Federal Reserve Bulletin, 1983-07

VOLUME 69 • NUMBER 7 • JULY 1983 FEDERAL RESERVE Board of Governors of the Federal Reserve System Washington, D.C. PUBLICATIONS COMMITTEE > Joseph R. Coyne, Chairman • Stephen H. Axilrod • Michael Bradfield • S. David Frost 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 477 THE LABOR MARKET IN RECESSION on Banking, Finance and Urban Affairs and AND RECOVERY the Subcommittee on Commerce, Consumer, and Monetary Affairs of the House Taken together, back-to-back recessions Committee on Government Operations, made the 1980-82 period the longest and June 16, 1983. most severe deterioration in labor market conditions in more than four decades. 531 Theodore E. Allison, Staff Director for Federal Reserve Bank Activities, states that the 489 PROFITABILITY OF INSURED Federal Reserve endorses a bill that would COMMERCIAL BANKS IN 1982 authorize the Bureau of Engraving and Printing to print the back of the one-dollar Reported profits of insured commercial note by the offset process, before the Senbanks edged down further from the 1979 ate Committee on Banking, Housing, and peak, and returns on assets and on equity Urban Affairs, June 22, 1983. reached lows last observed in the recovery from the 1973-75 recession. 532 Mr. Corrigan discusses some of his observations about emerging trends in the 508 FINANCIAL DEVELOPMENTS OF BANK structure of the nation's banking and fi- HOLDING COMPANIES IN 1982 nancial system and the implications for public policy, before the Subcommittee on The overall financial performance of the Telecommunications, Consumer Protecnation's bank holding companies was reation, and Finance of the House Committee sonably good in 1982. on Energy and Commerce, June 28, 1983. 515 NEW FEDERAL RESERVE MEASURES OF 535 John E. Ryan, Director, Division of Bank- CAPACITY AND CAPACITY UTILIZATION ing Supervision and Regulation, discusses the role of the banking agencies in the After reestimating capacity growth from government's efforts to identify and prose- 1967 to the present, the Federal Reserve cute violations of criminal laws by officers, found that industrial capacity has grown directors, or other bank employees, before more slowly since 1979 than earlier estithe Commerce, Consumer, and Monetary mates indicated. Affairs Subcommittee of the House Committee on Government Operations, June 28, 522 INDUSTRIAL PRODUCTION 1983. Output rose about 1.1 percent in June. 538 ANNOUNCEMENTS 524 STATEMENTS TO CONGRESS Proposed legislation to authorize new non- E. Gerald Corrigan, President, Federal Re- banking powers for bank and thrift holding serve Bank of Minneapolis, reviews devel- companies. opments in the pricing of services by the Amendments to the minimum capital guide- Federal Reserve and comments on some lines of the Federal Reserve Board and the larger issues regarding the role of the Feder- Comptroller of the Currency. al Reserve in the payments mechanism, before the Subcommittee on Domestic Amendment to Regulation D and final rule Monetary Policy of the House Committee regarding bankers acceptances; proposed Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

definition of participations in bankers ac- A69 GUIDE TO TABULAR PRESENTATION, ceptances that would be eligible for the STATISTICAL RELEASES, AND SPECIAL bankers acceptance limitations in the Bank TABLES Export Services Act that were covered in the final rule. A70 BOARD OF GOVERNORS AND STAFF Proposal to revise the fee structures for definitive securities safekeeping and non- ALL FEDERAL OPEN MARKET COMMITTEE cash collection services; proposal to revise AND STAFF; ADVISORY COUNCILS Regulation B (Equal Credit Opportunity). Meeting of the Consumer Advisory Coun- A73 FEDERAL RESERVE BANKS, BRANCHES, cil. AND OFFICES Admission of three state banks to membership in the Federal Reserve System. A74 FEDERAL RESERVE BOARD PUBLICATIONS 542 LEGAL DEVELOPMENTS Amendments to Regulations D and K; vari- A76 INDEX TO STATISTICAL TABLES ous bank holding company orders; and pending cases. A78 MAP OF FEDERAL RESERVE SYSTEM Ai FINANCIAL AND BUSINESS STATISTICS A3 Domestic Financial Statistics A46 Domestic Nonfinancial Statistics A54 International Statistics Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Labor Market in Recession and Recovery Robert S. Gay and Jeffrey D. Hedlund of the duction remained depressed in many cyclically Board's Division of Research and Statistics pre- sensitive sectors, including housing and durable pared this article. goods manufacturing, leaving employment in these areas well below prerecession levels. By Developments in the labor market during the the third quarter of 1981, the unemployment rate, past three years have reflected two recessions in at 7.4 percent, was only fractionally lower than rapid succession—one in 1980 and a longer its peak for 1980, set a year earlier. When a downswing that began in mid-1981 and ran sustained recovery in final demand did not matethrough the end of 1982. Between the cyclical rialize during 1981, many firms again cut producpeak in economic activity in the first quarter of tion and employment. The second, more severe, 1980 and the trough in the final quarter of 1982, cyclical downturn pushed the unemployment real output showed virtually no growth on bal- rate to 10.8 percent at the end of 1982. Taken ance (chart 1). As the gap between actual output together, the back-to-back recessions made the and its potential widened, the utilization of labor 1980-82 period the longest and most severe resources fell: payroll employment declined deterioration in labor market conditions in more sharply, particularly in key durable goods indus- than four decades. tries that also faced longer-run structural prob- Nonfarm payroll employment registered a net lems, and, by the end of 1982, unemployment decline of 2.3 million from March 1980 to Decernhad climbed to a postwar record high. Although ber 1982, but in the cyclically sensitive goodsthe subsequent increase in private employment producing sector net job losses were an excephas been about normal for the initial phase of a tionally large 3.6 million. Exacerbating the business recovery, unemployment is still excep- cyclical contraction in labor demand were longtionally high in mid-1983. term problems facing some durable goods indus- The period from early 1980 through 1982 can tries that had caused serious losses in market be viewed as one long spell of economic stagna- share to foreign producers over the past decade. tion. The recovery from the brief contraction in In addition, the dramatic appreciation of the 1980 aborted after just one year. Sales and pro- dollar on exchange markets since 1980 contribut- 1. Real GNP, employment, and unemployment H : i ' GNP data are in constant 1972 dollars, from the Department of employment and unemployment rate are from the Bureau of Labor Commerce; percentage change from 1982:4 to 1983:2 is based on the Statistics and are seasonally adjusted, "flash" estimate of real GNP for 1983:2, at an annual rate. Payroll Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

478 Federal Reserve Bulletin • July 1983 ed to job losses in export-dependent industries. ty began to rise in early 1982 even though output Many workers who lost their jobs were unable to continued to decline. Faced with intense compefind other employment because of the general tition and weak final demand, businesses recogdearth of new job opportunities, and long-term nized the need to pare their workforces and to unemployment rose to record levels for the post- reorganize production to improve efficiency; in war era. same instances high-cost facilities were shut As the period of slack demand lengthened, down. Output per hour continued to rebound in competitive pressures intensified, damping price the initial phase of the recovery. This sustained and cost increases. At least two facets of the rise in productivity over the past year and a half resulting trends in the labor market contrasted marked a noticeable improvement from a very with the experience in other recent recessions. poor productivity performance in the 1970s. First, the rate of increase in wages decelerated to the slowest pace since the mid-1960s. Second, productivity rose during the 1980-82 period, in contrast to the sharp deterioration during the EMPLOYMENT 1974-75 recession. Taken together, these developments point toward reduced pressures on The demand for labor remained weak after the prices from labor costs. 1980 slowdown in economic activity, and during Consumer prices had accelerated in the late the subsequent cyclical contraction employment 1970s, reaching double-digit rates of increase in 1979 and 1980. But slack demand and substantial 2. Composition of changes in employment unused capacity subsequently constrained price Millions of persons increases. In addition, the effects of the rise in Other private pmauMMii the dollar relative to foreign currencies and a partial reversal of the runup in prices of petro- Services leum products also helped to ease inflation, and by mid-1983 the increase in consumer prices had slowed to less than 4 percent. Wages, which in Durable manufacturing many industries are not changed more than once a year, tended to lag behind price increases. Over time, the sustained decline in inflation reduced pressures for catchup wage adjustments as well as the size of cost-of-living payments. Expectations also played a role in reducing nominal wage increases. By 1982, it became increasingly clear that competitive pressures would limit price increases for some time, and workers ac- Mar. 1980- Dec. 1982- Dec. 1982 June 1983 cepted smaller wage increases in recognition of Bureau of Labor Statistics monthly payroll employment data, the trend toward lower inflation. In many hard- seasonally adjusted. "Other private" includes mining, transportation hit industries, massive unemployment and and public utilities, and finance, insurance, and real estate. Employment in this category increased so little since the recovery began that mounting financial losses persuaded workers to it does not appear in that bar. eliminate or postpone usual wage increases—or even to accept temporary pay cuts—in order to declined more in relative terms than in any forestall further layoffs and potential bankrupt- previous postwar recession. Between March cies. These forces continued to damp wage gains 1980 and July 1981, nonfarm payroll employment during the initial stage of the ensuing recovery. rose just 600,000; it then fell nearly 3 million But, despite smaller nominal increases, workers' during the next year and a half. As the period of real wages rose on average during the past year stagnation lengthened, job cutbacks became and a half as prices decelerated even more. widespread: 80 percent of all industries reported While wage pressures were easing, productivi- net declines in employment between December Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Labor Market in Recession and Recovery 479 1981 and December 1982. Nonetheless, as is changes and consumer preferences. As these usually the case in a recession, the distribution of problems evolved, domestic markets became injob losses among industries was very unequal, as creasingly vulnerable to import competition. In chart 2 shows. Workers in manufacturing indus- the automobile and basic steel industries, for tries, particularly those producing durable example, import penetration was dramatic: the goods, endured most of the losses, and the share of imported cars in total domestic sales construction industry also suffered a dispropor- climbed from 6 percent in 1965 to 28 percent in tionate share of the decline in employment. Even 1982, and during that same period foreign steel government employment was uncharacteristical- producers more than doubled their share of the ly weak, declining almost 600,000 over the past U.S. market to 22 percent. three years. Private service industries were less affected by the downturn in demand and were among the few sources of new job opportunities. Industry Mix of Employment A number of factors combined to produce the during the Recession employment decline of the 1980-82 period. The most important one, of course, was the cyclical In response to these domestic and international contraction in aggregate demand. Rapid inflation influences, manufacturing employment began to in 1979 and 1980 eroded real incomes and, along decline in mid-1979, even before the business with policy actions necessary to bring inflation cycle peak of early 1980. By December 1982, under control, pushed up interest rates. As fi- factory payrolls had dropped almost 3 million. nancing costs rose rapidly relative to household Job cutbacks in manufacturing were concentratpurchasing power, consumers reduced spending ed in industries that produce consumer durable on housing, automobiles, and other durables. goods, in which employment fell considerably The result was widespread job losses in those more even in relative terms than it did during the sectors and in the industries that supply them. severe 1973-75 recession (chart 3). Conditions in financial markets eased during the Among the hardest-hit industries in the manulatter half of 1982, providing a subsequent boost facturing sector were autos and steel. Sales of to production and employment in the credit- domestic autos began to decline in 1979 as subsensitive sectors of the economy. stantial price increases, high financing costs, a The foreign sector also contributed to the steep runup in energy prices, and a shift in deterioration in domestic employment. Between preferences toward imported models all acted to early 1980 and late 1982, the value of the dollar relative to foreign currencies increased 40 per- 3. Cyclical comparisons in employment cent, raising the price of U.S. exports to foreign countries and reducing the relative price of imported goods. The dollar's strength, combined with economic weakness abroad, brought on a significant decline in export volume over the three years and substantial job losses in domestic exporting industries. This decline reversed the trend of the 1970s, when the export sector was a major source of job growth. The lengthy period of slack demand also brought to a head longer-run structural problems in key manufacturing industries, which exacerbated the cyclical contraction in employment. These difficulties included high domestic labor costs, a narrowing or even elimination of the U.S. productivity advantage, and the failure of Bureau of Labor Statistics monthly payroll employment data, seasonally adjusted; peaks are specific to total nonfarm payroll domestic industries to adapt quickly to product employment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

480 Federal Reserve Bulletin • July 1983 4. Auto and construction employment buildings remained relatively buoyant. The decline in housing construction also dates back to Millions of units Millions of persons 1979, when high prices, rising financing costs, Sales of domestically produced autos and declining real income began to curtail demand; and by mid-1982 homebuilding had vehicle employment dropped to a postwar record low. More than 700,000 construction jobs were lost during the 1980-82 period. In addition, workers in housingrelated industries—such as lumber and wood products, stone, clay, and glass products, and furniture and fixtures—suffered substantial job cutbacks. In contrast with the goods-producing sectors, employment in the private service-producing sector continued to expand. Firms providing health, business, and social services generated Total bousing starts the bulk of new job opportunities; employment in MmmiMmmMm those areas, which has been on a strong secular Employment data from the Bureau of Labor Statistics payroll uptrend, rose 1.3 million from early 1980 to late survey. Motor vehicle employment represents quarterly averages, not 1982. Partly offsetting those gains were small seasonally adjusted; construction employment represents seasonally adjusted quarterly averages. New domestic auto sales are Federal declines in several other service-producing sec- Reserve data, seasonally adjusted at an annual rate. Total private tors, particularly trade and trucking. housing starts are Department of Commerce data, seasonally adjusted at an annual rate. The values for motor vehicle employment and After two decades of steady growth, total housing starts in 1983:2 are May data. government employment declined during the damp demand. Automakers responded by cut- past three years. The divergent trends can be ting production and employment sharply (chart seen in chart 3. State and local governments 4). Despite efforts to boost sales through price accounted for virtually all of the recent cutbacks, rebates, demand for domestically produced cars as they did for the job gains during the 1970s. continued to slide in 1981 and 1982. As a result, Several factors acted to halt the strong upward many auto workers remained on indefinite layoff trend of government employment. First, a sharp for more than three years. By late 1982, about decline in birth rates over the past two decades 360,000 workers, or roughly one-third of the had reduced the demand for teachers by the late prerecession workforce, had been laid off from 1970s. Second, the budget positions of state and the motor vehicle industry. local governments deteriorated as the weakness For every job in motor vehicle manufacturing, in economic activity, smaller federal grants, and there are about two associated jobs elsewhere in taxpayer resistance to higher property taxes cut the economy, according to estimates by the into revenues; consequently, states and localities Bureau of Labor Statistics. Thus the decline in were forced to curb the growth in their expendiauto demand had a pervasive impact on produc- tures. Finally, federal funding for a countercyclition and employment in a wide variety of related cal public service employment program was terindustries, such as steel, fabricated metals, and minated in 1981; this development contrasted rubber. In the steel industry, which also faced with the situation in 1975, when a similar prolong-term problems, almost two-thirds of capaci- gram added an estimated quarter of a million jobs ty was idle by late 1982, and the decline in at state and local governments. employment was exceptionally large. Like manufacturing, the construction industry was hard-hit during the prolonged slump in eco- Employment during Recovery nomic activity. Much of the contraction in building activity occurred in the residential sector A recovery in economic activity has been under while construction of commercial and industrial way since the turn of the year. Interest rates fell Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Labor Market in Recession and Recovery 481 appreciably in the second half of 1982, helping to 5. Labor force growth trigger an improvement in the credit-sensitive Percent, annual rates sectors of the economy. As spending on housing and consumer durable goods revived, production and employment began to rebound. By June 1983, total payroll employment had increased about 1.1 million from the December 1982 low. Thus far, the rebound in private employment has been comparable in relative terms to those recorded during the first six months of other post- 4 2 -0+ 2 4 war recoveries. However, in this expansion, Bureau of Labor Statistics household data for the civilian labor unlike the others, government employment has force, seasonally adjusted. Rates of change from 1973:4 to 1980:1 and continued to edge lower. from 1980:1 to 1983:2 are compounded annual rates. Total is persons aged 16 and over; men are males aged 20 and over; women are females In the manufacturing sector, employment aged 20 and over; and teenagers are both sexes aged 16 to 19 years. gains have been concentrated among producers of durable goods, especially those that were most the paucity of job opportunities probably disaffected by the recession. Roughly 300,000 jobs suaded many potential workers from entering the were regained in durable manufacturing over the labor force or from continuing their job search. first six months of 1983, led by substantial in- At the same time, mounting layoffs in many creases in transportation equipment and lumber. sectors of the economy pushed the civilian un- Still, that gain represented only about 10 percent employment rate from 6 percent in early 1980 to of the jobs lost over the preceding three and a 10.8 percent last December. half years. At factories producing nondurable goods, where layoffs generally had been much less extensive, there has been only a small Patterns of Participation amount of new hiring, primarily in the rubber industry. Likewise, the recovery in total con- Although the weak labor market discouraged job struction employment has been moderate. Al- search and slowed growth in the labor force of all though residential building activity has rebound- demographic groups, the effect was pronounced ed strongly during the past year, that strength among teenagers, who traditionally are the most has been offset by the downturn in investment in cyclically sensitive group. Over the past three nonresidential structures that began in late 1982. years, the teenage labor force fell 1.3 million. The pickup in economic activity in the first Much of the decline was due to a reduction in the half of 1983 also stimulated hiring in service- teenage population, reflecting the falling birth producing industries. Employment in the finance and services industries accounted for more than 6. Labor force participation rates half of the total rise in payroll employment, and Percent hiring in the large trade sector totaled 200,000 between December 1982 and June 1983. The number of jobs in transportation and public utilities, however, was unchanged. LABOR SUPPLY AND UNEMPLOYMENT The civilian labor force continued to expand during the past three years, albeit at only half of 1970 1975 1980 1983 the rapid rate of increase during the 1970s (chart Bureau of Labor Statistics household data for the civilian labor force, seasonally adjusted. Men are males aged 20 and over; women 5). Part of the slowdown was due to the reduced are females aged 20 and over; and teenagers are both sexes aged 16 to growth rate of the working-age population, but 19 years. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

482 Federal Reserve Bulletin • July 1983 rates of the 1960s. But, as chart 6 shows, the labor force participation of adult women during labor force participation rate for teenagers (that the recession. Some evidence suggests that paris, the share of the teenage population who are ticipation among married women may have reemployed or are looking for jobs) also dropped flected an "added worker" effect; that is, wives almost 5 percentage points. Most likely, many whose husbands became unemployed may have young persons did not enter the labor force or been more likely to enter the labor force over the abandoned their job search and took up alterna- past three years. Notwithstanding these influtive activities, such as enrolling in school. ences, the rate of increase in participation among The rate of participation in the labor market by women over the past three years was about half adult men, especially older men, continued to fall that which underlay the strong upward trend in during the past three years. For several decades, the 1970s, suggesting that poor job prospects participation among adult men has been on a curtailed the labor force activity of many adult downward trend, probably in response to the women. improvements in social security benefits, private pensions, and disability income that have fostered an early departure of older men from the Job Losses and Unemployment labor force. Recently, that downtrend has steepened: the rate of decline in participation over the The cyclical contraction in employment during past three years among all adult men was one and the 1980-82 period not only restrained the influx one-half times as great as that in the previous of new jobseekers, but also left a record number decade, suggesting that poor employment pros- of workers unemployed. The number of persons pects discouraged job search among prime-age who lost their last job increased by 4.1 million males and accelerated the exit of older men from from early 1980 to late 1982, making up threethe labor force. quarters of the increase in the total number of In contrast with the patterns for teenagers and unemployed persons. All demographic groups adult men, the participation rate of adult women rose throughout the recession. The factors that continued to draw women into the workforce 7. Unemployment rates during the 1980-82 period probably were an Percent extension of those influencing the strong upward trend during the 1970s. Several explanations for that trend have been advanced. First, the entrance of the large baby-boom cohort into the labor market swelled the supply of young workers and depressed their wages relative to normal levels; that adversity may have spurred the rise in participation of younger women, who entered the labor force to bolster family income. These women subsequently developed strong attachments to the workforce. Second, the birth rate has declined since the 1960s and decisions to have fewer children, probably made in conjunction with decisions concerning labor force participation, may have allowed more women to enter or to remain in the labor force. In addition, a shift in cultural attitudes has made labor force participation by women, including those with children, more socially acceptable. Beyond these longer-run influences, the desire Bureau of Labor Statistics household data for the civilian labor force, seasonally adjusted. Adult men and women are those aged 20 to maintain family income may have supported and over. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Labor Market in Recession and Recovery 483 experienced their highest jobless rates in the lengthy contraction that followed. As a consepostwar era. quence, by mid-1983, the average duration of As noted earlier, the distribution of employ- unemployment had climbed to a postwar record ment losses in the recession among industries of 22 weeks, and one-quarter of unemployed was very unequal, and that inequality affected persons had been out of work for more than six the distribution of unemployment among demo- months. graphic groups. Because adult men are concentrated in the manufacturing and construction industries, in which employment cutbacks were Unemployment Insurance in the Recession very large, their unemployment rate rose more than 5 percentage points over the 1980-82 peri- The length of the slowdown in economic activity od, to 10.1 percent in December 1982 (chart 7). and the large increase in the number of long-term Because women are more heavily employed in unemployed workers posed significant problems service industries, which fared considerably bet- for the unemployment insurance (UI) system, ter through the recession than goods-producing which was designed to cope mainly with shortindustries, the increase in their unemployment term adjustments in labor markets. The proporrate, to 9.2 percent at the end of 1982, was less tion of unemployed workers who were receiving than that for adult men. Never before in the UI benefits in this recession was much lower postwar period had joblessness among men ex- than that in earlier cycles: it was only about oneceeded that for women by such a wide margin. third in 1982 compared with more than one-half The industrial mix of employment losses dur- in 1975. Several factors may have been responsiing the 1980-82 period also affected the distribu- ble for the narrow extent of UI coverage. First, tion of unemployment among racial groups. As is because the level of unemployment remained the case with adult men, nonwhite workers tend high for a long period of time, a large portion of to be concentrated in blue-collar jobs; conse- the jobless in 1982 probably had exhausted their quently, they suffered a larger increase in their unemployment insurance. In addition, the persisunemployment rate than did whites. The reces- tence of weak labor demand probably prevented sion also exacerbated the persistent labor market many persons from reestablishing a work history problems of nonwhite teenagers, whose jobless to regain entitlement to program benefits. Secrate rose from about 30 percent before the eco- ond, the abolition of the national trigger unemnomic slowdown to almost 50 percent in recent ployment rate for extended benefits in October months. 1981 and a legislated increase in the state trigger The extended slowdown in economic activity rate meant that fewer persons received extended increased the duration of unemployment consid- benefits when their 26 weeks of regular state erably (chart 8). Many workers who lost their benefits were exhausted. At the end of 1982, only jobs during the initial downturn remained jobless 13 states with particularly high unemployment during the short-lived recovery in 1981 and the rates were offering extended benefits; under pre- 1981 law, extended benefits would have been available in all 50 states, as they were during the 8. Average duration of unemployment 1975 recession. The relatively low percentage of unemployed 20 persons receiving UI benefits in 1982 was a source of concern both because it reflected the hardship imposed on unemployed workers and 15 their families and because it implied that UI transfers were not supporting aggregate personal 10 income to the same extent as in earlier downturns. In response to these concerns, the Con- 1970 1975 1980 1983 gress in September 1982 extended the duration of unemployment insurance benefits, as it had in Bureau of Labor Statistics data, seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

484 Federal Reserve Bulletin • July 1983 the 1975 recession. Under the Federal Supple- years illustrates the role of past and expected mental Compensation program, the maximum inflation in the wage-determination process. duration of benefits in states with particularly Wages of many workers are tied directly to past high unemployment was first extended to 55 price movements, either explicitly through costweeks and then to 65 weeks, although states with of-living escalator clauses or implicitly through lower rates of insured unemployment had shorter catchup wage adjustments. Backing up demands durations. By May 1983, more than 1.5 million for wage increases that keep up with inflation persons who otherwise would have exhausted may be such factors as the exercise of collective their benefits were continuing to receive income power, management's concerns about falling mosupport under the new program. rale and hence falling productivity if wages were being eroded by inflation, and traditional wage comparisons among workers. The strong link A Move toward Recovery between wage and price movements helps to explain the high rate of wage increase during As the economy began to recover, the civilian periods of simultaneous high joblessness and jobless rate declined, falling 0.8 percentage point rapid inflation, as in 1980 and 1981 (chart 9). from its December 1982 high to 10 percent in When price inflation declined, however, the June 1983. Much of the reduction in unemploy- forces that had sustained wage increases during ment occurred among adult men, although their the late 1970s and early 1980s began to unwind. jobless rate still was somewhat higher than that Pressures for catchup adjustments subsided, as for adult women. For teenagers and nonwhites, workers' real wages started to rise in early 1982 however, joblessness remained close to reces- and lower inflation directly reduced cost-of-livsion highs. By industry grouping, improvement ing adjustments. Changing expectations also fighas been most pronounced in the durable goods ured in the unwinding of the wage-price spiral. sector, in which the jobless rate fell nearly 5 By 1982, workers began to perceive that lower percentage points to 12 percent. The unemploy- inflation rates would be sustained for some time ment rate should drop further in the latter half of and, as a result, that they did not need to build 1983 as the recovery in business activity contin- into their wage adjustments a large premium for ues. future inflation. Although price movements clearly had an important influence on wage adjustments, high un- WAGES employment and mounting financial strains also exerted downward pressure on wages after 1980. One consequence of prolonged slack demand, The effect of high unemployment was most prohigh unemployment, and the slowing of price increases has been a substantial decline in wage 9. Changes in wages and prices inflation. At least initially, rising unemployment Four-quarter percentage change appeared to have little effect on wage increases. The index of hourly earnings for production or nonsupervisory workers in the private nonfarm economy rose 9.6 percent in 1980—more than in any other year since the series was begun in 1964—even though unemployment averaged 7.5 percent during the last three quarters of that year. As economic stagnation extended into its second and third years, however, the rate of wage gain slowed steadily. By mid-1983, wage 1972 1975 1980 1983 inflation was less than 5 percent, the slowest rate Bureau of Labor Statistics data, seasonally adjusted. Changes in in 16 years. wages and prices are the percentage change from the same quarter one year earlier in the hourly earnings index and the fixed-weight price The behavior of wages during these three index for personal consumption expenditures respectively. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Labor Market in Recession and Recovery 485 nounced in construction and manufacturing. earlier recessions, but they largely involved mar- Wages in construction continued to rise rapidly ginal firms and rarely had any consequence for through 1981, perhaps because heavy construc- other workers, even in the same industry. The tion activity held up relatively well, but the rate pervasiveness of recent concessions is thus unof gain began to decelerate markedly in 1982. paralleled in the postwar period. Between late Over the 12 months ended in mid-1983, when 1981 and mid-1983, concessions spread to a joblessness among construction workers aver- variety of industries, including meatpacking, auaged more than 20 percent, wages rose just 2.6 tos, trucking, rubber, airlines, construction, percent, compared with 8.3 percent in 1981. In steel, and aluminum. In many cases, revised pay the manufacturing sector, wages moderated even plans involved all union workers in the industry, more significantly. The rate of increase in the and nonunionized white-collar workers generally index of hourly earnings for manufacturing, accepted terms similar to those of their union which had climbed to 10.6 percent in 1980, counterparts. About 1.5 million union workers, slowed to 3.5 percent over the year ended in June or 40 percent of all workers who negotiated new 1983. agreements in major collective bargaining units In many hard-pressed industries, most of during 1982 and early 1983, will not receive any which are heavily unionized, the reduction in scheduled wage increase over the life of their wage adjustments was particularly dramatic. As contracts—usually three years. A large portion early as 1981, large-scale plant closings and mass of these workers still are covered by cost-oflayoffs threatened the job security of even senior living clauses, but escalator provisions recently union members. In an effort to curb employers' have contributed little to wage increases, as the financial losses and to forestall further layoffs, accompanying table suggests, and they actually many workers agreed to reopen contract negotia- generated some wage cuts in early 1983. Wage tions and offered significant concessions. A com- adjustments under new major collective bargainmon feature was a freeze on basic wages— ing agreements in the private sector dropped sometimes including the escalator clause and from 7.9 percent annually over the life of consometimes with delays or limits on escalator tracts negotiated in 1981 (excluding cost-of-living payments—or even an outright decrease in escalation) to 3.6 percent in contracts reached wages. Firms often cut back nonwage benefits as last year, by far the smallest average increase for well and modified restrictive work rules. Accom- any year since the series began in 1968. New panying the concessions was an increased will- settlements reached during the first quarter of ingness to experiment with worker participation 1983 were even smaller, with adjustments averin management, profit-sharing plans, and other aging only 2.2 percent annually. innovations. Even where concessions were not made, de- Clearly, the prolonged weakness in economic celeration of wages was widespread. In the activity precipitated concessions, but long-run structural changes also played a role. Over the Components of effective wage change, major union past decade, heavily unionized industries have contracts, 1975-83 faced increasingly intense competition from for- Percent eign firms or domestic nonunion firms. In some Annual cases, such as trucking and airlines, government Component average, 1980 1981 1982 1983:1' 1975-79 deregulation of the market has altered the competitive environment. Despite these develop- Average total adjustment ments, wage settlements until recently continued in wages 8.4 9.9 9.5 6.8 1.2 to provide customary annual increases plus full Earlier agreements 3.4 3.5 3.8 3.6 1.6 New settlements 2.8 3.6 2.5 1.7 -.8 indexation. When competitive pressures were Cost-of-living adjustments 2.2 2.8 3.2 1.4 .4 intensified by the extended weakness in demand SOURCE. Bureau of Labor Statistics data for collective bargaining during 1980-82, unions were forced to adapt to settlements in the private sector covering 1,000 or more workers. changing economic conditions. Details may not sum to totals because of rounding. 1. Data for 1983 include adjustments put in place through March at Unions had made scattered concessions in compound annual rates, not seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

486 Federal Reserve Bulletin • July 1983 sparsely organized trade sector, the rate of in- hour over the entire period from early 1980 to crease in the index of hourly earnings fell from mid-1983 looks noticeably better than the very 8.3 percent in 1980 to 4.8 percent over the year poor performance over the 1973-80 business ended in June 1983. Wage pressures also have cycle. eased in the services industry, although not so Growth in output per hour typically slows much as in other sectors, perhaps because em- toward the end of a cyclical expansion as producployment in that industry continued to expand tion bottlenecks and shortages of skilled workers during the recession. For white-collar workers, appear. In a recession, outright declines often many of whom are not covered by the index of occur as cutbacks in employment lag reductions hourly earnings, wage gains roughly paralleled in output. Many firms are reluctant to cut deeply those of other workers. The comprehensive em- into their workforces because of the high costs of ployment cost index, which covers all wage and layoffs and uncertainty about the length and salary workers including supervisory personnel, severity of the contraction. In the initial phase of indicated that wages of white-collar employees a recovery, a parallel process occurs: firms do rose by 5.7 percent over the year ended in March not rapidly hire more workers and expand capac- 1983, down from 8.3 percent during the preced- ity; first, underutilized workers and equipment ing 12-month period. are used more intensively to produce the higher Employers' efforts to cut costs also extended output, and productivity rebounds. to trimming the rapid rise in expenses for non- During the brief 1980-81 cycle, the behavior of wage benefits. During the 1970s, nonwage bene- productivity followed this typical cyclical patfits rose considerably faster than wage rates, tern. However, after another decline in producperhaps because employer-financed benefits are tivity associated with the onset of the second not taxable. But by 1982, pressures to reduce contraction, employers stepped up efforts to trim costs apparently forced many employers to re- their workforces in line with falling sales. As a vise benefit plans. As a result, employer costs for result, output per hour began to rebound in early benefits were increasing only at about the same 1982, nearly a year before the cyclical trough in rate as wages in 1982, according to compensation economic activity. Over the four quarters of data from the employment cost index. 1982, productivity in the nonfarm business sector The sustained slowing in wages over the past rose 1.3 percent, a relatively good performance two and a half years clearly has favorable impli- for a year when real output dropped substantialcations for prospective price behavior. Despite ly. And, in the first quarter of 1983, when output smaller nominal wage increases, workers' real began to rebound, the increase in productivity hourly compensation has been rising on average was a strong 4.7 percent at an annual rate. since late 1981, reducing latent pressures for The good performance of productivity in 1982 catchup increases. At the same time, conces- may have reflected aggressive efforts to cut labor sions in multiyear union contracts should hold input temporarily because of the length of the down cost increases in key industries. More- recent contraction. Yet employers also may be over, the recent performance of productivity making longer-lasting changes in the organizaappears to be reinforcing the lower trend in labor tion of production and of their workforces. Incosts. deed, recent data on output per hour suggest that the trend advance in productivity may have improved from its anemic 0.6 percent annual rate between the business cycle peaks in 1973 and PRODUCTIVITY AND LABOR COSTS 1980, depicted in chart 10. For example, over the Perhaps the most encouraging labor market de- 1980-81 cycle, output per hour increased at a 0.9 velopment in the past three years has been the percent annual rate, and, by the first quarter of performance of productivity. Although produc- 1983, the level of productivity was well above the tivity growth has displayed the sharp swings that trend line extrapolated from the 1973-80 cycle. usually occur around cyclical contractions in In past cycles, the level of output per hour economic activity, the increase in output per typically did not regain its trend until after sev- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Labor Market in Recession and Recovery 487 10, Trends in productivity may result simply from the adverse effect of 1972 dollars per hour reduced productivity growth on unit labor costs and hence prices, rapid inflation itself may generate real efficiency losses. High inflation and rapidly varying relative prices may distort the price signals in the marketplace, making cost control more difficult and diverting managerial attention to coping with short-term financial problems and uncertainty. In contrast, low inflation may foster "back to basics" activities such as streamlining organizational structures, adopting the most efficient production methods, and Labor productivity in the nonfarm business sector, Bureau of Labor Statistics data. Trends are constructed from the business cycle peak in improving product quality. If so, a more stable 1969:4 to the peak in 1973:4 and from the 1973:4 peak to the 1980:1 economic environment should enhance the perpeak. formance of productivity. eral quarters of strong gains. Moreover, numer- Other factors clearly can affect the trend in ous qualitative reports suggest that many firms aggregate productivity, such as investment in are improving efficiency and lowering "break- new plant and equipment and spending on reeven points" by modifying work rules, restructur- search and development; the intensity of energy ing layers of management, and changing produc- use; the restrictiveness of government regulation methods. tions; and shifts in output among industries with Pinpointing the causes for a change in the varying productivity levels. But these factors underlying productivity trend is extremely diffi- probably have yet to be a significant influence on cult so early in a business cycle, particularly aggregate productivity in this business cycle. For because the reasons for the dramatic slowdown example, although competitive pressures may during the 1970s are not well understood. With have forced some firms to adopt new technolothat caveat, several long-run determinants could gies, investment spending by businesses generalbe reinforcing a trend toward better productivity ly has been weak during the past recession. growth. Whatever the causes, an improvement in pro- First, the demographic composition of the ductivity performance would have favorable labor force has changed significantly in recent consequences for workers' real incomes and years. During the 1960s and 1970s, large numbers potentially for prices. As chart 11 indicates, of women and younger workers entered the labor market. Because these workers were relatively 11. Productivity and real wages inexperienced, their entry probably damped overall productivity growth. By the late 1970s, however, the members of the baby boom generation had gained more work experience and the proportion of younger workers in the workforce had begun to decline—developments that probably supported the growth in productivity. The trend toward smaller cohorts of younger workers and a more moderate increase in labor force participation than in the 1970s should continue into the 1980s. Second, changes in the underlying productivity trend over the past two decades have been Labor productivity and hourly compensation, Bureau of Labor Statistics data for the nonfarm business sector. Real hourly compensaclosely correlated with changes in the inflation tion is constructed by deflating nominal compensation by the gross rate: productivity growth slowed as inflation domestic business product deflator before 1960 and by the gross domestic product fixed-weight price index later. Gross domestic accelerated. Although this negative correlation business product price indexes, Department of Commerce data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

488 Federal Reserve Bulletin • July 1983 movements in real hourly compensation have Rising productivity also has eased cost presclosely paralleled the underlying productivity sures on prices. The turnabout in productivity trend throughout the postwar period. Indeed, if growth since early 1982, coupled with much nominal wages were to rise faster than prices more moderate increases in hourly compensaover an extended period and those real wage tion, has resulted in a marked deceleration in the gains were not matched by rising productivity1, rise of unit labor costs—a key determinant of the consequence would be a secular squeeze on price trends in the long run. Over the year ended profits with resulting adverse effects on invest- in the first quarter of 1983, unit labor costs rose ment and hence future productivity growth. Over 3.6 percent, in sharp contrast with the rapid 11 the past three years, real hourly compensation percent advance during 1979-80, just three years and productivity have increased on balance at an earlier. • annual rate of nearly 1 percent, a somewhat stronger advance than that in the late 1970s. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

489 Profitability of Insured Commercial Banks in 1982 Barbara Negri Opper of the Board's Division of tor for commercial banks in 1982, as they have Research and Statistics prepared this article. since 1979. When market interest rates broke at midyear, large banks as a group were well posi- Persistent weakness in business activity and em- tioned to reap temporary benefits, and their net ployment, along with high interest rates, exerted interest margins in the second half of the year considerable pressure on commercial banks in were considerably wider than those prevailing in 1982. Reported profits edged down further from recent years. Conversely, many small banks the 1979 peak, and returns on assets and on found themselves with short-term money market equity, at 0.71 percent and 12.2 percent respec- assets financed by six-month money market certively, reached lows last observed in the recov- tificates (MMCs) issued at the higher rates preery from the 1973-75 recession. Also, an over- vailing during the first half; the relatively slower hang of potential losses became worrisome as the decline in their interest expenses is estimated to financial difficulties of some major borrowing have eliminated several basis points from their countries impaired their ability to maintain pay- net interest margins in the second half of the ments on debt owed to U.S. banks. year. Deregulation of interest rate ceilings on Most commercial banks continued to record retail deposits proceeded in large steps in 1982; substantial profits. However, the proportion of by year-end, $82 billion of savings and small time banks with operating losses rose to nearly 8 deposits outstanding at commercial banks was in percent, about equal to the mid-1970s peak and accounts, all carrying market interest rates, that more than double the recent low in 1979. Differ- had been authorized within the year. The money ences in the credit quality of loan portfolios market deposit account (MMDA) was a spectacdistinguished weak from strong performers in ular newcomer; it became effective December 14 1982. under authority of the Garn-St Germain Deposi- Problem loans were a principal, and more or tory Institutions Act of 1982 and, because high less pervasive, depressant to earnings in 1982. promotional interest rates accentuated its inher- Loan-loss provisions increased significantly in ent attractiveness, it accounted for over $60 1982 at banks of all sizes and with all kinds of billion at commercial banks by the end of the lending specialties, particularly during the sec- year. At that time, three-fifths of the assets of ond half of the year. Medium-sized and larger insured commercial banks was funded by liabilbanks recorded especially severe deterioration in ities that could carry market yields, compared commercial and industrial loans; in the second with one-half two years earlier. half, chargeoffs doubled to an annual rate ex- An unusually large volume of bank and bank ceeding 1 percent of portfolios as the incidence holding company securities was issued in public of business bankruptcies reached a postwar markets during 1982 in the form of common peak. stock, mandatory convertible securities, and per- Risks associated with the level and volatility of petual preferred stock. Nonetheless, this addimarket interest rates remained an important fac- tional capital in effect did little more than offset a reduction in earnings retention at banks as opposed to bank holding companies. For all banks taken together, equity capital remained at 5.8 NOTE. Nancy Bowen, Mary McLaughlin, and Alan Boyce percent of average assets as it has since 1978. provided data processing assistance. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

490 Federal Reserve Bulletin • July 1983 INTEREST INCOME about the same amount. Reflecting the scarcity of floating-rate issues, the larger proportion of Interest earned declined 62 basis points relative longer-term issues held (three-fourths of portfoto average assets at all banks in 1982, in associa- lios mature in more than one year), and the tion primarily with the drop in market yields but absence of problem credits that might have interalso with interest forgone from problem loans rupted the flow of interest payments, yields on (table 1). The effective gross yield on loan portfo- bank securities portfolios increased 76 basis lios declined 117 basis points during the year points over 1981. Though not all classes of banks (table 2), and the yield after loan-loss provisions did so, the banking system as a whole allocated a fell an additional 27 basis points. By contrast, in larger portion of assets to loans; that fraction 1981, when loan-loss provisions were only begin- rose a percentage point to 56 percent (table 3). ning to edge up, gross and net loan yields rose by 1. Components of interest margin 1. Income and expense as percent of average assets, all insured commercial banks, 1980-821 Percent of average assets GROSS INTEREST INCOME Item 1980 1981 1982 12 Gross interest income 9.87 11.81 11.19 13 money center if \ Gross interest expense 6.78 8.75 8.02 Net interest margin 3.09 3.07 3.17 Noninterest income .89 .99 1.05 10 Loan-loss provision .25 .26 .39 Other noninterest expense 2.63 2.76 2.91 Income before tax 1.10 1.04 .91 Taxes2 .28 .24 .17 Other3 -.03 -.04 -.03 Net income .79 .76 .71 Cash dividends declared .29 .30 .31 Net retained earnings .50 .46 .40 MEMO Net interest margin, taxable equivalent4 3.46 3.45 3.55 Average assets (billions of dollars)1.... 1,768 1,933 2,101 GROSS INTEREST EXPENSE 1. Average assets are fully consolidated and net of loan-loss 10 reserves; averages are based on amounts outstanding at the beginning and end of each year. 2. Includes all taxes estimated to be due on income, on extraordinary gains, and on security gains. 3. Includes securities and extraordinary gains or losses (-) before taxes. 4. For each bank with profits before tax greater than zero, income from state and local obligations was increased by [1/(1 - t) - 1] times the lesser of profits before tax or interest earned on state and local obligations (t is the marginal federal income tax rate). This adjustment approximates the equivalent pretax return on state and local obligations. 2. Rates of return on fully consolidated portfolios, all insured commercial banks, 1980-821 t i i Percent NET INTEREST MARGIN Item 1980 1981 1982 Securities, total 7.88 9.27 9.96 U.S. government 9.38 11.38 12.19 State and local government 6.03 6.72 7.19 Other 10.55 11.54 11.64 Loans, gross 13.71 16.37 15.20 Net of loan-loss provision 13.19 15.83 14.39 1970 1972 1974 1976 1978 1980 1982 Taxable equivalent2 Total securities 10.23 11.73 12.49 Size categories are based on year-end consolidated assets of each State and local government 11.13 12.15 12.93 bank. Total securities and gross loans . 12.88 15.26 14.57 Gross interest income is adjusted for taxable equivalence. Net interest margins are gross interest income adjusted for taxable equiva- 1. Calculated as described in the "Technical Note,' FEDERAL lence minus gross interest expense. RESERVE BULLETIN, vol. 65 (September 1979), p. 704. Data are for domestic operations until 1976, when foreign office 2. See table 1, note 4. operations of U.S. banks were consolidated into the totals. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks in 1982 491 3. Portfolio items as percent of total assets including loan-loss reserves, all insured commercial banks, 1980-821 Average during year Domestic offices Fully consolidated offices IItteemm 1980 1981 1982 1980 1981 1982 Interest-earning assets 80.2 80.8 82.5 82.9 83.8 85.2 Loans 55.1 54.5 55.3 55.4 55.2 56.1 Securities 20.1 20.0 19.2 17.0 17.0 16.6 U.S. Treasury 6.4 6.4 6.1 5.3 5.3 5.1 U.S. government agencies 3.7 4.0 4.1 3.0 3.3 3.5 State and local governments 9.4 9.1 8.6 7.8 7.6 7.2 Other bonds and stocks .5 .5 .4 .8 .8 ..77 Gross federal funds sold and reverse repurchase agreements 4.4 4.8 5.2 3.7 4.0 4.4 Interest-bearing deposits .6 1.6 2.7 6.8 7.7 8.1 MEMO: Average gross assets (billions of dollars).... 1,460 1,603 1,763 1,768 1,940 2,100 1. Percentages are based on aggregate data and thus reflect the dates in December of the preceding year and in June and December of heavier weighting of large banks. Data are based on averages for call the current year. The decline in gross interest earned relative to ly than money market yields in the second half of assets reflects the greater weight of loans in bank 1982. assets. Interest earnings of other large commercial The decline was steepest at the money center banks also fell, influenced by many of the same banks, two-thirds of whose assets can be charac- factors that affected money center banks. The terized as "rate sensitive" either because they decline, 93 basis points, was mitigated by differhave short maturities or because they carry ences in asset diversification between these two yields contractually linked to the money mar- sets of large banks. Loans at large money center kets. Gross yields on loan portfolios of these banks accounted for 61 percent of assets in 1982, banks fell 2 percentage points from 1981, a major in contrast to 55 percent for other large banks; 6 factor behind the decline of 110 basis points in percent of the assets of money center banks was the rate of gross interest earned by money center invested in securities, as opposed to 14 percent banks shown in the top panel of chart 1. (Appen- at other large banks. dix tables A. 1 and A.2 present data for these and Differences in the characteristics of loan portother groups of banks.) Gross loan yields at folios, more than the distribution of total assets, money center banks fell nearly 3!/2 percentage account for the relative stability of gross interest points from the second half of 1981, when market earned by medium-sized commercial banks and yields peaked, to the second half of 1982. Yields for the increase of 45 basis points registered by on new short-term business loans acquired by small banks. Consumer loans and mortgages domestic offices of these banks fell much more account for a larger fraction of assets at these rapidly—between 7 and 8 percentage points dur- two sets of banks—about 30 percent, as opposed ing that period, from a 19 percent peak. Much of to 12 percent at money center banks—and these the discrepancy between the behavior of short- investments tend to have longer maturities and term market yields and average loan portfolio less volatile yields than money market instruyields at money center banks reflects the influ- ments. Also, business loans at these two sets of ence of portfolio diversification; although short- smaller banks have tended to be more insulated term domestic-office business loans account for from money market developments. For example, 17 percent of loans at money center banks, loans yields on new short-term business loans acquired with fixed interest rates or longer maturities— by a sample of small banks peaked in late 1981 consumer loans, longer-term business loans, per- near 19 percent, close to yields on loans extendmanent mortgages—account for 29 percent. The ed by money center banks; but by the end of smaller drop in average loan portfolio yields also 1982, those yields had fallen only to the 15 is attributable to returns from outstanding busi- percent range. In addition to the patterns for new ness loans with yields tied by contract to the business loans, yields on outstanding business prevailing prime rate, which declined more slow- loans with floating rates at small banks may Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

492 Federal Reserve Bulletin • July 1983 reflect movements in the prevailing prime rate Rates paid for fully consolidated liabilities, all more closely than they do at money center insured commercial banks, 1980-82' banks; tying rates directly to money market Percent instruments has become an important technique Item 1980 1981 1982 of business loan pricing at the latter, since many Time and savings deposits 10.66 13.38 11.94 of their customers have direct access to the Large negotiable certificates of deposit. 12.56 16.42 14.14 financial markets and can negotiate bank credit Deposits in foreign offices 14.03 17.34 14.87 Other deposits 8.10 10.02 9.75 at relatively narrow spreads over market rates. Subordinated notes and debentures 8.90 10.01 9.99 Gross federal funds purchased and repurchase agreements 14.68 17.52 12.83 Other liabilities for borrowed money 11.34 14.42 13.22 Total 11.10 13.86 12.08 INTEREST EXPENSE MEMO: All except "other deposits" 13.45 16.82 14.03 Interest expense as a percent of average assets 1. Calculated as described in the "Technical Note," FEDERAL RESERVE BULLETIN (September 1979), p. 704. declined 73 basis points in 1982, the net effect of cross-currents from three developments during the year. These were further deregulation of Deposits with fixed interest ceilings, all of interest rate ceilings on deposits denominated which were below market interest rates, conbelow $100,000; market disruptions following the tracted $40 billion during the year whereas deinsolvencies of Drysdale Government Securities posits that were ceiling free or had indexed and the Penn Square Bank of Oklahoma City; ceilings expanded $115 billion. The shift from and the midyear acceleration of the decline in savings and small time deposits with low interest market interest rates. Clearly, these factors did costs to deposits offering market yields helps not affect all types of banks equally, as suggested account for the small decline—a mere 27 basis by the divergent changes in interest expenses points—in the effective rate paid on such acdepicted in the middle panel of chart 1. counts ("other deposits" in table 4), when the three-month Treasury bill yield averaged Vh The Depository Institutions Deregulation percentage points below its year-earlier average. Committee (DIDC), established pursuant to the Some of the relative stability in interest costs for Monetary Control Act of 1980 to direct the savings and small time deposits also stems from orderly removal of all deposit interest ceilings by 1986, established four new accounts in 1982: a 7to 31-day and a 91-day small time deposit carry- average assets by about 6 or 7 percent. These simulations were based on assumptions that MMDA interest rates would ing interest ceilings indexed to market yields on average out near the Treasury bill rate; that market interest U.S. Treasury obligations of similar maturities; a rates would change little from early in the year; that about ceiling-free deposit with a minimum maturity of one-fifth of average outstanding MMDA balances would represent internal shifts out of accounts paying lower interest 3'/2 years to enable depositories to attract longerrates, such as passbook, NOW, and demand deposits; that term funds and thereby exert more control over about one-half would come from internal shifts out of acthe maturity profile of their liabilities; and the counts paying market rates, such as MMCs; and that the MMDA that enables depositories to offer a liquid remainder would represent new money. The simulations indicated that the cost impact of the MMDA would be quite account insured by the Federal Deposit Insuruneven across banks, and that some banks could experience ance Corporation and combining limited transac- a reduction in interest costs. Those that would benefit would tion capabilities with yields competitive with already have shifted toward a deregulated liability base: they had below-average fractions of assets funded by passbook, returns from money market mutual fund shares.1 NOW, and demand deposits and accordingly tended already to have below-average net interest margins. Those exposed to the largest increases in interest cost associated with the MMDA tended conversely to have relatively large passbook, 1. Frederick T. Furlong, "New Deposit Instruments," NOW, and demand deposits and above-average earnings FEDERAL RESERVE BULLETIN, vol. 69 (May 1983), pp. 319— (both in 1982 and simulated for 1983). Thus the MMDA is not 26. Banks offered above-market yields on the MMDA in their believed to have increased bank interest costs in such a way initial marketing of this account, but by February 1983, as to cause immediate concern. However, it significantly average offering yields had settled down near the current increases the share of liabilities carrying costs that could rise yield on U.S. Treasury bills. Simulations done for all of 1983 quickly if short-term market yields rose. It accordingly suggested that on average, interest cost increases associated increases the interest risk exposure of banks or suggests that with the MMDA, if not offset by portfolio shifts to increase some compensating portfolio adjustments toward short-term asset yields, would reduce commercial bank returns on or floating-rate assets are in store. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks in 1982 493 5. Ratio of financial liabilities to total assets including loan-loss reserves, all insured commercial banks, 1980-821 Percent, average during year Domestic offices Fully consolidated offices IItteemm 1980 1981 1982 1980 1981 1982 Financial claims 87.6 87.2 86.3 89.1 88.8 88.3 Demand deposits 29.1 25.1 20.7 24.0 20.8 17.4 Interest-bearing claims 58.5 62.1 65.6 65.1 68.0 70.9 Time and savings accounts 47.8 50.8 53.9 55.5 57.8 60.3 Large time2 15.5 17.2 18.4 12.8 14.2 15.4 16.1 15.8 15.0 Other domestic 32.3 33.6 35.6 26.7 27.8 29.9 MMCs and 91-day variableceiling accounts 9.9 2.7 12.9 8.2 10.5 10.8 NOW accounts 1.2 2.9 4.1 1.0 2.4 3.4 Subordinated notes and debentures .4 .4 .4 .4 .3 .3 Other borrowings 1.9 1.8 1.8 2.3 2.3 2.3 Gross federal funds purchased and repurchase agreements 8.4 9.1 9.5 6.9 7.5 8.0 MEMO Money market liabilities3 26.1 28.5 30.1 38.4 40.2 41.0 Average gross assets (billions of dollars) 1,460 1,603 1,763 1,768 1,940 2,100 1. Percentages are based on aggregate data and thus reflect the 2. Deposits of $100,000 and over issued by domestic offices. heavier weighting of large banks. Data are based on averages for call 3. Large time deposits issued by domestic offices, deposits issued dates in December of the preceding year and in June and December of by foreign offices, subordinated notes and debentures, repurchase the current year. agreements, gross federal funds purchased, and other borrowings. the lagging effect of costs on deposits with matu- section of table 4), and the pace in the second rities of six months or more issued before the half was somewhat faster than that. midyear break in market rates. As table 5 indi- As indicated in appendix table A.2, however, cates, over one-third of savings and small time the rate of decline in effective interest rates paid deposits was in accounts with variable ceilings, for money market liabilities varied considerably the dominant one being the MMC. These effects among classes of banks. The differences appear had the greatest impact on small banks, for to be related to opportunities to reprice those which savings and small time deposits funded a liabilities soon after the sharp decline in market greater share of assets than was the case for yields at midyear. For example, for the year as a larger banks. Small banks were thus most ex- whole, the effective interest rate paid on largeposed to increases in interest costs associated denomination certificates of deposit (CDs) dewith the removal of ceilings; they also funded a clined 227 basis points at 13 money center banks, larger share of assets with MMCs than larger but 264 basis points at other large banks. At the banks did, and thus their interest costs respond- end of June, 70 percent of the large CDs outed more slowly to declining market interest standing at money center banks matured within yields in the second half of the year. According- three months, but 80 percent matured that soon ly, in 1982, total interest expenses as a percent of at the other large banks. (That single difference average assets increased at small banks, in con- in maturity distribution—the additional 10 pertrast with the decreases registered by the larger cent of their $114 billion in CDs maturing within banks. three months—may have saved the large non- The decline in interest expenses at the largest money center banks on the order of $100 million banks was quite sharp: 129 basis points at money in interest expense during 1982 because market center banks and 96 basis points at others with at yields on CDs declined about 5 percentage points least $1 billion in assets. That pattern reflects the between June and September.) relatively close linkage of interest expenses of In addition to maturity profiles, changing perthese banks with market yields via their relative- ceptions of risk affected both the relationship of ly heavy reliance on short-term money market CD yields to other market yields and the pattern liabilities. For all banks, the effective interest of CD yields among banks. Concerns about rate paid on money market liabilities fell 23/4 nonperforming loans and interest risk exposure percentage points on average for the year (memo seem to have been reflected in a general increase Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

494 Federal Reserve Bulletin • July 1983 in yields on CDs relative to those on U.S. enced somewhat smaller gains, but also reported Treasury obligations during the previous three wider net interest margins in 1982 than they had years; such an increase occurred in 1973-75 had since the mid-1970s. Virtually all of this under similar circumstances. In mid-May, how- increase was registered in the second half of ever, this rise was accentuated when money 1982, and it is attributable to a combination of markets were disrupted by the announced de- asset and liability positioning and temporary fault in delivery of securities sold under repur- changes in alignments among certain market chase agreement (RPs) by Drysdale Government yields. At midyear, large banks generally had Securities; that development created temporary slightly more liabilities than assets eligible for uncertainty regarding the status of banks with near-term repricing. These estimates are relawhich Drysdale had extensive dealings or those tively crude, particularly with respect to the particularly active in the market for RPs. Then, near-term interval within which repricing is posin early July, the Penn Square Bank of Oklahoma sible; but at midyear the "gap" between such City was declared insolvent. That bank had liabilities and assets was considerably wider at originated and sold to other large banks else- money center banks than at other large banks, an where in the country a huge volume of energy observation that tends to corroborate the larger loans whose quality was doubtful, particularly in increase in net interest margins of the money view of the sharp drop in oil prices. Also, in a center group. move that carried repercussions to other large In addition, the prime rate lagged declines in banks not directly associated with Penn Square other short-term yields during the second half of Bank, the insolvency resulted in losses to unin- the year, although it tended to maintain its estabsured creditors, such as CD holders, raising the lished relationship with the average cost of monawareness of market participants that such ey market liabilities at large commercial banks.3 losses were possible. The difference between Banks reaped a temporary gain to the extent that market yields on three-month CDs issued by loans in their portfolio were tied to the prime but large banks and the Treasury bill yield widened sharply; it reached a peak of 23/4 percentage points before receding by year-end to a more reflecting business done only at the domestic offices of these typical range of less than 1 percentage point. banks, exclusive of the foreign-office operations important to large banks. 3. For example, a quarterly regression encompassing the period from the fourth quarter of 1979 through the end of 1982 indicates that NET INTEREST MARGINS P = -3.62 + 1.44AV /?2= .90; DW = 2.04, Net interest margins—the difference between (.14) interest income adjusted for taxable equivalence where P is the prime rate and AV is the weighted average and interest expense—increased relative to aver- effective interest rate paid on money market liabilities during age assets in 1982, as shown in the bottom panel the current quarter by commercial banks with at least $300 million in assets. The actual prevailing prime rate minus that of chart 1. Banks of various sizes differed in the fitted on the basis of this regression was -44 and -7 basis relative speed with which their portfolio yields points during the third and fourth quarters respectively. By and liability interest costs responded to the sharp contrast, a prime rate regression based on marginal costs and encompassing the same period suggests that in the third midyear drop in market yields. In general, larger quarter the actual prevailing prime rate was 138 basis points banks registered bigger increases in net interest higher than fitted, but by the fourth quarter was only 12 basis margins than smaller ones, especially in the points above fitted. The regression using marginal costs is second half of the year. P = 5.12 + MCD R2= .73; DW = 1.21, Money center banks recorded an increase of (.14) 20 basis points in their margin, the largest since at least the mid-1970s.2 Other large banks experi- where P is the prime rate and CD is the 30-day CD rate adjusted to include reserve costs. See Michael A. Goldberg, "The Pricing of the Prime Rate," Journal of Banking and 2. Longer comparisons are marred because it was only in Finance, vol. 6 (June 1982), pp. 277-96; and Karma Hadjimi- 1976 that banks began reporting in such a way as to permit the chalaikis, "Symmetric versus Asymmetric Interest Rate Adconstruction of a fully consolidated net interest margin. justment Mechanisms," Economic Letters, vol. 7 (September Before that, it was possible to construct a net interest margin 1981), pp. 257-64. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks in 1982 495 6. Loan portfolio losses and recoveries, all insured commercial banks, 1981-82 Millions of dollars, except as noted Net losses YYeeaarr aanndd ssiizzee ooff bbaannkk11 LLoosssseess RReeccoovveerriieess LLooaann--lloossss cchhaarrggeedd Dollar Percent of pprroovviissiioonn amount loans2 1981 All banks 5,240 1,519 3,721 .35 5,032 Less than $100 million 1,107 292 815 .43 987 $100 million to $1 billion 1,095 280 815 .39 11,,001144 $1 billion or more Money center banks 1,175 400 775 .22 1,269 Others 1,863 546 11,,331177 .40 11,,776622 1982 All banks 8,109 1,588 6,521 .55 8,291 Less than $100 million 1,578 308 1,270 .67 1,479 $100 million to $1 billion 1,637 315 11,,332222 .60 11,,664422 $1 billion or more Money center banks 2,125 392 1,733 .45 2,212 Others 2,769 574 2,194 .57 2,958 1. Size categories are based on year-end fully consolidated assets. 2. Average of beginning- and end-of-year loan balances. financed by liabilities eligible for repricing at Provisions for loan losses jumped 13 basis market yields early in the second half. points to 0.39 percent of average assets, surpass- For some time up to mid-1982, small banks had ing the recent peak in 1975. Loans written off as bolstered net interest margins by taking advan- uncollectible (net of recoveries from loans previtage of a persistent inversion in the term struc- ously charged off) also increased sharply, to 0.55 ture of market interest rates: they acquired mon- percent of average loans, just under the recent ey market assets with funds raised by issuing peak in 1975-76. MMCs. However, when market yields dropped As table 6 indicates, all four major size groups precipitously in the middle of the year, these of commercial banks registered large year-tobanks faced temporary pressure on net interest year increases in net chargeoffs relative to avermargins until the high-yield MMCs issued in the age loans. Losses in relation to the total asset first half of the year matured. Net interest mar- base similarly increased to previous cyclical gins of banks with less than $100 million in assets peaks at all sizes of banks (see chart 2). This fell 11 basis points from the first to the second apparent uniformity represents credit deteriorahalf of the year, and for 1982 as a whole were tion throughout the economy. (One important only 3 basis points higher than in 1981. exception seems to be consumer loans; sample surveys show that their chargeoff and delinquency rates were about unchanged in 1982 from the LOAN LOSSES preceding two years.) Banks with a heavy concentration of agricultural loans in their portfolios Actual and potential chargeoffs of loans loomed registered the highest rate of loans charged off in as a major factor in commercial banking during recent memory: 0.70 percent of average loans, 1982. Many sectors of the domestic economy up sharply from 0.43 percent in 1981 and a range manifested strains associated with continued of only 0.16 to 0.24 percent during the 1970s. high inflation and interest rates, weak business Real estate lending may have fared somewhat activity, and associated postwar record bank- better: banks with relatively large mortgage portruptcy rates, high unemployment rates, and a folios reported an increase of 11 basis points in sharp, unanticipated decline in oil prices. Agri- net chargeoffs, to 0.45 percent of average loans; culture was further affected by general declines but large banks required to report chargeoffs and in commodity prices and reduced export demand recoveries by portfolio category showed an averfor farm products. Reflecting repercussions from age net chargeoff rate on loans secured by real estate of 0.11 percent of the portfolio, about weakness in worldwide economic activity, severdouble the 1981 rate. The detail provided by al foreign economies had difficulties that affected large banks shows that chargeoffs of business loans to private borrowers in their countries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

496 Federal Reserve Bulletin • July 1983 2. Net loan losses first time in at least five years, the fraction of Percent of average assets assets in business loans exerted a significant influence on returns. In 1982, for every increase of 1 percentage point in the proportion of assets allocated to business loans, pretax profitability declined 2 basis points. This result reflects the widespread difficulties encountered by businesses in coping with the prolonged weakness in sales; a balance sheet that had unusually large debt relative to equity financing; and high nominal interest rates, which raised business debt i i i i i i i i i i i i service costs through floating-rate loan contracts 1970 1972 1974 1976 1978 1980 1982 Net loan losses are charged as a percent of average consolidated and refinancing of short-term obligations. assets net of loan-loss reserves, all commercial banks. Low-earning banks seem to have been distinguished from high-earning banks by loans of poor loans extended to customers located in the Unit- quality, as evidenced by higher loan-loss provied States accelerated dramatically in the second sions and loan chargeoffs net of recoveries. Tahalf of 1982, to an annual rate of 1.35 percent of ble 7 demonstrates this point. It reports certain the average of such loans outstanding, more than characteristics of banks in each of three size double the pace in the comparable period of the classes, divided into quartiles according to the previous two years. ratios of their net income to average equity Indeed, regression analysis of the determi- capital. The data are reported separately for the nants of pretax operating profitability based on first and second halves of 1982 because the cross-section data from all 14,000 insured com- quality of loan portfolios worsened as the year mercial banks indicates that during 1982, for the progressed. 7. Selected characteristics of insured commercial banks, by size and by profitability, 19821 Percent of average assets NNeett llooaann cchhaarrggeeooffiiffss SSiizzee aanndd qquuaarrttiillee ooff pprrooffiittaabbiilliittyy Interest eq T u a i x v a a b le l n e- ce Interest Loan-loss Ot i h n e te r re n s o t n - P be ro fo fi r t e s oo aass ff aa pp vv ee ee rrcc rraa ee gg nn ee tt income adjustment2 expense provision expense tax3 llooaannss First half Less than $100 million Lowest quartile 11.62 .22 7.46 .48 4.11 .31 .73 Highest quartile 12.81 .63 7.24 .14 2.99 3.19 .17 $100 million to $1 billion Lowest quartile 11.19 .26 7.82 .39 3.49 .25 .55 Highest quartile 12.25 .79 7.49 .23 3.28 2.18 .21 $1 billion and more Lowest quartile 11.45 .22 8.63 .48 3.48 .25 .53 Highest quartile 11.554 .59 8.05 .27 3.164 1.30 .28 Second half Less than $100 million Lowest quartile 11.34 .09 7.09 1.35 4.65 -.94 2.09 Highest quartile 12.27 .70 7.21" .28 3.41 2.21 .48 $100 million to $1 billion Lowest quartile 10.61 .21 7.07 1.12 3.62 -.39 1.67 Highest quartile 11.30 .78 6.71 .30 3.40 1.83 .47 $1 billion and more Lowest quartile 10.32 .17 7.62 1.05 3.57 -.16 1.32 Highest quartile 10.434 ,554 6.70 .37 3.374 1.48 .59 1. Profitability is defined as the ratio of net income to average 3. The sum of noninterest income (not shown) and interest income equity. All numbers shown are annual rates. less the three expense items shown. 2. See table 1, note 4. 4. Differences between means are not significant within the 0.05 range. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks in 1982 497 As table 7 shows, banks with the lowest return for about half of the increase in overall noninteron equity were different in several ways from est expenses other than loan-loss provisions. their most profitable peers. At banks of small and The undifferentiated category "other operatmedium size, gross interest income unadjusted ing expenses" was responsible for the other half for taxable equivalence was on average far lower of the increase in operating costs. No further among those in the lowest earnings group than detail is available on the nature of these exthose in the highest.4 Although this difference is penses, and the composition no doubt varies to be expected because loans charged off have widely across banks. Some of the increase may been delinquent in their interest payments, no have been associated with promotional expenses significant difference in gross interest earnings for the new MMDA, some with problem loans. appears between the highest and lowest quartiles As table 7 shows, banks with weak earnings were of the largest banks. In most cases, interest apt also to have loans of poor quality and relaexpenses were significantly lower at the most tively high noninterest expenses other than loanprofitable banks; at small and medium-sized loss provisions. In addition, losses not directly banks the difference was smaller than it was for connected with deterioration in loan credit qualiinterest income, but the reverse was true at ty—for example, those incurred from securities larger banks, which rely more heavily on unin- or RP transactions, or from foreign exchange sured liabilities. Provisions for loan losses taken trading—appear in this item. by the least profitable banks were significantly Noninterest income also increased relative to higher than those at their most profitable peers, average assets in 1982. Income from charges and and the difference between the two groups was fees increased 5 basis points, about half of which substantially larger in the second half of the year. is attributed to service charges and fees on Similarly, the volume of loans charged off in deposits. Many banks have established activity relation to average loans outstanding was signifi- fees and other charges for interest-bearing transcantly higher at the least profitable banks—by a action accounts; growth in such fees may reflect very wide margin in the second half. Noninterest the slight increase from 1981 to 1982 in turnover operating expenses other than loan-loss provi- of interest-bearing transaction accounts (from 14 sions also were significantly higher at small and to 14!/2 times per year) as well as the widened use medium-sized banks in the lowest earnings quar- of such deposits suggested by the increase of 1 tile; a similar, though not statistically significant, percentage point in the fraction of average assets difference is shown for the largest banks. These funded by NOW accounts. Income from loan enlarged noninterest expenses may be associated fees, which includes fees associated with loans to with additional legal and collection fees connect- countries experiencing liquidity difficulties, also ed with administering problem loans. grew. OTHER NONINTEREST EXPENSES AND PROFITABILITY, DIVIDENDS, AND CAPITAL NONINTEREST INCOME The pressures squeezing profitability during 1982 For all banks, noninterest expenses other than were evidently felt by banks of all sizes. Weightloan-loss provisions increased 15 basis points ed average returns for all insured commercial relative to average assets, and large banks regis- banks declined 5 basis points in terms of average tered an increase about double that for small assets, and a full percentage point in terms of banks. Expenses for wages, salaries, and em- average equity capital (table 8). Return on averployee benefits continued to grow faster than age equity—which in a sense is not affected by average assets, as has been the case for several the differences in capital leverage between small years. In 1982, increases in these expenses, and large banks—declined fairly uniformly in combined with occupancy expenses, accounted 1982. Small and medium-sized banks registered a reduction of slightly less than a full percentage point in return to equity capital. The reduction 4. The adjustment for taxable equivalence obviously is small for banks with low taxable income. was slightly larger for the larger banks on aver- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

498 Federal Reserve Bulletin • July 1983 8. Profit rates, all insured commercial banks, 1978-82 Percent Type of return and size of bank1 1978 1979 1980 1981 1982 Return on assets2 All banks .76 .80 .79 .76 .71 Less than $100 million 1.04 1.15 1.18 1.15 1.08 $100 million to $1 billion .90 .96 .96 .91 .85 $1 billion or more Money center banks .53 .56 .56 .53 .50 Others .68 .72 .66 .68 .63 Return on equity3 All banks 12.9 13.9 13.7 13.2 12.2 Less than $100 million 13.2 14.1 14.2 13.6 12.7 $100 million to $1 billion 13.2 13.9 13.7 12.8 12.0 $1 billion or more Money center banks 12.8 14.0 14.4 13.4 12.3 Others 12.5 13.5 12.7 12.9 11.9 1. Size categories are based on year-end fully consolidated assets. 3. Net income as a percent of the average of beginning- and end-of- 2. Net income as a percent of the average of beginning- and end-of- year equity capital. year fully consolidated assets net of loan-loss reserves. age, and in 1982 there was unusually wide disper- but total equity capital increased $0.3 billion less sion in their performance. in 1982 than in 1981. Notwithstanding reduced profitability in 1982, Adjustable-rate perpetual preferred stock and cash dividends on common and preferred stock mandatory convertible securities were important increased an average of 1 basis point relative to avenues for attracting capital, particularly by average assets, and small banks raised their large bank holding companies, which issued $1.8 dividend payments 4 basis points from 1981. billion and $1.3 billion respectively in these Only 0.4 percent of average assets was retained, forms in public markets during 1982. Moreover, 6 basis points less than in 1981 and 10 basis rapidly rising values in the stock market providpoints less than in 1980. On average all banks, ed a more favorable environment for issuance of whatever their size, retained less income relative common stock than in several years. Not all of to average assets in 1982 than in 1981. the externally generated capital was passed on to In the aggregate, insured commercial banks the commercial bank affiliates of these large retained $8.4 billion of income in 1982 (table 9), holding companies, however; growth in capital which was $1/2 billion less than in the year earlier ratios at some large bank holding companies was and the first reduction since the small decline larger than that at their commercial bank affilireported in 1975. Banks raised %2Vi billion in ates. So, though aggregate capital issued by equity from sources other than income retention, banking organizations increased substantially, 9. Sources of increase in total equity capital, all insured commercial banks, 1978—82 Millions of dollars, except as noted Retained income1 Net increase in equity Percent of increase in equity capital capital from retained income Year All Large All Large All banks Large banks banks banks2 banks banks2 (column 1 -H (column 2 -H column 3) column 4) (1) (2) (3) (4) (5) (6) 1978. 7,019 2,947 8,148 3,304 86 89 1979. 8,350 3,616 9,952 4,291 84 84 1980. 8,859 3,843 10,828 4,567 82 84 1981. 8,904 4,108 11,168 5,426 80 76 1982. 8,410 4,055 10,865 5,304 77 76 1. Net income less cash dividends declared on preferred and 2. Banks with fully consolidated assets of $1 billion or more, common stock. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks in 1982 499 the ratio of equity capital to assets at money 11. Assets and liabilities, U.S. insured commercial center banks edged up by only 0.1 percent, and banks with foreign offices, December 31, 1982 that for all insured commercial banks taken to- Percent of total, except as noted gether remained unchanged at 5.8 percent. Domestic Foreign Item offices offices Total assets (billions of dollars) 963 390 INSURED U.S. COMMERCIAL BANKS Cash and due from banks 11 32 Gross federal funds sold and reverse WITH FOREIGN OFFICES repurchase agreements 4 * Securities 12 3 56 51 Other 16 14 Like all other large insured commercial banks in Advances to affiliated offices 4 6 the United States, the 196 commercial banks Total liabilities (billions of dollars) 899 389 with foreign offices or Edge or Agreement corpo- Deposits 70 79 Non-interest-bearing1 21 3 rations experienced opportunities brought by Interest-bearing 49 76 rapidly falling interest rates and encountered Savings and small time 25 n.a. Time of $100,000 or more 24 n.a. difficulties associated with deterioration in the Nondeposit financial claims 19 4 Federal funds purchased and credit quality of loans. Gains in their consolidat- repurchase agreements 15 * Subordinated notes and debentures .... 1 * ed net interest margins were more than offset by Other liabilities for borrowed money ... 4 4 increases in loan-loss provisions and other ex- Other 11 16 Advances from affiliated offices 2 11 penses, and profits edged down from 1981. In addition, loans extended by many of these banks 1. Demand deposits in domestic offices, non-interest-bearing deposits in foreign offices. to customers in certain less industrialized coun- * Less than 0.5 percent, tries were impaired by the sharp, unexpected n.a. Not available. drop in oil prices, realignments of currency values, and pervasive recession. Interest earned on loans at foreign offices loan portfolios at foreign offices does not repredeclined 286 basis points in 1982 (table 10). Such sent any material disruption in interest receipts.) loans tend to carry short maturities—at year- A different portfolio mix contributed to the slowend, three-fifths matured within one year—or to er decline in loan yields at domestic offices—139 be otherwise closely linked with money market basis points—than at foreign offices; at the end of rates, and the behavior of portfolio yields largely 1982, about one-third of the domestic-office portreflected the declines in short-term market yields folios of these banks was in real estate and from 1981. (Most of the loans extended in coun- consumer loans, which tend to have average tries experiencing severe difficulties during 1982 maturities longer than one year and whose yields were maintained on an accrual status; reported tend to be less volatile than money market rates. interest includes income due from those loans, Dissimilarities in asset distribution also help and accordingly the observed decline in yields on account for the larger decline in total portfolio yields at foreign offices (from 18'/2 to 153/4 percent) than at domestic offices (from \5VI to 143/8 10. Rates of return and rates paid for funds, U.S. percent). Slightly over half of both foreign- and insured commercial banks with foreign offices, domestic-office assets was in loans at the end of 1981-821 1982 (table 11). The difference in the response of Percent yields stems from the larger allocation of domes- Domestic offices Foreign offices tic-office assets to securities, only 20 percent of IItteemm which matured within one year, and from the 1981 1982 1981 1982 larger allocation of foreign-office assets to inter- Loans 16.32 14.93 19.27 16.41 bank deposits, three-fourths of which matured Interest-earning assets2 15.53 14.36 18.47 15.77 Interest-bearing deposits ... 12.91 11.36 17.34 14.86 within three months. Interest-bearing claims 13.85 11.52 17.27 14.98 Foreign and domestic offices also differed in 1. Calculated as described in the "Technical Note," FEDERAL effective interest rates paid for liabilities. For the RESERVE BULLETIN (September 1979), p. 704. former, those rates declined 248 basis points, but 2. See table 1, note 4. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

500 Federal Reserve Bulletin • July 1983 12. Interest income and expense as percent of DEVELOPMENTS IN EARLY 1983 average assets, U.S. insured commercial banks with foreign offices, 1981-82 The rebound in the economy and relative stability in interest rates during the first quarter of Domestic offices Foreign offices IItteemm 1983 set the stage for some improvement in the 1981 1982 1981 1982 credit quality of domestic loans in commercial Gross interest income 10.24 9.80 14.96 12.59 bank portfolios. Loan-loss provisions at banks Gross interest expense.... 7.60 6.77 13.16 11.40 with at least $300 million in assets had backed Net interest margin 2.64 3.03 1.80 1.19 Taxable equivalent1 .. 3.02 3.39 1.80 1.19 down considerably from fourth-quarter peaks, although they remained 10 to 15 basis points 1. Approximated for domestic offices according to the method described in table 1, note 4. above the range—about 0.25 percent of average assets—registered in the first quarter of the prefor the latter, only 155 basis points (table 10). On vious three years. The improved loan portfolios average during 1982, four-fifths of interest-bear- evidently reflect domestic developments; the ing deposits of foreign offices matured within most noteworthy indication is the decline to an three months, and as indicated in table 11, such annual rate slightly below 1 percent of portfolios deposits account for virtually all of the interest- in chargeoffs of business loans extended to U.S. bearing liabilities those offices issued. An aver- addressees. Unsettled conditions persisted with age of three-fourths of large CDs issued by respect to bank debt outstanding in countries domestic offices matured within three months; at experiencing liquidity strains. the other extreme, savings and small time depos- Net interest margins at large banks were mainits other than short-term variable-ceiling deposits tained in the first quarter near the relatively high accounted for an average of two-thirds of all levels reached in late 1982. With approximately savings and small time deposits issued by domes- offsetting changes in noninterest income and tic offices. expenses, and stability in net interest margins, At foreign offices the ratio of interest income pretax profitability in the first quarter increased to assets declined on average nearly 2Vi percent- nearly as much as the reduction in loan-loss age points (table 12), while the decline at domes- provisions. In the first quarter, pretax profitabilitic offices was less than Vi percentage point, ty for all banks with assets of at least $300 million reflecting their different changes in portfolio was about equal to that a year earlier and only yields. Similarly, interest expenses declined slightly below that in the preceding two years. more rapidly at foreign offices than at domestic offices. Nonetheless, net interest margins of domestic offices widened by a substantial 37 basis 13. Consolidated income and expenses, U.S. insured commercial banks with foreign offices, points whereas those at foreign offices narrowed 1981-82 61 basis points. Percent of average assets On a consolidated basis, the net interest margins of banks with foreign offices expanded in Item 1981 1982 1982 by 13 basis points, reflecting the greater Gross interest income 12.13 11.11 weight of domestic-office volume (table 13). That Gross interest expense 9.74 8.58 Net interest margin 2.39 2.53 gain and expanded noninterest earnings were Taxable equivalent1 2.66 2.79 more than offset by a rapid increase in loan-loss Noninterest income 1.10 1.17 provisions and other noninterest expenses. Pre- Loan-loss provision .25 .39 Other noninterest expense 2.38 2.56 tax income declined from 0.86 to 0.75 percent of Income before tax .86 .75 Foreign offices2 .30 .24 average assets, and earnings computed on a fully Domestic offices2 .56 .51 allocated basis fell by about equal amounts at Net income .60 .55 foreign and domestic offices. International busi- International business2 .21 .18 Domestic business2 .39 .37 ness contributed about one-third of consolidated net income, slightly less than in 1981 (see table 1. See table 1, note 4. A.3). 2. See table A.3. Reflects amounts attributed to each class of business, giving full allocation of income and expense. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks in 1982 501 A.l. Report of income, all insured commercial banks, 1978-82 Millions of dollars, except as noted Item 1978 1979 1980 1981 1982 Operating income, total 113,170 149,795 190,109 247,932 257,188 Interest, total 102,706 137,364 174,416 228,675 235,121 Loans 75,948 101,942 126,663 163,171 166,589 Balances with banks 6,662 10,561 16,035 23,935 23,857 Federal funds sold and securities purchased under resale agreement 3,664 6,106 8,750 12,236 11,316 Securities (excluding trading accounts) Total income 16,432 18,755 22,968 29,333 33,359 U.S. Treasury and U.S. government agencies and corporations 9,335 10,630 13,400 18,037 21,022 States and political subdivisions 6,003 6,928 8,131 9,671 10,612 Other1 1,094 1,197 1,437 1,635 1,725 Trust department 2,138 2,375 2,738 3,179 3,604 Direct lease financing 862 1,073 1,371 1,746 1,943 Service charges on deposits 2,039 2,517 3,173 3,905 4,573 Other charges, fees, etc 2,930 3,635 4,352 5,302 6,203 Other operating income 2,495 2,831 4,059 5,116 5,715 Operating expenses, total 98,104 131,950 170,675 227,714 238,016 Interest, total 59,198 87,570 119,758 169,268 168,553 Time and savings deposits 50,054 71,693 98,130 138,977 141,097 Time CDs of $100,000 or more issued by domestic offices 11,693 18,105 24,753 39,034 37,359 Deposits in foreign offices 14,559 24,523 34,941 46,696 41,746 Other deposits 23,802 29,065 38,436 53,248 62,029 Federal funds purchased and securities sold under repurchase agreement 7,247 12,218 16,707 23,786 20,618 Other borrowed money2 1,452 3,162 4,380 5,894 6,188 Capital notes and debentures 445 497 541 611 650 Salaries, wages, and employee benefits 18,654 21,465 24,565 27,927 31,218 Occupancy expense3 5,559 6,255 7,325 8,566 9,960 Loan-loss provision 3,499 3,764 4,453 5,059 8,291 Other operating expenses 11,194 12,796 14,573 16,962 19,953 Income before taxes and securities gains or losses 15,067 17,843 19,435 20,149 19,172 Applicable income taxes 4,155 4,736 5,009 4,611 3,639 Net securities gains or losses (-) after taxes -225 -350 -492 -861 -661 Extraordinary charges (-) or credits after taxes 45 39 17 54 68 Net income 10,731 12,797 13,950 14,731 14,940 Cash dividends declared 3,714 4,449 5,091 5,831 6,529 MEMO Number of banks 14,380 14,352 14,421 14,400 14,121 Average fully consolidated assets (billions of dollars) 1,418 1,593 1,768 1,933 2,101 1. Includes interest income from other bonds, notes and deben- 3. Occupancy expense for bank premises net of any rental income tures, and dividends from stocks. plus furniture and equipment expenses. 2. Includes interest paid on U.S. Treasury tax and loan account balances, which were begun in November 1978. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

502 Federal Reserve Bulletin • July 1983 A.2. Portfolio composition, interest rates, and income and expenses, insured commercial banks, 1979-82' A. All banks Item 1979 1980 1981 1982 Balance-sheet items as percent of average consolidated assets Interest-earning assets 83.0 82.9 83.8 85.1 Loans 56.3 55.4 55.2 56.1 Commercial and industrial 20.6 20.8 21.5 22.8 Real estate 14.6 14.6 14.4 14.2 Personal 11.4 10.6 9.6 9.2 Securities 17.2 17.0 17.0 16.6 U.S. Treasury 5.5 5.3 5.3 5.1 U.S. government agencies 2.8 3.0 3.3 3.5 State and local governments 8.0 7.8 7.6 7.2 Other bonds and stock .8 .8 .8 .7 Gross federal funds sold and securities purchased under resale agreement 3.4 3.7 4.0 4.4 Interest-bearing deposits 6.2 6.8 7.7 8.1 Financial claims 89.7 89.1 88.8 88.8 Demand deposits 25.3 24.0 20.8 17.4 Interest-bearing claims 64.4 65.1 68.0 70.9 Time and savings deposits 55.0 55.5 57.8 60.3 Large time 12.7 12.8 14.2 15.4 In foreign offices 15.6 16.0 15.8 15.0 Other domestic deposits 26.7 26.7 27.8 29.9 MMCs and 91-day variable-ceiling deposits 3.9 8.2 10.5 10.8 NOW accounts .6 1.0 2.4 3.4 Subordinated notes and debentures .4 .4 .3 .3 Other borrowings 2.4 2.3 2.3 2.3 Gross federal funds purchased and securities sold under repurchase agreement 6.6 6.9 7.5 8.0 MEMO: Money market liabilities 37.6 38.4 40.2 41.0 Effective interest rates (percent) Rates earned Securities 7.05 7.88 9.27 9.96 State and local governments 5.58 6.03 6.72 7.19 Loans, gross 12.01 13.71 16.37 15.20 Net of loan-loss provision 11.55 13.19 15.83 14.39 Taxable equivalent Securities 9.31 10.23 11.73 12.49 Securities and gross loans 11.37 12.88 15.26 14.57 Rates paid Time and savings deposits 8.69 10.66 13.38 11.94 Large negotiable CDs 10.52 12.56 16.42 14.14 In foreign offices 11.38 14.03 17.34 14.87 Other deposits 6.65 8.10 10.02 9.75 Liabilities except "other deposits" 11.20 13.45 16.82 14.03 All interest-bearing liabilities 9.13 11.10 13.86 12.08 Income and expenses as percent of average consolidated assets Gross interest income 8.62 9.87 11.81 11.19 Gross interest expense 5.50 6.78 8.75 8.02 Net interest margin 3.12 3.09 3.07 3.17 Noninterest income .78 .89 .99 1.05 Loan-loss provision .24 .25 .26 .39 Other noninterest expense 2.54 2.63 2.76 2.91 Profits before tax 1.12 1.10 1.04 .91 Taxes .28 .28 .24 .17 Other -.04 -.03 -.04 -.03 Net income .80 .79 .76 .71 Dividends .28 .29 .30 .31 Retained income .52 .50 .46 .40 MEMO: Net interest margin, taxable equivalent 3.48 3.46 3.45 3.55 1. See notes to tables in the text. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks in 1982 503 A.2. Portfolio composition, interest rates, and income and expenses, insured commercial banks, 1979-821— Continued B. Banks with less than $100 million in assets Item 1979 1980 1981 1982 Balance-sheet items as percent of average consolidated assets Interest-earning assets 89.8 89.4 90.8 91.0 Loans 58.5 55.9 53.6 52.5 Commercial and industrial 12.1 11.9 12.3 12.9 Real estate 21.6 20.8 19.6 18.4 Personal 17.2 15.5 14.0 12.9 Securities 27.1 27.8 29.4 29.6 U.S. Treasury 9.1 9.2 9.9 9.8 U.S. government agencies 5.5 6.3 7.4 8.4 State and local governments 12.0 11.8 11.5 10.9 Other bonds and stock .5 .5 .5 .4 Gross federal funds sold and securities purchased under resale agreement 4.0 5.5 5.9 6.4 Interest-bearing deposits .1 .2 1.9 2.6 Financial claims 90.2 89.8 89.5 89.5 Demand deposits 28.9 26.7 22.5 19.0 Interest-bearing claims 61.3 63.1 66.9 70.3 Time and savings deposits 59.6 61.4 65.0 68.1 Large time 9.1 9.5 10.0 10.7 .0 Other domestic deposits 50.6 52.0 55.0 57.5 MMCs and 91-day variable-ceiling deposits 7.8 17.4 22.5 23.1 NOW accounts .5 .8 4.0 6.2 Subordinated notes and debentures .2 .2 .2 .1 Other borrowings .4 .4 .3 .3 Gross federal funds purchased and securities sold under repurchase agreement 1.0 1.0 1.4 1.7 MEMO: Money market liabilities 10.8 11.1 12.0 12.8 Effective interest rates (percent) Rates earned Securities 7.02 7.89 9.69 10.82 State and local governments 5.42 5.80 6.44 7.24 Loans, gross 10.88 12.43 14.90 15.35 Net of loan-loss provision 10.42 11.90 14.30 14.46 Taxable equivalent Securities 9.09 9.98 1111..7777 1122..9977 Securities and gross loans 10.31 11.60 13.79 14.48 Rates paid Time and savings deposits 7.11 8.81 11.21 10.97 Negotiable CDs 9.79 11.66 15.18 13.72 Other deposits 6.71 8.36 10.56 10.52 Liabilities except "other deposits" 10.00 11.66 15.11 13.54 All interest-bearing liabilities 7.22 8.89 11.31 11.02 Income and expenses as percent of average consolidated assets Gross interest income 8.44 9.67 11.49 11.71 Gross interest expense 4.27 5.36 7.13 7.33 Net interest margin 4.18 4.31 4.36 4.38 Noninterest income .60 .64 .69 .68 Loan-loss provision .24 .26 .28 .41 Other noninterest expense 3.02 3.12 3.23 3.30 Profits before tax 1.52 1.57 1.55 1.35 Taxes .33 .36 .35 .26 Other -.04 -.03 -.06 -.01 Net income 1.15 1.18 1.15 1.08 Dividends .29 .31 .35 .39 .86 .87 .80 .69 MEMO: Net interest margin, taxable equivalent 4.70 4.85 4.92 4.95 1. See notes to tables in the text. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

504 Federal Reserve Bulletin • July 1983 A.2. Portfolio composition, interest rates, and income and expenses, insured commercial banks, 1979-821 Continued C. Banks with $100 million to $1 billion in assets Item 1979 1980 1981 1982 Balance-sheet items as percent of average consolidated assets Interest-earning assets 87.2 87.2 88.0 89.0 Loans 56.8 55.4 54.1 53.4 Commercial and industrial 16.1 15.9 16.3 16.9 Real estate 20.6 20.5 20.0 19.4 Personal 16.4 15.4 14.0 13.2 Securities 25.0 25.2 25.7 25.3 U.S. Treasury . 8.0 7.9 8.1 8.0 U.S. government agencies 4.0 4.4 5.0 5.5 State and local governments 12.3 12.3 11.9 11.1 Other bonds and stock .7 .6 .7 .7 Gross federal funds sold and securities purchased under resale agreement 4.3 5.4 5.5 5.9 Interest-bearing deposits 1.0 1.3 2.8 4.4 Financial claims 91.0 90.7 90.6 90.6 Demand deposits 30.1 28.8 25.0 21.3 Interest-bearing claims 60.8 62.0 65.6 69.2 Time and savings deposits 54.2 55.2 58.2 61.6 Large time 14.1 14.4 15.0 15.4 In foreign offices .5 .2 .2 .2 Other domestic deposits 39.5 40.6 43.0 46.0 MMCs and 91-day variable-ceiling deposits 5.7 12.2 15.8 16.6 NOW accounts .9 1.5 3.6 5.2 Subordinated notes and debentures .5 .4 .4 .4 Other borrowings 1.2 .9 .9 .8 Gross federal funds purchased and securities sold under repurchase agreement 5.0 5.4 6.1 6.5 MEMO: Money market liabilities 21.3 21.3 22.6 23.2 Effective interest rates (percent) Rates earned Securities 6.82 7.64 9.14 9.96 State and local governments 5.40 5.82 6.49 7.03 Loans, gross 11.56 12.79 15.23 14.68 Net of loan-loss provision 11.09 12.26 14.66 13.83 Taxable equivalent Securities 9.12 10.00 11.44 12.34 Securities and gross loans 10.80 11.91 13.99 13.92 Rates paid Time and savings deposits 7.58 9.05 11.46 10.67 Negotiable CDs 10.82 12.13 16.05 13.96 In foreign offices 11.64 12.99 15.84 14.44 Other deposits 6.53 8.06 9.99 9.69 Liabilities except "other deposits" 11.02 12.48 16.07 13.53 All interest-bearing liabilities 7.98 9.50 11.97 10.89 Income and expenses as percent of average consolidated assets Gross interest income 8.44 9.47 11.25 11.05 Gross interest expense 4.66 5.62 7.39 7.13 Net interest margin 3.78 3.85 3.86 3.92 Noninterest income .75 .82 .87 .90 Loan-loss provision .23 .26 .27 .40 Other noninterest expense 3.07 3.20 3.34 3.42 Profits before tax 1.23 1.20 1.12 1.00 Taxes .23 .22 .17 .12 Other -.03 -.03 -.05 -.04 Net income .96 .96 .91 .85 Dividends .34 .36 .39 .40 Retained income .62 .60 .52 .45 MEMO: Net interest margin, taxable equivalent 4.31 4.40 4.40 4.47 1. See notes to tables in the text. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks in 1982 505 A.2. Portfolio composition, interest rates, and income and expenses, insured commercial banks, 1979-821— Continued D. Thirteen money center banks Item 1979 1980 1981 1982 Balance-sheet items as percent of average consolidated assets Interest-earning assets 77.8 78.0 79.6 81.4 Loans 54.8 55.4 57.5 61.0 Commercial and industrial 29.7 29.9 31.2 33.6 Real estate 6.2 6.9 7.5 8.1 Personal 4.2 4.3 4.2 4.3 Securities 7.4 7.2 6.8 6.3 U.S. Treasury 2.1 2.2 2.0 1.7 U.S. government agencies ..88 .9 ..88 .7 State and local governments 33..00 2.8 22,,77 2.7 Other bonds and stock 1.4 1.4 1.3 1.2 Gross federal funds sold and securities purchased under resale agreement 2.0 1.6 2.1 2.4 Interest-bearing deposits 13.7 13.7 13.2 11.7 Financial claims 88.4 87.8 87.2 87.2 Demand deposits 17.9 17.5 14.7 11.1 Interest-bearing claims 70.5 70.3 72.5 74.8 Time and savings deposits 57.9 57.8 59.5 61.4 Large time 11.2 11.1 13.5 15.7 In foreign offices 40.1 40.3 39.3 38.0 Other domestic deposits 6.6 6.4 6.6 7.7 MMCs and 91-day variable-ceiling deposits .8 1.8 2.3 2.5 NOW accounts .3 .5 .7 .9 Subordinated notes and debentures .3 .2 .2 .2 Other borrowings 4.2 4.2 4.4 4.6 Gross federal funds purchased and securities sold under repurchase agreement 8.1 8.2 8.5 8.6 MEMO: Money market liabilities 63.9 63.9 65.9 67.1 Effective interest rates (percent) Rates earned Securities 7.67 8.83 9.90 9.78 State and local governments 6.35 6.95 7.68 7.64 Loans, gross 12.76 14.95 17.63 15.65 Net of loan-loss provision 12.39 14.56 17.20 14.98 Taxable equivalent Securities 9.94 11.25 12.74 1122..5577 Securities and gross loans 12.42 14.52 17.10 15.35 Rates paid Time and savings deposits 10.37 12.98 16.02 13.67 Negotiable CDs 9.90 13.37 16.98 14.71 In foreign offices 11.27 13.94 17.17 14.88 Other deposits 7.40 8.29 9.40 8.79 Liabilities except "other deposits" 11.13 13.73 17.10 14.55 All interest-bearing liabilities 10.62 13.07 16.20 13.65 Income and expenses as percent of average consolidated assets Gross interest income 8.85 10.40 12.58 11.50 Gross interest expense 6.78 8.40 10.69 9.40 Net interest margin 2.07 2.00 1.89 2.11 Noninterest income .79 .96 1.11 1.16 Loan-loss provision .18 .19 .21 .35 Other noninterest expense 1.77 1.83 1.94 2.16 Profits before tax .91 .94 .86 .76 Taxes .33 .36 .31 .24 Other -.02 -.01 -.02 -.03 Net income .56 .56 .53 .50 Dividends .22 .22 .21 .22 Retained income .34 .34 .32 .27 MEMO: Net interest margin, taxable equivalent 2.23 2.15 2.07 2.27 1. See notes to tables in the text. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

506 Federal Reserve Bulletin • July 1983 A.2. Portfolio composition, interest rates, and income and expenses, insured commercial banks, 1979-821— Continued E. Large banks other than money center banks Item 1979 1980 1981 1982 Balance-sheet items as percent of average consolidated assets Interest-earning assets 81.1 81.1 81.3 83.0 Loans 56.1 55.0 54.4 55.1 Commercial and industrial 19.9 20.8 20.7 21.8 Real estate 14.4 14.7 14.6 14.6 Personal 11.5 10.9 9.7 9.3 Securities 15.2 15.0 14.4 13.8 U.S. Treasury 4.9 4.5 4.2 4.1 U.S. government agencies 2.3 2.3 2.2 2.1 State and local governments 7.5 7.7 7.5 7.1 Other bonds and stock .5 .5 .5 .5 Gross federal funds sold and securities purchased under resale agreement 3.8 3.6 3.9 4.3 Interest-bearing deposits 6.0 7.4 8.7 9.8 Financial claims 89.7 89.1 88.8 88.8 Demand deposits 27.3 26.1 23.1 19.7 Interest-bearing claims 62.4 63.0 65.7 68.8 Time and savings deposits 49.3 49.7 51.9 54.4 Large time 15.8 15.7 16.8 17.7 In foreign offices 10.8 11.4 11.7 11.0 Other domestic deposits 22.7 22.6 23.2 25.7 MMCs and 91-day variable-ceiling deposits 3.2 6.6 8.2 8.4 NOW accounts .8 1.2 2.5 3.2 Subordinated notes and debentures .6 .6 .5 .5 Other borrowings 2.6 2.4 2.3 2.2 Gross federal funds purchased and securities sold under repurchase agreement 10.0 10.4 11.0 11.7 MEMO: Money market liabilities 39.7 40.4 42.4 43.0 Effective interest rates (percent) Rates earned Securities 7.04 7.67 8.65 9.11 State and local governments 5.65 6.11 6.86 7.15 Loans, gross 12.38 13.85 16.62 14.98 Net of loan-loss provision 11.80 13.23 16.00 14.10 Taxable equivalent Securities 9.48 10.29 11.56 12.08 Securities and gross loans 11.75 13.08 15.53 14.38 Rates paid Time and savings deposits 8.88 10.64 13.49 11.75 Negotiable CDs 11.10 12.66 16.63 13.99 In foreign offices 11.78 14.37 17.94 14.83 Other deposits 6.40 7.72 9.55 9.33 Liabilities except "other deposits" 11.58 13.63 16.93 13.58 All interest-bearing liabilities 9.52 11.36 14.11 11.85 Income and expenses as percent of average consolidated assets Gross interest income 8.63 9.71 11.60 10.72 Gross interest expense 5.59 6.76 8.64 7.68 Net interest margin 3.04 2.95 2.96 3.04 Noninterest income .92 1.01 1.13 1.22 Loan-loss provision .29 .30 .29 .42 Other noninterest expense 2.67 2.76 2.92 3.07 Profits before tax 1.00 .90 .88 .77 Taxes .22 .19 .15 .10 Other -.06 -.05 -.05 -.04 Net income .72 .66 .68 .63 Dividends .29 .29 .31 .30 Retained income .42 .37 .37 .33 MEMO: Net interest margin, taxable equivalent 3.38 3.31 3.35 3.42 1. See notes to tables in the text. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks in 1982 507 A.3. Income attributable to international business of U.S. commercial banks with foreign offices, 1982 Millions of dollars Item Amount Pretax income attributable to foreign offices1 3,037 Plus: Pretax income attributable to international business conducted in domestic offices 953 Less: adjustment amount2 160 Pretax income attributable to international business 3,830 Less: All income taxes attributable to international business 1,624 Net income attributable to international business 2,206 MEMO Provision for possible loan losses attributable to international business 1,029 Noninterest income Attributable to foreign offices' 2,174 Attributable to international business 2,844 Noninterest expense Attributable to foreign offices1 3,634 Attributable to international business 4,794 Intracompany items attributable to international business Interest income 7,596 Interest expense 10,147 Interest income of domestic offices from foreign-domiciled customers 6,003 Fully consolidated Pretax income 9,348 Total applicable taxes 2,103 Net income3 6,825 Average total assets 1,249,052 1. Including Edge Act and Agreement subsidiaries. For example, any net income of foreign offices from business with 2. Reflects the amount necessary to reconcile the preceding two U.S.-domiciled customers is included here. amounts with pretax income attributable to international business. 3. After gains and losses from securities transactions and extraordinary items. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

508 Financial Developments of Bank Holding Companies in 1982 Anthony G. Cornyn of the Board's Division of verse of 394 companies and for three size classes Banking Supervision and Regulation prepared or peer groups: 59 holding companies with more this article. than $5 billion in assets; 134 with $1 billion to $5 billion in assets; and 201 with $100 million to $1 In 1982, the nation's largest bank holding compa- billion in assets. The data used in the review nies operated in a difficult economic and finan- were drawn from the Federal Reserve's Bank cial setting. Protracted weakness in domestic and Holding Company Financial Supplement (form international economic activity, combined with FR Y-9). The review discusses recent trends in high real rates of interest, had slowed the growth earnings and profitability, balance-sheet compoof bank loans and impaired the ability of some sition, asset quality, and capital. borrowers to service existing debt. Besides the adverse economic environment, banking institutions were forced to cope with intensified compe- EARNINGS AND PROFITABILITY tition in the financial services industry and with the increased costs associated with the phasing Earnings of bank holding companies rose moderout of interest ceilings on deposits and the intro- ately in 1982. For the universe of 394 companies, duction of new deposit products and services. net operating earnings rose 5.8 percent over the Viewed in such a context, the overall financial year-earlier level (table 1). Although significantly performance of the nation's bank holding compa- below the pace of the last several years, the nies was reasonably good. Their earnings contin- earnings growth of bank holding companies in ued to expand, if at a noticeably slower pace than 1982 compared favorably with corporate profits in recent years. Profitability, as measured by in general, which were down about 22 percent for returns on average assets, held up fairly well, the year. The growth in earnings reflected strong although returns on equity declined somewhat. gains in both net interest income and noninterest Capital strength improved considerably as a re- revenue that more than offset relatively sharp sult of slower asset growth and record external increases in loan-loss provisions and noninterest equity financing. The imprint of the recession, expenses. Of the three groups, the medium-sized however, was clearly left on credit quality, as companies registered the largest gains in earnings, revealed by the sharply higher levels of nonper- 10.4 percent; the small companies reported the forming loans and net loan charge-offs. smallest gains. This review of major financial developments of Net interest income (on a fully taxable equivabank holding companies during 1982 is based on lent basis) of the 394 companies amounted to data from a sample of 394 bank holding companies that had more than $100 million in consolidated assets as of year-end 1982.1 These compa- 1. Net operating income, 1978-821 nies controlled aggregate assets of $1,596.1 Percent change billion, or about 70 percent of the assets con- Size class 1978-79 1979-80 1980-81 1981-82 trolled by U.S. commercial banking institutions. Universe2 20.2 9.5 8.6 5.8 The article presents data for the entire uni- $100 million to $1 billion 17.9 .6 7.9 2.6 $1 billion to $5 billion 23.2 14.4 8.0 10.4 $5 billion or more 19.4 9.3 8.9 4.5 1. As of December 31, 1982, 4,557 registered bank holding 1. Before securities transactions and extraordinary items. companies were in existence. 2. Here and in the following tables the universe was 394 companies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

509 2. Selected income and expense items, 1981 and climb in noninterest revenue as a percentage of 1982' average assets, from 0.82 percent in 1979 to 1.12 percent in 1982. Dollar amount (millions) CChhaannggee Responding to a need to build loan-loss re- IItteemm ((ppeerrcceenntt)) serves in the face of higher loan losses and 1981 1982 considerable uncertainty over the outlook for Gross interest income2 174,876 179,765 2.8 credit quality, the 394 companies set aside $6.2 Gross interest expense 131,592 128,915 -2.0 Net interest income 43,284 50,850 17.5 billion in provisions for loan losses, an increase Noninterest income 14,759 17,085 15.8 Noninterest expense 36,830 43,378 17.8 of 61.4 percent from 1981. Provisions for loan Loan-loss provisions 3,834 6,187 61.4 losses, an expense item, are designed to maintain Income before taxes2 17,377 18,368 5.7 Taxes 2,551 2,259 -11.5 reserves sufficient to cover the risks inherent in a Taxable equivalent adjustment 5,671 6,420 13.2 bank's loan portfolio. The amount charged Net income before securi- against earnings, while partly at the bank's disties transactions 9,154 9,688 5.8 Securities gains (losses)3... (433) (435) cretion, is influenced by several other factors Net income 8,720 9,252 6.1 including net loan losses in the current period, 1. Details may not add to totals because of rounding. changes in the size and composition of the port- 2. Fully taxable equivalent. folio, and the expected impact of economic and 3. Includes extraordinary items. financial conditions on future loan losses. $50.9 billion, an increase of 17.5 percent from the Noninterest operating expenses of the industry $43.3 billion in 1981 (table 2). Net interest in- have outpaced asset growth in recent years and come, the key component in bank earnings, consequently have placed significant pressure on represents the difference between the interest earnings and profitability. The need to impleand fees earned on loans and investments and the ment effective cost control programs has become interest expense incurred on deposits and other increasingly apparent as the economy makes a interest-bearing liabilities. The excellent growth transition from high to low rates of inflation and of net interest income was in large part attribut- as the pace of expansion of bank earning assets able to the sharp drop in short-term interest rates slows. Although there is evidence that many in the second half of the year. Many of the larger banking institutions have moved aggressively to banking organizations were, on balance, "liabil- bring growth rates of operating expenses in line ity sensitive"—that is, the volume of their inter- with the slower rate of asset expansion, total est-sensitive liabilities exceeded the volume of noninterest operating expenses (excluding loantheir interest-sensitive assets. Consequently, the loss provisions) rose 17.8 percent in 1982 to $43.4 drop in interest rates caused their average cost of billion. funds to decline faster than the average yield on earning assets, producing wider margins. Growth 3. Selected income statement items, 1979-82' in the volume of earning assets, which on a Percent of average assets composite basis rose about 9.1 percent in 1982, also contributed to the growth of net interest Item 1979 1980 1981 1982 earnings. Gross interest income2 9.31 10.56 12.59 11.79 Gross interest expense 6.07 7.43 9.48 8.45 Noninterest operating revenue has become an Net interest income 3.23 3.12 3.11 3.33 increasingly important source of earnings and Noninterest income .82 .94 1.06 1.12 profitability in recent years as companies have Noninterest expense 2.42 2.51 2.65 2.84 Loan-loss provisions .25 .26 .27 .40 moved aggressively to develop new products and Income before taxes2 1.38 1.28 1.25 1.20 expand services to supplement net interest earn- Taxes .27 .24 .18 .14 ings. In 1982, noninterest earnings were up 15.8 Taxable equivalent adjustment .42 .37 .40 .42 percent from the previous year. They were Net income before securibuoyed by higher profits from bond trading, ties transactions .68 .66 .65 .63 Securities gains (losses)3... -.01 -.02 -.03 -.02 increased service charges and fee-based income, Net income .66 .64 .62 .60 gains from sales of assets, and other items. The progress made in generating noninterest revenue 1. Details may not add to totals because of rounding. is reflected in table 3, which shows a steady 2. Fully taxable equivalent. 3. Includes extraordinary items. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

510 Federal Reserve Bulletin • July 1983 Salaries and employee benefits (the largest 5. Return on average assets, 1979-821 component of total noninterest operating ex- Percent penses) increased 15.1 percent, occupancy and Size class 1979 1980 1981 1982 equipment expenses increased 30.9 percent, and "other expenses" rose 20.5 percent. The growth Universe .68 .66 .65 .63 $100 million to $1 billion .85 .78 .77 .72 of occupancy and equipment expense reflects the $1 billion to $5 billion .83 .87 .84 .82 $5 billion or more .62 .60 .60 .57 continued investment in technology for data processing, telecommunications, and funds 1. Net income before securities transactions and extraordinary items divided by average assets. transfer systems—all of which are designed to increase productivity and reduce overhead costs 6. Return on average equity, 1979-82' over the long term. Growth in "other expenses" Percent was attributable partly to higher advertising and Size class 1979 1980 1981 1982 marketing outlays to promote new products and services, including individual retirement ac- 1144..77 1144..55 1144..00 1133..22 $100 million to $1 billion 1133..66 1122..33 1122..22 1111..44 counts (IRAs) and money market deposit ac- $1 billion to $5 billion 1133..99 1144..44 1133..88 1133..66 $5 billion or more 1155..11 1144..77 1144..22 1133..22 counts (MMDAs). Increased net assessments for deposit insurance by the Federal Deposit Insur- 1. Net income before securities transactions and extraordinary ance Corporation also contributed to the growth items divided by average equity. in this category. Growth in noninterest operating expenses would have been even higher had it not ly in 1982 and accounted for roughly 9.3 percent been for the decline in the general rate of infla- of consolidated earnings in 1982, up from 4.9 tion. percent in 1981. Mortgage banking, consumer On a fully taxable equivalent basis, income finance, and leasing activities accounted for the before taxes totaled $18.4 billion, up 5.7 percent dominant share of the nonbank earnings. from $17.4 billion in the previous year. Net of The slow pace in the growth of earnings put taxes and the taxable equivalent adjustment, net downward pressure on key measures of the income before securities transactions was $9.7 profitability of bank holding companies. Return billion, an increase of 5.8 percent over 1981. on average assets, defined as income before After deducting losses on securities and extraor- securities transactions divided by average total dinary items of $435 million, the 394 companies assets, was 0.63 percent in 1982, down slightly reported net income of $9.3 billion, up 6.1 per- from 0.65 percent in 1981 (table 5). Return on cent from $8.7 billion in 1981. average equity declined to 13.2 percent, from Table 4 summarizes the contributions of bank 14.0 percent in 1981 (table 6). The more proand nonbank subsidiaries to the consolidated net nounced decline in the return on equity was income of bank holding companies. Aggregate related to the reduced balance-sheet leverage earnings of nonbank subsidiaries rose significant- employed by the group. 4. Contribution of bank and nonbank subsidiaries to BALANCE-SHEET CHANGES consolidated earnings, 1978-82 In recent years, the asset growth of bank holding Entity 1978 1979 1980 1981 1982 companies has slowed considerably from that Amount (millions of dollars) experienced in the late 1970s. Total assets of the BBBBaaaannnnkkkk ssssuuuubbbbssssiiiiddddiiiiaaaarrrriiiieeeessss 6,272 7,508 8,199 8,885 9,211 394 companies increased 9.9 percent in 1982 and NNNNoooonnnnbbbbaaaannnnkkkk ssssuuuubbbbssssiiiiddddiiiiaaaarrrriiiieeeessss 270 350 295 433 858 PPPPaaaarrrreeeennnntttt ccccoooommmmppppaaaannnnyyyy aaaannnndddd aaaadddd---- 9.7 percent in 1981. Over the 1976-80 period, jjjjuuuussssttttmmmmeeeennnnttttssss (294) (364) (408) (598) (817) CCCCoooonnnnssssoooolllliiiiddddaaaatttteeeedddd 6,248 7,494 8,086 8,720 9,252 assets expanded at a compounded annual rate of about 12.8 percent. The more restrained pace of Percent of consolidated net income asset expansion can be linked to the protracted BBBBaaaannnnkkkk ssssuuuubbbbssssiiiiddddiiiiaaaarrrriiiieeeessss 100.4 100.2 101.4 101.9 99.5 NNNNoooonnnnbbbbaaaannnnkkkk ssssuuuubbbbssssiiiiddddiiiiaaaarrrriiiieeeessss ,,,, 4.3 4.6 3.6 4.9 9.3 slowdown in economic activity, the decline in PPPPaaaarrrreeeennnntttt ccccoooommmmppppaaaannnnyyyy aaaannnndddd aaaadddd---jjjjuuuussssttttmmmmeeeennnnttttssss (4.7) (4.8) (5.0) (6.8) (8.8) inflation, and high real rates of interest—all of CCCCoooonnnnssssoooolllliiiiddddaaaatttteeeedddd 100.0 100.0 100.0 100.0 100.0 which acted to dampen loan demand. In addi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Developments of Bank Holding Companies in 1982 511 tion, deterioration in creditworthiness has 1. Composition of assets prompted bankers to exercise greater care in Percent of total reviewing and extending credit to current and 100 1 W All other assets potential customers, and these more cautious Cash lending practices have exerted considerable re- 80 straint on asset growth. Among the three peer 60 Investment securities. groups, the aggregate assets of the large companies grew at the slowest pace, 8.9 percent, com- 40 pared with 13.3 percent for the medium-sized Loans and leases banks, and 10.4 percent for the small ones. 20 There were no dramatic shifts in the allocation 0 of assets of bank holding companies among the 1978 1980 1982 major balance-sheet items (table 7). However, as Data are as of December 31, 1982. "Cash" excludes interestchart 1 shows, the shares of assets allocated to bearing balances. several of the largest asset categories—loans, investment securities, money market invest- opportunity cost of holding these balances through ments, and non-interest-bearing cash balances— the use of sophisticated cash management techchanged significantly over the 1978-82 period. niques. The adoption of same-day settlement pro- Holdings of non-interest-bearing cash balances cedures in 1981 by participants in CHIPS, the and investment securities were pared back rela- Clearing House Interbank Payments System, also tive to assets, while loans and lease-financing contributed significantly to the reduction. At yearreceivables and holdings of money market instru- end 1982, non-interest-bearing cash balances of the ments increased. 394 companies stood at 6.9 percent of aggregate The pronounced reduction in non-interest-bear- assets, down from 7.9 percent a year earlier and ing cash balances over the last several years from 12.5 percent at the end of 1978. reflects efforts by management to minimize the On the liability side, dependence on deposit 7. Selected balance-sheet items, year-end 1981 and 1982 Percent of total assets Size class UUnniivveerrssee IItteemm $5 billion $1 billion— $100 millionor more $5 billion Si billion 1981 1982 1981 1982 1981 1982 1981 1982 Cash (excluding interest-bearing deposits) 7.2 6.4 10.4 8.4 8.0 6.9 7.9 6.9 Money market investments1 15.0 14.5 12.6 14.7 10.1 11.9 14.3 14.4 Investment securities 8.8 8.6 19.1 19.2 24.4 24.5 11.6 11.6 Loans and leases, net 60.0 61.1 52.3 51.8 52.3 51.4 58.1 58.7 Premises and equipment 1.2 1.3 2.0 2.0 2.2 2.2 1.4 1.5 Other assets 7.7 8.0 3.6 3.9 2.8 3.0 6.6 6.9 Total assets 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Demand deposits 14.8 13.5 24.3 21.4 22.7 19.9 17.1 15.4 Time deposits in denominations of $100,000 or more 15.0 15.0 13.6 13.1 14.1 12.7 14.7 14.5 Other time deposits 7.8 8.5 20.5 21.5 26.8 27.9 11.3 12.2 Savings deposits 5.8 8.1 13.7 16.8 17.0 21.1 8.0 10.5 Foreign deposits 26.7 23.8 3.1 2.9 .0 .0 20.7 18.3 Total deposits 70.2 68.9 75.3 75.8 80.6 81.7 71.7 71.0 Short-term borrowings2 15.3 15.6 13.9 13.4 9.2 8.4 14.7 14.8 Long-term borrowings 2.4 2.9 1.7 1.7 1.9 1.7 2.3 2.6 Other liabilities 7.8 7.9 3.0 3.0 1.8 1.6 6.5 6.6 Stockholders' equity3 4.3 4.5 6.1 6.1 6.5 6.5 4.8 4.9 Total liabilities and stockholders' equity 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 1. Includes interest-bearing cash balances with other depository sold under agreements to repurchase, and other borrowings with an institutions, trading account securities, federal funds sold, and securi- original maturity of one year or less. ties purchased under agreements to resell. 3. Includes minority interest in the equity accounts of consolidated 2. Includes commercial paper, federal funds purchased, securities subsidiaries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

512 Federal Reserve Bulletin • July 1983 2. Composition of liabilities and stockholders' equity assets, aggregate net dependence on purchased funds of the 394 companies declined from 42.2 Percent of total percent of net assets at the end of 1981 to 39.5 100 AH other liabilities SH ™ W ) M M Mm. WM. W Stockholders'equity percent by year-end 1982 (chart 3). The reduced 80 dependence on purchased funds served to improve liquidity on the liability side of the balance 60 sheet. As chart 3 shows, the larger bank holding Time, savings, and companies are significantly more dependent on 40 other deposits purchased funds than are smaller companies. wp Because of their retail orientation, the smaller 20 I | I S^? 8? companies generally meet a larger share of their n0 —S _ _ L 1 J _ . S I l A a I i I i _L_i _L.. i_ —i?I 2DLe2m and deposits funding needs with consumer deposits. 1978 1980 1982 Data are as of December 31, 1982. "Time, savings, and other deposits" exclude demand deposits. CREDIT QUALITY sources of funds continued to decline in relative AND LOAN-LOSS EXPERIENCE terms in 1982, while the role of short- and longterm borrowings in meeting the funding needs of The depth and duration of the recession eroded bank holding companies continued to expand. the debt-servicing capacities of bank borrowers Chart 2 shows the trend in the major sources of and pushed concerns over the quality of bank funds over the 1978-82 period. credit to the forefront. The broad deterioration in Dependence on "purchased funds" declined credit quality was evident in the record level of in 1982, reversing the uptrend that had been in business failures, the pronounced weakness in force for some time. Purchased funds are defined the farm and real estate sectors of the economy, as large-denomination time deposits, foreign de- and the much-publicized payments problems of posits, federal funds purchased, securities sold several large developing countries. It produced under agreements to repurchase, commercial pa- sizable increases in the nonperforming assets and per, and other borrowings with an original matu- net loan charge-offs of banking institutions. rity of one year or less. Interest-bearing place- Nonperforming assets include nonaccrual and ments with other banks and federal funds sold reduced-rate loans and real estate acquired in are deducted from total purchased funds to ar- settlement of loan obligations. Nonaccrual loans rive at net purchased funds and deducted from are loans on which the accrual of interest has total assets to arrive at adjusted assets. Based on ceased because principal or interest payments the ratio of net purchased funds to adjusted are past due. Reduced-rate loans generally include only loans that have been restructured to 3. Ratio of net purchased funds to adjusted assets, provide for a below-market rate of interest beby size of bank holding company cause the financial position of the borrower has Percent deteriorated. A nonperforming loan is not necessarily uncollectible. $5 billion or more Although data on nonperforming assets are not 40 readily available for all companies included in the survey, data on the nation's 25 largest bank $1 billion to $5 billion ^ holding companies show that nonperforming assets rose about 77 percent in 1982. (The 25 $100 million to $1 billion companies control about 45 percent of the total 1978 1980 1982 assets of U.S. commercial banks.) The surge in nonperforming assets pushed the group's ratio of Annual data. Purchased funds include large-denomination time deposits, foreign deposits, federal funds purchased, securities sold nonperforming assets to total loans, a widely under agreements to repurchase, commercial paper, and other borused indicator of credit quality, to 3.1 percent at rowings with an original maturity of one year or less. Interest-bearing placements with other banks, federal funds sold, and securities year-end 1982, up from 1.9 percent as of yearpurchased under agreements to resell are deducted from total assets to end 1981. Despite the increase, the year-end arrive at adjusted assets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Developments of Bank Holding Companies in 1982 513 figure was still well below the year-end peak of strains on the cash flow of businesses and house- 4.4 percent in 1976. holds. A significant part of the increase resulted Comparisons of current levels of nonperform- from the dramatic jump in business failures, ing assets against those of the mid-seventies may which, according to Dun & Bradstreet, rose be misleading because of distortions introduced about 49 percent in 1982 to 25,346—the highest by the rescheduling of international loans. Last total in any year since 1932. The composite ratio year, there were numerous reschedulings of of net loan losses to average loans and leases loans to countries experiencing liquidity prob- outstanding rose to 0.53 percent in 1982, from lems. Rescheduled sovereign credits are usually 0.35 percent in 1981 (table 8). not classified as nonperforming assets unless the rescheduling has involved a reduction in loan principal or a rate of interest on the loan that is CAPITAL lower than normal. In 1982, public and private borrowers in Mexi- The banking industry made considerable progco encountered difficulty in meeting interest and ress in strengthening its capital base in 1982. principal payments on dollar-denominated bor- Relatively slow asset growth, particularly among rowings. As part of an economic stabilization some of the larger institutions, and an aboveprogram, the Mexican government adopted for- average growth of equity, stemming from a receign exchange controls in September, which ef- ord level of external capital financing, contributfectively prohibited private borrowers from ob- ed to the improvement. taining the foreign currency needed to make Table 9 shows the improvement registered for interest and principal payments. The government each of the peer groups as reflected in two subsequently implemented a special payments measures of capital adequacy: the ratio of equity arrangement whereby private borrowers make to total assets, and the ratio of equity to risk interest payments in local currency to designated assets (total assets less cash and U.S. govern- Mexican banks, which credit the proceeds to ment securities). special accounts denominated in U.S. dollars. Nineteen eighty-two was a record year for The Mexican government has agreed to repay external capital financing. Bank holding compasuch interest in U.S. dollars subject to the avail- nies raised in excess of $2.2 billion of common ability of foreign currency. Loans to private and preferred equity and another $1.3 billion in borrowers that have made interest payments in equity-related offerings. A large portion of the accordance with these special arrangements are total was raised through the use of three recent not generally classified as nonperforming assets. financing innovations: adjustable-rate preferred In addition to the sharp increase in nonper- stock, equity-for-debt exchanges, and mandaforming assets, the deterioration in credit quality tory convertible securities. was reflected in net loan losses, which rose Adjustable-rate preferred stock, which made substantially in 1982 both in absolute and in its debut in May 1982, is widely viewed as the relative terms. Net loan charge-offs of the 394 most important recent innovation in bank financcompanies totaled $4.8 billion, an increase of ing. On these issues the dividend rate is adjusted 70.5 percent from 1981. Losses occurred across a quarterly according to a formula that typically broad range of loan categories and reflected the sets the dividend rate a specified number of basis points above or below the higher of (1) the Treasury bill rate; (2) the U.S. Treasury ten-year constant-maturity rate; or (3) the U.S. Treasury 8. Ratio of net loan losses to average loans and twenty-year constant-maturity rate for the twoleases outstanding, 1980-82 week period preceding the end of each quarter. Percent Most of the adjustable-rate issues are also de- Size class 1980 1981 1982 signed to be perpetual so that they qualify as Universe .38 .35 .53 "primary capital" under the capital adequacy $100 million to $1 billion .48 .41 .57 guidelines of the Federal Reserve and the Comp- $1 billion to $5 billion .43 .43 .58 $5 billion or more .36 .33 .52 troller of the Currency. In terms of dollar vol- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

514 Federal Reserve Bulletin • July 1983 Selected capital ratios, year-end 1980-82 Percent Equity to assets' Equity to risk assets2 SSiizzee ccllaassss 1980 1981 1982 1980 1981 1982 Universe 4.67 4.76 4.92 6.35 6.21 6.33 $100 million to $1 billion 6.49 6.49 6.50 8.58 8.63 8.72 $1 billion to $5 billion 6.10 6.09 6.12 8.18 8.18 8.23 $5 billion or more 4.14 4.30 4.49 5.69 5.53 5.67 1. Total stockholders' equity plus minority interest in equity ac- counts of consolidated subsidiaries divided by total assets less cash counts of consolidated subsidiaries divided by total assets. and due from depository institutions, U.S. Treasury securities, and 2. Total stockholders' equity plus minority interest in equity ac- obligations of U.S. government agencies and corporations. ume, adjustable-rate preferred stock was by far also count as primary capital under the capital the largest source of external equity capital. adequacy guidelines of the Federal Reserve and Bank holding companies raised more than $1.8 the Comptroller of the Currency. Mandatory billion of equity through the issuance of such convertible securities come in two basic forms: stock in 1982. "equity notes" and "equity commitment Bank holding companies raised about $140 notes." Equity notes are debt instruments that million of equity capital through exchanges of are issued with stock-purchase contracts. The equity for debt, better known as "stock-for-debt contracts require the holder to purchase the swaps." These transactions involved the issu- common or perpetual preferred stock of the ance of new shares of common stock in exchange issuer within a specified period not to exceed 12 for outstanding long-term debt instruments of the years. In 1982, there were two issues of equity issuer that are purchased in the open market, notes for a combined total of $250 million. Equity usually at a substantial discount from book val- commitment notes require the issuer to sell comue. The transactions increase equity in two mon or perpetual preferred stock over a specified ways: (1) the new issue of equity replaces exist- period in a sufficient amount to replace the notes ing debt; and (2) the difference between the book at maturity. There were six public offerings of value of the extinguished debt and the price paid commitment notes in 1982 for a total of $1,025 for the debt in the market is treated as a tax-free million. gain, so that retained earnings increase directly. The extraordinarily large volume of external Bank holding companies first began using stock- primary capital financing was the result not only for-debt swaps in 1981. of the recent financing innovations and the more Apart from the common stock issued in these receptive market but also of other factors, instock-for-debt swaps, bank holding companies cluding (1) the slowdown in the rate of internal issued only $160 million in straight common capital generation experienced by the industry stock during the year through public and private over the last several years; (2) the desire of some offerings. Despite the runup in bank stock prices banking organizations to build capital in anticipain the second half of 1982, bank equities contin- tion of some relaxation of interstate banking ued to sell at relatively low multiples of price to restrictions (in essence positioning themselves to earnings and of price to book value, and there- capitalize on any investment opportunities that fore most banking institutions continued to view may arise); (3) the concern of management, common stock as an unattractive funding alter- investors, and rating agencies over the adequacy native. of capital stirred by perceptions of increased risk The third innovation in bank capital financing in the economic and financial environment; and was the introduction of mandatory convertible (4) the regulatory pressures placed on banking securities. Introduced in the first quarter of the institutions to address the long-term decline in year, these are equity-related instruments that capital ratios. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

515 New Federal Reserve Measures of Capacity and Capacity Utilization This article was prepared by Ronald F. Rost of 1. Utilization rates in total manufacturing the Board's Division of Research and Statistics. The Federal Reserve has reestimated industrial capacity growth from 1967 to the present and has found that capacity has grown more slowly since 1979 than earlier estimates indicated. The downward revisions of capacity have resulted in new operating rates that are somewhat higher than previous estimates; for total manufacturing it is now estimated that capacity utilization rose to 74.4 percent in June 1983, about P/t percentage points above the rate that would have been 1950 1955 1960 1965 1970 1975 1980 estimated before the revision. Although operating rates have been revised upward, they still indicate that much spare capacity remains in the production. Starting in July, estimates of capaciindustrial sector.1 ty and operating rates are being reported for a As chart 1 shows, in early 1979 the operating broader aggregate—total industry—comprising rate in manufacturing reached a cyclical high of manufacturing, mining, and utilities. With the 87.5 percent, similar to the rate at other peace- inclusion of the mining and utilities industries, time peaks. Subsequently, as industrial activity energy-related activities now are measured more declined, capacity utilization fell to a low of 75.5 extensively. In addition, series on domestic auto percent by mid-1980. It then reversed itself, but production capacity and utilization have been the ensuing recovery was incomplete; the operat- constructed to supplement the existing series for ing rate climbed to 80.5 percent by late 1980 and motor vehicles and parts. remained at about that level until September Both the revised operating rates and the new 1981, when it once again turned down and began series have been included in a redesigned monthto decline rapidly. By November 1982, it had ly capacity utilization release that was first introfallen to a postwar low of 68.8 percent, and duced to the public in mid-July. The new release despite the subsequent recovery to 74.4 percent also includes additional detail on capacity utilizaby mid-1983, it now has been about four years tion by industry.2 since U.S. industry has operated close to earlier The next section of this article reviews the peaks in capacity. revised data and the movement of the new series. This article also introduces an expanded data The following section considers certain methodset for capacity utilization that provides the same ological issues, in particular the expansion of the breadth of coverage as the index of industrial coverage to mining and utilities, and the final 1. The revised data are available, on request, from Publi- 2. The monthly release has been expanded and includes cations Services, Board of Governors of the Federal Reserve series for the industries shown in table 2. In addition, detail is System, Washington, D.C. 20551. provided for autos and electric utilities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

516 Federal Reserve Bulletin • July 1983 1. Capacity utilization, June 1983 and at selected peaks and troughs Capacity utilization rate VVaalluuee-- IInndduussttrryy aaddddeedd pprrooppoorrttiioonn May March March July November June 1973 1975 1979 1981 1982 1983 Total industry1 100.00 88.4 71.1 87.3 81.7 69.6 74.5 Manufacturing 87.95 87.9 69.0 87.5 80.9 68.8 74.4 Mining 6.36 89.1 88.5 84.6 91.1 70.8 68.4 Utilities 5.69 93.4 85.9 86.3 85.3 81.0 74.2 Industrial materials2 91.9 69.3 88.7 82.7 b/.U 74.4 1. Capacity utilization for total industry is obtained by aggregating many of the items included in the primary processing grouping of the output and capacity indexes for manufacturing, mining, and manufacturing, as well as some of the output of the advanced utilities, weighted by value added. processing industries, mines, and utilities—such as iron ore, crude oil, 2. Industrial materials are items produced and used as inputs by semiconductors, and electricity sold to industry. manufacturing plants, mines, and utilities. Industrial materials include section discusses the revised estimates of capaci- activity. The operating rate fell from more than ty for manufacturing and materials.3 90 percent in mid-1981 to less than 68 percent in April 1983. Although the declines in capacity utilization during the past two years have been REVISED DATA AND NEW SERIES more moderate for the utilities industry than for mining, utilities found themselves with more idle Revised rates of capacity utilization for manufac- capacity during this latest recession than in 1975. turing, and for the newly constructed series for At that time the operating rate for utilities demining, utilities, and total industry, are shown clined only to 82 percent, but earlier this year it from 1967 to the present in the accompanying dropped below 78 percent. charts. Not surprisingly, the cyclical behavior of Taking a longer view, the utilities operating the total industry series is similar to that of the rate seems to be characterized by a pronounced manufacturing series. The total industry series is downtrend that started in 1973 and resulted aggregated by means of value-added weights, largely from developments relating to the proand the mining and utilities weights are small duction and use of electricity. From 1968 to 1972, relative to that of manufacturing (see table 1). electric utilities operated within a few percentage Moreover, the mining and utilities industry series points of capacity. After 1972, however, capacity generally have not been characterized by large grew faster than output and utilization declined cyclical swings. as electric utilities expanded to meet an expected The charts also demonstrate that the operating strong growth in demand that failed to materialrates for total industry usually are a little higher ize. Rapid growth in capacity continued until than those for manufacturing because of the 1979, when utilities began tapering off" their exinfluence of the relatively high rates for mining pansion of capacity. The further decline in elecand utilities. From 1967 to 1982, the manufacturing rate averaged 81.8 percent, while the 2. Utilization rates in manufacturing and industry averages for mining and utilities were 86.5 per- Percent cent and 88.6 percent respectively. In contrast to previous downturns, the last Totaf industry recession saw a severe curtailment of mining 85 3. The general methodology used by the Federal Reserve to estimate capacity and capacity utilization is described in Frank deLeeuw, "A Revised Index of Manufacturing Capacity," FEDERAL RESERVE BULLETIN, vol. 52 (November 1966), i 75 pp. 1605-15. A detailed description of the method used for n Total manufacturing the 1976 revision of capacity and capacity utilization is provided in Federal Reserve Measures of Capacity and Capacity Utilization (Board of Governors of the Federal t i i i t l it i Reserve System, 1978). 1970 1975 1980 1983 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

New Federal Reserve Measures of Capacity and Capacity Utilization 517 3. Utilization rates in manufacturing, previously estimated for some industries and mining, and utilities may even have declined for others. According to the revisions, from year-end 1979 to year-end Percent 1982 manufacturing capacity grew at an annual Utilities 95 rate of 2.4 percent rather than 3.0 percent, and materials capacity grew at a 2.0 percent annual rate rather than at a 2.5 percent rate. With slower R \ 85 capacity growth, the revised operating rates for V manufacturing and materials are higher than the \jLJ\ earlier ones. Nonetheless, the operating rates for v" total manufacturing and total materials in late 1982 were still at postwar lows. For manufacturing, the low in November was estimated at 1 1 1 1 1 1 i i i i i i i t i i 67.4 percent, and is now set at 68.8 percent. The 1970 1975 1980 1983 low for materials, which occurred in December, trie utility operating rates since 1981 has been the has been revised from 65.2 percent to 66.6 perresult of a cyclical halt in demand growth. cent. The revised estimates of capacity growth and The capacity growth rates and operating rates capacity utilization for manufacturing and mate- for some individual industry groups have been rials are shown in table 2, along with the esti- changed more substantially. Revised estimates mates published before this revision. All the indicate that since late 1979, capacity actually component series have been reestimated from shrank somewhat in the petroleum refining and 1967 to the present, and the estimates of capacity the motor vehicles and parts industries, and even growth since 1979 generally have been lowered. more in the iron and steel industry. In several Indeed, this investigation of capacity was industries—fabricated metals, machinery, aeroprompted by a growing concern that during the space, and stone, clay, and glass products— prolonged economic stagnation since early 1979, capacity growth since 1979 remains positive but capacity may have grown more slowly than has been cut back considerably from previous 2. Revised and previous Federal Reserve estimates of capacity growth and capacity utilization Capacity growth rates' Capacity utilization (percent, annual rate of change) (percent) IIInnnddduuussstttrrryyy 1973-79 1979-82 March 1979 December 1982 JJuunnee 11998833PP Revised Previous Revised Previous Revised Previous Revised Previous Total manufacturing 3.1 3.2 2.4 3.0 87.5 87.2 68.9 67.5 74.4 Food 3.4 3.0 3.3 2.8 85.1 87.1 77.9 81.0 77.6 Textiles .8 1.1 .1 1.0 88.2 86.5 74.6 71.3 85.2 Paper 2.0 2.2 1.9 2.8 91.3 91.1 86.1 82.8 91.1 Chemicals 5.7 5.7 4.9 5.0 83.5 83.5 64.8 64.9 69.1 Petroleum refining 3.7 3.7 -.7 1.8 87.6 87.6 72.2 67.3 76.5 Rubber and plastics 7.6 7.6 1.9 1.9 90.5 90.5 74.5 74.5 86.0 Stone, clay, and glass 3.4 3.9 1.7 2.8 87.8 86.0 63.0 58.6 70.9 Iron and steel .3 .9 -1.7 -.2 89.9 87.8 38.8 35.5 59.9 Nonferrous metals .8 .8 .2 .6 93.4 92.8 63.0 60.9 76.6 Fabricated metals 2.0 3.2 1.4 2.7 89.5 85.3 60.8 54.8 65.9 Nonelectrical machinery 4.3 4.4 3.3 4.0 83.1 83.1 61.6 60.4 64.6 Electrical machinery 2.9 3.0 3.3 4.4 90.0 90.0 74.7 72.5 81.2 Motor vehicles and parts 3.5 4.0 -.3 1.0 92.7 92.1 56.0 52.3 71.1 Aerospace .8 1.2 4.0 4.7 89.6 87.4 69.4 67.0 68.0 Instruments 3.3 4.0 2.6 2.7 92.3 89.4 73.1 70.3 73.1 Industrial materials 3.3 3.4 2.0 2.5 88.7 88.6 66.6 65.2 74.2 Durable goods 3.4 3.4 1.5 2.3 87.6 87.6 59.6 58.2 69.9 Nondurable goods 4.1 4.2 3.1 3.4 90.7 90.6 71.8 71.1 79.1 Energy 1.9 2.3 1.2 1.7 88.5 87.9 78.8 76.4 79.1 1. Capacity growth rates are calculated using end-of-year data for p Preliminary. the years indicated. For example, capacity growth for 1979-82 is calculated using year-end 1982 and year-end 1979 capacity estimates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

518 Federal Reserve Bulletin • July 1983 estimates. Earlier estimates already indicated The series on capacity and operating rates for slow capacity growth over this period for textiles total utilities were constructed by aggregating the and nonferrous metals, and the new estimates indexes for electric utilities and gas utilities. are still lower—under 0.5 percent per year. Ac- Capacity estimates for the gas utility industry are cording to earlier estimates, the growth in rubber based on the McGraw-Hill operating rate survey. and plastics capacity had sharply decelerated in From 1967 to 1971, the capacity of gas utilities recent years, and the reexamination has substan- grew at about a 4.5 percent rate, and from 1971 to tiated this trend. Only for the food industry has 1982 it slowed dramatically, to about a 0.2 perestimated capacity growth since 1979 been re- cent rate. During this period, incentives to exvised up instead of down. pand gas storage and transmission capability were limited as supply shortages were encountered in interstate markets. The series for gas METHODOLOGY FOR NEW SERIES utilities, unlike the ones for electric utilities, are not shown separately in the expanded release on This section presents the methodology for con- capacity utilization.4 structing the new series; the revision of the previous series on manufacturing and materials is presented in the next section. Mining Capacity indexes covering about 85 percent of Utilities the mining industry have long been included as components of industrial materials. New capaci- About 60 percent of activity in the electric utility ty indexes were developed for the three compoindustry has been covered for many years in the nents of the industry not categorized as industrial industrial materials data set. The new series on materials: LP propane, oil and gas drilling, and capacity and operating rates for the total electric stone, sand, and gravel. The development relied utility industry have been constructed by the same mainly on inferring capacity from peak-to-peak methodology and are derived from the same basic trends in the corresponding industrial production source, the Edison Electric Institute. series. The component capacity indexes were The Edison Electric data are estimates of aggregated to obtain capacity for the industry, physical or engineering capacity, not economic and capacity was divided into industrial produccapacity. Accordingly, a sizable proportion of tion in the mining industry to obtain capacity the generating capacity reflected in those data is utilization.5 removed in the process of constructing Federal Reserve capacity indexes because it could not be 4. An alternative procedure is to base the series for total used to meet increased demand on a sustained utilities completely on McGraw-Hill data. The McGraw-Hill basis. These data include some generating capa- utilization survey reports separate series for electric and gas utilities, and the capacity expansion survey reports a single bility—about 15 percent—that is present as a series for total utilities. These series have been used to contingency against outages of entire plants or construct a capacity index for the utilities industry by the parts of plants, as well as for preventive mainte- same methodology used to construct Federal Reserve capacity indexes for manufacturing industries. When they were nance. Moreover, a substantial amount of generadjusted to take account of the special safety and peak-load ating capability exists simply to meet peak sum- requirements of the electric utility industry, the two series mer or winter demand. Although at other times based on Edison Electric Institute and McGraw-Hill data behaved in similar ways. this capability is idle, it cannot be treated as 5. Capacity in mining also was estimated by means of an excess because without it peak demand could not alternative calculation, based on the McGraw-Hill surveys. be met safely and reliably, and a general increase The resulting capacity index showed somewhat more growth in the demand for electricity would require the over the 1967-81 period than the index derived from the materials data set. The discrepancy lies in the 1967-74 period, building of new capacity. As a result, the electric when the alternative index grew faster than the materialspower series exhibit some of the lowest utiliza- based index. The alternative index probably overstated cation rates before capacity is adjusted, but some pacity growth at that time because mining capacity growth was held back by a low rate of investment and the imposition of the highest rates after it is adjusted. of strict pollution controls and safety and health regulations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

New Federal Reserve Measures of Capacity and Capacity Utilization 519 After growing at a 0.5 percent rate from 1967 have peaked in late 1979 (the beginning of the to 1974, capacity in the mining industry grew at a 1980 model year). Since 1977 there has been a rate of 3.6 percent from 1974 to 1981, largely a substantial expansion in the capacity to build response of supply to the jump in oil prices. small cars, and an even larger shrinkage in the Much of the growth derives from the phenome- capacity to build large cars.6 nal expansion of capacity for oil and gas well drilling, at an annual rate of more than 15 percent over the period. Crude oil capacity in Alaska and METHODOLOGY FOR REVISION California more than doubled during those years, OF MANUFACTURING AND MATERIALS and the capacity to produce bituminous coal and stone and earth materials also increased substan- Information used in the revision of capacity tially. included (1) the McGraw-Hill operating rate sur- After 1981, the growth in mining capacity vey; (2) the McGraw-Hill capacity expansion slowed sharply; the recession hit the entire in- survey; (3) the Bureau of Economic Analysis dustry especially hard, particularly oil and gas (BEA) operating rate survey; (4) capital stock drilling and metal mining. The mining industry data from the Department of Commerce and index reflects little more than 1 percent growth in other sources; (5) capacity data in physical units capacity from 1981 to 1983. from various business and trade organizations and government agencies; (6) Federal Reserve tabulations of plant closings reported by the Auto Production media; and (7) Federal Reserve data on industrial production. These data generally were available In the past the Federal Reserve has estimated for the period 1967-82.7 The Federal Reserve capacity and operating rates for motor vehicles does not conduct its own surveys; all data are and parts production as a whole, but has not compiled from outside sources. constructed separate series for auto assemblies. All 96 series on industrial materials were re- Series on capacity and operating rates for domes- evaluated, using essentially the same methodolotic auto assemblies are included in the expanded gy as in the past. More than 20 of the series are release on capacity utilization, and detailed se- based on data on capacity and output expressed ries for large and small autos also have been in physical units. About 30 more of the series are estimated, although these will not be shown sufficiently related to data in physical units so separately in the release. that they are of some value in preparing capacity These series are based on specific information estimates. For about 40 other materials series, about production in each domestic assembly for which physical unit sources are not available, plant, compiled by Ward's Communications and estimates are based largely on peak-to-peak published in Ward's Automotive Reports. To trends in production. Because output has been obtain plant capacities, maximum sustainable below peak levels for the past few years, estiline speeds were estimated, two shifts and about mates for these series have been particularly 10 percent overtime were assumed, and allowances were made for vacations and normal down 6. In physical units, domestic auto production capacity is about 9.5 million in 1983, down from a peak of 10.9 million in time for model changeover. Decisions as to the 1980 model year. From 1977 to 1983 large-car capacity whether closed or mothballed facilities should be has declined from 6.6 million to 4.2 million units, while smallcounted as part of capacity were made case by car capacity has grown from 3.9 million to 5.2 million units. The translation of these figures on physical capacity into case. The resulting estimates of capacity in physindexes of capacity is complicated by the adjustments for ical units were then adjusted to take account of quality changes included in the construction of the industrial the change in quality reflected in the correspond- production indexes for autos. Thus, although movements in the Federal Reserve operating rates and capacity estimates ing industrial production series. for auto production depict auto industry activity much as Estimates on auto capacity have been com- physical data do, there are some differences. pleted for the period 1977-83; the plant data are 7. The Bureau of the Census also conducts an annual survey of plant capacity, but the series were not incorporated not published for earlier years. The overall cainto this revision, largely because data were not available pacity of the U.S. auto industry is estimated to before 1974 nor for 1982. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

520 Federal Reserve Bulletin • July 1983 difficult to make. However, industry estimates equations, but nevertheless showed a pattern of and materials estimates are not prepared in isola- slower growth over successive intervals that was tion from one another. Those materials series consistent with the results from the surveys of covering activity in parts of a given manufac- operating rates. An upward bias in this survey turing industry are aggregated, and the results has been recognized for some time: respondents are compared with the estimates for the industry appear to provide their gross additions to capaas a whole. This procedure provides a valuable city rather than additions net of depreciation and check on consistency. obsolescence. Historically, the Federal Reserve's method- Data on real growth in the capital stock played ology for estimating manufacturing capacity has a less important role in the estimation procedure been to benchmark its capacity indexes over the than in the past. The latest revision of data on the long run to the capacity points that are obtained real capital stock in manufacturing by the Deby dividing the annual McGraw-Hill operating partment of Commerce has produced a troublerates into industrial production indexes. For this some puzzle: growth in the capital stock is revision, the benchmarking was accomplished by estimated to have increased substantially during means of equations in which the capacity points 1973-79 and again during 1979-81; yet the surimplied by the McGraw-Hill survey of operating veys of operating rates and of capacity, and data rates were regressed on trends and on variables from business and trade associations, imply a that permitted breaks in trend. The equations slowdown in capacity growth after 1973. yielded capacity estimates that were smoother Until this changed relationship between capacthan the raw capacity points; the raw points are ity and capital is better understood, data on the subject to short-term random disturbances that capital stock will be of limited value in inferring are larger than the probable variations in actual capacity.8 Since the late 1960s important changes capacity. Another set of equations—similarly in the economic environment have affected the specified—provided the capacity trends implied relationship between capacity and the capital by the BE A operating rates. In a third set of stock; these have included (1) an increase in equations, the capacity indexes resulting from foreign competition, (2) the imposition of stricter the McGraw-Hill capacity survey—which is in- pollution controls and occupational safety and dependent of the December survey of operating health requirements, and (3) a rise in the relative rates—were regressed on trend variables and price of energy. Any of these changes can accelvariables allowing breaks in trend. This survey erate the obsolescence of standing capacity, but asks respondents how much their capacity has such a development will be missed by an index changed since the previous year. that infers capacity from capital stock series that The estimates of manufacturing capacity re- are constructed using historical service lives. In sulting from these three sets of regressions were addition, investments in pollution abatement, not combined or averaged by means of a formal safety and health, and energy conversion add to quantitative procedure. In the process of con- the capital stock, but usually not to capacity. structing final estimates for each industry, the In general, the manufacturing industry equaquality of the estimates from individual equa- tions indicate capacity slowdowns starting in the tions was considered, and in some cases one or 1973-75 period, when the economy experienced more of the equations were rejected as being a deep recession and an energy shock. Actually, econometrically unsound. In most cases, howev- the previous Federal Reserve estimates of capacer, the equations based on the two surveys of ity reflected the bulk of this slowdown. Estimatoperating rates provided similar estimates of capacity. For some industries, historically reli- 8. This puzzle is mentioned but not resolved by Barry able data on capacity provided by industry asso- Bosworth in "Capital Formation and Economic Policy," ciations or government agencies were major de- Brookings Papers on Economic Activity, 1982:2, pp. 286-90. A study that attributes some of the divergence between terminants of the final estimates of capacity. capital and capacity to stricter pollution controls and safety The equations using the McGraw-Hill direct and health requirements is Ronald F. Rost, "Capacity- Neutral Investments and Capacity Measurement in Manufacsurvey of capacity yielded considerably higher turing," Journal of Industrial Economics, vol. 30 (June 1982), estimates of capacity growth than did the other pp. 391-403. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

New Federal Reserve Measures of Capacity and Capacity Utilization 521 ed growth in capacity for total manufacturing 1981 cutback. On the other hand, the surveybefore 1979 was about unchanged by this revi- based equations for iron and steel suggest much sion; both the previous and the new estimates larger declines in capacity than AISI reports. find a slowdown from an annual rate of 4.1 According to AISI, steel capacity declined about percent during 1967-73 to one of a little over 3 4 percent from 1977 to 1982, while the implied percent during 1973-79. Moreover, as table 2 capacity points from the McGraw-Hill survey shows, the capacity growth rates among compo- and the estimates of some industry analysts point nent industries, with the exception of fabricated to reductions ranging from 10 to 25 percent over metals, were revised only moderately over the that period. The Federal Reserve estimates show 1973-79 period. a moderate cutback in capacity of about 5VI The capacity points implied by the surveys of percent from 1977 to 1982 because the jury is still operating rates showed a further pronounced out on the real status of much of the currently slowing of capacity growth in some industries idle capacity in the steel industry. Some of this and a contraction of capacity in others around capacity might be "found" again later in the 1979-80, when the second energy shock oc- recovery. curred and a period of prolonged economic stag- Thus the amount of capacity shrinkage reflectnation began. ed in the revised series for iron and steel has Largely on the basis of this survey evidence, a been kept on the moderate side, and so have the slowing of capacity growth was estimated start- downward revisions of capacity growth for most ing at that time for textiles, rubber and plastics, other industries. When a plant is closed down fabricated metals, machinery, instruments, aero- indefinitely, it is frequently impossible to know space, and stone, clay, and glass products. The whether the closing is permanent because market capacity points derived from the surveys also conditions cannot be predicted with certainty. indicated a slowdown for the paper industry and For that reason, it appears preferable to wait a small, outright decline for motor vehicles and until economic recovery is well along before parts. Data from other sources—the American deciding on the likely disposition of facilities that Paper Institute and Ward's Communications— were "closed indefinitely" in 1982. The capacity supported these estimates. estimates for some industries for 1981 and 1982 In a few cases, direct data were used in could have been lowered further on the basis of preference to the results from basic equations the point estimates of capacity implied by the applied to survey samples. The Department of surveys, but doing so would have involved some Energy (DOE) estimates petroleum refining ca- risks. The 1982 survey results probably include pacity by monitoring the status of all domestic some cyclical gloom on the part of the responrefineries; similarly, the American Iron and Steel dents. If 1983 continues to be a year of recovery Institute (AISI) determines raw steel capacity by and 1984 follows suit, survey results for these monitoring all domestic producers. Because the years should facilitate the separation of secular decline in petroleum refining capacity did not developments from the previously experienced begin until 1981, after several years of rapid cyclical phenomenon of "losing" and later expansion in capacity, the estimating equations "finding" some capacity. • based on McGraw-Hill survey data missed the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

522 Industrial Production Released for publication July 15 in the first quarter. The index for June was 8.2 percent above the November 1982 trough of the Industrial production increased an estimated 1.1 recession; the increase to date is about typical percent in June—the same as in May. Output for a postwar recovery. At 145.9 percent of the gains were widespread among materials and 1967 average, the index was still about 5 percent products, but were especially sharp in durable below the prerecession high of July 1981. consumer goods, construction supplies, and re- In market groupings, output of durable conlated materials. Industrial production in the sec- sumer goods advanced almost 3 percent in June, ond quarter was more than 4 percent higher than reflecting a strong gain in autos and continued 1967 = 100 1967 = 100 TOTAL INDEX 170 Materials output 170 150 ~ 7\ 130 Products output FINAL PRODUCTS 190 MATERIALS Nondurable 170 Business equipment \ 150 \ Consumer goods \ y^Durable\ 130 110 90 190 CONSUMER GOODS INTERMEDIATE PRODUCTS 170 Nondurable Business supplies ^ • X 150 \ r n /v - / ^ Durable \ / \! 130 v Construction supplies 110 1969-70=100 Annual rate, millions of units 180 140 1977 1979 1981 1983 1977 1979 1981 1983 All series are seasonally adjusted and are plotted on a ratio scale. Auto sales and stocks include imports. Latest figures: June. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

523 1967 = 100 Percentage change from preceding month PPPeeerrrccceeennntttaaagggeee ccchhhaaannngggeee,,, GGrroouuppiinngg 1983 1983 JJJuuunnneee 111999888222 tttooo JJJuuunnneee MayP Junec Feb. Mar. Apr. May June 111999888333 Major market groupings Total industrial production 144.3 145.9 .5 1.4 1.9 1.1 1.1 5.2 Products, total 146.0 147.6 -.4 .9 2.0 1.0 1.1 3.9 Final products 144.5 146.0 -.9 .7 2.1 1.2 1.0 2.7 Consumer goods 149.5 151.3 -.1 .6 2.3 1.3 1.2 4.5 Durable 144.6 148.8 2.1 1.4 2.8 3.2 2.9 10.5 Nondurable 151.5 152.3 -.9 .3 2.1 .6 .5 2.4 Business equipment 148.6 149.8 -2.7 .7 2.3 1.1 .8 -4.4 Defense and space 118.7 120.0 -.3 .8 1.0 .4 1.1 11.5 Intermediate products 151.9 153.5 1.1 1.7 2.0 .7 1.1 8.2 Construction supplies 138.5 140.9 2.1 2.6 2.8 1.2 1.7 14.5 Materials 141.5 143.3 2.2 2.0 1.6 1.2 1.3 7.3 Major industry groupings Manufacturing 145.0 146.6 1.1 1.6 1.9 1.3 1.1 6.5 Durable 131.2 133.2 1.1 1.9 2.2 1.6 1.5 6.1 Nondurable 164.9 165.9 1.0 1.1 1.6 1.0 .6 6.8 Mining 112.6 113.1 -5.2 -2.6 -.8 .8 .4 -8.4 Utilities 169.7 170.3 -.7 2.3 2.1 .3 .4 .5 p Preliminary. e Estimated. NOTE. Indexes are seasonally adjusted. increases in the production of goods for the for consumer goods. Among nondurable materihome. Autos were assembled at an annual rate of als, textiles and chemicals rose markedly. Out- 6.8 million units, up from the 6.2 million rate in put of energy materials increased following small May. Production of nondurable consumer goods declines in May and April. increased 0.5 percent. Business equipment rose In industry groupings, output of manufacturing 0.8 percent in June, the fourth successive month- was up 1.1 percent in June, reflecting a gain of ly increase, while output of construction supplies 1.5 percent in durables and a 0.6 percent rise in increased 1.7 percent further. nondurable manufacturing. Production of mines Materials output rose 1.3 percent, reflecting and utilities both advanced 0.4 percent. sharp gains in durables such as metals and parts Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

524 Statements to Congress Statement by E. Gerald Corrigan, President, role of the Fed versus the role of correspondent Federal Reserve Bank of Minneapolis, before the banks in the operation of the payments mecha- Subcommittee on Domestic Monetary Policy of nism was, if anything, more contentious 70 years the Committee on Banking, Finance and Urban ago than it is today. That earlier debate was, in Affairs and the Subcommittee on Commerce, effect, decided on the side of granting to the Consumer, and Monetary Affairs of the Commit- Federal Reserve an operational role in the paytee on Government Operations, U.S. House of ments mechanism as the best means of ensuring Representatives, June 16, 1983. that the interest of the public at large would be well served. For 70 years, therefore, the Federal Reserve has functioned side by side with private I greatly appreciate the opportunity to appear correspondent banks and others in the provision before these subcommittees to review develop- of payments services. Far more often than not, ments with regard to the pricing of services by that side-by-side relationship functioned as a the Federal Reserve under the Monetary Control loose partnership in which competing interests Act (MCA) of 1980 and to comment on some have been melded together in a manner that larger issues regarding the role of the Federal promoted the public interest as well as the legiti- Reserve in the payments mechanism. The issues mate interests of private suppliers of payments before the subcommittees are technically com- services. plex—complex to the point that the maze of The pricing provisions of the Monetary Condetail can overshadow the public-interest consid- trol Act of 1980 have altered substantially the erations associated with a safe, efficient, and roles and relationships of both users and supplitrusted payments mechanism for the effective ers of payments services to depository instituworkings of our financial institutions, financial tions. For member banks, the MCA meant that markets, and the economy at large. Indeed, even implicit costs for Federal Reserve services—in those of us who are close to the day-to-day the form of reserves that bore no interest— operation of the payments mechanism often lose suddenly became explicit hard-dollar charges in sight of its size and complexity and, more impor- a setting in which deregulation, high interest tantly, the financial interdependencies that arise rates, and the effects of subpar economic perin a system in which hundreds of billions of formance were already pinching operating dollars change hands daily. The smooth function- spreads and profits. For nonmember banks, ing of the payments mechanism and the demon- thrifts, and credit unions, the MCA resulted in an strated public confidence in its operation are not alternative source of payments services and to be taken for granted even though we all exhibit therefore reshaped the competitive environment an almost blind trust that the system will, in fact, in which large correspondent banks had been work—and work well. accustomed to operating. For the Federal Re- The public-interest aspects of the operation of serve, it meant having to make the virtually the payments mechanism are not new; they can unprecedented shift from an environment of probe traced to the very origins of the Federal viding "free" services to a limited number of Reserve as the nation's central bank. The contro- depository institutions to an environment of proversy as to what role the Fed should play in the viding priced services to a potential population of operation of the payments mechanism is not new almost 40,000 depository institutions. either. Indeed, a review of the legislative history Considering the scope and magnitude of these of the Federal Reserve Act and its earliest changes, it is not surprising that there have been amendments suggests that the debate as to the a few rough spots along the way for all—the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

525 Federal Reserve included. Those rough spots ous cost containment and operations improvenotwithstanding, I would suggest that the most ment efforts beginning in the mid-1970s. For surprising and gratifying aspect of the transition example, the inflation-adjusted total of expendilies not with the problems that have been en- tures by the Federal Reserve declined more than countered, but rather with how much has been 1 percent per year between 1974 and 1979 despite achieved in the relatively short time span of a substantial growth in volume and substantial little more than two years. additions to the various duties and responsibil- In that connection, I would like, in the balance ities of the Reserve Banks over that period. of my statement, to summarize three major areas Similarly, pronounced reductions in staff and that seem to me to go to the heart of these very sharp rises in worker productivity—particuoversight hearings. They are the following: first, larly in the areas that would later become priced the achievements of the Federal Reserve in im- services—were a hallmark of Reserve Bank opplementing the provisions of the MCA; second, erations long before the passage of the Monetary the issues surrounding the role of the Fed as a Control Act. regulatory agency and a provider of payments With the advent of pricing, the volume of services to depository institutions; and finally, activity in each of the Fed service lines (except the larger question of what role the Fed should those involving electronic payments) declined. play in the operation of the payments mecha- While some declines were to be expected, it was nism. In the course of these remarks and in the impossible to foresee the timing, magnitude, and detailed material submitted to the subcommit- exact service mix of these drops in volume. In tees, I believe I have fully answered all of the any event, within a few months after the comquestions raised in your letter requesting my mencement of pricing of each service line, detestimony before you today. clines in volume ranged from 15 to 30 percent depending on the particular service in question. In the check area, for example, processed vol- IMPLEMENTATION OF THE ume at all Federal Reserve Banks in the first MONETARY CONTROL ACT quarter of 1983 was about 30 percent below what it would have been had the growth trend in In summary, the MCA instructed the Federal volume before pricing persisted until early 1983. Reserve: (1) to provide all depository institutions By another measure, the Fed's so-called share of access to Fed services; (2) to price a specified check processing has dropped about 10 percentgroup of services and any new services to recov- age points since the start of pricing. In and of er full costs plus the private sector adjustment themselves, these declines in volume are not the factor (PSAF); (3) to achieve a balance between slightest bit bothersome to the Federal Reserve, costs (including the PSAF) and revenues over in part because they suggest that the particular the long run, while giving due regard to competi- payments in question are being made more effitive forces and the need to provide an adequate ciently. level of services nationwide; (4) to price or Faced with these declines in volume, the Fedeliminate Federal Reserve float; and (5) to adjust eral Reserve moved immediately to adjust its resources in line with any declines in volume. resource base in line with resulting lower levels The MCA further specified that the Fed should of activities—recognizing, of course, that in the begin pricing its services by September 1981. relatively short run it is not possible to adjust Despite the size and complexity of the task and large, fixed-cost components. Indeed, in the relathe inevitable problems encountered along the tively short run, labor is the only variable cost way, I believe the Federal Reserve has made element of size that can be adjusted; and in this remarkable progress in complying with the spirit area, very sharp and prompt adjustments were and the letter of the MCA in the relatively short made. For example, in the post-pricing environtime since pricing began. ment, staff reductions carrying an aggregate hard-dollar cost savings of almost $23 million— The Federal Reserve Banks were well posi- $18 million in check processing alone—were tioned to cope with the pricing provisions of the effected by the Reserve Banks. In percentage MCA, in part because they had undertaken rigor- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

526 Federal Reserve Bulletin • July 1983 terms, the post-pricing reductions in staff were time that the Fed has been too slow in dealing almost exactly in line with the declines in vol- with float by means of its strategy of seeking to ume. It should also be emphasized that the squeeze out float through operational improve- Federal Reserve Banks went to great efforts to ments. In fact, meaningful steps to reduce float bring about these staff reductions in as painless a were already under way when the MCA was manner as possible by relying largely on turnover passed. The emphasis on operational improveand retirements. ments has been welcomed by the vast majority of Obviously, the uncertainties associated with depository institutions. However, the stress on the initial pricing efforts, the declines in volume, operational improvements primarily grew out of and the large fixed costs associated with these the fact that such an approach was more likely to activities made the task of achieving full cost produce results that would add to the efficiency recovery very difficult in the short run. How- of the payments mechanism. Simply to price all ever, by strenuous efforts to cut costs, improve check float by adding its value, across the board, services, and restructure prices and fees, steady to check costs would raise significant issues of progress has been made toward the goal of cost- equity and incentives. For example, if the Fed revenue matching. Indeed, as of the spring of were to add the value of interterritory transporta- 1983, all individual service lines (except defini- tion float to all check prices, the writers of small tive securities and noncash collection, which checks would heavily subsidize the writers of account for less than 5 percent of the total large checks. Indeed, such an approach would expenditures for priced services and will be preserve the irresistible incentives to create float repriced this summer) are, for all practical pur- because most of its cost would be borne by poses, achieving or exceeding the cost-revenue someone else. Such an approach is not in the matching objective. For the March-April 1983 public interest. period, all services combined produced a total There is one other point I would stress with revenue flow of $520 million at an annual rate regard to float. At the current federal funds rate compared with total annualized costs of $494 of about 8.5 percent, the remaining check float million, including the PSAF. Preliminary data for has a value of about $150 million, which repre- May suggest that these trends continued into that sents about 40 percent of current check costs. month. Having said this, I do not want to make However, it does not follow that Federal Retoo much of two or three months' data. As we serve check prices will have to increase, on have seen, things can change quickly, but as of average, 40 percent, because operational imthis reading, the overall cost-recovery situation provements and changed crediting procedures looks good. that will be introduced this summer will, in With regard to float, major progress has also effect, eliminate the bulk of the remaining float. been made. Float reductions achieved through Recognizing that individual depository instituimprovements in operations have been so dra- tions have options as to which methods of dealmatic that check float has dropped from $6.3 ing with float they wish to use, my best guess is billion in 1979 to a relatively modest $2.1 billion that at least $1 billion of the $1.8 billion will be in 1982. The trend is even lower in that for the eliminated so that no more than the value of $800 last quarter of 1982 and the first quarter of 1983 million will need to be priced. Other things being check float was $1.8 billion. With regard to that equal, this would imply a change in our cost base remaining float, firm plans are now in place to of about 18 percent. eliminate or price the balance of float over the period from July through October 1983. Those steps entail a three-pronged effort of operational THE FEDERAL RESERVE AS A SERVICE improvements, changed crediting procedures, PROVIDER AND A REGULATOR and the addition of the value of those elements of float that cannot be squeezed out of the system in It seems to me that the issue of the Federal a cost-effective fashion to the cost base, subject Reserve as a so-called competitor and regulator to recovery through pricing. boils down to two separate but related issues. The suggestion has been made from time to First, are there inherent competitive advantages Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 527 that accrue to the Federal Reserve that stand in • With regard to clearing balances, there are a the way of achieving fair and equitable competi- number of self-imposed constraints on the effection between the Federal Reserve and private tive utility of such balances that may, at times, suppliers of payments services? Second, is there be overlooked. In fact, the only case I can see in a potential conflict of interest between the Fed's which such balances with the Fed are more operational role in the payments mechanism and advantageous relative to a compensating balance its role as a regulator-supervisor of banks and, if at a correspondent bank is when such a balance so, are there adequate safeguards to insure that is held by a small institution that satisfies all of its any potential conflict of interest will not become required reserves with vault cash. However, an actual conflict? even then the fact that the Fed does not permit I think it is important to note at the outset that the use of earnings credits on excess clearing wherever one comes out on the question of balances would seem, on average, to more than whether the Federal Reserve has inherent com- compensate for this difference. petitive advantages, it is very clear that corre- • With regard to the PSAF, the conceptual spondent banks have important competitive ad- framework for determining it has generally been vantages relative to the Federal Reserve Banks. viewed as reasonable. The debate, as I see it, Correspondent banks can pick and choose with surrounds the values assigned to the variables whom they do business; they have more flexibili- that are part of the mathematical calculation used ty in varying the terms and conditions of a to determine the PSAF. To be sure, there are business relationship; they have vastly more elements of judgment involved in assigning valpricing flexibility; they can serve all of the bank- ues to these parameters. Indeed, it has been ing needs of their respondents; and perhaps most precisely for this reason that the Federal Reimportant of all, they do not have to balance, in serve, in establishing the PSAF, has in some the public interest and under close public scruti- important respects given the benefit of the doubt ny, the often conflicting points of view of thou- in the direction of assigning values to the varisands of depository institutions and dozens of ables that have had the effect of shading the trade associations at the state and national level. resulting PSAF higher rather than lower. As a As I have listened to comments about the related matter, the dynamics of the PSAF calcu- Fed's "inherent" advantages, it seems to me lation are such that it takes rather substantial that the major points that are made fall into changes in the already conservative estimates of several areas: the Fed does not pay (and is the variables in the calculation to produce signifiprecluded by law from paying) presentment fees; cant changes in the PSAF itself and/or in the Fed clearing balances are not subject to reserve absolute amount of dollars that the Fed must requirements and thus provide a competitive recover via its service fees. In short, there are edge over compensating balances at correspon- elements of judgment involved in determining dent banks; the PSAF is too low; and, more the PSAF, but it seems to me that the approach generally, the facts of universal reserve balances taken by the Fed and the resulting value assigned and of a nationwide network of offices place the to the PSAF are reasonable. Fed in a competitively superior position. The The universality of reserve balances and the materials submitted to the subcommittees deal nationwide presence of Fed offices were both an with most of these issues in some detail. How- explicit and essential part of the initial design of ever, I would like to make a few summary the Federal Reserve by the Congress for the comments in each of these areas. purpose of facilitating a safer and more efficient • With regard to presentment fees—at least payments mechanism. Whether the position of those levied before the Uniform Commercial large correspondent banks in this respect would, Code cutoff hour of 2 p.m.—I simply cannot find in fact, be materially different from what it is any rationale to support the point of view that today in a framework in which McFadden or says the Fed should pay such fees. If anything, I Douglas were amended or eliminated is difficult would go in the opposite direction and suggest to judge. That is something we will know for that presentment fees should be banned alto- certain only if and when we have interstate gether. banking on a national level. The limited evidence Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

528 Federal Reserve Bulletin • July 1983 available today from situations involving grand- There is one other point I wish to comment on fathered interstate bank holding companies or briefly in this regard, and that pertains to the multistate processing subsidiaries of large bank suggestion that the Fed's cost allocations to holding companies simply does not tell us very priced services are somehow inappropriate or much. On the other hand, I think it is fair to that the allocation problems faced by the Fed are assume that full-scale interstate banking could somehow more insurmountable than the allocahave important implications for the manner in tion problems faced by correspondent banks. which the payments system operates. Cost accounting systems are never perfect. But In the case of the costs associated with reserve we have been careful and methodical in allocatbalances, some reasonable quantitative judg- ing costs, and the process is under constant ments can be made as to the extent to which review by the Reserve Banks, their auditors, and these elements may influence the competitive by the examiners of the Board of Governors. At position of correspondent banks. Before turning present, the General Accounting Office (GAO) is to that question, however, a more general obser- taking a fresh look at this matter and the Fed has vation should be made. The suggestion is often engaged an outside accounting firm to do more of made that required reserves are sterile balances the same. Obviously, to the extent any of these that, in effect, are nothing more than a cost of entities have suggestions or comments as to our doing business. In a proximate sense, that is methods, we will carefully evaluate such comtrue, but to suggest that banks—especially large ments and, when appropriate, take necessary banks—receive no value in exchange for main- action. We will certainly keep the Congress taining such balances would be quite erroneous. informed of any developments in this regard. Within the day and even on a day-to-day basis, Turning now to the so-called regulator-comreserves are the working balances that are essen- petitor issue, I will readily concede that there tial to the smooth functioning of contemporary could be a potential conflict of interest between banking organizations. The fact that some large the Fed's overall role and its specific role as a banks turn over their total reserve position doz- provider of payments services in a competitive ens of times daily illustrates the utility of these environment. I will also concede that this dual balances. The foregone income associated with role is not a typical situation for a public body, reserve balances is a consideration, but, mone- but I would hasten to add that the public interest tary policy considerations aside, reserve bal- aspects of the payments mechanism are far greatances are not a sterile lump of idle cash wasting er than is the case with other activities that are away in the vaults of the Federal Reserve Banks. vested with a public interest. Moreover, insofar All of that notwithstanding, the question at as potential conflicts of the Fed are concerned, hand is whether the costs of reserves incurred by there are powerful forces that more than adecorrespondent banks are such as to place such quately ensure that potential conflicts will not banks at a competitive disadvantage relative to become actual conflicts. These powerful counthe Fed in the provision of payments services to tervailing forces include the generalized public other depository institutions. Viewed in this per- scrutiny of Fed actions, the oversight and generspective, it would seem that to the extent the al supervisory role of the Board of Governors, argument is valid, it is so only insofar as it the public comment process, the activities of the pertains to the reserves held by correspondent GAO, and the oversight of the Congress itself. banks on "due to" deposits. However, for the Moreover, I think the point should be stressed sake of illustration, even if we were to look at the that removal of the Fed from an operational role opportunity cost of all required reserves for the in the payments system would put the payments sample of large banks used to estimate the vari- system entirely in the hands of private suppliers ables in the PSAF calculation, the implications who legitimately look first to their customers' for the value of the PSAF are quite modest. For and their shareholders' interests in determining example, taking account of the cost of reserves the operational posture they will take in providwould raise the cost of short-term capital about 8 ing such services. That position is wholly appropercent, to 14.2 percent, and thereby raise the priate, but at times it may not yield results that PSAF from 16.0 to 16.3 percent. are in the public interest. The payments process Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 529 is, inevitably, one that entails collisions of inter- balances are, at one and the same time, the ests; payors want to slow it down; collectors vehicles through which most payments are want to speed it up; large economic agents have made, the bedrock upon which all other financial more clout and flexibility than the small ones. flows rest, and the mechanism through which These potential conflicts are subtle and often monetary policy is conducted. This trilogy of hidden, and thus not easy to detect or resolve. unique functions is one of the reasons that banks The potential conflict associated with Fed activi- (operating with the Federal Reserve) have, in ties is one that—to the extent it is real—is highly effect, had an exclusive franchise on the operavisible and therefore subject to remedy by the tion of the payments mechanism and it is one of Federal Reserve Board or the Congress. the reasons why I believe that franchise should The Federal Reserve is, and has been, sensi- be preserved. More to the point, that trilogy tive to these concerns and, working with the points, in my judgment, to the imperatives of Congress and others, will seek to ensure that all strong banks, strong financial markets, and a factors bearing on these considerations are care- strong and efficient clearing system. Stated diffully weighed so that fairness and equity contin- ferently, the payments system demands—indeed ue to be an integral and essential aspect of the requires—the highest degree of public confi- Fed's actions. dence. It simply would not be possible to make hundreds of billions of dollars in payments daily if public confidence in the certainty of payments THE ROLE OF THE FEDERAL RESERVE IN were shaken or undermined. THE PAYMENTS MECHANISM The question, therefore, is not whether the central bank has a responsibility to ensure the The questions I have discussed earlier concern- safety and efficiency of the payments mechaing achievements of the Fed in implementing the nism, but how that responsibility can be most pricing provisions of the MCA and the very effectively discharged. More particularly, should difficult questions of competitive parity between the Fed seek to achieve these public policy the Fed and private correspondent banks are objectives by regulation alone? Should it act as a important. However, they do not get to the very processor of last resort, taking on only those essence of the most fundamental issue that is functions that others are unwilling to provide or before these subcommittees: namely, what ongo- unable to provide at reasonable prices and condiing role, if any, should the Federal Reserve have tions? Or should it maintain a viable operational in the operation of the payments mechanism? presence in the payments mechanism along the As I see it, there is virtually unanimous agree- general lines that have prevailed for the past 70 ment that the Federal Reserve, as the nation's years? From my perspective, the dictates of central bank, has a natural and continuing inter- public policy point strongly in the direction of est in the efficient and safe functioning of the preserving the viable operational presence of the payments mechanism. In part, that natural inter- Fed in the payments mechanism—recognizing, est arises from the fact that disruptions in the of course, that the exact configuration of that payments mechanism—regardless of their ori- presence need not, and probably will not, remain gins—can threaten the safety and soundness of as it is today. In saying this, I should also stress financial institutions, financial markets more that an operational presence for the central bank generally, and, in the extreme, the smooth func- along the general lines of the Fed's current tioning of the economy at large. Indeed, however activities is not unique or even unusual among great those concerns may have been 70 years the industrialized countries of the world. ago, a strong case can be made that they take on The concept of the processor of last resort is even greater importance in the context of today's deceptively appealing but, in fact, is not workhighly interdependent domestic and international able. The Federal Reserve Banks could not banking and financial system. maintain the standby facilities, equipment, and The point should also be made that transaction personnel that would be needed to function on an balances at depository institutions and the re- on-again, off-again basis or to step into those quired reserves that are associated with such situations in which an adequate level of pay- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

530 Federal Reserve Bulletin • July 1983 ments services might not be available nationwide absent the "hands on" working knowledge at reasonable costs and terms. Moreover, even gained through operations, regulatory efforts the simplest aspects of the payments mechanism would quickly take on an ivory-tower character require a continuity of expertise and working that would be ineffective or would impair the knowledge that would be very difficult to main- efficiency of the payments mechanism, or both. tain in such an environment. Therefore, assign- There is no doubt in my mind that the Fed's ing to the Fed a role as processor of last resort is operational presence in the payments mechanism simply not viable. Stated differently, the proces- is a better alternative than what otherwise would sor of last resort must be a processor. be a cumbersome and very costly regulatory In my opinion, the United States has—taking apparatus. account of the size of our economy—the most While I am skeptical that regulation alone efficient payments system in the world. That fact could provide a cost-effective and efficient methcannot be attributed to technological superiority ; od of ensuring the public policy objectives assoit surely cannot be attributed to geography or the ciated with the operation of the payments mechapresence of a neat and clean banking and finan- nism, there are other aspects of the Fed's cial structure. While many factors may be in- operational presence that would be very difficult volved, I would suggest that the side-by-side to duplicate if the Federal Reserve were simply a presence of the Federal Reserve and the private regulator of the payments system. For example, banking system has been one of the primary the Fed can be thought of as something of a factors—if not the primary factor—that has per- neutral and trusted intermediary in the payments mitted—indeed encouraged—the payments sys- process. Its only interest is bringing together tem in the United States to achieve this status. collectors and payors in the fastest and safest One can speculate whether the result would have manner possible. It has no particular interest in been different had the historic role of the Fed whether a check is large or small, whether the been confined to that of a regulator. That specu- collecting or paying institution is large or small, lation—however interesting—cannot alter 70 or whether the payor is a good customer otheryears of experience and it cannot alter where we wise. Indeed, the fact that the Reserve Banks are today. Let me cite a few contemporary have no relationships with bank customers is a examples that may help to illustrate my point. feature that makes them an attractive source of • Is it reasonable to conclude that the book- payments services for many depository instituentry system for U.S. government securities tions. This role as a trusted and neutral intermewould have been developed as quickly as it diary is reinforced by the fact that the Fed is also was—if at all—if the Fed had been only a regula- the bankers' bank whose solvency is never in tor rather than a participant in the payments question. This feature permits the Fed to prudenmechanism? tially assume such risks as the intraday credit • Is it reasonable to assume that one or more exposure on Fedwire or the correspondent for private entities could, or would even want to, problem banks that others may be unable or displace the Fed's funds transfer network? unwilling to accept. In tandem, the neutral intermediary and the ever-solvent bankers' bank are • On the other side of the coin, as late as 1979 aspects of the Fed's role in the payments mechathe Federal Reserve attempted, in the form of a nism that contribute in no small way to that Board policy statement, to put a halt to remote essential public confidence in the payments sysdisbursement of checks. But we probably have tem. more remotely disbursed checks today than we did in 1979, and the Federal Reserve is now None of the above should be construed to seeking to achieve through its operations what it mean that the Fed's operational presence should could not achieve through the policy statement. remain exactly what it is today. Technological The point, of course, is that the payments developments, the advent of interstate banking, mechanism is so complex, legally and operation- the creative efforts of individual banks, and a ally, that it is far from clear that public policy host of other factors will, no doubt, change that objectives could be achieved simply by writing role over time. Indeed, on the basis of these regulations. Moreover, it is quite possible that hearings and subsequent hearings in the Senate, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 531 the Congress may wish to provide different or The Monetary Control Act, it seems to me, has more specific guidance to the Federal Reserve, produced the result envisioned by the Congress although I would suggest that any such move in that it has—the transitional problems notwithwould be premature at this time. standing—fostered further strides in the direc- The bottom line, as I see it, is that the financial tion of greater efficiencies in the payments mechsystem, the business community, and the public anism. Our continuing goal should be to see that at large have been the clear beneficiaries of the those achievements are not compromised and Fed's role—in partnership with the banking com- that we move forward in adapting our payments munity—in promoting the highly efficient and system to the needs of the future in a way that safe payments system that we enjoy in the Unit- ensures that the public confidence in the payed States. ments system is solidified even further. • Statement by Theodore E. Allison, Staff Director next 5 years, however, we project that our needs for Federal Reserve Bank Activities, Board of will grow at an average annual rate of about 10 Governors of the Federal Reserve System, be- percent, from just over 4 billion notes (in 1982) to fore the Committee on Banking, Housing, and about 6V2 billion (in 1987). Urban Affairs, U.S. Senate, June 22, 1983. The main factor in the sizable increase in our projected needs for new notes is our commitment Thank you for the opportunity to appear today to to improving the quality of the nation's currency. convey the Federal Reserve's endorsement of a Each year, the replacement of unfit notes acbill that would authorize the Bureau of Engrav- counts for the bulk of the Federal Reserve's new ing and Printing (BEP) to print the back of the currency requirements from the BEP, and our one-dollar note by the offset process. needs for notes would grow even if our objective The Federal Reserve's support for this propos- were only to maintain the current quality of our al is grounded on the very favorable impact it currency. To achieve the improvement in quality would have both on the capacity of the BEP to required by the public, caused in large measure produce currency and on its cost of printing one- by the growing use of machines that handle dollar notes, which account for about half of the currency, we will need a greater number of new total notes that the Federal Reserve needs print- notes to replace the higher number of unfit notes ed each year. We concur that there will be no that will be removed from circulation. appreciable risk to security from this change as By way of background, let me turn briefly to the incidence of counterfeit one-dollar notes is the manner in which unfit notes are replaced by extremely small, and the front of the note will new currency. The public's needs for currency continue to be printed by the intaglio process. are met by withdrawals from accounts at deposi- Moreover, we are assured that there will be no tory institutions, which, in turn, replenish their degradation of the quality of the printing—that supplies of vault cash by drawing down their is, of its clarity, consistency, and overall visual reserve balances at Reserve Banks. Likewise, appearance—as a result of the change to offset. depository institutions dispose of excess curren- The principal issue behind this proposal is the cy by depositing it at Reserve Banks for credit to need to increase the BEP's production capacity their reserve accounts. Thus there is a continuto serve the currency requirements of the public. ous flow of currency into and out of the Reserve To meet these requirements, the Federal Re- Banks, in the process of which notes that are not serve must have new notes in sufficient quantity fit for further circulation are removed and deto establish and maintain a high quality of notes stroyed, and new notes are issued. in circulation and to allow for the increase in During the 1970s, the volume of currency circulating currency related to economic growth. handled by the Federal Reserve grew so rapidly The Federal Reserve System during the last 10 that the practice of manual, note-by-note inspecyears has increased its orders for new notes at an tion for fitness was replaced by inspection of 100average annual rate of about 5 percent. For the note packages, the typical size unit deposited at Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

532 Federal Reserve Bulletin • July 1983 the Reserve Banks. While that change enabled not yet sufficient—improvement in quality of the the Reserve Banks to improve processing pro- currency. ductivity, it resulted in a decline in currency In conclusion, the Federal Reserve is commitquality as notes of marginal quality were recircu- ted to a major program of improving and mainlated. The decline in the overall quality of the taining the appearance and quality of our nacurrency occurred at a time when the need for tion's currency, particularly in view of the higher quality currency—for automated teller greater usage of machines that dispense and machines, fare machines, bill changers, and accept notes. With sufficient production capacity vending machines—was growing. The Federal at the BEP to provide for consistently high Reserve set about to restore, and then further quality currency, society will be able to take full improve, quality by developing and installing advantage of the speed, convenience, and effinew currency-processing equipment and proce- ciencies that are afforded by the use of such dures that would allow a return to note-by-note machines. The Federal Reserve believes that the inspection for fitness. The last of these new proposed legislation, and the resulting change to machines will be installed later this year. These offset printing for the backs of one-dollar notes, processors, together with a comprehensive pro- is an appropriate response to the need for more gram of quality measurement and monitoring, currency production capacity, and we urge your have already resulted in a noticeable—though passage of it. • Statement by E. Gerald Corrigan, President, the financial press of some event or some devel- Federal Reserve Bank of Minneapolis, before the opment that seems to challenge one or more Subcommittee on Telecommunications, Con- aspects of existing law or regulation or that sumer Protection, and Finance of the Committee seems to undermine some aspect of the once on Energy and Commerce, U.S. House of Repre- conventional wisdom about the structure of our sentatives, June 28, 1983. financial system. To put it somewhat more graphically, it is, indeed, very hard to tell the I appreciate the opportunity to appear before this players without—or even with—a scorecard. It is subcommittee and share with you some of my in this environment that the legislative moratoripersonal observations about emerging trends in um on the formation of nonbank banks (and the structure of our banking and financial system related matters) suggested by the Federal Reand their implications for public policy. serve seems to me to make very good sense. It seems to me that any discussion of this More generally, in this environment, with all of subject must start with an appreciation of the its competitive implications, it is not surprising historic and ongoing role that banks have played to find a growing sense of urgency regarding the in the day-to-day functioning of our financial and need to update some of our laws and regulations economic system. It also seems to me that as we as they pertain to the structure of banking and grapple with this very complex and very impor- the financial system. tant subject, we need a systematic and intellec- I share in that sense of urgency, in part betually consistent framework for analysis within cause I believe that banking functions in particuwhich we can find solutions that are reasonable lar and financial activities more generally are too and functional and that serve the public interest. important to allow events to run helter-skelter in As the subcommittee knows, I have attempted to the hope that they will shake out in a manner that provide one such framework for analysis in my is consistent with the public interest. While that essay, "Are banks special?" sense of urgency is understandable, I believe it is Spurred by a variety of factors that need not be important that we not lose sight of the fact that restated here, the pace of financial change and for the past five decades our banking system has innovation in the United States and around much worked remarkably well. Indeed, over the past of the industrialized world has proceeded at decade alone, the banking system has weathered nearly breakneck speed. Almost daily we read in a number of storms and, in the process, demon- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 533 strated a truly impressive degree of underlying ly associated with banks. It identifies three such strength and resiliency. The demonstrated ca- unique functions: (1) banks issue transaction pacity of the banking system to weather these accounts—that is, liabilities that in fact or perstorms also forcefully underscores the public's ception are payable on demand at par and are deeply entrenched confidence in the safety and readily transferable to third parties; (2) banks are soundness of the banking system. To some con- the backup or standby source of liquidity and siderable, but admittedly unmeasurable, degree, credit to all other institutions; and (3) the bankpublic confidence in the banking system has its ing system is the transmission belt through which roots in the legislative and regulatory frame- monetary policy is conducted. The essay sugwork—much of it dating back to the 1930s— gests that in order for banks—or any class of within which banks and other financial institu- institutions—to perform these functions, it is tions operate. The point I am working toward important that their financial condition—the should be obvious. Namely, as we proceed with quality of their assets, the depth and quality of the urgent task of reshaping the legislative and their capital, and the like—justify public confiregulatory framework within which banks and dence in their strength and vitality. In turn, these other financial institutions operate, we must not considerations are, fundamentally, why it has lose sight of those characteristics of the present been deemed in the public interest to have a system that have permitted it to work so very public safety net in the form of deposit insurwell for 50 years. ance, access to the discount window, and partic- In general, I believe most of us can agree on ular forms of supervision and regulation associatthe broad objectives that should be served by the ed with banks. effort to reshape our banking laws and regula- This framework, while perhaps a bit more tions in a manner that is more in keeping with the conservative than others, is not one that says realities of the contemporary marketplace. We that banks should be precluded from engaging in want a system that promotes—indeed encour- nonbanking activities nor that nonbank organizaages—fair and reasonable competition in the tions should be precluded from engaging in bankprovision of banking and financial services; we ing activities. On the contrary, the analysis is want a system that provides consumers and quite compatible with those results. At the same businesses—small or large—with access to the time, however, it does suggest that just because a most cost-effective means of conducting their particular activity can be classified as financial in financial affairs; we want a system that permits nature, it does not necessarily follow that such the monetary authorities to conduct monetary activity should be fair game for banking organipolicy with a reasonable degree of efficiency; zations. And it clearly suggests that the historic and, most of all, we want a safe and sound separation of banking and commerce more gensystem that will preserve, if not solidify, the erally continues to make eminent good sense. public's confidence in the banking system. These Within that framework, it seems to me that our objectives—and others that could be added to efforts to decide which activities are appropriate the list—are easy to articulate and, taken individ- for banks must start with a workable definition of ually, are easy to subscribe to. The problem a bank. The definition I have suggested is simply arises, however, because specific objectives may that a bank is any institution that issues liabilities often be in conflict with one another. To cite just that are payable on demand at par and are readily one such conflict, the objective of competition transferable to third parties; that is, banks issue may, at some point, be fundamentally in conflict transaction accounts. With that or some other with the objective of safety and soundness. definition as a point of departure, the activities Thus, the task at hand is one that inevitably appropriate for banking organizations can then entails the weighing and balancing of sometimes be determined by the following guidelines: conflicting objectives in a manner that in the final First, I believe we must keep in mind that analysis best serves the public interest. questions of bank powers and bank ownership The approach I have suggested in "Are banks are, in practice, one and the same. That is, if we special?" seeks to balance these considerations say that a banking organization can engage in a by looking first at the unique functions historical- particular set of nonbanking activities, it seems Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

534 Federal Reserve Bulletin • July 1983 to me to follow, as a matter of logic and practical- financial activities into banking organizations, ity, that another firm engaged exclusively in but for now I would strongly favor a tempered those same activities can own a bank, whereas a approach. firm engaged in a still broader range of activities Regardless of where the line for permissible should not be permitted to own a bank. banking activities is drawn, the spread of combi- Second, nonbank activities of banks should be nations of banking and nonbank financial institufinancial in nature or closely related to banking, tions is inevitable. In such a setting, I believe it is but they should also be activities that are not fair to speculate that the blending of financial unduly risky; they should not be activities that institutions and financial functions will work in can impair the impartiality of the credit decision- the direction of creating still greater interdepenmaking process. These criteria suggest to me that dencies in what is already a highly interdepenwhile there is a wide range of financial activities dent and interconnected financial system domesthat may be wholly appropriate for banking orga- tically and worldwide. However, over a nizations, there may also be activities that— reasonably long period of time, it is not clear to while unambiguously financial in nature—should me that broader powers for banks—in and of not be engaged in by banking organizations. themselves—will produce a degree of interde- Third, the bank holding company structure pendence materially different from what would provides a vehicle that can help ensure that the occur in any event. pursuit of nonbanking activities by bank organi- Thus, regardless of the causes, the reality of zations does not impair the soundness of banks extraordinary financial interdependence does imor the soundness and objectivity of their deci- ply that the task of isolating and containing sionmaking. Indeed, the separate capitalization problems of a financial nature becomes more of subsidiaries of bank holding companies and difficult, as we have seen during the past year or the restrictions against self-dealing contained in so. In this context, even if the blending of Section 23A of the Federal Reserve Act can be financial functions and financial institutions did thought of as a fire wall providing a measure of not directly and materially make the degree of protection against conflicts of interest and financial interdependence greater than it would against the risk of loss in nonbank activities that otherwise have been, it might produce a situation could impair the financial condition of the bank in which it is more difficult to quickly identify the itself. However, I, for one, am not persuaded dimensions and reach of problems when they that these protections can take on fail-safe char- arise and to identify the circuit breakers that acteristics, particularly since the strength of the need to be thrown to prevent a particular probfire wall is likely to be tested only in times of lem from taking on systemic characteristics. peril. None of this, in my judgment, need stand in the Let me state it differently. I think it may be way of the expansion of banking activities and asking too much to expect that banks can stand the associated blending of financial functions and by with the same detached objectivity when institutions, but it does underscore the case for faced with a failing or troubled affiliate as they the tempered approach I suggested earlier. might in the case of an unaffiliated firm. Similar- As a related matter, the deregulation of ly, I think it may be asking too much of even banks—whether in the form of the de facto relatively sophisticated investors, much less elimination of Regulation Q or the expansion of small depositors, to expect that they can readily banking activities—produces an acute dilemma. disassociate the problems of a subsidiary of a That is, deregulated banks, at least at the margin, bank holding company from the bank itself. are more risky. In principle, therefore, these Partly for these reasons, I believe that we should institutions should be more subject to the discitake a very hard look at whether banks should be plines of the marketplace, including the ultimate permitted to engage in activities that—while fi- discipline of failure. Yet, it is even more compelnancial in nature—may entail excessive risk and ling that concerns about systemic risk and public may threaten the objectivity of the credit deci- confidence in the banking system mandate that sionmaking process. In time and under some we maintain a public safety net under the bankcircumstances, it may make sense to fold all ing system. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 535 Stated differently, one of the most difficult and ketplace cannot be held back and, in a fundamenimportant questions raised by banking deregula- tal way, they should not be held back. These tion relates to the task of dovetailing the evident forces for change offer the potential for a more need for greater market discipline on the part of competitive, a more innovative, and a more vital banking organizations with the need to maintain banking and financial system. At the same time, public confidence in the banking system. We however, they dramatically underscore the need need a public safety net that is strong and effec- for discipline and prudence in financial affairs tive, but also one that permits market discipline generally and in banking activities in particular. to play its natural role. The task at hand is formidable, yet manageable. As I said earlier, I, like many others, look As we proceed, however, it seems to me that the upon the current situation with a sense of urgen- overriding consideration should be to preserve cy insofar as the need for legislative remedy is and maintain a strong banking system in which concerned. The tides of technology and the mar- public confidence can safely reside. Statement by John E. Ryan, Director, Division evaluate, among other things, the quality of loans of Banking Supervision and Regulation, Board and investments, liquidity, capital adequacy, and of Governors of the Federal Reserve System, general financial condition. Examiners also rebefore the Commerce, Consumer, and Monetary view the activities of management and directors Affairs Subcommittee of the Committee on Gov- of banking organizations; the adequacy of interernment Operations, U.S. House of Representa- nal systems and controls; any material transactives, June 28, 1983. tions with or loans to officers, directors, policymaking employees, or other insiders; and I appreciate the opportunity to appear before this compliance with a wide variety of laws and subcommittee on behalf of the Federal Reserve regulations affecting banks' relations with depos- System to discuss the role of the banking agen- itors, borrowers, investors, and their communicies in the government's efforts to identify and ties generally. This process is designed to deterprosecute violations of criminal laws by officers, mine that the institution is being operated directors, or other bank employees. soundly and in accord with laws and regulations. The primary responsibility of the Federal Re- Because abuses by insiders have historically serve's supervisory effort is to ensure that bank- been major contributing factors in bank problems ing institutions under its supervision are operat- and failures, examiners are instructed to review ed in a sound and prudent manner and are carefully any transactions involving the banking complying with applicable laws and regulations. institution, its officers, directors, or principal When violations of sound banking practices or shareholders. Insider abuses in banks became of laws and regulations are discovered, the Federal concern to the Congress and resulted in the Reserve takes action to stop such activities and enactment of the Financial Institutions Regulato protect the banking institution from their tory and Interest Rate Control Act of 1978 effects. Although the Federal Reserve has no (FIRA). This law, which places restrictions on authority for criminal prosecutions, it does refer loans to insiders, together with the increased possible criminal violations that are uncovered vigilance by examiners, has been useful in deterby examiners to appropriate authorities and pro- ring abuses. However, there is no foolproof way vides such assistance as may be requested by to ensure that banks will not be adversely affectthose authorities. ed because of improper transactions with insid- The Federal Reserve has the primary federal ers, particularly when such transactions involve supervisory responsibility for approximately criminal acts. 1,000 state member banks and for 4,500 bank As a practical matter, criminal violations that holding companies. These responsibilities are have had a materially adverse effect on an instifulfilled largely through the conduct of periodic tution's financial condition have surfaced in the on-site examinations during which examiners first instance in the form of inadequately docu- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

536 Federal Reserve Bulletin • July 1983 mented loans, incomplete credit information As a procedural matter, when examiners unconcerning borrowers, and other forms of incom- cover evidence or information suggesting the plete recordkeeping. Our experience indicates possible violation of a criminal statute in the that when deficiencies in recordkeeping exist— process of conducting an on-site examination, a and while they are not widespread, they are not determination is made as to whether the bank uncommon—such deficiencies almost always are itself has referred the violation to the appropriate the result of lax procedures rather than criminal enforcement authority. If the bank has not reactivities. In those few cases in which criminal ported the violation or if it appears advisable for activities are involved, extensive criminal inves- any other reason, the examiners will directly tigations, lasting in some cases for years, are refer the possible violation to the local office of often necessary to prove criminal violations. the U.S. Attorney. In such instances, examiners It should be emphasized, however, that the gather as much information as is reasonable in Federal Reserve does not wait until criminal light of the individual circumstances, and the prosecution is completed before taking action to District Reserve Bank forwards a report to the protect the institution. In those cases in which appropriate enforcement authorities. evidence suggests that improper activities could It is important to point out that the transfer of harm the institution or the public, the Federal information from customer records by federal Reserve takes prompt action to stop those activi- bank examiners to federal law enforcement agenties, to prevent the activities from recurring in cies is subject to certain restrictions contained in the future, and to remedy the adverse conditions the Right to Financial Privacy Act of 1978. This resulting from the improper activities. In most act establishes procedural safeguards and genersituations, bringing the matter to the attention of ally requires, with some exceptions, that a custhe institution's board of directors is sufficient as tomer be notified whenever information from his it normally is quick to replace individuals respon- or her financial records is transferred from one sible for the activities. In those few cases when federal agency to another. This requirement apthe directors do not act—often when the individ- plies to information from the individual financial ual involved in misconduct is also a control- records of bank officials and other insiders, as owner—there are a number of enforcement well as to financial information from the records mechanisms available to the regulatory agencies. of other bank customers. These include cease and desist authority, the The procedures for referring evidence of possiassessment of civil money penalties, and the ble criminal violations uncovered during an exsuspension and removal of an officer or director. amination to the proper law enforcement agen- In 1981 and 1982, the Federal Reserve issued cies were developed jointly by the staffs of the 27 cease and desist orders, entered into 35 writ- Federal Reserve and the Justice Department, ten agreements, and assessed 22 civil money and we believe that they have worked reasonably penalities. Twenty-three of these actions in- well. volved persons in their individual capacities as Since the beginning of 1981, the Federal Reofficers, directors, or other persons participating serve has referred, or determined that banks in the affairs of an institution. In 1981, the themselves have referred, information on 201 Federal Reserve also suspended and removed possible criminal violations involving amounts of more than $10,000 and an officer, director, or one officer who was indicted and convicted of a employee of a bank, and information on an felony. In addition, over time there have been additional 1,847 possible violations involving other occasions on which the actual or planned amounts of less than $10,000. Most of these initiation of removal proceedings has resulted in violations have dealt with such misconduct as resignations by individuals, thereby obviating embezzlement and defalcations, theft, teller the need to take further removal action. So far shortages, misapplication of bank funds, fraud, this year, we have completed 19 supervisory and alteration of bank records. The Federal actions and currently have 17 actions pending Reserve believes that its current resources and completion. Of this latter figure, 7 involve pendthe procedures worked out with the primary ing actions against persons in their individual enforcement agencies will enable it to continue capacities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 537 to ensure that referrals are made in a timely enforcement actions against named individuals manner. or institutions requires the careful balancing of a Because the judicial and procedural consider- number of important procedural, supervisory, ations pertaining to criminal investigations and and enforcement considerations. It can be arprosecutions are different in many respects from gued that public disclosure may serve as a deterconsiderations of safety and soundness, they rent to those insiders who might be inclined to require specialized expertise. Nonetheless, the abuse their positions or otherwise engage in banking agencies have participated in special improper or self-serving activities. This could investigations conducted under the direction of result over time in an increased level of complithe enforcement agencies and have assisted the ance with laws and adherence to sound banking enforcement agencies in preparing cases by pro- practices. On the other hand, public disclosure of viding expertise in banking matters. Decisions on supervisory actions in some instances may be whether to indict or seek additional information counterproductive from a supervisory standare made by the primary law enforcement au- point. For example, the immediate disclosure of thorities. Generally, the Federal Reserve does a supervisory action could have a disruptive not get involved in the process of indictment or effect on a bank's funding or overall financial prosecution, although System examiners have condition, thereby potentially aggravating a delitestified in criminal cases and have provided cate situation that the supervisory action was other assistance in the preparation of criminal intended to correct. In addition, our experience cases. suggests that if it were understood that supervi- The subcommittee has requested the views of sory agencies would, as a matter of routine, fully the agencies on the public disclosure of supervi- disclose all information about any enforcement sory actions against named officers and directors action, financial insitutions or individuals subject when violations are of a serious, nontechnical to enforcement proceedings would be more likenature. In considering this question and the ly to refuse to consent voluntarily to the provirelated broader issue of the disclosure of actions sions of a corrective action. This would tend to against institutions, it is important to keep in frustrate expeditious correction of the problems. mind that, in practice, a certain amount of disclo- We believe that these considerations need to sure already takes place. For example, compa- be fully evaluated and the risks and benefits nies that are required to file public financial carefully weighed before making a final determistatements must also disclose enforcement ac- nation on the merits of routine public disclosure tions that are deemed to be material. In addition, of enforcement actions against named individthe banking agencies make public on an annual uals or institutions. On balance, we tend to basis case-by-case summaries of supervisory en- believe that the considerations outlined above forcement actions. While these summaries do argue for a continuation of some supervisory not identify specific companies or individuals, discretion on the question of public disclosure of they do provide detail on the enforcement provi- supervisory enforcement orders, and against sions of individual supervisory actions and the across-the-board disclosures of all such actions. types of specific problems the actions are intend- The Federal Reserve, together with the other ed to correct. We believe the summaries serve to supervisory agencies, has a vital interest in eninform the public and the financial community suring that possible criminal misconduct in the that violations of law or sound banking practice nation's banks be uncovered, and it continues to will elicit a prompt and comprehensive supervi- support vigorous and timely prosecution and sory response. Finally, the Federal Reserve has, punishment of any bank officer, director, or in certain egregious cases, disclosed the names other insider found to be engaged in criminal of individuals or companies subject to civil mon- activities. We stand ready to assist in this proey penalties for engaging in improper conduct or cess in any manner that is consistent with our violations of substantive banking regulations. statutory authority and our primary responsibil- The question of whether there should be rou- ity for the safety and soundness of the nation's tine disclosure by supervisory agencies of all banking system. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

538 Announcements PROPOSED LEGISLATION.- need to maintain the basic separation of banking from NEW NONBANKING POWERS FOR BANK commercial and industrial activities. Fulfillment of these objectives, and the overriding need to maintain AND THRIFT HOLDING COMPANIES confidence in our banking system requires, we believe, a certain degree of supervision and regulatory The Federal Reserve Board announced on July oversight. 8, 1983, its support of legislation transmitted to The provisions of the Treasury bill recognize these the Congress by the Treasury Department that objectives and have the support of the Board. In particular, the terms and conditions for the authorizawould authorize new nonbanking powers for tion of expanded powers, and the provisions for folbank and thrift holding companies. low-on supervision and examination, are sufficient to A letter was sent by the Board to the Chairmen meet our concerns while not unduly limiting the ability of the Senate and House Banking Committees. A of bank holding companies to compete. copy of the letter to the Chairman of the Senate As to the powers themselves, while the Board will require additional time to consider fully whether or not Committee on Banking, Housing, and Urban any additional criteria for the insurance or real estate Affairs follows. authorities might be appropriate, the Board is broadly in agreement with the additional powers contained in July 5, 1983 the Treasury bill. Similarly, with respect to S&L holding company The Honorable Jake Garn powers, the Treasury proposal is an appropriate and Chairman reasonable starting point. At this time we have no Committee on Banking, specific suggestions to improve them. However, we Housing, and Urban Affairs will be giving this matter further consideration, partic- United States Senate ularly with respect to assuring competitive balance in Washington, D.C. 20510 powers and benefits among institutions offering similar services. Dear Chairman Garn: In addition, there are other matters not included in the Treasury proposal on which the Board may wish to The Board has reviewed the draft bill prepared by suggest legislative action. These subjects include the the Treasury Department to authorize new nonbank- need for rules to maintain an appropriate degree of ing powers for bank and thrift holding companies. The coordination between authorities granted under State bill would provide for the use of a holding company as and Federal law, the possibility of changes in the laws the vehicle for the conduct of nonbanking activities by establishing geographic limitations on banking activibanking organizations. It would extend the existing ties, as well as the need to consider, as part of any nonbanking powers of these companies to include comprehensive definition of the term bank, authorizservices of a financial nature as well as those closely ing reserve requirements for companies that offer related to banking. In addition, the bill would autho- transaction accounts. The Board intends to expedite rize certain securities services, insurance and real its consideration of these issues and make recommenestate brokerage, real estate development (with limita- dations to you in the near future. tions on the amount of capital investment) and insur- In the past, I have often stressed the urgent requireance underwriting. ment for positive banking legislation to address the I have, in numerous public statements, expressed fundamental need to adapt the banking and financial the Board's support for appropriate expansion of system to a rapidly changing world. To allow the time nonbanking activities of banks to allow more effective for Congress to act on permanent legislation, I have responses to market incentives, provided that these previously submitted draft legislation to avoid a preactivities and the manner in which they were super- emption of Congressional discretion in this area. vised are consistent with the public policy objectives In our view, the Administration's proposal provides flowing from the unique role that banks play in our a complementary comprehensive approach looking economy. Accordingly, we have been concerned that, toward effective competition in the provision of finanas part of the process of powers expansion, account cial services while maintaining the nation's basic intershould be taken of prudential considerations and of the est in the soundness and stability of the banking Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 539 system. I hope the Congress could act quickly on this organizations increased from 4.63 percent to 5.35 comprehensive legislation with a view to completing percent through the issue of $450 million of Congressional action by the end of this year. common stock, $2.9 billion of preferred stock, and $1.3 billion of mandatory convertible securi- Sincerely, Paul A. Volcker ties. This substantial improvement means that Chairman most of these institutions are already in compli- Board of Governors ance or will not have far to go to come into of the Federal Reserve System compliance with the amended guidelines. In light of the progress made toward greater uniformity MINIMUM CAPITAL GUIDELINES: in the treatment of capital among banks and AMENDMENTS within the context of fostering continued improvement in bank capital ratios, the agencies The Comptroller of the Currency and the Federal are particularly interested in receiving comment Reserve Board on June 13, 1983, announced on the question of whether a further step would amendments to their minimum capital guidelines. now be advisable directed toward a closer align- The guidelines, which were originally made pub- ment of capital ratios for all banking organizalic in December 1981, are used by the two tions regardless of size. agencies in examining and supervising national The guidelines for the multinationals are the banks, state chartered banks that are members of same as those already used for regional banking the Federal Reserve System, and bank holding organizations—companies with total assets excompanies. The amendments are effective imme- ceeding $1 billion that are not designated as diately; however, the two agencies will continue multinationals. The agencies recognized that the to accept comments on the changes until August primary capital ratios of several multinationals 12, 1983. currently have been below desired levels and The revisions would (1) establish a 5 percent emphasized that these organizations would be minimum ratio of primary capital to total assets given a reasonable period of time to bring their for the 17 banking organizations designated by ratios up to acceptable levels. The agencies the agencies as multinationals; and (2) expand noted that they will continue to administer the the definition of secondary capital in considering capital guidelines with appropriate flexibility and the capital adequacy of consolidated bank hold- will take into consideration the unique charactering companies. istics of individual banks. Definitions of primary and secondary capital In the second major change, the agencies said are included in the revised guidelines. that the unsecured long-term debt of the parent The agencies noted that they had previously company and its nonbank affiliates could now be amended their policies to ensure that the capital counted as secondary capital for purposes of positions of the 17 multinationals would be evaluating the capital adequacy of the consolistrengthened.1 Over the past 18 months, the dated holding company. However, unlike bankaverage primary capital ratio for these banking issued debt, the long-term debt of the parent company and its nonbank subsidiaries would not be required to be subordinated. Also, such long- 1. The 17 multinational organizations are the following: term debt would not be limited to 50 percent of BankAmerica Corporation (Bank of America, NT&SA); holding company primary capital, whereas bank Bank of Boston Corporation (The First National Bank of Boston); Bankers Trust New York Corporation (Bankers subordinated debt is limited to 50 percent of bank Trust Company); Chase Manhattan Corporation (Chase Man- primary capital. The agencies will retain the 50 hattan Bank, N.A.); Chemical New York Corporation percent limit for bank subordinated debt because (Chemical Bank); Citicorp (Citibank, N.A.); Continental Illinois Corporation (Continental Illinois National Bank and Trust Company of Chicago); Crocker National Corporation land Banks, Inc. (Marine Midland Bank, N.A.); Mellon (Crocker National Bank); First Chicago Corporation (The National Corporation (Mellon Bank, N.A.); Morgan, J. P. & First National Bank of Chicago); First Interstate Bancorp Co., Incorporated (Morgan Guaranty Trust Company of New (First Interstate Bank of California); Irving Bank Corporation York); Security Pacific Corporation (Security Pacific Nation- (Irving Trust Company); Manufacturers Hanover Corpora- al Bank); and Wells Fargo & Company (Wells Fargo Bank, tion (Manufacturers Hanover Trust Company); Marine Mid- N.A.). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

540 Federal Reserve Bulletin • July 1983 lending limits of many banks are tied to capital, The Board took this action in order to prevent which includes subordinated debt. the use of so-called agented acceptance arrange- In amending the capital guidelines program, ments with third parties from being used as a the agencies reemphasized that banking organi- device to avoid reserve requirements. zations generally are expected to operate above The Bank Export Services Act (BESA) raised the minimum primary capital ratios. The agen- the limits on the aggregate amount of eligible cies also said that some banking organizations bankers acceptances that may be granted by an will be expected to hold additional primary capi- individual member bank from 50 percent of the tal to compensate for additional risk. Such banks bank's capital stock and surplus (100 percent would include those that have a higher-than- with the permission of the Board) to 150 percent average percentage of their assets exposed to of the bank's capital (200 percent with the perrisk or a greater-than-average amount of off- mission of the Board). The act also applied these balance-sheet risk. As techniques of financial limits to U.S. branches and agencies of foranalysis evolve, the agencies plan to review eign banks when the parent bank has, or is these guidelines and in particular will continue to controlled by, a company or companies with review such issues as the level of intangibles, the consolidated bank assets of more than $1 billion role of debt as capital, and the possible need for a worldwide. These limits do not apply to nonsingle capital standard for all banks. member banks. The BESA also provided that any portion of an eligible bankers acceptance created by a member BANKERS ACCEPTANCES: AMENDMENT TO bank or by a U.S. branch or agency of a foreign REGULATION D, FINAL RULE, bank covered by the BESA that is sold through a AND PROPOSED ACTION participation agreement to another covered bank should not be included in the calculation of the The Federal Reserve Board took two final ac- creating bank's limits on bankers acceptances.2 tions in connection with bankers acceptances. Instead, the amount of the participation in the One of the final actions was an amendment to acceptance is to be applied to the limitations Regulation D (Reserve Requirements of Deposi- applicable to the covered bank that purchases tory Institutions), dealing with the reservability the participation. The BESA also provided that of ineligible bankers acceptances. The other final eligible bankers acceptances, growing out of action and the draft regulation issued for com- domestic transactions, are not to exceed 50 perment related to bankers acceptances under the cent of the aggregate of all acceptances autho- Bank Export Services Act. rized for a covered bank. Regulation D now applies reserve require- In the other final rule, issued on June 21, 1983, ments to ineligible acceptances only when the the Board clarified the following: creating institution itself discounts and sells the • Eligible acceptances created by covered acceptance.1 Under the amendment to Regula- banks and sold through participations to noncovtion D adopted in final form by the Board: ered banks (including Edge and Agreement corporations) are subject to the quantitative limita- An ineligible bankers acceptance not held in portfolio tions of the selling covered banks. by the creating bank will be treated as a reservable deposit regardless of whether the depository institu- • Eligible acceptances created by noncovtion that created the ineligible bankers acceptance, or ered banks (including Edges) sold through particanother, subsequently discounts and sells it. ipation agreements to covered banks are includ- 1. "Eligible" bankers acceptances are not subject to 2. "Covered banks"—those subject in the BESA to federal reserve requirements. They must meet criteria in quantitative limits on eligible acceptances—are member section 13 of the Federal Reserve Act, including require- banks and U.S. branches and agencies of foreign banks ments that the acceptance (1) grow out of a trade transaction whose parent foreign bank has or is controlled by a foreign involving exporting, importing, or domestic shipment of company that has worldwide consolidated bank assets of goods or storage of readily marketable staples, and (2) have a $1 billion or more. All other institutions—"noncovered" maturity of less than six months; "ineligible" acceptances banks—are not subject in the BESA to a quantitative limit on are those not meeting these requirements. eligible acceptances. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 541 ed in the quantitative limitations applicable to the The Federal Reserve Board also announced purchasing covered banks. that it intends to review its Regulation B (Equal • The parent of U.S. offices of foreign banks Credit Opportunity). The Board asked for comis defined as the institution that owns the U.S. ment by August 30, 1983, to assist it in the branch or agency "most directly" and the capital review. of the parent is defined in accordance with procedures currently used for reporting to the Board on FR Y7. MEETING OF CONSUMER ADVISORY • The 50 percent limitation on eligible accep- COUNCIL tances growing out of domestic transactions is applied to the maximum permissible amount of The Federal Reserve Board has announced that eligible acceptances that a covered bank could its Consumer Advisory Council met on July 20 create, not just outstandings. and 21, 1983. In addition to these final rules, the Board has The Council, with 30 members who represent issued for comment a proposed definition of a broad range of consumer and creditor interests, participations in bankers acceptances that would advises the Board on its responsibilities regardbe eligible for the acceptance limitations in the ing consumer credit protection legislation and Bank Export Services Act covered in the final regulation. rule issued on June 21, 1983. The Board requested comment on the proposed definition by August 5, 1983. SYSTEM MEMBERSHIP ADMISSION OF STATE BANKS The following banks were admitted to member- PROPOSED ACTIONS ship in the Federal Reserve System during the period June 7 through July 8, 1983. The Federal Reserve Board issued for comment Kansas proposed revisions to the fee structures for its Topeka Columbia Trust Company definitive securities safekeeping and noncash Pleasanton First State Bank collection services. The Board requested com- Texas ment by August 8, 1983. Irving First Bank/Las Colinas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

542 Legal Developments AMENDMENT TO REGULATION D that is issued to, or any bankers' acceptance of the depository institution held by, any office lo- The Board of Governors has amended Regulation D to cated outside the United States of another deposiapply reserve requirements to bankers' acceptances tory institution or Edge or agreement corporation ("BAs") that do not meet the criteria of section 13 of organized under the laws of the United States, to the Federal Reserve Act ("ineligible BAs") regardless any office located outside the United States of a of whether the instrument is discounted and resold by foreign bank, or to institutions whose time deposthe depository institution that created it. its are exempt from interest rate limitations under Effective June 20, 1983, the Board amends Regula- section 217.3(g) of Regulation Q (12 CFR tion D as set forth below: 217.3(g)). Part 204 — Reserve Requirements of Depository Institutions AMENDMENT TO REGULATION K Section 204.2 — Definitions The Bank Export Services Act (Pub. L. 97-290, Title II (1982)) amended the Bank Holding Company Act of (a)(1) * * * 1956 to permit bank holding companies, their subsid- (viii) any liability of a depository institution that iary Edge or Agreement corporations, and bankers' arises from the creation after June 20, 1983, of a banks to invest in export trading companies. The bankers' acceptance that is not of the type deregulation implements and interprets this provision by scribed in paragraph 7 of section 13 of the Federal establishing procedures for prior Board review of Reserve Act (12 U.S.C. 372) except any such these investments and providing guidance on how the liability held for the account of an entity specified Board intends to administer the statute. in § 204.2(a)(l)(vii)(A). Effective July 8, 1983, the Board amends Regulation K by adding new Subpart C as set forth below: (c)(1) * * * (ii) borrowings, regardless of maturity, represented by a promissory note, an acknowledgement of Part 211 — International Banking Operations advance, or similar obligation described in section 204.2(a)(l)(vii) that is issued to, or any bankers' Subpart A * * * acceptance of the depository institution held by, any office located outside the United States of Subpart B * * * another depository institution or Edge or agreement corporation organized under the laws of the Subpart C—Export Trading Companies United States, to any office located outside the United states of a foreign bank, or to institutions Section 211.31 Authority, purpose and scope whose time deposits are exempt from interest rate limitations under section 217.3(g) of Regulation Q Section 211.32 Definitions (12 CFR 217.3(g)); and Section 211.33 Investments and extensions of credit (f)(1) * * * Section 211.34 Procedures for filing and processing (v) a time deposit represented by a promissory notices note, an acknowledgement of advance, or a similar obligation described in section 2012(a)(l)(vii) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 543 Subpart C — Export Trading Companies Section 211.33 — Investments and Extensions of Credit Section 211.31 — Authority, Purpose and (a) Amount of Investments. In accordance with the Scope procedures of section 211.34 of this Subpart, an eligible investor may invest no more than five per cent of (a) Authority. This Subpart is issued by the Board of its consolidated capital and surplus in one or more Governors of the Federal Reserve System ("Board") export trading companies, except that an Edge or under the authority of the Bank Holding Company Act Agreement corporation not engaged in banking may of 1956, as amended (12 U.S.C. § 1841 et seq.) ("BHC invest as much as 25 per cent of its consolidated Act"), and the Bank Export Services Act (Title II, capital and surplus but no more than five per cent of Pub. L. 97-290, 96 Stat. 1235 (1982)) ("BESA"). the consolidated capital and surplus of its parent bank holding company. (b) Purpose and scope. This Subpart is in furtherance of the purposes of the BHC Act and the BESA, the (b) Extensions of credit. latter statute being designed to increase U.S. exports (1) Amount. An eligible investor in an export trading by encouraging investments and participation in ex- company or companies may extend credit directly port trading companies by bank holding companies or indirectly to the export trading company or and the specified investors. The provisions of this companies in a total amount that at no time exceeds Subpart apply to: (1) bank holding companies as 10 per cent of the investor's consolidated capital and defined in section 2 of the BHC Act (12 U.S.C. surplus. § 1841(a)); (2) Edge and Agreement corporations, as (2) Terms. An eligible investor in an export trading described in section 211.1(b) of this Part, that are company may not extend credit directly or indirectsubsidiaries of bank holding companies but are not ly to the export trading company or any of its subsidiaries of banks; (3) bankers' banks as described customers or to any other investor holding 10 per in section 4(c)(14)(F)(iii) of the BHC Act (12 U.S.C. cent or more of the shares of the export trading § 1843(c)(14)(F)(iii)); and (4) foreign banking organiza- company on terms more favorable than those affordtions as defined in section 211.23(a)(2) of this Part. ed similar borrowers in similar circumstances, and These entities are hereinafter referred to as "eligible such extensions of credit shall not involve more than investors." the normal risk of repayment or present other unfavorable features. For the purposes of this provision, an investor in an export trading company includes any affiliate of the investor. Section 211.32 — Definitions (3) Collateral requirements. Covered transactions between a bank and an affiliated export trading The definitions of section 211.2 in Subpart A apply to company in which a bank holding company has this Subpart subject to the following: invested pursuant to this Subpart are subject to the collateral requirements of section 23A of the Federal (a) "Export trading company" means a company that Reserve Act (12 U.S.C. § 371c), except where a is exclusively engaged in activities related to interna- bank issues a letter of credit or advances funds to an tional trade and, by engaging in one or more export affiliated export trading company solely to finance trade services, derives more than one-half its revenues the purchase of goods for which: in each consecutive two-year period from the export (i) the export trading company has a bona fide of, or from facilitating the export of, goods and serv- contract for the subsequent sale of the goods; and ices produced in the United States by persons other (ii) the bank has a security interest in the goods or than the export trading company or its subsidiaries. in the proceeds from their sale at least equal in For purposes of this subsection, revenues shall include value to the letter of credit or the advance. net sales revenues from exporting, importing, or third party trade in goods by the export trading company for Section 211.34 — Procedures for Filing and its own account and gross revenues derived from all Processing Notices other activities of the export trading company. (a) Filing notice. (b) The terms "bank," "company" and "subsidiary" (1) Prior notice of investment. An eligible investor have the same meanings as those contained in section shall give the Board 60 days' prior written notice of 2 of the BHC Act (12 U.S.C. § 1841). any investment in an export trading company. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

544 Federal Reserve Bulletin • July 1983 (2) Subsequent notice. An eligible investor shall give The time for filing comments and views has expired, the Board 60 days' prior written notice of changes in and the Board has considered the application and all the activities of an export trading company that is a comments received in light of the factors set forth in subsidiary of the investor if the export trading section 3(c) of the Act. company expands its activities beyond those de- Applicant, the seventh largest banking organization scribed in the initial notice to include: (i) taking title in Texas, controls 49 banking subsidiaries1 with total to goods; (ii) product research and design; (iii) deposits of approximately $4.5 billion, representing product modification; or (iv) activities not specifi- 3.7 percent of the total deposits in commercial banks cally covered by the list of services contained in in the state.2 Bank, with deposits of $122.4 million, is section 4(c)(14)(F)(ii) of the BHC Act. Such an the 56th largest commercial banking organization in expansion of activities shall be regarded as a pro- Texas, and controls 0.1 percent of the total deposits in posed investment under this Subpart. commercial banks in the state. Upon consummation of this transaction, Applicant would remain the seventh (b) Time period for Board action. largest banking organization in the state, and would (1) A proposed investment that has not been disap- control 3.8 percent of the total deposits in commercial proved by the Board may be made 60 days after the banks in the state. Thus, the Board concludes that the Reserve Bank accepts the notice for processing. A acquisition of Bank would have no significant effect on proposed investment may be made before the expi- the concentration of banking resources in Texas. ration of the 60-day period if the Board notifies the Both Applicant and Bank compete in the Houston investor in writing of its intention not to disapprove banking market.3 Bank is the 22nd largest banking the investment. organization in that market, controlling approximately (2) The Board may extend the 60-day period for an 0.4 percent of the total deposits in commercial banks additional 30 days if the Board determines that the in the market. Applicant is the third largest commerinvestor has not furnished all necessary information cial banking organization in the Houston banking or that any material information furnished is sub- market, controlling approximately 9.8 percent of the stantially inaccurate. The Board may disapprove an total deposits in commercial banks in the market. investment if the necessary information is provided Upon consummation of this transaction, Applicant within a time insufficient to allow the Board reason- would remain the third largest commercial banking ably to consider the information received. organization in the market, and its share of the total (3) Within three days of a decision to disapprove an deposits would increase to 10.2 percent. investment, the Board shall notify the investor in Although consummation of this proposal would writing and state the reasons for the disapproval. eliminate some existing competition between Applicant and Bank in the Houston banking market, certain facts of record mitigate the competitive effects of the BANK HOLDING COMPANY AND BANK MERGER transaction. The Houston banking market is not highly ORDERS ISSUED BY THE BOARD OF GOVERNORS concentrated now and would not become a highly concentrated market after consummation of this pro- Orders Under Section 3 of Bank Holding posal. The share of deposits held by the four largest Company Act commercial banking organizations in the market is 65.0 percent and would increase to 65.4 percent upon Allied Bancshares, Inc., consummation of the proposal. The Herfindahl- Houston, Texas Hirschman Index ("HHI") in the market is 1350 and would increase by only 7 points to 1357 upon consummation of the proposal.4 In addition, numerous com- Order Approving Acquisition of Bank Allied Bancshares, Inc., Houston, Texas ("Applicant"), a bank holding company within the meaning of 1. This figure includes two acquisitions which have received Board the Bank Holding Company Act, has applied for the approval, but which have not yet been consummated. 2. All banking data are as of June 30, 1982, and include acquisitions Board's approval under section 3(a)(3) of the Act approved through March 31, 1983. (12 U.S.C. § 1842(a)(3)) to acquire 100 percent of the 3. The Houston banking market is approximated by the Houston voting shares of Town & Country Bank, Houston, RMA, as defined by the Rand McNally & Company 1982 Commercial Atlas and Marketing Guide. Texas ("Bank"). 4. Under the Department of Justice merger guidelines, a market in Notice of the application, affording opportunity for which the post-merger HHI is between 1,000 and 1,800 is considered only moderately concentrated, and the Department is unlikely to interested persons to submit comments and views, has challenge mergers in such markets unless the resulting increase in the been given in accordance with section 3(b) of the Act. HHI is greater than 100 points. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 545 mercial banking organizations, including the state's section of the country, may be substantially to lessen largest, would remain in the market after consumma- competition or to tend to create a monopoly, or which tion of the proposal.5 In light of the above, the Board in any other manner would be in restraint of trade, concludes that the acquisition would not have any unless the Board finds that the anti-competitive effects significant adverse effects on competition in any rele- of the transaction are clearly outweighed in the public vant area. interest by the probable effect of the transaction in The financial and managerial resources and future meeting the convenience and needs of the community prospects of Applicant, its subsidiaries and Bank are to be served. Although the Houston banking market is regarded as generally satisfactory. Accordingly, con- not yet considered "highly concentrated" under the siderations relating to banking factors are consistent Department of Justice merger guidelines, section 3(c) with approval. Although consummation of the propos- of the Act does not require the Board to tolerate the al would effect no immediate changes in the services development of undue concentration among banking offered by Bank, considerations relating to the conve- organizations before it is empowered to intervene. nience and needs of the community to be served are Indeed, the Supreme Court stated in Brown Shoe Co. consistent with approval of the application. Accord- v. United States, 370 U.S. 294, 317-18 (1961), that ingly, the Board has determined that consummation of agencies have the authority to arrest mergers at a time the transaction would be consistent with the public when the trend to a lessening of competition in a line of interest and that the application should be approved. commerce is in its incipiency. We believe that such a On the basis of the record, this application is ap- trend is present in the Houston banking market and proved for the reasons summarized above. The trans- that denial of this application would "brake this force action shall not be made before the thirtieth calendar at its outset and before it gather(s) momentum." day following the effective date of this Order, or later Id., at 318. than three months after the effective date of this While the market shares of Applicant and Bank in Order, unless such period is extended for good cause this case are relatively small, Applicant is the third by the Board or by the Federal Reserve Bank of Dallas largest banking organization in a market that has acting pursuant to delegated authority. grown increasingly concentrated over the past several By order of the Board of Governors, effective years. From 1970 through 1982, for example, the June 13, 1983. percent of total deposits held by the four largest banking organizations in the Houston banking market Voting for this action: Vice Chairman Martin and Gover- increased from 46.8 percent to 64.4 percent. Further, nors Wallich, Partee, and Gramley. Voting against this ac- in the one-year period from 1981 to 1982, the four-firm tion: Governors Teeters and Rice. Absent and not voting: concentration ratio increased by about seven percent- Chairman Volcker. age points from 57.2 to 64.4 percent, accelerating the trend toward a concentration of deposits among the JAMES MCAFEE, top four banking institutions in the Houston banking [SEAL] Associate Secretary of the Board market. While the percent of deposits held by the four Dissenting Statement of Governors Teeters and Rice largest bank holding companies in the Houston market has risen rapidly, the share of deposits controlled by We would deny this application because approval the medium-sized independent banks and one-bank would further a disturbing trend toward concentration holding companies in that market has steadily fallen. and the elimination of existing competition in the In 1971, these banking organizations controlled 26.5 Houston banking market and toward a reduction in the percent of the total deposits in commercial banks in number of sizable independent banks in the market. the Houston banking market. In 1982, their market Section 3(c) of the Bank Holding Company Act share had decreased to only 5.5 percent. This substanprovides, in part, that the Board may not approve any tial reduction in market share occurred even though proposed acquisition, the effect of which, in any the total number of commercial banks in the Houston banking market increased during this same period from 126 to 214, and the amount of deposits in the 5. A number of thrift institutions are headquartered in Houston, controlling about $7.4 billion in total deposits throughout the state. It market increased from a total of $6.0 billion to $32.0 is estimated that thrift institutions control less than 20 percent of the billion. Approval of this application will accelerate the total deposits in the Houston market. Although thrift institutions in Texas have not historically engaged in commercial lending to any anticompetitive trend toward concentration in the great extent, under provisions of the recently enacted Garn-St Ger- Houston banking market. main Depository Institutions Act of 1982 the commercial lending powers of federal thrift institutions have been significantly expanded. The anticompetitive effects of this application are Title III 96 Stat. 1469, 1499-1500. exacerbated by the fact that Bank is one of only eight Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

546 Federal Reserve Bulletin • July 1983 independent banks or one-bank holding companies Bank, with deposits of $40.8 million, is the 135th with over $100 million in deposits remaining in the largest bank in Wisconsin, holding 0.18 percent of total Houston banking market. In our view, the elimination deposits in commercial banks in the state. Acquisition of such medium- to large-sized banking organizations of Bank would have no appreciable effect upon the as competitors in the Houston banking market has concentration of banking resources in Wisconsin. greater competitive significance than the elimination Bank is the fifth largest of 13 banks in the relevant of smaller banks in the market. Apart from the fact banking market, and holds 10.3 percent of deposits in that the acquisition of medium- to large-sized banking commercial banks in that market.2 Because none of organizations by large bank holding companies accel- Applicant's subsidiaries operate in this market, conerates a trend toward concentration, the larger inde- summation of the proposed transaction will not elimipendent banks are more likely than the smaller banks nate any existing competition. The Board concludes to possess the capabilities for effective competition that consummation of the proposal would not elimithrough acquisitions and through the provision of new nate substantial probable future competition in the banking services. Thus, these acquisitions eliminate market because the market's three-firm concentration banking organizations that could provide banking cus- ratio is 60.3 percent, and therefore, the market is not tomers with feasible alternatives to the large multi- highly concentrated under the Board's proposed bank holding companies in the market. guidelines.3 Accordingly, the Board has determined In our view, the Board should not continue to permit that competitive considerations are consistent with the largest bank holding companies in the Houston approval of the application. banking market to continue the trend toward the The financial and managerial resources and future concentration of banking resources by acquiring the prospects of Applicant, its subsidiaries and Bank are few remaining medium- to large-sized independent regarded as consistent with approval. Thus, considerbanks in the market. ations relating to banking factors are consistent with Accordingly, we dissent from the Board's decision approval of the application. Considerations relating to to approve this application. the convenience and needs of the community to be served also are consistent with approval. Accordingly, June 13, 1983 it is the Board's judgment that consummation of the proposal to acquire Bank would be consistent with the public interest and that the application should be First Wisconsin Corporation, approved. Milwaukee, Wisconsin On the basis of the record, the application is approved for the reasons summarized above. The acqui- Order Approving Acquisition of Bank sition of shares of Bank shall not be made before the thirtieth calendar day following the effective date of First Wisconsin Corporation, Milwaukee, Wisconsin, this Order or later than three months after that date, a bank holding company within the meaning of the unless such period is extended for good cause by the Bank Holding Company Act, has applied for the Board of Governors or by the Federal Reserve Bank of Board's approval under section 3(a)(3) of the Act Chicago, pursuant to delegated authority. (12 U.S.C. § 1842(a)(3)) to acquire 100 percent of the By order of the Board of Governors, effective voting shares of Bank of Two Rivers, Two Rivers, June 14, 1983. Wisconsin ("Bank"). Notice of the application, affording an opportunity Voting for this action: Chairman Volcker and Governors for interested persons to submit comments and views, Martin, Partee, Rice, and Gramley. Absent and not voting: has been given in accordance with section 3(b) of the Governors Wallich and Teeters. Act. The time for filing comments and views has expired and the Board has considered the application JAMES MCAFEE, and all comments received in light of the factors set [SEAL] Associate Secretary of the Board forth in section 3(c) of the Act (12 U.S.C. § 1842(c)). Applicant, the largest banking organization in Wisconsin, controls 19 banks with aggregate deposits of $3.05 billion, representing approximately 13.6 percent of total deposits in commercial banks in the state.1 2. The relevant banking market is approximated by all of Manitowoc County except the towns of Schleswig and Eaton. 3. Proposed "Policy Statement for Assessing Competitive Factors under the Bank Merger Act and the Bank Holding Company Act," 45 1. All banking data are as of June 30, 1982. Federal Register 9017 (March 1982). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 547 North Central Financial Services, Inc., would be consistent with the public interest and that Sioux Falls, Iowa the application should be approved. On the basis of the record, the application is ap- Order Approving Formation of Bank Holding proved for the reasons summarized above. The trans- Company action shall not be consummated before the thirtieth calendar day following the effective date of this Order North Central Financial Services, Inc., Sioux Falls, or later than three months after the effective date of South Dakota, has applied for the Board's approval this Order, unless such period is extended for good under section 3(a)(1) of the Bank Holding Company cause by the Board or by the Federal Reserve Bank of Act (12 U.S.C. § 1842(a)(1)) to become a bank holding Minneapolis acting pursuant to delegated authority. company by acquiring 80 percent of the voting shares By order of the Board of Governors, effective of First National Bank of Volga, Volga, South Dakota. June 22, 1983. Notice of the application, affording opportunity for interested persons to submit comments, has been Voting for this action: Chairman Volcker and Governors given in accordance with section 3(b) of the Act. The Martin, Wallich, Partee, Teeters, Rice, and Gramley. time for filing comments has expired, and the Board has considered the application and all comments re- JAMES MCAFEE, ceived in light of the factors set forth in section 3(c) of [SEAL] Associate Secretary of the Board the Act. Applicant, a nonoperating corporation with no subsidiaries, was organized under the laws of South Northwest Suburban Bancorp, Inc., Dakota for the purpose of becoming a bank holding Mount Prospect, Illinois company by acquiring Bank, which controls deposits of $14.4 million.1 Upon acquisition of Bank, Applicant Order Approving Formation of a Bank Holding would control the 60th largest of 132 banking organiza- Company tions in South Dakota and approximately 0.21 percent of the total commercial bank deposits in the state. Northwest Suburban Bancorp, Inc., Mount Prospect, Within the relevant banking market,2 Bank is the Illinois, has applied for the Board's approval under fourth largest of ten banking organizations and holds section 3(a)(1) of the Bank Holding Company Act 6.4 percent of total deposits in commercial banks.3 (12 U.S.C. § 1842(a)(1)) to form a bank holding compa- While four of Applicant's principals are officers and ny by acquiring 100 percent of the voting shares of minority shareholders of another banking organization First National Bank of Mount Prospect, Mount Prosin South Dakota, that organization does not compete pect, Illinois ("Mount Prospect"); Countryside Bank, in the relevant market. Thus, consummation of the Mount Prospect, Illinois ("Countryside"); and First proposal would have no adverse effect on competition National Bank of Lake Zurich, Lake Zurich, Illinois or increase the concentration of banking resources in ("Lake Zurich"), (collectively "Banks"). any relevant market. Accordingly, competitive consid- Notice of the application, affording opportunity for erations are consistent with approval. interested persons to submit comments and views has The financial and managerial resources and future been given in accordance with section 3(b) of the Act. prospects of Applicant and Bank are considered gener- The time for filing comments and views has expired ally satisfactory, particularly in light of Applicant's and the Board has considered the application and all commitment to limit future borrowing4 and to comments received in light of the factors set forth in strengthen Bank's managerial resources. Thus, the section 3(c) of the Act (12 U.S.C. § 1842(c)). Board concludes that considerations relating to bank- Applicant is a nonoperating corporation organized ing factors are consistent with approval, as are consid- for the purpose of acquiring Banks, which hold deposerations relating to the convenience and needs of the its aggregating $187.3 million.1 Upon acquiring Banks, community to be served. Accordingly, based on the Applicant would control 0.20 percent of total deposits foregoing and other facts of record, the Board has held by commercial banks in the state. In light of the determined that consummation of the transaction small share of the state's commercial bank deposits that would be controlled by Applicant, the Board concludes that consummation of the transaction would 1. Banking data are as of September 30, 1982. not have any serious adverse effects on the concentra- 2. The relevant banking market is approximated by Brookings County and the eastern half of Kingsbury County, South Dakota. tion of banking resources in Illinois. 3. Market data from June 30, 1982, Summary of Deposit. 4. Applicant would incur no debt in connection with consummation of this proposal. 1. All banking data are as of June 30, 1982. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

548 Federal Reserve Bulletin • July 1983 Banks all operate in the Chicago banking market.2 action shall not be made before the thirtieth calendar Mount Prospect is the 60th largest banking organiza- day following the effective date of this Order or later tion in the relevant market, and controls approximate- than three months after the effective date of this ly 0.21 percent of the total deposits in commercial Order, unless such period is extended for good cause banks therein. Countryside and Lake Zurich are the by the Board or by the Federal Reserve Bank of 203rd and 332nd largest banking organizations in the Chicago, pursuant to delegated authority. Chicago banking market, controlling approximately By order of the Board of Governors, effective 0.07 and 0.02 percent, respectively, of total deposits in June 14, 1983. commercial banks in the market. Upon consummation, Applicant would become the 36th largest com- Voting for this action: Chairman Volcker and Governors mercial banking organization in the Chicago banking Martin, Partee, Rice, and Gramley. Absent and not voting: market, controlling 0.30 percent of market deposits. Governors Wallich and Teeters. Consummation of this proposal would eliminate some existing competition between Banks in the Chicago JAMES MCAFEE, market. [SEAL] Associate Secretary of the Board The Chicago banking market, with a four-firm concentration ratio of 54 percent would not be considered highly concentrated after consummation of this pro- Pennbancorp, posal. In addition, the market contains numerous Titusville, Pennsylvania alternative banking organizations. In view of these factors, the absolute and relative sizes of the banks Order Denying the Merger of Bank Holding involved and the fact that Banks are commonly con- Companies trolled by three individual shareholders, the Board concludes that the amount of existing competition that Pennbancorp, Titusville, Pennsylvania, a bank holding would be eliminated by consummation of this transac- company within the meaning of the Bank Holding tion is not significant. Company Act ("Act"), has applied for the Board's The financial and managerial resources and future approval under section 3 of the Act (12 U.S.C. § 1842) prospects of Applicant and Banks are considered to merge with First Seneca Corporation, Oil City, generally satisfactory, especially in light of Appli- Pennsylvania ("First Seneca"). As a result of the cant's commitment to provide additional capital to merger, Applicant would acquire all of the outstanding Mount Prospect and Lake Zurich. In this regard, voting shares of First Seneca's subsidiary bank, First Applicant would incur debt in connection with this Seneca Bank, and ownership of between 5.52 percent proposal for the purpose of providing the capital and 11.54 percent of the outstanding voting shares of injections and paying organizational expenses. How- several other banks and bank holding companies in ever, based upon the relatively small amount of debt Pennsylvania. incurred and Banks' past earnings, Applicant appears Notice of this application, affording opportunity for to have sufficient financial flexibility to meet its annual interested persons to submit comments and views, has debt servicing requirements while permitting all three been given in accordance with section 3(b) of the Act. banks to maintain adequate capital positions. There- The time for filing comments has expired, and the fore, considerations relating to banking factors in Board has considered the application and all comregard to this proposal are consistent with approval. ments received, including those of the Antitrust Divi- Although consummation of this proposal would ef- sion of the Department of Justice and the Pennsylvania fect no immediate changes in the banking services Department of Banking, in light of the factors set forth offered by Banks, considerations relating to the conve- in section 3(c) of the Act (12 U.S.C. § 1842(c)). nience and needs of the community to be served are Applicant, the 26th largest banking organization in consistent with approval of the application. Accord- Pennsylvania, controls one bank with total deposits of ingly, the Board has determined that consummation of $542.4 million, representing commercial banks in the the transaction would be in the public interest and that state.1 First Seneca, the 20th largest banking organizathe application should be approved. tion in the state, controls one bank with total deposits On the basis of the record, the application is ap- of $587.7 million, representing 0.86 percent of the total proved for the reasons summarized above. The trans- deposits in commercial banks in the state. Upon consummation of this proposal, Applicant would become the fourteenth largest banking organization in 2. The Chicago banking market is approximated by Cook, DuPage, and Lake Counties in Illinois. 1. All banking data are as of June 30, 1982. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 549 the state and would control 1.66 percent of the total of the Supreme Court, that "the relevant market must deposits in commercial banks in the state. In the reflect the commercial and banking realities and Board's view, consummation of this proposal would should consist of the localized area where the banks not have a significant effect upon the concentration of involved offer their services and where local custombanking resources in Pennsylvania. ers can practicably turn for alternatives.3 The Su- Although Applicant's subsidiary bank ("Bank") op- preme Court has indicated that, in determining a erates 23 branches in 7 banking markets and First relevant geographic market, "the proper question is Seneca Bank operates 48 branches in 9 banking mar- not where the parties to the merger do business or kets, the only relevant market area in which both even where they compete, but where, within the area Applicant and First Seneca maintain banking offices is of competitive overlap, the effect of the merger on in Venango County, Pennsylvania. Accordingly, con- competition will be direct and immediate.4 summation of the proposal would not have any sub- Based upon all the facts of record, including the stantial adverse effect on existing competition in any geographic proximity of Oil City and Franklin, and market area other than in Venango County. relevant shopping, commuting, banking and employ- Applicant operates one office and one drive-in facili- ment data, the Board concludes that the relevant ty in Venango County, both located in the city of geographic market within which to evaluate the com- Franklin. First Seneca Bank operates three offices in petitive effects of this proposal is all of Venango Venango County, two in the city of Oil City and one in County (except the four northern townships)5 and the Cranberry township. Franklin and Oil City are located four westernmost townships in Clarion County.6 The approximately in the center of Venango County and Board believes that this market accurately reflects the are eight miles apart. Cranberry is about nine miles area where the banks involved operate and to which from Franklin and eight miles from Oil City. their customers can practicably and feasibly turn for Oil City and Franklin are the largest communities in alternative banking services. Venango county and account for 21 and 12 percent, In many cases the Board has used Ranally Metro respectively, of the total population of the county. The Areas ("RMAs") as guides in defining relevant geo- Oil City-Franklin-Cranberry area is the economic cen- graphic banking markets,7 because an RMA usually ter of the region, containing virtually all of the local designates a defined geographic locality that is demoindustry. The rest of Venango County is primarily graphically and commercially integrated. A RMA is rural in nature. generally defined as a compact area with relatively Applicant contends that Oil City and Franklin are in high population density that is linked by commuting, separate banking markets, which are approximated by retail, and wholesale trade patterns.8 By definition an the service areas of Bank and First Seneca Bank,2 and RMA includes a central city or cities and all adjacent that consummation of the proposed merger would, continuously built-up areas as well as certain other therefore, have no adverse effect upon existing compe- areas. These other areas are included in a given RMA tition. Applicant bases its market definition on the if a minimum of 20 percent of the labor force of that following factors: that Bank and First Seneca Bank do area or 8 percent of the total population of that area not derive any significant banking business from each commutes to the central city and its adjacent built up other's service area; that no significant commuting areas. The fact that Franklin and Oil City are in the exists between the Franklin and Oil City areas for same RMA, indicates that there is significant commutemployment or shopping; that the banks and thrift ing for employment to Franklin and Oil City. institutions in Franklin and Oil City maintain different prices and services; and that residents in the two areas do not shift their banking business from one city to the 3. St. Joseph Valley Bank, 68 FEDERAL RESERVE BULLETIN other in response to changes in prices or services. 673, 674 (1982). 4. United States v. Philadelphia National Bank, 374 U.S. 321, 357 In determining the relevant banking market for the (1963). United States v. Phillipsburg National Bank, 399 U.S. 350, purpose of assessing the competitive effects of a 364-65 (1970). 5. These four townships are Plum, Cherry Tree, Oil Creek, and merger, the Board has stated, in reliance on decisions Allegheny. The record shows that these four townships are economically linked to the Titusville area in Crawford County. For example, 50 percent of the employed residents in these townships commute to Crawford County for employment. 6. These are Washington, Ashland, Salem, and Richland Town- 2. Applicant considers the service area to be the geographic area ships. Commuting data indicate that over 30 percent of the employed from which each banking office draws at least 80 percent of its residents of these four townships commute to Venango County for deposits. Applicant has indicated that Oil City and Cranberry are in employment and most residents shop in Cranberry. the same market and has combined First Seneca's Oil City and 7. St. Joseph's Valley Bank, supra, n. 2; Ellis Banking Corporation, Cranberry branches into a joint service area. As noted, Oil City and 64 FEDERAL RESERVE BULLETIN 884 (1978). Cranberry are eight miles apart, approximately the same distance 8. Rand McNally Company, 1981 Commercial Atlas & Marketing apart as Franklin and Oil City. Guide, p. 21 (1981). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

550 Federal Reserve Bulletin • July 1983 The Board has also considered the geographic prox- addition, about 10 percent of the Franklin area resiimity of Franklin, Oil City, and Cranberry;9 the fact dents would bank in the Oil City area if they were that Franklin is the county seat and industrial center of dissatisfied with banking services in the Franklin area. Venango County; the daily public transportation be- The survey indicates that 11 percent of the Oil City tween Franklin, Oil City, and Cranberry; newspaper area residents have a banking relationship in the circulation data indicating that a large number of Oil Franklin area and that, in addition, about 10 percent of City residents subscribe to the Franklin newspaper the Oil City area residents would bank in the Franklin and that a significant number of Franklin residents area if they were dissatisfied with banking services in subscribe to the Oil City newspaper; and advertise- the Oil City area.15 ment by businesses, including financial institutions The Reserve Bank survey also indicates that finanoperating in Franklin or Oil City in both newspapers. cial institutions in one city are feasible, alternative In connection with its evaluation of the relevant sources of banking services for small businesses locatgeographic market, the Federal Reserve Bank of ed in the other city. The survey indicates that a Cleveland conducted a survey of 204 businesses and significant number of small businesses in one city shop 603 households to ascertain the banking, shopping, for loan rates in the other city and were solicited for and employment practices of the residents of the banking business by financial institutions in the other Franklin and Oil City areas.10 The survey results city. In addition, the survey revealed that a substantial indicate that there is significant commuting between percentage of the businesses surveyed would use a the Franklin and Oil City areas for employment, financial institution in the other city if they became shopping, and banking. dissatisfied with the banking services provided by With respect to employment, the survey results financial institutions in their city.16 indicate that about 14 percent" of Franklin area12 While the Board has considered Applicant's data on residents work in the Oil City area,13 and that about 18 deposit and loan service area overlap between Bank percent of the Oil City area residents work in the and First Seneca Bank,17 the Board does not believe Franklin area. In this regard, the Board notes that that bank service areas are determinative of the releabout 22 percent of the individuals on the payroll of vant geographic market. A market definition based the largest employer in the County, which is located in only on service area data would be inconsistent with Franklin, live in the eastern portion of the county the decisions of the Supreme Court referred to above where Oil City and Cranberry are located. regarding market definition because a service area With respect to shopping, the survey results indicate may be too narrow to accurately reflect the competithat 63 percent of the Franklin area residents shop for tive and economic forces in the market or the feasible clothing and 14.8 percent shop for household items in alternative sources of banking services for locally the Oil City area,14 and that 14.9 percent of the Oil City limited customers. Moreover, the Board believes that area residents shop for clothing and 6.2 percent for the deposit and loan service area overlap data submithousehold items in the Franklin area. ted for the Franklin and Oil City offices of Bank and With respect to banking services, the survey results First Seneca Bank indicate that financial institutions in indicate that 15 percent of Franklin area residents have a banking relationship in the Oil City area and that, in 15. Applicant also conducted a survey of households and businesses to determine the banking practices in the Franklin and Oil City areas. Applicant's survey indicates that 12 percent of Franklin area 9. Franklin and Oil City are connected by a two-to-three lane residents with checking accounts have checking accounts in the Oil highway for approximately four miles which becomes a divided four- City area; 17.2 percent of the Franklin area households with direct lane highway for the remaining four miles. The trip between the cities loans acquired them in the Oil City area; over 8 percent of Oil City takes approximately ten minutes. households have a banking relationship with a Franklin institution; 21 10. Copies of the questionnaire and the survey results were provid- percent of the responding Franklin area households would consider ed in their entirety to Applicant. While Applicant questioned certain using an Oil City area financial institution if they became dissatisfied wording in the survey, Applicant did not provide any information that with their current banking services; and 30 percent of the responding would provide a basis to discount the results of the survey. Oil City households would consider using a Franklin area institution if 11. These percentages as well as others which are cited in this they became dissatisfied with their current banking services. Order are estimates based on surveys undertaken by the Reserve 16. Similarly, Applicant's survey of businesses indicates that about Bank and the Applicant. 53 percent of the Franklin area respondents and about 27 percent of 12. The Franklin area includes Franklin City, Sugar Creek, Polk, the Oil City area respondents would consider, using an institution in Cooperstown, Oakland and the townships of French Creek, Jackson, the the other city if they became dissatisfied with their current banking Sandy Creek, and Mineral. services. 13. The Oil City area includes Oil City, Seneca, Reno, Rouseville, 17. Bank derives 3.3 percent of the deposits and 6.7 percent of the and the townships of Cranberry, Cornplanter, and Pine Grove. loans at its Franklin offices from First Seneca Bank's service area. 14. The Board notes that Applicant has included Cranberry town- First Seneca Bank derives 3.6 percent of the deposits and 13.7 percent ship, in which Cranberry Mall—the largest shopping area in the of the loans at its Oil City area offices from Bank's Franklin service county—is located, in the Oil City area. area. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 551 one city are in fact alternative sources of banking a lack of commuting and commercial interaction beservices for residents in the other city.18 tween Titusville and Oil City and Franklin, the Board The Board has also considered Applicant's conten- has redefined the market to exclude Titusville.21 tion that prices and services differ between Oil City The Pennsylvania Department of Banking issued an and Franklin financial institutions.19 A survey con- opinion that Oil City and Franklin are separate and ducted by the the overall or average price of providers distinct geographical market areas on the basis of of banking services. As noted, the record does not "topographical features that localize these communishow any significant differences overall between the ties." However, the Department did not describe terms or interest rates paid on deposits or charged on these topographical features and the Reserve Bank loans by banks and savings and loan associations in survey did not reveal any such features that would the two cities. substantiate a conclusion that these towns are in The Board has also considered the comments of the separate banking markets. As noted, the two areas are Antitrust Division of the U.S. Department of Justice connected by a well-paved highway and commuting and the Pennsylvania Department of Banking concern- between the two areas is not obstructed in any ing the relevant geographic market in this case. The manner. Department of Justice has defined the relevant bank- Applicant is the third largest banking organization in ing market as all of Venango County plus Titusville in the Oil City-Franklin banking market and controls 19.1 Crawford County, a market that includes both Frank- percent of the total deposits in commercial banks in lin and Oil City.20 Based on record evidence indicating the market.22 First Seneca is the second largest banking organization in the market and holds 19.4 percent of the total deposits in commercial banks in the market. The Oil City-Franklin banking market is highly concentrated with the four largest commercial banking organizations controlling 86.6 percent of the com- 18. The deposit and loan service area data for Applicant and First Seneca are understated because Applicant has excluded the unincor- mercial banking deposits in the market and a porated town of Reno from the service area of both Applicant's Herfindahl Hirschman-Index ("HHI") of 2317. Upon Franklin office and First Seneca's Oil City office even though these consummation of this proposal, Applicant would conoffices directly compete with one another in Reno. Reno lies between Franklin and Oil City and is approximately 3 miles from Oil City and 5 trol 38.5 percent of the total deposits in commercial miles from Franklin. Applicant has stated that Applicant and First banks in the market; the percent of commercial bank- Seneca each derive approximately $500,000 in deposits from Reno. In the Board's judgment, this competition between Applicant and First ing deposits held by the four largest banking organiza- Seneca in Reno provides an additional indication that Franklin and Oil tions in the market would increase to 93.8 percent; and City financial institutions are located in one geographic market. the HHI would increase by 741 points to 3058.23 The 19. Applicant asserts that, when First Seneca became the only bank in Oil City and Franklin to offer free checking in September 1980, only increase in market deposit concentration that would 60 out of 700 new accounts were from Franklin residents; that First result from this proposal would make this transaction Seneca paid a higher rate on 3-l/2 year certificates of deposit between one that would be subject to challenge under the May and July 1982; and that Applicant failed to attract substantial IRA accounts from Oil City residents between January and April 1982, Department of Justice merger guidelines. Based on when Applicant alleges that no bank in Oil City aggressively promoted these and other facts of record, the Board concludes IRAs. that consummation of this transaction is likely to While First Seneca was the only institution in the market to offer zero balance free checking, the record shows that other institutions substantially lessen competition in the Oil City-Frankoffered free checking or NOW accounts with small minimum balances lin banking market.24 ($200 and $100, respectively). The Board believes it significant that, even with this small price disparity, 9 percent of the free checking accounts opened by First Seneca's office in Oil City during 1981 were from Franklin consumers, thereby demonstrating that a number of Franklin residents viewed an Oil City institution as an alternative for 21. Various employment, business, and census commuting data banking services. Applicant's reliance on rate difference on 3-'/2 year collected by the Reserve Bank indicate that economic interaction certificates in early 1982 is misplaced because the rates on certificates between the Titusville and Franklin-Oil City area is limited. Less than are not comparable. The First Seneca certificates offered a floating 7 percent of the residents in the Titusville area travel to Venango rate, whereas the rates on certificates offered by other institutions County for employment. Newspaper circulation data reveal that were fixed. With regard to IRAs, the record shows that two other Titusville residents generally subscribe to the Titusville newspaper banks advertised for IRAs during early 1982 and that institutions in rather than the Franklin or Oil City newspapers. both cities currently pay similar rates on these accounts. 22. Market data are as of June 30, 1981. 20. Applicant has a large branch in Titusville and, if Titusville were 23. Under the Department of Justice merger guidelines in a market included in the market, Applicant's market share would be about 38 where the post-merger HHI exceeds 1800, the Department is likely to percent, while First Seneca would hold about 15.8 percent of the total challenge a merger which produces an increase in the HHI of 100 deposits in commercial banks in the market. Based on these percent- points or more. ages, the Department of Justice concluded that the merger is substan- 24. In previous cases, the Board has concluded that the divestiture tially anticompetitive. The redefinition of the market to exclude of a banking office in a highly concentrated market, prior to or Titusville reduces Applicant's share of market deposits from 38 concurrent with the consummation of the proposal, was an effective percent to 19 percent. However, as discussed below, even on the basis means to eliminate significantly adverse effects on existing competiof the redefined market, the proposed merger would exceed the tion in a market. See Barnett Banks of Florida, 68 FEDERAL RESERVE Department of Justice's merger guidelines and be subject to judicial BULLETIN 190 (1982); Hartford National Corporation, 69 FEDERAL challenge under those guidelines. RESERVE BULLETIN 33 (1983). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

552 Federal Reserve Bulletin • July 1983 In reaching this conclusion, the Board has consid- as satisfactory and their future prospects appear favorered Applicant's contention that thrift institutions able. Accordingly, the Board concludes that the subshould be included in the product market as full stantial anticompetitive effects of this transaction are competitors of commercial banks. In a number of not outweighed by the convenience and needs of the recent cases, the Board has, in its evaluation of the community. competitive effects of a bank merger, considered the Based on the foregoing and other considerations recent expansion of the deposit and lending authority reflected in the record, the Board's judgment is that of thrift institutions and has concluded that, as a result the proposed merger and acquisition is not in the of their expanded powers, thrift institutions have public interest and the application should be, and become, or at least have the potential to become, hereby is, denied. major competitors of commercial banks not only in the By order of the Board of Governors, effective provision of consumer banking services but also in June 10, 1983. commercial banking services. However, in this case, the record shows that there are three savings and loan Voting for this action: Chairman Volcker and Governors associations in the market that hold 23 percent of the Martin, Wallich, Partee, Rice, and Gramley. Absent and not total deposits in financial institutions in the market. If voting: Governor Teeters. all thrift institutions are included in the market as full competitors of commercial banks, the market shares JAMES MCAFEE, of Applicant and First Seneca would be 14.6 percent [SEAL] Associate Secretary of the Board and 14.9 percent, respectively. The post-merger HHI would increase by 435 points to 2024 and the four-firm Concurring Statement of Chairman Volcker concentration ratio would increase to about 80 per- and Governors Martin and Rice cent. On this basis, the Board would continue to regard the competitive effects of this merger as sub- We concur in the result reached by the Board. We stantially adverse.25 concur because we believe that the Oil City-Franklin Where, as here, consummation of the proposed banking market is a relevant geographic market in this transaction is likely substantially to lessen competi- case and, as we understand the manner in which the tion, section 3(c) of the Act requires the Board to deny antitrust laws have heretofore been applied, the mergthe application unless the substantial adverse effects er cannot be approved because it may tend substantialare clearly outweighed in the public interest by the ly to lessen competition in that market. However, we probable effect of the transaction in meeting the con- agree with this decision reluctantly because we believe venience and needs of the community to be served. that the merger of Applicant and First Seneca could The facts of record indicate that the banking needs of potentially have a positive effect on competition within the communities to be served are being met by both the western portion of Pennsylvania. It would do this Applicant and First Seneca. Although Applicant's by strengthening the ability of banks below the first proposal includes several improvements and expan- tier in Pennsylvania to compete with the largest banks sions in the services and operations of the respective in a number of markets. banks, it is the Board's view that these benefits, while Recent changes in the state's bank branching and lending some weight towards approval of the proposal, merger laws have vastly increased opportunities for are not sufficient to outweigh the substantially adverse consolidation of banks in Pennsylvania, and a trend competitive effects of this proposal. Moreover, there toward concentration is now evident as shown by the is no claim that the merger is necessary on a financial combination of some of the largest banks in the state. or managerial basis, and the financial and managerial The ten largest banking organizations in Pennsylvania resources of Applicant and First Seneca are regarded now hold 44.8 percent of the total deposits in commercial banks in the state, and, after consummation of the four mergers between the state's largest banking organizations recently approved by the Board, these banking organizations will hold 51.3 percent of the total 25. The Board has also considered the effect consummation of this deposits in commercial banks in the state. The size proposal would have on probable future competition in the remaining disparity between the ten largest banking organizaseparate 14 markets in which either Applicant and First Seneca compete. The Board has examined the concentration of banking tions and the state's remaining banking organizations resources in each market, the number of probable future entrants, the is increasing and is likely to increase further in the size of the bank to be acquired and the attractiveness of the market for future. entry on a de novo or foothold basis absent approval of the application. After consideration of these factors in the context of the specific We believe it is desirable to maintain effective facts of this case, the Board concludes that consummation of this competitive capability of a variety of banking organiproposal would not have any significant adverse effects on probable future competition in any relevant market. zations. If banking organizations such as Applicant Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 553 and First Seneca are to maintain their competitive the Bank Holding Company Act—avoidance of undue vitality, they must be capable of offering the varied concentration of banking resources. and specialized services and expertise that are avail- June 10, 1983 able from the larger banking organizations. Based upon the statements made by Applicant, the proposed merger would apparently substantially strengthen the Walter E. Heller International Corporation, competitive capabilities of the combined companies. Chicago, Illinois Applicant has stated that this merger would enable the resulting organization to compete effectively with American National Corporation, future entrants into the traditional rural markets that it Chicago, Illinois and First Seneca have served in the past, and that the resulting organization would become a stronger com- Order Approving Acquisition of Banks petitor in the highly concentrated Pittsburgh banking market. Applicant further states that its affiliation with Walter E. Heller International Corporation, Chicago, First Seneca will benefit the public greatly because the Illinois, a bank holding company within the meaning of resulting organization will have the financial resources the Bank Holding Company Act, has applied for the to improve the current level of services offered by Board's approval under section 3(a)(3) of the Act these organizations and be able to meet the challenges (12 U.S.C. § 1842(a)(3)) to acquire, through its wholly of new technology and increasing competition from its owned subsidiary, American National Corporation, larger competitors. Chicago, Illinois, also a bank holding company within Nevertheless, the Bank Merger and Bank Holding the meaning of the Act, 100 percent of the voting Company Act standards have thus far been applied so shares of First National Bank of Liberty ville, Libertyas to disapprove mergers if they would have anticom- ville, Illinois ("Libertyville Bank") and 100 percent of petitive effects in any relevant geographic market. For the voting shares of First American Bank of Bensenthe reasons we have outlined, and particularly in the ville, Bensenville, Illinois ("Bensenville Bank") (todeveloping situation in Pennsylvania, we would prefer gether, "Banks"). to reach a decision that would result in a strengthening Notice of the application, affording opportunity for of the competitive position of the Applicant. In this interested persons to submit comments, has been case, however, we are unable to reach such a decision given in accordance with section 3(b) of the Act. The because the level of concentration in the Oil City- time for filing comments has expired, and the Board Franklin banking market—a four-firm ratio of 86.6 has considered the application and all comments repercent—is severe and, while this market is only a ceived in light of the factors set forth in section 3(c) of minor portion of the markets affected by the proposal, the Act.1 Applicant, the fifth largest banking organizathere have been no efforts to divest to mitigate or tion in Illinois, controls one banking subsidiary with eliminate the anticompetitive effect. However, where, total deposits of approximately $1.5 billion, representas here, a proposed merger would strengthen the ing 1.6 percent of the total deposits in commercial diversity of market competitors, but where, in contrast banks in the state.2 Libertyville Bank, with deposits of to the present case, the level of concentration in the $102.6 million, is the 130th largest commercial banking market is less severe or where there have been good organization in Illinois, controlling 0.1 percent of the faith, but unsuccessful, efforts to divest, consideration total deposits in commercial banks in the state. Benshould be given to a broader interpretation of the senville Bank, the 154th largest commercial banking Board's authority. organization in the state, controls $91 million in depos- The 1966 Amendments to the Bank Holding Compa- its, representing approximately 0.1 percent of the total ny Act and the Bank Merger Act permit the Board to deposits in commercial banks in Illinois. Upon consummation of this transaction, Applicant would reapprove an application if it finds that the anticompetimain the fifth largest banking organization in the state tive effects of a proposal are clearly outweighed in the and would control 1.8 percent of the total deposits in public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served. Thus, we would suggest that, in appropriate cases, the Board give more emphasis to balancing the public benefits that would be derived from encouraging the growth of a variety of effective 1. Mr. Timothy J. Anderson, a shareholder of Libertyville Bank, competitors against the anticompetitive effects that submitted comments concerning Applicant's acquisition of Libertymay result in one of many relevant geographic markets ville Bank. The Board has determined, however, that Mr. Anderson's affected by a merger proposal. We believe this ap- comments do not raise issues that would warrant denial of the application. proach would further one of the major objectives of 2. All banking data are as of June 30, 1982. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

554 Federal Reserve Bulletin • July 1983 commercial banks in the state. Thus, the Board con- day following the effective date of this Order or later cludes that the acquisition of Banks would have no than three months after the effective date of this significant effect on the concentration of banking re- Order, unless such period is extended for good cause sources in Illinois. by the Board or by the Federal Reserve Bank of Applicant and both Banks compete in the Chicago Chicago acting pursuant to delegated authority. banking market.3 Libertyville Bank is the 96th largest By order of the Board of Governors, effective banking organization in that market, controlling ap- June 28, 1983. proximately 0.16 percent of the total deposits in commercial banks in the market. Bensenville Bank is the Voting for this action: Vice Chairman Martin and Gover- 105th largest commercial banking organization in the nors Wallich, Partee, Teeters, Rice, and Gramley. Absent relevant market and controls 0.14 percent of total and not voting: Chairman Volcker. deposits in commercial banks therein. Applicant is the fifth largest banking organization in the Chicago bank- JAMES MCAFEE, [SEAL] Associate Secretary of the Board ing market, controlling approximately 2.3 percent of the total deposits in commercial banks in the market. Upon consummation of this transaction, Applicant would remain the fifth largest commercial banking Orders Under Section 4 of Bank Holding organization in the market, and its share of the total Company Act deposits would increase to 2.6 percent. Although consummation of this proposal would Citicorp, eliminate some existing competition between Appli- New York, New York cant, Libertyville Bank, and Bensenville Bank in the Chicago banking market, the following and other facts Order Approving Expansion of Activities and of record mitigate the anticompetitive effects of the Acquisition of Branch Offices by Citicorp Savings, transaction. The Chicago banking market is not highly San Francisco, California concentrated, with the four largest commercial banking organizations in the market holding 54.1 percent of Citicorp, New York, New York, a bank holding comthe total deposits in commercial banks therein. In pany within the meaning of the Bank Holding Compaaddition, numerous commercial banking organizations ny Act ("Act"), has applied for the Board's approval would remain in the market after consummation of the under section 4(c)(8) of the Act (12 U.S.C. proposal. In light of the above, as well as the size of § 1843(c)(8)), and section 225.4(b)(2) of the Board's Banks and their small market shares, the Board con- Regulation Y (12 C.F.R. § 225.4(b)(2)), to expand the cludes that the acquisitions would not have any signifi- powers of its subsidiary, Citicorp Savings, San Francant adverse effects on competition or on the concen- cisco, California, a federally chartered savings and tration of resources in any relevant area. The financial loan association, to include the commercial lending and managerial resources and future prospects of and deposit taking powers authorized for federal sav- Applicant, its subsidiaries and Banks are regarded as ings and loan associations in the Garn-St Germain generally satisfactory. Accordingly, considerations re- Depository Institutions Act of 1982. Citicorp also has lating to banking factors are consistent with approval. applied under section 4(c)(8) and section 225.4(b)(2) of Although consummation of the proposal would effect Regulation Y for approval to convert 15 California no immediate changes in the services offered by offices of Citicorp Person-to-Person Thrift, Inc., and Banks, considerations relating to the convenience and Citicorp Person-to-Person Financial Center, Inc. needs of the community to be served are consistent ("PTPFC") (together, "Person-to-Person subsidiarwith approval of the application. Accordingly, the ies"), into branches of Citicorp Savings. In connection Board has determined that consummation of the trans- with this transaction, Citicorp Savings would acquire action would be consistent with the public interest and the lending and insurance agency activities currently that the application should be approved. engaged in by the Person-to-Person subsidiaries. On the basis of the record, this application is ap- Notice of the applications, affording opportunity for proved for the reasons summarized above. The trans- interested persons to submit comments, has been duly action shall not be made before the thirtieth calendar published. (48 Federal Register 9372 (1983)). The time for filing comments has expired and the Board has considered the applications and all comments received, including those of the Conference of State Bank Supervisors and Option Advisory Services, Inc., in light of the factors set forth in section 4(c)(8) of the 3. The Chicago banking market is defined as Cook, DuPage, and Act. Lake Counties in Illinois. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 555 By Order dated September 28, 1982,1 the Board The proposed expansion of Citicorp Savings' powapproved Citicorp's application under section 4(c)(8) ers would not result in any potential adverse effects of the Act, to acquire Fidelity Federal Savings and not previously considered by the Board in its order Loan Association of San Francisco, San Francisco, approving the acquisition of Fidelity. The other condi- California ("Fidelity"), the successor to a failed guar- tions in the Board's order of September 28, 1982, will antee stock savings and loan association under the remain in effect, including the condition that Citicorp receivership of the Federal Savings and Loan Insur- Savings' activities be limited to those that are permisance Corporation ("FSLIC"). Citicorp later changed sible for bank holding companies under section 4(c)(8) Fidelity's name to Citicorp Savings. In acting on the of the BHC Act. application, the Board relied upon the commitments The proposed transfer of assets of the Person-tooffered by Citicorp and established certain conditions Person subsidiaries to Citicorp Savings also is consistfor the conduct of the activity. Included among these ent with the provisions of the Board's original order. conditions was a requirement that Fidelity's activities That order permits Citicorp Savings to branch to the be limited to those then permitted to federal savings extent permissible for national and state banks in and loan associations ("S&Ls") under the Home California. Citicorp Savings' establishment of branch Owners' Loan Act (12 U.S.C. § 1464) ("HOLA"). The offices at the location of the 15 Person-to-Person subject applications essentially request modification of offices is authorized under state and federal law and, this condition. therefore, Citicorp Savings' acquisition of the Person- At the time the Board acted on Citicorp's applica- to-Person offices is permissible under the Board's tion to acquire Fidelity, Congress was considering original order. enactment of the Garn-St Germain Depository Institu- In connection with the conversion of the Person-totions Act of 1982 and, as a result, the scope of future Person subsidiaries into branches of Citicorp Savings, federal S&L powers was uncertain as was the effect of Citicorp intends that these branches will engage in the the proposed expanded commercial lending powers on sale of credit-related life, accident, health, and properthe status of S&Ls under the BHC Act. Because of ty and casualty insurance currently engaged in by this uncertainty, the Board imposed the condition Citicorp Person-to-Person Financial Center, Inc. limiting Fidelity's powers to those then permitted. ("PTPFC").4 PTPFC currently engages in the sale of Subsequent to the Board's approval of Citicorp's property and casualty insurance pursuant to the grandacquisition of Fidelity, Congress enacted the Garn-St father provisions of Title VI of the Garn-St Germain Germain Act, which significantly expanded the com- Act, which generally prohibited the sale of property mercial lending and other powers of federal S&Ls.2 and casualty insurance by bank holding companies and The Garn-St Germain Act also expressly exempts their subsidiaries.5 The legislative history of this prosavings and loan associations the accounts of which vision indicates that Congress intended to permit the are insured by the FSLIC from the definition of transfer of grandfathered insurance activities to a "bank" under the BHC Act. parent bank holding company or to any of its nonbank In light of enactment of the Garn-St Germain Act, subsidiaries if the transfer is for management or effithe Board has reexamined the continued need for the ciency purposes.6 Since the transfer of the Person-tolimitation on Citicorp Savings' lending and deposit Person subsidiaries to Citicorp Savings has been propowers. The Board concludes that the expanded com- posed by Citicorp for management and internal mercial lending and deposit taking authority of federal efficiency purposes, it appears that the grandfathered S&Ls under the Garn-St Germain Act is consistent property and casualty insurance activities of these with the requirements of the BHC Act and the Board's subsidiaries may be permissibly transferred as part of Order approving the acquisition of Fidelity by the transaction. Citicorp.3 In reviewing these proposals, the Board has taken into consideration the comments of the Conference of 4. Citicorp contemplates that such activities would be performed 1. 68 FEDERAL RESERVE BULLETIN 656 (1982). by a service corporation subsidiary of Citicorp Savings since S&Ls 2. For example, S&Ls are now permitted to accept demand depos- are not authorized to perform such activities directly, although they its from commercial customers, make commercial real estate loans up may do so through a service corporation. Citicorp does not seek to 40 percent of total assets, and make general commercial loans up to approval at this time for Citicorp Savings to engage in the sale of 5 percent of total assets until January 1, 1984, and 10 percent property and casualty insurance at Citicorp Savings' 85 existing thereafter. offices, although Citicorp has stated that it may do so in the future. 3. The exercise of these expanded powers by Citicorp Savings does 5. The sale of credit-related life, accident and health insurance is not raise a question under section 3 of the BHC Act because of the exempt from the prohibition of Title VI. exclusion of federally insured S&Ls from the definition of "bank" in 6. S. Rep. No. 97-641 (Conference Report), 97th Cong., 2d Sess. 91 the BHC Act, enacted as part of the Garn-St Germain Act. (1982). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

556 Federal Reserve Bulletin • July 1983 State Bank Supervisors ("CSBS") and Option Advis- assure compliance with the provisions and purposes of ory Services, Inc. ("Option Advisory") objecting to the Act and the Board's regulations and orders issued the application. The comments of these organizations thereunder, or to prevent evasion thereof. are substantially identical to their objections to Citi- The proposed activities shall not commence later corp's original application to acquire Citicorp Savings. than three months after the effective date of this The Board held informal hearings on the original Order, unless such period is extended for good cause application at which both of these protestants testified, by the Board or by the Federal Reserve Bank of New and the Board fully considered their comments. The York. Board determined that their objections did not warrant By order of the Board of Governors, effective a formal hearing or denial of the application. The June 1, 1983. Board has reviewed the comments submitted by the protestants on the subject applications and has deter- Voting for this action: Vice Chairman Martin and Govermined that they do not raise any new issues that nors Wallich, Teeters, Rice, and Gramley. Absent and not warrant a hearing or denial of the applications. voting: Chairman Volcker and Governor Partee. Governor Wallich took no part in the consideration of the insurance The CSBS argues that the applications represent an aspects of this application. attempt by Citicorp to circumvent the conditions imposed in the Board's original order. For the reasons JAMES MCAFEE, indicated above, the Board has determined that the [SEAL] Associate Secretary of the Board proposals are consistent with the Board's original order and would not significantly alter the balance of public interest factors relied on by the Board in its order. The CSBS argues that the new powers autho- Citizens Fidelity Corporation, rized by the Garn-St Germain Act "would move Louisville, Kentucky Citicorp Savings away from residential lending," contrary to the first condition in the Board's order requir- Order Approving Acquisition of Limited Purpose ing that Citicorp Savings have as its primary purpose National Bank the provision of residential housing credit. The Board notes that Citicorp has not requested relief from this Citizens Fidelity Corporation, Louisville, Kentucky, a condition and the Board expects Citicorp Savings to bank holding company within the meaning of the Bank continue to conduct its operations in accordance with Holding Company Act ("Act"), has applied for the this condition. Board's approval under section 4(c)(8) of the Act On the basis of all the facts of record, the Board has (12 U.S.C. § 1843(c)(8)) and section 225.4(b)(2) of the determined that the expansion of Citicorp Savings' Board's Regulation Y (12 C.F.R. § 225.4(b)(2)), to commercial lending and deposit activities to include acquire all of the voting shares of Citizens Fidelity those authorized by the Garn-St Germain Act and the (Ohio), N.A., Cincinnati, Ohio ("CFO"), a proposed transfer to Citicorp Savings of the assets and insurance limited purpose national bank that will engage in credit activities of the Person-to-Person subsidiaries would card operations. not result in decreased or unfair competition, conflicts Notice of the application, affording opportunity for of interests, unsound banking practices, or undue interested persons to submit comments, has been duly concentration of resources. published. (47 Federal Register 40237 (1982)). The Based on the foregoing and other considerations time for filing comments has expired and the Board reflected in the record, the Board has determined that has considered the application and all comments rethe public benefits associated with the subject propos ceived, including those of the Ohio Superintendent of als can reasonably be expected to outweigh possible Banks in opposition to the application, in light of the adverse effects, and that the balance of the public factors set forth in section 4(c)(8) of the Act (12 U.S.C. interest factors which the Board is required to consid- § 1843(c)(8)). er under section 4(c)(8) of the Act is favorable. The Applicant is the second largest banking organization applications are hereby approved and the conditions in in Kentucky, operating one subsidiary bank with total the Board's order of September 28, 1982, are hereby deposits of $1.6 billion.1 This application involves the modified accordingly. transfer of the credit card operations of Applicant's This determination is subject to the conditions set bank subsidiary, Citizens Fidelity Bank & Trust, forth in section 225.4(c) of Regulation Y and the Louisville, Kentucky ("Kentucky Bank"), to CFO in Board's authority to require such modification or view of Ohio's less restrictive policy regarding interest termination of the activities of a holding company or any of its subsidiaries as the Board finds necessary to 1. Banking data are as of Decemper 31, 1982. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 557 rates. As a result of a recent Supreme Court decision Glass-Steagall Act, and the Act's prudential rules permitting a national bank to charge its credit card limiting excessive risk in nonbanking activities. Concustomers interest rates allowed under the law of the sistent with Congressional intent and the Board's state where the bank is located, regardless of the responsibilities for the administration of the Act, the customer's location, a number of bank holding compa- Board has interpreted broadly the definition of nies have transferred their credit card operations to "bank" in the Act to limit the potential for evasion of certain states that permit higher interest rates and that the fundamental purposes of Act through this device. have adopted specific laws providing for the establish- Thus, the Board has ruled that, for purposes of the ment of banks in that state by out-of-state bank BHC Act, NOW accounts should be regarded as holding companies. Such proposals have been ap- demand deposits and that commercial loans include proved by the Board, and the Board has no objection such commercial loan substitutes as the purchase of to the transaction contemplated under Applicant's commercial paper, bankers acceptances, and certifiproposal standing by itself. However, this application cates of deposit, and the sale of federal funds.2 In raises a technical issue regarding CFO's status as a addition, the Board has recommended a temporary bank under the Act, and this technical issue has broad legislative halt to the chartering and acquisition of policy implications. nonbank banks and bank-like thrift institutions by The other bank holding companies that have trans- nondepository institutions pending action by the Conferred their credit card operations to other states have gress on comprehensive legislation to define the apapplied to the Board under section 3 of the Act in propriate nonbanking powers of banks and thrifts. reliance on state laws that have specifically invited The Board has carefully reviewed Applicant's proentry by out-of-state banking organizations. Appli- posal in light of these considerations and the definition cant, on the other hand, proposes to limit CFO's of bank in the Act. CFO's proposed activities conductactivities to avoid bank status and the interstate bank- ed in accordance with the commitments that the ing prohibitions contained in the Act. Thus, the appli- Applicant has proposed will not meet the definition of cation has been filed under section 4 of the Act the term bank as provided in the Act and as that term pertaining to the acquisition of nonbank assets, rather has been interpreted by the Board. Accordingly, the than section 3, pertaining to the acquisition of banks, Board is constrained to conclude, on the basis of the because of Applicant's assertion that CFO will not be specific facts of this case, that CFO will not be a bank a bank for the purposes of the Act because it will not for purposes of the Act. accept demand deposits or make commercial loans. As noted above, the Board has approved substan- (12 U.S.C. 1841(c). Applicant proposed the following tively similar proposals under section 3 of the Act to commitments regarding CFO's status under the Act: establish banks for the purpose of facilitating credit CFO would not accept demand deposits or any other card operations and in this case, as in those cases, the form of transaction account. It would not offer savings Board believes the substance of the transaction is accounts, and would not offer any time deposits to the consonant with sound banking practice and not incongeneral public, although it would accept time deposits sistent with the policies underlying the Act. In differof $100,000 or more from financial institutions such as ent circumstances, where a proposal was contrary to banks and insurance companies. In addition, CFO the policies of the Act, the Board would necessarily would not make commercial loans of any type; pur- have to take this into account as a significant adverse chase commercial paper, certificates of deposit, or factor in making its analysis under section 4(c)(8). bankers acceptances; or sell federal funds. Rather, Accordingly, the present decision is confined to the CFO would engage solely in credit card operations for special facts of this case and is not a precedent for individuals. These limitations are contained in CFO's expansion of activities beyond the limits of this decibylaws, which cannot be amended without approval of sion. However, the evolution of the bank definition the Comptroller and the Board. Finally, CFO would should not turn on specific responses to specific cases. not have the word "bank" in its name and its offices Action is needed on the proposal submitted by the would be located on the third floor of an office Board to Congress to assure that the fundamental rules building. governing banking behavior are established for the The Board has expressed concern about recent future by Congressional action. acquisitions by nonbanking companies of institutions Under section 4(c)(8) of the Act, the Board is that are chartered as banks but which limit their authorized to permit bank holding companies to acactivities to avoid coverage under the "bank" definition in the Act. The Board has opposed such acquisitions of so-called "nonbank banks" that would under- 2. First Bancorporation (Beehive Thrift and Loan), 68 FEDERAL RESERVE BULLETIN 253 (1982); Letter dated December 16, 1982, to mine the separation of banking from commerce, the The Dreyfus Corporation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

558 Federal Reserve Bulletin • July 1983 quire shares of any company the activities of which the subsidiary a branch of another. Consequently, the Board has determined to be "so closely related to Board believes it inappropriate not to follow these banking or managing or controlling banks as to be a precedents.5 In addition, the Ohio Superintendent has proper incident thereto." The Board has previously asserted that this application is inconsistent with the determined by regulation that the making of loans by a interstate banking prohibitions of section 3(d) of the credit card company is closely related to banking. BHC Act. However, because of the Board's finding (12 C.F.R. § 225.4(a)(1)). Similarly, the Board has under existing law and interpretations that CFO is not determined that the acceptance of deposits through an a bank under the BHC Act, section 3(d) of the Act is industrial bank is closely related to banking.3 Although not applicable to the proposal. the Board has not determined that the conduct of such Accordingly, the Board has determined that approvactivities through a national bank is closely related to al of the proposal would not be inconsistent with state banking, banks do perform both of these functions, law and would be consistent with federal law. There is and as such these activities are closely related to no evidence that consummation of the proposal would banking. result in any undue concentration of resources, con- The proposed acquisition is essentially an internal flicts of interests, unsound banking practices, or other reorganization that will not alter the number of firms or adverse effects. the structure of the market for bank credit card Based upon the foregoing and all of the facts of services. Applicant asserts that the current high cost record, the Board has determined that the balance of of funds, coupled with provisions in Kentucky law public interest factors it is required to consider under setting an 18 percent revolving credit usury limit and section 4(c)(8) is favorable, subject to the conditions prohibiting credit card fees, have made its existing and commitments described herein. Accordingly, the credit card operations unprofitable. Applicant has application is hereby approved as conditioned herein. represented that it will be forced to liquidate its credit This determination is also subject to the conditions set card business or sell the business to an out-of-state forth in section 225.4(c) of Regulation Y and the money center bank if it is not permitted to move its Board's authority to require such modification or credit card operations to Ohio. Accordingly, to the termination of the activities of a holding company or extent that the proposal would maintain the existence any of its subsidiaries as the Board finds necessary to of a competitor in the market for credit card services, assure compliance with the provisions and purposes of the proposal offers competitive benefits. Moreover, a the Act and the Board's regulations and orders issued number of other bank holding companies have taken thereunder, or to prevent evasion thereof. advantage of specific laws that have invited entry by The proposed activities shall not commence later out-of-state banking organizations seeking to transfer than three months after the effective date of this their credit card operations to states allowing more Order, unless such period is extended for good cause favorable interest rates, and approval would allow by the Board, or by the Federal Reserve Bank of Applicant to remain competitive with these organiza- St. Louis. tions. By order of the Board of Governors, effective In its deliberations on this application, the Board June 24, 1983. has taken into consideration the views of the Ohio Superintendent of Banks that CFO will be a de facto Voting for this action: Chairman Volcker and Governors branch of the Kentucky Bank contrary to Ohio law. Martin, Partee, and Gramley. Voting against this action: The record of the application4 and a long line of Governors Wallich, Teeters, and Rice. decisions by both the Board and the courts demonstrates that the mere fact of common ownership by a JAMES MCAFEE, [SEAL] Associate Secretary of the Board bank holding company is insufficient to make one 3. First Bancorporation, 68 FEDERAL RESERVE BULLETIN 253 5. E.g., Guaranty Bancshares Corporation, 69 FEDERAL RESERVE (1982). BULLETIN 39 (1983); Michigan National Corporation, 64 FEDERAL 4. CFO will have a separate corporate and capital structure, RESERVE BULLETIN 127 (1978). Accord, Grandview Bank & Trust Co. separate physical facilities, will have only one officer and director in v. Board of Governors, 550 F.2d 415 (8th Cir.), cert, denied, 98 S. Ct. common with the Kentucky Bank, will not be advertised as an arm of 64 (1977). The Ohio Superintendent also states that CFO's acquisition the Kentucky Bank, will not be substantially funded by Kentucky by Applicant would contravene Ohio's prohibition against deposit- Bank, and will not accept deposits or pay checks on behalf of taking in Ohio by banks chartered outside Ohio. However, since Kentucky Bank. Moreover, the sale of the Kentucky Bank's credit CFO's principal place of business will be in Ohio, it will not violate card business to CFO will at arm's length and at fair market value. this prohibition. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 559 Dissenting Statement of Governors Wallich, believe that approval of the present application would Teeters, and Rice establish a precedent for the establishment of additional nonbank banks and that this is a seriously adverse We dissent from the Board's decision on this applica- factor that, in our judgment, requires denial of the tion. This application raises a technical issue regarding application. While the Board has approved several CFO's status as a bank under the Act that has impor- proposals by bank holding companies to transfer their tant policy implications. The technical issue relates to credit card operations to other states, each of these CFO's compliance with the terms of the BHC Act's proposals was filed under section 3 of the Act and bank definition. However, resolution of this issue will involved the acquisition of banks in states that specifihave a significant precedential impact on implementa- cally invited such entry. In contrast, this proposal tion of the purposes of the BHC Act and the potential seeks approval by an out-of-state bank holding compafor its evasion by so-called "nonbank banks" — ny to acquire an institution that is chartered as a institutions that are otherwise banks but either do not national bank without express authorization under make commercial loans or do not take demand depos- Ohio law, and in the face of the opposition of the Ohio its. Although CFO will neither offer demand deposits Superintendent of Banks. The Superintendent has nor make commercial loans within the meaning of the opposed the application as contrary to the intent of bank definition, this should not end the Board's inqui- Ohio law to exclude out-of-state banking organizations ry, since its decision under section 4(c)(8) is not a from conducting operations in the State and thus mechanical analysis of technical definitions but a contrary to the Bank Holding Company Act's providetermination whether a proposed activity will pro- sions against bank holding company acquisition of outduce public benefits that outweigh adverse effects. of-state banks against the wishes of the host state. The CFO will have a full national bank charter empower- opposition to this proposal by Ohio authorities thus ing it to engage in a full range of commercial banking raises a serious adverse factor. activities and its deposits will be insured by the FDIC. Citizens Fidelity asserts that approval of its applica- CFO will not be a limited purpose national bank of the tion would yield competitive benefits by enabling it to type described in 12 U.S.C. § 27 that is confined to continue as a competitor in offering credit card servtrust activities. In fact, for most of our Federal bank- ices. If it is not permitted to move its credit card ing laws, including the National Bank Act, the Glass- operations to Ohio, Citizens Fidelity asserts that it will Steagall Act, the McFadden Act, the Federal Reserve be forced to terminate its credit card business or sell Act, and the Bank Merger Act, CFO would be regard- the business to a large money center bank. However, ed as a bank. CFO also would be a bank as that term is the Kentucky usury law reflects an implicit determinadefined under Ohio law. tion by that State that any competitive benefits result- The Board has expressed concern about the charter- ing from Citizens Fidelity's continued credit card ing and acquisition of nonbank banks and bank-like operations would be outweighed by the harm to the thrifts by commercial enterprises as a device for taking Kentucky public associated with the charging of interdeposits from the public, engaging in banking opera- est rates higher than those that the State has detertions, and gaining access to the payments mechanism. mined are consistent with public policy. While, as a The Board has stated that institutions engaged in these general matter, we do not favor state imposed interest operations should be subject to the provisions of the rate ceilings, we believe that state policy regarding Act that separate banking from commerce, aid in interest rates is a relevant factor in the application of assuring adequate capital, prevent conflicts of interest, the public benefits standard under section 4(c)(8) of and limit the taking of excessive risks in nonbanking the Act, and that it is appropriate to take the effect of activities. Widespread use of this device for evading the present proposal in avoiding this state policy into the Act seriously undermines the fundamental policies account in the weighing process, particularly where of the Act as established by Congress. Recent at- approval of the application would create an undesirtempts by nonbanking organizations to utilize the able precedent under the BHC Act. nonbank loophole to evade these policies threaten to Citizens Fidelity further maintains that it cannot alter significantly the banking structure without Con- transfer its credit card operations to a state such as gressional action on the underlying policy issues. Delaware or South Dakota that has invited entry by Accordingly, the Board has recommended a tempo- out-of-state bank holding companies due to capital and rary legislative halt to the chartering or acquisition of employee requirements and the difficulty of managing nonbank banks and bank-like thrifts by nondepository a credit card operation so far from Kentucky. The institutions pending action by Congress on compre- Board in the past has approved such transactions by hensive legislation to define the appropriate nonbank- bank holding companies establishing banks in such ing powers of banks and thrifts. In this context, we states to engage in credit card operations under section Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

560 Federal Reserve Bulletin • July 1983 3 of the Act. That section does not require that a rently owns and operates the Green Machine Network proposal yield net public benefits and clearly permits ("GMN"), which serves ATMs owned by Third and such transactions. various other financial institutions. We note that South Dakota recently amended its law Third would transfer its rights and obligations in the to lower the applicable capital requirement and that GMN to the newly formed corporation, Green Ma- Delaware has liberalized both its capital and employee chine, and Third then would dividend its Green Marequirements. Although Citizens Fidelity would not chine stock to Applicant. Applicant would then sell 50 have close geographic proximity to its credit card percent of Green Machine's shares to the EFT Netoperation if it transferred the operation to South work Corporation, Dayton, Ohio ("ENC"), which is a Dakota or Delaware, an alternative method of accom- wholly-owned subsidiary of GEM. Green Machine plishing Applicant's objectives does exist without rais- would engage in the activities of providing data procing the serious precedential effects of the current essing services to other financial institutions by operproposal. ating an ATM network interchange and providing In making decisions under section 4(c)(8), the Board related data processing services.1 The Board has is required to determine whether a proposed activity found that providing the proposed data processing can reasonably be expected to produce benefits to the services are closely related to banking. (12 C.F.R public that outweigh possible adverse effects. By §§ 225.4(a)(8)(i) and (ii)). virtue of this statutory provision, the Board is given Notice of this application, affording opportunity for broad discretion in applying this test so as not to interested persons to submit comments and views has approve activities that would not be in the public been duly published. (48 Federal Register 8131 interest. In our opinion, approval of the subject pro- (Feb. 25, 1983)). The time for filing comments and posal would not be in the public interest because of the views has expired and the Board has considered the adverse precedent that it would create. Because of application and comments received in light of the these potential serious adverse effects on implementa- factors set forth in section 4(c)(8) of the BHC Act tion of the policies of Congress established in the BHC (12 U.S.C. § 1843(c)(8)). Act, we would deny the present application. In reach- Applicant, the 15th largest commercial banking oring this conclusion, we would take into account the ganization in Ohio, controls two banks with aggregate public policies of Ohio and Kentucky as expressed in deposits of approximately $632 million, representing their banking and usury laws as they affect this appli- 1.5 percent of all commercial bank deposits in Ohio.2 cation. These serious adverse effects of the application Through its nonbanking subsidiaries, Applicant is enoutweigh any minor public benefits associated with gaged in underwriting credit related life and accident preserving competition in the form proposed in the and health insurance and operating a thrift institution. application, in our opinion. As described above, Applicant's subsidiary, Third National Bank and Trust Company, currently owns June 24, 1983 and operates the Green Machine; however, Applicant conducts no other data processing activities for any other financial institutions. Interstate Financial Corporation, GEM, the fourth largest savings and loan associa- Dayton, Ohio tion in Ohio, has total savings deposits of $1.15 billion, representing 3.3 percent of all savings deposits in the Order Approving Acquisition of Green state.3 GEM currently operates its own network of 25 Machine Network Corporation ATMs, which are known as GEM Card Tellers. GEM Interstate Financial Corporation, Dayton, Ohio, a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act") (12 U.S.C. § 1841 et seq.), has applied for the Board's approval under section 4(c)(8) of the BHC Act (12 U.S.C. 1. An ATM is a machine that performs many of the functions § 1843(c)(8)) and section 225.4(b) of the Board's Reguperformed by a human bank teller. Other terms may be used to lation Y (12 C.F.R. § 225.4(b)), to establish a joint describe ATMs such as customer bank communications terminals venture with GEM Savings Association, Dayton, Ohio ("CBCTs") or remote service units ("RSU"). Through an ATM, a customer of a financial institution may make deposits, withdraw funds ("GEM"), to acquire the voting shares of the Green from accounts, transfer funds from one account to another, or draw on Machine Network Corporation, Dayton, Ohio pre-established lines of credit. An ATM may be located either at manned facilities of a bank or may stand by itself. ("Green Machine"). Applicant's lead bank, the Third 2. Banking data are as of September 30, 1982. National Bank and Trust Company ("Third"), cur- 3. Savings and loan data are as of January 1, 1982. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 561 also engages in certain nonbanking activities, includ- that consummation of the proposal would not have any ing mortgage banking, real estate development and adverse effects on existing competition in any relevant management consulting. No other financial institu- product or geographic market. tions participate in the GEM Card Teller network and The Board also has considered the effects of con- GEM provides no data processing services for other summation of this Proposal on probable future compefinancial institutions. tition in the relevant lines of commerce, particularly in ENC is a non-operating corporation whose sole light of the fact that this application involves the use of activity would be to hold shares of Green Machine. a joint venture to engage in the relevant activities. In Green Machine currently provides data processing this regard, GEM presumably could offer these servservices to Third and other unaffiliated financial insti- ices independently. However, GEM has not chosen to tutions by operating as an automated teller machine do so to date and does not appear to be a likely network interchange.4 Green Machine currently pro- independent entrant absent this joint venture. Morevides ATM network interchange services to Third and over, the market for data processing services is not 26 other unaffiliated financial institutions, including regarded as concentrated. For example, there currentnational and state banks, federal and state S&Ls (but ly are at least 60 data processing firms, including not GEM), and federal and state credit unions, in the several national concerns, 'operating in the Dayton Dayton banking market.5 Green Machine does not market. Thus, the loss of one potential entrant into the own or intend in the future to own or provide any market for data processing services does not raise any ATMs. Each ATM in Green Machine's ATM network serious concern. Accordingly, the Board concludes would be owned by one of the member financial that consummation of the proposed joint venture institutions. The member financial institutions that would not have significantly adverse effects upon own the ATMs would be compensated for their use by probable future competition in any market. customers of another financial institution on a transac- The Board also has reviewed this proposal to insure tion fee basis. Upon consummation, GEM would add that no unfair competitive practices, violations of law its ATMs to Green Machine's ATM network. Further, or other substantially adverse effects would result Applicant proposes to expand Green Machine's ATM from consummation of this proposal. In this regard, network interchange services throughout the states of the record indicates that the Green Machine would act Ohio, Indiana, and Kentucky. Finally, Green Machine merely as a clearinghouse or "switch" for transactions would expand its data processing services to include between linked ATMs. Thus, any financial institution other permissible non-ATM related data processing meeting certain qualifications would be entitled to join services. the network and the affiliation between participating The appropriate line of commerce for analyzing the institutions would be defined by the rules of operation competitive effects of consummation of this proposal of the Green Machine interchange. Moreover, no is the provision to unaffiliated financial institutions of other affiliation between the participating financial data processing services, particularly the operation of institutions is proposed and no participating financial an ATM network exchange. As described above, institution would be empowered to sanction or veto except for the services provided through the Green the entry of any other financial institution into the Machine, neither Applicant nor GEM currently offers Green Machine interchange. Finally, the opportunity data processing services to other unaffiliated financial for exclusionary or discriminatory practices in the institutions. Accordingly, it is the Board's judgment operation of the network would be minimized, since there are several other competing ATM interchanges in the region. The Board also has considered the effect of consummation of this proposal in light of state and federal laws governing the establishment of branches and the use of ATMs in a network. As described above, the 4. An ATM network interchange links various ATMs with the financial institutions whose customers use such ATMs. Also, the Green Machine network would only provide data ATMs are linked with a central data processing center that acts as a processing services for the interchange and would clearinghouse or "switch" for transactions between the ATMs and neither own nor provide ATMs. Moreover, memberthe financial institutions belonging to the ATM network interchange. Any customer of a financial institution belonging to an ATM network ship in the network is not restricted and Applicant has interchange may use any ATM in the exchange, regardless of whether stated that the institutional participants in the network such ATM is owned by another financial institution, to conduct a would comply with all applicable federal and state banking transaction. 5. The Dayton banking market is defined as Montgomery, Green, branching and other statutes regarding establishment and Miami Counties, Ohio; and the townships of Bethel and Mad and use of ATMs in the network. Applicant further has River in Clark County, Ohio, and the townships of Clear Creek, committed to offer through the interchange only those Massie, and Wayne in Warren County, Ohio. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

562 Federal Reserve Bulletin • July 1983 transactional services legally available to ATM cus- Newport Savings and Loan Association, tomers of participating financial institutions under Newport, Rhode Island applicable federal and state laws. It is the Board's view that approval of this applica- Order Approving Retention of a De Novo Branch tion reasonably may be expected to produce substantial benefits to the public. Consummation of this Newport Savings and Loan Association, Newport, proposal would allow individuals residing in the Great- Rhode Island, a Rhode Island mutual building-loan er Dayton area immediate access to a larger number of association, which is a bank holding company within ATMs. In addition, expansion of the network through- the meaning of the Bank Holding Company Act (the out Ohio and into Kentucky and Indiana would intro- "Act"), has applied for the Board's approval under duce into those areas a new provider of data process- section 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)) and ing services and an alternative ATM network. In section 225.4(b)(1) of the Board's Regulation Y addition, the economies of scale that would result from (12 C.F.R. § 225.4(b)(1)), to continue to engage in the operation of a combined network would accrue to all activities of a mutual building-loan association at a participating financial institutions. Finally, the joint branch office in Middletown, Rhode Island. Applicant venture would enable Applicant and GEM to share the engages primarily in accepting share deposits and costs of expanding and improving EFT services and making real estate mortgage loans. Applicant's acwould insure greater availability of funds for product counts are insured by the Federal Savings and Loan research and development. Insurance Corporation ("FSLIC"). There is no evidence in the record of this case The Board has not added the operation of a Rhode indicating consummation of the present proposal Island mutual building-loan association to the list of would result in undue concentration of resources, activities specified in section 225.4(a) of Regulation Y unfair competition, conflicts of interest, unsound as generally permissible for bank holding companies. banking practices or other adverse effects. Based upon In 1972, however, the Board determined that the the foregoing and other facts of record, the Board operation of such an institution is closely related to concludes that the balance of public interest factors it banking in Rhode Island and approved Applicant's must consider under section 4(c)(8) of the Act favors proposal to become a bank holding company and to approval of this application. In addition, the financial continue to engage in the activities of a mutual buildand managerial resources and future prospects of ing-loan association.1 Applicant are considered consistent with approval. Notice of the application, affording opportunity for Accordingly, the Board concludes that approval of interested persons to submit comments, has been duly this application is in the public interest and has deter- published (48 Federal Register 15186 (1983)). The time mined that the application should be approved. This for filing comments has expired and the Board has determination is subject to the conditions set forth in considered the application and all comments received section 225.4(c) of Regulation Y and to the Board's in light of the factors set forth in section 4(c)(8) of the authority to require such modification and termination Act. of the activities of a bank holding company or its Applicant (consolidated assets of $27.5 million) is a subsidiaries as the Board finds necessary to assure one bank holding company by virtue of its control of compliance with the provisions and purposes of the The Island Trust Company, Newport, Rhode Island Act and the Board's regulations and orders issued (deposits of $1.8 million).2 As of June 30, 1982, Applithereunder or to prevent evasions thereof. cant was the 12th largest commercial banking organi- Consummation of this transaction shall not be made zation in Rhode Island.3 later than three months after the effective date of this As noted above, the Board first approved Appli- Order, unless such period is extended for good cause cant's request to become a bank holding company and by the Board or the Federal Reserve Bank of Cleve- to continue to engage in the activities of a mutual land pursuant to delegated authority. building-loan association in Rhode Island in 1972. This By order of the Board of Governors, effective June 14, 1983. 1. Newport Savings and Loan Association, 58 FEDERAL RESERVE BULLETIN 513 (1972). Under section 333 of the Garn-St Germain Voting for this action: Chairman Volcker and Governors Depository Institutions Act of 1982, Applicant is not a "bank" within Martin, Partee, Rice, and Gramley. Absent and not voting: the meaning of section 2(c) of the Bank Holding Company Act Governors Wallich and Teeters. because its accounts are insured by the Federal Savings and Loan Insurance Corporation. 2. As of December 31, 1982. JAMES MCAFEE, 3. Deposit figures include the combined deposits of the thrift [SEAL] Associate Secretary of the Board institution and the bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 563 application requests Board approval of Applicant's In considering similar applications involving the retention of a branch office opened de novo on affiliation of commercial banks and thrift institutions, May 31, 1979, without the Board's prior approval. the Board has expressed its view that serious adverse Upon examination of all the facts of the record and the effects may result from tandem operation of these two circumstances of this application, it is the Board's types of institutions.7 The Board's concern in these view that the Applicant's action was inadvertent. In cases is that such an affiliation would result in a acting on this application, the Board has taken into subversion of the purpose of the interest rate differenconsideration that Applicant, upon becoming aware of tial between commercial banks and thrift institutions. the requirement for Board approval to open the office, However, the Board has recognized a longstanding immediately consulted the Federal Reserve Bank of and widespread integration of the operations of depos- Boston to determine what actions would be necessary itory institutions in Rhode Island.8 Every thrift of any to comply with the Act. Applicant has also initiated a size in Rhode Island now owns a commercial bank and program to monitor compliance with the Act and the each operates its thrift and bank offices in tandem. The Board's regulations. Accordingly, the Board believes unique historical and legal development of commercial that an application to retain the office is appropriate bank and thrift affiliation in Rhode Island indicates and that Applicant's actions with respect to the office that such affiliation results, at least partly, from Rhode do not reflect adversely upon Applicant's managerial Island's efforts to afford competitive equity among thrift institutions. On this basis, the Board has deterresources. mined that the tandem operation of thrifts and com- The Board has previously determined that the opermercial banks in Rhode Island should not be regarded ation of a Rhode Island mutual building-loan associaas an adverse effect under the Act. tion by a Rhode Island bank holding company is so closely related to banking as to be a proper incident There is no evidence of any other potential adverse thereto. In its 1972 approval of Applicant's application effects that might be associated with this proposal. to become a bank holding company and to continue to Based upon the foregoing and other considerations engage in the activities of a mutual building-loan reflected in the record, the Board has determined that association, the Board determined that, "[i]n view of the balance of public interest factors the Board is the history of close affiliation of mutual thrift institu- required to consider under section 4(c)(8) favors aptions and commercial banks in Rhode Island . . . proval of Applicant's retention of this branch office. Applicant's continuing to engage in the activities of a Accordingly, this application is approved.9 This deterthrift institution ... is an activity so closely related to mination is subject to the conditions set forth in Rhode Island banking as to be a proper incident section 225.4(c) of Regulation Y and to the Board's thereto."4 The Board has recently considered whether authority to require such modification or termination banking conditions have changed in Rhode Island such of the activities of a holding company or any of its that this statement would no longer be valid, and has subsidiaries as the Board finds necessary to assure determined that no evidence exists that would warrant compliance with the provisions and purposes of the a change in the Board's position at this time.5 Accord- Act and the Board's regulations and orders issued ingly, the Board confirms its finding that the operation thereunder, or to prevent evasion thereof. of a mutual building-loan association is so closely By order of the Board of Governors, effective related to banking in Rhode Island as to be a proper June 8, 1983. incident thereto. Notwithstanding this general finding, the Board Voting for this action: Vice Chairman Martin, Governors must also consider the particular facts of this case to Partee, Teeters, Rice, and Gramley. Absent and not voting: Chairman Volcker and Governor Wallich. determine whether the retention of this office can reasonably be expected to produce benefits to the JAMES MCAFEE, public that outweigh possible adverse effects. Reten- [SEAL] Associate Secretary of the Board tion of this branch would have no significant adverse effect on competition because it is a de novo office. The Board views de novo entry as procompetitive and a positive public benefit because such entry provides an additional source of competition in a market.6 1. First Financial Group of New Hampshire, Inc., 66 FEDERAL RESERVE BULLETIN 594 (1980). 8. Old Colony Co-Operative Bank, 69 FEDERAL RESERVE BULLE- 4. Newport Savings and Loan Association, 58 FEDERAL RESERVE TIN 377 (1983); Old Colony Co-Operative Bank, 66 FEDERAL RESERVE BULLETIN 313, 315 (1972). BULLETIN 665, (1980). 5. Old Colony Co-Operative Bank, 69 FEDERAL RESERVE BULLE- 9. In connection with this application, the Board hereby delegates TIN 377 (1983). authority to the Federal Reserve Bank of Boston to approve applica- 6. Virginia National Bancshares, Inc., 66 FEDERAL RESERVE BUL- tions by Applicant to open additional de novo offices, pursuant to LETIN 668, 671 (1980). section 225.4(b)(1) of Regulation Y (12 C.F.R. § 225.4(b)(1)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

564 Federal Reserve Bulletin • July 1983 Southeast Banking Corporation, Holland. As chartered surveyors, Gooch & Wagstaff Miami, Florida provides various services with regard to land and buildings. For example, Gooch & Wagstaff acts as Order Approving Proposal to Engage in agent with respect to the sale and leasing of commer- Investment Advisory Services cial property; furnishes investment advice concerning property; values property for various corporate pur- Southeast Banking Corporation, Miami, Florida, a poses; and provides property management services. bank holding company within the meaning of the Bank Gooch & Wagstaff s clientele consists primarily of Holding Company Act, has applied for the Board's foreign organizations including pension funds, finanapproval pursuant to section 4(c)(8) of the Act cial institutions, banks, insurance companies and in- (12 U.S.C. § 1843(c)(8)) and section 225.4(b) of the dustrial corporations, although it also advises individ- Board's Regulation Y (12 C.F.R. § 225.4(b)) to ac- ual investors. In general, each office services clients quire, through its wholly owned subsidiary Southeast with respect to properties located within that office's Investors Management Corporation, Miami, Florida geographic area. The geographic scope of the Denver ("SIMCO"), a 50 percent interest in Southeast/Gooch office is the State of Colorado.2 Apart from this joint & Wagstaff, Miami, Florida ("Company"), a de novo venture, Gooch & Wagstaff has no plans to open an company. The remaining interest in Company would office in the southeastern United States or Texas. be acquired by Gooch & Wagstaff, Inc., Lakeland, Company would provide investment advice related Florida, an affiliate of Gooch & Wagstaff, London, to income-producing real property located in the England, a United Kingdom chartered surveyor firm. southeastern United States and Texas and would Company would act as an investment adviser with solicit primarily foreign investors from western Eurespect to income-producing real property. The Board rope, Latin America, and the middle and far East, has determined that this activity is closely related to although Company also would serve U.S. investors. banking (12 C.F.R. § 225.4(a)(5)). Once an investor decides to purchase a particular Notice of the application, affording interested per- property, Company would assist the investor in implesons an opportunity to submit comments on the public menting this decision, including locating available interest factors has been duly published (48 Federal sources of financing. After an acquisition has been Register 15713 (1983)). The time for filing comments made, Company would monitor and make recommenhas expired and the Board has considered the applica- dations concerning the financial and technical aspects tion and all comments received in light of the public of the management of the property. For its European interest factors set forth in section 4(c)(8) of the Act. and Latin American clients Company would evaluate Applicant, with consolidated deposits of approxi- and advise on closed-end property funds. In addition, mately $5.5 billion,1 is the second largest banking Company would publish periodic reports on real estate organization in Florida, and is engaged through subsid- market conditions and trends for distribution in selectiaries in various nonbanking activities. Specifically, ed markets. Applicant engages in mortgage banking, consumer This proposal involves a de novo acquisition and finance, trust company, data processing and insurance normally consummation of the transaction would not activities. In addition, Applicant recently received have any adverse effects upon either existing or potenapproval to engage through SIMCO in investment tial competition. However, since the proposal involves advisory activities. At present, SIMCO's activities are the use of a joint venture between a bank holding limited to conducting preliminary market research and company and a nonbanking company, the Board has making contacts with developers. analyzed the proposal with respect to its effects on Gooch & Wagstaff is a partnership of chartered existing and potential competition between Applicant surveyors with its principal office in London, England. and Gooch & Wagstaff in the relevant market for In addition, Gooch & Wagstaff has established offices investment advisory services.3 in Amsterdam, Holland; Frankfurt, West Germany; and Denver, Colorado. Gooch & Wagstaff is affiliated with G&W Architect, London, England, and, to a more limited extent, with PSI Limited, Amsterdam, Holland, a management firm with which Gooch & 2. The Denver office has served as a consultant on a few isolated projects located in other parts of the United States, including the Wagstaff jointly manages a number of projects in southeast. 3. The Board has previously expressed concerns regarding the potential for undue concentration of resources or other adverse effects that result from the combination in a joint venture of banking and nonbanking institutions. See, Deutsche Bank AG, 67 FEDERAL RE- SERVE BULLETIN 449 (1981); BankAmerica Corporation, 60 FEDERAL 1. All banking data are as of December 31, 1982. RESERVE BULLETIN 517 (1974). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 565 Although Gooch & Wagstaff engages in a number of the Board has determined that future applications to the proposed activities, it does not provide these open additional offices of Company may be processed services for properties located in the southeastern in the same manner as other de novo applications United States. Applicant does not currently engage in under the provisions of section 225.4(b)(1) of Regulathe proposed activities.4 Accordingly, consummation tion Y (12 C.F.R. § 225.4(b)(1)), and authority to act of the proposed transaction would not eliminate any on such applications is hereby delegated to the Federal existing competition between Applicant and Gooch & Reserve Bank of Atlanta. Wagstaff. The proposed activity shall be commenced not later With respect to potential competition, given its than three months after the effective date of this historical pattern of growth, Gooch & Wagstaff ap- Order, unless such period is extended for good cause pears only moderately likely to establish an office in by the Board or by the Federal Reserve Bank of the southeastern United States. Applicant does not Atlanta pursuant to delegated authority. have the expertise for dealing with foreign investors By order of the Board of Governors, effective and, absent affiliation with Gooch & Wagstaff, Appli- June 15, 1983. cant would be unlikely to have access to such investors. Moreover, there would remain numerous other Voting for this action: Chairman Volcker and Governors competitors in the market, including commercial Wallich, Partee, Rice, and Gramley. Absent and not voting: banks, real estate brokerage firms and insurance com- Governors Martin and Teeters. panies. Accordingly, the Board concludes that consummation of the proposed transaction would not JAMES MCAFEE, have a significant impact on potential competition in [SEAL] Associate Secretary of the Board any relevant market. The Board also finds that consummation of the proposed transaction can be expected to result in United Jersey Banks, public benefits. Consummation will allow Company to Princeton, New Jersey combine Applicant's knowledge of real estate in the southeastern United States with Gooch & Wagstaff s Order Approving Acquisition of Retail Discount experience and knowledge of foreign investors. In Broker addition, it appears that the de novo nature of this proposal will result in increased competition. The United Jersey Banks, Princeton, New Jersey financial and managerial resources and future pros- ("UJB"), a bank holding company within the meaning pects of Applicant are consistent with approval of this of the Bank Holding Company Act of 1956, as amendproposal, and there is no evidence in the record to ed (12 U.S.C. § 1841, et seq.) (the "Act"), has applied indicate that consummation of the proposal would for the Board's approval under section 4(c)(8) of the result in undue concentration of resources, conflicts of Act (12 U.S.C. § 1843(c)(8)) and section 225.4(b)(2) of interests, unsound banking practices or other adverse the Board's Regulation Y (12 C.F.R. § 225.4(b)(2)), to effects on the public interest. acquire 100 percent of the voting shares of Richard Based on the foregoing and other considerations Blackman & Co., Paramus, New Jersey ("Blackreflected in the record, the Board concludes that the man"), a company that engages in discount retail balance of public interest factors that it must consider securities brokerage activities. under section 4(c)(8) of the Act favors approval. Notice of the application, affording interested per- Accordingly, the application is approved. This deter- sons an opportunity to submit comments and views on mination is subject to the conditions set forth in the relation of the proposed activities to banking and section 225.4(c) of Regulation Y and to the Board's on the balance of public interest factors regarding the authority to require such modification or termination application was duly published in the Federal of such activities as the Board finds necessary to RegisterThe time for filing comments and views has assure compliance with the provisions and purposes of expired, and the Board has considered the application the Act, and the Board's regulations and orders issued and all comments received in light of the factors set thereunder, or to prevent evasion thereof. In addition, forth in section 4(c)(8) of the Act. 4. Although SIMCO received approval to engage in investment advisory activities in late 1982, it has only commenced such operations in a preliminary manner. Upon approval of this proposal, 1. 48 Federal Register 8347 (February 28, 1983), corrected, 48 SIMCO will cease its limited activities. Federal Register 10471 (March 11, 1983). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

566 Federal Reserve Bulletin • July 1983 UJB is a bank holding company by virtue of its "closely related to banking" within the meaning of control of eight banks located in New Jersey, including section 4(c)(8) of the Act.6 At the same time, the Board its lead bank, United Jersey Bank, Hackensack, New also determined that retail securities brokerage — Jersey. UJB holds total consolidated assets of $2.9 purchasing and selling securities without recourse, billion,2 and is the fourth largest commercial banking solely upon the order and for the account of, customorganization in New Jersey.3 UJB also engages, ers — is not an activity prohibited to member bank through certain of its subsidiaries, in various permissi- affiliates by the provisions of the Glass-Steagall Act.7 ble nonbank activities, including leasing, mortgage Accordingly, based upon its review of this application banking, consumer and commercial lending, and credit and the substantial similarity between the proposed related insurance activities. activities and those previously approved by the Board, Blackman, a "discount" retail securities broker, is the Board adopts and reaffirms its prior determinations qualified as a broker/dealer under the laws of New and concludes that the proposed securities brokerage, Jersey and New York, and is registered with the margin lending, and incidental activities involved in Securities and Exchange Commission (the "SEC") this application are closely related to banking and not pursuant to section 15 of the Securities Exchange Act proscribed by the provisions of the Glass-Steagall Act. of 1934.4 Currently, Blackman operates from a single In determining whether the proposed activities are office in Paramus, New Jersey, and functions solely as "a proper incident to banking or managing or controlan "introducing" broker, taking customer orders to ling banks", section 4(c)(8) of the Act further requires purchase or sell securities and passing them on to the Board to consider whether performance of the other brokers for execution, clearing, and settlement. proposed activity by an affiliate of a bank holding However, following consummation of this proposal, company "can reasonably be expected to produce UJB intends to expand Blackman's activities to in- benefits to the public, such as greater convenience, clude clearing and settlement of its customers' securi- increased competition, or gains in efficiency, that ties transactions, extension of margin credit in confor- outweigh possible adverse effects, such as undue mity with the Board's Regulation T (12 C.F.R. § 220), concentration of resources, decreased or unfair comcarrying its customers' temporary credit balances petition, conflicts of interests, or unsound banking awaiting investment (paying interest on some of them), practices." (12 U.S.C. § 1843(c)(8)). On the basis of and providing securities custodial services to its bro- the record of the application, the Board finds that kerage customers.5 UJB would make these services consummation of this proposal can reasonably be available at UJB's banking subsidiaries' 118 branch expected to produce significant public benefits in the offices throughout New Jersey. Blackman would not form of increased competition, greater convenience, give investment advice, solicit orders to purchase or and increased efficiency in the provision of retail sell particular securities, engage in securities transac- securities brokerage services, that outweigh possible tions for its own account, or engage in dealing, under- adverse effects. writing, or market making activities. Based on the facts of record, it appears that the Section 4(c)(8) of the Act authorizes a bank holding affiliation of Blackman with UJB may reasonably be company to engage in, or acquire shares of a company expected to result in increased competition, consumer that engages in, an activity determined by the Board (by order or regulation) to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. By order dated January 7, 1983, approving an application by BankAmerica Cor- 6. See the Board's Order approving the application of BankAmerica Corporation, San Francisco, California to acquire the Charles poration, San Francisco, California, to acquire the Schwab Corporation, 69 FEDERAL RESERVE BULLETIN 105 (1983), Charles Schwab Corporation, the Board determined petition for review pending sub nom. Securities Industry Association v. Board of Governors of the Federal Reserve System, et al. No. 83that retail securities brokerage, including clearing and 4019 (2d Cir.). The Board also determined in that case that providing settlement of customers' securities transactions, and securities custodial services and carrying customer credit balances margin lending, carrying customers' brokerage ac- awaiting investment (and paying interest on some of them) were incidental to permissible securities brokerage and margin lending counts, and providing securities custodial services are activities. On February 17, 1983, the Board decided to publish for comment a proposed rule that would add discount securities brokerage and securities credit lending to the list of nonbanking activities designated in Regulation Y as generally permissible for bank holding companies. (48 Federal Register 1146 (February 24, 1983)). As of this 2. Asset data are as of September 30, 1982. date, the proposal has not been adopted by the Board in final form. 3. Market ranking based on deposit data as of December 31, 1981. 7. See id., at 114-16. Section 20 of the Glass-Steagall Act prohibits 4. 15 U.S.C. § 780. the affiliation of any bank that is a member of the Federal Reserve 5. These services are currently provided to Blackman's customers System with any corporation or similar organization that is "engaged pursuant to an arrangement with Ernst & Company, a "specialist" principally in the issue, flotation, underwriting, public sale, or distrisecurities firm. bution" of securities. (12 U.S.C. § 377). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 567 convenience, and efficiency in the provision of retail tion would not directly affect UJB's market ranking. securities brokerage services. By permitting Black- Blackman has total assets of $211,000, and consummaman, a very small brokerage firm with 22,000 customer tion of this proposal would not significantly increase accounts and a single office location, to utilize UJB's UJB's resources. Neither Blackman nor UJB account extensive office network and substantial managerial, for a significant share of the nationwide market for technical, and capital resources, consummation of this securities brokerage services.11 Accordingly, the proposal is likely to significantly strengthen Blackman Board finds that consummation of this proposal would as a competitor in the nationwide market for retail not have any significant adverse effect on competition securities brokerage services, and to make discount or on the concentration of resources in any relevant brokerage services more conveniently available to the market.12 public.8 Since Blackman's brokerage commissions are Affiliation of Blackman with UJB is not likely to substantially below the publicly announced commis- result in any unfair or anticompetitive practices. There sion rates of the larger and better known "full-line" is no evidence in the record that UJB or Blackman brokerage firms, strengthening Blackman as a compet- would engage in any unfair or anticompetitive pracitor is likely to result in additional competitive pres- tices. The record shows that UJB would maintain sure on full-line brokerage firms to "unbundle" their Blackman as a separate subsidiary that would continue brokerage services from their research and advisory to be subject to the rules and regulations of the SEC,13 services and to lower their publicly announced broker- the Securities Investor Protection Corporation,14 New age commission rates. In addition, by permitting Jersey and New York "blue sky" laws, and the rules Blackman and UJB to share their respective market- and regulations of the various securities exchanges of ing, managerial, and technical resources, consumma- which Blackman may in the future become a memtion of the proposal may be expected to produce ber.15 In addition, UJB has taken measures to insure increased efficiency in their provision of brokerage compliance by UJB personnel with the Bank Holding and related financial services to the public. Company Act and Regulation Y prohibition of tie-ins Based on the facts of record, the Board finds that between bank and nonbank services. Finally, UJB has consummation of the proposal is not likely to produce indicated that in connection with this acquisition, it significant adverse effects. Although UJB's banking will take measures to prevent tie-ins between bank subsidiaries engage in margin lending to a limited credit or other bank services and Blackman's securiextent9 and perform securities transaction services as ties brokerage services.16 an accomodation to their customers,10 UJB does not In summary, there is no evidence in the record to actively promote these services and does not have a indicate that approval of this application would result significant market share. Blackman does not currently in an undue concentration of resources, decreased or engage in margin lending, but refers its customers unfair competition, unsafe or unsound banking pracdesiring margin credit to Ernst & Company. In addition, as noted above, the proposed de novo expansion of Blackman's services, as to both the types of services it provides and the office locations at which its 11. Based on data contained in the SEC's Staff Report on the Securities Industry in 1980 indicating that total retail securities services would be made available, may be expected to brokerage commission revenues for 1980 were $4,234 billion, Applihave a significantly procompetitive effect. cant estimates that Blackman's 1980 commission revenues of $1,764 million represented 0.04 percent of national retail brokerage commis- Consummation of this proposal would not result in sions. any undue concentration of resources in banking or 12. In considering the competitive effects of this proposal the Board has reviewed provisions in Applicant's Plan and Agreement of Merger any other relevant market. UJB is the fourth largest and in its Employment Agreement with Blackman's president that banking organization in New Jersey and this acquisi- restrict the ability of Blackman's principals to compete with UJB following consummation of the acquisition. Having reviewed the details of the covenants not to compete in the contracts involved in this proposal, the Board finds that their provisions are reasonable in duration and in geographic scope and are consistent with the public interest. Accordingly, the Board concludes that the existence of such 8. The record indicates that following consummation of this pro- covenants does not require denial of the application. See Orbanco, posal, UJB would make Blackman's discount brokerage services Inc., 59 FEDERAL RESERVE BULLETIN 367, 368 (1973). available at branches of its subsidiary banks located in several 13. See, e.g., 17 C.F.R. §§ 240.15bl-l-240.15c3-3a. communities that are not currently served by a discount securities 14. The Securities Investor Protection Corporation ("SIPC") was brokerage office. established by section 3 of the Securities Investor Protection Act of 9. The record indicates that as of September 30, 1982, UJB's 1970, Pub. L. 91-598, 84 Stat. 1636 (December 30, 1970), codified as subsidiaries had outstanding $225,000 in loans to purchase or carry amended at 15 U.S.C. § 78ccc. securities, excluding loans to brokers or dealers, representing approx- 15. Blackman is not currently a member of any securities exchange imately 0.01 percent of UJB's total loan portfolio. and has no present plans to become a member. 10. Applicant indicates that in 1981, UJB's subsidiary banks en- 16. While the potential for conflicts of interests and unsafe banking gaged in a total of 819 customer-directed securities transactions, for practices may exist with respect to the credit decisions and trust which the banks assessed fees totalling $24,950. department operations of UJB's subsidiary banks, the risk of such Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

568 Federal Reserve Bulletin • July 1983 tices, or any other adverse effects on the public by the Board or by the Federal Reserve Bank of New interest in any market. In this regard, because Black- York. man would not deal in securities for its own account By order of the Board of Governors, effective and would not actively promote any particular security June 2, 1983. through the provision of investment advice or otherwise, it would not have the "salesman's stake" or Voting for this action: Vice Chairman Martin and Goverpromotional interest in the success or failure of any nors Wallich, Teeters, Rice, and Gramley. Absent and not particular issue of securities that led Congress to voting: Chairman Volcker and Governor Partee. mandate a separation of banking from certain types of securities-related activities. Accordingly, the Board JAMES MCAFEE, [SEAL] Associate Secretary of the Board believes that performance of the limited types of securities-related activities involved in this proposal by a subsidiary of a bank holding company is consistent with the public interest and the Glass-Steagall and Orders Under Section 3 and 4 of Bank Bank Holding Company Acts. Holding Company Act Based upon the foregoing and other considerations reflected in the record, the Board has determined that BankAmerica Corporation, consummation of this proposal can reasonably be San Francisco, California expected to produce benefits to the public that outweigh possible adverse effects, and that the balance of Order Approving Acquisition of Bank Holding the public interest factors that the Board is required to Company consider under section 4(c)(8) of the Act, is favorable. Accordingly, the application is hereby approved. BankAmerica Corporation, San Francisco, California, This determination is subject to the conditions set a registered bank holding company, has applied for the forth in section 225.4(c) of Regulation Y (12 C.F.R. Board's approval under section 3 of the Bank Holding § 225.4(c)) and the Board's authority to require such Company Act ("BHC Act") (12 U.S.C. § 1842) to modification or termination of the activities of a holdacquire 100 percent of the voting shares of Seafirst ing company or any of its subsidiaries as the Board Corporation, Seattle, Washington, which owns 100 finds necessary to assure compliance with the provipercent of the voting shares of Seattle-First National sions and purposes of the Act and the Board's regula- Bank, Seattle, Washington, and Western National tions and orders issued thereunder, or to prevent Bank, Bothell, Washington. BankAmerica Corporaevasion thereof. tion has also applied for the Board's approval under Because of the extensive consideration accorded to sections 4(c)(8) and 4(c)(13) of the Bank Holding Blackman's securities brokerage, margin lending, and Company Act (12 U.S.C. § 1843(c)(8) & (13)) to incidental activities in the context of this application, acquire the following nonbanking and foreign banking and having determined that the public interest considsubsidiaries of Seafirst Corporation: SF Leasing Corerations of section 4(c)(8) favor approval of UJB's poration and SF Leasing Corporation of Delaware, proposal, the Board has determined that further appli- Seattle, Washington, which engage in the leasing of cations by UJB to extend Blackman's retail discount property and equipment; Seafirst Insurance Corporasecurities brokerage, margin lending, and incidental tion, Seafirst Life Insurance Company and SFC Insuractivities to additional offices may be processed in the ance Company, all of Seattle, Washington, which act same manner as other de novo applications under the as agent, underwriter, or reinsurer of credit life, acciprovisions of section 225.4(b)(1) of Regulation Y dent and health, and property damage insurance di- (12 C.F.R. § 225.4(b)(1)). Authority is hereby delegatrectly related to extensions of credit by Seafirst Cored to the Federal Reserve Bank of New York to take poration; Seafirst Commercial Corporation, which action on such notices properly filed as prescribed in engages in financing and commercial lending through that section. offices in Lake wood, Colorado, Sacramento, Califor- The proposed activities shall not commence later nia, St. Paul, Minnesota, Dallas and Houston, Texas, than three months after the effective date of this Metairie, Louisiana, Oklahoma City, Oklahoma, Order, unless such period is extended for good cause Bellevue, Washington, and Anchorage, Alaska; Seafirst Community Banking Corporation, Seattle, Washington, which owns and operates industrial banks, conflicts or practices is minimized by existing legal and regulatory including Seafirst Industrial Bank, Seafirst University restrictions and supervisory mechanisms applicable to Blackman, Hills Industrial Bank, and Seafirst Belcaro Industrial UJB, and UJB's banking and nonbanking subsidiaries, and by UJB's Bank, all of Denver, Colorado, all of which engage in decentralized management structure. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 569 industrial banking activities and various permissible to an application that will permit a bank holding insurance activities;1 Seafirst Venture Capital Corpo- company to acquire directly or indirectly voting shares ration, Seattle, Washington, an investment company of a bank located outside of the state in which the that does not control voting securities; Seafirst Pay- operations of the banking subsidiaries of the bank ment Services Corporation, Seattle Washington, holding company are principally conducted, unless which issues and sells travelers checks; Seafirst Mort- such interstate acquisition is specifically authorized by gage of California, which engages in mortgage banking the state in which the bank is located. (12 U.S.C. through offices in Walnut Creek and Irvine, California; § 1842(d)(1)). The Washington State banking laws Sutter Trust Company, which makes, services, and were amended in April, 1983, to provide specifically acquires real estate loans and other extensions of that a bank holding company that conducts its operacredit for its own account and the accounts of others tions principally outside of the State of Washington through offices in Phoenix and Mesa, Arizona, and may acquire a bank operating principally within the Las Vegas, Nevada; Seafirst Dealer Banking Corpora- State of Washington, provided the out-of-state bank tion, and Seafirst Nominees, Ltd., London, England, holding company obtains the express written approval and Seafirst Overseas Finance Corporation, Curacao, of the Washington State Supervisor of Banking. (Re- Netherland Antilles, which are inactive corporations; vised Code of Washington § 30.04.230(9), as amended as well as Seattle-First National Bank (Switzerland) by 1983 V/ash. Laws Chap. 157). Zurich, Zurich, Switzerland, Seattle-First Asia Limit- The Supervisor of Banking in Washington has reed, Hong Kong, and Seattle-First Bank (Canada), with viewed the application submitted by BankAmerica offices in Edmonton, Alberta, Vancouver, British Co- Corporation and Seafirst Corporation in accordance lumbia, and Calgary, Alberta, Canada, all of which with the Washington banking statute and the appropriengage in commercial banking outside the United ate regulations thereunder. By order dated June 2, States. BankAmerica Corporation also proposes to 1983, the Supervisor determined that Seafirst Corporaacquire Seattle-First International Corporation, Seattion and BankAmerica Corporation met the conditions tle, Washington, and Seattle-First International Bank, set forth in section 9(4) of the Washington banking Seattle, Washington, and Portland, Oregon, which are law, and issued to BankAmerica Corporation the corporations organized pursuant to the Edge Act Supervisor's express written approval under section 9 (12 U.S.C. § 611 et seq.). of the Washington banking law to acquire Seafirst Notice of the applications, affording interested per- Corporation and its banking subsidiaries. Based on the sons opportunity to submit comments, has been given entire record, it is the Board's judgment that the in accordance with sections 3 and 4 of the Act. The Washington banking statute authorizes, expressly and time for filing comments and views has expired, and not by implication, the acquisition of a bank in Washthe Board has considered the application and all ington State by an out-of-state bank holding company comments received, including comments submitted by when the approval of the Washington State Banking various shareholders and on behalf of Rainier Bancor- Supervisor has been obtained. Accordingly, the Board poration, Inc., Seattle, Washington, in light of the believes that approval of this application is consistent factors set forth in section 3(c) of the Act, the consid- with the requirements of Washington State law and is erations specified in section 4 of the Act, and the not prohibited by the interstate banking provision of purposes of the Edge Act.2 section 3(d) of the Act. Under section 3(d) of the Act, "the Douglas Amend- BankAmerica Corporation, with total consolidated ment," the Board is prohibited from granting approval assets of $119.7 billion, is the largest commercial banking organization in California, and the second largest banking institution in the United States.3 Bank- America Corporation operates one subsidiary bank, Bank of America N.T. & S.A., San Francisco, Califor- 1. The industrial banks owned or controlled by Seafirst Corpora- nia, which controls domestic deposits of $55.5 billion tion do not offer demand deoosits, NOW accounts or other transaction accounts, and are therefore not "banks" for purposes of the BHC Act. Accordingly, this portion of the application was processed under section 4 of the BHC Act. 2. The Board has reviewed the comments submitted by shareholders and has determined that these comments do not warrant disapproval of the proposed acquisition. The Board has also reviewed the comments submitted on behalf of Rainier Bancorporation requesting The Board has also received a request from the Legal Aid Society of the Board to consider carefully whether the proposed acquisition is Alameda County, Oakland, California that Board action be deferred. permissible under section 3(d) of the Bank Holding Company Act and This comment was untimely. Moreover, the Board has determined complies with section 30.04.230(9) of the Washington State Code. As that the requested deferral of action on this application is not discussed below, the Board finds that consummation of this proposal warranted and that the record of BankAmerica Corporation under the is consistent with the Washington State statute and section 3(d) of the Community Reinvestment Act is consistent with approval. BHC Act. 3. All banking data are as of March 31, 1983. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

570 Federal Reserve Bulletin • July 1983 representing 36 percent of the total deposits in com- of Justice has advised the Board of the Department's mercial banks in California, and is the largest commer- opinion that consummation of this proposal would not cial bank in the United States. BankAmerica Corpora- have a significantly adverse effect on competition in tion also operates numerous nonbanking subsidiaries any relevant geographic market. located throughout the United States and abroad, In previous cases involving expansion of large multiincluding subsidiaries engaged in consumer and com- national banking organizations, such as BankAmerica mercial lending, mortgage banking, leasing, data proc- Corporation, the Board has indicated that such expanessing, investment advisory services, certain retail sion should be effected consistent with the attainment discount securities brokerage activities, and certain of an adequate capital position. This is particularly the credit related insurance underwriting and insurance case with an acquisition involving a company of the agency activities in California. size and in the financial condition of Seafirst Corpora- Seafirst Corporation, with consolidated total assets tion. In this case, the Board noted as a favorable factor of $9.6 billion, is the largest commercial banking the improvement in BankAmerica Corporation's capiorganization in the State of Washington. The banking tal position in the past 12-month period, during which subsidiaries of Seafirst Corporation are Seattle-First time it has increased its primary capital by $930 National Bank and Western National Bank. Seattle- million. In this regard, the Board has received a First National Bank, with total assets of $9.4 billion written commitment from BankAmerica Corporation and total domestic deposits of $6.5 billion, is the regarding its intention to achieve a 5 percent primary largest commercial bank in the State of Washington, capital ratio within the next twelve months and to controlling approximately 34 percent of the total de- submit to the Board a written plan to accomplish this posits in commercial banking institutions statewide. objective. Western National Bank has total assets of $3.6 million In acting on this application the Board relied upon and total deposits of $2.8 million, and is one of the BankAmerica Corporation's stated intention to insmaller commercial banking institutions in the state. crease its capital position to a level consistent with the This application involves the combination of the Board's recently issued capital adequacy guidelines. largest banking organization in California and the Based on these factors and all of the facts of record, largest banking organization in Washington and will the Board concludes that the financial and managerial increase BankAmerica Corporation's share of deposits resources of Applicant and its future prospects are in commercial banks in the United States from 4.0 consistent with approval of this application. Morepercent to 4.6 percent. In reviewing the effects of this over, in view of Applicant's commitment to increase proposal on the concentration of resources, the Board the capital of Seafirst Corporation and Seattle-First has considered the serious financial condition of Sea- National Bank, the financial and managerial resources first Corporation as evidenced by its reported loan and future prospects of Seafirst Corporation and its losses, the erosion of its capital, and other facts of subsidiary banks are consistent with approval of this record. The Board has also considered the commit- application. ment by BankAmerica Corporation to contribute $150 BankAmerica Corporation has also applied, pursumillion to the capital of Seafirst Corporation and the ant to sections 4(c)(8) and 4(c)(13) of the Act, to benefits to the convenience and needs of the communi- acquire the nonbanking subsidiaries of Seafirst Corpoties in Washington of maintaining Seafirst Corporation ration. BankAmerica Corporation and Seafirst Corpoas a viable competitor in Washington. The Board ration operate various nonbank subsidiaries with ofbelieves that these public benefits are substantial and fices in the same markets. Those subsidiaries are mitigate the effects of any increase in concentration of engaged in mortgage banking, consumer finance, leasresources resulting from the proposed acquisition. ing, commercial lending, operating industrial banks, BankAmerica Corporation and Seafirst Corporation and certain discount securities brokerage activities. In do not operate subsidiary banks in the same markets. each case, the overlapping market share is insignifi- Therefore, consummation of the proposed transaction cant in comparison with the total market volume. would have no adverse effects on existing competition Moreover, there are a large number of competitors in in any relevant market. BankAmerica Corporation is each of the overlapping markets, and elimination of prohibited under the Washington State banking code Applicant or Seafirst Corporation as a competitor and, consequently, under section 3(d) of the Bank would not have any significant adverse effects. There Holding Company Act, from establishing a banking is no evidence in the record to indicate that approval of subsidiary de novo in Washington at this time. Ac- this proposal would result in undue concentration of cordingly, consummation of the proposed transaction resources, decreased or unfair competition, conflicts would not have a significantly adverse effect on proba- of interest, unsound banking practices, or other effects ble future competition in any relevant market. In this adverse to the public interest. Accordingly, the Board regard, the Antitrust Division of the U.S. Department has determined that considerations relating to the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 571 public interest factors under section 4 of the Act are the Act and the Board's regulations and orders issued consistent with approval of this application.4 thereunder, or to prevent evasion thereof. The financial and managerial resources of Bank- By order of the Board of Governors, effective America Corporation are consistent with its acquisi- June 22, 1983. tion of Seafirst Corporation's Edge Corporations. The acquisition of Seafirst Corporation by BankAmerica Voting for this action: Chairman Volcker and Governors Corporation would result in the continuation of the Martin, Partee, Teeters, Rice, and Gramley. Present and international services currently provided, and is con- abstaining: Governor Wallich. sistent with the purposes of the Edge Act. According- JAMES MCAFEE, ly, the Board finds that the retention of Seattle-First [SEAL] Associate Secretary of the Board International Corporation, Seattle, Washington, and Seattle-First International Bank, Seattle, Washington, and Portland, Oregon, would be in the public interest. Based on the foregoing and all of the facts of record, Concurring Statement of Governor Teeters the Board has determined that the applications under section 3 and 4 of the Act should be and hereby are I concur with the decision of the Board. However, it is approved. my opinion that the combination of the largest bank In view of all of the facts of record and the findings holding company in California and the largest bank by the Washington Supervisor of Banking, the Board holding company in Washington represents a signifihas determined that the conditions specified in section cant increase in the concentration of banking re- 11(b) of the Act for consummation of a proposal on or sources in the Pacific Northwest. In my view, this after the fifth calendar day after Board approval are increase in concentration of resources would, under present in this case. Accordingly, consummation of ordinary circumstances, have a detrimental effect on this transaction may take place on or after the fifth competition among commercial banks in the banking calendar day following the effective date of this order.5 markets in that area of the country. However, in view The transaction, including the acquisition of the non- of the financial condition of Seafirst Corporation and banking subsidiaries, shall not be consummated later the other facts and circumstances of this case, this than three months after the effective date of this Order increase does not warrant denial of this application. unless the period for consummation is extended for good cause by the Board or the Federal Reserve Bank June 22, 1983 of San Francisco under delegated authority. The determination as to the acquisition by BankAmerica Corporation of the nonbank subsidiaries of Seafirst Corpora- Cedaredge Financial Services, Inc., tion is subject to the conditions set forth in section Denver, Colorado 225.4(c) of Regulation Y (12 C.F.R.§ 225.4(c)) and to the Board's authority to require such modification or Order Approving Formation of a Bank Holding termination of the activities of a holding company or Company and Commencement of any of its subsidiaries as the Board finds necessary to General Insurance Agency Activities assure compliance with the provisions and purposes of Cedaredge Financial Services, Inc., Denver, Colorado, has applied for the Board's approval under sec- 4. BankAmerica Corporation has applied to engage in the sale of tions 3(a)(1) and 4(c)(8) of the Bank Holding Company property and casualty insurance in Washington through Seafirst Corporation. Under Title VI of the Garn-St Germain Act, Seafirst Act (12 U.S.C. §§ 1842(a)(1) and 1843(c)(8)) to become Corporation is entitled to continue to engage in the sale of credit- a bank holding company by acquiring The First Narelated property and casualty insurance in Washington and in certain tional Bank of Cedaredge, Cedaredge, Colorado other states because Seafirst Corporation obtained the Board's approval for such activity under the BHC Act before May 1, 1982. The ("Bank"), and to commence general insurance agency Board concludes that, under Title VI of the Garn-St Germain Act, activities in Cedaredge, a town of less than 5,000 Seafirst Corporation may continue to engage in the insurance agency population. activity in these states after its acquisition by BankAmerica Corporation. Seafirst Corporation will remain an independent and separate Notice of the application, affording opportunity for subsidiary of BankAmerica Corporation. BankAmerica Corporation interested persons to submit comments and views, has does not seek approval at this time for BankAmerica Corporation or its present subsidiaries to engage in these activities through existing been given in accordance with sections 3(b) and 4(c)(8) offices of BankAmerica Corporation or its subsidiaries. of the Act. The time for filing comments and views has 5. The Board has considered the request by Rainier Bancorporation expired and the Board has considered the application that action on this application be deferred and has determined that, under the circumstances of this case, deferral is not warranted. and all comments received in light of the factors set Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

572 Federal Reserve Bulletin • July 1983 forth in sections 3(c) and 4(c)(8) of the Act (12 U.S.C. In connection with Applicant's proposal under sec- §§ 1842(c) and 1843(c)(8)). tion 4(c)(8) of the Act (12 U.S.C § 1843(c)(8)) to engage Applicant is a nonoperating corporation organized de novo in general insurance activities, the Board has for the purpose of acquiring Bank, which holds depos- concluded that consummation of this proposal can its of $8.2 million.1 Upon acquisition of Bank, Appli- reasonably be expected to produce significant public cant would control the 272nd largest banking organiza- benefits in the form of increased competition, efficiention in Colorado and less than 1 percent of the total cy, and convenience in the provision of insurance deposits in commercial banks in the state.2 services to the Cedaredge community, with no signifi- Bank is the 5th largest of 6 banks competing in the cant adverse effects.4 Accordingly, the Board has Delta banking market3 and holds approximately 6.0 determined that consummation of the transaction percent of the total deposits in commercial banks in would be in the public interest and that the application that market. Although three of Applicant's principals should be approved. are associated with six other depository institutions in On the basis of the record, the application is ap- Colorado and Wyoming, none of those other deposi- proved for the reasons summarized above. This detertory institutions competes in the Delta banking mar- mination is subject to the conditions set forth in ket. Since Applicant has no other subsidiaries, con- section 225.4(c) of Regulation Y and the Board's summation of the proposed transaction would have no authority to require such modification or termination adverse effect on competition or on the concentration of the activities of a holding company or any of its of banking resources in any relevant area. Thus, the subsidiaries as the Board finds necessary to assure Board concludes that competitive considerations are compliance with the provisions and purposes of the consistent with approval of the application. Act and the Board's regulations and orders issued Applicant's managerial and financial resources are thereunder, or to prevent evasion thereof. considered satisfactory, and its future prospects ap- The acquisition of Bank shall not be consummated pear favorable, particularly in light of commitments by before the thirtieth calendar day following the effective Applicant's principals to maintain Bank's capital at date of this Order and neither the acquisition of Bank adequate levels. Applicant's principals have satisfac- nor the commencement of general insurance agency tory records managing other banks, including Appli- activities shall take place later than three months after cant's president, who will become president of Bank the effective date of this Order, unless such period is upon consummation of this proposal. It is anticipated extended for good cause by the Board or by the that affiliation with Applicant will result in improve- Federal Reserve Bank of Kansas City pursuant to ments in Bank's overall operations. Thus, Bank's delegated authority. financial and managerial resources and future pros- By order of the Board of Governors, effective pects are consistent with approval. While Applicant May 31, 1983. will incur debt in connection with this proposal, Applicant appears to have sufficient financial flexibility to Voting for this action: Chairman Volcker and Governors meet its debt servicing requirements while maintaining Martin, Wallich, Partee, Rice, and Gramley. Absent and not voting: Governor Teeters. Governor Wallich abstains from Bank's capital at acceptable levels. Therefore, based voting on the application to engage in insurance agency on these and other facts of record, the Board conactivities. cludes that considerations relating to banking factors lend weight for approval of the application. JAMES MCAFEE, Although consummation of the proposal would ef- [SEAL] Associate Secretary of the Board fect no immediate changes in the services offered by Bank, considerations relating to the convenience and needs of the community to be served are consistent with approval of the application. 4. The Board's determination that general insurance agency activi- 1. Deposit data are as of December 31, 1982. ties in towns with populations not exceeding 5,000 are closely related 2. State and market shares and rankings are based on deposit data to banking (section 225.4(a)(9)(ii) of Regulation Y) (12 C.F.R. as of December 31, 1981. § 225.4(a)(9)(ii))) was undisturbed by the Garn-St Germain Depository 3. The Delta banking market is approximated by Delta County, Institutions Act of 1982. See Pub. L. 97-290, Title VI, § 601, 96 Stat. Colorado. 1536 (October 15, 1982). Legal Developments continued on next page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 573 ORDERS APPROVED UNDER BANK HOLDING COMPANY ACT By the Board of Governors During June 1983 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) Barnett Banks of Florida, Inc., Boulevard Bank, June 27, 1983 Jacksonville, Florida Key West, Florida Broadway Bancshares, Inc., Eisenhower National Bank, June 29, 1983 San Antonio, Texas San Antonio, Texas Dairyland Bancshares, Inc., Citizens National Bank and Trust, June 27, 1983 Marshfield, Wisconsin Marshfield, Wisconsin Farmers Investment Corporation, Farmers Bank and Trust Company, June 7, 1983 Little Rock, Arkansas Clarksville, Arkansas Texas Commerce Bancshares Inc., Texas Commerce Bank-Sugarland, N.A., June 8, 1983 Houston, Texas 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 Albank Corporation, Albany Bank and Trust Company Chicago June 6, 1983 Chicago, Illinois N.A., Chicago, Illinois Alexander City Bancshares, Alexander City Bank, Atlanta May 27, 1983 Inc., Alexander City, Alabama Alexander City, Alabama BancTexas Group, Inc., The Standard Bank, Dallas June 7, 1983 Dallas, Texas Houston, Texas Butler Bancorp, Inc., The First National Bank of Kansas City May 26, 1983 Butler, Missouri Butler, Butler, Missouri Byers Bancshares, Inc., First National Bank of Byers, Dallas May 27, 1983 Byers, Texas Byers, Texas Central Shares, Inc., Central Bank, St. Louis May 27, 1983 Lebanon, Missouri Lebanon, Missouri Centre 1 Bancorp, Inc., The First National Bank and Chicago June 15, 1983 Beloit, Wisconsin Trust Company of Beloit, Beloit, Wisconsin Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

574 Federal Reserve Bulletin • July 1983 Section 3—Continued ,. „ . Reserve Effective Applicant B ankw(s) ^ Bank Commercial Bancshares, Inc., Fidelity Bank & Trust Company New York June 14, 1983 Jersey City, New Jersey of New Jersey, Pennsauken, New Jersey Consolidated Bancorp, Inc., Farmers & Merchants State Dallas May 25, 1983 Hewitt, Texas Bank, Ferris, Texas Davis County Bancorporation, Davis County Bank, San Francisco May 31, 1983 Salt Lake City, Utah Farmington, Utah Dawson Bancshares, Inc., First Bank & Trust Company, Dallas June 8, 1983 Dawson, Texas Dawson, Texas Dixie Bancshares, Inc., Dukedom Bank, St. Louis June 17, 1983 Dukedom, Tennessee Dukedom, Tennessee Energy Banks, Security Bank of Glenrock, Kansas City May 27, 1983 Casper, Wyoming, Glenrock, Wyoming Faulkner County Bankshares, The First National Bank of St. Louis May 25, 1983 Inc., Conway, Conway, Arkansas, Conway, Arkansas 1st Columbia Corp., The First National Bank of Chicago June 1, 1983 Columbus, Wisconsin Columbus, Columbus, Wisconsin First Farmers Investment Cor- Bank of Pawnee, St. Louis June 14, 1983 poration, Inc., Pawnee, Illinois Greenfield, Illinois First Mabel BanCorporation, First National Bank of Crosby, Minneapolis June 14, 1983 Inc., Crosby, Minnesota Mabel, Minnesota First Menasha Bancshares, Inc., The First National Bank of Chicago May 26, 1983 Menasha, Wisconsin Menasha, Menasha, Wisconsin First Mulberry Bancshares, Bank of Mulberry, St. Louis May 25, 1983 Inc., Mulberry, Arkansas Mulberry, Arkansas First Railroad & Banking Com- Commercial Bankshares, Inc., Atlanta May 27, 1983 pany of Georgia, Griffin, Georgia Augusta, Georgia First State Holding Company, Butler Bancorp, Inc., Kansas City May 26, 1983 Inc., Butler, Missouri Joplin, Missouri Firstmondovi, Inc., The First National Bank of Minneapolis May 27, 1983 Mondovi, Wisconsin Mondovi, Mondovi, Wisconsin GenBanc, Inc., The Genoa Banking Company, Cleveland May 27, 1983 Genoa, Ohio Genoa, Ohio Gulfcoast Bancshares, Inc., The County Bank, Atlanta June 10, 1983 Palmetto, Florida Palmetto, Florida Halbur Bancshares, Inc., Farmers Savings Bank, Chicago June 22, 1983 Halbur, Iowa Halbur, Iowa HomeBanc Corporation, The Home Bank, Atlanta June 3, 1983 Guntersville, Alabama Guntersville, Alabama Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 575 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date I.S.B. Financial Corp., Interstate Bank of Oak Forest, Chicago June 17, 1983 Midlothian, Illinois Oak Forest, Illinois Independent Banks of Virginia, Heritage Bank & Trust, Richmond May 31, 1983 Inc., Norfolk, Virginia Norfolk, Virginia Lakeland Financial Corporation, Lake City Bank, Chicago June 1, 1983 Warsaw, Indiana Warsaw, Indiana Lindell Bancshares, Inc., State Bank of Cold Spring, Minneapolis June 21, 1983 Cold Spring, Minnesota Cold Spring, Minnesota Memphis Bancshares, Inc., First State Bank, Dallas June 3, 1983 Memphis, Texas Memphis, Texas Metropolitan Bancshares, Inc., Metropolitan National Bank, Dallas June 20, 1983 Farmers Branch, Texas Farmers Branch, Texas Metropolitan National Bank-Richardson, Richardson, Texas Northeastern Bancorp, Inc., The Cement National Bank, Philadelphia June 17, 1983 Scranton, Pennsylvania Northampton, Pennsylvania Northern Wisconsin Bank Hold- Laona State Bank, Minneapolis May 27, 1983 ing Company, Laona, Wisconsin Laona, Wisconsin Oklahoma Bancorporation, Inc., Oklahoma Bank and Trust Kansas City May 20, 1983 Clinton, Oklahoma Company, Clinton, Oklahoma Peoples National Corporation, Community National Bank of Chicago June 10, 1983 Columbus Junction, Iowa Muscatine, Muscatine, Iowa Pickens County Bancshares, Bank of Reform, Atlanta June 3, 1983 Inc., Reform, Alabama Reform, Alabama Pilot Bancorp, Inc., Pilot Grove Savings Bank, Chicago May 27, 1983 Pilot Grove, Iowa Pilot Grove, Iowa Pioneer Bank shares, Inc., Pioneer Bank, Chicago June 14, 1983 North Branch, Michigan North Branch, Michigan Platte Valley National Platte Valley National Bank, Kansas City May 20, 1983 Company, Inc., Columbus, Nebraska Schuyler, Nebraska Plymouth Investment Company, Farmers State Bank, Kansas City June 8, 1983 Plymouth, Nebraska Plymouth, Nebraska Sequatchie Valley Bancshares, Citizens Bank of Dunlap, Atlanta June 21, 1983 Inc., Dunlap, Tennessee Dunlap, Tennessee Skylake Bankshares, Inc., Skylake State Bank, Atlanta June 2, 1983 North Miami Beach, Florida North Miami Beach, Florida South Suburban Bancorp, Inc., First Suburban Bank of Chicago May 27, 1983 Olympia Fields, Illinois Olympia Fields, Olympia Fields, Illinois Southern Bancshares Corp., Southern Commercial Bank, St. Louis June 2, 1983 St. Louis, Missouri St. Louis, Missouri Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

576 Federal Reserve Bulletin • July 1983 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Southern Bancshares, Inc., Moulton State Bank, Dallas June 16, 1983 Bremond, Texas Moulton, Texas Southern National Banks, Inc., First National Bank of Atlanta June 14, 1983 Fort Walton Beach, Florida Okaloosa County, Fort Walton Beach, Florida Southwest Florida Banks, Inc., Palm State Bank, Atlanta June 3, 1983 Fort Myers, Florida Palm Harbor, Florida State Bancorp, Inc., The State Bank of Washington, St. Louis May 27, 1983 Washington, Indiana Washington, Indiana Susquehanna Bancshares, Inc., Citizens National Bank and Trust Philadelphia June 17, 1983 Lititz, Pennsylvania Company of Waynesboro, Waynesboro, Pennsylvania Texana Bancshares, Inc., Texana National Bank of College Dallas May 27, 1983 Hamilton, Texas Station, College Station, Texas Thorndale Bancshares, Inc., Thorndale State Bank, Dallas May 27, 1983 Thorndale, Texas Thorndale, Texas Union of Texas Bancshares, Union Bank of Houston, Dallas May 31, 1983 Inc., Houston, Texas Houston, Texas United Central Bancshares, Plaza State Bank, Chicago June 7, 1983 Inc., Urbandale, Iowa Des Moines, Iowa United Midwest Bancorpora- Liberty Bank—Oakland, Chicago June 15, 1983 tion, Ltd., Troy, Michigan West Bloomfield, Michigan Universal Bancshares, Inc., The Fidelity State Bank, Kansas City May 27, 1983 Kansas City, Kansas Kansas City, Kansas Upper Cumberland Bancshares, Peoples Bank and Trust of Atlanta June 14, 1983 Inc., Pickett County, Byrdstown, Tennessee Byrdstown, Tennessee V.B.T. Holding Corporation, The Valparaiso Bank and Trust Atlanta June 16, 1983 Valparaiso, Florida Company, Valparaiso, Florida Bank of Mary Esther, Mary Esther, Florida Victoria Bankshares, Inc., American National Bank of Dallas May 31, 1983 Victoria, Texas Bay City, Bay City, Texas Cibolo State Bank, Cibolo, Texas W.B.T. Holding Company, Central Trade Bank, St. Louis June 23, 1983 Memphis, Tennessee Memphis, Tennessee Western Bancshares of Citizens Bank, Kansas City June 9, 1983 Albuquerque, Inc., Albuquerque, New Mexico Albuquerque, New Mexico Western Bank, Albuquerque, New Mexico Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 577 Section 4 Nonbanking Reserve Effective Applicant company Bank date F & M Financial Services Leasenu, Inc., Chicago June 21, 1983 Corporation, Menomonee Falls, Wisconsin Menomonee Falls, Wisconsin Slater Bancshares, Inc., Miller & Boyd Insurance Agency, Kansas City June 1, 1983 Slater, Missouri Slater, Missouri Southern Bancorporation, Inc., Bibb Investment Company, Richmond June 2, 1983 Greenville, South Carolina Macon, Georgia Southern Bancorporation, Inc., Master Loan Service of Long- Richmond May 25, 1983 Greenville, South Carolina view, Inc., Beaumont, Texas Sections 3 and 4 Bank(s)/Nonbanking Reserve Effective Applicant company Bank date The Home State Building, Inc., Home State Bank, Kansas City June 7, 1983 Lewis, Kansas Lewis, Kansas Lewis Insurance Service, Inc., Lewis, Kansas SSB Bancorp, Shipshewana State Bank, Chicago May 26, 1983 Shipshewana, Indiana Shipshewana, Indiana Shipshewana Insurance Agency, Inc., Shipshewana, Indiana ORDERS APPROVED UNDER BANK MERGER ACT By the Board of Governors Effective Applicant Bank ^^ Hempstead Bank, Nassau Trust Company, June 1, 1983 Hempstead, New York Glen Cove, New York By Federal Reserve Banks Reserve Effective Applicant Bank(s) Bank date Heritage Interim Bank, Heritage Bank & Trust, Richmond May 31, 1983 Norfolk, Virginia Norfolk, Virginia Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

578 Federal Reserve Bulletin • July 1983 PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits Charles G. Vick v. Paul A. Volcker, et al., filed March against the Federal Reserve Banks in which the Board 1982, U.S.D.C. for the District of Columbia. of Governors is not named a party. Jolene Gustafson v. Board of Governors, filed March 1982, U.S.C.A. for the Fifth Circuit. Independent Insurance Agents of America, Inc. and Edwin F. Gordon v. Board of Governors, et al., filed Independent Insurance Agents of Missouri, Inc. v. October 1981, U.S.C.A. for the Eleventh Circuit Board of Governors, filed June 1983, U.S.C. A. for (two consolidated cases). the Eighth Circuit (two cases). Allen Wolfson v. Board of Governors, filed September The Committee for Monetary Reform, et al., v. Board 1981, U.S.D.C. for the Middle District of Florida. of Governors, filed June 1983, U.S.D.C. for the Bank Stationers Association, Inc., et al. v. Board of District of Columbia. Governors, filed July 1981, U.S.D.C. for the North- Dakota Bankshares, Inc.v. Board of Governors, filed ern District of Georgia. May 1983, U.S.C.A. for the Eighth Circuit. Public Interest Bounty Hunters v. Board of Gover- Jet Courier Services, Inc., et al. v. Federal Reserve nors, et al, filed June 1981, U.S.D.C. for the Bank of Atlanta, et al., filed February 1983, Northern District of Georgia. U.S.C.A. for the Sixth Circuit. First Bank & Trust Company v. Board of Governors, Securities Industry Association v. Board of Gover- filed February 1981, U.S.D.C. for the Eastern Disnors, et al., filed February 1983, U.S.C.A. for the trict of Kentucky. Second Circuit. 9 to 5 Organization for Women Office Workers v. Flagship Banks, Inc. v. Board of Governors, filed Board of Governors, filed December 1980, January 1983, U.S.D.C. for the District of Colum- U.S.D.C. for the District of Massachusetts. bia. Securities Industry Association v. Board of Gover- Flagship Banks, Inc. v. Board of Governors, filed nors, et al., filed October 1980, U.S.C.A. for the October 1982, U.S.D.C. for the District of Colum- District of Columbia. bia. A. G. Becker, Inc. v. Board of Governors, et al., filed Association of Data Processing Service Organiza- October 1980, U.S.C.A. for the District of Columtions, Inc., et al. v. Board of Governors, filed bia. August 1982, U.S.C.A. for the District of Columbia. A. G. Becker, Inc. v. Board of Governors, et al., filed Richter v. Board of Governors, et al., filed May 1982, August 1980, U.S.C.A. for the District of Columbia. U.S.D.C. for the Northern District of Illinois. Berkovitz, et al. v. Government of Iran, et al., filed Wyoming Bancorporation v. Board of Governors, filed June 1980, U.S.D.C. for the Northern District of May 1982, U.S.C.A. for the Tenth Circuit. California. First Bancorporation v. Board of Governors, filed April 1982, U.S.C.A. for the Tenth Circuit. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1 Financial and Business Statistics CONTENTS Domestic Financial Statistics WEEKLY REPORTING COMMERCIAL BANKS A3 Monetary aggregates and interest rates Assets and liabilities A4 Reserves of depository institutions, Reserve A20 All reporting banks Bank credit A21 Banks with assets of $1 billion or more A5 Reserves and borrowings of depository A22 Banks in New York City institutions A23 Balance sheet memoranda A6 Federal funds and repurchase agreements of A24 Branches and agencies of foreign banks large member banks A25 Gross demand deposits of individuals, partnerships, and corporations POLICY INSTRUMENTS FINANCIAL MARKETS A7 Federal Reserve Bank interest rates A8 Reserve requirements of depository institutions A26 Commercial paper and bankers dollar A9 Maximum interest rates payable on time and acceptances outstanding savings deposits at federally insured institutions All Prime rate charged by banks on short-term All Federal Reserve open market transactions business loans All Terms of lending at commercial banks A28 Interest rates in money and capital markets FEDERAL RESERVE BANKS A29 Stock market—Selected statistics A30 Selected financial institutions—Selected assets A12 Condition and Federal Reserve note statements and liabilities A13 Maturity distribution of loan and security holdings FEDERAL FINANCE MONETARY AND CREDIT AGGREGATES A31 Federal fiscal and financing operations A32 U.S. Budget receipts and outlays A14 Aggregate reserves of depository institutions A33 Federal debt subject to statutory limitation and monetary base A33 Gross public debt of U.S. Treasury—Types and A15 Money stock measures and components ownership A16 Bank debits and deposit turnover A34 U.S. government securities dealers— A17 Loans and securities of all commercial banks Transactions, positions, and financing A35 Federal and federally sponsored credit agencies—Debt outstanding COMMERCIAL BANKING INSTITUTIONS A18 Major nondeposit funds A19 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 • July 1983 SECURITIES MARKETS AND International Statistics CORPORATE FINANCE A54 U.S. international transactions—Summary A36 New security issues—State and local A55 U.S. foreign trade governments and corporations A55 U.S. reserve assets A37 Open-end investment companies—Net sales and A55 Foreign official assets held at Federal Reserve asset position Banks A37 Corporate profits and their distribution A56 Foreign branches of U.S. banks—Balance sheet A38 Nonfinanciai corporations—Assets and data liabilities A58 Selected U.S. liabilities to foreign official A38 Total nonfarm business expenditures on new institutions plant and equipment A39 Domestic finance companies—Assets and liabilities and business credit REPORTED BY BANKS IN THE UNITED STATES A58 Liabilities to and claims on foreigners REAL ESTATE A59 Liabilities to foreigners A61 Banks' own claims on foreigners A40 Mortgage markets A62 Banks' own and domestic customers' claims on A41 Mortgage debt outstanding foreigners A62 Banks' own claims on unaffiliated foreigners A63 Claims on foreign countries—Combined CONSUMER INSTALLMENT CREDIT domestic offices and foreign branches A42 Total outstanding and net change A43 Terms REPORTED BY NONBANKING BUSINESS ENTERPRISES IN THE UNITED STATES FLOW OF FUNDS A64 Liabilities to unaffiliated foreigners A65 Claims on unaffiliated foreigners A44 Funds raised in U.S. credit markets A45 Direct and indirect sources of funds to credit markets SECURITIES HOLDINGS AND TRANSACTIONS A66 Foreign transactions in securities Domestic Nonfinanciai Statistics A67 Marketable U.S. Treasury bonds and notes— Foreign holdings and transactions A46 Nonfinanciai business activity—Selected measures A46 Output, capacity, and capacity utilization INTEREST AND EXCHANGE RATES A47 Labor force, employment, and unemployment A48 Industrial production—Indexes and gross value A67 Discount rates of foreign central banks A50 Housing and construction A68 Foreign short-term interest rates A51 Consumer and producer prices A68 Foreign exchange rates A52 Gross national product and income A53 Personal income and saving A69 Guide to Tabular Presentation, Statistical Releases, and Special Tables Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Financial Statistics A3 1.10 MONETARY AGGREGATES AND INTEREST RATES Monetary and credit aggregates (annual rates of change, seasonally adjusted in percent)1 IItteemm 1982 1983 1983 Q2 Q3 Q4 Q1 Jan. Feb. Mar. Apr. May Reserves of depository institutions 1 4.8 5.1 11.0 1.1 -19.5 6.6 19.7 8.8 -1.9 2 Required 5.3 4.9 10.1 .8 -21.2 10.2 20.0 7.6 -1.1 3 Nonborrowed 8.5 11.5 12.7 .6 -16.7 5.1 13.6' 2.5' -.2 4 Monetary base2 7.7 6.8 8.0 8.6 4.7 11.4 15.0 6.9 10.4 Concepts of money and liquid assets^ 5 Ml 3.2 6.1 13.1 14.1 9.8 22.4 15.9 -2.7 26.3 6 M2 7.0 10.9 9.3 20.3 30.9 24.4 11.2 3.0' 12.8 1 M3 8.5 12.5 9.5 10.2 13.0 13.6 8.2 3.5' 11.3 8 L 10.5 12.1 8.8 n.a. 13.0 11.1 n.a. n.a. n.a. Time and savings deposits Commercial banks 9 Total 13.4 18.2 3.2 12.4 27.9 8.8 2.9 6.8 -3.0 10 Savings4 -1.7 -1.8 13.4 -43.4 -85.9 -55.4 -19.9 -12.6 0 11 Small-denomination time5 -17.0 18.7 -.5 -48.5 -83.0 -63.9 -38.7 -19.5 -10.5 12 Large-denomination time6 17.0 26.8 -6.8 -58.5 -97.1 -60.9 -27.7 .8 -37.7 13 Thrift institutions7 4.1 6.5 6.2 12.1 10.8 21.3 17.2 16.9' 11.9 14 Total loans and securities at commercial banks8 -6.7 6.0 5.5 9.8 12.8 7.6 11.2 8.7 10.7 Interest rates (levels, percent per annum) 1982 1983 1983 Q3 Q4 Q1 Q2 Feb. Mar. Apr. May June Short-term rates 1 1 5 6 D Fe is d c e o ra u l n t f u w n i d n s d 9 o w borrowing10 1 1 1 0 . . 0 8 1 3 9 9 . . 2 2 5 8 8 8. . 6 5 5 0 8 8 . . 5 8 0 0 8 8. . 5 5 1 0 8 8 . . 7 5 7 0 8 8 . . 8 5 0 0 8 8. . 6 5 3 0 8 8 . . 9 5 8 0 1 1 7 8 T C r o e m as m u e ry rc i b a i l l l p s a ( p 3 e - r m ( o 3 n - t m h, o n se th c ) o 1 n 1- d 12 a ry market) 1 9 1 . . 3 1 2 5 7 8 . . 9 8 0 0 8 8 . . 1 3 1 4 8 8 . . 6 4 2 0 8 8 . . 1 3 1 4 8 8. . 3 5 5 2 8 8. . 2 5 1 3 8 8. . 1 3 9 3 9 8 . . 0 7 0 9 Long-term rates Bonds 19 U.S. government13 .. 12.94 10.72 10.87 10.81 11.03 10.80 10.63 10.67 11.12 20 State and local government 11.39 9.90 9.43 9.23 9.58 9.20 9.05 9.11 9.52 21 Aaa utility (new issue) 14.25 12.10 11.89 11.46 12.08 11.70 11.41 11.32 11.87 22 Conventional mortgages 15.65 13.79 13.26 n.a. 13.18 13.17 13.02 13.09 n.a. 1. Unless otherwise noted, rates of change are calculated from average 5. Small-denomination time deposits—including retail RPs—are those issued amounts outstanding in preceding month or quarter. in amounts of less than $100,000. 2. Includes reserve balances at Federal Reserve Banks in the current week 6. Large-denomination time deposits are those issued in amounts of $100,000 plus vault cash held two weeks earlier used to satisfy reserve requirements at all or more. depository institutions plus currency outside the U.S. Treasury, Federal Reserve 7. Savings and loan associations, mutual savings banks, and credit unions. Banks, the vaults of depository institutions, and surplus vault cash at depository 8. Changes calculated from figures shown in table 1.23. Beginning December institutions. 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 9. Averages of daily effective rates (average of the rates on a given date nonbank issuers; (3) demand deposits at all commercial banks other than those weighted by the volume of transactions at those rates). due to domestic banks, the U.S. government, and foreign banks and official 10. Rate for the Federal Reserve Bank of New York. institutions less cash items in the process of collection and Federal Reserve float; 11. Quoted on a bank-discount basis. and (4) negotiable order of withdrawal (NOW) and automatic transfer service 12. Unweighted average of offering rates quoted by at least five dealers. (ATS) accounts at banks and thrift institutions, credit union share draft (CUSD) 13. Market yields adjusted to a 20-year maturity by the U.S. Treasury. accounts, 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 Moody's Investors Service and adjusted to an Aaa basis. Federal Reserve Eurodollars held by U.S. residents other than banks at Caribbean branches of compilations. member banks, and balances of money market mutual funds (general purpose and 16. Average rates on new commitments for conventional first mortgages on broker/dealer). new homes in primary markets, unweighted and rounded to nearest 5 basis points, M3: M2 plus large-denomination time deposits at all depository institutions from Department of Housing and Urban Development. and 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 other than banks, bankers acceptances, commercial paper, Treasury bills and 1980. 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 Nonfinancial Statistics • July 1983 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 FFFaaaccctttooorrrsss 1983 1983 Apr. May June May 18 May 25 June 1 June 8 June 15 June 22 p June 29? SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 11111 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt ooooouuuuutttttssssstttttaaaaannnnndddddiiiiinnnnnggggg 159,250 160,130 162,306 159,993 159,716 160,326 160,424 161,349 163,332 162,748 22222 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss11111 137,877 139,481 141,484 139,806 140,400 140,446 140,540 140,921 142,427 141,615 33333 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 137,453 139,362 141,177 139,806 140,400 139,770 140,540 140,921 141,953 141,615 44444 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 424 119 307 0 0 676 0 0 474 0 55555 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss 8,931 8,916 8,922 8,908 8,908 8,948 8,908 8,893 8,937 8,890 66666 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 8,910 8,908 8,895 8,908 8,908 8,908 8,908 8,893 8,890 8,890 77777 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 21 8 27 0 0 40 0 0 47 0 88888 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 72 22 38 0 0 50 0 0 83 0 99999 LLLLLoooooaaaaannnnnsssss 995 907 1,716 1,073 951 1,118 907 1,811 1,715 2,102 1111100000 FFFFFllllloooooaaaaattttt 1,996 2,096 1,843 1,522 1,626 1,717 2,058 1,486 1,682 1,633 1111111111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 9,379 8,708 8,303 8,684 7,831 8,047 8,012 8,238 8,488 8,509 1111122222 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk 11,137 11,133 11,131 11,132 11,132 11,132 11,132 11,131 11,131 11,131 1111133333 SSSSSpppppeeeeeccccciiiiiaaaaalllll dddddrrrrraaaaawwwwwiiiiinnnnnggggg rrrrriiiiiggggghhhhhtttttsssss ccccceeeeerrrrrtttttiiiiifffffiiiiicccccaaaaattttteeeee aaaaaccccccccccooooouuuuunnnnnttttt ..... 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 1111144444 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccuuuuurrrrrrrrrreeeeennnnncccccyyyyy ooooouuuuutttttssssstttttaaaaannnnndddddiiiiinnnnnggggg 13,786 13,786 13,786 13,786 13,786 13,786 13,786 13,786 13,786 13,786 AAAAABBBBBSSSSSOOOOORRRRRBBBBBIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 1111155555 CCCCCuuuuurrrrrrrrrreeeeennnnncccccyyyyy iiiiinnnnn ccccciiiiirrrrrcccccuuuuulllllaaaaatttttiiiiiooooonnnnn 155,354 157,143 159,177 157,365 157,004 158,151 159,246 159,391 159,068 158,833 1111166666 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccaaaaassssshhhhh hhhhhooooollllldddddiiiiinnnnngggggsssss 514 532 536 533 533 533 538 540 535 533 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss,,,,, wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 1111177777 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 3,841 3,521 3,525 3,131 2,966 2,883 2,648 3,131 3,838 3,858 1111188888 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 254 244 219 272 214 273 202 221 213 221 1111199999 OOOOOttttthhhhheeeeerrrrr 642 565 541 560 535 562 527 543 516 575 2222200000 RRRRReeeeeqqqqquuuuuiiiiirrrrreeeeeddddd cccccllllleeeeeaaaaarrrrriiiiinnnnnggggg bbbbbaaaaalllllaaaaannnnnccccceeeeesssss 625 693 754 697 702 716 735 750 760 772 2222211111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd cccccaaaaapppppiiiiitttttaaaaalllll 4,995 4,959 5,107 4,867 4,985 4,978 4,994 5,046 5,206 5,197 2222222222 RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaaccccccccccooooouuuuunnnnntttttsssss22222 22,565 22,010 21,981 22,105 22,312 21,764 21,069 21,261 22,729 22,294 End-of-month figures Wednesday figures 1983 1983 Apr. May June May 18 May 25 June 1 June 8 June 15 June 22 June 29 SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 2222233333 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt ooooouuuuutttttssssstttttaaaaannnnndddddiiiiinnnnnggggg 161,866 160,828 164,075 161,986 161,531 166,123 161,304 163,582 165,347 162,170 2222244444 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss''''' 141,550 141,180 141,673 141,297 140,750 144,324 141,063 139,998 143,456 140,729 2222255555 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 137,864 141,180 140,511 141,297 140,750 139,594 141,063 139,998 142,137 140,729 2222266666 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 3,686 0 1,162 0 0 4,730 0 0 1,319 0 2222277777 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss 9,156 8,908 9,105 8,908 8,908 9,186 8,908 8,890 9,032 8,890 2222288888 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 8,908 8,908 8,890 8,908 8,908 8,908 8,908 8,890 8,890 8,890 2222299999 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 248 0 215 0 0 278 0 0 142 0 3333300000 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 704 0 203 0 0 351 0 0 272 0 3333311111 LLLLLoooooaaaaannnnnsssss 848 1,260 3,610 2,028 1,548 2,124 803 4,412 1,900 2,080 3333322222 FFFFFllllloooooaaaaattttt -1,124 850 1,058 1,951 2,225 1,966 2,241 1,444 2,047 1,638 3333333333 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 10,732 8,630 8,426 7,802 8,100 8,172 8,289 8,838 8,640 8,833 3333344444 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk 11,135 11,132 11,131 11,132 11,132 11,132 11,131 11,131 11,131 11,131 3333355555 SSSSSpppppeeeeeccccciiiiiaaaaalllll dddddrrrrraaaaawwwwwiiiiinnnnnggggg rrrrriiiiiggggghhhhhtttttsssss ccccceeeeerrrrrtttttiiiiifffffiiiiicccccaaaaattttteeeee aaaaaccccccccccooooouuuuunnnnnttttt ..... 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 3333366666 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccuuuuurrrrrrrrrreeeeennnnncccccyyyyy ooooouuuuutttttssssstttttaaaaannnnndddddiiiiinnnnnggggg 13,786 13,786 13,786 13,786 13,786 13,786 13,786 13,786 13,786 13,786 AAAAABBBBBSSSSSOOOOORRRRRBBBBBIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 3333377777 CCCCCuuuuurrrrrrrrrreeeeennnnncccccyyyyy iiiiinnnnn ccccciiiiirrrrrcccccuuuuulllllaaaaatttttiiiiiooooonnnnn 155,307 158,634 160,457 157,546 157,627 159,091 159,748 159,600 159,086 159,945 3333388888 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccaaaaassssshhhhh hhhhhooooollllldddddiiiiinnnnngggggsssss 524 532 533 534 532 535 539 538 533 531 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss,,,,, wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 3333399999 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 6,015 4,372 8,764 2,673 2,809 2,670 3,067 3,170 3,379 4,026 4444400000 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 322 445 279 250 240 278 177 271 180 241 4444411111 OOOOOttttthhhhheeeeerrrrr 796 679 470 517 684 633 514 620 453 443 4444422222 RRRRReeeeeqqqqquuuuuiiiiirrrrreeeeeddddd cccccllllleeeeeaaaaarrrrriiiiinnnnnggggg bbbbbaaaaalllllaaaaannnnnccccceeeeesssss 641 711 775 697 705 711 737 748 760 772 4444433333 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd cccccaaaaapppppiiiiitttttaaaaalllll 5,253 5,144 5,111 4,696 4,798 5,014 4,899 4,900 5,053 5,038 4444444444 RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaaccccccccccooooouuuuunnnnntttttsssss22222 ''''' 22,547 19,847 17,220 24,609 23,672 26,727 21,157 23,269 25,438 20,708 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 1983 Dec. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June? 1 Reserve balances with Reserve Banks1 26,163 24,252 24,604 24,804 24,431 23,530 22,168 22,565 22,010 21,981 2 Total vault cash (estimated) 19,538 19,578 19,807 20,392 21,454 20,035 19,484 19,569 19,710 20,094 3 Vault cash at institutions with required reserve balances2 13,577 13,658 13,836 14,292 14,602 13,705 13,027 13,246 13,339 13,693 4 Vault cash equal to required reserves at other institutions 2,178 2,677 2,759 2,757 2,829 2,562 2,844 2,839 2,933 2,912 5 Surplus vault cash at other institutions3 3,783 3,243 3,212 3,343 4,023 3,768 3,613 3,484 3,438 3,489 6 Reserve balances + total vault cash4 45,701 43,830 44,411 45,196 45,885 43,565 41,652 42,134 41,720 42,075 7 Reserve balances + total vault cash used to satisfy reserve requirements4 5 41,918 40,587 41,199 41,853 41,862 39,797 38,039 38,650 38,282 38,586 8 Required reserves (estimated) 41,606 40,183 40,797 41,353 41,316 39,362 37,602 38,174 37,833 37,943 9 Excess reserve balances at Reserve Banks4'6 312 404 402 500 546 435 437 476 449 643 10 Total borrowings at Reserve Banks 642 455 579 697 500 557 852 993 902 1,716 11 Seasonal borrowings at Reserve Banks 53 86 47 33 33 39 53 82 98 121 12 Extended credit at Reserve Banks 149 141 188 187 156 277 318 407 514 964 Weekly averages of daily figures for week ending 1983 Apr. 27 May 4 May 11 May 18 May 25 June 1 June 8 June 15 June 22P June 29P n Reserve balances with Reserve Banks1 22,822 22,851 21,345 22,105 22,312 21,764 21,069 21,261 22,729 22,294 14 Total vault cash (estimated) 19,630 20,244 20,307 19,516 18,877 19,856 20,136 20,477 19,615 20,202 15 Vault cash at institutions with required reserve balances2 13,417 13,709 13,512 13,081 13,123 13,445 13,427 13,324 13,819 13,982 16 Vault cash equal to required reserves at other institutions 2,832 2,977 3,123 2,947 2,635 3,010 3,148 3,343 2,564 2,809 17 Surplus vault cash at other institutions3 3,381 3,558 3,672 3,488 3,119 3,401 3,561 3,810 3,232 3,411 18 Reserve balances + total vault cash4 42,452 43,095 41,652 41,621 41,189 41,620 41,205 41,738 42,344 42,496 19 Reserve balances + total vault cash used to satisfy reserve requirements4'5 39,071 39,537 37,980 38,133 38,070 38,219 37,644 37,928 39,112 39,085 20 Required reserves (estimated) 38,612 38,935 37,572 37,755 37,620 37,743 37,020 37,578 38,594 38,566 71 Excess reserve balances at Reserve Banks4-6 459 602 408 378 450 476 624 350 518 519 22 Total borrowings at Reserve Banks 1,171 925 707 1,073 951 1,118 907 1,811 1,715 2,102 73 Seasonal borrowings at Reserve Banks 90 101 91 91 104 108 107 no 125 143 24 Extended credit at Reserve Banks 484 493 506 519 511 530 453 1,096 1,061 1,262 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 3. Total vault cash at institutions without required reserve balances less vault clearing balances plus vault cash at institutions with required reserve balances cash equal to their required reserves. plus vault cash equal to required reserves at other institutions. 4. Adjusted to include waivers of penalties for reserve deficiencies in accord- 6. Reserve balances with Federal Reserve Banks, which exclude required ance with Board policy, effective Nov. 19,1975, of permitting transitional relief on clearing balances plus vault cash used to satisfy reserve requirements less a graduated basis over a 24-month period when a nonmember bank merged into an required reserves. (This measure of excess reserves is comparable to the old excess reserve concept published historically.) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Nonfinancial Statistics • July 1983 1.13 FEDERAL FUNDS AND REPURCHASE AGREEMENTS Large Member Banks' Averages of daily figures, in millions of dollars 1983, week ending Wednesday BByy mmaattuurriittyy aanndd ssoouurrccee May 4 May 11 May 18 May 25 June 1 June 8 June 15 June 22 June 29 One day and continuing contract 1 Commercial banks in United States 59,065 63,386 61,792 58,724 59,750 64,366 62,554 59,083 55,811 2 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 30,120 29,157 29,147 29,120 28,042 26,878 26,422 25,715 24,115 3 Nonbank securities dealers 5,067 4,518 5,046 6,496 7,282 5,958 5,925 6,110 5,614 4 All other 26,907 27,172 26,420 26,906 25,604 25,710 26,898 26,962 27,406 All other maturities 5 Commercial banks in United States 4,883 4,776 4,849 5,142 5,214 5,228 5,558 5,729 5,630 6 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 9,781 9,337 9,351 9,534 9,909 10,414 10,326 10,104 10,479 7 Nonbank securities dealers 6,263 6,227 6,422 6,442 6,301 5,402 5,891 6,456 6,072 8 All other 8,584 9,352 9,616 9,558 9,173 8,701 8,724 8,708 9,548 MEMO: Federal funds and resale agreement loans in maturities of one day or continuing contract 9 Commercial banks in United States 25,686 24,544 24,315 22,909 25,364 22,770 22,729 24,732 23,767 10 Nonbank securities dealers 4,332 3,932 3,858 4,234 4,395 4,560 4,097 4,231 4,187 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 All 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per annum Current and previous levels Extended credit1 Short-term adjustment credit Federal Reserve and seasonal credit First 60 days Next 90 days Bank of borrowing of borrowing After 150 days Effective date for current rates Rate on Effective Previous Rate on Previous Rate on Previous Rate on Previous 6/30/83 date rate 6/30/83 rate 6/30/83 rate 6/30/83 rate Boston 8'/2 12/14/82 m 9'/2 101/2 12/14/82 New York ... 12/15/82 12/15/82 Philadelphia.. 12/17/82 12/17/82 Cleveland 12/15/82 12/15/82 Richmond ... 12/15/82 12/15/82 Atlanta 12/14/82 12/14/82 Chicago 12/14/82 12/14/82 St. Louis .... 12/14/82 12/14/82 Minneapolis.. 12/14/82 12/14/82 Kansas City . 12/15/82 12/15/82 Dallas 12/14/82 12/14/82 San Francisco 8W 12/14/82 8W 9'/2 10W 12/14/82 Range of rates in recent years2 Range (or F.R. Range (or F.R. Range (or F.R. Effective date A le l v l e F l) . — R. B o an f k Effective date A le l v l e F l) . — R. B o an f k Effective date A le l v l e F l) . — R. B o an f k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1973 m IVi 1978— July 3 7-7 'A 7'/4 11998811—— MMaayy 55 13-14 14 1974—Apr. 25 7W-8 10 71/4 7'/4 88 14 14 3 0 8 Aug. 21 73/4 73/4 Nov. 2 13-14 13 Dec. 9 7V4-8 73/4 Sept. 22 8 8 6 13 13 16 73/4 73/4 Oct. 16 8-8 Vi 8'/2 Dec. 4 12 12 20 8>/2 m 1975— Jan. 6 7V4—73/4 73/t Nov. 1 8W-9W 9 i/i 1982— July 20 11W-12 ll'/2 2 10 4 7'/4 7 - 1 7 / 3 4 /4 7 7 1 '/ / 4 4 3 9Vi 9'/2 Aug. 2 2 3 1 1 1 1 - 1/ 1 2 1 >/2 1 11 1 W Feb. 5 63/4-7'/4 63/4 1979—July 20 10 10 3 11 11 7 63/4 63/4 Aug. 17 10-10'/! lO'/i 16 10'/2 10W Mar. 10 61/4—63/4 6W 20 low 10W 27 10-10W 10 14 6'/4 6'/4 Sept. 19 10W-1 1 11 30 10 10 May 2 1 3 6 6- 6 6 1/4 6 6 Oct. 2 8 1 1 1 1 1 -1 2 1 1 2 1 Oct. 1 1 3 2 9W 9< -10 /2 9 9 W Vi 10 12 12 Nov. 22 9-9'/2 9 1976— Jan. 19 5W-6 5>/2 26 9 9 Nov. 2 2 3 2 51/ S 4- V 5 i V i 5 5 W 1/ 4 1980—Feb. 1 1 5 9 12 1 - 3 1 3 1 1 3 3 Dec. 1 1 5 4 S 8W '/2 -9 -9 9 8 W 26 51/4 51/4 May 29 12-13 13 17 8'/2 8W 30 12 12 1977— Aug. 30 5V4-53/4 51/4 June 13 11-12 11 Sept. 3 2 1 51/ 5 4 3 -5 / 3 4 /4 5 5 3 3 / / 4 4 July 2 1 8 6 10 1 - 1 1 1 1 1 1 0 Oct. 26 6 6 29 10 10 Sept. 26 11 11 1978— Jan. 9 6-6 >/2 6V1 Nov. 17 12 12 May 2 1 0 1 66 V'/2—i 7 6 7 > /2 Dec. 5 12 1 - 3 1 3 1 1 3 3 12 7 7 In effect June 30, 1983 8W 8'/2 1. Applicable to advances when exceptional circumstances or practices involve In 1980 and 1981, the Federal Reserve applied a surcharge to short-term only a particular depository institution and to advances when an institution is adjustment credit borrowings by institutions with deposits of $500 million or more under sustained liquidity pressures. See section 201.3(b)(2) of Regulation A. that had borrowed in successive weeks or in more than 4 weeks in a calendar 2. Rates for short-term adjustment credit. For description and earlier data see quarter. A 3 percent surcharge was in effect from Mar. 17, 1980, through May 7, the following publications of the Board of Governors: Banking and Monetary 1980. There was no surcharge until Nov. 17, 1980, when a 2 percent surcharge was Statistics, 1914-1941, and 1941-1970; Annual Statistical Digest, 1970-1979, 1980, adopted; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and and 1981. to 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981, and to 2 percent effective Oct. 12. As of Oct. 1, the formula for applying the surcharge was changed from a calendar quarter to a moving 13-week period. The surcharge was eliminated on Nov. 17, 1981. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Nonfinancial Statistics • July 1983 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Percent of deposits Member bank requirements Depository institution requirements before implementation of the after implementation of the TTyy dd pp ee ee pp oo oo ff ss ii dd tt ee ii pp nn oo ttee ss rr ii vv tt,, aa aa ll nndd Monetary Control Act TTyy dd pp ee ee pp oo oo ss ff ii tt dd ee iinn pp tt oo ee ss rr ii vv tt,, aa ll aa 55 nn dd Monetary Control Act6 Percent Effective date Percent Effective date Net demand2 Net transaction accounts18 $2 million-$10 million 7 9 l/2 1 1 2 2 / / 3 3 0 0/ / 7 7 6 6 $ O 0 v - e $ r 2 6 $ . 2 3 6 . m 3 i m llio ill n io n 11 3 22 1122//3300//8822 $10 million-$100 million 113/4 12/30/76 $100 million-$400 million 123/4 12/30/76 Nonpersonal time deposits9 Over $400 million 161/4 12/30/76 By original maturity Less than 2xh years 3 3/31/83 TTiimmee aanndd ssaavviinnggss22--33 2Vi years or more 0 3/31/83 Savings 3 3/16/67 Eurocurrency liabilities TTiimmee44 3 11/13/80 $0 million-$5 million, by maturity 30-179 days 3 3/16/67 180 days to 4 years 2'/> 1/8/76 4 years or more 1 10/30/75 Over $5 million, by maturity 30-179 days 6 12/12/74 180 days to 4 years 2Vi 1/8/76 4 years or more 1 10/30/75 1. For changes in reserve requirements beginning 1963, see Board's Annual percent above the base used to calculate the marginal reserve in the statement Statistical Digest, 1971-1975, and for prior changes, see Board's Annual Report week of May 14-21, 1980. In addition, beginning Mar. 19, 1980, the base was for 1976, table 13. Under provisions of the Monetary Control Act, depository reduced to the extent that foreign loans and balances declined. institutions include commercial banks, mutual savings banks, savings and loan 5. The Garn-St Germain Depository Institutions Act of 1982 (Public Law 97associations, credit unions, agencies and branches of foreign banks, and Edge Act 320) provides that $2 million of reservable liabilities (transaction accounts, corporations. nonpersonal time deposits, and Eurocurrency liabilities) of each depository 2. Requirement schedules are graduated, and each deposit interval applies to institution be subject to a zero percent reserve requirement. The Board is to adjust that part of the deposits of each bank. Demand deposits subject to reserve the amount of reservable liabilities subject to this zero percent reserve requirerequirements were gross demand deposits minus cash items in process of ment each year for the next succeeding calendar year by 80 percent of the collection and demand balances due from domestic banks. percentage increase in the total reservable liabilities of all depository institutions, The Federal Reserve Act as amended through 1978 specified different ranges of measured on an annual basis as of June 30. No corresponding adjustment is to be requirements for reserve city banks and for other banks. Reserve cities were made in the event of a decrease. Effective Dec. 9, 1982, the amount of the designated under a criterion adopted effective Nov. 9, 1972, by which a bank exemption was established at $2.1 million. In determining the reserve requirehaving net demand deposits of more than $400 million was considered to have the ments of a depository institution, the exemption shall apply in the following order: character of business of a reserve city bank. The presence of the head office of (1) nonpersonal money market deposit accounts (MMDAs) authorized under 12 such a bank constituted designation of that place as a reserve city. Cities in which CFR section 1204.122; (2) net NOW accounts (NOW accounts less allowable there were Federal Reserve Banks or branches were also reserve cities. Any deductions); (3) net other transaction accounts; and (4) nonpersonal time deposits banks having net demand deposits of $400 million or less were considered to have or Eurocurrency liabilities starting with those with the highest reserve ratio. With the character of business of banks outside of reserve cities and were permitted to respect to NOW accounts and other transaction accounts, the exemption applies maintain reserves at ratios set for banks not in reserve cities. only to such accounts that would be subject to a 3 percent reserve requirement. Effective Aug. 24, 1978, the Regulation M reserve requirements on net balances 6. For nonmember banks and thrift institutions that were not members of the due from domestic banks to their foreign branches and on deposits that foreign Federal Reserve System on or after July 1, 1979, a phase-in period ends Sept. 3, branches lend to U.S. residents were reduced to zero from 4 percent and 1 percent 1987. For banks that were members on or after July 1, 1979, but withdrew on or respectively. The Regulation D reserve requirement of borrowings from unrelated before Mar. 31, 1980, the phase-in period established by Public Law 97-320 ends banks abroad was also reduced to zero from 4 percent. on Oct. 24, 1985. For existing member banks the phase-in period is about three Effective with the reserve computation period beginning Nov. 16, 1978, years, depending on whether their new reserve requirements are greater or less domestic deposits of Edge corporations were subject to the same reserve than the old requirements. All new institutions will have a two-year phase-in requirements as deposits of member banks. beginning with the date that they open for business, except for those institutions 3. Negotiable order of withdrawal (NOW) accounts and time deposits such as that have total reservable liabilities of $50 million or more. Christmas and vacation club accounts were subject to the same requirements as 7. Transaction accounts include all deposits on which the account holder is savings deposits. permitted to make withdrawals by negotiable or transferable instruments, pay- The average reserve requirement on savings and other time deposits before ment orders of withdrawal, and telephone and preauthorized transfers (in excess implementation of the Monetary Control Act had to be at least 3 percent, the of three per month) for the purpose of making payments to third persons or others. minimum specified by law. However, MMDAs and similar accounts offered by institutions not subject to the 4. Effective Nov. 2, 1978, a supplementary reserve requirement of 2 percent rules of the Depository Institutions Deregulation Committee (D1DC) that permit was imposed on large time deposits of $100,000 or more, obligations of affiliates, no more than six preauthorized, automatic, or other transfers per month of which and ineligible acceptances. This supplementary requirement was eliminated with no more than three can be checks—are not transaction accounts (such accounts the maintenance period beginning July 24, 1980. are savings deposits subject to time deposit reserve requirements.) Effective with the reserve maintenance period beginning Oct. 25, 1979, a 8. The Monetary Control Act of 1980 requires that the amount of transaction marginal reserve requirement of 8 percent was added to managed liabilities in accounts against which the 3 percent reserve requirement applies be modified excess of a base amount. This marginal requirement was increased to 10 percent annually by 80 percent of the percentage increase in transaction accounts held by beginning Apr. 3, 1980, was decreased to 5 percent beginning June 12, 1980, and all depository institutions determined as of June 30 each year. Effective Dec. 31, was eliminated beginning July 24, 1980. Managed liabilities are defined as large 1981, the amount was increased accordingly from $25 million to $26 million; and time deposits, Eurodollar borrowings, repurchase agreements against U.S. effective Dec. 30, 1982, to $26.3 million. government and federal agency securities, federal funds borrowings from non- 9. In general, nonpersonal time deposits are time deposits, including savings member institutions, and certain other obligations. In general, the base for the deposits, that are not transaction accounts and in which the beneficial interest is marginal reserve requirement was originally the greater of (a) $100 million or (b) held by a depositor that is not a natural person. Also included are certain the average amount of the managed liabilities held by a member bank, Edge transferable time deposits held by natural persons, and certain obligations issued corporation, or family of U.S. branches and agencies of a foreign bank for the two to depository institution offices located outside the United States. For details, see reserve computation periods ending Sept. 26, 1979. For the computation period section 204.2 of Regulation D. beginning Mar. 20, 1980, the base was lowered by (a) 7 percent or (b) the decrease in an institution's U.S. office gross loans to foreigners and gross balances due NOTE. Required reserves must be held in the form of deposits with Federal from foreign offices of other institutions between the base period (Sept. 13-26, Reserve Banks or vault cash. After implementation of the Monetary Control Act, 1979) and the week ending Mar. 12, 1980, whichever was greater. For the nonmembers may maintain reserves on a pass-through basis with certain apcomputation period beginning May 29, 1980, the base was increased by IVi proved institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments All 1.16 MAXIMUM INTEREST RATES PAYABLE on Time and Savings Deposits at Federally Insured Institutions Percent per annum Savings and loan associations and Commercial banks mutual savings banks (thrift institutions) Type and maturity of deposit In effect June 30, 1983 Previous maximum In effect June 30, 1983 Previous maximum Effective Effective Effective Effective date date date date 1 Savings 51/4 7/1/79 7/1/73 5V2 7/1/79 5VA 2 Negotiable order of withdrawal accounts2.. 51/4 12/31/80 1/1/74 5'/4 12/31/80 5 1/1/74 Time accounts3 4 5 6 3 F 9 2 1 1 0 i 4 t t x o o - d e 8 d a 9 2 2 y ! c / y s d e 2 e a t i a y o l i r y s n s e ' 1 g 7 a y r r e s a 7 a t r e s by maturity4 553'//44 8 7 1 / / / 1 1 1 / / / 7 7 80 3 9 5 5 5 53 V V /4 i 2 1 1 7 7 / / 2 2 / / 1 1 1 1 / / / / 7 7 7 7 3 3 0 0 6 6 (6 ! ) / 2 1 ( /1 ') / 80 6 ( 5 5 3 3 6 / / ) 4 4 1 1 / / 2 2 0 1 1 ) / / 7 7 0 0 7 8 9 6 4 2 x t t h o o t 8 6 o y y 4 e e y a a r e r s s a 8 8 r s7 6 7 7 1 ' ' / / / 2 2 4 12 1 7 / 1 2 / / 1 3 1 / / / 7 7 7 3 4 3 7 5 (9 ' 3 / / ) 4 4 1 1 1 /2 /1 1 / / 7 7 3 0 6 7 7 3 3 1 / / / 4 4 2 12 1 / 1 2 ( / 3 1 ') / / 7 7 4 3 7 6 (" V ) i 1 1 / 1 2 / 1 1 / / 7 7 0 3 10 8 years or more8 73/4 6/1/78 (6) 8 6/1/78 (6) 11 Issued to governmental units (all maturities)10 6/1/78 73/4 12/23/74 8 6/1/78 73/4 12/23/74 12 IRAs and Keogh (H.R. 10) plans (3 years or more)1011 6/1/78 73/4 7/6/77 8 6/1/78 73/4 7/6/77 1. July 1, 1973, for mutual savings banks; July 6, 1973, for savings and loans. 9. Between July 1, 1973, and Oct. 31, 1973, certificates maturing in 4 years or 2. Federally insured commercial banks, savings and loan associations, cooper- more with minimum denominations of $1,000 had no ceiling; however, the amount ative banks, and mutual savings banks in Massachusetts and New Hampshire of such certificates that an institution could issue was limited to 5 percent of its were first permitted to offer negotiable order of withdrawal (NOW) accounts on total time and savings deposits. Sales in excess of that amount, as well as Jan. 1, 1974. Authorization to issue NOW accounts was extended to similar certificates of less than $1,000, were limited to the 6'/2 percent ceiling on time institutions throughout New England on Feb. 27. 1976, New York State on Nov. deposits maturing in 2'/2 years or more. Effective Nov. 1, 1973, ceilings were 10, 1978, New Jersey on Dec. 28, 1979, and to similar institutions nationwide reimposed on certificates maturing in 4 years or more with minimum denominaeffective Dec. 31, 1980. Effective January 5, 1983, the interest rate ceiling is tion of $1,000. There is no limitation on the amount of these certificates that banks removed for NOW accounts with an initial balance and average maintenance can issue. balance of $2,500. 10. Accounts subject to fixed-rate ceilings. See footnote 8 for minimum 3. For exceptions with respect to certain foreign time deposits, see the denomination requirements. BULLETIN for October 1962 (p. 1279), August 1965 (p. 1084), and February 1968 11. Effective Jan. 1, 1980, commercial banks are permitted to pay the same rate (p. 167). as thrifts on IRA and Keogh accounts and accounts of governmental units when 4. Effective Nov. 10, 1980, the minimum notice period for public unit accounts such deposits are placed in 21/2-year-or-more variable-ceiling certificates or in 26at savings and loan associations was decreased to 14 days and the minimum week money market certificates regardless of the level of the Treasury bill rate. maturity period for time deposits at savings and loan associations in excess of $100,000 was decreased to 14 days. Effective Oct. 30, 1980, the minimum maturity NOTE. Before Mar. 31, 1980, the maximum rates that could be paid by federally or notice period for time deposits was decreased from 30 to 14 days at mutual insured commercial banks, mutual savings banks, and savings and loan associasavings banks. tions were established by the Board of Governors of the Federal Reserve System, 5. Effective Oct. 30, 1980, the minimum maturity or notice period for time the Board of Directors of the Federal Deposit Insurance Corporation, and the deposits was decreased from 30 to 14 days at commercial banks. Federal Home Loan Bank Board under the provisions of 12 CFR 217, 329, and 526 6. No separate account category. respectively. Title II of the Depository Institutions Deregulation and Monetary 7. No minimum denomination. Until July 1, 1979, a minimum of $1,000 was Control Act of 1980 (P.L. 96-221> transferred the authority of the agencies to required for savings and loan associations, except in areas where mutual savings establish maximum rates of interest payable on deposits to the Depository banks permitted lower minimum denominations. This restriction was removed for Institutions Deregulation Committee. The maximum rates on time deposits in deposits maturing in less than 1 year, effective Nov. 1, 1973. denominations of $100,000 or more with maturities of 30-89 days were suspended 8. No minimum denomination. Until July 1, 1979, the minimum denomination in June 1970; the maximum rates for such deposits maturing in 90 days or more was $1,000 except for deposits representing funds contributed to an individual were suspended in May 1973. For information regarding previous interest rate retirement account (IRA) or a Keogh (H.R. 10) plan established pursuant to the ceilings on all types of accounts, see earlier issues of the FEDERAL RESERVE Internal Revenue Code. The $1,000 minimum requirement was removed for such BULLETIN, the Federal Home Loan Bank Board Journal, and the Annual Report accounts in December 1975 and November 1976 respectively. of the Federal Deposit Insurance Corporation. For deposits subject to variable ceiling rates and deposits not subject to interest rate ceilings see page A10. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Nonfinancial Statistics • July 1983 1.16 Continued TIME DEPOSITS SUBJECT TO VARIABLE CEILING RATES 91-day time deposits. Effective May 1, 1982, depository institutions were 12-month all savers certificates. Effective Oct. 1, 1981, depository institutions authorized to offer time deposits that have a minimum denomination of $7,500 and are authorized to issue all savers certificates (ASCs) with a 1-year maturity and an a maturity of 91 days. Effective Jan. 5, 1983, the minimum denomination required annual investment yield equal to 70 percent of the average investment yield for 52for this deposit is reduced to $2,500. The ceiling rate of interest on these deposits week U.S. Treasury bills as determined by the auction of 52-week Treasury bills is indexed to the discount rate (auction average) on most recently issued 91-day held immediately before the calendar week in which the certificate is issued. A Treasury bills for thrift institutions and the discount rate minimum 25 basis points maximum lifetime exclusion of $1,000 ($2,000 on a joint return) from gross income for commercial banks. The rate differential ends 1 year from the effective date of is generally authorized for interest income from ASCs. The annual investment these instruments and is suspended at any time the Treasury bill discount rate is 9 yield for ASCs issued in December 1982 (in percent) was as follows: Dec. 26, 6.26. percent or below for four consecutive auctions. The maximum allowable rates in June 1983 (in percent) for commercial banks and thrifts were as follows: May 28, 1'/2-year to less than 2'/2-year time deposits. Effective Aug. 1, 1981, commercia 8.65; June 7, 8.64; June 14, 8.73; June 21, 8.98; and June 28, 9.09. banks are authorized to pay interest on any variable ceiling nonnegotiable time deposit with an original maturity of 2'/2 years to less than 4 years at a rate not to Six-month money market time deposits. Effective June 1, 1978, commercial exceed '/4 of 1 percent below the average 2'/2-year yield for U.S. Treasury banks and thrift institutions were authorized to offer time deposits with a maturity securities as determined and announced by the Treasury Department immediately of exactly 26 weeks and a minimum denomination requirement of $10,000. before the date of deposit. Effective May 1, 1982, the maximum maturity for this Effective Jan. 5, 1983, the minimum denomination required for this deposit is category of deposits was reduced to less than 3'/i years. Effective Apr. 1,1983, the reduced to $2,500. The ceiling rate of interest on these deposits is indexed to the maximum maturity for this category of deposits was reduced to less than 2Vi years discount rate (auction average) on most recently issued 26-week U.S. Treasury and the minimum maturity was reduced to l'/2 years. Thrift institutions may pay bills. Interest on these certificates may not be compounded. Effective for all 6- interest on these certificates at a rate not to exceed the average 1 '/2-year yield for month money market certificates issued beginning Nov. 1, 1981, depository Treasury securities as determined and announced by the Treasury Department institutions may pay rates of interest on these deposits indexed to the higher of (1) immediately before the date of deposit. If the announced average 1 '/2-year yield the rate for 26-week Treasury bills established immediately before the date of for Treasury securities is less than 9.50 percent, commercial banks may pay 9.25 deposit (bill rate) or (2) the average of the four rates for 26-week Treasury bills percent and thrift institutions 9.50 percent for these deposits. These deposits have established for the 4 weeks immediately before the date of deposit (4-week no required minimum denomination, and interest may be compounded on them. average bill rate). Ceilings are determined as follows: The ceiling rates of interest at which they may be offered vary biweekly. The maximum allowable rates in June 1983 (in percent) for commercial banks were as Bill rate or 4-week Commercial bank ceiling follows: June 7, 9.55; and June 21, 9.65; and for thrift institutions: June 7, 9.80; average bill rate and June 21, 9.90. 7.50 percent or below 7.75 percent Between Jan. 1, 1980, and Aug. 1, 1981, commercial banks and thrift institu- Above 7.50 percent '/4 of 1 percentage point plus the higher of tions were authorized to offer variable ceiling nonnegotiable time deposits with no the bill rate or 4-week average bill rate required minimum denomination and with maturities of 2Vi years or more. Effective Jan. 1, 1980, the maximum rate for commercial banks was }A percentage Thrift ceiling point below the average yield on 2'/2-year U.S. Treasury securities; the ceiling rate 7.25 percent or below 7.75 percent for thrift institutions was '/•» percentage point higher than that for commercial Above 7.25 percent, but below '/? of 1 percentage point plus the higher of banks. Effective Mar. 1, 1980, a temporary ceiling of 113/4 percent was placed on 8.50 percent the bill rate or 4-week average bill rate these accounts at commercial banks and 12 percent on these accounts at savings 8.50 percent or above, but below 9 percent and loans. Effective June 2, 1980, the ceiling rates for these deposits at 8.75 percent commercial banks and savings and loans were increased '/2 percentage point. The 8.75 percent or above '/» of 1 percentage point plus the higher of temporary ceiling was retained, and a minimum ceiling of 9.25 percent for the bill rate or 4-week average bill rate commercial banks and 9.50 percent for thrift institutions was established. The maximum rates in June 1983 for commercial banks based on the bill rate were as follows: May 28, 8.92; June 7, 9.04; June 14, 9.08; June 21, 9.27; and June 28, 9.39, and based on the 4-week average bill rate were as follows: May 28, 8.60; June 7, 8.77; June 14, 8.94; June 21, 9.08; and June 28, 9.19. The maximum allowable rates in June 1983 for thrifts based on the bill rate were as follows: May 28,9.00; June 7,9.04; June 14, 9.08; June 21, 9.27; and June 28, 9.39; and based on the 4-week average bill rate were as follows: May 28, 8.85; June 7, 9.00; June 14, 9.00; June 21, 9.08; and June 28, 9.19. TIME DEPOSITS NOT SUBJECT TO INTEREST RATE CEILINGS Money market deposit account. Effective Dec. 14, 1982, depository institutions Time deposits of 7 to 31 days. Effective Sept. 1, 1982, depository institutions are authorized to offer a new account with a required initial balance of $2,500 and were authorized to issue nonnegotiable time deposits of $20,000 or more with a an average maintenance balance of $2,500 not subject to interest rate restrictions. maturity or required notice period of 7 to 31 days. The maximum rate of interest No minimum maturity period is required for this account, but depository payable by thrift institutions was the rate established and announced (auction institutions must reserve the right to require seven days' notice before withdraw- average on a discount basis) for U.S. Treasury bills with maturities of 91 days at als. When the average balance is less than $2,500, the account is subject to the the auction held immediately before the date of deposit or renewal ("bill rate"). maximum ceiling rate of interest for NOW accounts; compliance with the average Commercial banks could pay the bill rate minus 25 basis points. The interest rate balance requirement may be determined over a period of one month. Depository ceiling was suspended when the bill rate is 9 percent or below for the four most institutions may not guarantee a rate of interest for this account for a period longer recent auctions held before the date of deposit or renewal. Effective January 5, than one month or condition the payment of a rate on a requirement that the funds 1983, the minimum denomination required for this deposit was reduced to $2,500 remain on deposit for longer than one month. No more than six preauthorized, and the interest rate ceiling was removed. automatic, or other third-party transfers are permitted per month, of which no more than three can be checks. Telephone transfers to third parties or to another Time deposits of 2'/2 years or more. Effective May 1, 1982, depository account of the same depositor are regarded as preauthorized transfers. institutions were authorized to offer negotiable or nonnegotiable time deposits with a minimum original maturity of 3'/2 years or more that are not subject to IRAs and Keogh (H.R. 10) plans (18 months or more). Effective Dec. 1, 1981, interest rate ceilings. Such time deposits have no minimum denomination, but depository institutions are authorized to offer time deposits not subject to interest must be made available in a $500 denomination. Additional deposits may be made rate ceilings when the funds are deposited to the credit of, or in which the entire to the account during the first year without extending its maturity. Effective beneficial interest is held by, an individual pursuant to an IRA agreement or Apr. 1, 1983, the minimum maturity period for this category of deposits was Keogh (H.R. 10) plan. Such time deposits must have a minimum maturity of 18 reduced to 2'/2 years. months, and additions may be made to the time deposit at any time before its maturity without extending the maturity of all or a portion of the balance of the account. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments All 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS Millions of dollars 1982 1983 TTyyppee ooff ttrraannssaaccttiioonn 11998800 11998811 11998822 Nov. Dec. Jan. Feb. Mar. Apr. May U.S. GOVERNMENT SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 7,668 13,899 17,067 2,552 1,897 0 1,456 1,259 2,880 516 2 Gross sales 7,331 6,746 8,369 0 731 1,983 934 0 0 0 3 Exchange 0 0 0 0 0 0 0 0 0 0 4 Redemptions 3,389 1,816 3,000 0 200 900 300 0 0 0 Others within 1 year 5 Gross purchases 912 317 312 88 0 0 0 0 0 173 6 Gross sales 0 23 0 0 0 0 0 0 0 0 7 Maturity shift 12,427 13,794 17,295 2,819 906 558 4,564 1,198 826 1,795 8 Exchange -18,251 -12,869 -14,164 -1,924 -943 -544 -2,688 -900 0 -1,842 9 Redemptions 0 0 0 0 0 0 0 0 0 0 1 to 5 years 10 Gross purchases 2,138 1,702 1,797 485 0 0 0 0 0 595 11 Gross sales 0 0 0 0 0 0 0 0 0 0 12 Maturity shift -8,909 -10,299 -14,524 -2,204 -906 -553 -4,564 -1,198 -684 -41 13 Exchange 13,412 10,117 11,804 1,515 943 544 1,599 900 0 1,367 5 to 10 years 14 Gross purchases 703 393 388 194 0 0 0 0 0 326 15 Gross sales 0 0 0 0 0 0 0 0 0 0 16 Maturity shift -3,092 -3,495 -2,172 -616 0 -5 229 0 -142 -1,754 17 Exchange 2,970 1,500 2,128 250 0 0 650 0 0 300 Over 10 years 18 Gross purchases 811 379 307 132 0 0 0 0 0 108 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shift -426 0 -601 0 0 0 -229 0 0 0 21 Exchange 1,869 1,253 234 159 0 0 439 0 0 175 All maturities 22 Gross purchases 12,232 16,690 19,870 3,452 1,897 0 1,456 1,259 2,880 1,719 23 Gross sales 7,331 6,769 8,369 0 731 1,983 934 0 0 0 24 Redemptions 3,389 1,816 3,000 0 200 900 300 0 0 0 Matched transactions 25 Gross sales 674,000 589,312 543,804 39,579 72,123 59,398 35,234 47,892 37,873 43,404 26 Gross purchases 675,496 589,647 543,173 41,724 69,088 59,043 38,204 47,724 36,205 45,001 Repurchase agreements 27 Gross purchases 113,902 79,920 130,774 4,161 15,229 6,747 6,697 3,526 7,671 0 28 Gross sales 113,040 78,733 130,286 4,161 11,525 10,451 6,697 3,526 3,984 3,687 29 Net change in U.S. government securities 3,869 9,626 8,358 5,596 1,636 -6,943 3,192 1,090 4,899 -371 FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 668 494 0 0 0 0 0 0 0 0 31 Gross sales 0 0 0 0 0 0 0 0 0 0 32 Redemptions 145 108 189 * 6 9 5 8 7 * Repurchase agreements 33 Gross purchases 28,895 13,320 18,957 739 2,566 452 276 379 340 0 34 Gross sales 28,863 13,576 18,638 739 1,978 1,040 276 379 92 248 35 Net change in federal agency obligations 555 130 130 582 -596 -5 -8 241 -248 BANKERS ACCEPTANCES 36 Repurchase agreements, net 73 -582 1,285 0 1,480 -1,480 0 0 704 -704 37 Total net change in System Open Market Account 4,497 9,175 9,773 5,596 3,697 -9,019 3,187 1,082 5,844 -1,322 NOTE: Sales, redemptions, and negative figures reduce holdings of the System Open Market Account; all other figures increase such holdings. Details may not add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Nonfinancial Statistics • July 1983 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements Millions of dollars Wednesday End of month Account 1983 1983 June 1 June 8 June 15 June 22 June 29 Apr. May June Consolidated condition statement ASSETS 1 Gold certificate account 11,132 11,131 11,131 11,131 11,131 11,135 11,132 11,131 2 Special drawing rights certificate account 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 3 Coin 397 396 401 398 387 452 403 382 Loans 4 To depository institutions 2,124 803 4,412 1,900 2,080 848 1,260 3,610 5 Other 0 0 0 0 0 0 0 0 Acceptances 6 Held under repurchase agreements 351 0 0 272 0 704 0 203 Federal agency obligations 7 Bought outright 8,908 8,908 8,890 8,890 8,890 8,908 8,908 8,890 8 Held under repurchase agreements 278 0 0 142 0 248 0 215 U.S. government securities Bought outright 9 Bills 57,209 58,678 57,700 59,839 58,431 56,682 58,795 58,213 10 Notes 63,107 63,107 63,107 63,107 63,107 62,187 63,107 63,107 11 Bonds 19,278 19,278 19,191 19,191 19,191 18,995 19,278 19,191 12 Total1 139,594 141,063 139,998 142,137 140,729 137,864 141,180 140,511 13 Held under repurchase agreements 4,730 0 0 1,319 0 3,686 0 1,162 14 Total U.S. government securities 144,324 141,063 139,998 143.456 140,729 141,550 141,180 141,673 15 Total loans and securities 155,985 150,774 153,300 154,660 151,699 152,258 151,348 154,591 16 Cash items in process of collection 12,318 8,818 9,123 9.125 8,475 6,354 6,607 8,211 17 Bank premises 558 554 554 554 553 552 553 553 Other assets 18 Denominated in foreign currencies2 4,379 4,384 4,394 4,396 4,400 4,957 4,376 4,322 19 All other3 3,235 3,351 3,890 3,690 3,880 5,223 3,701 3,551 20 Total assets 192,622 184,026 187,411 188,572 185,143 185,549 182,738 187,359 LIABILITIES 21 Federal Reserve notes 146,237 146,898 146,754 146,231 147,078 142,497 145,783 147,587 Deposits 22 Depository institutions 27,441 21,898 24,027 26,204 21,487 23,193 20,567 18,004 23 U.S. Treasury—General account 2,670 3,067 3,170 3,379 4,026 6,015 4,372 8,764 24 Foreign—Official accounts 278 177 271 180 241 322 445 279 25 Other 630 510 610 447 436 791 670 461 26 Total deposits 31,019 25,652 28,078 30,210 26,190 30,321 26,054 27,508 27 Deferred availability cash items 10.352 6,577 7,679 7,078 6,837 7,478 5,757 7,153 28 Other liabilities and accrued dividends4 1,961 1,785 1,787 1,937 1,927 2,069 1,849 2,021 29 Total liabilities 189,569 180,912 184,298 185,456 182,032 182,365 179,443 184,269 CAPITAL ACCOUNTS 30 Capital paid in 1,414 1,414 1,416 1,420 1,421 1,407 1,413 1,421 31 Surplus 1,359 1,359 1,359 1,359 1,359 1,359 1,359 1,359 32 Other capital accounts 280 341 338 337 331 418 523 310 33 Total liabilities and capital accounts 192,622 184,026 187,411 188,572 185,143 185,549 182,738 187,359 34 MEMO: Marketable U .S. government securities held in custody for foreign and international account 110,083 110,145 110,228 108,667 110.758 109,843 110,198 110,889 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to bank) 163,568 164,106 164,980 166,001 166,482 161,327 163,394 166,397 36 LESS: Held by bank5 17,331 17,208 18,226 19,770 19,404 18,830 17,611 18,810 37 Federal Reserve notes, net 146,237 146,898 146,754 146,231 147,078 142,497 145,783 147,587 Collateral for Federal Reserve notes 38 Gold certificate account 11,132 11,131 11,131 11,131 11.131 11,135 11,132 1111,,113311 39 Special drawing rights certificate account 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 40 Other eligible assets 0 0 0 0 0 0 0 0 41 U.S. government and agency securities 130,487 131,149 131.005 130,482 131,329 126,744 130,033 131,838 42 Total collateral 146,237 146,898 146,754 146,231 147,078 142,497 145,783 147,587 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 market exchange rates of foreign-exchange commitments. against receipt of foreign currencies and foreign currencies warehoused for the 5. Beginning September 1980, Federal Reserve notes held by the Reserve Bank U.S. Treasury. Assets shown in this line are revalued monthly at market exchange are exempt from the collateral requirement. rates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Reserve Banks; Banking Aggregates A13 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holdings Millions of dollars Wednesday End of month TTTyyypppeee aaannnddd mmmaaatttuuurrriiitttyyy gggrrrooouuupppiiinnngggsss 1983 1983 June 1 June 8 June 15 June 22 June 29 Apr. 29 May 31 June 30 1 Loans—Total 2,124 803 4,412 1,900 2,080 848 1,260 3,610 2, Within 15 days 2,061 730 4,367 1,851 2,039 805 1,220 3,561 3 16 days to 90 days 63 73 45 49 41 43 40 49 4 91 days to 1 year 0 0 0 0 0 0 0 0 5 Acceptances—Total 351 0 0 272 0 704 0 203 6 Within 15 days 351 0 0 272 0 704 0 203 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 144,324 141,063 139,998 143,456 140,729 141,550 141,180 141,673 10 Within 15 days1 11,524 8,276 8,282 7,736 5,960 4,947 4,011 3,767 II 16 days to 90 days 28,286 28,947 28,659 31,000 30,096 30,724 32,654 30,111 17 91 days to 1 year 42,680 42,006 41,223 42,886 42,839 44,296 42,680 46,442 n Over 1 year to 5 years 33,067 33,067 33,067 33,067 33,067 31,972 33,067 32,586 14 Over 5 years to 10 years 11,700 11,700 11,700 11,700 11,700 12,828 11,700 11,700 15 Over 10 years 17,067 17,067 17,067 17,067 17,067 16,783 17,068 17,067 16 Federal agency obligations—Total 9,186 8,908 8,890 9,032 8,890 9,156 8,908 9,105 17 Within 15 days1 406 128 28 301 192 484 188 406 18 16 days to 90 days 585 651 702 571 582 499 585 583 19 91 days to 1 year 2,022 1,969 1,976 1,976 2,012 2,026 1,977 2,012 20 Over 1 year to 5 years 4,465 4,452 4,501 4,501 4,421 4,499 4,450 4,421 21 Over 5 years to 10 years 1,190 1,190 1,165 1,165 1,165 1,130 1,190 1,165 22 Over 10 years 518 518 518 518 518 518 518 518 1. Holdings under repurchase agreements are classified as maturing within 15 days in accordance with maximum maturity of the agreements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • July 1983 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE Billions of dollars, averages of daily figures 1982 1983 1979 1980 1981 IItteemm Dec. Dec. Dec. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS' 1 Total reserves2 36.23 37.93 39.93 40.41 40.78 40.34 41.00 41.31 41.27 41.77 2 Nonborrowed reserves 32.76 34.54 39.45 39.45 39.79 40.15 39.59 39.76 40.21 40.30 40.32 40.19 3 Required reserves.... 33.91 35.71 39.53 39.53 40.01 40.28 39.57 39.91 40.57 40.83 40.80 41.24 4 Monetary base3 142.8 154.9 173.2 173.2 174.3 175.6 176.3 178.0 180.2 181.2 182.9 184.4 Not seasonally adjusted 5 Total reserves2 37.24 37.24 40.00 40.00 40.68 41.56 42.23 40.23 40.23 41.05 40.74 40.89 6 Nonborrowed reserves 35.55 35.55 39.52 39.52 40.06 40.93 41.69 39.64 39.44 40.04 39.78 39.31 7 Required reserves 36.72 36.72 39.59 39.59 40.28 41.06 41.67 39.79 39.80 40.58 40.27 40.36 8 Monetary base3 158.2 158.2 173.2 173.2 175.4 178.9 177.7 175.9 177.7 180.3 181.8 183.6 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS4 9 Total reserves2 40.66 40.66 40.59 40.59 41.20 41.85 41.86 39.80 38.04 38.65 38.31 34.47 10 Nonborrowed reserves 38.97 38.97 40.11 40.11 40.58 41.22 41.33 39.22 37.24 37.65 37.36 36.89 11 Required reserves 40.15 40.15 40.18 40.18 40.80 41.35 41.32 39.36 37.60 38.18 37.84 37.94 12 Monetary base3 162.5 162.5 173.8 173.8 176.0 179.3 177.9 176.0 175.9 178.4 179.9 181.7 1. Reserve aggregates include required reserves of member banks and Edge al phase-in program of the Monetary Control Act of 1980, the net changes in Act corporations and other depository institutions. Discontinuities associated required reserves of depository institutions have been as follows: Effective with the implementation of the Monetary Control Act, the inclusion of Edge Act November 13, 1980, a reduction of $2.9 billion; February 12, 1981, an increase of corporation reserves, and other changes in Regulation D have been removed. $245 million; March 12, 1981, an increase of $75 million;May 14, 1981, an increase Beginning with the week ended December 23, 1981, reserve aggregates have been of $245 million; September 3, 1981, a reduction of $1.1 billion; November 12, reduced by shifts of reservable liabilities to international banking facilities (IBFs). 1981, an increase of $210 million; January 14, 1982, a reduction of $60 million; On the basis of reports of liabilities transferred to IBFs by U.S. commercial banks February 11, 1982 an increase of $170 million; March 4, 1982, an estimated and U.S. agencies and branches of foreign banks, it is estimated that required reduction of $2.0 billion; May 13, 1982, an estimated increase of $150 million; reserves were lowered on average $10 miilon to $20 million in December 1981 and August 12, 1982 an estimated increase of $140 million; and September 2, 1982, an $40 million to $70 million in January 1982. estimated reduction of $1.2 billion; October 28, 1982 an estimated reduction of 2. Reserve balances with Federal Reserve Banks (which exclude required $100 million; December 23, 1982 an estimated reduction of $800 million; and clearing balances) plus vault cash at institutions with required reserve balances March 3, 1983 an estimated reduction of $2.1 billion. Beginning with the week plus vault cash equal to required reserves at other institutions. ended December 23, 1981, reserve aggregates have been reduced by shifts of 3. Includes reserve balances and required clearing balances at Federal Reserve reservable liabilities to IBFs. On the basis of reports of liabilities transferred to Banks in the current week plus vault cash held two weeks earlier used to satisfy IBFs by U.S. commercial banks and U.S. agencies and branches offoreign banks, reserve requirements at all depository institutions plus currency outside the U.S. it is estimated that required reserves were lowered on average by $60 million to Treasury, Federal Reserve Banks, the vaults of depository institutions, and $90 million in December 1981 and $180 million to $230 million in January 1982, surplus vault cash at depository institutions. mostly reflecting a reduction in reservable Eurocurrency transactions. 4. Reserves of depository institutions series reflect actual reserve requirement percentages with no adjustments to eliminate the effect of changes in Regulation D NOTE. Latest monthly and weekly figures are available from the Board's including changes associated with the implementation of the Monetary Control H.3(502) statistical release. Back data and estimates of the impact on required Act. Includes required reserves of member banks and Edge Act corporations and reserves and changes in reserve requirements are available from the Banking beginning November 13, 1980, other depository institutions. Under the transition- Section, Division of Research and Statistics, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Aggregates A15 1.21 MONEY STOCK MEASURES AND COMPONENTS Billions of dollars, averages of daily figures 1983 1979 1980 1981 1982 IItteemm Dec. Dec. Dec. Dec. Feb. Mar. Apr. May Seasonally adjusted MEASURES' 1 Ml 389.0 414.1 440.6 478.2 491.1 497.6 496.5 507.4 2 M2 1,497.5 1,630.3 1,794.9 1,959.5 2,050.8 2,070.0 2,075. 1' 2,097.3 3 M3 1,758.4 1,936.7 2,167.9 2,377.6 2,430.6 2,447.3 2,454.5r 2,477.6 4 L2 2,131.8 2,343.6 2,622.0 2,896.8'' n.a. n.a. n.a. n.a. SELECTED COMPONENTS 5 Currency 106.5 116.2 123.2 132.8 135.6 137.0 138.0 139.3 6 Traveler's checks3 3.7 4.1 4.5 4.2 4.3 4.5 4.6 4.7 7 Demand deposits 262.0 266.8 236.4 239.8 238.7 240.1 238.9 242.5 8 Other checkable deposits4 17.0 26.9 76.6 101.3 112.5 116.0 115.0 120.9 9 Savings deposits5 423.1 400.7 344.4 359.3' 325.7 322.8 321.9 323.4 10 Small-denomination time deposits6 635.9 731.7 828.6 859.1 755.1 733.8 725.7 720.1 11 Large-denomination time deposits7 222.2 258.9 302.6 333.8 297.9 2%. 3 300.4r 299.2 Not seasonally adjusted MEASURES' 1? Ml 398.8 424.7 452.1 491.0 480.7' 489.2 504.4 499.8 13 M2 1,502.1 1,635.0 1,799.6 1,964.5 2,042.5 2,066.0 2,088.8' 2,093.9 14 M3 1,766.1 1,944.9 2,175.9 2,385.3 2,427.C 2,446.0 2,466.C 2,472.8 15 L2 2,138.9 2,350.8 2,629.7 2,904.7' n.a. n.a. n.a. n.a. SELECTED COMPONENTS 16 Currency 108.2 118.3 125.4 135.2 133.7 135.4 137.4 138.9 17 Traveler's checks3 3.5 3.9 4.3 4.0 4.1 4.3 4.4 4.5 18 Demand deposits 270.1 275.2 244.0 247.7 232.8 235.2 242.4 238.1 19 Other checkable deposits4 17.0 27.2 78.4 104.CV 1I0.(K 114.3' 120.3' 118.2 20 Overnight RPs and Eurodollars8 21.2 28.4 36.1 44.3 48.8' 48.7' 50.6' 56.3 21 Savings deposits5 420.7 398.3 342.1 356.7' 324.5' 323.3' 324.7' 325.0 22 Money market deposit accounts n.a. n.a. n.a. 43.2' 277.7' 320.5' 341.2' 356.8 23 Small-denomination time deposits6 633.1 728.3 824.1 853.9 758.5 737.7 728.6' 722.7 Money market mutual funds 24 General purpose and broker/dealer 33.4 61.4 150.9 182.2 159.6' 154.0 146.7 140.9 75 Institution only 9.5 14.9 36.0 47.6 45.2 43.5 41.0 40.4 26 Large-denomination time deposits7 226.0 262.4 305.9 336.5 302.6 299.0' 298.2' 298.0 1. Composition of the money stock measures is as follows: 3. Outstanding amount of U.S. dollar-denominated traveler's checks of non- Ml: Averages of daily figures for (1) currency outside the Treasury, Federal bank issuers. Reserve Banks, and the vaults of commercial banks; (2) traveler's checks of 4. Includes ATS and NOW balances at all institutions, credit union share draft nonbank issuers; (3) demand deposits at all commercial banks other than those balances, and demand deposits at mutual savings banks. due to domestic banks, the U.S. government, and foreign banks and official 5. Excludes NOW and ATS accounts at commercial banks and thrift instituinstitutions less cash items in the process of collection and Federal Reserve float; tions and CUSDs at credit unions and all money market deposit accounts and (4) negotiable order of withdrawal (NOW) and automatic transfer service (MMDAs). (ATS) accounts at banks and thrift institutions, credit union share draft (CUSD) 6. Issued in amounts of less than $100,000 and includes retail RPs. accounts, and demand deposits at mutual savings banks. 7. Issued in amounts of $100,000 or more and are net of the holdings of M2: Ml plus money market deposit accounts, savings, and small-denomination domestic banks, thrift institutions, the U.S. government, money market mutual time deposits at all depository institutions, overnight repurchase agreements at funds, and foreign banks and official institutions. commercial banks, overnight Eurodollars held by U.S. residents other than banks 8. Overnight (and continuing contract) RPs are those issued by commercial at Caribbean branches of member banks and balances of money market mutual banks to other than depository institutions and money market mutual funds funds (general purpose and broker/dealer). (general purpose and broker/dealer), and overnight Eurodollars are those issued M3: M2 plus large-denomination time deposits at all depository institutions, by Caribbean branches of member banks to U.S. residents other than depository term RPs at commercial banks and savings and loan associations, and balances of institutions and money market mutual funds (general purpose and broker/dealer). institution-only money market mutual funds. 2. L: M3 plus other liquid assets such as term Eurodollars held by U.S. NOTE: Latest monthly and weekly figures are available from the Board's H.6 residents other than banks, bankers acceptances, commercial paper, Treasury (508) release. Back data are available from the Banking Section, Division of bills and other liquid Treasury securities, and U.S. savings bonds. 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

A16 Domestic Nonfinancial Statistics • July 1983 1.22 BANK DEBITS AND DEPOSIT TURNOVER Debits are shown in billions of dollars, turnover as ratio of debits to deposits. Monthly data are at annual rates. 1982 1983 BBaannkk ggrroouupp,, oorr ttyyppee ooff ccuussttoommeerr 11998800'' 11998811'' 11998822'' Dec. Jan. Feb. Mar. Apr. May Seasonally adjusted DEBITS TO Demand deposits2 1 All insured banks 62,757.8 80,858.7 90,914.4 97,748.5 103,333.1 102,743.5 102,206.1 103,022.3 107,273.3 2 Major New York City banks 25,156.1 33,891.9 37,932.9 42,104.4 46,353.0 45,133.2 44,327.4 46,025.6 46,891.2 3 Other banks 37,601.7 46,966.9 52,981.6 55,644.1 56,980.1 57,610.3 57,878.7 56,996.7 60,382.1 4 ATS-NOW accounts3 159.3 743.4 1,036.2 1,448.1 1,262.3 1,286.4 1,369.4 1,202.2 1,371.5 5 Savings deposits4 670.0 672.7 721.4 889.3 904.3 827.9 803.2 714.9 743.1 DEPOSIT TURNOVER Demand deposits2 6 All insured banks 198.7 285.8 324.2 342.6 361.1 361.3 356.1 359.7 370.4 7 Major New York City banks 803.7 1,105.1 1,287.6 1,381.2 1,462.3 1,462.5 1,437.4 1,502.8 1,471.5 8 Other banks 132.2 186.2 211.1 218.3 223.9 227.2 225.9 222.9 234.3 9 ATS-NOW accounts3 9.7 14.0 14.5 18.4 15.8 15.1 15.6 13.9 15.2 10 Savings deposits4 3.6 4.1 4.5 4.7 6.0 5.8 5.7 5.1 5.4 Not seasonally adjusted DEBITS TO Demand deposits2 II All insured banks 63,124.4 81,197.9 91,031.9 107,454.9 101,566.1 92,654.1 109,166.3 100,117.1 103,947.8 12 Major New York City banks 25,243.1 34,032.0 38,001.0 47,576.3 45,657.2 40,937.3 47,496.6 43,678.9 44,942.5 13 Other banks 37,881.3 47,165.9 53,030.9 59,878.6 55,908.8 51,716.8 61,669.7 56,438.1 59,005.4 14 ATS-NOW accounts3 158.0 737.6 1,027.1 1,411.9 1,525.5 1,198.7 1,398.4 1,405.3 1,353.1 15 MMDA5 0 0 0 0 278.4 324.7 454.9 545.8 505.6 16 Savings deposits4 669.8 672.9 720.0 878.0 980.4 754.3 820.4 779.9 722.2 DEPOSIT TURNOVER Demand deposits2 17 All insured banks 202.3 286.1 325.0 367.2 346.1 334.8 391.8 347.9 368.1 18 Major New York City banks 814.8 1,114.2 1,295.7 1,540.7 1,368.1 1,366.7 1,561.1 1,446.9 1,471.0 19 Other banks 134.8 186.2 211.5 228.8 215.0 209.5 248.5 219.1 234.3 20 ATS-NOW accounts3 9.7 14.0 14.3 17.5 18.6 14.4 16.2 15.6 15.3 21 MMDA5 0 0 0 0 2.4 2.0 2.4 2.8 2.4 22 Savings deposits4 3.6 4.1 4.5 4.7 6.6 5.3 5.8 5.6 5.2 1. Annual averages of monthly figures. NOTE. Historical data for demand deposits are available back to 1970 estimated 2. Represents accounts of individuals, partnerships, and corporations and of in part from the debits series for 233 SMSA's that were available through June states and political subdivisions. 1977. Historical data for ATS-NOW and savings deposits are available back to 3. Accounts authorized for negotiable orders of withdrawal (NOW) and ac- July 1977. Back data are available on request from the Banking Section, Division counts authorized for automatic transfer to demand deposits (ATS). ATS data of Research and Statistics, Board of Governors of the Federal Reserve System, availability starts with December 1978. Washington, D.C. 20551. 4. Excludes ATS and NOW accounts, MMDA and special club accounts, such as Christmas and vacation clubs. 5. Money Market Deposit Accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A17 1.23 LOANS AND SECURITIES All Commercial Banks1 Billions of dollars; averages of Wednesday figures 1981 1982 1983 1981 1982 1983 Dec.2 Dec. Feb.3 Mar. Apr. May Dec.2 Dec. Feb.3 Mar. Apr. May Seasonally adjusted Not seasonally adjusted 1 Total loans and securities4 1,316.3 1,412.1 1,436.5 1,450.2 1,460.6 1,474.4 1,326.1 1,422.5 1,432.2 1,445.0 1,460.0 1,468.1 2 U.S. Treasury securities 111.0 130.9 144.5 151.0 157.8 166.1 111.4 131.5 145.1 153.2 160.6 165.3 3 Other securities 231.4 239.1 243.2 242.8 243.4 245.0 232.8 240.6 242.6 242.3 243.3 245.2 4 Total loans and leases4 973.9 1,042.0 1,048.8 1,056.3 1,059.5 1,063.3 981.8 1,050.4 11,,004444..44 11,,004499..55 11,,005566..00 11,,005577..66 5 Commercial and industrial loans 358.0 392.4 394.9 396.2 392.8 393.0 360.1 394.7 393.4 395.1 395.2 393.1 6 Real estate loans 285.7 303.2 307.6 309.5 311.4 313.6 286.8 304.1 307.3 308.6 310.4 312.4 7 Loans to individuals 185.1 191.8 192.9 194.8 196.0 197.9 186.4 193.1 192.3 193.0 194.7 196.7 8 Security loans 21.9 24.7 22.2 22.6 22.9 23.4 22.7 25.5 21.5 22.0 22.9 22.5 9 Loans to nonbank financial institutions 30.2 31.1 31.6 32.0 31.6 31.1 31.2 32.1 31.7 31.6 31.3 30.7 10 Agricultural loans 33.0 36.1 36.7 37.1 37.2 36.9 33.0 36.1 36.1 36.3 36.6 36.7 11 Lease financing receivables.... 12.7 13.1 13.3 13.1 13.1 13.1 12.7 13.1 13.3 13.1 13.1 13.1 12 All other loans 47.2 49.7 49.6 51.0 54.3 54.4 49.2 51.7 48.8 49.8 51.9 52.4 MEMO: 13 Total loans and securities plus loans sold4'5 1,319.1 1,415.0 1,439.4 1,453.1 1,463.6 1,477.2 1,328.9 1,425.4 1,435.1 1,448.0 1,462.9 1,470.9 14 Total loans plus loans sold4-5 .... 976.7 1,045.0 1,051.7 1,059.3 1,062.4 1,066.1 984.7 1,053.3 1,047.4 1,052.5 1,059.0 1,060.4 15 Total loans sold to affiliates4-5.... 2.8 2.9 3.0 3.0 3.0 2.8 2.8 2.9 3.0 3.0 3.0 2.8 16 Commercial and industrial loans plus loans sold5 360.2 394.6 397.2 398.6 395.3 395.1 362.3 396.9 395.8 397.4 397.5 395.3 17 Commercial and industrial loans sold5 2.2 2.3 2.3 2.4 2.4 2.2 2.2 2.3 2.3 2.4 2.4 2.2 18 Acceptances held 8.9 8.5 8.2 8.9 8.9 8.2 9.8 9.5 8.4 8.5 8.2 7.7 19 Other commercial and industrial loans 349.1 383.8 386.7 387.3 384.0 384.8 350.3 385.2 385.1 386.6 386.9 385.4 20 To U.S. addressees6 334.9 373.5 374.5 375.0 372.1 371.8 334.3 372.7 372.8 374.4 375.1 373.4 21 To non-U.S. addressees 14.2 10.3 12.2 12.3 11.9 13.0 16.1 12.4 12.3 12.2 11.8 12.0 22 Loans to foreign banks 19.0 13.5 14.3 14.9 15.2 15.1 20.0 14.5 14.1 14.6 14.6 14.5 1. Includes domestically chartered banks; U.S. branches and agencies of 4. Excludes loans to commercial banks in the United States. foreign banks, New York investment companies majority owned by foreign 5. Loans sold are those sold outright to a bank's own foreign branches, banks, and Edge Act corporations owned by domestically chartered and foreign nonconsolidated nonbank affiliates of the bank, the bank's holding company (if banks. not a bank), and nonconsolidated nonbank subsidiaries of the holding company. 2. Beginning December 1981, shifts of foreign loans and securities from U.S. 6. United States includes the 50 states and the District of Columbia. banking offices to international banking facilities (IBFs) reduced the levels of several items. Seasonally adjusted data that include adjustments for the amounts NOTE. Data are prorated averages of Wednesday estimates for domestically shifted from domestic offices to IBFs are available in the Board's G.7 (407) chartered banks, based on weekly reports of a sample of domestically chartered statistical release (available from Publications Services, Board of Governors of banks and quarterly reports of all domestically chartered banks. For foreignthe Federal Reserve System, Washington, D.C. 20551). related institutions, data are averages of month-end estimates based on weekly 3. Due to loan reclassifications, several categories have breaks in series: reports from large agencies and branches and quarterly reports from all agencies, beginning Jan. 12, 1983, real estate loans increased $0.4 billion and loans to branches, investment companies, and Edge Act corporations engaged in banking. individuals decreased $0.2 billion. As of Jan. 26, 1983, other securities increased $0.2 billion and total loans and commercial and industrial loans decreased $0.2 billion. As of Feb. 2, 1983, real estate loans increased $0.5 billion and commercial and industrial loans decreased $0.5 billion. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Nonfinancial Statistics • July 1983 1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS1 Monthly averages, billions of dollars 1981 1982 1983 SSoouurrccee Dec. July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Total nondeposit funds 1 Seasonally adjusted2 96.0 85.0 81.7 78.4 80.6 86.7 82.1 72.3 75.6 75.7 80.2 90.8 2 Not seasonally adjusted 97.5 86.7 85.4 80.8 82.8 88.7 83.5 73.8 76.5 76.4 78.7 90.3 Federal funds, RPs, and other borrowings from nonbanks3 3 Seasonally adjusted 111.5 119.3 120.2 121.6 126.1 129.1 127.3 131.6 134.6 134.7 139.1 145.2 4 Not seasonally adjusted 113.0 121.0 123.9 124.0 128.3 131.1 128.8 133.1 135.5 135.3 137.7 144.7 5 Net balances due to foreign-related institutions, not seasonally adjusted -18.2 -37.3 -41.3 -46.3 -48.0 -44.8 -48.1 -62.4 -62.0 -61.9 -61.8 -56.9 6 Loans sold to affiliates, not seasonally adjusted4 2.8 2.8 2.8 2.8 2.8 2.9 2.9 3.0 3.0 3.0 3.0 2.8 MEMO 7 Domestically chartered banks' net positions with own foreign branches, not seasonally adjusted5 -22.5 -33.1 -34.5 -39.0 -40.3 -38.3 -39.8 -50.1 -50.5 -52.8 -52.4 -48.4 8 Gross due from balances 54.9 60.7 65.2 68.8 69.6 69.9 72.4 79.3 78.8 79.8 79.9 76.0 9 Gross due to balances 32.4 27.6 30.8 29.7 29.4 31.6 32.6 29.2 28.3 26.9 27.5 27.6 10 Foreign-related institutions' net positions with directly related institutions, not seasonally adjusted6 4.3 -4.3 -6.9 -7.3 -7.8 -6.5 -8.3 -12.3 -11.5 -9.0 -9.4 -8.5 11 Gross due from balances 48.1 52.9 53.8 54.6 54.1 53.7 54.9 57.6 56.1 56.1 55.9 55.7 12 Gross due to balances 52.4 48.6 46.9 47.3 46.4 47.2 46.6 45.3 44.6 47.1 46.6 47.2 Security RP borrowings 13 Seasonally adjusted' 59.0 61.9 65.2 65.0 69.0 71.5 71.0 72.2 74.3 74.7 79.3 84.6 14 Not seasonally adjusted 59.2 62.2 67.5 66.0 69.8 72.1 71.1 72.2 73.7 73.9 76.3 82.6 U.S. Treasury demand balances8 15 Seasonally adjusted 12.2 9.0 10.1 11.1 14.4 10.6 11.9 15.7 8.8 12.5 13.5 11.2 16 Not seasonally adjusted 11.1 8.2 8.1 12.3 16.4 7.8 10.8 16.3 10.2 13.2 14.2 12.3 Time deposits, $100,000 or more9 17 Seasonally adjusted 324.1 360.3 367.1 366.7 376.6 360.6 347.3 319.2 303.0 296.0 296.2 287.0 18 Not seasonally adjusted 330.4 350.6 359.3 361.8 364.9 361.7 353.9 325.4 310.4 300.7 292.9 285.0 IBF ADJUSTMENTS FOR SELECTED ITEMS10 19 22.4 32.2 32.5 32.8 33.1 33.3 33.9 34.2 2222200000 11111.....77777 22222.....44444 22222.....44444 22222.....44444 22222.....44444 22222.....44444 22222.....44444 22222.....44444 2222211111 2222200000.....77777 2222299999.....88888 3333300000.....11111 3333300000.....44444 3333300000.....77777 3333300000.....99999 3333311111.....55555 3333311111.....88888 2222222222 33333.....11111 55555.....11111 55555.....33333 55555.....44444 55555.....44444 55555.....55555 55555.....88888 55555.....88888 2222233333 Item 10 1111177777.....66666 2222244444.....77777 2222244444.....99999 2222255555.....00000 2222255555.....33333 2222255555.....44444 2222255555.....77777 2222266666.....00000 1. Commercial banks are those in the 50 states and the District of Columbia participations in pooled loans. Includes averages of daily figures for member with national or state charters plus agencies and branches of foreign banks, New banks and averages of current and previous month-end data for foreign-related York investment companies majority owned by foreign banks, and Edge Act institutions. corporations owned by domestically chartered and foreign banks. 4. Loans initially booked by the bank and later sold to affiliates that are still 2. Includes seasonally adjusted federal funds, RPs, and other borrowings from held by affiliates. Averages of Wednesday data. nonbanks and not seasonally adjusted net Eurodollars and loans to affiliates. 5. Averages of daily figures for member and nonmember banks. Includes averages of Wednesday data for domestically chartered banks and 6. Averages of daily data. averages of current and previous month-end data for foreign-related institutions. 7. Based on daily average data reported by 122 large banks. 3. Other borrowings are borrowings on any instrument, such as a promissory 8. Includes U.S. Treasury demand deposits and Treasury tax-and-loan notes at note or due bill, given for the purpose of borrowing money for the banking commercial banks. Averages of daily data. business. This includes borrowings from Federal Reserve Banks and from foreign 9. Averages of Wednesday figures. banks, term federal funds, overdrawn due from bank balances, loan RPs, and 10. Estimated effects of shifts of foreign assets from U.S. banking offices to international banking facilities (IBFs). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Banking Institutions A19 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series Billions of dollars except for number of banks 1982 1983 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June DOMESTICALLY CHARTERED COMMERCIAL BANKS1 1 Loans and securities, excluding interbank 1,318.8 1,337.1 1,343.0 1,347.0 1,370.4 1,370.8 1,373.7 1,392.2 1,404.0 1,411.9 1,435.4 2 Loans, excluding interbank 970.6 985.9 988.5 990.4 1,000.8 993.3 991.4 1,001.7 1,004.6 1,006.9 1,025.2 3 Commercial and industrial 346.2 354.4 355.8 355.4 357.9 355.6 356.3 358.6 358.5 357.3 360.7 4 Other 624.4 631.5 632.7 635.0 642.9 638.2 635.8 643.7 646.8 650.8 664.5 5 U.S. Treasury securities 113.7 115.0 119.4 122.2 129.0 136.0 141.4 150.6 155.5 160.9 166.0 6 Other securities 234.5 236.2 235.1 234.4 240.5 241.6 240.8 239.9 243.9 244.1 244.1 7 Cash assets, total 160.8 157.4 162.1 169.7 184.4 167.8 184.7 168.9 170.1 164.5 176.9 8 Currency and coin 20.3 20.4 20.5 19.0 23.0 20.4 20.3 19.9 20.4 20.3 21.3 9 Reserves with Federal Reserve Banks 26.1 17.0 23.5 22.0 25.4 23.9 25.3 20.5 23.9 22.4 18.8 10 Balances with depository institutions . 58.8 60.4 61.3 64.6 67.6 67.7 71.6 67.1 66.1 65.6 69.7 11 Cash items in process of collection ... 55.5 59.6 56.8 64.1 68.4 55.9 67.5 61.5 59.6 56.3 67.1 12 Other assets2 231.3 234.9 237.0 241.8 265.3 260.1 263.6 257.9 252.4 248.3 253.1 13 Total assets/total liabilities and capital ... 1,710.9 1,729.3 1,742.1 1,758.6 1,820.1 1,798.7 1,822.0 1,818.9 1,826.3 1,824.9 1,865.4 14 Deposits 1,279.1 1,290.7 1,300.2 1,316.9 1,361.8 1,340.6 1,368.3 1,374.2 1,368.0 1,370.8 1,402.9 15 Demand 315.5 323.0 326.5 338.1 363.9 324.0 337.9 333.4 329.2 324.5 344.4 16 Savings 229.5 230.9 238.2 244.9 296.4 361.5 395.2 419.2 426.9 440.2 445.4 17 Time 734.1 736.8 735.4 733.9 701.5 655.1 635.2 621.6 611.9 606.1 613.2 18 Borrowings 196.0 202.8 203.7 198.1 215.1 221.6 218.0 211.3 224.0 214.1 221.2 19 Other liabilities 103.9 103.4 106.2 109.3 109.2 106.4 106.0 103.5 102.3 104.7 104.2 20 Residual (assets less liabilities) 131.9 132.5 132.0 134.3 133.9 130.1 129.6 130.0 132.0 135.1 137.1 MEMO: 21 U.S. Treasury note balances included in borrowing 5.9 17.0 11.7 2.4 10.7 17.1 7.0 9.6 17.8 2.7 19.3 22 Number of banks 14,770 14,785 14,797 14,782 14,787 14,780 14,812 14,819 14,823 14,817 14,826 ALL COMMERCIAL BANKING INSTITUTIONS3 23 Loans and securities, excluding interbank 1,376.6 1,397.3 1,401.7 1,413.7 1,429.8 1,427.5 1,429.8 1,451.3 1,461.0 1,467.6 1,491.8 24 Loans, excluding interbank 1,024.7 1,042.4 1,042.3 1,052.1 1,054.9 1,044.8 1,042.3 1,054.5 1,055.2 1,055.9 1,074.8 25 Commercial and industrial 384.5 395.0 393.7 398.9 396.5 393.0 392.9 396.5 394.1 392.3 396.0 26 Other 640.2 647.4 648.6 653.2 658.4 652.4 650.0 658.6 661.8 664.7 678.8 27 U.S. Treasury securities 115.8 117.2 122.7 125.7 132.8 139.5 145.1 155.3 160.3 166.1 171.3 28 Other securities 236.1 237.7 236.7 235.9 242.1 243.2 242.4 241.5 245.5 245.8 245.7 29 Cash assets, total 176.2 173.7 178.7 181.2 200.7 183.7 200.5 185.5 186.3 180.3 193.5 30 Currency and coin 20.4 20.4 20.5 19.0 23.0 20.4 20.3 19.9 20.4 20.3 21.3 31 Reserves with Federal Reserve Banks 27.5 18.4 25.0 23.4 26.8 25.3 26.7 22.0 25.4 23.8 20.0 32 Balances with depository institutions . 71.8 74.2 75.3 74.4 81.4 81.1 84.9 81.0 79.8 78.9 84.0 33 Cash items in process of collection ... 56.5 60.6 57.8 64.3 69.4 56.9 68.6 62.6 60.7 57.3 68.2 34 Other assets2 306.8 310.3 313.9 323.3 341.7 333.2 330.2 325.4 317.7 309.5 318.0 35 Total assets/total liabilities and capital ... 1,859.6 1,881.3 1,894.2 1,918.2 1,972.2 1,944.4 1,960.4 1,962.2 1,964.9 1,957.5 2,003.3 36 Deposits 1,321.7 1,335.5 1,345.2 1,358.1 1,409.7 1,385.4 1,412.6 1,419.5 1,411.0 1,413.1 1,444.0 37 Demand 327.7 335.1 338.9 344.9 376.2 335.9 350.2 345.7 341.1 336.4 356.5 38 Savings 229.7 231.1 238.5 245.1 296.7 361.9 395.6 419.7 427.3 440.7 445.8 39 Time 764.3 769.2 767.8 768.0 736.7 687.7 666.8 654.1 642.6 636.0 641.7 40 Borrowings 260.0 267.6 268.3 267.0 278.3 283.5 276.0 269.9 281.3 269.5 278.2 41 Other liabilities 144.1 143.8 146.9 156.6 148.4 143.5 140.4 141.1 138.7 137.9 142.2 42 Residual (assets less liabilities) 133.8 134.4 133.9 136.6 135.8 132.0 131.5 131.9 133.9 137.0 139.0 MEMO: 43 U.S. Treasury note balances included in borrowing 5.9 17.0 11.7 2.4 10.7 17.1 7.0 9.6 17.8 2.7 19.3 44 Number of banks 15,289 15,311 15,330 15,318 15,329 15,332 15,366 15,376 15,390 15,385 15,396 1. Domestically chartered commercial banks include all commercial banks in NOTE. Figures are partly estimated. They include all bank-premises subsidiarthe United States except branches of foreign banks; included are member and ies and other significant majority-owned domestic subsidiaries. Data for domestinonmember banks, stock savings banks, and nondeposit trust companies. cally chartered commercial banks are for the last Wednesday of the month. Data 2. Other assets include loans to U.S. commercial banks. for other banking institutions are estimates made on the last Wednesday of the 3. Commercial banking institutions include domestically chartered commercial month based on a weekly reporting sample of foreign-related institutions and banks, branches and agencies of foreign banks, Edge Act and Agreement quarter-end condition report data. corporations, and New York State foreign investment corporations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Nonfinancial Statistics • July 1983 1.26 ALL LARGE WEEKLY REPORTING COMMERCIAL BANKS with Domestic Assets of $750 Million or More on December 31, 1977, Assets and Liabilities Millions of dollars, Wednesday figures 1983 AAccccoouunntt May 4 May 11 May 18 May 25 June 1 p June 8^ June 15P June 22p June 29p 1 Cash items in process of collection 52,638 47,625 50,227 44,192 69,150 44,415 58,469 47,554 53,934 2 Demand deposits due from banks in the United States.. 7,287 6,566 7,002 6,896 8,938 6,618 7,548 7,082 7,850 3 All other cash and due from depository institutions .... 31,989 32,358 35,159 34,110 37,721 33,363 34,312 37,036 33,052 4 Total loans and securities 666,354 661,926 660,389 657,796 670,550 665,318 668,602 662,783 665,320 Securities 5 U.S. Treasury securities 52,444 53,296 53,484 52,492 54,352 55,367 55,197 54,477 53,742 6 Trading account 10,224 10,014 9,236 9,460 10,467 11,093 10,974 10,958 10,317 7 Investment account, by maturity 42,220 43,281 44,248 43,032 43,885 44,274 44,224 43,519 43,425 8 One year or less 13,414 13,976 13,940 13,718 14,960 15,231 15,068 15,101 15,231 9 Over one through five years 26,075 26,574 27,524 26,642 26,608 26,694 26,801 26,048 25,837 10 Over five years 2,731 2,730 2,784 2,673 2,317 2,350 2,355 2,370 2,357 11 Other securities 84,563 83,477 83,492 83,434 83,627 84,544 83,672 83,206 83,204 12 Trading account 7,365 6,031 5,938 5,762 6,063 6,921 6,218 5,881 5,832 13 Investment account 77,198 77,446 77,554 77,672 77,563 77,623 77,453 77,325 77,372 14 U.S. government agencies 16,766 16,865 16,867 16,866 16,750 16,724 16,587 16,549 16,485 15 States and political subdivisions, by maturity 56,988 57,150 57,221 57,318 57,372 57,449 57,479 57,367 57,466 16 One year or less 7,036 7,226 7,159 7,133 7,184 7,237 7,207 7,100 7,422 17 Over one year 49,952 49,924 50,062 50,185 50,188 50,212 50,272 50,267 50,043 18 Other bonds, corporate stocks and securities 3,444 3,431 3,466 3,488 3,441 3,450 3,387 3,409 3,421 Loans 19 Federal funds sold1 42,880 42,482 40,508 40,850 43,119 40,290 42,642 39,935 39,600 20 To commercial banks 31,123 31,836 30,350 30,266 32,843 29,590 31,271 30,106 28,603 21 To nonbank brokers and dealers in securities 8,569 8,122 7,555 7,882 7,333 7,637 7,762 6,795 8,021 22 To others 3,188 2,524 2,603 2,702 2,942 3,062 3,609 3,034 2,976 23 Other loans, gross 499,814 496,059 496,286 494,515 502,862 498,652 500,603 498,665 502,245 24 Commercial and industrial 216,168 214,181 213,094 212,573 214,470 212,916 213,564 214,197 213,329 25 Bankers acceptances and commercial paper 4,730 4,485 3,885 3,508 3,956 3,964 4,094 4,429 4,446 26 All other 211,438 209,696 209,209 209,065 210,513 208,952 209,470 209,768 208,883 27 U.S. addressees 204,481 202,874 202,372 202,218 203,654 202,012 202,620 202,894 202,120 28 Non-U.S. addressees 6,957 6,822 6,837 6,847 6,860 6,940 6,850 6,874 6,763 29 Real estate 133,981 133,919 134,207 134,240 134,358 134,272 134,614 134,605 134,860 30 To individuals for personal expenditures 75,532 75,398 75,374 75,500 75,691 75,736 7766,,006655 7766,,338822 7766,,885599 To financial institutions 31 Commercial banks in the United States 8,242 7,680 8,031 7,727 8,079 7,480 7,402 6,956 7,186 32 Banks in foreign countries 7,469 7,372 7,416 7,489 8,440 7,933 7,881 7,884 8,006 33 Sales finance, personal finance companies, etc 9,393 9,238 9,148 9,248 9,722 9,220 9,522 9,068 9,500 34 Other financial institutions 16,239 16,155 15,872 15,668 16,301 16,303 16,045 15,621 15,883 35 To nonbank brokers and dealers in securities 8,215 7,568 8,028 7,058 9,174 9,237 9,199 8,305 9,744 36 To others for purchasing and carrying securities2 .... 2,881 2,917 2,930 2,845 2,846 2,935 2,933 2,932 2,990 37 To finance agricultural production 6,857 6,843 6,869 6,900 6,950 6,972 7,005 7,050 7,050 38 All other 14,836 14,787 15,317 15,266 16,830 15,648 16,371 15,665 16,807 39 LESS: Unearned income 5,215 5,212 5,191 5,216 5,097 5,130 5,134 5,142 5,158 40 Loan loss reserve 8,131 8,175 8,191 8,280 8,313 8,404 8,378 8,359 8,312 41 Other loans, net 486,468 482,672 482,905 481,019 489,451 485,118 487,090 485,164 488,774 42 Lease financing receivables 11,082 11,068 11,025 11,015 11,039 11,029 11,034 10,996 11,052 43 All other assets 144,303 142,531 139,440 134,400 139,334 138,660 140,644 139,664 140,941 44 Total assets 913,653 902,074 903,242 888,409 936,732 899,404 920,608 905,115 912,150 Deposits 45 Demand deposits 180,005 172,010 174,279 166,111 201,731 171,233 192,814 171,933 180,687 46 Mutual savings banks 730 608 683 582 832 630 111 624 592 47 Individuals, partnerships, and corporations 132,125 132,138 130,807 126,686 150,310 132,047 142,778 130,551 134,190 48 States and political subdivisions 5,924 4,594 4,771 4,621 5,482 4,417 5,925 5,166 5,510 49 U.S. government 3,472 2,107 2,757 1,536 1,134 2,214 8,392 2,293 2,031 50 Commercial banks in the United States 20,718 17,870 19,913 18,688 25,867 18,150 19,542 18,874 20,667 51 Banks in foreign countries 5,759 5,768 5,502 5,624 6,681 5,792 5,761 5,959 6,254 52 Foreign governments and official institutions 961 1,016 974 987 997 855 1,153 1,100 1,190 53 Certified and officers' checks 10,316 7,908 8,871 7,386 10,427 7,129 8,485 7,366 10,254 54 Time and savings deposits 409,703 409,531 408,680 409,677 411,391 413,687 412,712 413,033 414,176 55 Savings 169,403 170,174 171,436 172,066 174,821 175,700 175,747 173,747 173,545 56 Individuals and nonprofit organizations 152,279 152,792 153,684 154,224 156,511 157,311 157,247 155,225 154,838 57 Partnerships and corporations operated for profit .. 15,939 16,218 16,555 16,682 17,073 17,237 17,240 17,372 17,454 58 Domestic governmental units 1,087 1,072 1,107 1,072 1,140 1,059 1,177 1,087 1,177 59 All other 98 92 90 89 97 93 84 62 76 60 Time 240,300 239,357 237,244 237,610 236,570 237,987 236,964 239,286 240,631 61 Individuals, partnerships, and corporations 209,312 208,417 207,108 207,456 207,807 209,035 208,745 210,984 212,469 62 States and political subdivisions 18,655 18,838 18,646 18,684 18,305 18,233 17,599 17,545 17,412 63 U.S. government 526 349 350 357 340 332 325 380 402 64 Commercial banks in the United States 8,287 8,216 7,707 7,745 6,882 77,,005566 6,954 66,,996644 66,,998866 65 Foreign governments, official institutions, and banks 3,520 3,538 3,433 3,368 3,235 3,332 33,,334411 33,,441133 33,,336611 Liabilities for borrowed money 66 Borrowings from Federal Reserve Banks 145 543 1,222 659 1,166 18 3,493 728 992 67 Treasury tax-and-loan notes 11,513 9,163 6,956 1,625 5,862 698 1,055 14,000 14,190 68 All other liabilities for borrowed money3 170,014 169,892 169,779 166,257 171,602 171,125 168,324 161,915 158,350 69 Other liabilities and subordinated notes and debentures . 81,988 80,426 81,987 83,842 84,382 81,957 81,843 83,128 83,501 70 Total liabilities 853,369 841,566 842,903 828,171 876,135 838,718 860,241 844,737 851,896 71 Residual (total assets minus total liabilities)4 60,284 60,509 60,339 60,238 60,596 60,686 60,367 60,378 60,253 1. Includes securities purchased under agreements to resell. 4. Not a measure of equity capital for use in capital adequacy analysis or for 2. Other than financial institutions and brokers and dealers. other analytic uses. 3. Includes federal funds purchased and securities sold under agreements to repurchase; for information on these liabilities at banks with assets of $1 billion or more on Dec. 31, 1977, see table 1.13. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Banks A21 1.27 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 May 4 May 11 May 18 May 25 June 1 p June 8^ June 15p June 22p June 29p 1 Cash items in process of collection 49,578 44,959 47,362 41,627 65,267 41,762 54,922 44,622 51,061 2 Demand deposits due from banks in the United States 6,767 6,058 6,429 6,352 8,328 6,086 6,901 6,422 7,120 3 All other cash and due from depository institutions .. 29,306 29,508 32,317 31,098 34,776 30,633 31,316 33,936 30,203 4 Total loans and securities 619,094 615,204 613,832 611,966 623,684 618,553 621,881 616,506 618,702 Securities 5 U.S. Treasury securities 48,032 48,889 48,967 48,041 49,837 50.716 50,586 49,768 48,952 6 Trading account 10,025 9,883 9,071 9,304 10,324 10,928 10,818 10,796 10,116 7 Investment account, by maturity 38,007 39,006 39,896 38,737 39,513 39,788 39,768 38,972 38,836 8 One year or less 11,676 12,209 12,155 11,951 13,144 13,353 13,258 13,254 13,435 9 Over one through five years 23,835 24,302 25,193 24,340 24,270 24,314 24,372 23,580 23,294 10 Over five years 2,496 2,495 2,549 2,446 2,098 2,120 2,137 2,138 2,107 11 Other securities 76,930 75,903 75,798 75,766 75,920 76,887 75,962 75,552 75,508 12 Trading account 7,182 5,875 5,684 5,572 5,848 6,754 5,970 5,695 5,665 13 Investment account 69,748 70,028 70,114 70,194 70,072 70,133 69,992 69,856 69,843 14 U.S. government agencies 15,192 15,298 15,298 15,285 15,159 15,128 14,998 14,958 14,865 15 States and political subdivisions, by maturity 51,506 51,667 51,721 51,802 51,842 51,929 51,970 51,849 51,909 16 One year or less 6,226 6,409 6,341 6,315 6,354 6,449 6,437 6,336 6,730 17 Over one year 45,280 45,258 45,380 45,487 45,488 45,480 45,533 45,513 45,178 18 Other bonds, corporate stocks and securities 3,050 3,063 3,096 3,107 3,071 3,075 3,024 3,050 3,070 Loans 19 Federal funds sold1 37,492 37,591 36,100 37,030 38,585 35,852 38,370 36,213 35,768 20 To commercial banks 26,352 27,493 26,466 26,975 28,827 25,683 27,584 26,867 25,315 21 To nonbank brokers and dealers in securities 7,989 7,596 7,050 7,390 6,838 7,142 7,199 6,337 7,502 22 To others 3,152 2,502 2,584 2,683 2,920 3,027 3,587 3,008 2,950 23 Other loans, gross 468,977 465,195 465,328 463,606 471,731 467,608 469,441 467,439 470,919 24 Commercial and industrial 204,453 202,422 201,323 200,857 202,744 201,206 201,853 202,497 201,617 25 Bankers acceptances and commercial paper 4,304 4,035 3,425 3,059 3,527 3,554 3,702 4,053 4,116 26 All other 200,148 198,387 197,899 197,798 199,217 197,652 198,151 198,444 197,501 27 U.S. addressees 193,302 191,678 191,180 191,070 192,476 190,834 191,417 191,687 190,857 28 Non-U.S. addressees 6,846 6,709 6,718 6,728 6,740 6,818 6,733 6,756 6,644 29 Real estate 125,814 125,735 126,002 126,036 126,149 126,035 126,301 126,290 126,517 30 To individuals for personal expenditures 67,158 67,012 66,984 67,080 67,213 67,242 67,518 67,812 68,230 To financial institutions 31 Commercial banks in the United States 7,842 7,297 7,632 7,329 7,603 7,026 7,014 6,512 6,737 32 Banks in foreign countries 7,398 7,301 7,344 7,417 8,349 7,852 7,798 7,808 7,924 33 Sales finance, personal finance companies, etc. .. 9,224 9,066 8,974 9,063 9,543 9,027 9,335 8,894 9,325 34 Other financial institutions 15,570 15,489 15,220 15,028 15,652 15,654 15,393 14,958 15,206 35 To nonbank brokers and dealers in securities 8,168 7,530 7,986 7,023 9,123 9,189 9,154 8,257 9,724 36 To others for purchasing and carrying securities2 .. 2,644 2,679 2,692 2,606 2,609 2,698 2,693 2,685 2,743 37 To finance agricultural production 6,656 6,639 6,662 6,697 6,748 6,768 6,801 6,844 6,844 38 All other 14,050 14,025 14,509 14,471 15,998 14,909 15,581 14,881 16,051 39 LESS: Unearned income 4,617 4,614 4,590 4,616 4,505 4,536 4,538 4,542 4,560 40 Loan loss reserve 7,720 7,761 7,772 7,860 7,884 7,973 7,940 7,923 7,885 41 Other loans, net 456,640 452,820 452,966 451,130 459,342 455,098 456,963 454,974 458,474 42 Lease financing receivables 10,675 10,664 10,627 10,617 10,635 10,622 10,628 10,592 10,648 43 All other assets 140,109 138,452 135,344 130,365 135,300 134,362 136,233 135,369 136,540 44 Total assets 855,528 844,845 845,912 832,027 877,990 842,018 861,881 847,446 854,275 Deposits 45 Demand deposits 167,112 159,800 161,896 154,247 187,926 158,933 179,056 159,456 168,307 46 Mutual savings banks 694 579 649 553 790 605 749 595 563 47 Individuals, partnerships, and corporations 122,190 122,507 121,184 117,284 139,611 122,199 132,511 120,878 124,425 48 States and political subdivisions 5,348 4,076 4,170 4,150 4,888 3,981 5,172 4,468 4,940 49 U.S. government 3,164 1,958 2,513 1,421 1,012 1,998 7,611 2,002 1,827 50 Commercial banks in the United States 19,059 16,319 18,391 17,202 23,914 16,653 17,950 17,400 19,142 51 Banks in foreign countries 5,714 5,726 5,456 5,580 6,627 5,750 5,717 5,920 6,213 52 Foreign governments and official institutions 960 1,015 973 986 996 854 1,148 1,095 1,189 53 Certified and officers' checks 9,982 7,620 8,559 7,070 10,087 6,894 8,199 7,098 10,007 54 Time and savings deposits 380,647 380,474 379,601 380,449 381,818 383,910 382,830 383,120 384,245 55 Savings 156,819 157,560 158,744 159,356 161,877 162,659 162,648 160,851 160,650 56 Individuals and nonprofit organizations 141,110 141,611 142,444 142,975 145,047 145,765 145,685 143,857 143,473 57 Partnerships and corporations operated for profit 14,610 14,868 15,187 15,301 15,676 15,827 15,787 15,927 16,021 58 Domestic governmental units 1,010 994 1,028 995 1,061 978 1,095 1,007 1,082 59 All other 90 87 85 84 94 89 82 60 74 60 Time 223,828 222,914 220,857 221,093 219,941 221,251 220,182 222,269 223,594 61 Individuals, partnerships, and corporations 195,007 194,140 192,861 193,103 193,297 194,396 193,970 195,998 197,482 62 States and political subdivisions 16,752 16,945 16,782 16,798 16,459 16,401 15,842 15,770 15,642 63 U.S. government 446 258 258 262 249 244 237 289 293 64 Commercial banks in the United States 8,102 8,034 7,522 7,561 6,700 6,878 6,792 6,800 6,816 65 Foreign governments, official institutions, and banks 3,520 3,538 3,433 3,368 3,235 3,332 3,341 3,413 3,361 Liabilities for borrowed money 66 Borrowings from Federal Reserve Banks 145 543 1,215 643 1,159 18 3,479 728 985 67 Treasury tax-and-loan notes 10,868 8,622 6,539 1,529 5,594 628 963 13,334 13,467 68 All other liabilities for borrowed money3 160,284 160,312 160,190 156,924 162,353 161,726 159,102 153,012 149,364 69 Other liabilities and subordinated notes and debentures 80,025 78,422 79,959 81,817 82,400 79,980 79,873 81,198 81,501 70 Total liabilities 799,080 788,174 789,399 775,609 821,251 785,194 805,304 790,849 797,870 71 Residual (total assets minus total liabilities)4 56,448 56,671 56,513 56,418 56,739 56,824 56,577 56,598 56,405 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

A22 Domestic Nonfinancial Statistics • July 1983 1.28 LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures 1983 May 4 May 11 May 18 May 25 June IP June 8p June 15P June 221> June 29p 1 Cash items in process of collection 17,214 16,302 18,229 14,489 24,749 14,670 21,142 15,756 20,426 2 Demand deposits due from banks in the United States.. 1,257 1,020 1,245 1,212 1,593 950 999 952 1,114 3 All other cash and due from depository institutions 7,298 6,167 6,518 5,880 6,131 6,631 6,295 7,187 5,778 4 Total loans and securities1 142,754 142,088 144,466 142,980 148,649 143,459 144,793 142,005 144,238 Securities 5 U.S. Treasury securities2 6 Trading account2 7 Investment account, by maturity 9,718 10,485 10,685 9,555 9,529 9,476 9,488 9,088 9,094 8 One year or less 1,817 2,368 2,363 2,248 2,453 2,532 2,539 2,456 2,571 9 Over one through five years 7,360 7,574 7,814 6,799 6,569 6,478 6,508 6,182 6,080 10 Over five years 541 543 508 508 508 466 442 445500 442 11 V 13 Investment account 13,916 14,085 14,151 14,133 14,151 14,179 14,213 14,166 14,252 14 U.S. government agencies 1,458 1,450 1,528 1,522 1,532 1,520 1,556 1,556 1,525 15 States and political subdivisions, by maturity 11,630 11,792 11,805 11,800 11,813 11,849 11,858 11,804 11,922 16 One year or less 1,466 1,609 1,562 1,528 1,517 1,509 1,519 1,473 1,506 17 Over one year 10,164 10,183 10,244 10,271 10,296 10,340 10,338 10,331 1100,,441166 18 Other bonds, corporate stocks and securities 827 843 818 811 806 810 799 804 880066 Loans 19 Federal funds sold3 10,108 10,065 12,383 13,051 13,751 11,749 11,715 10,467 11,594 20 To commercial banks 4,584 5,129 7,433 7,643 8,687 6,758 6,048 5,759 6,238 21 To nonbank brokers and dealers in securities 4,085 4,105 3,955 4,220 3,820 3,660 4,004 3,352 4,110 22 To others 1,438 831 995 1,187 1,244 1,331 1,663 1,356 1,246 23 Other loans, gross 112,948 111,398 111,182 110,233 115,196 112,070 113,366 112,276 113,322 24 Commercial and industrial 58,283 57,536 57,051 56,786 58,094 57,088 57,730 58,258 57,242 25 Bankers' acceptances and commercial paper 1,165 1,171 917 908 1,111 1,076 916 1,189 1,024 26 All other 57,118 56,365 56,133 55,879 56,983 56,012 56,814 57,069 56,218 27 U.S. addressees 55,616 54,856 54,655 54,403 55,480 54,395 55,203 55,447 54,668 28 Non-U.S. addressees 1,502 1,508 1,479 1,476 1,503 1,617 1,610 1,622 1,550 29 Real estate 19,533 19,419 19,586 19,574 19,557 19,407 19,440 19,480 19,482 30 To individuals for personal expenditures 11,620 11,612 11,555 11,560 1111,,557755 1111,,557744 1111,,663344 1111,,668811 1111,,776611 To financial institutions 31 Commercial banks in the United States 2,377 2,201 2,238 2,105 2,314 1,862 1,739 1,470 1,496 32 Banks in foreign countries 2,758 2,726 2,613 2,712 3,153 2,735 2,790 2,914 2,868 33 Sales finance, personal finance companies, etc 3,864 3,800 3,747 3,725 3,959 3,622 3,890 3,638 3,891 34 Other financial institutions 4,918 4,616 4,543 4,498 4,739 4,580 4,557 4,400 4,475 35 To nonbank brokers and dealers in securities 4,881 4,805 4,829 4,146 5,968 5,895 6,140 5,238 6,325 36 To others for purchasing and carrying securities4 .... 587 564 540 551 543 620 617 626 661 37 To finance agricultural production 467 458 472 474 466 472 471 473 468 38 All other 3,660 3,661 4,008 4,101 4,827 4,215 4,356 4,098 4,652 39 LESS: Unearned income 1,404 1,409 1,396 1,405 1,392 1,400 1,403 1,415 1,428 40 Loan loss reserve 2,531 2,537 2,539 2,587 2,586 2,615 2,586 2,578 2,5% 41 Other loans, net 109,013 107,452 107,247 106,242 111,217 108,055 109,376 108,284 109,298 42 Lease financing receivables 2,032 2,032 2,012 2,012 2,017 2,002 2,014 2,001 2,001 43 All other assets5 63,432 62,693 59,580 55,475 58,847 59,365 61,515 61,628 61,121 44 Total assets 233,988 230,302 232,049 222,048 241,986 227,346 236,758 229,529 234,678 Deposits 45 Demand deposits 49,174 46,818 48,946 44,860 60,696 46,106 54,164 47,190 52,236 46 Mutual savings banks 302 262 311 246 374 282 419 300 255 47 Individuals, partnerships, and corporations 30,471 31,525 31,857 30,007 40,117 31,590 35,587 31,662 33,029 48 States and political subdivisions 1,103 727 688 680 833 811 1,185 927 908 49 U.S. government 854 586 630 419 210 562 2,603 506 457 50 Commercial banks in the United States 5,485 4,300 5,529 4,739 7,356 4,342 4,900 4,674 6,060 51 Banks in foreign countries 4,432 4,437 4,200 4,199 5,256 4,426 4,361 44,,666688 4,977 52 Foreign governments and official institutions 772 816 768 794 801 659 932 888888 949 53 Certified and officers' checks 5,753 4,165 4,961 3,775 5,749 3,433 4,176 3,564 5,601 54 Time and savings deposits 72,126 72,063 72,283 72,466 73,003 73,018 72,560 72,194 72,436 55 Savings 27,537 27,899 28,428 28,705 29,333 29,606 29,834 29,591 29,684 56 Individuals and nonprofit organizations 25,049 25,360 25,752 26,032 26,395 26,663 26,798 26,572 26,651 57 Partnerships and corporations operated for profit .. 2,205 2,265 2,389 2,4)1 2,673 2,710 2,763 2,784 2,764 58 Domestic governmental units 220 214 228 203 1% 177 217 201 231 59 All other 62 60 59 58 68 57 56 34 38 60 Time 44,590 44,164 43,856 43,761 43,669 43,412 42,727 42,603 42,752 61 Individuals, partnerships, and corporations 36,537 36,383 36,576 36,231 37,070 36,489 35,834 35,783 35,990 62 States and political subdivisions 2,196 2,201 2,188 2,220 2,121 2,131 2,094 2,018 2,028 63 U.S. government 230 39 39 39 39 39 41 83 90 64 Commercial banks in the United States 4,184 4,073 4,233 3,305 3,128 33,,337788 33,,334422 33,,224466 33,,222255 65 Foreign governments, official institutions, and banks 1,444 1,467 1,420 1,366 1,311 11,,337744 11,,441166 11,,447744 11,,442200 Liabilities for borrowed money 66 400 1,120 1,375 67 Treasury tax-and-loan notes 2,578 2,184 1,707 479 1,249 110 148 3,120 3,335 68 All other liabilities for borrowed money6 58,664 58,191 55,750 51,149 53,007 55,683 55,969 53,989 52,754 69 Other liabilities and subordinated notes and debentures . 32,124 31,137 32,773 33,654 34,444 32,782 32,985 33,478 34,563 70 Total liabilities 214,666 210,792 212,579 202,608 222,398 207,700 217,201 209,971 215,325 71 Residual (total assets minus total liabilities)7 19,322 19,510 19,470 19,440 19,587 19,646 19,557 19,558 19,353 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 A23 1.29 LARGE WEEKLY REPORTING COMMERCIAL BANKS Balance Sheet Memoranda Millions of dollars, Wednesday figures 1983 AAccccoouunntt May 4 May 11 May 18 May 25 June IP June 8P June 15P June 22? June 29P BANKS WITH ASSETS OF $750 MILLION O RMORE 1 Total loans (gross) and securities adjusted1 640,336 635,798 635,389 633,298 643,038 641,782 643,441 639,222 643,001 2 Total loans (gross) adjusted1 503,330 499,026 498,413 497,372 505,058 501,871 504,572 501,538 506,056 3 Demand deposits adjusted2 103,178 104,407 101,382 101,694 105,580 106,455 106,410 103,212 104,055 4 Time deposits in accounts of $100,000 or more 145,043 144,473 142,564 143,197 141,870 143,009 141,773 143,895 144,828 5 Negotiable CDs 97,203 96,545 94,601 95,134 94,270 94,942 93,840 95,700 96,139 6 Other time deposits 47,839 47,928 47,963 48,063 47,600 48,067 47,933 48,1% 48,688 7 Loans sold outright to affiliates3 2,790 2,808 2,808 2,757 2,735 2,777 2,792 2,721 2,775 8 Commercial and industrial 2,172 2,189 2,189 2,145 2,130 2,173 2,161 2,149 2,202 9 Other 617 619 619 611 606 604 631 572 573 BANKS WITH ASSETS OF $1 BILLION OR MORE 10 Total loans (gross) and securities adjusted1 597,238 592,789 592,095 590,157 599,642 598,352 599,760 595,592 599,095 11 Total loans (gross) adjusted1 472,276 467,997 467,330 466,350 473,885 470,750 473,213 470,273 474,634 12 Demand deposits adjusted2 95,311 96,564 93,629 93,997 97,733 98,520 98,574 95,432 96,277 13 Time deposits in accounts of $100,000 or more 137,123 136,598 134,724 135,210 133,796 134,824 133,590 135,523 136,463 14 Negotiable CDs 92,909 92,282 90,381 90,820 89,834 90,399 89,308 91,012 91,431 15 Other time deposits 44,214 44,316 44,343 44,391 43,961 44,425 44,282 44,511 45,032 16 Loans sold outright to affiliates3 2,734 2,753 2,755 2,704 2,683 2,726 2,738 2,666 2,720 17 Commercial and industrial 2,128 2,145 2,146 2,104 2,089 2,132 2,117 2,105 2,158 18 Other 606 608 609 600 594 594 621 562 562 BANKS IN NEW YORK CITY 19 Total loans (gross) and securities adjusted1-4 139,728 138,703 138,730 137,223 141,628 138,854 140,995 138,768 140,528 20 Total loans (gross) adjusted1 116,094 114,133 113,894 113,535 117,947 115,199 117,293 115,514 117,182 21 Demand deposits adjusted2 25,620 25,630 24,557 25,212 28,380 26,531 25,518 26,254 25,292 22 Time deposits in accounts of $100,000 or more 33,830 33,639 33,471 33,438 33,260 32,957 32,265 32,237 32,353 23 Negotiable CDs 23,774 23,639 23,362 23,408 23,098 22,751 22,061 22,083 22,165 24 Other time deposits 10,056 10,000 10,109 10,031 10,162 10,206 10,205 10,154 10,188 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, banks. nonconsolidated nonbank affiliates of the bank, the bank's holding company (if 2. All demand deposits except U.S. government and domestic banks less cash not a 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

A24 Domestic Nonfinancial Statistics • July 1983 1.30 LARGE WEEKLY REPORTING BRANCHES AND AGENCIES OF FOREIGN BANKS Assets and Liabilities Millions of dollars, Wednesday figures 1983 AAccccoouunntt May 4 May 11 May 18 May 25 June 1 p June 8p June 15p June 22p June 29p 1 Cash and due from depository institutions. 8,138 7,076 7,448 6,873 7,114 7,161 7,006 7,287 7,530 2 Total loans and securities 40,957 40,458 40,832 39,972 41,550 41,889 40,880 41,272 42,019 3 U.S. Treasury securities 4,148 4,068 3,985 4,282 4,353 4,366 4,336 4,337 4,425 4 Other securities 844 887 918 923 875 858 850 855 860 5 Federal funds sold1 2,491 1,838 2,588 2,152 3,132 2,991 1,718 2,312 2,862 6 To commercial banks in United States .. 2,093 1,593 2,430 2,058 2,960 2,806 1,595 2,296 2,737 7 To others 399 245 157 94 172 185 123 16 126 8 Other loans, gross 33,474 33,665 33,342 32,615 33,190 33,674 33,976 33,767 33,871 9 Commercial and industrial 17,264 17,596 17,461 17,210 17,453 1177,,774488 1177,,772288 1177,,446600 1177,,224433 10 Bankers acceptances and commercial paper 2,482 2,570 2,500 2,452 2,521 2,611 2,571 2,659 2,849 11 All other 14,782 15,026 14,961 14,759 14,932 15,137 15,156 14,801 14,394 12 U.S. addressees 12,890 13,174 13,184 12,966 13,086 13,273 13,326 12,890 12,687 13 Non-U.S. addressees 1,892 1,852 1,776 1,793 1,846 1,864 1,830 1,911 1,706 14 To financial institutions 12,247 12,349 12,093 11,717 11,849 11,868 12,139 12,256 12,358 15 Commercial banks in United States... 9,293 9,357 9,144 8,880 8,844 9,126 9,448 9,695 9,843 16 Banks in foreign countries 2,387 2,415 2,385 2,260 2,372 2,166 2,100 1,955 1,948 17 Nonbank financial institutions 567 578 565 576 632 576 590 605 567 18 For purchasing and carrying securities .. 457 236 193 224 221 444 328 362 449 19 All other 3,506 3,484 3,595 3,463 3,667 33,,661133 33,,778811 33,,668899 33,,882211 20 Other assets (claims on nonrelated parties) 10,645 10,729 9,797 9,929 9,768 10,007 10,234 10,085 10,309 21 Net due from related institutions 13,100 13,444 12,056 11,370 11,355 10,351 10,753 9,778 10,166 22 Total assets 72,840 71,707 70,134 68,143 69,787 69,409 68,872 68,422 70,024 23 Deposits or credit balances2 21,851 21,980 22,198 21,072 21,459 21,819 21,214 20,974 21,132 24 Credit balances 207 178 204 203 207 160 268 186 206 25 Demand deposits 2,253 1,815 2,616 1,820 22,,001100 11,,882200 11,,991122 11,,998811 22,,003388 26 Individuals, partnerships, and corporations 843 768 1,047 900 977 814 961 888 915 27 Other 1,411 1,048 1,568 920 1,033 1,006 951 1,092 1,123 28 Total time and savings 19,391 19,987 19,378 19,048 19,241 19,839 1199,,003344 1188,,880077 1188,,888888 29 Individuals, partnerships, and corporations 16,604 17,286 16,516 16,179 16,582 16,834 16,148 15,810 16,190 30 Other 2,787 2,701 2,862 2,869 2,660 3,004 2,886 2,997 2,699 31 Borrowings3 30,776 30,914 28,621 29,429 29,582 28,564 28,914 28,285 28,928 32 Federal funds purchased4 11,197 11,466 9,762 10,387 9,585 88,,668855 88,,668855 88,,114466 77,,669922 33 From commercial banks in United States 9,421 9,554 7,930 8,367 8,035 7,274 7,276 6,717 6,310 34 From others 1,776 1,912 1,832 2,020 1,550 1,411 1,410 1,429 1,382 35 Other liabilities for borrowed money 19,579 19,448 18,859 19,042 19,997 19,879 20,228 20,139 21,236 36 To commercial banks in United States 16,802 16,717 16,245 16,424 17,104 16,887 17,271 17,300 18,373 37 To others 2,776 2,731 2,614 2,618 2,892 2,992 2,957 2,839 2,863 38 Other liabilities to nonrelated parties 11,586 11,591 11,342 11,248 10,996 11,199 11,121 11,003 11,245 39 Net due to related institutions 8,627 7,221 7,973 6,394 7,750 7,826 7,623 8,160 8,719 40 Total liabilities 72,840 71,707 70,134 68,143 69,787 69,409 68,872 68,422 70,024 MEMO 41 Total loans (gross) and securities adjusted* 29,571 29,508 29,258 29,033 29,746 29,956 29,837 29,280 29,439 42 Total loans (gross) adjusted5 24,579 24,553 24,356 23,828 24,518 24,732 24,651 24,088 24,153 1. Includes securities purchased under agreements to resell. 4. Includes securities sold under agreements to repurchase. 2. Balances due to other than directly related institutions. 5. Excludes loans and federal funds transactions with commercial banks in 3. Borrowings from other than directly related institutions. United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

IPC Demand Deposits A25 1.31 GROSS DEMAND DEPOSITS of Individuals, Partnerships, and Corporations' Billions of dollars, estimated daily-average balances Commercial banks TTyyppee ooff hhoollddeerr 1981 1982 11997788 1199779922 11998800 DDeecc.. DDeecc.. DDeecc.. June3 Sept. Dec. Mar. June Sept. Dec. 1 All holders—Individuals, partnerships, and corporations 294.6 302.2 315.5 4 277.5 288.9 268.9 271.5 276.7 295.4 2 Financial business 27.8 27.1 29.8 I 28.2 28.0 27.8 28.6 31.9 35.5 3 Nonfinancial business 152.7 157.7 162.3 n.a. 148.6 154.8 138.7 141.4 142.9 151.7 4 Consumer 97.4 99.2 102.4 1 82.1 86.6 84.6 83.7 83.3 88.1 5 Foreign 2.7 3.1 3.3 1 3.1 2.9 3.1 2.9 2.9 3.0 6 Other 14.1 15.1 17.2 t 15.5 16.7 14.6 15.0 15.7 17.1 Weekly reporting banks 1981 1982 11997788 1199779944 11998800 DDeecc.. DDeecc.. DDeecc.. June3 Sept. Dec. Mar. June Sept. Dec. 7 All holders—Individuals, partnerships, and corporations 147.0 139.3 147.4 t 131.3 137.5 126.8 127.9 132.1 144.0 1 8 Financial business 19.8 20.1 21.8 n.a. 20.7 21.0 20.2 20.2 23.4 26.7 9 Nonfinancial business 79.0 74.1 78.3 71.2 75.2 67.1 67.7 68.7 74.2 10 Consumer 38.2 34.3 35.6 28.7 30.4 29.2 29.7 29.6 31.9 1 1 1 2 O Fo th re e i r g n 7 2 . . 5 5 7 3 . . 8 0 3 8 . . 1 6 1t 7 2 . . 9 9 2 8. . 0 8 7 2 . . 3 9 7 2 . . 5 8 2 7. . 7 7 2 8 . . 9 4 1. Figures include cash items in process of collection. Estimates of gross 3. Demand deposit ownership survey estimates for June 1981 are not available deposits are based on reports supplied by a sample of commercial banks. Types of due to unresolved reporting errors. depositors in each category are described in the June 1971 BULLETIN, p. 466. 4. After the end of 1978 the large weekly reporting bank panel was changed to 2. Beginning with the March 1979 survey, the de iand deposit ownership 170 large commercial banks, each of which had total assets in domestic offices survey sample was reduced to 232 banks from 349 inks, and the estimation exceeding $750 million as of Dec. 31, 1977. See "Announcements," p. 408 in the procedure was modified slightly. To aid in comparing estimates based on the old May 1978 BULLETIN. Beginning in March 1979, demand deposit ownership and new reporting sample, the following estimates in billions of dollars for estimates for these large banks are constructed quarterly on the basis of 97 sample December 1978 have been constructed using the new smaller sample; financial banks and are not comparable with earlier data. The following estimates in billions business, 27.0; nonfinancial business, 146.9; consumer, 98.3; foreign, 2.8; and of dollars for December 1978 have been constructed for the new large-bank panel; other, 15.1. financial business, 18.2; nonfinancial business, 67.2; consumer, 32.8; foreign, 2.5; other, 6.8. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Nonfinancial Statistics • July 1983 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period 1982 1983 iIn strument D 19 e 7 c 7 . D 19 e 7 c 8 . 1 D 9 e 7 c 9 . 1 D 19 e 8 c 0 . D 19 e 8 c 1 . Dec.2' Jan/ Feb/ Mar/ Apr/ May Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 65,051 83,438 112,803 124,374 165,455 166,208 165,257 168,562 167,665 170,659 169,503 Financial companies3 Dealer-placed paper4 2 Total 8,796 12,181 17,359 19,599 29,904 34,067 35,444 37,593 36,255 37,481 38,645 3 Bank-related (not seasonally adjusted) 2,132 3,521 2,784 3,561 6,045 2,516 2,660 2,604 2,030 1,950 1,954 Directly placed paper5 4 Total 40,574 51,647 64,757 67,854 81,715 84,183 82,948 84,932 85,773 87,831 87,238 5 Bank-related (not seasonally adjusted) 7,102 12,314 17,598 22,382 26,914 32,034 31,691 31,661 32,951 32,495 32,943 6 Nonfinancial companies6 15,681 19,610 30,687 36,921 53,836 47,958 46,865 46,037 45,637 45,347 43,620 Bankers dollar acceptances (not seasonally adjusted) 7 Total 25,450 33,700 45,321 54,744 69,226 79,543 77,529 73,706 70,843 70,389 Holder 8 Accepting banks 10,434 8,579 9,865 10,564 10,857 10,910 10,249 9,567 10,518 9,494 9 Own bills 8,915 7,653 8,327 8,963 9,743 9,471 9,067 8,258 9,083 7,951 10 Bills bought 1,519 927 1,538 1,601 1,115 1,439 1,182 1,308 1,435 1,543 Federal Reserve Banks 11 Own account 954 587 704 776 195 1,480 0 0 0 0 n.a. 12 Foreign correspondents 362 664 1,382 1,791 1,442 949 965 1,003 758 778 13 Others 13,700 23,870 33,370 41,614 56,926 66,204 66,315 63,136 59,568 60,118 Basis 14 Imports into United States 6,378 8,574 10,270 11,776 14,765 17,683 15,803 14,976 14,217 14,418 15 Exports from United States 5,863 7,586 9,640 12,712 15,400 16,328 17,931 17,633 16,826 17,124 16 All other 13,209 17,540 25,411 30,257 39,061 45,532 43,794 41,097 39,800 38,848 1. A change in reporting instructions results in offsetting shifts in the dealer- financing; factoring, finance leasing, and other business lending; insurance placed and directly placed financial company paper in October 1979. underwriting; and other investment activities. 2. Effective December 1, 1982, there was a break in the commercial paper 4. Includes all financial company paper sold by dealers in the open market. series. The key changes in the content of the data involved additions to the 5. As reported by financial companies that place their paper directly with reporting panel, the exclusion of broker or dealer placed borrowings under any investors. master note agreements from the reported data, and the reclassification of a large 6. Includes public utilities and firms engaged primarily in such activities as portion of bank-related paper from dealer-placed to directly placed. communications, construction, manufacturing, mining, wholesale and retail trade, 3. Institutions engaged primarily in activities such as, but not limited to, transportation, and services. commercial, savings, and mortgage banking; sales, personal, and mortgage 1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per annum Effective date Effective Date Month Average rate 1981—Nov. 17 16.50- 1982—Aug. 2 15.00 1982—Jan 15.75 1982—Nov 17.00 16 14.50 Feb 16.56 Dec 20 16.50 18 14.00 Mar 16.50 24 16.00 23 13.50 Apr 16.50 1983—Jan Dec. 1 15.75 Oct. 7 13.00 May 16.50 Feb 14 12.00 June 16.50 1982—Feb. 18 17.00 Nov. 22 11.50 July 16.26 Apr 23 16.50 Aug 14.39 May July 20 16.00 1983—Jan. 11 11.00 Sept 13.50 June 29 15.50 Feb. 28 10.50 Oct 12.52 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Business Lending All 1.34 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 2-6, 1983 Size of loan (in thousands of dollars) All Item sizes 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) 38,047,964 1,048,221 837,763 1,107,318 2,190,699 1,043,487 31,820,476 2 Number of loans 200,351 139,058 25,163 17,304 12,665 1,580 4,581 3 Weighted-average maturity (months) 1.4 4.0 4.2 4.5 4.9 3.3 ..88 4 With fixed rates .9 3.4 3.7 3.3 4.7 1.9 ..55 5 With floating rates 2.2 5.5 5.3 5.9 5.1 4.1 1.5 6 Weighted-average interest rate (percent per annum) .. 10.30 13.86 13.68 12.62 11.87 11.34 9.87 7 Interquartile range1 9.55-10.50 12.68-14.49 12.34-14.11 11.57-13.80 11.02-12.47 10.92-12.10 9.52-9.96 8 With fixed rates 10.21 14.39 14.36 13.29 11.86 10.73 9.80 9 With floating rates 10.43 12.96 12.55 12.00 11.87 11.58 9.99 Percentage of amount of loans 10 With floating rate 41.0 36.6 37.6 51.9 6633..44 7711..66 3388..33 II Made under commitment 65.0 39.5 37.9 61.3 54.2 70.4 67.3 12 With no stated maturity 13.2 12.7 18.1 16.9 29.8 32.3 11.2 13 With one-day maturity 37.1 .1 .0 .1 .4 2.1 44.3 1-99 LONG-TERM COMMERCIAL AND INDUSTRIAL LOANS 14 Amount of loans (thousands of dollars) 4,204,614 776,312 420,291 180,470 2,827,541 15 Number of loans 38,494 35,845 1,997 265 387 16 Weighted-average maturity (months) 56.6 33.4 35.6 44.6 66.8 17 With fixed rates 44.0 36.9 22.0 58.1 55.4 18 With floating rates 62.7 26.3 46.3 42.0 70.1 19 Weighted-average interest rate (percent per annum).. 11.41 14.52 12.86 11.92 10.31 20 Interquartile range1 9.71-12.19 12.13-14.93 11.73-14.00 11.19-12.68 9.63-11.02 2 2 2 1 W Wi i t t h h f f i l x o e a d ti n r g a t r e a s t es 1 12 1 . .0 24 1 1 1 3 5 . . 5 0 1 1 1 1 2 3 . . 1 7 5 8 1 11 1 . . 9 9 5 2 1 9 0 . . 5 5 5 3 Percentage of amount of loans 23 With floating rate 67.4 33.0 5566..11 8844..11 7777..55 24 Made under commitment 72.3 18.3 42.8 76.2 91.3 1-24 25-49 50-99 500 and over CONSTRUCTION AND LAND DEVELOPMENT LOANS 25 Amount of loans (thousands of dollars) 1,917,014 199,628 77,218 47,315 438,205 1, 154,649 26 Number of loans 25,727 21,047 2,219 716 1,460 284 27 Weighted-average maturity (months) 8.3 5.8 7.1 13.8 7.6 8.9 28 With fixed rates 5.2 5.7 6.8 8.6 6.1 4.4 29 With floating rates 12.2 5.9 8.0 14.8 11.3 12.9 30 Weighted-average interest rate (percent per annum) .. 11.72 14.44 13.99 12.91 12.08 10.91 31 Interquartile range1 10.18-12.68 13.50-14.74 13.52-14.76 12.46-13.31 11.84-12.12 9.55-12.41 32 With fixed rates 11.53 14.97 14.42 13.16 11.93 10.01 33 With floating rates 11.93 13.34 12.93 12.87 12.46 11.59 Percentage of amount of loans 34 With floating rate 47.7 32.2 28.8 85.0 29.5 56.9 35 Secured by real estate 56.7 75.3 94.1 84.2 93.5 36.0 36 Made under commitment 48.3 41.5 61.9 64.8 22.4 57.7 37 With no stated maturity 6.9 10.7 2.8 7.0 2.5 8.2 38 With one-day maturity 18.0 .0 .0 .4 .0 29.9 Type of construction 39 1- to 4-family 7.3 20.2 17.2 46.1 8.3 2.4 40 Multifamily 5.5 14.6 6.1 17.2 7.4 2.6 41 Nonresidential 87.2 65.1 76.7 36.7 84.3 95.0 AAllll ssiizzeess 1-9 10-24 25-49 50-99 100-249 250 and over LLOOAANNSS TTOO FFAARRMMEERRSS 42 Amount of loans (thousands of dollars) 1,698,648 195,436 204,859 168,982 254,228 240,631 634,513 43 Number of loans 79,848 54,748 13,889 5,146 3,625 1,724 717 44 Weighted-average maturity (months) 10.6 6.8 8.8 8.0 7.7 29.4 7.0 45 Weighted-average interest rate (percent per annum).. 13.26 14.01 13.80 13.60 14.23 13.68 12.21 46 Interquartile range1 12.13-14.21 13.43-14.56 13.29-14.18 12.96-14.20 13.42-15.19 13.00-14.45 11.83-12.55 By purpose of loan 47 Feeder livestock 13.35 1144..2266 13.90 13.44 14.36 13.71 1122..1177 48 Other livestock 13.00 14.01 12.96 13.75 13.26 (2) (2) 49 Other current operating expenses 13.25 13.98 13.59 13.80 13.54 13.76 12.35 50 Farm machinery and equipment 14.78 13.90 15.01 13.64 15.68 14.16 (2) 51 Other 12.62 14.19 14.08 12.97 13.75 13.74 12.03 1. Interest rate range that covers the middle 50 percent of the total dollar NOTE. For more detail, see the Board's E.2 (111) statistical release, amount of loans made. 2. Fewer than 10 sample loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Nonfinancial Statistics • July 1983 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. 1983 1983, week ending IInnssttrruummeenntt 11998800 11998811 11998822 Mar. Apr. May June June 3 June 10 June 17 June 24 July 1 MONEY MARKET RATES 1 Federal funds1'2 13.36 16.38 12.26 8.77 8.80 8.63 8.98 8.77 8.84 8.84 9.14 8.90 Commercial paper3 4 2 1-month 12.76 15.69 11.83 8.56 8.58 8.36 8.97 8.68 8.90 8.88 9.15 9.14 3 3-month 12.66 15.32 11.89 8.52 8.53 8.33 9.00 8.74 8.97 8.91 9.15 9.11 4 6-month 12.29 14.76 11.89 8.48 8.48 8.31 9.03 8.78 9.03 8.95 9.16 9.11 Finance paper, directly placed3 4 5 1-month 12.44 15.30 11.64 8.48 8.52 8.28 8.86 8.64 8.89 8.81 9.08 8.80 6 3-month 11.49 14.08 11.23 8.35 8.41 8.19 8.81 8.53 8.70 8.77 8.95 9.02 7 6-month 11.28 13.73 11.20 8.35 8.41 8.15 8.80 8.50 8.68 8.77 8.95 9.02 Bankers acceptances4 5 8 3-month 12.72 15.32 11.89 8.54 8.49 8.36 9.04 8.80 9.10 8.94 9.16 9.08 9 6-month 12.25 14.66 11.83 8.52 8.43 8.33 9.06 8.83 9.13 8.96 9.17 9.12 Certificates of deposit, secondary market6 10 1-month 12.91 15.91 12.04 8.62 8.60 8.44 9.06 8.80 9.01 8.98 9.21 9.21 11 3-month 13.07 15.91 12.27 8.69 8.63 8.49 9.20 8.96 9.19 9.11 9.33 9.28 12 6-month 12.99 15.77 12.57 8.80 8.76 8.62 9.45 9.24 9.49 9.39 9.56 9.49 13 Eurodollar deposits, 3-month2 14.00 16.79 13.12 9.25 9.23 8.96 9.67 9.41 9.58 9.60 9.70 9.79 U.S. Treasury bills4 Secondary market7 14 3-month 11.43 14.03 10.61 8.35 8.21 8.19 8.79 8.57 8.76 8.70 8.97 8.88 15 6-month 11.37 13.80 11.07 8.37 8.30 8.22 8.89 8.68 8.88 8.80 9.02 8.97 16 1-year 10.89 13.14 11.07 8.36 8.29 8.23 8.87 8.68 8.85 8.77 9.02 8.98 Auction average8 17 3-month 11.506 14.029 10.686 8.304 8.252 8.19 8.82 8.65 8.64 8.73 8.98 9.09 18 6-month 11.374 13.776 11.084 8.325 8.343 8.20 8.89 8.67 8.79 8.83 9.02 9.14 1100..774488 1133..115599 1111..009999 88..442277 88..227755 88..0055 88..8800 88..8800 CAPITAL MARKET RATES U.S. Treasury notes and bonds9 Constant maturities10 20 1-year 12.05 14.78 12.27 9.04 8.98 8.90 9.66 9.43 9.64 9.54 9.82 9.78 21 l-l/H-year" .... 9.80 9.90 10.05 22 2-year 11.77 14.56 12.80 9.66 9.57 9.49 10.18 9.99 10.16 10.08 10.32 10.29 23 2-w-year12 10.10 10.15 10.40 24 3-year 11.55 14.44 12.92 9.84 9.76 9.66 10.32 10.17 10.29 10.20 10.45 10.47 25 5-year 11.48 14.24 13.01 10.08 10.02 10.03 10.63 10.51 10.61 10.49 10.71 10.80 26 7-year 11.43 14.06 13.06 10.31 10.29 10.30 10.83 10.76 10.85 10.70 10.84 10.96 27 10-year 11.46 13.91 13.00 10.51 10.40 10.38 10.85 10.79 10.87 10.71 10.87 11.01 28 20-year 11.39 13.72 12.92 10.80 10.63 10.67 11.12 11.09 11.13 10.98 11.12 11.26 29 30-year 11.30 13.44 12.76 10.63 10.48 10.53 10.93 10.93 10.96 10.80 10.92 11.07 Composite13 30 Over 10 years (long-term) 10.81 12.87 12.23 10.34 10.19 10.21 10.64 10.61 10.66 10.52 10.63 10.77 State and local notes and bonds Moody's series14 31 Aaa 7.85 10.43 10.88 8.42 8.28 8.39 8.76 8.95 8.90 8.60 8.60 8.60 32 Baa 9.01 11.76 12.48 10.05 9.75 9.74 10.21 10.40 10.30 10.10 10.05 10.05 33 Bond Buyer series15 8.59 11.33 11.66 9.20 9.05 9.11 9.52 9.78 9.69 9.38 9.38 9.36 Corporate bonds Seasoned issues16 34 All industries 12.75 15.06 14.94 12.71 12.44 12.30 12.54 12.54 12.57 12.48 12.51 12.58 35 Aaa 11.94 14.17 13.79 11.73 11.51 11.46 11.74 11.76 11.77 11.66 11.71 11.85 36 Aa 12.50 14.75 14.41 12.32 12.06 11.95 12.15 12.17 12.21 12.12 12.10 12.16 37 A 12.89 15.29 15.43 13.15 12.86 12.68 12.88 12.83 12.89 12.85 12.90 12.91 38 Baa 13.67 16.04 16.11 13.61 13.29 13.09 13.37 13.40 13.41 13.31 13.34 13.39 Aaa utility bonds17 12.74 15.56 14.41 11.70 11.41 11.32 11.87 11.80 11.93 40 Recently offered issues 12.70 15.56 14.45 11.74 11.50 11.37 11.81 11.72 11.78 11.66 11.84 12.00 MEMO: Dividend/price ratio18 41 Preferred stocks 10.60 12.36 12.53 10.86 10.80 10.65 10.81 10.70 10.74 10.93 10.69 11.00 42 Common stocks 5.26 5.20 5.81 4.59 4.44 4.27 4.26 4.33 4.37 4.22 4.13 4.24 1. Weekly and monthly figures are averages of all calendar days, where the 11. Each biweekly figure is the average of five business days ending on the rate for a weekend or holiday is taken to be the rate prevailing on the preceding Monday following the date indicated. Beginning Apr. 1, 1983, this rate determines business day. The daily rate is the average of the rates on a given day weighted by the maximum interest payable in the following two-week period on l-'/2-year small the volume of transactions at these rates. saver certificates. (See table 1.16.) 2. Weekly figures are statement week averages—that is, averages for the 12. Each biweekly figure is the average of five business days ending on the week ending Wednesday. Monday following the date indicated. Until Mar. 31, 1983, the biweekly rate 3. Unweighted average of offering rates quoted by at least five dealers (in the determined the maximum interest rate payable in the following two-week period case of commercial paper), or finance companies (in the case of finance paper). on 2-'/2-year small saver certificates. (See table 1.16.) Before November 1979, maturities for data shown are 30-59 days, 90-119 days, 13. Averages of yields (to maturity or call) for all outstanding bonds neither due and 120-179 days for commercial paper; and 30-59 days, 90-119 days, and 150- nor callable in less than 10 years, including several very low yielding "flower" 179 days for finance paper. bonds. 4. Yields are quoted on a bank-discount basis, rather than an investment yield 14. General obligations only, based on figures for Thursday, from Moody's basis (which would give a higher figure). Investors Service. 5. Dealer closing offered rates for top-rated banks. Most representative rate 15. General obligations only, with 20 years to maturity, issued by 20 state and (which may be, but need not be, the average of the rates quoted by the dealers). local governmental units of mixed quality. Based on figures for Thursday. 6. Unweighted average of offered rates quoted by at least five dealers early in 16. Daily figures from Moody's Investors Service. Based on yields to maturity the day. on selected long-term bonds. 7. Unweighted average of closing bid rates quoted by at least five dealers. 17. Compilation of the Federal Reserve. Issues included are long-term (20 8. Rates are recorded in the week in which bills are issued. Beginning with the years or more). New-issue yields are based on quotations on date of offering; Treasury bill auction held on Apr. 18, 1983, bidders were required to state the those on recently offered issues (included only for first 4 weeks after termination percentage yield (on a bank discount basis) that they would accept to two decimal of underwriter price restrictions), on Friday close-of-business quotations. places. Thus, average issuing rates in bill auctions will be reported using two 18. Standard and Poor's corporate series. Preferred stock ratio based on a rather than three decimal places. sample of ten issues: four public utilities, four industrials, one financial, and one 9. Yields are based on closing bid prices quoted by at least five dealers. transportation. 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, Digitized fora cFtivRelAy StrEadRed securities. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Markets A29 1.36 STOCK MARKET Selected Statistics 1982 1983 IInnddiiccaattoorr 11998800 11998811 11998822 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May j June Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 68.06 74.02 68.93 76.10 79.75 80.30 83.25 84.74 87.50 90.61 94.61 96.43 2 Industrial 78.64 85.44 78.18 86.67 90.76 92.00 95.37 97.26 100.61 104.46 109.43 112.52 3 Transportation 60.52 72.61 60.41 66.64 71.92 73.40 75.65 79.44 83.28 85.26 89.07 92.22 4 Utility 37.35 38.90 39.75 42.67 43.46 42.93 45.59 45.92 45.89 46.22 47.62 46.76 5 Finance 64.28 73.52 71.99 80.59 88.66 86.22 85.66 86.57 93.22 99.07 102.45 101.22 6 Standard & Poor's Corporation (1941-43 = 10)' ... 118.71 128.05 119.71 132.66 138.10 139.37 145.13 146.80 151.88 157.71 164.10 166.39 7 American Stock Exchange (Aug. 31, 1973 = 100) 300.94 343.58 282.62 308.74 333.54 333.36 360.92 373.84 383.76 405.02 447.94 475.01 Volume of trading (thousands of shares) 8 New York Stock Exchange 44,867 46,967 64,617 98,508 88,431 76,463 88,463 85,026 82,694 89,627 93,016 89,729 9 American Stock Exchange 6,377 5,346 5,283 7,828 8,672 7,475 9,220 8,256 7,354 8,576 12,260 10,874 Customer financing (end-of-period balances, in millions of dollars) 10 Regulated margin credit at brokers-dealers2 14,721 14,411 13,325 11,728 12,459 13,325 13,370 13,985 14,483 15,590 16,713 f 11 Margin stock3 14,500 14,150 12,980 11,450 12,170 12,980 13,070 13,680 14,170 15,260 16,370 I 12 Convertible bonds 219 259 344 277 288 344 299 304 312 329 342 1 13 Subscription issues 2 2 1 1 1 1 1 1 1 1 1 n.a. Free credit balances at brokers4 1 14 Margin-account 2,105 3,515 5,735 5,520 5,600 5,735 6,257 6,195 6,370 6,090 6,090 1 15 Cash-account 6,070 7,150 8,390 8,120 8,395 8,390 8,225 7,955 7,965' 7,970 8,310 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)s I 17 Under 40 14.0 37.0 21.0 21.0 20.0 21.0 18.0 18.0 17.0 14.0 14.0 | 18 40-49 30.0 24.0 24.0 24.0 21.0 24.0 23.0 20.0 21.0 19.0 19.0 n.a. 19 50-59 25.0 17.0 24.0 22.0 25.0 24.0 25.0 27.0 25.0 28.0 30.0 20 60-69 14.0 10.0 14.0 16.0 15.0 14.0 16.0 16.0 18.0 19.0 16.0 2 2 1 2 8 70 0 - o 7 r 9 more 9 8 . . 0 0 6 6 . . 0 0 9 8 . . 0 0 9 8 . . 0 0 1 9 0 . . 0 0 9 8 . . 0 0 9 9 . . 0 0 1 9 0 . . 0 0 1 9 0 . . 0 0 1 9 0 . . 0 0 1 9 1 . . 0 0 T 1 Special miscellaneous-account balances at brokers (end of period) 23 Total balances (millions of dollars)6 21,690 25,870 35,598 33,689 34,909 35,598 43,838 43,006 43,472 44,999 45,465 Distribution by equity status (percent) 24 Net credit status 47.8 58.0 62.0 61.0 62.0 62.0 65.0 66.0 62.0 64.0 62.0 n.a. Debt status, equity of 1 25 60 percent or more 44.4 31.0 29.0 29.0 29.0 29.0 28.0 27.0 28.0 30.0 32.0 1 26 Less than 60 percent 7.7 11.0 9.0 10.0 9.0 9.0 8.0 7.0 9.0 6.0 6.0 t Margin requirements (percent of market value and effective date)7 Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 27 Margin stocks 70 80 65 55 65 50 28 Convertible bonds 50 60 50 50 50 50 29 Short sales 70 80 65 55 65 50 1. Effective July 1976, includes a new financial group, banks and insurance 5. Each customer's equity in his collateral (market value of collateral less net companies. With this change the index includes 400 industrial stocks (formerly debit balance) is expressed as a percentage of current collateral values. 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40 6. Balances that may be used by customers as the margin deposit required for financial. additional purchases. Balances may arise as transfers based on loan values of 2. Margin credit includes all credit extended to purchase or carry stocks or other collateral in the customer's margin account or deposits of cash (usually sales related equity instruments and secured at least in part by stock. Credit extended is proceeds) occur. end-of-month data for member firms of the New York Stock Exhange. 7. Regulations G, T, and U of the Federal Reserve Board of Governors, In addition to assigning a current loan value to margin stock generally, prescribed in accordance with the Securities Exchange Act of 1934, limit the Regulations T and U permit special loan values for convertible bonds and stock amount of credit to purchase and carry margin stocks that may be extended on acquired through exercise of subscription rights. securities as collateral by prescribing a maximum loan value, which is a specified 3. A distribution of this total by equity class is shown on lines 17-22. percentage of the market value of the collateral at the time the credit is extended. 4. Free credit balances are in accounts with no unfulfilled commitments to the Margin requirements are the difference between the market value (100 percent) brokers and are subject to withdrawal by customers on demand. and the 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

A30 Domestic Nonfinancial Statistics • July 1983 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1982 1983 AAccccoouunntt 11998800 11998811 July Aug. Sept. Oct. Nov. Dec/ Jan/ Feb/ Mar. Apr/ May? Savings and loan associations 1 Assets 630,712 664,167 697,690 703,399 691,077 692,549 697,189 706,045 714,676 772,352 723,616 727,659 729,806 2 Mortgages 503,192 518,547 510,678 509,776 493,899 489,923 488,614 482,234 481,470 481,090 475,688 473,813 473,192 3 Cash and investment securities' 57,928 63,123 72,854 74,141 74,692 75,638 78,122 84,767 90,662 94,080 96,649 98,933 103,598 4 Other 69,592 82,497 114,158 119,482 122,486 126,988 130,453 139,044 142,544 147,182 151,279 152,913 153,016 5 Liabilities and net worth 630,712 664,167 697,690 703,399 691,077 692,549 697,189 706,045 714,676 772,352 723,616 727,659 729,806 6 Savings capital 511,636 525,061 539,830 542,648 547,628 547,112 548,439 566,189 582,918 591,913 597,112 600,508 601,615 7 Borrowed money 64,586 88,782 98,433 98,803 99,771 100,881 102,948 97,979 88,925 86,544 84.884 83,552 82,651 8 FHLBB 47,045 62,794 67,019 66,374 65,567 65,015 64,202 63,861 60,415 58,841 56,859 55,845 54,568 9 Other 17,541 25,988 31,414 32,429 34,204 35,866 38,746 34, U8 28,510 27,703 28,025 27,707 28,083 10 Loans in process 8,767 6,385 7,250 7,491 8,084 8,484 8,967 9,934 10,453 11,039 12,245 13,447 14,712 11 Other 12,394 15,544 27,375 29,965 19,202 20,018 21,048 15,720 16,658 17,524 14,767 16,181 18,120 12 Net worth2 33,329 28,395 24,802 24,492 24,476 24,538 24,754 26,157 26,175 26,371 26,853 27,418 27,420 13 MEMO: Mortgage loan commitments outstanding3 16,102 15,225 15,924 16,943 17,256 18,407 19,682 18,054 19,453 22,051 24,885 27,912 30,171 Mutual savings banks4 14 Assets 171,564 175,728 175,683 172,901 173,487 172,908 172,287 174,197 174,726 176,378 178,814 178,826 Loans 15 Mortgage 99,865 99,997 96,282 94,498 94,382 94,261 94,017 94,091 93,944 93,607 93,822 93,311 16 Other 11,733 14,753 17,128 16,929 17,458 17,035 16,702 16,957 17,420 18,211 17,837 18,353 Securities 17 U.S. government5 8,949 9,810 10,058 9,675 9,404 9,219 9,456 9,743 10,248 11,081 12,187 12,364 18 State and local government 2,390 2,288 2,236 2,201 2,191 2,505 2,4% 2,470 2,446 2,440 2,403 2,311 19 Corporate and other6 39,282 37,791 36,651 35,937 35,845 35,599 35,753 36,161 36,430 36,905 37,827 38,342 20 Cash 4,334 5,442 6,225 6,460 6,695 6,749 6,291 6,919 6,275 6,104 6,548 6,039 21 Other assets 5,011 5,649 7,104 7,192 7,514 7,540 7,572 7,855 7,963 8,031 8,189 8,107 n.a. 22 Liabilities 171,564 175,728 175,683 172,901 173,487 172,908 172,287 174,197 174,726 176,378 178,814 178,826 23 Deposits 154,805 155,110 154,314 152,014 153,089 152,210 151,304 155,196 157,113 159,162 161,489 161,262 24 Regular7 151,416 153,003 151,969 149,736 150,795 149,928 149,167 152,777 154,876 156,915 159,088 158,760 25 Ordinary savings 53,971 49,425 47,580 46,901 47,496 48,520 49,208 46,862 41,850 41,165 41,183 40,379 26 Time 97,445 103,578 116,998 116,213 103,299 101,408 99,959 110,462 103,658 100,851 99,687 97,992 27 Other 2,086 2,108 2,345 2,278 2,294 2,283 2,137 2,419 2,237 2,247 2,401 2,502 28 Other liabilities 6,695 10,632 11,926 11,671 11,166 11,556 11,893 8,336 7,722 7,542 7,395 7,631 29 General reserve accounts 11,368 9,986 9,443 9,216 9,232 9,141 9,089 9,235 9,196 9,197 9,342 9,352 30 MEMO: Mortgage loan commitments outstanding8 1,476 1,293 992 1,056 1,217 1,281 1,400 1,285 1,253 1,295 1,639 1,860 Life insurance companies 31 Assets 479,210 525,803 551,124 557,094 563,321 571,902 578,200 584,311 589,490 595,959 602,770 Securities Government 21,378 25,209 28,694 30,263 30,759 31,791 32,682 34,558 35,567 36,946 38,469 United States9. 5,345 8,167 10,774 12,214 12,606 13,538 14,370 16,072 16,731 17,877 19,213 State and local 6,701 7,151 7,705 7,799 7,834 7,871 7,935 8,094 8,225 8,333 8,368 Foreign10 9,332 9,891 10,215 10,250 10,319 10,382 10,377 10,392 10,611 10,736 10,888 n a. n.a. Business 238,113 255,769 267,627 270,029 273,539 279,918 283,650 283,799 290,178 293,427 296,223 Bonds 190,747 208,098 221,503 221,642 223,783 226,879 229,101 228,220 233,380 235,376 236,420 Stocks 47,366 47,670 46,124 48,387 49,756 53,039 54,549 55,579 56,798 58,051 59,803 39 Mortgages 131,030 137,747 140,044 140,244 140,404 140,678 140,956 141,919 142,277 142,683 143,031 40 Real estate 15,063 18,278 20,198 20,176 20,268 20,293 20,480 21,019 20,922 21,014 21,175 41 Policy loans 41,411 48,706 51,867 52,238 52,525 52,751 52,916 53,114 53,239 53,383 53,560 42 Other assets 31,702 40,094 42,694 44,144 45,826 46,471 47,516 49,902 47,307 48,506 50,322 Credit unions" 43 Total assets/liabilities and capital. 71,709 77,682 84,423 85,102 86,554 88,144 89,261 69,673 69,741 71,293 73,737 74,716 76,717 44 Federal 39,801 42,382 45,931 46,310 47,076 47,649 48,272 45,483 45,418 46,449 48,057 48,628 49,869 45 State 31,908 35,300 38,492 38,792 39,478 40,495 40,989 24,190 23,323 24,844 25,680 26,088 26,848 46 Loans outstanding 47,774 50,448 50,133 50,733 51,047 50,934 50,936 43,335 43,052 42,895 43,192 43,621 44,124 47 Federal 25,627 27,458 27,351 27,659 27,862 27,789 27,824 29,941 27,724 27,592 27,733 27,995 28,357 48 State 22,147 22,990 22,782 23,074 23,185 23,145 23,139 15,393 15,328 15,303 15,459 15,626 15,789 49 Savings 64,399 68,87) 75,088 75,331 76,874 78,529 79,799 63,071 63,321 64,684 67,266 68,510 70,186 50 Federal (shares) 36,348 37,574 40,%9 41,178 41,961 42,852 43,413 41,341 41,441 42,404 43,890 44,741 45,782 51 State (shares and deposits). 28,051 31,297 34,119 34,153 34,913 35,677 36,386 21,730 21,880 22,280 23,376 23,769 24,405 For notes see bottom of opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A31 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year FFiissccaall FFiissccaall FFiissccaall Type of account or operation yyeeaarr yyeeaarr yyeeaarr 1981 1982 1983 11998800 11998811 11998822 H2 HI H2 Mar. Apr. May U.S. budget 1 Receipts1 517,112 599,272 617,766 301,777 322,478 286,338 43,504 66,234 33,755 2 Outlays1-2 576,675 657,204 728,375 358,558 348,678 390,846 69,540 69,542 63,040 3 Surplus, or deficit (-) -59,563 -57,932 -110,609 -56,780 -26,200 -104,508 -26,036 -3,308 -29,285 4 Trust funds 8,801 6,817 5,456 -8,085 -17,690 -6,576 2,085 403 24,923 5 Federal funds3 -68,364 -64,749 -116,065 -48,697 -43,889 -97,934 -28,120 -3,711 -54,208 OOffff--bbuuddggeett eennttiittiieess ((ssuurrpplluuss,, oorr ddeeffiicciitt ((--)))) 66 FFeeddeerraall FFiinnaanncciinngg BBaannkk oouuttllaayyss -14,549 -20,769 -14,142 -8,728 -7,942 -4,923 -1,244 -1,290 -1,433 77 OOtthheerr44 303 -236 -3,190 -1,752 227 -2,267 -16 151 242 U.S. budget plus off-budget, including Federal Financing Bank 8 Surplus, or deficit (-) -73,808 -78,936 -127,940 -67,260 -33,914 -111,699 -27,296 -4,447 -30,476 Source or financing 9 Borrowing from the public 70,515 79,329 134,993 54,081 41,728 119,609 31,303 2,681 18,497 10 Cash and monetary assets (decrease, or increase (-)) -355 -1,878 -11,911 -1,111 -408 -9,057 -6,767 -8,156 19,189 11 Other6 3,648 1,485 4,858 14,290 -7,405 1,146 2,761 9,922 -7,209 MEMO: 12 Treasury operating balance (level, end of period) 20,990 18,670 29,164 12,046 10,999 19,773 15,452 24,053 5,233 13 Federal Reserve Banks 4,102 3,520 10,975 4,301 4,099 5,033 3,572 6,015 4,372 14 Tax and loan accounts 16,888 15,150 18,189 7,745 6,900 14,740 11,880 18,038 861 1. Effective Feb. 8, 1982, supplemental medical insurance premiums and 5. Includes U.S. Treasury operating cash accounts; special drawing rights; gold voluntary hospital insurance premiums, previously included in other insurance tranche drawing rights; loans to International Monetary Fund; and other cash and receipts, have been reclassified as offsetting receipts in the health function. monetary assets. 2. Effective Oct. 1, 1980, the Pension Benefit Guaranty Corporation was 6. Includes accrued interest payable to the public; allocations of special reclassified from an off-budget agency to an on-budget agency in the Department drawing rights; deposit funds; miscellaneous liability (including checks outstandof Labor. ing) and asset accounts; seigniorage; increment on gold; net gain/loss for U.S. 3. Half-year figures are calculated as a residual (total surplus/deficit less trust currency valuation adjustment; net gain/loss for IMF valuation adjustment; and fund surplus/deficit). profit on the sale of gold. 4. Other off-budget includes Postal Service Fund; Rural Electrification and Telephone Revolving Fund; and Rural Telephone Bank; it also includes petroleum SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S. acquisition and transportation and strategic petroleum reserve effective Novem- Government." Treasury Bulletin, and the Budget of the United States Governber 1981. ment, Fiscal Year 1984. NOTES TO TABLE 1.37 10. Issues of foreign governments and their subdivisions and bonds of the 1. Holdings of stock of the Federal Home Loan Banks are included in "other International Bank for Reconstruction and Development. assets." 11. As of December 1982, National Credit Union Administration data no longer 2. Includes net undistributed income, which is accrued by most, but not all, includes either federally chartered or state-chartered corporate credit unions. associations. 3. Excludes figures for loans in process, which are shown as a liability. NOTE. Savings and loan associations: Estimates by the FHLBB for all 4. The NAMSB reports that, effective April 1979, balance sheet data are not associations in the United States. Data are based on monthly reports of federally strictly comparable with previous months. Beginning April 1979, data are reported insured associations and annual reports of other associations. Even when revised, on a net-of-valuation-reserves basis. Before that date, data were reported on a data for current and preceding year are subject to further revision. gross-of-valuation-reserves basis. Mutual savings banks: Estimates of National Association of Mutual Savings 5. Beginning April 1979, includes obligations of U.S. government agencies. Banks for all savings banks in the United States. Before that date, this item was included in "Corporate and other." Life insurance companies: Estimates of the American Council of Life Insurance 6. Includes securities of foreign governments and international organizations for all life insurance companies in the United States. Annual figures are annualand, before April 1979, nonguaranteed issues of U.S. government agencies. statement asset values, with bonds carried on an amortized basis and stocks at 7. Excludes checking, club, and school accounts. year-end market value. Adjustments for interest due and accrued and for 8. Commitments outstanding (including loans in process) of banks in New York differences between market and book values are not made on each item separately State as reported to the Savings Banks Association of the state of New York. but are included, in total, in "other assets." 9. Direct and guaranteed obligations. Excludes federal agency issues not Credit unions: Estimates by the National Credit Union Administration for a guaranteed, which are shown in the table under "Business" securities. group of federal and state-chartered credit unions that account for about 30 percent 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

A32 Domestic Nonfinancial Statistics • July 1983 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS Millions of dollars Calendar year FFFiiissscccaaalll FFFiiissscccaaalll FFFiiissscccaaalll SSSooouuurrrccceee ooorrr tttyyypppeee yyyeeeaaarrr yyyeeeaaarrr yyyeeeaaarrr 1981 1982 1983 111999888000 111999888111 111999888222 H2 HI H2 Mar. Apr. May RECEIPTS 1 All sources' 517,112 599,272 617,766 301,777 322,478 286,338 43,504 66,234 33,755 2 Individual income taxes, net 244,069 285,917 297,744 147,035 150,565 145,676 15,658 35,040 6,384 3 Withheld 223,763 256,332 267,513 134,199 133,575 131,567 24,808 2211,,663366 22,205 4 Presidential Election Campaign Fund ... 39 41 39 5 34 5 9 88 6 5 Nonwithheld 63,746 76,844 84,691 17,391 66,174 20,040 3,604 31,961 1,131 6 Refunds 43,479 47,299 54,498 4,559 49,217 5,938 12,764 18,564 16,958 Corporation income taxes 7 Gross receipts 72,380 73,733 65,991 31,056 37,836 25,661 6,985 8,445 1,903 8 Refunds 7,780 12,596 16,784 6,847 8,028 11,467 2,612 3,650 2,205 9 Social insurance taxes and contributions, net 157,803 182,720 201,498 91,592 108,079 94,278 1177,,993399 21,481 22,330 10 Payroll employment taxes and contributions2 133,025 156,932 172,744 82,984 88,795 85,063 16,975 14,567 15,680 11 Self-employment taxes and contributions3 5,723 6,041 7,941 244 7,357 177 418 4,232 418 12 Unemployment insurance 15,336 15,763 16,600 6,355 9,809 6,857 160 2,324 5,875 13 Other net receipts1'4 3,719 3,984 4,212 2,009 2,119 2,181 387 358 357 14 Excise taxes 24,329 40,839 36,311 22,097 17,525 16,556 2,755 2,557 2,991 15 Customs deposits 7,174 8,083 8,854 4,661 4,310 4,299 733 762 670 16 Estate and gift taxes 6,389 6,787 7,991 3,742 4,208 3,445 500 458 493 17 Miscellaneous receipts5 12,748 13,790 16,161 8,441 7,984 7,891 1,545 1,141 1,190 OUTLAYS 18 All types1'6 576,675 657,204 728,424 358,532 348,683 390,847 69,540 69,542 63,040 19 National defense 135,856 159,765 187,418 87,421 93,154 100,419 19,038 17,524 17,309 20 International affairs 10,733 11,130 9,982 4,646 5,183 4,406 1,601 937 438 21 General science, space, and technology ... 5,722 6,359 7,070 3,388 3,370 3,903 526 607 589 22 Energy 6,313 10,277 4,674 4,394 2,946 2,059 488 212 375 23 Natural resources and environment 13,812 13,525 12,934 7,296 5,636 6,940 913 1,036 905 24 Agriculture 4,762 5,572 14,875 5,181 7,087 13,260 1,003 2,717 558 25 Commerce and housing credit 7,788 3,946 3,865 1,825 1,408 2,244 395 434 136 26 Transportation 21,120 23,381 20,560 10,753 9,915 10,686 1,776 1,581 1,531 27 Community and regional development .... 10,068 9,394 7,165 4,269 3,055 4,186 562 427 469 28 Education, training, employment, social services 30,767 31,402 26,300 13,874 12,607 12,187 2,114 1,985 2,113 29 Health1 55,220 65,982 74,017 35,322 37,219 39,073 6,913 7,120 6,966 30 Income security6 193,100 225,101 248,343 129,269 112,782 133,779 24,840 24,654 22,304 31 Veterans benefits and services 21,183 22,988 23,955 12,880 10,865 13,241 2,292 3,357 882 32 Administration of justice 4,570 4,696 4,671 2,290 2,334 2,373 473 432 378 33 General government 4,505 4,614 4,726 2,320 2,400 2,322 427 163 1,002 34 General-purpose fiscal assistance 8,584 6,856 6,393 3,043 3,325 3,152 40 1,162 287 35 Net interest' 52,458 68,726 84,697 39,952 41,883 44,948 6,854 6,343 8,215 36 Undistributed offsetting receipts8 -9,887 -16,509 -13,270 -9,564 -6,490 -8,333 -715 -1,148 -1,414 1. Effective Feb. 8, 1982, supplemental medical insurance premiums and 6. Effective Oct. 1, 1980, the Pension Benefit Guaranty Corporation was voluntary hospital insurance premiums, previously included in other insurance reclassified from an off-budget agency to an on-budget agency in the Department receipts, have been reclassified as offsetting receipts in the health function. of Labor. 2. Old-age, disability, and hospital insurance, and railroad retirement accounts. 7. Net interest function includes interest received by trust funds. 3. Old-age, disability, and hospital insurance. 8. Consists of rents and royalties on the outer continental shelf and U.S. 4. Federal employee retirement contributions and civil service retirement and government contributions for employee retirement. disability fund. 5. Deposits of earnings by Federal Reserve Banks and other miscellaneous SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S. receipts. Government" and the Budget of the U.S. Government, Fiscal Year 1984. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A33 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1981 1982 1983 IItteemm Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 1 Federal debt outstanding 970.9 977.4 1,003.9 1,034.7 1,066.4 1,084.7 1,147.0 1,201.9 1,249.3 2 Public debt securities 964.5 971.2 997.9 1,028.7 1,061.3 1,079.6 1,142.0 1,197.1 1,244.5 3 Held by public 773.7 771.3 789.8 825.5 858.9 867.9 925.6 987.7 1,043.3 4 Held by agencies 190.9 199.9 208.1 203.2 202.4 211.7 216.4 209.4 201.2 5 Agency securities 6.4 6.2 6.1 6.0 5.1 5.0 5.0 4.8 4.8 6 Held by public 4.9 4.7 4.6 4.6 3.9 3.9 3.7 3.7 3.7 7 Held by agencies 1.5 1.5 1.5 1.4 1.2 1.1 1.3 1.1 1.1 8 Debt subject to statutory limit 965.5 972.2 998.8 1,029.7 1,062.2 1,080.5 1,142.9 1,197.9 1,245.3 9 Public debt securities 963.9 970.6 997.2 1,028.1 1,060.7 1,079.0 1,141.4 1,196.5 1,243.9 10 Other debt1 1.6 1.6 1.6 1.6 1.5 1.5 1.5 1.4 1.4 11 MEMO: Statutory debt limit 985.0 985.0 999.8 1,079.8 1,079.8 1,143.1 1,143.1 1,290.2 1,290.2 1. Includes guaranteed debt of government agencies, specified participation NOTE. Data from Treasury Bulletin (U.S. Treasury Department), certificates, notes to international lending organizations, and District of Columbia stadium bonds. 1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership Billions of dollars, end of period 1983 TTyyppee aanndd hhoollddeerr Feb. Mar. Apr. May June 1 Total gross public debt 845.1 930.2 1,028.7 1,197.1 1,215.3 1,244.5 1,247.9 1,291.4 1,319.6 By type 2 Interest-bearing debt 844.0 928.9 1,027.3 1,195.5 1,213.7 1,243.0 1,242.1 1,289.9 1,318.1 3 Marketable 530.7 623.2 720.3 881.5 907.7 937.8 935.5 957.4 978.9 4 Bills 172.6 216.1 245.0 311.8 314.9 331.9 325.9 325.2 334.3 5 Notes 283.4 321.6 375.3 465.0 481.3 494.1 494.9 513.6 527.1 6 Bonds 74.7 85.4 99.9 104.6 111.5 111.4 114.6 118.5 117.5 7 Nonmarketable1 313.2 305.7 307.0 314.0 306.1 305.2 306.6 332.6 339.2 2.2 9 State and local government series 24.6 23.8 23.0 25.7 25.7 27.1 28.0 29.6 33.1 10 Foreign issues3 28.8 24.0 19.0 14.7 12.7 12.4 12.0 11.1 11.4 11 Government 23.6 17.6 14.9 13.0 11.4 11.1 10.7 10.5 10.8 12 Public 5.3 6.4 4.1 1.7 1.3 1.3 1.3 0.6 0.6 13 Savings bonds and notes 79.9 72.5 68.1 68.0 68.3 68.5 68.8 69.2 69.4 14 Government account series4 177.5 185.1 196.7 205.4 199.1 197.0 197.6 222.4 225.0 15 Non-interest-bearing debt 1.2 1.3 1.4 1.6 1.6 1.5 5.9 1.5 1.5 By holder5 16 U.S. government agencies and trust funds 187.1 192.5 203.3 209.4 203.3 201.2 17 Federal Reserve Banks 117.5 121.3 131.0 139.3 135.6 136.7 18 Private investors 540.5 616.4 694.5 848.4 906.6 19 Commercial banks 96.4 116.0 109.4 131.4 153.2 20 Mutual savings banks 4.7 5.4 5.2 n.a. n.a. 21 Insurance companies 16.7 20.1 19.1 38.7 40.0 22 Other companies 22.9 25.7 37.8 n.a. n.a. nn n.a. n.a. 23 State and local governments 69.9 78.8 85.6 113.4 n a. n.a. Individuals 24 Savings bonds 79.9 72.5 68.0 68.3 68.3 25 Other securities 36.2 56.7 75.6 48.2 48.4 26 Foreign and international6 124.4 127.7 141.4 149.4 156.3 27 Other miscellaneous investors7 90.1 106.9 152.3 233.2 n.a. 1. Includes (not shown separately): Securities issued to the Rural Electrifica- 5. Data for Federal Reserve Banks and U.S. government agencies and trust tion Administration, depository bonds, retirement plan bonds, and individual funds are actual holdings; data for other groups are Treasury estimates. retirement bonds. 6. Consists of investments of foreign balances and international accounts in the 2. These nonmarketable bonds, also known as Investment Series B Bonds, United States. may be exchanged (or converted) at the owner's option for l!/2 percent, 5-year 7. Includes savings and loan associations, nonprofit institutions, corporate marketable Treasury notes. Convertible bonds that have been so exchanged are pension trust funds, dealers and brokers, certain government deposit accounts, removed from this category and recorded in the notes category (line 5). and 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

A34 Domestic Nonfinancial Statistics • July 1983 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions Par value; averages of daily figures, in millions of dollars 1983 1983, week ending Wednesday IItteemm 11998800 11998811 11998822 Mar. Apr. May May 25 June 1 June 8 June 15 June 22 June 29 Immediate delivery1 1 U.S. government securities 18,331 24,728 32,271 37,900 38,468 41,584 35,028 41,804 41,837 39,190 42,959 45,430 By maturity 2 Bills 11,413 14,768 18,398 20,195 22,142 21,878 19,098 22,147 22,090 22,244 21,357 23,560 i Other within 1 year 421 621 810 519 611 448 493 542 604 759 467 640 4 1-5 years 3,330 4,360 6,272 7,884 7,385 8,908 7,576 11,169 6,632 6,536 11,314 8,251 J 5-10 years 1,464 2,451 3,557 5,196 4,136 4,415 3,434 3,762 8,267 5,031 4,943 7,092 6 Over 10 years 1,704 2,528 3,234 4,106 4,194 5,813 4,428 4,184 4,244 4,619 4,878 5,887 By type of customer 7 U.S. government securities dealers 1,484 1,640 1,769 1,757 2,418 2,361 1,852 2,122 2,095 22,,003300 22,,226644 33,,003322 8 U.S. government securities brokers 7,610 11,750 15,659 18,414 18,535 19,460 17,678 19,846 20,906 20,757 23,089 23,426 9 All others2 9,237 11,337 15,344 17,728 17,515 18,550 15,499 19,836 18,836 16,404 17,606 18,973 10 Federal agency securities 3,258 3,306 4,142 4,575 5,584 5,457 5,641 4,156 4,380 5,702 4,134 5,021 11 Certificates of deposit 2,472 4,477 5,001 3,702 4,541 3,879 3,326 4,291 4,495 3,933 4,270 3,342 12 Bankers acceptances 1 1,807 2,502 2,255 3,063 2,480 1,897 2,159 2,310 2,392 2,187 2,505 13 Commercial paper 6,128 7,595 7,604 8,603 8,145 7,882 99,,008844 77,,998888 88,,550077 99,,228855 77,,662266 Futures transactions3 14 Treasury bills 1 3,523 5,031 6,040 6,057 6,526 6,217 7,134 8,885 7,087 8,138 6,447 15 Treasury coupons n.a. 1,330 1,490 2,138 1,779 2,313 2,342 2,204 2,237 2,684 3,175 2,841 16 Federal agency securities 1 234 259 262 194 317 361 523 326 388 229900 337733 Forward transactions4 17 U.S. government securities i 365 835 1,628 1,322 1,458 743 1,018 1,211 1,075 2,307 995 18 Federal agency securities T 1,370 982 1,439 1,493 1,521 1,166 1,175 2,058 2,162 1,526 904 1. Before 1981, data for immediate transactions include forward transactions. from the date of the transaction for government securities (Treasury bills, notes, 2. Includes, among others, all other dealers and brokers in commodities and and bonds) 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 Transactions are market purchases and sales of U.S. government securities exchange in which parties commit to purchase or sell securities for delivery at a dealers reporting to the Federal Reserve Bank of New York. The figures exclude future date. allotments of, and exchanges for, new U.S. government securities, redemptions 4. Forward transactions are agreements arranged in the over-the-counter of called or matured securities, purchases or sales of securities under repurchase market in which securities are purchased (sold) for delivery after 5 business days agreement, reverse repurchase (resale), or similar contracts. 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing Averages of daily figures, in millions of dollars 1983 1983, week ending Wednesday IItteemm 11998800 11998811 11998822 Mar. Apr. May May 11 May 18 May 25 June 1 June 8 Positions Net immediate1 1 U.S. government securities 4,306 9,033 9,328 11,399 9,014 5,878 11,813 7,215 304 -18 4,273 2 Bills 4,103 6,485 4,837 9,544 7,775 4,270 6,886 5,405 1,323 615 4,420 3 Other within 1 year -1,062 -1,526 -199 3 -371 16 97 93 -90 46 146 4 1-5 years 434 1,488 2,932 1,263 733 485 2,560 180 -1,856 -215 -778 5 5-10 years 166 292 -341 -748 -57 -183 209 -118 -98 -1,045 513 6 Over 10 years 665 2,294 2,001 1,337 934 1,290 2,062 1,655 1,025 582 -28 7 Federal agency securities 797 2,277 3,712 4,855 5,278 5,651 5,581 6,067 5,697 5,194 5,559 8 Certificates of deposit 3,115 3,435 5,531 6,104 5,474 4,836 5,103 4,760 4,333 4,585 4,534 9 Bankers acceptances A 1,746 2,832 2,809 3,051 2,931 3,834 3,029 2,101 1,852 2,294 10 Commercial paper t 2,658 3,317 3,173 3,228 3,014 3,575 2,813 2,405 2,678 22,,996633 Futures positions 11 Treasury bills 1 -8,934 -2,508 -530 -7,151 -5,771 -10,259 -6,976 -1,777 -1,206 -569 12 Treasury coupons n.a. -2,733 -2,361 -1,907 -1,966 -1,386 -2,214 -1,700 -787 -302 -113 13 Federal agency securities | 522 -224 -64 112 51 51 85 1 53 178 Forward positions 14 U.S. government securities 1 -603 -788 -1,782 -887 -2,034 -863 -1,813 -3,513 -2,913 -1,245 15 Federal agency securities T -451 -1,190 -1,906 -1,570 -1,712 -1,573 -2,095 -1,703 -1,764 -1,891 Financing2 Reverse repurchase agreements3 A 16 Overnight and continuing f 14,568 2266,,775544 1199,,666688 22,351 23,679 20,420 25,853 27,618 31,355 26,658 17 Term agreements 1 32,048 48,247 49,637 49,414 49,308 49,816 49,578 50,846 49,086 4499,,229944 Repurchase agreements4 n.a. 18 Overnight and continuing 1 35,919 49,695 5511,,222288 51,702 52,378 51,300 54,039 50,924 57,438 53,590 19 Term agreements t 29,449 43,410 43,450 41,890 42,350 44,435 41,613 43,039 39,433 40,178 For notes see opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A35 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1982 1983 AAggeennccyy 11997799 11998800 11998811 Sept. Oct. Nov. Dec. Jan. Feb. Mar. 1 Federal and federally sponsored agencies' 163,290 193,229 227,210 245,951 244,599 243,535 247,119 247,887 244,243' 240,475 2 Federal agencies 24,715 28,606 31,806 32,606 32,713 32,772 33,055 33,018 33,045 33,083 3 Defense Department2 738 610 484 388 377 364 354 346 336 335 4 Export-Import Bank3-4 9,191 11,250 13,339 14,042 14,000 13,999 14,218 14,267 14,255 14,304 5 Federal Housing Administration5 537 477 413 335 323 311 288 282 281 271 6 Government National Mortgage Association participation certificates6 2,979 2,817 2,715 2,165 2,165 2,165 2,165 2,165 2,165 2,165 7 Postal Service7 1,837 1,770 1,538 1,471 1,471 1,471 1,471 1,471 1,471 1,471 8 Tennessee Valley Authority 8,997 11,190 13,115 14,010 14,185 14,270 14,365 14,365 14,415 14,415 9 United States Railway Association7 436 492 202 195 192 192 194 122 122 122 10 Federally sponsored agencies1 138,575 164,623 195,404 213,345 212,886 210,763 214,064 214,869 211,198' 207,392 11 Federal Home Loan Banks 33,330 41,258 58,090 61,251 60,904 60,356 61,447 59,969 57,515' 54,880 12 Federal Home Loan Mortgage Corporation 2,771 2,536 2,604 3.000 3,000 3,000 3,000 3,000 3,202 2,002 13 Federal National Mortgage Association 48,486 55,185 58,749 68,130 67,916 66,852 70,052 72,247 72,221 71,366 14 Federal Land Banks 16,006 12,365 9,717 7,652 6,813 6,813 6,813 5,802 5,802 5,802 15 Federal Intermediate Credit Banks 2,676 1,821 1,388 926 926 926 926 926 926 926 16 Banks for Cooperatives 584 584 220 220 220 220 220 220 220 220 17 Farm Credit Banks1 33,216 48,153 60,034 65,553 66,449 65,877 65,014 66,360 65,796 65,653 18 Student Loan Marketing Association 1,505 2,720 4,600 6,611 6,657 6,718 6,591 6,404 6,257 66,,554422 19 Other 1 1 2 2 1 1 1 1 1 11 MEMO: 20 Federal Financing Bank debt ' 67,383 87,460 110,698 124,357 125,064 125,707 126,424 126,587 126,623 127,717 Lending to federal and federally sponsored agencies 21 Export-Import Bank4 8,353 10,654 12,741 13,954 13,954 13,954 14,177 14,177 14,177 14,232 22 Postal Service7 1,587 1,520 1,288 1,221 1,221 1,221 1,221 1,221 1,221 1,221 23 Tennessee Valley Authority 7,272 9,465 11,390 12,285 12,460 12,545 12,640 12,640 12,690 12,675 24 United States Railway Association7 436 492 202 195 192 192 194 122 122 122 Other Lending9 25 Farmers Home Administration 32,050 39,431 48,821 53,736 53,661 53,661 53,261 53,056 52,431 52,686 26 Rural Electrification Administration 6,484 9,196 13,516 16,282 16,600 16,750 17,157 17,330 17,502 17,816 27 Other 9,696 13,982 18,140 21,684 26,976 27,384 27,774 28,041 28,480 28,965 1. In September 1977 the Farm Credit Banks issued their first consolidated and Urban Development; Small Business Administration; and the Veterans bonds, and in January 1979 they began issuing these bonds on a regular basis to Administration. replace the financing activities of the Federal Land Banks, the Federal Intermedi- 7. Off-budget. ate Credit Banks, and the Banks for Cooperatives. Line 17 represents those 8. The FFB, which began operations in 1974, is authorized to purchase or sell consolidated bonds outstanding, as well as any discount notes that have been obligations issued, sold, or guaranteed by other federal agencies. Since FFB issued. Lines 1 and 10 reflect the addition of this item. incurs debt solely for the purpose of lending to other agencies, its debt is not 2. Consists of mortgages assumed by the Defense Department between 1957 included in the main portion of the table in order to avoid double counting. and 1963 under family housing and homeowners assistance programs. 9. Includes FFB purchases of agency assets and guaranteed loans; the latter 3. Includes participation certificates reclassified as debt beginning Oct. 1, 1976. contain loans guaranteed by numerous agencies with the guarantees of any 4. Off-budget Aug. 17, 1974, through Sept. 30, 1976; on-budget thereafter. particular agency being generally small. The Farmers Home Administration item 5. Consists of debentures issued in payment of Federal Housing Administration consists exclusively of agency assets, while the Rural Electrification Administrainsurance claims. Once issued, these securities may be sold privately on the tion entry contains both agency assets and guaranteed loans. securities market. 6. Certificates of participation issued prior to fiscal 1969 by the Government National Mortgage Association acting as trustee for the Farmers Home Administration; Department of Health, Education, and Welfare; Department of Housing NOTES TO TABLE 1.43 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 a arranged to make delivery on short sales and those for which the securities commitment, that is, trade-date basis, including any such securities that have obtained have been used as collateral on borrowings, i.e., matched agreements. been sold under agreements to repurchase (RPs). The maturities of some 4. Includes both repurchase agreements undertaken to finance positions and repurchase agreements are sufficiently long, however, to suggest that the securi- "matched book" repurchase agreements. ties involved are not available for trading purposes. Securities owned, and hence dealer positions, do not include securities to resell (reverse RPs). Before 1981, NOTE. Data for positions are averages of daily figures, in terms of par value, data for immediate positions include forward positions. based on the number of trading days in the period. Positions are shown net and are 2. Figures cover financing involving U.S. government and federal agency on a commitment basis. Data for financing are based on Wednesday figures, in securities, negotiable CDs, bankers acceptances, and commercial paper. terms of actual money borrowed or lent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 DomesticN onfinancial Statistics • July 1983 1.45 NEW SECURITY ISSUES of State and Local Governments Millions of dollars 1982 1983 Type of issue or issuer, or use 11998800 11998811 11998822 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. 1 All issues, new and refunding1 48,367 47,732 78,950 6,673 8,466 10,287 9,761 3,625 5,998 8,141 10,149 Type of issue 2 General obligation 14,100 12,394 21,088 1,716 2,331 3,392 1,623 847 1,250 2,230 3,278 3 U.S. government loans2 38 34 225 30 30 34 37 0 3 3 2 4 Revenue 34,267 35,338 57,862 4,957 6,135 6,895 8,138 2,778 4,748 5,911 6,871 5 U.S. government loans2 57 55 461 54 57 57 62 0 2 5 9 Type of issuer 6 State 5,304 5,288 8,406 1,077 1,010 1,091 220 237 275 724 1,745 7 Special district and statutory authority 26,972 27,499 45,000 3,607 5,160 5,489 6,171 2,100 4,123 5,046 5,227 8 Municipalities, counties, townships, school districts 16,090 14,945 25,544 1,821 2,296 3,243 3,370 1,288 1,600 2,371 3,177 9 Issues for new capital, total 46,736 46,530 74,612 6,470 7,275 9,496 9,531 3,127 4,909 6,709 8,242 Use of proceeds 10 Education 4,572 4,547 6,444 840 546 765 895 352 1,079 811 605 11 Transportation 2,621 3,447 6,256 557 636 1,291 1,342 49 539 815 559 12 Utilities and conservation 8,149 10,037 14,254 292 1,338 1,969 1,891 956 1,039 1,716 2,508 13 Social welfare 19,958 12,729 26,605 2,647 2,918 2,336 3,121 817 1,391 2,376 2,637 14 Industrial aid 3,974 7,651 8,256 1,082 621 877 1,308 306 167 330 350 15 Other purposes 7,462 8,119 12,797 1,052 1,212 2,258 974 647 694 904 1,583 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. 1.46 NEW SECURITY ISSUES of Corporations Millions of dollars 1982 1983 TTyyppee ooff iissssuuee oorr iissssuueerr,, 11998800 11998811 11998822 oorr uussee Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. 1 All issues1-2 73,694 69,991 83,788 9,318 8,247 9,989 8,802 9,830 7,598 8,481 11,608 2 Bonds 53,206 44,642 53,226 6,553 5,762 7,121 5,412 5,636 4,470 3,819 5,267 Type of offering 3 Public 41,587 37,653 43,428 5,546 5,308 6,426 4,927 4,264 4,470 3,819 5,267 4 Private placement 11,619 6,989 9,798 1,007 454 695 485 1,372 n.a. n.a. n.a. Industry group 5 Manufacturing 15,409 12,325 13,307 1,602 1,730 2,044 2,138 1,204 849 635 962 6 Commercial and miscellaneous 6,693 5,229 5,681 1,202 481 417 523 565 702 361 551111 7 3,329 2,052 1,474 402 64 285 88 120 31 250 8 Public utility 9,557 8,963 12,155 934 1,021 1,663 1,246 944 313 813 950 9 6,683 4,280 2,265 205 311 208 115 372 650 10 Real estate and financial 11,534 11,793 18,344 2,208 2,156 2,504 1,302 2,431 2,575 1,760 2,194 11 Stocks3 20,489 25,349 30,562 2,765 2,485 2,868 3,390 4,194 3,128 4,662 6,341 Type 12 Preferred 3,631 1,797 5,113 622 522 611 573 421 594 1,962 893 13 Common 16,858 23,552 25,449 2,143 1.963 2,257 2,817 3,773 2,534 2,700 5,448 Industry group 14 Manufacturing 4,839 5,074 5,649 717 345 666 481 921 876 1,048 1,584 15 Commercial and miscellaneous 5,245 7,557 7,770 375 742 640 1,024 693 994 646 1,225 16 Transportation 549 779 709 62 84 80 225 22 355 283 91 17 Public utility 6,230 5,577 7,517 759 1,003 620 752 742 350 534 674 18 Communication 567 1,778 2,227 495 4 33 14 1,361 187 2 1,133 19 Real estate and financial 3,059 4,584 6,690 357 307 829 894 455 366 2,149 1,634 1. Figures, which represent gross proceeds of issues maturing in more than one 2. Data for 1983 include only public offerings. year, sold for cash in the United States, are principal amount or number of units 3. Beginning in August 1981, gross stock offerings include new equity volume multiplied by offering price. Excludes offerings of less than $100,000, secondary from swaps of debt for equity. offerings, undefined or exempted issues as defined in the Securities Act of 1933, employee stock plans, investment companies other than closed-end, intracorpo- SOURCE. Securities and Exchange Commission and the Board of Governors of rate transactions, and sales to foreigners. the Federal Reserve System. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Corporate Finance A37 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Asset Position Millions of dollars 1982 1983 IItteemm 11998811 11998822 Oct. Nov. Dec. Jan. Feb. Mar. Apr/ May INVESTMENT COMPANIES' 1 Sales of own shares2 20,596 45,675 5,668 5,815 5,291 8,095 6,115 7,871 8,418 7,578 2 Redemptions of own shares3 15,866 30,078 3,046 3,493 4,835 4,233 3,510 5,066 6,482 4,486 3 Net sales 4,730 15,597 2,622 2,322 456 3,862 2,605 2,805 1,936 3,092 4 Assets4 55,207 76,741 70,964 74,864 76,841 80,384 84,981 90,075 98,669 101,423 5 Cash position5 5,277 5,999 5,948 5,838 6,040 6,943 7,404 7,904 8,496 8,772 6 Other 49,930 70,742 65,016 69,026 70,801 73,441 77,577 82,171 90,173 92,651 1. Excluding money market funds. 5. Also includes all U.S. government securities and other short-term debt 2. Includes reinvestment of investment income dividends. Excludes reinvest- securities. ment of capital gains distributions and share issue of conversions from one fund to another in the same group. NOTE. Investment Company Institute data based on reports of members, which 3. Excludes share redemption resulting from conversions from one fund to comprise substantially all open-end investment companies registered with the another in the same group. Securities and Exchange Commission. Data reflect newly formed companies after 4. Market value at end of period, less current liabilities. their initial offering of securities. 1.48 CORPORATE PROFITS AND THEIR DISTRIBUTION Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1981 1982 1983 AAccccoouunntt 11998800 11998811 11998822 Q2 Q3 Q4 Q1 Q2 Q3 Q4 QK 1 Corporate profits with inventory valuation and capital consumption adjustment 181.6 190.6 160.8 185.1 193.1 183.9 157.1 155.4 166.2 164.6 186.1 2 Profits before tax 242.4 232.1 174.9 225.4 233.3 216.5 171.6 171.7 180.3 175.9 177.9 3 Profits tax liability 84.6 81.2 57.7 79.2 82.4 71.6 56.7 55.3 60.9 58.0 65.2 4 Profits after tax 157.8 150.9 117.1 146.2 150.9 144.9 114.9 116.3 119.4 117.9 112.7 5 Dividends 58.1 65.1 70.3 64.0 66.8 68.1 68.8 69.3 70.5 72.4 73.5 6 Undistributed profits 99.7 85.8 46.9 82.2 84.1 76.8 46.1 47.0 48.8 45.5 39.2 7 Inventory valuation -43.0 -24.6 -9.2 -22.8 -23.0 -17.1 -4.4 -9.4 -10.3 -12.6 .5 8 Capital consumption adjustment -17.8 -16.8 -4.9 -17.5 -17.1 -15.5 -10.1 -6.9 -3.8 1.3 7.7 SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Nonfinancial Statistics • July 1983 1.49 NONFINANCIAL CORPORATIONS Current Assets and Liabilities Billions of dollars, except for ratio 1981 1982 AAccccoouunntt 11997766 11997777 11997788 11997799 11998800 Q4 Qi Q2 Q3 Q4 1 Current assets 827.4 912.7 1,043.7 1,218.2 1,333.5 1,426.8 1,424.6 1,422.6 1,446.9 1,430.9 2 Cash 88.2 97.2 105.5 118.0 127.1 131.9 122.0 124.4 126.9 143.7 3 U.S. government securities 23.5 18.2 17.3 17.0 19.3 18.0 16.9 17.1 19.6 23.1 4 Notes and accounts receivable 292.9 330.3 388.0 461.1 510.6 536.2 539.2 536.8 539.7 517.0 5 Inventories 342.5 376.9 431.6 505.5 543.7 587.1 592.7 588.4 598.0 577.5 6 Other 80.3 90.1 101.3 116.7 132.7 153.6 153.7 155.8 162.7 169.6 7 Current liabilities 495.1 557.1 669.3 807.8 890.9 979.5 988.0 987.5 1,005.2 976.5 8 Notes and accounts payable 282.1 317.6 382.9 461.2 515.2 562.4 555.5 555.1 559.7 548.7 9 Other 213.0 239.6 286.4 346.6 375.7 417.1 432.5 432.4 445.5 427.8 10 Net working capital 332.4 355.5 374.4 410.5 442.6 447.3 436.6 435.1 441.7 454.4 11 MEMO: Current ratio1 1.671 1.638 1.559 1.508 1.497 1.457 1.442 1.441 1.439 1.465 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, Board of Governors of the Federal Reserve System, Washington, D.C. Corporations" in the July 1978 BULLETIN, pp. 533-37. 20551. SOURCE. Federal Trade Commission and Bureau of the Census. 1.50 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1982 1983 IInndduussttrryy11 11998811 11998822 1199883311 Q2 Q3 Q4 Ql Q21 Q3' Q41 1 Total nonfarm business 321.49 316.43 305.53 323.22 315.79 302.77 293.03 302.23 306.83 320.02 Manufacturing 7 Durable goods industries 61.84 56.44 51.95 59.03 57.14 50.50 50.74 49.64 53.34 54.09 3 Nondurable goods industries 64.95 63.23 60.84 64.74 62.32 59.59 59.12 61.34 60.75 62.15 Nonmanufacturing 4 Mining 16.86 15.45 13.24 16.56 14.63 13.31 12.03 13.69 13.54 13.70 Transportation 5 Railroad 4.24 4.38 3.96 4.73 3.94 4.31 3.35 4.00 4.09 4.41 6 Air 3.81 3.93 3.42 3.54 4.11 4.85 4.09 3.25 2.68 3.66 7 Other 4.00 3.64 3.42 4.06 3.24 3.25 3.60 3.40 3.17 3.51 Public utilities 8 Electric 29.74 33.40 33.84 32.26 34.98 35.12 33.97 34.16 32.97 34.24 9 Gas and other 8.65 8.55 7.76 9.14 8.40 7.77 7.64 8.03 7.48 7.87 10 Trade and services 86.33 86.95 87.13 88.85 87.31 84.00 82.38 85.33 87.41 93.37 11 Communication and other2 41.06 40.46 39.97 40.33 39.73 40.06 36.11 39.40 41.39 43.00 1. Anticipated by business. SOURCE. Survey of Current Business (Department 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 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities Billions of dollars, end of period 1982 1983 AAccccoouunntt 11997777 11997788 11997799 11998800 11998811 Ql Q2 Q3 Q4 Ql ASSETS Accounts receivable, gross 1 Consumer 44.0 52.6 65.7 73.6 85.5 85.1 88.0 88.3 89.5 89.9 2 Business 55.2 63.3 70.3 72.3 80.6 80.9 82.6 82.2 81.0 82.2 3 Total 99.2 116.0 136.0 145.9 166.1 166.0 170.6 170.5 170.4 172.1 4 LESS: Reserves for unearned income and losses.... 12.7 15.6 20.0 23.3 28.9 29.1 30.2 30.4 30.5 29.7 5 Accounts receivable, net 86.5 100.4 116.0 122.6 137.2 136.9 140.4 140.1 139.8 142.4 6 Cash and bank deposits 2.6 3.5 1 7 Securities .9 1.3 \ 24.91 27.5 34.2 35.0 37.3 39.1 39.7 42.8 8 All other 14.3 17.3 J 9 Total assets 104.3 122.4 140.9 150.1 171.4 171.9 177.8 179.2 179.5 185.2 LIABILITIES 10 Bank loans 5.9 6.5 8.5 13.2 15.4 15.4 14.5 16.8 18.6 16.6 11 Commercial paper 29.6 34.5 43.3 43.4 51.2 46.2 50.3 46.7 45.8 45.2 Debt 12 Short-term, n.e.c 6.2 8.1 8.2 7.5 9.6 9.0 9.3 9.9 8.7 9.8 13 Long-term, n.e.c 36.0 43.6 46.7 52.4 54.8 59.0 60.3 60.9 63.5 64.7 14 Other 11.5 12.6 14.2 14.3 17.8 19.0 18.9 20.5 18.7 22.8 15 Capital, surplus, and undivided profits 15.1 17.2 19.9 19.4 22.8 23.3 24.5 24.5 24.2 26.0 16 Total liabilities and capital 104.3 122.4 140.9 150.1 171.4 171.9 177.8 179.2 179.5 185.2 1. Beginning Q1 1979, asset items on lines 6, 7, and 8 are combined. NOTE. Components may not add to totals due to rounding. 1.52 DOMESTIC FINANCE COMPANIES Business Credit Millions of dollars, seasonally adjusted except as noted Changes in accounts Extensions Repayments receivable AAAccccccooouuunnntttsss rrreeeccceeeiiivvvaaabbbllleee TTTyyypppeee ooouuutttssstttaaannndddiiinnnggg 1983 1983 1983 AAAppprrr... 333000,,, 111999888333111 Feb. Mar. Apr. Feb. Mar. Apr. Feb. Mar. Apr. 1 Total 83,081 126 -80 887 22,458 23,924 22,927 22,332 24,004 22,040 2 Retail automotive (commercial vehicles) 14,811 396 645 830 1,336 1,604 1,810 940 959 980 3 Wholesale automotive 12,425 115 -590 226 6,643 6,058 6,494 6,258 6,648 6,268 4 Retail paper on business, industrial, and farm equipment 27,654 381 283 -116 1,477 1,252 1,180 1,096 969 1,296 5 Loans on commercial accounts receivable and factored commercial accounts receivable 9,400 -243 102 73 11,634 13,327 11,897 11,877 13,225 11,824 6 All other business credit 18,791 -523 -520 -126 1,368 1,683 1,546 1,891 2,203 1,672 1. Not seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • July 1983 1.53 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1982 1983 IItteemm 11998800 11998811 11998822 Nov. Dec. Jan. Feb. Mar. Apr. May Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms1 1 Purchase price (thousands of dollars) 83.4 90.4 94.6 97.9 91.8 88.9 88.4 80.1 89.6 92.1 2 Amount of loan (thousands of dollars) 59.2 65.3 69.8 75.6 67.6 65.4 66.6 60.5 66.5 67.8 3 Loan/price ratio (percent) 73.2 74.8 76.6 79.0 75.2 75.2 77.9 76.8 74.2 77.5 4 Maturity (years) 28.2 27.7 27.6 27.9 26.9 26.5 27.2 24.2 26.9 26.8 5 Fees and charges (percent of loan amount)2 2.09 2.67 2.95 2.76 2.98 2.46 2.78 2.21 2.09 2.44 6 Contract rate (percent per annum) 12.25 14.16 14.47 13.26 13.09 13.00 12.62 12.97 12.02 12.21 Yield (percent per annum) 7 FHLBB series5 12.65 14.74 15.12 13.81 13.69 13.49 13.16 13.41 12.42 12.67 8 HUD series4 13.95 16.52 15.79 13.80 13.62 13.44 13.18 13.17 13.02 13.09 SECONDARY MARKETS Yield (percent per annum) 9 FHA mortgages (HUD series)5 13.44 16.31 15.31 12.82 12.80 12.87 12.65 12.68 12.50 12.41 10 GNMA securities5 12.55 15.29 14.68 12.66 12.60 12.06 11.94 11.87 11.76 11.72 FNMA auctions7 14.11 16.70 1144..4433 1166..6644 1155..9955 1133..7755 1133..7722 nn..aa.. nn..aa.. nn..aa.. nn..aa.. Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 13 Total 55,104 58,675 66,031 70,126 71,814 73,106 73,555 73,666 73,554 74,116 14 FHA/VA-insured 37,365 39,341 39,718 39,174 39,057 38,924 38,768 38,409 37,901 37,669 15 Conventional 17,725 19,334 26,312 30,952 32,757 34,182 34,788 35,257 35,653 36,446 Mortgage transactions (during period) 16 Purchases 8,099 6,112 15,116 1,681 2,495 2,045 1,594 1,433 1,004 1,579 17 Sales 0 2 2 1 1 0 1 777 586 204 Mortgage commitments8 18 Contracted (during period) 8,083 9,331 22,105 2,795 3,055 2,006 785 1,184 1,023 1,534 19 Outstanding (end of period) 3,278 3,717 7,606 7,286 7,606 7,487 6,475 6,187 5,811 5,726 Auction of 4-month commitments to buy Government-underwritten loans 20 Offered 8,605.4 2,487.2 307.4 27.0 4.6 2.0 0 n.a. n.a. n.a. 21 Accepted 4,002.0 1,478.0 104.3 0 0 0 0 n.a. n.a. n.a. Conventional loans 22 Offered 3,639.2 2,524.7 445.3 22.1 23.2 7.8 1.8 n.a. n.a. n.a. 23 Accepted 1,748.5 1,392.3 237.6 11.4 15.3 0 0 n.a. n.a. n.a. FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)9 24 Total 4,362 5,245 5,153 4,676 4,733 4,560 4,450 4,795 4,997 6,026 25 FHA/VA 2,116 2,236 1,921 1,012 1,009 1,004 1,000 995 990 984 26 Conventional 2,246 3,010 3,224 3,618 3,724 3,556 3,450 3,800 4,008 5,042 Mortgage transactions (during period) 27 Purchases 3,723 3,789 23,671 1,917 3,916 1,479 1,688 2,849 1,807 2,439 28 Sales 2,527 3,531 24,164 2,182 3,798 1,641 1,756 2,469 1,525 1,408 Mortgage commitments10 29 Contracted (during period) 3,859 6,974 28,187 1,714 1,068 2,059 868 1,438 3,079 2,334 30 Outstanding (end of period) 447 3,518 7,549 10,407 7,549 8,098 7,238 5,845 7,253 6,889 1. Weighted averages based on sample surveys of mortgages originated by prevailing ceiling rate. Monthly figures are unweighted averages of Monday major institutional lender groups. Compiled by the Federal Home Loan Bank quotations for the month. Board in cooperation with the Federal Deposit Insurance Corporation. 7. Average gross yields (before deduction of 38 basis points for mortgage 2. Includes all fees, commissions, discounts, and "points" paid (by the servicing) on accepted bids in Federal National Mortgage Association's auctions borrower or the seller) to obtain a loan. of 4-month commitments to purchase home mortgages, assuming prepayment in 3. Average effective interest rates on loans closed, assuming prepayment at the 12 years for 30-year mortgages. No adjustments are made for FN MA commitment end of 10 years. fees or stock related requirements. Monthly figures are unweighted averages for 4. Average contract rates on new commitments for conventional first mort- auctions conducted within the month. FNMA's commitment auctions were gages, rounded to the nearest 5 basis points; from Department of Housing and discontinued in March 1983. Urban Development. 8. Includes some multifamily and nonprofit hospital loan commitments in 5. Average gross yields on 30-year, minimum-downpayment, Federal Housing addition to 1- to 4-family loan commitments accepted in FNMA's free market Administration-insured first mortgages for immediate delivery in the private auction system, and through the FNMA-GNMA tandem plans. secondary 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. FHLMC's 6. Average net yields to investors on Government National Mortgage Associa- mortgage commitments and mortgage transactions include activity under morttion guaranteed, mortgage-backed, fully modified pass-through securities, assum- gage/securities swap programs, while the corresponding data for FNMA exclude ing prepayment in 12 years on pools of 30-year FHA/VA mortgages carrying the swap activity. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate Debt A41 1.54 MORTGAGE DEBT OUTSTANDING Millions of dollars, end of period 1982 1983 TTyyppee ooff hhoollddeerr,, aanndd ttyyppee ooff pprrooppeerrttyy 11998800 11998811 11998822 Q1 Q2 Q3 Q4 Ql 1 All holders 1,471,786 1,583,264 1,652,126 1,602,855 1,624,279 1,632,161 1,652,126 1,679,911 ? 1- to 4-family 986,979 1,065,294 1,112,352 1,076,930 1,089,522 1,097,507 1,112,352 1,133,012 3 Multifamily 137,134 136,354 136,515 137,712 138,332 136,508 136,515 138,164 4 Commercial 255,655 279,889 296,369 284,306 290,951 291,740 296,369 301,703 5 92,018 101,727 106,890 103,907 105,474 106,406 106,890 107,032 Major financial institutions 997,168 1,040,827 1,020,527 1,041.702 1,042,904 1,027,027 1,020,527 1,026,582 7 Commercial banks' 263,030 284,536 301,742 289,365 294,022 298,342 301,742 305,672 8 1- to 4-family 160,326 170,013 177,122 171,350 172,596 175,126 177,122 179,430 9 Multifamily 12,924 15,132 15,84! 15,338 15,431 15,666 15,841 16,147 10 Commercial 81,081 91,026 100,269 94,256 97,522 99,050 100,269 101,575 11 Farm 8,699 8,365 8,510 8,421 8,473 8,500 8,510 8,520 1? Mutual savings banks 99,865 99,997 94,452 97,464 96,346 94,382 94,452 93,697 13 1- to 4-family 67,489 68,187 64,095 66,305 65,381 63,849 64,095 63,582 14 Multifamily 16,058 15,960 15,037 15,536 15,338 15,026 15,037 14,917 15 Commercial 16,278 15,810 15,292 15,594 15,598 15,479 15,292 15,170 16 Farm 40 40 28 29 29 28 28 28 17 Savings and loan associations 503,192 518,547 482,414 516,111 512,997 493,899 482,414 484,080 18 1- to 4-family 419,763 433,142 398,537 430,178 425,890 410,035 398,537 397,178 19 Multifamily 38,142 37,699 36,023 37,986 38,321 36,894 36,023 36,511 20 Commercial 45,287 47,706 47,854 47,947 48,786 46,970 47,854 50,391 21 Life insurance companies 131,081 137,747 141,919 138,762 139,539 140,404 141,919 143,133 22 1- to 4-family 17,943 17,201 16,743 17,086 16,451 16,865 16,743 16,836 23 Multifamily 19,514 19,283 18,847 19,199 18,982 18,967 18,847 19,054 74 Commercial 80,666 88,163 93,501 89,529 91,113 91,640 93,501 94,618 25 Farm 12,958 13,100 12,828 12,948 12,993 12,932 12,828 12,625 26 Federal and related agencies 114,300 126,094 138,185 128,698 131,456 134,409 138,185 140,023 77 Government National Mortgage Association 4,642 4,765 4,227 4,438 4,669 4,110 4,227 3,785 28 1- to 4-family 704 693 676 689 688 682 676 665 29 Multifamily 3,938 4,072 3,551 3,749 3,981 3,428 3,551 3,120 30 Farmers Home Administration 3,492 2,235 1,786 2,469 1,335 947 1,786 2,077 31 1- to 4-family 916 914 783 715 491 302 783 707 32 Multifamily 610 473 218 615 179 46 218 380 33 Commercial 411 506 377 499 256 164 377 337 34 Farm 1,555 342 408 640 409 435 408 653 35 Federal Housing and Veterans Administration 5,640 5,999 5,228 6,003 5,908 5,362 5,228 5,156 36 1- to 4-family 2,051 2,289 1,980 2,266 2,218 2,130 1,980 1,883 37 Multifamily 3,589 3,710 3,248 3,737 3,690 3,232 3,248 3,273 38 Federal National Mortgage Association 57,327 61,412 71,814 62,544 65,008 68,841 71,814 73,666 39 1- to 4-family 51,775 55,986 66,500 57,142 59,631 63,495 66,500 68,370 40 Multifamily 5,552 5,426 5,314 5,402 5,377 5,346 5,314 5,2% 41 Federal Land Banks 38,131 46,446 50,350 47,947 49,270 49,983 50,350 50,544 42 1- to 4-family 2,099 2,788 3,068 2,874 2,954 3,029 3,068 3,059 43 Farm 36,032 43,658 47,282 45,073 46,316 46,954 47,282 47,485 44 Federal Home Loan Mortgage Corporation 5,068 5,237 4,780 5,297 5,266 5,166 4,780 4,795 45 1- to 4-family 3,873 5,181 4,733 5,240 5,209 5,116 4,733 4,740 46 Multifamily 1,195 56 47 57 57 50 47 55 47 Mortgage pools or trusts2 142,258 163,000 216,654 172,303 183,657 198,376 216,654 234,596 48 Government National Mortgage Association 93,874 105,790 118,940 108,592 111,459 114,776 118,940 127,939 49 1- to 4-family 91,602 103,007 115,831 105,701 108,487 111,728 115,831 124,482 50 Multifamily 2,272 2,783 3,109 2,891 2,972 3,048 3,109 3,457 51 Federal Home Loan Mortgage Corporation 16,854 19,853 42,964 23,970 28,703 35,132 42,964 48,008 52 1- to 4-family 13,471 19,501 42,560 23,610 28,329 34,739 42,560 47,575 53 Multifamily 3,383 352 404 360 374 393 404 433 54 Federal National Mortgage Association3 n.a. 717 14,450 2,786 4,556 8,133 14,450 18,157 55 1- to 4-family n.a. 717 14,450 2,786 4,556 8,133 14,450 18,157 56 Farmers Home Administration 31,530 36,640 40,300 36,955 38,939 40,335 40,300 40,492 57 1- to 4-family 16,683 18,378 20,005 18,740 19,357 20,079 20,005 20,263 58 Multifamily 2,612 3,426 4,344 3,447 4,044 4,344 4,344 4,344 59 Commercial 5,271 6,161 7,011 6,351 6,762 7,056 7,011 7,115 60 Farm 6,964 8,675 8,940 8,417 8,776 8,856 8,940 8,770 61 Individual and others4 218,060 253,343 276,760 260,152 266,262 272,349 276,760 278,710 62 1- to 4-family5 138,284 167,297 185,269 172,248 177,284 182,199 185,269 186,085 63 Multifamily 27,345 27,982 30,532 29,395 29,586 30,068 30,532 31,177 64 Commercial 26,661 30,517 32,065 30,130 30,914 31,381 32,065 32,497 65 Farm 25,770 27,547 28,894 28,379 28,478 28,701 28,894 28,951 1. Includes loans held by nondeposit trust companies but not bank trust NOTE. Based on data from various institutional and governmental sources, with departments. 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 of guaranteed by the agency indicated. nonfarm mortgage debt by type of property, if not reported directly, and 3. Outstanding balances on FNMA's issues of securities backed by pools of interpolations and extrapolations when required, are estimated mainly by the conventional mortgages held in trust. The program was implemented by FNMA in Federal Reserve. Multifamily debt refers to loans on structures of five or more October 1981. units. 4. Other holders include mortgage companies, real estate investment trusts, state and local credit agencies, state and local retirement funds, noninsured pension funds, credit unions, and U.S. agencies for which amounts are small or for which separate data are not readily available. Digitized for 5F. RInAclSudEeRs a new estimate of residential mortgage credit provided by individuals. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Nonfinancial Statistics • July 1983 1.55 CONSUMER INSTALLMENT CREDIT1 Total Outstanding, and Net ChangeA Millions of dollars 1982 1983 HHoollddeerr,, aanndd ttyyppee ooff ccrreeddiitt 11998800 11998811 11998822 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Amounts outstanding (end of period) 1 Total 313,472 331,697 344,798 336,473 338,372 344,798 343,151 340,343 342,568 344,748 By major holder 2 Commercial banks 147,013 147,622 152,069 149,528 149,651 152,069 150,906 150,257 151,319 152,408 3 Finance companies 76,756 89,818 94,322 92,541 93,462 94,322 95,080 93.859 94,817 94,675 4 Credit unions 44,041 45,954 47,253 46,645 46,832 47,253 46,946 46,757 47,081 47,505 5 Retailers2 28,448 29,551 30,202 27,046 27,639 30,202 28,859 27,734 27,472 27,455 6 Savings and loans 9,911 11,598 13,891 13,457 13,672 13,891 14,209 14.860 15,083 15,551 7 Gasoline companies ... 4,468 4,403 4,063 4,322 4,141 4,063 4,102 3,780 3,669 3,980 8 Mutual savings banks .. 2,835 2,751 2,998 2,934 2,975 2,998 3,049 3,096 3,127 3,174 By major type of credit 9 Automobile 116,838 125,331 130,227 128,375 129,299 130,227 129,482 129,055 130,959 131,976 10 Commercial banks... 61,536 58,081 58,851 58,552 58,701 58,851 57,740 57,971 58,567 59,291 11 Indirect paper 35,233 34,375 35,178 34,744 34,884 35,178 (3) (3) (3) (3) 12 Direct loans 26,303 23,706 23,673 23,808 23,817 23,673 (3) (3) (3) (3) 13 Credit unions 21,060 21,975 22,596 22,306 22,395 22,596 22,458 22,360 22,518 22,721 14 Finance companies .. 34,242 45,275 48,780 47,518 48,203 48,780 49,284 48,724 49,874 49,964 | 15 Revolving 58,352 62,819 67,184 61,836 62,362 67,184 65,562 63,372 63,091 63,521 16 Commercial banks... 29,765 32,880 36,688 34,110 34,233 36,688 36,282 35,481 35,533 35,651 17 Retailers 24,119 25,536 26,433 23,404 23,988 26,433 25,178 24,111 23,889 23,890 18 Gasoline companies . 4,468 4,403 4,063 4,322 4,141 4,063 4,102 3,780 3,669 3,980 19 Mobile home 17,322 18,373 18,988 19,043 19,049 18,988 19,291 19,374 19,379 19,400 20 Commercial banks... 10,371 10,187 9,684 9,860 9,806 9,684 9,828 9,806 9,739 9,624 21 Finance companies .. 3,745 4,494 4,965 4,971 4,970 4,965 4,981 4,960 4,967 4,970 22 Savings and loans ... 2,737 3,203 3,836 3,716 3,775 3,836 3,984 4,112 4,174 4,303 23 Credit unions 469 489 503 496 498 503 498 496 499 503 24 Other 120,960 125,174 128,399 127,219 127,662 128,399 128,816 128,542 129,139 129,851 25 Commercial banks... 45,341 46,474 46,846 47,006 46,911 46,846 47,056 46,999 47,480 47,842 26 Finance companies .. 38,769 40,049 40,577 40,052 40,289 40,577 40,815 40,175 39,976 39,741 27 Credit unions 22,512 23,490 24,154 23,844 23,939 24,154 23,990 23,901 24,064 24,281 28 Retailers 4,329 4,015 3,769 3,642 3,651 3,769 3,681 3,623 3,583 3,565 29 Savings and loans ... 7,174 8,395 10,055 9,741 9,897 10,055 10,225 10,748 10,909 11,248 30 Mutual savings banks 2,835 2,751 2,998 2,934 2,975 2,998 3,049 3,096 3,127 3,174 Net change (during period)4 31 Total 1,448 18,217 13,096 -131 2,015 2,418 2,725 735 2,582 2,271 2,696 By major holder 32 Commercial banks -7,163 607 4,442 73 457 1,111 410 788 1,354 1,186 1,540 33 Finance companies .... 8,438 13,062 4,504 -372 1,051 1,024 1,881 -658 487 -520 362 34 Credit unions -2,475 1,913 1,298 38 412 197 20 43 143 708 288 35 Retailers2 329 1,103 651 -67 -51 -91 -14 36 422 147 169 36 Savings and loans 1,485 1,682 2,290 274 181 201 412 677 187 394 374 37 Gasoline companies ... 739 -65 -340 -108 -35 -51 -78 -200 -35 299 -51 38 Mutual savings banks.. 95 -85 251 31 0 27 94 49 24 57 14 By major type of credit 39 Automobile 477 8,495 4,898 -70 1,534 1,491 625 -233 1,221 689 1,313 4 4 4 0 1 2 Co D I m n i d r m e ir c e e r t c c l t i o a p a l a n b p s a er n ks... - - - 3 5 2 , , , 1 8 7 0 3 2 4 0 6 - - 3 2 - , , 8 4 5 5 5 9 8 5 7 - 8 7 3 0 7 3 3 0 1 1 2 3 1 0 7 7 2 3 1 0 3 3 2 6 4 5 4 9 2 2 8 7 9 -58 ( ( 1 3 3 ) ) 3 ( ( 21 3 3 ) ) 2 ( ( 430 3 ) ) 6 ( ( 12 3 3 ) ) 1,06 ( ( 6 3 3 ) ) 43 Credit unions -1,184 914 622 16 211 89 20 15 68 341 137 44 Finance companies .. 7,491 11,033 3,505 -223 987 875 1,186 -569 913 -264 110 45 Revolving 1,415 4,467 4,365 81 39 501 68 -135 1,177 917 514 46 Commercial banks... -97 3,115 3,808 223 74 650 130 61 786 468 373 47 Retailers 773 1,417 897 -34 0 -98 16 4 426 150 192 48 Gasoline companies . 739 -65 -340 -108 -35 -51 -78 -200 -35 299 -51 49 Mobile home 483 1,049 609 -35 23 -37 420 204 -61 22 17 50 Commercial banks... -276 -186 -508 -105 -47 -74 193 26 -95 -99 -86 51 Finance companies .. 355 749 471 -9 5 -15 53 59 -23 8 1 52 Savings and loans ... 430 466 633 78 61 49 175 120 54 107 98 53 Credit unions -25 20 14 1 4 3 -1 -1 3 6 4 54 Other -927 4,206 3,224 -107 419 463 1,612 899 245 643 852 55 Commercial banks... -960 1,133 372 -182 94 8 668 380 423 205 187 56 Finance companies .. 592 1,280 528 -140 59 164 642 -148 -403 -264 251 57 Credit unions -1,266 975 662 21 197 105 1 29 72 361 147 58 Retailers -444 -314 -246 -33 -51 7 -30 32 -4 -3 -23 59 Savings and loans ... 1,056 1,217 1,657 196 120 152 237 557 133 287 276 60 Mutual savings banks 95 -85 251 31 0 27 94 49 24 57 14 1. The Board's series cover most short- and intermediate-term credit extended liquidations, seasonally adjusted. Beginning 1983, net change equals outstandings, to individuals through regular business channels, usually to finance the purchase seasonally adjusted less outstandings of the previous period, seasonally adjusted. of consumer goods and services or to refinance debts incurred for such purposes, NOTE: Total consumer noninstallment credit outstanding—credit scheduled to and scheduled to be repaid (or with the option of repayment) in two or more be repaid in a lump sum, including single-payment loans, charge accounts, and installments. service credit—amounted to, not seasonally adjusted, $74.8 billion at the end of 2. Includes auto dealers and excludes 30-day charge credit held by travel and 1980, $80.6 billion at the end of 1981, and $85.9 billion at the end of 1982. entertainment companies. 3. Not reported after December 1982. • These data have been revised from December 1980 through February 1983. 4. For 1982 and earlier, net change equals extensions, seasonally adjusted less Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Consumer Debt A43 1.56 TERMS OF CONSUMER INSTALLMENT CREDIT Percent unless noted otherwise 1982 1983 IItteemm 11998800 11998811 11998822 Nov. Dec. Jan. Feb. Mar. Apr. May INTEREST RATES Commercial banks' i 1 14.30 16.54 16.83 15.97 14.81 13.90 15.47 18.09 18.65 17.99 17.47 16.57 14.99 17.45 18.05 17.55 16.73 15.84 4 1177..3311 1177..7788 1188..5511 1188..7755 1188..8822 1188..7799 Auto finance companies New car 14.82 16.17 16.15 12.82 12.57 12.25 12.05 12.07 11.90 11.94 6 Used car 19.10 20.00 20.75 20.68 20.63 20.20 19.91 19.38 18.91 18.76 OTHER TERMS3 Maturity (months) 7 New car 45.0 45.4 46.0 46.4 46.4 46.0 45.9 45.9 45.8 45.4 8 Used car 34.8 35.8 34.0 36.9 36.9 38.2 37.7 37.7 37.7 37.9 Loan-to-value ratio 9 New car 87.6 86.1 85.3 87.0 87.0 86.0 86.0 84.0 86.0 86.0 10 Used car 94.2 91.8 90.3 91.0 90.0 90.0 90.0 91.0 91.0 92.0 Amount financed (dollars) 11 New car 6,322 7,339 8,178 8,339 8,468 8,683 8,755 8,829 8,662 8,572 12 Used car 3,810 4,343 4,746 4,822 4,846 4,742 4,731 4,802 4,869 4,984 1. Data for midmonth of quarter only. 3. At auto finance companies. 2. Before 1983 the maturity for new car loans was 36 months, and for mobile home loans was 84 months. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 DomesticN onfinancial Statistics • July 1983 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS Billions of dollars; half-yearly data are at seasonally adjusted annual rates. 1980 1981 1982 ly/y HI H2 HI H2 HI H2 Nonfinanciai sectors 1 Total net borrowing by domestic nonfinanciai sectors .... 317.7 368.6 388.8 355.0 391.1 412.7 325.1 384.9 402.7 379.6 365.9 459.6 By sector and instrument 2 U.S. government 56.8 53.7 37.4 79.2 87.4 161.3 63.3 95.1 81.9 92.9 100.2 222.4 3 Treasury securities 57.6 55.1 38.8 79.8 87.8 162.1 63.9 95.7 82.4 93.2 101.5 222.7 4 Agency issues and mortgages -.9 -1.4 -1.4 -.6 -.5 -.9 -.6 -.6 -.5 -.4 -1.4 -.4 5 Private domestic nonfinanciai sectors 260.9 314.9 351.5 275.8 303.7 251.5 261.9 289.7 320.8 286.7 265.7 237.2 6 Debt capital instruments 169.8 198.7 216.0 204.1 175.0 168.4 203.8 204.4 196.5 153.5 157.1 179.7 7 Tax-exempt obligations 21.9 28.4 29.8 35.9 32.9 59.5 30.7 41.0 35.1 30.6 52.7 66.3 8 Corporate bonds 21.0 20.1 22.5 33.2 23.9 25.5 37.3 29.0 24.7 23.0 13.4 37.7 9 Mortgages 126.9 150.2 163.7 135.1 118.3 83.3 135.8 134.3 136.7 99.9 91.1 75.6 10 Home mortgages 94.3 112.1 120.1 96.7 78.6 58.8 96.5 96.9 95.2 62.0 58.6 59.0 11 Multifamily residential 7.1 9.2 7.8 8.8 4.6 1.3 8.1 9.5 5.1 4.1 4.2 -1.6 12 Commercial 18.4 21.7 23.9 20.2 25.3 18.0 20.3 20.1 27.4 23.2 22.8 13.3 13 Farm 7.1 7.2 11.8 9.3 9.8 5.2 10.9 7.8 9.0 10.5 5.4 4.9 14 Other debt instruments 91.1 116.2 135.5 71.7 128.8 83.0 58.1 85.4 124.3 133.2 108.6 57.5 15 Consumer credit 40.2 48.8 45.4 4.9 25.3 14.4 -3.3 13.0 29.4 21.2 14.4 14.4 16 Bank loans n.e.c 26.7 37.1 49.2 35.4 51.1 57.4 18.0 52.7 47.7 54.6 77.4 37.5 17 Open market paper 2.9 5.2 11.1 6.6 19.2 -2.8 20.3 -7.1 10.7 27.6 4.4 -9.9 18 Other 21.3 25.1 29.7 24.9 33.1 14.0 23.0 26.7 36.5 29.8 12.4 15.6 19 By borrowing sector 260.9 314.9 351.5 275.8 303.7 251.5 261.9 289.7 320.8 286.7 265.7 237.2 20 State and local governments 15.4 19.1 20.2 27.3 22.3 45.8 21.8 32.8 25.1 19.5 41.1 50.4 21 Households 137.3 169.3 176.5 117.5 120.4 88.5 115.2 119.8 141.0 99.9 88.1 89.0 22 Farm 12.3 14.6 21.4 14.4 16.4 9.0 15.7 13.0 19.9 12.8 8.4 9.6 23 Nonfarm noncorporate 28.3 32.4 34.4 33.8 40.5 24.7 27.5 40.2 41.8 39.3 32.4 16.9 24 Corporate 67.6 79.4 99.0 82.8 104.1 83.5 81.7 83.9 93.0 115.2 95.7 71.2 25 Foreign net borrowing in United States 13.5 33.8 20.2 27.2 27.3 15.3 29.0 25.3 34.0 20.6 17.5 13.2 26 Bonds 5.1 4.2 3.9 .8 5.5 6.4 2.0 -.4 3.3 7.6 2.2 10.7 27 Bank loans n.e.c 3.1 19.1 2.3 11.5 3.7 -6.2 5.9 17.2 5.0 2.3 -.4 -12.1 28 Open market paper 2.4 6.6 11.2 10.1 13.9 10.7 15.7 4.5 20.6 7.1 12.5 9.0 29 U.S. government loans 3.0 3.9 2.9 4.7 4.3 4.4 5.4 4.0 5.0 3.6 3.2 5.7 30 Total domestic plus foreign 331.2 402.3 409.1 382.2 418.4 428.0 354.2 410.2 436.7 400.2 383.3 472.8 Financial sectors 31 Total net borrowing by financial sectors 48.8 75.0 80.7 61.3 80.7 68.8 57.6 65.0 85.8 75.5 93.5 44.2 By instrument 32 U.S. government related 21.9 36.7 47.3 43.6 45.1 62.6 47.3 39.8 42.5 47.8 59.3 65.9 33 Sponsored credit agency securities 7.0 23.1 24.3 24.4 30.1 13.1 27.1 21.7 26.9 33.3 21.4 4.7 34 Mortgage pool securities 16.1 13.6 23.1 19.2 15.0 49.5 20.2 18.1 15.6 14.5 37.9 61.2 35 -1.2 36 Private financial sectors 26.9 38.3 33.4 17.7 35.6 6.2 10.3 25.2 43.4 27.8 34.2 -21.8 37 Corporate bonds 10.1 7.5 7.8 7.1 -.8 2.3 9.9 4.4 -2.1 .4 -3.3 7.9 38 Mortgages 3.1 .9 -1.2 -.9 -2.9 1.8 -5.3 3.5 -2.3 -3.5 1.9 1.6 39 Bank loans n.e.c -.3 2.8 -.4 -.4 2.2 3.2 .1 -.9 3.7 .7 6.0 .5 40 Open market paper 9.6 14.6 18.0 4.8 20.9 -1.8 -.1 9.7 24.8 17.0 16.0 -19.6 41 Loans from Federal Home Loan Banks 4.3 12.5 9.2 7.1 16.2 .8 5.8 8.5 19.3 13.2 13.8 -12.1 By sector 42 Sponsored credit agencies 5.8 23.1 24.3 24.4 30.1 13.1 27.1 21.7 26.9 33.3 21.4 4.7 43 Mortgage pools 16.1 13.6 23.1 19.2 15.0 49.5 20.2 18.1 15.6 14.5 37.9 61.2 44 Private financial sectors 26.9 38.3 33.4 17.7 35.6 6.2 10.3 25.2 43.4 27.8 34.2 -21.8 45 Commercial banks 1.1 1.3 1.6 .5 .4 1.2 .8 .3 .2 .5 .7 1.7 46 Bank affiliates 2.0 7.2 6.5 6.9 8.3 1.9 5.8 8.0 6.9 9.7 9.7 -5.8 47 Savings and loan associations 9.9 14.3 11.4 6.6 13.1 -1.7 .1 13.2 19.2 6.9 16.6 -19.9 48 Finance companies 16.9 18.1 16.6 6.3 14.1 5.3 6.0 6.5 17.3 11.0 7.7 2.9 49 REITs -2.5 -1.4 -1.3 -2.2 .2 .1 -2.0 -2.5 .2 .2 .1 .1 All sectors 50 Total net borrowing 379.9 477.4 489.7 443.5 499.1 496.9 411.8 475.2 522.5 475.7 476.8 516.9 51 U.S. government securities 79.9 90.5 84.8 122.9 132.6 224.0 110.7 135.1 124.5 140.7 159.6 288.4 52 State and local obligations 21.9 28.4 29.8 35.9 32.9 59.5 30.7 41.0 35.1 30.6 52.7 66.3 53 Corporate and foreign bonds 36.1 31.8 34.2 41.1 28.5 34.2 49.3 33.0 26.0 30.9 12.2 56.3 54 Mortgages 129.9 151.0 162.4 134.0 115.2 85.0 130.4 137.7 134.3 96.2 92.8 77.1 55 Consumer credit 40.2 48.8 45.4 4.9 25.3 14.4 -3.3 13.0 29.4 21.2 14.4 14.4 56 Bank loans n.e.c 29.5 59.0 51.0 46.5 57.0 54.4 24.0 69.0 56.4 57.6 82.9 26.0 57 Open market paper 15.0 26.4 40.3 21.6 54.0 6.1 35.9 7.2 56.2 51.8 32.8 -20.6 58 Other loans 27.4 41.5 41.8 36.6 53.7 19.2 34.1 39.2 60.7 46.6 29.3 9.1 External corporate equity funds raised in United States 59 Total new share issues 6.5 1.9 -3.8 22.1 -2.9 34.5 16.3 27.9 11.2 -17.0 23.5 45.6 60 Mutual funds .9 -.1 .1 5.0 7.7 19.6 5.5 4.5 8.9 6.5 14.5 24.7 61 All other 5.6 1.9 -3.9 17.1 -10.6 14.9 10.8 23.4 2.3 -23.5 9.0 20.8 62 Nonfinanciai corporations 2.7 -.1 -7.8 12.9 -11.5 11.4 6.9 18.8 .9 -23.8 7.0 15.8 63 Financial corporations 2.5 2.5 3.2 2.1 .9 2.2 1.9 2.3 .8 1.0 2.2 2.2 64 Foreign shares purchased in United States .4 -.5 .8 2.1 * 1.3 1.9 2.2 .7 -.7 -.2 2.9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A45 1.58 DIRECT AND INDIRECT SOURCES OF FUNDS TO CREDIT MARKETS Billions of dollars, except as noted; half-yearly data are at seasonally adjusted annual rates. 1980 1981 1982 TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 11997777 11997788 11997799 11998800 11998811 11998822 HI H2 HI H2 HI H2 1 Total funds advanced in credit markets to domestic nonfinancial sectors 317.7 368.6 388.8 355.0 391.1 412.7 325.1 384.9 402.7 379.6 365.9 459.6 By public agencies and foreign 2 Total net advances 79.2 101.9 74.6 95.8 95.9 110.9 104.6 87.0 98.7 93.2 92.2 112299..66 3 U.S. government securities 34.9 36.1 -6.3 15.7 17.2 17.7 20.5 10.9 15.9 18.5 .2 35.2 4 Residential mortgages 20.0 25.7 35.8 31.7 23.4 61.1 34.9 28.5 21.4 25.5 47.4 74.7 5 FHLB advances to savings and loans 4.3 12.5 9.2 7.1 16.2 .8 5.8 8.5 19.3 13.2 13.8 -12.1 6 Other loans and securities 20.1 27.6 35.9 41.3 39.1 31.4 43.4 39.1 42.1 36.0 30.9 31.8 Total advanced, by sector 7 U.S. government 10.0 17.1 19.0 23.7 24.2 19.4 24.6 22.8 27.1 21.2 14.0 24.9 8 Sponsored credit agencies 22.4 39.9 52.4 44.4 46.0 63.5 45.2 43.7 44.3 47.7 60.4 66.6 9 Monetary authorities 7.1 7.0 7.7 4.5 9.2 9.8 14.9 -5.9 -3.7 22.1 -6.3 25.9 10 Foreign 39.6 38.0 -4.6 23.2 16.6 18.2 19.9 26.5 30.9 2.2 24.1 12.3 Agency and foreign borrowing not in line 1 11 Sponsored credit agencies and mortgage pools 21.9 36.7 47.3 43.6 45.1 62.6 47.3 39.8 42.5 47.8 59.3 65.9 12 Foreign 13.5 33.8 20.2 27.2 27.3 15.3 29.0 25.3 34.0 20.6 17.5 13.2 Private domestic funds advanced 13 Total net advances 273.9 337.1 381.8 329.9 367.6 379.7 296.9 362.9 380.5 354.7 350.4 409.1 14 U.S. government securities 45.1 54.3 91.1 107.2 115.4 206.3 90.2 124.2 108.5 122.3 159.4 253.2 15 State and local obligations 21.9 28.4 29.8 35.9 32.9 59.5 30.7 41.0 35.1 30.6 52.7 66.3 16 Corporate and foreign bonds 22.2 22.4 23.7 25.8 20.6 21.2 31.6 20.1 18.6 22.7 * 42.4 17 Residential mortgages 81.4 95.5 92.0 73.7 59.7 -1.1 69.6 77.8 78.8 40.5 15.3 -17.5 18 Other mortgages and loans 107.6 149.1 154.3 94.4 155.3 94.6 80.6 108.3 158.7 151.8 136.7 52.4 19 LESS: Federal Home Loan Bank advances 4.3 12.5 9.2 7.1 16.2 .8 5.8 8.5 19.3 13.2 13.8 -12.1 Private financial intermediation 20 Credit market funds advanced by private financial institutions 261.7 302.9 292.2 257.9 301.3 262.5 245.4 270.4 326.3 276.3 278.7 246.3 21 Commercial banking 87.6 128.7 121.1 99.7 103.5 107.8 64.7 134.8 107.8 99.2 122.5 93.1 22 Savings institutions 81.6 73.6 55.5 54.1 24.6 24.0 34.9 73.2 43.9 5.3 29.8 18.2 23 Insurance and pension funds 69.0 75.0 66.4 74.4 75.8 88.6 84.3 64.4 75.8 75.8 87.2 90.0 24 Other finance 23.5 25.6 49.2 29.8 97.4 42.1 61.5 -1.9 98.8 95.9 39.2 44.9 25 Sources of funds 261.7 302.9 292.2 257.9 301.3 262.5 245.4 270.4 326.3 276.3 278.7 246.3 26 Private domestic deposits and RP's 138.9 141.1 142.5 167.8 211.2 170.4 162.5 173.1 212.0 210.3 161.1 179.6 27 Credit market borrowing 26.9 38.3 33.4 17.7 35.6 6.2 10.3 25.2 43.4 27.8 34.2 -21.8 28 Other sources 96.0 123.5 116.4 72.4 54.6 85.9 72.7 72.1 70.9 38.2 83.4 88.4 29 Foreign funds 1.2 6.3 25.6 -23.0 -8.8 -28.6 -20.0 -26.0 -.7 -16.8 -18.3 -39.0 30 Treasury balances 4.3 6.8 .4 -2.6 -1.1 6.1 -6.1 1.0 6.0 -8.2 -5.1 17.2 31 Insurance and pension reserves 51.4 62.2 49.1 65.4 70.8 78.1 70.3 60.5 66.0 75.6 77.3 78.8 32 Other, net 39.1 48.3 41.3 32.6 -6.4 30.4 28.6 36.6 -.4 -12.3 29.4 31.4 Private domestic nonfinancial investors 33 Direct lending in credit markets 39.0 72.5 122.9 89.7 101.9 123.5 61.7 117.7 97.5 106.2 105.9 141.0 34 U.S. government securities 24.6 36.3 61.4 38.3 50.4 70.6 23.3 53.3 43.0 57.7 59.4 81.8 35 State and local obligations -.8 3.6 9.4 12.6 20.3 41.3 6.2 18.9 22.8 17.8 40.8 41.7 36 Corporate and foreign bonds -5.1 -2.9 10.2 9.3 -7.9 -8.3 7.8 10.8 -9.2 -6.6 -26.6 10.0 37 Open market paper 9.6 15.6 12.1 -3.4 3.5 -2.3 -8.1 1.4 -1.4 8.4 7.8 -12.5 38 Other 10.7 19.9 29.8 32.9 35.6 22.3 32.5 33.3 42.3 29.0 24.5 20.0 39 Deposits and currency 148.5 152.3 151.9 179.2 221.0 176.5 172.4 186.1 218.6 223.4 161.1 191.8 40 Currency 8.3 9.3 7.9 10.3 9.5 8.4 9.3 11.3 5.8 13.2 2.0 14.8 41 Checkable deposits 17.2 16.3 19.2 4.2 18.3 17.0 -2.5 il.O 26.5 10.1 9.2 24.8 42 Small time and savings accounts 93.5 63.7 61.0 79.5 46.6 122.7 73.4 85.7 26.9 66.3 77.7 167.6 43 Money market fund shares .2 6.9 34.4 29.2 107.5 24.7 61.9 -3.4 104.1 110.8 39.4 10.1 44 Large time deposits 25.8 46.6 21.2 48.3 36.3 2.1 24.4 72.1 46.8 25.7 33.7 -29.5 45 Security RPs 2.2 7.5 6.6 6.5 2.5 3.8 5.3 7.8 7.7 -2.6 1.1 6.6 46 Deposits in foreign countries 1.3 2.0 1.5 1.1 .3 -2.3 .6 1.7 .8 -.2 -2.0 -2.6 47 Total of credit market instruments, deposits and currency 187.5 224.9 274.8 269.0 322.8 300.0 234.1 303.8 316.1 329.6 267.0 332.9 48 Public holdings as percent of total 23.9 25.3 18.2 25.1 22.9 25.9 29.5 21.2 22.6 23.3 24.1 27.4 49 Private financial intermediation (in percent) 95.6 89.9 76.5 78.2 82.0 69.1 82.7 74.5 85.8 77.9 79.5 60.2 50 Total foreign funds 40.8 44.3 21.0 .2 7.8 -10.4 * .5 30.3 -14.6 5.9 -26.7 MEMO: Corporate equities not included above 51 Total net issues 6.5 1.9 -3.8 22.1 -2.9 34.5 16.3 27.9 11.2 -17.0 23.5 45.6 52 Mutual fund shares .9 -.1 .1 5.0 7.7 19.6 5.5 4.5 8.9 6.5 14.5 24.7 53 Other equities 5.6 1.9 -3.9 17.1 -10.6 14.9 10.8 23.4 2.3 -23.5 9.0 20.8 54 Acquisitions by financial institutions 7.4 4.6 10.4 14.6 22.9 31.4 8.6 20.7 25.3 20.5 21.1 41.6 55 Other net purchases -.8 -2.7 -14.2 7.5 -25.8 3.2 7.7 7.2 -14.1 -37.5 2.4 4.0 NOTES BY LINE NUMBER. 32. Mainly retained earnings and net miscellaneous liabilities. 1. Line 1 of table 1.58. 33. Line 12 less line 20 plus line 27. 2. Sum of lines 3-6 or 7-10. 34-38. Lines 14-18 less amounts acquired by private finance. Line 38 includes 6. Includes farm and commercial mortgages. mortgages. 11. Credit market funds raised by federally sponsored credit agencies, and net 40. Mainly an offset to line 9. issues of federally related mortgage pool securities. 47. Lines 33 plus 39, or line 13 less line 28 plus 40 and 46. 13. Line 1 less line 2 plus line 11 and 12. Also line 20 less line 27 plus line 33. Also 48. Line 2/line 1. sum of lines 28 and 47 less lines 40 and 46. 49. Line 20/line 13. 18. Includes farm and commercial mortgages. 50. Sum of lines 10 and 29. 26. Line 39 less lines 40 and 46. 51. 53. Includes issues by financial institutions. 27. Excludes equity issues and investment company shares. Includes line 19. 29. Foreign deposits at commercial banks, bank borrowings from foreign NOTE. Full statements for sectors and transaction types in flows and in amounts branches, and liabilities of foreign banking agencies to foreign affiliates. outstanding, may be obtained from Flow of Funds Section, Division of Research 30. Demand deposits at commercial banks. and Statistics, Board of Governors of the Federal Reserve System, Washington, 31. Excludes net investment of these reserves in corporate equities. D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • July 1983 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures 1967 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1982 1983 MMeeaassuurree 11998800 11998811 11998822 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June 1 Industrial production1 147.0 IS 1.0 138.6 135.7 134.9 135.2 137.4 138.1 140.0 142.7 144.3 145.9 Market groupings 2 Products, total 146.7 150.6 141.8 139.3 139.0 139.9 140.9 140.3 141.6 144.5 146.0 147.6 3 Final, total 145.3 149.5 141.5 138.7 138.3 139.5 140.1 138.9 139.9 142.8 144.5 146.0 4 Consumer goods 145.4 147.9 142.6 142.2 141.3 142.0 143.6 143.4 144.3 147.6 149.5 151.3 5 Equipment 145.2 151.5 139.8 134.0 134.2 136.1 135.3 132.7 133.8 136.2 137.5 138.7 6 Intermediate 151.9 154.4 143.3 141.6 141.8 141.5 143.7 145.3 147.8 150.8 151.9 153.5 7 Materials 147.6 151.6 133.7 130.0 128.4 127.8 132.0 134.9 137.6 139.8 141.5 143.3 Industry groupings 8 Manufacturing 146.7 150.4 137.6 135.0 134.0 134.5 136.7 138.2 140.4 143.1 145.0 146.6 Capacity utilization (percent)12 9 Manufacturing 79.6 79.4 71.1 69.4 68.8 68.9 70.0 70.6 71.6 72.9 73.7 74.4 10 Industrial materials industries 80.4 80.7 70.1 67.9 67.0 66.6 68.7 70.1 71.5 72.5 73.4 74.2 11 Construction contracts (1977 = 100)3 107.0 111.0 111.0 105.0 122.0 131.0 127.0 119.0 131.0 129.0 148.0 n.a. 12 Nonagricultural employment, total4 137.4 138.5 136.2 135.2 134.9 134.7 135.1 134.9 135.0 135.4 135.9' 136.4 13 Goods-producing, total 110.1 109.4 102.6 99.9 99.2 98.9 99.5 98.9 98.8 99.4' 100.2 100.9 14 Manufacturing, total 104.3 103.7 96.9 94.4 93.7 93.6 93.8 93.8 93.9 94.5 95.1' 95.4 15 Manufacturing, production-worker ... 99.3 98.0 89.4 86.4 85.6 85.6 85.9 86.0 86.1 86.9 87.6' 88.3 16 Service-producing 152.4 154.4 154.7 154.5 154.5 154.4 154.6 154.6 154.8 155.2 155.5' 155.9 17 Personal income, total 342.9 383.5 407.9 414.2 417.1 418.3 419.4' 419.7 422.0 425.2' 430.3 n.a. 18 Wages and salary disbursements 317.6 349.9 365.5 368.0 368.2 370.0 373.8 373.3 375.2' 378.4 384.4 n.a. 19 Manufacturing 264.3 288.1 285.3 281.3 280.0 279.3 283.9 285.5 287.5 291.6' 294.9 n.a. 20 Disposable personal income5 332.9 370.3 396.7 403.7 406.8 407.4 409.6 409.2 411.7 415.6 418.5 n.a. 21 Retail sales" 303.8 330.6 326.0 347.4 353.4 353.3 352.7 348.3 356.4 364.7 376.1 378.7 Prices7 22 Consumer 246.8 272.4 289.1 294.1 293.6 292.4 293.1' 293.2 293.4 295.5 297.1 n.a. 23 Producer finished goods 247.0 269.8 280.7 284.1 284.9 285.5' 283.9' 283.7 283.4 283.0 284.3 n.a. 1. The capacity utilization series has been revised back to January 1967. 6. Based on Bureau of Census data published in Survey of Current Business. 2. Ratios of indexes of production to indexes of capacity. Based on data from 1. Data without seasonal adjustment, as published in Monthly Labor Review. Federal Reserve, McGraw-Hill Economics Department, Department of Com- Seasonally adjusted data for changes in the price indexes may be obtained from merce, and other sources. the Bureau of Labor Statistics, U.S. Department of Labor. 3. Index of dollar value of total construction contracts, including residential, nonresidential and heavy engineering, from McGraw-Hill Information Systems NOTE. Basic data (not index numbers) for series mentioned in notes 4, 5, and 6, Company, F. W. Dodge Division. and indexes for series mentioned in notes 3 and 7 may also be found in the Survey 4. Based on data in Employment and Earnings (U.S. Department of Labor). of Current Business. Series covers employees only, excluding personnel in the Armed Forces. Figures for industrial production for the last two months are preliminary and 5. Based on data in Survey of Current Business (U.S. Department of Com- estimated, respectively. merce). 2.11 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION Seasonally adjusted 1982 1983 1982 1983 1982 1983 Q3 Q4 Q1 Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql Q2 Output (1967 = 100) Capacity (percent of 1967 output) Utilization rate (percent) 1 Total industry 138.2 135.3 138.5 144.3 192.8 193.7 194.6 195.5 71.7 69.8 71.2 73.8 2 Mining 117.2 117.0 116.7 112.5 164.8 165.1 165.2 165.3 71.1 70.9 70.6 68.0 3 Utilities 167.9 166.2 163.6 169.7 206.5 207.4 208.5 209.8 81.3 80.1 78.5 80.9 4 Manufacturing 137.7 134.5 138.4 144.9 193.9 194.8 195.7 196.6 71.0 69.0 70.7 73.7 5 Primary processing 132.4 129.3 137.0 144.8 193.0 193.7 194.3 194.8 68.6 66.8 70.5 74.3 6 Advanced processing 140.5 137.3 139.7 144.7 194.3 195.4 196.5 197.6 72.3 70.2 71.1 73.2 7 Materials 132.6 128.7 134.8 141.5 191.0 191.7 192.3 192.9 69.4 67.1 70.1 73.4 8 Durable goods 124.7 117.1 125.2 134.5 194.4 194.8 195.2 195.6 64.2 60.2 64.2 68.8 9 Metal materials 73.0 66.5 78.6 85.6 140.6 140.3 140.2 139.9 51.9 47.4 56.1 61.2 10 Nondurable goods 155.1 157.0 163.5 171.4 215.6 216.9 217.8 218.8 71.9 72.4 75.2 78.3 11 Textile, paper, and chemical 158.4 160.8 169.3 179.1 226.8 228.3 229.4 230.7 69.8 70.5 73.8 77.6 12 Paper 145.9 147.6 149.9 152.6 163.6 164.4 165.3 166.1 89.1 89.7 90.7 91.9 13 Chemical 188.5 191.9 204.7 219.4 290.6 292.8 294.8 296.6 64.9 65.5 69.4 74.0 14 Energy materials 123.8 121.5 122.2 121.6 152.8 153.3 153.9 154.3 81.0 79.2 79.5 78.8 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Labor Market A47 2.11 Continued Previous cycle1 Latest cycle2 1982 1982 1983 High Low High Low June Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Capacity utilization rate (percent) 15 Total industry 88.4 71.1 87.3 76.5 72.2 70.1 69.6 69.7 70.7 71.0 71.8 73.1 73.8 74.5 16 Mining 91.8 86.0 88.5 84.0 75.0 70.3 70.8 71.7 73.8 69.9 68.1 67.6 68.1 68.4 17 Utilities 94.9 82.0 86.7 83.8 82.2 81.0 80.4 79.0 78.4 77.7 79.4 80.8 80.9 81.0 18 Manufacturing 87.9 69.0 87.5 75.5 71.3 69.4 68.8 68.9 70.0 70.6 71.6 72.9 73.7 74.4 19 Primary processing 93.7 68.2 91.4 72.6 68.2 67.6 66.4 66.2 68.6 70.8 72.1 73.4 74.5 75.2 20 Advanced processing .... 85.5 69.4 85.9 77.0 72.9 70.3 70.0 70.4 70.9 70.8 71.5 72.5 73.3 74.0 21 Materials 92.6 69.3 88.9 74.2 70.0 67.9 67.0 66.6 68.7 70.1 71.5 72.5 73.4 74.2 22 Durable goods 91.4 63.5 88.4 68.4 65.2 60.9 59.8 59.8 62.3 64.2 66.0 67.7 68.7 69.9 23 Metal materials 97.8 68.0 95.4 59.4 52.8 49.3 46.2 46.8 53.3 56.1 58.8 59.4 60.8 63.2 24 Nondurable goods 94.4 67.4 91.7 77.5 71.4 73.1 72.5 71.6 73.4 75.3 76.8 77.4 78.5 79.1 25 Textile, paper, and chemical 95.1 65.4 92.3 75.5 69.3 70.9 70.5 70.0 71.4 74.1 75.8 76.7 77.8 78.4 26 Paper 99.4 72.4 97.9 89.8 86.3 90.7 91.1 87.4 90.9 90.8 90.3 91.0 92.4 92.3 27 Chemical 95.5 64.2 91.3 70.7 65.3 65.7 65.4 65.4 66.4 69.9 71.9 72.9 74.2 74.8 28 Energy materials 94.5 84.4 88.7 84.4 82.2 80.0 79.2 78.5 80.1 79.2 79.2 78.7 78.5 79.1 1. Monthly high 1973; monthly low 1975. 2. Preliminary; monthly highs December 1978 through January 1980; monthly lows July through October 1980. 2.12 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data are seasonally adjusted. Exceptions noted. 1982 1983 CCaatteeggoorryy 11998800 11998811 11998822 Dec. Jan. Feb. Mar. Apr. May June HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 169,847 172,272 174,451 175,381 175,543 175,693 175,850 175,996 176,151 176,320 2 Labor force (including Armed Forces)1 109,042 110,812 112,384 113,311 112,737 112,741 112,678 112,988 112,947 114,127 3 Civilian labor force 106,940 108,670 110,204 111,129 110,548 110,553 111100,,448844 111100,,778866 111100,,774499 111111,,993322 Employment 4 Nonagricultural industries2 95,938 97,030 96,125 95,682 95,691 95,670 95,729 96,088 96,190 97,264 5 Agriculture 3,364 3,368 3,401 3,411 3,412 3,393 3,375 3,371 3,367 33,,552222 Unemployment 6 Number 7,637 8,273 10,678 12,036 11,446 11,490 11,381 11,328 11,192 11,146 7 Rate (percent of civilian labor force)... 7.1 7.6 9.7 10.8 10.4 10.4 10.3 10.2 10.1 10.0 8 Not in labor force 60,805 61,460 62,067 62,070 62,806 62,952 63,172 63,008 63,204 62,193 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 90,406 91,156' 89,596' 88,665 88,886 88,746' 88,814 89,101' 89,416' 89,760 10 Manufacturing 20,285 20,170' 18,853' 18,193 18,244 18,245 18,267 18,376' 18,486' 18,560 11 Mining 1,027' 1,132 1,122 1,053 1,037 1,014 1,006 997 998' 1,008 12 Contract construction 4,346' 4,176 3,912 3,815 3,905 3,790 3,757 3,786' 3,863' 3,946 13 Transportation and public utilities 5,146' 5,157 5,057 5,008 4,980 4,965 4,963 4,988 4,991' 4,997 14 Trade 20,310' 20,551 20,547 20,256 20,355 20,343 20,350 20,329' 20,354' 20,457 15 Finance 5,160' 5,301 5,350 5,367 5,374 5,384 5,391 5,423' 5,431' 5,451 16 Service 17,89c 20,547' 20,401' 19,215 19,238 19,262 19,356 19,478' 19,565' 19,711 17 Government 16,241' 16,024 15,784 15,758 15,753 15,742 15,724 15,724' 15,728' 15,630 1. Persons 16 years of age and over. Monthly figures, which are based on 3. Data include all full- and part-time employees who worked during, or sample data, relate to the calendar week that contains the 12th day; annual data received pay for, the pay period that includes the 12th day of the month, and are averages of monthly figures. By definition, seasonality does not exist in exclude proprietors, self-employed persons, domestic servants, unpaid family population figures. Based on data from Employment and Earnings (U.S. Depart- workers, and members of the Armed Forces. Data are adjusted to the March 1983 ment of Labor). benchmark and only seasonally adjusted data are available at this time. Based on 2. Includes self-employed, unpaid family, and domestic service workers. data from Employment and Earnings (U.S. Department of Labor). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • July 1983 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value Monthly data are seasonally adjusted 1967 1982 1983 pro- 11998822 por- avg. tion June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar/ Apr. MayP Index (1967 = 100) MAJOR MARKET 1 Total index 100.00 138.6 138.7 138.8 138.4 137.3 135.7 134.9 135.2 137.4 138.1 140.0 142.7 144.3 2 Products 60.71 141.8 142.1 142.6 142.0 140.8 139.3 139.0 139.9 140.9 140.3 141.6 144.5 146.0 3 Final products 47.82 141.5 142.1 142.5 141.2 140.0 138.7 138.3 139.5 140.1 138.9 139.9 142.8 144.5 4 Consumer goods 27.68 142.6 144.8 145.8 144.1 143.4 142.2 141.3 142.0 143.6 143.4 144.3 147.6 149.5 5 Equipment 20.14 139.8 138.4 138.0 137.3 135.2 134.0 134.2 136.1 135.3 132.7 133.8 136.2 137.5 6 Intermediate products 12.89 143.3 141.9 142.8 144.7 143.7 141.6 141.8 141.5 143.7 145.3 147.8 150.8 151.9 7 Materials 39.29 133.7 133.5 133.0 132.8 132.0 130.0 128.4 127.8 132.0 134.9 137.6 139.8 141.5 Consumer goods 8 Durable consumer goods 7.89 129.2 134.6 137.3 132.9 131.3 126.5 124.6 125.9 131.6 134.4 136.3 140.1 144.6 9 Automotive products 2.83 129.5 143.0 149.7 135.5 135.5 123.6 120.7 128.7 136.2 144.3 142.6 145.3 151.5 10 Autos and utility vehicles 2.03 99.0 117.1 127.7 107.1 105.8 89.6 86.9 99.0 107.0 120.8 116.4 117.8 124.9 11 Autos 1.90 86.6 101.9 114.6 93.3 94.3 79.5 77.7 87.9 97.1 107.3 99.9 102.7 107.4 12 Auto parts and allied goods .80 206.9 208.6 205.4 207.6 210.7 210.0 206.6 204.0 210.2 203.9 209.3 215.0 219.0 13 Home goods 5.06 129.1 129.9 130.4 131.4 128.9 128.1 126.8 124.3 129.1 128.8 132.8 137.3 140.7 14 Appliances, A/C, and TV 1.40 102.6 106.4 102.7 104.5 99.4 106.1 104.8 94.2 109.5 105.8 105.0 106.1 113.2 15 Appliances and TV 1.33 104.6 108.8 106.1 108.6 104.1 110.5 108.4 98.3 112.9 108.8 108.5 109.7 116.5 16 Carpeting and furniture 1.07 149.7 149.0 151.4 152.5 153.3 151.9 151.4 150.8 149.0 156.7 168.3 180.3 180.7 17 Miscellaneous home goods 2.59 135.0 134.9 136.7 137.2 134.9 130.1 128.6 129.8 131.4 129.7 133.3 136.4 139.0 18 Nondurable consumer goods 19.79 148.0 148.8 149.1 148.6 148.2 148.5 147.9 148.4 148.3 147.0 147.5 150.6 151.5 19 Clothing 4.29 20 Consumer staples 15.50 159.0 159.9 159.7 159.4 158.8 159.1 158.1 158.8 158.6 157.4 158.1 161.2 161.9 21 Consumer foods and tobacco 8.33 149.7 150.9 149.9 149.6 148.6 150.2 149.0 149.5 150.9 149.5 148.4 150.9 22 Nonfood staples 7.17 169.7 170.4 171.2 170.8 170.7 169.5 168.7 169.6 167.6 166.5 169.4 173.1 173.6 23 Consumer chemical products .... 2.63 219.9 219.8 222.3 222.4 221.7 220.0 218.9 220.9 222.6 220.9 225.6 225.5 225.7 24 Consumer paper products 1.92 127.7 126.7 128.1 129.4 128.2 125.3 125.1 128.3 127.1 127.9 128.1 128.9 129.1 25 Consumer energy products 2.62 150.2 152.8 151.4 149.3 150.6 151.1 150.2 148.4 142.2 140.2 143.3 153.0 153.9 2266 11..4455 117700..88 117711..11 116677..77 116699..77 116699..55 116699..11 117711..55 116699..33 116644..11 116622..99 116666..11 117766..22 Equipment 27 Business 12.63 157.9 156.7 154.9 153.9 150.5 147.1 146.4 148.1 146.6 142.7 143.7 147.0 148.6 28 Industrial 6.77 134.9 134.0 131.3 128.4 123.8 118.3 117.2 117.9 118.4 113.7 113.1 113.7 115.8 29 Building and mining 1.44 214.2 209.0 200.4 190.8 182.1 169.3 165.7 171.9 173.8 153.6 145.3 142.9 151.6 30 Manufacturing 3.85 107.2 107.5 106.0 104.4 101.6 98.0 97.5 97.0 97.6 97.9 99.7 101.7 102.1 31 Power 1.47 129.9 129.9 129.6 130.1 124.7 121.0 121.0 119.7 118.3 116.0 116.2 116.6 116.3 32 Commercial transit, farm 5.86 184.4 183.0 182.2 183.3 181.4 180.5 180.2 183.0 179.2 176.1 179.2 185.4 186.6 33 Commercial 3.26 253.5 247.5 248.8 253.5 254.0 253.5 254.8 258.6 254.9 251.2 255.7 264.3 266.1 34 Transit 1.93 103.9 108.3 106.3 102.0 95.5 93.2 92.3 96.2 90.8 88.2 90.1 92.0 92.4 35 Farm .67 80.5 84.1 76.9 75.8 76.1 76.8 70.7 65.1 66.0 63.4 63.4 70.2 71.0 36 Defense and space 7.51 109.4 107.6 109.5 109.5 109.5 111.9 113.6 115.9 116.4 116.1 117.0 118.2 118.7 Intermediate products 37 Construction supplies 6.42 124.3 123.1 124.1 127.1 125.5 122.5 123.4 123.0 127.0 129.7 133.1 136.8 138.5 38 Business supplies 6.47 162.1 160.6 161.4 162.1 161.8 160.5 160.1 159.8 160.3 160.9 162.3 164.8 165.3 39 Commercial energy products 1.14 181.1 178.3 179.8 178.1 179.2 180.4 182.4 182.4 180.6 178.6 180.3 184.1 184.7 Materials 40 Durable goods materials 20.35 125.0 126.6 126.0 125.1 123.0 118.5 116.4 116.5 121.5 125.3 128.7 132.3 134.4 41 Durable consumer parts 4.58 95.3 103.1 103.8 101.0 97.1 91.4 90.0 91.1 96.2 101.6 104.0 106.6 108.1 42 Equipment parts 5.44 166.8 168.3 166.1 164.1 158.3 155.4 155.1 155.3 157.5 158.8 162.5 167.2 170.2 43 Durable materials n.e.c 10.34 116.2 115.1 114.8 115.4 115.8 111.1 107.7 107.4 113.8 118.2 121.9 125.3 127.3 44 Basic metal materials 5.57 79.9 77.4 75.7 76.1 77.7 73.0 69.1 68.7 78.1 82.4 86.0 87.1 89.0 45 Nondurable goods materials 10.47 157.5 153.5 152.3 154.5 158.5 158.2 157.3 155.6 159.7 164.0 167.5 169.2 171.7 46 Textile, paper, and chemical materials 7.62 161.1 156.7 155.3 157.7 162.2 161.5 161.0 160.0 163.7 170.0 174.3 176.5 179.6 47 Textile materials 1.85 102.2 99.1 99.6 103.2 103.3 104.4 102.5 102.1 104.7 106.4 110.6 110.9 111.8 48 Paper materials 1.62 145.6 140.7 142.1 146.6 148.9 148.9 149.7 144.1 150.1 150.1 149.5 150.8 153.5 49 Chemical materials 4.15 193.5 188.7 185.4 186.5 193.7 192.0 191.6 192.0 195.4 206.2 212.5 215.9 220.1 50 Containers, nondurable 1.70 161.4 158.5 158.1 162.8 167.3 164.9 160.8 155.2 162.1 159.6 163.8 163.2 165.0 51 Nondurable materials n.e.c 1.14 127.9 124.8 123.4 120.1 121.1 125.5 127.4 127.2 129.6 130.5 127.7 129.3 128.9 52 Energy materials 8.48 125.1 125.4 126.0 124.5 121.0 122.6 121.4 120.4 123.0 121.8 121.9 121.3 121.2 53 Primary energy 4.65 116.0 116.6 117.2 113.8 111.1 114.4 113.7 113.5 116.5 115.4 114.4 113.9 113.6 54 Converted fuel materials 3.82 136.3 136.0 136.7 137.4 133.0 132.6 130.8 128.9 130.8 129.6 131.1 130.3 130.5 Supplementary groups 55 Home goods and clothing 9.35 119.6 120.2 121.4 112211..33 112200..11 119.9 119.6 118.2 120.8 119.9 122.0 125.9 128.5 56 Energy, total 12.23 135.7 136.2 136.4 134.8 132.7 134.1 133.3 132.2 132.4 131.0 131.9 133.9 134.1 57 Products 3.76 159.6 160.5 160.0 158.0 159.3 160.0 160.0 158.7 153.8 151.9 154.5 162.4 163.2 58 Materials 8.48 125.1 125.4 126.0 124.5 121.0 122.6 121.4 120.4 123.0 121.8 121.9 121.3 121.2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Output A49 2.13 Continued 1967 1982 1983 SIC pro- 1982 Grouping code por- avg. tion June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar/ Apr. May Junef Index (1967 = 100) MAJOR INDUSTRY 1 Mining and utilities 12.05 146.3 145.2 142.6 141.3 139.7 140.4 140.4 140.1 141.3 141.7 137.7 138.8 139.6 140.2 2 Mining 6.36 126.1 123.5 120.1 116.9 114.7 115.9 116.8 118.4 121.9 114.5 112.6 111.7 112.6 113.1 3 Utilities 5.69 168.7 169.4 167.7 168.5 167.5 167.8 166.7 164.2 163.1 171.9 165.8 169.2 169.7 170.3 4 Electric 3.88 190.5 191.6 189.2 189.9 188.2 188.4 188.3 185.6 184.4 191.6 188.2 192.5 193.1 193.7 5 Manufacturing 87.95 137.6 137.7 138.1 138.0 137.1 135.0 134.0 134.5 136.7 138.0 140.4 143.1 145.0 146.6 6 Nondurable 35.97 156.2 155.3 155.7 156.9 156.7 156.2 155.3 155.6 157.4 157.5 160.7 163.3 164.9 165.9 7 Durable 51.98 124.7 125.5 125.9 124.9 123.5 120.3 119.3 119.9 122.5 124.5 126.3 129.1 131.2 133.2 Mining 8 Metal 10 .51 82.4 71.8 58.1 53.4 55.4 63.1 70.4 74.9 81.7 71.2 75.2 79.8 83.0 9 Coal 11.12 .69 142.7 144.4 140.3 135.8 127.9 143.2 134.1 129.7 144.8 135.0 127.3 125.3 125.6 123.7 10 Oil and gas extraction 13 4.40 131.1 129.1 127.0 123.3 121.0 119.1 120.3 122.9 124.6 117.5 114.4 112.2 113.3 113.8 11 Stone and earth minerals 14 .75 112.1 106.6 103.8 105.7 106.3 108.5 111.9 111.7 112.8 108.1 114.0 117.7 116.8 Nondurable manufactures 12 Foods 20 8.75 151.1 151.0 151.0 150.7 149.0 151.5 152.0 152.8 154.4 147.0 152.0 153.5 13 Tobacco products 21 .67 118.0 123.6 121.4 120.6 113.3 110.6 113.0 109.9 104.7 115.9 113.4 114.4 14 Textile mill products 22 2.68 124.5 123.7 124.3 125.9 126.1 125.9 123.1 122.2 125.8 128.7 131.9 136.4 137.1 15 Apparel products 23 3.31 16 Paper and products 26 3.21 150.8 146.8 147.0 152.5 154.3 155.0 154.5 151.1 158.8 160.9 156.3 157.0 160.6 160.9 17 Printing and publishing 27 4.72 144.1 142.6 143.9 145.3 144.3 142.0 141.7 142.8 141.3 135.8 145.9 145.5 145.0 145.9 18 Chemicals and products 28 7.74 196.1 193.2 194.1 195.6 196.4 194.1 192.8 195.9 197.6 200.0 205.7 208.8 210.9 19 Petroleum products 29 1.79 121.8 124.3 124.7 121.4 122.6 123.8 120.0 118.7 113.5 108.6 114.8 121.5 123.6 124.4 20 Rubber and plastic products 30 2.24 254.7 258.9 256.8 261.1 262.0 256.3 250.2 249.7 256.2 275.2 272.0 283.1 288.1 21 Leather and products 31 .86 60.9 62.3 62.9 60.8 60.9 59.5 57.7 56.0 59.5 64.1 59.4 58.7 59.8 Durable manufactures 22 Ordnance, private and government 19.91 3.64 86.9 86.5 87.1 86.5 86.9 89.5 91.9 92.5 93.5 93.4 91.9 93.2 94.0 95.0 23 Lumber and products 24 1.64 112.6 112.2 116.9 120.3 119.9 117.2 119.1 121.4 130.0 130.5 128.7 132.1 135.8 24 Furniture and fixtures 25 1.37 151.9 152.5 154.5 156.7 155.7 154.3 152.4 153.7 150.0 162.5 161.0 168.3 169.7 25 Clay, glass, stone products 32 2.74 128.2 126.1 126.9 128.8 130.4 128.1 127.3 125.4 128.0 124.8 135.6 138.3 139.3 26 Primary metals 33 6.57 75.3 72.8 72.9 72.9 73.2 69.6 63.6 63.5 73.1 79.4 81.2 82.5 85.1 86.9 27 Iron and steel 331.2 4.21 61.7 58.0 58.1 57.4 56.4 54.1 47.5 46.6 59.0 64.3 66.9 68.5 70.3 28 Fabricated metal products 34 5.93 114.8 115.0 115.5 114.3 112.3 107.6 107.0 107.3 107.6 112.3 113.9 115.3 116.1 117.3 29 Nonelectrical machinery 35 9.15 149.0 147.4 147.1 147.2 144.9 140.4 139.6 139.2 138.0 137.1 138.6 143.2 146.6 147.6 30 Electrical machinery 36 8.05 169.3 170.8 170.3 169.7 167.0 165.4 165.5 165.5 169.5 170.1 173.8 177.5 179.6 182.3 31 Transportation equipment 37 9.27 104.9 111.6 112.7 107.0 105.3 100.8 100.2 103.7 106.3 110.5 110.1 111.4 113.6 116.9 32 Motor vehicles and parts 371 4.50 109.8 124.0 127.2 116.7 113.5 103.0 101.7 108.8 113.9 124.8 123.2 125.5 130.3 136.7 33 Aerospace and miscellaneous transportation equipment... 372-9 4.77 100.4 99.9 99.0 97.8 97.6 98.6 98.7 98.9 99.1 97.0 97.7 98.1 97.7 98.3 34 Instruments 38 2.11 161.9 164.8 165.2 165.5 161.9 157.4 155.8 155.2 154.5 151.6 154.0 155.6 157.0 156.7 35 Miscellaneous manufactures 39 1.51 137.0 136.8 134.7 133.9 132.9 129.6 129.5 128.2 131.3 130.6 136.9 144.0 147.4 148.6 Gross value (billions of 1972 dollars, annual rates) MAJOR MARKET 36 Products, total 507.4 579.6 584.1 585.8 578.5 575.3 570.0 568.4 572.9 578.1 578.4 584.1 595.1 602.1 610.0 37 Final 390.9 451.1 456.7 457.2 449.2 446.3 442.8 441.3 445.8 448.3 447.3 451.3 459.4 465.7 472.1 38 Consumer goods . 277.5 308.0 313.1 314.9 309.1 309.3 306.6 305.6 306.8 310.9 312.0 313.8 320.1 324.3 328.8 39 Equipment 113.4 143.1 143.5 142.3 140.1 137.0 136.2 135.7 138.9 137.4 135.3 137.5 139.3 141.4 143.2 40 Intermediate 116.6 128.5 127.4 128.7 129.3 129.0 127.2 127.1 127.1 129.8 131.1 132.8 135.7 136.5 137.9 1. 1972 dollar value. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics • July 1983 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates except as noted. 1982 1983 IItteemm 11998800 11998811 11998822 Sept. Oct. Nov. Dec. Jan. Feb/ Mar/ Apr/ May Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,191 986 1,001 1,029 1,154 1,227 1,326 1,447 1,479 1,467 1,536 1,622 2 1-family 710 564 546 576 657 738 753 866 835 859 841 934 3 2-or-more-family 480 421 454 453 497 489 573 581 644 608 695 688 4 Started 1,292 1,084 1,062 1,134 1,142 1,361 1,280 1,694 1,784 1,605 1,504 1,791 5 1-family 852 705 663 683 716 868 842 1,126 1,103 1,008 1,006 1,151 6 2-or-more-family 440 379 400 451 426 493 438 568 681 597 498 640 7 8 Un 1 d - e fa r m c i o ly n struction, end of period1 8 51 9 5 6 6 3 8 8 2 2 7 4 2 0 0 0 6 3 8 8 5 0 6 3 9 8 1 3 7 39 1 5 2 4 7 1 3 1 0 4 7 2 5 8 6 7 4 9 5 6 5 4 8 7 3 2 0 4 8 9 6 0 2 t 9 2-or-more-family 382 301 320 306 307 317 319 329 341 359 372 10 Completed 1,502 1,266 1,006 936 1,077 1,053 1,035 1,195 1,138 1,135 1,164 n.1a. 11 1-family 957 818 631 585 679 679 647 782 709 789 805 12 2-or-more-family 545 447 374 351 398 374 388 413 429 346 359 13 Mobile homes shipped 222 241 239 222 224 251 243 284 283 276 291 1 Merchant builder activity in 1-family units 14 Number sold 545 436 413 473 481 545 529 611 593 610 621 648 15 Number for sale, end of period1 342 278 255 247 245 246 251 259 262 264 269 276 PPrriiccee ((tthhoouussaannddss ooff ddoollllaarrss))22 MMeeddiiaann 1166 UUnniittss ssoolldd 64.7 68.8 69.3 67.7 69.7 73.5 71.7 73.5 73.8 72.8 74.6 75.9 AAvveerraaggee 1177 UUnniittss ssoolldd 76.4 83.1 83.8 79.6 79.9 87.8 86.7 87.2 86.8 86.4 87.9 90.7 EXISTING UNITS (1-family) 18 Number sold 2,974 2,418 1,991 1,910 1,990 2,150 2,260 2,580 2,460 2,710 2,730 2,860 Price of units sold <thousands of dollars)2 19 Median 62.1 66.1 67.7 67.3 66.9 67.7 67.8 68.1 68.2 68.9 68.8 69.3 20 Average 72.7 78.0 80.4 80.0 79.3 80.4 80.6 80.0 80.3 81.1 81.3 81.8 Value of new construction3 (millions of dollars)' CONSTRUCTION 21 Total put in place 230,712 239,418 232,048 230,689 234,067 243,714 240,207 247,914 243,032 241,908 245,601 256,002 ?? 175,700 186,069 180,979 178,177 181,899 190,520 190,768 195,032 194,331 194,865 198,048 205,657 73 Residential 87,262 86,567 74,809 71,696 76,432 81,245 86,018 89,701 93,568 96,127 102,037 106,995 74 Nonresidential, total 88,438 99,502 106,170 106,481 105,467 109,275 104,750 105,331 100,763 98,738 96,011 98,662 Buildings 75 13,839 17,031 17,346 16,545 17,117 16,716 15,631 15,182 14,315 14,263 13,223 13,293 •>6 29,940 34,243 37,281 38,029 36,996 37,861 36,934 38,167 36,675 35,469 33,619 34,273 77 Other 8,654 9,543 10,507 10,663 10,863 11,517 11,784 11,983 11,664 11,598 10,770 11,606 28 Public utilities and other 36,005 38,685 41,036 41,244 40,491 43,181 40,401 39,999 38,109 37,408 38,399 39,490 79 Public 55,011 53,346 51,068 52,512 52,168 53,194 49,439 52,882 48,701 47,043 47,552 47,345 30 1,880 1,966 2,205 2,622 2,364 2,572 2,432 2,341 2,421 2,541 2,782 2,273 31 13,770 13,599 13,521 14,041 14,447 14,409 13,048 13,966 12,509 11,836 12,900 12,756 37 Conservation and development 5,089 5,300 5,029 4,874 4,752 4,708 4,625 4,756 4,532 4,894 4,710 4,260 33 Other 34,272 32,481 30,313 30,975 30,605 31,505 29,334 31,819 29,239 27,742 27,160 28,056 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 3. Value of new construction data in recent periods may not be strictly Institute and seasonally adjusted by the Census Bureau, and (b) sales and prices of comparable with data in prior periods because of changes by the Bureau of the existing units, which are published by the National Association of Realtors. All Census in its estimating techniques. For a description of these changes see back and current figures are available from originating agency. Permit authoriza- Construction Reports (C-30-76-5), issued by the Bureau in July 1976. tions are those reported to the Census Bureau from 16,000jurisdictions 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 C m h o an n g th e s f e ro ar m li e 1 r 2 Change ( a f t r o a m nn u 3 a m l o ra n t t e h ) s earlier Change from 1 month earlier IIInnndddeeexxx llleeevvveeelll IIIttteeemmm MMMaaayyy 1982 1983 1983 111999888333 11998822 11998833 (((111999666777 MMaayy MMaayy === 111000000)))''' June Sept. Dec. Mar. Jan. Feb. Mar. Apr. May CONSUMER PRICES2 1 All items 6.7 3.5 9.8 4.1 .5 .4 .2 -.2 .1 .6 .5 297.1 7 Food 4.8 2.4 6.2 .6 .8 2.8 .1 .0 .6 .4 .3 292.4 Energy items -2.2 4.8 7.5 8.1 10.2 -25.1 -2.5 -3.7 -.9 2.0 2.5 421.3 4 All items less food and energy 8.7 3.6 9.6 4.7 -.3 4.4 .5 .4 .2 .4 .3 284.7 S Commodities 6.6 4.7 9.9 2.4 5.4 5.7 .5 .4 .1 .2 240.8 6 Services 10.4 2.6 11.3 4.6 -4.8 3.7 .5 .3 .1 .5 .3 335.6 PRODUCER PRICES 7 Finished goods 3.0 2.3 4.6 4.2 5.2 -4.7 -1.1' .C -.1 -.1 .3 284.3 8 Consumer foods 3.8 .1 9.8 -7.7 .8 3.6 -.1 .6 .5 1.2 -.5 262.6 9 Consumer energy -11.2 1.5 -9.2 30.9 7.0 -34.3 -4.2 -2.9 -3.2 -2.8 2.2 769.7 10 Other consumer goods 5.6 3.2 5.7 4.2 7.9 -2.3 -1.2' .5' .1 .2 ..11 239.0 11 Capital equipment 5.9 3.1 5.2 3.5 3.6 3.3 .6' .4 -.3 ..22 286.8 17 Intermediate materials3 1.3 .1 -.5 2.3 1.5 -5.1 -.6' .1' -.8 -.4 .4 315.0 13 Excluding energy 3.0 .9 .0 1.0 1.0 1.1 -.1' .6' -.1 -.2 .4 293.7 Crude materials 14 Foods .8 -2.3 15.8 -26.4 1.3 18.1 1.1 2.4 .7 3.0 --11..22 225566..55 15 Energy -1.8 1.0 1.6 8.7 6.4 -7.6 -1.1' -.9' .1 -1.4 -.3 791.5 16 Other -10.6 1.2 19.2 2.9 -8.0 -15.7 -S.O' -2.7' 1.5 2.0 5.2 246.6 1. Not seasonally adjusted. 3. Excludes intermediate materials for food manufacturing and manufactured 2. Figures for consumer prices are those for all urban consumers and reflect a animal feeds, rental-equivalence measure of homeownership after 1982. SOURCE. Bureau of Labor Statistics. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 Domestic Nonfinancial Statistics • July 1983 2.16 GROSS NATIONAL PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates. 1982 1983 AAccccoouunntt 11998800 11998811 11998822 Ql Q2 Q3 Q4 Ql' GROSS NATIONAL PRODUCT 1 Total 2,633.1 2,937.7 3,059.3 2,995.5 3,045.2 3,088.2 3,108.2 3,170.6 By source 2 Personal consumption expenditures 1,667.2 1,843.2 1,971.1 1,919.4 1,947.8 1,986.3 2,030.8 2,052.9 3 Durable goods 214.3 234.6 242.7 237.9 240.7 240.3 251.8 256.9 4 Nondurable goods 670.4 734.5 762.1 749.1 755.0 768.4 775.7 777.5 5 Services 782.5 874.1 966.3 932.4 952.1 977.6 1,003.3 1,018.5 6 Gross private domestic investment 402.4 471.5 420.3 414.8 431.5 443.3 391.5 421.7 7 Fixed investment 412.4 451.1 444.1 450.4 447.7 438.6 439.9 458.1 8 Nonresidential 309.2 346.1 348.0 357.0 352.2 344.2 338.4 337.1 9 Structures 110.5 129.7 141.5 141.4 143.6 141.3 139.6 136.8 10 Producers' durable equipment 198.6 216.4 206.5 215.6 208.6 203.0 198.8 200.3 11 Residential structures 103.2 105.0 96.2 93.4 95.5 94.3 101.4 121.0 12 Nonfarm 98.3 99.7 90.5 87.9 89.6 88.7 95.7 115.2 13 Change in business inventories -10.0 20.5 -23.8 -35.6 -16.2 4.7 -48.3 -36.3 14 Nonfarm -5.7 15.0 -24.3 -36.0 -15.0 3.7 -50.0 -35.6 15 Net exports of goods and services 25.2 26.1 20.5 31.3 34.9 6.9 9.1 19.6 16 Exports 339.2 367.3 350.8 359.9 365.8 349.5 328.1 332.4 17 Imports 314.0 341.3 330.3 328.6 330.9 342.5 319.1 312.8 18 Government purchases of goods and services 538.4 596.9 647.4 630.1 630.9 651.7 676.8 676.3 19 Federal 197.2 229.0 257.9 249.7 244.3 259.0 278.7 274.1 20 State and local 341.2 368.0 389.4 380.4 386.6 392.7 398.0 402.2 By major type of product 21 Final sales, total 2,643.1 2,917.3 3,083.1 3,031.1 3,061.4 3,083.5 3,156.5 3,206.9 22 Goods 1,141.9 1,289.2 1,280.4 1,269.4 1,283.1 1,295.5 1,273.6 1,295.5 23 Durable 477.3 528.1 493.3 482.4 505.9 516.9 467.9 483.5 24 Nondurable 664.6 761.1 787.1 787.0 777.2 778.6 805.7 812.0 25 Services 1,225.6 1,364.3 1,494.4 1,444.4 1,476.7 1,509.5 1,547.0 1,571.0 26 Structures 265.7 284.2 284.5 281.7 285.3 283.2 287.7 304.1 27 Change in business inventories -10.0 20.5 -23.8 -35.6 -16.2 4.7 -48.3 -36.3 28 Durable goods -5.2 8.7 -18.9 -30.9 -6.6 10.1 -48.3 -35.9 29 Nondurable goods -4.8 11.8 -5.0 -4.8 -9.6 -5.4 .0 -.5 30 MEMO: Total GNP in 1972 dollars 1,474.0 1,502.6 1,476.9 1,470.7 1,478.4 1,481.1 1,477.2 1,486.7 NATIONAL INCOME 31 Total 2,117.1 2,352.5 2,436.6 2,396.9 2,425.2 2,455.6 2,468.8 2,524.9 32 Compensation of employees 1,598.6 1,767.6 1,856.5 1,830.8 1,850.7 1,868.3 1,876.1 1,908.1 33 Wages and salaries 1,356.1 1,494.0 1,560.6 1,541.5 1,556.6 1,570.0 1,574.5 1,597.3 34 Government and government enterprises 260.2 283.1 302.3 296.3 300.0 303.5 309.2 313.2 35 Other 1,095.9 1,210.9 1,258.4 1,245.2 1,256.6 1,266.4 1,265.4 1,284.1 36 Supplement to wages and salaries 242.5 273.6 295.8 289.3 294.1 298.3 301.6 310.8 37 Employer contributions for social insurance 115.3 133.2 142.1 140.2 141.7 142.8 143.7 150.1 38 Other labor income 127.3 140.4 153.8 149.1 152.5 155.5 157.9 160.6 39 Proprietors' income1 116.3 124.7 120.3 116.4 117.3 118.4 128.9 128.9 40 Business and professional1 96.9 100.7 101.3 98.6 99.9 101.7 104.8 110.0 41 Farm1 19.4 24.0 19.0 17.8 17.4 16.6 24.1 18.9 42 Rental income of persons2 32.9 33.9 34.1 33.9 34.2 34.6 33.9 35.3 43 Corporate profits' 181.6 190.6 160.8 157.1 155.4 166.2 164.6 186.1 44 Profits before tax3 242.5 232.1 174.9 171.6 171.7 180.3 175.9 177.9 45 Inventory valuation adjustment -43.0 -24.6 -9.2 -4.4 -9.4 -10.3 -12.6 .5 46 Capital consumption adjustment -17.8 -16.8 -4.9 -10.1 -6.9 -3.8 1.3 7.7 47 Net interest 187.7 235.7 264.9 258.7 267.5 268.1 265.3 266.6 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

National Income Accounts A53 2.17 PERSONAL INCOME AND SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1982 1983 AAccccoouunntt 11998800 11998811 11998822 Qi Q2 Q3 Q4 QK PERSONAL INCOME AND SAVING 1 Total personal income 2,160.2 2,404.1 2,569.9 2,510.5 2,552.7 2,592.5 2,624.0 2,648.2 2 Wage and salary disbursements 1,356.1 1,493.9 1,560.7 1,541.6 1,556.6 1,570.0 1,574.5 1,597.3 3 Commodity-producing industries 468.0 510.8 509.9 514.3 513.6 510.2 501.6 509.8 4 Manufacturing 354.4 386.4 382.6 385.1 385.6 383.8 375.8 383.0 5 Distributive industries 330.5 361.4 376.0 371.4 375.4 378.4 378.8 381.1 6 Service industries 297.5 338.6 372.5 359.5 367.6 377.8 385.0 393.2 7 Government and government enterprises 260.2 283.1 302.3 296.5 300.0 303.5 309.2 313.2 8 Other labor income 127.3 140.4 153.8 149.1 152.5 155.5 157.9 160.6 9 Proprietors' income1 116.3 124.7 120.3 116.4 117.3 118.4 128.9 128.9 10 Business and professional1 96.9 100.7 101.3 98.6 99.9 101.7 104.8 110.0 11 Farm1 19.4 24.0 19.0 17.8 17.4 16.6 24.1 18.9 12 Rental income of persons2 32.9 33.9 34.1 33.9 34.2 34.6 33.9 35.3 13 Dividends 55.9 62.5 67.0 65.8 66.1 67.2 68.8 69.8 14 Personal interest income 256.3 308.5 371.2 359.7 372.0 378.2 374.6 376.5 15 Transfer payments 297.2 336.3 374.7 354.6 365.2 381.0 397.8 396.2 16 Old-age survivors, disability, and health insurance benefits.... 154.2 182.0 204.5 194.7 197.5 209.2 216.6 217.1 17 LESS: Personal contributions for social insurance 88.7 104.9 111.7 110.6 111.4 112.4 112.5 116.4 18 EQUALS: Personal income 2,160.2 2,404.1 2,569.9 2,510.5 2,552.7 2,592.5 2,624.0 2,648.2 19 LESS: Personal tax and nontax payments 336.2 386.7 397.2 393.4 401.2 394.4 399.7 401.0 20 EQUALS: Disposable personal income 1,824.1 2,029.2 2,172.7 2,117.1 2,151.5 2,198.1 2,224.3 2,247.2 21 LESS: Personal outlays 1,717.9 1,898.9 2,030.5 1,977.9 2,007.2 2,046.1 2,090.9 2,114.0 22 EQUALS: Personal saving 106.2 130.2 142.2 139.1 144.3 152.0 133.4 133.3 MEMO: Per capita (1972 dollars) 23 Gross national product 6,474 6,536 6,364 6,360 6,380 6,376 6,342 6,367 24 Personal consumption expenditures 4,087 4,122 4,123 4,104 4,121 4,117 4,151 4,167 25 Disposable personal income 4,472 4,538 4,545 4,527 4,552 4,555 4,547 4,561 26 Saving rate (percent) 5.8 6.4 6.5 6.6 6.7 6.9 6.0 5.9 GROSS SAVING 27 Gross saving 406.3 477.5 414.0 428.8 441.5 422.4 363.3 415.5 28 Gross private saving 438.3 504.7 531.4 520.3 529.0 546.1 531.1 547.2 29 Personal saving 106.2 130.2 142.2 139.1 144.3 152.0 133.4 133.3 30 Undistributed corporate profits1 38.9 44.4 32.8 32.5 30.7 34.8 34.2 47.4 31 Corporate inventory valuation adjustment -43.0 -24.6 -9.2 -4.4 -9.4 -10.3 -12.6 .5 Capital consumption allowances 32 Corporate 181.2 220066..22 225.1 218.9 223.4 227.5 230.6 223322..22 33 Noncorporate 112.0 123.9 131.3 129.8 130.5 131.9 132.9 134.3 34 Wage accruals less disbursements .0 .0 .0 .0 .0 .0 .0 .0 35 Government surplus, or deficit (-), national income and product accounts -33.2 -28.2 -117.4 -90.7 -87.5 -123.7 -167.7 -131.7 36 Federal -61.4 -60.0 -149.5 -118.4 -119.6 -156.0 -204.2 -174.0 37 State and local 28.2 31.7 32.1 27.7 32.1 32.3 36.4 42.3 38 Capital grants received by the United States, net 1.2 1.1 .0 .0 .0 .0 .0 .0 39 Gross investment 410.1 475.6 415.7 421.3 442.3 426.0 373.1 418.3 40 Gross private domestic 402.4 471.5 420.3 414.8 431.5 443.3 391.5 421.7 41 Net foreign 7.8 4.1 -4.6 6.5 10.8 -17.3 -18.5 -3.4 42 Statistical discrepancy 3.9 -1.9 1.7 -7.5 .8 3.6 9.7 2.8 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 • July 1983 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data are seasonally adjusted except as noted.1 1982 1983 IItteemm ccrreeddiittss oorr ddeebbiittss 11998800'' 11998811'' 11998822'' Ql' Q2r Q3' Q4' Ql" 1 Balance on current account 421 4,592 -11,211 564 11,,443344 --66,,559966 --66,,662211 --33,,004455 259 22,,221188 --88,,114433 --55,,554466 --22,,996611 3 Merchandise trade balance2 -25,544 -28,067 -36,389 -6,103 --55,,885544 --1133,,007788 --1111,,335544 --88,,773388 4 Merchandise exports 224,237 237,019 211,217 55,636 5544,,999966 5522,,224411 4488,,334444 4499,,556633 5 Merchandise imports -249,781 -265,086 -247,606 -61,739 --6600,,885500 --6655,,331199 --5599,,669988 --5588,,330011 6 Military transactions, net -2,286 -1,355 179 -51 220011 5544 --2266 770022 7 Investment income, net3 29,570 33,484 27,304 6,937 77,,553366 66,,882211 66,,000088 55,,223355 8 Other service transactions, net 5,738 7,462 5,729 1,842 11,,335533 11,,334499 11,,118822 11,,331199 9 Remittances, pensions, and other transfers -2,347 -2,382 -2,621 -603 -702 -656 -661 -644 10 U.S. government grants (excluding military) -4,709 -4,549 -5,413 -1,458 -1,100 -1,086 -1,770 -919 11 Change in U.S. government assets, other than official reserve assets, net (increase, -) -5,140 -5,078 -5,732 -807 -1,489 -2,502 -934 -1,060 12 Change in U.S. official reserve assets (increase, -) -8,155 -5,175 -4,965 -1,089 -1,132 -794 -1,949 -787 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -16 -1,823 -1,371 -400 -241 -434 -297 -98 15 Reserve position in International Monetary Fund -1,667 -2,491 -2,552 -547 -814 -459 -732 -2,139 16 Foreign currencies -6,472 -861 -1,041 -142 -77 99 -920 1,450 17 Change in U.S. private assets abroad (increase, -)3 -72,757 -100,348 -107,348 -29,560 -38,313 -22,803 -16,670 -19,936 18 Bank-reported claims -46.838 -83,851 -109,346 -32,551 -38,653 -20,631 -17,511 -17,483 19 Nonbank-reported claims -3,174 -1,181 6,976 3,918 -277 998 2,337 n.a. 20 U.S. purchase of foreign securities, net -3,524 -5,636 -7,986 -581 -546 -3,331 -3,527 -2,032 21 U.S. direct investments abroad, net3 -19,221 -9,680 3,008 -346 1,163 161 2,031 -421 22 Change in foreign official assets in the United States (increase, +) 15,566 5,430 3,172 -3,061 1,930 2,642 1,661 -37 23 U.S. Treasury securities 9,708 4,983 5,759 -1,327 -2,094 4,834 4,346 3,166 24 Other U.S. government obligations 2,187 1,289 -670 -301 258 -71 -556 -568 25 Other U.S. government liabilities4 685 -28 504 75 459 -160 130 -390 26 Other U.S. liabilities reported by U.S. banks -159 -3,479 -2,054 -1,697 3,271 -1,911 -1,717 -1,898 27 Other foreign official assets5 3,145 2,665 -367 189 36 -50 -542 -347 28 Change in foreign private assets in the United States (increase, +)3 39,356 75,248 84,693 30,185 29,683 14,971 9,856 17,311 29 U.S. bank-reported liabilities 10,743 42,154 64,263 25,685 24,778 10,977 2,823 9,853 30 U.S. nonbank-reported liabilities 6,845 942 -3,104 -182 -2,517 -425 20 n.a. 31 Foreign private purchases of U.S. Treasury securities, net 2,645 2,982 7,004 1,288 2,095 1,364 2,257 2,947 32 Foreign purchases of other U.S. securities, net 5,457 7,171 6,141 1,313 2,434 420 1,975 2,887 33 Foreign direct investments in the United States, net3 13,666 21,998 10,390 2,081 2,893 2,635 2,781 1,624 34 Allocation of SDRs 1,152 1,093 0 0 0 00 00 0 35 Discrepancy 29,556 24,238 41,390 3,768 7,887 1155,,008822 1144,,665577 7,554 -729 881 --11,,119900 11,,004422 -340 37 Statistical discrepancy in recorded data before seasonal adjustment 29,556 24,238 41,390 4,497 7,006 1166,,227722 1133,,661155 7,894 MEMO: Changes in official assets 38 U.S. official reserve assets (increase, -) -8,155 -5,175 -4,965 -1,089 -1,132 -794 -1,949 -787 39 Foreign official assets in the United States (increase, +) 14,881 5,458 2,668 -3,136 1,471 2,802 1,531 353 40 Change in Organization of Petroleum Exporting Countries official assets in the United States (part of line 22 above) 12,769 13,581 7,420 5,190 3,024 368 -1,162 -1,442 41 Transfers under military grant programs (excluded from lines 4, 6, and 10 above) 756 680 644 93 125 267 158 42 1. Seasonal factors are no longer calculated for lines 12 through 41. 4. Primarily associated with military sales contracts and other transactions 2. Data are on an international accounts (IA) basis. Differs from the Census arranged with or through foreign official agencies. basis data, shown in table 3.11, for reasons of coverage and timing; military 5. Consists of investments in U.S. corporate stocks and in debt securities of exports 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 (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 1983 IItteemm 11998800 11998811 11998822 Nov. Dec. Jan. Feb. Mar. Apr. May 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments 220,626 233,677 212,193 15,852 16,347 17,393 16,326 16,752 16,074 15,566 2 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 244,871 261,305 243,952 18,892 19,154 20,021 19,015 19,525 19,771 21,514 3 Trade balance -24,245 -27,628 -31,759 -3,041 -2,808 -2,628 -2,689 -2,774 -3,697 -5,948 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 of a free-alongside-ship (f.a.s.) value basis—that is, value at the port of combined with other military transactions and reported separately in the "service export. Beginning in 1981, foreign trade of the U.S. Virgin Islands is included in account" in table 3.10, line 6). On the import side, additions are made for gold, the Census basis trade data; this adjustment has been made for all data shown in ship purchases, imports of electricity from Canada, and other transactions; the table. Beginning with 1982 data, the value of imports are on a customs military payments are excluded and shown separately as indicated above. valuation basis. The Census basis data differ from merchandise trade data shown in table 3.10, SOURCE. FT900 "Summary of U.S. Export and Import Merchandise Trade" U.S. International Transactions Summary, for reasons of coverage and timing. On (Department of Commerce, Bureau of the Census). the export side, the largest adjustments are: (1) the addition of exports to Canada 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1982 1983 TTyyppee 11997799 11998800 11998811 Dec. Jan. Feb. Mar. Apr. May June 1 Total 18,956 26,756 30,075 33,958 33,936 34,233 34,261 34,173 33,931 33,876 2 Gold stock, including Exchange Stabilization Fund1 11,172 11,160 11,151 11,148 11,144 11,139 11,138 11,132 11,132 11,131 3 Special drawing rights2-3 2,724 2,610 4,095 5,250 5,267 5,284 5,229 5,192 5,525 5,478 4 Reserve position in International Monetary Fund2 1,253 2,852 5,055 7,348 8,035 8,594 9,293 9,284 9,424 9,413 5 Foreign currencies4-5 3,807 10,134 9,774 10,212 9,490 9,216 8,601 8,565 7,850 7,854 1. Gold held under earmark at Federal Reserve Banks for foreign and interna- 3. Includes allocations by the International Monetary Fund of SDRs as follows: tional 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. Gold stock is valued at $42.22 per fine troy ounce. 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 transactions in SDRs. on a weighted average of exchange rates for the currencies of member countries. 4. 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 1981, 5 currencies have been used. The U.S. SDR holdings and reserve position in against receipt of foreign currencies in 1979 and 1980. 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 1983 AAsssseettss 11997799 11998800 11998811 Dec. Jan. Feb. Mar. Apr. May June 1 Deposits 429 411 505 328 366 352 424 322 445 279 Assets held in custody 2 U.S. Treasury securities1 95,075 102,417 104,680 112,544 115,872 116,428 114,999 114,880 115,401 114,499 3 Earmarked gold2 15,169 14,965 14,804 14,716 14,717 14,752 14,726 14,723 14,727 14,724 1. Marketable U.S. Treasury bills, notes, and bonds; and nonmarketable U.S. NOTE. Excludes deposits and U.S. Treasury securities held for international Treasury securities payable in dollars and in foreign currencies. and regional organizations. Earmarked gold is gold held for foreign and interna- 2. Earmarked gold is valued at $42.22 per fine troy ounce. tional accounts and is not included in the gold stock of the United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics • July 1983 3.14 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data Millions of dollars, end of period 1982 1983 \ yfy Oct/ Nov/ Dec/ Jan/ Feb/ Mar. Apr.? All foreign countries 1 Total, all currencies 364,409 401,135 462,847 463,950 468,603 469,210 461,965 458,042 464,958 453,243 2 Claims on United States 32,302 28,460 63,743 89,075 90,849 91,767 89,695 87,525 93,828 87,404 3 Parent bank 25,929 20,202 43,267 61,307 62,476 61,629 59,694 58,500 63,312 57,934 4 Other 6,373 8,258 20,476 27,768 28,373 30,138 30,001 29,025 30,516 29,470 5 Claims on foreigners 317,330 354,960 378,954 354,671 357,321 358,045 352,764 351,251 352,137 347,876 6 Other branches of parent bank 79,662 77,019 87,821 90,030 91,916 91,116 89,484 89,765 89,083 88,715 7 Banks 123,420 146,448 150,763 133,489 133,359 133,576 131,028 129,169 132,048 127,290 8 Public borrowers 26,097 28,033 28,197 23,876 23,340 23,968 24,464 24,585 24,574 25,097 9 Nonbank foreigners 88,151 103,460 112,173 107,276 108,706 109,385 107,778 107,732 106,432 106,774 10 Other assets 14,777 17,715 20,150 20,204 20,433 19,398 19,506 19,266 18,993 17,963 11 Total payable in U.S. dollars 267,713 291,798 350,735 361,883 363,611 361,574 354,681 350,489 356,402 344,142 12 Claims on United States 31,171 27,191 62,142 87,355 88,976 90,047 88,001 85,901 91,391 85,127 13 Parent bank 25,632 19,896 42,721 60,562 61,662 60,973 58,926 57,799 62,379 57,298 14 Other 5,539 7,295 19,421 26,793 27,314 29,074 29,075 28,102 29,012 27,829 15 Claims on foreigners 229,120 255,391 276,937 261,935 261,820 259,512 254,858 252,964 253,403 248,483 16 Other branches of parent bank 61,525 58,541 69,398 74,032 74,780 73,512 71,188 71,935 70,768 69,810 17 Banks 96,261 117,342 122,110 107,487 106,681 106,275 103,596 100,797 103,413 98,603 18 Public borrowers 21,629 23,491 22,877 18,659 18,187 18,303 18,717 18,891 18,723 18,901 19 Nonbank foreigners 49,705 56,017 62,552 61,757 62,172 61,422 61,357 61,341 60,499 61,169 20 Other assets 7,422 9,216 11,656 12,593 12,815 12,015 11,822 11,624 11,608 10,532 United Kingdom 21 Total, all currencies 130,873 144,717 157,229 164,582 165,687 161,067 157,464 156,577 156,022 152,408 22 Claims on United States 11,117 7,509 11,823 27,829 28,677 27,354 27,175 26,423 26,259 25,139 23 Parent bank 9,338 5,275 7,885 23,717 24,278 23,017 22,539 21,962 21,912 20,657 24 Other 1,779 2,234 3,938 4,112 4,399 4,337 4,636 4,461 4,347 4,482 25 Claims on foreigners 115,123 131,142 138,888 129,913 130,666 127,734 124,354 124,214 123,993 121,727 26 Other branches of parent bank 34,291 34,760 41,367 37,013 38,319 37,000 34,959 35,437 36,171 32,973 27 Banks 51,343 58,741 56,315 52,568 51,414 50,767 49,497 48,580 48,976 48,301 28 Public borrowers 4,919 6,688 7,490 6,157 6,170 6,240 6,421 6,592 6,337 6,567 29 Nonbank foreigners 24,570 30,953 33,716 34,175 34,763 33,727 33,477 33,605 32,509 33,886 30 Other assets 4,633 6,066 6,518 6,840 6,344 5,979 5,935 5,940 5,770 5,542 31 Total payable in U.S. dollars 94,287 99,699 115,188 127,517 128,863 123,740 120,233 119,273 118,891 113,170 32 Claims on United States 10,746 7,116 11,246 27,255 28,093 26,761 26,581 25,829 25,597 24,374 33 Parent bank 9,297 5,229 7,721 23,478 24,035 22,756 22,250 21,700 21,626 20,354 34 Other 1,449 1,887 3,525 3,777 4,058 4,005 4,331 4,129 3,971 4,020 35 Claims on foreigners 81,294 89,723 99,850 95,269 95,870 92,228 89,137 88,973 88,797 84,981 36 Other branches of parent bank 28,928 28,268 35,439 32,243 33,154 31,648 29,380 29,918 30,589 27,131 37 Banks 36,760 42,073 40,703 39,077 38,310 36,717 35,616 34,499 34,442 33,228 38 Public borrowers 3,319 4,911 5,595 4,251 4,281 4,329 4,600 4,789 4,413 4,504 39 Nonbank foreigners 12,287 14,471 18,113 19,698 20,125 19,534 19,541 19,767 19,353 20,118 40 Other assets 2,247 2,860 4,092 4,993 4,900 4,751 4,515 4,471 4,497 3,815 Bahamas and Caymans 41 Total, all currencies 108,977 123,837 149,108 139,493 140,990 145,089 142,115 138,730 145,663 142,049 42 Claims on United States 19,124 17,751 46,546 55,728 57,081 59,402 57,302 56,225 62,686 57,559 43 Parent bank 15,1% 12,631 31,643 32,927 34,022 34,653 32,958 32,839 37,937 34,113 44 Other 3,928 5,120 14,903 22,801 23,059 24,749 24,344 23,386 24,749 23,446 45 Claims on foreigners 86,718 101,926 98,057 79,578 79,230 81,387 80,722 78,527 79,040 80,817 46 Other branches of parent bank 9,689 13,342 12,951 17,955 18,066 18,720 20,091 19,730 17,512 22,175 47 Banks 43,189 54,861 55,151 40,478 41,070 42,636 40,770 39,101 42,288 39,607 48 Public borrowers 12,905 12,577 10,010 6,743 6,310 6,413 6,434 6,494 6,540 6,366 49 Nonbank foreigners 20,935 21,146 19,945 14,402 13,784 13,618 13,427 13,202 12,700 12,669 50 Other assets 3,135 4,160 4,505 4,187 4,679 4,300 4,091 3,978 3,937 3,673 51 Total payable in U.S. dollars 102,368 117,654 143,743 134,662 135,699 139,538 136,278 132,884 139,549 135,711 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Overseas Branches A57 3.14 Continued 1982 1983 LLiiaabbiilliittyy aaccccoouunntt Oct/ Nov/ Dec/ Jan/ Feb/ Mar. Apr.P All foreign countries 52 Total, all currencies 364,409 401,135 462,847 463,950 468,603 469,210 461,965 458,042 464,958 453,243 53 To United States 66,689 91,079 137,767 169,400 171,884 178,834 178,353 176,206 188,928 180,057 54 Parent bank 24,533 39,286 56,344 64,190 66,376 75,487 79,862 77,409 84,938 77,090 55 Other banks in United States 13,968 14,473 19,197 32,607 31,764 33,358 32,791 32,650 33,975 32,687 56 Nonbanks 28,188 37,275 62,226 72,603 73,744 69,989 65,700 66,147 70,015 70,280 57 To foreigners 283,510 295,411 305,630 274,470 276,360 270,545 265,172 263,553 258,255 255,229 58 Other branches of parent bank 77,640 75,773 86,3% 91,660 91,310 90,094 88,926 90,486 87,352 88,304 59 Banks 122,922 132,116 124,906 98,320 98,236 %,706 92,847 90,205 91,728 86,949 60 Official institutions 35,668 32,473 25,997 19,440 21,095 19,614 20,246 19,739 17,808 18,384 61 Nonbank foreigners 47,280 55,049 68,331 65,050 65,719 64,131 63,153 63,123 61,367 61,592 62 Other liabilities 14,210 14,690 19,450 20,080 20,359 19,831 18,440 18,283 17,775 17,957 63 Total payable in U.S. dollars 273,857 303,281 364,447 377,176 379,306 378,860 370,132 367,528 374,355 363,151 64 To United States 64,530 88,157 134,700 166,431 168,411 175,347 174,728 172,533 185,430 176,638 65 Parent bank 23,403 37,528 54,492 62,245 64,083 73,161 77,590 75,076 82,627 75,009 66 Other banks in United States 13,771 14,203 18,883 32,362 31,428 32,993 32,267 32,223 33,535 32,226 67 Nonbanks 27,356 36,426 61,325 71,824 72,900 69,193 64,871 65,234 69,268 69,403 68 To foreigners 201,514 206,883 217,602 199,297 198,981 192,290 185,265 185,616 179,527 177,088 69 Other branches of parent bank 60,551 58,172 69,299 76,237 74,661 72,863 71,075 72,855 69,472 69,937 70 Banks 80,691 87,497 79,594 59,782 58,829 57,355 52,225 51,234 52,183 48,428 71 Official institutions 29,048 24,697 20,288 15,253 16,774 15,055 15,940 15,381 13,536 13,801 72 Nonbank foreigners 31,224 36,517 48,421 48,025 48,717 47,017 46,025 46,146 44,336 44,922 73 Other liabilities 7,813 8,241 12,145 11,448 11,914 11,223 10,139 9,379 9,398 9,425 United Kingdom 74 Total, all currencies 130,873 144,717 157,229 164,582 165,687 161,067 157,464 156,577 156,022 152,408 75 To United States 20,986 21,785 38,022 53,777 54,003 53,954 52,650 51,927 55,309 52,883 76 Parent bank 3,104 4,225 5,444 10,568 10,597 13,091 14,287 14,080 14,616 14,343 77 Other banks in United States 7,693 5,716 7,502 12,567 12,374 12,205 12,343 12,198 13,172 12,119 78 Nonbanks 10,189 11,844 25,076 30,642 31,032 28,658 26,020 25,649 27,521 26,421 79 To foreigners 104,032 117,438 112,255 102,611 103,927 99,567 97,827 97,515 93,835 92,460 80 Other branches of parent bank 12,567 15,384 16,545 18,399 19,372 18,361 19,343 21,008 19,653 19,470 81 Banks 47,620 56,262 51,336 45,601 44,266 44,020 41,073 39,892 40,867 38,960 82 Official institutions 24,202 21,412 16,517 11,379 12,940 11,504 12,377 12,025 10,252 10,520 83 Nonbank foreigners 19,643 24,380 27,857 27,232 27,349 25,682 25,034 24,590 23,063 23,510 84 Other liabilities 5,855 5,494 6,952 8,194 7,757 7,546 6,987 7,135 6,878 7,065 85 Total payable in U.S. dollars 95,449 103,440 120,277 133,591 135,188 130,261 126,286 126,007 126,088 120,683 86 To United States 20,552 21,080 37,332 53,146 53,056 53,029 51,808 50,977 54,520 51,993 87 Parent bank 3,054 4,078 5,350 10,442 10,306 12,814 14,105 13,859 14,476 14,212 88 Other banks in United States 7,651 5,626 7,249 12,472 12,188 12,026 12,128 12,041 12,987 11,929 89 Nonbanks 9,847 11,376 24,733 30,232 30,562 28,189 25,575 25,077 27,057 25,852 90 To foreigners 72,397 79,636 79,034 76,519 77,982 73,477 71,000 71,994 68,309 65,485 91 Other branches of parent bank 8,446 10,474 12,048 14,614 15,310 14,300 15,081 16,709 14,918 14,815 92 Banks 29,424 35,388 32,298 30,404 29,092 28,810 25,177 25,563 26,395 23,821 93 Official institutions 20,192 17,024 13,612 9,806 11,198 9,668 10,657 10,121 8,419 8,474 94 Nonbank foreigners 14,335 16,750 21,076 21,695 22,382 20,699 20,085 19,601 18,577 18,375 95 Other liabilities 2,500 2,724 3,911 3,926 4,150 3,755 3,478 3,036 3,259 3,205 Bahamas and Caymans % Total, all currencies 108,977 123,837 149,108 139,493 140,990 145,089 142,115 138,730 145,663 142,049 97 To United States 37,719 59,666 85,759 %,864 98,525 104,384 104,398 102,519 111,560 105,685 98 Parent bank 15,267 28,181 39,451 40,279 41,950 47,040 50,441 47,633 55,620 48,050 99 Other banks in United States 5,204 7,379 10,474 17,481 16,805 18,466 17,561 17,328 17,300 17,451 100 Nonbanks 17,248 24,106 35,834 39,104 39,770 38,878 36,3% 37,558 38,640 40,184 101 To foreigners 68,598 61,218 60,012 39,793 39,603 38,249 35,470 33,859 31,894 34,146 102 Other branches of parent bank 20,875 17,040 20,641 17,421 17,566 15,7% 14,258 13,809 12,071 14,474 103 Banks 33,631 29,895 23,202 10,297 10,413 10,166 9,279 8,451 9,027 8,126 104 Official institutions 4,866 4,361 3,498 2,137 1,846 1,967 1,849 1,720 1,678 1,710 105 Nonbank foreigners 9,226 9,922 12,671 9,938 9,778 10,320 10,084 9,879 9,118 9,836 106 Other liabilities 2,660 2,953 3,337 2,836 2,862 2,456 2,247 2,352 2,209 2,218 107 Total payable in U.S. dollars 103,460 119,657 145,284 136,629 137,879 141,841 138,702 135,377 142,465 138,502 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • July 1983 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1982 1983 IItteemm 11998800 11998811 Oct. Nov. Dec. Jan. Feb. Mar.'' Apr.P 1 Total1 164,578 170,109 171,406 168,025 172,780 175,163 172,915 173,119 173,414 By type 2 Liabilities reported by banks in the United States2 30,381 26,928 27,056 25,338 24,873 23,842 21,422 22,980 22,693 3 U.S. Treasury bills and certificates3 56,243 52,389 43,964 42,906 46,658 50,432 49,954 47,917 48,399 U.S. Treasury bonds and notes 4 Marketable 41,455 53,186 65,619 65,850 67,715 67,735 69,303 70,250 70,558 5 Nonmarketable4 14,654 11,791 9,350 8,750 8,750 8,750 7,950 7,950 7,950 6 U.S. securities other than U.S. Treasury securities5 21,845 25,815 25,417 25,181 24,784 24,404 24,286 24,022 23,814 By area 7 Western Europe1 81,592 65,891 60,846 59,447 61,501 62,525 62,103 61,734 62,169 8 Canada 1,562 2,403 2,204 2,044 2,070 2,430 2,754 2,942 2,770 9 Latin America and Caribbean 5,688 6,954 7,231 5,900 6,028 7,138 6,100 5,578 6,161 10 Asia 70,784 91,790 95,110 93,960 95,922 95,278 95,677 96,789 95,331 11 Africa 4,123 1,829 1,452 1,371 1,350 1,716 1,327 1,162 1,208 12 Other countries6 829 1,242 4.563 5,303 5,909 6,076 4,954 4,914 5,775 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, commer- agencies, and U.S. corporate stocks and bonds. cial paper, negotiable time certificates of deposit, and borrowings under repur- 6. Includes countries in Oceania and Eastern Europe. chase agreements. 3. Includes nonmarketable certificates of indebtedness (including those pay- NOTE. Based on Treasury Department data and on data reported to the able in foreign currencies through 1974) and Treasury bills issued to official Treasury Department by banks (including Federal Reserve Banks) and securities institutions of foreign countries. dealers in 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 1982 1983 IItteemm 11997799 11998800 11998811 June Sept. Dec. Mar.P 1 Banks' own liabilities 1,918 3,748 3,523 4,513 4,575 4,751 5,072 2 Banks' own claims 2,419 4,206 4,980 5,895 6,337 7,689 8,101 3 Deposits 994 2,507 3,398 3,565 3,429 4,241 3,725 4 Other claims 1,425 1,699 1,582 2,329 2,908 3,448 4,376 5 Claims of banks' domestic customers1 580 962 971 921 506 676 637 1. Assets owned by customers of the reporting bank located in the United NOTE. Data on claims exclude foreign currencies held by U.S. monetary States that represent claims on foreigners held by reporting banks for the accounts authorities, 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 1983 HHoollddeerr aanndd ttyyppee ooff lliiaabbiilliittyy 11997799 11998800 11998811AA Oct. Nov. Dec. Jan. Feb. Mar. Apr.P 1 All foreigners 187,521 205,297 244,043 300,811 302,776 305,320 304,779 304,653 316,117 308,936 ? Banks' own liabilities 117,196 124,791 163,738 221,055 226,068 225,379 219,361 219,666 234,317 226,019 3 Demand deposits 23,303 23,462 19,628 17,059 17,148 16,017 16,089 17,423 16,495 15,695 4 Time deposits' 13,623 15,076 28,992 62,172 62,718 67,072 64,347 65,273 68,491 67,303 5 Other2 16,453 17,583 17,617 22,930 24,414 23,791 22,918 20,295 24,566 21,882 6 Own foreign offices3 63,817 68,670 97,500 118,894 121,788 118,499 116,006 116,676 124,765 121,139 7 Banks' custody liabilities4 70,325 80,506 80,305 79,756 76,708 79,941 85,419 84,987 81,800 82,917 8 U.S. Treasury bills and certificates5 48,573 57,595 55,316 53,374 52,138 55,614 62,137 61,904 58,747 60,087 9 Other negotiable and readily transferable instruments6 19,396 20,079 19,019 22,668 20,965 20,625 19,352 19,205 18,831 18,799 10 Other 2,356 2,832 5,970 3,715 3,605 3,702 3,930 3,877 4,222 4,031 11 Nonmonetary international and regional organizations7 2,356 2,344 2,721 6,036 6,465 4,597 6,611 5,969 3,949 5,917 12 Banks' own liabilities 714 444 638 2,337 3,387 1,584 1,787 1,695 1,304 2,542 13 Demand deposits 260 146 262 261 257 106 284 195 221 252 14 Time deposits' 151 85 58 431 969 1,339 1,333 1,367 917 2,031 15 Other2 303 212 318 1,645 2,161 139 170 134 166 259 16 Banks' custody liabilities4 1,643 1,900 2,083 3,699 3,078 3,013 4,824 4,275 2,645 3,375 17 U.S. Treasury bills and certificates 102 254 541 2,160 1,774 1,621 3,603 3,153 1,501 2,230 18 Other negotiable and readily transferable instruments6 1,538 1,646 1,542 1,539 1,304 1,392 1,221 1,122 1,144 1,145 19 Other 2 0 0 0 0 0 0 0 0 0 20 Official institutions8 78,206 86,624 79,318 71,021 68,244 71,531 74,274 71,377 70,897 71,092 21 Banks' own liabilities 18,292 17,826 17,094 16,989 16,638 16,526 16,411 14,620 16,443 16,060 22 Demand deposits 4,671 3,771 2,564 2,138 2,074 1,981 2,168 2,063 2,287 2,322 23 Time deposits' 3,050 3,612 4,230 6,132 5,539 5,489 4,907 5,481 5,331 6,031 24 Other2 10,571 10,443 10,300 8,720 9,025 9,057 9,336 7,076 8,825 7,706 25 Banks' custody liabilities4 59,914 68,798 62,224 54,031 51,607 55,006 57,864 56,756 54,454 55,032 26 U.S. Treasury bills and certificates5 47,666 56,243 52,389 43,964 42,906 46,658 50,432 49,954 47,917 48,399 27 Other negotiable and readily transferable instruments6 12,196 12,501 9,787 10,033 8,672 8,319 7,396 6,769 6,512 6,618 28 Other 52 54 47 34 28 28 35 33 25 15 29 Banks9 88,316 96,415 136,030 182,766 185,679 185,097 178,460 180,891 192,698 183,610 30 Banks* own liabilities 83,299 90,456 124,312 166,268 169,412 168,679 161,637 162,878 174,321 165,157 31 Unaffiliated foreign banks 19,482 21,786 26,812 47,374 47,624 50,179 45,631 46,202 49,556 44.019 32 Demand deposits 13,285 14,188 11,614 9,882 9,724 8,733 8,186 9,627 8,264 7,691 33 Time deposits' 1,667 1,703 8,735 26,026 26,035 28,267 25,556 25,297 27,613 24,233 34 Other2 4,530 5,895 6,462 11,466 11,865 13,179 11,889 11,278 13,679 12,095 35 Own foreign offices3 63,817 68,670 97,500 118,894 121,788 118,499 116,006 116,676 124,765 121,139 36 Banks' custody liabilities4 5,017 5,959 11,718 16,498 16,267 16,419 16,822 18,012 18,377 18,453 37 U.S. Treasury bills and certificates 422 623 1,687 5,634 5,792 5,809 6,292 6,791 7,122 7,475 38 Other negotiable and readily transferable instruments6 2,415 2,748 4,421 8,061 7,782 7,844 7,698 8,345 8,266 8,041 39 Other 2,179 2,588 5,611 2,803 2,693 2,766 2,833 2,876 2,990 2,937 40 Other foreigners 18,642 19,914 25,974 40,989 42,388 44,095 45,434 46,416 48,573 48,316 41 Banks' own liabilities 14,891 16,065 21,694 35,461 36,631 38,591 39,526 40,473 42,249 42,260 42 Demand deposits 5,087 5,356 5,189 4,778 5,093 5,197 5,452 5,539 5,724 5,430 43 Time deposits 8,755 9,676 15,969 29,583 30,175 31,977 32,551 33,128 34,630 35,009 44 Other2 1,048 1,033 537 1,100 1,363 1.416 1,524 1,807 1,896 1,821 45 Banks' custody liabilities4 3,751 3,849 4,279 5,528 5,756 5,504 5,908 5,943 6,323 6,056 46 U.S. Treasury bills and certificates 382 474 699 1,615 1,666 1,525 1,810 2,006 2,207 1,983 47 Other negotiable and readily transferable instruments6 3,247 3,185 3,268 3,035 3,207 3,070 3,037 2,970 2,909 2,995 48 Other 123 190 312 878 884 908 1,062 968 1,207 1,078 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 10,984 10,745 10,747 15,029 14,408 14,296 13,367 11,611 11,383 11,603 1. Excludes negotiable time certificates of deposit, which are included in 6. Principally bankers acceptances, commercial paper, and negotiable time "Other negotiable and readily transferable instruments." certificates of deposit. 2. Includes borrowing under repurchase agreements. 7. Principally the International Bank for Reconstruction and Development, and 3. U.S. banks: includes amounts due to own foreign branches and foreign the Inter-American and Asian Development Banks. subsidiaries consolidated in "Consolidated Report of Condition" filed with bank 8. Foreign central banks and foreign central governments, and the Bank for regulatory agencies. Agencies, branches, and majority-owned subsidiaries of International Settlements. foreign banks: principally amounts due to head office or parent foreign bank, and 9. Excludes central banks, which are included in "Official institutions." foreign branches, agencies or wholly owned subsidiaries of head office or parent • Liabilities and claims of banks in the United States were increased, foreign bank. beginning in December 1981, by the shift from foreign branches to international 4. Financial claims on residents of the United States, other than long-term banking facilities in the United States of liabilities to, and claims on, foreign securities, held by or through reporting banks. residents. 5. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official institutions of foreign countries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • July 1983 3.17 Continued 1982 1983 AArreeaa aanndd ccoouunnttrryy 11997799 11998800 II998811AA Oct. Nov. Dec. Jan. Feb. Mar. Apr." 1 Total 187,521 205,297 244,043 300,811 302,776 305,320 304,779 304,653 316,117 308,936 2 Foreign countries 185,164 202,953 241,321 294,776 296,311 300,723 298,168 298,683 312,168 303,018 3 Europe 90,952 90,897 91,309 116,015 117,242 117,695 118,764 116,019 116,456 111,279 4 Austria 413 523 596 508 441 512 467 513 604 576 5 Belgium-Luxembourg 2,375 4,019 4,117 2,782 2,499 2,517 2,270 2,295 2,726 2,800 6 Denmark 1,092 497 333 166 221 509 996 1,197 765 849 7 Finland 398 455 296 478 572 748 473 369 408 437 8 France 10,433 12,125 8,486 7,358 7,065 8,169 8,462 7,723 6,780 7,098 9 Germany 12,935 9,973 7,665 5,360 6,093 5,375 5,807 6,227 6,458 3,441 10 Greece 635 670 463 516 496 537 589 595 597 671 11 Italy 7,782 7,572 7,290 5,541 4,779 5,674 4,938 4,514 4,312 5,024 12 Netherlands 2,337 2,441 2,823 3,102 3,100 3,362 3,770 3,1% 3,704 3,966 13 Norway 1,267 1,344 1,457 2,026 2,197 1,567 1,476 1,407 1,061 1,566 14 Portugal 557 374 354 356 453 388 398 370 363 346 15 Spain 1,259 1,500 916 1,315 1,301 1,405 1,316 1,524 1,640 1,484 16 Sweden 2,005 1,737 1,545 1,997 1,615 1,380 1,315 1,645 1,379 1,212 17 Switzerland 17,954 16,689 18,720 27,619 27,994 28,999 28,996 30,263 30,433 29,468 18 Turkey 120 242 518 317 255 296 190 251 254 231 19 United Kingdom 24,700 22,680 28,287 49,009 50,274 48,169 50,339 47,202 47,703 45,007 20 Yugoslavia 266 681 375 390 470 499 470 452 491 504 21 Other Western Europe1 4,070 6,939 6,526 6,524 6,889 6,965 6,033 5,898 6,365 6,137 22 U.S.S.R 52 68 49 111 45 50 47 41 40 44 23 Other Eastern Europe2 302 370 493 541 486 573 412 335 374 416 24 Canada 7,379 10,031 10,250 12,163 11,719 12,217 10,990 13,618 15,159 14,695 25 Latin America and Caribbean 49,686 53,170 85,159 108,687 110,140 112,916 110,576 111,105 119,895 118,013 26 Argentina 1,582 2,132 2,445 3,482 3,432 3,577 4,833 4,891 4,684 4,603 27 Bahamas 15,255 16,381 34,856 43,123 44,125 44,026 42,911 45,029 48,832 49,379 28 Bermuda 430 670 765 1,507 1,596 1,572 1,989 1,903 2,124 2,137 29 Brazil 1,005 1,216 1,568 2,020 1,986 2,010 1,916 2,010 1,948 2,477 30 British West Indies 11,138 12,766 17,794 23,068 24,276 26,372 24,630 23,963 27,520 23,882 31 Chile 468 460 664 1,447 1.444 1,626 1,341 1,280 1,084 1,196 32 Colombia 2,617 3,077 2,993 2,407 2,426 2,593 2,384 2,336 1,887 1,825 33 Cuba 13 6 9 7 8 9 10 10 9 12 34 Ecuador 425 371 434 556 519 453 472 499 575 534 35 Guatemala 414 367 479 636 639 670 682 669 675 666 36 Jamaica 76 97 87 118 108 126 115 103 134 107 37 Mexico 4,185 4,547 7,170 8,031 8,047 7,967 7,930 7,380 8,118 8,353 38 Netherlands Antilles 499 413 3,182 3,677 3,518 3,597 3,762 3,474 3,416 3,426 39 Panama 4,483 4,718 4,857 4,770 4,798 4,738 4,923 4,983 5,617 5,428 40 Peru 383 403 694 1,031 959 1,147 1,052 903 927 1,158 41 Uruguay 202 254 367 844 651 759 726 817 818 852 42 Venezuela 4,192 3,170 4,245 8,796 8,315 8,382 7,649 7,671 8,146 8,585 43 Other Latin America and Caribbean 2,318 2,123 2,548 3,166 3,293 3,291 3,251 3,185 3,381 3,394 44 Asia 33,005 42,420 50,005 49,803 48.565 48,679 48,193 49,614 52,524 50,202 China 45 Mainland 49 49 158 216 214 203 220 196 208 187 46 Taiwan 1,393 1,662 2,082 2,568 2,769 2,716 3,139 3,515 3,535 3,600 47 Hong Kong 1,672 2,548 3,950 4,957 4,847 4,465 4,542 4,988 5,725 5,119 48 India 527 416 385 439 507 433 514 962 521 669 49 Indonesia 504 730 640 757 534 849 1,156 614 855 1,028 50 Israel 707 883 592 612 705 606 608 515 985 1,775 51 Japan 8,907 16,281 20,750 16,830 15,680 16,098 15,836 16,613 17,022 16,038 52 Korea 993 1,528 2,013 1,927 1,776 1,692 1,473 1,458 1,418 1,175 53 Philippines 795 919 874 736 768 770 680 787 718 712 54 Thailand 277 464 534 365 349 629 482 529 488 528 55 Middle-East oil-exporting countries3 15,300 14,453 13,174 14,053 14,396 13,433 12,332 11,672 13,155 11,755 56 Other Asia 1,879 2,487 4,854 6,344 6,020 6,784 7,210 7,764 7,893 7,616 57 Africa 3,239 5,187 3,180 3,369 3,192 3,070 3,331 3,087 2,910 2,829 58 Egypt 475 485 360 242 373 398 500 416 533 466 59 Morocco 33 33 32 54 66 75 51 51 57 48 60 South Africa 184 288 420 279 564 277 276 317 281 299 61 Zaire 110 57 26 23 22 23 25 31 33 28 62 Oil-exporting countries4 1,635 3,540 1,395 1,669 1,250 1,280 1,603 1,333 975 1,071 63 Other Africa 804 783 946 1,103 918 1,016 877 939 1,031 916 64 Other countries 904 1,247 1,419 4,738 5,452 6,146 6,314 5,241 5,224 6,001 65 Australia 684 950 1,223 4,530 5,224 5,904 6,080 5,052 4,933 5,805 66 All other 220 297 196 207 228 243 235 190 291 195 67 Nonmonetary international and regional organizations 2,356 2,344 2,721 6,036 6,465 4,597 6,611 5,969 3,949 5,917 68 International 1,238 1,157 1,661 5,141 5,522 3,705 5,769 5,186 3,182 5,194 69 Latin American regional 806 890 710 573 533 517 527 487 478 494 70 Other regional5 313 296 350 322 410 375 316 296 289 229 1. Includes the Bank for International Settlements. Beginning April 1978, also 5. Asian, African, Middle Eastern, and European regional organizations, includes Eastern European countries not listed in line 23. except the Bank for International Settlements, which is included in "Other 2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German Western Europe." Democratic Republic, Hungary, Poland, and Romania. A Liabilities and claims of banks in the United States were increased, beginning 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and in December 1981, by the shift from foreign branches to international banking United Arab Emirates (Trucial States). facilities in the United States of liabilities to, and claims on, foreign residents. 4. 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 1983 AArreeaa aanndd ccoouunnttrryy 11997799 11998800 11998811 •• Oct. Nov. Dec. Jan. Feb. Mar. Apr? 1 Total 133,943 172,592 251,082 334,783 336,551 353,733 357,333 358,695 372,551 360,138 2 Foreign countries 133,906 172,514 251,026 334,728 336,494 353,665 357,260 358,618 372,482 360,046 3 Europe 28,388 32,108 49,067 78,358 79,190 84,005 83,503 84,289 88,028 83,347 4 Austria 284 236 121 173 197 216 232 226 255 307 Belgium-Luxembourg 1,339 1,621 2,851 4,965 5,395 5,115 4,730 5,363 5,700 5,348 6 Denmark 147 127 187 396 406 554 609 648 1,134 1,124 7 Finland 202 460 546 813 904 990 984 957 %1 844 8 France 3,322 2,958 4,124 6,219 6,627 6,863 7,204 7,367 7,216 7,222 9 Germany 1,179 948 938 1,522 1,756 1,860 1,407 1,740 1,810 1,271 10 Greece 154 256 333 335 373 452 576 632 652 628 11 Italy 1,631 3,364 5,240 7,346 7,708 7,498 7,544 7,005 7,125 7,373 17 Netherlands 514 575 682 1,285 1,122 1,428 1,470 1,356 1,629 1,247 13 Norway 276 227 384 544 650 572 625 587 544 628 14 Portugal 330 331 529 1,018 924 943 843 834 820 797 15 Spain 1,051 993 2,100 3,558 3,643 3,730 3,699 3,223 3,120 3,004 16 Sweden 542 783 1,205 2,799 2,804 3,030 3,113 2,693 2,414 2,289 17 Switzerland 1,165 1,446 2,213 1,636 1,516 1,639 1,568 1,496 1,668 2,362 18 Turkey 149 145 424 603 598 560 527 567 595 608 19 United Kingdom 13,795 14,917 23,654 41,661 40,868 44,754 44,703 45,916 48,671 44,533 20 Yugoslavia 611 853 1,224 1,248 1,261 1,418 1,382 1,399 1,393 1,432 71 Other Western Europe1 175 179 209 266 380 378 310 319 322 232 77 U.S.S.R 268 281 377 242 227 263 233 250 310 392 23 Other Eastern Europe2 1,254 1,410 1,725 1,728 1,832 1,741 1,745 1,709 1,690 1,706 24 Canada 4,143 4,810 9,164 12,982 12,500 14,216 14,865 15,583 16,477 15,069 7.5 Latin America and Caribbean 67,993 92,992 138,138 180,564 180,902 187,379 192,024 192,002 198,501 195,728 76 Argentina 4,389 5,689 7,522 11,019 10,816 10,960 11,231 11,431 11,264 11,223 27 Bahamas 18,918 29,419 43,446 51,848 52,207 56,300 58,003 56,654 59,354 57,200 78 Bermuda 496 218 346 602 957 603 582 536 506 385 79 Brazil 7,713 10,496 16,914 22,999 22,978 23,204 23,036 23,377 23,555 23,712 30 British West Indies 9,818 15,663 21,930 28,270 27,370 29,162 32,790 33,376 35,212 34,958 31 Chile 1,441 1,951 3,690 5,276 5,091 5,560 5,229 5,302 5,209 5,130 32 Colombia 1,614 1,752 2,018 2,838 2,895 3,185 3,221 3,159 3,167 3,148 33 Cuba 4 3 3 3 3 3 11 2 2 0 34 Ecuador 1,025 1,190 1,531 2,057 2,101 2,053 2,038 2,054 2,054 2,084 35 Guatemala3 134 137 124 111 140 124 129 119 84 77 36 Jamaica3 47 36 62 151 218 181 206 197 216 196 37 Mexico 9,099 12,595 22,409 29,422 29,558 29,449 29,422 30,234 31,251 31,709 38 Netherlands Antilles 248 821 1,076 685 731 814 815 906 970 1,037 39 Panama 6,041 4,974 6,779 10,286 10,516 10,133 10,040 9,296 9,797 8,951 40 Peru 652 890 1,218 2,244 2,252 2,332 2,299 2,273 2,301 2,329 41 Uruguay 105 137 157 572 609 681 687 684 707 859 47 Venezuela 4,657 5,438 7,069 9,925 10,250 10,682 10,225 10,283 10,615 10,537 43 Other Latin America and Caribbean 1,593 1,583 1,844 2,257 2,211 1,953 2,057 2,117 2,236 2,193 44 30,730 39,078 49,780 55,723 56,671 60,629 59,032 58,966 61,476 57,738 China 45 Mainland 35 195 107 139 194 210 198 195 195 238 46 Taiwan 1,821 2,469 2,461 2,020 2,255 2,285 2,223 1,975 1,860 1,786 47 Hong Kong 1,804 2,247 4,126 5,976 6,201 7,705 7,081 7,112 7,656 7,482 48 India 92 142 123 254 258 222 230 200 160 163 49 Indonesia 131 245 351 315 314 342 370 429 505 535 50 Israel 990 1,172 1,562 1,748 1,895 2,043 1,835 1,732 1,744 2,035 51 Japan 16,911 21,361 26,762 26,722 25,952 27,199 26,741 26,845 28,545 24,943 57 Korea 3,793 5,697 7,324 7,790 8,536 9,389 9,052 9,183 9,170 8,891 53 Philippines 737 989 1,817 2,560 2,467 2,555 2,444 2,599 2,628 2,627 54 Thailand 933 876 564 442 501 643 649 651 625 737 55 Middle East oil-exporting countries4 1,548 1,432 1,575 2,848 3,176 3,087 3,428 3,403 3,829 3,926 56 Other Asia 1,934 2,252 3,009 4,910 4,923 4,948 4,781 4,643 4,557 4,374 57 Africa 1,797 2,377 3,503 5,017 5,274 5,350 5,608 5,504 5,483 5,689 58 Egypt 114 151 238 365 349 322 310 277 309 291 59 Morocco 103 223 284 367 384 347 342 359 375 382 60 South Africa 445 370 1,011 1,744 1,832 2,013 2,061 2,193 2,185 2,119 61 Zaire 144 94 112 61 58 57 57 54 52 104 62 Oil-exporting countries5 391 805 657 764 903 803 914 841 844 750 63 Other 600 734 1,201 1,717 1,747 1,807 1,924 1,781 1,717 2,041 64 Other countries 855 1,150 1,376 2,083 1,957 2,086 2,228 2,274 2,519 2,475 65 Australia 673 859 1,203 1,713 1,528 1,713 1,714 1,6% 1,953 1,889 66 All other 182 290 172 370 429 373 514 578 566 586 67 Nonmonetary international and regional organizations6 36 78 56 56 57 68 73 77 69 92 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 2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German "Other Western Europe." Democratic 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, United Arab Emirates (Trucial States). beginning 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 • July 1983 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 1983 TTyyppee ooff ccllaaiimm 11997799 11998800 11998811AA Oct. Nov. Dec. Jan. Feb. Mar. Apr.P 1 Total 111111155555554444444,,,,,,,000000033333330000000 111111199999998888888,,,,,,,666666699999998888888 222222288888887777777,,,,,,,000000055555551111111 333333399999993333333,,,,,,,666666644444442222222 444444411111110000000,,,,,,,666666600000002222222 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 111111133333333333333,,,,,,,999999944444443333333 111111177777772222222,,,,,,,555555599999992222222 222222255555551111111,,,,,,,000000088888882222222 334,783 336,551 333333355555553333333,,,,,,,777777733333333333333 357,333 358,695 333333377777772222222,,,,,,,555555555555551111111 360,138 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 11111115555555,,,,,,,999999933333337777777 22222220000000,,,,,,,888888888888882222222 33333331111111,,,,,,,333333300000002222222 42,429 42.296 44444444444444,,,,,,,666666600000001111111 44,360 45,423 44444446666666,,,,,,,999999933333338888888 47,512 44 OOwwnn ffoorreeiiggnn ooffffiicceess11 44444447777777,,,,,,,444444422222228888888 66666665555555,,,,,,,000000088888884444444 99999996666666,,,,,,,666666644444447777777 117,329 118,060 111111122222227777777,,,,,,,222222277777775555555 133,589 134,460 111111144444443333333,,,,,,,666666688888884444444 135,425 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 44444440000000,,,,,,,999999922222227777777 55555550000000,,,,,,,111111166666668888888 77777774444444,,,,,,,111111133333334444444 114,464 115,123 111111111111119999999,,,,,,,333333322222227777777 116,434 117,731 111111122222221111111,,,,,,,000000000000008888888 116,633 66 DDeeppoossiittss 6666666,,,,,,,222222277777774444444 8888888,,,,,,,222222255555554444444 22222223333333,,,,,,,000000011111112222222 42,165 41,227 44444443333333,,,,,,,000000011111112222222 42,160 44,133 44444448888888,,,,,,,666666622222226666666 44,257 77 OOtthheerr 33333334444444,,,,,,,666666655555554444444 44444441111111,,,,,,,999999911111114444444 55555551111111,,,,,,,111111122222223333333 72,299 73,896 77777776666666,,,,,,,333333311111115555555 74,274 73,598 77777772222222.......333333388888882222222 72,376 88 AAllll ootthheerr ffoorreeiiggnneerrss 22222229999999,,,,,,,666666655555550000000 33333336666666,,,,,,,444444455555559999999 44444448888888,,,,,,,999999999999999999999 60,561 61,073 66666662222222,,,,,,,555555533333330000000 62,950 61,081 66666660000000,,,,,,,999999922222221111111 60,568 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss22 22222220000000,,,,,,,000000088888888888888 22222226666666,,,,,,,111111100000006666666 33333335555555,,,,,,,999999966666668888888 33333339999999,,,,,,,999999900000009999999 33333338888888,,,,,,,000000055555551111111 999999955555555555555 888888888888885555555 1111111,,,,,,,333333377777778888888 2222222,,,,,,,222222222222226666666 1111111,,,,,,,999999933333339999999 11 Negotiable and readily transferable 11111113333333,,,,,,,111111100000000000000 11111115555555,,,,,,,555555577777774444444 22222226666666,,,,,,,333333355555552222222 33333330000000,,,,,,,666666622222227777777 22222229999999,,,,,,,222222233333330000000 12 Outstanding collections and other 6666666,,,,,,,000000033333332222222 9999999,,,,,,,666666644444448888888 8888888,,,,,,,222222233333338888888 7777777,,,,,,,000000055555556666666 6666666,,,,,,,888888888888882222222 13 MEMO: Customer liability on 11111118888888,,,,,,,000000022222221111111 22222222222222,,,,,,,777777711111114444444 22222229999999,,,,,,,555555511111117777777 33333338888888,,,,,,,333333399999991111111 33333335555555,,,,,,,333333311111111111111 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States4 ... 22,333 24,468 39,862 45,717 46,884 40,967 38,263 38,608 37,614 n.a. 1. U.S. banks: includes amounts due from own foreign branches and foreign 4. Includes demand and time deposits and negotiable and nonnegotiable subsidiaries consolidated in "Consolidated Report of Condition" filed with bank certificates of deposit denominated in U.S. dollars issued by banks abroad. For regulatory agencies. Agencies, branches, and majority-owned subsidiaries of description of changes in data reported by nonbanks, see July 1979 BULLETIN, foreign banks: principally amounts due from head office or parent foreign bank, p. 550. and foreign branches, agencies, or wholly owned subsidiaries of head office or • Liabilities and claims of banks in the United States were increased, parent foreign bank. beginning in December 1981, by the shift from foreign branches to international 2. Assets owned by customers of the reporting bank located in the United banking facilities in the United States of liabilities to, and claims on, foreign States that represent claims on foreigners held by reporting banks for the account residents. of their 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 1982 1983 MMaattuurriittyy;; bbyy bboorrrroowweerr aanndd aarreeaa 11997799 11998800 11998811AA June Sept. Dec. Mar.'' 1 Total 86,181 106,748 153,879 200,596 213,223 225,853 226,429 By borrower 2 Maturity of 1 year or less1 65,152 82,555 115,849 151,698 161,686 171,852 171,000 3 Foreign public borrowers 7,233 9,974 15,099 19,367 20,057 20,999 21,597 4 All other foreigners 57,919 72,581 100,750 132,331 141,629 150,852 149,404 5 Maturity of over 1 year1 21,030 24,193 38,030 48,898 51,537 54,001 55,429 6 Foreign public borrowers 8,371 10,152 15,650 20,057 21,925 22,883 24,553 7 All other foreigners 12,659 14,041 22,380 28,841 29,612 31,118 30,875 By area Maturity of 1 year or less1 8 Europe 15,235 18,715 27,914 39,064 44,880 49,232 52,859 9 Canada 1,777 2,723 4,634 6,594 7,039 7,554 6,794 10 Latin America and Caribbean 24,928 32,034 48,489 68,046 71,686 72,922 73,588 11 21,641 26,686 31,413 33,518 33.297 37,226 32,538 12 Africa 1,077 1,757 2,457 3,259 3,621 3,692 3,862 13 All other2 493 640 943 1,217 1,163 1,225 1,359 Maturity of over 1 year1 14 Europe 4,160 5,118 8,094 9,244 10,510 11,559 11,924 15 Canada 1,317 1,448 1,774 2,340 1,955 1,923 1,924 16 Latin America and Caribbean 12,814 15.075 25,089 32,919 34,020 35,121 35,574 17 1,911 1,865 1,907 2,479 3,088 3,168 3,531 18 Africa 655 507 899 1,295 1,328 1,491 1,480 19 All other2 173 179 267 622 635 740 995 1. Remaining time to maturity. • Liabilities and claims of banks in the United States were increased, 2. Includes nonmonetary international and regional organizations. beginning 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 Banks' Billions of dollars, end of period 1981 1982 1983 AArreeaa oorr ccoouunnttrryy 11997799 11998800 Mar. June Sept. Dec. Mar. June Sept. Dec. Mar.'' 1 Total 303.9 352.0 372.1 382.9 399.8 414.4 417.7 432.6 434.5 436.3 433.6 2 G-10 countries and Switzerland 138.4 162.1 168.5 168.3 172.2 175.2 173.7 175.0 173.6 177.3 178.1 3 Belgium-Luxembourg 11.1 13.0 13.6 13.8 14.1 13.3 13.2 14.1 13.6 13.0 13.5 4 France 11.7 14.1 14.5 14.7 16.0 15.3 15.9 16.4 15.7 16.7 16.5 5 Germany 12.2 12.1 13.3 12.1 12.7 12.9 12.5 12.7 12.2 12.6 12.9 6 Italy 6.4 8.2 7.7 8.4 8.6 9.6 9.0 9.0 9.7 10.3 10.2 7 Netherlands 4.8 4.4 4.6 4.2 3.7 4.0 4.0 4.1 3.8 3.6 4.3 8 Sweden 2.4 2.9 3.2 3.1 3.4 3.7 4.0 4.0 4.7 5.0 4.2 9 Switzerland 4.7 5.0 5.1 5.2 5,1 5.5 5.3 5.1 5.0 5.0 4.6 10 United Kingdom 56.4 67.4 68.5 67.0 68.8 69.9 69.8 68.5 69.0 71.0 72.0 11 Canada 6.3 8.4 8.9 10.8 11.8 10.9 11.6 11.3 10.8 11.0 10.7 12 Japan 22.4 26.5 29.1 28.9 28.0 30.1 28.4 29.8 29.0 29.0 29.2 13 Other developed countries 19.9 21.6 23.5 24.8 26.4 28.4 30.6 32.1 32.6 33.6 33.8 14 Austria 2.0 1.9 1.8 2.1 2.2 1.9 2.1 2.1 2.0 1.9 2.1 15 Denmark 2.2 2.3 2.4 2.3 2.5 2.3 2.5 2.6 2.5 2.4 3.3 16 Finland 1.2 1.4 1.4 1.3 1.4 1.7 1.6 1.6 1.8 2.2 2.1 17 Greece 2.4 2.8 2.7 3.0 2.9 2.8 2.8 2.6 2.5 2.9 2.8 18 Norway 2.3 2.6 2.8 2.8 3.0 3.1 3.2 3.2 3.4 3.3 3.3 19 Portugal .7 .6 .6 .8 1.0 1.1 1.2 1.5 1.6 1.5 1.4 20 Spain 3.5 4.4 5.5 5.7 5.8 6.7 7.2 7.3 7.7 7.5 7.0 21 Turkey 1.4 1.5 1.5 1.4 1.5 1.4 1.6 1.5 1.5 1.4 1.5 22 Other Western Europe 1.4 1.7 1.8 1.8 1.9 2.1 2.2 2.2 2.1 2.3 2.2 23 South Africa 1.3 1.1 1.5 1.9 2.5 2.8 3.3 3.5 3.6 3.7 3.6 24 Australia 1.3 1.3 1.5 1.7 1.9 2.5 3.0 4.0 4.0 4.4 4.6 25 OPEC countries2 22.9 22.7 21.7 22.2 23.5 24.5 25.1 26.1 27.0 27.4 28.4 26 Ecuador 1.7 2.1 2.0 2.0 2.1 2.2 2.3 2.4 2.3 2.2 2.2 27 Venezuela 8.7 9.1 8.3 8.8 9.2 9.7 9.7 9.8 10.1 10.6 10.3 28 Indonesia 1.9 1.8 2.1 2.1 2.5 2.5 2.7 2.8 2.9 3.2 3.5 29 Middle East countries 8.0 6.9 6.7 6.8 7.1 7.5 8.2 8.7 9.0 8.7 9.3 30 African countries 2.6 2.8 2.6 2.6 2.6 2.5 2.2 2.5 2.7 2.8 3.1 31 Non-OPEC developing countries 63.0 77.4 82.2 84.8 90.2 96.2 97.5 103.6 103.9 106.7 107.0 Latin America 32 Argentina 5.0 7.9 9.5 8.5 9.3 9.4 9.9 9.7 9.2 8.9 9.0 33 Brazil 15.2 16.2 17.0 17.5 17.7 19.1 19.7 21.3 22.4 22.8 22.9 34 Chile 2.5 3.7 4.0 4.8 5.5 5.8 6.0 6.4 6.2 6.3 6.0 35 Colombia 2.2 2.6 2.4 2.5 2.5 2.6 2.3 2.6 2.8 3.0 3.0 36 Mexico 12.0 15.9 17.0 18.2 20.0 21.6 22.9 25.1 24.9 24.4 24.6 37 Peru 1.5 1.8 1.8 1.7 1.8 2.0 1.9 2.5 2.6 2.6 2.4 38 Other Latin America 3.7 3.9 4.7 3.8 4.2 4.1 4.1 4.0 4.3 4.0 4.3 Asia China 39 Mainland .1 .2 .2 ~> .2 .2 .2 .3 .2 .2 .2 40 Taiwan 3.4 4.2 4.4 4.6 5.1 5.1 5.1 5.0 4.9 5.3 5.1 41 India .2 .3 .3 .3 .3 .3 .5 .5 .5 .6 .4 42 Israel 1.3 1.5 1.3 1.8 1.5 2.1 1.7 2.2 1.9 2.3 2.0 43 Korea (South) 5.4 7.1 7.7 8.8 8.6 9.4 8.6 8.9 9.3 10.8 10.8 44 Malaysia 1.0 1.1 1.2 1.4 1.4 1.7 1.7 1.9 1.8 2.1 2.5 45 Philippines 4.2 5.1 4.8 5.1 5.6 6.0 5.9 6.3 6.0 6.2 6.6 46 Thailand 1.5 1.6 1.6 1.5 1.4 1.5 1.4 1.3 1.3 1.6 1.6 47 Other Asia .5 .6 .5 .7 .8 1.0 1.2 1.1 1.3 1.1 1.3 Africa 48 Egypt .6 .8 .8 .7 1.0 1.1 1.3 1.3 1.3 1.2 1.1 49 Morocco .6 .7 .6 .5 .7 .7 .7 .7 .8 .7 .8 50 Zaire .2 .2 .2 .2 .2 .2 .2 .2 .1 .1 .1 51 Other Africa3 1.7 2.1 2.2 2.1 2.2 2.3 2.3 2.3 2.2 2.4 2.3 52 Eastern Europe 7.3 7.4 7.7 7.7 7.7 7.8 7.2 6.7 6.3 6.2 6.1 53 U.S.S.R .7 .4 .4 .5 .4 .6 .4 .4 .3 .3 .3 54 Yugoslavia 1.8 2.3 2.4 2.5 2.5 2.5 2.5 2.4 2.2 2.2 2.5 55 Other 4.8 4.6 4.8 4.8 4.7 4.7 4.3 3.9 3.8 3.7 3.3 56 Offshore banking centers 40.4 47.0 53.7 59.3 61.7 63.5 65.3 71.1 71.0 67.5 64.5 57 Bahamas 13.7 13.7 15.5 17.9 21.3 18.9 19.9 23.6 20.8 18.6 16.8 58 Bermuda .8 .6 .7 .7 .8 .7 .7 .7 .8 .9 1.0 59 Cayman Islands and other British West Indies 9.4 10.6 11.9 12.6 12.1 12.4 12.0 12.2 13.4 13.2 11.5 60 Netherlands Antilles 1.2 2.1 2.3 2.4 2.2 3.2 3.2 3.0 3.3 3.3 3.2 61 Panama4 4.3 5.4 6.5 6.9 6.7 7.6 7.1 7.3 8.0 7.5 6.8 62 Lebanon .2 .2 ~> .2 .2 .2 .2 .2 .1 .1 .1 63 Hong Kong 6.0 8.1 8.4 10.3 10.3 11.8 12.9 14.3 14.9 14.8 14.8 64 Singapore 4.5 5.9 7.3 8.1 8.0 8.7 9.3 9.8 9.8 9.1 10.3 65 Others5 .4 .3 .9 .3 .1 .1 .1 .1 .0 .0 .0 66 Miscellaneous and unallocated6 11.7 14.0 14.9 15.7 18.2 18.8 18.3 18.2 20.1 17.6 16.2 1. The banking offices covered by these data are the U.S. offices and foreign 2. In addition to the Organization of Petroleum Exporting Countries shown branches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks. individually, this group includes other members of OPEC (Algeria, Gabon, Iran, Offices not covered include (1) U.S. agencies and branches offoreign banks, and Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates) as (2) foreign subsidiaries of U.S. banks. To minimize duplication, the data are well as Bahrain and Oman (not formally members of OPEC). adjusted to exclude the claims on foreign branches held by a U.S. office or another 3. Excludes Liberia. foreign branch of the same banking institution. The data in this table combine 4. Includes Canal Zone beginning December 1979. foreign branch claims in table 3.14 (the sum of lines 7 through 10) with the claims 5. Foreign branch claims only. of U.S. offices in table 3.18 (excluding those held by agencies and branches of 6. Includes New Zealand, Liberia, and international and regional organizaforeign banks and those constituting claims on own foreign branches). tions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics • July 1983 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States' Millions of dollars, end of period 1981 1982 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11997799 11998800 11998811 Sept. Dec. Mar. June Sept. Dec.P 1 Total 17,433 22,226 22,480 23,608 22,480 22,393 20,965 21,440 21,795 2 Payable in dollars 14,323 18,481 18,758 20,377 18,758 19,623 18,182 18,324 18,696 3 Payable in foreign currencies 3,110 3,745 3,722 3,230 3,722 2,770 2,783 3,116 3,099 By type 4 Financial liabilities 7,523 11,330 12,117 13,084 12,117 12,599 10,028 10,707 10,253 5 Payable in dollars 5,223 8,528 9,446 10,688 9,446 10,627 8,066 8,399 8,178 6 Payable in foreign currencies 2,300 2,802 2,671 2,3% 2,671 1,972 1,%1 2,308 2,075 7 Commercial liabilities 9,910 10,896 10,363 10,524 10,363 9,794 10,937 10,733 11,542 8 Trade payables 4,591 4,993 4,720 4,430 4,720 4,022 5,027 4,527 4,471 9 Advance receipts and other liabilities 5,320 5,903 5,643 6,094 5,643 5,773 5,910 6,206 7,071 10 Payable in dollars 9,100 9,953 9,312 9,689 9,312 8,9% 10,115 99,,992255 10,518 11 Payable in foreign currencies 811 943 1,052 835 1,052 798 822 880088 1,024 By area or country Financial liabilities 12 Europe 4,665 6,481 6,819 7,968 6,819 7,883 5,947 6,389 6,152 13 Belgium-Luxembourg 338 479 471 507 471 605 518 494 502 14 France 175 327 709 929 709 924 581 672 635 15 Germany 497 582 491 430 491 503 439 446 422 16 Netherlands 829 681 748 664 748 755 517 759 702 17 Switzerland 170 354 715 465 715 707 661 670 653 18 United Kingdom 2,477 3,923 3,559 4,800 3,559 4,282 3,084 3,212 3,061 19 Canada 532 964 958 977 958 914 758 702 685 20 Latin America and Caribbean 1,514 3,136 3,356 3,293 3,356 3,333 2,805 2,969 2,683 21 Bahamas 404 964 1,279 1,019 1,279 1,095 1,003 933 866 22 Bermuda 81 1 7 6 7 6 7 14 23 23 Brazil 18 23 22 20 22 27 24 28 28 24 British West Indies 516 1,452 1,241 1,398 1,241 1,469 1,044 981 992 25 Mexico 121 99 102 107 102 67 83 85 121 26 Venezuela 72 81 98 90 98 97 100 104 114 27 Asia 804 723 957 814 957 455 502 631 718 28 Japan 726 644 792 696 792 293 340 424 527 29 Middle East oil-exporting countries2 31 38 75 51 75 63 66 67 70 30 Africa 4 11 3 3 3 2 3 3 4 31 Oil-exporting countries3 1 1 0 1 0 0 0 0 0 32 All other4 4 15 24 29 24 12 11 13 12 Commercial liabilities 33 Europe 3,709 4,402 3,771 3,%3 3,771 3,422 3,742 3,861 3,578 34 Belgium-Luxembourg 137 90 71 79 71 50 47 50 50 35 France 467 582 573 575 573 504 700 759 602 36 Germany 545 679 545 590 545 473 457 436 464 37 Netherlands 227 219 221 239 221 232 248 281 340 38 Switzerland 316 499 424 569 424 400 412 358 335 39 United Kingdom 1,080 1,209 880 925 880 824 850 904 802 40 Canada 924 888 897 853 897 884 1,116 1,188 1,482 41 Latin America and Caribbean 1,325 1,300 1,044 1,137 1,044 817 1,418 1,220 1,127 42 Bahamas 69 8 2 3 2 22 20 6 16 43 Bermuda 32 75 67 113 67 71 102 48 89 44 Brazil 203 111 67 61 67 83 62 128 65 45 British West Indies 21 35 2 11 2 27 2 3 32 46 Mexico 257 367 340 392 340 210 727 484 475 47 Venezuela 301 319 276 273 276 194 219 269 157 48 Asia 2,991 3,034 3,285 3,221 3,285 3,404 3,298 3,207 3,966 49 Japan 583 802 1,094 775 1,094 1,090 1,064 1,134 1,028 50 Middle East oil-exporting countries2 1,014 890 910 881 910 998 958 821 1,538 51 Africa 728 817 703 757 703 664 732 663 736 52 Oil-exporting countries3 384 517 344 355 344 247 340 248 284 53 All other4 233 456 664 593 664 604 630 595 653 1. For a description of the changes in the International Statistics tables, see 3. Comprises Algeria, Gabon, Libya, and Nigeria. July 1979 BULLETIN, p. 550. 4. Includes nonmonetary international and regional organizations. 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). 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 States' Millions of dollars, end of period 1981 1982 Type, and area or country 11997799 11998800 11998811 Sept. Dec. Mar. June Sept. Dec.P 1 Total 31,299 34,482 35,672 34,170 35,672 30,203 30,483 29,488 27,153 2 Payable in dollars 28,096 31,528 32,071 31,161 32,071 27,564 27,983 26,835 24,545 3 Payable in foreign currencies 3,203 2,955 3,601 3,010 3,601 2,639 2,500 2,653 2,608 By type 4 Financial claims 18,398 19,763 20,742 19,171 20,742 17,748 18,360 17,714 16,432 5 Deposits 12,858 14,166 14,688 13,611 14,688 12,730 13,603 12,608 11,918 6 Payable in dollars 11,936 13,381 14,057 12,876 14,057 12,267 13,229 12,194 11,552 7 Payable in foreign currencies 923 785 631 734 631 463 374 413 366 8 Other financial claims 5,540 5,597 6,054 5,561 6,054 5,018 4,757 5,106 4,514 9 Payable in dollars 3,714 3,914 3,600 3,867 3,600 3,362 3,189 3,419 2,833 10 Payable in foreign currencies 1,826 1,683 2,454 1,694 2,454 1,656 1,568 1,687 1,681 11 Commercial claims 12,901 14,720 14,930 14,999 14,930 12,455 12,122 11,774 10,721 12 Trade receivables 12,185 13,960 13,965 14,062 13,965 11,493 11,069 10,709 9,752 13 Advance payments and other claims.. 716 759 965 937 965 962 1,053 1,065 969 14 Payable in dollars 12,447 14,233 14,414 14,417 14,414 11,935 11,565 11,222 10,160 15 Payable in foreign currencies 454 487 516 582 516 520 557 552 561 By area or country Financial claims 16 Europe 6,179 6,069 4,515 4,515 4,515 4,506 4,661 4,728 4,524 17 Belgium-Luxembourg 32 145 43 43 43 16 13 16 10 18 France 177 298 285 285 285 375 313 305 129 19 Germany 409 230 224 224 224 197 148 174 168 20 Netherlands 53 51 50 50 50 79 56 52 30 21 Switzerland 73 54 57 43 57 53 63 60 84 22 United Kingdom 5,099 4,987 3,525 3,525 3,525 3,549 3,795 3,749 3,839 23 Canada 5,003 5,036 6,628 6,040 6,628 4,942 4,365 4,322 4,199 24 Latin America and Caribbean 6,312 7,811 8,615 7,762 8,615 7,432 8,312 7,630 6,783 25 Bahamas 2,773 3,477 3,925 3,284 3,925 3,537 3,845 3,366 3,137 26 Bermuda 30 135 18 15 18 27 42 19 13 27 Brazil 163 96 30 66 30 49 76 76 60 28 British West Indies 2,011 2,755 3,503 3,315 3,503 2,797 3,504 3,171 2,656 29 Mexico 157 208 313 283 313 281 274 268 274 30 Venezuela 143 137 148 143 148 130 134 133 139 31 Asia 601 607 762 501 762 670 800 825 736 32 Japan 199 189 366 113 366 257 327 247 191 33 Middle East oil-exporting countries2 16 20 37 29 37 36 33 30 15 34 Africa 258 208 173 169 173 164 156 165 158 35 Oil-exporting countries3 49 26 46 41 46 43 41 50 48 36 All other4 44 32 48 116 48 34 66 44 31 Commercial claims 4,922 5,544 5,359 5,378 5,359 4,381 4,273 4,164 3,658 37 Europe 202 233 234 220 234 246 211 178 152 38 Belgium-Luxembourg 727 1,129 776 767 776 698 636 646 465 39 France 593 599 557 582 557 452 392 427 341 40 Germany 298 318 303 308 303 227 297 278 364 4 4 4 1 2 3 N S U w e n t i i h t t e z e d e r r l l a K a n n i d n d s g dom 9 2 0 7 1 2 3 92 5 9 4 4 9 2 6 7 9 1, 4 0 0 3 4 4 4 9 2 6 7 9 1,0 3 6 5 2 4 9 3 0 8 5 4 1,0 2 3 5 5 8 7 3 6 2 5 8 44 Canada 859 914 967 1,017 967 943 713 666 635 45 Latin America and Caribbean 2,879 3,766 3,479 3,734 3,479 2,925 2,787 2,772 2,376 46 Bahamas 21 21 12 18 12 80 30 19 21 47 Bermuda 197 108 223 241 223 212 225 154 259 48 Brazil 645 861 668 726 668 417 423 481 252 49 British West Indies 16 34 12 13 12 23 10 7 9 50 Mexico 708 1,102 1,022 985 1,022 762 750 869 672 51 Venezuela 343 410 424 456 424 396 383 373 342 52 Asia 3,451 3,522 3,914 3,700 3,914 3,155 3,323 3,086 3,104 53 Japan 1,177 1,052 1,244 1,129 1,244 1,160 1,213 968 1,157 54 Middle East oil-exporting countries2 765 825 901 829 901 757 806 775 710 55 Africa 551 653 750 717 750 587 614 638 535 56 Oil-exporting countries3 130 153 152 154 152 143 138 148 133 57 All other4 240 321 461 453 461 463 413 448 413 1. For a description of the changes in the International Statistics tables, see 3. Comprises Algeria, Gabon, Libya, and Nigeria. July 1979 BULLETIN, p. 550. 4. Includes nonmonetary international and regional organizations. 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 International Statistics • July 1983 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1983 1982 1983 TTrraannssaaccttiioonnss,, aanndd aarreeaa oorr ccoouunnttrryy 11998811 11998822 A Ja p n r . . - Oct. Nov. Dec. Jan. Feb. Mar. Apr.P U.S. corporate securities STOCKS 1 Foreign purchases 40,686 41,902 23,460 5,967 5.581 5,839 5,141 5,310 7,083 5,926 2 Foreign sales 34,856 37,948 20,195 5,675 5,245 4,868 4,376 4,349 6,155 5,316 3 Net purchases, or sales (-) 5,830 3,954 3,265 292 336 971 765 961 928 611 4 Foreign countries 5,803 3,869 3,156 282 325 946 755 940 902 559 5 Europe 3,662 2,596 3,105 175 69 672 586 890 976 653 6 France 900 -143 136 -30 -8 43 47 52 8 29 7 Germany -22 333 670 47 26 138 84 137 226 222 8 Netherlands 42 -60 46 -102 -24 25 2 8 41 -5 9 Switzerland 288 -529 815 -118 -208 226 211 223 102 278 10 United Kingdom 2,235 3,129 1,363 435 317 242 183 442 576 162 11 Canada 783 221 420 5 72 154 90 61 147 122 12 Latin America and Caribbean -30 304 171 142 54 39 -5 83 -23 116 13 Middle East1 1,140 368 -417 -98 9 -153 -57 -13 -57 -290 14 Other Asia 287 246 -227 22 112 210 118 -91 --221100 --4455 15 Africa 7 2 25 0 2 3 6 4 88 88 16 Other countries -46 131 80 35 7 22 18 6 60 -4 17 Nonmonetary international and regional organizations 27 85 108 10 11 25 10 21 26 52 BONDS2 18 Foreign purchases 17,304 21,631 8,508 2,778 2,099 2,099 1.933 1,885 2,312 2,378 19 Foreign sales 12,252 20,480 8,620 2,961 2,280 2,457 2.278 1,877 2,448 2,018 20 Net purchases, or sales (-) 5,052 1,151 -113 -183 -181 -358 -345 8 -136 360 21 Foreign countries 4,991 1,179 -88 -223 -190 -348 -343 33 -153 374 22 Europe 1,371 1,848 -247 408 -236 -158 -189 -148 -266 356 23 France 11 295 -38 -17 24 146 -21 -2 -22 7 24 Germany 848 2,116 43 187 11 43 -96 -35 127 47 25 Netherlands 70 28 19 -2 -4 -1 16 0 3 1 26 Switzerland 108 161 318 -4 -13 44 29 62 -2 229 27 United Kingdom 196 -903 -404 225 -327 -461 -105 -90 -182 -27 28 Canada -12 25 28 -152 10 -l 11 15 21 -18 29 Latin America and Caribbean 132 160 33 -15 28 -6 23 11 1 -2 30 Middle East1 3,465 -821 -128 -435 -20 -177 -211 86 32 -35 31 Other Asia 44 -23 211 -30 28 -5 23 72 59 57 32 Africa -1 -19 0 0 0 0 -1 0 -5 33 Other countries -7 7 20 0 0 -1 0 0 0 21 34 Nonmonetary international and regional organizations 61 -28 -25 41 10 -10 -2 -25 17 -14 Foreign securities 35 Stocks, net purchases, or sales (-) -247 -1,340 -1,541 -308 -740 -272 -320 -226 -447 -548 36 Foreign purchases 9,339 7,170 4,232 706 772 927 1,032 1,042 1,187 971 3/ Foreign sales 9,586 8,511 5,773 1,014 1,512 1,199 1,352 1,268 1,634 1,519 38 Bonds, net purchases, or sales (-) -5,460 -6,610 -1,459 -1,331 -458 -417 22 -278 -556 -646 39 Foreign purchases 17,553 29,900 11,609 3,058 2.953 2,962 2,881 3,526 2,772 2,430 40 Foreign sales 23,013 36,510 13,068 4,389 3.411 3,379 2,859 3,804 3,328 3,076 41 Net purchases, or sales (-), of stocks and bonds .... -5,707 -7,950 -3,000 -1,639 -1,199 -689 -298 -504 -1,003 -1,194 42 Foreign countries -4,694 -6,778 -3,031 -1,247 -1,168 -736 -272 -817 -714 -1,227 43 Europe -728 -2,436 -2,284 -517 -572 -555 -307 -687 -604 -686 44 Canada -3,697 -2,364 -894 -181 -7 -29 -20 -449 13 -438 45 Latin America and Caribbean 69 246 666 -268 -62 29 258 345 -24 87 46 -367 -1,851 -597 -283 -536 -195 -192 -37 -146 -221 47 Africa -55 -9 58 0 4 4 -9 21 30 16 48 Other countries 84 -364 20 3 5 10 -2 -10 16 16 49 Nonmonetary international and regional organizations -1,012 -1,172 31 -392 -31 47 -26 312 -289 33 1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, 2. Includes state and local government securities, and securities of U.S. Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). government 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 1983 1982 1983 Country or area 1981 1982 J A a p n r .- . Oct. Nov. Dec. Jan. Feb. Mar. Apr.P Holdings (end of period)1 1 Estimated total2... 70,249 85,169 83,860 84,667 85,169 85,458 86,057 88,675 87,511 2 Foreign countries2 64.565 80,586 79,166 79,447 80,586 80,854 82,098 83,046 84,025 Europe2 24,012 29,274 29,071 29,447 29,274 29,855 31,039 32,364 33,496 Belgium-Luxembourg.. 543 447 834 448 447 716 -87 -332 -107 Germany2 11,861 14,841 14,493 14,704 14,841 15,151 16,650 17,560 17.791 Netherlands 1,991 2,754 2,356 2,473 2,754 2,839 3,011 3,194 3,228 Sweden 643 667 655 687 667 668 681 656 656 Switzerland2 846 1,540 1,266 1,532 1,540 1,013 1,039 1,044 1,063 United Kingdom 6,709 6,549 7,237 7,099 6,549 6,721 6,941 7,478 7,736 Other Western Europe. 1,419 2,476 2,230 2,505 2,476 2,748 2,804 2,764 3,130 11 Eastern Europe 0 0 0 0 0 0 0 0 0 12 Canada 514 602 482 552 602 649 639 724 696 13 Latin America and Caribbean 736 1,076 1,086 1,231 1,076 1,067 1,050 951 932 14 Venezuela 286 188 204 172 188 190 74 77 72 15 Other Latin America and Caribbean. 319 656 657 759 656 720 792 690 676 16 Netherlands Antilles 131 232 225 300 232 156 185 184 184 17 Asia 38,671 49,502 48,288 48,079 49,502 49,146 49,256 48,897 48,782 18 Japan 10,780 11,578 11,396 11,314 11,578 11,655 11,707 11,736 11,850 19 Africa 631 77 178 77 77 77 80 80 80 20 All other 2 55 61 62 55 60 34 31 39 21 Nonmonetary international and regional organizations . 5,684 4,583 4,694 5,220 4,583 4,604 3,959 5,629 3,486 22 International 5,638 4,186 4,417 4,939 4,186 4,165 3,405 4,966 2,969 23 Latin American regional 1 6 -4 -4 6 6 6 6 6 Transactions (net purchases, or sales (-) during period) 24 Total2 12,700 14,920 2,342 1,703 808 502 289 599 2,618 -1,163 25 Foreign countries2 11,604 16,021 3,439 792 281 1,139 268 1,245 948 979 26 Official institutions 11,730 14,529 2,843 641 231 1,866 20 1,567 947 308 27 Other foreign2 -127 1,487 596 151 50 -727 248 -323 1 670 28 Nonmonetary international and regional organizations 1,096 -1,096 -1,096 910 527 -637 21 -645 1,670 -2,142 MEMO: Oil-exporting countries 29 Middle East3 11,156 7,534 -917 209 -320 303 121 -233 -691 -115 30 Africa4 -289 -552 0 0 -100 0 0 0 0 0 1. Estimated official and private holdings of marketable U.S. Treasury securi- 2. Beginning December 1978, includes U.S. Treasury notes publicly issued to ties 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 United Arab Emirates (Trucial States). foreign countries. 4. Comprises Algeria, Gabon, Libya, and Nigeria. 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per annum Rate on June 30, 1983 Rate on June 30, 1983 Rate on June 30, 1983 Country Country Country Per- Month Per- Month Per- Month cent effective cent effective cent effective Austria.. 3.75 Mar. 1983 France1 12.25 June 1983 Norway 8.0 June 1979 Belgium . 9.0 June 1983 Germany, Fed. Rep. of 4.0 Mar. 1983 Switzerland 4.0 Mar. 1983 Brazil... 49.0 Mar. 1981 Italy 17.0 Apr. 1983 United Kingdom2 Canada.. 9.42 June 1983 Japan 5.5 Dec. 1981 Venezuela Sept. 1982 Denmark 7.5 Apr. 1983 Netherlands 4.5 May 1983 1. As of the end of February 1981, the rate is that at which the Bank of France or makes advances against eligible commercial paper and/or government commerdiscounts Treasury bills for 7 to 10 days. cial banks or brokers. For countries with more than one rate applicable to such 2. Minimum lending rate suspended as of Aug. 20, 1981. discounts or advances, the rate shown is the one at which it is understood the central bank transacts the largest proportion of its credit operations. MOTE. Rates shown are mainly those at which the central bank either discounts Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 International Statistics • July 1983 3.27 FOREIGN SHORT-TERM INTEREST RATES Percent per annum, averages of daily figures 1982 1983 CCoouunnttrryy,, oorr ttyyppee 11998800 11998811 11998822 Dec. Jan. Feb. Mar. Apr. May June 1 Eurodollars 14.00 16.79 12.24 9.47 8.97 9.14 9.25 9.23 8.96 9.66 2 United Kingdom 16.59 13.86 12.21 10.55 11.04 11.29 10.92 10.21 10.18 9.91 3 Canada 13.12 18.84 14.38 10.56 9.87 9.69 9.36 9.39 9.30 9.41 4 Germany 9.45 12.05 8.81 6.54 5.78 5.79 5.40 5.16 5.27 5.52 5 Switzerland 5.79 9.15 5.04 3.71 2.78 2.95 3.64 4.20 4.48 4.98 6 Netherlands 10.60 11.52 8.26 5.66 4.97 4.82 4.34 5.19 5.65 5.81 7 France 12.18 15.28 14.61 12.70 12.55 12.88 12.64 12.12 12.51 12.59 8 Italy 17.50 19.98 19.99 19.20 18.95 19.04 19.19 18.20 17.75 17.72 9 Belgium 14.06 15.28 14.10 12.25 12.25 12.25 13.32 11.05 10.04 9.73 10 Japan 11.45 7.58 6.84 6.96 6.47 6.64 6.72' 6.34r 6.26' 6.46 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 1983 CCoouunnttrryy//ccuurrrreennccyy 11998800 11998811 11998822 Jan. Feb. Mar. Apr. May June 1 Argentina/peso n.a. n.a. 20985.00 48916.66 50239.47 62386.95 66868.56 71100.94 8.08 2 Australia/dollar1 114.00 114.95 101.65 98.26 96.62 88.39 86.76 87.85 87.72 3 Austria/schilling 12.945 15.948 17.060 16.783 17.076 16.940 17.176 17.368 17.974 4 Belgium/franc 29.237 37.194 45.780 46.888 47.739 47.519 48.577 49.239 50.928 5 Brazil/cruzeiro n.a. 92.374 179.22 262.30 309.01 401.30 434.77 465.65 517.28 6 Canada/dollar 1.1693 1.1990 1.2344 1.2287 1.2277 1.2263 1.2325 1.2292 1.2323 7 Chile/peso n.a. n.a. 51.118 74.257 76.863 76.378 76.028 75.405 77.500 8 China, P.R./yuan n.a. 1.7031 1.8978 1.9238 1.9653 1.9834 1.9938 1.9895 1.9949 9 Colombia/peso n.a. n.a. 64.071 70.762 71.751 73.179 74.751 76.153 77.380 10 Denmark/krone 5.6345 7.1350 8.3443 8.4171 8.5811 8.6223 8.6663 8.8003 9.1287 11 Finland/markka 3.7206 4.3128 4.8086 5.3120 5.3907 5.4266 5.4342 5.4361 5.5351 12 France/franc 4.2250 5.4396 6.5793 6.7725 6.8855 7.0204 7.3148 7.4163 7.6621 13 Germany/deutsche mark 1.8175 2.2631 2.428 2.3893 2.4280 2.4110 2.4397 2.4665 2.5490 14 Greece/drachma n.a. n.a. 66.872 80.761 83.621 83.897 84.037 84.105 84.486 15 Hong Kong/dollar n.a. 5.5678 6.0697 6.5252 6.6060 6.6536 6.7868 6.9667 7.2822 16 India/rupee 7.8866 8.6807 9.4846 9.7938 9.9184 9.9652 9.9824 9.9895 10.049 17 Indonesia/rupiah n.a. n.a. 660.43 694.62 700.01 714.72 970.81 968.83 973.00 18 Iran/rial n.a. 79.324 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 19 Ireland/pound1 205.77 161.32 142.05 139.16 136.81 134.79 129.53 128.11 123.81 20 Israel/shekel n.a. n.a. 24.407 34.863 36.986 38.867 40.951 43.427 46.138 21 Italy/lira 856.20 1138.60 1354.00 1374.71 1399.78 1429.72 1451.88 1467.76 1510.98 22 Japan/yen 226.63 220.63 249.06 232.73 236.12 238.25 237.75 234.76 240.03 23 Malaysia/ringgit 2.1767 2.3048 2.3395 2.2822 2.2757 2.2898 2.3063 2.3009 2.3244 24 Mexico/peso 22.968 24.547 72.990 150.75 157.81 161.78 153.77 150.27 149.02 25 Netherlands/guilder 1.9875 2.4998 2.6719 2.6310 2.6779 2.6834 2.7486 2.7737 2.8557 26 New Zealand/dollar1 97.34 86.848 75.101 72.921 71.895 66.642 65.726 66.246 65.659 27 Norway/krone 4.9381 5.7430 6.4567 7.0447 7.1171 7.1852 7.1460 7.1154 7.2678 28 Peru/sol n.a. n.a. 694.59 1019.54 1087.43 1160.19 1284.37 1390.60 1514.46 29 Philippines/peso n.a. 7.8113 8.5324 9.2632 9.4488 9.5896 9.8449 10.015 10.393 30 Portugal/escudo 50.082 61.739 80.101 94.548 93.771 95.867 99.055 99.521 107.39 31 Singapore/dollar n.a. 2.1053 2.1406 2.0768 2.0758 2.0854 2.1010 2.0920 2.1198 3? South Africa/rand1 128.54 114.77 92.297 93.82 91.04 91.64 91.42 92.31 91.65 33 South Korea/won n.a. n.a. 731.93 749.80 752.19 757.94 765.29 767.96 775.82 34 Spain/peseta 71.758 92.396 110.09 126.844 129.886 133.498 135.99 137.76 143.29 35 Sri Lanka/rupee 16.167 18.967 20.756 21.378 22.355 22.982 22.971 22.970 23.050 36 Sweden/krona 4.2309 5.0659 6.2838 7.3227 7.4385 7.4882 7.4941 7.4978 7.6351 37 Switzerland/franc 1.6772 1.9674 2.0327 1.9679 2.0180 2.0663 2.0587 2.0572 2.1123 38 Thailand/baht n.a. 21.731 23.014 23.000 22.999 22.991 22.990 22.988 22.990 39 United Kingdom/pound1 232.58 202.43 174.80 157.56 153.29 149.00 153.61 157.22 154.80 40 Venezuela/bolivar n.a. 4.2781 4.2981 4.2973 4.3101 7.9500 9.0429 10.233 11.213 MEMO: United States/dollar2 87.39 102.94 116.57 117.73 119.70 120.71 121.82 122.05 125.16 1. Value in U.S. cents. description and back data, see "Index of the Weighted-Average Exchange Value 2. Index of weighted-average exchange value of U.S. dollar against currencies of the U.S. Dollar: Revision" on p. 700 of the August 1978 BULLETIN. of other G-10 countries plus Switzerland. March 1973 = 100. Weights are 1972-76 global trade of each of the 10 countries. Series revised as of August 1978. For NOTE. Averages of certified noon buying rates in New York for cable tranfers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

69 Guide to Tabular Presentation, Statistical Releases, and Special Tables GUIDE TO TABULAR PRESENTATION Symbols and Abbreviations c Corrected 0 Calculated to be zero e Estimated n.a. Not available p Preliminary n.e.c. Not elsewhere classified r Revised (Notation appears on column heading 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 SMSAs Standard metropolitan statistical areas when 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 1983 A76 SPECIAL TABLES Published Irregularly, with Latest Bulletin Reference Assets and liabilities of commercial banks, June 30, 1982 October 1982 A70 Assets and liabilities of commercial banks, September 30, 1982 January 1983 A70 Assets and liabilities of commercial banks, December 31, 1982 April 1983 A70 Assets and liabilities of U.S. branches and agencies of foreign banks, June 30, 1982 October 1982 A76 Assets and liabilities of U.S. branches and agencies of foreign banks, September 30, 1982 January 1983 A76 Assets and liabilities of U.S. branches and agencies of foreign banks, December 31, 1982 April 1983 A76 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

70 Federal Reserve Board of Governors PAUL A. VOLCKER, Chairman HENRY C. WALLICH 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 STANLEY J. SIGEL, Assistant to the Board WILLIAM R. JONES, Special Assistant to the Board NORMAND R.V. BERNARD, Special Assistant to the Board WILLIAM R. MALONI, Special Assistant to the Board NAOMI P. SALUS, Special Assistant to the Board DIVISION OF RESEARCH AND STATISTICS LEGAL DIVISION JAMES L. KICHLINE, Director JOSEPH S. ZEISEL, Deputy Director MICHAEL BRADFIELD, General Counsel MICHAEL J. PRELL, Senior Associate Director J. VIRGIL MATTINGLY, JR., Associate General Counsel JARED J. ENZLER, Associate Director GILBERT T. SCHWARTZ, Associate General Counsel DONALD L. KOHN, Associate Director RICHARD M. ASHTON, Assistant General Counsel ELEANOR J. STOCKWELL, Associate Director NANCY P. JACKLIN, Assistant General Counsel DAVID E. LINDSEY, Deputy Associate Director MARYELLEN A. BROWN, Assistant to the General Counsel FREDERICK M. STRUBLE, Deputy Associate Director HELMUT F. WENDEL, Deputy Associate Director MARTHA BETHEA, Assistant Director OFFICE OF THE SECRETARY ROBERT M. FISHER, Assistant Director SUSAN J. LEPPER, Assistant Director WILLIAM W. WILES, Secretary THOMAS D. SIMPSON, Assistant Director BARBARA R. LOWREY, Associate Secretary LAWRENCE SLIFMAN, Assistant Director JAMES MCAFEE, Associate Secretary STEPHEN P. TAYLOR, Assistant Director PETER A. TINSLEY, Assistant Director LEVON H. GARABEDIAN, Assistant Director DIVISION OF CONSUMER (Administration) AND COMMUNITY AFFAIRS GRIFFITH L. GARWOOD, Director DIVISION OF INTERNATIONAL FINANCE JERAULD C. KLUCKMAN, Associate Director GLENN E. LONEY, Assistant Director EDWIN M. TRUMAN, Director DOLORES S. SMITH, Assistant Director ROBERT F. GEMMILL, Senior Associate Director CHARLES J. SIEGMAN, Senior Associate Director LARRY J. PROMISEL, Associate Director DIVISION OF BANKING DALE W. HENDERSON, Deputy Associate Director SUPERVISION AND REGULATION SAMUEL PIZER, Staff Adviser MICHAEL P. DOOLEY, Assistant Director JOHN E. RYAN, Director RALPH W. SMITH, JR., Assistant Director WILLIAM TAYLOR, Deputy Director FREDERICK R. DAHL, Associate Director DON E. KLINE, 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

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

72 Federal Reserve Bulletin • July 1983 FOMC and Advisory Councils FEDERAL OPEN MARKET COMMITTEE PAUL A. VOLCKER, Chairman ANTHONY M. SOLOMON, Vice Chairman LYLE E. GRAMLEY PRESTON MARTIN EMMETT J. RICE ROGER GUFFEY FRANK E. MORRIS THEODORE H. ROBERTS SILAS KEEHN J. CHARLES PARTEE NANCY H. TEETERS HENRY C. WALLICH STEPHEN H. AXILROD, Staff Director and Secretary RICHARD G. DAVIS, Associate Economist NORMAND R.V. BERNARD, Assistant Secretary THOMAS E. DAVIS, Associate Economist NANCY M. STEELE, Deputy Assistant Secretary ROBERT EISENMENGER, Associate Economist MICHAEL BRADFIELD, General Counsel EDWARD C. ETTIN, Associate Economist JAMES H. OLTMAN, Deputy General Counsel MICHAEL J. PRELL, Associate Economist JAMES L. KICHLINE, Economist KARL A. SCHELD, Associate Economist EDWIN M. TRUMAN, Economist (International) CHARLES J. SIEGMAN, Associate Economist ANATOL BALBACH, 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 RONALD TERRY, Eighth District, President WILLIAM S. EDGERLY, First District, Vice President LEWIS T. PRESTON, Second District ROGER E. ANDERSON, Seventh District JOHN H. WALTHER, Third District E. PETER GILLETTE, JR., Ninth District JOHN G. MCCOY, Fourth District N. BERNE HART, Tenth District VINCENT C. BURKE, JR., Fifth District T.C. FROST, JR., Eleventh District PHILIP F. SEARLE, Sixth District JOSEPH J. PINOLA, Twelfth District HERBERT V. PROCHNOW, Secretary WILLIAM J. KORSVIK, Associate Secretary CONSUMER ADVISORY COUNCIL SUSAN PIERSON DE WITT, Chicago, Illinois, Chairman WILLIAM J. O'CONNOR, JR., Buffalo, New York, Vice Chairman ARTHUR F. BOUTON, Little Rock, Arkansas KENNETH V. LARKIN, San Francisco, California JAMES G. BOYLE, Austin, Texas TIMOTHY D. MARRINAN, Minneapolis, Minnesota GERALD R. CHRISTENSEN, Salt Lake City, Utah STANLEY L. MULARZ, Chicago, Illinois THOMAS L. CLARK, JR., New York, New York WILLARD P. OGBURN, Boston, Massachusetts JEAN A. CROCKETT, Philadelphia, Pennsylvania ELVA QUIJANO, San Antonio, Texas JOSEPH N. CUGINI, Westerly, Rhode Island JANET J. RATHE, Portland, Oregon MEREDITH FERNSTROM, New York, New York JANET M. SCACCIOTTI, Providence, Rhode Island ALLEN J. FISHBEIN, Washington, D.C. GLENDA G. SLOANE, Washington, D.C. E.C.A. FORSBERG, SR., Atlanta, Georgia HENRY J. SOMMER, Philadelphia, Pennsylvania LUTHER R. GATLING, New York, New York NANCY Z. SPILLMAN, LOS Angeles, California RICHARD F. HALLIBURTON, Kansas City, Missouri WINNIE F. TAYLOR, Gainesville, Florida CHARLES C. HOLT, Austin, Texas MICHAEL M. VAN BUSKIRK, Columbus, Ohio GEORGE S. IRVIN, Denver, Colorado CLINTON WARNE, Cleveland, Ohio HARRY N. JACKSON, Minneapolis, Minnesota FREDERICK T. WEIMER, Chicago, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

73 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK, Chairman President Vice President branch, or facility Zip Deputy Chairman First Vice President in charge of branch BOSTON* 02106 Robert P. Henderson Frank E. Morris Thomas I. Atkins James A. Mcintosh NEW YORK* 10045 John Brademas Anthony M. Solomon Gertrude G. Michelson Thomas M. Timlen Buffalo 14240 M. Jane Dickman John T. Keane PHILADELPHIA 19105 Robert M. Landis, Esq. Edward G. Boehne Nevius M. Curtis 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 William S. Lee, III Jimmie R. Monhollon Baltimore 21203 Edward H. Covell Robert D. McTeer, Jr. Charlotte 28230 Dr. Henry Ponder Albert D. Tinkelenberg Culpeper Communications and Records Center 22701 John G. Stoides ATLANTA 30301 William A. Fickling, Jr. William F. Ford John H. Weitnauer, Jr. Robert P. Forrestal Birmingham 35283 Samuel R. Hill, Jr. Fred R. Herr Jacksonville 32231 Joan W. Stein Charles D. East Miami 33152 Eugene E. Cohen Patrick K. Barron Nashville 37203 Robert C.H. Mathews, Jr. Jeffrey J. Wells New Orleans 70161 Roosevelt Steptoe 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 W.L. Hadley Griffin Theodore H. Roberts Mary P. Holt Donald W. Moriarty, Jr. Little Rock 72203 Richard V. Warner John F. Breen Louisville 40232 William C. Ballard, Jr. Memphis 38101 G. Rives Neblett Randall C. Sumner MINNEAPOLIS 55480 William G. Phillips E. Gerald Corrigan John B. Davis, Jr. Thomas E. Gainor Helena 59601 Gene J. Etchart 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 Chester J. Kesey Joel L. Koonce, Jr. Houston 77252 Paul N. Howell J.Z. Rowe San Antonio 78295 Carlos Zuniga 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 84125 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

74 Federal Reserve Board Publications Copies are available from PUBLICATIONS SERVICES, payable to the order of the Board of Governors of the Federal Mail Stop 138, 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. PART 2, 1971. 153 pp. and PART 3, 1973. 131 pp. TIONS. 1974. 125 pp. Parts 2 and 3, $1.00 each; 10 or more to one address, $.85 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, $4.50 each. Paper ed. $4.00 each; 10 or more to one ANNUAL STATISTICAL DIGEST address, $3.60 each. 1971-75. 1976. 339 pp. $ 5.00 per copy. FEDERAL RESERVE STAFF STUDY: WAYS TO MODERATE 1972-76. 1977. 377 pp. $10.00 per copy. FLUCTUATIONS IN HOUSING CONSTRUCTION. 1972. 487 1973-77. 1978. 361 pp. $12.00 per copy. pp. $4.00 each; 10 or more to one address, $3.60 each. 1974-78. 1980. 305 pp. $10.00 per copy. LENDING FUNCTIONS OF THE FEDERAL RESERVE BANKS. 1970-79. 1981. 587 pp. $20.00 per copy. 1973. 271 pp. $3.50 each; 10 or more to one address, 1980. 1981. 241 pp. $10.00 per copy. $3.00 each. 1981. 1982. 239 pp. $ 6.50 per copy. IMPROVING THE MONETARY AGGREGATES: REPORT OF THE FEDERAL RESERVE CHART BOOK. Issued four times a year in ADVISORY COMMITTEE ON MONETARY STATISTICS. February, May, August, and November. Subscription 1976. 43 pp. $1.00 each; 10 or more to one address, $.85 includes one issue of Historical Chart Book. $7.00 per each. year or $2.00 each in the United States, its possessions, ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— Canada, and Mexico. Elsewhere, $10.00 per year or Regulation Z) Vol. I (Regular Transactions). 1969. 100 $3.00 each. pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each HISTORICAL CHART BOOK. Issued annually in Sept. Subscrip- volume $1.00; 10 or more of same volume to one tion to the Federal Reserve Chart Book includes one address, $.85 each. issue. $1.25 each in the United States, its possessions, FEDERAL RESERVE MEASURES OF CAPACITY AND CAPACITY Canada, and Mexico; 10 or more to one address, $1.00 UTILIZATION. 1978. 40 pp. $1.75 each; 10 or more to one each. Elsewhere, $1.50 each. address, $1.50 each. SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SE- THE BANK HOLDING COMPANY MOVEMENT TO 1978: A RIES OF CHARTS. Weekly. $15.00 per year or $.40 each in COMPENDIUM. 1978. 289 pp. $2.50 each; 10 or more to the United States, its possessions, Canada, and Mexico; one address, $2.25 each. 10 or more of same issue to one address, $13.50 per year IMPROVING THE MONETARY AGGREGATES: STAFF PAPERS. or $.35 each. Elsewhere, $20.00 per year or $.50 each. 1978. 170 pp. $4.00 each; 10 or more to one address, THE FEDERAL RESERVE ACT, as amended through December $3.75 each. 1976, with an appendix containing provisions of certain 1977 CONSUMER CREDIT SURVEY. 1978. 119 pp. $2.00 each. other statutes affecting the Federal Reserve System. 307 FLOW OF FUNDS ACCOUNTS. 1949-1978. 1979. 171 pp. $1.75 each; 10 or more to one address, $1.50 each. pp. $2.50. INTRODUCTION TO FLOW OF FUNDS. 1980. 68 pp. $1.50 each; REGULATIONS OF THE BOARD OF GOVERNORS OF THE FED- 10 or more to one address, $1.25 each. ERAL RESERVE SYSTEM. PUBLIC POLICY AND CAPITAL FORMATION. 1981. 326 pp. REPORT OF THE JOINT TREASURY-FEDERAL RESERVE STUDY $13.50 each. OF THE U.S. GOVERNMENT SECURITIES MARKET. 1969. NEW MONETARY CONTROL PROCEDURES: FEDERAL RE- 48 pp. $.25 each; 10 or more to one address, $.20 each. SERVE STAFF STUDY, 1981. JOINT TREASURY-FEDERAL RESERVE STUDY OF THE GOV- SEASONAL ADJUSTMENT OF THE MONETARY AGGREGATES: ERNMENT SECURITIES MARKET; STAFF STUDIES—PART REPORT OF THE COMMITTEE OF EXPERTS ON SEASONAL 1. 1970. 86 pp. $.50 each; 10 or more to one address, $.40 ADJUSTMENT TECHNIQUES. 1981. 55 pp. $2.75 each. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

75 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 BELOW THE BOTTOM LINE: THE USE OF CONTINGENCIES three Handbooks plus substantial additional material.) AND COMMITMENTS BY COMMERCIAL BANKS, by Benja- $175.00 per year. min Wolkowitz and others. Jan. 1982. 186 pp. Rates for subscribers outside the United States are as MULTIBANK HOLDING COMPANIES: RECENT EVIDENCE ON follows and include additional air mail costs: COMPETITION AND PERFORMANCE IN BANKING MAR- Federal Reserve Regulatory Service, $225.00 per year. KETS, by Timothy J. Curry and John T. Rose. Jan. 1982. Each Handbook, $75.00 per year. 9 pp. WELCOME TO THE FEDERAL RESERVE, DECEMBER 1982. COSTS, SCALE ECONOMIES, COMPETITION, AND PRODUCT PROCESSING BANK HOLDING COMPANY AND MERGER APPLI- MIX IN THE U.S. PAYMENTS MECHANISM, by David B. CATIONS Humphrey. Apr. 1982. 18 pp. SUSTAINABLE RECOVERY: SETTING THE STAGE, November DIVISIA MONETARY AGGREGATES: COMPILATION, DATA, 1982. AND HISTORICAL BEHAVIOR, by William A. Barnett and REMARKS BY CHAIRMAN PAUL A. VOLCKER, AT ANNUAL Paul A. Spindt. May 1982. 82 pp. HUMAN RELATIONS AWARD DINNER, December 1982. THE COMMUNITY REINVESTMENT ACT AND CREDIT ALLO- REMARKS BY CHAIRMAN PAUL A. VOLCKER, AT DEDICATION CATION, by Glenn Canner. June 1982. 8 pp. CEREMONIES: FEDERAL RESERVE BANK OF SAN FRAN- INTEREST RATES AND TERMS ON CONSTRUCTION LOANS AT CISCO, March 1983. COMMERCIAL BANKS, by David F. Seiders. July 1982. RESTORING STABILITY. REMARKS BY CHAIRMAN PAUL A. 14 pp. VOLCKER, April 1983. STRUCTURE-PERFORMANCE STUDIES IN BANKING: AN UP- DATED SUMMARY AND EVALUATION, by Stephen A. Rhoades. Aug. 1982. 15 pp. CONSUMER EDUCATION PAMPHLETS FOREIGN SUBSIDIARIES OF U.S. BANKING ORGANIZATIONS, by James V. Houpt and Michael G. Martinson. Oct. Short pamphlets suitable for classroom use. Multiple 1982. 18 pp. copies available without charge. REDLINING: RESEARCH AND FEDERAL LEGISLATIVE RE- SPONSE, by Glenn B. Canner. Oct. 1982. 20 pp. Alice in Debitland BANK CAPITAL TRENDS AND FINANCING, by Samuel H. Consumer Handbook to Credit Protection Laws Talley. Feb. 1983. 19 pp. The Equal Credit Opportunity Act and . . . Age FINANCIAL TRANSACTIONS WITHIN BANK HOLDING COMPA- The Equal Credit Opportunity Act and . . . Credit Rights in NIES, by John T. Rose and Samuel H. Talley, May 1983. Housing 11 pp. The Equal Credit Opportunity Act and . . . Doctors, Lawyers, Small Retailers, and Others Who May Provide Incidental Credit The Equal Credit Opportunity Act and . . . Women REPRINTS OF BULLETIN ARTICLES Fair Credit Billing Most of the articles reprinted do not exceed 12 pages. Federal Reserve Glossary Guide to Federal Reserve Regulations Perspectives on Personal Saving. 8/80. How to File A Consumer Credit Complaint Federal Reserve and the Payments System: Upgrading If You Borrow To Buy Stock Electronic Capabilities for the 1980s. 2/81. If You Use A Credit Card Survey of Finance Companies, 1980. 5/81. Series on the Structure of the Federal Reserve System Bank Lending in Developing Countries. 9/81. The Board of Governors of the Federal Reserve System The Commercial Paper Market since the Mid-Seventies. The Federal Open Market Committee 6/82. " Federal Reserve Bank Board of Directors Applying the Theory of Probable Future Competition. 9/82. Federal Reserve Banks International Banking Facilities. 10/82. Monetary Control Act of 1980 U.S. International Transactions in 1982. 4/83. Organization and Advisory Committees Truth in Leasing U.S. Currency What Truth in Lending Means to You Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

All GOLD REAL estate loans Certificate account, 12 Banks, by classes, 19-21, 41 Stock, 4, 55 Rates, terms, yields, and activity, 3, 40 Government National Mortgage Association, 35, 40, 41 Savings institutions, 28 Gross national product, 52, 53 Type of holder and property mortgaged, 41 Repurchase agreements and federal funds, 6, 19, 20, 21 HOUSING, new and existing units, 50 Reserve requirements, 8 Reser es INCOME, personal and national, 46, 52, 53 Commercial banks, 18 Industrial production, 46, 48 Depository institutions, 3, 4, 5, 13 Installment loans, 42, 43 Federal Reserve Banks, 12 Insurance companies, 30, 33, 41 U.S. reserve assets, 55 Interbank loans and deposits, 18 Residential mortgage loans, 40 Interest rates Retail credit and retail sales, 42, 43, 46 Bonds, 3 Business loans of banks, 27 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, 28 Savings and loan association, 9, 30, 41, 42, 43, 44 (See also Mortgages, 3, 40 Thrift institutions) Prime rate, commercial banks, 27 Savings deposits (See Time and savings deposits) Time and savings deposits, 9 Securities (See specific types) International banking facilities, 17 Federal and federally sponsored credit agencies, 35 International capital transactions of United States, 54-67 Foreign transactions, 66 International organizations, 58, 59-61, 64-67 New issues, 36 Inventories, 52 Prices, 29 Investment companies, issues and assets, 37 Special drawing rights, 4, 12, 54, 55 Investments (See also specific types) State and local governments Banks, by classes, 18, 30 Deposits, 19, 20, 21 Commercial banks, 3, 16, 18, 19-21 Holdings of U.S. government securities, 33 Federal Reserve Banks, 12, 13 New security issues, 36 Savings institutions, 30, 41 Ownership of securities issued by, 19, 20, 21, 30 Rates on securities, 3 LABOR force, 47 Stock market, 29 Life insurance companies (See Insurance companies) Stocks (See also Securities) Loans (See also specific types) New issues, 36 Banks, by classes, 18, 19-22 Prices, 29 Commercial banks, 3, 16, 18, 19-22, 23, 27 Federal Reserve Banks, 3, 4, 5, 7, 12, 13 TAX receipts, federal, 32 Insured or guaranteed by United States, 40, 41 Thrift institutions, 3 (See also Credit unions, Mutual Savings institutions, 30, 41 savings banks, and Savings and loan associations) Time and savings deposits, 3, 9, 15, 18, 19-22 MANUFACTURING Trade, foreign, 55 Capacity utilization, 46 Treasury currency, Treasury cash, 4 Production, 46, 49 Treasury deposits, 4, 12, 31 Margin requirements, 29 Treasury operating balance, 31 Member banks (See also Depository institutions) Federal funds and repurchase agreements, 6 Reserve requirements, 8 UNEMPLOYMENT, 47 Mining production, 49 U.S. government balances Mobile home shipments, 50 Commercial bank holdings, 19, 20, 21 Monetary and credit aggregates, 3, 13 Treasury deposits at Reserve Banks, 4, 12, 31 Money and capital market rates (See Interest rates) U.S. government securities Money stock measures and components, 3, 14 Bank holdings, 18, 19-21, 33 Mortgages (See Real estate loans) Dealer transactions, positions, and financing, 34 Mutual funds (See Investment companies) Federal Reserve Bank holdings, 4, 12, 13, 33 Mutual savings banks, 9, 19-21, 30, 33, 41, 42, 43 (See also Foreign and international holdings and transactions, 12, Thrift institutions) 33, 67 Open market transactions, 11 Outstanding, by type and ownership, 33 NATIONAL defense outlays, 32 Ownership of securities issued by, 30 National income, 52 Rates, 3, 28 U.S. international transactions, 54-67 OPEN market transactions, 11 Utilities, production, 49 PERSONAL income, 53 Prices VETERANS Administration, 40, 41 Consumer and producer, 46, 51 Stock market, 29 WEEKLY reporting banks, 19-24 Prime rate, commercial banks, 27 Wholesale (producer) prices, 46, 51 Producer prices, 46, 51 Production, 46, 48 Profits, corporate, 37 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

78 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories •s Helena Minneapolis 1 { (7)i \ v- I \\c/ic^ / I W® Kansas Oklahoma C itvJ. r 1 IMMiaMl Dallas® V iH ) © 'JlPaCo ,J (U) 'Houston] SSan Antonio January 1978 LEGEND Boundaries of Federal Reserve Districts ® Federal Reserve Bank Cities Boundaries of Federal Reserve Branch • Federal Reserve Branch Cities Territories Federal Reserve Bank Facility Q Board of Governors of the Federal Reserve System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis