Federal Reserve Bulletin, 1982-10

VOLUME 68 • NUMBER 10 • OCTOBER 1982 FEDERAL RESERVE 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 565 INTERNATIONAL BANKING FACILITIES can do to benefit housing and related industries is to pursue policies that will get rid of International banking facilities established inflation once and for all, before the Subby banking offices in the United States have committee on Forests, Family Farms, and shown substantial growth in the nine Energy of the House Committee on Agrimonths of their existence. culture, September 16, 1982. 617 Henry C. Wallich, Member, Board of Gov- 579 TREAS UR Y AND FEDERAL RESERVE ernors, discusses the views of the Board on FOREIGN EXCHANGE OPERATIONS foreign investment in U.S. banks and says From February through July the dollar was that on the whole the performance of forgenerally strong against major foreign cur- eign-owned banks has been satisfactory and rencies. supervisory problems have not been serious, before the Subcommittee on Com- 609 STAFF STUDIES merce, Consumer, and Monetary Affairs of the House Committee on Government Op- "Foreign Subsidiaries of U.S. Banking Orerations, September 30, 1982. ganizations" shows that these subsidiaries are an integral part of the international financial network of large U.S. banks, that 625 ANNOUNCEMENTS their assets have increased tenfold during Amendments to Regulation D to change the last decade, and that they are likely to from lagged to contemporaneous reserve continue to be useful vehicles for U.S. requirements the way depository institubanks seeking to expand their international tions maintain reserves. banking capabilities. Amendments to Regulation E to reduce regulatory burdens without giving up signif- "Redlining Research and Federal Legislaicant consumer protection in electronic tive Response" finds little evidence to indifund transfers. cate that any neighborhood has been simultaneously redlined by all lenders, although Issuance of revised capital adequacy critesome discrimination by individual institu- ria. tions may exist. Revision of official staff commentary on Regulation Z. 612 IND US TRIAL PROD UCTION Amendment to Regulation L that imple- Output declined about 0.6 percent in Sep- ments changes in the Depository Institutember. tions Management Interlocks Act. Change in reporting date for data on past- 614 STATEMENTS TO CONGRESS due and other nonperforming loans. Lyle E. Gramley, Member, Board of Gov- Meeting of Consumer Advisory Council. ernors, discusses the housing and forest products industries in terms of their present Publication of supplement to the Board's state and outlook for the future and says list of over-the-counter stocks that are subthat the most important thing government ject to its margin requirements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Availability of Annual Statistical Digest, sets and were contributing to substantial 1981. volatility in interest rates. The intermeeting range for the federal funds rate, which Exemption of Massachusetts, Oklahoma, provides a mechanism for initiating further and Wyoming from certain parts of the consultation of the Committee, was set at 7 Truth in Lending Act. to 11 percent. Proposed amendment to Regulation T regarding the use of private mortgage-backed 637 LEGAL DEVELOPMENTS securities that may be used as collateral for Amendments to Regulations A and Q; varimargin credit at securities brokers; proous bank holding company orders; and posed changes in Regulation L to simplify pending cases. and clarify Management Official Interlocks' proposed rule that time deposits linked to a line of credit on which checks or similar AI FINANCIAL AND BUSINESS STATISTICS third-party transfers can be drawn are sub- A3 Domestic Financial Statistics ject to the reserve requirements of transac- A46 Domestic Nonfinancial Statistics tion accounts under Regulation D. A54 International Statistics Hearing on a petition to prohibit the opera- A70 Special Tables tion of sweep accounts by member banks. A69 GUIDE TO TABULAR PRESENTATION, Admission of three state banks to member- STATISTICAL RELEASES, AND SPECIAL ship in the Federal Reserve System. TABLES RECORD OF POLICY ACTIONS OF THE A80 BOARD OF GOVERNORS AND STAFF FEDERAL OPEN MARKET COMMITTEE At its meeting on August 24, 1982, the A82 FEDERAL OPEN MARKET COMMITTEE Committee agreed to reaffirm the objectives AND STAFF; ADVISORY COUNCILS for monetary growth established at the June 30-July 1 meeting calling for expansion at A83 FEDERAL RESERVE BANKS, annual rates of about 5 percent for Ml and BRANCHES, AND OFFICES about 9 percent for M2 over the June to September period. The Committee decided A84 FEDERAL RESERVE BOARD that somewhat more rapid growth in the PUBLICATIONS monetary aggregates would be acceptable depending upon evidence that economic A86 INDEX TO STATISTICAL TABLES and financial uncertainties were fostering unusual liquidity demands for monetary as- A88 MAP OF FEDERAL RESERVE SYSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

International Banking Facilities This article was prepared by Sydney J. Key of HISTORY OF THE IBF PROPOSAL the Board's Division of International Finance. Footnotes appear at the end of the article. During the 1960s, the Eurocurrency market grew rapidly, as did participation in that market by The Federal Reserve Board permitted banking foreign branches of U.S.-chartered banks. This offices in the United States to establish interna- development was in part a result of interest rate tional banking facilities (IBFs) beginning in early ceilings, maturity limitations, and reserve re- December 1981. The purpose was to allow these quirements on deposits at banks in the United banking offices to conduct a deposit and loan States. U.S. measures to reduce net capital outbusiness with foreign residents, including foreign flows from the United States—the Interest banks, without being subject to reserve require- Equalization Tax and Voluntary Foreign Credit ments or interest rate ceilings. IBFs are also Restraint program, which were in effect from the exempt from the insurance coverage and assess- mid-1960s until January 1974—also contributed ments imposed by the Federal Deposit Insurance to the growth of the offshore banking market. Corporation. In addition, nine states have en- By 1982, total deposits in the Eurocurrency couraged banking institutions to establish IBFs market amounted to an estimated $900 billion, by granting favorable tax treatment under state net of deposits between banks within the market. or local law for IBF operations. As a result, Claims on nonbanks amounted to about $500 banking offices located in the United States can, billion. Although dollar-denominated assets and through their IBFs, conduct transactions with liabilities predominate, Euromarket activity inforeign residents in a regulatory environment cludes all major currencies and is conducted in broadly similar to that of the Eurocurrency mar- international financial centers around the world. ket without having to use an offshore facility. The conventional definition of the Eurocurrency By early September 1982, nearly 400 banking market includes deposits and loans booked outinstitutions—including U.S.-chartered banks, side the country in whose currency they are U.S. agencies and branches of foreign banks, and denominated. IBFs are domiciled in the United U.S. offices of Edge corporations—had established IBFs. Total assets at IBFs amounted to 1. IBF assets and liabilities more than $150 billion, of which IBFs in New Ratio scale, billions of dollars York accounted for more than three-quarters. Chart 1 shows that IBF assets grew rapidly during December 1981 as IBFs were opened in large numbers and as assets were shifted to IBFs from their establishing entities and from foreign offices of those entities. Growth has continued in 1982 but at a more moderate pace. A considerable proportion of IBF activity is interbank, and the bulk of IBF deposits have maturities of fourteen days or more. This article reviews the history of the IBF proposal, summarizes the legal framework for IBF operations, and then discusses the activities of IBFs during the first nine months of their existence. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

566 Federal Reserve Bulletin • October 1982 States; but, because their regulatory environ- liability accounts segregated on the books of its ment is broadly similar to that of the Euromar- establishing entity. Under Federal Reserve ket, IBF deposits and loans, including those that Board regulations, IBFs may be established by a are denominated in dollars, can, for most pur- U.S.-chartered depository institution, a U.S. poses, be considered part of the Euromarket. branch or agency of a foreign bank, or a U.S. IBF-type proposals were first put forward in office of an Edge or Agreement corporation.1 No the early 1970s to allow U.S. banks more flexibil- formal application is required to open an IBF, ity under the Voluntary Foreign Credit Restraint but an entity must notify its Federal Reserve (VFCR) program, which set ceilings on claims on Bank before doing so and agree to comply with foreigners held by U.S. banking offices. After the the Federal Reserve Board's regulations, includremoval of the VFCR and other U.S. capital ing recordkeeping, accounting, and reporting recontrols in January 1974, the idea of IBFs re- quirements.2 emerged as a possible method of reducing the burden of domestic reserve requirements and interest rate limitations. Proposals for a "foreign Permissible IBF Activities window" or a "free-trade banking zone" were studied within the government as a way of grant- Transactions that may be booked at an IBF are ing regulatory relief. The Federal Reserve Board specified in the June 1981 amendments to Reguwas, however, concerned about the effect that lations D (Reserve Requirements of Depository the adoption of such proposals would have on Institutions) and Q (Interest on Deposits) of the the conduct of monetary policy and on competi- Federal Reserve Board. In adopting these tion among groups of U.S. banks. amendments the Board intended to facilitate the The proposal that culminated in the final IBF provision of international banking services to regulations was submitted to the Board by the foreign customers at banking offices in the Unit- New York Clearing House Association in July ed States. However, to avoid complicating the 1978. The month before, the New York state conduct of domestic monetary policy, the Board legislature had enacted a statute granting favor- wanted to insulate U.S. economic activity from able tax treatment to IBFs under New York IBF transactions. Among the Board's principal State and City law, subject to the condition that concerns was the possibility that IBF accounts the Federal Reserve Board take action to exempt might be substituted for transaction accounts IBF activities from reserve requirements and included in Ml or be used to circumvent reserve interest rate limitations. requirements or interest rate ceilings. Conse- The Board considered the IBF proposal in quently, the amendments to Regulations D and Q December 1978, and decided to request comment impose a number of limitations on IBF activities on a number of its features and to analyze further that do not apply to foreign branches of Unthe issues involved. After passage of the Mone- chartered banks. tary Control Act of 1980, which broadened the First, IBF loan and deposit customers are Federal Reserve Board's authority to impose restricted to foreign residents (including banks), reserve requirements and explicitly confirmed other IBFs, and the entity establishing the IBF. the Board's authority to exempt IBFs from such Lending to or accepting deposits from any other requirements, the Board again considered IBFs U.S. resident is prohibited. Funds advanced to a and issued proposed regulations for comment. In U.S. banking office from its own IBF are subject June 1981 the Board adopted final regulations, to Eurocurrency reserve requirements in the which became effective December 3, 1981. same manner as funds advanced from a bank's foreign offices to its U.S. offices. Second, limitations are placed on the maturity FEDERAL RESERVE BOARD REGULATIONS of "IBF time deposits," which may be in the form of deposits, borrowings, placements, or Although IBFs are often regarded as engaging in similar instruments. An IBF may offer such loan and deposit transactions, in reality an IBF is deposits with an overnight maturity to banks in not an institution but rather a set of asset and foreign countries, to other IBFs, and to domestic Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

International Banking Facilities 567 and foreign offices of its establishing entity;3 but However, for purposes of reserve require- IBF time deposits of nonbank foreign residents ments and interest rate ceilings, foreign branches are subject to a minimum maturity or notice and IBFs are treated in a similar manner. Deposrequirement of two business days. its at foreign branches of U.S. banks that are Third, transactions of nonbank customers at payable only outside the United States are not IBFs are subject to a minimum amount of subject to reserve requirements or interest rate $100,000; a withdrawal of less than this amount is ceilings. Net advances by a branch to its U.S. permitted only to close out an account or to parent bank, purchases of assets from its parent withdraw accumulated interest. Deposits and bank, and branch loans to U.S. residents are withdrawals of banks at IBFs are not subject to included in the calculation of the parent bank's any minimum amount. required Eurocurrency reserves.6 Fourth, IBFs are prohibited from issuing negotiable instruments because such instruments could be transferred by the original holder to OTHER BANKING LAWS AND REGULATIONS U.S. residents who are not eligible deposit customers of IBFs. In addition to the Federal Reserve Board's regu- Fifth, an IBF may extend credit to a foreign lations, IBFs are governed by state and other nonbank customer only if the proceeds are used federal banking laws and regulations. An entity to finance operations of the borrower (or its that establishes an IBF does not obtain any new affiliates) outside the United States. Similarly, powers by doing so, because an IBF is simply a under the Board's regulations, an IBF may ac- segregated set of books. Thus an establishing cept a deposit from a foreign nonbank customer entity may not engage in any type of business only if the funds are used to support operations through its IBF that it is not already permitted to of the depositor (or its affiliates) outside the engage in under its federal or state charter or United States.4 license. For example, as a depository institution, Sixth, IBFs may engage in limited kinds of a federal savings and loan association could secondary market transactions; in particular, establish an IBF, but as of this writing, it could they may purchase (or sell) IBF-eligible assets not make unsecured commercial loans through such as loans, loan participations, securities, the IBF because federal law does not permit the certificates of deposit, and bankers acceptances association itself to make such loans. from (or to) any domestic or foreign customer, Similarly, in meeting loan limitation requireexcept domestic affiliates of the establishing enti- ments, establishing entities must include loans ty.5 made by the IBF. For example, IBFs established by U.S. offices of an Edge corporation are subject to the lending limits and the leveraging Permissible Activities of Foreign Branches restrictions of the Edge corporation.7 of U.S. Banks One example of the application of state banking laws and regulations to IBF activities in- The limitations on IBFs are more restrictive than volves U.S. offices of foreign banks. Some states those on foreign branches of U.S.-chartered impose asset-pledge or asset-maintenance rebanks. In contrast to IBFs, such branches are quirements based on the liabilities of state-linot prohibited from accepting deposits from and censed offices of foreign banks. Without special making loans to U.S. residents. There are no action, these requirements would apply to liabillimitations on the maturities of deposits at such ities of IBFs operated at such offices; however, branches provided that they are payable only New York, California, and Florida have exemptoutside the United States. In addition, unlike ed IBF liabilities from these requirements. IBFs, foreign branches of U.S. banks may issue Without special legislation, federal law would negotiable instruments, such as certificates of have subjected deposits at IBFs established by deposit and bankers acceptances, and they may federally insured depository institutions to the purchase or sell assets in secondary market insurance coverage and concomitant assesstransactions without restriction. ments of the Federal Deposit Insurance Corpora- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

568 Federal Reserve Bulletin • October 1982 tion. However, federal legislation enacted in late to foreign persons; the income derived from 1981 exempted deposits at IBFs from such cov- deposits and placements with foreign banks or erage and assessments. other IBFs; and gains and losses on certain foreign exchange transactions. Under regulations issued by the New York State Department TAX LAWS AND REGULATIONS of Taxation and Finance, applicable expenses include interest expenses, bad-debt deductions, Favorable tax treatment under state and local and other direct and indirect expenses. statutes has been an important factor for banks in Two adjustments must be made to a New York assessing the attractiveness of establishing an IBF's eligible net income. The first is a deduction IBF. Where favorable tax treatment for IBFs has for the "ineligible funding amount," which rebeen granted, there are usually tax advantages in flects the decision to give an IBF a tax benefit booking loans at an IBF rather than at a domestic only to the extent that the IBF is funded by office. For some U.S.-chartered banks, there are foreign persons, including other IBFs. also tax advantages to booking loans at an IBF The second adjustment is a deduction for the rather than at a shell branch because, in some "floor amount." The purpose is to avoid an instances, state tax authorities have attempted to abrupt decrease in tax revenues by reducing the apply state tax laws so that certain income from tax benefit granted to an IBF in proportion to the shell branches would, in effect, be treated as decline in foreign lending activity on the domesincome of the domestic bank itself. In such a tic books of its establishing entity since 1975-77, situation, a bank may use an IBF instead of a the base period. The floor amount is phased out, shell branch in order to rely on specific statutory but is not reduced to zero until the beginning of provisions granting tax relief to IBFs. the tenth taxable year of an IBF's existence. Nine states, including New York, California, In Illinois, the portion of a bank's adjusted Illinois, and Florida, have enacted special tax federal taxable income subject to state taxation is legislation for IBFs.8 The provisions for tax relief determined by using a one-factor formula: the differ considerably, reflecting differences in both ratio of a bank's gross income from Illinois the underlying state tax structures and the sources to its gross income from all sources. Tax amount and timing of the tax relief provided for relief for IBFs was granted by allowing a bank to IBF operations. There have been no modifica- exclude the "adjusted income" of its IBF from tions to federal tax statutes for IBFs; as a result, its Illinois gross income for purposes of this income arising from IBF activities is subject to formula. However, like New York, Illinois re- U.S. federal income taxation in the same manner quires that a floor amount be used to adjust an as other income of the domestic office of the IBF's income.10 Illinois does not use the concept establishing entity. of ineligible funding. New York was the first state to grant favorable In California, a bank is taxed on the basis of tax treatment to IBFs, but it limited that relief in the worldwide activities of its "unitary" group— a number of ways. The statute established a that is, a group of affiliated corporations having complex formula for determining an IBF's interrelated operations, including any that do "adjusted eligible net income," which is the business in California. The amount of income amount that is deductible from New York tax- subject to California taxation is determined by an able income in computing New York State and apportionment formula that takes into account City income taxes.9 Because the bulk of IBF the ratio of California to worldwide assets, reveactivity is located in that state, a summary of the nues, and payroll. Tax relief for IBFs was grant- New York formula may be useful. ed by treating IBF assets and revenues as if they First, an IBF's "eligible net income" must be were located outside California for purposes of calculated by subtracting its "applicable ex- this formula. penses" from its "eligible gross income." Eligi- In some states, special legislation for IBFs is ble gross income consists of gross income from considered unnecessary; Texas, for example, making, arranging for, placing, or servicing loans does not impose a tax on corporate income. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

International Banking Facilities 569 1. Number of IBFs, by state and type of establishing 78 percent of this total; in California, for about 13 entity, September 8, 1982 percent; in Illinois, for nearly 6 percent; and in Florida, for 2 percent. Un- Agencies Offices of State chartered and Edge Total IBF claims on unrelated parties amounted to banks' branches2 corporations $131 billion (table 2). Claims on foreign banks New York 36 125 15 176 were the largest component of IBF assets: taken California 12 48 10 70 together, balances due from banks in foreign Florida 21 19 20 60 Illinois 6 13 4 23 countries and loans to banks in foreign countries Texas 12 (3) 3 15 Pennsylvania 6 2 0 8 accounted for more than two-fifths of claims on District of Columbia 7 1 0 8 unrelated parties. Business loans to foreign resi- Washington 3 4 0 7 Georgia 4 1 1 6 dents accounted for slightly more than one- Massachusetts 3 1 1 5 Others4 17 0 0 17 quarter of such claims; and loans to foreign Total 127 214 54 395 governments and official institutions accounted 1. Only one thrift institution, a savings and loan association located for an additional 12 percent. (The growth of these in Florida, has established an IBF; it is included with U.S.-chartered assets is shown in chart 2.) banks in this table. 2. U.S. agencies and branches of foreign banks. 3. Under the Texas constitution, foreign banks are prohibited from establishing agencies or branches in that state. 4. Connecticut, Kentucky, Louisiana, Michigan, New Jersey, 2. Selected types of IBF assets North Carolina, Ohio, and Rhode Island. Ratio scale, billions of dot lars Although income from foreign sources is not Business loans to foreign residents subject to Florida income taxes, that state enacted special IBF legislation to ensure that all IBF operations would be exempt from Florida countries income and other taxation. Loans to foreign governments IBF ACTIVITIES: THE FIRST NINE MONTHS ' Balances due from banks in foreign countries As noted earlier, nearly 400 banking institutions had established IBFs by September 8, 1982. Almost half are located in New York; another one-third are located in California and Florida. (See table 1.) U.S. agencies and branches of foreign banks account for more than half of the IBFs of large U.S.-chartered banks and U.S. total number of institutions establishing IBFs.11 agencies and branches of foreign banks had simi- Of all the IBFs established by September 8, lar asset structures—that is, they had approxionly 219—or 55 percent—had total assets or mately the same proportion of claims on unrelatliabilities of $50 million or more and were there- ed parties in most major asset categories. The fore required to file a weekly report of their only notable difference between the two groups activities with the Federal Reserve; of these, 38 involved claims on other IBFs, which were more had total assets or total liabilities of $1 billion or important for agencies and branches than for more. large U.S. banks. As of early September, IBFs at U.S. agencies and branches of foreign banks accounted for a IBF Assets substantial portion of IBF activity: 52 percent of IBF claims on unrelated parties. Large Un- As of September 8, total IBF assets were $152 chartered banks accounted for 42 percent of such billion. IBFs in New York accounted for about claims. By contrast, U.S. offices of Edge corpo- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

570 Federal Reserve Bulletin • October 1982 rations accounted for only 5 percent of IBF $39 billion, was accounted for by U.S. agencies claims on unrelated parties; and smaller Un- and branches of Japanese banks. The amount of chartered banks accounted for the remaining 1 IBF activity being conducted at agencies and percent. branches of Japanese banks is not surprising Of the approximately $68 billion in claims on because almost none of the Japanese banks have unrelated parties at IBFs of U.S. agencies and Caribbean shell branches.12 branches of foreign banks, nearly three-fifths, or IBF loans and deposits may be denominated in 2. Assets and liabilities of international banking facilities, by type of establishing entity, September 8, 19821 Billions of dollars Large Agencies All Total, Un- Balance sheet item ch b a a r n t k er s e 2 d bra a n n c d h es3 en o t t i h ti e e r s 4 ent a i l t l i es ASSETS 1. Total claims on unrelated parties5 54.8 68.0 8.5 131.3 2. Loans and balances due from other IBFs 2.4 10.8 2.0 15.2 Balances due from 3. Banks in foreign countries 11.1 12.4 4.2 27.7 4. Foreign governments and official institutions .2 0 0 .2 5. Securities of foreign residents .1 1.0 0 1.1 Loans to foreign residents 6. Business (commercial and industrial) loans 16.8 17.0 .7 34.5 7. Banks in foreign countries 13.2 14.7 1.0 28.9 8. Foreign governments and official institutions 6.8 9.1 .3 16.2 9. Other loans .9 .3 .1 1.2 10. Other assets in IBF accounts 1.8 1.7 .2 3.8 11. Gross claims on foreign offices of establishing entity5 6.1 13.7 .4 20.2 12. Total assets other than claims on U.S. offices of establishing entity5 60.9 81.6 8.9 151.5 LIABILITIES 13. Total liabilities due to unrelated parties5 22.9 48.1 6.5 77.6 14. Liabilities due to other IBFs 2.4 12.3 .7 15.4 15. Overnight maturity or notice .1 .6 .1 .9 16. Liabilities due to banks in foreign countries 9.7 25.7 1.8 37.3 17. Overnight maturity or notice .9 1.2 .3 2.3 18. 2-13 days maturity or notice .1 1.3 .2 1.5 19. 14 days or more maturity or notice 8.8 23.3 1.4 33.4 20. Liabilities due to foreign governments and official institutions 3.6 2.7 .2 6.5 21. Overnight maturity or notice 1.6 .5 0 2.1 22. 2-13 days maturity or notice .2 .1 0 .3 23. 14 days or more maturity or notice 1.8 2.1 .2 4.1 24. Liabilities due to other foreign residents 5.6 4.9 3.4 13.8 25. 2-13 days maturity or notice .2 .2 .1 .4 26. 14 days or more maturity or notice 5.4 4.8 3.3 13.4 27. Other liabilities in IBF accounts 1.0 1.3 .4 2.7 28. Gross liabilities due to foreign offices of establishing entity5 34.6 22.2 1.3 58.1 29. Total liabilities other than those due to U.S. offices of establishing entity5 57.6 70.3 7.8 135.7 RESIDUAL 30. Net due from or net due to (-) U.S. offices of establishing entity (item 29 minus item 12)5 -3.4 -11.3 -1.1 -15.8 MEMO: Net due from or net due to (-) foreign offices of establishing entity (item 11 minus item 28)5 -28.5 -8.6 -.9 -38.0 Number of reporters 37 149 33 219 1. Includes data only for entities whose IBFs had assets or liabil- 4. U.S.-chartered banks with domestic assets of less than $750 ities of at least $50 million on September 8, 1982, or on any earlier million on December 31, 1977, and U.S. offices of Edge and Agreeweekly IBF report date. (Details may not add to totals because of ment corporations. rounding.) 5. Includes amounts denominated in both U.S. dollars and other 2. Banks with domestic assets of $750 million or more on December currencies; unless noted, figures on all other lines include only 31, 1977. amounts denominated in U.S. dollars. 3. U.S. agencies and branches of foreign banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

International Banking Facilities 571 either U.S. dollars or foreign currencies. Al- 4. Selected types of IBF liabilities though U.S. banks had sought this ability, to Ratio scale, billions of doll iars date the volume of IBF business denominated in foreign currencies has been very small, account- Liabilities due to in foreign ing for only 2 to 3 percent of total assets or total countries liabilities at IBFs of both large U.S.-chartered banks and U.S. agencies and branches of foreign banks. This compares with a share of business : due to foreign 1 denominated in foreign currencies of approxigovernments and official institutiioonnss mately 4 percent of total assets at Caribbean branches of U.S. banks and about 25 percent of total assets at London branches of U.S. banks. Liabilities due to ink foreign resi Liabilities due to other IBFs IBF Funding IBFs have obtained most of their funding from banks, including their establishing entities and foreign offices of those entities. At first, IBFs due to unrelated foreign residents at London and were funded primarily by net advances from Caribbean branches of U.S. banks. However, establishing entities and foreign offices of those relative to the size of the Eurocurrency market, entities. As of the end of December 1981, IBF the volume of deposits of foreign banks at IBFs liabilities due to unrelated parties were equal to was small. Such deposits amounted to $26 billion only one-third of IBF claims on unrelated parties at IBFs established by U.S. agencies and and amounted to about $18 billion. But, as chart branches of foreign banks and only $10 billion at 3 shows, the pattern of IBF funding has been IBFs established by large U.S.-chartered banks. changing. In the aggregate, as of September 8, In comparison, foreign branches of U.S.-char- 1982, IBF liabilities due to unrelated parties had tered banks alone had $106 billion of liabilities increased to about 60 percent of IBF claims on due to unrelated foreign banks as of July 30. unrelated parties and amounted to $78 billion. The maturity structure of IBF liabilities due to About half of these liabilities due to unre- foreign banks is typical of the maturity structure lated parties represented deposits of banks in of the Euromarket rather than that of the domesforeign countries. Foreign banks accounted for tic interbank market. Although IBFs may offer approximately the same proportion of liabilities deposits with an overnight maturity to banks, about 90 percent of the deposits of banks in foreign countries on the IBF books as of early 3. Composition of IBF liabilities September had maturities of fourteen days or Ratio scale, billions of dollars more. Bankers report that typical maturities are from one to three months, a pattern similar to •HMMHNHS that of the Euromarket, as contrasted with a 60 predominance of overnight maturities in the domestic interbank market. The inter-IBF market is still quite small, but it Net liabilities due to foreign J if offices of establishing entity is growing. IBF liabilities due to other IBFs increased from $l'/4 billion at the end of Decem- / Net liabilities due to establishing entity - / ber 1981 to $15!/2 billion in early September (chart 4). Of this total, U.S. agencies and branches of foreign banks accounted for more than $12 billion; these entities appear to use the inter-IBF market as a substitute for the term Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

572 Federal Reserve Bulletin • October 1982 federal funds market, and so far, there has been allowed to an IBF. As expected, funding of New little trading of overnight funds among IBFs. York IBFs by large U.S.-chartered banks has To date, rates paid on IBF deposits have been become very small; as already noted, funding virtually the same as rates on Eurodollar depos- from the establishing entity appears to be chanits of comparable size and maturity. Bankers neled through foreign branches. However, dereport only isolated instances of IBF deposit spite this tax provision, funding of New York rates below Eurodollar rates; a typical example IBFs by agency or branch establishing entities involves a bank located in a foreign country amounted to more than $6Vi billion in the aggreacting in a fiduciary role for a customer with a gate in early September. strong preference for an IBF deposit in the Most of the other states with IBF tax statutes United States. Bankers also report that rates on do not use the concept of ineligible funding. deposits transferred to IBFs during times of Outside New York, both large U.S.-chartered international crisis have not differed significantly banks and agencies and branches are, in the from Eurodollar rates. aggregate, advancing funds to their IBFs. Of The pattern of IBF funding of U.S.-chartered course, both in New York and elsewhere, some banks has consistently differed from that of U.S. individual establishing entities are receiving agencies and branches of foreign banks. Agen- funds from their IBFs. As noted earlier, funds cies and branches have been funding a much acquired from an IBF are included in the calculalarger portion of their IBF claims on unrelated tion of an establishing entity's required reserves parties with IBF liabilities due to unrelated par- against Eurocurrency liabilities. ties. As of early September, they funded 71 percent of such claims with liabilities due to unrelated parties; the comparable figure for large Shifting of Assets and Liabilities to IBFs U.S.-chartered banks was 42 percent. from U.S. Books of Establishing Entities This difference in the extent of direct funding from unrelated foreign residents is reflected in a As expected, some of the assets and liabilities on difference in the reliance on net advances to the IBF books were shifted there from establish- IBFs from foreign offices of the establishing ing entities and foreign offices of those entities. entity. As of early September, large U.S.-char- In order to measure the effect of shifts of assets tered banks funded 52 percent of their IBF and deposits to IBFs from banking offices in the claims on unrelated parties with net advances United States on domestic bank credit and the from their foreign offices to their IBFs; the monetary aggregates, the Federal Reserve has comparable figure for U.S. agencies and collected data for amounts that were shifted from branches of foreign banks was only 13 percent. U.S. books of establishing entities during the In the aggregate, large U.S.-chartered banks are first four weeks of each IBF's existence.13 advancing funds to their foreign branches; thus These data indicate that shifts of claims on some portion of IBF funding from such branches unrelated parties in initial four-week periods may be funding from the establishing entity that amounted to about $34 billion by January 27, is being channeled through its foreign branches. 1982. U.S. agencies and branches of foreign The net position of an IBF vis-a-vis its estab- banks accounted for nearly 85 percent of these lishing entity is a residual that balances the IBF shifts. This is not surprising because, compared books. If IBF claims on unrelated parties and with U.S.-chartered banks, the agencies and related foreign offices exceed comparable IBF branches had more IBF-eligible assets on their liabilities, the establishing entity is advancing U.S. books in the first place. As expected, shifts funds to its IBF. If liabilities of an IBF exceed its from U.S. books of agencies and branches of assets, the IBF is advancing funds to its estab- Japanese and Italian banks were particularly lishing entity. large because, as noted earlier, almost none of the Japanese and Italian banks have Caribbean Under the New York State tax statute, funding shell branches. The $16 billion in claims on by the establishing entity is not funding by a unrelated parties shifted from U.S. books of "foreign person" and therefore constitutes "inagencies and branches of Japanese banks was eligible funding," which reduces the tax benefit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

International Banking Facilities 573 equal to more than a fifth of total assets at all official institutions on their domestic books. Al- U.S. agencies and branches of Japanese banks. though it is not known whether such loans and Initial four-week transfers to IBFs from U.S. deposits are IBF-eligible, some further shifting to books of establishing entities of liabilities due to IBFs from U.S. offices may occur. unrelated parties, including those occurring at maturity, have been relatively small. Agencies and branches accounted for nearly 90 percent of the approximately $6 billion in such transfers Shifting of Assets and Liabilities to IBFs that occurred through January 27, the bulk of from Foreign Offices of Establishing which was in liabilities due to foreign banks and Entities to foreign governments and official institutions. Because deposits of foreign banks and official No data are available for shifting to IBFs from institutions are excluded from the U.S. monetary foreign offices of either U.S. or foreign banks. aggregates, the impact of such liability shifts on However, the amounts of such shifts through the monetary aggregates was negligible.14 January 27 were estimated by subtracting the Reports filed by additional establishing entities amounts shifted to IBFs from U.S. books of from the end of January through early Septem- establishing entities from the amounts on the IBF ber show that these institutions shifted about $3 balance sheets. This calculation assumes that all billion in claims on unrelated parties to their amounts on the IBF books at the end of January IBFs during the first four weeks of the IBF's were shifted from establishing entities or foreign existence. Of this amount, about $2 billion was offices of those entities, and does not take into accounted for by agencies and branches. These account other business booked at IBFs or reports also show that during this period initial amounts shifted from U.S. books of an establishfour-week transfers to IBFs of liabilities due to ing entity after the filing of its four-week domesunrelated parties amounted to about %iA billion. tic shift report. As a result, these estimates The excess of assets over liabilities shifted represent an upper limit on amounts shifted to from domestic books to IBFs during the initial IBFs from foreign offices of establishing entities four-week periods was not surprising for several through the end of January. reasons: first, a significant portion of domestic As of January 27, IBFs established by Unoffice liabilities due to foreign residents com- chartered banks had about $25 billion in claims prises negotiable certificates of deposit, which on unrelated foreign residents and about $6 bilmay not be offered by IBFs; second, Regulation lion in liabilities due to unrelated foreign resi- Q penalties for early withdrawal of certain time dents that were not shifted from U.S. offices of deposits probably inhibited shifting, because a these banks during the first four weeks after deposit could be transferred to an IBF before establishment of an IBF (table 3). The comparamaturity without incurring such penalties only if ble figures for IBFs established by U.S. agencies the maturity were not shortened and if the rate and branches of foreign banks were about $5Vi were not changed; and, third, unlike shifting a billion for claims on unrelated foreign residents loan, shifting the booking of a deposit to an IBF and $9 billion for liabilities due to unrelated may involve renegotiation with the customer, foreign residents. because the characteristics of IBF time deposits That non-U.S. offices of foreign banks have are somewhat different from those of most do- shifted much smaller amounts of assets to IBFs mestic office liabilities. than have non-U.S. offices of U.S. banks can be A number of U.S. banking institutions still explained in part by differences in tax incentives. have some loans to foreign residents and depos- U.S. banks are subject to U.S. federal income its of foreign residents on their U.S. books. For taxation on their worldwide income, which inexample, as of September 8, large U.S.-char- cludes income of both their IBFs and their fortered banks had about $71/2 billion in loans to eign offices. Therefore, shifting assets from a foreign banks, $7^3 billion in business loans to foreign office to an IBF would not, in general, foreign residents, and $5 billion in time deposits increase a U.S. bank's federal income tax liabilof foreign banks and foreign governments and ity. Income arising from the activities of an IBF Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

574 Federal Reserve Bulletin • October 1982 at a U.S. agency or branch of a foreign bank is, unrelated foreign residents at Caribbean like that of an IBF of a U.S. bank, subject to branches of U.S. banks that had established U.S. federal income taxation in the same manner IBFs declined by amounts roughly similar to the as income arising from the activities of the agen- estimated shifts to IBFs from foreign offices of cy or branch itself. By contrast, income associat- U.S. banks. Moreover, bankers indicate that the ed with activities at non-U.S. offices of foreign bulk of shifts to IBFs from foreign branches of banks is not subject to U.S. federal taxation, U.S. banks were from branches in Nassau and provided that the income is not "effectively the Caymans. Claims on and liabilities due to connected" with the activities of a U.S. agency unrelated foreign residents, particularly banks, or branch. As a result, a foreign bank would, in at London branches of U.S. banks also declined general, increase its U.S. federal income tax from the end of November to the end of January, liability by shifting assets from a foreign office to but it is not clear to what extent these declines an IBF. were caused by shifting to IBFs. The estimates of potential shifting to IBFs The excess of estimated assets over estimated from foreign branches of U.S. banks are consis- liabilities shifted to IBFs from foreign branches tent with data from the monthly reports filed by of U.S. banks implicitly involves advances from these branches. Although it is impossible to the foreign branches to the IBFs, and is consisdetermine what changes in branch activity would tent with the change in the net position of the have occurred in the absence of IBFs, shifting to Caribbean branches vis-a-vis their parent banks IBFs appears to have been associated with a in the United States, which include IBFs. decline in transactions with unrelated foreign The decline in transactions with unrelated forresidents at foreign branches of U.S. banks. As eign residents at Caribbean branches that aptable 3 shows, from the end of November to the pears to have been associated with shifts to IBFs end of January, claims on and liabilities due to during December and January continued through 3. Potential shifting to IBFs from foreign branches of U.S.-chartered banks through January 27, 1982 Billions of dollars Amounts Shifts to Potential Changes at Changes at outstanding IBFs from shifts to IBFs Caribbean London Item at IBFs, domestic from foreign branches, branches, 1/27/82" books2 branches, 11/30/81—1/29/823 11/30/81-1/29/821? (2) - (1) (1) (2) (3) (4) (5) Claims on unrelated foreign residents 1. Banks 13.5 1.2 12.3 -11.5 -7.1 2. Nonbanks 10.9 2.2 8.7 -7.8 -.6 3. Public and official institutions 4.7 .9 3.8 -4.0 -.2 4. Total, lines 1-34 29.1 4.3 24.8 -23.3 -7.9 Liabilities due to unrelated foreign residents 5. Banks 3.9 3.9 -5.5 -6.5 6. Nonbanks 1.4 1.3 -1.2 -2.8 7. Public and official institutions .9 .9 -.1 1.0 8. Total, lines 5-74 6.2 6.1 -6.8 -8.3 MEMO Excess of assets shifted to IBFs over liabilities shifted to IBFs (line 4 minus line 8) 4.2 18.7 Net liabilities due to U.S. offices (including IBFs) on books of foreign branches -16.7 -3.0 1. Includes only IBFs that were established by U.S.-chartered November 30, 1981, and as of January 29, 1982 (the last business day banks on or before January 6, 1982, and that had assets or liabilities of of the month), and whose U.S.-chartered parent banks had estabat least $50 million on January 27, 1982. Figures include amounts lished IBFs. denominated in U.S. dollars only. 4. Does not include claims on (other liabilities due to) other IBFs 2. Includes shifting through January 27, 1982, to IBFs that were because IBFs are not foreign residents. Securities of non-U.S. adestablished on or before January 6, 1982, and that had assets or dressees and "other assets" ("other liabilities") in IBF accounts are liabilities of at least $50 million on January 27, 1982. Figures include also excluded because the equivalent categories for foreign branches amounts denominated in U.S. dollars only. of U.S. banks are not allocated between domestic and foreign 3. Includes only branches that reported on form FR 2502 as of residents. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

International Banking Facilities 575 5. Transactions with unrelated foreign residents at Caribbean branches of U.S.-chartered banks mid-1982. This trend suggests that IBFs are period from the end of November through the being used instead of shell branches to book end of July, considerable amounts of claims on business that is IBF-eligible. As chart 5 shows, and liabilities due to unrelated foreign residents Caribbean branch claims on three categories of remain on the Caribbean branch books. foreign residents—banks, nonbanks, and public At London branches of U.S.-chartered banks, and official institutions—continued to decline the pattern of activity since the end of January through the first half of 1982, although at a less appears to have been affected only slightly, if at rapid rate than in December and January. Liabil- all, by the existence of IBFs. For example, ities due to foreign banks at the Caribbean although claims on unrelated foreign banks at the branches continued to decline rather sharply. London branches declined in December and Jan- As shown in table 4, despite the relatively uary, a time when many IBFs were established, large decline in Caribbean branch transactions such claims remained approximately constant with unrelated foreign residents over the entire from the end of January through July (chart 6). 6. Transactions with unrelated foreign residents at London branches of U.S.-chartered banks Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

576 Federal Reserve Bulletin • October 1982 4. Selected assets and liabilities of foreign branches of U.S.-chartered banks' Billions of dollars All branches Caribbean branches London branches IItteemm 11/30/81 7/30/82 Pe c r h c a e n n g ta e2 g e 11/30/81 7/30/82 Pe c r h c a e n n g t e a 2 g e 11/30/81 7/30/82 Pe c r h c a e n n g t e a 2 g e Total assets/liabilities 463 465 .5 149 141 -5.2 162 164 -1.5 Claims on unrelated parties3 347 321 -7.5 117 93 -20.4 115 107 -6.7 Foreign residents 309 274 -11.1 100 67 -32.9 104 97 -7.4 U.S. residents 18 27 52.0 12 22 81.3 4 4 3.0 Liabilities due to unrelated parties3 326 318 -2.5 89 85 -4.8 141 139 -1.7 Foreign residents 228 195 -14.7 41 25 -40.1 102 91 -10.8 U.S. residents 79 103 30.9 44 58 30.4 32 40 23.1 1. Data include all branches with total assets of at least $150 3. Claims on (liabilities due to) unrelated U.S. residents plus claims million—or "shell" branches with total assets of at least $501 million— on (liabilities due to) unrelated foreign residents do not equal total on the report date or on any previous report date in the same calendar claims on (liabilities due to) unrelated parties because an "other year. assets" ("other liabilities") category is not allocated between domes- 2. Percentage changes were computed using unrounded numbers. tic and foreign residents on the FR 2502 report form. CONCLUSION that, to date, IBFs have not attracted a substantial amount of new business. Rather, the busi- Claims on unrelated parties at IBFs amounted to ness now on the IBF books either was shifted $57 billion on December 30, 1981, the end of the there from establishing entities and foreign offirst month of IBF operations. Since then, IBF fices of those entities or would, in the absence of activity has continued to grow, and, as of Sep- IBFs, have been booked at the establishing entitember 8, 1982, such claims amounted to $131 ties or foreign offices of those entities. billion. Although IBFs have been in operation for Beyond the general forces underlying the less than a year, some definite patterns of activi- growth of the Eurocurrency market as a whole, a ty have emerged. For example, on the liability number of factors are involved in the future side, IBF business consists primarily of inter- growth of IBFs. For example, the ability of IBFs bank and intrabank transactions. However, this to attract deposits from foreign residents will pattern may change over time as IBFs develop a depend, among other things, on depositors' pernonbank customer base. ceptions of advantages regarding the sovereign Both U.S.-chartered banks and U.S. agencies risk associated with deposits subject to U.S. law and branches of foreign banks that have estab- and on the extent to which banks actively market lished IBFs are continuing to develop ways to IBF deposits. use IBFs more effectively. New York State tax Just how competitive IBFs will be with other regulations for IBFs were not issued until the end banking centers remains to be seen. Further of March 1982, and the prolonged uncertainty growth in IBF activity in the near future seems regarding these regulations may partially explain likely as experience is gained with this innovawhy some banking institutions have moved slow- tion. And in the long term, IBFs have the potenly in shifting assets to their IBFs. tial to become a significant center of Euromarket The consensus in the banking community is activity. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

International Banking Facilities 577 FOOTNOTES 1. In general, each branch or agency of a foreign bank may New York on the basis of a one-factor formula, the ratio of establish an IBF. However, for regulatory and reporting gross income from New York sources to gross income from purposes IBF activities at a foreign bank's branches and all sources. Many New York banks use the separate accountagencies in the same state and same Federal Reserve District ing basis. are regarded as activities of a single IBF. 10. The adjustment for the floor amount in Illinois is A U.S.-chartered bank may engage in IBF activities at any similar to that in New York except that the base year is 1980, of its branch offices; since virtually all U.S.-chartered banks and the floor amount is not phased out. may operate branches in only one state, for regulatory and 11. Some multistate networks of related IBFs have been reporting purposes a U.S. bank is regarded as establishing established, particularly by foreign banks. Of the 126 Unonly one IBF. However, through its subsidiary Edge corpora- chartered banks that have themselves established IBFs, 23 tion, a U.S. banking organization may have IBFs in more have related IBFs in at least one other state established by than one state. offices of their subsidiary Edge corporations. Of the 138 In general, IBFs may be established at each U.S. office of a foreign banks with U.S. agencies and branches that have subsidiary Edge corporation of a domestic or foreign bank. established IBFs, 87 have IBFs at agencies or branches in However, as in the case of agencies and branches, for only one state (in almost all cases, New York), while the regulatory and reporting purposes, IBF activities at offices of remaining 51 have IBFs at agencies or branches in at least Edge corporations in the same state and same Federal two states. Reserve District are regarded as activities of a single IBF. 12. Like the Japanese banks, almost none of the major 2. Such notice must be filed two weeks before opening an Italian banks have Caribbean shell branches. As of Septem- IBF. The basic accounting requirement is that an establishing ber 8, IBFs established by agencies and branches of Italian entity must segregate on its books and records the asset and banks had about %1Vi billion in claims on unrelated parties, liability accounts of its IBF. At present the Board requires the largest figure for a European country. In the aggregate, entities whose IBFs have assets or liabilities of $50 million or IBFs established by U.S. agencies and branches of European more to file weekly reports of their IBF accounts. All entities banks had about $22 billion in such claims. with IBFs are required to file a quarterly report of their IBF 13. Asset sales from a U.S. banking office to its IBF are accounts as a supplement to their quarterly report of condi- subject to Eurocurrency reserve requirements; however, the tion. Federal Reserve Board's regulations permit assets to be trans- 3. IBF transactions with foreign governments and official ferred from a U.S. office to its IBF on a reserve-free basis institutions are treated in the same manner as IBF transac- during the first four weeks after the institution has established tions with foreign banks. Deposits of foreign governments its IBF. This rule appears to provide an incentive for a banking and official institutions, like those of foreign banks, are not office to make such transfers during that period. However, included in the U.S. monetary aggregates. some large U.S.-chartered banks were substantial net lenders of 4. This policy must be communicated in writing to IBF funds to their foreign branches, so that even after taking into nonbank customers when a credit or deposit relationship is account such asset sales (and also loans to U.S. residents at first established; foreign affiliates of U.S. entities must supply their foreign branches), these banks would have had no incena written acknowledgment. tive arising from Eurocurrency reserve requirements to make 5. The transactions must be at arm's length and without such transfers during the four-week period. recourse, and the assets involved must satisfy the use-of- 14. Shifting of assets and liabilities to IBFs had a relatively proceeds requirement. In addition, an establishing entity and small impact on required reserves. From December 3, 1981, its affiliates may not endorse or in any way guarantee a through January 1982, the period during which the bulk of negotiable instrument sold by its IBF in a secondary market shifting from domestic books to IBFs occurred, the estimated transaction. reduction in required reserves attributable to IBFs was only 6. In the calculation of such reserves, any amounts that the about $180 million to $230 million compared with total foreign branches are, on a net basis, receiving from their required reserves of about $41 billion for the week ending parent bank may be used to offset branch loans to U.S. December 2, 1981. Most of the impact was attributable to a residents and purchases of assets from the parent bank. decline in Eurocurrency reserves, which are estimated to 7. Some banking organizations have requested that the have decreased between $140 million and $160 million com- Board consider permitting lending limits and leveraging re- pared with total Eurocurrency reserves of $550 million for the strictions for an IBF established by a U.S. office of an Edge week ending December 2. The reduction in Eurocurrency corporation to be based on the capital of the parent bank, reserves resulted principally from the transfer to IBFs of an rather than that of the Edge corporation. excess of claims on unrelated foreigners over liabilities due to 8. The others are Connecticut, Maryland, Georgia, North unrelated foreigners from the U.S. books of establishing Carolina, and Washington; the District of Columbia has also entities. These transfers created a "due from IBF" on the enacted IBF tax legislation. books of the domestic office, which, because IBFs are 9. Under New York law, New York taxable income may included with foreign branches for reserve requirement purbe computed according to one of two methods: a separate poses, reduced U.S. offices' net liabilities due to foreign accounting basis; or a formula allocation basis under which a branches and IBFs—one of the components used in calculatportion of adjusted federal taxable income is allocated to ing Eurocurrency reserve requirements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

579 Treasury and Federal Reserve Foreign Exchange Operations This 41st joint report reflects the Treasury-Fed- deficits, even after the economy was projected to eral Reserve policy of making available addition- emerge from recession, put pressures on the al information on foreign exchange operations financial markets. from time to time. The Federal Reserve Bank of Abroad, monetary authorities faced even more New York acts as agent for both the Treasury prolonged weakness of their domestic economies and the Federal Open Market Committee of the than experienced in the United States as well as Federal Reserve System in the conduct of foreign persistent inflationary pressures and structurally exchange operations. large fiscal deficits. Pressures to stimulate de- This report was prepared by Sam Y. Cross, mand and to lower record or near-record rates of Manager of Foreign Operations for the System unemployment were intense. Expectations de- Open Market Account and Executive Vice Presi- veloped in the market that foreign authorities not dent in charge of the Foreign Group of the only would be reluctant to raise their interest Federal Reserve Bank of New York. It covers the rates, but would also take advantage of opportuperiod January through July 1982. Previous re- nities to relax their financial policies, at least in ports have been published in the March and some measure. September BULLETINS of each year beginning In general, interest rate developments tended with September 1962. to confirm these expectations through the first half of the year. With the Federal Reserve re- The dollar was generally strong during the Feb- straining the growth of bank reserves, short-term ruary-through-July period of this review. It U.S. interest rates were bid up sharply in March climbed irregularly through the first half of the and again in June in anticipation of a renewed year, and by early July reached levels against expansion in the monetary aggregates. When several currencies not seen in many years. Al- dollar interest rates rose, interest rates for assets though the dollar eased back from its highs denominated in other currencies barely induring the last weeks of July, it closed on balance creased. between 4 and 16 percent higher against major On those occasions when the demand for foreign currencies. money and credit subsided and U.S. interest For much of the period, market participants rates eased, such as in late February and late focused on monetary policy developments here April and early May, interest rates abroad also and abroad though the movement of interest rate tended to soften and some foreign central banks differentials had less impact on dollar exchange reduced official lending rates. Moreover, in view rates than in many earlier periods. In the United of improvements in inflation and balance of States, money growth was strong even as the payments performances, some countries, notaeconomy contracted, and an unexpectedly large bly Germany and the Netherlands, were prebulge in the monetary aggregates in January pared at times to see a lowering in their domestic pushed growth in Ml above its targeted range. interest rates even without comparable declines Market participants anticipated that the Federal in U.S. interest rates. As a result, there was a Reserve would tighten up on the availability of tendency through June for actual and expected banks' reserves, thereby restraining the growth interest rate differentials favoring the dollar to of money and credit even though concern was widen when U.S. interest rates moved higher by mounting over recession in the United States. more than the differentials narrowed when U.S. Also, the prospect of continued large U.S. fiscal rates moved lower. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

580 Federal Reserve Bulletin • October 1982 Meanwhile, several other factors supported Exporting Countries (OPEC) member states. Inthe demand for dollars. Underpinning the dollar deed, the more pessimistic outlook for growth of was growing evidence that inflation was receding world trade heightened competitive pressures, in the United States. To be sure, market partici- particularly for those countries in which trade is pants had concerns about the stance of fiscal a major component of gross national product. policy, including fears that pressures would arise In addition, the United States continued to on the Federal Reserve to relax monetary policy prove attractive to foreign investors. For one prematurely and thereby dissipate the hard-won thing, economic policies of the United States gains in the anti-inflation fight. But, for the time embodied a clear antiregulatory posture and a being, market participants were generally im- strong commitment to private enterprise that, pressed by the commitment to reduce the role of combined with a relatively flexible structure of government in the private sector, by the stead- management-worker relations, served as an infastness of the U.S. monetary authorities in ducement to foreign direct investment in the sticking with restrictive policies, and by the United States. The domestic political and ecoresults achieved so far. Wage settlements proved nomic climate in many other parts of the world, surprisingly moderate, with some unions accept- including continental Europe and Canada, was ing pay cuts to prevent or cushion declines in often more uncertain for business and financial employment, and many union settlements actual- investment. ly suspended or otherwise modified even the In the first six months of 1982, foreign direct principle of cost-of-living increases. Forecasters investment in the United States continued to anticipated that, even if food and energy prices exceed U.S. direct investment abroad. For anwere to increase again, the overall U.S. inflation other, the United States increasingly came to be rate would decelerate substantially for the year viewed as a safe haven for investors seeking as a whole. Inflation in this country was thereoutlets for funds at a time of mounting internafore moving well below that of most U.S. trading tional insecurity. Instability in Eastern Europe partners and was rapidly converging toward the and open hostilities in the Middle East were performance of traditionally "low inflation" thought to have more serious economic and countries, such as Germany, Japan, and Switzerpolitical implications for many countries abroad land. than for the United States. These international Also, the deepening international recession, an tensions posed difficult policy issues for authoriabrupt stagnation in the volume of world trade, ties already grappling with divisive domestic and a buildup of pressures for protectionist mea- problems, underlining in the market's view the sures affected the United States less adversely difficulties foreign leaders confronted in dealing than many other countries. Confounding expec- with the numerous challenges before them. tations of a swing into deficit, this country's These uncertainties therefore prompted sizable current account remained in surplus. Import net flows of long-term portfolio capital into the volumes, particularly of crude oil, declined United States that, to some extent, had their sharply in response to the recession in the econo- counterpart in outflows from Germany and Jamy and continued reaction to previous oil price pan. increases, while agricultural exports and the per- Several of the factors underpinning the dollar formance of services, most notably net invest- coalesced in early June. Hostilities in Lebanon ment income earnings, remained strong. Also, a intensified, other developments in the Middle softening of most commodity prices and the East were temporarily unsettling, the financial strengthening of the dollar led to an improvement markets in the United States were wary of a in the terms of trade, which helped hold down renewed bulge in the monetary aggregates, and the total cost of imports. At the same time, market speculation built up that competitive further improvements in the current accounts of pressures would soon force a realignment of the Germany and Japan were stalled by the weaken- European Monetary System (EMS). In the ing global demand for manufactured goods, as event, the EMS was realigned over the June 12well as the slowdown of previously buoyant 13 weekend, following an earlier adjustment of markets in Asia and in Organization of Petroleum parities in February. This time intense bidding Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 581 1. Drawings and repayments under reciprocal currency arrangements, January 1, 1982-July 31, 1982' Millions of dollars equivalent; drawings, or repayments (-) Activity by foreign central banks BBBaaannnkkk dddrrraaawwwiiinnnggg ooonnn SSSyyysssttteeemmm OOOuuutttssstttaaannndddiiinnnggg,,, 1982 OOOuuutttssstttaaannndddiiinnnggg,,, JJJaaannn... 111,,, 111999888222 JJJuuulllyyy 333111,,, 111999888222 Q1 Q2 July Bank of Mexico 0 0 f 800.0 700.0} 700.0 1-800.0 -200.0) Activity by the Federal Reserve System TTTrrraaannnsssaaaccctttiiiooonnnsss wwwiiittthhh CCCooommmmmmiiitttmmmeeennntttsss,,, 1982 CCCooommmmmmiiitttmmmeeennntttsss,,, JJJaaannn... 111,,, 111999888111 JJJuuulllyyy 333111,,, 111999888222 Q1 Q2 July Public series German Federal Bank 3,622.3 0 -451.0 -580.6 2,610.6 Swiss National Bank 458.5 0 0 0 458.5 Total 4,080.8 0 -451.0 -580.6 3,069.1 1. Because of rounding, figures may not add to totals. Data are on a value-date basis. pushed the dollar up, not only against the curren- France, did the authorities continue the earlier cies that had been devalued in the joint float, but trend toward an easing of monetary policy, and also and unexpectedly against the German mark, short-term interest rates in most foreign industriwhich had just been revalued, and against non- al countries were either unchanged or moved EMS currencies as well. With the dollar rising somewhat higher. Thus, interest rate differentials sharply in unsettled markets, the U.S. authori- narrowed dramatically, for example, from IVi to ties intervened on June 14 in an effort to restore 4 percentage points vis-a-vis the German mark orderly trading conditions. Operating through and from 9Vi to 53/4 percentage points against the the Trading Desk, they bought $21 million equiv- Japanese yen. alent of German marks and $9 million equivalent The dollar weakened only slightly, however. of Japanese yen. This operation provided resist- Market participants recognized that there continance to the rapid run-up in dollar rates and ued to be important reasons other than interest helped restore more orderly trading conditions. rates for buying and holding dollars. In addition, In July dollar interest rates dropped sharply. by this time, market participants were shoring up The domestic economy was proving far weaker their liquidity positions in dollars as a precaution than expected, with worrisome declines in pro- against any funding difficulties that might arise in duction and with increases in unemployment. the wake of the deteriorating financial positions Though corporate balance sheets remained gen- of major private and public-sector borrowers. erally strained by the burden of short-term debt, Some problems had arisen affecting U.S. banks overall credit demands slackened in response to and other financial concerns, as in the cases of the continuing stagnation in demand and output. Drysdale Securities and Penn Square Bank, as Moreover, the growth of the monetary aggre- well as private institutions abroad. Still other gates, for the first time in 1982, slowed sufficient- difficulties related to the sovereign debts of varily to bring Ml into target range, and with short- ous countries including major borrowers in Eastterm interest rates softening, the Federal ern Europe and Latin America. Among market Reserve twice announced cuts in its discount participants the feeling prevailed that, while indirate of Vi percentage point from 12 to 11 percent vidual U.S. institutions were vulnerable to seriby the end of July. Abroad, interest rates did not ous financial strains, they were as a group in a decline nearly so much. The process of winding better position to cope with international finandown inflationary pressures had stalled. Al- cial pressures than nondollar-based institutions. though economic conditions generally had dete- By the end of July the dollar was off the riorated further as the recession deepened, only highest levels of the period. Compared with in a few countries, such as Great Britain and levels at the end of January, it was still about AVi Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

582 Federal Reserve Bulletin • October 1982 percent higher on balance against the Canadian sury used to finance interest and principal paydollar and the German mark, nearly 7 percent ments on foreign currency-denominated securihigher against pound sterling, and about 11 per- ties. The Treasury general account gained $133.1 cent higher against the Japanese yen and the million net, reflecting $137.3 million of profits on Swiss franc. Against the currencies within the the redemption of German mark-denominated EMS that had been devalued, the dollar rose on securities, which was partially offset by $4.2 balance between 9 percent and 16 percent. On a million of losses as a result of annual renewals at trade-weighted basis the dollar rose nearly 10 current market rates of the agreement to warepercent. house Swiss-franc proceeds of Treasury securities with the Federal Reserve. As of July 31, 1982, valuation losses on outstanding balances 2. U.S. Treasury and Federal Reserve were $617.4 million for the Federal Reserve and foreign exchange operations1 $1,382.2 million for the ESF. The Treasury gen- Net profits or losses (—), in millions of dollars eral account had valuation gains of $722.2 million U.S. Treasury related to outstanding issues of securities denom- FFeeddeerraall inated in foreign currencies. PPeerriioodd RReesseerrvvee Exchange General Stabilization account Fund 1982: 1 000 111666...999 --- 444...222 GERMAN MARK 2 000 111...555 777888...555 July 000 111...777 555888...888 Valuation profits and losses on outstanding assets and liabil- By late 1981 through early 1982 Germany's ecoities as of July 31, 1982 ... ---666111777...444 ---111,,,333888222...222 777222222...222 nomic situation had improved in major respects. 1. Data are on a value-date basis. Germany's export sector was enjoying boom conditions aided by improved competitiveness, During the period, the Bank of Mexico re- which partly reflected the mark's prolonged dequested and was granted three drawings on its preciation against the dollar, and by exceptional swap line under the Federal Reserve's reciprocal buoyancy in OPEC markets. Meanwhile, import currency arrangements. The drawings were demand was sluggish, reflecting stagnation in the made at the end of April, June, and July, each for domestic economy. This combination generated one-day maturity. a surplus in the current account in the fourth On May 12 and July 26 the U.S. Treasury quarter of 1981 and, for the year as a whole, redeemed further maturing German mark-de- produced a dramatic narrowing of the deficit nominated securities equivalent to $1,011.6 mil- from DM 30 billion to DM 17 billion. Inflation, lion. After these redemptions, the Treasury had after peaking at an annual rate of 6.7 percent in outstanding $3,069.1 million equivalent of the October 1981, slowed markedly in response to foreign currency notes, public series, which had softer international commodities prices, a flatbeen issued in the German and Swiss markets tening-out of unit labor costs, and the impact of with the cooperation of the respective authorities economic slack on wage-price behavior. Greater in connection with the dollar-support program of progress by Germany than by most other coun- November 1978. Of the notes outstanding as of tries in gaining balance of payments equilibrium July 31, 1982, a total of $2,610.6 million was and in the fight against inflation had for some denominated in German marks and $458.5 mil- time kept the mark strong within the EMS. lion was denominated in Swiss francs. The matu- Therefore, even as the German currency derity dates for those securities range between clined against the dollar to trade around DM September 1, 1982, and July 26, 1983. 2.3420 at the end of January, it tended to stabilize in effective terms. The authorities felt able to In the seven months through July 1982, the begin a cautious easing of monetary policy with- Federal Reserve had no gains or losses on its out incurring highly adverse exchange rate conforeign currency transactions. The Exchange sequences and, beginning October 1981, lowered Stabilization Fund (ESF) gained $15.7 million net the Lombard rate three times from 12 percent to in connection with sales of foreign currencies to 10 percent by late January. Looking ahead, many the Treasury general account, which the Trea- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 583 exchange market participants expected the au- decline of the OPEC surplus and oil revenues thorities would gain more room for maneuver, placed limits on previously expanding markets, particularly once U.S. interest rates dropped and many large industrial economies were befrom their high levels and large interest differen- coming locked into a pattern of domestic stagnatials adverse to the mark began to narrow. tion. By comparison, in the United States, reces- Despite these achievements, however, major sion-induced declines in import demand kept the economic problems persisted and were reflected current account in surplus when a deficit was to a large extent in the weak performance of the expected, and forecasters began to assess the capital account. Domestically, nonwage labor outlook for U.S. balance of payments performcosts remained high and the role of the govern- ance more favorably. In view of the unexpected ment in the economy expanded despite efforts to deterioration relative to the United States in both consolidate the fiscal deficit. These trends were current and long-term private capital accounts of thought to imply a loss of private initiative and Germany's, the mark declined against the dollar, decisionmaking. They also generated worries in moving lower almost without interruption the private sector about Germany's medium- through mid-April. term growth prospects in view of the potential Within the EMS, however, the mark remained need for future increases in taxes and the grow- firm. In fact, after the realignment of the joint ing burden of social benefit programs. Interna- float on February 21, in which the central rates of tionally, there were heightened tensions in Po- the Belgian franc and the Danish krone were land, especially after the imposition of martial adjusted downward and 3 percent respectivelaw, a general deterioration in East-West relaly, the mark was quick to move to the top of the tions, and renewed hostilities in the Middle East newly aligned band. Germany's superior inflaas well as in some of the world's other trouble tion performance in relation to other EMS memspots. Many of these developments generated ber states and the authorities' established policy important disagreements at the policy level and record of combating inflationary pressures drew attention to divisions within the ruling brought the mark into renewed demand, as tradcoalition government. ers and investors accelerated the shift of short- In an environment of political and economic term funds into the mark at the expense of other uncertainty, large net flows of private direct EMS currencies whose prospects were less investment and long-term portfolio capital promising. moved from Germany to other countries, partic- The renewed strength of the mark within the ularly the United States. The pressure of long- EMS served to mitigate conflicting pressures on term capital outflows intensified when, contrary domestic monetary and exchange rate policies. to expectations, U.S. money growth accelerated To be sure, outflows of long-term capital from early in the year even as the U.S. domestic Germany to the United States showed no signs of economy was contracting. As short-term U.S. abating and the mark continued to weaken interest rates moved higher, opening up interest against the dollar. But, with the German currendifferentials adverse to the mark to about 6V2 cy firm within the EMS, the effective exchange percentage points by mid-February, capital flowed rate held steady, thereby tempering the rise in out of Germany more heavily than before. Germany's import prices. In addition, oil and Meanwhile, Germany's current account per- other dollar-denominated commodities that formance in January and February suffered a loomed large in Germany's import bill and that serious setback. The services balance reverted to had contributed previously to the phenomenon sizable deficit, partly as the result of growing of imported inflation were declining in price. outflows of investment income and mounting Furthermore, the outlook for domestically generinterest payments on public-sector borrowings. ated price rises improved when, early in the wage Also, the trade surplus narrowed substantially, round, the pace-setting metals industry agreed on underscoring the many risks to sustained, rapid annual wage increases of only 4.2 percent, comexport growth that had begun to develop. There pared with about 5 percent a year earlier. were constraints presented by the financing Altogether, these considerations provided problems of Eastern European countries, the greater insulation than before between develop- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

584 Federal Reserve Bulletin • October 1982 ments in U.S. and German markets. The authori- foreign currency reserves declined only moderties were concerned, however, about the magni- ately from $37.5 billion to $37.1 billion. tude of the long-term outflows of funds. While After mid-April, market sentiment shifted for a resisting calls for the imposition of capital con- time in favor of the mark, as traders reacted to trols, the German Federal Bank reached a new Germany's record monthly trade surplus angentleman's agreement late in February, with nounced for March and to evidence of continued large commercial banks limiting the size of indi- moderate pay settlements in the 1982 wage vidual foreign mark-denominated bond and note round. Moreover, U.S. interest rates turned sudissues. On March 19 the central bank lowered the denly downward as prolonged weakness of the special Lombard rate Vz percentage point to 9V2 U.S. economy encouraged expectations of a percent. The German Federal Bank also provid- rapid unwinding of the April money bulge. Thus, ed additional liquidity to the domestic markets, the mark rose against the dollar in the exchanges. but proceeded with considerable caution. The The German Federal Bank, while welcoming the authorities feared that too abrupt or rapid an advance of the mark particularly for its favorable easing of monetary restrictiveness would under- implications for inflation, remained concerned mine the progress achieved in reducing inflation about the weakness of the domestic economy. and inflationary expectations. They also wished Hopes for an improvement in domestic deto avoid pushing the growth of central bank mand were disappointed by the continued slump money beyond the top of the annual growth in capital investment, the lack of consumer confitarget of 4 to 7 percent. dence, and the persistent rise in unemployment. The reduction of German interest rates was In these circumstances, the authorities acted followed immediately by interest rate cuts in further to lower domestic interest rates. The several other European centers, so that interest German Federal Bank on May 6 closed the rate relationships within Europe were largely special Lombard facility and reintroduced reguunchanged. By this time, interest differentials lar Lombard credit at 9 percent, V2 percentage among EMS states were widely seen as inade- point lower than the special lending rate. German quate compensation for divergent inflation pros- Federal Bank President Poehl stated that the pects and performance, so that the pressure of abolition of the special Lombard had symbolic large money flows into Germany persisted and meaning: it signified success in decoupling monekept the mark pinned to the top of a fully tary policy in Germany from that of other counstretched EMS band. The German Federal Bank tries and signaled generally easier credit condiand other EMS central banks absorbed part of tions that would foster economic recovery. the pressure through purchases of EMS curren- Following the reduction of the Lombard rate, cies against the sale of marks. Meanwhile, unlike German money market rates moved lower, but interest rates in Europe, those in the United comparable U.S. rates declined even more, so States had begun to rise again, ahead of the that the adverse interest differential against the anticipated bulge in money growth in April and mark narrowed to 5V2 percentage points. The against the background of large U.S. budget mark thus continued to rise against the dollar and deficits overhanging the credit markets. In these reached DM 2.2770 by mid-May, up 6 percent circumstances, the mark continued to decline from the lows touched a month before. against the dollar, falling to DM 2.4225 by April However, the mark was unable to consolidate 15, a drop of 3Vz percent from late-January these gains, because again U.S. interest rates levels. rebounded and market participants found reason The German Federal Bank provided little in- to question the strength of the underlying fundatervention resistance to the mark's descent, part- mentals of the German economy. For example, ly not to aggravate strains within the EMS and Germany's trade surplus declined in April while partly because the authorities felt unable to pro- the U.S. trade account registered impressive vide through the mechanism of intervention a gains, raising new questions about the extent to lasting and effective counterweight to the pres- which current account trends would benefit the sure of long-term capital outflows. Between the mark. In addition, Germany's governing coaliend of January and the end of March, Germany's tion was seen increasingly as threatened by pro- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 585 tracted difficulties in reaching agreement on pro- U.S., European, and Japanese authorities to halt posed spending cuts to reduce the 1983 federal the continuing run-up in dollar rates. While the budget deficit and financing requirement. Unset- European authorities did on occasion operate in tling geopolitical developments, such as the Is- a concerted fashion to restrain the decline of raeli invasion of Lebanon and the conflict be- their currencies against the dollar, the interventween Iran and Iraq, were also thought to have tion operations were relatively modest in more serious adverse consequences for Germany amount. For their part the U.S. authorities did than for the United States and to a lesser extent not again intervene during the period under rethe United Kingdom, considered less vulnerable view. to a disruption of internationally traded oil. Between mid-June and mid-July the mark was The mark's weakening tendency against the pushed downward against the dollar, as exdollar contrasted with continued strength within change market participants grappled with several the EMS, where speculation of another realign- sources of concern that worked in the direction ment kept the German currency in heavy de- of further undermining confidence in the German mand throughout the spring against weaker cur- currency. One such concern centered on the rencies, particularly the French and the Belgian budget. Within the governing coalition, public francs. In the event, shortly after the Versailles disagreement over the persistence of large budeconomic summit the EMS was again realigned. getary deficits was often intense and each party Over the June 12-13 weekend the mark and the suffered heavy losses in local elections early in Dutch guilder parities were adjusted upward by the summer. A compromise on the 1983 budget about 7 percent and 10 percent against the Italian was finally reached in July, reducing the federal lira and French franc respectively, and 4lA per- government's projected net borrowing DM 6 cent against other participating currencies. That billion to DM 28.5 billion. But, partly because same weekend, international concerns, which for the budget rested on economic growth assumpsome time had supported the dollar in the ex- tions, which private analysts generally regarded changes, intensified with the death of King as highly optimistic, many questioned whether Khaled of Saudi Arabia and the extension of the actual budget outcome would conform to the fighting in Lebanon among Israel, Syria, and the compromise. Palestine Liberation Organization. Financial concerns, too, worked against the When trading resumed after the realignment German currency. West German banks, of all on Monday, June 14, the mark emerged at the Western banks, were the most heavily commitbottom of the newly aligned band and funds ted in Eastern Europe and therefore had the most flowed as anticipated from the revalued EMS to lose if Polish debt-rescheduling negotiations, currencies into the currencies of the joint float which had already dragged on for months, failed that had been devalued. But a portion of the to reach a successful conclusion. Unease about unwinding of long EMS currency positions was the risks to the German economy of its deep reflected in heavy bidding for dollars in unsettled international involvement was also underscored trading conditions. The mark declined sharply by the U.S. decision to ban the sale of U.S. and unexpectedly against the dollar first in Eu- goods and technology, even if produced abroad rope and then in New York. At this time the U.S. under license, to the Soviet Union's gas pipeline authorities intervened to purchase modest project. Furthermore, the combination of restricamounts of German marks, as well as Japanese tive monetary policy and slack demand generatyen. Operating on behalf of the Federal Reserve ed liquidity strains in the private sector in Gerand the U.S. Treasury, the Desk acquired $21 many, as in several other countries. million equivalent of marks. It was publicly These various problems dragged the mark announced that the U.S. authorities had con- sharply lower, particularly as demands for dollar ducted some intervention, the first since March liquidity accelerated in late June and early July. 1981, in accordance with stated U.S. policy of At that time, banks bid aggressively in the money intervening to counter disorderly conditions. In markets to lock in their funding to finance the subsequent days and weeks, talk spread in the heavy rollover of six-month credit coming due in market that concerted action was likely by the the Euromarkets and to meet precautionary de- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

586 Federal Reserve Bulletin • October 1982 mands on the part of financial market partici- outflows of capital in the long-term sector— pants laboring under the awareness of increased which reached nearly DM 13 billion in the first risk in international lending. On July 7 the mark five months of the year—were being augmented dropped to as low as DM 2.52 in European by short-term outflows, as previous speculative trading, a decline of about W/i percent from the inflows were for the most part unwound followhigh reached in May. ing the EMS realignment. There was concern lest Subsequently, U.S. interest rates began to these outflows gain momentum, particularly decline rapidly, narrowing the dollar's interest since the mark was trading at or near the bottom rate advantage over the mark. The growth of the of the joint float, and following up on the Febru- U.S. monetary aggregates had slowed sufficient- ary agreement with the commercial banks to ly to bring Ml back into target range (for the first limit the volume of individual mark Eurobond time in 1982), and with short-term interest rates issues, the German Federal Bank asked to be softening, the Federal Reserve twice announced notified of any direct foreign credits of DM 50 cuts in its discount rate of Vz percentage point, million or more. At the same time, the authorities thereby reducing the rate from 12 to 11 percent pointed to an erosion of confidence in the domesby the end of July. But, even as interest differen- tic bond markets in which large financial requiretials adverse to the mark narrowed to 4 percent- ments of the public sector appeared to hamper age points, demand for the mark in the ex- further reductions of long-term rates. For these changes was muted. This lack of enthusiasm in reasons the German Federal Bank did not further part reflected uncertainty in the exchange mar- relax domestic monetary conditions as U.S. inkets that the downtrend in U.S. interest rates terest rates declined, but left its credit policies would be sustained. Participants were mindful of unchanged at its council meeting late in July. frequent reversals in the past and focused on the At the end of July the mark was trading at DM threat of significantly higher interest rates posed 2.4430, up about 3 percent from its lows, but by uncommonly large U.S. government deficits down about 4lA percent from levels at the end of projected for fiscal year 1983 and beyond. In January. Between April and July, Germany's addition, sentiment toward the mark remained foreign currency reserves were subject to diverse adversely affected by the numerous challenges to tendencies. At times, particularly in June, the German policy and leaders presented by finan- German Federal Bank was active in the market cial, trade, and political problems and by worries as a seller of dollars in support of the mark. The that policies might not be adopted to deal with German authorities, along with others in the these problems effectively. EMS, acted as sellers of marks to alleviate By midsummer the weakness of the mark strains within the joint float. After the June against the dollar had become more of a con- realignment of the EMS, some of these mark straint on the German authorities' policy op- sales were reversed. On balance, therefore, Gertions, even though on a trade-weighted effective many's reserves showed little further change to basis the German currency remained steady. stand at $36.5 billion at the end of July, down German policymakers hoped to lower domestic about $1 billion over the six months under reinterest rates further to support the economy, view. During the period, the U.S. Treasury paid which was stagnating far longer than expected. off $1,011.6 million equivalent of its German With foreign orders trending sharply downward mark-denominated securities. These redempand compounding persistently slack domestic tions, which occurred on May 12 and July 26, left demand, industrial production dropped sharply the Treasury with $2,610.6 million equivalent of and unemployment climbed over 7 percent. But mark-denominated notes (public series) outthe authorities were reluctant to take action that standing. would risk further undermining the mark in the exchanges. The nation's inflation rate, after de- Swiss FRANC celerating to 5 percent year on year in March, was headed higher, in part owing to the continu- Early in 1982 the Swiss economy, while lagging ing weakness of the mark against the dollar and behind the downturn in demand and output in to administrative price increases. Moreover, the most industrialized countries, was showing clear Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 587 signs of weakness. Domestic consumption was hoped to maintain a relatively neutral monetary declining, while previously buoyant investment policy, pursuing the anti-inflation fight while at in plant and equipment leveled off and construc- the same time providing sufficient liquidity to tion activity slackened in response to the higher avoid exacerbating the developing weakness of cost of credit. The stagnation in the economy the economy. Accordingly, the Swiss National was cushioned to some extent by resiliency in Bank aimed to keep central bank money on its the export sector despite the strong appreciation targeted average growth of 3 percent for 1982. of the franc, as export contracts received last The authorities made use of foreign currency year when foreign demand was stronger were swaps to provide the domestic market with temfilled. But the sluggishness of demand on the part porary liquidity, while also working in various of Switzerland's major customers, Germany in ways to add liquidity on a permanent basis. particular, coupled with the lagged effect of the Foreign currency swaps would necessarily rerise in the franc, was expected to cause export main the principal means of regulating liquidity volumes to stagnate in the months ahead. At the in the short run. But, over the longer run, the same time, inflation decelerated to about 6 per- authorities planned to expand open market opercent at an annual rate from peaks of some 11 ations in domestic assets. As the markets in percent in the autumn. The improved price per- Switzerland responded to the increase in liquidformance stemmed from the slowdown in domes- ity, domestic interest rates in both the money tic economic activity, a substantially tighter and the capital markets moved progressively stance of monetary policy in 1981, and lower lower, falling more rapidly than interest rates in import costs—reflecting both the weakness of other European centers. The Swiss National international commodities prices and the sharp Bank confirmed this trend on March 19 by reducrise of the franc in the exchanges. ing the discount rate Vi percentage point to 5Vi percent. Almost immediately thereafter, four Switzerland's encouraging progress on the inmajor Swiss banks cut their interest rates further flation front, combined with its climate of polition large time deposits. cal and social stability, made the franc an attractive asset, especially at a time when serious The drop in Swiss interest rates was considereconomic problems and political uncertainties able, shifting out three-month interest differenundermined investor confidence in several other tials adverse to franc-denominated assets to V/i European currencies. Indeed, short-term funds percentage points against the German mark and flowed into the Swiss franc, keeping it relatively 9Vi percentage points against the dollar. Consefirm against other European currencies even as it quently, foreign official and corporate borrowers weakened against the dollar. By the end of placed heavier demands on Switzerland's capital January the franc was trading at SF 0.80 against market and converted the proceeds of their the German mark, not far below its historical Swiss franc-denominated borrowings in the expeaks, even as it had fallen back to SF 1.8680 changes. At the same time, market participants against the dollar. In the weeks surrounding the reportedly unwound speculative positions aslate-February realignment of the EMS joint float, sumed earlier against weaker currencies within these inflows intensified. The inflows, together the EMS. The buildup of capital outflows was with the demand for the franc arising from Swit- such that new foreign Swiss-franc bond issues in zerland's current account surplus, more than the first quarter of 1982 increased 50 percent offset the impact of longer term, interest-sensi- over the corresponding months of 1981. The tive capital outflows, as international borrowers pressure of these and other capital outflows took advantage of relatively lower interest rates offset demand for the franc arising from the in Switzerland than in most other industrial current account surplus, which itself was proving countries. As a result, the franc declined less unexpectedly large. Tourism receipts and investrapidly than other currencies against the dollar in ment income remained strong. Moreover, the late February and early March to trade around traditional deficit on trade actually narrowed, SF 1.88 against the U.S. currency and as high as principally reflecting the impact on imports of SF 0.7855 against the German mark. declining world oil prices and weakening domestic demand. But, in addition, exports slackened With inflation moderating, the authorities Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

588 Federal Reserve Bulletin • October 1982 only moderately because exporters accepted de- Swiss authorities might have less leeway than clining profit margins to maintain market shares before to continue as forcefully with the comparand because less price-sensitive, high-technolo- atively easier monetary policy approach adopted gy goods, which figure large in Switzerland's early in the year. The rate of inflation had begun export basket, continued to find outlets in major to move back up, largely owing to the rapid foreign markets. Even so, exporters were depreciation of the franc in the spring. There was thought to be facing the limits of their ability to concern also that if the increase in prices went compensate through decreasing profitability for too far, it might reignite inflationary expectathe recent strong appreciation of the franc, and tions, while also becoming embedded in domesthere were concerns that any further erosion in tic costs through the process of wage indexation. competitiveness would begin to cause problems. Moreover, the growth of central bank money, In the event, however, declining Swiss interest which in May grew at 2.4 percent year over year, rates induced large and rising net capital out- began to approach the authorities' target. Thus, flows, which brought the franc under selling when the liquidity provided through foreign expressure in the exchange markets during the change swaps was not fully replaced, expectaspring. Market participants sensed that the Swiss tions developed that conditions in the domestic authorities were not intervening or otherwise money market would be less liquid than before. taking measures to support the exchange rate At the same time, broader concerns weighed and were not uncomfortable with a gradual de- on many other European currencies and worked cline of the currency. When the Swiss central to the advantage of the Swiss franc. The Swiss bank continued, as planned, supplying generous government continued to exercise tight control amounts of liquidity to the domestic markets, over federal finances, particularly on the expen- Swiss interest rates and the exchange rate fell diture side, and the budget deficit was expected rapidly lower. to remain under 1 percent of GNP in 1982 even as On May 6, however, the Swiss authorities did economic activity stalled. Equilibrium in Swiss not join other European authorities in reducing public finances stood in contrast to developofficial interest rates. At that time, the German ments in other countries, most of which were Federal Bank suspended its special Lombard experiencing serious difficulties in trying to hold loan facility while the Netherlands Bank lowered their deficits to levels that, relative to GNP, its rate on discount borrowings and the rate on already far exceeded that in Switzerland. Growspecial advances. The Swiss authorities stated ing worries internationally about the risks of that, in leaving the discount and Lombard rates sovereign lending and concerns over developing unchanged, they wished to discourage the view liquidity strains posed less of a threat to the from developing in the domestic markets that financial health of major institutions in Switzermonetary policy was directed toward interest land than to institutions elsewhere. In addition, rates rather than toward the monetary aggre- political tensions, particularly the dangers of gates. The authorities also found it desirable to expanding warfare in the Middle East, underkeep official lending rates at relatively high lev- scored the role of the Swiss franc as a safe haven els, compared with market interest rates, to for international investors attracted by Switzerdiscourage excessive commercial bank borrow- land's political stability. ing from the central bank, particularly at the For all these reasons, the franc became inmonth-end. But, even as official rates held creasingly attractive to traders and investors steady, market rates continued to ease so by late during June and July. The spot rate steadied May three-month interest differentials adverse to against the German mark, rather than weakening assets denominated in Swiss francs widened to as before, and the franc moved in line with about IOV2 and nearly 5 percentage points vis-a- stronger EMS currencies against the dollar. At vis the dollar and the mark respectively. In the the end of July the franc was trading at SF 2.08 exchange markets, the franc declined to around against the dollar for a decline of about 11 SF 1.9960 against the dollar and SF 0.8501 percent since the end of January and at SF 0.85 against the German mark at the end of May. against the German mark, for a decline of about By June, market participants sensed that the 6V2 percent over the six months under review. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 589 Between the end of January and the end of July, cy, interest rates in Japan eased when yields on Switzerland's foreign exchange reserves rose dollar investments were rising once more. The from $10.5 billion to $11.8 billion, principally in further widening of rate differentials already unresponse to foreign currency swap operations favorable to the yen prompted Japanese invesand interest earnings on outstanding reserves. tors to step up the flow of long-term capital Intervention operations in the exchanges were abroad and encouraged foreigners to float Samuboth infrequent and limited in scale. rai bonds. The yen was thus under downward pressure in the exchange markets in December, and even more so after the new year. Despite the JAPANESE YEN authorities' expressed determination to limit the easing of Japanese interest rates to protect the By early 1982, Japan had succeeded in reducing yen, market participants saw little scope for its inflation rate to the lowest among the major action to counter a sharp upward trend in foreign industrial countries and had recorded a huge interest rates given the weakness of the Japanese swing in its current account back into solid economy and the policies then in force. Although surplus. Economic growth, however, was falling the Bank of Japan sold dollars in the exchange short of the targeted rate of 4 percent for the year markets to moderate the yen's decline, the exended March 1982, and there were but limited change rate by the end of January 1982 had fallen choices available to the authorities to generate to ¥ 230.00, 8 percent below the high reached at economic recovery. Though stimulative mea- the end of November. In relation to the German sures had been taken in 1981, domestic demand mark the yen's decline was smaller, at about IV2 remained stagnant and gains in output were percent, bringing the cross rate on January 29 to almost entirely concentrated in the foreign sec- ¥ 98.21. At that point, Japanese foreign extor. Looking ahead, the contribution of exports change reserves stood at $24.6 billion, down to further growth appeared problematic. Further about $400 million from levels at the the end of increases in Japan's penetration of foreign mar- November. kets in a recessionary environment threatened to The yen declined further during the first half of exacerbate tensions between Japan and its trad- February, as interest rate differentials favoring ing partners. Also, with slackening demand dollar over yen investments widened more than 2 abroad, it began to appear that export growth percentage points to more than 10 percentage might well be much weaker than expected in points. Long-term investment overseas by Japa- 1982 even if heightened trade tensions were nese residents continued large while short-term avoided. On the domestic front, a relatively capital inflows tapered off. Japanese individuals restrictive government budget had been an- purchased nearly $1 billion of the innovative nounced in December for the fiscal year to start "zero-coupon" bonds being offered in the Euroin April 1982, in pursuit not of short-run expan- markets during January and February, reflecting sion but of the medium-term goal of further the attraction of these issues partly due to a reducing the government's deficit as a proportion proposed tightening in Japan of tax reporting of of GNP. As a result, monetary policy was left interest income on domestic bank deposits. Unwith the burden of providing stimulus to the der these conditions the yen fell below ¥ 242 per economy—a decision that had taken account of dollar by February 15. Then, from mid-February Japan's success in curbing inflation and of its to early March the yen gyrated widely with some strong current account position. The Bank of net upward trend largely in response to reports Japan had reduced its discount rate and relaxed that the Japanese authorities had intervened agits "window guidance" for commercial bank gressively in the Tokyo market and were considlending in order to spur demand and announced ering actions to limit the export of capital overthat first-quarter growth of its main monetary seas. By early March the Bank of Japan aggregate (M2 plus certificates of deposit) was permitted a slight rise in interest rates for call expected to continue at the relatively expansive money to defend the exchange rate. The authorirate of about 11 percent. ties asked Japanese securities companies to refrain temporarily from selling zero-coupon bonds Following this shift in Japan's economic poli- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

590 Federal Reserve Bulletin • October 1982 from March 4, while the Ministry of Finance revenues was also announced, adding to the made public its intention to establish reporting government's borrowing requirement for the requirements for holders of these securities to 1982-83 fiscal year. At the same time, the monelimit Japanese income tax avoidance. These de- tary authorities announced that yields on the velopments lent support to the yen in the ex- government's current issue of long-term bonds changes and by March 8 the yen had recovered would be lowered about lA percentage point— to ¥ 232.25 in the Far East, almost 4 percent less than had been anticipated. They also acted above the level of three weeks earlier. to keep money market rates firm and to dispel From that time through the middle of April the expectations of a seasonal easing of rates, in part yen drifted lower in the exchanges. Foreign through a program of large-scale sales of Treainterest rates, especially those in the United sury bills, with a view toward preventing any States, failed to decline as expected and at home further widening of the adverse interest rate new indications of weakness appeared in the differentials and containing the effects on domesdomestic economy. Publication of Japan's tic prices of the recent decline of the yen. Furfourth-quarter GNP figures made a particularly thermore, the Bank of Japan approved a scaling strong impression because they showed a sharp back of second-quarter lending plans of commerdecline in net exports and resulted in the first cial banks to an overall increase of 17.6 percent, quarterly decline in Japanese real GNP in nearly and later announced its expectation that this seven years. Prices began to drop sharply on the would support a somewhat slower monetary Tokyo stock exchange, partly in response to growth rate of 10 percent. These announcements foreign sales of Japanese securities, reportedly alleviated concern in the exchange markets that including sales by important OPEC investors. Japanese interest rates might ease, and trading in These events in combination served to focus the yen came into better balance in the exmarket attention once again on the difficult changes. choices facing the Japanese authorities. In this In the two weeks after these measures, the yen climate, debate intensified over ways through declined only slightly, reaching a low on April 15 which the government might help the domestic of ¥ 248.15 against the dollar and ¥ 102.44 in economy. With inflation running about 3 percent terms of the German mark. The Bank of Japan, and the annual spring wage settlements promis- as in earlier months, sold substantial amounts of ing to come out at a relatively moderate 7 percent dollars at times when the yen was dropping most average increase, it seemed that domestic con- rapidly in the exchange markets. These sales siderations argued in favor of reductions of Japa- were reflected in a decline of $900 million in nese interest rates. Also depressing sentiment foreign exchange reserves during March. When, toward the yen were trade disputes with both the in addition, U.S. and Eurodollar interest rates United States and the European Community eased in mid-April, the yen briefly recovered. countries, as the latter announced their intention Also at this time, actions were taken to postpone to file a formal General Agreement on Tariffs and foreigners' access to the Japanese capital market Trade complaint against Japan's export prac- and to tighten approval procedures for yentices. Trade figures for February showed that syndicated loans to foreign borrowers. The auexports had declined by enough to turn that thorities regarded these actions as temporary month's current account back into deficit. departures from their longer-term policy of liber- In early April, some fiscal measures were alizing capital flows. taken to boost the domestic economy, but they By mid-May the yen had moved back up to were milder than had been anticipated. While not about midwinter levels. Several times thereafter, increasing the government's overall net expendi- Bank of Japan Governor Mayekawa reaffirmed tures planned for the fiscal year just beginning, the authorities' determination to keep interest the government announced that it would acceler- rates high in order to support the yen, and the ate the schedule of public works expenditures central bank backed that announcement with and housing loan approvals as it had done in the large-scale Treasury bill sales. Yet market particprevious fiscal year. A shortfall of about 10 ipants still worried that long-term interest rates percent in the previous year's government tax would have to be held down to assist the govern- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 591 merit's coming bond flotation. Speculation also enough yield for the government's own flotation arose that the Japanese authorities might be of long-term bonds resulted in cancellation of the moving to facilitate, rather than contain, capital issue scheduled for July. The yen's decline, once outflows following the announcement in May of started, received an additional push when particlong-term liberalization measures affecting the ipants on the International Monetary Market purposes for which Japanese banks could grant (IMM) rushed to liquidate large long yen posisyndicated loans in yen to foreigners. In addi- tions, producing some of the busiest trading ever tion, U.S. interest rates were firming once more of yen futures contracts and bringing large offers and interest differentials favoring dollar invest- of yen into the forward interbank market. The ments widened. yen thus fell back nearly to the ¥ 259 level before In this atmosphere, the yen declined steadily recovering some of its lost ground after the after mid-May. Expectations of an agreement at announcement on July 30 of a second Federal the Versailles summit to lower dollar interest Reserve discount rate reduction. rates were widespread in the Tokyo market, and The yen closed on July 30 at ¥ 255.60, down 10 the yen came under renewed selling pressure percent from six months earlier and 3/4 percent after that meeting ended in early June without below the low point reached nearly a year earliany such announcement. The outbreak of fight- er. The yen also declined against the German ing in Lebanon also made the dollar seem more mark, to close at ¥ 104.63, nearly equal to the attractive as an investment medium, compared lowest level reached in the previous year alwith the yen and other currencies. Then, when though still far above the cross rates prevailing the U.S. dollar rose strongly against all curren- before 1981. The Bank of Japan's periodic sales cies following the EMS realignment during the of dollars while the currency was declining re- June 12-13 weekend, the yen once again came on duced foreign exchange reserves a total of $2.8 offer. The rate dropped rapidly during the New billion for the six-month period so that reserves York trading session on Monday, June 14, falling stood at $21.8 billion at the end of July. below ¥ 250 before the New York Desk entered the market to buy $9 million equivalent of Japanese yen to restore more orderly conditions. STERLING Nevertheless, the currency resumed its fall, despite support from the Bank of Japan. By June Early in 1982 sterling held steady in the exchange 28, the rate had reached a 27-month low of more markets, trading on January 29 at $1.8670 and than ¥ 259 per dollar and ¥ 104 in terms of the 91.8 on the trade-weighted, effective index. The German mark, and Japanese reserves had de- authorities in the United Kingdom were generalclined more than $1 billion since the end of May ly seen as adhering to policies of monetary and to stand at $21.7 billion. fiscal restraint, despite the pressures of large- In early July, the yen began to rise in response scale unemployment. Public-sector borrowing to declining U.S. interest rates. The yen climbed had gone down as a percentage of GNP through above ¥ 250 on July 23, just before the Federal both increased taxes and the containment of Reserve cut its official discount rate Vi percent- expenditures, as the public-sector wage bill was age point, but its tenuous recovery soon faded. brought under control. While the actual growth Abroad, the better-than-expected current ac- of sterling M3 exceeded the annual growth range count performance of the United States and the of 7 to 11 percent, innovations in financial instideceleration of inflation globally tended to erode tutions and behavior appeared to have diminsome of the benefits of Japan's earlier and supe- ished the usefulness of the targeted aggregate as rior economic performance. Within Japan, public a guide to monetary conditions. Other indicators criticism of the government's economic policies such as short-term interest rates, as well as the focused on the failure to reduce the government substantial decline in inflation itself, suggested deficit as quickly as planned, and interest rates continued monetary stringency. rose on the government's long-term bonds trad- Meanwhile, however, developments in the ing in the secondary market. In these circum- U.K. economy generated discussion about the stances, difficulties in setting an attractive desirability of some easing in the restrictiveness Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

592 Federal Reserve Bulletin • October 1982 of policy. To be sure, the economy showed signs Oil Corporation cut its price for North Sea oil, of recovery from the prolonged recession, as the thereby reducing projected domestic government previously rapid reduction of inventories slowed revenues as well as the contribution of oil earnand as some types of investment began to revive. ings to the balance of payments. Sterling there- But unemployment continued rising, and there fore eased back to $1.83 and 90.4 in effective was reason to question whether the upturn in terms in early March. investment was sustainable without some policy On March 9 the government presented its stimulus to demand, a reduction of taxes, or 1982-83 budget, addressing the two principal other action to improve company profitability. elements of its medium-term financial strategy: At the same time, rapid gains in productivity, the public-sector borrowing requirement and the moderate wage settlements, and the earlier de- growth of money. Personal tax allowances and preciation of sterling in 1981 improved the ability excise taxes were increased about in line with of British industry to compete internationally. inflation, while the national insurance surcharge The gains in competitiveness, however, only paid by employers was reduced 1 percentage partially reversed the severe losses of the previ- point to 2Vi percent. On the expenditure side the ous two years, so that the level of costs remained share of resources claimed by the public sector high in relation to Britain's major trading part- was cut back. Altogether, the public-sector borners. Consequently, the surpluses on the trade rowing requirement was projected to decline and current accounts were expected to be erod- from £ IOV2 billion to £ 9V2 billion, or from about ed, even without a pickup in the economy. 4V2 percent to 3Vi percent of GNP. With respect Within the United Kingdom, several types of to the broad monetary aggregates, the governstimuli came under scrutiny. Lower interest ment noted several factors boosting the growth rates, for example, would be expected to boost of sterling M3 above target. The civil service investment, particularly stock building and con- dispute had postponed tax payments; the public struction. A depreciation of the exchange rate had increased its demand for liquid assets as a would improve competitiveness and enhance ex- medium for saving; other structural changes, porters' profit margins. Public works measures such as a shift in housing finance away from the would provide the greatest number of jobs. A cut building societies, had enhanced the role of the in indirect taxes would reduce costs. Among banks in financial transactions. Taking account exchange market participants it was feared that, of these developments in the budget, the authoriwhatever the specific measures, any significant ties raised the target range for sterling M3 growth policy change aimed at restoring economic to 8 to 12 percent and also applied this growth growth would jeopardize the hard-won progress range both to the narrow money supply (Ml) and already made in controlling inflation and infla- to broad private-sector liquidity. In restating its tionary expectations. As a result, sterling came financial strategy, the government recognized under downward pressure during February amid explicitly the usefulness of the exchange rate as market nervousness ahead of the government's an indicator of financial ease or stringency. statement of policy in the forthcoming 1982-83 The budget was well received and was seen by budget. the markets as compatible with a slowing of At this time, also, U.K. short-term interest inflation to below 10 percent per year and with a rates eased lower, extending the softening trend continued easing in short-term interest rates. On established in autumn 1981, and major clearing March 11, in fact, the clearing banks announced banks lowered their base lending rates xh per- another reduction of V2 percentage point in their centage point to Wh percent. These cuts coin- base lending rates to 13 percent. Meanwhile, cided with a softening of interest rates in the heavy official sales of public-sector debt to the United States, but were not matched, as in nonbank public continued to be larger than needprevious months, by lower interest rates else- ed to fund the public-sector borrowing requirewhere in Europe, so that selected interest differ- ment. The program of debt sales, begun in the entials moved against sterling-denominated as- winter, aimed at reducing the banks' cash holdsets. Moreover, against the background of ings and thereby restraining the growth of broadweakening world oil prices the British National ly defined money. In effect, the authorities Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 593 sought to reverse a part of the increased interme- monetary aggregates, including sterling M3, diation through the banking system that had were growing within the government's target swollen the growth of sterling M3. The combina- range of 8 to 12 percent. Inflation decelerated tion of heavy sales of debt and massive tax both on the wholesale and on the retail levels. payments—reflecting the normal tax-gathering Manufacturing pay settlements averaged about 7 season as well as the ongoing reflux of revenue percent in the current wage round, compared delayed earlier by the civil service dispute—put with more than 20 percent only two years previpressure on the domestic market's cash position. ously, improving prospects for inflation to re- To relieve the shortages, the authorities acquired main below double-digit rates. Moreover, publicsizable amounts of commercial bills, mainly sector borrowing in 1981-82 unexpectedly turned through outright purchases. Even so, Britain's out to be nearly £ 2 billion less than the official money markets remained comparatively tight at target, and preliminary indications suggested a time when many interest rates on the Continent that the public-sector borrowing requirement were falling. With market sentiment also encour- would fall short of the £ 9Vi billion projection for aged by the government's steadfast policy fiscal 1982-83. In addition, data on the balance of stance, sterling traded firmly in the exchange payments showed that, while the current account markets. Thus, the strong rise in the dollar at this surplus was shrinking, the deterioration was less time was reflected less in movements of sterling rapid than anticipated. To be sure, imports, than in other currencies so that, even as the particularly of semimanufactured goods, posted pound fell to as low as $1.7780 in late March, it large increases, but the volume of U.K. non-oil remained quite stable around 91.0 to 91.4 in exports registered sizable growth as well. effective terms. After mid-June, when the United Kingdom On April 2, Argentina invaded the Falkland regained military control of the Falkland Islands Islands, initiating a crisis that in varying degrees and the pressures of the crisis passed, favorable kept the sterling money and exchange markets developments within the U.K. economy showed off balance through mid-June. At first, the pound through decisively and benefited sterling in sevcame under severe selling pressure, dropping to eral respects. Domestically, optimism that progas low as $1.7465 and in effective terms to 89.5 ress on inflation would endure helped short-term amid fears that the crisis could force the resigna- interest rates resume their decline and lent suption of the Thatcher government and end its port to the rally that had earlier developed in conservative economic policies. But the Bank of common stocks and gilt-edge instruments. In the England reacted quickly, supporting sterling in exchange markets, participants expressed confithe exchanges to prevent sharp, disorderly dence in the resolve of the authorities to maintain movements from cumulating and acting to stabi- steady and stringent financial policies over an lize the gilt-edge market as well. Thereafter, the extended period. Moreover, the perceived ability authorities continued to stabilize the markets, of British policy to meet stated goals stood in which alternated between fears of prolonged contrast to market doubts about policy coherfighting and hopes of an early peaceful settle- ence and credibility in many other industrial ment. Sterling traded mostly within an effective countries. range between 89 and 91, and for the most part At the same time, other aspects of the internabetween 90 and 91, despite the markets' vulnera- tional environment favored the pound. There bility to news and rumors concerning the Falk- were growing worries over potential disruptions lands. Against the dollar, the pound fluctuated to the flow of oil from the Middle East as the more widely, rising to as high as $1.8360 in early result of fighting in Lebanon and between Iran May when U.S. interest rates dropped back and Iraq. In an environment in which large banks sharply, but falling again to around $1.77 by mid- and nonfinancial institutions in other countries June. were experiencing severe liquidity problems, Meanwhile, during the Falklands crisis, under- traders and investors became increasingly conlying sentiment toward the pound improved. cerned about the creditworthiness of counter- There was evidence of subdued monetary parts and the safety of their assets. In these growth, with recent statistics showing that the circumstances, both Britain's oil self-sufficiency Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

594 Federal Reserve Bulletin • October 1982 and the favorable reputation of London's finan- swaps against European currency units (ECUs) cial system made sterling a relatively attractive done with the European Fund for Monetary and secure asset. As funds flowed into the Unit- Cooperation (FECOM) and other factors, such ed Kingdom, sterling held up better than most as the repayments and accruals of external pubother major currencies against the surge of the lic-sector borrowings. dollar in the exchanges. Although the pound declined to as low as $1.7065 early in July, it nonetheless remained steady on an effective ba- FRENCH FRANC sis, trading around 91.2. During July, attention turned decisively to the Early in 1982 the French franc traded comfortstate of the economy. Growing evidence con- ably in the exchanges even as market sentiment firmed that after bottoming out in mid-1981 the remained skeptical about the currency's longereconomy had shown little growth. In key areas of term outlook. Supporting the franc was a combi- British industry the outlook for a sustained re- nation of foreign exchange controls, conversions covery deteriorated badly. Private forecasters of public-sector foreign borrowings, and shortand major international organizations, such as term capital inflows by investors taking advanthe Organization for Economic Cooperation and tage of higher nominal interest rates in France Development, revised downward their growth than in many other EMS countries. The franc forecasts for 1983. Deep disappointment about therefore remained in the upper portion of the the prospects for expansion in the economy and joint float in the early weeks of 1982, while the continued rise in unemployment prompted trading against the dollar at FF 5.9600 at the end renewed calls for some easing in government of January. policies. In the background, however, market partici- By this time, however, the feeling had devel- pants expressed worry that French policies had oped in the exchange markets that declines in placed insufficient emphasis on curbing inflation inflation, in the public-sector borrowing require- since the October 1981 realignment, thereby alment, and in the growth of the monetary aggre- lowing the benefits of the franc's depreciation to gates were all consistent with some easing in erode. The government appeared committed to interest rate policy and should not damage confi- its original strategy of economic expansion dence in the pound. In the event, the Bank of aimed at boosting jobs and absorbing the rapidly England steadily lowered its money market inter- growing labor force. However, the stimulus provention rates, and U.K. interest rates fell more vided to consumption had not been accompanied rapidly than those in the United States. By the by a pickup in domestic investment and employend of July, U.K. bank rates reached the lowest ment. Rather, the boost to demand was reflected level since November 1978 and interest rate primarily in higher domestic prices, burgeoning differentials moved against sterling-denominated imports, and a worrisome increase in the governassets. Even so, the pound gave up comparative- ment's budget deficit. At the same time, export ly little ground in the exchange markets. growth was hampered by depressed economic At the month-end the pound traded at $1.7475 conditions in most foreign markets. As a result, against the dollar for a decline of 7 percent over France's trade and inflation performance deterithe six months under review. On an effective orated in relation both to earlier trends and to basis, the pound closed the period at 91.5, down several other industrial countries, particularly about V* percent. Between the end of January those like Germany that had chosen to follow and the end of July the foreign exchange reserves economic policies of greater restraint. of the United Kingdom declined from $12.6 These concerns found little reflection in exbillion to $10.9 billion. The loss of reserves change rate movements so long as official parireflected only in small part the authorities' inter- ties within the EMS could be expected to hold. vention operations in the exchange market, par- But, unexpectedly, on February 21 the Belgian ticularly in the wake of the Falkland Islands franc and the Danish krone were devalued crisis. For the most part, the decline in reserves percent and 3 percent respectively, vis-a-vis the reflected the revaluation losses of gold and dollar French franc and all other EMS currencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 595 Almost immediately, market participants began same time, Finance Minister Delors spoke out to question the durability of the new parities in strongly against a devaluation of the franc. view of concern, in private as well as official These actions were seen in the market as circles, that the exchange rate relationships for strong signals of the government's determination the franc did not accurately reflect the relative to avoid a devaluation of the franc and prompted competitiveness of the French economy and the nonresidents to begin covering their short curdivergence of French economic policy from that rency positions. The purchases of franc balances of other EMS countries. Speculation thus devel- coincided with a tapering-off of special factors oped that the French currency would soon be that had also weighed on the franc, such as devalued in the context of another and more compensation payments to nonresidents for their extensive realignment of the EMS and, amid ownership share in nationalized industries. Sellheavy outflows of capital, the franc dropped to ing pressures on the franc therefore abated, the bottom of the joint float arrangement by the particularly once the long Easter weekend end of February. passed without a realignment of the EMS. As a The French authorities were concerned about result, the French currency moved from the the weakness of the French franc, but the top bottom to the middle of the joint float even as it priority remained providing stimulus to the do- weakened further against the dollar, declining to mestic economy—particularly to avert heavy so- FF 6.2950 around mid-April. cial and political costs of growing unemploy- But, otherwise, with respect to objectives for ment. Consequently, the authorities sought to the domestic economy, the French government stem the selling pressures on the franc without experienced difficulties. Heavier spending in the major revisions in domestic economic programs. public sector, enlarged by the nationalization of They also urged other countries to begin relaxing twelve industrial groups, did not lead as expecttheir policies of restraint, believing that policy ed to an improvement in business conditions. In stimulus elsewhere, particularly in the monetary fact, investment activity remained weak, particusphere, was important to promote a general larly in the private sector where industry faced decline in international interest rates, a recovery increased payments for imported materials and of the sagging world economy, and some im- had to shoulder the growing costs of domestic provement in the overall employment situation. reforms. The introduction of a shorter workweek Meanwhile, to defend the franc the Bank of and in some sectors a longer vacation period, France during March raised domestic interest with no accompanying decrease in compensarates, moving call money rates for example to tion, together with higher taxes to finance addisome 18 percent from about 14 percent. These tional social benefits, exerted a considerable actions reversed the previously easier tendency squeeze on corporate profit margins. Meanwhile, in domestic interest rates, while also moving consumer demand—the main factor sustaining counter to the downtrend in interest rates in most the economy in the latter part of 1981—began to other European centers. falter, further removing incentives to capital ex- The central bank also intervened heavily in the penditure. Consequently, in the first quarter of exchanges as a seller of foreign currencies to 1982, industrial production and real GNP dekeep the franc trading within the required 2Va clined, and unemployment rose further, appercent band against the German mark and proaching the two million level. Dutch guilder. Moreover, the government tight- Disappointment over the economy's perforened exchange controls. Henceforth, exporters mance prompted the French authorities to introwere required to repatriate the proceeds of sales duce several measures in the spring. For selected abroad within two weeks rather than one month investments, the government provided loans at as previously. French investments abroad in below-market interest rates. It also reduced emexcess of FF 1 million were to be financed totally ployers' social security contributions in hard-hit abroad rather than up to 75 percent from foreign industries as well as in those pledged to maintain sources as before. Approval from the Bank of a certain level of investment or employment. In France was required in more cases than before May the government proposed a supplementary for financial transfers of funds abroad. At the 1982 budget, authorizing FF 5 billion in expendi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

596 Federal Reserve Bulletin • October 1982 tures for the purpose of supporting nationalized altogether—perhaps even before the seven-nacompanies, reducing selected business taxes, tion economic summit in Versailles. Between and extending tax incentives to the agricultural late April and early June the franc came under sector. repeated bouts of selling pressure, particularly To contain the rise in the budget deficit, the before weekends. The Bank of France again government reduced certain expenditures and raised domestic interest rates and intervened raised taxes. Specifically, expenditures by the heavily in the exchanges. But market partici- Social and Economic Development Fund were pants, sensing the magnitude of the support cut back. With respect to revenues, effective operations, viewed the authorities as having only July 1 the authorities boosted the value-added limited resources to maintain the franc within the tax 1 percentage point to 18.6 percent, increased mandatory EMS limits, and so the selling prestaxes on banks and other public-sector and finan- sures remained intense. cial institutions, and requested banks to provide Over the June 12-13 weekend the French franc equity financing and participation loans of about was devalued within the EMS. Against the Ger- FF 6 billion to nationalized firms to strengthen man mark and Dutch guilder, which were revaltheir capital base. Meanwhile, to minimize the ued against all other currencies within the EMS, monetary impact of these measures and to help the franc was in effect devalued about 10 perkeep the monetary aggregates from growing be- cent. Against currencies whose official parities yond the targeted annual range of \2Vi to l3Vi were unchanged, the franc was adjusted downpercent, the government began selling floating- ward 53/4 percent. Against the Italian lira, itself rate Treasury bills. The new bills were designed adjusted downward by 23/4 percent against all to attract institutional investors, such as insur- participating currencies, the franc was in effect ance companies and pension funds, previously depreciated about 3 percent. To support the reluctant to invest in paper with fixed interest devaluation and to help promote a convergence rates. of inflation rates between France and other EMS Exchange market participants welcomed the countries, the government introduced a fourauthorities' move toward some tax relief for month wage-price freeze to be followed by a business, but worried that, unless basic elements system of guidelines designed to slow inflation to of the overall strategy were changed, France 10 percent in 1982 and to 8 percent in 1983. The would move increasingly out of step with its French government also pledged to restrain the competitors regarding inflation, balance of pay- growth of the government budget deficit to ments, and budgetary developments. They noted no more than 3 percent of GNP this year and that France's inflation rate had accelerated to 14 next, largely through cutbacks in current expenpercent, compared with only 5 percent in Germa- diture. ny. The cumulative trade deficit widened to FF In the exchange markets the French stabiliza- 81 billion at an annual rate in the first four tion plan was seen as a compromise between the months of the year, compared with a deficit of desired policy of stimulus to respond to the FF 50.8 billion for all of 1981 and FF 62.4 billion unemployment problem and the pressures for in 1980. And the budget deficit, officially project- restraint to deal with mounting inflation and the ed to rise to FF 95 billion, about 3 percent of weakness of the franc. Participants adopted a GNP, was privately forecast to exceed FF 100 cautious attitude, wondering whether the govbillion. Moreover, differing views among indus- ernment would gain acceptance for its program trial countries about the appropriate policy ap- which in some respects, for example stiff wage proach to deal with stagflation in the world controls, appeared tougher than anti-inflation economy persisted, and thus few market partici- measures imposed by its more conservative prepants counted on policy convergence at the decessors. Initially, at least, French unions—a international level to bring France into closer major source of political support for the Socialist alignment with its competitors. government—objected to the loss of purchasing power implicit in the wage freeze and were Speculation therefore mounted that the franc reluctant to give up the nearly automatic system would be devalued as part of an EMS realignof wage indexing that for years had helped wages ment or would be withdrawn from the joint float Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 597 keep pace with inflation. Industry, for its part, part, this progress reflected falling world prices objected to the price freeze. For, despite the of oil and other raw materials, those price movegovernment's move after the devaluation to low- ments stemming from deepening recession in er domestic interest rates, the rebuilding of profit most industrial economies. Moreover, price inmargins was still thought to be difficult, all the creases were slowing in Italy as the restrictive more so without improvements in productivity. monetary policy of the Bank of Italy began to As a result of the wait-and-see attitude in the dampen domestic inflationary pressures. The lira exchange markets, international investors were was also supported at this point by improvement hesitant to reconstitute franc-denominated as- in the Italian current account deficit, which had sets, and the reflux of funds that developed contracted from a $10 billion annual rate early in immediately after the realignment soon tapered 1981 to a $3 billion rate by the year-end. The off. Nonetheless, in the six weeks to the end of improvement derived from both strong growth of July the franc traded comfortably in the upper export volume and declines in imports. The gains part of the EMS and the Bank of France was able in exports reflected the 1981 devaluations of the to enter the market as a purchaser of currencies lira within the EMS and a surge in orders from in order to begin repaying debt and rebuilding those OPEC nations that developed large current reserves. Against the dollar the franc weakened account surpluses after the 1979-80 oil price along with other major currencies, falling to FF increases. At the same time, Italian imports had 7.00 on July 8 before recovering somewhat to declined due to the weak domestic economy and trade at FF 6.8025 in the New York market at the the import deposit scheme, which had been end of July. At this level, the franc was about 14 adopted in May 1981. (The deposit scheme repercent lower on balance over the six-month quired that a percentage of the foreign exchange period under review. France's foreign exchange value of imports be placed in a non-interestreserves declined from $18.3 billion at the end of bearing account with the Italian central bank. January to $13.3 billion at the end of July. In Initially the deposit was set at 30 percent, but the part, the decline reflected intervention support ratio had been gradually reduced to 15 percent by for the franc by the Bank of France, financed the end of January 1982.) through reserve holdings and very short-term The markets remained concerned that the reborrowings within the EMS. The drop in re- cent Italian improvement in inflation and the serves also reflected revaluation losses on gold external account would be difficult to sustain. and dollar swaps against ECUs done with OPEC current account surpluses had begun to FECOM. contract, threatening to limit further expansion of Italian exports, while failure to make additional gains on domestic inflation and wage increases ITALIAN LIRA was thought likely to result in declining competitiveness of Italian exports to industrial econo- The Italian lira was trading firmly at the top of mies. Moreover, any upturn in domestic incomes the EMS early in 1982, although it had fallen would be likely to spur imports. In contrast to back to LIT 1,250 against the rising U.S. dollar. the favorable performance of the trade balance, The lira's strength in the EMS partly reflected its the surplus on the invisibles account deteriorated two devaluations within that currency arrange- during 1981, as increased borrowing abroad and ment during 1981. Also, some recent improve- the high level of international interest rates ment had occurred in the Italian external balance sharply pushed up the cost of servicing Italy's and domestic inflation rate, and substantial in- external debt—a drain on the current account not flows of capital had been attracted by high Italian likely to be substantially relieved in 1982. interest rates. The Bank of Italy had taken ad- The inflation outlook was also clouded by the vantage of the lira's relative strength to rebuild long-standing problems of the huge government its foreign currency reserves to a level of $17.8 deficit and steeply rising wage costs. The governbillion at the end of January 1982. ment had proposed an official ceiling of LIT 50 The Italian inflation rate had begun to slow in trillion for the 1982 public-sector borrowing re- 1981 and moderated further in January 1982. In quirement, slightly below last year's actual re- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

598 Federal Reserve Bulletin • October 1982 suit. But, in 1981 the outcome had exceeded the speculation over another EMS realignment, and original ceiling of LIT 37.5 trillion by some LIT residents scrambled to purchase foreign curren- 17 trillion. Thus, market participants were skep- cies and to repay mark-denominated debt. As a tical that such an ambitious goal for 1982 was result, the lira, which had traded around the feasible and worried that fiscal stimulus would middle of the new EMS band immediately after contribute to renewed inflationary pressures. On the realignment, declined faster than other contithe wage front, the government had begun nego- nental currencies against the dollar during tiations with business and labor in the middle of March. At times, it traded at or near the bottom 1981 to modify Italy's scala mobile, which pro- of the joint float despite heavy intervention by vides for automatic quarterly adjustments in pay the Bank of Italy, including its first sales of to offset inflation. Into 1982, however, no signifi- marks in six months. Italian foreign currency cant progress had been made in these negotia- reserves declined $4.5 million during February tions. and March. Finally, the Italian economy had weakened in During April and the first part of May, the lira the second half of 1981, with real GNP declining generally remained under downward pressure in for the year as a whole for only the second time the exchanges. The latest balance of payments since World War II. The softening of the domes- data, including the report of a record February tic economy had contributed to slower price trade deficit of LIT 2.9 trillion, confirmed the increases in the short run, but had led to calls for market's worry that export growth might stagan easing of the strong anti-inflation stance of nate, mainly as a result of the dwindling OPEC monetary policy, which had held nominal Italian surplus and the increased financing difficulties of interest rates well above those of Italy's major certain less developed countries, which limited trading partners into 1982. Many market partici- the scale of their imports. Also, Italian imports pants remained concerned that any easing of had surged in the wake of the elimination of the monetary policy would quickly release new infla- import deposit scheme, mostly to rebuild domestionary pressures in the domestic economy and tic inventories. At home, inflation remained conalso tend to reduce capital inflows. siderably higher than that of Italy's major trading Despite these concerns about the future, the partners, despite having slowed somewhat furlira remained firm within the EMS into February ther, while market concern increased over the 1982. The Italian authorities took advantage of deepening crisis within the government. Sharp the lira's strength to suspend the import deposit divisions over economic policy, particularly bescheme in early February, about a month ahead tween the Christian Democrats and the Socialof its scheduled termination. This action was ists, threatened to impede parliamentary adoptaken to minimize speculative pressures in the tion of a proposed austerity budget and to bring exchange markets that otherwise were expected down the Spadolini coalition government. to result from the markets' anticipation of the The market thus came to view the lira as a change at the end of the month. Although some candidate for devaluation within the EMS, genselling pressure emerged on the day of the an- erating adverse movements in leads and lags and nouncement, the Bank of Italy was quick to prompting Italian residents to repay foreign curintervene and the lira soon steadied. rency loans and to borrow lire. In order to curb In the EMS realignment on February 21, the the leading and lagging of payments, the Foreign lira, like the French franc, was left unchanged. Trade Ministry moved to tighten foreign ex- The realignment focused on the market's atten- change controls. In addition, residents were no tion on the question of the future competitive- longer permitted to repay foreign currency loans ness of Italian exports and domestic economic borrowed from Italian banks before maturity. problems. In addition, Italian market interest Subsequently, the Bank of Italy announced it rates were easing, fostering rumors that the Bank would increase its progressive penalties on lira of Italy would lower its discount rate either credit extensions in excess of its established independently or in cooperation with the mone- ceilings to counteract the widespread substitutary authorities in Germany and France. In these tion by Italian borrowers of home currency for circumstances, the lira became caught up in foreign currency financing. In addition, the Bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 599 of Italy intervened frequently in the exchanges to enabled the Italian authorities to relax foreign resist the decline in the rate, and it kept Italian exchange controls on export-related credit. interest rates high and steady even though rates Against the strong dollar, however, the lira fell abroad tended to ease. Nonetheless, the selling back to a record low of LIT 1,401.50 in European pressures on the lira persisted, and late in April it trading. slipped below the 2!/4 percent limit required for Despite the firmness of the lira within the its partner currencies in the EMS, even though it EMS, the market remained concerned over sevremained well within the broader 6 percent band eral issues. Impatience over the lack of progress applying to the lira. in negotiating ways to modify the scala mobile By late May, however, foreign currency in- had prompted employers' associations in first the flows from the start of the tourist season, togeth- private and then the public sector to announce er with the earlier exchange control measures, they would withdraw from the 1975 agreement helped bring trading into better balance. In these with labor unions on wage indexation when it circumstances the view developed in the market expires in February 1983. Employers were seekthat a devaluation of the lira might be put off at ing a number of reforms to the system, including least until after the Versailles summit in June and the exclusion of indirect taxes and externally perhaps through the summer. The Bank of Italy generated cost increases from the calculation of was able to scale back its support operations wage increases, a more flexible escalator that considerably and, on occasion, even purchase would allow firms to differentiate among various dollars to rebuild reserves. Nonetheless, foreign wage and salary categories, and adjustments in currency reserves fell another $1.8 billion during wages every four or six months rather than every the two months. three months. Although many labor leaders ac- Over the June 12-13 weekend the lira's central cepted the need for some modification of the rate within the EMS was adjusted downward 23A agreement, the unions were sharply divided over percent against those currencies in the system the nature and extent of any changes. The breakwhose central rates remained unchanged, as part down of negotiations to change the wage indexaof a realignment involving the French franc. In tion system was a serious setback to the governeffect, the lira was devalued about 7 percent ment's efforts to forge a social pact and to limit against the German mark and Dutch guilder, wage increases in 1982 to 16 percent, and it each of which was revalued 4V4 percent. In raised the possibility of protracted strikes by the public statements after the realignment, Prime unions. Also, the outcome of the three-year wage Minister Spadolini asserted that the lira was contract negotiations, which had not yet begun in devalued solely to protect the competitiveness of earnest even though some of the contracts had Italian exports in the face of the devaluation of expired the previous December, had been the French franc and not because the move was thrown into greater doubt. necessary in the short run. At that point, Italy Meanwhile, after months of fractious debate, expected an influx of funds during the tourist the Italian cabinet finally approved a major stabiseason, by then well under way. The government lization program designed to hold the increase in also announced the devaluation would be fol- the state borrowing requirements in 1982 to a lowed up with a package of austerity mea- level well beyond the original proposed ceiling of sures. LIT 50 trillion but lower than the estimated LIT After the realignment, the lira traded above the 70 trillion that would result if no action were 21/4 percent limit required for other participating taken. However, even after this action, the state currencies. The Bank of Italy took advantage of borrowing requirement would exceed that of the lira's comfortable position within the EMS to most other industrial countries and pose a threat rebuild reserves and to ease short-term domestic to the progress already made on the inflation interest rates. Nonetheless, Italian rates re- front. Furthermore, the program still awaited mained high in relation to interest rates abroad final parliamentary approval. and continued to attract capital inflows, particu- By the end of July the lira was trading at LIT larly with a lira devaluation no longer a near-term 1,367.00 against the dollar, down 9V4 percent prospect. The relative strength of the lira also over the six-month period under review and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

600 Federal Reserve Bulletin • October 1982 down 5 percent against the German mark. Mean- franc, Danish krone, and Irish pound traded in while, Italy's foreign exchange reserves stood at the middle and lower portions of the band. The $13.9 billion, an increase of $3.9 billion over the upper group contained currencies that were vulperiod. nerable on fundamental economic grounds, but nonetheless remained firm, benefiting from a combination of relatively high interest rates, EUROPEAN MONETARY SYSTEM exchange controls, and expectations in the market that official parities established in October In early 1982 most countries participating in the 1981 would hold at least in the near term. At the EMS joint float arrangement had been pursuing bottom, requiring persistent intervention supgenerally restrictive macroeconomic policies for port, was the Belgian franc. Structural problems about two years to counter inflationary pressures in the Belgian economy were reflected in mountarising from the second round of international oil ing public-sector fiscal deficits, in excess of 15 price increases. Some had made considerable percent of GNP, and current account deficits, progress in reducing inflation and in limiting the which for some years had been financed through impact of higher oil prices and depreciating ex- government-arranged loans in dollars and in othchange rates on domestic wages and costs. er currencies. The external public debt, which Meanwhile, the dramatic softening of previously was practically nil in 1977, had risen by the end tight conditions in the world oil market and the of 1981 to more than 10 percent of GNP. weakening of economic activity in the EMS (and Like governments in other small, open econoamong industrial countries more generally) mies, the government of Belgium had for some helped erode many of the larger payments imbal- time rejected devaluation of its currency, arguing ances that had emerged in the aftermath of the oil that the benefits of such action would be quickly shock. But there were major problems as well. eroded in view of the large role of international Rigidities in economic and social structures— trade in total GNP and the high degree of domeswhich in varying degrees characterize all indus- tic wage indexation. But, because of the mounttrial countries—hampered the implementation of ing gravity of the situation, the new government restrictive policies in individual EMS member that came to office after the November 1981 states or meant that success in the battle against election had been granted special powers by inflation was achieved only at considerable cost. Parliament, including authority to constrain the Restrictive policies proved costly in terms of growth of wage increases. Consequently, a output losses and unemployment, and the pros- change in the official parity of the Belgian franc pects for growth appeared more pessimistic than seemed more likely than before. Meanwhile, expected earlier, even for countries that had Denmark and Ireland, which had also relied chosen to adopt policies of greater stimulus. heavily on foreign borrowings to finance large Also, while the progress on inflation was fiscal and current account deficits, found the achieved through tight monetary policies and inflows of private capital had slowed. To mainhigh interest rates, the outlook for maintaining a tain balance in the foreign exchange market, durable reduction of inflation was being under- Ireland continued to place reliance on foreign mined by the persistence of unacceptably high exchange controls. In Denmark, concern develgovernment deficits. Within individual countries oped that the exchange rate for the krone did not the listless state of domestic demand generated reflect the deterioration that had occurred in the efforts by domestic firms to sell in external economy's external competitive position. markets, competitive pressures among member On February 21, the Belgian franc was devalstates were strong, and protectionist tendencies ued 8V2 percent and the Danish krone 3 percent were growing. Moreover, underlying the more against all other participating currencies. In conbalanced pattern of payments positions were nection with the realignment, the Belgian ausubstantial disparities in competitiveness. thorities introduced measures aimed at stimulat- Within the joint float arrangement, the Nether- ing private investment while reducing the lands guilder, French franc, and Italian lira trad- government borrowing requirement. The meaed at the top while the German mark, the Belgian sures included a limited price freeze, the tempo- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 601 rary suspension of wage indexation, and selected ened, falling for a time to the middle of the band. tax reductions for business and industry. Imme- Meanwhile, the Belgian franc dropped to the diately after the realignment, the Belgian franc bottom of the joint float where it alternated with and Danish krone rose to the top of the newly the French franc. The Irish pound traded in the aligned band, the Netherlands guilder traded lower portion of the band. The Italian lira, tradaround the middle, and the German mark, ing in its wider, 6 percent margin, fell below the French franc, Italian lira, and Irish pound moved currencies in the narrow 2V4 percent band. On to the lower portion of the EMS band. March 19 and again on May 6—with the EMS Exchange market participants were skeptical fully stretched—the central banks of Germany that the new parities would stick, citing concerns and the Netherlands reduced their official lendabout relative competitiveness, unresolved ing rates. The authorities in the Netherlands had structural problems, and continued policy diver- room to provide some stimulus to stagnant dogences. It was known in the market that the mestic demand, owing to the favorable external governments of Belgium and Denmark had re- position of the Netherlands. Indeed, with domesquested larger depreciations of their currencies tic demand weaker than in most other EMS than had been agreed to by other member states, countries, competitiveness improving, and natuand participants therefore questioned whether ral gas export revenues boosted by earlier price the realignment was sufficient to rectify the vari- hikes, the Dutch current account posted a surous imbalances that had already emerged. At the plus estimated at around AV2 percent of GNP. same time, the realignment appeared too narrow The reduction of interest rates in Germany and in scope. It was seen in the market as failing to the Netherlands provided only temporary relief address differences between currencies of coun- to the weaker currencies. The psychology of the tries benefiting from improving current account market grew increasingly pessimistic, as skeptiand inflation performances, such as the German cism intensified about the willingness and ability mark and the Netherlands guilder, and curren- of the authorities in the weaker currency councies of countries where the outlook was decided- tries to correct imbalances in their economies. ly less favorable, such as the French franc and Adverse social reaction within Belgium prothe Italian lira. voked by the post-February devaluation program With respect to structural issues, Belgium and and by specific problems in the steel sector Denmark were not alone in facing problems of (including demonstrations and strikes) cast doubt large and growing budget deficits and rigid wage on the durability of the government's austerity bargaining systems. In general, market partici- measures. Elsewhere, institutional arrangepants felt that there was additional need in those ments, coupled with the pressures of high and and other countries—France and Italy in particu- rising unemployment, appeared to make a tightlar—to contain wage demands, to reduce govern- ening of financial policies very nearly untenable, ment expenditures, and to alleviate the pressures particularly in Denmark and Ireland where doof deficit financing on the financial markets and mestic budget deficits widened sharply. To deultimately on the growth of money. Looking fend existing parities, the authorities of Belgium, ahead, participants expressed worry that diver- Ireland, and France raised official interest rates gences in economic policy would compound ex- while money market rates in Denmark moved isting differences in economic performance. higher. France and Italy also tightened exchange They noted that not all countries maintained controls. And in all cases, intervention sales of equal vigilance in the fight against inflation. In dollars and of stronger EMS currencies became the case of France, emphasis continued to be heavier and more frequent. placed on expansionary programs to curtail un- Over the weekend of June 12-13, the EMS was employment. again realigned. The central parities of the Ger- These concerns generated renewed tension man mark and Dutch guilder were revalued by within the joint float and, as speculation mounted 4Va percent, while those of the French franc and that another realignment was inevitable, the Ger- Italian lira were devalued by 53/4 percent and 23/4 man mark and the Dutch guilder moved to the percent respectively against the other participattop of the system, while the Danish krone weak- ing currencies. The bilateral central rates of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

602 Federal Reserve Bulletin • October 1982 Belgian franc, Irish pound, and Danish krone in order to repay debt or to rebuild international were otherwise left unchanged. In subsequent reserve positions. days and weeks, the Italian lira and Franch franc traded at the top of the newly aligned band, and the Irish pound and Danish krone moved near CANADIAN DOLLAR the top while the Belgian franc traded in the middle. The German mark and Netherlands guil- The Canadian dollar was declining against the der traded at the bottom of the new alignment. U.S. currency at the end of January 1982, having The new exchange rate structure and the relax- fallen nearly 2 percent since November to ation of tensions enabled several EMS countries U.S.$0.8342 (Can.$ 1.1988), a level about 3 perpreviously constrained from easing monetary cent above its fifty-year low of August 1981. The conditions to reduce domestic interest rates. Canadian economy was in a deepening slump in France, Denmark, and Ireland permitted money early 1982, but little apparent progress had yet market rates to ease, while Belgium lowered been made on Canada's persistent double-digit official lending rates. The tendency of interest inflation rate or the high rate of new wage rates to ease occurred largely during July, when settlements. Because of the inflation problem U.S. interest rates were registering sharp de- and the risk it would be worsened by further clines from the high levels that had prevailed in declines in the exchange rate, Canadian moneprevious months. tary and fiscal policy remained anti-inflationary. However, the reduction of European interest But the policy had been widely criticized in rates lagged behind the cuts in the United States. Canada in a debate that appeared to intensify The weakness of the EMS currency bloc as a each time new evidence appeared of declining whole against the rising dollar made the authori- productive activity and worsening unemployties reluctant to take actions that could contrib- ment. The Canadian dollar tended to weaken in ute to a further depreciation of their currencies. the exchanges at such points, mainly reflecting In addition, within the EMS the reflux of funds concern that interest rates would be lowered to from revalued currencies into those that were stimulate the economy and would trigger addidevalued was comparatively modest both in tional capital outflows. In fact, Canadian interest scale and in duration, owing to the cautious rates had lagged behind the rapid rise of U.S. reaction of the market to the newly established rates during December and January, and by the parities. To be sure, participants appreciated that end of the month the favorable differential had greater efforts than earlier in the year were being narrowed by as much as 5 percentage points and made to harmonize economic policies, particu- had been reversed for some maturities. larly in view of restrictive policy measures in Downward pressure on the Canadian dollar France and Italy that accompanied the realign- also reflected the earlier worsening of Canada's ment. external position and the closely related contro- Nonetheless, participants awaited the evolu- versy over energy policy. Despite the weakening tion within various EMS countries of the pro- domestic economy, Canada's balance of payposed austerity and budget-tightening programs, ments position had deteriorated progressively sensing that political and institutional difficulties through the first three quarters of 1981, mainly would make it hard for many governments to because of climbing external debt-service costs carry out intended remedial measures. In these but also because declining demand abroad cut circumstances, part of the unwinding of specula- into Canadian exports. The deficit on current tive positions occurred not within the EMS be- account widened just as massive net investment tween revalued and devalued currencies but vis- outflows developed in connection with the "Cana-vis the dollar instead. This meant that, while adianization" of ownership in energy-related inthe EMS mechanism operated free of strains dustries. If anything, Canadian energy policy during the balance of June and July, individual became even more controversial because of the member states had less leeway than after previ- deteriorating financial position of Canadian enerous realignments to relax monetary policy or to gy companies. Falling world energy prices and enter the exchange market as buyers of currency declining demand stretched the cash flows of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 603 those companies at the same time that debt- January, the largest in a year. In fact, the Canadiservice costs were climbing as a result of buyouts an trade surplus remained large, subsequently of foreign equity interests. Moreover, the owner- underpinning the currency for the remainder of ship goals of the national energy program had not the period under review. been reached, raising the specter of further large This recovery for the Canadian dollar proved capital outflows even though the Canadian gov- brief, as selling pressure against the Canadian ernment was thought prepared to accept a fur- dollar reemerged by the middle of March. U.S. ther slowing of the rate of buyout because of interest rate increases outpaced those in Canada, financing difficulties and pressure on the ex- partly eroding the positive interest differentials change rate. that had opened up, while evidence of the Cana- Reflecting this background, sentiment toward dian economy's weakness continued to cumuthe Canadian dollar was decidedly bearish as the late. The Canadian currency thus declined during period opened. Large sales on Chicago's IMM the rest of March, but met resistance when it pushed the rate through the psychologically im- approached the technically important U.S.$0.81 portant level of U.S.$0.83 (equivalent to (Can.$1.2346) level. Through early May, the Can.$1.2057 in the interbank market) on the first exchange rate fluctuated just above this level, day of February, and the rate declined through responding mainly to modest variations in Canamost of the month as interest rate differentials dian-U.S. interest rate differentials and particiadverse to the Canadian currency opened up. pating only slightly in the general rise and fall of Highly publicized criticism of the government's foreign currencies against the U.S. dollar that anti-inflation policies during a conference of the took place. ten provincial premiers contributed to nervous- Market participants remained preoccupied ness in the exchanges, despite Prime Minister with the state of Canadian economic policy. Trudeau's strong reaffirmation of the govern- Their concerns gained new emphasis from the ment's policy stance. Then, three major private news that unemployment had risen to 9 percent participants withdrew from the Alsands develop- in March, while consumer prices had registered ment project in Alberta, drawing attention to the their second consecutive monthly increase of problems being encountered in the government's more than 1 percent. Rumors developed in the long-term program for Canada's energy develop- market, and were confirmed by an announcement. In all, the Canadian dollar fell an addition- ment on May 1, that the Alberta oil sands develal 2xh percent during February to U.S.$0.81 opment project would be abandoned after with- (Can.$1.2346). Official operations moderated drawal by all its private participants. The Bank pressures in the exchanges, and Canadian for- of Canada was a net seller of U.S. dollars during eign currency reserves declined nearly $800 mil- March, recording a drop of approximately $500 lion during the month. million in reserves, but during April its net From late February through early May, the reserve position remained about unchanged as Canadian dollar fluctuated in a range between the central bank drew $500 million on its credit about U.S.$0.81 (Can.$1.2346) and U.S.$0,825 lines with U.S. commercial banks to bolster (Can.$1.2121). During early March the Canadian reserves. dollar firmed in the exchanges, following actions The Canadian currency's relative steadiness by the Bank of Canada to push interest rates since late February ended abruptly in early May, sharply higher and reestablish an interest rate and a sustained slide began, which took the differential favorable to the Canadian dollar. Canadian dollar to record levels below $0.77 Market participants were reassured by these (Can.$1.30) by the third week of June. In a actions and the accompanying statement by the sudden wave of selling, the exchange rate plum- Bank of Canada that reaffirmed the policy of meted through the U.S.$0.81 level on May 12 for maintaining a positive interest rate spread, rela- the first time since August 1981. While market tive to the United States, sufficient to attract participants were encouraged by another large needed capital inflows. Also, Canada's trade trade surplus in March, this good news was surplus had increased significantly in late 1981 swamped by an April jump in the unemployment and had jumped to a U.S.$1.3 billion surplus in rate to 9.6 percent and by an article published in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

604 Federal Reserve Bulletin • October 1982 a leading Toronto newspaper, which suggested the rapid declines in U.S. interest rates and a that the Canadian authorities might be consider- softening of the U.S. dollar through the end of ing a shift in policy toward stimulating the econo- the period. Corporations took advantage of the my and allowing the currency to depreciate. historic low rates to meet their needs for Canadi- Government officials were quick to refute this an currency, while professionals began taking suggestion. Still, the Canadian dollar dropped profits on their very large short positions. A new nearly 1 percent that day to close at U.S.$0.8059 budget was announced on June 28, and the main (Can.$1.2408). The Bank of Canada provided feature was a proposal for a two-year national exchange market support and acted to tighten effort to brake inflation. The program included a cash reserves of the banking system. After a rise cap on salary increases of government employof lA percentage point in the central bank's ees, limits on price increases in federally regulatdiscount rate and the Prime Minister's statement ed sectors of the economy, some temporary assuring Parliament that there would be no de- deindexation of personal income taxes and social valuation or imposition of exchange controls, security payments, and new measures to assist market participants were reassured that, for the those most severely affected by the recession. moment, policy would not be changed. An- Market reaction to the budget announcement nouncement of modification to the export licens- was primarily negative, focusing on the Can.$9 ing criteria on natural gas also helped the Canadi- billion increase to nearly Can.$20 billion in the an currency. government's estimated total deficit for the cur- Market sentiment deteriorated further in June, rent fiscal year, a change that resulted from the however, on news of another decline in industrial low level of actual economic activity compared production and a record 10.2 percent unemploy- with what had been assumed in the previous ment rate in May, prompting more public calls budget. On the positive side, market participants for lower interest rates. In addition, greater were relieved that government policy remained concern developed about the financial strains firmly anti-inflationary. Thus, the exchange rate affecting Canadian corporations and even some fluctuated without significant gains. Canadian large Canadian banks. In this environment, news gross foreign exchange holdings declined about that otherwise might have been favorable to the $500 million through May and June, even after exchange rate, such as better trade figures and a additional drawings on the credit lines with Cahigher discount rate for the Bank of Canada, only nadian and foreign banks that amounted to $300 served to confirm the likelihood of further weak- million in May and $1.4 billion in June. ening of the economy and thereby deepened the The Canadian dollar firmed in the exchanges in mood of pessimism about prospects for the Ca- July, initially supported by technical factors, as nadian currency. Then, after the close of the some widely used statistical models gave strong Versailles summit meeting, Prime Minister Tru- "buy" signals and participants on the IMM deau indicated that Canada might take indepen- began turning their large short positions. U.S. dent action if U.S. interest rates did not fall by interest rates also began a decline, which was not mid-July, suggesting to the market the possibility immediately matched by equivalent cuts in Canaof a change of heart by the authorities about dian rates, and speculation arose in the market accepting the consequences of currency depreci- that the authorities planned to tap foreign credit ation. Heavy speculative sales occurred in an markets again to bolster official reserves. These increasingly bearish atmosphere, particularly af- supporting factors were reinforced by a continter the announcements of a further acceleration ued strong trade performance, seasonal inflows of consumer price inflation during May and an 8 from tourism, and an unusually heavy schedule percent quarterly decline at an annual rate in real of foreign borrowing conversions, which in com- GNP for the first three months of the year. The bination appeared to swamp any negative impact exchange rate thus fell to a historic low of on sentiment from the report of yet another U.S.$0.7683 (Can.$1.3016) on June 22. increase in June unemployment to 10.9 percent and the downgrading of some major Canadian At these levels, the Canadian dollar met resisborrowers' debt issues by an American bondtance to further declines, steadied through early rating service. Some selling emerged later in the July, and began a recovery that coincided with Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 605 month when wage talks between Prime Minister increases climbed, and in consequence, the rate Trudeau and the Canadian Labor Congress end- of inflation accelerated in 1980 and 1981 to nearly ed in disagreement, but this pressure soon abated 30 percent. On the international front, the relaand the Canadian currency continued to firm tively stable peso exchange rate and rising dodespite a temporary rise in U.S. interest rates mestic prices combined to spur imports of contoward the end of the month. sumer goods, to depress Mexican non-oil The Canadian dollar thus closed the period at exports, and to worsen a trade deficit already U.S.$0.7987 (Can.$1.2520) on July 30, AVI per- deepened by expanding capital goods imports cent lower than six months earlier, but still and recession in the industrial world. nearly 4 percent higher than its lowest level Meanwhile, the rapid growth of external inreached in June. As the Canadian dollar reversed debtedness and historically high international strongly during July, the Bank of Canada made interest rates led to rapidly climbing debt service substantial net purchases of U.S. dollars and costs. Indeed, by the end of 1981, Mexican repaid $750 million of its drawings on commer- public and private foreign currency debt reached cial banks, while adding about $400 million to an estimated $75 billion, with debt-service costs official foreign exchange reserves. During the six virtually absorbing total oil revenues in that year. months as a whole, Canada's official foreign The oil price jump of 1979-80 had worked initialexchange reserves fell about $800 million to $2.1 ly to increase Mexican foreign currency earnings billion, and $1.65 billion of the borrowings on sharply, but the high prices by 1981 produced an commercial bank credit lines remained outstand- opposite effect, cutting deeply into world oil ing as of the end of July. demand and thereby halting the rapid rise in Mexican oil production as well as lowering export earnings below what had been expected. MEXICAN PESO Moreover, late in 1981, the Mexican authorities announced a 1982 public-sector budget clearly By early 1982, the Mexican peso was widely seen intended to continue the rapid expansion of the by market participants as significantly overval- economy—a policy that intensified fears of even ued in the exchange markets, reflecting the accu- more inflation and a peso devaluation, particularmulated effects of a high and accelerating domes- ly in view of the deterioration in the external tic inflation rate, a nearly fixed exchange rate account. Despite these developments, the peso late in 1981 was trading at about Mex.$26 against the U.S. dollar over a period of several ($0,038), in nominal terms only about 15 percent years, and to an extent the appreciation of the below its level five years earlier, but in real terms U.S. dollar after the middle of 1980. Dating from substantially higher. early 1977 and increasingly after 1979, the Mexican authorities had followed an aggressive policy The authorities initially responded to the growof industrialization and expansion of domestic ing pressure on the peso by accelerating the employment, based on rapidly expanding oil gradual depreciation of the currency in the exproduction and exports, and a program of bor- changes to an annual rate of about 17 percent by rowing abroad to finance the import of industrial the end of 1981. Nevertheless, there were frecapital goods. These policies succeeded in their quent rumors of an impending maxi-devaluamajor objectives, with real output expanding in tion—such as had occurred in 1976—prompting Mexico at an annual rate of more than 8 percent bursts of foreign currency purchases by Mexican in the four years through 1981 and with commen- residents and an erosion of Mexico's foreign surate effects on employment. currency reserves, which at the end of 1981 were At the same time, however, signs of strain ap- reported at $3.7 billion. Then, on February 17, 1982, the Banco de Mexico announced that, in peared on both the domestic and the internationview of the external situation, it would temporaral fronts. Domestically, fiscal deficits had ily withdraw intervention support from the peso, climbed to approximately 15 percent of gross so that the peso could find an equilibrium level in domestic product by 1981, expansion of the the market. The Mexican authorities saw the money supply had held steady at about 33 perproblem primarily as one of external balance and cent per annum for four consecutive years, wage Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

606 Federal Reserve Bulletin • October 1982 stated that an exchange rate adjustment would government to announce a number of tax concesmake it possible to continue efforts to industrial- sions, and promises of a sympathetic review of ize Mexico and to expand employment. Accord- requests for increases of controlled prices. In the ingly, such corrective measures as were an- wake of these developments, market estimates of nounced to go along with the floating exchange 1982 Mexican inflation were revised sharply rate were addressed mainly to external consider- higher, some predicting a rate near 60 percent. In ations and to cushioning the domestic effects of consequence, the peso again came under susthe devaluation. Public spending was to be re- tained downward pressure in the exchanges and duced, with the savings used to cushion the capital flowed out of Mexico. The terms of incomes of the workers from the effect of curren- Mexico's new international borrowings, which cy devaluation and to cover the increased peso had begun to harden even before the February costs of servicing the public-sector external debt. devaluation, hardened further. In mid-April the Price controls were announced, and domestic peso stood at about Mex.$46, and was being interest rates were to be kept high, but measures allowed to decline in the exchanges at an annual were also taken to ensure adequate credit flows rate of about 22 percent. to critical sectors of the economy. Then, on April 21, the government of Mexico On the external side, the Mexican authorities announced a stabilization program, prompted by expected that the decline in the peso exchange the deteriorating external situation, but in this rate would substantially restore Mexico's com- instance including a major domestic austerity petitive position in non-oil exports, sharply re- program designed to facilitate improvement in duce nonessential imports, and halt the capital the external account. The seventeen-point proflight. The expected swing in the Mexican trade gram was aimed at sharp reduction of governaccount was in turn thought likely to reduce ment spending and the fiscal deficit, largely Mexico's need for external borrowing through through increases in prices of public-sector 1982. In addition, import licensing was to be goods and services, a tightening of monetary tightened. Immediately after the announcement, policy, and substantial further reductions of imthe peso dropped in the exchanges from ports, which in turn would reduce the need to Mex.$26.74 to Mex.$38 and in the next two borrow abroad. This program, if implemented as weeks fell to about Mex.$45, a devaluation of announced, was thought by market participants about 40 percent from the February 17 level. likely to result in a virtual cessation of Mexican Once trading settled down, some capital reflows economic expansion in 1982 and thus was taken occurred, enabling Mexico to buy back some of as a more concerted attempt to deal with the the reserves lost earlier. Through March and external situation than the February program. much of April, an uneasy peace existed in the The announcement of such a program only about exchange markets. The peso first climbed some- two months before national elections was also what and then drifted lower amid some resident taken by the market as an indication that the selling, with market participants increasingly Mexican authorities viewed the situation as inconcerned whether the February policy actions creasingly serious. At the end of April, the were sufficient to correct the external imbalance. Federal Reserve received and granted a request from the Banco de Mexico for a $600 million But it soon became clear that much if not all of drawing on the swap facility to meet month-end the potential benefit of the devaluation would be liquidity needs. lost in a burst of inflation brought on by government actions aimed at cushioning the domestic In the weeks that followed, market concerns impacts of the devaluation. The main issue con- focused on two closely linked issues. First, cerned wages. The government agreed in late whether the stabilization program would be im- March with the trade unions for increases rang- plemented aggressively enough to redress the ing from 10 to 30 percent, increases that followed serious internal and external imbalances and, a 34 percent boost in the minimum wage on second, whether Mexico would be able to bor- January 1, 1982. Employers then contended that row enough on the international capital markets the wage increases could not be absorbed with- to bridge the gap until the program had time to out adjustments on the price front, leading the work. With respect to the first issue, concern Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 607 arose that political pressures ahead of and even ruary devaluation, but also reflecting the April after the July 4 national elections would force import control program. While non-oil exports postponement of key program elements, particu- had been sluggish to respond, oil exports on a larly the sharp price increases in domestic energy daily basis had rebounded to nearly the levels and critical foodstuffs. originally targeted for all of 1982. On the domes- Through the late spring and early summer, it tic side, limitations on peso credit were showing became increasingly clear that Mexico was en- up in continuing interest rate increases. By late countering considerable difficulty in rolling over July, rates on most short-term deposits had maturing foreign currency credits and raising climbed from just over 30 percent in February to needed new cash. A "jumbo loan" of $21/2 billion about 50 percent, high by historical standards in was floated in late May, about half of which was Mexico but still well below the expected rate of new cash used to bolster foreign exchange re- inflation. But the government expenditure reducserves. The terms of the loan called for higher tions and price increases were proceeding less interest rate spreads above the London interbank rapidly than called for in the April program, offer rate (LIBOR) than had existed only a few suggesting that the reduction of the fiscal deficit months before, but loan participations were slow in 1982 would be at best only about two-thirds of to sell outside the lead underwriting syndicate the amount targeted in April. despite the higher interest yield. A few weeks Capital flight apparently tapered off somewhat later, Mexico successfully floated a Eurobond through late June and July, although downward issue, but only by offering a record interest yield pressure on the peso in the exchanges continued. on such issues of ISV2 percent. At the same time, However, with estimates of the inflation rate private-sector borrowers also were experiencing progressively revised upward, market particidifficulties, particularly Grupo Industrial Alfa, pants came to expect an acceleration in the the large Mexican industrial conglomerate, gradual peso depreciation or another major dewhich earlier had suspended payments on its valuation, and concern remained over the possiinternational obligations. And again, at the end bility of a renewal of significant speculative of June, the Banco de Mexico requested and was pressure. Thus, it was clear that more time and granted a $200 million drawing on its swap line continued forceful government action would be with the Federal Reserve to meet a temporary required before economic balance could be reliquidity need, with the funds taken down on stored, with the implication that liquidity pres- June 30 and repaid on July 1. sures would continue to be serious for some As the period drew to a close, signs appeared time. At the end of July the peso had declined to that the April economic program was beginning about Mex.$49 to the U.S. dollar. And, on the to take effect, although at the same time many final day of the period, Mexico again drew on its came to question whether the program was suffi- swap line with the Federal Reserve to finance a cient to restore external and internal balance short-run liquidity need, taking down $700 mileven if fully implemented. Imports had come lion on July 30 and repaying the amount in full down sharply, partly in consequence of the Feb- the following business day. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

609 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 SUMMARIES FOREIGN SUBSIDIARIES OF U.S. BANKING ORGANIZATIONS James V. Houpt and Michael G. Martinson— Staff, Board of Governors Prepared as a staff paper in mid-1982. Whereas much attention has been given to the tained from examinations, on-site visits, applicarecent increase in foreign ownership of U.S. tions, and other sources. Much of this type of banks, the U.S. ownership of foreign banks and information is confidential for individual compafinancial institutions has gone largely unnoticed. nies, but it has been sufficiently aggregated or Indeed, many bank analysts ignore the role of generalized to permit disclosure. Because many subsidiaries altogether and point solely to the of these statistics have not been previously reoperations of foreign branches of U.S. banks to leased to the public, they should improve the indicate the level of the banks' foreign activity. understanding of the structure and overseas ac- The data on foreign branches do, in fact, account tivities of U.S. banks. for most of the foreign assets of U.S. banks, but The study demonstrates that subsidiaries are they exclude the assets of the banks' subsidiar- engaged in financial, bank-related activities, with ies, which by one measure exceed $83 billion. about two-thirds of the assets in foreign compa- This study discusses the growth trends and nies that are themselves basically commercial activities of foreign subsidiaries of U.S. banks, banks. Other major activities of subsidiaries are bank holding companies, and Edge corporations; merchant banking, consumer finance, commerthe roles these subsidiaries perform in the inter- cial finance, and leasing. Most subsidiaries are national operations of the parent organizations; located in Western Europe and offshore financial and the way they are supervised and regulated by centers, and 90 percent of the assets of foreign the Federal Reserve. The study is based on subsidiaries are owned by ten large U.S. banking annual financial data supplied by the foreign organizations. The study identifies the major subsidiaries, supplemented by information ob- subsidiaries by their principal functions and dis- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

610 Federal Reserve Bulletin • October 1982 cusses both the banking and the nonbanking increased tenfold during the last decade, and companies. It shows that subsidiaries are an that they are likely to continue to be a useful integral part of the international financial net- vehicle for U.S. banks seeking to expand their works of large U.S. banks, that their assets have international banking capabilities. • REDLINING: RESEARCH AND FEDERAL LEGISLATIVE RESPONSE Glenn B. Canner—Staff, Board of Governors Prepared as a staff paper in mid-1982 Since 1975, the Congress has passed two legisla- itory institutions have shown wide disparities in tive acts designed to encourage institutional the number and dollar volume of conventional mortgage lenders—commercial banks, savings mortgage loans extended to borrowers in differand loan associations, credit unions, and mutual ent geographic areas. They also have shown that savings banks—to help meet the housing credit in some neighborhoods mortgage finance is domneeds of the communities in which they are inated by government-insured or governmentchartered. The first, the Home Mortgage Disclo- guaranteed contracts, and in others conventional sure Act (HMDA) of 1975, was enacted during a loans are predominant. In general the redlining ground swell of opposition to the alleged redlin- studies have found that variations in lender being activities of institutional mortgage lenders. havior toward borrowers in different geographic The second, the Community Reinvestment Act areas can be traced to factors associated with (CRA), was passed in 1977. The CRA directed income variations, mortgage contract characterfour of the federal financial supervisory agen- istics, lender specialization, property charactercies—the Board of Governors of the Federal istics, neighborhood factors, and regulatory in- Reserve System, the Comptroller of the Curren- fluences such as usury laws and mortgage cy, the Federal Home Loan Bank Board, and the portfolio constraints. Anecdotal evidence and Federal Deposit Insurance Corporation—to use information obtained from CRA analysis of bank their examinations and their reviews of applica- applications suggest that at times some lenders tions by financial institutions to encourage these have adopted mortgage loan policies that may institutions to help meet the credit needs of their have restricted the flow of credit to certain communities, including low- and moderate-in- neighborhoods. However, the empirical studies come neighborhoods, in ways that are consistent offer little evidence to indicate that any neighborwith safe and sound operation of the institution. hood has been simultaneously redlined by all Whereas the HMDA relied on the force of public lenders, although some discrimination by indidisclosure to influence the loan policies of finan- vidual institutions may exist. cial institutions toward certain sections of their The HMDA requires public disclosure of the communities, the CRA placed responsibility for geographic distribution of home mortgage and promoting bank activity in these neighborhoods improvement loan extensions by federal deposion the regulatory agencies. tory institutions. Research indicates that the This paper focuses on the widespread research HMDA data is useful both to banking regulators that has analyzed the redlining issue. The review in fair housing and CRA enforcement and to describes the research methodologies, findings, community groups in supporting allegations of and limitations of each statistical approach. In unequal neighborhood treatment by lenders. addition to the research, the paper discusses the The CRA empowers the federal banking regufederal legislative response to redlining and ex- lators to encourage the depository institutions to amines issues related to the HMDA and the serve the credit needs of their entire communi- CRA. ties and to assess the degree to which they are Studies of alleged redlining activities by depos- doing so. The act was not intended to impose Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Staff Studies 611 bureaucratic credit allocation on the banking The Federal Reserve has taken the position that system, a position the Federal Reserve Board it will scrutinize carefully such agreements to has reiterated on numerous occasions. However, ensure that they are consistent with the safety it may have that effect in practice because lend- and soundness of the bank and that they do not ers, to avoid lengthy delays and possible denials establish a preference for credit extensions that of bank applications, may choose to negotiate a is inconsistent with evenhanded treatment of settlement with a particular community group. borrowers throughout the community. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

612 Industrial Production Released for publication October 15 second month, and output of defense and space equipment continued to expand. At 137.3 per- Industrial production declined an estimated 0.6 cent of the 1967 average, the index for Septempercent in September, following a roughly simi- ber is 10.8 percent below its recent peak in July lar drop in August. The decline in September was 1981. concentrated in business equipment and in dura- In market groupings in September, output of ble materials, while output of consumer goods consumer goods remained at its level in August, was unchanged on balance. Output of nondura- as production of home goods and nondurable ble materials rose more than 1 percent for the consumer goods edged upward. Autos continued 1967 = 100 1967 = 100 -TOTAL INDEX 170 170 Materials output \ 150 130 Products output [ i ll i 1969-70=100 Annual rate, millions of units 180 18 140 14 -MANUFACTURING Nondurable / ^ Durable \ / 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: September. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

613 1967 = 100 Percentage change from preceding month PPPeeerrrccceeennntttaaagggeee ccchhhaaannngggeee,,, GGGrrrooouuupppiiinnnggg 1982 1982 SSSeeepppttt... 111999888111 tttooo SSSeeepppttt... Aug." Sept.e May June July Aug. Sept. 111999888222 Major market groupings Total industrial production 138.1 137.3 -.7 -.4 .1 -.5 -.6 -9.4 Products, total 141.4 140.9 -.4 -.1 .3 -.8 -.4 -6.7 Final products 140.8 140.3 -.3 -.1 .2 -1.1 -.4 -6.5 Consumer goods 144.4 144.4 1.1 .8 .8 -1.0 .0 -2.3 Durable 132.8 132.2 1.5 1.5 1.9 -3.2 -.5 -5.8 Nondurable 149.1 149.2 .9 .6 .4 — .2 .1 -1.1 Business equipment 151.6 149.2 -3.0 -2.0 -1.3 -1.9 -1.6 -18.3 Defense and space 109.3 110.2 .5 -.1 1.4 .2 .8 7.0 Intermediate products 143.6 143.4 -.8 -.5 .7 .5 -.1 -7.2 Construction supplies 125.0 125.2 -1.1 .7 .9 .6 .2 -10.4 Materials 132.9 131.8 -1.4 -.6 -.5 .0 -.8 -13.6 Major industry groupings Manufacturing 137.7 136.9 -.6 -.1 .4 -.4 -.6 -9.4 Durable 124.3 122.8 -.5 -.5 .3 -1.3 -1.2 -12.8 Nondurable 156.9 157.4 -.7 .2 .4 .6 .3 -5.1 Mining 118.2 115.7 -3.9 -4.2 -2.6 -1.7 -2.1 -20.2 Utilities 168.4 168.9 -.1 -.9 -1.1 .5 .3 .7 p Preliminary. e Estimated. NOTE. Indexes are seasonally adjusted. to be assembled at the annual rate that had goods and for equipment. Output of energy mateprevailed in August—5.5 million units—but out- rials declined 1.5 percent as output of coal was put of lightweight trucks for consumer use de- reduced mainly because of the rail strike. Howclined. Production of business equipment fell 1.6 ever, output of nondurable materials, such as percent in September, close to the average textiles, paper, and chemicals, increased 1.4 monthly decline since the end of 1981. In Sep- percent following a similarly large increase in tember large declines occurred in production of August. building and mining, manufacturing, and transit In industry groupings, manufacturing output equipment. Output of construction supplies was reduced 0.6 percent further in September edged up in September, although somewhat less because of sharp cutbacks in durable goods than in each of the preceding three months. industries. Production in nondurable manufac- Production of materials was curtailed 0.8 per- turing continued to increase slightly as did utility cent, reflecting a sharp reduction in durable output. Mining output, however, was again rematerials, particularly in parts for consumer duced sharply. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

614 Statements to Congress Statement by Lyle E. Gramley, Member, Board budget, fiscal and monetary policy will be workof Governors of the Federal Reserve System, ing together to defeat inflation. before the Subcommittee on Forests, Family Farms, and Energy of the Committee on Agriculture, U.S. House of Representatives, September THE CURRENT ECONOMIC SITUATION 16, 1982. The nation has been in the grip of an economic I am pleased to discuss with you the present state slowdown for some time. The recession began in of the housing and forest products industries and the housing and heavy durable goods industries, the outlook for the future. My testimony will but it has since become widespread among indusreview briefly the current economic and financial tries and geographic regions. Nevertheless, situation, discuss the origins of the problems those components of the economy most heavily facing housing and related industries, and indi- dependent on credit have been affected the loncate what I believe to be the appropriate course gest and the most severely. By late last year, for government policy in the period ahead. housing starts had fallen to the lowest level since The problems of the housing industry and World War II, and output in sectors closely those that supply it are part of a broader econom- related to housing—such as the forest products ic malady. We must keep that carefully in mind industry—has contracted sharply. The auto inas we look for solutions. Quick fixes tailored to dustry and producers of business capital equipspecific industries could prove illusory, and ment also have been hit hard. counterproductive over the longer term, if they The hardships resulting from high interest diverted us from attending to the broader policy rates have not stopped at our national borders. needs of the national economy. High interest rates have had substantial adverse We are now in the process of reversing an effects on borrowers abroad, reflecting the ininflation that began in the mid-1960s and that creased economic interdependence of nations steadily worsened until it threatened to bring and the growing integration of international capiserious harm to our economic institutions. This tal markets. effort has imposed substantial costs in terms of The human costs of the recession have been reduced output and employment, economic serious. The overall unemployment rate has hardships for individuals and families, and de- reached a post-World-War-II high of nearly 10 clining sales and profits for many businesses. percent, or more than 10 million people. The fact The credit-dependent housing industry and the that the recession has been most severe in the industries related to it clearly have suffered dis- construction and durable goods industries means proportionately. However, these industries that the burden of rising unemployment has been clearly have as much to gain as others—if not relatively heavy on adult men, although joblessmore—from a successful effort to restore price ness among young and inexperienced workers stability. We have made substantial progress also is relatively high. In addition to those offiduring the past two and a half years in reducing cially recorded as unemployed, hundreds of inflation. Price stability, lower interest rates, and thousands of discouraged workers who want a healthy economic recovery are all achievable. work have given up looking for jobs. We in the Federal Reserve will persist in our Economic and personal hardship has been policy of monetary discipline, and if the Conparticularly severe in those areas of the country gress and the administration are successful in where the most depressed industries are concentheir efforts to reduce the deficit in the federal trated. Employment in the auto industry—which Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

615 is facing both cyclical and structural problems— unusually weak; consumer spending remains has fallen nearly a third during the past several sluggish; and business fixed investment is declinyears; in July, the unemployment rate in Michi- ing substantially. gan was almost 15 percent. Because of the mas- My judgment is that a pickup in activity is sive downswing in national housing activity, likely to develop in the months ahead, bolstered scores of lumber mills have been closed or have to a degree by the midyear tax cut and the effects curtailed operations, and many thousands of of the recent drop in market interest rates. Hisemployees in the west and south—the areas in tory suggests, moreover, that some momentum which most of the nation's forest products are will develop once an upturn is in process. But the produced—have been laid off or had their work- toll of three years of financial and economic weeks cut. In Washington and Oregon, for exam- stress will limit the pace of recovery for a while. ple, the number of persons employed in the Business capital investment is perhaps the major lumber industry during the second quarter of this point of vulnerability. Current and planned outyear was almost 30 percent below the level four lays for plant and equipment have continued to years earlier. decline substantially; both domestic and export Economic and financial market developments markets are weak; capacity utilization is low; have taken a heavy toll on individuals and insti- temporary overbuilding of offices and stores has tutions in a wide range of other industries as appeared; operating profits of nonfinancial corwell. We have seen bankruptcy or reorganization porations have fallen to a postwar low; and the of a significant number of major corporations and illiquidity of many firms is likely to discourage a large number of small businesses. Business businesses from making long-term investment failures, in fact, have climbed to the highest commitments. Housing is not apt to contribute to levels since the 1930s; even when measured cyclical recovery to the extent that it has in past relative to the total number of concerns in opera- upswings, at least not until long-term interest tion, business failures are the highest in several rates decline considerably further. The overall decades. And the substantial rise in market inter- pace of expansion during the first several quarest rates since 1978 has placed serious strains on ters of recovery, therefore, is apt to be a good many financial institutions, particularly those deal weaker than has been typical of other postthat traditionally have supplied the lion's share war recoveries from recession. of housing credit. Many thrift institutions that relied on short-term deposit funds and made long-term, fixed-rate mortgage loans have en- SOURCES OF THE PROBLEMS countered severe earnings and net worth problems. Strenuous efforts by the regulatory agen- Two factors are primarily responsible for the cies have been required to support capital current condition of the general economy and the positions and to help arrange appropriate merg- credit-dependent sectors such as housing. The ers and acquisitions of financially troubled firms. first is the strong inflationary momentum that About 300 mergers took place in the savings and built up over the past 15 years or so. The second loan industry during 1981 and roughly 250 have is the mix of public policies that has been in place occurred so far this year, quite a few of which during much of the past several years. were arranged or assisted by the regulators. Toward the end of the last decade, there was There is some evidence suggesting that the fairly general recognition that inflation had been recession of 1981-82 is now behind us. Real allowed to get out of hand and that it was gross national product increased somewhat in seriously damaging our economy. Fighting inflathe second quarter, when the rate of inventory tion came to be recognized as the top priority for liquidation exercised less drag on the economy economic policy. In late 1979, the Federal Rethan it had in the first three months of the year. serve moved to ensure the monetary discipline Moreover, the index of leading economic indica- that was needed if inflationary pressures were to tors has moved up for several months in a row. be contained. Unfortunately, for a time the Sys- Yet, there is little evidence so far that recovery tem carried on that battle largely alone. Large is under way. Labor markets continue to be and growing budget deficits created a serious Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

616 Federal Reserve Bulletin • October 1982 imbalance in fiscal policy, contributing to ex- inflation. Moreover, we are benefiting on the traordinarily heavy pressures on financial mar- inflation front from the continued glut in world kets and record interest rates. oil markets, from the improvement in the value Let me remind you of the serious state of the of the dollar abroad, and from harvests of major federal budget at midyear 1982. Leaders from the grain crops that will apparently be very abunadministration and the Congress agreed that, dant. under current law and assuming the President's Slower inflation has helped to take pressure off proposed defense buildup, the deficit in fiscal financial markets, by reducing demands for mon- 1985 would exceed $230 billion if the economy ey and credit and by lowering the inflation premigrew reasonably well—that is, at an average rate um contained in nominal interest rates. The of 4 percent a year—over the 1983-85 period. longer that improved price performance is main- The deficit in fiscal 1985 would then be about 5!/2 tained, the greater will be the confidence of percent of GNP, by far the largest of any postwar private market participants that a decisive downyear. Since net private saving historically aver- trend in inflation is being achieved. ages about 7 to 8 percent of GNP, a deficit of this Sentiment in financial markets has also been size would absorb roughly three-fourths of net improved by evidence of the breakup of the private saving, leaving precious little to finance political logjam that appeared last spring to be net private investment in business capital and holding up progress on the budget. Passage of the housing. tax bill has not ended the need for concern about Even under the best of circumstances, bring- federal deficits and the threat they contain for ing an end to an inflation that had gone on largely financial markets and for private industries most unchecked for a decade and a half was bound to heavily dependent on credit. But its passage does be painful. But the threat that monetary and suggest that the clear and present danger of a fiscal policies might collide head on made it burgeoning deficit is widely recognized, and that doubly so. the process of reducing the government's ab- Since midyear, interest rates on short-term sorption of credit is now under way. securities have come down dramatically, and improvement has also occurred in those interest rates that have such an important bearing on the FUTURE PROSPECTS AND POLICIES pace of economic activity—that is, on corporate bond rates, mortgage rates, and the rates paid by Let me turn, next, to the policies that are most business borrowers at banks. likely to be successful in helping to restore health These developments reflect, in part, a recogni- to all major segments of our nation's economy. tion by financial market participants that the The fight against inflation has been long and recovery in economic activity likely to develop arduous. A temptation exists, therefore, to beover the rest of 1982 and on into 1983 will be come impatient, and to adopt a course of ecocomparatively weak. They also stem, however, nomic policies designed to encourage greater from the improved prospects for budgetary disci- strength of recovery in the near term. Declaring pline and a growing realization that monetary the battle against inflation won would be premarestraint has contributed importantly to reduced ture. Inflationary expectations remain powerful, inflation. despite recent progress on the price front, and In 1979 and 1980, the long-term trend rate of downgrading of the inflation problem as our top price increase was probably in the neighborhood priority could mean that the costs borne to this of 10 percent. With food and energy prices rising point would have been largely wasted. rapidly at that time, actual inflation rates were Indeed, I would argue that the single most above 12 percent. Since then, the underlying important thing government can do for the benetrend rate of price rise has, I believe, been cut fit of housing and related industries is to pursue nearly in half—largely because some moderation policies that will get rid of inflation once and for has occurred in the rise of wages and salaries. all. Inflation produces the high interest rates that Improvements in productivity introduced by cause ratios of monthly payments to borrower business firms may also be helping to moderate income to rise to prohibitive levels during the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 617 early years of the home mortgage contract. Ex- Our nation also badly needs actions to achieve pectations of inflation also cause prices of houses smaller "structural" federal deficits—that is, to to shoot up faster than prices of consumer goods assure that deficits will decline as the economy and services, making it more difficult for first- recovers. The congressional budget resolution time home buyers to meet monthly payment and was a welcome show of determination to achieve downpayment requirements. During the latter a sounder fiscal policy, and the recent tax bill part of the 1970s, for example, average home was a concrete step toward implementing the prices were rising at rates of nearly 20 percent needed budgetary restraint. But a great deal per year, roughly twice the pace for goods and more needs to be done as the economy expands. services generally or for personal income. Indeed, even if the objectives of the budget Inflation can be disastrous for rental housing, a resolution are fully reached, the deficit appears particularly important alternative for our less likely to be higher in the next several fiscal years affluent citizens. The production of apartment than in the current year, despite the fact that the structures for rent has been depressed for many economy will be expanding. Of course, some of years, even as vacancy rates have fallen to the deficit in fiscal year 1983 will reflect the historic lows. Investors have been unwilling or economic weakness this year and the time reunable to take on the risks of rental projects for quired merely to regain lost ground. But abwhich predicting returns is quite difficult, espe- stracting from those factors, a structural deficit cially when local governments might abruptly problem would remain to be dealt with, even if impose controls on the rents that can be charged. all the deficit-reducing measures in the budget We must have a sensible, coherent, and unam- resolution were enacted. biguous set of federal policies to achieve a sus- If we do not take strong steps to deal with this tained economic recovery unhampered by resur- budget problem, continuing federal deficits will gent inflation and heightened financial pressures. preempt an excessive share of net saving gener- The Federal Reserve is fully cognizant of the ated by the private sector and, in the process, need to follow policies that will permit a healthy place renewed pressures on credit markets when and sustained economic recovery. But we have the economy starts expanding. This prospect, of no intention of abandoning the basic monetary course, also influences the attitudes of both discipline that is needed if we are to achieve that borrowers and lenders, limiting the decline in goal. We recognize that excessive monetary long-term rates of interest needed now by creditgrowth would simply embed inflation and infla- dependent sectors such as homebuilding. A credtionary expectations more deeply in the econom- ibly firmer budget posture is needed to promote ic system, ultimately pushing long-term interest confidence that fiscal and monetary policies are rates to levels that would exacerbate the prob- working together in fighting the battle against lems of housing and housing-related industries. inflation. • Statement by Henry C. Wallich, Member, Board tion to the growing tide of foreign interest in of Governors of the Federal Reserve System, investing in our banking system. That interest, as before the Subcommittee on Commerce, Con- I mentioned then, reflected the growing internasumer and Monetary Affairs of the Committee on tionalization of banking, which had been mani- Government Operations, U.S. House of Repre- fested earlier by the movement abroad by U.S. sentatives, September 30, 1982. banks. In the past two years, foreign investment has continued at significant levels, though per- This is the third time I have been privileged to haps not so intensely. By the middle of this year, appear before this subcommittee to present the 134 banks were controlled by foreign banking views of the Board of Governors on the subject organizations and other foreign investors, or of foreign investment in U.S. banks. On those about 35 more than when I last testified. These previous occasions in 1979 and 1980, some espe- 134 banks account for approximately 5!/2 percent cially large acquisitions had drawn public atten- of domestic banking assets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

618 Federal Reserve Bulletin • October 1982 The invitation for the Board to be represented emphasis on retail lending as a proportion of the at these hearings asked that the testimony treat total was evident as a result of greater diversifiseveral specific points: first, the performance of cation of the lending portfolio. foreign-owned banking institutions; second, Fed- 4. Within the total group, the greatest imeral Reserve policy on the supervision of foreign provement in earnings and the largest increases bank holding companies; third, the procedures in capital took place at banks acquired by foreign followed by the Board in processing applications individuals; however, the earnings base of these by foreigners to invest in U.S. banks; and finally, banks was low before acquisition. the issues that were present in recent, specific applications. These generalizations are based on a review of banks acquired by foreign interests and not those established de novo by foreigners. They are also THE PERFORMANCE OF FOREIGN-OWNED based on information through 1980. However, BANKING INSTITUTIONS partial data for 1981 support these findings. Supervisory experience forms another aspect In the past two years, there has been an increase of the performance of foreign-owned banking in foreign acquisitions of large U.S. banking organizations. As you know, direct supervisory organizations such as Crocker National Corpora- responsibility is shared at the federal level among tion, Financial General Bankshares, and LITCO the Office of the Comptroller of the Currency, Bancorporation. I shall come back to these ac- with responsibility for national banks; the Federquisitions later. Significant interest has also been al Reserve, with responsibility for state member shown in smaller institutions, notably in Florida banks and bank holding companies; and the and California. Federal Deposit Insurance Corporation, with re- These acquisitions and investments have oc- sponsibility for all other insured banks. The curred recently and, indeed, some are currently Federal Reserve has supervisory responsibility in process. It is yet too soon, therefore, to for 12 state member banks that are owned by attempt to draw any firm conclusions about the foreigners and for 67 foreign-owned bank holding performance of these banking organizations un- companies. We have direct knowledge of and der their new owners. As the subcommittee is experience only with these foreign-owned instiaware, the Board and the other bank regulatory tutions. However, we do keep in close touch agencies have been monitoring on a continuous with the other banking agencies about their subasis the behavior and performance of foreign- pervisory experience with foreign-owned banks owned banking organizations. The most recent under their jurisdictions. Specific material on the overall review by the Board staff was completed supervisory experience has been filed by the last year, and I have attached it to this statement three agencies with the subcommittee. Here, I for the subcommittee's information.1 should like to confine my remarks to some The principal conclusions of the review may general observations about that experience. be summarized as follows: Supervisory experience may be judged in several ways. One way is according to the condition 1. Before their acquisition, the banks generalof the banking institution because the ultimate ly had lower earnings and lower equity ratios objective of bank supervision is the promotion of than other banks in their peer group. sound and healthy banks. Another way is the 2. After acquisition, earnings generally imrecord of compliance by the banking institution proved, though not fully to peer-group levels, with the laws and regulations to which it is while equity ratios were raised to peer levels as a subject. result of infusions of capital by the new owners. On the first measure, evidence has already 3. The business orientation of the acquired been cited that the equity ratios and earnings of banks did not change materially. Somewhat less banks acquired by foreigners generally showed improvement. Further evidence is available from 1. The attachments to this statement are available on the ratings assigned by the supervisory agencies request from Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. on the basis of examination reports. In response Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 619 to your request, the three banking agencies pre- principally in their capability to be a continuing pared and transmitted to the subcommittee a source of strength to the banking operations in summary table of the ratings of a sample of the United States. banks. Of the 52 banks in the sample, 40 had Since that statement appeared three and a half strong composite ratings for financial soundness years ago, the Board has implemented it in of one or two. Only 5 were rated unsatisfactory, several ways. First, before approving the estaband some of these had been weak when acquired lishment of a foreign bank holding company, the by foreign investors. Board assures itself about the financial and man- The record of compliance is more difficult to agerial resources of the foreign organization. measure. There is probably not a bank in the Applicants are required to furnish extensive in- United States whose examination report does formation so as to enable the Board to render a not cite violations of law and regulations. Most judgment that those resources are sufficient to of these violations are technical and most are provide support to the U.S. subsidiary bank. The immediately corrected, usually during the exami- same requirements apply to domestic applicants. nation itself. Foreign-owned banks have proved Also, foreign supervisory authorities are contactno different in this regard. A supervisory prob- ed about the financial condition and the reputalem exists only when serious violations occur or tion of the applicant. when a pattern of violations is recurring. This Second, the Board has established annual resituation may be cause for a cease-and-desist porting requirements through which foreign bank order or some other supervisory action. On this holding companies submit information permitbasis, our experience has been—and I believe ting an appraisal of the financial condition of the this is shared by the other agencies—that the foreign organization on a continuing basis. The compliance record of foreign-owned banks requirements also serve for assessing compliance equals that of similar domestically owned banks. with regulations governing U.S. operations of foreign banking organizations. Third, a reporting system has been put in place SUPERVISION OF that monitors transactions between the U.S. FOREIGN BANK HOLDING COMPANIES bank and the foreign parent organization on a quarterly basis. Under the law, responsibility for the supervision Fourth, foreign bank holding companies are of bank holding companies has been assigned to required to report any nonbank activities comthe Board. That responsibility includes all bank menced in the United States and the authority holding companies whether domestically or for- under which they are undertaken. The commiteign owned. tee staff has seen copies of the reports that have Of the 134 U.S. banks controlled by foreign been filed with the Board. interests, 84 are held through corporations. A primary supervisory tool in the case of These corporations are required to become bank domestic bank holding companies is the examiholding companies and fall under the direct su- nation or inspection process. The examination pervisory jurisdiction of the Board. Within this process is also an important supervisory tool in group of 84 banks, 60 are owned by foreign the case of foreign bank holding companies, banking organizations and the remainder by indi- although the ways in which this tool is employed vidual investors. necessarily differ. The foreign organization itself The Board outlined its approach to the super- is not inspected, because it is located outside the vision of foreign bank holding companies in a jurisdiction of the United States. For information policy statement issued in February 1979. The about the foreign organization, reliance is placed central theme of that statement is that the on the reports just mentioned and on relation- Board's primary concerns are with the opera- ships with foreign supervisory authorities. Nor is tions and activities conducted in the United there a system of regular inspections of nonfinan- States and that our supervisory efforts would be cial subsidiaries in the United States. As you so directed. The Board's interest in the foreign know, under the law, foreign banking organizaparent organization or in the foreign owners lies tions may have indirect subsidiaries in the Unit- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

620 Federal Reserve Bulletin • October 1982 ed States that engage in nonfinancial activities of of an existing bank and becomes the largest kinds not permitted domestic bank holding com- single shareholder. The relevant banking agency panies, provided certain conditions are met. Be- has to determine the investor's condition and cause the Board is not responsible for the condi- status. The ability to make such a determination tion of the foreign banking organization and its is necessarily complicated by distance and differactivities, financial and nonfinancial, outside the ences in foreign conditions and standards. United States, interest in any indirect nonfinan- On the question of continuing supervision, cial activities in the United States is limited to there is the problem of assuring that the bank is compliance with regulation. When the U.S. bank managed well and that it is not used for the is held by an intermediate U.S. holding compa- benefit of the foreign owners to the detriment of ny, that company and its nonbank subsidiaries the condition of the bank. Individual investors, will be inspected, as necessary, on the same by comparison with banking organizations, may terms as a domestic bank holding company. The not have the same interest in preserving their subsidiary banks are, of course, examined by the banking reputations. The first line of defense on relevant bank supervisory agency, and the Board this point is to limit entry to persons of undoubtrelies on the examination reports prepared by ed integrity and banking experience. On the those agencies to monitor the condition of those whole, as described earlier, the banks owned by institutions. foreign individuals have been managed well and For the most part, foreign bank holding com- have posed few supervisory problems. However, panies are foreign banking organizations. As there have been exceptions, one being the Amersuch, they are usually the major banks in their ican Bank and Trust Company situation in New home countries; they are supervised by foreign York several years ago, when a foreign investor banking authorities; and they have a recognized abused the bank to his own benefit. The subcomreputation in the international marketplace. mittee is familiar with that unfortunate experi- These banks acknowledge that they are guests in ence, which illustrates the need for vigilance in this country and are anxious to remain in good the examination process when dealing with standing by adherence to the rules and regula- banks owned by individuals, whether domestic tions to which they are subject. For these rea- or foreign. sons, the Board has not been confronted with serious problems in supervising the U.S. activities of these companies. FEDERAL RESERVE PROCEDURES ON By contrast, when U.S. banks are controlled APPLICATION ACQUISITIONS by foreign individuals, certain supervisory problems do arise. One relates to the initial entry of I should now like to turn to a description of how the foreign investors in seeking to acquire or the Board handles applications by foreigners to establish a bank. Another relates to the supervi- acquire U.S. banking organizations. sion of the continuing operations of those banks, The Bank Holding Company Act provides once they have been acquired. However, these several criteria that the Board is required to problems also exist when domestic individuals consider in judging applications to form bank acquire banks. holding companies: (1) the financial and manage- On the question of entry, the principal problem rial resources of the acquiring company and the is ascertaining the financial strength and reputa- bank to be acquired; (2) the future prospects of tion of the would-be foreign owners. This is a each; (3) the convenience and needs of the problem faced by the Office of the Comptroller of community to be served; and (4) the effects of the the Currency when foreign investors seek to proposal on competition. Similar criteria are to charter a national bank and by the various state be considered by the banking agencies under the authorities when a state banking charter is Change in Bank Control Act. These criteria sought. The problem is also encountered in all apply to both foreign and domestic acquirers. three federal banking agencies under the Change When an application is received by the Federal in Bank Control Act when a foreign investor Reserve from foreign banking organizations or seeks approval to acquire more than 10 percent foreign individuals to form a bank holding com- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 621 pany, the same general procedures are followed Midland Bank had total deposits of $55 billion and the same general information is required as if and was the third largest bank in the United domestic organizations or domestic individuals Kingdom. Crocker National Bank had total aswere involved. Also, a concerted effort is made sets of $19 billion and was the fourth largest bank to obtain additional information that will permit in California and the twelfth largest in the United an evaluation of the foreign banking organization States. viewed against the environment in which it oper- Under the proposal, Midland Bank would imates in its home country. Foreign individuals are mediately acquire 51 percent of the stock of required to submit financial statements and other Crocker National Corporation with the intention information sufficient to assess their ability to of ultimately acquiring 57 percent. The end result manage a banking organization and to stand of the acquisition would be an infusion of $495 behind the acquired bank. Contact is usually million in new capital into the Crocker National made with the appropriate foreign supervisory Corporation. At the time of the application, authority about the condition and reputation of Midland Bank had no operating banking presthe foreign applicant. When a foreign banking ence in the United States. Its only representation organization is involved, this procedure is in was as a part owner of European American Bank keeping with the broad agreement reached and Trust Company, a consortium bank in New among the central banks and bank supervisory York owned by six banks from different Euroauthorities of the Group of Ten countries and pean countries. Switzerland that foreign banks operating within Although the acquisition of a large U.S. bank their territories should be adequately supervised was involved, virtually no issues were presented institutions in their home countries and that the by the application under the criteria specified in home country supervisors shall supervise the the Bank Holding Company Act. The application activities of their banks on a consolidated basis. indicated no adverse competitive factors because Midland Bank had no direct banking operations in California or elsewhere in the United States. Midland Bank was in strong financial condition, SOME RECENT MAJOR ACQUISITIONS and its reputation as an international bank was undoubted. The proposed capital infusion was I propose now to comment on three recent major regarded as a factor that weighed in favor of acquisitions as requested in your letter to testify. approval. The cases are the following: (1) the acquisition of In approving the bank acquisition, the Board Crocker National Corporation by Midland Bank also had to consider the other activities of the Limited; (2) the acquisition of Financial General Midland Bank organization in the United States Bankshares by a group of Middle Eastern inves- and their consistency with the requirements of tors; and (3) the acquisition of LITCO Bancor- the Bank Holding Company Act. As a result, the poration by Banca Commerciale Italiana. My Board order approving the bank holding comparemarks will be confined to the highlights of each ny formation required that Midland divest its 20 case. More details are contained in the Federal percent interest in European American Bank on Reserve Board's orders approving the acquisi- the grounds that retention would be inconsistent tions, which I should like to submit for inclusion with the policy underlying section 3(d) of the act. in the record. Under that section, bank holding companies are effectively barred from acquiring more than 5 percent of the shares of a bank in another state. Crocker National Corporation The Board also denied an exemption from the prohibitions of section 4 of the act for the activi- In early 1981, Midland Bank Limited, one of the ties of the U.S. subsidiary of Thomas Cook major London clearing banks, applied to acquire Limited. That company provides retail and a majority interest in Crocker National Corpora- wholesale travel services in the United States, an tion, whose principal subsidiary bank and princi- activity that the Board has found to be not pal asset is Crocker National Bank. At the time, closely related to banking. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

622 Federal Reserve Bulletin • October 1982 Financial General Bankshares the record on which the Board based its decision. In making that decision, the Board took special Financial General Bankshares is a multistate care to review the financial resources of all the bank holding company with 12 banks located in investors. The information submitted demonthe District of Columbia and the states of Mary- strated that all the investors possessed sufficient land, New York, Tennessee, and Virginia. In financial resources to make the acquisition and November 1978, the first applications to acquire to provide future support if needed. this holding company were made by Credit and The financial factors relating to the acquisition Commerce American Holdings of the Nether- of Financial General were considered to be conlands Antilles and Credit and Commerce Ameri- sistent with approval. So far as management was can Investment of the Netherlands. The two concerned, the investors did not propose to take applicant companies were formed by a group of an active role themselves. Rather, they proposed individual investors from several Middle Eastern to have all the director and top management countries for the purpose of the acquisition. A positions filled by qualified Americans. The protracted process ensued. The proposed acqui- Board carefully reviewed the composition of the sition was at first opposed by existing manage- proposed board of directors of Financial General ment of Financial General and its subsidiary and the proposed senior management and was banks. Moreover, two of the state banking super- satisfied about their qualifications. visors involved (Virginia and Tennessee) recom- The Board approved the acquisition on August mended denial on the grounds that the acquisi- 25, 1981. The transaction was consummated in tion would be detrimental to the convenience and April 1982, and the name of the organization was needs of the communities served. In addition, subsequently changed to First American Bankthe Attorney General of the state of Maryland shares. issued an opinion that Maryland state law precluded a Maryland banking institution from being subject to an "unfriendly" affiliation. In these LITCO Bancorporation circumstances, the Board dismissed the first applications on the grounds that it was prohibited In December 1981, Banca Commerciale Italiana from approving a proposal that would violate (BCI) applied to the Board to acquire LITCO state law. Bancorporation of New York, a bank holding These complications were subsequently re- company owning all of the shares of Long Island solved, and a new application was filed in No- Trust Company. Long Island Trust Company vember 1980. Whereas a number of technical had about $1.1 billion in assets, and its business issues remained, the principal issue for the Board orientation was primarily directed toward dothen became the identity of the purchasers, their mestic business in the metropolitan New York reputation and their financial strength, and what area. BCI was the second largest bank in Italy those attributes meant for the future operations and had consolidated assets of about $34.5 bilof the bank holding company. lion. BCI conducted a wholesale banking busi- The Middle Eastern investor group consisted ness in the United States through branches in of fourteen individuals and companies from Sau- New York and Chicago and an agency in Los di Arabia, the United Arab Emirates, and Ku- Angeles. BCI is indirectly owned by the Italian wait. The group included eight individuals, three government through a government holding compersonal holding companies, two government- pany, Istituto per la Ricostruzione Industriale. owned companies, and one private company. In In this case, as with the Midland-Crocker the course of processing the application, a meet- acquisition, there were few issues under the ing was held at the Board's offices, which was statutory factors prescribed in the Bank Holding attended by representatives of the investor Company Act. The Board found that the acquisigroup, counsel for the applicants, representa- tion would have no significantly adverse effects tives of the state banking departments involved, on the concentration of banking resources or on and the Comptroller of the Currency. The inforexisting or potential competition. BCI had made mation developed at this meeting became part of a commitment to inject $20 million of foreign Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 623 capital into LITCO and to maintain LITCO for foreign private companies exceptions are among the more strongly capitalized institutions allowed for indirect interests in the U.S. operain the United States. As for BCI itself, the Board tions of foreign commercial and industrial commade its evaluation on the basis of its policy panies. Application of these rules would mean statement on supervision of foreign bank holding that a foreign government could not indirectly companies that takes a number of factors into own banks in more than one state. Similarly, a account in judging the financial and managerial foreign government that indirectly owned a bank resources of a foreign banking organization. In in the United States would have to conform its addition to its financial condition, these factors nonbanking activities in the United States to included the record and integrity of management, those permissible to a privately owned foreign the bank's standing and role in its home country, banking organization. Failure to apply these and the opinion of the home country regulators. rules to foreign government-owned banks, it can Having considered these factors, the Board con- be argued, would give those organizations adcluded that the financial and managerial re- vantages over their privately owned counterparts sources of BCI were satisfactory. and thus would be inconsistent with the principle During the Board's consideration of this case, of national treatment. several issues emerged that stemmed from the Distinctions can be drawn between private and fact that BCI is indirectly owned by the govern- government ownership, and these distinctions ment of Italy. The four largest banks in Italy are may form a basis for differences in treatment. nationalized institutions. All conduct banking The Bank Holding Company Act presumes that operations in several states in the United States. all banks and nonbank companies under common The Italian government also operates a number ownership and control are operated as an inteof nationalized industries and commercial enter- grated whole. That presumption stems from the prises, many of which have subsidiaries in the act's objectives of avoiding conflicts of interest United States. and undue concentration of resources when The specific question that arose in these cir- banking and nonbanking activities are combined cumstances was how foreign governments or under common control and management. This governmental entities should be treated under presumption also reflects experience, especially the Bank Holding Company Act. Should they be in the United States, that private companies do subject to the same provisions as a private com- operate in this way. pany, or is a different treatment warranted? Foreign countries that have nationalized banks The principle of national treatment is the basic and other enterprises have done so for a variety government policy toward foreign banks and is of historical and policy reasons. Some foreign embodied in the International Banking Act of governments do operate, and in fact have good 1978. The essence of that principle is that foreign policy reasons for so operating, the nationalized banking organizations and their owners be treat- banks and nationalized businesses as separate ed the same as their domestic counterparts. The entities. However, conditions vary from country Bank Holding Company Act, which governs the to country and may change over time within a activities of domestic banking organizations, has country with changes in political philosophy or in among its purposes the prevention of conflicts of other circumstances. This diversity highlights interest and undue concentration of resources. the difficulty of establishing a policy suitable to These objectives are intended to help ensure that all situations that avoids making arbitrary disbanks in the United States serve as effective and tinctions among countries. impartial credit intermediaries. To this end, the The act provides little guidance on these quesact provides that a private company cannot own tions. It expressly exempts from its application a U.S. bank and also own companies in the organizations owned by the federal government United States that engage in industrial and com- or state governments. However, it is silent on the mercial activities. Also, a private company can- status of foreign governments. not, as a general rule, own and operate banks in The question of applying the act to foreign more than one state. These rules apply to all governments is not concerned with the activities private companies, domestic or foreign, although they conduct within their own territories or out- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

624 Federal Reserve Bulletin • October 1982 side the United States. It is solely concerned this situation would help limit the potential for with those activities that extend into the United practices conflicting with the purposes of the States. Applying the act to foreign governments Bank Holding Company Act. even in that more limited sense has broad implications that extend beyond the purely regulatory issues. For example, strict application of the limitation on nonbanking activities could pre- CONCLUSION clude banks owned by foreign governments from engaging in banking activities in the United To sum up, foreign interest in establishing and States. This could raise important questions in expanding banking operations in the United the fields of U.S. foreign relations and U.S. States continues unabated. Most of those operaforeign investment and economic policy. tions will continue to be conducted through Before the BCI case, the Board had approved branches and agencies, but a reasonable expectaa number of applications to form bank holding tion is that foreigners will also seek to acquire or companies by foreign banks that were govern- establish subsidiary banks. The involvement of ment owned and when the foreign government foreign banks in our banking system and foreign indirectly had commercial and industrial activi- investment in U.S. banks have benefited the ties in the United States. In those cases, the United States, and I believe that they will contin- Board did not apply the act to the applicant's ue to do so. government owners. After careful consideration, In this statement I have tried to identify the and pending further examination of the issues problems associated with foreign investments in outlined here, the Board decided to continue the U.S. banks and to place these problems in perprevious practice in the BCI case. spective. On the whole, the performance of In approving the application, the Board recog- foreign-owned banks has been satisfactory, and nized that the act is concerned not only with supervisory problems have not been serious. As problems of actual conflicts of interest or con- foreign involvement in the banking system incentration of resources but also with the poten- creases, new problems and new issues will surely tial for those problems. For this reason, the emerge. This calls for continuous monitoring of Board in its order highlighted its belief that the developments and the adaptation of supervisory issues associated with foreign government own- requirements to them. ership should be brought to the attention of the In discussing the BCI case, I devoted a large public for further discussion and debate. Be- amount of time to the issue of the treatment of cause of the complexity and far-reaching implica- foreign governments and of entities owned by tions of these issues, some of which I have tried foreign governments under the Bank Holding to convey, the Board stated in its order that they Company Act. This issue is extremely complex, should be resolved in a congressional framework and the questions that arise in evaluating the in which all the relevant considerations could be issue are very difficult. The Board has not examined and weighed. reached any firm conclusions on these issues and In recognition of the potential conflicts in the is not prepared to make legislative recommenda- BCI case, the Board decided that the banking tions at this time. For this reason, the Board and nonbanking organizations owned by the Ital- welcomes these hearings as contributing to the ian government were affiliates of LITCO. As a public discussion of these issues that it believes consequence, the limitations on the amount and desirable. We hope that the discussion will evoke the collateral requirements of section 23A of the thoughtful and constructive consideration by the Federal Reserve Act would apply to extensions Congress, other government agencies, foreign of credit by LITCO to these affiliates. The Board banking authorities, and the banking community believed that the application of section 23A to both here and abroad. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

625 Announcements REGULATION D: AMENDMENTS institutions that will maintain reserves on the new basis enough time to make the adjustments The Federal Reserve Board has announced final required in their administrative and data processapproval of a change—from lagged to contempo- ing procedures. raneous reserve requirements (CRR)—in the As adopted by the Board, the principal feaway depository institutions maintain reserves. tures of CRR, set forth below, are for the most The change, which will be made as amend- part those proposed in November 1981: ments to Regulation D (Reserve Requirements of 1. Contemporaneous reserve requirements Depository Institutions), are effective February will apply only to institutions reporting their 2, 1984. At that time, medium-sized and larger deposits on a weekly basis. (Certain institutions depository institutions will begin posting re- with $15 million or less in total deposits report serves on transaction accounts with a two-day deposits and calculate required reserves quarterrather than the current two-week accounting ly, and certain others, with reservable liabilities delay. [Transaction accounts include checking, under $2 million, will be exempt from reserve negotiable order of withdrawal (NOW), automat- requirements on enactment of legislation now ic transfer, and share draft accounts.] Reserve awaiting the President's signature [H.R. 6267]). requirements on nontransaction liabilities will be 2. Reserves will be maintained over two-week met on a lagged basis. periods that will continue to end on a Wednes- The Board acted after consideration of com- day. ment received on proposals published in Novem- 3. All institutions subject to CRR will settle ber 1981, and after extensive staff study during their reserve accounts on the same day. the past several years. The Board decided in 4. Required reserves will be computed on the principle on June 28, 1982, to adopt contempora- basis of average deposits over a two-week comneous reserve requirements on transaction de- putation period ending on Monday. Reserves posits, but left open for later decision the ques- required to be posted against transaction actions of an effective date and whether reserve counts will be maintained in the two-week period periods for different sets of institutions should be ending on Wednesday, two days after the end of placed on a staggered basis, with half the institu- the computation period. The two-day interval tions settling every other week. The Board has provides time for calculation of required redecided against staggering settlement periods. serves. Contemporaneous reserve requirements are 5. Required reserves for other liabilities expected to improve the implementation of mon- against which reserves must be held—such as etary policy to a degree by strengthening the certain kinds of time deposits—will also be comlinkage between reserves held by depository puted on the basis of average deposits over a institutions and the money supply. The Board two-week period ending on Monday, but the noted that sizable slippages will remain between reserves required will be posted in the 2-week reserves and money, because short-run flows are maintenance period beginning 17 days later, on a inherently volatile. Thursday. Under the present lagged reserve system, de- 6. Vault cash eligible to be counted as repository institutions must post their required serves will be equal to vault cash holdings during reserves in any given week based on their depos- the computation period ending 17 days before the it levels two weeks earlier. beginning of the maintenance period. The effective date was placed 16 months ahead 7. To assist depository institutions in impleto give both Reserve Banks and the depository menting CRR the Board adopted transition peri- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

626 Federal Reserve Bulletin • October 1982 ods for the carryover of reserve balance deficien- vide a periodic statement for each account when cies or surpluses. During the first six months a transfer is made between accounts of the same following the start of CRR, reserve surpluses or consumer in the same institution. deficiencies that may be carried over into the 4. Modifications to the requirements for docunext reserve period will equal the greater of 3 mentation and error resolution procedures for percent of the daily average level of required transfers initiated outside the United States. reserves (including required clearing balances), or $25,000. During the next six months, the permissible carryover will equal the greater of REVISED CAPITAL ADEQUACY CRITERIA 2Yi percent of daily average required reserves, or $25,000. Thereafter, the carryover is the greater The Federal Reserve Board has reaffirmed, with of 2 percent of daily average required reserves, one substantial change, its criteria adopted in or $25,000. May (see BULLETIN, June 1982, pages 361-62) The Board approved two other amendments to for determining whether debt securities with a Regulation D as follows: mandatory requirement for future conversion to 1. The dates on which nonmember depository equity can qualify as part of the primary capital institutions phasing in to the reserve require- of state member banks and bank holding compaments of the Monetary Control Act over an nies. eight-year period will be moved back one week, The Board began applying the criteria immediso as to avoid falling in the middle of a reserve ately after adoption, but invited comment from maintenance period under the CRR schedule. the public. The amendment of the criteria was 2. Depository institutions with less than $15 adopted after consideration of comment remillion in deposits and that are not subject to ceived. It applies only to securities issued after CRR will continue to have a one-week mainte- September 27, 1982. The Comptroller of the nance period, with settlement day on Wednes- Currency is announcing similar amendment of day. Their computation week each quarter will these criteria, for national banks. be shifted back two days from Wednesday to The amendment limits the issue of equity Monday to align with the computation period of commitment notes to 10 percent of primary capiinstitutions subject to CRR. tal, exclusive of mandatory convertible issues. The Board left unchanged the requirement that equity notes and equity commitment notes to- REGULATION E: AMENDMENTS gether may not make up more than 20 percent of such primary capital of a banking organization. The Federal Reserve Board has announced Certain technical revisions were also made. adoption of amendments to its Regulation E Equity commitment notes and equity notes are (Electronic Fund Transfer), effective October 12, the two forms in which mandatory convertible 1982. The Board acted after consideration of debt has been issued recently by banking organicomment received on proposals published in zations. March. The Board placed a cap on equity commitment The amendments, which are intended to re- notes to encourage banking institutions to rely duce regulatory burdens without giving up signif- more on equity notes in issuing mandatory conicant consumer protection, call for the following: vertible securities. The Board's view is that there 1. An exemption from the regulation, for fi- is greater assurance that equity notes will be nancial institutions whose assets do not exceed transformed into equity by the time of maturity $25 million, of preauthorized transfers by gov- than is the case with equity commitment notes. ernment agencies and private corporations. Equity commitment notes are issued with an 2. An exemption from the need to disclose, on undertaking by the issuer to sell sufficient equity terminal receipts, the type of account involved in during the life of the notes—up to 12 years—to an automated teller machine transaction, when build up a fund to liquidate the notes at maturity. only a single account can be accessed. Their transformation into stock may thus depend 3. An exemption from the requirement to pro- on circumstances over a considerable period. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 627 In contrast, the contract attached to issues of 2. The stock purchase contract must require the equity notes obligates the holder of the notes to purchase of either common or perpetual preferred stock. buy common or perpetual preferred stock of the issuer at a specified price at or before maturity of the notes, thus making conversion of the debt to Provisions Applicable Only to Securities equity almost certain. Payable from the Sale of Common or In view of its desire to encourage the growth of Perpetual Preferred Stock equity in the primary capital of banking organizations, the Board therefore views equity notes 1. The securities indenture must contain the followas a more desirable form of primary capital. ing two provisions: The Board's revised criteria are as follows: • The issuer will establish an identifiable and segregated fund solely from the sale of common or perpetual preferred stock, the proceeds of which will be the Provisions Applicable to Both Types of sole source of repayment for the securities. • By the time that one-third of the life of the Mandatory Convertible Securities securities has run, the issuer must have paid into the fund an amount equal to one-third of the original 1. The securities must mature in 12 years or less. principal of the securities. By the time that two-thirds 2. The aggregate amount of mandatory convertible of the life of the securities has run, the issuer must securities that will be included for regulatory purposes have paid into the fund an amount equal to two-thirds for evaluating capital adequacy cannot exceed 20 of the original principal of the securities. At least 60 percent of primary capital other than mandatory con- days prior to the maturity of the securities, the issuer vertible securities.1 must have paid into the fund an amount equal to the 3. The issuer may redeem securities prior to maturi- entire original principal of the securities. Payments ty only with the proceeds of the sale of common or into the fund must come only from the sale of common perpetual preferred stock of the bank or bank holding or perpetual preferred stock.3 company or with the approval of its primary supervi- 2. If the issuer fails to meet any of these periodic sor. funding requirements, its supervisor immediately will 4. The holder of the security cannot accelerate the cease to treat the unfunded securities as primary payment of principal except in the event of bankrupt- capital. cy, insolvency, or reorganization. 3. If a security is issued by a subsidiary of a bank or 5. The security must be subordinate in right of bank holding company, any guarantee of the principal payment to all senior indebtedness of the issuer. In the by that subsidiary's parent bank or bank holding event that the proceeds of the security are reloaned to company must be subordinate to the same degree as an affiliate, the loan must be subordinated to the same the security issued by the subsidiary and limited to degree as the original issue. repayment of the principal amount of the security at its final maturity. 4. For regulatory analysis of capital adequacy, the Provisions Applicable Only to Securities with aggregate amount of securities payable from the sale of Mandatory Stock Purchase Contracts common or perpetual preferred stock cannot exceed 10 percent of primary capital other than mandatory convertible securities. 1. The stock purchase contract can be separated from a security and held separately only if the holder of the contract provides sufficient collateral to the issuer, or to an independent trustee for the benefit of REGULATION Z: REVISED COMMENTARY the issuer, to assure performance under the contract.2 The Federal Reserve Board has made public a 1. In addition, for regulatory analysis of capital adequacy the aggregate amount of securities payable from the sale of revision of its official staff commentary on Regucommon or perpetual preferred stock cannot exceed 10 lation Z (Truth in Lending). percent of primary capital other than mandatory convertible The revision of the staff commentary, which securities. See last paragraph of these criteria. 2. Collateral is defined as cash or certificates of deposit; applies to and interprets the requirements of U.S. government securities that will mature prior to or Regulation Z, was effective September 17, 1982. simultaneously with the maturity of the equity contract and However, creditors have the option of continuthat have a par or maturity value at least equal to the amount of the holder's obligation under the stock purchase contract; ing to rely on the existing Regulation Z commenstandby letters of credit issued by a U.S. bank that is not an affiliate of the issuer; or other collateral as may be designated 3. The funded portions of the securities will be deducted from time to time by the regulators. from primary capital to avoid double counting. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

628 Federal Reserve Bulletin • October 1982 tary until April 1, 1983, when reliance on the clause of the act—a management official to conrevised commentary becomes mandatory. The tinue in an interlocking relationship for the entire new commentary is based on Regulation Z as 10-year grandfathered period provided by the revised April 1, 1981, under the Truth in Lending act, despite certain changes in circumstances, Simplification Act of 1980. such as a merger of an institution involved in an The commentary was revised after consider- interlock. The amendment also permits a manation of comment received on proposals in May agement official serving both a depository and a of this year. This is the first of expected periodic nondepository institution to continue in both revisions of the commentary to update it as positions although the nondepository institution significant new questions arise about the applica- becomes a savings and loan holding company. tion of the regulation to specific transactions. The commentary is intended to substitute for individual Board and staff interpretations. Reli- DATA ON PAST-DUE LOANS ance upon it is a defense against suit. Changes in the commentary are generally in The three federal bank regulatory agencies—the the direction of providing more flexibility, while Federal Deposit Insurance Corporation, the Fedpreserving basic consumer protection. Changes eral Reserve Board, and the Office of the Compgenerally have been made only when necessary troller of the Currency—announced on Septemto respond to significant questions that have ber 15, 1982, that all FDIC-insured commercial arisen since the commentary was first issued, or banks will begin reporting data on past-due and to clarify language. other nonperforming loans at the end of the year. Issues dealt with in the revised commentary For national banks, the new report will replace a include the following: past-due loan schedule that has been submitted 1. The use of the creditor's commercial lend- to the Comptroller's Office for some years. ing rate as the base rate in variable-rate open-end The Office of Management and Budget has credit plans. granted the agencies approval to collect data in 2. Application of the finance charge rules to the form of a new supervisory supplement to the the offering of cash discounts in the sale of motor reports of condition and income (call reports) vehicle fuel. filed by all federally insured banks with federal 3. Prepayment disclosures in transactions in- regulators. The new information will be collected volving prepaid finance charges. quarterly beginning with the December 31, 1982, 4. Disclosures for several types of mortgage reports and will be made available to the public financing plans, including growth equity mort- beginning with the June 30, 1983, reports. gages and graduated-payment adjustable-rate The agencies originally had hoped to institute mortgages. the new supplement beginning September 30, 1982. However, the delay until December is needed to give reporting banks more time to REGULATION L: AMENDMENT prepare for the new requirements. The delay until the mid-1983 reports in making the informa- The Federal Reserve Board on September 29, tion available to the public will permit time to 1982, announced adoption of an amendment to resolve problems that may arise in the reporting its Regulation L (Management Official Inter- and processing of the data. locks) that implements the Depository Institu- The agencies said reports such as the new tions Management Interlocks Act, to reflect supplement are critically important to their efchanges in the act recently adopted by the Con- forts to upgrade their off-site computerized monigress. toring systems and thus reduce the burden The Interlocks Act prohibits certain interlock- placed on banks in on-site examinations. Iming relationships among officials of financial insti- provements in such systems, the regulators said, tutions, including depository holding companies not only will help improve their surveillance of and their affiliates. banks but will also lower their costs and reduce The amendment permits—under a grandfather the overall burden on banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 629 In addition to providing better current data to and 5, dealing respectively with credit billing and bank regulators, the information should be of consumer leases. benefit to the depositing public and to other bank creditors and to bank investors. The agencies noted that public disclosure of this type is in line NEW PUBLICATION with an increased emphasis on marketplace discipline and bank deregulation. They also noted The Annual Statistical Digest, 1981, is now that, under the securities laws, registered bank available. This one-year Digest is designed as a holding companies already disclose similar types compact source of economic—and especially fiof information. nancial—data. The object is to lighten the burden In commenting on this and other changes in of assembling time series by providing a single the call report mandated by the Federal Financial source of historical continuations of the statistics Institutions Examination Council, a number of carried regularly in the FEDERAL RESERVE BULbanks and banking organizations said they recog- LETIN. The Digest also offers a continuation of nized the regulators' need for additional informa- series that formerly appeared regularly in the tion but they objected to the structure of some of BULLETIN, as well as certain special, irregular the revisions. In response, the agencies indicated tables that the BULLETIN also once carried. The that they are prepared to meet with representa- domestic nonfinancial series included are those tives of the banking industry to explore structur- for which the Board of Governors is the primary al alternatives. source. This issue of the Digest covers only 1981 unless data were revised for earlier years. It MEETING OF CONSUMER ADVISORY serves to maintain the historical series first pub- COUNCIL lished in Banking and Monetary Statistics, 1941- 70, and the Digest, 1970-1979 and 1980. A Con- The Federal Reserve Board has announced that cordance of Statistics will be included with all its Consumer Advisory Council met on October orders. It serves as a guide to tables that cover 27 and 28, 1982. the same material in the current and the most The Council, with 30 members who represent recent annual Digest, the ten-year Digest for a broad range of consumer and creditor interests, 1970-79, and the BULLETIN. advises the Board on its responsibilities regard- Copies of the Digest are available from Publiing consumer credit protection legislation and cations Services, Board of Governors of the regulation at quarterly meetings. Federal Reserve System, Washington, D.C. 20551. The price is $6.50 per copy. TRUTH IN LENDING EXEMPTIONS REVISED OTC STOCK LIST The Federal Reserve Board has granted exemptions, effective October 1, 1982, from certain The Federal Reserve Board has published a parts of the federal Truth in Lending Act to the supplement to its list of over-the-counter (OTC) states of Massachusetts, Oklahoma, and Wyo- stocks that are subject to its margin regulations, ming. effective October 18, 1982. The supplement Exemptions from certain requirements of the should be used in conjunction with the list of Truth in Lending Act were granted on the OTC margin stocks that was effective July 26, grounds that consumer credit protection laws 1982. and enforcement in these states met the stan- Changes that have been made in the list, which dards of the act for exemptions. All three states now includes 1,577 OTC stocks, are as follows: sought and received exemption from chapter 2 of 73 stocks have been included for the first time; 10 the act, which pertains to credit transactions. stocks previously on the list have been removed Massachusetts and Oklahoma requested and re- for substantially failing to meet the requirements ceived additional exemptions from chapters 4 for continued listing; and 21 stocks have been Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

630 Federal Reserve Bulletin • October 1982 removed for reasons such as the companies mined that time deposits linked to a line of credit being listed on a national securities exchange or on which checks or similar third-party transfers being acquired by another firm. The supplement can be drawn are subject to the reserve requireis available on request from Publications Serv- ments of transaction accounts. ices, Board of Governors of the Federal Reserve The Board made the rule—a temporary System, Washington, D.C. 20551. amendment to Regulation D (Reserve Requirements of Depository Institutions)—effective October 7,1982, but requested comment by Decem- PROPOSED ACTIONS ber 3, 1982, on its technical aspects pending adoption on a permanent basis. The Federal Reserve Board has proposed for public comment an amendment to Regulation T (Credit by Brokers and Dealers) that would spec- PETITION REGARDING SWEEP ify the characteristics of private mortgage- ARRANGEMENTS backed securities that may be used as collateral for margin credit at securities brokers. Comment The Federal Reserve Board has announced that should be received by October 29, 1982. it is scheduling an informal hearing before the The Federal Reserve has also proposed Board's staff to gather information and give changes in Regulation L (Management Official interested parties an opportunity to express their Interlocks) that would accomplish the following: views in connection with a petition to the Board 1. Simplify procedures for obtaining excep- by the Securities Industry Association to prohibtions to the act and extensions of time to permit it the operation of sweep accounts by member compliance with the act. banks. The hearing is scheduled for November 3 2. Ease the burden of the act on depository and 4, 1982, at the Board's offices in Washinginstitution holding companies by redefining cer- ton, D.C. Comment may also be submitted in tain terms. writing. 3. Entirely exclude from the prohibitions of the act management officials whose functions relate exclusively to retail merchandising and SYSTEM MEMBERSHIP: manufacturing. ADMISSION OF STATE BANKS 4. Broaden the circumstances under which the exception to the prohibitions of the act is avail- The following banks were admitted to memberable on grounds of disruptive management loss. ship in the Federal Reserve System during the 5. Clarify the circumstances that require ter- period September 11 through October 10, 1982: mination of nongrandfathered management official interlocks. Delaware The Board will receive comment on the pro- Wilmington Chemical Bank (Delaware) posed changes in Regulation L for at least 30 Texas days after their publication in the Federal Regis- Arlington Commonwealth Bank ter. of Arlington The Federal Reserve Board has also deter- Canton Traders State Bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

631 Record of Policy Actions of the Federal Open Market Committee Meeting Held on August 24, 1982 point to 9.8 percent, as the civilian labor force expanded and total civil- 1. Domestic Policy Directive ian employment was unchanged. The information reviewed at this Private housing starts rose 34 permeeting suggested that real GNP cent in July, more than reversing the would advance only a little further in decline in June; but at an annual rate the current quarter, following an in- of 1.2 million units, starts remained crease at an annual rate of about 1 lA low by historical standards. All of percent in the second quarter. Aver- the July increase was in multifamily age prices, as measured by the fixed- units; starts of such units more than weight price index for gross domes- doubled, in part because of an uptic business product, were contin- surge in those qualifying for rental uing to rise more slowly than in subsidies under a federal govern- 1981. ment program terminating on Sep- The nominal value of retail sales tember 30. That impending terminarose 1 percent in July, according to tion also apparently contributed to a the advance report, recovering only substantial rise in July in newly ispart of the 3!/4 percent decline re- sued permits for multifamily units; corded in June. Sales of new domes- permits for single-family dwellings tic automobiles, which had dropped declined slightly and were at about to an annual rate of 4.8 million units the same pace as in the second quarin June, rose a little in July and early ter as a whole. Combined sales of August. new and existing homes in June con- The index of industrial production tinued about 25 percent below those was about unchanged in July, fol- of a year earlier. lowing a cumulative decline of more The producer price index for finthan 10 percent from the prereces- ished goods and the consumer price sion level in July 1981. Production of index both rose 0.6 percent in July, business equipment continued to following increases of 1.0 percent in drop at its recent pace of 2 to 3 June. At the producer level, prices percent per month, while output of of energy-related items increased defense and space equipment contin- sharply in both months and in July ued to expand. Output of consumer accounted for nearly all of the rise in goods picked up, reflecting mainly the index; prices of food and food an increase in automobile assem- materials fell substantially in July. blies, but automobile output in July At the consumer level, food prices was at a rate substantially above the edged down in July, while increases sales pace of June and July, and in energy prices and homeownership production schedules for August costs moderated from the rapid rates were cut back. recorded in June. Over the first sev- Nonfarm payroll employment, af- en months of the year, the producer ter declining sharply in June, was price index for finished goods and essentially unchanged in July, as the consumer price index rose at continued job losses in manufac- annual rates of about 3 percent and turing were about offset by gains in 5V2 percent respectively, compared trade and service industries. The un- with increases of about 7 percent employment rate rose 0.3 percentage and 9 percent in 1981. The advance Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

632 Federal Reserve Bulletin • October 1982 in the index of average hourly earn- ing the month, and shares in money ings also was considerably less rapid market mutual funds continued to through July than during 1981. expand at a relatively strong pace; in In foreign exchange markets the contrast, savings deposits at all detrade-weighted value of the dollar pository institutions declined subagainst major currencies, while fluc- stantially after growing moderately tuating over a wide range, had during earlier months of the year. changed little on balance since late Total credit outstanding at U.S. June despite a sharp decline in U.S. commercial banks grew at an annual interest rates relative to foreign rate of about 6V2 percent in July, well rates. The strength of the dollar in below the pace in the first half of the the face of narrowing interest rate year. Growth in business loans differentials apparently reflected slowed in July, but generally strong concerns of market participants business demands for short-term about economic and financial diffi- credit were reflected in an increase culties abroad. The U.S. foreign in loans booked at foreign branches trade deficit in the second quarter of U.S. banks and in a sharp accelwas somewhat below the first-quar- eration in issuance of commercial ter deficit, reflecting primarily a sub- paper by nonfinancial businesses. Isstantial drop in petroleum imports; suance of publicly offered bonds the total of other imports rose some- rose in July. what and exports were about un- Nonborrowed reserves expanded changed. relatively rapidly in July. However, At its meeting on June 30-July 1, with the demand for reserves weak, the Committee had agreed to seek in part reflecting the sluggishness of behavior of reserve aggregates asso- Ml, adjustment borrowing by deposciated with growth of Ml and M2 itory institutions (including seasonal from June to September at annual borrowing) declined from an average rates of about 5 percent and about 9 of about $1.1 billion in June to about percent respectively. It had also de- $330 million in the two statement cided that somewhat more rapid weeks ending August 18. growth would be acceptable depend- Market interest rates had declined ing on evidence that economic and sharply over the period since the financial uncertainties were leading last Committee meeting. Short-term to exceptional liquidity demands. market rates fell 4 to 6 percentage Moreover, the Committee had noted points. The federal funds rate, for that seasonal uncertainties, together example, declined from around 1416 with increased social security pay- percent at the end of June to about ments and the initial impact of the 10 percent in the statement week tax cut on cash balances, might lead ending August 18 and to around 9 to a temporary bulge in the monetary percent in the days immediately preaggregates, particularly Ml. The in- ceding this Committee meeting. termeeting range for the federal Bond yields declined about PA to 2 funds rate, which provides a mecha- percentage points. A substantial part nism for initiating further consulta- of the decline in long-term rates oction of the Committee, was set at 10 curred in an unusually strong rally in to 15 percent. debt markets around mid-August, Ml in fact declined slightly in when record price increases also oc- July, following declines in May and curred in the stock market. The June, as demand deposits continued strength of the downward movement to contract and growth in currency in interest rates apparently reflected slowed further. Growth of M2, after a shift in market sentiment about the moderating in June from a rapid pace outlook for interest rates against the in previous months, accelerated background of strains in financial again in July. Small-denomination markets, relatively weak economic time deposits increased sharply dur- indicators, and legislative action on Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 70 the federal budget. Over the inter- would over time ease pressures in meeting interval, the prime rate long-term debt markets, improve charged by commercial banks on business confidence, and strengthen short-term business loans was low- business capital spending. ered from I6I/2 percent to W/2 per- Some members commented that cent. In conjunction with the decline to date the midyear reduction in fedin short-term market rates, the Fed- eral income taxes and the concurrent eral Reserve discount rate was re- cost-of-living increase in social seduced in three steps from 12 percent curity payments appeared to have to 101/2 percent over the period. In had little impact on consumer spendhome mortgage markets, average ing. The view was expressed, howrates on new commitments for fixed- ever, that the midyear tax actions rate conventional loans at savings were likely to exert a positive influand loan associations declined about ence on a delayed basis. It was also Vi percentage point on balance. noted that the recently reduced lev- The staff projections presented at els of interest rates, if they were this meeting suggested that real GNP sustained, would help to relieve fiwould grow at a moderate pace over nancial pressures throughout the the year ahead but that the unem- economy and thereby contribute to ployment rate would remain near its improvement in economic activity recent high level. Inflation, as mea- over the months ahead. sured by the fixed-weight price in- At its meeting on June 30-July 1, dex for gross domestic business the Committee had begun a review product, was expected to pick up of the monetary growth objectives somewhat over the months ahead for the period from the fourth quarfrom the substantially reduced pace ter of 1981 to the fourth quarter of in the first half of 1982, but contin- 1982 that it had set in early Februued improvement in the underlying ary. Subsequently, at a meeting on trend was anticipated. July 15, the Committee had reaf- In the Committee's discussion of firmed those objectives, which inthe economic situation and outlook, cluded ranges of Vh to 51/2 percent several members commented that for Ml, 6 to 9 percent for M2, and the timing of an economic recovery 6'/2 to 9'/2 percent for M3. The assowas subject to considerable uncer- ciated range for bank credit was 6 to tainty, but no member expressed 9 percent. At the same time the disagreement with the general char- Committee agreed that growth in the acter of the staff projection. As at monetary and credit aggregates other recent meetings, some Com- around the top of the indicated mittee members suggested that the ranges would be acceptable in the principal risks of a deviation from light of the relatively low base period the projection were on the down for the Ml target and other factors, side. Reference was made to the and that it would tolerate for some growing expressions of concern in period of time growth somewhat the business community and to fi- above the target range should unusunancial strains being experienced by al precautionary demands for money many business firms, financial insti- and liquidity be evident in the light tutions, and others. In this situation, of current economic uncertainties. spending might well remain weak in The Committee also indicated that it key sectors of the economy. Busi- was tentatively planning to continue ness capital spending was cited as the current ranges for 1983 but that it especially vulnerable to remaining would review that decision carefully depressed, particularly in the event in the light of developments over the of renewed upward pressure on remainder of 1982. long-term interest rates. On the oth- At this meeting the Committee reer hand, it was observed, continued viewed the short-run objectives that success in the fight against inflation it had established at the previous Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

71 Federal Reserve Bulletin • October 1982 meeting calling for expansion at an- tive strength in M2 over the course nual rates of about 5 percent for Ml of recent weeks that appeared to be and about 9 percent for M2 over the related in part to unusual demands three months from June to Septem- for liquid investments, such as monber. Data available through mid-Au- ey market funds, at comparatively gust indicated that growth in Ml was attractive yields. The members running below the Committee's ob- agreed that under prevailing circumjective, while partial data suggested stances, growth in M2 somewhat that growth in M2 had moved above above its short-run target would be the objective for the three-month acceptable over the period immediperiod. In relation to the Commit- ately ahead. tee's objectives for the year as a At the conclusion of the discuswhole, the latest staff estimates indi- sion the Committee agreed to reafcated that the expansion of Ml was firm the objectives for monetary within its longer-run range, while growth established at the June 30that of M2 was somewhat above its July 1 meeting for the June to Sep- 1982 range. tember period. The Committee de- During the Committee's discus- cided that somewhat more rapid sion, most of the members agreed growth in the monetary aggregates that the short-run growth objectives would be acceptable depending upon adopted at the previous meeting re- evidence that economic and finanmained appropriate under current cial uncertainties were fostering uneconomic and financial conditions usual liquidity demands for moneand should be retained. The view tary assets and were contributing to was expressed that the substantial substantial volatility in interest recent decline in interest rates, rates. The intermeeting range for the which in part reflected growing pub- federal funds rate, which provides a lic awareness of the progress that mechanism for initiating further conhad been made in curbing inflation, sultation of the Committee, was set provided welcome relief in easing at 7 to 11 percent. financial strains throughout the The following domestic policy dieconomy. A number of members ex- rective was issued to the Federal pressed concern, however, about Reserve Bank of New York: the volatility of interest rates and some commented that further sharp The information reviewed at this meeting suggests only a little further advance movements in either direction over in real GNP in the current quarter, folthe near term might have damaging lowing a relatively small increase in the consequences. Some members em- second quarter, while prices on the averphasized that a pronounced increase age are continuing to rise more slowly from current levels would aggravate than in 1981. In July the nominal value of retail sales rose somewhat from a sharpfinancial strains and inhibit recovery ly reduced June level; housing starts in interest-sensitive sectors of the increased substantially, though from a economy. Some members also sug- relatively low rate; and industrial progested that a large further decline duction and nonfarm payroll employment were essentially unchanged. The might foster a resurgence of inflaunemployment rate rose 0.3 percentage tionary expectations and could point to 9.8 percent. Over the first seven prove to be unsustainable and there- months of the year the advance in the fore unsettling to financial markets. index of average hourly earnings was Several members expressed the considerably less rapid than during 1981. view that the Committee should re- The weighted average value of the dollar against major foreign currencies, view its policy if reserve provision to while fluctuating over a wide range, has meet monetary growth objectives changed little on balance since late June was fostering a substantial change in despite a sharp decline in U.S. interest pressures on bank reserve positions rates relative to foreign rates. Demand for dollars appeared to reflect concern and in credit markets. about economic and financial difficulties Reference was made to the rela- abroad. The U.S. foreign trade deficit in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 635 the second quarter was somewhat below Domestic Operations that pursuit of the the first-quarter deficit, with petroleum monetary objectives and related reserve imports down substantially. paths during the period before the next Ml declined slightly in June and July, meeting is likely to be associated with a while growth of M2 moderated some- federal funds rate persistently outside a what from its average pace earlier in the range of 7 to 11 percent. year. Business demands for credit, especially short-term credit, remained gener- Votes for this action: Messrs. ally strong. Market interest rates have Volcker, Solomon, Balles, Black, declined sharply since around midyear, Ford, Mrs. Horn, Messrs. Martin, reflecting a shift in market sentiment Partee, Rice, and Mrs. Teeters. Vote about the outlook for interest rates against this action: Mr. Wallich. Abagainst the background of strains in fi- sent and not voting: Mr. Gramley. nancial markets, relatively weak economic indicators, and legislative action Mr. Wallich dissented from this on the federal budget. The Federal Re- action because he favored an apserve discount rate was reduced in three proach to operations early in the steps from 12 percent to 10'/2 percent period that would lessen the chances during the period. of short-term interest rates remain- The Federal Open Market Committee seeks to foster monetary and financial ing below the prevailing discount conditions that will help to reduce infla- rate or falling further below it. He tion, promote a resumption of growth in was concerned that such interest output on a sustainable basis, and conrate behavior would tend to acceltribute to a sustainable pattern of international transactions. At its meeting in erate monetary expansion and that early February, the Committee had the necessary restraint of reserve agreed that its objectives would be fur- growth to curb such expansion might thered by growth of Ml, M2, and M3 lead to a sizable rebound in shortfrom the fourth quarter of 1981 to the term rates with adverse implications fourth quarter of 1982 within ranges of 2XA to 5VI percent, 6 to 9 percent, and 6VI for business and consumer confito 9VI percent respectively. The associat- dence. ed range for bank credit was 6 to 9 percent. The Committee began a review 2. Authorization for Foreign of these ranges at its meeting on June 30- July 1, and at a meeting on July 15, it Currency Operations reaffirmed the targets for the year set in At this meeting Committee members February. At the same time the Committee agreed that growth in the monetary were apprised of the status of ongoand credit aggregates around the top of ing discussions with the Government the indicated ranges would be acceptable of Mexico regarding short-term fiin the light of the relatively low base nancing arrangements to support period for the Ml target and other factors, and that it would tolerate for some Mexico's efforts to strengthen its period of time growth somewhat above economic and financial position. At the target range should unusual precau- its meeting on June 30-July 1, the tionary demands for money and liquidity Committee had agreed, in response be evident in the light of current economto a request by officials of the Bank ic uncertainties. The Committee also indicated that it was tentatively planning to of Mexico, that it would stand ready continue the current ranges for 1983 but to provide to the Bank of Mexico up that it would review that decision care- to the full $700 million available unfully in the light of developments over der the Federal Reserve System's the remainder of 1982. In the short run, the Committee con- existing swap arrangement with that tinues to seek behavior of reserve aggre- Bank. Subsequently, on August 4, gates consistent with growth of Ml and 1982, the Bank of Mexico, which M2 from June to September at annual had drawn on its swap line on an rates of about 5 percent and about 9 overnight basis on a few occasions in percent respectively. Somewhat more rapid growth would be acceptable de- recent months, drew $700 million for pending on evidence that economic and a period of three months. financial uncertainties are leading to ex- At the time of this meeting, negoticeptional liquidity demands and changes ations were under way among Mexiin financial asset holdings. The Chairman may call for Committee consulta- co, the U.S. Treasury, major central tion if it appears to the Manager for banks, and other lenders to provide Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

636 Federal Reserve Bulletin • October 1982 multilateral financial support to Any changes in the terms of existing Mexico. The purpose of the support swap arrangements, and the proposed terms of any new arrangements that may was to effect an orderly transition to be authorized, shall be referred for rean economic stabilization program view and approval to the Committee. that the Government of Mexico had announced was being developed. Votes for this action: Messrs. The Committee authorized Federal Volcker, Solomon, Balles, Black, Ford, Mrs. Horn, Messrs. Martin, Reserve participation in the pro- Partee, Rice, Mrs. Teeters, and Mr. posed multilateral financing package Wallich. Votes against this action: through the temporary establish- None. Absent and not voting: Mr. ment of a special swap arrangement Gramley. of $325 million with the Bank of Mexico in addition to the regular On August 30, 1982, the U.S. arrangement of $700 million. Ac- Treasury and the Federal Reserve cordingly, paragraph 2 of the Com- announced that they were participatmittee's authorization for foreign ing with central banks of other currency operations was amended, Group of Ten countries, Spain, and effective August 28, 1982, for the Switzerland, under the aegis of the period through August 23, 1983, to Bank for International Settlements, read as follows: in making available to the Bank of Mexico short-term financing totaling 2. The Federal Open Market Commit- $1.85 billion. The Treasury would tee directs the Federal Reserve Bank of provide $600 million though the Ex- New York to maintain reciprocal currenchange Stabilization Fund, in concy arrangements ("swap" arrangements) for the System Open Market Account for junction with the $325 million that periods up to a maximum of 12 months the Federal Reserve was making with the following foreign banks, which available through its additional swap are among those designated by the Board arrangement. The multilateral fiof Governors of the Federal Reserve System under Section 214.5 of Regula- nancing program provided that tion N, Relations with Foreign Banks drawings by Mexico would be made and Bankers, and with the approval of in line with progress toward agreethe Committee to renew such arrangement between the Mexican Governments on maturity: ment and the International Monetary Fund (IMF) on an economic adjust- Amount of arrangement Foreign bank (millions of ment program that will permit Mexidollars equivalent) co to qualify for drawings under the IMF's Extended Fund Facility. Austrian National Bank 250 National Bank of Belgium 1,000 Bank of Canada 2,000 National Bank of Denmark 250 Bank of England 3,000 Bank of France 2,000 German Federal Bank 6,000 Bank of Italy 3,000 Bank of Japan 5,000 Bank of Mexico Regular 700 Special 325 Netherlands Bank 500 Bank of Norway 250 Bank of Sweden 300 Swiss National Bank 4,000 Bank for International Settlements Dollars against Swiss francs 600 Dollars against authorized European currencies other than Swiss francs 1,250 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

637 Legal Developments AMENDMENTS TO REGULATION A Federal Reserve Bank of— Rate Effective The Board of Governors has amended its Regulation Boston 10 Aug. 27, 1982. New York 10 Aug. 27, 1982. A, Extensions of Credit by Federal Reserve Banks Philadelphia 10 Aug. 27, 1982. (12 CFR Part 201), for the purpose of adjusting dis- Cleveland 10 Aug. 30, 1982. Richmond 10 Aug. 27, 1982. count rates with a view to accommodating commerce Atlanta 10 Aug. 27, 1982. and business in accordance with other related rates Chicago 10 Aug. 27, 1982. St. Louis 10 Aug. 27, 1982. and the general credit situation of the country. The Minneapolis 10 Aug. 27, 1982. Kansas City 10 Aug. 27, 1982. action was taken to bring the discount rate into better Dallas 10 Aug. 27, 1982. alignment with short-term market interest rates. San Francisco 10 Aug. 27, 1982. Effective on the dates specified in the text of the regulation, sections 201.51 and 201.52 of Regulation A (b) The rates for other extended credit provided to are amended as set forth below: depository institutions under sustained liquidity pressures or where there are exceptional circumstances or practices involving a particular institution under Part 201—Extensions of Credit by Federal § 201.3(b)(2) of Regulation A are: Reserve Banks Section 201.51—Short Term Adjustment Credit Federal Reserve Bank of— Rate Effective for Depository Institutions. Boston 10 Aug. 27, 1982. New York 10 Aug. 27, 1982. Philadelphia 10 Aug. 27, 1982. The rates for short term adjustment credit provided to Cleveland 10 Aug. 30, 1982. Richmond 10 Aug. 27, 1982. depository institutions under § 201.3(a) of Regulation Atlanta 10 Aug. 27, 1982. A are: Chicago 10 Aug. 27, 1982. St. Louis 10 Aug. 27, 1982. Minneapolis 10 Aug. 27, 1982. Kansas City 10 Aug. 27, 1982. Dallas 10 Aug. 27, 1982. San Francisco 10 Aug. 27, 1982. Federal Reserve Bank of— Rate Effective Boston 10 Aug. 27, 1982. Note. These rates apply for the first 60 days of borrowing. A 1 New York 10 Aug. 27, 1982. percent surcharge applies for borrowing during the next 90 days, and a Philadelphia 10 Aug. 27, 1982. 2 percent surcharge applies for borrowing thereafter. Cleveland 10 Aug. 30, 1982. Richmond 10 Aug. 27, 1982. Atlanta 10 Aug. 27, 1982. Chicago 10 Aug. 27, 1982. St. Louis 10 Aug. 27, 1982. AMENDMENTS TO REGULATION Q Minneapolis 10 Aug. 27, 1982. Kansas City 10 Aug. 27, 1982. Dallas 10 Aug. 27, 1982. The Board of Governors has amended Regulation Q— San Francisco 10 Aug. 27, 1982. Interest on Deposits (12 CFR Part 217) to permit member banks to issue all time deposits in book-entry form as an alternative to issuing certificates of deposit in definitive form. The Board also adopted technical Section 201.52—Extended Credit to Depository amendments to conform Regulation Q to actions taken Institutions. by the Depository Institutions Deregulation Com- (a) The rates for seasonal credit extended to deposi- mittee. tory institutions under § 201.3(b)(1) of Regulation A Effective September 1, 1982, the Board amends are: Regulation Q (12 CFR Part 217) as follows: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

638 Federal Reserve Bulletin • October 1982 Part 217—Interest on Deposits (d) [Reserved]. 1. Section 217.1 is amended by revising paragraph (b), by removing paragraphs (c) and (d) and reserving (h) Obligations issued by the parent bank holding them, by removing footnotes 2 and 3 and renumbering company of a member bank. the remaining footnotes accordingly, and by revising (1) For the purposes of this part, the "deposits" of a paragraph (h) to read as follows: member bank also include an obligation that is (i) issued in a denomination of less than $100,000; (ii) Section 217.1—Definitions. required to be registered with the Securities and Exchange Commission under the Securities Act of 1933; (iii) issued or guaranteed in whole or in part as (b)(1) "Time deposit" means to principal or interest by the member bank's parent (i) a deposit that the depositor does not have a which is a bank holding company under the Bank right to withdraw for a period of 14 days or more Holding Company Act of 1956, as amended after the date of deposit. "Time deposit" includes (12 U.S.C. 1841-1850), regardless of the use of the funds: proceeds; and (iv) issued with a stated maturity, (A) Payable on a specified date not less than 14 notice period or redemption period of less than VA days after the date of deposit; years. (B) Payable at the expiration of a specified time (2)(i) Effective April 1, 1983, this paragraph is not less than 14 days after the date of deposit; amended by striking the term "3'/2 years" wherever (C) Payable upon written notice which actually it appears and inserting in its place the term "2'/2 is required to be given by the depositor not less years", (ii) Effective April 1, 1984, this paragraph is than 14 days before the date of repayment;1 or amended by striking the term "2'/2 years" wherever (D) Such as "Christmas club" accounts and it appears and inserting in its place " 1V2 years", "vacation club" accounts, that are deposited (iii) Effective April 1, 1985, this paragraph is amendunder written contracts providing that no with- ed by striking the term "P/2 years" wherever it drawal shall be made until a certain number of appears and inserting in its place "6 months", (iv) periodic deposits have been made during a Effective March 31, 1986, this paragraph is amended period of not less than three months even by striking the term "6 months" wherever it appears though some of the deposits may be made and inserting in its place "14 days". within 14 days from the end of the period; (3) The term "deposits" does not include those (ii) An "international banking facility time depos- obligations of a bank holding company that are it;" and subject to interest rate limitations imposed pursuant (iii) A deposit or account issued pursuant to to Pub. L. 89-597. 12 CFR 217.7(1) or 1204.121, including those with an original maturity or notice period of seven to 13 days. 2. Section 217.3 is amended by revising paragraph (f) (2) A time deposit may be represented by a transfer- to read as follows: able or nontransferable, or a negotiable or nonnegotiable, certificate, instrument, passbook, statement Section 217.3—Interest on time and savings or otherwise. A time deposit evidenced by a certifi- deposits. cate or instrument is payable only upon presentation of the certificate or instrument. A time deposit established in statement, book-entry, or other form (f) No interest after maturity or expiration of notice. must be evidenced by a written agreement and After the date of maturity of any time deposit, such deposits must be confirmed by issuance of a receipt deposit is a demand deposit, and no interest may be or advice. paid on such deposit for any period subsequent to such date. After the expiration of the period of notice given (c) [Reserved]. with respect to the repayment of any time deposit or savings deposit, such deposit is a demand deposit and no interest may be paid on such deposit for any period subsequent to the expiration of such notice, except •A deposit with respect to which the bank merely reserves the right that, if the owner of such deposit advises the bank in to require notice of not less than 14 days before any withdrawal is writing that the deposit will not be withdrawn pursuant made is not a "time deposit" within the meaning of the above definition. to such notice or that the deposit will thereafter again Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 639 be subject to the contract or requirements applicable may be regarded as having matured individually and to such deposit, the deposit will again constitute a time been redeposited at intervals equal to such period. deposit or savings deposit, as the case may be, after Except as provided in § 217.7(1)(4), when a time the date upon which such advice is received by the deposit is payable only after notice, for funds on bank. On each certificate, passbook, or other docu- deposit for at least the notice period, the penalty for ment representing a time deposit, the bank shall have early withdrawal shall be imposed for at least the printed or stamped a conspicuous statement indicating notice period. that no interest will be paid on the deposit after the maturity date or, in the case of a time deposit that is automatically renewable, a conspicuous statement in- (f) Loans upon security of time deposits. Except as dicating that the contract will be renewed automatical- provided in § 217.7(1)(3), a member bank may make a ly upon maturity, and indicating the terms of such loan to the depositor upon the security of his time renewal, Provided, however, that a member bank may deposit provided that the rate of interest on such loan provide in any time deposit contract that if the deposit, shall be not less than 1 per cent per annum in excess of or any portion thereof, is withdrawn not more than the rate of interest on the time deposit. seven calendar days after a maturity date (one business day for deposits authorized by section 217.7(1)), 4. Section 217.6 is amended by revising paragraph (i) interest will be paid thereon at the originally specified to read as follows: contract rate. A member bank may specify in the time deposit contract that interest will be paid at any other Section 217.6—Advertising of interest on lower rate. However, in no event may the rate speci- deposits. fied be less than the current rate paid on savings deposits by the member bank. (i) Any advertisement, announcement, or solicitation relating to interest paid by a member bank on a time 3. Section 217.4 is amended by revising the first deposit issued pursuant to § 217.7(f) or 217.7(j) shall sentence in subparagraph (l)(iii) of paragraph (d), by include a clear and conspicuous notice that federal revising subparagraphs (5) and (6) of paragraph (d), regulations prohibit the compounding of interest durand by revising paragraph (f) to read as follows: ing the term of the deposit. Section 217.4—Payment of time deposits before 5. Section 217.7 is amended by revising paragraphs (a), maturity. (b), (d), (e), (f), (g), and (h), and by adding new paragraphs (j), (k), and (1). ^^ * * * Section 217.7—Maximum rates of interest Q) * * * payable by member banks on time and savings (iii) Except as provided in § 217.7 (j) and (1), the deposits. following minimum early withdrawal penalty shall apply to time deposit contracts entered into, re- Pursuant to the provisions of section 19 of the Federal newed, or extended on or after June 2, 1980: Reserve Act and § 217.3 of this part, the Board of * * * Governors of the Federal Reserve System hereby prescribes the following maximum rates' of interest per annum payable by member banks of the Federal (5) Except for time deposits on which no maximum Reserve System on time and savings deposits: interest rate limitation is prescribed, any amendment of a time deposit contract that results in an (a) Time deposits of $100,000 or more and IBF time increase in the rate of interest paid or in a reduction deposits. Except for a time deposit issued subject to all in the maturity of the deposit constitutes a payment the conditions of paragraph (1) or 12 CFR 1204.121, of the time deposit before maturity. there is no maximum rate of interest presently pre- (6) For purposes of computing the penalty required scribed on any time deposit of $100,000 or more with a to be imposed under this paragraph, under a time maturity of 14 days or more or on IBF time deposits deposit agreement that provides that subsequent issued under § 217.1(1). deposits reset the maturity of the entire account, each deposit maintained in the account for at least a period equal to the original maturity of the deposit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

640 Federal Reserve Bulletin • October 1982 (b) Fixed-ceiling time deposits. Except as provided in average on a discount basis) for U.S. Treasury bills paragraphs (a), (d), (e), (f), (g), (i), (j), (k), and (1), of with maturities of 26 weeks at the auction held immethis section, no member bank shall pay interest on any diately prior to the date of deposit ("bill rate"), or (2) time deposit at a rate in excess of the applicable rate the average of the four rates established and anunder the following schedule: nounced (auction average on a discount basis) for U.S. Treasury bills with maturities of 26 weeks at the four auctions held immediately prior to the date of deposit Maximum Maturity percent ("four-week average bill rate"). Rounding any rate to 14 days or more but less than 90 days 5'/4 the next higher rate is not permitted and interest may 90 days or more but less than 1 year 5% not be compounded during the term of this deposit. 1 year or more but less than 2Vi years 6 2Vi years or more but less than 4 years 6V2 4 years or more but less than 6 years 71/4 6 years or more but less than 8 years 7'/: Bill rate or 4-week Interest rate ceiling average bill rate 8 years or more TA * * * ** 7.50 percent or below 7.75 percent Above 7.50 percent One-quarter of 1 percentage point plus the higher of the bill rate or (d) Governmental unit time deposits. Except as pro- 4-week average bill rate. vided in paragraphs (a), (f), (g), (j), (k), and (1) of this section, and notwithstanding paragraph (b), no mem- A member bank may offer this category of time deposit ber bank shall pay interest on any time deposit which to all depositors. However, a member bank may pay consists of funds deposited to the credit of, or in which interest on any nonnegotiable time deposit of $10,000 the entire beneficial interest is held by, the United or more with a maturity of 26 weeks which consists of States, any State of the United States, or any county, funds deposited to the credit of, or in which the entire municipality or political subdivision thereof, the Dis- beneficial interest is held by: trict of Columbia, the Commonwealth of Puerto Rico, (3) The United States, any State of the United the Virgin Islands, American Samoa, Guam, or politi- States, or any county, municipality or political subcal subdivision thereof, at a rate in excess of 8 per division thereof, the District of Columbia, the Comcent.2 monwealth of Puerto Rico, the Virgin Islands, American Samoa, Guam, or political subdivision (e) Individual Retirement Account and Keogh (H.R. thereof; or 10) plan deposits. Notwithstanding paragraphs (b) and (4) An individual pursuant to an Individual Retire- (g) of this section, a member bank may pay interest at ment Account agreement or Keogh (H.R. 10) Plan any rate as agreed to by the depositor on any time established pursuant to 26 U.S.C. (I.R.C. 1954) 219, deposit with a maturity of one and one-half years or 401, 404, 408 and related provisions at a rate not to more, that consists of funds deposited to the credit of, exceed the ceiling rate payable on the same category or in which the entire beneficial interest is held by, an of deposit by any federally insured savings and loan individual pursuant to an Individual Retirement Ac- association or mutual savings bank.3 count agreement or Keogh (H.R. 10) Plan established pursuant to 26 U.S.C. (I.R.C. 1954) 219, 401, 404, 408, (g) Time deposits with maturities of 2lh years to less and related provisions. A member bank may permit than 3>/ years. 2 additional deposits to be made to such a time deposit (1) Except as provided in paragraphs (a) and (e) of at any time prior to its maturity without extending the this section and notwithstanding paragraphs (b) and maturity of all or a portion of the entire balance in the (d) of this section, a member bank may pay interest account. on any nonnegotiable time deposit with an original maturity of 2Vi years to less than V/i years at a rate (f) 26-week money market time deposits. Except as provided in paragraph (a) of this section and notwithstanding paragraphs (b) and (d) of this section, a member bank may pay interest on any nonnegotiable 3The ceiling rate of interest payable for this category of deposit by time deposit of $10,000 or more, with a maturity of 26 federally insured savings and loan associations and mutual savings weeks, at a rate not to exceed the ceiling rate set forth banks is 7.75 percent when the bill rate or four-week average bill rate is 7.25 percent or lower, one-half of one percent above the bill rate or below. The ceiling rate shall be based on the higher of four-week average bill rate when the bill rate or four-week average bill either (1) The rate established and announced (auction rate is above 7.25 percent but below 8.50 percent, 9.00 percent when the bill rate is above 7.25 percent but below 8.50 percent or above but below 8.75 percent, and one-quarter of one percent above the bill rate or four-week average bill rate when the bill rate or four-week average bill rate is 8.75 percent or above. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 641 not to exceed the higher of one-quarter of 1 per cent (2)(i) Except as provided in paragraphs (j)(2)(ii) and below the average 2'/2-year yield for U.S. Treasury (iii) of this section the ceiling rate of interest securities as determined and announced by the U.S. payable by a member bank shall be the rate estab- Department of the Treasury immediately prior to the lished and announced (auction average on a disdate of deposit, or 9.25 per cent. Such announce- count basis) for U.S. Treasury bills with maturities ment is made by the U.S. Department of the Trea- of 91 days at the auction held immediately prior to sury every two weeks. The average 2'/2-year yield the date of deposit ("bill rate") minus one-quarter will be rounded by the U.S. Department of the of one percentage point (25 basis points). Treasury to the nearest 5 basis points. The rate paid (ii) If the bill rate is 9 per cent or below at the four on any such deposit cannot exceed the ceiling rate in most recent auctions of U.S. Treasury bills with effect on the date of deposit. A member bank may maturities of 91 days held immediately prior to the offer this category of time deposit to all depositors. date of deposit, the ceiling rate of interest payable However, a member bank may pay interest on any by a member bank shall be the bill rate. nonnegotiable time deposit with a maturity of 2/2 (iii) Effective May 1, 1983, the ceiling rate of years to less than 3'/> years which consists of funds interest payable by a member bank on this categodeposited to the credit of, or in which the entire ry of deposit for deposits issued or renewed on or beneficial interest is held by the United States, any after that date shall be the bill rate. State of the United States, or any county, munici- (3) Where all or any part of a time deposit issued pality or political subdivision thereof, the District of under this paragraph is paid before maturity, a Columbia, the Commonwealth of Puerto Rico, the depositor shall forfeit an amount equal to at least all Virgin Islands, American Samoa, Guam, or political interest earned on the amount withdrawn. subdivision thereof at a rate not to exceed the ceiling rate payable on the same category of deposit by any (k) Time deposits with original maturities of 3'h years federally insured savings and loan association or or more. mutual savings bank.4 (1) Notwithstanding paragraphs (b) and (d) of this (2) Effective April 1, 1983, this paragraph is amend- section, a member bank may pay interest at any rate ed by striking the term "2V2 years to less than 3/2 as agreed to by the depositor on any time deposit years" wherever it appears and inserting in its place with an original maturity of 3'/> years or more that "l'/2 years to less than 2/2 years", and by striking has no minimum denomination but is made available the term "average 2/2-year yield" wherever it ap- in a denomination of $500. pears and inserting in its place "average 1 '/2-year (2) Any time deposit with an original maturity of 1V2 yield". years or more issued pursuant to this paragraph may provide by contract that additional deposits may be (h) Obligations of the parent bank holding company of made to the account for a period of one year from a member bank. Interest may be paid on a deposit as the date that it is established without extending the defined in section 217.1(h) at a rate not to exceed the original maturity date of the account. Deposits made maximum rate payable by a member bank on a deposit to the account more than one year after the date that of equal maturity and denomination. For purposes of it is established shall extend the maturity of the this paragraph, the maturity of an obligation of a entire account for a period of time at least equal to parent bank holding company is the lesser of the stated the original term of the account. maturity period, notice period, or redemption period. (3) Any time deposit offered pursuant to this paragraph may be issued in a negotiable or nonnegotiable form. (j) 91-day time deposits. (1) Except as provided in (4)(i) Effective April 1, 1983, this paragraph is paragraph (a) of this section and notwithstanding para- amended by striking the term "3'/> years" whergraphs (b) and (d) of this section, a member bank may ever it appears and inserting in its place the term pay interest on any negotiable or nonnegotiable time "2'/2 years". deposit of $7,500 or more, with a maturity of 91 days, (ii) Effective April 1, 1984, this paragraph is at a rate not to exceed the ceiling rates set forth below. amended by striking the term "2V2 years" wher- Rounding any rate upward is not permitted, and inter- ever it appears and inserting in its place "1/2 est may not be compounded during the term of this years". deposit. (iii) Effective April 1, 1985, this paragraph is amended by striking the term "IV2 years" wherever it appears in subparagraph (1) and inserting * * * in its place "6 months". 4 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

642 Federal Reserve Bulletin • October 1982 (1) Seven-to-31 day time deposits of $20,000 or more. interest at any rate as agreed to by the depositor (1) Notwithstanding paragraphs (b) and (d) of this on this category of deposit for deposits issued section, a member bank may pay interest on any or renewed during such period; or nonnegotiable time deposit of $20,000 or more, with (B) Effective May 1, 1983. A member bank may a maturity or required notice period of not less than pay interest at any rate as agreed to by the seven days nor more than 31 days, at a rate not to depositor on this category of deposit for deposexceed the ceiling rates set forth below. However, a its issued or renewed on or after May 1, 1983. member bank shall not pay interest in excess of the (3)(i) A member bank is not permitted ceiling rate for regular savings deposits or accounts (A) To lend funds to a depositor upon the on any day the balance in a time deposit issued security of a time deposit that it has issued under this paragraph is less than $20,000. Rounding under this paragraph, or any rate upward is not permitted. (B) To lend funds to a depositor to meet or (2)(i) For fixed interest rate, fixed maturity time maintain the minimum denomination requiredeposits issued under this paragraph, the ceiling ment of a time deposit issued under this pararate of interest payable by a member bank shall be graph. the rate established and announced (auction aver- (ii) The rate of interest and any other charges age on a discount basis) for U.S. Treasury bills imposed on an overdraft credit arrangement to with maturities of 91 days at the auction held which withdrawals are paid or to which payments immediately prior to the date of deposit or renew- upon maturity or expiration of a required notice al ("bill rate") minus one-quarter of one percent- period are made from an account issued under this age point (25 basis points). paragraph must be not less than those imposed on (ii) For variable interest rate, fixed maturity time such overdrafts for customers that do not possess deposits and for all notice accounts issued under an account issued under this paragraph at the this paragraph, the ceiling rate of interest payable same institution. by a member bank shall be the bill rate in effect on (4)(i) Where all or any part of a time deposit issued the date of opening or renewal of the account under this paragraph is paid before maturity or minus one-quarter of one percentage point (25 expiration of the required notice period, a deposibasis points). The interest rate on the account tor shall forfeit an amount at least equal to the then may be adjusted to be not in excess of the bill greater of rate, minus 25 basis points, established and an- (A) All interest earned on the amount withnounced at the most recent subsequent auction drawn from the most recent of the date of during the life of the deposit but not less often deposit, date of maturity, or date on which than every 31 days. notice was given, or (iii) Notwithstanding subparagraphs (2)(i) and 2(ii) (B) All interest that could have been earned on of this paragraph, a member bank may pay inter- the amount withdrawn during a period equal to est at a rate not to exceed the bill rate on any time one-half the maturity period or required notice deposit issued under this paragraph which con- period. sists of funds deposited to the credit of, or in (ii) Where all or any part of a time deposit issued which the entire beneficial interest is held by: under this paragraph is withdrawn within one (A) The United States, any State of the United business day after the maturity date of the deposit States, or any county, municipality or political or the date of expiration of notice of withdrawal, subdivision thereof, the District of Columbia, no early withdrawal penalty is required to be the Commonwealth of Puerto Rico, the Virgin applied on the amount withdrawn. Islands, American Samoa, Guam, or political (5) Additional deposits to an account issued under subdivision thereof; or this paragraph with a fixed maturity must be main- (B) An individual pursuant to an Individual tained in the account for a period at least equal to Retirement Account agreement or Keogh (H.R. the original term of the account and may be regarded 10) Plan established pursuant to 26 U.S.C. (IRC as having matured individually and having been 1954) 219, 401, 404, 408, and related provisions. redeposited at intervals equal to such period. For (iv) The ceiling rates in paragraphs (l)(2)(i), (2)(ii) accounts issued under this paragraph that are suband (2)(iii) of this section shall not apply. ject to a notice period, additional deposits must (A) If the bill rate is 9 per cent or below at the remain in the account for a period equal to at least four most recent auctions of U.S. Treasury bills the notice period before such funds may be withwith maturities of 91 days held prior to the date drawn without the imposition of an early withdrawal of deposit or renewal. A member bank may pay penalty. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 643 (6) Deposits to any account issued under this para- Applicant, the fifth largest banking organization in graph may not be made by automatically transfer- Michigan, controls 27 subsidiary banks with aggregate ring funds from another account of the depositor at deposits of $3.06 billion, representing 7.04 percent of the same institution where the transfer is initiated by the total deposits in commercial banks in the state.2 the level of the balance in any account. Upon acquisition of Bank (deposits of $20.6 million), (7)(i) Withdrawals from any account issued under Applicant's share of deposits in commercial banks in this paragraph may not be made (A) by check, Michigan would increase by .05 percent, and Applidraft, or other third party payment instrument or cant would remain the fifth largest banking organizainstruction drawn or issued by the depositor, or tion in the state.3 Accordingly, consummation of this (B) by automatically transferring funds to another proposal would not have an appreciable effect on account of the depositor where the transfer is concentration of commercial banking resources in initiated by the level of balance in any account Michigan. held by the depositor. Bank is the fourth largest banking organization in (ii) Payments at maturity or withdrawals may be the Huron County banking market, controlling appaid by (A) check or cash to the depositor, (B) proximately 8.7 percent of total deposits in commercash, draft, or electronic transfer issued by the cial banks in the market.4 Applicant, through a branch institution to a third party, or (C) transfer to any office of a banking subsidiary in the Huron County other account held by the depositor. banking market, is the ninth largest banking organiza- (iii) Notice of withdrawal of an account issued tion in the relevant market and controls about 0.5 under this paragraph may be delivered by the percent of the total deposits in the market. Upon depositor to the institution by telephone or other consummation, Applicant would become the fourth telecommunication, mail, messenger, standing or- largest banking organization in the market with 9.2 der, or by appearance in person at the offices or percent of the market's commercial banking deposits. premises of the institution. Although consummation of the proposal would eliminate some existing competition between Applicant and BANK HOLDING COMPANY AND BANK MERGER Bank, the Board does not regard the effects on existing ORDERS ISSUED BY THE BOARD OF GOVERNORS competition to be so serious as to warrant denial of the application. The four-firm concentration ratio will Orders Under Section 3 of Bank Holding increase by only 0.5 percent and there will remain Company Act several other market competitors that could serve as entry vehicles for banking organizations not currently Statement by the Board of Governors of the represented in the market. Accordingly, the Board Federal Reserve System Regarding the concludes that consummation of the proposal would Application of First American not have significantly adverse effects on existing or Bank Corporation to Acquire Huron potential competition, and would not increase the County Bank concentration of banking resources in any relevant area. By Order dated August 30, 1982, the Board approved The financial and managerial resources of Applithe application of First American Bank Corporation, cant, its subsidiaries and Bank are regarded as general- Kalamazoo, Michigan, under section 3(a)(3) of the ly satisfactory and their future prospects appear favor- Bank Holding Company Act (12 U.S.C. § 1842(a)(3)) able. Accordingly, considerations relating to banking to acquire 100 percent of the voting shares of Huron factors are consistent with approval of the application. County Bank, Harbor Beach, Michigan ("Bank").1 In Following consummation of the proposal, Applicant this Statement, the Board sets forth its reasons for intends to provide Bank with assistance in marketing approving the application. its NOW account program, and in establishing expand- 1. In conjunction with this application, Applicant requested prior 2. All banking data are as of June 30, 1981. approval to merge HC State Bank, Harbor Beach, Michigan, a new 3. On August 30, 1982, the Board approved the application of First bank formed for the purpose of effecting the transaction, with Huron American Bank Corporation to merge with Mid-Michigan Bank Cor- County Bank under the charter of the former and with the title of poration, Gladwin, Michigan. Upon consummation of that transac- Huron County Bank pursuant to section 18(c) of the Federal Deposit tion, Applicant's share of deposits in commercial banks in Michigan Insurance Act (12 U.S.C. § 1828(c)). After consideration of the will increase by 0.15 percent. statutory factors in light of all the facts of record, the Board deter- 4. The Huron County banking market consists of all but the extreme mined that the proposed merger is consistent with the public interest southwestern portion of Huron County, Michigan, plus the communiand approved the merger application on August 30, 1982. ty of Minden in adjacent Sanilac County, Michigan. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

644 Federal Reserve Bulletin • October 1982 ed credit card services, ATMs, trust services and a organizations in the state.1 Fannin Bank, the only commercial leasing program, services that are not banking subsidiary of Fannin Bancshares, holds total currently offered by Bank, thus increasing Bank's deposits of $373 million, representing 0.4 percent of ability to serve its customers. In light of this proposed statewide deposits. Fannin Bancshares ranks 21st expansion in services, the Board concludes that con- among all commercial banking organizations in Texas. siderations relating to the convenience and needs of Upon consummation of the proposed merger, Interthe community to be served lend some weight toward First would remain the largest banking organization in approval of the acquisition and outweigh any adverse the state, and the percentage of statewide deposits competitive effects that may result from consumma- controlled by InterFirst would increase to 11.4 pertion of the proposal. Accordingly, the Board con- cent. The Board's view is that consummation of the cludes that consummation of the proposed transaction proposed merger would not have an appreciable effect would be in the public interest and that the application on the concentration of commercial banking resources should be approved. in Texas. On the basis of the record, the application has been Fannin Bank operates in the Houston banking marapproved for the reasons summarized above. The ket,2 where it holds 1.64 percent of market deposits acquisition of shares of Bank shall not be made before and ranks as the tenth largest of 110 commercial the thirtieth calendar day following the effective date banking organizations in the market. InterFirst is the of the Order, or later than three months after the fifth largest commercial banking organization in the effective date of the Order, unless such period is Houston banking market with 11 banking subsidiaries, extended for good cause by the Board of Governors or and holds $1.48 billion in deposits, representing 6.51 by the Federal Reserve Bank of Chicago, pursuant to percent of market deposits. Following consummation delegated authority. of the proposed transaction, InterFirst would become Board of Governors of the Federal Reserve System, the fourth largest commercial banking organization in September 15, 1982. the Houston market. Although the proposed acquisition will eliminate some competition between Fannin (Signed) JAMES MCAFEE, Bank and InterFirst's banking subsidiaries in the [SEAL] Associate Secretary of the Board. Houston banking market, the Board notes that the market is not highly concentrated. Moreover, in recent years the Houston banking market has experienced InterFirst Corporation, rapid population and commercial growth, leading to Dallas, Texas substantial expansion in banking in the market. In view of these and other facts of record, the Board's Order Approving Acquisition of Bank Holding judgment is that the effects of the proposed transaction Company on competition in the Houston banking market are not so serious as to warrant denial of the application. InterFirst Corporation, Dallas, Texas, a bank holding The financial and managerial resources of Intercompany within the meaning of the Bank Holding First, Fannin Bancshares, and their subsidiary banks Company Act of 1956, as amended (12 U.S.C. § 1841 are regarded as generally satisfactory, and their future et seq.), has applied for the Board's approval under prospects appear favorable. Accordingly, banking facsection 3 of the act (12 U.S.C. § 1842) to acquire tors are consistent with approval of the proposal. indirect control of Fannin Bank, Houston, Texas, Although the proposed transaction will not bring through the acquisition of its parent, Fannin Banc- new services to the Houston banking market, the shares, Inc., Houston, Texas. present customers of Fannin Bank will benefit from Notice of the application, affording opportunity for access to the InterFirst ATM network, and from the interested persons to submit comments and views, intitiation or expansion of specialized lending services, has been given in accordance with section 3(b) of the and international banking activities. Thus, consideract (12 U.S.C. § 1842(b)). The time for filing com- ations relating to the convenience and needs of the ments and views has expired and the Board has community to be served are consistent with approval. considered the application and all comments received Accordingly, the Board's judgment is that consummain light of the factors set forth in section 3(c) of the act (12 U.S.C. § 1842(c)). 1. All deposit data as of June 30, 1981, reflecting acquisitions InterFirst, the largest banking organization in Tex- approved as of June 30, 1982. as, controls 54 banking subsidiaries with aggregate 2. The relevant geographic banking market is the Houston RMA, which consists of the majority of Harris County, and portions of statewide deposits of $10.3 billion, representing 11 Waller, Fort Bend, Brazoria, Galveston, Chambers, Liberty, and percent of the total deposits in commercial banking Montgomery Counties. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 645 tion of the proposal would be consistent with the Company Act, has applied for the Board's approval public interest. under section 3(a)(3) of the act (12 U.S.C. § 1842(a)(3)) On the basis of the record and for the reasons to acquire all of the voting shares of San Bancorp, discussed above, the application is hereby approved. Sanborn, Iowa ("Company"), a registered one-bank The transaction shall not be consummated before the holding company, and to acquire indirectly its comthirtieth day following the effective date of this Order, mercial bank subsidiary, Sanborn Savings Bank, Sanor later than three months after the effective date of born, Iowa ("Bank"). this Order, unless such period is extended for good Notice of the application, affording opportunity for cause by the Board or by the Federal Reserve Bank of interested persons to submit comments and views, has Dallas, pursuant to delegated authority. been given in accordance with section 3(b) of the act. By order of the Board of Governors, effective The time for filing comments and views has expired, September 16, 1982. and the Board has considered the application and all comments received in light of the factors set forth in Voting for this action: Chairman Volcker and Governors section 3(c) of the act (12 U.S.C. § 1842(c)). Wallich, Partee, Rice, and Gramley. Voting against this The proposed transaction is essentially a reorganizaaction: Governor Teeters. Absent and not voting: Governor Martin. tion whereby the shareholder who presently controls Bank through Company will control Bank through (Signed) JAMES MCAFEE, Applicant. Applicant, a one-bank holding company, is [SEAL] Associate Secretary of the Board. the 320th largest banking organization in Iowa, controlling $19.1 million in deposits.1 Upon acquisition of Dissenting Statement of Governor Teeters Bank ($14.7 million in deposits) Applicant would control the 396th largest commercial bank in Iowa and I would deny the application of InterFirst Corporation would hold approximately .17 percent of the total to acquire Fannin Bancshares, Inc. In this case, the deposits of commercial banks in the state. largest banking organization in Texas, operating the Bank is the third largest of six commercial banking fifth largest banking organization in the Houston bank- organizations in the O'Brien County banking market, ing market, is seeking to acquire the tenth largest and holds approximately 16 percent of the total deposcommercial banking organization in that market. In its in commercial banks in the market.2 Applicant's my view, the acquisition would represent the elimina- banking subsidiary does not compete in the relevant tion of a significant competitor from the Houston banking market. The facts of record indicate that market and would contribute to concentration of bank- consummation of the proposal would not result in any ing resources in a market that has been experiencing adverse effects upon competition or increase the conconcentration among its larger financial institutions. centration of banking resources in any relevant area. Moreover, Fannin Bancshares, with total deposits of Accordingly, the Board concludes that competitive $373 million, is of sufficient size and possesses suffi- considerations are consistent with approval of the cient resources to independently expand its operations application. in the Houston banking market, as well as into other The Board has indicated on previous occasions that markets in Texas. Thus, the acquisition of Fannin by a holding company should serve as a source of finan- InterFirst would foreclose the possibility of future cial and managerial strength to its subsidiary bank(s), expansion by a viable potential competitor in the state. and that the Board will closely examine the condition Accordingly, consummation of the transaction would, of an applicant in each case with this consideration in in my view, have an adverse effect on competition mind. Moreover, the Board has stated that in acting without offering any offsetting benefits or outweighing upon future applications by an applicant, it will assess convenience and needs considerations. the applicant's managerial resources in light of its In light of the above, I would deny this application. compliance with prior commitments to the Board.3 In this case, the Board concludes that the record presents September 16, 1982 adverse considerations as they relate to the applicant Milford Bancorporation, Milford, Iowa 1. All banking data are as of December 31, 1981. 2. The O'Brien County banking market is approximated by all of O'Brien County, Iowa, except the westernmost portion. Order Denying Acquisition of Bank 3. "First City Bancorporation of Texas, Inc. (Central Bank and Trust Company), 61 FEDERAL RESERVE BULLETIN 591 (1975)," Milford Bancorporation, Milford, Iowa, a bank hold- "Bank Shares Incorporated," 62 FEDERAL RESERVE BULLETIN 626 (1976), see also "American National Sidney Corp.", 66 FEDERAL ing company within the meaning of the Bank Holding RESERVE BULLETIN 159 (1980). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

646 Federal Reserve Bulletin • October 1982 bank holding company, that these considerations war- By order of the Board of Governors, effective rant denial of its proposed acquisition of Company and September 27, 1982. Bank. The Board's approval on January 20, 1978, of the Voting for this action: Chairman Volcker and Governors formation of Company and acquisition of Bank relied, Wallich, Partee, Teeters, Rice, and Gramley. Absent and not in part, upon a commitment made by the principal voting: Governor Martin. shareholder of Company and Applicant, who also serves as chairman and president of Applicant and (Signed) JAMES MCAFEE, Dickinson Bank, chairman of Company, and president [SEAL] Associate Secretary of the Board. of Bank, to inject by June 30, 1978, $200,000 of equity capital into Applicant's subsidiary commercial bank, Dickinson County Savings Bank, Milford, Iowa Trans world Corporation, ("Dickinson Bank"). The capital injection was to have Lake Forest, Illinois been accomplished by principal's purchase with personal funds of 200 shares of unissued stock. To date, Order Approving Acquisition of Bank Applicant's principal has not complied with this commitment. In view of the fact that Dickinson Bank's Trans world Corporation, Lake Forest, Illinois, a bank overall condition has declined since its acquisition by holding company within the meaning of the Bank Applicant, the Board regards the continuing noncom- Holding Company Act, has applied for the Board's pliance with the commitment by Applicant's principal approval under section 3(a)(3) of the act (12 U.S.C. as a factor reflecting adversely upon the financial and § 1842(a)(3)) to acquire shares of Dempster Plaza State managerial resources of Applicant, and as providing Bank, Niles, Illinois ("Bank"). sufficient grounds for denial of the present proposal. Notice of the application, affording opportunity for In addition, the Board notes that Applicant would interested persons to submit comments and views, has incur a sizeable additional debt in connection with this been given in accordance with section 3(b) of the act. proposal. The amount of Applicant's original debt The time for filing comments and views has expired, upon formation in 1974 was limited to the maximum and the Board has considered the application and all amount Applicant demonstrated that it could retire comments received in light of the factors set forth in within the then-requisite 12-year period. However, section 3(c) of the act (12 U.S.C. § 1842(c)). Applicant has not met its debt servicing projections, Applicant is a one bank holding company by virtue nor has it significantly reduced its original acquisition of its control of The Northlake Bank, Northlake, debt. Based upon this record, the Board is unable to Illinois ("Northlake Bank") (deposits of $11.6 milconclude that Applicant's projections will be fulfilled. lion). Both Northlake Bank and Bank, with deposits of Accordingly, based upon the above and other facts of $21.7 million, are among the smaller commercial banks record, the Board concludes that considerations relat- in the state.1 Upon consummation of the proposed ing to financial resources and future prospects of transaction, Applicant will become the 483rd largest Applicant, Dickinson Bank, and Bank weigh against commercial banking organization in Illinois, and will approval of this application. control 0.03 percent of the deposits in commercial No significant changes in Bank's operations or in banks in that state. In light of the small share of the the services offered to customers are anticipated to state's commercial bank deposits that will be confollow from consummation of the proposed acquisi- trolled by Applicant, the Board concludes that contion. Consequently, convenience and needs factors summation of the transaction will not have any serious lend no weight toward approval of this proposal. adverse effects on the concentration of banking re- On the basis of the circumstances concerning this sources in Illinois. application, the Board concludes that the banking The proposal represents a reorganization whereby considerations involved in this proposal present ad- Applicant will acquire shares of Bank now held by its verse factors bearing upon the financial and manageri- principal. Because both Northlake Bank and Bank al resources and future prospects of Applicant and compete in the Chicago banking market,2 the 1977 Bank. Such adverse factors are not outweighed by any acquisition of Bank by Applicant's principal eliminatprocompetitive effects of by benefits that would result ed some existing competition in the market. However, in better serving the convenience and needs of the consummation of the proposed transaction will incommunity. Accordingly, the Board's judgment is that approval of the application would not be in the public interest and that the application should be denied. 1. All banking data are as of December 31, 1981. On the basis of the facts of record, the application is 2. The Chicago banking market is approximated by Cook, DuPage, denied for the reasons summarized above. and Lake Counties, Illinois. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 647 crease Applicant's share of deposits in commercial Orders Under Section 4 of Bank Holding banks in the market to only 0.05 percent. In light of the Company Act small absolute and relative size of Northlake Bank and Bank and the fact that numerous banking alternatives BankAmerica Corporation, will remain in the market after consummation, the San Francisco, California Board concludes that consummation will have no significant effect on existing competition in any rele- Order Approving Application to Engage in vant market. Equity Financing Activities The financial and managerial resources of Applicant, Northlake Bank and Bank are generally satisfac- BankAmerica Corporation, San Francisco, California, tory and the future prospects for each appear favor- a bank holding company within the meaning of the able especially in light of the additional capital that Bank Holding Company Act, has applied for the Applicant will provide Bank. Thus, banking factors Board's approval, under section 4(c)(8) of the act are consistent with approval of the application. With (12 U.S.C. § 1843(c)(8)) and section 225.4(a) of the respect to the convenience and needs of the communi- Board's Regulation Y (12 C.F.R. § 225.4(a)), to engage ties to be served, the Board notes that Bank's record through its subsidiary, BA Mortgage and International of serving its community has improved significantly Realty Company, San Francisco, California ("BAsince its acquisition by Applicant's principal. Thus, MIRCO"), in the activity of arranging equity financing although no immediate changes in Bank's services are for certain types of income-producing properties. contemplated, considerations relating to convenience Notice of the application, affording interested perand needs of the community lend weight toward sons an opportunity to submit comments and views on approval of the application. Accordingly, the Board's the relatedness of the proposed activity to banking and judgment is that the proposed acquisition is in the on the balance of public interest factors regarding the public interest and that the application should be application has been duly published (46 Federal Regisapproved.3 ter 61297 (1981)). The time for filing comments and On the basis of the record, the application is ap- views has expired and the Board has considered the proved for the reasons summarized above. This trans- application and all comments received in light of the action shall not be made before the thirtieth day public interest factors set forth in section 4(c)(8) of the following the effective date of this Order, or later than act. three months after the effective date of this Order, Applicant is a bank holding company by virtue of its unless such period is extended by the Board or by the control of Bank of America NT & SA, San Francisco, Federal Reserve Bank of Chicago, acting pursuant to California (domestic deposits of $51.2 billion), the delegated authority. largest banking organization in California. Bank of By order of the Board of Governors, effective America controls 36.1 percent of total deposits in September 1, 1982. commercial banks in that state.1 Applicant also engages in certain nonbanking activities, including mort- Voting for this action: Chairman Volcker and Governors gage banking, commercial lending and leasing, credit Martin, Wallich, Teeters, Rice, and Gramley. Absent and not related insurance activities, investment advisory activvoting: Governor Partee. ities, and management consulting to depository institutions. (Signed) JAMES MCAFEE, Applicant, through BAMIRCO, currently engages in [SEAL] Associate Secretary of the Board. mortgage banking and servicing activities for which it received Board approval under section 4(c)(8) of the act and sections 225.4(a)(1) and (3) of Regulation Y. BAMIRCO also is authorized to provide investment advisory services under section 225.4(a)(5) of Regulation Y, including advice with respect to commercial or 3. The Board notes that, pursuant to section 4(a)(2) of the Act industrial real estate. (12 U.S.C. § 1843(a)(2)), Applicant has indefinite grandfather privi- BAMIRCO currently provides to persons seeking leges with respect to certain real estate activities. In this regard, there financing for commercial or industrial income producis no evidence in the record that Applicant's continued performance of these activities would result in any undue concentration of resources, ing property a variety of financing services, including decreased or unfair competition, conflicts of interest, unsound bank- the provision or arrangement of traditional mortgage ing practices or other adverse effects that would warrant termination loans. In this application, BAMIRCO seeks authority of these activities. Accordingly, the Board concludes termination of these real estate activities is not warranted at this time. This determi- to provide these persons equity financing as an alternation is subject to later review by the Board or by the Reserve Bank. Moreover, this determination is not an authorization to expand these activities. 1. Banking data are as of June 30, 1981. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

648 Federal Reserve Bulletin • October 1982 native to an extension of credit made or arranged by cial or industrial income-producing real property, only BAMIRCO.2 The equity financing activity will be where the financing arranged exceeds $1 million, and performed only by BAMIRCO, Applicant's mortgage will place equity financing only with institutional or banking subsidiary, and will be offered only as an wealthy, professional individual investors. alternative to traditional financing arrangements. BA- The evidence of record shows that, in performing MIRCO will not solicit for properties to be sold, list or the equity financing activity for commercial or indusadvertise properties for sale, or hold itself out or trial income-producing real estate, BAMIRCO needs advertise as a real estate broker or syndicator. and will utilize the type of expertise and analysis In order to approve an application submitted pursu- developed by financial institutions in evaluating and ant to section 4(c)(8) of the act to engage in a nonbank arranging mortgage financing for such property. For activity, the Board is required to find that the activity example, Applicant states that BAMIRCO would conis closely related to banking or managing or controlling sult with the developer/owner to determine the nature, banks. In determining whether an activity is closely objectives and financing requirements of a project; related to banking under section 4(c)(8) of the act, the would consider the project's concept, architectural Board has used the following guidelines recognized by design, building layout, suitability for purpose and the courts: (1) whether banks have generally provided prospects; would analyze traffic flow, competing projthe proposed service; (2) whether banks generally ects, source of customers, the nature of the market; provide services that are operationally or functionally would calculate projected rentals and income flows; so similar to the proposed service as to equip them and would review the developer/owner's timetable for particularly well to provide the proposed service; or the project; and availability of construction financing (3) whether banks generally provide services that are and long term financing for the property. Based upon so integrally related to the proposed service as to its review, BAMIRCO would prepare a written analyrequire their provision in specialized form.3 In addi- sis of the project and, in view of this analysis and its tion, the Board may consider other factors in deciding knowledge of the current real estate financing market, what activities are closely related to banking.4 BAMIRCO would formulate financing alternatives, Upon consideration of the entire record on this which might include equity financing. According to application, including all public comments submitted, Applicant, in presenting a project to an investor this the Board has determined, for the reasons explained analysis is the same, whether the ultimate financing is below, that Applicant's proposed equity financing in the form of a mortgage or equity financing. activity as conditioned by this Order is closely related The Board finds that the particular expertise and to banking. analysis required to provide equity financing for large Equity financing, as proposed by BankAmerica, commercial or industrial income-producing properties involves arranging for the financing of commercial or is functionally and operationally similar to the analysis industrial income-producing real estate through the and expertise that is required when a bank provides transfer of the title, control and risk of the project from traditional mortgage financing services for such propthe owner/developer to one or more investors. BA- erties. Banking organizations have historically provid- MIRCO would represent the owner/developer and ed financing for commercial and industrial properties would be paid a fee by the owner/developer for this and thus are particularly well equipped to provide the service. Neither BAMIRCO nor any of its affiliates proposed service. The Board's judgment is that the will provide financing to the investors in connection functional and operational similarity between mortwith an equity financing arrangement. BAMIRCO will gage banking and equity financing is further supported arrange equity financing only in the case of commer- by the fact that equity financing can be viewed as an economic substitute for long-term mortgage financing. Evidence in the record shows that investors have increasingly turned to equity participations in projects 2. A staff opinion issued on January 16, 1981, informed BAMIRCO as a means of increasing their yields and protecting that, as an incident to its lending authority under section 225.4(a)(1), it could place equity interests in connection with lending transactions in themselves against inflation and interest rate fluctuawhich BAMIRCO was a participant or as part of a package where a tions. permanent mortgage loan was being made in connection with the Moreover, the Board's view is that equity financing equity placement. The Board will review this staff opinion in light of the limitations and conditions in this Order. as proposed by Applicant and as conditioned by this 3. "National Courier Association" v. "Board of Governors," 516 Order bears a functional relationship to investment F.2d 1229 (D.C. Cir. 1975). 4. "Alabama Association of Insurance Agents" v. "Board of advisory services traditionally and lawfully performed Governors," 553 F.2d 224, 241 (5th Cir. 1976), rehearing denied 558 by commercial banks with respect to commercial and F.2d 729 (1977), cert, denied. 435 U.S. 904 (1978). See "Board of industrial real estate. Accordingly, on these bases and Governors" v. "Investment Company Institute," 450 U.S. 46, 55 (1981). based upon the evidence of record and subject to the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 649 conditions and limitations set forth in this Order, the creased competition would result by providing a Board finds that equity financing by Applicant is broader range of long-term financing alternatives and closely related to banking.5 by aiding the flow of funds between investors and The Board has imposed the conditions in this Order developers. This should also tend to produce lower to confine the activity proposed by Applicant to equity costs and increased efficiencies. Moreover, competifinancing and to prevent Applicant from engaging in tion would be enhanced since mortgage company real estate development or syndication. In equity subsidiaries of bank holding companies could better financing, BAMIRCO's function is limited to acting as compete with independent mortgage companies, intermediary between developers and investors to which may engage in both traditional mortgage bankarrange financing. Neither BAMIRCO nor any affiliate ing and equity financing. Some concern was expressed may acquire an interest in the real estate project for by commenters on the application that consummation which BAMIRCO arranges equity financing nor have of the proposal might result in unfair competition by any role in the development of the project. Neither allowing bank holding companies to engage in real BAMIRCO nor any of its affiliates shall participate in estate brokerage and might result in conflicts of intermanaging, developing or syndicating property for ests with respect to subsidiary banks. As noted, the which BAMIRCO arranges equity financing, nor pro- Board has limited the proposed activity to exclude mote or sponsor the development or syndication of general real estate brokerage. Moreover, in view of the such property. The fee BAMIRCO receives for arrang- commitments and representations furnished by Appliing equity financing for a project shall not be based on cant, including the prohibition against the financing by profits derived, or to be derived, from the property BAMIRCO's affiliates of investors in an equity financand should not be larger than the fee that would be ing arrangement, the Board believes that approval of charged by an unaffiliated intermediary. The Board the activity is not likely to result in any conflicts of finds that Applicant's proposed equity financing activ- interest. ity will not constitute either real estate development or There is no evidence in the record to indicate that real estate syndication, provided the above-mentioned Applicant's engaging in the proposed activity would conditions and limitations are observed by Applicant lead to any undue concentration of resources, deand BAMIRCO. creased or unfair competition, unsound banking prac- Before approving a bank holding company's appli- tices, or other adverse effects. The Board's view is cation to engage in an activity that the Board deter- that the subject application to engage in the proposed mines is closely related to banking, the Board must equity financing activity as limited by this Order would also find that consummation of the proposal can produce benefits to the public that outweigh any reasonably be expected to produce benefits to the potential adverse effects. public that outweigh possible adverse effects. With Based upon the foregoing and other considerations respect to the proposed equity financing activity, it reflected in the record, the Board has determined that appears from the record that authorizing the activity the balance of the public interest factors that the Board for bank holding companies would enhance competi- is required to consider under section 4(c)(8) of the act tion and provide greater convenience, increased effi- is favorable. This determination is conditioned upon ciencies, and lower costs, without resulting in any Applicant's strictly limiting its activities as described in adverse consequences. Greater convenience and in- information provided in connection with this application and as provided in this Order. Accordingly, the application is hereby approved. This determination is subject to the limitations set forth in this Order, the conditions set forth in section 5. In a 1972 decision, the Board required an applicant to divest a general real estate brokerage subsidiary because the applicant had not 225.4(c) of Regulation Y, and the Board's authority to demonstrated that the proposed activity was closely related to bank- require such modification or termination of the activiing. "Boatmen's Bancshares, Inc," 58 FEDERAL RESERVE BULLETIN ties of a holding company or any of its subsidiaries as 427 (1972). Some comments on BankAmerica's proposal suggested that equity financing should be regarded as real estate brokerage and the Board finds necessary to assure compliance with impermissible under the Board's "Boatmen's" decision. However, the provisions of and purposes of the act, and the equity financing for incomeproducing properties was not an activity Board's regulations and orders issued thereunder, or considered in the "Boatmen's" case. Moreover, economic conditions have changed significantly since 1972 when that determination was to prevent evasion thereof. made, and, as noted below, equity financing has become an economic The proposed activity shall be commenced not later substitute for long-term mortgage financing. Because the particular expertise and analysis required for equity financing are not involved in than three months after the effective date of this general real estate borkerage, the Board's conclusion with respect to Order, unless such period is extended for good cause BAMIRCO's proposed activities does not represent a departure from by the Board or by the Federal Reserve Bank of San the Board's position concerning the impermissibility of general real estate brokerage. Francisco. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

650 Federal Reserve Bulletin • October 1982 By order of the Board of Governors, effective BankEast (consolidated deposits of $417.6 million) September 1, 1982. operates four commercial banks, three guaranty savings banks, and a mortgage company.4 Guaranty Bank Voting for this action: Chairman Volcker and Governors currently operates a single office in Salem, New Martin, Wallich, Teeters, Rice, and Gramley. Absent and not Hampshire.5 This application involves the establishvoting: Governor Partee. ment of a de novo branch of Guaranty Bank. There are no other subsidiaries of Applicant operating in the (Signed) WILLIAM W. WILES, Boston banking market. Accordingly, it does not ap- [SEAL] Secretary of the Board. pear that consummation of the proposed transaction, as conditioned in this Order, would result in any BankEast Corporation, adverse effects on competition in any relevant market. Manchester, New Hampshire The Board has previously determined that because of the unique structural and competitive situation Order Conditionally Approving Establishment between commercial banks and guaranty savings of de novo branch of Guaranty Savings Bank banks in New Hampshire, the operation of a New Hampshire guaranty savings bank by a New Hamp- BankEast Corporation, Manchester, New Hampshire, shire bank holding company is so closely related to a bank holding company within the meaning of the banking as to be a proper incident thereto.6 No evi- Bank Holding Company Act, has applied for the dence has been presented to indicate that banking Board's approval under section 4(c)(8) of the act conditions have substantially changed in New Hamp- (12 U.S.C. § 1843(c)(8)) and section 225.4(b)(2) of the shire since the Board's consideration of this issue Board's Regulation Y (12 C.F.R. § 225.4(b)(2)) to earlier this year, and BankEast must limit Guaranty establish a de novo branch office in Pelham, New Bank's deposit-taking or commercial lending activities Hampshire, of its existing subsidiary, BankEast Guar- to remain under the nonbanking provisions of the act. anty Savings Bank, Salem, New Hampshire ("Guar- The Board, therefore, confirms its finding that the anty Bank"), an organization engaged pursuant to the operation of a guaranty savings bank may be so closely laws of New Hampshire in the activities of a guaranty related to banking in New Hampshire as to be a proper savings bank.1 incident thereto. The Board by order approved the acquisition of Notwithstanding this general finding, the Board Guaranty Bank by BankEast (formerly First Financial must also consider the particular facts of this case to Group) and determined that the operation of such an determine whether the proposed acquisition is a propinstitution was closely related to banking in New er incident to banking, that is, whether it "can reason- Hampshire.2 ably be expected to produce benefits to the public such Notice of the application, affording opportunity for as greater convenience, increased competition, or interested persons to submit comments and views, has gains in efficiency, that outweigh possible adverse been duly published. The time for filing comments and effects such as undue concentration of resources, views has expired and the Board has considered the decreased or unfair competition, conflicts of interest, application and all comments received in light of the or unsound banking practices." factors set forth in section 4(c)(8) of the act (12 U.S.C. In considering previous applications under the act § 1843(c)(8)).3 involving the affiliation of commercial banks and guaranty savings banks in New Hampshire in 1980 and 1982, the Board noted the potential for serious con- 1. A guaranty savings bank is essentially the same as a mutual flicts of interests, unfair competition, and circumvensavings bank except that the former is a stock institution. That is, the ownership of the equity interest in a guaranty savings bank is vested in tion of the Regulation Q interest rate differential that the holders of the capital stock or special deposits. Under the current might arise from the operation of these two types of laws of New Hampshire, guaranty savings banks may engage not only institutions at nearby locations or in close mutual in typical savings bank activities, such as accepting time and savings deposits, acting as fiduciary and dealing in real estate mortgage financing, but also in typical commercial bank activities (including accepting demand deposits and making commercial loans) that exceed 4. All financial data are as of March 31, 1982, and include acquisithose permissible for thrifts under federal statutes. tions as of June 30, 1982. 2. "First Financial Group of New Hampshire, Inc.", 66 FEDERAL 5. Salem, New Hampshire, is located in the Boston banking RESERVE BULLETIN 594 (1980). However, the Board has not added market, which is approximated by the Boston RMA. the operation of a guaranty savings bank to the list of permissible 6. "Profile Bankshares, Inc.", 61 FEDERAL RESERVE BULLETIN activities in section 225.4(a) of Regulation Y. 901 (1975); "First Financial Group of New Hampshire, Inc.", 66 3. This application has been accepted and processed under section FEDERAL RESERVE BULLETIN 594 (1980); "Heritage Banks Inc.", 66 4 of the act, and is approved only on the condition that Guaranty Bank FEDERAL RESERVE BULLETIN 590 (1980); "BankEast Corporation", limit its commercial lending activity to that currently permissible to 68 FEDERAL RESERVE BULLETIN 379 (1982), and; "BankEast Corpothrift institutions under federal statute law. ration", 68 FEDERAL RESERVE BULLETIN 116 (1982). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 651 support of each other ("tandem operations").7 In Board's authority to require such modification or order to limit the potential for these adverse effects the termination of the activities of a holding company or Board approved those previous cases upon certain any of its subsidiaries as the Board finds necessary to conditions barring the two types of institutions from assure compliance with the provisions and purposes of conducting tandem operations. The Regulation Q in- the act and the Board's regulations and orders issued terest rate differential on account categories in exis- thereunder, or to prevent evasion thereof. tence in December 1975 remains in effect until the The transaction shall be made not later than three Depository Institutions Deregulation Committee elimi- months after the effective date of this Order, unless nates rate ceilings or until March 31, 1986. In addition, such period is extended for good cause by the Board or it does not appear that relevant considerations have by the Federal Reserve Bank of Boston. changed since May 1982, when the Board last reiterat- By order of the Board of Governors, effective ed its policy against tandem operations of thrifts and September 2, 1982. commercial banks. Accordingly, the Board believes that the following conditions must remain in effect and Voting for this action: Chairman Volcker and Governors must be extended in connection with its approval of Martin, Wallich, Teeters, Rice, and Gramley. Absent and not voting: Governor Partee. this application: (1) that BankEast will not establish any commercial bank facility within the service area of (Signed) WILLIAM W. WILES, any office of Guaranty Bank without Board consent; [SEAL] Secretary of the Board. and (2) that BankEast will not shift assets or liabilities from Guaranty Bank to any other subsidiary or from any other subsidiary to Guaranty Bank.8 Financial and managerial considerations and future Bankers Trust New York Corporation, prospects concerning Applicant and its subsidiaries, New York, New York including Guaranty Bank, are generally satisfactory. Except as discussed above, the Board has found that Order Approving Application to Engage in Certain no other adverse effects are likely to result from Futures Commission Merchant Activities consummation of this proposal. Also, it appears that the proposed affiliation would produce several public Bankers Trust New York Corporation, New York, benefits including the introduction of a new source of New York, a bank holding company within the meanservices in Pelham, New Hampshire, where there is ing of the Bank Holding Company Act of 1956, as currently only one banking facility. In addition, Guar- amended (12 U.S.C. §§ 1841-1849), has applied for the anty Bank's de novo branch office will introduce Board's approval, under section 4(c)(8) of the act NOW accounts, drive-up facilities, and automated (12 U.S.C. § 1843(c)(8)) and section 225.4(b)(2) of the teller machines to Pelham. Board's Regulation Y (12 C.F.R. § 225.4(b)(2)), to Based upon the foregoing and other considerations engage through a de novo subsidiary, BT Capital reflected in the record, the Board has determined that Markets Corp., New York, New York ("BTCM"), in the balance of public interest factors the Board is acting as a futures commission merchant (an "FCM") required to consider under section 4(c)(8) is favorable for nonaffiliated persons, in the execution and clearprovided that BankEast and Guaranty Bank abide by ance of certain futures contracts on major commodity the conditions set forth herein. Accordingly, the appli- exchanges. Such contracts would cover U.S. Governcation is hereby conditionally approved, subject to the ment securities (including Government National Mortlimitations described above relating to the commercial gage Association, or "GNMA" securities), negotiable lending activities of Guaranty Bank and restrictions money market instruments (including, in particular, relating to tandem operations between BankEast's domestic and Eurodollar certificates of deposit commercial and guaranty savings bank subsidiaries. ("CDs")), foreign exchange, and bullion. This determination is further subject to the conditions Notice of the application, affording interested perset forth in section 225.4(c) of Regulation Y and to the sons an opportunity to submit comments and views on the relation of the proposed activity to banking and on the balance of public interest factors regarding the 7. "BankEast Corporation", 68 FEDERAL RESERVE BULLETIN 116 application, has been duly published (47 Federal Regand 379 (1982); "First Financial Group of New Hampshire, Inc.", 66 ister 18180 (1982)). The time for filing comments and FEDERAL RESERVE BULLETIN 594 (1980). views has expired, and the Board has considered the 8. These conditions would remain effective so long as these institutions, or their successors remain affiliated. However, BankEast may application and all comments received in light of the apply for relief from these conditions when the Regulation Q interest public interest factors set forth in section 4(c)(8) of the rate differential has been eliminated, or if the Board changes its policy generally regarding tandem operations. act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

652 Federal Reserve Bulletin • October 1982 Applicant is a bank holding company by virtue of its the same factors it employed in reaching these two control of Bankers Trust Company, New York, New earlier determinations to Morgan's proposal. York ("Bank") and several other banks. Applicant Upon examination of the record, it appears that holds total consolidated deposits of $24.9 billion, and Applicant's situation is substantially similar to that is the sixth largest commercial banking organization in of Morgan. Bank is a New York State bank, and New York State.1 Applicant, through certain of its New York law grants it the authority to buy and sell subsidiaries, engages in various permissible nonbank- bullion and foreign exchange.6 Bank presently ing activities. trades bullion in London and, since the resumption The Board recently approved an application by J. P. of gold trading in the United States, Bank has been Morgan & Co. Incorporated, New York, New York trading bullion in the New York market. FCM ("Morgan"), another bank holding company within activities in bullion on the part of BTCM would thus the meaning of the act, to engage in FCM activities.2 appear to complement Bank's trading in the cash Applicant's proposal closely parallels that submitted bullion markets. In addition, because Bank already by Morgan, and the characteristics of Morgan on trades in the cash and forward markets in bullion which the Board relied in considering Morgan's appli- and foreign exchange for its customers, acting as an cation are shared by Applicant. Accordingly, the FCM in futures markets for the same commodities Board considers it appropriate to examine Applicant's would appear to be an "integral adjunct" to these proposal within the same framework the Board used to present services. Finally, it is reasonable to assume consider Morgan's application. that market participants for whom Bank trades would regard futures contracts in bullion and foreign Closely Related to Banking exchange as the functional equivalent of forward contracts for some purposes. Accordingly, Appli- In order to approve an application submitted pursuant cant's proposed activity could be considered fundato section 4(c)(8) of the act, the Board is first required mentally a substitute for other services Bank alto determine that the proposed activity is closely ready provides. On this basis, the board concludes related to banking or managing or controlling banks. In that Applicant's proposal to act as an FCM for approving Morgan's application, the Board deter- bullion and foreign exchange is closely related to mined that Morgan's proposed activities as an FCM, banking. with respect to the contracts involved in its application, would be closely related to banking.3 Upon Government Securities and Money Market Instruconsideration of all the facts of record, the Board has ments. Applicant's proposal also involves the exedetermined, for the reasons explained below, that cution and clearance of futures contracts covering BTCM's proposed activities as an FCM, with respect U.S. bonds, Treasury bills, GNMA securities, and to the contracts involved in this application, would negotiable money market instruments, particularly also be closely related to banking. domestic and Eurodollar CDs. As with the Morgan application, the Board has Bullion and Foreign Exchange. In the Board's Or- examined the portion of the record for this proposal der approving Morgan's application, it was noted that concerns FCM activities for U.S. bonds, Treathat the Board had determined previously that FCM sury bills, GNMA securities, and negotiable money activities or their equivalent, with respect to bullion market instruments, in light of Applicant's experiand foreign exchange, were closely related to bank- ence in related markets for these instruments. Bank ing. The Board made these earlier determinations in already trades in futures contracts covering various connection with applications submitted by Republic U.S. Government and GNMA securities for its own New York Corporation, New York, New York,4 account. Bank has long been a major participant, for and Standard and Chartered Banking Group Ltd., the account of customers as well as its own account, London, England.5 In deciding that Morgan's activi- in the U.S. Government securities cash market. ties with respect to bullion and foreign exchange Indeed, Bank is a member of the Association of were closely related to banking, the Board applied Primary Dealers, and among the members of the Association, Bank has been consistently one of the 1. Banking data as of June 30, 1982. 2. "J. P. Morgan & Co. Incorporated", 68 FEDERAL RESERVE BULLETIN 514 (1982). 3. Id. at 514. 5. "Standard and Chartered Banking Group, Ltd.", 38 Federal 4. "Republic New York Corporation", 63 FEDERAL RESERVE Register 27552 (1973). BULLETIN 951 (1977). 6. New York Banking Law § 96.1 (McKinney 1971). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 653 top five dealers in terms of volume over the last five Adverse Effects years. In addition, Bank is already providing a forward market for the account of customers in In its Order approving Morgan's application, the GNMA securities. Applicant's experience in these Board recognized that the activity of trading futures activities has provided it with useful expertise in contracts involves various types of financial risks and areas that are operationally or functionally similar to potential conflicts of interest, and is susceptible to FCM activities for nonaffiliated persons in U.S. anticompetitive and manipulative practices. The bonds, Treasury bills, and GNMA securities. Ac- Board noted, however, that Congress has addressed cordingly, the Board concludes that the proposed those types of possible adverse effects through the FCM activities for these instruments would be passage of the Commodity Exchange Act, as amendclosely related to banking. ed,7 and the creation of the Commodity Futures Trad- The Board has also determined, in the circum- ing Commission ("CFTC"). The Board also noted that stances of this case, that BTCM's proposed activi- the CFTC has promulgated regulations to effectuate ties as an FCM with respect to futures contracts in the provisions of the Commodity Exchange Act.8 negotiable money market instruments would be Applicant has chosen to conduct the proposed activiclosely related to banking. Bank is an active partici- ties through a separately incorporated subsidiary that pant in the cash markets for various money market would be subject to the Commodity Exchange Act and instruments, and this experience has provided Ap- CFTC regulation. The Board has considered the implicant with useful expertise in trading the underly- pact of the applicable statutes and regulations in its ing commodity involved in these futures contracts. evaluation of the likelihood that significant adverse Like futures contracts in U.S. Government securi- effects regarding conflicts of interests, unsound bankties, futures contracts in these instruments are used ing practices, decreased or unfair competition, or in large part to hedge against interest-rate risk undue concentration of resources would develop in associated with holding and trading financial assets this case. and liabilities. There appears to be little basis for distinguishing between the operational or functional Conflicts of Interests. Conflicts of interest that characteristics of FCM activities with respect to could be associated with this proposal fall into two contracts in these money market instruments and broad categories: those arising out of the general those of FCM activities with respect to contracts in business of engaging in FCM activities, and those Government securities. arising out of the particular circumstances of an FCM that is a subsidiary of a bank holding compa- Balance of Public Benefits and Adverse Effects ny. Rules and regulations promulgated and enforced by the CFTC and the relevant futures exchanges In order to approve this application, the Board is also substantially reduce the possibility for significant required to determine that the performance of the conflicts of the first category. In addition, BTCM proposed activities by BTCM, "can reasonably be has committed that it will, in addition to timeexpected to produce benefits to the public, such as stamping orders of all customers to the nearest greater convenience, increased competition, or gains minute, execute all orders, to the extent consistent in efficiency, that outweigh possible adverse effects, with customers' specifications, in strictly chronosuch as undue concentration of resources, decreased logical sequence, and that BTCM will execute each or unfair competition, conflicts of interests, or un- order with reasonable promptness with due regard sound banking practices." (12 U.S.C. § 1843(c)(8)). to market conditions. The Board concludes that the risk of conflicts of interest arising from the general Public Benefits business of an FCM that may result from consummation of the proposal as submitted is not inconsis- Consummation of the proposal would provide added tent with approval. convenience to those clients of Bank who trade in the cash, forward, and futures markets for the commodities involved in this application. The Board expects that the de novo entry of BTCM into the market for 7. U.S.C. §§ 1-24. FCM services would increase the level of competition 8. For example, CFTC regulations require FCMs to keep detailed records on many aspects of FCM activities, such as segregation of among FCMs already in operation. Accordingly, the funds and investments made on behalf of customers; (17 C.F.R. Board has concluded that the performance of the §§ 1.20, .25); prescribe protective procedures for such activities as buying and selling contracts of two customers on opposite sides of the proposed activities by BTCM can reasonably be exsame transaction; (17 C.F.R. § 1.39); and impose minimum financial pected to produce benefits to the public. and related reporting requirements; (17 C.F.R. §§ 1.10-.18). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

654 Federal Reserve Bulletin • October 1982 With respect to the second category of conflicts, in evaluating. In addition, the record indicates that the Board believes that existing statutory and super- BTCM would employ a high degree of credit selecvisory safeguards, together with Applicant's inter- tivity in choosing its customers, who will include nal control procedures, will substantially reduce the institutional and commercial clients of Bank. possibility of significant adverse effects. For exam- Applicant's proposal differs from Morgan's prople, section 23A of the Federal Reserve Act9 would posal in that Applicant does not initially anticipate require any extension of credit by Bank to BTCM to that BTCM will be a member of the exchanges with be secured by collateral of a value at least 20 percent which it deals. Accordingly, BTCM would not inigreater than the amount of the credit, or at least 10 tially be exposed to contingent liability that exists percent greater than the amount of the credit if through the assessment provisions of clearing assosecured by the obligations of any state or political ciation guaranty funds. Applicant has indicated that subdivision of a state. Any loans from Bank to BTCM may in future stages of its proposed opera- BTCM's customers would be subject to examination tions become a clearing member of the exchanges it by the Board and appropriate state authorities. deals with. Furthermore, Applicant maintains internal proce- Should BTCM become a member of an exchange dures that generally prohibit disclosure among em- or clearing association, the degree of risk to Appliployees of Applicant and its subsidiaries of confi- cant associated with providing BTCM's services dential information pertaining to customers, could be increased through the practice of certain whether received from customers or derived from exchanges or clearing associations of requiring the internal sources. Finally, as discussed below, the parent corporation of a clearing member to also circumstances of this application alleviate any sub- become a member of that exchange or clearing stantial concern regarding the possibility of volun- association. Applicant has committed that BTCM tary tying. There thus appears to be no significant would not, without the prior consent of the Board, danger that conflicts associated with the fact that become a clearing member of any exchange whose BTCM would be a bank holding company subsidiary rules impose such a requirement that has not waived will develop under this proposal. that requirement for Applicant. On the basis of all the facts of record, the Board Unsound Banking Practices. An FCM clearing and has concluded that the inherent risks of providing executing contracts for nonaffiliated persons is gen- FCM services for nonaffiliated persons under the erally exposed to several types of financial risks. circumstances of this proposal are manageable in However, the Board believes that Applicant's com- view of the expertise and resources of Applicant and petence, experience, and resources sufficiently its subsidiaries, the commitments entered into by equip BTCM to deal with these risks. Furthermore, Applicant and BTCM, and the regulatory environthe Board believes that the Commodity Exchange ment in which the FCM activities would be Act and CFTC regulations are significant factors in conducted. ameliorating the general hazards of the FCM activities proposed in the application.10 Decreased or Unfair Competition. It is conceivable As an FCM for nonaffiliated persons, BTCM that a commercial bank in Bank's position could would be contractually liable for nonperformance by exert pressure on its customers to use the services a customer of BTCM on each futures contract of the bank's affiliated FCM, or that a borrower traded by BTCM for that customer. Similarly, in could perceive that its use of an affiliated FCM some circumstances, BTCM could be obligated to could secure more favorable terms for the borrower meet a margin call delivered to a customer of in the borrower's banking business. As the Board BTCM. Applicant and its subsidiaries appear well noted in its Order approving the Morgan applicaprepared to deal with these potential obligations. tion, compulsory tying arrangements are prohibited The risks that a customer of BTCM would default on by the Bank Holding Company Act, and voluntary a contract or fail to meet a margin call are essentially tying can only take place when a firm possesses credit risks of a type Bank has significant expertise significant market power." However, as was the case with Morgan, it appears that Applicant lacks the requisite market power for voluntary tying to 9. 12 U.S.C. § 371c. occur, in view of the substantial competition among 10. Among the provisions the Board has considered in this regard FCMs and in commercial lending. In addition, Apare the CFTC's net capital requirements, (17 C.F.R. §§ 1.17(a), .17(c)(2), .17(c)(3), .52(a)), and the sections of the Commodity Exchange Act granting the CFTC the authority to establish position limits and approve or disapprove daily price movement limits on 11. "Citicorp" (Citicorp Person-to-Person Financial Center of futures contracts, (7 U.S.C. §§ 6a, 7a(12)). Connecticut, Inc.), 67 FEDERAL RESERVE BULLETIN 443, 446 (1981). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 655 plicant has committed that BTCM will advise each 8. Applicant and its subsidiaries have demonstrated of BTCM's customers in writing that doing business expertise and established capability in the cash, with BTCM will not in any way affect any provision forward, or futures markets for each of the contracts of credit to that customer from Bank or any other involved. subsidiary of Applicant. 9. Applicant will require BTCM to advise each of its customers in writing that doing business with BTCM Conclusion will not in any way affect any provision of credit to that customer by Bank or any other subsidiary of On the basis of all the facts of record, the Board has Applicant. determined that in the circumstances of this case, the 10. Applicant is adequately capitalized to engage in provision by BTCM of the proposed FCM services to additional nonbanking activities. nonaffiliated persons would not result in decreased or 11. BTCM will not extend credit to customers for unfair competition, conflicts of interests, unsound the purpose of meeting initial or maintenance margin banking practices, or undue concentration of resources required of customers, subject to the limited excepin either commercial banking or the market for FCM tion of posting margin on behalf of customers in services. In considering this application, the Board has advance of prompt reimbursement. taken all the relevant facts of record into account. In the circumstances of Applicant's proposal, the Board Based upon the foregoing and other considerations believes it is appropriate to give special consideration reflected in the record, the Board has determined that to the following features of the application: the public benefits associated with consummation of 1. BTCM will not trade for its own account. this proposal can reasonably be expected to outweigh 2. The instruments and precious metals upon which possible adverse effects, and that the balance of the the proposed futures contracts are based are essen- public interest factors, which the Board is required to tially financial in character and the contracts are of a consider under section 4(c)(8) of the act, is favorable. type that a bank may execute for its own account. Accordingly, the application is hereby approved.12 3. BTCM has an initial capitalization that is in This determination is subject to the conditions set substantial excess of that required by CFTC regula- forth in section 225.4(c) of Regulation Y and the tions, and will maintain fully adequate capitaliza- Board's authority to require such modification or tion. termination of the activities of a holding company or 4. BTCM and Bank have entered into a formal any of its subsidiaries as the Board finds necessary to service agreement that specifies the services that assure compliance with the provisions and purposes of Bank will supply to BTCM. These services include the act and the Board's regulations and orders issued the assessment of customer credit risk and continu- thereunder, or to prevent evasion thereof. ous monitoring of customer positions and monitor- The proposed activities shall not commence later ing the status of customer margin accounts. than three months after the effective date of this 5. Through its proposed service agreement with Order, unless such period is extended for good cause Bank, BTCM will be able to assess customer credit by the Board or by the Federal Reserve Bank of New risks, and will take such assessments into consider- York. ation in establishing appropriate position limits for By order of the Board of Governors, effective each customer, both with respect to each type of September 20, 1982. contract and with respect to the customer's aggregate position for all contracts. Voting for this action: Chairman Volcker and Governors 6. Applicant has committed that BTCM would not, Wallich, Partee, Teeters, Rice, and Gramley. Absent and not voting: Governor Martin. without the prior consent of the Board, become a clearing member of any exchange whose rules re- (Signed) JAMES MCAFEE, quire the parent corporation of a clearing member to [SEAL] Associate Secretary of the Board. also become a clearing member, unless the requirement is waived with respect to Applicant. 7. BTCM has committed that it will, in addition to 12. The Board notes that the circumstances of this application differ time-stamping orders of all customers to the nearest from those of a recent application submitted pursuant to section 25(a) of the Federal Reserve Act. "Bankers International Corporation", 67 minute, execute all orders, to the extent consistent FEDERAL RESERVE BULLETIN 364 (1981). That application involved with customers' specifications, in strictly chrono- brokerage activities with respect to futures contracts covering greasy logical sequence, and that it will execute all orders wool, live cattle, and boneless beef. In addition, the regulatory environment in which the activities proposed in the earlier application with reasonable promptness with due regard to would have taken place differs in key respects from that involved in market conditions. this application. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

656 Federal Reserve Bulletin • October 1982 Citicorp, The Board has carefully considered the issues raised New York, New York by the protestants in writing or in oral testimony and, in the Appendix attached to this Order, which is an Order Approving Acquisition of Savings and Loan integral part hereof, the Board has analyzed these Association comments and evaluated their relevance to the Board's conclusions in light of the factors set forth in Citicorp, New York, New York, a bank holding com- section 4(c)(8) of the act. In addition, the findings of pany within the meaning of the Bank Holding Compa- the Board pursuant to section 4(c)(8) of the act are ny Act, has applied for the Board's approval under elaborated in the Appendix. Based upon the record section 4(c)(8) of the act (12 U.S.C. § 1843(c)(8)) and before the Board in this matter, the Board makes the section 225.4(b)(2) of the Board's Regulation Y following findings. (12 C.F.R. § 225.4(b)(2)), to acquire 100 percent of the Citicorp, with total consolidated assets of $120.1 voting shares of Fidelity Federal Savings and Loan billion and deposits of $74.5 billion, is the second Association of San Francisco, San Francisco, Califor- largest banking organization in the United States.2 nia ("Fidelity"), and its wholly-owned service corpo- Citicorp operates three subsidiary banks: Citibank, ration. Fidelity is a federally chartered and insured N.A., New York, New York ("Citibank"), the second savings and loan association and is the successor by largest commercial bank in New York with $21.9 supervisory conversion of Fidelity Savings and Loan billion in domestic deposits, representing 12.3 percent Association, San Francisco, California, a California of the deposits in commercial banks in New York (as guarantee stock savings and loan association, that was of June 30, 1981); Citibank (New York State), N.A., closed by the State of California on April 13, 1982, and Buffalo, New York; and Citibank (South Dakota), placed under the receivership of the Federal Savings N.A., Sioux Falls, South Dakota.3 Citicorp also conand Loan Insurance Corporation ("FSLIC").1 trols numerous nonbanking subsidiaries located By letters, dated August 13 and September 8, 1982, throughout the United States, including subsidiaries the Federal Home Loan Bank Board ("FHLBB") engaged in consumer lending, mortgage lending, mortrequested that the Board act expeditiously upon this gage servicing, industrial banking, and commercial application in light of the emergency nature of the lending in California. situation at Fidelity and its deteriorating financial Fidelity is a savings and loan association headquarcondition. In light of this request, the Board promptly tered in San Francisco, California, which operates published notice of the application in the Federal eighty-one offices in California, primarily in the San Register, providing twenty-one days for interested Francisco area, and has regulatory approval for three persons to comment on the application. In addition, in additional offices. Fidelity, with total assets of $2.9 order to provide a full opportunity for public com- billion, is the 16th largest savings and loan association ment, the Board ordered informal hearings on the in California and the 42nd largest in the United States. application in both Washington, D.C., and San Fran- Fidelity is primarily engaged in taking savings deposits cisco, California, to receive comments and testimony and making loans to individuals secured by mortgages from interested persons on the application and to allow on real property. Fidelity also owns a service corporainterested persons to question Citicorp concerning its tion that operates in the States of Hawaii and Nevada proposal. and that engages in the activities of mortgage broker- In response to its request for comment on this ing, loan servicing, mortgage lending, real estate deapplication, the Board received thirty-five written velopment, and the sale and leasing of equipment to comments opposing the acquisition ("protestants") Fidelity. and eleven favoring the acquisition. Ten general com- Citicorp's banking subsidiaries and Fidelity operate ments were received that did not take a position on the in separate markets. Fidelity operates in ten California proposal. In addition, the Board received sworn testi- SMS As, where it controls from .24 percent to 3.7 mony from twenty-three persons who appeared at the percent of the total deposits in commercial banks and two hearings, as well as statements and other docu- savings and loan associations in those markets.4 Citiments submitted by the participants at the hearings. As discussed below, a number of protestants requested that the Board order a formal hearing on the 2. Unless otherwise indicated, all financial data are as of June 30, application. 1982. 3. Citicorp received Board approval on July 21, 1982, to acquire Citibank (Delaware), Wilmington, Delaware, a proposed new bank. 1. Fidelity is currently operated as a mutual association. In order to "Citicorp", 68 FEDERAL RESERVE BULLETIN 499 (1982). effect consummation of the proposal, Fidelity will be converted from a 4. Fidelity's highest market share of 3.7 percent is in the Vallejomutual association and issued a charter as a stock federal savings and Fairfield-Napa SMSA, where it ranks as the sixth largest depository loan association. institution. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 657 corp operates approximately twenty offices of its pected to produce benefits to the public, such as nonbank subsidiaries in California, including industrial greater convenience, increased competition, or gains loan company offices that engage in limited deposit- in efficiency that outweigh possible adverse effects, taking activities. Those offices that engage in the same such as undue concentration of resources, decreased activities as Fidelity have only insignificant market or unfair competition, conflicts of interests, or unshares and are located primarily in southern Califor- sound banking practices." nia, whereas Fidelity is located primarily in northern In 1977, the Board considered the general question California. For example, in originating first mortgages, whether savings and loan association ("S&L") activi- Citicorp and Fidelity together account for less than ties are a proper incident to banking. At that time, the 1.5 percent of the total volume of mortgages originated Board determined that, as a general matter, S&L in California. Citicorp's share of deposits among activities were not a proper incident to banking beall deposit-taking institutions in California is also cause the potential adverse effects of generally allowinsignificant. ing affiliations of banks and savings and loan associa- Citicorp's application to acquire Fidelity was filed tions were then sufficiently strong to outweigh such and has been considered by the Board under section public benefits as might result in individual cases. 4(c)(8) of the Bank Holding Company Act, which deals "D. H. Baldwin & Co.", 63 FEDERAL RESERVE BULwith the permissible nonbanking activities of a bank LETIN 280 (1977). holding company. As explained in the Appendix to this Because of the considerations elaborated in D. H. Order, the Board believes that a federally insured Baldwin & Co., the Board has not been prepared to savings and loan association that offers NOW ac- permit bank holding companies to acquire thrift insticounts and that exercises no greater commercial lend- tutions on a general basis. However, the Board has ing powers than are now permitted to federal savings consistently regarded the Bank Holding Company Act and loan associations under the Home Owners' Loan as authorizing the Board to permit such an acquisition. Act ("HOLA") is not a bank for purposes of the act. As the problems of the thrift industry began to become In this connection, the Board also notes that the more acute in 1981, the Board advised Congress that, acquisition and ownership of Fidelity is subject to the in the absence of enactment of emergency thrift acqui- Savings and Loan Holding Company Act Amend- sition legislation, the public interest might dictate that ments of 1967 ("S&LHC Act").5 Thus, the Board the Board use its existing authority under the act to concludes that Fidelity is not a "bank" under the act, approve interindustry acquisitions on a case by case that Citicorp's application is properly filed under sec- basis. The Board indicated that, in the case of a failing tion 4 of the act, and that the interstate banking thrift institution, any adverse effects of a bank holding prohibition of section 3(d) of the act6 does not bar company affiliation with a thrift might be overcome by Board approval of this application. the public benefits associated with preserving the Section 4(c)(8) of the act authorizes a bank holding failing institution. In April of this year, the Board company to acquire a nonbank company if the activi- approved such an application in order to prevent the ties of the nonbank company are determined by the failure of a thrift institution.9 Board to be "so closely related to banking or manag- In a letter, dated August 13, 1982, FHLBB Chairing or controlling banks as to be a proper incident man Richard Pratt informed the Board that the thereto."7 The Board has determined previously that FHLBB had selected Citicorp as the winning bidder the operation of a savings and loan association is for Fidelity and urged the Board to act promptly on the closely related to banking8 and reaffirms that determi- Citicorp application in view of the deteriorating finannation in this Order. cial condition of Fidelity and its continued deposit With respect to the "proper incident" requirement, outflows, earnings losses and continued and increasing section 4(c)(8) of the act requires the Board to consider need for assistance. In a further letter of September 8, whether the performance of the activity by an affiliate 1982, Chairman Pratt advised the Board that there is of a bank holding company "can reasonably be ex- no evidence that the rate of decline in Fidelity's position will slow or that its condition can improve unless it is acquired by an institution with greatly 5. 12 U.S.C. § 1730a. superior resources that can rebuild public confidence 6. 12 U.S.C. § 1842(d). 7. 12 U.S.C. § 1843(c)(8). in the institution. 8. "American Fletcher Corporation", 60 FEDERAL RESERVE BUL- Fidelity's predecessor was placed in receivership on LETIN 868 (1974); "D. H. Baldwin & Co.", 63 FEDERAL RESERVE April 13, 1982, more than five months ago, and Fideli- BULLETIN 280 (1977); "Interstate Financial Corp.", 68 FEDERAL RESERVE BULLETIN 316 (1982). A recent Board staff study of thrift ty's condition has steadily deteriorated since that time. institutions supports the view that operating a thrift institution is closely related to banking. "Bank Holding Company Acquisitions of Thrift Institutions", September 1981. 9. "Interstate Financial Corporation", supra note 8. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

658 Federal Reserve Bulletin • October 1982 Fidelity continues to lose deposits at a rate in excess of earnings. The Board expects that Citicorp will contin- $1 million per day and to experience operating losses, ue its efforts to improve its capital position and will estimated at over $200,000 per day. Fidelity has now take such efforts into consideration in acting on appliexhausted its net worth and, as contemplated at the cations for further expansion of Citicorp's activities. time the FHLBB authorized the FSLIC to transfer the On balance, the Board concludes that Citicorp has assets and liabilities of Fidelity's predecessor to Fidel- both the financial and managerial resources needed to ity, Fidelity's net worth will be maintained by ad- acquire Fidelity and make it a viable competitor withvances from the FSLIC, absent consummation of out significant adverse effects on Citicorp. Citicorp's proposal. As explained in the Appendix, the Board has reex- In view of the determination by the FHLBB, the amined, in the context of this application, the general primary supervisory authority for Fidelity, with re- adverse factors cited in the Board's D. H. Baldwin spect to the emergency financial condition at Fidelity, decision, including regulatory conflict, erosion of instithe substantial savings to the FSLIC through the tutional rivalry and the potential for undermining Citicorp proposal, the present circumstances of the interstate banking prohibitions, and has determined thrift industry and the financial condition of a large that these adverse effects are outweighed by the number of its members, and the other favorable public substantial public benefits that are expected to result benefit considerations listed in the Appendix, the from the restoration of Fidelity as an effective Board has determined that consummation of the Citi- competitor. corp proposal, as specifically conditioned in this Or- In addition, the Board has considered other possible der, may reasonably be expected to result in substan- adverse effects that might be associated with this tial public benefits. These benefits include increased particular application, including the potential for decompetition and greater convenience to the public creased or unfair competition, conflicts of interests, through the restoration of Fidelity as an effective financial risks, diversion of funds, participation in competitor and through Citicorp's stated commit- impermissible activities, evasion of interest rate limitaments to meet the credit needs of Fidelity's communi- tions, unsound banking practices, and undue concenties. In its evaluation of the public benefits in this case, tration of resources. the Board also has taken into account the beneficial In view of Citicorp's limited presence in the relevant effect on the financial community as a whole of California markets served by Fidelity, the number and implementing an additional mechanism for the solution size of financial organizations operating in these Caliof the difficult problems for the thrift industry and the fornia markets, the legal prohibitions against Citifederal insurance funds posed by the poor earnings corp's expansion of its bank subsidiaries into Califorsituation of this industry. nia, and the fact that Fidelity is a failing institution In the exercise of its responsibility under the act, the with limited competitive vigor, the Board concludes Board has carefully considered whether Citicorp's that this proposal would not have any significant financial and managerial resources are adequate to adverse effects on existing or potential competition in effect the proposed acquisition of Fidelity. The Board any relevant market. Indeed, the proposed acquisition notes that Citicorp has extensive experience in both will have a substantial beneficial impact on competithe consumer banking and consumer finance areas and tion by ensuring the continued operation of Fidelity as appears fully capable of revitalizing a consumer orient- a viable institution through access to the financial and ed depository institution such as Fidelity. In its evalu- managerial resources of Citicorp. ation of Citicorp's financial resources, the Board has The affiliation of Citicorp and Fidelity also is not reviewed relevant data from Citicorp's inspection re- likely to result in unfair competition in view of the ports and the examination reports of its subsidiaries as various conditions imposed by the Board that require well as official reports and filings with the Board, Fidelity to be operated independently and not utilized including data on Citicorp's loan portfolio. Based upon to further or enhance the activities of Citicorp's other this review, the Board concludes that the proposed subsidiaries. In addition, Fidelity's activities will be acquisition would not represent a significant additional limited to those permissible under the act and its burden on Citicorp's financial resources, particularly offices will be limited to locations at which banks in view of Fidelity's size in relation to that of Citicorp. located in California may establish branches. Although the Board has noted, with respect to both To guard against possible adverse effects of affili- Citicorp and other large multinational banks, a long ation in this case between a banking organization and a term trend toward lower capital ratios, the Board also savings and loan association, including the potential has taken into account as a favorable factor the for unfair competition and diversion of funds, the improvement in Citicorp's capital over the past one Board has established the following as conditions for and one-half years and the recent improvement in its its approval of the application: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 659 1. Citicorp shall operate Fidelity as a federal sav- commercial bank without the Board's prior apings and loan association having as its primary proval. purpose the provision of residential housing credit. The Board concludes that consummation of the Fidelity shall limit its activities to those permitted to proposal, subject to the conditions set out in this Order federal savings and loan associations currently un- and the Appendix thereto, may not reasonably be der the Home Owners' Loan Act and to bank expected to result in conflicts of interests, unsound holding companies and their subsidiaries under sec- banking practices, undue concentration of resources, tion 4(c)(8) of the Bank Holding Company Act. or other adverse effects. These limitations shall apply to Fidelity's wholly- The Board also has considered the contention that owned service corporation, Fidelity Subsidiary Cor- the FSLIC erred in not accepting a bid from one of the poration, which shall have two years from the date California savings and loan associations that bid for of this Order to complete the divestiture of its Fidelity. The selection of the most favorable bid for impermissible real estate development projects. Fidelity is a matter committed to the jurisdiction of the 2. Fidelity shall not establish or operate a remote FSLIC and the Board concludes that proper adminisservice unit at any location outside California. tration of the law requires that there should be only 3. Fidelity shall not establish or operate branches at one administrative decision on this issue. The law locations not permissible for national or state banks assigns to the Board the responsibility under section located in California.10 4(c)(8) of the Bank Holding Company act for a deter- 4. Fidelity shall be operated as a separate, indepen- mination of the public benefits and adverse effects of dent, profit-oriented corporate entity and shall not the application before it—the Citicorp application— be operated in tandem with any other subsidiary of and the Board has discharged that responsibility in this Citicorp. Citicorp and Fidelity shall limit their oper- Order. ations to effect this condition, and shall observe the Based upon the foregoing and other facts and cirfollowing conditions: (a) No banking or other sub- cumstances reflected in the record and as more fully sidiary of Citicorp shall link its deposit-taking activi- set forth in the Appendix, the Board has determined ties to accounts at Fidelity in a sweeping arrange- that the acquisition of Fidelity by Citicorp would result ment or similar arrangement, (b) Neither Citicorp in substantial and compelling public benefits that are nor any of its subsidiaries shall solicit deposits or sufficient to outweigh any adverse effects that may loans for Fidelity; nor shall Fidelity, directly or reasonably be expected to result from this proposal, indirectly, solicit deposits or loans for any other including any potential adverse effects of the affiliation subsidiary of Citicorp. of a commercial banking organization with a thrift 5. To the extent necessary to ensure independent institution. Accordingly, the application is approved operation of Fidelity and prevent the improper di- subject to the conditions and limitations described in version of funds, there shall be no transactions this Order, the Appendix hereto, and the record of this between Fidelity and Citicorp or any of its subsidiar- application. ies without the prior approval of the Federal Re- The Board has also considered the requests of a serve Bank of New York. This limitation encom- number of commenters that the Board delay action on passes the transfer, purchase, sale or loan of any the application in order to allow for Congressional assets or liabilities, but does not include infusions of action on bills now pending before Congress that, if capital from Citicorp or the payment of dividends by enacted, would establish specific procedures for ac- Fidelity to Citicorp.11 quisition of a failing thrift institution by a bank holding 6. Citicorp shall not change Fidelity's name to company.12 The Board notes that the proposed legislainclude the word "bank" or any other term that tion would not prohibit Board approval of this applicamight confuse the public regarding Fidelity's status tion, but rather would facilitate the acquisition of as a nonbank thrift institution. failing thrifts by bank holding companies across state 7. Fidelity shall not convert its charter to that of a lines. Moreover, the FHLBB has advised that the state savings and loan association or other state procedures utilized in the Fidelity bidding process chartered thrift institution or to a national or state generally complied with the terms of these bills; that an extensive attempt, over a long period of time, was made to find interested and capable bidders from 10. The Federal Reserve Bank of New York is hereby delegated within the industry; that a broad range of bidders, authority to act on applications by Citicorp to open additional offices of Fidelity under section 225.4(b)(1) of Regulation Y. (12 C.F.R. including banks and savings and loan associations, § 225.4(b)(1)). 11. The Board does not consider any extension of credit by Citicorp to Fidelity that is necessary to maintain Fidelity's liquidity or general 12. H.R. 4603, 97th Cong., 1st Sess. (1981); S. 2879, 97th Cong., 2d financial integrity to be covered by this limitation. Sess. (1982). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

660 Federal Reserve Bulletin • October 1982 were initially invited to bid; that a rebidding was Fidelity's Status as a Nonbank under the Bank organized at which California financial institutions Holding Company Act were given an opportunity to better or equal Citicorp's bid; and that, accordingly, the basic concepts con- In its evaluation of the application, the Board considtained in both versions of these bills were embodied in ered the objections of a number of the protestants that the procedure by which the FSLIC decided to accept Fidelity should be regarded as a "bank" for purposes the Citicorp proposal. of the act; that Citicorp's application to acquire Fideli- In view of these considerations, the Board's estab- ty was, therefore, improperly filed under the nonbank lished legal authority to authorize the acquisition, the provisions of section 4(c)(8) of the act and should have request of the FHLBB for expedited treatment of the been filed, and should be considered by the Board, application in view of the emergency situation of under section 3 of the act, which requires prior Board Fidelity, the clear public benefits of the application, approval before a bank holding company such as and the costs and uncertainties of delay, the Board has Citicorp may acquire control of a bank; and that, determined that it would not be in the public interest to because Fidelity is a bank, Board approval of its delay a decision on the application. acquisition by an out-of-state bank holding company The Board has also carefully considered the re- such as Citicorp is barred by section 3(d) of the act.2 quests of several protestants that the Board hold a Section 3(d) prohibits the Board from approving an formal hearing regarding Citicorp's proposal. For the application by a bank holding company to acquire an reasons specified in the Appendix to this Order, the interest in a bank located outside of the state in which Board does not believe a formal hearing is required or the operations of the bank holding company's subsidappropriate in this case and, accordingly, denies the iary banks are principally conducted (in Citicorp's requests of the protestants for a formal hearing. case, the state of New York), unless such an acquisi- Several protestants have requested that, in the event tion is expressly permitted by the law of the state in the Board approves the proposed acquisition, the which the acquiree bank is located. Board stay the effective date of the approval pending The act defines a bank as an institution that accepts judicial review of the Board's action. The Board has deposits that the depositor has a legal right to withreviewed these requests in light of the factors general- draw on demand and that is engaged in the business of ly applied by the courts on stay requests and, based making commercial loans.3 As a federal savings and upon that review as explained in the Appendix to this loan association, Fidelity is authorized to offer NOW Order, does not believe that a stay of the Board's accounts and to engage in certain limited commercial Order in this case is appropriate or in the public lending activities.4 Based on the terms and legislative interest. Accordingly, the Board hereby denies protes- history of the act, the Board has previously detertants' request for a stay of the Board's Order. mined that, because of the check-like powers of NOW By Order of the Board of Governors, effective accounts and because they generally perform the same September 28, 1982. function as demand deposits, NOW accounts satisfy the demand deposit test in the definition of "bank" in Voting for this action: Chairman Volcker and Governors the act.5 Martin, Partee, Teeters, Rice, and Gramley. Absent and not As indicated, the Board believes that a federally voting: Governor Wallich. insured savings and loan association that offers NOW accounts and exercises no greater commercial lending (Signed) JAMES MCAFEE, powers than are now permitted to a federal savings [SEALI Associate Secretary of the Board. Appendix Savings Associations ("U.S. League"), the California Bankers Association, the California Savings and Loan League, and the Conference In connection with its decision on the application of of State Bank Supervisors. The California financial institutions supervisory authorities also Citicorp, New York, New York, under section 4(c)(8) appeared at the informal hearing in San Francisco to express their of the Bank Holding Company Act to acquire Fidelity concerns with the application and to urge delay of any Board decision pending Congressional action on emergency thrift acquisition legisla- Federal Savings and Loan Association of San Francistion. The state representatives expressed concern over the interstate co, San Francisco, California ("Fidelity"), the Board nature of the acquisition as well as the impact it might have on issues the following statement containing additional California financial institutions and indicated that the Board should hold a formal hearing to explore and evaluate these questions. findings of fact and conclusions of law with respect to, 2. 12 U.S.C. § 1842(d). and the Board's analysis of the issues raised by, the 3. 12 U.S.C. § 1841(c). application and the comments received.1 4. 12 U.S.C. §§ 1464(b) and (c) and 1832. Fidelity offers NOW accounts and has outstanding about $190 million in commercial real estate loans, representing about 6 percent of Fidelity's total assets. 1. Among the protestants to the application were the Independent 5. "First Bancorporation", 68 FEDERAL RESERVE BULLETIN 253 Bankers Association of America ("IBAA"), the U.S. League of (1982). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 661 and loan association under the Home Owners' Loan noted, the Board has required, as a condition of its Act of 1933, as amended ("HOLA") is not a "bank" approval, that Citicorp maintain Fidelity as a federal for purposes of the act.6 In reaching this decision, the savings and loan association subject to the restrictions Board has relied on the fact that the lending activities of HOLA. An expansion of Fidelity's activities beof federal savings and loan associations have histori- yond that now permitted to a federal savings and loan cally been highly specialized and, under current statu- association would represent a significant alteration of tory and regulatory provisions, continue to be concen- Fidelity's activities and would require prior Board trated in home mortgages. HOLA expressly provides approval under section 225.4(c) of Regulation Y that the primary purpose of a federally chartered (12 C.F.R. § 225.4(c)). savings and loan association is the provision of residential credit.7 The Operation of a Savings and Loan Association is In this regard, the Board also notes that Congress Closely Related to Banking has designed a separate and independent statutory structure for the regulation of federally insured savings Section 4 of the Bank Holding Company Act generally and loan associations and their holding companies. prohibits a bank holding company from engaging, While Congress has recently permitted federal savings either directly or through a subsidiary, in nonbanking and loan associations to engage in limited non-residen- activities, that is, in activities other than those of tial mortgage lending, Congress has left intact a sepa- banking or managing or controlling banks.10 The prinrate statutory and regulatory framework for the opera- cipal exception to this prohibition is contained in tion and ownership of federally insured savings and section 4(c)(8) of the act, which authorizes a bank loan associations and banks. In the Board's view, this holding company to acquire a company engaged in provides a strong indication of Congressional intent activities that "the Board after due notice and opporthat a federally insured savings and loan association tunity for hearing has determined (by order or regulanot be subject to the act as a bank. Federal savings and tion) to be so closely related to banking . . . as to be a loan associations are included within the definition of proper incident thereto."11 In making the determina- "thrift institution" under section 2(i) of the act tion whether an activity is a proper incident to bank- (12 U.S.C. § 1841(0). This differentiation between ing, section 4(c)(8) requires that: banks and thrift institutions in the definitional sections of the act provides additional support for the conclu- the Board shall consider whether its performance by sion that federal savings and loan associations that an affiliate of a holding company can reasonably be expected to produce benefits to the public, such as engage in activities no broader than permitted by the greater convenience, increased competition, or gains terms of the HOLA are not "banks" within the in efficiency, that outweigh possible adverse effects, meaning of the act.8 such as undue concentration of resources, decreased For these reasons, the Board concludes that Fidelity or unfair competition, conflicts of interests, or unsound banking practices.12 is not a bank under the act and its acquisition by Citicorp is not barred by section 3(d) of the act.9 As Section 4(c)(8) thus requires the Board to make two separate findings in order for a nonbanking activity to 6. "First Bancorporation", 68 FEDERAL RESERVE BULLETIN 253 (1982); "Interstate Financial Corp.", 68 FEDERAL RESERVE BULLE- TIN 316 (1982). The industrial loan company involved in First Bancor- provision in the S&LHC Act that prevents a savings and loan holding poration offered NOW accounts and made commercial loans in excess company from acquiring an interest in an insured institution that of the amount permitted to a federal thrift. Consequently, the Board would result in the formation of a multiple savings and loan holding concluded that it was "bank" for purposes of the act. On the other company controlling an "insured institution" in more than one state hand, the state chartered and insured savings and loan association in (12 U.S.C. § 1730a(e)(3)). Because none of Citicorp's currently- Interstate did not make commercial loans and committed to secure owned bank or nonbank subsidiaries is included within the definition FSLIC insurance, and thus the Board determined that it was not a of "insured institution" under the S&LHC Act, the proposed acquisi- "bank." tion does not violate this prohibition. 7. 12 U.S.C. § 1464. Under the HOLA, a Federal savings and loan Several protestants have claimed that Fidelity will be operated as a association is not permitted to engage in general commercial lending. branch of Citicorp's subsidiary banks and thereby violate the McFad- It may, however, invest up to 20 percent of its assets in commercial den Act prohibitions against interstate branching (12 U.S.C. § 36). real estate loans and may invest an additional 20 percent of its assets The Board has considered this claim and finds that Fidelity will not in commercial paper. (12 U.S.C. § 1464(c)(2)(A) and (B)). Fidelity's take deposits nor solicit or make loans on behalf of any Citicorp current loan portfolio appears permissible under the HOLA. subsidiary bank. In addition, Fidelity will be operated separately and 8. The Board notes that Congress has under consideration legisla- independently from Citicorp's bank subsidiaries and, as noted in the tion that would expand the commercial lending authority of federal Order, the Board has imposed conditions to ensure such separate savings and loan associations and that would specifically exempt an operation and to prevent tandem operations. On this basis, the Board association exercising such expanded commercial lending authority concludes that Fidelity will not be operated as a branch of any from the definition of bank in the act. S.2879, 97th Cong., 2d Sess. Citicorp subsidiary bank, and its operation as a subsidiary of Citicorp § 333 (1982). will not contravene the McFadden Act. 9. The nonbank provisions of section 4 of the act do not have an 10. 12 U.S.C. § 1843(a)(2). interstate prohibition similar to that in section 3(d) of the act. Lewis v. 11. 12 U.S.C. § 1843(c)(8). BT Investment Managers, Inc., 447 U.S. 27 (1980). There is a 12. Id. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

662 Federal Reserve Bulletin • October 1982 be permissible for a bank holding company.13 First, closely related to banking, in order to approve such an the Board must determine whether the activity is activity for a bank holding company, the Board must "closely related to banking," that is, whether as a also find that the proposal meets the proper incident to general matter the activity is permissible for bank banking test of section 4(c)(8) of the act. holding companies. Second, the Board must determine whether the performance of the proposed activity by The Operation of a Savings and Loan Association as an applicant bank holding company may reasonably be a Proper Incident to Banking expected to produce public benefits that outweigh possible adverse effects. In 1977, the Board considered the general question On a number of occasions over the past ten years, whether the operation of a savings and loan associathe Board has considered, both in the context of a tion is a proper incident to banking. At that time and rulemaking proceeding and specific applications, on the basis of the factual record presented in that whether the operation of a savings and loan associa- case, the Board determined that, as a general matter, tion by a bank holding company is a permissible such an activity is not a proper incident to banking activity for a bank holding company under the closely because the potential adverse effects of allowing affilirelated and proper incident tests in section 4(c)(8) of ations between banks and savings and loan associathe act.14 In 1974, the Board concluded, on the basis of tions on a general basis were sufficiently strong to a record compiled after notice and a rulemaking hear- outweigh the public benefits that might result in indiing in which numerous parties participated, that the vidual cases. "D. H. Baldwin & Co.," (63 FEDERAL operation of a savings and loan assocation is closely RESERVE BULLETIN 280 (1977)). In the Baldwin case, related to banking within the meaning of section 4(c)(8) the Board identified three potential adverse effects of the act.15 The Board, however, denied the applica- that could be expected to result from the affiliation of a tion because the applicant failed to demonstrate that it bank and a savings and loan association: the conflict could satisfy the proper incident to banking test, that between the statutory and regulatory frameworks is, that the reasonably expected public benefits of the within which banks and savings and loans operate ; the proposal outweighed possible adverse effects.16 In a erosion of institutional rivalry between banks and number of cases decided since that time, the Board has savings and loans; and the potential for undermining consistently held to the position that the operation of a federal prohibitions against interstate banking. Based savings and loan association is closely related to upon competitive considerations and these generalized banking.17 adverse effects, and in the absence of any compelling In this case, the Board reaffirms its view as ex- public benefits, the Board denied the application. In pressed in American Fletcher Corp., and in other subsequent years, the Board approved a number of decisions, that the operation of a savings and loan applications by bank holding companies in New association is an activity that is closely related to Hampshire to acquire thrift associations, but only on banking. Both banks and savings and loan associations the basis of the historical affiliations between banks are financial intermediaries with liability structures and thrifts in that state and certain structural and dominated by deposits and asset structures dominated competitive considerations of that affiliation.18 by loans. The traditional deposit-taking and lending In 1982, in "Interstate Financial Corporation," (68 activities of a savings and loan association are func- FEDERAL RESERVE BULLETIN 316 (1982)), the Board tionally and operationally similar to activities per- was called upon for the first time to determine whether formed by banks and require the same type of analysis the adverse effects identified in the Baldwin decision and expertise. could be offset by the benefits to the public associated While the Board believes that the operation of a with preserving a financially troubled savings and loan savings and loan association is an activity that is association. In Interstate, the Ohio Superintendent of Building and Loan Associations requested the Board to consider the application on an expedited basis in 13. National Courier Association v. Board of Governors, 516 F.2d view of the facts that the association had nearly 1229, 1232-1233 (D.C. Cir. 1975). depleted its capital and under Ohio law its liquidation 14. E.g., "Newport Savings and Loan Association", 58 FEDERAL would have been required in the near future. While RESERVE BULLETIN 313 (1972); "American Fletcher Corp.", 60 FEDERAL RESERVE BULLETIN 868 (1974). 15. "American Fletcher Corp.", supra note 14. 16. In American Fletcher Corp., the Board denied on the basis of adverse financial considerations. 18. E.g., "First Financial Group of New Hampshire", (66 FEDER- 17. E.g., "Memphis Trust Company", 61 FEDERAL RESERVE BUL- AL RESERVE BULLETIN 594 (1980)). On this same basis, the Board had LETIN 327 (1975); "D. H. Baldwin & Co.", 63 FEDERAL RESERVE earlier approved applications by bank holding companies to acquire BULLETIN 280 (1977); "Interstate Financial Corp.", 68 FEDERAL thrifts in the state of Rhode Island. See, e.g., "Old Colony Coopera- RESERVE BULLETIN 316 (1982). tive Bank", (58 FEDERAL RESERVE BULLETIN 417 (1972)). 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Legal Developments 663 specifically stating that it did not overrule its conclu- Upon consummation of the proposal, Citicorp will sion in Baldwin that, as a general matter, the operation become a savings and loan holding company under the of a savings and loan association by a bank holding S&LHC Act.21 As a savings and loan holding company company is not a proper incident to banking, the and a bank holding company, Citicorp will be required Board concluded, on the basis of the specific facts in to conform its activities to the requirements of both the Interstate case, that the public benefits of preserv- statutes. As a unitary savings and loan holding compaing the savings and loan association as a viable com- ny, Citicorp is prohibited from engaging in any activity petitor were so substantial as to outweigh the adverse that would have the effect of evading a law or regulaeffects of the interindustry affiliation. In analyzing the tion applicable to an insured savings and loan associapublic benefits of the proposal, the Board considered tion (12 U.S.C. § 1730a(c)(l)).22 In the Board's view, the financial conditions facing the thrift industry gen- Citicorp will be able to continue its bank holding erally, the financial condition of a number of its company and commercial bank operations without members, the lack of any other viable alternatives to conflict with the S&LHC Act or the HOLA. address the association's financial condition, the re- In view of the above, the Board concludes that while quest of the Ohio supervisory authorities for prompt some adverse consequences may result because of action, and the potential ramifications of a liquidation regulatory conflicts between the Bank Holding Comof the association on the association's customers, the pany Act, the HOLA, and the S&LHC Act, these depositing public, the state of Ohio, and the Ohio adverse effects are mitigated by the conditions im- Deposit Guarantee Fund. posed in this Order to require Citicorp's compliance with the terms of each statute and, as discussed below, Generalized Adverse Effects Identified in the D. H. to prevent any unfair competitive advantage accruing Baldwin Case to Citicorp or Fidelity by reason of the affiliation. The Board also continues to believe that, as a In its consideration of the proper incident test in general matter, the affiliation between banks and connection with this application, the Board has reex- thrifts may produce possible adverse effects by diminamined each of the potential adverse factors found in ishing the interindustry rivalry that has produced price Baldwin. and service benefits to the public and by undermining With regard to the potential for regulatory conflict, the prohibition of the act against interstate banking.23 Citicorp is currently a bank holding company and is However, these adverse effects, in the context of this therefore subject to the provisions of the Bank Hold- case, are substantially mitigated by the fact that Fideliing Company Act. Fidelity, as a federal savings and ty is a failing institution that has lost its competitive loan association, is subject to the provisions of the vigor and is able to continue operations only through HOLA. In order to reduce the potential for conflict substantial federal financial assistance. As discussed between the Bank Holding Company Act and HOLA, below, the Board believes that the revitilization of and the Board conditions approval of this application upon restoration of public confidence in Fidelity is a public Fidelity's activities being limited to those that are benefit that, along with other public benefits, outpermitted both to federal thrift institutions currently weighs any adverse effects that may result from conunder the HOLA and to bank holding companies and summation of the proposal. their nonbank subsidiaries under section 4(c)(8) of the act.19 This condition does not limit the performance of the traditional deposit-taking and lending activities of federal savings and loan associations by Fidelity.20 Fidelity's ability to offer all services authorized under HOLA, the affiliation will restore Fidelity to a viable competitive position and allow it to continue to offer most authorized services. These benefits 19. See note 25, below. In the event Fidelity intends to engage, are, in the Board's judgment, more than sufficient to outweigh the fact directly or through a service corporation, in any additional nonbank- that Fidelity may no longer engage in real estate development and ing activity not covered by this application, Citicorp and Fidelity similar impermissible activities under the act, activities that represent would be required to obtain the Board's approval under section 4(c)(8) only a small fraction of Fidelity's overall operations. In this regard, of the act and section 225.4 of Regulation Y. This application covers Citicorp has indicated it has no desire to engage in such activities, but the traditional deposit-taking and lending activities of federal savings intends to promote Fidelity's basic consumer oriented services. The and loan associations as currently authorized under HOLA, mortgage Board also notes that the FHLBB has urged approval of the applicabrokering, loan servicing, and mortgage lending. tion as providing substantial public benefits through the restoration of 20. In its D. H. Baldwin decision, the Board expressed concern Fidelity as an active competitor that outweigh any possible adverse that a condition that limited the activities of a savings and loan effects. association owned by a bank holding company would place the 21. 12 U.S.C. § 1730a. association at a competitive disadvantage and prevent the full realiza- 22. The FHLBB has granted a waiver to Citicorp of the restrictions tion of public benefits that are expected from the operation of the on the amount of debt that can be incurred by a nondiversified savings association. Indeed, the FHLBB had opposed the acquisition of a and loan holding company (12 U.S.C. § 1730a(g)). savings and loan by a bank holding company on this basis. While the 23. See "D. H. Baldwin & Co.", (63 FEDERAL RESERVE BULLETIN Board recognizes that Fidelity's affiliation with Citicorp will limit 280 (1977)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

664 Federal Reserve Bulletin • October 1982 Moreover, to ameliorate further the possible ad- institution now that it is under FSLIC receivership; verse effects of affiliation in this case between a and (3) the Citicorp proposal is not the only available banking organization and a thrift association, the alternative to address Fidelity's situation and thus Board has conditioned approval of the proposal to does not qualify for approval under the criteria cited require that Fidelity continue to be operated as a by the Board in its Interstate decision. savings and loan association having as its primary purpose the provision of residential credit, that its Unfair competition. The Board does not believe that offices be confined to California, and that Fidelity and the evidence of record in this case supports the Citicorp's subsidiaries be operated separately and proposition that the acquisition would result in a independently of one another. The Board believes that major restructuring of the financial services indussuch restrictions will minimize the potential for ero- try. On the contrary, the Board believes that the sion of statutory prohibitions against interstate bank- proposed acquisition, in light of Citicorp's commiting and maintain the independence and specialized ments and the conditions imposed by the Board in function of the savings and loan industry. this Order, will result in the operation of two independent and different types of depository institu- Other Possible Adverse Effects tions supported by the financial and managerial strength of a parent holding company that will As discussed below, the Board in its evaluation of the permit these organizations to provide substantial application has also considered the potential for addi- public benefits in their respective product and geotional adverse effects that might result from consum- graphic markets. mation of Citicorp's particular proposal, including the Citicorp has filed an application to acquire and potential for decreased or unfair competition, conflicts operate a savings and loan association in California of interest, financial risks, diversion of funds, partici- and has stated that it will operate Fidelity indepenpation in impermissible nonbanking activities, evasion dently of its commercial banking activities. The of interest rate limitations, and undue concentration of Board has considered the application only on this resources. basis and its approval as conditioned by this Order is In this connection, the Board considered the conten- designed to ensure that Fidelity will be operated as a tions of the protestants that, in addition to the general savings and loan association and will continue to effects cited by the Board in Baldwin, the following serve the specialized purpose for which it was adverse effects may result from consummation of the organized and will not be utilized to further or Citicorp proposal: (1) the acquisition would result in a enhance the activities of Citicorp's subsidiary major restructuring of the financial services industry banks. and Citicorp would obtain an unfair competitive advantage over commercial banks and thrift organiza- Participation in non-permissable activities. The tions that are not afforded the combination in one Board has given careful consideration to the contenorganization of thrift and commercial banking powers; tion that Citicorp will obtain an unfair competitive (2) decreased or unfair competition would result be- advantage over commercial banks through affiliation cause Citicorp's substantial resources would enable it with a savings and loan association that may engage to strengthen the competitive position of Fidelity to in activities that are not authorized for banks, for the detriment of the already weakened thrift industry example, certain service corporation activities. To in California; (3) Citicorp would operate Fidelity in address these concerns, the Board has limited Fideltandem with its banking and other subsidiaries through ity's activities to those permissible for bank holding the use of Fidelity's deposits to fund Citicorp's other companies under the act and to locations at which activities or through the use of Citicorp's other subsid- banks located in California could establish iaries to attract deposits to Fidelity; (4) Citicorp may branches. As the Board has previously held, the act not have the financial ability and resources to operate requires that the activities of a thrift institution that and revitalize Fidelity ; and (5) the transaction would is acquired by a bank holding company must be result in an undue concentration of resources. limited to those permissible under the act.24 In Protestants also allege that other adverse consider- conformance with that holding, the Board's approvations warrant denial of Citicorp's proposal, namely, al of this application does not authorize Citicorp to (1) the procedures utilized by FSLIC in the bidding process for Fidelity were unfair and the Citicorp offer for Fidelity was not the offer most favorable to the FSLIC and the public; (2) no emergency situation 24. "Central Pacific Corporation", 68 FEDERAL RESERVE BULLEexists at Fidelity in that it is no longer a failing TIN 382 (1982). See "Interstate Financial Corporation", supra note 17. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 665 engage in any activity through Fidelity that is not of Citicorp.26 The Board has also prohibited certain permissible under section 4(c)(8) of the act.25 transactions between Fidelity and Citicorp or any of In addition, this Order does not authorize Fidelity its subsidiaries without the Board's prior approval. to perform any activity that is not permitted to a While the Board has prohibited Citicorp from changfederal savings and loan association under the ing Fidelity's name to include the word "bank" or HOLA. As a condition of this Order, Fidelity may any other term that might confuse the public regardnot, without specific approval by the Board, exer- ing Fidelity's status as a nonbank thrift institution, cise any deposit-taking or commercial lending pow- the Board does not regard as unfair competition ers not currently authorized by statute for a federal Applicant's use of the "Citi" prefix or the name savings and loan association. "Citicorp" in Fidelity's name. In order to prevent Citicorp from securing any The Board believes these conditions also address competitive advantage with regard to geographic the concerns raised by several of the protestants location over commercial banking organizations op- regarding the potential for diversion of Fidelity's erating in California, the Board's approval is condi- funds by Citicorp. The potential adverse effects that tioned upon Applicant not establishing branches of might result from shifting assets and liabilities be- Fidelity at locations not permissible for national or tween Fidelity and Citicorp's other subsidiaries to state banks located in California. In order to prevent take advantage of differing interest rates27 and costs any unfair competitive advantage that might result is further protected against through the restrictions from Fidelity's ability to establish remote service on interaffiliate transactions imposed by the Federal units in other states, the Board also conditions Reserve Act (12 U.S.C. § 371c) and the S&LHC Act approval upon Applicant not establishing or operat- (12 U.S.C. § 1730a(d)). ing a remote service unit at any location outside of The Board has also considered the contention that California. The Board believes that these restric- Citicorp's financial support for Fidelity will give tions are consistent with Citicorp's statements to the Fidelity an unfair competitive advantage over its Board that Citicorp intends to operate Fidelity as a thrift competitors. In the Board's opinion, the restosavings and loan association in California and does ration of Fidelity as a viable competitor and the not intend to use Fidelity to achieve interstate increased competition and improved and expanded branching or interstate acquisitions or to attract services that are expected of Fidelity through access deposits from Citicorp's New York customers or to the financial and managerial resources of Citicorp from anywhere else in the country outside of Cali- may only be viewed as a public benefit.28 The fact fornia. that a particular depository institution is owned by an organization that is able to provide it with finan- Diversion of funds. As noted in the Order, to further cial and managerial assistance may provide the ensure that Fidelity is operated as a savings and loan institution with a competitive advantage, but there is association and not utilized to further or enhance the nothing unfair about such an advantage.29 Indeed, activities of any Citicorp subsidiary, the Board has one of the principal concerns of the Board under the imposed the conditions that require Fidelity to be act is that a bank holding company should serve as a operated as a separate, independent, profit-oriented source of financial strength and support for its corporate entity and has prohibited Fidelity from subsidiaries. Finally, the restrictions imposed in this being operated in tandem with any other subsidiary 26. The Board has previously indicated that serious adverse effects, including the potential for conflicts of interest, unfair competition and 25. This requirement is also applicable to activities performed by evasion of federal interest rate limitations, may result from the tandem Fidelity through a service corporation. The Board has previously held operations of a bank and a thrift association. "First Financial Group that, under the act, a bank holding company subsidiary may not of New Hampshire, Inc.", 66 FEDERAL RESERVE BULLETIN 594 perform indirectly through a service corporation an activity that is (1980); "Heritage Banks, Inc.", 66 FEDERAL RESERVE BULLETIN 590 impermissible for the bank holding company. Central Pacific Corp., (1980). supra note 24. Fidelity's service corporation, therefore, must termi- 27. Fidelity is subject to interest rate ceilings under 12 C.F.R. Part nate all activities that are not permissible under the act. 526. Fidelity currently is engaged, through its service corporation, in a 28. The fact that Citicorp will receive assistance from the FSLIC number of real estate development projects, an activity that is not also will not result in unfair competition. According to the FSLIC, the permissible for a bank holding company. In accordance with Citi- Citicorp proposal in fact entails less financial assistance than the corp's commitments and the terms of this Order, Fidelity may not proposal of any other bidder. However, even if this were not the case, engage in any additional real estate development projects either the FSLIC assistance merely remedies the severe competitive disaddirectly or through a service corporation. In order to afford Fidelity a vantage now affecting Fidelity as a result of its weak financial reasonable period of time to divest currently held impermissible assets condition. and in view of the fact that such assets consist primarily of real estate 29. The Board also notes that a number of other thrift institutions in projects, the Board has provided a two-year divestiture period for California are owned by parent organizations that are able to provide such assets. their subsidiaries with substantial financial support. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

666 Federal Reserve Bulletin • October 1982 Order that Fidelity be operated as a separate, profit- Order, may not reasonably be expected to result in oriented savings and loan association will also pro- conflicts of interests, unsound banking practices, or tect against unfair competition by Fidelity through other adverse effects.31 its affiliation with Citicorp. The Board also has considered the contention that Reasonably Expected Public Benefits the Board's limitation of thrift acquisitions by bank holding companies to situations involving a failing The Board has also examined the record to determine institution and its case-by-case approach to such whether consummation of the proposal may reasonsituations creates an unfair competitive situation.30 ably be expected to produce public benefits. The The Board's approach to the question of thrift Board believes that Citicorp's acquisition of Fidelity acquisitions by bank holding companies is mandated will provide a substantial and compelling public beneby the act. Where the Board finds adverse effects fit in that Citicorp will provide Fidelity with sufficient associated with a bank holding company proposal, new capital funds and managerial assistance to restore the Board is precluded from approving the proposal Fidelity as a viable competitor and to restore public in the absence of countervailing public benefits. confidence in Fidelity. Fidelity is a substantial organi- Because of the adverse effects associated with the zation, serving thousands of customers in numerous affiliation of banks and thrifts that were identified by communities. In the Board's opinion, the public benethe Board in Baldwin, the Board may only approve fits generally associated with revitalization of a failing such an application where public benefits based on financial institution are magnified in this case in view the facts in a particular case outweigh adverse of Fidelity's size and the number of its customers. effects. Such compelling public benefits have only The record establishes that Citicorp has the financial been found where the thrift institution is failing. and managerial resources and the commitment to serving the convenience and needs of the public to Undue Concentration of Resources. The Board has achieve this result. The acquisition will restore an considered whether the proposal will result in an active and effective competitor to, and increase comundue concentration of resources. Citicorp is the petition in, numerous California markets, presents the second largest banking organization in the country potential for expansion and increased competition in on the basis of total assets. Citicorp controls 1.29 other California markets, ensures the continuation of percent of domestic deposits in commercial banks, services by Fidelity to its customers and the public, savings banks, and savings and loan associations in and protects the interests of Fidelity's depositors, the the United States. On this basis, Citicorp is the third public, the savings and loan industry generally, and largest financial institution in the United States. the FSLIC.32 Upon consummation, Citicorp would control ap- The Board has considered as a substantial public proximately 1.37 percent of deposits in such institu- benefit the savings to the FSLIC that will result from tions and would remain the third largest institution the proposal. The FHLBB has advised the Board that on this basis. The acquisition would increase Citi- the Citicorp bid was $143 million more favorable to corp's total assets by 2.5 percent. Fidelity is the 42nd largest savings and loan 31. In reaching the conclusion that consummation of the proposal association in the United States, and is not viewed would not have a substantial impact on Citicorp's overall financial position and that Citicorp has both the financial and managerial by the Board as a dominant firm in its industry or in resources needed to acquire Fidelity and make it a viable competitor any geographic market. On the basis of these facts without any significant adverse effects to Citicorp, the Board has and in view of Fidelity's financial condition, the considered the comments of the IBAA, the U.S. League, and others regarding Citicorp's foreign loan portfolio. Board concludes that consummation of the proposal 32. In this connection, the U.S. Department of Justice stated that will not result in any undue concentration of re- the acquisition of thrift institutions by bank holding companies is procompetitive and will provide enhanced services at competitive sources. prices. Similarly, the Comptroller of the Currency urged approval of The Board concludes that consummation of the the proposed acquisition on the basis that it would be procompetitive proposal, subject to the conditions set out in this and would provide significant public benefits. The Comptroller also expressed the view that the cost savings to the FSLIC would be a public benefit to other FSLIC-insured institutions and their depositors 30. The Board notes that none of the protestants stated that it had in view of the potentially large liabilities of the FSLIC as a result of the been prevented from submitting an offer to acquire Fidelity. Those financial condition of the thrift industry. The Federal Deposit Insur- California institutions that did submit offers to acquire Fidelity were ance Corporation took no position on this particular application, but afforded a second opportunity to meet or exceed the Citicorp bid. In stated its belief that the Board has discretion under the Bank Holding any event, the federal deposit insurance agencies have traditionally Company Act to approve the acquisition by a bank holding company limited the group of institutions from which bids are solicited to ensure of a thrift and that such an acquisition would provide an additional an orderly and prompt resolution of an emergency situation, and this alternative for resolving situations involving financially troubled fimatter is appropriately reserved to the discretion of these agencies. nancial institutions and would be in the public interest. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 667 FSLIC than any other bid received and $303 million have reduced funding costs for Fidelity and this also less than the cost of maintaining a phoenix association. has served to relieve pressure on the institution. The FHLBB has also advised the Board that, using an The Board concludes that any realistic assessment optimistic projection of interest rates, Citicorp's bid of Fidelity's condition compels the conclusion that was $56 million more favorable than the next lowest Fidelity is a failing institution. It is undisputed that, on second round bid and $35 million less than the cost of April 13, 1982, following a period of substantial deposmaintaining a phoenix association. it losses and substantial borrowings from the Federal Citicorp's commitment to the introduction of new Home Loan Bank of San Francisco ("Home Loan products and services and the expansion of current Bank") of approximately $1.4 billion to maintain liservices of Fidelity through access to Citicorp's finan- quidity, the California Savings and Loan Commissioncial and managerial resources also lends weight toward er closed Fidelity's predecessor and appointed the approval. In addition to the substantial public benefits FSLIC as receiver for the state on the basis that associated with the revitalization of Fidelity that have Fidelity's predecessor was in an unsafe condition and already been cited, Citicorp has stated that it intends conducting its business in an unsafe and injurious not only to restore Fidelity as a competitor but to manner. Substantial operating losses have continued enhance its competitive position and to promote its at Fidelity since the receivership was announced and services to the public by providing Fidelity with access Fidelity's approximately $2.9 billion in assets is now to resources for the expansion of services in the areas supported by loans from the Home Loan Bank of over of NOW accounts, consumer loans, credit cards, $1.7 billion. Deposit withdrawals at Fidelity have also education loans, trust activities, and automated teller been steady and substantial since appointment of the facilities. This expansion of Fidelity's services and FSLIC as receiver and have forced the FSLIC to operations also will provide greater convenience to the guarantee an advance of an additional $325 million to public. Citicorp's experience and expertise, particular- Fidelity from the Home Loan Bank since April 13. The ly in managing large scale operations and in the design FHLBB has provided the Board with data indicating and implementation of electronic banking and financial that deposit outflows at Fidelity have increased during data processing, also should provide gains in efficiency the first twenty-one days of September. The FHLBB at Fidelity. has also advised that Fidelity's operating losses con- Finally, Citicorp has a good record of service to the tinue substantially unabated and that Fidelity has convenience and needs of the public, and has stated exhausted its net worth. that it intends to use its resources to promote and Much of the market value of a depository institution expand Fidelity's service to its communities, including such as Fidelity is derived from its deposit base. More services directed to the credit needs of low- and than 20 percent of Fidelity's deposit base has dissipatmoderate-income neighborhoods in those communi- ed since March 31, and thus, the assets held by the ties.33 In this connection, Citicorp representatives FSLIC as receiver must be regarded as wasting. In testified at the informal hearings that Fidelity would addition, advances from the Home Loan Bank have consult with community groups to determine the credit grown to the point that they exceed Fidelity's deposits needs of the community and would study complaints by a considerable margin. The FHLBB has informed with respect to Fidelity's lending and correct any the Board that these advances now represent by far deficiencies. The Board expects that Citicorp will the greatest ratio of advances to savings of any federaladhere strictly to these commitments. ly insured thrift institution. The lack of public confidence in Fidelity even after Fidelity's Financial Condition the creation of the FSLIC receivership supports, in the Board's view, the statement of the FHLBB that there As stated above, protestants have asserted that Fideli- is no evidence that the rate of decline in Fidelity's ty should not be regarded as a failing institution position will slow or that its condition can improve because its condition has stabilized as a result of the unless it is acquired by an entity with greatly superior FSLIC receivership. According to protestants, this resources that can ensure Fidelity's revitalization and FSLIC assistance could continue for some time with- rebuild public confidence in Fidelity.34 In this regard, out significant deterioration in Fidelity's condition. the FHLBB has advised the Board that Fidelity's Similarly, protestants state that declining interest rates 34. Such an acquisition is also necessary to prevent the loss of employees that Fidelity is experiencing. The current receivership 33. Although the Board does not believe that the Community cannot provide the stability needed to retain key employees. Delay in Reinvestment Act is applicable in the case of section 4 applications, resolving Fidelity's problems would mean that even greater efforts the Board has considered Citicorp's record under that statute in acting would be required to rebuild both employee morale and public upon this application. confidence. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

668 Federal Reserve Bulletin • October 1982 acquisition by Citicorp would make Fidelity viable procedures followed by the FSLIC generally complied again and remove any future risk that extraordinary with the procedures now under consideration by Conassistance by the FSLIC would be needed. gress for acquisition of failing federally insured thrift For these reasons, the Board concludes that Fideli- institutions and that FSLIC's decision to allow a ty's continuing and unresolved financial problems second round of bidding for Fidelity in order to require prompt action to minimize the loss to the provide California financial organizations with an op- FSLIC and provide Fidelity with a strong parent portunity to match the bid of Citicorp adhered to the organization capable of restoring public confidence in spirit of these proposals. The FSLIC also published that institution. the procedures it followed in the second round bidding In the Board's judgment and in light of the commit- in the Federal Register (47 Federal Register 31322 ments made by Citicorp and the conditions imposed in (1982)). this Order, the public benefits expected from the restoration of public confidence in Fidelity and in the Available Alternatives to the Citicorp Proposal savings and loan industry, the substantial savings to the FSLIC, and reasonably expected gains in efficien- A number of the protestants argue that the Board's cy, increased competition and greater convenience to authority to approve a failing thrift acquisition under the public, outweigh any adverse effects that are the act is limited to the situation presented in the associated with this proposal. Interstate case, where the Board found that one of the factors in favor of approval was the fact that the bank FSLIC Bid Procedures holding company's proposed acquisition was the only available means by which the thrift institution could be Protestants have also asserted that, contrary to the maintained as a competitor and its liquidation predetermination by the FSLIC, Citicorp's bid to acquire vented. Fidelity would not in fact result in the lowest cost to The fact that the proposed bank holding company the FSLIC and that the FSLIC erred in not accepting a acquisition of the thrift association in Interstate was bid from one of the savings and loan associations that the only available means of dealing with its condition bid for Fidelity. The Board does not believe that this is was only one of the considerations that the Board took a proper issue for resolution by the Board under into account in approving the Interstate application. section 4(c)(8) of the act.35 Section 4(c)(8) of the act There is no legal requirement under the act that there does not require a determination that a given proposal be no other viable alternative to a bank holding is the most desirable that could be presented. Rather, company acquisition of a failing thrift, and there is no the statute directs the Board to determine whether indication in its Interstate decision that the Board reasonably expected public benefits from any given intended that this factor must be present in every bank proposal outweigh possible adverse effects. The fact holding company application to acquire a failing that alternative purchasers may be available is not thrift.36 As was the case in Interstate, the primary determinative. regulator for Fidelity has explored all of the alterna- Even if the Board were to conclude that another bid tives and has determined that the Citicorp proposal is should have been accepted by the FSLIC, this deci- substantially more favorable to Fidelity, its depositors sion would have little meaning because the Board has and creditors, and the FSLIC than any other bid and no authority to award the right to acquire Fidelity to substantially reduces the insurance liability and risk to another bidder. The decision as to which bid to accept the FSLIC, including the potential cost, as compared is committed to the exclusive discretion of the FSLIC. to any other bid. The presence or absence of alterna- An orderly administrative process dictates that the tives is but one factor in the evaluation of public Board not substitute its judgment for that of the benefits. As indicated, the Board's responsibility un- FSLIC. The Board does, however, note that the der the act is to balance public benefits against possible adverse effects. In this case, the Board believes that the balance of public benefits is favorable and that the application may be approved. 35. The Board has considered the contention that the FSLIC is not authorized to sell the assets held by Fidelity because of litigation pending regarding the appointment by the FHLBB of the FSLIC as federal receiver. Fidelity Savings and Loan Association v. FHLBB, et al„ No. 82-4337 and 82-4354 (N.D. Calif.). The Board notes that the 36. The approval of the primary regulatory authority for an acquisiappointment of the FSLIC as receiver has not been stayed or tion of a failing thrift association is also not a requirement under otherwise enjoined and its appointment as receiver is, therefore, valid section 4(c)(8) of the act. In any event, in this case, the primary at this time. Nor has the Court enjoined the FSLIC from transferring regulator, the FHLBB, has urged Board approval of the application as Fidelity to Citicorp. a means of restoring Fidelity to a viable condition. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 669 Requests for Formal Hearing ate Fidelity is a responsibility that is vested in the federal bank regulatory agencies, and public participa- Several protestants (including the IBAA, the U.S. tion in this process would be inconsistent with the League, the California Bankers, Crocker National entire scheme of federal bank regulation. The Board's Bank, Fidelity Federal Savings and Loan Association, assessment under the Bank Holding Company Act of Glendale, California, the California supervisory au- Citicorp's financial resources, including its overseas thorities, and Option Advisory Services, Inc.) have loan portfolio, is based upon detailed examination of requested that the Board hold a formal hearing regard- the operations of Citicorp's subsidiaries.38 Protestants ing Citicorp's proposal. They raise as the basis for a have alleged no dispute as to the facts regarding hearing the following: (1) discovery is necessary so Citicorp's financial resources or its foreign loans, but that all relevant facts associated with the application, rather have merely advanced conjectural and concluincluding the complete record of the FSLIC's consid- sory statements to support their hearing request on eration of various bids, may be provided to protes- this point. Indeed, the hearing requests are framed in tants; (2) the need to "probe" or "examine" whether terms of a need to probe or examine rather than on any Citicorp has the financial resources to operate Fidelity specific or supported allegation of financial weakness. in light of current international economic conditions; In the Board's opinion, protestants' questions re- (3) the need to assess the policy implications of garding Citicorp's financial resources and the conclu- Citicorp's application and the competitive effects of sions to be drawn therefrom do not require a formal the proposal on banks and thrifts in California and the hearing. Protestants were afforded ample opportunity nation; (4) whether Fidelity is or will be operated as a to present their testimony on these points and to bank and whether its acquisition violates section 3(d) question Citicorp. To warrant a hearing, the Board of the BHC Act; (5) whether Citicorp's bid was more believes tht protestants must raise more than generalfavorable than any other bid; and (6) whether Fideli- ized claims and requests to "probe" an applicant's ty's financial condition is so serious as to warrant financial resources. In the Board's opinion, the hear- Board approval of this application. ing requirement in the act, as it has been interpreted by Both the Board's Rules of Procedure37 and the the courts, does not require the Board to hold a Federal Register notice regarding this application state hearing on the basis of conjecture or unsupported that any request for a formal hearing must indicate allegations and the Board is not required "to investiwhy a written proceeding would not suffice in lieu of a gate every potential adverse contingency which a formal hearing and identify the disputed issues of fact contestant hypothesizes."39 that would be resolved at the formal hearing. The The essential element of protestants' claim of unfair persons requesting a hearing did not comply with this competition is a request that the Board evaluate the procedure. Rather, the hearing requests were conclu- competitive impact of the proposal based on the sory in nature, did not delineate specific disputed allegation that Citicorp would be an effective and facts, and were based on issues derived from conclu- aggressive competitor with advantages not available to sions drawn from undisputed facts. its banking and thrift competitors. As explained Apart from the fact that the protestants did not above, the Board believes it has addressed these comply with the Board's regulations and its notice, the concerns through the imposition of appropriate condiprotestants also failed to raise any factual issues that tions that eliminate the unfair competitive advantage would warrant a hearing. With respect to the FSLIC that the protestants claim may result, and in any event bid procedures, the Board believes that the issue of material facts are not in issue regarding the allegation which bid was the more favorable and the fairness of of unfair competition. FSLIC's procedures are not relevant to this proceed- The Board believes that the procedures it used to ing and, thus, a hearing on these issues is not warrant- solicit and explore the various policy and legislativeed. The question raised concerning Fidelity's status type concerns raised by protestants were appropriate under the act involves an issue of law that also does under the circumstances and fully adequate under the not require a hearing. There is no dispute that Fidelity act. The Board imposed no limitation on the length or offers NOW accounts and makes commercial real nature of the written comments. In addition, the Board estate loans in accordance with the provisions of the held informal hearings in Washington, D.C. and San HOLA. Francisco, California that were attended by a total of Assessment of the quality of Citicorp's or Citibank's loan portfolio and Citicorp's financial ability to oper- 38. Trial-type hearings are not required when examination or testing is a better way to find the facts. 2 K. Davis, "Administrative Law Treatise" § 12.12 at 455 (1979). 39. Connecticut Bankers Association v. Board of Governors, 627 37. 12 C.F.R. § 262.3(e) (1982). F.2d 245, 254 (D.C. Cir. 1980). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

670 Federal Reserve Bulletin • October 1982 approximately 200 people. All persons that wished to Second, the Board has expressly found that Citispeak at these hearings were given an opportunity to corp's acquisition of Fidelity is not likely, under the do so, and all persons that spoke at the informal conditions imposed by the Board, to result in any hearings were given an opportunity to submit ques- significant unfair competitive advantage or other comtions to Citicorp regarding the application. A number petitive harm to depository institutions that compete of such questions were received and Citicorp respond- with Fidelity or Citicorp or to their depositors or the ed to all of them.40 public generally. Moreover, in this case, there is little In addition, the Board has explored the policy issues likelihood that consummation of the acquisition would raised by protestants on a number of occasions over prevent a reversal of the transaction should such the last ten years, including in a rulemaking proceed- action subsequently become necessary because Fideliing and oral presentation to the Board. Last year, the ty will be maintained as a separate corporate entity. Board's staff completed a detailed study of the impli- Thus, in the Board's view, there is no likelihood of any cations of thrift acquisitions by bank holding compa- irreparable harm to any protestant if a stay is not nies. The Board solicited public comment on the granted. general issue of such acquisitions in conjunction with Third, the Board has found that, in light of Fidelity's this study, and reviewed some 379 written comments significant continuing daily net loss of deposits and its on that study. operating losses, a delay in consummation of this Based on the foregoing considerations, the Board proposal would permit continued significant financial does not believe that a formal hearing is required or harm to Fidelity that would otherwise be remedied by appropriate in this case and denies the requests of the consummation of the proposal. Moreover, delay protestants for a formal hearing.41 would continue to encourage the departure of employees and to exacerbate the adverse publicity regarding Request for a Stay of the Board's Order Fidelity since its closing by supervisory authorities. Because of these facts, the Board is concerned that it Several protestants, including the IBAA, have re- may be more difficult to restore Fidelity to a viable quested that, in the event the Board approves the condition if a stay is granted. proposed acquisition, the Board stay the effectiveness The loss of Fidelity's important competitive presof the approval pending judicial review of the Board's ence would harm the customers for financial services action. The Board has reviewed these requests in light in its market areas. Citicorp would also be harmed by a of the factors generally applied by the courts on stay stay pending review since delay would increase signifirequests,42 and, based upon that review, does not cantly the amount of funds Citicorp would be required believe that a stay of the Board's Order in this case is to expend to revitalize Fidelity. Finally, during the appropriate. pendency of any stay, the FSLIC, as receiver of First, as explained in detail above, the Board be- Fidelity, may be required to extend funds to Fidelity to lieves that its approval of Citicorp's acquisition of cover its continuing operating losses and to assure Fidelity, subject to the conditions imposed in the maintenance of some minimal net worth, funds that Order, complies with all applicable procedural and could be used to assist other financially troubled substantive requirements and is supported by substan- insured institutions. The Board finds, therefore, that tial evidence. Accordingly, it is unlikely, in the the granting of a stay would cause significant harm to Board's opinion, that any protestants will be success- third parties. ful in overturning the Board's approval on judicial Finally, the Board believes that a stay in this case is review. clearly not in the public interest. A stay would leave unresolved for a lengthy time the ultimate control and 40. The hearing officer declined to present one series of questions to ownership of a failing thrift institution, would prevent Citicorp on the basis that the questions were unrelated to the the restoration of Fidelity as an active competitive application to acquire Fidelity. 41. The Board provided 21 days notice in the Federal Register of force in its market area, and could result in substantial receipt of Citicorp's application to acquire Fidelity. Because the losses to the FSLIC. Federal Register Act states that a statutory requirement of notice and opportunity for hearing is satisfied by a notice period of fifteen days For these reasons, the Board hereby denies protes- (44 U.S.C. § 1508), the Board believes that the notice provided in this tants' request for a stay of the Board's Order. case is legally sufficient. The Board also believes that the twenty-one day comment period was appropriate in view of the request of the FHLBB that the Board act expeditiously and the fact that the Board Conditions of Approval also held two informal hearings at which interested persons could provide comments on the application and question Citicorp concerning the proposal. The Board believes that interested persons have The Board's approval of this application is further been afforded ample opportunity under the circumstances to submit subject to the conditions set forth in section 225.4(c) of their views on the proposal. Regulation Y and to the Board's authority to require 42. Virginia Petroleum Jobbers Association v. Federal Power Commission, 259 F.2d 921, 925 (D.C. Cir. 1958). such modification or termination of the activities of a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 671 holding company or any of its subsidiaries as the usual in connection with foreign banking or financial Board finds necessary to assure compliance with the operations and therefore permissible for a foreign provisions and purposes of the act and the Board's subsidiary of a United States banking organization regulations and orders issued thereunder, or to pre- (12 C.F.R. § 211.5(d)). Included on this list, in section vent evasion thereof. The transaction shall be made 211.5(d)(14) of Regulation K, are any activities that the not later than three months after the effective date of Board has determined by regulation or order are this Order, unless that period is extended for good closely related to banking under section 4(c)(8) of the cause by the Board or by the Federal Reserve Bank of Bank Holding Company Act (12 U.S.C. § 1843(c)(8)). New York acting pursuant to authority hereby dele- By order dated July 1, 1982, the Board determined that gated. the activity of acting as a futures commission mer- By order of the Board of Governors, effective chant ("FCM") in the execution and clearance of September 28, 1982. certain futures contracts is, in the circumstances described in that order, closely related to banking under Voting for this action: Chairman Volcker and Governors section 4(c)(8). "J. P. Morgan & Co., Incorporated", Martin, Partee, Teeters, Rice, and Gramley. Absent and not 68 FEDERAL RESERVE BULLETIN 514 (1982) ("Morvoting: Governor Wallich. gan"). Therefore, absent action of the Board to remove the activity from coverage of section (Signed) JAMES MCAFEE, 211.5(d)(14) of Regulation K, the activity of acting as a [SEAL] Associate Secretary of the Board. broker or an FCM for contracts based on precious metals and certain financial instruments would be a permissible activity for a foreign subsidiary of a Unit- Order Under Section 25(a) Federal Reserve Act ed States banking organization. An investor bank holding company, Edge Corpora- Citibank Overseas Investment Corporation, tion or member bank would ordinarily be entitled to Wilmington, Delaware engage in any permissible activity under the general consent or notification procedures of Regulation K Order Approving Application to Engage in Certain (12 C.F.R. §§ 211.5(c)(1), (2)). However, in acting on Futures Commission Merchant Activities the Morgan application, the Board noted that the activity of trading futures contracts involves various Citibank Overseas Investment Corporation types of financial risks to the FCM. In light of the ("COIC"), Wilmington, Delaware, has applied for the potential risks to the organization resulting from the Board's approval under section 25(a) of the Federal conduct of this activity, the Board has determined Reserve Act (12 U.S.C. § 615) and section 211.5 of the under section 211.5(c) of Regulation K that it is Board's Regulation K (12 C.F.R. § 211.5) to engage, appropriate in all cases to suspend the operation of the through its subsidiary, Citifutures Limited, London, general consent procedures with respect to FCM ac- England, in the activity of acting as a broker with tivities conducted on exchanges outside the United respect to gold bullion on the London Gold Futures States and to require all investors that wish to engage Market ("LGFM") and with respect to United King- in these activities to obtain the prior approval of the dom government bonds, and Eurodollar and sterling Board.1 A requirement of prior approval will enable deposit interest rate futures on the London Interna- the Board to assess the financial condition of the tional Financial Futures Exchange ("LIFFE"). applicant in light of the activities to be commenced and COIC is a corporation organized under section 25(a) the rules of the exchange on which the activity is to be of the Federal Reserve Act (an "Edge Corporation") conducted, and to ensure that such activities will be and is wholly-owned by Citibank, N.A., New York, conducted in accordance with high standards of finan- New York. Citibank is a subsidiary of Citicorp, New cial prudence. York, New York, which is the second largest commer- In the Morgan application, the Board identified cial banking organization in the United States with certain risks to which an organization is exposed by consolidated assets of $120.1 billion as of June 30, engaging in FCM activities. As an FCM in the London 1982. futures markets, Citifutures would be contractually Edge Corporations are organized for the purpose of liable for nonperformance by a customer on each engaging in international or foreign banking or other futures contract traded by Citifutures for that custominternational or foreign operations and are authorized to invest in foreign companies that engage in activities that are usual in connection with the transaction of 1. The Board has determined that the prior notification, rather than banking or other financial operations abroad. Regula- the specific consent, procedures of section 211.5(c) of Regulation K shall apply to any investor that seeks to engage in this activity on the tion K lists activities determined by the Board to be LGFM or the LIFFE through a foreign subsidiary. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

672 Federal Reserve Bulletin • October 1982 er. In addition, it appears that Citifutures may be monitoring of customer positions, and monitoring obligated to meet special variation margin calls made the status of customer margin accounts. of customers. However, these risks are essentially 5. By means of its credit approval process with credit risks of the type that a large and sophisticated Citibank, Citifutures will assess customer credit international banking organization such as Citicorp risks, and will take such assessments into considerhas significant expertise in evaluating. Citifutures has ation in establishing appropriate position limits for comprehensive written procedures for evaluating the each customer, both with respect to each type of credit risk of potential customers, many of whom will contract and with respect to the customer's aggrebe clients of Citicorp/Citibank entities worldwide. gate position for all contracts. Other risks identified in the Morgan order related to 6. Citifutures has stated that it will, in addition to the risk associated with membership on certain com- time-stamping orders of all customers to the nearest modity exchange clearing associations where the minute, execute all orders, to the extent consistent member is exposed to a contingent liability for the with customers' specifications, in chronological secontractual obligations due the association by all clear- quence, and that it will execute all orders with ing members. This potential liability exists through the reasonable promptness- with due regard to market assessment provisions of certain clearing association conditions. guaranty funds to which all clearing members must 7. Citicorp and its subsidiaries have demonstrated contribute. Some exchanges could also require the expertise and established capability in the cash, parent corporation of a clearing member to become a forward and futures markets for the type of conmember of the exchange or clearing association. In tracts involved. this regard, the Board notes that the London ex- 8. The provisions of FCM services by Citifutures to changes involved in this application differ significantly a customer will not in any way affect the provision in a number of respects from the exchanges and of credit or other services to that customer by the clearing associations considered by the Board in the Citicorp organization. Morgan application. Neither the LGFM nor the 9. Citifutures will not extend credit to customers for LIFFE is a "mutual market" in which members the purpose of meeting initial or maintenance margin mutually guarantee each other's liability either directly required of customers, subject to the limited excepor through mandatory assessments by a guaranty fund. tion of posting margin on behalf of customers in On the London exchanges, clearing of contracts is advance of prompt reimbursement. done by the International Commodities Clearing House Ltd. ("ICCH"), an independent clearing house The Board will consider these and similar factors in that is jointly owned by the London clearing banks and acting on future proposals under Regulation K by that assures the integrity of the LGFM and the LIFFE. investors to engage in the activity of acting as an FCM In effect, ICCH substitutes itself as the counterparty in on the LGFM and the LIFFE. all floor executions. ICCH's performance guaranty is supported by its share capital, by the implied support Based upon the foregoing and other considerations of its bank ownership and by a requirement that reflected in the record, the Board has determined that members post initial and variation margin payments. the application should be and hereby is approved. This In considering this application, the Board has placed determination is subject to such modification as the particular reliance on the following factors associated Board finds necessary to assure compliance with the with COIC's proposal: provisions and purposes of the Federal Reserve Act 1. Citifutures, which is organized exclusively to and the Board's regulations thereunder. In this regard, perform a brokerage function, will not trade for its the Board expects that COIC will notify the Board of own account. any substantial changes in the activities or regulations 2. The instruments and precious metals upon which of LIFFE, LGFM, or ICCH that would materially the proposed futures contracts are based are essen- increase the liability of the Citibank organization in tially financial in character and are of a type that a conducting these activities. bank may execute for its own account. In considering this application, the Board recog- 3. Citifutures has and will maintain capitalization nized that a member bank may seek to conduct these that is fully adequate to conduct these activities in a activities through a foreign branch, rather than safe and sound manner. through a subsidiary. The Board is concerned that 4. Citifutures and Citibank have established a credit such activities should be conducted by all U.S. bankapproval process that specifies the services that ing organizations in accordance with high standards of Citibank will supply to Citifutures, including the banking and financial prudence. In this regard, the assessment of customer credit risk, the continuous Board is considering the issuance of a statement of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 673 policy guidelines or regulations governing the partici- in commercial banks in the state.3 Bank is the 89th pation of U.S. banking organizations in such activities. largest commercial bank in the state with total deposits By order of the Board of Governors, effective of $70.5 million, representing less than one percent of September 29, 1981. the total deposits in commercial banks in the state. Upon consummation of the proposed merger, Appli- Voting for this action: Chairman Volcker and Governors cant would become the 10th largest commercial bank- Martin, Partee, Teeters, Rice, and Gramley. Absent and not ing institution in the state and would control approxivoting: Governor Wallich. mately 1.29 percent of the total deposits in commercial banking institutions in the state. Accordingly, consum- (Signed) JAMES MCAFEE, mation of this proposal would not have an appreciable [SEAL] Associate Secretary of the Board. effect upon the concentration of commercial banking resources in Indiana. Applicant is located in Elkhart County and operates Order Under Bank Merger Act 14 banking offices: 12 located in Elkhart City, one located in Nappanee, Indiana, and one located in St. Joseph Valley Bank, Bristol, Indiana. Bank is also located in Elkhart Coun- Elkhart, Indiana ty and operates five offices, all located in Goshen, Indiana. All offices of Applicant are at least 5 miles Order Approving Merger of Banks from any offices of Bank. Elkhart County is a growing population center adjacent to South Bend, Indiana, St. Joseph Valley Bank, Elkhart, Indiana ("Appliand is included in the South Bend-Elkhart Ranally cant"), a subsidiary of SJV Corporation, Elkhart, Metro Area. The Board has previously determined Indiana, a bank holding company within the meaning that Elkhart County is part of a banking market that of the Bank Holding Company Act, has applied for the closely approximates the South Bend-Elkhart Ranally Board's approval under the Bank Merger Act Metro Area, which includes Elkhart County and St. (12 U.S.C. § 1828(c)) to merge with the First National Joseph County.4 Bank of Goshen, Goshen, Indiana ("Bank"), under In connection with this application, the Board has the charter and title of Applicant. St. Joseph Valley considered comments submitted by the Office of the Bank has concurrently applied for membership in the Federal Reserve System.1 Deputy Assistant Attorney General for the United States, Antitrust Division ("Antitrust Division"), con- Notice of this application, affording interested percerning the relevant market. The Antitrust Division sons an opportunity to submit comments and views, claims that the relevant banking market in this case has been given in accordance with the Bank Merger consists of the Elkhart County SMSA, which consists Act and the Board's Rules of Procedure (12 C.F.R. of Elkhart County alone. On the basis of this definition § 262.3(b)). As required by the Bank Merger Act, of the relevant banking merger, the Antitrust Division reports of the competitive effects of the merger were has concluded that the merger of Applicant and Bank requested from the United States Attorney General, would have a significantly adverse effect on competithe Comptroller of the Currency, and the Federal tion.5 Deposit Insurance Corporation. Comments were re- The Antitrust Division makes several assertions in ceived from the Office of the United States Attorney support of its definition of the relevant banking mar- General, Mr. C. Gerald Pressler and Mr. Howard Young.2 ket. First, the Antitrust Division asserts that commuting patterns and patterns of industrial and commercial Applicant is the 14th largest commercial banking development and interaction between Elkhart County organization in Indiana, with total deposits of $269.8 and the surrounding counties, do not justify inclusion million, representing 1.02 percent of the total deposits of the adjacent counties in the Elkhart banking market. 1. The application for membership is being processed by the Federal Reserve Bank of Chicago under delegated authority. 3. All banking data are as of June 30, 1981. 2. Mr. Pressler's remarks relate to matters of private negotiation 4. See, e.g., "American National Bancorp, Inc.", Board Order between shareholders and Applicant, and do not present grounds for dated April 13, 1979. The relevant market as defined by the Board denial of this application. Mr. Young, the second protestant, ex- includes all of Elkhart County, Indiana, and St. Joseph County, pressed concerns regarding the administration of individual trust Indiana (including South Bend but excluding Warren and Olive accounts by Applicant, and the managerial strengths of Applicant. townships) as well as Cass County, Michigan, and five townships in After review of Mr. Young's remarks, Applicant's response, and a Berrien County, Michigan (Oronke, Berrien, Buchanan, Niles, and report of an investigation into Mr. Young's allegations conducted by Bertrand). the Indiana Department of Financial Institutions, it has been deter- 5. Letter from Mr. Ronald G. Carr, Deputy Assistant Attorney mined that Mr. Young's protest does not present grounds for denial of General, Antitrust Division, Department of Justice, to the Chairman this application. of the Board of Governors, dated May 14, 1982. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

674 Federal Reserve Bulletin • October 1982 Second, the Antitrust Division asserts that, because with St. Joseph County and townships in Michigan as banks in Indiana are restricted to operations within a the final destination of over three-quarters of these single county by state branching laws and by a state commuters. prohibition on multi-bank holding companies, banks in These commuting patterns are corroborated by in- Elkhart County do not have the opportunity to com- clusion of Elkhart County and St. Joseph County in a pete with banks in adjacent counties by establishing single Ranally Metro Area. An RMA is defined generbranch offices or affiliates in those counties.6 ally as a compact area with relatively high population As the Board has previously indicated, the Board density that is linked by commuting, retail, and wholebelieves that the relevant banking market must reflect sale trade patterns.9 By definition, an RMA includes a the commercial and banking realities and should con- central city or cities and all adjacent continuously built sist of the localized area where the banks involved up areas as well as certain other areas. These other offer their services and where local customers can areas are included in a given RMA if a minimum of 20 practicably turn for alternatives.7 The key question to percent of the labor force of that area or 8 percent of be considered in making this selection "is not where the total population of that area commutes to the the parties to the merger do business or even where central city and its adjacent built-up areas. The they compete, but where, within the area of competi- Board's judgement is that an RMA usually designates tive overlap, the effect of the merger on competition a defined geographic locality that is demographically will be direct and immediate."8 and commercially integrated. On this basis, the Board Applying these principles to the facts of this case, has in many cases used RMA's as guides in defining the Board concludes that the relevant banking market relevant geographic banking markets.10 within which to evaluate the competitive effects of this The Board believes that the fact that banks in proposal includes Elkhart County, Indiana, St. Joseph Indiana are legally restricted in their ability to branch County, Indiana (including South Bend and excluding does not preclude them from competing for business Warren and Olive townships), Cass County, Michigan, outside of their home county or preclude customers and five townships in Berrien County, Michigan from seeking the services of out-of-county banks. For (Oronke, Berrien, Buchanan, Niles and Bertrand). example, during 1980, 1981 and the first half of 1982, This area closely approximates the South Bend-Elk- Applicant spent approximately 29 percent of its total hart RMA, and includes the two major population advertising budget in efforts to reach customers in St. centers in Northern Indiana, South Bend and Elkhart Joseph County.11 In addition, Applicant regularly tar- City, which are approximately 12 miles apart and gets over 20 percent of its banking solicitation calls to connected by extensive highway systems. potential customers in the South Bend-Elkhart area The Board believes that the Antitrust Division's outside of its home county of Elkhart County, and has narrow definition of the relevant banking market as experienced a higher success rate from calls made Elkhart County alone unduly emphasizes the specific through this program to potential customers located locations at which banks are permitted to do business outside of its home county than from calls made to in Indiana. The close proximity of Elkhart and South potential customers within Elkhart County. Bend and the surrounding commercial and industrial The record also indicates that non-residents of Elkarea has resulted in a substantial amount of commuting hart County view banks in Elkhart County as practicaacross counties in this area. A study of commuting ble alternatives to banks in their home counties. For patterns conducted by the Indiana Employment Secur- example, during 1980, 1981 and the first half of 1982, ity Division in 1972 revealed that approximately one over 25 percent of the home improvement loans made out of nine workers in this area commutes to work by Applicant (measured both by number and principal outside of the workers' home county. Nearly 20 per- amount) were sought by and made to residents of the cent of the labor force employed in Elkhart County South Bend-Elkhart area living outside of Elkhart commuted into Elkhart County from adjacent coun- County, Applicant's home county. ties, with the vast majority of those commuters coming from counties within the South Bend-Elkhart RMA. In addition, over six percent of the work force residing in Elkhart County commuted to other counties to work, 9. Rand McNally and Company, "1981 Commercial Atlas & Marketing Guide," p. 2 (1981). 10. See, e.g., "Ellis Banking Corporation," 64 FEDERAL RESERVE BULLETIN 884 (1978). 6. Indiana Code Annotated §§ 28-1-17-1 & 28-8-2-1 (Burns 1981). 11. While South Bend may be regarded as the media center in the 7. See "Wyoming Bancorporation", 68 FEDERAL RESERVE BULLE- South Bend-Elkhart area, Elkhart city is served by three local radio TIN 313, 314 (1982). stations, two local television stations, and several local newspapers 8. United States v. Philadelphia National Bank, 374 U.S. 321, 357 and magazines. As a result, use of competing media in South Bend (1963); United States v. Phillipsburg National Bank, 399 U.S. 350, evidences a conscious choice by banks located in Elkhart City to 364-65 (1970). reach potential customers in South Bend and the surrounding area. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 675 The Antitrust Division contends that the high unem- tion,12 Bank's small size, and the existence of numerployment rate presently being experienced by both ous remaining banking alternatives in the market, the Elkhart and St. Joseph Counties (approximately 12 Board does not regard the elimination of competition percent) has substantially reduced commuting in the in this case to be so significant as to warrant denial of South Bend-Elkhart area. The record in this case does the application. Accordingly, the Board concludes that not support this conclusion, and the Antitrust Division consummation of the proposed merger would not have has not provided any data showing that the unemploy- a significant adverse effect upon existing or potential ment rate has affected commuters in the Elkhart area competition. Thus, competitive effects are consistent in any greater proportion than non-commuters. Fur- with approval. ther, while the unemployment rate at a given time may The financial and managerial resources of Appliaffect the demand for banking services in the short cant, its parent, and Bank are regarded as generally term, the relevant geographic market for a given satisfactory and their future prospects appear favorproduct is shaped by long-term employment patterns able. As a result, considerations relating to banking and commercial development. factors are consistent with approval. Although no new Accordingly, on the basis of the facts of record, banking services would be introduced to the relevant including the demographic and commercial integration banking market as a result of the proposed transaction, of the South Bend-Elkhart area, the substantial com- the customers of Bank would benefit from the addition muting patterns throughout the area, the significant of new services, including access to Applicant's Autoemployment of area-wide marketing techniques, and matic Teller Machine network, the addition of VA and the recognition and active use by customers through- FHA lending programs, and the addition of data out the area of banks outside their home county as processing services. Thus, considerations relating to practicable alternatives to banks within their home the convenience and needs of the community to be county, the Board has determined that the relevant served are consistent with approval and tend to outgeographic market in this case is the South Bend- weigh any adverse competitive effects of the transac- Elkhart area and is not, as the Antitrust Division tion. Based upon the foregoing and other considersuggests, limited to Elkhart County alone. ations reflected in the record, the Board's judgment is Within the relevant banking market, Applicant is the that consummation of the transaction would be confourth largest of 22 commercial banking organizations, sistent with the public interest. controlling 11.0 percent of total deposits in commer- On the basis of the record and for the reasons cial banks in the market. Bank ranks as the market's discussed above, the application is hereby approved. 12th largest commercial banking organization and The transaction shall not be consummated before the holds 2.9 percent of the total deposits in commercial thirtieth day following the effective date of this Order, banks in the market. Upon consummation of the or later than three months after the effective date of proposed merger, Applicant would become the mar- this Order, unless such period is extended for good ket's second largest commercial banking organization cause by the Board or by the Federal Reserve Bank of and would control 13.9 percent of the total deposits in Chicago, pursuant to delegated authority. commercial banks in the market. By order of the Board of Governors, effective Consummation of the proposed merger would elimi- September 28, 1982. nate some existing competition in the relevant banking market. However, in view of all of the facts of record, Voting for this action: Chairman Volcker and Governors including the relatively low level of market concentra- Martin, Partee, Teeters, Rice, and Gramley. Absent and not voting: Governor Wallich. 12. The four firm concentration ratio is 53.4 percent, and upon (Signed) JAMES MCAFEE, consummation, would increase to 56.3 percent. [SEAL] Associate Secretary of the Board. Legal Developments continued on next page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

676 Federal Reserve Bulletin • October 1982 ORDERS APPROVING APPLICATIONS UNDER THE BANK HOLDING COMPANY ACT AND BANK MERGER ACT By the Board of Governors During September 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) Cripple Creek Bancorporation, Inc., Bank of Cripple Creek, September 27, 1982 Cripple Creek, Colorado Cripple Creek, Colorado First City Bancorporation of Texas, Inc., First City Bank—East, N.A., September 7, 1982 Houston, Texas El Paso, Texas Mercantile Texas Corporation, Ashford Bank, September 17, 1982 Dallas, Texas Houston, Texas Texas Commerce Bancshares, Inc., Texas Commerce Bank-Greens Crossing, September 15, 1982 Houston, Texas N.A., Houston, 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 Affiliated Bankshares of Colora- Alameda National Bank, Kansas City August 27, 1982 do, Inc., Lakewood, Colorado Boulder, Colorado American Heritage Bancorp, Inc., American Heritage Bank, Kansas City August 23, 1982 El Reno, Oklahoma El Reno, Oklahoma Ashby Bancshares, Inc., First State Bank of Ashby, Minneapolis August 31, 1982 Ashby, Minnesota Ashby, Minnesota Belfield Bancshares, Inc., First National Bank of Belfield, Minneapolis September 1, 1982 Belfield, North Dakota Belfield, North Dakota B.O.A. Bancshares, Inc., Bank of Almeda, Dallas September 8, 1982 Houston, Texas Houston, Texas Cedar Valley Bankshares, Ltd., First Security Bank & Trust Chicago September 1, 1982 Charles City, Iowa Company, Charles City, Iowa Central Bancorporation, Inc., Central Bank of Chatfield, N.A., Kansas City August 30, 1982 Denver, Colorado Littleton, Colorado Central Colorado Company, Denver, Colorado C.C.B., Inc., Denver, Colorado Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 677 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Central Fidelity Banks, Inc., The Washington County National Richmond August 30, 1982 Richmond, Virginia Bank of Abingdon, Abingdon, Virginia Century Bank Shares, First State Bank of Lyman, Kansas City September 22, 1982 Lyman, Wyoming Lyman, Wyoming Citizens Bank Holding Company, Citizens State Bank of Finley, Minneapolis August 27, 1982 Finley, North Dakota Finley, North Dakota Columbia Bancshares, Inc., Columbia National Bank, St. Louis September 15, 1982 Columbia, Illinois Columbia, Illinois Dallas Guaranty Bancshares, Guaranty Bank, Dallas September 9, 1982 Inc., Dallas, Texas Dallas, Texas First & Merchants Corporation, The Wise County National Bank, Richmond September 7, 1982 Richmond, Virginia Wise, Virginia First Banc Group, Inc., Ashley State Bank, St. Louis September 10, 1982 Centralia, Illinois Ashley, Illinois The First State Bank of Centralia, Centralia, Illinois Hoyleton State and Savings Bank, Hoyleton, Illinois First Bancorporation of Ohio, The Twinsburg Banking Cleveland September 8, 1982 Akron, Ohio Company, Twinsburg, Ohio First Comanche Bancshares, Inc., First Comanche Bank, Dallas September 3, 1982 Comanche, Texas Comanche, Texas First National Columbus Ban- First National Bank and Trust Kansas City September 2, 1982 corp, Company, Columbus, Nebraska Columbus, Nebraska First Port Allen Bancshares, Inc., First National Bank of Port Allen, Atlanta August 27, 1982 Port Allen, Louisiana Port Allen, Louisiana First Republic Bancshares, Inc., First Republic Bank, Dallas September 16, 1982 Rayville, Louisiana Rayville, Louisiana Essex Iowa Bancorporation, Inc., The First National Bank of Chicago September 3, 1982 Essex, Iowa Essex, Essex, Iowa Follett Bancshares, Inc., The Follett National Bank, Dallas September 2, 1982 Follett, Texas Follett, Texas Glendive Bancorporation, Inc., First Fidelity Bank, Minneapolis August 30, 1982 Glendive, Montana Glendive, Montana Haskell Bancorporation, Inc., The First Bank of Haskell, Kansas City September 10, 1982 Haskell, Oklahoma Haskell, Oklahoma Humble Bancshares, Inc., Humble National Bank, Dallas September 20, 1982 Humble, Texas Humble, Texas Kersey Bancorp, Inc., Kersey State Bank, Kansas City September 1, 1982 Kersey, Colorado Kersey, Colorado The Magnolia State Corporation, Jasper County Bank, Atlanta August 27, 1982 Bay Springs, Mississippi Bay Springs, Mississippi Manchester Bancorp, Inc., First State Bank, Cleveland September 3, 1982 Manchester, Kentucky Manchester, Kentucky Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

678 Federal Reserve Bulletin • October 1982 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Maple Hill Bancshares, Inc., The Stockgrowers State Bank, Kansas City September 8, 1982 Maple Hill, Kansas Maple Hill, Kansas Nacogdoches Commercial Banc- Commercial National Bank in Dallas September 17, 1982 shares, Inc., Nacogdoches, Nacogdoches, Texas Nacogdoches, Texas Nicol Bankshares Corp., First Citibank of Olathe, Kansas City August 24, 1982 Olathe, Kansas Olathe, Kansas Noble Bank Holding Company, First State Bank of Red Wing, Minneapolis September 1, 1982 Inc., Red Wing, Minnesota Red Wing, Minnesota Northeast Bancorporation, Inc., First American State Bank of Minneapolis September 10, 1982 Minneapolis, Minnesota Sargeant, Sargeant, Minnesota North Side Bancorp, Inc., North Side Bank, Chicago September 16, 1982 Racine, Wisconsin Racine, Wisconsin North Side Bank of Caledonia, Caledonia, Wisconsin Palm Bancorp, The First National Bank of Philadelphia September 3, 1982 Palmerton, Pennsylvania Palmerton, Palmerton, Pennsylvania Peoples Bancshares, Ltd., K-S Banco, Inc., Chicago August 31, 1982 Waterloo, Iowa Waterloo, Iowa Plainview First National Banc- First National Bancshares, Inc., Texas September 2, 1982 shares, Inc., Plainview, Texas Plainview, Texas Schreiner Bancshares, Inc., Southwest National Bank, Dallas September 7, 1982 Kerrville, Texas Austin, Texas Security Bancshares, Inc., Security State Bank of Dunseith, Minneapolis September 2, 1982 Dunseith, North Dakota Dunseith, North Dakota 7L Corporation, Clearwater Beach Bank, Atlanta September 7, 1982 Tampa, Florida Clearwater, Florida First Florida Banks, Inc., Northeast Bank of Clearwater, Tampa, Florida Clearwater, Florida Union Bancshares, Inc., Union Bank & Trust Company, Atlanta September 10, 1982 Livingston, Tennessee Livingston, Tennessee Union Illinois Company, Columbia National Bank, St. Louis September 15, 1982 East St. Louis, Illinois Columbia, Illinois Union National Corporation, Keystone National Bank, Cleveland August 27, 1982 Mt. Lebanon, Pennsylvania Punxsutawney, Pennsylvania United Bancorporation, Inc., United Bank of Illinois, N.A., Chicago September 15, 1982 Rockford, Illinois Rockford, Illinois United Bank of Belvidere, Belvidere, Illinois United Bank of Southgate, Rockford, Illinois United Bancorporation, Inc., Rockford, Illinois S.B.A. Company, Rockford, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 679 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Oregon Corporation, Rockford, Illinois East Riverside Inc., Rockford, Illinois Valley Bancorp, Inc., Thirty-Three Venturers, Inc., Kansas City September 2, 1982 Hopkins, Missouri Hopkins, Missouri Webbers Falls Bancorp, Inc., Webbers Falls State Bank, Kansas City August 27, 1982 Webbers Falls, Oklahoma Webbers Falls, Oklahoma Western National Bancorpora- Western National Bank of Tulsa, Kansas City August 26, 1982 tion, Inc., Tulsa, Oklahoma Tulsa, Oklahoma Section 4 Nonbanking Reserve Effective Applicant company Bank date (or activity) First National Bancshares, Inc. Le Ann Corporation, Chicago September 13, 1982 East Lansing, Michigan East Lansing, Michigan Citizens and Southern Georgia Oglethorpe Loan Company, Atlanta August 31, 1982 Corporation, Savannah, Georgia Atlanta, Georgia Puget Sound Bancorp, Washington Mortgage Compa- San Francisco September 17, 1982 Tacoma, Washington ny, Inc., Seattle, Washington Washington Leasing Corporation and Affiliated Escrow, Inc., Seattle, Washington Sections 3 and 4 Nonbanking Reserve Effective Applicant Bank(s) company Bank date (or activity) GL & ML Limited, State Savings Bank, Aplington Insurance, Chicago September 17, 1982 Aplington, Iowa Aplington, Iowa Inc., Aplington, Iowa Panora Financial Mid Iowa, Inc., to engage in general in- Chicago September 24, 1982 Corp., Panora, Iowa surance activities in Panora, Iowa Panora State Bank, a town with a popu- Panora, Iowa lation of less than 5,000 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

680 Federal Reserve Bulletin • October 1982 ORDERS APPROVED UNDER BANK MERGER ACT By the Board of Governors Reserve Effective Applicant Bank(s) Bank date United Virginia Bank, The First National Bank Richmond September 7, 1982 Richmond, Virginia of Martinsville and Henry County, Fieldale, Virginia Citizens National Bank, New Market, Virginia PENDING CASES INVOLVING THE BOARD OF GOVERNORS* *This list of pending cases does not include suits Allen Wolfs on 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 Association of Data Processing Service Organiza- Circuit (two cases). tions, Inc., et al. v. Board of Governors, filed Bank Stationers Association, Inc., et al. v. Board of August 1982, U.S.C. A. for the District of Columbia. Governors, filed July 1981, U.S.D.C. for the North- The Philadelphia Clearing House Association, et al. v. ern District of Georgia. Board of Governors, filed July 1982, U.S.D.C. for Public Interest Bounty Hunters v. Board of Goverthe Eastern District of Pennsylvania. nors, et al., filed June 1981, U.S.D.C. for the Richter v. Board of Governors, et al., filed May 1982, Northern District of Georgia. U.S.D.C. for the Northern District of Illinois. Edwin F. Gordon v. John Heimann, et al., filed May Montgomery v. Utah, et al., filed May 1982, U.S.D.C. 1981, U.S.C.A. for the Fifth Circuit. for the District of Utah. First Bank & Trust Company v. Board of Governors, Wyoming Bancorporation v. Board of Governors, filed filed February 1981, U.S.D.C. for the Eastern Dis- May 1982, U.S.C.A. for the Tenth Circuit. trict of Kentucky. First Bancorporation v. Board of Governors, filed 9 to 5 Organization for Women Office Workers v. April 1982, U.S.C.A. for the Tenth Circuit. Board of Governors, filed December 1980, Charles G. Vick v. Paul A. Volcker, et al., filed March U.S.D.C. for the District of Massachusetts. 1982, U.S.D.C. for the District of Columbia. Securities Industry Association v. Board of Gover- Jolene Gustafson v. Board of Governors, filed March nors, et al., filed October 1980, U.S.D.C. for the 1982, U.S.C.A. for the Fifth Circuit. District of Columbia. Christian Educational Association, Inc. v. Federal Securities Industry Association v. Board of Gover- Reserve System, filed January 1982, U.S.D.C. for nors, et al., filed October 1980, U.S.C.A. for the the Middle District of Florida. District of Columbia. Option Advisory Service, Inc. v. Board of Governors, A. G. Becker, Inc. v. Board of Governors, et al., filed filed December 1981, U.S.C.A. for the Second October 1980, U.S.D.C. for the District of Colum- Circuit. bia. Edwin F. Gordon v. Board of Governors, et al., filed A. G. Becker, Inc. v. Board of Governors, et al., filed October 1981, U.S.C.A. for the Eleventh Circuit October 1980, U.S.C.A. for the District of Colum- (two consolidated cases). bia. Wendall Hall v. Board Governors, et al., filed Septem- A. G. Becker, Inc. v. Board of Governors, et al., filed ber 1981, U.S.D.C. for the Northern District of August 1980, U.S.D.C. for the District of Columbia. Georgia. Berkovitz, et al. v. Government of Iran, et al., filed June 1980, U.S.D.C. for the Northern District of California. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1 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 POLICY INSTRUMENTS 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 A27 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 outlays 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 • October 1982 SECURITIES MARKETS AND A56 Foreign branches of U.S. banks—Balance sheet CORPORATE FINANCE data A58 Selected U.S. liabilities to foreign official A36 New security issues—State and local institutions governments and corporations A37 Open-end investment companies—Net sales and asset position REPORTED BY BANKS IN THE UNITED STATES A37 Corporate profits and their distribution A38 Nonfinancial corporations—Assets and A58 Liabilities to and claims on foreigners liabilities A59 Liabilities to foreigners A38 Total nonfarm business expenditures on new A61 Banks' own claims on foreigners plant and equipment A62 Banks' own and domestic customers' claims on A39 Domestic finance companies—Assets and foreigners liabilities; business credit A62 Banks' own claims on unaffiliated foreigners A63 Claims on foreign countries—Combined domestic offices and foreign branches REAL ESTATE A40 Mortgage markets REPORTED BY NONBANKING BUSINESS A41 Mortgage debt outstanding ENTERPRISES IN THE UNITED STATES A64 Liabilities to unaffiliated foreigners CONSUMER INSTALLMENT CREDIT A65 Claims on unaffiliated foreigners A42 Total outstanding and net change A43 Extensions and liquidations SECURITIES HOLDINGS AND TRANSACTIONS A66 Foreign transactions in securities FLOW OF FUNDS A67 Marketable U.S. Treasury bonds and notes— Foreign holdings and transactions A44 Funds raised in U.S. credit markets A45 Direct and indirect sources of funds to credit markets INTEREST AND EXCHANGE RATES A67 Discount rates of foreign central banks Domestic Nonfinancial Statistics A68 Foreign short-term interest rates A68 Foreign exchange rates A46 Nonfinancial business activity—Selected measures A46 Output, capacity, and capacity utilization A69 Guide to Tabular Presentation, A47 Labor force, employment, and unemployment Statistical Releases, and Special A48 Industrial production—Indexes and gross value Tables A50 Housing and construction A51 Consumer and producer prices A52 Gross national product and income Special Tables A53 Personal income and saving A70 Commercial bank assets and liabilities, June 30, 1982 International Statistics A76 Assets and liabilities of U.S. branches and agencies of foreign banks, June 30, 1982 A54 U.S. international transactions—Summary A55 U.S. foreign trade A55 U.S. reserve assets A55 Foreign official assets held at Federal Reserve Banks 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 Apr. May June July Aug. Monetary and credit aggregates (annual rates of change, seasonally adjusted in percent)1 Reserves of depository institutions 1 Total 3.4 3.1 7.5 .6 2.4 2.2 2.2 -1.6 8.8 2 Required 2.4 3.5 7.1 1.1 5.2 -.5 3.8 -1.8 8.9 3 Nonborrowed 7.5 10.9 -.9 4.2 2.1 17.0 -.5 14.8 14.5 4 Monetary base2 4.1' 3.8' 7.8 7.1 9.2' 8.6 7.7 2.8 6.8 Concepts of money and liquid assets3 5 Ml .3 5.7 10.4 3.3 11.0 -2.4 -.3 -.3' 10.4 6 M2 8.3 8.9 9.8 9.5 10.0 10.7 6.6 9.7 14.2 7 M3 11.2 9.3 8.7 10.7 12.0 11.3 8.8' 12.6' 18.4 8 L 11.9 10.7 10.3 11.9 11.9' 13.0 10.6 n.a. n.a. Time and savings deposits Commercial banks 9 Total 18.4 8.3 7.5 17.1' 15.7 18.1 17.3' 22.9 16.3 10 Savings4 -22.7 -11.9 8.7 2.0 -.7 -1.5 -3.7' -22.5' -8.4 11 Small-denomination time5 24.3 20.8 9.7 23.8 28.8 20.8 15.8 29.1 20.3 12 Large-denomination time6 36.0 5.4 4.6 17.0' 8.7 24.0 29.6' 36.4' 22.7 13 Thrift institutions7 2.6 2.7 3.1 6.6 5.3 9.9 3.8 10.4' 5.8 14 Total loans and securities at commercial banks8 8.7 3.6 2.6 8.6 8.8 8.2 5.6 6.4 6.2 1981 1982 1982 Q4 Q1 Q2 Q3 May June July Aug. Sept. Interest rates (levels, percent per annum) 15 S F h e o d r e t- r t a e l r m f un r d a s t 9 e s 13.59 14.23 14.52 11.01 14.45 14.15 12.59 10.12 16 Discount window borrowing10 13.04 12.00 12.00 10.83 12.00 12.00 11.81 10.68 17 Treasury bills (3-month market yield)' 11.75 12.81 12.42 9.32 12.09 12.47 11.35 18 Commercial paper (3-month)11' .... 13.04 13.81 13.81 11.15 13.42 13.96 12.94 Long-term rates Bonds 19 U.S. government13 14.14 14.27 13.74 12.94 13.46 14.18 13.76 12.91 20 State and local government14 12.54 13.02 12.33 11.39 11.95 12.45 12.28 11.23 21 Aaa utility (new issue)15 15.67 15.71 15.73 14.25 15.22 15.92 15.61 13.95 22 Conventional mortgages16 17.33 17.10 16.63 16.50 16.75 16.50 15.40 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 reserves of depository institutions reflect the transitional L: M3 plus other liquid assets such as term Eurodollars held by U.S. residents phase-in of reserve requirements as specified in the Monetary Control Act of 1980. other than banks, bankers acceptances, commercial paper. Treasury bills and other 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 Financial Statistics • October 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 July Aug. Sept. Aug. 18 Aug. 25 Sept. 1 Sept. 8 Sept. 15 Sept. 22 Sept. 29 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 153,468 153,903 152,834 154,854 153,804 153,195 152,702 153,044 153,823 152,755 2 U.S. government securities1 132,400 132,787 131,920 133,776 133,282 132,991 132,092 131,273 132,089 131,736 3 Bought outright 131,540 132,666 131,436 133,607 133,282 132,821 132,092 131,020 131,319 131,226 4 Held under repurchase agreements 860 121 484 169 0 170 0 253 770 510 5 Federal agency securities 9,223 9,004 9,042 9,006 8,955 8,988 8,954 8,973 9,109 9,014 6 Bought outright 9,001 8,969 8,951 8,955 8,955 8,955 8,954 8,950 8,949 8,949 7 Held under repurchase agreements 222 35 91 51 0 33 0 23 160 65 8 Acceptances 300 56 159 66 0 81 0 94 330 142 9 Loans 669 506 976 482 609 507 948 1,330 810 749 10 Float 1,972 2,056 1,633 1,909 1,858 1,556 1,918 2,292 2,282 1,764 11 Other Federal Reserve assets 8,904 9,494 9,104 9,615 9,100 9,073 8,791 9,084 9,203 9,350 12 Gold stock 11,149 11,148 11,148 11,148 11,148 11,148 11,148 11,148 11,148 11,148 13 Special drawing rights certificate account... 3,895 4,018 4,118 4,018 4,018 4,018 4,018 4,018 4,218 4,218 14 Treasury currency outstanding 13,785 13,786 13,786 13,786 13,786 13,786 13,786 13,786 13,786 13,786 ABSORBING RESERVE FUNDS 15 Currency in circulation 147,850 148,218 148,631 148,763 148,098 147,783 149,070 149,471 148,425 147,642 16 Treasury cash holdings 429 416 415 414 416 417 413 413 413 419 Deposits, other than reserves, with Federal Reserve Banks 17 Treasury 3,319 3,310 4,062 2,973 2,872 3,157 3,776 3,468 3,611 4,489 18 Foreign 311 314 264 283 295 346 247 242 248 287 19 Other 615 646 509 623 576 552 520 582 547 392 20 Required clearing balances 220 234 275 234 236 247 268 275 291 296 21 Other Federal Reserve liabilities and capital 5,280 5,246 4,836 5,284 5,210 5,030 4,630 4,952 4,897 4,882 22 Reserve accounts2 24,273 24,471 22.894 25,233 25,052 24,614 22,729 22,592 24,543 23,501 End-of-month figures Wednesday figures 1982 1982 July Aug. Sept. Aug. 18 Aug. 25 Sept. 1 Sept. 8 Sept. 15 Sept. 22 Sept. 29 SUPPLYING RESERVE FUNDS 23 Reserve Bank credit outstanding 153,768 153,643 156,519 154,669 156,689 155,223 152,659 154,865 153,665 151,850 24 U.S. government securities1 132.640 132,858 134,393 133,189 134,738 132,883 130,683 129,645 131,205 130,305 25 Bought outright 132,640 131,669 130,591 133,189 134,738 132,883 130,683 129,645 131,205 130,305 26 Held under repurchase agreements 0 1,189 3,802 0 0 0 0 0 0 0 27 Federal agency securities 9,001 9,184 9,950 8,955 8,955 8,954 8,954 8,949 8,949 8,949 28 Bought outright 9,001 8,955 8,949 8,955 8,955 8,954 8,954 8,949 8,949 8,949 29 Held under repurchase agreements 0 229 1,001 0 0 0 0 0 0 0 30 Acceptances 0 565 813 0 0 0 0 0 0 0 31 Loans 458 449 1,123 935 1,637 1,356 482 3,798 1,965 1,154 32 Float 1,713 1,446 567 2,477 2,156 3,201 3,170 3,315 2,110 1,937 33 Other Federal Reserve assets 9,956 9,141 9,673 9,113 9,203 8,829 9,370 9,158 9,436 9,505 34 Gold stock 11,149 11,148 11,148 11,148 11,148 11,148 11,148 11,148 11,148 11,148 35 Special drawing rights certificate account... 4,018 4,018 4,218 4,018 4,018 4,018 4.018 4,018 4,218 4,218 36 Treasury currency outstanding 13,786 13,786 13.786 13,786 13,786 13,786 13,786 13,786 13,786 13,786 ABSORBING RESERVE FUNDS 37 Currency in circulation 147,051 148,310 148,110 148,824 148,132 148,578 150,064 149,343 148,241 148,178 38 Treasury cash holdings 418 418 423 414 416 415 410 413 413 421 Deposits, other than reserves, with Federal Reserve Banks 39 Treasury 3,275 3,234 10,975 3,147 3,541 3,460 4,041 3,565 3,648 8,320 40 Foreign 982 348 396 310 319 344 226 305 235 295 41 Other 663 502 405 587 598 563 534 573 410 386 42 Required clearing balances 221 247 300 234 237 247 259 268 279 296 43 Other Federal Reserve liabilities and capital 5,359 4,791 5,047 5,084 5,042 4,531 4,673 4,716 4,725 4,669 44 Reserve accounts2 24,752 24,745 20,015 25,021 27,356 26,037 21,404 24,634 24,866 18,437 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 1981 1982 Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept.? 1 Reserve balances with Reserve Banks1.... 26,163 26,721 25,963 24,254 24,565 24,207 24,031 24,273 24,471 22,852 2 Total vault cash (estimated) 19,538 20,284 19,251 18,749 18,577 19,048 19,318 19,448 19,500 19,914 3 Vault cash at institutions with required reserve balances2 13,577 14,199 13,082 12,663 12.709 12,972 13,048 13,105 13,188 13,754 4 Vault cash equal to required reserves at other institutions 2,178 2,290 2,235 2,313 2.284 2,373 2,488 2,486 2,518 2,832 5 Surplus vault cash at other institutions3 . 3,783 3,795 3,934 3,773 3,584 3,703 3,782 3,857 3,794 3,328 6 Reserve balances + total vault cash4 45,701 47,005 45,214 43.003 43,142 43,255 43,349 43,721 43,971 42,766 7 Reserve balances + total vault cash used to satisfy reserve requirements4-5 41,918 43,210 41,280 39,230 39,558 39,552 39,567 39,864 40,177 39,438 8 Required reserves (estimated) 41,606 42,785 40,981 38,873 39,284 39,192 39,257 39,573 39,866 39,574 9 Excess reserve balances at Reserve Banks4-6 312 425 299 357 274 360 310 291 311 -136 10 Total borrowings at Reserve Banks 642 1.526 1,713 1,611 1,581 1,105 1,205 669 510 976 11 Seasonal borrowings at Reserve Banks 53 75 132 174 167 237 239 225 119 102 12 Extended credit at Reserve Banks.... 149 197 232 309 245 177 103 46 94 118 Weekly averages of daily figures for week ending 1982 July 28 Aug. 4 Aug. 11 Aug. 18 Aug. 25 Sept. 1 Sept. 8 Sept. 15 Sept. 22P Sept. 29P 13 Reserve balances with Reserve Banks1.... 24,148 23,955 23,302 25,233 25,052 24,614 22,729 22,592 24,542 23,512 14 Total vault cash (estimated) 20,252 19,846 20,172 19,227 18,834 19,579 20,006 20,541 18,745 20,418 15 Vault cash at institutions with required reserve balances2 13,623 13,520 13,372 13,003 12,822 13,397 13,476 13,734 13,320 14,200 16 Vault cash equal to required reserves at other institutions 2,597 2,520 2,814 2,397 2,429 2,417 3,179 3,229 2,404 2,879 17 Surplus vault cash at other institutions3 . 4,032 3,806 3,986 3,827 3,583 3,765 3,351 3,578 3,021 3,339 18 Reserve balances + total vault cash4 44,400 43,801 43,474 44,460 43,886 44,193 42,735 43,133 43,287 4433,,993300 19 Reserve balances + total vault cash used to satisfy reserve requirements4-5 40,368 39,995 39,488 40,633 40,303 40,428 39,384 39,555 40,266 40,591 20 Required reserves (estimated) 40,057 39,701 39,162 40,314 40,043 40,066 38,719 39,235 40,002 40,279 21 Excess reserve balances at Reserve Banks4-6 311 294 326 319 260 362 665 320 264 312 22 Total borrowings at Reserve Banks 548 679 369 482 609 507 948 1,330 809 749 23 Seasonal borrowings at Reserve Banks 188 166 133 131 94 95 106 89 100 112 24 Extended credit at Reserve Banks.... 24 20 64 123 118 116 116 116 118 124 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 Financial Statistics • October 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 Aug. 4 Aug. 11 Aug. 18 Aug. 25 Sept. 1 Sept. 8 Sept. 15 Sept. 22 Sept. 29 One day and continuing contract 1 Commercial banks in United States 56,000 57,841 55,543 53,587 52,371 58,495 60,900 54,117 50,972 2 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 22,651' 22,494r 22,172 22,720 22,401 21,308 22,967 24,836 24,267 3 Nonbank securities dealers 5,023 5,932 4,996 4,800 4,989 5,125 4.886 5,655 4,713 4 All other 22,441 21,577 22,031 22,766 21,586 22,192 21.615 21,240 20,731 All other maturities 5 Commercial banks in United States 4,730 4.448 4,549 4,622 4.833 5,020 5,126 4,454 4,390 6 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 8,432 8,718 8,761 8,573 8,491 8,354 8.515 8.480 8,171 7 Nonbank securities dealers 4,306 4,567 4,486 4,620 4,938 4,281 4,634 5,025 5,616 8 All other 9,924 9,672 10,274 9,574 9,064 8,879 9,068 9,059 9,284 MEMO: Federal funds and resale agreement loans in maturities of one day or continuing contract 9 Commercial banks in United States 24,491 23,906 23,823 25,607 26,070 26,378 27,210 25,451 24,214 10 Nonbank securities dealers 4,724 4,408' 4,520r 5,100 4,908 4,796 5,257 4,681 4,576 1. Banks with assets of $1 billion or more as of Dec. 31, 1977. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A7 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per annum Current and previous levels Extended credit1 Short-term adjustment credit and seasonal credit First 60 days Next 90 days Federal Reserve of borrowing of borrowing After 150 days Bank Effective date for current rates Rate on Effective Previous Rate on Previous Rate on Previous Rate on Previous 9/30/82 date rate 9/30/82 rate 9/30/82 rate 9/30/82 rate Boston 8/27/82 10.5 12.5 8/27/82 New York... 8/27/82 8/27/82 Philadelphia . 8/27/82 8/27/82 Cleveland 8/30/82 8/30/82 Richmond 8/27/82 8/27/82 Atlanta 8/27/82 8/27/82 Chicago 8/27/82 8/27/82 St. Louis 8/27/82 8/27/82 Minneapolis . 8/27/82 8/27/82 Kansas City . 8/27/82 8/27/82 Dallas 8/27/82 8/27/82 San Francisco 8/27/82 10.5 10.5 11.5 8/27/82 Range of rates in recent years2 Range (or F.R. Range (or F.R. Range (or F.R. Effective date A le ll v e F l) . — R. Ba of n k Effective date A le ll v e F l) . — R. Ba o n f k Effective date A le ll v e F l) . — R. Ba o n f k Banks N.Y. Banks N.Y. Banks N.Y. 71/5 6-6'/! In effect Dec. 31, 1973. 7V5 1978— Jan. 9. 61/5 6V5 1980— June 13. 11-12 11 1974— Apr. 25 7V5-8 20. 6V5 16. 11 11 3 0 8 May 11. 61/2-7 7 July 28. 10-11 10 Dec. 9 7V734/-48 73/4 12. 7 7 29. 10 10 16 73/4 July 3. 7-71/4 7711//44 Sept. 26. 11 11 10. 71/4 Nov. 17. 12 12 1975— Jan. 6 7'/4-73/4 73/4 Aug. 21. 73/4 73/4 Dec. 5. 12-13 13 10 71/4-73/4 7711//44 Sept. 22. 8 8 8. 13 13 24 71/4 Oct. 2160. . 881-8/2'/5 8811//55 Feb. 5 63/4-7'/4 63/4 91/5 1981— May 5. 13-14 14 7 61/643-6/4> /4 63/4 Nov. 1. 8V5-9'/5 8. 14 14 Mar. 10 61/4 3. 9V5 9V5 Nov. 2. 13-14 13 14 61/4 61/4 6. 13 13 May 16 6-61/4 6 1979— July 20. 10 10 Dec. 4. 12 12 23 6 6 Aug. 17. 10-101/5 10V5 1976— Jan. 19 51/2-6 551V/i 5 20. 101/5 101/5 1982— July 20. 11.5-12 11.5 23 5V5 51/4 Sept. 19. 101/5-11 11 23. 11.5 11.5 Nov. 22 51/541-5/14/! 21. 11 11 Aug. 2. 11-11.5 11 26 51/4 Oct. 8. 11-12 12 3. 11 11 10. 12 12 16. 10.5 10.5 1977— Aug. 30 5V4-53/4 5513//44 27. 10-10.5 10 3 1 51/4-53/4 53/4 1980— Feb. 15. 12-13 13 30. 10 10 Sept. 2 53/4 19. 13 13 Oct. 26 6 6 May 29. 12-13 13 30. 12 12 In effect Sept. 30, 1982 10 10 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 tor 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 NonfinancialS tatistics • October 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 accounts6-7 0-2 7 12/30/76 3 11/13/80 2-10 91,fi 12/30/76 1122 1111//1133//8800 10-100 113/4 12/30/76 100-400 123/4 12/30/76 Nonpersonal time deposits8 Over 400 16'/4 12/30/76 By original maturity Less than 3 Vi years 3 4/29/82 TTiimmee aanndd ssaavviinnggss22,,33 33VV22 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 m 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 IVi 1/8/76 4 years or more 1 10/30/75 1. For changes in reserve requirements beginning 1963, see Board's Annual government and federal agency securities, federal funds borrowings from non- Statistical Digest, 1971-1975 and for prior changes, see Board's Annual Report for member institutions, and certain other obligations. In general, the base for the 1976, table 13. Under provisions of the Monetary Control Act, depository insti- marginal reserve requirement was originally the greater of (a) $100 million or (b) tutions include commercial banks, mutual savings banks, savings and loan asso- the average amount of the managed liabilities held by a member bank, Edge ciations, credit unions, agencies and branches of foreign banks, and Edge Act corporation, or family of U.S. branches and agencies of a foreign bank for the two corporations. statement weeks ending Sept. 26, 1979. For the computation period beginning Mar. 2. Requirement schedules are graduated, and each deposit interval applies to 20,1980, the base was lowered by (a) 7 percent or (b) the decrease in an institution's that part of the deposits of each bank. Demand deposits subject to reserve re- U.S. office gross loans to foreigners and gross balances due from foreign offices quirements were gross demand deposits minus cash items in process of collection of other institutions between the base period (Sept. 13-26, 1979) and the week and demand balances due from domestic banks. ending Mar. 12,1980, whichever was greater. For the computation period beginning The Federal Reserve Act as amended through 1978 specified different ranges of May 29,1980, the base was increased by 7V5 percent above the base used to calculate requirements for reserve city banks and for other banks. Reserve cities were des- the marginal reserve in the statement week of May 14-21, 1980. In addition, ignated under a criterion adopted effective Nov. 9, 1972, by which a bank having beginning Mar. 19, 1980, the base was reduced to the extent that foreign loans and net demand deposits of more than $400 million was considered to have the character balances declined. of business of a reserve city bank. The presence of the head office of such a bank 5. For existing nonmember banks and thrift institutions at the time of impleconstituted designation of that place as a reserve city. Cities in which there were mentation of the Monetary Control Act, the phase-in period ends Sept. 3, 1987. Federal Reserve Banks or branches were also reserve cities. Any banks having net For existing member banks the phase-in period is about three years, depending on demand deposits of $400 million or less were considered to have the character of whether their new reserve requirements are greater or less than the old requirebusiness of banks outside of reserve cities and were permitted to maintain reserves ments. For existing agencies and branches of foreign banks, the phase-in ended at ratios set for banks not in reserve cities. Aug. 12, 1982. New institutions have a two-year phase-in beginning with the date Effective Aug. 24, 1978, the Regulation M reserve requirements on net balances that they open for business, except for those institutions having total reservable due from domestic banks to their foreign branches and on deposits that foreign liabilities of $50 million or more. branches lend to U.S. residents were reduced to zero from 4 percent and 1 percent 6. Transaction accounts include all deposits on which the account holder is respectively. The Regulation D reserve requirement on borrowings from unrelated permitted to make withdrawals by negotiable or transferable instruments, payment banks abroad was also reduced to zero from 4 percent. orders of withdrawal, and telephone and preauthorized transfers (in excess of three Effective with the reserve computation period beginning Nov. 16, 1978, domestic per month) for the purpose of making payments to third persons or others. deposits of Edge corporations were subject to the same reserve requirements as 7. The Monetary Control Act of 1980 requires that the amount of transaction deposits of member banks. accounts against which the 3 percent reserve requirement will apply be modified 3. Negotiable order of withdrawal (NOW) accounts and time deposits such as annually to 80 percent of the percentage increase in transaction accounts held by Christmas and vacation club accounts were subject to the same requirements as all depository institutions on the previous June 30. At the beginning of 1982 the savings deposits. amount was accordingly increased from $25 million to $26 million. The average reserve requirement on savings and other time deposits before 8. In general, nonpersonal time deposits are time deposits, including savings implementation of the Monetary Control Act had to be at least 3 percent, the deposits, that are not transaction accounts and in which the beneficial interest is minimum specified by law. held by a depositor that is not a natural person. Also included are certain trans- 4. Effective Nov. 2, 1978, a supplementary reserve requirement of 2 percent was ferable time deposits held by natural persons, and certain obligations issued to imposed on large time deposits of $100,000 or more, obligations of affiliates, and depository institution offices located outside the United States. For details, see ineligible acceptances. This supplementary requirement was eliminated with the section 204.2 of Regulation D. maintenance period beginning July 24, 1980. The category of time deposit authorized by the Depository Institutions Dereg- Effective with the reserve maintenance period beginning Oct. 25, 1979, a mar- ulation Committee (DIDC), effective Sept. 1, 1982 (original maturity or required ginal reserve requirement of 8 percent was added to managed liabilities in excess notice period of 7 to 31 days, required minimum deposit balance of $20,000, and of a base amount. This marginal requirement was increased to 10 percent beginning ceiling rate tied to the 91-day Treasury bill rate), is classified as a time deposit for Apr. 3, 1980, was decreased to 5 percent beginning June 12, 1980, and was reduced reserve requirement purposes. to zero beginning July 24, 1980. Managed liabilities are defined as large time deposits. Eurodollar borrowings, repurchase agreements against U.S. NOTE. Required reserves must be held in the form of deposits with Federal Reserve Banks or vault cash. After implementation of the Monetary Control Act, nonmembers may maintain reserves on a pass-through basis with certain approved institutions. NOTES TO TABLE 1.16 20. Effective May 1, 1982, depository institutions were authorized to offer ne- 18. Between Jan. 1, 1980, and Aug. 1, 1981, commercial banks, and thrifts were gotiable or nonnegotiable time deposits with a minimum original maturity of V/2 authorized to offer variable ceiling nonnegotiable time deposits with no required years or more that are not subject to interest rate ceilings. Such time deposits have minimum denomination and with maturities of 2Vi years or more. Effective Jan. no minimum denomination, but must be made available in a $500 denomination. 1, 1980, the maximum rate for commercial banks was 3A percentage point below Additional deposits may be made to the account during the first year without the average yield on 2V4 year U.S. Treasury securities; the ceiling rate for thrifts extending its maturity. was '/4 percentage point higher than that for commercial banks. Effective Mar. 1, NOTE. Before Mar. 31, 1980, the maximum rates that could be paid by federally 1980, a temporary ceiling of ll3/4 percent was placed on these accounts at com- insured commercial banks, mutual savings banks, and savings and loan associations mercial banks and 12 percent on these accounts at savings and loans. Effective were established by the Board of Governors of the Federal Reserve System, the June 2, 1980, the ceiling rates for these deposits at commercial banks and savings Board of Directors of the Federal Deposit Insurance Corporation, and the Federal and loans was increased Vi percentage point. The temporary ceiling was retained, Home Loan Bank Board under the provisions of 12 CFR 217, 329, and 526 reand a minimum ceiling of 9.25 percent for commercial banks and 9.50 percent for spectively. Title II of the Depository Institutions Deregulation and Monetary Conthrifts was established. trol Act of 1980 (P.L. 96-221) transferred the authority of the agencies to establish 19. Effective Dec. 1, 1981, depository institutions were authorized to offer time maximum rates of interest payable on deposits to the Depository Institutions Dedeposits not subject to interest rate ceilings when the funds are deposited to the regulation Committee. The maximum rates on time deposits in denominations of credit of, or in which the entire beneficial interest is held by, an individual pursuant $100,000 or more with maturities of 30-89 days were suspended in June 1970; such to an IRA agreement or Keogh (H.R. 10) plan. Such time deposits must have a deposits maturing in 90 days or more were suspended in May 1973. For information minimum maturity of 18 months, and additions may be made to the time deposit regarding previous interest rate ceilings on all types of accounts, see earlier issues at any time before its maturity without extending the maturity of all or a portion of the FEDERAL RESERVE BULLETIN, the Federal Home Loan Bank Board Journal, of the balance of the account. 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 September 30, 1982 Previous maximum In effect September 30, 1982 Previous maximum Effective Effective Effective Effective date date date date 2 1 N Sa e v g i o n t g ia s ble order of withdrawal accounts 2 .. 5 5 1 1 / / 4 4 12/ 7 3 / 1 1 / / 8 7 0 9 7 1 / / 1 1/ / 7 7 4 3 5 5' ' / / 4 5 12 7 /3 / 1 1 / / 8 7 0 9 5 51 A 1 o /1 /74 Time accounts 3 1 4 8 9 5 6 7 3 0 9 6 8 4 F 2 2 1 1 0 Y i 4 y x t t t t i o o - o o e d e 8 d t a a 9 2 8 2 6 o y r V s c s d y y y 4 i e e e o e a t i y j o l a a r a y i e e r r r n a s m s s s a 1 g ' r r 7 8 8 s o s v r r e 7 a 7 e a t e r 8 s by maturity 4 6 5 6 7 I 7 5V 1 V 3 3 V /4 / / i 4 4 4 2 12 > 7 7 6 / 81 1 2 / / / / / 1 1 1 3 1 1 / / / / / / / 1 7 7 7 7 7 7 4 3 3 8 9 3 / 80 :6) 5 55 7 5 5 V '/ 3 V % 4 4 / 4 i 1 1 1 1 7 7 / 1 / / 2 2 2 / / / 1 1 1 1 1 1 / / / / / / 7 7 7 7 7 7 0 3 0 0 3 3 6 8 7 6 6 7 ( V V 6 3 % ) 5 / 4 i 12 1 6 / 1 1 2 O ( / / / 1 3 1 1 ') / / / / 7 7 8 7 4 8 0 3 (6) 6 7 5 5 V 3 3 / / i 4 4 i 1 1 1 i / / / / 2 2 2 ( 1 > 1 1 1 / ) / / / 7 7 7 7 3 0 0 0 11 Issue m d a t t o u r g i o ti v e e s) r n 1 m 0 ental units (all 8 6/1/78 73/4 12/23/74 73/4 12/23/74 12 IRAs o r a n m d o K re e ) o ™ eh n (H.R. 10) plans (3 years 8 6/1/78 73/4 7/6/77 6/1/78 73/4 7/6/77 1 1 4 3 S 9 7 p 1 -t e - o c d i a 3 a y l 1 - t d v i a m a r y e i a t b d im l e e p e o c d s e i i e t l p i s n 1 o 3 g s it r s a 1 t 2 e s by maturity o ( 1 12 3 ) C n 2) o o C1 1 3 2 5 ) 15 6-month money market time deposits 14... 15 (,5 1 1 6 7 2 1 2 V - i m y o e n ar th s t a o l l le s s a s v e th rs a n c e 3 r t V if i i y c e at a e r s s 17 o(18 ) (. 1 8) 6 ( ( 1 ,7 6 (1 17 6 ) O (18 ) Accounts with no ceiling rates 18 IRAs and Keogh (H.R. 10) plans (18 (19) (19) (19) (19) 19 3Vi y m ea o r n s th o s r m or o m re o t r i e m ) e 1 9 deposits 20 n (20) (20) (2°) C) 1. July 1, 1973, for mutual savings banks; July 6, 1973, for savings and loans. auctions. The maximum allowable rates in Sept. (in percent) for commercial banks 2. For authorized states only. Federally insured commercial banks, savings and were as follows: Sept. 8, 8.565; Sept. 14, 8.161; Sept. 21, 7.849; Sept. 28, 7.801; loan associations, cooperative banks, and mutual savings banks in Massachusetts and for thrifts Sept. 8, 8.565; Sept. 14, 8.161; Sept. 21, 7.849; Sept. 28, 7.80. f.nd New Hampshire were first permitted to offer negotiable order of withdrawal 14. Must have a maturity of exactly 26 weeks and a minimum denomination of (NOW) accounts on Jan. 1, 1974. Authorization to issue NOW accounts was ex- $10,000, and must be nonnegotiable. tended to similar institutions throughout New England on Feb. 27, 1976, in New 15. Commercial banks and thrift institutions were authorized to offer money York State on Nov. 10, 1978, and in New Jersey on Dec. 28, 1979 and to similar market time deposits effective June 1, 1978. These deposits have a minimum deinstitutions nationwide effective Dec. 31, 1980. nomination requirement of $10,000 and a maturity of 26 weeks. The ceiling rate 3. For exceptions with respect to certain foreign time deposits see the BULLETIN of interest on these deposits is indexed to the discount rate (auction average) on for October 1962 (p.-1279), August 1965 (p. 1084), and February 1968 (p. 167). most recently issued 26-week U.S. Treasury bills. Interest on these certificates may 4. Effective Nov. 10, 1980, the minimum notice period for public unit accounts not be compounded. Effective for all 6-month money market certificates issued at savings and loan associations was decreased to 14 days and the minimum maturity beginning Nov. 1, 1981, depository institutions may pay rates of interest on these period for time deposits at savings and loan associations in excess of $100,000 was deposits indexed to the higher of (1) the rate for 26-week Treasury bills established decreased to 14 days. Effective Oct. 30, 1980, the minimum maturity or notice immediately before the date of deposit (bill rate) or (2) the average of the four period for time deposits was decreased from 30 to 14 days at mutual savings banks. rates for 26-week Tresury bills established for the 4 weeks immediately before 5. Effective Oct. 30, 1980, the minimum maturity or notice period for time the date of deposit (4-week average bill rate). Ceilings are determined as follows: deposits was decreased from 30 to 14 days at commercial banks. 6. No separate account category. Bill rate or 4-week Commercial bank ceiling 7. No minimum denomination. Until July 1, 1979, a minimum of $1,000 was average bill rate required for savings and loan associations, except in areas where mutual savings 7.50 percent or below 7.75 percent banks permitted lower minimum denominations. This restriction was removed for Above 7.50 percent '/4 of 1 percentage point plus the higher of deposits maturing in less than 1 year, effective Nov. 1, 1973. the bill rate or 4-week average bill rate 8. No minimum denomination. Until July 1, 1979, the minimum denomination was $1,000 except for deposits representing funds contributed to an individual Thrift ceiling retirement account (IRA) or a Keogh (H.R. 10) plan established pursuant to the 7.25 percent or below 7.75 percent Internal Revenue Code. The $1,000 minimum requirement was removed for such Above 7.25 percent, but below '/i of 1 percentage point plus the higher of accounts in December 1975 and November 1976 respectively. 8.50 percent the bill rate or 4-week average bill rate 9. Between July 1, 1973, and Oct. 31, 1973, certificates maturing in 4 years or 8.50 percent or above, but below 9 percent more with minimum denominations of $1,000 had no ceiling; however, the amount 8.75 percent of such certificates that an institution could issue was limited to 5 percent of its 8.75 percent or above Vi of 1 percentage point plus the higher of total time and savings deposits. Sales in excess of that amount, as well as certificates the bill rate or 4-week average bill rate of less than $1,000, were limited to the 6Vz percent ceiling on time deposits maturing in 2Vi years or more. Effective Nov. 1,1973, ceilings were reimposed on certificates The maximum allowable rates in Sept. for commercial banks and thrifts based on maturing in 4 years or more with minimum denomination of $1,000. There is no the bill rate were as follows: Sept. 8, 9.855; Sept. 14, 9.954; Sept. 21, 9.693; Sept. limitation on the amount of these certificates that banks can issue. 28, 9.446; and based on the 4-week average bill rate were as follows: Sept. 8, 9.79; 10. Accounts subject to fixed-rate ceilings. See footnote 8 for minimum denom- Sept. 14, 9.76; Sept. 21, 9.874; Sept. 28, 9.737 ination requirements. 16. Effective Oct. 1, 1981, depository institutions are authorized to issue all 11. Effective Jan. 1, 1980, commercial banks are permitted to pay the same rate savers certificates (ASCs) with a 1-year maturity and an annual investment yield as thrifts on IRA and Keogh accounts and accounts of governmental units when equal to 70 percent of the average investment yield for 52-week U.S. Treasury bills such deposits are placed in the new 2V£-year or more variable-ceiling certificates as determined by the auction of 52-week Treasury bills held immediately before or in 26-week money market certificates regardless of the level of the Treasury bill the calendar week in which the certificate is issued. A maximum lifetime exclusion rate. of $1,000 ($2,000 on a joint return) from gross income is generally authorized for 12. Effective Sept. 1, 1982, depository institutions are authorized to issue non- interest income from ASCs. The annual investment yield for ASCs issued in Sept. negotiable time deposits of $20,000 or more with a maturity or required notice (in percent) was as follows: Sept.5, 8.15. period of 7 to 31 days. The maximum rate of interest payable by thrift institutions 17. Effective Aug. 1, 1981, commercial banks may pay interest on any variable is the rate established and announced (auction average on a discount basis) for ceiling nonnegotiable time deposit with an original maturity of 2Vi years to less U.S. Treasury bills with maturities of 91 days at the auction held immediately than 4 years at a rate not to exceed Vi of 1 percent below the average 2V5-year before the date of deposit or renewal ("bill rate"). Commercial banks may pay yield for U.S. Treasury securities as determined and announced by the Treasury the bill minus 25 basis points. The interest rate ceiling is suspended when the bill Department immediately before the date of deposit. Effective May 1, 1982, the rate is 9 per cent or below for the four most recent auctions held before the date maximum maturity for this category of deposits was reduced to less than 3Vi years. of deposit or renewal. The maximum allowable rate from Sept. 1 through Sept. 7 Thrift institutions may pay interest on these certificates at a rate not to exceed the was 8.604 for commercial banks and 8.354 for thrifts. The interest rate ceiling was average 2V5-year yield for Treasury securities as determined and announced by the suspended for the remaining weeks in September. Treasury Department immediately before the date of deposit. If the announced 13. Effective May 1, 1982, depository institutions were authorized to offer time average 2Vi-year yield for Treasury securities is less than 9.50 percent, commercial deposits that have a minimum denomination of $7,500 and a maturity of 91 days. banks may pay 9.25 percent and thrift institutions 9.50 percent for these deposits. The ceiling rate of interest on these deposits is indexed to the discount rate (auction These deposits have no required minimum denomination, and interest may be average) on most recently issued 91-day Treasury bills for thrift institutions and compounded on them. The ceiling rates of interest at which they may be offered the discount rate minus 25 basis points for commercial banks. The rate differential vary biweekly. The maximum allowable rates in Sept. (in percent) for commercial ends 1 year from the effective date of these instruments and is suspended at any banks were as follows: Sept. 14, 11.80; Sept. 28, 11.55; and for thrifts: Sept. 14, timr the Treasury bill discount rate is 9 percent or below for four consecutive 12.05; Sept. 28, 11.80. NOTES are continued on opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Financial Statistics • October 1982 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS Millions of dollars 1982 TTyyppee ooff ttrraannssaaccttiioonn 11997799 11998800 11998811 Feb. Mar. Apr. May June July Aug. U.S. GOVERNMENT SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 15,998 7,668 13,899 1,017 474 4,149 595 1,559 1,905 1,721 2 Gross sales 6,855 7,331 6,746 868 995 0 519 0 1,175 651 3 Exchange 0 0 0 0 0 0 0 200 -200 0 4 Redemptions 2,900 3,389 1,816 0 600 0 400 0 200 600 Others within 1 year1 5 Gross purchases 3,203 912 317 20 0 132 0 0 71 0 6 Gross sales 0 0 23 0 0 0 0 0 0 0 7 Maturity shift 17,339 12,427 13,794 2,633 900 333 1,498 988 382 4,938 8 Exchange -11,308 -18,251 -12,869 -940 -1,479 -525 -2,541 -1,249 0 -3,914 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 50 0 570 0 0 691 0 11 Gross sales 0 0 0 0 0 0 0 0 0 0 12 Maturity shift -12,693 -8,909 -10,299 -974 -900 -333 -1,000 -988 -382 -4,938 13 Exchange 7,508 13.412 10,117 765 1,479 525 1,600 1,049 200 3,078 5 to 10 years 14 Gross purchases 523 703 393 0 0 81 0 0 113 0 15 Gross sales 0 0 0 0 0 0 0 0 0 0 16 Maturity shift -4,646 -3.092 -3,495 -1,659 0 0 -498 0 0 601 17 Exchange 2,181 2,970 1,500 100 0 0 941 0 0 837 Over 10 years 18 Gross purchases 454 811 379 0 0 52 0 0 123 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 -601 21 Exchange 1,619 1,869 1,253 75 0 0 0 0 0 0 All maturities1 22 Gross purchases 22,325 12.232 16,690 1,087 474 4,984 595 1,559 2,903 1,721 23 Gross sales 6,855 7,331 6,769 868 995 0 519 0 1,175 651 24 Redemptions 5,500 3.389 1,816 0 600 0 400 0 200 600 Matched transactions 25 Gross sales 627,350 674,000 589,312 28,033 38,946 44,748 36,047 41,509 54,646 39,403 26 Gross purchases 624,192 675,496 589,647 28,258 38,650 44,759 36,790 37,548 58,753 37,962 Repurchase agreements 27 Gross purchases 107,051 113,902 79,920 18.656 8,595 18,396 10,155 5,332 18,267 3,755 28 Gross sales 106,968 113,040 78,733 21,919 6,998 14,724 15,424 5,332 18,267 2,567 29 Net change in U.S. government securities 6,896 3,869 9.626 -2,820 179 8,667 -4,850 -2,402 5,636 217 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 0 0 32 Redemptions 134 145 108 32 13 5 1 6 1 46 Repurchase agreements 33 Gross purchases 37,321 28,895 13,320 872 554 2,033 1,305 831 4,389 1,095 34 Gross sales 36,960 28,863 13,576 1,006 471 1,119 2,301 831 4,389 866 35 Net change in federal agency obligations 681 555 130 -166 70 909 -997 -6 -1 183 BANKERS ACCEPTANCES 36 Repurchase agreements, net 116 73 -582 -597 488 280 -768 0 0 565 37 Total net change in System Open Market Account 7,693 4,497 9,175 -3,583 737 9,856 -6,615 -2,408 5,634 966 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 AAAccccccooouuunnnttt 1982 1982 Sept. 1 Sept. 8 Sept. 15 Sept. 22 Sept. 29 July Aug. Sept. Consolidated condition statement ASSETS 1 Gold certificate account 11,148 11,148 11,148 11,148 11,148 11,149 11,148 11,148 2 Special drawing rights certificate account 4.018 4,018 4,018 4,218 4,218 4.018 4,018 4,218 3 429 415 420 438 446 432 432 450 Loans 4 To depository institutions 1.356 482 3.798 1,965 1,154 458 449 1,123 5 Other 0 0 0 0 0 0 0 0 Acceptances 6 Held under repurchase agreements 0 0 0 0 0 00 565 813 Federal agency obligations 7 Bought outright 8.954 8,954 8.949 8,949 8,949 9.001 8,955 8,949 8 Held under repurchase agreements 0 0 0 0 0 0 229 1,001 U.S. government securities Bought outright 9 Bills 52.601 50,401 49.363 50,923 50,023 52,358 51,387 50,309 10 Notes 62.018 62,018 62,018 62.018 62.018 62,018 62,018 62,018 11 Bonds 18.264 18,264 18,264 18.264 18,264 18.264 18,264 18,264 12 Total1 132,883 130,683 129,645 131.205 130,305 132,640 131,669 130,591 13 Held under repurchase agreements 0 0 0 0 0 0 1.189 3,802 14 Total U.S. government securities 132.883 130,683 129,645 131,205 130,305 132.640 132,858 134,393 15 Total loans and securities 143,193 140,119 142,392 142,119 140,408 142,099 143,056 146,279 16 Cash items in process of collection 10.161 10,958 10,671 8,903 7.985 8,220 9,680 6,779 17 Bank premises 535 536 536 538 539 528 534 541 Other assets 18 Denominated in foreign currencies2 4.963 4,993 5,008 5.037 5,041 5,405 4,959 5,116 19 All other3 3.331 3,841 3,614 3.861 3,925 4.023 3,648 4,016 20 Total assets 177,778 176,028 177,807 176,262 173,710 175,874 177,475 178,547 LIABILITIES 21 Federal Reserve notes 135.636 137,103 136.390 135.306 135,259 134,115 135,374 135,197 Deposits 22 Depository institutions 26.284 21,663 24.902 25.145 18,734 24.974 24,993 20,318 23 U.S. Treasury—General account 3.460 4,041 3,565 3,648 8,320 3,275 3.234 10,975 24 Foreign—Official accounts 344 226 305 235 295 982 348 396 25 Other 563 534 573 410 385 662 501 394 26 Total deposits 30,651 26,464 29,345 29,438 27,734 29,893 29,076 32,083 27 Deferred availability cash items 6.960 7,788 7,356 6,793 6,048 6.507 8,234 6,220 28 Other liabilities and accrued dividends4 1.808 1,711 1,749 1,747 1,696 2,197 1,805 2,027 29 Total liabilities 175,055 173,066 174,840 173,284 170,737 172,712 174,489 175,527 CAPITAL ACCOUNTS 30 Capital paid in 1.339 1,339 1.340 1,341 1,340 1,336 1,337 1,341 31 Surplus 1,278 1,278 1.278 1,278 1,278 1,278 1,278 1,278 32 Other capital accounts 106 345 349 359 355 548 371 401 33 Total liabilities and capital accounts 177,778 176,028 177,807 176,262 173,710 175,874 177,475 178,547 34 MEMO: Marketable U.S. government securities held in custody for foreign and international account 93.985 97.442 99,391 96,486 97,939 95,684 94,780 98,192 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to bank) .... 155,840 155,975 156,342 156,519 156,405 155,017 155,800 156,412 36 LESS: Held by bank5 20,204 18,872 19,952 21,213 21,146 20,902 20,426 21,215 37 Federal Reserve notes, net 135,636 137,103 136.390 135,306 135,259 134,115 135,374 135,197 Collateral for Federal Reserve notes 38 Gold certificate account 11,148 11,148 11,148 11,148 11,148 11,149 11,148 11,148 39 Special drawing rights certificate account 4,018 4,018 4,018 4,218 4,218 4,018 4,018 4,218 40 Other eligible assets 0 0 17 0 11 0 0 0 41 U.S. government and agency securities 120,470 121.937 121,207 119,940 119.882 118,948 120,208 119,831 42 Total collateral 135,636 137,103 136,390 135,306 135,259 134,115 135,374 135,197 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 DomesticN onfinancialS tatistics • October 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 Sept. 1 Sept. 8 Sept. 15 Sept. 22 Sept. 29 July 31 Aug. 31 Sept. 30 1 Loans—Total 1,356 482 3,798 1,965 1,154 458 449 1,123 2 Within 15 days 1,294 438 3,761 1,835 1,110 383 411 1,076 3 16 days to 90 days 62 44 37 130 44 75 38 47 4 91 days to 1 year 0 0 0 0 0 0 0 0 5 Acceptances—Total 0 0 0 0 0 0 565 813 6 Within 15 days 0 0 0 0 0 0 565 813 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 132,883 130,683 129,645 131,205 130,305 132,640 132,858 134,393 10 Within 15 days' 6,625 5,370 5,534 5,508 4,211 4,374 3,911 5,743 11 16 days to 90 days 23,603 24,449 22,190 23,877 24,429 27,562 25,870 24,429 12 91 days to 1 year 38,132 36,341 37,398 37,297 37,142 34,775 38,554 39,781 13 Over 1 year to 5 years 35,974 35,974 35,974 35,974 35,974 38,216 35,974 35,891 14 Over 5 years to 10 years 12,267 12,267 12,267 12,267 12,267 10,830 12,267 12,267 15 Over 10 years 16,282 16,282 16,282 16,282 16,282 16,883 16,282 16,282 16 Federal agency obligations—Total 8,954 8,954 8,949 8,949 8,949 9,001 9,184 9,950 17 Within 15 days1 35 35 1 131 207 174 345 1,208 18 16 days to 90 days 407 503 568 438 407 524 407 407 19 91 days to 1 year 1,900 1,804 1,838 1,838 1,863 1,593 1,829 1,863 20 Over 1 year to 5 years 5,227 5,227 5,157 5,157 5,087 5,305 5,228 5,087 21 Over 5 years to 10 years 882 882 882 882 882 902 872 882 22 Over 10 years 503 503 503 503 503 503 503 503 1. Holdings under repurchase agreements are classified as maturing within IS 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 11997799 11998800 11998811 Feb. Mar. Apr. May June Debits to demand deposits' (seasonally adjusted) 11111111 AAAAAAAAllllllllllllllll ccccccccoooooooommmmmmmmmmmmmmmmeeeeeeeerrrrrrrrcccccccciiiiiiiiaaaaaaaallllllll bbbbbbbbaaaaaaaannnnnnnnkkkkkkkkssssssss 49,775.0 63.013.4 80,059.7 85,274.3 83,617.4 83,404.1 87,488.1 88,259.6 22222222 MMMMMMMMaaaaaaaajjjjjjjjoooooooorrrrrrrr NNNNNNNNeeeeeeeewwwwwwww YYYYYYYYoooooooorrrrrrrrkkkkkkkk CCCCCCCCiiiiiiiittttttttyyyyyyyy bbbbbbbbaaaaaaaannnnnnnnkkkkkkkkssssssss 18,512.7 25.192.5 33,642.7 35,983.8 34,218.3 35.238.0 37,379.7 37,016.6 33333333 OOOOOOOOtttttttthhhhhhhheeeeeeeerrrrrrrr bbbbbbbbaaaaaaaannnnnnnnkkkkkkkkssssssss 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) 44444444 AAAAAAAATTTTTTTTSSSSSSSS////////NNNNNNNNOOOOOOOOWWWWWWWW33333333 83.3 158.4 741.3 836.7 935.4 1,072.5 929.0 1,069.9 55555555 BBBBBBBBuuuuuuuussssssssiiiiiiiinnnnnnnneeeeeeeessssssssssssssss44444444 77.3 93.4 112.1 95.2 115.4 103.0 90.2 107.6 66666666 OOOOOOOOtttttttthhhhhhhheeeeeeeerrrrrrrrssssssss55555555 515.2 605.3 582.2 534.8 586.9 609.6 570.4 593.4 77777777 AAAAAAAAllllllllllllllll aaaaaaaaccccccccccccccccoooooooouuuuuuuunnnnnnnnttttttttssssssss 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) 88888888 AAAAAAAAllllllllllllllll ccccccccoooooooommmmmmmmmmmmmmmmeeeeeeeerrrrrrrrcccccccciiiiiiiiaaaaaaaallllllll bbbbbbbbaaaaaaaannnnnnnnkkkkkkkkssssssss 163.5 201.6 281.4 307.1 304.7 301.3 315.8 322.7 99999999 MMMMMMMMaaaaaaaajjjjjjjjoooooooorrrrrrrr NNNNNNNNeeeeeeeewwwwwwww YYYYYYYYoooooooorrrrrrrrkkkkkkkk CCCCCCCCiiiiiiiittttttttyyyyyyyy bbbbbbbbaaaaaaaannnnnnnnkkkkkkkkssssssss 646.2 813.7 1,100.5 1,252.1 1,211.7 1,255.3 1,292.8 1,326.4 1111111100000000 OOOOOOOOtttttttthhhhhhhheeeeeeeerrrrrrrr bbbbbbbbaaaaaaaannnnnnnnkkkkkkkkssssssss 113.3 134.3 182.8 198.0 200.7 193.7 202.0 208.6 Savings deposit turnover2 (not seasonally adjusted) 1111111111111111 AAAAAAAATTTTTTTTSSSSSSSS////////NNNNNNNNOOOOOOOOWWWWWWWW33333333 7.8 9.7 14.2 13.0 14.2 15.4 14.0 15.8 1111111122222222 BBBBBBBBuuuuuuuussssssssiiiiiiiinnnnnnnneeeeeeeessssssssssssssss44444444 7.2 9.3 12.3 12.1 14.6 13.2 11.4 13.5 1111111133333333 OOOOOOOOtttttttthhhhhhhheeeeeeeerrrrrrrrssssssss55555555 2.7 3.4 3.7 3.6 3.9 4.0 3.8 3.9 1111111144444444 AAAAAAAAllllllllllllllll aaaaaaaaccccccccccccccccoooooooouuuuuuuunnnnnnnnttttttttssssssss 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 commercial banks but including savings and loan associations, mutual savings banks, states and political subdivisions. credit unions, the Export-Import Bank, and federally sponsored lending agencies). 2. Excludes special club accounts, such as Christmas and vacation clubs. 5. Savings accounts other than NOW; business; and, from December 1978, ATS. 3. Accounts authorized for negotiable orders of withdrawal (NOW) and accounts authorized for automatic transfer to demand deposits (ATS). ATS data availability NOTE. Historical data for the period 1970 through June 1977 have been estimated; starts with December 1978. these estimates are based in part on the debits series for 233 SMS As, which were 4. Represents corporations and other profit-seeking organizations (excluding available through June 1977. Back data are available from Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Debits and turnover data for savings deposits are not available before July 1977. 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 IItteemm D 19 e 7 c 8 . D 19 e 7 c 9 . D 19 e 8 c 0 . D 19 e 8 c 1 . Apr. May June July Aug. Seasonally adjusted MEASURES1 1 Ml 363.2 389.0 414.5 440.9 452.4 451.5 451.4 451.3' 455.2 2 M2 1,403.9 1,518.9 1,656.2 1,822.7 1.880.7 1,897.5 1,907.9 l,923.4r 1.946.2 3 M3 1,629.0 1,779.4 1,963.1 2,188.1 2,258.1 2,279.3 2.296.0r 2,320.2 2,355.7 4 L2 1,938.9 2,153.9 2,370.4 2.642.8 2,743.5r 2,773.2 2,797.8 n.a. n.a. SELECTED COMPONENTS 5 Currency 97.4 106.1 116.2 123.1 126.3 127.4 128.4 128.8 129.5 6 Traveler's checks3 3.5 3.7 4.2 4.3 4.4 4.5 4.5 4.4 4.4 7 Demand deposits 253.9 262.2 267.2 236.4 233.0 232.7 231.0 230.6 231.1 8 Other checkable deposits7 8.4 16.9 26.9 77.0 88.6 87.0 87.5 87.4 90.2 9 Savings deposits4 479.9 421.7 398.9 343.6 350.5 350.9 349.9 344.0 342.1 10 Small-denomination time deposits5 533.9 652.6 751.7 854.7 881.6 894.1 900.9 919.7 930.2 11 Large-denomination time deposits6 194.6 221.8 257.9 300.3 317.2 321.6 328.3 335.8r 339.4 Not seasonally adjusted MEASURES1 12 Ml 372.5 398.8 424.6 451.2 455.5 445.1 450.5 454.0 454.0 13 M2 1,408.5 1,524.7 1,662.5 1.829.4 1,887.9 1,888.9 1,906.4r 1,924.8r 1,938.7 14 M3 1,637.5 1,789.2 1,973.9 2,199.9 2,266.1 2,269.3 2,290.0 2,314.1 2,342.3 15 L2 1,946.6 2,162.8 2,380.2 2,653.8 2,754.1' 2,766.3 2,792.9 n.a. n.a. SELECTED COMPONENTS 16 Currency 99.4 108.2 118.3 125.4 125.6 127.2 128.3 129.8 130.0 17 Traveler's checks3 3.3 3.5 3.9 4.1 4.2 4.3 4.7 4.9 4.9 18 Demand deposits 261.5 270.1 275.1 243.3 236.1 228.3 230.4 231.5 229.3 19 Other checkable deposits7 8.4 17.0 27.2 78.4 89.5 85.4 87.2 87.9 89.8 20 Overnight RPs and Eurodollars8 24.1 26.3 35.0 38.1 40.4 42.8 43.0 43.5r 44.7 21 Savings deposits4 478.0 420.5 398.0 343.0 348. lr 347.4 348.0 ' 348.3 346.2 22 Small-denomination time deposits5 531.1 649.7 748.9 851.7 888.1 895.3 902.3 914.1 919.9 Money market mutual funds 23 General purpose and broker/dealer 7.1 34.4 61.9 151.2 161.9 164.3 168.6 171.3 180.0 24 Institution only 3.1 9.3 13.9 33.7 31.5 32.8 33.7 36.7 43.1 25 Large-denomination time deposits6 198.6 226.0 262.3 305.4 317.9 320.3 323.9r 328.3r 333.5 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 • October 1982 1.22 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1982' 1978 1979 1980 1981 IItteemm Dec.r Dec/ Dec.r Dec.' Feb. Mar. Apr. May June July Aug. Sept. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 32.82 34.26 36.46 37.99 38.26 38.36 38.43 38.50 38.58 38.52 38.80 39.55 2 Nonborrowed reserves 31.95 32.79 34.77 37.35 36.47 36.80 36.87 37.39 37.37 37.83 38.29 38.62 3 Required reserves 32.59 33.93 35.95 37.67 37.96 37.99 38.16 38.15 38.27 38.21 38.49 39.19 4 Monetary base4 132.2 142.5 155.0 162.7 164.7 165.2 166.5 167.7 168.8 169.2 170.1 171.9 Not seasonally adjusted 5 Total reserves3 33.37 34.83 37.11 38.66 38.05 37.80 38.33 38.19 38.07 38.43 38.51 39.34 6 Nonborrowed reserves 32.50 33.35 35.42 38.03 36.26 36.24 36.76 37.07 36.86 37.74 38.00 38.41 7 Required reserves 33.13 34.50 36.59 38.34 37.75 37.44 38.06 37.83 37.76 38.12 38.20 38.97 8 Monetary base4 134.8 145.4 158.0 165.8 162.9 163.3 165.6 167.1 168.2 170.0 170.4 171.4 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS5 9 Total reserves3 41.68 43.91 40.66 41.92 41.29 39.24 39.56 39.55 39.57 39.97 40.18 39.95 10 Nonborrowed reserves 40.81 42.43 38.97 41.29 39.50 37.68 37.99 38.43 38.36 39.28 39.66 39.02 11 Required reserves 41.45 43.58 40.15 41.60 40.98 38.87 39.28 39.19 39.26 39.65 39.87 39.58 12 Monetary base4 144.6 156.2 162.4 169.7 166.8 165.4 167.6 169.2 170.4 172.3 172.8 172.3 1. Reserve aggregates include required reserves of member banks and Edge Act a reduction of $2.9 billion; Feb. 12, 1981, an increase of $245 million: Mar. 12, corporations ana other depository institutions. Discontinuities associated with the 1981, an increase of $75 million; May 14, 1981, an increase of $245 million; Aug. implementation of the Monetary Control Act, the inclusion of Edge Act corporation 13, 1981, an increase of $230 million; Sept. 3, 1981, a reduction of $1.1 billion; reserves, and other changes in Regulation D, have been removed. Beginning with Nov. 12. 1981, an increase of $210 million; Jan. 14,1982, a reduction of $60 million; the week ended December 23, 1981, reserves aggregates have been reduced by Feb. 11, 1982 an increase of $170 million; Mar. 4, 1982, an estimated reduction of shifts of reservable liabilities to international banking facilities (IBFs). On the basis $2.0 billion; May 13, 1982, an estimated increase of $150 million; Aug. 12, 1982 of reports of liabilities transferred to IBFs by U.S. commercial banks and U.S. an estimated increase of $140 million; and Sept. 2, 1982, an estimated reduction agencies and branches of foreign banks, it is estimated that required reserves were of $1.2 billion. Beginning with the week ended December 23, 1981, reserve aglowered on average by $10 million to $20 million in December 1981 and $40 million gregates have been reduced by shifts of reservable liabilities to IBFs. On the basis to $70 million in January 1982. of reports of liabilities transferred to IBFs by U.S. commercial banks and U.S. 2. Reserve balances with Federal Reserve Banks (which exclude required clear- agencies and branches of foreign banks, it is estimated that required reserves were ing balances) plus vault cash at institutions with required reserve balances plus lowered on average by $60 million to $90 million in December 1981 and $180 vault cash equal to required reserves at other institutions. million to $230 million in January 1982, mostly reflecting a reduction in reservable 3. Includes reserve balances and required clearing balances at Federal Reserve Eurocurrency transactions. 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 4. Reserves of depository institutions series reflect actual reserve requirement of Research and Statistics, Board of Governors of the Federal Reserve System, percentages with no adjustments to eliminate the effect of changes in Regulation Washington, D.C. 20551. D, including changes associated with the implementation of the Monetary Control Act. Includes required reserves of member banks and Edge Act corporations and beginning November 13, 1980, other depository institutions. Under the transitional phase-in program of the Monetary Control Act of 1980, the net changes in required reserves of depository institutions have been as follows: Effective Nov. 13, 1980, 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 Apr.2 May2 June2 July2 Aug.2 Dec.2 Apr.2 May2 June2 July2 Aug.2 Seasonally adjusted Not seasonally adjusted 1 Total loans and securities3 1,316.3 1,352.6 1,361.9 1,368.7 1,376.1 1,383.2 1,326.1 1,351.4 1,355.9 1,366.3 1,370.4 1,377.8 2 U.S. Treasury asecurities 111.0 116.6 116.3 115.8 116.5 117.8 111.4 118.7 115.8 116.1 115.6 116.4 3 Other securities 231.4 234.0 234.9 235.8 235.9 237.1 232.8 234.0 235.1 235.6 234.7 236.4 4 Total loans and leases3 973.9 1,002.0 1,010.7 1,017.1 1.023.7 1,028.4 981.8 998.7 1,005.0 1,014.6 1,020.1 1,025.0 5 Commercial and industrial loans 358.0 373.1 378.8 383.4 386.7 387.8 360.1 375.2 378.9 382.6 385.5 385.5 6 Real estate loans 285.7 293.9 295.5 297.3 297.5 298.6 286.8 293.0 294.4 295.8 296.6 298.3 7 Loans to individuals 185.1 186.9 187.4 188.3 189.2 189.6 186.4 185.6 186.2 187.5 188.3 189.8 8 Security loans 21.9 20.9 20.6 19.5 21.0 21.4 22.7 20.9 19.8 20.5 20.5 22.0 9 Loans to nonbank financial institutions 30.2 33.3 33.2 33.6 33.9 33.2 31.2 33.0 32.8 33.1 33.3 33.1 10 Agricultural loans 33.0 34.4 34.6 35.4 35.7 36.1 33.0 33.8 34.4 35.5 36.1 36.6 11 Lease financing receivables.... 12.7 13.1 13.1 13.1 13.2 13.1 12.7 13.1 13.1 13.1 13.2 13.1 12 All other loans 47.2 46.5 47.4 46.6 46.4 48.6 49.2 44.1 45.4 46.3 46.7 46.7 MEMO: 13 Total loans and securities plus loans sold3-7 1,319.1 1,355.4 1,364.7 1,371.6 1,378.9 1,386.1 1,328.9 1,354.2 1,358.7 1,369.2 1,373.2 1,380.6 14 Total loans plus loans sold3,7 976.7 1,004.8 1,013.5 1,020.0 1,026.5 1,031.2 984.7 1,001.5 1,007.8 1,017.5 1,023.0 1,027.8 15 Total loans sold to affiliates7 .... 2.8 2.8 2.8 3.0 2.8 2.8 2.8 2.8 2.8 2.8 3.0 2.8 16 Commercial and industrial loans plus loans sold7 360.2 375.3 381.1 385.7 389.0 390.1 362.3 377.5 381.1 385.0 387.8 387.7 17 Commercial and industrial loans sold7 2.2 2.3 2.2 2.4 2.3 2.3 2.2 2.3 2.2 2.4 2.3 2.3 18 Acceptances held 8.9 10.3 10.1 9.1 8.7 9.1 9.8 9.5 9.5 9.2 8.6 8.8 19 Other commercial and industrial loans 349.1 362.8 368.8 374.2 378.0 378.7 350.3 365.7 369.4 373.5 376.8 376.7 20 To U.S. addressees8 334.9 350.1 355.2 360.1 364.7 365.7 334.3 352.9 356.7 360.5 363.9 363.9 21 To non-U.S. addressees 14.2 12.7 13.5 14.2 13.3 13.1 16.1 12.8 12.7 13.0 13.0 12.8 22 Loans to foreign banks 19.0 15.2 15.0 14.7 14.8 14.6 20.0 14.6 14.4 14.2 14.5 14.1 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 by 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 DomesticN onfinancialS tatistics • October 1982 1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS1 Monthly averages, billions of dollars 1980 1981 1982 SSoouurrccee Dec. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Total nondeposit funds 1 Seasonally adjusted2 122.0 116.3 116.2 98.5 89.5 88.0 83.8 83.5 82.1 84.4 80.0 78.4 2 Not seasonally adjusted 122.6 118.2 120.7 98.9 87.9 88.5 84.8 84.3 85.6 86.5 82.1 82.8 Federal funds, RPs, and other borrowings from nonbanks3 111.1 3 Seasonally adjusted 110191..01 110.0 114.2 116.2 113.8 113.6 113.1 113.2 113.8 114.3 116.7 4 Not seasonally adjusted 111.6 114.6 114.6 114.6 114.3 114.6 113.9 116.6 115.9 116.3 121.1 5 Net balances due to foreign-related institutions, not seasonally adjusted 8.2 4.5 3.4 -18.6 -29.6 -28.6 -32.6 -32.5 -33.9 -32.4 -37.1 -41.1 6 Loans sold to affiliates, not seasonally adjusted4 2.7 2.7 2.7 2.8 2.8 2.8 2.8 2.8 2.8 3.0 2.8 2.8 MEMO 7 Domestically chartered banks net positions with own foreign branches, not seasonally adjusted5 -14.7 -15.4 -14.9 -22.5 -27.1 -25.9 -28.8 -29.8 -29.8 -29.1 -32.7 -34.1 8 Gross due from balances 37.5 45.5 47.9 54.9 55.1 55.0 56.7 57.4 58.1 57.6 60.3 64.7 9 Gross due to balances 22.8 30.1 32.9 32.4 28.0 29.1 27.9 27.6 28.3 28.5 27.6 30.6 10 Foreign-related institutions net positions with directly related institutions, not seasonally adjusted6 22.9 19.9 18.4 3.9 -2.5 -2.7 -3.8 -2.7 -4.1 -3.3 -4.4 -7.0 11 Gross due from balances 32.5 38.3 39.1 48.1 50.0 50.5 50.0 49.1 49.4 50.2 52.7 53.4 12 Gross due to balances 55.4 58.2 57.4 52.0 47.5 47.9 46.2 46.4 45.4 46.9 48.3 46.4 Security RP borrowings 13 Seasonally adjusted* 64.0 64.9 65.0 70.0 73.0 71.0 71.4 71.9 69.0 69.1 69.3 71.9 14 Not seasonally adjusted 62.3 64.7 67.3 68.2 69.2 69.1 70.0 70.4 70.0 68.7 68.9 73.9 U.S. Treasury demand balances8 15 Seasonally adjusted 9.5 11.1 12.1 11.8 13.4 22.1 17.5 13.6 15.3 9.9 8.4 9.2 16 Not seasonally adjusted 9.0 13.3 9.7 11.2 14.5 20.0 15.5 13.8 15.4 10.8 8.3 8.2 Time deposits, $100,000 or more9 17 Seasonally adjusted 267.0 324.8 323.4 324.0 324.3 327.2 332.0 334.4 341.1 349.4 360.1 366.8 18 Not seasonally adjusted 272.4 322.6 324.6 330.3 330.6 335.3 337.2 335.6 340.0 344.6 350.4 359.0 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 of several cludes averages of Wednesday data for domestically chartered banks and averages items as follows: lines 1 and 2, $22.4 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. 3. Other borrowings are borrowings on any instrument, such as a promissory For January 1982, the levels were reduced as follows: lines 1 and 2, $29.6 billion; note or due bill, given for the purpose of borrowing money for the banking business. lines 3 and 4, $2.4 billion; line 5, $27.2 billion; line 7. $4.8 billion; and line 10, This includes borrowings from Federal Reserve Banks and from foreign banks, $22.5 billion. For February the levels were reduced as follows: lines 1 and 2, $30.4 term federal funds, overdrawn due from bank balances, loan RPs, and participa- billion; lines 3 and 4, $2.4 billion; line 5, $28.0 billion; line 7, $4.9 billion; and line tions in pooled loans. Includes averages of daily figures for member banks and 10, $23.1 billion. For March the levels were reduced as follows: lines 1 and 2, $30.9 averages of current and previous month-end data for foreign-related institutions. billion; lines 3 and 4, $2.4 billion; line 5, $28.5 billion; line 7, $4.9 billion; and line 4. Loans initially booked by the bank and later sold to affiliates that are still 10, $23.6 billion. For April the levels were reduced as follows: lines 1 and 2, $31.3 held by affiliates. Averages of Wednesday data. billion; lines 3 and 4, $2.4 billion; line 5, $29.0 billion; line 7, $5.0 billion; and line 5. Averages of daily figures for member and nonmember banks. 10, $24.0 billion. For May the levels were reduced as follows: lines 1 and 2, $31.7 6. Averages of daily data. billion; lines 3 and 4, $2.4 billion; line 5, $29.3 billion; line 7. $5.0 billion; and line 7. Based on daily average data reported by 122 large banks. 10, $24.3 billion. For June the levels were reduced as follows: lines 1 and 2, $31.9 billion; lines 3 and 4, $2.4 billion; line 5, $29.5 billion; line 7. $5.0 billion; and line 10, $24.5 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 Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept. DOMESTICALLY CHARTERED COMMERCIAL BANKS' 1 Loans and securities, excluding interbank 1,249.4 1.267.4 1,261.2 1,271.2 1,285.8 1.292.6 1.300.7 1.315.4 1,313.2 1.318.8 1,337.3 2 Loans, excluding interbank 912.8 926.4 920.1 929.1 939.9 947.2 954.3 969.1 966.6 970.6 986.1 3 Commercial and industrial 312.6 320.3 321.0 325.6 332.4 336.7 341.9 348.7 346.4 346.2 355.0 4 Other 600.2 606.0 599.1 603.5 607.5 610.5 612.4 620.4 620.3 624.3 631.2 5 U.S. Treasury securities 106.7 109.8 111.5 112.3 114.5 113.0 111.5 113.4 113.4 113.7 115.0 6 Other securities 229.9 231.3 229.6 229.8 231.4 232.4 234.9 232.9 233.2 234.5 236.2 7 Cash assets, total 162.8 173.1 155.3 151.6 164.5 153.6 153.0 165.4 154.5 160.8 157.4 8 Currency and coin 18.3 22.0 19.8 19.7 18.9 19.9 20.0 20.1 20.5 20.3 20.4 9 Reserves with Federal Reserve Banks 26.1 28.0 30.2 24.8 25.7 25.5 21.7 18.2 25.1 26.1 17.0 10 Balances with depository institutions . 52.0 54.5 50.3 51.0 55.9 52.4 54.9 59.6 55.4 58.8 60.4 11 Cash items in process of collection ... 66.4 68.6 55.0 56.1 64.0 55.8 56.3 67.4 53.6 55.5 59.6 12 Other assets2 194.4 211.2 197.0 201.9 219.3 206.6 209.9 223.2 224.2 231.4 234.9 13 Total assets/total liabilities and capital... 1,606.7 1,651.8 1,613.5 1,624.7 1,669.5 1,652.9 1,663.6 1,704.0 1,692.0 1,711.0 1,729.6 14 Deposits 1,206.0 1,240.3 1,205.8 1,213.7 1,250.8 1.231.0 1,244.0 1.284.8 1,266.4 1,279.2 1,290.7 15 Demand 339.2 363.9 322.3 316.7 338.3 315.5 315.4 345.2 314.4 315.5 323.0 16 Savings 217.9 222.4 223.0 222.5 229.9 226.6 227.6 228.9 227.1 229.5 230.9 17 Time 648.9 654.0 660.5 674.4 682.6 688.9 701.0 710.7 724.8 734.2 736.9 18 Borrowings 179.3 190.2 191.9 191.0 196.4 201.1 195.1 189.7 195.4 196.0 202.8 19 Other liabilities 95.2 91.7 89.7 92.5 94.4 92.4 93.9 96.6 99.1 103.9 103.4 20 Residual (assets less liabilities) 126.2 129.6 126.1 127.5 128.0 128.4 130.6 133.0 131.1 131.9 132.6 MEMO: 21 U.S. Treasury note balances included in borrowing 5.6 13.6 16.7 17.1 10.9 16.6 7.1 7.5 8.0 5.9 17.1 22 Number of banks 14,743 14,744 14,690 14.702 14.709 14.710 14,722 14.736 14.752 14,770 14,785 ALL COMMERCIAL BANKING INSTITUTIONS3 23 Loans and securities, excluding interbank 1,335.5 1,330.0 1,321.6 1,331.5 1.345.8 1.350.7 1.358.5 1,374.3 1.370.5 1.376.6 1.397.5 24 Loans, excluding interbank 994.7 984.5 975.8 984.4 995.1 1.000.6 1.007.6 1,023.7 1.020.0 1.024.6 1.042.6 25 Commercial and industrial 365.5 360.8 360.3 364.6 372.4 374.7 379.3 386.7 383.8 384.5 395.6 26 Other 629.2 623.7 615.5 619.7 622.7 625.8 628.3 636.9 636.3 640.0 647.1 27 U.S. Treasury securities 108.8 112.5 114.5 115.5 117.6 116.1 114.3 116.2 115.8 115.9 117.2 28 Other securities 232.0 233.0 231.4 231.6 233.1 234.1 236.6 234.4 234.7 236.1 237.7 29 Cash assets, total 179.3 188.1 170.0 165.8 178.8 168.1 167.7 180.3 169.4 176.2 173.7 30 Currency and coin 18.3 22.0 19.8 19.7 18.9 19.9 20.0 20.2 20.5 20.4 20.4 31 Reserves with Federal Reserve Banks 27.5 29.3 31.3 26.1 26.9 26.8 23.0 19.6 26.4 27.5 18.4 32 Balances with depository institutions . 66.0 67.1 62.7 63.0 68.0 64.6 67.3 72.2 68.0 71.9 74.2 33 Cash items in process of collection ... 67.4 69.6 56.1 57.1 65.0 56.8 57.3 68.4 54.6 56.5 60.6 34 Other assets2 267.0 288.7 274.2 278.1 295.2 280.3 285.9 300.1 299.6 306.9 310.3 35 Total assets/total liabilities and capital... 1,781.7 1,806.8 1,765.8 1,775.5 1,819.9 1,799.1 1,812.1 1,854.7 1,839.6 1,859.7 1,881.5 36 Deposits 1,254.1 1,288.7 1,251.5 1,258.3 1,295.0 1.272.7 1,286.2 1,325.8 1.307.4 1.321.8 1.335.6 37 Demand 352.6 377.7 335.1 329.4 350.8 327.9 327.9 357.4 326.7 327.8 335.1 38 Savings 218.1 222.6 223.2 222.8 230.2 226.9 227.8 229.1 227.4 229.8 231.1 39 Time 683.4 688.3 693.1 706.2 714.0 717.9 730.4 739.3 753.3 764.3 769.3 40 Borrowings 246.2 250.8 253.5 255.9 260.0 260.8 255.3 253.2 258.3 260.0 267.6 41 Other liabilities 153.3 135.6 132.8 131.8 135.0 135.3 138.2 140.8 140.9 144.1 143.9 42 Residual (assets less liabilities) 128.1 131.5 128.1 129.4 129.9 130.3 132.5 134.9 133.0 133.8 134.5 MEMO: 43 U.S. Treasury note balances included in borrowing 5.6 13.6 16.7 17.1 10.9 16.6 7.1 7.5 8.0 5.9 17.1 44 Number of banks 15.212 15,213 15.185 15,201 15,214 15,215 15.235 15,235 15.271 15,289 15.311 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 • October 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 Account Aug. 4 Aug. 11 Aug. 18 Aug. 25 Sept. IP Sept. 8p Sept. 15 p Sept. 22p Sept. 29p 1 Cash items in process of collection 48.793 43.068 45,076 44.471 58,086 53,080 56,356 46,116 47,974 i Demand deposits due from banks in the United States.. 6.804 6.470 6.296 6.616 7.707 7,485 7.777 7,381 7,118 3 All other cash and due from depository institutions .... 32.537 34.505 34.204 36.778 34.258 31,974 34,659 34,154 28,728 4 Total loans and securities 633,119 628,446 631,097 627,061 636,201 638,989 641,507 635,520 638,786 Securities 5 U.S. Treasury securities 38,662 39.148 38.752 37.399 37,113 38,740 38,811 38,018 38,019 6 Trading account 9.348 9.485 8.764 7.685 6,952 8,056 7,733 7,173 7,203 7 Investment account, by maturity 29.314 29.663 29.988 29.714 30,161 30,684 31,078 30,845 30,816 8 One year or less 9.656 9.935 10.574 10.180 10.375 10,411 10,734 10,714 10,352 9 Over one through five years 17.356 17.452 17,185 17.444 17,684 18,031 18.186 18,041 18,304 10 Over five vears 2.303 2.276 2,228 2.090 2.101 2,243 2,159 2,090 2,159 11 Other securities 78.226 79.603 77.970 78.074 78.718 80,204 78.103 78,035 78,504 12 Trading account 3.906 5.402 3.495 3,519 4.152 5,884 3,872 3,655 3,967 13 Investment account 74.320 74.201 74,475 74.555 74.566 74,320 74,231 74,380 74,537 14 U.S. government agencies 15.444 15,397 15,563 15.613 15.596 15,454 15,410 15,434 15,530 15 States and political subdivisions, by maturity 55.842 55,734 55,841 55.851 55,831 55,713 55,708 55,823 55,936 16 One year or less 7.340 7,171 7,142 7.073 7.066 7,075 7,177 7,032 7,052 17 Over one year 48.502 48.562 48.699 48.779 48.765 48,638 48.531 48,791 48,884 18 Other bonds, corporate stocks and securities 3,034 3.070 3.071 3.091 3,139 3,153 3.113 3,123 3,071 Loans 19 Federal funds sold1 42,224 37.842 40,033 39.512 41,585 41,641 43,975 39,315 39,499 20 To commercial banks 30,461 27.269 28,859 28.286 31,062 31,005 33,186 28,491 28,778 21 To nonbank brokers and dealers in securities 8,737 7,663 8,164 8.690 7.986 8,294 8,643 8,695 8,767 22 To others 3,026 2,909 3.010 2.536 2,537 2,341 2,146 2,129 1,954 23 Other loans, gross 487.244 485.143 487.656 485,351 492.114 491,779 493,984 493,497 496,030 24 Commercial and industrial 210,958 211.324 211.082 210,271 212,757 213,043 216.076 216,927 217,415 25 Bankers acceptances and commercial paper 4,143 4.457 3,996 4.241 5,138 4,657 4,990 4,696 4,812 26 All other 206.815 206.867 207,086 206.030 207,619 208,386 211.087 212,231 212,603 27 U.S. addressees 199.863 199.989 200,218 198.990 200.611 201,096 203.846 204,986 205,198 28 Non-U.S. addressees 6.952 6.878 6,868 7.040 7,008 7,290 7,241 7,245 7,405 29 Real estate 130.236 130.419 130,611 130.943 131.052 131,087 131,291 131,627 131,660 30 To individuals for personal expenditures 72.792 72,688 72.836 73.028 73,374 73,268 73,449 73,488 73,652 To financial institutions 31 Commercial banks in the United States 6.687 6.970 7.059 6,991 7.206 8.456 7,059 6,708 6,780 32 Banks in foreign countries 7.278 7.169 7.047 6.884 7.277 7,479 7,498 7,255 6,905 33 Sales finance, personal finance companies, etc 11.375 11,253 11.156 11.294 11.627 11,010 11,028 10.805 11,120 34 Other financial institutions 16.138 16.224 16,351 16.098 16.486 16,186 16.456 16,242 16,171 35 To nonbank brokers and dealers in securities 8.060 5.931 7,939 6.409 7.690 7,167 7,068 6,736 7,892 36 To others for purchasing and carrying securities2 2.573 2.578 2.598 2.573 2.567 2,591 2,530 2,538 2,604 37 To finance agricultural production 6,549 6.544 6.549 6.496 6.567 6,504 6,480 6,516 6,571 38 All other 14.599 14.043 14.428 14.363 15.510 14,988 15,048 14,655 15,261 39 LESS: Unearned income 5.826 5.855 5.856 5.833 5.792 5,788 5,797 5,763 5,764 40 Loan loss reserve 7.413 7.434 7.458 7.442 7,537 7,587 5,569 7,582 7,504 4i Other loans, net 474.006 471.853 474.342 472.076 478,785 478,404 780,618 480,152 482,763 42 Lease financing receivables 11.053 11,045 11.046 11.028 11.067 11,087 11,111 11,089 11,097 43 All other assets 125.294 124.723 125,781 126.078 129,941 130,130 131,821 128.550 128,871 44 Total assets 857,601 848,258 853,501 852,033 877,260 872,744 883,231 862,811 862,574 Deposits 45 Demand deposits 167.617 160.863 160.990 160.153 182,564 176,419 182,465 162,924 164,712 46 Mutual savings banks 640 592 552 503 654 666 606 521 534 47 Individuals, partnerships, and corporations 123.784 122.536 122.154 120.755 136,351 132,570 135,420 123,045 124,189 48 States and political subdivisions 4.952 4.844 4,350 4.519 4,850 4,632 5,575 4,883 4,487 49 U.S. government 3.290 1.851 2,556 1.444 900 1,233 6.132 2,347 1,875 50 Commercial banks in the United States 18.619 17.375 17,714 17.951 20,735 21,356 19,751 17,896 17,983 51 Banks in foreign countries 6.993 6.235 6,026 5.846 5.875 6,771 5,918 6,006 5,800 52 Foreign governments and official institutions 1.029 870 1,004 1.091 1.244 1,022 861 959 957 53 Certified and officers' checks 8.310 6,558 6.633 8.043 11,954 8,168 8,201 7,266 8,885 54 Time and savings deposits 397.362 395.572 399,508 400.998 401,576 401,611 401,109 402,652 401,822 55 Savings 80.658 80.183 79,956 79.820 80,977 81,970 82,011 80,344 80,043 56 Individuals and nonprofit organizations 77.360 76.855 76,656 76.478 77,596 78,554 78,610 77,043 76,700 57 Partnerships and corporations operated for profit .. 2.748 2.739 2,733 2.791 2,812 2,856 2,806 2,757 2,780 58 Domestic governmental units 525 565 542 533 548 539 578 524 546 59 All Other 24 24 25 19 20 21 18 20 17 60 Time 316,704 315,389 319,552 321.177 320.599 319,641 319,098 322,308 321,780 61 Individuals, partnerships, and corporations 278,272 277.046 279,874 281.180 280,606 279,709 279,104 282,175 281,658 62 States and political subdivisions 20,631 20.849 21.059 21.429 21.854 21,786 21,700 f21,767 21,676 63 U.S. government 444 427 451 583 618 592 573 583 558 64 Commercial banks in the United States 12,423 12.242 13,104 12,912 12,561 12,651 12,836 12,796 12,951 65 Foreign governments, official institutions, and banks 4,934 4,824 5,063 5,073 4,961 4,903 4,885 4,987 4,936 Liabilities for borrowed money 66 Borrowings from Federal Reserve Banks 1.869 60 575 1.240 843 45 3,304 1,356 575 67 Treasury tax-and-loan notes 1,531 2,971 3,105 4,022 2,281 2,121 3,956 9,432 13,168 68 All other liabilities for borrowed money3 150.384 149.715 148,572 144.822 146,642 153,448 151,289 144,169 141,958 69 Other liabilities and subordinated notes and debentures 82.434 82.570 84,326 84.320 86,462 82,088 84,196 85,532 83,620 70 Total liabilities 801,196 791,751 797,076 795,556 820,369 815,731 826,319 806,064 805,855 71 Residual (total assets minus total liabilities)4 56.405 56.507 56.425 56.476 56,892 57,013 56,912 56,746 56,719 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 $1 Billion or More on December 31, 1977, Assets and Liabilities Millions of dollars, Wednesday figures, 1982 Account Aug. 4 Aug. 11 Aug. 18 Aug. 25 Sept. I? Sept. 8p Sept. 15 p Sept. 22p Sept. 29p 1 Cash items in process of collection 45.901 40.624 42.539 42.098 55.244 49,974 53,266 43,412 45,528 2 Demand deposits due from banks in the United States.... 6.179 5.824 5.695 6,015 7,037 6.750 7,071 6,742 6,441 3 All other cash and due from depository institutions 30,075 31.997 31.658 34.038 31,606 29.654 32,065 31,338 26,255 4 Total loans and securities 593,054 588,594 591,301 587,596 596,218 598,503 600,967 595,027 598,385 Securities 5 U.S. Treasury securities 35,558 35.963 35,567 34,186 33,978 35,590 35,498 34,696 34,643 6 Trading account 9,238 9.378 8,629 7,525 6,854 7,965 7,627 7,064 7,108 7 Investment account, by maturity 26.320 26,585 26,938 26,660 27,124 27,625 27,870 27,632 27,535 8 One year orless 8,629 8.914 9.520 9.111 9,300 9,335 9,591 9,560 9,181 9 Over one through five years 15,651 15.658 15,452 15.720 15,983 16,306 16,385 16,246 16,459 10 Over five years 2,040 2.013 1.966 1,830 1,840 1.984 1,894 1,826 1,895 11 Other securities 71.874 73.279 71.576 71.677 72,320 73.746 71,670 71,611 72,116 12 Trading account 3,778 5.290 3,345 3.378 4,004 5,666 3,711 3,539 3.839 13 Investment account 68,096 67,989 68,231 68.299 68,316 68,080 67,960 68,072 68,278 14 U.S. government agencies 14.249 14.216 14,380 14.436 14,424 14.280 14,231 14,246 14,357 15 States and political subdivision, by maturity 51.025 50.913 50.996 50.994 50,985 50.879 50,827 50,913 51,059 16 One year or less 6,619 6.451 6,402 6.343 6,334 6,348 6,390 6,232 6,289 17 Over one year 44,406 44,462 44.593 44.651 44,650 44,532 44.437 44,680 44,770 18 Other bonds, corporate stocks and securities 2.821 2.860 2,856 2.869 2,907 2,921 2.901 2,913 2,861 Loans 19 Federal funds sold1 37.748 33.606 36,041 35.830 37,510 37.161 39,810 35,272 35,762 20 To commercial banks 26.682 23.710 25,601 25,177 27,496 26.947 29,417 25,313 25,592 21 To nonbank brokers and dealers in securities 8.127 7.072 7,510 8,159 7,513 7,909 8,284 7,868 8,250 22 To others 2,938 2,824 2.929 2.493 2,500 2,305 2,109 2,091 1,920 23 Other loans, gross 460.083 458.001 460,396 458,144 464,706 464,346 466,317 465,752 468,097 24 Commercial and industrial 200,444 200,826 200,516 199,712 202,156 202,388 205,248 206,015 206,424 25 Bankers acceptances and commercial paper 3.962 4.253 3.783 4,020 4,913 4,423 4,703 4,324 4,494 26 All other 196.482 196.573 196.733 195,692 197,243 197,966 200,546 201,691 201,929 27 U.S. addressees 189,669 189.822 190,003 188,777 190,363 190,809 193,434 194,578 194,651 28 Non-U.S. addressees 6.813 6,752 6.731 6,916 6,880 7,157 7,112 7,113 7,278 29 Real estate 122,958 123.163 123,328 123.635 123,731 123,787 123,973 124,266 124,266 30 To individuals for personal expenditures 65,442 65.293 65,444 65,632 65,922 65.835 65.996 66,014 66,141 To financial institutions 31 Commercial banks in the United States 6,549 6.829 6,925 6,844 7,028 8,290 6,875 6,555 6,615 32 Banks in foreign countries 7,204 7,082 6,973 6,807 7,193 7.358 7.416 7,168 6,821 33 Sales finance, personal finance companies, etc 11,178 11.069 10,972 11,118 11,452 10.843 10,851 10,629 10.950 34 Other financial institutions 15,723 15.798 15,923 15.687 16,066 15,776 16,041 15,830 15,773 35 To nonbank brokers and dealers in securities 8,019 5.894 7,903 6,380 7,662 7.134 7,033 6,700 7,850 36 To others for purchasing and carrying securities2 2,342 2.348 2,362 2.338 2,338 2,361 2,301 2,309 2,371 37 To finance agricultural production 6,368 6.354 6.360 6.311 6,382 6,319 6.297 6,335 6,390 38 All other 13.853 13.345 13,688 13,680 14,774 14.254 14,286 13,931 14,495 39 LESS: Unearned income 5,182 5,209 5.207 5,186 5.150 5,145 5,152 5,113 5,115 40 Loan loss reserve 7,027 7.048 7.071 7,056 7.146 7,195 7,176 7,192 7,119 41 Other loans, net 447,874 445.745 448,118 445,903 452,411 452,006 453,989 453,448 455,863 42 Lease financing receivables 10.722 10.715 10,716 10,700 10.738 10,753 10,780 10,758 10,760 43 All other assets 121,447 120.908 121.884 122.186 126,044 126,316 128,045 124,809 125,054 44 Total assets 807,378 798,663 803,795 802,633 826,888 821,960 832,195 812,086 812,423 Deposits 45 Demand deposits 155,947 149.875 149,985 149.259 170,515 164,286 170,048 151,413 153,241 46 Mutual savings banks 616 574 535 489 636 640 589 506 518 47 Individuals, partnerships, and corporations 114,842 113,907 113,530 112.150 126.934 123,203 126,134 114,542 115,199 48 States and political subdivisions 4.454 4.405 3,891 4.018 4,324 4,057 5,059 4,249 3,974 49 U.S. government 3,020 1.678 2,319 1,305 804 1,068 5,470 1,921 1,688 50 Commercial banks in the United States 17.065 15.986 16,375 16,623 19,147 19,691 18,205 16,538 16,608 51 Banks in foreign countries 6,931 6.184 5.977 5.794 5,815 6,726 5.856 5,954 5,719 52 Foreign governments and official institutions 1,024 865 1,003 1,087 1,239 1,020 847 951 935 53 Certified and officers' checks 7,994 6.277 6,354 7,792 11,616 7,881 7,889 6,751 8,599 54 Time and savings deposits 373.049 371.279 375.302 376.786 377,142 377,088 376,455 378,084 377,051 5S Savings 74,432 73.997 73,769 73,658 74,730 75,629 75,653 74,148 73,856 56 Individuals and nonprofit organizations 71,395 70.933 70.722 70,581 71.611 72,481 72,571 71,111 70,776 57 Partnerships and corporations operated for profit .... 2,528 2.519 2,516 2,574 2,589 2,632 2,570 2,535 2,556 58 Domestic governmental units 485 521 506 484 509 495 494 482 507 59 All other 24 24 25 19 20 21 18 20 17 60 Time 298,616 297,282 301,533 303,129 302,412 301,458 300,802 303,936 303,195 61 Individuals, partnerships, and corporations 262,356 261.179 264,083 265.331 264,676 263,776 263.027 266,008 265,294 62 States and political subdivisions 18,861 18.987 19.174 19,551 19,915 19,808 19,754 19,845 19,754 63 U.S. government 393 371 393 524 549 524 506 516 496 64 Commercial banks in the United States 12,072 11.920 12,819 12,650 12,310 12,447 12,629 12,580 12,715 65 Foreign governments, official institutions, and banks . 4,934 4,824 5,063 5,073 4,961 4,903 4.885 4,987 4,936 Liabilities for borrowed money 66 1,865 5 525 1.103 836 3,239 1,297 535 67 Treasury tax-and-loan notes 1,388 2.756 2,858 3,745 2,101 1,952 3,678 8,806 12,393 68 All other liabilities for borrowed money3 141.962 141,355 140,121 136,694 138,704 145,244 143,324 135,863 134,561 69 Other liabilities and subordinated notes and debentures 80,274 80,377 82,049 82,054 84,220 79,914 82,061 83,394 81,450 70 Total liabilities 754,483 745,647 750,839 749,642 773,518 768,484 778,806 758,858 759,231 71 Residual (total assets minus total liabilities)4 52,895 53.016 52,955 52,989 53,370 53,476 53,388 53,228 53,192 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 DomesticN onfinancial Statistics • October 1982 1.28 LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures, 1982 Account Aug. 4 Aug. 11 Aug. 18 Aug. 25 Sept. I? Sept. SP Sept. 15 p Sept. 22P Sept. 29P 1 Cash items in process of collection 14,644 12,759 13,494 14,923 22,531 16,109 18,914 14,156 16,655 2 Demand deposits due from banks in the United States 1,336 1,160 1,302 1,248 1,567 1,200 1,587 1,773 1,191 3 All other cash and due from depository institutions.. 6,262 6,877 5,953 6,812 5,726 5,468 8,967 5,110 4,522 4 Total loans and securities' 139,746 136,605 138,920 140,826 144,483 142,458 143,435 142,802 142,266 Securities 7 Investment account, by maturity 6,428 6,313 6,447 6,374 6,437 6,678 6,708 6,602 6,556 8 One year or less 1,064 1,047 1,222 1,096 1,109 1,016 1,138 1,117 991 9 Over one through five years 4,776 4,703 4,672 4,790 4,839 5,094 5,052 4,982 4,989 10 Over five years 587 563 553 488 488 568 518 503 576 13 Investment account 14,245 14,123 14,116 14,168 14,191 14,108 13,939 13,908 13,928 14 U.S. government agencies 2.003 2,003 2,010 2,059 2,054 2,042 2,022 2,015 2,084 15 States and political subdivision, by maturity .... 11,314 11,199 11,169 11,172 11,160 11,081 10,951 10,931 10,920 16 One year or less 1.664 1,514 1,470 1,454 1,422 1,431 1,411 1,271 1,253 17 Over one year 9.650 9,685 9,698 9,717 9,738 9,650 9,540 9,660 9,666 18 Other bonds, corporate stocks and securities.... 928 922 937 938 977 984 966 962 924 Loans 19 Federal funds sold 3 9,400 8,087 8,850 11,467 11,690 9,989 10,524 10,687 8,982 20 To commercial banks 4,314 3,709 4,004 6,150 6,946 4,955 5,321 5,812 4,045 21 To nonbank brokers and dealers in securities 3,664 3,163 3,619 4,347 3,783 4,084 4,300 3,824 4,067 22 To others 1,421 1,215 1,227 969 961 950 902 1,051 869 23 Other loans, gross 113,425 111,855 113,283 112,599 115,956 115,477 116,088 115,418 116,578 24 Commercial and industrial 59,412 59,291 59,249 59,057 59,963 59,890 61,381 61,575 61,222 25 Bankers acceptances and commercial paper 1,139 1,314 1,305 1,250 1,683 1,381 1,482 1,311 1,197 26 All other 58,273 57,977 57,944 57,807 58,280 58,508 59,899 60,264 60,025 27 U.S. addressees 56,899 56,663 56,642 56,399 56,912 57,117 58,528 58,749 58,410 28 Non-U.S. addressees 1,374 1,314 1,302 1,408 1,368 1,391 1,371 1,516 1,615 29 Real estate 18,463 18,462 18,507 18,769 18,812 18,823 18,919 18,969 18,941 30 To individuals for personal expenditures 11,364 11,386 11,434 11,460 11,524 11,535 11,531 11,590 11,594 31 To financial institutions Commercial banks in the United States 1,842 2,068 1,946 1,928 2,019 2,835 1,961 1,879 1,986 32 Banks in foreign countries 2,884 2,775 2,748 2,501 2,848 3,109 3,002 2,764 2,544 33 Sales finance, personal finance companies, etc... 4.911 4,777 4,674 4,851 5,146 4,734 4,781 4,560 4,723 34 Other financial institutions 4,720 4,794 4,863 4,829 5,098 4,849 4,966 4,914 4,902 35 To nonbank brokers and dealers in securities 4,929 3,548 5,001 4,262 5,148 4,750 4,725 4,415 5,516 36 To others for purchasing and carrying securities4 . 620 625 644 612 616 642 618 621 649 37 To finance agricultural production 440 432 432 426 491 428 416 413 424 38 All other 3,838 3,696 3,783 3,902 4,290 3,881 3,786 3,718 4,074 39 LESS: Unearned income 1,496 1,511 1,513 1,510 1,500 1,484 1,491 1,490 1,490 40 Loan loss reserve 2,255 2,262 2,263 2,270 2,292 2,309 2,333 2,325 2,289 41 Other loans, net 109,673 108.082 109,507 108,818 112,164 111,683 112,264 111,604 112,799 42 Lease financing receivables 2,119 2,118 2,119 2,104 2,091 2,090 2,112 2,092 2,093 43 All other assets5 51,020 50,739 50,169 50,111 52,305 52,015 51,595 50,572 50,615 44 Total assets 215,128 210,259 211,957 216,025 228,703 219,340 226,610 216,504 217,342 Deposits 45 Demand deposits 43,804 42,555 42,244 44,762 54,114 48,304 51,336 43,974 45,781 46 Mutual savings banks 320 323 283 231 300 306 300 260 249 47 Individuals, partnerships, and corporations 27,589 28,529 28,319 29,311 34,783 31,976 34,330 29,440 30,407 48 States and political subdivisions 679 848 432 452 602 751 1,233 607 519 49 U.S. government 830 496 662 381 140 318 1,612 508 474 50 Commercial banks in the United States 3,669 3,858 4,011 4,740 5,529 4,828 4,491 4,495 3,915 51 Banks in foreign countries 5,499 4,813 4,637 4,398 4,395 5,197 4,613 4,573 4,491 52 Foreign governments and official institutions 788 627 754 806 950 759 595 665 686 53 Certified and officers' checks 4,431 3,060 3,146 4,443 7,416 4,171 4,162 3,426 5,042 54 Time and savings deposits 73,775 73,437 75,063 75,469 76,005 75,260 74,528 74,310 72,705 55 Savings 9,633 9,626 9,599 9,560 9,671 9,812 9,834 9,664 9,645 56 Individuals and nonprofit organizations 9,293 9,259 9,246 9,228 9,342 9,475 9,498 9,332 9,311 57 Partnerships and corporations operated for profit 232 231 231 235 241 246 237 231 228 58 Domestic governmental units 105 134 120 96 85 88 97 99 105 59 All other 2 2 2 2 2 3 2 1 1 60 Time 64,143 63,811 65,464 65,909 66,333 65,447 64,694 64,646 63,060 61 Individuals, partnerships, and corporations 54,188 54,024 55,071 55,429 55,851 55,173 54,487 54,692 53,183 62 States and political subdivisions 2,289 2,330 2,386 2,350 2,442 2,384 2,372 2,333 2,300 63 U.S. government 78 77 94 190 224 211 197 206 195 64 Commercial banks in the United States 5,255 5,148 5.659 5,688 5,583 5,526 5,533 5,352 5,376 65 Foreign governments, official institutions, and banks 2,333 2,232 2,254 2,252 2,234 2,153 2,105 2,063 2,006 Liabilities for borrowed money 400 525 175 670 1,855 891 28 67 Treasury tax-and-loan notes 280 947 837 1,268 620 702 1,103 2,805 3,134 68 All other liabilities for borrowed money6 49.005 45,742 44,704 46,017 46,156 47,430 48,651 45,339 47,864 69 Other liabilities and subordinated notes and debentures 30,034 29,673 30,686 30,517 32,992 29,446 30,835 31,002 29,857 70 Total liabilities 197,298 192,354 194,061 198,209 210,557 201,142 208,309 198,321 199,369 71 Residual (total assets minus total liabilities)7 17,829 17,905 17,896 17,816 18,146 18,198 18,301 18,182 17,973 1. Excludes trading account securities. 5. Includes trading account securities. 2. Not available due to confidentiality. 6. Includes federal funds purchased and securities sold under agreements to 3. Includes securities purchased under agreements to resell. repurchase. 4. Other than financial institutions and brokers and dealers. 7. Not a measure of equity capital for use in capital adequacy analysis or for other analytic uses. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Banks A21 1.29 LARGE WEEKLY REPORTING COMMERCIAL BANKS Balance Sheet Memoranda Millions of dollars, Wednesday figures, 1982 Account Aug. 4 Aug. 11 Aug. 18 Aug. 25 Sept. 1 p Sept. 8? Sept. 15P Sept. 22P Sept. 29P BANKS WITH ASSETS OF $750 MILLION OR MORE 1 Total loans (gross) and securities adjusted1 609,209 607,496 608,492 605,059 611,261 612,903 614,628 613,665 616,495 2 Total loans (gross) adjusted1 492,321 488,746 491,770 489,586 495,430 493,959 497,714 497,612 499,972 3 Demand deposits adjusted2 96,915 98,568 95,642 96,287 102,844 100,750 100,226 96,564 96,880 4 Time deposits in accounts of $100,000 or more 202,763 201,316 205,141 206,667 205,841 204,620 203,854 206,555 205,787 5 Negotiable CDs 146,289 144,794 148,642 149,800 148,434 147,276 146,755 148,887 148,230 6 Other time deposits 56,474 56,522 56,499 56,867 57,408 57,344 57,100 57,667 57,556 7 Loans sold outright to affiliates3 2,804 2,795 2,822 2,881 2,833 2,835 2,820 2,855 2,861 8 Commercial and industrial 2,261 2,256 2,278 2,318 2,272 2,280 2,260 2,274 2,281 9 Other 542 540 544 563 561 555 560 582 580 BANKS WITH ASSETS OF $1 BILLION OR MORE 10 Total loans (gross) and securities adjusted1 572,031 570,312 571,053 567,816 573,989 575,606 577,003 575,464 578,411 11 Total loans (gross) adjusted1 464,599 461,069 463,910 461,953 467,692 466,270 469,835 469,157 471,651 12 Demand deposits adjusted2 89,960 91,587 88,752 89,233 95,319 93,552 93,107 89,541 89,416 13 Time deposits in accounts of $100,000 or more 193,765 192,325 196,177 197,694 196,749 195,547 194,672 197,328 196,368 14 Negotiable CDs 140,752 139,294 143,275 144,505 143,045 141,951 141,356 143,482 142,656 15 Other time deposits 53,013 53,031 52,899 53,190 53,704 53,596 53,316 53,846 53,713 16 Loans sold outright to affiliates3 2,714 2,708 2,736 2,800 2,754 2,751 2,741 2,787 2,784 17 Commercial and industrial 2,194 2,191 2,215 2,260 2,214 2,214 2,196 2,220 2,218 18 Other 520 516 521 540 539 537 545 567 566 BANKS IN NEW YORK CITY 19 Total loans (gross) and securities adjusted1-4 137,341 134,601 136,746 136,528 139,310 138,462 139,976 138,925 140,013 20 Total loans (gross) adjusted1 116,668 114,165 116,183 115,986 118,682 117,676 119,328 118,414 119,528 21 Demand deposits adjusted2 24,661 25,442 24,078 24,719 25,915 27,050 26,319 24,815 24,738 22 Time deposits in accounts of $100,000 or more 49,601 49,264 50,831 51,250 51,591 50,613 49,866 49,801 48,155 23 Negotiable CDs 38,358 37,938 39,772 40,227 40,411 39,650 39,095 38,798 37,157 24 Other time deposits 11,244 11,325 11,059 11,023 11,180 10,963 10,771 11,003 10,998 1. Exclusive of loans and federal funds transactions with domestic commercial 3. Loans sold are those sold outright to a bank's own foreign branches, nonbanks. consolidated nonbank affiliates of the bank, the bank's holding company (if not a 2. All demand deposits except U.S. government and domestic banks less cash bank), and nonconsolidated nonbank subsidiaries of the holding company, items in process of collection. 4. Excludes trading account securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 DomesticN onfinancialS tatistics • October 1982 1.291 LARGE WEEKLY REPORTING BRANCHES AND AGENCIES OF FOREIGN BANKS Assets and Liabilities Millions of dollars, Wednesday figures, 1982 Account Aug. 4 Aug. 11 Aug. 18 Aug. 25 Sept. IP Sept. 8p Sept. 15 p Sept. 22p Sept. 29p 1 Cash and due from depository institutions 6,416 6,589 6,788 6,644 6,946 7,112 6,865 7,265 7,253 2 Total loans and securities 45,352 45,170 45,855 45,330 46,072 45,792 46,556 46,164 47,712 3 U.S. Treasury securities 1,851 1,878 1,776 1,735 1,565 1,573 1,743 1,856 1,757 4 Other securities 849 847 849 856 859 854 841 840 840 5 Federal funds sold1 2,658 3,187 3,270 2,631 3,344 3,005 3,760 2,884 4,042 6 To commercial banks in United States.. 2,490 3,098 3,048 2,508 3,115 2,546 3,554 2,824 3,758 7 To others 168 89 222 123 229 459 207 60 283 8 Other loans, gross 39,994 39,258 39,959 40,108 40,304 40,360 40,212 40,584 41,074 9 Commercial and industrial 18,877 18,664 18,648 19,054 19,369 19,579 19,601 19,543 20,136 10 Bankers acceptances and commercial paper 3,047 3,077 2,893 3,099 3,105 3,158 3,145 3,097 3,286 11 All other 15,830 15,587 15,755 15,954 16,264 16,421 16,456 16,447 16,849 12 U.S. addressees 13,816 13,542 13,793 13,780 14,060 14,279 14,455 14,459 14,896 13 Non-U.S. addressees 2,013 2,045 1,962 2,174 2,204 2,142 2,001 1,988 1,953 14 To financial institutions 16,242 15,865 16,214 16,162 15,905 15,948 15,884 16,298 16,169 15 Commercial banks in United States .. 13,197 12,831 13,116 13,180 12,868 13,050 13,072 13,264 13,166 16 Banks in foreign countries 2,413 2,426 2,488 2,368 2,417 2,292 2,198 2,391 2,308 17 Nonbank financial institutions 631 608 611 614 619 606 614 643 694 18 For purchasing and carrying securities .. 582 455 557 413 477 233 352 316 433 19 All other 4,293 4,274 4,540 4,480 4,553 4,600 4,374 4,426 4,336 20 Other assets (claims on nonrelated parties) 12,898 12,941 13,030 12,712 12,606 12,421 12,361 12,068 11,859 21 Net due from related institutions 11,582 11,956 12,405 12,197 12,459 12,514 12,220 12,063 11,153 22 Total assets 76,247 76,655 78,078 76,884 78,083 77,839 78,003 77,560 77,977 23 Deposits or credit balances2 21,425 21,448 22,568 22,226 23,030 22,592 22,454 23,462 23,771 24 Credit balances 201 192 230 214 245 239 249 178 212 25 Demand deposits 1,913 1,760 1,940 1,813 2,048 1,988 2,064 2,081 1,906 26 Individuals, partnerships, and corporations 811 710 770 763 731 721 937 860 771 27 Other 1,102 1,050 1,170 1,050 1,317 1,267 1,126 1,221 1,135 28 Total time and savings 19,311 19,496 20,398 20,199 20,736 20,365 20,141 21,203 21,653 29 Individuals, partnerships, and corporations 16,224 16,352 17,010 16,808 17,303 17,111 16,871 17,930 18,609 30 Other 3,087 3,145 3,388 3,391 3,433 3,254 3,269 3,274 3,044 31 Borrowings3 33,756 33,707 34,448 32,934 34,340 34,360 34,192 33,316 32,624 32 Federal funds purchased4 8,684 8,621 9,447 7,910 9,451 9,690 9,735 8,499 8,058 33 From commercial banks in United States 7,747 7,746 8.625 7,045 8,612 8,758 8,559 7,440 7,227 34 From others 937 875 822 865 839 933 1,176 1,059 831 35 Other liabilities for borrowed money ... 25,073 25,086 25,001 25,024 24,889 24,669 24,457 24,817 24,565 36 To commercial banks in United States 22,643 22,595 22,600 22,564 22,518 22,358 22,158 22,376 22,333 37 To others 2,430 2,491 2,401 2,460 2,371 2,311 2,300 2,440 2,232 38 Other liabilities to nonrelated parties 13,033 12,829 12,857 12,518 12,428 12,159 12,141 11,800 11,629 39 Net due to related institutions 8,033 8,671 8,205 9,206 8,285 8,728 9,216 8,981 9,954 40 Total liabilities 76,247 76,655 78,078 76,884 78,083 77,839 78,003 77,560 77,977 MEMO 41 Total loans (gross) and securities adjusted' 29,664 29,241 29,691 29,642 30,088 30,197 29,931 30,076 30,788 42 Total loans (gross) adjusted5 26,965 26,516 27,065 27,051 27,664 27,770 27,346 27,380 28,190 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 A23 1.30 LARGE WEEKLY REPORTING COMMERCIAL BANKS Domestic Classified Commercial and Industrial Loans Millions of dollars Outstanding Net change during IIInnnddduuussstttrrryyy ccclllaaassssssiiifffiiicccaaatttiiiooonnn 1982 1982 May 26 June 30 July 28 Aug. 25 Sept. 29P Q2 Q3 July Aug. Sept/ 1 Durable goods manufacturing 28,842 29,104 28,543 29,155 31,469 465 2,367 -560 611 2,328 2 Nondurable goods manufacturing 23,998 25,297 24,819 24,890 25,809 2,135 506 -478 71 939 3 Food, liquor, and tobacco 4,784 4,807 4,681 4,584 4,840 256 34 -126 -96 243 4 Textiles, apparel, and leather 4,722 4,864 5,068 5,064 4,856 329 -7 204 -4 -209 5 Petroleum refining 4,677 5,087 4,840 4,717 5,316 638 220 -247 -123 598 6 Chemicals and rubber 5,232 5,551 5,198 5,548 5,811 795 260 -353 350 292 7 Other nondurable goods 4,581 4,988 5,032 4,976 4,987 498 1 44 -56 14 8 Mining (including crude petroleum and natural gas) 28,246 28,257 27,987 27,330 28,248 2,406 -7 -270 -657 931 9 Trade 28,704 29,166 28,580 28,304 29,010 345 -187 -586 -276 680 10 Commodity dealers 1,873 1,861 1,648 1,788 1,945 -460 84 -214 140 158 11 Other wholesale 13,489 13,775 13,634 13,482 13,974 249 198 -141 -152 483 12 Retail 13,342 13,529 13,298 13,035 13,091 556 -469 -231 -263 38 13 Transportation, communication, and other public utilities 23,703 25,015 24,964 24,752 24,908 1,372 -105 -51 -211 155 14 Transportation 9,070 9,228 8,868 8,961 8,981 74 -246 -360 93 16 15 Communication 4,559 4,779 4,832 4,904 5,140 538 361 52 72 235 16 Other public utilities 10,074 11,008 11,263 10,887 10,786 760 -220 256 -376 -95 17 Construction 7,690 7,765 7,926 7,835 7,893 513 128 161 -91 63 18 Services 27,956 28,780 28,863 28,987 29,332 1,639 564 83 124 357 19 All other1 17,133 17,301 17,362 17,572 17,982 40 719 61 210 420 20 Total domestic loans 186,271 190,684 189,044 188,825 194,651 8,914 3,986 -1,640 -219 5,874 21 MEMO: Term loans (original maturity more than 1 year) included in domestic loans . 89,282 89,849 87,247 87,050 89,290 2,646 -559 -2,602 -196 2,240 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 NonfinancialS tatistics • October 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 f 277.5 288.9 268.9 271.5 1 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 n.a. 148.6 154.8 138.7 141.4 4 Consumer 97.4 99.2 102.4 86.7 1 82.1 86.6 84.6 83.7 5 Foreign 2.7 3.1 3.3 3.4 I 3.1 2.9 3.1 2.9 6 Other 14.1 15.1 17.2 15.6 t 15.5 16.7 14.6 15.0 Weekly reporting banks 1980 1981 1982 11997788 1199779955 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 1 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 n.a. 71.2 75.2 67.1 67.7 1 1 0 1 C Fo o r n e s i u gn m er 3 2 8 . . 5 2 34 3. . 0 3 35 3 . . 6 1 30 3 . . 6 2 \ 11 28 2 . . 7 9 3 2 0. . 4 8 2 2 9. . 2 9 2 2 9 . . 8 7 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 Instrument 1977 1978 19791 1980 1981 Dec. Dec. Dec. Dec. Dec. Mar. Apr. May June July Aug. Commercial paper (seasonally adjusted) 1 All issuers 65,051 83,438 112,803 124,524 165,508 166,726 171,866 176,210 178,842 180,669 177,182 Financial companies2 Dealer-placed paper3 2 Total 8,796 12,181 17,359 19,790 30,188 31,574 32,848 34,683 36,685 37,961 38,066 3 Bank-related (not seasonally adjusted) 2,132 3,521 2,784 3,561 6,045 7,055 7,905 8,003 7,188 6,427 6,038 Directly placed paper4 4 Total 40,574 51,647 64,757 67,854 81,660 78,322 81,585 82,390 84,774 85,684 81,707 5 Bank-related (not seasonally adjusted) 7,102 12,314 17,598 22,382 26,914 27,579 29,434 30,576 30,828 31,141 28,901 6 Nonfinancial companies5 15,681 19,610 30,687 36,880 53,660 56,830 57,433 59,137 57,383 57,024 57.409 Bankers dollar acceptances (not seasonally adjusted unless noted otherwise) 7 Total 25,450 33,700 45,321 54,744 69,226 71,619 71,128 71,601 71,765 72,559 Holder 8 Accepting banks 10,434 8,579 9,865 10,564 10,857 12,964 12,675 11,104 10,362 11,164 9 Own bills 8,915 7,653 8,327 8,963 9,743 11,139 11,409 9,879 9,175 9,734 10 Bills bought 1,519 927 1,538 1,601 1,115 1,825 1,266 1,225 1,188 1,431 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 1,379 1,329 1,234 1,348 1,250 13 Others 13,700 24,456 33,370 41,614 56,926 57,276 57,124 59,262 60,054 60,145 Basis 14 Imports into United States 6,378 8,574 10,270 11,776 14,765 14,877 15,303 14,979 15,213 15,094 15 Exports from United States 5,863 7,586 9,640 12,712 15,400 16,835 16,887 16,255 15,649 16,167 16 All other 13,209 17,540 25,411 30,257 39,061 39,907 38,937 40,458 40,842 41,298 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 • October 1982 1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per annum Rate Effective Date Rate Month Average rate 20.00 1982—Feb. 128 . . 16.50 1981—Jan. 20.16 1982—Jan. 19.50 17.00 Feb. 19.43 Feb. 19.00 23. 16.50 Mar. 18.05 Mar. 18.00 July 20. 16.00 Apr. 17.15 Apr. 17.50 29. 15.50 May 19.61 May 17.00 Aug. 2. 15.00 June 20.03 June 16.50- 16. 14.50 July 20.39 July 17.00 18. 14.00 Aug. 20.50 Aug. 16.50 23. 13.50 Sept. 20.08 Sept. 16.00 Oct. 18.45 15.75 Nov. 16.84 Dec. 15.75 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 1-99 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 1-24 25-49 50-99 500 and over LAND DEVELOPMENT LOANS 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 16.96 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, Digitized for FofR loAaSns EmRad e. 2. Fewer than 10 sample loans. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Markets A27 1.35 INTEREST RATES Money and Capital Markets Averages, percent per annum; weekly and monthly figures are averages of business day data unless otherwise noted. 1982 1982, week ending IInnssttrruummeenntt 11997799 11998800 11998811 June July Aug. Sept. Sept. 3 Sept. 10 Sept. 17 Sept. 24 Oct. 1 MONEY MARKET RATES 1 Federal funds1-2 11.19 13.36 16.38 14.15 12.59 10.12 10.31 10.15 10.14 10.27 10.31 10.12 Commercial paper3 4 7 1-month 10.86 12.76 15.69 13.95 12.62 9.50 9.96 9.58 9.99 10.17 9.88 9.86 3 3-month 10.97 12.66 15.32 13.96 12.94 10.15 10.36 10.10 10.29 10.64 10.37 10.17 4 6-month 10.91 12.29 14.76 13.79 13.00 10.80 10.86 10.84 10.95 11.20 10.76 10.45 Finance paper, directly placed3-4 5 1-month 10.78 12.44 15.30 13.79 12.42 9.32 9.89 9.52 9.97 9.79 10.79 9.77 6 3-month 10.47 11.49 14.08 13.09 12.24 9.62 9.65 9.44 9.70 9.79 9.67 9.42 7 6-month 10.25 11.28 13.73 12.69 12.15 9.93 9.63 9.47 9.65 9.74 9.67 9.42 Bankers acceptances4-5 8 3-month 11.04 12.78 15.32 14.00 12.90 10.34 10.40 10.12 10.33 10.68 10.47 10.16 9 6-month n.a. n.a. 14.66 13.76 12.91 10.90 10.82 10.99 10.96 11.11 10.68 10.33 Certificates of deposit, secondary market6 10 1-month 11.03 12.91 15.91 14.18 12.88 10.07 10.23 9.98 10.15 10.53 10.21 10.08 11 3-month 11.22 13.07 15.91 14.46 13.44 10.61 11.66 10.42 10.58 10.94 10.73 10.43 12 6-month 11.44 12.99 15.77 14.66 13.80 11.53 11.46 11.64 11.64 11.81 11.31 10.86 13 Eurodollar deposits, 3-month2 11.96 14.00 16.79 15.45 14.37 11.57 11.74 11.26 11.53 11.94 11.93 11.61 U.S. Treasury bills4 Secondary market7 14 3-month 10.07 11.43 14.03 12.47 11.35 8.68 7.92 8.31 8.34 8.03 7.53 7.52 15 6-month 10.06 11.37 13.80 12.70 11.88 9.88 9.37 9.59 9.63 9.57 9.21 8.85 16 1-year 9.75 10.89 13.14 12.57 11.90 10.37 9.92 10.12 10.09 10.12 9.77 9.51 Auction average8 17 3-month 10.041 11.506 14.077 12.108 11.914 9.006 8.196 8.604 8.565 8.161 7.849 7.801 18 6-month 10.017 11.374 13.811 12.310 12.236 10.105 9.539 9.746 9.605 9.704 9.443 9.196 1199 99..881177 1100..774488 1133..115599 1122..117733 1122..331188 1111..119955 1100..228866 1100..228866 CAPITAL MARKET RATES U.S. Treasury notes and bonds9 Constant maturities10 20 1-year 10.67 12.05 14.78 14.07 13.24 11.43 10.85 11.12 11.05 11.10 10.67 10.34 2i1t 2-year 10.12 11.77 14.56 14.47 13.80 12.32 11.78 11.93 11.90 12.01 11.68 11.37 12.05 11.80 23 3-year 9.71 11.55 14.44 14.48 14.00 12.62 12.03 12.25 12.16 12.23 11.96 11.60 24 5-year 9.52 11.48 14.24 14.43 14.07 13.00 12.25 12.54 12.43 12.47 12.11 11'. 74 25 7-year 9.48 11.43 14.06 14.47 14.07 13.14 12.36 12.77 12.63 12.60 12.13 11.77 26 10-year 9.44 11.46 13.91 14.30 13.95 13.06 12.34 12.69 12.58 12.58 12.14 11.78 27 20-year 9.33 11.39 13.72 14.18 13.76 12.91 12.16 12.48 12.39 12.42 11.95 11.65 28 30-year 9.29 11.30 13.44 13.92 13.55 12.77 12.07 12.38 12.25 12.21 11.86 11.76 Composite12 29 Over 10 years (long-term) 8.74 10.81 12.87 13.32 12.97 12.15 11.48 11.76 11.63 11.62 11.30 11.18 State and local notes and bonds Moody's series13 3(1 Aaa 5.92 7.85 10.43 11.55 11.47 10.68 9.76 9.40 9.40 10.00 10.00 10.00 31 Baa 6.73 9.01 11.76 12.74c 13.17 12.36 11.75 12.00 12.00 12.00 11.50 11.25 32 Bond Buyer series14 6.52 8.59 11.33 12.45 12.28 11.23 10.66 10.74 10.75 10.74 10.58 10.48 Corporate bonds Seasoned issues15 33 All industries 10.12 12.75 15.06 15.77 15.70 15.06 14.34 14.56 14.43 14.43 14.25 14.09 34 Aaa 9.63 11.94 14.17 14.81 14.61 13.71 12.94 13.20 13.03 13.08 12.83 12.66 35 Aa 9.94 12.50 14.75 15.26 15.21 14.48 13.72 14.00 13.87 13.80 13.57 13.44 36 A 10.20 12.89 15.29 16.07 16.20 15.70 15.07 15.32 15.18 15.13 14.95 14.84 37 Baa 10.69 13.67 16.04 16.92 16.80 16.32 15.63 15.73 15.63 15.72 15.65 15.40 Aaa utility bonds16 38 10.03 12.74 15.56 15.92 15.61 13.95 13.50 13.93 13.60 13.14 13.31 39 Recently offered issues 10.02 12.70 15.56 15.84 15.61 14.47 13.57 13.88 13.87 13.67 13.28 13.30 MEMO: Dividend/price ratio17 40 Preferred stocks 9.07 10.57 12.36 12.96 13.24 12.78 12.41 12.38 12.42 12.44 12.47 12.35 41 Common stocks 5.46 5.25 5.41 5.97 6.31 6.32 5.63 5.80 5.61 5.52 5.54 5.66 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 1.16.) 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 NonfinancialS tatistics • October 1982 1.36 STOCK MARKET Selected Statistics 1982 IInnddiiccaattoorr 11997799 11998800 11998811 Jan. Feb. Mar. Apr. May June July Aug. Sept. 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 67.91 66.16 63.86 66.97 67.07 63.10 62.82 62.91 70.21 2 Industrial 61.82 78.64 85.44 76.85 74.78 71.51 75.59 75.97 71.59 71.37 70.98 80.08 3 Transportation 45.20 60.52 72.61 62.04 59.09 55.19 57.91 56.84 53.07 53.40 53.98 61.39 4 Utility 36.46 37.35 38.90 39.30 38.32 38.57 39.20 39.40 37.34 37.20 38.19 40.36 5 Finance 58.65 64.28 73.52 70.99 70.50 69.08 71.44 69.16 63.19 61.59 62.84 69.66 6 Standard & Poor's Corporation (1941^3 = 10)1,.. 107.94 118.71 128.05 117.41 114.50 110.84 116.31 116.35 109.70 109.38 109.65 122.43 7 American Stock Exchange (Aug. 31, 1973 = 100) 186.56 300.94 343.58 296.49 275.10 255.08 271.15 272.88 254.72 250.63 253.54 286.22 Volume of trading (thousands of shares) 8 New York Stock Exchange 32,233 44.867 46.967 48.419 51,169 55,227 54,116 51,328 50,481 54,530r 76,031 73,710 9 American Stock Exchange 4,182 6,377 5.346 4,497 4,400 4,329 3,937 4,292 3,720 3,611 5,567 5,064 Customer financing (end-of-period balances, in millions of dollars) 10 Regulated margin credit at brokers-dealers2 11,619 14,721 14,411 13,441 13,023 12,095 12,202 12,237 11,783 11,729 11,396 f 11 Margin stock3 11,450 14,500 14.150 13,190 12,770 11,840 11,950 11,990 11,540 11,470 11,150 12 Convertible bonds 167 219 259 249 251 249 251 246 242 258 245 13 Subscription issues 2 2 2 2 2 6 1 1 1 1 1 n a. Free credit balances at brokers4 14 Margin-account 1,105 2,105 3,515 3,455 3,755 3,895 4,145 4,175 4,215 4,410 4.470 1 15 Cash-account 4,060 6,070 7,150 6,575 6.595 6,510 6,270 6,355 6,345 6,730 7,550 t 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 37.0 44.0 39.0 34.0 40.0 43.0 44.0 30.0 18 40-49 29.0 30.0 21.0 24.0 22.0 24.0 25.0 24.0 21.0 23.0 26.0 19 50-59 27.0 25.0 22.0 16.0 15.0 16.0 18.0 15.0 16.0 13.0 18.0 n a. 20 60-69 14.0 14.0 10.0 10.0 8.0 10.0 10.0 9.0 9.0 9.0 12.0 1 21 70-79 8.0 9.0 6.0 7.0 6.0 6.0 7.0 6.0 6.0 6.0 8.0 1 22 80 or more 7.0 8.0 6.0 6.0 5.0 5.0 6.0 5.0 5.0 5.0 6.0 1 Special miscellaneous-account balances at brokers (end of period) 23 Total balances (millions of dollars)6 16,150 21,690 25,870 26,080 26,850 28,030 28,252 28,521 29,798 29,773 31,102 f Distribution by equity status (percent) 1 24 Net credit status 44.2 47.8 58.0 58.0 58.0 59.0 57.0 58.0 59.0 59.0 60.0 n.a. Debt status, equity of 1 25 60 percent or more 47.0 44.4 31.0 31.0 30.0 28.0 29.0 29.0 28.0 26.0 28.0 I 26 Less than 60 percent 8.8 7.7 11.0 11.0 12.0 13.0 13.0 13.0 13.0 14.0 12.0 t Margin requirements (percent of market value and effective date)7 Mar. 11, 1968 June , 1968 May 6, 1970 Dec. 6. 1971 Nov. 24, 1972 Jan. 3, 1974 27 Margin stocks 70 80 65 55 65 50 28 Convertible bonds 50 60 50 50 50 50 29 Short sales 70 80 65 55 65 50 1. Effective July 1976, includes a new financial group, banks and insurance 5. Each customer's equity in his collateral (market value of collateral less net companies. With this change the index includes 400 industrial stocks (formerly debit balance) is expressed as a percentage of current collateral values. 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40 6. Balances that may be used by customers as the margin deposit required for financial. additional purchases. Balances may arise as transfers based on loan values of other 2. Margin credit includes all credit extended to purchase or carry stocks or related collateral in the customer's margin account or deposits of cash (usually sales proequity instruments and secured at least in part by stock. Credit extended is end- ceeds) occur. of-month data for member firms of the New York Stock Exchange. 7. Regulations G, T, and U of the Federal Reserve Board of Governors, pre- In addition to assigning a current loan value to margin stock generally. Regu- scribed in accordance with the Securities Exchange Act of 1934, limit the amount lations T and U permit special loan values for convertible bonds and stock acquired of credit to purchase and carry margin stocks that may be extended on securities through exercise of subscription rights. as collateral by prescribing a maximum loan value, which is a specified percentage 3. A distribution of this total by equity class is shown on lines 17-22. of the market value of the collateral at the time the credit is extended. Margin 4. Free credit balances are in accounts with no unfulfilled commitments to the requirements are the difference between the market value (100 percent) and the brokers and are subject to withdrawal by customers on demand. maximum loan value. The term "margin stocks" is defined in the corresponding regulation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Institutions A29 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1981 1982 Account 1979 1980 Nov. Dec. Jan. Feb. Mar. Apr. May June Julyr Aug. Savings and loan associations 1 Assets 578,962 630,712 660,326 663,844 667,600 671,895 678,039 681,368 686,942 692,245 697,354 702,413 2 Mortgages 475,688 503,192 519,146 518,350 517,493 516,284 515,896 514,475 513,807 512,746 510,413 509,291 3 Cash and investment securities1 46,341 57,928 61,369 62,756 64,089 66,585 67,758 67,859 69,931 70,451 72,477 73,676 4 Other 56,933 69,592 79,811 82,738 86,018 89,026 94,835 99,034 103,204 109,228 114,464 119,446 5 Liabilities and net worth 578,962 630,712 660,326 663,844 667,600 671,895 678,039 681,368 686,942 692,425 697,354 702,413 6 Savings capital 470,004 511,636 519,777 524,374 526,382 529,064 535,566 532,899 534,517 537,965 539,127 541,490 7 Borrowed money 55,232 64,586 86,255 89,097 89,099 89,465 91,013 93,883 94,440 97,177 98,762 99,139 8 FHLBB 40,441 47,045 61,922 62,794 62,581 62,690 63,639 65,347 65,216 66,925 67,019 66,417 9 Other 14,791 17,541 24,333 26,303 26,518 26,775 27,374 28,536 29,224 30,252 31,743 32,722 10 Loans in process 9,582 8,767 6,451 6,369 6,249 6,144 6,399 6,550 6,748 7,087 7,231 7,446 11 Other 11,506 12,394 19,101 15,612 18,356 20,145 18,574 22,012 25,819 24,732 27,433 29,889 12 Net worth2 32,638 33,329 28,742 28,392 27,514 27,077 26,487 26,024 25,418 25,454 24,801 24,449 13 MEMO: Mortgage loan commitments outstanding3 16,007 16,102 15,758 15,225 15,131 15,397 15,582 16,375 16,622 16,828 15,924 16,728 Mutual savings banks4 14 Assets 163,405 171,564 175,258 175,728 175,938 175,763 174,776 174,813 174,952 175,091 175,563 Loans 15 Mortgage 98,908 99,865 99,879 99,997 99,788 98,838 97,464 97,160 96,334 96,346 96,231 16 Other 9,253 11,733 15,073 14,753 15,029 15,604 16,514 16,424 17,409 16,546 17,104 Securities 17 U.S. government5 7,658 8,949 9,508 9,810 9,991 9,966 10,072 10,146 9,968 10,112 10,036 18 State and local government 2,930 2,390 2,271 2,288 2,290 2,293 2,276 2,269 2,259 2,253 2,247 19 Corporate and other6 37,086 39,282 37,874 37,791 37,849 37,781 37,379 37,473 37,486 36,958 36,670 20 Cash 3,156 4,334 5,039 5,442 5,210 5,412 5,219 5,494 5,469 6,040 6,167 21 Other assets 4,412 5,011 5,615 5,649 5,781 5,869 5,852 5,846 6,027 6,836 7,109 n a. 22 Liabilities 163,405 171,564 175,258 175,728 175,938 175,763 174,776 174,813 174,952 175,091 175,563 23 Deposits 146,006 154,805 153,809 155,110 154,843 154,626 154,022 153,187 153,354 154,273 154,204 24 Regular7 144,070 151,416 151,787 153,003 152,801 152,616 151,979 151,021 151,253 152,030 151,845 25 Ordinary savings 61,123 53,971 48,456 49,425 48,898 48,297 48,412 47,733 47,895 47,942 47,534 26 Time 82,947 97,445 103,331 103,578 103,903 104,318 103,567 103,288 103,358 104,088 104,310 27 Other 1,936 2,086 2,023 2,108 2,042 2,010 2,043 2,166 2,101 2,243 2,359 28 Other liabilities 5,873 6,695 11,434 10,632 11.280 11,464 11,132 12,141 12,246 11,230 11,940 29 General reserve accounts 11,525 11,368 10,015 9,986 9,814 9,672 9,622 9,485 9,352 9,588 9,419 30 MEMO: Mortgage loan commitments outstanding8 3,182 1,476 1,207 1,293 916 950 978 953 998 1,010 992 Life insurance companies 31 Assets 432,282 479,210 523,866 525,803 529,094 531,166 535,402 539,801 543,470 547,075 551,124 Securities 37 Government 338 21,378 25,147 25,209 25,916 26,208 26,958 27,346 27,835 28,243 28,694 33 United States9 4,888 5,345 8,105 8,167 8,771 9,019 9,576 9,832 10,187 10,403 10,774 34 State and local 6,428 6,701 7,172 7,151 7,247 7,302 7,369 7,467 7,543 7,643 7,705 35 Foreign10 9,022 9,332 9,870 9,891 9,898 9,887 10,013 10,045 10,105 10,197 10,215 n a. 36 Business 222,332 238,113 256,881 255,769 259,279 259,449 259,770 262,599 264,107 265,080 267,627 37 Bonds 178,171 190,747 209,639 208,098 211,917 213,180 213,683 215,586 217,594 219,006 221,503 38 Stocks 48,757 47,366 47,242 47,670 47,362 46,269 46,087 47,013 46,513 46,074 46,124 39 Mortgages 119,421 131,030 137,275 137,747 138,210 138,372 138,762 139,206 139,455 139,539 140,044 40 Real estate 13,007 15,063 17,819 18,278 18,409 18,702 19,167 19,516 19,713 19,959 20,198 41 Policy loans 44,825 41,411 48,246 48,706 49,059 49,490 50,052 50,573 50,992 51,438 51,867 42 Other assets 27,563 31.702 38,499 40,094 38,121 38,945 40,696 40,561 41,368 42,816 42,694 Credit unions 43 Total assets/liabilities and capital 65,854 71,709 76,830 77,682 78,012 78,986 81,055 81,351 82,858 84,107 84,423 85,102 44 Federal 35,934 39,801 42,025 42,382 42,512 43,111 44,263 44,371 45,077 45,705 45,931 46,310 45 State 29,920 31,908 34,805 35,300 35.500 35,875 36,792 36,980 37,781 38,402 38,492 38,792 46 Loans outstanding 53,125 47,774 50,631 50,448 49,949 49,610 49,668 49,533 49,556 49,919 50,133 50,733 47 Federal 28,698 25,627 27,508 27,458 27,204 27,051 27,119 27,064 27,073 27,295 27,351 27,659 48 State 24,426 22,147 23,123 22,990 22,745 22,559 22,549 22,469 22,483 22,624 22,782 23,074 49 Savings 56,232 64,399 67,981 68,871 69,432 70,227 72,218 72,569 73,602 74,834 75,088 75,331 50 Federal (shares) 35,530 36,348 37,261 37,574 37,875 38,331 39,431 39,688 40,213 40,710 40,969 41,178 51 State (shares and deposits) 25,702 28,051 30,720 31,297 31,557 31,896 32,787 32,881 33,389 34,124 34,119 34,153 For notes see bottom of page A30. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Nonfinancial Statistics • October 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 June July Aug. U.S. budget 1 Receipts' 463,302 517,112 599,272 317,304 301,777 322,478 66,353 44,675 44,924 2 Outlays1'2 490,997 576,675 657,204 333,115 358,558 348,678 59,629 64,506 59,628 3 Surplus, or deficit (-) -27,694 -59,563 -57,932 -15,811 -56,780 -26,200 6,724 -19,831 -14,704 4 Trust funds 18,335 8,801 6,817 5,797 -8,085 -17,690 5,192 -6,171 -1,997 5 Federal funds3 -46,030 -68,364 -64,749 -21,608 -48,697 -43,889 1,532 -13,660 -12,707 OOffff--bbuuddggeett eennttiittiieess ((ssuurrpplluuss,, oorr ddeeffiicciitt ((--)))) 66 FFeeddeerraall FFiinnaanncciinngg BBaannkk oouuttllaayyss -13,261 -14,549 -20,769 -11,046 -8,728 -7,942 -2,052 -939 -1,336 77 OOtthheerr44 793 303 -236 -900 -1,752 227 -216 -192 -711 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 4,457 -20,962 -16,751 Source or financing 9 Borrowing from the public 33,641 70,515 79,329 33,213 54,081 41,728 3,260 14,348 21,086 10 Cash and monetary assets (decrease, or increase (- )y -408 -355 -1,878 2,873 -1,111 -408 3,489 1,061 2,338 11 Other6 6,929 3,648 1,485 -8,328 14,290 -7,405 -4,228 5,553 -6,673 MEMO: 12 Treasury operating balance (level, end of period) 24,176 20,990 18,670 16,389 12,046 10,999 10,999 10,398 8,019 13 Federal Reserve Banks 6,489 4,102 3,520 2,923 4,301 4,099 4,099 3,275 3,234 14 Tax and loan accounts 17,687 16,888 15,150 13,466 7,745 6,900 6,900 7,123 4,785 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 gold; 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 June July Aug. RECEIPTS 1 All sources1 463,302 517,112 599,272 317,304 301,777 322,478 66,353 44,675 44,924 2 Individual income taxes, net 217,841 244,069 285,917 142,889 147,035 150,565 32,273 23,987 20,867 3 Withheld 195,295 223,763 256,332 126,101 134,199 133,575 21,912 23,769 20,521 4 Presidential Election Campaign Fund... 36 39 41 36 5 34 4 4 1 5 Nonwithheld 56,215 63,746 76,844 59,907 17,391 66,174 11,774 2,233 1,529 6 Refunds 33,705 43,479 47,299 43,155 4,559 49,217 1,417 2,019 1,185 Corporation income taxes 7 Gross receipts 71,448 72,380 73,733 44,048 31,056 37,836 11,943 2,445 1,694 8 Refunds 5,771 7,780 12,596 6,565 738 8,028 1,354 1,844 1,271 9 Social insurance taxes and contributions. net 138,939 157,803 182,720 101,316 91,592 108,079 17,572 14,874 17,961 10 Payroll employment taxes and contributions2 115,041 133,042 156,953 83,851 82,984 88,795 16,189 13,860 14,823 11 Self-employment taxes and contributions3 5,034 5,723 6,041 6,240 244 7,357 828 -649 0 12 Unemployment insurance 15,387 15,336 16,129 9,205 6,355 9,809 217 1,292 2,743 13 Other net receipts1-4 3,477 3,702 3,598 2,020 2,009 2,119 336 370 396 14 Excise taxes 18,745 24,329 40,839 21,945 22,097 17,525 2,768 2,774 2,828 15 Customs deposits 7,439 7,174 8,083 3,926 4,661 4,310 771 773 747 16 Estate and gift taxes 5,411 6,389 6,787 3,259 3,742 4,208 745 624 681 17 Miscellaneous receipts5 9,252 12,748 13,790 6,487 8,441 7,984 1,634 1,042 1,418 OUTLAYS 18 All types1-6 490,997 576,675 657,204 333,115 358,558 346,286 59,629 64,506 59,628 19 National defense 117,681 135,856 159,765 80,005 87,421 93,154 16,419 16,757 15,318 20 International affairs 6,091 10,733 11,130 5,999 4,655 5,183 402 460 395 21 General science, space, and technology ... 5,041 5,722 6,359 3,314 3,388 3,370 543 552 620 22 Energy 6,856 6,313 10,277 5,677 4,394 2,814 601 171 256 23 Natural resources and environment 12,091 13,812 13,525 6,476 7,296 5,636 1,041 1,161 1,172 24 Agriculture 6,238 4,762 5,572 3,101 5,181 7,087 53 831 707 25 Commerce and housing credit 2,579 7,788 3,946 2,073 1,825 1,410 4 996 -385 26 Transportation 17,459 21,120 23,381 11,991 10,753 9,915 1,752 1,608 1,836 27 Community and regional development — 9,542 10,068 9,394 4,621 4,269 3,193 557 502 675 28 Education, training, employment, social services 29,685 30,767 31,402 15,928 13,878 12,595 1,997 1,838 2,408 29 Health1 46,962 55,220 65,982 33,113 35,322 37,213 6,772 6,275 6,356 30 Income security6 160,159 193,100 225,099 113,490 129,269 112,782 20,812 22,385 20,346 31 Veterans benefits and services 19,928 21,183 22,988 10,531 12,880 10,865 1,927 3,099 997 32 Administration of justice 4,153 4,570 4,698 2,344 2,290 2,334 353 376 427 33 General government 4,093 4,505 4,614 2,692 2,311 2,410 393 207 630 34 General-purpose fiscal assistance 8,372 8,584 6,856 3,015 3,043 3,325 204 1,165 38 35 Interest 52,566 64,504 82,537 41,178 47,667 50,070 13,787 7,158 8,871 36 Undistributed offsetting receipts7 -18,488 -21,933 -30,320 -12,432 -17,281 -14,680 -7,989 -1,036 -1,038 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 rehealth 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 Financial Statistics • October 1982 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1980 1981 1982 IItteemm June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 1 Federal debt outstanding 884.4 914.3 936.7 970.9 977.4 1,003.9 1,034.7 1,066.4 1,084.7 2 Public debt securities 877.6 907.7 930.2 964.5 971.2 997.9 1,028.7 1,061.3 1,079.6 3 Held by public 682.7 710.0 737.7 773.7 771.3 789.8 825.5 858.9 867.9 4 Held by agencies 194.9 197.7 192.5 190.9 199.9 208.1 203.2 202.4 211.7 5 Agency securities 6.8 6.6 6.5 6.4 6.2 6.1 6.0 5.1 5.0 6 Held by public 5.3 5.1 5.0 4.9 4.7 4.6 4.6 3.9 3.9 7 Held by agencies 1.5 1.5 1.5 1.5 1.5 1.5 1.4 1.2 1.1 8 Debt subject to statutory limit 878.7 908.7 931.2 965.5 972.2 998.8 1,029.7 1,062.2 1,080.5 9 Public debt securities 877.0 907.1 929.6 963.9 970.6 997.2 1,028.1 1,060.7 1,079.0 10 Other debt1 1.7 1.6 1.6 1.6 1.6 1.6 1.6 1.5 1.5 11 MEMO: Statutory debt limit 925.0 925.0 935.1 985.0 985.0 999.8 1,079.8 1,079.8 1,143.1 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 May June July Aug. Sept. 1 Total gross public debt 789.2 845.1 930.2 1,028.7 1,071.7 1,079.6 1,089.6 1,109.2 1,142.0 By type 2 Interest-bearing debt 782.4 844.0 928.9 1,027.3 1,066.4 1,078.4 1,083.3 1,108.1 1,140.9 3 Marketable 487.5 530.7 623.2 720.3 755.7 764.0 774.1 801.4 824.4 4 Bills 161.7 172.6 216.1 245.0 256.1 256.0 262.0 273.1 277.9 5 Notes 265.8 283.4 321.6 375.3 398.4 406.9 411.1 427.4 6 Bonds 60.0 74.7 85.4 99.9 101.2 101.1 101.0 100.9 103.6 7 Nonmarketable1 294.8 313.2 305.7 307.0 310.7 314.4 309.2 306.7 316.4 8 2.2 2.2 9 State and local government series 24.3 24.6 23.8 23.0 23.4 23.4 23.4 23.5 23.6 10 Foreign issues3 29.6 28.8 24.0 19.0 18.4 17.5 16.6 15.6 14.7 11 Government 28.0 23.6 17.6 14.9 14.8 13.8 13.6 12.5 12.2 12 Public 1.6 5.3 6.4 4.1 3.6 3.6 3.1 3.1 2.4 13 Savings bonds and notes 80.9 79.9 72.5 68.1 67.3 67.4 67.4 67.4 67.5 14 Government account series4 157.5 177.5 185.1 196.7 201.3 206.0 201.5 119.9 210.5 15 Non-interest-bearing debt 6.8 1.2 1.3 1.4 5.3 1.2 1.1 1.1 1.2 By holder5 16 U.S. government agencies and trust funds 170.0 187.1 192.5 203.3 206.7 211.7 17 Federal Reserve Banks 109.6 117.5 121.3 131.0 129.4 127.0 18 Private investors 508.6 540.5 616.4 694.5 735.2 740.9 19 Commercial banks 93.2 96.4 116.0 109.4 109.4 117.0 20 Mutual savings banks 5.0 4.7 5.4 5.2 5.7 5.7 21 Insurance companies 15.7 16.7 20.1 19.1 21.5r 22.2 22 Other companies 19.6 22.9 25.7 37.8 38.8 38.9 n a. n a. n a. 23 State and local governments 64.4 69.9 78.8 85.6 91.8 91.2 Individuals 24 Savings bonds 80.7 79.9 72.5 68.0 67.4 67.4 25 Other securities 30.3 36.2 56.7 75.6 78.8 78.8 26 Foreign and international6 137.8 124.4 127.7 141.4 138.9 141.9 27 Other miscellaneous investors7 58.9 90.1 106.9 152.3 182.9 177.8 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 Type of holder 1980 1981 11998800 11998811 June July June July All maturities 1 to 5 years 1 All holders 623,186 720,293 763,995 774,077 197,409 228,550 249,021 245,985 2 U.S. government agencies and trust funds 9,564 8,669 7,994 7,988 1,990 1,906 1,775 1,770 3 Federal Reserve Banks 121,328 130,954 127,005 131,533 35,835 38,223 37,484 37,834 4 Private investors 492,294 580,671 628,997 634,556 159,585 188,422 209,762 206,381 5 Commercial banks 77,868 74,618 82,431 74,707 44,482 39,021 41,479 38,662 6 Mutual savings banks 3,917 3,971 4,415 4,335 1,925 1,870 2,063 2,010 7 Insurance companies 11,930 12,090 13,453 13,708 4,504 5,596 6,342 6,265 8 Nonfinancial corporations 7,758 4,214 3,710 3,497 2,203 1,146 929 803 9 Savings and loan associations 4,225 4,1227 5,062 4,896 2,289 2,260 2,852 2,733 10 State and local governments 21,058 18,991 22,631 21,703 4,595 4,278 4,696 4,552 11 All others 365,539 462,663 497,294 511,711 99,577 134,251 151,401 151,355 Total, within 1 year 5 to 10 years 12 All holders 297,385 340,082 355,611 361,264 56,037 63,483 67,108 74,631 13 U.S. government agencies and trust funds 830 647 144 145 1,404 779 779 779 14 Federal Reserve Banks 56,858 64,113 62,202 65,986 13,548 11,854 10,559 10,830 15 Private investors 239,697 275,322 293,264 295,116 41,175 50,851 55,770 63,022 16 Commercial banks 25,197 29,480 33,944 29,877 5,793 4,496 3,978 3,161 17 Mutual savings banks 1,246 1,569 1,794 1,794 455 238 220 199 18 Insurance companies 1,940 2,201 2,244 2,402 3,037 2,507 2,682 2,879 19 Nonfinancial corporations 4,281 2,421 1,694 1,582 357 344 277 280 20 Savings and loan associations 1,646 1,731 1,927 1,784 216 98 141 255 21 State and local governments 7,750 7,536 7,622 6,289 2,030 2,365 2,606 2,885 22 All others 197,636 230,383 244,040 251,388 29,287 40,804 45,867 53,363 Bills, within 1 year 10 to 20 years 23 AH holders 216,104 245,015 256,007 262,009 36,854 44,744 46,246 46,205 24 U.S. government agencies and trust funds 1 » 1 2 3,686 3,996 3,952 3,952 25 Federal Reserve Banks 43,971 49,679 47,921 52,358 5,919 6,692 6,642 6,669 26 Private investors 172,132 195,335 208,085 209,650 27,250 34,055 35,651 35,583 27 Commercial banks 9,856 9,667 13,556 10,062 1,071 873 1,351 1,336 28 Mutual savings banks 394 423 586 604 181 151 182 181 29 Insurance companies 672 760 762 925 1,718 1,119 1,367 1,361 30 Nonfinancial corporations 2,363 1,173 998 1,010 431 131 481 511 31 Savings and loan associations 818 363 760 681 52 16 29 29 32 State and local governments 5,413 5,126 4,789 3,746 3,597 2,824 4,814 4,858 33 All others 152,616 177,824 186,634 192,622 20,200 28,940 27,428 27,208 Other, within 1 year Over 20 years 34 All holders 81,281 95,068 99,604 99,237 35,500 43,434 46,010 46,010 35 U.S. government agencies and trust funds 829 647 143 143 1,656 1,340 1,343 1,343 36 Federal Reserve Banks 12,888 14,433 14,281 13,627 9,258 10,073 10,118 10,214 37 Private investors 67,565 79,987 85,180 85,467 24,587 32,020 34,549 34,453 38 Commercial banks 15,341 19,814 20,388 19,815 1,325 749 1,679 1,670 39 Mutual savings banks 852 1,146 1,208 1,190 110 144 156 151 40 Insurance companies 1,268 1,442 1,481 1,476 730 666 819 801 41 Nonfinancial corporations 1,918 1,248 696 573 476 172 329 321 42 Savings and loan associations 828 1,368 1,167 1,103 21 17 114 96 43 State and local governments 2,337 2,410 2,833 2,542 3,086 1,988 2,893 3,019 44 All others 45,020 52,560 57,406 58,767 18,838 28,285 28,559 28,397 NOTE. Direct public issues only. Based on Treasury Survey of Ownership from and 726 insurance companies, each about 80 percent; (2) 405 nonfinancial cor- Treasury Bulletin (U.S. Treasury Department). porations and 457 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 July 31,1982: (1) 5,279 commercial banks, 439 mutual savings banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic Nonfinancial Statistics • October 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 June July Aug. Aug. 25 Sept. 1 Sept. 8 Sept. 15 Sept. 22 Immediate delivery1 1 U.S. government securities 13,183 18,331 24,728 27,136 33,328 41,041 40,165 37,643 36,644 33,605 42,358 By maturity 2 Bills 7,915 11,413 14,768 16,831 20,675 23,655 24,169 20,155 24,297 20,343 22,374 3 Other within 1 year 454 421 621 646 1,011 1,094 1.037 867 894 1,379 1,323 4 1-5 years 2,417 3,330 4,360 4,438 5,899 8,784 8,175 8,854 5,058 5,144 11,233 5 5-10 years 1,121 1,464 2,451 2,821 3,558 4,186 3,426 4,928 3,909 3,952 3,905 6 Over 10 years 1,276 1,704 2,528 2,400 2,186 3,323 3.359 2,838 2,486 2,788 3,523 By type of customer / U.S. government securities dealers 1,448 1,484 1,640 1,693 2,095 1,997 2,293 1,765 2,127 1,712 1,970 8 U.S. government securities brokers 5,170 7,610 11,750 13,061 16,106 19,616 19,327 17,139 16,732 15,661 19,210 9 All others2 6,564 9,237 11,337 12,382 15,127 19,429 18.545 18,739 17,785 16,232 21,179 10 Federal agency securities 2,723 3,258 3,306 3,237 4,011 5,000 5,778 4,336 3,722 4,274 4,958 11 Certificates of deposit 1,764 2,472 4,477 5,518 6,068 5,391 5,662 3,893 3,983 4,479 4,801 12 Bankers acceptances 1,807 2,250 2,915 2,781 2,399 2,267 2,415 2,356 2,317 13 Commercial paper 6,128 8,131 7,308 7,686 7,754 7,460 7,709 7,966 7,703 Futures transactions3 T 14 Treasury bills 3,523 4,629 4,969 6,404 6,564 5,798 4,934 6,856 6,382 15 Treasury coupons 1 1,330 1,215 1,033 1,573 1,455 1,593 1,688 1,432 3,357 16 Federal agency securities n.a. n.a. 234 267 285 331 348 294 262 263 311 Forward transactions4 1 17 U.S. government securities \ 365 692 482 743 437 554 594 1,014 1,323 18 Federal agency securities 1,370 537 610 787 856 720 721 1,221 1,107 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 cdelivery 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 11997799 11998800 11998811 June July Aug. Aug. 4 Aug. 11 Aug. 18 Aug. 25 Sept. 1 Positions Net immediate1 1 U.S. government securities 3,223 4,306 9,033 11,075 9,161 4,893 7,258 8,928 6,432 1,578 418 2 Bills 3,813 4.103 6,485 7,284 7,163 1,265 3,510 4,672 2,393 -1,493 -2,426 3 Other within 1 year -325 -1,062 -1,526 -462 -2,027 -632 -506 -527 -688 -747 -655 4 1-5 years -455 434 1,488 2,206 2,552 2,269 3,075 3,092 2,692 2,043 2,005 5 5-10 years 160 166 292 -254 -417 -248 -827 -264 -73 -38 -25 6 Over 10 years 30 665 2,294 2,301 1,890 1,880 2,005 1,955 2,108 1,813 1,517 7 Federal agency securities 1,471 797 2,277 2,976 2,878 3,578 3,522 3,460 3,769 3,599 3,454 8 Certificates of deposit 2,794 3,115 3,435 5,580 7,728 7,834 8,529 7,904 8,382 7,850 6,539 9 Bankers acceptances i 1 1,746 2,666 3,023 3,207 3,668 3,343 3,394 2,909 2,988 10 Commercial paper t t 2,658 3,503 3,779 3,658 4,015 3,542 3,502 3,791 3,448 Futures positions 11 Treasury bills 1 1 -8,934 -6,067 -1,542 6,185 4,069 4,448 6,540 7,944 7,512 12 Treasury coupons n.a. n.a. -2,733 -2,045 -2,878 -2,915 -3,103 -3,406 -3,628 -2,332 -1,862 13 Federal agency securities I 1 522 73 295 -11 341 236 270 -405 -438 Forward positions 1 1 4 5 U Fe .S d . e r g a o l v a e g r e n n m cy e n s t ec se u c ri u t r i i e t s i es \ 1 1 - - 6 4 0 5 3 1 -1 - , 7 4 6 5 0 2 -1 - , 4 2 4 2 4 7 -1 - , 6 2 1 4 2 1 -1 - , 3 1 7 3 6 2 -1 - , 2 1 2 8 8 7 -1 - , 6 1 7 4 6 8 -1 - , 8 3 6 9 0 6 - - 1 1 , , 2 3 0 2 4 0 Financing2 Reverse repurchase agreements3 f f 16 Overnight and continuing 14,568 25,655 27,391 29,374 26,411 29,554 30,204 31,327 32,046 17 Term agreements 1 1 32,048 39,795 44,136 50,497 53,984 47,881 49,642 50,482 49,411 Repurchase agreements4 n.1a. n1.a. 18 Overnight and continuing 1 35,919 42,038 54,660 50,318 53,397 51,382 49,094 47,399 47,107 19 Term agreements 29,449 35,525 37,821 48,692 46,621 47,753 48,854 51,538 50,409 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 June 1 Federal and federally sponsored agencies1 137,063 163,290 193,229 227,210 226,418 226,539 228,749 232,274 234,593 238,787 2 Federal agencies 23,488 24,715 28,606 31,806 31,053 30,806 31.408 31,613 31,551 32,274 3 Defense Department2 968 738 610 484 470 460 454 447 434 419 4 Export-Import Bank3'4 8,711 9,191 11,250 13,339 13,135 12,861 13,421 13,475 13,416 13,939 5 Federal Housing Administration5 588 537 477 413 406 397 382 376 363 358 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 2,165 7 Postal Service7 2,364 1,837 1,770 1,538 1,538 1,538 1,538 1,538 1,471 1,471 8 Tennessee Valley Authority 7,460 8,997 11,190 13,115 13,115 13,187 13,250 13,410 13,500 13,715 9 United States Railway Association7 356 436 492 202 198 198 198 202 202 207 10 Federally sponsored agencies1 113,575 138,575 164,623 195,404 195,365 195,733 197,341 200,661 203,042 206,513 11 Federal Home Loan Banks 27,563 33,330 41,258 58,090 57,387 57,743 58,839 59,937 60,772 61,883 12 Federal Home Loan Mortgage Corporation 2,262 2,771 2,536 2,604 2,604 2,604 2,500 2,500 2,500 3,099 13 Federal National Mortgage Association 41,080 48,486 55,185 58,749 58,860 59,018 59,270 60,478 61,996 62,660 14 Federal Land Banks 20,360 16,006 12,365 9,717 8,717 8,717 8,717 8,217 8,217 8,217 15 Federal Intermediate Credit Banks 11,469 2,676 1,821 1,388 1,388 1,388 1,388 926 926 926 16 Banks for Cooperatives 4,843 584 584 220 220 220 220 220 220 220 17 Farm Credit Banks1 5,081 33,216 48,153 60,034 61,187 61,041 61,405 63,381 63,409 64,506 18 Student Loan Marketing Association8 915 1,505 2,720 4,600 5,000 5,000 5,000 5,000 5,000 5,000 19 Other 2 1 1 2 2 2 2 2 2 2 MEMO: 20 Federal Financing Bank debt1'9 51,298 67,383 87,460 110,698 111,965 112,367 113,567 114,961 117,475 120,241 Lending to federal and federally sponsored 21 Export-Import Bank4 6,898 8,353 10,654 12,741 12,741 12,741 13,305 13,305 13,305 13,829 22 Postal Service7 2,114 1,587 1,520 1,288 1,288 1,288 1,288 1,288 1,221 1,221 23 Student Loan Marketing Association8 915 1,505 2,720 4,600 5,000 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 11,990 25 United States Railway Association7 356 436 492 202 198 198 198 202 202 207 Other Lending10 26 Farmers Home Administration 23,825 32,050 39,431 48,821 49,026 49,081 48,681 49,356 51,056 52,346 27 Rural Electrification Administration 4,604 6,484 9,196 13,516 13,836 13,989 14,452 14,716 15,046 15,454 28 Other 6,951 9,696 13,982 18,140 18,441 18,608 19,118 19,409 19,870 20,194 1. In September 1977 the Farm Credit Banks issued their first consolidated bonds, of Housing and Urban Development; Small Business Administration; and the and in January 1979 they began issuing these bonds on a regular basis to replace Veterans Administration. the financing activities of the Federal Land Banks, the Federal Intermediate Credit 7. Off-budget. Banks, and the Banks for Cooperatives. Line 17 represents those consolidated 8. Unlike other federally sponsored agencies, the Student Loan Marketing Asbonds outstanding, as well as any discount notes that have been issued. Lines 1 sociation may borrow from the Federal Financing Bank (FFB) since its obligations and 10 reflect the addition of this item. are guaranteed by the Department of Health, Education, and Welfare. 2. Consists of mortgages assumed by the Defense Department between 1957 and 9. The FFB, which began operations in 1974, is authorized to purchase or sell 1963 under family housing and homeowners assistance programs. obligations issued, sold, or guaranteed by other federal agencies. Since FFB incurs 3. Includes participation certificates reclassified as debt beginning Oct. 1, 1976. debt solely for the purpose of lending to other agencies, its debt is not included in 4. Off-budget Aug. 17, 1974, through Sept. 30, 1976; on-budget thereafter. the main portion of the table in order to avoid double counting. 5. Consists of debentures issued in payment of Federal Housing Administration 10. Includes FFB purchases of agency assets and guaranteed loans; the latter insurance claims. Once issued, these securities may be sold privately on the se- contain loans guaranteed by numerous agencies with the guarantees of any particcurities market. ular agency being generally small. The Farmers Home Administration item consists 6. Certificates of participation issued prior to fiscal 1969 by the Government exclusively of agency assets, while the Rural Electrification Administration entry National Mortgage Association acting as trustee for the Farmers Home Admin- contains both agency assets and guaranteed loans. istration; Department of Health, Education, and Welfare; Department NOTES TO TABLE 1.44 1. Immediate positions are net amounts (in terms of par values) of securities 3. Includes all reverse repurchase agreements, including those that have been owned by nonbank dealer firms and dealer departments of commercial banks on arranged to make delivery on short sales and those for which the securities obtained a commitment, that is, trade-date basis, including any such securities that have have been used as collateral on borrowings, i.e., matched agreements. been sold under agreements to repurchase (RPs). The maturities of some repur- 4. Includes both repurchase agreements undertaken to finance positions and chase agreements are sufficiently long, however, to suggest that the securities "matched book" repurchase agreements. involved are not available for trading purposes. Securities owned, and hence dealer 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 Nonfinancial Statistics • October 1982 1.46 NEW SECURITY ISSUES of State and Local Governments Millions of dollars 1982 Type of issue or issuer. 11997799 11998800 11998811 Jan/ Feb. Mar.r Apr.' Mayr Juner July 1 All issues, new and refunding1 43,365 48,367 47,732 3,911 3,720 5,661 6,708 5,619 5,813 5,823 Type of issue 2 General obligation 12,109 14,100 12,394 1,038 1,054 1,733 2,222 1,506 1,811 967 3 U.S. government loans2 53 38 34 2 0 9 10 10 16 22 4 Revenue 31,256 34,267 35,338 2,873 2,666 3,928 4,486 4,113 4,002 4,856 5 U.S. government loans2 67 57 55 4 6 5 32 38 45 49 Type of issuer 6 State 4,314 5,304 5,288 514 234 432 1,061 601 1,074 257 7 Special district and statutory authority 23,434 26,972 27,499 2,135 2,187 2,993 3,880 2,975 2,899 3,987 8 Municipalities, counties, townships, school districts 15,617 16,090 14,945 1,262 1,299 2,236 1,767 2,043 1,840 1,579 9 Issues for new capital, total 41,505 46,736 46,530 3,754 3,679 4,798 6,682 5,489 5,723 5,637 Use of proceeds 10 Education 5,130 4.572 4,547 236 266 405 460 483 724 288 11 Transportation 2,441 2.621 3,447 144 207 363 284 292 300 117 12 Utilities and conservation 8,594 8,149 10,037 1,189 1,284 754 1,333 1,363 830 1,269 13 Social welfare 15,968 19,958 12,729 927 837 1,773 2,339 2,026 2,292 3,033 14 Industrial aid 3,836 3,974 7,651 468 501 636 667 350 397 493 15 Other purposes 5,536 7,462 8,119 790 584 867 1,599 975 1,180 437 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 1982 TTyyppee ooff iissssuuee oorr iissssuueerr,, oorr uussee 11997799 11998800 11998811 Jan. Feb. Mar. Apr.r Mayr June July 1 All issues1 51,533 73,694 69,283 2,954 3,294 6,436 4,622 6,675 4,030 5,264 2 Bonds 40,208 53,206 44,643 1,278 1,879 4,512 2,575 4,420 2,836 3,337 Type of offering 3 Public 25,814 41,587 37,653 614 1,464 3,540 2,100 3.973 2,398 2,868 4 Private placement 14,394 11,619 6,989 664 415 972 475 447 438 469 Industry group 5 Manufacturing 9,678 15,409 12,325 283 262 708 497 608 211 1,290 6 Commercial and miscellaneous 3,948 6,693 5,229 230 59 691 139 490 329 492 7 Transportation 3,119 3,329 2,054 43 3 224 26 74 79 40 8 Public utility 8,153 9,557 8,963 493 345 1,568 888 1.186 699 536 9 Communication 4,219 6,683 4,280 8 364 84 16 315 174 75 10 Real estate and financial 11,094 11,534 11,793 221 845 1,236 1,010 1,748 1.344 905 11 Stocks 11,325 20,489 24,642 1,676 1,415 1,924 2,047 2,255 1,194 1,927 Type 12 Preferred 3,574 3,631 1,796 199 185 199 172 888 67 645 13 Common 7,751 16,858 22,846 1,477 1,230 1,725 1,875 1,367 1,127 1,282 Industry group 14 Manufacturing 1,679 4,839 4,838 129 67 394 102 162 53 105 15 Commercial and miscellaneous 2,623 5,245 7,436 723 426 653 770 569 339 615 16 Transportation 255 549 735 25 73 27 15 35 52 5 17 Public utility 5,171 6,230 5,486 449 743 547 756 401 242 267 18 Communication 303 567 1,778 58 2 3 3 30 8 96 19 Real estate and financial 1,293 3,059 4,371 292 104 301 401 1,058 499 839 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 1982 IItteemm 11998800 11998811 Jan. Feb. Mar. Apr. May June July Aug. INVESTMENT COMPANIES1 1 Sales of own shares2 15,266 20,596 2,049 2,049 3,325 2,754 2,345 3,061 3,304 4,322 2 Redemptions of own shares3 12,012 15,866 1,475 1,456 2,056 2,293 1,854 2,038 2,145 2,336 3 Net sales 3,254 4,730 1,557 593 1,269 461 491 1,023 1,159 1,986 4 Assets4 58,400 55,207 54,347 52,695 53,001 56,026 54,889 54,238 54,592 62,214 5 Cash position5 5,321 5,277 5,424 5,540 5,752 6,083 5,992 6,298 5,992 6,042 6 Other 53,079 49,930 48,923 47,155 47,249 49,943 48,896 47,940 48,600 56,172 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 11997799 11998800 11998811 Q4 Q1 Q2 Q3 Q4 Q1 Q2 1 Corporate profits with inventory valuation and 1 capital consumption adjustment 194.8 181.6 190.6 181.2 200.3 185.1 193.1 183.9 157.1 155.4 Profits before tax 252.7 242.4 232.1 245.9 253.1 225.4 233.3 216.5 171.6 171.7 3 Profits tax liability 87.6 84.6 81.2 87.8 91.5 79.2 82.4 71.6 56.7 55.3 4 Profits after tax 165.1 157.8 150.9 158.1 161.6 146.2 150.9 144.9 114.9 116.4 5 Dividends 52.7 58.1 65.1 59.6 61.5 64.0 66.8 68.1 68.8 69.3 6 Undistributed profits 112.4 99.7 85.8 98.5 100.1 82.2 84.1 76.8 46.1 47.1 7 Inventory valuation -43.1 -43.0 -24.6 -45.5 -35.5 -22.8 -23.0 -17.1 -4.4 -9.4 8 Capital consumption adjustment -14.8 -17.8 -16.8 -19.2 -17.3 -17.5 -17.1 -15.5 -10.1 -6.9 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 NonfinancialS tatistics • October 1982 1.50 NONFINANCIAL CORPORATIONS Current Assets and Liabilities Billions of dollars, except for ratio 1981 1982 AAccccoouunntt 11997766 11997777 11997788 11997799 11998800 Q1 Q2 Q3 Q4 Q1 1 Current assets 827.4 912.7 1,043.7 1,218.2 1,336.1 1,374.6 1,385.9 1,405.7 1,419.3 1,413.2 2 Cash 88.2 97.2 105.5 118.0 127.3 126.9 126.7 125.7 132.1 122.0 3 U.S. government securities 23.5 18.2 17.3 17.0 19.9 19.8 20.5 18.6 18.6 17.6 4 Notes and accounts receivable 292.9 330.3 388.0 461.1 509.0 524.2 528.3 535.4 527.9 526.0 5 Inventories 342.5 376.9 431.6 505.5 540.2 555.4 559.3 569.8 578.5 584.4 6 Other 80.3 90.1 101.3 116.7 139.6 148.4 151.0 156.3 162.2 163.1 7 Current liabilities 495.1 557.1 669.3 807.8 886.8 916.1 921.6 954.1 964.1 966.3 8 Notes and accounts payable 282.1 317.6 382.9 461.2 508.3 510.3 513.1 533.6 544.2 533.4 9 Other 213.0 239.6 286.4 346.6 378.5 405.8 408.4 420.5 419.9 432.8 10 Net working capital 332.4 355.5 374.4 410.5 449.3 458.5 464.3 451.7 455.1 446.9 11 MEMO: Current ratio 1 1.671 1.638 1.559 1.508 1.507 1.500 1.504 1.473 1.472 1.463 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 IInndduussttrryy11 11998800 11998811 1199882211 Q2 Q3 Q4 Q1 Q2 Q3 1 Q41 1 Total nonfarm business 295.63 321.49 323.66 316.73 328.25 327.83 327.72 323.22 320.24 324.47 Manufacturing 2 Durable goods industries 58.91 61.84 59.50 63.10 62.58 60.78 60.84 59.03 59.98 58.80 3 Nondurable goods industries 56.90 64.95 64.74 62.40 67.53 66.14 67.48 64.74 63.10 64.09 Nonmanufacturing 4 Mining 13.51 16.86 16.48 16.80 17.55 16.81 17.60 16.56 15.66 16.02 Transportation 5 Railroad 4.25 4.24 4.51 4.38 4.18 4.18 4.56 4.73 4.10 4.64 6 Air 4.01 3.81 3.86 3.29 3.34 4.82 3.20 3.54 3.79 4.85 7 Other 3.82 4.00 3.95 4.04 4.09 4.12 4.23 4.06 3.50 4.07 Public utilities 8 Electric 28.12 29.74 32.29 29.32 30.54 31.14 30.95 32.26 32.67 33.15 9 Gas and other 7.32 8.65 8.61 8.53 9.01 8.60 9.17 9.14 7.87 8.50 10 Trade and services 81.79 86.33 87.40 85.88 87.55 88.33 87.80 88.85 86.71 86.07 11 Communication and other2 36.99 41.06 42.33 39.02 41.89 42.92 41.89 40.33 42.85 44.09 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 11997777 11997788 11997799 11998800 Q1 Q2 Q3 Q4 Q1 Q2 ASSETS Accounts receivable, gross 1 Consumer 44.0 52.6 65.7 73.6 76.1 79.0 84.5 85.5 85.1 88.0 2 Business 55.2 63.3 70.3 72.3 72.7 78.2 76.9 80.6 80.9 82.6 3 Total 99.2 116.0 136.0 145.9 148.7 157.2 161.3 166.1 166.0 170.6 4 LESS: Reserves for unearned income and losses .... 12.7 15.6 20.0 23.3 24.3 25.7 27.7 28.9 29.1 30.2 5 Accounts receivable, net 86.5 100.4 116.0 122.6 124.5 131.4 133.6 137.2 136.9 140.4 6 Cash and bank deposits 2.6 3.5 7 8 A Se ll c u o r t i h ti e e r s 14. . 3 9 17 1 . . 3 3 J>> 2244..9911 27.5 30.8 31.6 34.5 34.2 35.0 37.3 9 Total assets 104.3 122.4 140.9 150.1 155.3 163.0 168.1 171.4 171.9 177.8 LIABILITIES 10 Bank loans 5.9 6.5 8.5 13.2 13.1 14.4 14.7 15.4 15.4 14.5 11 Commercial paper 29.6 34.5 43.3 43.4 44.2 49.0 51.2 51.2 46.2 50.3 12 Short-term, n.e.c 6.2 8.1 8.2 7.5 8.2 8.5 11.9 9.6 9.0 9.3 13 Long-term, n.e.c 36.0 43.6 46.7 52.4 51.6 52.6 50.7 54.8 59.0 60.3 14 Other 11.5 12.6 14.2 14.3 17.3 17.0 17.1 17.8 19.0 18.9 15 Capital, surplus, and undivided profits 15.1 17.2 19.9 19.4 20.9 21.5 22.4 22.8 23.3 24.5 16 Total liabilities and capital 104.3 122.4 140.9 150.1 155.3 163.0 168.1 171.4 171.9 177.8 1. Beginning Q1 1979, asset items on lines 6, 7, and 8 are combined. NOTE. Components may not add to totals due to rounding. 1.53 DOMESTIC FINANCE COMPANIES Business Credit Millions of dollars, seasonally adjusted except as noted Changes in accounts Extensions Repayments receivable AAAccccccooouuunnntttsss rrreeeccceeeiiivvvaaabbbllleee TTTyyypppeee ooouuutttssstttaaannndddiiinnnggg 1982 1982 1982 JJJuuulllyyy 333111,,, 111999888222111 May June July May June July May June July 1 Total 82,649 50 1,064 868 20,033 21,355 20,284 19,983 20,271 19,416 2 Retail automotive (commercial vehicles) 12,303 362 149 -118 1,235 1,056 802 873 907 920 3 Wholesale automotive 13,762 -199 1,020 1,035 5,269 6,364 5,878 5,468 5,344 4,843 4 Retail paper on business, industrial, and farm equipment.... 27,820 -74 -184 -11 1,503 1,331 1,365 1,577 1,515 1,376 5 Loans on commercial accounts receivable and factored commercial accounts receivable 9,329 171 -111 85 10,151 10,611 10,571 9,980 10,722 10,486 6 All other business credit 19,433 -210 190 -123 1,875 1,973 1,668 2,085 1,783 1,791 1. Not seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • October 1982 1.54 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1982 Item 11997799 11998800 11998811 Feb. Mar. Apr. May June July Aug. 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 97.3 90.0 95.7 86.4 89.4 98.4r 91.4 2 Amount of loan (thousands of dollars) 53.3 59.2 65.3 71.1 65.4 70.4 64.8 66.2 73.1' 66.5 3 Loan/price ratio (percent) 73.9 73.2 74.8 76.5 75.7 77.2 77.4 77.0 77.3 74.1 4 Maturity (years) 28.5 28.2 27.7 28.1 27.4 28.6 25.9 27.4 28.4r 26.4 5 Fees and charges (percent of loan amount)2 1.66 2.09 2.67 3.01 2.90 3.28 3.16 3.00 3.15r 2.87 .6 Contract rate (percent per annum) 10.48 12.25 14.16 14.44 14.93 15.13 15.11 14.74 15.01r 15.05 Yield (percent per annum) 7 FHLBB series5 10.77 12.65 14.74 15.12 15.67 15.84 15.89 15.40 15.70r 15.68 8 HUD series4 11.15 13.95 16.52 17.20 16.80 16.65 16.50 16.75 16.50 15.40 SECONDARY MARKETS Yield (percent per annum) 9 FHA mortgages (HUD series)5 10.92 13.44 16.29 17.10 16.41 16.31 16.19 16.73 16.29 14.61 10 GNMA securities6 10.22 12.55 15.29 16.21 15.54 15.40 15.30 15.84 15.56 14.74 FNMA auctions7 11.17 14.11 16.70 18.00 17.29 16.27 16.22 15 78 12 Conventional loans 11.77 14.43 16.64 17.91 17.09 16.66 16.33 16.73 16.85 15.78 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 13 Total 48,050 55,104 58,675 62,112 62,544 63,132 63,951 65,008 66,158 67,810 14 FHA/VA-insured 33,673 37,365 39,341 39,926 39,893 39,834 39,808 39,829 39,853 39,922 15 Conventional 14,377 17,725 19,334 22,185 22,654 23,298 24,143 25,179 26,305 27,888 Mortgage transactions (during period) 16 Purchases 10,812 8,099 6,112 519 604 755 1,006 1,223 1,354 1,931 17 Sales 0 0 2 0 0 0 0 0 0 0 Mortgage commitments8 18 Contracted (during period) 10,179 8,083 9,331 1,174 1,903 2,482 1,550 1,583 2,016 1,820 19 Outstanding (end of period) 6,409 3,278 3,717 3,857 4,990 6,586 7,016 7,206 7,674 6,900 Auction of 4-month commitments to buy Government-underwritten loans 20 Offered 8,860.4 8,605.4 2,487.2 41.7 45.7 7.0 35.7 33.1 8.9 43.3 21 Accepted 3,920.9 4,002.0 1,478.0 23.4 29.6 0.0 7.4 7.4 0.0 5.7 Conventional loans 22 Offered 4,495.3 3,639.2 2,524.7 28.6 65.0 29.5 37.8 59.0 37.2 70.1 23 Accepted 2,343.6 1,748.5 1,392.3 19.6 32.3 22.0 23.0 33.1 23.6 42.9 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)9 24 Total 3,543 4,362 5,245 5,342 5.320 5,274 5,279 5,295 5,309 5,201 25 FHA/VA 1,995 2,116 2,236 2,218 2,227 2,226 2,232 2,225 2,232 2,216 26 Conventional 1,549 2,246 3,010 3,124 3,094 3,048 3,047 3,069 3,017 2,985 Mortgage transactions (during period) 27 Purchases 5,717 3,723 3,789 1,228 1,479 2,143 1,214 1,581 2,237 2,529 28 Sales 4,544 2,527 3,531 1,115 1,564 2,177 1,194 1,562 2,204 2,619 Mortgage commitments10 29 Contracted (during period) 5,542 3,859 6,974 565 2,523 2,824 2,692 3,166 2,189 2,768 30 Outstanding (end of period) 797 447 3,518 4,336 5,461 6,041 7,420 8,970 8,544 9,318 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 All holders 1,337,797 1,471,835 1,583,690' 1,533,254' 1,561,669' 1,583,690' 1,603,057' 1,625,886 2 1- to 4-family 891,115 987,028 l,060,517r 1,028,355' 1,047,689' 1,060,517' 1,071,647' 1,085,540 3 Multifamily 128,433 137,134 141,481' 139,280' 140,228' 141,481' 142,672' 143,962 4 Commercial 235,572 255,655 279,968r 268,095' 273,746' 279,968' 284,829' 290,772 5 Farm 82,677 92,018 101,724r 97,524' 100,006' 101,724' 103,909' 105,612 6 Major financial institutions 938,567 997,168 1,040,630' 1,023,133' 1,033,825' 1,040,630' 1,041,487' 1,042,663 7 Commercial banks1 245,187 263,030 284,536' 273,225 279,017' 284,536' 289,365' 294,022 8 1- to 4-family 149,460 160,326 170,013' 164,873 167,550' 170,013' 171,350' 172,596 9 Multifamily 11,180 12,924 15,132r 13,800 14,481' 15,132' 15,338' 15,431 10 Commercial 75,957 81,081 91,026' 86,091 88,588' 91,026' 94,256' 97,522 11 Farm 8,590 8,699 8,365' 8,461 8,398' 8,365' 8,421' 8,473 12 Mutual savings banks 98,908 99,865 99,997 99,993 99,994 99,997 97,464 96,357 13 1- to 4-family 66,140 67,489 68,187 68,035 68,116 68,187 66,305' 65,381 14 Multifamily 16,557 16,058 15,960 15,909 15,939 15,960 15,536' 15,338 15 Commercial 16,162 16,278 15,810 15,999 15,909 15,810 15,594 15,598 16 Farm 49 40 40 50 30 40 29' 40 17 Savings and loan associations 475,688 503,192 518,350 515,256 518,778 518,350 515,896 512,745 18 1- to 4-family 394,345 419,763 432,978 430,702 433,750 432,978 430,928 428,194 19 Multifamily 37,579 38,142 37,684 38,077 37,975 37,684 37,506 36,866 20 Commercial 43,764 45,287 47,688 46,477 47,053 47,688 47,462 47,685 21 Life insurance companies 118,784 131,081 137,747' 134,659' 136,036' 137,747' 138,762' 139,539 22 1- to 4-family 16,193 17,943 17,201' 17,549' 17,376' 17,201' 17,086' 16,451 23 Multifamily 19,274 19,514 19,283r 19,495' 19,441' 19,283' 19,199' 18,982 2.4 Commercial 71,137 80,666 88,163' 84,571' 86,070' 88,163' 89,529' 91,113 25 Farm 12,180 12,958 13,100' 13,044' 13,149' 13,100' 12,948' 12,993 26 Federal and related agencies 97,084 114,300 126,112 119,124 121,772 126,112 128,721 132,240 27 Government National Mortgage Association 3,852 4,642 4,765 4,972 4,382 4,765 4,438 4,669 28 1- to 4-family 763 704 693 698 696 693 689 688 29 Multifamily 3,089 3,938 4,072 4,274 3,686 4,072 3,749 3,981 30 Farmers Home Administration 1,274 3,492 2,235 2,662 1,562 2,235 2,469 2,038 31 1- to 4-family 417 916 914 1,151 500 914 715 792 32 Multifamily 71 610 473 464 242 473 615 198 33 Commercial 174 411 506 357 325 506 499 444 34 Farm 612 1,555 342 690 495 342 640 604 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 118,664 142,258 162,990 152,308 158,140 162,990 172,292 182,945 48 Government National Mortgage Association 75,787 93,874 105,790 100,558 103,750 105,790 108,592 111,459 49 1- to 4-family 73,853 91,602 103,007 98,057 101,068 103,007 105,701 108,487 50 Multifamily 1,934 2,272 2,783 2,501 2,682 2,783 2,891 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 38,273 57 1- to 4-family 14,884 16,683 18,378 17,165 18,407 18,378 18,740 19,056 58 Multifamily 2,163 2,612 3,426 3,097 3,488 3,426 3,447 4,026 59 Commercial 4,328 5,271 6,161 5,750 6,040 6,161 6,351 6,574 60 Farm 6,322 6,964 8,675 8,173 8,519 8,675 8,417 8,581 61 Individual and others4 183,482 218,109 253,958 238,689 247,932 253,958 260,557 268,038 67 1- to 4-family5 110,857 138,333 167,460 155,231 162,587 167,460 171,995 177,865 63 Multifamily 23,376 27,345 28,340 27,782 28,272 28,340 29,043 29,732 64 Commercial 24,050 26,661 30,614 28,850 29,761 30,614 31,138 31,836 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. 5. Includes a new estimate of residential mortgage credit provided by individuals. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 DomesticN onfinancialS tatistics • October 1982 1.56 CONSUMER INSTALLMENT CREDIT1 Total Outstanding, and Net Change Millions of dollars 1982 HnlHpr onrf fvrw» of rrf^Hit 11997799 11998800 11998811 Feb. Mar. Apr. May June July Aug. Amounts outstanding (end of period) 1 Total 312,024 313,472 333,375 327,435 327,131 328,363 329,338 331,851 332,471 333,808 By major holder 2 Commercial banks 154,177 147,013 149,300 146,922 146,454 146,616 146,147 146,775 146,745 147,275 3 Finance companies 68,318 76,756 89,818 89,009 89,591 90,674 91,958 93,009 93,353 93,207 4 Credit unions 46,517 44,041 45,954 45,586 45,632 45,450 45,472 45,882 45,698 46,154 5 Retailers2 28,119 28,448 29,551 27,013 26,530 26,537 26,536 26,645 26,710 26,751 6 Savings and loans 8,424 9,911 11,598 11,738 11,926 12,081 12,202 12,312 12,520 12,833 7 Gasoline companies 3,729 4,468 4,403 4,433 4,229 4,227 4,218 4,398 4,600 4,714 8 Mutual savings banks 2,740 2,835 2,751 2,734 2,769 2,778 2,805 2,830 2,845 2,874 By major type of credit 9 Automobile 116,362 116,838 126,431 125,294 125,559 126,201 127,220 128,415 128,359 128,281 10 Commercial banks 67,367 61,536 59,181 58,604 58,510 58,458 58,099 58,140 58,131 58,222 11 Indirect paper 38,338 35,233 35,097 34,920 34,888 34,920 34,791 34,903 34,979 34,996 12 Direct loans 29,029 26,303 24,084 23,684 23,622 23,538 23,308 23,237 23,152 23,226 13 Credit unions 22,244 21,060 21,975 21,799 21,821 21,733 21,744 21,940 21,852 22,071 14 Finance companies 26,751 34,242 45,275 44,891 45,228 46,010 47,377 48,335 48,376 47,988 15 Revolving 56,937 58,352 63,049 59,514 58,491 58,641 58,647 59,302 59,824 60,475 16 Commercial banks 29,862 29,765 33,110 31,923 31,532 31,638 31,619 31,974 32,205 32,691 17 Retailers 23,346 24,119 25,536 23,158 22,730 22,776 22,810 22,930 23,019 23,070 18 Gasoline companies 3,729 4,468 4,403 4,433 4,229 4,227 4,218 4,398 4,600 4,714 19 Mobile home 16,838 17,322 18,486 18,343 18,363 18,402 18,479 18,543 18,601 18,741 20 Commercial banks 10,647 10,371 10,300 10,111 10,037 9,974 9,960 9,924 9,857 9,790 21 Finance companies 3,390 3,745 4,494 4,506 4,548 4,608 4,666 4,731 4,801 4,916 22 Savings and loans 2,307 2,737 3,203 3,241 3,293 3,336 3,369 3,400 3,458 3,544 23 Credit unions 494 469 489 485 486 484 484 488 486 491 24 Other 121,887 120,960 125,409 124,284 124,718 125,119 124,992 125,591 125,687 126,311 25 Commercial banks 46,301 45,341 46,709 46,284 46,375 46,546 46,469 46,737 46,552 46,572 26 Finance companies 38,177 38,769 40,049 39,612 39,815 40,056 39,915 39,943 40,176 40,303 27 Credit unions 23,779 22,512 23,490 23,302 23,326 23,233 23,244 23,454 23,360 23,592 28 Retailers 4,773 4,329 4,015 3,855 3,800 3,761 3,726 3,715 3,691 3,681 29 Savings and loans 6,117 7,174 8,395 8,497 8,633 8,745 8,833 8,912 9,063 9,289 30 Mutual savings banks 2,740 2,835 2,751 2,734 2,769 2,778 2,805 2,830 2,845 2,874 Net change (during period)3 31 Total 38,381 1,448 19,894 75 990 1,175 1,399 1,349 570 66 By major holder 32 Commercial banks 18,161 -7,163 2,284 -171 166 96 -13 -100 -66 -252 33 Finance companies 14,020 8,438 13,062 307 673 544 1,126 874 195 -142 34 Credit unions 2,185 -2,475 1,913 -135 -122 132 w39 38 -69 179 35 Retailers2 2,132 329 1,103 -124 171 181 68 304 297 -109 36 Savings and loans 1,327 1,485 1,682 173 251 205 221 187 196 268 37 Gasoline companies 509 739 -65 36 -150 -6 -20 38 3 65 38 Mutual savings banks 47 95 -85 -11 1 23 56 8 14 57 By major type of credit 39 Automobile 14,715 477 99,,559955 -56 --2288 233 959 655 61 -402 40 Commercial banks 6,857 -5,830 -2,355 -180 -248 -159 -305 -240 101 -146 41 Indirect paper 4,488 -3,104 -136 -141 -130 2 -52 -52 225 -129 42 Direct loans 2,369 -2,726 -2,219 -39 -118 -161 -253 -188 -124 -17 43 Credit unions 1,044 -1,184 914 -59 -55 54 -34 28 -26 65 44 Finance companies 6,814 7,491 11,033 183 275 338 1,298 867 -14 -321 45 Revolving 8,628 1,415 4,697 -155 307 499 537 507 612 143 46 Commercial banks 5,521 -97 3,345 -65 296 285 436 219 266 162 47 Retailers 2,598 773 1,417 -126 161 220 121 250 343 -84 48 Gasoline companies 509 739 -65 36 -150 -6 -20 38 3 65 49 Mobile home 1,603 483 1,161 -44 15 51 70 67 63 141 50 Commercial banks 1,102 -276 -74 -110 -82 -48 -41 -58 -57 -62 51 Finance companies 238 355 749 56 52 53 44 64 73 108 52 Savings and loans 240 430 466 14 47 43 67 60 47 94 53 Credit unions 23 -25 20 -4 -2 3 0 1 0 1 54 Other 13,435 -927 4,441 330 696 392 -167 120 -166 184 55 Commercial banks 4,681 -960 1,368 184 200 18 -103 -21 -376 -206 56 Finance companies 6,968 592 1,280 68 346 153 -216 -57 136 71 57 Credit unions 1,118 -1,266 975 -72 -65 75 -5 9 -43 113 58 Retailers -466 -444 -314 2 10 -39 -53 54 -46 -25 59 Savings and loans 1,087 1,056 1,217 159 204 162 154 127 149 174 60 Mutual savings banks 47 95 -85 -11 1 23 56 8 14 57 1. The Board's series cover most short- and intermediate-term credit extended 3. Net change equals extensions minus liquidations (repayments, charge-offs and to individuals through regular business channels, usually to finance the purchase other credit); figures for all months are seasonally adjusted. of consumer goods and services or to refinance debts incurred for such purposes, and scheduled to be repaid (or with the option of repayment) in two or more NOTE: Total consumer noninstallment credit outstanding—credit scheduled to installments. be repaid in a lump sum, including single-payment loans, charge accounts, and 2. Includes auto dealers and excludes 30-day charge credit held by travel and service credit—amounted to, not seasonally adjusted $71.3 billion at the end of entertainment companies. 1979, $74.8 billion at the end of 1980, and $80.2 billion at the end of 1981. 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 Holder and fvnp nf credit 11997799 Feb. Mar. Apr. May June July Aug. Extensions 1 Total 324,777 306,076 336,341 27,150 27,462 28,648 29,197 29,737 27,514 27,579 By major holder 2 Commercial banks 154,733 134,960 146,186 12,431 12,519 12,790 12,765 13,460 12,485 12,499 3 Finance companies 61,518 60,801 66,344 4,857 5,002 5,343 6,135 5,700 4,607 4,685 4 Credit unions 34,926 29,594 35,444 2,695 2,631 3,010 2,902 2,887 2,711 2,904 5 Retailers1 47,676 49,942 53,430 4,254 4,536 4,618 4,449 4,762 4,785 4,396 6 Savings and loans 5,901 6,621 8,142 754 788 823 841 785 803 863 7 Gasoline companies 18,005 22,253 24,902 2,007 1,835 1,915 1,880 1,969 1,944 2,021 8 Mutual savings banks 2,018 1,905 1,893 152 151 185 225 174 179 211 By major type of credit y Automobile 93,901 83,454 94,404 7,283 7,183 7,871 8,429 8,182 7,332 7,112 10 Commercial banks 53,554 41,109 42,792 3,415 3,393 3,499 3,317 3,404 3,687 3,454 ii Indirect paper 29,623 22,558 24,941 1,875 1,875 2,079 1,954 2,036 2,324 1,957 12 Direct loans 23,931 18,551 17,851 1,540 1,518 1,420 1,363 1,368 1,363 1,497 13 Credit unions 17,397 15,294 18,084 1,363 1,420 1,542 1,483 1,497 1,389 1,499 14 Finance companies 22,950 27,051 33,527 2,505 2,370 2,830 3,629 3,281 2,256 2,159 15 Revolving 120,174 128,068 140,135 11,730 12,143 12,416 12,528 13,361 12,551 12,497 16 Commercial banks 61,048 61,593 67,370 5,928 6,235 6,309 6,604 7,141 6,237 6,512 17 Retailers 41,121 44,222 47,863 3,795 4,073 4,192 4,044 4,251 4,370 3,964 18 Gasoline companies 18,005 22,253 24,902 2,007 1,835 1,915 1,880 1,969 1,944 2,021 19 Mobile home 6,471 5,093 6,028 364 411 544 478 459 441 581 20 Commercial banks 4,542 2,937 3,106 136 156 253 201 180 173 194 21 Finance companies 797 898 1,313 117 120 122 114 129 133 193 22 Savings and loans 948 1,146 1,432 102 126 151 151 137 123 181 23 Credit unions 184 113 176 9 9 18 12 13 12 13 24 Other 104,231 89,461 95,774 7,773 7,725 7,853 7,762 7,735 7,190 7,389 25 Commercial banks 35,589 29,321 32,918 2,952 2,735 2,729 2,643 2,735 2,388 2,339 26 Finance companies 37,771 32,852 31,504 2,235 2,512 2,391 2,392 2,290 2,218 2,333 27 Credit unions 17,345 14,187 17,182 1,323 1,202 1,450 1,407 1,377 1,310 1,392 2.8 Retailers 6,555 5,720 5,567 459 463 426 405 511 415 432 29 Savings and loans 4,953 5,476 6,710 652 662 672 690 648 680 682 30 Mutual savings banks 2,018 1,905 1,893 152 151 185 225 174 179 211 Liquidations 31 Total 286,396 304,628 316,447 27,075 26,472 27,509 27,798 28,388 26,944 27,513 By major holder 32 Commercial banks 136,572 142,123 143,902 12,602 12,353 12,694 12,778 13,560 12,551 12,751 33 Finance companies 47,498 52,363 53,282 4,550 4,329 4,799 5,009 4,826 4,412 4,827 34 Credit unions 32,741 32,069 33,531 2,830 2,753 2,878 2,941 2,849 2,780 2,725 35 Retailers1 45,544 49,613 52,327 4,378 4,365 4,437 4,381 4,458 4,488 4,505 36 Savings and loans 4,574 5,136 6,640 581 537 618 620 598 607 595 37 Gasoline companies 17,496 21,514 24,967 1,971 1,985 1,921 1,900 1,931 1,941 1,956 38 Mutual savings banks 1,971 1,810 1,978 163 150 162 169 166 165 154 By major type of credit 39 Automobile 79,186 82,977 84,809 7,339 7,211 7,638 7,470 7,527 7,271 7,514 40 Commercial banks 46,697 46,939 45,147 3,595 3,641 3,658 3,622 3,644 3,586 3,600 41 Indirect paper 25,135 25,662 25,077 2,016 2,005 2,077 2,006 2,088 2,099 2,086 42 Direct loans 21,562 21,277 20.070 1,579 1,636 1,581 1,616 1,556 1,487 1,514 43 Credit unions 16,353 16,478 17,169 1,422 1,475 1,488 1,517 1,469 1,415 1,434 44 Finance companies 16,136 19,560 22,494 2,322 2,095 2,492 2,331 2,414 2,270 2,480 45 Revolving 111,546 126,653 135,438 11,885 11,836 11,917 11,991 12,854 11,939 12,354 46 Commercial banks 55,527 61,690 64,025 5,993 5,939 6,024 6,168 6,922 5,971 6,350 47 Retailers 38,523 43,449 46,446 3,921 3,912 3,972 3,923 4,001 4,027 4,048 48 Gasoline companies 17,496 21,514 24,967 1,971 1,985 1,921 1,900 1,931 1,941 1,956 49 Mobile home 4,868 4,610 4,867 408 396 493 408 392 378 440 50 Commercial banks 3,440 3,213 3,180 246 238 301 242 238 230 256 51 Finance companies 559 543 564 61 68 69 70 65 60 85 52 Savings and loans 708 716 966 88 79 108 84 77 76 87 53 Credit unions 161 138 156 13 11 15 12 12 12 12 54 Other 90,796 90,388 91,333 7,443 7,029 7,461 7,929 7,615 7,356 7,205 55 Commercial banks 30,908 30,281 31,550 2,768 2,535 2,711 2,746 2,756 2,764 2,545 56 Finance companies 30,803 32,260 30,224 2,167 2,166 2,238 2,608 2,347 2,082 2,262 57 Credit unions 16,227 15,453 16,207 1,395 1,267 1,375 1,412 1,368 1,353 1,279 58 Retailers 7,021 6,164 5,881 457 453 465 458 457 461 457 59 Savings and loans 3,866 4,420 5,493 493 458 510 536 521 531 508 60 Mutual savings banks 1,971 1,810 1,978 163 150 162 169 166 165 154 1. Includes auto dealers and excludes 30-day charge credit held by travel and entertainment companies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic NonfinancialS tatistics • October 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 1982 Transaction ratfonrv sprtnr 11997766 11997777 11997788 11997799 11998800 11998811 H2 HI H2 HI H2 HI Nonfinancial sectors 1 Total funds raised 273.5 334.3 401.7 402.0 397.1 406.9 406.6 363.0 431.2 438.2 375.7 385.2 2 Excluding equities 262.7 331.2 402.3 409.1 382.2 418.4 411.0 354.2 410.2 436.7 400.2 385.6 By sector and instrument 3 U.S. government 69.0 56.8 53.7 37.4 79.2 87.4 46.1 63.3 95.1 81.9 92.9 99.0 4 Treasury securities 69.1 57.6 55.1 38.8 79.8 87.8 46.6 63.9 95.7 82.4 93.2 98.6 5 Agency issues and mortgages -.1 -.9 -1.4 -1.4 -.6 -.5 -.5 -.6 -.6 -.5 -.4 .4 6 All other nonfinancial sectors 204.5 277.5 348.0 364.7 317.9 319.6 360.5 299.8 336.1 356.3 282.8 286.3 7 Corporate equities 10.8 3.1 -.6 -7.1 15.0 -11.5 -4.3 8.9 21.0 1.6 -24.5 -.4 8 Debt instruments 193.6 274.4 348.7 371.7 303.0 331.0 364.9 290.9 315.0 354.8 307.3 286.6 9 Private domestic nonfinancial sectors 184.9 263.6 314.8 343.6 288.7 292.3 332.2 268.8 308.5 321.7 262.9 272.7 10 Corporate equities 10.5 2.7 -.1 -7.8 12.9 -11.5 -6.1 6.9 18.8 .9 -23.8 -.1 11 Debt instruments 174.3 260.9 314.9 351.5 275.8 303.7 338.3 261.9 289.7 320.8 286.7 272.8 12 Debt capital instruments 123.6 169.8 198.7 216.0 204.1 175.0 213.1 203.8 204.4 196.5 153.5 157.6 13 State and local obligations 15.7 21.9 28.4 29.8 35.9 32.9 32.8 30.7 41.0 35.1 30.6 46.8 14 Corporate bonds 22.8 21.0 20.1 22.5 33.2 23.9 22.6 37.3 29.0 24.7 23.0 18.5 Mortgages lb Home mortgages 63.9 94.3 112.1 120.1 96.7 78.6 113.9 96.5 96.9 95.2 62.0 66.7 16 Multifamily residential 3.9 7.1 9.2 7.8 8.8 4.6 6.9 8.1 9.5 5.1 4.1 5.6 17 Commercial 11.6 18.4 21.7 23.9 20.2 25.3 25.4 20.3 20.1 27.4 23.2 14.0 18 Farm 5.7 7.1 7.2 11.8 9.3 9.8 11.5 10.9 7.8 9.0 10.5 6.1 19 Other debt instruments 50.7 91.1 116.2 135.5 71.7 128.8 125.2 58.1 85.4 124.3 133.2 115.2 20 Consumer credit 25.4 40.2 48.8 45.4 4.9 25.3 41.0 -3.3 13.0 29.4 21.2 16.0 21 Bank loans n.e.c 4.4 26.7 37.1 49.2 35.4 51.1 39.6 18.0 52.7 47.7 54.6 84.6 22 Open market paper 4.0 2.9 5.2 11.1 6.6 19.2 17.4 20.3 -7.1 10.7 27.6 3.4 23 Other 16.9 21.3 25.1 29.7 24.9 33.1 27.2 23.0 26.7 36.5 29.8 11.2 24 By borrowing sector 184.9 263.6 314.8 343.6 288.7 292.3 332.2 268.8 308.5 321.7 262.9 272.7 25 State and local governments 15.2 15.4 19.1 20.2 27.3 22.3 22.5 21.8 32.8 25.1 19.5 34.3 26 Households 89.5 137.3 169.3 176.5 117.5 120.4 165.8 115.2 119.8 141.0 99.9 102.2 27 Farm 80.2 110.9 126.3 146.9 143.9 149.5 143.9 131.8 155.9 155.6 143.5 136.1 28 Nonfarm noncorporate 10.2 12.3 14.6 21.4 14.4 16.4 22.7 15.7 13.0 19.9 12.8 4.8 29 Corporate 15.4 28.3 32.4 34.4 33.8 40.5 37.0 27.5 40.2 41.8 39.3 25.6 30 Foreign 54.5 70.4 79.3 91.2 95.7 92.6 84.2 88.6 102.7 93.9 91.4 105.8 31 Corporate equities 19.6 13.9 33.2 21.0 29.3 27.3 28.3 31.0 27.5 34.6 19.9 13.6 32 Debt instruments .3 .4 -.5 .8 2.1 * 1.7 1.9 2.2 .7 -.7 -.2 33 Bonds 19.3 13.5 33.8 20.2 27.2 27.3 26.6 29.0 25.3 34.0 20.6 13.8 34 Bank loans n.e.c 8.6 5.1 4.2 3.9 .8 5.5 4.9 2.0 -.4 3.3 7.6 2.1 35 Open market paper 5.6 3.1 19.1 2.3 11.5 3.7 2.6 5.9 17.2 5.0 2.3 -2.0 36 U.S. government loans 1.9 2.4 6.6 11.2 10.1 13.9 16.3 15.7 4.5 20.6 7.1 11.3 Financial sectors 37 Total funds raised 22.5 52.2 77.5 83.9 68.5 89.3 78.7 65.1 71.9 95.5 83.0 107.4 By instrument 38 U.S. government related 14.3 21.9 36.7 47.3 43.6 45.1 50.8 47.3 39.8 42.5 47.8 61.1 39 Sponsored credit agency securities 2.5 7.0 23.1 24.3 24.4 30.1 25.8 27.1 21.7 26.9 33.3 21.9 40 Mortgage pool securities 12.2 16.1 13.6 23.1 19.2 15.0 25.0 20.2 18.1 15.6 14.5 39.2 41 Loans from U.S. government 8.2 30.3 40.8 36.6 24.9 44.1 27.9 17.7 32.0 53.0 35.3 46.3 42 Private financial sectors -.2 3.4 2.5 3.2 7.2 8.6 2.6 7.5 6.9 9.7 7.5 16.1 43 Corporate equities 8.4 26.9 38.3 33.4 17.7 35.6 25.3 10.3 25.2 43.4 27.8 30.2 44 Debt instruments 9.8 10.1 7.5 7.8 7.1 -.8 7.7 9.9 4.4 -2.1 .4 -3.3 45 Corporate bonds 2.1 3.1 .9 -1.2 -.9 -2.9 -2.9 -5.3 3.5 -2.3 -3.5 1.7 46 Mortgages -3.7 -.3 2.8 -.4 -.4 2.2 .5 .1 -.9 3.7 .7 2.2 47 Bank loans n.e.c 2.2 9.6 14.6 18.0 4.8 20.9 10.8 -.1 9.7 24.8 17.0 15.8 48 Open market paper and RPs -2.0 4.3 12.5 9.2 7.1 16.2 9.2 5.8 8.5 19.3 13.2 13.8 49 Loans from Federal Home Loan Banks 22.5 52.2 77.5 83.9 68.5 89.3 78.7 65.1 71.9 95.5 83.0 107.4 By sector 50 Sponsored credit agencies 2.1 5.8 23.1 24.3 24.4 30.1 25.8 27.1 21.7 26.9 33.3 21.9 51 Mortgage pools 12.2 16.1 13.6 23.1 19.2 15.0 25.0 20.2 18.1 15.6 14.5 39.2 52 Private financial sectors 8.2 30.3 40.8 36.6 24.9 44.1 27.9 17.7 32.0 53.0 35.3 46.3 53 Commercial banks 2.3 1.1 1.3 1.6 .5 .4 1.8 .8 .3 .2 .5 1.0 54 Bank affiliates 5.4 2.0 7.2 6.5 6.9 8.3 4.9 5.8 8.0 6.9 9.7 9.3 55 Savings and loan associations .1 9.9 14.3 11.4 6.6 13.1 10.2 .1 13.2 19.2 6.9 16.4 56 Other insurance companies .9 1.4 .8 .9 1.1 1.1 .9 1.0 1.1 1.1 1.1 1.0 57 Finance companies 4.3 16.9 18.1 16.6 6.3 14.1 11.0 6.0 6.5 17.3 11.0 4.1 58 REITs -2.2 -1.9 -.9 -.3 -1.5 -.5 -.1 -1.4 -1.7 -.6 -.3 * 59 Open-end investment companies -2.4 .9 -.1 .1 5.0 7.7 -.8 5.5 4.5 8.9 6.5 14.5 All sectors 60 Total funds raised, by instrument 296.0 386.5 479.2 485.9 465.6 496.2 485.3 428.1 503.1 533.7 458.7 492.6 61 Investment company shares -2.4 .9 -.1 .1 5.0 7.7 -.8 5.5 4.5 8.9 6.5 14.5 62 Other corporate equities 13.1 5.6 1.9 -3.9 17.1 -10.6 -.9 10.8 23.4 2.3 -23.5 1.2 63 Debt instruments 285.4 379.9 477.4 489.7 443.5 499.1 487.1 411.8 475.2 522.5 475.7 476.9 64 U.S. government securities 83.8 79.9 90.5 84.8 122.9 132.6 97.0 110.7 135.1 124.5 140.7 160.1 65 State and local obligations 15.7 21.9 28.4 29.8 35.9 32.9 32.8 30.7 41.0 35.1 30.6 46.8 66 Corporate and foreign bonds 41.2 36.1 31.8 34.2 41.1 28.5 35.2 49.3 33.0 26.0 30.9 17.3 67 Mortgages 87.1 129.9 151.0 162.4 134.0 115.2 154.7 130.4 137.7 134.3 96.2 94.0 68 Consumer credit 25.4 40.2 48.8 45.4 4.9 25.3 41.0 -3.3 13.0 29.4 21.2 16.0 69 Bank loans n.e.c 6.2 29.5 59.0 51.0 46.5 57.0 42.7 24.0 69.0 56.4 57.6 84.8 70 Open market paper and RPs 8.1 15.0 26.4 40.3 21.6 54.0 44.5 35.9 7.2 56.2 51.8 30.5 71 Other loans 17.8 27.4 41.5 41.8 36.6 53.7 39.2 34.1 39.2 60.7 46.6 27.4 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 1982 TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 11997766 11997777 11997788 11997799 11998800 11998811 H2 HI H2 HI H2 HI 1 Total funds advanced in credit markets to nonfinancial sectors 262.7 331.2 402.3 409.1 382.2 418.4 411.0 354.2 410.2 436.7 400.2 385.6 By public agencies and foreign 2 Total net advances 49.8 79.2 101.9 74.6 95.8 95.9 101.0 104.6 87.0 98.7 9933..22 9911..66 3 U.S. government securities 23.1 34.9 36.1 -6.3 15.7 17.2 16.6 20.5 10.9 15.9 18.5 1.1 4 Residential mortgages 12.3 20.0 25.7 35.8 31.7 23.4 36.7 34.9 28.5 21.4 25.5 47.1 5 FHLB advances to savings and loans -2.0 4.3 12.5 9.2 7.1 16.2 9.2 5.8 8.5 19.3 13.2 13.8 6 Other loans and securities 16.4 20.1 27.6 35.9 41.3 39.1 38.6 43.4 39.1 42.1 36.0 29.7 Total advanced, by sector 7 U.S. government 7.9 10.0 17.1 19.0 23.7 24.2 18.7 24.6 22.8 27.1 21.2 10.6 8 Sponsored credit agencies 16.8 22.4 39.9 52.4 44.4 46.0 56.9 45.2 43.7 44.3 47.7 61.8 9 Monetary authorities 9.8 7.1 7.0 7.7 4.5 9.2 14.0 14.9 -5.9 -3.7 22.1 -6.5 10 Foreign 15.2 39.6 38.0 -4.6 23.2 16.6 11.3 19.9 26.5 30.9 2.2 25.8 11 Agency borrowing not included in line 1 14.3 21.9 36.7 47.3 43.6 45.1 50.8 47.3 39.8 42.5 47.8 61.1 Private domestic funds advanced 12 Total net advances 227.1 273.9 337.1 381.8 329.9 367.6 360.8 296.9 362.9 380.5 354.7 355.1 13 U.S. government securities 60.7 45.1 54.3 91.1 107.2 115.4 80.5 90.2 124.2 108.5 122.3 159.1 14 State and local obligations 15.7 21.9 28.4 29.8 35.9 32.9 32.8 30.7 41.0 35.1 30.6 46.8 15 Corporate and foreign bonds 30.5 22.2 22.4 23.7 25.8 20.6 24.1 31.6 20.1 18.6 22.7 4.4 16 Residential mortgages 55.4 81.4 95.5 92.0 73.7 59.7 84.0 69.6 77.8 78.8 40.5 25.0 17 Other mortgages and loans 62.9 107.6 149.1 154.3 94.4 155.3 148.7 80.6 108.3 158.7 151.8 133.5 18 LESS: Federal Home Loan Bank advances -2.0 4.3 12.5 9.2 7.1 16.2 9.2 5.8 8.5 19.3 13.2 13.8 Private financial intermediation 19 Credit market funds advanced by private financial institutions 190.9 261.7 302.9 292.2 257.9 301.3 260.7 245.4 270.4 326.3 276.3 289.4 20 Commercial banking 59.6 87.6 128.7 121.1 99.7 103.5 108.1 64.7 134.8 107.8 99.2 123.3 21 Savings institutions 70.2 81.6 73.6 55.5 54.1 24.6 48.9 34.9 73.2 43.9 5.3 30.6 22 Insurance and pension funds 49.7 69.0 75.0 66.4 74.4 75.8 60.1 84.3 64.4 75.8 75.8 93.3 23 Other finance 11.4 23.5 25.6 49.2 29.8 97.4 43.6 61.5 -1.9 98.8 95.9 42.3 24 Sources of funds 190.9 261.7 302.9 292.2 257.9 301.3 260.7 245.4 270.4 326.3 276.3 289.4 25 Private domestic deposits 124.4 138.9 141.1 142.5 167.8 211.2 145.9 162.5 173.1 212.0 210.3 172.0 26 Credit market borrowing 8.4 26.9 38.3 33.4 17.7 35.6 25.3 10.3 25.2 43.4 27.8 30.2 27 Other sources 58.0 96.0 123.5 116.4 72.4 54.6 89.5 72.7 72.1 70.9 38.2 87.1 28 Foreign funds -4.7 1.2 6.3 25.6 -23.0 -8.8 3.4 -20.0 -26.0 -.7 -16.8 -30.6 29 Treasury balances -.1 4.3 6.8 .4 -2.6 -1.1 -.7 -6.1 1.0 6.0 -8.2 -5.2 30 Insurance and pension reserves 34.3 51.4 62.2 49.1 65.4 70.8 43.8 70.3 60.5 66.0 75.6 78.5 31 Other, net 28.5 39.1 48.3 41.3 32.6 -6.4 43.0 28.6 36.6 -.4 -12.3 44.4 Private domestic nonfinancial investors 32 Direct lending in credit markets 44.7 39.0 72.5 122.9 89.7 101.9 125.4 61.7 117.7 97.5 106.2 95.9 33 U.S. government securities 15.9 24.6 36.3 61.4 38.3 50.4 54.9 23.3 53.3 43.0 57.7 60.2 34 State and local obligations 3.3 -.8 3.6 9.4 12.6 20.3 11.5 6.2 18.9 22.8 17.8 27.2 35 Corporate and foreign bonds 11.8 -5.1 -2.9 10.2 9.3 -7.9 16.9 7.8 10.8 -9.2 -6.6 -23.0 36 Commercial paper 1.9 9.6 15.6 12.1 -3.4 3.5 14.6 -8.1 1.4 -1.4 8.4 6.9 37 Other 11.8 10.7 19.9 29.8 32.9 35.6 27.6 32.5 33.3 42.3 29.0 24.7 38 Deposits and currency 133.4 148.5 152.3 151.9 179.2 221.0 149.9 172.4 186.1 218.6 223.4 170.0 39 Currency 7.3 8.3 9.3 7.9 10.3 9.5 6.3 9.3 11.3 5.8 13.2 2.0 40 Checkable deposits 10.4 17.2 16.3 19.2 4.2 18.3 22.5 -2.5 11.0 26.5 10.1 7.0 41 Small time and savings accounts 123.7 93.5 63.7 61.0 79.5 46.6 50.7 73.4 85.7 26.9 66.3 90.0 42 Money market fund shares * .2 6.9 34.4 29.2 107.5 38.6 61.9 -3.4 104.1 110.8 39.7 43 Large time deposits -12.0 25.8 46.6 21.2 48.3 36.3 39.4 24.4 72.1 46.8 25.7 48.3 44 Security RPs 2.3 2.2 7.5 6.6 6.5 2.5 -5.3 5.3 7.8 7.7 -2.6 -12.9 45 Foreign deposits 1.7 1.3 2.0 1.5 1.1 .3 -2.3 .6 1.7 .8 -.2 -4.1 46 Total of credit market instruments, deposits and currency 178.1 187.5 224.9 274.8 269.0 322.8 275.3 234.1 303.8 316.1 329.6 265.9 47 Public support rate (in percent) 19.0 23.9 25.3 18.2 25.1 22.9 24.6 29.5 21.2 22.6 23.3 23.8 48 Private financial intermediation (in percent)... 84.0 95.6 89.9 76.5 78.2 82.0 72.3 82.7 74.5 85.8 77.9 81.5 49 Total foreign funds 10.5 40.8 44.3 21.0 .2 7.8 14.8 .5 30.3 -14.6 -4.7 MEMO: Corporate equities not included above 50 Total net issues 10.6 6.5 1.9 -3.8 22.1 -2.9 -1.7 16.3 27.9 11.2 -17.0 15.7 51 Mutual fund shares -2.4 .9 -.1 .1 5.0 7.7 -.8 5.5 4.5 8.9 6.5 14.5 52 Other equities 13.1 5.6 1.9 -3.9 17.1 -10.6 -.9 10.8 23.4 2.3 -23.5 1.2 53 Acquisitions by financial institutions 12.5 7.4 4.6 10.4 14.6 22.9 14.2 8.6 20.7 25.3 20.5 22.2 54 Other net purchases -1.9 -.8 -2.7 -14.2 7.5 -25.8 -15.9 7.7 7.2 -14.1 -37.5 -6.5 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 • October 1982 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures 1967 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1982 MMeeaassuurree 11997799 11998800 11998811 Jan. Feb. Mar. Apr. May Juner July Aug.'' Sept. 1 Industrial production1 152.5 147.0 151.0 140.7 142.9 141.7 140.2 139.2 138.7 138.8 138.1 137.3 Market groupings 2 Products, total 150.0 146.7 150.6 142.9 144.6 143.7 142.9 142.3 142.1 142.5 141.4 140.9 3 Final, total 147.2 145.3 149.5 142.8 144.1 143.3 142.6 142.2 142.1 142.4 140.8 140.3 4 Consumer goods 150.8 145.4 147.9 139.6 141.8 141.5 142.1 143.6 144.8 145.9 144.4 144.4 5 Equipment 142.2 145.2 151.5 147.2 147.3 145.9 143.4 140.4 138.4 137.6 135.8 134.6 6 Intermediate 160.5 151.9 154.4 143.4 146.3 145.2 143.7 142.6 141.9 142.9 143.6 143.4 7 Materials 156.4 147.6 151.6 137.2 140.4 138.5 136.2 134.3 133.5 132.9 132.9 131.8 Industry groupings 8 Manufacturing 153.6 146.7 150.4 138.5 140.9 140.1 138.7 137.9 137.7 138.2 137.7 136.9 Capacity utilization (percent)1-2 9 Manufacturing 85.7 79.1 78.5 71.1 72.2 71.6 70.8 70.2 70.0 70.1 69.6 69.1 10 Industrial materials industries 87.4 80.0 79.9 71.4 72.9 71.8 70.5 69.4 68.8 68.4 68.3 67.6 11 Construction contracts (1977 = 100)3 121.0 106.0 107.0 118.0 97.0 105.0 88.0 94.0 111.0 98.0 112.0 112.0 12 Nonagricultural employment, total4 136.5 137.4 138.5 137.5 137.5 137.2 136.9 137.0 136.5 136.1 135.7 135.3 13 Goods-producing, total 113.5 110.3 110.2 105.9 105.7 104.9 104.2 104.1 102.9 102.3 101.4 101.0 14 Manufacturing, total 108.2 104.4 103.7 100.4 100.0 99.3 98.6 98.3 97.3 96.7 96.0 95.5 15 Manufacturing, production-worker 105.3 99.4 98.5 93.2 92.9 92.1 91.2 90.9 89.8 89.2 88.3 87.9 16 Service-producing 149.1 152.6 155.0 154.8 154.9 155.0 154.8 155.1 154.9 154.6 154.4 154.1 17 Personal income, total 309.7 342.9 383.5 396.7 399.0 399.8 402.5 405.7 407.3 411.5 412.9 n.a. 18 Wages and salary disbursements 289.8 317.6 349.9 359.6 362.2 361.3 362.2 365.4 366.0 367.8 368.5 n.a. 19 Manufacturing 249.0 264.3 288.1 286.1 289.0 286.4 286.3 288.1 288.4 288.3 287.1 n.a. 20 Disposable personal income5 301.2 332.9 370.3 385.0 386.5 387.7 391.7 392.9 393.4 401.3 402.3 n.a. 21 Retail sales® 281.6 303.8 330.6 326.0 334.9 333.5 337.4 347.1 336.4 341.8 338.4 341.9 Prices7 22 Consumer 217.4 246.8 272.4 282.5 283.4 283.1 284.3 287.1 290.6 292.2 292.8 n.a. 23 Producer finished goods 217.7 247.0 269.8 277.9 277.9 277.3 277.3 277.7 279.9 281.7 282.4 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 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Output (1967 = 100) Capacity (percent of 1967 output) Utilization rate (percent) 1 Manufacturing 145.0 139.8 138.1 137.6 193.9 195.2 196.4 197.7 74.8 71.6 70.3 69.6 2 Primary processing 143.5 137.1 132.3 131.5 197.5 198.6 199.5 200.4 72.7 69.1 66.3 65.6 3 Advanced processing 145.8 141.6 141.2 140.7 192.0 193.5 194.9 196.2 75.9 73.2 72.5 71.7 4 Materials 144.0 138.7 134.7 132.5 191.5 192.6 193.7 194.6 75.2 72.0 69.6 68.1 5 Durable goods 140.2 130.9 127.1 124.6 195.3 196.4 197.3 198.3 71.8 66.7 64.4 62.9 6 Metal materials 99.5 90.9 77.0 n.a. 142.1 142.3 142.4 n.a. 70.1 63.9 54.1 n.a. 7 Nondurable goods 164.5 161.0 156.8 154.0 213.1 214.6 216.1 217.4 77.2 75.0 72.6 70.8 8 Textile, paper, and chemical 169.4 164.5 160.5 157.1 223.9 225.6 227.3 228.8 75.7 72.9 70.6 68.6 9 Textile 106.8 101.3 101.8 n.a. 141.6 142.1 142.4 n.a. 75.4 71.3 71.5 n.a. 10 Paper 147.0 146.1 142.0 n.a. 162.8 163.8 164.6 n.a. 90.3 89.2 86.3 n.a. 11 Chemical 206.2 200.0 194.0 n.a. 284.4 287.3 289.6 n.a. 72.5 69.6 67.0 n.a. 12 Energy materials 127.9 129.8 125.5 125.1 155.8 156.5 157.0 157.6 82.1 82.9 79.9 79.3 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 High Low High Low Sept. Jan. Feb. Mar. Apr. May June' July' Aug.' Sept. Capacity utilization rate (percent) 13 Manufacturing 88.0 69.0 87.2 74.9 78.3 71.1 72.2 71.6 70.8 70.2 70.0 70.1 69.6 69.1 14 Primary processing 93.8 68.2 90.1 71.0 78.2 68.5 70.0 68.6 67.2 66.1 65.7 65.7 65.5 65.5 15 Advanced processing.... 85.5 69.4 86.2 77.2 78.3 72.8 73.6 73.2 72.6 72.5 72.3 72.4 71.8 71.0 16 Materials 92.6 69.4 88.8 73.8 80.0 71.4 72.9 71.8 70.5 69.4 68.8 68.4 68.3 67.6 17 Durable goods 91.5 63.6 88.4 68.2 77.3 66.2 67.4 66.4 65.0 64.2 64.0 63.7 63.1 61.8 18 Metal materials 98.3 68.6 96.0 59.6 79.1 65.8 64.7 61.1 56.2 53.9 52.2 50.8 51.4 n.a. 19 Nondurable goods 94.5 67.2 91.6 77.5 82.9 73.2 76.5 75.3 74.4 72.5 70.9 70.1 70.8 71.7 20 Textile, paper, and chemical 95.1 65.3 92.2 75.3 82.1 70.7 74.4 73.7 72.5 70.6 68.8 67.8 68.4 69.6 21 Textile 92.6 57.9 90.6 80.9 81.3 68.6 71.9 73.5 73.4 71.5 69.6 69.6 71.5 n.a. 22 Paper 99.4 72.4 97.7 89.3 95.7 87.6 90.7 89.4 87.4 86.1 85.3 85.3 87.7 n.a. 23 Chemical 95.5 64.2 91.3 70.7 79.2 67.4 71.3 70.2 69.0 66.9 65.0 63.7 63.6 n.a. 24 Energy materials 94.6 84.8 88.3 82.7 83.0 83.7 83.2 81.8 80.2 79.9 79.8 80.1 79.6 78.3 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 Mar. Apr. May June July Aug Sept. HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 166,951 169,847 172,272 173,842 174,019 174,201 174,363 174,544 174,707 174,888 2 Labor force (including Armed Forces)1 ... 107,050 109,042 110,812 111,521 111,823 112,841 112,364 112,702 112,840 113,178 3 Civilian labor force 104,962 106,940 108,670 109,346 109,648 110,666 110,191 110,522 110,644 110,980 4 Nonagricultural industries2 95,477 95,938 97,030 96,144 96,032 96,629 96,406 96,272 96,404 96,352 5 Agriculture 3,347 3,364 3,368 3,349 3,309 3,488 3,357 3,460 3,435 3,368 Unemployment 6 Number 6,137 7,637 8,273 9,854 10,307 10,549 10,427 10,790 10,805 11,260 7 Rate (percent of civilian labor force) . 5.8 7.1 7.6 9.0 9.4 9.5 9.5 9.8 9.8 10.1 8 Not in labor force 59,901 60,805 61,460 62,321 62,196 61,360 61,999 61,842 61,867 61,710 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 89,823 90,564 91,548 90,304 90,083 90,166 89,839 89,535' 89,268r 89,038 10 Manufacturing 21,040 20,300 20,264 19,319 19,169 19,115 18,930 18,813' 18,662' 18,576 11 Mining 958 1,020 1,104 1,197 1,182 1,152 1,124 1,100' 1,082' 1,080 12 Contract construction 4,463 4,399 4,307 3,934 3,938 3,988 3,940 3,927' 3,895' 3,890 13 Transportation and public utilities 5,136 5,143 5,152 5,100 5,094 5,101 5,078 5,044' 5,024' 5,023 14 Trade 20,192 20,386 20,736 20,655 20,584 20,652 20,595 20,615' 20,544' 20,488 15 Finance 4,975 5,168 5,330 5,336 5,335 5,342 5,352 5,359' 5,361' 5,367 16 Service 17,112 17,901 18,598 18,904 18,929 18,963 18,988 19,042' 19,042' 19,054 17 Government 15,947 16,249 16,056 15,859 15,852 15,853 15,832 15,635' 15,658' 15,560 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 • October 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 age Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug.? Sept/ Index (1967 = 100) MAJOR MARKET 1 Total index 100.00 151.0 151.6 149.1 146.3 143.4 140.7 142.9 141.7 140.2 139.2 138.7 138.8 138.1 137.3 2 Products 60.71 150.6 151.0 149.4 147.5 146.2 142.9 144.6 143.7 142.9 142.3 142.1 142.5 141.4 140.9 3 Final products 47.82 149.5 150.0 148.9 147.2 146.3 142.8 144.1 143.3 142.6 142.2 142.1 142.4 140.8 140.3 4 Consumer goods 27.68 147.9 147.8 146.5 144.0 142.0 139.6 141.8 141.5 142.1 143.6 144.8 145.9 144.4 144.4 5 Equipment 20.14 151.8 152.9 152.1 151.5 152.1 147.2 147.3 145.9 143.4 140.4 138.4 137.6 135.8 134.6 6 Intermediate products 12.89 154.4 154.6 151.4 148.7 145.9 143.4 146.3 145.2 143.7 142.6 141.9 142.9 143.6 143.4 7 Materials 39.29 151.6 152.5 148.5 144.6 139.0 137.2 140.4 138.5 136.2 134.3 133.5 132.9 132.9 131.8 Consumer goods 8 Durable consumer goods 7.89 140.5 140.4 136.3 129.7 123.2 120.1 125.9 128.1 130.7 132.6 134.6 137.2 132.8 132.2 9 Automotive products 2.83 137.9 139.1 132.8 121.7 119.2 109.2 117.5 125.0 129.9 138.9 143.0 149.4 136.7 135.0 10 Autos and utility vehicles 2.03 111.2 110.0 101.7 88.9 87.5 71.6 82.0 93.6 100.5 111.8 117.1 127.7 109.6 106.9 11 Autos 1.90 103.4 103.3 92.5 81.1 78.1 61.3 70.5 79.8 87.2 96.1 101.9 114.6 96.1 96.3 12 Auto parts and allied goods... 80 205.6 212.9 211.8 205.0 199.7 204.4 207.8 204.5 204.6 207.6 208.6 204.4 205.2 206.2 13 Home goods 5.06 142.0 141.1 138.2 134.1 125.4 126.3 130.6 129.9 131.1 129.1 129.9 130.3 130.6 130.7 14 Appliances, A/C, and TV .... 1.40 119.6 119.0 116.7 107.7 85.7 100.6 103.5 97.0 102.7 100.5 106.4 102.7 103.9 107.2 15 Appliances and TV 1.33 121.2 121.4 118.7 108.7 86.6 101.6 104.1 97.4 103.1 101.5 108.8 106.1 107.9 16 Carpeting and furniture 1.07 158.0 158.6 152.6 146.9 144.4 137.9 147.8 151.3 151.8 145.9 149.0 150.9 150.3 17 Miscellaneous home goods.... 2.59 147.4 145.8 143.9 143.2 139.1 135.4 138.1 138.9 138.0 137.7 134.9 136.8 137.0 135.6 18 Nondurable consumer goods 19.79 150.9 150.8 150.5 149.7 149.5 147.4 148.1 146.8 146.6 147.9 148.8 149.4 149.1 149.2 19 Clothing 4.29 119.8 119.3 117.8 116.1 113.8 106.0 158.1 20 Consumer staples 15.50 159.5 159.5 159.6 159.0 159.4 158.9 159.2 149.6 158.3 159.0 159.9 160.3' 160.1 160.2 21 Consumer foods and tobacco . 8.33 150.3 149.5 150.7 150.4 150.9 150.0 151.1 168.0 148.1 149.9 150.9 151.2 22 Nonfood staples 7.17 170.0 171.1 169.9 169.1 169.3 169.1 168.7 217.8 170.0 169.5 170.4 170.8 171.5 171.6 23 Consumer chemical products 2.63 223.1 227.5 223.0 220.3 220.1 220.1 218.2 127.8 218.3 216.6 219.8 221.3 224.7 24 Consumer paper products .. 1.92 127.9 127.7 126.9 125.7 127.2 127.0 130.2 147.6 128.7 126.7 126.7 128.1 129.0 25 Consumer energy products . 2.62 147.7 146.4 148.2 149.4 149.1 148.9 147.2 170.4 151.9 153.6 152.8 151.4 149.2 26 Residential utilities 1.45 166.3 162.8 166.2 167.4 167.5 172.3 171.6 169.0 174.5 173.7 171.1 167.7 Equipment 27 Business 12.63 181.1 182.7 180.5 179.0 179.0 172.2 171.6 151.2 164.9 159.9 156.7 154.6 151.6 149.2 28 Industrial 6.77 166.4 168.9 166.9 165.1 164.0 158.1 155.9 256.9 145.9 138.9 134.0 131.0 127.6 125.0 29 Building and mining 1.44 286.2 293.6 295.6 293.8 294.6 289.0 274.9 116.3 242.2 224.4 209.0 200.4 190.5 183.0 30 Manufacturing 3.85 127.9 129.3 125.7 123.6 122.0 116.9 116.8 139.0 114.0 109.7 107.5 105.8 103.8 102.2 31 Power 1.47 149.7 150.4 148.4 147.1 145.5 137.4 141.1 189.5 134.8 131.5 129.9 128.6 128.0 127.9 32 Commercial transit, farm 5.86 198.0 198.5 196.2 195.0 196.3 188.5 189.9 257.8 186.9 184.1 183.0 182.0 179.3 177.1 33 Commercial 3.26 258.7 264.2 259.8 260.6 262.9 256.1 256.4 110.5 253.1 247.7 247.5 248.4 246.7 245.8 34 Transit 1.93 125.4 121.0 120.6 116.6 117.5 109.0 110.4 84.9 110.9 110.9 108.3 106.3 102.1 97.6 35 Farm 67 112.0 102.1 104.6 101.7 98.9 88.4 95.1 107.0 83.5 85.8 84.1 76.9 74.2 36 Defense and space 7.51 102.7 103.0 104.5 105.3 107.0 105.2 106.5 125.6 107.2 107.7 107.6 109.1 109.3 110.2 Intermediate products 37 Construction supplies 6.42 141.9 139.7 135.2 130.1 127.0 124.2 127.5 164.6 123.6 122.2 123.1 124.2 125.0 125.2 38 Business supplies 6.47 166.7 169.4 167.5 167.1 164.6 162.4 165.1 184.5 163.7 162.8 160.6 161.5 162.1 39 Commercial energy products.... 1.14 176.4 174.2 174.3 177.0 177.3 181.7 184.1 130.7 183.5 180.3 178.3 178.1 178.6 Materials 40 Durable goods materials 20.35 149.1 150.4 145.6 141.0 134.0 129.7 132.4 130.7 128.1 126.6 126.6 126.0 125.2 122.7 41 Durable consumer parts 4.58 114.5 114.5 107.6 102.8 92.9 86.9 92.2 94.1 94.7 98.9 103.1 103.8 101.0 98.0 42 Equipment parts 5.44 191.2 192.7 190.3 188.7 183.3 177.2 180.1 177.5 173.9 170.0 168.3 166.5 164.4 159.1 43 Durable materials n.e.c 10.34 142.3 144.1 138.9 132.9 126.1 123.6 125.1 122.2 118.8 116.1 115.1 114.5 115.3 114.4 44 Basic metal materials 5.57 112.0 113.1 106.5 101.6 94.8 94.5 94.3 88.6 82.3 79.4 77.4 75.8 76.4 45 Nondurable goods materials 10.47 174.6 175.5 170.6 164.7 158.3 156.8 164.2 162.0 160.3 156.6 153.5 152.0 154.0 156.1 46 Textile, paper, and chemical materials 7.62 181.4 182.5 176.4 169.9 161.9 159.1 167.9 166.6 164.4 160.4 156.7 155.0 156.6 159.6 47 Textile materials 1.85 113.0 114.9 111.6 106.9 102.0 97.3 102.2 104.5 104.5 101.8 99.1 99.3 102.1 48 Paper materials 1.62 150.6 155.1 149.6 150.2 141.2 143.2 148.5 146.7 143.5 141.8 140.7 140.9 145.0 49 Chemical materials 4.15 224.0 223.4 215.9 205.8 196.8 193.0 204.9 202.2 199.3 193.9 188.7 185.4 185.5 50 Containers, nondurable 1.70 169.3 170.9 166.7 163.5 161.9 162.4 166.7 161.3 159.8 157.2 158.5 157.2 161.6 51 Nondurable materials n.e.c 1.14 137.4 136.2 137.1 131.9 128.6 132.4 136.0 132.4 134.2 130.6 124.8 124.7 124.6 52 Energy materials 129.0 128.9 128.3 128.1 127.4 130.9 130.3 128.2 125.8 125.4 125.4 126.1 125.5 123.6 53 Primary energy 4.65 115.0 117.4 116.4 115.6 115.9 119.2 119.5 119.2 117.3 116.9 116.6 117.5 116.4 54 Converted fuel materials 3.82 145.9 142.9 142.8 143.4 141.4 145.1 143.4 139.1 136.1 135.7 136.0 136.6 136.5 Supplementary groups 55 Home goods and clothing 9.35 131.8 131.1 128.8 125.9 120.1 117.0 120.1 118.9 118.9 119.5 120.2 121.0 120.9 120.9 56 Energy, total 12.23 137.4 136.8 136.9 137.2 136.7 139.5 138.9 137.6 136.7 136.5 136.2 136.4 135.5 134.5 57 Products 3.76 156.4 154.8 156.1 157.8 157.7 158.8 158.4 158.8 161.5 161.7 160.5 159.5 158.1 58 Materials 129.0 128.9 128.3 128.1 127.4 130.9 130.3 128.2 125.8 125.4 125.4 126.1 125.5 123.6 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Output A49 2.13 Continued 1967 1981 1982 Grouping SIC pro- 1981 code por- avg. tion Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug.P Sept.' Index (1967 100) MAJOR INDUSTRY 1 Mining and utilities 12.05 155.0 155.8 156.1 155.4 154.7 157.4 155.6 153.1 151.6 148.8 145.2 142.7 141.9 140.8 2 Mining 6.36 142.2 145.0 145.3 143.3 142.6 144.5 142.4 138.1 134.1 128.9 123.5 120.3 118.2 115.7 3 Utilities 5.69 169.1 167.8 168.1 168.9 168.2 171.8 170.4 170.0 171.0 170.9 169.4 167.6 168.4 168.9 4 Electric 3.88 190.9 188.3 189.4 190.9 190.2 195.2 192.5 191.7 193.1 193.4 191.6 189.1 190.3 190.9 5 Manufacturing 87.95 150.4 151.1 148.0 145.0 142.0 138.5 140.9 140.1 138.7 137.9 137.7 138.2 137.7 136.9 6 Nondurable 35.97 164.8 165.9 162.8 160.3 157.4 155.1 157.8 157.3 156.1 155.0 155.3 155.9 156.9 157.4 7 Durable 51.98 140.5 140.9 137.8 134.4 131.3 127.1 129.3 128.2 126.7 126.1 125.5 125.9 124.3 122.8 Mining 8 Metal 10 .51 123.1 121.5 119.8 115.4 110.9 121.3 120.8 109.9 108.8 90.0 71.8 58.1 58.0 9 Coal 11.12 .69 141.3 161.9 166.9 160.8 145.5 147.9 156.0 155.6 146.2 149.2 144.4 140.3 139.9 127.8 10 Oil and gas extraction 13 4.40 146.8 148.8 148.9 148.4 150.5 151.5 146.6 141.4 137.7 132.7 129.1 127.3 123.9 121.8 11 Stone and earth minerals 14 .75 129.4 123.4 122.0 116.7 115.7 115.8 120.5 121.6 119.6 114.6 106.6 103.8 105.8 Nondurable manufactures 12 Foods 20 8.75 152.1 150.7 151.4 153.0 152.8 151.1 151.7 150.8 149.7 150.5 151.0 151.6 13 Tobacco products 21 .67 122.2 •122.4 124.3 119.6 112.6 112.7 126.7 126.7 116.1 118.6 123.6 119.9 14 Textile mill products 22 2.68 135.7 136.3 132.5 126.1 122.8 120.0 125.8 126.0 126.3 123.5 123.7 124.5 126.7 15 Apparel products 23 3.31 120.4 122.5 117.8 113.8 114.1 16 Paper and products 26 3.21 155.0 158.6 153.3 152.6 146.6 148.3 151.5 150.6 149.8 146.5 146.8 146.9 150.3 152.0 17 Printing and publishing 27 4.72 144.2 145.9 145.6 143.4 145.3 145.6 146.4 145.9 144.2 143.8 142.6 144.3 145.6 146.0 18 Chemicals and products 28 7.74 215.6 216.3 208.8 204.6 199.8 196.7 201.3 200.3 198.6 193.6 193.2 194.0 195.9 19 Petroleum products 29 1.79 129.7 129.1 128.3 128.0 128.3 123.3 119.5 121.3 120.8 122.2 124.3 124.7 119.7 121.9 20 Rubber and plastic products 30 2.24 274.0 282.2 276.0 264.1 247.3 244.7 251.8 253.4 255.1 257.0 258.9 256.8 258.7 21 Leather and products 31 .86 69.3 69.7 71.2 70.8 65.6 63.1 64.0 61.2 60.6 61.1 62.3 62.9 62.4 Durable manufactures 22 Ordnance, private and government . 19.91 3.64 81.1 82.3 82.5 84.3 85.5 84.1 83.8 83.8 85.2 86.3 86.5 86.7 87.5 88.5 23 Lumber and products 24 1.64 119.1 113.2 109.6 104.7 104.8 99.2 104.9 103.5 106.2 110.6 112.2 116.9 115.9 24 Furniture and fixtures 25 1.37 157.2 159.9 157.2 153.7 149.4 144.3 148.4 150.2 151.8 151.1 152.5 154.0 155.2 25 Clay, glass, stone products 32 2.74 147.9 147.3 143.4 135.9 131.5 128.5 135.0 131.5 127.0 125.0 126.1 126.9 128.1 26 Primary metals 33 6.57 107.9 108.6 102.3 96.6 89.6 89.7 88.5 83.0 76.4 75.2 72.8 72.9 72.2 71.1 27 Iron and steel 331.2 4.21 99.8 99.2 92.2 87.2 79.2 79.6 78.5 73.0 65.1 62.4 58.0 58.1 57.2 28 Fabricated metal products 34 5.93 136.4 136.8 133.8 130.2 126.1 120.7 121.4 121.1 119.1 115.8 115.0 115.6 114.0 112.0 29 Nonelectrical machinery 35 9.15 171.2 173.9 169.7 167.9 167.4 160.9 160.0 157.3 153.7 150.0 147.4 147.2 145.0 142.3 30 Electrical machinery 36 8.05 178.4 180.0 179.6 175.7 170.7 168.2 172.9 172.6 172.2 170.9 170.8 170.3 169.8 168.0 31 Transportation equipment 37 9.27 116.1 114.2 110.6 106.1 103.7 96.6 102.0 104.4 105.9 110.0 111.6 112.7 107.7 105.3 32 Motor vehicles and parts 371 4.50 122.3 120.4 113.8 105.5 100.4 90.4 98.6 105.6 110.7 119.8 124.0 127.2 117.7 114.8 33 Aerospace and miscellaneous transportation equipment 372-9 4.77 110.2 108.5 107.5 106.8 106.8 102.4 105.3 103.2 101.3 100.8 99.9 99.0 98.2 96.3 34 Instruments 38 2.11 170.3 169.7 168.6 167.1 166.8 162.2 164.5 163.0 162.8 163.8 164.8 165.4 165.0 162.5 35 Miscellaneous manufactures 39 1.51 154.7 154.2 151.5 151.7 147.9 144.9 144.5 145.3 144.6 141.7 136.8 134.2 132.7 131.1 Gross value (billions of 1972 dollars, annual rates) MAJOR MARKET 36 Products, total. 507.4 612.3 611.5 605.0 597.6 592.8 577.4 588.1 586.8 582.1 586 1 584.1 583.7 37 Final 390.9 474.1 473.0 470.1 465.2 462.3 448.8 457.1 456.6 453.5 458.3 456.7 455.5 451.2 448.9 38 Consumer goods . 277.5 318.0 317.7 314.3 310.5 307.2 298.9 306.3 306.9 306.7 312.3 313.1 313.7 312.0 310.8 39 Equipment 113.4 156.1 155.3 155.8 154.7 155.1 149.9 150.8 149.7 146.8 146.0 143.5 141.8 139.3 138.1 40 Intermediate 116.6 138.2 138.4 134.9 132.4 130.5 128.7 131.1 130.2 128.6 127.8 127.4 128.2 128.5 128.9 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 • October 1982 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates except as noted. 1982 IItteemm 11997799 11998800 11998811 Jan. Feb. Mar. Apr. May' June' July' Aug. Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,552 1,191 986 803 792 851 879 944 929 1,062 886 2 1-family 981 710 454 450 436 460 450 488 516 500 494 3 2-or-more-family 570 480 421 353 356 391 429 456 413 562 392 4 Started 1,745 1,292 1,084 885 945 931 882 1,066 908 1,195 1,002 5 1-family 1,194 852 705 592 568 621 566 631 621 625 610 6 2-or-more-family 551 440 379 293 377 310 316 435 287 570 397 7 Under construction, end of period1 1,140 896 682 684 688 682 673 664 662 678 n.a. 8 1-family 639 515 382 394 400 399 393 382 385 381 n.a. 9 2-or-more-family 501 382 301 291 288 283 280 282 277 297 n.a. 10 Completed 1,855 1,502 1,266 1,063 920 926 962 1,138 935 991 n.a. 11 1-family 1,286 957 818 640 545 585 596 684 580 673 n.a. 12 2-or-more-family 569 545 447 423 375 341 366 454 355 318 n.a. 13 Mobile homes shipped 277 222 241 211 251 252 255 246 257 246 n.a. Merchant builder activity in I-family units 14 Number sold 709 545 436 399 376 380 335 395 372 352 359 15 Number for sale, end of period1 402 342 278 275 274 269 264 259 253 250 247 PPrriiccee ((tthhoouussaannddss ooff ddoollllaarrss))22 MMeeddiiaann 1166 UUnniittss ssoolldd 62.8 64.7 68.8 66.2 65.7 67.2 70.2 69.3 69.6 71.8 73.2 AAvveerraaggee 1177 UUnniittss ssoolldd 71.9 76.4 83.1 78.0 80.7 83.7 85.0 86.5 85.5 87.7 92.3 EXISTING UNITS (1-family) 18 Number sold 3,701 2,881 2,350 1,860 1,950 1,990 1,910 1,900 1,980 1,890 1,790 Price of units sold (thousands of dollars)2 19 Median 55.5 62.1 66.1 66.4 66.9 67.0 67.1 67.8 69.4 69.2 69.3 20 Average 64.0 72.7 78.0 79.8 78.8 79.1 79.4 80.6 82.3 82.0 82.4 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 230,412 230,748 238,198 225,086 222,615 224,583 226,095 r 228,745 231,589 228,740 232,316 22 Private 181,622 175,701 185,221 175,493 173,026 173,605 175,142' 179,941 182,651 180,301 182,087 23 Residential 99,028 87,261 86,566 73,737 69,161 70,040 72,300' 75,453 75,251 76,200 77,306 24 Nonresidential, total 82,594 88,440 98,655 101,756 103,865 103,565 102,842' 104,488 107,400 104,101 104,781 Buildings 25 Industrial 14,953 13,839 17,031 17,113 17,211 16,641 15,882 17,118 18,424 16,404 17,377 26 Commercial 24,919 29,940 34,243 36,161 36,841 38,362 38,437 36,818 38,048 37,512 37,249 27 Other 7,427 8,654 9,543 9,558 10,002 9,880 9,897 10,427 10,579 10,130 10,501 28 Public utilities and other 35,295 36,007 37,838 38,924 39,811 38,682 38,626' 40,125 40,349 40,055 39,654 29 Public 48,790 55,047 52,977 49,593 49,589 50,978 50,953' 48,804 48,938 48,439 50,229 30 Military 1,648 1,880 1,966 2,092 1,459 2,317 1,706' 2,140 1,901 1,891 2,079 31 Highway 11,997 13,808 13,304 11,479 12,422 13,307 12,113 11,655 13,073 14,119 13,424 32 Conservation and development 4,586 5,089 5,225 5,232 5,301 5,056 5,493' 5,223 5,051 5,060 5,078 33 Other 30,559 34,270 32,482 30,790 30,407 30,298 31,641' 29,786 28,913 27,369 29,648 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 IIIttteeemmm 1981 1982 1982 AAAuuuggg... 11998811 11998822 111999888222 AAuugg.. AAuugg.. Sept. Dec. Mar. June Apr. May June July Aug. === ((( 111 111 999 000 666 000 777 ))) ''' CONSUMER PRICES2 1 All items 10.9 5.9 12.8 5.4 1.0 9.3 .2 1.0 1.0 .6 .3 292.8 2 Commodities 8.2 4.0 8.5 3.6 -.8 7.8 -.3 .9 1.3 .6 .0 266.4 3 Food 7.2 3.6 7.7 1.7 3.9 7.3 .3 .8 .6 -.1 -.3 287.4 4 Commodities less food 8.7 4.1 9.0 4.3 -2.6 7.9 -.5 .9 1.5 .8 .2 253.8 5 Durable 8.7 5.9 10.8 1.2 3.5 14.1 .6 1.4 1.3 .3 .3 244.6 6 Nondurable 8.7 2.0 4.6 3.8 -4.9 1.9 -2.2 .7 2.0 1.1 .2 263.6 7 Services 14.6 8.6 19.2 7.8 3.5 11.3 .9 .9 .8 .6 .6 338.9 8 Rent 8.9 7.5 10.2 9.0 5.9 5.6 .2 .8 .4 1.0 .5 226.0 9 Services less rent 15.4 8.7 20.4 7.6 3.3 11.9 1.0 1.0 .9 .5 .6 360.5 Other groupings 11) All items less food 11.6 6.4 13.9 6.2 .9 9.7 .2 1.0 1.2 .7 .4 292.5 11 All items less food and energy 11.5 7.1 15.0 5.6 3.0 10.6 .8 .9 .9 .6 .5 279.8 12 Homeownership 14.7 6.7 21.5 .3 -2.4 19.8 1.3 1.8 1.4 .4 .4 385.9 PRODUCER PRICES 13 Finished goods 8.0 4.0 3.4 5.5 .9' 4.1' .1 .1' 1.0 .6 .6 282.4 14 Consumer 7.4 3.6 2.8 4.5 .6' 3.5' .0 .3' 1.1' .6 .6 282.7 15 Foods 4.0 1.4 1.6 -3.9 6.1' 11.5' 1.7' .6' .5 -1.5 .1 259.8 16 Excluding foods 8.9 4.5 3.2 7.8 -1.4' .4' -.7 .6' 1.4 1.5 .8 290.1 17 Capital equipment 9.9 5.9 5.7 9.7 2.4' 6.2' .3' .4 .8 .5 .7 281.4 18 Intermediate materials3 10.0 .6 5.2 2.7 -1.8' -1.4' -.8 .1' .3 .5 -.1 316.3 Crude materials 19 Nonfood 20.8 -2.9 1.1 -6.0 -18.0' 8.5' -.3' 1.8' .6 1.0 -.1 471.1 20 Food -5.4 -4.2 -18.2 -25.5 23.3 24.3 3.5 2.7 -.6 -2.7 -1.0 250.7 1. Not seasonally adjusted. 3. Excludes intermediate materials tor 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 • October 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 Q2 Q3 Q4 Q1 Q2r GROSS NATIONAL PRODUCT 1 Total 2,417.8 2,633.1 2,937.7 2,901.8 2,980.9 3,003.2 2,995.5 3,045.2 By source 2 Personal consumption expenditures 1.507.2 1,667.2 1,843.2 1,819.4 1,868.8 1,884.5 1,919.4 1,947.8 3 Durable goods 213.4 214.3 234.6 230.4 241.2 229.6 237.9 240.7 4 Nondurable goods 600.0 670.4 734.5 729.6 741.3 746.5 749.1 755.0 5 Services 693.7 782.5 874.1 859.4 886.3 908.3 932.4 952.1 6 Gross private domestic investment 423.0 402.4 471.5 475.5 486.0 468.9 414.8 431.5 7 Fixed investment 408.8 412.4 451.1 450.9 454.2 455.7 450.4 447.7 8 Nonresidential 290.2 309.2 346.1 341.3 353.0 360.2 357.0 352.2 9 Structures 98.3 110.5 129.7 127.0 132.7 139.6 141.4 143.6 10 Producers' durable equipment 191.9 198.6 216.4 214.3 220.2 220.6 215.6 208.6 11 Residential structures 118.6 103.2 105.0 109.5 101.2 95.5 93.4 95.5 12 Nonfarm 114.0 98.3 99.7 104.7 95.6 89.4 87.9 89.6 13 Change in business inventories 14.3 -10.0 20.5 24.6 31.8 13.2 -35.6 -16.2 14 Nonfarm 8.6 -5.7 15.0 19.3 24.6 6.0 -36.0 -15.0 15 Net exports of goods and services 13.2 25.2 26.1 23.7 25.9 23.5 31.3 34.9 16 Exports 281.4 339.2 367.3 368.9 367.2 367.9 359.9 365.8 17 Imports 268.1 314.0 341.3 345.1 341.3 344.4 328.6 330.9 18 Government purchases of goods and services 474.4 538.4 596.9 583.2 600.2 626.3 630.1 630.9 19 Federal 168.3 197.2 229.0 218.2 230.0 250.5 249.7 244.3 20 State and local 306.0 341.2 368.0 365.0 370.1 375.7 380.4 386.6 By major type of product 21 Final sales, total 2,403.5 2,643.1 2,917.3 2,877.2 2,949.1 2,989.9 3,031.1 3,061.4 22 Goods 1,065.6 1,141.9 1,289.2 1,276.0 1,317.0 1,298.5 1,269.4 1,283.1 23 Durable 464.8 477.3 528.1 538.2 547.3 504.9 482.4 505.9 24 Nondurable 600.8 664.6 761.1 737.8 769.7 793.6 787.0 777.2 25 Services 1,089.7 1,225.6 1,364.3 1,340.2 1,382.1 1,421.5 1,444.4 1,476.7 26 Structures 262.5 265.7 284.2 285.6 281.9 283.3 281.7 285.3 27 Change in business inventories 14.3 -10.0 20.5 24.6 31.8 13.2 -35.6 -16.2 28 Durable goods 10.5 -5.2 8.7 18.5 19.8 -5.6 -30.9 -6.6 29 Nondurable goods 3.8 -4.8 11.8 6.1 12.0 18.9 -4.8 -9.6 30 MEMO: Total GNP in 1972 dollars 1,479.4 1,474.0 1,502.6 1,502.2 1,510.4 1,490.1 1,470.7 1,478.4 NATIONAL INCOME 31 Total 1,966.7 2,117.1 2,352.5 2,324.4 2,387.3 2,404.5 2,396.9 2,425.2 32 Compensation of employees 1.458.1 1.598.6 1.767.6 1,750.0 1.789.1 1,813.4 1,830.8 1,850.7 33 Wages and salaries 1,237.4 1.356.1 1,494.0 1,479.4 1,512.6 1,531.1 1,541.5 1,556.6 34 Government and government enterprises 236.2 260.2 283.1 279.8 284.0 292.3 296.3 300.0 35 Other 1.001.4 1,095.9 1.210.9 1,199.6 1,228.6 1,238.8 1.245.2 1,256.6 36 Supplement to wages and salaries 220.7 242.5 273.6 270.6 276.5 282.3 289.3 294.1 37 Employer contributions for social insurance 105.8 115.3 133.2 132.1 134.3 136.5 140.2 141.7 38 Other labor income 114.9 127.3 140.4 138.4 142.2 145.8 149.1 152.5 39 Proprietors' income1 132.1 116.3 124.7 123.8 127.5 124.1 116.4 117.3 40 Business and professional1 100.2 96.9 100.7 101.2 100.4 99.5 98.6 99.9 41 Farm1 31.9 19.4 24.0 22.5 27.1 24.6 17.8 17.4 42 Rental income of persons2 27.9 32.9 33.9 34.0 33.6 33.6 33.9 34.2 43 Corporate profits' 194.8 181.6 190.6 185.1 193.1 183.9 157.1 155.4 44 Profits before tax3 252.7 242.5 232.1 225.4 233.3 216.5 171.6 171.7 45 Inventory valuation adjustment -43.1 -43.0 -24.6 -22.8 -23.0 -17.1 -4.4 -9.4 46 Capital consumption adjustment -14.8 -17.8 -16.8 -17.5 -17.1 -15.5 -10.1 -6.9 47 Net interest 153.8 187.7 235.7 231.6 244.0 249.5 258.7 267.5 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 06292STB10 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 Q2 03 Q4 Q1 Q2r PERSONAL INCOME AND SAVING 1 Total personal income 1,943.8 2,160.2 2,404.1 2,380.6 2,458.2 2,494.6 2,510.5 2,552.7 2 Wage and salary disbursements 1.237.6 1,356.1 1,493.9 1,479.4 1,512.3 1,531.2 1,541.6 1,556.6 3 Commodity-producing industries 438.4 468.0 510.8 507.2 519.3 517.7 514.3 513.6 4 Manufacturing 333.9 354.4 386.4 386.9 392.9 388.7 385.1 385.6 5 Distributive industries 303.4 330.5 361.4 358.7 366.5 368.3 371.4 375.4 6 Service industries 259.7 297.5 338.6 333.7 342.8 352.8 359.5 367.6 7 Government and government enterprises 236.2 260.2 283.1 279.8 283.8 292.4 296.5 300.0 8 Other labor income 114.9 127.3 140.4 138.4 142.2 145.8 149.1 152.5 9 Proprietors' income1 132.1 116.3 124.7 123.8 127.5 124.1 116.4 117.3 10 Business and professional1 100.2 96.9 100.7 101.2 100.4 99.5 98.6 99.S 11 Farm1 31.9 19.4 24.0 22.5 27.1 24.6 17.8 17.4 12 Rental income of persons2 27.9 32.9 33.9 34.0 33.6 33.6 33.9 34.2 13 Dividends 50.8 55.9 62.5 61.5 64.1 65.2 65.8 66.1 14 Personal interest income 209.6 256.3 308.5 320.6 339.6 351.0 359.7 372.0 15 Transfer payments 250.3 297.2 336.3 327.0 344.8 350.7 354.6 365.2 16 Old-age survivors, disability, and health insurance benefits 131.8 154.2 182.0 173.7 190.6 192.8 194.7 197.5 17 LESS: Personal contributions for social insurance 81.1 88.7 104.9 104.1 106.1 107.0 110.6 111.4 18 EQUALS: Personal income 1.943.8 2,160.2 2,404.1 2,380.6 2,458.2 2,494.6 2,510.5 2,552.7 19 LESS: Personal tax and nontax payments 301.0 336.3 386.7 384.2 398.1 393.2 393.4 401.2 20 EQUALS: Disposable personal income 1,650.2 1,824.1 2,029.2 1,996.5 2,060.0 2,101.4 2,117.1 2,151.5 21 LESS: Personal outlays 1,553.5 1.717.9 1,898.9 1,874.5 1,925.7 1,942.7 1,977.9 2,007.2 22 EQUALS: Personal saving 96.7 106.2 130.2 122.0 134.4 158.6 139.1 144.3 MEMO: Per capita (1972 dollars) 23 Gross national product 6,572 6,474 6,536 6,544 6,563 6,458 6,360 6,380 24 Personal consumption expenditures 4,120 4,087 4,122 4,115 4,134 4,088 4,104 4,121 25 Disposable personal income 4,512 4,472 4,538 4,516 4,557 4,559 4,527 4,552 26 Saving rate (percent) 5.9 5.8 6.4 6.1 6.5 7.5 6.6 6.7 GROSS SAVING 27 Gross saving 422.8 406.3 477.5 482.4 490.0 476.3 428.8 441.5 28 Gross private saving 407.3 438.3 504.7 488.9 513.4 547.7 520.3 529.0 29 Personal saving 96.7 106.2 130.2 122.0 134.4 158.6 139.1 144.3 30 Undistributed corporate profits' 54.5 38.9 44.4 42.0 43.9 44.3 32.5 30.7 31 Corporate inventory valuation adjustment -43.1 -43.0 -24.6 -22.8 -23.0 -17.1 -4.4 -9.4 Capital consumption allowances 32 Corporate 157.5 181.2 206.2 202.9 209.7 216.0 218.9 223.4 33 Noncorporate 98.6 112.0 123.9 122.1 125.5 128.7 129.8 130.5 34 Wage accruals less disbursements .0 .0 .0 .0 .0 .0 .0 .0 35 Government surplus, or deficit (-), national income and product accounts 14.3 -33.2 -28.2 -7.6 -24.5 -72.5 -90.7 -87.5 36 Federal -16.1 -61.4 -60.0 -40.5 -58.0 -101.7 -118.4 -119.6 37 State and local 30.4 28.2 31.7 32.9 33.5 29.1 27.7 32.1 38 Capital grants received by the United States, net 1.1 1.2 1.1 1.1 1.1 1.1 .0 .0 39 Gross investment 421.2 410.1 475.6 477.8 489.1 469.0 421.3 442.3 40 Gross private domestic 423.0 402.4 471.5 475.5 486.0 468.9 414.8 431.5 41 Net foreign -1.8 7.8 4.1 2.3 3.1 0.1 6.5 10.8 42 Statistical discrepancy -1.5 3.9 -1.9 -4.6 -0.8 -7.2 -7.5 .8 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 • October 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 Q2 Q3 Q4 Q1r Q2 p 1 Balance on current account -466 1,520 4,471 11,,339999 775511 --992277 11,,008888 22,,006622 11,,997755 --11,,883344 11,,229933 774422 22,,668800 3 Merchandise trade balance2 -27,346 -25,338 -27,889 -6,547 -7,845 -9,185 -5,873 -5,784 4 Merchandise exports 184,473 224,237 236,254 60,284 57,694 57,593 55,780 55,094 5 Merchandise imports -211,819 -249,575 -264,143 -66,831 -65,539 -66,778 -61,653 -60,878 6 Military transactions, net -2,035 -2,472 -1,541 -587 -528 167 371 7 Investment income, net3 31,215 29,910 33,037 8,201 8,1^3 8,529 6,861 7,672 8 Other service transactions, net 3,262 6,203 7,472 1,842 2,160 2,127 1,981 1,535 9 Remittances, pensions, and other transfers -2,011 -2,101 -2,104 -524 -558 -562 -575 -662 10 U.S. government grants (excluding military) -3,549 -4,681 -4,504 -986 -1,250 -1,308 -1,473 -1,070 11 Change in U.S. government assets, other than official reserve assets, net (increase, -) -3,743 -5,126 -5,137 -1,518 -1,257 -987 -904 -1,559 12 Change in U.S. official reserve assets (increase, -) -1,133 -8,155 -5,175 -905 -4 262 -1,089 -1,132 13 Gold -65 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -1,136 -16 -1,823 -23 -225 -134 -400 -241 15 Reserve position in International Monetary Fund -189 -1,667 -2,491 -780 -647 -358 -547 -814 16 Foreign currencies 257 -6,472 -861 -102 868 754 -142 -77 17 Change in U.S. private assets abroad (increase, -)3 -59,469 -72,746 -98,982 -19,143 -15,996 -46,952 -29,208 -31,924 18 Bank-reported claims -26,213 -46,838 -84,531 -14,998 -15,254 -42,645 -32,708 -33,866 19 Nonbank-reported claims -3,307 -3,146 -331 2,470 855 -508 4,112 n.a. 20 U.S. purchase of foreign securities, net -4,726 -3,524 -5,429 -1,511 -618 -2,843 -531 -409 21 U.S. direct investments abroad, net3 -25,222 -19,238 -8,691 -5,104 -979 -956 -81 2,351 22 Change in foreign official assets in the United States (increase, +) -13,697 15,442 4,785 -2,860 -5,835 8,119 -3,122 1,935 23 U.S. Treasury securities -22,435 9,708 4,983 -2,063 -4,635 4,439 -1,344 -2,087 24 Other U.S. government obligations 463 2,187 1,289 536 545 -246 -296 258 25 Other U.S. government liabilities4 -73 561 -69 48 -337 275 -182 361 26 Other U.S. liabilities reported by U.S. banks 7.213 -159 -4,083 -2,028 -2,382 3,436 -1,516 3,367 27 Other foreign official assets5 1,135 3,145 2,665 647 974 215 216 36 28 Change in foreign private assets in the United States (increase, +)2f 52,157 39,042 73,136 16,324 22,715 30,988 28,203 29,248 29 U.S. bank-reported liabilities 32,607 10,743 41,262 7,663 16,916 20,476 25,423 22,006 30 U.S. nonbank-reported liabilities 1,362 6,530 532 -162 1,006 -457 -982 n.a. 31 Foreign private purchases of U.S. Treasury securities, net 4,960 2,645 2,932 750 -446 1,238 1,277 2,074 32 Foreign purchases of other U.S. securities, net 1,351 5,457 7,109 3,533 761 396 1,319 2,495 33 Foreign direct investments in the United States, net3 .... 11,877 13,666 21,301 4,540 4,478 9,335 1,166 2,673 34 Allocation of SDRs 1,139 1,152 1,093 0 0 0 0 0 35 Discrepancy 25,212 28,870 25,809 6,703 -374 9,497 5,032 1,370 503 -2,144 2,474 -899 577 37 Statistical discrepancy in recorded data before seasonal adjustment 25,212 28,870 25,809 6,200 1,770 7,023 5,931 793 MEMO: Changes in official assets 38 U.S. official reserve assets (increase, ~) -1,133 -8,155 -5.175 -905 -4 262 -1,089 -1,132 39 Foreign official assets in the United States (increase, +) -13,624 14,881 4,854 -2,908 -5,498 7,844 -2,940 1,574 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 2,786 2,935 2,230 4,988 3,072 41 Transfers under military grant programs (excluded from lines 4, 6, and 10 above) 465 631 602 214 132 64 93 126 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. 1982 IItteemm 11997799 11998800 11998811 Feb. Mar. Apr. May June July Aug. 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments 181,860 220,626 233.677 18,704 18,602 17,843 18,218 18,822 18,026 17,498 2 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 209,458 244,871 261,305 19,090 20.349 17.387 20,558 21,310 19,559 23,494 3 Trade balance -27,598 -24,245 -27,628 -387 -1,747 456 -2,340 -2,488 -1,532 -5,996 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 Mar. Apr. May June July Aug. Sept. 1 Total1 18,956 26,756 30,075 29,944 31,552 30,915 30,671 31,227 31,233 30,993 2 Gold stock, including Exchange Stabilization Fund1 11,172 11,160 11,151 11.150 11,149 11,149 11,149 11.149 11,148 11,148 3 Special drawing rights2-3 2,724 2,610 4,095 4,306 4,294 4,521 4,461 4,591 4,601 4,809 4 Reserve position in International Monetary Fund2 1,253 2,852 5,055 5,367 6,022 6,099 6,062 6,386 6,433 6,406 5 Foreign currencies4-5 3,807 10,134 9,774 9.121 10,097 9,146 8,999 9,101 9,051 8,630 1. Gold held under earmark at Federal Reserve Banks for foreign and inter- 3. Includes allocations by the International Monetary Fund of SDRs as follows: national accounts is not included in the gold stock of the United States; see table $867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; $710 million on Jan. 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 Mar. Apr. May June July Aug. Sept. 1 Deposits 429 411 505 421 966 308 585 982 347 396 Assets held in custody 2 U.S. Treasury securities' 95,075 102,417 104,680 103,964 102,346 102,112 103,292 106,696 104.136 106.117 3 Earmarked gold2 15,169 14,965 14,804 14,798 14,788 14,778 14,777 14,762 14,761 14,726 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 • October 1982 3.14 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data Millions of dollars, end of period . . . 1982 11998800 Jan. Feb. Mar Apr. May June July? All foreign countries 1 Total, all currencies 364,409 401,135 462,790 459,998 461,249 463,663 460,225 461,591 458,570 465,155 2 Claims on United States 32,302 28,460 63,540 69,794 69,539 75,745 77,914 79,606 83,538 82,727 3 Parent bank 25,929 20,202 43,064 49,206 47,996 51,978 54,563 56,152 57,969 55,337 4 Other 6,373 8,258 20.476 20,588 21,543 23,767 23,351 23,454 25,569 27,390 5 Claims on foreigners 317,330 354,960 379,102 370,124 371,644 368,678 362,690 362,271 356,160 363,190 6 Other branches of parent bank 79,662 77,019 87,840 89,010 88,637 86,853 86,186 88,468 87,254 88,918 7 Banks 123,420 146.448 150,892 145,528 146,317 146,960 142,387 139,400r 137,362 142,707 8 Public borrowers 26,097 28,033 28,197 26,568 26,851 26,333 25,590 24,989 25,226 24,641 9 Nonbank foreigners 88,151 103,460 112,173 109,018 109,839 108,532 108,527 109,414' 106,318 106,924 10 Other assets 14,777 17,715 20,148 20,080 20,066 19,240 19,621 19,714 18,872 19,238 11 Total payable in U.S. dollars 267,713 291,798 350,678 351,125 353,001 355,535 351,349 351,757 353,545 359,489 12 Claims on United States 31,171 27,191 61,939 68,241 67,983 74,226 76,410 78,000 81,971 81,084 13 Parent bank 25,632 19,896 42,518 48,623 47,402 51,389 54,107 55,667 57,472 54,658 14 Other 5,539 7,295 19,421 19,618 20,581 22,837 22,303 22,333 24,499 26,426 15 Claims on foreigners 229,120 255,391 277,085 270,696 272,903 269,548 263,047 261,822 260,301 266,603 16 Other branches of parent bank 61,525 58,541 69,403 71,999 72,094 70,377 69,409 70,795 70,435 71,952 17 Banks 96,261 117,342 122,253 117,148 118,227 117,371 113,673 110,783' 110,064 115,012 18 Public borrowers 21,629 23,491 22,877 21,180 21,483 20,632 20,170 19,579 19,944 19,293 19 Nonbank foreigners 49,705 56,017 62,552 60,369 61,099 61,168 59,795 60,665' 59,858 60,346 20 Other assets 7,422 9,216 11.654 12,188 12,115 11,761 11,892 11,935 11,273 11,802 United Kingdom 21 Total, all currencies 130,873 144,717 157,229 157,892 162,351 161,471 159,481 161,036 158,466 163,899 22 Claims on United States 11,117 7,509 11,823 13,935 15,884 16,343 17,676 20,155 20,744 24,301 23 Parent bank 9,338 5,275 7,885 10,264 12,044 12,446 13,750 15,854 16,768 20,019 24 Other 1,779 2,234 3,938 3,671 3,840 3,897 3,926 4,301 3,976 4,282 25 Claims on foreigners 115,123 131,142 138,888 137,953 140,197 139,292 135,634 134,845 131,860 133,418 26 Other branches of parent bank 34,291 34,760 41,367 41,468 40,935 41,186 39,811 39,621 37,696 36,704 27 Banks 51,343 58,741 56,315 56,164 57,975 56,940 55,545 54,674' 54,727 56,428 28 Public borrowers 4,919 6,688 7,490 7,249 7,370 7,541 6,822 6,663 6,595 6,456 29 Nonbank foreigners 24,570 30,953 33,716 33,072 33,917 33,625 33,456 33,887' 32,842 33,830 30 Other assets 4,633 6,066 6,518 6,004 6,270 5,836 6,171 6,063 5,862 6,180 31 Total payable in U.S. dollars 94,287 99,699 115,188 116,870 121,432 120,432 117,914 119,586 120,002 125,040 32 Claims on United States 10,746 7,116 11.246 13,438 15,391 15,842 17,182 19,608 20,256 23,760 33 Parent bank 9,297 5,229 7,721 10,098 11,881 12,293 13,623 15,663 16,599 19,790 34 Other 1,449 1,887 3,525 3,340 3,510 3,549 3,559 3,945 3,657 3,970 35 Claims on foreigners 81,294 89,723 99,850 99,473 101,861 100,500 96,595 95,926 95,857 97,153 36 Other branches of parent bank 28,928 28,268 35,439 35,875 35,697 36,055 34,240 33,922 32,567 31,461 37 Banks 36,760 42,073 40,703 40,610 42,453 40,732 40,070 39,593' 40,479 42,515 38 Public borrowers 3,319 4,911 5,595 5,423 5,467 5,360 4,717 4,507 4,655 4,513 39 Nonbank foreigners 12,287 14,471 18,113 17,565 18,244 18,353 17,568 17,904' 18,156 18,664 40 Other assets 2,247 2,860 4,092 3,959 4,180 4,090 4,137 4,052 3,889 4,127 Bahamas and Caymans 41 Total, all currencies 108,977 123,837 149,051 146,585 142,853 143,795 142,941 139,836 141,607 140,828 42 Claims on United States 19,124 17,751 46,343 50,647 49,060 54,019 55,533 54,316 56,662 52,479 43 Parent bank 15,196 12,631 31,440 35,453 32,704 35,311 37,013 36,099 35,987 30,278 44 Other 3,928 5,120 14,903 15,194 16,356 18,708 18,520 18,217 20,675 22,201 45 Claims on foreigners 86,718 101,926 98,205 91,538 89,405 85,465 83,124 81,191 80,948 84,310 46 Other branches of parent bank 9,689 13,342 12,951 14,084 14,384 12,035 12,640 14,248 15,479 17,521 47 Banks 43,189 54,861 55.299 50,754 48,951 47,867 45,768 43,165 42,521 44,208 48 Public borrowers 12,905 12,577 10,010 8,713 8,584 7,980 7,847 7,348 7,314 7,018 49 Nonbank foreigners 20,935 21,146 19,945 17,987 17,486 17,583 16,869 16,430 15,634 15,563 50 Other assets 3,135 4,160 4,503 4,400 4,388 4,311 4,284 4,329 3,997 4,039 51 Total payable in U.S. dollars 102,368 117,654 143,686 141,447 137,842 138,748 137,840 134,925 136,639 135,349 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Overseas Branches A57 3.14 Continued 1982 T ' kT» 11997799 11998811 Jan. Feb. Mar. Apr. May June JulyP All foreign countries 52 Total, all currencies 364,409 401,135 462,790 459,998 461,249 463,663 460,225 461,591 458,570 465,155 53 To United States 66,689 91,079 137,712 144,175 145,487 150,837 153,064 156,103 160,881 163,782 54 Parent bank 24,533 39,286 56,143 56,047 55,378 58,766 56,881 56,234 59,016 60,746 55 Other banks in United States 13,968 14,473 19,343 19,886 22,652 24,431 26,026 27,680 29,711 31,584 56 Nonbanks 28,188 37,275 62,226 68,242 67,457 67,640 70,157 72,189 72,154 71,452 57 To foreigners 283,510 295,411 305,630 296,183 296,188 293,369 286,969 284,373 278,216 281,731 58 Other branches of parent bank 77,640 75,773 86,406 85,644 84,351 85,581 84,150 85,631 84,547 86,815 59 Banks 122,922 132,116 124,896 118,512 118,939 117,069 111,660 107,337 104,894 106,217 60 Official institutions 35,668 32,473 25,997 25,124 24,625 23,039 22,340 22,703 19,909 20,246 61 Nonbank foreigners 47,280 55,049 68,331 66,903 68,273 67,680 68,819 68,702 68,866 68,453 62 Other liabilities 14,210 14,690 19,448 19,640 19,574 19,457 20,192 21,115 19,473 19,642 63 Total payable in U.S. dollars 273,857 303,281 364,390 364,005 366,885 369,503 366,655 368,327 369,109 375,650 64 To United States 64,530 88,157 134,645 141,163 142,521 147,790 149,960 152,973 157,684 160,527 65 Parent bank 23,403 37,528 54,291 53,969 53,355 56,701 54,820 54,272 56,988 58,765 66 Other banks in United States 13,771 14,203 19,029 19,759 22,441 24,190 25,689 27,265 29,375 31,252 67 Nonbanks 27,356 36,426 61,325 67,435 66,725 66,899 69,451 71,436 71,321 70,510 68 To foreigners 201,514 206,883 217,602 210,860 212,915 210,267 204,984 202,547 200,027 203,905 69 Other branches of parent bank 60,551 58,172 69,309 69,149 68,187 69,497 68,047 68,540 68,547 70,457 70 Banks 80,691 87,497 79,584 74,293 76,101 73,181 69,276 66,627 65,567 66,788 71 Official institutions 29,048 24,697 20,288 19,937 19,322 18,120 17,491 17,900 15,368 15,744 72 Nonbank foreigners 31,224 36,517 48,421 47,481 49,305 49,469 50,170 49,480 50,545 50,916 73 Other liabilities 7,813 8,241 12,143 11,982 11,449 11,446 11,711 12,807 11,398 11,218 United Kingdom 74 Total, all currencies 130,873 144,717 157,229 157,892 162,351 161,471 159,481 161,036 158,466 163,899 75 To United States 20,986 21,785 38,022 40,768 43,358 42,481 41,886 43,882 44,086 46,589 76 Parent bank 3,104 4,225 5,444 6,413 6,765 6,313 8,006 6,694 6,323 6,849 77 Other banks in United States 7,693 5,716 7,502 7,313 8,973 8,607 8,345 8,972 9,985 11,215 78 Nonbanks 10.189 11,844 25,076 27,042 27,620 27,561 25,535 28,216 27,778 28,525 79 To foreigners 104,032 117,438 112,255 110,036 111,417 111,262 109,629 109,199 106,665 109,274 80 Other branches of parent bank 12,567 15,384 16,545 16,270 16,546 17,245 18,358 19,412 17,771 18,010 81 Banks 47,620 56,262 51,336 49,622 49,937 49,616 47,549 46,204 46,628 48,847 82 Official institutions 24,202 21,412 16,517 16,110 15,965 14,608 13,908 14,119 11,746 12,088 83 Nonbank foreigners 19,643 24,380 27,857 28,034 28,969 29,793 29,814 29,464 30,520 30,329 84 Other liabilities 5.855 5,494 6,952 7,088 7,576 7,728 7,966 7,955 7,715 8,036 85 Total payable in U.S. dollars 95,449 103,440 120,277 121,407 127,029 126,359 124,248 126,901 125,859 130,992 86 To United States 20,552 21,080 37,332 40,276 42,809 41,885 41,198 43,143 43,323 45,753 87 Parent bank 3,054 4,078 5,350 6,296 6,660 6,211 7,907 6,624 6,212 6,773 88 Other banks in United States 7,651 5,626 7,249 7,289 8,884 8,489 8,167 8,755 9,806 11,048 89 Nonbanks 9,847 11,376 24,733 26,691 27,265 27,185 25,124 27.764 27,305 27,932 90 To foreigners 72,397 79,636 79,034 77,463 80,581 80,825 79,444 79,914 78,794 81,376 91 Other branches of parent bank 8,446 10,474 12,048 11,900 12,254 13,130 14,102 14,958 13,903 14,202 92 Banks 29,424 35,388 32,298 30,995 32,249 32,090 30,415 29,965 30,557 32,670 93 Official institutions 20,192 17,024 13,612 13,497 13,418 12,196 11,568 11,829 9,843 10,212 94 Nonbank foreigners 14,335 16,750 21,076 21,071 22,660 23,409 23,359 23,162 24,491 24,292 95 Other liabilities 2,500 2,724 3,911 3,668 3.639 3,649 3,606 3,844 3,742 3,863 Bahamas and Caymans 96 Total, all currencies 108,977 123,837 149,051 146,585 142,853 143,795 142,941 139,836 141,607 140,828 97 To United States 37,719 59,666 85,704 89,032 87,429 91,808 94,166 94,421 97,707 98,371 98 Parent bank 15,267 28,181 39,250 37,777 36,682 39,146 35,806 36,395 39,225 40,867 99 Other banks in United States 5,204 7.379 10,620 11,208 12,211 14,285 15,907 16,834 17,416 17,860 100 Nonbanks 17,248 24,106 35,834 40,047 38,536 38,377 42,453 41,192 41,066 39,644 101 To foreigners 68,598 61,218 60,012 54,494 52,333 49,005 45,773 42,032 41,145 39,710 102 Other branches of parent bank 20,875 17,040 20,641 20,721 19,814 18,614 17,365 15,888 15,890 15,045 103 Banks 33,631 29,895 23,202 18,624 18,221 16,418 14,723 13,457 12,620 11,730 104 Official institutions 4,866 4.361 3,498 3,149 2,505 2,607 2,512 2,448 2,466 2,402 105 Nonbank foreigners 9,226 9,922 12,671 12,000 11,793 11,366 11,173 10,239 10,169 10,533 106 Other liabilities 2,660 2,953 3,335 3,059 3,091 2,982 3,002 3,383 2,755 2,747 107 Total payable in U.S. dollars 103,460 119,657 145,227 142,793 139,247 140,115 139,461 136,504 138,369 137,638 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • October 1982 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1982 IItteemm 11998800 11998811 Feb. Mar. Apr. May. June JulyP Aug.'' 1 Total1 164,578 169,697 166,209 166,757 165,526 166,993 168,382 169,886 169,233 By type 2 Liabilities reported by banks in the United States2 30,381 26,567 24,713 25,051 26,326 27,723 28,459 25,469 26,501 3 U.S. Treasury bills and certificates3 56,243 52,389 48,174 47,048 43,850 4422,,774411 4433,,550099 4455,,882244 4444,,118822 U.S. Treasury bonds and notes 4 Marketable 41,455 53,150 56,333 57,647 58,459 59,933 60,251 63,068 63,435 5 Nonmarketable4 14,654 11,791 11,291 11,291 11,050 10,750 10,150 9,750 9,350 6 U.S. securities other than U.S. Treasury securities5 21,845 25,800 25,698 25,720 25,841 25,846 26,013 25,775 25,765 By area 1 Western Europe1 81,592 65,479 62,049 60,364 57,393 57,382 58,079 58,772 61,084 8 Canada 1,562 2,403 1,669 1,647 1,721 1,329 1,568 1,519 1,771 9 Latin America and Caribbean 5,688 6,954 6,308 6,562 7,124 7,248 7,692 7,164 6,742 10 Asia 70,784 91,790 93,559 95,247 94,866 95,908 95,494 97,147 94,924 11 4,123 1,829 1,474 1,337 1,823 1,381 1,437 1,485 1,326 12 Other countries6 829 1,242 1,150 1,600 2,599 3,745 4,112 3,799 3,386 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 11997799 11998800 11998811 Sept. Dec. Mar. June 1 Banks' own liabilities 1,918 3,748 3,798 2,878 3,798 4,326 4,640 2 Banks' own claims1 2,419 4,206 5,220 4,078 5,220 5,612 6,363 3 Deposits 994 2,507 3,398 2,409 3,398 3,796 3,560 4 Other claims 1,425 1,699 1,822 1,669 1,822 1,816 2,803 5 Claims of banks' domestic customers2 580 962 971 248 971 944 924 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 1982 HHoollddeerr aanndd ttyyppee ooff lliiaabbiilliittyy 11997799 11998800 11998811 Feb. Mar. Apr. May June' July Aug.f 1 All foreigners 187,521 205,297 242,981 254,520 261,219 266,256 274,341 285,911 284,169 293,328 2 Banks' own liabilities 117,196 124,791 162,755 179,819 187,559 194,898 203,120 212,634 208,300 217,780 3 Demand deposits 23,303 23,462 19,677 17,808 16,498 18,161 16,550 17,285 17,101 15,694 4 Time deposits1 13,623 15,076 28,816 36,555 43,597 48,552 53,414 56,007 59,516 62,077 Other2 16,453 17,583 17,418 17,235 18,989 18,570 21,171 22,146 20,385 24,133 6 Own foreign offices3 63,817 68,670 96,844 108,221 108,475 109,616 111,984 117,196 111,298 115,607 7 Banks' custody liabilities4 70,325 80,506 80,225 74,701 73,660 71,358 71,222 73,277 75,869 75,548 8 U.S. Treasury bills and certificates5 48,573 57,595 55,312 51,142 50,152 47,353 46,476 48,817 51,211 49,646 9 Other negotiable and readily transferable instruments6 19,396 20,079 18,944 18,718 18,901 19,326 20,751 20,448 20,649 22,124 10 Other 2,356 2,832 5,970 4,842 4,607 4,679 3,995 4,011 4,009 3,778 11 Nonmonetary international and regional organizations7 2,356 2,344 2,721 2,091 2,045 2,043 3,039 4,001 4,082 5,073 12 Banks' own liabilities 714 444 638 298 445 603 1,272 1,233 2,246 3,093 13 Demand deposits 260 146 262 135 209 149 185 300 343 265 14 Time deposits1 151 85 58 76 141 286 471 586 633 453 15 Other2 303 212 318 87 96 168 616 347 1,271 2,376 16 Banks' custody liabilities4 1,643 1,900 2,083 1,792 1,599 1,439 1,767 2,768 1,835 1,980 17 U.S. Treasury bills and certificates 102 254 541 277 109 142 253 1,425 487 328 18 Other negotiable and readily transferable instruments6 1,538 1,646 1,542 1,515 1,490 1,297 1,514 1,343 1,349 1,652 19 Other 2 0 0 0 0 0 0 0 0 0 20 Official institutions8 78,206 86,624 78,957 72,886 72,099 70,176 70,464 71,968 71,293 70,683 21 Banks' own liabilities 18,292 17,826 16,808 14,959 15,326 17,112 17,626 18,964 15,927 16,240 22 Demand deposits 4,671 3,771 2,612 2,385 2,277 3,241 2,156 3,167 2,800 2,035 23 Time deposits1 3,050 3,612 4,146 4,261 4,866 5,623 5,769 5,500 6,101 5,700 24 Other2 10,571 10,443 10,050 8,312 8,183 8,248 9,702 10,297 7,026 8,506 25 Banks' custody liabilities4 59,914 68,798 62,149 57,927 56,773 53,064 52,838 53,004 55,366 54,443 26 U.S. Treasury bills and certificates5 47,666 56,243 52,389 48,174 47,048 43,850 42,741 43,509 45,824 41,182 27 Other negotiable and readily transferable instruments6 12,196 12,501 9,712 9,717 9,685 9,029 10,057 9,461 9,507 10,224 28 Other 52 54 47 37 40 185 40 33 36 37 29 Banks' 88,316 96,415 135,355 151,420 157,787 161,176 165,642 173,299 171,001 177,852 30 Banks' own liabilities 83,299 90,456 123,640 140,669 146,591 148,456 153,081 160,594 157,329 163,642 31 Unaffiliated foreign banks 19,482 21,786 26,796 32,448 38,116 38,840 41,097 43,398 46,032 48,036 32 Demand deposits 13,285 14,188 11,614 10,444 9,267 9,915 9,697 9,274 9,384 8,776 33 Time deposits1 1,667 1,703 8,654 13,653 18,653 19,260 21,248 23,403 25,381 26,737 34 Other2 4,530 5,895 6,528 8,350 10,195 9,664 10,152 10,721 11,267 12,523 35 Own foreign offices3 63,817 68,670 96,844 108,221 108,475 109,616 111,984 117,196 111,298 115,607 36 Banks' custody liabilities4 5,017 5,959 11,715 10,751 11,197 12,720 12,562 12,706 13,671 14,209 37 U.S. Treasury bills and certificates 422 623 1,683 1,876 2,213 2,592 2,698 2,926 3,872 3,970 38 Other negotiable and readily transferable instruments6 2,415 2,748 4,421 4,405 4,729 5,968 6,097 6,520 6,661 7,102 39 Other 2,179 2,588 5,611 4,470 4,255 4,160 3,766 3,260 3,138 3,138 40 Other foreigners 18,642 19,914 25,947 28,124 29,288 32,861 35,196 36,642 37,794 39,720 41 Banks' own liabilities 14,891 16,065 21,669 23,893 25,196 28,727 31,140 31,842 32,798 34,804 42 Demand deposits 5,087 5,356 5,189 4,843 4,745 4,855 4,512 4,544 4,575 4,888 43 Time deposits 8,755 9,676 15,958 18,564 19,936 23,383 25,926 26,518 27,401 29,187 44 Other2 1,048 1,033 523 485 515 489 702 781 822 729 45 Banks' custody liabilities4 3,751 3,849 4,278 4,231 4,092 4,134 4,055 4,800 4,996 4,916 46 U.S. Treasury bills and certificates 382 474 698 815 782 769 784 957 1,028 1,167 47 Other negotiable and readily transferable instruments6 3,247 3,185 3,268 3,081 2,997 3,032 3,082 3,125 3,133 3,147 48 Other 123 190 312 335 313 334 189 718 835 603 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 10,984 10,745 10,672 10,916 11,169 11,673 12,652 12,878 12,962 13,892 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 • October 1982 3.17 Continued 1982 AArreeaa aanndd ccoouunnttrryy 11997799 11998800 Feb. Mar. Apr. May June' July August? 1 Total 187,521 205,297 242,981 254,520 261,219 266,256 274,341 285,911 284,169 293,328 2 Foreign countries 185,164 202,953 240,259 252,430 259,174 264,213 271,302 281,910 280,088 288,255 3 Europe 90,952 90,897 90,942 91,957 93,541 91,890 97,484 102,699 106,219 111,915 4 Austria 413 523 587 647 545 472 454 434 501 532 5 Belgium-Luxembourg 2,375 4,019 4,117 3,254 3,002 2,898 3,075 2,869 2.957 3,217 6 Denmark 1,092 497 333 524 514 613 608 510 452 446 7 Finland 398 455 296 292 273 229 212 181 162 266 8 France 10,433 12,125 8,486 8,047 7,792 6,737 6,312 9,234 8,635 8,156 9 Germany 12,935 9,973 7,665 6,668 7,698 6,555 6,954 6,221 5,624 5,397 10 Greece 635 670 463 535 472 457 549 512 506 559 11 Italy 7,782 7,572 7,290 6,497 4,300 3,695 3,420 4,720 5,760 6,703 12 Netherlands 2,337 2,441 2,823 3,027 3,111 2,963 2,719 2,836 2,762 2,804 13 Norway 1,267 1,344 1,457 1,129 1,518 1,666 1,981 1,370 1,333 1,634 14 Portugal 557 374 354 275 272 272 276 365 365 453 15 Spain 1,259 1,500 916 946 1,136 1,055 1,114 1,191 1,133 1,223 16 Sweden 2,005 1,737 1,545 1,480 1,358 1,373 1,425 1,416 1,385 1,278 17 Switzerland 17,954 16,689 18,723 18,515 19,199 20,339 21,651 22,473 23,853 25,019 18 Turkey 120 242 518 216 283 364 204 167 222 287 19 United Kingdom 24,700 22,680 28,288 34.073 35,146 35,452 39,893 41,159 44,115 46,800 20 Yugoslavia 266 681 375 219 223 259 237 314 320 317 21 Other Western Europe1 4,070 6,939 6,165 5,279 6,256 6,106 6,000 6,163 5,694 6,336 22 U.S.S.R 52 68 49 52 44 37 30 44 41 47 23 Other Eastern Europe2 302 370 493 284 400 350 371 521 397 440 24 Canada 7,379 10,031 10,250 11,105 10,780 12,298 10,619 11,541 11,167 11,574 25 Latin America and Caribbean 49,686 53,170 84,685 94,715 98,073 103,809 105,507 109,452 103,877 107,226 26 Argentina 1,582 2,132 2,445 2,897 3,037 2,729 2,203 2,030 2,095 2,644 27 Bahamas 15,255 16,381 34.400 43,675 44,689 45,608 44,819 44,615 39,474 41,823 28 Bermuda 430 670 765 865 1,113 1,165 1,350 1,300 1,303 1,290 29 Brazil 1,005 1,216 1,568 1,803 1,352 1,462 1,615 1,822 1,823 1,944 30 British West Indies 11,138 12,766 17,794 18,847 18,844 19,623 19,690 22,631 21,986 22,801 31 Chile 468 460 664 815 951 992 1,224 1,124 1,525 1,165 32 Colombia 2,617 3,077 2,993 2,924 2,654 2,639 2,515 2,700 2,699 2,636 33 Cuba 13 6 9 10 7 6 6 6 7 9 34 Ecuador 425 371 434 370 513 491 465 559 527 478 35 Guatemala3 414 367 479 519 590 569 583 580 613 616 36 Jamaica3 76 97 87 100 129 133 104 100 139 136 37 Mexico 4,185 4,547 7,163 7,246 7,646 8,533 8,992 8.957 9,643 9,259 38 Netherlands Antilles 499 413 3,182 3,234 3,434 3,474 3,449 3.727 3,602 3,793 39 Panama 4,483 4,718 4,847 3,357 4,190 4,238 4,338 5,357 4,884 4,689 40 Peru 383 403 694 531 532 620 753 1,069 931 984 41 Uruguay 202 254 367 479 323 410 561 542 609 656 42 Venezuela 4,192 3,170 4,245 4,578 5,120 8,061 9,421 9,310 9,143 9,239 43 Other Latin America and Caribbean 2,318 2,123 2,548 2,464 2,948 3,056 3,419 3,022 2,874 3,066 44 Asia 33,005 42,420 49,784 50,409 52,607 50,362 51,066 51,143 52,047 5500,,881199 China 45 Mainland 49 49 158 215 257 331 284 244 261 245 46 Taiwan 1,393 1,662 2,082 2,253 2,213 2,291 2,372 2,334 2,371 2,253 47 Hong Kong 1,672 2,548 3,950 4,302 4,195 4,587 4,737 4,880 4,918 4,551 48 India 527 416 385 414 435 544 603 540 551 655 49 Indonesia 504 730 640 1,241 1,127 837 784 583 722 593 50 Israel 707 883 592 507 449 539 562 610 476 486 51 Japan 8,907 16,281 20,550 20,778 21,955 19,307 19,008 18,994 19,833 19,283 52 Korea 993 1,528 2,013 2,162 2,138 2,355 2,191 1,863 1,934 1,712 53 Philippines 795 919 874 739 671 691 758 839 660 728 54 Thailand 277 464 534 494 340 517 474 485 450 369 55 Middle-East oil-exporting countries4 15,300 14,453 13.154 13,569 14,799 14,347 14,400 14,267 14,243 14,106 56 Other Asia 1,879 2,487 4.852 3,735 4,028 4,016 4,893 5,503 5,629 5,838 57 Africa 3,239 5,187 3,180 2,814 2,398 3,111 2,629 2,675 2,692 3,205 58 Egypt 475 485 360 339 297 411 382 447 430 398 59 Morocco 33 33 32 35 36 52 37 59 52 47 60 South Africa 184 288 420 368 330 308 305 335 339 341 61 Zaire 110 57 26 40 69 41 27 37 25 25 62 Oil-exporting countries5 1,635 3,540 1,395 1,112 627 1,144 846 901 1,025 915 63 Other Africa 804 783 946 920 1,039 1,156 1,031 896 821 1,479 64 Other countries 904 1,247 1,419 1,430 1,775 2,743 3,997 4,400 4,085 3,516 65 Australia 684 950 1,223 1,204 1,550 2,542 3,752 4,172 3,831 3,317 66 All other 220 297 196 226 225 201 245 228 254 199 67 Nonmonetary international and regional organizations 2,356 2.344 2,721 2,091 2,045 2,043 3,039 4,001 4,082 5,073 68 International 1,238 1,157 1,661 1,082 1,081 1,269 2,064 2,860 3,064 3,998 69 Latin American regional 806 890 710 706 630 450 661 694 606 713 70 Other regional6 313 296 350 303 334 323 314 446 412 362 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 1982 AArreeaa aanndd ccoouunnttrryy 11997799 11998800 11998811AA Feb. Mar. Apr. May June' July Aug.P 1 Total 133,943 172,592 251,029 266,483 276,924 287,562 299,979 314,381 322,901 326,915 2 Foreign countries 133,906 172,514 250,973 266,435 276,868 287,522 299,936 314,338 322,856 326,809 3 Europe 28,388 32,108 49,047 54,695 56,937 59,319 62,009 64,115 67,304 70,683 4 Austria 284 236 121 172 130 200 201 140 189 189 5 Belgium-Luxembourg 1,339 1,621 2,843 3,280 3,778 3,848 3,669 3,760 4,101 4,419 6 Denmark 147 1.27 188 253 285 286 276 287 308 323 7 Finland 202 460 547 573 574 525 638 736 699 776 8 France 3,322 2,958 4,126 4,951 5,579 5,042 5,508 6,405 5,938 6,027 9 Germany 1,179 948 936 870 1,123 1,483 1,512 1,758 1,736 1,569 10 Greece 154 256 333 321 325 279 262 297 305 270 11 Italy 1,631 3,364 5,240 5,644 5,333 5,099 5,842 6,024 6,295 6,583 12 Netherlands 514 575 686 814 956 750 917 1,005 1,119 1,110 13 Norway 276 227 384 437 447 452 416 429 538 487 14 Portugal 330 331 529 666 724 813 797 938 990 970 15 Spain 1,051 993 2,100 2,507 2,619 2,499 2,624 3,086 3,308 3,520 16 Sweden 542 783 1,206 1,504 1,550 1,441 1,692 1,638 1,518 1,718 17 Switzerland 1,165 1,446 2,213 2,001 1,709 1,564 1,557 1,596 1,601 1,589 18 Turkey 149 145 424 522 496 487 573 584 646 600 19 United Kingdom 13,795 14,917 23,645 26,665 27,784 31,081 31,974 31,834 34,410 36,891 20 Yugoslavia 611 853 1,224 1,243 1,200 1,238 1,202 1,294 1,266 1,220 21 Other Western Europe1 175 179 209 192 317 282 386 247 280 291 22 U.S.S.R 268 281 367 262 218 195 251 296 276 315 23 Other Eastern Europe2 1,254 1,410 1,725 1,817 1,790 1,755 1,711 1,761 1,781 1,816 24 Canada 4,143 4,810 9,164 9,925 10,970 11,805 11,323 12,693 13,070 12,087 25 Latin America and Caribbean 67,993 92,992 138,114 148,003 152,875 158,097 166,757 173,201 178,007 181,309 26 Argentina 4,389 5,689 7,522 8,827 8,928 10,896 10,816 11,012 10,971 10,945 27 Bahamas 18,918 29,419 43,437 45,860 47,586 47,606 48,730 51,849 52,398 54,617 28 Bermuda 496 218 346 481 401 575 396 414 402 385 29 Brazil 7,713 10,496 16,918 17,878 18,723 19,380 20,413 21,147 21,556 22,471 30 British West Indies 9,818 15,663 21,913 22,031 22,975 22,739 25,469 25,825 27,912 28,501 31 Chile 1,441 1,951 3,690 4,363 4,513 4,590 4,884 5,268 5,228 5,377 32 Colombia 1,614 1,752 2,018 2,067 2,018 2,146 2,265 2,554 2,612 2,640 33 Cuba 4 3 3 9 3 137 37 3 8 3 34 Ecuador 1,025 1,190 1,531 1,752 1,837 1,879 1,852 2,022 2,027 2,048 35 Guatemala3 134 137 124 119 106 116 112 124 147 116 36 Jamaica3 47 36 62 115 151 130 781 124 578 153 37 Mexico 9,099 12,595 22,407 24,301 25,174 26,087 28,321 29,547 29,727 29,346 38 Netherlands Antilles 248 821 1,076 1,150 873 886 880 1,028 1,032 778 39 Panama 6,041 4,974 6,780 7,306 7,509 8,246 8,318 8,660 9,146 9,565 40 Peru 652 890 1,218 1,433 1,518 1,589 1,672 2,047 2,064 2,062 41 Uruguay 105 137 157 240 232 316 346 381 413 457 42 Venezuela 4,657 5,438 7.069 7,727 8,085 8,560 9,172 9,138 9,681 9,805 43 Other Latin America and Caribbean 1,593 1,583 1,844 2,374 2,245 2,220 2,295 2,057 2,105 2,039 44 Asia 30,730 39,078 49,770 48,211 50,107 52,115 53,117 57,368 57,417 55,999 China 45 Mainland 35 195 107 65 84 98 68 124 139 127 46 Taiwan 1,821 2,469 2,461 2,215 2,300 2,275 2,114 2,048 1,977 1,891 47 Hong Kong 1,804 2,247 4,126 4,287 5,434 5,344 5,978 6,390 6,124 6,407 48 India 92 142 123 188 212 195 185 252 266 235 49 Indonesia 131 245 346 330 356 308 315 288 294 297 50 Israel 990 1,172 1,562 1,467 1,241 1,160 1,391 1,835 1,637 1,534 51 Japan 16,911 21,361 26,757 26,081 25,972 27,358 26,732 29,258 30,091 28,397 52 Korea 3,793 5,697 7,324 6,272 6,564 6,953 7,103 7,119 6,878 6,967 53 Philippines 737 989 1,817 1,989 2,270 2,266 2,459 2,605 2,605 2,611 54 Thailand 933 876 564 559 513 565 502 459 406 388 55 Middle East oil-exporting countries4 1,548 1,432 1,575 1,991 2,021 2,411 2,613 2,564 2,665 2,614 56 Other Asia 1,934 2,252 3,009 2,766 3,139 3,182 3,656 4,426 4,335 4,530 57 1,797 2,377 3,503 4,019 4,203 4,383 4,768 4,851 5,029 4,847 58 Egypt 114 151 238 293 327 345 400 416 378 399 59 Morocco 103 223 284 273 294 312 278 334 314 368 60 South Africa 445 370 1,011 1,249 1,426 1,344 1,387 1,467 1,620 1,574 61 Zaire 144 94 112 93 89 100 81 84 81 58 62 Oil-exporting countries5 391 805 657 593 637 725 839 799 849 762 63 Other 600 734 1,201 1,518 1,429 1,557 1,783 1,751 1,787 1,685 64 Other countries 855 1,150 1,376 1,583 1,777 1,803 1,961 2,111 2,028 1,885 65 Australia 673 859 1,203 1,385 1,501 1,560 1,655 1,806 1,700 1,538 66 All other 182 290 172 198 276 243 306 305 328 347 67 Nonmonetary international and regional organizations6 36 78 56 47 57 40 43 43 45 106 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 ^ 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 • October 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 1982 TTyyppee ooff ccllaaiimm 11997799 11998800 11998811AA Feb. Mar. Apr. May June' July'' Aug P 1 Total 111111155555554444444,,,,,,,000000033333330000000 111111199999998888888,,,,,,,666666699999998888888 222222288888886666666,,,,,,,333333399999998888888''''''' 333333311111118888888,,,,,,,111111199999996666666''''''' 333333355555556666666,,,,,,,666666611111111111111 332266,,991155 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 111111133333333333333,,,,,,,999999944444443333333 111111177777772222222,,,,,,,555555599999992222222 222222255555551111111,,,,,,,000000022222229999999 266,483 222222277777776666666,,,,,,,999999922222224444444 287,562 299,979 333333311111114444444,,,,,,,333333388888881111111 322,901 332266,,991155 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 11111115555555,,,,,,,999999933333337777777 22222220000000,,,,,,,888888888888882222222 33333331111111,,,,,,,111111199999993333333 33,460 33333333333333,,,,,,,777777700000005555555 35,203 37,593 44444440000000,,,,,,,000000000000001111111 40,698 4411,,775500 44 OOwwnn ffoorreeiiggnn ooffffiicceess11 44444447777777,,,,,,,444444422222228888888 66666665555555,,,,,,,000000088888884444444 99999996666666,,,,,,,666666633333339999999 98,305 111111100000001111111,,,,,,,777777711111110000000 106,115 107,618' 111111111111113333333,,,,,,,777777722222222222222 114,098 111177,,009900 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 44444440000000,,,,,,,999999922222227777777 55555550000000,,,,,,,111111166666668888888 77777774444444,,,,,,,000000099999991111111 82,946 88888887777777,,,,,,,222222288888888888888 90,760 97,112 111111100000001111111,,,,,,,777777755555556666666 108,364 110088,,884433 66 DDeeppoossiittss 6666666,,,,,,,222222277777774444444 8888888,,,,,,,222222255555554444444 22222222222222,,,,,,,666666688888889999999 26,259 22222228888888,,,,,,,777777700000009999999 29,152 33,432 33333335555555,,,,,,,666666666666667777777 39,998 3399,,665588 77 OOtthheerr 33333334444444,,,,,,,666666655555554444444 44444441111111,,,,,,,999999911111114444444 55555551111111,,,,,,,444444400000003333333 56,686 55555558888888,,,,,,,555555577777779999999 61,607 63,679 66666666666666,,,,,,,000000099999990000000 68,366 6699,,118855 88 AAllll ootthheerr ffoorreeiiggnneerrss 22222229999999,,,,,,,666666655555550000000 33333336666666,,,,,,,444444455555559999999 44444449999999,,,,,,,111111100000005555555 51,772 55555554444444,,,,,,,222222222222222222222 55,484 57,657 55555558888888,,,,,,,999999900000001111111 59,741 5599,,223322 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss22 .... 22222220000000,,,,,,,000000088888888888888 22222226666666,,,,,,,111111100000006666666 33333335555555,,,,,,,333333366666668888888''''''' 44444441111111,,,,,,,222222277777771111111''''''' 44444442222222,,,,,,,222222233333330000000 999999955555555555555 888888888888885555555 1111111,,,,,,,333333377777778888888 1111111,,,,,,,555555511111112222222 1111111,,,,,,,444444422222226666666 11 Negotiable and readily transferable 11111113333333,,,,,,,111111100000000000000 11111115555555,,,,,,,555555577777774444444 22222225555555,,,,,,,777777755555552222222 33333332222222,,,,,,,333333322222228888888 33333331111111,,,,,,,999999966666666666666 12 Outstanding collections and other 6666666,,,,,,,000000033333332222222 9999999,,,,,,,666666644444448888888 8888888,,,,,,,222222233333338888888''''''' 7777777,,,,,,,444444433333331111111''''''' 8888888,,,,,,,888888833333338888888 13 MEMO: Customer liability on 11111118888888,,,,,,,000000022222221111111 22222222222222,,,,,,,777777711111114444444 22222229999999,,,,,,,555555566666665555555 33333330000000,,,,,,,444444488888880000000''''''' 33333332222222,,,,,,,999999922222229999999 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States5 22,305' 24.511r 39,820' 43,781 40,806 41,362 43,947' 44,304 44,939 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 1979 1980 1981 1982 MMaattuurriittyy;; bbyy bboorrrroowweerr aanndd aarreeaa Dec. Dec. June Sept Dec. A' Mar. June 1 Total 86,181 106,748 117,610 122,477 153,914 174,403 199,743 By borrower 2 Maturity of 1 year or less1 65,152 82,555 92,124 94,957 115,885 132,875 151,417 3 Foreign public borrowers 7,233 9,974 11,752 12,990 15,196 16,344 19,308 4 All other foreigners 57,919 72,581 80,372 81,967 100,689 116,531 132,110 5 Maturity of over 1 year1 21,030 24,193 25,486 27,520 38,029 41,528 48,326 6 Foreign public borrowers 8,371 10,152 11,177 12,564 15,640 16,851 20,003 7 All other foreigners 12,659 14,041 14,309 14,956 22,389 24,678 28,322 By area Maturity of 1 year or less1 8 Europe 15,235 18,715 21,149 23,015 27,883 34,228 39,076 9 Canada 1,777 2,723 3,314 3,959 4,634 5,791 6,579 10 Latin America and Caribbean 24,928 32,034 33,584 35,590 48,461 58,144 67,444 11 21,641 26,686 31,509 29,295 31,508 30,578 33,788 12 Africa 1,077 1,757 1,768 2,324 2,457 2,884 3,309 13 All other2 493 640 801 774 943 1,249 11,,222200 Maturity of over 1 year1 14 Europe 4,160 5,118 6,312 6,424 8,099 8,435 9,340 15 Canada 1,317 1,448 1,317 1,347 1,774 1,863 2,345 16 Latin America and Caribbean 12,814 15,075 15,458 17,478 25,088 27,623 32,340 17 1,911 1,865 1,679 1,550 1,902 2,236 2,455 18 Africa 655 507 559 548 899 1,056 1,275 19 All other2 173 179 161 172 267 315 571 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 June Sept. Dec. Mar. June Sept. Dec. Mar. June'' 1 Total 266.2 303.9 328.8 339.3 352.0 372.1 382.8 399.8 412.3 411.0 419.2 2 G-10 countries and Switzerland 124.7 138.4 154.2 158.8 162.1 168.5 168.3 172.2 173.9 172.1 170.3 3 Belgium-Luxembourg 9.0 11.1 13.1 13.6 13.0 13.6 13.8 14.1 13.3 13.1 13.8 4 France 12.2 11.7 14.1 13.9 14.1 14.5 14.7 16.0 15.3 15.8 16.3 5 Germany 11.3 12.2 12.7 12.9 12.1 13.3 12.1 12.7 12.9 12.4 12.6 6 Italy 6.7 6.4 6.9 7.2 8.2 7.7 8.4 8.6 9.8 8.9 8.8 7 Netherlands 4.4 4.8 4.5 4.4 4.4 4.6 4.2 3.7 4.0 4.0 4.0 8 Sweden 2.1 2.4 2.7 2.8 2.9 3.2 3.1 3.4 3.7 4.0 3.9 9 Switzerland 5.3 4.7 3.3 3.4 5.0 5.1 5.2 5.1 5.5 5.3 5.1 10 United Kingdom 47.3 56.4 64.4 66.7 67.4 68.5 67.0 68.8 69.1 68.7 66.4 11 Canada 6.0 6.3 7.2 7.7 8.4 8.9 10.8 11.8 11.0 11.4 10.9 12 Japan 20.6 22.4 25.5 26.1 26.5 29.1 28.9 28.0 29.4 28.4 28.5 13 Other developed countries 19.4 19.9 20.3 20.6 21.6 23.5 24.8 26.4 28.4 30.5 31.6 14 Austria 1.7 2.0 1.8 1.8 1.9 1.8 2.1 2.2 1.9 2.1 2.1 15 Denmark 2.0 2.2 2.2 2.2 2.3 2.4 2.3 2.5 2.3 2.5 2.6 16 Finland 1.2 1.2 1.3 1.2 1.4 1.4 1.3 1.4 1.7 1.6 1.6 17 Greece 2.3 2.4 2.5 2.6 2.8 2.7 3.0 2.9 2.8 2.8 2.5 18 Norway 2.1 2.3 2.4 2.4 2.6 2.8 2.8 3.0 3.1 3.2 3.2 19 Portugal .6 .7 .6 .7 .6 .6 .8 1.0 1.1 1.1 1.5 20 3.5 3.5 3.9 4.2 4.4 5.5 5.7 5.8 6.6 7.1 7.2 21 Turkey 1.5 1.4 1.4 1.3 1.5 1.5 1.4 1.5 1.4 1.5 1.4 22 Other Western Europe 1.3 1.4 1.6 1.7 1.7 1.8 1.8 1.9 2.1 2.2 2.2 23 South Africa 2.0 1.3 1.5 1.2 1.1 1.5 1.9 2.5 2.8 3.2 3.4 24 Australia 1.4 1.3 1.2 1.2 1.3 1.5 1.7 1.9 2.5 3.1 3.8 25 OPEC countries3 22.7 22.9 20.9 21.4 22.7 21.7 22.2 23.5 24.4 24.7 25.3 26 Ecuador 1.6 1.7 1.8 1.9 2.1 2.0 2.0 2.1 2.2 2.3 2.3 27 Venezuela 7.2 8.7 7.9 8.5 9.1 8.3 8.8 9.2 9.6 9.4 9.4 28 Indonesia 2.0 1.9 1.9 1.9 1.8 2.1 2.1 2.5 2.5 2.7 2.7 29 Middle East countries 9.5 8.0 6.9 6.7 6.9 6.7 6.8 7.1 7.6 8.2 8.6 30 African countries 2.5 2.6 2.5 2.4 2.8 2.6 2.6 2.6 2.5 2.2 2.3 31 Non-OPEC developing countries 52.6 63.0 67.7 73.0 77.4 82.2 84.8 90.2 95.8 94.0 100.0 Latin America 32 Argentina 3.0 5.0 5.6 7.6 7.9 9.5 8.5 9.3 9.3 9.3 8.9 33 Brazil 14.9 15.2 15.3 15.8 16.2 17.0 17.5 17.7 19.0 18.9 20.2 34 Chile 1.6 2.5 2.7 3.2 3.7 4.0 4.8 5.5 5.8 5.6 6.0 35 Colombia 1.4 2.2 2.2 2.4 2.6 2.4 2.5 2.5 2.6 2.2 2.5 36 Mexico 10.8 12.0 13.6 14.4 15.9 17.0 18.2 20.0 21.5 22.1 23.9 37 1.7 1.5 1.4 1.5 1.8 1.8 1.7 1.8 2.0 1.8 2.3 38 Other Latin America 3.6 3.7 3.6 3.9 3.9 4.7 3.8 4.2 4.1 4.0 3.9 Asia China 39 Mainland .0 .1 .1 .1 .2 .2 .2 .2 .2 .2 .3 40 Taiwan 2.9 3.4 3.8 4.1 4.2 4.4 4.6 5.1 5.1 5.1 5.8 41 .2 .2 .2 .3 .3 .3 .3 .3 .5 .5 42 1.0 1.3 1.2 1.1 1.5 1.3 1.8 1.5 2.0 1.6 2.1 43 Korea (South) 3.9 5.4 7.1 7.1 7.7 8.8 8.6 9.4 8.6 8.8 44 Malaysia .6 1.0 1.1 1.1 1.1 1.2 1.4 1.4 1.7 1.7 1.8 45 Philippines 2.8 4.2 4.6 5.1 4.8 5.1 5.6 6.0 5.8 6.2 46 Thailand 1.2 1.5 1.5 1.6 1.6 1.5 1.4 1.5 1.3 1.3 47 Other Asia .2 .5 .5 .5 .6 .5 .7 .8 1.0 1.0 1.2 Africa 48 Egypt .4 .6 .8 .6 .8 .8 .7 1.0 1.1 1.3 1.3 49 Morocco .6 .6 .5 .6 .7 .6 .5 .7 .7 .7 .7 50 .2 .2 .2 .2 .2 .2 .2 .2 .2 .2 .2 51 Other Africa4 1.4 1.7 1.9 2.1 2.1 2.2 2.1 2.2 2.3 2.3 2.3 52 Eastern Europe 6.9 7.3 7.2 7.3 7.4 7.7 7.7 7.7 7.7 7.0 6.4 53 U.S.S.R 1.3 .7 .5 .5 .4 .4 .5 .4 .6 .4 .4 54 Yugoslavia 1.5 1.8 2.1 2.1 2.3 2.4 2.5 2.5 2.5 2.4 2.3 55 Other 4.1 4.8 4.5 4.7 4.6 4.8 4.8 4.7 4.7 4.2 3.7 56 Offshore banking centers 31.0 40.4 44.3 44.6 47.0 53.7 59.3 61.7 63.6 64.5 67.3 57 Bahamas 10.4 13.7 13.7 13.2 13.7 15.5 17.9 21.3 18.9 19.8 22.5 58 Bermuda .7 .8 .6 .6 .6 .7 .7 .8 .7 .7 .7 59 Cayman Islands and other British West Indies 7.4 9.4 9.8 10.1 10.6 11.9 12.6 12.1 12.6 11.6 11.6 60 Netherlands Antilles .8 1.2 1.2 1.3 2.1 2.3 2.4 2.2 3.2 3.2 3.0 61 Panama5 3.0 4.3 4.9 5.6 5.4 6.5 6.9 6.7 7.5 7.0 6.8 62 Lebanon .1 .2 .2 .2 .2 .2 .2 .2 .2 .2 .2 63 Hong Kong 4.2 6.0 6.9 7.5 8.1 8.4 10.3 10.3 11.8 12.8 13.0 64 Singapore 3.9 4.5 5.9 5.6 5.9 7.3 8.1 8.0 8.6 9.2 9.5 65 Others6 .5 .4 .4 .4 .3 .9 .3 .1 .1 .1 .1 66 Miscellaneous and unallocated7 9.1 11.7 14.3 13.7 14.0 14.9 15.7 18.2 18.7 18.2 18.3 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 S10 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 • October 1982 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1981 1982 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11997799 11998800 11998811 June' Sept. ' Dec. ' Mar. 1 Total 17,383r 22,125' 22,001 21,696 23,347 22,001 21,460' 2 Payable in dollars 14,288' 18,394' 18,367 18,393 20,218 18,367 18,785' 3 Payable in foreign currencies2 3,095' 3,731' 3,635 3,303 3,129 3,635 2,675' By type 4 Financial liabilities 7,476r 11,282' 11,723 11,730 12,894 11,723 11,930' 5 Payable in dollars 5,192' 8,494' 9,130 9,351 10,592 9,130 10,043' 6 Payable in foreign currencies 2,284' 2,788' 2,593 2,378 2,302 2,593 1,887' 7 Commercial liabilities 9,906' 10,843' 10,278 9,966 10,453 10,278 9,530 8 Trade payables 4,591' 4,940' 4,647 4,488 4,364 4,647 3,961 9 Advance receipts and other liabilities 5,315 5,903 5,631 5,479 6,089 5,631 5,569 10 Payable in dollars 9,095 9,900 9,237 9,042 9,626 9.237 8,742 11 Payable in foreign currencies 811r 943' 1,041 924 827 1,041 788 By area or country Financial liabilities 12 Europe 4,649' 6,467' 6,667 6,257 7,824 6,667 7,584' 13 Belgium-Luxembourg 322' 465' 431 519 482 431 534' 14 France 175 327 636 372 846 636 856' 15 Germany 497 582 491 451 430 491 503 16 Netherlands 829 681 738 772 664 738 735' 17 Switzerland 170 354 715 345 465 715 707 18 United Kingdom 2,477' 3,923' 3,531 3,672 4,773 3,531 4,143' 19 Canada 532 964 958 978 977 958 914 20 Latin America and Caribbean 1,483 3,103 3,114 3,597 3,247 3,114 2,968' 21 Bahamas 375 964 1,279 1,272 1,019 1,279 1,095 22 Bermuda 81 1 7 1 6 7 6 23 Brazil 18 23 22 20 20 22 27 24 British West Indies 514 1,452 1,045 1,538 1,395 1,045 1,123' 25 Mexico 121 99 102 98 107 102 67 26 Venezuela 72 81 98 91 90 98 97 27 Asia 804 723 957 869 814 957 450 28 Japan 726 644 792 750 696 792 293 29 Middle East oil-exporting countries3 31 38 47 29 30 47 63' 30 Africa 4 11 3 5 3 3 2 31 Oil-exporting countries4 1 1 0 0 1 0 0 32 All other5 4 15 24 24 29 24 12 Commercial liabilities 33 Europe 3,707' 4,402' 3,771 3,981 3,961 3,771 3,421 34 Belgium-Luxembourg 137 90 67 72 78 67 50 35 France 467 582 573 558 575 573 504 36 Germany 545 679 545 617 590 545 473 37 Netherlands 227 219 221 225 238 221 232 38 Switzerland 316' 499' 424 380 569 424 400 39 United Kingdom 1,077 1,209 884 1,029 925 884 824 40 Canada 924 876 870 735 834 870 857 41 Latin America 1,323 1,259 986 1,149 1,087 986 770 42 Bahamas 69 8 2 4 3 2 22 43 Bermuda 32 75 67 72 113 67 71 44 Brazil 203 111 67 54 61 67 83 45 British West Indies 21 35 2 34 11 2 27 46 Mexico 257 326 293 319 345 293 176 47 Venezuela 301 319 276 290 273 276 194 48 2,991 3,034 3,285 2,803 3,221 3,285 3,214 49 Japan 583 802 1,094 867 775 1,094 1,081 50 Middle East oil-exporting countries3 1,014 890 910 837 881 910 816 51 Africa 728 817 703 676 757 703 664 52 Oil-exporting countries4 384 517 344 392 355 344 247 53 All other5 233 456 664 622 593 664 604 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 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11997799 11998800 '' 11998811 June ' Sept. ' Dec. ' Mar. ' 1 Total 31,375' 34,743 35,790 35,638 34,544 35,790 30,042 2 Payable in dollars 28,183' 31,803 32,206 32,596 31,541 32,206 27,435 3 Payable in foreign currencies2 3,193 2,940 3,584 3,042 3,003 3,584 2,607 By type 4 Financial claims 18,484' 20,057 20,906 20,409 19,586 20,906 17,658 5 Deposits 12,847' 14,220 14,694 14,683 13,775 14,694 12,590 6 Payable in dollars 11,931' 13,445 14,080 13,956 13,048 14,080 12,133 7 Payable in foreign currencies 916 775 614 727 727 614 457 8 Other financial claims 5,637 5,837 6,212 5,726 5,811 6,212 5,068 9 Payable in dollars 3,810 4,154 3,758 3,988 4,116 3,758 3,439 10 Payable in foreign currencies 1,826 1,683 2,454 1,738 1,695 2,454 1,629 11 Commercial claims 12,892 14,686 14,884 15,229 14,959 14,884 12,384 12 Trade receivables 12,188 13,953 13,944 14,359 14,048 13,944 11,449 13 Advance payments and other claims 704 733 940 870 911 940 935 14 Payable in dollars 12,441 14,203 14,368 14,652 14,377 14,368 11,864 15 Payable in foreign currencies 450 483 516 577 582 516 520 By area or country Financial claims 16 Europe 6,191' 6,179 4,592 5,213 4,846 4,592 4,511 17 Belgium-Luxembourg 32 195 43 174 26 43 16 18 France 177 337 325 377 348 325 422 19 Germany 409 230 244 139 320 244 197 20 Netherlands 53 51 50 52 68 50 79 21 Switzerland 73 59 87 116 100 87 53 22 United Kingdom 5,111 4,992 3,505 4,009 3,659 3,505 3,502 23 Canada 4.997' 5,064 6,624 6,186 6,032 6,624 4,891 24 Latin America and Caribbean 6,293 7,823 8,589 8,121 7,747 8,589 7,377 25 Bahamas 2,765 3,479 3,902 3,346 3,262 3,902 3,482 26 Bermuda 30 135 18 33 15 18 27 27 Brazil 163 96 30 20 66 30 49 28 British West Indies 2,011 2,755 3,500 3,421 3,313 3,500 2,797 29 Mexico 157 208 313 264 283 313 281 30 Venezuela 143 137 148 143 143 148 130 31 Asia 706 722 882 637 623 882 680 32 Japan 199 189 363 137 111 363 267 33 Middle East oil-exporting countries3 16 20 37 19 29 37 36 34 Africa 253 238 168 216 222 168 164 35 Oil-exporting countries4 49 26 46 39 41 46 43 36 All other5 44 32 51 37 116 51 34 Commercial claims 37 Europe 4,909 5,512 5,329 5,470 5,347 5,329 4,342 38 Belgium-Luxembourg 202 233 234 235 220 234 245 39 France 727 1,129 776 784 767 776 696 40 Germany 589 591 554 572 580 554 444 41 Netherlands 298 318 303 308 308 303 227 42 Switzerland 272 353 427 474 404 427 354 43 United Kingdom 901 928 967 1,067 1,032 967 1,057 44 Canada 859 914 967 1,016 1,017 967 939 45 Latin America and Caribbean 2,879 3,765 3,464 3,821 3,726 3,464 2,904 46 Bahamas 21 21 12 29 18 12 80 47 Bermuda 197 108 223 208 241 223 212 48 Brazil 645 861 668 824 726 668 417 49 British West Indies 16 34 12 34 13 12 23 50 Mexico 708 1,101 1,020 1,121 983 1,020 759 51 Venezuela 343 410 422 420 454 422 394 52 Asia 3,451 3,522 3,914 3,813 3,700 3,914 3,151 53 Japan 1,177 1,052 1,244 1,241 1,129 1,244 1,158 54 Middle East oil-exporting countries3 765 825 901 937 829 901 757 55 Africa 554 655 750 705 717 750 584 56 Oil-exporting countries4 133 156 152 137 154 152 142 57 All other5 240 318 459 404 451 459 463 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 • October 1982 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1982 1982 TTrraannssaaccttiioonnss,, aanndd aarreeaa oorr ccoouunnttrryy 11998800 11998811 J A a u n g .- . Feb. Mar. Apr. May June July Aug .P U.S. corporate securities STOCKS 1 Foreign purchases 40,298 40,603 20,141 2,524 2,635 2,359 2,622 2,166 2,648 3,171 2 Foreign sales 34,870 34,835 17,686 1,988 2,506 2,101 2,186 1,863 2,648 2,646 3 Net purchases, or sales (-) 5,427 5,768 2,455 536 129 258 436 303 0 525 4 Foreign countries 5,409 5,743 2,418 537 120 252 429 299 -6 523 5 Europe 3,116 3,606 1,932 347 166 167 306 158 292 264 6 France 492 892 -103 -6 -51 33 -48 -25 2 -8 7 Germany 169 -28 161 17 42 29 43 11 21 -16 8 Netherlands -328 39 106 38 1 -9 36 23 2 12 9 Switzerland 310 280 -287 -33 -60 -66 6 -85 -31 -57 10 United Kingdom 2,528 2,209 2,049 317 223 176 279 225 297 364 11 Canada 887 783 -122 20 -118 0 -10 2 -45 74 12 Latin America and Caribbean 148 -30 151 31 -19 53 22 25 -69 121 13 Middle East1 1,206 1,140 478 137 84 61 104 73 -133 100 14 Other Asia 16 284 -79 -6 4 -40 -21 39 -54 -42 15 Africa -1 7 -3 1 -3 0 1 -3 1 0 16 Other countries 38 -46 62 6 6 12 27 6 0 5 17 Nonmonetary international and regional organizations 18 24 37 -I 9 6 6 4 6 2 BONDS2 18 Foreign purchases 15,425 17,290 12,368 929 1,619 2,217 1,929 1,483 1,732 1,512 19 Foreign sales 9,964 12,247 10,412 930 1,481 1,485 1,199 1,153 1,623 1,764 20 Net purchases, or sales (-) 5,461 5,043 1,956 -1 138 733 730 330 110 -252 21 Foreign countries 5,526 4,976 1,988 10 144 674 690 356 75 -116 22 Europe 1,576 1,356 1,971 16 169 540 704 244 185 -32 23 France 129 11 115 14 12 20 46 23 3 -18 24 Germany 212 848 1,786 104 225 396 500 115 256 102 25 Netherlands -65 70 45 0 17 14 11 5 -4 0 26 Switzerland 54 108 157 8 15 46 48 12 -22 31 27 United Kingdom 1,257 181 -156 -102 -102 59 91 67 -63 -108 28 Canada 135 -12 167 15 29 46 23 21 1 4 29 Latin America and Caribbean 185 132 133 -11 26 -8 15 61 17 18 30 Middle East1 3,499 3,465 -303 -63 -41 126 -112 22 -68 -78 31 Other Asia 117 44 37 52 -29 -18 61 9 -60 -31 32 Africa 5 -1 -19 0 -6 -13 0 0 0 0 33 Other countries 10 -7 2 2 -3 1 0 -1 0 2 34 Nonmonetary international and regional organizations -65 66 -32 -11 -6 59 40 -26 35 -136 Foreign securities 35 Stocks, net purchases, or sales (-) -2,136 -39 168 38 31 -65 -115 79 44 11 36 Foreign purchases 7,893 9,261 4,187 509 692 383 486 619 444 531 37 Foreign sales 10,029 9,300 4,019 471 661 448 601 540 400 520 38 Bonds, net purchases, or sales (-) -1,001 -5,436 -2,832 -99 -540 -33 461 -762 -544 -1,208 39 Foreign purchases 17,084 17,540 17,893 1,513 2,549 2,254 2,755 2,033 2,288 3,279 40 Foreign sales 18,086 22,976 20,724 1,612 3,089 2,287 2,294 2,795 2,832 4,487 41 Net purchases, or sales (-), of stocks and bonds . -3,138 -5,475 -2,664 -62 -509 -98 346 -684 -500 -1,197 42 Foreign countries -4,014 -4,463 -2,352 -121 -525 -32 126 -305 -507 -999 43 Europe -1,108 -681 -557 -58 109 -127 -40 -425 -21 -128 44 Canada -1,948 -3,698 -1,579 -102 -628 120 76 -81 -266 -533 45 Latin America and Caribbean 86 170 728 67 96 202 144 76 26 49 46 Asia -1,147 -291 -963 -21 -115 -209 -53 127 -255 -433 47 Africa 24 -53 -17 -1 -5 -17 -1 0 3 17 48 Other countries 79 90 37 -7 17 0 -1 -2 6 29 49 Nonmonetary international and regional organizations 876 -1,012 -312 60 16 -66 219 -379 7 -198 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 1982 Country or area 11998800 11998811 Jan.- Aug. Feb. Mar. Apr. May June July Aug .p Holdings (end of period)1 1 Estimated total2 57,549 70,201 73,800 75,794 77,268 77,836 78,199 79,655 80,477 2 Foreign countries2 52,961 64,530 68,273 70,251 71,925 72,950 73,005 75,363 76,737 3 Europe2 24,468 23,976 25,332 26,085 26,393 26,021 25,738 26,454 27,729 4 Belgium-Luxembourg 77 543 363 539 709 340 152 155 576 5 Germany2 12,327 11,861 12,845 13,055 13,231 12,974 13,022 13,535 13,959 6 Netherlands 1,884 1,955 2,038 2,052 2,139 2,152 2,176 2,147 2,312 7 Sweden 595 643 635 697 662 655 652 650 644 8 Switzerland2 1,485 846 984 1,025 1,157 1,134 1,039 1,016 1,100 9 United Kingdom 7,323 6,709 6,931 7,037 6,737 6,811 6,674 6,923 7,125 10 Other Western Europe 111 1,419 1,535 1,680 1,757 1,954 2,023 2,028 2,012 11 Eastern Europe 0 0 0 0 0 0 0 0 0 12 Canada 449 514 499 458 473 506 410 445 352 13 Latin America and Caribbean 999 736 728 760 886 938 910 848 1,166 14 Venezuela 292 286 286 286 306 296 253 229 222 15 Other Latin America and Caribbean 285 319 337 370 383 437 432 402 611 16 Netherlands Antilles 421 131 104 103 196 204 224 217 333 17 Asia 26,112 38,671 41,310 42,531 43,750 45,060 45,516 47,189 47,175 18 Japan 9,479 10,780 11,022 11,203 11,381 11,396 11,137 11,289 11,247 19 Africa 919 631 400 401 403 405 405 405 305 20 All other 14 2 5 17 22 21 26 23 12 21 Nonmonetary international and regional organizations 4,588 5,671 5,527 5,543 5,343 4,886 5,194 4,292 3,740 22 International 4,548 5,637 5,493 5,529 5,278 4,822 5,123 4,167 3,629 23 Latin American regional 36 1 -4 -4 -4 -4 -4' -4 -4 Transactions (net purchases, or sales -) during period) 24 Total2 6,066 12,652 10,276 2,313 1,994 1,474 568 362 1,457 822 25 Foreign countries2 6,906 11,568 12,207 2,423 1,978 1,674 1,025 54 2,358 1,374 26 Official institutions 3,865 11,694 10,285 2,343 1,314 812 1,474 318 2,817 367 27 Other foreign2 3,040 -127 1,921 80 664 862 -448 -264 -458 1,007 28 Nonmonetary international and regional organizations -843 1,085 -1,931 -110 16 -200 -457 309 -903 -553 MEMO: Oil-exporting countries 29 Middle East3 7,672 11.156 7,169 1,373 470 906 907 924 1,313 257 30 Africa4 327 -289 -327 -119 0 2 2 0 0 -100 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 Sept. 30, 1982 Rate on Sept. 30, 1982 Rate on Sept. 30, 1982 Country Country Country Per- Month Per- Month Per- Month cent effective cent effective cent effective Argentina 226.0 Aug. 1982 France1 13.75 Sept. 1982 Sweden 10.0 Mar. 1982 Austria .. 6.25 Aug. 1982 Germany, Fed. Rep. of 7.0 Aug. 1982 Switzerland 5.0 Aug. 1982 Belgium.. 12.5 Sept. 1982 Italy 18.0 Aug. 1981 United Kingdom' Brazil 49.0 Mar. 1981 Japan 5.5 Dec. 1981 Venezuela 14.0 Aug. 1981 Canada .. 12.98 Sept. 1982 Netherlands 7.0 Aug. 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 • October 1982 3.27 FOREIGN SHORT-TERM INTEREST RATES Percent per annum, averages of daily figures 1982 CCoouunnttrryy,, oorr ttyyppee 11997799 11998800 11998811 Mar. Apr. May June July Aug. Sept. 1 Eurodollars 11.96 14.00 16.79 14.90 15.20 14.53 15.45 14.37 11.57 11.74 2 United Kingdom 13.60 16.59 13.86 13.53 13.69 13.31 12.96 12.35 11.08 10.84 3 Canada 11.91 13.12 18.84 15.67 15.74 15.46 16.84 16.23 14.76 13.57 4 Germany 6.64 9.45 12.05 9.84 9.30 9.12 9.22 9.41 8.94 8.13 5 Switzerland 2.04 5.79 9.15 6.37 4.96 3.80 5.39 4.32 4.07 3.97 6 Netherlands 9.33 10.60 11.52 8.90 8.20 8.62 8.75 8.95 8.66 7.85 7 France 9.44 12.18 15.28 15.21 16.36 16.17 15.67 14.64 14.43 14.09 8 Italy 11.85 17.50 19.98 20.63 20.62 20.59 20.51 20.18 19.52 18.56 9 Belgium 10.48 14.06 15.28 14.02 14.95 15.00 15.38 15.22 14.00 13.06 10 Japan 6.10 11.45 7.58 6.43 6.57 6.80 7.14 7.15 7.14 7.19 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 Apr. May June July Aug. Sept. 1 Argentina/peso n.a. n.a. n.a. 11761.36 13942.50 15025.00 19671.43 21172.73 25961.90 2 Australia/dollar1 111.77 114.00 114.95 105.15 105.94 103.23 101.09 97.83 95.820 3 Austria/schilling 13.387 12.945 15.948 16.853 16.274 17.114 17.342 17.431 17.597 4 Belgium/franc 29.342 29.237 37.194 45.292 43.666 46.183 47.029 47.483 48.300 5 Brazil/cruzeiro n.a. n.a. 92.374 151.03 159.08 167.70 177.97 188.25 201.73 6 Canada/dollar 1.1603 1.1693 1.1990 1.2252 1.2336 1.2756 1.2699 1.2452 1.2348 7 Chile/peso n.a. n.a. n.a. 39.407 39.537 43.373 47.228 54.941 62.643 8 China, P.R./yuan n.a. n.a. 1.7031 1.8565 1.8123 1.9014 1.9300 1.9432 1.9567 9 Colombia/peso n.a. n.a. n.a. 61.057 62.365 63.318 65.539 65.179 65.921 10 Denmark/krone 5.2622 5.6345 7.1350 8.1591 7.8444 8.3481 8.5402 8.6482 8.8038 11 Finland/markka 3.8886 3.7206 4.3128 4.6097 4.5045 4.6763 4.7278 4.7515 4.8014 12 France/franc 4.2566 4.2250 5.4396 6.2457 6.0237 6.5785 6.8560 6.9285 7.0649 13 Germany/deutsche mark 1.8342 1.8175 2.2631 2.3970 2.3127 2.4292 2.4662 2.4813 2.5055 14 Greece/drachma n.a. n.a. n.a. 63.541 62.892 67.795 69.434 70.165 70.946 15 Hong Kong/dollar n.a. n.a. 5.5678 5.8270 5.7549 5.8669 5.9025 6.0598 ,6.1253 16 India/rupee 8.1555 7.8866 8.6807 9.3923 9.2965 9.4668 9.5633 9.5741 9.6495 17 Indonesia/rupiah n.a. n.a. n.a. 651.14 653.67 654.98 659.18 662.11 662.75 18 Iran/rial n.a. n.a. 79.324 n.a. n.a. n.a. n.a. n.a. n.a. 19 Ireland/pound1 204.65 205.77 161.32 144.22 149.60 141.92 139.48 138.54 136.53 20 Israel/shekel n.a. n.a. n.a. 20.014 21.184 23.179 25.320 26.940 28.922 2.1 Italy/lira 831.10 856.20 1138.60 1321.60 1283.37 1358.43 1382.26 1392.60 1411.19 22 Japan/yen 219.02 226.63 220.63 244.11 236.96 251.20 255.03 259.04 263.29 23 Malaysia/ringgit 2.1721 2.1767 2.3048 2.3395 2.2907 2.3392 2.3554 2.3528 2.3610 24 Mexico/peso 22.816 22.968 24.547 46.152 46.903 47.716 48.594 90.187 101.86 25 Netherlands/guilder 2.0072 1.9875 2.4998 2.6594 2.5709 2.6848 2.7239 2.7295 2.7444 26 New Zealand/dollar1 102.23 97.34 86.848 76.562 77.025 74.951 73.990 73.217 72.419 27 Norway/krone 5.0650 4.9381 5.7430 6.0820 5.9675 6.1869 6.3557 6.6785 6.8999 28 Peru/sol n.a. n.a. n.a. 591.29 622.87 656.11 693.56 730.97 772.08 29 Philippines/peso n.a. n.a. 7.8113 8.3565 8.4016 8.4511 8.4802 8.5142 8.6521 30 Portugal/escudo 48.953 50.082 61.739 72.493 70.610 78.477 84.514 85.914 87.702 31 Singapore/dollar n.a. n.a. 2.1053 2.1329 2.0886 2.1379 2.1464 2.1594 2.1671 32 South Africa/rand/1 118.72 128.54 114.77 94.880 94.010 89.57 87.20 86.77 86.830 33 South Korea/won n.a. n.a. n.a. 721.03 724.35 738.30 743.06 744.45 743.61 34 Spain/peseta 67.158 71.758 92.396 106.15 102.987 109.215 111.57 112.079 113.049 35 Sri Lanka/rupee 15.570 16.167 18.967 20.575 20.365 20.750 20.895 20.895 20.918 36 Sweden/krona 4.2892 4.2309 5.0659 5.9144 5.7888 6.0244 6.1159 6.1441 6.2313 37 Switzerland/franc 1.6643 1.6772 1.9674 1.9624 1.9500 2.0789 2.0960 2.1119 2.1418 38 Thailand/baht n.a. n.a. 21.731 23.025 23.000 23.000 23.000 23.000 23.000 39 United Kingdom/pound1 212.24 232.58 202.43 177.20 181.03 175.63 173.54 172.50 171.20 40 Venezuela/bolivar n.a. n.a. 4.2781 4.3023 4.2991 4.2953 4.2951 4.2981 4.3006 MEMO: United States/dollar2 88.09 87.39 102.94 114.07 111.03 116.97 118.91 119.63 120.93 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 1982 A76 SPECIAL TABLES Published Irregularly, with Latest Bulletin Reference Assets and liabilities of U.S. branches and agencies of foreign banks, June 30, 1982 October 1982 A76 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 Commercial bank assets and liabilities, June 30, 1982 October 1982 A70 Special tables begin on next page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Special Tables • October 1982 4.20 DOMESTIC AND FOREIGN OFFICES, Commercial Banks with Assets of $100 Million or over'p Consolidated Report of Condition; June 30, 1982 Millions of dollars Banks with foreign offices2 Insured Foreign Domestic offices3 offices 1 Total assets 1,659,191 1,217,234 388,174 877,777 441,957 2 Cash and due from depository institutions 280,847 226,729 127,212 99,517 54,119 3 Currency and coin (U.S. and foreign) 14,930 8,671 274 8,397 6,259 4 Balances with Federal Reserve Banks 18,041 12,595 261 12,334 5,446 5 Balances with other central banks 3,618 3,618 3,522 96 (4) 6 Demand balances with commercial banks in United States 18,141 7,521 215 7,306 10,620 7 All other balances with depository institutions in United States and with banks in foreign countries 160,979 140,905 121,195 19,711 20,073 8 Time and savings balances with commercial banks in United States 17,276 8,468 5,964 2,504 8,808 9 Balances with other depository institutions in United States 732 379 274 105 353 10 Balances with banks in foreign countries 142,971 132,059 114,956 17,102 10,913 11 Foreign branches of other U.S. banks 8 20,725 17,049 3,676 12 Other banks in foreign countries 111,334 97,908 13,426 W 13 Cash items in process of collection 65,138 53,418 1,745 51,673 11,720 14 Total securities, loans, and lease financing receivables 1,246,761 879,246 208,877 670,369 367,515 15 Total securities, book value 234,145 125,350 9,736 115,614 108,795 16 U.S. Treasury 63,184 28,788 208 28,580 34,396 17 Obligations of other U.S. government agencies and corporations 38,893 16,017 27 15,990 22,876 18 Obligations of states and political subdivisions in United States 105,790 57,664 632 57,032 48,126 19 All other securities 26,278 22,882 8,870 14,011 3,397 20 Other bonds, notes, and debentures 10,964 8,548 6,989 1,559 2,416 21 Federal Reserve and corporate stock 1,890 1,401 173 1,228 489 22 Trading account securities 13,424 12,933 1,709 11,224 491 23 Federal funds sold and securities purchased under agreements to resell 60,874 36,712 920 35,791 24,162 24 Total loans, gross 960,939 718,659 197,657 521,002 242,279 25 LESS: Unearned income on loans 14,520 7,543 1,831 5,712 6,977 26 Allowance for possible loan loss 10,253 7,519 291 7,228 2,734 27 EQUALS: Loans, net 936,166 703,597 195,536 508,062 232,568 Total loans, gross, by category 28 Real estate loans 224,387 137,652 8,660 128,992 86,735 29 Construction and land development 32,242 11,051 30 Secured by farmland 848 1,426 31 Secured by residential properties 70,482 48,520 32 1- to 4-family 66,815 46,270 33 FHA-insured or VA-guaranteed 3,959 2,019 34 Conventional 62,857 44,252 35 Multifamily 3,667 2,249 36 FHA-insured 224 73 37 Conventional 3,443 2,177 38 Secured by nonfarm nonresidential properties 25,420 25,738 39 Loans to financial institutions 89,203 55,590 6,426 40 REITs and mortgage companies in United States 4,532 4,434 596 41 Commercial banks in United States 8,501 7,841 3,782 4 4 2 3 O U t .S h . e r b c ra o n m c m he e s r c a i n a d l b a a g n e k n s c ies of foreign banks 3 4, , 5 9 1 8 3 8 4 3 , , 1 68 6 1 0 H(4 ) 44 Banks in foreign countries 45,609 19,875 493 4 4 5 6 F O o t r h e e i r g n branches of other U.S. banks 44 1 , , 5 0 8 2 9 0 19,1 7 5 2 1 4 (04 ) 47 Finance companies in United States 11,118 10,860 492 48 Other financial institutions 19,443 12,580 1,063 49 Loans for purchasing or carrying securities 10,330 8,765 1,899 50 Brokers and dealers in securities 7,251 6,062 405 51 Other 3,079 2,703 1,494 52 Loans to finance agricultural production and other loans to farmers 6,911 6,191 5,304 53 Commercial and industrial loans 351,071 230,096 76,332 5 5 4 5 U N . o S n . -U ad .S d . r e a s d se d e r s e s ( s d e o e m s i ( c d i o le m ) icile) 2 1 2 2 2 8 , , 2 8 6 0 5 6 2 2 0 3 6 , , 6 4 7 2 5 1 (4) 56 Loans to individuals for household, family, and other personal expenditures 137,915 76,182 69,596 61,733 57 Installment loans 57,104 50,471 58 Passenger automobiles 16,559 20,980 59 Credit cards and related plans 21,022 9,952 60 Retail (charge account) credit card 17,041 8,558 61 Check and revolving credit 3,982 1,394 62 Mobile homes 3,206 3,535 63 Other installment loans 16,317 16,004 64 Other retail consumer goods 4,241 3,283 65 Residential property repair and modernization 3,590 4,110 66 Other installment loans for household, family, and other personal expenditures 8,486 8,612 67 Single-payment loans 12,492 11,262 68 All other loans 47.311 25,537 21,773 3,851 69 Loans to foreign governments and official institutions 32,999 23,352 9,647 70 Other 14.312 2,185 12,126 (4) 71 Lease financing receivables 13,587 2,685 10,902 1,989 72 Bank premises, furniture and fixtures, and other assets representing bank premises 14,689 1,452 13,236 9,202 73 Real estate owned other than bank premises 1,495 93 1,402 901 74 All other assets 95,075 50,540 93,252 10,221 75 Investment in unconsolidated subsidiaries and associated companies 1,446 1,076 370 62 7 7 7 6 Cu U st . o S m . a e d rs d ' r l e i s a s b e i e li s t y ( d o o n m a i c c c il e e p ) tances outstanding 5 1 9 8 , , 1 7 2 9 0 8 15, 8 870 43,(2541) (4426) 78 Non-U.S. addressees (domicile) 40,322 4 4 79 Net due from foreign branches, foreign subsidiaries, Edge and agreement subsidiaries... (4) 21,684 27,033 H 80 Other 34,509 11,911 22,599 9,732 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A71 4.20 Continued Banks with foreign offices2 BBaannkkss wwiitthhoouutt Item IInnssuurreedd ffoorreeiiggnn Total F o o ff r i e c i e g s n 3 D o o f m fi e c s e t s i c ooffffiicceess 81 Total liabilities and equity capital5 1,659,191 1,217,234 (*) (4) 441,957 82 Total liabilities excluding subordinated debt 1,565,085 1,156,351 387,925 817,142 408,734 83 Total deposits 1,261,124 900,544 320,153 580,391 360,581 84 Individuals, partnerships, and corporations 972,857 654,499 168,123 486,376 318,359 85 U.S. government 4,436 3,136 264 2,872 1,301 86 States and political subdivisions in United States 55,271 26,845 557 26,288 28,427 87 All other 216,631 207,621 150,491 57,130 9,010 88 Foreign governments and official institutions 26,865 26,689 19,884 6,805 176 89 Commercial banks in United States 69,474 61,068 27,519 33,549 8,406 90 U.S. branches and agencies of foreign banks 0 5,111 3,357 1,754 0 91 Other commercial banks in United States (4) 55,956 24,162 31,794 (4) 9 9 2 3 Ba F n o k r s e i i g n n f o b r r e a i n g c n h c e o s u o n f t r o ie th s er U.S. banks 120,292 11 1 9 9 , , 8 9 6 3 5 2 10 1 3 7 , , 0 9 8 0 8 7 1 2 6 , , 0 7 2 7 5 6 ( 4 4 28 ) 94 Other banks in foreign countries (4) 99,933 85,181 14,752 (4) 95 Certified and officers' checks, travelers checks, and letters of credit sold for cash 11,929 8,443 719 7,724 3,485 96 Federal funds purchased and securities sold under agreements to repurchase in domestic offices and Edge and agreement subsidiaries 153,431 118,332 370 117,962 35,099 97 Interest-bearing demand notes issued to U.S. Treasury and other liabilities for borrowed 98 Int m er o e n s e t- y b earing demand notes (note balances) issued to U.S. Treasury 44 6 , , 3 2 4 6 2 1 4 4 0 , , 2 2 8 2 2 3 15, ( 4 4 92 ) 2 4 4 , , 2 73 8 1 2 4 1 , , 1 9 1 7 9 9 99 Other liabilities for borrowed money 38,081 35,941 15,492 20,449 2,140 100 Mortgage indebtedness and liability for capitalized leases 2,201 1,449 16 1,433 752 101 All other liabilities 103,986 95,802 51,893 92,626 8,184 102 Acceptances executed and outstanding 59,809 59,383 13,950 45,432 427 103 Net aue to foreign branches, foreign subsidiaries, Edge and agreement subsidiaries (4) (4) 27,033 21,684 (4) 104 Other 44,177 36,420 10,910 25,509 7,757 105 Subordinated notes and debentures 5,866 4,200 259 3,941 1,666 106 Total equity capital5 88,241 56,683 (4) (4) 31,557 107 Preferred stock 217 131 r) (4) 86 1 1 0 0 8 9 S C u o r m pl m us o n stock 2 1 9 7 , , 4 1 6 2 5 9 1 1 1 7 , , 1 7 5 5 0 7 ( r 4 ) ) ( ( 4 4 ) ) 1 5 1 , , 9 7 7 0 9 8 110 Undivided profits and reserve for contingencies and other capital reserves 41,429 27,645 r) (4) 13,785 111 Undivided profits 40,586 27,256 r) r) 13,330 112 Reserve for contingencies and other capital reserves 844 389 r) r) 455 MEMO Deposits in domestic offices 113 Total demand 267,952 177,122 0 177,122 90,830 114 Total savings 152,991 78,032 0 78,032 74,959 115 Total time 520,029 325,237 0 325,237 194,791 116 Time deposits of $100,000 or more 287,385 214,445 0 214,445 72,940 117 Certificates of deposit (CDs) in denominations of $100,000 or more 253,726 185,113 0 185,113 68,613 118 Other 33,660 29,333 0 29,333 4,327 119 Savings deposits authorized for automatic transfer and NOW accounts 44,610 22,790 0 22,790 21,819 120 Money market time certificates of $10,000 and less than $100,000 with original maturities of 26 weeks 0 0 0 0 0 121 All savers certificates 15,469 7,968 0 7,968 7,501 122 Demand deposits adjusted6 174,948 103,168 0 103,168 71,780 1 1 1 2 2 2 4 5 3 Sta N U n o . d S n b . - y U a d l . e S d t . r t e e a s r d s s d e o e r f e s s c ( s r d e e o e d s m i t i , ( c d t i o o le m t ) a i l c ile) 80, ( M 7 4 60 ) 7 5 1 5 5 9 , , , 5 7 8 8 0 7 3 4 9 14, 0 ( 5 4 8 8 ) 60, ( W 9 4 96 ) 5, [ ( 1 * 4 7 ) 6 ) 126 Standby letters of credit conveyed to others through participations (included in total standby letters of credit) 6,557 6,229 555 5,675 327 127 Holdings of commercial paper included in total gross loans (4) (4) (4) 201 836 Average for 30 calendar days (or calendar month) ending with report date 128 Total assets 1,647,490 1,207,586 342,624 864,963 439,904 129 Cash and due from depository institutions 274,875 224,210 125,023 99,187 50,665 130 Federal funds sold ana securities purchased under agreements to resell 61,597 34,334 862 33,472 27,263 131 Total loans 941,396 707,553 197,412 510,141 233,843 132 Total deposits 1,241,560 881,835 315,403 566,432 359,725 133 Time CDs in denominations of $100,000 or more in domestic offices 252,802 (4) (4) 183,900 68,902 134 Federal funds purchased and securities sold under agreements to repurchase 164,474 128,770 538 128,233 35,704 135 Other liabilities for borrowed money 36,891 34,913 15,339 19,574 1,978 136 Number of banks 1,708 194 194 194 1,514 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Special Tables • October 1982 4.21 DOMESTIC OFFICES, Insured Commercial Banks with Assets of $100 Million or over17'' Consolidated Report of Condition; June 30, 1982 Millions of dollars Member banks NNoonn-- IItteemm IInnssuurreedd mmeemmbbeerr Total National State iinnssuurreedd 1 Total assets 1,319,733 1,114,859 845,225 269,634 204,874 2 Cash and due from depository institutions 153,635 133,065 97,921 35,144 20,570 3 Currency and coin (U.S. and foreign) 14,656 12,412 9,778 2,634 2,244 4 Balances with Federal Reserve Banks 17,780 17,039 12,645 4,394 741 5 Balances with other central banks 96 96 79 17 0 6 Demand balances with commercial banks in United States 17,926 12,335 9,775 22,,555599 55,,559922 7 All other balances with depository institutions in United States and with banks in foreign countries 39,784 30,614 23,039 7,574 9,170 8 Time and savings balances with commercial banks in United States 11,311 7,639 5,878 1,761 3,672 9 Balances with other depository institutions in United States 458 170 132 38 288 10 Balances with banks in foreign countries 28,015 22,805 17,029 5,775 5,210 11 Cash items in process of collection 63,393 60,571 42,604 17,966 2,823 12 Total securities, loans, and lease financing receivables 1,037,884 866,016 658,613 207,403 171,868 13 Total securities, book value 224,410 175,328 132,870 42,458 49,081 14 U.S. Treasury 62,976 46,880 35,268 11,613 16,096 15 Obligations of other U.S. government agencies and corporations 38,867 28,431 22,944 5,487 10,436 16 Obligations of states and political subdivisions in United States 105,159 84,598 64,012 20,586 20,560 17 All other securities 17,408 15,419 10,647 4,772 1,990 18 Other bonds, notes, and debentures 3,975 2,384 1,731 652 1,591 19 Federal Reserve and corporate stock 1,717 1,538 1,162 376 180 20 Trading account securities 11,716 11,497 7,754 3,744 218 21 Federal funds sold and securities purchased under agreements to resell 59,954 50,859 39,278 11,580 9,095 22 Total loans, gross 763,282 646,416 491,596 154,820 116,866 23 LESS: Unearned income on loans 12,690 9,664 7,269 2,396 3,025 24 Allowance for possible loan loss 9,962 8,714 6,574 2,140 1,248 25 EQUALS: Loans, net 740,630 628,038 477,754 150,284 112,592 Total loans, gross, by category 26 Real estate loans 215,726 172,516 141,493 31,023 43,211 27 Construction and land development 43,293 36,513 28,456 8,058 6,780 28 Secured by farmland 2,275 1,658 1,480 178 616 29 Secured by residential properties 119,001 95,448 79,678 15,770 23,553 30 1- to 4-family 113,085 90,733 75,908 14,824 22,353 31 FHA-insured or VA-guaranteed 5,977 5,326 4,346 980 651 32 Conventional 107,108 85,406 71,562 13,844 21,702 33 Multifamily 5,916 4,715 3,770 945 1,200 34 FHA-insured 296 215 113 102 81 35 Conventional 5,620 4,500 3,657 843 1,119 36 Secured by nonfarm nonresidential properties 51,158 38,897 31,879 7,018 12,261 37 Loans to financial institutions 62,016 57,324 35,338 21,986 4,692 38 REITs and mortgage companies in United States 5,030 4,689 3,362 1,327 341 39 Commercial banks in United States 11,623 8,613 5,657 2,956 3,010 40 Banks in foreign countries 20,368 19,816 10,672 9,145 551 41 Finance companies in United States 11,353 11,131 6,929 4,202 221 42 Other financial institutions 13,643 13,075 8,719 4,356 568 43 Loans for purchasing or carrying securities 10,663 10,106 6,015 4,092 557 44 Brokers and dealers in securities 6,467 6,240 3,074 3,166 227 45 Other 4,197 3,866 2,941 925 330 46 Loans to finance agricultural production and other loans to farmers 11,495 10,046 9,185 861 1,449 47 Commercial and industrial loans 306,427 267,740 198,606 69,134 38,687 48 Loans to individuals for household, family, and other personal expenditures 131,329 104,926 85,570 19,357 26,403 49 Installment loans 107,575 85,737 70,517 15,220 21,838 50 Passenger automobiles 37,539 28,306 23,071 5,235 9,232 51 Credit cards and related plans 30,975 27,844 22,987 4,856 3,131 52 Retail (charge account) credit card 25,599 23,236 19,381 3,855 2,363 53 Check and revolving credit 5,376 4,608 3,607 1,001 768 54 Mobile homes 6,741 5,383 4,904 479 1,358 55 Other installment loans 32,321 24,204 19,555 4,649 8,117 56 Other retail consumer goods 7,523 5,940 4,875 1,065 1,583 57 Residential property repair and modernization 7,700 5,472 4,433 1,039 2,228 58 Other installment loans for household, family, and other personal expenditures 17,097 12,792 10,247 2,545 4,305 59 Single-payment loans 23,754 19,189 15,053 4,137 4,565 60 All other loans 25,624 23,756 15,390 8,367 1,868 61 Lease financing receivables 12,891 11,792 8,711 3,081 1,099 62 Bank premises, furniture and fixtures, and other assets representing bank premises 22,438 18,156 14,692 3,464 4,282 63 Real estate owned other than bank premises 2,303 1,883 1,493 391 419 64 All other assets 103,473 95,738 72,506 23,231 7,735 65 Investment in unconsolidated subsidiaries and associated companies 432 398 367 31 34 66 Customers' liability on acceptances outstanding 43,677 42,779 30,947 11,832 898 67 Net due from foreign branches, foreign subsidiaries, Edge and agreement subsidiaries 27,033 24,969 20,821 4,148 2,064 6K Other 3322,,333311 2277,,559911 2200,,337722 77,,222200 44,,774400 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A73 4.21 Continued Member banks NNoonn-- IItteemm IInnssuurreedd mmeemmbbeerr iinnssuurreedd Total National State 69 Total liabilities and equity capital8 1,319,733 1,114,859 845,225 269,634 204,874 70 Total liabilities excluding subordinated debt 1,225,876 1,036,209 785,736 250,473 189,667 71 Total deposits 940,971 771,172 598,421 172,752 169,799 72 Individuals, partnerships, and corporations 804,735 653,944 514,387 139,557 150,790 73 U.S. government 4,173 3,685 2,822 863 488 74 States and political subdivisions in United States 54,715 41,316 33,976 7,340 13,399 75 All other 66,140 62,775 41,397 21,378 3,365 76 Foreign governments and official institutions 6,981 6,755 4,155 2,600 226 77 Commercial banks in United States 41,955 39,550 28,524 11,025 2,405 78 Banks in foreign countries 17,204 16,470 8.718 7,752 734 79 Certified and officers' checks, travelers checks, and letters of credit sold for cash 11,209 9,452 5,839 3,613 1,757 80 Demand deposits 267,952 227,880 167,749 60,131 40,072 81 Mutual savings banks 944 819 424 395 125 82 Other individuals, partnerships, and corporations 206,462 172,032 129,573 42,459 34,430 83 U.S. government 3,410 3,018 2,256 762 392 84 States and political subdivisions in United States 10,672 8,759 6,994 1,766 1,913 85 All other 35,253 33,800 22,664 11,136 1,453 86 Foreign governments and official institutions 1,668 1,638 976 662 30 87 Commercial banks in United States 26,200 25,039 18,720 6,319 1,161 88 Banks in foreign countries 7,385 7,123 2,968 4,155 262 89 Certified and officers' checks, travelers checks, and letters of credit sold for cash 11,209 9,452 5,839 3,613 1,757 90 Time deposits 520,029 423,499 334,195 89,304 96,529 91 Mutual savings banks 253 233 162 71 21 92 Other individuals, partnerships, and corporations 446,018 362,592 288,892 73,700 83,426 93 U.S. government 708 617 517 100 91 94 States and political subdivisions in United States 42,187 31,107 25,915 5,192 11,080 95 All other 30,862 28,951 18,710 10,241 1,911 96 Foreign governments and official institutions 5,290 5,094 3,156 1.938 195 97 Commercial banks in United States 15,754 14,510 9,804 4,705 1,244 98 Banks in foreign countries 9,819 9,347 5,749 3,598 472 99 Savings deposits 152,991 119,793 96,477 23,316 33,198 100 Mutual savings banks * * * * * 101 Other individuals, partnerships, and corporations 151,057 118,268 95,337 22,932 32,788 102 Individuals and nonprofit organizations 145,394 114,257 92,110 22,147 31,137 103 Corporations and other profit organizations 5,663 4,011 3,226 785 1,651 104 U.S. government 54 50 49 1 4 105 States and political subdivisions in United States 1,855 1,450 1,068 383 405 106 All other 24 24 23 1 * 107 Foreign governments and official institutions 23 23 22 1 * 108 Commercial banks in United States 1 1 * 1 * 109 Banks in foreign countries * 110 Federal funds purchased and securities sold under agreements to repurchase 153,061 140,800 108,067 32,733 12,260 111 Interest-bearing demand notes issued to U.S. Treasury and other liabilities for borrowed money 28,850 26,885 13,852 13,032 1,965 112 Interest-bearing demand notes (note balances) issued to U.S. Treasury 6,261 5,513 3,985 1,528 749 113 Other liabilities for borrowed money 22,588 21,372 9,868 11,504 1,216 114 Mortgage indebtedness and liability for capitalized leases 2,185 1,789 1,510 279 396 115 All other liabilities 100,809 95,562 63,885 31,677 5,247 116 Acceptances executed and outstanding 45,859 44,961 33,075 11,885 898 117 Net due to foreign branches, foreign subsidiaries. Edge and agreement subsidiaries 21,684 21,112 9,935 11,177 572 118 33,266 29,489 20,875 8,615 3 777 119 Subordinated notes and debentures 5,607 4,473 3,048 1,425 1,134 120 Total equity capital8 88,250 74,177 56,441 17,736 14,073 MEMO 121 Time deposits of $100,000 or more 287,385 243,836 185,666 58,170 43,550 122 Certificates of deposit (CDs) in denominations of $100,000 or more 253,726 212,357 164,743 47,615 41,368 P3 Other 33,660 31,478 20,923 10,555 2,181 124 Savings deposits authorized for automatic transfer and NOW accounts 44,610 35,076 28,775 6,301 9,534 125 Money market time certificates of $10,000 and less than $100,000 with original maturities of 26 weeks 0 0 0 0 0 126 All savers certificates 15,469 11,978 9,761 2,217 3,490 127 Demand deposits adjusted6 174,948 139,253 104,169 35,083 35,695 128 Total standby letters of credit 66,172 63,355 41,154 22,200 2,817 129 Conveyed to others through participation (included in standby letters of credit) 6,002 5,873 4,151 1,721 130 130 Holdings of commercial paper included in total gross loans 1,037 641 485 157 396 Average for 30 calendar days (or calendar month) ending with report date 131 Total assets 1,304,867 1,101,958 833,893 268,065 202,908 132 Cash and due from depository institutions 149,852 130,667 97,229 33,438 19,185 133 Federal funds sold and securities purchased under agreements to resell 60,735 50,801 39,663 11,138 9,935 134 Total loans 743,984 630,882 479,319 151,563 113,102 135 Total deposits 926,157 757,536 589,339 168,197 168,620 136 Time CDs in denominations of $100,000 or more in domestic offices 252,802 211,362 164,208 47,154 41,440 137 Federal funds purchased and securities sold under agreements to repurchase 163,936 151,809 114,570 37,239 12,128 138 Other liabilities for borrowed money 21,552 20,375 9,879 10,496 1,177 139 Number of banks 1,708 1,061 884 177 647 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Special Tables • October 1982 4.22 DOMESTIC OFFICES, Insured Commercial Bank Assets and Liabilities"' Consolidated Report of Condition; June 30, 1982 Millions of dollars Member banks IItteemm IInnssuurreedd Total National State insured 1 1,722,905 1,282,006 985,399 296,607 440,899 2 Cash and due from depository institutions 188,164 149,269 111,604 37,665 38,895 3 Currency and coin (U.S. and foreign) 20,055 14,882 11,850 3,032 5,173 4 Balances with Federal Reserve Banks 20,203 19,287 14,541 4,747 915 5 Balances with other central banks 96 96 79 17 0 6 Demand balances with commercial banks in United States 30,763 16,752 13,589 3,163 14,011 7 All other balances with depository institutions in United States and banks in foreign countries 51,176 36,133 27,676 8,457 15,042 8 Cash items in process of collection 65,872 62,119 43,870 18,249 3,753 9 Total securities, loans, and lease financing receivables 1,388,811 1,009,704 778,997 230,707 379,108 10 Total securities, book value 343,621 224,102 173,846 50,256 119,519 11 U.S. Treasury 102,410 62,746 48,346 14,399 39,664 12 Obligations of other U.S. government agencies and corporations 72,760 41,963 34,263 7,7Q0 30,797 13 Obligations of states and political subdivisions in United States 149,280 103,208 79,965 23,243 46,072 14 All other securities 19,172 16,186 11,272 4,914 2,986 15 Federal funds sold and securities purchased under agreements to resell 84,149 61,339 47,957 13,382 22,810 16 Total loans, gross 979,143 734,345 565,250 169,095 244,798 17 LESS: Unearned income on loans 19,305 12,460 9,616 2,844 6,845 18 Allowance for possible loan loss 12,051 9,602 7,328 2,275 2,449 19 EQUALS: Loans, net 947,787 712,283 548,306 163,977 235,505 Total loans, gross, by category 20 Real estate loans 291,017 202,914 166,593 36,321 88,103 21 Construction and land development 48,492 38,281 30,013 8,268 10,210 22 Secured by farmland 8,451 3,702 3,092 610 4,748 23 Secured by residential properties 164,469 114,766 95,490 19,276 49,703 24 1- to 4-family 157,292 109,583 91,335 18,249 47,708 25 Multifamily 7,177 5,183 4,155 1,028 1,994 26 Secured by nonfarm nonresidential properties 69,606 46,165 37,998 8,166 23,441 27 Loans to financial institutions 66,391 59,322 37,139 22,184 7,068 28 Loans for purchasing or carrying securities 11,261 10,320 6,196 4,124 941 29 Loans to finance agricultural production and other loans to farmers 35,759 19,160 16,677 2,483 16,599 30 Commercial and industrial loans 361,074 290,092 217,752 72,340 70,982 31 Loans to individuals for household, family, and other personal expenditures 184,460 127,321 104,328 22,994 57,138 32 Installment loans 147,018 102,614 84,663 17,951 44,404 33 Passenger automobiles 57,743 36,806 30,265 6,542 20,937 34 Credit cards and related plans 32,587 28,842 23,723 5,119 3,745 35 Mobile homes 9,966 6,814 6,124 690 3,152 36 All other installment loans for household, family, and other personal expenditures 46,721 30,151 24,551 5,601 16,569 37 Single-payment loans 37,442 24,707 19,665 5,042 12,734 38 All other loans 29,182 25,214 16,564 8,650 3,968 39 Lease financing receivables 13,253 11,980 8,887 3,092 1,274 40 Bank premises, furniture and fixtures, and other assets representing bank premises 30,572 21,505 17,504 4,001 9,067 41 Real estate owned other than bank premises 3,258 2,235 1,775 460 1,023 42 All other assets 112,099 99,293 75,519 23,774 12,806 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A75 4.22 Continued Member banks NNoonn-- IItteemm IInnssuurreedd mmeemmbbeerr iinnssuurreedd Total National State 43 Total liabilities and equity capital8 1,722,905 1,282,006 985,399 296,607 440,899 44 Total liabilities excluding subordinated debt 1,593,493 1,188,690 913,628 275,062 404,803 45 Total deposits 1,290,997 915,124 719,325 195,800 375,873 46 Individuals, partnerships, and corporations 1,120,747 784,482 623,994 160,488 336,265 47 U.S. government 5,101 4,089 3,177 912 1,012 48 States and political subdivisions in United States 83.783 52,501 43,417 9,084 31,283 49 All other 67,279 63,396 41,869 21,527 3,884 50 Certified and officers' checks, travelers checks, and letters of credit sold for cash 14.086 10,657 6,868 3,788 3,430 51 Demand deposits 341,450 258,716 193,966 64,751 82,734 52 Individuals, partnerships, and corporations 271,500 199,590 152,745 46,845 71,910 53 U.S. government 4,164 3,357 2,551 806 807 54 States and political subdivisions in United States 15,881 10,959 8,854 2,105 4,922 55 All other 35,819 34,154 22,947 11,207 1,665 56 Certified and officers' checks, travelers checks, and letters of credit sold for cash 14,086 10,657 6,868 3,788 3,430 57 Time deposits 723,621 505,544 402,913 102,632 218,077 58 Other individuals, partnerships, and corporations 627,295 436,372 350,642 85,730 190,924 59 U.S. government 870 677 572 105 193 60 States and political subdivisions in United States 64,059 39,295 32,816 6,479 24,764 61 All other 31,398 29,201 18,883 10,318 2,197 62 Savings deposits 225,925 150,864 122,446 28,418 75,061 63 Corporations and other profit organizations 7,977 4,940 4,000 941 3,036 64 Other individuals, partnerships, and corporations 213,975 143,581 116.608 26,973 70,395 65 U.S. government 67 55 54 1 12 66 States and political subdivisions in United States 3,844 2,247 1.746 501 1,597 63 41 38 2 22 68 Federal funds purchased and securities sold under agreements to repurchase 161,901 145,454 111.861 33,593 16,447 69 Interest-bearing demand notes (note balances) issued to U.S. Treasury and other liabilities for borrowed money 30,672 27,894 14,619 13,276 2,778 70 Mortgage indebtedness and liability for capitalized leases 2,596 1,945 1,629 315 652 71 All other liabilities 107,326 98,272 66,195 32,078 9,054 72 Subordinated notes and debentures 6,186 4,713 3,260 1,453 1,473 73 Total equity capital8 123,225 88,603 68,511 20,092 34,622 MEMO 74 Time deposits of $100,000 or more 333,851 261,916 201,119 60,796 71,936 75 Certificates of deposit (CDs) in denominations of $100,000 or more 296,817 229,031 178,998 50,033 67,786 76 Other 37,034 32,885 22,121 10,764 4,149 77 Savings deposits authorized for automatic transfer and NOW accounts 68,151 45,035 37,266 7,769 23.116 78 Money market time certificates of $10,000 and less than $100,000 with original maturities of 26 weeks 0 0 0 0 0 79 All savers certificates 22,321 14,825 12.135 2.690 7,496 80 Demand deposits adjusted6 244,651 167,849 128.543 39,305 76,802 81 Total standby letters of credit 67,817 64,002 41.714 22,288 3,815 Average for 30 calendar days (or calendar month) ending with report date 82 Total deposits 1,276,268 901,476 710,209 191,267 374,792 83 Number of banks 14,409 5,533 4,501 1,032 8,876 1. Effective Dec. 31, 1978, the report of condition was substantially revised for 3. Foreign offices include branches in foreign countries and in U.S. territories commercial banks. Commercial banks with assets less than $100 million and with and possessions, subsidiaries in foreign countries, and all offices of Edge Act and domestic offices only were given the option to complete either the abbreviated or agreement corporations wherever located. the standard set of reports. Banks with foreign offices began reporting in greater 4. This item is unavailable for all or some of the banks because of the lesser detail on a consolidated domestic and foreign basis. These tables reflect the varying detail available from banks without foreign offices, the inapplicability of certain levels of reporting detail. items to banks that have only domestic offices, and the absence of detail on a fully Beginning Dec. 3, 1981, depository institutions may establish international bank- consolidated basis for banks with foreign offices. ing facilities (IBFs). Activity of IBFs established by U.S. commercial banks is 5. Equity capital is not allocated between the domestic and foreign offices of reflected in the appropriate asset and liability line items in the domestic office banks with foreign offices. portion of the tables. Activity of IBFs established by Edge Act and Agreement 6. Demand deposits adjusted equal demand deposits other than domestic comsubsidiaries of U.S. commercial banks is reflected in the appropriate asset and mercial interbank and U.S. government less cash items in process of collection. liability line items in the foreign office portion of the tables. When there is a column 7. Domestic offices exclude branches in foreign countries and in U.S. territories for fully consolidated foreign and domestic data, activity of IBFs is reflected in the and possessions, subsidiaries in foreign countries, and all offices of Edge Act and appropriate asset and liability line items in that portion of the tables. agreement corporations wherever located. 2. All transactions between domestic and foreign offices of a bank are reported 8. This item contains the capital accounts of U.S. banks that have no Edge or in "Net due from" and "Net due to" (lines 79 and 103). All other lines represent foreign operations and reflects the difference between domestic office assets and transactions with parties other than the domestic and foreign offices of each bank. liabilities of U.S. banks with Edge or foreign operations excluding the capital Since these intra-office transactions are erased by consolidation, total assets and accounts of their Edge or foreign subsidiaries. liabilities are the sum of all except intra-office balances. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Special Tables • October 1982 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, June 30, 19821 Millions of dollars All states2 New York CCaallii-- Other states2 IItteemm ffoorrnniiaa.. IIlllliinnooiiss,, Total Branches4 Agencies Branches4 Agencies ttoottaall33 bbrraanncchheess Branches Agencies 1 Total assets5 186,608 137,935 48,673 120,199 7,699 37,647 8,673 8,337 4,052 2 Cash and due from depository institutions 21.644 20.295 1.349 18,407 266 877 1.610 239 246 3 Currency and coin (U.S. and foreign) 22 20 2 16 1 1 i 1 1 4 Balances with Federal Reserve Banks 971 892 79 726 32 41 26 135 10 5 Balances with other central banks 4 1 3 1 0 3 1 0 0 6 Demand balances with commercial banks in United States 1.171 1.035 136 953 53 62 45 33 25 7 All other balances with depository institutions in United States and with banks in foreign countries 19,346 18,232 1,114 16,603 178 757 1.533 67 209 8 Time and savings balances with commercial banks in United States 8.181 7.505 676 6,458 141 448 963 66 105 9 Balances with other depository institutions in United States 121 110 11 110 0 11 0 0 0 10 Balances with banks in foreign countries 11.044 10.617 427 10,035 38 298 570 0 104 11 Foreign branches of U.S. banks 1.215 1.187 28 1.122 8 19 65 0 1 12 Other banks in foreign countries 9,829 9.430 399 8.912 29 279 505 0 103 13 Cash items in process of collection 130 114 15 109 1 12 2 3 2 14 Total securities, loans, and lease financing receivables.. 120,228 91,547 28,681 80,164 5,164 20,672 6,429 4,391 3,409 15 Total securities, book value 4,709 4.248 462 4.046 265 200 170 26 2 16 U.S. Treasury 2.680 2.450 230 2.388 190 43 37 21 0 17 Obligations of other U.S. government agencies and corporations 477 454 23 442 7 18 5 5 0 18 Obligations of states and political subdivisions in United States 76 72 5 52 2 1 20 0 2 19 Other bonds, notes, debentures, and corporate stock 1,476 1.272 204 1,163 66 139 109 0 0 20 Federal funds sold and securities purchased under agreements to resell 8,149 6.458 1.691 5,964 1.240 486 230 192 37 By holder 21 Commercial banks in United States 7.384 5.698 1.686 5.231 1.235 486 204 192 37 22 Others 765 760 5 734 5 0 26 0 0 By type 23 One-day maturity or continuing contract 8.097 6.406 1,691 5.915 1.239 486 228 192 37 24 Securities purchased under agreements to resell... 329 307 22 139 21 1 6 163 0 25 Other 7.768 6.099 1,669 5.777 1.218 486 222 28 37 26 Other securities purchased under agreements to resell 52 51 1 49 1 0 2 0 0 27 Total loans, gross 115.738 87.447 28.291 76.250 4.909 20,530 6.270 4,367 3,412 28 LESS: Unearned income on loans 220 148 73 133 11 58 12 2 4 29 EQUALS: Loans, net 115.518 87.299 28,219 76.117 4.898 20.471 6.259 4,364 3.408 Total loans, gross, bv category 30 Real estate loans 4.720 2.018 2,701 1.407 12 1.765 57 476 1,002 31 Loans to financial institutions 41,832 34.544 7,288 31,911 1.151 5.920 2,379 224 248 32 Commercial banks in United States 22,181 17.443 4.738 15,724 355 4.393 1.479 221 8 33 U.S. branches and agencies of other foreign banks 20,576 16.174 4.401 14.519 321 4.079 1.464 185 8 34 Other commercial banks 1,606 1.269 337 1.205 34 314 16 36 1 35 Banks in foreign countries 18.171 15.822 2,349 15.200 655 1.495 610 2 209 36 Foreign branches of U.S. banks 1.553 1.450 103 1,414 46 63 26 0 4 37 Other 16.618 14.372 2.245 13,786 609 1.432 584 2 205 38 Other financial institutions 1.480 1.279 201 986 140 32 290 1 31 39 Loans for purchasing or carrying securities 541 505 36 443 36 60 0 2 0 40 Commercial and industrial loans 55,197 38.888 16.309 31.493 3.271 11.415 3.468 3.558 1.992 41 U.S. addressees (domicile) 31.253 21.349 9.904 15.550 933 7.827 2,958 2.502 1.482 42 Non-U.S. addressees (domicile) 23.944 17.540 6,404 15,942 2.338 3,587 510 1.056 511 43 Loans to individuals for household, family, and other personal expenditures 206 149 56 109 11 49 8 20 8 44 All other loans 13.243 11.342 1.901 10.887 429 1.320 358 87 161 45 Loans to foreign governments and official institutions 10.866 9.050 1.816 8,661 407 1.281 326 55 135 46 Other 2.377 2.292 85 2,226 23 39 32 32 25 47 Lease financing receivables 1 1 0 1 0 0 0 0 0 48 All other assets 36,587 19.635 16.951 15.665 1.030 15,612 404 3.516 360 49 Customers' liability on acceptances outstanding 11.493 8.048 3,445 7,724 784 2,638 130 184 33 50 U.S. addressees (domicile) 5,809 3.437 2.371 3.309 50 2,322 94 27 7 51 Non-U.S. addressees (domicile) 5,684 4.611 1,073 4,416 734 315 36 157 26 52 Net due from related banking institutions6 18,228 5.872 12,356 2,663 57 12,076 0 3,194 238 53 Other 6,866 5,715 1,150 5.277 189 898 274 139 88 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies All 4.30 Continued All states2 New York CCaallii-- IIlllliinnooiiss,, Other states2 IItteemm Total Branches4 Agencies Branches4 Agencies ff tt oo oo rr tt nn aa ii ll aa 33 ,, bbrraanncchheess Branches Agencies 54 Total liabilities5 186,608 137,935 48,673 120,199 7,699 37,647 8,673 8,337 4,052 55 Total deposits and credit balances 70,799 65,313 5,486 57,528 1,136 3,703 2,040 5,595 798 56 Individuals, partnerships, and corporations 29,996 28,408 1,588 21,895 239 847 897 5,484 634 57 U.S. addressees (domicile) 23,057 22,980 77 16,878 41 85 692 5,347 14 58 Non-U. S. addressees (domicile) 6,939 5,428 1,511 5,017 198 763 205 137 619 59 U.S. government, states, and political subdivisions in United States 131 72 58 20 58 2 1 50 0 60 All other 40,673 36,832 3,840 35,613 839 2,853 1,142 61 165 61 Foreign governments and official institutions 5,031 4,708 323 4,601 42 281 90 17 0 62 Commercial banks in United States 9,945 8,541 1,403 7,947 188 1,190 572 17 31 63 U.S. branches and agencies of other foreign banks 6,512 5,685 827 5,305 83 740 376 5 4 64 Other commercial banks in United States 3,432 2,856 576 2,642 105 450 196 12 27 65 Banks in foreign countries 25,077 23,064 2,013 22,576 549 1,358 463 14 116 66 Foreign branches of U.S. banks 3,879 3,535 344 3,491 118 217 36 7 9 67 Other banks in foreign countries 21,119 19,530 1,669 19,085 432 1,141 427 8 107 68 Certified and officers' checks, travelers checks, and letters of credit sold for cash 619 519 100 489 59 25 17 13 17 69 Demand deposits 3,275 3,083 191 2,842 59 68 105 127 74 70 Individuals, partnerships, and corporations 1,499 1,437 62 1,251 0 28 83 95 41 71 U.S. addressees (domicile) 960 960 0 785 0 7 80 88 0 72 Non-U.S. addressees (domicile) 538 477 62 466 0 21 3 7 41 73 U.S. government, states, and political subdivisions in United States 9 9 0 7 0 1 0 1 0 74 All other 1,767 1,638 130 1,585 59 39 21 31 32 75 Foreign governments and official institutions 411 402 9 385 0 9 1 17 0 76 Commercial banks in United States 82 82 0 79 0 0 1 2 0 77 U.S. branches and agencies of other foreign banks 28 28 0 28 0 0 0 0 0 78 Other commercial banks in United States 54 54 0 51 0 0 1 2 0 79 Banks in foreign countries 655 635 20 632 0 5 2 0 15 80 Certified and officers' checks, travelers checks, and letters of credit sold for cash 619 519 100 489 59 25 17 13 17 81 Time deposits 66,779 61,746 5,034 54,264 885 3,583 1,905 5,441 701 82 Individuals, partnerships, and corporations 27,992 26,630 1,362 20,364 139 773 785 5,362 570 83 U.S. addressees (domicile) 21,754 21,753 0 15,881 0 53 584 5,234 0 84 Non-U.S. addressees (domicile) 6,238 4,877 1,361 4,483 133 720 200 128 569 85 U.S. government, states, and political subdivisions in United States 122 64 0 13 0 1 0 49 0 86 All other 38,665 35,052 3,613 33,887 688 2,809 1,121 30 132 87 Foreign governments and official institutions 4,593 4,301 350 4,212 79 271 89 0 0 88 Commercial banks in United States 9,817 8,439 1,377 7,848 166 1,186 570 16 31 89 U.S. branches and agencies of other foreign banks 6,479 5,653 827 5,272 83 740 375 5 4 90 Other commercial banks in United States 3,337 2,787 551 2,576 84 446 195 11 27 91 Banks in foreign countries 24,256 22,313 1,943 21,827 501 1,352 461 14 101 92 Savings deposits 278 252 26 192 0 23 29 26 8 93 Individuals, partnerships, and corporations 278 252 26 192 0 23 29 26 8 94 U.S. addressees (domicile) 198 198 0 144 0 3 27 23 0 95 Non-U.S. addressees (domicile) 79 54 26 47 0 20 2 2 8 96 U.S. government, states, and political subdivisions in United States 0 0 0 0 0 0 0 0 0 97 All other 0 0 0 0 0 0 0 0 0 98 Credit balances 467 232 236 230 192 29 0 1 15 99 Individuals, partnerships, and corporations 228 90 138 89 100 23 0 1 15 1(M) U.S. addressees (domicile) 144 69 77 67 41 22 0 1 14 101 Non-U.S. addressees (domicile) 84 21 63 21 60 2 0 0 1 102 U.S. government, states, and political subdivisions in United States 0 0 0 0 0 0 0 0 0 103 All other 240 142 98 142 92 6 0 0 0 104 Foreign governments and official institutions 27 5 23 5 21 1 0 0 0 105 Commercial banks in United States 46 20 26 20 22 4 0 0 0 106 U.S. branches and agencies of other foreign banks 5 5 0 5 0 0 0 0 0 107 Other commercial banks in United States 41 16 26 16 21 4 0 0 0 108 Banks in foreign countries 166 117 49 117 49 0 0 0 0 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 Special Tables • October 1982 4.30 Continued All states2 New York CCaallii-- Other states2 IItteemm ffoorrnniiaa,, IIlllliinnooiiss,, Total Branches4 Agencies Branches4 Agencies ttoottaall33 bbrraanncchheess Branches Agencies 109 Federal funds purchased and sold under agreement to repurchase 17,918 11,168 6,750 9,851 1,940 3,697 999 232 1,198 By holder no Commercial banks in United States 15,209 9,766 5,443 8,482 1,566 3,613 967 231 350 111 Others 2,709 1,402 1,306 1,369 374 85 32 0 848 By type 112 One-day maturity or continuing contract 16,739 10,136 6,603 8,851 1,845 3,645 967 232 1,198 113 Securities sold under agreements to repurchase ... 940 778 162 652 54 108 10 115 0 114 Other 15,799 9,358 6,441 8,199 1,791 3,538 957 116 11,,119988 115 Other securities sold under agreements to repurchase 1,179 1,032 147 1,000 95 52 32 0 0 116 Other liabilities for borrowed money 48,130 21,557 26,573 19,805 1,636 24,639 928 731 391 117 Owed to banks 45,550 19,661 25,889 17,973 1,604 23,994 891 705 384 118 U.S. addressees (domicile) 43,336 17,828 25,507 16,266 1,481 23,836 854 640 259 119 Non-U.S. addressees (domicile) 2,215 1,833 382 1,707 123 158 37 64 125 120 Owed to others 2,579 1,896 684 1,832 32 645 37 26 7 121 U.S. addressees (domicile) 2,157 1,583 573 1,523 3 571 35 25 0 122 Non-U.S. addressees (domicile) 423 312 111 309 29 74 2 1 7 123 All other liabilities 49,761 39,898 9,863 33,015 2,987 5,608 4,707 1,780 1,665 124 Acceptances executed and outstanding 13,356 9,780 3,576 9,455 812 2,740 132 183 34 125 Net due to related banking institutions6 32,151 26,598 5,553 20,437 2,071 2,292 4,406 1,379 1,566 126 Other 4,254 3,520 734 3,123 104 575 169 217 64 MEMO 127 Time deposits of $100,000 or more 52,895 50,838 2,057 43,607 19 1,516 1,697 55,,440011 655 128 Certificates of deposit (CDs) in denominations of $100,000 or more 28,274 26,995 1,279 20,486 1 914 1,108 5,316 449 129 Other 24,621 23,843 778 23,121 19 602 588 85 206 130 Savings deposits authorized for automatic transfer and NOW accounts 27 17 10 4 0 4 5 6 7 131 Money market time certificates of $10,000 and less than $100,000 with original maturities of 26 weeks 2 2 0 0 0 1 0 0 0 132 Time certificates of deposit in denominations of $100,000 or more with remaining maturity of more than 12 months 2,435 2,367 68 2,116 0 11 34 214 59 133 Acceptances refinanced with a U.S.-chartered bank ... 5,061 3,488 1,573 3,164 40 1,518 26 298 15 134 Statutory or regulatory asset pledge requirement 78,297 75,160 3,137 69,433 3,088 67 5,668 40 2 135 Statutory or regulatory asset maintenance requirement 9,926 9,549 377 5,520 43 2 257 3,772 332 136 Commercial letters of credit 6,764 4,100 2,665 3,603 396 2,201 295 193 77 137 Standby letters of credit, total 10,906 8,889 2,017 7,837 347 1,181 468 393 680 138 U.S. addressees (domicile) 8,693 7,074 1,619 6,318 198 970 328 275 603 139 Non-U.S. addressees (domicile) 2,214 1,815 399 1,519 149 211 139 118 77 140 Standby letters of credit conveyed to others through participations (included in total standby letters of credit) 2,110 2,008 102 1,993 23 78 14 0 2 141 Holdings of commercial paper included in total gross loans 655 605 50 567 10 40 38 0 0 142 Holdings of acceptances included in total commercial ana industrial loans 5,250 3,783 1,467 3,687 89 1,337 61 35 41 143 Immediately available funds with a maturity greater than one day (included in other liabilities for borrowed money) 33,888 12,660 21,229 11,406 1,399 19,668 681 500 235 144 Gross due from related banking institutions6 77,582 53,622 23,960 46,224 5,295 17,976 2,678 4,609 800 145 U.S. addressees (domicile) 22,282 9,166 13,116 4,602 1,644 11,277 175 4,302 283 146 Branches and agencies in United States 21,914 8,968 12,946 4,432 1,591 11,160 147 4,302 283 147 In the same state as reporter 659 285 374 244 12 355 0 41 7 148 In other states 21,255 8,683 12,572 4,188 1,579 10,805 147 4,261 276 149 U.S. banking subsidiaries7 368 198 170 170 54 117 28 0 0 150 Non-U.S. addressees (domicile) 55,300 44,456 10,844 41,623 3,651 6,699 2,503 307 517 151 Head office and non-U.S. branches and agencies.. 52,834 42,098 10,736 39,285 3,626 6,634 2,485 306 498 152 Non-U.S. banking companies and offices 2,466 2,358 108 2,338 24 65 18 2 19 153 Gross due to related banking institutions6 91,506 74,349 17,157 63,998 7,309 8,192 7,083 2,795 2,129 154 U.S. addressees (domicile) 21,307 15,235 6,072 9,955 2,405 2,967 2,975 2,088 917 155 Branches and agencies in United States 21,018 15,005 6,013 9,792 2,404 2,943 2,912 2,086 881 156 In the same state as reporter 478 186 292 76 0 292 70 39 0 157 In other states 20,540 14,820 5,721 9,716 2,404 2,651 2,841 2,947 881 158 U.S. banking subsidiaries7 289 230 59 163 0 25 63 2 36 159 Non-U.S. addressees (domicile) 70,199 59,114 11,085 54,043 4,904 5,225 4,108 706 1,212 160 Head office and non-U.S. branches and agencies.. 68,529 57,529 11,001 52,489 4,843 5,204 4,102 689 1,202 161 Non-U.S. banking companies and offices 1,669 1,585 84 1,554 61 21 6 17 9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U. S. Branches and Agencies A79 4.30 Continued All states2 New York Other states3 CCaallii-- IIlllliinnooiiss,, IItteemm Total Branches4 Agencies Branches4 Agencies ff tt oo oo rr tt nn aa ii ll aa 33 ,, bbrraanncchheess Branches Agencies Average for 30 calendar days (or calendar month) ending with report date 162 Total assets 178,795 130,621 48,174 113,361 7,375 37,549 8,582 8,005 3,924 163 Cash and due from depository institutions 19,192 18,018 1,173 16,373 264 772 1,401 218 164 164 Federal funds sold ana securities purchased under agreements to resell 6,473 4,915 1,558 4,620 1.118 424 149 131 30 165 Totalloans 110,988 83,106 27,882 72,168 4,749 20,379 6,090 4,292 3,309 166 Loans to banks in foreign countries 17,703 15,430 2,273 14,745 623 1,454 673 2 207 167 Total deposits and credit balances 66,528 61,593 4,936 54,069 1,054 3.357 1,995 5,387 665 168 Time CDs in denominations of $100,000 or more 27,453 26,250 1,203 20,007 1 873 1,033 5,104 415 169 Federal funds purchased and securities sold under agreements to repurchase 16,790 10,197 6,593 8,992 1.588 3,951 947 238 1,074 170 Other liabilities for borrowed money 46,287 20,144 26,142 18,506 1,634 24,192 880 685 390 171 Number of reports filed8 387 205 182 127 45 105 38 31 41 1. Data are aggregates of categories reported on the quarterly form FFIEC 002, footnote 6). On the former monthly branch and agency report, avail- "Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks." able through the G.ll statistical release, gross balances were included in total assets This form was first used for reporting data as of June 30, 1980. From November and total liabilities. Therefore, total asset and total liability figures in this table are 1972 through May 1980, U.S. branches and agencies of foreign banks had filed a not comparable to those in the G.ll tables. monthly FR 886a report. Aggregate data from that report were available through 6. "Related banking institutions" includes the foreign head office and other U.S. the Federal Reserve statistical release G.ll, last issued on July 10, 1980. Data in and foreign branches and agencies of the bank, the bank's parent holding company, this table and in the G.ll tables are not strictly comparable because of differences and majority-owned banking subsidiaries of the bank and of its parent holding in reporting panels and in definitions of balance sheet items. company (including subsidiaries owned both directly and indirectly). Gross amounts 2. Includes the District of Columbia. due from and due to related banking institutions are shown as memo items. 3. Agencies account for virtually all of the assets and liabilities reported in 7. "U.S. banking subsidiaries" refers to U.S. banking subsidiaries majority- California. owned by the foreign bank and by related foreign banks and includes U.S. offices 4. Includes all offices that have the power to accept deposits from U.S. residents, of U.S.-chartered commercial banks, of Edge Act and Agreement corporations, including any such offices that are considered agencies under state law. and of New York State (Article XII) investment companies. 5. Total assets and total liabilities include net balances, if any, due from or due 8. In some cases two or more offices of a foreign bank within the same metto related banking institutions in the United States and in foreign countries (see ropolitan area file a consolidated report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A80 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 HELMUT F. WENDEL, Deputy Associate Director MARYELLEN A. BROWN, Assistant to the General Counsel MARTHA BETHEA, Assistant Director JOE M. CLEAVER, Assistant Director ROBERT M. FISHER, Assistant Director OFFICE OF THE SECRETARY DAVID E. LINDSEY, Assistant Director LAWRENCE SLIFMAN, Assistant Director WILLIAM W. WILES, Secretary FREDERICK M. STRUBLE, Assistant Director BARBARA R. LOWREY, Associate Secretary STEPHEN P. TAYLOR, Assistant Director JAMES MCAFEE, Associate 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 DOLORES S. SMITH, Assistant Director LARRY J. PROMISEL, Senior Deputy Associate Director DALE W. HENDERSON, Deputy Associate Director SAMUEL PIZER, Staff Adviser DIVISION OF BANKING MICHAEL P. DOOLEY, Assistant Director SUPERVISION AND REGULATION 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

A81 and Official Staff NANCY H. TEETERS LYLE E. GRAMLEY EMMETT J. RICE OFFICE OF DIVISION OF SUPPORT SERVICES STAFF DIRECTOR FOR MANAGEMENT DONALD E. ANDERSON, Director JOHN M. DENKLER, Staff Director ROBERT E. FRAZIER, Associate Director EDWARD T. MULRENIN, Assistant Staff Director WALTER W. KREIMANN, Associate Director JOSEPH W. DANIELS, SR., Director of Equal Employment Opportunity OFFICE OF STAFF DIRECTOR FOR FEDERAL RESERVE BANK ACTIVITIES DIVISION OF DATA PROCESSING THEODORE E. ALLISON, Staff Director CHARLES L. HAMPTON, Director BRUCE M. BEARDSLEY, Deputy Director ULYESS D. BLACK, Associate Director DIVISION OF FEDERAL RESERVE GLENN L. CUMMINS, Assistant Director BANK OPERATIONS NEAL H. HILLERMAN, Assistant Director ROBERT J. ZEMEL, Assistant Director CLYDE H. FARNSWORTH, JR., Director LORIN S. MEEDER, Associate Director DAVID L. ROBINSON, Associate Director DIVISION OF PERSONNEL C. WILLIAM SCHLEICHER, JR., Associate Director WALTER ALTHAUSEN, Assistant Director DAVID L. SHANNON, Director CHARLES W. BENNETT, Assistant Director JOHN R. WEIS, Assistant Director ANNE M. DEBEER, Assistant Director CHARLES W. WOOD, Assistant Director JACK DENNIS, JR., Assistant Director RICHARD B. GREEN, Assistant Director EARL G. HAMILTON, Assistant Director OFFICE OF THE CONTROLLER ELLIOTT C. MCENTEE, Assistant Director *HOWARD F. CRUMB, Acting Adviser GEORGE E. LIVINGSTON, Controller *On loan from the Federal Reserve Bank of New York. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A82 Federal Reserve Bulletin • October 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

A83 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 William H. Hendricks Cincinnati 45201 Clifford R. Meyer Robert E. Showalter 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 Eugene E. Cohen 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 Memphis 38101 Donald B. Weis Randall C. Sumner MINNEAPOLIS 55480 William G. Phillips E. Gerald Corrigan John B. Davis, Jr. Thomas E. Gainor Helena 59601 Ernest B. Corrick Robert F. McNellis KANSAS CITY 64198 Paul H. Henson Roger Guffey Doris M. Drury Henry R. Czerwinski Denver 80217 James E. Nielson Wayne W. Martin Oklahoma City 73125 Christine H. Anthony William G. Evans Omaha 68102 Robert G. Lueder Robert D. Hamilton DALLAS 75222 Gerald D. Hines Robert H. Boykin John V. James William H. Wallace El Paso 79999 A. J. Losee Joel L. Koonce, Jr. Houston 77001 Jerome L. Howard J. Z. Rowe San Antonio 78295 Lawrence L. Crum Thomas H. Robertson SAN FRANCISCO 94120 Caroline L. Ahmanson John J. Balles Alan C. Furth John B. Williams Los Angeles 90051 Bruce M. Schwaegler Richard C. Dunn Portland 97208 John C. Hampton Angelo S. Carella Salt Lake City 84130 Wendell J. Ashton A. Grant Holman Seattle 98124 John W. Ellis Gerald R. Kelly 'Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; Cranford, New Jersey 07016; Jericho, New York 11753; Utica at Oriskany, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311; Des Moines, Iowa 50306; Indianapolis, Indiana 46204; and Milwaukee, Wisconsin 53202. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A84 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. 1. 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, 1981. 1982. 239 pp. $6.50 per copy. $3.00 each. FEDERAL RESERVE CHART BOOK. Issued four times a year in IMPROVING THE MONETARY AGGREGATES: REPORT OF THE February, May, August, and November. Subscription ADVISORY COMMITTEE ON MONETARY STATISTICS. includes one issue of Historical Chart Book. $7.00 per 1976. 43 pp. $1.00 each; 10 or more to one address, $.85 year or $2.00 each in the United States, its possessions, each. Canada, and Mexico. Elsewhere, $10.00 per year or ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— $3.00 each. Regulation Z) Vol. I (Regular Transactions). 1969. 100 HISTORICAL CHART BOOK. Issued annually in Sept. Subscrip- pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each tion to Federal Reserve Chart Book includes one issue. volume $1.00; 10 or more of same volume to one $1.25 each in the United States, its possessions, Canada, address, $.85 each. and Mexico; 10 or more to one address, $1.00 each. FEDERAL RESERVE MEASURES OF CAPACITY AND CAPACITY Elsewhere, $1.50 each. UTILIZATION. 1978. 40 pp. $1.75 each; 10 or more to one SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SE- address, $1.50 each. RIES OF CHARTS. Weekly. $15.00 per year or $.40 each in THE BANK HOLDING COMPANY MOVEMENT TO 1978: A the United States, its possessions, Canada, and Mexico; COMPENDIUM. 1978. 289 pp. $2.50 each; 10 or more to 10 or more of same issue to one address, $13.50 per year one address, $2.25 each. or $.35 each. Elsewhere, $20.00 per year or $.50 each. IMPROVING THE MONETARY AGGREGATES: STAFF PAPERS. THE FEDERAL RESERVE ACT, as amended through December 1978. 170 pp. $4.00 each; 10 or more to one address, 1976, with an appendix containing provisions of certain $3.75 each. other statutes affecting the Federal Reserve System. 307 pp. $2.50. 1977 CONSUMER CREDIT SURVEY. 1978. 119 pp. $2.00 each. FLOW OF FUNDS ACCOUNTS. 1949-1978. 1979. 171 pp. $1.75 REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDeach; 10 or more to one address, $1.50 each. ERAL RESERVE SYSTEM. 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

A85 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. Rates for subscribers outside the United States are as BANKING STRUCTURE AND PERFORMANCE AT THE STATE 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. Organization and Advisory Committees Industrial Electric Power Use. 1/76. Truth in Leasing Revised Series for Member Bank Deposits and Aggregate U.S. Currency Reserves. 4/76. What Truth in Lending Means to You 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. Applying the Theory of Probable Future Competition. 9/82. International Banking Facilities. 10/82. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A86 Index to Statistical Tables References are to pages A3 through A79 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, 70-75 Turnover, 12 Domestic finance companies, 39 Depository institutions Federal Reserve Banks, 11 Reserve requirements, 8 Foreign banks, U.S. branches and agencies, 22, 76 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, 71, 73, 75 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 BANKERS balances, 17, 18-20, 70, 72, 74 Loans) (See also Foreigners) Dividends, corporate, 37 Banks for Cooperatives, 35 Bonds (See also U.S. government securities) New issues, 36 Rates, 3 EMPLOYMENT, 46, 47 Branch banks, 15, 21, 22, 56, 76 Eurodollars, 27 Business activity, nonfinancial, 46 Business expenditures on new plant and equipment, 38 Business loans (See Commercial and industrial loans) FARM mortgage loans, 41 Federal agency obligations, 4, 10, 11, 12, 34 Federal credit agencies, 35 CAPACITY utilization, 46 Federal finance Capital accounts Debt subject to statutory limitation and types and Banks, by classes, 17, 71, 73, 75 ownership of gross debt, 32 Federal Reserve Banks, 11 Receipts and outlays, 30, 31 Central banks, 67 Treasury financing of surplus, or deficit, 30 Certificates of deposit, 21, 27 Treasury operating balance, 30 Commercial and industrial loans Federal Financing Bank, 30, 35 Commercial banks, 15, 17, 22, 26 Federal funds, 3, 6, 18, 19, 20, 27, 30 Weekly reporting banks, 18-22, 23 Federal Home Loan Banks, 35 Commercial banks Federal Home Loan Mortgage Corporation, 35, 40, 41 Assets and liabilities, 17, 18-21, 70-75 Federal Housing Administration, 35, 40, 41 Business loans, 26 Federal Intermediate Credit Banks, 35 Commercial and industrial loans, 15, 17, 22, 23, 26 Federal Land Banks, 35, 41 Consumer loans held, by type, 42, 43 Federal National Mortgage Association, 35, 40, 41 Loans sold outright, 21 Federal Reserve Banks Nondeposit funds, 16 Condition statement, 11 Number, by classes, 17, 71, 73, 75 Discount rates (See Interest rates) Real estate mortgages held, by holder and property, 41 U.S. government securities held, 4, 11, 12, 32, 33 Time and savings deposits, 3 Federal Reserve credit, 4, 5, 11, 12 Commercial paper, 3, 25, 27, 39 Federal Reserve notes, 11 Condition statements (See Assets and liabilities) Federally sponsored credit agencies, 35 Construction, 46, 50 Finance companies Consumer installment credit, 42, 43 Assets and liabilities, 39 Consumer prices, 46, 51 Business credit, 39 Consumption expenditures, 52, 53 Loans, 18, 19, 20, 42, 43 Corporations Paper, 25, 27 Profits and their distribution, 37 Financial institutions Security issues, 36, 66 Loans to, 18, 19, 20 Cost of living (See Consumer prices) Selected assets and liabilities, 29 Credit unions, 29, 42, 43 Float, 4 (See also Thrift institutions) Flow of funds, 44, 45 Currency and coin, 5, 17, 70, 72, 74 Foreign banks, assets and liabilities of U.S. branches and Currency in circulation, 4, 13 agencies, 22, 76 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, 71, 73, 75 Liabilities to, 21, 55, 56-60, 64, 66, 67 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A87 GOLD Certificate account, 11 REAL estate loans Stock, 4, 55 Banks, by classes, 18-20, 41 Government National Mortgage Association, 35, 40, 41 Rates, terms, yields, and activity, 3, 40 Gross national product, 52, 53 Savings institutions, 27 Type of holder and property mortgaged, 41 HOUSING, new and existing units, 50 Repurchase agreements and federal funds, 6, 18, 19, 20 Reserve requirements, 8 Reserves INCOME, personal and national, 46, 52, 53 Commercial banks, 17, 71 Industrial production, 46, 48 Depository institutions, 3, 4, 5, 14 Installment loans, 42, 43 Federal Reserve Banks, 11 Insurance companies, 29, 32, 33, 41 U.S. reserve assets, 55 Insured commercial banks, 70-75 Residential mortgage loans, 40 Interbank loans and deposits, 17 Retail credit and retail sales, 42, 43, 46 Interest rates Bonds, 3 Business loans of banks, 26 SAVING Federal Reserve Banks, 3, 7 Flow of funds, 44, 45 Foreign central banks and foreign countries, 67 National income accounts, 53 Money and capital markets, 3, 27 Savings and loan assns., 9, 29, 33, 41, 42, 43, 44 Mortgages, 3, 40 (See also Thrift institutions) Prime rate, commercial banks, 26 Savings deposits (See Time and savings deposits) Time and savings deposits, 9 Securities (See specific types) International capital transactions of United States, 54-67 Federal and federally sponsored credit agencies, 35 International organizations, 58, 59-61, 64-67 Foreign transactions, 66 Inventories, 52 New issues, 36 Investment companies, issues and assets, 37 Prices, 28 Investments (See also specific types) Special drawing rights, 4, 11, 54, 55 Banks, by classes, 17, 29 State and local governments Commercial banks, 3, 15, 17, 18-20, 70, 72, 74 Deposits, 18, 19, 20 Federal Reserve Banks, 11, 12 Holdings of U.S. government securities, 32, 33 Savings institutions, 29, 41 New security issues, 36 Ownership of securities issued by, 18, 19, 20, 29 LABOR force, 47 Rates on securities, 3 Life insurance companies (See Insurance Stock market, 28 companies) Stocks (See also Securities) Loans (See also specific types) New issues, 36 Banks, by classes, 17, 18—21 Prices, 28 Commercial banks, 3, 15, 17, 18-21, 22, 26, 70, 72, 74 Federal Reserve Banks, 3, 4, 5, 7, 11, 12 TAX receipts, federal, 31 Insured or guaranteed by United States, 40, 41 Thrift institutions, 3 (See also Credit unions, Savings institutions, 29, 41 Mutual savings banks, and Savings and loan associations) MANUFACTURING Time and savings deposits, 3, 9, 12, 17, 18-21, 71, 73, 75 Capacity utilization, 46 Trade, foreign, 55 Production, 46, 49 Treasury currency, Treasury cash, 4 Margin requirements, 28 Treasury deposits, 4, 11, 30 Member banks (See also Depository institutions) Treasury operating balance, 30 Federal funds and repurchase agreements, 6 Reserve requirements, 8 Mining production, 49 UNEMPLOYMENT, 47 Mobile home shipments, 50 U.S. international transactions, 54-67 Monetary and credit aggregates, 3, 14 U.S. government balances Money and capital market rates (See Interest Commercial bank holdings, 18, 19, 20 rates) Treasury deposits at Reserve Banks, 4, 11, 30 Money stock measures and components, 3, 13 U.S. government securities Mortgages (See Real estate loans) Bank holdings, 17, 18-20, 32, 33, 70, 72, 74 Mutual funds (See Investment companies) Dealer transactions, positions, and financing, 34 Mutual savings banks, 9, 18-20, 29, 32, 33, 41, 42, 43 Federal Reserve Bank holdings, 4, 11, 12, 32, 33 (See also Thrift institutions) Foreign and international holdings and transactions, 11, 32, 67 NATIONAL defense outlays, 31 Open market transactions, 10 National income, 52 Outstanding, by type and ownership, 32, 33 Ownership of securities issued by, 29 OPEN market transactions, 10 Rates, 3, 27 Utilities, production, 49 PERSONAL income, 53 Prices VETERANS Administration, 40, 41 Consumer and producer, 46, 51 Stock market, 28 Prime rate, commercial banks, 26 WEEKLY reporting banks, 18-23 Producer prices, 46, 51 Wholesale (producer) prices, 46, 51 Production, 46, 48 Profits, corporate, 37 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A88 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories LEGEND —~ Boundaries of Federal Reserve Districts ® Federal Reserve Bank Cities Boundaries of Federal Reserve Branch * Federal Reserve Branch Cities Territories Federal Reserve Bank Facility Q Board of Governors of the Federal Reserve System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis