Federal Reserve Bulletin, 1982-08

AUGUST 1982 FEDERAL RESERVE BULLETIN Monetary Policy Report to Congress Profitability of Insured Commercial Banks Federal Reserve System Pricing: An Overview Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The FEDERAL RESERVE BULLETIN (ISSN 0014-9209) may be obtained from PUBLICATIONS SERVICES, Board of Governors of the Federal Reserve System, Washington, D.C. 20551, and remittance should be made payable to the order of the Board of Governors of the Federal Reserve System in a form collectible at par in U.S. currency. (Stamps and coupons are not accepted.) Second-Class Postage Paid at Washington, D.C., and at an additional mailing office. POSTMASTER: Send address changes to PUBLICATIONS SERVICES, MP-510, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. A copy of the FEDERAL RESERVE BULLETIN is sent to each member bank without charge; member banks desiring additional copies may secure them at a special S10.00 annual rate. The regular subscription price in the United States and its possessions, and in Bolivia. Canada. Chile. Colombia. Costa Rica. Cuba. Dominican Republic. Ecuador. Guatemala. Haiti. Republic of Honduras. Mexico. Nicaragua. Panama. Paraguay. Peru. El Salvador. Uruguay, and Venezuela is $20.00 per annum or S2.00 per copy: elsewhere. S24.00 per annum or S2.50 per copy. Group subscriptions in the United States for 10 or more copies to one address. SI.75 per copy per month, or S18.00 for 12 months. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

VOLUME 68 • NUMBER 8 • AUGUST 1982 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 John M. Denkler • Griffith L. Garwood • James L. Kichline • 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. It is assisted by the Economic Editing Unit headed by Mendelle T. Berenson, the Graphic Communications Section under the direction of Peter G. Thomas, and Publications Services supervised by Helen L. Hulen. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 443 MONETAR Y POLICY REPORT TO ing requirements and says that the Federal CONGRESS Reserve believes the Bank Secrecy Act remains an effective investigative tool in The contraction in economic activity that enforcing the nation's laws against drug had begun in mid-1981 continued into the trafficking, tax evasion, and other efforts to first half of 1982 although at a diminished launder or conceal illegal financial transacpace, and the recession seemed to be drawtions, before the Subcommittee on General ing to a close. Oversight and Renegotiation of the Committee on Banking, Finance and Urban Af- 453 PROFITABILITY OF INSURED fairs, U.S. House of Representatives, July COMMERCIAL BANKS 13, 1982. Profitability of insured commercial banks weakened slightly during 1981 from recent 483 Preston Martin, Vice Chairman, Board of high rates. Governors of the Federal Reserve System, testifies that the Federal Reserve does not 467 FEDERAL RESERVE SYSTEM PRICING. believe that credit controls are an effective, AN OVERVIEW efficient, or fair method to deal with high interest rates or inflation when the more The basic purpose to be served by a contingeneral instruments of monetary and fiscal ued Federal Reserve presence in the paypolicy can be used, before the Consumer ments service area is to contribute to the Affairs and Coinage Subcommittee of the efficiency and integrity of the payments Committee on Banking, Finance and Urban mechanism. Affairs, U.S. House of Representatives, July 15, 1982. 477 STAFF STUDIES "Structure-Performance Studies in Bank- 487 Paul A. Volcker, Chairman, Board of Goving: An Updated Summary and Evalua- ernors of the Federal Reserve System, distion" indicates that the structure-perform- cusses monetary policy; enlarges on some ance analytical framework is being adapted aspects of the Humphrey-Hawkins report; to a wider range of uses, and banking is a and says that as recovery starts, the cash convenient laboratory to investigate hy- flow of business should improve and interpotheses that arise in the field of industrial est rates should start to come down, before organization. the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, July 20, 1982; 479 INDUSTRIAL PRODUCTION and before the Committee on Banking, Finance and Urban Affairs, U.S. House of Output declined about 0.1 percent in July. Representatives, July 21, 1982. 481 STATEMENTS TO CONGRESS 494 Chairman Volcker reviews the monetary John E. Ryan, Director, Division of Bank- and budgetary situation and says that the ing Supervision and Regulation, Board of basic objective of the Federal Reserve mon- Governors, evaluates the enforcement and etary policy is the fostering of an environuse of the Bank Secrecy Act and its report- ment conducive to sustained recovery in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

business activity while maintaining the fi- 499 LEGAL DEVELOPMENTS nancial discipline needed to restore reason- Various bank holding company orders, and able price stability: in light of that goal, the pending cases. Federal Open Market Committee has concluded that the quantitative objectives for A l FINANCIAL AND B USINESS STA TISTICS the various monetary aggregates should not be changed at this time, before the Commit- A3 Domestic Financial Statistics tee on the Budget, U.S. Senate, July 28, A46 Domestic Nonfinancial Statistics 1982. A54 International Statistics 497 ANNOUNCEMENTS A69 GUIDE TO TABULAR PRESENTATION, STATISTICAL RELEASES, AND SPECIAL Changes in the discount rate. TABLES Planned revisions in priced services offered to depository institutions. A70 BOARD OF GOVERNORS AND STAFF Publication of a revised list of over-the- A72 FEDERAL OPEN MARKET COMMITTEE counter stocks that are subject to the AND STAFF; ADVISORY COUNCILS Board's margin regulations. Proposed changes in ways to deal with A73 FEDERAL RESERVE BANKS, reduced rate financing in Truth in Lending BRANCHES, AND OFFICES disclosures; proposed modification of the System's check processing and collection A74 FEDERAL RESERVE BOARD procedures. PUBLICATIONS Change in Board staff. A76 INDEX TO STATISTICAL TABLES Admission of six state banks to membership in the Federal Reserve System. A78 MAP OF FEDERAL RESERVE SYSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to Congress Report submitted to the Congress on July 20, mentum of inflation, have diminished considera- 1982, pursuant to the Full Employment and bly. Not only have wage increases eased for Balanced Growth Act of 1978.1 union workers in hardpressed industries as a result of contract concessions, but wage and fringe benefit increases also have slowed for THE PERFORMANCE OF THE ECONOMY nonunion and white-collar workers in a broad IN THE FIRST HALF OF 1982 range of industries. In addition there has been increasing use of negotiated workrule changes as The contraction in economic activity that began well as other efforts by business to enhance in mid-1981 continued into the first half of 1982, productivity and trim costs. At the same time, although at a diminished pace. Declines in pro- purchasing power has been rising; real compenduction and employment slowed, while sales of sation per hour increased 1 percent during 1981 automobiles improved. Real gross national prod- and rose at an annual rate of about 3 percent over uct fell at an annual rate of 4 percent between the the first half of 1982. third quarter of 1981 and the first quarter of 1982. With output declining, the margin of unused plant capacity widened and the unemployment Interest Rates rate rose to a postwar record. By mid-1982, however, the recession seemed As the recession developed in the autumn of to be drawing to a close. Inventory positions had 1981, short-term interest rates moved down subimproved substantially, home building was be- stantially. However, part of this decline was ginning to revive, and consumer spending ap- retraced at the turn of the year as the demand for peared to be rising. Nonetheless, business in- money bulged and reserve positions tightened. vestment showed signs of increased weakness. After the middle of the first quarter, short-term Although final demands apparently fell during rates fluctuated but generally trended downthe second quarter, the rate of inventory liquida- ward, as money—particularly the narrow meation slowed, and on balance, real GNP apparent- sure, Ml—grew slowly on average and the weakly changed little. If, in fact, this spring or early ness in economic activity continued. In mid-July, summer is determined to have been the cyclical short-term rates were distinctly below the peak trough, both the depth and duration of the de- levels reached in 1980 and 1981. Nonetheless, cline in activity will have been about the same as short-term rates were still quite high relative to in other postwar recessions. the rate of inflation. The progress in reducing inflation that began Long-term interest rates also remained high during 1981 continued in the first half of 1982. during the first half of 1982. In part, this reflected The greatest improvement was in prices of food doubts by market participants that the improved and energy—which benefited from favorable price performance would be sustained over the supply conditions—but increases in price mea- longer run. This skepticism was related to the sures that exclude these volatile items also have fact that, during the past two decades, episodes slowed markedly. Moreover, increases in em- of reduced inflation have been short-lived, folployment costs, which carry forward the mo- lowed by reacceleration to even faster rates of price increase. High long-term rates also have been fostered by the prospect of huge deficits in 1. The charts for the report are available on request from the federal budget even as the economy recov- Publications Services, Board of Governors of the Federal ers. Fears of deepening deficits have affected Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

444 Federal Reserve Bulletin • August 1982 expectations of future credit market pressures, large share of business borrowing this year has and perhaps also have sustained inflation expec- been accomplished in short-term markets—at tations. The resolution on the 1983 fiscal year banks and through sales of commercial paper. budget that was adopted by the Congress repre- The persistently large volume of business borsents a beginning effort to deal with the prospect rowing suggests an accumulation of liquid assets of widening deficits; and the passage of imple- as well as an intensification of financial pressures menting legislation should work in the direction on at least some firms. Signs of corporate stress of reducing market pressures on interest rates. continue to mount, including increasing numbers of dividend reductions or suspensions, a rising fraction of business loans at commercial banks Domestic Credit Flows with interest or principal past due, and relatively frequent downgradings of credit ratings. Aggregate credit flows to private nonfinancial After raising a record volume of funds in U.S. borrowers increased somewhat in the first half of credit markets in 1981, the federal government 1982 from the reduced pace in the second half of continued to borrow at an extraordinary pace 1981, according to very preliminary estimates. during the first half of 1982 as receipts (national Business borrowing rose while households re- income and product accounts basis) fell while duced further their use of credit. Borrowing by expenditures continued to rise. Owing to the the federal government increased sharply in late second phase of the tax cut that went into effect 1981, after the 5 percent cut in personal income on July 1 and the effects on tax revenues of the tax rates, and remained near the new higher level recession and reduced inflation, federal credit on a seasonally adjusted basis during the first demands will expand further in the period ahead. half of 1982. Reflecting uncertainties about the future economic and financial environment, both lenders and borrowers have shown a strong Consumption preference for short-term instruments. Much of the slackening in credit flows to Personal consumption expenditures (adjusted for nonfinancial sectors in the last part of 1981 was inflation) fell sharply in the fourth quarter of accounted for by households, particularly by 1981, but turned up early in 1982 and apparently household mortgage borrowing. Since then, strengthened further during the second quarter. mortgage credit flows have picked up slightly. The weakness in consumer outlays during the The advance was encouraged in part by the fourth quarter was concentrated in the auto gradual decline in mortgage rates from the peaks sector, as total sales fell to an annual rate of 7.4 of last fall. In addition, households have made million units—the lowest quarterly figure in more widespread use of adjustable-rate mortgages and than a decade—and sales of domestic models "creative" financing techniques—including rela- plummeted to a rate of 5.1 million units. tively short-term loans made by sellers at below- Price rebates and other sales promotion promarket interest rates and builder "buydowns." grams during the early months of 1982 provided a About two-fifths of all conventional mortgage fillip to auto demand, and sales climbed to a rate loans closed recently were adjustable-rate instru- of 8.1 million units. Auto markets remained firm ments, and nearly three-fourths of existing home into the spring, boosted in part by various purtransactions reportedly involved some sort of chase incentives. But as has generally occurred creative financing. when major promotions have ended, auto pur- Business borrowing dropped sharply during chases fell sharply in June. Outside the auto the last quarter of 1981, primarily reflecting sector, retail sales at most types of stores were reduced inventory financing needs. However, up significantly for the second quarter as a use of credit by nonfinancial corporations rose whole. Even purchases at furniture and applisignificantly in the first half of 1982, despite a ance outlets, which had been on a downtrend further drop in capital expenditures. The high since last autumn, increased during the spring. level of bond rates has discouraged corporations Real after-tax income has continued to edge from issuing long-term debt, and a relatively up, despite the sharp drop in output during the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to Congress 445 recession. The advance reflects not only typical fell precipitously. However, with a combination cyclical increases in transfer payments but also of production cutbacks and sales promotions, the the reduction in personal income tax rates on days' supply of unsold cars on dealers lots had October 1. Households initially saved a sizable improved considerably by spring. proportion of the tax cut, boosting the personal Manufacturers and nonauto retailers also saving rate from 5'/4 percent in mid-1981—about found their inventories rising rapidly last auequal to the average of the late 1970s and early tumn. Since then, manufacturers as a whole have 1980s—to 6.1 percent in the fourth quarter of liquidated the accumulation that occurred during 1981. During early 1982, however, consumers 1981, although some problem areas still exist— increased spending, partly to take advantage of particularly in primary metals. Stocks held by price markdowns for autos and apparel, and so nonauto retailers have been brought down from the saving rate fell. their cyclical peak, but they remain above prerecession levels. Business Investment Residential Construction As typically occurs during a recession, the contraction in business fixed investment has lagged Housing activity thus far in 1982 has picked up behind the decline in overall activity. Indeed, somewhat from the depressed level in late 1981. even though real GNP dropped substantially Housing starts during the first five months of during the first quarter of 1982, real spending for 1982 were up 10 percent on average from the fixed business capital actually rose a bit. An fourth quarter of 1981. The improvement in especially buoyant element of the investment home building has been supported by strong sector has been outlays for nonfarm buildings— underlying demand for housing services in most most notably, commercial office buildings, for markets and by the continued adaptation of real which appropriations and contracts often are set estate market participants to nontraditional fia year or more in advance. nancing techniques that facilitate transactions. In contrast to investment in structures, busi- The turnaround in housing activity has not ness spending for new equipment showed little occurred in all areas of the country. In the south, advance during 1981 and weakened considerably home sales increased sharply in the first part of in the first half of 1982. Excluding business 1982, and housing starts rose 25 percent from the purchases of new cars, which also were buoyed fourth quarter of 1981. In contrast, housing starts by rebate programs, real investment in produc- declined further, on average, during the first five ers' durable equipment fell at an annual rate of 2 months of 1982 in both the west and the industripercent in the first quarter. The decline evidently al north central states. accelerated in the second quarter. In April and May, shipments of nondefense capital goods, which account for about 80 percent of the spend- Government ing on producers' durable equipment, averaged nearly 3 percent below the first-quarter level in Federal government purchases of goods and nominal terms. Moreover, sales of heavy trucks services, measured in constant dollars, declined dropped during the second quarter to a level over the first half of 1982. The decrease occurred more than 20 percent below the already de- entirely in the nondefense area, primarily reflectpressed first-quarter average. ing a sharp drop in the rate of inventory accumu- Businesses liquidated inventories at a rapid lation by the Commodity Credit Corporation rate during late 1981 and in the first half of 1982. during the spring quarter. Purchases by the Com- The adjustment of stocks followed a sizable modity Credit Corporation had reached record buildup during the summer and autumn of last levels during the previous two quarters, owing to year that accompanied the contraction of sales. last summer's large harvests and weak farm The most prominent inventory overhang by the prices. Other nondefense outlays fell slightly end of 1981 was in the automobile sector as sales over the first half of the year as a result of cuts in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

446 Federal Reserve Bulletin • August 1982 employment and other expenditures under many during the first half of the year. The current programs. Real defense spending apparently rose account, which was in surplus for 1981 as a over the first half of the year, and the backlog of whole, recorded another surplus in the first half unfilled orders grew further. The federal deficit of this year as the value of imports fell more than on a national income and product account basis the value of exports. widened from $100 billion at the end of 1981 to about $130 billion during the spring of this year. Much of this increase in the deficit reflects the Labor Markets effects of the recession on federal expenditures and receipts. Employment has declined nearly V/2 million At the state and local government level, real since the peak reached in mid-1981. As usually purchases of goods and services fell further over happens during a cyclical contraction, the largest the first half of 1982 after having declined 2 job losses have been in durable goods manufacpercent during 1981. Most of the weakness this turing industries—such as autos, steel, and mayear has been in construction outlays as employ- chinery—as well as at construction sites. The job ment levels have stabilized after large reductions losses in manufacturing and construction during in the federally funded program (under the Com- this recession follow a limited recovery from the prehensive Employment and Training Act) led to 1980 recession; as a result, employment levels in sizable layoffs last year. The declines in state and these industries are more than 10 percent below local government activity in part reflect fiscal their 1979 highs. In addition, declines in aggrestrains associated with the withdrawal of federal gate demand have tempered the pace of hiring at support for many activities and the effects of service industries and trade establishments over cyclically sluggish income growth on tax re- the past year. As often happens near a businessceipts. Because of the serious revenue problems, cycle trough, employment fell faster than output several states have increased sales taxes and in early 1982 and labor productivity showed a excise taxes on gasoline and alcohol. small advance after having declined sharply during the last half of 1981. Since mid-1981 the overall unemployment rate International Payments and Trade has risen 2V\ percentage points to a postwar record of 9!/2 percent. The effects of the reces- The weighted-average value of the dollar, after sion have been most severe in the durable goods having declined about 10 percent from its peak and construction industries, and the burden of last August, began to strengthen sharply again rising unemployment has been relatively heavy around the beginning of the year, and since then on adult men who tend to be more concentrated it has appreciated nearly 15 percent on balance. in these industries. At the same time, joblessness The appreciation of the dollar has been associat- among young and inexperienced workers reed to a considerable extent with the declining mains extremely high; hardest hit have been inflation rate in the United States and the rise in black male teenagers who experienced an unemdollar interest rates relative to yields on assets ployment rate of nearly 60 percent in June 1982. denominated in foreign currencies. Reflecting the persistent slack in labor mar- Reflecting the effects of the strengthening dol- kets, most indicators of labor supply also show a lar, as well as the slowing of economic growth significant weakening. For example, the number abroad, real exports of goods and services have of discouraged workers—that is, persons who been decreasing since the beginning of 1981. The report that they want work but are not looking volume of imports other than oil, which rose for jobs because they believe they cannot find fairly steadily throughout last year, dropped any—has increased by nearly a half million over sharply in the first half of 1982, owing to the the past year, continuing an upward trend that weakness of aggregate demand—especially for began before the 1980 recession. In addition, the inventories—in the United States. In addition, labor force participation rate—the proportion of both the volume and the price of imported oil fell the working-age population that is employed or Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to Congress 447 actively seeking jobs—has been essentially flat have risen faster than wages over the years, also for the last two years after rising about Vi per- are being scaled back. Because wage demands, centage point annually between 1975 and 1979. not to mention direct escalator provisions, are responsive to price performance, the progress made in reducing the rate of inflation should Prices and Labor Costs contribute to further moderation in labor cost pressures. A slowing in the pace of inflation, which was evident during 1981, continued through the first half of this year. During the first five months of THE GROWTH OF MONEY AND CREDIT 1982 (the latest data available), the consumer IN THE FIRST HALF OF 1982 price index (CPI) increased at an annual rate of 3.5 percent, sharply lower than the 8.9 percent The annual targets for the monetary aggregates rise during 1981. Much of the improvement was announced in February were chosen to be conin energy and food prices as well as in the volatile sistent with continued restraint on the growth of CPI measure of homeownership costs. But even money and credit in order to exert sustained excluding these items, the annual rate of increase downward pressure on inflation. At the same in consumer prices has slowed to 5 V2 percent this time, these targets were expected to result in year compared with 9l/z percent last year. The sufficient money growth to support an upturn in moderation of price increases also was evident at economic activity. Measured from the fourth the producer level. Prices of capital equipment quarter of 1981 to the fourth quarter of 1982, the have increased at an annual rate of 4lA percent growth ranges for the aggregates adopted by the thus far this year—well below the 9lA percent Federal Open Market Committee (FOMC) were pace of 1981. In addition, the decline in raw as follows: for Ml, 2Vi to 5Vi percent; for M2, 6 materials prices, which occurred throughout last to 9 percent; and for M3, 6'/2 to 9Vi percent. The year, has continued in the first half of 1982. corresponding range specified by the FOMC for Gasoline prices at the retail level, which had bank credit was 6 to 9 percent.2 remained virtually flat over the second half of When the FOMC was deliberating on its annu- 1981, fell substantially during the first four al targets in February, the Committee was aware months of 1982. Slack domestic demand and an that Ml already had risen well above its average overhang of stocks on world petroleum markets level in the fourth quarter of 1981. In light of the precipitated the decline in prices. However, gas- financial and economic backdrop against which oline prices began to rise again in May in reflec- the bulge in Ml had occurred, the Committee tion of rising consumption, reduced stocks, and believed it likely that there had been an upsurge lower production schedules by major crude oil in the public's demand for liquidity. It also suppliers. seemed probable that this strengthening of mon- The rate of increase in employment costs ey demand would unwind in the months ahead. decelerated considerably during the first half of Thus, under these circumstances and given the 1982. The index of average hourly earnings, a relatively low base for the Ml range for 1982, it measure of wage trends for production and non- did not appear appropriate to seek an abrupt supervisory personnel, rose at an annual rate of return to the annual target range, and the FOMC 6!/4 percent over the first half of this year, compared with an increase of 8LA percent during 1981. Part of the slowing was due to early 2. Because of the authorization of international banking negotiation of expiring contracts and renegotia- facilities (IBFs) on December 3, 1981, the bank credit data starting in December 1981 are not comparable with earlier tion of existing contracts in a number of major data. The target for bank credit was put in terms of annuaindustries. These wage concessions are expected lized growth measured from the average of December 1981 to relieve cost pressures and to enhance the and January 1982 to the average level in the fourth quarter of competitive position of firms in these industries. 1982 so that the shift of assets to IBFs that occurred at the turn of the year would not have a major impact on the pattern Increases in fringe benefits, which generally of growth. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

448 Federal Reserve Bulletin • August 1982 indicated its willingness to permit Ml to remain interest rates, this pattern of velocity behavior above the range for a while. At the same time, suggests a heightened demand for Ml and M2 the FOMC agreed that the expansion in Ml for over the first half. the year as a whole might appropriately be in the The unusual demand for Ml has been focused upper part of its range, particularly if available on its negotiable order of withdrawal account evidence suggested the persistence of unusual component. After the nationwide authorization desires for liquidity that had to be accommodat- of NOW accounts at the beginning of 1981, the ed to avoid undue financial stringency. growth of such deposits surged. When the aggre- In setting the annual target for M2, the FOMC gate targets were reviewed this past February, a indicated that M2 growth for the year as a whole variety of evidence indicated that the major shift probably would be in the upper part of its annual from conventional checking and savings acrange and might slightly exceed the upper limit. counts into NOW accounts was over; in particu- The Committee anticipated that demands for the lar, the rate at which new accounts were being assets included in M2 might be enhanced by new opened had dropped off considerably. As a result tax incentives such as the broadened eligibility of that shift, however, NOW accounts and other for individual retirement and Keogh accounts, or interest-bearing checkable deposits had grown to by further deregulation of deposit rates. The account for almost 20 percent of Ml by the Committee expected that M3 growth again would beginning of 1982. Subsequently, it has become be influenced importantly by the pattern of busi- increasingly apparent that Ml is more sensitive ness financing and, in particular, by the degree to to changes in the public's desire to hold highly which borrowing would be focused in markets liquid assets. for short-term credit. Ml is intended to be a measure of money As anticipated—and consistent with the balances held primarily for transaction purposes. FOMC's short-run targets—the surge in Ml However, in contrast to the other major compogrowth in December and January was followed nents of Ml—currency and conventional checkby appreciably slower growth. After January, ing accounts—NOW accounts also have some Ml increased at an annual rate of only VA characteristics of traditional savings accounts. percent on average, and the level of Ml in June Apparently reflecting precautionary motives to a was only slightly above the upper end of the considerable degree, NOW accounts and other Committee's annual growth range. From the interest-bearing checkable deposits grew surprisfourth quarter of 1981 to June, Ml increased at a ingly rapidly in the fourth quarter of last year and 5.6 percent annual rate. M2 growth so far this the first quarter of this year. Although growth in year also has run a bit above the FOMC's annual this component has slowed recently, its growth range; from the fourth quarter of 1981 through from the fourth quarter of last year to June has June, M2 increased on average at an annual rate been 30 percent at an annual rate. The other of 9.4 percent. From a somewhat longer perspec- components of Ml increased at an annual rate of tive, Ml has increased at an annual rate of 4.7 less than 1 percent over this same period. percent, measuring growth from the first half of Looking at the components of M2 not also 1981 to the first half of 1982 and abstracting from included in Ml, the so-called nontransaction the shift into NOW accounts in 1981; and M2 has components, these items grew at a 103/4 percent grown at a 9.7 percent annual rate on a half-year annual rate from the fourth quarter of 1981 to over half-year basis. June. General-purpose and broker-dealer money Although Ml growth has been moderate on market mutual funds were an especially strong balance thus far this year, that growth has con- component of M2, increasing at an annual rate of siderably exceeded the pace of increase in nomi- almost 30 percent this year. Compared with last nal GNP. Indeed, the first-quarter decline in the year, however, when the assets of such money income velocity of Ml—that is, GNP divided by funds more than doubled, this year's increase Ml—was extraordinarily sharp. Similarly, the represents a sharp deceleration. velocity of the broader aggregates has been un- Perhaps the most surprising development afusually weak. Given the persistence of high fecting M2 has been the behavior of conventional Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to Congress 449 savings deposits. After declining in each of the THE FEDERAL RESERVE S OBJECTIVES past four years—falling 16 percent last year— FOR GROWTH OF MONEY AND CREDIT savings deposits have increased at an annual rate of about 4 percent thus far this year. This turn- There is a clear need today to promote higher around in savings deposit flows, taken together levels of production and employment in our with the strong increase in NOW accounts and economy. The objective of Federal Reserve polithe still substantial growth in money funds, sug- cy is to create an environment conducive to gests that stronger preferences to hold safe and sustained recovery in business activity while highly liquid financial assets in the current reces- maintaining the financial discipline needed to sionary environment are bolstering the demand restore reasonable price stability. The experifor M2 as well as for Ml. ence of the past two decades has amply demon- M3 increased at an annual rate of 9.7 percent strated the destructive impact of inflation on from the fourth quarter of 1981 to June, just economic performance. Because inflation cannot above the upper end of the FOMC's annual persist without excessive monetary expansion, growth target. Early in the year, growth of M3 appropriately restrained growth of money and was relatively moderate as a strong rise in large- credit over the longer run is critical to achieving denomination CDs was offset by declines in term lasting prosperity. RPs and in money market mutual funds restrict- The policy of firm restraint on monetary ed to institutional investors. During the second growth has contributed importantly to the recent quarter, however, M3 showed a larger increase; progress toward reducing inflation. But when the weakness in its term RP and money fund inflationary cost trends remain entrenched, the components subsided and heavy issuance of process of slowing monetary growth can entail large CDs continued. With growth of "core economic and financial stresses, especially when deposits" relatively weak on average, commer- so much of the burden of dealing with inflation cial banks borrowed heavily in the form of large rests on monetary policy. These strains—reflect- CDs to fund the increase in their loans and ed in reduced profits, liquidity problems, and investments. balance sheet pressures—place particular hard- Commercial bank credit grew at an annual rate ships on industries, such as construction, busiof 8.3 percent over the first half of the year, in ness equipment, and consumer durables, that the upper part of the FOMC's range for 1982. depend heavily on credit markets. Bank loans have increased on average at an Unfortunately, these stresses cannot be easily annual rate of about 9!/2 percent, with loans to remedied through accelerated money growth. nonfinancial businesses expanding at an annual The immediate effect of encouraging faster rate of 14 percent. In past economic downturns, growth in money might be lower interest rates, business loan demand at banks has tended to especially in short-term markets. In time, howweaken, but consistently high long-term interest ever, the attempt to drive interest rates lower rates in the current recession have induced cor- through a substantial reacceleration of money porations to meet the bulk of their external growth would founder, for the result would be to financing needs through short-term borrowing. embed inflation and expectations of inflation Real estate loans have increased at an annual even more deeply into the nation's economic rate of 7lA percent this year, somewhat slower system. It would mean that this recession was than the growth in each of the past two years. another wasted, painful episode instead of a Consumer loans outstanding during the first half transition to a sustained improvement in the of the year have grown at the same sluggish pace economic environment. The present and proof 3 percent experienced last year. The invest- spective pressures on financial markets urgently ment portfolios of banks have expanded at an need to be eased not by relaxing discipline on annual rate of about 5 percent, with the rate of money growth, but by adopting policies that will increase in U.S. government obligations about ensure a lower and declining federal deficit. twice as large as the growth in holdings of other Moreover, a return to financial health will retypes of securities. quire the adoption of more prudent credit prac- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

450 Federal Reserve Bulletin • August 1982 tices on the part of private borrowers and lenders gates somewhat above their targeted ranges alike. would be tolerated for a time and still would be In reviewing its targets for 1982 and setting consistent with the FOMC's general policy tentative targets for 1983, the FOMC had as its thrust. basic objective the maintenance of the longer- Looking ahead to 1983 and beyond, the FOMC range thrust of monetary discipline in order to remains committed to restraining money growth reduce inflation further, while providing suffi- in order to achieve sustained noninflationary cient money growth to accommodate exceptional economic expansion. At this point, the FOMC liquidity pressures and support a sustainable feels that the ranges now in effect can approprirecovery in economic activity. At the same time, ately remain as preliminary targets for 1983. the Committee recognized that regulatory ac- Because monetary aggregates in 1982 more likely tions or changes in the public's financial behav- than not will be close to the upper ends of their ior might alter the implications of any quantita- ranges, or perhaps even somewhat above them, tive monetary goals in ways that cannot be fully the preliminary 1983 targets would be fully conpredicted. sistent with a reduction in the actual growth of In light of all these considerations, the Com- money in 1983. mittee concluded that a change in the previously In light of the unusual uncertainty surrounding announced targets was not warranted at this the economic, financial, and budgetary outlook, time. Because of the tendency for the demand for the FOMC stressed the tentative nature of its money to run strong on average in the first half, 1983 targets. On the one hand, postwar cyclical and also responding to the congressional budget experience strongly suggests that some reversal resolution, careful consideration was given to the of this year's unusual shift in the asset-holding question of whether some raising of the targets preferences of the public could be expected; with was in order. However, the available evidence economic activity on an upward trend, any lindid not suggest that a large increase in the ranges gering precautionary motives for holding liquid was justified, and a small change in the ranges balances should begin to fade, thus contributing would have represented a degree of "fine tun- to a rapid rise in the velocity of money. Moreing" that appeared inconsistent with the degree over, regulatory actions by the Depository Instiof uncertainty surrounding the precise relation- tutions Deregulation Committee that increase the ship of money to other economic variables at this competitive appeal of deposit instruments—as time. However, the Committee concluded, based well as the more widespread use of innovative on current evidence, that growth this year cash management techniques, such as "sweep" around the top of the ranges for the various accounts—also could reduce the demand for aggregates would be acceptable. money relative to income and interest rates. On The Committee also agreed that possible shifts the other hand, factors exist that should increase in the demand for liquidity in current economic the attractiveness of holding cash balances. The circumstances might require more than ordinary long upward trend in the velocity of money since elements of flexibility and judgment in assessing the 1950s took place in an environment of rising appropriate needs for money in the months inflation and higher nominal interest rates—deahead. In the near term, measured growth of the velopments that provide incentives for econoaggregates may be affected by the income tax mizing on money holdings. As these incentives reductions that occurred on July 1, by cost-of- recede, it is possible that the attractiveness of living increases in social security benefits, and cash holdings will be enhanced and that more by the ongoing difficulties of accurately account- money will be held relative to the level of busiing for seasonal movements in the money stock. ness activity. But more fundamentally, it is unclear to what degree businesses and households may continue to wish to hold unusually large precautionary THE OUTLOOK FOR THE ECONOMY liquid balances. To the extent the evidence suggests that relatively strong precautionary de- The economy at midyear appears to have leveled mands for money persist, growth of the aggreoff after sizable declines last fall and winter. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to Congress 451 Consumption has strengthened with retail sales developments. For that reason, the recorded rate up significantly in the second quarter. New and of inflation may be higher in the second half. existing home sales have continued to fluctuate However, prospects appear excellent for conat depressed levels, but housing starts nonethe- tinuing the downtrend in the underlying rate of less have edged up. In the business sector, inflation. As noted earlier, significant progress substantial progress has been made in working has been made in slowing the rise in labor off excess inventories, and the rate of liquidation compensation, and improvement in underlying appears to have declined. On the negative side, cost pressures should continue over the balance however, plant and equipment spending, which of the year. Unit labor costs also are likely to be typically lags an upturn in overall activity, is still held down by a cyclical rebound in productivity depressed. And the trend in export demand growth as output recovers. Moreover, lower continues to be a drag on the economy, reflecting inflation will contribute to smaller cost-of-living the dollar's strength and weak economic activity wage adjustments, which will moderate cost abroad. pressures further. An evaluation of the balance of economic The Federal Reserve's objectives for money forces indicates that an upturn in economic activ- growth through the end of 1983 are designed to ity is highly likely in the second half of 1982. be consistent with continuing recovery in eco- Monetary growth along the lines targeted by the nomic activity. A critical factor influencing the FOMC should accommodate this expansion in composition and strength of the expansion will real GNP, given the increases in velocity that be the extent to which pressures in financial typically occur early in a cyclical recovery and markets moderate. This, in turn, depends imporabsent an appreciable resurgence of inflation. tantly on the progress made in further reducing The 10 percent cut in income tax rates that went inflationary pressures. A marked decrease in into effect July 1 is boosting disposable personal inflation will take pressure off financial markets income and should reinforce the growth in con- in two ways. First, slower inflation will lead to sumer spending. Given the improved inventory a reduced growth in transaction demands for situation, any sizable increase in consumer money, given any particular level of real activity. spending should, in turn, be reflected in new It follows that a given target for money growth orders and a pickup in production. Another can be achieved with less pressure on interest element supporting growth in real GNP will be rates and accordingly less restraint on real activithe continuing rise in defense spending and the ty, the greater is the reduction in inflation. Secassociated private investment outlays needed for ond, further progress in curbing inflation will the production of defense equipment. help lower long-term interest rates by reducing the inflation premium contained in nominal inter- At least during the initial phase, the expansion est rates. The welcome relief in inflation seen is likely to be more heavily concentrated in recently apparently is assumed by many to repreconsumer spending than in past business cycles, sent a cyclical rather than a sustained drop in as current pressures in financial markets and inflation. But the longer that improved price liquidity strains may inhibit the recovery in inperformance is maintained, the greater will be vestment activity. With mortgage interest rates the confidence that a decisive downtrend in high, residential construction does not seem likeinflation is being achieved. Such a change should ly to contribute to the cyclical recovery to the be reflected in lower long-term interest rates and extent that it has in the past. Likewise, the high stronger activity in the interest-sensitive sectors level of corporate bond rates, and the cumulative of the economy. deterioration in corporate balance sheets resulting from reliance in recent years on short-term Another crucial influence on financial markets borrowing, may restrain capital spending, espe- and thus on the nature of the expansion in 1983 cially given the considerable margin of unutilized will be the federal budgetary decisions that are capacity that now exists. made in coming months. The budget resolution The excellent price performance so far this that was recently passed by the House and the year has been helped by slack demand and by Senate is a constructive first step in reducing exceptionally favorable energy and food supply budget deficits as the economy recovers. How- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

452 Federal Reserve Bulletin • August 1982 ever, much remains to be done in appropriation in the accompanying table. In addition to the and revenue legislation to implement this resolu- monetary aggregate objectives discussed earlier, tion. How the budgetary process unfolds will be these projections assume that the federal budget an important factor in determining future credit will be put on a course that over time will result demands by the federal government and thus the in significant reductions in the federal deficit. extent to which deficits will preempt the net Revised administration forecasts for the econsavings generated by the private economy. A omy were not available at the time of the Comstrong program of budget restraint would mini- mittee's deliberation. Our understanding, howmize pressures in financial markets and thereby ever, is that the administration's midyear enhance the prospects for a more vigorous re- budgetary review will be presented within the covery in home building, business fixed invest- framework of the economic assumptions used in ment, and other credit-dependent sectors. the first budget resolution. For the remainder of 1982, those assumptions imply somewhat more Economic projections of FOMC members rapid recovery than the range now thought most likely by members of the FOMC, but are consis- Actual Projected tent with the monetary targets outlined in this IItteemm 1981 1982 1983 report on the assumption of growth in velocity characteristic of the early stages of a number of Changes, fourth quarter to fourth quarter, percent past recoveries. Looking further ahead, the Nominal GNP 9.8 5'A to IVi 7 to 956 Real GNP .9 VztoVA 2Vi to 4 Committee members, like the administration and GNP deflator 8.9 4% to 6 4 to 5Va the Congress, foresee continued economic ex- Average level in the fourth quarter, percent pansion in 1983, but currently anticipate a less Unemployment rate 8.3 9 to 9-Mi 8'/2 to 9Vi rapid rate of price increase and somewhat slower real growth than the assumptions underlying the In assessing the economic outlook, the individ- budget. The monetary targets tentatively set for ual members of the FOMC have formulated pro- 1983, which will be reviewed early next year, jections for several key measures of economic would imply, under the budgetary assumptions, performance that fall generally within the ranges relatively high growth in velocity. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

453 Profitability of Insured Commercial Banks Barbara Negri Opper of the Banking Section of nated for depositors with small balances. These the Board's Division of Research and Statistics depositors are relatively important customers of prepared this article.1 small banks, and adjustments of asset portfolios also were pronounced at small banks. Profitability of insured commercial banks was An above-average exposure to interest risk, well maintained in 1981. The 0.76 percent re- suggested by an imbalance between assets and turned on average assets and 13.2 percent earned liabilities carrying interest rates highly responon average equity capital in 1981 were slightly sive to changing market interest rates, was signifbelow recent peaks, but were a bit above the icant in differentiating those banks with reduced averages for the preceding five years. Against a net interest margins from their peers. However, backdrop of rising interest rates and deposit those banks actually reporting losses in the secceiling deregulation, banks had to expand and ond half of 1981 appeared to have encountered redistribute their asset portfolios in order to problems primarily with loan quality, as indicatachieve continued strong profitability. The num- ed by their above-average loan loss provisions. ber of banks recording extremely poor operating Commercial banks with foreign offices or Edge results did increase, but it remained small; in Act or Agreement subsidiaries experienced a many instances, the problems of weaker per- gain in net interest margins of foreign offices but formers reflected the adverse economic circum- an erosion in net interest returns from the more stances, which contributed to a deterioration in important domestic offices. The resultant reducthe quality of assets. Table 1 summarizes income and expenses relative to average assets for all 1. Income and expense as percent of average assets, all insured commercial banks, 1979-81' insured commercial banks, and table A.l presents these data in dollar amounts. Item 1979 1980 1981 Increases in interest expenses attributable to Gross interest earned 8.62 9.87 11.81 changes in liability structure and to higher money Gross interest expense 5.50 6.78 8.75 Net interest margin 3.12 3.09 3.07 market interest rates induced asset adjustments Noninterest income .78 .89 .99 Loan loss provision .24 .25 .26 by most groups of banks. Demand deposits, on Other noninterest expense 2.54 2.63 2.76 Income before tax 1.12 1.10 1.04 which payment of explicit interest is prohibited Taxes2 .28 .28 .24 by law, again declined—by nearly $50 billion— Other3 -.04 -.03 -.04 Net income .80 .79 .76 and at the end of the year financed only 19 Cash dividends declared .28 .29 .30 percent of total banking assets in contrast to 28 Net retained earnings .52 .50 .46 percent as recently as 1977. Some balances for- MEMO merly in demand deposits were shifted to the Net interest margin, taxable equivalent4 3.48 3.46 3.45 relatively new interest-bearing transaction ac- Average assets (billions of dollars)1 .. 1,594 1,768 1,933 counts on which an interest ceiling of 5 XU percent 1. Average assets are fully consolidated and net of loan loss applies and which grew by $43 billion. The reserves; averages are based on amounts outstanding at the beginning remaining asset growth was funded by non- and end of each year. 2. Includes all taxes estimated to be due on income, on extraorditransaction claims that in general bear open nary gains, and on security gains. market interest rates, including accounts with 3. Includes securities and extraordinary gains or losses (-) before taxes. rate ceilings that have been liberalized or elimi- 4. For each bank with profits before tax greater than zero, income from state and local obligations was increased by [1/(1 - t) - 1] 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 Bowen, 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

454 Federal Reserve Bulletin • August 1982 tion in consolidated net interest margins, along during 1981 (table 2), both before and after with a small increase in net noninterest ex- account is taken of provisions for potential credit penses, caused returns on assets of these large losses. Yields on securities, after estimated adbanks to decline slightly in 1981. justments for taxable equivalence, increased Dollar profits of all insured commercial banks much less—about 1V2 percentage points. Loan increased nearly $0.8 billion during 1981, to $14.7 portfolio yields increased faster at money center billion. Virtually all of that increase was passed and other large banks than at small banks, conon to shareholders in the form of increased cash sistent with the lower incidence in small-bank dividends, especially by small and medium-sized loan portfolios of short maturities and variable banks. The $8.9 billion of income retained in the capital structure of banks during 1981 was identi- 1. Components of interest margin cal to that in the preceding year, although assets Percent of average assets grew by $170 billion. GROSS INTEREST INCOME INTEREST INCOME Gross interest income relative to average assets of all banks increased nearly 200 basis points during 1981. This increase was about as large at small banks as at money center banks, a pattern that contrasts with the experience in the early stages of the 1973-75 business cycle, as shown in chart 1. Such comparability would not be expected on the basis of the relatively larger holdings at money center banks of loans and other assets carrying yields that tend to move closely with prevailing market rates. Whereas loan yields at some small banks increased sharply during 1981, as discussed later, much of the acceleration in interest earnings at small banks is attributable to a restructuring of their asset portfolios both to increase the yield sensitivity of their holdings and to reap short-run gains from a steeply inverted term structure of market yields. During 1981, commercial banks with year-end assets of $100 million or less added, net, nearly $7 billion of federal funds sold, reverse repurchase agreements, and interest-bearing deposits of other NET INTEREST MARGIN commercial banks; the acquisition of such extremely short-term instruments represented 18 percent of the total net asset growth of small banks and increased the fraction of their outstanding assets so invested from 7 to 8 percent over the year. Securities accounted for another I I ! I I I I I 1 11 31 percent of net asset growth of small banks 1971 1973 1975 1977 1979 1981 leaving less than 40 percent of new assets allocat- Size categories are based on year-end consolidated assets of each ed to loan growth, well below the fraction of bank. Gross interest income is adjusted for taxable equivalence. Net outstanding small bank assets held as loans. interest margins are gross interest income adjusted for taxable equiva- Yields on loan portfolios held by all insured lence minus gross interest expense. Data are for domestic operations until 1976, when foreign office banks increased more than 2xh percentage points operations of U.S. banks were consolidated into the totals. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks 455 2. Rates of return on fully consolidated portfolios, other banks increased from 0.6 to 1.6 percent of all insured commercial banks, 1979-811 average assets. Percent The composition of commercial bank loan Item 1979 1980 1981 portfolios was altered somewhat during 1981. In addition to adjustments initiated by banks in Securities, total 7.05 7.88 9.27 U.S. government 8.25 9.38 11.38 managing their portfolios, borrower demand for State and local government 5.58 6.03 6.72 consumer loans was sluggish; sales of autos, Other 9.24 10.55 11.54 Loans, gross 12.01 13.71 16.37 appliances, and other durable goods traditionally Net of loan loss provision 11.55 13.19 15.83 Taxable equivalent2 sold on credit were weak, and consumers Total securities 9.31 10.23 11.73 seemed reluctant to incur new debt in an uncer- State and local 10.44 11.13 12.15 Total securities and gross loans . 11.37 12.88 15.26 tain economic environment. Consumer loans dropped from 18 to 17 percent of the nearly $1.2 1. Calculated as described in the "Technical note," BULLETIN, vol. 65 (September 1979), p. 704. trillion in loans held by commercial banks. By 2. See note 4 to table 1. contrast, business loans increased from 38 to 40 interest rates. The improvement in securities percent of bank loans as businesses exhibited yields was above average at small banks, which unusually strong cyclical reliance on bank loans acquired a disproportionately large volume of in the face of unfavorable terms in the public investments at a time when market rates were debt and equity markets. The shift from consumwell above average portfolio yields. These er to business loans tended to increase the reyields, and other 1981 data referred to in the sponsiveness of yields on bank portfolios to open tables, are shown for various bank size catego- market rates; the share of business loans subject ries in table A.2; for comparable data for 1980, to market-based repricing through floating-rate see BULLETIN (September 1981), page 668. provisions or short maturities is much higher than that for consumer loans. The share of banking assets allocated to loans declined during 1981 (table 3), particularly for domestic-office portfolios. This decline was due entirely to the shift by small banks from loans to INTEREST EXPENSE short-term investments. On a consolidated basis, for which activity by large and money center Gross interest expense relative to average assets banks would carry greater weight, the allocation increased nearly 200 basis points, about the same of assets to loans changed little. Similarly reflect- as interest income. Small and medium-sized ing asset restructuring undertaken by small banks continue to have a large, albeit declining, banks, total domestic-office holdings of commer- share of their assets financed by claims carrying cial banks in the interest-bearing deposits of fixed below-market ceilings on deposit interest 3. Portfolio composition as percent of total assets including loan loss reserves, all insured commercial banks, 1979-811 Average during year Domestic Fully consolidated IItteemm 1979 1980 1981 1979 1980 1981 Interest-earning assets 80.4 80.2 80.8 83.0 82.9 83.8 Loans 56.0 55.1 54.5 56.3 55.4 55.2 Securities 20.0 20.1 20.0 17.2 17.0 17.0 U.S. Treasury 6.6 6.4 6.4 5.5 5.3 5.3 U.S. government agencies 3.4 3.7 4.0 2.8 3.0 3.3 State and local governments 9.5 9.4 9.1 8.0 7.8 7.6 Other bonds and stocks .5 .5 .5 .8 .8 .8 Gross federal funds sold and reverse repurchase agreements 4.0 4.4 4.8 3.4 3.7 4.0 Interest-bearing deposits .4 .6 1.6 6.2 6.8 7.7 MEMO: Average gross assets (billions of dollars) ... 1,329 1,460 1,603 1,593 1,768 1,940 1. Percentages are based on aggregate data and thus reflect the dates in December of the preceding year and June and December of heavier weighting of large banks. Data are based on averages for call the current year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

456 Federal Reserve Bulletin • August 1982 rates; the slower increase in their interest ex- individual retirement account and Keogh depospenses compared with those of larger banks, as its maturing in IV2 years or more. During 1981, shown in chart 1, reflects that funding mix. SSCs grew from 8 to 12 percent of all interest- In 1981 alone, deposits subject to fixed interest bearing claims outstanding at small banks; by the ceilings declined from four-tenths to three-tenths end of 1981, all saver certificates had grown to 2 of total interest-bearing liabilities of small banks. percent of small-bank interest-bearing liabilities. As recently as the end of 1978, almost 80 percent The rapid growth in these new deposits in an of the interest-bearing liabilities of small banks environment of fluctuating but generally increaswere subject to fixed interest ceilings such as are ing short-term market yields contributed to a currently in force on negotiable order of with- sharp rise in effective interest rates paid on drawal (NOW) and passbook accounts and on savings and small time deposits. That increase some small time deposits. (At large banks, the was larger, at 220 basis points, for small banks decline in issuance of fixed-ceiling passbook and than for all banks taken together ("other depossmall time deposits essentially occurred long its" in table 4) because the change in the compoago; their respective proportions were three- sition of deposits was more pronounced at small tenths in 1978 and slightly more than two-tenths banks. in 1981.) The change in the composition of smallbank liabilities reflects almost entirely the evolu- 4. Rates paid for fully consolidated liabilities, tion in the structure of interest ceilings on small all insured commercial banks, 1979—811 time deposits, as the proportion of large certifi- Percent cates of deposit (CDs) and other money market Item 1979 1980 1981 instruments has remained at slightly less than 20 percent of their interest-bearing claims since the Time and savings accounts 8.69 10.66 13.38 Negotiable certificates of deposit2 . 10.52 12.56 16.42 mid-1970s. Deposits in foreign offices 11.38 14.03 17.34 Other deposits 6.65 8.10 10.02 The deposit most responsible for the change in Subordinated notes and debentures . 8.41 8.90 10.01 Gross federal funds purchased and the liability structure at small banks is the sixrepurchase agreements 12.95 14.68 17.52 month money market certificate (MMC), created Other liabilities for borrowed money 9.17 11.34 14.42 Total 9.13 11.10 13.86 in mid-1978 with a rate ceiling linked to market MEMO: Not covered by regulatory ceilings2 11.20 13.45 16.82 yields on six-month U.S. Treasury bills. By the end of 1981, the MMC had grown to account for 1. Calculated as described in the "Technical note," BULLETIN (September 1979), p. 704. one-third of small-bank interest-bearing liabil- 2. Does not include nonnegotiable time deposits of $100,000 or ities. Further steps were taken during 1981 that more. enhanced the ability of depository institutions to offer the public attractive instruments carrying Effective interest rates paid for large negotialonger maturities. The one-year "all savers cer- ble CDs increased almost 4 percentage points, tificate" was authorized by the Congress for even though more than one-half of the net growth issuance during the 15-month period between in these claims occurred during the fourth quar- October 1, 1981, and December 31, 1982; this ter of 1981 when market yields had fallen sharply account carries a tax-free yield set at 70 percent from earlier peaks. Interest costs of most other of the investment yield on new one-year U.S. short-term liabilities increased between 3 and V/J Treasury bills. In the late summer, the Deposi- percentage points in 1981. tory Institutions Deregulation Committee In addition to the influence of higher interest (DIDC) removed the "cap" on the interest rate costs, an increase in the proportion of assets ceiling on the 2V2-year small saver certificate funded by interest-bearing claims also exerted (SSC) so that offering yields on this account upward pressure on bank interest expenses. The freely could follow increases in market yields on share of average outstanding assets funded by U.S. Treasury securities; and near the end of the demand deposits issued by domestic offices, on year, in the first example of total deregulation which payment of explicit interest is prohibited, since 1974, DIDC removed all constraints on the dropped about 5 percentage points in just two interest rates that depositories could offer on years (table 5). Clearly, some of that decline Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks 457 5. Composition of financial liabilities as percent of total assets including loan loss reserves, all insured commercial banks, 1979-811 Average during year Domestic Fully consolidated IItteemm 1979 1980 1981 1979 1980 1981 Financial claims 88.0 87.6 87.2 89.7 89.1 88.8 Demand deposits 30.3 29.1 25.1 25.3 24.0 20.8 Interest-bearing claims 57.7 58.5 62.1 64.4 65.1 68.0 Time and savings accounts 47.3 47.8 50.8 55.0 55.5 57.8 Large time2 15.2 15.5 17.2 12.7 12.8 14.2 15.6 16.1 15.8 Other domestic 32.1 32.3 33.6 26.7 26.7 27.8 NOW accounts .7 1.2 2.9 .6 1.0 2.4 Subordinated notes and debentures .4 .4 .4 .4 .4 .3 Other borrowings 2.0 1.9 1.8 2.4 2.3 2.3 Gross federal funds purchased and repurchase agreements 7.9 8.4 9.1 6.6 6.9 7.5 MEMO Managed liabilities3 25.6 26.1 28.5 37.6 38.4 40.2 Average gross assets (billions of dollars) 1,329 1,460 1,603 1,593 1.768 1,940 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, repurchase the current year. agreements, gross federal funds purchased, and other borrowings. represented shifts into interest-bearing transac- improved net interest margins during 1981 (table tion deposits such as NOW accounts; commer- 6). Looking within asset size classes, an imporcial banks were authorized to offer these ac- tant factor distinguishing those with improved counts nationwide at the beginning of 1981, margins from their peers was estimated interest subject to a 5XU percent interest ceiling. Banks risk exposure, as indicated by the relationship responded to the remainder of the shift out of between assets and liabilities carrying interest demand deposits by increasing their reliance on returns or costs highly sensitive to changes in large time deposits, purchases of federal funds, market interest rates. Specifically, commercial and sales of securities under repurchase agree- banks with increased net interest margins alloments, all of which entail money market interest cated significantly more assets than did their costs that in 1981 averaged in the range of 16 to peers to instruments carrying yields highly re- 17 percent. sponsive to changes in market rates; they also funded a significantly smaller proportion of assets with liabilities carrying rapidly changing NET INTEREST MARGINS interest costs. Banks with increased net interest margins had about the same overall magnitude Interest income net of interest expense, the net and intrayear timing of asset growth as their interest margin, declined fractionally during 1981 peers, unlike 1980 when management of asset for all insured commercial banks taken as a growth appeared to have had a material influence group. However, that result reflects the experi- on profitability. ence of the money center banks, for which net Another way of looking at the influence of the interest margins of domestic offices contracted relationship of "interest-sensitive" assets and significantly. Net interest margins at other size liabilities on patterns in net interest margins is to classes of insured commercial banks were either categorize banks not by size but by specializaunchanged or improved, as shown in chart 1. tion in their loan portfolios. Two examples are Nearly as many commercial banks with at banks with large allocations to mortgages and to least $25 million in assets experienced increases agricultural loans. Maturities of mortgage portfoin net interest margins from 1980 as experienced lios tend to be considerably longer than those of no change or a decline; substantially more banks agricultural loans so that more old fixed-rate with less than $25 million in assets experienced mortgages with low yields still remain outstand- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

458 Federal Reserve Bulletin • August 1982 6. Factors associated with the 1980-81 change in net interest margins, all insured commercial banks1 Percent except for number of banks Rate-sensitive assets and liabilities2 Aver m ag a e r g i i n n t 3 e rest Asset growth Assets, year-end 1981 Number Assets Liabilities 1981 11998800 11998811 1980 1981 1980 1981 HI H2 (1) (2) (3) (4) (5) (6) (7) (8) (9) Less than $25 million Increased margins 3,733 19.4 22.0 28.3 32.5 5.13 5.78 5.1 7.0 Others 2,599 17.3 20.2 31.6 36.2 5.16 4.64 5.2* 7.1* $25 million to $100 million Increased margins 2,863 16.9 19.4 30.9 34.3 5.03 5.51 5.1 7.3 Others 2,951 14.4 18.2 32.8 36.8 4.75 4.27 4.4 6.8* $100 million to $1 billion Increased margins 821 20.9 23.8 34.2 37.5 4.67 5.11 3.4 7.5 Others 826 17.7 22.0 35.8 39.9 4.47 3.95 3.5+ 6.6+ 13 money center Increased margins 4 57.8 62.7 60.0 65.5 1.91 2.06 4.9 3.8 Others 9 59.9t 63.1 + 60.8t 67.8+ 2.19 2.06t 4.8+ 2.6+ Others, $1 billion or more Increased margins 96 45.9 49.4 45.2 48.3 3.59 3.99 2.7 8.7 Others 93 39.4 43.5 44.8+ 48.0+ 3.76 3.32 3.3+ 6.7t 1. Differences between means are statistically significant at the .01 and other loans with floating rates. Small banks do not report the loan level except when noted by an asterisk (*), which are significant at the detail, so their holdings of loans to financial institutions, construction .05 level, or a dagger (t), which are not within the .05 range. loans, and purpose loans are included. Rate-sensitive liabilities: large 2. As a percent of total assets, December 1980 and December 1981. time deposits and foreign office deposits due in one year or less, Rate-sensitive assets: interest-bearing deposits, federal funds sold, federal funds, RPs, MMCs, and other short-term borrowings. reverse RPs, loans and government debt maturing in one year or less, 3. Taxable equivalent, as a percent of average assets. ing than agricultural loans; also, indications are The experience of small commercial banks that acceptance of variable interest rate terms that utilized the MMC most extensively relative has been occurring more rapidly in agricultural to other sources of funds was compared with that than in mortgage markets. Banks in both groups for small banks with the lowest degree of MMC tend to be small, averaging in each case less than use (table 7). Interest expenses of the high-MMC $100 million in assets, and both have participated group were significantly higher, and net interest in the rapid change in liabilities associated with margins significantly lower, than the group with the introduction of variable-ceiling small time the lowest MMC use. As in 1980, but in contrast deposits.2 However, as shown in chart 2, net to prior years, those banks with the lowest interest margins of banks specializing in agricul- utilization rate of MMCs tended to have relativetural loans have increased—in 1981 by about as ly large amounts of transaction deposits; what much as at all small banks—whereas margins of advantage they had relative to other banks in banks specializing in mortgages have declined. lower interest costs appears to have been offset Gross interest income relative to average assets by higher noninterest operating expenses, and of the mortgage group increased 170 basis points the net profit rates of the two groups showed no during 1981; that of all small banks increased 182 significant difference. basis points, and that of the agricultural group increased 198 basis points. LOAN LOSSES AND OTHER NONINTEREST INCOME AND EXPENSE 2. The mortgage group consists of commercial banks with at least one-fourth of their assets allocated to loans secured by real estate; in 1981, this group contained 3,400 banks. The For all banks, increased loan loss provisions agricultural group consists of commercial banks with at least accounted for a deterioration of 1 basis point in one-fourth of loans at their domestic offices allocated to farm income relative to average assets. Large banks real estate mortgages and loans made to finance agricultural production; this group contained 4,214 banks in 1981. other than the money center group reported a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks 459 2. Insured commercial banks with large mortgage and Comparison of operating results in 1981, small agricultural loan portfolios insured commercial banks with greatest and least reliance on MMCs1 Percent of average assets Means, in percent Quartile IItteemm Highest Lowest Growth in total assets (percent) 12.8 17.9 Income and expense scaled to average consolidated assets Interest income 11.80 11.70 Interest expense 7.52 6.24 Net interest margin, taxable equivalent 4.74 5.87 Noninterest income .50 .95 Loan loss provision .28 .35 Other noninterest expense 2.80 4.37 Profit before tax 1.71* 1.69 Net income 1.24* 1.20 As percent of year-end financial claims Transaction balances 25.8 37.0 NOW, ATS 6.5 5.9 MMCs 38.2 14.4 Average change in 1981 (thousands of dollars) Total financial claims 2,119 3,197 Transactions 483 922 NOW, ATS 1,219 1,318 MMCs 11,,886622 664400 1. Top and bottom quartiles, as determined by MMCs as a percent of total financial claims at the end of 1981, of all banks with year-end assets below $100 million. Net interest margins are gross interest income adjusted for taxable The differences between means of the two groups are all statistically equivalence minus gross interest expense. significant at the 1 percent level except when indicated (*). Each group contains 3,069 observations. small decline in provisions for loan losses relative to average assets. Other size categories banks remained level while their loans grew reported increases on the order of 1 or 2 basis rapidly. By contrast, for commercial banks with points during 1981. Loan loss provisions of $100 million or less in assets, net charge-offs as a banks with large concentrations of mortgage fraction of average outstanding loans increased loans increased about in line with those for other sharply, exceeding the peak net charge-off rate of small banks (chart 2). Banks specializing in agri- 0.41 percent in 1976. cultural lending reported sharply increased loan Noninterest income and expenses again inloss provisions for the second year, after a creased more rapidly than assets, as they have in prolonged period of below-average provisions. Actual loan losses net of amounts recovered from loans that had been previously charged off 3. Net loan losses charged as losses increased moderately again in 1981 Percent of average assets (chart 3). However, the reduction in small-bank asset allocations to loans has had the effect, if everything else were held constant, of holding down the statistic as shown in the chart. Thus, the impact of a deteriorating economy in 1981 on the credit quality of commercial bank loan portfolios is indicated more clearly by the ratio shown in table 8—loan losses measured in terms of average loans outstanding during the year. At 0.35 percent of average loans, that ratio for all 1971 1973 1975 1977 1979 1981 banks had edged down, but principally because hex loan losses are cnargea as a perceni of average consolidated the dollar volume of net charge-offs at large assets net of loan loss reserves, all commercial banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

460 Federal Reserve Bulletin • August 1982 8. Loan portfolio losses and recoveries, all insured commercial banks, 1980-81 Millions of dollars, except as noted Net losses YYeeaarr,, aanndd ssiizzee ooff bbaannkk11 cc LL hh oo aa ss rrgg ssee ee ss dd RReeccoovveerriieess Dollar Percent of LL pprr oo oo aa vv nn ii ss ll ii oo oo ss nn ss amount loans2 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 1981 All banks 5,240 1,519 3,721 .35 5,032 Less than $100 million 1,107 292 815 .43 987 $100 million to $1 billion 1,095 280 815 .39 1,014 $1 billion or more Money center 1,175 400 775 .22 1,269 Others 1,863 546 1,317 .40 1,762 1. Size categories are based on year-end fully consolidated assets. 2. Average of beginning- and end-of-year loan balances. recent years. Since 1978, service charges on PROFITABILITY AND DIVIDENDS deposits have increased 6 basis points relative to average assets, at least partially reflecting Before-tax profits at all insured commercial changes in pricing associated with the transition banks edged down 6 basis points to 1.04 percent to NOW and other interest-bearing transaction of assets in 1981. Before-tax profitability dedeposits. Income from charges and fees other clined across all size classes but fell most at the than on deposit accounts also has increased large money center banks. relative to average assets by 6 basis points since All size groups of banks also incurred losses 1978; at least some of this growth may reflect from securities transactions and/or extraordinary income from outstanding business loan commit- items, presumably in connection with the impact ments and standby letters of credit, the com- of continued high and volatile market interest bined total of which grew from $217 billion at the rates on the capital values of portfolio assets. end of 1978 to $436 billion at the end of 1981, With assets growing and the volume of liquid from about 14 percent to 21 percent of assets. short-term assets growing even faster, losses About half of the 13-basis-point increase in non- realized on securities portfolios were probably interest operating expenses during 1981 came related more to investment strategy than to cashfrom growth in salaries and occupancy expenses. flow needs. 9. Profit rates, all insured commercial banks, 1977-81 Percent Type of return and size of bank1 1977 1978 1979 1980 1981 Return on assets2 All banks .71 .76 .80 .79 .76 Less than $100 million .98 1.04 1.15 1.18 1.15 $100 million to $1 billion .82 .90 .96 .96 .91 $1 billion or more Money center .50 .53 .56 .56 .53 Others .62 .68 .72 .66 .68 Return on equity3 All banks 11.8 12.9 13.9 13.7 13.2 Less than $100 million 12.4 13.2 14.1 14.2 13.6 $100 million to $1 billion 12.0 13.2 13.9 13.7 12.8 $1 billion or more Money center 11.4 12.8 14.0 14.4 13.4 Others 11.2 12.5 13.5 12.7 12.9 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks 461 10. Sources of increase in total equity capital, all insured commercial banks, 1977-81 Millions of dollars, except as noted Retained income1 Net increase in equity Increase in equity capital from Year capital retained income (percent) Large Large Column 1 Column 2 Total banks2 Total banks2 column 3 column 4 (1) (2) (3) (4) (5) (6) 197 7 5,599 2,157 7,094 2,939 79 73 197 8 7,019 2,947 8,148 3,304 86 89 197 9 8,350 3,616 9,952 4,291 84 84 198 0 8,859 3,843 10,828 4,567 82 84 198 1 8,904 4,108 11,168 5,426 80 76 1. Net income less cash dividends declared on preferred and 2. Banks with fully consolidated assets of $1 billion or more, common stock. Income taxes declined relative to average as- tal and attracted external funds as well (table 10). sets, mitigating the impact of lower before-tax Nonetheless, capital-to-asset ratios changed litearnings on income available for dividends and tle, remaining at an average 5.8 percent for all capital retention. In 1981, net income relative to banks and 3.9 percent for money center banks average assets for all banks declined 3 basis but edging up slightly for smaller institutions. points, only half of the shrinkage in before-tax profits (table 9). The return on average equity capital also edged down for all banks, but at 13.2 INSURED U.S. COMMERCIAL BANKS WITH percent remained near the decade high reached FOREIGN OFFICES in 1979. Despite the ability of commercial banks as a Commercial banks with foreign offices or Edge group to maintain strong profitability, not all Act or Agreement corporations held $1.2 trillion banks successfully avoided losses associated in consolidated assets at the end of 1981, an with risks from changing interest rates and from increase of 10 percent from a year earlier. By the the weakening of loan portfolio quality that oc- close of the year, 190 banks had such offices, 12 curred during the year. More banks had ex- more than at the end of 1980. penses exceeding income in 1981 than in other In 1981, more of the domestic-office assets of recent years, especially during the second half these banks were allocated to loans than a year when the economy fell into recession. Banks earlier, and less were allocated to interbank with net losses during the second half of 1981 had business and securities (table 11). At foreign larger loan loss provisions relative to average offices also, loans increased in proportion to assets than their peers, as well as lower gross assets, and interbank business shrank. interest income, both of which are consistent Interest earned on loans booked at foreign with poorer loan quality. Small unprofitable offices increased VU percentage points (table banks had about the same rate of interest ex- 12). Yields on domestic-office loans increased pense as profitable banks of the same size, but less, 2V2 percentage points, in part reflecting a among larger banks, the unprofitable institutions lower incidence of short-term and floating-rate had higher interest expenses. provisions in domestic-office portfolios but also Cash dividends declared on preferred and reflecting a change in the pricing of business common stock grew, relative to average assets, loans booked at the domestic offices of these at all except money center banks. Small in- large multinational banks. The shift in pricing, creases in dividends and decreases in net profit away from the prime rate and toward lower rates rates brought down the rate of income retained tied explicitly to money market instruments, during 1981 to 0.46 percent of assets. Small apparently represents a competitive response by banks retained less income, even in dollar terms, large banks to retain business loan customers than they had in 1980, while large banks in- with direct access to the money markets. Interest creased the amount of earnings retained as capi- rates paid on all interest-bearing liabilities of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

462 Federal Reserve Bulletin • August 1982 11. Assets and liabilities, U.S. insured commercial banks with foreign offices, December 31, 1981 Domestic offices Foreign offices Item Billions of Percent of Billions of Percent of dollars total dollars total Total assets 849 100 394 100 Cash and due from banks 102 12 131 33 Gross federal funds sold and reverse repurchase agreements 38 4 1 Securities 108 13 9 2 Loans 484 57 209 53 Other1 117 14 44 12 Total liabilities 791 100 394 100 Deposits 566 72 319 81 Noninterest-bearing2 198 25 12 3 Interest-bearing 368 46 307 78 Savings and small time 175 22 n.a. n.a. Time over $100,000 193 24 n.a. n.a. Nondeposit financial claims 148 19 18 4 Federal funds purchased and repurchase agreements 121 15 Subordinated notes and debentures 4 1 Other liabilities for borrowed money 23 3 18 Other1 77 10 57 1. Of these amounts, $33 billion represents net funds advanced by 2. Demand deposits in domestic offices, noninterest-bearing deposdomestic offices to their own foreign offices and $13 billion represents its 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. domestic offices increased 23A percentage points, 13. Interest income and expense as percent of more than the increase of 2 lU percent in taxable- average assets, U.S. insured commercial banks with foreign offices, 1980-81 equivalent returns on all interest-earning assets. At foreign offices, effective interest rates paid for Domestic offices Foreign offices interest-bearing claims increased VU percentage IItteemm points, slightly less than the improvement in 1980 1981 1980 1981 yields on interest-earning assets. Gross interest income.... 8.67 10.24 12.37 14.96 Gross interest expense ... 5.79 7.60 10.99 13.16 Noninterest-bearing deposits issued by domes- Net interest margin 2.88 2.64 1.39 1.80 tic offices declined from 31 percent to 25 percent Taxable equivalent1 . 3.23 3.02 1.39 1.80 of total liabilities and were replaced by interest- 1. Approximated for domestic offices according to the method bearing transaction accounts and by claims such described in table 1, note 4. as large time deposits bearing market interest rates. With that shift toward more reliance on interest-bearing liabilities and with interest costs 14. Consolidated income and expenses, U.S. insured commercial banks with foreign offices, 1980-81 rising faster than interest returns, the net interest Percent of average assets Item 1980 1981 12. Rates of return and rates paid for funds, U.S. Gross interest income 10.08 12.13 insured commercial banks with foreign offices, Gross interest expense 7.65 9.74 1980-811 Net interest margin 2.43 2.39 Taxable equivalent1 2.68 2.66 Percent Noninterest income .98 1.10 Domestic offices Foreign offices Loan loss provision .24 .25 Other noninterest expense 2.25 2.38 IItteemm Income before tax .92 .86 1980 1981 1980 1981 Foreign offices2 .26 .30 Domestic offices2 .66 .56 1133..8822 1166..3322 1166..0000 1199..2277 Interest-earning assets2... 1133..2244 1155..5533 1155..0066 1188..4477 .61 .60 Interest-bearing deposits . 1100..1111 1122..9911 1144..0033 1177..3344 International business2 .19 .21 Interest-bearing claims ... 1111..1100 1133..8855 1133..9977 1177..2277 Domestic business2 .42 .39 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. 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 463 margins of domestic offices narrowed almost XU than assets, but by roughly offsetting amounts. percentage point to 3.02 percent (table 13). Mar- The share of total income attributable to internagins at foreign offices, responding to changes in tional business increased, bolstered by the higher interest yields and costs, expanded sharply. net interest margins of foreign offices and by the Overall, consolidated net interest margins of increased share of consolidated assets at foreign banks with foreign offices narrowed slightly, offices. Before-tax income narrowed slightly to influenced more by domestic-office results than 0.86 percent of average assets, and net income by improvement at foreign offices (table 14). As was maintained at only 1 basis point below the with all large commercial banks, noninterest 1980 rate. • income and expenses both grew more rapidly APPENDIX TABLES A.l. Report of income, all insured commercial banks Amounts shown in millions of dollars Item 1976 1977 1978 1979 1980 1981 Operating income—Total 80,388 90,069 113,170 114499,,779955 119900,,110099 224477,,993322 Interest Loans 51,471 58,881 75,948 101,942 126,663 163,171 Balances with banks 4,459 4,860 6,662 10,561 16,035 23,935 Federal funds sold and securities purchased under resale agreement 1,979 2,471 3,664 6,106 8,750 12,236 Securities (excluding trading accounts) Total income 14,333 15,140 16,432 18,755 22,968 29,333 U.S. Treasury and U.S. government agencies and corporations 8,362 8,835 9,335 10,630 13,400 18,037 States and political subdivisions 5,116 5,338 6,003 6,928 8,131 9,671 Other1 855 967 1,094 1,197 1,437 1,635 Trust department 1,795 1,980 2,138 2,375 2,738 3,179 Direct lease financing 534 699 862 1,073 1,371 1,746 Service charges on deposits 1,629 1,797 2,039 2,517 3,173 3,905 Other charges, fees, etc 2,175 2,404 2,930 3,635 4,352 5,302 Other operating income 2,011 1,903 2,495 2,831 4,059 5,116 Operating expenses—Total 70,466 78,484 98,104 131,950 170,675 227,714 Interest Time and savings deposits 34,894 38,701 50,054 71,693 98,130 138,977 Time CDs of $100,000 or more issued by domestic offices 7,083 6,732 11,693 18,105 24,753 39,034 Deposits in foreign offices 8,745 10,216 14,559 24,523 34,941 46,696 Other deposits 19,066 21,753 23,802 29,065 38,436 53,248 Federal funds purchased and securities sold under repurchase agreements 3,305 4,536 7,247 12,218 16,707 23,786 Other borrowed money2 665 816 1,452 3,162 4,380 5,894 Capital notes and debentures 343 391 445 497 541 611 Salaries, wages, and employee benefits 14,686 16,276 18,654 21,465 24,565 27,927 Occupancy expense3 4,464 4,959 5,559 6,255 7,325 8,566 Provision for loan losses 3,650 3,244 3,499 3,764 4,453 5,059 Other operating expenses 8,456 9,561 11,194 12,796 14,573 16,962 Income before taxes and securities gains or losses 9,922 11,585 15,067 17,843 19,435 20,149 Applicable income taxes 2,287 2,829 4,155 4,736 5,009 4,611 Income before securities gains or losses 7,635 8,756 10,911 13,109 14,426 15,539 Net securities gains or losses (—) after taxes 190 95 -225 -350 -492 -861 Extraordinary charges (—) or credits after taxes 24 47 45 39 17 54 Net income 7,849 8,898 10,731 12,797 13,950 14,731 Cash dividends declared 3,029 3,299 3,714 4,449 5,091 5,831 MEMO Number of banks 14,397 14,397 14,380 14,352 14,421 14,400 Average fully consolidated assets (billion of dollars) 1,123 1,257 1,418 1,593 1,768 1,933 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 balances, which were begun in November 1978. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

464 Federal Reserve Bulletin • August 1982 A.2. Earnings, portfolio composition, and interest rates, all insured commercial banks, 1981' Assets Item All billion or more Less than $100 $100 million million to Money center Others $1 billion Balance sheet (as percent of average consolidated assets) Interest-earning assets 83.8 90.8 88.0 79.6 81.3 Loans 55.2 53.6 54.1 57.5 54.4 Securities 17.0 29.4 25.7 6.8 14.4 U.S. Treasury 5.3 9.9 8.1 2.0 4.2 U.S. government agencies 3.3 7.4 5.0 .8 2.2 State and local governments 7.6 11.5 11.9 2.7 7.5 Other bonds and stock .8 .5 .7 1.3 .5 Gross federal funds sold and reverse RPs 4.0 5.9 5.5 2.1 3.9 Interest-bearing deposits 7.7 1.9 2.8 13.2 8.7 Financial claims 88.8 89.5 90.6 87.2 88.8 Demand deposits 20.8 22.5 25.0 14.7 23.1 Interest-bearing claims 68.0 66.9 65.6 72.5 65.7 Time and savings deposits 57.8 65.0 58.2 59.5 51.9 Large time 14.2 10.0 15.0 13.5 16.8 In foreign offices 15.8 .2 39.3 11.7 Other domestic 27.8 55.0 43.0 6.6 23.2 MMCs 10.5 22.5 15.8 2.3 8.2 NOW accounts 2.4 4.0 3.6 .7 2.5 Subordinated notes and debentures .3 .2 .4 .2 .5 Other borrowings 2.3 .3 .9 4.4 2.3 Gross RPs and federal funds purchased 7.5 1.4 6.1 8.5 11.0 MEMO: Managed liabilities 40.2 12.0 22.6 65.9 42.4 Effective interest rates (percent) On securities 9.27 9.69 9.14 9.90 8.65 State and local governments 6.72 6.44 6.49 7.68 6.86 On loans, gross 16.37 14.90 15.23 17.63 16.62 Net of loan loss provision 15.83 14.30 14.66 17.20 16.00 Taxable equivalent Securities 11.73 11.77 11.44 12.74 11.56 Securities and gross loans 15.26 13.79 13.99 17.10 15.53 For time and savings deposits Negotiable CDs 16.42 15.18 16.05 16.98 16.63 In foreign offices 17.34 15.84 17.17 17.94 Other deposits 10.02 10.56 9.99 9.40 9.55 For managed liabilities 16.82 15.11 16.07 17.10 16.93 For all interest-bearing liabiliites 13.86 11.31 11.97 16.20 14.11 Earnings and expenses (as percent of average consolidated assets) Gross interest income 11.81 11.49 11.25 12.58 11.60 Gross interest expense 8.75 7.13 7.39 10.69 8.64 Net interest margin 3.07 4.36 3.86 1.89 2.96 Noninterest income .99 .69 .87 1.11 1.13 Loan loss provision .26 .28 .27 .21 .29 Other noninterest expense 2.76 3.23 3.34 1.94 2.92 Profits before tax 1.04 1.55 1.12 .86 .88 Taxes .24 .35 .17 .31 .15 Other -.04 -.06 -.05 -.02 -.05 Net income .76 1.15 .91 .53 .68 Dividends .30 .35 .39 .21 .31 Retained income .46 .80 .52 .32 .37 MEMO: Net interest margin, taxable equivalent 3.45 4.92 4.40 2.07 3.35 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 465 A.3. Income attributable to international business of U.S. commercial banks with foreign offices, 1981 Millions of dollars Item Amount Pretax income attributable to foreign offices' 3,453 Plus: Pretax income attributable to international business conducted in domestic offices 1,098 Less: adjustment amount2 232 Pretax income attributable to international business 4,319 Less; All income taxes attributable to international business 1,921 Net income attributable to international business 2,398 MEMO Provision for possible loan losses attributable to international business 567 Noninterest income attributable to foreign offices1 2,192 Noninterest income attributable to international business 2,761 Noninterest expense attributable to foreign offices1 3,736 Noninterest expense attributable to international business 5,567 Intracompany interest income attributable to international business ... 6,805 Intracompany interest expense attributable to international business .. 10,028 Interest income of domestic offices from foreign-domiciled customers . 4,147 Fully consolidated Pretax income 9,940 Total applicable taxes 2,691 Net income1 6,853 Average total assets 1,150,135 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

467 Federal Reserve System Pricing: An Overview This report was presented by E. Gerald Corri- answer that question. If there are enough takers gan, Chairman of the System's Pricing Policy of our services at prices that will generate suffi- Committee and President of the Federal Reserve cient revenue to cover our costs in a highly Bank of Minneapolis, on July 29, 1982. competitive market, the presumption would be strong that our presence in the market is contrib- My purpose today is to provide an overview of uting to the underlying goal of efficiency. Howthe experience of the Federal Reserve Banks ever, even that seemingly acid test cannot be a during the first year of pricing and to share with sufficient guide to our conduct. For example, the you our plans for the next year or so with respect Monetary Control Act of 1980 (MCA) speaks of to our priced services activities. I am sensitive to costs matching revenues "over the long run," our responsibilities to keep depository institu- giving due regard to "competitive factors and the tions informed of our intentions in this area. provision of an adequate level of such services Now, with a year or so of pricing experience nationwide." That language alone suggests to behind us, we are in a position to formulate and me—as does our initial experience with pricing— articulate better a reasonably comprehensive that there is no cookbook-like formula that can overview of those plans. Before getting into the or should serve as a one-dimensional guide to our specific elements of our plans, let me begin by actions—particularly in a context that recognizes providing perspective on where we are right now that we remain a public entity. Taken in historiand a brief overview of how we see our role in cal perspective, the Federal Reserve also has the payments area. inescapable responsibilities for the safety of the payments mechanism as well as for insuring the overall adequacy of payments services. We cannot back away from these responsibilities even in THE ROLE OF THE FED IN THE PRICED the so-called pricing environment. SERVICES ENVIRONMENT Because we do not have the luxury of a one- The basic purpose to be served by a continued dimensional guide to our actions, it will, I am Federal Reserve presence in the payments ser- sure, come as no surprise to most of you that we vice area—indeed, the purpose intended by the in the Federal Reserve have given extensive Congress—is to contribute to the efficiency and thought to devising an operational approach that integrity of the payments mechanism. As a corol- will permit us to best meet the pricing provisions lary to this, it is simple enough to say that as long of the MCA while continuing to serve our historias we are serving that purpose, we should remain cal public responsibilities regarding the payin the business, and on the contrary if we are not ments mechanism. Our first attempt—as reflectserving that purpose, we should get out of the ed in our initial schedule of fees—was rather business. While the logic of this proposition is simple. We essentially calculated our costs for clear enough, it is not so simple to develop an each individual product, added on the private operational and functional approach that should sector adjustment factor (PSAF), mailed out the guide our day-to-day actions. resulting price schedule, and in effect let nature On the surface, the issue would seem to come run its course. Despite our conservative but reasonable initial approach—or perhaps because down to the question, how will we know if we are of the approach—we have learned much in our contributing to the efficiency of the payments first year of pricing. mechanism? In one sense the "market" should Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

468 Federal Reserve Bulletin • August 1982 Let me mention a few things that stand out in To some extent, the situation we have faced in my mind. First, it does appear that Federal making the transition to pricing was heavily Reserve prices are generally within the range of conditioned by developments that predated pricprivate suppliers' prices. That fact, in turn, im- ing. For example, for reasons quite apart from plies that the visible presence of our prices in the the prospect of pricing, the Federal Reserve marketplace should be working in the direction Banks had—in the years before 1980 when the of lowering the overall costs to society of pay- MCA was enacted—done quite a good job of ment services. Second, although we have lost resource management. For example, between volume, literally thousands of institutions—in- 1974 and 1980, employment in our payments cluding approximately 3,000 nonmember institu- service operations was reduced more than 17 tions that heretofore did not have full access to percent and our expense growth was held signifi- Fed services—are securing at least some ser- cantly below the rate of inflation. During that vices from the Fed. The fact that so many insti- same period, productivity rose a rather remarktutions choose to obtain services from the Fed able 77 percent. Thus, long before pricing was when alternatives are often readily available also upon us, the Federal Reserve had been moving says something. We want Fed pricing to have the aggressively in a direction that would serve it desirable effect of causing all market partici- well, from a cost point of view, in the pricing pants—the Fed included—to sharpen their pen- environment. cils in search of lower costs and better services. If that was the good news, there was also some If we accomplish this, the operational presence bad news. For example, in the 1978-79 period, of the Federal Reserve in the payments mecha- the Federal Reserve made a commitment to nism will contribute further to the efficiency and expend tens of millions of dollars on its longintegrity of the payments mechanism, while per- range automation program. The rationale for this mitting us to retain the capability of providing decision was heavily, if not totally, dictated by minimal levels of services at reasonable prices in considerations relating to the effective discharge the event such services might not otherwise be of our public responsibilities—including those available. related to monetary policy—rather than in anticipation of pricing our payments services. That program, taken in the context of the sharp reductions in personnel over the 1974-80 period, has THE TRANSITION TO PRICING had the effect of significantly shifting the weight of our costs to the "fixed" or "overhead" varie- You are aware that Federal Reserve pricing is ty. Thus, our current cost structure is one in only about a year old. As I have implied, the which, in most cases, making quick adjustments transition from an environment of "giving it to even relatively modest changes in volume is away" to the priced and competitive setting has not easy nor, in some cases, even desirable. not been easy. However, I suspect that our If the transition to pricing has had its uncersituation, while more difficult in degree, has tainties—and it surely has—none were greater something in common with the problems faced than those relating to what would happen to by many financial institutions in learning to price Federal Reserve processing volume under prictheir products in a deregulated setting as well as ing. And our initial pricing endeavor—wire transsomething in common with the problems the fer services—because of the nature of the prodairline industry is grappling with in the face of uct, would tell us little about this phenomenon. deregulation. But whatever problems the banks Check pricing would be the big test because it and the airline industry have had in adjusting to constitutes three-quarters of our overall costs of deregulation, our problems have been different. priced services and because alternatives to Fed In part our problems are different because pric- check services are so readily available in virtualing is entirely new to us, and in part because we ly every location in the country. must not, in the interests of pricing, back away In any event, it is fair to say that, on balance, from our essential and ongoing public responsi- the drops in volume we have experienced were bilities. faster than we anticipated. We expected—and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve System Pricing: An Overview 469 welcomed—a drop in check volume due to the problems that are associated with a first cut at emergence or reemergence of local clearing oper- pricing. ations. We welcomed this development because Against this background, in February we beit contributed to efficiency even if it did cut into gan a basic reassessment of our approach to our volume. pricing. In that process, considerable weight was Let me be specific. Since pricing began and given to developing plans that would permit an through the first quarter of 1982, we estimate that orderly narrowing and elimination of the costthe total volume of our priced services activities revenue gap growing out of the declines in volhas fallen about 20 percent. To be even more ume that have been experienced. Thus, the prospecific, the volume of checks actually pro- gram we have embarked upon anticipates that by cessed by the Federal Reserve Banks has dropped the fourth quarter of 1982 the Reserve Banks, as 22 percent. a group, will be generating sufficient revenues to Almost half of the drop in processed check cover all costs and part of the PSAF. Several volume has been offset by a sharp rise in han- individual Banks that have experienced more dling of fine sort or packaged checks. Most, if not modest drops in volume are expected to cover all all, of the decline in processed check volume costs and the full amount of the PSAF in that occurred in the period August 1981 through time frame. On the other hand, a couple of Banks February 1982. The speed with which check that have had substantial drops in volume will volume fell off, together with the fact that the take longer to make the adjustments needed to volume drop has been very uneven from one match revenues with costs. In any event, we Federal Reserve office to another, suggests that, expect that all Reserve Banks will have made the in fact, much of the fall has been due to the transition to a cost-plus-PSAF-revenue match resurgence of local clearing arrangements. Also by late 1983. relevant is that the gains in fine-sort volume The cost-revenue gap situation brought into suggest that the Federal Reserve provides a sharp focus a series of both strategic and tactical necessary and vital coupling link between col- questions concerning our approach to pricing. lecting and paying banks that facilitates the deliv- Indeed, given the drops in volume and the resultery and settlement of those payments. ing cost-revenue gaps, we had three basic Whatever its origins, the drops in volume have choices. First, we could simply conclude that we put the Fed in a difficult position with respect to should begin a planned, wholesale withdrawal the task of generating sufficient revenues to from the payments business; second, we could cover its costs and the PSAF. Sharp resource drift along in much the same mode as that adjustments have been made because our Sys- adopted in our first year of pricing and more or temwide work force in check operations is ex- less let the cards fall where they may; or third, pected to drop more than 10 percent in 1982. we could take a more responsive and flexible However, while the amount of real resources approach to pricing. devoted to our priced services activities has We have chosen the third alternative after due remained about flat in the last year or so, de- consideration and for a number of reasons. On clines in volume and the rise in nominal costs the one hand, a planned withdrawal from the have produced a short-run divergence between payments business does not seem compatible our costs (including the PSAF) and our revenues. with the objective of working toward the efficien- For example, in February that gap reached 28 cy of the payments mechanism or with those percent, but preliminary estimates suggest that other essential public responsibilities mentioned by May the gap had been narrowed to a little less earlier. Moreover, most financial institutions— than 18 percent. Such a gap means that as of small and large alike—seem to agree that the May, we were covering almost all costs except Federal Reserve must play a role in the payments the 16 percent PSAF. As we see it, however, our process. This, of course, does not mean that we shortfall does not so much reflect the fact that we will not drop an individual service component are wildly out of line in costs or prices as much as when the market tells us we have nothing to offer it does the difficulties of adjusting our cost struc- or when no public benefit is associated with our ture in the short run and the "mechanical" activities. Nor does it mean that, in time, we Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

470 Federal Reserve Bulletin • August 1982 would not drop full lines of service if events so initial price setting exercise was rigid, mechanisdictate. However, it does say that we should tic, and solely driven by costs. No effort was make an honest effort to maintain a viable pres- made to price in a manner that recognized that ence when that presence is demonstrably com- the value of some services might be different patible with the goal of efficiency and with our from their "costs" nor was any effort made to overall public responsibilities. take account of prevailing market practices. We have also concluded that a continuation of Essentially, the new pricing approach starts the passive—if not mechanistic—approach we with the proposition that, for the full line of had initially adopted was not likely to provide check processing services, costs (including the much of a test of the extent to which the Fed's PSAF) and revenue must match. However, withoperational presence in payments activities was in the overall check service line, we wanted to working to increase overall efficiency. Thus, if build in more flexibility to vary prices in line with we are genuinely to help insure that payment market forces. Therefore, the approach we have services are delivered in the most effective and adopted is that, for any individual product within cheapest manner possible, we should emphasize an overall service line, the prices must at least a coordinated program of cost containment, cover direct production costs. Of course any product enhancement, and product promotion. shortfall from total cost recovery for one product This emphasis does not mean that we will behave in the check service line must be compensated as a private correspondent bank; we are a public for in the prices of other check products. In institution and will remain so. Similarly, this effect, therefore, we have built an element of approach does not mean that we covet any flexibility into the pricing methodology that perparticular share of the market. Our fundamental mits overhead costs to be spread among individmission, as we see it, is to contribute to the ual components of an overall service line in efficiency and safety of the payments mecha- accordance with judgments concerning the relanism, and the program I will outline below has tive demand for these individual service compobeen developed with this underlying objective nents. Rigorous control and monitoring procefully in mind. dures have been established to insure that this added degree of flexibility is used conservatively and judiciously. We believe that such flexibility is a more appropriate approach to pricing and PROSPECTIVE CHANGES IN CHECK that it is more in line with typical pricing prac- SERVICES AND PRICES tices. The adoption of this approach to pricing will, In mid-August the Federal Reserve Banks will be of course, mean that our prices, when published announcing new check prices and services, in mid-August, will look a bit different than they which will take effect on September 30, 1982. In do today. It also means that there could be more the same general time frame we will be implevariability in specific prices among Federal Rementing a number of important changes in serserve offices. By and large, however, the extent vice levels, making a modified approach to price to which this added flexibility has been used by determination, and completing the job of elimthe Reserve Banks will be quite limited. The inating or pricing Federal Reserve float. To put most important and widespread use of this techthe overall program into perspective, let me nique will be reflected in prices for certain types comment briefly on the major elements of the of cash letter deposits for which we have made check repricing effort. major improvements in availability and thereby have vastly enhanced the value of the service. Thus, the modified approach to price determina- Price-Setting Methodology tion not only is one that provides somewhat more flexibility, but more importantly, is one that provides the opportunity to create price incen- The new check prices to be promulgated in midtives that will work toward making the payments August reflect some departure from our earlier system operate better. pricing methodology. As mentioned earlier, our Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve System Pricing: An Overview 471 Improvements in Availability Federal Reserve Banks, for example, processing windows for late delivery work will be short- While the individual Federal Reserve Banks ened. Similarly, with the related shift to 12:00 have already implemented or are planning to noon presentment for city checks, the processing implement a number of enhancements in check windows for at least some banking organizations processing services, the most important change will also be shortened. Over time, a more generwill come about because of dramatic accelera- alized shift to a later presentment may also tions in the collection of certain classes of create some transitional problems for other checks. The principal catalyst for these enhance- classes of payor banks and to certain of their ments will be a reconfiguration of the interdis- corporate customers. On the other hand, many trict transportation network (ITS) used by the depositing banks will have considerably more Federal Reserve in moving checks around the time to get interzone checks into the Federal country. The new ITS network—which will be Reserve network for same-day or next-day preoperated for about the same overall cost as the sentment and credit. For example, under current Fed's current overall air transportation net- arrangements, checks deposited at the New work—will be phased into operation beginning York Federal Reserve Bank drawn on a Chicago August 1, 1982. city bank must be at the New York Bank by The new transportation network is structured 12:30 a.m. for same-day availability. With the on a "spoke and hub" concept. That is, five hubs restructured transportation arrangements such around the country will serve a series of spokes, checks can be deposited at the New York Bank the endpoint of each being a Federal Reserve as late as 3:00 a.m. office. Charter planes will make multiple flights Let me digress here for a bit and speak directly nightly between the respective hubs and their about the 12:00 noon presentment issue, which I spoke endpoints. Checks will be exchanged at know has been a source of contention to some the hubs either for delivery to endpoints connect- institutions. While we have talked informally ed to the same hub or for shipment to other hubs about moving to later presentment for quite some with subsequent dispatch to endpoints at those time, and have provided reasonable advance more distant hubs. notice of our intent to shift to 12:00 noon present- By using these transportation arrangements ment for city items, we did not necessarily do and by moving to later deposit deadlines for either of these things within a context that made interzone checks that are deposited with and readily apparent the rationale for changing pretransported by the Federal Reserve for next-day sentment hours. In some ways, the most essenor same-day credit, we expect to effect major tial ingredient in that missing context is, of enhancements to the check collection process. course, the overall acceleration in check collec- For example, under current Federal Reserve tion we expect to achieve by a combination of transportation arrangements and with Fed col- initiatives, including, but not limited to, 12:00 lection schedules, most inter-District Regional noon presentment. Also, not necessarily apparcheck Processing Center (RCPC) items are two- ent to all was that the shift to later presentment day availability points. Under the new arrange- would be accompanied by substantially later ments, we expect that 50 to 70 percent of these deposit hours for certain classes of cash letters. inter-District items will be collected and credited In any event, a number of banks and some of within one day—thereby accelerating by 24 their corporate customers have indicated that hours the collection of items valued at between they may have some transitional problems asso- $1.6 billion and $2.6 billion per day. At current ciated with 12:00 noon presentment. Whereas we interest rates, the value of their acceleration in are sensitive to those problems, we also believe collection can be as much as $1 million per day or that they are manageable because most checks a staggering $360 million per year. will still be presented to city banks much in This change—while clearly in the interest of accordance with existing schedules. improving the speed and efficiency of the overall Indeed, the noon presentment hour should be check collection process—is not one without its viewed as the latest hour at which presentment own problems and transitional difficulties. At the will take place. In practice, the presentment of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

472 Federal Reserve Bulletin • August 1982 most checks by virtually all Federal Reserve progress. The record speaks for itself. In the first offices will take place in advance of the noon quarter of 1980, our float averaged $4.9 billion deadline. However, in order to ensure that these whereas in the second quarter of 1982 it averaged changes in check collection procedures are di- $1.8 billion. This reduction in float increased our gested by banks and their customers with a payments to the Treasury about $350 million. minimal amount of difficulty, we have modified However, to the extent we have reduced float, the schedule for implementation of later present- someone else—be it a bank, a corporation, or a ment to provide a further six-week period over state or local government—has in one way or which the changes will be phased in. another picked up the tab. That is one of the The first phase of implementation will start on ironies of float, whether it is Federal Reserve August 2, when the Reserve Banks will begin float or one of the many other forms of float that, presenting checks to reserve city banks no later in the aggregate, are symptomatic of inefficienthan 11:00 a.m., unless the Reserve Bank is cies in the payments mechanism. currently presenting checks after that time. Indeed, the greatest irony of all is that the float Now, Federal Reserve offices in at least four game is played with the expectation of net win- Districts present checks as late as 12:00 noon to ners when in fact float is, by definition, a zerosome city banks, and offices in eight Districts sum game. As a practical matter, however, there present checks to some banks outside the re- are winners—some by accident of location, some serve city at 12:00 noon or later. by clever design, some by the sheer weight of The second step in the phase-in will occur on their relative economic power, and even some by August 16 when the Reserve Banks will shift to outright abuse. However, it is very hard—if not later deposit deadlines for interzone RCPC virtually impossible—to identify the specific winchecks. Of course, later deposit times will trans- ners and the specific net losers in float. That late into more rapid collection of these items. reality has had, and will continue to have, an The final step of the implementation will occur important impact on the approach of the Federal on September 16 when deposit deadlines for Reserve to pricing or eliminating float. interzone city checks will be moved forward. At Some would suggest that the simplest way to this time, 12:00 noon presentment will be imple- proceed would be for the Federal Reserve to mented, but even then we fully expect that the price float immediately and directly. A move in presentment of most city items by Federal Re- that direction could be achieved either by chargserve offices will occur before the noon deadline. ing payor banks directly for "actual" float or by This modification in the program should help folding the value of Fed float into our overall minimize transitional problems associated with check prices. The former approach entails a the change in check collection procedures. Even morass of technical, administrative, accounting, then, some problems may remain, which must be and legal issues. The latter approach just does considered and resolved in the context of the not make good sense to us because it would not overall benefits of the program in its entirety— create any incentive to get rid of float. Indeed, to including the fact that accelerating the collection the extent that relative economic power—to say of checks should encourage further shifts to nothing of abusive practices—has anything to do electronic payments. In this larger context, we with who benefits from float, this approach could are obviously convinced that the program is produce perverse results. To state the case more appropriate and consistent with our continuing directly, we want to go about the task of elimobjective of improving the payments process. inating or pricing float in a way that places the incentives and the disincentives where they belong. The costs of float or float reduction should Float Reduction and Elimination Program be borne, to the fullest extent possible, by those who "benefit" from float and particularly by those who are engaged in deliberate efforts to Financial institutions around the country are create float. quite familiar with the fact that the Federal Reserve has made dramatic progress in reducing Primarily for this reason the Federal Reserve, float—some I suspect are all too familiar with our in its float reduction efforts to date, has placed so Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve System Pricing: An Overview 473 much emphasis on float reduction rather than deposits. The Reserve Banks will be permitted to prematurely attempting to price float explicitly. offer any or all of the following methods: Over the next six to nine months, we will contin- 1. Fixed availability initially with "as of' adue to emphasize operational improvements in justments to correct for float after it occurs. our efforts to eliminate float. However, begin- 2. Actual availability in which credit is passed ning in early 1983 the thrust of the program will only when the checks are received on a timely begin to move in some new directions in that we basis by the payor banks' Federal Reserve office. will begin to alter crediting procedures for inter- 3. Fractional availability, in which fixed but territory cash letters and/or to price explicitly fractional day availability is given so that float is holdover and intraterritory transportation float. zero on average. Specifically, we have developed a comprehen- 4. Payment for float by holding a clearing sive program that, by roughly the end of the first balance at Reserve Banks. quarter of 1983, should reduce the level of Feder- We are providing these four options in the al Reserve float to a low frictional level (see the interest of trying to satisfy the differing needs of accompanying table). the various types and sizes of banking organizations that receive checks from the Federal Reserve. However, as a practical matter, we be- Summary of proposed plan for reduction of System float in 1982-83 lieve events will gravitate in the direction of actual availability and the use of clearing bal- Approximate _ . ances. target date Proposed action In order to execute this program, the Federal September 1982 Charge payor institutions for cash letter Reserve Banks are now developing a Systempresentments on midweek closings. September 1982 Wire advice for return items equal to or greater wide, automated "cash letter monitoring systhan $50,000. September 1982 Wire advice of adjustments equal to or greater tem." That system will permit us to track and than $50,000 (short-term measure). pinpoint almost instantaneously the location of Automate adjustment process (long-term measure). any cash letter in the Federal Reserve collection January 1983 Change crediting procedures for interterritory cash letter deposits. network. We believe that this system will pro- Early 1983 Eliminate or price holdover float. vide major benefits to us, to banking organiza- Early 1983 Eliminate or price intraterritory transportation float. tions, and to the payments network generally. It Early 1983 Eliminate or price noncheck float. may even help us in the execution of monetary policy as it should permit us to provide the At present, the largest remaining component Trading Desk in New York with more accurate of Federal Reserve float results from the ship- and timely estimates of the amount of float that ment of inter-District checks between Federal open market operations must offset or accommo- Reserve offices. Such float now amounts to date in managing the reserve position of the about $1 billion on a daily average basis. The banking system as a whole. More to the point in current practice is to give credit availability for the current context, however, the cash letter each category of check deposit according to a monitoring system will permit us to take the next fixed (whole-day) schedule. Thus, anything that and last major step in the float reduction-pricing goes amiss in the usual transportation cycle will program in a manner that is consistent with the slow the collection of a portion of the checks, objectives outlined earlier. and float results. Therefore, the key to the suc- Assuming these programs, in the aggregate, cess of our float program rests with our success succeed in getting float down to some low level in dealing with this element of float. To some around mid-1983, we will have another bridge to extent, we anticipate that the major improve- cross. Namely, what to do about the remaining ment of the ITS transportation network dis- or frictional levels of float? We have not yet cussed earlier should get things moving in the made that decision, in part because we are just right direction. However, the major changes that now beginning to focus on the question of whethshould do the job will come in January 1983 when er or not some low level of Federal Reserve float the Reserve Banks modify the way in which they exists that might properly be viewed as a necescredit depositors for interterritory cash letter sary lubricant for the payments mechanism. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

474 Federal Reserve Bulletin • August 1982 Such a question, of course, is very complex and earlier this year. However, we tentatively expect undoubtedly controversial, and it is also one that to announce new prices and any service level in the final analysis might require a change in the modifications early in 1983. statute. For now, however, we must wait to evaluate how these other initiatives work. We Clearing Balances. With the phasedown in will then be in a better position to determine the member bank reserve requirements called for in amount of residual float and what should best be the MCA, and given certain elements of our float done with that residual. reduction plan, an increasingly large number of institutions may want or need to establish clearing balance relationships with their respective Federal Reserve Banks. Therefore, in mid-Au- Other Near-Term Pricing Initiatives gust, we will be announcing a series of changes in our rules governing eligibility and administration While most of what I have said is related to the of clearing balances. These changes are aimed at check processing activities of the Federal Re- providing a greater degree of flexibility to deposiserve Banks, financial institutions should be tory institutions and to the Reserve Banks in the aware of a number of other near- and intermedi- establishment and use of clearing balances. ate-term plans in other areas. Let me, therefore, comment briefly on pending developments. Electronic Check Collection. For a number of months the Federal Reserve has been involved in Automated Clearinghouse Prices. On or about design work for a particular form of electronic August 16, the Reserve Banks will be announc- check collection (ECC). While that analysis has ing the new schedule of ACH prices. These provided many valuable insights into the probprices will represent the first step in our stated lems and opportunities associated with shifting objective of recovering full costs of ACH opera- paper payments to an electronic form, the ECC tions in 1985. At this time, we fully expect no program that has been discussed with the bankfurther ACH price increases until August 1983. ing industry will not be pursued further by the We contemplate that the new ACH price sched- Federal Reserve at this time. Nevertheless, some ules will differ from the current price schedules of the problems to which ECC had been directed in that they will incorporate a differential price (large checks) and some of its objectives (encourfor originators of debits and the receivers of aging the shift to electronic payments) remain credits and will also incorporate a night-cycle just as valid today as they were a year ago or five "premium" price. Also we have commissioned a years ago. Thus, we will continue our efforts to number of longer-term studies of what can be develop programs and initiatives that can effecdone—in cooperation with the private sector—to tively serve those objectives. promote the use of the ACH. FRCS-80. As many of you know, last month Securities and Noncash Collection Repricing. the Federal Reserve began live processing on the At present we contemplate that new price sched- FRCS-80, the Fed's new nationwide telecommuules for our securities processing and safekeep- nications network. At present, the Reserve ing services, along with coupon collection ser- Banks are developing standard software packvices, will be announced on or about November ages to replace the existing funds and securities 15 to take effect as of the first of next year. We transfers, bulk data, administrative messages, are still analyzing our experience with securities and related systems that will use the FRCS-80. pricing to learn what modifications in prices and Of course, the network is highly powerful and in the structure of prices would seem most flexible and should be able to meet our existing appropriate. applications at least for the remainder of this decade. Over a longer time frapie we believe Cash Transportation Services. We have not FRCS-80 will be a tool that can help meet the yet begun to focus in detail on the cash service evolving needs of our national payments mechaarea because it was not initially priced until nism. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve System Pricing: An Overview 475 Longer-Term Plans others are better off. Those realities should not deter us or you from seeking out those areas in I cannot tell you with any precision what may which we have common interests and from workdevelop in the longer term with respect to the ing together to achieve those larger objectives of nature and extent of the role and presence of the which I spoke earlier. Federal Reserve in the payments area. I can In closing, let me say a few words on a related repeat that we are very much inclined to the view subject. In virtually every form in which the that we should seek to maintain a viable, opera- subject of pricing is discussed among financial tional presence in the payments business primar- institutions, the point is made that the Federal ily because we believe that presence is consistent Reserve might use, could use, or perhaps even with the goal of improving the efficiency and has used its regulatory authority to its competieffectiveness of the payments mechanism. Simi- tive advantage. We are extremely sensitive to larly, I can tell you that we remain strongly this view. committed to a number of related objectives. I firmly believe our safeguards against abuse of These would include encouraging a continued our regulatory authority are more than adequate. shift toward faster, cheaper, and more certain Foremost among those safeguards is our own forms of payment and, to the maximum extent extremely high level of sensitivity to the issue. In possible, encouraging an evolution in payment addition, the fact that we operate under such practices in which institutions, small and large, close public scrutiny is, in and of itself, a powerand individuals will be direct beneficiaries of ful safeguard. Beyond that, we have also taken those constructive changes we help to foster. steps within the Reserve Banks to create our Achieving those objectives may not require that own version of the "Chinese Wall" by segregatthe Federal Reserve perform all of the operation- ing, to the maximum extent possible, priced al functions it performs today. On the other service activities from other activities within the hand, it may require that we take on some things Banks. Finally, if despite all of this, we appear to that we do not do today. If the need arises, we cross the line, obviously numerous avenues of are prepared to move in that direction. redress are available to those who may perceive The important point as I see it, however, is not that the "Wall" has been breached. so much the precise role that the Federal Re- In my judgment, the best way to insure that the serve plays in this process of change nor is it the problem does not arise is to seek out opportuniprecise role that any one institution, or group of ties for open and frank discussion of our coninstitutions, plays in that process. To the con- cerns, our plans, our priorities, and our intentrary, the genuinely important point is to recog- tions. Consistent with that, I believe the time nize—as I believe we all do—that we in the may be at hand when some degree of more Federal Reserve and you in the financial industry formal and regular communication between the have a common interest in seeing that these Federal Reserve and the financial industry—at objectives are well served. the level of the policymakers—may be appropri- Having said that, let me say something you ate, and I would welcome your views as to how already know. There simply is no way that each that might be accomplished. Earlier, I mentioned thing we do can please 15,000 banks, 4,000 two areas—the future of the ACH and moving on savings and loans, 400 savings banks, and 20,000 with a viable form of ECC—that I believe are credit unions. If we speed up check collection ripe candidates for such dialogue. In the meanand reduce float, inevitably, somebody is "hurt" while, I hope that we in the Federal Reserve and unhappy. But many others are better off. If have, through this vehicle, begun to provide we adopt later presentment hours, someone's ox more adequately some insights into our current is perceived as being gored, but here too, many plans. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

477 Staff Studies The staffs of the Board of Governors of the In all cases the analyses and conclusions set Federal Reserve System and of the Federal forth are those of the authors and do not neces- Reserve Banks undertake studies that cover a sarily indicate concurrence by the Board of Govwide range of economic and financial subjects. ernors, by the Federal Reserve Banks, or by the In some instances the Federal Reserve System members of their staffs. finances similar studies by members of the aca- Single copies of the full text of each of the demic profession. studies or papers summarized in the BULLETIN From time to time, papers that are of general are available without charge. The list of Federal interest to the professions and to others are Reserve Board publications at the back of each selected for the Staff Studies series. These pa- BULLETIN includes a separate section entitled pers are summarized—or, occasionally, printed "Staff Studies" that lists the studies that are in full—in the FEDERAL RESERVE BULLETIN. currently available. STUDY SUMMARY STRUCTURE-PERFORMANCE STUDIES IN BANKING. AN UPDATED SUMMARY AND EVALUATION Stephen A. Rhoades—Staff, Board of Governors Prepared as a staff paper in the first half of 1982 The structure-performance analytical frame- Evidence of a structure-performance relationwork grew out of the theoretical work of Edward ship was found in 30 of the 39 studies from 1960 Chamberlin and Joan Robinson during the 1930s. through September 1977 but in 23 of the 26 recent It has proved to be remarkably useful and versa- ones. Many of the later studies, in contrast with tile. Indeed, it has become an important founda- the earlier ones, do not examine the structuretion for antitrust policy and has provided the performance relationship per se. That is, they basic framework for examining a wide variety of have some other objective, and findings on the hypotheses other than the basic structure-per- basic structure-performance relationship emerge formance hypothesis. The banking industry is a as a by-product. The concentration ratio proved convenient laboratory for testing many of these to be the most frequently used and the most hypotheses. "successful" measure of market structure. Evi- While the early tests of the basic structure- dence is building that studies that use banks as performance hypothesis had focused on the in- the unit of observation should include a measure dustrial sector, the Bank Merger Act of 1960 of market share. In the recent studies, as in the gave impetus to similar studies in banking. An earlier ones, wage costs are generally not taken earlier Staff Study summarized and evaluated the into account when prices rather than profits are 39 structure-performance studies in banking used as a performance measure—probably a conducted from 1960 through September 1977. mistake. It is surprising that more of the recent This Staff Study summarizes and evaluates 26 studies did not account for nonbank thrift institustructure-performance studies from September tions in light of the expanded services these 1977 through June 1982. institutions may offer. Those studies that did Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

478 Federal Reserve Bulletin • August 1982 account for nonbank thrift institutions yielded the banking industry is proving to be a particularconflicting results regarding the degree of com- ly fruitful arena for investigations into a variety petition between banks and thrifts. of questions relying on the general structure- In conclusion, market structure does influence performance framework. Nevertheless, the nonperformance in banking. Though the magnitude profit objectives of businessmen, the use of of the influence is generally small, exceptions nonprice competition, the reason for the small exist. Therefore, the structure-performance ana- measured effect of structure on performance, lytical framework provides a solid foundation for and the competitive effects of nonbank thrifts are bank merger policy. From a research standpoint, receiving less attention than one might expect. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

479 Industrial Production Released for publication August 13 138.1 percent of the 1967 average, the total index in July was 10.3 percent below a year earlier. Industrial production edged down 0.1 percent in In market groupings, production of consumer July following declines of 0.7 percent in each of goods increased 0.6 percent, reflecting a sharp the two preceding months. Output of consumer rise in output of autos. Autos were assembled at goods increased during the month and materials an annual rate of 6.6 million units—up about 12 remained unchanged, but sizable reductions con- percent from June, but the industry has schedtinued in the output of business equipment. At uled about an equivalent reduction for August. 1967 = 100 1967 = 100 TOTAL INDEX 170 170 Materials output 150 _ — W^ - I '— 130 Products output i i I i 1 1969-70=100 Annual rate, millions of units 180 18 MANUFACTURING Nondura51e 1976 1978 1980 1982 1976 1978 1980 1982 All series are seasonally adjusted and are plotted on a ratio scale. Auto sales and stocks include imports. Latest figures: July. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

480 Federal Reserve Bulletin • August 1982 1967 = 100 Percentage change from preceding month PPPeeerrrccceeennntttaaagggeee ccchhhaaannngggeee,,, GGGrrrooouuupppiiinnnggg 1982 1982 JJJuuulllyyy 111999888111 tttooo JJJuuulllyyy June July Mar. Apr. May June July 111999888222 Major market groupings Total industrial production 138.2 138.1 -.8 -1.1 -.7 -.7 -.1 -10.3 Products, total 141.1 141.0 -.6 -.6 -.5 -.8 -.1 -7.8 Final products 141.1 140.9 -.6 -.5 -.2 -.8 -.1 -7.4 Consumer goods 143.7 144.5 -.2 .4 1.0 .1 .6 -4.1 Durable 136.1 138.4 1.7 2.0 2.0 2.1 1.7 -5.5 Nondurable 146.7 147.0 -.9 -.1 .6 -.5 .2 -3.5 Business equipment 155.2 152.0 -1.5 -2.4 -2.9 -3.1 -2.1 -17.7 Defense and space 108.1 109.0 .5 .2 .5 .4 .8 6.2 Intermediate products 140.8 141.1 -.8 -1.0 -1.0 -1.0 .2 -9.7 Construction supplies 120.9 121.2 -1.5 -1.6 -1.7 -.5 .2 -16.0 Materials 133.7 133.7 -1.4 -1.7 -1.2 -.7 .0 -13.9 Major industry groupings Manufacturing 137.1 137.1 -.6 -1.0 -.6 -.5 .0 -10.5 Durable 125.3 125.2 -.9 -1.2 -.6 -.6 -.1 -12.8 Nondurable 154.2 154.2 -.3 -.8 -.8 -.5 .0 -7.7 Mining 125.1 121.9 -3.0 -2.9 -3.3 -3.5 -2.6 -16.8 Utilities 168.7 170.2 -.2 .6 .1 -1.4 .9 -1.7 p Preliminary. e Estimated. NOTE. Indexes are seasonally adjusted. Production of nondurable consumer goods edged e<eq uipment parts. Output of nondurable materials up in July, but that of home goods was off cc hanged little, while that of energy materials slightly. Business equipment fell 2.1 percent fur- iri ncreased. ther in July as output was reduced sharply in In industry groupings, the level of manufacbuilding and mining, manufacturing, power, and tti uring production remained unchanged in July, commercial equipment. Output of construction bb ut mining was again reduced sharply reflecting and business supplies increased slightly. ssi hutdowns in metal mining industries as well as Production of total materials was unchanged in oc ontinued declines in oil and gas extraction and July. Another decline occurred in durable mate- c<co al output. Utilities increased an estimated 0.9 rials, reflecting curtailments in basic metals and pp ercent in July. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

481 Statements to Congress Statement by John E. Ryan, Director, Division the Federal Reserve refers to the appropriate law of Banking Supervision and Regulation, Board enforcement agency evidence of possible crimiof Governors of the Federal Reserve System, nal violations that are brought to light through its before the Subcommittee on General Oversight on-site examinations of the books and records of and Renegotiation of the Committee on Banking, state member banks. With respect to the Bank Finance and Urban Affairs, U.S. House of Rep- Secrecy Act, the Federal Reserve has specific resentatives, July 13, 1982. responsibilities for monitoring compliance of the financial institutions under its direct supervision I am pleased to participate on behalf of the with the requirements of the act. This responsi- Federal Reserve in this hearing to evaluate the bility was delegated to the Federal Reserve and enforcement and utilization of the Bank Secrecy other bank regulatory agencies by the Depart- Act and its reporting requirements. The Federal ment of the Treasury, which has primary respon- Reserve shares this subcommittee's desire that sibility for the enforcement of the statute. As the the Bank Secrecy Act remain an effective inves- processor of currency and coin, the Federal tigative tool in enforcing our nation's laws Reserve also assists the enforcement agencies by against drug trafficking, tax evasion, and other providing information on the aggregate dollar efforts to launder or conceal illegal financial amount of currency shipments into and out of transactions. To this end, the Federal Reserve, Reserve Banks and their branch offices as well as on an individual basis and in cooperation with on the principal denominations of the shipments. the other banking agencies, has been actively Within the last year, the Federal Reserve has engaged in efforts to improve the agencies' abili- taken a number of steps to continue to strengthen ty to monitor compliance with the Bank Secrecy its efforts to monitor compliance with the Bank Act, to ensure that apparent violations of the act Secrecy Act and to assist the primary agencies in are reported in a timely manner to the appropri- carrying out their enforcement responsibilities. ate federal enforcement authority, and to provide As was reported to this subcommittee last July, law enforcement agencies with information on the banking agencies implemented revised excurrency shipments to assist them in their studies amination procedures in March 1981. These proof the volume and pattern of cash transactions. cedures were designed to strengthen the ability Further, the Federal Reserve has conducted spe- of the agencies to determine if banks were comcial examinations at the request of the enforce- plying with the act and to provide the Treasury ment agencies, and it continues to stand ready to Department with better and more comprehensive assist the agencies in the investigation of poten- information on possible violations of the act. In tial criminal violations. revising the examination procedures, the bank- By way of background, I would like to de- ing agencies incorporated comments and suggesscribe briefly the general role of the Federal tions from the staffs of the Treasury Department Reserve in monitoring bank compliance with and the General Accounting Office. The procelaws and regulations and the other ways in which dures are designed to ensure that banks are it can assist the enforcement agencies in carrying aware of the requirements of the Bank Secrecy out their responsibilities under the Bank Secrecy Act and that they have established internal sys- Act. Then I would like to discuss in somewhat tems and methods to ensure compliance. For greater detail some ongoing efforts and develop- those institutions with deficiencies or for those ments that have occurred within the last year. that have engaged in unusually large cash shipments, the procedures call for extensive testing As a bank supervisory and regulatory agency, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

482 Federal Reserve Bulletin • August 1982 of actual transactions to determine if reports are branch offices. This information on currency being prepared as required by the Bank Secrecy receipts and payments is broken down by de- Act regulations. nomination to enable the enforcement authorities These procedures have been in force now for to focus on the denominations most popular with more than a year, and we believe they have those engaged in narcotics trafficking. We beproved to be both an effective and an efficient lieve this information has proved useful to the means for monitoring compliance with the re- enforcement authorities in analyzing the volume cordkeeping and reporting regulations. In addi- or pattern of regional cash flows and in identifytion to the on-site evaluation of bank compli- ing those areas that may warrant further study. ance, the Federal Reserve reports to the Trea- With the assistance of Federal Reserve officials, sury Department on a quarterly basis those the enforcement agencies have initiated or cominstitutions cited for apparent violations of cer- pleted such studies at three District Federal tain of the reporting and recordkeeping require- Reserve offices within the last year. In addition ments. A review of the reports submitted for the to providing information on currency shipments, period between January 1, 1981, and March 30, Federal Reserve staff members meet regularly 1982, indicates that the Federal Reserve has upon request with enforcement officials to disexamined and reviewed Bank Secrecy Act com- cuss data availability, to respond to special ad pliance in 1,242 financial institutions, cited 50 hoc requests, and to exchange information. institutions for not filing currency transaction Within the last several months, the Federal Rereports, criticized 74 institutions for not main- serve has agreed to provide the U.S. Customs taining a current list of customers who are ex- Service with monthly information on currency empt from reporting such transactions, and ad- shipments. This information has also been prodressed violations of the Bank Secrecy Act in vided to other agencies and congressional comfour formal supervisory enforcement actions. mittees on an ad hoc basis. In addition to these quarterly reports, the In addition to providing aggregate data on Federal Reserve has made specific referrals to currency shipments, District Reserve Banks the Treasury Department when circumstances have assisted the Treasury Department by makuncovered during an examination suggested pos- ing available other data on cash shipments within sible violations. These notification efforts serve Federal Reserve Districts. Moreover, each Fedas the basis for further review by the federal eral Reserve Bank has been instructed to estabenforcement agencies and in some instances may lish systems and internal operating procedures to result in the initiation of criminal investigations notify the appropriate banking agency when an by the appropriate authorities. In addition to institution under that agency's jurisdiction expemaking these reports, the Federal Reserve re- riences unusually large or abnormal currency sponds to follow-up questions by enforcement flows. In order to facilitate this process, the agencies concerning apparent violations and pos- Federal Reserve Bank of New York has develsible criminal investigations and stands ready if oped a pilot computer program that will automatrequested to conduct special on-site examina- ically identify banks with large currency shiptions to gather additional information. The Sys- ments for the purpose of further review and tem conducted such examinations in connection possible referral to the primary banking agency. with Operation Greenback in Florida and has These procedures, though relatively recent, have recently received another request to examine an already resulted in Reserve Bank notification of institution in connection with an ongoing investi- other agencies and should help the banking agengation. cies target their examination efforts on those institutions that warrant increased attention. As a result of its responsibilities for processing Moreover, the Federal Reserve is exploring with currency and coin, the Federal Reserve since the enforcement agencies additional ways of November 1979 has provided the Treasury Deimproving the System's ability to monitor compartment with a monthly report on aggregate pliance with the Bank Secrecy Act through the currency amounts received by and shipped from exchange of information derived from the cureach of its District Reserve Banks and their 25 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 483 rency transaction reports that banks file pursuant to assist the primary authorities in the discharge to Treasury Department regulations. of their enforcement responsibilities. Moreover, The Federal Reserve remains committed to we believe that actions taken by the banking fulfilling its responsibilities for monitoring com- agencies, together with the efforts of the primary pliance with the Bank Secrecy Act through the enforcement agencies, have served to heighten examination process and to assisting law en- awareness of the reporting requirements of the forcement agencies by providing data and con- Bank Secrecy Act and thereby have contributed ducting special examinations. We believe that to an improvement in the use of the data filed the actions taken by the banking agencies have pursuant to the financial recordkeeping and reenhanced their ability to monitor compliance and porting regulations. • Statement by Preston Martin, Vice Chairman, and have been a factor in the sharp rise in Board of Governors of the Federal Reserve Sys- business and personal bankruptcies in recent tem, before the Consumer Affairs and Coinage years. However, we do not believe that credit Subcommittee of the Committee on Banking, controls are an effective, efficient, or fair method Finance and Urban Affairs, U.S. House of Rep- to deal with these problems or those of inflation resentatives, July 15, 1982. when the more general instruments of monetary and fiscal policy can be used. Our experience I appreciate the opportunity to testify on a bill to with the administration of controls for a brief reinstate the Credit Control Act in a modified period in 1980 amply demonstrated the difficulform. As you know, under that act, which ex- ties encountered in the application of credit pired July 1, the President was empowered to controls. authorize the Federal Reserve to "regulate and Some have argued that direct government incontrol any or all extensions of credit" if he tervention in credit allocation may be necessary found such action "necessary or appropriate to under extraordinary circumstances, such as a prevent or control inflation generated by the national emergency, and in the absence of standextension of credit in an excessive volume." The by authority, problems might be encountered in act gave the Board broad powers to regulate the such circumstances if borrowers moved to obtain terms under which credit is extended and the credit when enabling legislation was being conpurposes for which it can be granted, as well as sidered. The greater danger would be that distorto require reporting and recordkeeping of credit tions in credit flows could occur on other occatransactions once the President decided that sions when circumstances seemed to suggest those powers should be exercised. One of the controls might be activated, and the existence of proposed amendments would enlarge the circum- credit control authority might tend to encourage stances under which the President could invoke its use unnecessarily. Accordingly, the Board the act to encompass recession and unemploy- feels that the proposed legislation would do more ment as well as inflation. Another proposed harm than good. amendment would make explicit the Board's authority under the act to limit credit granted for "nonproductive" purposes and to ensure the THE EFFECTS OF CREDIT CONTROLS availability of credit for other uses. The Federal Reserve Board is sympathetic to The ability of credit controls applied in this the concerns about the cost and availability of country to achieve their intended effects over credit over recent years that apparently have any extended period is limited, and the costs to prompted proposals to retain credit control au- borrowers, lenders, and society as a whole from thority. High interest rates have contributed to attempts to use controls to combat inflation or the weakness of the economy and stresses on the unemployment could become quite sizable. financial condition of entities operating within it These difficulties stem in large measure from the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

484 Federal Reserve Bulletin • August 1982 availability to many U.S. borrowers of funds arising from distortions in resource allocation from a number of different sources. A large and inefficiencies that inevitably result when business, for example, may be able to borrow regulatory mandate is substituted for market from a bank, finance company, or other financial decisions. Of course, the whole purpose of conintermediary, or it could obtain funds directly in trols is to change the allocation of credit and a variety of securities markets ranging from very presumably of spending from what would prevail short-term commercial paper through notes and in the absence of interference. A number of bonds and including sales of equity. These mar- governmental programs already exist to influkets are mostly located in this country, but ence the flow of funds to various sectors— increasing numbers of corporate borrowers are especially toward housing and agriculture. Howgaining access to a highly integrated worldwide ever, the full effect of these programs, for examdollar market over which it would be extremely ple on competing uses of credit, and the additiondifficult for U.S. authorities to exercise effective al costs of credit controls are difficult to control. determine. Breaking into the complex web of This sophisticated and decentralized financial private decisions about lending and borrowing system is a great advantage to the U.S. economy and about spending and saving may involve because it gives savers a variety of instruments considerable unintended indirect consequences among which to choose and helps to channel from distorting the price and interest rate signals these savings to investment uses in an efficient given to market participants. manner. However, the existence of these markets also means that control of one particular type of credit or of a narrow range of credit THE 1980 EXPERIENCE instruments is unlikely to be effective over an extended period. Borrowers may have a prefer- In many respects, the problems and pitfalls of ence as to the terms on which they wish to fund a utilizing credit controls were illustrated by our particular purchase, but money is fungible—that experience in the spring of 1980, when, consisis, funds obtained from any source can be ap- tent with the order of President Carter, the Board plied for any purpose—and if the incentive and took a series of actions designed to curb inflaopportunities are present, unregulated credit will tionary pressures by slowing the overall growth tend to be substituted for credit subject to con- of credit while directing it to uses considered trols. As attempts are made to maintain the most beneficial to the economy. The components effectiveness of controls in the face of continuing of the program, not all of which required the substitutions by borrowers and lenders, regula- authority of the Credit Control Act, included the tions will tend to become increasingly pervasive, following: a voluntary special credit restraint complex, and burdensome. Moreover, because program intended to reduce the expansion of controls are most readily applied to domestic short-term credit, primarily by holding the financial intermediaries, borrowers, such as growth of bank loans below 9 percent for the households and small businesses, that depend on year, with restraint to be applied mainly to loans these institutions for credit may tend to feel the for speculative purposes or for effecting takemajor effects of controls even when this is conovers or stock repurchases, rather than to loans trary to the intent of their designers. to small businesses, farmers, and purchasers of The cost of credit controls, if maintained for homes and autos; special deposit requirements any extended period, would include most visibly on increases in certain types of consumer loans; the government bureaucracy and the rulemaking an increase in the reserve requirement on growth and enforcing machinery that would be needed. in managed liabilities of member banks and ex- Less obvious would be the costs incurred by tension of the marginal reserve requirement to private businesses in increased reporting burden nonmembers to discourage further the expansion and the expenditure of managerial ingenuity to of bank credit; a special deposit requirement on conform with or, perhaps, get around the regula- increases in money market fund assets, in the tions. Least easy to ascertain would be the costs expectation that lower yields on these intermedi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 485 aries would slow the diversion of deposits from cal and monetary policies more difficult to forlocal institutions; and a surcharge on frequent mulate. borrowing from the Federal Reserve discount In addition, the numerous practical problems window by large banks. encountered in implementing the program tended When the President authorized the imposition to demonstrate the essentially arbitrary nature of of credit controls in March 1980, conditions in governmental direction of credit decisions and credit markets had been deteriorating in many the burdens imposed by controls. The general respects. Interest rates were rising, with concern principles guiding the credit restraint program about impending federal government deficits and seemed reasonably straightforward, but constant a pickup in inflation driving bond yields to record modification, interpretation, and clarification were levels, and bank credit growth was running well needed as these general principles were applied above the range considered appropriate by the to the complex financial relationships that char- Federal Open Market Committee. The public acterize our economy. In the few months they appeared to have little confidence that the usual were in effect, the consumer credit regulations, fiscal and monetary policy instruments would be by themselves, required 31 pages of answers to used to effect a lasting reduction in inflation. common questions and also to innumerable re- Under these circumstances, it seemed appropri- sponses to inquiries specific to individual instituate to supplement these techniques temporarily tions, even though these regulations were aimed with the special measures of the credit restraint at quite a limited sector of the consumer credit program; it was hoped that these actions would market. The voluntary credit restraint program speed the response of the economy to the more for banks and other lenders necessitated numergeneral policies already in place. ous judgments by the Federal Reserve and the The program did contribute to a sharp reduc- lenders as to whether individual loans for taketion in interest rates, but this downward move- over, purely financial, or speculative purposes ment in rates accompanied a steep decline in were justified under the guidelines. Lenders and economic activity. One reason for this was the borrowers rarely enter loan contracts that they great amount of uncertainty and confusion that do not feel will produce some economic benefits, accompanied the onset of controls. Borrowers and we found that the longer the program was in reduced their use of all types of credit, including effect, the more numerous and difficult became those the credit restraint program was not in- the issues of this sort that had to be confronted. tended to curtail, and with this reduction went a Problems also were encountered in verifying sharp drop in credit-financed purchases. Some whether credit continued to be made available to lenders, fearful of violating Board guidelines, borrowers, such as farmers and small busidrew back from the credit markets, cutting nesses, that were supposed to receive favored sharply their credit extensions; others used the treatment under the regulations. credit restraint program as the occasion for ac- Recognizing that larger corporations might be celerating a tightening of loan terms that had unfairly advantaged by access to a variety of been in train for some time. In response to credit markets, the Board required these corpoincoming information about the economy and rations to report directly to us so we could credit markets, the Federal Reserve quickly took monitor their total use of credit. Great difficulty steps to ease the credit restrictions. With the arose in standardizing and interpreting these credit restraints off, interest rates lower, and reports, however, especially the information underlying demands for goods and services still dealing with transactions with foreign subsidiarstrong, the economy rebounded rapidly in the ies. Moreover, the regulations and accompanythird and fourth quarters of 1980, thereby carry- ing reports placed a substantial burden on corpoing interest rates to even higher levels. In the end rations and lenders, who often were asked to the credit controls appeared to add to the volatili- develop and report data in unfamiliar and diffity in financial markets and the economy in 1980, cult categories. The Federal Reserve Banks and and in some ways, by distorting underlying eco- the Board also found that considerable resources nomic and financial conditions, made sound fis- had to be diverted from regular duties to inter- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

486 Federal Reserve Bulletin • August 1982 pret and monitor compliance with the regula- interest rates. It is difficult to see how credit tions, answer questions, and analyze incoming controls would ever work in this way. reports. Controls also can be used in an attempt to effect a redistribution of credit, perhaps to rechannel spending in directions considered more CREDIT CONTROLS TO socially desirable or to reduce unemployment in COMBAT INFLATION OR RECESSION particular sectors. Controls may succeed in this redistribution, but only at the expense of increas- As in 1980, the usual reason for imposing credit ing unemployment or reducing spending in other controls has been to combat inflation, or prevent sectors, and their effectiveness may be limited its outbreak. In the past, imposition of credit over time if constrained borrowers can substitute controls has primarily occurred during war when credit from noncontrolled sources. resources were being diverted from the produc- Differences in credit availability between protion of consumer goods, and the exigencies of ductive and nonproductive (usually takeover war finance were thought to constrain the degree credit) uses have been widely discussed. In that to which monetary and fiscal policies could be connection I should note that borrowing to fiused to hold down overall demand pressures. In nance takeovers does not draw significantly on this context the terms or availability of credit to the nation's total volume of savings—our ultifinance consumer purchases was controlled in mate source of credit. These transactions involve order to discourage consumer spending. Such a an exchange of financial assets, and while the policy might be successful in a national emergen- purchaser of stock may borrow to obtain the cy when a public consensus existed that would necessary funds, those selling the stock generally discourage finding ways to reduce the effect of will recycle the proceeds back into financial the controls, but even in these circumstances, markets by making a deposit in a bank or in some avoiding an eventual upward movement in prices other financial institution or by purchasing anrequires policies that bring aggregate supply and other security. demand into more lasting balance. The use of Although the overall balance of credit supplies credit controls—with the attendant costs, distor- and demands will not be greatly affected by such tions, and possibilities for evasion—is unlikely to transactions, some distortions may occur in the produce a permanent reduction in inflationary distribution of credit and the structure of rates in pressures, unless it is also accompanied by limi- different markets. In addition, the tendency for tations on the overall growth of money and banks to take on large obligations to individual credit. firms in short periods in conjunction with take- In the proposed bill, credit controls may also over financing may have implications in the be authorized by the President to combat unem- context of the Federal Reserve's supervisory ployment and recession. The success of credit responsibilities. For these reasons, we monitor allocation for this purpose is likely to be even the volume and terms of financing takeovers less than when credit controls are used for hold- carefully. When firm constraints operate on ing down inflation. Regulations to prevent or growth of bank credit, loans for one use would limit a proposed extension of credit or to raise its reduce from banks funds available for other cost would have a far better chance of being purposes, with potentially adverse consequences effective than would regulations to induce credit for those borrowers without access to other extensions that do not appear beneficial to the credit sources. lender or borrower. Lenders require a fair return The most recent example of asking banks to on their investments; for financial institutions limit takeover loans was during the credit resuch a return implies a reasonable margin over straint period in the spring of 1980, when, as the cost of obtaining funds. To encourage bor- noted earlier, we asked the banks not only to rowing and spending as a method of boosting curb lending for nonproductive purposes but also economic activity, credit controls would have to to maintain the flow of credit to homebuyers, result in greater volumes of credit at lower small businesses, and others whose credit needs Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 487 seemed important to satisfy. The problems we rates so high is investor fears of a reemergence of encountered then—for example, determining inflation at even higher levels as the economy which takeovers were justified and monitoring recovers—repeating the pattern of recent dethe use of foreign credit to finance mergers— cades; another is the prospect of the crowding highlighted the difficulties of enforcing such re- out of private borrowers because of the financing strictions in an equitable manner without impair- of massive and growing federal budget deficits in ing the efficient funding in our financial markets the midst of economic expansion. Unless the of necessary and legitimate changes in business Congress and the administration structure a fedownership. In this area, as in others, problems of eral budget that will move toward balance inanticipations also complicate the administration stead of toward greater deficits at higher levels of of controls. employment and output, the federal government It seems to me that the problems facing bor- will continue to use an outsized share of our rowers today do not stem from a lack of avail- nation's savings. Private borrowers, under these ability of funds from certain lenders that might be circumstances, will continue to face high interest remedied by redirecting credit flows, but rather rates, and the credit-sensitive sectors of our from the generally high level of interest rates. economy will not regain their former vigor. Stim- Liquidity pressures and balance sheet imbal- ulus to private activity cannot be obtained by ances of many years' standing are prevailing promulgating rules favoring one sector over anthroughout our credit markets. Of particular con- other. Instead we must work to increase the flow cern is the elevated level of long-term rates, of credit to all private borrowers and to assure which has depressed our housing markets and that this credit will be available at reasonable discouraged businesses from undertaking the rates by pursuing monetary and fiscal policies capital investment and balance sheet restructur- that promise a lasting abatement of inflationary ing so urgently needed. One factor keeping those pressures. • Statement by Paul A. Volcker, Chairman, Board would recall to you that, by the late 1970s, that of Governors of the Federal Reserve System, trend had shown every sign of feeding upon itself before the Committee on Banking, Housing, and and tending to accelerate to the point at which it Urban Affairs, U.S. Senate, July 20, 1982. threatened to undermine the foundations of our economy. Dealing with inflation was accepted as I am pleased to have this opportunity once again a top national priority, and as events developed, to discuss monetary policy with you within the that task fell almost entirely to monetary policy. context of recent and prospective economic de- In the best of circumstances, changing envelopments. As usual on these occasions, you trenched patterns of inflationary behavior and have the Humphrey-Hawkins report of the expectations—in financial markets, in the prac- Board of Governors before you. This morning I tices of business and financial institutions, and in want to enlarge upon some aspects of that report labor negotiations—is a difficult and potentially and amplify as fully as I can my thinking with painful process. Those, consciously or not, who respect to the period ahead. had come to "bet" on rising prices and the ready In assessing the current economic situation, I availability of relatively cheap credit to mask the believe the comments I made five months ago risks of rising costs, poor productivity, aggresremain relevant. Without repeating that analysis sive lending, or overextended financial positions in detail, I would emphasize that we stand at an have found themselves in a particularly difficult important crossroads for the economy and for position. economic policy. The pressures on financial markets and inter- In these past two years we have traveled a est rates have been aggravated by concerns over considerable way toward reversing the inflation- the prospect of huge volumes of Treasury financary trend of the previous decade or more. I ing, and by the need of some businesses to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

488 Federal Reserve Bulletin • August 1982 borrow at a time of a severe squeeze on profits. cy, but particular points of strain have been Lags in the adjustment of nominal wages and of evident. other costs to the prospects for sharply reduced Quite obviously, a successful program to deal inflation are perhaps inevitable, but they have with inflation, with productivity, and with the the effect of prolonging the pressure on profits— other economic and social problems we face and indirectly on financial markets and employ- cannot be built on a crumbling foundation of ment. Remaining doubts and skepticism that continuing recession. As you know, there have public policy will "carry through" on the effort been some indications—most broadly reflected to restore stability also affect interest rates, in the rough stability of the real gross national perhaps most particularly in the longer-term mar- product in the second quarter and small inkets. creases in the leading indicators—that the down- In fact, the evidence now seems to me strong ward adjustments may be drawing to a close. The that the inflationary tide has turned in a funda- tax reduction effective July 1, higher social semental way. In making that statement, I do not curity payments, rising defense spending and rely entirely on the exceptionally favorable con- orders, and the reductions in inventory already sumer and producer price data thus far this year, achieved, all tend to support the generally held when the recorded rates of price increase (at view among economists that some recovery is annual rates) declined to 31/2 and 2Vi percent likely in the second half of the year. respectively. That apparent improvement was I am also conscious of the fact that the leveling magnified by some factors likely to prove tempo- off of the GNP has masked continuing weakness rary, including, of course, the intensity of the in important sectors of the economy. In its early recession; those price indexes are likely to ap- stages, the prospective recovery must be led pear somewhat less favorable in the second half largely by consumer spending. But to be susof the year. What seems to me more important tained over time, and to support continuing for the longer run is that the trend of underlying growth in productivity and living standards, costs and nominal wages has begun to move more investment will be necessary. At present, lower, and that trend should be sustainable as the as you know, business investment is moving economy recovers upward momentum. While lower. House building has remained at depressed less easy to identify—labor productivity typical- levels; despite some small gains in starts during ly does poorly during periods of business de- the spring, the cyclical strength "normal" in that cline—encouraging signs have appeared that industry in the early stages of recovery is lackboth management and workers are giving more ing. Exports have been adversely affected by the intense attention to the effort to improve produc- relative strength of the dollar in exchange martivity. That effort should "pay off" in a period of kets. business expansion by helping to hold down I must also emphasize that the current probcosts and encouraging a revival of profits, there- lems of the American economy have strong by setting the stage for the sustained growth in parallels abroad. Governments around the world real income we want. have faced, in greater or lesser degree, both I am acutely aware that these gains against inflationary and fiscal problems. As they have inflation have been achieved in a context of come to grips with those problems, growth has serious recession. Millions of workers are unem- been slow or nonexistent, and the recessionary ployed, many businesses are hard-pressed to tendencies in various countries have fed back, maintain profitability, and business bankruptcies one on another. are at a postwar high. While some of the hardship In sum, we are in a situation that obviously can reasonably be traced to mistakes in manage- warrants concern, but also has great opportuniment or personal judgment, including presump- ties. Those opportunities lie in major part in tions that inflation would continue, large areas of achieving lasting progress—in pinning down and the country and sectors of the economy have extending what has already been achieved— been swept up in more generalized difficulty. Our toward price stability. In doing so, we will be financial system has great strength and resilien- laying the base for sustaining recovery over Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 489 many years ahead and for much lower interest growth toward the upper ends of the specified rates, even as the economy grows. Conversely, ranges. Given the bulge early in the year in Ml, to fail in that task now, when so much headway the Committee also contemplated that that parhas been made, could only greatly complicate the ticular measure of money might for some months problems of the economy over time. I find it remain above a straight-line projection of the difficult to suggest when and how a credible targeted range from the fourth quarter of 1981 to attack could be renewed on inflation should we the fourth quarter of 1982. neglect completing the job now. Certainly the As events developed, Ml and M2 both redoubts and skepticism about our capacity to deal mained somewhat above straight-line paths until with inflation—which now seem to be yielding— recently. M3 and bank credit have remained would be amplified, with unfortunate conse- generally within the indicated range, although quences for financial markets and ultimately for close to the upper ends. (See the accompanying the economy. table.) Taking the latest full month (June), Ml I am certain that many of the questions, con- grew 5.6 percent from the base period and M2, cerns, and dangers in your mind lie in the short 9.4 percent, close to the top of the ranges. To the run—and that those in good part revolve around second quarter as a whole, the growth was the pressures in financial markets. Can we look higher, at 6.8 percent and 9.7 percent respectiveforward to lower interest rates to support the ly. Looked at on a year-over-year basis, which expansion in investment and housing as the appropriately tends to average through volatile recovery takes hold? Is there, in fact, enough monthly and quarterly figures, Ml during the liquidity in the economy to support expansion— first half of 1982 averaged about 4.7 percent but not so much that inflation is reignited? Will, above the first half of 1981 after accounting for in fact, the economy follow the recovery path so shifts in negotiable order of withdrawal (NOW) widely forecast in coming months? accounts early last year. On the same basis, M2 These are the questions that we in the Federal and M3 grew 9.7 and 10.5 percent respectively, a Reserve must deal with in setting monetary poli- rate of growth distinctly faster than the nominal cy. As we approach these policy decisions, we GNP over the same interval. are particularly conscious of the fact that mone- In conducting policy during this period, the tary policy, however important, is only one Committee was sensitive to indications that the instrument of economic policy. Success in reach- desire of individuals and others for liquidity was ing our common objective of a strong and pros- unusually high, apparently reflecting concerns perous economy depends upon more than appro- and uncertainties about the business and finanpriate monetary policies, and I will touch this cial situation. One reflection of that may be morning on what seem to me appropriately com- found in unusually large declines in "velocity" plementary policies in the public and private over the period—that is, the ratio of measures of sectors. Targeted and actual growth of money and bank credit Percent changes, at seasonally adjusted annual rates THE MONETARY TARGETS FFOOMMCC Actual growth oobbjjeeccttiivvee,, Five months ago, in presenting our monetary and AAggggrreeggaattee 11998811::44 ttoo 1981:4 to 1981:4 to 1981 HI to 11998822::44 June 1982 1982:2 1982 HI credit targets for 1982, I noted some unusual factors could be at work, tending to increase the Ml 2Vi to 5>/> 5.6 6.8 4.7' M2 6 to 9 9.4 9.7 9.7 desire of individuals and businesses to hold as- M3 6'/2 to 91/2 9.7 9.8 10.5 Bank credit2 .... 6 to 9 8.0 8.3 8.4 sets in the relatively liquid forms encompassed in the various definitions of money. Partly for that 1. Adjusted for impact of shifts to new NOW accounts in 1981. reason—and recognizing that the conventional 2. The base for the bank credit target is the average level of December 1981 and January 1982, rather than the average for 1981:4. base for the Ml target of the fourth quarter of This base was adopted because of the impact on the series of shifts of 1981 was relatively low—I indicated that the assets to the new international banking facilities (IBFs); the figure for 1981 HI to 1982 HI has been adjusted for the impact of the initial Federal Open Market Committee contemplated shifting of assets to IBFs. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

490 Federal Reserve Bulletin • August 1982 money to GNP. Ml velocity—particularly for mixed. While many individual firms are under periods as short as three to six months—is his- strong pressure, some rise in liquid asset holdtorically volatile. A cyclical tendency to slow ings for the corporate sector as a whole appears (relative to its upward trend) during recessions is to be developing. The gap between internal cash common. But an actual decline for two consecu- flow (that is, retained earnings and depreciation tive quarters, as happened late in 1981 and the allowances) and spending for plant, equipment, first quarter of 1982, is rather unusual. The and inventory has also been at a historically low magnitude of the decline during the first quarter level, suggesting that a portion of recent business was larger than in any quarter of the entire credit demands is designed to bolster liquidity. postwar period. Moreover, declines in velocity But for many years business liquidity ratios have of this magnitude and duration are often accom- tended to decline, and balance sheet ratios have panied by (and are related to) reduced short-term reflected more dependence on short-term debt. interest rates. Those interest rate levels during In that perspective, any recent gains in liquidity the first half of 1982 were distinctly lower than appear small. during much of 1980 and 1981, but they rose In light of the evidence of the desire to hold above the levels reached in the closing months of more NOW accounts and other liquid balances last year. for precautionary rather than transaction pur- More direct evidence of the desire for liquidity poses during the months of recession, strong or precautionary balances affecting Ml can be efforts to reduce further the growth rate of the found in the behavior of NOW accounts. As you monetary aggregates appeared inappropriate. know, NOW accounts are a relatively new in- Such an effort would have required more presstrument, and we have no experience of behavior sure on bank reserve positions—and presumably over the course of a full business cycle. We do more pressures on the money markets and interknow that NOW accounts are essentially con- est rates in the short run. At the same time, an fined to individuals; their turnover relative to unrestrained buildup of money and liquidity demand accounts is relatively low; and from the clearly would have been inconsistent with the standpoint of the owner, they have some of the effort to sustain progress against inflation, both characteristics of savings deposits, including a because liquidity demands could shift quickly similarly low interest rate but easy access on and because our policy intentions could easily demand. We also know the bulk of the increase have been misconstrued. Periods of decline in in Ml during the early part of the year—almost velocity over a quarter or two are typically 90 percent of the rise from the fourth quarter of followed by periods of relatively rapid increase. 1981 to the second quarter of 1982—was concen- Those increases tend to be particularly large trated in NOW accounts, even though only about during cyclical recoveries. Indeed, velocity apa fifth of total Ml is held in that form. In contrast pears to have risen slightly during the second to the steep downward trend in low-interest quarter, and the growth in NOW accounts has savings accounts in recent years, savings ac- slowed. count holdings have stabilized or even increased Judgments on these seemingly technical conin 1982, suggesting the importance to many indi- siderations inevitably take on considerable imviduals of a high degree of liquidity in allocating portance in the target-setting process because their funds. A similar tendency to hold more the economic and financial consequences (insavings deposits has been observed in earlier cluding the consequences for interest rates) of a recessions. particular increase in Ml or M2 are dependent on I would add that the financial and liquidity the demand for money. Over longer periods, a positions of the household sector of the econo- certain stability in velocity trends can be obmy, as measured by conventional liquid asset served, but there is a noticeable cyclical pattern. and debt ratios, has improved during the reces- Taking account of those normal historical relasion period. Relative to income, debt repayment tionships, the various targets established at the burdens have declined to the lowest level since beginning of the year were calculated to be 1976. Trends among business firms are clearly consistent with economic recovery in a context Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 491 of declining inflation. That remains our judgment We, of course, have a concrete instance at today. Inflation has, in fact, receded more rapid- hand of a relatively large (and widely anticipated) ly than anticipated at the start of the year leaving jump in Ml in the first week of July—possibly potentially more room for real growth. On that influenced to some degree by larger social securibasis, the targets established early in the year ty payments just before a long weekend. Followstill appeared broadly appropriate, and the Fed- ing as it did a succession of money supply eral Open Market Committee decided at its re- declines, that increase brought the most recent cent meeting not to change them at this time. level for Ml barely above the June average, and However, the Committee also felt, in the light it is not of concern to us. of developments during the first half, that growth In this context, and in view of recent declines around the top of those ranges would be fully in short-term market interest rates, the Federal acceptable. Moreover—and I would emphasize Reserve yesterday reduced the basic discount this—growth somewhat above the targeted rate from 12 to IIV2 percent. ranges would be tolerated for a time in circum- In looking ahead to 1983, the Open Market stances in which it appeared that precautionary Committee agreed that a decision at this time or liquidity motivations, during a period of eco- would—even more obviously than usual—need nomic uncertainty and turbulence, were leading to be reviewed at the start of the year in light of to stronger-than-anticipated demands for money. all the evidence as to the behavior of velocity or We will look to a variety of factors in reaching money and liquidity demand during the current that judgment, including such technical factors year. Apart from the cyclical influences now at as the behavior of different components in the work, the possibility of a more lasting change in money supply, the growth of credit, the behavior the trend of velocity will need to be evaluated. of banking and financial markets, and more The persistent rise in velocity during the past broadly, the behavior of velocity and interest 20 years has been accompanied by rising inflarates. tion and interest rates—both factors that encour- I believe it is timely for me to add that, in these age economization of cash balances. In addition, circumstances, the Federal Reserve should not technological change in banking—spurred in be expected to respond, and does not plan to considerable part by the availability of computrespond, strongly to various bulges—or for that ers—has made it technically feasible to do more matter "valleys"—in monetary growth that and more business on a proportionately smaller seem likely to be temporary. As we have empha- cash base. With incentives strong to minimize sized in the past, the data are subject to a good holdings of cash balances that bear no or low deal of statistical "noise" in any circumstances, interest rates and given the technical feasibility and at times when demands for money and to do so, turnover of demand deposits has liquidity may be exceptionally volatile, more reached an annual rate of more than 300, quadruthan usual caution is necessary in responding to ple the rate 10 years ago. Technological change is "blips."1 continuing, and changes in regulation and bank practices are likely to permit still more economi- 1. In that connection, a number of observers have noted zation of Ml-type balances. However, lower that the first month of a calendar quarter—most noticeably rates of interest and inflation should moderate January and April—sometimes shows an extraordinarily large increase in Ml—amplified by the common practice of incentives to exploit that technology fully. In multiplying the actual change by 12 to show an annual rate. those conditions, velocity growth could slow, or Those bulges, more typically than not, are partially "washed conceivably at some point stop. out" by slower-than-normal growth the following month. The standard seasonal adjustment techniques we use to smooth To conclude that the trend has in fact changed out monthly money supply variations—indeed, any standard would clearly be premature, but it is a matter we techniques—may, in fact, be incapable of keeping up with will want to evaluate carefully as time passes. rapidly changing patterns of financial behavior, as they affect seasonal patterns. A note attached to this statement sets forth For now, the Committee felt that the existing some work in process on new seasonal adjustment techniques targets should be tentatively retained for next (available on request from Publications Services, Board of year. Since we expect to be around the top end of Governors of the Federal Reserve System, Washington, D.C. 20551). the ranges this year, those tentative targets Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

492 Federal Reserve Bulletin • August 1982 would of course be fully consistent with some- if the objectives of the budget resolution are fully what slower growth in the monetary aggregates reached, the deficit would be about as large in in 1983. Such a target would be appropriate on fiscal 1983 as this year's deficit, even as the the assumption of a more-or-less normal cyclical economy expands at a rate of 4 to 5 percent a rise in velocity. With inflation declining, the year, and inflation (and thus inflation-generated tentative targets would appear consistent with, revenues) remains higher than members of the and should support, continuing recovery at a Open Market Committee now expect. moderate pace. In considering the question posed by the budget resolution, the Open Market Committee felt that full success in the budgetary effort should THE BLEND OF MONETARY itself be a factor contributing to lower interest AND FISCAL POLICY rates and reduced strains in financial markets. It would thus assist importantly in the common The Congress, in adopting a budget resolution effort to reduce inflationary pressures in the contemplating cuts in expenditures and some context of a growing economy. By relieving new revenues, also called upon the Federal Re- concern about future financing volume and inflaserve to "reevaluate its monetary targets in tionary expectations, I believe as a practical order to assure that they are fully complemen- matter a credibly firmer budget posture might tary to a new and more restrained fiscal policy." permit a degree of greater flexibility in the actual I can report that members of the FOMC wel- short-term execution of monetary policy without comed the determination of the Congress to arousing inflationary fears. Specifically, market achieve greater fiscal restraint, and I want partic- anxiety that short-run increases in the monetary ularly to recognize the leadership of members of aggregates might presage continuing monetizathe Budget Committees and others in achieving tion of the debt could be ameliorated. But any that result. In most difficult circumstances, prog- gains in these respects will of course be depenress is being made toward reducing the huge dent on firmness in implementing the intentions potential gap between receipts and expenditures. set forth in the budget resolution and on encour- But I would be less than candid if I did not also aging confidence among borrowers and investors report a strong sense that considerably more that the effort will be sustained and reinforced in remains to be done to bring the deficit under coming years. control as the economy expands. The fiscal Taking account of all these considerations, the situation, as we appraise it, continues to carry Committee did not feel that the budgetary effort, the implicit threat of crowding out business in- important as it is, would in itself appropriately vestment and housing as the economy grows—a justify still greater growth in the monetary aggreprocess that would involve interest rates sub- gates over time than I have anticipated. Indeed, stantially higher than would otherwise be the excessive monetary growth—and perceptions case. For the more immediate future, we recog- thereof—would undercut any benefits from the nized that the need remains to convert the inten- budgetary effort with respect to inflationary extions expressed in the budget resolution into pectations. We believe fiscal restraint should be concrete legislative action. viewed more as an important complement to In commenting on the budget, I would distin- appropriately disciplined monetary policy than guish sharply between the "cyclical" and the as a substitute. "structural" deficit—that is, the portion of the deficit reflecting an imbalance between receipts and expenditures even in a satisfactorily growing CONCLUDING COMMENTS economy with declining inflation. To the extent the deficit turns out to be larger than contemplat- In an ideal world, less exclusive reliance on ed entirely because of a shortfall in economic monetary policy to deal with inflation would no growth, that "add on" would not be a source of doubt have eased the strains and high interest so much concern. But the hard fact remains that, rates that plague the economy and financial Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 493 markets today. To the extent that the fiscal est rates have contributed to a sense of uncerprocess can now be brought more fully to bear on tainty. Businesses have postponed investment the problem, the better off we will be—the more plans. Financial pressures have exposed lax assurance we will have that interest rates will practices and stretched balance sheet positions decline and keep declining during the period of in some institutions—financial as well as nonfirecovery, and that we will be able to support the nancial. The earnings position of the thrift indusincreases in investment and housing essential to try remains poor. a healthy, sustained recovery. But none of those problems can be dealt with Efforts made in the private sector—to increase successfully by re-inflation or by a lack of indiproductivity, to reduce costs, and to avoid infla- vidual discipline. It is precisely that environment tionary and job-threatening wage increases—are that contributed so much to the current difficulalso vital, even though the connection between ties. the actions of individual firms and workers and In contrast, we are now seeing new attitudes of the performance of the economy may not always cost containment and productivity growth—and be evident to the decisionmakers. We do know ultimately our industry will be in a more robust that progress is being made in these areas, and competitive position. Millions are benefiting more progress will hasten full and strong expan- from less rapid price increases—or actually lowsion. er prices—at their shopping centers and else- But we also know that we do not live in an where. Consumer spending appears to be moving ideal world. Strong resistance has developed to ahead, and inventory reductions help set the changing patterns of behavior and expectations stage for production increases. ingrained over years of inflation. The slower the Those developments should help recovery get progress on the budget, the more industry and firmly under way. The process of disinflation has labor build in cost increases in anticipation of enough momentum to be sustained during the inflation or government acts to protect markets early stages of recovery—and that success can or impede competition; the more highly specula- breed further success as concerns about inflation tive the financing undertaken, the greater the recede. As recovery starts, the cash flow of threat that available supplies of money and credit business should improve. And more confidence will be exhausted in financing rising prices in- should encourage greater willingness among instead of new jobs and growth. Those in vulnera- vestors to purchase longer debt maturities. ble competitive positions are most likely to feel Those factors should in turn work toward reducthe impact first and hardest, but unfortunately ing interest rates and sustaining them at lower the difficulties spread over the economic land- levels, encouraging in turn the revival of investscape. ment and housing we want. The hard fact remains that we cannot escape I have indicated that the Federal Reserve is those dilemmas by a decision to give up the fight sensitive to the special liquidity pressures that on inflation—by declaring the battle won before could develop during the current period of uncerit is. Such an approach would be transparently tainty. Moreover, the basic solidity of our financlear—not just to you and me—but to the inves- cial system is backstopped by a strong structure tors, the businessmen, and the workers who of governmental institutions precisely designed would, once again, find their suspicions con- to cope with the secondary effects of isolated firmed that they had better prepare to live with failures. The recent problems, related largely to inflation, and try to keep ahead of it. The reac- the speculative activities of a few highly levertions in financial markets and other sectors of the aged firms, can and will be contained, and over economy would, in the end, aggravate our prob- time, an appropriate sense of prudence in taking lems, not eliminate them. It would strike me as risks will serve us well. the cruelest blow of all to the millions who have We have been through—we are in—a trying felt the pain of recession directly to suggest, in period. But too much has been accomplished not effect, that it was all in vain. to move ahead and complete the job of laying the I recognize months of recession and high inter- groundwork for a much stronger economy. As Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

494 Federal Reserve Bulletin • August 1982 we look forward, not just to the next few months ployment and standards of living. That vision but to many years, the rewards will be great: in will not be accomplished by monetary policy renewed stability, in growth, and in higher em- alone. But we mean to do our part. • Chairman Volcker gave similar testimony before the Committee on Banking, Finance and Urban Affairs, U.S. House of Representatives, July 21, 1982. Statement by Paul A. Volcker, Chairman, Board strained fiscal policy." In the light of that Resoof Governors of the Federal Reserve System, lution, as well as other factors, we debated the before the Committee on the Budget, U.S. Sen- appropriateness of the monetary targets for 1982. ate, July 28, 1982. Analysis of past experience suggested strongly that the previously announced targets, particu- I am pleased to have this opportunity to meet larly with growth around the top of the range, with you again to review the monetary and should provide enough money and liquidity to budgetary situation in the light of our economic support moderate expansion over the remainder objectives. of this year. Pressing aggressively to reduce I want to take this occasion to recognize monetary growth well within the ranges did not particularly the leadership of members of this seem desirable at this stage of economic developcommittee in pressing for the budgetary savings ments, particularly in light of the evidence of a reflected in the First Budget Resolution. Given demand for liquidity for precautionary—as opthe nature of our budgetary problems, that step posed to transaction—purposes. A sizable incannot be the last if we are to bring the fiscal crease in the ranges, on the other hand, might deficit under control. But it does represent, in imply a buildup of money and liquidity to the most difficult circumstances, encouraging evi- degree that it would impair the effort needed to dence of the willingness and determination of the maintain and extend the encouraging progress Congress to undertake the necessary effort. toward disinflation. In presenting our monetary and credit targets In reaching that judgment, we were conscious to the Banking Committees last week, I noted that the strong liquidity demands evident in that the basic objective of Federal Reserve mon- recent months could shift quickly as the econoetary policy is the fostering of an environment my showed signs of recovery, and that raising conducive to sustained recovery in business ac- the targets could easily be misconstrued as a tivity, while maintaining the financial discipline willingness to tolerate more inflation. At the needed to restore reasonable price stability. In same time, the FOMC clearly recognized that reviewing the appropriate means to those broad possible demands for liquidity in the current ends, the Federal Open Market Committee at its uncertain economic circumstances would continrecent meetings concluded, in effect, that the ue to require a degree of flexibility and judgment quantitative objectives for the various Ms set in assessing appropriate needs for money in the forth at the beginning of the year should not be months ahead. changed at this time, but that we would find an We could observe that, over the first half of outcome around the top of those target ranges the year, the desire of individuals and businesses fully acceptable. to hold assets in relatively liquid forms appeared In reaching that conclusion, we considered to be extraordinarily strong, apparently reflectcarefully and explicitly the intent of the Con- ing concerns about the business and financial gress, as expressed in the First Budget Resolu- situation. One reflection of that may be found in tion, that the Federal Reserve "reevaluate its the large declines in the "velocity" of money monetary targets in order to assure that they are over the recession period—that is, the ratio of fully complementary to a new and more re- the gross national product to measures of money. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 495 That drop in velocity is particularly striking in markets. In time, however, an attempt to mainview of the persistence of high interest rates, tain lower interest rates by excessive money suggesting a heightened desire to hold money or growth would founder. The net result would be liquid assets relative to earlier trends. to embed inflation even more deeply into our While velocity often fluctuates widely over economic system, and to make buyers of fixedshort periods of time, trends have been much interest securities still more wary. Sooner or more stable over time. Assuming that velocity later, public and private demands for credit rebounds in the second half—as typically occurs would reflect the higher price levels, and savings early in a period of economic recovery—the likely would be discouraged. Market pressures targets established at the beginning of the year would return in amplified force. Put simply, for the monetary aggregates should be fully con- inflationary creation of money provides no essistent with economic expansion in a context of cape from the pressures of demands for credit, declining inflation. Postwar experience strongly nor can money creation substitute for real savpoints in that direction. However, the FOMC ings. explicitly considered the possibility that relative- We can, of course, affect that balance of ly strong precautionary demands for money demand and supply in credit markets by fiscal could persist. In that event—and it would inev- and other policies, and that is why I welcome the itably involve elements of judgment—growth of effort of the Congress to achieve greater fiscal the aggregates somewhat above the targeted restraint. I recognize—and more importantly the ranges would be tolerated for a time as consistent markets recognize—that sizable obstacles rewith the FOMC's general policy thrust. main in converting the intentions expressed in In looking ahead to 1983, the FOMC has the First Budget Resolution into concrete legisladecided to retain tentatively the existing targets. tive action; harmonizing the values and aims of The Committee will review the decision at the the authorizing and revenue committees—indeed start of next year, taking account of, among the values and aims of our citizens—within the other things, the behavior of velocity over the constraints of budgetary discipline is always difremainder of this year. Because we expect that ficult, and no more so than in today's circumthe monetary aggregates will be near the upper stances. ends of their ranges at the end of 1982, the Moreover, the effort this year must be put in tentative targets for 1983 would be consistent larger perspective. Even if the objectives of the with somewhat slower money growth next year. Budget Resolution are fully achieved for next With inflation declining, the tentative targets year and the underlying economic assumptions should be compatible with continuing recovery are realized, the deficit in fiscal year 1983 would at a moderate pace and an improvement in be about as large as this year's. Moreover, the employment opportunities. risks seem, in my judgment, all on the side of a In approaching these policy decisions, I have still greater deficit, despite your important efbeen very conscious of the fact that monetary forts. If the deficit turns out to be larger than policy, however important, is only one instru- expected entirely because of a shortfall in ecoment of economic policy. The attainment of our nomic growth or inflation—and I would point out common objective of a strong and prosperous that the members of the FOMC anticipate someeconomy depends also on appropriately comple- what less real growth and inflation (and thus mentary policies in the fiscal sphere and in the inflation-generated revenues) than does the Conprivate sector. gress—that "add on" should not be a source of Relaxing discipline on money growth might much concern. What is of concern is that you are seem attractive to some as a means of alleviating working from so large a "structural" deficit—a stresses in financial markets. Indeed, in circum- deficit that would exist even in a relatively stances in which inflationary expectations and prosperous economy—and that concern would pressures are quiescent, the immediate effect of mount to the extent the targeted savings are not encouraging faster growth in money might be to achieved. lower interest rates, particularly in short-term As we appraise the fiscal situation today, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

496 Federal Reserve Bulletin • August 1982 projected deficits continue to carry the implicit short-run increases in the money supply might threat of "crowding out" business investment presage a continuing inflationary monetization of and housing as the economy expands—a process the debt. But any gains in that respect will of that would imply significantly higher interest course depend on firmness in implementing the rates than would otherwise result. Your continu- intentions set forth in your First Resolution, and ing leadership in prodding your colleagues in the encouraging confidence among investors and Congress to deal with the budget dilemma thus borrowers that the effort will be sustained and remains crucially important to the outlook for reinforced in coming years. interest rates and the credit markets. I need not dwell on the fact that we are in most Put more positively, significant progress in difficult economic circumstances, with unemparing the deficits will contribute importantly to ployment far too high, with strong pressures on lower interest rates and reduced strains in finan- financial markets, and with a sense of widecial markets within any monetary framework. spread uncertainty. We cannot build a sound That budgetary policy, as we see it, is not program against inflation on a base of continuing fundamentally a substitute for disciplined mone- recession. But let us recognize, too, that we have tary policy but rather an essential complement. come a long way toward turning back the infla- When monetary policy alone must carry the tionary tide that had come to grip our economy burden of dealing with inflation, and when fiscal over the decade of the 1970s, and that promising deficits absorb so large a fraction of the capacity evidence of improvements in productivity and of the economy to generate savings, pressures efficiency is under way. More recently, there are tend to concentrate on financial markets and on at least some signs that the "grid-lock" in the vulnerable credit-dependent sectors of the econ- financial markets may be beginning to break up; omy. Conversely, budget restraint relieves those interest rates, while still very high in historical pressures and risks directly and would reinforce perspective, have declined to the lowest levels the growing sense of conviction that the infla- for some time. tionary tide has turned. The challenge is to sustain that progress during While the FOMC, in responding to the Budget a period of recovery, for such progress is needed Resolution, did not feel that larger growth in the to extend and support economic expansion over money supply over time would be desirable, let the long years ahead. Monetary and fiscal polime also say that I believe a credibly firmer cies alike need to be directed, and work in budgetary posture would permit us a degree of concert, toward that objective. In that context, I greater flexibility in the short-run conduct of and my colleagues believe a continuing dialogue policy. Specifically, by damping concern about a with members of this Committee is highly conresurgence of inflation or credit market pres- structive, and I welcome your comments and sures, fiscal restraint also lessens fears that questions. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

497 Announcements CHANGES IN DISCOUNT RATE Corrigan, President of the Federal Reserve Bank of Minneapolis and Chairman of the System's The Federal Reserve Board approved a reduc- Pricing Policy Committee. The changes will be tion in the basic discount rate from 12 percent to phased in over a number of months beginning in IIV2 percent, effective July 20, 1982. The action August. was taken in the context of recent declines in Among the changes announced are technical short-term market rates and the relatively re- revisions in the method for pricing Federal Restrained growth of money and credit in recent serve services and accelerations in the collection months. of certain classes of checks. Also announced In announcing the change, the Board acted on were plans for further reduction of Federal Rerequests from the Federal Reserve Banks of serve float and pricing of automated clearing- Chicago, Dallas, Atlanta, Richmond, Kansas house (ACH) services. Plans for an electronic City, New York, and San Francisco. (Subse- check collection (ECC) program that had been quently, the Board approved similar action by under discussion will be discontinued. the directors of the Federal Reserve Banks of In announcing the pricing and service changes, Boston, Cleveland, St. Louis, and Minneapolis, Mr. Corrigan emphasized that the Federal Reeffective July 21, and the Federal Reserve Bank serve System's continuing objective is to enof Philadelphia, effective July 23, 1982.) The hance the efficiency of the payments mechanism discount rate is the interest rate that applies to in a manner consistent with the Fed's overall borrowings from the District Federal Reserve public responsibilities. Banks. The System's initial pricing strategy was based on detailed cost estimates and involved calculat- In light of market interest rates and relatively ing individual product costs, then adding a prirestrained money and credit growth, the Federal vate sector adjustment factor (PSAF). The re- Reserve Board on July 30, 1982, approved a vised pricing technique recognizes that the value reduction in the basic discount rate from IIV2 of some services might be different from their percent to 11 percent, effective August 2. costs and takes into account prevailing market The Board acted on requests from the Federal practices. The most important and widespread Reserve Banks of Boston, New York, Philadel- use of this technique will be reflected in prices phia, Richmond, Atlanta, Chicago, St. Louis, for handling certain types of cash letter deposits Minneapolis, Kansas City, Dallas, and San Fran- (checks deposited with the Federal Reserve for cisco. (Subsequently, the Board approved simi- clearance), an area in which major improvements lar action by the directors of the Federal Reserve have been made in the availability of funds to Bank of Cleveland, effective August 3, 1982.) depositing institutions. REVISIONS IN PRICED SERVICES REVISED OTC STOCK LIST The Federal Reserve on July 29, 1982, an- The Federal Reserve Board has published a nounced planned revisions in priced services revised list of over-the-counter (OTC) stocks offered to depository institutions. that are subject to its margin regulations, effec- The changes were announced by E. Gerald tive July 26, 1982. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

498 Federal Reserve Bulletin • August 1982 Changes that have been made in the list, which CHANGE IN BOARD STAFF now includes 1,536 OTC stocks, are as follows: 86 stocks have been included for the first time; 19 The Federal Reserve Board has announced the stocks previously on the list have been removed following appointment. for substantially failing to meet the requirements Griffith L. Garwood, Deputy Director, has for continued listing; and 42 stocks have been been named Director of the Board's Division of removed for reasons such as listing on a national Consumer and Community Affairs, effective Ausecurities exchange or being acquired by another gust 1, 1982. He succeeds Janet Hart, director of firm. The list is available on request from Publi- the division since 1976, who has retired. cations Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. SYSTEM MEMBERSHIP: ADMISSION OF STATE BANKS PROPOSED ACTIONS The following banks were admitted to member- The Federal Reserve Board has announced that ship in the Federal Reserve System during the it is seeking comment on possible changes in the period July 11 through August 10, 1982: Board's rules concerning ways to deal with seller's points—reduced rate financing—in disclo- Colorado sures under its Regulation Z (Truth in Lending). Aurora Aurora Bank The Board requested comment by August 27, Westminster Bank of Westminster 1982. Florida The Federal Reserve Board has also requested Fort Myers First Independence comment on a proposal by the Federal Reserve Bank of Florida Banks to improve the speed and efficiency of the Texas nation's payments mechanism by modifying the El Paso Cielo Vista Bank System's check processing and collection proce- Midland Midland American Bank dures. The Board asked for comment on the Vermont proposal by September 20, 1982. Stowe Mountain Trust Company Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

499 Legal Developments BANK HOLDING COMPANY AND BANK MERGER York City metropolitan area, in New York State. ORDERS ISSUED BY THE BOARD OF GOVERNORS Citibank (South Dakota), N.A., Sioux Falls, South Dakota, was established in 1981 principally to conduct Orders Under Section 3 of Bank Holding the nationwide consumer credit card activities trans- Company Act ferred from Citibank (New York State), N.A. Citicorp also engages, directly and through subsidiaries, in a Citicorp, variety of nonbanking activities. New York, New York Bank is a newly chartered bank formed to engage in wholesale banking on a national and international Order Approving Acquisition of Bank basis. Section 3(d) of the Bank Holding Company Act (12 U.S.C § 1842(d)) prohibits the Board from approv- Citicorp, New York, New York, a bank holding com- ing any application by a bank holding company to pany within the meaning of the Bank Holding Compa- acquire any bank located outside the state in which the ny Act, has applied for the Board's approval under operations of the bank holding company's banking section 3(a)(3) of the act (12 U.S.C. § 1842(a)(3)) to subsidiaries are principally conducted unless the acacquire 100 percent of the voting shares, less direc- quisition is "specifically authorized by the statute laws tors' qualifying shares, of Citibank (Delaware), Wil- of the state in which such bank is located, by language mington, Delaware, a proposed new bank. to that effect and not merely by implication." On Notice of the application, affording opportunity for February 19, 1981, the state of Delaware amended its interested persons to submit comments and views, has banking laws to permit an out-of-state bank holding been given in accordance with section 3(b) of the act company to acquire a single de novo bank that will be and the time for filing comments and views has ex- "operated in a manner and at a location that is not pired. The Board has considered the applications and likely to attract customers from the general public in all comments received, including those of Kingsbridge [Delaware] to the substantial detriment of existing Heights Neighborhood Improvement Association banking institutions located in this state."3 ("KHNIA"),1 in light of the factors set forth in section The proposed acquisition under the Delaware law is 3(c) of the act (12 U.S.C. § 1842(c)). subject to approval by the State Bank Commissioner Citicorp, with total consolidated assets of $119.2 who, in acting on the application, must consider the billion, is the second largest banking organization in financial and managerial resources of the out-of-state the nation.2 It presently operates three banking subsid- bank holding company or its subsidiary, the future iaries. Its lead bank, Citibank, N.A., New York, New prospects of the company, its financial history, wheth- York, which accounts for approximately 87 percent of er the acquisition may result in undue concentration of its consolidated assets, is a full-service commercial resources or substantial lessening of competition in bank with $21.9 billion in domestic deposits. It is the Delaware, and the convenience and needs of the second largest commercial bank in the state of New public in Delaware. On November 17, 1981, the State York with 12.3 percent of state-wide commercial bank Banking Commissioner of Delaware preliminarily apdeposits as of June 30, 1981. Citibank (New York proved Citicorp's formation and acquisition of Bank. State), N.A., Buffalo, New York, is engaged principal- Based on the foregoing, the Board has determined, as ly in retail banking through branches north of the New required by section 3(d) of the act, that the proposed acquisition conforms to Delaware law and is specifically authorized by the statute laws of Delaware. 1. The Board notes that an objection to approval of the application was also received from Option Advisory Services, Inc., New York, New York, concerning the operations of certain of Citicorp's subsidiaries and alleging certain conflicts of interest involving Citicorp. Inasmuch as these objections were determined to be immaterial, 3. Delaware Code Annotated Title 5 § 803 (Interim Supp. 1981). nonsubstantive, and without merit, the related request for hearing has The law provides, however, that the bank may be operated to attract been denied. and retain customers with whom the bank, the out-of-state holding 2. Unless otherwise stated, banking data are as of December 31, company, or the holding company's banking and nonbanking subsid- 1981. iaries have or have had business relations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

500 Federal Reserve Bulletin • August 1982 Under the limitations imposed by Delaware law on the issues raised by the protest, the Board has consid- Bank's operations it is not likely that Bank will be a ered all the information submitted by KHNIA, as well significant competitor in the Wilmington banking mar- as the responses of Citibank. In addition, representaket.4 The Board notes that Bank will engage in a tives of the Board participated in a public meeting held "wholesale" banking business in the United States by the Office of the Comptroller of the Currency and internationally, will hold demand and other types ("OCC") on April 20, 1982, with regard to a branch of deposits, make loans, and provide a range of other application pending before the OCC, which KHNIA banking and financial services to corporate customers had protested based on identical issues under CRA. and depository institutions. Inasmuch as Bank will The entire record of that public meeting has been made provide these services de novo, consummation of the part of the record in this application. The Board has proposed transaction is regarded as procompetitive. also considered the conclusions reached by the OCC Accordingly, the Board concludes that the proposal resulting from recent regular and special examinations will not have adverse effects on competition in any of Citibank that included an assessment of Citibank's relevant area, and that the overall competitive effects CRA record. of the proposal are consistent with approval. KHNIA maintains that Citibank is pursuing a strate- The financial and managerial resources of Citicorp, gy of "disengagement" in the Bronx, as reflected by its subsidiaries and Bank are considered satisfactory, the closing of four branches in the Bronx in the past and their future prospects appear favorable. The four years, particularly the branch located in the Board has considered the capital position of Citicorp, Kingsbridge Heights neighborhood. As the Board has and wishes to reemphasize its earlier statements that stated previously, while it may not prescribe the the nation's largest banking organizations should make manner in which an applicant conducts its operations every effort to improve their capital positions over provided that they conform with applicable law and time. With respect to Citicorp, the Board has noted the banking practices, the Board does expect an applicant improvements that Citicorp has made in its capital to conduct its operations with due regard to serving position, and expects that efforts for further improve- the needs of its community.5 In this case the Board ment will continue. Accordingly, banking factors are does not find evidence that Citibank is pursuing a consistent with approval of the proposal. policy of disengaging itself from the Bronx generally. With respect to the effect of this application on the Moreover, while the closing of the Kingsbridge convenience and needs of the community to be served, Heights branch inconvenienced some Citibank custhe Board notes that upon consummation of this tomers, it appears that their banking needs continue to proposal a variety of financial services will be avail- be served by Citibank and other depository instituable to Bank's customers, as well as to other local tions in the area. Citibank currently operates 21 depository institutions and their customers. Such serv- branches throughout the Bronx, more than any other ices include foreign exchange and international trade depository institution in that area. Since 1976, Citiservices, custodial services, investment management bank has opened three branches in the Bronx and services, and private placement advice. Bank will also relocated two branches. In recent years, Citibank has participate in loans originated by local banks, thereby spent over $6 million in renovating 18 of its Bronx making a larger amount of lendable funds available to branches including the Kingsbridge Branch. local borrowers. With respect to the Kingsbridge Heights branch, In considering the effects of the proposed acquisi- which was opened in 1974, from the record it appears tion on the convenience and needs of the community that it was closed because it was not profitable, despite to be served, the Board also has considered the record specific efforts undertaken by Citibank to improve its of Citicorp's subsidiaries in meeting the credit needs of profitability. Citibank has established internal stantheir communities as provided in the Community dards and procedures for closing branches, including Reinvestment Act of 1977 ("CRA") (12 U.S.C. meeting with community representatives and planning § 2901-05) and the Board's Regulation BB (12 C.F.R. for continued provision of banking services to custom- § 228). In this regard, the Board has reviewed the ers. The record indicates that in closing the Kingsobjections raised by KHNIA concerning the record of performance of Citicorp's lead bank, Citibank, N.A., New York, New York, under the CRA. With regard to 5. "First National Boston Corporation", 66 FEDERAL RESERVE BULLETIN 162 (1980). The Board notes that opening and closing branches is a factor considered by each of the Federal bank regulatory 4. The Wilmington banking market is approximated by Cecil Coun- agencies in assessing the record of performance of a bank in meeting ty in Maryland, Salem County in New Jersey, Chester County in the credit needs of its community. See for example, section 228.7(g) of Pennsylvania, and New Castle County in Delaware. Board's Regulation BB (12 C.F.R. § 228.7(g)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 501 bridge Heights branch Citibank generally observed Citibank asserts that this suggestion was not intentionthese internal procedures, and that these procedures al. Citicorp also concedes that this program was the have also been observed in a number of suburban result of a marketing error, and has expressed its Citibank branch closings. Moreover, Citibank oper- intention of closely monitoring its subsidiaries' adverates four branches within one mile of the closed tising programs in the future. While the Board believes Kingsbridge Heights site, and there are numerous that this type of promotion is a legitimate area for other banking alternatives within a short distance of concern, the direct impact on the community does not the closed branch. Indeed, the record indicates that as appear great. In addition, the record indicates that of the date of the hearing, Citibank is continuing to Citibank extends credit to Bronx residents on the same serve a substantial portion of the accounts formerly basis as to residents of other communities it serves. maintained at the Kingsbridge Heights branch. On balance, this issue does not outweigh the positive The second issue raised by KHNIA concerns Citi- aspects of Citibank's record. bank's record in meeting the need for long-term mort- Based on the foregoing, and other facts of record, gage and rehabilitation financing of multifamily hous- the Board believes that Citicorp's overall record is ing. Citibank has received few applications for and has consistent with the purposes of CRA, and that factors extended few long-teriti loans for multifamily housing. relating to the convenience and needs of the communi- Citibank's policy of requiring a personal guarantee ty are consistent with approval of the application. from any owner/landlord seeking multifamily credit is Accordingly, on the basis of the record, the applicaa contributing factor. This policy, which is applied tion is approved. The transaction shall not be made uniformly by Citibank throughout its entire communi- before the thirtieth calendar day following the effective ty, reduces the risk involved with such lending, and is date of this Order, or later than six months after the a common requirement for this type of financing by effective date of this Order, unless such period is commercial banks in the New York City area. While extended for good cause by the Board or the Federal the policy may have a more significant effect on Reserve Bank of New York, pursuant to delegated residential lending in areas that have a greater propor- authority. tion of multifamily housing such as the Bronx, the By order of the Board of Governors, effective Board believes that such a policy is consistent with July 21, 1982. safe and sound bank practices. KHNIA asserts that Citibank has failed to honor an earlier commitment Voting for this action: Chairman Volcker and Governors made to it in 1980 to work with community groups on Martin, Partee, Teeters, and Rice. Absent and not voting: Governors Wallich and Gramley. developing an effective loan program for multifamily housing rehabilitation and other credit needs of the community. In this regard, Citibank notes that one (Signed) JAMES MCAFEE, governmental program directed at multifamily hous- [SEAL] Associate Secretary of the Board. ing, in which it planned to participate, did not develop as anticipated. Moreover, in an effort to assist in providing financing for housing, Citicorp has created a Hospital Trust Corporation, separate subsidiary, Citicorp Community Develop- Providence, Rhode Island ment, Inc., which has lent over $500 million to rehabilitate housing throughout the New York area, including HTC Properties, Inc., $80 million for housing renovation in the Bronx since Providence, Rhode Island 1978. In addition, Citibank notes its leadership in residential lending throughout the New York City Order Approving Acquisition of a Bank and area, and its continued activities with community Formation of a Bank Holding Company groups. The final issue raised by KHNIA charges that Hospital Trust Corporation, Providence, Rhode Island Citibank instituted an advertising campaign directed to ("Applicant"), has applied for the Board's approval, customers in the Bronx promoting the availability of pursuant to section 3(a)(3) of the Bank Holding Comresidential credit in areas outside the Bronx. From the pany Act of 1956 (12 U.S.C. § 1842(a)(3)), to acquire record, it appears that the advertising program, which through merger with its wholly-owned subsidiary HTC was directed to all Citibank customers in a four-county Properties, Inc., National Columbus Bancorp, Inc., area, including the Bronx, promoted residential hous- Providence, Rhode Island ("Columbus"), and indiing in Rockland and Westchester counties. While one rectly its subsidiary bank, Columbus National Bank of aspect of the program may have suggested that there Rhode Island, Providence, Rhode Island ("Bank"). In was greater availability of credit outside the Bronx, connection with this application, HTC Properties, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

502 Federal Reserve Bulletin • August 1982 Inc., Providence, Rhode Island, has applied for the the Providence banking market contains a large num- Board's approval, under section 3(a)(1) of the act ber of banking organizations. In light of these and (12 U.S.C. § 1842(a)(1)), to become a bank holding other facts of record, the Board finds that consummacompany through merger with Columbus. tion of the proposal will result in an elimination of Notice of the application, affording an opportunity existing competition between Applicant and Columbus for interested persons to submit comments and views, and will increase somewhat the concentration of bankhas been given in accordance with section 3(b) of the ing resources in the Providence market. While conact. The time for filing comments and views has summation of the proposal would have adverse comexpired and the Board has considered the application petitive effects, the Board notes that the overall and all comments received in light of the factors set operations of Columbus and Bank have declined in forth in section 3(c) of the act (12 U.S.C. § 1842(c)). recent years, which has served to reduce its effective- Applicant, the third largest banking organization in ness as a competitor in the Providence market. Ac- Rhode Island, controls aggregate deposits of $1.1 cordingly, in light of this and other facts of record, the billion, representing 15.4 percent of total deposits in Board's judgment is that the anticompetitive effects of commercial banks in the state.1 Acquisition of Colum- the proposed transaction are not significantly adverse. bus ($117 million in deposits), the ninth largest banking Moreover, the Board is of the view that other factors organization in Rhode Island, will increase Applicant's associated with this proposal mitigate any anticompetshare of commercial bank deposits in the state by 1.6 itive effects of the transaction. percent but will not alter Applicant's ranking in the The financial and managerial resources and future state. Thus, consummation of the transaction would prospects of Applicant and its subsidiaries are satisfacnot result in a significant increase in the concentration tory and their future prospects appear favorable. As a of banking resources in Rhode Island. result of consummation of this proposal, Columbus' Applicant operates in the Providence, Rhode Island, financial and managerial resources will be strengthbanking market, while Columbus Bank operates in the ened, particularly in light of Applicant's commitment Providence, Rhode Island,2 and New London, Con- to provide Bank with $6 million of additional capital. necticut,3 banking markets. It appears from the facts This affiliation with Applicant represents a means of of record that consummation of the proposal would preserving and strengthening a competitor in the marhave no significant effects on potential or existing ket. Thus, considerations relating to banking factors competition in the New London market. Applicant is lend weight toward approval of the application. the third largest of 19 commercial banking organiza- The Board has received a protest from Raul L. tions competing in the Providence market with $1.2 Lovett, Providence, Rhode Island ("Protestant"), billion in total deposits, controlling about 15.4 percent representing an unidentified group of persons, chalof total commercial bank deposits in the market.4 lenging under the Community Reinvestment Act, the Columbus is the ninth largest commercial banking record of Applicant's subsidiary bank, Rhode Island organization in the Providence market with $117.2 Hospital Trust National Bank, Providence, Rhode million in deposits, controlling 1.7 percent of the Island ("Hospital Trust"), in meeting the credit needs market. Acquisition of Columbus by Applicant would of its community in low- and middle-income areas in result in the elimination of some existing competition Providence, Rhode Island. Protestant contends that between Applicant and Columbus in the Providence mortgage data statistics indicate that Hospital Trust banking market. has made disproportionately more mortgage loans in In this instance, Applicant's acquisition of Colum- the high-income sections of Providence than in the bus would increase Applicant's market share to 17.1 low- to moderate-income areas of the city. The Board percent, while Applicant's rank in the market would has considered Protestant's comments and Appliremain unchanged. Following consummation of this cant's response and has found that Protestant's allegaproposal, the market's four-firm concentration ratio tions are without merit. would increase from 74.7 to 76.4 percent. However, Hospital Trust's record is generally satisfactory and indicates that it is meeting the credit needs of its community. Hospital Trust has been active in assisting small businessmen by providing technical assistance 1. Unless otherwise indicated, all banking data are as of June 30, 1981. and below market financing to such businesses. Also, 2. The Providence banking market is approximated by the Provi- Hospital Trust has been active in restoring abandoned dence SMSA and the towns of West Greenwich and Exeter, Rhode property in the low-income areas of Providence and Island. 3. The New London banking market is approximated by the New has participated in an organization that channels funds London Ranally Metro Area and the town of Voluntown, Connecti- to low- and moderate-income neighborhoods. Such cut. projects are providing employment to minority citi- 4. Data are as of June 30, 1981. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 503 zens in the area. Thus, Protestant's allegations are § 1842(a)(5)) to acquire El Paso National Corporation, without merit.5 El Paso, Texas ("El Paso National"), and thereby In addition, Applicant intends to provide Columbus acquire El Paso National's banking and nonbanking with access to Applicant's secondary mortgage capa- subsidiaries. Upon acquisition, El Paso National's bilities, full trust services, automated teller facilities, banking and nonbanking subsidiaries will be transand commercial lending expertise. In light of the ferred to a newly formed nonoperating subsidiary of above, considerations relating to the convenience and Texas Commerce, Telp 2 Corporation, Houston, Texneeds of the community to be served lend significant as ("Telp"), whose name will then be changed to El weight toward approval of the application and out- Paso National Corporation, El Paso, Texas. Telp has weigh any adverse competitive effects that might re- also applied to become a bank holding company pursusult from consummation of the proposal. Accordingly, ant to section 3(a)(1) of the act (12 U.S.C. the Board has determined that these applications § 1842(a)(1)). should be approved. In addition, Texas Commerce and Telp have applied On the basis of the record, these applications are for the Board's approval, under section 4(c)(8) of the approved for the reasons summarized above. The act (12 U.S.C. § 1843(c)(8)) and section 225.4(b)(2) of transaction shall not be made before the thirtieth the Board's Regulation Y (12 C.F.R. § 225.4(b)(2)), to calendar day following the effective date of this Order acquire El Paso National's nonbanking subsidiaries, unless such period is extended for good cause by the Trans Texas International Company, Trans Common- Board, or by the Federal Reserve Bank of Boston, wealth Associates, and El Paso National General under delegated authority. Agency, Inc., all of El Paso, Texas. By order of the Board of Governors, effective Notice of these applications, affording opportunity July 12, 1982. for interested persons to submit comments and views has been duly published. The time for filing comments Voting for this action: Vice Chairman Martin and Gover- has expired and the Board has considered the applicanors Partee, Teeters, and Rice. Absent and not voting: tions and all comments received in light of the factors Chairman Volcker and Governors Wallich and Gramley. set forth in section 3(c) of the act (12 U.S.C. § 1842(c)) and the considerations specified in section 4(c)(8) of (Signed) JAMES MCAFEE, the act (12 U.S.C. § 1843(c)(8)). [SEAL] Associate Secretary of the Board. Texas Commerce is the third largest banking organization in Texas, holding total bank deposits of $7.8 Texas Commerce Bancshares, Inc., billion, or 8.31 percent of the state's total bank depos- Houston, Texas its, and controlling 50 banking subsidiaries, including two de novo banks approved but not yet operating.1 Telp Corporation, Texas Commerce does not have any banking subsid- Houston, Texas iaries operating in the El Paso banking market2 and its nearest banking subsidiary is located approximately Order Approving Formation of a Bank Holding 280 miles from El Paso. El Paso National, the largest Company, Merger of Bank Holding Companies and banking organization in the El Paso market with 35.8 Acquisition of Nonbanking Companies percent of all banking deposits in the market, ranks fourteenth among banking organizations in Texas. El Texas Commerce Bancshares, Inc., Houston, Texas Paso National holds deposits of $606.4 million, or 0.65 ("Texas Commerce"), a bank holding company within percent of the state's total bank deposits, and has the meaning of the Bank Holding Company Act seven bank subsidiaries, all operating in the El Paso (12 U.S.C. §§ 1841 et seq.) has applied for the Board's banking market. Consummation of the proposed mergapproval under section 3(a)(5) of the act (12 U.S.C. would not significantly supplement the record before the Board, or 5. Protestant has also requested an extension of time in which to resolve any material issues of fact. In view of these facts, including the file additional information and a request for a hearing regarding this circumstances surrounding the financial condition of Bank and the application. Under section 3(b) of the act, the Board is required to need for prompt action on this application, the Board concludes that hold a hearing when the primary supervisor of the bank to be acquired the record in this case is sufficiently complete to render a decision and recommends disapproval of the application (12 U.S.C. § 1842(b)). In hereby denies Protestant's request for an extension of time and a this case, the Comptroller of the Currency has recommended that the hearing. application be approved and, therefore, there is no statutory requirement that the Board hold a hearing. Moreover, the Board has 1. All banking data are as of June 30, 1981, and reflect bank holding considered the allegations of Protestant, Applicant's response, and company formations and acquisitions approved as of December 31, other facts of record and finds that a grant of an extension of time in 1981. which to file additional information is unwarranted and that a hearing 2. The El Paso banking market is defined as the El Paso SMSA. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

504 Federal Reserve Bulletin • August 1982 er would increase Texas Commerce's share of state- banking subsidiaries do not derive significant amounts wide banking deposits to 8.96 percent and would make of business from the El Paso area. El Paso National's Texas Commerce the second largest banking organiza- nonbanking subsidiaries operate solely in the El Paso tion in Texas. While the size of the organizations SMSA. There is no evidence in the record to indicate involved is significant, approval of this proposal will that approval would result in undue concentration of have little effect on statewide concentration or on resources, decreased or unfair competition, conflicts statewide banking structure. Because Texas Com- of interest, unsound banking practices, or other admerce does not operate in the El Paso market, where verse effects on the public interest. Accordingly, the all of El Paso National's subsidiaries operate, no Board has determined that the balance of public interexisting competition will be eliminated. est factors it must consider under section 4(c)(8) of the Several factors, including the large size of El Paso act is consistent with approval of the applications. National, its market rank, and the high level of con- Based on the foregoing and the facts of record, the centration in the El Paso market,3 have caused the Board has determined that the applications under Board to consider carefully whether this merger may sections 3(a)(1), 3(a)(5), and 4(c)(8) should be and are be precluded upon the basis of the probable future approved. The merger shall not be made before the competition doctrine. In particular, the Board has thirtieth calendar day following the effective date of reviewed these applications in light of its proposed this Order; and neither the subject merger nor the policy statement4 for assessing competitive effects of acquisition of the nonbanking subsidiaries shall be bank and bank holding company acquisitions and made later than three months after the effective date of mergers. On the basis of the record, the Board has this Order, unless such period is extended for good concluded that there is insufficient ground upon which cause by the Board or by the Federal Reserve Bank of to determine that there would be a substantially ad- Dallas, pursuant to delegated authority. The determiverse effect on potential competition were Texas Com- nation as to Texas Commerce's and Telp's acquisition merce to enter the El Paso market by merger with El of El Paso National's nonbank subsidiaries is subject Paso National. to the conditions set forth in section 225.4(c) of The financial and managerial resources and future Regulation Y (12 C.F.R. § 225.4(c)) and to the Board's prospects of Texas Commerce, Telp, and El Paso authority to require such modifications or termination National and their respective subsidiaries are consid- of activities of a holding company or any of its ered satisfactory and consistent with approval. Al- subsidiaries as the Board finds necessary to assure though some new or expanded services may result compliance with the provisions and purposes of the act from approval of this acquisition, there is no evidence and the Board's regulations and Orders issued therein the record indicating that the banking needs of the under, or to prevent evasion thereof. community to be served are not being met. Consider- By order of the Board of Governors, effective ations relating to the convenience and needs of the July 27, 1982. community to be served are consistent with approval. With respect to the applications of Texas Commerce Voting for this action: Chairman Volcker and Governors and Telp to acquire El Paso National's nonbanking Martin and Rice. Voting against this action: Governor Teeters. Absent and not voting: Governors Wallich, Partee, and subsidiaries, these subsidiaries carry on the activities Gramley. of a trust company, act as investment or financial advisor, and act as insurance agent or broker for the (Signed) JAMES MCAFEE, sale of credit related insurance. Such activities have [SEAL] Associate Secretary of the Board. been found permissible for bank holding companies as activities closely related to banking or managing or controlling banks and are included in the list of permis- Dissenting Statement of Governor Teeters sible nonbanking activities in Regulation Y (12 C.F.R. § 225.4(a)(4), (5), and (9)). Texas Commerce's non- By approving these applications, the Board is continuing the trend it set in the PanNational case1 of applying 3. The El Paso market has a three firm deposit concentration level the standards set by the United States Court of Apof 76.2 percent and a four firm concentration level of 82.3 percent. The peals for the Fifth Circuit2 for probable future compe- El Paso market also has a Herfindahl index level of 2431. 4. "Proposed Policy Statement of the Board of Governors of the tition analysis in such an unrealistic manner as to Federal Reserve System for Assessing Competitive Factors Under the Bank Merger Act and the Bank Holding Company Act", 47 Federal Register 9017 (March 3, 1982). While the proposed policy statement 1. "Mercantile Texas Corporation" (PanNational Group, Inc.), 68 has not been approved by the Board, the Board will apply the FEDERAL RESERVE BULLETIN 191 (1982). proposed policy statement to all applications to determine whether 2. Mercantile Texas Corp. v. Board of Governors, 638 F.2d 1255 further scrutiny is warranted regarding anti-competitive effects. (5th Cir. 1981). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 505 eliminate this type of analysis as an effective tool for tion; provision of packaged financial systems to deposthe monitoring and regulation of the development of itory or other institutions to perform traditional bankbanking markets. As I stated in my dissent regarding ing functions; selling excess capacity on data that application, although probable future competition processing and data transmission facilities; providing analysis has been burdened with cumbersome stan- by-products of permissible data processing and data dards, I do not believe that the Board has given transmission activities; and providing data processing sufficient attention to ways of administering these and data transmission services for the internal operastandards that would make their application more tions of Citicorp and its subsidiaries. These activities feasible. would be performed from an office of Citishare located It is evident to me that the facts of this case, when in New York, New York, and the geographic area to viewed realistically, would support a finding that the be served is the entire United States. The Board has acquisition will substantially lessen probable future determined that certain data processing activities are competition. Indeed, I believe that the facts of record closely related to banking and therefore permissible would support a denial of this application within the for bank holding companies (12 C.F.R. § 225.4(a)(8)). standards set forth by United States Court of Appeals Notice of Citicorp's application, affording interested for the Fifth Circuit. The El Paso banking market is persons the opportunity to submit comments on the highly concentrated, there are relatively few potential public interest factors, was duly published (44 Federal entrants into this market, and the market is attractive Register 12504 (1979)). Following publication of notice to outside banking organizations, as witnessed by the of the application, the Association of Data Processing size and number of such organizations that have Service Organizations ("ADAPSO") and other interentered the market. Texas Commerce's expansion ested organizations (collectively "Protestants")1 filed history and de novo banking experience indicates that written submissions in opposition to the application de novo or foothold entry is feasible for Texas Com- and requested that the Board either deny the applicamerce and such entry would result in the eventual tion or order a formal hearing on the application. deconcentration of this market. If the majority contin- On June 10, 1980, the Board published an Order ues to believe that such facts are not adequate to requiring a public formal administrative hearing on support a denial of this type of application, I doubt that Citicorp's proposal (45 Federal Register 41533 (1980)). sufficient facts would be found in many future applica- Prior to commencement of the hearing, the Board tions. granted a request by Citicorp to amend its application by adding certain activities related to data processing July 27, 1982 and transmission, including electronic funds transfer activities, to the activities proposed to be engaged in by Citishare Corporation. Citicorp also proposed that Orders Under Section 4 of Banking Holding the Board adopt an amendment to its Regulation Y to Company Act permit the activities specified in Citicorp's application. After Citicorp amended its application, the Board Citicorp, republished the Order for a formal public hearing to New York, New York consider Citicorp's application and the proposed rule (45 Federal Register 75221 (1980)). The Hearing Order Order Approving Engaging in Data Processing and stated that material issues of fact existed concerning Data Transmission Activities Protestants' assertion that technological developments in the data processing industry had advanced the Citicorp, New York, New York, a bank holding com- scope of data processing activities, including the propany within the meaning of the Bank Holding Compa- posed activities, beyond that contemplated by the ny Act, has applied for the Board's approval under Board's Regulation Y. The Hearing Order also noted section 4(c)(8) of the act (12 U.S.C. § 1843(c)(8)) and that certain of the proposed activities had not previsection 225.4(b)(2) of the Board's Regulation Y ously been determined to be permissible for bank (12 C.F.R. § 225.4(b)(2)) to engage in certain data holding companies. Accordingly, the Board directed processing and data transmission activities through a that a public hearing be held with respect to whether subsidiary to be known as Citishare Corporation ("Ci- each of the activities proposed by Citicorp is "so tishare") New York, New York. Citicorp proposes to engage, through Citishare, in the following activities: processing and transmitting banking, financial, and 1. Other Protestants to the application were: ADP Network Services, Inc.; Comshare, Inc.; National CSS, Inc.; On-Line Systems, economic related data for others through timesharing; Inc.; Quantum Computer Services, Inc.; and Tymshare, Inc. On-Line electronic funds transfer; home banking; authentica- Systems, Inc. subsequently withdrew from the proceeding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

506 Federal Reserve Bulletin • August 1982 closely related to banking or managing or controlling 13.6 percent of total domestic deposits in commercial banks as to be a proper incident thereto" within the banks in that state. Applicant also controls one subsidmeaning of section 225.4(a) of Regulation Y and sec- iary bank in South Dakota with deposits of $174.5 tion (4(c)(8) of the act; and whether each of the million, representing 3.6 percent of total domestic proposed activities can reasonably be expected to deposits in commercial banks in that state.2 Citicorp's produce benefits to the public that outweigh possible New York banking subsidiary, Citibank, N.A., enadverse effects. gages in some of the proposed activities through an A public formal hearing, in accordance with the unincorporated division of Citibank known as Citi- Board's Rules of Practice for Hearings (12 C.F.R. share. Citicorp proposes to transfer all of the activities § 263), was held on July 6 and 7, September 21,22, and that were commenced de novo by Citishare and the 23, and November 16 and 17, 1981, in Washington, new activities contemplated by this application to D.C., before an Administrative Law Judge appointed Citishare Corporation, a wholly-owned subsidiary of by the Board. A substantial record on the application Citicorp. and proposed rule was developed through the submission of exhibits and testimony and through the partici- Whether Citicorp's Proposed Activities are Closely pation of Protestants, Citicorp, and other interested Related to Banking parties. As discussed above, section 4(c)(8) of the act permits a In a Recommended Decision dated March 29, 1982, bank holding company to engage, directly or through a the Administrative Law Judge concluded that each of subsidiary, in activities that the Board, after due the activities proposed to be engaged in by Citicorp is notice and opportunity for hearing, has determined by closely related to banking and thus permissible for a order or regulation to be "so closely related to banking bank holding company. The Administrative Law or managing or controlling banks as to be a proper Judge also found that approval of Citicorp's proposal incident thereto." would produce benefits to the public that would out- In the "National Courier" decision,3 a federal court weigh possible adverse effects. Accordingly, the Ad- established guidelines to determine whether a particuministrative Law Judge recommended that the Board lar activity meets the "closely related to banking" approve the application. The Administrative Law test. Under these guidelines, an activity may be found Judge also recommended that Regulation Y be amend- to be closely related to banking if it is demonstrated ed to encompass those activities proposed by Citicorp that banks generally have in fact provided the prothat are not currently permissible for bank holding posed service; or that banks generally provide services companies. Protestant's timely filed Exceptions to the that are operationally or functionally so similar to the Administrative Law Judge's Recommended Decision proposed services as to equip them particularly well to and Citicorp timely filed a Response to Protestant's provide the proposed service; or that banks generally Exceptions. provide services that are so integrally related to the Having considered the entire record of the proceed- proposed service as to require their provision in a ing, including the transcript, exhibits, rulings and specialized form.4 The Board has previously found the briefs filed in connection with the hearing, the Recom- "National Courier" guidelines useful in determining mended Decision filed by the Administrative Law whether there is a reasonable basis for an applicant's Judge, together with Protestants' Exceptions thereto opinion that a proposed nonbanking activity is closely and Citicorp's Response to Protestants' Exceptions, related to banking.5 The Board's Regulation Y also the Board has determined that the Administrative Law permits bank holding companies to engage in activities Judge's findings of fact and conclusions, as modified that are incidental to closely related activities. The and supplemented herein, are fully supported by the "National Courier" court defined incidental activities evidence of record and should be adopted as the findings and conclusions of the Board. Accordingly, the Board now states its findings on the facts and its conclusions drawn therefrom and issues its Order. 3. National Courier Association v. Board of Governors of the Federal Reserve System, 516 F.2d 1229 (D.C. Cir. 1975). 4. These guidelines have been followed by other Federal Circuit Findings Courts of Appeals. NCNB Corporation v. Board of Governors of the Federal Reserve System, 599 F.2d 609 (4th Cir. 1979); Association of Bank Travel Bureaus, Inc. v. Board of Governors of the Federal Citicorp, the largest banking organization in the Unit- Reserve System 568 F.2d 549, 551 (7th Cir. 1978); Alabama Association of Insurance Agents v. Board of Governors of the Federal ed States, controls two subsidiary banks in New York Reserve System, 533 F.2d 224, 241 (5th Cir. 1976), modified on other with aggregate deposits of $24.3 billion, representing grounds, 558 F.2d 729 (1977), cert, denied, 435 U.S. 904 (1978). 5. E.g., "NCNB Corporation" (Superior Insurance Company and Superior Claim Service), 64 FEDERAL RESERVE BULLETIN 506, 507 (1978), affd sub nom. NCNB Corporation v. Board of Governors of 2. All banking data are as of June 30, 1981. the Federal Reserve System, 599 F.2d 609 (4th Cir. 1979). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 507 as those that are necessary to the performance of economic statistics, forecasts, and analyses by closely related activities.6 newsletter or circulars. These findings support the conclusion that Citicorp's proposed services are 1. Internal Operations. Citicorp proposes to pro- closely related to banking under the "National Couvide data processing and data transmission services rier" criteria because they are provided by banks or for the internal operations of Citicorp and its subsid- are so similar to banking services that banking iaries. This activity is a permissible servicing activi- organizations are particularly well equipped to proty under section 4(c)(1)(C) of the act and the current vide such services. provisions of the Board's Regulation Y (12 C.F.R. The proposed services appear to be permissible, § 225.4(a)(8)(i)). This activity was not protested and to a large extent, under the existing provisions of the the Board finds that it is permissible. Board's Regulation Y.9The only novel aspect of this proposed activity is that the data to be processed or 2. Data Processing through Timesharing. Citicorp provided would be transmitted by remote electronic proposes to provide to financial and other institu- means rather than by the traditional "batch" methtions a variety of data processing7 services with od, under which the data are physically delivered to respect to financial, banking and other economic the computer. The Board has recognized, in previrelated data through timesharing.8 In timesharing ous actions involving data processing activities, that technology, the data to be processed are transmit- the particular technology by which a data processing ted, typically through leased telephone lines, to and activity is provided is not determinative of whether from the computer through use of a terminal on the such an activity is permissible. In its "Decimus" customer's premises. As part of this activity, Citi- decision,10 the Board expressly stated that permissicorp proposes to provide services such as credit ble data processing services may be provided by any analysis and financial modeling to banks and other technologically feasible method.11 financial institutions. Citicorp also proposes to pro- Protestants object to the Recommended Decivide accounting, bookkeeping, and economic fore- sion's failure to impose controls that would limit the casting and similar services to businesses generally. proposed timesharing activities as well as the other The third element of this activity consists of provid- proposed operations to permissible banking, finaning customers with access to data bases containing a cial and economic data. The Recommended Decivariety of financial and economic information, such sion, however, imposed the limitation, which the as national economic statistics, that is stored in Board adopts, that all proposed data processing Citicorp's computers. services provided by Citicorp to others outside the The Board finds that the proposed timesharing holding company for banking, financial, and ecoactivity is closely related to banking. The record of nomic data must be provided pursuant to a written this proceeding demonstrates that banks in fact agreement so describing and limiting the services. provide data processing services that assist banks in The Board also adopts the Recommended Deciperforming their own credit functions and that per- sion's requirement that the data processing faciliform financial bookkeeping and accounting opera- ties12 provided or made available to customers by tions for other businesses. The record also demon- Citicorp must be designed and marketed for the strates that banks have for many years provided transmission of permissible banking, financial, and economic data. However, the Board notes that, based on the facts of record, Citicorp has the 6. 516 F.2d at 1241. 7. These services include data processing means the processing of banking, financial and economic data, delivery of such data to and from customers and furnishing systems to protect the security of such 9. Section 225.4(a)(8)(ii) of Regulation Y currently provides that it data. is permissible for a bank holding company to store and process 8. Citicorp proposes to process and transmit "banking, financial, banking, financial, or related economic data, such as performing and economic related data." (emphasis supplied). This formulation payroll, accounts receivable or payable, or billing services. differs somewhat from the current provision of Regulation Y which 10. "BankAmerica Corp." (Decimus Corp.), 66 FEDERAL RESERVE permits data processing of banking, financial, and related economic BULLETIN 511, 513 (1980). data (12 C.F.R. § 225.4(a)(8)(ii)). Protestants assert that the "econom- 11. Protestants argue that the technology that Citicorp proposes to ic related data" test is too broad and includes data that are not closely use to process and transmit the data, viewed independently, is not related to banking. The Board agrees with Protestants' assertion that closely related to banking within the meaning of the act. The Board "economic related data" implies a significant expansion of the type of believes, however, that the data processing technology involved in data permitted to be processed and transmitted by bank holding this proposal is not an activity in itself, but merely the means of companies. The Recommended Decision contains no conclusion or providing services that the record demonstrates are closely related to finding to support such an expansion of the types of data permitted to banking. be processed and transmitted. The record supports a finding that 12. Facilities is defined to include data processing and transmission banks engage in the processing and transmission of economic data and hardware, systems software, documentation and operating personnel. such a finding was not contested by Citicorp. Therefore, the Board Hardware refers to the electronic equipment used in creating data finds that Citicorp should be permitted to perform permissible data processing systems. Software refers to the coded instructions that processing activities for "banking, financial, and economic data." control the manner in which the data is processed by the hardware. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

508 Federal Reserve Bulletin • August 1982 technological capability to limit the use of its data The record indicates that Citicorp also intends to processing facilities to the types of financial data provide computer hardware, as part of an integrated that the Board has found permissible for a bank package with software, to financial institutions in holding company. The Administrative Law Judge connection with its on-site data processing services. did not impose any restrictions on this basis on the The Board believes that, unless it is specifically grounds that it is undesirable to require excessive required to be provided in a specialized form, the efforts in equipment design. The Board believes, sale of computer hardware is not itself an activity however, that it is appropriate that all reasonable that is closely related to banking.14 However, the efforts should be taken to assure compliance with record supports a finding that the proposed offering the Board's finding that only the processing and of general purpose or specialized hardware in contransmission of banking, financial, and economic nection with a package of data processing services data is permissible. A limitation on the types of data designed to perform traditional banking operations for which processing and transmission services are is reasonably necessary to providing such a package offered does not appear excessive, since the tech- of services and therefore is a permissible incidental nology to effect such limitation currently exists. activity to an activity that is closely related to Therefore, in conducting its timesharing and other banking. proposed activities, Citicorp should take the techni- The Recommended Decision found that customcal steps necessary to ensure that its facilities are ers of data processing services require that suppliers operated only with respect to banking, financial, and provide both software and hardware as an integrated economic data. Accordingly, based on the entire package. Customers are interested in obtaining solurecord of this proceeding, the Board finds that the tions to their data processing problems and are provision of data processing and data transmission unwilling to obtain the various components of a data activities through timesharing, under the limitations processing package from different vendors. Moredescribed above, is closely related to banking. over, according to the record, certain types of hardware are now being offered with software built 3. On-Site Data Processing. Citicorp proposes to into the hardware.15 Thus, as the Recommended provide packaged financial systems, including gen- Decision found, a prohibition against providing eral and special purpose hardware and software, for hardware in connection with the sale of software or installation at the site of a depository or other other data processing services would place the data institutional customer for the purpose of effecting processing vendor at a competitive disadvantage. banking or banking-related activities such as check Accordingly, the activity of providing software collection, trust department securities recordkeep- without the corresponding authority to provide reing, and the issuance of certificates of deposit. The lated hardware is of questionable economic feasibilrecord of this proceeding demonstrates that, as a ity.16 part of the correspondent banking relationship, banks sell systems that perform these functions to 14. To the extent that software or hardware is required to be other banks. provided in a specialized form in order to provide a permissible data The software that would be provided in connec- processing or tansmission services, and is not likely to be used, to any significant extent, for nonfinancial purposes, the provision of such tion with this activity would assist financial institusoftware or hardware as a part of such service is "closely related to tion customers to perform banking and financial banking" in the act as interpreted by the courts that have ruled on that operations, such as check collection and issuance of language. 15. ADAPSO also contends that the evidence showing the economcertificates of deposit. The Board believes that ic necessity of packaging hardware with software is limited to certain offering this type of software to banks and financial types of software (systems software, that is, software designed to control the hardware and not to perform specific tasks). This evidence institutions is so functionally similar to ordinary does not support, it is argued, a finding that provision of hardware and correspondent services that banking organizations software together in general is economically necessary. A review of are particularly well suited to provide such soft- the record shows that the Recommended Decision's finding on this topic and supporting data are not limited to any particular type of ware, within the second standard of the "National software. Courier" test. Moreover, because banks and other 16. ADAPSO objects to these findings on the grounds that there is financial institutions require such software in a some evidence in the record that software is viewed in this industry as a product separate from hardware. However, that software and specialized form, the proposed offering of such hardware may be separate products does not preclude a finding that as software is closely related to banking under the third a practical matter both products must be provided to the seller in the standard of the "National Courier" test.13 same package. Moreover, the Administrative Law Judge, after having been presented with all of the evidence, made the factual determination that it was only questionably feasible to sell software and other 13. The software developed in connection with correspondent services without hardware. Even if some evidence might support a services may also be a permissible by-product that may be sold to conflicting inference, the Board's review of the record indicates that others as an incidental activiy of permissible data processing activi- the Judge's conclusion is supported by substantial evidence, is ties. See, 12 C.F.R. § 225.123(e)(2). reasonable, and should be upheld. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 509 In order to assure that its proposed provision of exceeds 30 percent of the total cost of the package of hardware comprises only an incidental activity, Citi- data processing services, the Board finds that the corp has committed that it will offer hardware only offering of hardware in connection with the proin conjunction with software that is designed and posed on-site data processing services is a permissimarketed solely for banking, financial, or economic ble incidental activity.18 data. Citicorp has also committed that the hardware In sum, the Board finds that providing a package provided as a part of an integrated package of data of hardware and software as part of the proposed processing services will not constitute the predomi- on-site data processing services is closely related to nant part of the package. banking or an incidental activity to an activity that is In the Board's view, the offering of computer closely related to banking. hardware is relatively far removed from banking functions and the provision of hardware is permissi- 4. Electronic Funds Transfer and Information Exble only as an incidental activity. A bank holding change Activities. Citicorp proposes to sell integratcompany should not, accordingly, become involved ed data processing and transmission systems, inin such an activity to any substantial extent, even in cluding both hardware and software, designed to: connection with permissible data processing activi- facilitate interbank transactions such as transfers of ties. According to the record, hardware costs ap- funds, foreign exchange, check clearing and collecproximately 25 percent of total costs for the data tion; and transmit between such institutions other processing industry as a whole, and are even lower financial and economic information normally ex- (12-13 percent) for large firms. This data suggests changed by financial institutions, (money market that the sale of hardware is now an ancillary aspect data). of the provision of data processing services and The record of this proceeding demonstrates that indicates an approximate ceiling that is consistent these activities are fundamental banking functions with the Board's view of the permissible extent of and that banks have, in fact, provided the proposed involvement in an incidental activity. services.19 The record also demonstrates that banks Based on these facts, the Board has determined are particularly well equipped to provide the prothat Citicorp may offer general purpose hardware in posed funds transfer services. Moreover, the necesconnection with the provision of its data processing sity for security and accuracy in the operation of services only if the cost to Citicorp of such hardware these services requires the provision of these servgenerally does not exceed approximately 30 percent ices, including hardware and software, in a specialof the total cost of the services provided. The Board ized form. recognizes that, in individual cases, the cost of The proposed activities therefore meet the "Nahardware may exceed the percentage limitation yet tional Courier" tests for activities that are closely remain incidental to the sale of software. However, related to banking and, based on the entire record of the Board would view with concern hardware sales this proceeding, the Board finds that the proposed that consistently exceed this limitation because such electronic funds transfer and information exchange circumstances would indicate that the sale of hard- activities are closely related to banking. ware had ceased to be incidental and had become a primary activity.17 The Board expects, that in com- 5. Home Banking Services. Citicorp proposes to puting relative costs for purposes of applying this provide consumers with banking-related services limitation, all costs, both direct and indirect, of each and the capability to access banking and financial component of the package of services, including the services through packaged electronic data processcost of development of that component, will be ing and data transmission systems including softtaken into account and that the cost of each component will reflect only the costs attributable to that component. In light of the facts of record, including 18. Citicorp also intends to sell hardware, specifically terminals, in the condition that Citicorp not provide general pur- connection with its timesharing proposal. The Board's findings that the provision of hardware is incidental to the on-site proposal apply pose hardware where the cost of the hardware equally to the sale of general purpose terminals in connection with permissible timesharing activities. Moreover, the conditions discussed above applicable to the offering of hardware in connection with on-site data processing are intended to apply to the offering of hardware in connection with timesharing or any other activity in- 17. The Board believes that a 30 percent limitation will provide volved in this proposal where general purpose hardware is proposed sufficient flexibility to adapt to the changing realities of the market for to be provided. data processing services. The Board notes that Citishare may make 19. For example, Citibank and other New York banks have created minor alterations on procured equipment that is intended to be sold as an automated clearing house that processes thousands of funds part of a package. However, Citicorp has not applied for approval to transfers each day. Moreover, banks have established large interbank manufacture hardware or software and this activity is not intended to networks with hundreds of terminals for the transmission of financial be encompassed by this order. information other than funds transfers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

510 Federal Reserve Bulletin • August 1982 ware and hardware. Citicorp would offer desk-top based upon tia consideration of the entire record of automated teller machines to consumers for use in this proceeding, including Citicorp's commitments, the home. These machines would enable consumers the Board finds that the provision of authentication to instruct the bank to pay their bills, to receive systems is closely related to banking. financial information, such as money market rates and stock prices, and to perform limited budget and 7. Excess Capacity. Citicorp proposes to sell, for accounting functions. any purpose, excess capacity on data processing In the Board's view, each aspect of the proposed and data transmission facilities. The only involvehome banking services is closely related to banking. ment of Citishare will be the furnishing of the Regarding bill paying and the provision of financial facilities. In connection with the sale of excess information, the record shows that many large capacity, Citicorp has committed that it will not banks now provide cash management services to provide programs for nonfinancial data and will not their corporate customers. These services involve purchase equipment to create excess capacity. The providing such customers, through terminals placed Administrative Law Judge also recommended that in their offices, access to banking services as well as Citicorp be prohibited from providing hardware in information providing money market rates. Provid- connection with excess capacity. ing the same services and information to consumers The sale of excess computer time has been deterthrough terminals located in the home clearly is so mined by the Board to be incidental to the provision functionally similar to these cash management serv- of permissible data processing services.20 The reices currently provided to corporate customers that cord of this proceeding demonstrates that because banks are well suited to provide the proposed serv- of the time-sensitive nature of much of the data ices. processed and customer expectations, data proces- As noted above, banks now provide budgeting sors providing timesharing must maintain sufficient and tax accounting services to business customers capacity to meet peak demand and provide back-up and, under the current provisions of Regulation Y, capacity in case of equipment failure. Excess capacbank holding companies also provide these services ity necessarily results from these requirements. The to business customers. The record of this proceed- sale of such excess capacity is essential to timesharing demonstrates that banks are particularly well ing since such sales are necessary to reduce costs equipped to provide these services. Providing these and to remain competitive.21 same services to consumers is, in the Board's view, Accordingly, based on the record of this case, also functionally similar to providing the services to including Citicorp's commitment and the Adminisbusiness customers. To the extent this proposed trative Law Judge's limitation, the Board finds that activity requires the sale of hardware and software the sale of excess computer capacity is incidental to as an integrated part of the entire activity, such the provision of data processing and transmission hardware and software will be provided to the services concerning banking, financial, and ecoconsumer in a specialized form suitable only for the nomic data.22 banking-related operations encompassed by the proposal. 8. By-Products. Citicorp proposes to sell the by- Accordingly, each of the elements of Citicorp's products of permissible data processing and data home banking proposal meets at least one of the transmission activities. By-products may be data, "National Courier" tests for closely relatedness. software, or data processing techniques that may be Based on its consideration of the entire record of applicable to the data processing requirements of this proceeding, including Citicorp's commitments, the Board finds that the provision of home banking services, as described and listed above, is closely 20. 12 C.F.R. § 225.123(e)(1). related to banking. 21. The Administrative Law Judge determined that the sale of excess capacity is closely related to banking. Protestants challenge this finding, and the Board agrees that Protestants' exception is 6. Authentication. Citicorp proposes to provide technically correct. The Board believes that the Administrative Law hardware and software for authentication of inter- Judge's conclusion is premised on a misinterpretation of the applicable standard for a closely related activity. The Administrative Law bank and intrabank identifiers for funds transfer and Judge's evaluation of the sale of excess capacity applies the test for an other electronic transmissions. activity that is incidental to a closely related activity as delineated by the "National Courier" court and applied by the Board. No evidence According to the record, banks require provision was introduced in the record of this application that would support a of these services in a specialized form for protection finding that the sale of excess capacity, which can involve any type of from the substantial risks of electronic forgery. The service with respect to any type of data, is closely related to banking. 22. Section 225.4(a) of Regulation Y permits bank holding compaproposed service meets the "National Courier" test nies to engage in "such incidental activities as are necessary to carry for an activity that is closely related to banking and on" a closely related activity. 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Legal Developments 511 other industries. The sale of by-products has been fits . . . that outweigh possible adverse effects," the determined by the Board to be a permissible inci- statute thus commands the Board to assess only those dental activity. The record of this proceeding dem- effects that, based on the record, are reasonably likely onstrates that the sale of by-products is a necessary to occur. The Board is not required to ensure against incident to the provision of data processing services. every potential adverse contingency that might be In its consideration of this activity, the Board relied hypothesized in connection with a proposal.24 on Citicorp's commitment that by-products will not Based on the evidence of record, the Administrative be designed or appreciably enhanced for the pur- Law Judge found that the benefits to the public from pose of marketability. the proposal in fact outweigh the possible adverse The proposed activity meets the "National Couri- effects. The Board concurs in and adopts that finding. er" test for an activity that is incidental to a closely related activity. Accordingly, the Board finds that 1. Absence of Possible Adverse Effects. the provision of by-products of data processing Absence of Tying. Section 106 of the act prohibits activities is incidental to the provision of permissible a bank from requiring its customers to purchase data processing and data transmission activities. from it an additional service, such as data processing services, in order to obtain credit from the Protestants' General Exceptions. Protestants have bank.25 The Board's Regulation Y applies this made a general objection to the types of data for prohibition to a bank holding company engaged in which the proposed data processing services would a permissible nonbanking activity, such as data be provided. Protestants claim that processing of processing.26 Thus, section 106 prohibits Citicorp financial and economic data is not closely related to from engaging in any explicit or implicit conduct banking because by definition such data is not that would condition obtaining credit on the purbanking data. The facts of record indicate, however, chase of Citicorp's data processing activities. that the data processing activities of banks today are Protestant asserts, however, that voluntary tynot limited to banking data, but extend to other ing could occur with respect to the proposed data types of financial and economic data. Because banks processing services. "Voluntary tying" results engage in the processing of this type of data, the when a customer believes that he or she stands a Board may properly find, under the "National Cou- better chance of obtaining another scarce product rier" tests, that Citicorp's proposed activities with (such as credit) if he or she voluntarily accepts respect to financial and economic data are closely other unwanted products rather than seeking related to banking.23 these products in the marketplace.27 As the Board has previously stated, the potential for voluntary tie-ins is structural and is based on the nature of The Balance of Public Benefits Over Possible competition in the relevant market areas. The Adverse Effects possibility of such tying is significantly reduced in Under section 4(c)(8) of the act, in order to approve competitive markets where there are a large numa proposal by a bank holding company to engage in ber of alternative sources of credit in the relevant activities that the Board has determined to be "closely markets.28 related to banking," the Board must determine whether the performance of the proposed activity "can reasonably be expected to produce benefits to the public, such as greater convenience, increased competition, or gains in efficiency, that outweigh possible 24. Connecticut Bankers Association v. Board of Governors of the adverse effects, such as undue concentration of re- Federal Reserve System, 627 F.2d 245, 254 (D.C. Cir. 1980). sources, decreased or unfair competition, conflicts of 25. 12 U.S.C. § 1971, et seq. interests, or unsound banking practices." In directing 26. 12 C.F.R. § 225.4(c)(1). 27. See, "Citicorp" (Person-to-Person Financial Center), 67 FEDthe Board to determine whether the proposed activity ERAL RESERVE BULLETIN 443, 446 (1981); "Virginia National Banc- "can reasonably be expected to produce bene- shares, Inc.", 66 FEDERAL RESERVE BULLETIN 668, 670 (1980), alFd sub nom. Independent Insurance Agents of America, Inc. v. Board of Governors of the Federal Reserve System, 646 F.2d 868 (4th Cir. 1981). 28. Id. Contrary to Protestant's contention, the legislative history of section 4(c)(8) clearly requires the Board to assess market structure 23. Protestants' argument that the types of data processed by banks and the market power of the seller in determining the likelihood of for their internal use is an invalid basis for determining what types of voluntary tie-ins. E.g., H.R. Rep. No. 1747, 91st Cong., 2d Sess. 18 data a bank holding company may process for others. The record (1970) ("the dangers of 'voluntary' tie-ins are basically structural" clearly indicates, however, that banks currently process and transmit and necessarily involve a "scarce" commodity). The scarcity of a banking, financial, and economic data for others, not merely for product depends on the number of alternative sources for that internal use. product. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

512 Federal Reserve Bulletin • August 1982 The Administrative Law Judge, finding that company to subsidize the activities of an affiliate tying in any form is unlikely unless the seller has company or division. Through such subsidization, market power in the tying product, determined the affiliate can offer its services at prices that are that the market for commercial loans is a competi- below its cost.30 The Administrative Law Judge tive one and no evidence was introduced that any found that there was no evidence in the record bank holding company is dominant in any market. that Citicorp has engaged in cross-subsidization. Therefore, there is little likelihood that voluntary The Administrative Law Judge also found that tying would occur in connection with the provi- cross-subsidization or predatory pricing is rationsion of the proposed services. al, and therefore a likely competitive technique Moreover, Protestants did not introduce any only where the subsidizing company possesses credible evidence that Citibank has engaged in sufficient market dominance such that below-cost any form of tying in connection with its current pricing would eliminate competitors and permit data processing services. In this connection, Citi- reaping of monopoly profits sufficient to more corp has stated that the personnel and manage- than recover prior losses.31 The facts of record in ment of its affiliates are fully aware of the anti- this proceeding show that the data processing tying provision of section 106 of the act. services industry has a large number of competi- Protestants point to certain facts of record as tors and low barriers to entry and, because of the evidence that voluntary tying is a likely result of significant resources of many of the firms providthis proposal. This argument overlooks the fact ing such services, it is unlikely that a single that scarcity of credit is the fundamental prerequi- competitor could become dominant. Therefore, site of voluntary tying. Where there are significant cross-subsidization is unlikely as a result of Citialternative sources of credit, as is the case here, corp's proposal. the fact that Citicorp would offer some data In support of their claims that cross-subsidizaprocessing services as a package, or would em- tion is a likely adverse effect, Protestants cite ploy the "Citi" prefix used by other Citicorp certain evidence in the record showing that Citisubsidiaries does not, standing alone, demon- bank, in connection with its existing data processstrate the likelihood of voluntary tying.29 In addi- ing activities, has provided services at belowtion, the Board does not accept Protestants' argu- market prices or, in some cases, at no extra cost. ment that Citicorp will price its data processing However, as the Board has previously noted, services not solely on the basis of the cost of such providing a service at prices lower than competiservices but also on whether the customer pur- tors does not necessarily establish cross-subsidichases other Citicorp services and thus will en- zation, because prices below market may result from courage tying. The anti-tying provisions of the act greater efficiency and economies of scale.32 Inand the Board's Regulation Y noted above ex- deed, the most controversial example of pricing pressly prohibit a bank holding company from below prevailing market rates cited by Protestants fixing or varying the price for one service on the resulted because Citibank used a mainframe comexpress or implied condition that the customer puter substantially more efficient than the compurchase a service from another Citicorp subsid- puters used by most of its competitors. There is iary. In the absence of any evidence that voluntary tying has or will occur, the Board does not believe this anticompetitive effect is likely to 30. The Board notes that cross-subsidization is a somewhat amorresult from approval of this application. phous concept and is not unique to banking. Any company that provides more than one product or service is capable of crosssubsidization and, to the extent that it results in unfair competitive Absence of Cross-Subsidization or Predatory practices, applicable statutes would restrict the practice. Pricing. The Administrative Law Judge deter- 31. Contrary to Protestants' contentions, the Board perceives no meaningful distinction between the mechanics of predatory pricing mined that it is unlikely that cross-subsidization and cross-subsidization. While cross-subsidization can involve using or predatory pricing will result from Citicorp's the income from one service to offset below-cost pricing of another proposed provision of data processing services. product, and while predatory pricing may result by pricing only a single product below cost, both practices can involve the identical Cross-subsidization is the use of the profits of one adverse effect—the unjustified below-cost pricing of another product to the substantial detriment of competitors. Cross-subsidization is not usually a goal in itself, but can represent a means of engaging in 29. For similar reasons, Protestants' argument that Citicorp has not predatory pricing. made certain commitments to guard against voluntary tying that were 32. In addition, it is accepted antitrust theory that a seller may voluntarily made in other applications is not persuasive. Citicorp has temporarily price below cost to meet competition or for promotional made a number of voluntary commitments to strengthen this proposal purposes. E.g., Areeda & Turner, "Predatory Pricing and Related and the record demonstrates that additional commitments are unnec- Practices under Section 2 of the Sherman Act", 88 Harv. L. Rev. 697, essary. 733 (1975). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 513 no record evidence that Citicorp has engaged in Protestants object to the finding that Citicorp's cross-subsidization in the past or is likely to do so proposal constitutes de novo entry, asserting that in the future. This conclusion is based in part on the data processing services currently offered the competitive nature of the data processing through Citibank cannot be characterized as de industry, which makes it unlikely that any one novo services. However, it is undisputed that competitor could recoup the substantial costs of some of the proposed activities of Citishare will cross-subsidization. To minimize the possibility be de novo since they are not currently being of cross-subsidization or other unfair practices, offered by Citibank. Approval of the application Citicorp has committed that Citishare will main- would result in the entry of a new competitor in tain separate books and financial statements, and the market for these services and would result in will provide to customers only Citishare's finan- public benefits. Thus, to the extent that de novo cial statements, not the statements of Citicorp, activities are involved, a positive public benefit unless requested. results from Citicorp's proposal. Accordingly, with respect to the de novo nature of Citicorp's Absence of Undue Concentration of Resources proposed new activities, the Board adopts the and Other Adverse Effects. The Administrative Administrative Law Judge's finding as one that is Law Judge concluded that there is no evidence supported by the record. that Citicorp will engage in any form of unfair competition or that this proposal is likely to result Greater Convenience and Gains in Efficiency. in any undue concentration of resources or other The Administrative Law Judge found that the adverse effects if this application is approved. The proposal would result in other public benefits. Board adopts these findings as supported by the The Judge found that entry of Citicorp into the entire record of this proceeding. data processing and data transmission field would enhance convenience and efficiency by increasing 2. Public Benefits. the accessibility of various financial services to De Novo Entry. The Recommended Decision customers and by permitting depository institufound that Citicorp's proposal would have a pro- tions and other customers to automate their opercompetitive effect. While certain of the services ations and reduce labor costs. The record supinvolved in this proposal are currently being of- ports these findings of the Administrative Law fered by Citicorp through Citibank, the remaining Judge and the Board adopts them. proposed services would be initiated de novo.33 The Board views de novo entry as procompeti- Request for Oral Argument tive and as a positive public benefit because such In their exceptions to the Recommended Decision, entry provides an additional source of competi- Protestants request oral argument before the Board tion in the market. In section 4(c)(8), Congress under section 263.14 of the Board's Rules of Practice authorized the Board to differentiate between for Hearings (12 C.F.R. § 263.14). Protestants state activities commenced de novo and activities com- that it would be useful to present the technological and menced through acquisition of a going concern competitive issues involved directly to the Board. because Congress viewed de novo entry as having Protestants' request does not show that any purpose beneficial effects on competition. The Board's would be served by allowing oral argument and this Regulation Y implementing section 4(c)(8) of the request is opposed by Citicorp. The Board believes act established expedited procedures for the proc- that issues in this proposal are fully and adequately essing of applications to engage de novo in ap- explained in the Recommended Decision and in the proved activities based on economic theory, legis- numerous written submissions of the parties and lative history, court interpretations, and the Board Counsel. Accordingly, no useful purpose would Board's experience in administering the act that, be served by granting oral argument before the Board. absent contrary evidence, de novo entry is gener- Protestants' request is hereby denied. ally procompetitive.34 Conclusion 33. A few of Citibank's data processing activities were commenced On the basis of all the facts of record, including the through the acquisition of going concerns. Citicorp has committed that it will not transfer any of these data processing activities to Citishare commitments made by Citicorp, the Board concludes without submitting separate applications for Board approval as re- that Citicorp's provision of data processing and transquired by section 4(c)(8) of the act. mission services through Citishare as proposed in this 34. See, "Virginia National Bancshares, Inc.", supra; "Bank- America Corp." (Decimus Corp.), supra. application can reasonably be expected to produce Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

514 Federal Reserve Bulletin • August 1982 benefits to the public that clearly outweigh possible the relation of the proposed activity to banking and on adverse effects. the balance of public interest factors regarding the Based on the foregoing and other considerations application, has been duly published (46 Federal Regreflected in the record, the Board has determined that ister 60503 (1981)). The time for filing comments and the balance of the public interest factors it is required views has expired, and the Board has considered the to consider under section 4(c)(8) is favorable. Accord- application and all comments received in light of the ingly, the application is hereby approved subject to the public interest factors set forth in section 4(c)(8) of the restrictions enumerated in this Order. act. This determination is also subject to the conditions Applicant is a bank holding company by virtue of its set forth in section 225.4(c) of Regulation Y and to the control of Morgan Guaranty Trust Company of New Board's authority to require such modification or York, New York, New York ("Morgan Guaranty"). termination of the activities of a holding company or Morgan Guaranty holds total deposits of $37.4 billion,1 any of its subsidiaries as the Board finds necessary to and is the fourth largest commercial bank in New York assure compliance with the provisions and purposes of State. Applicant, through certain of its subsidiaries, the act and the Board's regulation and orders issued engages in various permissible nonbanking activities. thereunder, or to prevent evasion thereof. The transaction shall not be made later than three months after Closely Related to Banking the effective date of this Order, unless such period is extended for good cause by the Board or the Federal In order to approve an application submitted pursu- Reserve Bank of New York, pursuant to delegated ant to section 4(c)(8) of the act, the Boart is first authority. required to determine that the proposed activity is By order of the Board of Governors, effective closely related to banking or managing or controlling July 9, 1982. banks. Upon consideration of all the facts of record, the Board has determined, for the reasons explained Voting for this action: Chairman Volcker and Governors below, that Morgan Futures' proposed activities as an Martin, Partee, Teeters, Rice, and Gramley. Absent and not FCM, with respect to the contracts involved in this voting: Governor Wallich. application, would be closely related to banking. (Signed) JAMES MCAFEE, Bullion and Foreign Exchange. On prior occasions, [SEAL] Associate Secretary of the Board. the Board has determined that FCM activities or their equivalent, with respect to bullion and foreign exchange, were closely related to banking. These J. P. Morgan & Co. Incorporated, determinations were issued in connection with the New York, New York applications of Republic New York Corporation, New York, New York, to retain Republic Clearing Order Approving Application to Engage in Certain Corporation2 in 1977, and Standard and Chartered Futures Commission Merchant Activities Banking Group Ltd., London, England, to acquire Mocatta Metals, Inc. in 1973.3 In both orders, the J. P. Morgan & Co. Incorporated, New York, New Board relied on the fact that the FCM, or its banking York, a bank holding company within the meaning of affiliate, was statutorily authorized to deal in the the Bank Holding Company Act of 1956, as amended underlying commodities involved. The Board also (12 U.S.C. § 1841 et seq.), has applied for the Board's concluded in "Standard and Chartered" that the approval, under section 4(c)(8) of the act (12 U.S.C. proposed activities would complement the appli- § 1843(c)(8)) and section 225.4(b)(2) of the Board's cant's international banking operations. In "Repub- Regulation Y (12 C.F.R. § 225.4(b)(2)), to engage lic New York" the Board noted that the proposed through its subsidiary, Morgan Futures Corporation, service appeared to be an "integral adjunct" to New York, New York ("Morgan Futures"), in acting precious metals professionals' other gold and silver as a futures commission merchant (an "FCM") for dealings with the FCM's banking affiliate, and that nonaffiliated persons, in the execution and clearance the proposed service was fundamentally a substitute of certain futures contracts on major commodity ex- for or variation of other precious metals services the changes. Such contracts would cover bullion, foreign banking affiliate already provided. exchange, U.S. Government securities, negotiable U.S. money market instruments, and certain other 1. Banking data are as of March 31, 1982. money market instruments. 2. "Republic New York Corporation", 63 FEDERAL RESERVE Notice of the application, affording interested per- BULLETIN 951 (1977). 3. "Standard and Chartered Banking Group", Ltd., 38 Federal sons an opportunity to submit comments and views on Register 27552 (1973). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 515 After applying the same factors it employed in and other money market instruments would be reaching these earlier determinations to the facts of closely related to banking. Morgan Guaranty is an this application, the Board has concluded that the active participant in the cash markets for various proposed activities with respect to bullion and for- money market instruments, and this experience has eign exchange also are closely related to banking. provided Applicant with useful expertise in trading New York law grants Morgan Guaranty the author- the underlying commodity involved in these futures ity to buy and sell bullion and foreign exchange.4 contracts. Like futures contracts in U.S. Govern- Morgan Guaranty or its predecessors traded bullion ment securities, futures contracts in these instruin the New York market as early as the mid- ments are used in large part to hedge against internineteenth century. They were major participants in est-rate risk associated with holding and trading the international gold market during the late nine- financial assets and liabilities. There appears to be teenth and early twentieth centuries, and Morgan little basis for distinguishing between the operation- Guaranty continues to be so. FCM activities in al or functional characteristics of FCM activities bullion would thus appear to complement Morgan with respect to contracts in these money market Guaranty's trading in the cash bullion markets. instruments and those of FCM activities with re- Moreover, Morgan Guaranty already trades in the spect to contracts in U.S. Government securities. cash and forward markets in bullion and foreign In this regard, the Board has considered the exchange for its customers, and acting as an FCM in comments submitted by the Securities Industry Asfutures markets for the same commodities would sociation, Washington, D.C., and E. F. Hutton & appear to be an "integral adjunct" to these present Company, Inc., New York, New York, who mainservices. Lastly, it is reasonable to assume that tained that Applicant's experience in the cash, formarket participants regard futures contracts in bul- ward, and futures markets has not sufficiently prelion or foreign exchange as the functional equivalent pared Applicant to engage in FCM activities for of forward contracts for some purposes, so that the nonaffiliated persons. The Board believes that these proposed activity could be considered fundamental- comments do not take sufficient account of the ly a substitute for other services Morgan Guaranty functional similarity between trading in forward already provides. On this basis, the Board con- markets for the account of customers and trading in cludes that Morgan's proposal to act as an FCM for futures markets for the account of customers, and bullion and foreign exchange is closely related to the operational similarity between trading in futures banking. contracts for one's own account and for the account of others. Applicant's present activities indicate that Government Securities and Money Market Instru- it possesses the necessary expertise to provide the ments. Applicant's proposal also involves the exe- proposed services. cution and clearance of futures contracts covering On the basis of all the facts of record, including U.S. Government securities, negotiable U.S. money the financial and managerial qualifications of permarket instruments, and certain other money mar- sons associated with the formation and operation of ket instruments. The Board believes that FCM Morgan Futures, and the customer base Morgan activities on the part of Morgan Futures with respect Futures is anticipated to serve, the Board has conto contracts covering U.S. Government securities cluded that the points raised in these comments do would be closely related to banking. Morgan Guar- not provide a substantial basis for denial of the anty already trades in futures contracts covering application.5 U.S. Government securities for its own account, and in the cash and forward markets for U.S. Balance of Public Benefits and Adverse Effects Government securities on behalf of its customers. Applicant's experience in these activities has pro- In order to approve this application, the Board is vided it with useful expertise in areas that are required to determine that the performance of the operationally or functionally similar to FCM activi- proposed activities by Morgan Futures, "can reasonties for nonaffiliated persons in U.S. Government ably be expected to produce benefits to the public, securities. such as greater convenience, increased competition, The Board has also determined, in the circum- or gains in efficiency, that outweigh possible adverse stances of this case, that Morgan Futures' proposed effects, such as undue concentration of resources, activities as an FCM with respect to futures con- decreased or unfair competition, conflicts of interests, tracts in negotiable U.S. money market instruments 5. The Board also notes that the Office of the Comptroller of the Currency has preliminarily approved certain proposed FCM activities by an operating subsidiary of North Carolina National Bank, Char- 4. New York Banking Law § 96.1 (McKinney 1971). lotte, North Carolina. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

516 Federal Reserve Bulletin • August 1982 or unsound banking practices," (12 U.S.C. arising out of the particular circumstances of an § 1843(c)(8)). FCM that is a subsidiary of a bank holding company. Rules and regulations promulgated and enforced Public Benefits by the CFTC and the relevant futures exchanges substantially reduce the possibility for significant Consummation of the proposal would provide added conflicts of the first category. Furthermore, Morgan convenience to those clients of Morgan Guaranty who Futures has committed to time-stamp orders of all trade in the cash, forward, and futures markets for the customers to the nearest minute, and to execute all commodities involved in this application. The Board orders in strictly chronological sequence. Morgan expects that the de novo entry of Morgan Futures into Futures has stated that it will execute each order the market for FCM services would increase the level with reasonable promptness upon receipt, with due of competition among FCMs already in operation. regard to market conditions. Consummation of the proposal is also likely to provide With respect to the second category of conflicts, Applicant with some gains in efficiency, through the the Board believes that existing statutory and superreduction of average fixed costs and the increase in visory safeguards, together with Applicant's intereconomies of scale. Accordingly, the Board has con- nal control procedures, will substantially reduce the cluded that the performance of the proposed activities possibility of significant adverse effects. For examby Morgan Futures can reasonably be expected to ple, section 23A of the Federal Reserve Act8 would produce benefits to the public. require any extension of credit by Morgan Guaranty to Morgan Futures to be secured by collateral of a value at least 20 percent greater than the amount of Adverse Effects the credit, or at least 10 percent greater than the The Board has considered several issues with respect amount of the credit if secured by the obligations of to possible adverse effects. The Board recognizes that any state or political subdivision of a state. Although the activity of trading futures contracts involves vari- Morgan Guaranty may lend to customers of Morgan ous types of financial risks and potential conflicts of Futures, all such loans will be subject to examinainterest, and is susceptible to anticompetitive and tion by the Board and appropriate state authorities. manipulative practices. The Board also notes, howev- Furthermore, Applicant's internal procedures gener, that Congress has addressed these types of possible erally prohibit disclosure within Morgan Guaranty adverse effects through the passage of the Commodity of confidential information pertaining to customers, Exchange Act6 and the creation of the Commodity whether received from customers or derived from Futures Trading Commission ("CFTC"). The CFTC internal sources. Finally, as discussed below, the has also promulgated regulations to effectuate the circumstances of this application alleviate any subprovisions of the Commodity Exchange Act.7 Applistantial concern regarding the possibility of voluncant has chosen to conduct the proposed activities tary tying. through a separately incorporated subsidiary that is subject to CFTC regulation. The Board has considered Unsound Banking Practices. Acting as an FCM can the impact of this statutory and regulatory framework in certain circumstances entail such a degree of in evaluating the likelihood that significant adverse financial exposure as to lead to unsound banking effects regarding conflicts of interests, unsound bankpractices. As an FCM engaged in clearing and ing practices, decreased or unfair competition, or executing contracts for nonaffiliated persons, there undue concentration of resources would develop in are several types of financial risks to which Morgan this case. Futures would be exposed. However, the Board believes that Applicant's competence, experience, Conflicts of Interests. Conflicts of interests that and resources sufficiently equip Morgan Futures to could be associated with this proposal fall into two deal with these risks. broad categories: those arising out of the general Furthermore, the Board believes that the Combusiness of engaging in FCM activities, and those modity Exchange Act and regulation by the CFTC and the various commodity exchanges are signifi- 6. 7 U.S.C. §§ 1-24. cant factors in ameliorating the general hazards of 7. For example, CFTC regulations require FCMs to keep detailed the proposed activity. For example, regulations of records on many aspects of FCM activities, such as segregation of the CFTC generally require FCMs to meet specified funds and investments made on behalf of customers (17 C.F.R. §§ 1.20, 1.25); prescribe protective procedures for such activities as buying and selling contracts of two customers on opposite sides of the same transaction (17 C.F.R. § 1.39); and impose minimum financial and related reporting requirements (17 C.F.R. §§ 1.10-.18). 8. 12 U.S.C. § 371c. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 517 net capital requirements that, as structured by the The degree of risk associated with providing FCM CFTC, take into account the degree of collateraliza- services as a clearing member on a commodities tion of loans extended by FCMs.9 Structuring the exchange can be increased through the practice of net capital requirement in this way addresses the requiring the parent corporation of a clearing mempossibility that FCMs may lend to trading customers ber to also become a member of that exchange or on an insufficiently secured basis, thereby endanger- clearing association. Applicant has committed that ing the financial integrity of the FCM and the Morgan Futures would not, without the prior constability of the market involved. In addition, the sent of the Board, become a clearing member of any CFTC possesses statutory authority to establish exchange whose rules impose such a requirement position limits that prescribe the maximum net posi- that has not waived that requirement for Applicant. tion that any one person may hold or control in a The Futures Industry Association, Washington, particular contract.10 Furthermore, as a general mat- D.C. ("FIA"), has drawn attention to the risks ter, domestic exchanges establish daily price move- associated with FCM retail activity and asserted ment limits on each futures contract. The CFTC is that the expertise that banks such as Morgan Guarstatutorily empowered to approve or disapprove anty have developed in managing risks for substanthese limits,11 and thus may influence the exposure tial commercial customers does not prepare them of FCMs to broad price fluctuations. for the financial risks associated with FCM dealings As an FCM for nonaffiliated persons, Morgan with the public. However, with respect to credit Futures would be contractually liable for nonper- risk, the record indicates that Morgan Futures will formance by a customer of Morgan Futures on each serve large and sophisticated institutional and corfutures contract traded by Morgan Futures for that porate customers. In addition, the record in this customer. Similarly, in some circumstances, Mor- case establishes Morgan Guaranty's long experience gan Futures could be obligated to meet a margin call in trading bullion, foreign exchange, government delivered to a customer of Morgan Futures. Appli- securities, and money market instruments. The ascant and its subsidiaries appear well prepared to sertions of FIA do not specifically detail the types of deal with these potential obligations. The risks that a risk referred to and do not explain why Morgan customer of Morgan Futures would default on a Guaranty's experience in these areas would be contract or fail to meet a margin call are essentially inadequate. credit risks of a type Morgan Guaranty has signifi- On the basis of all the facts of record, the Board cant expertise in evaluating. In addition, the record has concluded that the inherent risks of providing indicates that Morgan Futures would employ a high FCM services for nonaffiliated persons as a clearing degree of credit selectivity in choosing its custom- member of commodity exchanges under the circumers, some of whom are institutional and commercial stances of this proposal are manageable in view of clients of Morgan Guaranty. the expertise and resources of Applicant and its Another type of risk faced by Morgan Futures subsidiaries and the regulatory environment in would arise because its membership in certain com- which the FCM activities would be conducted. modity exchange clearing associations could expose it to contingent liability for the contractual obliga- Decreased or Unfair Competition. It has been sugtions due the associations by all clearing members. gested by FIA that a bank in the position of Morgan This potential liability exists through the assessment Guaranty could exert subtle pressure on its customprovisions of certain clearing association guaranty ers to use the services of the bank's affiliated FCM, funds to which all clearing members must contrib- or that a borrower could perceive that its use of an ute. In evaluating this element of risk to Morgan affiliated FCM could secure more favorable terms Futures, the Board has considered the effect of for the borrower in the borrower's banking busimargin requirements and the level of supervision ness. The Board notes that compulsory tying arand regulation imposed on the futures trading indus- rangements, whether subtle or overt, are prohibited try by the CFTC and by the exchanges and their by the Bank Holding Company Act, and that volunaffiliated clearing associations. Clearing associa- tary tying can only take place when a firm possesses tions, in particular, have established various proce- significant market power.12 It appears that Applidures that reduce the likelihood that this type of cant lacks the requisite market power for voluntary liability would arise. tying to occur, in view of the substantial competition among FCMs and in commercial lending. Moreover, 9. 17 C.F.R. §§ 1.17(a), .17(c)(2), .17(3), .52(a). 10. 7 U.S.C. § 6a. 12. "Citicorp" (Citicorp Person-to-Person Financial Center of 11. 7 U.S.C. § 7a(12). Connecticut, Inc.), 67 FEDERAL RESERVE BULLETIN 443, 446 (1981). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

518 Federal Reserve Bulletin • August 1982 FIA has conceded that it is unaware of any indica- member to also become a clearing member, Applition that Applicant has engaged in compulsory tying cant has obtained a waiver of the requirement. arrangements. 7. Morgan Futures has committed that it will, in In addition, Applicant has committed that Morgan addition to time-stamping orders of all customers to Futures will advise each customer that doing busi- the nearest minute, execute all orders, to the extent ness with Morgan Futures will not in any way alfect consistent with customers' specifications, in strictly any provision of credit to that customer from Mor- chronological sequence, and that it will execute all gan Guaranty or any other subsidiary of Applicant. orders with reasonable promptness with due regard The Board has considered FIA's suggestion that to market conditions. Morgan Futures be permitted to offer FCM services 8. Applicant and its subsidiaries have demonstrated only to corporations that have been customers of expertise and established capability of the cash, Morgan Guaranty for at least one year. However, forward, and futures markets for the contracts inthe Board does not believe such a requirement volved. would be necessary or helpful in addressing FIA's 9. Applicant will require Morgan Futures to advise concerns in this area. each of its customers in writing that doing business with Morgan Futures will not in any way alfect any Conclusion provision of credit to that customer by Morgan Guaranty or any other subsidiary of Applicant. On the basis of all the facts of record, the Board has 10. Applicant is adequately capitalized to engage in determined that in the circumstances of this case, the additional nonbanking activities. provision by Morgan Futures of the proposed FCM 11. Morgan Futures will not extend credit to cusservices to nonaffiliated persons would not result in tomers for the purpose of meeting initial or maintedecreased or unfair competition, conflicts of interests, nance margin required of customers, subject to the unsound banking practices, or undue concentration of limited exception of posting margin on behalf of resources in either commercial banking or the market customers in advance of prompt reimbursement. for FCM services. In considering this application, the Board has placed particular reliance on the following An individual commenter and FIA requested that aspects of Applicant's proposal: the Board hold a formal trial-type hearing regarding 1. Morgan Futures will not trade for its own ac- this application. Under section 4(c)(8) of the act, the count. Board is only required to hold a hearing when the 2. The instruments and precious metals upon which record indicates there are issues of fact that are the proposed futures contracts are based are essen- material to the Board's decision that are disputed by tially financial in character and are of a type that a the relevant parties.13 The Board has provided FIA bank may execute for its own account. with a full opportunity to present its views at an 3. Morgan Futures has an initial capitalization that informal evidentiary meeting between Board staff, is in substantial excess of that required by CFTC representatives of FIA, and representatives of Appliregulations, and will maintain fully adequate capital- cant, in order to determine whether a formal hearing ization. on the arguments raised by FIA was necessary. Repre- 4. Morgan Futures and Morgan Guaranty have en- sentatives of FIA indicated that FIA had no further tered into a formal service agreement that specifies arguments or evidence other than what was presented the services that Morgan Guaranty will supply to at the meeting. Each of FIA's major points has been Morgan Futures on an explicit fee basis. These discussed above, and upon complete examination of services include the assessment of customer credit the entire record, the Board concludes that FIA's risk, the continuous monitoring of customer posi- request presents no issues of material fact. Therefore, tions, and monitoring the status of customer margin the Board hereby denies FIA's request for a hearing. accounts. The individual commenter who requested a hearing 5. Through its proposed service agreement with argued that Applicant would fund the operations of Morgan Guaranty, Morgan Futures will be able to Morgan Futures in such a way as to result in an assess customer credit risks, and will take such unsound banking practice. However, the argument put assessments into consideration in establishing ap- forward by this commenter is inconsistent with the propriate position limits for each customer, both facts as presented in the record, and the commenter with respect to each type of contract and with respect to the customer's aggregate position for all contracts. 6. With respect to each futures exchange involved 13. Connecticut Bankers Association v. Board of Governors, 627 in this application that requires a parent of a clearing F.2d 245, 250-51 (D.C. Cir. 1980). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 519 did not directly challenge these facts.14 Accordingly, Board's approval under section 4(c)(8) of the act the Board finds that the request is grounded on a (12 U.S.C. § 1843(c)(8)) and section 225.4(b)(2) of the conclusory allegation and presents no genuine issue of Board's Regulation Y (12 C.F.R. § 225.4(b)(2)), to material fact. The Board concludes that a hearing acquire Dial Corporation, Des Moines, Iowa ("Dial"). would serve no useful purpose, and hereby denies this Dial engages primarily in making direct consumer request for a hearing. installment loans to individuals. In addition, Dial is Based upon the foregoing and other considerations engaged in purchasing sales finance contracts arising reflected in the record, the Board has determined that from the sale of goods and services; the leasing of the public benefits associated with consummation of industrial and agricultural equipment; commercial fithis proposal can reasonably be expected to outweigh nancing including accounts receivable financing; offerpossible adverse effects, and that the balance of the ing data processing services; offering thrift certificates public interest factors, which the Board is required to and accepting passbook savings; selling as agent travconsider under section 4(c)(8) of the act, is favorable. elers checks; and acting as agent for the sale of credit- Accordingly, the application is hereby approved.15 related insurance and underwriting as reinsurer credit- This determination is subject to the conditions set related insurance. Each of these activities has been forth in section 225.4(c) of Regulation Y and the determined by the Board to be closely related to Board's authority to require such modification or banking, (12 C.F.R. §§ 225.4(a)(1), (2), (4), (6), (8), (9), termination of the activities of a holding company or (10), and (13)).1 any of its subsidiaries as the Board finds necessary to Notice of the application, affording opportunity for assure compliance with the provisions and purposes of interested persons to submit comments and views on the act and the Board's regulations and orders issued the public interest factors, has been duly published (47 thereunder, or to prevent evasion thereof. Federal Register 21918 (1982)). The time for filing The proposed activities shall not commence later comments and views has expired, and the Board has than three months after the effective date of this considered the application and all comments received Order, unless such period is extended for good cause in light of the public interest factors set forth in section by the Board, or by the Federal Reserve Bank of New 4(c)(8) of the act (12 U.S.C. § 1843(c)(8)). York. Applicant with total assets of $15.2 billion2 is the By order of the Board of Governors, effective 19th largest bank holding company in the United July 1, 1982. States by virtue of its control of 87 banks in a sevenstate area including Iowa, Minnesota, Montana, Ne- Voting for this action: Chairman Volcker and Governors braska, North Dakota, South Dakota, and Wisconsin. Martin, Wallich, Partee, Teeters, Rice, and Gramley. In addition, Applicant engages in lease financing, mortgage banking, agricultural financing, secured (Signed) JAMES MCAFEE, commercial financing, data processing, credit-related [SEAL] Associate Secretary of the Board. insurance sales and reinsurance, municipal bond underwriting, and corporate trust and securities clear- Northwest Bancorporation, ance services. Minneapolis, Minnesota Dial, with total assets of $979 million as of December 31, 1981, operates 489 offices in 37 states. It is the Order Approving Acquisition of Nonbank Company 16th largest noncaptive finance company and the 31st largest of all finance companies in the United States, Northwest Bancorporation, Minneapolis, Minnesota, operating 476 consumer finance offices. As of Decema bank holding company within the meaning of the ber 31, 1981, approximately 78 percent of Dial's fi- Bank Holding Company Act, has applied for the nance receivables were direct installment loans to individuals. In evaluating applications under the Bank Holding Company Act, the Board considers the capital position 14. Specifically, the individual commenter asserts that Applicant proposes "to finance Morgan Futures with 'roll over' borrowings from MMFs (money market funds)," and argues that "American public savings would bear the risk of the new venture." The record wool, live cattle, and boneless beef. In addition, the regulatory indicates that Morgan Futures will be capitalized through a $10 million environment in which the activities proposed in the earlier application capital contribution by Applicant, and that Morgan Futures will not be would have taken place differs in key respects from those involved in trading for its own account. There is nothing in the record to support this application. the commenter's allegation. 15. The Board notes that the circumstances of this application differ 1. Dial engages also in certain insurance activities that are not from those of a recent application submitted pursuant to section 25(a) permissible for Applicant. Applicant has committed that Dial and its of the Federal Reserve Act. "Bankers International Corporation", 67 subsidiaries will cease such activities upon consummation of this FEDERAL RESERVE BULLETIN 364 (1981). That application involved proposal. brokerage activities with respect to futures contracts covering greasy 2. All banking data are as of December 31, 1981. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

520 Federal Reserve Bulletin • August 1982 of the banking organization involved and the effects markets, the Board does not regard the effects of the proposal will have on the organization's capital consummation on existing competition in these marposition. In accordance with this policy, the Board has kets as significantly adverse. In three other markets considered the capital position of Applicant. Appli- where Applicant and Dial compete, Applicant has cant's capital ratios compare favorably with the capital committed to divest of all Dial offices prior to consumratios of banking organizations of similar size and are mation of the proposed acquisition, thereby avoiding consistent with the Board's recently published capital the elimination of any existing competition in these adequacy guidelines.3 In connection with this acquisi- markets. In another market where it competes with tion, the Board notes that Applicant has historically Dial (Des Moines, Iowa), Applicant proposes to divest maintained a satisfactory capital position and has of two Dial offices, thereby reducing the anticompetistrengthened its capital position by issuing preferred tive consequences in this market associated with constock. Applicant will also incur some debt in connec- summation. In the remaining four markets in which tion with the acquisition, but it has demonstrated the Applicant and Dial currently compete (Fargo, Minnecapacity to service this debt. The Board expects that apolis/St. Paul, Omaha, and Bismark) their combined further developments in its debt position will be con- market share would range from 12.5 to 16.2 percent. sistent with the continued maintenance of Applicant's Accordingly, consummation of the proposal would satisfactory capital position. Dial is in satisfactory result in the elimination of some existing competition condition and its operations compare favorably with in these markets. The Board notes that in each of these those of other consumer finance companies. Based on markets Applicant currently has the largest share of the above analysis, the Board concludes the financial consumer finance receivables and that Dial's share and managerial resources of Applicant, its subsidiaries ranges from 0.3 to 1.3 percent. However, in evaluating and Dial are satisfactory. Indeed, the Board concludes the competitive effects associated with the proposed Applicant's favorable capital position is a factor that transaction in these markets, the Board has taken into contributes to approval in this case. consideration the facts that none of the markets in- The Board believes that the relevant product market volved is concentrated; there are numerous other to be considered in evaluating the competitive effects competitors; and there are few barriers to entry associof Applicant's acquisition of Dial's consumer finance ated with the consumer finance industry. In view of operations is the making of personal cash loans.4 The the foregoing, the Board does not believe that the Board has previously determined that consumer fi- anticompetitive effects of this proposal on existing nance companies compete with commercial banks for competition in these markets are so significant as to personal loans and that the relevant geographic market warrant denial. is approximated by the local banking market.5 Dial has The Board has considered also the effect of consumoffices engaged in consumer finance activities in fif- mation of this proposal on potential competition. In teen local markets in which Applicant's banking sub- this regard, the Board notes Dial is not dominant in sidiaries also compete. In seven of the markets in any of the markets in which it operates; the markets which Applicant and Dial currently compete, their involved appear unconcentrated; and in each market combined market share would be less than 10.0 per- there are a significant number of competitors and other cent and, in light of the other characteristics of these potential entrants. Thus, the Board concludes that consummation will not have significant effects on potential competition in any market. 3. FEDERAL RESERVE BULLETIN 33 (1982). Applicant and Dial both engage in indirect consumer 4. Although Applicant does not dispute the Board's definition of the relevant product market, Applicant points out that the appropriate finance, commercial finance, and leasing activities. measure may be broader than that used by the Board in connection The Board notes that the geographic market for each is with prior decisions. Specifically, Applicant states that estimated national or regional in scope and that Applicant's and direct automobile loans should be included in the product market. In addition, Applicant points out that an argument can be made for Dial's combined market share of each is small. In including indirect paper acquired by various institutions. The Board addition, both Applicant and Dial engage in data has determined previously that the appropriate product market in such processing activities; however, they do not service the cases is the making of direct personal loans, and continues to believe this is the appropriate market for considering the competitive effects same segment of the market and, absent this affiliof the acquisition of a consumer finance company by a bank holding ation, are unlikely to expand to do so. Moreover, the company. "Manufacturers Hanover Corporation", 66 FEDERAL RE- Board notes the data processing industry is competi- SERVE BULLETIN 599 (1980). See: "NCNB Corporation/TransSouth Financial Corporation", 64 FEDERAL RESERVE BULLETIN 504 (1978); tive and relatively unconcentrated. Lastly, both Appli- "Security Pacific Corporation", 65 FEDERAL RESERVE BULLETIN 73 cant and Dial engage in agricultural lending, the offer- (1979). ing of thrift certificates, and the sale of travelers 5. "Barclays Bank Limited", 65 FEDERAL RESERVE BULLETIN 504 (1979); "Security Pacific Corporation/American Finance System, checks. However, in each of these areas Dial's market Incorporated", 65 FEDERAL RESERVE BULLETIN 73 (1979); "Bankers share is de minimis. Accordingly, the Board concludes Trust New York Corporation", 59 FEDERAL RESERVE BULLETIN 694 that consummation of this proposal will not have (1973). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 521 significantly adverse competitive effects in any Based on the foregoing and other considerations market. reflected in the record, the Board has determined that In connection with the proposed acquisition, Appli- the balance of the public interest factors the Board is cant has indicated that it will cause Dial to offer a required to consider under section 4(c)(8) of the act is number of new services that will benefit individual favorable. Accordingly, the application is approved. customers, small to mid-sized businesses and agricul- This determination is subject to the conditions stated tural customers. In particular, following consumma- herein as well as those set forth in section 225.4(c) of tion of this proposal, Dial will provide additional credit Regulation Y and to the Board's authority to require to finance agriculture, small to medium sized busi- such modification or termination of the activities of a nesses, education, and home improvements. In addi- holding company or any of its subsidiaries as the tion, Dial will extend SBA-guaranteed and fixed-rate Board finds necessary to assure compliance with the loans for commercial and agricultural purposes. Appli- provisions and purposes of the act and the Board's cant has undertaken also that, upon consummation, regulations and orders issued thereunder, or to pre- Dial will provide new services for individual custom- vent evasion thereof. ers, including the redrafting of forms used in connec- The transaction shall not be consummated later than tion with credit transactions into "plain English." three months after the effective date of this Order, Moreover, Applicant has committed to reduce premi- unless such period is extended for good cause by the ums and improve benefits on credit-related insurance. Board or by the Federal Reserve Bank of Minneapolis, On the basis of the foregoing and other facts of pursuant to delegated authority. record, the Board concludes that the public benefits By order of the Board of Governors, effective that would result from the acquisition are sufficient to July 27, 1982. outweigh any slightly adverse competitive effects that might result from the transaction. Further, the Board Voting for this action: Chairman Volcker and Governors notes there is no evidence in the record that consum- Martin, Teeters, and Rice. Absent and not voting: Governors mation of the proposal would result in any undue Wallich, Partee, and Gramley. concentration of resources, unfair competition, conflicts of interests, unsound banking practices, or other (Signed) JAMES MCAFEE, adverse effects.6 [SEAL] Associate Secretary of the Board. 6. In this regard, the Board has considered Applicant's request that determined that Applicant should divest of these impermissible assets it be allowed five years to divest of Dial's impermissible insurance within two years of consummation. Accordingly, the Board's approvassets. The Board has considered the request in light of the purposes al is so conditioned. and policies underlying the act and prior Board decisions, and has Legal Developments continued on next page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

522 Federal Reserve Bulletin • August 1982 ORDERS APPROVING APPLICATIONS UNDER THE BANK HOLDING COMPANY ACT AND BANK MERGER ACT By the Board of Governors During July 1982, 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) Cambria State Bankshares, Inc., Cambria State Bank, July 6, 1982 Cambria, Wisconsin Cambria, Wisconsin First City Bancorporation of Texas, Inc., Citizens First National Bank of Tyler July 23, 1982 Houston, Texas Tyler, Texas First City Bank-Northchase, N.A., July 21, 1982 Houston, Texas First City Bank-West Belt, N.A., July 26, 1982 Houston, Texas First City National Bank of Fort Worth, July 26, 1982 Fort Worth, Texas Merchantile Texas Corporation, Brazospart Bank of Texas, July 1, 1982 Dallas, Texas Freeport, Texas Grand Prairie State Bank, July 23, 1982 Grand Prairie, Texas 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 Americana Bancorporation of Americana State Bank of Alden, Minneapolis July 12, 1982 Alden, Inc., Alden, Minnesota Edina, Minnesota AmSouth Bancorporation, National Bank of Birmingham, Atlanta July 22, 1982 Birmingham, Alabama Birmingham, Alabama Andrews Financial Corporation, Andrews Bancshares, Inc., Dallas July 16, 1982 Andrews, Texas Andrews, Texas Commercial State Bank, Andrews, Texas Bankcore, Inc., North Conway Bank, Boston July 14, 1982 North Conway, New Hampshire North Conway, New Hampshire Chemical New York Corporation, Chemical Bank (Delaware), New York July 27, 1982 New York, New York Wilmington, Delaware Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 523 Section 3—Continued Reserve Effective Applicant BBaannkk((ss)) Bank date Citizens and Southern Georgia Cor- The Citizens and Southern Bank Atlanta July 27, 1982 poration, of Dal ton, Atlanta, Georgia Dalton, Georgia Citizens Commerce Corporation, National Bank of Ardmore, Kansas City July 9, 1982 Ardmore, Oklahoma Ardmore, Oklahoma Citizens' National Corporation, Citizens' National Bank of Linton, St. Louis July 16, 1982 Linton, Indiana Linton, Indiana Community Banks, Inc., Badger Bankshares Corporation, Chicago July 26, 1982 Middleton, Wisconsin Monona, Wisconsin Monona-Grove State Bank, Monona, Wisconsin Crete Bancorporation, Inc., United Bank of Crete-Steger, Chicago July 27, 1982 Crete, Illinois Crete, Illinois Cullen/Frost Bankers, Inc., Union National Bank of Laredo, Dallas July 13, 1982 San Antonio, Texas Laredo, Texas De Kalb Bancorp, Inc., The De Kalb Bank, Chicago July 8, 1982 De Kalb, Illinois De Kalb, Illinois Detroitbank Corporation, The National Bank of Jackson, Chicago July 12, 1982 Detroit, Michigan Jackson, Michigan Farmers Bancorp, Inc., Farmers Bank, St. Louis July 12, 1982 Dyersburg, Tennessee Trimble, Tennessee Firsnabanco, Inc., First National Bank in Viroqua, Chicago July 27, 1982 Viroqua, Wisconsin Viroqua, Wisconsin First Bancorp, First Bank and Trust of Idaho, San Francisco July 16, 1982 Malad City, Idaho Malad City, Idaho First National Bancshares First National Bank of Fredonia, Kansas City July 6, 1982 of Fredonia Fredonia, Kansas Fredonia, Kansas Gulf South Bancshares, Inc., Gulf South Bank & Trust Company, Atlanta July 16, 1982 Gretna, Louisiana Gretna, Louisiana Hopkins Financial Corporation, Day County Bank, Minneapolis July 13, 1982 Mitchell, South Dakota Webster, South Dakota International Bancorp., International Bank North, Kansas City July 16, 1982 Denver, Colorado Federal Heights, Colorado Lakeshore Bancshares, Inc., Lakeshore Bank, N.A., Kansas City July 13, 1982 Oklahoma City, Oklahoma Oklahoma City, Oklahoma Monroe Bancshares, Inc., Bank of Madisonville, Atlanta July 23, 1982 Madisonville, Tennessee Madisonville, Tennessee National Bancshares Corporation of Peoples Bank, Dallas July 29, 1982 Texas, Houston, Texas San Antonio, Texas OMB Financial, Inc., The Oak Mound Bank, Richmond July 21, 1982 Clarksburg, West Virginia Clarksburg, West Virginia Oliver Bancorporation, Inc., State Bank of Oliver County, Minneapolis July 23, 1982 Center, North Dakota Center, North Dakota Oregon Bancorp, Inc., Community National Bank, Chicago July 9, 1982 Oregon, Wisconsin Oregon, Wisconsin PDR Bancshares, Inc., State Bank of Prairie du Rocher, St. Louis July 14, 1982 Prairie du Rocher, Illinois Prairie du Rocher, Illinois Progressive Capital Corporation, Central Progressive Bank of Amite, Atlanta July 9, 1982 Amite, Louisiana Amite, Louisiana Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

524 Federal Reserve Bulletin • August 1982 Section 3—Continued . l / \ Reserve Effective Applicant Bank(s) ^ ^ Red Bird Bancshares, Inc., Red Bird Bank of Dallas, Dallas July 28, 1982 Dallas, Texas Dallas, Texas Rend Lake Bancorp. Inc., Rend Lake Bank, St. Louis July 26, 1982 Marion, Illinois Christopher, Illinois Riverton State Bank Holding Com- Dubois National Bank, Kansas City July 20, 1982 pany, Dubois, Wyoming Riverton, Wyoming SNB Bancshares, Inc., The State National Bank of Eufaula, Kansas City July 19, 1982 Eufaula, Oklahoma Eufaula, Oklahoma St. Joseph Bancshares, Inc., First State Bank of St. Joseph, Minneapolis July 9, 1982 St. Joseph, Minnesota St. Joseph, Minnesota Tahoka First Bancorp, Inc., Cedar Creek Bank, Dallas July 15, 1982 Tahoka, Texas Seven Points, Texas Tennessee National Bancshares, Tennessee State Bank, Atlanta July 20, 1982 Inc., Gatlinburg, Tennessee Maryville, Tennessee Transworld Bancorp, Transworld Bank, San Francisco July 29, 1982 Sherman Oaks, California Sherman Oaks, California UBF Corporation, The Bank of Pasco County, Atlanta July 14, 1982 Dade City, Florida Dade City, Florida United American Bancshares, Inc., The First National Bank of Palestine, Dallas July 27, 1982 Palestine, Texas Palestine, Texas United American of Northwest Flori- First State Bank of Pensacola, Atlanta July 9, 1982 da, Inc., Pensacola, Florida Pensacola, Florida Union-Calhoun Investments, Ltd., Union State Bank, Chicago July 16, 1982 Rockwell City, Iowa Rockwell City, Iowa Valley View Bancshares, Inc., Security Bancshares, Inc., Kansas City July 21, 1982 Overland Park, Kansas Kansas City, Kansas Victoria Bankshares, Inc., Angleton Bank of Commerce, Dallas July 19, 1982 Victoria, Texas Angleton, Texas Wilson Bancshares, Inc., Wilson State Bank, Dallas July 23, 1982 Wilson, Texas Wilson, Texas Section 4 Nonbanking Reserve Effective Applicant company Bank date (or activity) Citicorp, Drum Savings and Investment Company, New York July 15, 1982 New York, New York of Douglas County, Inc., Omaha, Nebraska European American Bancorp, William J. Gill & Co. Inc., New York July 15, 1982 New York, New York Garden City, New York FM Co., Barnard Agency, Kansas City July 15, 1982 Milligan, Nebraska Milligan, Nebraska Santa Fe Trail Banc Shares, Inc. Thayer Leasing, Inc., Kansas City July 8, 1982 Hutchinson, Kansas Hutchinson, Kansas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 525 Sections 3 and 4 Nonbanking Reserve Effective Applicant Bank(s) company Bank date (or activity) Colonial Capital Corpo- Bank of Mantee, to engage in insurance St. Louis July 7, 1982 ration Mantee, Mississippi agency activities Mantee, Mississippi East Central Holding First State Bank of Isanti Agency, Inc., Minneapolis July 29, 1982 Company, Isanti, Isanti, Minnesota Cambridge, Minne- Isanti, Minnesota sota Miles-Advance Banc- The Bank of Advance, to engage in the sale of St. Louis July 14, 1982 shares Inc. Advance, Missouri credit insurance Advance, Missouri PENDING CASES INVOLVING THE BOARD OF GOVERNORS* *This list of pending cases does not include suits Allen Wolfson v. Board of Governors, filed September against the Federal Reserve Banks in which the Board 1981, U.S.D.C. for the Middle District of Florida. of Governors is not named a party. Option Advisory Service, Inc. v. Board of Governors, filed September 1981, U.S.C.A. for the Second Richter v. Board of Governors, et al., filed May 1982, Circuit (two cases). U.S.D.C. for the Northern District of Illinois. Bank Stationers Association, Inc., et al. v. Board of Montgomery v. Utah, et al., filed May 1982, U.S.D.C. Governors, filed July 1981, U.S.D.C. for the Northfor the District of Utah. ern District of Georgia. Wyoming Bancorporation v. Board of Governors, filed Public Interest Bounty Hunters v. Board of Gover- May 1982, U.S.C.A. for the Tenth Circuit. nors, et al., filed June 1981, U.S.D.C. for the Florida National Banks of Florida, Inc. v. Board of Northern District of Georgia. Governors, filed April 1982, U.S.C.A. for the Dis- Edwin F. Gordon v. John Heimann, et al., filed May trict of Columbia. 1981, U.S.C.A. for the Fifth Circuit. John A. Gabriel v. Board of Governors, filed April First Bank & Trust Company v. Board of Governors, 1982, U.S.C.A. for the Ninth Circuit. filed February 1981, U.S.D.C. for the Eastern Dis- First Bancorporation v. Board of Governors, filed trict of Kentucky. April 1982, U.S.C.A. for the Tenth Circuit. 9 to 5 Organization for Women Office Workers v. Charles G. Vick v. Paul A. Volcker, et. al., filed Board of Governors, filed December 1980, March 1982, U.S.D.C. for the District of Columbia. U.S.D.C. for the District of Massachusetts. Jolene Gustafson v. Board of Governors, filed March Securities Industry Association v. Board of Gover- 1982, U.S.C.A. for the Fifth Circuit. nors, et al., filed October 1980, U.S.D.C. for the First Lakefield BanCorporation v. Board of Gover- District of Columbia. nors, et al., filed January 1982, U.S.D.C. for the Securities Industry Association v. Board of Gover- District of Minnesota. nors, et al., filed October 1980, U.S.C.A. for the Christian Educational Association, Inc. v. Federal District of Columbia. Reserve System, filed January 1982, U.S.D.C. for A. G. Becker, Inc. v. Board of Governors, et al., filed the Middle District of Florida. October 1980, U.S.D.C. for the District of Colum- Option Advisory Service, Inc. v. Board of Governors, bia. filed December 1981, U.S.C.A. for the Second A. G. Becker, Inc. v. Board of Governors, et al., filed Circuit. October 1980, U.S.C.A. for the District of Colum- Edwin F. Gordon v. Board of Governors, et al., filed bia. October 1981, U.S.C.A. for the Eleventh Circuit A. G. Becker, Inc. v. Board of Governors, et al., filed (two consolidated cases). August 1980, U.S.D.C. for the District of Columbia. Wendall Hall v. Board of Governors, et al., filed Berkovitz, et al. v. Government of Iran, et al., filed September 1981, U.S.D.C. for the Northern District June 1980, U.S.D.C. for the Northern District of of Georgia. California. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A1 Financial and Business Statistics CONTENTS WEEKLY REPORTING COMMERCIAL BANKS Assets and liabilities Domestic Financial Statistics A18 All reporting banks A19 Banks with assets of $1 billion or more A3 Monetary aggregates and interest rates A20 Banks in New York City A4 Reserves of depository institutions, reserve, A21 Balance sheet memoranda bank credit A22 Branches and agencies of foreign banks A5 Reserves and borrowings of depository A23 Commercial and industrial loans institutions A24 Gross demand deposits of individuals, A6 Federal funds and repurchase agreements of partnerships, and corporations large member banks FINANCIAL MARKETS Pouc Y INS TR UMENTS A25 Commercial paper and bankers dollar A7 Federal Reserve Bank interest rates acceptances outstanding A8 Depository institutions reserve requirements A26 Prime rate charged by banks on short-term A9 Maximum interest rates payable on time and business loans savings deposits at federally insured institutions A26 Terms of lending at commercial banks A10 Federal Reserve open market transactions All Interest rates in money and capital markets A28 Stock market—Selected statistics A29 Selected financial institutions—Selected assets FEDERAL RESERVE BANKS and liabilities All Condition and Federal Reserve note statements A12 Maturity distribution of loan and security FEDERAL FINANCE holdings A30 Federal fiscal and financing operations A31 U.S. budget receipts and outlay MONETARY AND CREDIT AGGREGATES A32 Federal debt subject to statutory limitation A32 Gross public debt of U.S. Treasury—Types and A12 Bank debits and deposit turnover ownership A13 Money stock measures and components A33 U.S. government marketable securities— A14 Aggregate reserves of depository institutions Ownership, by maturity and monetary base A34 U.S. government securities dealers— A15 Loans and securities of all commercial banks Transactions, positions, and financing A35 Federal and federally sponsored credit agencies—Debt outstanding COMMERCIAL BANKS A16 Major nondeposit funds A17 Assets and liabilities, last Wednesday-of-month series Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 Federal Reserve Bulletin • August 1982 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 A55 Foreign official assets held at Federal Reserve asset position Banks A37 Corporate profits and their distribution A56 Foreign branches of U.S. banks—Balance sheet A38 Nonfinancial corporations—Assets and data liabilities A58 Selected U.S. liabilities to foreign official A38 Total nonfarm business expenditures on new institutions plant and equipment A39 Domestic finance companies—Assets and liabilities; business credit REPORTED BY BANKS IN THE UNITED STATES A58 Liabilities to and claims on foreigners REAL ESTATE A59 Liabilities to foreigners A61 Banks' own claims on foreigners A40 Mortgage markets A62 Banks' own and domestic customers' claims on A41 Mortgage debt outstanding foreigners A62 Banks' own claims on unaffiliated foreigners A63 Claims on foreign countries—Combined CONSUMER INSTALLMENT CREDIT domestic offices and foreign branches A42 Total outstanding and net change A43 Extension and liquidations REPORTED BY NONBANKING BUSINESS ENTERPRISES IN THE UNITED STATES FLOW OF FUNDS A64 Liabilities to unaffiliated foreigners A65 Claims on unaffiliated foreigners A44 Funds raised in U.S. credit markets A45 Direct and indirect sources of funds to credit markets SECURITIES HOLDINGS AND TRANSACTIONS A66 Foreign transactions in securities Domestic Nonfinancial Statistics A67 Marketable U.S. Treasury bonds and notes— Foreign holdings and transactions 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 A67 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 1981 1982 1982 Item Q3 Q4 Q1 Q2 Feb. Mar. Apr. May June Monetary and credit aggregates (annual rates of change, seasonally adjusted in percent) Reserves of depository institutions 1 Total 4.0 3.2 8.3 2.1 -10.2 4.8 2.7 4.3 3.3 2 Required 3.1 3.5 7.9 2.6 -6.9 3.1 5.3 1.8 4.7 3 Nonborrowed 7.9 10.5 .4 5.5 -18.8 12.2 2.4 18.1 .7 4 Monetary base2 4.3 3.9 8.0 7.3 3.4 4.1 9.2 9.0 7.9 Concepts of money and liquid assets3 5 Ml .3 5.7 10.4 3.3 -3.5 2.7 11.0 -2.4 -.3 6 M2 8.3 8.9 9.8 9.5 4.4 11.2 10.0 10.7 6.6 7 M3 11.2 9.3 8.7 10.7 5.8 11.3 12.0 10.9 9.0 8 L 11.9 10.7 10.3 n.a. 10. I'- 12.0 n.a. n.a. n.a. Time and savings deposits Commercial banks 9 Total 18.4 8.3 7.5 17.0 ll.! 19.9 15.7 18.1' 17.2 10 Savings4 -22.7 -11.9 8.7 2.0 .8 13.6 -.7 -1.5 -4.5 11 Small-denomination time5 24.3 20.8 9.7 23.8 16.1 25.1 28.8 20.8 15.8 12 Large-denomination time6 36.0 5.4 4.6 16.8 10.7 17.6 8.7 24.0 29.2 13 Thrift institutions7 2.6 2.7 3.1 6.6 5.2 7.4 5.3r 9.9 3.8 14 Total loans and securities at commercial banks8 8.7 3.6 2.6 8.6 10.7 8.2 8.8 8.2r 5.7 1981 1982 1982 Q3 Q4 Q1 Q2 Mar. Apr. May June July Interest rates (levels, percent per annum) Short-term rates 15 Federal funds9 17.58 13.59 14.23 14.52 14.68 14.94 14.45 14.15 12.59 16 Discount window borrowing10 14.00 13.04 12.00 12.00 12.00 12.00 12.00 12.00 11.81 17 Treasury bills (3-month market vield)1 15.05 11.75 12.81 12.42 12.68 12.70 12.09 12.47 11.35 18 Commercial paper (3-month)1 lr2.... 16.78 13.04 13.81 13.81 13.80 14.06 13.42 13.96 12.94 Long-term rates Bonds 19 U.S. government13 14.51 14.14 14.27 13.74 13.75 13.57 13.46 14.18 13.76 20 State and local government14 12.11 12.54 13.02 12.33 12.82 12.59 11.95 12.45 12.28 21 Aaa utility (new issue)15 16.82 15.67 15.71 15.73 15.43 15.83 15.22 15.92 15.61 22 Conventional mortgages'6 17.50 17.33 17.10 16.63 16.80 16.65 16.50 16.75 16.50 1. Unless otherwise noted, rates of change are calculated from average amounts 5. Small-denomination time deposits—including retail RPs—are those issued in outstanding in preceding month or quarter. amounts of less than $100,000. 2. Includes reserve balances at Federal Reserve Banks in the current week plus 6. Large-denomination time deposits are those issued in amounts of $100,000 or vault cash held two weeks earlier used to satisfy reserve requirements at all deposi- more. tory institutions plus currency outside the U.S. Treasury, Federal Reserve Banks, 7. Savings and loan associations, mutual savings banks, and credit unions. the vaults of depository institutions, and surplus vault cash at depository institu- 8. Changes calculated from figures shown in table 1.23. Beginning December tions. 1981, growth rates reflect shifts of foreign loans and securities from U.S. banking 3. Ml: Averages of daily figures for (1) currency outside the Treasury, Federal offices to international banking facilities. Reserve Banks, and the vaults of commercial banks; (2) traveler's checks of non- 9. Averages of daily effective rates (average of the rates on a given date weighted bank issuers; (3) demand deposits at all commercial banks other than those due by the volume of transactions at those rates). to domestic banks, the U.S. government, and foreign banks and official institutions 10. Rate for the Federal Reserve Bank of New York. less cash items in the process of collection and Federal Reserve float; and (4) 11. Quoted on a bank-discount basis. negotiable order of withdrawal (NOW) and automatic transfer service (ATS) ac- 12. Unweighted average of offering rates quoted by at least five dealers. counts at banks and thrift institutions, credit union share draft (CUSD) accounts, 13. Market yields adjusted to a 20-year maturity by the U.S. Treasury. and demand deposits at mutual savings banks. 14. Bond Buyer series for 20 issues of mixed quality. M2: Ml plus savings and small-denomination time deposits at all depository 15. Weighted averages of new publicly offered bonds rated Aaa, Aa, and A by institutions, overnight repurchase agreements at commercial banks, overnight Eu- Moody's Investors Service and adjusted to an Aaa basis. Federal Reserve comrodollars held by U.S. residents other than banks at Caribbean branches of member pilations. banks, and balances of money market mutual funds (general purpose and broker/ 16. Average rates on new commitments for conventional first mortgages on new dealer). 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 and balances of institution-only money market mutual funds. NOTE. Revisions in M2, M3, and L reflect the inclusion of three general purpose L: M3 plus other liquid assets such as term Eurodollars held by U.S. residents and broker/dealer money market funds that began reporting in May 1982 though other than banks, bankers acceptances, commercial paper. Treasury bills and other their operations began earlier. liquid Treasury securities, and U.S. savings bonds. 4. Savings deposits exclude NOW and ATS accounts at commercial banks and thrifts and CUSD accounts at credit unions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic NonfinancialS tatistics • August 1982 1.11 RESERVES OF DEPOSITORY INSTITUTIONS, RESERVE BANK CREDIT Millions of dollars Monthly averages of daily figures Weekly averages of daily figures for week ending 1982 1982 May June July June 16 June 23 June 30 July 7 July 14 P July 21 P July 28 P SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 151,333 152,140 153,521 152,095 152,793 151,778 153,023 153,060 155,478 152,591 2 U.S. government securities1 129,686 130,737 132,400 131,418 131,337 130,458 131,488 131,678 134,155 132,219 3 Bought outright 128,964 130,408 131,540 131,418 130,497 130,458 129,098 131,200 133,214 132,219 4 Held under repurchase agreements 722 329 860 0 840 0 2,390 478 941 0 5 Federal agency securities 9,123 9,077 9,223 9,002 9,236 9,002 9,553 9,120 9,312 9,001 6 Bought outright 9,008 9,004 9,001 9,002 9,002 9,002 9,001 9,001 9,001 9,001 7 Held under repurchase agreements 115 73 222 0 234 0 552 119 311 0 8 Acceptances 164 149 300 0 289 0 744 96 488 0 9 Loans 1,105 1,211 670 929 1,014 1,616 1,070 559 595 548 10 Float 2,167 2,227 2,024 2,088 2,064 1,675 1,589 2,866 2,011 1,766 11 Other Federal Reserve assets 9,088 8,739 8,904 8,657 8,852 9,027 8,578 8,742 8,916 9,057 12 Gold stock 11,149 11,149 11,149 11,149 11,149 11,149 11,149 11,149 11,149 11,149 13 Special drawing rights certificate account... 3,818 3,818 3,895 3,818 3,818 3,818 3,818 3,818 3,875 4,018 14 Treasury currency outstanding 13,758 13,774 13,785 13,772 13,777 13,781 13,781 13,786 13,786 13,786 ABSORBING RESERVE FUNDS 15 Currency in circulation 144,683 146,504 147,850 146,915 146,321 146,121 147,859 148,804 147,916 147,124 16 Treasury cash holdings 489 464 429 464 455 466 442 432 424 419 Deposits, other than reserves, with Federal Reserve Banks 17 Treasury 4,292 3,303 3,319 2,950 3,730 3,140 3,370 3,349 3,181 3,358 18 Foreign 332 296 311 303 271 322 269 258 278 261 19 Other 509 506 615 530 450 461 635 571 563 670 20 Required clearing balances 184 205 220 203 206 212 213 213 218 221 21 Other Federal Reserve liabilities and capital 5,364 5,373 5,280 5,308 5,471 5,344 5,134 5,195 5,449 5,330 22 Reserve accounts2 24,207 24,230 24,326 24,162 24,634 24,460 23,850 22,991 26,260 24,160 End-of-month figures Wednesday figures 1982 1982 May June Julyf June 16 June 23 June 30 July 1 July 14 P July 21P July 28P SUPPLYING RESERVE FUNDS 23 Reserve Bank credit outstanding 149,884 149,003 153,768 153,126 152,677 149,003 154,983 152,031 154,190 154,673 24 U.S. government securities1 129,407 127,005 132,640 130,803 131,021 127,005 132,143 131,126 132,907 132,934 25 Bought outright 129,407 127,005 132,640 130,803 131,021 127,005 128,456 131,126 132,907 132,934 26 Held under repurchase agreements ... 0 0 0 0 0 0 3,687 0 0 0 27 Federal agency securities 9,008 9,002 9,001 9,002 9,002 9,002 9,665 9,001 9,001 9,001 28 Bought outright 9,008 9,002 9,001 9,002 9,002 9,002 9,001 9,001 9,001 9,001 29 Held under repurchase agreements ... 0 0 0 0 0 0 664 0 0 0 30 Acceptances 0 0 0 0 0 0 862 0 0 0 31 Loans 1,058 1,638 458 1,504 1,054 1,638 680 651 750 1,470 32 Float 1,776 2,545 1,713 2,911 2,568 2,545 2,828 2,326 2,474 2,093 33 Other Federal Reserve assets 8,635 8,813 9,956 8,906 9,032 8,813 8,805 8,927 9,058 9,175 34 Gold stock 11,149 11,149 11,149 11,149 11,149 11,149 11,149 11,149 11,149 11,149 35 Special drawing rights certificate account 3,818 3,818 4,018 3,818 3,818 3,818 3,818 3,818 4,018 4,018 36 Treasury currency outstanding 13,767 13,781 13,786 13,776 13,781 13,781 13,781 13,786 13,786 13,786 ABSORBING RESERVE FUNDS 37 Currency in circulation 145,523 147,134 147,051 147,069 146,426 147,148 148,995 148,856 147,747 147,547 38 Treasury cash holdings 477 460 418 462 453 446 436 426 421 418 Deposits, other than reserves, with Federal Reserve Banks 39 Treasury 2,540 4,099 3,275 4,463 2,857 4,099 3,234 2,880 3,844 2,927 40 Foreign 308 586 982 228 275 586 192 239 238 301 41 Other 523 437 663 487 423 437 611 519 671 630 42 Required clearing balances 189 213 221 204 207 213 220 220 218 221 43 Other Federal Reserve liabilities and capital 5,784 4,837 5,359 5,135 5,229 4,837 5,232 4,990 5,214 5,127 44 Reserve accounts2 23,274 19,985 24,752 23,821 25,555 19,985 24,812 22,654 24,790 26,455 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 scheduled to be bought back under matched sale-purchase transactions. NOTE. For amounts of currency and coin held as reserves, see table 1.12. 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 RReesseerrvvee ccllaassssiiffiiccaattiioonn 1980 1981 1982 Dec. Nov. Dec. Jan. Feb. Mar. Apr. May June July P 1 Reserve balances with Reserve Banks1.... 26,664 25,892 26,163 26,721 25,963 24,254 24,565 24,207 24,031 24,319 2 Total vault cash (estimated) 18,149 18,844 19,538 20,284 19,251 18,749 18,577 19,048 19,318 19,553 3 Vault cash at institutions with required reserve balances2 12,602 12,986 13,577 14,199 13,082 12,663 12,709 1122,,997722 1133,,004488 13,251 4 Vault cash equal to required reserves at other institutions 704 2,073 2,178 2,290 2,235 2,313 2,284 2,373 2,488 2,439 5 Surplus vault cash at other institutions3 . 4,843 3,785 3,783 3,795 3,934 3,773 3,584 3,703 3,782 3,863 6 Reserve balances + total vault cash4 44,940 4444,,773366 45,701 47,005 45,214 43,003 43,142 43,255 4433,,334499 43,873 7 Reserve balances + total vault cash used to satisfy reserve requirements4 5 40,097 40,951 41,918 43,210 41,280 39,230 39,558 39,552 39,567 40,010 8 Required reserves (estimated) 40.067 40,604 41,606 42,785 40,981 38,873 39,284 39,192 39,257 39,650 9 Excess reserve balances at Reserve Banks4-6 30 347 312 425 299 357 274 360 310 360 10 Total borrowings at Reserve Banks 1,617 695 642 1,526 1,713 1,611 1,581 1,105 1,205 670 11 Seasonal borrowings at Reserve Banks 116 79 53 75 132 174 167 237 239 223 12 Extended credit at Reserve Banks.... n.a. 178 149 197 232 309 245 177 103 50 Weekly averages of daily figures for week ending 1982 May 26 June 2 June 9 June 16 June 23 June 30 July 7 July 14 July 21P July 28P 13 Reserve balances with Reserve Banks1.... 24,128 24,153 22,832 24,162 24,634 24,460 23,850 22,991 26,260 24,160 14 Total vault cash (estimated) 18,460 19,175 19,559 19,401 18,664 19,690 19,660 20,246 17,933 20,253 15 Vault cash at institutions with required reserve balances2 12,667 12,977 13,131 12,878 12,824 13,380 13,292 13,456 1122,,227722 1133,,669922 16 Vault cash equal to required reserves at other institutions 2,241 2,464 2,587 2,551 2,327 2,492 2,578 2,663 2,132 2,535 17 Surplus vault cash at other institutions3 . 3,552 3,734 3,841 3,972 3,513 3,818 3,790 4,127 3,529 4,026 18 Reserve balances + total vault cash4 42,588 43,328 42,391 43,563 43,298 44,150 4433,,551100 4433,,223377 4444,,119944 4444,,441144 19 Reserve balances + total vault cash used to satisfy reserve requirements4,5 39,036 39,594 38,550 39,591 39,785 40,332 39,720 39,110 40,665 40,388 20 Required reserves (estimated) 38,937 38,922 38,401 39,352 39,565 39,804 39,220 38,926 40,359 40,056 21 Excess reserve balances at Reserve Banks4 6 99 672 149 239 220 528 500 184 306 332 22 Total borrowings at Reserve Banks 1,046 1,048 1,304 929 1,014 1,616 1,070 559 595 548 23 Seasonal borrowings at Reserve Banks 258 260 217 221 253 268 251 231 239 188 24 Extended credit at Reserve Banks .... 162 132 115 104 96 93 87 70 33 24 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. Before 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 clear- 3. Total vault cash at institutions without required reserve balances less vault ing 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 clearwith Board policy, effective Nov. 19, 1975, of permitting transitional relief on a ing balances plus vault cash used to satisfy reserve requirements less required graduated basis over a 24-month period when a nonmember bank merged into an reserves. (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 • August 1982 1.13 FEDERAL FUNDS AND REPURCHASE AGREEMENTS Large Member Banks1 Averages of daily figures, in millions of dollars 1982, week ending Wednesday BByy mmaattuurriittyy aanndd ssoouurrccee June 2 June 9 June 16 June 23 June 30' July 7 July 14 July 21 July 28 One day and continuing contract 1 Commercial banks in United States 56,689 61,308 59,136 54,217 49,784 57,255 59,875 5555,,006699 5522,,888877 2 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 23,314 22,468 23,503 22,938 21,892 21,520 23,108 24,862 23,356 3 Nonbank securities dealers 4,483 3,484 3,870 4,322 4,219 3,874 3,721 3,644 4,102 4 All other 21,118 22,044 22,011 22,178 22,321 21,120 22,446 22,990 22,309 All other maturities 5 Commercial banks in United States 3,977r 4,214r 4,580r 4,562 ' 4,690 4,431 44,,446600 44,,336666 44,,556666 6 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 9,559r 9,286r 9,310r 9,586r 9,594 9,467 9,353 9,249 8,924 7 Nonbank securities dealers 3,873 3,315 3,308 3,563 3,506 3,380 3,181 3,546 3,751 8 All other 10,180 9,414 9,019 9,259 9,094 8,740 8,711 8,817 10,005 MEMO: Federal funds and resale agreement loans in maturities of one day or continuing contract 9 Commercial banks in United States 20,681r 19,879 19,418 18,304 17,864 19,389 20,610 20,415 21,974 10 Nonbank securities dealers 3,917' 4,066r 3,731 4,773' 4,426 4,029 3,831 4,327 4,114 1. Banks with assets of SI 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 Extended credit1 SShhoorrtt--tteerrmm aaddjjuussttmmeenntt ccrreeddiitt aanndd sseeaassoonnaall ccrreeddiitt First 60 days Next 90 days FFFeeedddeeerrraaalll RRReeessseeerrrvvveee of borrowing of borrowing After 150 days BBBaaannnkkk EEffffeeccttiivvee ddaattee ffoorr ccuurrrreenntt rraatteess Rate on Effective Previous Rate on Previous Rate on Previous Rate on Previous 7/31/82 date rate 7/31/82 rate 7/31/82 rate 7/31/82 rate Boston 11.5 7/21/82 12 11.5 12 12.5 13 13.5 14 7/21/82 New York 7/20/82 7/20/82 Philadelphia 7/23/82 7/23/82 Cleveland 7/21/82 7/21/82 Richmond 7/20/82 7/20/82 Atlanta 7/20/82 7/20/82 Chicago 7/20/82 7/20/82 St. Louis 7/21/82 7/21/82 Minneapolis 7/21/82 7/21/82 Kansas City 7/20/82 7/20/82 Dallas 7/20/82 7/20/82 San Francisco 11.5 7/20/82 12 11.5 12 12.5 13 13.5 14 7/20/82 Range of rates in recent years2 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 ll v e F l . s R - . Ba o n f k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1972 4V5 4V4 1976— Jan. 19. 5W-6 5V4 11997799—— SSeepptt.. 19 10W-11 11 1973— Jan. 15 5 5 23. 5 i/i 21 11 11 Feb. 26 5-51/5 51/2 Nov. 22. 5i/4-5i/i 51/4 Oct. 8 11-12 12 Mar. 2 5V5 51/l 26. 51/4 51/4 10 12 12 M A M p aayy r. 23 4 5(^ 5 - 3 5 /4 3 /4 5 5 3 ' / /i 4 1977— Aug. 30. 51/4-53/4 5'/4 1980— Feb. 15 12-13 13 11 53/4-6 6 31. 51/4-53/4 53/4 19 13 13 18 6 6 Sept. 2. 53/4 53/4 MMaayy 29 12-13 13 June 11 6-6l/2 6>/2 Oct. 26. 6 6 30 12 12 15 6'/5 6>/2 June 13 11-12 11 J AA u uu ly gg .. 1 2 4 7 1 -7 '/5 1 71 /2 1978— Jan. 290. . 6 6 - '/ 6 2 ' /5 6 6' '/ / 5 i JJuullyy 2 1 8 6 10 1 - 1 1 1 1 1 1 0 23 71/2 7Vl May 11. 6W-7 7 29 10 10 12. 7 7 Sept. 26 11 11 1974— Apr. 25 71/2-8 8 July 3. 7-71/4 71/4 Nov. 17 12 12 Dec. 9 73/4-8 73/4 Aug. 2 1 1 0. . 7 7 1 3 / / 4 4 7 71 3 / / 4 4 Dec. 8 5 12 1 - 3 1 3 1 1 3 3 16 73/4 73/4 Sept. 22. Oct. 2160. , 8-81/2 8'A 11998811—— MMaayy 5 13-14 14 1975— Jan. 6 7V4-7V4 73/4 81/S 81/2 8 14 14 10 71/4-73/4 71/4 Nov. 1. 8W-9W 9Vz Nov. 2 13-14 13 24 71/4 71/4 3. 9>A 9>/2 6 13 13 Feb. 5 63/4-71/4 63/4 Dec. 4 12 12 7 63/4 63/4 1979— July 20. 10 10 Mar. 10 6V4—63/4 6'/4 Aug. 17. 10-101/2 10W 11998822—— JJuullyy 20 11.5-12 11.5 14 61/4 61/4 20. 10>/2 10V5 23 11.5 11.5 MMaayy 16 6-61/4 6 23 6 6 In effect July 31, 1982 11.5 11.5 1. 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 2. Rates for short-term adjustment credit. For description and earlier data see quarter. A 3 percent surcharge was in effect from Mar. 17, 1980, through May 7, the following publications of the Board of Governors: Banking and Monetary 1980. There was no surcharge until Nov. 17, 1980, when a 2 percent surcharge was Statistics, 1914-1941 and 1941-1970; Annual Statistical Digest, 1970-1979, and 1980. adopted; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and to 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981, and to 2 percent effective Oct. 12. As of Oct. 1, the formula for applying the surcharge was changed from a calendar quarter to a moving 13-week period. The surcharge was eliminated on Nov. 17, 1981. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Nonfinancial Statistics • August 1982 1.15 DEPOSITORY INSTITUTIONS RESERVE REQUIREMENTS1 Percent of deposits Member bank requirements Depository institution requirements before implementation of the after implementation of the TTyyppee ooff ddeeppoossiitt,, aanndd ddeeppoossiitt iinntteerrvvaall Monetary Control Act TTyyppee ooff ddeeppoossiitt,, aanndd Monetary Control Act5 iinn mmiilllliioonnss ooff ddoollllaarrss ddeeppoossiitt iinntteerrvvaall Percent Effective date Percent Effective date Net demand2 Net transaction accounts61 0-2 7 12/30/76 $0-$26 million 3 11/13/80 2-10 9l/2 12/30/76 1122 1111//1133//8800 10-100 113/4 12/30/76 100-400 123/4 12/30/76 Nonpersonal time depositss Over 400 161/4 12/30/76 By original maturity Less than 3>/i years 3 4/29/82 TTiimmee aanndd ssaavviinnggss22,,33 33''//55 yyeeaarrss oorr mmoorree 0 4/29/82 Savings 3 3/16/67 Eurocurrency liabilities TTiimmee44 AAllll ttyyppeess 3 11/13/80 0-5, by maturity 30-179 days 3 3/16/67 180 days to 4 years 21/2 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 2Vz 1/8/76 4 years or more 1 10/30/75 1. For changes in reserve requirements beginning 1963, see Board's Annual was reduced to zero beginning July 24, 1980. Managed liabilities are defined as Statistical Digest, 1971-1975 and for prior changes, see Board's Annual Report for large time deposits, Eurodollar borrowings, repurchase agreements against U.S. 1976, table 13. Under provisions of the Monetary Control Act, depository insti- government and federal agency securities, federal funds borrowings from nontutions include commercial banks, mutual savings banks, savings and loan asso- member institutions, and certain other obligations. In general, the base for the ciations, credit unions, agencies and branches of foreign banks, and Edge Act marginal reserve requirement was originally the greater of (a) $100 million or (b) corporations. the average amount of the managed liabilities held by a member bank, Edge 2. (a) Requirement schedules are graduated, and each deposit interval applies corporation, or family of U.S. branches and agencies of a foreign bank for the two to that part of the deposits of each bank. Demand deposits subject to reserve statement weeks ending Sept. 26, 1979. For the computation period beginning Mar. requirements were gross demand deposits minus cash items in process of collection 20, 1980, the base was lowered by (a) 7 percent or (b) the decrease in an institution's and demand balances due from domestic banks. U.S. office gross loans to foreigners and gross balances due from foreign offices (b) The Federal Reserve Act as amended through 1978 specified different ranges of other institutions between the base period (Sept. 13-26, 1979) and the week of requirements for reserve city banks and for other banks. Reserve cities were ending Mar. 12,1980, whichever was greater. For the computation period beginning designated under a criterion adopted effective Nov. 9,1972, by which a bank having May 29,1980, the base was increased by 7V5 percent above the base used to calculate net demand deposits of more than $400 million was considered to have the character the marginal reserve in the statement week of May 14-21, 1980. In addition, of business of a reserve city bank. The presence of the head office of such a bank beginning Mar. 19, 1980, the base was reduced to the extent that foreign loans and constituted designation of that place as a reserve city. Cities in which there were balances declined. Federal Reserve Banks or branches were also reserve cities. Any banks having net 5. For existing nonmember banks and thrift institutions at the time of impledemand deposits of $400 million or less were considered to have the character of mentation of the Monetary Control Act, the phase-in period ends Sept. 3, 1987. business of banks outside of reserve cities and were permitted to maintain reserves For existing member banks the phase-in period is about three years, depending on at ratios set for banks not in reserve cities. whether their new reserve requirements are greater or less than the old require- (c) Effective Aug. 24, 1978, the Regulation M reserve requirements on net ments. For existing agencies and branches of foreign banks, the phase-in ends Aug. balances due from domestic banks to their foreign branches and on deposits that 12, 1982. New institutions have a two-year phase-in beginning with the date that foreign branches lend to U.S. residents were reduced to zero from 4 percent and they open for business, except for those institutions having total reservable liabilities 1 percent respectively. The Regulation D reserve requirement on borrowings from of $50 million or more. unrelated banks abroad was also reduced to zero from 4 percent. 6. Transaction accounts include all deposits on which the account holder is (d) Effective with the reserve computation period beginning Nov. 16, 1978, permitted to make withdrawals by negotiable or transferable instruments, payment domestic deposits of Edge corporations were subject to the same reserve require- orders of withdrawal, and telephone and preauthorized transfers (in excess of three ments as deposits of member banks. per month) for the purpose of making payments to third persons or others. 3. (a) Negotiable order of withdrawal (NOW) accounts and time deposits such 7. The Monetary Control Act of 1980 requires that the amount of transaction as Christmas and vacation club accounts were subject to the same requirements as accounts against which the 3 percent reserve requirement will apply be modified savings deposits. annually to 80 percent of the percentage increase in transaction accounts held by (b) The average reserve requirement on savings and other time deposits before all depository institutions on the previous June 30. At the beginning of 1982 the implementation of the Monetary Control Act had to be at least 3 percent, the amount was accordingly increased from $25 million to $26 million. minimum specified by law. 8. In general, nonpersonal time deposits are time deposits, including savings 4. (a) Effective Nov. 2, 1978, a supplementary reserve requirement of 2 percent deposits, that are not transaction accounts and in which the beneficial interest is was imposed on large time deposits of $100,000 or more, obligations of affiliates, held by a depositor that is not a natural person. Also included are certain transand ineligible acceptances. This supplementary requirement was eliminated with ferable time deposits held by natural persons, and certain obligations issued to the maintenance period beginning July 24, 1980. depository institution offices located outside the United States. For details, see (b) Effective with the reserve maintenance period beginning Oct. 25, 1979, a section 204.2 of Regulation D. marginal reserve requirement of 8 percent was added to managed liabilities in excess of a base amount. This marginal requirement was increased to 10 percent NOTE. Required reserves must be held in the form of deposits with Federal beginning Apr. 3, 1980, was decreased to 5 percent beginning June 12, 1980, and 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. NOTES TO TABLE 1.16 NOTE. Before Mar. 31, 1980, the maximum rates that could be paid by federally 18. Effective Dec. 1, 1981, depository institutions were authorized to offer time insured commercial banks, mutual savings banks, and savings and loan associations deposits not subject to interest rate ceilings when the funds are deposited to the were established by the Board of Governors of the Federal Reserve System, the credit of, or in which the entire beneficial interest is held by, an individual pursuant Board of Directors of the Federal Deposit Insurance Corporation, and the Federal to an IRA agreement or Keogh (H.R. 10) plan. Such time deposits must have a Home Loan Bank Board under the provisions of 12 CFR 217, 329, and 526 reminimum maturity of 18 months, and additions may be made to the time deposit spectively. Title II of the Depository Institutions Deregulation and Monetary Conat any time before its maturity without extending the maturity of all or a portion trol Act of 1980 (P.L. 96-221) transferred the authority of the agencies to establish of the balance of the account. maximum rates of interest payable on deposits to the Depository Institutions De- 19. Effective May 1, 1982, depository institutions were authorized to offer ne- regulation Committee. The maximum rates on time deposits in denominations of gotiable or nonnegotiable time deposits with a minimum original maturity of 31/? $100,000 or more with maturities of 30-89 days were suspended in June 1970; such years or more that are not subject to interest rate ceilings. Such time deposits have deposits maturing in 90 days or more were suspended in May 1973. For information no minimum denomination, but must be made available in a $500 denomination. regarding previous interest rate ceilings on all types of accounts, see earlier issues Additional deposits may be made to the account during the first year without of the FEDERAL RESERVE BULLETIN, the Federal Home Loan Bank Board Journal, extending its maturity. and the Annual Report of the Federal Deposit Insurance Corporation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments 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 (thrift institutions) Type and maturity of deposit In effect July 3t, 1982 Previous maximum In effect July 31, 1982 Previous maximum Effective Effective Effective Percent date date date 5V5 1 Savings 51/4 7/1/79 7/1/73 7/1/79 5V4 2 Negotiable order of withdrawal accounts 2 5!/4 12/31/80 1/1/74 5'/4 12/31/80 5 Time accounts 3 Fixed ceiling rates by maturity 4 3 14-89 days ' 5'/4 8/1/79 5 7/1/73 (6) (6) 4 90 days to 1 vear 53/4 1/1/80 5 •/> 7/1/73 6 1/1/80 53/4 5 6 7 2 2 1 x h t t o o to 2 2 > 4 y / e 2 y a e r y s a e r a s ' r s 7 7 6'A 7 7 / / 1 1 / / 7 7 3 3 5 5 5 3 3 l/ / / 4 4 l 1 1 1 / / / 2 2 2 1 1 1 / / / 7 7 7 0 0 0 6 m 1/2 0 (') ) 6 6 5 3 /4 9 8 6 4 t t o o 8 6 y y e e a a r r s s 8 8 71'A V i 12 1 / 1 2 / 3 1 / / 7 7 4 3 7!/4 11/1/73 7 7 l 3 /2 A 12 1 / 1 2 / 3 1 / / 7 7 4 3 . 7VS 1 1 0 1 8 Is s y u e e a d r s to o r g m ov o e re rn 8 m ental units (all maturities) 10 73/4 6 6 / / 1 1 / / 7 7 8 8 73/4 '12/23/74 6 6 / / 1 1 / / 7 7 8 8 \v4 12 Individual retirement accounts and Keogh (H.R. 10) plans (3 years or more) 1011 6/1/78 73/4 6/1/78 73/4 7/6/77 Special variable ceiling rates by maturity 13 91-day time deposits13 fl3l 14 6-month money market time deposits 14 15 12-month all savers certificates 15 16 years to less than 3V5 years 16 Accounts with no ceiling rates 17 Individual retirement accounts and Keogh (H.R. 10) plans (18 months or more) 18 18 3l/2 years or more time deposits 19 1. July 1, 1973, for mutual savings banks; July 6, 1973, for savings and loans. beginning Nov. 1, 1981, depository institutions may pay rates of interest on these 2. For authorized states only. Federally insured commercial banks, savings and deposits indexed to the higher of (1) the rate for 26-week Treasury bills established loan associations, cooperative banks, and mutual savings banks in Massachusetts immediately before the date of deposit (bill rate) or (2) the average of the four and New Hampshire were first permitted to offer negotiable order of withdrawal rates for 26-week Treasury bills established for the 4 weeks immediately before (NOW) accounts on Jan. 1, 1974. Authorization to issue NOW accounts was ex- the date of deposit (4-week average bill rate). Ceilings are determined as follows: tended to similar institutions throughout New England on Feb. 27, 1976, in New York State on Nov. 10, 1978, and in New Jersey on Dec. 28, 1979. Authorization Bill rate or 4-week Commercial bank ceiling to issue NOW accounts was extended to similar institutions nationwide effective average bill rate Dec. 31, 1980. 7.50 percent or below 7.75 percent 3. For exceptions with respect to certain foreign time deposits see the BULLETIN Above 7.50 percent •/4 of 1 percentage point plus the higher of for October 1962 (p. 1279), August 1965 (p. 1084), and February 1968 (p. 167). the bill rate or 4-week average bill rate 4. Effective Nov. 10, 1980, the minimum notice period for public unit accounts at savings and loan associations was decreased to 14 days and the minimum maturity Thrift ceiling period for time deposits at savings and loan associations in excess of $100,000 was 7.25 percent or below 7.75 percent decreased to 14 days. Effective Oct. 30, 1980, the minimum maturity or notice Above 7.25 percent, but below x/i of 1 percentage point plus the higher of period for time deposits was decreased from 30 to 14 days at mutual savings banks. 8.50 percent the bill rate or 4-week average bill rate 5. Effective Oct. 30, 1980, the minimum maturity or notice period for time 8.50 percent or above, but below 9 percent deposits was decreased from 30 to 14 days at commercial banks. 8.75 percent 6. No separate account category. 8.75 percent or above '/4 of 1 percentage point plus the higher of 7. No minimum denomination. Until July 1, 1979, a minimum of $1,000 was the bill rate or 4-week average bill rate required for savings and loan associations, except in areas where mutual savings banks permitted lower minimum denominations. This restriction was removed for The maximum allowable rates in July for commercial banks and thrifts based on deposits maturing in less than 1 year, effective Nov. 1, 1973. the bill rate were as follows: July 7, 13.226; July 13, 12.217; July 20, 11.691; July 8. No minimum denomination. Until July 1, 1979, the minimum denomination 27, 11.628. The maximum allowable rates in July for commercial banks and thrifts was $1,000 except for deposits representing funds contributed to an individual based on the 4-week average bill rate were as follows: July 7, 13.232; July 13, retirement account (IRA) or a Keogh (H.R. 10) plan established pursuant to the 13.098; July 20, 12.700; July 27, 12.190. Internal Revenue Code. The $1,000 minimum requirement was removed for such 15. Effective Oct. 1, 1981, depository institutions are authorized to issue all accounts in December 1975 and November 1976 respectively. savers certificates (ASCs) with a 1-year maturity and an annual investment yield 9. Between July 1, 1973, and Oct. 31, 1973, certificates maturing in 4 years or equal to 70 percent of the average investment yield for 52-week U.S. Treasury bills more with minimum denominations of $1,000 had no ceiling; however, the amount as determined by the auction of 52-week Treasury bills held immediately before of such certificates that an institution could issue was limited to 5 percent of its the calendar week in which the certificate is issued. A maximum less than 9.50 total time and savings deposits. Sales in excess of that amount, as well as certificates percent, commercial banks may pay lifetime exclusion of $1,000 ($2,000 on a joint of less than $1,000, were limited to the 6'/5 percent ceiling on time deposits maturing return) from gross income is generally authorized for interest income from ASCs. in 2V5 years or more. Effective Nov. 1,1973, ceilings were reimposed on certificates The annual investment yields for ASCs issued in July (in percent) were as follows: maturing in 4 years or more with minimum denomination of $1,000. There is no July 11, 9.99. limitation on the amount of these certificates that banks can issue. 16. Effective Aug. 1, 1981, commercial banks may pay interest on any variable 10. Accounts subject to fixed-rate ceilings. See footnote 8 for minimum denom- ceiling nonnegotiable time deposit with an original maturity of 2Vi years to less ination requirements. than 4 years at a rate not to exceed V4 of 1 percent below the average 2V5-year 11. Effective Jan. 1, 1980, commercial banks are permitted to pay the same rate yield for U.S. Treasury securities as determined and announced by the Treasury as thrifts on IRA and Keogh accounts and accounts of governmental units when Department immediately before the date of deposit. Effective May 1, 1982, the such deposits are placed in the new 2'/5-year or more variable-ceiling certificates maximum maturity for this category of deposits was reduced to less than 3Vi years. or in 26-week money market certificates regardless of the level of the Treasury bill Thrift institutions may pay interest on these certificates at a rate not to exceed the rate. average 2 VS -year yield for Treasury securities as determined and announced by 12. Must have a maturity of exactly 26 weeks and a minimum denomination of the Treasury Department immediately before the date of deposit. If the announced $10,000, and must be nonnegotiable. average 2'/5-ycar yield for Treasury securities is 9.25 percent and thrift institutions 13. Effective May 1, 1982, depository institutions were authorized to offer time 9.50 percent for these deposits. These deposits have no required minimum denomdeposits that have a minimum denomination of $7,500 and a maturity of 91 days. ination, and interest may be compounded on them. The ceiling rates of interest at The ceiling rate of interest on these deposits is indexed to the discount rate (auction which they may be offered vary biweekly. The maximum allowable rates in July average) on most recently issued 91-day Treasury bills for thrift institutions and (in percent) for commercial banks were as follows: July 3, 14.55; July 20, 13.75; the discount rate minus 25 basis points for commercial banks. The rate differential and for thrifts: July 3, 14.80; July 20, 14.00. ends 1 year from the effective date of these instruments and is suspended at any 17. Between Jan. 1, 1980, and Aug. 1, 1981, commercial banks, and thrifts were time the Treasury bill discount rate is 9% or below for four consecutive auctions. authorized to offer variable ceiling nonnegotiable time deposits with no required The maximum allowable rates in July (in percent) for commercial banks were as minimum denomination and with maturities of 2V5 years or more. Effective Jan. follows: July 7, 12.556; July 13, 11.547; July 20, 10.890; July 27, 10.309; and for 1, 1980, the maximum rate for commercial banks was 3/4 percentage point below thrift institutions: July 7, 12.806; July 13, 11.797; July 20, 11.140; July 27, 10.559. the average yield on 2'/2-year U.S. Treasury securities; the ceiling rate for thrifts 14. Commercial banks and thrift institutions were authorized to offer money was 1/4 percentage point higher than that for commercial banks. Effective Mar. 1, market time deposits effective June 1, 1978. These deposits have a minimum de- 1980, a temporary ceiling of ll3/4 percent was placed on these accounts at comnomination requirement of $10,000 and a maturity of 26 weeks. The ceiling rate mercial banks and 12 percent on these accounts at savings and loans. Effective of interest on these deposits is indexed to the discount rate (auction average) on June 2, 1980, the ceiling rates for these deposits at commercial banks and savings most recently issued 26-week U.S. Treasury bills. Interest on these certificates may and loans was increased Vi percentage point. The temporary ceiling was retained, not be compounded. Effective for all 6-month money market certificates issued and a minimum ceiling of 9.25 percent for commercial banks and 9.50 percent for thrifts was established. NOTES are continued on opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Financial Statistics • August 1982 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS Millions of dollars 1981 1982 TTyyppee ooff ttrraannssaaccttiioonn 11997799 11998800 11998811 Dec. Jan. Feb. Mar. Apr. May June U.S. GOVERNMENT SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 15,998 7,668 13,899 2,170 0 1.017 474 4,149 595 1,559 2 Gross sales 6,855 7,331 6,746 0 2,756 868 995 0 519 0 3 Exchange 0 0 0 0 0 0 0 0 0 200 4 Redemptions 2,900 3,389 1,816 0 600 0 600 0 400 0 Others within 1 year1 5 Gross purchases 3,203 912 317 80 0 20 0 132 0 0 6 Gross sales 0 0 23 0 0 0 0 0 0 00 7 Maturity shift 17,339 12,427 13,794 887 542 2,633 900 333 1,498 998888 8 Exchange -11,308 -18,251 -12,869 -754 0 -940 -1,479 -525 -2,541 -1,249 9 Redemptions 2,600 0 0 0 0 0 0 0 0 0 1 to 5 years 10 Gross purchases 2.148 2,138 1,702 526 0 50 0 570 0 0 11 Gross sales 0 0 0 0 0 0 0 0 0 0 12 Maturity shift -12,693 -8,909 -10,299 -887 -542 -974 -900 -333 -1,000 -988 13 Exchange 7,508 13,412 10,117 754 0 765 1,479 525 1,600 1,049 5 to 10 years 14 Gross purchases 523 703 393 165 0 0 0 81 0 0 15 Gross sales 0 0 0 0 0 0 0 0 0 0 16 Maturity shift -4,646 -3,092 -3,495 0 0 -1,659 0 0 -498 0 17 Exchange 2.181 2,970 1,500 0 0 100 0 0 941 0 Over 10 years 18 Gross purchases 454 811 379 108 0 0 0 52 0 0 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 0 21 Exchange 1,619 1,869 1,253 0 0 75 0 0 0 0 All maturities1 22 Gross purchases 22,325 12,232 16,690 3.049 0 1,087 474 4,984 595 1,559 23 Gross sales 6,855 7,331 6.769 0 2,756 868 995 0 519 0 24 Redemptions 5.500 3,389 1,816 0 600 0 600 0 400 0 Matched transactions 25 Gross sales 627,350 674,000 589,312 54,098 51,132 28,033 38,946 44,748 36,047 41,509 26 Gross purchases 624,192 675,496 589.647 54,044 51,717 28,258 38.650 44,759 36,790 37,548 Repurchase agreements 27 Gross purchases 107,051 113,902 79,920 14,180 12,962 18.656 8,595 18,396 10,155 5,332 28 Gross sales 106,968 113,040 78.733 12,760 12,914 21,919 6,998 14,724 15,424 5,332 29 Net change in U.S. government securities 6.896 3,869 9,626 4,415 -2,724 -2,820 179 8,667 -4,850 -2,402 FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 853 668 494 0 0 0 0 0 0 0 31 Gross sales 399 0 0 0 0 0 0 0 00 0 32 Redemptions 134 145 108 4 68 32 13 5 11 6 Repurchase agreements 33 Gross purchases 37,321 28,895 13.320 1.647 800 872 554 2,033 1,305 831 34 Gross sales 36,960 28,863 13,576 1.697 935 1,006 471 1,119 2,301 831 35 Net change in federal agency obligations 681 555 130 -54 -203 -166 70 909 -997 -6 BANKERS ACCEPTANCES 36 Repurchase agreements, net 116 73 -582 -549 402 -597 488 280 -768 0 37 Total net change in System Open Market Account 7,693 4,497 9,175 3,812 -2,524 -3,583 737 9,856 -6,615 -2,408 1. Both gross purchases and redemptions include special certificates created NOTE. Sales, redemptions, and negative figures reduce holdings of the System when the Treasury borrows directly from the Federal Reserve, as follows (millions Open Market Account; all other figures increase such holdings. Details may not of dollars): March 1979, 2,600. add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Reserve Banks All 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements Millions of dollars Wednesday End of month Account 1982 1982 June 30 July 7 July 14 July 21 July 28 May June July Consolidated condition statement ASSETS 1 Gold certificate account 11,149 11,149 11,149 11,149 11,149 11,149 11,149 11,149 2 Special drawing rights certificate account 3,818 3,818 3,818 4,018 4,018 3,818 3,818 4,018 3 Coin 415 408 412 421 425 386 415 432 Loans 4 To depository institutions 1,638 680 651 750 1,470 1,058 1,638 458 5 Other 0 0 0 0 0 0 0 0 Acceptances 6 Held under repurchase agreements 0 862 0 0 0 0 0 0 Federal agency obligations 7 Bought outright 9,002 9,001 9,001 9,001 9,001 9,008 9,002 9,001 8 Held under repurchase agreements 0 664 0 0 0 0 0 0 U.S. government securities Bought outright 9 Bills 47,921 49,172 50,844 52,625 52,652 50,123 47,921 52,358 10 Notes 60,943 61,143 62,018 62,018 62,018 61,143 60,943 62,018 11 Bonds 18,141 18,141 18,264 18,264 18,264 18,141 18,141 18,264 12 Total1 127,005 128,456 131,126 132,907 132,934 129,407 127,005 132,640 13 Held under repurchase agreements 0 3,687 0 0 0 0 0 0 14 Total U.S. government securities 127,005 132,143 131,126 132,907 132,934 129,407 127,005 132,640 15 Total loans and securities 137,645 143,350 140,778 142,658 143,405 139,473 137,645 142,099 16 Cash items in process of collection 9,603 10,913 8,434 8,622 7,743 8,033 9,603 8,220 17 Bank premises 521 521 524 524 529 518 521 528 Other assets 18 Denominated in foreign currencies2 4,779 4,593 4,593 4,597 4,604 4,880 4,779 5,405 19 All other3 3,513 3,691 3,810 3,937 4,042 3,237 3,513 4,023 20 Total assets 171,443 178,443 173,518 175,926 175,915 171,494 171,443 175,874 LIABILITIES 21 Federal Reserve notes 134,228 136,057 135,908 134,803 134,604 132,619 134,228 134,115 Deposits 22 Depository institutions 20,198 25,032 22,874 25,012 26,676 23,463 20,198 24,974 23 U.S. Treasury—General account 4,099 3,234 2,880 3,844 2,927 2,540 4,099 3,275 24 Foreign—Official accounts 586 192 239 238 301 308 586 982 25 Other 437 611 519 667 630 523 437 662 26 Total deposits 25,320 29,069 26,512 29,761 30,534 26,834 25,320 29,893 27 Deferred availability cash items 7,058 8,085 6,108 6,148 5,650 6,257 7,058 6,507 28 Other liabilities and accrued dividends4 2,079 2,295 2,034 2,236 2,149 2,643 2,079 2,197 29 Total liabilities 168,685 175,506 170,562 172,948 172,937 168,353 168,685 172,712 CAPITAL ACCOUNTS 30 Capital paid in 1,327 1,329 1,334 1,334 1,334 1,316 1,327 1,336 31 Surplus 1,278 1,278 1,278 1,278 1,278 1,278 1,278 1,278 32 Other capital accounts 153 330 344 366 366 547 153 548 33 Total liabilities and capital accounts 171,443 178,443 173,518 175,926 175,915 171,494 171,443 175,874 34 MEMO: Marketable U.S. government securities held in custody for foreign and international account 96,122 96,196 96,725 96,479 95,851 91,025 96,122 95,684 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to bank) .... 154,036 154,077 154,346 154,753 155,083 152,932 154,036 155,017 36 LESS: Held by bank5 19,976 18,120 18,438 19,950 20,479 20,313 19,808 20,902 37 Federal Reserve notes, net 134,060 135,957 135,908 134,803 134,604 132,619 134,228 134,115 Collateral for Federal Reserve notes 38 Gold certificate account 11,149 11,149 11,149 11,149 11,149 11,149 11,149 11,149 39 Special drawing rights certificate account 3,818 3,818 3,818 4,018 4,018 3,818 3,818 4,018 40 Other eligible assets 39 108 0 0 0 0 39 0 41 U.S. government and agency securities 119,054 120,882 120,941 119,636 119,437 117,652 119,222 118,948 42 Total collateral 134,060 135,957 135,908 134,803 134,604 132,619 134,228 134,115 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 NonfinancialS tatistics • August 1982 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holdings Millions of dollars Wednesday End of month TTTyyypppeee aaannnddd mmmaaatttuuurrriiitttyyy gggrrrooouuupppiiinnngggsss 1982 1982 June 30 July 7 July 14 July 21 July 28 May 28 June 30 July 30 1 Loans—Total 1,638 680 651 750 1,470 1,058 1,638 458 2 Within 15 days 1,585 562 504 715 1,432 1,010 1,585 383 3 16 days to 90 days 53 118 147 35 38 48 53 75 4 91 days to 1 year 0 0 0 0 0 0 0 0 5 Acceptances—Total 0 862 0 0 0 0 0 0 6 Within 15 days 0 862 0 0 0 0 0 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 127,005 132,143 131,126 132,907 132,934 129,407 127,005 132,640 10 Within 15 days' 2,316 6,147 4,056 3,910 6,006 3,090 2,316 4,374 11 16 days to 90 days 25,432 27,274 28,520 28,094 26,242 28,912 25,432 27,562 12 91 days to 1 year 34,454 33,719 32,620 34,973 34,756 32,138 34,454 34,775 13 Over 1 year to 5 years 37,326 37,526 38,217 38,217 38,217 37,790 37,326 38,216 14 Over 5 years to 10 years 10,717 10,717 10,830 10,830 10,830 10,717 10,717 10,830 15 Over 10 years 16,760 16,760 16,883 16,883 16,883 16,760 16,760 16,883 16 Federal agency obligations—Total 9,002 9,665 9,001 9,001 9,001 9,008 9,002 9,001 17 Within 15 days' 184 729 38 148 174 105 184 174 18 16 days to 90 days 443 557 612 485 524 510 443 524 19 91 days to 1 year 1,629 1,633 1,617 1,668 1,593 1,545 1,629 1,593 20 Over 1 year to 5 years 5,316 5,316 5,315 5,299 5,305 5,387 5,316 5,305 21 Over 5 years to 10 years 927 927 916 898 902 927 927 902 22 Over 10 years 503 503 503 503 503 534 503 503 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. 1982 BBaannkk ggrroouupp,, oorr ttyyppee ooff ccuussttoommeerr 1979 1980 1981 Feb. Mar. Apr. May June Debits to demand deposits' (seasonally adjusted) 111 AAAllllll cccooommmmmmeeerrrccciiiaaalll bbbaaannnkkksss 49,775.0 63.013.4 80,059.7 85,274.3 83,617.4 83,404.1 87,488.1 88,259.6 222 MMMaaajjjooorrr NNNeeewww YYYooorrrkkk CCCiiitttyyy bbbaaannnkkksss 18,512.7 25.192.5 33,642.7 35,983.8 34,218.3 35.238.0 37,379.7 37,016.6 333 OOOttthhheeerrr bbbaaannnkkksss 31,262.3 37,820.9 46,417.0 49,290.5 49,399.1 48.166.1 50,108.4 51,243.0 Debits to savings deposits2 (not seasonally adjusted) 444 AAATTTSSS///NNNOOOWWW333 83.3 158.4 741.3 836.7 935.4 1,072.5 929.0 1,069.9 555 BBBuuusssiiinnneeessssss444 77.3 93.4 112.1 95.2 115.4 103.0 90.2 107.6 666 OOOttthhheeerrrsss555 515.2 605.3 582.2 534.8 586.9 609.6 570.4 593.4 777 AAAllllll aaaccccccooouuunnntttsss 675.8 857.2 1,435.6 1,466.7 1,637.6 1.785.1 1,589.6 1,770.9 Demand deposit turnover' (seasonally adjusted) 8 All commercial banks 163.5 201.6 281.4 307.1 304.7 301.3 315.8 322.7 9 Major New York City banks 646.2 813.7 1,100.5 1,252.1 1,211.7 1,255.3 1,292.8 1,326.4 10 Other banks 113.3 134.3 182.8 198.0 200.7 193.7 202.0 208.6 Savings deposit turnover2 (not seasonally adjusted) 11 ATS/NOW3 7.8 9.7 14.2 13.0 14.2 15.4 14.0 15.8 12 Business4 7.2 9.3 12.3 12.1 14.6 13.2 11.4 13.5 13 Others5 2.7 3.4 3.7 3.6 3.9 4.0 3.8 3.9 14 All accounts 3.1 4.2 6.6 6.6 7.3 7.8 7.1 7.8 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 Board of Governors of the Federal Reserve System, Washington, D.C. 20551. authorized for automatic transfer to demand deposits (ATS). ATS data availability Debits and turnover data for savings deposits are not available before July 1977. starts with December 1978. 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 1982 1978 1979 1980 1981 IItteemm Dec. Dec. Dec. Dec. Feb. Mar. Apr. May June Seasonally adjusted MEASURES1 1 Ml 363.2 389.0 414.5 440.9 447.3 448.3 452.4' 451.5 451.3 2 M2 1,403.9 1,518.9 1,656.2 1,822.7 1,848.0 1,865.2 1,880.7 1,897.5 1,907.6 3 M3 1,629.0 1,779.4 1,963.1 2,188.1 2,215.0 2,235.8 2,258.1 2,278.7' 2,295.2 4 L2 1,938.9 2,153.9 2,370.4 2,642.8 2,689.9r 2,716.8 n.a. n.a. n.a. SELECTED COMPONENTS 5 Currency 97.4 106.1 116.2 123.1 124.6 125.1 126.3 127.4 128.4 6 Traveler's checks3 3.5 3.7 4.2 4.3 4.3 4.4 4.4 4.5 4.5 7 Demand deposits 253.9 262.2 267.2 236.4 234.5 233.0 233.0 232.6 231.0 8 Other checkable deposits7 8.4 16.9 26.9 77.0 83.8 85.7 88.6 87.0 87.5 9 Savings deposits4 479.9 421.7 398.9 343.6 348.6 350.7 350.5 350.9 349.9 10 Small-denomination time deposits5 533.9 652.6 751.7 854.7 859.4 869.9r 881.6 894.1 901.0 11 Large-denomination time deposits6 194.6 221.8 257.9 300.3 308.0 312.6' 317.1 321.4' 328.2 Not seasonally adjusted MEASURES1 12 Ml 372.5 398.8 424.6 451.2 437.2 440.0 455.5 445.1 450.4 13 M2 1,408.5 1,524.7 1,662.5 1,829.4 1,842.9 1,861.9 1,887.9 1,888.9' 1,906.1 14 M3 1,637.5 1,789.2 1,973.9 2,199.9 2,216.0 2,237.4 2,266.1 2,268.7' 2,289.3 15 L2 1,946.6 2,162.8 2,380.2 2,653.8 2,697.9' 2,722.8 n.a. n.a. n.a. SELECTED COMPONENTS 16 Currency 99.4 108.2 118.3 125.4 123.0 123.8 125.7 127.2 128.3 17 Traveler's checks3 3.3 3.5 3.9 4.1 4.1 4.2 4.2 4.3 4.7 18 Demand deposits 261.5 270.1 275.1 243.3 228.5 228.2 236.1 228.3' 230.3 19 Other checkable deposits7 8.4 17.0 27.2 78.4 81.4 83.8' 89.5 85.4' 87.1 20 Overnight RPs and Eurodollars8 24.1 26.3 35.0 38.1 42.9 43.0 40.4 42.8 42.8 21 Savings deposits4 478.0 420.5 398.0 343.0 344.5 346.1 348.1 347.4 347.9 22 Small-denomination time deposits5 531.1 649.7 748.9 851.7 868.5 879.6 888.1' 895.3 902.3 Money market mutual funds 23 General purpose and broker/dealer 7.1 34.4 61.9 151.2 156.0 159.2 161.9 164.3 168.6 24 Institution only 3.1 9.3 13.9 33.7 30.5 31.5 31.5 32.8 33.7 25 Large-denomination time deposits6 198.6 226.0 262.3 305.4 314.2 317.4 317.9 320.1' 323.8 1. Composition of the money stock measures is as follows: 5. Small-denomination time deposits—including retail RPs—are those issued in Ml: Averages of daily figures for (1) currency outside the Treasury, Federal amounts of less than $100,000. Reserve Banks, and the vaults of commercial banks; (2) traveler's checks of non- 6. Large-denomination time deposits are those issued in amounts of $100,000 bank issuers; (3) demand deposits at all commercial banks other than those due or more and are net of the holdings of domestic banks, thrift institutions, the U.S. to domestic banks, the U.S. government, and foreign banks and official institutions government, money market mutual funds, and foreign banks and official instituless cash items in the process of collection and Federal Reserve float; and (4) tions. negotiable order of withdrawal (NOW) and automatic transfer service (ATS) ac- 7. Includes ATS and NOW balances at all institutions, credit union share draft counts at banks and thrift institutions, credit union share draft (CUSD) accounts, balances, and demand deposits at mutual savings banks. and demand deposits at mutual savings banks. 8. Overnight (and continuing contract) RPs are those issued by commercial M2: Ml plus savings and small-denomination time deposits at all depository banks to other than depository institutions and money market mutual funds (general institutions, overnight repurchase agreements at commercial banks, overnight Eu- purpose and broker/dealer), and overnight Eurodollars are those issued by Carodollars held by U.S. residents other than banks at Caribbean branches of member ribbean branches of member banks to U.S. residents other than depository instibanks, and balances of money market mutual funds (general purpose and broker/ tutions and money market mutual funds (general purpose and broker/dealer). dealer). M3: M2 plus large-denomination time deposits at all depository institutions, term NOTE. Latest monthly and weekly figures are available from the Board's H.6 RPs at commercial banks and savings and loan associations, and balances of in- (508) release. Back data are available from the Banking Section, Division of Restitution-only money market mutual funds. search and Statistics, Board of Governors of the Federal Reserve System, Wash- 2. L: M3 plus other liquid assets such as term Eurodollars held by U.S. residents ington, D.C. 20551. 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 traveler's checks of nonbank issuers. 4. Savings deposits exclude NOW and ATS accounts at commercial banks and thrift institutions and CUSDs at credit unions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic NonfinancialS tatistics • August 1982 1.22 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1981 1982 1978 1979 1980 IItteemm Dec. Dec. Dec. Nov. Dec. Jan. Feb. Mar. Apr. May June' July Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 35.08 36.37 39.01 40.15 40.53 41.28 40.93 41.09 41.18 41.33 41.44 41.45 2 Nonborrowed reserves 34.22 34.90 37.32 39.49 39.89 39.76 39.14 39.53 39.61 40.21 40.24 40.75 3 Required reserves 34.85 36.04 38.49 39.81 40.21 40.86 40.62 40.73 40.91 40.97 41.13 41.12 4 Monetary base4 134.7 145.0 158.0 164.3 165.8 167.4 167.9 168.5 169.8 171.0 172.1 172.6 Not seasonally adjusted 5 Total reserves3 35.66 36.97 39.70 40.33 41.26 42.70 40.74 40.53 41.09 40.98 40.88 41.31 6 Nonborrowed reserves 34.80 35.50 38.01 39.67 40.63 41.18 38.95 38.98 39.52 39.87 39.68 40.61 7 Required reserves 35.43 36.65 39.19 39.99 40.94 42.28 40.44 40.18 40.81 40.63 40.57 40.98 8 Monetary base4 137.4 147.9 161.0 165.6 168.9 168.5 166.1 166.5 168.9 170.4 171.5 173.4 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS5 9 Total reserves3 41.68 43.91 40.66 40.95 41.92 43.20 41.29 39.23 39.56 39.55 39.57 39.99 10 Nonborrowed reserves 40.81 42.43 38.97 40.29 41.29 41.69 39.50 37.68 37.99 38.43 38.36 39.29 11 Required reserves 41.45 43.58 40.15 40.60 41.60 42.78 40.98 38.88 39.28 39.19 39.26 39.65 12 Monetary base4 144.6 156.2 162.4 166.3 169.7 169.1 166.8 165.4 167.6 169.2 170.4 172.4 1. Reserve measures from November 1980 to date reflect a one-time increase— 5. Reserves of depository institutions series reflect actual reserve requirement estimated at $550 million to $600 million—in required reserves associated with the percentages with no adjustments to eliminate the effect of changes in Regulation reduction of week-end avoidance activities of a few large banks. D, including changes associated with the implementation of the Monetary Control 2. Reserve aggregates include required reserves of member banks and Edge Act Act. Includes required reserves of member banks and Edge Act corporations and, corporations ana other depository institutions. Discontinuities associated with the beginning Nov. 13, 1980, other depository institutions. Under the transitional phaseimplementation of the Monetary Control Act, the inclusion of Edge Act corporation in program of the Monetary Control Act of 1980, the net changes in required reserves, and other changes in Regulation D have been removed. reserves of depository institutions have been as follows-, effective Nov. 13, 1980, 3. Reserve balances with Federal Reserve Banks (which exclude required clear- a reduction of $2.8 billion; Feb. 12, 1981, an increase of $245 million; Mar. 12, ing balances) plus vault cash at institutions with required reserve balances plus 1981, an increase of $75 million; May 14, 1981, an increase of $245 million; Aug. vault cash equal to required reserves at other institutions. 13, 1981, an increase of $245 million; Sept. 3, 1981, a reduction of $1.3 billion; 4. Includes reserve balances and required clearing balances at Federal Reserve and Nov. 19, 1981, an increase of $220 million. Banks in the current week plus vault cash held two weeks earlier used to satisfy reserve requirements at all depository institutions plus currency outside the U.S. NOTE. Latest monthly and weekly figures are available from the Board's H.3(502) Treasury, Federal Reserve Banks, the vaults of depository institutions, and surplus statistical release. Back data and estimates of the impact on required reserves and vault cash at depository institutions. changes in reserve requirements are available from the Banking Section, Division of Research and Statistics, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Aggregates A15 1.23 LOANS AND SECURITIES All Commercial Banks1 Billions of dollars; averages of Wednesday figures 1981 1982 1981 1982 Dec.2 Feb.2 Mar.2 Apr.2 May2 June2 Dec.2 Feb.2 Mar.2 Apr.2 May2 June2 Seasonally adjusted Not seasonally adjusted 1 Total loans and securities3 1,316.3 1,332.4" 1,342.5s 1,352.6 1,361.9 1,368.7* 1,326.1 1,328.24 1,337.3s 1,351.4 1,355.9 1,366.3® 2 U.S. Treasury securities 111.0 115.I4 114.45 116.6 116.3 115.8 111.4 115.64 116.1s 118.7 115.8 116.1 3 Other securities 231.4 232.04 233.1s 234.0 234.9 235.8 232.8 231.5 232.6s 234.0 235.1 235.6 4 Total loans and leases3 973.9 985.24 995.0s 1,002.0 1,010.7 1,017.I6 981.8 981.I4 988.6s 998.7 1,005.0 1,014.66 5 Commercial and industrial loans 358.0 365.6 370.0 373.1 378.8 383.4 360.1 364.2 369.0 375.2 378.9 382.7 6 Real estate loans 285.7 289.8" 292.3s 293.9 295.5 297.3 286.8 289.64 291.5s 293.0 294.4 295.8 7 Loans to individuals 185.1 185.7 186.4 186.9 187.4 188.36 186.4 185.1 184.7 185.6 186.2 187.56 8 Security loans 21.9 20.8 20.9 20.9 20.6 19.5 22.7 20.1 20.3 20.9 19.8 20.5 9 Loans to nonbank financial institutions 30.2 31.4 32.7 33.3 33.2 33.6 31.2 31.5 32.2 33.0 32.8 33.1 10 Agricultural loans 33.0 33.8 34.3 34.4 34.5 34.5 33.0 33.3 33.6 33.8 34.3 34.7 11 Lease financing receivables.... 12.7 13.1 13.1 13.1 13.1 13.1 12.7 13.1 13.1 13.1 13.1 13.1 12 All other loans 47.2 45.0 45.3 46.5 47.5 47.5 49.2 44.1 44.2 44.1 45.5 47.2 MEMO: 13 Total loans and securities plus loans sold3,7 1,319.1 11,,333355..2244 11,,334455..33ss 1,355.4 1,364.7 1,371.7s 1,328.9 1.331.04 1,340.1s 1,354.2 1,358.7 1,369.3® 14 Total loans plus loans sold3'7 976.7 988.14 997.9s 1,004.8 1,013.5 1,020.16 984.7 983.94 991.5s 1,001.5 1,007.8 1,017.66 15 Total loans sold to affiliates7 2.8 2.8 2.8 2.8 2.8 3.0 2.8 2.8 2.8 2.8 2.8 3.0 16 Commercial and industrial loans plus loans sold7 360.2 367.8 372.2 375.3 381.1 385.7 362.3 366.5 371.3 377.5 381.1 385.0 17 Commercial and industrial loans sold7 2.2 2.2 2.2 2.3 2.2 2.4 2.2 2.2 2.2 2.3 2.2 2.4 18 Acceptances held 8.9 8.9 9.6 10.3 10.1 9.1 9.8 9.1 9.2 9.5 9.5 9.2 19 Other commercial and industrial loans 349.1 356.6 360.4 362.8 368.8 374.2 350.3 355.2 359.8 365.7 369.4 373.5 20 To U.S. addressees8 334.9 344.1 347.7 350.1 355.2 360.0 334.3 342.6 347.2 352.9 356.7 360.5 21 To non-U.S. addressees 14.2 12.5 12.7 12.7 13.5 14.2 16.1 12.6 12.6 12.8 12.7 13.0 22 Loans to foreign banks 19.0 16.6 16.1 15.2 15.0 14.8 20.0 16.2 15.7 14.6 14.4 14.4 1. Includes domestically chartered banks; U.S. branches and agencies of foreign 6. Beginning June 2, 1982 total loans and securities, total loans and leases, and banks, New York investment companies majority owned bv foreign banks, and loans to individuals were increased $0.5 billion due to acquisition of loans by a Edge Act corporations owned by domestically chartered and foreign banks. commercial bank from a nonbank institution. 2. Beginning December 1981, shifts of foreign loans and securities from U.S. 7. Loans sold are those sold outright to a bank's own foreign branches, nonbanking offices to international banking facilities (IBFs) reduced the levels of consolidated nonbank affiliates of the bank, the bank's holding company (if not a several items. Seasonally adjusted data that include adjustments for the amounts bank), and nonconsolidated nonbank subsidiaries of the holding company. shifted from domestic offices to IBFs are available in the Board's G.7 (407) sta- 8. United States includes the 50 states and the District of Columbia. tistical release (available from Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551). NOTE. Data are prorated averages of Wednesday estimates for domestically 3. Excludes loans to commercial banks in the United States. chartered banks, based on weekly reports of a sample of domestically chartered 4. The merger of a commercial bank with a mutual savings bank beginning Feb. banks and quarterly reports of all domestically chartered banks. For foreign-related 24,1982, increased total loans and securities $1.0 billion; U.S. Treasury securities, institutions, data are averages of month-end estimates based on weekly reports $0.1 billion; other securities, $0.1 billion; total loans and leases, $0.8 billion; and from large agencies and branches and quarterly reports from all agencies, branches, real estate loans, $0.7 billion. investment companies, and Edge Act corporations engaged in banking. 5. The merger of a commercial bank with a mutual savings bank beginning Mar. 17,1982, increased total loans and securities $0.6 billion; U.S. Treasury securities, $0.1 billion; other securities $0.1 billion; total loans and leases, $0.4 billion; and real estate loans, $0.4 billion. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Financial Statistics • August 1982 1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS1 Monthly averages, billions of dollars 1980 1981 1982 SSoouurrccee Dec. July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Total nondeposit funds 1 Seasonally adjusted2 121.9 122.7 123.3 119.8 116.3 116.2 98.7 89.5 87.8 83.5 83.3 81.4 2 Not seasonally adjusted 122.5 124.6 127.4 125.0 118.3 120.8 99.1 87.9 88.1 84.3 84.0 84.7 Federal funds, RPs, and other borrowings from nonbanks3 3 Seasonally adjusted 111.0 113.8 110.5 108.2 109.1 110.1 114.4 116.2 113.7 113.5 113.0 113.0 4 Not seasonally adjusted 111.6 115.7 114.6 113.3 111.1 114.7 114.8 114.6 114.0 114.3 113.7 116.3 5 Net balances due to foreign-related institutions, not seasonally adjusted 8.2 6.2 10.1 8.9 4.5 3.4 -18.5 -29.6 -28.8 -32.9 -32.5 -34.4 6 Loans sold to affiliates, not seasonally adjusted4 2.7 2.7 2.6 2.7 2.7 2.7 2.8 2.9 2.8 2.8 2.8 2.8 MEMO 7 Domestically chartered banks net positions with own foreign branches, not seasonally adjusted5 -14.7 -14.6 -10.2 -12.3 -15.4 -14.9 -22.4 -27.1 -26.1 -29.0 -29.8 -30.3 8 Gross due from balances 37.5 45.0 43.7 44.5 45.5 47.9 54.9 57.1 57.2 59.2 60.0 59.1 9 Gross due to balances 22.8 30.4 33.5 32.2 30.1 32.9 32.5 30.0 31.1 30.1 30.1 28.8 10 Foreign-related institutions net positions with directly related institutions, not seasonally adjusted6 22.9 20.8 20.4 21.2 19.9 18.4 3.9 -2.5 -2.7 -3.8 -2.7 -4.0 11 Gross due from balances 32.5 37.4 38.0 40.1 38.3 39.1 48.1 50.0 50.5 50.0 49.1 49.4 12 Gross due to balances 55.4 58.2 58.4 61.3 58.2 57.4 52.0 47.5 47.8 46.2 46.4 45.4 Security RP borrowings 13 Seasonally adjusted' 64.0 69.2 65.7 63.0 64.9 65.0 70.0 73.0 71.0 71.4 71.9 69.0 14 Not seasonally adjusted 62.3 68.9 67.6 65.9 64.7 67.3 68.2 69.2 69.1 70.0 70.4 70.0 U.S. Treasury demand balances8 15 Seasonally adjusted 9.5 10.9 8.3 9.3 11.1 12.1 11.8 13.5 22.2 17.6 13.6 15.4 16 Not seasonally adjusted 9.0 10.8 7.5 10.9 13.3 9.7 11.3 14.5 20.1 15.6 13.8 15.4 Time deposits, $100,000 or more9 17 Seasonally adjusted 267.0 313.1 321.7 324.7 324.8 323.4 324.0 324.3 327.2 332.0 334.4 341.1 18 Not seasonally adjusted 272.4 304.7 314.8 320.2 322.6 324.6 330.3 330.6 335.3 337.2 335.6 339.9 1. Commercial banks are those in the 50 states and the District of Columbia 8. Includes U.S. Treasury demand deposits and Treasury tax-and-loan notes at with national or state charters plus agencies and branches of foreign banks, New commercial banks. Averages of daily data. York investment companies majority owned by foreign banks, and Edge Act cor- 9. Averages of Wednesday figures. porations owned by domestically chartered and foreign banks. 2. Includes seasonally adjusted federal funds, RPs, and other borrowings from NOTE. Beginning December 1981, shifts of foreign assets and liabilities from U.S. nonbanks and not seasonally adjusted net Eurodollars and loans to affiliates. In- banking offices to international banking facilities (IBFs) reduced levels for several cludes averages of Wednesday data for domestically chartered banks and averages items as follows: lines 1 and 2, S22.4 billion; lines 3 and 4, $1.7 billion; line 5, of current and previous month-end data for foreign-related institutions. $20.7 billion; line 7, $3.1 billion; and line 10, $17.6 billion. For January 1982, levels 3. Other borrowings are borrowings on any instrument, such as a promissory were reduced as follows: lines 1 and 2, $29.6 billion; lines 3 and 4, $2.4 billion; note or due bill, given for the purpose of borrowing money for the banking business. line 5, $27.2 billion; line 7, $4.7 billion; and line 10, $22.4 billion. This includes borrowings from Federal Reserve Banks and from foreign banks, For January 1982, levels were reduced as follows: lines 1 and 2, $29.6 billion; term federal funds, overdrawn due from bank balances, loan RPs, and participa- lines 3 and 4, $2.4 billion; line 5. $27.2 billion; line 7, $4.7 billion; and line 10, tions in pooled loans. Includes averages of daily figures for member banks and $22.4 billion. averages of current and previous month-end data for foreign-related institutions. For February 1982 the levels were reduced as follows: lines 1 and 2, $30.3 billion; 4. Loans initially booked by the bank and later sold to affiliates that are still lines 3 and 4, $2.4 billion; line 5. $27.9 billion; line 7, $4.8 billion; and line 10, held by affiliates. Averages of Wednesday data. $23.1 billion. For March the levels were reduced as follows: lines 1 and 2, $30.8 5. Averages of daily figures for member and nonmember banks. billion; lines 3 and 4, $2.4 billion; line 5, $28.4 billion; line 7, $4.8 billion and line 6. Averages of daily data. 10, $23.6 billion. For April the levels were reduced as follows: lines 1 and 2, $31.3 7. Based on daily average data reported by 122 large banks. billion; lines 3 and 4, $2.4 billion; line 5, $28.9 billion; line 7, $4.9 billion; and line 10, $23.9 billion. 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 1981 1982 AAccccoouunntt Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Juner July DOMESTICALLY CHARTERED COMMERCIAL BANKS1 1 Loans and securities, excluding 1.4 interbank 1,242.5 1,239.9 1,249.4 1,267.4 1,261.2 1,271.2 1,285.8 1,292.6 1,300.7 1,315.4 11,,331133 i.7 2 Loans, excluding interbank 906.2 902.9 912.8 926.4 920.1 929.1 939.9 947.2 954.3 969.1 966 1.4 3 Commercial and industrial 308.5 308.5 312.6 320.3 321.0 325.6 332.4 336.7 341.9 348.7 3461 .3 4 Other 597.8 594.3 600.2 606.0 599.1 603.5 607.5 610.5 612.4 620.4 620( .4 5 U.S. Treasury securities 109.4 110.0 106.7 109.8 111.5 112.3 114.5 113.0 111.5 113.4 113S .2 6 Other securities 226.9 227.1 229.9 231.3 229.6 229.8 231.4 232.4 234.9 232.9 233 k5 7 190.2 149.8 162.8 173.1 155.3 151.6 164.5 153.6 153.0 165.4 1541 .5 8 Currency and coin 19.2 19.7 18.3 22.0 19.8 19.7 18.9 19.9 20.0 20.1 20 9 Reserves with Federal Reserve Banks 26.8 25.3 26.1 28.0 30.2 24.8 25.7 25.5 21.7 18.2 25 ;1..i4 10 Balances with depository institutions . 68.9 49.3 52.0 54.5 50.3 51.0 55.9 52.4 54.9 59.6 551 .6 11 Cash items in process of collection ... 75.4 55.5 66.4 68.6 55.0 56.1 64.0 55.8 56.3 67.4 53 12 Other assets2 184.5 175.5 194.4 211.2 197.0 201.9 219.3 206.6 209.9 223.2 2241 .2 13 Total assets/total liabilities and capital... 1,617.2 1,565.2 1,606.7 1,651.8 1,613.5 1,624.7 1,669.5 1,652.9 1,663.6 1,704.0 1,692! .l >.5 14 1,224.4 1,177.1 1,206.0 1,240.3 1,205.8 1,213.7 1,250.8 1,231.0 1,244.0 1,284.8 1,2661 .5 15 378.0 324.0 339.2 363.9 322.3 316.7 338.3 315.5 315.4 345.2 314 '.2 16 Savings 216.7 214.0 217.9 222.4 223.0 222.5 229.9 226.6 227.6 228.9 227 L8 17 Time 629.7 639.1 648.9 654.0 660.5 674.4 682.6 688.9 701.0 710.7 724 i.4 18 Borrowings 176.9 174.5 179.3 190.2 191.9 191.0 196.4 201.1 195.1 189.7 195> .1 19 Other liabilities 91.4 89.3 95.2 91.7 89.7 92.5 94.4 92.4 93.9 96.6 99L I 20 Residual (assets less liabilities) 124.4 124.3 126.2 129.6 126.1 127.5 128.0 128.4 130.6 133.0 131 MEMO: 21 U.S. Treasury note balances included in i.O borrowing 15.3 13.9 5.6 13.6 16.7 17.1 10.9 16.6 7.1 7.5 8 22 Number of banks 14,720 14,740 14,743 14,744 14,690 14,702 14,709 14,710 14,722 14,736 14,7 ALL COMMERCIAL BANKING INSTITUTIONS3 23 Loans and securities, excluding .4 interbank 1,334.3 1,324.7 1,335.5 1,330.0 1,321.6 1,331.5 1,345.8 1,350.7 1,358.5 1,374.3 1,371 1.9 24 Loans, excluding interbank 993.8 983.6 994.7 984.5 975.8 984.4 995.1 1,000.6 1,007.6 1,023.7 1,020 \A 25 Commercial and industrial 366.3 361.7 365.5 360.8 360.3 364.6 372.4 374.7 379.3 386.7 384 ?,6 Other 627.5 621.9 629.2 623.7 615.5 619.7 622.7 625.8 628.3 636.9 636 >1..57 27 U.S. Treasury securities 111.6 111.9 108.8 112.5 114.5 115.5 117.6 116.1 114.3 116.2 115L 8 28 Other securities 228.9 229.2 232.0 233.0 231.4 231.6 233.1 234.1 236.6 234.4 234 29 Cash assets, total 234.5 165.4 179.3 188.1 170.0 165.8 178.8 168.1 167.7 180.3 1691 .3 30 Currency and coin 19.2 19.7 18.3 22.0 19.8 19.7 18.9 19.9 20.0 20.2 20 (.5 31 Reserves with Federal Reserve Banks 28.1 26.6 27.5 29.3 31.3 26.1 26.9 26.8 23.0 19.6 26 I'..58 37, Balances with depository institutions . 110.7 62.5 66.0 67.1 62.7 63.0 68.0 64.6 67.3 72.2 67 k6 33 Cash items in process of collection ... 76.5 56.6 67.4 69.6 56.1 57.1 65.0 56.8 57.3 68.4 54 34 Other assets2 251.0 244.0 267.0 288.7 274.2 278.1 295.2 280.3 285.9 300.1 299 1 .4 35 Total assets/total liabilities and capital... 1,819.8 1,734.0 1,781.7 1,806.8 1,765.8 1,775.5 1,819.9 1,799.1 1,812.1 1,854.7 1,8401 .1 '.4 36 Deposits 1,293.7 1,224.6 1,254.1 1,288.7 1,251.5 1,258.3 1,295.0 1,272.7 1,286.2 1,325.8 1,307 3 3 7 8 Savings 4 21 1 6 2 . . 9 2 3 2 3 1 7 4 . . 1 3 3 21 5 8 2 . . 1 6 3 2 7 2 7 2 . . 7 6 3 2 3 2 5 3 . . 1 2 3 22 2 2 9 . . 8 4 3 2 5 3 0 0 . . 8 2 2 3 2 2 6 7 . . 9 9 3 22 2 7 7 . . 8 9 3 22 5 9 7 . . 1 4 3 22 2 7 6 1'..84 39 Time 664.7 673.1 683.4 688.3 693.1 706.2 714.0 717.9 730.4 739.3 753 1.2 1.0 40 Borrowings 242.7 236.8 246.2 250.8 253.5 255.9 260.0 260.8 255.3 253.2 260 41 Other liabilities 157.0 146.4 153.3 135.6 132.8 131.8 135.0 135.3 138.2 140.8 1391i ..8O 42 Residual (assets less liabilities) 126.3 126.3 128.1 131.5 128.1 129.4 129.9 130.3 132.5 134.9 133 MEMO: 43 U.S. Treasury note balances included in 1.0 borrowing 15.3 13.9 5.6 13.6 16.7 17.1 10.9 16.6 7.1 7.5 8 44 Number of banks 15,189 15,209 15,212 15,213 15,185 15,201 15,214 15,215 15,235 15,235 15,2' 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 until June 1981; 3. Commercial banking institutions include domestically chartered commercial beginning July 1981, these data are estimates made on the last Wednesday of the banks, branches and agencies of foreign banks, Edge Act and Agreement corpo- month based on a weekly reporting sample of foreign-related institutions and quarterrations, and New York State foreign investment corporations. end condition report data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Nonfinancial Statistics • August 1982 1.26 ALL LARGE WEEKLY REPORTING COMMERCIAL BANKS with Domestic Assets of $750 Million or More on December 31, 1977, Assets and Liabilities, 1982 Millions of dollars, Wednesday figures June 2 June 9 June 16 June 23 June 30P July IP July 14 P July 21 p July 28 p 1 Cash items in process of collection 59,329 42,741 49,322 43,051 53,395 52,897 46,416 43,965 42,631 2 Demand deposits due from banks in the United States.. 8,394 6,726 7,322 6,512 7,233 8,499 6,450 6,392 6,654 3 All other cash and due from depository institutions 36,155 33,454 32,957 34,027 28,590 34,193 32,606 33,090 35,146 4 Total loans and securities 623,221 620,563 621,766 614,507 624,817 624,950 622,637 620,262 622,858 Securities 5 U.S. Treasury securities 36,938 38,056 37,245 36,819 36,997 36,885 36,525 36,649 37,659 6 Trading account 7,767 8,266 7,683 7,301 7,800 7,640 7,497 7,517 8,701 7 Investment account, by maturity 29,170 29,790 29,562 29,518 29,197 29,246 29,027 29,132 28,957 8 One year or less 9,647 10,040 10,120 10,118 9,818 10,208 10,009 9,999 9,743 9 Over one through five years 16,981 17,208 16,977 17,018 16,992 16,651 16,502 16,758 16,902 10 Over five years 2,542 2,542 2,464 2,382 2,387 2,387 2,517 2,375 2,312 11 Other securities 80,609 81,164 79,348 78,883 78,135 78,998 78,173 77,906 77,752 12 Trading account 4,816 5,290 3,708 3,226 2,847 4,028 3,366 3,466 3,175 13 Investment account 75,792 75,874 75,640 75,658 75,288 74,969 74,807 74,439 74,577 14 U.S. government agencies 15,798 15,733 15,622 15,554 15,578 15,498 15,401 15,361 15,516 15 States and political subdivisions, by maturity 57,006 57,037 56,947 57,074 56,512 56,436 56,413 56,053 55,992 16 One year or less 8,103 8,151 8,098 8,247 7,685 7,750 7,770 7,530 7,274 17 Over one year 48,902 48,885 48,849 48,827 48,827 48,686 48,642 48,522 48,718 18 Other bonds, corporate stocks and securities 2,988 3,103 3,071 3,029 3,199 3,035 2,993 3,025 3,069 Loans 19 Federal funds sold1 35,426 31,920 35,649 31,572 36,476 35,754 35,203 34,696 36,056 20 To commercial banks 25,543 21,762 25,369 20,342 25,127 25,410 25,523 24,324 25,636 21 To nonbank brokers and dealers in securities 7,108 7,363 7,445 8,443 8,395 7,295 6,967 7,659 7,727 22 To others 2,775 2,795 2,836 2,788 2,953 3,049 2,713 2,713 2,693 23 Other loans, gross 483,115 482,364 482,493 480,149 486,328 486,448 485,878 484,162 484,562 24 Commercial and industrial 209,132 209,664 209,564 208,580 212,438 212,396 212,116 210,431 210,483 25 Bankers acceptances and commercial paper 5,320 4,924 4,909 3,911 4,170 3,813 4,323 3,918 4,208 26 All other 203,812 204,740 204,655 204,669 208,267 208,583 207,794 206,513 206,275 27 U.S. addressees 196,929 197,772 197,766 197,718 201,043 201,410 200,628 199,495 199,213 28 Non-U.S. addressees 6,883 6,968 6,889 6,951 7,225 7,172 7,165 7,018 7,062 29 Real estate 129,098 129,196 129,466 129,730 129,679 129,762 130,114 130,277 130,083 30 To individuals for personal expenditures 72,207 72,179 72,316 72,435 72,679 72,560 72,470 72,592 72,816 To financial institutions 31 Commercial banks in the United States 6,980 7,086 6,737 6,625 6,885 6,855 6,538 6,662 6,764 32 Banks in foreign countries 7,392 6,803 7,026 6,925 7,161 7,797 7,572 6,866 7,243 33 Sales finance, personal finance companies, etc 11,504 11,249 11,637 11,137 11,292 11,342 11,198 11,185 11,076 34 Other financial institutions 16,264 16,305 16,232 16,143 16,382 16,554 16,434 16,486 16,269 35 To nonbank brokers and dealers in securities 6,455 6,682 6,021 5,509 6,144 5,167 6,078 6,496 6,902 36 To others for purchasing and carrying securities2 2,601 2,603 2,547 2,519 2,556 2,545 2,505 2,519 2,519 37 To finance agricultural production 6,134 6,138 6,213 6,235 6,270 6,335 6,368 6,418 6,510 38 All other 15,348 14,460 14,734 14,310 14,839 15,135 14,484 14,229 13,896 39 LESS: Unearned income 5,859 5,896 5,916 5,911 5,890 5,865 5,915 5,886 5,873 40 Loan loss reserve 7,007 7,045 7,053 7,006 7,228 7,270 7,226 7,264 7,298 41 Other loans, net 470,248 469,423 469,524 467,231 473,210 473,313 472,736 471,012 471,391 42 Lease financing receivables 11,089 11,100 11,095 11,086 11,127 11,149 11,139 11,167 11,170 43 All other assets 112,869 113,197 115,206 112,307 115,785 117,336 120,049 120,103 119,818 44 Total assets 851,057 827,781 837,668 821,490 840,947 849,023 839,298 834,979 838,277 Deposits 45 Demand deposits 179,471 158,284 168,543 155,401 178,551 176,409 165,274 158,707 158,878 46 Mutual savings banks 651 501 528 433 620 742 540 550 501 47 Individuals, partnerships, and corporations 133,774 122,844 126,610 117,757 133,232 131,489 126,831 121,449 120,287 48 States and political subdivisions 4,521 3,837 4,592 4,379 5,710 4,830 4,130 4,582 4,594 49 U.S. government 1,148 1,264 3,476 2,424 2,350 1,194 1,797 986 1,575 50 Commercial banks in the United States 23,721 16,667 18,916 16,848 20,442 23,415 17,638 17,229 17,299 51 Banks in foreign countries 7,508 6,111 6,817 6,495 6,669 6,900 6,875 6,852 7,078 52 Foreign governments and official institutions 826 926 1,100 848 1,699 1,030 1,206 1,141 1,092 53 Certified and officers' checks 7,321 6,133 6,506 6,215 7,829 6,807 6,257 5,918 6,450 54 Time and savings deposits 381,227 382,513 381,643 380,454 385,125 386,338 387,990 391,391 393,402 55 Savings 80,795 80,709 80,385 78,880 79,646 81,105 79,916 79,463 78,899 56 Individuals and nonprofit organizations 77,363 77,294 77,017 75,537 76,160 77,744 76,634 76,226 75,624 57 Partnerships and corporations operated for profit .. 2,823 2,828 2,769 2,770 2,778 2,789 2,740 2,715 2,748 58 Domestic governmental units 587 561 579 552 683 549 518 499 496 59 All other 21 25 20 20 24 22 24 23 31 60 Time 300,432 301,804 301,258 301,574 305,479 305,233 308,073 311,928 314,503 61 Individuals, partnerships, and corporations 263,021 264,591 264,764 264,902 269,391 269,454 271,258 274,645 276,274 62 States and political subdivisions 21,546 21,388 20,746 21,023 20,014 19,922 20,322 20,510 20,807 63 U.S. government 541 541 534 574 576 543 535 451 441 64 Commercial banks in the United States 10,686 10,717 10,677 10,636 10,867 10,643 11,196 11,644 12,138 65 Foreign governments, official institutions, and banks 4,638 4,565 4,537 4,440 4,630 4,671 4,762 4,678 4,842 Liabilities for borrowed money 66 Borrowings from Federal Reserve Banks 550 5,088 838 145 502 60 84 275 1,052 67 Treasury tax-and-loan notes 4,569 1,160 7,029 8,470 4,502 887 2,875 4,274 5,187 68 All other liabilities for borrowed money3 154,230 150,687 149,624 143,626 139,217 154,672 150,677 146,292 144,047 69 Other liabilities and subordinated notes and debentures 74,606 73,710 73,759 77,362 76,789 74,375 76,102 77,850 79,623 70 Total liabilities 794,654 771,441 781,436 765,458 784,686 792,741 783,001 778,790 782,189 71 Residual (total assets minus total liabilities)4 56,403 56,340 56,232 56,032 56,261 56,282 56,297 56,189 56,088 1. Includes securities purchased under agreements to resell. NOTE. Beginning in the week ending Dec. 9,1981, shifts of assets and liabilities 2. Other than financial institutions and brokers and dealers. to international banking facilities (IBFs) reduced the amounts reported in some 3. Includes federal funds purchased and securities sold under agreements to items, especially in loans to foreigners and to a lesser extent in time deposits. Based repurchase; for information on these liabilities at banks with assets of $1 billion or on preliminary reports, the large weekly reporting banks shifted $4.7 billion of more on Dec. 31, 1977, see table 1.13. assets to their IBFs in the five weeks ending Jan. 13, 1982. Domestic offices net 4. Not a measure of equity capital for use in capital adequacy analysis or for positions with IBFs are now included in net due from or net due to related instiother analytic uses. tutions. More detail will be available later. Digitized for FRASER 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 SI Billion or More on December 31, 1977, Assets and Liabilities Millions of dollars, Wednesday figures, 1982 June 2 June 9 June 16 June 23 June 30p July IP July 14 P July 21P July 28p 1 Cash items in process of collection 55,704 40,333 46,157 40,331 50,321 49,685 43,687 41,442 40,195 2 Demand deposits due from banks in the United States 7,511 6,145 6,623 5,902 6,611 7,684 5,914 5,761 6,062 3 All other cash and due from depository institutions 33,621 31,020 30,425 31,069 26,085 31,897 30,203 30,757 32,552 4 Total loans and securities 583,875 581,187 582,341 575,627 585,107 585,401 583,331 581,075 583,658 Securities 5 U.S. Treasury securities 33,992 35,071 34,191 33,703 33,837 33,727 33,458 33,560 34,639 6 Trading account 7,649 8,194 7,591 7,208 7,689 7,523 7,407 7,382 8,612 7 Investment account, by maturity 26,343 26,877 26,600 26,494 26,148 26,204 26,051 26,178 26,028 8 One year or less 8,678 8,997 9,038 8,989 8,818 9,182 8,993 9,027 8,783 9 Over one through five years 15,394 15,610 15,368 15,396 15,219 14,898 14,805 15,039 15,196 10 Over Five years 2,270 2,270 2,193 2,109 2,112 2,123 2,253 2,111 2,048 11 Other securities 74,258 74,781 72,988 72,513 71,809 72,637 71,852 71,585 71,402 12 Trading account 4,719 5,178 3,609 3,127 2,762 3,896 3,274 3,374 3,057 13 Investment account 69,539 69,603 69,378 69,386 69,046 68,741 68,578 68,210 68,345 14 U.S. government agencies 14,584 14,516 14,428 14,342 14,371 14,297 14,187 14,144 14,313 15 States and political subdivision, by maturity 52,155 52,178 52,080 52,216 51,673 51,605 51,594 51,240 51,170 16 One year or less 7,320 7,373 7,309 7,412 6,935 7,007 7,032 6,804 6,559 17 Over one year 44,835 44,805 44,771 44,804 44,738 44,598 44,561 44,436 44,611 18 Other bonds, corporate stocks and securities 2,800 2,909 2,870 2,828 3,001 2,839 2,797 2,827 2,862 Loans 19 Federal funds sold1 31,375 27,840 31,638 28,118 32,475 31,822 31,328 31,041 32,302 20 To commercial banks 22,344 18,536 22,162 17,849 21,994 22,156 22,426 21,433 22,666 21 To nonbank brokers and dealers in securities 6,395 6,639 6,773 7,625 7,642 6,715 6,308 6,987 7,022 22 To others 2,636 2,665 2,703 2,644 2,839 2,952 2,594 2,620 2,614 23 Other loans, gross 456,096 455,411 455,468 453,179 459,078 459,324 458,808 457,010 457,457 24 Commercial and industrial 198,686 199,247 199,166 198,224 201,870 201,894 201,696 199,937 200,008 25 Bankers acceptances and commercial paper 5,178 4,775 4,779 3,781 4,038 3,696 4,210 3,778 4,039 26 All other 193,508 194,472 194,387 194,443 197,831 198,197 197,486 196,159 195,969 27 U.S. addressees 186,742 187,621 187,612 187,610 190,730 191,146 190,447 189,277 189,038 28 Non-U.S. addressees 6,766 6,851 6,774 6,833 7,101 7,051 7,038 6,882 6,931 29 Real estate 121,928 122,030 122,287 122,545 122,469 122,570 122,871 123,046 122,845 30 To individuals for personal expenditures 64,853 64,774 64,888 64,998 65,237 65,175 65,119 65,219 65,420 To financial institutions 31 Commercial banks in the United States 6,836 6,927 6,600 6,468 6,705 6,676 6,359 6,477 6,612 32 Banks in foreign countries 7,316 6,726 6,926 6,844 7,078 7,716 7,491 6,797 7,174 33 Sales finance, personal finance companies, etc 11,315 11,069 11,452 10,956 11,106 11,148 11,010 10,999 10,895 34 Other financial institutions 15,864 15,898 15,808 15,729 15,965 16,131 16,009 16,042 15,826 35 To nonbank brokers and dealers in securities 6,398 6,619 5,966 5,460 6,091 5,119 6,035 6,449 6,862 36 To others for purchasing and carrying securities2 2,378 2,377 2,327 2,296 2,341 2,327 2,288 2,302 2,299 37 To finance agricultural production 5,971 5,974 6,049 6,069 6,102 6,164 6,194 6,244 6,335 38 All other 14,550 13,768 13,999 13,590 14,116 14,403 13,733 13,497 13,180 39 LESS: Unearned income 5,210 5,246 5,263 5,255 5,241 5,216 5,266 5,235 5,223 40 Loan loss reserve 6,636 6,670 6,680 6,630 6,851 6,892 6,849 6,886 6,919 41 Other loans, net 444,250 443,496 443,524 441,294 446,986 447,215 446,693 444,889 445,315 42 Lease financing receivables 10,745 10,757 10,751 10,756 10,795 10,818 10,808 10,836 10,840 43 All other assets 108,975 109,381 111,293 108,525 111,847 113,418 116,213 116,326 116,020 44 Total assets 800,432 778,823 787,590 772,210 790,766 798,903 790,156 786,198 789,328 Deposits 45 Demand deposits 166,832 147,175 156,315 144,217 166,355 164,103 153,835 147,560 147,928 46 Mutual savings banks 629 484 507 417 599 715 523 535 485 47 Individuals, partnerships, and corporations 124,087 113,975 117,387 109,347 123,891 121,967 117,863 112,648 111,737 48 States and political subdivisions 4,001 3,412 3,940 3,727 5,069 4,302 3,604 4,062 4,030 49 U.S. government 1,007 1,109 2,976 2,091 2,138 1,019 1,598 870 1,428 50 Commercial banks in the United States 21,827 15,356 17,456 15,524 18,932 21,736 16,260 15,876 15,962 51 Banks in foreign countries 7,442 6,050 6,720 6,426 6,562 6,834 6,811 6,788 7,019 52 Foreign governments and official institutions 822 920 1,099 833 1,698 1,029 1,200 1,135 1,085 53 Certinea and officers' checks 7,017 5,869 6,229 5,851 7,464 6,500 5,976 5,646 6,182 54 Time and savings deposits 357,680 358,741 357,944 356,798 361,373 362,508 364,035 367,259 369,172 55 Savings 74,581 74,493 74,180 72,821 73,513 74,849 73,730 73,331 72,797 56 Individuals and nonprofit organizations 71,397 71,330 71,061 69,727 70,305 71,746 70,715 70,353 69,778 57 Partnerships and corporations operated for profit 2,608 2,608 2,553 2,552 2,563 2,570 2,518 2,502 2,530 58 Domestic governmental units 554 529 546 522 620 511 473 454 457 59 All other 21 25 20 20 24 22 24 23 31 60 Time 283,099 284,248 283,764 283,977 287,861 287,660 290,304 293,928 296,376 61 Individuals, partnerships, and corporations 247,771 249,103 249,296 249,344 253,738 253,760 255,505 258,744 260,315 62 States and political subdivisions 19,833 19,683 19,085 19,349 18,423 18,397 18,732 18,869 19,105 63 U.S. government 487 483 477 516 514 486 477 393 386 64 Commercial banks in the United States 10,370 10,412 10,368 10,327 10,555 10,346 10,828 11,243 11,729 65 Foreign governments, official institutions, and banks , 4,638 4,565 4,537 4,440 4,630 4,671 4,762 4,678 4,842 Liabilities for borrowed money 66 Borrowings from Federal Reserve Banks 550 5,061 803 105 356 40 50 275 1,027 67 Treasury tax-and-loan notes 4,272 1,085 6,534 7,878 4,005 804 2,686 3,935 4,780 68 All other liabilities for borrowed money3 145,768 142,325 141,553 135,387 131,273 146,414 142,763 138,836 136,399 69 Other liabilities and subordinated notes and debentures 72,507 71,679 71,772 75,278 74,640 72,245 74,004 75,630 77,440 70 Total liabilities 747,610 726,065 734,921 719,662 738,003 746,114 737,374 733,494 736,746 71 Residual (total assets minus total liabilities)4 52,822 52,757 52,669 52,547 52,764 52,789 52,782 52,703 52,581 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 more on Dec. 31, 1977, see table 1.13. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Nonfinancial Statistics • August 1982 1.28 LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures, 1982 June 2 June 9 June 16 June 23 June 30 p July IP July 14 p July 21 p July 28 p 1 Cash items in process of collection 15,493 12,860 13,436 11,962 16,444 13,229 13,452 12,428 12,652 2 Demand deposits due from banks in the United States 1,743 1,362 1,406 1,216 1,370 1,363 1,189 1,088 1,236 3 All other cash and due from depository institutions 7,800 6,327 7,543 5,122 4,324 8,200 5,664 4,990 6,269 4 Total loans and securities1 138,067 135,906 136,397 135,226 138,540 138,102 138,242 135,406 137,986 Securities 5 U.S. Treasury securities2 6 Trading account2 7 Investment account, by maturity 6,492 6,629 6,231 6,172 6,032 6,097 5,834 6,063 6,055 8 One year or less 1,089 1,040 1,012 1,014 909 1,238 1,138 1,126 1,123 9 Over one through five years 4,543 4,735 4,441 4,431 4,397 4,132 3,973 4,292 4,345 10 Over five years 859 854 778 727 726 726 723 644 587 11 Other securities2 12 Trading account2 13 Investment account 14,962 15,056 15,015 14,907 14,785 14,662 14,637 14,370 14,335 14 U.S. government agencies 2,057 2,042 2,035 2,027 2,006 2,006 2,024 2,053 2,003 15 States and political subdivision, by maturity .. 12,057 12,065 12,026 11,934 11,669 11,727 11,724 11,375 11,359 16 One year or less 2,506 2,496 2,449 2,356 2,034 2,084 2,094 1,855 1,654 17 Over one year 9,551 9,569 9,577 9,578 9,635 9,642 9,630 9,521 9,706 18 Other bonds, corporate stocks and securities.. 848 949 954 946 1,111 930 888 941 972 Loans 19 Federal funds sold 3 8,222 7,121 7,081 8,066 9,073 8,112 7,976 7,232 9,374 20 To commercial banks 4,311 3,338 3,052 3,356 4,360 3,680 4,307 3,361 5,322 21 To nonbank brokers and dealers in securities ... 2,775 2,854 2,994 3,300 3,324 2,935 2,465 2,668 2,795 22 To others 1,136 929 1,035 1,410 1,388 1,498 1,204 1,203 1,257 23 Other loans, gross 112,158 110,880 111,874 109,836 112,372 112,958 113,536 111,480 111,964 24 Commercial and industrial 58,927 59,212 59,644 58,861 59,868 60,371 60,779 59,468 59,315 25 Bankers acceptances and commercial paper... 1,757 1,545 1,678 1,191 1,457 1,162 1,575 1,163 1,296 26 All other 57,170 57,667 57,967 57,670 58,412 59,209 59,204 58,305 58,019 27 U.S. addressees 55,698 56,187 56,458 56,217 56,893 57,708 57,667 56,818 56,561 28 Non-U.S. addressees 1,472 1,480 1,509 1,453 1,518 1,501 1,537 1,486 1,459 29 Real estate 18,167 18,202 18,260 18,316 18,336 18,344 18,394 18,467 18,432 30 To individuals for personal expenditures 11,105 11,110 11,143 11,166 11,172 11,222 11,257 11,288 11,298 31 To financial institutions Commercial banks in the United States 1,946 1,968 1,684 1,650 2,121 2,259 1,905 1,859 1,952 32 Banks in foreign countries 3,306 2,662 2,914 2,801 2,895 3,484 3,237 2,562 2,712 33 Sales finance, personal finance companies, etc. 5,058 4,903 5,186 4,829 4,924 5,040 4,957 4,900 4,860 34 Other financial institutions 4,823 4,879 4,745 4,662 4,704 4,788 4,788 4,751 4,704 35 To nonbank brokers and dealers in securities ... 3,683 3,382 3,291 3,054 3,644 2,610 3,582 3,638 3,904 36 To others for purchasing and carrying securities4 653 650 645 622 619 617 568 584 590 37 To finance agricultural production 391 377 361 354 337 338 320 327 436 38 All other 4,097 3,535 4,001 3,522 3,750 3,885 3,748 3,636 3,760 39 LESS: Unearned income 1,496 1,500 1,514 1,504 1,501 1,488 1,523 1,517 1,512 40 Loan loss reserve 2,271 2,281 2,289 2,250 2,221 2,239 2,217 2,221 2,230 41 Other loans, net 108,391 107,099 108,070 106,082 108,649 109,231 109,796 107,742 108,222 42 Lease financing receivables 2,258 2,262 2,265 2,267 2,269 2,267 2,266 2,262 2,254 43 All other assets5 45,955 44,100 43,966 42,404 44,348 46,704 48,362 48,059 47,875 44 Total assets 211,317 202,817 205,013 198,196 207,295 209,885 209,176 204,234 208,273 Deposits 45 Demand deposits 47,201 40,895 43,330 40,029 49,228 46,274 43,522 41,072 41,650 46 Mutual savings banks 303 228 251 196 293 394 267 308 237 47 Individuals, partnerships, and corporations 31,592 28,479 28,896 26,556 32,610 30,177 29,458 27,782 27,620 48 States and political subdivisions 471 488 532 584 756 625 464 552 426 49 U.S. government 159 296 1,045 586 541 239 426 216 355 50 Commercial banks in the United States 4,985 3,408 3,821 3,745 5,032 5,779 3,881 3,468 3,702 51 Banks in foreign countries 5,721 4,569 5,186 4,953 4,938 5,370 5,297 5,308 5,526 52 Foreign governments and official institutions... . 590 698 887 628 1,498 786 944 885 809 53 Certified and officers' checks 3,380 2,729 2,711 2,780 3,561 2,905 2,786 2,552 2,975 54 Time and savings deposits 67,939 68,151 68,438 67,502 70,010 69,995 69,652 70,270 71,825 55 Savings 9,694 9,670 9,714 9,581 9,682 9,766 9,616 9,546 9,472 56 Individuals and nonprofit organizations 9,337 9,328 9,354 9,241 9,303 9,426 9,291 9,231 9,156 57 Partnerships and corporations operated for profit 234 235 230 228 234 233 230 226 227 58 Domestic governmental units 121 105 129 110 143 106 94 87 88 59 All other 2 2 2 2 2 2 2 2 2 60 Time 58,245 58,481 58,723 57,921 60,328 60,229 60,036 60,724 62,352 61 Individuals, partnerships, and corporations .. . 49,302 49,798 50,117 49,493 52,070 51,885 51,384 52,003 52,876 62 States and political subdivisions 2,433 2,355 2,277 2,286 1,935 1,984 2,017 2,033 2,192 63 U.S. government 123 115 114 119 127 98 82 85 74 64 Commercial banks in the United States 4,119 4,022 4,044 3,955 3,971 4,009 4,247 4,473 4,968 65 Foreign governments, official institutions, and banks 2,268 2,192 2,171 2,068 2,225 2,253 2,306 2,130 2,242 Liabilities for borrowed money 66 Borrowings from Federal Reserve Banks 2,415 17 227755 440000 67 Treasury tax-and-loan notes 1,266 289 2,370 2,358 1,171 180 925 11,,229955 11,,553388 68 All other liabilities for borrowed money6 48,115 45,167 45,074 40,492 39,433 47,728 48,749 4444,,773388 4455,,553344 69 Other liabilities and subordinated notes and debentures 29,120 28,131 28,098 30,219 29,722 28,063 28,573 28,849 29,779 70 Total liabilities 193,642 185,048 187,601 180,328 189,565 192,240 191,422 186,500 190,726 71 Residual (total assets minus total liabilities)7 17,674 17,768 17,685 17,596 17,730 17,645 17,754 17,734 17,546 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 A19 1.29 LARGE WEEKLY REPORTING COMMERCIAL BANKS Balance Sheet Memoranda Millions of dollars, Wednesday figures, 1982 Account June 2 June 9 June 16 June 23 June 30P July IP July 14 p July 21 p July 28p BANKS WITH ASSETS OF $750 MILLION OR MORE 1 Total loans (gross) and securities adjusted1 603,564 604,657 602,630 600,457 605,923 605,820 603,717 602,426 603,629 2 Total loans (gross) adjusted1 486,018 485,437 486,036 484,754 490,791 489,937 489,019 487,871 488,218 3 Demand deposits adjusted2 95,273 97,612 96,830 93,078 102,364 98,903 99,423 96,527 97,372 4 Time deposits in accounts of $100,000 or more 190,598 191,561 190,545 190,643 193,846 193,160 195,393 198,757 200,982 5 Negotiable CDs 135,919 136,613 135,814 135,451 138,754 138,202 140,105 142,789 144,864 6 Other time deposits 54,678 54,948 54,730 55,192 55,092 54,958 55,288 55,968 56,118 7 Loans sold outright to affiliates3 2,805 2,850 2,924 3,060 3,057 2,853 2,855 2,812 2,817 8 Commercial and industrial 2,266 2,302 2,400 2,395 2,326 2,315 2,304 2,256 2,264 9 Other 539 548 525 665 731 537 552 556 553 BANKS WITH ASSETS OF $1 BILLION OR MORE 10 Total loans (gross! and securities adjusted1 566,541 567,640 565,523 563,195 568,501 568,678 566,660 565,287 566,523 11 Total loans (gross) adjusted1 458,291 457,788 458,344 456,980 462,855 462,315 461,351 460,141 460,482 12 Demand deposits adjusted2 88,293 90,378 89,726 86,270 94,964 91,662 92,290 89,371 90,344 13 Time deposits in accounts of $100,000 or more 181,969 182,753 181,853 181,878 185,094 184,516 186,609 189,782 191,909 14 Negotiable CDs 130,745 131,294 130,568 130,166 133,435 132,909 134,709 137,264 139,243 15 Other time deposits 51,223 51,460 51,285 51,712 51,660 51,607 51,900 52,518 52,666 16 Loans sold outright to affiliates3 2,716 2,757 2,828 2,852 2,971 2,763 2,768 2,726 2,724 17 Commercial and industrial 2,193 2,226 2,321 2,321 2,262 2,248 2,240 2,192 2,192 18 Other 523 532 508 530 709 515 528 534 532 BANKS IN NEW YORK CITY 19 Total loans (gross) and securities adjusted1,4 135,577 134,382 135,465 133,975 135,780 135,891 135,770 133,924 134,454 20 Total loans (gross) adjusted1 114,123 112,696 114,219 112,896 114,962 115,132 115,300 113,491 114,064 21 Demand deposits adjusted2 26,565 24,331 25,028 23,736 27,211 27,028 25,764 24,959 24,941 22 Time deposits in accounts of $100,000 or more 44,313 44,545 44,671 43,935 46,209 45,907 45,685 46,337 47,914 23 Negotiable CDs 33,359 33,495 33,765 33,127 35,396 35,039 34,846 35,329 36,922 24 Other time deposits 10,954 11,050 10,906 10,809 10,813 10,868 10,839 11,008 10,993 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 Domestic Nonfinancial Statistics • August 1982 1.291 LARGE WEEKLY REPORTING BRANCHES AND AGENCIES OF FOREIGN BANKS Assets and Liabilities Millions of dollars, Wednesday figures, 1982 Account June 2 June 9 June 16 June 23 June 30P July IP July 14P July 21P July 28 p 1 Cash and due from depository institutions 6,423 5,775 5,911 5,951 6,400 6,243 5,973 6,260 6,231 2 Total loans and securities 45,174 46,079 44,830 45,873 46,916 45,538 45,489 45,732 45,352 3 U.S. Treasury securities 2,257' 2,273' 2,180' 2,126' 2,324 2,025 1,924 1,935 1,911 4 5 O Fe t d h e er r a s l e f c u u n ri d t s ie s s o ld1 3,9 8 8 4 6 7 ' 4,3 8 4 5 6 2 ' 3,3 7 3 7 7 1 ' 4,8 7 1 7 6 3 ' 4,9 7 6 7 2 8 4,0 7 6 8 6 0 3,4 7 8 9 6 6 3,7 7 5 9 6 3 2,7 8 1 3 5 5 6 To commercial banks in United States.. 3,737 3,970 2,982 4,592 4,627 3,832 3,242 3,510 2,554 7 To others 248 377 356 224 335 234 244 245 161 8 Other loans, gross 38,084 38,608 38,542 38,158 38,851 38,666 39,284 39,248 39,891 9 Commercial and industrial 18,870 18,904 19,031 18,754 18,890 18,729 18,851 18,605 18,839 10 Bankers acceptances and commercial paper 3,168 3,393 3,371 3,355 3,362 3,236 3,222 3,056 3,034 11 All other 15,702 15,511 15,660 15,399 15,528 15,494 15,629 15,549 15,805 12 U.S. addressees 13,564 13,413 13,478 13,223 13,363 13,367 13,597 13,517 13,786 13 Non-U.S. addressees 2,137 2,098 2,183 2,176 2,164 2,127 2,032 2,033 2,018 14 To financial institutions 14,607 14,890 14,824 15,055 15,202 15,267 15,650 15,756 15,974 15 Commercial banks in United States .. 11,605 11,888 11,840 11,983 11,889 12,096 12,553 12,679 12,946 16 Banks in foreign countries 2,448 2,445 2,396 2,409 2,582 2,511 2,434 2,455 2,390 17 Nonbank financial institutions 554 557 588 663 731 660 664 623 637 18 For purchasing and carrying securities .. 452 767 575 304 389 273 430 562 738 19 All other 4,155 4,046 4,113 4,045 4,371 4,398 4,353 4,324 4,340 20 Other assets (claims on nonrelated parties) 12,403 12,583' 12,663 12,495 12,578 12,630 13,096 12,924 12,946 21 Net due from related institutions 11,974 12,277 11,836 11,520 12,591 10,631 11,066 10,976 11,767 22 Total assets 75,973 76,714' 75,240 75,839 78,485 75,042 75,624 75,893 76,296 23 Deposits or credit balances2 21,990 21,647 20,459 20,871 21,887 21,074 21,459 20,965 20,885 24 Credit balances 268 259 214 196 262 198 226 275 237 25 Demand deposits 2,156 1,865 1,912 1,968 2,319 2,018 2,074 1,903 2,022 26 Individuals, partnerships, and corporations 826 741 846 726 955 770 738 721 753 27 Other 1,330 1,124 1,065 1,242 1,364 1,248 1,335 1,181 1,270 28 Total time and savings 19,567 19,523 18,333 18,707 19,306 18,858 19,160 18,787 18,626 29 Individuals, partnerships, and corporations 16,019 16,187 14,876' 15,413 15,941 15,600 15,710 15,786 15,532 3 3 3 0 1 2 Bo F rr e o O d w e th r i a n e l r g s f 3 u nds purchased4 3 7 3 0 , , , 8 5 6 3 4 1 9 8 5 3 3 7 1 , , , 3 4 2 3 9 0 6 7 1 3 7 1 3 , , , 7 3 4 4 0 5 4 6 7 ' 2 6 3 9 , , , 0 2 9 0 9 0 5 4 0 3 7 3 2 , , , 3 8 2 6 1 0 4 0 3 3 6 3 0 , , , 3 2 3 0 5 3 9 8 2 3 6 3 0 , , , 4 2 6 4 9 2 9 7 7 3 7 3 2 , , , 0 7 0 0 8 8 1 8 9 3 3 3 8 , , , 0 2 3 9 1 5 4 3 8 33 From commercial banks in United States 6,626 6,337 6,569 4,931 6,852 5,429 5,601 66,,990066 7,435 34 From others 1,213 1,159 1,175 1,074 957 880 696 888822 923 35 Other liabilities for borrowed money ... 22,776 23,704 23,562 23,894 24,393 24,022 24,330 24,301 24,855 36 To commercial banks in United States 20,500 21,349 21,157 21,535 22,040 21,709 21,965 21,888 22,406 37 To others 2,276 2,355 2,405 2,360 2,353 2,314 2,366 2,413 2,449 38 Other liabilities to nonrelated parties 12,922 13,143R 13,004 13,003 12,556 12,693 12,921 13,030 13,034 39 Net due to related institutions 10,446 10,722 10,471 12,065 11,840 10,944 10,617 9,809 9,164 40 Total liabilities 75,973 76,714' 75,240 75,839 78,485 75,042 75,624 75,893 76,296 MEMO 41 Total loans (gross) and securities adjusted' 29,832 30,221 30,009 29,297 30,400 29,610 29,694 29,543 29,852 42 Total loans (gross) adjusted5 26,727 27,096 27,058 26,399 27,298 26,804 26,975 26,814 27,106 1. Includes securities purchased under agreements to resell. NOTE. Beginning in the week ending Dec. 9, 1981, shifts of assets and liabilities 2. Balances due to other than directly related institutions. to international banking facilities (IBFs) reduced the amounts reported in some 3. Borrowings from other than directly related institutions. items, especially in loans to foreigners and to a lesser extent in time deposits. Based 4. Includes securities sold under agreements to repurchase. on preliminary reports, the large weekly reporting branches and agencies shifted 5. Excludes loans and federal funds transactions with commercial banks in United $22.2 billion of assets to their IBFs in the six weeks ending Jan. 13, 1982. Domestic States offices net positions with IBFs are now included in net due from or net due to related institutions. More detail will be available later. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Banks A19 1.30 LARGE WEEKLY REPORTING COMMERCIAL BANKS Domestic Classified Commercial and Industrial Loans Millions of dollars Outstanding Net change during IIInnnddduuussstttrrryyy ccclllaaassssssiiifffiiicccaaatttiiiooonnn 1982 1982 Mar. 31 Apr. 28 May 26 June 30 July 28p 01 Q2 May June July? 1 Durable goods manufacturing 28,638 29,086 28,842 29,104 28,537 1,720 465 -244 262 -567 2 Nondurable goods manufacturing 23,162 23,577 23,998 25,322 24,746 1,364 2,160 420 1,324 -576 3 Food, liquor, and tobacco 4,550 4,816 4,784 4,817 4,688 346 267 -31 32 -129 4 Textiles, apparel, and leather 4,535 4,654 4,722 4,864 5,070 353 329 68 142 206 5 Petroleum refining 4,449 4,409 4,677 5,087 4,'792 -418 638 269 410 -295 6 Chemicals and rubber 5,138 5,187 5,232 5,566 5,160 795 428 45 334 -405 7 Other nondurable goods 4,490 4,512 4,581 4,988 5,035 287 498 70 406 47 8 Mining (including crude petroleum and natural gas) 25,851 26,792 28,246' 28,257 27,857 1,486 2,406 l,454r 11 -399 9 Trade 28,868 28,642 28,704 29,166 28,666 794 298 62 462 -500 10 Commodity dealers 2,322 1,858 1,873 1,861 1,648 30 -460 14 -12 -213 11 Other wholesale 13,573 13,558 13,489 13,775 13,686 606 202 -69 286 -89 12 Retail 12,972 13,225 13,342 13,529 13,331 158 556 116 187 -198 13 Transportation, communication, and other public utilities 23,642 23,686 23,703 25,030 24,972 462 1,387 18 1,326 -58 14 Transportation 9,154 9,101 9,070 9,228 8,932 540 74 -31 158 -296 15 Communication 4,242 4,471 4,559 4,779 4,794 287 538 88 220 15 16 Other public utilities 10,247 10,114 10,074 11,022 11,245 -365 775 -40 949 222 17 Construction 7,252 7,413 7,690 7,765 7,940 14 513 277 75 175 18 Services 27,142 27,359 27,956 28,781 28,842 554 1,638 597 825 61 19 All other1 17,268 16,942 17,133 17,307 17,478 195 38 191 174 172 20 Total domestic loans 181,825 183,496 186,271T 190,730 189,038 6,589 8,905 2,774 r 4,459 -1,692 21 MEMO: Term loans (original maturity more than 1 year) included in domestic loans . 87,203 88,277 89,282 89,849 87,588 1,917 2,646 1,004 568 -2,261 1. Includes commercial and industrial loans at a few banks with assets of $1 NOTE. New series. The 134 large weekly reporting commercial banks with dobillion or more that do not classify their loans. mestic assets of $1 billion or more as of Dec. 31, 1977, are included in this series. The series is on a last-Wednesday-of-the-month basis. Partly estimated historical data are available from the Banking Section, Division of Research and Statistics, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Nonfinancial Statistics • August 1982 1.31 GROSS DEMAND DEPOSITS of Individuals, Partnerships, and Corporations1 Billions of dollars, estimated daily-average balances Commercial banks TTyyppee ooff hhoollddeerr 1980 1981 1982 11997788 1199779922 DDeecc.. DDeecc.. Dec. Mar.3 June4 Sept. Dec. Mar. June 1 All holders—Individuals, partnerships, and corporations 294.6 302.2 315.5 280.8 277.5 288.9 268.9 271.5 2 Financial business 27.8 27.1 29.8 30.8 28.2 28.0 27.8 28.6 3 Nonfinancial business 152.7 157.7 162.3 144.3 148.6 154.8 138.7 141.4 4 Consumer 97.4 99.2 102.4 86.7 n a. 82.1 86.6 84.6 83.7 5 Foreign 2.7 3.1 3.3 3.4 3.1 2.9 3.1 2.9 6 Other 14.1 15.1 17.2 15.6 15.5 16.7 14.6 15.0 Weekly reporting banks 1980 1981 1982 11997788 11997799ss DDeecc.. DDeecc.. Dec. Mar.3 June4 Sept. Dec. Mar. June 7 All holders—Individuals, partnerships, and corporations 147.0 139.3 147.4 133.2 131.3 137.5 126.8 127.9 8 Financial business 19.8 20.1 21.8 21.9 20.7 21.0 20.2 20.2 9 Nonfinancial business 79.0 74.1 78.3 69.8 71.2 75.2 67.1 67.7 10 Consumer 38.2 34.3 35.6 30.6 n a. 28.7 30.4 29.2 29.7 11 Foreign 2.5 3.0 3.1 3.2 2.9 2.8 2.9 2.8 12 Other 7.5 7.8 8.6 7.7 7.9 8.0 7.3 7.5 1. Figures include cash items in process of collection. Estimates of gross deposits 4. Demand deposit ownership survey estimates for June 1981 are not yet available are based on reports supplied by a sample of commercial banks. Types of depositors due to unresolved reporting errors. in each category are described in the June 1971 BULLETIN, p. 466. 5. After the end of 1978 the large weekly reporting bank panel was changed to 2. Beginning with the March 1979 survey, the demand deposit ownership survey 170 large commercial banks, each of which had total assets in domestic offices sample was reduced to 232 banks from 349 banks, and the estimation procedure exceeding $750 million as of Dec. 31, 1977. See "Announcements," p. 408 in the was modified slightly. To aid in comparing estimates based on the old and new May 1978 BULLETIN. Beginning in March 1979, demand deposit ownership estireporting sample, the following estimates in billions of dollars for December 1978 mates for these large banks are constructed quarterly on the basis of 97 sample have been constructed using the new smaller sample; financial business, 27.0; banks and are not comparable with earlier data. The following estimates in billions nonfinancial business, 146.9; consumer, 98.3; foreign, 2.8; and other, 15.1. of dollars for December 1978 have been constructed for the new large-bank panel; 3. Demand deposit ownership data for March 1981 are subject to greater than financial business, 18.2; nonfinancial business, 67.2; consumer, 32.8; foreign, 2.5; normal errors reflecting unusual reporting difficulties associated with funds shifted other, 6.8. to negotiable order of withdrawal (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 1982 IInnssttrruummeenntt 11997777 11997788 1199779911 11998800 11998811 DDeecc.. DDeecc.. DDeecc.. DDeecc.. DDeecc.. Jan. Feb. Mar. Apr. May June Commercial paper (seasonally adjusted) 1 All issuers 65,051 83,438 112,803 124,524 165,508 165,305 164,954 166,572 171,709 176,048 178,683 Financial companies2 Dealer-placed paper3 2 Total 8,796 12,181 17,359 19,790 30,188 29,303 30,057 31,574 32,848 34,683 36,686 3 Bank-related (not seasonally adjusted) 22,,113322 3,521 2,784 33,,556611 66,,004455 66,,220000 66,,553388 77,,003344 77,,888877 77,,997744 77,,117733 Directly placed paper* 4 Total 40,574 51,647 64,757 67,854 81,660 80,566 79,370 78,168 81,428 82,228 84,614 5 Bank-related (not seasonally adjusted) 7,102 12,314 17,598 22,382 26,914 28,801 27,435 27,426 29,276 30,414 30,668 6 Nonfinancial companies5 15,681 19,610 30,687 36,880 53,660 55,436 55,527 56,830 57,433 59,137 57,383 Bankers dollar acceptances (not seasonally adjusted unless noted otherwise) 7 Total 25,450 33,700 45,321 54,744 69,226 70,088 70,468 71,619 71,128 73,756 Holder 8 Accepting banks 10,434 8,579 9,865 10,564 10,857 10,227 11,953 12,964 12,675 13,260 9 Own bills 8,915 7,653 8,327 8,963 9,743 9,095 10,928 11,139 11,409 12,035 10 Bills bought 1,519 927 1,538 1,601 1,115 1,132 1,025 1,825 1,266 11,,222255 Federal Reserve Banks 11 Own account 954 1 704 776 0 0 0 0 0 0 n a. 12 Foreign correspondents 362 664 1,382 1,791 1,442 1,427 1,530 1,379 1,329 1,234 13 Others 13,700 24,456 33,370 41,614 56,926 58,434 56,985 57,276 57,124 59,262 Basis 14 Imports into United States 6,378 8,574 10,270 11,776 14,765 14,727 15,430 14,877 15,303 15,503 15 Exports from United States 5,863 7,586 9,640 12,712 15,400 15,599 16,119 16,835 16,887 17,795 16 All other 13,209 17,540 25,411 30,257 39,061 39,762 38,919 39,907 38,937 40,458 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 NonfinancialS tatistics • August 1982 1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per annum Effective date Rate Effective Date Rate Month Average Month rate 1981—Sept. 15 20.00 1981—Dec. 1 15.75 1981—Mar. 18.05 1981—Dec 22 19.50 Apr. 17.15 Oct. 5 19.00 1982—Feb. 2 16.50 May 19.61 1982—Jan 13 18.00 18 17.00 June 20.03 Feb Nov. 3 17.50 23 16.50 July 20.39 9 17.00 July 20 16.00 Aug. 20.50 Apr 16.50- 29 15.50 Sept. 20.08 May 17 17.00 1981—Jan 20.16 Oct. 18.45 June 20 16.50 Feb 19.43 Nov. 16.84 July 24 16.00 1.34 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 3-8, 1982 Size of loan (in thousands of dollars) All sizes 1,000 1-24 25-49 50-99 100-499 500-999 and over SHORT-TERM COMMERCIAL AND INDUSTRIAL LOANS 1 Amount of loans (thousands of dollars) 36,600,259 885,940 501,046 707,807 2,349,121 1,198,641 30,957,703 2 Number of loans 161,197 115,667 14,935 11,137 13,022 1,848 4,588 3 Weighted-average maturity (months) 1.2 3.4 3.8 3.4 3.6 2.4 .9 4 Weighted-average interest rate (percent per annum).. 17.11 18.51 18.56 18.06 17.77 17.98 16.94 5 Interquartile range1 16.58-17.51 17.42-19.51 17.55-19.25 17.62-18.50 17.00-18.67 17.00-18.97 16.57-17.30 Percentage of amount of loans 6 With floating rate 29.8 39.2 48.4 44.8 52.3 50.8 26.3 7 Made under commitment 51.7 36.2 40.3 49.3 63.7 51.2 51.5 8 With no stated maturity 14.4 12.8 14.8 24.9 19.9 24.0 13.4 LONG-TERM COMMERCIAL AND INDUSTRIAL LOANS 9 Amount of loans (thousands of dollars) 3,705,382 253,640 410,817 164,045 2,876,880 10 Number of loans 20,575 18,222 1,547 244 562 11 Weighted-average maturity (months) 49.8 29.9 50.1 43.3 51.8 12 Weighted-average interest rate (percent per annum).. 16.96 18.80 17.59 17.29 16.69 13 Interquartile range1 16.50-17.51 17.79-19.56 17.50-17.81 16.50-18.00 16.00-17.32 Percentage of amount of loans 14 With floating rate 71.7 38.6 45.9 83.5 77.7 15 Made under commitment 72.1 28.9 36.2 82.8 80.4 CONSTRUCTION AND 16 Amount of loans (thousands of dollars) 1,921,308 182,396 228,405 166,690 427,520 916,297 17 Number of loans 31,454 18,881 6,446 2,273 3,050 805 18 Weighted-average maturity (months) 11.1 7.2 12.3 8.3 14.1 10.6 19 Weighted-average interest rate (percent per annum).. 17.80 19.13 18.81 17.97 18.45 16.% 20 Interquartile range1 16.07-19.10 18.54-20.15 17.00-19.82 16.72-19.25 18.13-19.59 16.07-17.88 Percentage of amount of loans 21 With floating rate 28.8 37.7 22.5 47.1 20.7 29.0 22 Secured by real estate 85.0 74.1 82.1 80.6 97.9 82.8 23 Made under commitment 32.9 55.5 65.6 19.3 18.4 29.6 24 With no stated maturity .9 1.9 1.1 2.7 1.4 .0 Type of construction 25 1- to 4-family 30.0 40.0 54.0 40.8 26.0 21.9 26 Multifamily 4.8 3.2 1.1 4.9 2.7 7.1 27 Nonresidential 65.2 56.8 44.9 54.3 71.3 71.0 All 250 sizes 1-9 10-24 25-49 50-99 100-249 and over 28 Amount of loans (thousands of dollars) 1,224,054 172,901 214,006 167,333 190,019 193,183 286,611 29 Number of loans 70,983 46,365 15,091 4,919 2,781 1,363 465 30 Weighted-average maturity (months) 7.6 6.6 6.4 7.6 5.3 9.3 9.4 31 Weighted-average interest rate (percent per annum).. 17.76 17.63 17.59 17.59 18.01 17.76 17.91 32 Interquartile range1 17.18-18.39 17.00-18.39 17.18-18.27 17.06-18.13 17.25-18.68 17.17-18.27 17.25-18.77 By purpose of loan 33 Feeder livestock 17.81 17.89 17.73 17.69 18.56 17.84 17.56 34 Other livestock 17.51 17.75 17.57 17.34 17.42 17.97 * 35 Other current operating expenses 17.66 17.46 17.61 17.57 17.83 17.65 17.59 36 Farm machinery and equipment 18.19 18.14 17.31 17.30 * * * 37 Other 17.85 18.21 17.70 17.68 17.76 17.85 17.98 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 All 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. 1982 1982, week ending IInnssttrruummeenntt 11997799 11998800 11998811 Apr. May June July July 2 July 9 July 16 July 23 July 30 MONEY MARKET RATES 1 Federal funds1-2 11.19 13.36 16.38 14.94 14.45 14.15 12.59 14.81 14.47 13.18 12.14 11.02 Commercial paper3'4 2 1-month 10.86 12.76 15.69 14.38 13.79 13.95 12.62 14.68 14.22 13.26 11.39 11.13 3 3-month 10.97 12.66 15.32 14.06 13.42 13.96 12.94 14.71 14.29 13.46 11.91 11.69 4 6-month 10.91 12.29 14.76 13.64 13.02 13.79 13.00 14.46 14.04 13.28 12.11 12.24 Finance paper, directly placed3'4 5 1-month 10.78 12.44 15.30 14.17 13.49 13.79 12.42 14.46 13.96 13.05 11.16 10.93 6 3-month 10.47 11.49 14.08 13.21 12.75 13.09 12.24 13.52 13.49 12.57 11.44 11.21 7 6-month 10.25 11.28 13.73 13.09 12.61 12.69 12.15 13.26 13.12 12.31 11.54 11.39 Bankers acceptances4,5 8 3-month 11.04 12.78 15.32 13.95 13.29 14.00 12.90 14.68 14.10 13.45 11.99 11.66 9 6-month n.a. n.a. 14.66 13.49 12.90 13.76 12.91 14.37 13.78 13.09 12.16 12.27 Certificates of deposit, secondary market6 10 1-month 11.03 12.91 15.91 14.44 13.95 14.18 12.88 14.86 14.44 13.54 11.80 11.25 11 3-month 11.22 13.07 15.91 14.44 13.80 14.46 13.44 15.21 14.80 13.96 12.58 12.01 12 6-month 11.44 12.99 15.77 14.42 13.77 14.66 13.80 15.36 14.88 14.05 12.88 13.00 13 Eurodollar deposits, 3-month2 11.96 14.00 16.79 15.18 14.53 15.45 14.37 16.28 15.78 15.00 14.10 13.08 U.S. Treasury bills4 Secondary market7 14 3-month 10.07 11.43 14.03 12.70 12.09 12.47 11.35 12.81 12.23 11.71 10.64 10.51 15 6-month 10.06 11.37 13.80 12.80 12.16 12.70 11.88 13.08 12.57 12.06 11.21 11.39 16 1-year 9.75 10.89 13.14 12.50 11.98 12.57 11.90 12.86 12.50 12.06 11.29 11.50 Auction average8 17 3-month 10.041 11.506 14.077 12.821 12.148 12.108 11.914 13.269 12.806 11.797 11.140 10.559 18 6-month 10.017 11.374 13.811 12.861 12.220 12.310 12.236 13.419 12.976 11.967 11.441 11.378 1199 99..881177 1100..774488 1133..115599 1122..773311 1122..119944 1122..117733 1122..331188 1122..331188 CAPITAL MARKET RATES U.S. Treasury notes and bonds9 Constant maturities10 20 1-year 10.67 12.05 14.78 13.98 13.34 14.07 13.24 14.41 13.98 13.46 12.50 12.73 21 2-year 10.12 11.77 14.56 14.20 13.78 14.47 13.80 14.75 14.43 14.00 13.20 13.34 ?? 2- /2-year11 14.80 14.00 13.45 23 3-year 9.71 11.55 14.44 14.18 13.77 14.48 14.00 14.81 14.49 14.08 13.53 13.72 24 5-year 9.52 11.48 14.24 14.00 13.75 14.43 14.07 14.73 14.48 14.10 13.66 13.89 25 7-year 9.48 11.43 14.06 13.94 13.74 14.47 14.07 14.73 14.47 14.06 13.67 13.93 26 10-year 9.44 11.46 13.91 13.87 13.62 14.30 13.95 14.54 14.30 13.93 13.58 13.85 27 20-year 9.33 11.39 13.72 13.57 13.46 14.18 13.76 14.28 14.06 13.73 13.44 13.69 28 30-year 9.29 11.30 13.44 13.37 13.24 13.92 13.55 14.03 13.79 13.53 13.27 13.49 Composite12 29 Over 10 years (long-term) 8.74 10.81 12.87 12.84 12.67 13.32 12.97 13.42 13.25 12.98 12.69 12.87 State and local notes and bonds Moody's series13 30 Aaa 5.92 7.85 10.43 11.66 11.05 11.55 11.47 11.60 11.55 11.40 11.40 11.40 31 Baa 6.73 9.01 11.76 13.29 12.63c 12.74c 13.17 13.20 13.20 13.15 13.15 13.15 32 Bond Buyer series14 6.52 8.59 11.33 12.59 11.95 12.45 12.28 12.58 12.47 12.36 12.01 11.97 Corporate bonds Seasoned issues15 33 All industries 10.12 12.75 15.06 15.53 15.34 15.77 15.70 15.96 15.90 15.76 15.54 15.58 34 Aaa 9.63 11.94 14.17 14.46 14.26 14.81 14.61 15.07 14.96 14.65 14.32 14.39 33 Aa 9.94 12.50 14.75 14.90 14.77 15.26 15.21 15.50 15.44 15.27 15.01 15.04 36 A 10.20 12.89 15.29 15.95 15.70 16.07 16.20 16.29 16.29 16.28 16.13 16.09 37 Baa 10.69 13.67 16.04 16.78 16.64 16.92 16.80 16.95 16.88 16.82 16.70 1166..7788 Aaa utility bonds16 38 10.03 12.74 15.56 15.83 15.22 15.92 15.61 15.88 15.33 39 Recently offered issues 10.02 12.70 15.56 15.45 15.24 15.84 15.61 16.03 15.80 15.70 15.26 15.47 MEMO: Dividend/price ratio17 40 Preferred stocks 9.07 10.57 12.36 12.90 12.58 12.96 13.24 13.20 13.35 13.29 13.18 13.15 41 Common stocks 5.46 5.25 5.41 5.99 5.97 5.97 6.31 6.29 6.43 6.24 6.19 6.38 1. Weekly and monthly figures are averages of all calendar days, where the 11. Each weekly figure is calculated on a biweekly basis and is the average of rate for a weekend or holiday is taken to be the rate prevailing on the preceding five business days ending on the Monday following the calendar week. The biweekly business day. The daily rate is the average of the rates on a given day weighted rate is used to determine the maximum interest rate payable in the following twoby the volume of transactions at these rates. week period on small saver certificates. (See table l.lo.) 2. Weekly figures are statement week averages—that is, averages for the week 12. Unweighted averages of yields (to maturity or call) for all outstanding notes ending Wednesday. and bonds neither due nor callable in less than 10 years, including several very low 3. Unweighted average of offering rates quoted by at least five dealers (in the yielding "flower" bonds. case of commercial paper), or finance companies (in the case of finance paper). 13. General obligations only, based on figures for Thursday, from Moody's Before November 1979, maturities for data shown are 30-59 days, 90-119 days, Investors Service. and 120-179 days for commercial paper; and 30-59 days, 90-119 days, and 150- 14. General obligations only, with 20 years to maturity, issued by 20 state and 179 days for finance paper. local governmental units of mixed quality. Based on figures for Thursday. 4. Yields are quoted on a bank-discount basis, rather than an investment yield 15. Daily figures from Moody's Investors Service. Based on yields to maturity basis (which would give a higher figure). on selected long-term bonds. 5. Dealer closing offered rates for top-rated banks. Most representative rate 16. Compilation of the Federal Reserve. Issues included are long-term (20 years (which may be, but need not be, the average of the rates quoted by the dealers). or more). New-issue yields are based on quotations on date of offering; those on 6. Unweighted average of offered rates quoted by at least five dealers early in recently offered issues (included only for first 4 weeks after termination of underthe day. writer price restrictions), on Friday close-of-business quotations. 7. Unweighted average of closing bid rates quoted by at least five dealers. 17. Standard and Poor's corporate series. Preferred stock ratio based on a sample 8. Rates are recorded in the week in which bills are issued. of ten issues: four public utilities, four industrials, one financial, and one trans- 9. Yields are based on closing bid prices quoted by at least five dealers. portation. Common stock ratios on the 500 stocks in the price index. 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 • August 1982 1.36 STOCK MARKET Selected Statistics 1981 1982 Y .. 11997799 11998800 11998811 Nov. Dec. Jan. Feb. Mar. Apr. May June July Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 55.67 68.06 74.02 71.49 71.81 67.91 66.16 63.86 66.97 67.07 63.10r 62.82 2 Industrial 61.82 78.64 85.44 80.86 81.70 76.85 74.78 71.51 75.59 75.97 71.59 71.37 3 Transportation 45.20 60.52 72.61 67.68 68.27 62.04 59.09 55.19 57.91 56.84 53.07 53.40 4 Utility 36.46 37.35 38.90 40.73 40.22 39.30 38.32 38.57 39.20 39.40 37.34 37.20 5 Finance 58.65 64.28 73.52 76.47 74.74 70.99 70.50 69.08 71.44 69.16 63.19 61.59 6 Standard & Poor's Corporation (1941^13 = 10)1... 107.94 118.71 128.05 122.92 123.79 117.41 114.50 110.84 116.31 116.35 109.70 109.38 7 American Stock Exchange (Aug. 31, 1973 = 100) 186.56 300.94 343.58 321.0 322.65 296.49 275.10 255.08 271.15 272.88 254.72 250.63 Volume of trading (thousands of shares) 8 New York Stock Exchange 32,233 44,867 46,967 50,791 43,598 48,419 51,169 55,227 54,116r 51,328' 50,481r 54,533 9 American Stock Exchange 4,182 6,377 5,346 5,257 4,992 4,497 4,400 4,329 3,937 4,292 3,720 3,611 Customer financing (end-of-period balances, in millions of dollars) 10 Regulated margin credit at brokers-dealers2 11,619 14,721 14,411 14,124 14,411 13,441 13,023 12,095 12,202 12,237 11,783 f 11 Margin stock3 11,450 14,500 14,150 13,860 14,150 13,190 12,770 11,840 11,950 11,990 11,540 1 12 Convertible bonds 167 219 259 261 259 249 251 249 251 246 242 n a. 13 Subscription issues 2 2 2 3 2 2 2 6 1 1 1 Free credit balances at brokers4 14 Margin-account 1,105 2,105 3,515 3,290 3,515 3,455 3,755 3,895 4,145 4,175 4,220 15 Cash-account 4,060 6,070 7,150 6,865 7,150 6,575 6,595 6,510 6,270 6,355 6,350 Margin-account debt at brokers (percentage distribution, end of period) 16 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 By equity class (in percent)5 17 Under 40 16.0 14.0 37.0 30.0 37.0 3377..00 44.0 3399..00 3344..00 4400..00 4433..00 18 40-49 29.0 30.0 21.0 25.0 24.0 24.0 22.0 24.0 25.0 24.0 21.0 19 50-59 27.0 25.0 22.0 21.0 17.0 16.0 15.0 16.0 18.0 15.0 16.0 20 60-69 14.0 14.0 10.0 11.0 10.0 10.0 8.0 10.0 10.0 9.0 9.0 21 70-79 8.0 9.0 6.0 6.0 6.0 7.0 6.0 6.0 7.0 6.0 6.0 22 80 or more 7.0 8.0 6.0 7.0 6.0 6.0 5.0 5.0 6.0 5.0 5.0 Special miscellaneous-account balances at brokers (end of period) 23 Total balances (millions of dollars)6 16,150 21,690 25,870 25,409 25,870 26,080 26,850 28,030 28,252 28,521 29,798 Distribution by equity status (percent) 24 Net credit status 44.2 47.8 58.0 57.0 58.0 58.0 58.0 59.0 57.0 58.0 59.0 Debt status, equity of 2 2 5 6 6 L 0 e s p s e t r h c a e n n t 6 o 0 r p m er o c r e e n t 47.0 44 7 . . 4 7 3 1 1 1 . . 0 0 3 1 3 0 . . 0 0 3 1 1 1 . . 0 0 3 1 1 1 . . 0 0 3 1 0 2 . . 0 0 2 1 8 3 . . 0 0 2 1 9 3 . . 0 0 2 1 9 3 . . 0 0 2 1 8 3 . . 0 0 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 proeguity instruments and secured at least in part bv stock. Credit extended is end- ceeds) occur. ot-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

Financial Institutions A29 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1981 1982 1979 1980 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May' JuneP Savings and loan associations 1 Assets 578,962 630,712 655,658 659,073 660,326 663,844 667,600 671,895 678,039 681,368 686,942 692,225 2 Mortgages 475,688 503,192 518,778 519,248 519,146 518,350 517,493 516,284 515,896 514,475 513,807 512,399 Cash and investment securities1 46,341 57,928 59,530 61,517 61,369 62,756 64,089 66,585 67,758 67,859 69,931 70,523 4 Other 56,933 69,592 77,350 78,308 79,811 82,738 86,018 89,026 94,835 99,034 103,204 109,303 5 Liabilities and net worth 578,962 630,712 655,658 659,073 660,326 663,844 667,600 671,895 678,039 681,368 686,942 692,225 6 Savings capital 470,004 511,636 515,649 519,288 519,777 524,374 526,382 529,064 535,566 532,899 534,517 538,054 7 Borrowed money 55,232 64,586 87,477 86,108 86,255 89,097 89,099 89,465 91,013 93,883 8 FHLBB 40,441 47,045 61,857 62,000 61,922 62,794 62,581 62,690 63,639 65,347 65,216 67,006 9 Other 14,791 17,541 25,620 24,108 24,333 26,303 26,518 26,775 27,374 28,536 29,224 30,147 10 Loans in process 9,582 8,767 7,040 6,757 6,451 6,369 6,249 6,144 6,399 6,550 6,748 7,021 11 Other 11,506 12,394 15,307 17,506 19,101 15,612 18,356 20,145 18,574 22,012 25,819 24,547 12 Net worth2 32,638 33,329 30,185 29,414 28,742 28,392 27,514 27,077 26,487 26,024 25,418 25,450 13 MEMO: Mortgage loan commitments outstanding3 16,007 16,102 16,012 15,733 15,758 15,225 15,131 15.397 15,582 16,375 16,622 16,839 Mutual savings banks4 14 Assets 163,405 171,564 175,234 175,693 175,258 175,728 175,938 175,763 174,776 174,813 174,952 Loans 15 Mortgage 98,908 99,865 99,944 99,903 99,879 99,997 99,788 98,838 97,464 97,160 96,334 16 Other 9,253 11,733 14,868 14,725 15,073 14,753 15,029 15,604 16,514 16,424 17,409 Securities 17 U.S. government5 7,658 8,949 9,594 9,765 9,508 9,810 9,991 9,966 10,072 10,146 9,968 18 State and local government 2,930 2,390 2,323 2,394 2,271 2,288 2,290 2,293 2,276 2,269 2,259 19 Corporate and other6 37,086 39,282 38,118 38,108 37,874 37,791 37,849 37,781 37,379 37,473 37,486 20 Cash 3,156 4,334 4,810 5,118 5,039 5,442 5,210 5,412 5,219 5,494 5,469 n a. 21 Other assets 4,412 5,011 5,577 5,681 5,615 5,649 5,781 5,869 5,852 5,846 6,027 22 Liabilities 163,405 171,564 175,234 175,693 175,258 175,728 175,938 175,763 174,776 174,813 174,952 23 Deposits 146,006 154,805 153,412 154,066 153,809 155,110 154,843 154,626 154,022 153,187 153,354 74 Regular7 144,070 151,416 151,072 151,975 151,787 153,003 152,801 152,616 151,979 151,021 151,253 25 Ordinary savings 61,123 53,971 49,254 48,238 48,456 49,425 48,898 48,297 48,412 47,733 47,895 76 Time and other 82,947 97,445 101,818 103,737 126,889 121,343 120,740 120,282 118,536 117,372 116,948 77 Other 1,936 2,086 25,769 24,806 2,023 2,108 2,042 2,010 2,043 2,166 2,101 78 Other liabilities 5,873 6,695 11,458 11,513 11,434 10,632 11,280 11,464 11,132 12,141 12,246 29 General reserve accounts 11,525 11,368 10,364 10,114 10,015 9,986 9,814 9,672 9,622 9,485 9,352 30 MEMO: Mortgage loan commitments outstanding8 3,182 1,476 1,218 1,140 1,207 1,293 916 950 978 953 998 Life insurance companies 31 Assets 432,282 479,210 509,478 515,079 519,281 521,354 525,331 526,573 530,014 533,810 537,281 Securities 32 Government 338 21,378 24,280 24,621 25,200 25,310 26,157 26,847 27,322 27,691 28,023 33 United States9 4,888 5,345 7,670 7,846 8,321 8,578 9,204 9,887 10,236 10,465 10,698 34 State and local 6,428 6,701 7,033 7,129 7,148 6,968 7,063 7,043 7,069 7,139 7,193 35 Foreign10 9,022 9,332 9,577 9,646 9,731 9,764 9,890 9,917 10,017 10,087 10,132 36 Business 222,332 238,113 250,315 253,976 255,632 254,978 257,614 257,318 257,452 260,034 261,521 37 Bonds 178,371 190,747 205,908 208,004 209,194 208,587 211,686 212,685 213,217 214,984 216,972 n.a. 38 Stocks 39,757 47,366 44,407 45,972 46,438 46,391 45,928 44,633 44,235 45,050 44,549 39 Mortgages 118,421 131,080 136,982 137,736 138,433 139,046 139,596 139,777 140,259 140,688 141,023 40 Real estate 13,007 15,033 17,801 18,382 18,629 19,157 19,276 18,999 19,472 19,947 20,186 41 Policy loans 34,825 41,411 47,042 47,731 48,275 48,741 49,092 49,535 50,083 50,640 51,059 42 Other assets 27,563 31,702 33,058 32,633 33,112 34,122 33,288 34,097 35,426 34,810 35,469 Credit unions 43 Total assetsAiabilities and capital 65,854 71,709 76,145 76,123 76,830 77,682 78,012 78,986 81,055 81,351 82,858 84,107 44 Federal 35,934 39,801 41,682 41,727 42,025 42,382 42,512 43,111 44,263 44,371 45,077 45,705 45 State 29,920 31,908 34,463 34,396 34,805 35,300 35,500 35,875 36,792 36,980 37,781 38,402 46 Loans outstanding 53,125 47,774 51,407 51,029 50,631 50,448 49,949 49,610 49,668 49,533 49,556 49,919 47 Federal 28,698 25,627 27,871 27,686 27,508 27,458 27,204 27,051 27,119 27,064 27,073 27,295 48 State 24,426 22,147 23,536 23,343 23,123 22,990 22,745 22,559 22,549 22,469 22,483 22,624 49 Savings 56,232 64,399 67,512 67,625 67,981 68,871 69,432 70,227 72,218 72,569 73,602 74,834 50 Federal (shares) 35,530 36,348 36,928 37,015 37,261 37,574 37,875 38,331 39,431 39,688 40,213 40,710 51 State (shares and deposits) 25,702 28,051 30,584 30,610 30,720 31,297 31,557 31,896 32,787 32,881 33,389 34,124 For notes see bottom of page A30. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Nonfinancial Statistics • August 1982 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year Fiscal Fiscal Fiscal Type of account or operation year year year 1981 1982 1982 1979 1980 1981 HI H2 HI Apr. May June U.S. budget 1 Receipts1^ 463,302 517,112 599,272 317,304 301,777 322,478 75,777 36,753 66,353 2 Outlays1-2 490,997 576,675 657,204 333,115 358,558 348,678 66,073 55,683 59,629 3 Surolus, or deficit (-) -27,694 -59,563 -57,932 -15,811 -56,780 -26,200 9,704 -18,930 6,724 4 Trust funds 18,335 8,801 6,817 5,797 -8,085 -17,690 626 1,958 5,192 5 Federal funds3 -46,030 -68,364 -64,749 -21,608 -48,697 -43,889 9,077 -20,888 1,532 OOffff--bbuuddggeett eennttiittiieess ((ssuurrpplluuss,, oorr ddeeffiicciitt 66 FFeeddeerraall FFiinnaanncciinngg BBaannkk oouuttllaayyss -13,261 -14,549 -20,769 -11,046 -8,728 -7,942 -1,153 -2,459 -2,052 77 OOtthheerr44 793 303 -236 -900 -1,752 227 160 -34 -216 U.S. budget plus off-budget, including Federal Financing Bank 8 Surplus, or deficit (-) -40,162 -73,808 -78,936 -27,757 -67,260 -33,914 8,711 -21,424 4,457 Source or financing 9 Borrowing from the public 33,641 70,515 79,329 33,213 54,081 41,728 2,527 3,187 3,260 10 Cash and monetary assets (decrease, or increase (- -408 -355 -1,878 2,873 -1,111 -408 -11,256 15,700 3,489 11 Other6 6,929 3,648 1,485 -8,328 14,290 -7,405 19 2,537 -4,228 MEMO: 12 Treasury operating balance (level, end of period) 24,176 20,990 18,670 16,389 12,046 10,999 28,740 7,947 10,999 13 Federal Reserve Banks 6,489 4,102 3,520 2,923 4,301 4,099 12,239 2,540 4,099 14 Tax and loan accounts 17,687 16,888 15,150 13,466 7,745 6,900 16,501 5,407 6,900 1. The Budget of the U.S. Government, Fiscal Year 1983, has reclassified sup- 5. Includes U.S. Treasury operating cash accounts; special drawing rights; gold plemental medical insurance premiums and voluntary hospital insurance premiums, tranche drawing rights; loans to International Monetary Fund; and other cash and previously included in other social insurance receipts, as offsetting receipts in the monetary assets. health function. 6. Includes accrued interest payable to the public; allocations of special drawing 2. Effective Oct. 1, 1980, the Pension Benefit Guaranty Corporation was re- rights; deposit funds; miscellaneous liability (including checks outstanding) ana classified from an off-budget agency to an on-budget agency in the Department of asset accounts; seigniorage; increment on jeold; net gain/loss for U.S. currency Labor. valuation adjustment; net gain/loss for IMF valuation adjustment; and profit on 3. Half-year figures are calculated as a residual (total surplus/deficit less trust the sale of gold. fund surplus/deficit). 4. Other off-budget includes Postal Service Fund; Rural Electrification and Tele- SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S. phone Revolving Fund; and Rural Telephone Bank; it also includes petroleum Government," Treasury Bulletin, and the Budget of the United States Government, acquisition and transportation and strategic petroleum reserve effective November Fiscal Year 1983. 1981. 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. Before 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. Be- Life insurance companies: Estimates of the American Council of Life Insurance fore 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, before 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 FFFiiissscccaaalll FFFiiissscccaaalll FFFiiissscccaaalll SSSooouuurrrccceee ooorrr tttyyypppeee yyyeeeaaarrr yyyeeeaaarrr yyyeeeaaarrr 1981 1982 1982 111999777999 111999888000 111999888111 HI H2 HI Apr. May June RECEIPTS 1 All sources1 463,302 517,112 599,272 317,304 301,777 322,478 75,777 36,753 66,353 7 Individual income taxes, net 217,841 244,069 285,917 142,889 147,035 150,565 41,672 9,576 32,273 3 Withheld 195,295 223,763 256,332 126,101 134,199 133,575 22,699 20,965 21,912 4 Presidential Election Campaign Fund... 36 39 41 36 5 34 6 7 4 Nonwithheld 56,215 63,746 76,844 59,907 17,391 66,174 35,282 1,183 11,774 6 Refunds 33,705 43,479 47,299 43,155 4,559 49,217 16,315 12,580 1,417 Corporation income taxes 7 Gross receipts 71,448 72,380 73,733 44,048 31,056 37,836 9,032 2,159 1111,,994433 8 Refunds 5,771 7,780 12,596 6,565 738 8,028 1,690 957 1,354 9 Social insurance taxes and contributions, net 138,939 157,803 182,720 101,316 91,592 108,079 21,593 20.483 17,572 10 Payroll employment taxes and contributions2 115,041 133,042 156,953 83,851 82,984 88,795 14,642 14,650 16,189 11 Self-employment taxes and contributions3 5,034 5,723 6,041 6,240 244 7,357 4,470 502 828 12 Unemployment insurance 15,387 15,336 16,129 9,205 6,355 9,809 2,120 5,004 217 13 Other net receipts1'4 3,477 3,702 3,598 2,020 2,009 2,119 362 327 336 14 Excise taxes 18,745 24,329 40,839 21,945 22,097 17,525 2,732 2,848 2,768 15 Customs deposits 7,439 7,174 8,083 3,926 4,661 4,310 704 683 771 16 Estate and gift taxes 5,411 6,389 6,787 3,259 3,742 4,208 582 613 745 17 Miscellaneous receipts5 9,252 12,748 13,790 6.487 8,441 7,984 1,152 1,349 1,634 OUTLAYS 18 All types1-6 490,997 576,675 657,204 333,115 358,558 346,286 66,073 55,683 59,629 19 National defense 117,681 135,856 159,765 80,005 87,421 93,154 16,385 15,204 16,419 20 International affairs 6,091 10,733 11,130 5,999 4,655 5,183 1,111 559 402 21 General science, space, and technology ... 5,041 5,722 6,359 3,314 3,388 3,370 532 613 543 22. Energy 6,856 6,313 10,277 5,677 4,394 2,814 511 486 601 23 Natural resources and environment 12,091 13,812 13,525 6,476 7,296 5,636 1,148 849 1,041 24 Agriculture 6,238 4,762 5,572 3,101 5,181 7,087 949 -400 53 25 Commerce and housing credit 2,579 7,788 3,946 2,073 1,825 1,410 1,178 -129 4 26 Transportation 17,459 21,120 23,381 11,991 10,753 9,915 1,867 1,425 1,752 27 Community and regional development.... 9,542 10,068 9,394 4,621 4,269 3,193 523 457 557 28 Education, training, employment, social services 29,685 30,767 31,402 15,928 13,878 12,595 2,304 1,996 1,997 79 Health1 46,962 55,220 65,982 33,113 35,322 37,213 6,298 6,019 6,772 30 Income security6 160,159 193,100 225,099 113,490 129,269 112,782 21,912 20,269 20,812 31 Veterans benefits and services 19,928 21,183 22,988 10,531 12,880 10,865 3,239 753 1,927 32, Administration of justice 4,153 4,570 4,698 2,344 2,290 2,334 419 364 353 33 General government 4,093 4,505 4,614 2,692 2,311 2,410 123 433 393 34 General-purpose fiscal assistance 8,372 8,584 6,856 3,015 3,043 3,325 1,176 352 204 35 Interest 52,566 64,504 82,537 41,178 47,667 50,070 7,633 7,720 13,787 36 Undistributed offsetting receipts7 -18,488 -21,933 -30,320 -12,432 -17,281 -14,680 -1,235 -1,286 -7,989 1. The Budget of the U.S. Government, Fiscal Year 1983 has reclassified sup- 5. Deposits of earnings by Federal Reserve Banks and other miscellaneous replemental medical insurance premiums and voluntary hospital insurance premiums, ceipts. previously included in other social insurance receipts, as offsetting receipts in the 6. Effective Oct. 1, 1980, the Pension Benefit Guaranty Corporation was renealth function. classified from an off-budget agency to an on-budget agency in the Department of 2. Old-age, disability, and hospital insurance, and railroad retirement accounts. Labor. 3. Old-age, disability, and hospital insurance. 7. Consists of interest received by trust funds, rents and royalties on the outer 4. Federal employee retirement contributions and civil service retirement and continental shelf, and U.S. government contributions for employee retirement. disability fund. SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S. Government" and the Budget of the U.S. Government, Fiscal Year 1983. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Nonfinancial Statistics • August 1982 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1980 1981 1982 IItteemm Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 1 Federal debt outstanding 870.4 884.4 914.3 936.7 970.9 977.4 1,003.9 1,034.7 1,066.4 2 Public debt securities 863.5 877.6 907.7 930.2 964.5 971.2 997.9 1,028.7 1,061.3 3 Held by public 677.1 682.7 710.0 737.7 773.7 771.3 789.8 825.5 858.9 4 Held by agencies 186.3 194.9 197.7 192.5 190.9 199.9 208.1 203.2 202.4 5 Agency securities 7.0 6.8 6.6 6.5 6.4 6.2 6.1 6.0 5.1 6 Held by public 5.5 5.3 5.1 5.0 4.9 4.7 4.6 4.6 3.9 7 Held by agencies 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.4 1.2 8 Debt subject to statutory limit 864.5 878.7 908.7 931.2 965.5 972.2 998.8 1,029.7 1,062.2 9 Public debt securities 862.8 877.0 907.1 929.6 963.9 970.6 997.2 1,028.1 1,062.7 10 Other debt1 1.7 1.7 1.6 1.6 1.6 1.6 1.6 1.6 1.5 11 MEMO: Statutory debt limit 879.0 925.0 925.0 935.1 985.0 985.0 999.8 1,079.8 1,079.8 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 1982 TTyyppee aanndd hhoollddeerr 11997788 11997799 11998800 11998811 Mar. Apr. May June July 1 Total gross public debt 789.2 845.1 930.2 1,028.7 1,061.3 1,065.7 1,071.7 1,079.6 1,089.6 By type 2 Interest-bearing debt 782.4 844.0 928.9 1,027.3 1,059.8 1,064.5 1,066.4 1,078.4 1,083.3 3 Marketable 487.5 530.7 623.2 720.3 752.6 755.8 755.7 764.0 774.0 4 Bills 161.7 172.6 216.1 245.0 256.2 254.9 256.1 256.0 262.0 5 Notes 265.8 283.4 321.6 375.3 395.0 399.7 398.4 406.9 411.1 6 Bonds 60.0 74.7 85.4 99.9 101.4 101.3 101.2 101.1 101.0 7 Nonmarketable1 294.8 313.2 305.7 307.0 307.2 308.7 310.7 314.4 309.2 8 Convertible bonds2 2.2 2.2 9 State and local government series 24.3 24.6 23.8 23.0 23.2 23.2 23.4 23.4 23.4 10 Foreign issues3 29.6 28.8 24.0 19.0 19.6 19.4 18.4 17 S 16.6 11 Government 28.0 23.6 17.6 14.9 15.6 15.4 14.8 13 8 13 6 12 Public 1.6 5.3 6.4 4.1 4.1 4.1 3.6 36 3 0 13 Savings bonds and notes 80.9 79.9 72.5 68.1 67.4 67.3 67.3 67.4 67.4 14 Government account series4 157.5 177.5 185.1 196.7 196.7 198.5 201.3 206.0 201.5 15 Non-interest-bearing debt 6.8 1.2 1.3 1.4 1.5 1.1 5.3 1.2 1.1 By holder5 16 U.S. government agencies and trust funds 170.0 187.1 192.5 203.3 202.5 204.3 206.7 17 Federal Reserve Banks 109.6 117.5 121.3 131.0 126.6 134.3 129.4 18 Private investors 508.6 540.5 616.4 694.5 733.3 727.1 735.2 19 Commercial banks 93.2 96.4 116.0 109.4 114.3 110.1 109.4 20 Mutual savings banks 5.0 4.7 5.4 5.2 5.8 5.6 5.7 21 Insurance companies 15.7 16.7 20.1 19.1 19.8 21.2 25.5 n a. n a. 22 Other companies 19.6 22.9 25.7 37.8 37.5 36.5r 38.8 23 State and local governments 64.4 69.9 78.8 85.6 88.3 88.5 91.8 Individuals 24 Savings bonds 80.7 79.9 72.5 68.0 67.5 67.3 67.4 25 Other securities 30.3 36.2 56.7 75.6 79.0 78.4 78.8 26 Foreign and international6 137.8 124.4 127.7 141.4 140.8 139.4r 138.9 27 Other miscellaneous investors7 58.9 90.1 106.9 152.3 180.3 180.0 182.9 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 l'/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 1982 1982 T /L |J 11998800 11998811 11998800 11998811 Apr. May Apr. May All maturities 1 to 5 years 1 All holders 623,186 720,293 755,832 755,688 197,409 228,550 240,814 245,598 2 U.S. government agencies and trust funds 9,564 8,669 8,001 7,994 1,990 1,906 1,906 1,906 3 Federal Reserve Banks 121,328 130,954 134,257 128,996 835 38,223 39,629 ' 37,423 4 Private investors 492,294 580,671 613,576 618,699 159,585 188,422 199,279 206,269 5 Commercial banks 77,868 74,618 76,488 75,964 44,482 39,021 39,823 39,456 6 Mutual savings banks 3,917 3,971 4,352 4,417 1,925 1,870 2,031 2,010 7 Insurance companies 11,930 12,090 13,848 13,026 4,504 5,596 6,512 6,116 8 Nonfinancial corporations 7,758 4,214 3,893 3,665 2,203 1,146 956 911 9 Savings and loan associations 4,225 4,122 4,721 4,817 2,289 2,260 2,459 2,693 10 State and local governments 21,058 18,991 21,593 22,865 4,595 4,278 4,544 4,845 11 All others 365,539 462,663 488,680 493,946 99,577 134,251 142,955 150,238 Total, within 1 year 5 to 10 years 12 All holders 297,385 340,082 355,754 354,741 56,037 63,483 66,920 63,044 13 U.S. government agencies and trust funds 830 647 20 14 1,404 779 779 779 14 Federal Reserve Banks 56,858 64,113 66,735 64,254 13,548 11,854 10,813 10,559 15 Private investors 239,697 275,322 288,998 290,474 41,175 50,851 55,329 51,706 16 Commercial banks 25,197 29,480 30,381 30,586 5,793 4,496 3,048 2,838 17 Mutual savings banks 1,246 1,569 1,829 1,864 455 238 186 201 18 Insurance companies 1,940 2,201 2,025 2,034 3,037 2,507 2,926 2,667 19 Nonfinancial corporations 4,281 2,421 1,911 1,665 357 344 258 270 20 Savings and loan associations 1,646 1,731 2,003 1,890 216 98 178 111 21 State and local governments 7,750 7,536 6,868 7,456 2,030 2,365 2,463 2,468 22 All others 197,636 230,383 243,981 244,980 29,287 40,804 46,270 43,150 Bills, within 1 year 10 to 20 years 23 All holders 216,104 245,015 254,880 256,114 36,854 44,744 46,335 46,295 24 U.S. government agencies and trust funds 1 • 2 1 3,686 3,996 3,952 3,952 25 Federal Reserve Banks 43,971 49,679 50,509 50,123 5,919 6,692 6,817 6,642 26 Private investors 172,132 195,335 204,369 205,990 27,250 34,055 35,565 35,701 27 Commercial banks 9,856 9,667 10,711 10,084 1,071 873 1,231 1,293 28 Mutual savings banks 394 423 596 631 181 151 170 189 29 Insurance companies 672 760 591 652 1,718 1,119 1,539 1,418 30 Nonfinancial corporations 2,363 1,173 1,228 1,046 431 131 329 405 31 Savings and loan associations 818 363 743 709 52 16 20 25 32 State and local governments 5,413 5,126 4,163 4,727 3,597 2,824 4,988 5,209 33 All others 152,616 177,824 186,335 188,142 20,200 28,940 27,289 27,160 Other, within 1 year Over 20 years 34 All holders 81,281 95,068 100,874 98,627 35,500 43,434 46,010 46,010 35 U.S. government agencies and trust funds 829 647 19 12 1,656 1,340 1,343 1,343 36 Federal Reserve Banks 12,888 14,433 16,226 14,131 9,258 10,073 10,263 10,118 37 Private investors 67,565 79,987 84,630 84,484 24,587 32,020 34,404 34,549 38 Commercial banks 15,341 19,814 19,670 20,502 1,325 749 2,006 1,791 39 Mutual savings banks 852 1,146 1,233 1,233 110 144 137 152 40 Insurance companies 1,268 1,442 1,433 1,382 730 666 847 790 41 Nonfinancial corporations 1,918 1,248 683 618 476 172 439 414 42 Savings and loan associations 828 1,368 1,260 1,181 21 17 61 99 43 State and local governments 2,337 2,410 2,704 2,729 3,086 1,988 2,731 2,886 44 All others 45,020 52,560 57,646 56,838 18,838 28,285 28,184 28,417 NOTE. Direct public issues only. Based on Treasury Survey of Ownership from and 725 insurance companies, each about 80 percent; (2) 406 nonfinancial cor- Treasury Bulletin (U.S. Treasury Department). porations and 464 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 May 31,1982: (1) 5,289 commercial banks, 444 mutual savings banks, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic NonfinancialS tatistics • August 1982 1.43 U.S. GOVERNMENT SECURITIES DEALERS Transactions Par value; averages of daily figures, in millions of dollars 1982 1982, week ending Wednesday IItteemm 11997799 11998800 11998811 Aprr May' June June 30 July 7 July 14 July 21 July 28 Immediate delivery1 1 U.S. government securities 13,183 18,331 24,728 28,454 31.556 27,136 27,080 27,778 35,391 38,631 34,358 By maturity 2 Bills 7,915 11,413 14,768 16,119 16,674 16,831 16,853 16,705 21,804 24,652 20,298 3 Other within 1 year 434 421 621 911 764 646 852 707 1,002 990 1,378 4 1-5 years 2,417 3,330 4,360 5,286 7,402 4,438 4,496 4,443 6,026 6,536 7,522 5-10 years 1,121 1,464 2,451 3,156 3,384 2,821 2,858 4,040 4,045 3,933 3,056 6 Over 10 years 1,276 1,704 2,528 2,983 3,333 2,400 2,022 1,884 2,515 2,520 2,104 By type of customer 7 U.S. government securities dealers 1,448 1,484 1,640 1,722 1,730 1,693 2,320 11,,556644 22,,222211 22,,770066 22,,224411 8 U.S. government securities brokers 5,170 7,610 11,750 13,671 15,507 13,061 12,559 12,887 17,640 19,176 16,322 9 All others2 6,564 9,237 11,337 13,062 14,319 12,382 12,201 13,327 15,530 16,749 15,796 10 Federal agency securities 2,723 3,258 3,306 3,622 3,918 3,237 3,588 2,837 4,775 4,752 4,368 11 Certificates of deposit 1,764 2,472 4,477 4,488 5,437 5,518 7,312 5,299 7,436 6,648 5,950 12 Bankers acceptances 1,807 2,441 2,454 2,250 2,114 2,425 3,480 3,317 2,900 13 Commercial paper 6,128 7,537 7,975 8,131 8,627 88,,333300 88,,008800 88,,007777 77,,118888 Futures transactions3 14 Treasury bills 3,523 4,527 5,630 4,629 3,532 3,318 5,753 5,822 5,474 13 Treasury coupons 1,330 975 1,970 1,215 1,019 943 1,247 1,157 982 16 Federal agency securities n.a. n a. 234 216 276 267 234 228 269 337722 336688 Forward transactions4 17 U.S. government securities 365 371 807 692 397 360 252 525 805 18 Federal agency securities 1,370 951 571 537 509 611 661 760 586 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, NOTE. 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 1982 1982, week ending Wednesday IItteemm 11997799 11998800 11998811 Aprr May June June 2 June 9 June 16 June 23 June 30 Positions Net immediate1 1 U.S. government securities 3,223 4,306 9,033 12,567 14,103 11,075 14,424 13,659 13,196 9,156 6,648 2 Bills 3,813 4,103 6,485 7,721 7,390 7,284 7,647 8,653 9,335 5,813 4,661 3 Other within 1 year -325 -1,062 -1,526 -99 -295 -462 -319 -360 -360 -515 -648 4 1-5 years -433 434 1,488 2,903 4,083 2,206 3,610 2,684 1,931 2,064 1,687 3 5-10 years 160 166 292 -540 -20 -254 647' 141 14 -393 -1,085 6 Over 10 years 30 663 2,294 2,582 2,946 2,301 2,839' 2,541 2,277 2,188 2,033 7 Federal agency securities 1,471 797 2,277 2,916 3,117 2,976 3,192 3,179 3,182 2,930 2,526 8 Certificates of deposit 2,794 3,115 3,435 4,467 4,950r 5,580 5,610 5,165 5,262 5,160 6,924 9 Bankers acceptances 1,746 2,530 2,719 2,666 3,047 2,968 2,753 2,246 2,525 10 Commercial paper 2,658 3,229 3,455' 3,503 3,717 33,,559944 33,,448800 33,,335588 33,,339966 Futures positions 11 Treasury bills -8,934 -5,460 - 9,985' -6,067 -9,202' -6,195 -5,682 -5,637 -5,879 12 Treasury coupons n.a. n a. -2,733 -2,905 -3,791' -2,045 -2,994' -2,416 2,080 -1,837 -2,036 13 Federal agency securities 522 -403 -579 73 -430 -126 -48 235 338899 Forward positions 1144 U.S. government securities -603 -590 -704' -760 -811 -962 -1,170 -516 -330 13 Federal agency securities -451 -1,064 -1,130 -1,452 -1,331 -1,469 -1,469 -1,397 -1,514 Financing2 Reverse repurchase agreements3 1166 Overnight and continuing 1144,,556688 26,924 28,801 25,655 24,683 22,613 22,451 26,839 31,687 17 Term agreements 32,048 46,509 45,253 39,795 40,329 41,260 38,921 3399,,221166 3399,,225500 Repurchase agreements4 n.a. n.a. 18 Overnight and continuing 35,919 53,246 58,415 42,038 53,964 51,466 52,052 52,710 57,117 19 Term agreements 29,449 43,140 40,142 35,525 37,640 37,934 34,490 34,663 32,898 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 1982 AAggeennccyy 11997788 11997799 11998800 Dec. Jan. Feb. Mar. Apr. May 1 Federal and federally sponsored agencies1 137,063 163,290 193,229 227,210 226,418 226,539 228,749 232,274 234,593 2 Federal agencies 23,488 24,715 28,606 31,806 31,053 30,806 31,408 31,613 31,551 3 Defense Department2 968 738 610 484 470 460 454 447 434 4 Export-Import Bank3-4 8,711 9,191 11,250 13,339 13,135 12,861 13,421 13,475 13,416 5 Federal Housing Administration5 588 537 477 413 406 397 382 376 363 6 Government National Mortgage Association participation certificates6 3,141 2,979 2,817 2,715 2,191 2,165 2,165 2,165 2,165 7 Postal Service7 2,364 1,837 1,770 1,538 1,538 1,538 1,538 1,538 1,471 8 Tennessee Valley Authority 7,460 8,997 11,190 13,115 13,115 13,187 13,250 13,430 13,500 9 United States Railway Association7 356 436 492 202 198 198 198 202 202 10 Federally sponsored agencies' 113,575 138,575 164,623 195,404 195,365 195,733 197,341 200,661 203,042 11 Federal Home Loan Banks 27,563 33,330 41,258 58,090 57,387 57,743 58,839 59,937 60,772 12 Federal Home Loan Mortgage Corporation 2,262 2,771 2,536 2,604 2,604 2,604 2,500 2,500 2,500 13 Federal National Mortgage Association 41,080 48,486 55,185 58,749 58,860 59,018 59,270 60,478 61,996 14 Federal Land Banks 20,360 16,006 12,365 9,717 8,717 8,717 8,717 8,217 8,217 15 Federal Intermediate Credit Banks 11,469 2,676 1,821 1,388 1,388 1,388 1,388 926 926 16 Banks for Cooperatives 4,843 584 584 220 220 220 220 220 220 17 Farm Credit Banks' 5,081 33,216 48,153 60,034 61,187 61,041 61,405 63,381 63,409 18 Student Loan Marketing Association8 915 1,505 2,720 4,600 5,000 5,000 5,000 5,000 5,000 19 Other 2 1 1 2 2 2 2 2 2 MEMO: 20 Federal Financing Bank debt1'9 51,298 67,383 87,460 110,698 111,965 112,367 113,567 114,961 117,475 Lending to federal and federally sponsored agencies 21 Export-Import Bank4 6,898 8,353 10,654 12,741 12,741 12,741 13,305 13,305 13,305 22 Postal Service7 2,114 1,587 1,520 1,288 1,288 1,288 1,288 1,288 1,221 23 Student Loan Marketing Association8 915 1,505 2,720 4,600 5,000 5,000 5,000 5,000 5,000 24 Tennessee Valley Authority 5,635 7,272 9,465 11,390 11,435 11,462 11,525 11,685 11,775 25 United States Railway Association7 356 436 492 202 198 198 198 202 202 Other Lending10 26 Farmers Home Administration 23,825 32,050 39,431 48,821 49,026 49,081 48,681 49,356 51,056 27 Rural Electrification Administration 4,604 6,484 9,196 13,516 13,836 13,989 14,452 14,716 15,046 28 Other 6,951 9,696 13,982 18,140 18,441 18,608 19,118 19,409 19,870 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. involvedare not available for trading purposes. Securities owned, and hence dealer positions, do not include securities to resell (reverse RPs). Before 1981, data for NOTE. Data for positions are averages of daily figures, in terms of par value, immediate positions include forward positions. based on the number of trading days in the period. Positions are shown net and 2. Figures cover financing involving U.S. government and federal agency secu- are on a commitment basis. Data for financing are based on Wednesday figures, rities, negotiable CDs, bankers acceptances, and commercial paper. in terms of actual money borrowed or lent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic NonfinancialS tatistics • August 1982 1.46 NEW SECURITY ISSUES of State and Local Governments Millions of dollars TTyyppee ooff iissssuuee oorr iissssuueerr,, 1981 1982 oorr uussee 11997799 11998800 11998811 Oct. Nov. Dec. Jan.' Feb.' Mar.r Apr. May 1 All issues, new and refunding1 43,365 48,367 47,732 4,097 5,355 4,744 3,875 3,720 5,653 6,668 5,569 Type of issue 2 General obligation 12,109 14,100 12,394 748 1.315 749 1,038 1,054 1,733 2,210 1,498 3 U.S. government loans2 53 38 34 2 3 1 2 0 9 10 10 4 Revenue 31,256 34,267 35,338 3,349 4,040 3,995 2,837 2,666 3,920 4,480 4,071 5 U.S. government loans2 67 57 55 5 2 3 4 6 5 32 38 Type of issuer 6 State 4,314 5,304 5,288 439 518 315 514 234 433 1,061 601 7 Special district and statutory authority .. 23,434 26,972 27,499 2,467 3,439 3,308 2,138 2,187 2,992 3,880 2,959 8 Municipalities, counties, townships, 15,617 16,090 14,945 1,191 1,398 1,120 11,,222266 11,,229999 22,,222288 1,749 22,,000099 school districts 9 Issues for new capital, total 41,505 46,736 46,530 4,009 5,318 4,683 3,718 3,663 4,790 6,668 5,438 Use of proceeds 10 Education 5,130 4,572 4,547 203 576 561 236 266 405 460 483 11 Transportation 2,441 2,621 3,447 499 286 355 144 207 362 282 292 12 Utilities and conservation 8,594 8,149 10,037 700 757 955 1,189 1,284 746 1,329 1,354 13 Social welfare 15,968 19,958 12,729 953 1,873 1,813 892 837 1,773 2,337 1,992 14 Industrial aid 3,836 3,974 7,651 1,015 676 523 467 501 636 667 342 15 Other purposes 5,536 7,462 8,119 639 1,150 476 790 584 868 1,593 975 1. Par amounts of long-term issues based on date of sale. SOURCE. Public Securities Association. 2. Consists of tax-exempt issues guaranteed by the Farmers Home Administration. 1.47 NEW SECURITY ISSUES of Corporations Millions of dollars 1981 1982 TTyyppee ooff iissssuuee oorr iissssuueerr,, oorr uussee 11997799 11998800 11998811 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May 1 All issues1 51,533 73,694 69,283 4,368 8,518 5,908 2,954 3,294 6,436 4,384 6,120 2 Bonds 40,208 53,206 44,643 2,845 6,724 3,893 1,278 1,879 4,512 2,352 3,980 Type of offering 3 Public 25,814 41,587 37,653 2,582 6,560 3,576 614 1,464 3,540 2,100 3,788 4 Private placement 14,394 11.619 6,989 263 164 317 664 415 972 252 192 Industry group 5 Manufacturing 9.678 15.409 12,325 21 2,054 954 283 262 708 445 593 6 Commercial and miscellaneous 3,948 6,693 5,229 617 949 850 230 59 691 124 466 7 Transportation 3,119 3,329 2,054 51 130 82 43 3 224 16 65 8 Public utility 8,153 9,557 8,963 1,008 802 582 493 345 1,568 846 977 9 Communication 4,219 6,683 4,280 83 326 106 8 364 84 4 315 10 Real estate and financial 11,094 11,534 11,793 1,065 2,463 1,319 221 845 1,236 1,563 917 11 Stocks 11,325 20,489 24,642 1,523 1,794 2,015 1,676 1,415 1,924 2,140 2,032 Type 12 Preferred 3,574 3,631 1,796 141 59 80 199 185 199 147 813 13 Common 7,751 16,858 22,846 1,382 1,735 1,935 1,477 1,230 1,725 1,885 1,327 Industry group 14 Manufacturing 1.679 4,839 4,838 193 407 258 129 67 394 102 156 15 Commercial and miscellaneous 2,623 5,245 7,436 449 564 456 723 426 653 787 543 16 Transportation 255 549 735 23 15 23 25 73 27 15 35 17 Public utility 5,171 6,230 5,486 438 405 604 449 743 547 731 401 18 Communication 303 567 1,778 7 85 95 58 2 3 3 30 19 Real estate and financial 1,293 3,059 4,371 412 318 580 292 104 301 394 975 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 1981 1982 IItteemm 11998800 11998811 Nov. Dec. Jan. Feb. Mar. Apr. Mayr June INVESTMENT COMPANIES1 1 Sales of own shares2 15,266 20,596 2,140 3,032 2,049 2,049 3,325 2,754 2,345 3,062 2 Redemptions of own shares3 12,012 15,866 1,125 1,769 1,475 1,456 2,056 2,293 1,854 2,036 3 Net sales 3,254 4,730 604 371 1,557 593 1,269 461 491 1,026 4 Assets4 58,400 55,207 57,408 55,207 54,347 52,695 53,001 56,026 54,889 54,146 5 Cash position5 5,321 5,277 6,269 5,277 5,424 5,540 5,752 6,083 5,992 6,298 6 Other 53,079 49,930 51,139 49,930 48,923 47,155 47,249 49,943 48,896 47,848 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. 1980 1981 1982 AAccccoouunntt 11997799rr 11998800rr 11998811'' Q3r Q4' Q1 Q2 03 Q4 Qlr 1 Corporate profits with inventory valuation and 2 Pro ca fi p t i s t a b l e c fo o r n e s u ta m x p tion adjustment 2 1 5 9 2 4 . . 7 8 2 1 4 8 2 1 . . 4 6 2 1 3 9 2 0 . . 1 6 2 1 3 7 8 7 . . 1 8 2 1 4 8 5 1 . . 9 2 2 2 0 5 0 3 . . 3 1 2 1 2 8 5 5 . . 4 1 2 1 3 9 3 3 . . 3 1 2 1 1 8 6 3 . . 5 9 1 1 5 7 7 1. . 6 1 3 Profits tax liability 87.6 84.6 81.2 82.2 87.8 91.5 79.2 82.4 71.6 55.8 4 Profits after tax 165.1 157.8 150.9 155.9 158.1 161.6 146.2 150.8 144.9 115.9 5 Dividends 52.7 58.1 65.1 58.7 59.6 61.5 64.0 66.8 68.1 68.8 6 Undistributed profits 112.4 99.7 85.8 97.3 98.5 100.1 82.2 84.1 76.9 47.0 7 Inventory valuation -43.1 -43.0 -24.6 -41.1 -45.5 -35.5 -22.8 -23.0 -17.1 -4.4 8 Capital consumption adjustment -14.8 -17.8 -16.8 -19.3 -19.2 -17.3 -17.5 -17.1 -15.5 -10.1 SOURCE. Survey of Current Business (U.S. Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Nonfinancial Statistics • August 1982 1.50 NONFINANCIAL CORPORATIONS Current Assets and Liabilities Billions of dollars, except for ratio 1980 1981 AAccccoouunntt 11997755 11997766 11997777 11997788 11997799 Q4 Q1 Q2 Q3 Q4 1 Current assets 759.0 826.8 902.1 1,030.0 1,200.9 1,281.6 1,321.2 1,317.4 1,349.2 1,361.4 2 Cash 82.1 88.2 95.8 104.5 116.1 121.0 120.5 118.5 118.3 124.5 3 U.S. government securities 19.0 23.4 17.6 16.3 15.6 17.3 17.0 17.7 16.0 15.8 4 Notes and accounts receivable 272.1 292.8 324.7 383.8 456.8 491.2 507.3 507.4 519.7 512.3 5 Inventories 315.9 342.4 374.8 426.9 501.7 525.4 542.8 540.0 557.2 6 Other 69.9 80.1 89.2 98.5 110.8 126.7 133.6 133.7 138.1 7 Current liabilities 451.6 494.7 549.4 665.5 809.1 877.2 910.9 908.1 951.1 962.3 8 Notes and accounts payable 264.2 281.9 313.2 373.7 456.3 498.3 504.0 500.8 529.1 541.3 9 Other 187.4 212.8 236.2 291.7 352.8 378.9 406.9 407.2 422.0 421.0 10 Net working capital 307.4 332.2 352.7 364.6 391.8 404.4 410.3 409.3 398.1 399.1 11 MEMO: Current ratio 1 1.681 1.672 1.642 1.548 1.484 1.461 1.450 1.451 1.419 1,415 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. 1981 1982 IInndduussttrryy 11998800 11998811 11998822 Q21 Q3 Q4 Q1 Q21 Q31 Q41 1 Total nonfarm business 295.63 321.49 328.60 316.73 328.25 327.83 327.72 323.75 328.04 334.78 Manufacturing 2 Durable goods industries 58.91 61.84 61.17 63.10 62.58 60.78 60.84 60.67 61.44 61.82 3 Nondurable goods industries 56.90 64.95 66.12 62.40 67.53 66.14 67.48 65.02 67.11 65.19 Nonmanufacturing 4 Mining 13.51 16.86 17.24 16.80 17.55 16.81 17.60 16.33 16.71 18.29 Transportation 5 Railroad 4.25 4.24 4.66 4.38 4.18 4.18 4.56 4.61 4.92 4.55 6 Air 4.01 3.81 3.84 3.29 3.34 4.82 3.20 3.39 4.12 4.66 7 Other 3.82 4.00 4.07 4.04 4.09 4.12 4.23 4.00 3.93 4.13 Public utilities 8 Electric 28.12 29.74 31.30 29.32 30.54 31.14 30.95 31.90 30.65 31.67 9 Gas and other 7.32 8.65 8.25 8.53 9.01 8.60 9.17 8.13 7.60 8.38 10 Trade and services 81.79 86.33 88.79 85.88 87.55 88.33 87.80 87.62 88.07 91.16 11 Communication and other2 36.99 41.06 43.15 39.02 41.89 42.92 41.89 42.08 43.48 44.94 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 1981 1982 AAccccoouunntt 11997766 11997777 11997788 11997799 11998800 Q1 Q2 Q3 Q4 Q1 ASSETS Accounts receivable, gross 1 Consumer 38.6 44.0 52.6 65.7 73.6 76.1 79.0 84.5 85.5 85.1 2 Business 44.7 55.2 63.3 70.3 72.3 72.7 78.2 76.9 80.6 80.9 3 Total 83.4 99.2 116.0 136.0 145.9 148.7 157.2 161.3 166.1 166.0 4 LESS: Reserves for unearned income and losses.... 10.5 12.7 15.6 20.0 23.3 24.3 25.7 27.7 28.9 29.1 5 Accounts receivable, net 72.9 86.5 100.4 116.0 122.6 124.5 131.4 133.6 137.2 136.9 6 Cash and bank deposits 2.6 2.6 3.5 7 Securities 1.1 .9 1.3 >> 2244..9911 27.5 30.8 31.6 34.5 34.2 35.0 8 All other 12.6 14.3 17.3 ) 9 Total assets 89.2 104.3 122.4 140.9 150.1 155.3 163.0 168.1 171.4 171.9 LIABILITIES 10 Bank loans 6.3 5.9 6.5 8.5 13.2 13.1 14.4 14.7 15.4 15.4 11 Commercial paper 23.7 29.6 34.5 43.3 43.4 44.2 49.0 51.2 51.2 46.2 Debt 12 Short-term, n.e.c 5.4 6.2 8.1 8.2 7.5 8.2 8.5 11.9 9.6 9.0 13 Long-term, n.e.c 32.3 36.0 43.6 46.7 52.4 51.6 52.6 50.7 54.8 59.0 14 Other 8.1 11.5 12.6 14.2 14.3 17.3 17.0 17.1 17.8 19.0 15 Capital, surplus, and undivided profits 13.4 15.1 17.2 19.9 19.4 20.9 21.5 22.4 22.8 23.3 16 Total liabilities and capital 89.2 104.3 122.4 140.9 150.1 155.3 163.0 168.1 171.4 171.9 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 AAAccccccooouuunnntttsss receivable rrreeeccceeeiiivvvaaabbbllleee TTTyyypppeee ooouuutttssstttaaannndddiiinnnggg MMMaaayyy 333111,,, 1982 1982 1982 111999888222111 Mar. Apr. May Mar. Apr. May Mar. Apr. May 1 Total 80,914 -418 120 50 18,148 19,110 20,033 18,566 18,990 19,983 2 Retail automotive (commercial vehicles) 12,065 34 100 362 962 935 1,235 928 835 873 3 Wholesale automotive 12,246 -634 11 -199 3,916 5,759 5,269 4,550 5,748 5,468 4 Retail paper on business, industrial, and farm equipment.... 27,625 384 -231 -74 1,538 1,181 1,503 9,634 9,174 1,577 5 Loans on commercial accounts receivable and factored commercial accounts receivable 9,225 140 260 171 9,774 9,434 10,151 9,634 9,174 9,980 6 All other business credit 19,753 -342 -20 -210 1,958 1,801 1,875 2,300 1,821 2,085 1. Not seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • August 1982 1.54 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1981 1982 Item 11997799 11998800 11998811 Dec. Jan. Feb. Mar. Apr. May June Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms1 1 Purchase price (thousands of dollars) 74.4 83.4 90.4 88.7 102.6 97.3 90.0 95.7 86.4' 2 Amount of loan (thousands of dollars) 53.3 59.2 65.3 64.4 71.3 71.1 65.4 70.4 64.8' 3 Loan/price ratio (percent) 73.9 73.2 74.8 75.3 73.5 76.5 75.7 77.2 77.4' 4 Maturity (years) 28.5 28.2 27.7 27.7 27.4 28.1 27.4 28.6 25.9' 5 Fees and charges (percent of loan amount)2 1.66 2.09 2.67 2.87 2.55 3.01 2.90 3.28 3.16' 6 Contract rate (percent per annum) 10.48 12.25 14.16 15.23 14.66 14.44 14.93 15.13 15.11' Yield (percent per annum) 7 FHLBB series5 10.77 12.65 14.74 15.87 15.25 15.12 15.67 15.84 15.89' 8 HUD series4 11.15 13.95 16.52 17.00 17.30 17.20 16.80 16.65 16.50 SECONDARY MARKETS Yield (percent per annum) 9 FHA mortgages (HUD series)5 10.92' 13.44' 16.29 16.43 17.38 17.10 16.41 16.31 16.19 10 GNMA securities6 10.22 12.55 15.29 15.51 16.19 16.21 15.54 15.40 15.30 FNMA auctions7 11 Government-underwritten loans 11.17 14.11 16.70 16.92 17.80 18.00 17.29 0.0 16.27 12 Conventional loans 11.77 14.43 16.64 16.95 17.33 17.91 17.09 16.66 16.33 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 13 Total 48,050 55,104 61,412 61,412 61,721 62,112 62,544 63,132 63,951 65,008 14 FHA/VA-insured 33,673 37,365 39,977 39,977 39,937 39,926 39,893 39,834 39,808' 39,829 15 Conventional 14.377 17,725 21,435 21,435 21,784 22,185 22,654 23,298 24,143 25,179 Mortgage transactions (during period) 16 Purchases 10,812 8,099 6,112 655 430 519 604 755 1,006 1,223 17 Sales 0 0 2 0 0 0 0 0 0 0 Mortgage commitments8 18 Contracted (during period) 10,179 8,083 9,331 1,272 813 1,202 1,881 2,482 1,550' 1,583 19 Outstanding (end of period) 6,409 3,278 3,717 3,717 3,536 3,857 4,990 6,586 7,016' 7,206 Auction of 4-month commitments to buy Government-underwritten loans 20 Offered 8,860.4 8,605.4 2,487.2 59.2 41.5 41.7 45.7 7.0 35.7 33.1 21 Accepted 3,920.9 4,002.0 1,478.0 27.0 30.8 23.4 29.6 0.0 7.4 7.4 Conventional loans 22 Offered 4,495.3 3.639.2 2,524.7 84.4 31.7 28.6 65.0 29.5 37.8 59.0 23 Accepted 2,343.6 1,748.5 1,392.3 48.0 11.5 13.6 32.3 22.0 23.0 33.1 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)9 24 Total 4,035 5,067 5,255 5,255 5,240 5,342 5,320 5,274 5,279 5,295 25 FHA/VA 1.102 1,033 990 990 987 984 981 979 976 973 26 Conventional 2,933 4,034 4,265 4.265 4,253 4,358 4,339 4,295 4,303 4,322 Mortgage transactions (during period) 27 Purchases 5,717 3,723 3,789 1.140 1,628 1,228 1,479 2,143 1,214 1,581 28 Sales 4,544 2,527 3,531 1.158 1,629 1,115 1,564 2,177 1,194 1,562 Mortgage commitments10 29 Contracted (during period) 5,542 3,859 6,974 203 3,280 565 2,523 2,824 2,692 3,166 30 Outstanding (end of period) 797 447 3,518 3,518 5,033 4,336 5,461 6,041 7,420 8,970 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 seror the seller) to obtain a loan. vicing) on accepted bids in Federal National Mortgage Association's auctions of 3. Average effective interest rates on loans closed, assuming prepayment at the 4-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. Includes some multifamily and nonprofit hospital loan commitments in ad- 5. Average gross yields on 30-year, minimum-downpayment, Federal Housing dition to 1- to 4-family loan commitments accepted in FNMA's free market auction Administration-insured first mortgages for immediate delivery in the private sec- system, and through the FNMA-GNMA tandem plans. ondary market. Any gaps in data are due to periods of adjustment to changes in 9. Includes participation as well as whole loans. maximum permissible contract rates. 10. Includes conventional and government-underwritten loans. 6. Average net yields to investors on Government National Mortgage Association guaranteed, mortgage-backed, fully modified pass-through securities. 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 1981 1982 TTyyppee ooff hhoollddeerr,, aanndd ttyyppee ooff pprrooppeerrttyy 11997799 11998800 11998811 Q2 Q3 Q4 Q1 Q2 1,326,371r 1,446,223r 1,545,508r 1,499,324r 1,525,768' 1,545,508 r l,562,110r 1,580,087 1 7 879,689r 961,416r 1,021,663r 993,862' l,010,697r 1,021,663' 1,031,391T 1,042,881 3 Multifamily 128,433r 137,134'' 141,457r 139,388r 140,376r 141,457' 142,592r 144,080 4 Commercial 235,572 255,655 280,585r 268,562 274,666r 280,585r 284,098r 287,217 5 82,677 92,018 101,803r 97,512 100,029r 101,803r 104,029r 105,909 6 Major financial institutions 938,567 997,168 1,044,019 1,023,793 1,036,880 1,044,019 1,045,045r 1,045,098 7 Commercial banks1 245,187 263,030 286,626 273,225 281,126 286,626 291,426 295,126 i 89 n C M 1o u m t l o t m i f 4 a e m r f c a i m i l a y l i ly 1 7 4 1 5 9 1 , , , 9 4 1 5 6 8 7 0 0 1 8 6 1 1 0 2 , , , 0 3 9 2 8 2 6 1 4 1 9 7 1 0 2 4 , , , 7 5 9 4 1 0 9 7 5 1 8 1 6 6 3 4 , , , 0 8 8 9 0 7 1 0 3 1 8 1 6 8 4 9 , , , 8 4 3 3 7 7 6 8 8 1 9 7 1 0 2 4 , , , 7 5 9 1 4 0 7 9 5 1 9 7 1 2 5 5 , , , 4 3 1 9 2 2 9 6 6 1 9 7 1 3 7 5 , , , 9 5 2 0 2 0 8 3 5 n 8,590 8,699 8,455 8,461 8,434 8,455 8,475 8,490 17 Mutual savings banks 98,908 99,865 99,997r 99,993 99,994 99,997' 97,464r 95,914 13 1- to 4-family 66,140 67,489 68,187r 68,035 68,116 68,187r 66,383r 65,318 14 Multifamily 16,557 16,058 15,960r 15,909 15,939 15,960r 15,448r 15,102 15 Commercial 16,162 16,278 15,810r 15,999 15,909 15,810r 15,594r 15,446 16 Farm 49 40 40 50 30 40r 39r 48 17 Savings and loan associations 475,688 503,192 518,350 515,256 518,778 518,350 515,896 512,399 •18 1- to 4-family 394,345 419,763 432,978 430,702 433,750 432,978 430,928 427,907 19 Multifamily 37,579 38,142 37,684 38,077 37,975 37,684 37,506 36,851 20 Commercial 43,764 45,287 47,688 46,477 47,053 47,688 47,462 47,641 21 Life insurance companies 118,784 131,081 139,046 135,319 136,982 139,046 140,259 141,659 77 1- to 4-family 16,193 17,943 17,382 17,646 17,512 17,382 17,281 17,483 23 Multifamily 19,274 19,514 19,486 19,603 19,592 19,486 19,419 19,668 74 Commercial 71,137 80,666 89,089 85,038 86,742 89,089 90,555 91,498 25 Farm 12,180 12,958 13,089 13,032 13,136 13,089 13,004 13.010 26 Federal and related agencies 97,084 114,300 126,112 119,124 121,772 126,112 128,721 132,981 27 Government National Mortgage Association 3,852 4,642 4,765 4,972 4,382 4,765 4,438 4,668 78 1- to 4-family 763 704 693 698 696 693 689 685 29 Multifamily 3,089 3,938 4,072 4,274 3,686 4,072 3,749 3,983 30 Farmers Home Administration 1,274 3,492 2,235 2,662 1,562 2,235 2,469 2,780 31 1- to 4-family 417 916 914 1,151 500 914 715 815 37 Multifamily 71 610 473 464 242 473 615 665 33 Commercial 174 411 506 357 325 506 499 510 34 Farm 612 1,555 342 690 495 342 640 790 35 Federal Housing and Veterans Administration 5,555 5,640 5,999 5,895 6,005 5,999 6,003 5,960 36 1- to 4-family 1,955 2,051 2,289 2,172 2,240 2,289 2,266 2,210 37 Multifamily 3,600 3,589 3,710 3,723 3,765 3,710 3,737 3,750 38 Federal National Mortgage Association 51,091 57,327 61,412 57,657 59,682 61,412 62,544 65,008 39 1- to 4-family 45,488 51,775 55,986 52,181 54,227 55,986 57,142 59,631 40 Multifamily 5,603 5,552 5,426 5,476 5,455 5,426 5,402 5,377 41 Federal Land Banks 31,277 38,131 46,446 42,681 44,708 46,446 47,947 49,270 47 1- to 4-family 1,552 2,099 2,788 2,401 2,605 2,788 2,874 2,954 43 Farm 29,725 36,032 43,658 40,280 42,103 43,658 45,073 46,316 44 Federal Home Loan Mortgage Corporation 4,035 5,068 5,255 5,257 5,433 5,255 5,320 5,295 45 1- to 4-family 3,059 3,873 4,018 4,025 4,166 4,018 4,075 4,042 46 Multifamily 976 1,195 1,237 1,232 1,267 1,237 1,245 1,253 47 Mortgage pools or trusts2 118,664r 142,258 162,990 152,308 158,140 162,990r 172,292r 182,091 48 Government National Mortgage Association 75,787r 93,874 105,790 100,558 103,750 105,790r 108,592' 111,459 49 1- to 4-family 73,853r 91,602 103,007 98,057 101,068 103,007r 105,701' 108,487 50 Multifamily 1,934r 2,272 2,783 2,501 2,682 2,783r 2,891r 2,972 51 Federal Home Loan Mortgage Corporation 15,180 16,854 19,843 17,565 17,936 19,843 23,959 28,693 57 1- to 4-family 12,149 13,471 15,888 14,115 14,401 15,888 18,995 22,637 53 Multifamily 3,031 3,383 3,955 3,450 3,535 3,955 4,964 6,056 54 Federal National Mortgage Association3 n.a. n.a. 717 n.a. n.a. 717 2,786 4,556 55 1- to 4-family n.a. n.a. 717 n.a. n.a. 717 ' 2,786 4,556 56 Farmers Home Administration 27,697 31,530 36,640 34,185 36,454 36,640 36,955 37,383 57 1- to 4-family 14,884 16,683 18,378 17,165 18,407 18,378 18,740 18,890 58 Multifamily 2,163 2,612 3,426 3,097 3,488 3,426 3,447 3,472 59 Commercial 4,328 5,271 6,161 5,750 6,040 6,161 6,351 6,371 60 Farm 6,322 6,964 8,675 8,173 8,519 8,675 8,417 8,650 61 Individual and others4 172,056r 192,497' 212,387r 204,099r 208,976r 212,387r 216,052r 219,917 67 1- to 4-family 99,431r 112,721r 125,889r 120,641r 123,631r 125,889r 127,490r 129,758 63 Multifamily 23,376r 27,345r 28,340' 27,782r 28,272r 28,340r 29,043r 29,726 64 Commercial 24,050 26,661 30,614 28,850 29,761 30,614 31,138 31,828 65 Farm 25,199 25,770 27,544 26,826 27,312 27,544 28,381 28,605 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. Outstanding balances on FNMA's issues of securities backed by pools of terpolations and extrapolations when required, are estimated mainly by the Federal conventional mortgages held in trust. The program was implemented by FNMA Reserve. Multifamily debt refers to loans on structures of five or more units. in October 1981. 4. Other holders include mortgage companies, real estate investment trusts, state and local credit agencies, state and local retirement funds, noninsured pension funds, credit unions, and U.S. agencies for which amounts are small or for which separate data are not readily available. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic NonfinancialS tatistics • August 1982 1.56 CONSUMER INSTALLMENT CREDIT1 Total Outstanding, and Net Change Millions of dollars 1982 Holder, and type of credit 11997799 11998800 11998811 Jan. Feb. Mar. Apr. May June Amounts outstanding (end of period) 1 Total 312,024 313,472 333,375 330,135 327,435 327,131 328,363 329,338 331,851 By major holder 2 Commercial banks 154,177 147,013 149,300 148,162 146,922 146,454 146,616 146,147 146,775 3 Finance companies 68,318 76,756 89,818 88,925 89,009 89,591 90,674 91,958 93,009 4 Credit unions 46,517 44,041 45,954 45,907 45,586 45,632 45,450 45,472 45,882 5 Retailers2 28,119 28,448 29,551 28,179 27,013 26,530 26,537 26,536 26,645 6 Savings and loans 8,424 9,911 11,598 11,668 11,738 11,926 12,081 12,202 12,312 7 Gasoline companies.... 3,729 4,468 4,403 4,541 4,433 4,229 4,227 4,218 4,398 8 Mutual savings banks .. 382,740 2,835 2,751 2,753 2,734 2,769 2,778 2,805 2,830 By major type of credit 9 Automobile 116,362 116,838 126,431 125,525 125,294 125,559 126,201 127,220 128,415 10 Commercial banks... 67,367 61,536 59,181 58,849 58,604 58,510 58,458 58,099 58,140 11 Indirect paper 38,338 35,233 35,097 35,029 34,920 34,888 34,920 34,791 34,903 12 Direct loans 29,029 26,303 24,084 23,820 23,684 23,622 23,538 23,308 23,237 13 Credit unions 22,244 21,060 21,975 21,953 21,799 21,821 21,733 21,744 21,940 14 Finance companies... 26,751 34,242 45,275 44,723 44,891 45,228 46,010 47,377 48,335 15 Revolving 56,937 58,352 63,049 61,433 59,514 58,491 58,641 58,647 59,302 16 Commercial banks... 29,862 29,765 33,110 32,643 31,923 31,532 31,638 31,619 31,974 17 Retailers 23,346 24,119 25,536 24,249 23,158 22,730 22,776 22,810 22,930 18 Gasoline companies.. 3,729 4,468 4,403 4,541 4,433 4,229 4,227 4,218 4,398 19 Mobile home 16,838 17.322 18,486 18,397 18,343 18,363 18,402 18,479 18,543 20 Commercial banks... 10,647 10,371 10,300 10,206 10,111 10,037 9,974 9,960 9,924 21 Finance companies... 3,390 3,745 4,494 4,481 4,506 4,548 4,608 4,666 4,731 22 Savings and loans.... 2,307 2,737 3,203 3,222 3,241 3,293 3,336 3,369 3,400 23 Credit unions 494 469 489 488 485 486 484 484 488 24 Other 121,887 120,960 125,409 124,780 124,284 124,718 125,119 124,992 125,591 25 Commercial banks... 46,301 45,341 46,709 46,464 46,284 46,375 46,546 46,469 46,737 26 Finance companies... 38,177 38,769 40,049 39,721 39,612 39,815 40,056 39,915 39,943 27 Credit unions 23,779 22,512 23,490 23,466 23,302 23,326 23,233 23,244 23,454 28 Retailers 4,773 4,329 4,015 3,930 3,855 3,800 3,761 3,726 3,715 29 Savings and loans.... 6,117 7,174 8,395 8,446 8,497 8,633 8,745 8,833 8,912 30 Mutual savings banks 2,740 2,835 2,751 2,753 2,734 2,769 2,778 2,805 2,830 Net change (during period)3 31 Total 38,381 1,448 19,894 443 75 990 1,175 1,399 1,349 By major holder 32 Commercial banks 18,161 -7,163 2,284 10 -171 166 96 -13 -too 33 Finance companies 14,020 8,438 13,062 -597 307 673 544 1,126 874 34 Credit unions 2,185 -2,475 1,913 689 -135 -122 132 -39 38 35 Retailers2 2,132 329 1,103 27 -124 171 181 68 304 36 Savings and loans 1,327 1,485 1,682 172 173 251 205 221 187 37 Gasoline companies.... 509 739 -65 39 36 -150 -6 -20 38 38 Mutual savings banks .. 47 95 -85 103 -11 1 23 56 8 By major type of credit 39 Automobile 14,715 477 9,595 -121 -56 -28 233 959 655 40 Commercial banks... 6,857 -5,830 -2,355 103 -180 -248 -159 -305 -240 41 Indirect paper 4,488 -3,104 -136 232 -141 -130 2 -52 -52 42 Direct loans 2,369 -2,726 -2,219 -129 -39 -118 -161 -253 -188 43 Credit unions 1,044 -1,184 914 345 -59 -55 54 -34 28 44 Finance companies... 6,814 7,491 11,033 -569 183 275 338 1,298 867 45 Revolving 8,628 1,415 4,697 -196 -155 307 499 537 507 46 Commercial banks... 5,521 -97 3,345 -276 -65 296 285 436 219 47 Retailers 2,598 773 1,417 41 -126 161 220 121 250 48 Gasoline companies.. 509 739 -65 39 36 -150 -6 -20 38 49 Mobile home 1,603 483 1,161 -26 -44 15 51 70 67 50 Commercial banks... 1,102 -276 -74 -74 -110 -82 -48 -41 -58 51 Finance companies... 238 355 749 6 56 52 53 44 64 52 Savings and loans 240 430 466 30 14 47 43 67 60 53 Credit unions 23 -25 20 12 -4 -2 3 0 1 54 Other 13,435 -927 4,441 786 330 696 392 -167 120 55 Commercial banks... 4,681 -960 1,368 257 184 200 18 -103 -21 56 Finance companies... 6,968 592 1,280 -34 68 346 153 -216 -57 57 Credit unions 1,118 -1,266 975 332 -72 -65 75 -5 9 58 Retailers -466 -444 -314 -14 2 10 -39 -53 54 59 Savings and loans.... 1,087 1,056 1,217 142 159 204 162 154 127 60 Mutual savings banks 47 95 -85 103 -11 1 23 56 8 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, NOTE: Total consumer noninstallment credit outstanding—credit scheduled to and scheduled to be repaid (or with the option of repayment) in two or more be repaid in a lump sum, including single-payment loans, charge accounts, and installments. service credit—amounted to, not seasonally adjusted $71.3 billion at the end of 2. Includes auto dealers and excludes 30-day charge credit held by travel and 1979, $74.8 billion at the end of 1980, and $80.2 billion at the end of 1981 entertainment companies. 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. 1982 HnlHpr and tvnp nf rreHit 11997799 11998800 11998811 Jan. Feb. Mar. Apr. May June Extensions 1 Total 324,777 306,076 336,341 26,888 27,150 27,462 28,648 29,197 29,737 By major holder 2 Commercial banks 154,733 134,960 146,186 11,775 12,431 12,519 12,790 12,765 13,460 3 Finance companies 61,518 60,801 66,344 4,433 4,857 5,002 5,343 6,135 5,700 4 Credit unions 34,926 29,594 35,444 3,326 2,695 2,631 3,010 2,902 2,887 5 Retailers1 47,676 49,942 53,430 4,385 4,254 4,536 4,618 4,449 4,762 6 Savings and loans 5,901 6,621 8,142 716 754 788 823 841 785 7 Gasoline companies 18,005 22,253 24,902 2,000 2,007 1,835 1,915 1,880 1,969 8 Mutual savings banks 2,018 1,905 1,893 253 152 151 185 225 174 By major type of credit y Automobile 93,901 83,454 94,404 7,474 7,283 7,183 7,871 8,429 8,182 10 Commercial banks 53,554 41,109 42,792 3,696 3,415 3,393 3,499 3,317 3,404 11 Indirect paper 29,623 22,558 24,941 2,293 1,875 1,875 2,079 1,954 2,036 12 Direct loans 23,931 18,551 17,851 1,403 1,540 1,518 1,420 1,363 1,368 13 Credit unions 17,397 15,294 18,084 1,702 1,363 1,420 1,542 1,483 1,497 14 Finance companies 22,950 27,051 33,527 2,076 2,505 2,370 2,830 3,629 3,281 15 Revolving 120,174 128,068 140,135 11,070 11,730 12,143 12,416 12,528 13,361 16 Commercial banks 61,048 61,593 67,370 5,135 5,928 6,235 6,309 6,604 7,141 17 Retailers 41,121 44,222 47,863 3,935 3,795 4,073 4,192 4,044 4,251 18 Gasoline companies 18,005 22,253 24,902 2,000 2,007 1,835 1,915 1,880 1,969 19 Mobile home 6,471 5,093 6,028 434 364 411 544 478 459 20 Commercial banks 4,542 2,937 3,106 188 136 156 253 201 180 21 Finance companies 797 898 1,313 99 117 120 122 114 129 22 Savings and loans 948 1,146 1,432 122 102 126 151 151 137 23 Credit unions 184 113 176 25 9 9 18 12 13 24 Other 104,231 89,461 95,774 7,910 7,773 7,725 7,853 7,762 7,735 25 Commercial banks 35,589 29,321 32,918 2,756 2,952 2,735 2,729 2,643 2,735 26 Finance companies 37,771 32,852 31,504 2,258 2,235 2,512 2,391 2,392 2,290 27 Credit unions 17,345 14,187 17,182 1,599 1,323 1,202 1,450 1,407 1,377 28 Retailers 6,555 5,720 5,567 450 459 463 426 405 511 29 Savings and loans 4,953 5,476 6,710 594 652 662 672 690 648 30 Mutual savings banks 2,018 1,905 1,893 253 152 151 185 225 174 Liquidations 31 Total 286,396 304,628 316,447 26,445 27,075 26,472 27,509 27,798 28,388 By major holder 32 Commercial banks 136,572 142,123 143,902 11,765 12,602 12,353 12,694 12,778 13,560 33 Finance companies 47,498 52,363 53,282 5,030 4,550 4,329 4,799 5,009 4,826 34 Credit unions 32,741 32,069 33,531 2,637 2,830 2,753 2,878 2,941 2,849 35 Retailers1 45,544 49,613 52,327 4,358 4,378 4,365 4,437 4,381 4,458 36 Savings and loans 4,574 5,136 6,640 544 581 537 618 620 598 37 Gasoline companies 17,496 21,514 24,967 1,961 1,971 1,985 1,921 1,900 1,931 38 Mutual savings banks 1,971 1,810 1,978 150 163 150 162 169 166 By major type of credit 39 Automobile 79,186 82,977 84,809 7,595 7,339 7,211 7,638 7,470 7,527 40 Commercial banks 46,697 46,939 45,147 3,593 3,595 3,641 3,658 3,622 3,644 41 Indirect paper 25,135 25,662 25,077 2,061 2,016 2,005 2,077 2,006 2,088 42 Direct loans 21,562 21,277 20.070 1,532 1,579 1,636 1,581 1,616 1,556 43 Credit unions 16,353 16,478 17,169 1,357 1,422 1,475 1,488 1,517 1,469 44 Finance companies 16,136 19,560 22,494 2,645 2,322 2,095 2,492 2,331 2,414 45 Revolving 111,546 126,653 135,438 11,266 11,885 11,836 11,917 11,991 12,854 46 Commercial banks 55,527 61,690 64.025 5,411 5,993 5,939 6,024 6,168 6,922 47 Retailers 38,523 43,449 46,446 3,894 3,921 3,912 3,972 3,923 4,001 48 Gasoline companies 17,496 21,514 24,967 1,961 1,971 1,985 1,921 1,900 1,931 49 Mobile home 4,868 4,610 4,867 460 408 396 493 408 392 50 Commercial banks 3,440 3,213 3,180 262 246 238 301 242 238 51 Finance companies 559 543 564 93 61 68 69 70 65 52 Savings and loans 708 716 966 92 88 79 108 84 77 53 Credit unions 161 138 156 13 13 11 15 12 12 54 Other 90,796 90,388 91,333 7,124 7,443 7,029 7,461 7,929 7,615 55 Commercial banks 30,908 30,281 31,550 2,499 2,768 2,535 2,711 2,746 2,756 56 Finance companies 30,803 32,260 30,224 2,292 2,167 2,166 2,238 2,608 2,347 57 Credit unions 16,227 15,453 16,207 1,267 1,395 1,267 1,375 1,412 1,368 58 Retailers 7,021 6,164 5,881 464 457 453 465 458 457 59 Savings and loans 3,866 4,420 5,493 452 493 458 510 536 521 60 Mutual savings banks 1,971 1,810 1,978 150 163 150 162 169 166 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 DomesticN onfinancial Statistics • August 1982 1.58 FUNDS RAISED IN U.S. CREDIT MARKETS Billions of dollars; half-yearly data are at seasonally adjusted annual rates. 1979 1980 1981 11997766 11997777 11997788 11997799 11998800 11998811 HI H2 HI H2 HI H2 Nonfinancial sectors 1 Total funds raised 273.6 336.6 395.6 387.0 371.9 376.0 385.0 389.0 339.0 404.9 418.4 333.6 2 Excluding equities 262.8 333.5 396.3 394.0 357.0 387.4 394.7 393.3 330.1 383.8 416.9 358.0 By sector and instrument 3 U.S. government 69.0 56.8 53.7 37.4 79.2 87.4 30.0 44.7 66.5 91.9 86.1 88.6 4 Treasury securities 69.1 57.6 55.1 38.8 79.8 87.8 32.3 45.2 67.2 92.4 86.7 89.0 Agency issues and mortgages -.1 -.9 -1.4 -1.4 -.6 -.5 -2.3 -.5 -.6 -.6 -.5 -.4 6 All other nonfinancial sectors 204.6 279.9 342.0 349.6 292.7 288.6 355.0 344.3 272.5 313.0 332.3 244.9 7 Corporate equities 10.8 3.1 -.6 -7.1 15.0 -11.5 -9.8 -4.3 8.9 21.0 1.5 -24.5 8 Debt instruments 193.8 276.7 342.6 356.7 277.8 300.1 364.7 348.6 263.6 292.0 330.7 269.4 9 Private domestic nonfinancial sectors 185.0 266.0 308.7 328.6 263.4 264.1 341.0 316.1 241.3 285.6 297.1 231.2 10 Corporate equities 10.5 2.7 -.1 -7.8 12.9 -11.5 -9.6 -6.1 6.9 18.8 .9 -23.8 11 Debt instruments 174.5 263.2 308.8 336.4 250.6 275.6 350.6 322.2 234.4 266.2 296.2 255.0 12 Debt capital instruments 123.7 172.2 193.7 200.1 179.4 147.8 203.0 197.2 177.0 181.9 171.1 124.5 13 State and local obligations 15.7 21.9 26.1 21.8 26.9 25.8 20.9 22.7 21.6 32.1 28.8 22.8 14 Corporate bonds 22.8 21.0 20.1 21.2 30.4 20.2 21.7 20.7 35.3 25.6 22.8 17.6 Mortgages 15 Home mortgages 64.0 96.3 108.5 113.7 81.7 62.2 117.6 109.8 76.5 87.0 77.3 47.2 16 Multifamily residential 3.9 7.4 9.4 7.8 8.5 4.6 8.0 7.6 8.2 8.8 5.0 4.2 17 Commercial 11.6 18.5 22.1 24.4 22.4 25.3 23.4 25.4 24.8 19.9 28.4 22.1 18 Farm 5.7 7.1 7.5 11.3 9.5 9.8 11.6 11.0 10.6 8.4 8.9 10.7 19 Other debt instruments 50.7 91.0 115.1 136.3 71.1 127.8 147.6 125.0 57.4 84.9 125.1 130.4 20 Consumer credit 25.4 40.2 47.6 46.3 2.3 25.3 50.9 41.6 -5.1 9.7 29.5 21.1 21 Bank loans n.e.c 4.4 26.7 37.1 49.2 37.3 50.1 55.5 42.8 13.5 61.2 42.0 58.3 22 Open market paper 4.0 2.9 5.2 11.1 6.6 19.2 8.0 14.2 24.8 -11.6 16.0 22.3 23 Other 16.9 21.3 25.1 29.7 24.9 33.2 33.1 26.4 24.1 25.6 37.6 28.7 24 By borrowing sector 185.0 266.0 308.7 328.6 263.4 264.1 341.0 316.1 241.3 285.6 297.1 231.2 25 State and local governments 15.2 17.3 20.9 18.4 25.3 23.1 17.9 18.9 19.7 30.9 26.2 20.0 26 Households 89.6 139.1 164.3 170.6 101.7 103.6 179.1 162.1 94.2 109.1 124.3 82.8 27 Farm 10.2 12.3 15.0 20.8 14.5 16.4 21.2 20.4 17.9 11.1 22.7 10.0 28 Nonfarm noncorporate 5.7 12.7 15.3 14.0 15.8 13.8 13.5 14.5 11.0 20.6 16.1 11.6 29 Corporate 64.3 84.6 93.2 104.8 106.1 107.3 109.3 100.2 98.4 113.8 107.8 106.7 30 Foreign 19.6 13.9 33.2 21.0 29.3 24.4 14.0 28.1 31.2 27.4 35.1 13.8 31 Corporate equities .3 .4 -.5 .8 2.1 * -.2 1.7 1.9 2.2 .6 -.7 32 Debt instruments 19.3 13.5 33.8 20.3 27.2 24.5 14.1 26.4 29.2 25.2 34.5 14.4 33 Bonds 8.6 5.1 4.2 3.9 .8 5.6 2.8 4.9 2.0 -.4 3.3 7.8 34 Bank loans n.e.c 5.6 3.1 19.1 2.3 11.5 .8 2.1 2.4 6.1 17.0 5.7 -4.1 35 Open market paper 1.9 2.4 6.6 11.2 10.1 13.9 6.1 16.3 15.7 4.5 20.6 7.1 36 U.S. government loans 3.3 3.0 3.9 3.0 4.7 4.2 3.1 2.8 5.4 4.0 4.9 3.6 Financial sectors 37 Total funds raised 23.4 51.4 76.8 84.3 66.7 88.6 87.8 80.8 59.8 73.5 92.6 84.6 By instrument 38 U.S. government related 15.1 21.9 36.7 48.2 43.0 44.4 43.7 52.8 44.7 41.3 40.6 48.2 39 Sponsored credit agency securities 3.3 7.0 23.1 24.3 24.4 30.1 21.2 27.3 25.1 23.7 24.0 36.1 40 Mortgage pool securities 12.2 16.1 13.6 24.0 18.6 14.3 22.5 25.5 19.6 17.6 16.5 12.1 41 Loans from U.S. government -.4 -1.2 0 0 0 0 0 0 0 0 0 0 42 Private financial sectors 8.2 29.5 40.1 36.0 23.7 44.2 44.1 28.0 15.2 32.2 52.0 36.4 43 Corporate equities -.2 2.6 1.8 2.5 6.2 8.3 3.6 1.4 7.1 5.2 9.7 7.0 44 Debt instruments 8.4 26.9 38.3 33.6 17.5 35.9 40.6 26.6 8.1 27.0 42.3 29.4 45 Corporate bonds 9.8 10.1 7.5 7.8 7.1 -.8 8.2 7.5 10.1 4.2 -2.0 .3 46 Mortgages 2.1 3.1 .9 -1.2 -.9 -2.9 .3 -2.6 -5.8 4.0 -2.9 -2.9 47 Bank loans n.e.c -3.7 -.3 2.8 -.4 -.5 2.5 -1.4 .6 * -.9 4.6 .3 48 Open market paper and RPs 2.2 9.6 14.6 18.2 4.6 20.9 25.4 10.9 -.8 10.1 24.6 17.3 49 Loans from Federal Home Loan Banks -2.0 4.3 12.5 9.2 7.1 16.2 8.2 10.1 4.6 9.6 18.0 14.5 By sector 50 Sponsored credit agencies 2.9 5.8 23.1 24.3 24.4 30.1 21.2 27.3 25.1 23.7 24.0 36.1 51 Mortgage pools 12.2 16.1 13.6 24.0 18.6 14.3 22.5 25.5 19.6 17.6 16.5 12.1 52 Private financial sectors 8.2 29.5 40.1 36.0 23.7 44.2 44.1 28.0 15.2 32.2 52.0 36.4 53 Commercial banks 2.3 1.1 1.3 1.6 .5 .4 1.3 1.8 .8 .3 .2 .5 54 Bank affiliates 5.4 2.0 7.2 6.5 6.9 8.3 8.0 4.9 5.8 8.0 6.9 9.7 55 Savings and loan associations .1 9.9 14.3 11.4 6.9 13.1 11.1 11.7 -1.4 15.2 17.2 8.9 56 Other insurance companies .9 1.4 .8 .9 .9 .9 .9 .9 .9 .9 .9 .9 57 Finance companies 4.3 16.9 18.1 16.8 5.8 14.4 22.7 10.9 5.2 6.3 18.3 10.6 58 REITs -2.2 -2.3 -1.1 -.4 -1.7 -.7 -.6 -.2 -1.4 -2.0 -.8 -.5 59 Open-end investment companies -2.4 .4 -.5 -.6 4.4 7.8 .7 -1.9 5.3 3.4 9.3 6.3 All sectors 60 Total funds raised, by instrument 297.0 388.0 472.5 471.3 438.6 464.6 472.8 469.7 398.8 478.4 511.0 418.2 61 Investment company shares -2.4 .4 -.5 -.6 4.4 7.8 .7 -1.9 5.3 3.4 9.3 6.3 62 Other corporate equities 13.1 5.3 1.7 -4.0 16.8 -11.0 -6.9 -1.0 10.7 22.8 1.9 -23.8 63 Debt instruments 286.4 382.3 471.3 475.8 417.5 467.7 479.0 472.6 382.9 452.1 499.8 435.6 64 U.S. government securities 84.6 79.9 90.5 85.7 122.3 131.9 73.8 97.6 111.3 133.2 126.8 136.9 65 State and local obligations 15.7 21.9 26.1 21.8 26.9 25.8 20.9 22.7 21.6 32.1 28.8 22.8 66 Corporate and foreign bonds 41.2 36.1 31.8 32.8 38.4 24.9 32.6 33.0 47.4 29.5 24.1 25.7 67 Mortgages 87.2 132.3 148.3 155.9 121.1 98.8 160.6 151.1 114.2 128.0 116.6 81.1 68 Consumer credit 25.4 40.2 47.6 46.3 2.3 25.3 50.9 41.6 -5.1 9.7 29.5 21.1 69 Bank loans n.e.c 6.2 29.5 59.0 51.0 48.4 53.4 56.2 45.8 19.6 77.2 52.3 54.5 70 Open market paper and RPs 8.1 15.0 26.4 40.5 21.4 54.0 39.5 41.5 39.7 3.1 61.3 46.7 71 Other loans 17.8 27.4 41.5 41.9 36.7 53.7 44.4 39.3 34.1 39.3 60.5 46.8 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 1979 1980 1981 TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 11997766 11997777 11997788 11997799 11998800 11998811 HI H2 HI H2 HI H2 1 Total funds advanced in credit markets to nonflnancial sectors 262.8 333.5 396.3 394.0 357.0 387.4 394.7 393.3 330.1 383.8 416.9 358.0 By public agencies and foreign 2 Total net advances 49.8 79.2 101.9 74.0 92.1 91.2 49.6 98.5 102.9 81.3 103.6 78.8 3 U.S. government securities 23.1 34.9 36.1 -6.2 15.6 17.2 -27.1 14.7 23.2 8.0 24.3 10.1 4 Residential mortgages 12.3 20.0 25.7 36.7 31.1 22.7 35.7 37.8 33.3 28.9 20.8 24.6 5 FHLB advances to savings and loans -2.0 4.3 12.5 9.2 7.1 16.2 8.2 10.1 4.6 9.6 18.0 14.5 6 Other loans and securities 16.4 20.1 27.6 34.3 38.2 35.0 32.8 35.8 41.7 34.8 40.5 29.6 Total advanced, by sector 7 U.S. government 7.9 10.0 17.1 19.0 23.7 24.1 19.8 18.3 25.4 22.1 27.7 20.5 8 Sponsored credit agencies 16.8 22.4 39.9 53.4 43.8 45.3 47.8 58.9 42.4 45.2 42.2 48.3 9 Monetary authorities 9.8 7.1 7.0 7.7 4.5 9.2 -.9 16.2 12.1 -3.1 -7.3 25.6 10 Foreign 15.2 39.6 38.0 -6.1 20.0 12.6 -17.2 5.1 23.0 17.0 40.9 -15.7 11 Agency borrowing not included in line 1 15.1 21.9 36.7 48.2 43.0 44.4 43.7 52.8 44.7 41.3 40.6 48.2 Private domestic funds advanced 12 Total net advances 228.1 276.2 331.0 368.2 307.9 340.6 388.9 347.6 271.9 343.8 353.8 327.5 13 U.S. government securities 61.5 45.1 54.3 91.9 106.7 114.7 101.0 82.9 88.1 125.3 102.6 126.8 14 State and local obligations 15.7 21.9 26.1 21.8 26.9 25.8 20.9 22.7 21.6 32.1 28.8 22.8 15 Corporate and foreign bonds 30.5 22.2 22.4 24.0 26.2 21.0 24.0 24.0 32.5 19.9 19.6 22.5 16 Residential mortgages 55.5 83.7 92.1 84.6 59.1 44.0 89.8 79.5 51.2 66.9 61.4 26.6 17 Other mortgages and loans 62.9 107.7 148.6 155.1 96.2 151.4 161.4 148.7 83.1 109.3 159.5 143.2 18 LESS: Federal Home Loan Bank advances -2.0 4.3 12.5 9.2 7.1 16.2 8.2 10.1 4.6 9.6 18.0 14.5 Private financial intermediation 19 Credit market funds advanced by private financial institutions 191.4 260.9 302.4 292.5 270.3 302.5 316.9 268.0 246.1 294.4 318.9 286.2 20 Commercial banking 59.6 87.6 128.7 121.1 99.7 99.8 130.3 112.0 58.5 140.9 101.6 98.0 21 Savings institutions 70.5 82.0 73.5 55.9 58.4 24.1 59.6 52.2 35.5 81.3 38.4 9.8 22 Insurance and pension funds 49.7 67.8 75.0 66.4 79.8 81.9 72.3 60.5 89.2 70.3 79.3 84.5 23 Other finance 11.6 23.4 25.2 49.0 32.4 96.7 54.8 43.3 62.8 1.9 99.5 93.9 24 Sources of funds 191.4 260.9 302.4 292.5 270.3 302.5 316.9 268.0 246.1 294.4 318.9 286.2 25 Private domestic deposits 124.4 138.9 140.8 143.2 171.1 204.8 135.1 151.2 158.7 183.6 203.6 206.1 26 Credit market borrowing 8.4 26.9 38.3 33.6 17.5 35.9 40.6 26.6 8.1 27.0 42.3 29.4 27 Other sources 58.5 95.1 123.2 115.7 81.6 61.8 141.2 90.3 79.4 83.8 73.0 50.7 28 Foreign funds -4.7 1.2 6.3 25.6 -22.3 -10.4 45.6 5.6 -22.8 -21.9 -6.5 -14.4 29 Treasury balances -.1 4.3 6.8 .4 -2.6 -1.1 5.0 -4.2 -2.3 -2.8 10.8 -13.0 30 Insurance and pension reserves 34.3 50.1 62.2 47.8 64.1 71.4 52.3 43.4 70.0 58.1 62.7 80.1 31 Other, net 29.0 39.5 48.0 41.9 42.4 2.0 38.4 45.4 34.5 50.4 6.0 -1.9 Private domestic nonfinancial investors 32 Direct lending in credit markets 45.1 42.2 67.0 109.3 55.1 74.0 112.5 106.1 33.9 76.4 77.3 70.7 33 U.S. government securities 16.4 24.1 35.6 62.8 32.6 44.8 71.0 54.5 19.3 45.8 37.1 52.4 34 State and local obligations 3.3 -.8 1.4 1.4 3.1 15.5 2.6 .2 -1.8 7.9 20.6 10.5 35 Corporate and foreign bonds 11.8 -3.8 -2.9 10.3 3.6 -10.4 4.6 16.0 4.8 2.3 -10.2 -10.6 36 Commercial paper 1.9 9.6 16.5 11.4 -3.8 4.3 11.4 11.4 -4.5 -3.1 4.9 3.8 37 Other 11.7 13.2 16.4 23.5 19.7 19.7 22.9 24.0 16.0 23.3 24.8 14.6 38 Deposits and currency 133.4 148.5 152.1 152.6 182.3 213.7 149.3 155.9 167.6 197.1 209.5 217.9 39 Currency 7.3 8.3 9.3 7.9 10.3 9.5 9.0 6.9 8.5 12.1 4.7 14.3 40 Checkable deposits 10.4 17.2 16.3 19.2 4.2 16.9 16.6 21.9 -1.5 9.9 28.9 4.9 41 Small time and savings accounts 123.7 93.5 63.5 61.7 80.9 40.7 66.5 56.9 66.7 95.2 14.6 66.8 42 Money market fund shares * .2 6.9 34.4 29.2 107.5 30.2 38.6 61.9 -3.4 104.1 110.8 43 Large time deposits -12.0 25.8 46.6 21.2 50.3 36.8 3.3 39.1 26.3 74.2 48.3 25.3 44 Security RPs 2.3 2.2 7.5 6.6 6.5 3.0 18.5 -5.3 5.3 7.8 7.7 -1.7 45 Foreign deposits 1.7 1.3 2.0 1.5 .9 -.6 5.2 -2.3 .4 1.3 1.2 -2.5 46 Total of credit market instruments, deposits and currency 178.5 190.7 219.1 261.9 237.5 287.7 261.8 262.0 201.5 273.4 286.8 288.6 47 Public support rate (in percent) 19.0 23.7 25.7 18.8 25.8 23.5 12.6 25.0 31.2 21.2 24.9 22.0 48 Private financial intermediation (in percent)... 83.9 94.4 91.3 79.4 87.8 88.8 81.5 77.1 90.5 85.6 90.1 87.4 49 Total foreign funds 10.5 40.8 44.3 19.5 -2.3 2.2 28.4 10.7 .2 -4.8 34.5 -30.1 MEMO: Corporate equities not included above 50 Total net issues 10.6 5.7 1.2 -4.6 21.1 -3.1 -6.2 -2.9 16.0 26.3 11.2 -17.5 51 Mutual fund shares -2.4 .4 -.5 -.6 4.4 7.8 .7 -1.9 5.3 3.4 9.3 6.3 52 Other equities 13.1 5.3 1.7 -4.0 16.8 -11.0 -6.9 -1.0 10.7 22.8 1.9 -23.8 53 Acquisitions by financial institutions 12.5 7.4 4.5 10.6 17.7 22.4 7.1 14.0 10.5 24.9 26.4 18.4 54 Other net purchases -1.9 -1.6 -3.4 -15.1 3.4 -25.5 -13.4 -16.9 5.5 1.4 -15.2 -35.9 NOTES BY LINE NUMBER. 31. Mainly retained earnings and net miscellaneous liabilities. 1. Line 2 of table 1.58. 32. Line 12 less line 19 plus line 26. 2. Sum of lines 3-6 or 7-10. 33-37. Lines 13-17 less amounts acquired by private finance. Line 37 includes 6. Includes farm and commercial mortgages. mortgages. 11. Credit market funds raised by federally sponsored credit agencies, and net 39. Mainly an offset to line 9. issues of federally related mortgage pool securities. 46. Lines 32 plus 38, or line 12 less line 27 plus 39 and 45. 12. Line 1 less line 2 plus line 11. Also line 19 less line 26 plus line 32. Also sum 47. Line 2/line 1. of lines 27, 32, and 38 less lines 39 and 45. 48. Line 19/line 12. 17. Includes farm and commercial mortgages. 49. Sum of lines 10 and 28. 25. Line 38 less lines 39 and 45. 50. 52. Includes issues by financial institutions. 26. Excludes equity issues and investment company shares. Includes line 18. 28. Foreign deposits at commercial banks, bank borrowings from foreign branches, NOTE. Full statements for sectors and transaction types quarterly, and annually and liabilities of foreign banking agencies to foreign affiliates. for flows and for amounts outstanding, may be obtained from Flow of Funds 29. Demand deposits at commercial banks. Section, Division of Research and Statistics, Board of Governors of the Federal 30. Excludes net investment of these reserves in corporate equities. Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • August 1982 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures 1967 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1981 1982 MMeeaassuurree 11997799 11998800 11998811 Nov. Dec. Jan. Feb. Mar. Apr. Mayr June? Julye 1 Industrial production1 152.5 147.0 151.0 146.3 143.4 140.7 142.9 141.7 140.2 139.2 138.2 138.1 Market groupings 2 Products, total 150.0 146.7 150.6 147.5 146.2 142.9 144.6 143.7 142.9 142.2 141.1 141.0 3 Final, total 147.2 145.3 149.5 147.2 146.3 142.8 144.1 143.3 142.6 142.3 141.1 140.9 4 Consumer goods 150.8 145.4 147.9 144.0 142.0 139.6 141.8 141.5 142.1 143.5 143.7 144.5 5 Equipment 142.2 145.2 151.8 151.5 152.1 147.2 147.3 145.9 143.4 140.6 137.6 136.0 6 Intermediate 160.5 151.9 154.4 148.7 145.9 143.4 146.3 145.2 143.7 142.2 140.8 141.1 7 Materials 156.4 147.6 151.6 144.6 139.0 137.2 140.4 138.5 136.2 134.6 133.7 133.7 Industry groupings 8 Manufacturing 153.6 146.7 150.4 145.0 142.0 138.5 140.9 140.1 138.7 137.8 137.1 137.1 Capacity utilization (percent)1'2 9 Manufacturing 85.7 79.1 78.5 74.8 73.1 71.1 72.2 71.6 70.8 70.2 69.7 69.5 10 Industrial materials industries 87.4 80.0 79.9 75.5 72.4 71.4 72.9 71.8 70.5 69.5 68.9 68.8 11 Construction contracts (1977 = 100)3 121.0 106.0 107.0 92.0 112.0 115.0 97.0 105.0 88.0 94.0 118.0 n.a. 12 Nonagricultural employment, total4 136.5 137.6 139.1 138.3 137.7 137.5 137.5 137.2 136.9 137.0 136.6 136.5 13 Goods-producing, total 113.5 110.3 110.2 108.0 106.9 105.9 105.7 104.9 104.2 104.1 102.9 102.4 14 Manufacturing, total 108.2 104.4 104.2 102.3 101.2 100.4 100.0 99.3 98.6 98.3 97.3 96.9 15 Manufacturing, production-worker 105.3 99.4 98.5 95.9 94.3 93.2 92.9 92.1 91.2 90.9 89.9 89.6 16 Service-producing 149.1 152.6 155.0 154.9 154.7 154.8 154.9 155.0 154.8 155.1 155.0 155.2 17 Personal income, total 308.5 342.9 381.6 396.7 396.4 396.7 399.0 399.8 402.3 405.2 406.6 n.a. 18 Wages and salary disbursements 289.8 317.6 349.9 359.3 358.4 359.6 362.2 361.3 362.2 365.2 365.7 n.a. 19 Manufacturing 249.0 264.3 288.1 290.4 286.9 286.1 289.0 286.4 286.3 287.8 288.2 n.a. 20 Disposable personal income5 300.1 332.9 370.3 384.2 383.8 385.0 386.5 387.7 391.8 392.6 393.8 n.a. 21 Retail sales® 281.6 303.8 330.6 333.3 334.1 326.0 334.9 333.5 337.4 347.1 335.8 339.0 Prices7 22 Consumer 217.4 246.8 272.4 280.7 281.5 282.5 283.4 283.1 284.3 287.1 290.6 n.a. 23 Producer finished goods 217.7 247.0 269.8 274.7 275.4 277.4 277.4 276.9 276.9 277.7 279.9 n.a. 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 1981 1982 1981 1982 1981 1982 SSeerriieess Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Output (1967 = 100) Capacity (percent of 1967 output) Utilization rate (percent) 1 Manufacturing 152.5 145.0 139.8 137.9 192.4 193.9 195.2 196.4 79.3 74.8 71.6 70.2 2 Primary processing 155.8 143.5 137.1 132.1 196.3 197.5 198.6 199.5 79.4 72.7 69.1 66.3 3 Advanced processing 150.7 145.8 141.6 140.9 190.4 192.0 193.5 194.9 79.2 75.9 73.2 72.3 4 Materials 154.3 144.0 138.7 134.8 190.3 191.5 192.6 193.7 81.1 75.2 72.0 69.6 5 Durable goods 152.8 140.2 130.9 127.1 194.2 195.3 196.4 197.3 78.7 71.8 66.7 64.4 6 Metal materials 114.2 99.5 90.9 76.7 141.9 142.1 142.3 142.4 80.5 70.1 63.9 53.9 7 Nondurable goods 175.8 164.5 161.0 157.6 211.2 213.1 214.6 216.1 83.3 77.2 75.0 73.0 8 Textile, paper, and chemical 182.8 169.4 164.5 160.9 221.7 223.9 225.6 227.3 82.5 75.7 72.9 70.8 9 Textile 115.5 106.8 101.3 102.7 141.0 141.6 142.1 142.4 81.8 75.4 71.3 72.1 10 Paper 152.2 147.0 146.1 142.1 161.9 162.8 163.8 164.6 94.1 90.3 89.2 86.3 11 Chemical 224.9 206.2 200.0 194.3 281.0 284.4 287.3 289.6 80.0 72.5 69.6 67.1 12 Energy materials 131.6 127.9 129.8 125.5 155.0 155.8 156.5 157.0 84.9 82.1 82.9 79.9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Labor Market A47 2.11 Continued Previous cycle1 Latest cycle2 1981 1982 cp • High Low High Low July Nov. Dec. Jan. Feb. Mar. Apr.' Mayr Juner July Capacity utilization rate (percent) 13 Manufacturing 88.0 69.0 87.2 74.9 79.8 74.8 73.1 71.1 72.2 71.6 70.8 70.2 69.7 69.5 14 Primary processing 93.8 68.2 90.1 71.0 80.1 72.7 69.6 68.5 70.0 68.6 67.2 66.0 65.7 65.6 15 Advanced processing.... 85.5 69.4 86.2 77.2 79.8 75.8 75.0 72.8 73.6 73.2 72.6 72.5 71.8 71.6 16 Materials 92.6 69.4 88.8 73.8 81.9 75.5 72.4 71.4 72.9 71.8 70.5 69.5 68.9 68.8 17 Durable goods 91.5 63.6 88.4 68.2 79.3 72.2 68.5 66.2 67.4 66.4 65.0 64.2 63.9 63.5 18 Metal materials 98.3 68.6 96.0 59.6 79.5 70.8 65.5 65.8 64.7 61.1 56.2 53.5 51.9 19 Nondurable goods 94.5 67.2 91.6 77.5 83.9 77.3 74.1 73.2 76.5 75.3 74.4 72.8 71.7 71.6 20 Textile, paper, and chemical 95.1 65.3 92.2 75.3 83.2 75.9 72.2 70.7 74.4 73.7 72.5 70.8 69.1 68.9 21 Textile 92.6 57.9 90.6 80.9 82.0 75.5 72.0 68.6 71.9 73.5 73.4 72.3 70.6 n.a. 22 Paper 99.4 72.4 97.7 89.3 92.9 92.3 86.5 87.6 90.7 89.4 87.4 86.0 85.5 n.a. 23 Chemical 95.5 64.2 91.3 70.7 81.2 72.4 69.0 67.4 71.3 70.2 69.0 67.1 65.2 n.a. 24 Energy materials 94.6 84.8 88.3 82.7 86.2 82.2 81.6 83.7 83.2 81.8 80.2 80.1 79.5 80.1 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. 1982 CCaatteeggoorryy 11997799 11998800 11998811 Jan. Feb. Mar. Apr. Mayr Juner July HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 166,951 169,847 172,272 173,494 173,657 173,842 174,019 174,201 174,363 174,544 2 Labor force (including Armed Forces)1 ... 107,050 109,042 110,812 111,038 111,333 111,521 111,823 112,841 112,364 112,702 3 Civilian labor force 104,962 106,940 108,670 108,879 109,165 109,346 109,648 111100,,666666 111100,,119911 111100,,552222 Employment 4 Nonagricultural industries2 95,477 95,938 97,030 96,170 96,217 96,144 96,032 96,629 96,406 96,272 5 Agriculture 3,347 3,364 3,368 3,411 3,373 3,349 3,309 33,,448888 33,,335577 33,,446600 Unemployment 6 Number 6,137 7,637 8,273 9,298 9,575 9,854 10,307 10,549 10,427 10,790 7 Rate (percent of civilian labor force) . 5.8 7.1 7.6 8.5 8.8 9.0 9.4 9.5 9.5 9.8 8 Not in labor force 59,901 60,805 61,460 62,456 62,324 62,321 62,196 61,360 61,999 61,842 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 . . 89,823 90,564 91,548 90,460 90,459 90,304 90,083 90,166 89,860 89,843 10 Manufacturing 21,040 20,300 20,264 19,517 19,454 19,319 19,169 19,115 18,929 18,839 11 Mining 958 1,020 1,104 1,201 1,203 1,197 1,182 1,152 1,121 1,107 12 Contract construction 4,463 4,399 4,307 . 3,966 3,974 3,934 3,938 3,988 3,942 3,932 13 Transportation and public utilities 5,136 5,143 5,152 5,125 5,115 5,100 5,094 5,101 5,081 5,058 14 Trade 20,192 20,386 20,736 20,630 20,670 20,655 20,584 20,652 20,602 20,629 15 Finance 4,975 5,168 5,330 5,326 5,326 5,336 5,335 5,342 5,356 5,362 16 Service 17,112 17,901 18,598 18,831 18,867 18,904 18,929 18,963 19,012 19,066 17 Government 15,947 16,249 16,056 15,864 15,850 15,859 15,852 15,853 15,817 15,850 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 • August 1982 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value Monthly data are seasonally adjusted. Grouping 1 p p 9 r o o 6 r - - 7 a 1 v 9 e 8 r 1 - 1981 1982 tion July Aug. Sept. Oct. Nov Dec. Jan. Feb Mar. Apr.r May June? July Index (1967 = 100) MAJOR MARKET 1 Total index 100.00 151.0 153.9 153.6 151.6 149.1 146.3 143.4 140.7 142.9 141.7 140.2 139.2 2 Products 60.71 150.6 153.0 152.6 151.0 149.4 147.5 146.2 142.9 144.6 143.7 142.9 142.2 3 Final products 47.82 149.5 152.1 151.5 150.0 148.9 147.2 146.3 142.8 144.1 143.3 142.6 142.3 4 Consumer goods 27.68 147.9 150.7 149.6 147.8 146.5 144.0 142.0 139.6 141.8 141.5 142.1 143.5 5 Equipment 20.14 151.8 154.1 154.0 152.9 152.1 151.5 152.1 147.2 147.3 145.9 143.4 140.6 6 Intermediate products 12.89 154.4 156.2 156.8 154.6 151.4 148.7 145.9 143.4 146.3 145.2 143.7 142.2 7 Materials 39.29 151.6 155.3 155.2 152.5 148.5 144.6 139.0 137.2 140.4 138.5 136.2 134.6 Consumer goods 8 Durable consumer goods 7.89 140.5 146.5 142.5 140.4 136.3 129.7 123.2 120.1 125.9 128.1 130.7 133.3 9 Automotive products 2.83 137.9 147.6 137.6 139.1 132.8 121.7 119.2 109.2 117.5 125.0 129.9 139.0 10 Autos and utility vehicles 2.03 111.2 123.0 107.8 110.0 101.7 88.9 87.5 71.6 82.0 93.6 100.5 111.8 11 Autos 1.90 103.4 118.1 104.0 103.3 92.5 81.1 78.1 61.3 70.5 79.8 87.2 96.1 12 Auto parts and allied goods... 80 205.6 210.0 213.1 212.9 211.8 205.0 199.7 204.4 207.8 204.5 204.6 208.0 13 Home goods 5.06 142.0 145.8 145.3 141.1 138.2 134.1 125.4 126.3 130.6 129.9 131.1 130.1 14 Appliances, A/C, and TV .... 1.40 119.6 123.6 126.8 119.0 116.7 107.7 85.7 100.6 103.5 97.0 102.7 100.5 15 Appliances and TV 1.33 121.2 124.8 128.9 121.4 118.7 108.7 86.6 101.6 104.1 97.4 103.1 101.5 16 Carpeting and furniture 1.07 158.0 163.2 160.1 158.6 152.6 146.9 144.4 137.9 147.8 151.3 151.8 147.1 17 Miscellaneous home goods.... 2.59 147.4 150.7 149.2 145.8 143.9 143.2 139.1 135.4 138.1 138.9 138.0 139.1 18 Nondurable consumer goods 19.79 150.9 152.3 152.5 150.8 150.5 149.7 149.5 147.4 148.1 146.8 146.6 147.5 19 Clothing 4.29 119.8 122.8 121.9 119.3 117.8 116.1 113.8 106.0 158.1 20 Consumer staples 15.50 159.5 160.5 161.0 159.5 159.6 159.0 159.4 158.9 159.2 149.6 158.3 158.6 21 Consumer foods and tobacco . 8.33 150.3 150.5 150.6 149.5 150.7 150.4 150.9 150.0 151.1 168.0 148.1 149.3 22 Nonfood staples 7.17 170.0 172.2 173.0 171.1 169.9 169.1 169.3 169.1 168.7 217.8 170.0 169.5 23 Consumer chemical products 2.63 223.1 226.8 227.7 227.5 223.0 220.3 220.1 220.1 218.2 127.8 218.3 216.9 24 Consumer paper products .. 1.92 127.9 127.6 128.9 127.7 126.9 125.7 127.2 127.0 130.2 147.6 128.7 126.4 25 Consumer energy products . 2.62 147.7 150.0 150.4 146.4 148.2 149.4 149.1 148.9 147.2 170.4 151.9 153.6 26 Residential utilities 1.45 166.3 172.6 169.7 162.8 166.2 167.4 167.5 172.3 171.6 169.0 174.5 173.7 Equipment 27 Business 12.63 181.1 184.8 184.8 182.7 180.5 179.0 179.0 172.2 171.6 151.2 164.9 160.2 28 Industrial 6.77 166.4 169.4 170.2 168.9 166.9 165.1 164.0 158.1 155.9 256.9 145.9 139.6 29 Building and mining 1.44 286.2 290.3 293.0 293.6 295.6 293.8 294.6 289.0 274.9 116.3 242.2 225.7 30 Manufacturing 3.85 127.9 130.8 130.8 129.3 125.7 123.6 122.0 116.9 116.8 139.0 114.0 110.6 31 Power 1.47 149.7 151.6 152.7 150.4 148.4 147.1 145.5 137.4 141.1 189.5 134.8 131.2 32 Commercial transit, farm 5.86 198.0 202.5 200.9 198.5 196.2 195.0 196.3 188.5 189.9 257.8 186.9 184.0 33 Commercial 3.26 258.7 263.7 264.3 264.2 259.8 260.6 262.9 256.1 256.4 110.5 253.1 247.4 34 Transit 1.93 125.4 128.4 124.6 121.0 120.6 116.6 117.5 109.0 110.4 84.9 110.9 110.9 35 Farm 67 112.0 118.0 111.8 102.1 104.6 101.7 98.9 88.4 95.1 107.0 83.5 86.1 36 Defense and space 7.51 102.7 102.6 102.8 103.0 104.5 105.3 107.0 105.2 106.5 125.6 107.2 107.7 Intermediate products 37 Construction supplies 6.42 141.9 144.3 144.0 139.7 135.2 130.1 127.0 124.2 127.5 164.6 123.6 121.5 38 Business supplies 6.47 166.7 168.0 169.5 169.4 167.5 167.1 164.6 162.4 165.1 184.5 163.7 162.7 39 Commercial energy products.... 1.14 176.4 180.0 176.6 174.2 174.3 177.0 177.3 181.7 184.1 130.7 183.5 180.8 Materials 40 Durable goods materials 20.35 149.1 153.6 154.3 150.4 145.6 141.0 134.0 129.7 132.4 130.7 128.1 126.7 41 Durable consumer parts 4.58 114.5 123.2 121.8 114.5 107.6 102.8 92.9 86.9 92.2 94.1 94.7 99.0 42 Equipment parts 5.44 191.2 193.8 194.7 192.7 190.3 188.7 183.3 177.2 180.1 177.5 173.9 169.8 43 Durable materials n.e.c 10.34 142.3 145.9 147.4 144.1 138.9 132.9 126.1 123.6 125.1 122.2 118.8 116.2 44 Basic metal materials 5.57 112.0 114.5 117.4 113.1 106.5 101.6 94.8 94.5 94.3 88.6 82.3 78.8 45 Nondurable goods materials 10.47 174.6 176.5 175.4 175.5 170.6 164.7 158.3 156.8 164.2 162.0 160.3 157.3 46 Textile, paper, and chemical materials 7.62 181.4 183.5 182.4 182.5 176.4 169.9 161.9 159.1 167.9 166.6 164.4 160.9 47 Textile materials 1.85 113.0 115.5 116.0 114.9 111.6 106.9 102.0 97.3 102.2 104.5 104.5 103.0 48 Paper materials 1.62 150.6 150.0 151.5 155.1 149.6 150.2 141.2 143.2 148.5 146.7 143.5 141.6 49 Chemical materials 4.15 224.0 227.1 224.1 223.4 215.9 205.8 196.8 193.0 204.9 202.2 199.3 194.4 50 Containers, nondurable 1.70 169.3 171.7 169.4 170.9 166.7 163.5 161.9 162.4 166.7 161.3 159.8 156.2 51 Nondurable materials n.e.c 1.14 137.4 136.6 137.8 136.2 137.1 131.9 128.6 132.4 136.0 132.4 134.2 134.8 52 Energy materials 129.0 133.3 132.6 128.9 128.3 128.1 127.4 130.9 130.3 128.2 125.8 125.7 53 Primary energy 4.65 115.0 120.3 120.9 117.4 116.4 115.6 115.9 119.2 119.5 119.2 117.3 117.5 54 Converted fuel materials 3.82 145.9 149.2 146.9 142.9 142.8 143.4 141.4 145.1 143.4 139.1 136.1 135.7 Supplementary groups 55 Home goods and clothing 9.35 131.8 135.2 134.5 131.1 128.8 125.9 120.1 117.0 120.1 118.9 118.9 119.6 56 Energy, total 12.23 137.4 141.2 140.5 136.8 136.9 137.2 136.7 139.5 138.9 137.6 136.7 136.8 57 Products 3.76 156.4 159.1 158.4 154.8 156.1 157.8 157.7 158.8 158.4 158.8 161.5 161.8 58 Materials 129.0 133.3 132.6 128.9 128.3 128.1 127.4 130.9 130.3 128.2 125.8 125.7 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Output A49 2.13 Continued 1967 SIC pro- 1981 Grouping code por- avg.r tion July Aug. Sept. Oct. Nov. Dec Feb. Mar. Apr.' May June^ July Index (1967 = 100) MAJOR INDUSTRY 1 Mining and utilities 12.05 155.0 159.1 158.2 155.8 156.1 155.4 154.7 157.4 155.6 153.1 151.6 149.3 145.7 144.7 2 Mining 6.36 142.2 146.5 146.0 145.0 145.3 143.3 142.6 144.5 142.4 138.1 134.1 129.7 125.1 121.9 3 Utilities 5.69 169.1 173.1 171.9 167.8 168.1 168.9 168.2 171.8 170.4 170.0 171.0 171.1 168.7 170.2 4 Electric 3.88 190.9 196.2 194.2 188.3 189.4 190.9 190.2 195.2 192.5 191.7 193.1 193.4 190.0 192.3 5 Manufacturing 87.95 150.4 153.2 153.2 151.1 148.0 145.0 142.0 138.5 140.9 140.1 138.7 137.8 137.1 137.1 6 Nondurable 35.97 164.8 167.1 167.3 165.9 162.8 160.3 157.4 155.1 157.8 157.3 156.1 154.9 154.2 154.2 7 Durable 51.98 140.5 143.6 143.4 140.9 137.8 134.4 131.3 127.1 129.3 128.2 126.7 126.0 125.3 125.2 Mining 8 Metal 10 .51 123.1 123.6 124.1 121.5 119.8 115.4 110.9 121.3 120.8 109.9 108.8 90.6 71.4 9 Coal 11.12 .69 141.3 170.0 167.4 161.9 166.9 160.8 145.5 147.9 156.0 155.6 146.2 149.2 144.4 142.0 10 Oil and gas extraction 13 4.40 146.8 147.7 148.2 148.8 148.9 148.4 150.5 151.5 146.6 141.4 137.7 133.4 129.4 127.0 11 Stone and earth minerals 14 .75 129.4 133.3 128.2 123.4 122.0 116.7 115.7 115.8 120.5 121.6 119.6 117.3 118.7 Nondurable manufactures 12 Foods 8.75 152.1 151.6 151.9 150.7 151.4 153.0 152.8 151.1 151.7 150.8 149.7 150.0 13 Tobacco products .67 122.2 121.3 123.8 122.4 124.3 119.6 112.6 112.7 126.7 126.7 116.1 117.2 14 Textile mill products 2.68 135.7 139.4 140.7 136.3 132.5 126.1 122.8 120.0 125.8 126.0 126.3 124.4 123.4 15 Apparel products 3.31 120.4 122.6 122.6 122.5 117.8 113.8 114.1 105.7 16 Paper and products 3.21 155.0 154.9 156.7 158.6 153.3 152.6 146.6 148.3 151.5 150.6 149.8 146.5 144.6 17 Printing and publishing 4.72 144.2 144.4 146.1 145.9 145.6 143.4 145.3 145.6 146.4 145.9 144.2 143.3 141.0 140.5 18 Chemicals and products 7.74 215.6 221.5 219.2 216.3 208.8 204.6 199.8 196.7 201.3 200.3 198.6 194.0 192.2 19 Petroleum products 1.79 129.7 128.7 130.4 129.1 128.3 128.0 128.3 123.3 119.5 121.3 120.8 121.8 125.9 20 Rubber and plastic products 2.24 274.0 285.3 286.7 282.2 276.0 264.1 247.3 244.7 251.8 253.4 255.1 255.1 257.5 21 Leather and products 69.3 70.1 69.6 69.7 71.2 70.8 65.6 63.1 64.0 61.2 60.6 61.2 60.4 Durable manufactures 22 Ordnance, private and government . 19.91 3.64 81.1 80.6 81.8 82.3 82.5 84.3 85.5 84.1 83.8 83.8 85.2 18161..30 86.4 86.8 23 Lumber and products 24 1.64 119.1 122.9 119.1 113.2 109.6 104.7 104.8 99.2 104.9 103.5 106.2 111.5 24 Furniture and fixtures 25 1.37 157.2 164.9 163.3 159.9 157.2 153.7 149.4 144.3 148.4 150.2 151.8 151.2 150.0 25 Clay, glass, stone products 32 2.74 147.9 148.7 148.2 147.3 143.4 135.9 131.5 128.5 135.0 131.5 127.0 124.4 125.8 26 Primary metals 33 6.57 107.9 109.4 113.1 108.6 102.3 96.6 89.6 89.7 88.5 83.0 76.4 74.6 72.7 27 Iron and steel 331.2 4.21 99.8 99.7 105.1 99.2 92.2 87.2 79.2 79.6 78.5 73.0 65.1 62.4 58.3 28 Fabricated metal products 34 5.93 136.4 140.1 140.0 136.8 133.8 130.2 126.1 120.7 121.4 121.1 119.1 116.0 114.8 114.9 29 Nonelectrical machinery 35 9.15 171.2 176.7 176.4 173.9 169.7 167.9 167.4 160.9 160.0 157.3 153.7 150.2 145.9 142.1 30 Electrical machinery 36 8.05 178.4 180.9 182.6 180.0 179.6 175.7 170.7 168.2 172.9 172.6 172.2 170.5 171.3 171.4 31 Transportation equipment 37 9.27 116.1 119.8 115.4 114.2 110.6 106.1 103.7 96.6 102.0 104.4 105.9 110.0 111.7 114.0 32 Motor vehicles and parts 371 4.50 122.3 130.5 123.1 120.4 113.8 105.5 100.4 90.4 98.6 105.6 110.7 119.8 124.3 128.2 33 Aerospace and miscellaneous transportation equipment 372-9 4.77 110.2 109.7 108.2 108.5 107.5 106.8 106.8 102.4 105.3 103.2 101.3 100.9 99.8 100.6 34 Instruments 38 2.11 170.3 172.1 172.3 169.7 168.6 167.1 166.8 162.2 164.5 163.0 162.8 163.5 164.1 163.3 35 Miscellaneous manufactures 39 1.51 154.7 159.4 158.6 154.2 151.5 151.7 147.9 144.9 144.5 145.3 144.6 143.6 140.8 142.0 Gross value (billions of 1972 dollars, annual rates) MAJOR MARKET 36 Products, total 507.41 612.3 621.4 616.5 611.5 605.0 597.6 592.8 577.4 588.1 586.8 582.1 585.1 580.4 584.2 37 Final 390.9' 474.1 481.9 476.4 473.0 470.1 465.2 462.3 448.8 457.1 456.6 453.5 457.7 454.0 457.2 38 Consumer goods 277.5' 318.0 324.0 319.3 317.7 314.3 310.5 307.2 298.9 306.3 306.9 306.7 311.5 311.1 315.8 39 Equipment 113.4' 156.1 157.9 157.1 155.3 155.8 154.7 155.1 149.9 150.8 149.7 146.8 146.2 142.9 141.5 40 Intermediate 116.61 138.2 139.5 140.1 138.4 134.9 132.4 130.5 128.7 131.1 130.2 128.6 127.3 126.4 127.0 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 • August 1982 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates except as noted. 1981 1982 IItteemm 11997799 11998800 11998811 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,552 1,191 986 738 743 797 803 792 851 879 994444 rr 948 2 1-family 981 710 564 400 413 454 450 436 460 450 448888'' 519 3 2-or-more-family 571 481 421 338 330 343 353 356 391 429 456' 429 4 Started 1,745 1,292 1,084 854 860 882 885 945 931 882' 1,075' 911 b 1-family 1,194 852 705 507 554 550 592 568 621 566 631' 607 6 2-or-more-family 551 440 379 347 306 332 293 377 310 316 444 R 304 7 Under construction, end of period1 1,140 896 682 731 705 689 684 688 682 674' 669 8 1-family 639 515 382 410 397 391 394 400 399 394 385 9 2-or-more-family 501 382 301 321 309 298 291 288 283 281 284 n.a. 10 Completed 1,855 1,502 1,266 1,265 1,067 1,114 1,063 920 926' 962' 1,107 11 1-family 1,286 957 818 725 673 676 640 545 585' 594 651 12 2-or-more-family 569 545 447 540 394 438 423 375 341' 368 456 n.a. 13 Mobile homes shipped 277 222 241 208 207 206 211 251 252 255 246 n.a. Merchant builder activity in 1family units 14 Number sold 709 545 436 359 388 456 399 376 338800'' 334411'' 339999'' 334433 lb Number for sale, end of period1 402 342 278 291 282 272 275 274 269 264 259' 255 Price (thousands of dollars)1 Median 16 Units sold 62.8 64.7 68.8 69.6 71.2 68.4 66.2 65.7 67.2' 7700..44'' 6699..44'' 7722..66 Average 17 Units sold 71.9 76.4 83.1 82.5 85.3 82.8 78.0 80.7 83.7' 85.7' 86.5' 88.1 EXISTING UNITS (1-family) 18 Number sold 3,701 2,881 2,350 1,930 1,900 1,940 1,860 1,950 1,990 1,910 1,900' 1950 Price of units sold (thousands of dollars)2 19 Median 55.5 62.1 66.1 66.0 65.9 66.6 66.4 66.9 67.0 67.1 67.8' 69.4 20 Average 64.0 72.7 78.0 76.6 77.5 78.6 79.8 78.8 79.1 79.4 80.6' 82.3 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 230,412 230,748 238,198 230,820 230,010 228,755 225,086 222,615 224,583 226,172' 227,708' 230,653 22 Private 181,622' 175,701' 185,221' 180,003 178,127' 176.562 175,493 173,026 173,605 175,318' 179,217' 182,822 23 Residential 99,028 87,261 86,566 78,222 76,167 75.829 73,737 69,161 70,040 72,406' 75,573' 74,786 24 Nonresidential, total 82,594 88,440' 98,655' 101,781 101,960' 100,733 101,756 103,865 110033,,556655 110022,,991122 110033,,664444'' 110088,,003366 Buildings 2B Industrial 14,953 13,839 17,031 18,548 18,356 16,622 17,113 17,211 16,641 15,882 17,118' 19,473 26 Commercial 24,919 29,940 34,243 34,606 35,667 36,382 36,161 36,841 38,362 38,437 36,818' 38,366 27 Other 7,427 8,654 9,543 9,713 9,419 9.223 9,558 10,002 9,880 9,897 10,427' 10,612 28 Public utilities and other 35,295' 36,007' 37,838' 38,914' 38,518' 38,506 38,924 39,811 38,682 38,696 39,281' 39,585 29 Public 48,790' 55,047' 52,977' 50,817 51,883' 52,193 49,593 49,589 50,978 50,854' 48,491' 47,831 30 Military 1,648' 1,880 1,966' 1,913 1,935 1,955 2,092 1,459 2,317 1,895 2,102 1,906 31 Highway 11,997 13,808' 13,304 11,863 12,798 12,732 11,479 1122,,442222 1133,,330077 1122,,111133 1111,,665555'' 1122,,000044 32 Conservation and development 4,586' 5,089' 5,225 5,239 4,906 4,884 5,232 5,301 5,056 5,180 4,911' 4,775 33 Other 30,559' 34,270' 32,482' 31,802 32,244' 32,622 30,790 30,407 30,298' 31,666' 29,823' 29,146 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 because of 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 JJJuuunnneee IIIttteeemmm 1981 1982 1982 111999888222 JJ 11 uu 99 nn 8811 ee JJ 11 uu 99 nn 8822 ee (((111999666777 Sept. Dec. Mar. June Feb. Mar. Apr. May June === 111000000)))''' CONSUMER PRICES2 1 All items 9.6 7.1 12.8 5.4 1.0 9.3 .2 -.3 .2 1.0 1.0 290.6 2 Commodities 8.8 4.7 8.5 3.6 -.8 7.8 .2 -.5 -.3 .9 1.3 265.1 3 Food 8.6 5.2 7.7 1.7 3.9 7.3 .6 -.4 .3 .8 .6 287.8 4 Commodities less food 8.9 4.5 9.0 4.3 -2.6 7.9 .0 -.5 -.5 .9 1.5 251.9 5 Durable 8.6 7.3 10.8 1.2 3.5 14.1 .4 .2 .6 1.4 1.3 243.2 6 Nondurable 9.2 1.2 4.6 3.8 -4.9 1.9 -.8 -.7 -2.2 .7 2.0 261.2 7 Services 10.7 10.3 19.2 7.8 3.5 11.3 .4 .0 .9 .9 .8 334.9 8 Rent 8.2 7.6 10.2 9.0 5.9 5.6 .4 .5 .2 .8 .4 222.6 9 Services less rent 11.0 10.7 20.4 7.6 3.3 11.9 .4 .0 1.0 1.0 .9 356.5 Other groupings 10 All items less food 9.8 7.5 13.9 6.2 .9 9.7 .2 -.2 .2 1.0 1.2 289.7 11 All items less food and energy 9.4 8.5 15.0 5.6 3.0 10.6 .4 .0 .8 .9 .9 277.3 12 Homeownership 9.4 9.2 21.5 .3 -2.4 19.8 .4 -.9 1.3 1.8 1.4 382.8 PRODUCER PRICES 13 Finished goods 10.5 3.5 3.4 5.5 .3 4.7 -.2 -.3 .1 .0 1.0 279.9 14 Consumer 10.3 2.8 2.8 4.5 -.1 4.3 -.1 -.5 .0 -.1 1.1 280.0 15 Foods 8.9 3.8 1.6 -3.9 6.0 11.7 .5 -.2 1.6 .7 .5 263.4 16 Excluding foods 10.7 2.5 3.2 7.8 -2.2 1.3 -.3 -.6 -.7 -.4 1.4 284.6 17 Capital equipment 10.9 6.0 5.7 9.7 2.1 6.5 -.4 .4 .4 .4 .8 279.6 18 Intermediate materials3 10.6 1.2 5.2 2.7 -1.4 -1.8 -.3 -.2 -.8 .0 .3 314.8 Crude materials 19 Nonfood 26.7 -4.0 1.1 -6.0 -18.1 8.7 -2.0 -2.0 -.2 1.7 .6 467.9 20 Food 8.8 -1.7 -18.2 -25.5 23.3 24.3 .7 .2 3.5 2.7 -.6 259.8 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 • August 1982 2.16 GROSS NATIONAL PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates. 1981 1982 AAccccoouunntt 11997799 11998800 11998811 Q1 Q2 Q3 Q4 Q1 Q2 GROSS NATIONAL PRODUCT 1 Total 2,417.8 2,633.1 2,937.7 2,864.9 2,901.8 2,980.9 3,003.2 2,995.5 3,047.4 By source 2 Personal consumption expenditures 1,507.2 1,667.2 1,843.2 1,799.9 1,819.4 1,868.8 1,884.5 1,919.4 1,950.8 3 Durable goods 213.4 214.3 234.6 236.9 230.4 241.2 229.6 237.9 242.6 4 Nondurable goods 600.0 670.4 734.5 720.6 729.6 741.3 746.5 749.1 756.5 5 Services 693.7 782.5 874.1 842.4 859.4 886.3 908.3 932.4 951.6 6 Gross private domestic investment 423.0 402.4 471.5 455.7 475.5 486.0 468.9 414.8 429.1 / Fixed investment 408.8 412.4 451.1 443.5 450.9 454.2 455.7 450.4 448.8 8 Nonresidential 290.2 309.2 346.1 330.0 341.3 353.0 360.2 357.0 354.0 9 Structures 98.3 110.5 129.7 119.6 127.0 132.7 139.6 141.4 143.2 1U Producers' durable equipment 191.9 198.6 216.4 210.4 214.3 220.2 220.6 215.6 210.8 11 Residential structures 118.6 103.2 105.0 113.6 109.5 101.2 95.5 93.4 94.7 12 Nonfarm 114.0 98.3 99.7 109.1 104.7 95.6 89.4 87.9 88.7 13 Change in business inventories 14.3 -10.0 20.5 12.2 24.6 31.8 13.2 -35.6 -19.7 14 Nonfarm 8.6 -5.7 15.0 10.0 19.3 24.6 6.0 -36.0 -19.2 15 Net exports of goods and services 13.2 25.2 26.1 31.2 23.7 25.9 23.5 31.3 35.6 16 Exports 281.4 339.2 367.3 365.4 368.9 367.2 367.9 359.9 360.9 17 Imports 268.1 314.0 341.3 334.2 345.1 341.3 344.4 328.6 325.3 18 Government purchases of goods and services 474.4 538.4 596.9 578.1 583.2 600.2 626.3 630.1 631.9 19 Federal 168.3 197.2 229.0 217.0 218.2 230.0 250.5 249.7 244.1 20 State and local 306.0 341.2 368.0 361.1 365.0 370.1 375.7 380.4 387.8 By major type of product 21 Final sales, total 2,403.5 2,643.1 2,917.3 2,852.7 2,877.2 2,949.1 2,989.9 3,031.1 3,067.0 22 Goods 1,065.6 1,141.9 1,289.2 1,265.3 1,276.0 1,317.0 1,298.5 1,269.4 1,290.1 23 Durable 464.8 477.3 528.1 522.0 538.2 547.3 504.9 482.4 506.7 24 Nondurable 600.8 664.6 761.1 743.3 737.8 769.7 793.6 787.0 783.4 25 Services 1,089.7 1,225.6 1,364.3 1,313.5 1,340.2 1,382.1 1,421.5 1,444.4 1,471.9 26 Structures 262.5 265.7 284.2 286.1 285.6 281.9 283.3 281.7 285.3 27 Change in business inventories 14.3 -10.0 20.5 12.2 24.6 31.8 13.2 -35.6 -19.7 28 Durable goods 10.5 -5.2 8.7 2.2 18.5 19.8 -5.6 -30.9 -6.3 29 Nondurable goods 3.8 -4.8 11.8 10.0 6.1 12.0 18.9 -4.8 -13.4 30 MEMO: Total GNP in 1972 dollars 1,479.4 1,474.0 1,502.6 1,507.8 1,502.2 1,510.4 1,490.1 1,470.7 1,476.8 NATIONAL INCOME 31 Total 1,966.7 2,117.1 2,352.5 2,293.7 2,324.4 2,387.3 2,404.5 2,396.9 n.a. 32 Compensation of employees 1,458.1 1,598.6 1,767.6 1,718.0 1,750.0 1,789.1 1,813.4 1,830.8 1,849.9 33 Wages and salaries 1,237.4 1,356.1 1,494.0 1,452.8 1,479.4 1,512.6 1,531.1 1,541.5 1,555.9 34 Government and government enterprises 236.2 260.2 283.1 276.2 279.8 284.0 292.3 296.3 300.1 3B Other 1,001.4 1,095.9 1,210.9 1,176.5 1,199.6 1,228.6 1,238.8 1,245.2 1,255.8 36 Supplement to wages and salaries 220.7 242.5 273.6 265.2 270.6 276.5 282.3 289.3 294.1 37 Employer contributions for social insurance 105.8 115.3 133.2 129.9 132.1 134.3 136.5 140.2 141.6 38 Other labor income 114.9 127.3 140.4 135.3 138.4 142.2 145.8 149.1 152.5 39 Proprietors' income1 132.1 116.3 124.7 123.4 123.8 127.5 124.1 116.4 115.3 40 Business and professional1 100.2 96.9 100.7 101.8 101.2 100.4 99.5 98.6 100.0 41 Farm1 31.9 19.4 24.0 21.6 22.5 27.1 24.6 17.8 15.3 42 Rental income of persons2 27.9 32.9 33.9 34.4 34.0 3.3.6 33.6 33.9 34.2 43 Corporate profits1 194.8 181.6 190.6 200.3 185.1 193.1 183.9 157.1 n.a. 44 Profits before tax3 252.7 242.5 232.1 253.1 225.4 23.3.3 216.5 171.6 n.a. 45 Inventory valuation adjustment -43.1 -43.0 -24.6 -35.5 -22.8 -23.0 -17.1 -4.4 -6.3 46 Capital consumption adjustment -14.8 -17.8 -16.8 -17.3 -17.5 -17.1 -15.5 -10.1 -5.9 47 Net interest 153.8 187.7 235.7 217.6 231.6 244.0 249.5 258.7 267.3 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 adjustment. SOURCE. Survey of Current Business (Department of Commerce). End Tape 05936STB10 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. 1981 1982 AAccccoouunntt 11997799 11998800 11998811 Q1 Q2 Q3 Q4 Q1 Q2 PERSONAL INCOME AND SAVING 1 Total personal income 1,943.8 2,160.2 2,404.1 2,330.0 2,380.6 2,458.2 2,494.6 2,510.5 2,549.5 ? Wage and salary disbursements 1,237.6 1,356.1 1,493.9 1,452.8 1,479.4 1,512.3 1,531.2 1,541.6 1,555.9 Commodity-producing industries 438.4 468.0 510.8 499.2 507.2 519.3 517.7 514.3 513.2 4 Manufacturing 333.9 354.4 386.4 377.0 386.9 392.9 388.7 385.1 385.5 Distributive industries 303.4 330.5 361.4 352.1 358.7 366.5 368.3 371.4 375.7 6 Service industries 259.7 297.5 338.6 325.2 333.7 342.8 352.8 359.5 366.9 7 Government and government enterprises 236.2 260.2 283.1 276.2 279.8 283.8 292.4 296.5 300.1 8 Other labor income 114.9 127.3 140.4 135.3 138.4 142.2 145.8 149.1 152.5 9 Proprietors' income1 132.1 116.3 124.7 123.4 123.8 127.5 124.1 116.4 115.3 10 Business and professional1 100.2 96.9 100.7 101.8 101.2 100.4 99.5 98.6 100.0 11 31.9 19.4 24.0 21.6 22.5 27.1 24.6 17.8 15.3 1? Rental income of persons2 27.9 32.9 33.9 34.4 34.0 33.6 33.6 33.9 34.2 N Dividends 50.8 55.9 62.5 59.2 61.5 64.1 65.2 65.8 66.1 14 Personal interest income 209.6 256.3 308.5 304.7 320.6 339.6 351.0 359.7 371.8 15 Transfer payments 250.3 297.2 336.3 322.8 327.0 344.8 350.7 354.6 365.0 16 Old-age survivors, disability, and health insurance benefits 131.8 154.2 182.0 171.0 173.7 190.6 192.8 194.7 197.1 17 LESS: Personal contributions for social insurance ... 81.1 88.7 104.9 102.5 104.1 106.1 107.0 110.6 111.3 18 EQUALS: Personal income 1,943.8 2,160.2 2,404.1 2,330.0 2,380.6 2,458.2 2,494.6 2,510.5 2,549.5 19 LESS: Personal tax and nontax payments 301.0 336.3 386.7 371.2 384.2 398.1 393.2 393.4 397.5 20 EQUALS: Disposable personal income 1,650.2 1,824.1 2,029.2 1,958.7 1,996.5 2,060.0 2,101.4 2,117.1 2,151.9 21 LESS: Personal outlays 1,553.5 1,717.9 1,898.9 1,852.8 1,874.5 1,925.7 1,942.7 1,977.9 2,009.9 22 EQUALS: Personal saving 96.7 106.2 130.2 105.9 122.0 134.4 158.6 139.1 142.0 MEMO: Per capita (1972 dollars) 23 Gross national product 6,572 6,474 6,536 6,583 6,544 66,,556633 66,,445588 66,,336600 66,,337733 24 Personal consumption expenditures 4,120 4,087 4,122 4,152 4,115 4,134 4,088 4,104 4,127 25 Disposable personal income 4,512 4,472 4,538 4,519 4,516 4,557 4,559 4,527 4,553 26 Saving rate (percent) 5.9 5.8 6.4 5.4 6.1 6.5 7.5 6.6 6.6 GROSS SAVING 27 Gross saving 422.8 406.3 477.5 461.4 482.4 490.0 476.3 428.8 n.a. 28 Gross private saving 407.3 438.3 504.7 468.7 488.9 513.4 547.7 520.3 n.a. 29 Personal saving 96.7 106.2 130.2 105.9 122.0 134.4 158.6 139.1 142.0 30 Undistributed corporate profits1 54.5 38.9 44.4 47.3 42.0 43.9 44.3 32.5 n.a. 31 Corporate inventory valuation adjustment -43.1 -43.0 -24.6 -35.5 -22.8 -23.0 -17.1 -4.4 -6.3 Capital consumption allowances 3? Corporate 157.5 181.2 206.2 196.2 202.9 209.7 221166..00 221188..99 222233..33 33 Noncorporate 98.6 112.0 123.9 119.2 122.1 125.5 128.7 129.8 131.4 34 Wage accruals less disbursements .0 .0 .0 .0 .0 .0 .0 .0 .0 35 Government surplus, or deficit (-), national income and product accounts 14.3 -33.2 -28.2 -8.3 -7.6 -24.5 --7722..55 --9911..66 n.a. 36 Federal -16.1 -61.4 -60.0 -39.7 -40.5 -58.0 -101.7 -119.3 n.a. 37 State and local 30.4 28.2 31.7 31.3 32.9 33.5 29.1 27.7 n.a. 38 Capital grants received by the United States, net 1.1 1.2 1.1 1.1 1.1 1.1 1.1 .0 .0 39 Gross investment 421.2 410.1 475.6 466.5 477.8 489.1 469.0 421.3 441.6 40 Gross private domestic 423.0 402.4 471.5 455.7 475.5 486.0 468.9 414.8 429.1 41 Net foreign -1.8 7.8 4.1 10.8 2.3 3.1 0.1 6.5 12.5 42 Statistical discrepancy -1.5 3.9 -1.9 5.1 -4.6 -0.8 -7.2 -7.5 -7.5 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 • August 1982 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data are seasonally adjusted except as noted.1 1981 1982 IItteemm ccrreeddiittss oorr ddeebbiittss 11997799 11998800 11998811 Q1 Q2 Q3 04 Q1P 1 Balance on current account -466 1,520 4,471 33,,224455 11,,339999 775511 --992277 11,,118800 33,,003377 11,,997755 --11,,883344 11,,229933 884444 3 Merchandise trade balance2 -27,346 -25,338 -27,889 -4,312 -6,547 -7,845 -9,185 -6,059 4 Merchandise exports 184,473 224,237 236,254 60,683 60,284 57,694 57,593 55,610 5 Merchandise imports -211,819 -249,575 -264,143 -64,995 -66,831 -65,539 -66,778 -61,669 6 Military transactions, net -2,035 -2,472 -1,541 -487 -587 61 -528 213 7 Investment income, net3 31,215 29,910 33,037 8,123 8,201 8,183 8,529 6,980 8 Other service transactions, net 3,262 6,203 7,472 1,343 1,842 2,160 2,127 2,036 9 Remittances, pensions, and other transfers -2,011 -2,101 -2,104 -462 -524 -558 -562 -525 10 U.S. government grants (excluding military) -3,549 -4,681 -4,504 -960 -986 -1,250 -1,308 -1,465 11 Change in U.S. government assets, other than official reserve assets, net (increase, -) -3,743 -5,126 -5,137 -1,375 -1,518 -1,257 -987 -909 12 Change in U.S. official reserve assets (increase, -) -1,133 -8,155 -5,175 -4,529 -'>05 -4 262 -1,089 13 Gold -65 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -1,136 -16 -1,823 1,441 -23 -225 -134 -400 15 Reserve position in International Monetary Fund -189 -1,667 -2,491 -707 -780 -647 -358 -547 16 Foreign currencies 257 -6,472 -861 -2,381 -102 868 754 -142 17 Change in U.S. private assets abroad (increase, -)3 -59,469 -72,746 -98,982 -16,892 -19,143 -15,996 -46,952 -36,225 18 Bank-reported claims -26,213 -46,838 -84,531 -11,634 -14,998 -15,254 -42,645 -34,685 19 Nonbank-reported claims -3,307 -3,146 -331 -3,148 2,470 855 -508 n.a. 20 U.S. purchase of foreign securities, net -4,726 -3,524 -5,429 -458 -1,511 -618 -2,843 -408 21 U.S. direct investments abroad, net3 -25,222 -19,238 -8,691 -1,652 -5,104 -979 -956 -1,132 22 Change in foreign official assets in the United States (increase, +) -13,697 15,442 4,785 5,361 -2,860 -5,835 8,119 -3,173 23 U.S. Treasury securities -22,435 9,708 4,983 7,242 -2,063 -4,635 4,439 -1,347 24 Other U.S. government obligations 463 2,187 1,289 454 536 545 -246 -296 25 Other U.S. government liabilities4 -73 561 -69 -55 48 -337 275 -305 26 Other U.S. liabilities reported by U.S. banks 7,213 -159 -4,083 -3,109 -2,028 -2,382 3,436 -1,441 27 Other foreign official assets5 1,135 3,145 2,665 829 (47 974 215 216 28 Change in foreign private assets in the United States (increase, +y 52,157 39,042 73,136 3,109 16,324 22,715 30,988 29,001 29 U.S. bank-reported liabilities 32,607 10,743 41,262 -3,793 7,663 16,916 20,476 25,477 30 U.S. nonbank-reported liabilities 1,362 6,530 532 147 -162 1,006 -457 n.a. 31 Foreign private purchases of U.S. Treasury securities, net 4,960 2,645 2,932 1,390 750 -446 1,238 1,124 32 Foreign purchases of other U.S. securities, net 1,351 5,457 7,109 2,419 3,533 761 396 1,363 33 Foreign direct investments in the United States, net3 .... 11,877 13,666 21,301 2,946 4,540 4,478 93,316 10,317 34 Allocation of SDRs 1,139 1,152 1,093 1,093 0 0 00 0 35 Discrepancy 25,212 28,870 25,809 9,988 6,703 -374 99,,449977 11,214 -829 503 -2,144 22,,447744 -875 37 Statistical discrepancy in recorded data before seasonal adjustment 25,212 28,870 25,809 10,817 6,200 1,770 77,,002233 12,089 MEMO: Changes in official assets 38 U.S. official reserve assets (increase, -1,133 -8,155 -5,175 -4,529 -905 -4 262 -1,089 39 Foreign official assets in the United States (increase, +) -13,624 14,881 4,854 5,416 -2,908 -5,498 7,844 -2,868 40 Change in Organization of Petroleum Exporting Countries official assets in the United States (part of line 22 above) 5,543 12,769 13,314 5,364 2,786 2,935 2,230 4,940 41 Transfers under military grant programs (excluded from lines 4, 6, and 10 above) 465 631 602 192 214 132 64 93 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 and Official Assets A55 3.11 U.S. FOREIGN TRADE Millions of dollars; monthly data are seasonally adjusted. 1981 1982 IItteemm 11997799 11998800 11998811 Dec. Jan. Feb. Mar. Apr. May June 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments 181,860 220,626 233,677 18,885 18,737 18,704 18,602 17,843 18,218 18,822 2 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 209,458 244,871 261,305 19,746 22,829 19,090 20,349 17,387 20,558 21,310 3 Trade balance -27,598 -24,245 -27,628 -861 -4,092 -387 -1,747 456 -2,340 -2,488 NOTE. The data through 1981 in this table are reported by the Bureau of Census not covered in Census statistics, and (2) the exclusion of military sales (which are data on a free-alongside-ship (f.a.s.) value basis—that is, value at the port of export. combined with other military transactions and reported separately in the "service Beginning in 1981, foreign trade of the U.S. Virgin Islands is included in the Census account" in table 3.10, line 6). On the import side, additions are made for gold, basis trade data; this adjustment has been made for all data shown in the table. ship purchases, imports of electricity from Canada and other transactions; military Beginning with 1982 data, the value of imports are on a customs valuation basis. payments are excluded and shown separately as indicated above. The Census basis data differ from merchandise trade data shown in table 3.10, U.S. International Transactions Summary, for reasons of coverage and timing. On SOURCE. FT900 "Summary of U.S. Export and Import Merchandise Trade" the export side, the largest adjustments are: (1) the addition of exports to Canada (U.S. Department of Commerce, Bureau of the Census). 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1982 TTyyppee 11997799 11998800 11998811 Jan. Feb. Mar. Apr. May June July 1 Total1 18,956 26,756 30,075 30,098 30,060 29,944 31,552 30,915 30,671 31,227 2 Gold stock, including Exchange Stabilization Fund1 11,172 11,160 11,151 11,151 11,150 11,150 11,149 11,149 11,149 11,149 3 Special drawing rights2 3 2,724 2,610 4,095 4,176 4,359 4,306 4,294 4,521 4,461 4,591 4 Reserve position in International Monetary Fund2 1,253 2,852 5,055 5,237 5,275 5,367 6,022 6,099 6,062 6,386 5 Foreign currencies4,5 3,807 10,134 9,774 9,534 9,276 9,121 10,097 9,146 8,999 9,101 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, 3.13. 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. 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS Millions of dollars, end of period 1982 AAsssseettss 11997799 11998800 11998811 Jan. Feb. Mar. Apr. May June JulyP 1 Deposits 429 411 505 333 416 421 966 308 585 982 Assets held in custody 2 U.S. Treasury securities1 95,075 102,417 104,680 104,631 103,557 103,964 102,346 102,112 103,292 106,696 3 Earmarked gold2 15,169 14,965 14,804 14,802 14,791 14,798 14,788 14,778 14,777 14,762 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

A56 International Statistics • August 1982 3.14 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data Millions of dollars, end of period 1981 1982 AAsssseett aaccccoouunntt 1199778811 11997799 11998800 Nov. Dec. r Jan. r Feb. ' Mar. ' Apr. May'' All foreign countries 1 Total, all currencies 306,795 364,409 401,135 462,810 462,790 459,998 461,249 463,728 460,225 460,210 2 Claims on United States 17,340 32,302 28,460 44,562 63,540 69,794 69,539 75,739 77,914 79,523 3 Parent bank 12,811 25,929 20,202 26,540 43,064 49,206 47,996 51,972 54,563 56,069 4 Other 4,529 6,373 8,258 18,022 20,476 20,588 21,543 23,767 23,351 23,454 5 Claims on foreigners 278,135 317,330 354,960 397,825 379,102 370,124 371,644 368,688 362,690 361,000 6 Other branches of parent bank 70,338 79,662 77,019 89.269 87,840 89,010 88,637 86,859 86,226 87,998 7 Banks 103.111 123,420 146,448 161,506' 150,892 145,528 146,317 146,961 142,347 139,390 8 Public borrowers2 23,737 26,097 28,033 30,185r 28,197 26,568 26,851 26,307 25,590 24,597 9 Nonbank foreigners 80.949 88,151 103,460 116,865 112,173 109,018 109,839 108,561 108,527 109,015 10 Other assets 11,320 14,777 17,715 20,423 20,148 20,080 20,066 19,301 19,621 19,687 11 Total payable in U.S. dollars 224,940 267,713 291,798 348,953 350,571 351,125 353,001 355,541 351,349 350,285 12 Claims on United States 16.382 31,171 27,191 43,279 61,939 68,241 67,983 74,220 76,410 77,917 13 Parent bank 12,625 25,632 19,896 26,355 42,518 48,623 47,402 51,383 54,107 55,584 14 Other 3,757 5,539 7,295 16,924 19,421 19,618 20,581 22,837 22,303 22,333 15 Claims on foreigners 203,498 229,120 255,391 293,690 276,965 270,6% 272,903 269,557 263,047 260,446 16 Other branches of parent bank 55,408 61,525 58,541 69.938 69,385 71,999 72,094 70,383 69,409 70,357 17 Banks 78,686 96.261 117,342 131,572 122,253 117,148 118,227 117,372 113,673 110,485 18 Public borrowers2 19,567 21,629 23,491 25,125r 22,863 21,180 21,483 20,624 20,170 19,221 19 Nonbank foreigners 49,837 49,705 56,017 67.055 62,464 60,369 61,099 61,178 59,795 60,383 20 Other assets 5.060 7,422 9,216 11,984 11,667 12,188 12,115 11,764 11,892 11,922 United Kingdom 21 Total, all currencies 106,593 130,873 144,717 161,531 157,229 157,892 162,351 161,471 159,481 161,036 22 Claims on United States 5.370 11,117 7,509 9,315 11,823 13,935 15,884 16,343 17,676 20,155 23 Parent bank 4,448 9,338 5,275 5,162 7,885 10,264 12,044 12,446 13,750 15,854 24 Other 922 1,779 2,234 4.153 3,938 3,671 3,840 3,897 3,926 4,301 25 Claims on foreigners 98,137 115,123 131,142 145,889 138,888 137,953 140,197 139,292 135,634 134,845 26 Other branches of parent bank 27,830 34,291 34.760 41.476 41,367 41,468 40,935 41,186 39,811 39,621 27 Banks 45,013 51,343 58,741 63.044 56,315 56,164 57,975 56,940 55,545 54,690 28 Public borrowers2 4,522 4,919 6,688 7,463 7,490 7,249 7,370 7,541 6,822 6,663 29 Nonbank foreigners 20,772 24,570 30,953 33,906 33,716 33,072 33,917 33,625 33,456 33,871 30 Other assets 3,086 4,633 6,066 6,327 6,518 6,004 6,270 5,836 6,171 6,063 31 Total payable in U.S. dollars 75,860 94,287 99,699 117,454 115,188 116,870 121,432 120,432 117,914 119,586 32 Claims on United States 5,113 10,746 7,116 8,811 11,246 13,438 15,391 15,842 17,182 19,608 33 Parent bank 4,386 9,297 5,229 5,110 7,721 10,098 11,881 12,293 13,623 15,663 34 Other 727 1,449 1,887 3,701 3,525 3,340 3,510 3,549 3,559 3,945 69,416 81,294 89,723 104,741 99,850 99,473 101,861 100,500 96,595 95,926 36 Other branches of parent bank 22,838 28,928 28,268 34,905 35,439 35,875 35,697 36,055 34,240 33,922 37 Banks 31,482 36,760 42,073 46,463 40,703 40,610 42,4.53 40,732 40,070 39,609 38 Public borrowers2 3,317 3,319 4,911 5,500 5,595 5,423 5,467 5,360 4,717 4,507 39 Nonbank foreigners 11,779 12,287 14.471 17,873 18,113 17,565 18,244 18,353 17,568 17,888 40 Other assets 1,331 2,247 2,860 3,902 4,092 3,959 4,180 4,090 4,137 4,052 Bahamas and Caymans 41 Total, all currencies 91,735 108,977 123,837 148,557 149,051 146,585 142,853 143,795 142,941 139,836 42 Claims on United States 9,635 19,124 17,751 29.909 46,343 50,647 49,060 54,019 55,533 54,316 43 Parent bank 6,429 15,196 12,631 17,665 31,440 35,453 32,704 35,311 37,013 36,099 44 Other 3,206 3,928 5,120 12,244 14,903 15,194 16,356 18,708 18,520 18,217 45 Claims on foreigners 79,774 86,718 101,926 113,486 98,205 91,538 89,405 85,465 83,124 81,191 46 Other branches of parent bank 12,904 9,689 13,342 13,972 12,951 14,084 14,384 12,035 12,640 14,248 47 Banks 33,677 43,189 54,861 61,333' 55,299 50,754 48,951 47,867 45,768 43,165 48 Public borrowers2 11,514 12,905 12,577 12,745r 10,010 8,713 8,584 7,980 7,847 7,348 49 Nonbank foreigners 21,679 20,935 21,146 25,436 19,945 17,987 17,486 17,583 16,869 16,430 50 Other assets 2,326 3,135 4,160 5,162 4,503 4,400 4,388 4,311 4,284 4,329 51 Total payable in U.S. dollars 85,417 102,368 117,654 142,632 143,686 141,447 137,842 138,748 137,840 134,925 .1. In May 1978 the exemption level for branches required to report was increased, 2. In May 1978 a broader category of claims on foreign public borrowers, inwhich reduced the number of reporting branches. eluding corporations that are majority owned by foreign governments, replaced the previous, more narrowly defined claims on foreign official institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Overseas Branches A57 3.14 Continued 1981 1982 T '.UTt. • 11997799 11998800 Nov. Dec/ Jan.' Feb.r Mar.' Apr. May? All foreign countries 52 Total, all currencies 306,795 364,409 401,135 462,810 462,790 459,998 461,249 463,728 460,225 460,210 53 To United States 58,012 66,689 91,079 128,084 137,696 144,075 145,371 150,632 152,841 155,961 54 Parent bank 28,654 24,533 39,286 49,385 56,127 56,011 55,328 58,666 56,847 56,096 55 Other banks in United States 12,169 13,968 14,473 16,663 19,343 19,863 22,617 24,413 25,969 27,678 56 Nonbanks 17,189 28,188 37,275 62,036 62,226 68,201 67,426 67,553 70,025 72,187 57 To foreigners 238,912 283,510 295,411 316,232 305,646 296,283 296,253 293,521 287,192 283,162 58 Other branches of parent bank 67,496 77,640 75,773 87,831 86,422 85,680 84,351 85,629 84,184 85,091 59 Banks 97,711 122,922 132,116 132,111 124,896 118,538 118,970 117,070 111,718 107,320 60 Official institutions 31,936 35,668 32,473 24,696 25,997 25,124 24,625 23,039 22,340 22,652 61 Nonbank foreigners 41,769 47,280 55,049 71,594 68,331 66,941 68,307 67,783 68,950 68,099 62 Other liabilities 9,871 14,210 14,690 18,494 19,448 19,640 19,625 19,575 20,192 21,087 63 Total payable in U.S. dollars 230,810 273,857 303,281 360,971 364,235 364,005 366,885 369,508 366,655 367,167 64 To United States 55,811 64,530 88,157 125,121 134,596 141,063 142,456 147,638 149,737 152,847 65 Parent bank 27,519 23,403 37,528 47,456 54,242 53,933 53,356 56,654 54,786 54,148 66 Other banks in United States 11,915 13,771 14,203 16,564 19,029 19,736 22,406 24,172 25,632 27,263 67 Nonbanks 16,377 27,356 36,426 61,101 61,325 67,394 66,694 66,812 69,319 71,436 68 To foreigners 169,927 201,514 206,883 224,610 217,479 210,960 212,980 210,419 205,207 201,530 69 Other branches of parent bank 53,396 60,551 58,172 69,561 69,181 69,185 68,187 69,545 68,081 68,097 70 Banks 63,000 80,691 87,497 84,789 79,590 74,319 76,132 73,182 69,334 66,621 71 Official institutions 26,404 29,048 24,697 18,911 20,288 19,937 19,322 18,120 17,491 17,892 72 Nonbank foreigners 27,127 31,224 36,517 51,349 48,420 47,519 49,339 49,572 50,301 48,920 73 Other liabilities 5,072 7,813 8,241 11,240 12,160 11,982 11,449 11,451 11,711 12,790 United Kingdom 74 Total, all currencies 106,593 130,873 144,717 161,531 157,229 157,892 162,351 161,471 159,481 161,036 75 To United States 9,730 20,986 21,785 36,316 38,022 40,768 43,358 42,481 41,886 43,882 76 Parent bank 1,887 3,104 4,225 4,045 5,444 6,413 6,765 6,313 8,006 6,694 77 Other banks in United States 4,189 7,693 5,716 6,652 7,502 7,313 8,973 8,607 8,345 8,972 78 Nonbanks 3,654 10,189 11,844 25,619 25,076 27,042 27,620 27,561 25,535 28,216 79 To foreigners 93,202 104,032 117,438 118,401 112,255 110,036 111,417 111,262 109,629 109,199 80 Other branches of parent bank 12,786 12,567 15,384 16,090 16.545 16,270 16,546 17,245 18,358 19,412 81 Banks 39,917 47,620 56,262 56,239 51,336 49,622 49,937 49,616 47,549 46,204 82 Official institutions 20,963 24,202 21,412 15,089 16,517 16,110 15,965 14,608 13,908 14,119 83 Nonbank foreigners 19,536 19,643 24,380 30,983 27,857 28,034 28,969 29,793 29,814 29,464 84 Other liabilities 3,661 5,855 5,494 6,814 6,952 7,088 7,576 7,728 7,966 7,955 85 Total payable in U.S. dollars 77,030 95,449 103,440 122,362 120,277 121,407 127,029 126,359 124,248 126,901 86 To United States 9,328 20,552 21,080 35,706 37,332 40,276 42,809 41,885 41,198 43,143 87 Parent bank 1,836 3,054 4,078 3,956 5,350 6,296 6,660 6,211 7,907 6,624 88 Other banks in United States 4,101 7,651 5,626 6,611 7,249 7,289 8,884 8,489 8,167 8,755 89 Nonbanks 3,391 9,847 11,376 25,139 24,733 26,691 27,265 27,185 25,124 27,764 90 To foreigners 66,216 72,397 79,636 82,766 79,034 77,463 80,581 80,825 79,444 79,914 91 Other branches of parent bank 9,635 8,446 10,474 11,457 12,048 11,900 12,254 13,130 14,102 14,958 92 Banks 25,287 29,424 35,388 35,141 32,298 30,995 32,249 32,090 30,415 29,965 93 Official institutions 17,091 20,192 17,024 12,133 13,612 13,497 13,418 12,196 11,568 11,829 94 Nonbank foreigners 14,203 14,335 16,750 24,035 21,076 21,071 22,660 23,409 23,359 23,162 95 Other liabilities 1,486 2,500 2,724 3,890 3,911 3,668 3,639 3,649 3,606 3,844 Bahamas and Caymans % Total, all currencies 91,735 108,977 123,837 148,557 149,051 146,585 142,853 143,795 142,941 139,836 97 To United States 39,431 37,719 59,666 80,161 85,704 88,968 87,364 91,703 94,032 94,421 98 Parent bank 20,482 15,267 28,181 36,066 39,250 37,777 36,683 39,146 35,806 36,395 99 Other banks in United States 6,073 5,204 7,379 8,971 10,620 11,185 12,176 14,267 15,855 16,834 100 Nonbanks 12,876 17,248 24,106 35,124 35,834 40,006 38,505 38,290 42,371 41,192 101 To foreigners 50,447 68,598 61,218 64,462 60,012 54,558 52,398 49,110 45,907 42,032 102 Other branches of parent bank 16,094 20,875 17,040 23,307 20,641 20,721 19,814 18,614 17,365 15,888 103 Banks 23,104 33,631 29,895 24,712 23,202 18,650 18,252 16,436 14,776 13,457 104 Official institutions 4,208 4,866 4,361 3,381 3,498 3,149 2,505 2,607 2,512 2,448 105 Nonbank foreigners 7,041 9,226 9,922 13,062 12,671 12,038 11,827 11,453 11,254 10,239 106 Other liabilities 1,857 2,660 2,953 3,934 3,335 3,059 3,091 2,982 3,002 3,383 107 Total payable in U.S. dollars 87,014 103,460 119,657 144,034 145,227 142,793 139,247 140,115 139,461 136,504 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • August 1982 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1981 1982 IItteemm 11997799 11998800 Dec.r Jan.' Feb.' Mar.' Apr. May? June? 1 Total1 149,697 164,578 169,697 167,975 166,209 166,757 165,526 166,983 168,954 By type 2 Liabilities reported by banks in the United States2 30,540 30,381 26,567 24,115 24,713 25,051 26,326 27,713 29,041 3 U.S. Treasury bills and certificates3 47,666 56,243 52,389 52,306 48,174 47,048 4433,,885500 4422,,774411 4433,,550099 U.S. Treasury bonds and notes 4 Marketable 37,590 41,455 53,150 53,992 56,333 57.647 58.459 59,933 60,241 5 Nonmarketable4 17,387 14,654 11,791 11,791 11,291 11,291 11.050 10,750 10,150 6 U.S. securities other than U.S. Treasury securities5 16,514 21,845 25.800 25,771 25,698 25,720 25,841 25,846 26,013 By area 7 Western Europe1 85,633 81,592 65,479 63,058 62,049 60,364 57,393 57,367 58,693 8 Canada 1,898 1,562 2,403 2,369 1,669 1,647 1,721 1,329 1,568 9 Latin America and Caribbean 6,291 5,688 6,954 5,930 6,308 6,562 7,124 7,248 7,662 10 52,978 70,784 91,790 94,137 93,559 95,247 94,866 95,913 95,484 11 Africa 2,412 4,123 1.829 1,649 1,474 1,337 1,823 1,381 1,437 12 Other countries6 485 829 1.242 832 1,150 1,600 2,599 3,745 4,110 1. Includes the Bank for International Settlements. 5. Debt securities of U.S. government corporations and federally sponsored 2. Principally demand deposits, time deposits, bankers acceptances, commercial agencies, and U.S. corporate stocks and bonds. paper, negotiable time certificates of deposit, and borrowings under repurchase 6. Includes countries in Oceania and Eastern Europe. agreements. 3. Includes nonmarketable certificates of indebtedness (including those payable NOTE. Based on Treasury Department data and on data reported to the Treasury in foreign currencies through 1974) and Treasury bills issued to official institutions Department by banks (including Federal Reserve Banks) and securities dealers in of foreign countries. the United States. 4. Excludes notes issued to foreign official nonreserve agencies. Includes bonds and notes payable in foreign currencies. 3.16 LIABILITIES TO AND CLAIMS ON FOREIGNERS Reported by Banks in the United States Payable in Foreign Currencies Millions of dollars, end of period 1981 1982 IItteemm 11997788 11997799 11998800 June Sept. Dec.' Mar. 1 Banks' own liabilities 2,406 1.918 3,748 3,031 2,878 3,798 4,391 2 Banks' own claims1 3,671 2,419 4.206 3,699 4,078 5,220 5,788 3 Deposits 1,795 994 2,507 2,050 2,409 3,398 3,979 4 Other claims 1,876 1.425 1,699 1,649 1,669 1,822 1.810 5 Claims of banks' domestic customers2 358 580 962 347 248 971 944 1. Includes claims of banks' domestic customers through March 1978. NOTE. Data on claims exclude foreign currencies held by U.S. monetary au- 2. Assets owned by customers of the reporting bank located in the United States thorities. that represent claims on foreigners held by reporting banks for the accounts of their domestic customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A59 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States Payable in U.S. dollars Millions of dollars, end of period 1981 1982 HHoollddeerr aanndd ttyyppee ooff lliiaabbiilliittyy 11997788 11997799 11998800 Dec.' Jan.' Feb/ Mar. Apr/ Mayr June'' 1 All foreigners 166,842 187,521 205,297 242,981 250,799 254,520 261,219 266,256 274,336 284,894 2 Banks' own liabilities 78,661 117,196 124,791 162,755 171,338 179,819 187,559 194,898 203,115 211,624 3 Demand deposits 19,218 23,303 23,462 19,677 18,334 17,808 16,498 18,161 17,514 17,893 4 Time deposits1 12,427 13,623 15,076 28,816 31,363 36,555 43,597 48,552 53,404 56,583 J Other2 9,705 16,453 17,583 17,418 16,466 17,235 18,989 18,570 20,221 22,372 6 Own foreign offices3 37,311 63,817 68,670 96,844 105,175 108,221 108,475 109,616 111,976 114,776 7 Banks' custody liabilities4 88,181 70,325 80,506 80,225 79,460 74,701 73,660 71,358 71,222 73,269 8 U.S. Treasury bills and certificates5 68,202 48,573 57,595 55,312 55,131 51,142 5500,,115522 4477,,335533 4466,,447766 4488,,881100 9 Other negotiable and readily transferable instruments6 17,472 19,396 20,079 18,944 18,842 18,718 18,901 19,326 20,751 20,455 10 Other 2,507 2,356 2,832 5,970 5,487 4,842 4,607 4,679 3,995 4,004 11 Nonmonetary international and regional organizations7 2,607 2,356 2,344 2,721 2,148 2,091 2,045 2,043 3,034 4,004 12 Banks' own liabilities 906 714 444 638 373 298 445 603 1,267 1,236 13 Demand deposits 330 260 146 262 130 135 209 149 185 300 14 Time deposits' 84 151 85 58 86 76 141 286 466 586 lb Other2 492 303 212 318 156 87 96 168 616 350 16 Banks' custody liabilities4 1,701 1,643 1,900 2,083 1,775 1,792 1,599 1,439 1,767 2,768 17 U.S. Treasury bills and certificates 201 102 254 541 217 277 109 142 253 11,,442255 18 Other negotiable and readily transferable instruments6 1,499 1,538 1,646 1,542 1,558 1,515 1,490 1,297 1,514 1,343 19 Other 1 2 0 0 0 0 0 0 0 0 20 Official institutions8 90,742 78,206 86,624 78,957 76,422 72,886 72,099 70,176 70,454 72,551 21 Banks' own liabilities 12,165 18,292 17,826 16,808 14,643 14,959 15,326 17,112 17,616 19,547 22 Demand deposits 3,390 4,671 3,771 2,612 2,404 2,385 2,277 3,241 2,779 3,383 23 Time deposits1 2,560 3,050 3,612 4,146 3,686 4,261 4,866 5,623 5,759 5,439 24 Other2 6,215 10,571 10,443 10,050 8,553 8,312 8,183 8,248 9,078 10,725 25 Banks' custody liabilities4 78,577 59,914 68,798 62,149 61,778 57,927 56,773 53,064 52,838 53,004 26 U.S. Treasury bills and certificates5 67,415 47,666 56,243 52,389 52,306 48,174 47,048 4433,,885500 4422,,774411 4433,,550099 27 Other negotiable and readily transferable instruments6 10,992 12,196 12,501 9,712 9,445 9,717 9,685 9,029 10,057 9,461 28 Other 170 52 54 47 27 37 40 185 40 33 29 Banks9 57,423 88,316 96,415 135,355 145,926 151,420 157,787 161,176 165,668 171,597 30 Banks' own liabilities 52,626 83,299 90,456 123,640 134,040 140,669 146,591 148,456 153,107 158,896 31 Unaffiliated foreign banks 15,315 19,482 21,786 26,796 28,865 32,448 38,116 38,840 41,131 44,120 32 Demand deposits 11,257 13,285 14,188 11,614 10,893 10,444 9,267 9,915 10,000 9,356 33 Time deposits' 1,429 1,667 1,703 8,654 10,672 13,653 18,653 19,260 21,269 24,110 34 Other2 2,629 4,530 5,895 6,528 7,299 8,350 10,195 9,664 9,862 10,654 35 Own foreign offices3 37,311 63,817 68,670 96,844 105,175 108,221 108,475 109,616 111,976 114,776 36 Banks' custody liabilities4 4,797 5,017 5,959 11,715 11,886 10,751 11,197 12,720 12,562 12,701 37 U.S. Treasury bills and certificates 300 422 623 1,683 1,853 1,876 2,213 22,,559922 22,,669988 22,,992222 38 Other negotiable and readily transferable instruments6 2,425 2,415 2,748 4,421 4,858 4,405 4,729 5,968 6,097 6,527 39 Other 2,072 2,179 2,588 5,611 5,176 4,470 4,255 4,160 3,766 3,253 40 Other foreigners 16,070 18,642 19,914 25,947 26,303 28,124 29,288 32,861 35,180 36,742 41 Banks' own liabilities 12,964 14,891 16,065 21,669 22,282 23,893 25,196 28,727 31,125 31,945 42 Demand deposits 4,242 5,087 5,356 5,189 4,906 4,843 4,745 4,855 4,549 4,855 43 Time deposits 8,353 8,755 9,676 15,958 16,918 18,564 19,936 23,383 25,910 26,447 44 Other2 368 1,048 1,033 523 458 485 515 489 666 643 45 Banks' custody liabilities4 3,106 3,751 3,849 4,278 4,021 4,231 4,092 4,134 4,055 4,797 46 U.S. Treasury bills and certificates 285 382 474 698 755 815 782 769 784 954 47 Other negotiable and readily transferable instruments6 2,557 3,247 3,185 3,268 2,981 3,081 2,997 3,032 3,082 3,125 48 Other 264 123 190 312 284 335 313 334 189 718 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 11,007 10,984 10,745 10,672 10,451 10,916 11,169 11,673 12,652 12,878 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. 4. Financial claims on residents of the United States, other than long-term securities, held by or through reporting banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • August 1982 3.17 Continued 1981 1982 AArreeaa aanndd ccoouunnttrryy 11997788 11997799 11998800 Dec.^' Jan.' Feb.' Mar. Apr.' May' June'' 1 Total 166,842 187,521 205,297 242,981 250,799 254,520 261,219 266,256 274,336 284,894 2 Foreign countries 164,235 185,164 202,953 240,259 248,651 252,430 259,174 264,213 271,302 280,890 3 Europe 85,172 90,952 90,897 90,942 89,804 91,957 93,541 91,890 97,469 103,216 4 Austria 513 413 523 587 719 647 545 472 454 434 5 Belgium-Luxembourg 2,550 2,375 4,019 4,117 3,954 3,254 3,002 2,898 3,075 2,869 6 Denmark 1,946 1,092 497 333 512 524 514 613 608 1,210 7 Finland 346 398 455 296 157 292 273 229 212 181 8 France 9,214 10,433 12,125 8,486 8,078 8,047 7,792 6,737 6,312 9,233 9 Germany 17,283 12,935 9,973 7,665 6,953 6,668 7,698 6,555 6,954 6,221 10 Greece 826 635 670 463 469 535 472 457 549 512 11 Italy 7,739 7,782 7,572 7,290 7,104 6,497 4,300 3,695 3.420 4,720 12 Netherlands 2,402 2,337 2,441 2,823 2,838 3,027 3,111 2,963 2,719 2,836 13 Norway 1,271 1,267 1,344 1,457 1,245 1,129 1,518 1,666 1,981 1,370 14 Portugal 330 557 374 354 301 275 272 272 276 365 15 Spain 870 1,259 1,500 916 1,024 946 1,136 1,055 1,114 1,191 16 Sweden 3,121 2,005 1,737 1,545 1,274 1,480 1,358 1,373 1,425 1,411 17 Switzerland 18,225 17,954 16,689 18,723 18.872 18,515 19,199 20,339 21,651 22,472 18 Turkey 157 120 242 518 336 216 283 364 204 169 19 United Kingdom 14,272 24,700 22,680 28,288 30,649 34,073 35,146 35,452 39,893 41,149 20 Yugoslavia 254 266 681 375 215 219 223 259 237 314 21 Other Western Europe' 3,440 4,070 6,939 6.165 4,765 5,279 6,256 6,106 5,985 5,996 22 U.S.S.R 82 52 68 49 68 52 44 37 30 44 23 Other Eastern Europe2 330 302 370 493 271 284 400 350 371 521 24 Canada 6,969 7,379 10,031 10,250 11,572 11,105 10,780 12,298 10,619 11,451 25 Latin America and Caribbean 31,638 49,686 53,170 84,685 92,474 94,715 98,073 103,809 105,517 108,240 26 Argentina 1,484 1,582 2.132 2,445 2,879 2,897 3,037 2,729 2,203 2,030 27 Bahamas 6,752 15,255 16,381 34,400 43,627 43,675 44,689 45,608 44,819 43,671 28 Bermuda 428 430 670 765 680 865 1,113 1,165 1,350 1,300 29 Brazil 1,125 1,005 1.216 1,568 1,608 1,803 1,352 1,462 1,615 1,838 30 British West Indies 5,974 11,138 12,766 17,794 17,924 18,847 18,844 19,623 19,690 22,304 31 Chile 398 468 460 664 771 815 951 992 1,224 1,124 32 Colombia 1,756 2,617 3,077 2,993 2,861 2,924 2,654 2,639 2,515 2,700 33 Cuba 13 13 6 9 7 10 7 6 6 6 34 Ecuador 322 425 371 434 355 370 513 491 465 559 35 Guatemala3 416 414 367 479 485 519 590 569 583 580 36 Jamaica3 52 76 97 87 120 100 129 133 104 101 37 Mexico 3,467 4,185 4,547 7,163 6,668 7,246 7,646 8.533 8,992 8,786 38 Netherlands Antilles 308 499 413 3,182 3,145 3,234 3,434 3.474 3,449 3,880 39 Panama 2,967 4,483 4,718 4,847 3,480 3,357 4,190 4,238 4,348 5,400 40 Peru 363 383 403 694 594 531 532 620 753 1.069 41 Uruguay 231 202 254 367 481 479 323 410 561 542 42 Venezuela 3,821 4,192 3,170 4,245 4,557 4,578 5,120 8,061 9.421 9,280 43 Other Latin America and Caribbean 1,760 2,318 2,123 2,548 2,232 2,464 2,948 3,056 3,419 3.070 44 36,492 33,005 42,420 49,784 5500,,665588 5500,,440099 5522,,660077 5500,,336622 51,071 50,908 China 45 Mainland 67 49 49 158 183 215 257 331 284 244 46 Taiwan 502 1,393 1,662 2,082 2,227 2,253 2,213 2,291 2,372 2,360 47 Hong Kong 1,256 1,672 2,548 3,950 3,946 4,302 4,195 4,587 4,737 4,842 48 India 790 527 416 385 512 414 435 544 603 540 49 Indonesia 449 504 730 640 1,230 1,241 1,127 837 784 583 50 Israel 688 707 883 592 546 507 449 539 562 605 51 Japan 21,927 8,907 16,281 20,550 20,051 20,778 21,955 19,307 19,008 18,781 52 Korea 795 993 1,528 2,013 2,146 2,162 2,138 2,355 2,191 1,863 53 Philippines 644 795 919 874 757 739 671 691 758 839 54 Thailand 427 277 464 534 369 494 340 517 474 485 55 Middle-East oil-exporting countries4 7,534 15,300 14,453 13,154 13,623 13,569 14,799 14,347 14,405 14,268 56 Other Asia 1,414 1,879 2,487 4,852 5,068 3,735 4,028 4,016 4,893 5,497 57 2,886 3,239 5,187 3,180 3,065 2,814 2,398 3,111 2,629 2,677 5588 Egypt 404 475 485 360 571 339 297 411 382 448 5599 Morocco 32 33 33 32 36 35 36 52 37 59 60 South Africa 168 184 288 420 252 368 330 308 305 335 61 Zaire 43 110 57 26 33 40 69 41 27 37 62 Oil-exporting countries5 1,525 1,635 3,540 1,395 1,207 1,112 627 1,144 846 901 63 Other Africa 715 804 783 946 966 920 1,039 1,156 1,031 896 64 Other countries 1,076 904 1,247 1,419 1,078 1,430 1,775 2,743 3,997 4,398 65 Australia 838 684 950 1,223 853 1,204 1,550 2,542 3,752 4,172 66 All other 239 220 297 196 225 226 225 201 245 226 67 Nonmonetary international and regional organizations 2,607 2,356 2,344 2,721 2,148 2,091 2,045 2,043 3,034 4,004 68 International 1,485 1,238 1,157 1,661 1,072 1,082 1,081 1,269 2,064 2,860 69 Latin American regional 808 806 890 710 712 706 630 450 661 694 70 Other regional6 314 313 296 350 364 303 334 323 309 449 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 Liabilities and claims of banks in the United States were increased, beginning 3. Included in "Other Latin America and Caribbean" through March 1978. in December 1981, by the shift from foreign branches to international banking 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and facilities in the United States of liabilities to, and claims on, foreign residents. United Arab Emirates (Trucial States). 5. Comprises Algeria, Gabon, Libya, and Nigeria. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A61 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States Payable in U.S. Dollars Millions of dollars, end of period 1981 1982 AArreeaa aanndd ccoouunnttrryy 11997788 11997799 11998800 Dec.Ar Jan/ Feb.' Mar. Apr.' Mayr June? 1 Total 115,545 133,943 172,592 251,029 255,822 266,483 276,924 287,562 300,193 311,859 2 Foreign countries 115,488 133,906 172,514 250,973 255,771 266,435 276,868 287,522 300,150 311,816 3 Europe 24,201 28,388 32,108 49,047 51,844 54,695 56,937 59,319 62,177 63,375 4 Austria 140 284 236 121 198 172 130 200 201 140 5 Belgium-Luxembourg 1,200 1,339 1,621 2,843 2,819 3,280 3,778 3,848 3,669 3,732 6 Denmark 254 147 127 188 226 253 285 286 284 322 7 Finland 305 202 460 547 555 573 574 525 638 736 8 France 3,735 3,322 2,958 4,126 4,707 4,951 5,579 5,042 5,508 6,377 9 Germany 845 1,179 948 936 1,080 870 1,123 1,483 1,512 1,758 in Greece 164 154 256 333 380 321 325 279 262 297 11 Italy 1,523 1,631 3,364 5,240 5,496 5,644 5,333 5,099 5,853 6,035 n Netherlands 677 514 575 686 763 814 956 750 927 992 13 Norway 299 276 227 384 384 437 447 452 416 428 14 Portugal 171 330 331 529 584 666 724 813 797 938 1*5 Spain 1,120 1,051 993 2,100 2,166 2,507 2,619 2,499 2,624 3,074 16 Sweden 537 542 783 1,206 1,329 1,504 1,550 1,441 1,692 1,641 17 Switzerland 1,283 1,165 1,446 2,213 1,849 2,001 1,709 1,564 1,557 1,602 18 Turkey 300 149 145 424 464 522 496 487 573 584 19 United Kingdom 10,147 13,795 14,917 23,645 25,136 26,665 27,784 31,081 32,113 31,087 7.0 Yugoslavia 363 611 853 1,224 1,211 1,243 1,200 1,238 1,202 1,294 71 Other Western Europe1 122 175 179 209 220 192 317 282 386 267 77. U.S.S.R 360 268 281 367 455 262 218 195 251 296 23 Other Eastern Europe2 657 1,254 1,410 1,725 1,820 1,817 1,790 1,755 1,711 1,775 24 Canada 5,152 4,143 4,810 9,164 9,600 9,925 10,970 11,805 11,323 12,694 75 Latin America and Caribbean 57,565 67,993 92,992 138,114 143,022 148,003 152,875 158,097 166,781 172,018 76 Argentina 2,281 4,389 5,689 7,522 8,622 8,827 8,928 10,896 10,816 10,890 77 Bahamas 21,555 18,918 29,419 43,437 44,886 45,860 47,586 47,606 48,754 51,455 78 Bermuda 184 496 218 346 481 452 401 575 396 419 79 Brazil 6,251 7,713 10,496 16,918 17,329 17,878 18,723 19,380 20,309 20,998 30 British West Indies 9,694 9,818 15,663 21,913 21,106 22,031 22,975 22,739 25,573 25,698 31 Chile 970 1,441 1,951 3,690 4,157 4,363 4,513 4,590 4,884 5,237 37. Colombia 1,012 1,614 1,752 2,018 2,108 2,067 2,018 2,146 2,265 2,537 33 Cuba 0 4 3 3 7 9 3 137 37 3 34 Ecuador 705 1,025 1,190 1,531 1,703 1,752 1,837 1,879 1,852 2,053 Guatemala3 94 134 137 124 119 119 106 116 112 124 36 Jamaica3 40 47 36 62 177 115 151 130 781 124 37 Mexico 5,479 9,099 12,595 22,407 23,025 24,301 25,174 26,087 28,321 29,311 38 Netherlands Antilles 273 248 821 1,076 953 1,150 873 886 880 1,025 39 Panama 3,098 6,041 4,974 6,780 6,927 7,306 7,509 8,246 8,318 8,422 40 Peru 918 652 890 1,218 1,432 1,433 1,518 1,589 1,672 2,139 41 Uruguay 52 105 137 157 262 240 232 316 346 381 47. Venezuela 3,474 4,657 5,438 7,069 7,237 7,727 8,085 8,560 9,172 9,138 43 Other Latin America and Caribbean 1,485 1,593 1,583 1,844 2,491 2,374 2,245 2,220 2,295 2,064 44 25,362 30,730 39,078 49,770 46,023 48,211 50,107 52,115 53,140 56,771 China 45 Mainland 4 35 195 107 85 65 84 98 68 124 46 Taiwan 1,499 1,821 2,469 2,461 2,654 2,215 2,300 2,275 2,114 1,918 47 Hong Kong 1,479 1,804 2,247 4,126 4,092 4,287 5,434 5,344 5,978 6,143 48 India 54 92 142 123 148 188 212 195 185 248 49 Indonesia 143 131 245 346 317 330 356 308 315 239 50 Israel 888 990 1,172 1,562 1,318 1,467 1,241 1,160 1,391 1,825 51 12,646 16,911 21,361 26,757 24,093 26,081 25,972 27,358 26,755 29,348 57. 2,282 3,793 5,697 7,324 6,540 6,272 6,564 6,953 7,103 7,037 53 680 737 989 1,817 1,764 1,989 2,270 2,266 2,459 2,605 54 Thailand 758 933 876 564 527 559 513 565 502 459 55 Middle East oil-exporting countries4 3,125 1,548 1,432 1,575 1,624 1,991 2,021 2,411 2,613 2,556 56 Other Asia 1,804 1,934 2,252 3,009 2,860 2,766 3,139 3,182 3,656 4,269 57 2,221 1,797 2,377 3,503 3,819 4,019 4,203 4,383 4,768 4,853 58 107 114 151 238 259 293 327 345 400 416 59 Morocco 82 103 223 284 273 273 294 312 278 334 60 South Africa 860 445 370 1,011 948 1,249 1,426 1,344 1,387 1,467 61 Zaire 164 144 94 112 98 93 89 100 81 84 67. Oil-exporting countries5 452 391 805 657 783 593 637 725 839 801 63 Other 556 600 734 1,201 1,458 1,518 1,429 1,557 1,783 1,752 64 Other countries 988 855 1,150 1,376 1,463 1,583 1,777 1,803 1,961 2,105 65 Australia 877 673 859 1,203 1,280 1,385 1,501 1,560 1,655 1,702 66 All other 111 182 290 172 183 198 276 243 306 404 67 Nonmonetary international and regional organizations6 56 36 7788 5566 5511 4477 5577 4400 4433 4433 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. NOTE. Data for period prior to April 1978 include claims of banks' domestic 3. Included in "Other Latin America and Caribbean" through March 1978. customers on foreigners. 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and A Liabilities and claims of banks in the United States were increased, beginning United Arab Emirates (Trucial States). in December 1981, by the shift from foreign branches to international banking facilities in the United States of liabilities to, and claims on, foreign residents. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics • August 1982 3.19 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 1982 TTyyppee ooff ccllaaiimm 11997788 11997799 11998800 Dec. A' Jan/ Feb/ Mar. Apr/ May' JuneP 1 Total ... 111111122222226666666,,,,,,,777777788888887777777 111111155555554444444,,,,,,,000000033333330000000 111111199999998888888,,,,,,,666666699999998888888 222222288888888888888,,,,,,,222222288888882222222 333333322222220000000,,,,,,,000000066666668888888 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 111111111111115555555,,,,,,,555555544444445555555 111111133333333333333,,,,,,,999999944444443333333 111111177777772222222,,,,,,,555555599999992222222 222222255555551111111,,,,,,,000000022222229999999 255,822 266,483 222222277777776666666,,,,,,,999999922222224444444 287,562 300,193 311,859 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 11111110000000,,,,,,,333333344444446666666 11111115555555,,,,,,,999999933333337777777 22222220000000,,,,,,,888888888888882222222 33333331111111,,,,,,,111111199999993333333 33,153 33,460 33333333333333,,,,,,,777777700000005555555 35,203 37,543 39,972 44 OOwwnn ffoorreeiiggnn ooffffiicceess11 44444441111111,,,,,,,666666600000005555555 44444447777777,,,,,,,444444422222228888888 66666665555555,,,,,,,000000088888884444444 99999996666666,,,,,,,666666633333339999999 96,476 98,305 111111100000001111111,,,,,,,777777711111110000000 106,115 107,798 111,837 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 44444440000000,,,,,,,444444488888883333333 44444440000000,,,,,,,999999922222227777777 55555550000000,,,,,,,111111166666668888888 77777774444444,,,,,,,000000099999991111111 76,304 82,946 88888887777777,,,,,,,222222288888888888888 90,760 97,195 101,389 66 DDeeppoossiittss 5555555,,,,,,,444444422222228888888 6666666,,,,,,,222222277777774444444 8888888,,,,,,,222222255555554444444 22222222222222,,,,,,,666666688888889999999 23,947 26,259 22222228888888,,,,,,,777777700000009999999 29,152 33,432 35,115 77 OOtthheerr 33333335555555,,,,,,,000000055555554444444 33333334444444,,,,,,,666666655555554444444 44444441111111,,,,,,,999999911111114444444 55555551111111,,,,,,,444444400000003333333 52,357 56,686 55555558888888,,,,,,,555555577777779999999 61,607 63,763 66,274 88 AAllll ootthheerr ffoorreeiiggnneerrss 22222223333333,,,,,,,111111111111111111111 22222229999999,,,,,,,666666655555550000000 33333336666666,,,,,,,444444455555559999999 44444449999999,,,,,,,111111100000005555555 49,889 51,772 55555554444444,,,,,,,222222222222222222222 55,484 57,658 58,661 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss22 .... 11111111111111,,,,,,,222222244444443333333 22222220000000,,,,,,,000000088888888888888 22222226666666,,,,,,,111111100000006666666 33333337777777,,,,,,,222222255555553333333 44444443333333,,,,,,,111111144444443333333 444444488888880000000 999999955555555555555 888888888888885555555 1111111,,,,,,,333333377777778888888 1111111,,,,,,,555555511111112222222 11 Negotiable and readily transferable 5555555,,,,,,,333333399999996666666 11111113333333,,,,,,,111111100000000000000 11111115555555,,,,,,,555555577777774444444 22222225555555,,,,,,,777777755555552222222 33333332222222,,,,,,,333333322222228888888 12 Outstanding collections and other 5555555,,,,,,,333333366666666666666 6666666,,,,,,,000000033333332222222 9999999,,,,,,,666666644444448888888 11111110000000,,,,,,,111111122222223333333 9999999,,,,,,,333333300000003333333 13 MEMO: Customer liability on 11111115555555,,,,,,,000000033333330000000 11111118888888,,,,,,,000000022222221111111 22222222222222,,,,,,,777777711111114444444 22222229999999,,,,,,,555555566666665555555 33333330000000,,,,,,,222222277777773333333 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States5 13,668 22,265 24,381 39,556 42,117 43,648 40,800 41,223 43,648 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. A Liabilities and claims of banks in the United States were increased, beginning 2. Assets owned by customers of the reporting bank located in the United States in December 1981, by the shift from foreign branches to international banking that represent claims on foreigners held by reporting banks for the account of their facilities in the United States of liabilities to, and claims on, foreign residents. domestic customers. NOTE. Beginning April 1978, data for banks' own claims are given on a monthly 3. Principally negotiable time certificates of deposit and bankers acceptances. basis, but the data for claims of banks' own domestic customers are available on a quarterly basis only. 3.20 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 1982 MMaattuurriittyy;; bbyy bboorrrroowweerr aanndd aarreeaa Dec. Dec. Dec. June' Sept' Dec.^' Mar. 1 73,635 86,181 106,748 117,610 122,477 153,932 174,697 By borrower 2 Maturity of 1 year or less1 58,345 65,152 82,555 92,124 94,957 115,895 132,886 3 Foreign public borrowers 4,633 7,233 9,974 11,752 12,990 15,196 16,579 4 All other foreigners 53,712 57,919 72,581 80,372 81,967 100,699 116,307 5 Maturity oi over 1 year1 15,289 21,030 24,193 25,486 27,520 38,037 41,811 6 Foreign public borrowers 5,395 8,371 10,152 11,177 12,564 15,648 17,054 7 All other foreigners 9,894 12,659 14,041 14,309 14,956 22,389 24,757 By area Maturity of 1 year or less1 8 15,169 15,235 18,715 21,149 23,015 27,886 34,061 9 Canada 2,670 1,777 2,723 3,314 3,959 4,634 5,628 10 Latin America and Caribbean 20,895 24,928 32,034 33,584 35,590 48,463 58,493 11 17,545 21,641 26,686 31,509 29,295 31,513 30,595 17. Africa 1,496 1,077 1,757 1,768 2,324 2,457 2,886 13 All other2 569 493 640 801 774 943 1,224 Maturity of over 1 year1 14 Europe 33,,114422 4,160 5,118 6,312 6,424 8,099 8,478 15 Canada 1,426 1,317 1,448 1,317 1,347 1,774 1,863 16 Latin America and Caribbean 8,464 12,814 15,075 15,458 17,478 25,096 27,849 17 1,407 1,911 1,865 1,679 1,550 1,902 2,214 18 637 655 507 559 548 899 1,093 19 All other2 214 173 179 161 172 267 315 1. Remaining time to maturity. A Liabilities and claims of banks in the United States were increased, beginning 2. Includes nonmonetary international and regional organizations. in December 1981, by the shift from foreign branches to international banking facilities in the United States of liabilities to, and claims on, foreign residents. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A63 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks1 Billions of dollars, end of period 1980 1981 1982 AArreeaa oorr ccoouunnttrryy 1199778822 11997799 Mar. June Sept. Dec. Mar. June Sept. Dec. Mar.'' 1 Total 266.2 303.9 308.5 328.8 339.3 352.0 370.6 382.5 399.4 411.3 408.5 2 G-10 countries and Switzerland 124.7 138.4 141.3 154.2 158.8 162.1 167.9 168.2 172.0 173.2 170.3 3 Belgium-Luxembourg 9.0 11.1 10.8 13.1 13.6 13.0 13.5 13.8 14.1 13.2 13.0 4 France 12.2 11.7 12.0 14.1 13.9 14.1 14.5 14.7 16.0 15.2 15.5 5 Germany 11.3 12.2 11.4 12.7 12.9 12.1 13.2 12.1 12.7 12.8 12.4 6 Italy 6.7 6.4 6.2 6.9 7.2 8.2 7.7 8.4 8.6 9.7 8.8 7 Netherlands 4.4 4.8 4.3 4.5 4.4 4.4 4.6 4.1 3.7 4.0 4.0 8 Sweden 2.1 2.4 2.4 2.7 2.8 2.9 3.2 3.1 3.4 3.7 4.1 9 Switzerland 5.3 4.7 4.3 3.3 3.4 5.0 5.1 5.2 5.1 5.4 5.3 10 United Kingdom 47.3 56.4 57.6 64.4 66.7 67.4 68.2 67.0 68.7 69.0 68.5 11 Canada 6.0 6.3 6.9 7.2 7.7 8.4 8.8 10.8 11.7 10.8 11.1 12 Japan 20.6 22.4 25.4 25.5 26.1 26.5 29.1 28.9 28.0 29.3 27.6 13 Other developed countries 19.4 19.9 18.8 20.3 20.6 21.6 23.5 24.8 26.4 28.4 30.4 14 Austria 1.7 2.0 1.7 1.8 1.8 1.9 1.8 2.1 2.2 2.0 2.1 15 Denmark 2.0 2.2 2.1 2.2 2.2 2.3 2.4 2.3 2.5 2.4 2.5 16 Finland 1.2 1.2 1.1 1.3 1.2 1.4 1.4 1.3 1.4 1.7 1.6 17 Greece 2.3 2.4 2.4 2.5 2.6 2.8 2.7 3.0 2.9 2.7 2.8 18 Norway 2.1 2.3 2.4 2.4 2.4 2.6 2.8 2.8 3.0 3.1 3.2 19 Portugal .6 .7 .6 .6 .7 .6 .6 .8 1.0 1.1 1.2 20 3.5 3.5 3.5 3.9 4.2 4.4 5.5 5.7 5.8 6.6 7.1 21 Turkey 1.5 1.4 1.4 1.4 1.3 1.5 1.5 1.4 1.5 1.4 1.5 22 Other Western Europe 1.3 1.4 1.4 1.6 1.7 1.7 1.8 1.8 1.9 2.1 2.2 23 South Africa 2.0 1.3 1.1 1.5 1.2 1.1 1.5 1.9 2.5 2.8 3.2 24 Australia 1.4 1.3 1.2 1.2 1.2 1.3 1.4 1.7 1.9 2.5 3.1 25 OPEC countries3 22.7 22.9 21.8 20.9 21.4 22.7 21.7 22.2 23.5 24.4 24.5 26 Ecuador 1.6 1.7 1.8 1.8 1.9 2.1 2.0 2.0 2.1 2.2 2.3 27 Venezuela 7.2 8.7 7.9 7.9 8.5 9.1 8.3 8.7 9.2 9.6 9.3 28 Indonesia 2.0 1.9 1.9 1.9 1.9 1.8 2.1 2.1 2.5 2.5 2.7 29 Middle East countries 9.5 8.0 7.8 6.9 6.7 6.9 6.7 6.8 7.1 7.6 8.1 30 African countries 2.5 2.6 2.5 2.5 2.4 2.8 2.6 2.6 2.6 2.5 2.1 31 Non-OPEC developing countries 52.6 63.0 63.7 67.7 73.0 77.4 81.9 84.7 90.0 95.9 94.2 Latin America 32 Argentina 3.0 5.0 5.5 5.6 7.6 7.9 9.4 8.5 9.2 9.3 9.3 33 Brazil 14.9 15.2 15.0 15.3 15.8 16.2 16.8 17.3 17.6 19.0 18.9 34 Chile 1.6 2.5 2.5 2.7 3.2 3.7 4.0 4.8 5.5 5.8 5.6 35 Colombia 1.4 2.2 2.1 2.2 2.4 2.6 2.4 2.5 2.5 2.6 2.2 36 Mexico 10.8 12.0 12.1 13.6 14.4 15.9 17.0 18.2 20.0 21.5 21.8 37 1.7 1.5 1.3 1.4 1.5 1.8 1.8 1.7 1.8 2.0 1.8 38 Other Latin America 3.6 3.7 3.6 3.6 3.9 3.9 4.7 3.8 4.2 4.4 4.4 Asia China 39 Mainland .0 .1 .1 .1 .1 .2 .2 .2 .2 .2 .2 40 Taiwan 2.9 3.4 3.6 3.8 4.1 4.2 4.4 4.6 5.1 5.1 5.1 41 .2 .2 .2 .2 .2 .3 .3 .3 .3 .3 .5 42 1.0 1.3 .9 1.2 1.1 1.5 1.3 1.8 1.5 2.0 1.6 43 Korea (South) 3.9 5.4 6.4 7.1 7.3 7.1 7.7 8.8 8.6 9.4 8.5 44 Malaysia .6 1.0 .8 1.1 1.1 1.1 1.2 1.4 1.4 1.7 1.7 45 Philippines 2.8 4.2 4.4 4.6 4.8 5.1 4.8 5.1 5.6 6.0 5.8 46 Thailand 1.2 1.5 1.4 1.5 1.5 1.6 1.6 1.5 1.4 1.5 1.3 47 Other Asia .2 .5 .5 .5 .5 .6 .5 .7 .8 1.0 1.0 Africa 48 Egypt .4 .6 .7 .8 .6 .8 .8 .7 1.0 1.1 1.3 49 Morocco .6 .6 .6 .5 .6 .7 .6 .5 .7 .7 .7 50 .2 .2 .2 .2 .2 .2 .2 .2 .2 .2 .2 51 Other Africa4 1.4 1.7 1.8 1.9 2.1 2.1 2.2 2.1 2.2 2.3 2.3 52 Eastern Europe 6.9 7.3 7.3 7.2 7.3 7.4 7.7 7.7 7.7 7.7 7.1 53 U.S.S.R 1.3 .7 .6 .5 .5 .4 .4 .5 .4 .6 .4 54 Yugoslavia 1.5 1.8 1.9 2.1 2.1 2.3 2.4 2.5 2.5 2.5 2.3 55 Other 4.1 4.8 4.9 4.5 4.7 4.6 4.8 4.8 4.7 4.7 4.4 56 Offshore banking centers 31.0 40.4 42.6 44.3 44.6 47.0 53.1 59.2 61.7 62.9 64.1 57 Bahamas 10.4 13.7 13.9 13.7 13.2 13.7 15.2 17.9 21.3 18.7 19.5 58 Bermuda .7 .8 .6 .6 .6 .6 .7 .7 .8 .7 .6 59 Cayman Islands and other British West Indies 7.4 9.4 11.3 9.8 10.1 10.6 11.7 12.6 12.0 12.3 11.5 60 Netherlands Antilles .8 1.2 .9 1.2 1.3 2.1 2.3 2.4 2.2 3.1 3.2 61 Panama5 3.0 4.3 4.9 5.6 5.6 5.4 6.5 6.9 6.7 7.5 6.8 62 Lebanon .1 .2 .2 .2 .2 .2 .2 .2 .2 .2 .2 63 Hong Kong 4.2 6.0 5.7 6.9 7.5 8.1 8.4 10.3 10.3 11.7 13.0 64 Singapore 3.9 4.5 4.7 5.9 5.6 5.9 7.3 8.1 8.0 8.6 9.3 65 Others6 .5 .4 .4 .4 .4 .3 .9 .3 .1 .1 .1 66 Miscellaneous and unallocated7 9.1 11.7 13.2 14.3 13.7 14.0 14.9 15.7 18.2 18.9 17.9 1. The banking offices covered by these data are the U.S. offices and foreign in this table include only banks' own claims payable in dollars. For earlier dates branches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks. the claims of the U.S. offices also include customer claims and foreign currency Offices not covered include (1) U.S. agencies and branches of foreign banks, and claims (amounting in June 1978 to $10 billion). (2) foreign subsidiaries of U.S. banks. To minimize duplication, the data are ad- 3. In addition to the Organization of Petroleum Exporting Countries shown justed to exclude the claims on foreign branches held by a U.S. office or another individually, this group includes other members of OPEC (Algeria, Gabon, Iran, foreign branch of the same banking institution. The data in this table combine Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates) as foreign branch claims in table 3.14 (the sum of lines 7 through 10) with the claims well as Bahrain and Oman (not formally members of OPEC). of U.S. offices in table 3.18 (excluding those held by agencies and branches of 4. Excludes Liberia. foreign banks and those constituting claims on own foreign branches). However, 5. Includes Canal Zone beginning December 1979. see also footnote 2. 6. Foreign branch claims only. 2. Beginning with data for June 1978, the claims of the U.S. offices 7. Includes New Zealand, Liberia, and international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics • August 1982 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States' Millions of dollars, end of period 1981 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11997788 11997799 11998800 June Sept. Dec.r Mar. p 1 Total 14,952 17,385 21,990 21,404 22,948 21,604 20,720 2 Payable in dollars 11,523 14,310 18,281 18,123 19,853 18,088 18,062 3 Payable in foreign currencies2 3,429 3,075 3,709 3,281 3,095 3,515 2,658 By type 4 Financial liabilities 6,368 7,485 11,153 11,465 12,512 11,325 11,190 5 Payable in dollars 3,853 5,215 8,381 9,099 10,227 8,851 9,320 6 Payable in foreign currencies 2,515 2,270 2,772 2,366 2,285 2,474 1,870 7 Commercial liabilities 8,584 9,900 10,837 9,939 10,436 10,278 9,530 8 Trade payables 4,001 4,585 4,934 4,460 4,351 4,647 3,961 9 Advance receipts and other liabilities 4,583 5.315 5,903 5,479 6,085 5,631 5,569 10 Payable in dollars 7,670 9,095 9,900 9,024 9,626 9,237 88,,774422 11 Payable in foreign currencies 914 805 936 915 810 1,041 778888 By area or country Financial liabilities 12 Europe 3,971 4,658 6,338 5,997 7,494 6,404 7,067 13 Belgium-Luxembourg 293 345 487 532 492 452 496 14 France 173 175 327 367 825 636 822 15 Germany 366 497 582 451 430 491 503 16 Netherlands 391 829 681 763 651 738 730 17 Switzerland 248 170 354 345 465 715 707 18 United Kingdom 2,167 2,463 3.772 3,422 4,478 3,246 3,704 19 Canada 247 532 964 978 977 958 914 20 Latin America and Caribbean 1,357 1,483 3,103 3,592 3,195 3,099 2,744 21 Bahamas 478 375 964 1,272 1,019 1,279 1,095 22 Bermuda 4 81 1 1 0 7 6 23 Brazil 10 18 23 20 20 22 27 24 British West Indies 194 514 1,452 1,534 1,363 1,045 1,016 25 Mexico 102 121 99 98 107 110022 67 26 Venezuela 49 72 81 91 90 9988 97 27 784 804 723 869 814 838 450 28 Japan 717 726 644 750 696 673 293 29 Middle East oil-exporting countries3 32 31 38 29 30 47 40 30 Africa 5 4 11 5 3 3 2 31 Oil-exporting countries4 2 1 1 0 1 0 0 32 All other5 5 4 15 24 29 24 12 Commercial liabilities 33 Europe 3,047 3,701 4,396 3,959 3,955 3,771 3,421 34 Belgium-Luxembourg 97 137 90 72 78 67 50 35 France 321 467 582 558 575 573 504 36 Germany 523 545 679 617 590 545 473 37 Netherlands 246 227 219 225 238 221 232 38 Switzerland 302 310 493 375 563 424 400 39 United Kingdom 824 1,077 1,209 1,011 925 884 824 40 Canada 667 924 876 731 823 870 857 41 Latin America 997 1,323 1,259 1,149 1,087 986 770 42 Bahamas 25 69 8 4 3 2 22 43 Bermuda 97 32 75 72 113 67 71 44 Brazil 74 203 111 54 61 67 83 45 British West Indies 53 21 35 34 11 2 27 46 Mexico 106 257 326 319 345 293 176 4/ Venezuela 303 301 319 290 273 276 194 48 Asia 2,927 2,991 3,034 2,803 3,221 3,285 3,214 49 Japan 448 583 802 867 775 1,094 1,081 50 Middle East oil-exporting countries3 1,518 1,014 890 837 881 910 816 51 Africa 743 728 817 676 757 703 664 52 Oil-exporting countries4 312 384 517 392 355 344 247 53 All other5 203 233 456 622 593 664 604 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 A65 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1981 1982 Type, and area or country 11997788 11997799 11998800 June Sept. Dec/ Mar.P 1 Total 28,001 31,341 34,597 35,341 34,348 35,737 30,059 2 Payable in dollars 24,998 28,148 31,663 32,424 31.380 32,167 27,452 3 Payable in foreign currencies2 3,003 3,193 2,933 2,917 2,968 3,571 2,607 By type 4 Financial claims 16,644 18,449 19,924 20,156 19,415 20,859 17,675 5 Deposits 11,201 12,813 14,087 14,530 13,628 14,675 12,638 6 Payable in dollars 10,133 11,897 13,312 13,805 12,902 14,060 12,181 7 Payable in foreign currencies 1,068 916 775 725 726 615 457 8 Other financial claims 5,443 5,637 5,837 5,625 5,787 6,185 5,037 9 Payable in dollars 3,874 3,810 4,154 3,988 4,102 3,744 3,408 10 Payable in foreign currencies 1,569 1,826 1,683 1,638 1,686 2,440 1,629 11 Commercial claims 11,357 12,892 14,673 15,185 14,933 14,878 12,384 12 Trade receivables 10,798 12,188 13,947 14,338 14,047 13,938 11,449 13 Advance payments and other claims.. 559 704 726 847 886 940 935 14 Payable in dollars 10,991 12,441 14,197 14,631 14,376 14,362 11,864 15 Payable in foreign currencies 366 450 476 554 556 516 520 By area or country Financial claims 16 Europe 5,225 6,167 6,116 5,156 4,822 4,566 4,570 17 Belgium-Luxembourg 48 32 195 174 26 43 16 18 France 178 177 337 377 348 325 452 19 Germany 510 409 230 139 320 244 217 20 Netherlands 103 53 51 52 68 50 79 21 Switzerland 98 73 59 116 86 73 39 22 United Kingdom 4,031 5,111 4,968 3,952 3,649 3,493 3,524 23 Canada 4,549 4,987 5,060 6,162 6,013 6,617 4,874 24 Latin America and Caribbean 5,714 6,293 7,768 7,987 7,621 8,575 7,359 25 Bahamas 3,001 2,765 3,448 3,330 3,253 3,902 3,444 26 Bermuda 80 30 135 33 15 18 94 27 Brazil 151 163 96 20 66 30 49 28 British West Indies 1,291 2,011 2,731 3,397 3,195 3,500 2,751 29 Mexico 162 157 208 162 271 299 281 30 Venezuela 157 143 137 143 143 148 130 31 Asia 920 706 710 599 621 882 680 32 Japan 305 199 177 99 109 363 267 33 Middle East oil-exporting countries- 18 16 20 19 29 37 36 34 Africa 181 253 238 216 222 168 159 35 Oil-exporting countries4 10 49 26 39 41 46 43 36 All other5 55 44 32 37 116 51 34 Commercial claims 3,983 4,909 5,512 5,470 5,347 5,327 4,342 37 Europe 144 202 233 235 220 234 245 38 Belgium-Luxembourg 609 727 1,129 784 767 776 696 39 France 399 589 591 572 580 554 444 40 Germany 267 298 318 308 308 303 227 41 Netherlands 198 272 353 474 404 427 354 42 Switzerland 824 901 928 1,067 1,032 965 1,057 43 United Kingdom 44 Canada 1,094 859 914 1,016 1,017 967 939 45 Latin America and Caribbean 2,546 2,879 3,765 3,804 3,726 3,464 22,,990044 46 Bahamas 109 21 21 29 18 12 8800 47 Bermuda 215 197 108 192 241 223 212 48 Brazil 628 645 861 824 726 668 417 49 British West Indies 9 16 34 34 13 12 23 50 Mexico 505 708 1,101 1,121 983 1,020 759 51 Venezuela 291 343 410 420 454 422 394 52 Asia 3,108 3,451 3,512 3,785 3,674 3,910 3,151 53 Japan 1,006 1,177 1,045 1,218 1,104 1,244 1,158 54 Middle East oil-exporting countries- 713 765 822 934 828 898 757 55 Africa 447 554 653 705 717 750 584 56 Oil-exporting countries4 136 133 153 137 154 152 142 57 All other5 178 240 318 404 451 459 463 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

A66 International Statistics • August 1982 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1982 1981 1982 TTrraannssaaccttiioonnss,, aanndd aarreeaa oorr ccoouunnttrryy 11998800'' 11998811'' Jan.- June Dec. Jan.' Feb/ Mar. Apr.' May June? U.S. corporate securities STOCKS 1 Foreign purchases 40,298 40,603 14.319 2,940 2,016 2,524 2,635 2,359 2,621 2,163 2 Foreign sales 34,870 34,835 12.390 2,740 1,748 1,988 2,506 2,101 2,186 1,862 3 Net purchases, or sales ( —) 5,427 5,768 1,929 200 268 536 129 258 435 302 4 Foreign countries 5,409 5,743 1,901 199 263 537 120 252 429 299 5 Europe 3,116 3,606 1,375 176 231 347 166 167 305 157 6 France 492 892 -97 5 0 -6 -51 33 -48 -25 7 Germany 169 -28 156 -6 15 17 42 29 43 10 8 Netherlands -328 39 91 -73 3 38 1 -9 36 23 9 Switzerland 310 280 -198 75 40 -33 -60 -66 6 -85 10 United Kingdom 2,528 2,209 1,388 171 169 317 223 176 279 224 11 Canada 887 783 -152 8 -45 20 -118 0 -10 2 12 Latin America and Caribbean 148 -30 99 -36 -13 31 -19 53 22 25 13 Middle East1 1.206 1,140 510 -24 51 137 84 61 104 73 14 Other Asia 16 284 17 74 40 -6 4 -40 -21 39 LB Africa -1 7 -4 0 0 1 -3 0 1 -3 16 Other countries 38 -46 57 1 -1 6 6 12 27 6 17 Nonmonetary international and regional organizations 18 24 27 0 5 -1 9 6 6 3 BONDS2 18 Foreign purchases 15,425 17,290 9,123 1,192 946 929 1,619 2,217 1,929 1,483 19 Foreign sales 9,964 12,247 7,025 1,038 778 930 1,481 1,485 1,199 1,153 20 Net purchases, or sales (-) 5,461 5,043 2,098 153 168 -1 138 733 730 330 21 Foreign countries 5,526 4,976 2,029 157 154 10 144 674 690 356 22 Europe 1,576 1,356 1,818 139 144 16 169 540 704 244 23 France 129 11 129 7 15 14 12 20 46 23 24 Germany 212 848 1,428 52 88 104 225 396 500 115 2b Netherlands -65 70 49 3 2 0 17 14 11 5 26 Switzerland 54 108 148 -3 19 8 15 46 48 12 27 United Kingdom 1,257 181 16 55 3 -102 -102 59 91 67 28 Canada 135 -12 162 -2 29 15 29 46 23 21 29 Latin America and Caribbean 185 132 98 22 17 -11 26 -8 15 61 30 Middle East1 3,499 3,465 -157 -62 -89 -63 -41 126 -112 22 31 Other Asia 117 44 128 60 53 52 - 29 -18 61 9 32 Africa 5 -1 -19 0 0 0 -6 -13 0 0 33 Other countries 10 -7 0 -2 0 2 -3 1 0 -1 34 Nonmonetary international and regional organizations -65 66 69 -4 14 -11 -6 59 40 -26 Foreign securities 35 Stocks, net purchases, or sales (-) -2,136 -39 114 65' 145 38 31 -65 -115 79 36 Foreign purchases 7,893 9,261 3,210 700 ' 522 509 692 383 486 618 37 Foreign sales 10,029 9,300 3,097 634' 377 471 661 448 601 538 38 Bonds, net purchases, or sales (-) -1,001 -5,436 - 1,054 -774' -106 -99 -540 -33 461 -737 39 Foreign purchases 17,084 17,540 12,336 1,980 1,222 1,513 2,549 2,254 2,755 2,043 40 Foreign sales 18,086 22,976 13,390 2.754' 1,327 1,612 3,089 2,287 2,294 2,780 41 Net purchases, or sales (-), of stocks and bonds . -3,138 -5,475 -941 -709' 39 -62 -509 -98 346 -658 42 Foreign countries -4,014 -4,463 -820 11' 11 -121 -525 -32 127 -279 43 Europe -1,108 -681 -408 127' 132 -58 109 -127 -40 -425 44 Canada -1,948 -3,698 -770 -166 -164 -102 -628 120 76 -71 45 Latin America and Caribbean 86 170 668 -2 67 67 96 202 145 91 46 -1,147 -291 -275 41' -3 -21 -115 -209 -53 127 47 Africa 24 -53 -37 6 -15 -1 -5 -17 -1 0 48 Other countries 79 90 2 6' -5 -7 17 0 -1 -2 49 Nonmonetary international and regional organizations 876 -1,012 -121 -720 28 60 16 -66 219 -379 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

Investment Transactions and Discount Rates A67 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Holdings and Transactions Millions of dollars 1982 1981 1982 Country or area 1980 1981 Jan.- June Dec. Jan. Feb. Mar. Apr. May June? Holdings (end of period)1 1 Estimated total2 57,549 70,201 70,201 71,487 73,800 75,794 77,268 77,816 78,168 2 Foreign countries2 52,961 64,530 64,530 65,850 68,273 70,251 71,925 72,930 72,972 3 Europe2 24,468 23,976 23,976 24,373 25,332 26,085 26,393 26,011 25,728 4 Belgium-Luxembourg 77 543 543 614 363 539 709 340 152 5 Germany2 12,327 11,861 11,861 11,898 12,845 13,055 13,231 12,974 13,022 6 Netherlands 1,884 1,955 1,955 1,998 2,038 2,052 2,139 2,152 2,176 7 Sweden 595 643 643 644 635 697 662 655 652 8 Switzerland2 1,485 846 846 904 984 1,025 1,157 1,134 1,039 9 United Kingdom 7,323 6,709 6,709 6,800 6,931 7,037 6,737 6,801 6,664 10 Other Western Europe 777 1.419 1,419 1,514 1,535 1,680 1,757 1,954 2,023 11 Eastern Europe 0 0 0 0 0 0 0 0 0 12 Canada 449 514 514 533 499 458 473 506 410 13 Latin America and Caribbean 999 736 736 721 728 760 886 928 899 14 Venezuela 292 286 286 286 286 286 306 296 253 15 Other Latin America and Caribbean 285 319 319 321 337 370 383 427 421 16 Netherlands Antilles 421 131 131 113 104 103 196 204 224 17 Asia 26,112 38,671 38,671 39,700 41,310 42,531 43,750 45,060 45,504 18 Japan 9,479 10,780 10,780 10,844 11,022 11,203 11,381 11,396 11,137 19 Africa 919 631 631 519 400 401 403 405 405 20 All other 14 2 2 3 5 17 22 21 26 21 Nonmonetary international and regional organizations 4,588 5,671 5,671 5,637 5,527 5,543 5,343 4,886 5,196 22 International 4,548 5,637 5,637 5,603 5,493 5,529 5,278 4,822 5,123 23 Latin American regional 36 1 1 1 -4 -4 -4 -4 -4 Transactions (net purchases, or sales i -) during period) 24 Total2 6,066 12,652 7,967 -169 1,286 2,313 1,994 1,474 548 352 25 Foreign countries2 6,906 11,568 8,442 -1,363 1,320 2,423 1,978 1,674 1,005 42 26 Official institutions 3,865 11,694 7,091 -787 841 2,343 1,314 812 1,474 308 27 Other foreign2 3,040 -127 1,349 -576 478 80 664 862 -469 -266 28 Nonmonetary international and regional organizations -843 1,085 -473 1,194 -33 -110 16 -200 -456 310 MEMO: Oil-exporting countries 29 Middle East3 7,672 11,156 5,599 17 1,019 1,373 470 906 907 924 30 Africa4 327 -289 -227 -407 -112 -119 0 2 2 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. 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per annum Rate on July 31, 1982 Rate on July 31, 1982 Rate on July 31, 1982 CCoouunnttrryy Country Country Per- Month Per- Month Per- Month cent effective cent effective cent effective Argentina 113.84 July 1982 France1 14.75 July 1982 Sweden 10.0 Mar. 1982 Austria 6.75 Mar. 1980 Germany, Fed. Rep. of 7.5 May 1980 Switzerland 5.5 Mar. 1982 Belgium 13.5 July 1982 Italy 19.0 Mar. J981 United Kingdom' Brazil 49.0 Mar. 1981 Japan 5.5 Dec. 1981 Venezuela 14.0 Aug. 1981 Canada 15.50 July 1982 Netherlands 8.0 Mar. 1982 Denmark 11.00 Oct. 1980 Norway 9.0 Nov. 1979 1. As of the end of February 1981, the rate is that at which the Bank of France discounts or makes advances against eligible commercial paper and/or discounts Treasury bills for 7 to 10 days. government commercial banks or brokers. For countries with 2. Minimum lending rate suspended as of Aug. 20, 1981. more than one rate applicable to such discounts or advances, the rate shown is the one at which it is understood the central bank transacts the NOTE. Rates shown are mainly those at which the central bank either largest proportion of its credit operations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 International Statistics • August 1982 3.27 FOREIGN SHORT-TERM INTEREST RATES Percent per annum, averages of daily figures 1982 CCoouunnttrryy,, oorr ttyyppee 11997799 11998800 11998811 Jan. Feb. Mar. Apr. May June July 1 Eurodollars 11.96 14.00 16.79 14.29 15.75 14.90 15.20 14.53 15.45 14.37 2 United Kingdom 13.60 16.59 13.86 15.14 14.47 13.53 13.69 13.31 12.96 12.35 3 Canada 11.91 13.12 18.84 15.01 15.25 15.67 15.74 15.46 16.84 16.23 4 Germany 6.64 9.45 12.05 10.43 10.22 9.84 9.30 9.12 9.22 9.41 5 Switzerland 2.04 5.79 9.15 8.53 8.29 6.37 4.96 3.80 5.39 4.32 6 Netherlands 9.33 10.60 11.52 10.49 10.06 8.90 8.20 8.62 8.75 8.95 7 France 9.44 12.18 15.28 15.07 14.58 15.21 16.36 16.17 15.67 14.64 8 Italy 11.85 17.50 19.98 21.38 21.34 20.63 20.62 20.59 20.51 20.18 9 Belgium 10.48 14.06 15.28 15.09 14.89 14.02 14.95 15.00 15.38 15.22 10 Japan 6.10 11.45 7.58 6.41 6.38 6.43 6.57 6.80 7.14 7.15 NOTE. Rates are for 3-month interbank loans except for Canada, finance company paper; Belgium, 3-month Treasury bills; and Japan, Gensaki rate. 3.28 FOREIGN EXCHANGE RATES Currency units per dollar 1982 CCoouunnttrryy//ccuurrrreennccyy 11997799 11998800 11998811 Feb. Mar. Apr. May June July 1 Argentina/peso n.a. n.a. n.a. 10256.00 10795.65 11761.36 13942.50 15025.00 19671.43 2 Australia/dollar1 111.77 114.00 114.95 108.50 106.03 105.15 105.94 103.23 101.09 3 Austria/schilling 13.387 12.945 15.948 16.587 16.711 16.853 16.274 17.114 17.342 4 Belgium/franc 29.342 29.237 37.194 41.144 44.379 45.292 43.666 46.183 47.029 5 Brazil/cruzeiro n.a. n.a. 92.374 137.97 144.07 151.03 159.08 167.70 177.97 6 Canada/dollar 1.1603 1.1693 1.1990 1.2140 1.2205 1.2252 1.2336 1.2756 1.2699 7 Chile/peso n.a. n.a. n.a. 39.100 39.100 39.407 39.537 43.373 47.228 8 China, P.R./yuan n.a. n.a. 1.7031 1.8200 1.8429 1.8565 1.8123 1.9014 1.9300 9 Colombia/peso n.a. n.a. n.a. 60.129 60.956 61.057 62.365 63.318 65.539 10 Denmark/krone 5.2622 5.6345 7.1350 7.7950 8.0396 8.1591 7.8444 8.3481 8.5402 11 Finland/markka 3.8886 3.7206 4.3128 4.5058 4.5663 4.6097 4.5045 4.6763 4.7278 12 France/franc 4.2566 4.2250 5.4396 6.0176 6.1428 6.2457 6.0237 6.5785 6.8560 13 Germany/deutsche mark 1.8342 1.8175 2.2631 2.3660 2.3800 2.3970 2.3127 2.4292 2.4662 14 Greece/drachma n.a. n.a. n.a. 60.973 61.769 63.541 62.892 67.795 69.434 15 Hong Kong/dollar n.a. n.a. 5.5678 5.8857 5.8298 5.8270 5.7549 5.8669 5.9025 16 India/rupee 8.1555 7.8866 8.6807 9.2144 9.2935 9.3923 9.2965 9.4668 9.5633 17 Indonesia/rupiah n.a. n.a. n.a. 645.89 649.00 651.14 653.67 654.98 659.18 18 Iran/rial n.a. n.a. 79.324 n.a. n.a. n.a. 19 Ireland/pound1 204.65 205.77 161.32 148.86 147.25 144.22 149.60 141.92 139.48 20 Israel/shekel n.a. n.a. n.a. 17.488 18.766 20.014 21.184 23.179 25.320 21 Italy/lira 831.10 856.20 1138.60 1263.20 1293.29 1321.60 1283.37 1358.43 1382.26 22 Japan/yen 219.02 226.63 220.63 235.31 241.23 244.11 236.96 251.20 255.03 23 Malaysia/ringgit 2.1721 2.1767 2.3048 2.3662 2.3265 2.3395 2.2907 2.3392 2.3554 24 Mexico/peso 22.816 22.968 24.547 31.736 45.366 46.152 46.903 47.716 48.594 25 Netherlands/guilder 2.0072 1.9875 2.4998 2.5947 2.6186 2.6594 2.5709 2.6848 2.7239 26 New Zealand/dollar1 102.23 97.34 86.848 79.325 77.698 76.562 77.025 74.951 73.990 27 Norway/krone 5.0650 4.9381 5.7430 5.9697 6.0255 6.0820 5.9675 6.1869 6.3557 28 Peru/sol n.a. n.a. n.a. 534.47 561.08 591.29 622.87 656.11 693.56 29 Philippines/peso n.a. n.a. 7.8113 8.2530 8.3291 8.3565 8.4016 8.4511 8.4802 30 Portugal/escudo 48.953 50.082 61.739 69.067 70.488 72.493 70.610 78.477 84.514 31 Singapore/dollar n.a. n.a. 2.1053 2.1095 2.1213 2.1329 2.0886 2.1379 2.1464 32 South Africa/rand/1 118.72 128.54 114.77 101.95 97.930 94.880 94.010 89.57 87.20 33 South Korea/won n.a. n.a. n.a. 710.05 714.67 721.03 724.35 738.30 743.06 34 Spain/peseta 67.158 71.758 92.396 100.70 104.53 106.15 102.987 109.215 111.57 35 Sri Lanka/rupee 15.570 16.167 18.967 20.611 20.700 20.575 20.365 20.750 20.895 36 Sweden/krona 4.2892 4.2309 5.0659 5.7579 5.8361 5.9144 5.7888 6.0244 6.1159 37 Switzerland/franc 1.6643 1.6772 1.9674 1.8909 1.8886 1.9624 1.9500 2.0789 2.0960 38 Thailand/baht n.a. n.a. 21.731 23.050 23.050 23.025 23.000 23.000 23.000 39 United Kingdom/pound1 212.24 232.58 202.43 184.70 180.53 177.20 181.03 175.63 173.54 40 Venezuela/bolivar n.a. n.a. 4.2781 4.2960 4.3012 4.3023 4.2991 4.2953 4.2951 MEMO: United States/dollar2 88.09 87.39 102.94 110.36 112.45 114.07 111.03 116.97 118.91 1. Value in U.S. cents. revised as of August 1978. For description and back data, see "Index of 2. 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 NOTE. Averages of certified noon buying rates in New York for cable transfers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A69 Guide to Tabular Presentation, 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 when IPCs Individuals, partnerships, and corporations about half of the figures in that column are changed.) REITs Real estate investment trusts * Amounts insignificant in terms of the last decimal place RPs Repurchase agreements shown in the table (for example, less than 500,000 when SMSAs Standard metropolitan statistical areas the smallest unit given is millions) Cell not applicable 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 Assets and liabilities of U.S. branches and agencies of foreign banks, March 31, 1982 July 1982 A76 Commercial bank assets and liabilities, June 30, 1981 October 1981 A74 Commercial bank assets and liabilities, September 30, 1981 January 1982 A70 Commercial bank assets and liabilities, December 31, 1981 April 1982 All Commercial bank assets and liabilities, March 31, 1982 July 1982 A70 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Federal Reserve Board of Governors PAUL A. VOLCKER, Chairman HENRY C. WALLICH PRESTON MARTIN, 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 FRANK O'BRIEN, JR., Deputy Assistant to the Board EDWARD C. ETTIN, Deputy Staff Director ANTHONY F. COLE, Special Assistant to the Board MURRAY ALTMANN, Assistant to the Board WILLIAM R. MALONI, Special Assistant to the Board STANLEY J. SIGEL, Assistant to the Board NAOMI P. SALUS, Special Assistant to the Board NORMAND R.V. BERNARD, Special Assistant to the Board WILLIAM R. JONES, Manager, Operations Review Program DIVISION OF RESEARCH AND STATISTICS LEGAL DIVISION JAMES L. KICHLINE, Director MICHAEL BRADFIELD, General Counsel JOSEPH S. ZEISEL, Deputy Director ROBERT E. MANNION, Deputy General Counsel MICHAEL J. PRELL, Associate Director J. VIRGIL MATTINGLY, JR., Associate General Counsel JARED J. ENZLER, Senior Deputy Associate Director GILBERT T. SCHWARTZ, Associate General Counsel DONALD L. KOHN, Senior Deputy Associate Director RICHARD M. ASHTON, Assistant General Counsel ELEANOR J. STOCKWELL, Senior Deputy Associate Director NANCY P. JACKLIN, Assistant General Counsel J. CORTLAND G. PERET, Deputy Associate Director MARYELLEN A. BROWN, Assistant to the General Counsel HELMUT F. WENDEL, Deputy Associate Director MARTHA BETHEA, Assistant Director JOE M. CLEAVER, Assistant Director OFFICE OF THE SECRETARY ROBERT M. FISHER, Assistant Director DAVID E. LINDSEY, Assistant Director WILLIAM W. WILES, Secretary LAWRENCE SLIFMAN, Assistant Director BARBARA R. LOWREY, Associate Secretary FREDERICK M. STRUBLE, Assistant Director JAMES MCAFEE, Associate Secretary STEPHEN P. TAYLOR, Assistant Director *DOLORES S. SMITH, Assistant Secretary PETER A. TINSLEY, Assistant Director LEVON H. GARABEDIAN, Assistant Director (Administration) DIVISION OF CONSUMER AND COMMUNITY AFFAIRS DIVISION OF INTERNATIONAL FINANCE GRIFFITH L. GARWOOD, Director EDWIN M. TRUMAN, Director JERAULD C. KLUCKMAN, Associate Director ROBERT F. GEMMILL, Associate Director GLENN E. LONEY, 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 MICHAEL P. DOOLEY, Assistant Director RALPH W. SMITH, JR., Assistant Director JOHN E. RYAN, Director FREDERICK R. DAHL, Associate Director DON E. KLINE, Associate Director WILLIAM TAYLOR, Associate Director JACK M. EGERTSON, Assistant Director ROBERT A. JACOBSEN, Assistant Director ROBERT S. PLOTKIN, Assistant Director THOMAS A. SIDMAN, Assistant Director SIDNEY M. SUSSAN, 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

A71 and Official Staff NANCY H. TEETERS LYLE E. GRAMLEY EMMETT J. RICE OFFICE OF OFFICE OF STAFF DIRECTOR FOR STAFF DIRECTOR FOR MANAGEMENT FEDERAL RESERVE BANK ACTIVITIES JOHN M. DENKLER, Staff Director THEODORE E. ALLISON, Staff Director EDWARD T. MULRENIN, Assistant Staff Director JOSEPH W. DANIELS, SR., Director of Equal Employment Opportunity DIVISION OF FEDERAL RESERVE BANK OPERATIONS DIVISION OF DATA PROCESSING CLYDE H. FARNSWORTH, JR., Director LORIN S. MEEDER, Associate Director CHARLES L. HAMPTON, Director WALTER ALTHAUSEN, Assistant Director BRUCE M. BEARDSLEY, Deputy Director CHARLES W. BENNETT, Assistant Director ULYESS D. BLACK, Associate Director RICHARD B. GREEN, Assistant Director GLENN L. CUMMINS, Assistant Director EARL G. HAMILTON, 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, Assistant Director tHowARD 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 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 Division of Consumer and Community Affairs. tOn loan from the Federal Reserve Bank of New York. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

72 Federal Reserve Bulletin • August 1982 FOMC and Advisory Councils FEDERAL OPEN MARKET COMMITTEE PAUL A. VOLCKER, Chairman ANTHONY M. SOLOMON, Vice Chairman JOHN J. BALLES LYLE E. GRAMLEY J. CHARLES PARTEE ROBERT P. BLACK KAREN N. HORN EMMETT J. RICE WILLIAM F. FORD PRESTON MARTIN NANCY H. TEETERS HENRY C. WALLICH STEPHEN H. AXILROD, Staff Director RICHARD G. DAVIS, Associate Economist MURRAY ALTMANN, Secretary EDWARD C. ETTIN, Associate Economist NORMAND R. V. BERNARD, Assistant Secretary MICHAEL W. KERAN, Associate Economist NANCY M. STEELE, Deputy Assistant Secretary DONALD L. KOCH, Associate Economist MICHAEL BRADFIELD, General Counsel JAMES PARTHEMOS, Associate Economist JAMES H. OLTMAN, Deputy General Counsel MICHAEL J. PRELL, Associate Economist ROBERT E. MANNION, Assistant General Counsel CHARLES J. SIEGMAN, Associate Economist JAMES L. KICHLINE, Economist EDWIN M. TRUMAN, Associate Economist JOHN M. DAVIS, 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 DONALD C. PLATTEN, Second District, President ROBERT M. SURDAM, Seventh District, Vice President WILLIAM S. EDGERLY, First District RONALD TERRY, Eighth District JOHN H. WALTHER, Third District CLARENCE G. FRAME, Ninth District JOHN G. MCCOY, Fourth District GORDON E. WELLS, Tenth District VINCENT C. BURKE, JR., Fifth District T. C. FROST, JR., Eleventh District ROBERT STRICKLAND, Sixth District JOSEPH J. PINOLA, Twelfth District HERBERT V. PROCHNOW, Secretary WILLIAM J. KORSVIK, Associate Secretary CONSUMER ADVISORY COUNCIL CHARLOTTE H. SCOTT, Charlottesville, Virginia, Chairman MARGARET REILLY-PETRONE, Upper Montclair, New Jersey, Vice Chairman ARTHUR F. BOUTON, Little Rock, Arkansas SHIRLEY T. HOSOI, LOS Angeles, California JULIA H. BOYD, Alexandria, Virginia GEORGE S. IRVIN, Denver, Colorado ELLEN BROADMAN, Washington, D.C. HARRY N. JACKSON, Minneapolis, Minnesota GERALD R. CHRISTENSEN, Salt Lake City, Utah F. THOMAS JUSTER, Ann Arbor, Michigan JOSEPH N. CUGINI, Westerly, Rhode Island ROBERT J. MCEWEN, S. J., Chestnut Hill, Massachusetts RICHARD S. D'AGOSTINO, Wilmington, Delaware STAN L. MULARZ, Chicago, Illinois SUSAN PIERSON DE WITT, Springfield, Illinois WILLIAM J. O'CONNOR, Buffalo, New York JOANNE S. FAULKNER, New Haven, Connecticut WILLARD P. OGBURN, Boston, Massachusetts MEREDITH FERNSTROM, New York, New York JANET J. RATHE, Portland, Oregon ALLEN J. FISHBEIN, Washington, D.C. RENE REIXACH, Rochester, New York E. C. A. FORSBERG, SR., Atlanta, Georgia PETER D. SCHELLIE, Washington, D.C. LUTHER R. GATLING, New York, New York NANCY Z. SPILLMAN, Los Angeles, California VERNARD W. HENLEY, Richmond, Virginia CLINTON WARNE, Cleveland, Ohio JUAN J. HINOJOSA, McAllen, Texas FREDERICK T. WEIMER, Chicago, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A73 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK, Chairman President Vice President branch, or facility Zip Deputy Chairman First Vice President in charge of branch BOSTON* 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 Jean A. Crockett Edward G. Boehne Robert M. Landis, Esq. Richard L. Smoot CLEVELAND* 44101 J. L. Jackson Karen N. Horn William H. Knoell Walter H. MacDonald Cincinnati 45201 Clifford R. Meyer Robert E. Showaiter Pittsburgh 15230 Milton G. Hulme, Jr. Harold J. Swart RICHMOND* 23219 Steven Muller Robert P. Black Paul E. Reichardt 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 William H. Martin, III Hiram J. Honea Jacksonville 32231 Copeland D. Newbern Charles D. East Miami 33152 Vacancy Patrick K. Barron Nashville 37203 Cecelia Adkins Jeffrey J. Wells New Orleans 70161 Leslie B. Lampton James D. Hawkins CHICAGO* 60690 John Sagan Silas Keehn Stanton R. Cook Daniel M. Doyle Detroit 48231 Russell G. Mawby William C. Conrad ST. LOUIS 63166 Armand C. Stalnaker Lawrence K. Roos W. L. Hadley Griffin Donald W. Moriarty, Jr. Little Rock 72203 Richard V. Warner John F. Breen Louisville 40232 James F. Thompson Donald L. Henry Donald B. Weis Randall C. Sumner Memphis 38101 William G. Phillips E. Gerald Corrigan MINNEAPOLIS 55480 John B. Davis, Jr. Thomas E. Gainor Ernest B. Corrick Betty J. Lindstrom Helena 59601 Paul H. Henson Roger Guffey KANSAS CITY 64198 Doris M. Drury Henry R. Czerwinski Vacancy Wayne W. Martin D O e k n la v h e o r ma City 7 8 3 0 1 2 2 1 5 7 Christine H. Anthony William G. Evans Robert G. Lueder Robert D. Hamilton Omaha 68102 Gerald D. Hines Robert H. Boy kin DALLAS 75222 John V. James William H. Wallace A. J. Losee Joel L. Koonce, Jr. E H l o P us a t s o o n 7 7 9 70 9 0 9 1 9 Jerome L. Howard J. Z. Rowe Lawrence L. Crum Thomas H. Robertson San Antonio 78295 Caroline L. Ahmanson John J. Balles SAN FRANCISCO 94120 Alan C. Furth John B. Williams Bruce M. Schwaegler Richard C. Dunn Los Angeles 90051 John C. Hampton Angelo S. Carella Portland 97208 Wendell J. Ashton A. Grant Holman Salt Lake City 84130 John W. Ellis Gerald R. Kelly Seattle 98124 *Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; Cranford, New Jersey 07016; Jericho, New York 11753; Utica at Oriskany, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311; Des Moines, Iowa 50306; Indianapolis, Indiana 46204; and Milwaukee, Wisconsin 53202. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Federal Reserve Board Publications Copies are available from PUBLICATIONS SERVICES, 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- Each volume $1.00; 10 or more to one address, $.85 TIONS. 1974. 125 pp. each. ANNUAL REPORT. OPEN MARKET POLICIES AND OPERATING PROCEDURES— FEDERAL RESERVE BULLETIN. Monthly. $20.00 per year or STAFF STUDIES. 1971. 218 pp. $2.00 each; 10 or more to $2.00 each in the United States, its possessions, Canada, one address, $1.75 each. and Mexico; 10 or more of same issue to one address, REAPPRAISAL OF THE FEDERAL RESERVE DISCOUNT MECHA- $18.00 per year or $1.75 each. Elsewhere, $24.00 per NISM. Vol. I. 1971. 276 pp. Vol. 2. 1971. 173 pp. Vol. 3. year or $2.50 each. 1972. 220 pp. Each volume $3.00; 10 or more to one BANKING AND MONETARY STATISTICS. 1914-1941. (Reprint address, $2.50 each. of Part I only) 1976. 682 pp. $5.00. THE ECONOMETRICS OF PRICE DETERMINATION CONFER- BANKING AND MONETARY STATISTICS, 1941-1970. 1976. ENCE, October 30-31, 1970, Washington, D.C. 1972. 397 1,168 pp. $15.00. pp. Cloth ed. $5.00 each; 10 or more to one address, ANNUAL STATISTICAL DIGEST $4.50 each. Paper ed. $4.00 each; 10 or more to one 1971-75. 1976. 339 pp. $5.00 per copy. 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. 1980. 1981. 241 pp. $10.00 per copy. 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. BANK CREDIT-CARD AND CHECK-CREDIT PLANS. 1968. 102 INTRODUCTION TO FLOW OF FUNDS. 1980. 68 pp. $1.50 each; pp. $1.00 each; 10 or more to one address, $.85 each. 10 or more to one address, $1.25 each. REPORT OF THE JOINT TREASURY-FEDERAL RESERVE STUDY PUBLIC POLICY AND CAPITAL FORMATION. 1981. 326 pp. OF THE U.S. GOVERNMENT SECURITIES MARKET. 1969. $13.50 each. 48 pp. $.25 each; 10 or more to one address, $.20 each. NEW MONETARY CONTROL PROCEDURES: FEDERAL RE- JOINT TREASURY-FEDERAL RESERVE STUDY OF THE GOV- SERVE STAFF STUDY, 1981. ERNMENT SECURITIES MARKET; STAFF STUDIES—PART SEASONAL ADJUSTMENT OF THE MONETARY AGGREGATES: 1. 1970. 86 pp. $.50 each; 10 or more to one address, $.40 REPORT OF THE COMMITTEE OF EXPERTS ON SEASONAL each. PART 2, 1971. 153 pp. and PART 3, 1973. 131 pp. ADJUSTMENT TECHNIQUES. 1981. 55 pp. $2.75 each. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A75 FEDERAL RESERVE REGULATORY SERVICE. Looseleaf; updat- STAFF STUDIES.- Summaries Only Printed in the ed at least monthly. (Requests must be prepaid.) Bulletin Consumer and Community Affairs Handbook. $60.00 per Studies and papers on economic and financial subjects year. that are of general interest. Requests to obtain single copies Monetary Policy and Reserve Requirements Handbook. of the full text or to be added to the mailing list for the series $60.00 per year. may be sent to Publications Services. Securities Credit Transactions Handbook. $60.00 per year. Federal Reserve Regulatory Service. 3 vols. (Contains all PERFORMANCE AND CHARACTERISTICS OF EDGE CORPORAthree Handbooks plus substantial additional material.) TIONS, by James V. Houpt. Feb. 1981. 56 pp. $175.00 per year. BANKING STRUCTURE AND PERFORMANCE AT THE STATE Rates for subscribers outside the United States are as LEVEL DURING THE 1970S, by Stephen A. Rhoades. Mar. follows and include additional air mail costs: 1981. 26 pp. Federal Reserve Regulatory Service, $225.00 per year. FEDERAL RESERVE DECISIONS ON BANK MERGERS AND AC- Each Handbook, $75.00 per year. QUISITIONS DURING THE 1970s, by Stephen A. Rhoades. WELCOME TO THE FEDERAL RESERVE, December 1980. Aug. 1981. 16 pp. BELOW THE BOTTOM LINE: THE USE OF CONTINGENCIES AND COMMITMENTS BY COMMERCIAL BANKS, by Benja- CONSUMER EDUCATION PAMPHLETS min Wolkowitz and others. Jan. 1982. 186 pp. Short pamphlets suitable for classroom use. Multiple MULTIBANK HOLDING COMPANIES: RECENT EVIDENCE ON copies available without charge. COMPETITION AND PERFORMANCE IN BANKING MAR- KETS, by Timothy J. Curry and John T. Rose. Jan. 1982. 9 pp. Alice in Debitland Consumer Handbook to Credit Protection Laws COSTS, SCALE ECONOMIES, COMPETITION, AND PRODUCT Dealing with Inflation: Obstacles and Opportunities MIX IN THE U.S. PAYMENTS MECHANISM, by David B. The Equal Credit Opportunity Act and . . . Age Humphrey. Apr. 1982. 18 pp. The Equal Credit Opportunity Act and . . . Credit Rights in DIVISIA MONETARY AGGREGATES: COMPILATION, DATA, Housing AND HISTORICAL BEHAVIOR, by William A. Barnett and The Equal Credit Opportunity Act and . . . Doctors, Law- Paul A. Spindt. May 1982. 82 pp. yers, Small Retailers, and Others Who May Provide THE COMMUNITY REINVESTMENT ACT AND CREDIT ALLO- Incidental Credit CATION, by Glenn Canner. June 1982. 8 pp. The Equal Credit Opportunity Act and . . . Women INTEREST RATES AND TERMS ON CONSTRUCTION LOANS AT Fair Credit Billing COMMERCIAL BANKS, by David F. Seiders. July 1982. Federal Reserve Glossary 14 pp. Guide to Federal Reserve Regulations STRUCTURE-PERFORMANCE STUDIES IN BANKING: AN UP- How to File A Consumer Credit Complaint DATED SUMMARY AND EVALUATION, by Stephen A. If You Borrow To Buy Stock Rhoades. Aug. 1982. 15 pp. If You Use A Credit Card Series on the Structure of the Federal Reserve System The Board of Governors of the Federal Reserve System REPRINTS The Federal Open Market Committee Most of the articles reprinted do not exceed 12 pages. Federal Reserve Bank Board of Directors Federal Reserve Banks Revision of Bank Credit Series. 12/71. Monetary Control Act of 1980 Rates on Consumer Installment Loans. 9/73. Truth in Leasing Industrial Electric Power Use. 1/76. U.S. Currency Revised Series for Member Bank Deposits and Aggregate What Truth in Lending Means to You Reserves. 4/76. Federal Reserve Operations in Payment Mechanisms: A Summary. 6/76. Perspectives on Personal Saving. 8/80. The Impact of Rising Oil Prices on the Major Foreign Industrial Countries. 10/80. Federal Reserve and the Payments System: Upgrading Electronic Capabilities for the 1980s. 2/81. Survey of Finance Companies, 1980. 5/81. Bank Lending in Developing Countries. 9/81. U.S. International Transactions in 1981. 4/82. The Commercial Paper Market since the Mid-Seventies. 6/82. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 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 Ownership by individuals, partnerships, and Assets and liabilities (See also Foreigners) corporations, 24 Banks, by classes, 17, 18-21 Turnover, 12 Domestic finance companies, 39 Depository institutions Federal Reserve Banks, 11 Reserve requirements, 8 Foreign banks, U.S. branches and agencies, 22 Reserves and related items, 3, 4, 5, 14 Nonfinancial corporations, 38 Deposits (See also specific types) Savings institutions, 29 Banks, by classes, 3, 17, 18-21, 29 Automobiles Federal Reserve Banks, 4, 11 Consumer installment credit, 42, 43 Turnover, 12 Production, 48, 49 Discount rates at Reserve Banks and at foreign central banks (See Interest rates) Discounts and advances by Reserve Banks (See Loans) BANKERS balances, 17, 18-20 Dividends, corporate, 37 (See also Foreigners) Banks for Cooperatives, 35 Bonds (See also U.S. government securities) New issues, 36 EMPLOYMENT, 46, 47 Yields, 3 Eurodollars, 27 Branch banks, 15, 21, 22, 56 Business activity, nonfinancial, 46 Business expenditures on new plant and equipment, 38 FARM mortgage loans, 41 Business loans (See Commercial and industrial loans) Federal agency obligations, 4, 10, 11, 12, 34 Federal credit agencies, 35 Federal finance CAPACITY utilization, 46 Debt subject to statutory limitation and types and Capital accounts ownership of gross debt, 32 Banks, by classes, 17 Receipts and outlays, 30, 31 Federal Reserve Banks, 11 Treasury financing of surplus, or deficit, 30 Central banks, 67 Treasury operating balance, 30 Certificates of deposit, 21, 27 Federal Financing Bank, 30, 35 Commercial and industrial loans Federal funds, 3, 6, 18, 19, 20, 27, 30 Commercial banks, 15, 17, 22, 26 Federal Home Loan Banks, 35 Weekly reporting banks, 18-22, 23 Federal Home Loan Mortgage Corporation, 35, 40, 41 Commercial banks Federal Housing Administration, 35, 40, 41 Assets and liabilities, 17, 18-21 Federal Intermediate Credit Banks, 35 Business loans, 26 Federal Land Banks, 35, 41 Commercial and industrial loans, 15, 17, 22, 23, 26 Federal National Mortgage Association, 35, 40, 41 Consumer loans held, by type, 42, 43 Federal Reserve Banks Loans sold outright, 21 Condition statement, 11 Nondeposit funds, 16 Discount rates (See Interest rates) Number, by classes, 17, 71 U.S. government securities held, 4, 11, 12, 32, 33 Real estate mortgages held, by holder and property, 41 Federal Reserve credit, 4, 5, 11, 12 Time and savings deposits, 3 Federal Reserve notes, 11 Commercial paper, 3, 25, 27, 39 Federally sponsored credit agencies, 35 Condition statements (See Assets and liabilities) Finance companies Construction, 46, 50 Assets and liabilities, 39 Consumer installment credit, 42, 43 Business credit, 39 Consumer prices, 46, 51 Loans, 18, 19, 20, 42, 43 Consumption expenditures, 52, 53 Paper, 25, 27 Corporations Financial institutions Profits and their distribution, 37 Loans to, 18, 19, 20 Security issues, 36, 66 Selected assets and liabilities, 29 Cost of living (See Consumer prices) Float, 4 Credit unions, 29, 42, 43 Flow of funds, 44, 45 Currency and coin, 5,17 Foreign banks, assets and liabilities of U.S. branches and Currency in circulation, 4, 13 agencies, 22 Customer credit, stock market, 28 Foreign currency operations, 11 Foreign deposits in U.S. banks, 4, 11, 18, 19, 20 DEBITS to deposit accounts, 12 Foreign exchange rates, 68 Debt (See specific types of debt or securities) Foreign trade, 55 Demand deposits Foreigners Adjusted, commercial banks, 12 Claims on, 56, 58, 61, 62, 63, 65 Banks, by classes, 17, 18-21 Liabilities to, 21, 55, 56-60, 64, 66, 67 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

All GOLD Production, 46, 48 Certificate account, 11 Profits, corporate, 37 Stock, 4, 55 Government National Mortgage Association, 35, 40, 41 REAL estate loans Gross national product, 52, 53 Banks, by classes, 18-20, 41 Rates, 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 U.S. reserve assets, 55 Business loans of banks, 26 Residential mortgage loans, 40 Federal Reserve Banks, 3, 7 Retail credit and retail sales, 42, 43, 46 Foreign central banks and foreign countries, 67 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 United States, 54-67 Savings and loan assns., 3, 9, 29, 33, 41, 44 International organizations, 58, 59-61, 64-67 Savings deposits (See Time deposits) Inventories, 52 Securities (See specific types) Investment companies, issues and assets, 37 Federal and federally sponsored credit agencies, 35 Investments (See also specific types) Foreign transactions, 66 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 Holdings of U.S. government securities, 32, 33 LABOR force, 47 New security issues, 36 Life insurance companies (See Insurance companies) Ownership of securities issued by, 18, 19, 20, 29 Loans (See also specific types) Yields of securities, 3 Banks, by classes, 17, 18-21 Stock market, 28 Commercial banks, 3, 15, 17, 18-21, 22, 26 Stocks (See also Securities) Federal Reserve Banks, 3, 4, 5, 7, 11, 12 New issues, 36 Insured or guaranteed by United States, 40, 41 Prices, 28 Savings institutions, 29, 41 TAX receipts, federal, 31 MANUFACTURING Time deposits, 3, 9, 12, 14, 17, 18-21 Capacity utilization, 46 Trade, foreign, 55 Production, 46, 49 Treasury currency, Treasury cash, 4 Margin requirements, 28 Treasury deposits, 4, 11, 30 Member banks Treasury operating balance, 30 Borrowing at Federal Reserve Banks, 5, 11 Federal funds and repurchase agreements, 6 UNEMPLOYMENT, 47 Reserve requirements, 8 U.S. international transactions, 54-67 Reserves and related items, 3, 4, 5, 14 U.S. government balances Mining production, 49 Commercial bank holdings, 18, 19, 20 Mobile home shipments, 50 Member bank holdings, 14 Monetary aggregates, 3, 14 Treasury deposits at Reserve Banks, 4, 11, 30 Money and capital market rates (See Interest U.S. government securities rates) Bank holdings, 17, 18-20, 32, 33 Money stock measures and components, 3, 13 Dealer transactions, positions, and financing, 34 Mortgages (See Real estate loans) Federal Reserve Bank holdings, 4, 11, 12, 32, 33 Mutual funds (See Investment companies) Foreign and international holdings and transactions, 11, Mutual savings banks, 3, 9, 18-20, 29, 32, 33, 41 32, 67 Open market transactions, 10 NATIONAL defense outlays, 31 Outstanding, by type and ownership, 32, 33 National income, 52 Ownership of securities issued by, 29 Rates, 3, 27 OPEN market transactions, 10 Utilities, production, 49 PERSONAL income, 53 VETERANS Administration, 40, 41 Prices Consumer and producer, 46, 51 WEEKLY reporting banks, 18-23 Stock market, 28 Wholesale (producer) prices, 46, 51 Prime rate, commercial banks, 26 Producer prices, 46, 51 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories 'ana \St>h I ah• Cin January 1978 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