equal amounts at large and small banks. Small attributable to loans to individuals and to busi- gains were realized in fiduciary income, and at ness loans extended to U.S. addressees.4 At these large banks trading-account profits grew. Service fees on deposits increased about 4 basis points relative to average assets at all size groups other 4. Information on the sectors in small bank loan portfolios that experienced credit deterioration is not available. than money center banks, presumably in associa- 8. Loan portfolio losses and recoveries, all insured commercial banks, 1979-80 Millions of dollars, except as noted Net losses YYeeaarr,, aanndd ssiizzee ooff bbaannkk11 LLoosssseess RReeccoovveerriieess LLooaann lloossss cchhaarrggeedd Dollar Percent of pprroovviissiioonn amount loans2 1979 All banks 3,731 1,197 2,534 .28 3,764 Less than $100 million 823 256 567 .30 783 $100 million to $1 billion 758 218 540 .30 745 $1 billion or more Money center 860 329 531 .20 895 Others 1,290 394 897 .34 1,341 1980 All banks 4,852 1,276 3,576 .36 4,452 Less than $100 million 1,006 264 742 .39 889 $100 million to $1 billion 988 245 743 .38 912 $1 billion or more Money center 1,089 316 773 .25 1,036 Others 1,769 451 1,318 .45 1,615 1. Size categories are based on year-end fully consolidated assets. 2. Average of beginning- and end-of-year loan balances. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

664 Federal Reserve Bulletin • September 1981 tion with the introduction of interest-bearing both large and small banks (table 10). At most consumer transaction accounts. Large banks, groups of commercial banks, and for all banks particularly the money center institutions, real- taken together, the increase in equity capital was ized gains from other service income, a category sufficient only to keep pace with assets. Equity that includes loan service fees as well as fees for capital ratios consequently remained about level miscellaneous banking services. with those in 1979. One exception is small banks, Wage and salary expenses increased at all size at which earnings retention exceeded asset categories of banks; those expenses increased 7 growth and the capital-to-assets ratio grew from basis points relative to average assets at banks 8.1 to 8.4 percent. With this leverage reduction, with less than $1 billion in assets, and by about returns on equity at small banks increased less half that at larger banks. Occupancy costs and than asset returns. In another exception, asset other operating costs also increased at all size growth at the money center banks slightly outgroups, adding about 8 basis points to small bank paced equity additions; with a small increase in expense ratios but substantially less to those of leverage, returns on equity increased despite large banks. stability in the return on average assets. PROFITABILITY AND DIVIDENDS INSURED U.S. COMMERCIAL BANKS WITH FOREIGN OFFICES Average returns on assets for all commercial banks as a group declined marginally in 1980. At the end of 1980, 178 insured U.S. commercial Improved rates of return at small banks were banks had foreign offices or Edge Act or Agreeabout offset by lower profitability at large non- ment corporations and held consolidated assets money center banks. Among other size groups, of $1.1 trillion.5 This aspect of U.S. commercial 1980 returns on assets were maintained at 1979 banking grew in importance during the year: the levels (table 9). number of banks with foreign offices increased Rates of return on assets showed more disper- by 14, and excluding intracompany balances, sion in 1980 than in 1979, a change not apparent the proportion of consolidated assets held at from the relative stability in overall average rates foreign offices increased from 30!/2 percent to 32 of return. The rate of loss incurred by banks in percent. Foreign offices and international busithe lowest one percentile of peer group profit- ness represented a larger share of consolidated ability increased sharply compared with 1979, returns on assets than in 1979. particularly at banks with more than $25 million During 1980, liabilities issued in domestic marin assets. In addition, more banks incurred losses kets often carried lower reserves-adjusted interthan in 1979. At the same time, profitability rates est costs than those issued abroad. At the end of of banks in the top fifth and first percentiles were the year, domestic offices of these banks had close to one-tenth higher in 1980 than in 1979 at outstanding a net $23 billion in funds advanced to all except the largest banks, at which returns their own foreign offices, an increase of $20 earned by the best performers were unchanged billion from the beginning of the year. Reflecting from last year. the enlarged role of domestic offices as a funding In aggregate, cash dividends increased some- source, deposits issued to third parties by foreign what faster than assets. At small banks, growth offices dropped from 87 to 83 percent of total liabilities during the year; at domestic offices the in dividends kept pace with earnings. At other proportion of assets allocated to intracompany nonmoney center banks, however, dividends inbusiness more than doubled to 3Vi percent (table creased faster than income and retained earnings 11). scaled to average assets were lower than in 1979. During 1980 little equity was attracted from The predominant loan customers of foreign external sources, continuing the recent pattern associated with extremely high equity capital costs. Retained income generated more than 5. Appendix table A.3 shows dollar amounts of income four-fifths of the increase in equity during 1980 at and expenses of banks with foreign offices. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks 665 9. Profit rates, all insured commercial banks, 1975-80 Percent Type of return and size of bank1 1975 1976 1977 1978 1979 1980 Return on assets2 All banks .69 .70 .71 .76 .80 .79 Less than $100 million .89 .94 .98 1.04 1.15 1.18 $100 million to $1 billion .75 .78 .82 .90 .96 .96 $1 billion or more Money center .56 .54 .50 .53 .56 .56 Others .59 .60 .62 .68 .72 .66 Return on equity3 All banks 11.8 11.5 11.8 12.9 13.9 13.7 Less than $100 million 11.5 11.8 12.4 13.2 14.1 14.2 $100 million to $1 billion 11.1 11.1 12.0 13.2 13.9 13.7 $1 billion or more Money center 13.8 12.3 11.4 12.8 14.0 14.4 Others 11.2 10.6 11.2 12.5 13.5 12.7 1. Size categories are based on year-end fully consolidated assets. 3. Net income as a percent of the average of beginning- and end-of- 2. Net income as a percent of the average of beginning- and end-of- year equity capital, year fully consolidated assets net of loan loss reserves. 10. Sources of increase in total equity capital, all insured commercial banks, 1975-801 Millions of dollars, except as noted Net retained income2 Net increase Increase in equity capital in equity capital from retained income (percent) YYeeaarr Large Large Column 1/ Column 2/ Total banks3 Total banks3 column 3 column 4 (1) (2) (3) (4) (5) (6) 1975.... 4,224 1,690 5,526 2,396 76 71 1976.... 4,834 1,909 7,254 3,371 67 57 1977.... 5,599 2,157 7,094 2,939 79 73 1978.... 7,019 2,947 8,148 3,304 86 89 1979.... 8,350 3,616 9,952 4,291 84 84 1980 8,859 3,843 10,828 4,567 82 84 1. In 1976, equity capital was affected by one-time accounting 2. Net income less cash dividends declared on preferred and changes in the treatment of loan loss and valuation reserves. Data for common stock. 1976 have been adjusted for that definitional change. 3. Banks with fully consolidated assets of $1 billion or more. 11. Assets and liabilities, U.S. insured commercial banks with foreign offices, December 31, 1980 Domestic offices Foreign offices IItteemm Billions of Percent of Billions of Percent of dollars total dollars total Total assets 769 100 354 100 Cash and due from banks 118 15 131 37 Gross federal funds sold and reverse RPs 26 3 * * Securities 116 15 11 3 415 54 185 5522 Other1 94 12 27 88 Total liabilities 716 100 353 100 Deposits 531 74 294 83 Noninterest-bearing2 225 31 17 5 Interest-bearing 306 43 277 78 Savings and small time 147 21 n.a. n.a. Time over $100,000 159 22 n.a. n.a. Nondeposit financial claims 128 18 1 5 Federal funds purchased and RPs 102 14 * * Subordinated notes and debentures 4 1 15 * Other liabilities for borrowed money 22 3 15 4 Other1 5577 8 4433 1122 1. Of these amounts, $27 billion represents net funds advanced by 2. Demand deposits in domestic offices, noninterest-bearing dedomestic offices to their own foreign offices and $4 billion represents posits in foreign offices, net funds advanced to domestic offices by their own foreign offices. * Less than $500,000 or 0.5 percent. n.a. Not available. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

666 Federal Reserve Bulletin • September 1981 branches continued to be borrowers domiciled 14. Interest income and expense as percent of outside the United States (table 12). Depositors average assets, U.S. insured commercial banks with foreign offices, 1979 and 1980 identifiable as foreign residents—primarily banks located abroad—accounted for more than half of Domestic offices Foreign offices total foreign office deposits. IItteemm 1979 1980 1979 1980 12. Customers, U.S. insured commercial banks with Gross interest income... 7.38 8.67 9.46 12.37 foreign offices, December 31, 1980 Gross interest expense .. 4.57 5.79 8.19 10.99 Net interest margin ... 2.82 2.88 1.26 1.39 Billions of dollars Taxable equivalent1. 3.13 3.23 1.26 1.39 Domestic Foreign 1. Approximated for domestic offices according to the method Item offices offices described in table 1, note 4. Total loans, gross 421 187 Real estate 109 7 margins at foreign offices increased relative to To financial institutions 41 35 In the United States 20 1 total assets, but remained less than half the level Outside the United States 10 27 Not specified 11 7 at domestic offices (table 14). At domestic of- Commercial and industrial 174 109 fices, net interest margins also increased relative To U.S. addressees 166 6 To non-U.S. addressees 8 103 to total assets, notwithstanding the faster in- To individuals 67 6 To foreign governments 3 25 crease in rates paid for funds over rates of return. Other 2277 5 Interest-bearing liabilities financed less than MEMO three-fifths of domestic office assets, so the To U.S. addressees 186 7 To non-U.S. addressees 21 155 impact of the relatively sharp increase in those Not specified 214 25 interest costs was diluted. Total deposits 531 294 On a consolidated basis, gross interest ex- Individuals, partnerships, and corporations 428 110 penses grew somewhat faster than gross interest U.S. federal, state, and local governments 27 1 earnings and consolidated net interest margins of Foreign governments and official banks with foreign offices were lower than last institutions 9 33 Commercial banks in the year (table 15). Increases in noninterest in- United States 48 18 Banks in foreign countries 11 130 come—gains in trading accounts as well as in- Certified and officers' checks 9 2 creased income from nondeposit service charges—exceeded those in noninterest ex- The gross rate of interest earned on invested penses, and before-tax profitability declined by assets increased 132 basis points at domestic less than the shrinkage in interest margins. • offices and double that at foreign offices (table 13). Rates of interest paid for interest-bearing liabilities increased even faster than asset returns 15. Consolidated income and expenses, U.S. insured commercial banks with foreign offices, 1979-80 at domestic offices, but at foreign offices they lagged improvement in asset yields. Net interest Percent of average assets Item 1979 1980 13. Rates of return and rates paid for funds, U.S. Gross interest income 8.75 10.08 insured commercial banks with foreign offices, Gross interest expense 6.25 7.65 1979 and 19801 Net interest margin 2.50 2.43 Taxable equivalent1 2.74 2.68 Percent Noninterest income .84 .98 Domestic offices Foreign offices Loan loss provisions .22 .24 Other noninterest expense 2.17 2.25 IItteemm Income before tax .95 .92 1979 1980 1979 1980 Foreign offices2 .22 .26 Domestic offices2 .73 .66 Loans 12.30 13.82 13.21 16.00 Interest-earning assets2... 11.92 13.24 12.35 15.06 .63 .61 Interest-bearing deposits 8.36 10.11 11.38 14.03 International business2 .16 .19 Interest-bearing claims ... 9.31 11.10 11.32 13.97 Domestic business2 .47 .42 1. Calculated as described in the "Technical note," BULLETIN 1. Approximated for domestic offices according to the method (September 1979), p. 704. described in table 1, note 4. 2. Taxable equivalent approximated for domestic offices according 2. See table A.3. Reflects amounts attributed, giving full allocation to the method described in table 1, note 4. of income and expense. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks 667 A.l Report of income, all insured commercial banks Amounts shown in millions of dollars Item 1972 1973 1974 1975 1976 1977 1978 1979 1980 Operating Income—Total 40,065 52,794 67,872 66,285 80,388 90,069 113,170 149,795 190,109 Interest Loans 25,498 35,213 46,942 43,197 51,471 58,881 75,948 101,942 126,663 Balances with banks n.a. n.a. n.a. n.a. 4,459 4,860 6,662 10,561 16,035 Federal funds sold and securities purchased under resale agreement 1,023 2,474 3,695 2,283 1,979 2,471 3,664 6,106 8,750 Securities (excluding trading accounts) Total income 8,329 9,138 10,344 12,201 14,333 15,140 16,432 18,755 22,968 U.S. Treasury and U.S. government agencies and corporations 4,520 4,905 5,428 6,758 8,362 8,835 9,335 10,630 13,400 States and political subdivisions 3,490 3,861 4.449 4,911 5,116 5,338 6,003 6,928 8,131 Other1 319 372 467 532 855 967 1,094 1,197 1,437 Trust department 1,366 1,460 1,506 1,600 1,795 1,980 2,138 2,375 2,738 Direct lease financing n.a. n.a. n.a. n.a. 534 699 862 1,073 1,371 Service charges on deposits 1,256 1,320 1.450 1,547 1,629 1,797 2,039 2,517 3,173 Other charges, fees, etc 1,079 1,247 1,405 1,647 2,175 2,404 2,930 3,635 4,352 Other operating income 1,512 1,942 2,530 3,811 2,011 1,903 2,495 2,831 4,059 Operating expenses—Total 32,836 44,113 58,645 57,313 70,466 78,484 98,104 131,950 170,675 Interest Time and savings deposits 13,781 19,747 27,777 26,147 34,894 38,701 50,054 71,693 98,130 Time CD's of $100,000 or more issued by domestic offices n.a. n.a. n.a. n.a. 7,083 6,732 11,693 18,105 24,753 Deposits in foreign offices n.a. n.a. n.a. n.a. 8,745 10,216 14,559 24,523 34,941 Other deposits n.a. n.a. n.a. n.a. 19,066 21,753 23,802 29,065 38,436 Federal funds purchased and securities sold under repurchase agreements 1,425 3,883 5,970 3,313 3,305 4,536 7,247 12,218 16,707 Other borrowed money2 115 499 912 374 665 816 1,452 3,162 4,380 Capital notes and debentures 212 253 280 292 343 391 445 497 541 Salaries, wages, and employee benefits 9,040 10,076 11,526 12,624 14,686 16,276 18,654 21,465 24,565 Occupancy expense3 2,658 2,970 3,396 3,837 4,464 4,959 5,559 6,255 7,325 Provision for loan losses 964 1,253 2,271 3,578 3,650 3,244 3,499 3,764 4,453 Other operating expenses 4,640 5,432 6,514 7,149 8,456 9,561 11,194 12.796 14,573 Income before taxes and securities gains or losses 7,229 8,681 9,227 8,973 9,922 11,585 15,067 17,843 19,435 Applicable income taxes 1,708 2,120 2,084 1,790 2,287 2,829 4,155 4,736 5,009 Income before securities gains or losses 5,522 6,560 7,143 7,182 7,635 8,756 10,911 13,109 14,426 Net securities gains or losses (-) after taxes 90 -27 -87 35 190 95 -225 -350 -492 Extraordinary charges (-) or credits after taxes 18 22 12 32 24 47 45 39 17 Net income 5,630 6,555 7,068 7,249 7,849 10,731 12.797 13,950 Cash dividends declared 2,191 2,423 2,760 3,025 3,029 3,299 3,714 4,449 5,091 MEMO Number of banks 13,721 13,964 14,216 14,372 14,397 14,397 14,380 14,352 14,421 Average fully consolidated assets (billions of dollars) 738 857 987 1,052 1,123 1,257 1,418 1,593 1,768 1. Includes interest income from other bonds, notes, debentures, 3. Occupancy expense for bank premises plus furniture and equipand dividends from stocks. ment expenses minus rental income received for bank premises, 2. Includes interest paid on U.S. Treasury tax and loan account n.a. Not available. balances, which were begun in November 1978. NOTE. For "Notes on comparability of commercial bank income data before 1976," see BULLETIN, vol. 64 (June 1978), p. 446. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

668 Federal Reserve Bulletin • September 1981 A.2 Earnings, portfolio composition, and interest rates, all insured commercial banks, 1980' Assets Item All $1 billion or more Less than $100 million $100 million to $1 billion Money center Others Balance sheet (as percent of average consolidated assets) Interest-earning assets 82.9 89.4 87.2 78.0 81.1 Loans 55.4 55.9 55.4 55.4 55.0 Securities 17.0 27.8 25.2 7.2 15.0 U.S. Treasury 5.3 9.2 7.9 2.2 4.5 U.S. government agencies 3.0 6.3 4.4 .9 2.3 State and local governments 7.8 11.8 12.3 2.8 7.7 Other bonds and stock .8 .5 .6 1.4 .5 Gross federal funds sold and reverse RPs 3.7 5.5 5.4 1.6 3.6 Interest-bearing deposits 6.8 .2 1.3 13.7 7.4 Financial claims 89.1 89.8 90.7 87.8 89.1 Demand deposits 24.0 26.7 28.8 17.5 26.1 Interest-bearing claims 65.1 63.1 62.0 70.3 63.0 Time and savings deposits 55.5 61.4 55.2 57.8 49.7 Large time 12.8 9.5 14.4 11.1 15.7 In foreign offices 16.0 0 .2 40.3 11.4 Other domestic 26.7 52.0 40.6 6.4 22.6 MMCs 8.2 17.4 12.2 1.8 6.6 Subordinated notes and debentures .4 .2 .4 .2 .6 Other borrowings 2.3 .4 .9 4.2 2.4 Gross RPs and federal funds purchased 6.9 1.0 5.4 8.2 10.4 MEMO: Managed liabilities 38.4 11.1 21.3 63.9 40.4 Effective interest rates (percent) On securities 7.88 7.89 7.64 8.83 7.67 State and local governments 6.03 5.80 5.82 6.95 6.11 On loans, gross 13.71 12.43 12.79 14.95 13.85 Net of loan loss provision 13.19 11.90 12.26 14.56 13.23 Taxable equivalent Securities 10.23 9.98 1100..0000 1111..2255 1100..2299 Securities and gross loans 12.88 11.60 11.91 14.52 13.08 For time and savings deposits Negotiable CDs 12.56 11.66 1122..1133 1133..3377 1122..6666 In foreign offices 14.03 12.99 13.94 14.37 Other deposits 8.10 8.36 8.06 8.29 7.72 For managed liabilities 13.45 11.66 12.48 13.73 13.63 For all interest-bearing liabilities 11.10 8.89 9.50 13.07 11.36 Earnings and expenses (as percent of average consolidated assets) Gross interest income 9.87 9.67 9.47 10.40 9.71 Gross interest expense 6.78 5.36 5.62 8.40 6.76 3.09 4.31 3.85 2.00 2.95 Noninterest income .89 .64 .82 .96 1.01 Loan loss provision .25 .26 .26 .19 .30 Other noninterest expense 2.63 3.12 3.20 1.83 2.76 Profits before tax 1.10 1.57 1.20 .94 .90 .28 .36 .22 .36 .19 Other -.03 -.03 -.03 -.01 -.05 .79 1.18 .96 .56 .66 Dividends .29 .31 .36 .22 .29 Retained income .50 .87 .60 .34 .37 MEMO: Net interest margin, taxable equivalent 3.46 4.85 4.40 2.15 3.31 1. See notes to tables in the text. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks 669 A.3 Income attributable to international business of U.S. commercial banks with foreign offices, 1980 Millions of dollars Item Amount Pretax income attributable to foreign offices1 2,701 Plus: Pretax income attributable to international business conducted in domestic offices 966 Less: adjustment amount2 203 Pretax income attributable to international business 3,464 Less: All income taxes attributable to international business 1,519 Net income attributable to international business 1,945 MEMO Provision for possible loan losses attributable to international business 384 Noninterest income attributable to foreign offices' 1,769 Noninterest income attributable to international business 2,276 Noninterest expense attributable to foreign offices' 3,572 Noninterest expense attributable to international business 4,340 Intracompany interest income attributable to international business 4,585 Intracompany interest expense attributable to international business 6,021 Interest income of domestic offices from foreign-domiciled customers 2,891 Fully consolidated Pretax income 9,626 Total applicable taxes 2,995 Net income3 6,326 Average total assets 1,043,494 1. Including Edge Act and Agreement subsidiaries. For example, net income of foreign offices from business with U.S.- 2. Reflects the amount necessary to reconcile the preceding two domiciled customers would be included here. amounts with pretax income attributable to international business. 3. After gains and losses from securities transactions and extraordinary items. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

671 Changes in Bank Lending Practices, 1979-81 This article was prepared by Warren T. Trepeta through August 1981.3 It also refers to selected of the Board's Division of Research and Statis- data from the Survey of Terms of Bank Lending tics.1 (STBL).4 Quantitative results from the STBL on the characteristics of business loans made by 48 According to the Senior Loan Officer Opinion Survey on Bank Lending Practices (LPS), large 3. Statistical summaries of these surveys appear in the banks generally relaxed their nonprice terms of appendix. Table A7 reports February 1981 responses to the credit in the second half of 1980 and in the first revised survey's six core questions from only those banks three quarters of 1981.2 This policy has reversed remaining in the current LPS panel in order to permit a comparison of survey results for February with those for May the trend toward more restrictive nonprice lend- and August 1981. ing terms that had prevailed from early 1978 to 4. First conducted in February 1977, the STBL gathers information on the gross volume and on the rate and selected mid-1980. nonrate characteristics of short-term (less than one year) and The Federal Reserve from time to time pub- long-term (one year or more) business loans extended during lishes the results of the senior loan officer survey the first full week of the middle month of each quarter. The STBL panel includes 48 large commercial banks, of which 35 in the BULLETIN. The previous article analyzed also respond to the LPS, and a stratified sample of other the eleven surveys from February 1977 through banks, from which estimates for all commercial banks are August 1979 (FEDERAL RESERVE BULLETIN, vol. derived. The STBL also obtains data on construction and land development loans and loans to farmers. The results of 65, October 1979, pp. 797-815). This article disthe most recent STBL are shown in the Financial and cusses the eight surveys from November 1979 Business Statistics of the BULLETIN. 1. Growth of business loans excluding bankers acceptances at commercial banks, 1978-81 1. Richard Field and Carol Keyt provided research assist- Seasonally adjusted annual rate. ance for the article. 2. The Federal Reserve has conducted a quarterly survey Year and All commercial Large banks' Other banks2 quarter banks of changes in lending practices at selected commercial banks since 1964. These surveys, which are conducted on the 15th 1978 of the middle month of each quarter, have provided qualita- Q1 21.7 22.6 21.5 tive information on past and prospective changes in business Q2 16.5 20.1 11.8 Q3 11.8 7.3 17.4 loan demand, adjustment of nonrate features of lending to Q4 14.4 6.9 23.9 businesses, and changes in banks' willingness to extend commercial and industrial loans and other types of credit. 1979 Through February 1981, the survey panel included roughly Q1 21.0 17.8 24.4 Q2 18.1 23.0 12.5 120 banks. As of September 1980, almost one-fourth of the Q3 19.5 22.3 16.1 panel had domestic assets of $5 billion or more, two-thirds Q4 8.6 .8 18.0 had assets between $1 billion and $5 billion, and 9 percent had 1980 assets under $1 billion. In May 1981, the panel was reduced to Qi 18.6 20.3 16.9 60 members of the former sample, distributed about evenly Q2 -10.7 -11.3 -10.4 across Federal Reserve Districts. As of September 1980, two- Q3 14.3 15.7 13.1 fifths of the revised panel had domestic assets of $5 billion or Q4 24.2 20.5 28.5 more, and the remainder had assets between $1 billion and $5 1981 billion. Through February 1981, members of the LPS panel Ql 5.8 -4.2 17.2 were asked to complete a reporting form containing 22 Q2 9.0 18.3 -1.0 questions. Since then, Reserve Bank officers familiar with July-Augustc 20.9 25.3 15.5 bank lending practices have conducted telephone interviews with the reduced panel of senior loan officers. Each quarter, 1. Domestically chartered weekly reporting banks with domestic assets, as of December 31, 1977, of $750 million or more. respondents are asked 6 core questions retained from the 2. Defined as domestically chartered banks with assets of less than former 22. In addition, when appropriate, the survey will $750 million plus foreign-related banking institutions in the United include supplemental questions addressing special issues in States. bank lending practices. e Estimated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

672 Federal Reserve Bulletin • September 1981 large banks usually conform with LPS results on Large banks exhibited some resistance to strong qualitative changes in lending practices at large business loan demand, with the number of LPS banks. However, STBL data for other banks respondents that reported a tightening of terms correspond less closely with LPS results, sug- on commercial and industrial loans exceeding the gesting—along with the frequently disparate number that indicated an easing in each of the rates of growth of business loans at large and first three surveys of 1979. This movement toother banks (table 1)—that business loan demand ward restrictive credit policies was less wideand credit policies may differ considerably spread than that reported throughout 1978, howamong banks of different size and type. ever, as both market interest rates and the prime rate stabilized after a substantial climb (chart). Selected measures of the cost of credit 1979:4 TO 1980:1 A PERIOD OF FURTHER RESTRAINT Percent During the first three quarters of 1979, large weekly reporting banks accelerated their business lending from the already robust pace of 1978, further increasing their reliance on costly borrowed funds to finance asset growth (table 2). 2. Selected balance sheet ratios at large commercial banks, 1976-81' Borrowing to Liquid assets to Period selected assets2 liabilities3 1976:4 30.1 13.1 1977:4 30.6 13.8 1978:4 35.2 10.4 1979 Qi 38.1 11.7 Q2 38.3 12.0 Q3 38.9 11.7 Q4 40.5 10.7 1978 1979 1980 1981 1980 The 90-day commercial paper rate has been converted from Qi 39.7 10.2 Q2 40.2 9.8 a discount-rate basis to a nominal annual yield. Q3 39.5 10.0 Q4 40.2 9.7 In the fourth quarter of 1979, borrowing by 1981 nonfinancial corporations dropped sharply; a re- Qi 41.4 10.1 Q2 42.3 10.0 duction in internally generated funds was more Q3 43.8 10.4 than offset by decreases in inventories and in net 1. Monthly averages of Wednesday figures for middle month of additions to holdings of financial assets. The quarter. decline in borrowing occurred primarily in the 2. Borrowing includes gross liabilities of banks to their foreign branches, all CDs of $100,000 or more, net federal funds purchased short- and intermediate-term area, in the form of and security repurchase agreements, and all other liabilities for a runoff of nonfinancial commercial paper and a borrowed money other than Treasury tax and loan accounts and borrowings from Federal Reserve Banks. Selected assets include all substantial reduction in growth of business loans assets less federal funds sold and cash items in the process of at banks. As the fourth quarter began, the Federcollection. 3. Liquid assets include Treasury and other securities maturing in al Reserve announced several measures to reone year or less, loans to brokers and dealers and domestic commer- strain growth of money and credit, including an cial banks, holdings of bankers acceptances, and gross sales of federal funds. Liabilities are total liabilities less capital accounts, valuation increase of 1 percent in the discount rate and a reserves, and demand deposits due to banks. marginal reserve requirement of 8 percent on NOTE. Beginning 1979:1, the panel of large banks was changed to include only those banks with assets of $750 million or more on increases over base-period levels in managed December 31, 1977. While the number of banks reporting thus fell liabilities issued by large member banks and by from 317 to 171, the panel's share in assets of the banking system as a whole dropped only slightly. U.S. branches and agencies of foreign banks. In Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Bank Lending Practices, 1979-81 673 addition, the System adopted a new operating In November 1979 well over half the LPS procedure emphasizing reserve aggregates, rath- panel reported a reduced willingness to make er than the federal funds rate, as the instrument both short- and long-term business loans at fixed of monetary control. With this evidence of the rates. Correspondingly, STBL data for Novem- Federal Reserve's intent to restrain monetary ber indicated declines of almost 10 percentage expansion, and with large banks experiencing a points in the proportions of new business loans sharp drop in liquidity and in growth of core made at fixed rates in both maturity categories at deposits, the number of LPS respondents report- 48 large banks (table 3). At other banks, the ing tighter terms on business loans and reduced fraction of long-term loans made at fixed rates willingness to make loans in every category registered an even greater decline, while the showed a marked increase. Restrictive measures figure for shorter maturities was essentially unincluded firmer standards to qualify for the prime changed. rate and for given spreads above prime, larger Consistent with the firming of standards to compensating-balance requirements, and stricter qualify for the prime rate reported in the LPS, review of credit applications from new custom- STBL data showed an increase at other than the ers. In addition, a substantial number of banks 48 large banks in the spread over prime of the reported more stringent policies toward estab- weighted-average interest rate on short-term lished customers for the first time since Novem- business loans made at or above prime (table 3). ber 1978. At the 48 large banks, however, this spread was 3. Selected terms of commercial and industrial loans, 1979-81 Percent unless noted otherwise 1979 1980 1981 Maturity, by type of bank Feb. May Aug. Nov. Feb. May Aug. Nov. Feb. May Weighted-average interest rate less the prime rate on loans made at or above prime1 Short-term2 48 large banks .68 .70 .60 .58 .58 .74 .60 .41 .78 .33 Other banks .81 .87 .74 .82 .78 1.00 .96 .83 .91 .78 Weighted-average difference between prime rate and interest rate on loans made below prime1 Short-term 48 large banks .98 .87 .58 1.18 1.23 4.14 1.08 .65 1.81 .65 Other banks 1.49 1.52 1.07 1.75 2.11 2.47 1.20 1.77 2.76 1.77 Loans made below prime Short-term 48 large banks 34.2 39.8 37.2 19.8 50.0 53.1 57.9 20.3 71.4 38.0 Other banks 30.7 24.6 21.2 26.6 15.3 26.8 16.2 16.0 22.6 31.2 Loans made on a fixed-rate basis Short-term 48 large banks 36.5 42.6 39.4 30.3 45.4 46.3 68.4 45.4 67.2 51.8 Other banks 59.5 63.1 63.3 64.5 55.6 64.3 57.9 56.1 50.7 49.4 Long-term 48 large banks 23.5 23.6 22.7 13.5 19.8 15.0 19.8 13.2 24.7 17.0 Other banks 52.5 70.6 69.8 53.1 55.8 44.0 51.2 51.8 28.5 33.1 Weighted-average maturity Short-term 48 large banks 2.2 1.9 1.7 1.9 1.4 1.7 1.1 1.3 1.0 1.1 Other banks 2.7 2.6 2.4 2.7 2.5 3.0 2.8 2.3 2.7 2.4 Long-term 48 large banks 44.5 46.3 37.9 54.6 47.2 46.6 51.1 52.4 46.2 51.7 Other banks 50.7 49.4 49.8 38.3 35.9 36.7 37.8 38.2 50.4 47.8 1. Interest rate spreads, expressed as differences between simple Terms of Bank Lending, rather than the widely quoted prevailing annual rates, are weighted by the dollar volume of loans. The relevant prime. prime rate is the prime reported by individual banks in the Survey of 2. Loans with an original maturity of less than one year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

674 Federal Reserve Bulletin • September 1981 essentially unchanged. Meanwhile, an increase 4. Commercial and industrial loan commitments at occurred at the 48 large banks in the difference selected large commercial banks, 1979-811 between the prime rate and the weighted-average Billions of dollars, seasonally adjusted interest rate on below-prime, short-term business loans. Month-end Total Unused2 Lo c a o n m s m m i a tm de e n u t n s d 3 er The results for the large banks appear to 1979 reflect a spread of the commercial paper rate February 258.3 158.0 100.3 May 272.7 167.2 105.5 over the prime rate during the week of the August 286.2 174.3 111.9 November 300.1 186.1 114.0 STBL—an unusual occurrence. Most below- 1980 February 321.6 201.8 119.8 prime lending at money-center banks consists of May 346.6 229.5 117.1 large and very short-term loans to highly credit- August 353.2 233.7 119.5 November 363.4 236.0 127.4 worthy corporate customers that have access to 1981 February 378.6 250.6 128.0 the commercial paper market; therefore, interest May 400.6 266.7 133.9 rates on such loans are closely related to money July 425.3 288.2 137.1 market rates.5 When the commercial paper rate 1. These figures are excerpted from a monthly series appearing in rose above the prime early in November, such Federal Reserve statistical release G.21. Included in the series are 122 weekly reporting banks accounting for about 85 percent of all comcredits probably dropped out of the below-prime mercial and industrial loans. As of February 1981, several banks category, resulting in a decline in the fraction of accounting for less than '/a percent of unused commitments were dropped from the reporting panel. short-term loans made below prime at the 48 2. Unused commitments are the amounts still available for lending large banks (table 3). What may have dominated under official promises to lend that are expressly conveyed to the bank's customers orally or in writing, usually in the form of a formally loans remaining in the below-prime category at executed agreement signed by one of the bank's officers. those banks—at rates well under prime—were 3. Loans made under commitments are outstanding loans, less repayments of principal, made under commitments currently or restructured loans and loans made under compreviously in force. mitments featuring interest rate caps, which tend to bind in a period of rapidly rising rates.6 borrowed much more heavily than in the previ- Moreover, some below-prime loans were likely ous quarter in order to augment their holdings of converted to loans at prime, and the volume of liquid assets. This buildup and a sharp rise in loans at prime may have been further augmented commercial and industrial loan commitments by substitution away from issuance of commer- outstanding at banks (table 4) suggest that busicial paper. Such a shift by highly creditworthy nesses anticipated a reduction in credit availabilborrowers toward borrowing at the prime rate ity—presaged by a surge in monetary expansion, would have tended to reduce the difference be- restrained provision of nonborrowed reserves, tween the prime rate and the weighted-average an increase of 1 percent in the discount rate in interest rate on short-term loans made at or February, and rumors of forthcoming credit conabove prime, and thus to offset the effects of trols. In mid-March the Federal Reserve antighter standards to qualify for the prime and nounced a multifaceted special credit restraint spreads above prime reported in the LPS. program, as part of a broader administration anti- Although the first quarter of 1980 witnessed inflation effort. Despite the pickup in business only a moderate increase in the gap between the lending and loan commitment activity at large capital expenditures and the internally generated banks before the February 1980 LPS, about onefunds of nonfinancial businesses, these firms fourth of respondents indicated that business loan demand had eased since November, while only half that proportion reported greater 5. As reported, such lending was initially developed to strength.7 Projections of changes in business loan provide users of commercial paper with transitional facilities to bridge gaps of a few days between issues of commercial paper. 6. The STBL also showed an increase in the proportion of 7. Some respondents may have failed to adjust adequately short-term loans made below prime at other than the 48 large for seasonal variation in loan demand. Growth of business banks; this rise likely reflected an interaction between rapidly loans at large banks is seasonally weak in February, whereas rising interest rates and cap provisions, which, together with November brings a seasonal increase. Growth of business restructured loans, appear to account for most of the below- loan commitments is seasonally strong in both months, but prime lending at nonmoney-center banks. more so in November. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Bank Lending Practices, 1979-81 675 demand over the next three months were about dents reported that business loan demand had evenly mixed. dropped off" since February, and almost as many The February LPS also indicated a further expected further easing over the next three decline in willingness to make most types of months. loans and additional tightening of terms on busi- The relatively high cost of bank credit in the ness loans. While the proportions of respondents second quarter may have reflected in part a who reported such shifts in lending policy gener- desire among bankers to adhere to the central ally were smaller than in November, reports of bank's voluntary guidelines for growth of bank further restraint, viewed against the backdrop of loans. In May, the proportions of LPS respona perceived softening of business loan demand, dents that indicated reduced willingness to lend suggest that large banks expected the Federal were higher than in February for most loan Reserve to maintain a restrictive stance. A fur- categories—especially installment loans to indither decline in willingness to make short-term viduals, a broad segment of which fell under the business loans at fixed rates was reported by a special deposit requirement of 15 percent on substantial minority of LPS respondents, who increases in covered consumer credit. may have expected, correctly, that short-term Consistent with the restrictive bank posture interest rates soon would increase. Similar ex- evidenced by the slow decline in the prime rate, pectations on the part of borrowers and corre- LPS respondents on balance tightened their stanspondingly strong demand for the fixed-rate fea- dards for credit to new and nonlocal corporate ture may account for the observed increase at the customers; firmed slightly both their compensat- 48 large banks in the proportion of short-term, as ing-balance requirements on business loans and well as long-term, business loans made at fixed their standards to qualify for the prime rate and rates, according to the STBL for February. At for given spreads over prime; and left other the same time, however, the weighted-average terms on business loans unchanged between maturity of business loans declined (table 3). In February and May despite weakening loan deaddition, with the prime rate again exceeding the mands. In addition, STBL data show some widcommercial paper rate, in contrast to November, ening of the spread between the prime rate and the proportion of short-term business loans made the weighted-average interest rate on short-term below prime at the 48 large banks proved much business loans made at or above prime. Given its higher in February than three months earlier. tendency to follow market interest rates more closely than the prime, the weighted-average interest rate on below-prime loans dropped almost 3 percentage points further below the 1980:2 TO 1980:3 prime, but nevertheless failed by a large margin CREDIT CONTROLS AND THEIR REMOVAL to keep pace with market rates. In the second quarter of 1980, the narrow mone- Rapid growth of money and credit resumed in tary aggregates and bank credit declined abrupt- the third quarter, helped by the completion in ly, as a sharp falloff in economic activity and the July of the phaseout of the special credit restraint borrower response to the special credit restraint program. Although a sharp drop in inventories program reduced demands for money and credit. reduced corporate needs for external funds to Nonfinancial corporations took advantage of finance capital expenditures, nonfinancial busilower bond yields to lengthen the maturity of nesses increased their issuance of debt and equitheir liabilities. They also diverted demand for ty as they stepped up their acquisitions of finanshort-term credit to the commercial paper mar- cial assets, especially liquid instruments, from ket from banks as the spread of the sluggishly the very low second-quarter pace. With bond declining prime rate over the rapidly falling com- yields rising over the quarter, net issuance of mercial paper rate widened to an unprecedented bonds slowed a bit, and firms focused increases IVi percentage points in May and remained quite in their borrowing on the short- and intermediwide by historical standards for the rest of the ate-term markets, particularly from banks. Nonquarter. In May, three-fourths of LPS respon- financial commercial paper outstanding decreased Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

676 Federal Reserve Bulletin • September 1981 and business loan growth at banks surged, as the spondents reduced compensating-balance respread of the prime rate over the commercial quirements, and somewhat smaller proportions paper rate narrowed to more typical levels. Nev- eased standards to qualify for the prime rate and ertheless, a plurality of the respondents to the for given spreads over prime; relatively few August LPS reported an easing of business loan banks firmed these terms on business loans. demand over the previous three months, perhaps Accordingly, STBL data for August showed a because the onset of the third quarter's robust decline in the spread over prime of the weightedgrowth in business loans did not occur until early average interest rate on short-term loans made at August and, at midmonth, may still have been or above prime. In addition, the substantial narviewed as random. Indeed, respondents who rowing of the spread between the prime rate and projected a drop in demand over the next three the commercial paper rate compressed the differmonths continued to outnumber those expecting ence between the prime rate and the weighteda pickup, but by a smaller margin than in May. average rate on short-term, below-prime loans, A more accommodative Federal Reserve but this average fell into closer alignment with stance was suggested by the phaseout of the the commercial paper rate between May and special credit restraint program and by three August, consistent with other signs of easing declines in the discount rate of 1 percentage credit policies. point each in late May, June, and July. So, LPS respondents on balance indicated a shift between May and August toward greater willingness to 1980:4 TO 1981:3 make most types of loans, especially installment ADDITIONAL EASING OF LENDING TERMS loans to individuals, which became more attractive with the removal of the special deposit A further pickup in economic activity boosted requirement on covered consumer credit. In Au- demands for money and credit in the fourth gust, for the first time since February 1978, the quarter of 1980 and drove market interest rates number of LPS respondents who reported a and the prime rate to new highs by the end of the greater inclination to make short-term business year. Nonfinancial businesses raised a greater loans at fixed rates exceeded the number who volume of funds than in the third quarter by reported less willingness to do so. Consistent issuing equity at a record rate and by boosting with this shift, STBL data for August revealed a their short- and intermediate-term borrowing, substantial increase in the proportion of short- while reducing bond issuance to about half the term business loans made at fixed rates at the 48 third-quarter volume. Business lending at banks large banks. Meanwhile, in August as in May, a surged to its fastest pace since autumn 1979, substantial minority of LPS respondents report- reflecting in part the unusually narrow spread ed a decline in willingness to offer fixed rates on between the prime rate and the commercial palong-term business loans, probably because long- per rate; nonfinancial commercial paper outrun trends in interest rates remained uncertain. standing declined for the second consecutive Nevertheless, the STBL showed some increase quarter. More than a third of LPS respondents reported in November that business loan demand from May to August in the proportion of longhad strengthened since the August survey, while term loans made at fixed rates. only a few indicated a falloff. As LPS respondents became more willing to lend between May and August, they relaxed their The liquidity of large banks declined between terms on business loans for the first time since August and November, and their reliance on early 1978. Reports of easier standards in review- borrowed funds increased considerably. Even ing credit applications from new and nonlocal so, responses to the November LPS indicated customers outnumbered indications of greater that on balance the survey panel's willingness to stringency. The same was true of policies toward make most types of loans had either declined established and local customers, policies that only slightly or stayed constant over the previous had changed relatively little over the history of three months, and that nonprice terms on busithe survey. Also, more than one-fourth of re- ness loans had remained about unchanged or had Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Bank Lending Practices, 1979-81 677 eased slightly. If the survey had been taken a bit of LPS respondents reporting a decline in delater, it might well have indicated a more restric- mand for business loans rose from less than onetive lending stance; just after the November tenth in November to more than one-third in survey date, the Federal Reserve increased the February, and the fraction reporting stronger discount rate and reimposed the surcharge on demand exhibited a similar, but opposite shift.8 frequent borrowings from the discount window Furthermore, expectations of easier demand for by large banks. business loans predominated among the minority In the May-August period, LPS respondents of LPS respondents predicting some change in on balance partly reversed the trend of several demand in the next three months. years toward reduced willingness to make short- Despite weak growth of core deposits and a term, fixed-rate loans. However, they resumed substantial increase in reliance on relatively exthis stance in the August-November period as pensive borrowed funds, the February LPS indiinterest rates rose sharply. In addition, they cated that the willingness of large banks to make continued to indicate growing reluctance to make most types of loans was about unchanged from long-term loans at fixed rates. Consistent with November. At the same time, a somewhat greatthese reports, STBL data for November showed er number of respondents reported a relaxation substantial declines in the proportions of both than indicated a firming of compensating-balance short- and long-term business loans made at requirements for business loans and standards to fixed rates at the 48 large banks, although other qualify for the prime rate and for given spreads banks indicated little change. The STBL also above prime. The reported easing of such stanrevealed a decline in the spread over prime of the dards was not evident in STBL data for Februweighted-average interest rate on loans made at ary: they revealed an increase from November in or above prime, confirming LPS results that the excess over prime of the weighted-average indicated a slight easing of standards to qualify interest rate on business loans made at or above for the prime rate and for given spreads over prime. In addition, LPS results indicating unprime. However, at the 48 large banks, the changed willingness to make short-term loans at spread of the prime rate over the weighted- fixed rates and a further disinclination to offer average interest rate on below-prime loans nar- fixed rates on long-term loans were not borne out rowed, and the frequency of below-prime lending by STBL data for the 48 large banks; those data plummeted, as the margin between the prime showed increases in the proportion of fixed-rate rate and the commercial paper rate became un- loans in both maturity categories, suggesting that usually slim. At the same time, the average rate demand for such credit may have strengthened. on below-prime loans slipped further below the Last, consistent with the decline in the commerprime at other banks, likely reflecting the inter- cial paper rate relative to the prime rate, the action of rising interest rates with cap provisions STBL revealed a drop in the weighted-average in loan commitments. interest rate on below-prime loans of more than 1 percentage point relative to the prime and a In the first quarter of 1981, nonfinancial businesses tapped domestic markets for a sharply reduced volume of funds. They also shifted their 8. These shifts appear small in light of the dramatic drop in borrowing from short- and intermediate-term the growth rate of business loans at domestic offices of large markets to the bond market, despite high bond commercial banks between November and February. The rates, apparently in order to strengthen their survey, however, does not specify precisely the meaning of balance sheets. In addition, as declines in the "loan demand," which some respondents may interpret to include the demand for lines of credit. Commercial and commercial paper rate outpaced reductions in industrial loan commitments at large banks expanded much the prime rate, nonfinancial firms shifted demand more rapidly in the November-February period than in the for short-term credit from banks to the commer- previous three months. In addition, some respondents may include in domestic office loan demand those demands excial paper market, adding to the outstanding pressed at domestic offices but satisfied through bookings at stock of nonfinancial commercial paper after two foreign branches. The weakness in business loan growth at quarters of runoff. With business lending decel- large banks in the first two months of 1981 in part reflected booking of about $2 billion of loans to U.S. firms at foreign erating sharply over the quarter, the proportion branches of domestically chartered banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

678 Federal Reserve Bulletin • September 1981 substantial increase in the proportion of short- Consistent with the LPS results, STBL data term loans made below prime. for May showed that the excess over prime of the Financing activity by businesses picked up in weighted-average interest rate on short-term the second quarter of 1981, boosted by remaining loans made at or above prime declined to its tax liabilities for 1980 and perhaps by a weaken- lowest level in the history of the STBL at the 48 ing of profits associated with a decline in eco- large banks and dropped at other banks as well. nomic activity following rapid growth in the first In addition, with the narrowing of the spread quarter. Equity issuance accelerated from an between the prime rate and the commercial paalready strong pace. With interest rates remain- per rate between February and May, the weighting high in the bond markets, nonfinancial firms ed-average interest rate on below-prime loans concentrated their borrowing in short maturities, moved into closer alignment with the prime rate, increasing the rates of growth of both nonfinan- and the proportion of short-term loans made cial commercial paper outstanding and business below prime dropped considerably. loans at banks. The revised, shortened LPS of With interest rates in bond markets climbing May did not ask respondents their perceptions of further, nonfinancial corporations continued to business loan demand over the previous three concentrate their borrowing in the short and months.9 Expectations were mixed regarding the intermediate maturities in July and August of strength of demand over the next three months. 1981. Over this period, business lending at banks Respondents to the LPS substantially eased surged, boosted in part by a substantial volume their terms on business loans between February of loans related to corporate mergers. Responses and May, even though the Federal Reserve to the August LPS replicated the pattern of May, moved quickly to restrain money growth follow- indicating a further easing of nonprice terms on ing a surge in April, and despite the fact that business loans. As in the three previous quarters, large banks increased their reliance on borrowed the easing of lending terms occurred despite funds considerably further between February increased use of borrowed funds by large banks, and May. Large minorities of LPS respondents and may have reflected an effort to meet compeindicated in May that over the previous three tition from foreign-related banking institutions in months, they had reduced compensating-balance the United States. A number of LPS respondents or fee requirements for business loans and had have commented that intense competition from relaxed standards to qualify for the prime rate foreign banks for both national and regional and for given spreads above prime. The number business has forced them to trim profit margins of respondents who reported an easier stance on on loans, as well as to include in credit agreelending to new and nonlocal customers was ments multiple options to base the pricing of small, but greater than in February. Few respon- loans on either the prime rate, domestic money dents indicated that they had tightened their market rates, or the London interbank offered terms on business loans. rate.10 • 10. As of this writing, results of the August STBL were not 9. See footnote 2. yet available. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Bank Lending Practices, 1979-81 679 Al. Senior loan officer opinion survey on bank lending practices, selected large U.S. banks Policy on November 15, 1979, compared with policy three months earlier Number of banks; figures in parentheses indicate percentage distribution of total banks reporting Much Moderately Essentially Moderately Much Item Total stronger stronger unchanged easier easier LOAN DEMAND Strength of demand for commercial and industrial loans' 1 Compared with three months earlier .. 121 (100) 2 (1.7) 27 (22.4) 71 (58.7) 19 (15.8) 2 (1.7) 2 Anticipated in next three months 121 (100) 1 (-9) 20 (16.6) 49 (40.5) 49 (40.5) 2 (1.7) Much Moderately Essentially Moderately Much INTEREST RATE POLICY Total firmer firmer unchanged easier easier Standards of creditworthiness 3 To qualify for prime rate 121 (100) 3 (2.5) 33 (27.3) 84 (69.5) 1 (-9) 0 (0) 4 To qualify for spread above prime 121 (100) 5 (4.2) 48 (39.7) 66 (54.6) 2 (1.7) 0 (0) Total Considerably Moderately Essentially Moderately Much greater greater unchanged less less Willingness to make fixed-rate loans 5 Short-term (under one year) 121 (100) 1 (.9) 1 (.9) 53 (43.9) 46 (38.1) 20 (16.6) 6 Long-term (one year or longer) 121 (100) 1 (-9) 6 (5.0) 40 (33.1) 33 (27.3) 41 (33.9) CREDIT AVAILABILITY Total Much Moderately Essentially Moderately Much AND NONPRICE TERMS firmer firmer unchanged easier easier Reviewing credit lines or loan applications for 7 Established customers 121 (100) 1 (-9) 16 (13.3) 103 (85.2) 1 (.9) 0 (0) 8 New customers 121 (100) 13 (10.8) 56 (46.3) 52 (43.0) 0 (0) 0 (0) 9 Local service area customers 120 (100) 2 (1.7) 18 (15.0) 100 (83.4) 0 (0) 0 (0) 10 Nonlocal service area customers ., 120 (100) 12 (10.0) 44 (36.7) 62 (51.7) 2 (1.7) 0 (0) Compensating balance requirements 11 Commercial and industrial loans 121 (100) 6 (5.0) 30 (24.8) 83 (68.6) 2 (1.7) 0 (0) 12 Loans to finance companies 121 (100) 8 (6.7) 20 (16.6) 92 (76.1) 1 (-9) 0 (0) Total Considerably Moderately Essentially Moderately Much greater greater unchanged less less Willingness to make other types of loans 13 Secured construction and land development loans 121 (100) 0 (0) 0 (0) 43 (35.6) 55 (45.5) 23 ((1199..11)) Secured real estate loans 14 1- to 4-family residential properties . 120 (100) 0 (0) 1 (.9) 55 (45.9) 39 (32.5) 25 (20.9) 15 Multifamily residential property .... 116 (100) 0 (0) 0 (0) 53 (45.7) 44 (38.0) 19 (16.4) 16 Commercial and industrial property 121 (100) 0 (0) 0 (0) 66 (54.6) 43 (35.6) 12 (10.0) 17 Installment loans to individuals 121 (100) 0 (0) 2 (1.7) 69 ((5577..11)) 45 ((3377..22)) 5 ((44..22)) Commercial and industrial loans 18 One to five years maturity 121 (100) 0 (0) 3 (2.5) 88 (72.8) 27 (22.4) 3 (2.5) 19 Over five years maturity 121 (100) 0 (0) 0 (0) 68 (56.2) 40 (33.1) 13 (10.8) 20 Loans to finance companies 121 (100) 0 (0) 0 (0) 94 (77.7) 21 (17.4) 6 (5.0) 21 Loans to securities brokers and dealers 120 (100) 0 (0) 0 (0) 74 ((6611..77)) 35 ((2299..22)) 11 ((99..22)) 22 Participation loans with correspondent banks 121 (100) 0 (0) 3 (2.5) 96 (79.4) 17 (14.1) 5 (4.2) 1. After allowance for bank's usual seasonal variation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

680 Federal Reserve Bulletin • September 1981 A2. Senior loan officer opinion survey on bank lending practices, selected large U.S. banks Policy on February 15, 1980, compared with policy three months earlier Number of banks; figures in parentheses indicate percentage distribution of total banks reporting Much Moderately Essentially Moderately Much Item Total stronger stronger unchanged easier easier LOAN DEMAND Strength of demand for commercial and industrial loans' 1 Compared with three months earlier .. 119 (100) 0 (0) 16 (13.5) 72 (60.6) 31 (26.1) 0 (0) 2 Anticipated in next three months 119 (100) 0 (0) 23 (19.4) 68 (57.2) 28 (23.6) 0 (0) Much Moderately Essentially Moderately Much INTEREST RATE POLICY Total firmer firmer unchanged easier easier Standards of creditworthiness 3 To qualify for prime rate 119 (100) 0 (0) 14 (11.8) 102 (85.8) 3 (2.6) 0 (0) 4 To qualify for spread above prime 119 (100) 0 (0) 19 (16.0) 96 (80.7) 4 (3.4) 0 (0) Considerably Moderately Essentially Moderately Much Total greater greater unchanged less less Willingness to malce fixed-rate loans 5 Short-term (under one year) 119 (100) 0 (0) 1 (.9) 81 (68.1) 27 (22.7) 10 (8.5) 6 Long-term (one year or longer) 119 (100) 0 (0) 3 (2.6) 49 (41.2) 39 (32.8) 28 (23.6) CREDIT AVAILABILITY Total Much Moderately Essentially Moderately Much AND NONPRICE TERMS firmer firmer unchanged easier easier Reviewing credit lines or loan applications for 1 Established customers 119 (100) 0 (0) 6 (5.1) 110 (92.5) 3 (2.6) 0 (0) 8 New customers 119 (100) 2 (1.7) 23 (19.4) 90 (75.7) 4 (3.4) 0 (0) 9 Local service area customers 118 (100) 0 (0) 10 (8.5) 105 (89.0) 3 (2.6) 0 (0) 10 Nonlocal service area customers 118 (100) 5 (4.3) 24 (20.4) 88 (74.6) 1 (.9) 0 (0) Compensating balance requirements 11 Commercial and industrial loans 119 (100) 0 (0) 18 (15.2) 87 (73.2) 14 (11.8) 0 (0) 12 Loans to finance companies 119 (100) 0 (0) 13 (11.0) 101 (84.9) 5 (4.3) 0 (0) Considerably Moderately Essentially Moderately Much Total greater greater unchanged less less Willingness to make other types of loans 13 Secured construction and land development loans 119 (100) 0 (0) 3 (2.6) 72 (60.6) 40 (33.7) 4 (3.4) Secured real estate loans 14 1- to 4-family residential properties . 118 (100) 1 (-9) 4 (3.4) 73 (61.9) 30 (25.5) 10 (8.5) 15 Multifamily residential property 115 (100) 0 (0) 1 (.9) 69 (60.0) 34 (29.6) 11 (9.6) 16 Commercial and industrial property 119 (100) 0 (0) 0 (0) 82 (69.0) 31 (26.1) 6 (5.1) 17 Installment loans to individuals 119 (100) 0 (0) 1 (.9) 69 (58.0) 43 (36.2) 6 (5.1) Commercial and industrial loans 18 One to five years maturity 119 (100) 0 (0) 4 (3.4) 100 (84.1) 14 (11.8) 1 (.9) 19 Over five years maturity 119 (100) 0 (0) 1 (.9) 83 (69.8) 26 (21.9) 9 (7.6) 20 Loans to finance companies 119 (100) 0 (0) 0 (0) 105 (88.3) 9 (7.6) 5 (4.3) 21 Loans to securities brokers and dealers 118 (100) 0 (0) 1 (.9) 102 (86.5) 12 (10.2) 3 (2.6) 22 Participation loans with correspondent banks 119 (100) 1 (•9) 11 (9.3) 95 (79.9) 10 (8.5) 2 (1.7) 1. After allowance for bank's usual seasonal variation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Bank Lending Practices, 1979-81 681 A3. Senior loan officer opinion survey on bank lending practices, selected large U.S. banks Policy on May 15, 1980, compared with policy three months earlier Number of banks; figures in parentheses indicate percentage distribution of total banks reporting Much Moderately Essentially Moderately Much Item Total stronger stronger unchanged easier easier LOAN DEMAND Strength of demand for commercial and industrial loans' 1 Compared with three months earlier .. 120 (100) 0 (0) 5 (4.2) 26 (21.7) 78 (65.0) 11 (9.2) 2 Anticipated in next three months 120 (100) 0 (0) 4 (3.4) 36 (30.0) 75 (62.5) 5 (4.2) Much Moderately Essentially Moderately Much INTEREST RATE POLICY Total firmer firmer unchanged easier easier Standards of creditworthiness 3 To qualify for prime rate 120 (100) 1 (.9) 15 (12.5) 100 (83.4) 4 (3.4) 0 (0) 4 To qualify for spread above prime.... 120 (100) 3 (2.5) 14 (11.7) 89 (74.2) 14 (11.7) 0 (0) Considerably Moderately Essentially Moderately Much Total greater greater unchanged less less Willingness to make fixed-rate loans 5 Short-term (under one year) 120 (100) 2 (1.7) 19 (15.9) 81 (67.5) 14 (11.7) 4 (3.4) 6 Long-term (one year or longer) 120 (100) 1 (.9) 8 (6.7) 76 (63.4) 19 (15.9) 16 (13.4) CREDIT AVAILABILITY Total Much Moderately Essentially Moderately Much AND NONPRICE TERMS firmer firmer unchanged easier easier Reviewing credit lines or loan applications for 7 Established customers 120 (100) 0 (0) 13 (10.9) 99 (82.5) 8 (6.7) 0 (0) 8 New customers 120 (100) 16 (13.4) 33 (27.5) 56 (46.7) 15 (12.5) 0 (0) 9 Local service area customers 120 (100) 0 (0) 14 (11.7) 93 (77.5) 13 (10.9) 0 (0) 10 Nonlocal service area customers 120 (100) 14 (11.7) 26 (21.7) 74 (61.7) 6 (5.0) 0 (0) Compensating balance requirements 11 Commercial and industrial loans 120 (100) 3 (2.5) 16 (13.4) 87 (72.5) 14 (11.7) 0 (0) 12 Loans to finance companies 120 (100) 2 (1.7) 15 (12.5) 98 (81.7) 5 (4.2) 0 (0) Considerably Moderately Essentially Moderately Much Total greater greater unchanged less less Willingness to make other types of loans 13 Secured construction and land development loans 120 (100) 0 (0) 4 (3.4) 63 (52.5) 35 (29.2) 18 (15.0) Secured real estate loans 14 1- to 4-family residential properties . 118 (100) 0 (0) 8 (6.8) 75 (63.6) 32 (18.7) 13 (11.1) 15 Multifamily residential property 115 (100) 0 (0) 1 (.9) 73 (63.5) 29 (25.3) 12 (10.5) 16 Commercial and industrial property 120 (100) 0 (0) 7 (5.9) 69 (57.5) 37 (30.9) 7 (5.9) 17 Installment loans to individuals 120 (100) 0 (0) 7 (5.9) 37 (30.9) 51 (42.5) 25 ((2200..99)) Commercial and industrial loans 18 One to five years maturity 120 (100) 0 (0) 13 (10.9) 87 (72.5) 18 (15.0) 2 (1.7) 19 Over five years maturity 120 (100) 0 (0) 6 (5.0) 77 (64.2) 29 (24.2) 8 (6.7) 20 Loans to finance companies 120 (100) 0 (0) 0 (0) 86 (71.7) 30 (25.0) 4 (3.4) 21 Loans to securities brokers and dealers 117 (100) 0 (0) 5 (4.3) 86 (73.6) 19 ((1166..33)) 7 ((66..00)) 22 Participation loans with correspondent banks 120 (100) 1 (.9) 11 (9.2) 89 (74.2) 15 (12.5) 4 (3.4) 1. After allowance for bank's usual seasonal variation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

682 Federal Reserve Bulletin • September 1981 A4. Senior loan officer opinion survey on bank lending practices, selected large U.S. banks Policy on August, 15, 1980, compared with policy three months earlier Number of banks; figures in parentheses indicate percentage distribution of total banks reporting Much Moderately Essentially Moderately Much Item Total stronger stronger unchanged easier easier LOAN DEMAND Strength of demand for commercial and industrial loans' 1 Compared with three months earlier .. 120 (100) 0 (0) 12 (10.0) 51 (42.5) 49 (40.9) 8 (6.7) 2 Anticipated in next three months 120 (100) 0 (0) 19 (15.9) 73 (60.9) 25 (20.9) 3 (2.5) Much Moderately Essentially Moderately Much INTEREST RATE POLICY Total firmer firmer unchanged easier easier Standards of creditworthiness 3 To qualify for prime rate 120 (100) 0 (0) 4 (3.4) 101 (84.2) 15 (12.5) 0 (0) 4 To qualify for spread above prime.... 120 (100) 0 (0) 4 (3.4) 95 (79.2) 21 (17.5) 0 (0) Considerably Moderately Essentially Moderately Much Total greater greater unchanged less less Willingness to make fixed-rate loans 5 Short-term (under one year) 120 (100) 4 (3.4) 19 (15.9) 84 (70.0) 10 (8.4) 3 (2.5) 6 Long-term (one year or longer) 120 (100) 0 (0) 9 (7.5) 82 (68.4) 12 (10.0) 17 (14.2) CREDIT AVAILABILITY Total Much Moderately Essentially Moderately Much AND NONPRICE TERMS firmer firmer unchanged easier easier Reviewing credit lines or loan applications for 7 Established customers 120 (100) 0 (0) 1 (.9) 96 (80.0) 23 (19.2) 0 (0) 8 New customers 120 (100) 0 (0) 7 (5.9) 74 (61.7) 36 (30.0) 3 (2.5) 9 Local service area customers 119 (100) 0 (0) 1 (.9) 94 (79.0) 23 (19.4) 1 (.9) 10 Nonlocal service area customers 119 (100) 1 (-9) 8 (6.8) 87 (73.2) 20 (16.9) 3 (2.6) Compensating balance requirements 11 Commercial and industrial loans 120 (100) 0 (0) 7 (5.9) 81 (67.5) 32 (26.7) 0 (0) 12 Loans to finance companies 120 (100) 1 (-9) 3 (2.5) 107 (89.2) 8 (6.7) 1 (.9) Considerably Moderately Essentially Moderately Much Total greater greater unchanged less less Willingness to make other types of loans 13 Secured construction and land development loans 120 (100) 1 (.9) 26 (21.7) 87 (72.5) 3 (2.5) 3 (2.5) Secured real estate loans 14 1- to 4-family residential properties . 118 (100) 0 (0) 14 (11-9) 94 (79.7) 6 (5.1) 4 (3.4) 15 Multifamily residential property .... 115 (100) 0 (0) 5 (4.4) 100 (87.0) 7 (6.1) 3 (2.7) 16 Commercial and industrial property 120 (100) 0 (0) 14 (11.7) 98 (81.7) 6 (5.0) 2 ' (1.7) 17 Installment loans to individuals 119 (100) 5 (4.3) 50 (42.1) 59 (49.6) 4 (3.4) 1 (.9) Commercial and industrial loans 18 One to five years maturity 120 (100) 2 (1.7) 19 (15.9) 96 (80.0) 3 (2.5) 0 (0) 19 Over five years maturity 120 (100) 2 (1.7) 10 (8.4) 96 (80.0) 9 (7.5) 3 (2.5) 20 Loans to finance companies 120 (100) 1 (.9) 10 (8.4) 106 (88.4) 3 (2.5) 0 (0) 21 Loans to securities brokers and dealers 119 (100) 2 (1.7) 16 (13.5) 97 (81.6) 3 (2.6) 1 (.9) 22 Participation loans with correspondent banks 120 (100) 2 (1.7) 24 (20.0) 93 (77.5) 1 (.9) 0 (0) 1. After allowance for bank's usual seasonal variation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Bank Lending Practices, 1979-81 683 A5. Senior loan officer opinion survey on bank lending practices, selected large U.S. banks Policy on November 15, 1980, compared with policy three months earlier Number of banks; figures in parentheses indicate distribution of total banks reporting Much Moderately Essentially Moderately Much Item Total stronger stronger unchanged easier easier LOAN DEMAND Strength of demand for commercial and industrial loans' 1 Compared with three months earlier .. 117 (100) 1 (.9) 42 (35.9) 65 (55.6) 9 ( 7.7) 0 (0) 2 Anticipated in next three months 117 (100) 0 (0) 25 (21.4) 78 (66.7) 13 (11.2) 1 (.9) Much Moderately Essentially Moderately Much INTEREST RATE POLICY Total firmer firmer unchanged easier easier Standards of creditworthiness 3 To qualify for prime rate 117 (100) 2 (1.8) 5 (4.3) 99 (84.7) 11 (9.5) 0 (0) 4 To qualify for spread above prime.... 117 (100) 2 (1.8) 5 (4.3) 94 (80.4) 16 (13.7) 0 (0) Considerably Moderately Essentially Moderately Much Total greater greater unchanged less less Willingness to make fixed-rate loans 5 Short-term (under one year) 117 (100) 1 (.9) 10 (8.6) 78 (66.7) 21 (18.0) 7 (6.0) 6 Long-term (one year or longer) 117 (100) 0 (0) 4 (3.5) 68 (58.2) 26 (22.3) 19 (16.3) CREDIT AVAILABILITY Total Much Moderately Essentially Moderately Much AND NONPRICE TERMS firmer firmer unchanged easier easier Reviewing credit lines or loan applications for 7 Established customers 117 (100) 1 (.9) 3 (2.6) 110 (94.1) 3 (2.6) 0 (0) 8 New customers 117 (100) 3 (2.6) 3 (2.6) 102 (87.2) 9 (7.7) 0 (0) 9 Local service area customers 116 (100) 1 (.9) 4 (3.5) 102 (88.0) 9 (7.8) 0 (0) 10 Nonlocal service area customers 116 (100) 2 (1.8) 7 (6.1) 106 (91.4) 1 (.9) 0 (0) Compensating balance requirements 11 Commercial and industrial loans 117 (100) 0 (0) 11 (9.5) 84 (71.8) 22 (18.9) 0 (0) 12 Loans to finance companies 117 (100) 0 (0) 7 (6.0) 105 (89.8) 5 (4.3) 0 (0) Considerably Moderately Essentially Moderately Much Total greater greater unchanged less less Willingness to make other types of loans 13 Secured construction and land development loans 117 (100) 0 (0) 6 (5.2) 93 (79.5) 17 (14.6) 1 (.9) Secured real estate loans 14 1- to 4-family residential properties . 114 (100) 0 (0) 3 (2.7) 87 (76.4) 19 (16.7) 5 (4.4) 15 Multifamily residential property 112 (100) 0 (0) 1 (.9) 94 (84.0) 10 (9.0) 7 (6.3) 16 Commercial and industrial property 117 (100) 0 (0) 5 (4.3) 99 (84.7) 11 (9.5) 2 (1.8) 17 Installment loans to individuals 116 (100) 0 (0) 9 (7.8) 85 (73.3) 18 (15.6) 4 (3.5) Commercial and industrial loans 18 One to five years maturity 117 (100) 0 (0) 2 (1.8) 111 (94.9) 3 (2.6) 1 (.9) 19 Over five years maturity 117 (100) 0 (0) 2 (1.8) 102 (87.2) 9 (7.7) 4 (3.5) 20 Loans to finance companies 117 (100) 0 (0) 0 (0) 111 (94.9) 5 (4.3) 1 (.9) 21 Loans to securities brokers and dealers 114 (100) 0 (0) 3 (2.7) 104 (91.3) 6 ((55..33)) 1 (.9) 22 Participation loans with correspondent banks 117 (100) 0 (0) 11 (9.5) 104 (88.9) 2 (1.8) 0 (0) 1. After allowance for bank's usual seasonal variation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

684 Federal Reserve Bulletin • September 1981 A6. Senior loan officer opinion survey on bank lending practices, selected large U.S. banks Policy on February 15, 1981, compared with policy three months earlier Number of banks; figures in parentheses indicate percentage distribution of total banks reporting Much Moderately Essentially Moderately Much Item Total stronger stronger unchanged easier easier LOAN DEMAND Strength of demand for commercial and industrial loans' 1 Compared with three months earlier .. 118 (100) 0 (0) 14 (11.9) 62 (52.6) 40 (33.9) 2 (1.7) 2 Anticipated in next three months 118 (100) 0 (0) 11 (9.4) 80 (67.8) 27 (22.9) 0 (0) Much Moderately Essentially Moderately Much INTEREST RATE POLICY Total firmer firmer unchanged easier easier Standards of creditworthiness 3 To qualify for prime rate 118 (100) 0 (0) 2 (1.7) 104 (88.2) 12 (10.2) 0 (0) 4 To qualify for spread above prime.... 118 (100) 0 (0) 3 (2.6) 97 (82.3) 18 (15.3) 0 (0) Considerably Moderately Essentially Moderately Much Total greater greater unchanged less less Willingness to make fixed-rate loans 5 Short-term (under one year) 118 (100) 0 (0) 10 (8.5) 96 (81.4) 9 (7.7) 3 (2.6) 6 Long-term (one year or longer) 118 (100) 0 (0) 3 (2.6) 80 (67.8) 22 (18.7) 13 (11.1) CREDIT AVAILABILITY Total Much Moderately Essentially Moderately Much AND NONPRICE TERMS firmer firmer unchanged easier easier Reviewing credit lines or loan applications for 7 Established customers 118 (100) 0 (0) 1 (-9) 111 (94.1) 6 (5.1) 0 (0) 8 New customers 118 (100) 1 (.9) 3 (2.6) 106 (89.9) 8 (6.8) 0 (0) 9 Local service area customers 117 (100) 0 (0) 2 (1.8) 109 (93.2) 6 (5.2) 0 (0) 10 Nonlocal service area customers 117 (100) 1 (.9) 3 (2.6) 109 (93.2) 4 (3.5) 0 (0) Compensating balance requirements 11 Commercial and industrial loans 118 (100) 0 (0) 3 (2.6) 91 (77.2) 24 (20.4) 0 (0) 12 Loans to finance companies 118 (100) 1 (.9) 4 (3.4) 104 (88.2) 9 (7.7) 0 (0) Considerably Moderately Essentially Moderately Much Total greater greater unchanged less less Willingness to make other types of loans 13 Secured construction and land development loans 118 (100) 0 (0) 6 (5.1) 93 (78.9) 18 (15.3) 1 (.9) Secured real estate loans 14 1- to 4-family residential properties . 117 (100) 0 (0) 3 (2.6) 91 (77.8) 21 (18.0) 2 (1.8) 15 Multifamily residential property 114 (100) 0 (0) 2 (1.8) 96 (84.3) 15 (13.2) 1 (.9) 16 Commercial and industrial property 118 (100) 0 (0) 6 (5.1) 102 (86.5) 9 (7.7) 1 (.9) 17 Installment loans to individuals 117 (100) 0 (0) 8 (6.9) 87 (74.4) 17 (14.6) 5 (4.3) Commercial and industrial loans 18 One to five years maturity 118 (100) 0 (0) 8 (6.8) 107 (90.7) 2 (1.7) 1 (.9) 19 Over five years maturity 118 (100) 0 (0) 4 (3.4) 105 (89.0) 7 (6.0) 2 (1.7) 20 Loans to finance companies 118 (100) 0 (0) 3 (2.6) 106 (89.9) 7 (6.0) 2 (1.7) 21 Loans to securities brokers and dealers 117 (100) 0 (0) 7 (6.0) 104 (88.9) 5 (4.3) 1 (.9) 22 Participation loans with correspondent banks. 118 (100) 0 (0) 16 (13.6) 101 (85.6) 1 (.9) 0 (0) 1. After allowance for bank's usual seasonal variation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Bank Lending Practices, 1979-81 685 A7. Senior loan officer opinion survey on bank lending practices, selected large U.S. banks' Policy on February 15, 1981, compared with policy three months earlier Number of banks; figures in parentheses indicate percentage distribution of total banks reporting Much Moderately Essentially Moderately Much Item Total stronger stronger unchanged easier easier 11111 SSSSStttttrrrrreeeeennnnngggggttttthhhhh ooooofffff dddddeeeeemmmmmaaaaannnnnddddd fffffooooorrrrr cccccooooommmmmmmmmmeeeeerrrrrccccciiiiiaaaaalllll aaaaannnnnddddd iiiiinnnnnddddduuuuussssstttttrrrrriiiiiaaaaalllll llllloooooaaaaannnnnsssss aaaaannnnntttttiiiiiccccciiiiipppppaaaaattttteeeeeddddd iiiiinnnnn nnnnneeeeexxxxxttttt ttttthhhhhrrrrreeeeeeeeee mmmmmooooonnnnnttttthhhhhsssss22222 60 (100) 0 (0) 3 (5.0) 47 (78.3) 10 (16.7) 0 (0) Much Moderately Essentially Moderately Much Total firmer firmer unchanged easier easier 22222 SSSSStttttaaaaannnnndddddaaaaarrrrrdddddsssss tttttooooo qqqqquuuuuaaaaallllliiiiifffffyyyyy fffffooooorrrrr ppppprrrrriiiiimmmmmeeeee rrrrraaaaattttteeeee .................... 60 (100) 0 (0) 0 (0) 56 (93.3) 4 (6.7) 0 (0) 33333 SSSSStttttaaaaannnnndddddaaaaarrrrrdddddsssss tttttooooo qqqqquuuuuaaaaallllliiiiifffffyyyyy fffffooooorrrrr sssssppppprrrrreeeeeaaaaaddddd aaaaabbbbbooooovvvvveeeee ppppprrrrriiiiimmmmmeeeee 60 (100) 0 (0) 1 (1.7) 53 (88.3) 6 (10.0) 0 (0) 44444 SSSSStttttaaaaannnnnccccceeeee ooooonnnnn cccccooooommmmmmmmmmeeeeerrrrrccccciiiiiaaaaalllll aaaaannnnnddddd iiiiinnnnnddddduuuuussssstttttrrrrriiiiiaaaaalllll llllleeeeennnnndddddiiiiinnnnnggggg tttttooooo NNNNNeeeeewwwww cccccuuuuussssstttttooooommmmmeeeeerrrrrsssss33333 60 (100) 0 (0) 0 (0) 58 (96.7) 2 (3.3) 0 (0) NNNNNooooonnnnnlllllooooocccccaaaaalllll cccccuuuuussssstttttooooommmmmeeeeerrrrrsssss33333 60 (100) 0 (0) 0 (0) 56 (93.3) 4 (6.7) 0 (0) 55555 CCCCCooooommmmmpppppeeeeennnnnsssssaaaaatttttiiiiinnnnnggggg bbbbbaaaaalllllaaaaannnnnccccceeeee rrrrreeeeeqqqqquuuuuiiiiirrrrreeeeemmmmmeeeeennnnntttttsssss fffffooooorrrrr cccccooooommmmmmmmmmeeeeerrrrrccccciiiiiaaaaalllll aaaaannnnnddddd iiiiinnnnnddddduuuuussssstttttrrrrriiiiiaaaaalllll llllloooooaaaaannnnnsssss44444 59 (100) 0 (0) 1 (1.7) 56 (94.9) 2 (3.3) 0 (0) Consid- Moderately Essentially Moderately Much Total erably greater unchanged less less greater 66666 WWWWWiiiiilllllllllliiiiinnnnngggggnnnnneeeeessssssssss tttttooooo mmmmmaaaaakkkkkeeeee iiiiinnnnnssssstttttaaaaallllllllllmmmmmeeeeennnnnttttt llllloooooaaaaannnnnsssss tttttooooo iiiiinnnnndddddiiiiivvvvviiiiiddddduuuuuaaaaalllllsssss 59 (100) 0 (0) 5 (8.5) 41 (69.5) 11 (18.6) 2 (3.4) 1. As of May 1981 the reporting panel was cut about in half to 60 banks. This table reports February responses to questions retained beyond May from only those 60 banks in order to permit a comparison of survey results for February with those for May and August (tables A8 and A9). 2. After allowance for bank's usual seasonal variation. 3. Beginning May 1981, a single question addresses banks' stance on lending to both new and nonlocal customers. 4. The corresponding question in the May 1981 and later surveys refers to compensating balance and/or fee requirements on commercial and industrial loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

686 Federal Reserve Bulletin • September 1981 A8. Senior loan officer opinion survey on bank lending practices, selected large U.S. banks Policy on May 15, 1981, compared with policy three months earlier Number of banks; figures in parentheses indicate percentage distribution of total banks reporting Much Moderately Essentially Moderately Much Item Total stronger stronger unchanged easier easier 11111 SSSSStttttrrrrreeeeennnnngggggttttthhhhh ooooofffff dddddeeeeemmmmmaaaaannnnnddddd fffffooooorrrrr cccccooooommmmmmmmmmeeeeerrrrrccccciiiiiaaaaalllll aaaaannnnnddddd iiiiinnnnnddddduuuuussssstttttrrrrriiiiiaaaaalllll llllloooooaaaaannnnnsssss aaaaannnnntttttiiiiiccccciiiiipppppaaaaattttteeeeeddddd iiiiinnnnn nnnnneeeeexxxxxttttt ttttthhhhhrrrrreeeeeeeeee mmmmmooooonnnnnttttthhhhhsssss''''' 60 (100) 0 (0) 17 (28.3) 29 (48.3) 14 (23.3) 0 (0) Much Moderately Essentially Moderately Much Total firmer firmer unchanged easier easier 22222 SSSSStttttaaaaannnnndddddaaaaarrrrrdddddsssss tttttooooo qqqqquuuuuaaaaallllliiiiifffffyyyyy fffffooooorrrrr ppppprrrrriiiiimmmmmeeeee rrrrraaaaattttteeeee .................... 60 (100) 0 (0) 1 (1.6) 46 (76.7) 12 (20.0) 1 (1.6) 33333 SSSSStttttaaaaannnnndddddaaaaarrrrrdddddsssss tttttooooo qqqqquuuuuaaaaallllliiiiifffffyyyyy fffffooooorrrrr sssssppppprrrrreeeeeaaaaaddddd aaaaabbbbbooooovvvvveeeee ppppprrrrriiiiimmmmmeeeee 60 (100) 0 (0) 0 (0) 35 (58.3) 25 (41.7) 0 (0) 44444 SSSSStttttaaaaannnnnccccceeeee ooooonnnnn cccccooooommmmmmmmmmeeeeerrrrrccccciiiiiaaaaalllll aaaaannnnnddddd iiiiinnnnnddddduuuuussssstttttrrrrriiiiiaaaaalllll llllleeeeennnnndddddiiiiinnnnnggggg tttttooooo nnnnneeeeewwwww aaaaannnnnddddd nnnnnooooonnnnnlllllooooocccccaaaaalllll cccccuuuuussssstttttooooommmmmeeeeerrrrrsssss 60 (100) 0 (0) 5 (8.3) 46 (76.7) 9 (15.0) 0 (0) 55555 CCCCCooooommmmmpppppeeeeennnnnsssssaaaaatttttiiiiinnnnnggggg bbbbbaaaaalllllaaaaannnnnccccceeeee ooooorrrrr fffffeeeeeeeeee rrrrreeeeeqqqqquuuuuiiiiirrrrreeeeemmmmmeeeeennnnntttttsssss fffffooooorrrrr cccccooooommmmmmmmmmeeeeerrrrrccccciiiiiaaaaalllll aaaaannnnnddddd iiiiinnnnnddddduuuuussssstttttrrrrriiiiiaaaaalllll llllloooooaaaaannnnnsssss 60 (100) 0 (0) 4 (6.7) 27 (45.0) 29 (48.3) 0 (0) Consid- Moderately Essentially Moderately Much Total erably greater unchanged less less greater 66666 WWWWWiiiiilllllllllliiiiinnnnngggggnnnnneeeeessssssssss tttttooooo mmmmmaaaaakkkkkeeeee iiiiinnnnnssssstttttaaaaallllllllllmmmmmeeeeennnnnttttt llllloooooaaaaannnnnsssss tttttooooo iiiiinnnnndddddiiiiivvvvviiiiiddddduuuuuaaaaalllllsssss 59 (100) 0 (0) 3 (5.1) 42 (71.2) 12 (20.3) 2 (3.4) 1. After allowance for bank's usual seasonal variation. A9. Senior loan officer opinion survey on bank lending practices, selected large U.S. banks Policy on August 15, 1981, compared with policy three months earlier Number of banks; figures in parentheses indicate percentage distribution of total banks reporting Much Moderately Essentially Moderately Much Item Total stronger stronger unchanged easier easier 11111 SSSSStttttrrrrreeeeennnnngggggttttthhhhh ooooofffff dddddeeeeemmmmmaaaaannnnnddddd fffffooooorrrrr cccccooooommmmmmmmmmeeeeerrrrrccccciiiiiaaaaalllll aaaaannnnnddddd iiiiinnnnnddddduuuuussssstttttrrrrriiiiiaaaaalllll llllloooooaaaaannnnnsssss aaaaannnnntttttiiiiiccccciiiiipppppaaaaattttteeeeeddddd iiiiinnnnn nnnnneeeeexxxxxttttt ttttthhhhhrrrrreeeeeeeeee mmmmmooooonnnnnttttthhhhhsssss''''' 60 (100) 0 (0) 25 (41.7) 27 (45.0) 8 (13.3) 0 (0) Much Moderately Essentially Moderately Much Total firmer firmer unchanged easier easier 22222 SSSSStttttaaaaannnnndddddaaaaarrrrrdddddsssss tttttooooo qqqqquuuuuaaaaallllliiiiifffffyyyyy fffffooooorrrrr ppppprrrrriiiiimmmmmeeeee rrrrraaaaattttteeeee 60 (100) 0 (0) 1 (1.7) 50 (83.3) 9 (15.0) 0 (0) 33333 SSSSStttttaaaaannnnndddddaaaaarrrrrdddddsssss tttttooooo qqqqquuuuuaaaaallllliiiiifffffyyyyy fffffooooorrrrr sssssppppprrrrreeeeeaaaaaddddd aaaaabbbbbooooovvvvveeeee ppppprrrrriiiiimmmmmeeeee 60 (100) 0 (0) 1 (1.7) 36 (60.0) 23 (38.3) 0 (0) 44444 SSSSStttttaaaaannnnnccccceeeee ooooonnnnn cccccooooommmmmmmmmmeeeeerrrrrccccciiiiiaaaaalllll aaaaannnnnddddd iiiiinnnnnddddduuuuussssstttttrrrrriiiiiaaaaalllll llllleeeeennnnndddddiiiiinnnnnggggg tttttooooo nnnnneeeeewwwww aaaaannnnnddddd nnnnnooooonnnnnlllllooooocccccaaaaalllll cccccuuuuussssstttttooooommmmmeeeeerrrrrsssss 60 (100) 0 (0) 6 (10.0) 47 (78.3) 7 (11.7) 0 (0) 55555 CCCCCooooommmmmpppppeeeeennnnnsssssaaaaatttttiiiiinnnnnggggg bbbbbaaaaalllllaaaaannnnnccccceeeee ooooorrrrr fffffeeeeeeeeee rrrrreeeeeqqqqquuuuuiiiiirrrrreeeeemmmmmeeeeennnnntttttsssss fffffooooorrrrr cccccooooommmmmmmmmmeeeeerrrrrccccciiiiiaaaaalllll aaaaannnnnddddd iiiiinnnnnddddduuuuussssstttttrrrrriiiiiaaaaalllll llllloooooaaaaannnnnsssss 60 (100) 0 (0) 2 (3.3) 30 (50.0) 28 (46.7) 0 (0) Consid- Moderately Essentially Moderately Much Total erably greater unchanged less less greater 66666 WWWWWiiiiilllllllllliiiiinnnnngggggnnnnneeeeessssssssss tttttooooo mmmmmaaaaakkkkkeeeee iiiiinnnnnssssstttttaaaaallllllllllmmmmmeeeeennnnnttttt llllloooooaaaaannnnnsssss tttttooooo iiiiinnnnndddddiiiiivvvvviiiiiddddduuuuuaaaaalllllsssss 59 (100) 1 (1.7) 6 (10.2) 44 (74.6) 5 (8.5) 3 (5.1) 1. After allowance for bank's usual seasonal variation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

687 Treasury and Federal Reserve Foreign Exchange Operations This 39th joint report reflects the Treasury- countries, the weakness of domestic demand was Federal Reserve policy of making available addi- seen in the markets as constraining the authoritional information on foreign exchange opera- ties from raising interest rates sufficiently to tions from time to time. The Federal Reserve attract capital inflows for financing current-ac- Bank of New York acts as agent for both the count deficits at prevailing exchange rates or to Treasury and the Federal Open Market Commit- curb inflation. Market participants focused on tee of the Federal Reserve System in the conduct the policy challenges facing many governments of foreign exchange operations. abroad and were concerned that policies would This report was prepared by Sam Y. Cross, not be adopted to deal with these problems Manager of Foreign Operations for the System effectively. Moreover, political developments in Open Market Account and Senior Vice President Eastern Europe and in the Middle East added to in charge of the Foreign Group of the Federal uncertainties for the outlook, especially for Eu- Reserve Bank of New York. It covers the period rope, and left traders and investors with the view February through July 1981. Previous reports that the United States was a relatively attractive have been published in the March and Septem- outlet for investment. ber BULLETINS of each year beginning with In this environment, the market perceived September 1962. little downside risk for the dollar in the exchange markets. Consequently, the dollar fluctuated The U.S. dollar advanced strongly against all currencies during the period under review in response to a variety of economic and political 1. Federal Reserve factors in the United States and abroad. In the reciprocal currency arrangements United States, the current account remained in Millions of dollars surplus. The domestic economy showed consid- Amount of facility erable resilience. The demand for money and IInnssttiittuuttiioonn Jan. 1, July 31, credit continued strong, and U.S. interest rates 1981 1981 remained high. Also, price indexes published Austrian National Bank 250 250 during the period pointed to a significant decline National Bank of Belgium 1,000 1,000 in the inflation rate. Moreover, the already favor- Bank of Canada 2,000 2,000 National Bank of Denmark 250 250 able market sentiment toward the Reagan admin- Bank of England 3,000 3,000 Bank of France 2,000 2,000 istration was strengthened by the administra- German Federal Bank 6,000 6,000 tion's apparent resolve and effectiveness in Bank of Italy 3,000 3,000 translating from plan to action its major fiscal Bank of Japan 5,000 5,000 Bank of Mexico 700 700 program designed to deal with inflation while Netherlands Bank 500 500 Bank of Norway 250 250 revitalizing the U.S. economy. Bank of Sweden 500 300 1 Swiss National Bank 4,000 4,000 The performance of major industrial countries abroad was less favorable. The current accounts Bank for International Settlements Swiss francs/dollars 600 600 of several countries, notably Germany, were in Other authorized European currencies/dollars 1,250 1,250 substantial deficit. Inflation was accelerating in most countries other than Japan. Economic ac- Total 30,300 30,100 tivity abroad was generally sluggish. In many 1. Decreased by $200 million effective May 23, 1981. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

688 Federal Reserve Bulletin • September 1981 2. Drawings and repayments under reciprocal complicating their efforts to encourage economic currency arrangements, January-July 1981 1 recovery and to avoid further depreciations of Millions of dollars equivalent; drawings, or repayments (—) their currencies. At the same time, evidence suggested that the U.S. economy had lost its OOuutt-- 1981 OOuutt-- BBaannkk ddrraawwiinngg ssttaannddiinngg ssttaannddiinngg upward momentum. Inflation figures continued oonn SSyysstteemm JJaann.. 11,, JJuullyy 3311,, 11998811 Ql Q2 July 11998811 to show improvement, while the growth of the narrow monetary aggregates had moderated. Ex- Bank of Sweden... 0 200.0 -200.0 0 0 pectations developed that U.S. interest rates might ease from their near-record highs. In these 1. Data are on a value-date basis. circumstances, the dollar remained in demand but fluctuated more irregularly than before. higher over most of the period under review. After mid-July, the demand for credit in the Early in February, the selling pressures against United States was stubbornly strong in the face other currencies focused mostly on the German of high interest rates and the broader monetary mark, which not only declined against the dollar aggregates continued to be buoyant. The market but also was weak within the joint float arrange- was impressed by Chairman Volcker's reaffirmament of the European Monetary System (EMS). tion of the Federal Reserve's commitment to After midmonth, the German Federal Bank took restrain monetary expansion. In addition, the strong action to defend the mark, and before market was becoming concerned about the imlong, increases in short-term interest rates in pact of the U.S. government's near-term financ- Germany were followed by rising interest rates in ing requirements on U.S. financial markets. In many other financial markets on the Continent. this environment, interest rates remained high, At the same time, interest rates in the United disappointing expectations of near-term de- States eased somewhat. As market participants clines. Moreover, as the administration's ecomoved to cover short currency positions, the nomic proposals gained congressional approval, mark rebounded and other currencies also market participants compared the breadth of strengthened by mid-March. support for the new policy directions in the From April to mid-May, there was renewed United States with the continuing debates on a upward pressure on short-term U.S. interest full range of policies in many countries abroad. rates and the dollar resumed its advance. By As a result, market sentiment toward the dollar midspring this tendency was reinforced as the became bullish. The dollar closed the period markets attempted to assess the implications of advancing strongly across the board. The extent renewed unrest in Poland, the change of govern- to which the exchange rates for individual curment in France, and political developments in rencies moved against the dollar depended in several other European countries. Moreover, large part on economic and political factors in U.S. statistics for the first quarter highlighted the unexpected strength of the domestic economy. As market participants began to adjust their 3. U.S. Treasury securities, expectations concerning the near-term outlook foreign currency denominated1 for the economy and for interest rates, the dollar Millions of dollars equivalent, issues, or redemptions (-) advanced strongly. CCoommmmiitt-- 1981 CCoommmmiitt-- Coming into the summer, market participants IIssssuueess mmeennttss mmeennttss took an increasingly bearish view of the outlook JJaa 11 nn 99 .. 88 11 11 ,, Ql Q2 July JJuu 11 llyy 99 88 33 11 11 ,, for Europe. A debate over monetary and exchange rate policies had emerged in the press, Public series Germany 5,233.6 0 0 0 5,233.6 intensifying with the approach of the July 19-20 Switzerland 1,203.0 0 0 -744.5 458.5 summit meeting at Ottawa. Market participants 6,436.6 0 0 -744.5 5,692.1 focused on complaints by foreign governments 1. Data are on a value-date basis. Because of rounding, figures may that the high level of U.S. interest rates was not add to totals. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 689 their respective countries. But, overall, the dol- under review. The Trading Desk continued to lar ended the period up 22lA percent against cooperate with other central banks by intervensterling, up 163/4 percent against the Japanese ing as their agent from time to time in the New yen, and up 16V* percent against the German York market. Over the six-month period such mark. operations were conducted in German marks, In their operations in the exchange market, the French francs, Japanese yen, and the Canadian U.S. authorities intervened to settle a volatile dollar. In their own markets central banks of market on nine trading days in February when other countries continued to intervene, operating the dollar was rising sharply. The equivalent of heavily at times, mostly to limit the decline of $610.0 million net of marks was purchased in the their currencies against the dollar. market and an additional $168.4 million of marks In April, the Bank of Sweden repaid, prior to was bought from correspondents. The proceeds maturity, the $200 million drawn in January of these market and correspondent purchases under the swap arrangement with the Federal were split evenly between the Federal Reserve Reserve, following a heavy reflow of funds into and the Treasury and were added to their respec- the Swedish krona. In May, an increase of $200 tive balances. million in the arrangement that had been agreed On March 30, when trading in the exchange upon for one year lapsed and the swap line markets faltered amidst the uncertainties follow- reverted to the earlier figure of $300 million. ing the assassination attempt on President Rea- On July 27, the U.S. Treasury paid off the first gan, the Trading Desk intervened to reassure the maturing tranche equivalent to $744.5 million of markets. A total of $74.4 million equivalent in its Swiss franc-denominated securities. These marks was sold from balances, again split evenly securities were issued with the cooperation of between the Federal Reserve and the Treasury. the Swiss authorities in connection with the On the following day, exchange markets quickly dollar-support program of November 1978. After returned to more orderly conditions. this redemption the Treasury had outstanding The Treasury indicated in April that, after $5,692.1 million equivalent of foreign currency study and consultation with officials of the Fed- notes, public series, of which $5,233.6 million is eral Reserve, the United States had adopted a denominated in German marks and $458.5 milminimal intervention approach—to intervene lion in Swiss francs. These securities mature only when necessary to counter conditions of between September 1, 1981, and July 26, 1983. disorder in the exchange market. On May 4, In the seven months through July 1981, the Treasury Under Secretary Sprinkel set forth the Federal Reserve had gains of $4.9 million on its rationale for this approach in testimony before exchange market operations, while the Exchange the Joint Economic Committee of the Congress. Stabilization Fund lost $4.5 million. The Trea- The United States did not intervene on its own sury's general account lost $82.7 million, reflectaccount through the remainder of the period ing losses of $144.3 million as a result of annual renewals at current market rates of the agree- 4. U.S. Treasury and Federal Reserve foreign ment to warehouse with the Federal Reserve the exchange operations1 Swiss franc proceeds of Treasury securities and Net profits or losses (-) in millions of dollars gains of $61.6 million on the reacquisition of U.S. Treasury Swiss francs in connection with the redemption PPeerriioodd FFeeddeerraall at maturity of securities denominated in Swiss RReesseerrvvee Exchange General Stabilization francs. As of July 31, valuation losses on outaccount Fund standing balances were $571.1 million for the 1980 Q1 6.2 -.1 -144.3 Federal Reserve and $1,807.2 million for the Q2 -1.4 -3.8 0 1981 July .1 0 61.6 Exchange Stabilization Fund. The Treasury's Valuation profits and losses on general account had valuation gains of $1,313.5 outstanding assets and liabilities as of July 1981 -571.1 -1,807.2 1,313.5 million related to outstanding issues of securities denominated in foreign currencies. 1. Data are on a value-date basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

690 Federal Reserve Bulletin • September 1981 GERMAN MARK January and some 20 percent from the previous September. Within the EMS the mark was trad- Early in 1981, Germany's current-account deficit ing at or near the floor of the joint float vis-a-vis showed no signs of contracting despite continued the French franc. The German Federal Bank stagnation of the domestic economy. Though intervened in dollars and, together with the Bank import demand had weakened and export orders of France, also in French francs to preserve the had picked up from earlier depressed levels, limits of the EMS. Largely reflecting these operthese initial improvements were more than offset ations, Germany's foreign exchange reserves deby the adverse impact on Germany's terms of clined to $42.7 billion at the end of February, trade of the sharp depreciation of the mark. At down $1.7 billion from the level outstanding on the same time, growing tourism, and interest and January 31. Meanwhile, during February the dividend payments led to a further deterioration U.S. authorities intervened to settle trading conin services. The authorities had hoped to correct ditions, which were frequently one way. The the current-account deficit gradually by a shift of authorities bought $610.0 million equivalent of resources toward investment and exports and, in marks net in the market and $168.4 million the interim, to finance the deficit by a combina- equivalent from correspondents, which were tion of private and official capital inflows. But added to balances of the Federal Reserve and of the protracted nature of the deficit exerted a the U.S. Treasury. negative impact on sentiment toward the mark, The sharp and prolonged decline of the mark and private capital flowed heavily out of Germa- posed serious problems for the German authoriny instead. Meanwhile, domestic demand re- ties. The depreciating mark boosted domestic mained exceptionally weak. Central bank money currency prices of oil and other dollar-invoiced was growing in the upper half of the 4 percent to imports relative to export prices, thus magnify- 7 percent annual growth range, and short-term ing the current-account deficit. The rising cost of domestic interest rates at 9 percent were the imports fed directly into domestic producer and subject of domestic debate—criticized for being consumer prices ahead of important spring wage too high to permit a recovery of domestic eco- negotiations and thereby threatened to provoke nomic activity but too low to defend the mark new domestic cost pressures. The mark's decline from downward pressures in the exchange mar- also complicated efforts to finance the external ket. deficit and generated some uneasiness on the By February, the outflow of funds from Ger- part of official mark holders. On February 19, the many accelerated sharply. Market participants German Federal Bank temporarily closed the were deeply concerned about the lack of resolu- Lombard window, suspended the traditional tion within Germany over the appropriate role fixed-rate facility, and announced that Lombard for monetary policy in dealing with the weakness credits would henceforth be made available at its of the external sector and about security issues discretion and at rates determined on a day-toraised by persistent tensions in Poland. At the day basis. German Federal Bank President Poehl same time, there was growing confidence in the stated that the immediate aim of these measures policies and leadership of the new U.S. adminis- was to tighten German monetary policy in order tration under President Reagan, which had al- to safeguard the stability of the mark. Thereafter, ready established a clear direction for the United German short-term interest rates shot up and call States in economic and military matters. With money temporarily reached 20 to 30 percent interest rates in Germany relatively low com- before settling back to trade around 12 to 13 pared with those in the United States and some percent. other industrial countries, funds flowed heavily Exchange market participants reacted posiout of marks, principally into dollar assets but tively to the tightening of German monetary also into sterling and higher-yielding currencies policy. As interest differentials adverse to the of the EMS. By midmonth the mark had plum- mark either narrowed sharply or disappeared meted to DM 2.25 against the dollar for a decline completely, previously adverse commercial of 5V2 percent from the levels at the end of leads and lags were unwound and nonresidents Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 691 repaid earlier mark-denominated borrowings. March to 6 percent by early June. In the credit This reflow of short-term funds into marks, prin- markets, however, yields on German bonds incipally out of French and Belgian francs, creased by more than yields in the United States. strengthened the mark dramatically within the These pressures on the German bond market EMS, and the mark traded after mid-February at spilled over into the exchanges, as foreigners the top of the joint float arrangement. The Ger- liquidated some of their mark-denominated asman Federal Bank was therefore able to begin sets to limit capital losses. In these circumpurchasing EMS currencies in the market to stances, the mark was again under downward repay debt to the FECOM (European Fund for pressure and had dropped to DM 2.25 before Monetary Cooperation), incurred earlier while May 10, when Francois Mitterrand was elected the mark was at the bottom of the EMS. Mean- President of France. Then a wave of French while, with U.S. interest rates also coming off franc selling pulled the mark and other EMS near-record highs, the mark rebounded against currencies even lower in the exchanges. To the dollar to trade around DM 2.09 to DM 2.12 maintain the intervention limits of the joint float, through early April. For their part the U.S. the German Federal Bank, along with the Bank authorities limited their intervention to one occa- of France, sold large amounts of marks against sion, on March 30, following the assassination French francs through the end of May before attempt on President Reagan, when they sold tough French exchange controls helped bring the $74.4 million equivalent of marks out of bal- market into better balance. The German Federal ances. Bank also sold large amounts of dollars in the During the spring the German Federal Bank market to absorb part of the mark liquidity maintained its essentially restrictive monetary created by the EMS intervention and to moderpolicy stance. Officials stated that there was no ate the steep fall of the mark against the dollar, basic conflict between internal and external poli- which declined further to nearly DM 2.33 by the cy considerations. Short-term stimulus to the end of the month. Part of these dollar sales economy, whatever the temporary benefits to occurred through the agency of the Trading Desk growth, would be counterproductive since it at the Federal Reserve Bank of New York, would increase domestic consumption and infla- operating on behalf of the German Federal Bank. tion at the expense of longer-term needs such as However, the Trading Desk did not intervene in capital formation, efficient economic decision- the exchanges on behalf of the Federal Reserve making, and productivity gains. The authorities or the U.S. Treasury. therefore kept a tight rein on liquidity, mainly In mid-June, selling pressures on the mark through open market operations and foreign cur- abated. By this time, economic activity in the rency swaps. These operations convinced ex- United States had turned sluggish, inflation figchange market participants that the German Fed- ures had improved, and growth of the monetary eral Bank would not allow interest rates to ease. aggregates had moderated. In these circum- But the occasionally highly charged domestic stances, U.S. interest rates had begun to soften debate over monetary policy also suggested that and were widely expected to register sustained the authorities would not be in a position to declines, thereby narrowing interest differentials increase short-term interest rates in the face of adverse to the mark. But the market had become continued recession and substantial unemploy- increasingly pessimistic over the outlook for ment. Europe. Major political and security issues were Meanwhile, in the United States, demands for of concern, as underlined by persistent tensions money and credit pressed against a restrained in Poland and by new questions about the framesupply of bank reserves and exerted upward work of Western European relations raised by pressure on short-term U.S. interest rates from changes in several governments. With respect to April through mid-June. The rise in U.S. interest Germany, there were open disputes in Germarates was not matched by increases in German ny's governing coalition over a broad range of money market rates, so that interest differentials issues. Germany's trade figures had not yet adverse to the mark widened from 2 percent in shown much evidence of improved competitive- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

692 Federal Reserve Bulletin • September 1981 ness resulting from the substantial real deprecia- favorably. There were still concerns that defense tion of the mark. Consumer price inflation was outlays and tax cuts might in combination swell also accelerating, and there was little prospect rather than reduce the budget deficit. But growfor a near-term reduction of price pressures, ing confidence that the Federal Reserve would given the rise in labor compensation negotiated keep the growth of bank reserves and the monein the spring. tary aggregates under firm control helped allevi- With these various concerns depressing senti- ate inflationary fears and also reinforced expecment toward the mark, the German currency tations that U.S. interest rates would remain weakened still further against the dollar in late high. The market's generally positive reaction to June and July, when U.S. interest rates firmed the Reagan administration's economic program, up rather than declining as expected. Continued coupled with the attraction of high yields on bearish sentiment toward the mark also ham- dollar placements, led to a surge of dollar bidding pered progress in financing the current account. during July. In these circumstances, the mark For several months, long-term private capital dropped sharply lower in frequently heavy tradhad remained in deficit, although the pace of net ing to DM 2.4770 by the end of the month for a outflows had slowed. By June the previous in- net decline of I6V2 percent over the six months under review. Meanwhile, Germany's foreign flow of short-term capital was being reversed. exchange reserves increased $647 million from Partly for this reason the German Federal Bank February levels to stand at $43.4 billion on announced that German interest rates would July 31, 1981. The rise in reserves mainly reflectremain high and that the growth of central bank ed sizable intervention purchases of currencies money would be held in the lower half of the within the EMS after March—mostly French annual target range. At the same time, the Gerfrancs but also Belgian francs—which offset inman government continued to borrow heavily tervention sales of dollars in the final months of abroad in order to finance the sizable currentthe period. account deficit, amounting to DM 29 billion at an annual rate in the first six months of the year. Between January and June the public authorities raised about DM 14 billion in foreign credits, Swiss FRANC with a large share coming directly from Saudi Arabia. Coming into 1981 the Swiss economy was con- During July, as the exchange market focused tinuing to show greater momentum than that of on fiscal policy developments in Germany rela- most other industrialized countries. At the same tive to those in the United States, the mark came time, the pace of consumer price increases had more heavily on offer. In Germany, increasing accelerated sharply in response to resilient congovernment expenditures threatened to raise the sumption demand and to the progressive decline public-sector deficit in 1981 to 4.5 percent of in the Swiss franc during much of 1980. The gross national product, from under 3 percent Swiss authorities were anxious to combat these only two years earlier. Although containing the emerging inflationary pressures while mindful of upward trend in spending had become a priority, the risks of precipitating a downturn for Switzermeasures to reduce expenditures in the 1982 land in view of the sluggishness of the internabudget were drafted in the midst of heated public tional economy. As a result, the Swiss National debate, raising some questions whether the final Bank announced it would leave its monetarybudget proposal would be approved by the Par- base growth target for 1981 unchanged from that liament. Meanwhile, the Reagan administration of 1980 at 4 percent. gained congressional support for major expendi- At that time, interest rates in Switzerland were ture cuts and tax reductions, marking an impor- well below those in all other major industrial tant shift in fiscal policy that was aimed at countries, and the differential vis-a-vis the Unitreducing inflation and providing greater incen- ed States had again widened to 10 percentage tives to the private sector. The exchange market points. In response, many corporate entities, assessed the new direction of U.S. fiscal policy governments, and other official agencies bor- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 693 rowed francs domestically or in the Euro-Swiss continued to expand in the first quarter of 1981, franc market, where many borrowers had op- in sharp contrast to the sluggishness in Germany tions allowing them to switch loan currency and elsewhere. Increases in employment, though denominations on rollover dates. In addition, slowing from the strong 1980 pace, remained with developments in Eastern Europe seen in the sufficient to enable Switzerland to avoid the market as casting a cloud over all the Continent, rising unemployment so troublesome to many the Swiss franc had lost some of its traditional industrial nations. Domestic consumption and attraction as a refuge for capital. As a result, construction activity had remained buoyant even inflows of funds were insufficient to offset the in the face of mortgage rates, which soared to buildup of interest-sensitive capital outflows, levels not seen since 1975. These pressures had and during January the Swiss franc continued to contributed to an acceleration of the inflation weaken both against the dollar and other Europe- rate to about 6 percent which, though high by an currencies. By the beginning of the period, the historical standards for Switzerland, was never- Swiss franc had declined about 16 percent from theless still among the lowest rates in the world. its 1980 highs to a three-year low of SF 1.9270 In the United States the unexpected strength of against the dollar and was trading at SF 0.90 the economy renewed monetary growth and put against the German mark. Swiss foreign ex- considerable upward pressure on dollar interest change reserves stood at $12.1 billion. rates, which was sustained over the remainder of On February 3, the Swiss National Bank the period. As the dollar again came into deraised its discount and Lombard rates Vi percent- mand, the franc fell in the exchanges. age point to 3>/ and 4VI percent respectively, the With the economy robust, the Swiss authori- 2 first change in these rates in nearly a year. The ties had leeway to pursue policies intended to actions were taken to support the franc in the push the inflation rate back down. Beginning in exchanges and to adjust official rates to tighten- late April and continuing through May, the Swiss ing domestic money market conditions. But in- National Bank fostered tighter money market terest rate differentials unfavorable to the Swiss conditions by allowing liquidity-providing forfranc remained wide, and the franc continued to eign currency swaps to run off. On May 11, the decline against a generally strengthening dollar. National Bank again raised the discount and As the franc eased, the National Bank sold Lombard rates, this time to 5 percent and 6Vz dollars to support the rate but operated in more percent respectively, and shortly thereafter anmodest amounts than many other central banks. nounced a willingness to see the monetary base Following a change in the administration of fall below its annual target range. In response, Germany's Lombard facility, which precipitated Swiss interest rates moved even higher, includa sharp rise in German money market interest ing the politically sensitive mortgage interest rate rates, the Swiss National Bank announced a and other long-term interest rates. second round of interest rate increases. On Feb- These developments coincided with the presiruary 20, the discount and Lombard rates were dential elections in France, and as all European raised to 4 percent and 5VI percent respectively, currencies initially dropped against the dollar, and the National Bank also conducted foreign the Swiss franc fell further to a low of SF 2.0790, currency swap operations—its major tool for down 12 percent from its March highs. Thereafmonetary control—so as to further tighten mon- ter, however, Switzerland came to be seen as a ey market conditions. By mid-March, money politically stable and economically sound investmarket rates had risen to about 9 percent, levels ment outlet and the Swiss franc began to regain not seen since the mid-1970s. Also, dollar inter- some of the status of a "safe haven" currency. est rates eased somewhat and the adverse inter- In the context of this improving exchange market est differentials narrowed sharply, helping the psychology, speculative and investment flows franc strengthen in the exchanges to a level of SF turned in favor of the franc. Funds also flowed in 1.8530 on March 18. from Germany to repay franc borrowings, which had become nearly as expensive as mark credit. By this time it had become clear that the Swiss Through the end of June the franc firmed slightly economy, rather than weakening as expected, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

694 Federal Reserve Bulletin • September 1981 against the dollar and climbed against the mark the yen, led to a marked improvement in the to SF 0.85, thus breaking out of the narrow range current account, which swung from deep deficit around SF 0.90 that had held for about two to virtual balance. They also impressed internayears. tional investors sufficiently to attract massive Through July the franc declined against the inflows of funds, particularly from Organization dollar in line with other currencies and against of Petroleum Exporting Countries (OPEC) investhe mark, mainly in response to growing market tors eager to increase the share of yen-denomiexpectations of an EMS realignment that was nated assets in their portfolios. As a result, the thought likely to benefit the mark. By the end of yen rebounded in the exchanges to ¥ 206.10 in the month, the franc had declined to SF 2.15 New York on January 31, up 21 percent against against the dollar and to SF 0.87 against the the dollar and 27 percent against the German mark, down about 1 PA percent against the dollar mark from its lows of April 1980. The governand up 4 percent against the mark for the six- ment proceeded to liberalize substantially exmonth interval. For the period, overall Swiss change controls on international capital transacforeign currency reserves fluctuated modestly, tions. Also, Japan's foreign exchange reserves largely in response to foreign currency swap rose to $22.7 billion by the end of January. operations conducted to influence growth of the Meanwhile, however, domestic demand had Swiss monetary base. At the close, Swiss re- stalled and, with the improvement in Japan's serves stood at $9.9 billion, down $2.2 billion external position, the authorities had begun to from the end of January. relax the tight stance of policy after mid-1980. On July 27, the U.S. Treasury redeemed the Yet, by early 1981, consumption and residential first maturing tranche of its Swiss franc-denomi- construction continued to falter and business nated securities in the amount of SF 1.2 billion, fixed investment, previously the only domestic issued in July 1979 with the cooperation of Swiss source of strength, was also decelerating rapidly. authorities in connection with the dollar-support The growth of the monetary aggregates had program of November 1978. In order to neutral- slowed, and yen money market rates softened. ize the liquidity effects of the note transactions, Inflationary pressures had eased, partly reflectthe Swiss National Bank allowed a portion of ing the dampening impact on import prices of the maturing foreign currency swaps to run off, yen's appreciation, so that wholesale-price inflathereby absorbing liquidity injected by the retire- tion had dropped from a year-on-year rate of 24 ment of the notes. As a result, the money mar- percent in the spring of 1980 to about 5 percent in kets remained generally steady over the end of early 1981. Meanwhile, in the exchange market the month. the rising dollar had eroded the yen's earlier buoyancy, but the rate nonetheless remained relatively stable around ¥ 208 through mid- JAPANESE YEN March. Against the currencies on the Continent, the yen held up relatively well even while those Early in 1981 the yen continued to benefit in the currencies benefited from a sharp rise in their exchanges from the rapid adjustment of Japan's interest rates. In these circumstances, domestic economy to the second oil shock. Restrictive pressures on the authorities intensified during February and March to adopt reflationary meamonetary and fiscal policies had successfully sures, including a reduction of interest rates. curtailed domestic demand, limited the buildup of inflationary expectations, and, together with On March 17, the government introduced a moderate wage settlements, contained the im- fiscal package that accelerated budgeted public pact of oil price increases on domestic costs. At works expenditures and provided low-cost fithe same time, changes in production processes nancing to promote housing construction, to aid under way since the mid-1970s had made indus- small companies, and to boost exports of industry less dependent on imported raw materials, trial plants. These measures were generally particularly oil. These developments, together thought to be modest so as not to compromise with the impact of the 1979-80 depreciation of materially the goals of reducing the budget deficit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 695 in the fiscal year ending March 1982 and of differentials favoring the dollar widened from easing the burden on the markets of financing the about 7 percentage points in March to more than central government's large fiscal requirement. At 11 percentage points in May and early June. In the same time, the Bank of Japan lowered its particular, life insurance companies, pension discount rate 1 percentage point to 6lA percent funds, and bank trusts took advantage of access for the third cut in less than a year, reduced to overseas investments by establishing a presbanks' reserve requirements, and then followed ence in the U.S. capital markets at yields more up by substantially relaxing window-guidance attractive than those available in Japan. As a ceilings on the growth of bank lending. result, the yen declined along with other major But the authorities were also convinced that foreign currencies against the dollar, dropping the large interest differentials adverse to the yen 73A percent from mid-March levels to 224 by might trigger volatile capital outflows. Japan's early June. interest rates were the lowest among the major These developments put pressure on Japan's industrial countries. The liberalization of Japa- capital markets, complicating the authorities' nese exchange controls also provided greater efforts to bolster domestic growth and to finance opportunities for capital outflows. Among other the large government deficit at current yields. things, the Bank of Japan introduced a new The authorities were concerned that raising the lending arrangement similar to the special Lom- national bond coupon, a key indicator of overall bard facility in Germany, enabling the central long-term interest rates in Japan, would lead to bank to charge more than the official discount higher lending rates throughout the economy. rate on its lending to commercial banks whenev- Reluctant therefore to increase new issue rates er necessary to counter potentially excessive as rates in the secondary market rose, the govcapital outflows or downward pressures on the ernment had difficulty arranging the June issue of yen. 10-year bonds and had to withdraw the July issue In the event, sentiment toward the yen in the altogether. In the exchange market, concern exchanges turned more cautious during the developed that these strains in the capital market spring. Though market participants were still would spill over into the currency markets, as confident in the thrust of Japan's economic poli- foreign investors decelerated their purchases of cies and the overall performance of the econo- Japanese assets or even began selling off some of my, there were reasons to question whether the their holdings. Moreover, the growing perceprapid improvement in the current account would tion that the authorities would find it difficult to continue. The likelihood of trade restrictions support the yen by raising Japanese interest rates against Japan's automobile exports dimmed contributed to a further decline in the yen to prospects for future export earnings, as did self- 228 by the end of June. imposed export restraints by Japanese manufac- These pressures against the yen intensified turers in industries faced with growing protec- considerably during July, as the long-awaited tionist sentiment abroad. Spreading recession in decline in U.S. interest rates failed to materialmajor overseas markets clouded export pros- ize. With little prospect that large interest differpects even further. Consequently, the trade sur- entials adverse to the yen would narrow and that plus was thought unlikely to widen sufficiently to the currency would soon rebound against the cover rising interest payments on nonresident dollar, a broad range of participants accelerated yen deposits and on tourism outflows, which their sales of yen in an effort to limit losses. At were significantly boosting Japan's traditional the same time, foreign corporations stepped up services deficit. short-term yen borrowings to meet financial In these circumstances, large interest differen- needs in other currencies, while commercial tials adverse to yen-denominated assets began to leads and lags also shifted against the yen. As the show through. Japanese resident institutions and flow of funds gathered force, the decline of the individuals—already in the process of adjusting yen began to outpace the fall of the European to newly liberalized foreign exchange controls— currencies against the rapidly strengthening dolstepped up their export of capital as interest lar. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

696 Federal Reserve Bulletin • September 1981 To cushion the yen's decline, the Bank of provement of $10 billion the largest of any indus- Japan intervened in Tokyo, substantially on oc- trial country and in sharp contrast to the general casion, and in New York through the Federal experience. These considerable achievements Reserve Bank of New York as agent. However, reflected a continued expansion of North Sea oil Governor Mayekawa, of the Bank of Japan, exports and an improvement in the non-oil terms explained that, while intervening to smooth er- of trade. They also reflected a sharp slashing of ratic rate movements, the Bank of Japan did not inventories, which was but one feature of the consider it necessary to adopt exceptional mea- severe recession that had gripped the economy sures to stop the yen's slide. The authorities for more than a year. Indeed, with corporate asserted in numerous public statements that the profits squeezed by persistently high interest yen had depreciated by more than was justified rates, wages, energy prices, and a strong pound, in terms of economic fundamentals and was British companies had also been forced to reduce therefore likely to move back up over time. fixed investment and to lay off workers in order Consumer price inflation was abating rapidly to restore their liquid-asset positions. Even so, and, given the moderate outcome of the wage the growth of sterling M-3 remained well above round negotiated in the spring, could be expected its target range, reflecting the continuing demand to remain the lowest among the major industrial for bank credit, the unexpectedly large publiccountries. Meanwhile, exports were proving sector borrowing, and the ending of the supplestronger than earlier anticipated, despite negoti- mentary special deposit scheme in June 1980. ated export restrictions, and were contributing to The Bank of England, therefore, kept monetary a modest surplus on the current account. The policy restrictive, and British interest rates had authorities also noted that short-term bank flows been slow to decline. were still positive, even while Japan's long-term Britain's improving external position and relacapital account had moved into deficit. This tively high interest rates had combined to push result largely reflected the fact that the covered sterling up to a six-year high against the dollar cost of borrowing dollars was often less than and to rise even further against the continental local yen financing, creating incentives for both currencies. By the end of January, however, the Japanese banks and nonbanks to borrow abroad. pound eased back to trade around $2.3630 But in the exchange market, the yen continued against the dollar and was at 104.4, according to dropping sharply to close at 240.35 on July 31, a new trade-weighted index adopted by the Bank down 163/4 percent against the dollar over the six- of England on February 2. Meanwhile, the Britmonth period under review but unchanged ish authorities had taken advantage of the against the German mark on balance. Exchange strength of sterling to repay before maturity a market intervention by the authorities contribut- number of international loans taken up in the ed to a decline of $278 million in Japan's foreign mid-1970s. As a result, British foreign exchange exchange reserves during July. Nonetheless, at reserves were down from their 1980 highs but the end of July Japan's reserves stood at $23.9 still stood at $18.7 billion. billion, up $1.2 billion on balance, mostly reflect- By early February, the pace of capital outing interest receipts on Japan's reserve holdings. flows had accelerated, as U.S. interest rates had become unexpectedly firm, and the dollar was generally strong in the exchanges. Although non- STERLING residents continued to add to their sterling balances, there was increasing evidence that British By early 1981, the British economy had shown residents were taking advantage of the eliminasubstantial improvements in both price and cur- tion of exchange controls to diversify their inrent-account performance. Inflation had fallen vestment portfolios into other currencies. Moreback for several months to single-digit rates from over, the protracted recession in the United Kingdom was weighing more heavily on market the level of 20 percent or more a year earlier. The psychology. The persistent strength of sterling current account moved into a surplus of $6.6 had generated bitter complaints from British billion for 1980, making the year-on-year im- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 697 industrialists over narrowing profit margins and ready been discounted in the money and exdeclining product market shares. The rate of change markets. After the uncertainties about unemployment was rising more quickly and the budget had been cleared away, sterling headed toward 10 percent. Also, a government moved up along with other European currencies decision to modify its plans for closing uneco- as U.S. interest rates eased back from earlier nomic coal mines, following an outburst of highs. Thus, the pound recovered to $2.2960 strikes by the nation's coal miners, was inter- around mid-March on a reflow of capital and a preted in the press as indicating the govern- reversal of previously adverse commercial leads ment's willingness to ease stringent policies and lags. Against the dollar, sterling was a net 3 aimed at making the economy work more effi- percent lower from the levels at the end of ciently. As a result, expectations developed in January. Against other European currencies, it the market that the U.K. authorities might take was also lower by about 7 percent, so that in advantage of the improvements both in inflation effective terms the pound was trading about and in the current account to soften the restric- .100.2, a decline of 4 percent. tive policy stance and to provide some stimulus By April, British interest rates had settled to the domestic economy. around levels similar to those in Germany. Anec- Therefore, as the market awaited the March 10 dotal information suggested that the economy budget, talk circulated that the authorities would was leveling off. But actual economic and financut the minimum lending rate by perhaps as cial trends were unusually difficult to monitor. A much as 3 to 4 percentage points and allow a civil servants' strike had the effect of both delaydownward adjustment in the exchange rate as a ing tax payments to the Exchequer and impeding means of stimulating economic activity. In this the collection of key trade and financial statisenvironment, the pound eased back against the tics. The Bank of England was proceeding with dollar in line with other European currencies. its plans to change operating techniques for But after mid-February, when interest rates in a monetary control so as to increase the role of number of other European currencies were market forces in determining short-term interest sharply increased, commercial leads and lags rates. And, as each step of the process was moved heavily against sterling and some OPEC announced, the markets were somewhat unsure members shifted funds out of the pound. As a of the near-term implications. The pound eased result, by early March the pound broke stride along with other currencies against the dollar with the currencies of the Continent and fell throughout the spring. By late May, it was about against the dollar some 8 percent to as low as 10 percent lower at around $2.07. In effective $2.1750. terms, it was trading at 98.8. For their part the authorities remained con- During June the focus of market attention cerned about the possibility of a resurgence in shifted to sterling. For some time, the energy monetary growth and inflation and about the situation had shielded the pound from a number persistence of a large public-sector borrowing of adverse factors. These included Britain's loss requirement. In his March 10 budget speech, of competitiveness arising from earlier high rates Chancellor Howe reiterated the government's of inflation and a strong exchange rate, a seriousdetermination to maintain a restrictive policy ly deteriorating economy, and a weakening of stance until inflation came under control and political support for the government's continuing called for increases in indirect taxes to reduce restrictive policies. Thus, when an increasing the projected public-sector borrowing require- oversupply of oil internationally prompted a sigment by £ 3 billion to £ IOV2 billion. This tighten- nificant cut in the price of North Sea crude, an ing of fiscal policy was coupled with a 2 percent- important element of favorable market psycholoage point reduction of the central bank's gy was shattered and the vulnerability of sterling minimum lending rate to 12 percent per annum as began to show through. well as with the lowering of the target for sterling The pound, therefore, came under heavy sell- M3 growth to a 6 to 10 percent annual range. The ing pressure during June and July, dropping lowering of the minimum lending rate had al- through the psychologically important level of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

698 Federal Reserve Bulletin • September 1981 $2.00. Market participants were doubtful that the rioration in its price performance. France's curgovernment would support the rate through a rent account had swung back into a deficit of $7 large increase in interest rates in view of the billion, and inflation had accelerated above the continuing recession. Talk circulated in the mar- two-digit level once more to a rate of 13 percent. kets that exchange controls might be reimposed, Faced with these setbacks to the five-year prompting even further selling of sterling. program of economic stabilization, the French Thereafter, sterling stabilized, as British inter- authorities remained committed to the priorities est rates rose after the Bank of England began of curbing inflation and maintaining the strength providing funds to the money market above of the French franc. Whatever stimulus that had rather than at the minimum lending rate. Also, been provided to the economy in 1980 and again following the resolution of the civil servants' in late February 1981 was modest in size and was strike, a pickup in tax collections was expected intended to contribute eventually to export comto tighten liquidity even more. The abatement of petitiveness. Monetary policy remained restriccivil disturbances gave an additional lift, while tive. The Bank of France had reduced its growth Prime Minister Thatcher's proposal of a modest target for M2 for 1981 to 10 percent, and the spending program to encourage private-sector already tight limits on banks' credit growth were hiring of young people was not viewed as a lowered 1 percentage point on average. Interest significant departure from past restrictive poli- rates in France remained high relative to interest cies and thus tended to reassure the exchange rates in most other countries on the Continent. In markets. As a result, sterling traded around $1.84 addition, the government continued to encourage on July 31, for an overall decline of 22!/4 percent large enterprises in France to take advantage of against the dollar for the six-month period. In capital markets abroad to finance on a long-term effective terms, the pound declined ll'A percent basis large investment projects at home. to 92.5 at the end of July. In the exchange markets, the current-account Meanwhile, over the six-month period the deficit continued to be more than offset by capi- Bank of England maintained its policy of inter- tal inflows, reflecting the attraction of interestvening lightly on both sides of the market to sensitive funds from abroad and efforts of dosmooth out sharp fluctuations in the rate. Ac- mestic residents to meet local financing needs in cordingly, during the period under review, the foreign currencies. In addition, the market's atti- U.K. external reserves were affected mainly by tude toward the French franc was generally more the repayment and prepayment of loans. Brit- positive than for other European currencies. ain's foreign exchange reserves declined $5.1 France's current-account deficit, though a billion over the six-month period to $13.6 billion source of concern, was considerably smaller on July 31. than the one for Germany, its principal trading partner. The government's fiscal deficit, though greater than the preceding year, was only V/2 FRENCH FRANC percent of overall gross national product, so that financing the deficit was not as much of a burden By the beginning of the period under review, the as in many other countries. France's traditional- French economy had moved into a recession that ly good relations with Middle Eastern countries was to prove deeper and more protracted than were generally thought in the market to make it many of the slowdowns then taking place else- easier for France to attract funds from investors where on the Continent. Industrial production seeking an alternative to the dollar. These longwas down 10 percent from the level of the standing ties were also thought to help protect previous year, and unemployment had risen in the nation from short-run disruptions in oil supplies, while France's commitment to the develline with the growth of the labor force to 7.3 opment of nuclear energy was seen as providing percent. At the same time, the sharp increase in a more secure energy source in the longer run. oil prices of recent years and lagging productivity Moreover, with the approach of presidential growth had contributed to a weakening of elections later in the spring, market participants France's external position and a worrisome dete- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 699 believed that the government would take ex- In this manner, the franc declined 8V<\ percent traordinary steps if necessary to bolster the franc against the dollar to FF 5.3950 by May 8, just should it come under selling pressure. Mean- prior to the second round of voting. while, France's foreign exchange reserves had Mitterrand's election came as a surprise to the swelled to an impressive $26.5 billion by exchange markets. With the Paris stock market January 31. plummeting, massive amounts of funds began to In this positive psychological climate, the be moved out of the franc. These flows largely franc had traded at or near the top of the EMS for took the form of commercial leads and lags but almost two years, even as it declined against the also represented withdrawals of deposits and generally rising dollar to FF 4.90 by the end of liquidations of investments. These selling pres- January. Early in February, the franc continued sures quickly pushed the franc from the middle to decline more slowly against the dollar than did to the floor of the joint float and to FF 5.5875 the other EMS currencies, falling some AVi per- against the dollar late in May. cent to FF 5.1150 by midmonth. Within the The authorities responded quickly to contain EMS, it remained at its upper intervention limit these selling pressures. The Bank of France and the French, German, and Belgian central intervened heavily to keep the franc within its banks intervened to keep the franc within its 2XA- 2V4-percent band against the mark. Effective percent band. In late February, however, the May 14, the central bank raised reserve require- French franc fell below the German mark in the ments on sight deposits and eliminated the spe- EMS, following action by the German Federal cial reserve requirement on nonresident deposits Bank to raise interest rates in Germany. With that had been imposed to curtail capital inflows French interest rates increasing not as rapidly as late in 1980. Also, it raised the discount rate on elsewhere, funds shifted out of francs and com- seven-day Treasury bills by AVi percentage mercial leads and lags swung from francs to points to 18 percent, while day-to-day rates in marks. Thus, by early March the franc had the money market jumped from 13!/2to 16 persettled about lA percent below the mark in the cent. At the same time, leading economic advis- EMS. Against the dollar, it fluctuated in line with ers to the new president reaffirmed France's other European currencies, recovering by the commitment to the EMS arrangements. end of March to early-February levels. Never- Once in office the new government took furtheless, France's foreign exchange reserves conther action to stabilize the franc by tightening tinued to strengthen, rising $1.3 billion over the exchange controls. With respect to trade financ- February to March period, to $27.8 billion, reing, it reduced the scope for leading and lagging flecting in part intervention within the EMS. commercial payments and receipts to one calen- Within France, the performance of the econo- dar month (retroactive to May 1). Regarding my was becoming a matter of increasing public portfolio investment in foreign currencies, residebate. Output had stabilized, but there was little dents were required as of May 22 to purchase the evidence of an upturn. Unemployment was rising exchange from other residents, thereby estabeven more rapidly than before. Inflation re- lishing a separate market for these transactions mained high. And the current-account deficit and removing them as a source of pressure on the showed no sign of narrowing. In the exchange exchange rate. For its part, the Bank of France markets the franc continued to be bolstered by hiked its discount rate on seven-day Treasury relatively high nominal interest rates through bills another AVi percentage points to 22 percent mid-April. Thereafter, as the electoral contest and day-to-day interest rates moved up as high as went through the first round of a two-stage 20 percent. voting procedure and forecasters indicated that In response to these stringent moves, the franc the outcome would be close, some international came into demand as exporters scrambled to investors began moving funds out of the franc. convert foreign currency receipts ahead of the But, with the Bank of France now intervening to month-end. By the end of May, therefore, the keep the franc from slipping within the EMS, the franc was off its lows against both the mark and rate continued to hold steady against the mark. the dollar. Thereafter, the new exchange control Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

700 Federal Reserve Bulletin • September 1981 measures were expected to generate a continuing down 3 !/4 percent on balance over the six-month reversal of leads and lags well into the summer. period. Meanwhile, France's foreign exchange Also, the tightening of credit conditions and the reserves, which had dropped $4.5 billion during sharp rise in Euro-French franc interest rates to May and June, declined only another $558 milaround 25 percent helped discourage nonresident lion to $22.6 billion, to register a net decline of outflows. Thus, the franc soon settled in around $3.8 billion from February to July. the middle of the EMS, a position it was generally to maintain through the end of July. As a result, the franc traded comfortably with- ITALIAN LIRA in the EMS during the June 21 parliamentary elections that provided a sufficient majority to The Italian lira was under considerable downthe new government to implement its economic ward pressure coming into the period as the program. By July, the authorities were proceed- market responded to a swing in Italy's current ing with a program to reduce unemployment by account back into heavy deficit, the persistence expanding the economy and increasing its pro- of relatively high inflation at home, and the lack ductive potential, while also carrying through a of progress in containing government expendilong-standing plan to nationalize key sectors of tures and curbing the public-sector deficit. The the economy. In particular, they announced $15 billion deterioration in Italy's current acplans to increase social-benefit expenditures, to count over 1980 to a $10-billion deficit had reraise the minimum wage, and to establish new flected in part an adverse turn in Italy's terms of programs for education, housing, and industrial trade resulting from the sharp increase in dollar retraining. prices for energy and other imported products. It Even with tax increases to generate more reflected as well the weakening demand in Italy's revenue, the fiscal deficit was expected to double principal export markets. In addition, the rapid for 1981. The government also moved forward pace of inflation, at 20 percent by late 1980, had with plans to nationalize 11 industrial groups. brought into question the competitiveness of Commercial bank lending ceilings were raised Italy's export sector, especially in those counand minimum reserve requirements lowered to tries participating in the fixed exchange rate allow greater expansion of bank lending. arrangement of the EMS. Moreover, the large With the exchange markets now more settled, and growing public-sector deficit, which amountthe Bank of France was also able to permit short- ed to 11 percent of gross domestic product, term interest rates to decline gradually, so that further clouded the prospect for reducing inflaby the end of July the central bank's discount tionary pressures in the near term. That deficit rate on seven-day Treasury bills was down to reflected a number of deep-seated problems in- 18^2 percent and day-to-day rates had eased to cluding the high level of wage settlements, the 173/4 percent. Even so, the market remained pervasiveness of a wage indexation system, and pessimistic over the outlook for the franc be- the lagging productivity growth and weakening cause France had adopted strongly stimulative capital structure of Italy's large governmentpolicies while other countries were still empha- enterprise sector. sizing restraint. With the dollar rising across the These problems had come into focus early in board, the franc eased by the end of the month to 1981 in the absence of progress in improving FF 5.8775, down 20 percent on balance for the price or trade performance at a time when indussix-month period. Even within the EMS the trial output had rebounded from earlier demarket found reason to contrast the recent refla- pressed levels. The government had proposed a tionary measures of the French government with medium-term program intended to cut current the budget-cutting efforts taking place in Germaspending, to stimulate investment, and to finance ny, especially after the Ottawa summit meetings. increased investment spending abroad. But the Even so, the franc held its own around the pace of public spending had quickened and monmiddle of the joint band to close the period etary growth had accelerated. In this environtrading at FF 2.3728 against the German mark, ment, the lira had fallen against the dollar to a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 701 record low in New York trading of LIT 1,004.50 Italy's foreign currency reserves during Februby the end of January. Within the EMS, the lira ary and March. had required steady intervention support by the In response to these exchange market pres- Bank of Italy to hold its position. Even so, Italy's sures, a series of actions were taken to support foreign currency reserves stood at a relatively the lira over the weekend of March 21-22. They high $20.5 billion. included a 6 percent downward adjustment of the Meanwhile, the task of controlling inflation lira's central rate within the EMS, which was and supporting the lira in the exchanges had reflected in the market by a 2!/2-percent depreciafallen on the Bank of Italy, which acted on tion against the dollar. Also, to absorb liquidity January 31 to tighten control over expansion of the Bank of Italy hiked reserve requirements money and credit. Ceilings on bank lending were from 15% percent to 20 percent above the levels extended to include loans under LIT 130 million at the end of February on both resident and and foreign currency loans, both previously ex- nonresident lira-denominated bank deposits. It cluded from limitation. The new ceilings were also raised the discount rate by 2xh percentage made effective March 31, at which time loans points to 19 percent, the first change in this rate coming under the new controls were to be re- since September 29, 1980. In addition, the govduced to the levels at the end of December and ernment announced its intention to propose meathen subject to a new and lower set of growth sures to Parliament to offset the potential effect limits for the remainder of the year. Credit on the government deficit of several budgetary extensions above the limits were made subject to amendments passed by Parliament in preceding a deposit requirement of 50 percent in noninter- weeks. The proposals focused on cuts in current est-bearing accounts at the central bank. As spending in line with those announced during the before, foreign currency loans to exporters were winter, which, when approved by Parliament, excluded. These actions improved exchange would be sufficient to bring the projected deficit market sentiment toward the lira early in Febru- for the government in 1981 back to the LIT 37.5 ary. Though the lira eased against the dollar, trillion level originally envisaged. which was strengthening at the time, it kept After these measures and as a result of its new generally in line with other currencies in the EMS parity, the lira moved from the bottom to EMS. near the top among the EMS currencies. Also, During February, however, the most recent the expansion of money and credit began to slow information suggested a further widening of the in response to the tightening of monetary policy. trade and current-account deficits and intensifi- Skepticism remained, however, over the fiscal cation of domestic inflationary pressures. As a situation. As a result, the lira soon began to ease result, the lira failed to recover late in the month toward the middle of the EMS and the Bank of by as much as the currencies of other continental Italy intervened on occasion to limit arty slipcountries, which were being bid up in response page. to sharp increases in short-term interest rates in During April and May, as U.S. interest rates their domestic markets. By mid-March the lira had again turned higher, short-term funds were had slipped nearly 4 percent against the German drawn increasingly from Italy. Thus, the lira mark and was thus requiring intervention sup- became more vulnerable to downward pressure. port to hold its position within the EMS. As the Moreover, at home Italy's inflation problem had March 31 deadline approached for cutting back again become a major focus of public debate. on foreign currency loans under the new credit Exchange market participants took note that the ceilings, importers and other residents came into Parliament had not yet acted on either the shortthe market as buyers of foreign currency. These term austerity measures proposed by the governtransactions added to the pressure against the ment in March or the three-year program under lira, which fell through Italy's divergence thresh- discussion for months. In addition, a major politold within the EMS even as the Bank of Italy ical controversy diverted attention away from stepped up its intervention support. These opera- economic matters. When it reached a crisis in tions contributed to a decline of $4 billion in late May that brought down the Forlani govern- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

702 Federal Reserve Bulletin • September 1981 ment, any chance of near-term action on policy capital inflows to finance current-account defiinitiatives evaporated. Moreover, by the end of cits. Fiscal deficits had grown and were exerting May, Italy's foreign exchange reserves had increasing strains on domestic capital markets, dropped a further $2 billion to $14.5 billion. and inflationary pressures appeared to be accel- To address the immediate pressures in the erating even as the domestic economies were exchange and financial markets, the Forlani gov- weakening. Although monetary policies were ernment—acting in a caretaker capacity—im- generally restrictive, slowdowns in the domestic posed an austerity program by decree that in- economies and rising unemployment were seen cluded increases in certain public charges and in the market as constraining the authorities from cuts of 5 to 10 percent in some categories of increasing interest rates further to maintain the government spending. These actions were in- currencies' attractiveness to international investended to reduce the government deficit by about tors and portfolio managers. Some countries had IV2 percent in 1981 if approved by Parliament been able to attract substantial amounts of priwithin 60 days. The government simultaneously vate funds, and others looked to governmentimposed an import deposit scheme, also by de- arranged loans from abroad as a means of achievcree, which required that all purchasers of for- ing external balance and stabilizing their eign exchange place with the Bank of Italy a 90- currencies within the joint float. But, in either day noninterest-bearing deposit equal to 30 case, the EMS currencies were vulnerable to percent of the exchange transaction. These de- capital outflows attracted by relatively high inposits had the effect of increasing the cost of terest rates in other countries and to an increaspayments in foreign currency as well as cutting ingly bullish sentiment toward the dollar. As a into credit available for domestic purposes. result, these currencies were continuing to decline as the six-month period under review After these actions, the lira traded more comopened. fortably within the EMS, enabling the Bank of Italy progressively to scale back its intervention Within the EMS there were also considerable support of the currency. Against the dollar, the strains and the 21/4-percent band for all but the lira continued to decline but, in contrast to Italian lira was fully stretched. Requiring persispreceding months, no more rapidly than other tent support at the bottom of the band was the continental currencies. During July the forma- Belgian franc, along with the German mark. The tion of a new government under the Republican Belgian franc was weighed down by concern Giovanni Spadolini and the onset of seasonal over a domestic economy that was undergoing inflows from tourism gave additional support to difficult structural adjustment, experiencing risthe lira. The Bank of Italy then became a sizable ing unemployment, and suffering from a fiscal net buyer of dollars for the first time during the deficit that had mounted to more than 10 percent period under review. By the end of July, the lira of gross national product. The current-account was trading at LIT 1,227.50, down on balance deficit also was large, and both deficits were 22 lA percent against the dollar and down 5 per- being financed to a large extent through governcent against the German mark. Meanwhile, Ita- ment-arranged loans denominated mostly in dolly's foreign currency reserves rose $2.0 billion lars and other Eurocurrencies. Close behind the after the end of May to $16.5 billion at the end of French franc at the top of the band was the July for a $4.0 billion decline over the six-month Dutch guilder. It was helped by the relatively period under review. favorable current-account position of the Netherlands and interest rates that were high enough to continue to attract nonresident investment in long-term bonds denominated in guilders. The OTHER CURRENCIES WITHIN THE Danish krone and Irish pound fluctuated around EUROPEAN MONETARY SYSTEM the middle of the band, and the Danish and Irish authorities relied heavily on conversions of for- In early 1981, the countries whose currencies are eign borrowings to keep their currencies trading members of the EMS joint floating arrangement comfortably within the joint float. faced similar problems. Most were dependent on Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 703 This configuration of currencies changed nounced parts of its program to cut the fiscal abruptly in mid-February, when the German deficit by BF 30 billion. However, the pressures authorities reacted to intensifying selling pres- against the Belgian franc remained intense as sure against their currency by tightening mone- continuing shifts in commercial leads and lags tary policy. German interest rates rose consider- aggravated the exchange market impact of the ably, especially rates on call money, and the large current-account deficit. On March 30, the mark snapped up within the EMS, rising from the government resigned, and immediately thereafbottom to the top of the joint float. As the mark ter the National Bank hiked its discount and advanced within the EMS, the French franc and Lombard rates another 3 percentage points. It Dutch guilder came under modest selling pres- also imposed measures to ensure that financial sure against the mark. But these pressures were institutions would not restore their liquidity by soon contained and the currencies stayed in the unloading government debt and would not add to upper half of the European Community (EC) outflows of capital by extending credits to the band after the Bank of France and the Nether- private sector. To restore confidence in the lands Bank, following quickly on the measures of franc, a one-month freeze on wholesale and retail the German Federal Bank, raised their own prices was imposed effective April 2. These new interest rates by 1 to 1 xh percentage points. The initiatives helped ease the immediate pressures Danish krone and the Irish pound eased into the against the Belgian franc. lower half of the joint float but were kept from During April and early May, trading became falling further by modest intervention. more comfortable within the EMS, which never- This changing configuration of currencies theless declined progressively against a generally within the EMS left the Belgian franc all the strengthening dollar. The mark remained at the more exposed at the bottom of the joint float. top of the band, providing the German Federal Belgium's fiscal and current-account deficits Bank an opportunity to improve its position continued to deteriorate. The authorities were within the FECOM by acquiring small amounts reluctant to raise domestic interest rates because of other EMS currencies in the market and by the economy was still weak and labor unrest was having its currency used in intervention to supalready festering in some of the most depressed port other EMS currencies. The Belgian franc industries. The coalition government was having gradually came into better balance, moving off difficulty agreeing on a program of expenditure the floor of the EMS in a favorable reaction to cuts and other measures to reduce the fiscal the tightening of monetary policy. The Dutch deficit. And the prolonged negotiations on eco- guilder, by contrast, declined into the middle of nomic policy were casting doubt in the exchange the band as the market reacted to the failure of markets about the government's ability to deal Dutch interest rates to keep pace with those with the country's economic problems. abroad and to uncertainties ahead of parliamen- Against this background, the Belgian franc tary elections. The Danish krone also eased remained pinned to its lower intervention point slightly within the joint float, while the Irish as the EMS group of currencies gained against pound stayed near the bottom of the band. the dollar late in February. In March, following a Intervention by the central banks of Belgium, the downward adjustment of the Italian lira, which Netherlands, Denmark, and Ireland was modest put it in the upper half of its new band, the franc and conducted mostly in dollars to stabilize the was exposed to even greater selling pressure. position of their currencies in the EMS. As the Heavy support had to be provided for the Bel- French presidential elections moved through the gian franc mainly by sales of German marks and first round of balloting, by contrast, official pur- French francs. The Belgian National Bank in- chases of francs against both marks and dollars creased its official lending rates in stages over the became heavy as the Bank of France acted to month. By March 26, its discount rate was up 1 steady the franc in the middle of the joint float. percentage point to 13 percent and its Lombard Later in May, the announcement of Mitterrate was up 3 percentage points to 15 percent. rand's victory in the French presidential elec- Also during the month, the government an- tions brought the French franc under immediate Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

704 Federal Reserve Bulletin • September 1981 pressure in the EMS and generated skepticism in cuts in the fiscal deficit, however, came from the market over the commitment of a new changes in taxation and subsidies proposed in the French government to the EMS institutions. The energy program. According to the proposed en- French authorities soon acted to support their ergy program, the federal government would currency by tightening exchange controls and by unilaterally establish a single price for crude oil raising interest rates sufficiently to trigger some at levels, though higher than before, still well reversal of leads and lags. In addition, to reas- below international levels. Unification of domessure the markets, both President Mitterrand and tic and imported crude oil prices would be Chancellor Schmidt publicly reaffirmed their in- achieved through new levies and a gradual elimitention to cooperate in upholding the EMS ar- nation of the direct government subsidy on imrangements. Meanwhile, the Dutch guilder, aid- ported oil. Incentives for exploration and develed by fairly moderate but persistent intervention opment would be provided in amounts varying by the Netherlands Bank, managed to maintain largely with the degree of Canadian ownership its position in the upper half of the joint float. and control of the enterprises concerned. A Also, the Danish krone and the Irish pound federal tax on oil and gas revenues, together with remained stable within the EMS. the increased levies, would considerably increase federal revenues. During June and July, the Belgian franc came under renewed selling pressure as the market In the exchanges, market participants quesreacted to a progressive lowering of domestic tioned whether adequate incentives would reinterest rates and to the new government's lack main to maintain the momentum of exploration of progress in reducing the fiscal deficit. The and development and to continue to attract the central banks met this pressure with forceful sizable inflow of investment from abroad that intervention, however, and by late July the cur- had buoyed the currency over previous years. In rency had stabilized within its EMS band. Nev- addition, the pricing and revenue provisions, ertheless, the market remained concerned about together with other elements of the budget, the prospects for EMS countries, individually raised complex issues about the relationship beand collectively. With sentiment toward the dol- tween the federal and provincial governments. lar becoming increasingly bullish during the sum- Late in the year, the Canadian dollar had come mer, the EMS currencies as a group weakened under selling pressure in the exchange markets, further. By the end of July, the EMS currencies dropping to its lowest levels since the 1930s. The had declined against the dollar by W/A percent Bank of Canada had responded forcefully to to 22lA percent on balance over the six-month these selling pressures by intervening heavily to period. cushion the Canadian dollar's decline and by raising short-term interest rates. As a result, the market had come into better balance and the spot CANADIAN DOLLAR rate had recovered somewhat. It was still trading, however, not far above its recent lows at The Canadian government sought to harness Can.$1.1948 by the end of January. Meanwhile, Canada's rich natural resources to generate high- Canada's foreign currency reserves stood at $1.4 er economic growth and to curb the deeply billion, and the government's outstanding borrowings under its $3.0 billion credit line with entrenched inflationary pressures. Its plans for foreign banks amounted to $300 million. Its $2.5 achieving these objectives were embodied in billion credit line with Canadian-chartered banks proposals submitted late in the year to Parliaremained fully available. (The latter credit line ment for the 1981 budget and for a national was increased to $3.5 billion in June 1981.) energy program. According to the budget, the federal deficit would be substantially reduced By February a more positive attitude develover several years with cuts, among other things, oped for the Canadian dollar. Canada's trade in transfers to the provinces in the context of the position had benefited from earlier shifts in the next federal-provincial review of financial ar- terms of trade and an improved competitive rangements in 1982. The largest contribution to position. The trade surplus had climbed to an Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 705 annual rate of $10 billion in the last quarter of to repatriate the Canadian constitution, a number 1980, swinging the current account into an un- of issues relating to the relationship between the characteristic surplus at a time when most indus- federal and provincial governments were being trialized countries were in deep current-account reviewed by the courts. Meanwhile, a first-quardeficit. Also, the Canadian economy was partic- ter slackening of export demand, particularly to ularly buoyant late in 1980, led by expanding the United States, had cut into Canada's trade exports. This pickup in activity contrasted with surplus, and the current account appeared to be the developing slowdown in much of Europe and returning to deficit. Moreover, domestic inflation Japan. had accelerated, spurred partly by increases in The unexpected pickup in economic activity energy prices, and the consumer price index was and ensuing resurgence in Ml provided the basis now rising to an annual rate in excess of 12 for the monetary authorities to put upward pres- percent. Also, wage settlements had failed to sure on short-term interest rates. In addition, the moderate, a number of industries were being hit persistently high level of interest rates in the by labor strikes, and difficult wage negotiations United States and the potential for interest- were approaching. Partly for domestic reasons sensitive outflows to put renewed selling pres- and partly in response to a renewed rise in U.S. sure on the Canadian dollar, and thereby to interest rates, the Bank of Canada allowed Canaexacerbate the inflationary situation, suggested dian rates to move up further. Initially, however, the desirability of allowing Canadian interest Canadian interest rates did not keep pace with rates to move gradually higher. Thus, Canadian those in the United States so that by mid-April interest rates continued to increase in early the previously favorable interest differentials had March, even as U.S. interest rates subsequently eroded. Thus, the Canadian dollar eased against edged lower, so that the usual pattern of interest the rapidly rising U.S. dollar through the spring. rate differentials favorable to Canada was rees- But it continued to move higher against the other tablished. Also, on February 13, the Bank of currencies, which were weakening more rapidly Canada, in announcing its monetary growth tar- against the U.S. currency. gets for the new year, cut the 1981 range for Ml Nevertheless, Canada headed back toward its expansion 1 percentage point to a range of 4 to 8 traditional pattern of current-account deficit fipercent. nanced by capital inflows. Canadian entities had In response to these various factors, the Cana- significantly stepped up their borrowing actividian dollar strengthened in the exchanges by ties in the United States. With the Canadian about IV2percent to around Can.$1.1783 by mid- dollar still close to its historic lows against the March. The Bank of Canada, continuing to inter- U.S. dollar and the monetary authorities having vene to moderate short-run fluctuations in the demonstrated determination to defend the rate, currency, was a net purchaser of dollars in the many borrowers took advantage of the relatively exchanges, as is reflected in the $378 million firm U.S. currency to borrow abroad and conincrease in foreign exchange reserves during vert the proceeds to finance domestic needs. At February and March. the same time, however, Canadian residents During the second quarter, however, the out- sought to make direct and portfolio investments look for the Canadian dollar became more guard- abroad, both in the energy sector to take advaned. Negotiations to resolve disagreements over tage of more rapid price increases than permitted pricing of oil and gas were dragging on without at home and in other natural resource industries. clear results. Pending resolution of these issues, Canadian investors were also purchasing foreignthe principal energy-producing province of Al- owned assets in Canada. In this connection, a berta had started to cut back oil production and few foreign-owned companies in Canada became these cutbacks were leading to a previously targets of unsolicited takeover bids, and widely unexpected increase in Canada's oil-import bill publicized fights for control drew attention to the as well as clouding prospects for the anticipated impact of the new pricing and tax provisions increase in federal government revenues. Also, favoring Canadian ownership in the energy secin the context of a federal government proposal tor. As market participants considered the impli- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

706 Federal Reserve Bulletin • September 1981 cations for capital flows and debt-servicing re- by facility with the Canadian chartered banks quirements of shifting ownership of the natural fully in place. Also, to support the exchange rate, resource industries to Canadian ownership, the the Bank of Canada moved to push interest rates Canadian dollar became increasingly vulnerable sharply higher, and by the close of the period the in the exchanges. rate on three-month Treasury bills had climbed Indeed, in July the Canadian dollar came un- to slightly over 20 percent, the highest in years. der extreme downward pressure in a selling wave On July 29, the Ministry of Finance announced that was precipitated by a few large commercial that it had obtained agreement from the major orders. Once the decline began, market partici- Canadian banks to curb loans to finance takepants focused their attention on other factors overs of foreign companies. This action helped that were also adverse for the Canadian dollar. bring the Canadian dollar market into better With the U.S. dollar rising sharply against other balance after the period under review. But in the currencies at the same time, the Canadian dollar interim the Canadian dollar dropped lower to fell further. To steady the market, the Bank of Can.$1.2344, registering a decline of 3V4 percent Canada bought Canadian dollars heavily in the for the six months between the end of January market. It financed its intervention in part by and the end of July. Also, at the end of July, drawing $700 million under its $3.0 billion facility Canadian reserves stood at $748 million, down with foreign banks, leaving its $3.5 billion stand- $600 million on balance. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

707 Industrial Production Released for publication September 16 Output of materials declined xh percent, reflecting a reduction in output of metals such as Industrial production declined an estimated 0.4 steel and of parts for consumer durable goods. A percent in August, after a rise of 0.3 percent in July. Most of the decline was due to a reduction Seasonally adjusted, ratio scale, 1967 = 100 in the output of autos, trucks, and parts. Decreases also occurred in the output of home goods, construction supplies, and materials. In contrast, production of equipment continued to advance. At 152.8 percent of the 1967 average, the index for August was 7.5 percent higher than that of a year earlier. In market groupings, production of consumer goods declined 1.0 percent in August, reflecting a large reduction in the output of consumer durable goods. Autos were assembled at an annual rate of 6.5 million units—more than 10 percent below the rate in July; production of small trucks for consumer use was reduced even more sharply. In addition, the output of home goods declined 1.8 percent, mainly because of a sharp cutback in production of appliances. Output of equipment—both business and defense—advanced further in August. Increases in commercial equipment and in building and mining equipment more than offset a decrease in the output of Federal Reserve indexes, seasonally adjusted. Latest figtransit equipment. ures: August. Auto sales and stocks include imports. Major market groupings 1967 = 100 Percentage change from preceding month PPPeeerrrccceeennntttaaagggeee ccchhhaaannngggeee,,, GGGrrrooouuupppiiinnnggg 1981 1981 AAAuuuggg... 111999888000 tttooo Julyp Aug.e Apr. May June July Aug. AAAuuuggg... 111999888111 Total industrial production. 153.4 152.8 -.1 .5 .1 .3 -.4 7.5 Products, total 152.4 151.9 .4 .7 -.1 .1 -.3 5.1 Final products 151.6 151.1 .6 .9 .1 .1 -.3 5.4 Consumer goods 150.0 148.5 .4 1.2 -.2 -.3 -1.0 3.9 Durable 146.8 141.4 .5 2.1 .5 -.8 -3.7 10.2 Nondurable 151.2 151.4 .4 .9 -.5 -.1 .1 1.8 Business equipment... 184.5 185.4 .9 .6 .8 .5 .5 8.4 Defense and space 102.4 102.9 .8 .5 -.3 .7 .5 5.3 Intermediate products ... 155.3 155.1 -.5 -.1 -.7 .2 -.1 4.2 Construction supplies . 143.2 142.9 -.7 -.9 -2.0 -.3 -.2 6.6 Materials 155.0 154.3 -1.0 .3 .4 .6 -.5 11.2 p Preliminary. e Estimated. NOTE. Indexes are seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

708 Federal Reserve Bulletin • September 1981 Major industry groupings 1967 = 100 Percentage change from preceding month PPPeeerrrccceeennntttaaagggeee ccchhhaaannngggeee,,, GGGrrrooouuupppiiinnnggg 1981 1981 AAAuuuggg... 111999888000 tttooo July" Aug.e Apr. May June July Aug. AAAuuuggg... 111999888111 Manufacturing 153.0 152.5 .3 .5 -.2 .3 -.3 8.0 Durable 143.5 142.4 .3 .7 -.3 .3 -.8 9.6 Nondurable 166.9 167.0 .4 .3 -.2 .5 .1 6.0 Mining 145.6 145.2 -5.6 .1 4.1 3.3 -.3 12.0 Utilities 171.3 170.3 -.1 1.8 1.1 -.7 -.6 -1.3 p Preliminary. e Estimated. NOTE. Indexes are seasonally adjusted. large decline occurred in energy materials due to tics, Board of Governors of the Federal Reserve a decrease in the output of coal, after its sharp System, Washington, D.C. 20551. poststrike rebound, and to some reduction in the The revised monthly data for the total index generation and use of electricity. (seasonally adjusted, 1967=100) follow: In industry groupings, output of manufacturing industries was reduced 0.3 percent, with a de- Month Revised Old Difference cline of 0.8 percent in durable goods manufacturing and a slight increase in nondurable 1980 January 153.0 152.7 .3 goods. Declines also occurred in the output of February 152.8 152.6 .2 March 152.1 152.1 .0 mining industries and utilities. April 148.2 148.3 -.1 May 143.8 144.0 -.2 June 141.4 141.5 -.1 • * * July 140.3 140.4 -.1 August 142.2 141.8 .4 September... 144.4 144.1 .3 October 146.6 146.9 -.3 The industrial production index has been re- November ... 149.2 149.4 -.2 vised from January 1980 to date in order to December ... 150.4 151.0 -.6 1981 include more recently available data and new January 151.4 151.7 -.3 seasonal factors. A complete listing of the indi- February 151.8 151.5 .3 March 152.1 152.2 -.1 vidual components, their sources, weights, and April 151.9 152.2 -.3 152.7 153.0 -.3 SIC codes is available from the Business Condi- June 152.9 152.9 .0 July 153.4 153.4 .0 tions Section, Division of Research and Statis- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

709 Announcements NEW DISCOUNT RATE over this year and the industry in general has sustained a high level of liquidity despite pres- The Federal Reserve Board on August 20, 1981, sure on the earnings of individual institutions. established a new borrowing rate for extended In taking the action, the Board acted on recredit to banks and thrift institutions that are quests from the boards of directors of the Federunder sustained liquidity pressures. al Reserve Banks of New York, Philadelphia, The new discount rate will be the basic rate of and Dallas. The discount rate is the interest rate 14 percent for the first 60 days of borrowing, 15 that is charged for borrowings from the District percent for the next 90 days, and 16 percent Federal Reserve Banks. The Board also adjusted thereafter. The basic discount rate of 14 percent the rate for "extended credit for special circumand the 4 percent surcharge that applies to large, stances" to conform with the rate structure for frequent borrowers of short-term adjustment "other extended credit." credit were not affected by this action. Subsequently, the Board approved similar re- The Board acted at this time in view of several quests from the Reserve Banks of Richmond, applications received in recent weeks for bor- Atlanta, Minneapolis, and San Francisco, effecrowing under the extended credit program. This tive August 21; of Cleveland and St. Louis, program was established and described in the effective August 25; of Chicago and Kansas City, revision of Regulation A governing extensions of effective August 27; and of Boston, effective credit by the Federal Reserve Banks following September 3. the passage of the Monetary Control Act of 1980. The program is available to commercial banks and thrift institutions alike, including member ADMINISTRATIVE GUIDANCE institutions of the Federal Home Loan Bank FOR IMPLEMENTING REGULATION A System. In this latter connection, in an exchange of letters between Chairman Pratt of the Federal Following is the text of a letter sent September 2 Home Loan Bank Board and Chairman Volcker from Chairman Volcker to Chairman St Germain of the Federal Reserve Board, Chairman Pratt of the House Committee on Banking, Finance indicated that "it is now desirable and prudent and Urban Affairs regarding use by the thrift for the Federal Home Loan Bank System to industry of the discount window: encourage the Federal Reserve to supplement its Your letter of September 1 asks about the present own efforts in funding members' liquidity status of thrift industry use of the discount window. As needs." you know, consistent with the Monetary Control Act In his response, Chairman Volcker said: "we of 1980, the Federal Reserve System extends credit at greatly appreciate your cooperation, and that of the discount window on the same terms and conditions your staff, in developing practical approaches to to banks and other depository institutions offering transactions accounts or nonpersonal time deposits. our provision of extended credit to members of Credit is available for traditional short-term adjustthe Federal Home Loan Bank System." ment purposes and, as circumstances warrant, to meet The Federal Reserve's extended credit pro- longer-term needs in the interest of assuring the sound gram is designed to help commercial banks, functioning of depository institutions at time of strains savings and loan associations, savings banks, on liquidity. These programs were set forth in the revision of the Federal Reserve Board's Regulation A, and credit unions adjust to sustained liquidity published in September 1980. pressures. The Federal Reserve noted that de- As I previously noted, almost 500 thrifts as a matter posit growth in the thrift industry has continued of contingency planning had filed, or were in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

710 Federal Reserve Bulletin • September 1981 process of filing, the general agreement needed before draw upon internal liquidity (including federal funds credit can be provided under any Federal Reserve sold) to the extent such liquidity is in excess of their lending program. This number has now grown to about minimum operating needs. a thousand. Such agreements are a normal part of the Borrowing under the extended credit program may System's relationship with eligible depository institu- also involve a number of other asset adjustments by tions, whether or not they actually borrow, and virtu- the borrower. Sales of longer-term assets (such as ally all member banks have long had them in place. government and government-related securities, corpo- In the light of several requests for extended credit rate bonds, or mortgages) will be encouraged when by thrifts, the Federal Reserve recently announced they can be accomplished without unreasonable loss. discount rates applicable to extended credit for deposi- Outstanding loan commitments may be accommodattory institutions facing sustained liquidity pressures. ed, and some minimal new lending might be needed for Applications for such credit thus far have been fairly an institution to remain viable in serving its immediate limited, but a more sizable number of thrifts have community and existing depositors or to meet requireindicated they plan to apply. Many have specifically ments associated with issuance of "all-savers" certifiasked about the conditions under which they would be cates. Maintaining a presence in the market in "morteligible to borrow under the extended credit program. gage banking"—that is, originating and promptly In all its lending programs, the Federal Reserve acts placing loans with other investors—would also be essentially as lender of "last resort"—that is, borrow- consistent with the program. However, borrowing ing institutions are expected to borrow from the Feder- institutions would not be expected to undertake loan al Reserve for liquidity purposes only when other expansion programs beyond this framework. sources of funds are not reasonably available. This When the sustained liquidity pressures that caused long-established principle grows, among other consid- the institutions to borrow from the Federal Reserve erations, out of need to reconcile Federal Reserve abate, the institution is expected promptly to begin lending policies with the basic requirement that the reducing its indebtedness to the Federal Reserve. To growth of Federal Reserve credit—of which Federal insure full understanding and effective administration Reserve loans are one component—be restrained to of the program, each borrower is expected to work out amounts appropriate to meet objectives with respect a written plan with the Federal Reserve Bank that to monetary and credit expansion. details how it expects to strengthen its financial posi- Accordingly, to be eligible for discount window tion and encourage a reflow of funds from other credit at the Federal Reserve, a depository institution sources. The Federal Reserve will, in the process, must show that it has made reasonable efforts, under consult closely with the borrower's applicable superviprevailing market circumstances, to maintain fund sory agency. flows from usual sources, including special industry The administrative guidance provided Federal Relenders. Institutions that, despite such efforts, are serve Banks as a framework for appraising individual experiencing sustained liquidity pressures may obtain applications under the extended credit program is as advances under the extended credit program. The follows. It should be understood, of course, that discount rate applicable to such credit at present is 14 discretion and judgment must necessarily be exercised percent for the first 60 days, 15 percent for the next 90 by the lending officers familiar with the circumstances days, and 16 percent thereafter. Advances may be of the particular borrower. outstanding for up to 9 to 12 months, and if necessary, credit may be extended beyond that period. However, as borrowing is more extended, more rigorous or Administrative Guidance definite measures to assure ultimate repayment of the loan would be required. The credit will be fully collat- Eligibility. To be eligible for extended Federal Reeralized, with collateral valued at 90 percent of its serve credit, an institution will have to show that it is estimated market price. experiencing sustained liquidity pressures despite rea- The amount of funds available to an individual sonable efforts, under prevailing market circuminstitution will, of course, depend on an assessment of stances, to maintain fund flows from usual sources, its need, in consultation with the institution's primary including special industry lenders. supervisor or special industry lender, as appropriate. If an institution is a member of the Federal Home Operating plan. To insure effective administration Loan Bank System, it is expected that its local Home of the program, each borrower as a condition of the Loan Bank will maintain its outstanding credit to the loan is expected to work out a written plan with the institution and will ordinarily also provide a portion of Federal Reserve Bank, spelling out a specific method the new borrowing need. Other borrowing institutions for strengthening its financial position and for encourare expected, as may be reasonable under existing aging a reflow of funds from private sources within a market circumstances, to show evidence of a continu- reasonable period of time. In developing this plan, the ing effort to maintain inflows from deposits and other Federal Reserve will consult closely with, and expect market sources, and as appropriate to draw on existing concurrence from, the borrower's applicable supervibank lines. Moreover, while obtaining extended credit sory agencies. Among other things, the plan will at the discount window, borrowers are expected to include a financial forecast that identifies the institu- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 711 tion's expected operating plans, its projected funding Limits on investment growth. Users of the window needs, the economic assumptions on which these under this program will generally be expected to projections are based, and the specific steps the insti- eschew any increase in security investments while tution intends to take to improve its liquidity position borrowing. In addition, cash reflow from maturing and repay its borrowing. If the urgency of a borrower's obligations should be used, to the extent feasible, to need for funds provides insufficient time for working reduce reliance on the discount window. out the full details of the borrowing plan, Federal Reserve credit will at the outset be advanced on a day- Limits on expansion of loan portfolio. While obtainto-day basis until the plan for extended borrowing can ing discount window credit under this program, instibe completed. tutions will be permitted to accommodate outstanding loan commitments. While some minimal new lending Loan amount. Limits on loan amounts should not be might be needed for the institution to remain viable in set arbitrarily, given the need for flexibility in accom- serving the immediate community and existing deposimodating the specific needs of individual institutions. tors or to meet requirements associated with issuance However, in cases when borrowings from the Federal of "all-savers" certificates, the institution will not be Reserve are relatively heavy, monitoring of loan per- permitted to engage in an expansion program. Reformance, in concert with the borrower's primary newed forward commitments may be permitted in the supervisor and insurer, will have to be especially context of a prearranged plan when operating imrigorous. provements indicate clearly that an institution can repay its debt to the Federal Reserve in the relatively Loan duration. In general, advances under the exnear term. tended credit program could be expected to be renewed from time to time, but it is anticipated that Collateral procedures. Loan collateral should be these advances ordinarily would not be renewed be- held either under a third-party custody arrangement yond nine to twelve months. However, if a borrower's or, if some Reserve Banks believe this to be necesneed justifiably continues beyond a year, the credit sary, at the Reserve Bank itself. Collateral should be may be extended. As a matter of principle, the more valued at 90 percent of its estimated market price and protracted the borrowing, the firmer the measures the revalued frequently, perhaps monthly. borrower will be required to take to insure ultimate repayment of the loan. Loan contracts will be drafted in the form of demand obligations, with repayments consistent with these policy guidelines. REGULATION J: AMENDMENT Use of other sources of funds. Institutions borrow- The Federal Reserve Board amended its Regulaing under this program will be expected to evidence a continuing effort to maintain deposit inflows. Further, tion J (Collection of Checks and Other Items and to the extent that borrowing needs result from erosion Transfer of Funds), effective August 13, 1981, to in other than consumer deposits, borrowers will be conform the regulation to legislation making Fedexpected to evidence a continuing effort to refund eral Reserve check collection services available discount window credit in these nonconsumer deposit to all depository institutions. markets where reasonable terms can be obtained. These other markets include, but are not limited to, The revision of the regulation deals with excommercial bank backup lines, repurchase agree- pansion of access to Federal Reserve check ments, mortgage warehousing, and large-denomina- collection services in accordance with the Monetion certificates of deposit. tary Control Act of 1980. Expanded access to Reliance on internal liquidity. While using the dis- these services became available to all depository count window for this purpose, borrowers will be institutions when the Federal Reserve began expected to trim their holdings of cash equivalents pricing its services on August 1, 1981. (including federal funds sold) to the minimum levels consistent with their operating needs. Also, to the extent practicable, they will be expected to apply temporary excess cash balances to the reduction of SYSTEM MEMBERSHIP: discount window loans. ADMISSION OF STATE BANK Sales of assets. To minimize drawings of other extended credit, borrowers will be encouraged to The following bank was admitted to membership cover as much of their funding needs as feasible in the Federal Reserve System during the period through the sale of assets (such as government and August 11 through September 10, 1981: federal agency securities, GNMA pass-through certificates, corporate securities, and mortgages) when such sales can be accomplished without experiencing un- Virginia reasonable market losses. Hayes First Settlers Bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

712 Record of Policy Actions of the Federal Open Market Committee Meeting Held on July 6-7, 1981 workweek edged down to 40.1 hours. The unemployment rate was 1. Domestic Policy Directive 7.3 percent, lower than in May but The information reviewed at this unchanged from earlier months of meeting suggested that real gross the year. national product changed little in the The Department of Commerce second quarter, following expansion survey of business spending plans in the first quarter at an annual rate taken in May suggested that currentof 8.6 percent. Average prices, as dollar expenditures for plant and measured by the fixed-weight price equipment would rise about 8V2 perindex for gross domestic business cent in 1981, compared with IOV4 product, rose less rapidly than in the percent reported in the February first quarter. survey and an actual expansion of The dollar value of retail sales was about 91/4 percent in 1980. The latest virtually unchanged in May after survey results implied little growth having declined appreciably in April. in nominal expenditures over the re- Unit sales of new automobiles re- mainder of the year, given the relamained weak in June; sales in the tively large increase in outlays in the second quarter as a whole were first quarter. about one-fifth below the first-quar- Private housing starts fell 14 perter rate. cent in May to an annual rate of 1.15 The index of industrial production million units, 25 percent below the rose 0.3 percent in May, following average pace in the fourth quarter of an increase of only 0.1 percent in 1980. Combined sales of new and April. A further increase in automo- existing homes in May continued at bile assemblies in May, to an annual about the reduced rate of recent rate nearly 2 million units above the months. recent pace of sales of domestic Producer prices of finished goods models, accounted for more than increased 0.6 percent in June, about half of the increase in the total index. the same as the April-May average. Production of business equipment Over the second quarter producer and space and defense products con- prices rose at an annual rate of about tinued to expand, while output of 7 percent, considerably below the construction supplies fell. average rate of 12 percent in the first Nonfarm payroll employment, quarter. Prices of consumer foods adjusted for changes in the number continued to change little on balance of workers on strike, continued to during the quarter; and energy advance in April and May but de- prices, which had surged in the first clined appreciably in June; employ- quarter following decontrol of oil ment fell substantially further in con- prices, rose at an annual rate of only struction and state and local 5^4 percent. Price increases for other government in June, and it also de- finished goods on the average were clined in retail trade. In manufac- somewhat higher in the second quarturing, employment was about un- ter than in the first. The rise in the changed, while the average factory consumer price index slowed in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

April to an annual rate of 5 percent; During the intermeeting period, but it accelerated in May to a rate of incoming data indicated a progres- 8 percent, reflecting primarily a sive weakening of M-1B. In accorsharp rise in the homeownership dance with the Committee's decision component of the index. Over the on May 18, reserves provided two-month period, food prices de- through open market operations clined slightly on balance, and the were constrained to accommodate rate of increase in prices of energy the weakness up to a point, but items slowed substantially. Over the subsequently they were more ample. first six months of 1981, the rise in Reserves borrowed from the disthe index of average hourly earnings count window remained around %2XA of private nonfarm production work- billion through most of June and ers was slightly less rapid than it was then declined to around $l3/4 billion during 1980. toward the end of the intermeeting In foreign exchange markets the period. Federal funds generally tradtrade-weighted value of the dollar ed in a range of 18!/2 to \9Vi percent against major foreign currencies throughout the intermeeting period. continued to rise through May and However, most other short-term early June and then leveled off. On market interest rates declined 3A to the average in June, the value of the 13A percentage points, on balance. dollar was about 25 percent above its M-1B, adjusted for the estimated year-earlier level. The U.S. trade effects of shifts into NOW accounts, deficit in the April-May period was declined at annual rates of about 5 somewhat above the average in the percent and IOV2 percent in May and first quarter. The value of exports June respectively, following expanwas down marginally, but the value sion at an annual rate of close to 17 of imports was considerably higher. percent in April. From the fourth At its meeting on May 18, the quarter of 1980 to the second quarter Committee had decided that open of 1981, shift-adjusted M-1B grew at market operations in the period until an annual rate of about 2V4 percent, this meeting should be directed to- below the lower end of the Commitward behavior of reserve aggregates tee's range for growth in that aggreassociated with growth of M-1B gate for the year ending in the fourth from April to June at an annual rate quarter of 1981. Growth in M-2 of 3 percent or lower, after allow- slowed to an annual rate of about A%A ance for the impact of flows into percent on average in May and June, NOW accounts, and growth in M-2 reflecting not only the contraction in at an annual rate of about 6 percent. M-1B, but also a moderation in A shortfall in growth of M-1B from growth of money market mutual the two-month rate of 3 percent funds. The recent slowing brought would be acceptable, in light of the M-2 to a level in the second quarter rapid growth in April and the objec- that was only slightly above the uptive adopted by the Committee at its per end of the growth path consismeeting on March 31 for growth tent with its range for the year from from March to June at an annual rate the fourth quarter of 1980 to the of 5'/2 percent or somewhat less. If it fourth quarter of 1981. appeared to the Manager for Domes- Total credit outstanding at U.S. tic Operations that pursuit of the commercial banks expanded at an monetary objectives and related re- annual rate of \PA percent in May, serve paths during the period before but the rate slowed to about 5 perthe next meeting was likely to be cent in June. Heavy acquisitions of associated with a federal funds rate U.S. government securities characpersistently outside a range of 16 to terized both months. Growth in total 22 percent, the Chairman might call loans accelerated in May and then for Committee consultation. slowed in June, but business loans Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

714 Federal Reserve Bulletin • September 1981 picked up in May from the sluggish A number questioned whether progpace of earlier months and acceler- ress thus far represented more than a ated further in June. Net issues of temporary respite; and they felt that commercial paper by nonfinancial significant and sustained progress in corporations grew at exceptionally reducing the underlying rate of inflarapid rates in May and June, follow- tion would take time and might not ing a decline in April. be consistent with an early and Yields on most long-term securi- strong rebound in economic activity. ties trended downward through Others were more optimistic, sugmuch of the intermeeting period but gesting that significant improvement moved up in the final days to levels in the behavior of prices would help little changed from those at the time to set the stage for sizable growth in of the May meeting. Over the inter- 1982. val, the prime rate charged by com- A number of members commented mercial banks on short-term busi- that realization of forecasts of susness loans moved in a range of 19'/2 tained growth in real GNP over the to 20Vi percent; at the end of the next year or more, even at a slow period the rate was 20 percent at pace, depended upon declines in inmost banks. In home mortgage mar- terest rates. In their opinion, an exkets, average rates on new commit- tended period with interest rates at ments for fixed-rate loans at savings or near the high levels currently preand loan associations remained close vailing would more likely induce to the level of WA percent prevailing both a decline in economic activity since mid-May. and a spreading of financial strains. The staff projections presented at A few members described monetary this meeting suggested that growth policy, and its objective of rein real GNP would probably be slug- strained growth in monetary aggregish over the second half of 1981 and gates, as a "governor" on the econinto the first half of 1982. That devel- omy that retarded expansion in opment might well be accompanied economic activity as long as inflation by an upward drift in the unemploy- and inflationary expectations rement rate but also by some progress mained high but tended to prevent in reducing inflation. The rise in the any contraction in activity from cufixed-weight price index for gross mulating. In this framework, a pickdomestic business product was pro- up in demands for goods and servjected to change little during the rest ices while inflation remained high of this year from the reduced pace of would lead to rising interest rates the second quarter and to decline and increasing restraint on expendisomewhat further in the first half of tures, and any easing in demands for next year. goods and services would tend to A substantial number of members lower interest rates and lessen rebelieved that growth in real GNP straint on expenditures. It was also would prove to be stronger than pro- suggested that long-term interest jected by the staff, although in some rates might be on the verge of eascases anticipated strength was con- ing, in response to the improvement centrated in 1982. Other members in the outlook for prices that apthought that economic activity was peared to be developing, which likely to be weaker than projected by would permit stronger expansion in the staff; they anticipated a decline economic activity next year than in real GNP over the balance of 1981 generally projected. On the other followed by relatively sluggish re- hand, some skepticism was excovery in 1982. While expecting the pressed about the chances of emergrate of inflation to remain high by ing from the current environment of historical standards, nearly all mem- rapid inflation and high interest rates bers anticipated some improvement. gradually, and without considerable Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 111 stress in the financial structure and year. However, growth of M-2 and risks for economic activity during M-3 so far in 1981 has been at or the transition to lower rates of infla- above the Committee's ranges. tion. The shortfall in growth of shift- At its meeting on February 2-3, adjusted M-1B in the first half of the 1981, the Committee had adopted year followed relatively rapid the following ranges for growth of growth in the latter part of 1980; and the monetary aggregates over the it was accompanied by an unusually period from the fourth quarter of rapid rise in the income velocity of 1980 to the fourth quarter of 1981: money, as nominal GNP expanded M-1A and M-1B, 3 to 5Vi percent strongly. In partial explanation, exand VA to 6 percent respectively, traordinarily high interest rates in after adjustment for the estimated combination with the introduction of effects of flows into NOW accounts; NOW accounts on a nationwide ba- M-2, 6 to 9 percent; and M-3, 6V2 to sis apparently provided a greater 9Vi percent. The associated range for stimulus to intensive management of growth of commercial bank credit cash balances than that normally aswas 6 to 9 percent. In establishing sociated with an increase in interest the ranges then, the Committee had rates. In the period ahead, M-1B agreed that monetary growth should might behave somewhat differently slow in 1981 in line with the continu- from earlier measures of transaction ing objective of contributing to a balances, because of the sizable volreduction in the rate of inflation and ume of deposits earning interest and providing the basis for restoration of because of the greater weight of economic stability and sustainable household balances in the total. The growth in output of goods and serv- behavior of M-2 was likely to be ices. affected to some extent by two re- At this meeting, in accordance cent decisions of the Depository Inwith the Full Employment and Bal- stitutions Deregulation Committee anced Growth Act of 1978 (the Hum- (DIDC), effective August 1: one rephrey-Hawkins Act), the Committee moved rate caps on the 2'/2-year reviewed its ranges for growth of the small saver certificate, enabling the monetary and credit aggregates for rate to fluctuate with the yield on the period from the fourth quarter of 2'/2-year Treasury securities at all 1980 to the fourth quarter of 1981 levels; and the other eliminated ceiland gave preliminary consideration ings altogether on small time deposto objectives for monetary growth its with initial maturities of four that might be appropriate for 1982.1 years or more. The rapid growth of In doing so, the members recognized money market funds appeared to inthe likelihood of continued diver- fluence the growth of both M-1 and gence in the growth of the different M-2, in opposite directions, but the aggregates, partly reflecting institu- magnitude of the effects was difficult tional change, and the considerable to judge. uncertainty about how such institu- In the Committee's discussion of tional change might affect monetary the longer-run ranges, the members growth in the future. As noted earli- were in agreement on the need to er, expansion of shift-adjusted M-1B maintain a policy of restraint. Howfrom the fourth quarter of 1980 to the ever, continuation of the increase in second quarter of 1981 was relative- velocity of M-1B at the rate of the ly low in relation to the path implied first half seemed unlikely, and thus by the Committee's range for the the public's demand for narrowly defined money would probably pick up in the second half. Moreover, a 1. The Board's midyear report under the significantly more rapid increase in act was transmitted to the Congress on July 20, 1981. narrowly defined money would be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

716 Federal Reserve Bulletin • September 1981 necessary to reach the Committee's for M-2, and 6V2 to 9Vi percent for M-3. objective for the year. At the same The associated range for bank credit was 6 to 9 percent. The Committee recogtime, it was observed that the presnized that a shortfall in M-1B growth in ent situation provided a critical op- the first half of the year partly reflected a portunity to sustain the signs of pro- shift in public preferences toward other gress in reducing the rate of highly liquid assets and that growth in the broader aggregates had been running inflation, an opportunity that could somewhat above the upper end of the be lost if monetary growth in the ranges. In light of its desire to maintain months ahead became too rapid. moderate growth in money over the bal- Even if rapid monetary expansion ance of the year, the Committee expectshould lower interest rates, which ed that growth in M-1B for the year would be near the lower end of its range. was debatable, such effects would At the same time, growth in the broader likely be temporary, and latent de- monetary aggregates might be high in mands for goods and services would their ranges. be released at the potential cost of a still more difficult period of high Votes for this action: Messrs. interest rates and financial strains Volcker, Solomon, Boehne, Boykin, Corrigan, Gramley, Keehn, Partee, later. The point was made that last- Rice, Schultz, Mrs. Teeters, and Mr. ing declines in nominal interest rates Wallich. Votes against this action: and a solid base for sustained growth None. would depend on convincing progress in reducing inflation. With respect to 1982, the Commit- In light of all the circumstances, tee favored some reduction in the the Committee agreed to retain the objectives for monetary growth in previously established ranges for the keeping with the long-standing goal monetary aggregates for 1981. In the of moving gradually toward rates of course of the discussion, some senti- monetary expansion consistent with ment was expressed for a reduction general price stability. Looking toof Vz percentage point in the range ward completion of the major shift for M-1B, which would indicate that into NOW accounts, the Committee the System did not intend to seek decided to establish a range for a very rapid monetary growth in the single M-l aggregate having the second half of the year. However, a same coverage as the present M-1B. small adjustment of that sort, though Moreover, on the assumption that partly justified by institutional shifts into NOW accounts from nonchange, was considered on balance transaction balances would no longpotentially more confusing than use- er be significant, calculation of rates ful. Instead, in light of its desire to of growth for M-l after adjustment maintain moderate growth in money for such shifts would not be necesover the balance of the year, the sary. The Committee also decided to Committee wished to affirm that widen the range for the narrow mongrowth in M-1B near the lower end etary aggregate to 3 percentage of its range would be acceptable and points, from 2xh points, reflecting desirable. At the same time, the the greater uncertainty at this time in Committee recognized that growth judging the relationship of this aggrein the broader monetary aggregates gate to economic and financial demight be high in their ranges. velopments resulting from the recent change in its composition; because The Committee reaffirmed the ranges of the possibility of some residual for growth in the aggregates for the perishifting into NOW accounts, the upod from the fourth quarter of 1980 to the fourth quarter of 1981 that it had adopted per end of the range was reduced by at its meeting in early February 1981. less than the lower end. These ranges, abstracting from the im- Thus, the Committee tentatively pact of NOW accounts on a nationwide basis, were 3 to 5Vi percent for M-1A, agreed that for the period from the V/2 to 6 percent for M-IB, 6 to 9 percent fourth quarter of 1981 to the fourth Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 111 quarter of 1982 growth of M-l, M-2, er, they wished to avoid generating and M-3 within ranges of 2VI to 5VI an excessively rapid rebound in percent, 6 to 9 percent, and 6VI to 9VI growth of M-1B, both because the percent would be appropriate. The pace would need to be sharply reupper and lower ends of the range duced later and because such a refor M-l were reduced Vi percentage bound might tend to raise growth of point and 1 percentage point respec- M-2 above the upper end of its range tively from the 1981 range for M-1B. for the year. With respect to the The ranges for the broader aggre- intermeeting range for the federal gates were unchanged from those for funds rate that provided a mecha- 1981. However, given the expecta- nism for initiating further consultation that growth of these aggregates tion of the Committee, proposals in 1981 would be around the upper typically were from 15 or 16 percent end of the ranges and looking toward to 21 or 22 percent. results in 1982 more toward the mid- Specifically, the members agreed dle of the ranges, the new ranges to seek behavior of reserve aggrewere fully consistent with year-to- gates associated with growth of year reductions in growth. M-1B from June to September at an annual rate of 7 percent, after allow- The Committee tentatively agreed that ance for flows into NOW accounts, for the period from the fourth quarter of 1981 to the fourth quarter of 1982 growth provided that growth of M-2 reof M-l, M-2, and M-3 within ranges of mained around the upper end of its 21/2 to 5V2 percent, 6 to 9 percent, and 6/2 range for the year or tended to move to 9'/2 percent would be appropriate. down within the range. Given the Votes for this action: Messrs. declines in May and June, growth of Volcker, Solomon, Boehne, Boykin, M-1B at the rate specified for the Corrigan, Gramley, Keehn, Partee, period from June to September Rice, Schultz, and Wallich. Vote would result in growth at an annual against this action: Mrs. Teeters. rate of about 2 percent from the Mrs. Teeters dissented from this average in the second quarter to the action because she believed that, in average in the third quarter. The light of all the uncertainties in the members recognized that shifts into economic situation, it was prema- NOW accounts would continue to ture to adopt objectives calling for distort measured growth in M-lB to reduced monetary growth in 1982. an unpredictable extent and that op- She preferred to specify the same erational paths would have to be ranges for 1982 as for 1981, pending developed in the light of evaluation the Committee's reconsideration of of those distortions. The Chairman monetary objectives for 1982 at its might call for Committee consultameeting next February. tion if it appeared to the Manager for In the Committee's discussion of Domestic Operations that pursuit of policy for the short run, the mem- the monetary objectives and related bers in general agreed that opera- reserve paths during the period betions in the period before the next fore the next meeting was likely to meeting should be directed toward be associated with a federal funds growth of monetary aggregates over rate persistently outside a range of the third quarter at rates that would 15 to 21 percent. promote achievement of the mone- The following domestic policy ditary objectives for the year as a rective was issued to the Federal whole. Thus, they wished to foster Reserve Bank of New York: growth of M-lB over the third quarter at a rate high enough to permit The information reviewed at this meeting suggests that real GNP changed little growth of this monetary aggregate in the second quarter, following the subtoward the lower end of its range for stantial expansion in the first quarter; the year. At the same time, howev- prices on the average rose less rapidly Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

718 Federal Reserve Bulletin • September 1981 than in the first quarter. The dollar value ed that growth in M-1B for the year of total retail sales was virtually un- would be near the lower end of its range. changed in May after having declined At the same time, growth in the broader appreciably in April, and sales of new aggregates may be high in their ranges. cars remained weak in June. Industrial The associated range for bank credit was production rose slightly on the average 6 to 9 percent. The Committee also tenin April and May, while nonfarm payroll tatively agreed that for the period from employment continued to advance, after the fourth quarter of 1981 to the fourth adjustment for strikes. In June strike- quarter of 1982 growth of M-l, M-2, and adjusted nonfarm employment declined M-3 within ranges of 2Vi to 5Vi percent, 6 appreciably; the unemployment rate was to 9 percent, and 6Y2 to 9Vi percent 7.3 percent, somewhat lower than in would be appropriate. These ranges will May but unchanged from earlier months be reconsidered as warranted to take of 1981. In May housing starts declined account of developing experience with sharply. Over the first six months of public preferences for NOW and similar 1981, the rise in the index of average accounts as well as changing economic hourly earnings was slightly less rapid and financial conditions. than during 1980. In the short run the Committee seeks The weighted average value of the behavior of reserve aggregates consisdollar against major foreign currencies tent with growth of M-lB from June to continued to rise through May and early September at an annual rate of 7 percent June and then leveled off. In April-May after allowance for the impact of flows the U.S. foreign trade deficit was some- into NOW accounts (resulting in growth what above the first-quarter rate. at an annual rate of about 2 percent from M-1B, adjusted for the estimated ef- the average in the second quarter to the fects of shifts into NOW accounts, de- average in the third quarter), provided clined substantially in May and June that growth of M-2 remains around the following the sharp expansion in April, upper limit of, or moves within, its range and growth in M-2 slowed. The level of for the year. It is recognized that shifts adjusted M-1B in the second quarter on into NOW accounts will continue to disthe average was below the lower end of tort measured growth in M-1B to an the Committee's range for growth over unpredictable extent, and operational rethe year from the fourth quarter of 1980 serve paths will be developed in the light to the fourth quarter of 1981; the level of of evaluation of those distortions. The M-2 in the second quarter was slightly Chairman may call for Committee conabove the upper end of its range for the sultation if it appears to the Manager for year. Since mid-May, on balance, short- Domestic Operations that pursuit of the term market interest rates have declined monetary objectives and related reserve somewhat while long-term yields gener- paths during the period before the next ally have changed little. meeting is likely to be associated with a The Federal Open Market Committee federal funds rate persistently outside a seeks to foster monetary and financial range of 15 to 21 percent. conditions that will help to reduce inflation, promote sustained economic Votes for this action: Messrs. growth, and contribute to a sustainable Volcker, Solomon, Boehne, Boykin, pattern of international transactions. At Corrigan, Gramley, Keehn, Rice, its meeting in early February, the Com- Schultz, Mrs. Teeters, and Mr. Wallich. Vote against this action: Mr. mittee agreed that these objectives would be furthered by growth of M-1A, Parte e. M-1B, M-2, and M-3 from the fourth quarter of 1980 to the fourth quarter of Mr. Partee dissented from this ac- 1981 within ranges of 3 to 5'/i percent, tion because, in light of the indica- 3Yz to 6 percent, 6 to 9 percent, and 6V2 to tions of weakening in economic ac- 9V2 percent respectively, abstracting from the impact of introduction of NOW tivity, he preferred to give more accounts on a nationwide basis. The emphasis to reducing the risk of a Committee recognized that the shortfall cumulative shortfall in growth of in M-1B growth in the first half of the M-1B. Accordingly, he favored year partly reflected a shift in public preferences toward other highly liquid specification of a somewhat higher assets and that growth in the broader objective for growth of M-1B over aggregates has been running somewhat the period from June to September, above the upper ends of the ranges. The and without the additional weight as- Committee reaffirmed its ranges for signed to the potential for more rapid 1981, but in light of its desire to maintain moderate growth in money over the bal- growth of M-2. In his view, the ance of the year, the Committee expect- short-run behavior of M-2 was sub- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 111 ject to great uncertainty because of Votes for this action: Messrs. both the volatile influence of money Volcker, Solomon, Boykin, Corrigan, Gramley, Keehn, Rice, Schultz, Mrs. market mutual funds and the recent Teeters, Messrs. Winn, and Black. DIDC actions authorizing certain de- Votes against this action: None. Abposit instruments to be offered at sent: Messrs. Boehne and Partee. competitive interest rates beginning (Mr. Black voted as alternate for Mr. Boehne.) August 1. This action was taken on the rec- 2. Authorization for Domestic ommendation of the Manager for Open Market Operations Domestic Operations. The Manager had advised that since the July meet- On August 6, 1981, the Committee ing, substantial net purchases of sevoted to increase from $3 billion to curities had been undertaken to $4Vi billion the limit on changes counter the effects on member bank between Committee meetings in reserves of the transfer of funds as- System Account holdings of U.S. sociated with settlement of Iranian government and federal agency seaccounts and also the effects of levcurities specified in paragraph 1(a) of els of float that were lower than the authorization for domestic open normal. The leeway for further purmarket operations, effective immedichases had been reduced to about ately, for the period ending with the $200 million, and additional purclose of business on August 18, chases in excess of that amount 1981. might be required over the rest of the intermeeting interval. 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

720 Legal Developments REVISION OF REGULATION C depository institutions are serving the housing needs of the communities and neighborhoods in which they are located. The purpose is also to assist public Part 203—Home Mortgage Disclosure officials in distributing public sector investments so as to attract private investment to neighborhoods where The Board of Governors of the Federal Reserve Sys- it is needed. This regulation is not intended to encourtem is adopting in final form a revised version of age unsound lending practices or the allocation of Regulation C. Regulation C implements the Home credit. Mortgage Disclosure Act and requires depository institutions with offices in standard metropolitan statisti- (c) Scope. This regulation applies to depository institucal areas (SMSAs) to disclose data about their home tions that make federally related mortgage loans. It mortgage and home improvement loans each year. requires a covered depository institution to disclose Institutions with less than $10 million in assets are loan data at certain of its offices and to report the data exempt from coverage. to its supervisory agency. Effective August 4, 1981, (except that a lobby notice requirement becomes effective on September 30, (d) Central data repositories. The act requires that the 1981), pursuant to the authority granted in (12 U.S.C. loan data be made available at central data repositories 2084(a)), the Board hereby revises Regulation C located within each standard metropolitan statistical (12 CFR Part 203) to read as follows: area. It also requires the Federal Financial Institutions Examination Council to aggregate mortgage loan data for all institutions in each standard metropolitan statis- Part 203—Home Mortgage Disclosure tical area, showing lending patterns by location, age of housing stock, income level, and racial characteristics. Section 203.1 Authority, purpose, and scope. A listing of central data repositories can be obtained Section 203.2 Definitions. from the Department of Housing and Urban Develop- Section 203.3 Exemptions. ment, Washington, D.C. 20410, or from any of the Section 203.4 Compilation of loan data. agencies listed in Appendix A. Section 203.5 Disclosure and reporting requirements. Section 203.2—Definitions. Section 203.6 Administrative enforcement and sanctions for violations. For the purposes of this regulation, the following Appendix A Federal enforcement agencies. definitions apply: Appendix B State exemptions. Appendix C [Reserved for disclosure form (a) Act means the Home Mortgage Disclosure Act of and instructions.] 1975 (Title III of Public Law 94-200), as amended in 1980 (Title III of Public Law 96-399), codified in Title 12, §§ 2801 through 2811 of the United States Code. Section 203.1—Authority, purpose and scope. (b) Branch office means an office approved as a branch (a) Authority. This regulation is issued by the Board of of the depository institution by its federal or state Governors of the Federal Reserve System pursuant to supervisory agency, but excludes freestanding autothe Home Mortgage Disclosure Act of 1975, as amend- mated teller machines and other electronic terminals. ed (Title 12, §§ 2801 through 2811 of the United States Code). (c) Depository institution means a commercial bank, savings bank, savings and loan association, building (b) Purpose. The purpose of this regulation is to and loan association, homestead association (including provide the public with loan data to determine whether a cooperative bank), or credit union, that makes Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 721 federally related mortgage loans.1 A majority-owned ernment National Mortgage Association, or the Farmnon-depository subsidiary is deemed to be part of its ers Home Administration). parent depository institution for the purposes of this regulation. A majority-owned depository subsidiary (g) State means any state of the United States of may, at the parent depository institution's option, be America, the District of Columbia, and the Commontreated as part of its parent or as a distinct entity. wealth of Puerto Rico. (d) Federal Housing Authority (FHA), Farmers Home Section 203.3—Exemptions. Adminstration (FmHA), or Veterans Administration (VA) loans means mortgage loans insured under Title (a) Asset size and location. A depository institution is II of the National Housing Act or under Title V of the exempt from all requirements of this regulation Housing Act of 1949 or guaranteed under Chapter 37 (1) If its total assets on December 31 are $10,000,000 of Title 38 of the United States Code. or less; or (2) If it has neither a home office nor a branch office (e) Home improvement loan means any loan, including in a standard metropolitan statistical area (SMSA) a refinancing, (i) whose proceeds, as stated by the as defined by the U.S. Department of Commerce. borrower to the lender at the time of the loan application, are to be used for repairing, rehabilitating, or (b) State law. A state-chartered depository institution remodeling a residential dwelling located in a state; is exempt from the requirements of this regulation if it and (ii) that is recorded on the depository institution's is subject to state laws that contain, as determined by books as a home improvement loan.2 the Board in accordance with Appendix B, (1) requirements substantially similar to those imposed by this (f) Home purchase loan means any loan, including a regulation, and (2) adequate provisions for enforcerefinancing, secured by and made for the purpose of ment. For purposes of data aggregation, however, an purchasing residential real property located in a state institution exempted under this paragraph shall submit (including single-family homes, dwellings for from 2 to the data required by the disclosure laws of its state to 4 families, other multi-family dwellings, and individual its state supervisory agency. units of condominiums or cooperatives).3 The term does not include temporary financing (such as a bridge (c) Change of status. loan or a construction loan) or the purchase of an (1) An institution that becomes subject to the reinterest in a pool of mortgage loans (such as mortgage quirements of this regulation shall compile loan data participation certificates issued or guaranteed by the beginning with the calendar year following the year Federal Home Loan Mortgage Corporation, the Gov- in which it becomes subject, except that: (2) An institution that is exempt under § 203.3(b) and that subsequently loses its exemption shall 1. "Federally related mortgage loan" means any loan (other than compile loan data in compliance with this regulation temporary financing such as a construction loan) that beginning with the calendar year following the year (i) Is secured by a first lien on residential real property (including for which it last reported loan data under the state individual units of condominiums and cooperatives) that is designed principally for the occupancy of from l-to-4 families and is located disclosure law. in a state; and (ii) Section 203.4—Compilation of loan data. (a) Is made in whole or in part by a depository institution the deposits or accounts of which are insured by an agency of the federal government, or by a depository institution that is regulat- (a) Data to be included. A depository institution shall ed by an agency of the federal government; or compile data on the number and total dollar amount4 (b) Is made in whole or in part, or is insured, guaranteed, supplemented, or assisted in any way, by the Secretary of of home purchase and home improvement loans that it Housing and Urban Development or any other officer or agency originates and purchases, for each calendar year beof the federal government or under or in connection with a housing or urban development program administered by any such ginning with calendar year 1981. officer or agency; or (c) Is intended to be sold by the depository institution that originates the loan to the Federal National Mortgage Association, the Government National Mortgage Association, or the Federal 4. "Total dollar amount" means (i) original principal amount of Home Loan Mortgage Corporation, or to a financial institution loans originated by the depository institution (to the extent of its from which it is to be purchased by the Federal Home Loan ownership interest, when the loan is made jointly or cooperatively) Mortgage Corporation. and (ii) the unpaid balance of loans purchased by the depository 2. See footnote 3. institution (to the extent of its ownership interest in such purchased 3. An institution may categorize a first-lien loan made for home loans). For home improvement loans, whether originated or purimprovement purposes as a home purchase loan if that is the manner chased, the amount to be reported may include unpaid finance in which it normally records first-lien loans. charges. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

722 Federal Reserve Bulletin • September 1981 (b) Format. The loan data shall be compiled separately tory institution acting as trustee or in some other for originations and purchases, using the form set forth fiduciary capacity; in Appendix C, and shall be itemized as follows: (2) Loans on unimproved land; or (1) Geographic itemization. The loan data shall be (3) Refinancings that the depository institution origiitemized by standard metropolitan statistical area nates, if there is no increase in the principal that is (SMSA). Within each SMSA, the data shall be outstanding on the existing loan at the time of the further itemized by the census track in which the refinancing and if the institution and the borrower property to be purchased or improved is located, are the same parties on the existing loan and the except that refinancing. (i) If the property is located in a county with a population5 of 30,000 or less or in an area that has (d) SMS As and census tracts. For purposes of geonot been assigned census tracts, itemization by graphic itemization county shall be used instead of itemization by (1) A depository institution shall use the SMSA census tract. boundaries defined by the U.S. Department of Com- (ii) If the property is located outside any SMSA, merce, Washington, DX. 20233, as of the first day or is located in an SMSA in which the institution of the calendar year for which the data are compiled. has neither a home nor a branch office, no item- (2) A depository institution shall use the census tract ization (by SMSA, county, or census tract) is numbers and boundaries on the census tract maps in required and the data for all such loans shall the "1980 Census of Population and Housing, CENinstead be listed as an aggregate sum. SUS TRACTS, PHC80-2" series prepared by the (2) Type-of-loan itemization. The loan data within Bureau of the Census.7 If a census tract number is each geographic category described in paragraph duplicated within an SMSA, then the census tract (b)(1) of this section shall be further itemized as shall also be identified by county, city, or town follows: name. (i) FHA, FmHA, and VA loans on l-to-4 family dwellings; Section 203.5—Disclosure and reporting (ii) Other home purchase (conventional) loans on requirements. l-to-4 family dwellings; (iii) Home improvement loans on l-to-4 family (a) Time requirements for disclosure statements. A dwellings; depository institution shall make its loan data disclo- (iv) Total home purchase and home improvement sure statements available to the public by March 31 loans on dwellings for more than 4 families; and following the calendar year for which the data were (v) Total home purchase and home improvement compiled, and shall continue to make them available loans on l-to-4 family dwellings (from categories for five years from that date. (i), (ii), and (iii) above) made to any borrower who did not, at the time of the loan application, intend (b) Offices at which disclosure statements are to be to use the property as a principal dwelling.6 This made available. addendum item is not required for loans on prop- (1) A depository institution shall make a complete erty in the outside-SMSAs category described in disclosure statement available at its home office. paragraph (b)(l)(ii) of this section. (2) A depository institution shall also make a disclosure statement available in at least one branch office (c) Excluded data. A depository institution shall not in each SMSA where it has offices, other than the disclose loan data for SMSA in which the home office is located. The (1) Loans originated and purchased by the deposi- statement at a branch office may omit, at the option of the institution, all data other than the data relating to property located in the SMSA where that branch is located. 5. The population is to be determined by reference to the "1980 (3) Upon request, a depository institution shall Census of Population, NUMBER OF INHABITANTS, PC80-1-A" promptly provide information regarding the office(s) series prepared by the Bureau of the Census, U.S. Department of Commerce, Washington, D.C. 20233. Until this publication becomes of the institution where its disclosure statements are available, county population shall be determined using the "1980 available. Census of Population and Housing, FINAL POPULATION AND HOUSING UNIT COUNTS (Advanced Reports), PHC80-V" series, also prepared by the Bureau of the Census. 6. A depository institution may assume, unless its records contain 7. An institution may use either 1970 or 1980 census tract boundinformation to the contrary, that a loan that it purchases does not fall aries in geocoding loans in an SMSA until the 1980 census tract outline within this category. maps for that SMSA become available from the Bureau of the Census. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 723 (c) Manner of making disclosure statements available. National Banks A depository institution shall makes its loan data disclosure statements available to anyone requesting Comptroller of the Currency them for inspection or copying during the hours the Office of Customer and Community Programs office is normally open to the public for business. A Washington, D.C. 20219 depository institution that provides photocopying facilities may impose a reasonable charge for this ser- State Member Banks vice. Federal Reserve Bank serving the district in which the (d) Notice of availability. A depository institution shall state member bank is located. provide notice of the availability of its mortgage loan data by posting a notice in the lobbies of its home and Nonmember Insured Banks and Mutual Savings branch offices that are located in SMS As. Banks (e) Reporting requirements. For purposes of data Federal Deposit Insurance Corporation Regional Diaggregation, a depository institution shall send two rector for the region in which the bank is located. copies of its complete disclosure statement to the regional office of its enforcement agency by March 31 Savings Institutions Insured by the FSLIC and following the calendar year for which the data were Members of the FHLB System (except for Savings compiled. Banks insured by FDIC) The Federal Home Loan Bank Board Supervisory Section 203.6—Administrative enforcement and Agent in the district in which the institution is located. sanctions for violations. Credit Unions (a) Administrative enforcement. As set forth more fully in §§ 305(b) and 306(b) of the act, compliance Office of Consumer Affairs with the act and this regulation is enforced by the National Credit Union Administration Comptroller of the Currency, the Federal Reserve 1776 G Street, N.W. System, the Federal Deposit Insurance Corporation, Washington, D.C. 20456 the Federal Home Loan Bank Board, and the National Credit Union Administration. Other Depository Institutions (b) Sanctions for violations. Federal Deposit Insurance Corporation Regional Di- (1) A violation of the act or this regulation is subject rector for the region in which the institution is located. to administrative sanctions as provided in § 305(c) of the act. (2) An error in compiling or disclosing required data Appendix B is not considered a violation of the act or this regulation if the error was unintentional and resulted State Exemptions from a bona fide mistake despite the maintenance of procedures reasonably adapted to avoid such an (a) Application. Any state,1 state-chartered depository error. institution, or association of such depository institutions may apply to the Board pursuant to this appendix and the Board's Rules of Procedure (12 CFR 262) for an exemption under § 203.3(b). Such an exemption Appendix A requires a determination that a state-chartered depository institution is subject to state law requirements2 Federal Enforcement Agencies substantially similar to those imposed by this regula- The following list indicates which federal agency enforces Regulation C for particular classes of institu- 1. "State" includes any subdivision of a state. tions. Any questions concerning compliance by a 2. "State law" includes any regulations which implement the law, any official interpretations of the law, and regulations of a state agency particular institution should be directed to the approor department that has jurisdiction over a class(es) of depository priate enforcing agency. institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

724 Federal Reserve Bulletin • September 1981 tion, and that there is adequate provision for enforce- there is not in fact adequate provision for enforcement of those requirements. ment. (3) The Board will publish notice of its intent to (b) Supporting documents. The application, which revoke an exemption in the Federal Register and may be made by letter, shall include will send the notice to the appropriate state official. (1) A copy of the full text of the relevant state law, The Board will allow time after publication for including provisions for enforcement; interested persons to submit written comments. (2) A statement of reasons why the state require- (4) If an exemption is revoked, the Board will ments are substantially similar to those imposed by publish notice of the revocation in the Federal the act and this regulation, including an explanation Register and will send a copy of the notice to the why any differences are not significant; and appropriate state official and to the regulatory au- (3) An undertaking to inform the Board within 30 thorities specified in § 305(b) of the act. days of the occurence of any change in the relevant (5) The Board may dispense with the procedures set state law. forth in this section in any case in which it finds such procedures unnecessary. (c) Public notice of filing. The Board will publish in the Federal Register notice of the filing of an application that complies with the above requirements. A copy of AMENDMENTS TO REGULATION J the application will be made available for examination during business hours at the Board and at the Federal Part 210—Collection of Checks and Other Reserve Bank of each Federal Reserve District in Items and Transfer of Funds which the applicant is situated. The Board will provide a period of time for interested persons to submit Redefinition of the Terms "Sender" written comments. For multiple applications concern- and "Bank" ing the same state law, the Board may (1) consolidate the notice of receipt of all such applications in one The Board of Governors of the Federal Reserve Sys- Federal Register notice, and (2) dispense with publica- tem has amended Subpart A of Regulation J, governtion of notice of applications subsquently received. ing the collection of checks and other items by Reserve Banks, to implement the Monetary Control Act (d) Grant of exemption. If the Board determines that of 1980. This amendment redefines the terms "sendsome or all state-chartered depository institutions are er" and "bank" so that each term includes "deposisubject to requirements substantially similar to those tory institutions" as defined in section 19(b) of the imposed by this regulation, and that there is adequate Federal Reserve Act, as amended by the Monetary provision for enforcement, the Board will exempt such Control Act. institution(s) from the requirements of this regulation Effective August 12, 1981, pursuant to its authority (except as specified in § 203.3(b)) by publishing notice under section 13 of the Federal Reserve Act, as of the exemption in the Federal Register. The Board amended, 12 U.S.C. § 342; section 16 of the Federal also will furnish a copy of the notice to the applicant, Reserve Act, 12 U.S.C. §§ 248(o), 360; and section to each state authority responsible for administrative 11(0 Of the Federal Reserve Act, 12 U.S.C. § 248(i), enforcement of the state law, to the regulatory authori- the Board hereby amends Regulation J (12 C.F.R. Part ties specified in § 305(b) of the act, and to each 210) as follows: participant in the proceeding. In section 210.2, new paragraph (b) is added, and existing paragraphs (b) through (k) are redesignated paragraphs (c) through (1) and revised to read as (e) Subsequent amendments; revocation of exemption. follows: (1) The Board will inform the appropriate state official of any subsequent amendments to this regu- Section 210.2—Definitions lation (including published interpretations of the Board) that might require amendment of the state As used in this subpart, unless the context otherwise law. The Board may require reapplication for an requires: exemption. (2) The Board reserves the right to revoke an exemption if at any time it determines that state law (b) "Bank" includes a depository institution as dedoes not in fact impose requirements substantially fined in section 19 of the Federal Reserve Act similar to those imposed by this regulation, or that (12 U.S.C. § 461(b)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 725 (c) "Bank draft" means a check drawn by one bank (2) the bank through which an item is payable or on another bank. collectible and to which it is sent for payment or collection. (d) "Banking day" means a day during which a bank is open to the public for carrying on substantially all its (k) "Sender" means any of the following that sends banking functions. an item to a Reserve Bank: a depository institution, a clearing institution, another Reserve Bank, an interna- (e) "Cash item" means: tional organization, a foreign correspondent, or a (1) a check other than one classified as a noncash branch or agency of a foreign bank maintaining reitem under this section; or serves under section 7 of the International Banking (2) any other item payable on demand and collect- Act of 1978 (12 U.S.C. §§ 347d, 3105). ible at par that the Reserve Bank of the District in (1) "Depository institution" means a depository which the item is payable is willing to accept as a institution as defined in section 19(b) of the Federal cash item. Reserve Act. (12 U.S.C. § 461(b)) (2) "Clearing institution" means: (f) "Check" means a draft, as defined in the Uniform (i) an institution that is not a depository institu- Commercial Code, that is drawn on a bank and pay- tion, but maintains with a Reserve Bank the able on demand. balance referred to in the first paragraph of section 13 of the Federal Reserve Act (12 U.S.C. (g) "Item" means an instrument for the payment of § 342); or money, whether negotiable or not, that is: (ii) a corporation that maintains an account with a (1) payable in a Federal Reserve District1 ("Dis- Reserve Bank in conformity with section 211.4 of trict"); this chapter (Regulation K). (2) sent by a sender to a Reserve Bank for handling (3) "International Organization" means an internaunder this subpart; and tional organization for which a Reserve Bank is (3) collectible in funds acceptable to the Reserve empowered to act as depository or fiscal agent and Bank of the District in which the instrument is maintains an account. payable. (4) "Foreign correspondent" means any of the fol- Unless otherwise indicated, "item" includes both lowing for which a Reserve Bank maintains an cash and noncash items. "Item" does not include a account: a foreign bank or banker, a foreign state as check that cannot be collected at par,2 or an "item" defined in section 25(b) of the Federal Reserve Act as defined in section 210.26 that is handled under (12 U.S.C. § 632), or a foreign correspondent or subpart B. agency referred to in section 14(e) of that Act (12 U.S.C. § 358). (h) "Nonbank payor" means a payor of an item, other (1) "State" means a State of the United States, the than a bank. District of Columbia, Puerto Rico, or a territory, possession, or dependency of the United States. (i) "Noncash item" means an item that a receiving Reserve Bank classifies in its operating circulars as requiring special handling. The term also means an item normally received as a cash item if a Reserve AMENDMENT TO REGULATION K Bank decides that special conditions require that it handle the item as a noncash item. Part 211—International Banking Operations (j) "Paying bank" means: Amendment of Rule Regarding Capital (1) the bank by which an item is payable, unless the Requirements of Edge Corporations item is payable or collectible through another bank and is sent to the other bank for payment or collec- The Board of Govenors of the Federal Reserve System tion; or has amended section 211.6(d) of Regulation K (12 C.F.R. § 211.6(d) to include certain subordinated 1. For purposes of this subpart, the Virgin Islands and Puerto Rico notes and debentures within the definition of "capital are deemed to be in the Second District, and Guam and American and surplus" solely for the purpose of determining Samoa in the Twelfth District. 2. The Board publishes a "Memorandum on Exchange Charges," capital adequacy of Edge Corporations. listing the banks that would impose exchange charges on cash items Effective July 29, 1981, pursuant to the Board's and other checks forwarded by Reserve Banks and therefore would not pay at par. authority under section 25(a) of the Federal Reserve Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

726 Federal Reserve Bulletin • September 1981 Act (12 U.S.C. §§ 611-631), Regulation K is amended ("ERISA") by State member banks, in accordance by revising section 211.6(d) to read as set forth below: with section 3004(b) of ERISA and the Interagency Agreement adopted to implement the provision Section 211.6—Leading Limits and Capital thereof. Requirements ^ *** (d) Capitalization. An Edge Corporation shall at all times be capitalized in an amount that is adequate in (28) With the prior approval of both the Director of relation to the scope and character of its activities. In the Board's Division of Banking Supervision and the case of an Edge Corporation engaged in banking, Regulation and the General Counsel of the Board: its capital and surplus shall be not less than 7 per cent (a) to enter into a written agreement with a bank of risk assets. For this purpose, subordinated capital holding company or any non-banking subsidiary notes or debentures, in an amount not to exceed 50 per thereof, with a State member bank, or with any cent of non-debt capital, may be included for deter- other person or entity subject to the Board's supermining capital adequacy in the same manner as for a visory jurisdiction under 12 U.S.C. § 1818(b) conmember bank; risk assets shall be deemed to be all cerning the prevention or correction of an unsafe or assets on a consolidated basis other than cash, unsound practice in conducting the business of such amounts due from banking institutions in the United bank holding company, non-banking subsidiary or States, United States Government securities, and Fed- State member bank or other entity, or concerning eral funds sold. the correction or prevention of any violation of law, rule or regulation, or any condition imposed in writing by the Board in connection with the granting of any application or other request by the bank or AMENDMENTS TO RULES REGARDING company or any other appropriate matter; and (b) to DELEGATION OF AUTHORITY stay, modify, terminate or suspend an agreement entered into pursuant to subdivision (a) of this Part 265—Rules Regarding Delegation of paragraph. Any agreement authorized under this Authority paragraph may, by its terms, be enforceable to the same extent and in the same manner as an effective Expansion of Federal Reserve Banks Delegated and outstanding cease-and-desist order that has be- Authority come final pursuant to 12 U.S.C. §§ 1818(b) and (k). The Board of Governors of the Federal Reserve System has extended delegated authority to the Board's Director of Banking Supervision and Regulation to BANK HOLDING COMPANY AND BANK MERGER refer violations of the Employee Retirement Income ORDERS ISSUED BY THE BOARD OF GOVERNORS Security Act by State member banks to the Department of Labor. In addition, the Board has expanded Orders Issued Under Section 3 of Bank Holding the delegated authority of the Federal Reserve Banks Company Act to enter into written agreements to correct violations of law, rule, or regulation. Arlington Bancorp, Inc., Effective August 10, 1981, Part 265 is amended by Arlington Heights, Illinois adding new section 265.2(c)(30), and by amending section 265.2(f)(28) to read as set forth below: Cary-Grove Bancorp, Inc., Cary, Illinois Section 265.2—Specific Functions Delegated to Board Employees and to Federal Reserve Elk Grove Bancorp, Inc., Banks Elk Grove Village, Illinois Hoffman Bancorp, Inc., Hoffman Estates, Illinois (30) To provide to the Department of Labor written notification of possible significant violations of the Meadows Bancorp, Inc., Employee Retirement Income Security Act Rolling Meadows, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 727 Subpal Bancorp, Inc., nois ("Hoffman Bank") (deposits of $24.8 million); Palatine, Illinois Suburban Bank of Rolling Meadows, Rolling Meadows, Illinois ("Meadows Bank") (deposits of $26.4 Suburban Bancorp, Inc., million); Suburban National Bank of Palatine ("Subpal Palatine, Illinois Bank") (deposits of $11.5 million); Palatine National Bank, Palatine, Illinois ("Suburban Bank") (deposits Woodfield Bancorp, Inc., of $38 million) ; and Suburban National Bank of Wood- Schaumburg, Illinois field, Schaumburg, Illinois ("Woodfield Bank") (deposits of $11.3 million.1 Mr. Gerald F. Fitzgerald and Order Approving Formation of a Bank Holding certain members of his immediate family control each Company and Acquisition of Shares of a Bank of these seven bank holding companies (collectively Holding Company referred to as the "Suburban Bank Group"). Certain members of the Fitzgerald family are also principals of Arlington Bancorp, Inc., Arlington Heights, Illinois Arlington and Bank. After consummation of this pro- ("Arlington"), has applied for the Board's approval, posal, these seven bank holding companies would pursuant to section 3(a)(1) of the Bank Holding Com- control 80 percent or more of Arlington.2 pany Act of 1956 (12 U.S.C. § 1842(a)(1)), to become a Bank is to be located in the Chicago banking marbank holding company by acquiring 80 percent or ket.3 The subsidiary banks of six of the seven bank more of the voting shares of Suburban National Bank holding companies in the Suburban Bank Group are of Arlington Heights, Arlington Heights, Illinois also located in the Chicago market, controlling, in the ("Bank"), a de novo bank. In connection with this aggregate, 0.2 percent of total market deposits.4 Bank application, Cary-Grove Bancorp, Inc., Cary, Illinois would be a de novo bank organized by the principals of ("Cary-Grove"); Elk Grove Bancorp, Inc., Elk Grove Suburban Bank Group. The Board finds that, based Village, Illinois ("Elk Grove"); Hoffman Bancorp, upon the facts of record, consummation of the applica- Inc., Hoffman Estates, Illinois ("Hoffman"); Mead- tions would not result in any adverse competitive ows Bancorp, Inc., Rolling Meadows, Illinois ("Mead- effects in any relevant area. Thus, competitive considows"); Subpal Bancorp, Inc., Palatine, Illinois ("Sub- erations are consistent with approval of the applicapal"); Suburban Bancorp, Inc., Palatine, Illinois tions. ("Suburban"); and Woodfield Bancorp, Inc., Schaumburg, Illinois ("Woodfield"), all of which are one-bank holding companies within the meaning of the act, have each applied for the Board's approval, under 1. All banking data are as of December 31, 1980. 2. The Board notes that, in an instance very similar to this section 3(a)(3) of the act (12 U.S.C. § 1842(a)(3)), to proposal, it found a group of bank holding companies acting together acquire up to 14.9 percent of the voting shares of to acquire the shares of a bank holding company to be a "company" Arlington. and a "bank holding company" within the meaning of section 2 of the act. (Board letter of November 17, 1978, to Mr. William Beaman, Notice of the applications, affording opportunity for Clerk, United States District Court for the District of Wyoming). The interested persons to submit comments and views has Board believes that the record in connection with this proposal could support a finding that the seven bank holding companies known as the been given in accordance with section 3(b) of the act. Suburban Bank Group are together a "company" that would become The time for filing comments and views has expired, a "bank holding company" upon consummation of the transaction. and the Board has considered the applications and all However, the Board finds no regulatory purpose would be served at this time by requiring the Suburban Bank Group itself to apply for the comments received, including those of the Illinois Board's prior approval to become a bank holding company and to Commissioner of Banks and Trust Companies, in light register with the Board as such in light of the Suburban Bank Group's of the factors set forth in section 3(c) of the act intention to reorganize as a multibank holding company after January 1, 1982, the effective date of the recently enacted amendment to (12 U.S.C. § 1842(c)). the Illinois Bank Holding Company Act removing the current prohibi- Arlington, a nonoperating corporation, was orga- tion against multibank holding companies in the state. In addition, in accordance with the opinion of the Illinois Commissioner of Banks nized for the purpose of becoming a bank holding and Trust Companies, the Applicants have committed not to consumcompany by acquiring bank, a de novo bank. Cary- mate the acquisition of Arlington until after January 1, 1982, in order Grove, Elk Grove, Hoffman, Meadows, Subpal, Sub- to avoid any possible violation of the current Illinois prohibition against multibank holding companies. If the same or substantially the urban, and Woodfield are one-bank holding companies same seven bank holding companies again act as a group to acquire by virtue of their ownership, respectively, of Subur- control of another company (before their reorganization into a multibank holding company is complete), such companies may be considban Bank of Cary-Grove, Cary, Illinois ("Cary-Grove ered a "company". Accordingly, Applicants should not make any Bank") (deposits of $24.4 million); Suburban Bank of future joint acquisitions prior to consultation with the Board's staff. Elk Grove Village, Elk Grove Village, Illinois ("Elk 3. The Chicago banking market is approximated by Cook, DuPage, Grove Bank") (deposits of $15.4 million); Suburban and Lake Counties, Illinois. 4. The subsidiary bank of Cary-Grove is located in a separate Bank of Hoffman-Schaumburg, Hoffman Estates, Illibanking market. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

728 Federal Reserve Bulletin • September 1981 Where principals of an applicant are engaged in Commercial Security Bancorporation, operating a chain of banking organizations, the Board, Ogden, Utah in addition to analyzing the one-bank holding company proposal before it, also analyzes the proposal in the Order Denying Acquisition of Bank context of multibank holding company standards to assess the financial and managerial resources and Commercial Security Bancorporation, Ogden, Utah, a future prospects of the institutions comprising the bank holding company within the meaning of the Bank chain. Based upon such an analysis in this case, the Holding Company Act, as amended, has applied for financial and managerial resources and future pros- the Board's approval under section 3(a)(3) of the act pects of the Suburban Bank Group, its subsidiary (12 U.S.C § 1842(a)(3)) to acquire 100 percent of the banks, and Arlington, are regarded as generally satis- voting shares of Box Elder County Bank, Brigham factory. Bank, as a proposed de novo bank, has no City, Utah ("Bank"). financial or operating history, however, its prospects Notice of the application, affording opportunity for as a subsidiary of Arlington appear favorable. Accord- interested persons to submit comments and views has ingly, considerations relating to banking factors are been given in accordance with section 3(b) of the act. consistent with approval of this application. The time for filing comments and views has expired Within Bank's proposed primary service area, Bank and the Board has considered all comments received will be the only full service bank offering lending in light of the factors set forth in section (c) of the act services to the public, and will serve as an additional (12 U.S.C. § 1842(c)). source of banking services within the Chicago banking Applicant, the fourth largest banking organization in market. Accordingly, considerations relating to the Utah, controls two banking subsidiaries with aggreconvenience and needs of the community lend weight gate deposits of $433 million, representing approxitoward approval of the applications. It is the Board's mately 8.0 percent of total deposits in commercial judgment that consummation of the proposed transac- banks in the state.' Bank, with deposits of $40.5 tion would be in the public interest and the applica- million is the 14th largest banking organization in tions should be approved. Utah, representing approximately 0.7 percent of state- On the basis of the record, the applications are wide commercial bank deposits. Consummation of the approved for the reasons summarized above. The proposed acquisition would not alter Applicant's ranktransactions shall not be made before January 1, 1982, ing in the state, although Applicant's share of stateor later than three months after January 1, 1982, and wide commercial bank deposits would increase to 8.7 Suburban National Bank of Arlington Heights, Arling- percent. The Board concludes that consummation ton Heights, Illinois, shall be opened for business not would not result in a significant increase in concentralater than six months after the effective date of this tion of banking resources in Utah. Order,5 unless such period is extended for good cause Bank is located in Brigham City, the county seat of by the Board, or by the Federal Reserve Bank of Box Elder County, Utah. Applicant's closest subsid- Chicago, pursuant to delegated authority. iary bank, Bear River State Bank ("Bear River By order of the Board of Governors, effective Bank") is located in Tremonton, the second largest August 19, 1981. city in Box Elder County. Applicant asserts that Brigham City and Tremonton are in separate banking Voting for this action: Chairman Volcker and Governors markets and that consummation of the transaction Schultz, Wallich, Partee, and Gramley. Absent and not would not have any significant adverse effects. voting: Teeters and Rice. The Supreme Court has articulated a number of factors to be considered in determining a geographic (Signed) WILLIAM W. WILES, banking market. See United States v. Philadelphia [SEAL] Secretary of the Board. National Bank, 374 U. S. 321 (1963); United States v. Phillipsburg National Bank & Trust Co., 399 U. S. 350 (1970). See also Mid-Nebraska Banc shares v. Board of Governors, 627 F.2d 266 (D.C. Cir. 1980). These 5. In order to comply with the Illinois Bank Holding Company Act, cases indicate that the competitive effects of a prowhich until January 1, 1982, prohibits multibank holding companies in Illinois (16 1/2 111. Rev. State. § 71 et seq.), the Applicants have posed acquisition should be judged in a localized committed, in accordance with the advice of the Illinois Commission- market in which banks offer their services and to er of Banks and Trust Companies, that Bank will be chartered before January 1, 1982, and the proposal will not be consummated before January 1, 1982, the effective date of the new legislation permitting multibank holding companies in Illinois. The new Illinois law would 1. Except as otherwise indicated, all banking data are as of Decemgenerally prohibit the acquisition of a de novo bank chartered after ber 11, 1980 and do not reflect Applicant's acquisition on April 4, January 1, 1982. 1981, of Bear River State Bank, Tremonton, Utah. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 729 which local customers can practically turn for alterna- Bank are regarded as satisfactory. Accordingly, banktives. The Supreme Court has stated in this regard ing factors are consistent with, but lend no weight that, "the proper question is not where the parties to toward approval of the application. While Applicant the merger do business or even where they compete, proposes to assist Bank in offering additional services, but where, within the area of competitive overlap, the there is no indication that the needs of Bank's customeffect of the merger on competition will be direct and ers are not currently being met or that the benefits immediate." (United States v. Philadelphia National expected from the proposal cannot reasonably be Bank, supra, at 357.) In determining what this area is, expected through other means.2 Accordingly, the the Supreme Court sought "to delineate the areas in Board finds that considerations relating to the convewhich bank customers that are neither very large nor nience and needs of the community to be served do not very small find it practical to do their banking busi- outweigh the substantially adverse competitive effects ness. . . . United States v. Philadelphia National that would result from Applicant's acquisition of Bank, supra at 359. Bank. Based on a review of all the facts of record, the On the basis of the foregoing and other consider- Board believes that the relevant banking market is ations reflected in the record, it is the Board's judgapproximated by Box Elder County. Approximately ment that consummation of the proposed transaction 80 percent of the County's population lives in Brigham would not be in the public interest, and the application City and the Tremonton areas. The two communities is hereby denied. are 19 miles apart and are connected by a superhigh- By order of the Board of Governors, effective way. There are no intervening natural barriers. A August 4, 1981. newspaper and a radio station located in Brigham City serve both communities. The record indicates that Voting for this action: Chairman Volcker and Governors there is a significant amount of commuting to points Schultz, Wallich, Teeters, Rice, and Gramley. Absent and between and through the two communities. Moreover, not voting: Governor Partee. the primary service areas of both Bank and Bear River Bank are confined to Box Elder County. Accordingly, (Signed) WILLIAM W. WILES, the Board finds that Bank and Bear River Bank are [SEAL] Secretary of the Board. institutions "to which local customers can practically turn for alternatives" and that the smaller banking markets proposed by Applicant are too narrow to Midland Bank Limited, approximate accurately the area where the competi- London, England tive effects of the acquisition will be direct and immediate. Order Approving Formation of Bank Holding Bank, with $40.5 million in deposits, is the second Company, Acquisition of Nonbank and Edge Act largest of four banking organizations in the Box Elder Subsidiaries and Retention of Nonbank Companies; County banking market, and controls 29.2 percent of Order Denying Retention of Travel Agency Activities the market's commercial bank deposits. Applicant's of Thomas Cook, Inc. subsidiary, Bear River Bank (deposits of $14.9 million) is the third largest banking organization in that market Midland Bank Limited ("Midland"), London, Enwith 11.9 percent of the market's commercial bank gland, has applied under section 3(a)(1) of the Bank deposits. Acquisition of Bank would increase Appli- Holding Company Act (12 U.S.C. § 1842(a)(1)) for cant's share of market deposits to 41.1 percent and approval of the formation of a bank holding company Applicant would become the second largest banking by acquiring 51 percent of the voting shares of Crocker organization in the relevant banking market. The National Corporation ("Crocker"), San Francisco, Board notes that consummation of the proposal also California. would increase the concentration of banking resources Midland has also applied to do business under in the already concentrated Box Elder County banking section 25(a) of the Federal Reserve Act (the "Edge market. The Board further notes that the increase in Act") (12 U.S.C. §§ 611-631) by acquiring indirectly Applicant's market share as a result of the proposal the shares of three Edge Corporation subsidiaries would substantially exceed the Department of Justice owned by Crocker National Bank: Crocker Bank Merger Guidelines. Based on all the facts of record, International (Chicago), Chicago, Illinois; Crocker the Board concludes that the effects of the proposal on Bank International (New York), New York, New competition would be substantially adverse. The financial and managerial resources and future 2. See United States v. Third National Bank, 390 U.S. 171, 190 prospects of Applicant, its banking subsidiaries and (1968). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

730 Federal Reserve Bulletin • September 1981 York; and Crocker International Investment Corpora- New York, New York, a commercial finance company tion, San Francisco, California. The factors that are specializing in overseas trade financing of products considered in acting on these applications include manufactured in the United States; (4) LAFCO (Westthose set forth in section 211.4(a) of the Board's ern Hemisphere), Ltd., New York, New York, which Regulation K (12 C.F.R. § 211.4(a)). markets the services of certain financing affiliates in Midland has also applied, pursuant to section 4(c) the western hemisphere, and extends credit to Latin (8) of the Bank Holding Company Act (12 U.S.C. American importers of United States products; and (5) § 1843(c)(8)) and section 225.4(b)(2) of the Board's Export Credit Corporation, a commercial finance Regulation Y (12 C.F.R. § 225.4(b)(2)), for permission company specializing in overseas trade financing of to acquire indirectly voting shares of the following products manufactured in the United States. subsidiaries of Crocker: (1) Bishop Building Co., Inc., The activities applied for have either been specified Honolulu, Hawaii, which owns and operates the Bish- by the Board in section 225.4(a) of Regulation Y as op Trust Building in Honolulu and leases it to subsid- permissible for bank holding companies, subject to iaries of Crocker and other tenants; (2) Bishop Trust Board approval of individual proposals in accordance Company, Ltd., Honolulu, Hawaii, which conducts a with the procedures of section 225.4(b), or have been full-service trust business and provides limited data authorized by Order under section 4(c)(8) in particular processing services to other Crocker subsidiaries; (3) cases. Hawaii Finance Company, Ltd., Honolulu, Hawaii, Midland has also applied, pursuant to section 4(c) which operates as an industrial loan company making (9) of the Bank Holding Company Act (12 U.S.C. secured and unsecured loans to individuals; (4) Miles § 1843(c)(9)) and section 211.23(f)(5) of the Board's Crossing Ltd., Honolulu, Hawaii, which owns real Regulation K (12 C.F.R. § 211.23(f)(5)), to retain Midestate mortgages and other real estate receivables; (5) land's interest in The Thomas Cook Group Ltd. CNC Insurance Agency Inc., San Francisco, Califor- ("TCG"), Peterborough, England. TCG provides renia, which engages in the activity of acting as agent for tail and wholesale travel arrangements, and issues and credit life, credit accident, and health insurance direct- sells travelers checks on a worldwide basis through its ly related to extensions of credit by Crocker's subsid- subsidiaries.1 iaries; (6) Crocker Investment Management Corp., Notice of receipt of these applications has been San Francisco, California, which engages in the activi- given in accordance with sections 3 and 4 of the Bank ty of providing portfolio investment advice and general Holding Company Act (46 Federal Register 18,066 economic and financial information and advice; (7) (1981)), and the time for filing views and comments has Crocker Mortgage Investment Company Inc., Los expired. The Board has considered the applications Angeles, California, which engages in the activities of and all comments received in light of the factors set originating, purchasing, and servicing loans secured forth in section 3(c) of the Bank Holding Company Act by real estate and servicing loans and other extensions (12 U.S.C. § 1842(c)), the considerations specified in of credit; (8) Western Bradford Trust Company, San sections 4(c)(8) and (9) of the Bank Holding Company Francisco, California, a trust company which fur- Act, and the purposes of the Edge Act. nishes services to security holders, brokers, dealers Midland is the third largest of the major London and issuers, provides data processing services to clearing banks and the lead bank of the 15th largest Crocker and its subsidiaries, and provides computer banking organization in the world, with total deposits software services to Crocker and its subsidiaries; and of approximately $55.1 billion.2 Midland's business (9) Crocker Holdings Inc., Germantown, Tennessee, consists of the provision of a wide range of banking, which holds real estate related assets of Crocker that financial, and related services through its various are in the process of liquidation. subsidiaries and affiliated companies. Domestic bank- In addition, Midland has applied, pursuant to sec- ing is conducted through a network of more than 3,000 tion 4(c)(8) of the Bank Holding Company Act and branches by Midland itself in England and Wales, and section 225.4(b)(2) of the Board's Regulation Y, for by subsidiaries in Scotland, Northern Ireland, and the permission to retain the following indirect subsidiar- Republic of Ireland. In addition to commercial banking ies: (1) Samuel Montagu (Metals), Inc., New York, and trust services, Midland engages in merchant bank- New York, which engages in the activity of dealing in ing, equity financing, mortgage banking, consumer precious metals by buying and selling gold and silver financing, equipment leasing, factoring, providing on the spot and futures markets for its own account, travel services, and issuing and selling travelers and deals with other precious metals dealers; (2) Thomas Cook, Inc., New York, New York, a company that engages in the issuance and sale of travelers 1. As noted above, Midland applied pursuant to section 4(c)(8) to retain TCG's U.S. travelers check business. checks; (3) London American Finance Corporation, 2. Banking data for Midland are as of December 31, 1980. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 731 checks on a worldwide basis. Approximately 60 per- tal position. Moreover, the Board expects that both cent of Midland's profits derive from domestic bank- Midland and Crocker will be mindful of this opportuniing; 25 percent from its international activities; and 15 ty in the employment of the new capital funds. percent from related services. The Board notes that Crocker's capital ratios are Crocker does not engage directly in any activity comparable to the ratios of other large U.S. banks at except holding shares of its subsidiaries. Its banking the present time. The Board, however, is aware that subsidiary, Crocker National Bank ("Bank"), San the capital ratios of the largest U.S. banks have Francisco, California, holds domestic deposits of ap- generally declined over the past few years while, at the proximately $11.4 billion, is the fourth largest banking same time, the risks to which they are exposed have organization in California, with 385 branches, and the increased. The Board believes, therefore, that banks 12th largest banking organization in the United in this position should avail themselves of every States.3 Upon consummation of this proposal, Mid- opportunity to strengthen their capital positions. The land would be the 10th largest banking organization in injection of capital by Midland provides such an the world. opportunity consistent with a reasonable rate of Midland does not operate any banking offices in the growth in Crocker's assets. In exercising its responsi- United States.4 Accordingly, the Board finds that bility under the Bank Holding Company Act, the approval of the proposal would have no significant Board will monitor closely the capital position of large effect on the concentration of banking resources or banking organizations in connection with their future existing competition in any relevant area. Further- expansion plans. more, while Midland has demonstrated that it is a In light of all the facts of record, the Board conlikely entrant into the United States banking market, cludes that banking factors and considerations relating and has the financial reosurces to establish de novo to the convenience and needs of the communities to be offices in Bank's major market areas, most of the served are consistent with approval of the applicametropolitan California markets in which Bank com- tions. The Board's judgment is that, with respect to petes are competitive markets; therefore, the elimina- the application filed under section 3 of the Bank tion of probable future competition would not be Holding Company Act, consummation of the proposal significant. Accordingly, the Board finds consumma- would be in the public interest and should be aption of the proposal would have no significant effect on proved. probable future competition. In reaching these conclusions, the Board has given The financial and managerial resources and future due consideration to the public comments received on prospects of Midland appear generally satisfactory. these applications, and the views expressed on the Under the proposed transaction, Crocker would re- proposal at the public meeting ordered by the Board, ceive capital injections totalling $495 million. In the and held in San Francisco, California, on June 22, first stage of the proposal, Midland would acquire 51 1981. The Board had ordered this meeting because of percent of Crocker for $595 million, of which $270 the importance of Crocker in the communities in million would be added to Crocker's capital funds which it operates and because of the interest of the through the purchase of newly issued shares. In the public in the proposal. The objections expressed in the second stage of the proposal, Midland, at its option or written submissions and at the public meeting were upon call by Crocker, would purchase, over four based primarily upon issues related to the foreign years, new common shares from Crocker for a total of acquisition of U.S. banks in general and Community $225 million. The additional purchase would increase Reinvestment Act considerations. The Board has de- Midland's ownership of Crocker from 51 percent to 57 termined that these objections do not warrant denial of percent. the application. The Board notes that there is no The Board regards the additional capital being pro- statutory authority in the Bank Holding Company Act vided to Crocker as a result of the transaction as a for taking into account the nationality of the acquiring positive factor in that it provides the opportunity to company, and that the Community Reinvestment Act achieve a permanent enhancement of Crocker's capi- does not apply to a transaction where the acquiring banking organization has no banking presence in the United States. At the June 22 meeting the Board also 3. Banking data for Crocker and market data are as of December considered the written submissions and oral presenta- 31, 1980. tions in regard to their bearing on the convenience and 4. Midland does have, as discussed below, a 20.125 percent interest needs factors that the Board must consider under the in European American Bancorp, New York, New York, which has a wholly-owned subsidiary bank, European American Bank and Trust Bank Holding Company Act, and found that these Company, New York, New York. In addition, Thomas Cook Travel- factors are positive and consistent with approval as lers Cheques, Ltd. is licensed as a banking agency under New York discussed above. Accordingly, the Board has deter- State Banking Law. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

732 Federal Reserve Bulletin • September 1981 mined that the public comments on the applications do Company Act favored approval of the acquisition of not raise issues that would warrant denial, or condi- these companies when they were acquired originally tional approval of this application. by Crocker. Nothing in the record suggests that Mid- As discussed above, Midland currently has a 20.125 land's acquisition of Crocker would alter that balance. percent ownership interest in European-American Furthermore, the Board has determined that retention Bancorp ("EAB"), New York, New York, a bank by Midland or Samuel Montagu (Metals), Inc., Thomholding company with respect to European-American as Cook, Inc. (issuance and sale of travelers checks), Bank and Trust Company ("EABTC"), New York, London American Finance Corporation, LAFCO New York. At the time the Board approved EAB's (Western Hemisphere), Ltd., and Export Credit Corapplication to become a bank holding company in 1977 poration would produce benefits to the public and (63 FEDERAL RESERVE BULLETIN 595), the Board would be in the public interest. There is no evidence in concluded that neither Midland nor any of the other the record that consummation of the proposal would, five foreign banks having interests in EAB should be with respect to these section 4(c)(8) applications, considered bank holding companies, individually or result in undue concentration of resources, decreased collectively.5 or unfair competition, conflicts of interests, unsound Section 3(d) of the Bank Holding Company Act banking practices, or other adverse effects on the (12 U.S.C. § 1842(d)) generally prohibits the Board public interest. Accordingly, the Board has deterfrom approving an application that would permit a mined that the balance of public interest factors it must bank holding company to acquire more than 5 percent consider under section 4(c)(8) of the Bank Holding of the voting shares of a bank located outside of the Company Act favors approval of the applications filed bank holding company's principal state of banking under that section, and that those applications should operations, unless such acquisition is specifically au- be approved.6 thorized by state law. Although Midland is not cur- Similarly, with respect to Crocker's three Edge rently a bank holding company, Midland's acquisition corporations, the public interest in the uninterrupted of Crocker while maintaining its present interest in continuation of their service to customers favors ap- EAB would be inconsistent with the legislative direc- proval of their retention after Crocker is acquired by tion contained in section 3(d). Midland. The financial and managerial resources of Therefore, in order to prevent any evasion of the Midland, an organization broadly represented in forprovisions and purposes of section 3(d), the Board has eign markets, are regarded as consistent with approval determined that Midland should be required to divest of the acquisition of these three corporations by Midits interest in EAB. In light of the unique structure of land. Their acquisition by Midland would enable these EAB as a consortium organization, and taking into Edge corporations to continue the international servconsideration EABTC's acquisition in 1974 of the ices Crocker's Edge Corporations are able to provide assets of Franklin National Bank, the Board believes to their customers, consistent with the purposes of the that it would be appropriate to allow Midland a longer Edge Act to afford at all times a means of financing period of time than is usual in order to complete the international trade, to stimulate competition for interdivestiture. The additional time will provide EAB and national banking and financing services, and to faciliits owners flexibility to assure that the capital strength tate and stimulate United States exports. Accordingly, of the institution will be adequately maintained. There- the Board finds that the applications filed under the fore, the Board has determined that Midland should Edge Act for the retention of Crocker Bank Internareduce its interest in EAB to five percent or less of tional (Chicago), Crocker Bank International (New EAB's shares within three years of consummation of York), and Crocker International Investment Corporathe transaction, provided that such period may be tion should be approved. extended for good cause by the Board or by the Midland has also applied, pursuant to section 4(c)(9) Federal Reserve Bank of San Francisco under delegat- of the Bank Holding Company Act and section 211.23 ed authority. of the Board's Regulation K, to retain its wholly- With respect to the applications to acquire Crock- owned subsidiary, Thomas Cook Group Ltd. er's nonbank subsidiaries, it was previously deter- ("TCG"), a worldwide travel agency whose U.S. mined that the balance of public interest factors pre- subsidiary is Thomas Cook, Inc. ("TCI"). Midland, scribed by section 4(c)(8) of the Bank Holding through its indirect subsidiary, TCI, engages in provid- 5. The other shareholders of EAB are Societe Generale de Banque, S.A., Brussels, Belgium (20.125%); Deutsche Bank A.G., Frankfurt, Germany (20.125%); Amsterdam-Rotterdam Bank, N.V., Amster- 6. In light of the Board's action requiring Midland's divestiture of dam, The Netherlands (17.0%); Societe Generale, Paris, France EAB, the applications filed under section 4(c)(8) to retain EAB's (20.125%); and Creditanstalt Bankverein, Vienna, Austria (2.5%). nonbank subsidiaries are rendered moot. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 733 ing travel services in the United States as part of the give the foreign institution a competitive advantage worldwide travel services provided by its parent com- over domestic banking organizations.7 pany, TCG. Section 211.23(f)(5)(iii)(B) of the Board's With respect to this application, the Board notes Regulation K specifically states that a foreign banking that not only are the travel agency activities of TCI organization may engage in the activity of arrangement impermissible for domestic banking organizations but of passenger transportation (Standard Industrial Code TCI, in addition to providing travel services to its 4722) in the United States only with the approval of the customers, provides nationwide outlets for the sale of Board pursuant to section 4(c)(9) of the Bank Holding Thomas Cook travelers checks and for the conducting Company Act. of foreign currency transactions. Thus, Midland would TCG, a British company controlled by Midland be able, through TCI, to combine under common since 1972 and wholly-owned by Midland since 1977, ownership and operation permissible section 4(c)(8) provides retail and wholesale travel arrangements, and activities with the impermissible activity of operating a sells travelers checks on a worldwide basis through its travel agency. No U.S. banking organization is able to subsidiaries. TCG currently engages in the wholesale market section 4(c)(8) services throughout the United and retail travel business through the Travel Division States in the same manner.8 Midland's commitments of its wholly-owned U.S. subsidiary, TCI, a New York regarding the separation of its U.S. travel and banking Corporation. TCI serves customers in both the busi- business do not reduce the competitive advantage ness and pleasure travel segments (70 percent of Midland would gain over domestic organizations in the revenues and 30 percent of revenues, respectively) conduct of its permissible nonbanking activities. Thus, through a nationwide retail network of 66 travel outlets based on all the facts of record, the Board concludes in 53 cities in the United States. Several of the outlets that Midland's retention of the travel services of TCI in New York engage in both wholesale travel business would be substantially at variance with the purposes of (packaging of tours) and retail travel business. All the Bank Holding Company Act and that the applicaother U.S. outlets engage only in retail business. tion to retain TCI under section 4(c)(9) should be and In support of its application to retain TCI, Midland is denied. Accordingly, under section 4(a)(2) of the has made a number of commitments and presented Bank Holding Company Act, Midland must divest the evidence to demonstrate that an exemption under travel agency operations of TCI within two years of section 4(c)(9) would not be at variance with the acquiring Crocker, unless such period is extended for purposes of the Bank Holding Company Act and good cause by the Board or by the Federal Reserve would be in the public interest. In the past, Midland Bank of San Francisco, pursuant to delegated and TCI have not sought public recognition of their authority.9 connection and there is little public identification in Midland has also indicated that it intends to retain the U.S. of one with the other. Midland has committed certain indirect investments in the United States to preserve the complete separation of its banking through foreign nonbanking companies on the basis of operations in the United States, whether conducted through Crocker or otherwise, from the travel business conducted in the United States by TCI. Midland also contends that retention of TCI would be in the public interest because of the fragmentation of the 7. See The Royal Trust Company, 60 FEDERAL RESERVE BULLETIN U.S. travel agency industry and because TCI brings 58 (1974); Lloyds Bank Limited, 60 FEDERAL RESERVE BULLETIN 139 (1974); The Bank of Tokyo, Ltd., 61 FEDERAL RESERVE BULLETIN 449 foreign revenues to the United States by virtue of its (1975); and Israel Discount Bank Limited, 66 FEDERAL RESERVE relationship with TCG. BULLETIN 910 (1980). 8. By order dated January 26, 1976, the Board found that the Section 4(c)(9) of the Bank Holding Company Act operation of a travel agency is not closely related to banking and provides that the nonbanking prohibitions of section 4 therefore determined not to add the operation of a travel agency to the shall not apply to the investments or activities of a list of permissible activities in Regulation Y (62 FEDERAL RESERVE BULLETIN 148 (1976)). foreign company that conducts the greater part of its 9. As noted above, a subsidiary of Midland is licensed by the New business outside the U.S. if the Board by regulation or York State Banking Department to maintain an agency in New York order determines that, under the circumstances and City and has operated the agency since prior to July 26, 1978. Although Midland has not asserted grandfather rights under the subject to the conditions set forth in the regulation or International Banking Act of 1978 to retain TCI, the Board has order, the exemption would not be substantially at examined the question of Midland's grandfathered status. In light of variance with the purposes of the Bank Holding Com- previous Board determinations that an otherwise grandfathered foreign bank loses that status upon the acquisition of a U.S. subsidiary pany Act and would be in the public interest. In bank, the Board has determined that Midland may not retain the travel determining whether to grant an exemption under agency operation of TCI pursuant to 12 U.S.C. § 3106(c). National Westminster Bank Limited, 65 FEDERAL RESERVE BULLETIN 357 section 4(c)(9), the Board has generally considered (1979); Algemene Bank Nederland, N.V., 65 FEDERAL RESERVE among other things whether such exemption would BULLETIN 658 (1979). 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734 Federal Reserve Bulletin • September 1981 section 2(h) of the Bank Holding Company Act New England Merchants Company, Inc., (12 U.S.C. § 1841(h)). In each instance, Midland has Boston, Massachusetts provided information on the size and amount of assets and revenues of the foreign company abroad and of its T.N.B. Financial Corp., U.S. operations, and information on whether the ac- Springfield, Massachusetts tivity of the U.S. operations is in the same general line of business as that of the foreign nonbanking compa- Order Approving Merger of Bank Holding ny. From the information provided, it appears that Companies retention of these investments is permissible under section 2(h). New England Merchants Company, Inc., Boston, Based on the foregoing and other considerations Massachusetts, a bank holding company within the reflected in the record, the Board has determined that meaning of the Bank Holding Company Act, has the applications under sections 3(a)(1) and 4(c)(8) of applied for the Board's approval under section 3(a)(5) the Bank Holding Company Act and under the Edge of the act (12 U.S.C. § 1842(a)(5)) to merge with Act should be and hereby approved subject to the T.N.B. Financial Corp., Springfield, Massachusetts following conditions: ("T.N.B."), under the name and charter of New (1) that Midland reduce its interest in EAB to five England Merchants Company, Inc. ("Applicant"). percent or less of EAB's shares within three years of Notice of the application, affording opportunity for consummation of the transaction; and interested persons to submit comments and views, has (2) that Midland divest the travel agency operations been given in accordance with section 3(b) of the act. of TCI or reduce its interest in TCI to five percent or The time for filing comments and views has expired less" of TCI's shares within 2 years of consummation and the Board has considered the application and all of the transaction. comments received in light of the factors set forth in section 3(c) of the act (12 U.S.C. § 1842(c)). The periods referred to above may be extended for Applicant, the fourth largest banking organization in good cause by the Board or by the Federal Reserve Massachusetts, controls five banks with aggregate Bank of San Francisco under delegated authority. The deposits of $2.0 billion, representing 9.2 percent of acquisition of Crocker shall not be made before the total deposits in commercial banks in the state.1 thirtieth calendar day following the effective date of T.N.B., the eighth largest banking organization in the this Order, or later than three months after the effec- state, controls six banks with total deposits of approxitive date of this Order unless such period is extended mately $588.7 million, representing 2.8 percent of total for good cause by the Board or by the Federal Reserve statewide commercial bank deposits. Upon consum- Bank of San Francisco, pursuant to delegated author- mation, the resulting banking organization would rank ity. The determination as to Midland's acquisition of as the third largest in the state, controlling 12.0 percent Crocker's nonbank subsidiaries and retention of its of total deposits in commercial banks in the state. own nonbank subsidiaries under section 4(c)(8) of the Although the proposed merger would increase the act is subject to the conditions set forth in section share of total deposits held by the five largest banking 225.4(c) of Regulation Y, and to the Board's authority organizations in Massachusetts, in light of all the facts to require such modification or termination of the of record,2 it appears that consummation of the proactivities of a bank holding company or any of its posal would have only slightly adverse effects on the subsidiaries as the Board finds necessary to assure concentration of banking resources in the state. compliance with the provisions and purposes of the act Applicant's subsidiary banks do not compete in the and the Board's Orders and regulations issued there- five banking markets in which T.N.B. operates and the under, or to prevent evasion thereof. shortest distance between offices of Applicant and By order of the Board of Governors, effective T.N.B. is 64 miles. Thus, consummation of the trans- August 25, 1981. action would not have any effect on existing competition in any relevant area. T.N.B.'s subsidiary banks compete in the Springfield, Amherst-Northampton, Voting for these actions: Chairman Volcker and Governors Greenfield, North Adams-Williamstown and Athol Schultz, Wallich, Partee, and Gramley. Absent and not voting: Governors Teeters and Rice. Not voting on the 1. All banking data are as of December 31, 1980. insurance activities: Governors Schultz and Wallich. 2. Although the Board is of the opinion that thrift institutions do not compete actively with commercial banks over a sufficient range of services to consider them full competitors of commercial banks, the Board, in light of the relative size and nature of the operations of thrift (Signed) WILLIAM W. WILES, institutions in Massachusetts, regards their presence as a mitigating [SEAL] Secretary of the Board. factor to reduce the effects on concentration in the state. 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Legal Developments 735 banking markets. The proposed merger would have no customer's checking account. Affiliation with Applisignificant adverse effect on probable future competi- cant will enable T.N.B. to service larger borrowers tion in these markets because, in general, the markets through overline participation with Applicant's subsidare not attractive to de novo entry. Moreover, Appli- iaries, and will allow T.N.B. to participate more cant's banks are restricted by law from branching into actively in the secondary mortgage market which these areas, and the alternatives available to Applicant would enable its banks to become more reliable for entering these markets are limited. Thus, consum- sources of mortgage funds. Accordingly, the Board mation of the transaction would not result in any concludes that considerations relating to the conveadverse effects on probable future competition in these nience and needs of the communities to be served lend markets. weight toward approval. Based upon the foregoing and Applicant's subsidiary banks operate in the Boston, other considerations reflected in the record, the Fall River, Cape Cod, and New Bedford banking Board's judgment is that the proposed merger is in the markets. Although T.N.B. appears to have the re- public interest and that the application should be sources to expand into these markets absent the approved. proposed affiliation, there are several factors that On the basis of the record, the application is apmitigate any adverse effects on probable future compe- proved for the reasons summarized above. The transtition that may result from the proposed merger. The action shall not be made before the thirty days after New Bedford and Fall River markets are not consid- the effective date of this Order, or later than three ered attractive to de novo entry at this time, and months after the effective date of this Order unless T.N.B.'s subsidiary banks are prohibited by state law such period is extended for good cause by the Board or from branching into any of the markets in which by the Federal Reserve Bank of Boston, pursuant to Applicant's banks operate. Although the Boston bank- delegated authority. ing market may be considered attractive to de novo By order of the Board of Governors, effective entry, it is not a highly concentrated market3 and loss August 20, 1981. of T.N.B. as a future entrant would not have any serious adverse effects on competition. Moreover, in Voting for this action: Chairman Volcker and Governors light of T.N.B.'s history of expansion, which has been Schultz, Wallich, Partee, and Gramley. Absent and not limited to the western and central portions of the state, voting: Governors Teeters and Rice. the Board is unable to conclude that T.N.B. is a likely entrant into any of the four markets in which Applicant (Signed) BARBARA R. LOWREY, [SEAL] Assistant Secretary of the Board. competes. These markets are all located in the eastern part of Massachusetts and are a considerable distance from T.N.B. headquarters in Springfield. Moreover, there are substantial numbers of thrift institutions in Orders Issued Under Sections 3 and 4 of Bank each of these markets that compete to some extent Holding Company Act with commercial banks, thus further mitigating any adverse competitive effects associated with the pro- Canadian Commercial Bank, posal. Therefore, the Board finds that consummation Edmonton, Alberta, Canada of the proposal would have only slightly adverse effects on probable future competition. CCB Bancorp, Inc. The financial and managerial resources of Appli- Los Angeles, California cant, T.N.B., and their subsidiaries are considered generally satisfactory and their future prospects favor- Order Approving Formation of Bank Holding able. Thus, considerations relating to banking factors Companies and Engaging in Mortgage Banking are consistent with approval. Following consumma- Activities tion of the proposed transaction, Applicant will assist T.N.B. in offering simple interest loans and a one- Canadian Commercial Bank, Edmonton, Alberta, percent interest rate reduction on such loans when Canada ("CCB"), a foreign bank subject to certain payments are made by automatic transfer from the provisions of the Bank Holding Company Act,1 and its subsidiary, CCB Bancorp, Inc., Los Angeles, Califor- 3. The Boston banking market is approximated by the Boston RMA and includes the major metropolitan areas (SMSAs) of Boston, Brockton, Lowell, and Lawrence-Haverhill. There are 159 cities and 1. CCB, a foreign bank operating an agency in Los Angeles, towns in this market which extends over the entire east coast of California, is subject to certain provisions of the act pursuant to Massachusetts except Cape Cod, and the market also includes 13 section 8(a) of the International Banking Act of 1978 (12 U.S.C. towns in southern New Hampshire. § 3106(a) (1978)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

736 Federal Reserve Bulletin • September 1981 nia ("CCB Bancorp"), have applied for the Board's has no authority to accept deposits, it does compete approval, pursuant to section 3(a)(1) of the act directly for loans with Bank's Santa Ana branch and (12 U.S.C. § 1842(a)(1)) to become bank holding com- Laguna Niguel loan production office, both located in panies by acquiring, indirectly and directly, 40.12 the Los Angeles banking market. However, following percent of the voting shares of Westlands Bank, Santa consummation of the proposal, Bank's market share Ana, California ("Bank").2 and rank would be unchanged and numerous banking CCB has also applied under Section 4(c)(8) of the act alternatives would remain within the market. It ap- (12 U.S.C. § 1843(c)(8)) and section 225.4(b)(2) of the pears from these and other facts of record that con- Board's Regulation Y (12 C.F.R. § 225.4(b)(2)) for summation of the proposal would not result in any permission to engage de novo through its subsidiary, adverse effects upon existing or potential competition CCB Realty, Inc., Los Angeles, California ("CCB or increase the concentration of banking resources in Realty"), in mortgage banking activities. Such activi- any relevant area. Accordingly, the Board concludes ties have been determined by the Board to be closely that competitive considerations are consistent with related to banking (12 C.F.R. § 225.4(a)(1)). approval of the applications. Notice of the applications, affording opportunity for The financial and managerial resources and future interested persons to submit comments and views, has prospects of CCB, CCB Bancorp, and Bank appear been given in accordance with sections 3 and 4 of the generally satisfactory, particularly in light of the $5.0 act (46 Federal Register 32,504 (1981)). The time for million in new capital that would be injected into Bank filing views and comments has expired, and the Board following consummation of this proposal. Accordinghas considered the applications and all comments ly, banking factors lend weight toward approval of the received in light of the factors set forth in section 3(c) applications of CCB and CCB Bancorp to become of the act (12 U.S.C. § 1842(c)) and the considerations bank holding companies. Upon consummation of the specified in section 4(c)(8) of the act. proposal, CCB intends to assist Bank in providing new CCB is a Canadian bank with total assets and and improved services to its customers. In this regard, deposits (as of October 31, 1980) of approximately the Board notes that CCB has particular expertise in $768.4 million and of $649.8 million, respectively. the areas of commercial, industrial, and real estate CCB Bancorp is a nonoperating California corporation lending, data processing services and mortgage bankwith no subsidiaries, organized for the purpose of ing, that will enable it to lend support to Bank's becoming a bank holding company by acquiring Bank. operations. Moreover, the increased flexibility and Upon acquisition of Bank (deposits of $188.0 million), resources made available by CCB to Bank will assist CCB Bancorp and, indirectly CCB, would control the Bank in continuing to meet the convenience and needs 39th largest commercial banking organization head- of its community. Thus, considerations relating to the quartered in California and would hold approximately convenience and needs of the community to be served 0.1 percent of the total deposits in commercial banks lend weight toward approval of the applications to in the state.3 Bank is the 33rd largest of 104 commer- acquire Bank. Accordingly it is the Board's judgment cial banking organizations located in the Los Angeles that the acquisition of Bank by CCB and CCB Bancorp banking market and holds approximately 0.2 percent would be in the public interest and the applications of the total deposits in commercial banking organiza- should be approved. tions in the market.4 CCB Currently engages in busi- CCB has also applied for permission to engage de ness in the United States solely through an agency novo through its subsidiary, CCB Realty, in the mort- ("Agency") located in Los Angeles, California, which gage banking activities of making, acquiring and serhad loans totalling approximately $140.0 million out- vicing loans and other extensions of credit secured by standing as of December 31, 1980. Although Agency real estate mortgages and deeds of trust. These activities will include the origination, processing, servicing, and acquiring of mortgage loans or other extensions of 2. CCB also intends to acquire a two-year stock purchase warrant credit secured by mortgages on residential single- and entitling it to purchase 625,309 shares of Bank; a four-year stock multi-family real estate, and commercial and industrial purchase warrant entitling it to purchase 500,000 shares of Bank; and a stock purchase option right if, under certain conditions, there should properties. In addition, CCB Realty's activities will be an issuance of Bank stock, options, warrants or convertible include the purchase, sale or placement of mortgage securities during the third or fourth years following CCB's initial acquisition of Bank's shares. CCB proposes to transfer its warrant and loans, and the management and sale of property acoption rights to CCB Bancorp. Under section 3 of the act, Board quired through foreclosure. CCB Realty's activities approval would be required prior to any purchase of Bank's shares will be conducted from an office in Los Angeles, through the exercise of rights or warrants (12 C.F.R. § 225.103). 3. All banking data are as of December 31, 1980. California, serving the United States. It does not 4. The Los Angeles banking market is approximated by the Los appear from the facts of record that commencement of Angeles RMA, which consists of parts of Los Angeles, Orange, San mortgage banking activities by CCB through CCB Bernadino, Riverside, and Ventura Counties. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 737 Realty would result in any adverse competitive effects Credit and Commerce American Holdings, in any market, while approval of the application would N.V., provide an alternative source of real estate credit in Willemstad, Netherlands Antilles the United States. Accordingly, it is concluded that Credit and Commerce American Investment, CCB's proposal to engage de novo through its subsid- B.V., iary CCB Realty in mortgage banking activities can Amsterdam, The Netherlands reasonably be expected to produce benefits to the public that outweigh any adverse effects that may be FGB Holding Corporation, associated with the proposal. Furthermore, there is no Washington, D.C. evidence in the record indicating that these activities would result in any undue concentration of resources, Order Approving Formation of Bank Holding decreased or unfair competition, conflicts of interests, Companies unsound banking practices, or other adverse effects upon the public interest. Credit and Commerce American Holdings, N.V. Based upon the foregoing and other considerations ("CCAH"), Willemstad, Netherlands Antilles; Credit reflected in the record, it has been determined, in and Commerce American Investment, B.V. accordance with the provisions of section 4(c)(8) of the ("CCAI"), Amsterdam, The Netherlands; and FGB act, that the application to engage de novo in mortgage Holding Corporation ("FGB"), Washington, D.C., banking activities throughout the United States can have applied for the Board's approval under section reasonably be expected to produce favorable public 3(a)(1) of the Bank Holding Company Act (12 U.S.C. benefits and should be approved. § 1842(a)(1)) to become bank holding companies Accordingly, the applications are approved for the through the acquisition of FGB of up to 100 percent of reasons summarized above. The acquisition of shares the voting shares of Financial General Bankshares, of Bank shall not be made before the thirtieth calendar Inc. ("FG"), Washington, D.C. FG is a grandfathered day following the effective date of this Order. The multi-state bank holding company with subsidiary acquisition of Bank and the commencement of mortbanks in Maryland, New York, Tennessee, Virginia, gage banking activities shall be made not later than and the District of Columbia.1 three months after the effective date of this Order, Applicants have also applied under section 4(c)(8) of unless such period is extended for good cause by the the Act (12 U.S.C. § 1843(c)(8)) and section Board or by the Federal Reserve Bank of San Francis- 225.4(b)(2) of the Board's Regulation Y (12 C.F.R. co, pursuant to delegated authority. The approval of § 225.4(b)(2)) for permission to indirectly acquire, as CCB's mortgage banking activities is subject to the an incident to their acquisition of FG, shares of conditions set forth in section 225.4(c) of Regulation National Mortgage Corporation, and Money Exchange Y, and to the Board's authority to require reports by, Services, Inc., both of Washington, D.C. These comand make examinations of holding companies and their panies are existing nonbanking subsidiaries of FG. subsidiaries, and to require such modification or termi- National Mortgage Corporation, is a small, presently nation of the activities of a bank holding company or inactive, mortgage banking company, and Money Exits subsidiaries as the Board finds necessary to assure change Service Corporation provides electronic data compliance with the provisions and purposes of the act processing services for certain affiliated banks. Such and the Board's regulations and orders issued thereunactivities have been determined by the Board to be der, or to prevent evasion thereof. closely related to banking (12 C.F.R. § 225.4(a)(1) By order of the Board of Governors, effective and (8)). August 17, 1981. Notice of the applications, affording opportunity for interested persons to submit comments and views, has Voting for this action: Chairman Volcker and Governors Schultz, Wallich, Partee, Teeters, Rice, and Gramley. 1. FG's subsidiary banks are First American Bank, N.A., District of Columbia; Eastern Shore National Bank, Pocomoke City, Maryland; First American Bank of Maryland, Silver Spring, Maryland; Community State Bank, Albany, New York; Bank of Commerce, (Signed) WILLIAM W. WILES, New York City, New York; Valley Fidelity Bank and Trust Company, [SEAL] Secretary of the Board. Knoxville, Tennessee; and the following Virginia banks: First American Bank of Virginia, McLean; The Valley National Bank, Harrisonburg; The Peoples National Bank of Leesburg, Leesburg; The First National Bank of Lexington, Lexington; The Round Hill National Bank, Round Hill; and Shenandoah Valley National Bank, Winchester. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

738 Federal Reserve Bulletin • September 1981 been given in accordance with sections 3 and 4 of the Applicants are non-operating corporations orgaact (45 Federal Register 85,521 (1980)), and the time nized for the purpose of becoming bank holding comfor filing views and comments has expired. The Board panies by acquiring FG. CCAH, a corporation orgahas considered the applications and all comments nized under the laws of the Netherlands Antilles, owns received, including those of the Commissioner of all of the outstanding shares of CCAI, which is orga- Financial Institutions for the State of Virginia and nized under the laws of The Netherlands. CCAI, in several shareholders of FG,2 in light of the factors set turn, owns all of the outstanding shares of FGB, a forth in section 3(c) of the act (12 U.S.C. § 1842(c)) corporation chartered under the laws of the state of and the considerations set forth in section 4 of the Virginia. Upon acquisition of FG (total deposits of act. $2.1 billion), Applicants would control 10.2 percent of CCAH and CCAI first applied to acquire FG in total deposits in commercial banks in the District of November 1978. The applications grew out of Securi- Columbia, 4.7 percent of such deposits in Virginia, 2.2 ties and Exchange Commission ("SEC") allegations percent in Maryland, and negligible percentages of that certain individuals, some of whom are principals such deposits in New York and Tennessee.4 Inasmuch of CCAH and CCAI, had violated section 13(d) of the as Applicants and their principals control no other Securities and Exchange Act of 1934 by acquiring, as a banks and engage in no nonbanking business in the group, more than 5 percent of the equity securities of United States, consummation of the transaction would FG without making appropriate filings with the SEC. have no adverse effects on either existing or potential Without admitting or denying these allegations, the competition in any relevant market, and would not defendants entered into a consent agreement with the increase the concentration of resources in any relevant SEC; according to the terms of that agreement, certain area. Therefore, competitive considerations are coi> of the defendants represented that they intended to sistent with approval of the applications. make a tender offer for any and all shares of FG at the The financial and managerial resources of Applipreviously highest offered price, subject to obtaining cants, FG, and its subsidiary banks are considered appropriate regulatory approvals. CCAH and CCAI generally satisfactory and the future prospects of each were created as the vehicles for making the tender appear favorable. The proposed transaction would offer. provide FG with $12 million in new capital. Moreover, When these applications were first filed in 1978, the the Board expects Applicants to serve as a continuing Commissioner of Financial Institutions of the State of source of strength to FG and its subsidiary banks, and Virginia, the Commissioner of Banking of the State of Applicants recognize their responsibility to do so. Tennessee, and the Bank Commissioner of the State of Although Applicants will incur $50 million in debt in Maryland, as well as the management of FG, objected connection with this proposal, Applicants have made to the applications. In addition, the Attorney General certain commitments that ensure that they will be able for the State of Maryland issued an opinion interpret- to service the debt without adversely affecting the ing a section of Maryland state law to preclude un- financial position of FG or its subsidiary banks. Also, friendly affiliations. Because the Maryland state bank as part of the proposal, Applicants have stated they affiliate of FG was objecting to the proposal, the will not be paying any dividends to their principals in Attorney General found that the proposed acquisition the near future. In the Board's judgment, banking of FG would violate Maryland law. The Board decided factors are consistent with approval. to address this legal issue before acting on the merits Convenience and needs considerations relating to of the applications, and by Order dated February 15, this proposal are favorable. The additional capital to 1979 (65 FEDERAL RESERVE BULLETIN 254 (1979)), be injected into FG's subsidiary banks is expected to determined that it was precluded by law from approving the applications.3 In July 1980, CCAH and CCAI and their principals, and FG entered into a definitive agreement for the sale approving an application by a bank holding company to acquire voting shares of banks in more than one state, was not applicable to the of FG's voting shares to CCAH and CCAI. This proposed transaction. While the Board determined that section 3(d) agreement concluded the struggle over control of FG applies to the formation of a multi-state bank holding company as well as the expansion of an existing multi-state bank holding company, the between FG's management and CCAH and CCAI and Board held that the Congressional intent of prohibiting the formation their principals, and led to the filing of the subject and limiting the expansion of such holding companies would be applications. preserved even if the Board approved those applications. The Board reached this determination because the acquisition of FG by these two shell corporations would increase neither the number of multi-state 2. The Board has determined that the shareholder protests do not bank holding companies nor the number of out-of-home state banks raise issues that would warrant denial of the applications. owned or controlled by FG (65 FEDERAL RESERVE BULLETIN at 3. In that Order the Board also determined that section 3(d) of the 255-56). act (12 U.S.C. § 1842(d)), which generally prohibits the Board from 4. Banking data are as of March 31, 1980. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 739 strengthen the organization and allow it to provide cordingly, the Board finds that the objections of the new services to the public. Applicants plan to increase Commissioner do not warrant denial of these applicathe competitive posture of FG by expanding the tions. branch networks of its subsidiary banks, by increasing With respect to the applications to acquire FG's commercial lending and services, and by establishing nonbank subsidiaries, the Board has determined that an international department at the New York City the balance of public interest factors prescribed by subsidiary bank. The Board finds that considerations section 4(c)(8) of the act favor approval of FG's relating to the convenience and needs of the communi- retention of National Mortgage Corporation (65 FEDties to be served lend some weight toward approval of ERAL RESERVE BULLETIN 72 (1979)). Nothing in the these applications. The Board's judgment is that, with record suggests that Applicants' acquisition of FG respect to the applications filed under section 3 of the would alter that balance. Money Exchange Services, act, consummation of the proposal would be in the Inc., provides data processing services to FG's subsidpublic interest and these applications should be iary banks. It does not appear that the acquisition of approved. this company would have any adverse effect on com- In reaching these conclusions, the Board considered petition in any relevant area. There is no evidence in the public comments received on these applications, the record that consummation of the proposal would, and has given particular attention to the submissions with respect to these applications, result in undue made by the Commissioner of Financial Institutions concentration of resources, decreased or unfair comfor the State of Virginia (the "Commissioner"). The petition, conflicts of interests, unsound banking prac- Commissioner made a timely recommendation of deni- tices or other adverse effects on the public interest. al of these applications, which would ordinarily re- Accordingly, the Board has determined that the balquire the Board, in accordance with section 3(b) of the ance of public interest factors it must consider under act (12 U.S.C. § 1842(b)), to order a formal hearing on section 4(c)(8) of the act favors approval of the applithe applications. However, the Commissioner subse- cations filed under that section, and that these applicaquently concurred in a decision by the Virginia State tions should be approved. Corporation Commission to withdraw the request for a On the basis of the record, the applications are formal hearing. approved for the reasons summarized above. The The Board determined it would be useful for Board acquisition of FG shall not be made before the thirtieth and Reserve Bank staff to conduct an informal meet- calendar day following the effective date of this Order, ing, on the record, to be attended by representatives of or later than three months after the effective date of CCAH and CCAI. The bank supervisors for the states this Order unless such period is extended for good of Maryland, New York, Tennessee and Virginia, and cause by the Board or by the Federal Reserve Bank of the Comptroller of the Currency were invited to partic- Richmond, pursuant to delegated authority. The deteripate. Only the Commissioner decided to participate in mination as to Applicant's acquisition of FG's nonthis proceeding held at the Board on April 23, 1981, bank subsidiaries under section 4(c)(8) of the act is while all the other invited parties, except for the subject to the conditions set forth in section 225.4(c) of Banking Department of the State of Tennessee, sent Regulation Y, and to the Board's authority to require representatives as observers. such modification or termination of the activities of a The Commissioner was given an opportunity to holding company or any of its subsidiaries as the submit written questions to the Applicants, to make an Board finds necessary to assure compliance with the oral presentation at the meeting, and to submit a provisions and purposes of the act and the Board's closing statement in response to issues and questions regulations and orders issued thereunder, or to preraised by representatives of CCAH and CCAI at the vent evasion thereof. meeting. The Board has examined carefully all of these By order of the Board of Governors, effective comments, and Applicants' responses thereto, and August 25, 1981. determined that while the Commissioner has raised issues regarding foreign acquisitions of U.S. banks, Voting for these actions: Chairman Volcker and Governors and supervisory and regulatory issues related to such Schultz, Wallich, Partee, and Gramley. Absent and not acquisitions, these matters were addressed respon- voting: Governors Teeters and Rice. sively by Applicants, and, in certain instances, have previously been addressed by the Board itself.5 Ac- (Signed) WILLIAM W. WILES, [SEAL] Secretary of the Board. 5. In its February 23, 1979 "Statement of Policy on Supervision and Regulation of Foreign Bank Holding Companies," the Board en- foreign banks in this country. The Board noted that the International dorsed the principle of national treatment, or nondiscrimination, as a Banking Act of 1978 generally incorporates that principle in its basis for the rules governing the entry and subsequent operations of provisions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

740 Federal Reserve Bulletin • September 1981 Orders Issued Under Section 4 of Bank Holding Applicant is a bank holding company by virtue of its Company Act control of Citibank, N.A., New York, New York (total deposits of $72.5 billion), and Citibank (New York Citicorp, state), N.A., Buffalo, New York (total deposits of $2.1 New York, New York billion), and together they constitute the largest banking organization in New York state.3 Applicant's sub- Order Approving Retail Check Authorization and sidiary banks in the aggregate control 13 percent of the Check Guarantee Activities total deposits of commercial banks in the state. Applicant also engages in various other permissible non- Citicorp, New York, New York, a bank holding com- banking activities. pany within the meaning of the Bank Holding Compa- In order to approve this application, the Board is ny Act, has applied for the Board's approval, under required to determine that the performance of the section 4(c)(8) of the Board's Regulation Y (12 C.F.R. proposed activities by CFI, "can reasonably be ex- § 225.4(b)(2)), to engage de novo, through an existing pected to produce benefits to the public, such as nonbank subsidiary, Citicorp Financial, Inc. ("CFI"), greater convenience, increased competition, or gains Towson, Maryland, in the activity of retail check in efficiency that outweigh possible adverse effects, authorization. Under the proposal, CFI, for a fee, such as undue concentration of resources, decreased would authorize merchants by telephone or on-line or unfair competition, conflicts of interest, or unsound computer terminal, to accept checks written by Choice banking practices." (12 U.S.C. § 1843(c)(8)). cardholders.1 In addition, CFI would guarantee pay- Applicant's proposed retail check authorization and ment of all accepted checks by purchasing from mer- check guarantee service would benefit merchants by chants all dishonored checks that it had validly autho- providing a convenient means for decreasing badrized. CFI would charge the cardholder's account for check losses. The convenience of individual consumthe amount of any dishonored checks. ers would be enhanced by the proposed activity since The activity of engaging in retail check authorization their personal checks would be more readily accepted and check guarantee as proposed by Applicant has not for the purchase of goods and services from merbeen added to the Board's list of permissible activities chants. The de novo entry of Applicant into the check for bank holding companies found in Regulation Y. authorization business would increase the level of (12 C.F.R. § 255.4(a)). However, in connection with competition among check authorization systems alan earlier application, the Board determined by order ready in operation. Accordingly, the Board has conthat the activity of retail check authorization and cluded that the performance of the proposed activities check guarantee is closely related to banking. (Barnett by Applicant is likely to produce significant benefits to Banks of Florida, Inc., 65 FEDERAL RESERVE BULLE- the public. TIN 263 (1979)). As noted in this earlier decision, banks With respect to possible adverse effects, nothing in have in fact engaged in the proposed activity. Further- the record indicates that Applicant's proposal would more, various aspects of the proposed activity are result in any undue concentration of resources. The operationally similar to normal bank functions and Board recognizes the potential in the proposal for services, such as check processing, credit data file unfair competition or conflicts of interest with respect maintenance, data processing, and overdraft protec- to the authorization of checks not drawn on subsidiary tion, that are currently engaged in or provided by banks of Applicant. However, the Board relies on banks. Accordingly, the Board has determined that Applicant's commitment that CFI in performing these retail check authorization and check guarantee activi- activities will not discriminate against checks drawn ties as Applicant proposes are closely related to bank- on banks that are not subsidiaries of Applicant. In ing.2 addition, neither of Applicant's two principal banking Notice of the application, affording interested per- subsidiaries operate banking offices in the area in sons an opportunity to submit comments and views on which CFI's check guarantee program would operate. public interest factors, has been duly published (46 Also, the risk to Applicant associated with this propos- Federal Register 28745 (1981)). The time for filing al appears to be no more than the usual banking risk comments and views has expired, and the Board has because CFI will maintain a credit relationship with considered the application and all comments received the consumers whose checks are guaranteed. Further, in light of the public interest factors set forth in section Applicant is fully aware of section 106 of the 1970 4(c)(8) of the act. Amendments to the Act and section 225.4(c) of the 1. The Choice Card is CFI's proprietary credit card. 2. See National Courier Association v. Board of Governors of the Federal Reserve System, 516 F.2d 1229 (D.C. Cir. 1975). 3. All banking data are as of December 31, 1980. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 741 Board's Regulation Y, which prohibit a bank holding Bank determined that the public interest factors recompany and its subsidiaries from engaging in imper- quired to be considered under section 4(c)(8) of the act missible tie-in arrangements in connection with exten- outweighed possible adverse effects and, accordingly, sions of credit, sales of property, or the furnishing of the Reserve Bank approved the subject proposal purservices. suant to delegated authority. Based upon the foregoing and other considerations On May 4, 1981, the Independent Insurance Agents reflected in the record, the Board has determined that of Kentucky, Inc. ("IIAK"), which had objected to the balance of the public interest factors, which the the proposal during its pendency at the Reserve Bank, Board is required to consider under section 4(c)(8) of filed a timely petition for review of the Reserve Bank's the act, is favorable. Accordingly, the application is approval of that proposal.1 The petition questioned the hereby approved. This determination is subject to the legality of certain of Applicant's proposed insurance conditions set forth in section 225.4(c) of Regulation Y activities under state law, and in addition it questioned and the Board's authority to require such modification the correctness of the opinion of the Commissioner of or termination of the activities of a holding company or the Kentucky Department of Banking and Securities any of its subsidiaries as the Board finds necessary to ("State Commissioner") that the proposed activities assure compliance with the provisions and purposes of were permissible under state law. the act and the Board's regulations and orders issues The legality of the proposed activities under state thereunder, or to prevent evasion thereof. law was questioned by IIAK in connection with Appli- The transaction shall not be made later than three cant's original notification of its proposed insurance months after the effective date of this Order, unless activities. IIAK contended that Agency would be such period is extended for good cause by the Board or prohibited under section 287.030(3) of Kentucky Reby the Federal Reserve Bank of New York. vised Statutes from engaging in certain of the proposed By order of the Board of Governors, effective insurance activities. The pertinent portions of that August 3, 1981. section provided as follows: Voting for this action: Chairman Volcker and Governors "no person who hereafter owns or acquires more than one- Schultz, Wallich, Teeters, Rice, and Gramley. Absent and half (V2) of the capital stock of one (1) bank or combined bank not voting: Governor Partee. and trust company shall: (a) own or acquire directly or indirectly any capital stock in any other bank or combined bank and trust company domiciled in Kentucky, or (b) act as (Signed) WILLIAM W. WILES, insurance agent or broker with respect to any insurance [SEAL] Secretary of the Board. except credit life insurance, credit health insurance, insurance of the interest of a real property mortgagee in mortgaged property, other than title insurance ..." Western Kentucky Bancshares, Inc., Livermore, Kentucky The State Commissioner was consulted regarding his interpretation of the above-quoted language and Order Vacating in Part and Affirming in Part the effect of that provision upon the subject proposal. Reserve Bank Order Approving de novo Insurance In his response of March 26, 1981, the State Commis- Activities sioner concluded that the above statutory language does not prohibit the acquisition of an independent Western Kentucky Bancshares, Inc. ("Applicant"), insurance agency by a bank holding company, not- Livermore, Kentucky, notified the Federal Reserve withstanding the fact that such agency is engaged in Bank of St. Louis ("Reserve Bank") of its proposal, insurance activities that the bank holding company under section 4(c)(8) of the Bank Holding Company itself would be prohibited from engaging indirectly Act (12 U.S.C. § 1843(c)(8)) and section 225.4(b) (1) of under KRS § 287.030(3), provided that the subsidiary the Board's Regulation Y, to engage de novo, through operates as an independent entity. The State Commisits subsidiary, Big Rivers Insurance Agency, Inc. sioner observed that the phrase "directly or indirect- ("Agency"), Livermore, Kentucky, in certain insur- ly" appears in part (a) of the statute, but not in part ance agency activities. These activities include acting as insurance agent or broker with respect to the sale of accident and health, and property and casualty insur- 1. Under § 265.3 of the Board's Rules Regarding Delegation of Authority, IIAK's deadline for requesting such review would have ance, which is directly related to extensions of credit expired on April 27, 1981. However, by letter dated April 24, 1981, by Applicant's subsidiary bank, Farmers & Merchants IIAK requested that the time during which it could seek review of the Bank, Livermore, Kentucky. On April 20, 1981, based Reserve Bank's approval of the subject application be extended from April 27 until May 4, 1981. The Secretary of the Board granted this upon all the facts of record as of that date, the Reserve request. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

742 Federal Reserve Bulletin • September 1981 (b), and relying on the literal words of the statute, he decisions, to make determinations or assumptions concluded that the prohibition contained in part (b), with respect to the legality of an Applicant's proposal, regarding insurance activities, did not apply to indirect and to determine whether an Applicant's proposed activities. The State Commissioner concluded, there- activities would produce public benefits that outweigh fore, that KRS § 287.030(3) would not prohibit Appli- possible adverse effects.2 In this connection, the Sucant from engaging indirectly, through Agency, in the preme Court has indicated that the Board may not proposed insurance activities including acting as agent approve an application by a bank holding company if or broker with respect to the sale of property and consummation of the proposal contemplated by such casualty insurance, an activity that Applicant would application would be prohibited by a valid state law.3 be prohibited from engaging in. Although the Reserve In view of the ambiguity of the relevant provision of Bank might not have interpreted the above provision Kentucky law, as well as the conflicting opinions of in the same manner as the State Commissioner, and so the State Commissioner and the Attorney General informed the protestants to the subject application, the regarding the interpretation thereof, the Board has State Commissioner's interpretation was found to be decided to follow the more limited interpretation of reasonable. Therefore, in accordance with the State that provision of state law which would prohibit a Commissioner's interpretation, the Reserve Bank con- Kentucky bank holding company from directly or cluded that KRS § 287.030(3) does not prohibit Appli- indirectly engaging in any insurance activities except cant's proposed insurance activities through agency. those specified in KRS § 287.030(3). Under this inter- Following the Reserve Bank's approval of the sub- pretation, Applicant would be prohibited by state law ject proposal, IIAK requested that the Kentucky At- from engaging in certain of its proposed activities, torney General issue an interpretation of the relevant specifically, acting as agent or broker with respect to provision of KRS § 287.030(3). On May 8, 1981, the the sale of property and casualty insurance. Accord- Attorney General issued his opinion that a Kentucky ingly, the Board hereby vacates that portion of the bank holding company would be prohibited under the Reserve Bank's Order of April 20, 1981, approving above-cited section of law from acquiring a company Applicant's proposal to engage, through Agency, in that would perform insurance activities that the bank the activity of acting as insurance agent or broker with holding company itself would be prohibited from en- respect to the sale of property and casualty insurance gaging in under state law. The Attorney General which is directly related to extensions of credit, and, in opined that it was the clear intent of the state legisla- addition, it denies Applicant's proposal to engage in ture to limit the involvement of Kentucky bank hold- such property and casualty insurance activities. The ing companies in insurance activities and any con- Board, however, affirms in all other respects the struction authorizing such a holding company to Reserve Bank's Order. engage in more extensive insurance activities indirect- By order of the Board of Governors, effective ly through a subsidiary would render the limitation a August 6, 1981. nullity. Thus, because Applicant would be prohibited, under state law, from engaging in the proposed proper- Voting for this action: Chairman Volcker and Governors ty and casualty insurance activities, Applicant could Schultz, Teeters, Rice, and Gramley. Abstaining from this action Governor Wallich. Absent and not voting: Governor not, in the Attorney General's view, engage in such Partee. activities indirectly through Agency. Under Kentucky law, the Attorney General is the (Signed) WILLIAM W. WILES, chief law officer of the state and all its departments and [SEAL] Secretary of the Board. commissions, and is authorized to furnish written opinions touching the official duties of any state or local officials. Although opinions of the Attorney General are advisory in nature and not legally binding on officials or other parties, there is a tendency for state officials to follow such opinions. Accordingly, the State Commissioner does not appear to be legally 2. Florida Association of Insurance Agents, Inc., v. Board of bound to follow the Attorney General's opinion, and Governors, 591 F.2d 334 (1979); Alabama Association of Insurance Agents v. Board of Governors, 533 F.2d 224 (5th Cir. 1976), afTd on has indicated that he will not follow the Attorney rehearing 558 F.2d 729 (1977) (en banc) cert, den., 435 U.S. 904 (1978); General's opinion in this case. See, Whitney National Bank in Jefferson Parish v. Bank of New Orleans and Trust Company, 379 U.S. 411 (1965). Under section 4(c)(8) of the act, the Board is prelim- 3. Whitney National Bank in Jefferson Parish v. Bank of New inarily required, in accordance with Supreme Court Orleans and Trust Company, 379 U.S. 411, 419 (1965). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 743 ORDERS APPROVING APPLICATIONS UNDER THE BANK HOLDING COMPANY ACT AND BANK MERGER ACT By the Board of Governors During August 1981, 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 Applicant Bank(s) (effective date) Agri Bancorporation, Sedgwick County Bank, August 24, 1981 Holyoke, Colorado Julesburg, Colorado The Chugwater Corporation, First National Bank of Chugwater, August 7, 1981 Chugwater, Wyoming Chugwater, Wyoming FirstBank Holding Company of Colorado, FirstBank of Avon, August 11, 1981 Lakewood, Colorado Avon, Colorado FirstBank Holding Company, Lakewood, Colorado First International Bancshares, Inc., The First National Bank in Mount August 25, 1981 Dallas, Texas Pleasant, Mount Pleasant, Texas First International Bancshares, Inc., Paris Bank of Texas, August 28, 1981 Dallas, Texas Paris, Texas Independent Bank Holding Company, Western National Bank of Denver, August 31, 1981 Englewood, Colorado Denver, Colorado The Moorcroft Corporation, Moorcroft State Bank, Moorcroft, August 10, 1981 Moorcroft, Wyoming Moorcroft, Wyoming The Newcastle Corporation, National Bank of Newcastle, August 10, 1981 Newcastle, Wyoming Newcastle, Wyoming Southwest Bancshares, Inc., Fort Worth Bancshares Inc., August 10, 1981 Houston, Texas Fort Worth, Texas Fort Worth Bank and Trust, Fort Worth, Texas Southwest Bancshares, Inc., Mansfield State Bank, August 14, 1981 Houston, Texas Mansfield, Texas Texas American Bancshares Inc., Fondren Southwest Bank, August 20, 1981 Fort Worth, Texas Houston, Texas Thomas County Bankshares Thomas County Bankshares, Inc., August 4, 1981 of Colby, Kansas, Inc., Colby, Kansas Colby, Kansas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

744 Federal Reserve Bulletin • September 1981 Sections 3 and 4 Nonbanking Reserve Effective Applicant Bank(s) company Bank date (or activity) Greene Investment Home State Bank, Chicago August 10, 1981 Co., Jefferson, Iowa Coon Rapids, Iowa Greene County Agri- to engage in the sale of cultural Credit Cor- credit life and disabilporation, ity insurance Jefferson, Iowa Section 4 Nonbanking _„ ,• Effective AApplic antt company t( or activit I y ) \ date Provident National Corporation, L. S. Consulting Corp., August 27, 1981 Philadelphia, Pennsylvania Philadelphia, Pennsylvania 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 Belle Plaine Service Corp., Citizens State Bank, Chicago August 10, 1981 Des Moines, Iowa Belle Plaine, Iowa The Bradley Corporation, The Bank of Bradley, St. Louis August 28, 1981 Bradley, Arkansas Bradley, Arkansas Brenton Banks, Inc., Community Holding Company, Chicago August 12, 1981 Des Moines, Iowa Knoxville, Iowa The Community National Bank & Trust Company of Knoxville, Knoxville, Iowa Burchard Bankshares, Inc., State Bank of Burchard, Kansas City July 31, 1981 Tecumseh, Nebraska Burchard, Nebraska CTS Bancorporation, Central Trust and Savings Bank, Chicago August 18, 1981 Eldridge, Iowa Eldridge, Iowa Cambridge Capital Co., Peoples State Bank of Cambridge, Minneapolis August 6, 1981 Cambridge, Minnesota Cambridge, Minnesota Citizens Financial Services, Inc. Citizens Bank of Aurora, Kansas City August 6, 1981 Aurora, Colorado Aurora, Colorado City Bancshares, Inc., The City National Bank of Mineral Dallas July 31, 1981 Mineral Wells, Texas Wells, Mineral Wells, Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 745 Section 3—Continued Reserve Effective Applicant BBaannkk((ss)) Bank date Commerical Bancshares, Inc., Commercial Bank, Kansas City July 17, 1981 Tulsa, Oklahoma Tulsa, Oklahoma Dakota Bank Holding Co., Bank of Cresbard, Minneapolis August 7, 1981 Aberdeen, South Dakota Cresbard, South Dakota Dakota Bankshares, Inc., Liberty National Bank and Trust Minneapolis August 24, 1981 Fargo, North Dakota Company, Dickinson, North Dakota Emerson First National Company, The First National Bank, Kansas City August 14, 1981 Schuyler, Nebraska Emerson, Nebraska First Fairfield Bankshares, Inc., First National Bank, Dallas August 6, 1981 Fairfield, Texas Fairfield, Texas First Healdton Bancorporation, Inc., Bank of Healdton, Kansas City August 11, 1981 Healdton, Oklahoma Healdton, Oklahoma First Jefferson Corporation, The Jefferson Bank, Atlanta August 13, 1981 Biloxi, Mississippi Biloxi, Mississippi Fort Gibson Bancshares, Inc., Fort Gibson State Bank, Kansas City July 30, 1981 Fort Gibson, Oklahoma Fort Gibson, Oklahoma Franklin Bancorp, Inc., Bank of College Grove, Altanta August 6, 1981 College Grove, Tennessee College Grove, Tennessee GNB Bancorporation, The Grundy National Bank of Chicago August 10, 1981 Grundy Center, Iowa Grundy Center, Grundy Center, Iowa Gulfstream Banks, Inc., Summit Banking Corporation, Atlanta August 14, 1981 Boca Raton, Florida Tamarac, Florida Summit Bank, Tamarac, Florida Jeffries Insurance Agency, Inc., First State Bank of Buckner, Kansas City August 14, 1981 Buckner, Missouri Buckner, Missouri Kavanaugh Bancshares, Inc., The Farmers Bank of Walker Kansas City July 24, 1981 Walker, Missouri Walker, Missouri Liberty Bancshares, Inc., Liberty Bank, Atlanta August 14, 1981 Brentwood, Tennessee Brentwood, Tennessee Lytton Bancorporation, Lytton Savings Bank, Chicago August 20, 1981 Lytton, Iowa Lytton, Iowa Mercer Bancorp, Inc., The Peoples Bank of Mercer, Kansas City August 14, 1981 Mercer, Missouri Mercer, Missouri Michigan National Corporation, Peoples State Bank of East Tawas, Chicago August 11, 1981 Bloomfield Hills, Michigan East Tawas, Michigan Michigan National Corporation, The Midwest Bank, Chicago August 18, 1981 Bloomfield Hills, Michigan Jackson, Michigan Mountain Valley Bankshares, Inc., Mountain Valley Bank, Kansas City August 3, 1981 Conifer, Colorado Conifer, Colorado Mustang Community Ban Corp., Mustang Community Bank, Kansas City August 3, 1981 Mustang, Oklahoma Mustang, Oklahoma National City Bancorporation, National City Bank of Ridgedale, Minneapolis August 19, 1981 Minneapolis, Minnesota Minnetonka, Minnesota North Fork Bancorporation, Inc., The North Fork Bank and Trust New York August 21, 1981 Mattituck, New York Company, Mattituck, New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

746 Federal Reserve Bulletin • September 1981 Section 3—Continued Reserve Effective AApppplliiccaanntt BBaannkk((ss)) Bank date Palos Bancshares, Inc., Palos Bank and Trust Company, Chicago August 7, 1981 Palos Heights, Illinois Palos Heights, Illinois Peoples Bankshares, Ltd., Parkersburg State Bank, Chicago August 24, 1981 Waterloo, Iowa Parkersburg, Iowa Perry Bancshares, Inc., Perry State Bank, St. Louis August 14, 1981 Perry, Missouri Perry, Missouri Platteville Capital Corporation, The Platteville State Bank, Kansas City July 24, 1981 Platteville, Colorado Platteville, Colorado Port Neches Bancshares, Inc., The First National Bank of Port Dallas August 7, 1981 Port Neches, Texas Neches, Port Neches, Texas Puget Sound Bancorp, Puget Sound National Bank, San Francisco August 21, 1981 Tacoma, Washington Tacoma, Washington Security National Corporation, The First National Bank of Akron, Chicago August 18, 1981 Sioux City, Iowa Akron, Iowa Shattuck Bancshares, Inc., The Shattuck National Bank, Kansas City August 14, 1981 Shattuck, Oklahoma Shattuck, Oklahoma Shawmut Corporation, First Melville Bancorp, Inc., Boston August 12, 1981 Boston, Massachusetts New Bedford, Massachusetts Shawneetown Bancorp, Inc., First National Bank in Shawnee- St. Louis August 7, 1981 Shawneetown, Illinois town, Shawneetown, Illinois Sheridan Bancorp, Inc., Sheridan State Bank, Chicago August 25, 1981 Sheridan, Illinois Sheridan, Illinois Sherburn Bancshares, Inc., Farmers State Bank of Sherburn, Minneapolis August 28, 1981 Sherburn, Minnesota Sherburn, Minnesota Society Corporation, Lancaster National Bank, Cleveland August 6, 1981 Cleveland, Ohio Lancaster, Ohio Southwest Bancorporation, Inc., First American State Bank of Minneapolis July 30, 1981 Minneapolis, Minnesota Brownsdale, Brownsdale, Minnesota Southwest Florida Banks, Inc., Peoples Bank of Hillsborough Atlanta August 7, 1981 Fort Myers, Florida County, Tampa, Florida Texas Commerce Bancshares, Inc., First National Bank of Stafford, Dallas August 13, 1981 Houston, Texas Houston, Texas Troy Bancorp, Inc., Bank of Troy, St. Louis August 14, 1981 Troy, Tennessee Troy, Tennessee Twin Cities Financial Services, Inc., Citizens Bank of Blount County, Atlanta August 20, 1981 Mary ville, Tennessee Mary ville, Tennessee Union Planters Corporation, Union Planters Bank of Nashville, St. Louis August 21, 1981 Memphis, Tennessee Nashville, Tennessee Westex Bancorp, Inc., The First State Bank, Dallas July 27, 1981 Del Rio, Texas Brackettville, Texas Wyoming Bancorporation First Wyoming Bank, N.A.- Kansas City July 31, 1981 Cheyenne, Wyoming Torrington, Torrington, Wyoming Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 103 Sections 3 and 4 Nonbanking Reserve Effective Applicant Bank(s) company Bank date (or activity) V & V Holding Com- Central Trust Company trust company Kansas City August 7, 1981 pany Lander, Wyoming activities Lander, Wyoming Central Bank and Trust Lander, Wyoming PENDING CASES INVOLVING THE BOARD OF GOVERNORS* *This list of pending cases does not include suits A. G. Becker, Inc., v. Board of Governors, et al., filed against the Federal Reserve Banks in which the Board October 1980, U.S.C.A. for the District of Columof Governors is not named a party. bia. Independent Insurance Agents of America and Independent Insurance Agents of Missouri v. Board of Bank Stationers Association, Inc., et al v. Board of Governors, filed September 1980, U.S.C.A. for the Governors, filed July 1981, U.S.D.C. for the North- Eighth Circuit. ern District of Georgia. Nebraska Bankers Association, et al. v. Board of Public Interest Bounty Hunters v. Board of Gover- Governors, et al., filed September 1980, U.S.D.C. nors, et al., filed June 1981. U.S.D.C. for the for the District of Nebraska. Northern District of Georgia. Republic of Texas Corporation v. Board of Governors, Edwin F. Gordon v. John Heimann, et al., filed May filed September 1980, U.S.C.A. for the Fifth Cir- 1981, U.S.C.A. for the Fifth Circuit. cuit. Louis J. Roussell v. Board of Governors, filed May A. G. Becker, Inc. v. Board of Governors, et al., filed 1981, U.S.C.A. for the District of Columbia. August 1980, U.S.D.C. for the District of Columbia. Wilshire Oil Company of Texas v. Board of Gover- Otero Savings and Loan Association v. Board of nors, et al., filed April 1981, U.S.C.A. for the Third Governors, filed August 1980, U.S.D.C. for the Circuit. District of Colorado. People of the State of Arkansas v. Board of Gover- Edwin F. Gordon v. Board of Governors, et al., filed nors, et al., filed March 1981, U.S.C.A. for the August 1980, U.S.C.A. for the Fifth Circuit. Western District of Arkansas. U.S. League of Savings Associations v. Depository First Bank & Trust Company v. Board of Governors, Institutions Deregulation Committee, et al., filed filed February 1981, U.S.D.C. for the Eastern Dis- June 1980, U.S.D.C. for the District of Columbia. trict of Kentucky. Berkovitz, et al. v. Government of Iran, et al., filed Ellis E. St. Rose & James H. Sibbet v. Board of June 1980, U.S.D.C. for the Northern District of Governors, filed February 1981, U.S.D.C. for the California. District of Columbia. Mercantile Texas Corporation v. Board of Governors, Option Advisory Service, Inc. v. Board of Governors, filed May 1980, U.S.C.A. for the Fifth Circuit. et al., filed February 1981, U.S.C.A. for the Second Corbin, Trustee v. United States, filed May 1980, Circuit. United States Court of Claims. 9 to 5 Organization for Women Office Workers v. Louis J. Roussel v. Comptroller of the Currency and Board of Governors, filed December 1980, Federal Reserve Board, filed April 1980, U.S.D.C. U.S.D.C. for the District of Massachusetts. for the District of Columbia. Securities Industry Association v. Board of Gover- County National Bancorporation and TGB Co. v. nors, et al., filed October 1980, U.S.D.C for the Board of Governors, filed September 1979, District of Columbia. U.S.C.A. for the Eighth Circuit. Securities Industry Association v. Board of Gover- Donald W. Riegle, Jr. v. Federal Open Market Comnors, et al., filed October 1980, U.S.C.A. for the mittee, filed July 1979, U.S.D.C. for the District of District of Columbia. Columbia. A. G. Becker, Inc., v. Board of Governors, et al., filed Security Bancorp and Security National Bank v. October 1980, U.S.D.C. for the District of Colum- Board of Governors, filed March 1978, U.S.C.A. for bia. the Ninth Circuit. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

748 Federal Reserve Bulletin • September 1981 Roberts Farms, Inc. v. Comptroller of the Currency, September 1976, U.S.C.A. for the District of Coet al., filed November 1975, U.S.D.C. for the South- lumbia. ern District of California. David Merrill, et al. v. Federal Open Market Commit- Darnell Hilliard v. G. William Miller, et al., filed tee, filed May 1975, U.S.D.C. for the District of Columbia. 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 Reserves of depository institutions, reserve, A18 All reporting banks bank credit A19 Banks with assets of $1 billion or more A5 Reserves and borrowings of depository A20 Banks in New York City institutions A21 Balance sheet memoranda A6 Federal funds and repurchase agreements of A22 Branches and agencies of foreign banks large member banks A23 Commercial and industrial loans A24 Gross demand deposits of individuals, partnerships, and corporations POLICY INSTRUMENTS A7 Federal Reserve Bank interest rates FINANCIAL MARKETS A8 Depository institutions reserve requirements A9 Maximum interest rates payable on time and A25 Commercial paper and bankers dollar savings deposits at federally insured institutions acceptances outstanding A10 Federal Reserve open market transactions A26 Prime rate charged by banks on short-term business loans A26 Terms of lending at commercial banks FEDERAL RESERVE BANKS A27 Interest rates in money and capital markets A28 Stock market—Selected statistics All Condition and Federal Reserve note statements A29 Savings institutions—Selected assets and A12 Maturity distribution of loan and security liabilities holdings FEDERAL FINANCE MONETAR Y AND CREDIT A GGREGA TES A30 Federal fiscal and financing operations A12 Bank debits and deposit turnover A31 U.S. budget receipts and outlay A13 Money stock measures and components A32 Federal debt subject to statutory limitation A14 Aggregate reserves of depository institutions A32 Gross public debt of U.S. Treasury—Types and and member bank deposits ownership A15 Loans and securities of all commercial banks A33 U.S. government marketable securities— Ownership, by maturity A34 U.S. government securities dealers— COMMERCIAL BANKS Transactions, positions, and financing A35 Federal and federally sponsored credit A16 Major nondeposit funds agencies—Debt outstanding A17 Assets and liabilities, last Wednesday-of-month series Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

106 Federal Reserve Bulletin • September 1981 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 institutions liabilities A38 Total nonfarm business expenditures on new plant and equipment REPORTED BY BANKS IN THE UNITED STATES A39 Domestic finance companies—Assets and liabilities; business credit A58 Liabilities to and claims on foreigners A59 Liabilities to foreigners A61 Banks' own claims on foreigners REAL ESTATE A62 Banks' own and domestic customers' claims on foreigners A40 Mortgage markets A62 Banks' own claims on unaffiliated foreigners A41 Mortgage debt oustanding A63 Claims on foreign countries—Combined domestic offices and foreign branches CONSUMER INSTALLMENT CREDIT SECURITIES HOLDINGS AND TRANSACTIONS A42 Total outstanding and net change A43 Extension and liquidations A64 Marketable U.S. Treasury bonds and notes— Foreign holdings and transactions A64 Foreign official assets held at Federal Reserve FLOW OF FUNDS Banks A65 Foreign transactions in securities A44 Funds raised in U.S. credit markets 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, Statistical Releases, and Special Tables Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Financial Statistics A3 1.10 MONETARY AGGREGATES AND INTEREST RATES 1980 1981 1981 Item Q3 Q4 Ql Q2 Mar. Apr. May June July Monetary and credit aggregates (annual rates of change, seasonally adjusted in percent)1 Reserves of depository institutions 1 Total 7.0' 16.7' 2.8' 3.3' 3.7' 6.0' 8.5' -5.8' 7.9 2 Required 6.1r 15.6' 4.1r 4.3' 4.6' 9.8' 7.1' -8.1' 7.9 3 Nonborrowed 12.9' 7.2 7.8' -3.3' 13.6' -4.5' -19.4' 0.1' 19.9 4 Monetary base2 9.5 10.6 5.1' 5.3' 3.7' 6.9' 8.5' 0.2' 8.9 Concepts of money and liquid assets3 5 Ml-A 11.3 8.2 -20.8 -5.3 -4.6 2.6 -5.6 -9.9 --22..00 6 Ml-B 13.9 10.8 4.9 8.7 13.1 22.3 -6.1 -7.5 3.6 7 M2 15.4 8.1 8.3' 10.6 16.2 13.6 3.7 4.1 7.5 8 M3 13.1 11.3 12.4 10.6' 10.8' 11.1' 8.7' 10.6' 8.7 9 L 10.0' 11.4' 12.9' 8.5 5.8' 6.1' 10.9' 11.7 n.a. Time and savings deposits Commercial banks 10 Total 6.1 15.4 17.0 10.0 2.0 6.8 19.2 17.2 16.8 11 Savings4 22.2 1.5 -30.5 -11.9 -10.4 -2.8 -16.0 -24.0 -11.5 12 Small-denomination time5 2.1 16.2 30.2 13.4 16.4 5.4 15.8 22.0 14.5 13 Large-denomination time6 -1.2 25.4 37.5 20.0 -5.9 13.7 44.3 35.8 34.8 14 Thrift institutions7 10.1 9.7 5.3 0.4 1.5 -2.5 2.7 0.3 -5.2 15 Total loans and securities at commercial banks8 6.7 14.6' 11.8 5.5 -.7' 4.4 11.7 5.7 5.7 1980 1981 1981 Q3 Q4 Ql Q2 Apr. May June July Aug. Interest rates (levels, percent per annum) Short-term rates 16 Federal funds9 9.83 15.85 16.57 17.78 15.72 18.52 19.10 19.04 17.82 17 Discount window borrowing10 10.35 11.78 13.00 13.62 13.00 13.87 14.00 14.00 14.00 18 Treasury bills (3-month market yield)1 9.15 13.61 14.39 14.91 13.69 16.30 14.73 14.95 15.51 19 Commercial paper (3-month)11 12 9.65 15.26 15.34 16.15 14.56 17.56 16.32 17.00 17.23 Long-term rates Bonds 20 U.S. government13 10.95 12.23 12.74 13.49 13.46 13.82 13.20 13.92 14.52 21 State and local government14 8.58 9.59 9.97 10.69 10.62 10.78 10.67 11.14 12.26 22 Aaa utility (new issue)15 12.20 13.49 14.45 15.41 15.68 15.81 14.76 16.30 23 Conventional mortgages16 13.12 14.62 15.10 16.15' 15.70 16.35 16.40 16.70 17.50 1. Unless otherwise noted, rates of change are calculated from average amounts 4. Savings deposits exclude negotiable order of withdrawal (NOW) and automatic outstanding in preceding month or quarter. Growth rates are adjusted for discon- transfer service (ATS) accounts at commercial banks. tinuities in series that result from changes in Regulation D. 5. Small-denomination time deposits are those issued in amounts of less than 2. Includes reserve balances at Federal Reserve Banks in the current week plus $100,000. vault cash held two weeks earlier used to satisfy reserve requirements at all deposi- 6. Large-denomination time deposits are those issued in amounts of $100,000 or tory institutions plus currency outside the U.S. Treasury, Federal Reserve Banks, more. the vaults of depository institutions, and surplus vault cash at depository institu- 7. Savings and loan associations, mutual savings banks, and credit unions. tions. 8. Changes calculated from figures shown in table 1.23. 3. Ml-A: Averages of daily figures for (1) demand deposits at all commercial 9. Averages of daily effective rates (average of the rates on a given date weighted banks other than those due to domestic banks, the U.S. government, and foreign by the volume of transactions at those rates). banks and official institutions less cash items in the process of collection and Federal 10. Rate for the Federal Reserve Bank of New York. Reserve float; (2) currency outside the Treasury, Federal Reserve Banks, and the 11. Quoted on a bank-discount basis. vaults of commercial banks; and (3) traveler's checks of nonbank issuers. 12. Unweighted average of offering rates quoted by at least five dealers. Ml-B: Ml-A plus negotiable order of withdrawal and automated transfer service 13. Market yields adjusted to a 20-year maturity by the U.S. Treasury. accounts at banks and thrift institutions, credit union share draft accounts, and 14. Bond Buyer series for 20 issues of mixed quality. demand deposits at mutual savings banks. 15. Weighted averages of new publicly offered bonds rated Aaa, Aa, and A by M2: Ml-B plus savings and small-denomination time deposits at all depository Moody's Investors Service and adjusted to an Aaa basis. Federal Reserve cominstitutions, overnight repurchase agreements at commercial banks, overnight Eu- pilations. rodollars held by U.S. residents other than banks at Caribbean branches of member 16. Average rates on new commitments for conventional first mortgages on new banks, and money market mutual fund shares. homes in primary markets, unweighted and rounded to nearest 5 basis points, from M3: M2 plus large-denomination time deposits at all depository institutions and Dept. of Housing and Urban Development. term RPs at commercial banks and savings and loan associations. NOTE. Reserve series have been revised to adjust for discontinuties associated L: M3 plus other liquid assets such as term Eurodollars held by U.S. residents with the transitional phase-in of reserve requirements under the Monetary Control other than banks, bankers acceptances, commercial paper, Treasury bills and other Act of 1980. liquid Treasury securities, and U.S. savings bonds. M3 has been revised to incorporate additional data for term repurchase agreements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic Nonfinancial Statistics • September 1981 1.11 RESERVES OF DEPOSITORY INSTITUTIONS, RESERVE BANK CREDIT Millions of dollars Monthly averages of Weekly averages of daily figures for week ending daily figures Factors 1981 1981 JuneP JulyP Aug.P July 15P July 22P July 29P Aug. 5P Aug. 12P Aug. 19P Aug. 26P SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 144,999 147,405 146,892 147,172 148,927 147,246 145,784 146,268 148,189 147,299 2 U.S. government securities1 120,637 122,882 124,522 123,129 123,889 122,820 123,025 122,967 125,497 125,801 3 Bought outright 120,333 121,203 123,950 120,624 121,344 121,604 121,682 122,967 124,408 125,207 4 Held under repurchase agreements 304 1,679 572 2505 2,545 1,216 1,343 0 1,089 594 5 Federal agency securities 8,773 9,067 8,785 9,094 9,395 8,867 8.941 8,694 8,881 8,780 6 Bought outright 8,710 8,694 8,694 8.694 8,694 8,694 8,694 8,694 8,694 8,694 7 Held under repurchase agreements 63 373 91 400 701 173 247 0 187 86 8 Acceptances 155 338 102 393 453 154 303 0 214 89 9 Loans 2,038 1,751 1,408 1,295 1,730 1.978 1,118 1,271 1,457 1,726 10 Float 3,474 3,176 2,796 3,276 3,230 3,167 2.779 3,701 2,723 2,148 11 Other Federal Reserve assets 9,922 10,191 9,279 9.984 10,229 10,261 9,618 9,635 9,416 8,754 12 Gold stock 11,154 11,154 11,154 11,154 11,154 11.154 11,154 11,154 11,154 11,154 13 Special drawing rights certificate account. .. 2,826 3,068 3,068 3,068 3,068 3,068 3,068 3,068 3,068 3.068 14 Treasury currency outstanding 13.587 13,613 13.607 13,585 13.590 13,594 13.922 13,606 13,609 13,609 ABSORBING RESERVE FUNDS 15 Currency in circulation 136,730 138,360 138,452 139,069 138,411 137,732 138,338 139,033 138,915 138,140 16 Treasury cash holdings 498 468 450 475 463 457 449 450 452 453 Deposits, other than member bank reserves with Federal Reserve Banks 17 Treasury 3.049 3.144 3,208 3,407 3.106 3,063 2,961 3,614 2,974 3,106 18 Foreign 292 309 280 262 293 282 270 279 276 277 19 Other 367 538 503 524 490 531 602 446 460 487 20 Required clearing balances n.a. n.a. 26 n.a. n.a. n.a. n.a. n.a. 42 43 21 Other Federal Reserve liabilities and capital 4,810 5,249 4,778 4,867 5,024 6,001 4,764 4,560 4,924 4,843 22 Reserve accounts2 26,819 27,172 27,023 26,373 28,952 26,997 26,544 25,713 27,976 27,780 End-of-month figures Wednesday figures 1981 1981 June July Aug. July 15 July 22 July 29 Aug. 5 Aug. 12 Aug. 19 Aug. 26 SUPPLYING RESERVE FUNDS 23 Reserve bank credit outstanding 142,934 144,651 145,731 149,276 155,422 147,760 148,166 146,395 149,191 144,829 24 U.S. government securities1 120.017 123,172 124,522 122,289 125,682 122.549 122,692 122,710 126,082 122,829 25 Bought outright 120,017 121,554 124,522 121.581 121,658 120.873 122,692 122,710 125,155 122,829 26 Held under repurchase agreements 0 1,618 0 708 4.024 1.676 0 0 927 0 27 Federal agency securities 8,694 9,054 8,694 8,918 9,998 9,251 8,694 8,694 8,986 8,694 28 Bought outright 8.694 8,694 8,694 8,694 8.694 8,694 8,694 8,694 8,694 8,694 29 Held under repurchase agreements 0 360 0 224 1,304 557 0 0 292 0 30 Acceptances 0 453 0 223 621 296 0 0 154 0 31 Loans 1.010 1,027 1,254 3.286 5,230 1.916 1,804 1,321 1,914 1,482 32 Float 2,506 1,251 2,229 4,443 3,626 3,060 5,081 3.933 3,203 2,885 33 Other Federal Reserve assets 10,707 9,694 9,032 10,117 10,265 10.688 9,895 9,737 8,852 8,939 34 Gold stock 11.154 11,154 11,154 11,154 11.154 11,154 11.154 11,154 11,154 11,154 35 Special drawing rights certificate account.. 3,068 3.068 3,068 3,068 3.068 3,068 3,068 3,068 3,068 3,068 36 Treasury currency outstanding 14.155 14,350 13,609 13,588 13,593 13.599 13,604 13,609 13,609 13,609 ABSORBING RESERVE FUNDS 37 Currency in circulation 138,080 138,287 137,913 139,181 138,348 138.158 138,896 139,572 138,968 138,246 38 Treasury cash holdings 478 448 446 466 463 453 447 453 453 448 Deposits, other than member bank reserves with Federal Reserve Banks 39 Treasury 2,923 2.922 2.595 3,153 3,573 3.193 2,936 3,075 3,104 3,139 40 Foreign 338 285 256 288 346 211 205 241 207 263 41 Other 536 472 502 486 674 1,010 798 454 434 503 42 Required clearing balances n.a. n.a. 45 n.a. n.a. n.a. n.a. n.a. 42 43 43 Other Federal Reserve liabilities and capital 5,330 4,798 4,805 4.558 5,064 5,686 4,428 4,414 4,755 4,591 44 Reserve accounts2 23,626 26,011 27,000 28.953 34,769 26,870 28,282 26,017 29,059 25,427 1. Includes securities loaned—fully guaranteed by U.S. government securities 2. Excludes required clearing balances, pledged with Federal Reserve Banks—and excludes (if any) securities sold and NOTE. For amounts of currency and coin held as reserves, see table 1.12. scheduled to be bought back under matched sale-purchase transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Depository Institutions A5 1.12 RESERVES AND BORROWINGS Depository Institutions Millions of dollars Monthly averages of daily figures Reserve classification 1979 1980 1981 Dec. Dec. Jan. Feb. Mar. Apr. May June July Aug. 1 Reserve balances with Reserve Banks1 3322,,447733 2266,,666644 2277,,111144 2266,,559911 2266,,772222 2277,,117733 2266,,882222 2266,,881199 2277,,117722 2277..002233 2 Total vault cash (estimated) nn..aa.. 1188,,114499 1199,,229933 1177,,882244 1177,,332277 1177,,118899 1177,,777733 1188,,119988 1188,,227733 1188,,443388 3 Vault cash at institutions with required reserve balances2 1111,,334444 1122,,660022 1133,,558877 1122,,118877 1111,,668877 1111,,668877 1122,,112244 1122,,339966 1122,,550044 1122,,558855 4 Vault cash equal to required reserves at other institutions nn..aa.. 770044 770000 776633 11,,223377 11..220044 11,,331100 11,,335500 11,,331199 11,,336644 5 Surplus vault cash at other institutions3 .. nn..aa.. 44,,884433 55,,000066 44,,887744 44,,440033 44,,229988 44,,333399 44,,445522 44,,445500 44,,448899 6 Reserve balances + total vault cash4 nn..aa.. 4444,,994400 4466,,552200 4444,,552244 4444,,115555 4444..445511 4444,,668833 4455,,110000 4455,,550077 4455,,551133 7 Reserve balances + total vault cash used to satisfy reserve requirements4-5 4433,,997722 4400,,009977 4411,,551144 3399,,665500 3399,,775522 4400,,115533 4400,,334444 4400,,664488 4411,,005577 4411..002244 8 Required reserves (estimated) 4433,,557788 4400,,006677 4411,,002255 3399,,444488 3399,,337722 4400,,007711 4400,,221133 4400,,009988 4400,,667755 4400,,775533 9 Excess reserve balances at Reserve Banks4-6 . 339944 3300 448899 220022 338800 8822 113311 555500 338822 227711 10 Total borrowings at Reserve Banks 11,,447733 11,,661177 11,,440055 11,,227788 11,,000044 11,,334433 22,,115544 22,,003388 11,,775511 11,,440088 11 Seasonal borrowings at Reserve Banks 8822 111166 112200 114488 119977 116611 225599 229911 224488 222200 nn..aa.. nn..aa.. nn..aa.. nn..aa.. nn..aa.. nn..aa.. nn..aa.. nn..aa.. nn..aa.. 7799 Weekly averages of daily figures for week ending: June 24 July 1 July 8 July 15 July 22 July 29 Aug. 5 Aug. 12 Aug. 19 Aug. 26 13 Reserve balances with Reserve Banks1 27,430 27,383 26,406 26,373 28,952 26,997 26,544 25,713 27,976 27,780 14 Total vault cash (estimated) 17,306 18,325 18,495 18,856 16.736 18,878 18,688 19,048 17,911 17,995 15 Vault cash at institutions with required reserve balances2 11,907 12,573 12,729 12.831 11,411 12,940 12,848 13,054 12,180 1122,,116644 16 Vault cash equal to required reserves at other institutions 1,230 1,285 1,309 1,361 1,258 1,351 1,323 1,383 1,306 1,448 17 Surplus vault cash at other institutions3 .. 4,169 4,467 4,457 4,664 4,067 4,587 4,517 4,611 4,425 4,383 18 Reserve balances + total vault cash4 44,818 45,785 44,975 45,288 45,747 45,931 45,288 44,815 45,940 4455,,882266 19 Reserve balances + total vault cash used to satisfy reserve requirements4-5 40,649 41,318 40,518 40,624 41,680 41,344 40,771 40,204 41,515 41,443 20 Required reserves (estimated) 40,285 40,830 40,017 40,495 41,350 40,895 40,392 39,882 41,298 41,281 21 Excess reserve balances at Reserve Banks4-6 . 364 488 501 129 330 449 379 322 217 162 22 Total borrowings at Reserve Banks 2,305 1,735 1,866 1,295 1,730 1,978 1,118 1,271 1,457 1,726 23 Seasonal borrowings at Reserve Banks 306 306 241 247 244 258 227 223 231 246 24 Extended credit at Reserve Banks n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 155 1. As of Aug. 13, 1981 excludes required clearing balances of all depository existing member bank, or when a nonmember bank joins the Federal Reserve institutions. System. For weeks for which figures are preliminary, figures by class of bank do 2. Prior to Nov. 13, 1980, the figures shown reflect only the vault cash held by not add to total because adjusted data by class are not available. member banks. 5. Reserve balances with Federal Reserve Banks which exclude required clearing 3. Total vault cash at institutions without required reserve balances less vault balances plus vault cash at institutions with required reserve balances plus vault cash equal to their required reserves. cash equal to required reserves at other institutions. 4. Adjusted to include waivers of penalties for reserve deficiencies in accordance 6. Reserve balances with Federal Reserve Banks which exclude required clearing with Board policy, effective Nov. 19, 1975, of permitting transitional relief on a balances plus vault cash used to satisfy reserve requirements less required reserves. graduated basis over a 24-month period when a nonmember bank merged into an (This measure of excess reserves is comparable to the old excess reserve concept published historically.) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Nonfinancial Statistics • September 1981 1.13 FEDERAL FUNDS AND REPURCHASE AGREEMENTS Large Member Banks1 Averages of daily figures, in millions of dollars 1981, week ending Wednesday BByy mmaattuurriittyy aanndd ssoouurrccee July 1 July 8 July 15 July 22 July 29' Aug. 5 Aug. 12 Aug. 19 Aug. 26 One day and continuing contract 1 Commercial banks in United States 46,493' 51,960 52,105 46,894 44,629 47,895 51,567 47,237 45,287 2 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 16,312' 15,528r 16,290r 15.554r 15,278 15,092 15,522 16,048 15,841 3 Nonbank securities dealers 2,600 2,831 2,998 3,041 2,276 2,767 2,629 3,081 3,143 4 All other 20,731 17,066 20,659' 21,408' 21,856 20,888 20,998 20,224 21,365 All other maturities 5 Commercial banks in United States 3,655 4.930 3,572 3,504 3,546 3,592 3,283 3,233 3,275 6 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 7,410 7,429 7,732 8,218 7,330 7,212 6,721 7,111 6,865 7 Nonbank securities dealers 5,313 5.469 4,926 4,884 4,921 4,887 4,479 4,573 4,328 8 All other 9,702 12,732r 9,822 9,849 9,567 9,854 9,908 9,596 9,501 MEMO: Federal funds and resale agreement loans in maturities of one day or continuing contract 9 Commercial banks in United States 16,006 15,924 17,081 15,304 14,778 16,389 15,347 16,247 14,111 10 Nonbank securities dealers 2,931 2,744 2,294' 2,598r 2,357 2,534 2,819 2,679 2,408 1. Banks with assets of $1 billion or more as of Dec. 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 Other extended credit2 SSShhhooorrrttt---ttteeerrrmmm aaadddjjjuuussstttmmmeeennnttt cccrrreeedddiiittt aaannnddd ssseeeaaasssooonnnaaalll cccrrreeedddiiittt111 First 60 days Next 90 days FFFFeeeeddddeeeerrrraaaallll RRRReeeesssseeeerrrrvvvveeee of borrowing of borrowing After 150 days BBBBaaaannnnkkkk EEEffffffeeeccctttiiivvveee dddaaattteee RRaattee oonn PPrreevviioouuss RRaattee oonn PPrreevviioouuss RRaattee oonn PPrreevviioouuss fffooorrr cccuuurrrrrreeennnttt rrraaattteeesss Rate on Effective Previous 88//3311//8811 rraattee 88//3311//8811 rraattee 88//3311//8811 rraattee 8/31/81 date rate Boston 14 5/5/81 13 15 14 15 14 15 14 5/5/81 New York 14 5/5/81 13 14 15 15 15 16 15 8/20/81 Philadelphia 14 5/5/81 13 14 15 15 15 16 15 8/20/81 Cleveland 14 5/5/81 13 14 15 15 15 16 15 8/25/81 Richmond 14 5/5/81 13 14 15 15 15 16 15 8/21/81 Atlanta 14 5/5/81 13 14 15 15 15 16 15 8/21/81 Ohio 14 5/8/81 13 14 15 15 15 16 15 8/27/81 St. Louis 14 5/5/81 13 14 15 15 15 16 15 8/25/81 Minneapolis 14 5/5/81 13 14 15 15 15 16 15 8/21/81 Kansas City 14 5/5/81 13 14 15 15 15 16 15 8/27/81 Dallas 14 5/5/81 13 14 15 15 15 16 15 8/20/81 San Francisco.... 14 5/5/81 13 14 15 15 15 16 15 8/21/81 Range of rates in recent years3 Range (or F.R. Range (or F.R. Range (or F.R. Effective date A le l v l e F l) . — R. Ba o n f k Effective date A le l v l e F l) . — R. Ba o n f k Effective date A le l v l e F l) . — R. Ba o n f k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1972. 4V4 4Vi 1976— Jan. 19 5 V5-6 5Vi 11997799—— SSeepptt.. 19 10W-11 11 1973— Jan. 15 5 5 23 51/4 5Vi 21 11 11 Feb. 26 5-5 Vi 5V2 Nov. 22 5to-5i/! 5 to Oct. 8 11-12 12 M Ap a r r . . 2 2 3 5V 5V l 5 - 53A 5 51 V /2 i 26 5to 5to 10 12 12 May 4 53/4 53/4 11997777—— AAuugg.. 30 51/4-53/4 5to 1980— Feb. 15 12-13 13 11 5V4-6 6 31 5V4-53/4 53/4 19 13 13 June 1 1 1 8 1 5 6 6 6 -6 V Vi z 6 6 6 V V i i O Se c p t. t . 2 2 6 6 5 % 6 53 /4 J MM u aa n yy e 3 2 1 0 9 3 1 1 1 1 2 2 - - 1 1 2 3 1 1 1 2 1 3 J A u u ly g . 2 1 2 3 4 1 7 I - V 1 i Y i 7 7 m 1 /2 1978— MM Ja aa n yy . 2 1 9 0 1 6V 6 6 S - - V 6 7 W i 7 6 6 V V 4 4 JJuullyy 2 2 1 8 9 6 10 1 1 - 1 0 1 1 1 1 1 0 1 0 12 7 7 Sept. 26 11 11 1974— Apr. 25 7V5-8 8 July 3 7-7to 7to Nov. 17 12 12 30 8 8 July 10 7 to 7to Dec. 5 12-13 13 Dec. 9 73/4-8 73/4 Aug. 21 73/4 73/4 8 13 13 1 6 73/4 73/4 Sept. 22 Oct. 16 8-8 Vi 8Vi 1981— May 5 13-14 14 1975— Jan. 6 7 to 7 to 20 8Vi 8Vi MMaayy 8 14 14 10 7 to 7to Nov. 1 8V^-9i/2 91/2 2 4 1V\ 7to 3 9Vi 9 Vi Feb. 5 63/4 7 6% 63/4 1979— July 20 10 10 Mar. 10 6V4-63/4 6to AAuugg.. 17 10-10VS lO'/i 14 6to 6 to 20 10V5 10W May 16 6-6to 6 In effect Aug. 31, 1981 14 14 1. Effective May 5, 1981, a 4 percent surcharge was applied to short-term ad- 3. Rates for short-term adjustment credit. For description and earlier data see justment credit borrowings by institutions with deposits or $500 million or more the following publications of the Board of Governors: Banking and Monetary who borrowed in successive weeks or in more than 4 weeks in a calendar quarter. Statistics, 1914-1941 and 1941-1970; Annual Statistical Digest, 1971-1975, 1972- The rate for seasonal credit is unaffected by the surcharge. 1976, 1973-1977, and 1974-1978. 2. Applicable to advances when exceptional circumstances or practices involve In 1980 and 1981, the Federal Reserve applied a surcharge to short-term adonly a particular depository institution and to advances when an institution is under justment credit borrowings by institutions with deposits of $500 million or more sustained liquidity pressures. See section 201.3(b)(2) of Regulation A. that had borrowed in successive weeks or in more than 4 weeks in a calendar quarter. A 3 percent surcharge was in effect from Mar. 17, 1980, through May 7, 1980. On Nov. 17, 1980, a 2 percent surcharge was adopted; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980 and to 4 percent on May 5, 1981. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 DomesticN onfinancial Statistics • September 1981 1.15 DEPOSITORY INSTITUTIONS RESERVE REQUIREMENTS1 Percent of deposits Member bank requirements Depository institution requirements before implementation of the after implementation of the Type of deposit, and deposit interval Monetary Control Act Type of deposit, and Monetary Control Act5 in millions of dollars deposit interval Percent Effective date Percent Net demand2 Net transaction accounts6 0 2 - - 2 1 0 7 9 >/2 1 1 2 2 / / 3 3 0 0 / / 7 7 6 6 O $0 v - e $ r 2 5 $ 2 m 5 i m lli i o ll n i on 10-100 113/4 12/30/76 100-400 123/4 12/30/76 Nonpersonal time deposits1 Over 400 16'/4 12/30/76 By original maturity Less than 4 years Time and savings2,3 4 years or more Savings 3/16/67 Eurocurrency liabilities Time4 All types 0-5, by maturity 30-179 days 3 3/16/67 180 days to 4 years 2'/i 1/8/76 4 years or more ... 1 10/30/75 Over 5, by maturity 30-179 days 6 12/12/74 180 days to 4 years 2Vi 1/8/76 4 years or more ... 1 10/30/75 1. For changes in reserve requirements beginning 1963, see Board's Annual (b) Effective with the reserve maintenance period beginning Oct. 25, 1979, a Statistical Digest, 1971-1975 and for prior changes, see Board's Annual Report for marginal reserve requirement of 8 percent was added to managed liabilities in 1976, table 13. Under provisions of the Monetary Control Act, depository insti- excess of a base amount. This marginal requirement was increased to 10 percent tutions include commercial banks, mutual savings banks, savings and loan asso- beginning Apr. 3, 1980, was decreased to 5 percent beginning June 12, 1980, and ciations, credit unions, agencies and branches of foreign banks, and Edge Act was reduced to zero beginning July 24, 1980. Managed liabilities are defined as corporations. large time deposits, Eurodollar borrowings, repurchase agreements against U.S. 2. (a) Requirement schedules are graduated, and each deposit interval applies government and federal agency securities, federal funds borrowings from nonto that part of the deposits of each bank. Demand deposits subject to reserve member institutions, and certain other obligations. In general, the base for the requirements were gross demand deposits minus cash items in process of collection marginal reserve requirement was originally the greater of (a) $100 million or (b) ana demand balances due from domestic banks. the average amount of the managed liabilities held by a member bank, Edge (b) The Federal Reserve Act as amended through 1978 specified different ranges corporation, or family of U.S. branches and agencies of a foreign bank for the two of requirements for reserve city banks and for other banks. Reserve cities were statement weeks ending Sept. 26,1979. For the computation period beginning Mar. designated under a criterion adopted effective Nov. 9,1972, by which a bank having 20,1980, the base was lowered by (a) 7 percent or (b) the decrease in an institution's net demand deposits of more than $400 million was considered to have the character U.S. office gross loans to foreigners and gross balances due from foreign offices of business of a reserve city bank. The presence of the head office of such a bank of other institutions between the base period (Sept. 13-26, 1979) and the week constituted designation of that place as a reserve city. Cities in which there were ending Mar. 12,1980, whichever was greater. For the computation period beginning Federal Reserve Banks or branches were also reserve cities. Any banks having net May 29,1980, the base was increased by 7 V5 percent above the base used to calculate demand deposits of $400 million or less were considered to have the character of the marginal reserve in the statement week of May 14-21, 1980. In addition, business of Danks outside of reserve cities and were permitted to maintain reserves beginning Mar. 19,1980, the base was reduced to the extent that foreign loans and at ratios set for banks not in reserve cities. balances declined. (c) Effective Aug. 24, 1978, the Regulation M reserve requirements on net 5. For existing nonmember banks and thrift institutions at the time of implebalances due from domestic banks to their foreign branches and on deposits that mentation of the Monetary Control Act, the phase-in period ends Sept. 3, 1987. foreign branches lend to U.S residents were reduced to zero from 4 percent and For existing member banks the phase-in period is about three years, depending on 1 percent respectively. The Regulation D reserve requirement on borrowings from whether their new reserve requirements are greater or less than the old requireunrelated banks abroad was also reduced to zero from 4 percent. ments. For existing agencies and branches of foreign banks, the phase-in ends Aug. (d) Effective with the reserve computation period beginning Nov. 16, 1978, 12, 1982. All new institutions will have a two-year phase-in beginning with the date domestic deposits of Edge corporations were subject to the same reserve require- that they open for business. ments as deposits of member oanks. 6. Transaction accounts include all deposits on which the account holder is 3. (a) Negotiable order of withdrawal (NOW) accounts and time deposits such permitted to make withdrawals by negotiable or transferable instruments, payment as Christmas and vacation club accounts were subject to the same requirements as orders of withdrawal, and telephone and preauthorized transfers (in excess of three savings deposits. per month) for the purpose or making payments to third persons or others. (b) The average reserve requirement on savings and other time deposits before 7. In general, nonpersonal time deposits are time deposits, including savings implementation of the Monetary Control Act had to be at least 3 percent, the deposits, that are not transaction accounts and in which the beneficial interest is minimum specified by law. held by a depositor that is not a natural person. Also included are certain trans- 4. (a) Effective Nov. 2,1978, a supplementary reserve requirement of 2 percent ferable time deposits held by natural persons, and certain obligations issued to was imposed on large time deposits of $100,000 or more, obligations of affiliates, depository institution offices located outside the United States. For details, see and ineligible acceptances. This supplementary requirement was eliminated with section 204.2 of Regulation D. the maintenance period beginning July 24, 1980. NOTE. Required reserves must be held in the form of deposits with Federal Reserve Banks or vault cash. After implementation of the Monetary Control Act, nonmembers may maintain reserves on a pass-through basis with certain approved institutions. 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 July 31, 1981 Previous maximum In effect July 31, 1981 Previous maximum Percent Effective Percent Effective Effective Percent date date date 1 Savings 5'/4 7/1/79 7/1/73 5 Vi 7/1/79 51/4 0) 2 Negotiable order of withdrawal accounts 2 5V4 12/31/80 1/1/74 51/4 12/31/80 5 1/1/74 Time accounts 3 >) Fixed ceiling rates by maturity 4 3 4 9 1 0 4 - d 8 a 9 y s d a to y s 1 ' year 5 5 ! 3/ / 4 4 8 1 / / 1 1 / / 7 8 9 0 5 5 1h 7 7 / / 1 1 / / 7 7 3 3 6 ( 6) 1/1/80 53/4 0 5 6 2 1 t t o o 2 2V y 5 e y ar e s a r 7 s 7 7/1/73 5 53 V /4 I 1 1/ / 2 2 1 1 / / 7 7 0 0 6'/i (') 6 5 3/4 1 1 / / 2 2 1 1 / / 7 7 0 0 7 8 2 4 V t i o to 6 y 4 e y a e rs a r 8 s 7 6 7 V 1/ 5 4 1 7 1 / / 1 1 / / 7 7 3 3 53/4 1/21/70 6 7V % i 11 0 /1 ) / 73 »)6 1/21/70 9 6 to 8 years 8 IVI 12/23/74 11/1/73 73/4 12/23/74 71/2 11/1/73 10 8 years or more 8 73/4 6/1/78 6/1/78 11 Issued to governmental units (all maturities) 10 6/1/78 12/23/74 6/1/78 73/4 12/23/74 12 Individual retirement accounts and Keogh (H.R. 10) plans (3 years or more) 1011 6/1/78 7/6/77 6/1/78 73/4 7/6/77 13 6 Sp -m ec o ia n l t h v a m ri o a n b e le y c m e a il r in k g e t r t a i t m es e b d y e po m s a i t t u s ri '2 ty fl3l 14 2 Vi years or more 1. July 1, 1973, for mutual savings banks; July 6, 1973, for savings and loan rate is between 83/4 and 9 percent. Also effective March 15, 1979, interest comassociations. pounding was prohibited on six-month money market time deposits at all offering 2. For authorized states only, federally insured commercial banks, savings and institutions. The maximum allowable rates in July for commercial banks and thrift loan associations, cooperative banks, and mutual savings banks in Massachusetts institutions were as follows: Aug. 4, 15.821; Aug. 11, 15.372; Aug. 18, 15.894; and New Hampshire were first permitted to offer negotiable order of withdrawal Aug. 25, 16.104. Effective for all six-month money market certificates issued be- (NOW) accounts on Jan. 1, 1974. Authorization to issue NOW accounts was ex- ginning June 5, 1980, the interest rate ceilings will be determined by the discount tended to similar institutions throughout New England on Feb. 27, 1976, and in rate (auction average) of most recently issued six-month U.S. Treasury bills as New York State on Nov. 10, 1978, and in New Jersey on Dec. 28, 1979. Author- follows: ization to issue NOW accounts was extended to similar institutions nationwide Bill rate Commercial bank ceiling Thrift ceiling effective Dec. 31, 1980. 8.75 and above bill rate + '/4 percent bill rate + Vi percent 3. For exceptions with respect to certain foreign time deposits see the FEDERAL 8.50 to 8.75 bill rate + V4 percent 9.00 RESERVE BULLETIN for October 1962 (p. 1279), August 1965 (p. 1084), and Feb- 7.50 to 8.50 bill rate + 'A percent bill rate + Vi percent ruary 1968 (p. 167). 7.25 to 7.50 7.75 bill rate + >/i percent 4. Effective Nov. 10, 1980, the minimum notice period for public unit accounts Below 7.25 7.75 7.75 at savings and loan associations was decreased to 14 days and the minimum maturity The prohibition against compounding interest in these certificates continues. period for time deposits at savings and loan associations in excess of $100,000 was 14. Effective Aug. 1, 1981, commercial banks may pay interest on any variable decreased to 14 days. Effective Oct. 30, 1980, the minimum maturity or notice ceiling nonnegotiable time deposit with an original maturity of 2Vi years to less period for time deposits was decreased from 30 days to 14 days for mutual savings than 4 years at a rate not to exceed Vi of 1 percent below the average 2'/2-year tanks. yield for U.S. Treasury securities as determined and announced by the U.S. Treas- 5. Effective Oct. 30, 1980, the minimum maturity or notice period for time ury Department immediately before the date of deposit. Mutual savings banks and deposits was decreased from 30 days to 14 days for commercial banks. savings and loan associations may pay interest on these certificates at a rate not 6. No separate account category. to exceed the averate 2Vi -year yield for U.S. Treasury securities as determined 7. No minimum denomination. Until July 1, 1979, a minimum of $1,000 was and announced by the Treasury Department immediately before the date of deposit. required for savings and loan associations, except in areas where mutual savings If the announced average 2'/5-year yield for U.S. Treasury securities is less than banks permitted lower minimum denominations. This restriction was removed for 9.50 percent, commercial banks may pay 9.25 percent and mutual savings banks deposits maturing in less than 1 year, effective Nov. 1, 1973. and savings and loan associations, 9.50 percent for these deposits. These deposits 8. No minimum denomination. Until July 1, 1979, minimum denomination was have no required minimum denomination, and interest may be compounded on $1,000 except for deposits representing funds contributed to an Individual Retire- them. The ceiling rates of interest at which they may be offered vary biweekly. ment Account (IRA) or a Keogh (H.R. 10) plan established pursuant to the Internal The maximum allowable rates in August (in percent) for commercial banks were Revenue Code. The $1,000 minimum requirement was removed for such accounts as follows: Aug. 1, 14.90; Aug. 4, 15.55; Aug. 18, 15.65; and for thrift institutions: in December 1975 and November 1976 respectively. Aug. 1, 15.15; Aug. 4, 15.80; Aug. 18, 15.90. 9. Between July 1, 1973, and Oct. 31, 1973, there was no ceiling for certificates 15. Between Jan. 1, 1980, and Aug. 1, 1981, commercial banks, mutual savings maturing in 4 years or more with minimum denominations of $1,000; however, the banks, and savings and loan associations were authorized to offer variable ceiling amount of such certificates that an institution could issue was limited to 5 percent nonnegotiable time deposits with no required minimum denomination and with of its total time and savings deposits. Sales in excess of that amount, as well as maturities of 2Vi years or more. Effective Jan. 1, 1980, the maximum rate for certificates of less than $1,000, were limited to the 6Vi percent ceiling on time commercial banks was 3/4 percentage point below the average yield on 2Vi-year deposits maturing in 2Vi years or more. U.S. Treasury securities; the ceiling rate for thrift institutions was VA percentage Effective Nov. 1, 1973, ceilings were reimposed on certificates maturing in 4 point higher than that for commercial banks. Effective Mar. 1, 1980, a temporary years or more with minimum denomination of $1,000. There is no limitation on ceiling of ll3/4 percent was placed on these accounts at commercial banks; the the amount of these certificates that banks can issue. temporary ceiling for savings and loan associations and commercial banks, savings 10. Accounts subject to fixed-rate ceilings. See footnote 8 for minimum denom- and loan associations, and mutual savings banks was increased Vi percentage point. ination requirements. The temporary ceiling was retained, and a minimum ceiling of 9.25 percent for 11. Effective January 1, 1980, commercial banks are permitted to pay the same commercial banks and 9.50 percent for savings and loan associations and mutual rate as thrifts on IRA and Keogh accounts and accounts of governmental units savings banks was established. when such deposits are placed in the new 2Vi-year or more variable-ceiling certif- NOTE. Before Mar. 31, 1980, the maximum rates that could be paid by federally icates or in 26-week money market certificates regardless of the level of the Treasury insured commercial banks, mutual savings banks, and savings and loan associations bill rate. were established by the Board of Governors of the Federal Reserve System, the 12. Must have a maturity of exactly 26 weeks and a minimum denomination of Board of Directors of the Federal Deposit Insurance Corporation, and the Federal $10,000, and must be nonnegotiable. Home Loan Bank Board under the provisions of 12 CFR 217, 329, and 526 re- 13. Commercial banks, savings and loan associations, and mutual savings banks spectively. Title II of the Depository Institutions Deregulation and Monetary Conwere authorized to offer money market time deposits effective June 1, 1978. The trol Act of 1980 (P.L. 96-221) transferred the authority of the agencies to establish ceiling rate for commercial banks on money market time deposits entered into maximum rates of interest payable on deposits to the Depository Institutions Debefore June 5,1980, is the discount rate (auction average) on most recently issued regulation Committee. The maximum rates on time deposits in denominations of six-month U.S. Treasury bills. Until Mar. 15, 1979, the ceiling rate for savings and $100,000 or more with maturities of 30-89 days were suspended in June 1970; such loan associations and mutual savings banks was V4 percentage point higher than deposits maturing in 90 days or more were suspended in May 1973. For information the rate for commercial banks. Beginning Mar. 15, 1979, the Vi-percentage-point regarding previous interest rate ceilings on all types of accounts, see earlier issues interest differential is removed when the six-month Treasury bill rate is 9 percent of the FEDERAL RESERVE BULLETIN, the Federal Home Loan Bank Board Journal, or more. The full differential is in effect when the six-month bill rate is 83/4 percent and the Annual Report of the Federal Deposit Insurance Corporation. or less. Thrift institutions may pay a maximum 9 percent when the six-month bill Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Financial Statistics • September 1981 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS Millions of dollars 1981 TTyyppee ooff ttrraannssaaccttiioonn 11997788 11997799 11998800 Jan. Feb. Mar. Apr. May June July U.S. GOVERNMENT SECURITIES Outright transactions (excluding matched salepurchase transactions) Treasury bills 1 Gross purchases 16,628 15,998 7,668 1,100 0 1,607 1,141 790 295 1,325 2 Gross sales 13,725 6,855 7,331 3,865 357 0 0 0 90 0 3 Exchange 0 0 0 0 0 0 0 0 0 0 4 Redemptions 2,033 2,900 3,389 1,000 0 0 0 0 0 100 Others within 1 year1 5 Gross purchases 1,184 3,203 912 0 0 0 115 0 0 122 6 Gross sales 0 0 0 0 23 0 0 0 0 0 7 Maturity shift -5,170 17,339 12,427 462 990 878 522 2,900 833 1,073 8 Exchange -11,308 -18,251 0 -1,936 -1,385 -261 -1,281 -823 -351 9 Redemptions 2,600 0 0 0 0 0 0 0 0 1 to 5 years 10 Gross purchases 4,188 2,148 2,138 0 0 0 469 0 0 607 11 Gross sales 0 0 0 0 0 0 0 0 0 0 12 Maturity shift -12,693 -8,909 -462 -990 -878 -522 -1,724 -833 -1,073 13 Exchange 7,508 13,412 0 1,211 1,385 261 681 823 351 5 to 10 years 14 Gross purchases 1,526 523 703 0 0 0 164 0 0 64 15 Gross sales 0 0 0 0 0 0 0 0 0 0 16 Maturity shift -4,646 -3,092 0 0 0 0 -1,176 0 0 17 Exchange 2,181 2,970 0 400 0 0 300 0 0 Over 10 years 18 Gross purchases 1,063 454 811 0 0 0 89 0 0 182 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shift 0 -426 0 0 0 0 0 0 0 21 Exchange 1,619 1,869 0 325 0 0 300 0 0 All maturities1 22 Gross purchases 24,591 22,325 12,232 1,100 0 1,607 1,977 790 295 2,301 23 Gross sales 13,725 6,855 7,331 3,865 380 0 0 0 90 0 24 Redemptions 2,033 5,500 3,389 1,000 0 0 0 0 0 100 Matched transactions 25 Gross sales 511,126 627,350 674,000 61,427 30,819 32,003 37,251 45,658 51,106 69,972 26 Gross purchases 510,854 624,192 675,496 63,062 31,651 30,441 37,295 43,492 52,607 69,309 Repurchase agreements 2/ Gross purchases 151,618 107,051 113,902 6,108 0 1,623 9,458 1,219 3,509 23,217 28 Gross sales 152,436 106,968 113,040 8,137 0 1,246 9,835 1,219 3,509 21,599 29 Net change in U.S. government securities 7,743 6,896 3,869 -4,159 452 422 1,644 -1,376 1,706 3,155 FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 301 853 668 0 0 0 0 0 0 0 31 Gross sales 173 399 0 0 0 0 0 0 0 0 32 Redemptions 235 134 145 0 3 15 2 * 26 * Repurchase agreements 33 Gross purchases 40,567 37,321 28,895 652 0 494 1,211 186 691 5,182 34 Gross sales 40,885 36,960 28,863 1,177 0 437 1,268 186 691 4,822 35 Net change in federal agency obligations -426 681 555 -525 -3 42 -58 0 -26 360 BANKERS ACCEPTANCES 36 Outright transactions, net 0 0 0 0 0 0 0 0 0 0 37 Repurchase agreements, net -366 116 73 -776 0 298 -298 0 0 453 38 Net change in bankers acceptances -366 116 73 -776 0 298 -298 0 0 453 39 Total net change in System Open Market Account 6,951 7,693 4,497 -5,460 450 762 1,287 -1,376 1,680 3,968 1. Both gross purchases and redemptions include special certificates created NOTE. Sales, redemptions, and negative figures reduce holding 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): 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 AAAccccccooouuunnnttt 1981 1981 July 29 Aug. 5 Aug. 12 Aug. 19 Aug. 26 June July Aug. Consolidated condition statement ASSETS 1 Gold certificate account 11,154 11,154 11,154 11,154 11,154 11,154 11.154 11,154 2 Special drawing rights certificate account 3.068 3,068 3,068 3,068 3,068 3,068 3,068 3,068 .3 367 368 370 371 374 380 380 384 Loans 4 To depository institutions 1,916 1,804 1,321 1,914 1.482 1,010 1,027 1,254 5 Other 0 0 0 0 0 0 0 0 Acceptances 6 Held under repurchase agreements 296 0 0 154 0 0 453 0 Federal agency obligations V Bought outright 8.694 8,694 8,694 8,694 8,694 8,694 8.694 8,694 8 Held under repurchase agreements 557 0 0 292 0 0 360 0 U.S. government securities Bought outright 9 Bills 43,473 45,292 45,310 47,755 45,429 43,593 44.154 47,122 10 Notes 59,609 59,609 59.609 59,429 59,429 58,818 59,609 59,429 11 Bonds 17,791 17,791 17,791 17,971 17,971 17.606 17,791 17,971 12 Total1 120,873 122,692 122,710 125,155 122.829 120.017 121.554 124,522 13 Held under repurchase agreements 1,676 0 0 927 0 0 1,618 0 14 Total U.S. government securities 122.549 122,692 122,710 126,082 122,829 120,017 123,172 124,522 15 Total loans and securities 134,012 133,190 132,725 137,136 133,005 129,721 133,706 134,470 16 Cash items in process of collection 8,556 12,403 10,076 9,031 8,440 11,297 7.085 7,606 17 Bank premises 479 477 481 482 485 475 479 484 Other assets 18 Denominated in foreign currencies2 5,812 5,758 5,757 5,763 5,765 6,430 5,739 5,713 19 All other3 4,397 3,660 3,499 2,607 2,689 3,802 3.476 2,835 20 Total assets 167,845 170,078 167,130 169,612 164,980 166,327 165,087 165,714 LIABILITIES 21 Federal Reserve notes 125,379 126,107 126.786 126,183 125,459 124,783 124,765 125,134 Deposits 22 Depository institutions 26,870 28,282 26,017 29.101 25,470 23.626 26,011 27,045 23 U.S. Treasury—General account 3,193 2.936 3.075 3,104 3,139 2,923 2,922 2,595 24 Foreign—Official accounts 211 205 241 207 263 338 285 256 25 Other 1,010 798 454 434 503 536 472 502 26 Total deposits 31,284 32,221 29,787 32,846 29,375 27,423 29,690 30,398 27 Deferred availability cash items 5,496 7,322 6,143 5,828 5,555 8.791 5,834 5,377 28 Other liabilities and accrued dividends4 2,885 1.712 1.633 1,946 1.786 2,387 1,992 1,801 29 Total liabilities 165,044 167,362 164,349 166,803 162,175 163,384 162,281 162,710 CAPITAL ACCOUNTS 30 Capital paid in 1,250 1,251 1.252 1,254 1,254 1,246 1,250 1,256 31 Surplus 1.203 1,203 1,203 1,203 1,203 1,203 1,203 1,203 32 Other capital accounts 348 262 326 352 348 494 353 545 33 Total liabilities and capital accounts 167,845 170,078 167,130 169,612 164,980 166,327 165,087 165,714 34 MEMO: Marketable U.S. government securities held in custody for foreign and international account 95,116 94,020 91,507 91,752 91.648 97,549 95.133 92,025 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to bank) .... 146,989 147,470 148,027 148.740 149,102 145,062 147,142 149,051 36 Less-held by bank5 21,610 21,363 21,241 22,557 23,643 20,279 22,377 23,917 37 Federal Reserve notes, net 125,379 126,107 126,786 126,183 125,459 124,783 124,765 125,134 Collateral for Federal Reserve notes 38 Gold certificate account 11.154 11,154 11.154 11,154 11,154 11,154 11,154 11,154 39 Special drawing rights certificate account 3,068 3,068 3,068 3,068 3,068 3,068 3,068 3,068 40 Other eligible assets 0 0 0 0 0 27 0 0 41 U.S. government and agency securities 111.157 111,885 112,564 111,961 111,237 110,534 110,543 110,912 42 Total collateral 125,379 126,107 126,786 126,183 125,459 124,783 124,765 125,134 1. Includes securities loaned—fully guaranteed by U.S. government securities 3. Includes special investment account at Chicago of Treasury bills maturing pledged with Federal Reserve Banks—and excludes (if any) securities sold and within 90 days. scheduled to be bought back under matched sale-purchase transactions. 4. Includes exchange-translation account reflecting the monthly revaluation at 2. Includes U.S. government securities held under repurchase agreement against market exchange rates of foreign-exchange commitments. receipt of foreign currencies and foreign currencies warehoused for the U.S. Treas- 5. Beginning September 1980, Federal Reserve notes held by the Reserve Bank ury. Assets shown in this line are revalued monthly at market exchange rates. are exempt from the collateral requirement. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Nonfinancial Statistics • September 1981 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holdings Millions of dollars Wednesday End of month TTTyyypppeee aaannnddd mmmaaatttuuurrriiitttyyy gggrrrooouuupppiiinnngggsss 1981 1981 July 29 Aug. 5 Aug. 12 Aug. 19 Aug. 26 June 30 July 31 Aug. 31 1 Loans—Total 1,916 1,804 1,321 1,914 1,482 1.010 1,027 1,254 2 Within 15 days 1,869 1,696 1.220 1.882 1.442 964 926 1,169 3 16 days to 90 days 47 108 101 32 40 46 101 85 4 91 days to 1 year 0 0 0 0 0 0 0 0 5 Acceptances—Total 296 0 0 154 0 0 453 0 6 Within 15 days 296 0 0 154 0 0 453 0 7 16 days to 90 days 0 0 0 0 0 0 0 0 8 91 days to 1 year 0 0 0 0 0 0 0 0 9 U.S. government securities—Total 122,549 122,692 122,710 126,082 122,829 120,017 123,172 124,522 10 Within 15 days1 3,451 5,649 5,520 6,019 4.404 1,714 4,253 3,589 11 16 days to 90 days 23,801 22,050 23,207 24,443 22,619 23,875 21,945 24,422 12 91 days to 1 year 31.758 32,176 31,166 33,184 33,370 31,742 34,157 34,071 13 Over 1 year to 5 years 34.535 33,813 33,813 34,714 34,714 33,928 33,813 34,718 14 Over 5 years to 10 years 13,106 13,106 13,106 11,519 11,519 13,042 13,106 11,519 15 Over 10 years 15,898 15,898 15,898 16,203 16,203 15,716 15,898 16,203 16 Federal agency obligations—Total 9,251 8,694 8,694 8,986 8,694 8,694 9,054 8,694 17 Within 15 days' 622 0 100 454 195 207 425 195 18 16 days to 90 days 647 718 618 556 424 446 647 553 19 91 days to 1 year 1,717 1,711 1.711 1,711 1,821 1,779 1.717 1,692 20 Over 1 year to 5 years 4,649 4,649 4,649 4,649 4,638 4,636 4,649 4,638 21 Over 5 years to 10 years 1.015 1.015 1,015 1,015 1,015 982 1,015 1,015 22 Over 10 years 601 601 601 601 601 644 601 601 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. 1981 BBaannkk ggrroouupp,, oorr ttyyppee ooff ccuussttoommeerr 11997788 11997799 11998800 Mar. Apr. May June July Debits to demand deposits' (seasonally adjusted) 11111111 AAAAAAAAllllllllllllllll ccccccccoooooooommmmmmmmmmmmmmmmeeeeeeeerrrrrrrrcccccccciiiiiiiiaaaaaaaallllllll bbbbbbbbaaaaaaaannnnnnnnkkkkkkkkssssssss 40,297.8 49,775.0 63.013.4 75.487.3 73,621.7 74.800.5 78.745.3 83.256.8 22222222 MMMMMMMMaaaaaaaajjjjjjjjoooooooorrrrrrrr NNNNNNNNeeeeeeeewwwwwwww YYYYYYYYoooooooorrrrrrrrkkkkkkkk CCCCCCCCiiiiiiiittttttttyyyyyyyy bbbbbbbbaaaaaaaannnnnnnnkkkkkkkkssssssss 15,008.7 18.512.7 25.192.5 30.276.0 29.501.3 29,610.9 32.262.4 37,282.6 33333333 OOOOOOOOtttttttthhhhhhhheeeeeeeerrrrrrrr bbbbbbbbaaaaaaaannnnnnnnkkkkkkkkssssssss 25,289.1 31.262.3 37,820.9 45.211.3 44.120.4 45.189.6 46,482.8 46,074.2 Debits to savings deposits2 (not seasonally adjusted) 44444444 AAAAAAAATTTTTTTTSSSSSSSS////////NNNNNNNNOOOOOOOOWWWWWWWW33333333 17.1 83.3 158.4 668.7 815.4 693.3 808.8 798.2 55555555 BBBBBBBBuuuuuuuussssssssiiiiiiiinnnnnnnneeeeeeeessssssssssssssss44444444 56.7 77.3 93.4 112.8 112.4 112.0 113.8 120.6 66666666 OOOOOOOOtttttttthhhhhhhheeeeeeeerrrrrrrrssssssss55555555 359.7 515.2 605.3 556.8 590.1 518.3 586.4 605.5 77777777 AAAAAAAAllllllllllllllll aaaaaaaaccccccccccccccccoooooooouuuuuuuunnnnnnnnttttttttssssssss 432.9 675.8 857.2 1,338.3 1,517.9 1.323.6 1,509.0 1,524.3 Demand deposit turnover1 (seasonally adjusted) 88888888 AAAAAAAAllllllllllllllll ccccccccoooooooommmmmmmmmmmmmmmmeeeeeeeerrrrrrrrcccccccciiiiiiiiaaaaaaaallllllll bbbbbbbbaaaaaaaannnnnnnnkkkkkkkkssssssss 139.4 163.5 201.6 262.9 257.2 260.9 281.3 296.1 99999999 MMMMMMMMaaaaaaaajjjjjjjjoooooooorrrrrrrr NNNNNNNNeeeeeeeewwwwwwww YYYYYYYYoooooooorrrrrrrrkkkkkkkk CCCCCCCCiiiiiiiittttttttyyyyyyyy bbbbbbbbaaaaaaaannnnnnnnkkkkkkkkssssssss 541.9 646.2 813.7 959.5 1,001.9 975.1 1,085.4 1,288.6 1111111100000000 OOOOOOOOtttttttthhhhhhhheeeeeeeerrrrrrrr bbbbbbbbaaaaaaaannnnnnnnkkkkkkkkssssssss 96.8 113.3 134.3 176.9 171.8 176.3 185.8 182.4 Savings deposit turnover2 (not seasonally adjusted) 1111111111111111 AAAAAAAATTTTTTTTSSSSSSSS////////NNNNNNNNOOOOOOOOWWWWWWWW33333333 7.0 7.8 9.7 14.2 15.2 13.5 15.2 14.7 1111111122222222 BBBBBBBBuuuuuuuussssssssiiiiiiiinnnnnnnneeeeeeeessssssssssssssss44444444 5.1 7.2 9.3 11.3 11.6 11.7 12.3 13.2 1111111133333333 OOOOOOOOtttttttthhhhhhhheeeeeeeerrrrrrrrssssssss55555555 1.7 2.7 3.4 3.5 3.6 3.3 3.7 3.9 1111111144444444 AAAAAAAAllllllllllllllll aaaaaaaaccccccccccccccccoooooooouuuuuuuunnnnnnnnttttttttssssssss 1.9 3.1 4.2 6.1 6.7 6.0 6.9 6.9 1. Represents accounts of individuals, partnerships, and corporations, and of NOTE. Historical data for the period 1970 through June 1977 have been estimated; states and political subdivisions. these estimates are based in part on the debits series for 233 SMSAs, which were 2. Excludes special club accounts, such as Christmas and vacation clubs. available through June 1977. Back data are available from Publications Services, 3. Accounts authorized for negotiable orders of withdrawal (NOW) and accounts Division of Administrative Services. Board of Governors of the Federal Reserve authorized for automatic transfer to demand deposits (ATS). ATS data availability System, Washington, D.C. 20551. Debits and turnover data for savings deposits starts with December 1978. are not available before July 1977. 4. Represents corporations and other profit-seeking organizations (excluding commercial banks but including savings and loan associations, mutual savings banks, credit unions, the Export-Import Bank, and federally sponsored lending agencies). 5. Savings accounts other than NOW; business; and. from December 1978, ATS. 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 1981 11997777 11997788 11997799 11998800 Item DDeecc.. DDeecc.. DDeecc.. DDeecc.. Mar. Apr. May June July Seasonally adjusted MEASURES1 1 Ml-A 331.4 354.8 372.7 387.7 365.8 366.6 364.9 361.9 361.6 2 Ml-B 336.4 364.2 390.5 415.6 425.8 433.7 431.5 428.8 430.3 3 M2 1,296.4 1,404.2 1,525.2 1,669.4 1,718.6 1,738.1 1,743.4 1,749.3 1,760.5 4 M3 1,462.5 1,625.7 1,775.1 1,963.5 2,026.1 2,044.6 2,059.0 2,076.5' 2,090.1 5 L2 1,722.7 1,936.5 2,151.1 2,377.4 2,443.7 2,455.6 2,476.7' n.a. n.a. COMPONENTS 6 Currency 88.6 97.4 106.1 116.1 117.9 118.9 119.8 119.9 120.9 7 Demand deposits 239.7 253.9 262.8 267.4 243.5 243.1 240.7 237.9 236.6 8 Travelers checks3 3.1 3.5 3.8 4.2 4.4 4.6 4.4 4.2 4.1 9 Savings deposits 486.5 475.5 416.5 393.0 368.3 367.0 361.1 354.0' 349.0 10 Small-denomination time deposits4 453.8 533.3 652.7 756.8 789.4 790.0 798.4 807.7' 811.6 11 Large-denomination time deposits5 145.1 194.0 219.7 256.8 271.0 269.5 277.2 287.3 290.3 Not seasonally adjusted MEASURES1 12 Ml-A 340.1 364.2 382.5 397.7 358.9 369.5 359.4 361.1 363.7 13 Ml-B 345.1 373.6 400.6 425.9 417.8 436.7 424.4 428.4 433.2 14 M2 1,299.0 1,409.0 1,531.3 1,675.2 1,713.4 1,745.7 1,737.5 1,751.5' 1,765.4 15 M3 1,467.7 1,634.6 1,785.5 1,974.0 2,023.6 2,051.1 2,052.1 2,073.0' 2,090.7 16 L2 1,726.7 1,943.6 2,158.8 2,384.0 2,444.5 2,465.3 2,472.6' n.a. n.a. COMPONENTS 17 Currency 90.3 99.4 108.3 118.4 116.8 118.4 119.3 119.9 121.5 18 Demand deposits 247.0 261.5 270.8 275.4 237.9 246.8 235.9 237.0' 237.6 19 Travelers checks3 2.9 3.3 3.5 3.9 4.2 4.3 4.2 4.3 4.7 20 Other checkable deposits6 5.0 9.4 18.2 28.3 59.2 67.5 65.3 67.6' 69.7 21 Overnight RPs and Eurodollars7 18.6 23.9 25.4 32.4 33.3 34.3 38.3 39.7 39.2 22 Money market mutual funds 3.8 10.3 43.6 75.8 105.6 117.1 118.1 122.8 134.3 23 Savings deposits 483.1 472.6 413.9 390.2 365.7 366.4 359.7 355.4' 352.8 24 Small-denomination time deposits4 451.3 531.7 651.4 755.2 794.8 795.2 801.0 808.9' 809.9 25 Large-denomination time deposits5 147.7 198.1 223.9 261.4 273.8 268.3 276.3 281.6 286.0 1. Composition of the money stock measures is as follows: 4. Small-denomination time deposits are those issued in amounts of less than Ml-A: Averages of daily figures for (1) demand deposits at all commercial banks $100,000. other than those due to domestic banks, the U.S. government, and foreign banks 5. Large-denomination time deposits are those issued in amounts of $100,000 and official institutions less cash items in the process of collection and Federal or more and are net of the holdings of domestic banks, thrift institutions, the U.S. Reserve float; (2) currency outside the Treasury, Federal Reserve Banks, and the government, money market mutual funds, and foreign banks and official instituvaults of commercial banks; and (3) travelers checks of nonbank issuers. tions. Ml-B: Ml-A plus negotiable order of withdrawal (NOW) and automatic transfer 6. Includes ATS and NOW balances at all institutions, credit union share draft service (ATS) accounts at banks and thrift institutions, credit union share draft balances, and demand deposits at mutual savings banks. accounts, and demand deposits at mutual savings banks. 7. Overnight (and continuing contract) RPs are those issued by commercial M2: Ml-B plus savings and small-denomination time deposits at all depository banks to the nonbank public, and overnight Eurodollars are those issued by Cainstitutions, overnight repurchase agreements at commercial banks, overnight Eu- ribbean branches of member banks to U.S. nonbank customers. rodollars held by U.S. residents other than banks at Caribbean branches of member banks, and money market mutual fund shares. NOTE. Latest monthly and weekly figures are available from the Board's H.6(508) M3: M2 plus large-denomination time deposits at all depository institutions and release. Back data are available from the Banking Section, Division of Research term RPs at commercial banks and savings and loan associations. and Statistics. 2. L: M3 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. 3. Outstanding amount of U.S. dollar-denominated travelers checks of nonbank issuers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 DomesticN onfinancial Statistics • September 1981 1.22 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MEMBER BANK DEPOSITS1 Billions of dollars, averages of daily figures 1980 1981 IItteemm D 19 e 7 c 8 . D 19 e 7 c 9 . D 19 e 8 c 0 . Nov.2 Dec. Jan. Feb. Mar. Apr. May June July Seasonally adjusted 1 Total reserves3 41.16 43.46 40.13 41.23 40.13 40.10 39.76 40.25 40.25 40.81 40.83 41.11 2 Nonborrowed reserves 40.29 41.98 38.44 39.17 38.44 38.71 38.45 39.25 38.91 38.58 38.80 39.43 3 Required reserves 40.93 43.13 39.58 40.73 39.58 39.56 39.57 39.87 40.10 40.55 40.50 40.76 4 Monetary base4 142.2 153.7 159.8 160.7 159.8 160.1 160.6 161.3 162.2 163.6 163.8 165.0 5 Member bank deposits subject to reserve requirements5 616.1 644.5 701.8 694.3 701.8 703.8 704.3 703.4 711.2 715.0 720.8 728.3 6 Time and savings 428.7 451.2 485.6 475.4 485.6 517.5 523.4 524.7 531.1 538.1 545.6 553.8 Demand 7 Private 185.1 191.5 196.0 198.1 196.0 184.1 178.8 176.7 177.4 174.7 173.3 172.3 8 U.S. government 2.2 1.8 1.9 2.2 1.9 2.3 2.1 2.0 2.8 2.2 1.9 2.2 Not seasonally adjusted 9 Monetary base4 144.6 156.2 162.5 161.5 162.5 161.0 158.9 159.6 161.7 162.7 163.3 165.5 10 Member bank deposits subject to reserve requirements5 624.0 652.7 710.3 694.6 710.3 712.6 701.5 702.9 713.5 710.0 719.7 727.8 11 Time and savings 429.6 452.1 486.5 493.0 505.0 520.6 524.9 527.8 531.6 538.1 545.0 552.7 Demand 12 Private 191.9 198.6 203.2 199.6 203.3 189.9 174.5 173.0 178.9 169.8 172.2 173.1 13 U.S. government 2.5 2.0 2.1 1.9 2.1 2.1 2.0 2.1 3.0 2.1 2.5 2.0 1. Reserves of depository institutions series reflect actual reserve requirement 2. Reserve measures for November reflect increases in required reserves assopercentages with no adjustment to eliminate the effect of changes in Regulations ciated with the reduction of weekend avoidance activities of a few large banks. D and M. Before Nov. 13, 1980, the date of implementation of the Monetary The reduction in these activities lead to essentially a one-time increase in the Control'Act, only the reserves of commercial banks that were members of the average level of required reserves that need to be held for a given level of deposits Federal Reserve System were included in the series. Since that date the series entering the money supply. In November, this increase in required reserves is include the reserves of all depository institutions. In conjunction with the imple- estimated at $550 million to $600 million. mentation of the act, required reserves of member banks were reduced about $4.3 3. Reserve balances with Federal Reserve Banks plus vault cash at institutions billion and required reserves of other depository institutions were increased about with required reserve balances plus vault cash equal to required reserves at other $1.4 billion. Effective Oct. 11, 1979, an 8 percentage point marginal reserve re- institutions. quirement was imposed on "Managed Liabilities." This action raised required 4. Includes reserve balances at Federal Reserve Banks in the current week plus reserves about $320 million. Effective Mar. 12, 1980, the 8 percentage point mar- vault cash held two weeks earlier used to satisfy reserve requirements at all ginal reserve requirement was raised to 10 percentage points. In addition the base depository institutions plus currency outside the U.S. Treasury, Federal Reserve upon which the marginal reserve requirement was calculated was reduced. This Banks, the vaults of depository institutions, and surplus vault cash at depository action increased required reserves about $1.7 million in the week ending Apr. 2, institutions. 1980. Effective May 29, 1980, the marginal reserve requirement was reduced from 5. Includes total time and savings deposits and net demand deposits as defined 10 to 5 percentage points and the base upon which the marginal reserve requirement by Regulation D. Private demand deposits include all demand deposits except was calculated was raised. This action reduced required reserves about $980 million those due to the U.S. government, less cash items in process of collection and in the week ending June 18, 1980. Effective July 24, 1980, the 5 percent marginal demand balances due from domestic commercial banks. reserve requirement on managed liabilities and the 2 percent supplementary reserve requirement against large time deposits were removed. These actions reduced NOTE. Latest monthly and weekly figures are available from the Board's H.3(502) required reserves about $3.2 billion. statistical release. Back data and estimates of the impact on required reserves and changes in reserve requirements are available from the Banking Section, Division 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 1981 1981 1978 1979 1980 1978 1979 1980 Dec. Dec. Dec. Dec. Dec. Dec. June July June July Seasonally adjusted Not seasonally adjusted 1 Total loans and securities2 1.013.43 1.134.64 1,237.2s 1,285.4 1,291.6 1,022.53 1,145.04 1,248.8s 1,289.4 1,293.1 2 U.S. Treasury securities 93.3 93.8 110.7 119.3 120.4 94.5 95.0 112.1 119.7 118.2 3 Other securities 173.23 191.8 213.9 219.0 219.5 173.93 192.6 214.8 219.6 219.3 4 Total loans and leases2 746.93 848.94 912.75 947. V 951.6 754.23 857.44 922.0s 950.0 955.5 5 Commercial and industrial loans 246.I6 291.I4 324.95 338.87r 343.8 247.76 293.04 327.05 340.67 345.3 6 Real estate loans 210.5 241.34 260.65 271.6 273.0 210.9 241.84 261.1s 271.4 273.3 7 Loans to individuals 164.7 184.9 175.2 174.1 174.0 165.6 186.0 176.2 173.6 174.4 8 Security loans 19.3 18.6 17.6 20.5 19.5 20.6 19.8 18.8 20.6 18.7 9 Loans to nonbank financial institutions .. 27.18 28.84 28.75 29.3 29.0 27.68 29.34 29.2s 29.5 29.4 10 Agricultural loans 28.2 31.1 31.6 32.8r 33.1 28.1 30.9 31.4 33.0' 33.5 11 Lease financing receivables 7.5 9.3 10.9 12.2 12.3 7.5 9.3 10.9 12.2 12.3 12 All other loans 43.63 44.0 63.3 67.8' 66.9 46.23 47.3 67.3 69.1r 68.4 MEMO: 13 Total loans and securities plus loans sold2'9 . 11,,001177..1133 11..113377..6644 1100 11,,223399..99ss l,288.2r 1,294.2 11,,002266..2233 11,,114488..0044 1100 11,,225511..55ss 1,292.2 1,295.8 14 Total loans plus loans sold2'9 750.63 851.94-10 915.4s 950.0 954.3 757.93 860.44'10 924.75 952.9 958.2 15 Total loans sold to affiliates9 3.7 3.08'10 2.7 2.8 2.7 3.7 3.08-10 2.7 2.8 2.7 16 Commercial and industrial loans plus loans sold9 224488..0066''1111 229933..1144--1100 332266..6655 340.87 345.8 249.66-11 295.04'10 328.8s 334422..7777 347.5 17 Commercial and industrial loans sold9 ... 1.9" 2.010 1.8 2.0 2.0 1.9" 2.010 1.8 2.0 2.0 18 Acceptances held 6.6 8.2 8.2 10.0 10.2 7.3 9.1 8.8 10.0 9.8 19 Other commercial and industrial loans... 239.5 282.9 316.7 328.8 333.6 240.4 283.9 318.2 330.7 335.7 20 To U.S. addressees12 226.0 264.1 295.2 304.0 308.7 225.9 264.1 295.2 306.1 310.9 21 To non-U.S. addressees 13.5 18.8 21.5 24.7 24.9 14.5 19.8 23.0 24.6 24.8 22 Loans to foreign banks 21.5 18.5 23.1 21.8 21.4 23.2 20.0 24.8 22.4 22.3 1. Includes domestically chartered banks; U.S. branches and agencies of foreign 8. As of Dec. 1, 1978, nonbank financial loans were reduced $0.1 billion as the banks, New York investment companies majority owned by foreign banks, and result of reclassification. Edge Act corporations owned by domestically chartered and foreign banks. 9. Loans sold are those sold outright to a bank's own foreign branches, non- 2. Excludes loans to commercial banks in the United States. consolidated nonbank affiliates of the bank, the bank's holding company (if not a 3. As of Dec. 31, 1978, total loans and securities were reduced by $0.1 billion. bank), and nonconsolidated nonbank subsidiaries of the holding company. "Other securities" were increased by $1.5 billion and total loans were reduced by 10. As of Dec. 1, 1979, loans sold to affiliates were reduced $800 million and $1.6 billion largely as the result of reclassifications of certain tax-exempt obligations. commercial and industrial loans sold were reduced $700 million due to corrections Most of the loan reduction was in "all other loans." of two banks in New York City. 4. As of Jan. 3, 1979, as the result of reclassifications, total loans and securities 11. As of Dec. 31, 1978, commercial and industrial loans sold outright were and total loans were increased by $0.6 billion. Business loans were increased by increased $0.7 billion as the result of reclassifications, but $0.1 billion of this amount $0.4 billion and real estate loans by $0.5 billion. Nonbank financial loans were was offset by a balance sheet reduction of $0.1 billion as noted above. reduced by $0.3 billion. 12. United States includes the 50 states and the District of Columbia. 5. Absorption of a nonbank affiliate by a large commercial bank added the following to February figures: total loans and securities, $1.0 billion; total loans NOTE. Data are prorated averages of Wednesday estimates for domestically and leases, $1.0 billion; commercial and industrial loans, $.5 billion; real estate chartered banks, based on weekly reports of a sample of domestically chartered loans, $.1 billion; nonbank financial, $.1 billion. banks and quarterly reports of all domestically chartered banks. For foreign-related 6. As of Dec. 31,1978, commercial and industrial loans were reduced $0.1 billion institutions, data are averages of month-end estimates based on weekly reports as a result of reclassifications. from large agencies and branches and quarterly reports from all agencies, branches, 7. An accounting procedure change by one bank reduced commercial and in- investment companies, and Edge Act corporations engaged in banking. dustrial loans by $0.1 billion as of Apr. 1, 1981. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Nonfinancial Statistics • September 1981 1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS1 Monthly averages, billions of dollars December outstanding Outstanding in 1980 and 1981 SSoouurrccee 1977 1978 1979 Nov. Dec. Jan. Feb. Mar. Apr. May June July Total nondeposit funds 1 Seasonally adjusted2 61.5 91.2 121.1 116.9 120.4 124.5 122.0 117.0 111.2 117.6 119.7 118.2 2 Not seasonally adjusted 60.1 90.2 119.8 120.1 119.9 122.0 121.2 116.7 111.8 122.0 120.4 118.9 Federal funds, RPs, and other borrowings from 3 Seasonally adjusted 58.4 80.7 90.0 105.4 109.5 113.5 110.9 110.7 109.4 106.7 111.8 110.7 4 Not seasonally adjusted 57.0 79.7 88.7 108.6 109.0 111.0 110.2 110.5 109.0 111.0 112.6 111.5 5 Net balances due to foreign-related institutions. not seasonally adjusted -1.5 6.8 28.1 8.9 8.2 8.2 8.3 3.5 -0.9 8.2 5.0 4.8 6 Loans sold to affiliates, not seasonally adjusted4-5 4.7 3.7 3.0 2.6 2.7 2.8 2.8 2.8 2.7 2.8 2.8 2.7 MEMO 7 Domestically chartered banks net positions with own foreign branches, not seasonally adjusted** -12.5 -10.2 6.5 -14.2 -14.7 -16.2 -14.7 -16.9 -21.3 -13.6 -14.6 -14.7 8 Gross due from balances 21.1 24.9 22.8 37.3 37.5 37.5 36.4 38.9 43.1 43.6 42.7 45.2 9 Gross due to balances 8.6 14.7 29.3 23.1 22.8 21.2 21.7 22.0 21.8 30.0 28.0 30.5 10 Foreign-related institutions net positions with directly related institutions, not seasonally adjusted7 10.9 17.0 21.6 23.1 22.9 24.4 22.9 20.5 20.4 21.8 19.6 19.5 11 Gross due from balances 10.7 14.3 28.9 31.0 32.5 31.5 31.8 31.9 33.8 34.9 35.5 33.7 12 Gross due to balances 21.7 31.3 50.5 54.1 55.4 55.9 54.7 52.3 54.1 56.7 55.1 53.2 Security RP borrowings 13, Seasonally adjusted® 36.0 44.8 49.2 58.8 63.4 68.7 67.0 67.1 67.0 64.4 71.0r 69.5 14 Not seasonally adjusted 35.1 43.6 47.9 60.9 61.7 65.0 65.2 65.8 65.6 67.7 70.6r 69.1 U.S. Treasury demand balances9 15 Seasonally adjusted 4.4 8.7 8.9 8.1 8.4 6.9 8.2 11.7 12.3 14.2 10.9' 11.9 16 Not seasonally adjusted 5.1 10.3 9.7 6.7 9.0 8.0 8.1 10.3 12.1 12.3r 12.4r 10.8 Time deposits, $100,000 or more10 17 Seasonally adjusted 162.0 213.0 227.1 254.9 265.8 277.0 282.5 281.1 284.3 294.8 303.6' 312.8 18 Not seasonally adjusted 165.4 217.9 232.8 257.9 272.4 282.0 287.0 285.9 283.7 293.6 298.4r 305.0 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 agencies and branches of foreign banks. New corrections of two New York City banks. York investment companies majority owned by foreign banks, and Edge Act cor- 6. Averages of daily figures for member and nonmember banks. Before October porations owned by domestically chartered and foreign banks. 1980 nonmember banks were interpolated from quarterly call report data. 2. Includes seasonally adjusted federal funds, RPs, and other borrowings from 7. Includes averages of current and previous month-end data until August 1979; nonbanks and not seasonally adjusted net Eurodollars and loans to affiliates. In- beginning September 1979 averages of daily data. cludes averages of Wednesday data for domestically chartered banks and averages 8. Based on daily average data reported by 122 large banks beginning February of current and previous month-end data for foreign-related institutions. 1980 and 46 banks before February 1980. 3. Other borrowings are borrowings on any instrument, such as a promissory 9. Includes U.S. Treasury demand deposits and Treasury tax-and-loan notes at note or due bill, given for the purpose of borrowing money for the banking business. commercial banks. Averages of daily data. This includes borrowings from Federal Reserve Banks and from foreign banks, 10. Averages of Wednesday figures. term federal funds, overdrawn due from bank balances, loan RPs, and participations in pooled loans. Includes averages of daily figures for member banks and NOTE. Movement of federal funds, RPs, and other borrowings from nonbanks averages of current and previous month-end data for foreign-related institutions. (lines 3 and 4) is based on fluctuations in security RP borrowings (lines 13 and 14) 4. Loans initially booked by the bank and later sold to affiliates that are still and borrowings from unaffiliated foreign sources (not shown) after October 1980. held by affiliates. Averages of Wednesday data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A17 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series Billions of dollars except for number of banks 1980 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. DOMESTICALLY CHARTERED COMMERCIAL BANKS' 1 Loans and securities, excluding interbank 1,134.8 1,150.8 1,177.1 1,166.0 1,167.0 1,169.5 1.187.8 1,194.6 1,205.3 1,213.2 1,220.6 2 Loans, excluding interbank 821.6 832.8 851.4 840.2 839.0 840.6 855.4 862.4 872.2 879.2 88( .8 3 Commercial and industrial 269.0 275.7 281.5 277.6 276.3 277.5 285.4 287.9 293.1 295.8 299.0 4 Other 552.6 557.1 569.9 562.6 562.7 563.1 570.1 574.5 579.1 583.4 587.9 5 U.S. Treasury securities 104.4 107.1 111.2 112.0 113.7 112.9 115.8 114.9 116.1 115.8 114.0 6 Other securities 208.9 210.9 214.6 213.8 214.3 216.0 216.6 217.3 216.9 218.2 219.8 7 Cash assets, total 155.9 175.6 194.2 159.3 165.9 167.9 181.8 180.3 169.8 161.1 173.2 8 Currency and coin 18.3 16.9 19.9 18.7 18.6 17.8 18.8 19.5 19.1 19.6 20.2 9 Reserves with Federal Reserve Banks 31.7 30.4 28.2 25.2 30.4 31.8 38.3 25.2 25.4 27.0 25.4 10 Balances with depository institutions . 47.2 56.1 63.0 54.9 54.6 55.1 57.3 62.0 60.7 56.8 66.0 11 Cash items in process of collection ... 58.8 72.2 83.0 60.5 62.3 63.3 67.4 73.6 64.6 57.7 61.6 12 Other assets2 151.3 151.3 165.6 155.8 160.1 163.4 167.7 158.8 168.6 158.8 164.2 13 Total assets/total liabilities and capital. .. 1,442.1 1,477.7 1,537.0 1,481.0 1,493.0 1,500.9 1,537.3 1,533.7 1,543.7 1,533.2 1,557.9 14 Deposits 1,092.9 1,126.2 1,187.4 1,128.7 1.132.0 1,136.5 1,151.7 1,170.3 1,165.9 1,160.8 1,182.2 15 Demand 375.7 393.0 432.2 351.1 345.5 345.3 356.8 360.7 350.9 333.6 342.5 16 Savings 210.9 209.5 201.3 211.9 214.3 220.5 222.7 220.9 220.7 219.8 218.0 17 Time 506.2 523.7 553.8 565.7 572.3 570.7 572.2 588.7 594.3 607.3 621.7 18 Borrowings 161.7 157.3 156.4 156.4 163.2 163.8 179.5 155.7 169.3 159.3 163.7 19 Other liabilities 74.7 78.1 79.0 76.7 80.3 80.6 81.8 82.3 81.8 86.3 89 .8 20 Residual (assets less liabilities) 112.7 116.1 114.2 119.3 117.5 120.0 124.3 125.4 126.7 126.7 122.1 MEMO: 21 U.S. Treasury note balances included in borrowing 11.5 4.4 9.5 9.5 8.5 10.2 16.9 5.5 17.4 7.2 6.9 22 Number of banks 14,760 14.692 14,693 14,689 14,696 14,701 14,713 14,719 14,719 14,719 14,720 ALL COMMERCIAL BANKING INSTITUTIONS3 23 Loans and securities, excluding interbank 1,262.4 1,253.8 24 Loans, excluding interbank 999999999999999999999933333333333333333333332222222222222222222222......................5555555555555555555555 999999999999999999999922222222222222222222220000000000000000000000......................9999999999999999999999 25 Commercial and industrial 333333333333333333333333333333333333333333330000000000000000000000......................6666666666666666666666 333333333333333333333322222222222222222222229999999999999999999999......................3333333333333333333333 26 Other 666666666666666666666600000000000000000000001111111111111111111111......................9999999999999999999999 555555555555555555555599999999999999999999991111111111111111111111......................6666666666666666666666 27 U.S. Treasury securities 111111111111111111111111111111111111111111113333333333333333333333......................6666666666666666666666 111111111111111111111111111111111111111111115555555555555555555555......................2222222222222222222222 28 Other securities 222222222222222222222211111111111111111111116666666666666666666666......................3333333333333333333333 222222222222222222222211111111111111111111117777777777777777777777......................7777777777777777777777 29 Cash assets, total 222222222222222222222211111111111111111111118888888888888888888888......................6666666666666666666666 111111111111111111111199999999999999999999993333333333333333333333......................6666666666666666666666 30 Currency and coin 22222222222222222222220000000000000000000000......................0000000000000000000000 11111111111111111111117777777777777777777777......................8888888888888888888888 31 Reserves with Federal Reserve Banks 22222222222222222222229999999999999999999999......................0000000000000000000000 33333333333333333333332222222222222222222222......................7777777777777777777777 32 Balances with depository institutions . 88888888888888888888885555555555555555555555......................0000000000000000000000 77777777777777777777777777777777777777777777......................9999999999999999999999 33 Cash items in process of collection ... 88888888888888888888884444444444444444444444......................7777777777777777777777 66666666666666666666665555555555555555555555......................3333333333333333333333 34 Other assets2 222222222222222222222222222222222222222222222222222222222222222222......................7777777777777777777777 222222222222222222222222222222222222222222225555555555555555555555......................5555555555555555555555 35 Total assets/total liabilities and capital. . . 1111111111111111111111,,,,,,,,,,,,,,,,,,,,,,777777777777777777777700000000000000000000003333333333333333333333......................7777777777777777777777 1111111111111111111111,,,,,,,,,,,,,,,,,,,,,,666666666666666666666677777777777777777777773333333333333333333333......................0000000000000000000000 nnnnnnnnnnnnnnnnnnnnn aaaaaaaaaaaaaaaaaaaaa..................... 36 Deposits 1111111111111111111111,,,,,,,,,,,,,,,,,,,,,,222222222222222222222233333333333333333333339999999999999999999999......................9999999999999999999999 1111111111111111111111,,,,,,,,,,,,,,,,,,,,,,111111111111111111111199999999999999999999990000000000000000000000......................6666666666666666666666 37 Demand 444444444444444444444455555555555555555555553333333333333333333333......................6666666666666666666666 333333333333333333333366666666666666666666667777777777777777777777......................4444444444444444444444 38 Savings 222222222222222222222200000000000000000000001111111111111111111111......................6666666666666666666666 222222222222222222222222222222222222222222220000000000000000000000......................7777777777777777777777 39 Time 555555555555555555555588888888888888888888884444444444444444444444......................7777777777777777777777 666666666666666666666600000000000000000000002222222222222222222222......................5555555555555555555555 40 Borrowings 222222222222222222222211111111111111111111110000000000000000000000......................4444444444444444444444 222222222222222222222222222222222222222222223333333333333333333333......................3333333333333333333333 41 Other liabilities 111111111111111111111133333333333333333333335555555555555555555555......................5555555555555555555555 111111111111111111111133333333333333333333337777777777777777777777......................2222222222222222222222 42 Residual (assets less liabilities) 111111111111111111111111111111111111111111117777777777777777777777......................9999999999999999999999 111111111111111111111122222222222222222222221111111111111111111111......................9999999999999999999999 MEMO: 43 U.S. Treasury note balances included in borrowing 9999999999999999999999......................5555555555555555555555 11111111111111111111110000000000000000000000......................2222222222222222222222 44 Number of banks 11111111111111111111115555555555555555555555,,,,,,,,,,,,,,,,,,,,,,111111111111111111111122222222222222222222220000000000000000000000 11111111111111111111115555555555555555555555,,,,,,,,,,,,,,,,,,,,,,111111111111111111111144444444444444444444447777777777777777777777 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. Other assets include loans to U.S. commercial banks. other banking institutions are for the last day of the quarter. 3. Commercial banking institutions include domestically chartered commercial banks, branches and agencies of foreign banks. Edge Act and Agreement corporations, and New York State foreign investment corporations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Nonfinancial Statistics • September 1981 1.26 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 1981 AAccccoouunntt July 1 July 8 July 15 July 22 July 29 p Aug. 5P Aug. 12 P Aug. 19 p Aug. 26p 1 Cash items in process of collection 65,919 53.555 57.633 51.889 46.575 57.990 52.659 54,425 5500..445566 2 Demand deposits due from banks in the United States 22.805 21,661 22.527 20.012 14.663 20.313 21.019 21.538 19.971 3 All other cash and due from depository institutions. . 31.724 35,642 35.310 39.148 33,356 33.889 33.554 35,673 32,251 4 Total loans and securities 584,064 580,247 582,512 571,438 573,257 586,619 579,474 577,500 579,192 Securities 5 U.S. Treasury securities 40.612 41,839 41.068 40,244 40.657 41.294 40,475 40.431 39,806 6 Trading account 6,793 8,148 7.411 6,843 7.247 8,072 7,356 8,337 7,795 7 Investment account, by maturity 33.819 33,691 33.656 33,401 33,410 33.221 33.119 32,095 32,010 8 One year or less 10.550 10.382 10.296 9,975 10.019 10.012 10,022 9,205 9.170 9 Over one through five years 19,466 19,473 19.462 19.508 19.553 19.413 19,324 19,132 19,140 10 Over five years 3.802 3.836 3.899 3.918 3.837 3.797 3,773 3.758 3.701 11 Other securities 78,930 77.651 77.311 77,282 77.475 78,527 77,746 77,376 77.745 12 Trading account 4.650 3.421 3.389 3,252 3.246 4.167 3,273 2.911 2,904 13 Investment account 74.280 74.230 73.922 74,030 74,229 74,360 74,473 74,465 74,841 14 U.S. government agencies 16.399 16,345 16,115 16.069 16,154 16.149 16.159 16,128 16.345 15 States and political subdivision, by maturity .... 55,177 55.166 55.148 55,302 55.385 55.459 55,506 55,538 55,641 16 One year or less 7.034 7.077 7.049 7.095 7.051 7.266 7,266 7.194 7,235 17 Over one year 48.142 48.089 48.099 48,208 48.334 48.194 48,240 48,344 48,407 18 Other bonds, corporate stocks and securities.... 2,704 2.719 2.659 2.659 2,690 2,751 2,808 2.800 2,854 Loans 19 Federal funds sold1 28.703 30.822 33,974 25.780 26,331 31,529 28,236 27,831 28,241 20 To commercial banks 20.157 23.298 26.696 18,385 19.172 24,138 20,682 20.073 19,742 21 To nonbank brokers and dealers in securities 6.695 5,598 5,192 5,371 5,261 5,520 5,639 5.732 6.519 22 To others 1.851 1,926 2.085 2,024 1,898 1,872 1,915 2,026 1.980 23 Other loans, gross 447.847 442.003 442.276 440.284 440,965 447,462 445,237 444,102 445.680 24 Commercial and industrial 182.490 181.538 180.769 180.515 180.468 184,219 183,556 182,784 182,859 25 Bankers acceptances and commercial paper 5.720 5.015 4.822 4.165 4.397 4.468 3,930 3,354 3,265 26 All other 176,769 176,523 175.946 176.349 176,071 179,750 179,626 179.430 179,594 27 U.S. addressees 169,088 168.956 168.319 168,810 168,520 172.294 172,226 172.042 172.180 28 Non-U.S. addressees 7,682 7,567 7.627 7.540 7.551 7,456 7.400 7,388 7,414 29 Real estate 117.749 117.800 118.246 118.480 118.692 118.940 119,380 119,718 119,902 30 To individuals for personal expenditures 71.493 71.277 71.249 71.352 71,688 71.857 71.864 72,035 72,304 To financial institutions 31 Commercial banks in the United States 6.247 5.767 6.210 6.039 5.547 6,087 5,901 6,226 6.520 32 Banks in foreign countries 9.385 9.360 9.538 8.767 9.216 9.119 9,036 9.122 9.432 33 Sales finance, personal finance companies, etc . . 10.545 9.909 9,737 9,864 10,085 10.166 10,238 10.128 10.132 34 Other financial institutions 16.225 16,138 15,915 15,930 15.855 16,380 16,340 16,259 16,257 35 To nonbank brokers and dealers in securities 9,555 7.116 7.337 6,311 6,617 7,253 5,584 4.943 5,067 36 To others for purchasing and carrying securities2 . . 2,545 2,535 2.541 2,539 2,543 2,617 2.591 2,594 2.580 37 To finance agricultural production 5,946 5.990 5,982 5.981 5,986 6,034 6,045 6,020 5,977 38 All other 15.666 14.572 14.752 14,506 14,269 14,788 14,701 14.272 14,650 39 LESS: Unearned income 5,878 5,918 5,948 5.953 5,980 5.934 5,953 5.963 5,995 40 Loan loss reserve 6.150 6.150 6.169 6.199 6,191 6.259 6,267 6,277 6,284 41 Other loans, net 435.819 429.935 430,158 428.132 428.794 435.269 433,016 431.862 433,400 42 Lease financing receivables 10.270 10,362 10.395 10.381 10.410 10,411 10,422 10.449 10,475 43 All other assets 92.981 91.514 89.860 87.113 87,335 88.638 88,522 88,866 89,043 44 Total assets 807,763 792,982 798,237 779,981 765,596 797,860 785,651 788,452 781,388 Deposits 45 Demand deposits 209,696 191,354 203.375 182,928 173,400 196.528 187,520 187,973 181,631 46 Mutual savings banks 737 598 694 492 535 686 571 570 584 47 Individuals, partnerships, and corporations 140,436 129.640 133,780 124.508 122,031 132.306 128.077 123,367 122,471 48 States and political subdivisions 5.179 4.504 4,853 4,146 4,164 4.617 3.856 4,244 4,116 49 U.S. government 1.082 1,971 3.005 1.860 1.784 3.200 2,121 3,023 1,870 5(1 Commercial banks in the United States 41.213 36,132 41.194 34,908 27.912 36.314 34.659 38,939 34,598 51 Banks in foreign countries 8.392 8,450 9.389 7.637 8.693 8.822 8.580 9,001 9,149 52 Foreign governments and official institutions 1.619 1.760 1.906 1,305 1,304 1,329 1,878 1,698 1,680 53 Certified and officers' checks 11,038 8.299 8,554 8,072 6.975 9,253 7,778 7,130 7,163 54 Time and savings deposits 337.390 337.754 337.954 339,331 341.228 343.767 345,178 345.301 346,841 55 Savings 78.250 78.708 77,942 77,305 76,373 77,553 76.709 76,187 75,500 56 Individuals and nonprofit organizations 74,373 74.910 74,153 73.631 72.728 73,923 73,074 72,592 71,935 57 Partnerships and corporations operated for profit 3.203 3.192 3.150 3.141 3,112 3,088 3,066 3.019 3,029 58 Domestic governmental units 656 586 618 509 509 519 547 553 513 59 All other 18 20 21 23 22 22 23 23 23 60 Time 259.139 259.046 260,012 262,027 264,855 266,214 268,468 269.114 271,342 61 Individuals, partnerships, and corporations 225.852 225,636 227,735 229.468 232.103 233,805 235,663 235,919 237,718 62 States and political subdivisions 18.703 18,729 18.515 18.786 18.878 18.757 19,087 19,413 19,674 63 U.S. government 268 279 268 278 281 273 272 256 246 64 Commercial banks in the United States 8,121 8.040 8.032 8.041 8,304 8,247 8,308 8,312 8,407 65 Foreign governments, official institutions, and banks 6.195 6.362 5,462 5.454 5,289 5.132 5,138 5.215 55,,229966 Liabilities for borrowed money 66 Borrowings from Federal Reserve Banks 3.128 2.145 2.521 4.147 653 1.100 502 881 299 67 Treasury tax-and-Ioan notes 9.542 5.141 4,000 5.133 4,902 1,541 1,814 2,163 3,946 68 All other liabilities for borrowed money3 128.273 138.916 132,288 127,679 123,438 133.272 128,903 128,739 112233,,774400 69 Other liabilities and subordinated notes and debentures 67,549 65.304 65.948 68,698 69,881 69.059 69,124 70,958 72,488 70 Total liabilities 755,578 740,615 746,086 727,916 713,503 745,267 733,040 736,015 728,946 71 Residual (total assets minus total liabilities)4 52.184 52.367 52.151 52,064 52,094 52,593 52,611 52,437 52.441 1. Includes securities purchased under agreements to resell. 4. Not a measure of equity capital for use in capital adequacy analysis or for 2. Other than financial institutions and brokers and dealers. 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 SI billion or Digitized for FmRoAreS oEn RD ec. 31, 1977. see table 1.13. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Banks A19 1.27 LARGE WEEKLY REPORTING COMMERCIAL BANKS with Domestic Assets of $1 Billion or More on December 31, 1977, Assets and Liabilities Millions of dollars, Wednesday figures 1981 AAccccoouunntt July 1 July 8 July 15 July 22 July 29 p Aug. 5p Aug. 12 p Aug. 19p Aug. 26P 1 Cash items in process of collection 62,670 50,798 54,629 49,201 44,096 54,861 49,759 51,480 47,'779 7 Demand deposits due from banks in the United States 22,078 20,973 21,788 19,409 14,001 19,666 20,362 20,852 19,356 3 All other cash and due from depository institutions.. 29,583 33,707 33,031 36,791 31,132 32,010 31,446 33,298 29,973 4 Total loans and securities 545,810 541,355 544,196 533,416 535,259 546,079 540,495 539,210 540,823 Securities 5 U.S. Treasury securities 37,206 38,447 37,669 36,846 37,266 37,873 37,087 37,033 36,412 6 Trading account 6,728 8,073 7,342 6,766 7,158 7,983 7,278 8,244 7,718 7 Investment account, by maturity 30,478 30,375 30,327 30,080 30,108 29,890 29,808 28,789 28,694 8 One year or less 9,657 9,460 9,371 9,057 9,125 9,108 9,133 8,329 8,284 9 Over one through five years 17,380 17,438 17,417 17,464 17,505 17,353 17,255 17,052 17,059 in Over five years 3,441 3,477 3,539 3,558 3,478 3,429 3,420 3,407 3,351 n Other securities 72,641 71,379 71,056 71,005 71,159 72,222 71,442 71,089 71,432 1? Trading account 4,558 3,364 3,327 3,197 3,174 4,107 3,216 2,857 2,843 n Investment account 68,082 68,016 67,728 67,808 67,985 68,116 68,226 68,232 68,589 14 U.S. government agencies 15,211 15,135 14,920 14,869 14,942 14,942 14,949 14,936 15,151 15 States and political subdivision, by maturity .... 50,344 50,338 50,325 50,456 50,528 50,598 50,645 50,666 50,754 16 One year or less 6,299 6,333 6,305 6,334 6,290 6,494 6,497 6,432 6,465 17 Over one year 44,046 44,006 44,020 44,121 44,238 44,103 44,148 44,234 44,289 18 Other bonds, corporate stocks and securities.... 2,527 2,542 2,484 2,484 2,515 2,576 2,632 2,629 2,684 Loans 19 Federal funds sold1 25,542 26,826 30,599 22,696 23,358 26,166 24,427 24,753 25,041 20 To commercial banks 17,519 19,879 23,895 15,803 16,670 19,280 17,418 17,520 17,221 71 To nonbank brokers and dealers in securities 6,203 5,054 4,653 4,894 4,816 5,044 5,124 5,263 5,876 77 To others 1,820 1,893 2,051 1,998 1,872 1,842 1,884 1,970 1,944 23 Other loans, gross 421,439 415,755 415,966 413,994 414,621 420,988 418,729 417,542 419,184 74 Commercial and industrial 173,520 172,580 171,767 171,517 171,471 175,154 174,486 173,751 173,861 25 Bankers acceptances and commercial paper 5,529 4,830 4,634 3,977 4,224 4,299 3,761 3,176 3,106 76 All other 167,992 167,750 167,133 167,540 167,246 170,854 170,725 170,574 170,754 77 U.S. addressees 160,378 160,252 159,576 160,072 159,768 163,480 163,480 163,264 163,418 28 Non-U.S. addressees 7,614 7,498 7,557 7,467 7,479 7,375 7,323 7,310 7,336 ?9 Real estate 111,169 111,211 111,634 111,876 112,071 112,329 112,737 113,024 113,234 30 To individuals for personal expenditures 62,658 62,457 62,452 62,554 62,858 62,964 62,967 63,114 63,364 To financial institutions 31 Commercial banks in the United States 6,095 5,628 6,064 5,927 5,434 5,961 5,786 6,098 6,398 37 Banks in foreign countries 9,261 9,290 9,465 8,674 9,132 9,043 8,967 9,061 9,370 33 Sales finance, personal finance companies, etc .. 10,406 9,769 9,589 9,718 9,938 10,007 10,085 9,977 9,981 34 Other financial institutions 15,843 15,764 15,546 15,551 15,469 15,997 15,938 15,842 15,816 35 To nonbank brokers and dealers in securities 9,491 7,045 7,267 6,239 6,542 7,183 5,515 4,869 4,998 36 To others for purchasing and carrying securities2 . . 2,312 2,299 2,306 2,312 2.317 2,387 2,364 2,368 2,353 37 To finance agricultural production 5,798 5,839 5,829 5,825 5,830 5,880 5,891 2,865 5,824 38 All other 14,886 13,873 14,046 13,800 13,557 14,083 13,992 13,575 13,985 39 LESS: Unearned income 5,240 5,278 5,304 5,304 5,333 5,294 5,307 5,314 5,346 40 Loan loss reserve 5,777 5,775 5,790 5,821 5,812 5,875 5,883 5,893 5,901 41 Other loans, net 410.422 404,702 404,872 402,869 403,476 409,818 407,539 406,335 407,938 47 Lease financing receivables 9,973 10,066 10,100 10,090 10,119 10,119 10,131 10,157 10,184 43 All other assets 90,207 88,825 87,296 84,553 84,724 85,914 85,790 86,153 86,274 44 Total assets 760,323 745,723 751,040 733,460 719,332 748,649 737,984 741,151 734,389 Deposits 45 Demand deposits 197,066 179,506 191,310 171,721 116622,,226622 182,870 175,505 176,396 170,432 46 Mutual savings banks 703 570 673 473 516 660 550 551 562 47 Individuals, partnerships, and corporations 130,740 120,355 124,433 115,640 113,338 121,829 118,919 114,327 113,604 48 States and political subdivisions 4,565 4,056 4,334 3,644 3,554 4,135 3,414 3,727 3,605 49 U.S. government 936 1,804 2,673 1,678 1,604 2,968 1,948 2,773 1,687 50 Commercial banks in the United States 39,534 34,611 39,730 33,614 26,626 34,748 33,257 37,546 33,326 51 Banks in foreign countries 8,312 8,369 9,316 7,563 8,612 8,758 8,519 8,929 9,068 57 Foreign governments and official institutions 1,615 1,752 1,898 1,295 1,303 1,328 1,877 1,697 1,679 53 Certified and officers' checks 10,660 7,989 8,252 7,812 6,707 8,444 7,021 6,846 6,899 54 Time and savings deposits 315,351 315,620 315,813 317,281 319,194 321,511 322,877 322,944 324,471 55 Savings 72,308 72,701 71,903 71,400 70,544 71,626 70,856 70,357 69,740 56 Individuals and nonprofit organizations 68,726 69,190 68,474 68,004 67,175 68,272 67,494 67,039 66,443 57 Partnerships and corporations operated for profit 2,950 2,947 2,907 2,899 2,874 2,854 2,832 2,787 2,795 58 Domestic governmental units 614 544 501 473 472 479 507 508 479 59 All other 18 20 21 23 22 22 23 23 23 60 Time 243,042 242,920 243,909 245,882 248,650 249,884 252,021 252,587 254,731 61 Individuals, partnerships, and corporations 211,737 211,550 213,680 215,376 217,985 219,573 221,336 221,557 223,270 67 States and political subdivisions 17,103 17,070 16,855 17,123 17,178 17,049 17,346 17,632 17,896 63 U.S. government 254 265 254 264 270 263 262 246 236 64 Commercial banks in the United States 7,753 7,672 7,657 7,664 7,926 7,868 7,940 7,937 8,033 65 Foreign governments, official institutions, and banks 6,195 6,362 55,,446622 5,454 55,,228899 5,132 5,138 5,215 5,296 Liabilities for borrowed money 66 Borrowings from Federal Reserve Banks 3,106 2,041 2,357 3,977 596 1,001 459 667 275 67 Treasury tax-and-loan notes ; 8,830 4,728 3,683 4,731 4,520 1,394 1,659 1,958 3,650 68 All other liabilities for borrowed money3 121,277 131,230 124,764 120,000 115,892 125,388 120,930 120,961 115,840 69 Other liabilities and subordinated notes and debentures 65,902 63,677 64,393 67,110 68,213 67,355 67,417 69,267 70,752 70 Total liabilities 711,532 696,803 702,320 684,821 670,676 699,519 688,848 692,193 685,420 71 Residual (total assets minus total liabilities)4 48,791 48,920 48,720 48,640 48,656 49,130 49,136 48,958 48,969 1. Includes securities purchased under agreements to resell. 4. Not a measure of equity capital for use in capital adequacy analysis or for 2. Other than financial institutions and brokers and dealers. 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 Digitized for mFoRreA oSn EDeRc. 31, 1977, see table 1.13. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 DomesticN onfinancial Statistics • September 1981 1.28 LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures 1981 July 1 July 8 July 15 July 22 July 29 p Aug. 5p Aug. 12? Aug. 19 P 1 Cash items in process of collection 25,553 19,107 15,256 20,568 18,644 19,945 2 Demand deposits due from banks in the United States 15,542 15,708 16,332 14,362 8,775 13,765 14,862 15,205 3 All other cash and due from depository institutions 8,164 9,819 9,361 8,774 6,529 10,079 6,735 8,511 4 Total loans and securities1 134,677 131,792 135,942 129,734 129,689 134,354 132,139 130,575 Securities 5 U.S. Treasury securities2 6 Trading account2 7 Investment account, by maturity 9,014 9,085 9,078 8,936 8,956 9,011 8,922 8,391 8 One year or less 2,306 2,350 2,336 2,153 2,210 2,400 2,386 1,926 9 Over one through five years 5,897 5,888 5,864 5,906 5,868 5,733 5,657 5,638 10 Over five years 811 847 877 877 878 878 827 11 Other securities2 12 Trading account2 13 Investment account 14,238 14,240 14,152 14,192 14,193 14,364 14,335 14,283 14 U.S. government agencies 2,551 2,535 2,516 2,491 2,510 2,528 2,490 2,479 15 States and political subdivision, by maturity .. 11,074 11,101 11,060 11,123 11,096 11,153 11,151 11,124 16 One year or less 1,630 1,673 1,675 1,718 1,690 1,769 1,775 1,694 17 Over one year 9,444 9,427 9,385 9,404 9,406 9,384 9,376 9,430 18 Other bonds, corporate stocks and securities.. 613 604 576 578 586 682 693 680 Loans 19 Federal funds sold3 7,508 7,458 11,331 7,615 6,952 7,848 7,993 20 To commercial banks 3,274 3,801 7,749 3.948 3,490 4,598 4,014 4,156 21 To nonbank brokers and dealers in securities 3,249 2,589 2,428 2,529 2,535 2,849 2,907 2,758 22 To others 948 1,068 1,154 1,137 927 940 927 1,019 23 Other loans, gross 107,145 104,237 104,639 102,252 102,859 105,876 104,321 103,270 24 Commercial and industrial 53,556 53,544 53,037 52,222 52,231 54,285 53,713 53,412 25 Bankers acceptances and commercial paper... 1,898 1,648 1,621 1,172 1,312 1,450 1,277 954 26 All other 51,658 51,896 51,416 51,050 50,919 52,836 52,437 52,459 27 U.S. addressees 49,040 49,377 48,866 48,507 48,362 50,341 49,985 50,023 28 Non-U.S. addressees 2,618 2,519 2,551 2,542 2,557 2,495 2,452 2,436 29 Real estate 16,061 16,082 16,234 16,286 16,382 16,466 16,587 16,700 30 To individuals for personal expenditures 10,000 10,011 10,041 10,107 10,153 10,200 10,260 10,303 31 To financial institutions Commercial banks in the United States 1,662 1,479 1,814 1,570 1,171 1,488 1,258 1,548 32 Banks in foreign countries 4,845 4,849 5,222 4,396 4,972 4,737 4,572 4,454 33 Sales finance, personal finance companies, etc. 4,663 4,156 4,066 4,201 4,254 4,331 4,287 4,093 34 Other financial institutions 4,652 4,620 4,471 4,448 4,420 4,619 4,641 4,672 35 To nonbank brokers and dealers in securities 6,082 4,294 4,544 3,739 3,910 4,329 3,215 2,889 36 To others for purchasing and carrying securities4 576 586 601 582 609 610 581 573 37 To finance agricultural production 390 389 371 374 365 373 364 356 38 All other 4,656 4,226 4,238 4,325 4,391 4,436 4,842 4,269 39 LESS: Unearned income 1,291 1,304 1,319 1,311 1,324 1,319 1,330 1,337 40 Loan loss reserve 1,936 1,923 1,940 1.949 1,946 1,965 1,956 1.96S 41 Other loans, net 103,917 101,010 101,380 98,991 99,589 102,592 101,035 99,968 42 Lease financing receivables 2,244 2,245 2,260 2,259 2,263 2,250 2,229 2,245 43 All other assets5 39,233 37,887 36,055 35,588 36,210 36,356 35,580 37,656 44 Total assets 225,414 217,322 220,758 209,823 198,723 217,372 210,190 214,137 Deposits 45 Demand deposits 75,928 66,315 74,152 63,888 54,922 66,726 64,014 66,159 46 Mutual savings banks 387 278 395 238 259 348 258 278 47 Individuals, partnerships, and corporations 36,461 31,025 32,654 30,307 28,909 33,249 31,005 29,050 48 States and political subdivisions 522 436 483 412 344 433 362 323 49 U.S. government 178 551 725 506 380 744 651 748 50 Commercial banks in the United States 24,998 22,149 27,020 21.844 14,519 19,860 20,120 24,277 51 Banks in foreign countries 6,453 6,566 7,423 5,841 6,938 6,918 6,926 7,081 52 Foreign governments and official institutions 1,281 1,404 1,622 1,019 1,036 1,053 1,597 1,392 53 Certinecfand officers' checks 5,647 3,905 3,829 3,721 2,536 4,121 3,095 3,011 54 Time and savings deposits 60,483 60,257 60,213 61,082 61,396 61,459 61,528 61,099 55 Savings 9,437 9,438 9,358 9,243 9,117 9,227 9,204 9,142 56 Individuals and nonprofit organizations 9,060 9,064 8,999 8,895 8,766 8,821 8,783 57 Partnerships and corporations operated for profit 255 258 253 258 261 256 251 250 58 Domestic governmental units 120 112 103 87 88 90 103 108 59 All other 3 2 2 2 2 2 2 2 60 Time 51,045 50,819 50,855 51,839 52,279 52,232 52,325 51,957 61 Individuals, partnerships, and corporations 43,850 43,533 43,949 44.845 45,336 45,394 45,532 44,959 62 States and political subdivisions 1,503 1,618 1,676 1,702 1,711 1,691 1,695 1,817 63 U.S. government 83 83 79 87 98 100 89 90 64 Commercial banks in the United States 2,729 2,662 2,639 2,690 2,718 2,698 2,652 2,648 65 Foreign governments, official institutions, and banks 2,923 2,511 2,515 2,416 2,349 2,356 2,444 Liabilities for borrowed money 66 Borrowings from Federal Reserve Banks 1,625 360 1,283 1,003 67 Treasury tax-and-loan notes 2,369 1,255 1,081 1,300 1,340 259 477 411 68 All other liabilities for borrowed money6 43,548 47,908 41,894 40,012 37,938 44,706 40,987 41,239 69 Other liabilities and subordinated notes and debentures 25,156 24,850 25,908 26,354 27,068 27,757 26,787 28,921 70 Total liabilities 209,108 200,946 204,530 193,638 182,665 200,906 193,794 197,829 71 Residual (total assets minus total liabilities)7 16,306 16,377 16,228 16,185 16,057 16,466 16,396 16,308 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. 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 A21 1.29 LARGE WEEKLY REPORTING COMMERCIAL BANKS Balance Sheet Memoranda Millions of dollars, Wednesday figures 1981 AAccccoouunntt July 1 July 8 July 15 July 22 July 29P Aug. 5p Aug. 12 p Aug. 19 P Aug. 26p BANKS WITH ASSETS OF $750 MILLION OR MORE 1 Total loans (gross) and securities adjusted1 569.688 563,250 561,722 559,166 560,709 568,587 565,111 563,441 565,210 2 Total loans (gross) adjusted1 450,147 443,760 443,343 441,640 442,577 448,766 446,890 445,634 447,659 3 Demand deposits adjusted2 101,482 99,696 101,542 94,271 97,128 99,024 98,080 91,585 94,707 4 Time deposits in accounts of $100,000 or more 170,407 170,325 170,859 172,484 174,846 175,669 177,213 177,539 179,582 5 Negotiable CDs 122.735 122,345 123,533 124,423 126,604 127,198 128,432 128,472 130,174 6 Other time deposits 47,672 47,980 47,326 48,061 48,242 48,470 48,781 49,067 49,408 7 Loans sold outright to affiliates3 2,798 2,673 2,711 2,693 2,650 2,642 2,616 2,631 2,656 8 Commercial and industrial 2,133 2,016 2,062 2,035 1,971 1,965 1,940 1,959 1,973 9 Other 665 657 649 658 679 677 676 671 683 BANKS WITH ASSETS OF $1 BILLION OR MORE 10 Total loans (gross) and securities adjusted1 533,214 526,901 525,331 522,810 524,300 532,008 528,481 526,800 528,451 11 Total loans (gross) adjusted1 423,367 417,074 416,606 414,960 415,875 421,912 419,952 418,678 420,607 12 Demand deposits adjusted2 93,926 92,293 94,278 87,227 89,935 90,293 90,541 84,597 87,640 13 Time deposits in accounts of $100,000 or more 161,348 161,250 161,823 163,448 165,777 166,514 167,985 168,249 170,220 14 Negotiable CDs 116,565 116,146 117,354 118,249 120,417 120,983 122,187 122,177 123,813 15 Other time deposits 44,782 45,104 44,470 45,199 45,360 45,531 45,798 46,072 46.407 16 Loans sold outright to affiliates3 2,729 2,604 2,643 2.618 2,574 2,568 2,544 2,560 2,580 17 Commercial and industrial 2,077 1,960 2,007 1,964 1,907 1,903 1,882 1,902 1,914 18 Other 652 644 636 654 667 665 662 658 666 BANKS IN NEW YORK CITY 19 Total loans (gross) and securities adjusted1-4 132,968 129,739 129,637 127,475 128,298 131,551 130,154 128,173 128,494 20 Total loans (gross) adjusted1 109,716 106,414 106.407 104,348 105,150 108,176 106,897 105,499 105,868 21 Demand deposits adjusted2 25,199 23,745 25.600 22,430 24,766 25,554 24,599 21,189 23,138 22 Time deposits in accounts of $100,000 or more 40,196 39,919 39,882 40,822 41,192 41,014 41,000 40,597 41,454 23 Negotiable CDs 29,827 29,395 29,640 30,486 30,880 30,520 30,460 30,039 30,859 24 Other time deposits 10,369 10,524 10.242 10,336 10,312 10,494 10,540 10,557 10,594 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. consolidated nonbank affiliates of the bank, the bank's holding company (if not a 2. All demand deposits except U.S. government and domestic banks less cash bank), and nonconsolidated nonbank subsidiaries of the holding company, items in process of collection. 4. Excludes trading account securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 DomesticN onfinancial Statistics • September 1981 1.291 LARGE WEEKLY REPORTING BRANCHES AND AGENCIES OF FOREIGN BANKS Assets and Liabilities Millions of dollars, Wednesday figures Account July 1 July 8 July 15 July 22 July 29 Aug. 5 Aug. 12 Aug. 19 Aug. 26 1 Cash and due from depository institutions 23,820 24,360 27,126 24,362 18,899 24,136 22,323 24,958 23,560 2 Total loans and securities 62,826 61,268 61,054 62,000 61,751 61,280 62,144 62,005 62,564 3 U.S. Treasury securities 1,867 1,869 1,768 1,703 1,753 1,725 1,766 1,757 1,824 4 Other securities 952 949 982 988 1,006 995 997 987 987 5 Federal funds sold1 5,046 4,443 4,261 4,884 4,578 3,412 4,396 4,333 5,137 6 To commercial banks in U.S 4,785 4,169 3,877 4,805 4,422 3,227 4,148 4,272 4,606 7 To others 261 273 384 80 156 186 248 60 531 8 Other loans, gross 54,962 54,007 54,043 54,424 54,413 55,147 54,985 54,929 54,616 9 Commercial and industrial 26,306 26,026 26,164 26,575 26,815 27,451 27,432 27,501 27,220 10 Bankers acceptances and commercial paper 3,549 3,563 3,518 3,480 3,425 3,344 3,352 3,326 3,310 11 All other 22,757 22,463 22,646 23,095 23,390 24,107 24,080 24,176 23,910 12 U.S. addresses 13,331 12,818 13,017 13,338 13,575 14,111 14,170 14,173 14,009 13 Non-U.S. addresses 9,530 9,645 9,629 9,757 9,814 9,997 9,909 10,002 9,900 14 To financial institutions 19,479 19,411 19,351 19,468 19,483 19,234 19,227 19,321 19,148 15 Commercial banks in U.S 11,653 11,656 11,488 11,553 11,741 11,516 11,692 11,743 11,518 16 Banks in foreign countries 7,443 7,405 7,531 7,584 7,394 7,411 7,223 7,273 7,297 17 Nonbank financial institutions 383 350 332 331 348 307 312 305 333 18 For purchasing and carrying securities .. 1,262 816 790 604 525 730 564 570 563 19 All other 7,915 7,752 7,737 7,776 7,590 7,731 7,762 7,535 7,685 20 Other assets (claims on nonrelated parties) 9,788 10,312 10,132 9,863 10,072 10,315 10,222 10,365 10,686 21 Net due from related institutions 9,447 9,098 9,334 9,126 9,280 9,601 9,316 9,217 9,286 22 Total assets 105,881 105,038 107,646 105,351 100,002 105,332 104,005 106,546 106,096 23 Deposits or credit balances2 42,140 42,138 43,575 41,443 36,880 42,099 40,669 42,904 42,527 24 Credit balances 1,895 1,959 2,425 2,062 1,722 2,243 2,614 2,646 2,622 25 Demand deposits 18,995 18,844 20,057 17,904 13,345 18,152 16,075 18,823 18,166 26 Individuals, partnerships, corporations 1,206 1,066 971 944 852 956 990 998 975 27 Other 17,789 17,778 19,086 16,960 12,493 17,196 15,085 17,825 17,191 28 Total time and savings 21,250 21,335 21,093 21,477 21,813 21,704 21,979 21,436 21,739 29 Individuals, partnerships, corporations 17,482 17,518 17,344 17,779 18,163 18,169 18,459 17,800 18,097 30 Other 3,768 3,817 3,749 3,698 3,650 3,535 3,520 3,636 3,642 31 Borrowings3 30,250 30,124 31,882 29,243 29,201 30,985 30,230 30,268 29,939 32 Federal funds purchased4 3,962 3,799 5,831 3,665 3,269 5,254 4,513 4,502 4,315 33 From commercial banks in U.S 3,208 3,049 5,032 2,772 2,544 4,421 3,776 3,730 3,493 34 From others 754 750 799 893 725 833 737 772 822 35 Other liabilities for borrowed money .. 26,287 26,324 26,051 25,577 25,932 25,640 25,716 25,766 25,624 36 To commercial banks in U.S 22,018 21,841 21,763 21,437 21,833 21,801 22,136 21,890 21,756 37 To others 4,269 4,483 4,288 4,140 4,099 3,839 3,580 3,876 3,868 38 Other liabilities to nonrelated parties 10,076 10,431 10,218 9,909 10,247 10,733 10,308 10,444 10,682 39 Net due to related institutions 23,414 22,345 21,970 24,756 23,674 21,605 22,799 22,928 22,948 40 Total liabilities 105,881 105,038 107,646 105,351 100,002 105,332 104,005 106,546 106,096 MEMO 41 Total loans (gross) and securities adjusted' 46,388 45,443 45.689 45,643 45,588 46,537 46,304 45,990 46,440 42 Total loans (gross) adjusted5 43,570 42,624 42,939 42,951 42,828 43,817 43,541 43,246 43,621 1. Includes securities purchased under agreements to resell. 4. Includes securities sold under agreements to repurchase. 2. Balances due to other than directly related institutions. 5. Excludes loans and federal funds transactions with commercial banks in U.S. 3. Borrowings from other than directly related institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Financial Statistics • September 1981 A23 1.29 LARGE WEEKLY REPORTING COMMERCIAL BANKS Domestic Classified Commercial and Industrial Loans Millions of dollars Outstanding Net change during IIInnnddduuussstttrrryyy ccclllaaassssssiiifffiiicccaaatttiiiooonnn 1981 1981 1981 Apr. 29 May 27 June 24 July 29 Aug. 26p Ql Q2 June July Aug.? 1 Durable goods manufacturing 24,570 24,623 25,274 25,370 25,629 -217 620 651 96 259 2 Nondurable goods manufacturing 19,845 20,250 20,618 20,175 22,478 -1,229 1,217 368 -443 2,303 3 Food, liquor, and tobacco 4,409 4,577 4,404 4,095 4,392 -834 -176 -173 -309 297 4 Textiles, apparel, and leather 4,469 4,603 4,920 4,994 5,068 200 569 317 74 74 5 Petroleum refining 3,298 3,440 3,412 3,546 3,587 -724 430 -28 134 40 6 Chemicals and rubber 4,036 3,957 4,049 3,791 5,500 -100 211 92 -258 1,709 7 Other nondurable goods 3,633 3,672 3,832 3,749 3,931 230 182 160 -83 182 8 Mining (including crude petroleum and natural gas) 16,752 17,197 18,194 19,658 20,019 -695 2,444 998 1,464 361 9 Trade 26,778 26,306 26,107 26,462 26,399 -729 490 -199 355 -63 10 Commodity dealers. 2,337 1,865 1,499 1,601 1,659 -613 -451 -366 102 58 11 Other wholesale 12,244 12,023 12,087 12,405 12,368 -467 212 65 318 -37 12 Retail 12,196 12,418 12,520 12,456 12,372 352 728 102 -64 -84 13 Transportation, communication, and other public utilities 20,338 20,403 20,824 21,027 21,417 -1,518 851 421 203 390 14 Transportation 8,156 8,343 8,196 8,251 8,273 -377 89 -147 55 22 15 Communication 3,275 3,462 3,542 3,545 3,589 -174 381 79 3 44 16 Other public utilities 8,906 8,597 9,086 9,231 9,555 -967 381 489 145 324 17 Construction 6,446 6,988 6,984 7,108 7,132 218 758 -4 124 24 18 Services 24,074 24,421 24,546 24,524 24,771 555 934 124 -22 248 19 All other2 15,404 15,008 15,177 15,444 15,572 -878 -4 169 266 128 20 Total domestic loans 154,208 155,195 157,724 159,768 163,418 -4,492 7,311 2,529 2,044 3,650 21 MEMO: Term loans (original maturity more than 1 year) included in domestic loans 80,333 82,411 83,402 84,354 86,103 -2,492 4,104 991 952 1,749 1. Adjustment bank amounts represent accumulated adjustments originally made NOTE. New series. The 134 large weekly reporting commercial banks with doto offset the cumulative effects of mergers. These adjustment amounts should be mestic assets of $1 billion or more as of Dec. 31,1977, are included in this series. added to outstanding data for any date in the year to establish comparability with The revised series is on a last-Wednesday-of-the-month basis. Partly estimated any date in the subsequent year. Changes shown have been adjusted for these historical data are available from the Banking Section, Division of Research and amounts. Statistics, Board of Governors of the Federal Reserve System, Washington, D.C. 2. Includes commercial and industrial loans at a few banks with assets of $1 20551. billion or more that do not classify their loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 DomesticN onfinancial Statistics • September 1981 1.31 GROSS DEMAND DEPOSITS of Individuals, Partnerships, and Corporations' Billions of dollars, estimated daily-average balances Commercial banks TTyyppee ooff hhoollddeerr 19792 1980 1981 11997755 11997766 11997777 11997788 DDeecc.. DDeecc.. DDeecc.. DDeecc.. Dec. Mar. June Sept. Dec. Mar.3 1 All holders—Individuals, partnerships, and corporations 236.9 250.1 274.4 294.6 302.2 288.4 288.6 302.0 315.5 280.8 2 Financial business 20.1 22.3 25.0 27.8 27.1 28.4 27.7 29.6 29.8 30.8 3 Nonfinancial business 125.1 130.2 142.9 152.7 157.7 144.9 145.3 151.9 162.3 144.3 4 Consumer 78.0 82.6 91.0 97.4 99.2 97.6 97.9 101.8 102.4 86.7 5 Foreign 2.4 2.7 2.5 2.7 3.1 3.1 3.3 3.2 3.3 3.4 6 Other 11.3 12.4 12.9 14.1 15.1 14.4 14.4 15.5 17.2 15.6 Weekly reporting banks 19794 1980 1981 11997755 11997766 11997777 11997788 DDeecc.. DDeecc.. DDeecc.. DDeecc.. Dec. Mar. June Sept. Dec. Mar.3 7 All holders—Individuals, partnerships, and corporations 124.4 128.5 139.1 147.0 139.3 133.6 133.9 140.6 147.4 133.2 8 Financial business 15.6 17.5 18.5 19.8 20.1 20.1 20.2 21.2 21.8 21.9 9 Nonfinancial business 69.9 69.7 76.3 79.0 74.1 69.1 69.2 72.4 78.3 69.8 10 Consumer 29.9 31.7 34.6 38.2 34.3 34.2 33.9 36.0 35.6 30.6 11 Foreign 2.3 2.6 2.4 2.5 3.0 3.0 3.1 3.1 3.1 3.2 12 Other 6.6 7.1 7.4 7.5 7.8 7.2 7.5 7.9 8.6 7.7 1. Figures include cash items in process of collection. Estimates of gross deposits 4. After the end of 1978 the large weekly reporting bank panel was changed to are based on reports supplied by a sample of commercial banks. Types of depositors 170 large commercial banks, each of which had total assets in domestic offices in each category are described in the June 1971 BULLETIN, P. 466. exceeding $750 million as of Dec. 31, 1977. See "Announcements," p. 408 in the 2. Beginning with the March 1979 survey, the demand deposit ownership survey May 1978 BULLETIN. Beginning in March 1979, demand deposit ownership estisample was reduced to 232 banks from 349 banks, and the estimation procedure mates for these large banks are constructed quarterly on the basis of 97 sample was modified slightly. To aid in comparing estimates based on the old and new banks and are not comparable with earlier data. The following estimates in billions reporting sample, the following estimates in billions of dollars for December 1978 of dollars for December 1978 have been constructed for the new large-bank panel; have been constructed using the new smaller sample; financial business, 27.0; financial business, 18.2; nonfinancial business, 67.2; consumer, 32.8; foreign, 2.5; nonfinancial business, 146.9; consumer. 98.3; foreign, 2.8; and other. 15.1. other, 6.8. 3. Demand deposit ownership data for March 1981 are subject to greater than normal errors reflecting unusual reporting difficulties associated with funds shifted to NOW accounts authorized at year-end 1980. For the household category, the $15.7 billion decline in demand deposits at all commercial banks between December 1980 and March 1981 has an estimated standard error of $4.8 billion. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Deposits and Commercial Paper A25 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period 1981 Instrument 1977 1978 19791 1980 Dec. Dec. Dec. Dec. Jan. Feb. Mar. Apr. May June July Commercial paper (seasonally adjusted) 1 All issuers 65,051 83,438 112,154r 123,703r 126,793r 128,252r 130,548r 132,052r 139,224' 145,652' 150,965 Financial companies2 Dealer-placed paper3 2 Total 8,796 12,181 1166,,772222rr 18,186r 18,023r 18,805r 20,489r 22,029r 22,819' 24,442' 24,497 3 Bank-related 2.132 3,521 2,874 3,561 3.670 3.742 4,163 4,437 4,800 4.750 5,267 Directly placed paper4 4 Total 40,574 51,647 64,748 67,888 68,956 68,936 69,461 69.537 71,842 74,952 79,571 5 Bank-related 7,102 12,314 17,598 22,382 22,570 22,331 21,604 22,858 23,880 24,107 26,104 6 Nonfinancial companies5 15,681 19,610 30,684 37,629 39,814 40,511 40,598 40,486 44.563 46,258 46,877 Bankers dollar acceptances (not seasonally adjusted) 7 Total 25,450 33,700 45,321 54,744 54,465 58,084 60,089 62,320 60,551 63,427 63,721 Holder 8 Accepting banks 10,434 8,579 9,865 10,564 9.371 9,911 10,117 10,781 10,132 11,595 10,505 9 Own bills 8,915 7,653 8,327 8,963 7.951 8,770 8,735 9,626 9,049 10,207 9,437 10 Bills bought 1,519 927 1,538 1,601 1.420 1,141 1,382 1,155 1,082 1,389 1,068 Federal Reserve Banks 11 Own account 954 1 704 776 0 0 298 0 0 0 453 12 Foreign correspondents 362 664 1,382 1,791 1.771 1,399 1,372 1,383 1,255 1.272 1,459 13 Others 13,700 24,456 33,370 41,614 43,323 46,779 48,303 50,156 49,164 50,560 51,303 Basis 14 Imports into United States 6,378 8,574 10,270 11,776 11,903 12,976 13,292 13,634 12,775 12,996 13,059 15 Exports from United States 5,863 7,586 9,640 12,712 12.816 12,979 13,451 13,368 13,057 13,388 13,296 16 All other 13,209 17,540 25,411 30,257 29,746 32,129 33,347 35,319 34,768 37,043 37,365 1. A change in reporting instructions results in offsetting shifts in the dealer- 3. Includes all financial company paper sold by dealers in the open market. placed and directly placed financial company paper in October 1979. 4. As reported by financial companies that place their paper directly with inves- 2. Institutions engaged primarily in activities such as, but not limited to, com- tors. mercial, savings, and mortgage banking; sales, personal, and mortgage financing; 5. Includes public utilities and firms engaged primarily in such activities as comfactoring, finance leasing, and other business lending; insurance underwriting; and munications, construction, manufacturing, mining, wholesale and retail trade, other investment activities. transportation, and services. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Nonfinancial Statistics • September 1981 1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per annum Effective date Rate Effective Date Month Average Month rate 1980—Dec. 16 21.00 1981—Apr. 2 17.00 1980—Apr. 19.77 1981—Jan. . 19 21.50 24 17.50 May, 16.57 Feb.. 30. 18.00 June 12.63 Mar. 1981—Jan. 2 . 20.50 May 4. 19.00 July 11.48 Api. 9 . 20.00 11. 19.50 Aug. 11.12 May Feb. 3. 19.50 19. 20.00 Sept. 12.23 June 23. 19.00 22. 20.50 Oct. 13.79 July Mar. 10 18.00 June 3 20.00 Nov. 16.06 Aug. 17 17.50 July 8. 20.50 Dec. 20.35 1.34 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 4-9, 1981 Size of loan (in thousands of dollars) All IItteemm ssiizzeess 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) 16,840,794 853,190 481,971 767,519 2,118,788 1,041,775 11,577,551 2 Number of loans 164,452 121,015 14,694 12,003 12,686 1,706 2,346 3 Weighted-average maturity (months) 2.0 3.1 3.8 3.5 3.2 3.3 1.4 4 Weighted-average interest rate (percent per annum) . 19.99 19.45 19.87 19.10 19.93 19.58 20.14 5 Interquartile range1 19.00-20.85 17.85-21.15 18.83-21.74 17.00-21.00 18.95-21.49 18.39-20.75 19.36-20.85 Percentage of amount of loans 6 With floating rate 49.0 30.1 4411..22 4433..22 64.7 6600..77 4477..22 7 Made under commitment 52.8 24.6 33.1 48.1 49.1 56.7 56.4 8 With no stated maturity 21.6 13.4 12.6 21.4 20.7 29.5 22.0 LONG-TERM COMMERCIAL AND INDUSTRIAL LOANS 9 Amount of loans (thousands of dollars) 3,633,958 280,677 450,944 175,691 2,726,645 10 Number of loans 21,441 17,936 2,725 277 503 11 Weighted-average maturity (months) 50.6 35.4 53.1 43.S 52.2 12 Weighted-average interest rate (percent per annum) . 19.25 19.22 19.34 19.48 19.23 13 Interquartile range1 19.00-20.00 17.87-21.34 18.68-20.16 19.00-20.74 19.00-19.76 Percentage of amount of loans 14 With floating rate 78.6 4499..55 6688..44 8877..11 8822..77 15 Made under commitment 77.2 25.7 34.6 78.0 89.5 CONSTRUCTION AND LAND DEVELOPMENT LOANS 16 Amount of loans (thousands of dollars) 874,542 74,010 81,222 169,763 223,133 326,415 17 Number of loans 13,956 7,690 2,363 2,333 1,332 237 18 Weighted-average maturity (months) 13.2 3.3 4.1 17.7 12.0 16.1 19 Weighted-average interest rate (percent per annum) . 19.09 19.83 19.06 16.10 20.74 19.35 20 Interquartile range1 18.00-21.94 18.00-21.91 15.00-21.74 8.25-18.40 20.40-22.54 19.00-21.55 Percentage of amount of loans 21 With floating rate 66.3 58.5 4422..33 1199..44 83.2 8877..00 22 Secured by real estate 93.1 93.3 85.5 97.9 92.4 93.0 23 Made under commitment 64.8 63.5 62.3 19.8 80.9 78.1 24 With no stated maturity 10.5 20.6 5.2 4.7 4.0 17.0 Type of construction 25 1- to 4-family 32.3 64.1 85.5 12.5 24.0 27.7 26 Multifamily 13.1 2.9 3.3 3.0 10.1 25.2 27 Nonresidential 54.7 33.0 11.2 84.5 65.9 47.2 All 250 sizes 1-9 10-24 25-49 50-99 100-249 and over 28 Amount of loans (thousands of dollars) 1,419,090 188,183 236,302 220,646 180,935 281.187 311,838 29 Number of loans 77,593 50,065 15,850 6,450 2,740 1,957 531 30 Weighted-average maturity (months) 6.8 6.8 6.4 6.6 6.3 7.7 6.8 31 Weighted-average interest rate (percent per annum) . 17.88 17.50 17.59 17.67 17.78 17.97 18.46 32 Interquartile range1 16.53-19.10 16.64-18.68 16.64-18.81 16.64-18.50 16.64-18.50 16.53-18.77 16.10-20.75 By purpose of loan 33 Feeder livestock 18.44 17.98 1188..4433 17.91 18.07 18.49 1188..9933 34 Other livestock 17.98 17.28 18.42 17.39 18.75 17.64 (2) 35 Other current operating expenses 17.73 17.46 17.36 17.65 17.88 18.27 17.85 36 Farm machinery and equipment 17.61 17.53 17.62 17.63 17.01 (2) (2) 37 Other 17.68 17.30 17.25 17.58 17.22 17.35 19.73 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(111) 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 A27 1.35 INTEREST RATES Money and Capital Markets Averages, percent per annum; weekly and monthly figures are averages of business day data unless otherwise noted. 1981 1981, week ending IInnssttrruummeenntt 11997788 11997799 11998800 May June July Aug. July 31 Aug. 7 Aug. 14 Aug. 21 Aug. 28 MONEY MARKET RATES 1 Federal funds1,2 7.93 11.19 13.36 18.52 19.10 19.04 17.82 18.54 18.25 18.29 18.19 17.41 Commercial paper3'4 2 1-month 7.76 10.86 12.76 17.91 17.34 17.70 17.58 17.36 17.89 17.59 17.74 17.32 3 3-month 7.94 10.97 12.66 17.56 16.32 17.00 17.23 17.02 17.37 17.16 17.37 17.16 4 6-month 7.99 10.91 12.29 16.66 15.22 16.09 16.62 16.28 16.70 16.46 16.72 16.67 Finance paper, directly placed3,4 5 1-month 7.73 10.78 12.44 17.47 16.66 17.29 17.37 17.08 17.62 17.32 17.58 17.09 6 3-month 7.80 10.47 11.49 15.56 14.58 15.21 15.88 15.68 15.73 15.83 15.95 15.99 7 6-month 7.78 10.25 11.28 14.97 14.13 14.47 15.32 15.03 15.14 15.20 15.32 15.59 Bankers acceptances4,5 8 3-month 8.11 11.04 12.78 17.56 16.27 17.10 17.22 17.20 17.33 17.17 17.28 17.17 9 6-month n.a. n.a. n.a. 16.26 15.02 16.15 16.56 16.45 16.59 16.42 16.57 16.67 Certificates of deposit, secondary market6 10 1-month 7.88 11.03 12.91 18.16 17.55 17.98 17.91 17.85 18.02 17.93 18.02 17.84 11 3-month 8.22 11.22 13.07 18.27 16.90 17.76 17.96 17.82 18.04 17.88 18.03 18.02 12 6-month 8.61 11.44 12.99 17.66 16.09 17.40 17.98 17.73 17.99 17.80 18.07 18.16 13 Eurodollar deposits, 3-month2 8.78 11.96 14.00 19.06 17.86 18.49 18.79 18.91 18.84 18.78 18.73 18.84 U.S. Treasury bills4 Secondary market7 14 3-month 7.19 10.07 11.43 16.30 14.73 14.95 15.51 15.07 15.43 15.25 15.63 15.71 15 6-month 7.58 10.06 11.37 15.29 14.09 14.74 15.52 15.00 15.40 15.28 15.58 15.76 16 1-year 7.74 9.75 10.89 14.29 13.22 13.91 14.70 14.25 14.63 14.43 14.70 14.99 Auction average8 17 3-month 7.221 10.041 11.506 16.295 14.557 14.699 15.612 15.065 15.674 15.235 15.705 15.832 18 6-month 7.572 10.017 11.374 15.334 13.947 14.402 15.548 14.790 15.571 15.122 15.644 15.854 1199 77..667788 99..881177 1100..774488 1144..662233 1133..114466 1133..773355 1144..554422 1144..554422 CAPITAL MARKET RATES U.S. Treasury notes and bonds9 Constant maturities10 20 1-year 8.34 10.67 12.05 16.20 14.86 15.72 16.72 16.13 16.56 16.45 16.74 17.07 21 2-year 8.34 10.12 11.77 15.46 14.51 15.35 16.28 15.77 16.09 15.97 16.28 16.71 ?? 2-'/2-year11 15.80 15.90 16.50 23 3-year 8.29 9.71 11.55 15.08 14.29 15.15 16.00 15.55 15.88 15.67 15.98 16.39 24 5-year 8.32 9.52 11.48 14.63 13.95 14.79 15.56 15.13 15.45 15.13 15.51 16.04 25 7-year 8.36 9.48 11.43 14.30 13.67 14.49 15.22 14.80 15.15 14.83 15.13 15.69 26 10-year 8.41 9.44 11.46 14.10 13.47 14.28 14.94 14.59 14.90 14.61 14.83 15.32 27 20-year 8.48 9.33 11.39 13.82 13.20 13.92 14.52 14.23 14.51 14.14 14.34 14.99 28 30-year 8.49 9.29 11.30 13.60 12.96 13.59 14.17 13.87 14.14 13.83 14.00 14.57 Composite12 29 Over 10 years (long-term) 7.89 8.74 10.81 12.96 12.39 13.05 13.61 13.30 13.58 13.25 13.46 14.02 State and local notes and bonds Moody's series13 30 Aaa 5.52 5.92 7.85 9.90 9.86 10.21 11.10 10.50 11.10 11.10 11.10 11.10 31 BBaaaa 6.27 6.73 9.01 11.28 11.21 11.55 12.78 11.70 12.50 12.50 12.60 13.50 32 BBoonndd BBuuyyeerr sseerriieess1144 6.03 6.52 8.59 10.78 10.67 11.14 12.26 11.44 11.63 11.94 12.49 12.97 Corporate bonds Seasoned issues15 33 All industries 9.07 10.12 12.75 15.15 14.76 15.18 15.60 15.35 15.53 15.42 15.51 15.87 34 Aaa 8.73 9.63 11.94 14.32 13.75 14.38 14.89 14.61 14.82 14.62 14.78 15.21 35 Aa 8.92 9.94 12.50 14.88 14.41 14.79 15.42 14.99 15.35 15.25 15.32 15.65 36 A 9.12 10.20 12.89 15.43 15.08 15.36 15.76 15.55 15.62 15.59 15.69 16.07 37 Baa 9.45 10.69 13.67 15.95 15.80 16.17 16.34 16.25 16.31 16.21 16.25 16.54 Aaa utility bonds16 38 8.96 10.03 12.74 15.81 14.76 16.30 16.78 39 Recently offered issues 8.97 10.02 12.70 15.48 14.81 15.73 16.82 16.55 16.68 16.63 16.80 17.15 MEMO: Dividend/price ratio17 40 Preferred stocks 8.25 9.07 10.57 12.03 12.23 12.43 12.63 12.57 12.52 12.43 12.63 12.94 41 Common stocks 5.28 5.46 5.25 4.98 5.03 5.18 5.16 5.17 5.06 5.03 5.15 5.38 1. Weekly and monthly figures are averages of all calendar days, where the rate 11. Each weekly figure is calculated on a biweekly basis and is the average of for a weekend or holiday is taken to be the rate prevailing on the preceding business five business days ending on the Monday following the calendar week. The biweekly day. The daily rate is the average of the rates on a given day weighted by the rate is used to determine the maximum interest rate payable in the following twovolume of transactions at these rates. week period on small saver certificates. (See table 1.16.) 2. Weekly figures are statement week averages—that is, averages for the week 12. Unweighted averages for all outstanding notes and bonds neither due nor ending Wednesday. callable in less than 10 years, including several very low yielding "flower" bonds. 3. Unweighted average of offering rates quoted by at least five dealers (in the 13. General obligations only, based on figures for Thursday, from Moody's case of commercial paper), or finance companies (in the case of finance paper). Investors Service. Before November 1979, maturities for data shown are 30-59 days, 90-119 days, 14. General obligations only, with 20 years to maturity, issued by 20 state and and 120-179 days for commercial paper; and 30-59 days, 90-119 days, and 150- local governmental units of mixed quality. Based on figures for Thursday. 179 days for finance paper. 15. Daily figures from Moody's Investors Service. Based on yields to maturity 4. Yields are quoted on a bank-discount basis, rather than an investment yield on selected long-term bonds. basis (which would give a higher figure). 16. Compilation of the Federal Reserve. Issues included are long-term (20 years 5. Dealer closing offered rates for top-rated banks. Most representative rate or more). New-issue yields are based on quotations on date of offering; those on (which may be, but need not be, the average of the rates quoted by the dealers). recently offered issues (included only for first 4 weeks after termination of under- 6. Unweighted average of offered rates quoted by at least five dealers early in writer price restrictions), on Friday close-of-business quotations. the day. 17. Standard and Poor's corporate series. Preferred stock ratio based on a sample 7. Unweighted average of closing bid rates auoted by at least five dealers. of ten issues: four public utilities, four industrials, one financial, and one trans- 8. Rates are recorded in the week in which bills are issued. portation. Common stock ratios on the 500 stocks in the price index. 9. Yields (not compounded) are based on closing bid prices quoted by at least five dealers. 10. Yields adjusted to constant maturities by the U.S. Treasury. That is, yields are read from a yield curve at fixed maturities. Based on only recently issued, actively traded securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Nonfinancial Statistics • September 1981 1.36 STOCK MARKET Selected Statistics 1981 Indicator 11997788 11997799 11998800 Jan. Feb. Mar. Apr. May June July Aug. Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 53.76 55.67 68.06 76.24 73.52 76.46 77.60 76.28 76.80 74.98 75.24 2 Industrial 58.30 61.82 78.64 89.23 85.74 89.39 90.57 88.78 88.63 86.64 86.72 3 Transportation 43.25 45.20 60.52 74.43 72.76 77.09 80.63 76.78 76.71 74.42 73.27 4 Utility 39.23 36.46 37.35 38.53 37.59 37.78 38.34 38.27 39.23 38.90 40.22 5 Finance 56.74 58.65 64.28 70.04 68.48 72.82 74.59 74.65 79.79 74.97 73.76 6 Standard & Poor's Corporation (1941^13 = 10)> 96.11 107.94 118.71 132.97 128.40 133.19 134.43 131.73 132.28 129.13 129.63 7 American Stock Exchange (Aug. 31, 1973 = 100) 144.56 186.56 300.94 344.21 338.28 347.07 363.09 365.52 369.64 364.33 364.60 Volume of trading (thousands of shares) 8 New York Stock Exchange 28,591 32,233 44,867 45.500 42,963 53,387 54,124 45,272 50,517 43,930 44,489 9 American Stock Exchange 3,622 4,182 6,377 6,024 4,816 5,682 6,339 5,650 6,096 4,374 5,137 Customer financing (end-of-period balances, in millions of dollars) 10 Regulated margin credit at brokersdealers2 11,035 11,619 14,721 14,242 14,171 14,243 14,869 14,951 15,126 15,134 f 11 Margin stock3 10,830 11,450 14,500 14,020 13,950 14,020 14,630 14,700 14,870 14,870 | 12 Convertible bonds 205 167 219 221 220 222 238 251 254 263 13 Subscription issues 1 2 2 1 1 1 1 1 2 1 n a. Free credit balances at brokers4 14 Margin-account 835 1,105 2,105 2,065 2,225 2,340 2,270 2,345 2,350 2,670 I 15 Cash-account 2,510 4,060 6,070 5,655 5,700 6,530 6,440 6,150 6,650 6,470 Margin-account debt at brokers (percentage distribution, end of period) 16 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 By equity class (in percent)5 17 Under 40 33.0 16.0 14.0 20.0 20.0 16.0 20.8 21.3 25.0 25.0 18 40-49 28.0 29.0 30.0 30.0 31.0 28.0 26.8 25.3 29.0 29.0 19 50-59 18.0 27.0 25.0 22.0 21.0 26.0 23.7 25.3 21.0 22.0 n.a. 20 60-69 10.0 14.0 14.0 13.0 13.0 14.0 12.6 12.7 11.0 11.0 | 21 70-79 6.0 8.0 9.0 8.0 8.0 9.0 8.1 8.0 7.0 7.0 22 80 or more 5.0 7.0 8.0 7.0 7.0 8.0 8.0 8.0 7.0 6.0 1 Special miscellaneous-account balances at brokers (end of period) 23 Total balances (millions of dollars)6 13,092 16,150 21,690 21,686 21,861 22,548 22,748 23,457 23,700 24,460 t Distribution by equity status (percent) 1 24 Net credit status 41.3 44.2 47.8 47.0 48.6 50.9 49.3 50.2 53.2 53.8 n.a. Debt status, equity of 1 25 60 percent or more 45.1 47.0 44.4 43.9 43.1 41.5 41.7 41.0 38.4 37.9 26 Less than 60 percent 13.6 8.8 7.7 9.1 8.3 7.6 9.0 8.8 8.4 8.3 \ 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 related collateral in the customer's margin account or deposits of cash (usually sales proequity instruments and secured at least in part by stock. Credit extended is end- ceeds) occur. 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 1.37 SAVINGS INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1980 1981 1978 1979 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July? Savings and loan associations 1 Assets 523,542 578,962 617,773 623,939 629,829 631,228 634,405 636,859 639,827 644,603 646,704 648,743 2 Mortgages 432,808 475,688 496,495 499,973 502,812 504,068 505,309 507,152 509,525 511,754 514,803 516,278 3 Cash and investment securities1 44,884 46,341 56,146 57,302 57,572 57,460 58,401 58,461 56,886 59,045 57,616 57,446 4 Other 45,850 56,933 65,132 66,664 69,445 69,700 70,695 71,246 72,416 73,804 74,285 75,019 5 Liabilities and net worth 523,542 578,962 617,773 623,939 629,829 631,228 634,405 636,859 639,827 644,603 646,704 648,743 6 Savings capital 430,953 470,004 500,861 503,365 510,959 512,946 515,250 518,990 516,071 517,628 517,632 514,087 7 Borrowed money 42,907 55,232 60,727 62,067 64,491 62,938 62,270 64,197 67,704 70,025 74,756 79,345 8 FHLBB 31,990 40,441 44,325 45,505 47,045 46,629 46,360 47,310 49,607 51,064 53,836 57,098 9 Other 10,917 14,791 16,562 17,446 16,309 15,910 16,887 18,097 18,097 18,961 20,920 22,247 10 Loans in process 10,721 9,582 8,853 8,783 8,120 7,833 7,756 7,840 7,840 7,997 8,008 7,733 11 Other 9,904 11,506 14,502 16,433 12,227 14,104 16,071 13,271 14,946 17,089 14,756 16,565 12 Net worth2 29,057 32,638 33,029 33,221 33,319 33,120 32,981 32,645 32,266 31,864 31,552 31,013 13 MEMO: Mortgage loan commitments outstanding3 18,911 16,007 19,077 17,979 16,102 15,972 16,279 17,374 18,552 18,740 18,020 17,199 Mutual savings banks4 14 Assets 158,174 163,405 170,432 171,126 171,564 171,891 172,349 173,232 172,837 173,776 174,387 Loans 15 Mortgage 95,157 98,908 99,523 99,677 99,865 99,816 99,739 99,719 99,798 99,790 99,993 16 Other 7,195 9,253 11,382 11,477 11,733 12,199 12,598 13,248 12,756 13,375 14,403 Securities 17 U.S. government5 4,959 7,658 8,622 8,715 8,949 9,000 9,032 9,203 9,262 9,296 9,230 18 State and local government 3,333 2,930 2,754 2,736 2,390 2,378 2,376 2,359 2,314 2,328 2,337 19 Corporate and other6 39,732 37,086 39,720 39,888 39,282 39,256 39,223 39,236 39,247 39,111 38,418 20 Cash 3,665 3,156 3,592 3,717 4,334 4,133 4,205 4,238 4,172 4,513 4,473 n.a. 21 Other assets 4,131 4,412 4,839 4,916 5,011 5,107 5,177 5,231 5,288 5,364 5,534 22 Liabilities 158,174 163,405 170,432 171,126 171,564 171,891 172,349 173,232 172,837 173,776 174,387 23 Deposits 142,701 146,006 151,998 152,133 153,501 153,143 153,332 154,805 153,692 153,891 154,926 24 Regular7 141,170 144,070 149,797 150,109 151,416 151,051 151,346 152,630 151,429 151,658 152,603 25 Ordinary savings 71,816 61,123 57,651 56.256 53,971 52,737 52,035 53,049 52,331 51,212 51,594 26 Time and other 69,354 82,947 92,146 93,853 97,445 98,314 99,311 99,581 99,098 100,447 101,009 27 Other 1,531 1,936 2,200 2,042 2,086 2,092 1,986 2,174 2,264 2,232 2,323 28 Other liabilities 4,565 5,873 7,117 7,644 6,695 7,426 7,753 7,265 8,103 8,922 8,634 29 General reserve accounts 10,907 11,525 11,317 11,349 11,368 12,957 13,412 11,163 11,042 10,923 10,827 30 MEMO: Mortgage loan commitments outstanding8 4,400 3,182 1,817 1,682 1,476 1,316 1,331 1,379 1,614 1,709 1,577 Life insurance companies 31 Assets 389,924 432,282 470,717 476,294 479,210 482,009 485,033 490,149 493,185 497,276 500,316 Securities 32 Government 20,009 0,338 21,078 21,275 21,871 22,246 22,669 22,775 22,603 22,948 23,415 33 United States9 4,822 4,888 5,241 5,351 5,838 6,429 6,774 6,807 6,502 6,787 7,119 34 State and local 6,402 6,428 6,505 6,571 6,701 6,571 6,145 6,199 6,809 6,815 6,876 35 Foreign10 8,785 9,022 9,332 9,353 9,332 9,246 9,250 9,269 9,292 9,346 9,420 36 Business 198,105 222,332 236,523 239,537 238,059 240,959 241,675 243,996 245,841 247,437 248,737 n a. 37 Bonds 162,587 178,371 191,428 191,722 190,693 194,777 195,251 196,514 198,397 199,818 201,402 38 Stocks 35,518 39,757 45,095 47,815 47,366 46,182 46,424 47,482 47,444 47,619 47,335 39 Mortgages 106,167 118,421 128,963 129,813 131,080 131,710 132,567 133,230 133,896 134,492 135,318 40 Real estate 11,764 13,007 14,791 14,919 15,033 15,657 15,869 16,244 16,464 16,738 16,966 41 Policy loans 30,146 34,825 40,499 40,813 41,411 41,988 42,574 43,231 43,772 44,292 44,970 42 Other assets 23,733 27,563 28,863 29,937 31,702 29,449 29,679 30,673 30,609 31,369 30,910 Credit unions 43 Total assets/liabilities and capital 62,348 65,854 70,702 71,335 71,709 70,754 71,446 73,214 72,783 73,565 74,041 73,616 44 Federal 34,760 35,934 39,155 39,428 39,801 39,142 39,636 40,624 40,207 40,648 40,948 40,510 45 State 27,588 29,920 31,547 31,907 31,908 31,612 31,810 32,590 32,576 32,917 33,093 33,106 46 Loans outstanding 50,269 53,125 47,221 47,299 47,774 47,309 47,451 47,815 47,994 48,499 49,064 49,507 47 Federal 27,687 28,698 25,288 25,273 25,627 25,272 25,376 25,618 25,707 26,038 26,422 26,661 48 State 22,582 24,426 21,933 22,026 22,147 22,037 22,075 22,197 22,287 22,461 22,642 22,846 49 Savings 53,517 56,232 63,957 64,304 64,399 63,874 64,357 65,744 65,495 65,988 66,472 65,854 50 Federal (shares) 29,802 35,530 36,030 36,183 36,348 35,915 36,236 36,898 36,684 36,967 37,260 36,819 51 State (shares and deposits) 23,715 25,702 27,927 28,121 28,051 27,959 28,121 28,846 28,811 29,021 29,212 29,035 For notes see bottom of page A30. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Nonfinancial Statistics • September 1981 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year FFiissccaall FFiissccaall FFiissccaall Type of account or operation yyeeaarr yyeeaarr yyeeaarr 11997788 11997799 11998800 1980 1981 1981 HI H2 HI May June July U.S. budget 1 Receipts' 401,997 465,940 520,050 270,864 262,152 318,899 38,514 70,688 48,142 2 Outlays1,2 450,804 493,635 579,613 289,905 310,972 334,710 54,608 55,619 58,486 3 Surplus, or deficit( -) -48,807 -27,694 -59,563 -19,041 -48,821 -15,811 -16,094 15,070 -10,343 4 Trust funds 12,693 18,335 8,791 4,383 -2,551 5,797 3,639 3,026 -3,506 5 Federal funds3 -61,532 -46,069 -67,752 -23,418 -46,306 -21,608 -19,733 12,045 -6,838 Off-budget entities (surplus, or deficit 6 Federal Financing Bank outlays -10,661 -13,261 -14,549 -7,735 -7,552 -11,046 -1,943 -1,295 -2,429 7 Other4 302 793 303 -522 376 -900 -342 45 -348 U.S. budget plus off-budget, including Federal Financing Bank 8 Surplus, or deficit (-) -59,166 -40,162 -73,808 -27,298 -55,998 -27,757 -18,379 13,820 -13,120 Source or financing 9 Borrowing from the public 59,106 33,641 70,515 24,435 54,764 33,213 539 572 3,383 10 Cash and monetary assets (decrease, or increase (-))' -3,023 -408 -355 -3,482 -6,730 2,873 22,809 -15,121 5,570 11 Other6 3,083 6,929 3,648 6,345 7,964 -8,328 -4,969 730 4,168 MEMO: 12 Treasury operating balance (level, end of period) 22,444 24,176 20,990 14,092 12,305 16,389 5,702 16,389 11,318 13 Federal Reserve Banks 16,647 6,489 4,102 3,199 3,062 2,923 2,288 2,923 2,922 14 Tax and loan accounts 5,797 17,687 16,888 10,893 9,243 13,466 3,414 13,466 8,396 1. Effective June 1978, earned income credit payments in excess of an indi- 6. Includes accrued interest payable to the public; allocations of special drawing vidual's tax liability, formerly treated as income tax refunds, are classified as outlays rights; deposit funds; miscellaneous liability (including checks outstanding) ana retroactive to January 1976. asset accounts; seignorage; increment on gold; net gain/loss for U.S. currency 2. Effective Oct. 1, 1980, the Pension Benefit Guaranty Corporation was re- valuation adjustment; net gain/loss for IMF valuation adjustment; and profit on classified from an off-budget agency to an on-budget agency in the Department of the sale of gold. Labor. 3. Half-year figures are calculated as a residual (total surplus/deficit less trust SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S. fund surplus/deficit). Government," Treasury Bulletin, and the Budget of the United States Government, 4. Includes Postal Service Fund; Rural Electrification and Telephone Revolving Fiscal Year 1981. Fund; and Rural Telephone Bank. 5. Includes U.S. Treasury operating cash accounts; special drawing rights; gold tranche drawing rights; loans to International Monetary Fund; and other cash and monetary assets. NOTES TO TABLE 1.37 1. Holdings of stock of the Federal Home Loan Banks are included in "other 10. Issues of foreign governments and their subdivisions and bonds of the Inassets." ternational Bank for Reconstruction and Development. 2. Includes net undistributed income, which is accrued by most, but not all, associations. NOTE. Savings and loan associations: Estimates by the FHLBB for all associations 3. Excludes figures for loans in process, which are shown as a liability. 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. Before Life insurance companies: Estimates of the American Council of Life Insurance 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 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS Millions of dollars Calendar year Fiscal Fiscal Fiscal SSoouurrccee oorr ttyyppee year year year 1980 1981 1981 1978 1979 1980 HI H2 HI May June July RECEIPTS 1 All sources1 401,997 465,955 520,050 270,864 262,152 318,899 38,514 70,688 48,142 7 Individual income taxes, net 180.988 217.841 244,069 119.988 131.962 142,889 10.496 33,729 24,439 3 Withheld 165,215 195,295 223,763 110,394 120.924 126.101 20,260 23,000 23.963 4 Presidential Election Campaign Fund... 39 36 39 34 4 36 8 5 4 S Nonwithheld 47.804 56,215 63.746 49.707 14,592 59.907 2,451 11,682 2,228 6 Refunds' 32,070 33.705 43.479 40.147 3,559 43,155 12,222 958 1,756 Corporation income taxes 7 65,380 71,448 72,380 43,434 28.579 44.048 11,,889944 1166,,441111 22,,772211 8 Refunds 5.428 5,771 7.780 4,064 4,518 6,565 883 618 1.007 9 Social insurance taxes and contributions. net 123.410 141,591 160.747 86.597 77.262 102.911 20,694 14,657 1155,,220066 10 Payroll employment taxes and contributions2 99,626 115,041 133.042 69,077 66,831 83,851 15,026 13,308 1133,,889999 II Self-employment taxes and contributions3 4,267 5,034 5.723 5.535 188 6.240 419 536 --772233 12 Unemployment insurance 13.850 15,387 15,336 8,690 6,742 9,205 4.660 234 1,379 13 Other net receipts4 5,668 6,130 6,646 3,294 3,502 3.615 588 580 652 14 18,376 18,745 24,329 11.383 15.332 21,945 3,953 4,224 3,997 IS Customs deposits 6.573 7,439 7.174 3.443 3.717 3.926 625 791 777 16 Estate and gift taxes 5.285 5,411 6.389 3.091 3,499 3,259 647 531 621 17 Miscellaneous receipts5 7,413 9,252 12,741 6.993 6.318 6.487 1,087 964 1,388 OUTLAYS 18 All types1-6 450,804 493,635 579,613 289,905 310,972 334,710 54,608 55,619 58,486 19 National defense 105.186 117.681 135.856 69.132 72,457 80.005 13.810 13,839 14,692 70 International affairs 5,922 6,091 10,733 4.602 5.430 5,999 737 1,373 378 21 General science, space, and technology ... 4.742 5,041 5.722 3.150 3,205 3.314 536 609 515 7? 5,861 6,856 6.313 3.126 3.997 5.677 1,106 1,319 914 73 Natural resources and environment 10,925 12.091 13.812 6.668 7.722 6,476 1,017 1,140 1.164 24 Agriculture 7,731 6.238 4.762 3,193 1.892 3,101 -151 274 -86 75 Commerce and housing credit 3.324 2,565 7.782 3.878 3.163 1.940 -269 860 -52 76 Transportation 15,445 17,459 21.120 9.582 11.547 11.991 1.581 1,841 1.771 27 Community and regional development.... 11.039 9.482 10.068 5.302 5,370 4.621 687 928 677 ?.H Education, training, employment, social 26.463 29.685 30.767 16.686 15,221 15.928 22..667777 2,131 22..440000 79 Health 43.676 49.614 58,165 29,299 31,263 34.708 5.645 6.123 6,141 30 Income security'-6 146.180 160.159 193,100 94,605 107,912 113.490 18.576 18.807 19,637 31 Veterans benefits and services 18,974 19.928 21.183 9,758 11,731 10.531 1,670 1.786 2,995 37 Administration of justice 3.802 4,153 4,570 2,291 2,299 2.344 343 388 386 33 General government 3,737 4,153 4.505 2,422 2,432 2,692 393 506 242 34 General-purpose fiscal assistance 9,601 8.372 8.584 3,940 4.191 3,015 253 44 1,234 3S 43.966 52.556 64.504 32,658 35,909 41,178 7,024 11,674 6,164 36 Undistributed offsetting receipts'" - 15.772 -18.489 -21.933 - 10.387 -14.769 - 12.432 -1,029 -8,023 -688 1. Effective June 1978. earned income credit payments in excess of an individual's classified from an off-budget agency to an on-budget agency in the Department of tax liability, formerly treated as income tax refunds, were classified as outlays Labor. retroactive to January 1976. 7. Effective September 1976. "Interest" and "Undistributed offsetting receipts" 2. Old-age, disability, and hospital insurance, and railroad retirement accounts. reflect the accounting conversion from an accrual basis to a cash basis for the 3. Old-age, disability, and hospital insurance. interest on special issues for U.S. government accounts. 4. Supplementary medical insurance premiums, federal employee retirement 8. Consists of interest received by trust funds, rents and royalties on the Outer contributions, and Civil Service retirement and disability fund. Continental Shelf, and U.S. government contributions for employee retirement. 5. Deposits of earnings by Federal Reserve Banks and other miscellaneous re- ' s. SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S. Effective Oct. 1. 1980. the Pension Benefit Guaranty Corporation was re- Government" and the Budget of the U.S. Government. Fiscal Year 1981. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Nonfinancial Statistics • September 1981 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1979 1980 1981 IItteemm Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 1 Federal debt outstanding 804.6 812.2 833.8 852.2 870.4 884.4 914.3 936.7 970.9 2 Public debt securities 796.8 804.9 826.5 845.1 863.5 877.6 907.7 930.2 964.5 3 Held by public 630.5 626.4 638.8 658.0 677.1 682.7 710.0 737.7 773.7 4 Held by agencies 166.3 178.5 187.7 187.1 186.3 194.9 197.7 192.5 190.9 5 Agency securities 7.8 7.3 7.2 7.1 7.0 6.8 6.6 6.5 6.4 6 Held by public 6.3 5.9 5.8 5.6 5.5 5.3 5.1 5.0 4.9 7 Held by agencies 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 8 Debt subject to statutory limit 797.9 806.0 827.6 846.2 864.5 878.7 908.7 931.2 965.5 9 Public debt securities 796.2 804.3 825.9 844.5 862.8 877.0 907.1 929.6 963.9 10 Other debt1 1.7 1.7 1.7 1.7 1.7 1.7 1.6 1.6 1.6 11 MEMO: Statutory debt limit 798.0 830.0 830.0 879.0 879.0 925.0 925.0 935.1 985.0 1. Includes guaranteed debt of government agencies, specified participation cer- NOTE. Data from Treasury Bulletin (U.S. Treasury Department). tificates, notes to international lending organizations, and District of Columbia stadium bonds. 1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership Billions of dollars, end of period 1981 Type and holder 1977 1978 1979 1980 Apr. May June July Aug 1 Total gross public debt 930.2 968.5 971.2 973.3 980.2 By type 2 Interest-bearing debt 715.2 782.4 844.0 928.9 962.8 964.8 969.9 972.1 978.9 3 Marketable 459.9 487.5 530.7 623.2 657.9 656.2 660.8 666.4 673.8 4 Bills 161.1 161.7 172.6 216.1 225.8 224.5 218.8 217.5 219.9 5 Notes 251.8 265.8 283.4 321.6 341.1 338.4 348.8 354.0 357.6 6 Bonds 47.0 60.0 74.7 85.4 91.0 93.3 93.2 94.9 96.3 7 Nonmarketable1 255.3 294.8 313.2 305.7 304.9 308.6 309.2 305.6 305.2 8 Convertible bonds2 2.2 2.2 2.2 9 State and local government series 13.9 24.3 24.6 23.8 23.4 23.2 23.2 22.8 22.8 10 Foreign issues3 22.2 29.6 28.8 24.0 24.4 24.8 23.5 21.9 21.4 11 Government 21.0 28.0 23.6 17.6 18.0 18.4 17.1 16.3 15.7 12 Public 1.2 1.6 5.3 6.4 6.4 6.4 6.4 5.7 5.7 13 Savings bonds and notes 77.0 80.9 79.9 72.5 69.8 69.5 69.2 69.0 68.6 14 Government account series4 139.8 157.5 177.5 185.1 187.0 190.8 193.0 191.6 192.1 15 Non-interest-bearing debt 3.7 1.2 1.3 1.2 3.7 1.3 1.2 1.3 By holder5 16 U.S. government agencies and trust funds 154.8 170.0 187.1 192.5 193.9 197.8 199.9 17 Federal Reserve Banks 102.8 109.6 117.5 121.3 119.7 117.9 120.0 18 Private investors 461.3 508.6 540.5 616.4 650.4 652.3 651.2 9 Commercial banks 101.4 93.1 91.5 104.7 104.8 104.4 103.7 20 Mutual savings banks 5.9 5.0 4.7 5.8 6.2 6.2 6.0 21 Insurance companies 15.1 14.9 14.8 15.2 14.8 16.3 15.9 22 Other companies 22.7 21.2 24.9' 24.6 21.8 20.7 20.6 23 State and local governments 55.2 64.4 67.4 74.7 79.1 80.4 78.6 Individuals 24 Savings bonds 76.7 80.7 79.9 72.2 69.8 69.5 69.2 25 Other securities 28.6 30.3 36.2 56.7 68.3 70.3 70.4 26 Foreign and international6 109.6 137.8 123.8 134.3 143.1 139.4 141.2 27 Other miscellaneous investors7 46.1 58.2 97.4 127.9 142.5 145.1 145.6 1. Includes (not shown separately): Securities issued to the Rural Electrification 5. Data for Federal Reserve Banks and U.S. government agencies and trust Administration, depository bonds, retirement plan bonds, and individual retire- funds are actual holdings; data for other groups are Treasury estimates. ment bonds. 6. Consists of investments of foreign balances and international accounts in the 2. These nonmarketable bonds, also known as Investment Series B Bonds, may United States. be exchanged (or converted) at the owner's option for ll/2 percent, 5-year mar- 7. Includes savings and loan associations, nonprofit institutions, corporate penketable Treasury notes. Convertible bonds that have been so exchanged are re- sion trust funds, dealers and brokers, certain government deposit accounts, and moved from this category and recorded in the notes category (line 5). government sponsored agencies. 3. Nonmarketable dollar-denominated and foreign currency-denominated series held by foreigners. NOTE. Gross public debt excludes guaranteed agency securities. 4. Held almost entirely by U.S. government agencies and trust funds. Data by type of security from Monthly Statement of the Public Debt of the United States (U.S. Treasury Department); data by holder from Treasury Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A33 1.42 U.S. GOVERNMENT MARKETABLE SECURITIES Ownership, by maturity Par value; millions of dollars, end of period 1981 1981 Type of holder 11997799 11998800 11997799 1980 May June May June All maturities 1 to 5 years 1 All holders 530,731 623,186 656,185 660,769 164,198 197,409 203,174 208,085 2 U.S. government agencies and trust funds 11,047 9,564 9,228 9,227 2,555 1,990 1,357 1,357 3 Federal Reserve Banks 117,458 121,328 117,900 120,017 8,469 35,835 33,938 33,928 4 Private investors 402,226 492,294 529,057 531,525 133,173 159,585 167,880 172,801 5 Commercial banks 69,076 77,868 77,689 77,764 38,346 44,482 40,325 40,578 6 Mutual savings banks 3,204 3,917 4,202 4,222 1,668 1,925 2,071 2,084 7 Insurance companies 11,496 11,930 12,621 11,852 4,518 4,504 5,493 4,929 8 Nonfinancial corporations 8,433 7,758 6,820 6,789 2,844 2,203 1,157 1,642 9 Savings and loan associations 3,209 4.225 4,572 4,438 1,763 2,289 2,549 2,430 10 State and local governments 15,735 21,058 23,338 22,604 3,487 4,595 5,472 5,282 11 All others 291,072 365,539 399,815 403,856 80,546 99,577 110,813 115,856 Total, within 1 year 5 to 10 years 12 All holders 255,252 297,385 314,411 310,922 50,440 56,037 58,295 61,485 13 U.S. government agencies and trust funds 1,629 830 1,119 1,119 871 1,404 1,411 1,411 14 Federal Reserve Banks 63,219 56,858 55,205 57,331 12,977 13,458 13,042 13,042 15 Private investors 190,403 239,697 258,087 252,471 36,592 41,175 43,842 47,033 16 Commercial banks 20,171 25,197 28,662 28,221 8,086 5,793 5,680 5,912 17 Mutual savings banks 836 1,246 1,404 1,377 459 455 400 417 18 Insurance companies 2,016 1,940 2,103 2,036 2,815 3,037 2,616 2,583 19 Nonfinancial corporations 4,933 4,281 3,664 3,192 308 357 391 383 20 Savings and loan associations 1,301 1,646 1,881 1,866 69 216 82 83 21 State and local governments 5,607 7,750 8,135 7,495 1,540 2,030 2,254 2,297 22 All others 155,539 197,636 212,238 208,285 24,314 29,287 32.419 35,358 Bills, within 1 year 10 to 20 years 23 All holders 172,644 216,104 224,514 218,786 27,588 36,854 39,927 39,899 24 U.S. government agencies and trust funds. 0 1 2 1 4,520 3,686 3,685 3,685 25 Federal Reserve Banks 45,337 43,971 41,887 43,593 3,272 5,919 5,945 5,945 26 Private investors 127,306 172,132 182.625 175,192 19,796 27,250 30,296 30,268 27 Commercial banks 5,938 9,856 9,891 9,138 993 1,071 1,368 1,311 28 Mutual savings banks 262 394 455 449 127 181 177 195 29 Insurance companies 473 672 791 736 1,305 1,718 1.674 1,590 30 Nonfinancial corporations 2,793 2,363 1,671 1,197 218 431 766 758 31 Savings and loan associations 219 818 749 692 58 52 36 36 32 State and local governments 3,100 5,413 5,318 4,774 1,762 3,597 4,164 4,314 33 All others 114,522 152,616 163,751 158,206 15,332 20,200 22,110 22,064 Other, within 1 year Over 20 years 34 All holders 82,608 81,281 89,897 92,136 33,254 35,500 40,378 40,378 35 U.S. government agencies and trust funds. 1,629 829 1,118 1,118 1,472 1,656 1,656 1,656 36 Federal Reserve Banks 17,882 12,888 13,318 13,738 9,520 9,258 9,770 9,770 37 Private investors 63,097 67,565 75,462 77,279 22,262 24,587 28,953 28,953 38 Commercial banks 14,233 15,341 18,771 19,083 1,470 1,325 1,654 1,742 39 Mutual savings banks 574 852 949 929 113 110 150 149 40 Insurance companies 1,543 1.268 1,312 1,299 842 730 734 714 41 Nonfinancial corporations 2,140 1,918 1.993 1.995 130 476 843 815 42 Savings and loan associations 1,081 828 1,132 1,174 19 21 24 22 43 State and local governments 2,508 2,337 2,817 2,721 3,339 3,086 3,313 3,216 44 All others 41,017 45.020 48,487 50,079 16,340 18,838 22,235 22,294 NOTE. Direct public issues only. Based on Treasury Survey of Ownership from and 724 insurance companies, each about 80 percent; (2) 409 nonfinancial cor- Treasury Bulletin (U.S. Treasury Department). porations and 474 savings and loan associations, each about 50 percent; and (3) Data complete for U.S. government agencies and trust funds and Federal Reserve 488 state and local governments, about 40 percent. Banks, but data for other groups include only holdings of those institutions that "All others," a residual, includes holdings of all those not reporting in the report. The following figures show, for each category, the number and proportion Treasury Survey, including investor groups not listed separately. reporting as of June 30,1981: (1) 5,341 commerciafbanks, 457 mutual savings banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 DomesticN onfinancial Statistics • September 1981 1.43 U.S. GOVERNMENT SECURITIES DEALERS Transactions Par value; averages of daily figures, in millions of dollars 1981 1981 , week ending Wednesday IItteemm 11997788 11997799 11998800 MayP Junep July'' July 22 July 29 Aug. 5 Aug. 12 Aug. 19 Aug. 26 Immediate delivery' 1 U.S. government securities.... 10,285 13,183 21.554 23.513 21,885 19,541 19.532 22,567 26,241 20,011 23,604 By maturity 7 Bills 6,173 7,915 12.359 13,900 14,011 12,812 12.427 14,257 14,847 11,996 14,739 3 Other within 1 year 392 454 459 478 615 382 370 597 352 848 375 4 1-5 years 1.889 2,417 3.954 4,052 3,200 2,914 3.592 4,113 4,374 2,983 4,347 5 5-10 years 965 1,121 1.982 2,511 2,062 1,637 1.378 1,565 2,315 1,525 1,865 6 Over 10 years 867 1,276 2.574 2,571 1,997 1.796 1.764 2,035 4,353 2,659 2,278 Bv type of customer 7 U.S. government securities dealers 1.135 1,448 1.108 1,373 2,289 1,676 1.223 1.836 1,853 1,650 1,604 8 U.S. government securities brokers 3,838 5.170 n a. 10.226 11,158 10,279 9,705 9.604 10,244 13,343 9.271 11,720 9 All others2 5.312 6,564 10.221 10,984 9,317 8,160 8.705 10,486 11,046 9,091 10,279 10 Federal agency securities 1,894 2,723 2.806 3,865 3,056 2.110 3.082 2,787 3,485 3.257 3,215 11 Certificates of deposit A 2.992 4.336 4,237 4,058 4.398 4.275 4,432 3,827 4,031 12 Bankers acceptances t 1.363 1,833 1,644 1,570 1.776 1.745 1,564 1.109 1,272 13 Fu C tu o r m es m t e r r a c n i s a a l c p ti a o p n e s r 3 1 6.047 6,295 5,899 5.754 5.666 5,645 5,685 5,804 6,199 14 Treasury bills n a. n.a. 2.768 3,390 3,808 3,272 3.854 3,349 3,519 3,721 3,716 15 Treasury coupons | 1.040 887 1,185 967 1.405 1,212 1,138 901 1,367 16 Federal agency securities 243 190 155 163 178 248 216 243 227 Forward transactions4 17 U.S. government securities.... 280 253 370 420 405 335 1.110 380 377 18 Federal agency securities 1.403 1,375 922 946 832 1.305 1,744 694 720 1. Before 1981, data for immediate transactions include forward transactions. date of the transaction for government securities (Treasury bills, notes, and bonds) 2. Includes, among others, all other dealers and brokers in commodities and or after 30 days for mortgage-backed agency issues. securities, nondealer departments of commercial banks, foreign banking agencies, NOTES. Averages for transactions are based on number of trading days in the and the Federal Reserve System. period. 3. Futures contracts are standardized agreements arranged on an organized ex- Transactions are market purchases and sales of U.S. government securities dealchange in which parties commit to purchase or sell securities for delivery at a future ers reporting to the Federal Reserve Bank of New York. The figures exclude date. allotments of. and exchanges for. new U.S. government securities, redemptions of 4. Forward transactions are agreements arranged in the over-the-counter market called or matured securities, purchases or sales of securities under repurchase in which securities are purchased (sold) for delivery after 5 business days from the agreement, reverse repurchase (resale), or similar contracts. 1.44 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing Averages of daily figures, in millions of dollars 1981 1981. week ending Wednesday IItteemm 11997788 11997799 11998800 MayP June'' July'' July 1 July 8 July 15 July 22 July 29 Aug. 5 Positions Net immediate' 1 U.S. government securities.... 2,656 3,223 4.646 9.037 6,319 7.320 7.645 6,719 5.030 6,104 5,048 2 Bills 2.452 3.813 1.820 5,472 3.022 3,031 3.252 3.349 2,756 2,741 2,985 3 Other within 1 year 260 -325 226 -523 -1,393 -1,001 -1.171 -1,375 -1,501 -1,414 -1.972 4 1-5 years -92 -455 499 1.133 1,745 2,613 2.046 1,446 900 2,282 2,380 5 5-10 years 40 160 157 490 774 184 1.100 1,052 739 487 83 6 Over 10 years -4 30 1.944 2.232 2.171 2,493 2.418 2,246 2.136 2,008 1,573 7 Federal agency securities 606 1,471 1680 2,504 3,028 2.729 2.940 3.028 3,093 3,132 2,889 8 Certificates of deposit 2,775 2,794 n a. 1.965 4,012 4,861 5,550 5.376 5,025 4,566 4,391 4,811 9 Bankers acceptances i 1.278 2,109 1,946 2,649 2,499 2,024 1.714 1,523 1,681 10 Commercial paper t t 2.373 3.043 2,308 3,153 2.658 2,237 2.071 2,099 2,477 11 Fu T tu r r e e a s p u o ry si t b io il n ls s 1 1 -6.146 -9.773 9,421 -9,302 -8.637 -7,549 -11,244 -10,744 -7,667 12 Treasury coupons n.a. n.a. -2.312 -2.455 -2.484 -2,305 -2,469 -2.574 -2,593 -2,394 -2,248 13 Federal agency securities 1 1 -735 -1,041 -948 -1.035 -974 -976 -991 -887 -782 Forwards positions 1 1 4 5 F U e . d S e . r g a o l v a e g r e n n m cy e n s t ec s u e r c it u ie r s i ties.... i 1 T 1 -1 - . 1 0 2 0 4 9 -7 2 2 6 0 0 -4 1 9 0 3 1 -6 3 1 8 0 2 -4 2 3 2 7 6 -2 1 7 6 9 5 -5 1 5 1 8 5 - - 6 6 8 0 3 - - 1 4 8 8 6 8 Financing2 Reverse repurchase agreements3 . I I i 16 Overnight and continuing 10.667 12,193 15,371 14,643 14.047 15,310 16,392 16,464 15,617 17 Term agreements 30.592 29,785 29.519 30,248 29.464 28,981 29,672 29,230 29,348 Repurchase agreements4 n1.a. n.aI. n.a. 18 Overnight and continuing \ 28.075 33,748 36,175 36.899 36.713 36.446 36,067 34,752 36,705 19 Term agreements 27,716 27.684 26.122 26,275 25,463 25,238 27,926 25,708 26,353 For notes see opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A35 1.45 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1981 AAggeennccyy 11997788 11997799 11998800 Jan. Feb. Mar. Apr. May June 1 Federal and federally sponsored agencies1 137,063 163,290 193,229 195,056 194,926 198,828 200,434 205,020 208,961 2 Federal agencies 23,488 24,715 28,606 28,769 28,596 29,397 29,502 29,311 29,945 3 Defense Department2 968 738 610 600 591 576 566 556 546 4 Export-Import Bank3,4 8,711 9,191 11,250 11,239 11,201 11,881 11,868 11,850 12,423 5 Federal Housing Administration5 588 537 477 476 468 464 459 449 448 6 Government National Mortgage Association participation certificates6 3,141 2,979 2,817 2,817 2,817 2,817 2,775 2,775 2,715 7 Postal Service7 2,364 1,837 1,770 1,770 1,770 1,770 1,770 1,538 1,538 8 Tennessee Valley Authority 7,460 8,997 11,190 11,375 11,550 11,680 11,845 11,930 12,060 9 United States Railway Association7 356 436 492 492 199 209 219 213 215 10 Federally sponsored agencies1 113,575 138,575 164,623 166,287 166,330 169,431 170,932 175,709 179,016 11 Federal Home Loan Banks 27,563 33,330 41,258 41,819 42,275 43,791 44,357 47,121 49,425 12 Federal Home Loan Mortgage Corporation 2,262 2,771 2,536 2,518 2,514 2,409 2,409 2,409 2,409 13 Federal National Mortgage Association 41,080 48,486 55,185 54,605 54,110 54,666 54,183 54,430 54,657 14 Federal Land Banks 20,360 16,006 12,365 11,507 11,507 11,507 10,583 10,583 710,583 15 Federal Intermediate Credit Banks 11,469 2,676 1,821 1,388 1,388 1,388 1,388 1,388 71,388 16 Banks for Cooperatives 4,843 584 584 584 584 584 220 220 7,220 17 Farm Credit Banks1 5,081 33,216 48,153 50,645 50,675 51,689 54,345 56,061 56,932 18 Student Loan Marketing Association8 915 1,505 2,720 3,220 3,275 3,395 3,445 3,495 3,400 19 Other 2 1 1 1 2 2 2 2 2 MEMO: 20 Federal Financing Bank debt1 9 51,298 67,383 87,460 88,420 89,444 94,101 96,489 98,297 100,333 Lending to federal and federally sponsored 21 Export-Import Bank4 6,898 8,353 10,654 10,654 10,654 11,346 11,346 11,346 11,933 22 Postal Service7 2,114 1,587 1,520 1,520 1,520 1,520 1,520 1,288 1,288 23 Student Loan Marketing Association8 915 1,505 2,720 3,220 3,275 3,395 3,445 3,495 3,400 24 Tennessee Valley Authority 5,635 7,272 9,465 9,650 9,825 9,955 10,120 10,205 10,335 25 United States Railway Association7 356 436 492 492 199 209 219 213 215 Other Lending10 26 Fanners Home Administration 23,825 32,050 39,431 39,271 39,851 41,791 43,456 44,746 45,691 27 Rural Electrification Administration 4,604 6,484 9,196 9,471 10,212 10,443 10,652 10,988 11,346 28 Other 6,951 9,696 13,982 14,142 13,908 15,442 15,731 16,016 716,125 1. In September 1977 the Farm Credit Banks issued their first consolidated bonds, of Housing and Urban Development; Small Business Administration; and the and in January 1979 they began issuing these bonds on a regular basis to replace Veterans Administration. the financing activities of the Federal Land Banks, the Federal Intermediate Credit 7. Off-budget. Banks, and the Banks for Cooperatives. Line 17 represents those consolidated 8. Unlike other federally sponsored agencies, the Student Loan Marketing Asbonds outstanding, as well as any discount notes that have been issued. Lines 1 sociation may borrow from the Federal Financing Bank (FFB) since its obligations 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 and 9. The FFB, which began operations in 1974, is authorized to purchase or sell 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 in 4. Off-budget Aug. 17, 1974, through Sept. 30, 1976; on-budget thereafter. 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 particcurities market. ular agency being generally small. The Farmers Home Administration item consists 6. Certificates of participation issued prior to fiscal 1969 by the Government exclusively of agency assets, while the Rural Electrification Administration entry National Mortgage Association acting as trustee for the Farmers Home Admin- contains both agency assets and guaranteed loans. istration; Department of Health, Education, and Welfare; Department NOTES TO TABLE 1.44 1. Immediate positions are net amounts (in terms of par values) of securities 3. Includes all reverse repurchase agreements, including those that have been owned by nonbank dealer firms and dealer departments of commercial banks on arranged to make delivery on short sales and those for which the securities obtained a commitment, that is, trade-date basis, including any such securities that have have been used as collateral on borrowings, i.e., matched agreements. been sold under agreements to repurchase (RPs). The maturities of some repur- 4. Includes both repurchase agreements undertaken to finance positions and chase agreements are sufficiently long, however, to suggest that the securities "matched book" repurchase agreements. involved are not available for trading purposes. Securities owned, and hence dealer NOTE. Data for positions are averages of daily figures, in terms of par value, positions, do not include securities to resell (reverse RPs). Before 1981, data for based on the number of trading days in the period. Positions are shown net and immediate positions include forward positions. are on a commitment basis. Data for financing are based on Wednesday figures, 2. Figures cover financing involving U.S. government and federal agency secu- in terms of actual money borrowed or lent. rities, negotiable CDs, bankers acceptances, and commercial paper. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic Financial Statistics • September 1981 1.46 NEW SECURITY ISSUES of State and Local Governments Millions of dollars 1981 TTyyppee ooff iissssuuee oorr iissssuueerr,, oorr uussee 11997788 11997799 11998800 Jan. Feb. Mar. Apr. May June 1 All issues, new and refunding1 48,607 43,490 48,462 2,658 2,928 3,879 5,068 3,406 4,846 Type of issue 2 General obligation 17,854 12,109 14,100 728 876 1,249 1.317 1,307 1,355 3 Revenue 30,658 31,256 34,267 1,923 2,049 2,619 3,745 22,,008899 33,,448866 4 5 U.S. government loans 95 125 95 7 3 11 6 10 5 Type of issuer ftS tate 6,632 4,314 5,304 478 530 349 544 639 585 7 Special district and statutory authority 24,156 23,434 26,972 1,442 1,442 1,979 2,701 1,629 2,711 8 Municipalities, counties, townships, school districts 17,718 15,617 16,090 731 951 1,541 1,816 1,127 1,545 9 Issues for new capital, total 37,629 41,505 46,736 2,650 2,855 3,845 4,898 3,394 4,768 Use of proceeds 10 Education 5,003 5,130 4,572 338 292 515 479 227 615 11 Transportation 3,460 2,441 2,621 147 322 238 121 424 158 12 Utilities and conservation 9.026 8,594 8,149 585 452 784 1,262 641 756 13 Social welfare 10,494 15,968 19,958 786 881 956 1,001 1,054 1,408 14 Industrial aid 3,526 3,836 3,974 389 296 512 1,298 408 731 15 Other purposes 6,120 5,536 7,462 405 612 840 737 640 1,100 1. Par amounts of long-term issues based on date of sale. SOURCE. Public Securities Association. 2. Only bonds sold pursuant to the 1949 Housing Act, which are secured by contract requiring the Housing Assistance Administration to make annual contributions to the local authority. 1.47 NEW SECURITY ISSUES of Corporations Millions of dollars 1980 1981 TTyyppee ooff iissssuuee oorr iissssuueerr,, oorr uussee 11997788 11997799 11998800 Dec. Jan. Feb. Mar. Apr.r May June 1 All issues' 4477,,223300 5511,,553333 7733,,668888 55,,993333 55,,558811 44,,115577 6,423 66,,883355rr 5,457' 99,,553366 2 Bonds 3366,,887722 4400,,220088 5533,,119999 33,,004444 33,,338866 22,,883344 4.275 44,,559977'' 3,080r 55,,660011 Type of offering 3 Public 1199,,881155 2255,,881144 4411,,558877 11,,771199 22,,992288 22,,440088 3,778'' 33,,666688 2,520' 44,,660033 4 Private placement 1177,,005577 1144..339944 1111..661122 11,,332255 445588 442266 497 992299'' 560' 999988 Industry group 5 Manufacturing 99,,557722 99..667788 1155,,440099 660099 11,,663355 11,,114400 1.064 11,,445599'' 1,269 11,,331133 6 Commercial and miscellaneous 55,,224466 33,,994488 66,,668888 550099 223311 335566 212 334422'' 138 556666 7 Transportation 22,,000077 33,,111199 33,,332299 116655 335533 4455 172 114422'' 49 558844 8 Public utility 77,,009922 88,,115533 99..555566 331144 880000 559933 594 990044'' 1,063' 999966 9 Communication 33,,337733 44,,221199 66..668833 665533 6622 227722 958 555544'' 56 447700 10 Real estate and financial 99,,558866 1111,,009944 1111..553344 779933 330066 443300 1.276 11,,119977'' 506' 11,,667722 11 Stocks 1100,,335588 1111,,332255 2200,,449900 22,,888899 22,,119955 11,,332233 2,148 22,,223388 2,377 33,,993355 Type 12 Preferred 22,,883322 33,,557744 33,,663322 224411 336644 114499 298 8855 164 118888 13 Common 77,,552266 77,,775511 1166,,885588 22,,664488 11,,883311 11,,117744 1,850 22,,115533 2,213 33,,774477 Industry group 14 Manufacturing 11,,224411 11..667799 44,,883399 884444 660099 220044 735 553311 903 338822 15 Commercial and miscellaneous 11,,881166 22,,662233 55..224455 990088 660033 558899 816 447777 958 11,,002244 16 Transportation 226633 225555 554499 9955 112244 8811 17 114466 47 1188 17 Public utility 55,,114400 55,,117711 66,,223300 666699 556622 226600 414 771177 173 884433 226644 330033 556677 6655 1144 3311 5566 11,,003366 19 Real estate and financial 11,,663311 1122,,993311 33,,005599 330088 228844 115599 167 331100 296 663322 1. Figures, which represent gross proceeds of issues maturing in more than one 1933, employee stock plans, investment companies other than closed-end, intrayear, sold for cash in the United States, are principal amount or number of units corporate transactions, and sales to foreigners, multiplied by offering price. Excludes offerings of less than $100,000, secondary offerings, undefined or exempted issues as defined in the Securities Act of SOURCE. Securities and Exchange Commission. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Corporate Finance A37 1.48 OPEN-END INVESTMENT COMPANIES Net Sales and Asset Position Millions of dollars 1980 1981 IItteemm 11997799 11998800 Dec. Jan. Feb. Mar. Apr. May June July INVESTMENT COMPANIES1 1 Sales of own shares2 7,495 15,266 1,242 1,676 1,347 1,696 2,000 1,785 1,910 1,639 2 Redemptions of own shares3 8,393 12,012 1,720 1,193 960 1,112 1,594 1,250 1,512 1,298 3 Net sales -898 3,254 -478 483 387 584 406 535 398 341 4 Assets4 49,277 58,400 58,400 56,160 56,452 59,146 58,531 60,081 58,887 57,500 5 Cash position5 4,983 5,321 5,321 4,636 4,882 4,971 5,099 5,448 5,199 51,109 6 Other 44,294 53,079 53,079 51,524 51,570 54,175 53,432 54,633 53,688 52,391 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 reinvestment curities. 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 Seother in the same group. curities and Exchange Commission. Data reflect newly formed companies after 4. Market value at end of period, less current liabilities. their initial offering of securities. 1.49 CORPORATE PROFITS AND THEIR DISTRIBUTION Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1979 1980 1981 AAccccoouunntt 11997788 11997799 11998800 Q3 Q4 Q1 Q2 Q3 Q4 or 1 Corporate profits with inventory valuation and capital consumption adjustment 185.5 196.8 182.7 199.5 189.4 200.2 169.3 177.9 183.3 203.0 2 Profits before tax 223.3 255.3 245.5 262.0 255.4 277.1 217.9 237.6 249.5 257.0 3 Profits tax liability 82.9 87.6 82.3 88.4 87.2 94.2 71.5 78.5 85.2 87.7 4 Profits after tax 140.3 167.7 163.2 173.6 168.2 182.9 146.4 159.1 164.3 169.3 5 Dividends 44.6 50.1 56.0 50.2 51.6 53.9 55.7 56.7 57.7 59.6 6 Undistributed profits 95.7 117.6 107.2 123.4 116.6 129.0 90.7 102.4 106.6 109.7 7 Inventory valuation -24.3 -42.6 -45.6 -46.5 -50.8 -61.4 -31.1 -41.7 -48.4 -39.2 8 Capital consumption adjustment -13.5 -15.9 -17.2 -16.1 -15.1 -15.4 -17.6 -17.9 -17.8 -14.7 SOURCE. Survey of Current Business (U.S. Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Nonfinancial Statistics • September 1981 1.50 NONFINANCIAL CORPORATIONS Current Assets and Liabilities Billions of dollars, except for ratio 1980 1981 AAccccoouunntt 11997755 11997766 11997777 11997788 11997799 Qlr Q2r Q3r Q4' QI 1 Current assets 759.0 826.8 902.1 1,030.0 1,200.9 1,234.0 1,232.2 1,254.9 1,281.1 1,321.4 ? Cash 82.1 88.2 95.8 104.5 116.1 110.5 111.5 113.4 120.9 120.4 3 U.S. government securities 19.0 23.4 17.6 16.3 15.6 15.2 14.0 16.4 17.1 16.8 4 Notes and accounts receivable 272.1 292.8 324.7 383.8 456.8 470.3 463.4 478.7 491.6 507.9 5 Inventories 315.9 342.4 374.8 426.9 501.7 518.9 525.0 524.5 525.3 542.8 6 69.9 80.1 89.2 98.5 110.8 119.2 118.3 121.9 126.2 133.5 7 Current liabilities 451.6 494.7 549.4 665.5 809.1 836.5 826.0 850.5 877.8 911.7 8 Notes and accounts payable 264.2 281.9 313.2 373.7 456.3 467.7 462.8 477.0 498.5 504.5 9 187.4 212.8 236.2 291.7 352.8 368.8 363.2 373.5 379.3 407.2 10 Net working capital 307.4 332.2 352.7 364.6 391.8 397.5 406.2 404.3 403.4 409.7 11 MEMO: Current ratio 1 1.681 1.672 1.642 1.548 1.484 1.475 1.492 1.475 1.460 1.449 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. 1.51 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1980 1981 IInndduussttrryy 11997799 11998800 1199881111 Q2 Q3 Q4 QI Q21 031 Q41 1 Total nonfarm business 270.46 295.63 321.50 294.36 296.23 299.58 312.24 316.73 322.96 332.69 Manufacturing 2 Durable goods industries 51.07 58.91 62.92 59.38 58.19 59.77 61.24 63.10 63.07 64.06 3 Nondurable goods industries 47.61 56.90 63.87 56.32 58.21 58.86 63.27 62.40 65.65 64.05 Nonmanufacturing 4 Mining 11.38 13.51 16.47 12.81 1133..8866 1155..2288 1166..2200 16.80 1166..1122 1166..7700 Transportation 5 Railroad 4.03 4.25 4.43 4.06 3.98 4.54 4.23 4.38 4.22 4.84 6 Air 4.01 4.01 3.60 4.27 4.06 3.77 3.85 3.29 2.84 4.44 7 Other 4.31 3.82 4.12 3.76 4.18 3.39 3.66 4.04 4.00 4.60 Public utilities 8 Electric 27.65 28.12 28.12 27.91 28.14 27.54 27.69 29.32 29.41 28.84 9 Gas and other 6.31 7.32 8.07 7.12 7.44 7.41 8.36 8.53 7.38 8.16 10 Trade and services 79.26 81.79 87.30 81.07 81.19 82.91 83.43 85.88 86.55 92.68 11 Communication and other2 34.83 36.99 41.89 37.66 36.97 36.11 40.32 39.02 43.70 44.31 1. Anticipated by business. SOURCE. Survey of Current Business (U.S. Dept. of Commerce). 2. "Other" consists of construction; social services and membership organizations; and forestry, fisheries, and agricultural services. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Corporate Finance A39 1.52 DOMESTIC FINANCE COMPANIES Assets and Liabilities Billions of dollars, end of period 1980 1981 AAccccoouunntt 11997755 11997766 11997777 11997788 11997799 Q2 Q3 04 Q1 02 ASSETS Accounts receivable, gross 1 Consumer 36.0 38.6 44.0 52.6 65.7 70.2 71.7 73.6 76.1 79.0 2 Business 39.3 44.7 55.2 63.3 70.3 70.3 66.9 72.3 72.7 78.2 3 Total 75.3 83.4 99.2 116.0 136.0 140.4 138.6 145.9 148.7 157.2 4 LESS: Reserves for unearned income and losses.... 9.4 10.5 12.7 15.6 20.0 21.4 22.3 23.3 24.3 25.7 5 Accounts receivable, net 65.9 72.9 86.5 100.4 116.0 119.0 116.3 122.6 124.5 131.4 6 Cash and bank deposits 2.9 2.6 2.6 3.5 7 Securities 1.0 1.1 .9 1.3 2244..9911 26.1 28.3 27.5 30.8 31.6 8 All other 11.8 12.6 14.3 17.3 9 Total assets 81.6 89.2 104.3 122.4 140.9 145.1 144.7 150.1 155.3 163.0 LIABILITIES 10 Bank loans 8.0 6.3 5.9 6.5 8.5 10.1 10.1 13.2 13.1 14.4 11 Commercial paper 22.2 23.7 29.6 34.5 43.3 40.7 40.5 43.4 44.2 49.0 12 Short-term, n.e.c 4.5 5.4 6.2 8.1 8.2 7.9 7.7 7.5 8.2 8.5 13 Long-term, n.e.c 27.6 32.3 36.0 43.6 46.7 50.5 52.0 52.4 51.6 52.6 14 Other 6.8 8.1 11.5 12.6 14.2 16.0 14.6 14.3 17.3 17.0 15 Capital, surplus, and undivided profits 12.5 13.4 15.1 17.2 19.9 19.9 19.8 19.4 20.9 21.5 16 Total liabilities and capital 81.6 89.2 104.3 122.4 140.9 145.1 144.7 150.1 155.3 163,0 1. Beginning Q1 1979, asset items on lines 6, 7, and 8 are combined. NOTE. Components may not add to totals due to rounding. 1.53 DOMESTIC FINANCE COMPANIES Business Credit Millions of dollars, seasonally adjusted except as noted Changes in accounts Extensions Repayments receivable AAAccccccooouuunnntttsss rrreeeccceeeiiivvvaaabbbllleee TTTyyypppeee ooouuutttssstttaaannndddiiinnnggg JJJuuunnneee 333000... 1981 1981 1981 111999888111111 Apr. May June Apr. May June Apr. May June 1 Total 78,232 1,409 1,813 1,850 18,133 18,983 19,502 16,724 17,170 17,652 2 Retail automotive (commercial vehicles) 11,397 -213 -152 -217 790 830 734 1.003 982 951 3 Wholesale automotive 13,639 890 682 1.085 5.865 5.426 6,267 4.975 4,744 5.182 4 Retail paper on business, industrial and farm equipment 25.148 56 608 456 1.384 1.595 1,774 1.328 987 1.318 5 Loans on commercial accounts receivable and factored commercial accounts receivable 8.683 139 488 180 7,735 8,696 8,267 7.596 8.208 8,087 6 All other business credit 19.365 537 187 346 2.359 2.436 2,460 1.822 2.249 2,114 1. Not seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 DomesticN onfinancial Statistics • September 1981 1.54 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1981 Item 1978 1979 1980 Jan. Feb. Mar. Apr. May June July Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms' 1 Purchase price (thousands of dollars) 62.6 74.4 83.4 87.0 90.3 90.9 88.5 88.9 94.1' 97.0 2 Amount of loan (thousands of dollars) 45.9 53.3 59.2 63.0 65.6 64.5 64.1 65.5 66.8 67.7 3 Loan/price ratio (percent) 75.3 73.9 73.2 75.6 75.6 73.9 74.7 76.7 72.6 73.9 4 Maturity (years) 28.0 28.5 28.2 29.1 29.0 28.7 28.6 28.5 27.5 28.3 5 Fees and charges (percent of loan amount)2 1.39 1.66 2.09 2.40 2.59 2.64 2.61 2.60 2.50 2.73 6 Contract rate (percent per annum) 9.30 10.48 12.25 12.80 13.02 13.48 13.62 13.56 14.12 14.14 Yield (percent per annum) 1 FHLBB series5 9.54 10.77 12.65 13.26 13.54 14.02 14.15 14.10 14.67 14.72 8 HUD series4 9.68 11.15 13.95 14.95 15.10 15.25 15.70 16.35 16.40 16.70 SECONDARY MARKETS Yield (percent per annum) 9 FHA mortgages (HUD series)5 9.70 10.87 13.42 14.23 14.79 15.04 15.91 16.03 16.31 16.76 10 GNMA securities6 8.98 10.22 12.55 13.50 12.63c 14.22 14.69 15.31 15.02 15.76 FNMA auctions7 11 Government-underwritten loans 9.77 11.17 14.11 14.87 15.24 15.64' 16.54 16.93r 16.17 16.65 12 Conventional loans 10.01 11.77 14.43 14.95 15.05 15.29 15.66 16.44 16.30 16.44 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 13 Total 43,311 51,091 57.327 57.390 57.434 57,362 57,436 57,586 57,657 57,978 1 1 4 5 F V H A A -g - u in a s r u a r n e t d e ed 2 1 1 0 , , 2 5 4 4 3 4 2 1 4 0 , , 4 4 8 9 9 6 38.969 s 38.955 38,972 38,878 38.919 39,030 38,988 39,108 16 Conventional 11,524 16,106 18,358 18.435 18,462 18,484 18,517 18,557 18,669' 18,870 Mortgage transactions (during period) 17 Purchases 12,303 10,805 8,100 185 161 87 206 283 247 627 18 Sales 9 0 0 0 0 0 1' 0 0 0 Mortgage commitments9 19 Contracted (during period) 18,959 10,179 8,044 241 244 319' 383 802 1,110 1,662 20 Outstanding (end of period) 9,185 6,409 3,278 3,063 2,683 2,173 2,031 2,328 3,103 4,039 Auction of 4-month commitments to buy Government-underwritten loans 21 Offered 12,978 8,860 8.605 210.7' 154.2'' 169.0' 139.1 204.8'' 237.6 331.9 22 Accepted 6,747 3.920 4.002 110.8' 87.7'' 69.0'' 114.5 179.1 127.1' 290.4 Conventional loans 23 Offered 9,933 4.495 3,639 32.0 108.6 104.0' 126.9 281.3 307.1 306.6 24 Accepted 5,110 2,343 1,748 30.3 79.1 62.0 92.0 155.9r 224.0' 238.2 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)™ 25 Total 3,064 4.035 5,067 5.039 5,107 5.161 5,176 5,223 5,257 5,250 26 FHA/VA 1,243 1.102 1,033 1.029 1.025 1,021 1,017 1,013 1,009 1,005 27 Conventional 1,165 1,957 2,840 < 2.825 2,883 2,931 2,952 2,988 3,016 3,017 Mortgage transactions (during period) 28 Purchases 6,525 5,717 3,723 192' 179' 148 125 480 139 242 29 Sales 6,211 4.544 2.527 168 94 127 97 422 94 238 Mortgage commitments11 30 Contracted (during period) 7.451 5.542 3,859 203 90'' 475'' 118'' 130' 293' 866 31 Outstanding (end of period) 1,410 797 447 487 394 699 678 322 1,018 824 1. Weighted averages based on sample surveys of mortgages originated by major assuming prepayment in 12 years on pools of 30-year FHA/VA mortgages carrying institutional lender groups. Compiled by the Federal Home Loan Bank Board in the prevailing ceiling rate. Monthly figures are unweighted averages of Monday cooperation with the Federal Deposit Insurance Corporation. 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 servor the seller) in order to obtain a loan. icing) on accepted bias in Federal National Mortgage Association's auctions of 4- 3. Average effective interest rates on loans closed, assuming prepayment at the month commitments to purchase home mortgages, assuming prepayment in 12 end of 10 years. 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. Beginning March 1980. FHA-insured and VA-guaranteed mortgage holdings 5. Average gross yields on 30-year, minimum-downpayment. Federal Housing in lines 14 and 15 are combined. Administration-insured first mortgages for immediate delivery in the private sec- 9. Includes some multifamily and nonprofit hospital loan commitments in adondary market. Any gaps in data are due to periods of adjustment to changes in dition to 1- to 4-family loan commitments accepted in FNMA's free market auction maximum permissible contract rates. system, and through the FNMA-GNMA tandem plans. 6. Average net yields to investors on Government National Mortgage Associ- 10. Includes participation as well as whole loans. ation guaranteed, mortgage-backed, fully modified pass-through securities. 11. Includes conventional and government-underwritten loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate Debt A41 1.55 MORTGAGE DEBT OUTSTANDING Millions of dollars, end of period 1980 1981 TTyyppee ooff hhoollddeerr,, aanndd ttyyppee ooff pprrooppeerrttyy 11997788 11997799 11998800 Q2 Q3 Q4 QLR Q2 1 All holders 1,169,412 1,326,750 1,451,840 1,380,928 1,414,881 1,451,841r 1,473,354 1,503,308 7 1- to 4-family 765,217 878,931 960,422 910,286 935,393 960,408R 973,144 992,146 3 Multifamily 121,138 128,852 136,580 132,194 134,193 136,601R 138,092 140,276 4 Commercial 211,851 236,451 258,338 247,444 251,651 258,332R 262,250 266,751 5 71,206 82,516 96,500 91,004 93,644 96,500 99,868 104,135 Major financial institutions 848,177 938,567 998,386 958,750 977,281 998,372R 1,008,123 1,023,741 7 Commercial banks1 214,045 245,187 264,602 253,103 258,003 264,602 268,102 274,503 8 1- to 4-family 129,167 149,460 160,746 153,753 156,737 160,746 162,872 166,761 9 Multifamily 10,266 11,180 12,304 11,764 11,997 12,304 12,467 12,764 10 Commercial 66,115 75,957 82,688 79,110 80,626 82,688 83,782 85,782 11 Farm 8,497 8,590 8,864 8,476 8,643 8,864 8,981 9,196 12 Mutual savings banks 95,157 98,908 99,827 99,150 99,8306 99,813R 99,719 99,670 13 1- to 4-family 62,252 64,706 65,307 64,864 64,966 65,297R 65,236 65,204 14 Multifamily 16,529 17,340 17,180 17,223 17,249 17,338R 17,321 17,313 15 Commercial 16,319 16,963 17,120 17,004 17,031 17,118R 17,102 17,093 16 Farm 57 59 60 59 60 60 60 60 17 Savings and loan associations 432,808 475,688 502,812 481,042 491,895 502,812 507,152 514,568 18 1- to 4-family 356,114 394,345 419,446 399,746 409,896 419,446 423,066 429,253 19 Multifamily 36,053 37,579 38,113 37,329 37,728 38,113 38,442 39,004 20 Commercial 40,461 43,764 45,253 43,967 44,271 45,253 45,644 46,311 21 Life insurance companies 106,167 118,784 131,145 125,455 128,077 131,145 133,150 135,000 27. 1- to 4-family 14,436 16,193 17,911 17,796 17,996 17,911 17,815 18,076 23 Multifamily 19,000 19,274 19,614 19,284 19,357 19,614 19,678 19,957 24 Commercial 62,232 71,137 80,776 75,693 77,995 80,776 82,714 83,887 25 Farm 10,499 12,180 12,844 12,682 12,729 12,844 12,943 13,080 26 Federal and related agencies 81,739 97,084 114,300 108,539 110,526 114,300 116,243 119,476 27 Government National Mortgage Association 3,509 3,852 4,642 4,466 4,389 4,642 4,826 4,976 28 1- to 4-family 877 763 704 736 719 704 696 720 29 Multifamily 2,632 3,089 3,938 3,730 3,670 3,938 4,130 4,256 30 Farmers Home Administration 926 1,274 3,492 3,375 3,525 3,492 2,837 3,037 31 1- to 4-family 288 417 916 1,383 978 916 1,321 1,421 32 Multifamily 320 71 610 636 774 610 528 553 33 Commercial 101 174 411 402 370 411 479 504 34 Farm 217 612 1,555 954 1,403 1,555 509 559 35 Federal Housing and Veterans Administration 5,305 5,555 5,640 5,691 5,600 5,640 5,799 5,830 36 1- to 4-family 1,673 1,955 2,051 2,085 1,986 2,051 2,135 2,158 37 Multifamily 3,632 3,600 3,589 3,606 3,614 3,589 3,664 3,672 38 Federal National Mortgage Association 43,311 51,091 57,327 55,419 55,632 57,327 57,362 57,657 39 1- to 4-family 37,579 45,488 51,775 49,837 50,071 51,775 51,842 52,181 40 Multifamily 5,732 5,603 5,552 5,582 5,561 5,552 5,520 5,476 41 Federal Land Banks 25,624 31,277 38,131 35,574 36,837 38,131 40,258 42,693 42 1- to 4-family 927 1,552 2,099 1,893 1,985 2,099 2,228 2,401 43 Farm 24,697 29,725 36,032 33,681 34,852 36,032 38,030 40,292 44 Federal Home Loan Mortgage Corporation 3,064 4,035 5,068 4,014 4,543 5,068 5,161 5,283 45 1- to 4-family 2,407 3,059 3,873 3.037 3,459 3,873 3,953 4,041 46 Multifamily 657 976 1,195 977 1,084 1,195 1,208 1,242 47 Mortgage pools or trusts2 88,633 119,278 142,258 129,647 136,583 142,258 147,246 152,303 48 Government National Mortgage Association 54,347 76,401 93,874 84,282 89,452 93,874 97,184 100,558 49 1- to 4-family 52,732 74,546 91,602 82,208 87,276 91,602 94,810 98,102 50 Multifamily 1,615 1,855 2,272 2,074 2,176 2,272 2,374 2,456 51 Federal Home Loan Mortgage Corporation 11,892 15,180 16,854 16,120 16,659 16,854 17,067 17,650 52 1- to 4-family 9,657 12,149 13,471 12,886 13,318 13,471 13,641 14,100 53 Multifamily 2,235 3,031 3,383 3,234 3,341 3,383 3,426 3,550 54 Farmers Home Administration 22,394 27,697 31,530 29,245 30,472 31,530 32,995 34,095 55 1- to 4-family 13,400 14,884 16,683 15,224 16,226 16,683 16,640 16,965 56 Multifamily 1,116 2,163 2,612 2,159 2,235 2,612 2,853 3,078 57 Commercial 3,560 4,328 5,271 4,763 5,059 5,271 5,382 5,632 58 Farm 4,318 6,322 6,964 7,099 6,952 6,964 8,120 8,420 59 Individual and others3 150,863 171,821 196,896 183,992 190,491 196,911R 201,742 207,788 60 1- to 4-family 83,708 99,414 113,838 104,838 109,780 113,834R 116,889 120,763 61 Multifamily 21,351 23,251 26,058 24,596 25,407 26,081 R 26,481 26,955 67, Commercial 22,883 24,128 26,819 26,505 26,299 26,815 27,147 27,542 63 Farm 22,921 25,028 30,181 28,053 29,005 30,181 31,225 32,528 1. Includes loans held by nondeposit trust companies but not bank trust de- NOTE. Based on data from various institutional and governmental sources, with partments. some quarters estimated in part by the Federal Reserve in conjunction with the 2. Outstanding principal balances of mortgages backing securities insured or Federal Home Loan Bank Board and the Department of Commerce. Separation guaranteed by the agency indicated. of nonfarm mortgage debt by type of property, if not reported directly, and in- 3. Other holders include mortgage companies, real estate investment trusts, 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 DomesticN onfinancial Statistics • September 1981 1.56 CONSUMER INSTALLMENT CREDIT1 Total Outstanding, and Net Change^ Millions of dollars 1981 HHoollddeerr,, aanndd ttyyppee ooff ccrreeddiitt 11997788 11997799 11998800 Jan. Feb. Mar. Apr. May June July Amounts outstanding (end of period) 1 Total 273,645 312,024 313,435 310,554 309,188 310,766 313,419 315,465 318,459 320,886 By major holder 2 Commercial banks .... 136,016 154,177 145,765 143,749 142,030 141,897 142,070 142,143 143,310 144,020 3 Finance companies .... 54,298 68,318 76,756 77,131 78,090 79,490 81,033 81,794 82,723 83,924 4 Credit unions 44,334 46,517 44,041 43,601 43,776 44,212 44,390 45,055 45,686 46,096 5 Retailers2 25,987 28,119 29,410 28,300 27,329 26,965 27,227 27,319 27,412 27,469 6 Savings and loans 7,097 8,424 9,911 10,023 10,173 10,458 10,792 11,148 11,115 10,959 7 Gasoline companies ... 3,220 3,729 4,717 4,929 4,958 4,898 5,046 5,157 5,364 5,597 8 Mutual savings banks.. 2,693 2,740 2,835 2,821 2,832 2,846 2,861 2,849 2,849 2,821 By major type of credit 9 Automobile 101,647 116,362 116,327 115,262 115,677 117,517 118,479 118,932 119,685 121,002 10 Commercial banks .. 60,510 67,367 61,025 59,608 59,061 59,378 59,252 59,169 59,192 59,434 11 Indirect paper .... 33,850 38,338 34,857 33,947 33,667 34,016 33,931 33,913 33,996 34,270 12 Direct loans 26,660 29,029 26,168 25,661 25,394 25,362 25,321 25,256 25,196 25,164 13 Credit unions 21,200 22,244 21,060 20,850 20,933 21,142 21,227 21,545 21,847 22,044 14 Finance companies .. 19,937 26,751 34,242 34,804 35,683 36,997 38,000 38,218 38,646 39,525 15 Revolving 48,309 56,937 59,862 58,985 57,566 56,831 57,322 57,524 58,470 58,976 16 Commercial banks .. 24,341 29,862 30,001 29,952 29,412 29,051 29,127 29,096 29,722 29,923 17 Retailers 20,748 23,346 25,144 24,104 23,196 22,882 23,149 23,271 23,384 23,456 18 Gasoline companies . 3,220 3,729 4,717 4,929 4,958 4,898 5,046 5,157 5,364 5,597 19 Mobile home 15,235 16,838 17,327 17,244 17,189 17,273 17,422 17,626 17,724 17,784 20 Commercial banks .. 9,545 10,647 10,376 10,271 10,174 10,153 10,142 10,159 10,179 10,192 21 Finance companies .. 3,152 3,390 3,745 3,741 3,740 3,762 3,828 3,909 3,990 4,076 22 Savings and loans ... 2,067 2,307 2,737 2,768 2,809 2,888 2,980 3,079 3,069 3,026 23 Credit unions 471 494 469 464 466 470 472 479 486 490 24 Other 108,454 121,887 119,919 119,063 118,756 119,145 120,196 121,383 122,580 123,124 25 Commercial banks .. 41,620 46,301 44,363 43,918 43,383 43,315 43,549 43,719 44,217 44,471 26 Finance companies .. 31,209 38,177 38,769 38,586 38,667 38,731 39,205 39,667 40,087 40,323 27 Credit unions 22,663 23,779 22,512 22,287 22,377 22,600 22,691 23,031 23,353 23,563 28 Retailers 5,239 4,773 4,266 4,196 4,133 4,083 4,078 4,048 4,028 4,013 29 Savings and loans ... 5,030 6,117 7,174 7,255 7,364 7,570 7,812 8,069 8,046 7,933 30 Mutual savings banks 2,693 2,740 2,835 2,821 2,832 2,846 2,861 2,849 2,849 2,821 Net change (during period)3 31 Total 43,079 38,381 1,410 869 1,9% 3,108 2,331 1,346 1,930 1,954 By major holder 32 Commercial banks .... 23,641 18,161 -8,412 -1,357 -544 612 -345 -14 614 432 33 Finance companies .... 9,430 14,020 8,438 1,113 1,530 1,539 1,253 409 570 948 34 Credit unions 6,729 2,185 -2,475 288 444 287 272 391 219 532 35 Retailers2 2,497 2,132 1,291 409 103 253 531 -3 416 265 36 Savings and loans 7 1,327 1,485 232 254 418 421 519 45 -175 37 Gasoline companies ... 257 509 988 106 209 -6 141 67 78 4 38 Mutual savings banks.. 518 47 95 78 0 5 58 -23 -12 -52 By major type of credit 39 Automobile 18,736 14,715 -35 -63 979 1,682 428 -195 57 1,208 40 Commercial banks .. 10,933 6,857 -6,342 -1,253 -346 229 -461 -208 -214 199 41 Indirect paper .... 6,471 4,488 -3,481 -839 -229 268 -256 -83 -44 274 42 Direct loans 4,462 2,369 -2,861 -414 -117 -39 -205 -125 -170 -75 43 Credit unions 3,101 1,044 -1,184 206 211 132 142 160 106 263 44 Finance companies .. 4,702 6,814 7,491 984 1,114 1,321 747 -147 165 746 45 Revolving 9,035 8,628 2,925 557 441 587 838 350 1,018 477 46 Commercial banks .. 5,967 5,521 139 59 166 346 153 230 580 156 47 Retailers 2,811 2,598 1,798 392 66 247 544 53 360 317 48 Gasoline companies . 257 509 988 106 209 -6 141 67 78 4 49 Mobile home 286 1,603 488 -24 -47 88 145 243 89 67 50 Commercial banks .. 419 1,102 -271 -85 -102 -35 -15 7 -12 20 51 Finance companies .. 74 238 355 15 18 25 58 78 85 81 52 Savings and loans ... -276 240 430 46 31 97 99 152 14 -44 53 Credit unions 69 23 -25 0 6 1 3 6 2 10 54 Other 15,022 13,435 -1,968 399 623 751 920 948 766 202 55 Commercial banks .. 6,322 4,681 -1,938 -78 -262 72 -22 -43 260 57 56 Finance companies .. 4,654 6,968 592 114 398 193 448 478 320 121 57 Credit unions 3,559 1,118 -1,266 82 227 154 127 225 111 259 58 Retailers -314 -466 -507 17 37 6 -13 -56 56 -52 59 Savings and loans ... 283 1,087 1,056 186 223 321 322 367 31 -131 60 Mutual savings banks 518 47 95 78 0 5 58 -23 -12 -52 1. The Board's series cover most short- and intermediate-term credit extended 3. Net change equals extensions minus liquidations (repayments, charge-offs and to individuals through regular business channels, usually to finance the purchase other credit); figures for all months are seasonally adjusted. of consumer goods and services or to refinance debts incurred for such purposes, and scheduled to be repaid (or with the option of repayment) in two or more ATotal consumer noninstallment credit outstanding—credit scheduled to be reinstallments. paid in a lump sum, including single-payment loans, charge accounts, and service 2. Includes auto dealers and excludes 30-day charge credit held by travel and credit—amounted to $64.3 billion at the end of 1978, $71.3 billion at the end of entertainment companies. 1979, and $72.2 billion at the end of 1980. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Consumer Debt A43 1.57 CONSUMER INSTALLMENT CREDIT Extensions and Liquidations Millions of dollars; monthly data are seasonally adjusted. 1981 HHoollddeerr,, aanndd ttyyppee ooff ccrreeddiitt 11997799 Jan. Feb. Mar. Apr. May June July Extensions 1 Total 297,668 324,777 305,887 27,059 28,706 29,822 28,878 28,149 29,005 28,750 By major holder 7 Commercial banks 142,433 154,733 133,605 10,397 11,648 12,676 11,986 12,055 12,483 1122,,443333 3 Finance companies 50,505 61,518 60,801 5,904 6,193 5,911 5,218 4,937 5,251 5,439 4 Credit unions 38,111 34,926 29,594 2,994 3,167 3,153 3,181 3,212 3,137 3,299 5 Retailers1 44,571 47,676 50,959 4,673 4,500 4,685 5,002 4,486 5,018 4,826 6 Savings and loans 3,724 5,901 6,621 715 751 1,038 985 1,068 649 383 7 Gasoline companies 16,017 18,005 22,402 2,130 2,284 2,180 2,272 2,243 2,296 2,252 8 Mutual savings banks 2,307 2,018 1,905 246 163 179 234 148 171 118 By major type of credit 9 Automobile 87,981 93,901 83,002 7,237 8,333 8,700 77,,220055 77,,332200 77,,444422 88,,117788 10 Commercial banks 52,969 53,554 40,657 2,598 3,560 4,117 3,438 3,627 3,652 3,874 11 Indirect paper 29,342 29,623 22,269 1,230 1,944 2,365 1,929 2,071 2,126 2,349 12 Direct loans 23,627 23,931 18,388 1,368 1,616 1,752 1,509 1,556 1,526 1,525 13 Credit unions 18,539 17,397 15,294 1,592c 1,613 1,586 1,589 1,608 1,553 1,663 14 Finance companies 16.473 22,950 27,051 3,047 3,160 2,997 2,178 2,085 2,237 2,641 15 Revolving 105,125 120,174 129,580 11,483 11,867 12,071 12,352 11,904 12,668 12,190 16 Commercial banks 51,333 61.048 61,847 5,185 5,602 5,695 5,561 5,613 5,905 5,557 17 Retailers 37,775 41,121 45,331 4,168 3,981 4,196 4,519 4,048 4,467 4,381 18 Gasoline companies 16,017 18,005 22,402 2,130 2,284 2,180 2,272 2,243 2,296 2,252 19 Mobile home 5,412 6,471 5,098 383 409 641 551 609 488 451 7,0 Commercial banks 33,,669977 4,542 2,942 171 185 259 251 250 259 282 7.1 Finance companies 888866 797 898 81 88 88 100 112 122 116 22 Savings and loans 609 948 1,146 119 118 269 184 230 93 30 23 Credit unions 220 184 113 12 18 25 16 17 14 23 24 Other 99,150 104,231 88,207 7,956 8,097 8,410 8,770 8,316 8,407 7,931 7.5 Commercial banks 34,434 35,589 28,159 2,443 2,301 2,605 2,736 2,565 2,667 2,720 26 Finance companies 33,146 37,771 32,852 2,776 2,945 2,826 2,940 2,740 2,892 2,682 27 Credit unions 19,352 17,345 14,187 1,390 1,536 1,542 1,576 1,587 1,570 1,613 28 Retailers 6,796 6,555 5,628 505 519 489 483 438 551 445 29 Savings and loans 3,115 4,953 5,476 596 633 769 801 838 556 353 30 Mutual savings banks 2,307 2,018 1,905 246 163 179 234 148 171 118 Liquidations 31 Total 254,589 286,396 304,477 26,190 26,710 26,714 26,547 26,803 27,075 26,796 By major holder 32 Commercial banks 118,792 136,572 142,017 11,754 12,192 12,064 12,331 12,069 11,869 1122,,000011 33 Finance companies 41,075 47,498 52,363 4,791 4,663 4,372 3,965 4,528 4,681 4,491 34 Credit unions 31,382 32,741 32,069 2,706 2,723 2,866 2,909 2,821 2,918 2767 35 Retailers1 42,074 45,544 49,668 4,264 4,397 4,432 4,471 4,489 4,602 4561 36 Savings and loans 3,717 4,574 5,136 483 497 620 564 549 604 558 37 Gasoline companies 15,760 17,496 21,414 2,024 2,075 2,186 2,131 2,176 2,218 2,248 38 Mutual savings banks 1,789 1,971 1,810 168 163 174 176 171 183 170 By major type of credit 39 Automobile 69,245 79,186 83,037 7,300 7,354 7,018 6,777 7,515 7,385 66,,997700 40 Commercial banks 42,036 46,697 46,999 3,851 3,906 3,888 3,899 3,835 3,866 3,675 41 Indirect paper 22,871 25,135 25,750 2,069 2,173 2,097 2,185 2,154 2,170 2,075 42 Direct loans 19,165 21,562 21,249 1,782 1,733 1,791 1,714 1,681 1,696 1,600 43 Credit unions 15,438 16,353 16,478 1,386 1,402 1,454 1,447 1,448 1,447 1,400 44 Finance companies 11,771 16,136 19,560 2,063 2,046 1,676 1,431 2,232 2,072 1,895 45 Revolving 96,090 111,546 126,655 10,926 11,426 11,484 11,514 11,554 11,650 11,713 46 Commercial banks 45,366 55,527 61,708 5,126 5,436 5,349 5,408 5,383 5,325 5,401 47 Retailers 34,964 38,523 43,533 3,776 3,915 3,949 3,975 3,995 4,107 4,064 48 Gasoline companies 15,760 17,496 21,414 2,024 2,075 2,186 2,131 2,176 2,218 2,248 49 Mobile home 5,126 4,868 4,610 407 456 553 406 366 399 384 50 Commercial banks 3,278 3,440 3,213 256 287 294 266 243 271 262 51 Finance companies 812 559 543 66 70 63 42 34 37 35 52 Savings and loans 885 708 716 73 87 172 85 78 79 74 53 Credit unions 151 161 138 12 12 24 13 11 12 13 54 Other 84,128 90,796 90,175 7,557 7,474 7,659 7,850 7,368 7,641 7,729 55 Commercial banks 28,112 30,908 30,097 2,521 2,563 2,533 2,758 2,608 2,407 2,663 56 Finance companies 28,492 30,803 32,260 2,662 2,547 2,633 2,492 2,262 2,572 2,651 57 Credit unions 15,793 16,227 15,453 1,308 1,309 1,388 1,449 1,362 1,459 1,354 58 Retailers 7,110 7,021 6,135 488 482 483 496 494 495 497 59 Savings and loans 2,832 3,866 4,420 410 410 448 479 471 525 484 60 Mutual savings banks 1,789 1,971 1,810 168 163 174 176 171 183 170 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 Nonfinancial Statistics • September 1981 1.58 FUNDS RAISED IN U.S. CREDIT MARKETS Billions of dollars; half-yearly data are at seasonally adjusted annual rates. 1978 1979 1980 11997755 11997766 11997777 11997788 11997799 11998800 HI H2 HI H2 HI H2 Nonfinancial sectors 1 Total funds raised 210.8 271.9 338.5 400.4 394.9 365.4 384.8 416.0 380.5 408.2 325.8 404.9 2 Excluding equities 200.7 261.0 335.3 398.3 390.6 353.9 387.4 409.2 377.7 402.3 318.0 389.7 By sector and instrument 3 U.S. government 85.4 69.0 56.8 53.7 37.4 79.2 61.4 46.0 28.6 46.1 64.7 93.7 4 Treasury securities 85.8 69.1 57.6 55.1 38.8 79.8 62.3 47.9 30.9 46.6 65.3 94.3 5 Agency issues and mortgages -.4 -.1 -.9 -1.4 -1.4 -.6 -.9 -1.9 -2.3 -.5 -.6 -.6 6 All other nonfinancial sectors 125.4 202.8 281.7 346.7 357.6 286.2 323.4 370.0 351.9 362.1 261.1 311.2 7 Corporate equities 10.1 10.8 3.1 2.1 4.3 11.5 -2.6 6.8 2.8 5.9 7.8 15.3 8 Debt instruments 115.3 192.0 278.6 344.6 353.2 274.7 326.0 363.2 349.1 356.2 253.4 295.9 9 Private domestic nonfinancial sectors 112.1 182.0 267.8 314.4 336.4 256.7 302.8 326.1 338.6 333.0 231.9 281.5 10 Corporate equities 9.9 10.5 2.7 2.6 3.5 9.5 -1.8 7.0 2.8 4.1 6.0 13.0 11 Debt instruments 102.2 171.5 265.1 311.8 333.0 247.2 304.6 319.1 335.8 328.9 225.9 268.5 12 Debt capital instruments 98.4 123.5 175.6 196.6 199.9 179.7 188.3 205.0 198.8 201.1 171.9 187.4 13 State and local obligations 16.1 15.7 23.7 28.3 18.9 25.0 27.8 28.7 16.0 21.8 18.5 31.6 14 Corporate bonds 27.2 22.8 21.0 20.1 21.2 27.9 20.6 19.6 22.4 19.9 33.6 22.3 15 Home mortgages 39.5 63.6 96.3 104.6 109.1 81.5 100.1 109.1 109.8 108.5 70.7 92.8 16 Multifamily residential * 1.8 7.4 10.2 8.9 8.7 9.3 11.2 8.1 9.7 8.1 9.0 17 Commercial 11.0 13.4 18.4 23.3 25.7 21.6 21.2 25.4 26.0 25.4 25.5 19.3 18 Farm 4.6 6.1 8.8 10.2 16.2 14.0 9.3 11.1 16.6 15.9 15.5 12.4 19 Other debt instruments 3.8 48.0 89.5 115.2 133.0 67.2 116.3 114.1 137.0 127.8 54.0 81.1 20 Consumer credit 9.7 25.6 40.6 50.6 44.2 3.1 50.1 51.0 48.3 39.0 -4.3 8.9 21 Bank loans n.e.c -12.3 4.0 27.0 37.3 50.6 37.9 43.1 31.4 48.2 52.9 9.7 65.0 22 Open market paper -2.6 4.0 2.9 5.2 10.9 5.8 5.3 5.1 12.0 9.7 29.7 -18.1 23 Other 9.0 14.4 19.0 22.2 27.3 20.4 17.8 26.5 28.4 26.2 18.9 25.2 24 By borrowing sector 112.1 182.0 267.8 314.4 336.4 254.2 302.8 326.1 338.6 333.0 231.9 281.5 25 State and local governments 13.7 15.2 20.4 23.6 15.5 20.7 21.0 26.1 13.0 18.0 16.6 30.4 26 Households 49.7 90.5 139.9 162.6 164.9 100.8 156.1 169.1 167.6 161.2 88.7 113.7 27 Farm 8.8 10.9 14.7 18.1 25.8 19.0 15.3 20.8 23.5 28.1 20.9 14.7 28 Nonfarm noncorporate 2.0 4.7 12.9 15.4 15.9 12.5 16.4 14.4 15.5 15.9 10.3 15.5 29 Corporate 37.9 60.7 79.9 94.8 114.3 101.1 93.9 95.7 118.9 109.7 95.4 107.2 30 Foreign 13.3 20.8 13.9 32.3 21.2 29.9 20.6 43.9 13.3 29.1 29.3 29.7 31 Corporate equities .2 .3 .4 -.5 .9 2.2 -.8 -.2 * 1.7 1.8 2.3 32 Debt instruments 13.2 20.5 13.5 32.8 20.3 27.7 21.4 44.1 13.3 27.3 27.5 27.4 33 Bonds 6.2 8.6 5.1 4.0 3.9 .8 5.0 3.0 3.0 4.7 2.0 -.4 34 Bank loans n.e.c 3.9 6.8 3.1 18.3 2.3 11.8 9.3 27.3 1.0 3.5 4.4 18.7 35 Open market paper .3 1.9 2.4 6.6 11.2 10.1 3.6 9.6 6.1 16.3 15.7 4.5 36 U.S. government loans 2.8 3.3 3.0 3.9 3.0 5.0 3.6 4.2 3.1 2.8 5.4 4.6 Financial sectors 37 Total funds raised 12.7 24.1 54.0 81.4 88.5 70.8 80.7 82.1 86.3 90.7 53.7 84.2 By instrument 38 U.S. government related 13.5 18.6 26.3 41.4 52.4 47.5 38.5 44.3 45.8 59.0 45.8 48.9 39 Sponsored credit agency securities 2.3 3.3 7.0 23.1 24.3 24.3 21.9 24.3 21.5 27.0 25.1 23.7 40 Mortgage pool securities 10.3 15.7 20.5 18.3 28.1 23.2 16.6 20.1 24.2 32.0 20.7 25.2 41 Loans from U.S. government .9 -.4 -1.2 42 Private financial sectors -.8 5.5 27.7 40.0 36.1 23.3 42.2 37.8 40.5 31.7 7.9 35.3 43 Corporate equities .6 1.0 .9 1.7 2.3 3.4 2.2 1.1 2.0 2.5 2.6 4.3 44 Debt instruments -1.4 4.4 26.9 38.3 33.8 19.8 40.0 36.7 38.4 29.2 5.3 31.0 45 Corporate bonds 2.9 5.8 10.1 7.5 7.8 7.2 8.5 6.4 8.7 7.0 10.5 3.5 46 Mortgages 2.3 2.1 3.1 .9 -1.2 -.9 2.1 -.3 -.5 -1.9 -6.8 4.8 47 Bank loans n.e.c -3.7 -3.7 -.3 2.8 -.4 1.0 2.5 3.1 -.7 -.2 1.0 -1.9 48 Open market paper and RPs 1.1 2.2 9.6 14.6 18.4 5.4 13.5 15.7 23.0 13.8 -3.6 14.5 49 Loans from Federal Home Loan Banks -4.0 -2.0 4.3 12.5 9.2 7.1 13.2 11.8 7.8 10.5 4.1 10.2 By sector 50 Sponsored credit agencies 3.2 2.9 5.8 23.1 24.3 24.4 21.9 24.3 21.5 27.0 25.1 23.7 51 Mortgage pools 10.3 15.7 20.5 18.3 28.1 23.2 16.6 20.1 24.2 32.0 20.7 25.2 52 Private financial sectors -.8 5.5 27.7 40.0 36.1 23.3 42.2 37.8 40.5 31.7 7.9 35.3 53 Commercial banks 1.2 2.3 1.1 1.3 1.6 .6 1.5 1.1 1.3 1.8 .8 .3 54 Bank affiliates .3 -.8 1.3 6.7 4.5 5.6 5.8 7.6 6.2 2.9 4.5 6.6 55 Savings and loan associations -2.3 .1 9.9 14.3 11.4 6.4 16.4 12.2 9.9 12.9 -3.1 17.0 56 Other insurance companies 1.0 .9 .9 1.1 1.0 .8 1.0 1.1 1.0 .9 .8 .7 57 Finance companies .5 6.4 17.6 18.6 18.9 8.8 18.9 18.2 23.5 14.3 5.5 10.0 58 REITs -1.4 -2.4 -2.2 -1.0 -.4 -.9 -1.0 -1.0 -.6 -.1 -1.4 -2.0 59 Open-end investment companies -.1 -1.0 -.9 -1.0 -1.0 2.0 -.5 -1.5 -1.0 -.9 .9 2.6 All sectors 60 Total funds raised, by instrument 223.6 295.9 392.5 481.8 483.4 434.1 465.5 498.1 466.7 498.9 379.5 489.2 61 Investment company shares -.1 -1.0 -.9 -1.0 -1.0 2.0 -.5 -1.5 -1.0 -.9 .9 2.6 62 Other corporate equities 10.8 12.9 4.9 4.7 7.6 15.0 .1 9.4 5.8 9.3 9.5 17.0 63 Debt instruments 212.9 284.1 388.5 478.1 476.8 417.1 465.9 490.2 461.9 490.5 369.1 469.6 64 U.S. government securities 98.2 88.1 84.3 95.2 89.9 126.8 100.0 90.4 74.5 105.2 110.6 142.8 65 State and local obligations 16.1 15.7 23.7 28.3 18.9 22.2 27.8 28.7 16.0 21.8 18.5 31.6 66 Corporate and foreign bonds 36.4 37.2 36.1 31.6 32.9 35.6 34.2 29.1 34.1 31.5 46.1 25.4 67 Mortgages 57.2 87.0 133.9 149.1 158.6 124.8 141.9 156.3 159.8 157.4 113.0 138.2 68 Consumer credit 9.7 25.6 40.6 50.6 44.2 3.1 50.1 51.0 48.3 39.0 -4.3 8.9 69 Bank loans n.e.c -12.2 7.0 29.8 58.4 52.5 50.7 54.9 61.8 48.6 56.2 15.1 81.7 70 Open market paper and RPs -1.2 8.1 15.0 26.4 40.5 21.4 22.4 30.4 41.1 39.8 41.9 .9 71 Other loans 8.7 15.3 25.2 38.6 39.5 32.6 34.6 42.5 39.4 39.5 28.4 40.0 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A45 1.59 DIRECT AND INDIRECT SOURCES OF FUNDS TO CREDIT MARKETS Billions of dollars, except as noted; half-yearly data are at seasonally adjusted annual rates 1978 1979 1980 TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 11997755 11997766 11997777 11997788 11997799 11998800 HI H2 HI H2 HI H2 1 Total funds advanced in credit markets to nonfinancial sectors 200.7 261.0 335.3 398.3 390.6 349.8 387.4 409.2 377.7 402.3 318.0 389.7 By public agencies and foreign 2 Total net advances 44.6 54.3 85.1 109.7 80.1 95.8 102.8 116.6 47.6 112.5 110011..55 9900..44 3 U.S. government securities 22.5 26.8 40.2 43.9 2.0 22.3 43.7 44.0 -22.1 26.2 24.7 21.3 4 Residential mortgages 16.2 12.8 20.4 26.5 36.1 32.0 22.2 30.7 32.6 39.6 33.4 30.7 5 FHLB advances to savings and loans -4.0 -2.0 4.3 12.5 9.2 7.1 13.2 11.8 7.8 10.5 4.1 10.2 6 Other loans and securities 9.8 16.6 20.2 26.9 32.8 34.5 23.7 30.1 29.2 36.3 39.3 28.3 Total advanced, by sector 7 U.S. government 15.1 8.9 11.8 20.4 22.5 26.0 19.4 21.4 23.8 21.3 29.5 21.6 8 Sponsored credit agencies 14.8 20.3 26.8 44.6 57.5 48.6 39.4 49.8 49.9 65.2 43.6 52.9 9 Monetary authorities 8.5 9.8 7.1 7.0 7.7 4.5 13.4 .5 .9 14.5 14.6 -5.6 10 Foreign 6.1 15.2 39.4 37.7 -7.7 16.7 30.6 44.9 -27.0 11.7 13.8 21.5 11 Agency borrowing not included in line 1 13.5 18.6 26.3 41.4 52.4 47.5 38.5 44.3 45.8 59.0 45.8 48.9 Private domestic funds advanced 12 Total net advances 169.7 225.4 276.5 330.0 362.9 301.5 323.2 336.9 375.9 348.8 262.4 348.2 13 U.S. government securities 75.7 61.3 44.1 51.3 87.9 104.6 56.3 46.4 96.6 79.1 85.9 121.5 14 State and local Obligations 16.1 15.7 23.7 28.3 18.9 22.2 27.8 28.7 16.0 21.8 18.5 31.6 15 Corporate and foreign bonds 32.8 30.5 22.5 22.5 25.6 25.5 24.1 20.9 26.9 24.3 32.6 19.5 16 Residential mortgages 23.2 52.6 83.3 88.2 81.8 58.1 87.1 89.5 85.1 78.5 45.2 71.0 17 Other mortgages and loans 17.9 63.3 107.3 152.2 157.9 98.2 141.1 163.3 159.1 155.6 84.2 114.7 18 LESS: Federal Home Loan Bank advances -4.0 -2.0 4.3 12.5 9.2 7.1 13.2 11.8 7.8 10.5 4.1 10.2 Private financial intermediation 19 Credit market funds advanced by private financial institutions 122.5 190.1 257.0 296.9 292.5 265.6 301.7 292.0 307.5 277.4 230.7 293.0 20 Commercial banking 29.4 59.6 87.6 128.7 121.1 103.5 132.5 125.0 124.6 117.6 57.0 142.4 21 Savings institutions 53.5 70.8 82.0 75.9 56.3 57.6 75.8 75.9 57.7 54.9 32.1 81.1 22 Insurance and pension funds 40.6 49.9 67.9 73.5 70.4 76.4 76.9 70.2 75.4 65.5 86.4 68.0 23 Other finance -1.0 9.8 19.6 18.7 44.7 28.1 16.6 20.9 49.8 39.6 55.2 1.5 24 Sources of funds 122.5 190.1 257.0 296.9 292.5 265.6 301.7 292.0 307.5 277.4 230.7 293.0 25 Private domestic deposits 92.0 124.6 141.2 142.5 136.7 163.9 138.3 146.7 121.7 151.6 148.3 183.0 26 Credit market borrowing -1.4 4.4 26.9 38.3 33.8 19.8 40.0 36.7 38.4 29.2 5.3 31.0 27 Other sources 32.0 61.0 89.0 116.0 122.0 81.9 123.5 108.6 147.3 96.6 77.2 79.0 28 Foreign funds -8.7 -4.6 1.2 6.3 26.3 -20.0 5.7 6.9 49.4 3.2 -18.1 -28.1 29 Treasury balances -1.7 -.1 4.3 6.8 .4 -2.0 1.9 11.6 5.1 -4.3 -2.5 -2.6 30 Insurance and pension reserves 29.7 34.5 49.4 62.7 49.0 58.5 66.2 59.2 53.9 44.0 62.4 55.6 31 Other, net 12.7 31.2 34.1 40.3 46.3 45.4 49.6 31.0 38.9 53.7 35.4 54.1 Private domestic nonfinancial investors 32 Direct lending in credit markets 45.8 39.7 46.3 71.5 104.2 55.7 61.4 81.6 106.8 100.5 36.9 86.1 33 U.S. government securities 24.1 16.1 23.0 33.2 57.8 30.7 32.1 34.4 64.1 51.5 15.5 48.8 34 State and local obligations 8.4 3.8 2.6 4.5 -2.5 -1.8 7.0 2.0 -2.3 -2.7 -1.6 7.9 35 Corporate and foreign bonds 8.4 5.8 -3.3 -1.4 11.1 5.4 -3.7 1.0 7.8 14.2 5.2 5.3 36 Commercial paper -1.3 1.9 9.5 16.3 10.7 -2.4 8.2 24.4 12.5 9.0 -5.7 -2.9 37 Other 6.2 12.0 14.5 18.8 27.1 23.9 17.8 19.8 24.7 28.5 23.6 27.0 38 Deposits and currency 98.1 131.9 149.5 151.8 144.7 173.5 148.7 154.8 131.1 158.1 157.3 194.6 39 Security RPs .2 2.3 2.2 7.5 6.6 4.7 9.8 5.1 18.5 -5.3 5.3 7.4 40 Money market fund shares 1.3 * .2 6.9 34.4 29.2 6.1 7.7 30.2 38.6 61.9 -3.4 41 Time and savings accounts 84.0 113.5 121.0 115.2 84.7 131.8 110.7 119.8 71.4 97.9 92.3 178.9 42 Large at commercial banks -15.8 -13.2 23.0 45.9 .4 12.7 33.9 57.9 -25.3 26.0 -12.0 72.6 43 Other at commercial banks 40.3 57.6 29.0 8.2 39.3 62.9 18.4 -1.9 41.3 37.3 60.8 37.7 44 At savings institutions 59.4 69.1 69.0 61.1 45.1 56.2 58.5 63.8 55.4 34.7 43.5 68.7 45 Money 12.6 16.1 26.1 22.2 18.9 7.8 22.1 22.3 10.9 26.8 -2.2 11.8 46 Demand deposits 6.4 8.8 17.8 12.9 11.0 -1.8 11.6 14.2 1.6 20.3 -11.3 .2 47 Currency 6.2 7.3 8.3 9.3 7.9 9.6 10.5 8.1 9.3 6.5 9.0 11.6 48 Total of credit market instruments, deposits and currency 143.9 171.6 195.8 223.3 248.9 229.1 210.1 236.4 237.9 258.7 194.2 280.8 49 Public support rate (in percent) 22.2 20.8 25.4 27.5 20.5 27.4 26.5 28.5 12.6 28.0 31.9 23.2 50 Private financial intermediation (in percent) 72.2 84.3 93.0 90.0 80.6 88.1 93.4 86.7 81.8 79.5 87.9 84.2 51 Total foreign funds -2.6 10.6 40.5 44.0 18.6 -3.3 36.3 51.8 22.4 14.9 -4.3 -6.6 MEMO: Corporate equities not included above 52 Total net issues 10.7 11.9 4.0 3.7 6.6 17.0 -.4 7.9 4.8 8.4 10.4 19.6 53 Mutual fund shares -.1 -1.0 -.9 -1.0 -1.0 -2.0 -.5 -1.5 -1.0 -.9 .9 2.6 54 Other equities 10.8 12.9 4.9 4.7 7.6 15.0 .1 9.4 5.8 9.3 9.5 17.0 55 Acquisitions by financial institutions 9.6 12.3 7.4 7.6 15.7 18.7 .4 14.7 12.5 18.9 10.5 25.1 56 Other net purchases 1.1 -.4 -3.4 -3.8 -9.1 -1.7 -.8 -6.8 -7.7 -10.5 -.1 -5.5 NOTES BY LINE NUMBER. 30. Excludes net investment of these reserves in corporate equities. 1. Line 2 of table 1.58. 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 3, 47. Mainly an offset to line 9. 13, and 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 by 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 obtainedf 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 • September 1981 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures 1967 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1980 1981 MMeeaassuurree 11997788 11997799 11998800 Dec. Jan. Feb. Mar. Apr. May' June' July Aug. 1 Industrial production1 146.1 152.5 147.0' 150.4' 151.4' 151.8' 152. lr 151.9' 152.7 152.9' 153.4 152.8 Market groupings 2 Products, total 144.8 150.0 146.7' 149.4' 149.9' 150.2' 150.7' 151.3' 152.3 152.2 152.4 151.9 3 Final, total 135.9 147.2 145.3' 147.8' 147.8' 148.2' 149.0' 149.9' 151.3 151.5 151.6 151.1 4 Consumer goods 149.1 150.8 145.4' 147.1' 146.9' 147.6' 148.3' 148.9' 150.7 150.4 150.0 148.5 5 Equipment 132.8 142.2 145.2' 148.8' 149.1' 148.7' 150.0' 151.4' 152.1 153.0 153.9 154.6 6 Intermediate 154.1 160.5 151.9 155.4' 157.5' 157.7' 157.1' 156.3' 156.1 155.0 155.3 155.1 7 Materials 148.3 156.4 147.6r 152.2' 153.8 154.3' 154.4 152.9' 153.4 154.0 155.0 154.3 Industry groupings 8 Manufacturing 146.7 115533..66 146.7' 150.4' 151.1 151.2' 151.6' 152.0' 152.8 152.5 153.0 152.5 Capacity utilization (percent)1-2 9 Manufacturing 84.4 85.7 79.1' 79.8' 80.0 79.8 79.8' 79.8' 80.0 79.7 79.8 79.2 10 Industrial materials industries 85.6 87.4 80.0' 81.4' 82.1' 82.3' 82.1' 81.1' 81.2 81.4 81.7 81.2 11 Construction contracts (1972 = 100)3 174.1 185.6 161.8 193.0 185.0 177.0 183.0 172.0 160.0 170.0 n.a. n.a. 12 Nonagricultural employment, total4 131.8 136.5 137.6 138.2 138.4 138.7 138.8 139.0 139.1 139.2 139.8 139.9 13 Goods-producing, total 109.8 113.5 110.3 110.0 110.0 110.0 110.1 110.3 110.3 110.8 111.3 111.2 14 Manufacturing, total 105.4 108.2 104.4 103.7 103.7 103.8 103.8 104.6 105.0 104.1 105.7 105.5 15 Manufacturing, production-worker 103.0 105.3 99.4 98.3 98.2 98.2 98.4 99.2 99.6 99.6 100.2 100.1 If. Service-producing 143.8 149.1 152.6 153.7 154.0 154.4 154.5 154.7 155.0 154.8 155.4 155.5 17 Personal income, total 273.3 308.5 342.9 361.4 365.2 368.0 371.5 373.6 375.9 378.5 384.4 n.a. 18 Wages and salary disbursements 258.8 289.5 314.7 330.5 335.6 337.9 340.2 341.8 343.6 344.7 347.1 n.a. 19 Manufacturing 223.1 248.6 261.5 275.8 280.1 281.3 382.9 286.1 289.2 289.6 291.2 n.a. 20 Disposable personal income5 267.0 299.6 332.5 349.2 352.5 355.3 358.7 360.6 362.4 364.5 370.3 n.a. 21 Retail sales6 253.8 281.6 303.8 318.8 326.6 331.7 334.8 328.1 326.7 333.9 332.9 335.1 Prices7 22 Consumer 195.4 217.4 246.8 258.4 260.5 263.2 265.1 226.8 269.0 271.3 274.4 n.a. 23 Producer finished goods 194.6 216.1 246.9 257.2 260.4 262.4 265.3 267.7 268.9 269.9 271.3 271.2 1. The industrial production and capacity utilization series have been revised 6. Based on Bureau of Census data published in Survey of Current Business. back to January 1979. 7. Data without seasonal adjustment, as published in Monthly Labor Review. 2. Ratios of indexes of production to indexes of capacity. Based on data from Seasonally adjusted data for changes in the price indexes may be obtained from Federal Reserve, McGraw-Hill Economics Department, and Department of Com- the Bureau of Labor Statistics, U.S. Department of Labor. merce. 3. Index of dollar value of total construction contracts, including residential, NOTE. Basic data (not index numbers) for series mentioned in notes 4, 5, and nonresidential, and heavy engineering, from McGraw-Hill Information Systems 6, and indexes for series mentioned in notes 3 and 7 may also be found in the Company, F. W. Dodge Division. Survey of Current Business. 4. Based on data in Employment and Earnings (U.S. Department of Labor). Figures for industrial production for the last two months are preliminary and Series covers employees only, excluding personnel in the Armed Forces. estimated, respectively. 5. Based on data in Survey of Current Business (U.S. Department of Commerce). 2.11 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION Seasonally adjusted 1980 1981 1980 1981 1980 1981 SSeerriieess Q3r 04' Qlr Q2' Q3' Q4' QI' Q2' Q3' Q4' QI' Q2' Output (1967 = 100) Capacity (percent of 1967 output) Utilization rate (percent) 1 Manufacturing 141.5 148.6 151.3 152.4 186.4 187.9 189.4 190.9 75.9 79.1 79.9 79.8 2 Primary processing 139.7 152.7 157.5 156.6 191.2 192.5 193.8 195.0 73.1 79.3 81.3 80.3 3 Advanced processing 142.3 146.2 148.1 150.2 183.8 185.5 187.1 188.7 77.4 78.8 79.1 79.6 4 Materials 139.2 149.4 154.2 153.4 185.1 186.4 187.6 188.9 75.2 80.1 82.2 81.2 5 Durable goods 131.4 144.3 150.9 152.3 189.5 190.6 191.8 192.9 69.3 75.7 78.7 78.9 6 Metal materials 87.3 109.4 117.5 112.7 141.22 141.3 141.5 141.7 61.8 77.4 83.0 79.5 7 Nondurable goods 163.2 176.3 179.2 178.7 203.4 205.3 207.3 209.2 80.2 85.9 86.5 85.4 8 Textile, paper, and chemical 167.0 183.7 186.7 186.3 212.6 214.9 217.1 219.4 78.5 85.5 86.0 84.9 9 Textile 113.2 113.7 114.8 114.6 139.4 139.7 140.1 140.6 81.2 81.4 81.9 81.5 10 Paper 143.6 149.7 151.4 151.0 157.2 158.5 159.7 160.7 91.3 94.5 94.8 93.9 11 Chemical 200.0 228.2 232.7 232.2 267.1 270.5 274.1 277.5 74.9 84.3 84.9 83.7 12 Energy materials 128.4 128.2 130.9 125.0 152.3 152.8 153.5 154.2 84.4 83.9 85.3 81.0 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Labor Market A47 2.11 Continued Previous cycle1 Latest cycle2 1980 1980 1981 « • High Low High Low July Dec. Jan. Feb. Mar. Apr. May June July Capacity utilization rate (percent) 13 Manufacturing 88.0 69.0 87.2 74.9 74.9 79.8 80.0 79.8 79.8 79.8 80.0 79.7 79.8 14 Primary processing 93.8 68.2 90.1 71.0 71.0 80.9 81.5 81.5 80.8 80.7 80.6 79.6 79.8 15 Advanced processing 85.5 69.4 86.2 77.2 77.2 79.2 79.2 79.0 79.2 79.4 79.8 79.6 79.7 16 Materials 92.6 69.4 88.8 73.8 73.8 81.4 82.1 82.3 82.1 81.1 81.2 81.4 81.7 17 Durable goods 91.5 63,6 88.4 68.2 68.2 77.1 78.4 78.5 79.2 78.8 79.2 78.8 79.1 18 Metal materials 98.3 68.6 96.0 59.6 59.6 80.3 81.9 83.2 83.9 79.9 80.3 78.4 78.2 19 Nondurable goods 94.5 67.2 91.6 77.5 77.5 87.2 87.3 86.8 85.4 85.9 85.6 84.7 84.1 20 Textile, paper, and chemical.... 95.1 65.3 92.2 75.3 75.3 87.1 86.7 86.3 85.0 85.5 85.4 84.0 83.4 21 Textile 92.6 57.9 90.6 80.9 80.9 80.2 82.0 82.2 81.5 81.9 81.7 80.8 81.2 22 Paper 99.4 72.4 97.7 89.3 89.3 95.0 94.5 94.5 95.3 94.9 93.9 93.0 92.3 23 Chemical 95.5 64.2 91.3 70.7 70.7 86.8 86.0 85.3 83.4 84.1 84.3 82.7 81.8 24 Energy materials 94.6 84.8 88.3 82.7 84.4 84.6 84.9 85.8 85.2 79.9 79.8 83.4 85.7 1. Monthly high 1973; monthly low 1975. 2. Preliminary; monthly highs December 1978 through January 1980; monthly lows July 1980 through October 1980. 2.12 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data are seasonally adjusted. Exceptions noted. 1981 CCaatteeggoorryy 11997788 11997799 11998800 Feb. Mar. Apr. May June July Aug. HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 161,058 163,620 166,246 167,747 167,902 168,071 168,272 168,480 168,685 168,855 2 Labor force (including Armed Forces)1 ... 102.537 104,996 106,821 107,802 108,305 108,851 109,533 108,307 108,603 108,762 3 Civilian labor force 100,420 102,908 104,719 105,681 106,177 106,722 107,406 106,176 106,464 106,602 4 Nonagricultural industries2 91,031 93,648 93,960 94,646 95.136 95,513 95,882 95,127 95,704 95,574 5 Agriculture 3,342 3,297 3,310 3,281 3,276 3,463 3,353 3,265 3,258 3,370 Unemployment 6 Number 6,047 55,,996633 7,448 7,754 7,764 7,746 8,171 7,784 7,502 7,657 7 Rate (percent of civilian labor force) . 6.0 5.8 7.1 7.3 7.3 7.3 7.6 7.3 7.0 7.2 8 Not in labor force 58,521 58,623 59,425 59,946 59,598 59,219 58,739 60,173 60,082 60.093 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 86,697 89,823 90,564 91,258 91,347 91,458 91,564 91,615r 91,966r 92,027 10 Manufacturing 20,505 21,040 20.300 20,177 20,171 20,332 20,414 20,424R 20,547R 20,515 11 Mining 851 958 1,020 1,091 1,098 950 957 L,110R 1,131R 1,149 12 Contract construction 4.229 4,463 4,399 4,389 4,416 4,418 4,334 4,284R 4,269R 4,265 13 Transportation and public utilities 4,923 5,136 5.143 5,135 5,139 5,161 5,148 5,149R 5,161' 5,179 14 Trade 19,542 20,192 20,386 20,600 20,635 20,636 20,714 20,717R 20,794'' 20,863 15 Finance 4.724 4,975 5,168 5,283 5,293 5,316 5,326 5,331R 5,346R 5,355 16 Service 16,252 17,112 17,901 18,343 18,371 18,475 18,540 18,560R 18,653'" 18,688 17 Government 15,672 15,947 16,249 16,240 16.204 16,170 16,131 16,040R 16,065' 16,013 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 workfigures. Based on data from Employment and Earnings (U.S. Department of La- ers, 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 • September 1981 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value Monthly data are seasonally adjusted. 1967 1980 1980 1981 Grouping pro- averp ti o o r n - age Aug.r Sept/ Oct/ Nov.' Decr Jan.' Feb/ Mar.' Apr/ May' June JulyP Aug/ Index (1967 = 100) MAJOR MARKET 1 Total index 100.00 147.0 142.2 144.4 146.6 149.2 150.4 151.4 151.8 152.1 151.9 152.7 152.9 153.4 152.8 2 Products 60.71 146.7 144.5 145.6 147.1 148.7 149.4 149.9 150.2 150.7 151.3 152.3 152.2 152.4 151.9 3 Final products 47.82 145.3 143.3 144.1 145.7 147.4 147.8 147.8 148.2 149.0 149.9 151.3 151.5 151.6 151.1 4 Consumer goods 27.68 145.4 142.9 144.5 146.3 148.1 147.1 146.9 147.8 148.3 148.9 150.7 150.4 150.0 148.5 5 Equipment 20.14 145.2 143.7 143.6 144.8 146.5 148.8 149.1 148.7 150.0 151.4 152.1 153.0 153.9 154.6 6 Intermediate products 12.89 151.9 148.9 151.2 152.4 153.4 155.4 157.5 157.7 157.1 156.3 156.1 155.0 155.3 155.1 7 Materials 39.29 147.6 138.8 142.5 145.9 150.1 152.2 153.8 154.3 154.4 152.9 153.4 154.0 155.0 154.3 Consumer goods 8 Durable consumer goods 7.89 136.7 128.3 133.5 139.0 143.4 141.3 140.1 141.2 143.6 144.3 147.3 148.0 146.8 141.4 9 Automotive products 2.83 132.8 120.7 131.2 140.9 146.1 139.0 130.4 133.9 139.2 142.9 151.8 153.0 147.8 137.3 10 Autos and utility vehicles.... 2.03 110.1 93.1 106.5 119.2 125.4 116.2 102.7 108.5 116.1 120.2 129.1 131.4 123.0 108.7 11 Autos 1.90 103.6 90.1 98.9 109.7 115.4 105.9 93.3 101.1 107.8 113.2 120.0 122.2 118.1 104.9 12 Auto parts and allied goods.. 80 190.4 190.9 193.9 196.1 198.6 197.0 200.8 198.4 197.5 200.8 209.5 208.0 210.9 210.0 13 Home goods 5.06 138.9 132.6 134.7 137.8 141.8 142.6 145.6 145.2 146.1 145.0 144.8 145.1 146.3 143.7 14 Appliances, A/C, and TV . .. 1.40 117.3 113.5 115.8 122.2 128.4 126.4 132.2 125.8 129.1 121.2 121.4 119.5 123.6 116.1 15 Appliances and TV 1.33 119.5 114.2 117.1 124.5 131.0 128.7 134.1 128.2 131.2 122.6 122.3 120.9 124.7 16 Carpeting and furniture 1.07 155.2 142.1 147.8 150.2 154.1 157.3 156.2 160.4 160.2 165.2 163.1 166.3 166.1 17 Miscellaneous home goods... 2.59 143.8 139.0 139.6 141.2 144.0 145.4 148.4 149.5 149.4 149.7 149.9 150.3 150.4 149.8 18 Nondurable consumer goods 19.79 148.9 148.7 148.9 149.3 150.0 149.3 149.6 150.5 150.1 150.7 152.1 151.4 151.2 151.4 19 Clothing 4.29 126.0 125.6 123.5 122.5 125.5 121.0 121.2 120.9 118.9 120.6 122.1 120.7 20 Consumer staples 15.50 155.2 155.2 156.0 156.7 156.7 157.2 157.5 158.6 158.8 159.0 160.3 159.9 159.8 160.0 21 Consumer foods and tobacco 8.33 147.4 146.3 147.5 148.9 149.1 149.0 149.3 150.5 150.5 150.2 151.3 149.9 150.0 22 Nonfood staples 7.17 164.3 165.4 165.8 165.8 165.6 166.6 167.0 168.1 168.4 169.3 170.8 171.4 171.3 172.1 23 Consumer chemical products 2.63 208.9 210.3 211.1 211.1 211.0 213.8 213.0 219.3 220.0 224.1 225.1 224.4 225.5 24 Consumer paper products . 1.92 123.1 122.6 122.2 125.8 128.3 127.7 127.9 129.0 128.7 127.4 127.7 129.7 128.7 25 Consumer energy products 2.62 149.8 151.8 152.2 149.6 147.3 147.8 149.4 145.4 143.7 144.9 147.9 148.9 148.1 26 Residential utilities 1.45 167.9 173.8 173.8 169.6 166.0 166.2 167.5 161.3 161.1 162.9 168.9 170.4 Equipment 27 Business 12.63 173.2 171.1 170.7 171.9 173.9 177.1 177.7 177.5 179.3 181.0 182.0 183.5 184.5 185.4 28 Industrial 6.77 156.5 155.4 154.0 153.5 155.3 159.1 161.5 163.4 164.6 165.9 167.0 168.9 169.4 170.3 29 Building and mining 1.44 239.9 243.8 242.5 242.8 247.9 253.3 264.0 270.4 276.6 281.7 286.4 288.6 290.8 292.4 30 Manufacturing 3.85 128.2 125.5 124.0 123.1 124.3 128.5 127.7 128.4 128.6 128.5 128.4 130.6 130.9 131.5 31 Power 1.47 148.9 147.0 145.9 145.4 145.3 146.5 149.1 149.9 149.3 149.9 150.8 151.5 151.1 152.0 32 Commercial transit, farm 5.86 192.4 189.2 189.9 193.1 195.4 198.0 196.6 193.7 196.2 198.6 199.4 200.4 202.0 202.8 33 Commercial 3.26 237.8 235.6 237.6 242.0 244.8 248.5 249.3 250.4 252.7 254.5 258.0 259.9 263.1 265.6 34 Transit 1.93 139.9 137.6 134.6 135.6 137.5 139.0 133.1 124.8 127.8 131.5 130.0 129.7 128.7 126.9 35 Farm 67 123.1 112.3 116.8 120.9 121.9 122.4 122.9 116.4 118.5 119.7 113.9 114.9 115.5 36 Defense and space 7.51 97.7 98.1 99.2 100.3 101.0 100.9 100.5 100.7 101.5 102.0 101.7 102.4 102.9 Intermediate products 37 Construction supplies 6.42 140.9 134.1 138.5 140.6 142.6 145.2 148.4 148.9 149.0 147.9 146.5 143.6 143.2 142.9 38 Business supplies 6.47 162.8 163.6 163.7 164.1 164.2 165.5 166.6 166.4 165.1 164.7 165.6 166.3 167.3 39 Commercial energy products... 1.14 172.3 173.4 174.0 173.2 174.0 175.4 175.5 174.0 174.7 175.2 179.0 178.0 177.8 Materials 40 Durable goods materials 20.35 143.0 131.3 133.9 139.5 146.1 147.4 150.0 150.6 152.2 151.8 152.8 152.3 153.1 152.5 41 Durable consumer parts 4.58 107.8 96.8 102.8 108.3 113.1 113.8 114.7 114.3 118.4 119.7 121.1 123.0 123.1 120.9 42 Equipment parts 5.44 187.2 176.3 176.6 179.1 184.2 186.1 189.7 188.9 191.1 192.8 194.0 193.1 194.5 195.1 43 Durable materials n.e.c 10.34 135.3 122.8 125.2 132.4 140.6 142.0 144.7 146.6 146.7 144.3 145.1 143.8 144.5 144.2 44 Basic metal materials 5.57 105.3 89.9 91.4 100.7 114.7 114.3 116.6 118.6 118.3 113.8 114.3 112.3 112.5 45 Nondurable goods materials 10.47 171.5 161.3 171.3 174.3 175.1 179.6 180.2 179.9 177.5 179.3 179.0 177.9 177.0 177.1 46 Textile, paper, and chemical materials 7.62 177.7 164.8 176.5 180.8 182.4 187.6 187.6 187.3 185.1 186.8 187.3 184.8 184.1 184.5 47 Textile materials 1.85 117.4 112.7 114.3 113.7 115.2 112.2 114.8 115.1 114.4 115.1 114.9 113.7 114.4 48 Paper materials 1.62 145.6 142.6 148.0 148.6 149.5 151.1 150.5 151.0 152.6 152.2 150.9 149.8 149.0 49 Chemical materials 4.15 217.2 196.7 215.3 223.4 225.2 235.9 234.7 233.8 229.5 232.4 233.9 230.4 228.9 50 Containers, nondurable 1.70 165.9 160.0 169.7 168.9 166.5 169.9 173.0 172.3 168.7 172.0 167.8 172.1 171.0 51 Nondurable materials n.e.c. ... 1.14 138.2 139.7 139.0 138.4 139.2 139.7 141.0 141.8 139.6 139.7 140.5 140.0 138.9 52 Energy materials 8.48 129.3 129.3 127.6 126.2 128.9 129.6 130.2 131.6 130.9 123.1 123.0 128.8 132.5 130.3 53 Primary energy 4.65 115.2 115.4 114.1 113.9 114.4 116.0 115.8 118.2 116.9 104.2 104.4 113.1 119.5 54 Converted fuel materials 3.82 146.5 146.2 144.2 141.3 146.5 146.1 147.8 148.0 148.1 146.1 145.5 147.9 148.3 Supplementary groups 55 Home goods and clothing 9.35 133.0 129.4 129.6 130.8 134.3 132.7 134.4 134.1 133.6 133.8 134.4 133.9 134.3 133.0 56 Energy, total 12.23 137.7 138.2 137.2 135.6 137.0 137.7 138.5 138.5 137.7 132.6 133.5 137.7 140.1 138.9 57 Products 3.76 156.6 158.3 158.8 156.8 155.4 156.1 157.3 154.0 153.1 154.1 157.3 157.7 157.1 58 Materials 129.3 129.3 127.6 126.2 128.9 129.6 130.2 131.6 130.9 123.1 123.0 128.8 132.5 130.3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Output A49 2.13 Continued 1967 SIC pro- 1980 Grouping code por- avg. tion Aug.' Sept.' Oct.r Nov.r Dec Jan.r Feb.r Mar.f Apr.r Mayr Juner July'' Aug Index (1967 = 100) MAJOR INDUSTRY 1 Mining and utilities 12.05 149.5 149.9 149.5 148.9 151.5 152.4 153.3 154.1 154.8 150.5 152.1 155.8 157.8 157.1 2 Mining 6.36 132.7 129.6 130.7 132.1 135.1 138.6 140.4 143.1 143.2 135.2 135.4 141.0 145.6 145.2 3 Utilities 5.69 168.3 172.6 170.6 167.7 169.9 167.9 167.6 166.4 167.8 167.6 170.7 172.5 171.3 170.3 4 Electric 3.88 189.7 196.6 193.7 189.6 192.6 189.5 189.3 187.1 188.9 188.6 192.9 195.4 193.0 191.9 5 Manufacturing 87.95 146.7 141.2 143.9 146.5 148.9 150.4 151.1 151.2 151.6 152.0 152.8 152.5 153.0 152.5 6 Nondurable 35.97 161.2 157.6 161.0 162.1 163.0 165.0 165.6 166.2 165.3 165.9 166.4 166.0 166.9 167.0 7 Durable 51.98 136.7 129.9 132.1 135.7 139.2 140.3 141.0 140.8 142.1 142.5 143.5 143.1 143.5 142.4 Mining 8 Metal 10 .51 109.2 71.2 72.8 90.8 107.2 122.2 125.5 134.1 131.1 123.1 125.0 120.2 116.0 9 Coal 11.12 .69 146.7 153.0 149.1 149.7 151.7 153.5 147.5 159.0 151.2 75.9 77.0 122.9 168.5 163.9 10 Oil and gas extraction 13 4.40 133.3 133.4 134.7 134.5 136.1 138.4 141.4 142.2 144.1 146.1 146.2 147.6 147.6 148.0 11 Stone and earth minerals.... 14 .75 132.8 125.3 129.7 129.8 132.7 137.4 138.4 140.0 138.8 133.7 132.2 132.7 133.3 Nondurable manufactures 12 Foods 20 8.75 149.6 148.7 149.9 151.1 151.6 151.0 151.9 152.5 152.4 151.9 152.2 150.8 151.6 13 Tobacco products 21 .67 119.9 118.7 119.7 123.6 123.5 118.8 123.5 125.4 125.7 122.2 122.3 120.1 14 Textile mill products 22 2.68 138.6 134.8 133.2 134.3 136.4 135.6 138.4 139.3 136.2 138.9 138.8 138.5 137.7 15 Apparel products 23 3.31 127.0 125.5 123.5 121.7 125.7 122.7 123.8 121.6 120.2 121.6 122.6 121.1 16 Paper and products 26 3.21 151.1 146.8 153.6 153.4 154.3 157.0 156.5 156.0 157.6 157.0 155.9 153.4 154.9 155.2 17 Printing and publishing 27 4.72 139.6 141.7 140.9 142.5 142.1 143.0 143.9 144.8 142.7 141.6 141.3 143.3 144.4 144.8 18 Chemicals and products 28 7.74 207.1 198.2 208.2 209.4 211.7 220.5 218.9 219.8 218.5 219.8 220.6 219.7 221.2 19 Petroleum products 29 1.79 132.9 124.4 129.0 128.(1 128.6 131.3 133.1 131.5 130.3 130.0 129.8 129.3 129.0 131.2 20 Rubber and plastic products. 30 2.24 235.7 243.3 254.5 258.8 258.9 262.3 264.0 270.2 269.5 275.2 280.3 285.8 286.4 21 Leather and products 31 .86 70.1 67.9 67.5 70.1 71.0 67.9 68.9 68.3 68.8 68.9 69.8 68.9 69.4 Durable manufactures 22 Ordnance, private and 82.2 government 19.91 3.64 78.5 78.1 78.9 79.4 79.7 79.6 78.6 78.4 78.5 79.8 80.9 80.9 81.0 23 Lumber and products 24 1.64 119.3 120.2 121.6 121.4 123.7 123.6 127.4 126.2 125.6 126.3 126.2 122.5 121.3 24 Furniture and fixtures 25 1.37 150.0 140.8 144.5 146.7 147.6 148.6 150.0 154.3 155.6 158.7 158.9 161.0 161.6 25 Clay, glass, stone products .. 32 2.74 147.5 137.1 143.8 146.2 148.8 153.0 156.8 156.4 154.6 154.3 151.7 148.1 148.0 26 Primary metals 33 6.57 102.3 86.9 90.6 99.6 113.2 111.5 114.1 114.5 114.9 110.6 111.9 107.2 108.3 107.5 27 Iron and steel 331.2 4.21 92.4 76.0 80.4 92.(1 107.6 103.0 108.7 108.4 108.0 103.4 105.6 98.5 99.7 28 Fabricated metal products... 34 5.93 134.1 124.8 128.8 131.7 132.3 135.7 135.8 137.6 139.2 139.5 138.4 139.2 139.4 138.4 29 Nonelectrical machinery 35 9.15 162.8 159.6 159.5 160.9 162.9 166.9 167.3 168.3 169.2 169.7 172.1 173.8 176.0 177.2 30 Electrical machinery 36 8.05 172.8 166.8 167.4 169.8 173.0 175.1 177.6 174.9 177.4 178.8 179.9 180.1 181.9 181.3 31 Transportation equipment. . . 37 9.27 116.9 108.5 113.3 118.3 121.8 120.4 117.4 116.1 119.5 121.3 123.7 123.4 120.1 115.0 32 Motor vehicles and parts. . 371 4.50 119.0 104.1 113.7 123.2 129.2 125.7 120.0 119.9 127.1 130.7 136.4 137.5 131.0 121.0 33 Aerospace and miscellaneous transportation equipment 372-9 4.77 114.9 112.7 112.8 113.7 114.9 115.4 114.9 112.6 112.3 112.4 111.8 110.2 109.8 109.3 34 Instruments 38 2.11 171.1 168.6 168.1 169.6 170.0 171.9 173.9 171.1 170.0 170.0 170.6 171.3 173.6 174.5 35 Miscellaneous manufactures . 39 1.51 148.3 145.5 144.6 145.0 147.1 151.0 152.9 154.9 155.4 157.3 157.0 159.6 161.3 159.8 Gross value (billions of 1972 dollars, annual rates) MAJOR MARKET 36 Products, total 507.41 601.9 587.3 597.1 604.0 611.8 612.4 612.9 614.5 618.0 616.2 622.2 620.7 618.6 611.8 37 Final 390.91 465.2 453.4 461.1 467.0 473.5 472.6 471.6 472.8 476.4 476.3 482.4 482.0 480.0 473.2 38 Consumer goods . 277.51 313.3 304.8 311.8 315.8 320.7 317.7 316.8 318.8 320.5 320.0 324.3 323.7 322.3 316.4 39 Equipment 113.41 152.0 148.6 149.2 151.2 152.9 154.9 154.8 154.0 155.9 156.3 158.1 158.3 157.8 156.7 40 Intermediate 116.61 136.7 133.9 136.0 137.1 138.3 139.8 141.2 141.7 141.7 139.9 139.8 138.7 138.6 138.6 1. 1972 dollar value. NOTE. Published groupings include some series and subtotals not shown separately. For description and historical data, see Industrial Production—1976 Revision (Board of Governors of the Federal Reserve System: Washington, D.C.), December 1977. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics • September 1981 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates except as noted. 1980 1981 IItteemm 11997788 11997799 11998800 Dec. Jan. Feb. Mar. Apr.r May' June July Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,801 1,552 1,191 1,249 1,214 1,165 1,153 1,186 1,167 963 r 924 2 1-family 1,183 981 710 753 715 677 678 689 654 567 522 3 2-or-more-family 618 571 481 496 499 488 475 497 513 396 402 4 Started 2,020 1,745 1,292 1,535 1,660 1,215 1,297 1,332 USS' 1,021 1,055 5 1-family 1,433 1,194 852 974 993 791 838 897 764 679 691 6 2-or-more-family 587 551 440 561 667 424 459 435 394 342 364 7 Under construction, end of period1 1,310 1,140 896 915 940 938 927 r 913 897 860 n.a. 8 1-family 765 639 515 535 544 541 533 526 507 485 n.a. 9 2-or-more-family 546 501 382 381 397 397 394r 388 389 374 n.a. 10 Completed 1,868 1,855 1,502 1,373 1,252 1,389 1,362r 1,519 1,260 1,368 n.a. 11 1-family 1,369 1,286 957 895 903 965 880r 964 867 859 n.a. 12 2-or-more-family 498 569 545 478 349 424 482 555 393 509 n.a. 13 Mobile homes shipped 276 277 222 261 233 256 255 265 255 246 n.a. Merchant builder activity in 1-family units 14 Number sold 818 709 530 514 523 500 507 451r 479r 410r 420 lb Number for sale, end of period1 419 402 340 336 329 334 325 327 324 313 306 Price (thousands of dollars)2 Median 16 Units sold 55.8 62.7 64.9 67.2 67.9 65.8 67.1 68.4 71.5 69.7r 69.8 17 Units sold 62.7 71.9 76.6 81.5 80.2 80.1 81.2 82.9r 83.9 85.9 83.6 EXISTING UNITS (1-family) 18 Number sold 3,863 3,701 2,881 2,910 2,580 2,560 2,490 2,610 2,500 2,660 2,520 Price of units sold (thous. of dollars)2 1199 Median 48.7 55.5 62.1 63.0 64.5 64.1 64.4 65.3 66.3 67.7r 67.5 20 Average 55.1 64.0 72.7 74.0 76.1 75.7 76.2 77.3 78.6 79.9 79.1 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 205,559 230,781 230,273 245,433 259,049 254,458 250,274 248,904 239,693r 238,673 r 235,144 22 Private 159,664 181,690 174,896 187,875 193,877 193,155 189,641 192,465 188,204 186,936 185,088 23 Residential 93,423 99,032 87,260 98,898 100,686 99,684 96,266 98,287 94,233 91,441 87,878 24 Nonresidential, total 66,241 82,658 87,636 88,977 93,191 9933,,447711 9933,,337755 9944,,117788 9933,,997711 9955,,449955 9977,,221100 Buildings 2255 Industrial 10,993 14,953 13,839 14,293 15,339 15,094 15,380 15,505 15,503' 16,243'' 16,336 26 Commercial 25,137' 34,381r 43,260r 45,294r 48,459r 49,359' 49,448' 33,394 32,391 32,442 33,687 27 Other 6,739 7,427 8,654 9,268 9,891 9,938 9,588 9,196 8,903 9,735 9,179 28 Public utilities and other 23,372' 25,897' 21,883'' 20,122' 19,502r 19,080r 18,959' 36,083 37,174 37,075 38,008 29 Public 45,896 49,088r 55,371r 57,558 65,173 61,302 60,632' 56,439 51,489 51,737 50,056 30 Military 1,501 1,648 1,880 1,743 1,810 2,173 1,685 1,915 1,752 1,836 1,776 31 Highway 10,708 11,998 13,784 13,127 19,428r 17,832r 16,200' 15,099' 12,419 13,338 12,430 32 Conservation and development 4,457 4,586 5,089 5,383 6,285 6,168 5,565 5,681 4,894 4,912 5,192 33 Other 29,230 30,856' 34,618' 37,305 37,650 35,129 37,182 33,744 32,424 31,651 30,658 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 comparable and seasonally adjusted by the Census Bureau, and (b) sales and prices of existing with data in prior periods due to changes by the Bureau of the Census in its units, which are published by the National Association of Realtors. All back and estimating techniques. For a description of these changes see Construction Reports current figures are available from originating agency. Permit authorizations are (C-30-76-5), issued by the Bureau in July 1976. those reported to the Census Bureau from 16,000 jurisdictions beginning with 1978. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Prices A51 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data, except as noted 12 months to 3 months (at annual rate) to 1 month to IIInnndddeeexxx llleeevvveeelll JJJuuulllyyy IIIttteeemmm 1980 1981 1981 111999888111 11998800 11998811 (((111999666777 JJuullyy JJuullyy === 111000000)))>>> Sept. Dec. Mar. June Mar. Apr. May June July CONSUMER PRICES2 1 All items 13.2 10.7 7.8 13.2 9.6 7.4 .6 .4 .7 .7 1.2 274.4 2 Commodities 11.2 8.9 13.2 11.0 8.9 2.1 .5 .0 .2 .4 .8 255.0 3 Food 7.6 8.4 19.7 13.1 2.1 -.1 .4 .0 -.2 .2 .8 276.2 4 Commodities less food 12.8 9.2 10.6 9.9 12.3 3.1 .5 .0 .4 .4 .7 242.6 5 Durable 8.9 9.4 15.2 11.8 -.7 9.0 -.1 .3 .9 1.0 1.2 229.6 6 Nondurable 17.7 8.8 5.0 6.2 29.8 -2.0 1.3 -.2 -.2 .1 .1 257.5 7 Services 16.1 13.4 .7 16.8 10.3 15.1 .8 1.0 1.4 1.2 1.8 308.8 8 Rent 9.2 8.2 8.6 9.6 7.0 7.7 .5 .6 .8 .4 .5 207.8 9 Services less rent 17.1 14.1 -.3 17.8 10.9 16.1 .8 1.0 1.5 1.3 2.0 328.1 Other groupings 1U All items less food 14.4 11.3 5.7 13.2 11.7 9.0 .7 .5 .9 .8 1.3 272.7 11 All items less food and energy 12.4 11.1 5.8 14.4 5.8 11.8 .4 .6 1.1 1.0 1.4 259.0 12 Homeownership 19.9 13.5 -3.5 23.1 3.1 16.9 .3 .7 1.7 1.5 2.1 358.0 PRODUCER PRICES 13 Finished goods 14.6 8.8 13.5 8.3 13.3' 5.8' 1.2' .8 .1' .6 .4 271.3 14 Consumer 15.6 8.4 14.5 7.4 13.6' 4.9' 1.3' .8 -.1' .5 .3 272.6 15 Foods 7.5 6.3 31.0 4.3 1.6' .5' 1.0' -.1' .-.2' .5 1.5 256.9 16 Excluding foods 19.8 9.1 7.5 8.9 18.6' 6.6 1.5' 1.1 .0' .5 -.1 277.1 17 Capital equipment 10.9 10.4 9.9 11.8 12.0' 10.1' .7 .9 .8' .7 .7 265.7 18 Intermediate materials3 15.4 10.2 7.8 12.9 14.3' 7.4' 1.3' 1.0' .5' .3 .5 312.8 Crude materials 19 Nonfood 18.5 23.9 32.3 27.5 39.7' 6.5' - ,4R 1.3' .8' -.5 .8 484.2 20 Food 3.9 1.4 73.9 -4.0 -23.1 8.5 -2.0 1.5 -2.2 2.8 .3 267.0 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 • September 1981 2.16 GROSS NATIONAL PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates. 1980 1981 1978 Q2 Q3 Q4 Ql GROSS NATIONAL PRODUCT 1 Total 2,156.1 2,413.9 2,626.1 2,564.8 2,637.3 2,730.6 2,853.0 By source 2 Personal consumption expenditures. 1,348.7 1,510.9 1,672.8 1,626.8 1,682.2 1,751.0 1,810.0 3 Durable goods 199.3 212.3 211.9 194.4 208.8 223.3 238.3 4 Nondurable goods 529.8 602.2 675.7 664.0 674.2 703.5 726.0 5 Services 619.6 696.3 785.2 768.4 799.2 824.2 845.8 6 Gross private domestic investment .. 375.3 415.8 395.3 390.9 377.1 397.7 437.1 7 Fixed investment 353.2 398.3 401.2 383.5 393.2 415.1 432.7 8 Nonresidential 242.0 279.7 296.0 289.8 294.0 302.1 315.9 9 Structures 78.7 96.3 108.8 108.4 107.3 111.5 117.2 0 Producers' durable equipment 163.3 183.4 187.1 181.4 186.8 190.7 198.7 1 Residential structures 111.2 118.6 105.3 93.6 99.2 113.0 116.7 2 Nonfarm 106.9 113.9 100.3 88.9 94.5 107.6 111.4 13 Change in business inventories. 22.2 17.5 -5.9 7.4 -16.0 -17.4 4.5 14 Nonfarm 21.8 13.4 -4.7 6.1 -12.3 -14.0 6.8 15 Net exports of goods and services . -0.6 13.4 23.3 17.1 44.5 23.3 29.2 16 Exports 219.8 281.3 339.8 333.3 342.4 346.1 367.4 17 Imports 220.4 267.9 316.5 316.2 297.9 322.7 338.2 18 Government purchases of goods and services . 432.6 473.8 534.7 530.0 533.5 558.6 576.5 19 Federal 153.4 167.9 198.9 198.7 194.9 212.0 221.6 20 State and local 279.2 305.9 335.8 331.3 338.6 346.6 354.9 By major type of product 21 Final sales, total 2,133.9 2,396.4 2,632.0 2,557.4 2.653.4 2,748.0 2,848.5 22 Goods 946.6 1,055.9 1,130.4 1,106.4 1,129.4 1,169.0 1,247.5 23 Durable 409.8 451.2 458.6 444.6 456.5 476.7 501.4 24 Nondurable 536.8 604.7 671.9 661.8 672.9 692.2 746.1 25 Services 976.3 1,097.2 1.229.6 1,205.6 1,249.0 1,285.3 1,317.1 26 Structures 233.2 260.8 266.0 252.8 258.9 276.4 288.4 27 Change in business inventories. 22.2 17.5 -5.9 7.4 -16.0 -17.4 4.5 28 Durable goods 17.8 11.5 -4.0 3.3 -8.4 .7 -4.2 29 Nondurable goods 4.4 6.0 -1.8 4.1 -7.7 -18.1 30 MEMO: Total GNP in 1972 dollars 1,436.9 1,483.0 1.480.7 1,463.3 1,471.9 1,485.6 1,516.4 NATIONAL INCOME 31 Total 1,745.4 1,963.3 2.121.4 2,070.0 2,122.4 2,204.8 2,291.1 32 Compensation of employees 1.299.7 1,460.9 1.596.5 1,569.0 1,597.4 1,661.8 1,722.4 33 Wages and salaries 1,105.4 1,235.9 1.343.6 1,320.4 1.342.3 1,397.3 1,442.9 34 Government and government enterprises.. . 219.6 235.9 253.6 250.5 253.9 263.3 267.1 35 Other 885.7 1,000.0 1,090.0 1,069.9 1.088.4 1,134.0 1,175.7 36 Supplement to wages and salaries 194.3 225.0 252.9 248.6 255.0 264.5 279.5 37 Employer contributions for social insurance 92.1 106.4 115.8 113.6 116.0 121.0 131.5 38 Other labor income 102.2 118.6 137.1 135.1 139.1 143.5 148.0 39 Proprietors' income1 117.1 131.6 130.6 124.9 129.7 134.0 132.1 40 Business and professional1 91.0 100.7 107.2 101.6 107.6 111.6 113.2 41 Farm1 26.1 30.8 23.4 23.3 22.1 22.5 18.9 42 Rental income of persons2 27.4 30.5 31.8 31.5 32.0 32.4 32.7 43 Corporate profits1 199.0 196.8 182.7 169.3 177.9 183.3 203.0 44 Profits before tax3 223.3 255.4 245.5 217.9 237.6 249.5 257.0 45 Inventory valuation adjustment . -24.3 -42.6 -45.7 -31.1 -41.7 -48.4 -39.2 46 Capital consumption adjustment -13.5 -15.9 -17.2 -17.6 -17.9 -17.8 -14.7 47 Net interest 115.8 143.4 179.8 175.3 185.3 193.3 200.8 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.49. 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. 1980 1981 AAccccoouunntt 11997788 11997799 11998800 Q2 Q3 Q4 Q1 Q2r PERSONAL INCOME AND SAVING 1 Total personal income 1,721.8 1,943.8 2,160.2 2,114.5 2,182.1 2,256.2 2,319.8 2,368.9 2 Wage and salary disbursements 1,105.2 1,236.1 1,343.7 1,320.4 1,341.8 1,397.8 1,442.9 1,466.2 3 Commodity-producing industries 389.1 437.9 465.4 456.0 446600..11 484.0 501.3 507.9 4 Manufacturing 299.2 333.4 350.7 343.2 334466..77 364.0 377.4 386.6 Distributive industries 270.5 303.0 328.9 323.2 329.2 340.6 351.9 357.5 6 Service industries 226.1 259.2 295.7 290.8 298.7 310.0 322.5 330.5 1 Government and government enterprises 219.4 236.1 253.6 250.5 253.9 263.3 267.1 270.8 8 Other labor income 102.2 118.6 137.1 135.1 139.1 143.5 148.0 151.8 9 Proprietors' income1 117.2 131.6 130.6 124.9 129.7 134.0 132.1 134.1 in Business and professional1 91.0 100.8 107.2 101.6 107.6 111.6 113.2 112.5 11 Farm1 26.1 30.8 23.4 23.3 22.1 22.5 18.9 21.7 12 Rental income of persons2 27.4 30.5 31.8 31.5 32.0 32.4 32.7 33.3 n Dividends 43.1 48.6 54.4 54.2 55.1 56.1 58.0 60.2 14 Personal interest income 173.2 209.6 256.3 253.6 261.8 269.7 288.7 301.9 15 Transfer payments 223.3 249.4 294.2 280.7 310.7 313.9 319.6 324.2 16 Old-age survivors, disability, and health insurance benefits 116.2 131.8 153.8 144.7 163.2 165.3 169.8 172.0 17 LESS: Personal contributions for social insurance 69.6 80.6 87.9 85.9 88.1 91.2 102.3 103.1 18 EQUALS: Personal income 1,721.8 1,943.8 2,160.2 2,114.5 2,182.1 2,256.2 2,319.8 2,368.9 19 LESS: Personal tax and nontax payments 258.8 302.0 338.5 330.3 341.5 359.2 372.0 382.7 20 EQUALS: Disposable personal income 1,462.9 1,641.7 1,821.7 1,784.1 1,840.6 1,897.0 1,947.8 1,986.2 21 LESS: Personal outlays 1,386.6 1,555.5 1,720.4 1,674.1 1,729.2 1,799.4 1,858.9 1,881.0 22 EQUALS: Personal saving 76.3 86.2 101.3 110.0 111.4 97.6 88.9 105.2 MEMO: Per capita (1972 dollars) 23 Gross national product 6,426 6,588 66,,550033 6,438 66,,445566 66,,449999 66,,661199 66,,556688 24 Personal consumption expenditures 4,046 4,135 4,108 4,044 4,082 4,142 4,191 4,163 25 Disposable personal income 4,389 4,493 4,473 4,435 4,468 4,488 4,511 4,515 26 Saving rate (percent) 5.2 5.2 5.6 6.2 6.1 5.1 4.6 5.3 GROSS SAVING 27 Gross saving 355.2 412.0 401.9 394.5 402.0 406.7 442.6 R 459.2 28 Gross private saving 355.4 398.9 432.9 435.9 446.5 436.4 451.1' 472.1 29 Personal saving 76.3 86.2 101.3 110.0 111.4 97.6 88.9 105.2 30 Undistributed corporate profits1 57.9 59.1 44.3 42.1 42.8 40.4 55.7' 50.2 31 Corporate inventory valuation adjustment -24.3 -42.6 -45.7 -31.1 -41.7 -48.4 -39.2 -23.2 Capital consumption allowances 37 Corporate 136.4 155.4 175.4 173.0 178.4 118833..22 118877..55 119944..66 33 Noncorporate 84.8 98.2 111.8 110.7 113.4 115.8 119.0 122.1 34 Wage accruals less disbursements .0 .0 .0 .0 .5 -.5 .0 0 35 Government surplus, or deficit ( —), national income and product accounts -0.2 11.9 -32.1 -29.6 -45.6 -30.8 -9.7' --1144..00 36 Federal -29.2 -14.8 -61.2 -66.5 -74.2 -67.9 -46.6' -50.0 37 State and local 29.0 26.7 29.1 23.9 28.6 37.1 36.9r 36.0 38 Capital grants received by the United States, net .0 1.1 1.1 1.1 1.1 1.1 i.r 1.1 39 Gross investment 361.6 414.1 401.2 392.5 405.0 400.1 446.0 452.3 40 Gross private domestic 375.3 415.8 395.3 390.9 377.1 397.7 437.1 455.8 41 Net foreign -13.8 -1.7 5.9 1.7 27.8 2.3 8.8r -3.5 42 Statistical discrepancy 6.4 2.2 -.7 -1.9 3.0 -6.6 3.4 -6.9 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 • September 1981 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data are seasonally adjusted except as noted. 1980 1981 Item credits or debits 1978 1979 QL Q2 Q3 Q4 Q1P 1 Balance on current account -14,075 1,414 3,723 -2,095 -545 4,975 1,390 3,087 2 Not seasonally adjusted -1,575 905 1,149 3,244 3,368 3 Merchandise trade balance2 -33,759 -27,346 -25,342 -10,126 -6,744 -2,902 -5,570 -4,602 4 Merchandise exports 142,054 184,473 223,966 54,898 55,667 56,252 57,149 61,117 5 Merchandise imports -175,813 -211,819 -249,308 -65,024 -62,411 -59,154 -62,719 -65,719 6 Military transactions, net 738 -1,947 -2,515 -918 -427 -455 -715 -701 7 Investment income, net3 21,400 33,462 32,762 9,836 6,518 8,154 8,257 8,869 8 Other service transactions, net 2,613 2,839 5,874 991 1,440 1,681 1,762 1,033 9 Remittances, pensions, and other transfers -1,884 -2,057 -2,397 -542 -545 -591 -720 -562 10 U.S. government grants (excluding military) -3,183 -3,536 -4,659 -1,336 -787 -912 -1,624 -950 11 Change in U.S. government assets, other than official reserve assets, net (increase, -) -4,644 -3,767 -5,165 -1,456 -1,187 -1,427 -1,094 -1,358 12 Change in U.S. official reserve assets (increase, -) 732 -1,132 -8,155 -3,268 -502 -1,109 -4,279 -4,529 13 Gold -65 -65 0 0 0 0 0 0 14 Special drawing rights (SDRs) 1,249 -1,136 -16 -1,152 -112 -261 1,285 -1,441 15 Reserve position in International Monetary Fund 4,231 -189 -1,667 -34 -99 -294 -1,240 -707 16 Foreign currencies -4,683 257 -6,472 -2,082 -554 -4,324 -2,381 17 Change in U.S. private assets abroad (increase, -)3 -57,158 -57,739 -71,456 -7,915 -24,152 -16,766 -22,622 -12,633 18 Bank-reportea claims -33,667 -26,213 -46,947 -1,203 -20,165 -12,440 -13,139 -11,163 19 Nonbank-reported claims -3,853 -3,026 -2,653 -1,083 92 343 -2,005 n.a. 20 U.S. purchase of foreign securities, net -3,582 -4,552 -3,310 -766 -1,369 -818 -356 -488 21 U.S. direct investments abroad, net3 -16,056 -23,948 -18,546 -4,863 -2,710 -3,851 -7,122 -982 22 Change in foreign official assets in the United States (increase, +) 33,561 -13,757 15,492 -7,462 -7,557 7,686 7,712 5,384 23 U.S. Treasury securities 23,555 -22,435 9,683 -5,357 -4,360 3,769 6,911 7,055 24 Other U.S. government obligations 666 463 2,187 801 250 549 587 454 25 Other U.S. government liabilities4 2,359 -133 636 -68 420 80 205 55 26 Other U.S. liabilities reported by U.S. banks 5,551 7,213 -159 -3,198 -1,676 1,823 -460 -3,009 27 Other foreign official assets5 1,4530 1,135 3,145 360 851 1,465 469 829 28 Change in foreign private assets in the United States (increase, +)? 30,187 52,703 34,769 14,971 -326 3,965 16,157 2,157 29 U.S. bank-reported liabilities 16,141 32,607 10,743 6,599 -4,509 916 7,737 -3,662 30 U.S. nonbank-reported liabilities 1,717 2,065 5,109 416 1,092 373 3,228 n.a. 31 Foreign private purchases of U.S. Treasury securities, net 2,178 4,820 2,679 3,300 -1,260 -254 893 1,405 32 Foreign purchases of other U.S. securities, net 2,254 1,334 5,384 2,435 468 241 2,240 2,449 33 Foreign direct investments in the United States, net3 .... 7,896 11,877 10,853 2,221 3,883 2,689 2,059 1,965 34 Allocation of SDRs 0 1,139 1,152 1,152 0 0 0 1,093 35 Discrepancy 11,398 21,140 29,640 6,073 18,151 2,676 2,736 6,799 36 Owing to seasonal adjustments -206 1,355 -3,291 2,139 -344 37 Statistical discrepancy in recorded data before seasonal adjustment 6,279 7,143 MEMO: Changes in official assets 38 U.S. official reserve assets (increase, ~) 732 -1,132 -8,155 -3,268 502 -1,109 -4,279 -4,529 39 Foreign official assets in the United States (increase, +) 31,202 -13,624 14,856 -7,394 7,137 7,606 7,507 5,329 40 Change in Organization of Petroleum Exporting Countries official assets in the United States (part of line 22 above) -1,137 5,543 12,744 4,617 4,115 1,024 41 Transfers under military grant programs (excluded from lines 4, 6, and 10 above) 236 305 635 155 125 211 1. Seasonal factors are no longer calculated for lines 12 through 41. 4. 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 data, shown in table 3.11, for reasons of coverage and timing; military exports 5. Consists of investments in U.S. corporate stocks and in debt securities of are excluded from merchandise data and are included in line 6. private corporations and state and local governments. 3. Includes reinvested earnings of incorporated affiliates. NOTE. Data are from Bureau of Economic Analysis, Survey of Current Business (U.S. Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Trade and Reserve Assets A55 3.11 U. S. FOREIGN TRADE Millions of dollars; monthly data are seasonally adjusted. 1981 IItteemm 11997788 11997799 11998800rr Jan. Feb. Mar Apr. May June July 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments .: 143,682 181,860 220,626 18,825 19,764 21,434 19,818 18,869 19,870 19,264 2 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 174,759 209,458 244,871 23,194 21,922 20,949 22.289 21.310 21,975 19,807 3 Trade balance -31,075 -27,598 -24,245 -4,369 -2,158 485 -2,471 -2,441 -2,105 -542 NOTE. The data in this table are reported by the Bureau of Census data on a account" in table 3.10, line 6). On the import side, additions are made for gold, free-alongside-ship (f.a.s.) value basis—that is, value at the port of export. Begin- ship purchases, imports of electricity from Canada and other transactions; military ning in 1981, foreign trade of the U.S. Virgin Islands is included in the Census payments are excluded and shown separately as indicated above. basis trade data; this adjustment has been made for all data shown in the table. The Census basis data differ from merchandise trade data shown in table 3.10. SOURCE. FT900 "Summary of U.S. Export and Import Merchandise Trade" U.S. International Transactions Summary, for reasons of coverage and timing. On (U.S. Department of Commerce, Bureau of the Census). the export side, the largest adjustments are: (a) the addition of exports to Canada not covered in Census statistics, and (b) the exclusion of military sales (which are combined with other military transactions and reported separately in the "service 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1981 TTyyppee 11997788 11997799 11998800 Feb. Mar. Apr. May June July Aug.? 1 Total1 18,650 18,956 26,756 29,682 30,410 29,693 29,395 29,582 28,870 29,265 2 Gold stock, including Exchange Stabilization Fund1 11,671 11,172 11.160 11,156 11,154 11.154 11,154 11,154 11,154 11,154 3 Special drawing rights2-3 1,558 2,724 2,610 3,633 3,913 3,712 3,652 3,689 3,717 3,739 4 Reserve position in International Monetary Fund2 1,047 1,253 2,852 3,110 3,448 3,576 3,690 3,988 4,157 4,341 5 Foreign currencies4-5 4,374 3.807 10,134 11,783 11,895 11,251 10,899 10,751 9,842 10,031 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 S867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; $710 million on Jan. 1, 3.22. 1972; $1,139 million on Jan. 1, 1979; $1,152 million on Jan. 1. 1980; and $1,093 2. Beginning July 1974, the IMF adopted a technique for valuing the SDR based million on Jan. 1, 1981; plus net transactions in SDRs. on a weighted average of exchange rates for the currencies of member countries. 4. Beginning November 1978, valued at current market exchange rates. From July 1974 through December 1980, 16 currencies were used; from January 5. Includes U.S. government securities held under repurchase agreement against 1981. 5 currencies have been used. The U.S. SDR holdings and reserve position receipt of foreign currencies, if any. 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 • September 1981 3.13 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data Millions of dollars, end of period 1980 1981 Asset account 1977 19781 1979 Dec. Jan. Feb. fvlar. Apr. May June? All foreign countries 1 Total, all currencies 258,897 306,795 364,233 397,516 397,683' 401,092' 410,087 410,765' 416,639 422,915 2 Claims on United States 11,623 17,340 32,302 28,459 29,534 31,923 30,256 34,519' 38,645 35,203 3 Parent bank 7,806 12,811 25,929 20,202 20,674r 21,369 18,781 23,086' 28,012 24,309 4 Other 3,817 4,529 6,373 8,257 8,860 10,554 11,475 11,433' 10,633 10,894 5 Claims on foreigners 238,848 278,135 317,175 351,435 350,343' 351,101 361,413 357,823' 358,997 368,667 6 Other branches of parent bank 55,772 70,338 79,661 76,574' 75,622r 75,514' 77,631' 76,781' 76,191 79,832 7 Banks 91,883 103,111 123,413 144,674' 144,821' 146,187' 150,576' 148,015' 148,582 154,758 8 Public borrowers2 14,634 23,737 26,072 27,845 27,841' 28,138 28,758 28,123' 27,713 27,806 9 Nonbank foreigners 76,560 80,949 88,029 102,342 102,059' 101,262' 104,448 104,904' 106,511 106,271 10 Other assets 8,425 11,320 14,756 17,622 17,806' 18,068' 18,418 18,423' 18,997 19,045 11 Total payable in U.S. dollars 193,764 224,940 267,711 290,017 292,746' 296,916' 302,851 307,064' 312,279 320,303 12 Claims on United States 11,049 16,382 31,171 27,190 28,278 30,660 29,063 33,306 37,403 33,949 13 Parent bank 7,692 12,625 25,632 19,896 20,382 21,107 18,566 22,839 27,709 24,039 14 Other 3,357 3,757 5,539 7,294 7,896 9,553 10,497 10,467 9,694 9,910 15 Claims on foreigners 178,896 203,498 229,118 253,647 254,877' 256,332 263,641 263,252' 263,871 275,208 16 Other branches of parent bank 44,256 55,408 61,525 58,295' 58,849' 57,921' 59,870' 59,498r 58,704 62,696 17 Banks 70,786 78,686 96,261 116.020' 116,920' 118,411' 121,455r 120,558' 121,554 128,124 18 Public borrowers2 12,632 19,567 21,629 23,458 23,269r 23,561 24,035 23,767 23,194 23,488 19 Nonbank foreigners 51,222 49,837 49,703 55,874 55,839' 56,439' 58,281 59,429' 60,419 60,900 20 Other assets 3,820 5,060 7,422 9,180 9,591' 9,924' 10,147 10,506' 11,005 11,146 United Kingdom 21 Total, all currencies 90,933 106,593 130,873 142,781 143,609 144,708 145,459 142,582 146,640 149,704 22 Claims on United States 4,341 5,370 11,117 7,508 7,727 9,126 9,413 8,518 10,382 9,640 23 Parent bank 3,518 4,448 9,338 5,275 5,278 6,386 6,405 5,766 7,666 7,098 24 Other 823 922 1,779 2,233 2,449 2,740 3,008 2,752 2,716 2,542 25 Claims on foreigners 84,016 98,137 115,123 129,232 130,174 129,646 129,992 128,095 130,200 134,102 26 Other branches of parent bank 22,017 27,830 34,291 34,538 35,136 35,406 34,583 34,614 34,834 35,914 27 Banks 39,899 45,013 51,343 57,658 58,489 58,554 58,714 56,816 57,611 60,261 28 Public borrowers2 2,206 4,522 4,919 6,684 6,620 6,626 6,929 6,844 6,720 6,811 29 Nonbank foreigners 19,895 20,772 24,570 30,352 29,929 29,060 29,766 29,821 31,035 31,116 30 Other assets 2,576 3,086 4,633 6,041 5,708 5,936 6,054 5,969 6,058 5,962 31 Total payable in U.S. dollars 66,635 75,860 94,287 98,913 101,038 102,954 102,933 101,506 104,959 108,854 32 Claims on United States 4,100 5,113 10,746 7,115 7,304 8,671 9,001 8,080 9,932 9,150 33 Parent bank 3,431 4,386 9,297 5,229 5,221 6,324 6,381 5,715 7,611 7,059 34 Other 669 727 1,449 1,886 2,083 2,347 2,620 2,365 2,321 2,091 35 Claims on foreigners 61,408 69,416 81,294 88,950 90,682 91,204 90,696 90,199 91,632 96,240 36 Other branches of parent bank 18,947 22,838 28,928 28,231 28,768 28,946 28,132 28,393 28,527 29,725 37 Banks 28,530 31,482 36,760 41,373 42,887 42,751 42,609 41,767 42,786 45,631 38 Public borrowers2 1,669 3,317 3,319 4,909 4,816 4,930 5,168 5,093 4,967 5,123 39 Nonbank foreigners 12,263 11,779 12,287 14,437 14,211 14,577 14,787 14,946 15,352 15,761 40 Other assets 1,126 1,331 2,247 2,848 3,052 3,079 3,236 3,227 3,395 3,464 Bahamas and Caymans 41 Total, all currencies 79,052 91,735 108,977 123,837 123,541r 124,807' 127,801 132,063' 133,513 135,081 42 Claims on United States 5,782 9,635 19,124 17,751 18,370 19,150 17,348 22,473 24,531 21,809 43 Parent bank 3,051 6,429 15,196 12,631 12,842 12,417 10,017 14,908 17,511 14,475 44 Other 2,731 3,206 3,928 5,120 5,528 6,733 7,331 7,565 7,020 7,334 45 Claims on foreigners 71,671 79,774 86,718 101,926 100,822r 101,199 105,970 105,001' 104,117 108,488 46 Other branches of parent bank 11,120 12,904 9,689 13,342' 12,974' 11,996' 14,022' 13,107' 12,235 13,569 47 Banks 27,939 33,677 43,189 54,861r 54,237r 55,263' 57,045' 57,325' 56,995 59,715 48 Public borrowers2 9,109 11,514 12,905 12,577 12,569' 12,605 12,579 12,205 12,169 12,038 49 Nonbank foreigners 23,503 21,679 20,935 21,146 21,042r 21,335r 22,324 22,364' 22,718 23,166 50 Other assets 1,599 2,326 3,135 4,160 4,349r 4,458' 4,483 4,589 4,865 4,784 51 Total payable in U.S. dollars 73,987 85,417 102,368 117,654 117,630r 119,005' 121,900 126,429' 127,965 129,438 For notes see opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Overseas Branches A57 3.13 Continued 1980 1981 LLiiaabbiilliittyy aaccccoouunntt 1977 19781 1979 Dec. Jan. Feb. Mar. Apr.' May June? All foreign countries 52 Total, all currencies 285,897 306,795 364,233 397,516 397,683' 401,092' 410,087 410,765 416,639 422,915 53 To United States 44,154 58,012 66,686 90,996 92,466' 90,714' 97,671' 105,774 105,453 109,450 54 Parent bank 24,542 28,654 24,530 39,176 38,679 36,431' 43,020' 45,277 41,020 44,328 55 Other banks in United States 12,169 13,968 14,473 13,649' 13,959 14,372 15,531 16,293 16,140 56 Nonbanks 17,189 28,188 37,272 40,118 40,324 40,279 44,966 48,140 48,982 57 To foreigners 206,579 238,912 283,344 292,013 290,926' 296,500' 297,983 290,138 295,818 298,036 58 Other branches of parent bank 53,244 67,496 77,601 74,032 73,084 73,766' 75,321' 74,487 75,807 79,032 59 Banks 94,140 97,711 122,849 130,743 133,057' 134,865' 133,714' 128,828 133,210 131,828 60 Official institutions 28,110 31,936 35,664 32,448 28,951 28,602 29,871 28,024 27,464 26,347 61 Nonbank foreigners 31,085 41,769 47,230 54,790 55,834' 59,267' 59,077 58,799 59,337 60,829 62 Other liabilities 8,163 9,871 14,203 14,582 14,311' 13,878' 14,433' 14,853 15,368 15,429 63 Total payable in U.S. dollars 198,572 230,810 273,819 301,139 303,449' 307,533' 313,610 318,469 324,081 332,288 64 To United States 42,881 55,811 64,530 88,131 89,817' 88,325' 95,259' 103,330 103,088 106,868 65 Parent bank 24,213 27,519 23,403 37,504 37,021 34,955' 41,508' 43,801 39,585 42,823 66 Other banks in United States 11,915 13,771 14,203 13,475' 13,757 14,235 15,363 16,167 15,949 67 Nonbanks 16,377 27,356 36,424 39,321 39,613 39,516 44,166 47,336 48,096 68 To foreigners 151,363 169,927 201,476 204,834 205,360' 210,636' 209,459 205,565 211,412 215,798 69 Other branches of parent bank 43,268 53,396 60,513 57,050 56,972 56,896' 58,508' 58,096 59,100 62,291 70 Banks 64,872 63,000 80,691 86,642 89,438' 91,655' 87,520' 86,000 89,586 89,919 71 Official institutions 23,972 26,404 29,048 24,692 21,863 21,896 23,102 21,445 21,340 20,848 72 Nonbank foreigners 19,251 27,127 31,224 36,450 37,087' 40,189' 40,329 40,024 41,386 42,740 73 Other liabilities 4,328 5,072 7,813 8,174 8,272' 8,572' 8,892' 9,574 9,581 9,622 United Kingdom 74 Total, all currencies 90,933 106,593 130,873 142,781 143,609 144,708 145,459 142,582 146,640 149,704 75 To United States 7,753 9,730 20,986 21,735 23,226 22,754 24,374 26,008 26,826 29,735 76 Parent bank 1,451 1,887 3,104 4,176 4,228 3,190 4,242 4,542 4,378 4,372 77 Other banks in United States 4,189 7,693 5,716 5,436 5,840 5,519 5,915 5,965 6,172 78 Nonbanks 3,654 10,189 11,843 13,562 13,724 14,613 15,551 16,483 19,191 79 To foreigners 80,736 93,202 104,032 115,582 115,236 116,862 115,816 111,486 114,517 114,996 80 Other branches of parent bank 9,376 12,786 12,567 13,933 13,734 13,335 13,913 13,491 14,169 14,995 81 Banks 37,893 39,917 47,620 55,928 57,371 57,527 56,110 53,563 56,238 55,933 82 Official institutions 18,318 20,963 24,202 21,412 19,199 19,591 19,743 18,385 18,503 17,192 83 Nonbank foreigners 15,149 19,536 19,643 24,309 24,932 26,409 26,050 26,047 25,607 26,846 84 Other liabilities 2,445 3,661 5,855 5,464 5,147 5,092 5,269 5,088 5,297 5,003 85 Total payable in U.S. dollars 67,573 77,030 95,449 102,300 104,123 106,354 106,637 105,847 109,209 113,427 86 To United States 7,480 9,328 20,552 21,080 22,597 22,245 23,927 25,499 26,359 28,995 87 Parent bank 1,416 1,836 3,054 4,078 4,126 3,132 4,160 4,447 4,308 4,278 8 8 8 9 O No th n e b r a b n a k n s ks in United States 6 064 4 3 , , 1 3 0 9 1 1 7 9 , , 6 84 51 7 1 5 1 , , 6 3 2 7 6 6 1 5 3 , , 3 1 4 2 3 8 1 5 3 , , 7 3 5 5 7 6 1 5 4 , , 4 2 8 8 7 0 1 5 5 , , 8 2 4 1 1 1 1 5 6 , , 9 1 1 4 1 0 1 6 8 , , 0 6 9 2 4 3 90 To foreigners 58,977 66,216 72,397 78,512 78,768 81,006 79,501 77,212 79,575 81,411 91 Other branches of parent bank 7,505 9,635 8,446 9,600 9,591 9,097 9,297 9,168 9,327 10,288 92 Banks 25,608 25,287 29,424 35,177 36,463 37,007 34,553 34,117 35,899 36,711 93 Official institutions 15,482 17,091 20,192 17,024 14,941 15,404 15,718 14,473 14,846 13,995 94 Nonbank foreigners 10,382 14,203 14,335 16,711 17,773 19,498 19,933 19,454 19,503 20,417 95 Other liabilities 1,116 1,486 2,500 2,708 2,758 3,103 3,209 3,136 3,275 3,021 Bahamas and Caymans 96 Total, all currencies 79,052 91,735 108,977 123,837 123,541' 124,807' 127,801 132,063 133,513 135,081 97 To United States 32,176 39,431 37,719 59,666 58,986' 58,664' 64,026' 69,478 69,048 69,407 98 Parent bank 20,956 20,482 15,267 28,181 26,563 26,279' 31,741' 32,925 29,583 32,160 99 Other banks in United States 6,073 5,204 7,379 7,184' 7,165 7,883 8,618 9,297 8,822 100 Nonbanks 12,876 17,248 24,106 25,239 25,220 24,402 27,935 30,168 28,425 101 To foreigners 45,292 50,447 68,598 61,218 61,618' 63,266' 60,875 59,344 61,090 62,470 102 Other branches of parent bank 12,816 16,094 20,875 17,040 17,819 18,783' 17,437' 17,788 17,950 19,484 103 Banks 24,717 23,104 33,631 29,895 30,052' 30,287' 28,670' 27,133 28,768 28,326 104 Official institutions 3,000 4,208 4,866 4,361 4,204 3,663 4,403 4,079 3,666 3,685 105 Nonbank foreigners 4,759 7,041 9,226 9,922 9,543' 10,533' 10,365 10,344 10,706 10,975 106 Other liabilities 1,584 1,857 2,660 2,953 2,937' 2,877' 2,900' 3,241 3,375 3,204 107 Total payable in U.S. dollars 74,463 87,014 103,460 119,657 119,295' 120,712' 123,785 128,235 129,807 131,120 1. In May 1978 the exemption level for branches required to report was increased, eluding corporations that are majority owned by foreign governments, replaced which reduced the number of reporting branches. the previous, more narrowly defined claims on foreign official institutions. 2. In May 1978 a broader category of claims on foreign public borrowers, in- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • September 1981 3.14 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1981 IItteemm 11997788rr 11997799rr 11998800rr Feb. Mar^ Apr. May June'' July? 1 Total1 162,775 149,697 164,576 162,880 170,193 170,213 170,599 165,403 167,069 166,913 By type 2 Liabilities reported by banks in the United States2 . 23,326 30,540 30,381 25,025 27,471 27,491 25,563 23,563 25,234 25,854 3 U.S. Treasury bills and certificates3 67,671 47,666 56.243 56,988 60,493 60,493 61,670 57,858 57,719 55,669 U.S. Treasury bonds and notes 4 Marketable 35,894 37,590 41.455 43,725 44,808 44,808 45,303 45,625 46.605 47,402 5 Nonmarketable4 20,970 17.387 14.654 14,494 14,294 14,294 14,294 14,294 13,202 12,802 6 U.S. securities other than U.S. Treasury securities5 14,914 16,514 21.843 22,648 23,127 23,127 23,769 24,063 24,309 25.186 By area 7 Western Europe1 93,089 85,633 81.592 78,334 79,981 79,999 78.242 71,455 71,130 70,595 8 Canada 2,486 1.898 1,562 1,089 1,437 1,437 1,177 1,365 1.248 664 9 Latin America and Caribbean 5,046 6.291 5.688 5,242 6.365 6,365 5,908 5,525 6,103 5,577 10 Asia 59,004 52,978 70.782 73,162 77.169 77,171 79,255 81,015 83,123 85,741 11 Africa 2,408 2,412 4,123 3,947 4,087 4,087 4,187 3,927 3,190 2,645 12 Other countries6 742 485 829 1,106 1,154 1.154 1,830 2,116 2,275 1,691 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. A Data in the two columns for this date differ because of changes in reporting 3. Includes nonmarketable certificates of indebtedness (including those payable coverage. Figures in the first column are comparable in coverage with those shown in foreign currencies through 1974) and Treasury bills issued to official institutions for the preceding month; figures in the second column are comparable with those of foreign countries. for the following month. 4. Excludes notes issued to foreign official nonreserve agencies. Includes bonds and notes payable in foreign currencies. NOTE. Based on Treasury Department data and on data reported to the Treasury Department by banks (including Federal Reserve Banks) and securities dealers in the United States. 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 1980 1981 IItteemm 11997777 11997788 11997799 June Sept. Dec. Mar.± 1 Banks' own liabilities 925 2.406 1,918 2.739 2.754 3,748 3,268 3,262 2 Banks' own claims' 2,356 3,671 2.419 2.874 3,203 4.206 4,238 4,245 3 Deposits 941 1,795 994 1,090 1.169 2,507 1,697 1,758 4 Other claims 1.415 1.876 1.425 1,784 2,035 1,699 2,542 2,488 335588 558800 779988 559955 996622 444444 444444 1. Includes claims of banks' domestic customers through March 1978. A Data in the two columns for this date differ because of changes in reporting 2. Assets owned by customers of the reporting bank located in the United States coverage. Figures in the first column are comparable in coverage with those shown that represent claims on foreigners held by reporting banks for the accounts of for the preceding quarter; figures in the second column are comparable with those their domestic customers. for the following quarter. NOTE. Data on claims exclude foreign currencies held by U.S. monetary authorities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A59 3.16 LIABILITIES TO FOREIGNERS Reported by Banks in the United States Payable in U.S. dollars Millions of dollars, end of period 1981 Holder and type of liability 11997788 11997799 11998800 Feb. Mar.A Apr. May June July? 1 AH foreigners 166,842 187,521 205,295 201,515 203,651 205,284 213,152 213,475R 208,793 212,702 2 Banks' own liabilities 78,661 117,196 124,789 121,528 120,217 120,425 128,115 132,154' 127,957 131,368 3 Demand deposits 19,218 23,303 23,462 23,300 21,308 21,216 22,644 22,193 23,184 21,403 4 Time deposits1 12,427 13,623 15.076 15,778 16,272 16,304 15,719 16,046 16,640 16,431 5 Other2 9,705 16,453 17,581 13,476 15,947 16,199 14,789 12,359' 14,090 13,327 6 Own foreign offices3 37,311 63,817 68,670 68,973 66,690 66,707 74,963 81,556' 74,042 80,208 7 Banks' custody liabilities4 88.181 70,325 80,506 79,988 83,433 84,859 85,037 81,320' 80,836 81,334 8 U.S. Treasury bills and certificates5 68,202 48,573 57.595 58,518 62,259 62,342 63,273 59,597 59,731 57,559 9 Other negotiable and readily transferable instruments6 17,472 19,396 20,079 18,350 18,226 18,207 17,886 17,392' 17,021 17,422 10 Other 2,507 2,356 2,832 3,120 2,948 4,310 3,878 4,331 4,084 6,373 11 Nonmonetary international and regional organizations7 2,607 2,356 2,342 2,003 1,854 1,854 1,804 1,813' 1,777 1,782 12 Banks' own liabilities 906 714 442 317 293 293 655 509' 357 363 13 Demand deposits 330 260 146 186 126 126 178 147 224 222 14 Time deposits' 84 151 85 76 67 67 81 80 75 75 15 Other2 492 303 211 54 100 100 396 281' 58 65 16 Banks' custody liabilities4 1,701 1.643 1,900 1,687 1,561 1,561 1,149 1,304 1,420 1419 17 U.S. Treasury bills and certificates 201 102 254 368 333 333 63 213 289 247 18 Other negotiable and readily transferable instruments6 1,499 1,538 1,646 1.319 1,228 1,228 1,086 1,091 1,132 1,172 19 Other 1 2 0 0 0 0 0 0 0 0 20 Official institutions8 90,742 78,206 86,624 82,013 87,963 87,983 87,233 81,421' 82,953 81,523 21 Banks' own liabilities 12,165 18,292 17.826 13,938 16,200 16,220 14,688 13,466 15,815 14,449 22 Demand deposits 3,390 4,671 3,771 3,580 3,338 3,232 3,768 3,444 3,975 3,134 23 Time deposits' 2,560 3,050 3.612 2,997 2,920 2,938 2,412 2,642 2,563 2,085 24 Other2 6,215 10,571 10,443 7,361 9,941 10,050 8,508 7,381 9,277 9,230 25 Banks' custody liabilities4 78.577 59,914 68,798 68,075 71,763 71,763 72.545 67.955' 67,138 67,074 26 U.S. Treasury bills and certificates5 67,415 47,666 56,243 56,988 60,492 60,492 61,670 57,858 57,719 55,669 27 Other negotiable and readily transferable instruments6 10,992 12,196 12,501 10,894 11,080 11,080 10,790 10,014' 9,346 9,338 28 Other 170 52 54 193 191 191 84 83 73 2,087 29 Banks' 57,423 88,316 96,415 96,608 93,018 94,338 102,542 108,542' 101,468 106,992 30 Banks' own liabilities 52,626 83,299 90,456 90,319 86.649 86,620 95,096 100,442' 93,260 98,369 31 Unaffiliated foreign banks 15,315 19.482 21,786 21.346 19,958 19,914 20,133 18,886' 19,218 18,161 32 Demand deposits 11,257 13,285 14.188 14,287 12,585 12,588 13,493 13,394 13,638 12,931 33 Time deposits1 1.429 1,667 1,703 1,813 2,324 2,305 1,549 1,685' 1,728 1,573 34 Other2 2,629 4.530 5,895 5,245 5,049 5,021 5,091 3,808' 3,852 3,657 35 Own foreign offices3 37,311 63,817 68.670 68,973 66,690 66,707 74,963 81,556' 74,042 80,208 36 Banks' custody liabilities4 4,797 5,017 5,959 6,289 6,369 7,717 7,446 8,100' 8,208 8,623 37 U.S. Treasury bills and certificates 300 422 623 714 826 827 839 945' 1,165 1,037 38 Other negotiable and readily transferable instruments6 2,425 2.415 2.748 2.850 2,928 2,913 2,932 3,053 3,177 3,459 39 Other 2,072 2,179 2,588 2,726 2,615 3,977 3,675 4,102 3,866 4,127 40 Other foreigners 16,070 18,642 19,914 20,891 20,816 21,109 21,573 21,698' 22,595 22,405 41 Banks' own liabilities 12,964 14,891 16,065 16,955 17,076 17,291 17.676 17,737' 18,525 18,187 42 Demand deposits 4,242 5,087 5,356 5,246 5,259 5,270 5.205 5,209' 5,346 5,115 43 Time deposits 8.353 8,755 9,676 10,892 10.961 10.995 11.677 11,640' 12,275 12,697 44 Other2 368 1,048 1.033 816 856 1,027 794 889' 904 375 45 Banks' custody liabilities4 3,106 3,751 3.849 3,937 3.740 3,817 3.897 3,961' 4,070 4,218 46 U.S. Treasury bills and certificates 285 382 474 449 607 690 701 581' 559 606 47 Other negotiable and readily transferable instruments6 2,557 3,247 3,185 3,287 2,991 2,986 3,078 3,235' 3,367 3,453 48 Other 264 123 190 201 141 141 119 145 144 159 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 11,007 10,984 10,745 9,868 9,893 9,887 9.549 9,653' 10,176 9,831 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 before 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. A Data in the two columns for this date differ because of changes in reporting 4. Financial claims on residents of the United States, other than long-term se- coverage. Figures in the first column are comparable in coverage with those shown curities, held by or through reporting banks. for the preceding month; figures in the second column are comparable with those for the following month. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • September 1981 3.16 Continued 1981 AArreeaa aanndd ccoouunnttrryy 11997788 11997799 11998800 Feb. Mar. ^ Apr. May June July 1 Total 166,842 187,521 205,295 201,515 203,651 205,284 213,152 213,475r 208,793 212,702 2 Foreign countries 164,235 185,164 202,953 199,512 201,796 203,430 211,348 211,662' 207,016 210,920 3 Europe 85,172 90,952 90,897 89,181 91,338 92,495 89,934 87,197' 86,785 84,886 4 Austria 513 413 523 551 522 522 523 493' 540 609 5 Belgium-Luxembourg 2,550 2,375 4,019 4,782 4,698 4,698 4,926 5,469' 5,054 4,671 6 Denmark 1,946 1,092 497 432 463 461 434 526 415 430 7 Finland 346 398 455 355 332 332 328 280' 305 294 8 France 9,214 10,433 12,125 12,521 12,959 12,950 13,102 11,367' 11,515 11,060 9 Germany 17,283 12,935 9,973 9,296 12,299 12,305 12,489 9,472 9,628 9,069 10 Greece 826 635 670 563 593 593 574 513' 507 532 11 Italy 7,739 7,782 7,572 5,987 3,446 3,453 3,600 3,014' 4,620 6,140 12 Netherlands 2,402 2,337 2,441 2,540 2,324 2,328 2,314 2,176 2,133 1,765 13 Norway 1,271 1,267 1,344 1,037 1,575 1,575 1,477 1,648 1,743 1,288 14 Portugal 330 557 374 358 356 356 309 336 454 447 15 Spain 870 1,259 1,500 1,388 1,631 1,631 1,352 1,678 1,199 1,329 16 Sweden 3,121 2,005 1,737 2,078 2,408 2,408 2,784 2,501' 2,180 1,963 17 Switzerland 18,225 17,954 16,689 16,636 16,844 16,856 15,739 15,810' 15,841 16,141 18 Turkey 157 120 242 231 235 235 209 182 194 356 19 United Kingdom 14,272 24,700 22.680 24,325 24,715 25,836 24,343 25,485' 24,428 22,895 20 Yugoslavia 254 266 681 269 202 202 238 270 312 408 21 Other Western Europe1 3,440 4,070 6,939 5,385 5,338 5,356 4,893 5,604' 5,323 5,160 22 U.S.S.R 82 52 68 84 47 47 37 85 41 46 23 Other Eastern Europe2 330 302 370 363 352 350 264 288' 354 281 24 Canada 6,969 7,379 10.031 9,131 8,570 8,610 10,338 11,222' 10,199 9,192 25 Latin America and Caribbean 31,638 49,686 53,170 52,275 50,818 51,178 58,415 60,096' 56,153 63,755 26 Argentina 1,484 1.582 2.132 1,998 1,917 1,917 1,919 1,800 1,991 1,979 27 Bahamas 6,752 15.255 16.381 15,916 14,183 14,356 18,815 20,154' 1177,,776600 24,319 28 Bermuda 428 430 670 804 915 913 634 802' 669988 634 29 Brazil 1,125 1.005 1,216 1,266 1,151 1,148 1,345 1,347 1,412 1,145 30 British West Indies 5,974 11.138 12,766 12,144 11,566 11,566 13,995 14,892' 12,834 14,015 31 Chile 398 468 460 431 549 549 539 526 508 565 32 Colombia 1,756 2,617 3,077 3,087 2,970 2,970 2,940 2,828' 2,827 2,784 33 Cuba 13 13 6 7 6 6 8 7 7 7 34 Ecuador 322 425 371 449 511 511 352 391 463 392 35 Guatemala3 416 414 367 461 446 446 416 413 399 411 36 Jamaica3 52 76 97 101 94 94 141 132 80 122 37 Mexico 3,467 4,185 4.547 4,600 4,755 4,756 5,332 4,948 5,351 5,517 38 Netherlands Antilles 308 499 413 523 436 476 442 438' 493 480 39 Panama 2,967 4,483 4,718 3,984 4,297 4,445 4,723 4,847 4,615 4,989 40 Peru 363 383 403 447 341 342 354 334 450 363 41 Uruguay 231 202 254 266 306 306 284 334 322 243 42 Venezuela 3,821 4,192 3,170 3,925 4,218 4,220 4,178 3,924 3,548 3,666 43 Other Latin America and Caribbean 1,760 2,318 2.123 1,869 2,158 2,158 1,997 1,979 2,398 2,123 44 Asia 36,492 33,005 42.420 43,041 44,992 45,068 45,944 46,156' 4477,,227799 4477,,993333 China 45 Mainland 67 49 49 55 60 60 46 54 102 92 46 Taiwan 502 1,393 1,662 1,733 1,822 1.822 1,798 1,781 1,936 1,996 47 Hong Kong 1,256 1,672 2,548 3,054 2.440 2,438 2.468 3,001 3,151 3,446 48 India 790 527 416 604 576 576 442 458 408 392 49 Indonesia 449 504 730 678 1.063 1,063 944 707 582 1.309 50 Israel 688 707 883 557 582 582 444 404 478 387 51 Japan 21,927 8,907 16.281 17.990 19,367 19,442 19,450 19,803' 19,563 19,472 52 Korea 795 993 1.528 1,485 1,380 1,380 1,381 1,397 1,330 1,252 53 Philippines 644 795 919 1,057 1,115 1,115 1,213 802 1,049 996 54 Thailand 427 277 464 404 250 250 391 338 422 436 55 Middle-East oil-exporting countries4 7,534 15,300 14,453 13,015 14,205 14,205 15,119 14,728' 15,129 14,794 56 Other Asia 1,414 1,879 2,487 2,409 2,132 2,134 2,247 2,684' 3,129 3,362 57 Africa 2,886 3,239 5.187 4,371 4,553 4,553 4,529 4,513 3,917 3,168 58 Egypt 404 475 485 496 333 333 336 308 289 293 59 Morocco 32 33 33 30 33 33 34 54 41 77 60 South Africa 168 184 288 258 322 322 330 360 253 257 61 Zaire 43 110 57 58 28 28 28 24 181 84 62 Oil-exporting countries5 1,525 1,635 3,540 2,833 3,084 3,084 3,135 3,004 2,388 1,714 63 Other Africa 715 804 783 697 753 753 666 764 765 743 64 Other countries 1,076 904 1.247 1,513 1,526 1,526 2,189 2,477' 2,683 1,987 65 Australia 838 684 950 1,205 1,287 1.287 1,913 2,276' 2,398 1,770 66 All other 239 220 297 307 240 240 275 201 285 216 67 Nonmonetary international and regional organizations 2,607 2,356 2.342 2,003 1,854 1,854 1,804 1,813' 1,777 1,782 68 International 1,485 1,238 1.156 995 754 754 795 781' 747 699 69 Latin American regional 808 806 890 745 768 768 693 729 722 765 70 Other regional6 314 313 296 263 333 333 317 303 307 318 1. Includes the Bank for International Settlements. Beginning April 1978, also 6. Asian, African, Middle Eastern, and European regional organizations, except includes Eastern European countries not listed in line 23. the Bank for International Settlements, which is included in "Other Western 2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German Dem- Europe." ocratic Republic, Hungary, Poland, and Romania. A Data in the two columns for this date differ because of changes in reporting 3. Included in "Other Latin America and Caribbean" through March 1978. coverage. Figures in the first column are comparable in coverage with those for 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and the preceding month; figures in the second column are comparable with those for United Arab Emirates (Trucial States). the following month. 5. Comprises Algeria, Gabon, Libya, and Nigeria. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A61 3.17 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States Payable in U.S. Dollars Millions of dollars, end of period 1981 AArreeaa aanndd ccoouunnttrryy 11997788 11997799 11998800 Feb. Mar. Jt Apr. May June July? 1 Total 115,545 133,943 172,702 167,687 179,535 181,551 184,769 186,704r 197,310 196,717 2 Foreign countries 115,488 133,906 172,624 167,608 179,461 181,477 184,700 186,657' 197,262 196,657 3 Europe 24,201 28,388 32,155 30,768 34,136 35,098 34,265 34,305' 37,409 35,053 4 Austria 140 284 236 191 174 174 151 149 166 183 5 Belgium-Luxembourg 1,200 1,339 1,621 2,140 2,568 2,573 2,155 2,012' 2,796 2,039 6 Denmark 254 147 127 172 119 119 141 162 125 132 7 Finland 305 202 460 337 319 326 327 299 365 343 8 France 3,735 3,322 2,958 3,067 3,838 3.911 3,696 3,164 3,209 2,861 9 Germany 845 1,179 948 1,028 1,074 1,122 1,038 1,140 1,099 1,259 in Greece 164 154 256 244 210 210 334 242 249 292 11 Italy 1,523 1,631 3,364 3,105 3.052 3,055 2,926 2,981' 3,855 3,923 1? Netherlands 677 514 575 523 548 560 530 584 627 470 13 Norway 299 276 227 224 223 223 180 173 172 167 14 Portugal 171 330 331 240 247 247 242 263 353 389 15 Spain 1,120 1,051 993 1,152 1,494 1,497 1,601 1,720' 1,769 1,726 16 Sweden 537 542 783 733 868 884 975 996 794 730 17 Switzerland 1,283 1,165 1,446 1,729 1,313 1,375 1,263 1,698' 1,690 1,871 18 Turkey 300 149 145 155 136 136 132 172 147 137 19 United Kingdom 10,147 13,795 14,917 12,949 15,093 15,827 15,652 15,707' 16,675 15,358 20 Yugoslavia 363 611 853 859 871 872 878 904 988 992 7.1 Other Western Europe1 122 175 179 177 176 176 211 147 182 160 77 U.S.S.R 360 268 281 249 265 265 266 254 302 245 23 Other Eastern Europe2 657 1,254 1,457 1,494 1,548 1,548 1,569 1,539' 1,848 1,776 24 Canada 5,152 4,143 4,810 4,872 5,017 5,297 6,091 6,038' 7,024 7,861 7.5 Latin America and Caribbean 57,565 67,993 92,992 89,625 96,364 96,829 98,594 99,731' 103,300 105,083 7.6 Argentina 2,281 4,389 5,689 5,636 5,672 5,672 5,881 5,659' 5,822 5,742 27 Bahamas 21,555 18.918 29,419 28,642 34,139 34,285 33.926 33,202' 34,728 35,474 7,8 Bermuda 184 496 218 364 324 324 401 481 442 411 79 Brazil 6,251 7,713 10,496 9,801 10,213 10,269 9,924 9,921' 10,019 9,813 3n British West Indies 9,694 9,818 15,663 14,338 14,236 14,320 16,143 17,165' 18,207 17,998 31 Chile 970 1,441 1,951 1,843 1,876 1,876 2,028 2,019 2,074 2,203 37 Colombia 1,012 1,614 1,752 1.435 1,467 1.467 1.457 1,580 1,533 1,480 33 Cuba 0 4 3 3 3 3 4 3 3 7 34 Ecuador 705 1,025 1,190 1,179 1,257 1.257 1,229 1,239 1,285 1,306 35 Guatemala3 94 134 137 113 208 208 98 104 104 94 36 Jamaica3 40 47 36 41 77 77 34 35 38 39 37 Mexico 5,479 9,099 12.595 12,460 12,407 12,447 13,242 13,351 14,073 15,557 38 Netherlands Antilles 273 248 821 655 807 921 809 756 874 932 39 Panama 3,098 6,041 4,974 4,964 5,640 5,643 5,477 6,054' 6,210 5,861 40 Peru 918 652 890 877 794 794 853 873 819 804 41 Uruguay 52 105 137 107 103 103 105 100 94 102 42 Venezuela 3,474 4,657 5,438 5,514 5,441 5,458 5,325 5,438' 5,295 5,436 43 Other Latin America and Caribbean 1,485 1,593 1,583 1,653 1,702 1,705 1,658 1,751 1,678 1,823 44 25,362 30,730 39,140 39.113 40,636 40.941 42,439 43.006' 46,028 45,020 China 45 Mainland 4 35 195 186 201 201 202 204 205 209 46 Taiwan 1,499 1,821 2,469 2,270 2,413 2,413 2,568 2,413 2,471 2,380 47 Hong Kong 1,479 1,804 2,247 2,212 2,330 2,330 2,476 2,898' 3,328 3,188 48 India 54 92 142 142 127 127 134 170 132 106 49 Indonesia 143 131 245 306 288 288 299 268 258 271 SO Israel 888 990 1,172 829 944 981 1,014 1.186 1,309 1,178 51 Japan 12,646 16,911 21,361 22,314 23,710 23,977 23,862 24,209 25,998 25,963 5? Korea 2,282 3,793 5,697 5,936 5,823 5,823 6,024 6,014 6,678 6,486 53 Philippines 680 737 989 745 605 605 994 1,024 1,192 1,192 54 Thailand 758 933 876 808 835 835 829 698 662 551 55 Middle East oil-exporting countries4 3,125 1,548 1,494 1,443 1,486 1,486 1,909 1,474' 1,617 1,275 56 Other Asia 1,804 1,934 2,252 1.922 1,874 1.874 2,130 2,448' 2,178 2,222 57 Africa 2,221 1,797 2,377 1,981 2,271 2.271 2,272 2.536 2,423 2,519 58 Egypt 107 114 151 152 137 137 124 126 155 128 59 Morocco 82 103 223 115 153 153 118 87 71 88 60 South Africa 860 445 370 421 534 534 562 668 658 688 61 Zaire 164 144 94 94 111 111 108 98 98 100 62 Oil-exporting countries5 452 391 805 425 589 589 650 805 672 726 63 Other 556 600 734 773 746 746 710 752' 769 789 64 Other countries 988 855 1,150 1,250 1,038 1,041 1,038 1,040 1,078 1,121 65 Australia 877 673 859 868 870 874 922 898 939 988 66 All other 111 182 290 381 167 167 116 142 139 133 67 Nonmonetary international and. regional organizations6 56 36 7788 79 74 74 69 47' 48 60 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. A Data in the two columns shown for this date differ because of changes in 3. Included in "Other Latin America and Caribbean" through March 1978. reporting coverage. Figures in the first column are comparable in coverage with 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and those for the preceding month; figures in the second column are comparable with United Arab Emirates (Trucial States). those for the following month. NOTE. Data for period prior to April 1978 include claims of banks' domestic customers on foreigners. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics • September 1981 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 1981 TTyyppee ooff ccllaaiimm 11997788 11997799 11998800 Feb. Mar.A Apr. May June July? 1 Total 111111122222226666666,,,,,,,777777788888887777777 111111155555554444444,,,,,,,000000033333330000000 111111199999998888888,,,,,,,888888800000007777777 222222211111110000000,,,,,,,555555588888886666666 222222211111113333333,,,,,,,222222222222220000000 2 Banks' own claims on foreigners 111111111111115555555,,,,,,,555555544444445555555 111111133333333333333,,,,,,,999999944444443333333 111111177777772222222,,,,,,,777777700000002222222 167.687 111111177777779999999,,,,,,,555555533333335555555 111111188888881111111,,,,,,,555555555555551111111 184,769 186,704' 197,310 196,717 3 Foreign public borrowers 11111110000000,,,,,,,333333344444446666666 11111115555555,,,,,,,999999933333337777777 22222220000000,,,,,,,999999944444444444444 20,321 22222220000000,,,,,,,888888833333336666666 22222221111111.......000000022222227777777 21,401 21,529' 22,767 23,846 4 Own foreign offices1 44444441111111,,,,,,,666666600000005555555 44444447777777,,,,,,,444444422222228888888 66666665555555,,,,,,,000000088888884444444 64.798 77777774444444,,,,,,,666666666666660000000 77777774444444.......777777711111117777777 76,632 75,326' 80,137 79,992 5 Unaffiliated foreign banks 44444440000000,,,,,,,444444488888883333333 44444440000000,,,,,,,999999922222227777777 55555550000000,,,,,,,222222211111115555555 45.880 44444446666666,,,,,,,555555500000002222222 44444448888888,,,,,,,111111100000004444444 48,670 51,927' 55,326 54,751 6 Deposits 5555555,,,,,,,444444422222228888888 6666666,,,,,,,222222277777774444444 8888888,,,,,,,222222255555554444444 7.079 7777777.......222222266666663333333 8888888,,,,,,,222222200000005555555 7,831 10.441' 11,342 11,506 7 Other 33333335555555,,,,,,,000000055555554444444 33333334444444,,,,,,,666666655555554444444 44444441111111,,,,,,,999999966666662222222 38.800 33333339999999,,,,,,,222222233333339999999 33333339999999,,,,,,,888888899999998888888 40,839 41,486' 43,984 43,245 8 All other foreigners 22222223333333,,,,,,,111111111111111111111 22222229999999,,,,,,,666666655555550000000 33333336666666,,,,,,,444444455555559999999 36.689 33333337777777,,,,,,,555555533333337777777 33333337777777,,,,,,,777777700000003333333 38,066 37,921' 39,079 38,128 11111111111111,,,,,,,222222244444443333333 22222220000000,,,,,,,000000088888888888888 22222226666666,,,,,,,111111100000006666666 33333331111111,,,,,,,000000055555552222222 33333331111111,,,,,,,666666666666669999999 444444488888880000000 999999955555555555555 888888888888885555555 333333366666669999999 888888855555552222222 1111 NNeeggoottiiaabbllee aanndd rreeaaddiillyy ttrraannssffeerraabbllee iinnssttrruummeennttss33...... 5555555,,,,,,,333333399999996666666 11111113333333,,,,,,,111111100000000000000 11111115555555,,,,,,,555555577777774444444 11111119999999,,,,,,,999999933333330000000 22222220000000,,,,,,,000000066666664444444 5555555,,,,,,,333333366666666666666 6666666,,,,,,,000000033333332222222 9999999,,,,,,,666666644444448888888 11111110000000,,,,,,,777777755555552222222 11111110000000,,,,,,,777777755555553333333 11111115555555,,,,,,,000000033333330000000 11111118888888,,,,,,,000000022222221111111 22222222222222,,,,,,,777777711111114444444 22222224444444,,,,,,,444444455555552222222 22222224444444,,,,,,,444444455555552222222 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States-. 13,558 22.042 23,659 31,064 30,375 30.375 34,234 34,635 32,734 n.a. 1. U.S. banks: includes amounts due from own foreign branches and foreign 4. Data for March 1978 and for period before that are outstanding collections subsidiaries consolidated in "Consolidated Report of Condition" filed with bank only. regulatory agencies. Agencies, branches, and majority-owned subsidiaries of foreign 5. Includes demand and time deposits and negotiable and nonnegotiable certifbanks: principally amounts due from head office or parent foreign bank, and foreign icates of deposit denominated in U.S. dollars issued by banks abroad. For descripbranches, agencies, or wholly owned subsidiaries of head office or parent foreign tion of changes in data reported by nonbanks, see July 1979 BULLETIN, p. 550. bank. ^Data in the two columns for this month differ because of changes in reporting 2. Assets owned by customers of the reporting bank located in the United States coverage. Figures in the first column are comparable in coverage with those shown that represent claims on foreigners held by reporting banks for the account of their for the preceding month; figures in the second column are comparable with those domestic customers. shown for the following month. 3. Principally negotiable time certificates of deposit and bankers acceptances. NOTE. Beginning April 1978, data for banks' own claims are given on a monthly basis, but the data for claims of banks' own domestic customers are available on a quarterly basis only. 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 1981 MMaattuurriittyy;; bbyy bboorrrroowweerr aanndd aarreeaa Dec. Dec. June Sept. Dec. Mar.A 1 Total 73,635 86,181 93,260 99,022 106,857 104,789 106,513 By borrower 2 Maturity of 1 year or less1 58,345 65,152 71,938 76,231 82,665 80,855 82,636 3 Foreign public borrowers 4.633 7,233 7,227 8,935 10,036 10,519 10,630 4 All other foreigners 53,712 57,919 64,711 67,296 72,628 70,336 72,005 5 Maturity of over 1 year1 15,289 21,030 21.322 22,791 24,193 23,934 23,877 6 Foreign public borrowers 5,395 8,371 8,673 9,722 10,152 10,158 10,244 7 All other foreigners 9.894 12,659 12,649 13,069 14,041 13,775 13,634 By area Maturity of 1 year or less1 8 Europe 15,169 15.235 17,215 16,940 18,762 17,306 18,261 9 Canada 2,670 1.777 2,047 2,166 2,723 2,358 2,621 10 Latin America and Caribbean 20,895 24.928 24,460 28,097 32,034 30,844 31,096 11 Asia ; 17,545 21,641 26,162 26,876 26,748 28,001 28,305 12 Africa 1,496 1,077 1,330 1,401 1.757 1,624 1,624 13 All other2 569 493 724 751 640 722 729 Maturity of over 1 year1 14 Europe 3,142 4,160 4,033 4,705 5.118 5,698 5,578 15 Canada 1,426 1,317 1,199 1,188 1,448 1,184 1,200 16 Latin America and Caribbean 8,464 12,814 13,887 14,187 15,075 14,768 14,870 17 Asia 1,407 1,911 1,477 2,014 1,865 1,585 1,530 18 Africa 637 655 576 567 507 531 531 19 All other2 214 173 150 130 179 168 167 1. Remaining time to maturity. A Data in the two columns for this month differ because of changes in reporting 2. Includes nonmonetary international and regional organizations. coverage. Figures in the first column are comparable in coverage with those for the preceding quarter; figures in the second column are comparable with those for the following quarter. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A63 3.20 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks1 Billions of dollars, end of period 1979 1980 1981 AArreeaa oorr ccoouunnttrryy 11997777 1199778822 June Sept. Dec. Mar. June Sept. Dec. Mar .p Junep 1 Total 240.0 266.2 275.6 294.0 303.8 308.5 328.5 338.7 350.2 365.2' 380.6 7 G-10 countries and Switzerland 116.4 124.7 125.2 135.7 138.4 141.2 154.2 158.7 161.5 165.6 167.7 3 Belgium-Luxembourg 8.4 9.0 9.7 10.7 11.1 10.8 13.1 13.5 12.9 13.4 14.2 4 France 11.0 12.2 12.7 12.0 11.7 12.0 14.0 13.9 14.0 14.3 14.7 5 Germany 9.6 11.3 10.8 12.8 12.2 11.4 12.7 12.9 11.5 12.5 12.1 6 6.5 6.7 6.1 6.1 6.4 6.2 6.9 7.2 8.2 7.6 8.4 7 Netherlands 3.5 4.4 4.0 4.7 4.8 4.3 4.5 4.4 4.4 4.5 4.1 8 Sweden 1.9 2.1 2.0 2.3 2.4 2.4 2.7 2.8 2.9 3.2 3.1 9 Switzerland 3.6 5.3 4.7 5.0 4.7 4.3 3.3 3.4 4.0 4.0 5.2 10 United Kingdom 46.5 47.3 50.3 53.7 56.4 57.6 64.3 66.6 68.7 68.3 66.2 11 Canada 6.4 6.0 5.5 6.0 6.3 6.9 7.2 7.7 8.4 8.5 10.8 12 Japan 18.8 20.6 19.5 22.3 22.4 25.4 25.5 26.1 26.5 29.3 28.9 13 Other developed countries 18.6 19.4 18.2 19.7 19.9 18.8 20.3 20.6 21.3r 23.1 24.8 14 Austria 1.3 1.7 1.8 2.0 2.0 1.7 1.8 1.8 1.9 1.8 2.1 15 Denmark 1.6 2,0 1.9 2.0 2.2 2.1 2.2 2.2 2.3' 2.4 2.3 16 Finland 1.2 1.2 1.1 1.2 1.2 1.1 1.3 1.2 1.4 1.3 1.3 17 Greece 2.2 2,3 2.2 2.3 2.4 2.4 2.5 2.6 2.8 2.7 3.0 18 Norway 1.9 2.1 2.1 2.3 2.3 2.4 2.4 2.4 2.6 2.8 2.8 19 Portugal .6 .6 .5 .7 .7 .6 .6 .7 .6 .6 .8 20 Spain 3.6 3.5 3.0 3.3 3.5 3.5 3.9 4.2 4.0 5.1 5.7 21 Turkey 1.5 1.5 1.4 1.4 1.4 1.4 1.4 1.3 1.5 1.5 1.4 22 Other Western Europe .9 1.3 .9 1.5 1.4 1.4 1.6 1.7 1.7 1.8 1.8 23 South Africa 2.4 2.0 1.8 1.7 1.3 1.1 1.5 1.2 1.1 1.5 1.9 24 Australia 1.4 1.4 1.4 1.3 1.3 1.2 1.2 1.2 1.3 1.4 1.7 7.5 OPEC countries3 17.6 22.7 22.7 23.4 22.9 21.8 20.9 21.3 22.8 21.5 22.2 76 Ecuador 1.1 1.6 1.6 1.6 1.7 1.8 1.8 1.9 2.1 2.0 2.0 7.7 Venezuela 5.5 7.2 7.6 7.9 8.7 7.9 7.9 8.5 9.1 8.3 8.7 28 Indonesia 2.2 2.0 1.9 1.9 1.9 1.9 1.9 1.9 1.8 2.1 2.1 29 Middle East countries 6.9 9.5 9.0 9.2 8.0 7.8 6.9 6.6 6.9 6.5 6.8 30 African countries 1.9 2.5 2.6 2.8 2.6 2.5 2.5 2.4 2.8 2.6 2.6 31 Non-OPEC developing countries 48.7 52.6 56.0 58.9 62.9 63.7 67.4 72.8 77.0' 81.8 84.6 Latin America 37 Argentina 2.9 3.0 3.5 4.1 5.0 5.5 5.6 7.6 7.9 9.4 8.5 33 Brazil 12.7 14.9 15.1 15.1 15.2 15.0 15.3 15.8 16.2 16.7 17.3 34 Chile .9 1.6 1.8 2.2 2.5 2.5 2.7 3.2 3.7' 4.0 4.7 35 Colombia 1.3 1.4 1.5 1.7 2.2 2.1 2.2 2.4 2.6 2.4 2.5 36 Mexico 11.9 10.8 10.7 11.4 12.0 12.1 13.6 14.4 15.9 17.0 18.1 37 1.9 1.7 1.4 1.4 1.5 1.3 1.4 1.5 1.8 1.7 1.7 38 Other Latin America 2.6 3.6 3.3 3.6 3.7 3.6 3.6 3.9 3.9 4.8 3.8 Asia China 39 Mainland .0 .0 .1 .1 .1 .1 .1 .1 .2 .2 .2 40 Taiwan 3.1 2.9 3.3 3.5 3.4 3.6 3.8 4.1 4.2 4.4 4.7 41 India .3 .2 .2 .2 .2 .2 .2 .2 .3 .3 .3 42 Israel .9 1.0 .9 1.0 1.3 .9 1.2 1.1 1.5 1.3 1.8 43 Korea (South) 3.9 3.9 5.0 5.3 5.4 6.4 7.1 7.3 7.1 7.7 8.7 44 Malaysia4 .7 .6 .7 .7 .9 .8 .9 .9 1.0 1.0 1.4 45 Philippines 2.5 2.8 3.7 3.7 4.2 4.4 4.6 4.8 4.9' 4.8 5.2 46 Thailand 1.1 1.2 1.4 1.6 1.5 1.4 1.5 1.5 1.4 1.5 1.5 47 Other Asia .4 .2 .4 .4 .5 .5 .5 .5 .6 .5 .7 Africa 48 Egypt .3 .4 .7 .6 .6 .7 .7 .7 .8 .8 .7 49 Morocco .5 .6 .5 .5 .6 .5 .5 .6 .7 .6 .5 50 Zaire .3 .2 .2 .2 .2 .2 .2 .2 .2 .4 .2 51 Other Africa5 .7 1.4 1.5 1.6 1.7 1.7 1.8 2.0 2.0 2.1 2.1 52 Eastern Europe 6.3 6.9 6.7 7.2 7.3 7.3 7.2 7.3 7.4' 7.7 7.8 53 U.S.S.R 1.6 1.3 .9 .9 .7 .6 .5 .5 .4 .4 .5 54 Yugoslavia 1.1 1.5 1.7 1.8 1.8 1.9 2.1 2.1 2.3 2.4 2.5 55 Other 3.7 4.1 4.1 4.6 4.8 4.9 4.5 4.7 4.6' 4.9 4.9 56 Offshore banking centers 26.1 31.0 37.0 38.6 40.4 42.6 44.3' 44.5 46.6' 50.8 57.8 57 Bahamas 9.9 10.4 14.4 13.0 13.7 13.9 13.7 13.1 13.3 13.6 17.2 58 Bermuda .6 .7 .7 .7 .8 .6 .6 .6 .6 .7 .9 59 Cayman Islands and other British West Indies 3.7 7.4 7.4 9.5 9.4 11.3 9.8 10.1 10.6 11.3 11.9 60 Netherlands Antilles .7 .8 1.0 1.1 1.2 .9 1.2 1.3 2.1 2.1 2.4 61 Panama6 3.1 3.0 3.8 3.4 4.3 4.9 5.6 5.6 5.4 6.3 6.8 62 Lebanon .2 .1 .1 .2 .2 .2 .2 .2 .2 .2 .2 63 Hong Kong 3.7 4.2 4.9 5.5 6.0 5.7 6.9 7.5 8.1 8.4 10.2 64 Singapore 3.7 3.9 4.2 4.9 4.5 4.7 5.9 5.6 5.9 7.2 8.0 65 Others7 .5 .5 .4 .4 .4 .4 .4 .4 .3 .9 .3 66 Miscellaneous and unallocated8 5.3 9.1 9.9 10.6 11.7 13.1 14.3 13.7 13.9 14.8 15.7 1. The banking offices covered by these data are the U.S. offices and foreign the claims of the U.S. offices also include customer claims and foreign currency branches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks. claims (amounting in June 1978 to $10 billion). Offices not covered include (1) U.S. agencies and branches of foreign banks, and 3. In addition to the Organization of Petroleum Exporting Countries shown (2) foreign subsidiaries of U.S. banks. To minimize duplication, the data are ad- individually, this group includes other members of OPEC (Algeria, Gabon, Iran, justed to exclude the claims on foreign branches held by a U.S. office or another Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates) as foreign branch of the same banking institution. The data in this table combine well as Bahrain and Oman (not formally members of OPEC). 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. Beginning with data for June 1978, the claims of the U.S. offices 8. Includes New Zealand, Liberia, and international and regional organizations. in this tame include only banks' own claims payable in dollars. For earlier dates Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics • September 1981 3.21 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Holdings and Transactions Millions of dollars 1981 1981 Country or area 11997799 11998800 Jan.- JulyP Jan. Feb. Mar. Apr. May June July Holdings (end of period)1 1 Estimated total2 51,344 57,418 58,453 60,276R 61,759' 62,123' 62,836' 64,102 65,251 2 Foreign countries2 45,915 52,830' 53.918' 55,645' 56,840 57,352 58,038' 59,159 60,271 3 Europe2 24,824 24,337 25.176 25,466 25,235 24,883 24,511 24,869 25,186 4 Belgium-Luxembourg 60 77 80 88 106 123 131 173 163 5 Germany2 14,056 12,335 12.791 12.915 12.340 11,925 11,949 12,594 13,236 6 Netherlands 1,466 1.884 1.954 1,944 1,965 1,950 1,813 1,781 1,756 7 Sweden 647 595 555 535 566 567 572 582 606 8 Switzerland2 1,868 1,485 1.561 1,524 1,527 1.526 1,535 1,600 1,506 9 United Kingdom 6,236 7,183 7,438 7,745 7,892 7,862 7,274 6,836 6,569 10 Other Western Europe 491 777 796 714 839 930 1,236 1,304 1,350 11 Eastern Europe 0 0 0 0 0 0 0 0 0 12 Canada 232 449 458 490 478 464 486 484 501 13 Latin America and Caribbean 466 999 998 1.074 1,151 939 849 666 724 14 Venezuela 103 292 292 292 292 292 287 287 287 15 Other Latin America and Caribbean . 200 285 281 341 339 389 430 217 260 16 Netherlands Antilles 163 421 425 441 519 258 132 162 177 17 Asia 19,805 26,112 26.303 27,467 28,827 29.920 31.047 31,997 32,716 18 Japan 11,175 9,479 9.519 9,543 9,543 9,566 9,606 9,778 9,786 19 Africa 591 919' 970 1,139 1,139' 1.139' 1.140 1,139 1,139 20 All other -3 14 14 18 9 7 6 3 6 21 Nonmonetary international and regional organizations 5,429 4,588r 4.535 4,622 4,919' 4,771' 4.798 4,943 4,980 22 International 5,388 4,548 4.505 4,586 4.878 4,759 4,791 4,936 4,977 23 Latin American regional 37 36 26 36 36 6 1 1 1 Transactions (net purchases, or sales (-) during period) 24 Total2 6,397 6,074' 7,833 1,035 1,827 1,480 364 713 1,266 1,149 25 Foreign countries2 6,099 6,915' 7,441 1.088 1.736 1,185 512 686 1,121 1,112 26 Official institutions 1,697 3,865' 5,947 865 1,404 1,084 495 321 980 798 27 Other foreign2 4,403 3,049' 1.493 223 332 101 17 365 141 314 28 Nonmonetary international and regional organizations 301 -843 392 -53 91 295 -148 26 145 36 MEMO: Oil-exporting countries 29 Middle East3 1,014 7,672 5,889 300 1,139 1,322 1,062 841 565 659 30 Africa4 -100 327' 220 51 169 0 0 0 0 0 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 foreign United Arab Emirates (Trucial States). countries. 4. Comprises Algeria, Gabon, Libya, and Nigeria. 3.22 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS Millions of dollars, end of period 1981 AAsssseettss 11997788 11997799 11998800 Feb. Mar. Apr. May June July Aug.P 1 Deposits 367 429 411 422 474 475 346 338 285 255 Assets held in custody 2 U.S. Treasury securities1 117,126 95,075 102,417 106,389 111,859 113,746 109,742 107,884 105,064 102,197 3 Earmarked gold2 15,463 15,169 14.965 14,892 14.883 14.886 14,875 14,871 14.854 14,833 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 1981 1981 Transactions, and area or country 1979 1980 J Ju a l n y . P - Jan. Feb. Mar. Apr. May June JulyP U.S. corporate securities STOCKS 1 Foreign purchases 22,781 40,320 26.014 3,425' 2.720' 3.951' 4,041 4,083 4,354 3,440 2 Foreign sales 21,123 34,962 21,277 2,800' 2.313' 3.314' 3,323 2,858 3,419 3,250 3 Net purchases, or sales (—) 1,658 5,358 4,737 625' 407' 637' 718 1,225 935 190 4 Foreign countries 1,642 5,340 4,685 613' 405' 629' 710 1,215 930 182 5 Europe 217 3,069 3,077 440' 258' 606' 419 766 477 111 6 France 122 482 823 63' 42' 110 126 393 42 48 7 Germany -221 186 55 24 18 31 15 -17 11 -28 8 Netherlands -71 -328 71 43 2 12 -2 31 27 -41 9 Switzerland -519 308 359 105 -24 138 75 84 0 -19 10 United Kingdom 964 2.503 1.607 178 220 309' 197 215 349 138 11 Canada 552 865 776 26 91 105' 230 143 104 77 12 Latin America and Caribbean -19 148 74 101 -22 14 -26 9 126 -126 13 Middle East1 688 1.206 494 63 74 -95 91 223 33 105 14 Other Asia 211 16 287 -14 -2 0 3 77 187 37 15 Africa -14 -1 6 2 0 -1 -1 1 4 -1 16 Other countries 7 38 -30 -5 7 0 -5 -4 -1 -21 17 Nonmonetary international and regional organizations 17 18 52 12 2 8 8 10 5 8 BONDS2 18 Foreign purchases 8,835 15,425 11,262 1.549 1.402 2,035 1.549 894 1,939 1,894 19 Foreign sales 7,602 9,964' 6,632 817 863 1,239 774 669 1,450 820 20 Net purchases, or sales (-) 1,233 5,461' 4,630 733 539 796' 775 225 489 1,074 21 Foreign countries 1,330 5,526' 4,571 706 552 797 733 243 473 1,067 22 Europe 626 1.576 1,283 214 311 132 328 -3 179 122 23 France 11 129 0 4 -42 9 8 17 10 -5 24 Germany 58 213 528 49 112 97 23 28 151 68 25 Netherlands -202 -65 48 6 12 14 13 4 0 0 26 Switzerland -118 54 130 22 12 4 17 34 20 22 27 United Kingdom 814 1,257 467 124 207 -22 231 -87 4 11 28 Canada 80 135 70 7 -2 19 12 18 -6 23 29 Latin America and Caribbean 109 185 115 -3 26 28 22 9 12 21 30 Middle East1 424 3,499' 3,181 492 201 723 362 192 359 853 31 Other Asia 88 117 -75 -1 17 -105 9 27 -71 49 32 Africa 1 5 0 0 0 0 0 0 0 0 33 Other countries 1 10 -3 -4 0 0 0 0 1 0 34 Nonmonetary international and regional organizations -96 -65 59 27 -13 -1 42 -18 16 7 Foreign securities 35 Stocks, net purchases, or sales (-) -786 -2,089' -203 35 13 -187 -90 32 -114 108 36 Foreign purchases 4,615 7,885 5,655 696 709 763 851' 853' 891 891 37 Foreign sales 5,401 9,974' 5,858 661 697 950 941 821' 1.005 783 38 Bonds, net purchases, or sales (-) -3,855 -900' -2.668 -237 29 -141 -632 -194' -447 -1,046 39 Foreign purchases 12,672 17.069 9,716 1.142 1,296 1,686 1.154 1,292 1.509 1,636 40 Foreign sales 16,527 17,970' 12.384 1.379 1.267 1.827 1.786 1,487' 1,956 2,682 41 Net purchases, or sales (-), of stocks and bonds ... -4,641 -2,989' -2,871 -202 42 -328 -723 -162' -561 -937 42 Foreign countries -3,891 -3,866' -3,279 -261 24 -340 -732 -162' -561 -1,248 43 Europe -1,646 -958' -945 -116 80 -161 -300 75' -41 -481 44 Canada -2,601 -1,959' -2,050 -4 76 -101 -271 -385 -507 -858 45 Latin America and Caribbean 347 84' 68 51 52 -68 119 -51 -10 -24 46 Asia 44 -1.136' -329 -177 -169 9 -234 174 -72 141 47 Africa -61 24 -52 -10 -8 -17 -7 -3 -6 -2 48 Other countries 25 80 28 -4 -7 -2 -39 29 75 -23 49 Nonmonetary international and regional organizations -750 876 408 59 17 12 9 0 0 311 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 • September 1981 3.24 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1979 1980 1981 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11997788 11997799 Dec. Mar. June Sept, Dec. Mar. 1 Total 14,948 17,062 17,062 17,476 18,643 18,634 21,229 20,997 2 Payable in dollars 11,513 13,984 13,984 14,470 15,203 15,337 17,520 17,502 3 Payable in foreign currencies2 3,435 3,078 3,078 3,006 3,440 3,296 3,709 3,495 By type 4 Financial liabilities 6,353 7,366 7,366 7,832 8,410 8,293 11,015 11,206 5 Payable in dollars 3,838 5,096 5,096 5,591 5,791 5,818 8,243 8,600 6 Payable in foreign currencies 2,515 2,270 2,270 2,242 2,619 2,475 2,772 2,606 7 Commercial liabilities 8,595 9,696 9,696 9,693 10,233 10,341 10,214 9,791 8 Trade payables 4,008 4,424 4,424 4,190 4,297 4,381 4,400 4,442 9 Advance receipts and other liabilities 4,587 5,272 5,272 5,454 5,936 5,960 5,814 5,349 10 Payable in dollars 7,674 8,888 8,888 8,879 9,412 9,520 9,277 88,,990033 11 Payable in foreign currencies 921 808 808 764 821 821 936 888888 By area or country Financial liabilities 12 Europe 3,958 4,642 4,642 4,860 5,470 5,314 6,303 5,995 13 Belgium-Luxembourg 289 345 345 360 422 417 484 553 14 France 173 175 175 193 347 339 327 324 15 Germany 366 497 497 520 657 557 582 496 16 Netherlands 390 828 828 795 797 780 663 544 17 Switzerland 248 170 170 174 238 224 354 315 18 United Kingdom 2,159 2,449 2,449 2,647 2,841 2,867 3,758 3,650 19 Canada 244 439 439 380 530 508 864 982 20 Latin America and Caribbean 1,357 1,483 1,483 1,764 1,633 1,732 3,100 3,342 21 Bahamas 478 375 375 459 434 412 964 1,148 22 Bermuda 4 81 81 83 2 1 1 1 23 Brazil 10 18 18 22 25 20 23 19 24 British West Indies 194 514 514 694 700 703 1,452 1,389 25 Mexico 102 121 121 101 101 108 99 97 26 Venezuela 49 72 72 70 72 74 81 85 27 784 793 793 807 752 707 723 858 28 Japan 717 726 726 740 683 618 644 744 29 Middle East oil-exporting countries3 32 31 31 26 31 37 38 51 30 Africa 5 4 4 11 10 11 11 6 31 Oil-exporting countries4 2 1 1 1 1 1 1 1 32 All other5 5 4 4 10 15 21 15 23 Commercial liabilities 33 Europe 3,054 3,639 3,639 3,716 4,038 4,079 4,067 33,,666699 34 Belgium-Luxembourg 97 137 137 117 132 109 90 8822 35 France 321 467 467 503 485 501 582 560 36 Germany 529 548 548 545 727 693 679 639 37 Netherlands 246 227 227 288 245 276 219 246 38 Switzerland 302 310 310 382 462 452 493 385 39 United Kingdom 824 1,077 1,077 1,012 1,133 1,045 1,011 871 40 Canada 667 868 868 720 591 590 785 725 41 Latin America 997 1,323 1,323 1,253 1,271 11,,336611 11,,224444 11,,228800 42 Bahamas 25 69 69 4 26 88 88 11 43 Bermuda 97 32 32 47 107 114 73 111 44 Brazil 74 203 203 228 151 156 111 82 45 British West Indies 53 21 21 20 37 12 35 16 46 Mexico 106 257 257 235 272 324 326 419 47 Venezuela 303 301 301 211 210 293 307 253 48 2,931 2,905 2,905 2,950 3,091 2,909 2,848 2,853 49 Japan 448 494 494 581 418 502 645 621 50 Middle East oil-exporting countries3 1,523 1,017 1,017 901 1,030 944 894 947 51 Africa 743 728 728 742 875 1,006 814 824 52 Oil-exporting countries4 312 384 384 382 498 633 514 515 53 All other5 203 233 233 263 367 396 456 440 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 1979 1980 1981 Type, and area or country 1978 1979 Dec. Mar. June Sept. Dec. Mar. 1 Total 27,892 31,023 31,023 32,077 32,024 31,579 33,869 37,061 2 Payable in dollars 24,905 27,850 27,850 29,069 28,962 28,322 31,030 34,139 3 Payable in foreign currencies2 2,988 3,173 3,173 3,008 3,062 3,257 2,838 2,921 By type 4 Financial claims 16,570 18,222 18,222 19,332 18,630 18,285 19,281 21,760 5 Deposits 11,111 12,579 12,579 13,657 12,786 12,218 13,455 15,980 6 Payable in dollars 10,043 11,663 11,663 12,681 11,907 11,056 12,722 15,198 7 Payable in foreign currencies 1,068 916 916 977 879 1,162 733 782 8 Other financial claims 5,459 5,643 5,643 5,675 5,844 6,067 5,826 5,780 9 Payable in dollars 3,874 3,803 3,803 4,055 4,103 4,399 4,137 4,119 10 Payable in foreign currencies 1,584 1,840 1,840 1,620 1,740 1,668 1,689 1,662 11 Commercial claims 11,323 12,801 12,801 12,745 13,394 13,294 14,588 15,301 12 Trade receivables 10,764 12,112 12,112 12,095 12,685 12,605 13,871 14,506 13 Advance payments and other claims . 559 688 688 649 710 688 717 795 14 Payable in dollars 10,988 12,384 12,384 12,333 12,952 12,867 14,171 14,823 15 Payable in foreign currencies 335 416 416 411 443 427 416 478 By area or country Financial claims 16 Europe 5,215 6,146 6,146 5,843 5,843 5,605 6,021 6,047 17 Belgium-Luxembourg 48 32 32 21 23 17 195 159 18 France 178 177 177 290 307 409 340 411 19 Germany 510 409 409 300 190 168 230 213 20 Netherlands 103 53 53 39 37 30 32 42 21 Switzerland 98 73 73 89 96 41 59 90 22 United Kingdom 4,021 5,081 5,081 4,790 4,863 4,545 4,889 4,856 23 Canada 4,484 4,813 4,813 4,885 4,783 4,804 4,785 6,281 24 Latin America and Caribbean 5,714 6,261 6,261 7,583 6,924 6,757 7,496 8,485 25 Bahamas 3,001 2,741 2,741 3,516 3,080 2,831 3,333 3,919 26 Bermuda 80 30 30 34 25 65 135 13 27 Brazil 151 163 163 128 120 116 96 22 28 British West Indies 1,291 2,001 2,001 2,591 2,393 2,301 2,586 3,321 29 Mexico 163 158 158 169 178 192 208 201 30 Venezuela 157 143 143 134 139 128 137 131 31 Asia 920 706 706 713 758 791 710 696 32 Japan 305 199 199 226 253 269 177 191 33 Middle East oil-exporting countries 18 16 16 18 16 20 20 17 34 Africa 181 253 253 265 256 260 238 214 35 Oil-exporting countries4 10 49 49 40 35 29 26 27 36 All other5 55 44 44 43 65 68 32 36 Commercial claims 3,980 4,897 4,897 4,759 4,830 4,655 5,487 5,785 37 Europe 144 202 202 208 258 230 232 275 38 Belgium-Luxembourg 609 726 726 702 662 707 1,128 906 39 France 398 589 589 515 510 569 590 594 40 Germany 267 298 298 347 297 289 318 349 41 Netherlands 198 269 269 349 429 333 351 460 42 Switzerland 824 901 901 926 903 988 930 1,192 43 United Kingdom 44 Canada 1,094 846 846 861 896 929 897 1,027 45 Latin America and Caribbean 2.544 2,850 2,850 2,986 3,277 3,375 3,790 3,807 46 Bahamas 109 21 21 19 19 53 21 15 47 Bermuda 215 197 197 135 133 81 148 170 48 Brazil 628 645 645 654 695 710 861 797 49 British West Indies 9 16 16 11 9 17 34 15 50 Mexico 505 698 698 832 921 981 1,090 1,049 51 Venezuela 291 343 343 350 395 388 407 435 52 Asia 3,080 3,413 3,413 3,395 3,576 3,395 3,447 3,684 53 Japan 976 1,140 1,140 1,213 1,143 1,094 990 1,238 54 Middle East oil-exporting countries- 716 766 766 719 830 837 821 915 55 Africa 447 554 554 517 566 669 651 675 56 Oil-exporting countries4 136 133 133 114 115 135 151 143 57 All other5 178 240 240 225 249 270 316 321 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 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

A68 International Statistics • September 1981 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per annum Rate on Aug. 31, 1981 Rate on Aug. 31, 1981 Rate on Aug. 31, 1981 Country Country Country Per- Month Per- Month Per- Month cent effective cent effective cent effective securities for Argentina 284.69 Aug. 1981 France1 17.0 Aug. 1981 Sweden 12.0 Jan. 1981 Austria 6.75 Mar. 1980 Germany, Fed. Rep. of 7.5 May 1980 Switzerland 5.0 May 1981 Belgium 13.0 May 1981 Italy 19.0 Mar. 1981 United Kingdom2 Brazil 40.0 June 1980 Japan 6.25 Mar. 1981 Venezuela 10.0 July 1980 Canada 21.07 Aug. 1981 Netherlands 9.0 Mar. 1981 Denmark 11.00 Oct. 1980 Norway 9.0 Nov. 1979 1. As from February 1981, the rate at which the Bank of France discounts discounts or makes advances against eligible commercial paper and/or Treasury bills for 7 to 10 days. government commercial banks or brokers. For countries with 2. MLR suspended as of August 20, 1981. more than one rate applicable to such discounts or advances, the rate NOTE. Rates shown are mainly those at which the central bank either shown is the one at which it is understood the central bank transacts the largest proportion of its credit operations. 3.27 FOREIGN SHORT-TERM INTEREST RATES Percent per annum, averages of daily figures 1981 CCoouunnttrryy,, oorr ttyyppee 11997788 11997799 11998800 Feb. Mar. Apr. May June July Aug. 1 Eurodollars 8.74 11.96 14.00 17.18 15.36 15.95 19.06 17.86 18.50 18.79 2 United Kingdom 9.18 13.60 16.59 13.12 12.58 12.26 12.34 12.61 13.63 14.02 3 Canada 8.52 11.91 13.12 17.28 16.85 17.35 18.96 19.28 19.67 21.84 4 Germany 3.67 6.64 9.45 10.74 13.44 13.12 13.06 13.05 12.92 12.87 5 Switzerland 0.74 2.04 5.79 7.09 8.33 8.67 9.87 10.02 9.76 9.05 6 Netherlands 6.53 9.33 10.60 9.78 10.61 10.41 11.76 11.81 12.38 13.54 7 France 8.10 9.44 12.18 11.87 12.56 13.00 15.75 18.84 17.34 17.40 8 Italy 11.40 11.85 17.50 17.50 18.22 19.92 19.92 20.49 20.78 20.94 9 Belgium 7.14 10.48 14.06 12.52 13.93 17.16 16.90 15.58 16.16 16.00 10 Japan 4.75 6.10 11.45 8.52 7.87 6.83 7.22 7.41 7.16 7.22 NOTE. Rates are for 3-month interbank loans except for the following: Canada, finance company paper; Belgium, 3-month Treasury bills; and Japan, Gensaki rate. 3.28 FOREIGN EXCHANGE RATES Cents per unit of foreign currency 1981 CCoouunnttrryy//ccuurrrreennccyy 11997788 11997799 11998800 Feb. Mar. Apr. May June July Aug. 1 Australia/dollar 114.41 111.77 114.00 116.26 116.29 115.32 114.06 114.07 114.27 113.99 2 Austria/schilling 6.8958 7.4799 7.7349 6.6033 6.6959 6.5355 6.1722 5.9502 5.8225 5.6968 3 Belgium/franc 3.1809 3.4098 3.4247 2.8972 2.8966 2.8220 2.6742 2.5734 2.5027 2.4466 4 Canada/dollar 87.729 85.386 85.530 83.442 83.936 83.966 83.265 83.050 82.601 81.766 5 Denmark/krone 18.156 19.010 17.766 15.152 15.109 14.683 13.864 13.384 13.074 12.732 6 Finland/markka 24.337 27.732 26.892 24.656 24.612 23.059 23.207 22.511 22.045 21.607 7 France/franc 22.218 23.504 23.694 20.142 20.147 19.548 18.225 17.679 17.253 16.720 8 Germany/deutsche mark 49.867 54.561 55.089 46.757 47.498 46.219 43.601 42.054 40.977 39.988 9 India/rupee 12.207 12.265 12.686 12.164 12.131 12.060 11.900 11.688 11.229 11.038 10 Ireland/pound 191.84 204.65 205.77 173.31 173.25 168.46 159.49 153.61 149.40 146.04 11 Italy/lira .11782 .12035 .11694 .09807 .09699 .09280 .08766 .08436 .08233 .08038 12 Japan/yen .47981 .45834 .44311 .48615 .47897 .46520 .45332 .44621 .43055 .42881 13 Malaysia/ringgit 43.210 45.720 45.967 44.196 43.830 43.182 42.752 42.720 42.519 42.119 14 Mexico/peso 4.3896 4.3826 4.3535 4.2544 4.2238 4.1880 4.1500 4.1066 4.0650 4.0301 15 Netherlands/guilder 46.284 49.843 50.369 42.870 42.912 41.660 39.224 37.816 36.833 36.009 16 New Zealand/dollar 103.64 102.23 97.337 93.414 91.999 90.273 88.150 85.823 83.771 82.331 17 Norway/krone 19.079 19.747 20.261 18.485 18.540 18.271 17.652 16.907 16.387 16.177 18 Portugal/escudo 2.2782 2.0437 1.9980 1.7722 1.7621 1.7178 1.6449 1.5899 1.5429 1.4999 19 South Africa/rand 115.01 118.72 128.54 129.27 126.50 123.32 119.35 115.18 108.46 105.27 20 Spain/peseta 1.3073 1.4896 1.3958 1.1686 1.1672 1.1395 1.0953 1.0565 1.0248 .99864 21 Sri Lanka/rupee 6.3834 6.4226 6.1947 5.5975 5.5527 5.4185 5.4422 5.3970 5.3491 5.1932 22 Sweden/krona 22.139 23.323 23.647 21.734 21.704 21.309 20.450 19.802 19.293 18.870 23 Switzerland/franc 56.283 60.121 59.697 51.502 52.043 50.664 48.400 48.226 47.667 46.091 24 United Kingdom/pound 191.84 212.24 232.58 229.41 223.19 217.53 208.84 197.38 187.37 182.03 MEMO: 25 United States/dollar1 92.39 88.09 87.39 96.02 96.22 98.80 103.59 106.86 109.87 112.29 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 Digitized forr eFvRiseAd SaEs Rof August 1978. For description and back data, see "Index of NOTE. Averages of certified noon buying rates in New York for cable transfers. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

69 Guide to Tabular Presentation, Statistical Releases, and Special Tables GUIDE TO TABULAR PRESENTATION Symbols and Abbreviations c Corrected 0 Calculated to be zero e Estimated n.a. Not available P Preliminary n.e.c. Not elsewhere classified r Revised (Notation appears on column heading IPCs Individuals, partnerships, and corporations when more than half of figures in that column REITs Real estate investment trusts are changed.) RPs Repurchase agreements * Amounts insignificant in terms of the last decimal SMSAs Standard metropolitan statistical areas place shown in the table (for example, less than Cell not applicable 500,000 when the smallest unit given is millions) General Information Minus signs are used to indicate (1) a decrease, (2) a negative obligations of the Treasury. "State and local government" figure, or (3) an outflow. also includes municipalities, special districts, and other politi- "U.S. government securities" may include guaranteed cal subdivisions. issues 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 rounding. STATISTICAL RELEASES List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for periodic releases June 1981 A78 SPECIAL TABLES Published Irregularly, with Latest Bulletin Reference Commercial bank assets and liabilities, call dates, December 31, 1978, to March 31, 1980 October 1980 A71 Commercial bank assets and liabilities, June 30, 1980 December 1980 A68 Commercial bank assets and liabilities, September 30, 1980 February 1981 A68 Commercial bank assets and liabilities, December 31, 1980 April 1981 A72 Assets and liabilities of U.S. branches and agencies of foreign banks, March 31, 1981 July 1981 A78 Commercial bank assets and liabilities, March 31, 1981 July 1981 A72 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

70 Federal Reserve Board of Governors PAUL A. VOLCKER, Chairman HENRY C. WALLICH FREDERICK H. SCHULTZ, Vice Chairman J. CHARLES PARTEE OFFICE OF BOARD MEMBERS OFFICE OF STAFF DIRECTOR FOR MONETARY AND FINANCIAL POLICY JOSEPH R. COYNE, Assistant to the Board DONALD J. WINN, Assistant to the Board STEPHEN H. AXILROD, Staff Director ANTHONY F. COLE, Special Assistant to the Board EDWARD C. ETTIN, Deputy Staff Director WILLIAM R. MALONI, Special Assistant to the Board MURRAY ALTMANN, Assistant to the Board FRANK O'BRIEN, JR., Special Assistant to the Board PETER M. KEIR, Assistant to the Board JOSEPH S. SIMS, Special Assistant to the Board STANLEY J. SIGEL, Assistant to the Board JAMES L. STULL, Manager, Operations Review Program NORMAND R. V. BERNARD, Special Assistant to the Board LEGAL DIVISION DIVISION OF RESEARCH AND STATISTICS MICHAEL BRADFIELD, General Counsel JAMES L. KICHLINE, Director ROBERT E. MANNION, Deputy General Counsel JOSEPH S. ZEISEL, Deputy Director J. VIRGIL MATTINGLY, JR., Associate General Counsel MICHAEL J. PRELL, Associate Director GILBERT T. SCHWARTZ, Associate General Counsel ROBERT A. EISENBEIS, Senior Deputy Associate Director MICHAEL E. BLEIER, Assistant General Counsel JARED J. ENZLER, Senior Deputy Associate Director MARYELLEN A. BROWN, Assistant to the General Counsel ELEANOR J. STOCKWELL, Senior Deputy Associate Director DONALD L. KOHN, Deputy Associate Director J. CORTLAND G. PERET, Deputy Associate Director OFFICE OF THE SECRETARY HELMUT F. WENDEL, Deputy Associate Director MARTHA BETHEA, Assistant Director WILLIAM W. WILES, Secretary JOE M. CLEAVER, Assistant Director BARBARA R. LOWREY, Assistant Secretary ROBERT M. FISHER, Assistant Director JAMES MCAFEE, Assistant Secretary DAVID E. LINDSEY, Assistant Director *D. MICHAEL MANIES, Assistant Secretary LAWRENCE SLIFMAN, 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 GRIFFITH L. GARWOOD, Deputy Director JERAULD C. KLUCKMAN, Associate Director EDWIN M. TRUMAN, Director GLENN E. LONEY, Assistant Director ROBERT F. GEMMILL, Associate Director DOLORES S. SMITH, Assistant Director CHARLES J. SIEGMAN, Associate Director LARRY J. PROMISEL, Senior Deputy Associate Director DALE W. HENDERSON, Deputy Associate Director DIVISION OF BANKING SAMUEL PIZER, Staff Adviser SUPERVISION AND REGULATION RALPH W. SMITH, JR., Assistant Director JOHN E. RYAN, Director FREDERICK R. DAHL, Associate Director WILLIAM TAYLOR, 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 LAURA M. HOMER, Securities Credit Officer Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

71 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 ITONY J. SALVAGGIO, Acting Staff Director THEODORE E. ALLISON, Staff Director WOHN M. DENKLER, Staff Director HARRY A. GUINTER, Assistant Director for Contingency EDWARD T. MULRENIN, Assistant Staff Director Planning JOSEPH W. DANIELS, SR., Director of Equal Employment Opportunity DIVISION OF FEDERAL RESERVE BANK OPERATIONS DIVISION OF DATA PROCESSING CLYDE H. FARNSWORTH, JR., Director CHARLES L. HAMPTON, Direct&r LORIN S. MEEDER, Associate Director BRUCE M. BEARDSLEY, Associate Director WALTER ALTHAUSEN, Assistant Director IUYLESS D. BLACK, Deputy Director CHARLES W. BENNETT, Assistant Director GLENN L. CUMMINS, Assistant Director RICHARD B. GREEN, Assistant Director NEAL H. HILLERMAN, Assistant Director ELLIOTT C. MCENTEE, Assistant Director C. WILLIAM SCHLEICHER, JR., Assistant Director DAVID L. ROBINSON, Assistant Director ROBERT J. ZEMEL, Associate Director P.D. RING, Adviser §HOWARD F. CRUMB, Acting Adviser DIVISION OF PERSONNEL DAVID L. SHANNON, Director JOHN R. WEIS, Assistant Director CHARLES W. WOOD, Assistant Director OFFICE OF THE CONTROLLER JOHN KAKALEC, Controller GEORGE E. LIVINGSTON, Assistant Controller DIVISION OF SUPPORT SERVICES DONALD E. ANDERSON, Director ROBERT E. FRAZIER, Associate Director WALTER W. KREIMANN, Associate Director *On loan from the Federal Reserve Bank of Kansas City. tOn loan from the Federal Reserve Bank of Dallas. tOn leave of absence. §On loan from the Federal Reserve Bank of New York. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Federal Reserve Bulletin • September 1981 FOMC and Advisory Councils FEDERAL OPEN MARKET COMMITTEE PAUL A. VOLCKER, Chairman ANTHONY M. SOLOMON, Vice Chairman EDWARD G. BOEHNE LYLE E. GRAMLEY FREDERICK H. SCHULTZ ROBERT H. BOYKIN SILAS KEEHN NANCY H. TEETERS E. GERALD CORRIGAN J. CHARLES PARTEE HENRY C. WALLICH EMMETT J. RICE STEPHEN H. AXILROD, Staff Director JOHN P. DANFORTH, Associate Economist MURRAY ALTMANN, Secretary RICHARD G. DAVIS, Associate Economist NORMAND R. V. BERNARD, Assistant Secretary EDWARD C. ETTIN, Associate Economist NANCY M. STEELE, Deputy Assistant Secretary PETER M. KEIR, Associate Economist MICHAEL BRADFIELD, General Counsel DONALD J. MULLINEAUX, Associate Economist JAMES H. OLTMAN, Deputy General Counsel MICHAEL J. PRELL, Associate Economist ROBERT E. MANNION, Assistant General Counsel KARL L. SCHELD, Associate Economist JAMES L. KICHLINE, Economist EDWIN M. TRUMAN, Associate Economist JOSEPH E. BURNS, Associate Economist JOSEPH S. ZEISEL, Associate Economist PETER D. STERNLIGHT, Manager for Domestic Operations, System Open Market Account SAM Y. CROSS, Manager for Foreign Operations, System Open Market Account FEDERAL ADVISORY COUNCIL MERLE E. GILLIAND, Fourth District, President CHAUNCEY E. SCHMIDT, Twelfth District, Vice President WILLIAM S. EDGERLY, First District ROBERT M. SURDAM, Seventh District DONALD C. PLATTEN, Second District RONALD TERRY, Eighth District JOHN W. WALTHER, Third District CLARENCE G. FRAME, Ninth District J. OWEN COLE, Fifth District GORDON E. WELLS, Tenth District ROBERT STRICKLAND, Sixth District T. C. FROST, JR., Eleventh District HERBERT V. PROCHNOW, Secretary WILLIAM J. KORSVIK, Associate Secretary CONSUMER ADVISORY COUNCIL RALPH J. ROHNER, Washington, D.C., Chairman CHARLOTTE H. SCOTT, Charlottesville, Virginia, Vice Chairman ARTHUR F. BOUTON, Little Rock, Arkansas F. THOMAS JUSTER, Ann Arbor, Michigan JULIA H. BOYD, Alexandria, Virginia RICHARD F. KERR, Palm City, Florida ELLEN BROADMAN, Washington, D.C. HARVEY M. KUHNLEY, Minneapolis, Minnesota JAMES L. BROWN, Milwaukee, Wisconsin THE REV. ROBERT J. MCEWEN, S.J., Chestnut Hill, MARK E. BUDNITZ, Atlanta, Georgia Massachusetts JOSEPH N. CUGINI, Westerly, Rhode Island STAN L. MULARZ, Chicago, Illinois RICHARD S. D'AGOSTINO, Philadelphia, Pennsylvania WILLIAM J. O'CONNOR, Buffalo, New York SUSAN PIERSON DE WITT, Springfield, Illinois MARGARET REILLY-PETRONE, Upper Montclair, New Jersey JOANNE S. FAULKNER, New Haven, Connecticut RENE REIXACH, Rochester, New York LUTHER GATLING, New York, New York FLORENCE M. RICE, New York, New York VERNARD W. HENLEY, Richmond, Virginia HENRY B. SCHECHTER, Washington, D.C. JUAN JESUS HINOJOSA, McAllen, Texas PETER D. SCHELLIE, Washington, D.C. SHIRLEY T. HOSOI, Los Angeles, California NANCY Z. SPILLMAN, LOS Angeles, California GEORGE S. IRVIN, Denver, Colorado RICHARD A. VAN WINKLE, Salt Lake City, Utah MARY W. WALKER, Monroe, Georgia Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

73 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK, Chairman President Vice President branch, or facility Zip Deputy Chairman First Vice President in charge of branch BOSTON* 02106 Robert P. Henderson Frank E. Morris Thomas I. Atkins 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 Edward G. Boehne Jean A. Crockett Richard L. Smoot CLEVELAND* 44101 J. L. Jackson Willis J. Winn William H. Knoell Walter H. MacDonald Cincinnati 45201 Martin B. Friedman Robert E. Showalter Pittsburgh 15230 Milton G. Hulme, Jr. Harold J. Swart RICHMOND* 23219 Maceo A. Sloan Robert P. Black Steven Muller Jimmie R. Monhollon Baltimore 21203 Edward H. Covell Robert D. McTeer, Jr. Charlotte 28230 Naomi G. Albanese Stuart P. Fishburne Culpeper Communications and Records Center 22701 Albert D. Tinkelenberg ATLANTA 30301 William A. Fickling, Jr. William F. Ford John H. Weitnauer, Jr. Robert P. Forrestal Birmingham 35202 Louis J. Willie Hiram J. Honea Jacksonville 32231 Jerome P. Keuper Charles D. East Miami 33152 Roy W. Vandegrift, Jr. F. J. Craven, Jr. Nashville 37203 John C. Bolinger, Jr. Jeffrey J. Wells New Orleans 70161 Horatio C. Thompson James D. Hawkins CHICAGO* 60690 John Sagan Silas Keehn Stanton R. Cook Daniel M. Doyle Detroit 48231 Herbert H. Dow 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 Sister Eileen M. Egan Donald L. Henry Memphis 38101 Patricia W. Shaw Robert E. Matthews MINNEAPOLIS 55480 Stephen F. Keating E. Gerald Corrigan William G. Phillips Thomas E. Gainor Helena 59601 Norris E. Hanford Betty J. Lindstrom KANSAS CITY 64198 Paul H. Henson Roger Guffey Doris M. Drury 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 Gerald D. Hines Robert H. Boykin John V. James William H. Wallace El Paso 79999 Josefina A. Salas-Porras Joel L. Koonce, Jr. Houston 77001 Jerome L. Howard J. Z. Rowe San Antonio 78295 Lawrence L. Crum Thomas H. Robertson 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 John C. Hampton Angelo S. Carella Salt Lake City 84130 Wendell J. Ashton A. Grant Holman Seattle 98124 George H. Weyerhaeuser 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

74 Federal Reserve Board Publications Copies are available from PUBLICATIONS SERVICES, payable to the order of the Board of Governors of the Federal Room MP-510, Board of Governors of the Federal Reserve Reserve System. Remittance from foreign residents should System, Washington, D.C. 20551. When a charge is indicat- be drawn on a U.S. bank. Stamps and coupons are not ed, remittance should accompany request and be made accepted. THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNC- JOINT TREASURY-FEDERAL RESERVE STUDY OF THE GOV- TIONS. 1974. 125 pp. ERNMENT SECURITIES MARKET; STAFF STUDIES—PART ANNUAL REPORT. 1. 1970. 86 pp. $.50 each; 10 or more to one address, $.40 FEDERAL RESERVE BULLETIN. Monthly. $20.00 per year or each. Part 2, 1971. 153 pp. and Part 3, 1973. 131 pp. Each $2.00 each in the United States, its possessions, Canada, volume $1.00; 10 or more to one address, $.85 each. and Mexico; 10 or more of same issue to one address, OPEN MARKET POLICIES AND OPERATING PROCEDURES— $18.00 per year or $1.75 each. Elsewhere, $24.00 per STAFF STUDIES. 1971. 218 pp. $2.00 each; 10 or more to year or $2.50 each. one address, $1.75 each. BANKING AND MONETARY STATISTICS. 1914-1941. (Reprint REAPPRAISAL OF THE FEDERAL RESERVE DISCOUNT MECHAof Part I only) 1976. 682 pp. $5.00. NISM. Vol. 1. 1971. 276 pp. Vol. 2. 1971. 173 pp. Vol. 3. BANKING AND MONETARY STATISTICS, 1941-1970. 1976. 1972. 220 pp. Each volume $3.00; 10 or more to one 1,168 pp. $15.00. address, $2.50 each. THE ECONOMETRICS OF PRICE DETERMINATION CONFER- ANNUAL STATISTICAL DIGEST ENCE, October 30-31, 1970, Washington, D.C. 1972. 397 1971-75. 1976. 339 pp. $4.00 per copy for each paid pp. Cloth ed. $5.00 each; 10 or more to one address, subscription to Federal Reserve Bulletin; all others $4.50 each. Paper ed. $4.00 each; 10 or more to one $5.00 each. address, $3.60 each. 1972-76. 1977. 377 pp. $10.00 per copy. FEDERAL RESERVE STAFF STUDY: WAYS TO MODERATE 1973-77. 1978. 361 pp. $12.00 per copy. FLUCTUATIONS IN HOUSING CONSTRUCTION. 1972. 487 1974-78. 1980. 305 pp. $10.00 per copy. pp. $4.00 each; 10 or more to one address, $3.60 each. 1970-79. 1981. 587 pp. $20.00 per copy. LENDING FUNCTIONS OF THE FEDERAL RESERVE BANKS. 1973. 271 pp. $3.50 each; 10 or more to one address, FEDERAL RESERVE CHART BOOK. Issued four times a year in $3.00 each. February, May, August, and November. Subscription IMPROVING THE MONETARY AGGREGATES: REPORT OF THE includes one issue of Historical Chart Book. $7.00 per ADVISORY COMMITTEE ON MONETARY STATISTICS. year or $2.00 each in the United States, its possessions, 1976. 43 pp. $1.00 each; 10 or more to one address, $.85 Canada, and Mexico. Elsewhere, $10.00 per year or each. $3.00 each. ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— HISTORICAL CHART BOOK. Issued annually in Sept. Subscrip- Regulation Z) Vol. I (Regular Transactions). 1969. 100 tion to Federal Reserve Chart Book includes one issue. pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each $1.25 each in the United States, its possessions, Canada, volume $1.00; 10 or more of same volume to one and Mexico; 10 or more to one address, $1.00 each. address, $.85 each. Elsewhere, $1.50 each. FEDERAL RESERVE MEASURES OF CAPACITY AND CAPACITY SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SE- UTILIZATION. 1978. 40 pp. $1.75 each; 10 or more to one RIES OF CHARTS. Weekly. $15.00 per year or $.40 each in address, $1.50 each. the United States, its possessions, Canada, and Mexico; THE BANK HOLDING COMPANY MOVEMENT TO 1978: A 10 or more of same issue to one address, $13.50 per year COMPENDIUM. 1978. 289 pp. $2.50 each; 10 or more to or $.35 each. Elsewhere, $20.00 per year or $.50 each. one address, $2.25 each. THE FEDERAL RESERVE ACT, as amended through December IMPROVING THE MONETARY AGGREGATES: STAFF PAPERS. 1976, with an appendix containing provisions of certain 1978. 170 pp. $4.00 each; 10 or more to one address, other statutes affecting the Federal Reserve System. 307 $3.75 each. pp. $2.50. 1977 CONSUMER CREDIT SURVEY. 1978. 119 pp. $2.00 each. REGULATIONS OF THE BOARD OF GOVERNORS OF THE FED- FLOW OF FUNDS ACCOUNTS. 1949-1978. 1979. 171 pp. $1.75 ERAL RESERVE SYSTEM each; 10 or more to one address, $1.50 each. PUBLISHED INTERPRETATIONS OF THE BOARD OF GOVER- NORS, as of June 30, 1980. $7.50. INTRODUCTION TO FLOW OF FUNDS. 1980. 68 pp. $1.50 each; 10 or more to one address, $1.25 each. BANK CREDIT-CARD AND CHECK-CREDIT PLANS. 1968. 102 pp. $1.00 each; 10 or more to one address, $.85 each. PUBLIC POLICY AND CAPITAL FORMATION. 1981. 326 pp. $13.50 each. REPORT OF THE JOINT TREASURY-FEDERAL RESERVE STUDY OF THE U.S. GOVERNMENT SECURITIES MARKET. 1969. NEW MONETARY CONTROL PROCEDURES: FEDERAL RE- 48 pp. $.25 each; 10 or more to one address, $.20 each. SERVE STAFF STUDY, 1981. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

75 CONSUMER EDUCATION PAMPHLETS Richard D. Raddock, and Zoltan E. Kenessey. July Short pamphlets suitable for classroom use. Multiple 1979. 264 pp. copies available without charge. THE GNMA-GUARANTEED PASSTHROUGH SECURITY: MAR- KET DEVELOPMENT AND IMPLICATIONS FOR THE Alice in Debitland GROWTH AND STABILITY OF HOME MORTGAGE LEND- The Board of Governors of the Federal Reserve System ING, by David F. Seiders. Dec. 1979. 65 pp. Consumer Handbook To Credit Protection Laws PERFORMANCE AND CHARACTERISTICS OF EDGE CORPORA- The Equal Credit Opportunity Act and . . . Age TIONS, by James V. Houpt. Feb. 1981. 56 pp. The Equal Credit Opportunity Act and . . . Credit Rights in BANKING STRUCTURE AND PERFORMANCE AT THE STATE Housing LEVEL DURING THE 1970S, by Stephen A. Rhoades. Mar. The Equal Credit Opportunity Act and . . . Doctors, Law- 1981. 26 pp. yers, Small Retailers, and Others Who May Provide FEDERAL RESERVE DECISIONS ON BANK MERGERS AND AC- Incidental Credit QUISITIONS DURING THE 1970s, by Stephen A. Rhoades. The Equal Credit Opportunity Act and . . . Women Aug. 1981. 16 pp. Fair Credit Billing The Board of Governors of the Federal Reserve System The Federal Open Market Committee Federal Reserve Bank Board of Directors REPRINTS Federal Reserve Banks Most of the articles reprinted do not exceed 12 pages. Federal Reserve Glossary Monetary Control Act of 1980 Measures of Security Credit. 12/70. How to File A Consumer Credit Complaint Revision of Bank Credit Series. 12/71. If You Borrow To Buy Stock Assets and Liabilities of Foreign Branches of U.S. Banks. If You Use A Credit Card 2/72. Truth in Leasing Bank Debits, Deposits, and Deposit Turnover—Revised Se- U.S. Currency ries. 7/72. What Truth in Lending Means to You Rates on Consumer Instalment Loans. 9/73. New Series for Large Manufacturing Corporations. 10/73. The Structure of Margin Credit. 4/75. STAFF STUDIES Industrial Electric Power Use. 1/76. Studies and papers on economic and financial subjects Revised Series for Member Bank Deposits and Aggregate that are of general interest. Reserves. 4/76. Industrial Production—1976 Revision. 6/76. Summaries Only Printed in the Bulletin Federal Reserve Operations in Payment Mechanisms: A Requests to obtain single copies of the full text or to be Summary. 6/76. added to the mailing list for the series may be sent to The Federal Budget in the 1970's. 9/78. Publications Services. Implementation of the International Banking Act. 10/79. Perspectives on Personal Saving. 8/80. TIE-INS BETWEEN THE GRANTING OF CREDIT AND SALES OF The Impact of Rising Oil Prices on the Major Foreign INSURANCE BY BANK HOLDING COMPANIES AND OTHER Industrial Countries. 10/80. LENDERS, by Robert A. Eisenbeis and Paul R. Schweit- Federal Reserve and the Payments System: Upgrading Eleczer. Feb. 1979. 75 pp. tronic Capabilities for the 1980s. 2/81. MEASURES OF CAPACITY UTILIZATION: PROBLEMS AND U.S. International Transactions in 1980. 4/81. TASKS, by Frank de Leeuw, Lawrence R. Forest, Jr., Survey of Finance Companies, 1980. 5/81. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

76 Index to Statistical Tables References are to pages A3 through A68 although the prefix "A" is omitted in this index ACCEPTANCES, bankers, 10, 25, 27 Demand deposits—Continued Agricultural loans, commercial banks, 18, 19, 20, 26 Subject to reserve requirements, 14 Assets and liabilities (See also Foreigners) Turnover, 12 Banks, by classes, 17, 18-21 Depository institutions Domestic finance companies, 39 Reserve requirements, 8 Federal Reserve Banks, 11 Reserves, 3, 4, 5, 14 Foreign banks, U.S. branches and agencies, 22 Deposits (See also specific types) Nonfinancial corporations, current, 38 Banks, by classes, 3, 17, 18-21, 29 Savings institutions, 29 Federal Reserve Banks, 4, 11 Automobiles Turnover, 12 Consumer installment credit, 42, 43 Discount rates at Reserve Banks (See Interest rates) Production, 48, 49 Discounts and advances by Reserve Banks (See Loans) Dividends, corporate, 37 BANKERS balances, 17, 18-20 (See also Foreigners) Banks for Cooperatives, 35 Bonds (See also U.S. government securities) EMPLOYMENT, 46, 47 New issues, 36 Eurodollars, 27 Yields, 3 Branch banks, 15, 21, 22, 56 FARM mortgage loans, 41 Business activity, nonfinancial, 46 Federal agency obligations, 4, 10, 11, 12, 34 Business expenditures on new plant and equipment, 38 Federal and federally sponsored credit agencies, 35 Business loans (See Commercial and industrial loans) Federal finance Debt subject to statutory limitation and types and CAPACITY utilization, 46 ownership of gross debt, 32 Capital accounts Receipts and outlays, 31 Banks, by classes, 17 Treasury operating balance, 30 Federal Reserve Banks, 11 Federal Financing Bank, 30, 35 Central banks, 68 Federal funds, 3, 6, 18, 19, 20, 27, 30 Certificates of deposit, 21, 27 Federal Home Loan Banks, 35 Commercial and industrial loans Federal Home Loan Mortgage Corporation, 35, 40, 41 Commercial banks, 15, 17, 22, 26 Federal Housing Administration, 35, 40, 41 Weekly reporting banks, 18-22, 23 Federal Intermediate Credit Banks, 35 Commercial banks Federal Land Banks, 35, 41 Assets and liabilities, 3, 15, 17, 18-21 Federal National Mortgage Association, 35, 40, 41 Business loans, 26 Federal Reserve Banks Commercial and industrial loans, 15, 17, 22, 23, 26 Condition statement, 11 Consumer loans held, by type, 42, 43 Discount rates (See Interest rates) Loans sold outright, 21 U.S. government securities held, 4, 11, 12, 32, 33 Nondeposit funds, 16 Federal Reserve credit, 4, 5, 11, 12 Number, 17 Federal Reserve notes, 11 Real estate mortgages held, by holder and property, 41 Federally sponsored credit agencies, 35 Commercial paper, 3, 25, 27, 39 Finance companies Condition statements (See Assets and liabilities) Assets and liabilities, 39 Construction, 46, 50 Business credit, 39 Consumer installment credit, 42, 43 Loans, 18, 19, 20, 42, 43 Consumer prices, 46, 51 Paper, 25, 27 Consumption expenditures, 52, 53 Financial institutions, loans to, 18, 19, 20 Corporations Float, 4 Profits and their distribution, 37 Flow of funds, 44, 45 Security issues, 36, 65 Foreign banks, assets and liabilities of U.S. branches and Cost of living (See Consumer prices) agencies, 22 Credit unions, 29, 42,.43 Foreign currency operations, 11 Currency and coin, 5, 17 Foreign deposits in U.S. banks, 4, 11, 18, 19, 20 Currency in circulation, 4, 13 Foreign exchange rates, 68 Customer credit, stock market, 28 Foreign trade, 55 Foreigners DEBITS to deposit accounts, 12 Claims on, 56, 58, 61, 62, 63, 67 Debt (See specific types of debt or securities) Liabilities to, 21, 56-60, 64-66 Demand deposits Adjusted, commercial banks, 12, 14 Banks, by classes, 17, 18-21 GOLD Ownership by individuals, partnerships, and Certificates, 11 corporations, 24 Stock, 4, 55 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

All Government National Mortgage Association, 35, 40, 41 REAL estate loans Gross national product, 52, 53 Banks, by classes, 18-20, 41 Mortgage terms, yields, and activity, 3, 40 HOUSING, new and existing units, 50 Savings institutions, 27 Type of holder and property mortgaged, 41 INCOME, personal and national, 46, 52, 53 Repurchase agreements and federal funds, 6, 18, 19, 20 Industrial production, 46, 48 Reserve requirements, 8 Installment loans, 42, 43 Reserves Insurance companies, 29, 32, 33, 41 Commercial banks, 17 Interbank loans and deposits, 17 Depository institutions, 3, 4, 5, 14 Interest rates Federal Reserve Banks, 11 Bonds, 3 Member banks, 14 Business loans of banks, 26 U.S. reserve assets, 55 Federal Reserve Banks, 3, 7 Residential mortgage loans, 40 Foreign countries, 68 Retail credit and retail sales, 42, 43, 46 Money and capital markets, 3, 27 Mortgages, 3, 40 SAVING Prime rate, commercial banks, 26 Flow of funds, 44, 45 Time and savings deposits, 9 National income accounts, 53 International capital transactions of the Savings and loan assns., 3, 9, 29, 33, 41, 44 United States, 56-67 Savings deposits (See Time deposits) International organizations, 56-61, 64-67 Savings institutions, selected assets and liabilities, 29 Inventories, 52 Securities (See also U.S. government securities) Investment companies, issues and assets, 37 Federal and federally sponsored agencies, 35 Investments (See also specific types) Foreign transactions, 65 Banks, by classes, 17, 29 New issues, 36 Commercial banks, 3, 15, 17, 18-20 Prices, 28 Federal Reserve Banks, 11, 12 Special drawing rights, 4, 11, 54, 55 Savings institutions, 29, 41 State and local governments Deposits, 18, 19, 20 LABOR force, 47 Holdings of U.S. government securities, 32, 33 Life insurance companies (See Insurance companies) New security issues, 36 Loans (See also specific types) Ownership of securities of, 18, 19, 20, 29 Banks, by classes, 17, 18—21 Yields of securities, 3 Commercial banks, 3, 15, 17, 18-21, 22, 26 Stock market, 28 Federal Reserve Banks, 3, 4, 5, 7, 11, 12 Stocks (See also Securities) Insured or guaranteed by United States, 40, 41 New issues, 36 Savings institutions, 29, 41 Prices, 28 TAX receipts, federal, 31 MANUFACTURING Thrift institutions (See Savings institutions) Capacity utilization, 46 Time deposits, 3, 9, 12, 14, 17, 18-21 Production, 46, 49 Trade, foreign, 55 Margin requirements, 28 Treasury currency, Treasury cash, 4 Member banks Treasury deposits, 4, 11, 30 Borrowing at Federal Reserve Banks, 5, 11 Treasury operating balance, 30 Federal funds and repurchase agreements, 6 Reserve requirements, 8 UNEMPLOYMENT, 47 Reserves and related items, 14 U.S. balance of payments, 54 Mining production, 49 U.S. government balances Mobile home shipments, 50 Commercial bank holdings, 18, 19, 20 Monetary aggregates, 3, 14 Member bank holdings, 14 Money and capital market rates (See Interest Treasury deposits at Reserve Banks, 4, 11, 30 rates) U.S. government securities Money stock measures and components, 3, 13 Bank holdings, 17, 18-20, 32, 33 Mortgages (See Real estate loans) Dealer transactions, positions, and financing, 34 Mutual funds (See Investment companies) Federal Reserve Bank holdings, 4, 11, 12, 32, 33 Mutual savings banks, 3, 9, 18-20, 29, 32, 33, 41 Foreign and international holdings and transactions, 11, 32, 64 NATIONAL defense outlays, 31 Open market transactions, 10 National income, 52 Outstanding, by type and ownership, 32, 33 Rates, 3, 27 OPEN market transactions, 10 Savings institutions, 29 Utilities, production, 49 PERSONAL income, 53 Prices VETERANS Administration, 40, 41 Consumer and producer, 46, 51 Stock market, 28 WEEKLY reporting banks, 18-23 Prime rate, commercial banks, 26 Wholesale (producer) prices, 46, 51 Production, 46, 48 Profits, corporate, 37 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

78 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories LEGEND Boundaries of Federal Reserve Districts ® Federal Reserve Bank Cities Boundaries of Federal Reserve Branch • Federal Reserve Branch Cities Territories Federal Reserve Bank Facility Q Board of Governors of the Federal Reserve System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis